996 - Banca Antonveneta

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996 - Banca Antonveneta

\\ItAntonvenetaAnnualReport2007XII Financial Year


BANCA ANTONVENETA S.p.A., società per azioni con unico socio(single member joint stock company),a subsidiary ofABN AMRO Bank N.V.Share Capital €926,266,497.00, fully paid inRegistered Office: Piazzetta Filippo Turati 2, Padua, 35131Padua Register of Companies - Tax Code and V.A.T. number 02691680280Member of the Interbank Deposit Protection FundParent company of the “Banca Antonveneta” Banking Group.Registered in the Banking Groups Registry3


Board of DirectorsChairman * Francesco SpinelliSenior Deputy Chairman * Augusto FantozziVice ChairmanGilberto MuraroManaging Director * Piero Luigi MontaniDirectorsNicolò AzzolliniDavid Alan ColeEnrico Tommaso Cucchiani (1)Jan Maarten de JongMarta Maria Elorza Trueba (2)Guidalberto GuidiJavier Maldonado (2)Leopoldo MazzarolliMaurice Oostendorp (3)Alexander Michael Pietruska (4)* Antonio Scala* Giuseppe StefanelGiuliano TabacchiBoard of Statutory AuditorsChairmanGianni CagnoniStatutory AuditorsAlberto Dalla LiberaGianbattista GuerriniAlternate AuditorsEnzo NalliLeopoldo Rossi Chauvenet* Members of the Executive Committee(1) resigning – in office until 18 th September 2007(2) co-opted during the Council session of 6 th March 2008(3) resigning – in office until 27 th February 2008(4) resigning – in office until 29 th February 2008.5


Directors and Officers 5CONSOLIDATED FINANCIAL STATEMENTS AND REPORTStructure of the Antonveneta Group 11Consolidated financial statements data for the companies which are fully consolidated 13Directors’ Report 15Independent Auditors’ Report on the Consolidated Financial Statements 39Statutory Auditors' Report on the Consolidated Financial Statements 43CONSOLIDATED FINANCIAL STATEMENTS FOR 2007Consolidated financial statements 49Consolidated Notes to the Accounts 57Part A. Accounting Policies 59Part B. Information on the Consolidated Balance Sheet 75Part C. Information on the Consolidated Income Statement 121Part D. Segment Reporting 145Part E. Information on Risks and Related Hedging Policies 149Part F. Information on Consolidated Shareholders' Equity 183Part H. Transactions with Related Parties 189Scope of Consolidation and Preparation of the Consolidated Financial Statements 192INDIVIDUAL FINANCIAL STATEMENTS AND REPORTIndividual financial statements data 195Directors' Report 197Independent Auditors’ Report on the Antonveneta ABN Amro Financial Statements 215Statutory Auditors' Report on the Individual Financial Statements 219INDIVIDUAL FINANCIAL STATEMENTS FOR 2007Individual financial statements 225Notes to the Accounts 233Part A. Accounting Policies 235Part B. Information on the Balance Sheet 247Part C. Information on the Income Statement 293Part E. Information on Risks and Related Hedging Policies 313Part F. Information on Shareholders' Equity 363Part H. Transactions with Related Parties 371Equity Investments 379Statement of land and buildings owned 380INTERNATIONAL ACCOUNTING STANDARDS approved by the European Commission 381TERRITORIAL ORGANISATION 3837


GROUPSTRUCTUREANTONVENETAANTONVENETA ABNAMRO BANK S.p.A.(♦ ) (•)ANTENORE FINANCES.p.A.(♦ )SALVEMINI Srl(♦ )LA CITTADELLAS.p.A.55%98% 100% 99,167%ANTONVENETA ABNAMRO SGR S.p.A.(♦ )THEANO FINANCES.p.A.(♦ )ANTONVENETAIMMOBILIARES.p.A.(♦ )ANTONIANA VENETAPOPOLAREASSICURAZIONI100%98% 100% 50,00%ANTONVENETA ABNAMRO I.F. Ltd(♦ )GIOTTO FINANCES.p.A.(♦ )ANTONVENETACAPITAL LLC I(♦ )ANTONIANA VENETAPOPOLARE VITA100%98% 100% 50,00%GIOTTO FINANCEII S.p.A.(♦ )ANTONVENETACAPITAL LLC II(♦ )PADOVA 2000INIZIATIVEIMMOBILIARIS.p.A.98% 100% 45,010%INTERBANCAS.p.A.(♦ )ANTONVENETACAPITAL TRUST I(♦ )COSTRUZIONIECOLOGICHEMODERNE S.p.A.99,991%100% 40,197%INTERBANCAINTERNATIONALHOLDING (♦ )ANTONVENETACAPITAL TRUST II(♦ )SIDERMO Srl(in liquidazione)100%100% 32,250%BIOS INTERBANCAS.p.A.81,835%FULL CONSOLIDATIONFULL CONSOLIDAMENTO CONSOLIDATION INTEGRALEFOR SALE FOR SALEIN DISMISSIONECONSOLIDATION IN SHAREHOLDERS’ EQUITYCONSOLIDATION CONSOLIDAMENTO IN SHAREHOLDERS’ A PATRIMONIO EQUITY NETTO♦ (♦)Society Società included compresa in Banca nel Gruppo Antonveneta Bancario Group Banca Antonveneta(•) On Il 1st 1° January gennaio 2008 ABN ABN AMRO BANK BANK S.p.A. S.p.A. carried ha perfezionato out an integration la fusione by means per incorporazione of a merger corporation della controllata of its subsidiary ABN AMRO ABN SGR. AMRO SGR.• On 1 st January 2008 ABN At the AMRO same BANK date S.p.A. the Company carried turned out an into integration ABN AMRO by ASSET means MANAGEMENT of a merger corporation ITALY SGR S.p.A. of its subsidiary ABN AMRO SGR.Alla stessa data la Società si è trasformata in " ABN AMRO ASSET MANAGEMENT ITALY, Società di Gestione del Risparmio S.p.A.At the same date the Company turned into ABN AMRO ASSET MANAGEMENT . ITALY SGR S.p.A.11


CONSOLIDATED FINANCIAL STATEMENT DATA FOR THE COMPANIESWHICH ARE FULLY CONSOLIDATED(Figures in millions of Euro)DIRECTDEPOSITS25,140INDIRECTDEPOSITS36,819LOANS TOCUSTOMERS30,5730 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000TOTALBRANCHES9,492TOTALEMPLOYEES99613


The Macroeconomic ScenarioDear Shareholders,Before illustrating to you the activities carried out andthe results achieved by the Antonveneta Group during2007, we believe it is appropriate to briefly recall themain events which characterised the year just ended,from an economic and financial standpoint.The economy as a whole2007 was another year of growth for global economyand world commerce; nonetheless, evident signs of aslowdown in manufacturing activities emerged duringthe fourth quarter of the year. The decelerationconcerned the most advanced areas, in particular theUnited States, while emerging countries continued toexpand at elevated rates. The weakness of theinternational economic cycle during the latter part ofthe year was essentially attributable to two factors: onthe one hand, the considerable tension on financialmarkets caused by the crisis in the US sub-primemortgage loan sector last Summer; and on the otherhand, the significant rises in oil prices (the tendentialgrowth rate in the fourth quarter of 2007 +49% forthe average price in dollars of the main categories)and in certain important raw foodstuffs, caused by thehigh demand from economies undergoing greatestgrowth. On average in 2007, therefore, GDP growthfor the United States remained contained at 2.2% (-70basis points with respect to 2006), despite theconsistent increases reported during the second andthird quarters; in Japan and the UK, the GDP increaseduring 2007 came to 2.1% and 3.1%., respectivelyThe deterioration in the economic scenario during thelatter part of 2007 also affected the Euro zone, but hadless pronounced effects than the situation in the USA.GDP increased by 2.7% on an average annual basis, aresult just under that for 2006 (+2.8%). The greatestcontribution towards growth came from internaldemand, whose liveliest component was investmentexpenditure, while the contribution of the new foreigntrade balance remained contained, due to the partialoffsetting between the rises in exports and imports.The industrial manufacturing trend was curbed by theappreciation of the Euro exchange rate: annual growthcame to around 3.4%, approximately 60 basis pointsless with respect to 2006. Positive signs were seenboth from the job market, with an unemployment ratestill falling (7.4% on average in 2007, compared with8.2% last year), and with regard to public finance,with the deficit of the government agencies and thetotal Debt improving further.The average inflation rate in 2007, gauged by theharmonized consumer price index, rose by 2.1%, moreor less as in 2006 (+2.2%); however, in tendentialterms, growth in December came to around 3.1%,reflecting the heavy tension emerging in raw energyproducts and foodstuff markets.During 2007, the development of the economicscenario in Italy essentially followed that of the Eurozone, even if starting off from a less favourablestructural position. The GDP growth rate came to 1.5%(-30 basis points with respect to last year) on anaverage annual basis: in the presence of a more orless nil contribution from net foreign demand,manufacturing activities were entirely supported bythe internal components and, specifically, spending forconsumption, also aided by the incentives forpurchases of durables.Industrial production disclosed a significant decreaseduring the fourth quarter, reflecting the further erosionof competitiveness caused by the appreciation of theEuro, so that, on an average annual basis, the correctfigure for the working days dropped slightly withrespect to 2006 (-0.2%).The change in the harmonized consumer price indexcame to + 2.0% for the entire year and to +2.8% intendential terms in December, essentially repeatingthe trend registered by all the Euro zone countries,also in the underlying reasons. In conclusion, theunemployment rate dropped even further whencompared with the previous year, standing at around6.0% (6.8% in 2006).The financial and lending marketsAs from last summer, the deterioration in the degreeof solvency on so-called US sub-prime mortgage loans,within a general context of real estate sectorweakness, caused heavy turbulence on internationalfinancial markets. Such a tension, initially confined tostructured credit instruments directly linked to thetype of mortgage loans in question, rapidly extendedto other financial assets as well and to the main worldmonetary markets. Among other things, this led to awidespread liquidity crisis, with a sharp drop in tradingon interbank markets and a generalized rise inpremiums for the risk: in the Euro zone, thedifferential between the 3-month Euribor rate and therate on German government securities with the samematurity, normally standing at around 20 basis points,rose to more than 1 percentage point. The consistentinjections of liquidity made, together, by the leadinginternational monetary authorities towards the end of2007, temporarily mitigated the tension, but elevateduncertainty still exists with regard to the possibleevolution of the crisis and its consequences for thefinancial system, especially in the USA and in Europe.The rapid change in the economic scenario alsoinfluenced the regulation of the monetary policies inthe most advanced countries. In the United States,where the economic slowdown towards the end of2007 was more pronounced, the Federal Reserverepeatedly took steps to lower the official referencerate, as from the month of September, to the level of3.00% achieved at the beginning of the current year(-2.25 percentage points overall, of which -1.25concentrated in the two measures in January 2008).The monetary policy in the United Kingdom reversedas well towards year end: after the rise from 5% to5.75%, in three subsequent spurts between January17


and July 2007, the official reference rate was reducedlast December and in February 2008, returning to thelevel of 5.25%. By contrast, in the Euro zone the mainreference rate remained at the level of 4% reached atthe beginning of last summer, after the two 25 basispoint increases made in March and June. The recentinflationary pressure, which emerged within a contextof prolonged loan expansion, together with uncertaintyconcerning the possible overall impact of the financialmarket crisis on the economy as a whole, have so farled the European Central Bank to adopt a prudentattitude, also in the presence of signs of a slowdown inthe area’s economic activities.On a parallel, the real estate markets also disclosedheightened volatility during the second half of 2007:share prices on the main international stock marketsunderwent substantial downward adjustments which,in some cases, eroded and even compromised theannual performance of the respective general indexes.This is what happened on the Milan Stock Exchange,where the historic MIB and S&P/MIB indexes dropped,by 8% and 7%, respectively. Again with respect to theprevious year, total capitalisation fell by 5.8%, toaround 734 billion euro, while the equivalent tradingvalue reported an increase of around 37% in overallterms and nearly 39% as the daily average.The appreciation of the Euro against the dollarcontinued in the currency markets, encouraged by theimproved economic conditions of the Europeaneconomy when compared with the US situation and bythe cancellation of the positive differential between theUS interest rates and those of the EU area. The Euroalso appreciated against the Yen and the Sterling.With regard to the trend of the main monetary andlending aggregates in Italy, during 2007 the banklending expansion phase continued, supported by theonce again high demand from households andbusinesses. On a tendential basis, loans to residentsrose by 9.5% in December, mainly thanks to thesupport of the medium/long-term component(+11.8%), since those with a shorter maturitydisclosed a relatively contained growth rate (+5.6%);what is more, following last summer’s crisis, modestsigns of tightening in the policies for the disbursementof credit to business have emerged. Deposits bycontrast slowed down: again in December and intendential terms, the overall aggregate from residentsincreased by 6.2%. The slowdown in the growth rateconcerned deposits in a more pronounced manner(+3.9%), especially in the form of current accounts,but also bond performance, albeit still lively (+9.7%),was decidedly curbed when compared with the sameperiod in 2006.In conclusion, with reference to the asset managementsector, during 2007 the net run-off of resourcesintensified: the crisis on the Italian market by nowappears to be structural in nature, partly because ithas not been noted in the other leading Europeancountries. At year end, net deposits were negative withreference to both open-ended funds (-57.3 billion,which fell to -52.4 billion also considering the reservedfunds and hedge funds), and to retail portfoliomanagement in securities and funds (-28.2 billionoverall, gross of the duplication of the Group CollectiveInvestment Undertakings).GovernanceAmendment of the ownership set-ups of ABN AMROBankOn 23 rd April 2007, the Parent Company ABN AMROannounced that it had reached an agreement withBarclays for the merger between the latter and ABNAMRO, also revealing the decision to sell off thesubsidiary LaSalle to the Bank of America.On 20 th July 2007, Royal Bank of Scotland, BancoSantander and Fortis (hereinafter the “Banking Trust”),launched a public take-over bid for purchase andexchange on all ABN AMRO shares, offering 0.296ordinary RBS shares plus 35.60 euro in cash for everyABN AMRO share. The agreed subscription periodcommenced on 23 rd July 2007 and concluded on 5 thOctober 2007. The bid was conditional upon theoccurrence of certain requisites, including theminimum subscription of 80% of the share capital.On 6 th August 2007, Barclays made a competitivetake-over bid on all ABN AMRO shares, offering 2.13ordinary Barclays shares plus 13.15 euro in cash forevery ordinary ABN AMRO share, with the subscriptionperiod fixed between 7 th August 2007 and 4 th October2007. On 5 th October, Barclays declared thewithdrawal of its bid.On 6 th October 2007, the Banking Trust announcedthat the subscriptions to the bid has came to around86% of the ordinary shares of ABN AMRO; on thefollowing 10 th October 2007, the Banking Trustdeclared its unconditional bid. On 17 th October, theBanking Trust took steps to pay the price envisaged bythe bid.The banks belonging to the Banking Trust declared inthe “Bid Document” that: “After finalisation of the Bid,following a rational organization, it is envisaged thatthe following ownership set-up will emerge:• Fortis: Business unit in the Netherlands (excludingthe former Dutch wholesale customers, Interbankand DMC Consumer Finance), Global Private ClientBusiness unit (excluding Latin America), Globalportfolio management Business unit;• RBS: continuation of the Business unit activities inNorth America (after the sale of LaSalle), GlobalClients and wholesale clients Business unit in theNetherlands (including the former Dutch wholesaleclients) and Latin America (excluding Brazil),Business unit in Asia (excluding Saudi Hollandi) andBusiness unit in Europe (excluding Antonveneta);18


• Santander: Business unit in Latin America(excluding wholesale clients outside Brazil),Antonveneta, Interbanca and DMC ConsumerFinance;• Shared portfolios: Central headquarters and centraloffices, private equity portfolio, equity investmentsin Capitalia and Saudi Hollandi and Prime Bank.The division of the above businesses is based on thebusiness units indicated in the Annual Report and theFinancial reports for the accounting period ended as at31 December 2006.”On 8 th November 2007, Banca Monte dei Paschi diSiena S.p.A. (hereinafter, “Monte dei Paschi”)announced that it had reached an agreement withSantander for the purchase of Banca Antonveneta.In detail, the plan for the transition of BancaAntonveneta from ABN Amro envisages the exit ofInterbanca from the scope of consolidation in advancewith respect to a subsequent sale of the entire sharecapital to Santander or likewise to MPS, after thenecessary authorizations have been obtained. Thetransaction for the sale to MPS must be concluded by30 th September 2008.In the press release disclosed on 8 th November, Montedei Paschi declared, in relation to the strategicimportance of the transaction, that: “Antonvenetarepresents an important occasion for territorialcomplementarity and similar retail culture, consistencywith regard to governance (it does not present anyrestriction or complexity) and dimension.” Thetransaction permits the consolidation of the role ofthird banking hub in Italy capable of competing withthe other leading groups on the Italian and Europeanmarket.The agreement, which the parties envisage finalisingwithin the strictly necessary technical timeframes andwhich has already been approved by ABN Amro’sBoard of Directors, is subject to the authorizationsenvisaged by applicable Antitrust and BankingSupervision legal provisions.Restructuring of the Asset ManagementsectorIn June 2007, following authorization from the Bank ofItaly, a project was launched for the restructuring ofthe Group, aimed at concentrating within BancaAntonveneta all the private banking activities and allthe asset management activities within ABN AMROAsset Management N.V. (ABN AMRO Group company).The project, due to events which involved theownership structure of ABN AMRO Bank during thesecond part of the year and which are still underway,was achieved partially by means of:• the purchase – as from 1 July 2007 – by BancaAntonveneta of all the activities pertaining to thePrivate Banking business segment as well as thoseof a banking nature associated with the same, fromthe subsidiary Antonveneta ABN AMRO Bank S.p.A.(“AAA Bank”);• the merger by incorporation of Antonveneta ABNAMRO S.g.r. S.p.A. (“AAA S.g.r.”) within AAA Bankinvolving the simultaneous transformation of thelatter into an asset management company (S.g.r.),subject to amendment of the corporate purpose.The related merger project was approved by theextraordinary shareholders’ meetings of the twocompanies on 1st July 2007. The deed for themerger of AAA S.g.r. within AAA Bank was enteredinto on 18th December 2007, and was effective asfrom 1st January 2008; at the same time, AAABank adopted a new set of Articles of Association,changing its corporate name to ABN AMRO AssetManagement Italy S.g.r. S.p.A..As a result of the afore-mentioned reasons linked tothe evolution of control over the Banca AntonvenetaGroup and, therefore, of a possible re-definition of theBank’s strategies in line with the indications taht willcome from the new shareholder who will take control,the Bank’s Board of Directors has decided to suspend –for the moment – the part of the project whichenvisaged the sale of the equity investment held byBanca Antonveneta in the new ABN AMRO AssetManagement Italy S.g.r. (55%) to ABN AMRO AssetManagement N.V..* * *As at 1 August 2007 and 30 July 2007, respectively,Banca Antonveneta and the subsidiary InterbancaS.p.A. - in their capacity as jointly liable shareholders(Article 36 of Italian Presidential Decree No. 602/73),received notification of a notice of assessment for thebankruptcy of the company BELL S.A. (with registeredoffices in Luxembourg) to pay taxes in Italy (2001Irpeg – corporate income tax); at that time,Antonveneta and Interbanca S.p.A. held an interest ofaround 9.6% and 6.3%, respectively, in that company.Following the statement report process with the InlandRevenue, both the companies signed the consequentcompliance documents for the definitive settlement ofthe tax dispute, amounting to a total of 23.9 million, ofwhich 14.4 million payable by Banca Antonveneta and9.5 million payable by Interbanca S.p.A..Strategy, products and servicesDuring 2007, the Group continued to operate in thecommercial, merchant banking and asset amangementsectors on the basis of the strategies defined in the“2007–2008 Industrial Plan”. However, ABN AMROcorporate events, already illustrated in the section on“governance”, led to a significant slowdown in the planimplementation process, centred on the reorganizationof Antonveneta in the form of divisions, on a consistentbasis with the ABN AMRO Group model.19


Despite the afore-mentioned circumstances, theactivities for integration with the ABN AMRO Group inany event permitted Banca Antonveneta and itssubsidiaries during 2007 to share the aim of satisfyingthe growing needs of its customers by means ofextending the range of products and services offered,as well as the overall review of those already existing,especially in terms of prices applied, for the purpose ofadapting them to the increasingly competitiveconditions applied on the market.During 2007, the Antonveneta Group companies alsocontinued to dedicate considerable efforts for theachievement of initiatives aimed at improving internalefficiency, with regard to risk management, proceduraland legislative aspects, the sales network and thehuman resources.As already mentioned in the section on “governance”,as from 1 July, the activities of AAA Bank’s privatebusiness segment were transferred to BancaAntonveneta, together with the employees belongingto the same.As part of the strategies aimed at streamlining theorganizational structures, Banca Antonveneta signedan agreement for the transfer under outsourcing ofpart of the business segment concerning dataprocessing to Società Roma Servizi Informatici S.p.A.of the E.D.S. Group; the transfer, operative as from 1April, involved a total of 98 employees. Furthermore,in December Banca Antonveneta and the Trade Unionorganizations reached an agreement for theimplementation of a new voluntary staff redundancyplan which concerned the employees approachingretirement age and those who will be able to avail ofthe concessions associated with the “Solidarity Fund”for employees of lending institutions, set up with INPS(national social security institute); the agreement willbe implemented during 2008.With the aim of improving the quality of the assets andstreamlining the loan management activities, inDecember Banca Antonveneta, Interbanca and the twosecuritization firms, Antenore Finance and TheanoFinance, concluded the factoring without recourse ofnon-performing loans with Elipso Finance, a jointventure set up between General Electric, Pirelli RealEstate and Calyon SA. The transaction – whichrepresents the second tranche of the most extensiveloan factoring programme launched in 2006 byAntonveneta – concerned a portfolio of non-performingloans amounting, gross of adjustments made overtime, to a total of 2.5 billion euro, part of whichguaranteed by real estate property; in detail, thefactored portfolios amounted to approximately 1.1billion for Banca Antonveneta, 30 million forInterbanca, 994 million for Antenore Finance and 393million for Theano Finance.Before the afore-mentioned factoring, BancaAntonveneta had acquired a total of 458 million innon-performing loans from the securitization firmsAntenore Finance (180 million) and Theano Finance(278 million); following both the afore-mentionedfactoring transactions, these two firms cleared theirresidual non-performing loans portfolio.The economic impact of the entire transaction came toaround 7 million, generated by revenues for 14 millionand adjustments on loans for 7 million.20


Performance in 2007Comparability with 2006In the 2007 financial statements, the balances relatingto Interbanca and its subsidiaries were classified under“groups of assets held for sale”, on the basis of theagreement – already mentioned in the section on“governance” – between Santander and Monte deiPaschi di Siena, which excluded Interbanca from thesale of the Antonveneta Group. So as to provide a fullpicture, the results achieved by the afore-mentionedcompany and its subsidiaries during 2007 have in anyevent been commented on both within the sphere ofthe main sectors of the Group’s activities, and in thepart relating to the performance of the individualcompanies.Again with regard to the 2007 financial statements,AAA Bank and its subsidiaries were, by contrast,consolidated on a line-by-line basis – in contrast to theapproach adopted in the 2006 financial statements,when the same companies were included under“groups of assets held for sale” – following thesuspension of their sale to ABN AMRO AssetManagement N.V., as already mentioned previously.With regard to 2006, the income statement figures, incommon with 2007, were reclassified consolidatingAAA Bank line-by-line and including Interbanca among“groups of assets held for sale”. The balance sheetfigures, on the other hand, included the line-by-lineconsolidation of both the companies and are notconsistent with those for 2007 due to the differentplacement of Interbanca; therefore, in order to permita more correct evaluation of the Antonveneta Group’sperformance, the dynamics of the balance sheetaggregates have also been presented with reference tothe 2006 reclassified figures, which excluded thecontribution of Interbanca and its subsidiaries.The results for the 2007 accounting periodDuring 2007, the activities of the Group representedby Banca Antonveneta and its subsidiaries, on aconsistent basis with the strategies defined in the“2007–2008 Business Plan”, focused on thedevelopment of additional initiatives in the consumersector, support for businesses with regard to thecommercial sector and the implementation of servicesaddressing the private segment, continuing to payparticular attention to the area the bank is traditionallypresent in.450,000400,000350,000300,000250,000200,000150,000100,00050,0000-50,000339,410INCOME FOR THE YEAR(in thousands of Euro)89,290408,089-5,890Nevertheless, the achievement of the objectivesestablished for the year just ended was influenced byuncertainties regarding the ownerships set-ups of ABNAMRO Bank, which occurred during a period ofprofound operative re-organization of the AntonvenetaGroup, sharp competition in the context in which itoperates and heavy tension on financial markets. Thiswas joined by the unfavourable effects of specific nonrecurrentevents, detailed further on.The 2007 accounting period closed with a net loss of5.9 million, compared with profit of 408.1 million in theprevious year. The comparison with 2006 reveals, withregard to revenues, a reduction of 119 million(-6.2%), which was affected by a series of nonrecurrentevents: on the one hand, the writedown (48million) of Banca Antonveneta’s equity investment inHopa S.p.A. and the decreased contribution of netincome from the sale of equity investments (31 millioncompared with 92.5 million in 2006); on the otherhand, the positive impact of the non-performing loansfactoring transaction (14 million, compared with 1.5million in 2006).Net of the afore-mentioned non-recurrent income andexpense, the revenues therefore disclosed a decreaseof 1.2% (around -22 million), attributable to thedecreased contribution of net commission and otheroperating expense/income (-57 million, or -8.4%),consequent to the adoption of more competitive pricepolicies, mainly offset by the positive contribution ofnet interest income and the result of trading activities(including therein dividends and income from equityinvestments).Operating costs increased by 117 million (+10.5%),being the main consequence of the rise in personnelcosts for 107 million (+17.9%). This item was alsoaffected by non-recurrent expense and income: theformer includes the costs associated with the 2007incentives for the voluntary redundancies of staff andthe redundancy programme for 2008 (totalling 61million); the latter includes the benefits due to thechanges introduced by new legislation on the Staffseverance indemnity (17 million). On the other hand,during 2006, personnel costs benefited from recoverieson provisions for 11 million.21


Excluding the afore-mentioned non-recurrent items,the increase in personnel costs would come to around8%, reflecting the policy followed by the Group duringthe year, aimed at enhancing the sales network andthe co-ordination structures, also in terms of quality.Adjustments and provisions (374 million) were higherby around 126 million when compared with 2006, as aresult of the careful policy of assessing the positionsimplemented by the Group (+92 million in adjustmentson loans, of which 7 million deriving from the loanfactoring transaction) as well as the chargesassociated, on the one hand, with the definition of thetax dispute on the equity investment BELL S.A. (14million) and, on the other, the deterioration of financialassets (16 million, mainly referring to the equityinvestments Italease S.p.A., Palladio Finanziaria andBELL S.A.).The impact of the taxation for the year on profit fromordinary operations was also considerably higher thanin 2006, mainly as a result of the extraordinaryexpense (around 64 million) pertaining to the valuationof deferred tax assets and liabilities, in turn linked tothe decrease in the IRES-company earnings’ tax rate(from 33% to 27.5%) laid down by the 2008 FinancialBill.As a result of the loss reported by Interbanca and itssubsidiaries, due to the unfavourable impact of aseries of non-recurrent events illustrated further on,the result of assets held for sale presented a negativebalance of 10.1 million, compared with a gain of 94.9million in 2006.BONDS21.20%TERMDEPOSITS1.57%DIRECT DEPOSITS(%)OTHERDEPOSITS11.51%CURRENTACCOUNT ANDDEMANDDEPOSITS65.73%As at 31 December 2007, total deposits, equating tothe sum of direct and indirect customer deposits,amounted to 61,959 million, disclosing a decrease of3.2% when compared with the balance as at 31December 2006, calculated net of Interbanca. Indetail, direct deposits amounted to 25,140 million,down by 4,7% when compared with the balance as at31 December 2006 (net of Interbanca), as a result ofthe reduction in securities issued (-21.1%) consequentto the failure to renew bond issues falling due. Indirectdeposits (36,819 million) dropped to 2.1%, in thepresence of a reduction of 12.8% for the assetmanagement component and growth of 4.4% foradministered deposits.INDIRECT CUSTOMER DEPOSITS(in millions of Euro)With reference to the evolution of traded volumesduring 2007, the funding policy followed by the Group– based on the growth of indirect deposits, on aparallel with the reduction in bond issues, and aided bythe specific financing agreements with the parentcompany ABN AMRO Bank – was penalised by thenegative trend which affected the asset managementsector, having heightened in the second half of theyear.DIRECT DEPOSIT(in millions of Euro)40,00030,00020,00010,000030,02535,098 37,602 36,8192004 2005 2006 2007INDIRECT DEPOSITS(%)40,00036,318 33,347 30,19825,14030,00020,000GPM4.38%MUTUALFUNDS18.29%10,00002004 2005 2006 2007ADMINISTEREDSAVINGS66.48%TECHNICALRESERVES10.86%22


As at 31 December 2007, loans to customersamounted to 30,573 million, involving an increase of2.0% when compared with the balance as at 31December 2006, net of Interbanca; the rise in loans isattributable to the medium/long-term component and,in particular, to the component comprising mortgageloans (+6.5%), disbursed to both commercial andconsumer clientele.40,00030,00020,00010,0000OTHERLOANS31.45%CREDITCARDS,ETC.2.33%LOANS TO CUSTOMERS(in millions of Euro)34,739 35,183 36,90030,5732004 2005 2006 2007LOANS TO CUSTOMERS(%)NON-PERFORMINGLOANS5.99%MORTGAGELOANS39.58%CURRENTACCOUNTS20.65%Performance of the main business sectorsDuring 2007, the Group comprising Banca Antonvenetaand its subsidiaries continued to operate in thecommercial banking, merchant and investmentbanking, and asset management sectors. Withreference to bancassurance, the were activities carriedout in the life sector by Antoniana Veneta PopolareVita and in the non-life sector by Antoniana VenetaPopolare Assicurazioni, both companies jointly investedin by Banca Antonveneta and Allianz S.p.A. (whichtook over from Lloyd Adriatico in October, followingthe reorganization of the Italian activities of theinternational Allianz SE Group). Other companies alsoform part of the Group, carrying out activities useful tothose of Banca Antonveneta.The evolution of the Antonveneta Group’s activities inthe above areas is illustrated below, whilst furtherinformation can be found in the specific section of the“Notes to the Accounts.”Commercial BankingIn the commercial banking area, the Group operatedvia Banca Antonveneta, whose specific activities,illustrated in detail in the report which accompaniesthe individual financial statements, were targeted atthe pursuit of a policy aimed at satisfying customerneeds by means of the offer of new products andservices meeting market demand which arecompetitive in terms of price. So as to more fullysupport this policy, various initiatives were adoptedaimed at improving the efficiency of the structures andcontaining the operating costs trend. The aforementionedcorporate events of ABN AMRO and theheightened competition on the markets led to aslowdown in the process for implementing thestrategies contained in the “2007-2008 IndustrialPlan”, thereby conditioning the economic results for2007.As at 31 December 2007, total deposits amounted to61,358 million, disclosing a reduction of 2.0% withrespect to the 62,602 million reported as at 31December 2006. In detail, direct deposits (25,160million) fell by 4.3% while indirect deposits (36,198million) were essentially in line with the value at theend of 2006 (-0.3%), in the presence of a decrease of12.4% for asset management and a rise of 6.7% forthe administered component.As at 31 December 2007, the customer loansamounted to 30,595 million, up by 2.0% on an annualbasis. Within the sphere of the aggregate, loansgranted to households for home mortgage loansincreased by 10.9% from the start of the year, partlythanks to the disbursements of new loans totalling 1.4billion.In December, the bank took steps to factor nonperformingloans without recourse for a total amount,gross of adjustments made over time, of 1.1 billion,which were joined by the factoring of loans of the kindcarried out by the securitization firms AntenoreFinance (393 million) and Theano Finance (994million). Before this factoring transaction, BancaAntonveneta had acquired a total of 458 million innon-performing loans both from Antenore Finance(180 million) and from Theano Finance (278 million).Between the end of 2006 and the end of 2007, netimpaired loans fell by 6.6%, while the degree ofcoverage rose from 53.4% to 54%.With reference to the economic profile, BancaAntonveneta reported a net loss of 15.1 million,compared with profit of 293.3 million in 2006.Merchant & Investment bankingActivities were carried out via Interbanca – in itstwofold guise of bank serving businesses and merchantbank – and its subsidiaries Interbanca InternationalHolding SA and Bios Interbanca S.p.A..23


With regard to Interbanca, during 2007 the joint effectof the negative share market performance and theABN AMRO Bank’s corporate events ended up leadingto an overall drop in administered assets and revenueperformance lower than expectations.As at 31 December 2007, customer loans amounted to5,859 million, disclosing a decrease of 16.7% whencompared with the balance of 7,034 million at the endof 2006. During December, Interbanca factored nonperformingloans, for a total gross sum of 30 million,without any impact in the income statement.At the end of 2007, the equity investments in themerchant banking, excluding those consolidated lineby-lineand including convertible bond issues, came to167 million, compared with 257 million in 2006. During2007, the company made 3 new investments, for atotal of 32.7 million, including 3.6 million relating tothe subscription of a convertible bond issue. Thetransactions concerned Gear World S.p.A. (25 million),active in the gears industry, Imperium S.p.A. (5.3million), operating in the field of film production anddistribution, and Intersac Holding S.p.A. (2.4 million),specialized in airport handling. With reference to theequity investments already in the portfolio as at 31December 2006, additional investments were made for14.8 million. During the year, the company alsocarried out 9 disposals, for a total of 74.7 million, ofwhich 8 concerned the entire share capital. The capitalgains generated came to 49 million.With reference to funding, at the end of December2007 securities issued amounted to around 3 billion,involving a significant reduction with respect to the 4billion at the end of 2006; the decrease was strictlylinked to the effective funding requirements. During2007, no new bond issues were launched, partly inrelation to the Group’s strategies.2007 closed with a net loss of 10.2 million forInterbanca and its subsidiaries, compared with profit of93.3 million in 2006. This result was due to certainnon-recurrent factors concerning Interbanca S.p.A.including: the adjustments made on the IA&T/Mark IVHolding position (totalling over 55 million) and otherfactors such as:• the provision of around 9.5 million relating to thetransactional settlement of the tax dispute due toBELL S.A.’s failure to pay taxes in Italy (2001IRPEG –corporate income tax), a company in whichInterbanca held an interest of 6.3%;• the amount set aside of around 6 million for thestaff redundancy incentive plan;• the writedown of Hopa S.p.A. (24 million);• the effect, quantifiable at around 4,8 million,deriving from the changes in tax rules produced bythe 2008 Finance Bill.Excluding these non-recurrent factors, Interbanca’sresult would have amounted to around 31 million.Asset Management and BancassuranceThe asset management activities were performed byAntonveneta ABN AMRO Bank and its subsidiaries,Antonveneta ABN AMRO S.g.r. and Antonveneta ABNAMRO Investment Funds Ltd.. As already illustrated inthe section on “Governance”, during 2007 AAA Bankwas affected by an extensive corporate reorganizationplan, also extended to the subsidiary Antonveneta ABNAMRO S.g.r.; this plan led, among other things, to thetransfer to Banca Antonveneta of the core businessactivities of the private sector – as from 1 July – andthe centralization of the asset management activitiesin a new, single corporate entity “ABN AMRO AssetManagement Italy, Società di Gestione del RisparmioS.p.A.”.During 2007, activities in the sector were significantlyaffected by the prolonged negative trend in the assetmanagement market, which led to a generalizeddecrease in managed assets.So as to rationalize the range offered to customers, inthe portfolio management segment during 2007, stepswere taken to standardize the extensive range ofproduct lines featuring a similar profile, reducing themfrom 130 to 36, with advantages both for thecustomer, in terms of more focused and efficientservice, comparable with market parameters, and forthe company, in terms of management processoptimisation. Furthermore, following the introduction,as from 1 November 2007, of the MiFID (Markets inFinancial Instruments Directive) regulations, thecontents of the agreements were reviewed, so as toadapt them to the new legislation.With reference to the equity mutual fund sector, at thebeginning of 2007 the marketing of a new range offunds entitled “Export” came onto stream, proposed toinvestors during 2006 and featuring an absolutereturn-type management; the “Expert” rangecomprises two newly-established Italian unharmonizedopen-ended mutual funds and another twounharmonized open-ended mutual funds deriving fromthe conversion of the previous AAA Master EuroObbligazionario BT and AAA Master Flessibile funds.As at 31 December 2007, total asset managementactivities of Antonveneta ABN AMRO Bank and itssubsidiaries, Antonveneta ABN AMRO S.g.r. andAntonveneta ABN AMRO Investment Funds Ltd.,amounted to 4,821 million, comprising portfoliomanagement for 1,514 million, the mutual funds ofAAA S.g.r. for 2,484 million and the mutual funds ofAAA Investment Funds for 823 million.With regard to AAA Bank and its subsidiaries, the 2007accounting period ended with net profit of 4.3 million,compared with 11.6 million in 2006.With reference to bancassurance activities, during2007 marketing continued of Antonveneta Vitaproducts, placed by the Banca Antonveneta network.24


In detail, 19 new issues of unit-liked policies weredistributed, diversified in terms of investmenttimescale and characterized by the periodic paymentof fixed-amount (or a minimum guaranteed return) orvariable-amount coupons, linked to the performance ofstock market indexes. Furthermore, 3 “Elios Mix Più”type issues were placed and a new product waslaunched entitled “Elios Gestione Trend”, extremelyinnovative in terms of both the features of the financialmanagement profiles of the associated insurancefunds, and the management solutions for theinvestments of the policyholders.In order to adapt the range of single premiumproducts with guaranteed capital and returns linked tothe separate San Giusto Valore management scheme,in October the distribution of the new versions of the“Elios Valore” and “Elios Capital” products commenced,improved with respect to the past in relation to theminimum guaranteed return and the investmentduration restrictions.Following the review of the legislation onsupplementary pension funds, a specific individualpension product entitled “Elios Previdenza 2007” wasalso put together, and distributed as from May viaBanca Antonveneta branches.During 2007, Antonveneta Vita’s activities wereaffected by the general slowdown on the referencemarket; specifically, premiums written came to 837million, disclosing a decrease of 5.8% when comparedwith 2006, while technical provisions amounted toaround 4,000 million, down by 5.7% on an annualbasis.Main economic and equity aggregatesFor the purposes of more fully highlighting the resultsachieved by the Group comprising Banca Antonvenetaand its subsidiaries in the principal business areas, themain economic and equity aggregates are illustratedbelow, divided up by business sector, bearing in mindthat the figures relating to merchant & investmentbanking are indicated “as a reminder”, because, due tothe reasons illustrated previously, the activities ofInterbanca and its subsidiaries have been classifiedunder “groups of assets held for sale”.Balances as at31 December 2007(in millions of euro)Income statementCommercialBankingMerchant &Investment(as areminder)AssetmanagementOtherconsolidationadjustmentsGROUPTOTALNet interest income 1,059 (79) 5 -2 1,062Net commission 412 (34) 24 -2 434Other operating income 309 (39) 2 2 313TOTAL OPERATING INCOME 1,780 (152) 31 -1 1,809(98.4%) (1.7%) (-0.1%)TOTAL OPERATING COSTS 1,234 (60) 25 -31 1,227(100.5%) (2.0%) (-2.6%)OPERATING PROFIT (LOSS) 546 (92) 6 30 582NET PROFIT (LOSS) -15 -10 4 15 -6Assets/LiabilitiesLOANS TO CUSTOMERS 30,595 (5762) 0 -22 30,573DIRECT CUSTOMER DEPOSITS 25,160 (3028) 19 -39 25,140INDIRECT CUSTOMER DEPOSITS 36,198 (0) 4,918 -4,298 36,81925


OperationsOn the basis of the strategic policies contained in the2007–2008 Industrial Plan, during 2007 activitiescontinued aimed at a further improvement in theoperating efficiency of Banca Antonveneta and itssubsidiaries, with regard, above all else, to aspectsconcerning risk management, procedures andlegislation, the sales network and human resources.In detail, the systems for gauging the credit, marketand operating risks were streamlined even further;additional information on this aspect is included in thenotes to the accounts. In addition, all the legislativeand organizational fulfilments required by national andinternational provisions were implemented, includingthose useful for the assimilation of the EU directiveconcerning investment services for customers (MiFID)and anti-money laundering aspects.In April, Banca Antonveneta transferred underoutsourcing part of the business segment concerningdata processing to Società Roma Servizi InformaticiS.p.A. of the E.D.S. Group; the transfer involved atotal of 98 employees.With specific reference to the sales network, during2007 2 new branches were opened, in Sicily and inLombardy, thereby taking the total number of Groupbranches to 996, compared with 1,009 in 2006 whichalso included the Interbanca network.On the subject of human resources, one of the mainobjectives pursued during 2007 was that of increasingthe quality of the staff, implemented by means ofspecific attention paid to the professional growth andtraining of the resources, alongside the simultaneousreduction in the average age of the employees. Thelatter objective was achieved by means of theimplementation of trade union agreements aimed atencouraging the voluntary retirement of employeesand by means of a large-scale recruitment campaignfor young resources targeted at expanding the salesnetwork and the co-ordination structures, also in termsof quality. On 19 th December 2007, a new trade unionagreement was also signed for the voluntaryredundancies relating to 2008.As at 31 December 2007, total Group employeesnumbered 9,492, compared with 9,444 as at 31December 2006, calculated, for comparisonconsistency, net of the employees of Interbanca andits subsidiaries. The 98 employees transferred underoutsourcing arrangements to the company RomaServizi Informatici S.p.A. no longer formed part of theGroup’s personnel as at 31 December 2007.Italian Legislative Decree No. 196/2003(“Privacy Code”)In relation to the provisions set out in the legislativedecree above, we hereby announce that the companiesconcerned have updated their Security PlanningDocuments.BANCA ANTONVENETA - NETWORK AS AT 31 DECEMBER 2007RegionsNo. ofbranchesPIEDMONT 42VALLE D'AOSTA 1LIGURIA 12LOMBARDY 110VENETO 289FRIULI-VENEZIA GIULIA 66TRENTINO-ALTO ADIGE 2EMILIA-ROMAGNA 98MARCHE 34TUSCANY 21UMBRIA 1LAZIO 87ABRUZZI 7MOLISE 2CAMPANIA 26PUGLIA 71BASILICATA 2CALABRIA 28SICILY 96Total Italian Network 995Foreign network 1TOTAL 9961422110 28998122166341787226962287126


The economic and financial performanceof the Antonveneta GroupShareholders,After having informed you of the salient facts and theoperational features which characterized activitiesduring 2007, we hereby present the results achievedand the evolution of the main balance sheet and incomestatement aggregates, with the specific remarksalready referred to in the section “Performance in 2007– Comparability with 2006”. In particular – given theinclusion in 2007 of the subsidiary Interbanca under“groups of assets held for sale” – in order to permit themost harmonious comparison possible and allow acorrect valuation of the Antonveneta Group trends, thedynamics of the balance sheet aggregates have also becalculated on 2006 “reclassified figures”, which do notinclude Interbanca and its subsidiaries.With regard to the 2007-2006 comparison of theincome statement aggregates, these by contrast referto consistent financial statement formats, withInterbanca included under “profit (loss) after tax fromgroups of assets for sale” in both years.Furthermore, note that AAA Bank and its subsidiaries,which in the 2006 financial statements were includedunder “profit (loss) after tax from groups of assets forsale”, have been consolidated on a line-by-line basis,both in the format as at 31 December 2007 and that asat 31 December 2006.The basis of preparation for the consolidated financialstatements and the accounting figures is analyticallyoutlined in the "Notes to the Accounts."Customer depositsTotal depositsAs at 31 December 2007, total deposits, equal to thesum of direct and indirect customer deposits, amountedto 61,959 million, disclosing a decrease of 3.2% whencompared with the balance as at 31 December 2006,calculated net of Interbanca. During the year, thefunding policy launched in 2006 was confirmed, basedDirect andindirectdeposits(in thousands of euro)31.12.2007 31.12.2006%Change%Changeon 2006net ofInterbanca(1)Direct Deposits 25,139,929 30,311,707 -17.1% -4.7%Indirect deposits 36,818,864 37,601,733 -2.1% -2.1%Total deposits 61,958,793 67,913,440 -8.8% -3.2%(1) for comparison consistency with 2007.on the growth of indirect deposits and the simultaneousreduction in bond issues, aided by specific financingagreements entered into with ABN AMRO Bank atadvantageous conditions.As from the second half of 2007, the emphasis of thenegative phase which the asset management sectorsuffered, with a decrease in the main stock marketindexes, unfavourably influenced the placement ofGroup products with investors, even if, at overallindirect funding level, this phenomenon was partiallycompensated by the rise in administered savings.Direct depositsAt the end of 2007, direct deposits amounted to25,140 million, 4.7% lower than the balance as at 31December 2006, calculated net of Interbanca.Direct depositsby technicalform(in thousands of euro)The decrease reported in direct deposits is attributableto the drop in securities issued (-21.1%), consequentto the failure to renew the bond issues maturing.With regard to “Amounts due to customers”, the rise of0.9% in 2007 was determined by the increase inrepurchase transactions with ordinary customers, inparticular households.Indirect deposits31.12.2007 31.12.2006%Change%Changeon 2006net ofInterbanca(1)Due to customers- current accounts andunrestricted deposits 16,523,863 17,148,461 -3.6% -3.2%- term deposits 393,737 451,734 -12.8% -5.8%- other payables 2,892,942 2,169,504 +33.3% +34.8%Total due to customers 19,810,542 19,769,699 +0.2% +0.9%Securities issued- bonds 3,852,346 8,704,427 -55.7% -23.6%- subordinated securities 1,074,422 1,292,366 -16.9% -10.5%- other securities 402,619 545,215 -26.2% -21.2%Total securities issued 5,329,387 10,542,008 -49.4% -21.1%Direct customerdeposits(1) for comparison consistency with 2007.25,139,929 30,311,707 -17.1% -4.7%As at 31 December 2007, indirect deposits presented abalance of 36,819 million, down by 2.1% whencompared with the figure as at 31 December 2006(37,602 million). The negative change in theaggregate reflects the trend registered in the fourthquarter of 2007 (-5.6%), penalised by the sharpeningof the negative phase suffered by the assetmanagement sector and by the drop recorded inmarket values.27


At individual component level, administered deposits(24,478 million) disclosed an increase of 4.4%, thanksmainly to the placement of structured products, whosecontribution was greater than that in 2006 (1.4 billionas against 1.2 billion).Indirect deposits(at market values)(in thousands of euro)Asset management (12,341 million) reported adecrease of 12.8%, mainly concentrated in the lastquarter of 2007 (-11.8%). With reference to productsplaced by Banca Antonveneta, during 2007 placementof Abn Amro Investment Funds S.A. SICAVs continued,generating positive net funding of over 130 million,despite the net run-off registered in the fourth quarter(1.2 billion); at year end, the balance amounted to2,926 million, down by 5% when compared with 31December 2006, as a result of the decrease in marketvalues.Loans to customers31.12.2007 31.12.2006%Changeportfolio management 1,611,437 1,986,131 -18.9%- mutual investment funds and SICAV's 6,732,657 7,926,671 -15.1%- technical insurance provisions 3,997,227 4,243,043 -5.8%Asset management 12,341,321 14,155,845 -12.8%Administered assets 24,477,543 23,445,888 +4.4%Indirect deposits 36,818,864 37,601,733 -2,1%(*) Net of Group holdings in investment funds included in fund management.As at 31 December 2007, loans to customers totalled30,573 million, up by 2% when compared with 2006,not considering Interbanca in the equation.Customer loansby technical form(thousands of euro)31.12.2007 31.12.2006%ChangeDuring the year, Banca Antonveneta continued with itspolicy aimed at favouring the splitting, quality andprofitability of the loan portfolio; new loans weretargeted at both households and businesses, inparticular in the manufacturing and services sectors.%Changeon2006net ofInterbanca(1)Current accounts 6,312,893 6,377,605 -1.0% -1.0%Mortgage loans 12,099,747 18,083,893 -33.1% +6.5%Credit cards, personal loansand loans against salaries712,807 635,877 +12.1% +12.3%Other loans 9,616,239 9,643,982 -0.3% -0.2%Impaired loans 1,831,460 2,159,100 -15.2% -6.6%Loans to customers 30,573,146 36,900,457 -17.1% +2.0%The increases in loans recorded during the year (whichrose to +2.6% net of “impaired” positions) isattributable to the medium/long-term component(+4.3%) and, in particular, the mortgage loan sector(+6.5%), disbursed to both commercial and customerclientele. The positive trend of home mortgage loanscontinued in this latter sector – albeit at a slower pacethan in 2006. The total of said loans (5,786 million)increased by 10.9% in 2007, partly thanks to theapproximate 1.4 billion disbursements made duringthe year.The volume of consumer credit also grew, increasing12.3% with respect to 31 December 2006.As at 31 December 2007, there were no loans classifiedunder “significant exposures”.Loan QualityAs at 31 December 2007, the balance of net impairedloans (1,831 million) decreased during the year by6.6% on a consistent basis, partly following the aforementionedfactoring of Banca Antonveneta’s nonperformingloans. The degree of coverage rose from53.4% to 54%, as at 31 December 2006.As at 31 December 2007, performing loans amountedto 28,742 million, involving an annual increase of 2.6%calculated on a consistent basis and a coveragepercentage of 0.25% (0.30% in 2006). As of the samedate, the loans in question represented 94% of thetotal, compared with 93.5% in December 2006.The decrease in impaired loans, in the presence of anincrease in performing loans, led to a positive rearrangementof the customer loan portfolio. At the endof the year in question, the corresponding degree ofoverall coverage came to 6.8%, compared with 7.2%as at 31 December 2006.With regard to impaired loans, non-performing loans,gross of value adjustments, came to 2,733 million,from 3,063 million as at 31 December 2006, withouttaking Interbanca into the equation; net of valueadjustments, non-performing loans dropped to 841million, involving a decrease of 19% when comparedwith 31 December 2006. The non-performing loans (atbook value) to total customer loans ratio fell from3.5% to 2.8% as at 31 December 2006; the degree ofcoverage rose from 66.1% as at 31 December 2006 to69.2%.As illustrated in the first section of this report, inDecember Banca Antonveneta factored non-performingloans without recourse for a total of 1.1 billion, grossof the adjustments made over time. Previously, thebank had acquired non-performing loans from the twosecuritization firms, Antenore Finance and TheanoFinance, for a value amounting to 180 million andmore than 278 million gross of adjustments,respectively.28


Impaired and performingloansNET POSITION DEGREE OF COVERAGE 31.12.2006NET OF INTERBANCA (1)(customer loans – net position inthousands of euro and degree of coverage)31.12.2007 31.12.2006 % change 31.12.2007 31.12.2006 % changeDEGREE OFCOVERAGENon-performing loans 841,425 1,151,639 -26.9% 69.2% 64.7% -19.0% 66.1%Problem loans 637,357 704,257 -9.5% 25.8% 22.4% +2.4% 24.4%Restructured loans 134,221 110,090 +21.9% 9.7% 6.8% +23.1% 6.8%Past due and overrun loans 218,457 193,114 +13.1% 8.4% 7.9% +15.2% 7.9%Total non-impaired loans 1,831,460 2,159,100 -15.2% 54.0% 52.0% -6.6% 53.4%Country risk 163 3,877 -95.8% 25.2% 8.2% +14.0% 24.3%Total performing loans 28,741,523 34,737,480 -17.3% 0.25% 0.29% +2.6% 0.30%(1) for comparison consistency with 2007.Loans to customers 30,573,146 36,900,457 -17.1% 6.8% 6.2% +2.0% 7.2%Problem loans, net of value adjustments, amounted to637 million (623 million in December 2006, not takingInterbanca into the equation) involving a degree ofcoverage of 25.8% (24.4% as at 31 December 2006).Within the sphere of the factoring of non-performingloans, Banca Antonveneta factored problem loans for14.4 million, gross of adjustments.Net rescheduled loans amounted to 134 million (109million as at 31 December 2006, without Interbanca),with a coverage index of 9.7% (6.8% at the end of2006); past due and overrun loans totalled 218 million(190 million as at 31 December 2006 net of Interbanca)with a coverage index of 8.4% (7.9% as at 31December 2006).Financial assetsAs at 31 December 2007, financial assets totalled1,747 million, up by 14% when compared with thefigure as at 31 December 2006 which does not takeinto account the Interbanca balances. The change isattributable to the increases registered by the tradingportfolio (+45.4%) and the portfolio of assets availablefor sale (+17.4%), against a considerable decrease(-50.4%) in the portfolio of assets carried at fairvalue.Financialassets(in thousands of euro)31.12.2007 31.12.2006%Change%Changeson 2006net ofInterbanca(1)Overall, as at 31 December 2007 the portfoliocomprised assets held for trading (58%), assetsavailable for sale (32%) and assets carried at fair value(remaining 10%); there are no securities classifiedunder assets held to maturity.With regard to the trading portfolio, trading activitiesfor purely speculative purposes were reduced; theinvestment policy adopted privileged floating-ratesecurities, or in any event those protected againstinterest rate risks, with a good rating and issued bygovernments or banks, featuring an average maturityof less than 5 years. Part of the bond portfoliocomprises structured securities, deriving fromplacement and trading activities with customers carriedout by Banca Antonveneta.Banca Antonveneta’s portfolio of assets available forsale included 250 million in fixed-rate long-termmaturity Italian Government securities, with an overallview to ALM.The book value of junior portfolio securities, originatingfrom the securitization transactions carried out byBanca Antonveneta during the period 2000-2002, fellconsiderably to around 134 million, compared with 441million as at 31 December 2006. The decrease is due tothe conclusion of transactions under the responsibilityof Padova Finance, Theano Finance and AntenoreFinance. As at 31 December 2007, the portfolio ofassets carried at fair value included just the securitiesof the performing loan securitization transactionscarried out in 2001 and in 2002 (Giotto Finance andGiotto Finance Due).Held for trading 1,009,643 852,119 +18.5% +45.4%Carried at fair value 180,179 420,840 -57.2% -50.4%Available for sale 556,712 885,650 -37.1% +17.4%Held to maturity 0 0 - -Total 1,746,534 2,158,609 -19.1% +14.0%(1) for comparison consistency with 2007.29


Position on the interbanking marketAs at 31 December 2007, the Antonveneta Group was a“net buyer” on the interbanking market for 6 billion,compared with 4.1 billion as at 31 December 2006, netof Interbanca. The increase in the exposure is mainlycorrelated to the use (from 5 billion in 2006 to 7.5billion in 2007) by Banca Antonveneta of the creditfacility granted by ABN AMRO N.V. for medium andlong-term loans. The credit facility – raised to 12 billionin February 2007 – made it possible to maintain theexposure on the interbanking market of short-termdeposits at a normal level, involving consequentsavings on costs, and in the meantime to support directdeposits.Shareholders' equityAs at 31 December 2007, consolidated shareholders’equity – inclusive of the loss for the year – came toaround 3,373 million, disclosing a decrease of 4.1%when compared with the figure of 3,516 million as at31 December 2006. The decrease is chiefly due to thereduction (137 million) in the revaluation reserves(AFS).NET SHAREHOLDERS EQUITY(in millions of Euro)Position ontheinterbankingmarket(in thousands of euro)31.12.2007 31.12.2006%Change%Changeon 2006net ofInterbanca(1)4,0003,0003,090 3,0983,5163,373Due from banks 7,782,262 4,746,911 +63.9% +20.9%Due to banks 13,804,968 11,758,073 +17.4% +30.8%2,0002004 2005 2006 2007Difference -6,022,706 -7,011,162 -14.1% +46.3%(1) for comparison consistency with 2007.Short-term cash management was characterized by theoptimization of the maturities, anticipating – as far aspossible – any changes in the interest rates and limitingthe rate risk to the maximum.The regulatory capital amounted to 4,057 million, withTier 1 capital of 2,793 million.As regards capital ratios, the ratio between regulatorycapital and total weighted assets came to 9.9%; inparticular, the ratio between Tier 1 capital and totalweighted assets was equal to 6.8%.Equity investmentsAs at 31 December 2007, the book value of the equityinvestments amounted to 87.3 million, compared with83.5 million as of 31 December 2006. The itemincludes shareholdings held in associates, carried atequity.30


Income StatementThe 2007 income statement disclosed a netconsolidated loss of 5.9 million, compared with a profitof 408.1 million in 2006.The most significant components of the incomestatement, which has been re-classified and balanceddown,are commented on below.Banca Antonveneta GroupReclassified income statement(in thousands of euro)2007 2006contribution of the commission-based component (-57million overall), due to the adoption by theAntonveneta Group of more competitive pricepolicies.In particular, financial revenues for 2007 werenegatively affected by the writedown (48 million) ofthe shareholdings held by Banca Antonveneta in HopaS.p.A. and the decreased net proceeds deriving fromthe sale of equity investments (31 million comparedwith 92.5 million in 2006); the aggregate alsocomprises the loss onthe factoring of loans%changeNet interest income 1,062,059 +1.4% +1.4%Other operating income 747,317 -15.1% -15.1%of which: Net commission 434,269 -5.9% -5.9%Net profit (loss) on trading 36,017 -39.5% -39.5%Profit/loss on other financial instruments 8,546 -92.9% -92.9%Dividends and profits on equity investments 77,139 n.s. n.s.Other operating income/expense 191,346 -13.6% -13.6%Total operating income 1,809,376 -6.2% -6.2%Personnel costs 705,745 +17.9% +17.9%Other administrative expenses 471,488 +3.4% +3.4%Net value adjustments on tangible and intangible fixedassets50,108 -9.5% -9.5%Total operating costs 1,227,341 +10.5% +10.5%Operating profit (loss) 582,035 -28.8% -28.8%Net value adjustments for loan impairment 315,091 +41.1% +41.1%Other net adjustments and provisions 58,917 +139.2% +139.2%Gain (loss) on disposal of investments 2,167 n.s. n.s.Pre-tax operating profit 210,194 -63.1% -63.1%Income taxes 204,196 -18.7% -18.7%Profit (loss) on assets held for sale -10,147 n.s. n.s.Profit for period pertaining to minority interests 1,741 -67.1% -67.1%Net profit (loss) for the year -5,890 n.s. n.s.(40 million) and incomederiving from thereimbursement of theTheano Finance andAntenore Finance securities(51 million) associatedwith the afore-mentionedfactoring transaction onthe non-performing loanportfolio.Net commission (434million) and otheroperating expense/income (191 million)decreased, respectively, by5.9% and 13.6%.In particular, netcommission on guaranteesgiven (- 7.1%) and onservices decreased(-24.2%)- representedmainly by commission oncustomer loans and on therecovery of costs -representing, in total,25% of net commission.Within the sphere ofoperating income, incomefor the recovery of costson liability transactionsdecreased (-12.8%),equating to more than halfthe income gross ofexpense.As at 31 December 2007, operating income disclosed adecrease of 6.2%, approximating 1,809 million asagainst 1,928 million in 2006. In detail, net interestincome (1,062 million) rose by 1.4%, while otheroperating income presented a decrease of 15.1%,from 881 million in 2006 to 747 million. Thisperformance was positively affected by the rise in theresult from trading activities which, also taking intoaccount the contribution from dividends and income onequity investments, amounted to over 113 million, upconsiderably (+46.4%) with respect to the 77 millionreported in 2006. By contrast, the aggregate wasnegatively affected by the sharp reduction in net profiton other financial instruments (from 121 million in2006 to 8.5 million in 2007) and the reducedMoreover, the development of the activities for thepolicy, placement, and administration of assetspermitted an increase of 10.5% in net commissionrelating to “management, brokerage and advisory”activities (193 million, equating to 44% of the total).Within this sphere, net commission on the placementof securities (32 million) more or less doubled, whilethat on the distribution of third party services (66million) presented an increase of 44.4%.Taking away the non-recurrent income and expenseindicated above from total revenues, the annualchange reported during the year would have come to-1.2%, compared with -6.2%.31


Operating costs totalled 1,227 million, up by 10.5%with respect to the balance of 1,110 million in 2006. Indetail, personnel costs amounted to 706 million, asagainst 599 million in 2006, as a result of theexpenses (61 million) linked to 2007 incentives for thevoluntary redundancy of staff and the redundancyprogramme for 2008. By contrast, the 2007 figure waspositively affected by the lower expenses linked to thechanges introduced by new legislation on staffseverance indemnities (TFR) (17 million), while thatfor 2006 benefited from recoveries on provisions for 11million.Without considering the afore-mentioned nonrecurrentitems, the increase in personnel costs wouldhave come to around 8%, reflecting – on the one hand– the provisions for the new labour agreement signedin December and – on the other hand – the aforementionedpolicy followed by the Group during theyear regarding human resources.Other administrative expenses exceeded 471 million,involving an annual increase of 3.4%; the aggregateincludes the fees concerning the data processingactivities transferred to the E.D.S. Group, in relation towhich, however, amortisation/depreciation andpersonnel costs fell.At the end of 2007, the cost/income ratio came to67.8%, a percentage which drops to 65% if one doesnot take into account the afore-mentioned nonrecurrentincome and expense.As a dynamic of the trends illustrated, the operatingprofit amounted to 582 million, down with respect tothe balance of 818 million in 2006.Net adjustments and provisions totalled 374 million,compared with 248 million in 2006; in detail, netadjustments on loans amounted to 315 million asagainst 223 million in 2006. The balance of 58.9million for other net adjustments and provisionsincludes 14 million for the provision to the reserve forrisks and charges, following the afore-mentionedtransactions with the Inland Revenue, associated withthe failure of the Luxembourg–based company BELLS.A. to pay taxes in Italy (2001 Irpeg – corporateincome tax); furthermore, as part of this aggregate,there is a balance of 16 million in value adjustmentsfor the impairment of financial assets (mainly referringto the equity investments Italease S.p.A., BELL S.A.and Palladio Finanziaria).Income taxes amounted to around 204 million,compared with 251 million in the previous year. Theconsiderable incidence of income taxes with respect tothe profit from ordinary operations – completelycancelled out by taxes due – is due in part to the IRAP(regional business tax) charge, whose assessable baseis somewhat insensitive to the dynamics of the pre-taxresult, but is above all else attributable to theextraordinary effect (for approximately 64 million) ofthe valuation of the deferred tax assets and liabilitieslinked to the decrease in the IRES (company earnings’tax) rate (from 33% to 27.5%) ordained by the 2008Finance Bill.The result of assets held for sale disclosed a loss of10.1 million, compared with profit of 94.9 million in2006, mainly due to the results generated in the twoaccounting periods by Interbanca and its subsidiaries;in this connection, reference should be made to thematters already illustrated within the sphere of themain sectors of Group activities and in the followingsection relating to the performance of the individualcompanies.Reconciliation of Banca Antoniana Popolare Veneta and Consolidated Shareholders' Equity and Net Profitas at 31 December, 2007.Reconciliation of consolidated shareholders' equity and net profit as at 31 December, 2007, and the analogous items reported in theindividual financial statements for the Parent Bank Banca Antoniana Popolare Veneta is stated below (in thousands of euro):Shareholders'Equity (*)of which:Net profitParent Bank balances as at 31 December 2007 3,515,657 -15,145Net profit of consolidated investee companies 14,903Consolidation differences in investee shareholders' equity on line-by-line consolidation and theircarrying value, net of minority interestsDifferences in per-quota value of shareholders' equity measured on the equity method and theircarrying value-188,673Goodwill on consolidation 177,006Goodwill on application of equity method 21820,208 15,141Netting of infra-group dividends - -22,266Other consolidation adjustments -151,865 1,477Total consolidated net shareholders' equity 3,372,551 -5,890(*) Comprising: capital, share premiums, reserves, revaluation reserves, equity instruments and net profit.32


Performance of the main AntonvenetaGroup CompaniesWith a view to providing greater detail on theperformance of the Antonveneta Group in 2007, theeconomic and equity performances of the main Groupcompanies are illustrated below; in relation to BancaAntonveneta, reference should be made to the reportwhich accompanies its separate financial statements.Interbanca S.p.A.During 2007, Interbanca’s operations – as did those ofthe other Antonveneta Group companies – felt theeffect of the corporate events which affected ABNAMRO Bank, joined by the unfavourable performanceof the stock market, which had negative effectsespecially on commission; furthermore, the adoption ofa policy targeted at focusing activities on transactionscharacterized by greater profitability conditioned theperformance of administered funds, which reported anoverall reduction with respect to 2006.As at 31 December 2007, customer loans amounted to5,859 million, disclosing a decrease of 16.7% withrespect to the 7,034 million at the end of 2006, in thepresence of flows maturing for around 3,300 million,only partly offset by new disbursements. In December,Interbanca factored a portfolio of non-performing loansfor an overall gross value of approximately 30.3million, without any impact on the income statement.During the year just ended the company continued todevelop Corporate, Structured Finance and ProjectFinance activities, generating, in total, disbursementvolumes for 1,085 million (compared with 1,105million in 2006) and total commission amounting toaround 19 million, just under the figure of 20 million in2006.At the end of December 2007, the merchant bankingportfolio stood at 167 million, compared with 257million in 2006. During the year, the company made 3new investments (Gear World S.p.A., Imperium S.p.A.and Intersac Holding S.p.A.), for a total of 32.7million, of which 3.6 million relating to the subscriptionof a convertible bond issue. With reference to equityinvestments already in the portfolio, furtherinvestments were made for a total of 14.8 million.During the year, 9 disposals were also finalized(including Ricordeau S.r.l., Promotor InternationalS.p.a., Trend Group S.p.A. and Pramac S.p.A.), for atotal value of 74.7 million; of these transactions, 8concerned the entire share capital. The capital gainsgenerated came to around 49 million, essentially inline with the result for 2006.The company continued to be active in the Investmentbanking area, even if, as a result of the reduction inshare capital increase transactions linked to thenegative performance of the stock market,commission, equating in total to 4.2 million, was morecontained with respect to the figure of 6.2 million in2006. In the Merger & Acquisition area, in particular,the company obtained more than 20 appointments,serving both corporate customers and private equityfunds.At the end of December 2007, total funding, inclusiveof subordinated liabilities, amounted to 5,948 million,involving a significant decrease (-20.2%) with respectto 2006, linked to the effective requirement expressedby loan disbursements. Within the aggregate, thecomponent of securities issued, amounting toaround 3 billion, disclosed the most consistentdecrease (-25.4%), partly due to the fact that, duringthe year, no new bond issues were launched.During 2007, Interbanca reported a net loss of 4.7million, compared with profit of 86.8 million in 2006;this result was mainly influenced by certain nonrecurrentfactors, such as the adjustments relating tothe IA&T/Mark IV Holding position (for a total of morethan 55 million), the provision (9.5 million) for thetransactional settlement of the tax dispute for thefailure of the company BELL S.A. (a company in whichInterbanca held an interest of 6.3%) to pay taxes inItaly (2001 IRPEG – corporate income tax) and theamount set aside (approximately 6 million) for thestaff redundancy incentive plan.Antonveneta ABN AMRO Bank S.p.A.This company, 55% owned by Banca Antonveneta and45% owned by ABN AMRO Bank N.V., operates in theasset management sector. Further to the aforementionedcorporate reorganization plan launchedduring 2007, the company transferred the privatebanking business segment to Banca Antonveneta, asfrom 1 July – including the dedicated structurecomprising 75 employees, 1 financial advisor and fourbranches – and finalized the merger by incorporationof the subsidiary ABN AMRO S.g.r., with legal efficacyas from 1 January 2008. As from the same date, thecompany, subject to the amendment of its corporatepurpose, in turn changed into an asset managementcompany (S.g.r.), adopting the name “ABN AMROAsset Management Italy, Società di Gestione delRisparmio S.p.A.”.During the accounting period in question, the companyachieved an in-depth rationalization of the range,aimed at reducing the fragmentation and complexity ofthe portfolio management lines which, mainly bymeans of standardizing products with a similar profile,33


were reduced from 130 to 36. This made it possible toimprove the efficiency and the focus of the serviceprovided to the customer, also in terms ofcomparability with the market parameters, at thesame time optimizing the management process.Particular attention was paid during the year to theprocess for adaptation to MiFID legislation, introducedas from 1 November 2007 with the principal aim ofensuring an improved protection of those investing inassets management and administration products.The trend in the assets managed by AAA Bank reflectsthe general market crisis in Italy: as at 31 December2007, the equivalent value of portfolios managed cameto 1,072 million, disclosing a drop of 31.7% whencompared with the previous year. The preferenceshown by customer for alternative investment formsalso penalized the ABN AMRO Investment Funds S.ASicavs, for which AAA Bank performed brokerageactivities: for the first time since its marketing in Italyin 2004, net deposits for this product disclosed anegative balance of around 808 million.With regard to the annual trend in the economicresults, it should specified that, following the aforementionedsale of the private banking businesssegment on 1 st July, the 2007 and 2006 accountingperiods are not entirely consistent. The 2007 net profitamounted to 13.2 million, down slightly with respect tothe 13.5 million in the previous year. The interestmargin rose by 16.3%, while dividends from investeecompanies decreased (-17.5%) along with netcommission (-39.1%); total administrative expensesdisclosed a sharp drop (-30.1%), partly as a result ofthe sale of the private banking business segment.Antonveneta ABN AMRO S.g.r. S.p.A. (AAAS.g.r.)This company operated up until 31 st December 2007in the Italian mutual fund and portfolio managementfor institutional clientele sectors; as from 1 January2008, due to the afore-mentioned reorganization ofthe asset management activities, its incorporationwithin AAA Bank became fully operative, the latteralready holding total control over it.With reference to the business activities, during 2007the marketing of the new range of “Expert” fundscame into stream, created towards the end of 2006with the aim of seizing the opportunities provided bythe Bank of Italy Instruction dated 14 th April 2005regarding investment, within specific limits, inspeculative funds. The funds in question feature anabsolute return-type of management, based on theuse of a particularly advanced risk control system andon the combination of traditional strategies(management type) with alternative investmentactivities (non-management), within the sphere ofwhich the return which can be achieved is notdependent on the market trend. The range of “Expert”funds is divided up into two newly-established Italianunharmonized open-ended mutual funds and anothertwo unharmonized open-ended mutual funds derivingfrom the conversion of the previous “AAA Master EuroObbligazionario BT” and “AAA Master Flessibile” funds.As occurred for the parent bank AAA Bank, activitieswere extremely intense for the adaptation of theoperations to the evolution of the legislative context, inparticular to the MiFID directive introduced inNovember.The results for 2007 were affected by the prolongednegative overtone of the reference market: themanaged assets pertaining to the “Expert” and“Master” range of products amounted to 2,484 million,compared with 2,848 million as at 31 December 2006,while assets managed for institutional customers fellfrom 574 million in the previous year to 539 million.The net profit for the year came to 1.4 million,disclosing a significant decrease with respect to the 6.6million in 2006, mainly attributable to the decrease innet commission (-42.4%); the latter, furthermore, waspenalized not only by the disintermediation processunderway, but also by the increase in the retrocessionpercentages of the “Master” and “Expert” fundsacknowledged to Banca Antonveneta in order toencourage placement with retail customers.Antonveneta ABN AMRO Investment FundsLtd.The company is a wholly-owned subsidiary of AAABank and manages the 3A fund, an Irish multisegmentproduct authorized for marketing in Italy.At the end of 2007, the managed assets amounted to823 million, down by 29.1% with respect to the 1,161million reported in the previous year, while net profitcame to 1.4 million, compared with 5.6 million in2006.Interbanca International Holding S.AThis company – wholly-owned by Interbanca S.p.A. –makes investments in companies which have apredominantly foreign shareholding structure.During 2007, the company generated net profit of 1.7million, solely as a result of the bank interest accruedon liquidity outstanding.34


Antenore Finance Società dicartolarizzazione S.p.A.The company was established in October 2000, at thetime of the first securitization transaction on nonperformingloans acquired without recourse by BancaAntonveneta S.p.A.During 2007, the company proceeded to dispose of theresidual loan portfolio still held; the proceedsassociated with the disposal and the recovery activitiescarried out during the year amounted in total to 142.6million. Overall, from the start of its activities, thecompany has collected 307.2 million, a target initiallyenvisaged for December 2008.Furthermore, the following have been fully dischargedand repaid: 38.5 million of Class A securities; 20million of Class B securities; 165.9 million of Class Csecurities, of which 80.4 million repaid.Theano Finance Società di cartolarizzazioneS.p.A.The company was established in April 2001 in order toachieve the transaction for the securitization of nonperformingloans acquired without recourse by BancaAntonveneta S.p.A..During 2007, the company took steps to dispose of theresidual loan portfolio still held; the proceedsassociated with the disposal and the recovery activitiescarried out during the year amounted in total to 154.7million. Overall, from the start of its activities, thecompany has collected an amount of 513 million.Furthermore, 202.1 million in Class C securities havebeen discharged in full, of which 164.7 millionreimbursed.Giotto Finance Società di cartolarizzazioneS.p.A.Established in October 2001, the company isresponsible for a single securitization transaction onperforming loans acquired without recourse by BancaAntonveneta S.p.A.The company is operating normally. During 2007, thefollowing collections permitted the reimbursement of96.3 million in Class A securities, reducing the amountstill outstanding of said securities to a total of 164.2million, compared with the 982 million of the relatedissue. Class B securities are still outstanding for a totalof 53 million, whilst Class C securities, held entirely byBanca Antonveneta, amount to 93.8 million.Giotto Finance Due Società dicartolarizzazione S.p.A.Established in September 2002, the company isresponsible for a single securitization transaction onperforming loans acquired without recourse by BancaAntonveneta S.p.A.The securitization transaction is proceeding normally.In 2007, the flow of collections enabled the repaymentof 68.2 million in Class A securities, lowering the totalof such securities still outstanding to 273.1 million,compared with 644.4 million originally issued. Class Bsecurities still outstanding amount to 24 million, whilstClass C securities, held entirely by Banca Antonveneta,amount to 49.5 million.Antonveneta Immobiliare S.p.A.Owned entirely by Banca Antonveneta, the company isresponsible for the management and development ofthe real estate assigned in April 2003 by BancaAntonveneta This consists of real estate units used inoperations which is mainly rented by BancaAntonveneta, and property not used in operations,which is either vacant or leased to third-parties.During 2006, the leasing and sale of real estategenerated revenues of 47 million and profit for theyear of 22.5 million.The most significant transactions achieved during 2007included the finalization by the company of the sale ofa property located in Piazza Venezia, Rome, for a totalof 5.8 million, generating a capital gain of 1.9 million.Furthermore, the company has taken steps to assignthe last portion of urbanization work requested by thePadua Municipal Authority, so as to fulfil theobligations envisaged within the sphere of the buildingagreements for the “La Cittadella” business centre inPadua (the work in question almost entirely concernsan owned property, located within the La Cittadellabusiness centre).Bios Interbanca S.p.A.This company was established in November 2005following the non-proportional spin-off of Bios S.p.a.and is owned by Interbanca at 81.835%.Since this company has complied with the national taxconsolidation system with the parent bank BancaAntonveneta, it benefited from the compensation ofthe IRES (corporate income tax) credit attributed to itat the time of the spin-off which amounted toapproximately 4.5 million; the amount collected was35


used to partially repay the amounts owed to financingshareholders.The balance sheet as at 31 December 2007 shows theequity investment in Sorin S.p.a. among the mainasset items. This company is classified in the portfolioas "available for sale" and carried at fair value, whichcorresponds to the spot market price; the amountowed to the shareholders is shown among theliabilities.During 2007, the company reported a loss of 1.2million, essentially deriving from interest expense, aswell as from the adaptation of the new tax ratesintroduced by the 2008 Finance Bill.Salvemini S.r.l.This is a real estate company which is wholly-ownedby Banca Antonveneta.The 2007 accounting period closed with profit of 0.32million euro, generated by revenues on the rental ofowned properties. The shareholders’ equity thereforeamounted to 8.4 million euro.Antoniana Veneta Popolare Vita S.p.A.This insurance company operates in the life sector, viaa line of products based essentially on unit-linked andindex-linked policies featuring third party guarantees,and is jointly owned by Banca Antonveneta and AllianzS.p.A. (which took over last October from LloydAdriatico following the re-organization of the Italianactivities of the international Allianz SE Group). In thepresence of a further slowdown on the referencemarket, total sales revenues of the company during2007 fell by 5.8%, to around 837 million. All thebusiness segments disclosed a decrease in premiumstaken.With regard to product innovation, at the beginning ofthe year “Elios Gestione Trend” was launched; withinthe sphere of unit-linked policies, the product presentsimportant innovative elements both with regard to thefeatures of the financial management aspects of theassociated insurance funds, and in relation to themanagement solutions for the investments of thepolicyholders.Furthermore, for the purpose of adapting the range ofsingle-premium products – with guaranteed capitaland returns linked to the performance of the separateS. Giusto Valore management scheme – to thechanged monetary market conditions, new versions ofthe Elios Valore and Elios Capital products were puttogether, improved with respect to the previous onesin terms of investment duration restrictions andminimum return guarantee. Both products provide forguaranteed and free-of-charge automatic reinvestmentupon maturity in the EuromonetaInsurance Investment Fund, while customers areallowed to cash in on any of the amounts at noadditional charge.Following the review of the legislation associated withsupplementary pension funds, the company has puttogether its own product in individual form, entitled“Elios Previdenza 2007”, distributed from May viaBanca Antonveneta branches.Placement activities continued for traditional products,involving 3 “Elios Mix Più” type issues and 19 newissues of unit-linked policies, diversified in terms ofinvestment timescale and characterized by the periodicpayment of the fixed-amount (or with a minimumguaranteed return) or variable-amount coupons, linkedto the performance of stock market indexes.Total technical provisions recorded in the 2007financial statements amounted to approximately 4,003million euro, down by 5.7% when compared with thesame figure in the previous year (4,243 million).Profit for 2007 amounted to around 30 million euro,compared with profit of approximately 20 millionreported in 2006.Antoniana Veneta Popolare AssicurazioniS.p.A.This company – specialized in non-life insurance andjointly owned by Banca Antonveneta and Allianz S.p.A.(which took over last October from Lloyd Adriaticofollowing the re-organization of the Italian activities ofthe international Allianz SE group) – disclosed salesrevenues in 2007 of around 35 million, down by 7.5%on last year. This decrease is entirely due to therestructuring carried out in the Vehicle TPL class,whose percentage of total sales revenues, followingthe elimination of a number of agreements, fell from26% in 2006 to 16% in 2007. By contrast, the SundryVehicle Risks class rose considerably (+49%) and, witha percentage of 20% of total sales revenues, becamethe insurance company’s main business sector.The 2007 accounting period closed with profit of 506thousand euro, compared with profit of 207 thousandeuro in 2006.36


Relevant events occurred after closing 2007 Financial StatementsHOPA S.p.A.In the 31.12.2007 Financial Statements, among the assets designated at fair value, the Bank valued € 0.70 its sharein HOPA (No. 114,100,757 shares), which corresponds to 8.258% of co-interest (Antonveneta No. 65,951,416 sharesclassified among assets designed at fair value, and Interbanca No. 48,149,341 shares classified under item 150Balance Sheet “Non current assets and group of assets for sale”).As already reported in the press at the beginning of March 2008, due to the particularly negative trend of Telecomshares, starting from February 2008, and to HOPA inability to build up the granted warrantees on the existing loans,the execution on its Telecom shares was levied and the shares themselves were sold in the market to allow a refundof the existing loans. Such a sale determined a significant capital loss for HOPA considering the charging values ofTelecom Italia shares in its own Financial Statements.The trend of Telecom share therefore caused an impairment of HOPA net financial situation, with a consequentnegative impact on the FV of the investment. Such an event has a negative outcome on a new valuation, estimatedaround 0.33 € per share, with an overall impact of € 42.2m (net € 40.5m), attributable respectively to BancaAntonveneta for € 24.4m (net € 22.7m) and to its subsidiary Interbanca for € 17.8 (equals to the net). Such an eventwill be mirrored in 2008 Financial Statements.Sorin S.p.A./Bios Interbanca S.p.A.After the closing date of 2007 Financial Statements, the crisis of the stock market had significant consequences onthe value of Sorin, the only asset of the subsidiary Bios Interbanca, held through the controlled Interbanca. Thereference price as at 17 th March 2008 was € 0.8533 (in respect of € 1.343 as at 31 st December 2007 and of anaverage value of € 1.4881 within the last quarter), thus determining a further negative effect on the evaluation stocksof € 29.3m. On the other hand, there are to date no news or data of the company that can fundamentally explainsuch variations of the share in the Stock Exchange.Banca Italease S.p.A.This is a financial asset held by the Parent and classified under the available for sale portfolio. As at 31 st December2007, the stock amount, € -7.6m, was ascribed to P&L on the basis of a new value of € 9.175 per share (referenceprice as at 28 th December € 9.567).In the first part of 2008, following the market negative trend, the exchange rate of the share decreased, and as at17 th March its market value was € 5.285, with a negative effect on the evaluation stocks of € 21.8m.Outlook for 2008As already mentioned in the paragraph on “governance”, towards the end of the year the banking trust comprisingRoyal Bank of Scotland, Banco Santander and Fortis Bank acquired the majority of ABN AMRO Bank’s shares, onconclusion of a take-over bid launched beforehand; following this acquisition, all the assets belonging to BancaAntonveneta were allocated to Banco Santander which, at the beginning of November, signed an agreement for thesale of the same to Monte dei Paschi di Siena, excluding Interbanca. In detail, the agreement envisaged that, asdeeper soon as Banco Santander has completed the acquisition of Banca Antonveneta underway with ABN AMRO, itwill transfer the entire share capital to Monte dei Paschi di Siena, net of the equity investment in Interbanca, whichwill leave the Antonveneta Group on conclusion of the entire transaction.Following this agreement, Banca Antonveneta will join the third largest Italian banking group, characterized not onlyby a widespread presence in a number of important Italian regions, but also by dimensions which permit it tocompete with other leading groups on the Italian and European market and to further enhance the degree ofpenetration into the Italian retail market.37


Statutory AuditorsAntonveneta SpaStatutory Auditors’ Report to the Banca Antonveneta S.p.A. Shareholders’ Meetingon the Consolidated Financial Statements as at 31.12.2007Dear Shareholders,The consolidated Financial Statements as at 31 December 2007, submitted to our reviewalong with the Directors’ Report on Operations in accordance with IAS/IFRS internationalprinciples adopted by the European Union and with the measures established whileenforcing art. No. 9 of the Legislative Decree no. 38/2005, records for the AntonvenetaGroup a shareholders’ equity equal to € 3,373 million, of which € 5.9 million in net loss.The Board of Statutory Auditors, within the scope of its duties, examined:- the consolidated Balance Sheet and Income Statement,- the Report on Operations.The Consolidated Financial Statements of the Antonveneta Group were audited by theindependent auditing company Reconta Ernst & Young S.p.A.Padua, April 2 nd 2008The Board of Statutory AuditorsGianni Cagnoni – ChairmanAlberto Dalla Libera – AuditorGianbattista Guerrini – Auditor45


CONSOLIDATED FINANCIAL STATEMENTSConsolidated Balance Sheet - Assets€/thousandItems 31.12.2007 31.12.200610. Cash and cash equivalents 409,371 310,80920. Financial assets held for trading 1,009,643 - 852,11930. Financial assets designated at fair value 180,179 - 420,84040. Financial assets available for sale 556,712 - 885,65060. Loans to banks 7,782,262 4,746,91170. Loans to customers 30,573,146 36,900,45780. Hedging derivative contracts 25,101 165,553100. Equity Investments 87,292 83,518120. Tangible fixed assets 676,525 - 747,923130. Intangible fixed assets 668,176 838,229of which: - - -- goodwill 624,964 - 802,690 -140. Tax assets 438,125 824,039a) current 120,050 - 194,339 -b) prepaid 318,075 - 629,700 -150. Non-current assets and groups of assets held for sale 7,084,571 -160. Other assets 1,242,489 1,644,599TOTAL ASSETS 50,733,592 48,420,647With reference to the previous year, data as at 31 st December 2006 were presented again pursuant to IFRS 5. For further details please see Notes tothe Consolidated Accounts – Part A – Accounting policies50


Consolidated Balance Sheet - Liabilities€/thousandItems 31.12.2007 31.12.200610. Due to banks - 13,804,968 - 11,758,07320. Due to customers - 19,810,542 - 19,769,69930. Securities issued - 5,329,387 - 10,542,00840. Trading financial liabilities - 283,408 - 343,58260. Hedging derivative contracts - 12,753 - 168,58480. Tax liabilities - 40,525 - 336,206a) current 11,431 - 185,235 -b) deferred 29,094 - 150,971 -90. Liabilities associated with groups of assets held for sale - 6,290,173 - -100. Other liabilities - 1,167,799 - 1,377,692110. Provision for staff severance pay - 242,940 - 292,082120. Allowances for risks and charges - 339,250 - 275,590a) pension fund and other commitment 39,675 - 42,378 -b) other provisions 299,575 - 233,212 -140. Revaluation reserves - 65,766 - 203,046160. Equities - 8,551 - 8,551170. Reserves - 189,706 - - 218,243180. Share premium reserve - 2,188,152 - 2,188,152190. Share - 926,266 - 926,266210. Shareholders' equity pertaining to minority interests - 39,296 - 41,270220. Net profit (loss) for the period - - 5,890 - 408,089TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY - 50,733,592 - 48,420,647With reference to the previous year, data as at 31 st December 2006 were presented again pursuant to IFRS 5. For further details please see Notes tothe Consolidated Accounts – Part A – Accounting policies51


Consolidated Income Statement€/thousandItems 31.12.2007 31.12.200610. Interest income and similar income 2,318,415 1,780,93620. Interest expense and similar charges -1,256,356 -733,45430. Net interest income 1,062,059 1,047,48240. Commission income 525,044 554,32550. Commission expense -90,775 -92,93560. Net commissions 434,269 461,39070. Dividends and similar income 62,849 5,90480. Net profit on trading 36,017 59,57690. Net profit on hedging operations 1,069 478100. Profit (loss) on disposal or repurchase of: 34,067 105,229a) loans -40,485 5,980b) financial assets available for sale 71,440 96,659c) financial assets held to maturity - -d) financial liabilities 3,112 2,590110. Net profit from financial assets designated at fair value -26,590 14,896120. Net interest and other banking income 1,603,740 1,694,955130. Net adjustments/write-backs for impairment of: -331,006 -222,121a) loans -315,091 -223,331b) financial assets available for sale -16,306 -941c) financial assets held to maturity - -d) other financial operations 391 2,151140. Net income from banking activities 1,272,734 1,472,834170. Net income from banking and insurance activities 1,272,734 1,472,834180. Administrative expenses -1,177,233 -1,054,950a) personnel expenses -705,745 -598,808b) other administrative expenses -471,488 -456,142190. Net allowances to provisions for risks and charges -43,002 -25,840200. Adjustments/write-backs to tangible fixed assets -31,984 -32,156210. Adjustments/write-backs to intangible fixed assets -18,124 -23,207220. Other operating income/expenses 191,346 221,345230. Operating costs -1,078,997 -914,808240. Profit (loss) on equity investments 14,290 11,820270. Profit (loss) on disposal of investments 2,167 -171280. Income (loss) before tax from 210,194 569,675290. Income taxes on current operations -204,196 -251,158300. Income (loss) after tax from 5,998 318,517310. Income (loss) after tax from non-current assets held for sale -10,147 94,864320. Net income (loss) for the year -4,149 413,381330. Minority interests 1,741 5,292340. Parent Bank income (loss) for the year -5,890 408,089With reference to the previous year, data as at 31 st December 2006 were presented again pursuant to IFRS 5. For further details please see Notes tothe Consolidated Accounts – Part A – Accounting policies52


Statement of changes in consolidated shareholders' equity at 31 December 2007€/thousandAmounts as at31/12/2006GroupMinorityinterestsChanges toopening balancesAmounts as at01/01/2007GroupMinorityinterestsAllocation of net profit(loss)ReservesGroupMinorityinterestsDividends andother usesChanges inreservesGroupMinorityinterestsChange for the periodOperations on shareholders' equity carried out in the periodNew shareissuesGroupMinorityinterestsPurchase ofown sharesGroupMinorityinterestsExtraordinarydistribution ofdividendsChanges in EquityinstrumentsEquity derivativesStock optionsNet income(loss) as at31/12/2007GroupMinorityinterestsShareholders'equity as at31/12/2007GroupMinorityinterestsShare capital:a) ordinary shares 926,266 29,643 926,266 29,643 -16 - 926,266 29,627b) other shares - - - - - -Share premium reserve 2,188,152 9,372 2,188,152 9,372 - - - 2,188,152 9,372Reserves:a) profits -218,243 -2,241 - -218,243 -2,241 408,089 5,292 -140 156 - 189,706 3,207b) other - - - - - -Revaluation reserves:a) available for sale 133,273 -796 - 133,273 -796 -137,092 -3,855 -3,819 -4,651b) cash flow hedges -356 - -356 - -188 -544 -c) other 70,129 - - 70,129 - 70,129 -Equities 8,551 - 8,551 - 8,551 -Own shares - - - -Net profit (loss) for the period 408,089 5,292 408,089 5,292 -408,089 -5,292 -5,890 1,741 -5,890 1,741NET SHAREHOLDERS' EQUITY 3,515,861 41,270 3,515,861 41,270 - -137,420 -3,715 - - - - - - - - -5,890 1,741 3,372,551 39,926The amount of € 140,000 registered under item “Reserves: a) profits” refers to a greater value recognised in an operation of business combination under common control that is not included withinthe company aggregation discipline as provided by IFRS 3 and was inscribed as a positive item under the reserves in AAA Bank SpA’s shareholders’ equity.The amount of € 16,000 registrered under item “Share Capital: a) ordinary shares” refers to the decrease of the corporation stock because of La Cittadella S.p.A.’s losses.53


Statement of changes in consolidated shareholders' equity at 31 December 2006€/thousandChange for the periodAmounts as at31/12/2005GroupMinorityinterestsChanges toopening balancesAmounts as at01/01/2006GroupMinorityinterestsAllocation of net profit(loss)GroupReservesMinorityinterestsDividends andother usesChanges inreservesGroupMinorityinterestsOperations on shareholders' equity carried out in the periodNew shareissuesGroupMinorityinterestsPurchase ofown sharesGroupMinorityinterestsExtraordinarydistribution of dividendsChanges in EquityinstrumentsEquity derivativesStock optionsNet income (loss)as at 31/12/2006GroupMinorityinterestsShareholders' equityas at 31/12/2006GroupMinorityinterestsShare capital:a) ordinary shares 926,266 29,639 926,266 29,639 4 926,266 29,643b) other shares - - - - - -Share premium reserve 2,188,152 9,367 2,188,152 9,367 - - 5 2,188,152 9,372Reserves:a) profits -314,045 -7,306 6,512 -307,533 -7,306 89,290 5,064 1 -218,243 -2,241b) other - - - - - -Revaluation reserves:a) available for sale 121,711 108 464 122,175 108 11,098 -904 133,273 -796b) cash flow hedges 903 - 903 - -1,259 -356 -c) other 77,105 - -6,976 70,129 - 70,129 -Equities 8,551 - 8,551 - 8,551 -Own shares - - -Net profit (loss) for the period 89,290 5,064 89,290 5,064 -89,290 -5,064 408,089 5,292 408,089 5,292NET SHAREHOLDERS' EQUITY 3,097,933 36,872 3,097,933 36,872 - 9,839 -904 - - - 5 - - - - 408,089 5,292 3,515,861 41,27054


CONSOLIDATED CASH FLOW STATEMENT (Direct Method)31.12.2007 31.12.2006A. OPERATING ACTIVITIES1. Management 498,015 775,076- interest income received 2,318,415 1,780,936- interest expense paid (1,256,356) (733,454)- dividends and similar income 62,849 5,904- net commissions 434,269 461,390- payroll costs (711,248) (598,808)- other expenses (471,769) (456,142)- other income 344,033 471,544- taxes and duties (212,031) (251,158)- assets/liabilities from discontinued operations held for sale after taxes (10,147) 94,8642. Cash flow generated/absorbed by financial assets (3,025,530) (3,385,029)- financial assets held for trading (157,524) (428,374)- financial assets designated at fair value 214,071 8,032- financial assets available for sale 175,352 115,683- loans to customers 5,930,170 (2,025,567)- loans to banks: on demand (709,708) (539,636)- loans to banks: other loans (2,325,643) (277,341)- other assets (6,152,248) (237,826)3. Cash flow generated/absorbed by financial liabilities 2,662,601 2,674,553- due to banks: on demand (100,676) (228,697)- due to banks: other payables 2,147,571 5,652,697- due to customers 40,843 (132,753)- securities issued (5,226,931) (2,806,001)- trading financial liabilities (60,174) 82,921- other liabilities 5,861,968 106,386Net cash flow from (used for) operating activities 135,086 64,600B. INVESTMENT ACTIVITIES1. Cash flow generated by 19,808 11,820- sales of equity investments 14,290 11,820- sales of intangible fixed assets 3,880- sales of tangible fixed assets 738 -2. Cash flow absorbed by (54,879) (59,949)- purchase of equity investments (3,774) (6,017)- purchase of tangible fixed assets (19,685) (31,511)- purchase of intangible fixed assets (31,420) (22,421)Net cash flow generated/absorbed by investing activities (35,971) (48,129)C. FUNDING ACTIVITIES- issue/purchase of own shares - -- issue/purchase of equity instruments - -- distribution of dividends and other activities - -Net cash flow generated/absorbed by funding activities - -NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS DURING PERIOD 99,115 16,471RECONCILIATIONBalance sheet items 31.12.2007 31.12.2006Cash and cash equivalents at the beginning of the period 310,809 294,856Net increase (decrease) in cash and cash equivalents during the period 99,115 16,471Cash and cash equivalents: effect of change variation (553) (518)Cash and cash equivalents at the end of the period 409,371 310,80955


A.1 – GENERAL PARTSection 1 – PREPARATION CRITERIA ANDSCOPE OF CONSOLIDATIONStatement of compliance with theInternational Accounting Standards(IAS/IFRS)The Banca Antonveneta Group consolidated FinancialStatements as at 31 December 2007 were drawn upin compliance with the international accountingstandards issued by the International AccountingStandards Board (IASB) and relevant interpretationsby the International Financial ReportingInterpretation Committee (IFRIC) in the textapproved by the European Commission, as per EURegulation No. 1606 dated 19 th July 2002.The consolidated financial statements and the notesto the accounts are presented as required by thedecision of the Bank of Italy issued on 22 ndDecember 2005, exercising the powers granted it byart. 9 of Legislative Decree 38/2005 on "instructionsfor the preparation of consolidated financialstatements of banks and financial companies thatare parent companies of banking groups.”For the preparation of these financial statements,the standards effective as at 30.06.07 were applied(including the SIC and IFRIC interpretationdocuments) as approved by European UnionRegulations.Section 2 – DEFINITION OF THEINFORMATION USED IN PREPARING THECONSOLIDATED FINANCIAL STATEMENTSThese consolidated Financial Statements comprisethe Balance Sheet, Income Statement, Statement ofChanges in Shareholders’ Equity, Cash Flowstatement and Notes to the Accounts, and areaccompanied by the Report on Operations.Unless otherwise specified herein, theseConsolidated Financial Statements were drawn up inthousands of euro.In addition to the amounts for the period underreview, the financial statements also contain thecomparative data for the period ended on 31 stDecember 2006, pursuant to the provisions of IFRS5 (Non-current assets held for sale and discontinuedoperations).The income statement figures for the preceding yearfor Antonveneta ABN AMRO Bank that as at 31December 2006 had been presented according tothe provisions of IFRS 5 (item 150 Assets, 90Liabilities, and 310 P&L), were reclassified in theseFinancial Statements under the referring items ofBalance Sheet and P&L as at 31 December 2006,given that Antonveneta ABN AMRO Bank’s sale,previously planned, was blocked in the light of theevents occurred in 2007 to ABN AMRO Group.As at 31 December 2007, the assets and liabilitiesreferring to the participation in Interbanca, pursuantto the provisions of IFRS 5, were classified undergroups of assets held for sale; as a consequence,the income statement information for the precedingyear were presented again und item 310. Income(loss) net of taxes from groups of assets held forsale.The consolidated financial statements were preparedusing the historical cost method, except in the casesof derivative financial instruments, financial assetsand liabilities designated as at fair value andavailable for sale financial assets which arerecognised at fair value. The book value of theassets and liabilities which are used in fair valuehedging transactions which would have beenrecognised at cost has been adjusted to take intoaccount the changes in fair value that areattributable to the hedged risks.The following general preparation framework, setforth in IAS 1, lies at the basis of these ConsolidatedFinancial Statements:Going Concern Basis. Measurement andrecognition of Group assets, liabilities, and “offbalancesheet” transactions are made on theassumption of going concern for all thecompanies in the Group.Accrual Basis of Accounting. Income andexpenses are recognised on the accrual basisprinciple of accounting.Presentation Consistency. Presentation andclassification criteria of statement items areretained from one period to the next, unlesstheir amendment is required by an InternationalAccounting Principle (IAS/IFRS) or by anInterpretation (SIC) or unless it is necessary toenhance the significance and reliability of theaccounts. In case of amendment, the newcriteria – as far as possible – are adoptedretroactively, and specify the nature, reason andamount of the items being amended. Itempresentation and classification comply with theprovisions set forth by the Bank of Italy onbanking financial statements.Separate Presentation of Similar Classes. Incompliance with the provisions issued by theBank of Italy on banking financial statements,similar item classes are shown separately, ifsignificant. Different elements, where significant,are presented separately.61


No Offsetting Rule. Unless required by a specificInternational Accounting Standard (IAS/IFRS) orInterpretation (SIC) or by the provisions of theBank of Italy on Group financial statements,assets, liabilities, as well as expenses andincome may not be offset.Comparative Information. With reference to allthe information included in these ConsolidatedFinancial Statements – also qualitative oneswhen these are useful for better understanding– corresponding figures for the previous financialyear are shown, unless otherwise required by anInternational Accounting Standard or relevantInterpretation.Section 3 – SCOPE AND METHODS OFCONSOLIDATIONScope of ConsolidationThe scope of the Consolidated Financial Statementscomprises Banca Antonveneta and all the companiesit directly and indirectly controls, including therein –as required by international IAS/IFRS – companiesoperating in business areas different from thebusiness area of the Parent Bank and all privateequity investments. Similarly, special purposeentities fall within the scope of consolidation whenan effective controlling influence exists,independently of the existence of equity investmentsheld.The detailed area falling within the full scope ofconsolidation and the companies evaluatedaccording to the Shareholders’ Equity method isscheduled hereto.On the subject, it is to note that Interbanca and itsdirectly controlled companies are not included in thisGroup’s contract of sale drawn up between BancaMonte dei Paschi di Siena S.p.A. and BancoSantander S.A. The sale of such participations is stillin process and is directly managed by the memberstaking part to the consortium that in 2007 gainedcontrol of ABN AMRO Group, of which this companyis part.As a consequence, as at 31 December 2007, takinginto account the provisions of IFRS 5, theparticipations in Interbanca S.p.A. and its directlycontrolled companies were classified under groups ofassets held for sale; therefore, the balance sheetand P&L data were presented, respectively, underitem 150/80 BS (non-current assets and groups ofassets held for sale/liabilities connected with assetsheld for sale) and 310 P&L (income (loss) net oftaxes from groups of assets held for sale).The classification of the abovementioned assets asheld for sale has triggered a re-classification of thecorrespondent comparative P&L data, as alreadysignalled in Definition of the Information used inpreparing the Consolidated Financial Statements.Methods of ConsolidationInvestments in Wholly- or Jointly-ControlledCompaniesSubsidiaries are consolidated fully as from theiracquisition date, or the date on which the Groupacquires control, and their consolidation ceases onthe date on which control is transferred away fromthe Group. The recognition and measurement basesused for the consolidation of wholly and jointlycontrolledcompanies are reported below.Wholly-controlled companies. On the line-by-lineconsolidation method, the carrying value ofwholly-controlled companies, whether directly bythe Parent Bank or indirectly through otherGroup companies, is measured as theproportion, determined by the fraction ofshareholders' equity held by Group, of theassets and liabilities of the subsidiary, adjustedas required by the accounting standard ofreference. Equity assets and liabilities, offbalancesheet transactions, income andexpenses, as well as profit or loss deriving fromtransactions between companies within thescope of consolidation are netted off.Acquisitions of companies are accounted for onthe basis of the “acquisition method” as set forthin IFRS 3. Thus the acquirer recognises theassets, liabilities, and potential liabilities of theacquired company at their fair values on theacquisition date. Any excess of the price that ispaid over the fair value amount is recognisedunder assets as goodwill. This goodwill is notamortised, but is tested periodically forimpairment. In the event that the acquisitionprice is less than the fair value, the difference isrecognised directly in the income statement.Minority interests represent the part of theprofits or losses and net assets which are notheld by the Group, and are resented as aseparate item within the income statement andin the balance sheet as part of net shareholders'equity, separately from the shareholders’ equityheld by the Group. Possible acquisitions ofminority interests are accounted for using theparent entity extension method, according towhich the difference between the considerationpaid and the book value of the portion of the netassets is recognised as goodwill.Jointly-controlled companies. Equity investmentsin jointly-controlled companies are measured onthe equity method, one of the two optionspermitted by IAS 31. Under this method, equity62


investments are originally recognised at cost andwritten up or down to determine the relevantshare of profit or loss recorded by the jointlycontrolledcompany after the acquisition date andother changes in the shareholders’ equity of theinvestee. The portion of the investee’s results forthe year which concern the venturer isrecognised in the latter’s income statement,while other changes in the investee’sshareholders’ equity are recognised in theGroup’s shareholders’ equity. Dividends paid bythe jointly-controlled company reduce the valueof the equity investment. The goodwill of thejointly controlled company is included in the bookvalue of the equity investment and is notamortized. After applying the net equity method,the Group determines whether it is necessary torecognise other impairment concerning the netequity investment of the Group in the associate.Companies subject to significant influence.Equity investments in companies subject tosignificant influence are measured on the equitymethod. Under this method, equity investmentsare originally recognised at cost and written upor down to determine the relevant share ofprofit or loss recorded by the investee after theacquisition date, as well as other changes in thenet shareholders' equity of the investee. Theportion of the investee’s results for the yearwhich concern the venturer is recognised in thelatter’s income statement, while other changesin the investee’s shareholders’ equity arerecognised in the Group’s shareholders’ equity.Dividends paid by the investee reduce the valueof the equity investment. The goodwill of anassociate is included in the book value of theequity investment and is not amortized. Afterapplying the net equity method, the Groupdetermines whether it is necessary to recogniseother impairment concerning the net equityinvestment of the Group in the associate.SECTION 4 - Events occurred after thereference date of the Financial StatementsPlease refer to the special section within theDirectors’ Report.A.2 – PART RELATING TO THE PRINCIPALFINANCIAL STATEMENTS ITEMSFinancial assets held for tradingClassification criteriaThis category comprises debt and equity-basedsecurities and the positive fair value of derivativecontracts held for the purpose of generating shorttermincome and resulting from the change in theirprice. Derivative contracts embedded in complexfinancial instruments are included in this category,and are recognised separately when:the economic characteristics and risks of thederivative are not strictly correlated with theeconomic characteristics and risks of the primarycontract;a separate instrument with the same conditionsof the embedded derivative would constituteitself a derivative contract;the hybrid (combined) instrument is notrecorded under financial assets or liabilities heldfor trading, nor under those designated at fairvalue.Recognition and derecognition criteriaFinancial assets are first recognised on thesettlement date of debt and equity-based securitiesand on the subscription date for derivativecontracts.When first recognised, financial assets held fortrading are valued at cost (i.e. the instrument’s fairvalue), without taking into account transactionexpenses or income directly attributable to theinstrument itself.Financial assets are derecognised upon expiry ofcontractual rights on cash flows generated by theassets themselves or when the financial asset issold, thus substantially transferring all the relevantrisks and benefits.Valuation criteria and recognition of incomeAfter initial recognition, financial assets held fortrading are designated as at fair value and anychanges in fair value are recorded in the incomestatement.The fair value determination of financial instrumentsbeing classified in this portfolio is based on activemarket prices 1 , on the prices provided by marketSECTION 5 - Other aspectsThe Consolidated Financial Statements were auditedby the independent auditor Reconta Ernst & Young.1 A financial instrument is intended as listed on an active market ifthe listings, reflecting normal market transactions, are promptlyand regularly accessible through Stock Exchanges, Brokers,Dealers, Financial Industry Companies, Listing Companies orAuthorised Bodies and such prices represent effective and regularmarket transactions, which are carried out based on a normalreference period.63


If impairment is found, the loss is represented by thedifference between the asset's book value and thecurrent value of future estimated cash flows, discountedat the original effective interest rate. The resultingvalue is recorded in the income statement. If thegrounds underlying impairment cease to exist afterimpairment has been recorded, relevant write-backs arerecorded in the income statement.ReceivablesClassification criteriaReceivables include loans to customers and banks,whether directly granted or acquired by third parties,requiring fixed-term or definable-term payments, notlisted on an active market or originally classified underFinancial assets available for sale.Receivables also include commercial loans, repurchaseagreements, financial leases and securities that arepurchased through subscription or private placement,with fixed-term or definable-term payments, and notlisted on active markets. As regards loans acquiredwithout recourse, these are included among receivablesonce it is established that contractual clauses do notexist substantially altering the assignee's risk exposureand the assignor's assumption of the risk.Recognition and derecognition criteriaReceivables are first recognised on disbursement dateor, in the case of debt securities, on settlement date,based on the financial instrument's fair value, which isequal to the amount granted or the subscription price,including income and expenses that are directlyattributable to the individual receivable and aredefinable since the beginning of the transaction, ifsubsequently settled. Expenses which, despite havingthe above characteristics, are subject to reimbursementby the debtor or which may be considered normalinternal administrative costs are excluded.When the net granted amount does not correspond tothe asset’s fair value, due to the application of aninterest rate that is significantly lower than the marketrate or the rate normally applied to similar financing,receivables are first recognised for an amount equal tofuture cash flows discounted at an appropriate rate. Thedifference from the amount granted or the subscriptionprice is directly recognised in the income statement.In particular, repurchase agreements are booked aspayables when the spot amount is earned, while theyare recorded under receivables when the spot amountis paid.Sold loans are derecognised as assets only if suchdisposal involved a substantial transfer of all their risksand benefits. If, on the other hand, the risks andbenefits relating to sold loans are not transferred, thesold loan remains recorded among assets, even thoughthe loan ownership was legally and effectivelytransferred. Where the substantial transfer of risks andbenefits cannot be determined, sold loans arederecognised from the balance sheet if no control hasbeen maintained over potential risks and benefits. Onthe other hand, if such a control is kept, even partially,receivables are recognised for their residual amount,which is calculated based on the exposure to valuechanges in sold loans and on the variations of their cashflows. Finally, sold loans are derecognised if thecontractual rights to receive the relevant cash flowsremain unaltered, with the concomitant assumption ofan obligation to pay only such cash flows to thirdparties.Valuation criteria and recognition of incomeOnce they are first recognised, receivables are bookedat their amortised cost through the effective interestrate method. The amortised cost corresponds to thefirst recognised value, including or excluding capitalreimbursements, value adjustments and amortisation –calculated through the effective interest rate method –of the difference between the amount granted and thefixed-term repayable amount, which typically refers toincome and expenses directly relating to the individualloan. The effective interest rate is the rate comparingthe current value of future cash flows generated by theloan, in terms of principal and interest, with the amountdisbursed, including income and expenses associatedwith the loan itself. This accounting method, through afinancial logic, allows economic effect of initial incomeand expenses to be spread over the loan's expectedresidual duration.Estimated cash flows and the contractual duration ofthe receivable take into account all contractual clausesthat may potentially affect amounts and expiry, withoutconsidering any forecast losses. The effective interestrate initially recognised (original ratio) is that used todiscount expected cash flows, and consequentlydetermines the amortised cost following the firstrecognition.The amortised cost method is not used for short-termreceivables making the effect of the discount applicationnegligible. These receivables are measured at historicalcost, and related income and expenses recorded in theincome statement in a linear fashion for the entirecontractual duration of the receivable. A similardiscount is applied to non fixed term or revocable loans.While preparing financial statements and quarterlyfinancial reports, the Group investigates receivables inorder to identify those which, following events occurredafter their recognition, show objective impairments.A receivable is intended to be impaired when the Groupis unlikely to collect the amount due based on theoriginal contractual conditions or an equivalent value.This category of receivables includes non-performingloans, problem loans, restructured loans, bad debts or65


loans past due for over 180 days according to theprovisions of the Rule issued by the Bank of Italy,consistently with the IAS.Non-performing loans are analytically assessed, and thevalue adjustment to each loan corresponds to thedifference between the book value upon its evaluation(amortised cost) and the current value of expectedfuture cash flows, calculated by applying the originaleffective interest rate. Estimated cash flows take intoaccount expected recovery times, the estimatedrealisable value of any guarantees, as well as expensesexpected to be incurred to recover credit exposure.Value re-establishments connected with the passing oftime are located under write-backs.The original effective rate of each loan remainsunaltered in time, although the relationship isrestructured involving a change in the contractual rateand also when the relationship actually does no longerbear contractual interest. Value adjustments arerecorded in the income statement.The original value of receivables is restored in followingfiscal years when the reasons determining itsadjustment no longer exist, provided that suchvaluation is objectively connected with an eventoccurring after such value adjustment. Write-backs arestated in the income statement, and may under nocircumstances exceed the amortised cost that the loanswould have had if previous adjustments had not beenmade.Receivables for which individual objective losses werenot identified (i.e. normally performing loans), includingthose granted to counterparties living in countries atrisk, are collectively impaired. Such impairment isrecorded for grades of loans in the same credit riskcategory, with relative loss percentages estimated onthe basis of historical series based on observableelements at the measurement date, which enableslatent losses to be estimated for each category ofreceivable. Collective value adjustments are recorded inthe income statement.Every fiscal year or half-year end, any additional valueadjustment or write-back is differentially determined,with reference to all performing loans existing on thesame date.Sold loans are derecognised as assets only if suchdisposal involved a substantial transfer of all their risksand benefits. If, on the other hand, the risks andbenefits relating to sold loans are not transferred, theseremain recorded among assets, even though the loanownership was legally and effectively transferred.Where the substantial transfer of risks and benefitscannot be determined, sold loans are derecognisedfrom the balance sheet if no control has beenmaintained over potential risks and benefits. On theother hand, if such a control is kept, even partially,receivables are recognised for their residual amount,which is calculated based on the exposure to valuechanges in sold loans and on the variations of their cashflows.Finally, sold loans are derecognised if the contractualrights to receive the relevant cash flows remainunaltered, with the concomitant assumption of anobligation to pay only such cash flows to other thirdparties.Income (loss) from loans are booked in the P&L:when the at issue asset is cancelled, to item 100 a)Profit (loss) on disposal or repurchase of loans;when the asset incurred in a value reduction, to item130 a) Net adjustments/write-backs for impairmentof loans.The measurement criteria adopted for cash loans tocustomers and banks were also used for the collectivemeasurement of guarantees. Resulting values arebooked to other liabilities.Financial assets designated at fair valueClassification criteriaFinancial assets designated at fair value and recognisedin the income statement, include securities for whichthe Group has applied, where appropriate, the so-calledfair value option envisaged in IAS 39 was adopted.Recognition and derecognition criteriaThe same recognition and derecognition criteria usedfor financial assets held for trading were applied.Valuation criteria and recognition of incomeThe same valuation criteria adopted for financial assetsheld for trading are used.Interest income is booked under the income statementitem “Interest income and similar income.” Profits andlosses on disposals, as well as capital gains and lossesfollowing valuation are recorded under the incomestatement item “Net profit on financial assetsdesignated at fair value”.Hedging transactionsRecognition criteriaHedging activities are designed to neutralise the risk ofpotential losses that a determinate element or group ofelements (the hedged element) may carry due to adeterminate risk, through the use of profits carried on adifferent element or group of elements (the hedginginstrument), in the event in which the specific riskshould effectively occur.66


Within the hedging scope contemplated in IAS 39, theGroup adopts the following types of hedging:fair value hedge; it is intended to hedge theexposure to the fair value change in a bookingitem due to a particular risk;cash flow hedge; it is intended to hedge theexposure to changes in future cash flows due toparticular risks associated with booking items.At the consolidated level, only transactions effectivelyconcluded with a counterpart external to the Group maybe designated as hedging instruments. Outcomesderiving from transactions between entities within theGroup are therefore cancelled from the consolidatedfinancial statements.Valuation criteria and recognition of incomeHedging derivatives are designated at fair value. In thecase of fair value hedging, the fair value change in thehedged element is offset by the fair value change in thehedging instrument. This offsetting is recognisedthrough the recording in the income statement of fairvalue changes referring to both the hedged element(with respect to changes due to the underlying risk)and the hedging instrument. Any difference,representing the partial inefficiency of the hedging,consequently corresponds to the net economic effect.In the case of cash flow hedging, fair value changes inthe derivative instrument are recorded in theshareholders' equity, for the efficient part of thehedging, while the same are stated in the incomestatement only when, with reference to the hedgeditem, cash flows to be offset change.The fair value determination is based on active marketprices, as defined above, on the prices provided bymarket players or on internal evaluation models, whichare generally used in the financial industry, take intoaccount all risk factors related to instruments and referto market data, such as:methods based on the measurement of listedinstruments which have similar characteristics;measurement of the actual value of cash flowsgenerated by the instrument;measurement models of option prices.A derivative instrument is a hedging instrumentprovided that the relationship between the hedged andhedging instrument is formally documented, and ifeffective as of when the hedge commences and,potentially, for all its duration.The hedging efficiency depends on whether fair valuechanges in the hedged instrument or in the relevantexpected cash flows are offset by the fair value changesin the hedging instrument. Thus, this efficiency arisesfrom the comparison between the above-mentionedchanges, taking into account the purpose pursued bythe company when the hedge is executed.The hedging relationship is efficient when fair valuechanges (or cash flow changes) in the hedging financialinstrument substantially offset changes in the hedgedinstrument, for the risk being hedged.Such efficiency is assessed at year end or whilepreparing quarterly financial reports through:perspective assessments, evidencing theapplication of the hedging accounting system asthey prove its expected efficiency;retrospective assessments, showing the hedgingefficiency level achieved in the period to whichthey refer. In other words, they measure theextent to which effective results depart fromperfect hedging.If these assessments do not confirm hedgingeffectiveness, hedge accounting is discontinued, andthe hedging derivative contract is reclassified as atrading instrument.Equity InvestmentsClassification criteriaThe item includes investments held in associates,designated at equity. Associates are companies notcontrolled by the Group, but over which heavy influenceis exercised. Finally, the Group is considered toexercise heavy influence if it holds 20% or more of thevoting rights or legal relationships exist; heavyinfluence can be signalled also by other circumstances,such as participation in the decision-making process,where the Group has the power to heavily influence themanagement and financial decision-making process ofthe investee.The item further includes jointly-controlled companieswhich are booked on the equity method and not on theproportional method. Joint control exists where thereexist shareholder or other agreements regarding thejoint management of the business and the appointmentof directors.Recognition and derecognition criteriaFinancial assets included in this category are firstrecognised on the settlement date. When firstrecognised, financial assets are valued at cost.Financial assets are derecognised upon expiry ofcontractual rights on cash flows generated by theassets themselves or when the financial asset is sold,thus substantially transferring all the relevant risks andbenefits.67


Valuation criteria and recognition of incomeWhen it is proven that the value of an equityinvestment is impaired, the recoverable value of theequity investment itself is estimated, taking intoaccount the greater between the current value of thefuture cash flows possibly generated by the equityinvestment (its current value) and its fair value,excluding the expenses related to the final investmentdismissal.If the equity investment's recoverable value is lowerthan its book value, the relevant difference isrecognised in the income statement.If the grounds for impairment cease to exist afterimpairment has been recorded, relevant write-backs arerecorded in the income statement.Tangible fixed assetsClassification criteriaThe item includes land, real estate used in operations,property investments, technical systems, furniture,furnishings, and equipment of any kind.Real estate used in operations is defined as that held bythe Group for the supply of services or foradministrative purposes, while property investmentsare those held by the Group for the purpose ofreceiving rent income or of evaluating the investedcapital or for both.This item also includes assets used within the scope offinancial leasing contracts, even though their legalowner is the lessor.Recognition and derecognition criteriaTangible fixed assets are first valued at cost including,in addition to the purchase price, any ancillary expensesdirectly attributable to the purchase and commissioningof the asset.Tangible fixed assets are derecognised from the incomestatement when disposed of or when use of the asset ispermanently discontinued and from its dismissal nofuture economic benefits are expected.Costs of an incremental nature are recognised asadditions to the asset value. Ordinary maintenancecosts are recognised directly in the income statement.Valuation criteria and recognition of incomeAfter initial recognition, tangible fixed assets, includingreal estate not used in operations, are measured atcost, net of depreciation and impairment. Such assetsare depreciated over the full term of their useful liveson a straight-line basis, with the exception of land.Land, whether purchased independently or togetherwith relative buildings, has an indefinite useful life andhence is not subject to depreciation. If its value isincluded in the value of the building, by virtue of thecomponent approach application, it is considered as anasset that can be separated from the building; the landvalue and the building value are split based onindependent expert appraisals on fully-owned buildingsand buildings whose ownership percentage isconsidered significant.Every fiscal year or half-year end, when there areelements implying an asset being impaired, the asset’sbook value and recovery value are compared; the latteris equal to the greater of the fair value, net of any salescosts, and the relevant current value of the asset, thatis the current value of future cash flows generated bythe asset. Resulting adjustments are recorded in theincome statement. If the grounds for impairment ceaseto exist, a write-back is booked, which may under nocircumstances exceed the value the asset would havehad if previous impairments had not occurred, net ofdepreciation.Expenses related to improvements on thirdpartyassetsExpenses for the improvement of third-party buildingsare capitalised, taking into consideration that for theduration of the leasing contract the user will controlassets and take advantage of the future economicbenefits arising therefrom. These expenses areamortized for a period that may not exceed theduration of the leasing contract.Intangible fixed assetsClassification criteriaIntangible fixed assets are recognised in theshareholders' equity only if:they are identifiable;the entity controls them;expected future benefits arising from these assetsare likely to be attributed to the entity;the asset's cost can be reliably evaluated.Group intangible fixed assets include goodwill andmulti-year application software.Following a business combination, goodwill representsthe positive difference between the purchase cost andthe fair value of assets and liabilities acquired.Other intangible fixed assets are recorded if they can beidentified and arise from legal or contractual rights.Recognition and derecognition criteriaGoodwill is represented by the purchase cost surplusincurred compared to the fair value of assets on thepurchase date and other property acquired.68


Intangible fixed assets can be recorded as goodwill onlywhen the positive difference between the fair value ofpurchased assets and the purchase cost of the equityinvestment (including ancillary expenses) representsthe future profitability of the equity investment(goodwill).If such difference is negative (badwill) or the goodwilldoes not prove the investee's future profitability, such adifference is directly recognised in the incomestatement.Other intangible fixed assets are stated at cost,adjusted for any ancillary expenses only if the futureeconomic benefits resulting from the asset are likely tobe realised and if the asset cost can be reliablydetermined. On the other hand, the intangible fixedasset cost is stated in the income statement for thefinancial year in which it was incurred.Intangible fixed assets are derecognised fromshareholders' equity upon disposal and if no futureeconomic benefits are expected.Valuation criteria and recognition of incomeEvery year and any time impairment is found, anassessment is carried out on the sustainability of thegoodwill recorded. To this end, units generating cashflows and to which goodwill can be attributed areidentified. The amount of any impairment is determinedbased on the difference between the carrying value ofgoodwill and its recovery value, if lower. Such recoveryvalue is equal to the greater of the fair value of the unitgenerating cash flows, net of any sales costs, and therelevant current value. Resulting write-backs arerecorded in the income statement.The cost of intangible fixed assets having a defineduseful life is amortised on a straight-line basis,according to their residual useful life. If their useful lifecannot be defined, they are not amortised, and thefixed asset’s book value is only tested for adequacyperiodically.At the end of every financial year or when impairmentis found, the recovery value of the asset is estimated.The loss, recognised in the income statement, is equalto the difference between the book value andrecoverable value of the asset.Non-current assets for saleLiabilities associated with groups of assetsheld for saleThese items include non-current assets and relevantliabilities, as well as groups of discontinued assets andliabilities held for sale.These assets or liabilities, as envisaged in IFRS 5, arevalued at the lower of their book value and fairvalue, net of disposal costs.Relating income and expenses (net of tax effect) arerecognised in the income statement under a separateitem.Debts and securities issuedClassification criteriaDue to banks, Due to customers and Securities issuedinclude the various types of interbanking and customerfunding and the deposits made through certificates ofdeposit and bonds issued, therefore net of anyrepurchased amounts.These also include debts issued by the lessor within thescope of financial leasing transactions.Recognition and derecognition criteriaSuch financial liabilities are first recorded upon receiptof the amounts collected or upon the issue of debtsecurities.The first recognition is carried out based on theliabilities' fair value, which is normally equal to thecollected amount or issue price, adjusted according toany additional income and expenses directlyattributable to individual funding or issues and notreimbursed by the creditor. Internal costs of anadministrative nature are excluded.Financial liabilities are derecognised when expired orextinguished. Derecognition is made even where thepreviously issued securities are subsequentlyrepurchased. The difference between the liability bookvalue and the amount paid to repurchase it isrecognised in the income statement. The marketplacement of own securities following their repurchaseis considered as a new issue, and the new placementprice is booked without affecting the income statement.The fair value of financial assets, which are possiblyissued based on conditions that are significantly lowerthan the market ones, is specifically assessed and thedifference from the market value is directly recognisedin the income statement.Valuation criteria and recognition of incomeOnce they are first recognised, financial liabilities arevalued at the cost amortised according to the effectiveinterest rate method.When the time factor is negligible, exception is madefor short-term liabilities, which are still booked basedon the collected amount and whose possibly recordedcosts are recognised on a line-by-line basis in theincome statement for the contractual duration of theliability.69


Financial liabilities held for tradingThis item includes the negative value of tradingderivative contracts designated at fair value, ofderivative contracts involving other financialinstruments and of liabilities, which are also designatedat fair value, arising from technical overdraftsgenerated by securities trading transactions.The criteria for recognition, derecognition, valuationand recognition of income statement items are thesame as those illustrated for the financial assets heldfor trading.Staff severance indemnityPursuant to IAS 19 “Employee bonuses”, up to 31December 2006, staff severance indemnity was anobligation for the Bank to grant a defined benefit at themoment the employment relationship ceased.This benefit was considered a defined-benefit obligationand thus, the matured debt due to employees wasdetermined based on the current value of the accruedpart of the benefit which the employee would receiveupon disbursement, and was attributable to periods ofemployment during which the employee provided hisservices (P.U.C. – Projected Unit Credit Method).The scheme service costs were recorded under payrollcosts as net accrued benefits for the period, benefitspertaining to previous financial years which have notyet been accounted for, interest accrued, expectedincome generated by the scheme assets, and actuarialprofits and losses.The latter were recognised according to the so-called“corridor” method, which is the combined surplus of theprofits and losses existing at the end of the previousfiscal year, compared to the greater of 10% of thecurrent value of the benefits generated by the schemeand 10% of the fair value of the scheme assets.Following the reform of supplementary pension plans,which was implemented with Legislative Decree252/2005, integrated with the new provisions includedin the 2007 Budget Law and subsequent implementingdecrees:the quotas of staff severance indemnity maturedas at 31 December 2006 remain with thecompany, and are considered as a “definedbenefit” plan, as the company is obliged to pay toemployees, in the cases set forth by law, theamounts determined pursuant to art. 2120 of theItalian Civil Code. The change compared to theprevious situation involved the model’s actuarialassumptions, which must include the assumptionsof salary increase set forth in art. 2120 of theItalian Civil Code (application of a fixed rate of1.5%, and of 75% of the ISTAT inflation index)and not those rates estimated by the Bank;the quotas maturing starting from 1 January 2007must be allocated, based on the employees’choice, to supplementary pension plans, or beheld by the company, thus comprising a “definedcontributionplan”, as the Bank’s obligationtowards employees shall cease upon payment ofthe fund quotas matured.Based on the above, as from 1 January 2007:the obligation for the quotas matured as at 31December 2006 is recorded according to the rulesfor defined-benefit plans. This means that theobligation for benefits matured by employeesmust be assessed using actuarial techniques;the obligation for the quotas maturing from 1January 2007, as a result of supplementarypension plans or the INPS (National SocialSecurity Agency) treasury account, is recordedbased on the contributions owed for each year.The actuarial valuation of staff severance indemnity wascarried out taking into consideration the effects of theregulatory changes which result in the curtailment ofstaff severance indemnity.As provided by IAS 19, this curtailment was recorded inthe income statement, taking into account actuarialprofits and losses not previously recorded due to theapplication of the corridor method.Other employee benefits (i.e. retirement premiums andcontributions) contemplated in IAS 19 are recognised asliabilities, by estimating the single amount to pay toeach employee based on actuarial methods.Provisions for risks and chargesClassification criteriaThis item includes allowances for current obligationsbearing on the Group originated by a past event, whosepayment is certain or highly probable, but whoseamount and time of settlement are uncertain.Recognition criteriaAllowances are booked to this item only where:there is a current (legal or implicit) obligationarising from a past event;resources aimed at generating economic benefitswill be probably used to fulfil such obligation;the obligation amount can be reliably estimated.No allowances are allocated for potential andimprobable liabilities, although a description of thenature of the liability is nonetheless provided in theNotes to the Accounts.70


Valuation criteria and recognition of incomeThe allowances reflect the best possible estimate on thebasis of the elements at our disposal, and provisionsare recognized in the income statement.Where the temporal period is significant, allowances arediscounted using current market discount rates. Theeffect of such a discount is recognised in the incomestatement.Foreign currency transactionsRecognition criteriaForeign currency transactions are recorded in thebalance sheet currency upon initial recognition, byapplying the exchange rate in force on the transactiondate to the foreign currency amount.Valuation criteria and recognition of incomeAt the end of every financial year or quarter, statementitems in foreign currency are measured as follows:monetary assets and liabilities are converted at theexchange rate in force on the closing date;non-monetary items valued at historic cost areconverted at the exchange rate valid on thetransaction date;non-monetary items designated at fair value in aforeign currency are converted using the spotexchange rates in force on the closing date.Translation differences deriving from the settlement ofmoneys or from the conversion of moneys at exchangerates different from the initial conversion rates, or fromconversion in previous financial statements, arerecorded in the income statement for the period inwhich they arise.When a profit or loss relating to a non-monetaryelement is recognised in shareholders' equity, thetranslation difference relating to the element is alsorecognised in shareholders' equity. On the other hand,while a profit or loss is recognised in the incomestatement, the relevant translation difference is alsorecorded in the income statement.The euro conversion of foreign investees’ financialstatements is carried out by applying the exchangerates in force on the reference balance sheet date.Translation differences in the consolidated investees'equity are recorded under consolidated reserves andrecognised in the income statement only in the financialyear in which the equity investment is disposed of.Tax Assets and LiabilitiesIncome taxes are calculated in accordance with taxationlaws in force. The tax burden is represented by totalcurrent and deferred taxes used in determining theprofit or loss for the year.Income taxes are recorded in the income statement,with the exception of taxes relating to asset and liabilityitems of shareholders' equity.The Group measures the effects of current and prepaidtaxes by applying the tax rates applicable in the countryof reference for each subsidiary company includedwithin the scope of consolidation.Allowances for income taxes are determined based on aprudential forecast of the current, prepaid and deferredtax burden.Deferred taxes are calculated on all temporarydifferences in existence on the balance sheet dateamong the tax values of the assets and liabilities exceptfor temporary difference deriving from initialrecognition:of goodwill;of an asset or liability in a transaction that is not abusiness combination and does not affect theprofit for the year for the purpose of the financialstatements, or the taxable profit or loss.Timing differences may be:taxable, that is they will be taxed in determiningthe tax income for future years when the bookvalue of the asset or liability is realised orextinguished;deductible, that is they will be deducted fordetermining the tax income for future years whenthe book value of the asset or liability is realised orextinguished.Prepaid tax assets represent income taxes that can berecovered in future years through:deductible timing differences;unpaid taxation liabilities carried forward.Prepaid tax assets are booked when there is a recoverypossibility, which is valued based on the relevantcompany and Parent Bank capacity of generatingcontinuing positive tax income, due to the exercise ofthe option relating to "tax consolidation."Deferred tax liabilities represent taxes due in futureyears and referring to taxable timing differences.All deferred tax liabilities are recognised in the financialstatements.71


Prepaid tax assets and deferred tax liabilities aresystematically reviewed on the basis of amendments totaxation laws or rates and changes in the breakdown ofthe Group. The tax allowance balance is furtheradjusted in order to face the expenses that may arisefrom already notified audits or in any case from existinglitigation with tax authorities.consolidation. Consolidation regarded the economic andequity results of the companies, and excluded amountsrelating to the assets disposed of.The Group exercised the option provided by IFRS 1 notto recognise the disposed assets in the consolidatedfinancial statements, as the disposals were allconcluded before 1 st January 2004.OTHER INFORMATIONDividends and recognition of incomeIncome is recognised when received or in any casewhen the future economic benefits are likely to bereceived and these benefits can be reliably quantified.In particular:interest on arrears, where provided for in thecontract, is recorded in the income statement onlyupon its effective collection;dividends are recorded in the income statement atthe date on which their distribution is decided;income arising from the brokerage of tradingfinancial instruments, which is determined by thedifference between the transaction price and theinstrument fair value, is recognised in the incomestatement upon recording of the transaction if thefair value can be determined with reference torecent parameters or transactions that may beobserved on the same market in which theinstrument is traded. Income relating to financialinstruments for which the above-mentionedmeasurement is not possible is recognised in theincome statement for the duration of thetransaction.Allowances for guarantees and commitmentsIndividual and collective allowances relating toestimated future disbursements connected with thecredit risk of guarantees and commitments, which aredetermined by applying the same principles outlinedabove with respect to receivables, are recorded asOther liabilities, in accordance with the instructionsprovided by the Bank of Italy.SecuritisationsIn the 2000, 2001 and 2002 financial years, the Groupperformed a number of securitization operations onperforming and non-performing loans and securities,transferring the assets to special purpose entitiescreated for these aims.In accordance with IAS 27 and SIC 12, the specialpurpose entities were deemed Group-controlledcompanies and included within the scope of72


SCOPE AND METHOD OF CONSOLIDATION1. Investments in jointly-controlled companies (consolidated on a proportional basis)Company nameHead OfficeType ofrelationship(1)Shareholding relationshipInvestorundertakingStake %Availability ofvotes %(2)A. CompaniesA. 1 Fully consolidated companies1. Antonveneta Capital L.L.C. I Delaware 1 BAPV 100,00% 100,00%2. Antonveneta Capital L.L.C. II Delaware 1 BAPV 100,00% 100,00%3. Antonveneta Capital Trust I Delaware 1 BAPV 100,00% 100,00%4. Antonveneta Capital Trust II Delaware 1 BAPV 100,00% 100,00%5. Salvemini srl Padua 1 BAPV 100,00% 100,00%6. Antonveneta Immobiliare SpA Padua 1 BAPV 100,00% 100,00%7. Interbanca SpA (3) Milano 1 BAPV 99,99% 99,99%8. Interbanca International Holding SA (3) Brussels 1 Interbanca 100,00% 100,00%9. Bios Interbanca SpA (3) Milan 1 Interbanca 81,84% 100,00%10. La Cittadella SpA Padua 1 BAPV 99,17% 99,17%11. Giotto Finance SpA Padua 1 BAPV 98,00% 98,00%12. Giotto Finance 2 SpA Padua 1 BAPV 98,00% 98,00%13. Antenore Finance SpA Padua 1 BAPV 98,00% 98,00%14. Theano Finance SpA Padua 1 BAPV 98,00% 98,00%15. Antonveneta ABN Amro Bank SpA Milan 1 BAPV 55,00% 55,00%16. Antonveneta ABN Amro SGR SpA Milan 1 AAA Bank 100,00% 100,00%17. Antonveneta ABN Amro Investment Funds Ltd Dublin 1 AAA Bank 100,00% 100,00%A. 2 Companies consolidated on a proportional basis - - - - -(1) Type of relationship:1 = Majority of voting rights in the ordinary Shareholders’ Meeting(2) Availability of votes in the ordinary Shareholders’ Meeting(3) For sale assets73


ASSETSSection 1Cash and cash equivalents - Entry 101.1 Cash and cash equivalents: breakdownBanking groupInsurancecompaniesOther companies 31.12.2007 31.12.2006a) Cash 409,366 - 5 409,371 310,809b) Demand deposits at central banks - - - - -Total 409,366 - 5 409,371 310,80977


Section 2Financial assets held for trading - Entry 202.1 Financial assets held for trading: breakdown by productEntry/ValueBankinggroupInsurancecompaniesListed Non-Listed Listed Non-Listed Listed Non-ListedOthercompanies 31.12.2007 31.12.2006A. CASH ACTIVITIES1. Debt securities 222,925 445,728 - - - - 668,653 475,2121.1 Structured securities 114,619 157,127 - - - - 271,746 282,9041.2 Other debt securities 108,306 288,601 - - - - 396,907 192,3082. Capital notes 52,099 8,983 - - - - 61,082 8,7543. Interests in collective investment undertakings 50 - - - - - 50 7,6244. Loans - - - - - - - -4.1 Income from repurchase agreements - - - - - - - -4.2 Other - - - - - - - -5. Impaired assets - - - - - - - -6. Assets sold and not written off 22,389 17,424 - - - - 39,813 46,620Total A 297,463 472,135 - - - - 769,598 538,210B. DERIVATIVE INSTRUMENTS1. Financial derivatives 20,541 219,504 - - - - 240,045 313,9091.1 Trading 20,541 218,325 - - - - 238,866 194,9931.2 Connected with the fair value option - 623 - - - - 623 4461.3 Other - 556 - - - - 556 118,4702. Credit derivatives - - - - - - - -2.1 Trading - - - - - - - -2.2 Connected with the fair value option - - - - - - - -2.3 Other - - - - - - - -Total B 20,541 219,504 - - - - 240,045 313,909Total (A+B) 318,004 691,639 - - - - 1,009,643 852,11978


2.2 Financial assets held for trading: breakdown by debtors/issuersA. CASH ACTIVITIESEntry/ValueBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Debt securities 668,653 668,653 475,212a) Governments and Central Banks 44,309 44,309 56,853b) Other public entities 9,508 9,508 8,612c) Banks 571,314 571,314 399,435d) Other issuers 43,522 43,522 10,3122. Capital notes 61,082 61,082 8,754a) Banks 10,370 10,370 1,026b) Other issuers: 50,712 50,712 7,728- insurance companies 21,791 21,791 202- financial companies 1 1 6,259- non-financial companies 28,920 28,920 1,267- other3. Interests in collective investment undertakings 50 50 7,6244. Loansa) Governments and Central Banksb) Other public entitiesc) Banksd) Other parties5. Impaired assetsa) Governments and Central Banksb) Other public entitiesc) Banksd) Other issuers6. Assets sold and not written off 39,813 39,813 46,620a) Governments and Central Banks 14,855b) Other public entitiesc) Banks 39,813 39,813 31,765d) Other issuersB. DERIVATIVE INSTRUMENTSTotal A 769,598 769,598 538,210a) Banks 157,925 157,925 268,761b) Customers 82,120 82,120 45,148Total B 240,045 240,045 313,909Total (A+B) 1,009,643 1,009,643 852,11979


2.3.1 Financial assets held for trading pertaining to the banking group: derivative instrumentsType of derivative/Underlying assetA) LISTED DERIVATIVESInterestratesCurrenciesand goldCapitalnotesReceivables Other 31.12.2007 31.12.20061. Financial derivatives: 20,541 20,541 7,625- With exchange of capital 6,791 6,791 289- Options acquired 6,778 6,778 289- Other derivatives 13 13- Without exchange of capital 13,750 13,750 7,336- Options acquired 13,750 13,750 7,336- Other derivatives2. Credit derivatives:- With exchange of capital- Without exchange of capitalB) NON-LISTED DERIVATIVESTotal A 20,541 20,541 7,6251. Financial derivatives: 182,886 14,990 20,948 680 219,504 306,284- With exchange of capital 992- Options acquired 992- Other derivatives- Without exchange of capital 182,886 14,990 20,948 680 219,504 305,292- Options acquired 85,256 14,990 20,948 680 121,874 202,561- Other derivatives 97,630 97,630 102,7312. Credit derivatives:- With exchange of capital- Without exchange of capitalTotal B 182,886 14,990 20,948 680 219,504 306,284Total (A+B) 182,886 14,990 41,489 680 240,045 313,9092.4.1 Cash financial assets held for trading pertaining to the banking group, other than those sold and not written off,and other than impaired: annual changesType of derivative/Underlying assetDebtsecuritiesCapital notesInterests incollectiveinvestmentundertakingsLoans 31.12.2007A. Opening balance 475,212 8,754 7,624 491,590B. Increases 5,484,098 3,677,523 1,887 9,163,508B1. Acquisitions 5,420,641 3,638,117 1,847 9,060,605B2. Positive fair value changes 5,429 2,485 7,914B3. Other changes 58,028 36,921 40 94,989C. Decreases 5,290,657 3,625,195 9,461 8,925,313C1. Sold 4,957,533 3,523,806 9,361 8,490,700C2. Reimbursements 280,502 280,502C3. Negative fair value changes 10,724 1,034 85 11,843C4. Other changes 41,898 100,355 15 142,268D. Closing balance 668,653 61,082 50 729,78580


Section 3Financial assets designated at fair value - Entry 303.1 Financial assets designated at fair value: breakdown by productEntry/ValueBankinggroupInsurancecompaniesListed Unlisted Listed Unlisted Listed UnlistedOthercompanies 31.12.2007 31.12.20061. Debt securities 134,013 134,013 303,7701.1 Structured securities 49,678 49,678 115,8361.2 Other debt securities 84,335 84,335 187,9342. Capital notes 46,166 46,166 117,0703. Interests in collective investment undertakings4. Loans4.1 Structured4.2 Other5. Impaired assets6. Assets sold and not written offTotal 180,179 180,179 420,840Cost 180,179 180,179 473,053The other unlisted debt titles as at 31 December 2007 refer to Junior titles issued by the vehicles Giotto Finance and Giotto Finance 2.Each beforementioned Junior title’s fair value is estimated as current value:- of the expected cash flows deriving from the underlying secularization; i.e., substantially from the net provided refunds, for capital and interests andaccording to their proper time deadline, of the underlying loans and the receipts of the liquidity stocks;- of the expected cash flows for the same operation, and according to its proper time deadline, to pay administrative expenses (management expenses,legal expenses, etc.) and to refund (capital line and interest line) all issued title different from the Junior ones.The listed capital titles represent the amount held in HOPA SpA valued at 0,70 € per share.81


3.2 Financial assets designated at fair value: breakdown by debtors/issuersEntry/ValueBanking groupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Debt securities 134,013 134,013 303,770a) Governments and Central Banksb) Other public entitiesc) Banksd) Other issuers 134,013 134,013 303,7702. Capital notes 46,166 46,166 117,070a) Banksb) Other issuers: 46,166 46,166 117,070- insurance companies- financial companies 46,166 46,166 117,070- non-financial companies- other3. Interests in collective investment undertakings4. Loansa) Governments and Central Banksb) Other public entitiesc) Banksd) Other parties5. Impaired assetsa) Governments and Central Banksb) Other public entitiesc) Banksd) Other parties6. Assets sold and not written offa) Governments and Central Banksb) Other public entitiesc) Banksd) Other partiesTotal 180,179 180,179 420,8403.3.1 Financial assets designated at fair value, other than those sold and not written off, and other than impairedpertaining to the banking group: annual changesType of derivative/Underlying assetDebt securities Capital notesInterests incollectiveinvestmentLoans 31.12.2007undertakingsA. Opening balance 303,770 117,070 420,840B. Increases 36,558 13,565 50,123B1. Acquisitions 13,565 13,565B2. Positive fair value changes 935 935B3. Other changes 35,623 35,623C. Decreases 206,315 84,469 290,784C1. Sold 160,262 160,262C2. Reimbursements 12,505 12,505C3. Negative fair value changes 5,469 26,690 32,159C4. Other changes 28,079 57,779 85,858D. Closing balance 134,013 46,166 180,179Under item B.3 “Other variations” there are profits deriving from trading for € 26,225 thousand (Antenore Finance € 24,764 thousandand Padova Finance € 1,461 thousand).Under item C.4 “Other variations” (of debt titles) there are losses deriving from trading for € 21,599 thousand (HOPA CV).82


Section 4Financial assets available for sale - Entry 404.1 Financial assets available for sale: breakdown by productBanking InsuranceOther31.12.2007 31.12.2006Entry/Valuegroup companies companiesNonlistelistedlistedNon-Non-ListedListedListedListed Non-listed Listed Non-listed1. Debt securities 92,892 25,495 92,892 25,495 114,494 244,8461.1 Structured securities 15,647 15,647 21,9921.2 Other debt securities 92,892 9,848 92,892 9,848 114,494 222,8542. Capital notes 106,151 59,680 6 106,151 59,686 257,773 217,3852.1 Designated at fair value 106,151 34,298 106,151 34,298 257,773 190,9392.2 Designated at cost 25,382 6 25,388 26,4463. Interests in collective investment undertakings 24,508 6,7144. Loans5. Impaired assets6. Assets sold and not written off 257,874 14,614 257,874 14,614 4,852 15,078Total 456,917 99,789 6 456,917 99,795 401,627 484,0234.2 Financial assets available for sale: breakdown by debtors/issuersEntry/ValueBanking Insurance Othergroup companies companies31.12.2007 31.12.20061. Debt securities 118,387 118,387 359,340a) Governments and Central Banks 100,612 100,612 114,608b) Other public entitiesc) Banks 17,477 17,477 12,320d) Other issuers 298 298 232,4122. Capital notes 165,831 6 165,837 475,158a) Banks 56,033 56,033 125,837b) Other issuers: 109,798 6 109,804 349,321- insurance companies- financial companies 44,326 44,326 28,366- non-financial companies 65,465 6 65,471 308,254- other 7 7 12,7013. Interests in collective investment undertakings 31,2224. Loansa) Governments and Central Banksb) Other public entitiesc) Banksd) Other parties5. Impaired assetsa) Governments and Central Banksb) Other public entitiesc) Banksd) Other parties6. Assets sold and not written off 272,488 272,488 19,930a) Governments and Central Banks 257,874 257,874 4,852b) Other public entitiesc) Banks 14,614 14,614 15,078d) Other partiesTotal 556,706 6 556,712 885,65083


4.3.1 Financial assets available for sale pertaining to the banking group: hedged assetsHedged assetsAsset/Type of hedging 31.12.2007 31.12.2006Fair value Cash flow Fair value Cash flow1. Debt securities - - - -2. Capital notes - - 3,607 -3. Interests in collective investment undertakings - - - -4. Loans - - - -5. Portfolio - - - -Total - - 3,607 -4.4 Financial assets available for sale: assets with specific hedgingEntry/ValueBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Financial assets with specific fair value hedging - - - - 3,607a) interest rate risk - - - - -b) price risk - - - - 3,607c) exchange rate risk - - - - -d) credit risk - - - - -e) more risks - - - - -2. Financial assets with specific cash flow hedging - - - - -a) interest rate risk - - - - -b) exchange rate risk - - - - -c) other - - - - -Total - - - - 3,60784


4.5.1 Financial assets available for sale, other than those sold and not written off, and other than impaired: annualchanges pertaining to the banking groupDebtsecuritiesCapital notesInterests incollectiveinvestmentundertakingsLoans 31.12.2007A. Opening balance 359,340 355,724 31,222 746,286B. Increases 359,837 149,244 4,737 513,818B1. Acquisitions 321,717 106,344 1,063 429,124B2. Positive fair value changes 1,181 24,916 26,097B3. Write-backs -- charged to income statement -- charged to shareholders' equity -B4. Transfers from other portfolios -B5. Other changes 36,939 17,984 3,674 58,597C. Decreases 600,790 339,137 35,959 975,886C1. Sold 181,515 70,342 22,937 274,794C2. Reimbursements 34,487 34,487C3. Negative fair value changes 501 88,862 22 89,385C4. Impairment write-downs 16,306 16,306- charged to income statement 16,306 16,306- charged to shareholders' equity -C5. Transfers to other portfolios -C6. Other changes 384,287 163,627 13,000 560,914D. Closing balance 118,387 165,831 284,218As far as debt titles are concerned, it must be underlined that:- under item B.1 “Purchases” there are purchases of multi-year Treasury Bonds for € 320,674 thousand.- under item B.5 “Other variations” there are profits deriving from sale for € 30,632 thousand.- item C.1 “Sales” includes sales of multi-year Treasury Bonds for € 50,143 thousand and sales of Theano junior titles for € 131,372thousand.- under item C.6 “Other variations” there are assets sold and not written-off for € 252,558 and assets for sale relating to Interbancafor € 123,185 thousand.As far as capital titles are concerned, it must be highlighted that:- under item B.1 “Purchases” there are purchases of Banca Italease shares for € 50,515 thousand, of Telecom shares for € 31,004thousand and London Stock Exchange shares for € 18,114 thousand.- under item B.5 “Other variations” there are profits deriving from sale for € 17,984 thousand.- item C.1 “Sales” includes sales of Banca Italease shares for € 29,162 thousand, sales of Italian Stock Exchange shares for € 18,114thousand and sales of ABN AMRO shares for € 15,120 thousand.- under item C.6 “Other variations” there are assets sold and not written-off for € 252,558 and assets for sale relating to Interbancafor € 161,698 thousand.4.5.3 Financial assets available for sale, other than those sold and not written off, and other than impaired: annualchanges pertaining to the companiesDebtsecuritiesCapital notesInterests incollectiveinvestmentundertakingsLoans 31.12.2007A. Opening balance 119,434 119,434B. Increases -B1. Acquisitions -B2. Positive fair value changes -B3. Write-backs -- charged to income statement -- charged to shareholders' equity -B4. Transfers from other portfolios -B5. Other changes -C. Decreases 119,428 119,428C1. Sold -C2. Reimbursements -C3. Negative fair value changes -C4. Impairment write-downs -- charged to income statement -- charged to shareholders' equity -C5. Transfers to other portfolios -C6. Other changes 119,428 119,428D. Closing balance 6 685


Section 6Loans to banks - Entry 606.1.1 Loans to banks pertaining to the banking group: breakdown by productType of transaction/Value 31.12.2007 31.12.2006A. Loans to Central Banks 196,055 256,9871. Time deposits2. Reserve requirements 196,055 256,9873. Active repurchase agreements4. OtherB. Loans to banks 7,586,207 4,489,9241. Current accounts and demand deposits 485,556 1,134,3322. Time deposits 2,711,238 1,121,5403. Other loans: 4,381,683 2,225,9343.1 Income from repurchase agreements 4,221,691 2,069,7223.2 Financial lease3.3 Other 159,992 156,2124. Debt securities4.1 Structured securities4.2 Other debt securities5. Impaired assets 7,730 8,1186. Assets sold and not written offTotal (book value) 7,782,262 4,746,911Total (fair value) 7,782,262 4,746,91786


Section 7Loans to customers - Entry 707.1.1 Loans to customers pertaining to the banking group: breakdown by productType of transaction/Value 31.12.2007 31.12.20061. Current accounts 6,312,893 6,377,6052. Active repurchase agreements 7,1873. Mortgage loans 12,099,747 18,083,8934. Credit cards, personal loans and loans on one's wages 712,807 635,8775. Financial lease6. Factoring7. Other transactions 9,614,677 9,627,5068. Debt securities 1,562 9,2898.1 Structured8.2 Other debt securities 1,562 9,2899. Impaired assets 1,831,460 2,159,10010. Assets sold and not written offTotal (book value) 30,573,146 36,900,457Total (fair value) 31,312,780 37,077,36887


7.2.1 Loans to customers pertaining to the banking group: breakdown by debtors/issuersType of transaction/Value 31.12.2007 31.12.20061. Debt securities 1,562 9,289a) Governments - -b) Other public entities - -c) Other issuers 1,562 9,289- non-financial companies 1,562 2,304- financial companies - 6,985- insurance -- other -2. Loans to: 28,740,124 34,732,068a) Governments 4 124,692b) Other public entities 86,605 150,214c) Other parties 28,653,515 34,457,162- non-financial companies 19,323,055 25,177,305- financial companies 991,978 1,378,604- insurance 81 25,584- other 8,338,401 7,875,6693. Impaired assets: 1,831,460 2,159,100a) Governments -b) Other public entities 518 1,143c) Other parties 1,830,942 2,157,957- non-financial companies 1,139,175 1,361,635- financial companies 68,746 17,687- insurance 7 19- other 623,014 778,6164. Assets sold and not written off: -a) Governments -b) Other public entities -c) Other parties -- non-financial companies -- financial companies -- insurance -- other -Total 30,573,146 36,900,4577.3.1 Loans to customers pertaining to the banking group: assets with specific hedgingType of transaction/Value 31.12.2007 31.12.20061. Loans with specific fair value hedging: 4,797 464,104a) interest rate risk 4,797 464,104b) exchange rate riskc) credit riskd) more risks2. Loans with specific cash flow hedging:a) interest rate riskb) exchange rate riskc) otherTotal 4,797 464,10488


Section 8Hedging derivative contracts - Entry 808.1.1 Hedging derivative contracts pertaining to the banking group: breakdown by type of contract and underlying assetsType of derivative/Underlying assetA) LISTED DERIVATIVESInterest ratesCurrencies andgoldCapital notes Receivables Other 31.12.20071. Financial derivatives: -With exchange of capital -- Options acquired -- Other derivatives -Without exchange of capital -- Options acquired -- Other derivatives -2. Credit derivatives: -With exchange of capital -Without exchange of capital -B) NON-LISTED DERIVATIVESTotal A -1. Financial derivatives: 25,101 25,101With exchange of capital -- Options acquired -- Other derivatives -Without exchange of capital 25,101 25,101- Options acquired 3,880 3,880- Other derivatives 21,221 21,2212. Credit derivatives: -With exchange of capital -Without exchange of capital -Total B 25,101 25,10131.12.2007 (A+B) 25,101 25,10131.12.2006 (A+B) 162,960 - 2,593 - - 165,5538.2.1 Hedging derivative contracts pertaining to the banking group: breakdown by hedged portfolio and type of hedgingFair ValueCash flowTransaction/Type of hedgingRate risk Exchangerate riskSpecificCreditriskPrice riskMorerisksGeneric Specific Generic1. Financial assets available for sale X X2. Receivables 36 X X X3. Financial assets held to maturity X X X X4. Portfolio X X X X X XTotal assets 361. Financial liabilities 25,065 X X X2. Portfolio X X X X X XTotal liabilities 25,06589


Section 10Equity investments - Entry 10010.1 Investments in jointly-controlled companies (designated at equity), and in companies subject to significantinfluence: information on investment relationshipsB. CompaniesCompany nameAddress (headoffice)Type of relationshipShareholding relationshipStakeholder undertakingShareholdingrelationshipStake %Availability ofvotes %1. Antoniana Veneta Popolare Assicuraz. SpA Trieste joint control Banca Antonveneta 50.000% 50.000%2. Antoniana Veneta Popolare Vita SpA Trieste joint control Banca Antonveneta 50.000% 50.000%3. Padova 2000 Iniziative Immobiliari SpA Padova significant influence Banca Antonveneta 45.010% 45.010%4. Costruzioni Ecologiche Moderne SpA Roma significant influence Banca Antonveneta 40.197% 40.197%5. Sidermo Srl in liquidazione Mortegliano significant influence Banca Antonveneta 32.250% 32.250%10.2 Investments in jointly-controlled companies and companies subject to significant influence: accounting informationCompany nameA. Companies designated at equityTotalassetsTotalrevenuesProfit(Loss)Shareholders'equityConsolidatedbook valueFair valueA.1 jointly-controlled companies1. Antoniana Veneta Popolare Vita SpA 4,250,022 29,086 29,985 144,191 71,239 X2. Antoniana Veneta Popolare Assicurazioni SpA 101,060 380 506 16,045 8,022 XA.2 heavily-influenced companies1. Padova 2000 Iniziative Immobiliari SpA 19,969 -1,244 -323 129 58 -2. Costruzioni Ecologiche Moderne SpA 136,001 12,035 68 19,779 7,950 -3. Sidermo Srl in liquidazione 128 39 -1,564 71 23 -B. Companies consolidated on a proportional basis - - - - - -Total 4,507,180 40,296 28,672 180,215 87,292 -Note: with total profit it is meant:- Banks and financial corporations- Assurances: result of the technical statement- Other societies: value of production .10.3 Investments: annual changesBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.2006A. Opening balance 83,518 - - 83,518 77,501B. Increases 4,775 - - 4,775 6,017B.1 Acquisitions - - 3,067B.2 Write-backs - - -B.3 Revaluations - - -B.4 Other changes 4,775 4,775 2,950C. Decreases 1,001 - - 1,001 -C.1 Sales 1,001 1,001 -C.2 Value adjustments - - -C.3 Other changes - - -D. Closing balance 87,292 - - 87,292 83,518E. Total revaluations 18,341 - - 18,341 18,341F. Total adjustments 3,298 - - 3,298 3,29890


Section 12Tangible fixed assets - Entry 12012.1 Fixed assets: breakdown of assets designated at costAsset/ValueBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.2006A. Assets for functional use - -1.1 Property 611,490 407 611,897 682,043a) land 127 127 29,281b) buildings 554,465 400 554,865 587,090c) fixtures and furnishings 18,155 18,155 18,760d) electronic systems 14,081 7 14,088 18,234e) other 24,662 24,662 28,6781.2 Acquired under financial lease - -a) land - -b) buildings - -c) fixtures and furnishings - -d) electronic systems - -e) other - -Total A 611,490 407 611,897 682,043B. Assets held for investment - -2.1 Property 64,628 64,628 65,880a) land 34,644 34,644 34,644b) buildings 29,984 29,984 31,2362.2 Acquired under financial lease - -a) land - -b) buildings - -Total B 64,628 64,628 65,880Total (A+B) 676,118 407 676,525 747,923Depreciation is calculated at the rates considered to represent the remaining useful lives of the tangible assets. Depreciation for the beginningfinancial year is calculated according to the actual time period during which the asset was used.Rate (%)Furniture 12Furnishings 15Ordinary office machines 12Transportation vehicles 20Furnishings for residential buildings 15Electronic office machines 20EAD Machines 20EAD Installations 15Mobile phones 20Loading and unloading installations 7.5Security installations 15Various installations 15Various specific installations 10Various equipment 15Bullet proof vans 20Alarm installations 30Internal communication installations 25Internal telephone systems 8Vehicles 2591


12.3.1 Fixed assets for functional use pertaining to the banking group: annual changesLandBuildingsFixtures andfurnishingsElectronicsystemsOther 31.12.2007A. Gross opening balance 29,281 619,948 41,005 56,102 68,152 814,488A.1 Reductions of total net values 33,274 22,245 37,878 39,474 132,871A.2 Net opening balance 29,281 586,674 18,760 18,224 28,678 681,617B. Increases: 565 6,634 5,007 7,944 20,150B.1 Acquisitions 132 6,624 5,006 7,923 19,685B.2 Costs of capitalised improvements 433 433B.3 Write-backs -B.4 Positive changes of fair value charged to: -a) shareholders' equity -b) income statement -B.5 Positive goodwill on exchange rate -B.6 Transfers from properties held for -B.7 Other changes 10 1 21 32C. Decreases: 29,154 32,774 7,239 9,150 11,960 90,277C.1 Sales 3,205 127 441 107 3,880C.2 Amortisation and depreciation 6,815 5,964 6,079 11,834 30,692C.3 Value adjustments on impairments charged to -a) shareholders' equity -b) income statement -C.4 Negative changes of fair value charged to -a) shareholders' equity -b) income statement -C.5 Negative exchange differences -C.6 Transfer to: 29,154 22,754 1,148 2,400 55,456a) tangible assets held for investment -b) assets for sale 29,154 22,754 1,148 2,400 55,456C.7 Other changes 230 19 249D. Net closing balance 127 554,465 18,155 14,081 24,662 611,490D.1 Reductions of total net values 31,359 24,956 33,551 51,308 141,174D.2 Gross closing balance 127 585,824 43,111 47,632 75,970 752,664E. Designation at cost 127 554,465 18,155 14,081 24,662 611,49092


12.3.3 Fixed assets for functional use pertaining to other companies: annual changesLand BuildingsFixtures and Electronicfurnishings systemsOther 31.12.2007A. Gross opening balance 559 108 667A.1 Reductions of total net values 143 98 241A.2 Net opening balance 416 10 426B. Increases: -B.1 Acquisitions -B.2 Costs of capitalised improvements -B.3 Write-backs -B.4 Positive changes of fair value charged to: -a) shareholders' equity -b) income statement -B.5 Positive goodwill on exchange rate -B.6 Transfers from properties held for -B.7 Other changes -C. Decreases: 16 3 19C.1 Sales -C.2 Amortisation and depreciation 16 3 19C.3 Value adjustments on impairments charged to -a) shareholders' equity -b) income statement -C.4 Negative changes of fair value charged to -a) shareholders' equity -b) income statement -C.5 Negative exchange differences -C.6 Transfer to: -a) tangible assets held for investment -b) assets for sale -C.7 Other changes -D. Net closing balance 400 7 407D.1 Reductions of total net values 159 101 260D.2 Gross closing balance 559 108 667E. Designation at cost 400 7 40712.4 Tangible assets held for investment: annual changesBanking group Insurance companies Other companies 31.12.2007Land Buildings Land Buildings Land Buildings Land BuildingsA. Opening balance 34,644 31,236 34,644 31,236B. Increases 19 - 19B.1 Acquisitions - -B.2 Costs of capitalised improvements 19 - 19B.3 Net positive changes of fair value - -B.4 Write-backs - -B.5 Positive exchange differences - -B.6 Transfers from property to functional use - -B.7 Other changes - -C. Decreases 1,271 - 1,271C.1 Sales - -C.2 Amortisation and depreciation 1,271 - 1,271C.3 Net negative changes of fair value - -C.4 Value adjustments on impairments - -C.5 Negative exchange differences - -C.6 Transfers to other asset portfolios - -a) properties for functional use - -b) non-current assets for sale - -C.7 Other changes - -D. Closing balance 34,644 29,984 34,644 29,984E. Designation at fair value 34,644 34,324 34,644 34,32493


Section 13Intangible fixed assets - Entry 13013.1 Intangible assets: breakdown by type of assetBankingInsuranceOtheAsset/Valuegroupcompanies companies31.12.2007 31.12.2006Limited Unlimited Limited Unlimited Limited Unlimited Limited Unlimited Limited Unlimitedduration duration duration duration duration duration duration duration duration durationA.1 Goodwill X 624,964 X X X 624,964 X 802,690A.1.1 pertaining to the banking group X 624,964 X X X 624,964 X 802,690A.1.2 pertaining to minority interest X - X X X - X -A.2 Other intangible assets 43,178 34 43,178 34 35,521 18A.2.1 Assets designated at cost: 43,178 34 43,178 34 35,521 18a) Internally generated intangible assets - - - - - -b) Other activities 43,178 34 43,178 34 35,521 18A.2.2 Assets designated at fair value: - - - - - -a) Internally generated intangible assets - - - -b) Other activities - - - -Total 43,178 624,998 43,178 624,998 35,521 802,70813.2.1 Intangible assets pertaining to the banking group: annual changesOther intangible assets:Other intangible assets:Goodwill Internally generated Other 31.12.2007LimiteddurationUnlimiteddurationLimiteddurationUnlimiteddurationA. Opening balance 802,690 132,927 44 935,661A.1 Reductions of total net values 97,406 26 97,432A.2 Net opening balance 802,690 35,521 18 838,229B. Increases 31,464 44 31,508B.1 Acquisitions 31,376 44 31,420B.2 Increases in internal intangible assets X -B.3 Write-backs X -B.4 Positive changes of fair value -- to shareholders' equity X -- to income statement X -B.5 Positive exchange differences -B.6 Other changes 88 88C. Decreases: 177,726 23,807 28 201,561C.1 Sales 738 738C.2 Value adjustments 18,096 28 18,124- Amortisation X 18,096 28 18,124- Write-downs -+ Shareholders' equity X -+ income statement -C.3 Negative changes of fair value -- to shareholders' equity X -- to income statement X -C.4 Transfers to non-current assets for 177,726 4,973 182,699C.5 Negative exchange differences -C.6 Other changes -D. Net closing balance 624,964 43,178 34 668,176D.1 Adjustments of total net values 112,084 54 112,138E. Gross closing balance 624,964 155,262 88 780,314F. Designation at cost 624,964 43,178 34 668,17694


Section 14Tax assets and liabilities - Item 140 under assets and Item 80 under liabilities14.1 Prepaid tax assets: breakdownBanking groupInsurancecompaniesOthercompanies31.12.2007IRES IRAP IRES IRAP IRES IRAP IRES IRAP31.12.2006Value adjustments on loans 313,730 - - - - - 313,730 - 404,533Allowances for risks and charges 84,187 - - - - - 84,187 - 97,374Tax losses 8,443 - - - - - 8,443 - -Titles 4,084 118 - - - - 4,084 118 102,663Other 8,097 641 - - 338 55 8,435 696 25,130Prepaid tax assets - - - - - - 418,879 814 629,700Deferred/Compensated tax liabilities -101,392 -226 - - - - -101,392 -226 -Total prepaid taxes 317,149 533 - - 338 55 317,487 588 629,70014.2 Deferred tax liabilities: breakdownBanking groupInsurancecompaniesOthercompanies31.12.2007IRES IRAP IRES IRAP IRES IRAP IRES IRAP31.12.2006Tangible fixed assets 16,718 2,235 - - - - 16,718 2,235 16,309Untangible fixed assets 82,179 9,523 - - - - 82,179 9,523 84,559Fund for severance pay 9,191 - - - - - 9,191 - 6,386Patrimonial capital gain 4,593 9 - - - - 4,593 9 11,024Titles 3,268 1,467 - - - - 3,268 1,467 14,665Other 999 530 - - - - 999 530 18,028Deferred tax liabilities 116,948 13,764 - - - - 116,948 13,764 150,971Prepaid/Compensated tax assets -101,392 -226 - - - - -101,392 -226 -Total deferred taxes 15,556 13,538 - - - - 15,556 13,538 150,97195


14.3 Changes in prepaid taxes (contra-item of income statement)BankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Initial amount 618,937 7,662 626,599 734,6412. Increases 96,248 96,248 58,9752.1 Prepaid taxes recognised in the period 93,313 93,313 58,972a) relating to previous periods 24 24 12,196b) due to changes in accounting policy - -c) write-backs - -d) other 93,289 93,289 46,7762.2 New taxes or increases in tax rates - -2.3 Other increases 2,935 2,935 33. Decreases 298,993 7,269 306,262 167,0173.1 Prepaid taxes cancelled in the period 192,619 89 192,708 151,889a) reversals 192,281 89 192,370 123,615b) write-downs for unrecoverability 338 338 28,274c) changes in accounting policy - - - - -3.2 Reductions in tax rates 64,407 64,407 -3.3 Other decreases 41,967 7,180 49,147 15,1284. Final amount 416,192 393 416,585 626,599Item 3.3 “Other decreases” includes the amount of € 138 thousand due to a reclassification of the same amount under item 2.3 “Other increases” of table14.6 – Assets. Consequently, the highlighted amount did not have any impact on the 2007 P&L.14.4 Changes in deferred taxes (contra-item of income statement)BankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Initial amount 136,902 136,902 121,9462. Increases 39,073 39,073 30,9722.1 Deferred taxes recognised in the period 39,073 39,073 30,890a) relating to previous periods 577 577 225b) due to changes in accounting policy 1,552 1,552 2,328c) other 36,944 36,944 28,3372.2 New taxes or increases in tax rates - -2.3 Other increases - 823. Decreases 49,231 49,231 16,0163.1 Deferred taxes cancelled in the period 19,968 19,968 9,882a) reversals 15,625 15,625 9,882b) due to changes in accounting policy - -c) other 4,343 4,343 -3.2 Reductions in tax rates 13,580 13,580 -3.3 Other decreases 15,683 15,683 6,1344. Final amount 126,744 126,744 136,902Item 2.3 “Other increases” of € 2,935 thousand is due to a reclassification of the same amount under item 3.3 “Other decreases” of table 14.5 – Assets.Consequently, the highlighted amount did not have any impact on the 2007 P&L.96


14.5 Changes in prepaid taxes (offset against shareholders' equity)BankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Initial amount 3,101 3,101 4,0222. Increases 3,595 3,595 2202.1 Prepaid taxes recognised in the period 456 456 220a) relating to previous periods 328 328 -b) due to changes in accounting policy - -c) other 128 128 2202.2 New taxes or increases in tax rates - -2.3 Other increases 3,139 3,139 -3. Decreases 3,588 3,588 1,1413.1 Prepaid taxes cancelled in the period 306 306 1,141a) reversals 306 306 1,141b) write-downs for unrecoverability - -c) due to changes in accounting policy - -3.2 Reductions in tax rates 38 38 -3.3 Other decreases 3,244 3,244 -4. Final amount 3,108 3,108 3,10114.6 Changes in deferred taxes (offset against shareholders' equity)BankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Initial amount 14,069 14,069 14,1952. Increases 7,046 7,046 7,6662.1 Deferred taxes recognised in the period 3,770 3,770 6,941a) relating to previous periods - -b) due to changes in accounting policy - -c) other 3,770 3,770 6,9412.2 New taxes or increases in tax rates - -2.3 Other increases 3,276 3,276 7253. Decreases 17,147 17,147 7,7923.1 Deferred taxes cancelled in the period 9,554 9,554 7,344a) reversals 9,478 9,478 7,344b) due to changes in accounting policy - -c) other 76 76 -3.2 Reductions in tax rates 40 40 -3.3 Other decreases 7,553 7,553 4484. Final amount 3,968 3,968 14,06997


Section 15Non current assets and groups of assets held for sale and associated liabilitiesItem 140 under assets and Item 90 under liabilities15.1 Non-current assets and groups of assets held for sale: breakdown by type of assetA. Single assetsBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.2006A.1 Investments - -A.2 Fixed assets - -A.3 Intangible assets - -A.4 Other non-current assets - -B. Groups of assets (operating units sold)Total A - -B. 1 Financial assets held for trading 126,859 126,859 -B. 2 Financial assets designated at fair value 33,705 33,705 -B. 3 Financial assets available for sale 291,962 291,962 -B. 4 Financial assets held to maturity 13,667 13,667 -B. 5 Loans to banks 403,726 403,726 -B. 6 Loans to customers 5,762,159 5,762,159 -B. 7 Investments - -B. 8 Fixed assets 53,966 53,966 -B. 9 Intangible assets 181,699 181,699 -B.10 Other activities 216.828 216.828 -C. Liabilities associated with single assets held for saleTotal B 7,084,571 7,084,571 -C.1 Debts and payables - -C.2 Securities - -C.3 Other liabilities - -Total C - -D. Liabilities associated with groups of assets held for sale - -D. 1 Due to banks 2,919,855 2,919,855 -D. 2 Due to customers 166,923 166,923 -D. 3 Securities issued 2,832,160 2,832,160 -D. 4 Trading financial liabilities 126,372 126,372 -D. 5 Financial liabilities designated at fair value - -D. 6 Provisions 11,422 11,422 -D. 7 Other liabilities 233,441 233,441 -Total D 6,290,173 6,290,173 -98


Section 16Other assets - Entry 16016.1 Other assets: breakdown31.12.2007 31.12.2006Revenue Office advances on employee severance pay 9,343 12,858Tax assets held with the Revenue Office 152,400 151,886Tax advances 1,398 4,060Withholding tax paid - 142Premiums paid on stock options 4,833 4,535Third party cheques 1,069 12,025Securities portfolio former BNA internal fund 27,120 23,684Restructuring costs of third-party branches 31,075 28,469Accrued income and prepayments 162,910 125,692Grants due on facilitated-rate transactions 7,680 8,354Inventories for fixed assets in progress and finished goods 23,995 24,106Interest due from SBF 26,302 25,332Commissions due 40,230 34,141Invoices due 4,063 310Branch-specific entries 2,353 54,312Outstanding bills and checks 83 13,332Transitory transactions on securities 18,974 34,344Sundry items being processed 29,922 40,959Suspended direct taxes 1,636 1,661Substitute tax on goodwill 81,743 91,992Credit - debit cards to be charged 43,353 25,490Bank cheques and drafts being processed 354,401 343,262Residual items 217,606 583,653Total 1,242,489 1,644,59999


LIABILITIESSection 1Due to banks - Entry 101.1 Due to banks: breakdown by productType of transaction/ValueBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Due to central banks - - - - -2. Due to banks 13,804,968 - - 13,804,968 11,758,0732.1 Current accounts and demand deposits 56,991 - - 56,991 157,6672.2 Time deposits 5,439,213 - - 5,439,213 6,128,3572.3 Loans 8,056,612 - - 8,056,612 5,715,5712.3.1 Financial lease - - - - -2.3.2 Other 8,056,612 - - 8,056,612 5,457,0922.4 Payables for commitments to reacquire own asset instruments - - - - -2.5 Liabilities in respect of assets sold and not written off from the accounts 252,152 - - 252,152 14,9572.5.1 Passive repurchase agreements 252,152 - - 252,152 14,9572.5.2 Other - - - - -2.6 Other payables - - - - -Total 13,804,968 - - 13,804,968 11,758,073Fair value 13,804,968 - - 13,804,968 11,758,2001.2 Due to banks: subordinated payablesType of transaction/ValueMaturity dateInterest rate (nominalannual right applicable asat 31.12.2006)31.12.2007"ABN AMRO Bank N.V." floating rate subordinated lower tier II loan 10.10.2016 5.047% 400,000100


Section 2Due to customers - Entry 202.1 Due to customers: breakdown by productType of transaction/ValueBankingGroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Current accounts and demand deposits 16,523,863 - - 16,523,863 17,148,4612. Term deposits 393,737 - - 393,737 451,7343. Deposits in administration 11,439 - - 11,439 13,9804. Loans 2,821,355 - - 2,821,355 2,095,6354.1 Financial lease - - - - -4.2 Other 2,821,355 - - 2,821,355 2,095,6355. Payables for commitments to reacquire own asset instruments - - - - -6. Liabilities in respect of assets sold and not written off from the accounts 60,148 - - 60,148 59,8896.1 Passive repurchase agreements 60,148 - - 60,148 59,8896.2 Other - - - - -7. Other debts - - - - -Total 19,810,542 - - 19,810,542 19,769,699Fair value 19,810,542 - - 19,810,542 19,769,699101


Section 3Securities issued - Entry 303.1 Securities issued: breakdown by productType of security/ValueBankingGroupBookvalueFairvalueInsurancecompaniesBookvalueFairvalueOthercompaniesBookvalueFairvalue31.12.2007 31.12.2006A. Listed securities - - - - - - - - 420,057 420,2441. Bonds - - - - - - - - 420,057 420,2441.1 Structured - - - - - - - - 263,244 263,2441.2 Other - - - - - - - - 156,813 157,0002. Other securities - - - - - - - - - -2.1 Structured - - - - - - - - - -2.2 Other - - - - - - - - - -B. Non-listed securities 5,329,387 5,123,831 - - - - 5,329,387 5,123,831 10,121,951 10,150,0841. Bonds 4,926,768 4,721,212 - - - - 4,926,768 4,721,212 9,576,736 9,604,8691.1 Structured 55,557 55,557 - - - - 55,557 55,557 1,792,030 1,788,2001.2 Other 4,871,211 4,665,655 - - - - 4,871,211 4,665,655 7,784,706 7,816,6692. Other securities 402,619 402,619 - - - - 402,619 402,619 545,215 545,2152.1 Structured - - - - - - - - - -2.2 Other 402,619 402,619 - - - - 402,619 402,619 545,215 545,215Total 5,329,387 5,123,831 - - - - 5,329,387 5,123,831 10,542,008 10,570,328BookvalueFairvalueBookvalueFairvalue3.2 Detail of entry 30 "Securities issued": subordinated securitiesLoanAmount inoriginalcurrency(million)Book value31/12/06(€/1000)Issue dateMaturitydateInterestrateBook value31/12/07€/1000Preferred securities 1st tranche (a) Euro 80 80,000 21/12/2000 (b) Eur. 3 m.+3,75 80,000Preferred securities 2nd tranche (a) Euro 220 220,000 27/06/2001 (b) Eur. 3 m.+3,10 220,000Hybrid subordinated convertible loan 1335640 Lire 1,700,990 43,339 01/07/1999 01/07/2009 1% annuo 44,210Subordinated loan code 3381500 Euro 75 75,571 01/11/2002 01/11/2012 Eur. 3 m. 75,732Subordinated loan code 3385610 Euro 125 125,411 01/12/2002 01/12/2007 Eur. 3 m.+0,40 -Subordinated loan code 3450380 Euro 200 203,273 31/03/2003 31/03/2008 Eur. 3 m.+0,10 199,971450 453,507 23/04/2003 24/04/2013 454,509Total 1,201,101 - - - 1,074,422(a) The remuneration shown for preferred securities is that in force until 21 December 2010 and 27 June 2011. The spread will subsequently beincreased by 50% on the same refernce base.(b) Notes are unredeemable. Banca Antonveneta will only exercise the power to totally or partially redeem notes after 21 st December 2010 and 27 thJune 2011, respectively.(c) Coupons until 30/04/2008 at Euribor 3 m. increased by 0.90, coupons following and until maturity at Euribor 3 m, increased by 1.50%.Upon the authorisation of the Bank of Italy, the Bank has the right to redeem loans past which are past due for over 18 months following their dateof issue, in advance.The subordination clause states that in the case of Bank liquidation, redemption will be subordinated to the repayment of all other creditors notsimilarly subordinated.102


3.3 Securities issued: securities used for specific hedging31.12.2007 31.12.20061. Securities with specific hedging of fair value: 1,229,826 5,319,516a) interest rate risk 1,229,826 5,248,760b) exchange rate risk - -c) more risks - 70,7562. Securities with specific hedging of cash flow: - -a) interest rate risk - -b) exchange rate risk - -c) other - -103


Section 4Financial liabilities held for trading - Entry 404.1 Trading financial liabilities: breakdown by productBanking Group Insurance companies Other companies 31.12.2007 31.12.2006Type of transaction/ValueNVFV FV FV FV FVFV* NVFV* NVFV* NVFV* NVL NLL NLL NLL NLL NLFV*A. Cash liabilities - - - - - - - - - - - - - - - - - - - -1. Due to banks 249 2,591 - - - - - - - - - - 249 2,591 - - 15,215 18,302 - -2. Due to customers 6,880 28,677 - - - - - - - - - - 6,880 28,677 - - - - - -3. Debt securities - - - - - - - - - - - - - - - - - - - -3.1 Bonds - - - - - - - - - - - - - - - - - - - -3.1.1 Structured - - - X - - - X - - - X - - - X - - - X3.1.2 Other - - - X - - - X - - - X - - - X - - - X3.2 Other securities - - - - - - - - - - - - - - - - - - - -3.2.1 Structured - - - X - - - X - - - X - - - X - - - X3.2.2 Other - - - X - - - X - - - X - - - X - - - XTotal A 7,129 31,268 - - - - - - - - - - 7,129 31,268 - - 15,215 18,302 - -B. Derivative instruments - - - - - - - - - - - - - - - - - - - -1. Financial derivatives - 61,784 190,356 - - - - - - - - - - 61,784 190,356 - - 42,779 282,501 -1.1 Trading X 61,784 188,625 X X - - X X - - X X 61,784 188,625 X X 42,779 270,543 X1.2 Connected with the fair value option X - 1,192 X X - - X X - - X X - 1,192 X X - 4,869 X1.3 Other X - 539 X X - - X X - - X X - 539 X X - 7,089 X2. Credit Derivatives - - - - - - - - - - - - - - - - - - - -2.1 Trading X - - X X - - X X - - X X - - X X - - X2.2 Connected with the fair value option X - - X X - - X X - - X X - - X X - - X2.3 Other X - - X X - - X X - - X X - - X X - - XTotal B X 61,784 190,356 X X - - X X - - X X 61,784 190,356 X X 42,779 282,501 XTotal (A+B) X 93,052 190,356 X X - - X X - - X X 93,052 190,356 X X 61,081 282,501 XFV = fair valueFV* = fair value, calculated excluding changes in value due to change in issuer's creditworthiness since the date of issue.NV = nominal or notional valueL = listedNL = non-listed .104


4.4.1 Trading financial liabilities pertaining the the banking group: derivative instrumentsType of derivative/Underlying assetInterestratesForeigncurrenciesand goldEquitysecuritiesReceivables Other 31.12.2007 31.12.2006A) LISTED DERIVATIVES - - - - - - -1. Financial derivatives: 36,945 - 24,839 - - 61,784 42,779• With equity swaps - - 8,883 - - 8,883 722- Options issued - - 8,869 - - 8,869 722- Other derivatives - - 14 - - 14 -• Without equity swaps 36,945 - 15,956 - - 52,901 42,057- Options issued 36,945 - 15,956 - - 52,901 42,057- Other derivatives - - - - - - -2. Credit Derivatives: - - - - - - -• With equity swaps - - - - - - -• Without equity swaps - - - - - - -Total A 36,945 - 24,839 - - 61,784 42,779B) NON-LISTED DERIVATIVES - - - - - - -1. Financial derivatives: 147,239 14,072 28,399 - 646 190,356 282,501• With equity swaps - - - - - - 979- Options issued - - - - - - 979- Other derivatives - - - - - - -• Without equity swaps 147,239 14,072 28,399 - 646 190,356 281,522- Options issued 51,257 14,072 28,399 - 646 94,374 175,226- Other derivatives 95,982 - - - - 95,982 106,2962. Credit Derivatives: - - - - - - -• With equity swaps - - - - - - -• Without equity swaps - - - - - - -Total B 147,239 14,072 28,399 - 646 190,356 282,501Total (A+B) 184,184 14,072 53,238 - 646 252,140 325,2804.5 Trading financial cash liabilities (not including “technical overdrafts” ): yearly variationsDue to Banks Due to customers Securities issued 31.12.2007A. Opening bilance 18,302 - - 18,302B. Increases 368,803 504,535 - 873,338B1. Issuer - - - -B2. Sales 358,911 502,501 - 861,412B3. Positive fair value changes 28 - - 28B4. Other changes 9,864 2,034 - 11,898C. Diminuzioni 384,514 475,858 - 860,372C1. Acquisitions 384,123 469,703 - 853,826C2. Reimbursments - - - -C3. Negative fair value changes - - - -C4. Other changes 391 6,155 - 6,546D. Net closing balance 2,591 28,677 - 31,268105


Section 6Hedging derivative contracts - Entry 606.1.1 Hedging derivative contracts pertaining to the banking group: breakdown by type of contract and underlyingassetsType of derivative/underlying assetInterestratesCurrenciesand goldEquitysecuritiesReceivables Other 31.12.2007A) LISTED DERIVATIVES - - - - - -1. Financial derivatives: - - - - - -• With equity swaps - - - - - -- Options issued - - - - - -- Other derivatives - - - - - -• Without equity swaps - - - - - -- Options issued - - - - - -- Other derivatives - - - - - -2. Credit Derivatives: - - - - - -• With equity swaps - - - - - -• Without equity swaps - - - - - -Total A - - - - - -B) NON-LISTED DERIVATIVES - - - - - -1. Financial derivatives: 12,753 - - - - 12,753• With equity swaps - - - - - -- Options issued - - - - - -- Other derivatives - - - - - -• Without equity swaps 12,753 - - - - 12,753- Options issued 31 - - - - 31- Other derivatives 12,722 - - - - 12,7222. Credit Derivatives: - - - - - -• With equity swaps - - - - - -• Without equity swaps - - - - - -Total B 12,753 - - - - 12,75331.12.2007 (A+B) 12,753 - - - - 12,75331.12.2006 (A+B) 168,467 - 117 - - 168,5846.2.1 Hedging derivative contracts pertaining to the banking group: breakdown by portfolio and type of hedgingFair value hedgesCash flow hedgesTransaction/Type of hedgingrate riskExchangerate riskSpecificcredit risk price risk more risksGeneric Specific Generic1. Financial assets available for sale - - - - - X - X2. Receivables - - - - - - - -3. Financial assets held to maturity X - - X - X - X4. Portfolio X X X X X - X -Total assets - - - - - - - -1. Financial liabilities 12,753 - - - - X - X2. Portfolio X X X X X - X -Total liabilities 12,753 - - - - - - -106


Section 8Tax liabilities - Entry 80See Section 14 under assetsSection 9Associated liabilities and assets held for sale - Entry 9See Section 15 under assetsSection 10Other liabilities - Entry 10010.1 Other liabilities: breakdown31.12.2007 31.12.2006Due to Revenue Office for third parties 63,177 50,165Amounts available to customers 38,304 45,344Payroll duties and contributions 15,423 25,648Wire transfers to be settled 8,019 19,071Transitory entries on securities 32,286 30,373Security deposits and mortgage credit 27 27Invoices outstanding 1,571 1,074Trade payables 56,005 61,010Transitory funds Single taxation regime 1,817 2,603Suspended direct taxes 94 94Branch-specific entries 1,733 4,612Voluntary employee departure incentives 32,136 55,624Special employee management social security contributions 23,052 22,212Sundry items being processed 600,582 738,968prepayments and deferred income 164,520 160,291Residual items 129,053 160,576Total 1,167,799 1,377,692107


Section 11Provision for staff severance pay - Entry 11011.1 Provision for staff severance pay: annual changesBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.2006A. Opening balance 292,046 - 36 292,082 305,594B. Increases 21,083 - 7 21,090 30,502B.1 Allowances for the period 20,374 - 7 20,381 30,346B.2 Other increase changes 709 - - 709 156C. Decreases 70,224 - 8 70,232 44,014C.1 Liquidations carried out 34,761 - - 34,761 38,189C.2 Other decrease changes 35,463 - 8 35,471 5,825D. Closing balance 242,905 - 35 242,940 292,082Staff Severance Indemnity (TFR)Severance indemnities are governed by art. 2120 of the Italian Civil Code. Employees have the right to exercise these rights when employment isterminated for whatever reason. In the International Accounting Standards issued by the IASB, severance indemnities are covered under paragraphs 132and 143 of IAS 19, which govern the presentation of the indemnities in the financial statements and the calculation of severance pay indemnities. Inparticular, paragraph 140 explicitly states the requirement of carrying out the valuations with consideration taken of the time when the services will berendered and determining their corresponding average present value. The actuarial valuation of severance indemnities is carried out according to the“defined benefit” method, using the “projected unit credit method” as set forth in paragraphs 64 to 66 of IAS 19. This method consists in carrying outvaluations that express the average present value of the retirement benefit obligations accrued on the basis of the service the employee has rendered up tothe time the valuation is performed.The impact of the amendment and curtailment accountingAs from 1st January 2007, the impact on the value of the defined benefit obligation produced by rule amendments must be considered by accounting itseffects according to the dispositions of IAS 19.The effects deriving from the becoming effective of the amendment consist, for Banca Antonveneta SpA, Interbanca SpA, Antonveneta Immobiliare SpA,AAA Bank and AAA Sgr SpA, in a curtailment of Severance Indemnity Fund. According to what provided by § 111 of IAS 19, such a curtailment must beimmediately taken into account in the P&L of the respective companies.108


The actuarial assumptions used in the valuations.Insofar as the selection of the actuarial assumptions, IAS 19 requires that the assumptions adopted be objective, that is neither imprudentnor excessively prudent, and compatible between themselves, that is such as to reflect the economic relations among the variousvariables upon which the technical evaluation is based.With proper reference to the aforementioned evaluation methods, the following assumptions have therefore been adopted concerning theactuarial evaluation as at 31 December 2007:Demographic fundamentalsThese consist of the probabilities and conditions that could entail a change in assets, such as:- death, to this end, the most recent mortality table available was used as a reference, This is ISTAT 2000;- total and/or partial disability, the frequency of disability as reported by the INPS is used as a reference;- retirement due to old age and long service. The calculation of the probability of termination due to retirement was carried outwith account taken of the rules set by the applicable law. Currently, the age set for retirement is 65 fo r men and 60 for women. Thelong service requirements, as set forth by the applicable regulations, are: 57 years of age with 35 years of social insurancecontributions, that is, independently of age, 38 year of contributions for 2004 and 2005, 39 years of contribution for 2006 and 2007and 40 years from 2008 onwards. The so-called “voluntary redundancy” opportunities, which regulate the beginning of the retirementpension payments, were also taken into account.The following assumptions were also taken into consideration:• the probability of early exercise, i.e., the probability that the employee will exercise the right to receive a part of the accruedseverance indemnity earlier. It should be noted that, despite the fact that the conditions under which article 2120 allows such a rightto be exercised by the employee are very limited, the Parent Company has provided for some ameliorative conditions at the collectiveagreement level. A distribution of the frequency of early exercise of the severance indemnity and a distribution of the accruedseverance indemnity have been constructed on the basis of the data provided. Given the better conditions offered by thesupplementary agreement, the early exercise event is influenced by the circumstance of having already received an advance. Distinctfrequencies have therefore been calculated: in the case of previous exercise the frequency is 4.7% while in the other case it is 3.7%.Distinct distributions have been calculated for the advance severance indemnity as well:% PAID INADVANCENOPREVIOUSADVANCEWITHPREVIOUSADVANCE10% 1.6% 4.4%20% 1.6% 13.8%30% 6.8% 13.8%40% 4.7% 14.5%50% 2.6% 15.7%60% 18.4% 32.1%70% 64.2% 5.7%• the turn-over rates, as the events concerning the settlement by the company of the severance indemnities accrues by theemployee and the maturing of the loyalty bonus, where applicable. The turn-over rates used, which are separated by gender, ageand years of service with the company, are shown in the table below:109


AGESLENGTH OF YEARS SERVEDUP TO 2 3 - 5 6 - 10 11 - 20 over 20M A L E SUp to 20 0.000 0.000 0.000 0.000 0.00021 - 30 0.012 0.007 0.000 0.000 0.00031 - 40 0.000 0.010 0.017 0.013 0.00041 - 50 0.000 0.000 0.000 0.003 0.00851 - 60 0.000 0.000 0.000 0.000 0.008over 60 0.000 0.000 0.000 0.067 0.008F E M A L E SUp to 20 0.000 0.000 0.000 0.000 0.00021 - 30 0.005 0.000 0.000 0.000 0.00031 - 40 0.010 0.000 0.011 0.008 0.00041 - 50 0.000 0.000 0.000 0.004 0.01551 - 60 0.000 0.000 0.000 0.000 0.000over 60 0.000 0.000 0.000 0.000 0.000a zionon anticipazione• overall contribution of the individual length of service. As it is no possibile to acquire the information per employee on the dateof registration with the Compulsory General Insurance system, which is necessary in order to determine the overall contribution of theindividual length of service, we have estimated the length of service by age and gender, on the basis of our experience:CLASSES OF LENGTH OF SERVICEAGESWITHIN THE COMPANY0 - 2 3 - 5 6 - 10 11 - 20 over 20M A L E SUp to 21 0.0 0.0 0.0 0.0 0.021 - 30 1.0 1.0 1.0 1.0 0.031 - 40 5.0 4.0 3.0 1.5 0.041 - 50 21.0 16.0 14.0 5.0 2.051 - 55 25.0 24.0 20.0 15.0 4.0over 56 34.0 27.0 22.0 16.0 5.0F E M A L E SUp to 20 0.0 0.0 0.0 0.0 0.021 - 30 1.0 1.0 0.5 0.5 0.031 - 40 4.0 3.0 3.0 1.0 0.041 - 50 19.0 17.0 12.0 4.0 3.051 - 55 20.0 18.0 13.0 5.0 4.0over 56 28.0 22.0 18.0 8.0 5.0Financial and economic basesPlease refer to paragraph 72 of IAS 19• rates of inflation: These are set according to the Budget and Planning Report for 2008-2007 (28 th June 2007):YEARRATE2008 0.0172009 AND ONWARDS 0.015110


• discount rate. The financial basis used for the actuarial evaluations as at 31 st December 2007 has been developed an the basis ofswap rates with appropriate maturities, as at 27 th December 2007. The rates have been used to discount the short-term paymentsand, for longer terms, the discount rate was estimated by extrapolating the current market rates along the yield curve in question.SPOTRATES28.12.2006 28.12.20071y 4.0220 4.78602yr 4.1175 4.60603yr 4.1125 4.56554yr 4.1230 4.57735yr 4.1200 4.59986yr 4.1260 4.62237yr 4.1365 4.64508yr 4.1505 4.69409yr 4.1665 4.739410yr 4.1880 4.774412yr 4.2210 4.861515yr 4.2735 4.950920yr 4.2970 5.016225yr 4.2955 5.001730yr 4.2755 4.9433• salary levels (applied for the actuarial evaluation of Antonveneta Immobiliare SpA) have been forecasted on two levels:a) a static level, which is dependent upon the remuneration in relation to the increases in length of service, changes inqualifications, etc.;b) a dynamic level, which takes into consideration the changes in remuneration deriving from inflation and productivityincreases.Based on the overall data provided, remuneration levels by qualification(employees, executives and directors) andlength of service with the company were created. For the directors, there is no trend along which a remuneration levelcan be constructed: a rate of increase of 1% was therefore assumed, independently of the length of service. The changein the salary levels involves both compensation for severance indemnities and for the FPLD (Workers’ Pension Fund),using the same rate of increase. For the latter, assumptions regarding the increase in remuneration in real terms weremade (that is, differentiated insofar as the inflation dynamic), of 1%. Furthermore, the probability of moving from theemployee to the executive level was calculated separately by gender and l ength of service.111


Section 12Allowances for risks and charges - Entry 12012.1 Provisions for risks and charges: breakdownItems/ValueBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Company pension funds 39,675 - - 39,675 42,3782. Other allowances for risks and charges 298,710 - 865 299,575 233,2122.1 litigation 196,027 - - 196,027 201,8012.2 personnel fees 50,791 - - 50,791 6002.3 other 51,892 - 865 52,757 30,811Total 338,385 - 865 339,250 275,590The consistency of the pension funds based on the actuarial report is fully sufficient insofar as the obligations to date.Staff expenses includes the allowance for the 2007 early retirement campaign. Under item “Other” there is also the allowance relating to “Bell” transactionfor € 14.3 million.12.2 Provisions for risks and charges: annual changesBankinggroupPensionfundsotherprovisionsInsurancecompaniesPensionfundsotherprovisionsOthercompaniesPensionfundsotherprovisions31.12.2007PensionfundsotherprovisionsA. Opening balance 42,378 231,845 - - - 1,367 42,378 233,212B. Increases 1,702 98,605 - - - - 1,702 98,605B.1 Allowances for the period 210 94,443 - - - - 210 94,443B.2 Changes due to passing of time 397 4,162 - - - - 397 4,162B.3 Changes due to changes in discount rate - - - - - - - -B.4 Other increase changes 1,095 - - - - - 1,095 -C. Decreases 4,405 31,740 - - - 502 4,405 32,242C.1 Utilization during the period 3,337 25,160 - - - 407 3,337 25,567C.2 Changes due to changes in discount rate - - - - - - - -C.3 Other decrease changes 1,068 6,580 - - - 95 1,068 6,675D. Closing balance 39,675 298,710 - - - 865 39,675 299,57512.3.1 Integrated pension funds (FIP) - (ex-Banca Popolare Veneta employees)Fund as at 31.12.2006 2,245During the period disbursements were made: -relating to the 1956 agreement, to 14 beneficiaries for 58relating to the 1982 agreement, to 22 beneficiaries for 233for a total of: 291At the end of the year the fund was topped up with a contribution by the Bank, to cover the mathematicalreserve for: 60Funds at 31.12.2007 2,014112


12.3.2 Personnel pension fund (ex-Banca Nazionale dell’Agricoltura employees)Fund as at 31.12.2006 29,769Increases: 733Interest on cash and cash equivalents 2005 23Income from property (outstanding) 20Interest and profit on bonds and government bonds 690Various creditors -Decreases: 1,750Pensions granted 1,584Contributions paid to un-entitled beneficiaries -Contributions transferred to FAP BAPV and other funds -Settlement of principal due to entitled beneficiaries 53Municipal tax on properties -Substitute tax law no. 335 of 08.08.1995 113Indirect taxation and charges -Consulting fees -Costs for Supervisory Body -Total 28,752Interest accruals on own securities 362Fund as at 31.12.2007 29,114The fund was so investedProperty -Securities 27,120Interest accruals on securities 362Total of invested securities 27,482Various debtors -Various creditors -Cash and cash equivalents at the Institute 1,632TOTAL 29,11412.3.3 Loyalty bonus fundFund as at 31.12.2006 10,364Increases for the period 885Decreases for the period 2,702Fund as at 31.12.2007 8,547The loyalty bonus which is governed by the supplementary company agreements, is a right accruing to employees when they reach the length of servicewhich has been set.As this falls under the category of long term services, it is covered by IAS 19 in paragraphs 126-131 and is regulated in a simplified manner compared tothe post employment benefits. Despite this major advantage. The loyalty bonus is calculated using the same method that is used for defined benefits,through application of the projected unit credit method.12.4 Other provisions for risks and charges20072006OpeningbalanceUtilizationsNetallocationsFinalbalanceFund for country risk guarantees and commitments 19 - 4 23 19Fund for claw back actions 105,551 16,779 8,131 96,903 105,551Fund for litigation, operating risks and various disputes 98,331 8,931 11,261 100,661 98,331Fund for various future charges 29,311 1,135 73,812 101,988 29,311Total provisions for risks and charges – other provisions 233,212 26,845 93,208 299,575 233,212113


Section 15Group equity – Items 140, 160, 170, 180, 190, 200 and 22015.1 Group equity: breakdownItems/Value 31.12.2007 31.12.20061. Share capital 926,266 926,2662. Issue premiums 2,188,152 2,188,1523. Reserves 189,706 -218,2434. (Own shares) - -a) parent bank - -b) holding company - -5. Valuation reserve 65,766 203,0466. Equity instruments 8,551 8,5517. Income (Loss) for the year pertaining to group -5,890 408,089Total 3,372,551 3,515,86115.3 Capital - Number of shares: annual changesEntry/Type Ordinary OtherA. SHARES ISSUED: OPENING BALANCE 308,755,499 -A.1 Own shares (-) - -A.2 Opening balance of existing shares 308,755,499 -- fully paid-up 308,755,499 -- partially paid-up - -B. INCREASES - -B.1 New issues - -• paid issues: - -- business combination operations - -- bond conversions - -- exercising of warrant - -- other - -• free issues: - -- in favour of employees - -- in favour of directors - -- other - -B.2 Sale of own shares - -B.3 Other changes - -C. DECREASES - -C.1 Cancellation - -C.2 Acquisition of own shares - -C.3 Business disposal operations - -C.4 Other changes - -D. SHARES ISSUED: CLOSING BALANCE 308,755,499 -D.1 Treasury stock (+) - -D.2 Existing shares at the end of the period 308,755,499 -- fully paid-up 308,755,499 -- partially paid-up - -114


15.5 Income reserves: other information31.12.2007Legal reserve 185,253Reserves in bylaws - extraordinary 64,682Reserve for own shares 51,646FTA reserves -481,578Other reserves 369,703Total profit reserve 189,70615.6 Revaluation reserves: breakdownEntries/ElementsBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Financial assets available for sale (a) (d) 20,452 - -24,271 -3,819 133,2732. Tangible fixed assets - - - - -3. Intangible fixed assets - - - - -4. Foreign investment hedges - - - - -5. Cash flow hedges (b) -544 - - -544 -3566. Exchange differences - - - - -7. Non-current assets for sale - - - - -8. Special revaluation laws (d) 70,129 - - 70,129 70,129Total 90,037 - -24,271 65,766 203,046Banking group includes Interbanca for sale:(a) for € -6,017 thousand(b) for € -544,000 thousand(c) for € 14,473 thousand(d) Other companies includes Bios Interbanca for sale for € -20,957 thousand15.7.1 Revaluation reserves: annual changes pertaining to the banking groupFinancialassetsavailablefor saleTangiblefixedassetsIntangiblefixed assetsForeigninvestmenthedgesCashflowhedgesExchangedifferencesNoncurrentassets forsaleSpecialrevaluationlawsA. Opening balance 136,872 - - - -356 - - 70,129B. Increases 56,033 - - - 580 - - -B.1 Increases in fair value 36,110 - - - 541 - - -B.2 Other changes 19,923 - - - 39 - - -C. Decreases 172,453 - - - 768 - - -C.1 Reductions in fair value 109,143 - - - 768 - - -C.2 Other changes 63,310 - - - - - - -D. Closing balance 20,452 - - - -544 - - 70,129115


15.7.3. Revaluation reserves: annual changes pertaining to other companiesFinancialassetsavailable forsaleTangiblefixedassetsIntangiblefixed assetsForeigninvestmenthedgesCashflowhedgesExchangedifferencesNoncurrentassets forsaleSpecialrevaluationlawsA. Opening balance -3,599 - - - - - - -B. Increases - - - - - - - -B.1 Increases in fair value - - - - - - - -B.2 Other changes - - - - - - - -C. Decreases 20,672 - - - - - - -C.1 Reductions in fair value 17,358 - - - - - - -C.2 Other changes 3,314 - - - - - - -D. Closing balance -24,271 - - - - - - -15.8 Revaluation reserves of financial assets available for sale: breakdownAsset/ValueBankinggroupPositive Negativereserve reserveInsurancecompaniesNegativereserveOthercompaniesNegativereserve31.12.2007 31.12.2006Positive PositivePositive Negative Positive Negativereserve reservereserve reserve reserve reserve1. Debt securities 3,614 2,764 - - - - 3,614 2,764 11,773 1,2132. Equity securities 39,677 19,921 - - - 24,271 39,677 44,192 137,254 13,5143. Interests in collective investment undertakings - 154 - - - - - 154 35 1,0624. Loans - - - - - - - - - -Total 43,291 22,839 - - - 24,271 43,291 47,110 149,062 15,78915.9.1 Revaluation reserves of financial assets available for sale pertaining to the banking group: annual changesDebt securities Equity securitiesInterests incollectiveinvestmentLoansundertakings1. Opening balance 10.560 127.339 -1.027 -2. Positive changes 7.921 46.707 947 -2.1 Increases in fair value 2.944 33.166 - -2.2 Reversal to income statement of negative reserves 1 2.030 930 -- from impairment - 726 - -- from disposal 1 1.304 930 -2.3 Other changes 4.976 11.511 17 -3. Negative changes 17.631 154.290 74 -3.1 Reductions in fair value 6.463 102.658 22 -3.2 Reversal to income statement of positive reserves: -- from disposal 10.370 49.152 52 -3.3 Other changes 798 2.480 - -4. Closing balance 850 19.756 -154 -15.9.3 Revaluation reserves of financial assets available for sale pertaining to other companies: annual changesDebt securities Equity securitiesInterests incollectiveinvestmentLoansundertakings1. Opening balance - -3,599 - -2. Positive changes - - - -2.1 Increases in fair value - - - -2.2 Reversal to income statement of negative reserves - - - -- from impairment - - - -- from disposal - - - -2.3 Other changes - - - -3. Negative changes - 20,672 - -3.1 Reductions in fair value - 17,358 - -3.2 Reversal to income statement of positive reserves: - - - -- from disposal - - - -3.3 Other changes - 3,314 - -4. Closing balance - -24,271 - -116


Section 16Minority interests – Entry 21016.1 Shareholders' equity pertaining to minority interests: breakdownItems/ValueBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Share capital 22,469 - 7,158 29,627 29,6432. Issue premium 18 - 9,354 9,372 9,3723. Reserves 17,180 - -13,973 3,207 -2,2414. (Own shares) - - - - -5. Valuation reserve - - -4,651 -4,651 -7966. Equity instruments - - - - -7. Third party profit (loss) for the year 1,968 - -227 1,741 5,292Total 41,635 - -2,339 39,296 41,27016.2 Revaluation reserves: breakdownEntries/ElementsBanking groupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Financial assets available for sale (a) - - -4,651 -4,651 -7962. Tangible fixed assets - - - - -3. Intangible fixed assets - - - - -4. Foreign investment hedges - - - - -5. Cash flow hedges - - - - -6. Exchange differences - - - - -7. Non-current assets for sale - - - - -8. Special revaluation laws - - - - -Total - - -4,651 -4,651 -796(a) Refer to BIOS Interbanca for sale16.4 Revaluation reserves of financial assets available for sale: breakdownAsset/ValueBankinggroupPositiveReserveNegativeReserveInsurance companiesPositiveReserveNegativeReserveOthercompaniesPositiveReserveNegativeReserve31.12.2007PositiveReserveNegativeReserve1. Debt securities - - - - - - - -2. Equity securities - - - - - 4,651 - 4,6513. Interests in collective investment undertakings - - - - - - - -4. Loans - - - - - - - -Total - - - - - 4,651 - 4,651117


16.5.1 Revaluation reserve pertaining to the banking group: annual changesFinancialassetsavailablefor saleTangiblefixedassetsIntangiblefixed assetsForeigninvestmenthedgesCashflowhedgesExchangedifferencesNoncurrentassets forsaleSpecialrevaluationlawsA. Opening balance 3 - - - - - - -B. Increases - - - - - - - -B.1 Increases in fair value - - - - - - - XB.2 Other changes - - - - - - - -C. Decreases 3 - - - - - - -C.1 Reductions in fair value - - - - - - - XC.2 Other changes 3 - - - - - - -D. Closing balance - - - - - - - -16.5.3 Revaluation reserve pertaining to other companies: annual changesFinancialassetsavailablefor saleTangiblefixedassetsIntangiblefixed assetsForeigninvestmenthedgesCashflowhedgesExchangedifferencesNon-currentassets forsaleSpecialrevaluationlawsA. Opening balance -799 - - - - - - -B. Increases - - - - - - - -B.1 Increases in fair value - - - - - - - XB.2 Other changes - - - - - - - -C. Decreases 3,852 - - - - - - -C.1 Reductions in fair value 3,852 - - - - - - XC.2 Other changes - - - - - - - -D. Closing balance -4,651 - - - - - - -118


OTHER INFORMATION1. Guarantees and commitmentsTransactionsBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061) Guarantees of a financial nature 809,984 - - 809,984 1,368,342a) Banks 21,517 - - 21,517 11,544b) Customer 788,467 - - 788,467 1,356,7982) Guarantees of a commercial nature 2,159,273 - - 2,159,273 2,084,835a) Banks 21,696 - - 21,696 37,724b) Customer 2,137,577 - - 2,137,577 2,047,1113) Irrevocable commitments to grant finance 1,554,993 - - 1,554,993 2,500,509a) Banks 329,986 - - 329,986 339,803i) certain utilization 289,453 - - 289,453 296,495ii) uncertain utilization 40,533 - - 40,533 43,308b) Customer 1,225,007 - - 1,225,007 2,160,706i) certain utilization 99,973 - - 99,973 1,306,069ii) uncertain utilization 1,125,034 - - 1,125,034 854,6374) Commitments underlying credit derivatives: - - - - -Protection sellers - - - - -5) Assets lodged as security for third-party bonds - - - - -6) Other commitments 135,686 - - 135,686 96,641Total 4,659,936 - - 4,659,936 6,050,3272. Assets lodged as security for own liabilities and commitmentsPortfolios 31.12.2007 31.12.20061. Financial assets held for trading - -2. Financial assets designated at fair value - -3. Financial assets available for sale - 32,7004. Financial assets held to maturity - -5. Loans to banks - 375,8026. Loans to customers - 8097. Tangible fixed assets - -5. Management and brokerage on behalf of third partiesType of service 31.12.20071. Trading of financial instruments on behalf of third parties 1,734,896a) Acquisitions 903,5101. Settled 903,5102. Non-settled -b) Sales 831,3861. Settled 831,3862. Non-settled -2. Assets under management 1,072,401a) individual 1,072,401b) collective -3. Security custody and administration 36,342,710a) third-party securities on deposit: connected with activity of Custodian Bank (excluding assets under management) 2,167,7681. securities issued by companies included in the consolidation -2. other securities 2,167,768b) third-party securities deposited (excluding assets under management): other 32,627,6681. securities issued by companies included in the consolidation 4,215,0432. other securities 28,412,625c) third-party securities deposited at third parties 27,221,994d) own securities deposited at third parties 1,547,2744. Other transactions -119


120


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122


Section 1Interest - Entries 10 and 201.1.1 Interest income and similar items pertaining to the banking group: breakdown(amounts in euro thousand)PerformingImpairedEntry/Technical formfinancial assets Otherfinancial31.12.2007 31.12.2006DebtassetsLoans assetssecurities1. Financial assets held for trading 28,999 - - - 28,999 11,9942. Financial assets designated at fair value 18,525 - - - 18,525 19,0893. Financial assets available for sale 10,329 - - - 10,329 8,7704. Financial assets held to maturity - - - - - -5. Loans to banks 188,168 219,598 - - 407,766 132,3866. Loans to customers 643 1,700,331 140,117 - 1,841,091 1,585,8937. Hedging derivatives - - - - - 15,7048. Assets transferred but not written off 5,243 - - - 5,243 4,2159. Other Assets - - - 6,462 6,462 2,885Total 251,907 1,919,929 140,117 6,462 2,318,415 1,780,9361.2 Interest income and similar income: spreads on hedging activitiesEntries/SectorsA. Positive spreads on transactions of:BankingGroupInsurance Other31.12.2007 31.12.2006companies companiesA.1 Specific hedging of financial assets - - - - 4,308A.2 Specific hedging of financial liabilities - - - - 77,110A.3 Generic hedging of interest rate risk - - - - -A.4 Cash flow hedging of financial assets - - - - -A.5 Cash flow hedging of financial liabilities - - - - -A.6 Generic cash flow hedging - - - - -Total positive spreads (A) - - - - 81,418B. Negative spreads on transaction of:B.1 Specific hedging of financial assets - - - - (4,834)B.2 Specific hedging of financial liabilities - - - - (60,880)B.3 Generic hedging of interest rate risk - - - - -B.4 Cash flow hedging of financial assets - - - - -B.5 Cash flow hedging of financial liabilities - - - - -B.6 Generic cash flow hedging - - - - -Total negative spreads (B) - - - - (65,714)C. Balance (A-B) - - - - 15,7041.3 Interest income and similar income: other informationEntries/SectorsBankingGroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061.3.1 Interest income on financial assets in foreign currency 61,177 - - 61,177 50,9021.3.2 Interest income on financial leasing operations - - - - -1.3.3 Interest income on receivables with third-party assets under administration 1,698 - - 1,698 1,447Totale 62,875 - - 62,875 52,349123


1.4.1 Interest expense and similar charges pertaining to the banking group: breakdownEntries/Sectors Payables SecuritiesOtherliabilities31.12.2007 31.12.20061. Due to banks (603,610) - - (603,610) (263,218)2. Due to customers (335,782) - (55) (335,837) (234,571)3. Securities issuer - (244,487) - (244,487) (234,403)4. Financial liabilities held for trading - - - - -5. Financial liabilities designated at fair value - - - - -6. Financial liabilities on disposed assets not derecognised (5,081) - - (5,081) -7. Other liabilities and reserves - - (1,828) (1,828) (1,262)8. Hedging derivatives - - (65,513) (65,513) -Total (944,473) (244,487) (67,396) (1,256,356) (733,454)1.5 Interest expense and similar charges: spreads on hedging activitiesEntries/SectorsA. Positive spreads on transactions of:BankingGroupInsurancecompaniesOthercompanies31.12.2007 31.12.2006A.1 Specific hedging of fair value of assets 1,888 - - 1,888 -A.2 Specific hedging of fair value of liabilities 57,129 - - 57,129 -A.3 Generic hedging of interest rate risk - - - - -A.4 Specific cash flow hedging of financial assets - - - - -A.5 Specific cash flow hedging of financial liabilities - - - - -A.6 Generic cash flow hedging - - - - -Total positive spreads (A) 59,017 - - 59,017 -Negative spreads on transaction of:B.1 Specific hedging of fair value of assets (1,770) - - (1,770) -B.2 Specific hedging of fair value of liabilities (61,446) - - (61,446) -B.3 Generic hedging of interest rate risk - - - - -B.4 Specific cash flow hedging of financial assets (61,314) - - (61,314) -B.5 Specific cash flow hedging of financial liabilities - - - - -B.6 Generic cash flow hedging - - - - -Total negative spreads (B) (124,530) - - (124,530) -C. Balance (A-B) (65,513) - - (65,513) -1.6 Interest expense and similar charges: other informationEntries/SectorsBankingGroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061.6.1 Interest expense on liabilities in foreign currency (55,327) - - (55,327) (51,195)1.6.2 Interest expense on liabilities for financial leasing operations - - - - -1.6.3 Interest expense on third-party assets under administration (55) - - (55) (63)Total (55,382) - - (55,382) (51,258)124


Section 2Commissions - Entries 40 and 502.1.1. Income from commissions pertaining to the banking group: breakdownType of service/Sector 31.12.2007 31.12.2006a) Guarantees 26,257 28,390b) Credit derivatives - -c) Management, brokerage and consulting services: 196,863 180,6091. trading of financial instruments 13,651 14,0022. currency trading 8,672 9,9423. funds under management: 58,668 73,3083.1. individual 9,712 12,7483.2. collective 48,956 60,5604. safe custody and administration of securities 7,860 8,5975. depository bank 3,221 2,9056. placement of securities 32,356 16,9487. order collection 5,879 6,5808. consulting activities 569 2,6309. distribution of third party services 65,987 45,6979.1. funds under management: 36,680 21,8869.1.1. individual - -9.1.2. collective 36,680 21,8869.2. insurance products 29,307 23,8119.3. other products - -d) Payment and collection services 175,992 189,680e) Services for servicing securitisation transactions 5,456 5,609f) Services for factoring transactions - -g) Tax collection services - -h) Other services 120,476 150,037Total 525,044 554,3252.2 Commission income: products and services distribution channelsChannel/Sector 31.12.2007 31.12.2006a) at its own branches 194,894 125,3721. Funds under management 60,137 73,3082. Placement of securities 32,356 16,9483. Services and products of third parties 102,401 35,116b) off premises - -1. Funds under management - -2. Placement of securities - -3. Services and products of third parties - -c) other distribution channels - -1. Funds under management - -2. Placement of securities - -3. Services and products of third parties - -125


2.3.1. Commission expense pertaining to the banking group: breakdownService/Sector 31.12.2007 31.12.2006a) Guarantees received (39) (162)b) Credit derivatives - -c) Management and brokerage services (3,786) (5,848)1. Trading of financial instruments (2,540) (2,941)2. Currency trading (26) (40)3. Funds under management: (159) (365)3.1 Own portfolio (159) (201)3.2 Portfolio of third parties - (164)4. Safeguarding and administration of securities (1,061) (2,250)5. Placement of financial instruments - (252)6. Financial instruments, products and services offered outside the branch - -d) Payment and collection services (76,035) (81,420)e) Other services (10,915) (5,505)Total (90,775) (92,935)126


Section 3Dividends and similar income - Entry 703.1 Dividends and similar income: breakdownBankinggroupInsurancecompaniesOther companies 31.12.2007 31.12.2006Entry/IncomeDividendsIncome from interestsin collective investmentundertakingsDividendsIncome from interestsin collective investmentundertakingsDividendsIncome from interestsin collective investmentundertakingsDividendsIncome from interestsin collective investmentundertakingsDividendsIncome from interestsin collective investmentundertakingsA. Financial assets held for trading 57,773 876 - - - - 57,773 876 - -B. Financial assets available for sale 4,200 - - - - - 4,200 - 5,190 714C. Financial assets at fair value - - - - - - - - - -D. Investments - - - - - - - - - -Total 61,973 876 - - - - 61,973 876 5,190 714127


Section 4Net profit on trading - Entry 804.1.1 Net profit on trading activities pertaining to the banking group: breakdownTransactions/Income itemsCapital gain(A)Profits fromtrading(B)Losses(C)Losses fromtrading(D)Net result(A+B)-(C+D)1. Trading financial assets 7,914 37,827 (11,843) (90,173) (56,275)1.1 Debt securities 5,429 35,910 (10,724) (4,800) 25,8151.2 Capital notes 2,485 1,877 (1,034) (85,359) (82,031)1.3 Interests in collective investment undertakings - 40 (85) (14) (59)1.4 Loans - - - - -1.5 Other - - - - -2. Financial liabilities held for trading - 4,286 - (11,898) (7,612)2.1 Debt securities - - - - -2.2 Debt and payables - - - - -2.3 Other - 4,286 - (11,898) (7,612)3. Other financial assets and liabilities: exchange differences X X X X 7,1184. Derivatives 46,074 720,064 (29,840) (643,512) 92,7864.1 Financial derivatives 46,074 720,064 (29,840) (643,512) 92,786- On debt securities and interest rates 43,544 389,206 (20,298) (331,802) 80,650- On capital securities and stock indexes 1,171 306,281 (9,538) (286,679) 11,235- On currencies and gold X X X X -- Other 1,359 24,577 (4) (25,031) 9014.2 Credit derivatives - - - - -Total 53,988 762,177 (41,683) (745,583) 36,017128


Section 5Net profit on hedging - Entry 905.1 Net profit on hedging activitiesA. Income relating to:Income items/ValuesBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.2006A.1 Fair value hedging derivatives 5,372 - - 5,372 -A.2 Hedged financial assets (fair value) - - - - -A.3 Hedged financial liabilities (fair value) - - - - 26,285A.4 Cash flow hedging derivatives - - - - -A.5 Assets and liabilities in foreign currencies 50 - - 50 -Total income from hedging activities (A) 5,422 - - 5,422 26,285B. Charges relating to:B.1 Fair value hedging derivatives - - - - (25,807)B.2 Hedged financial assets (fair value) - - - - -B.3 Hedged financial liabilities (fair value) (4,353) - - (4,353) -B.4 Cash flow hedging derivatives - - - - -B.5 Assets and liabilities designated in foreign currencies - - - - -Total charges from hedging activities (B) (4,353) - - (4,353) (25,807)C. Net profit on hedge activities (A-B) 1,069 - - 1,069 478129


Section 6Profit (Losses) on disposal/reacquisition – Entry 1006.1 Profits (Losses) on disposal/reacquisition: breakdownFinancial assets:Entry/Income elementProfitsBanking group Insurance companies Other companies 31.12.2007 31.12.2006LossesNetincomeProfitsLosses1. Loans to banks - - - - - - - - - - - - - - -2. Loans to customers - (40,485) (40,485) - - - - - - - (40,485) (40,485) 5,980 - 5,9803. Financial assets available for sale 73,187 (1,747) 71,440 - - - - - - 73,187 (1,747) 71,440 96,770 (111) 96,6593.1 Debt securities 30,632 (43) 30,589 - - - - - - 30,632 (43) 30,589 184 (87) 973.2 Capital notes 38,879 (774) 38,105 - - - - - - 38,879 (774) 38,105 95,620 (2) 95,6183.3 Interests in collective investment undertakings 3,676 (930) 2,746 - - - - - - 3,676 (930) 2,746 904 (22) 8823.4 Loans - - - - - - - - - - - - 62 - 624. Financial assets held to maturity - - - - - - - - - - - - - - -Financial liabilities:NetincomeProfitsTotal assets 73,187 (42,232) 30,955 - - - - - - 73,187 (42,232) 30,955 102,750 (111) 102,6391. Due to banks - - - - - - - - - - - - - - -2. Due to customers - - - - - - - - - - - - - - -3. Securities issued 3,446 (334) 3,112 - - - - - - 3,446 (334) 3,112 3,125 (535) 2,590Total liabilities 3,446 (334) 3,112 - - - - - - 3,446 (334) 3,112 3,125 (535) 2,590LossesNetincomeProfitsLossesNetincomeProfitsLossesNetincome130


Section 7Net change in value of financial assets/liabilities designated at fair value –Entry 1107.1.1 Net change in value of financial assets/liabilities designated at fair value pertaining to the banking group:breakdownTransactions/Income itemsCapital gain(A)Gains ondisposal(B)Losses(C)Losses fromsale(D)Net income(A+B)-(C+D)1. Financial assets: 935 26,233 (32,159) (21,599) (26,590)1.1 Debt securities 935 26,225 (5,469) (21,599) 921.2 Capital notes - - (26,690) - (26,690)1.3 Interests in collective investment undertakings - - - - -1.4 Loans - 8 - - 82. Financial liabilities: - - - - -2.1 Securities issued - - - - -2.2 Due to banks - - - - -2.3 Due to customers - - - - -3. Assets and liabilities in foreign currencies: exchange differences X X X X -4. Derivative instruments - - - - -4.1 Financial derivatives - - - - -- on debt securities and interest rates - - - - -- on capital securities and stock indexes - - - - -- on currencies and gold - - - - -- other - - - - -4.2 Credit derivatives - - - - -Total 935 26,233 (32,159) (21,599) (26,590)131


Section 8Net value adjustments for loans and receivables impairments - Entry 1308.1.1 Net value adjustments for loans and receivables impairments pertaining to the banking group: breakdownWrite-downs (1) Write-backs (2)Transactions/Income items Specific Specific PortfolioPortfolioOtherOtherFromFromWrite-Offs Otherwritebackswritebacksinterestinterest31.12.2007(1)-(2)31.12.2006A. Loans to banks (135) (27) - 599 61 - 13 511 (588)B. Loans to customers (30,162) (548,426) (3,971) 80,371 172,868 - 13,718 (315,602) (222,743)C. Total (30,297) (548,453) (3,971) 80,970 172,929 - 13,731 (315,091) (223,331)8.2.1 Net value adjustments for impairments of financial assets available for sale pertaining to the banking group:breakdownWrite-downs (1) Write-backs (2)Transactions/Income items Specific SpecificWrite-OffsOtherFrominterest31.12.2007(1)-(2)31.12.2006A. Debt securities - - - - - (80)B. Capital notes - (16,306) X X (16,306) (861)C. Interests in collective investment undertakings - - X - - -D. Loans to banks - - - - - -E. Loans to customers - - - - - -F. Total - (16,306) - - (16,306) (941)8.4.1 Net value adjustments for impairments of other financial operations pertaining to the banking group: breakdownWrite-downs (1)Write-backs (2)Transactions/Income items Specific Specific PortfolioOtherwritebacksWrite-OffsOtherPortfolioFrominterestOtherwritebacksFrominterestOtherwritebacks31.12.2007(1)-(2)31.12.2006A. Guarantees - (4) - - - - 1,430 1,426 4,558B. Credit derivatives - - - - - - - - -C. Commitments to grant finance - - - - - - - - -D. Other operations - (1,035) - - - - - (1,035) (2,407)E. Total - (1,039) - - - - 1,430 391 2,151132


Section 11Administrative expenses - Entry 18011.1 Personnel costs: breakdownType of cost/SectorBankingGroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061) Personnel (683,911) - (123) (684,034) (591,222)a) wages and salaries (452,812) - (87) (452,899) (418,443)b) social security costs (118,902) - (26) (118,928) (113,476)c) severance pay indemnities - - - - -d) employee benefit plan costs - - - - -e) allocation to staff severance pay (20,374) - (7) (20,381) (27,353)f) allocation to pension and similar funds (60) - - (60) (100)- defined contribution (60) - - (60) (100)- defined benefit - - - - -g) payments to complementary external retirement benefit plans (19,382) - - (19,382) (21,444)- defined contribution (19,382) - - (19,382) (21,444)- defined benefit - - - - -h) costs deriving from payment agreements based on own asset instruments - - - - -i) other benefits in favour of personnel (72,381) - (3) (72,384) (10,406)2) Other personnel (12,079) - - (12,079) (2,224)3) Directors (9,505) - (127) (9,632) (5,362)Total (705,495) - (250) (705,745) (598,808)11.2 Average number of employees by categoryAverage number/Category 31.12.2007 31.12.2006Employees 9,441 9,995a) executives 157 217b) total managers 3,947 4,191- of which: 3rd and 4th level 1,569 1,700c) remaining personnel 5,337 5,587Other personnel 56 9Total 9,497 10,00411.3 Defined-benefit company pension funds: total costsType of fund 31.12.2007 31.12.2006Personnel pension fund FIPP - Banca Antoniana (2,192) (2,469)Personnel pension fund Interbanca SpA (525) (537)Personnel pension fund FAP - Banca Popolare Veneta (14,956) (16,386)Pension funds PAP/LUX (2) (4)Personnel pension fund - Credito Lombardo (326) (330)Personnel pension fund - Previbank/Kreditna (892) (1,122)Personnel pension fund - Casdic/Previp ex Molfetta (489) (596)Total (19,382) (21,444)133


11.4 Other benefits in favour of personnelType 31.12.2007 31.12.2006External training courses for employees (707) (381)Internal courses with external teaching staff (1,717) (1,196)Accommodation, rents due, condominium fees (1,494) (1,389)Scholarships and grants to employee children (512) (711)Voluntary employee departure plan (50,222) -One-off voluntary employee departure incentives (11,976) (1,202)Insurance companies (1,572) (1,936)Health insurance policies (3,322) (3,207)Other items (862) (384)Total (72,384) (10,406)11.5 Other administrative expenses: breakdownType of cost/Amount 31.12.2007 31.12.2006Fees to external professionals (36,097) (39,800)Stationery and printed materials (6,367) (4,291)Insurance companies (9,008) (8,563)Post & telephone costs (24,691) (25,025)Surveillance and armoured transport (11,687) (11,028)Advertisement and entertainment (19,761) (20,159)Rent expenses (43,928) (48,267)Car leases (2,955) (2,761)Data processing (60,979) (31,012)Litigation costs (32,914) (31,086)Title searches and information (7,117) (10,857)Association dues (2,542) (2,341)Maintenance costs for fixed assets (16,694) (18,012)Leasing and maintenance hardware and software (21,106) (36,348)Lighting, water, heating (12,882) (12,261)Various transport costs (4,583) (3,712)Own cars (petrol, lubricants etc.) (4,302) (1,086)Fees to the board of statutory auditors (627) (806)Data transmission (9,071) (8,678)Cleaning (7,024) (6,893)Newspapers, magazines, books (826) (790)Sundry expenses (8,016) (5,685)Subtotal (343,177) (329,461)Indirect taxes and fees:- Non-deductible VAT (62,761) (57,183)- Municipal tax on properties (2,667) (2,640)- Stamp duty and special tax on stock exchange contracts (47,353) (47,696)- Other indirect taxes and fees (15,530) (19,162)Total (471,488) (456,142)134


Section 12Net allowances for risks and charges - Entry 19012.1 Net allowances for risks and charges: breakdownType of expense/Value 31.12.2007 31.12.2006Allowances for revocatory actions (8,131) (15,672)Allowance for risks and charges (23,610) (10,168)Allowance for litigation, operating risks and various disputes (11,261) -Total (43,002) (25,840)135


Section 13Net value adjustments to tangible assets - Entry 20013.1.1 Net value adjustments to tangible assets pertaining to the banking group: breakdownA. Tangible assetsAsset/Income itemAmortisation/Depreciation(a)Valueadjustments forimpairments(b)Write-backs(c)Net result(a+b+c)A.1 Own (31,965) - (31,965)- for functional use (30,694) - (30,694)- for investment (1,271) - (1,271)A.2 Acquired under financial lease - - -- for functional use - - -- for investment - - -Total (31,965) - (31,965)13.1.3 Net value adjustments to tangible assets pertaining to other companies: breakdownA. Tangible assetsAsset/Income itemAmortisation/Depreciation(a)Valueadjustments forimpairments(b)Write-backs(c)Net result(a+b+c)A.1 Own (19) - (19)- for functional use (19) - (19)- for investment - - -A.2 Acquired under financial lease - - -- for functional use - - -- for investment - - -Total (19) - (19)136


Section 14Net value adjustments to intangible assets - Entry 21014.1.1 Net value adjustments to intangible assets pertaining to the banking group: breakdownA. Intangible assetsAsset/Income itemAmortisation/Depreciation(a)Valueadjustments forimpairments(b)Write-backs(c)Net result(a+b+c)A.1 Own (18,124) - (18,124)- internally generated by the company - - -- other (18,124) - (18,124)A.2 Acquired under financial lease - - -Total (18,124) - (18,124)137


Section 15Other operating overheads and income - Entry 22015.1 Other operating overheads: breakdownItems 31.12.2007 31.12.2006Amortization of expenses for improvements to third-party assets (9,154) (6,148)Interest on payment system errors (13,499) (9,914)Reimbursement of credit card fraud (3,259) (3,302)Losses due to robbery, cash theft (3,427) (2,926)Losses from passive litigations – Amount exceeding the relative fund (1,786) -Other items (6,483) (5,077)Total (37,608) (27,367)15.2 Other operating income: breakdownItems 31.12.2007 31.12.2006Rental income 4,459 2,661Recovery of taxes from third parties 57,241 61,053Recovery of expenses on deposits and overdrafts 117,505 134,708Recovery of insurance premiums 11,748 10,376Interest on payment system errors 9,435 7,376Recovery of expenses from claims 5,881 7,151Insurance compensation 2,170 3,335Other items 20,515 22,052Total 228,954 248,712138


Section 16Profits (Losses) from investments - Entry 24016.1 Profits (Losses) from investments: breakdownIncome item/Value1) JOINTLY-CONTROLLED COMPANIESBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.2006A. Income - 14,600 - 14.600 13.9851. Revaluations - - - - -2. Profits from disposal - - - - -3. Write-backs - - - - -4. Other positive changes - 14,600 - 14.600 13.985B. Charges - - - - -1. Write-downs - - - - -2. Value adjustments from impairments - - - - -3. Losses from disposal - - - - -4. Other negative changes - - - - -Net income - 14,600 - 14.600 13.9852) HEAVILY-INFLUENCED COMPANIESA. Income - - 541 541 491. Revaluations - - - - -2. Profits from disposal - - - - 493. Write-backs - - - - -4. Other positive changes - - 541 541 -B. Charges - - (851) (851) (2.214)1. Write-downs - - - - -2. Value adjustments from impairments - - - - -3. Losses from disposal - - (851) (851) (1.706)4. Other negative changes - - - - (508)Net income - - (310) (310) (2.165)Total - 14,600 (310) 14.290 11.820139


Section 19Profits (Losses) on disposal of investments - Entry 27019.1 Profits (Losses) on investments disposal: breakdownIncome item/ValueBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.2006A. Property 1,687 - 713 2,400 114- Profits from disposal 1,692 - 713 2,405 117- Losses from disposal (5) - - (5) (3)B. Other activities (233) - - (233) (285)- Profits from disposal 15 - - 15 40- Losses from disposal (248) - - (248) (325)Net income 1,454 - 713 2,167 (171)140


Section 20Taxes on income from continuing operations - Entry 29020.1 Taxes on income from continuing operations: breakdownItem/ValueBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Current taxes (-) (67,485) - (30) (67,515) (134,120)2. Changes in current tax for previous fiscal years (+/-) 5,118 - - 5,118 (3,172)3. Reduction in current tax payable for fiscal year (+/-) 26,602 - - 26,602 -4. Changes in prepaid taxes (+/-) (164,147) - (89) (164,236) (98,681)5. Change in deferred taxes (+/-) (4,165) - - (4,165) (15,185)6. Income taxes for the period (-) (-1+/-2+3+/-4+/-5) (204,077) - (119) (204,196) (251,158)20.2 Reconciliation of theoretical fiscal charge and effective fiscal chargeCorporate income tax%(IRES)Corporate income taxes with nominal rate application 69,364 33.00Effect of tax increases:Losses from securities 32,733 15.58Sundry administrative expenses 1,718 0.81Allowances to provisions 7,080 3.37Telephone costs 1,051 0.50Effect of changing rate on deferred tax 63,256 30.10Other Increases 2,990 1.40Total increases 108,828 51.76Effect of tax decreases:Dividends (26,160) -12.45Capital gains on securities (6,716) -3.19Charges in corporate income tax pertaining to other decreases (2,484) -1.18Other decreases (231) -0.10Total decreases (35,591) -16.92Total tax changes 73,237 34.84Corporate income taxes charged to income statement 142,601 67.84Regional taxon business activities %(IRAP)Regional taxes on business activities with nominal rate application 8,933 4.25Effect of tax increases:Personnel costs 28,623 13.62Net adjustments to loans 15,788 7.52Allowances for risks and charges 1,827 0.86Changes in corporate income tax pertaining to property 3,189 1.51Changes in corporate income tax pertaining to vehicles 655 0.31Rate increases resolved upon by Regions 6,533 3.11Other Increases 1,618 0.76Total increases 58,233 27.69Effect of tax decreases:Dividends (3,066) -1.45Effect of changing rate on deferred tax (3,451) -1.64Capital gains and write-backs of equity investments (2,915) -1.38"Tax wedge" deduction (2,625) -1.24Lower tax attributable to prior years (87) -0.04Charges in corporate income tax pertaining to other decreases (13) -0.01Other decreases (1,127) -0.55Total decreases (13,284) -6.31Total tax changes 44,949 21.38Regional taxes on business activities charged to income statement 53,882 25.63141


Section 21Income (loss) after tax from non-current assets held for sale - Entry 31021.1 Income (loss) after tax from non-current assets held for sale: breakdownIncome items/ValuesBankinggroupInsurancecompaniesOthercompanies31.12.2007 31.12.20061. Income 455,955 - - 455,955 456,1122. Charges (444,372) - - (444,372) (325,790)3. Income from valuation of groups of assets and related liabilities - - - - -4. Profits (losses) from disposal 14 - - 14 6,3915. Taxes and fees (21,744) - - (21,744) (41,849)Profit (Loss) (10,147) - - (10,147) 94,86421.2 Detail of income taxes on groups of assets/liabilities held for sale31.12.2007 31.12.20061. Current taxes (-) (26,316) (41,849)2. Changes in prepaid taxes (+/-) (4,289) -3. Changes in deferred taxes (+/-) 8,861 -4. Income taxes for period (-1+/-2+/-3) (21,744) (41,849)142


Section 22Third party profit (loss) for the year – Entry 33022.1 Details of entry 330 "loss for the year pertaining to minority interests"Items 31.12.2007Interbanca (1)Bios Interbanca (225)La Cittadella (1)Total (227)22.2 Details of entry 330 "income for the year pertaining to minority interests"Items 31.12.2007Antonveneta Abn Amro Sgr 639Antonveneta Abn Amro Investment Funds 617Antonveneta Abn Amro Bank 712Total 1,968143


Section 24Earnings per share24.1 Average number of diluted ordinary shares31.12.2007Weighted average of ordinary shares for determining BASIC earnings per share 308,755,499Convertible bonds - average of potential ordinary shares 2,201,581Weighted average of ordinary shares for determining DILUTED earnings per share 310,957,08024.2 Other informationEarningsWeightedaverage of Euroordinary sharesBASIC earnings per share - 308,755,499 -DILUTED earnings per share - 310,957,080 -144


145


146


A. PRIMARY REPORTINGA.1. Distribution by business area: Economic data€/thousandCommercial BankingMerchant &InvestmentAssetmanagementOther andconsolidationadjustmentsInterest margin 1,058,550 - 5,098 -1,589 1,062,059Net commissions 412,303 - 23,992 -2,026 434,269Earning margin 1,600,468 - 29,153 -25,881 1,603,740Operating expenses -1,094,569 - -23,233 38,805 -1,078,997Income before tax from operations 171,808 - 5,920 32,466 210,194Profit for the year -15,145 -10,204 4,374 15,085 -5,890TotalA.2. Distribution by business area: Balance Sheet data€/thousandCommercial BankingMerchant &InvestmentAssetmanagementOther andconsolidationadjustmentsLoans to Banks 7,770,652 - 109,135 -97,525 7,782,262Loans to customers 30,595,246 - 174 -22,274 30,573,146Due to banks 13,901,310 - - -96,342 13,804,968Due to customers 19,830,519 - 18,702 -38,679 19,810,542Short-term securities 5,329,387 - - - 5,329,387Indirect deposits 36,198,076 - 4,918,690 -4,297,902 36,818,864TotalB. SECONDARY REPORTINGSegment reporting by geographical area has been omitted as the Group operates predominantly in Italy. .147


148


This section provides information where theseare different from what already reported inthe Individual Notes to the Accounts.149


150


Section 1CREDIT RISKQUANTITATIVE INFORMATIONA. LOAN ASSET QUALITYA.1 IMPAIRED AND PERFORMING EXPOSURES: AMOUNTS, VALUE ADJUSTMENTS, TRENDS, ECONOMICAND GEOGRAPHICAL DISTRIBUTIONA.1.1 Distribution of financial assets by owner portfolio and by creditworthiness (book value)Banking groupOther companiesPortfolios/QualityNonperformingWatchlistRestructuredLoansPast-DueLoansForcountryriskOther Assets Impaired Other 31.12.20071. Financial assets held for trading - - - - - 1,009,643 - - 1,009,6432. Financial assets available for sale - - - - - 556,706 - 6 556,7123. Financial assets held to maturity - - - - - - - - -4. Loans to banks 7,730 - - - 10 7,774,522 - - 7,782,2625. Loans to customers 841,425 637,357 134,221 218,457 163 28,741,523 - - 30,573,1466. Financial assets designated at fair value - - - - - 180,179 - - 180,1797. Financial assets under sale 96,232 82,179 754 14,213 9,692 6,419,402 - 98,219 6,720,6918. Hedging derivatives - - - - - 25,101 - - 25,10131.12.2007 945,387 719,536 134,975 232,670 9,865 44,707,076 - 98,225 46,847,73431.12.2006 1,159,757 704,257 110,090 193,114 4,194 41,708,126 - 119,434 43,971,530A.1.2 Breakdown of Financial Assets by Portfolio and Type (Gross and Net Values)Portfolios/QualityGrossExposureNon-performing Assets Other AssetsPortfolioSpecificWritedownsWrite-downsNetExposureGrossExposurePortfolioWritedownsNetExposureTotal(NetExposures)A. Banking group1. Financial assets held for trading - - - - X X 1,009,643 1,009,6432. Financial assets available for sale - - - - 562,465 5,759 556,706 556,7063. Financial assets held to maturity - - - - - - - -4. Loans to banks 39,848 32,118 - 7,730 7,774,534 2 7,774,532 7,782,2625. Loans to customers 3,978,276 2,126,760 20,056 1,831,460 28,813,242 71,556 28,741,686 30,573,1466. Financial assets designated at fair value - - - - X X 180,179 180,1797. Financial assets under sale 312,788 119,124 286 193,378 6,191,732 11,815 6,429,094 6,622,4728. Hedging derivatives - - - - X X 25,101 25,101Totale A 4,330,912 2,278,002 20,342 2,032,568 43,341,973 89,132 44,716,941 46,749,509B. Other companies included in theconsolidation1. Financial assets held for trading - - - - X X - -2. Financial assets available for sale - - - - 6 - 6 63. Financial assets held to maturity - - - - - - - -4. Loans to banks - - - - - - - -5. Loans to customers - - - - - - - -6. Financial assets designated at fair value - - - - X X - -7. Financial assets under sale - - - - 98,219 - 98,219 98,2198. Hedging derivatives - - - - X X - -Totale B - - - - 98,225 - 98,225 98,22531.12.2007 4,330,912 2,278,002 20,342 2,032,568 43,440,198 89,132 44,815,166 46,847,73431.12.2006 4,547,741 2,363,699 16,824 2,167,218 40,473,890 108,090 41,804,312 43,971,530151


A.1.3 Exposure to Cash and Off-Balance Sheet Loans to Banks: Gross and Net ValuesA. CASH EXPOSURESType of exposure/ValuesGrossExposureSpecific PortfolioWrite-downs Write-downsNetExposureA.1 Banking groupa) Non-performing loans 39,848 32,118 - 7,730b) Problem loans - - - -c) Restructured exposures - - - -d) Expired exposures - - - -e) Country Risk 540 X 530 10f) Other assets 8,890,689 X - 8,890,689TOTAL A.1 8,931,077 3,118 530 8,898,429A.2 Other companiesa) Impaired - - - -b) Other - X - -TOTAL A.2 - - - -B. OFF BALANCE SHEET EXPOSURESTOTAL A 8,931,077 32,118 530 8,898,429B.1 Banking groupa) Impaired - - - -b) Other 769,588 X 1,098 768,490TOTAL B.1 769,588 - 1,098 768,490B.2 Other companiesa) Impaired - - - -b) Other - X - -TOTAL B.2 - - - -TOTAL B 769,588 - 1,098 768,490A.1.4 Cash Exposures to Banks: dynamic of exposures which are impaired and subject to gross "country risk"Cause/CategoryNonperformingWatchlistRestructuredLoansPast-DueLoansFor countryriskA. Gross initial exposures 50,153 - - - 865- of which: exposures transferred but not written off - - - - -B. Increases 23 - - - 12B.1 inflows from performing exposures - - - - -B.2 transfers from other categories of impaired exposures - - - - -B.3 other increases 23 - - - 12C. Decreases 10,328 - - - 337C.1 outflows to performing exposures - - - - -C.2 write-offs 9,442 - - - 219C.3 collections 886 - - - 76C.4 sale proceeds - - - - -C.5 transfers to other categories of impaired exposures - - - - -C.6 other decreases - - - - 42D. Gross final exposures 39,848 - - - 540- of which: exposures transferred but not written off - - - - -152


A.1.5 Cash Exposures to Banks: Trend of Total AdjustmentsCause/Category Non-performing WatchlistRestructured Past-Due For countryLoans Loans riskA. Initial total adjustments 42,035 - - - 548- of which: exposures transferred but not written off - - - - -B. Increases 185 - - - 34B.1 value adjustments 185 - - - 34B.2 transfers from other categories of impaired exposures - - - - -B.3 other increases - - - - -C. Decreases 10,102 - - - 52C.1 revaluation write-backs 660 - - - 49C.2 cash revaluations - - - - 3C.3 write-offs 9,442 - - - -C.4 transfers to other categories of impaired exposures - - - - -C.5 other decreases - - - - -D. Final total adjustments 32,118 - - - 530- of which: exposures transferred but not written off - - - - -A.1.6 Exposures for Cash and Off-Balance Sheet Loans to Customers: Gross and Net ValuesA. CASH EXPOSURESExposure Type/ValueGrossExposureSpecific Write-downsPortfolio Write-downsNetexposureA.1 Banking groupa) Non-performing loans 2,908,212 1,970,437 118 937,657b) Problem loans 980,624 261,023 65 719,536c) Restructured exposures 149,400 14,424 1 134,975d) Expired exposures 252,827 - 20,157 232,670e) Country Risk 10,555 X 700 9,855f) Other assets 35,423,671 X 87,902 35,335,769TOTAL A.1 39,725,289 2,245,884 108,943 37,370,462A.2 Other companiesa) Impaired - - - -b) Other 98,219 X - 98,219TOTAL A.2 98,219 - - 98,219TOTAL A 39,823,508 2.245.884 108,943 37,468,681B. OFF BALANCE SHEET EXPOSURESB.1 Banking groupa) Impaired 97,862 - 1 97,861b) Other 5,980,640 X 11,843 5,968,797TOTAL B.1 6,078,502 - 11,844 6.066.658B.2 Other companiesa) Impaired - - - -b) Other - X - -TOTAL B.2 - - - -TOTAL B 6,078,502 - 11,844 6,066,658153


A.1.7 Cash Exposures to Customers: dynamic of exposures which are impaired and subject to gross "country risk"Cause/Category Non-performing WatchlistRestructuredLoansPast-Due Loans For country riskA. Gross initial exposures 3,261,798 908,112 118,067 209,610 4,222- of which: exposures transferred but not written off - - - - -B. Increases 1,113,694 962,819 49,999 1,063,927 8,012B.1 inflows from performing exposures 10,820 849,805 19,235 1,015,821 7,624B.2 transfers from other categories of impaired exposures 547,649 20,501 23,192 - -B.3 other increases 555,225 92,513 7,572 48,106 388C. Decreases 1,467,280 890,307 18,666 1,020,710 1,679C.1 outflows to performing exposures 355 67,634 1,743 956,999 -C.2 write-offs 921,484 25,633 2,509 - -C.3 collections 207,428 217,983 11,373 1,463 1,345C.4 sale proceeds 333,357 11,813 - - -C.5 transfers to other categories of impaired exposures 4,634 567,099 3,041 16,568 -C.6 other decreases 22 145 - 45,680 334D. Gross final exposures 2,908,212 980,624 149,400 252,827 10,555- of which: exposures transferred but not written off - - - - -A.1.8 Cash exposures to customers: trend of total adjustmentsRestructuredForCause/Category Non-performing WatchlistPast-Due LoansLoanscountry riskA. Initial total adjustments 2,110,159 203,855 7,977 16,496 345- of which: exposures transferred but not written off - - - - -B. Increases 1,026,555 324,867 14,495 74,987 431B.1 value adjustments 498,958 318,064 11,037 74,970 431B.2 transfers from other categories of impaired exposures 143,728 2,870 3,457 - -B.3 other increases 383,869 3,933 1 17 -C. Decreases 1,166,159 267,634 8,047 71,326 76C.1 revaluation write-backs 160,232 58,417 4,073 71,309 1C.2 cash revaluations 80,844 36,399 945 - 75C.3 write-offs 921,484 25,633 2,509 - -C.4 transfers to other categories of impaired exposures 2,350 147,185 520 - -C.5 other decreases 1,249 - - 17 -D. Final total adjustments 1,970,555 261,088 14,425 20,157 700- of which: exposures transferred but not written off - - - - -154


A.3 DISTRIBUTION OF GUARANTEED EXPOSURES BY TYPE OF GUARANTEEA.3.1 Cash Exposures to Banks and Guaranteed CustomersReal Guarantees (1) Personal Guarantees (2)Value of exposuresPropertySecuritiesOther assetsGovernmentsCredit derivativesOther publicinstitutionsBanksOther subjectsGovernmentsCredit commitmentsOther publicinstitutionsBanksOther subjects31.12.2007(1) + (2)1. Secured exposures to banks 502 - - - - - - - - 454 87 11 5521.1 completely guaranteed 220 - - - - - - - - 206 74 11 2911.2 partly guaranteed 282 - - - - - - - - 248 13 - 2612. Secured exposures to customers 24,022,663 14,233,763 692,462 1,251,504 - - - - 3,800 4,758 439,555 6,964,739 23,590,5812.1 completely guaranteed 20,548,264 13,734,789 219,825 505,410 - - - - - 3,285 427,335 6,263,617 21,154,2612.2 partly guaranteed 3,474,399 498,974 472,637 746,094 - - - - 3,800 1,473 12,220 701,122 2,436,320A.3.2 "Off balance sheet" exposures towards guaranteed banks and customersReal Guarantees (1) Personal Guarantees (2)Value of exposuresPropertySecuritiesOther assetsGovernmentsCredit derivativesOther publicinstitutionsBanksOther subjectsGovernmentsCredit commitmentsOther publicinstitutionsBanksOther subjects31.12.2007(1) + (2)1. Secured exposures to banks - - - - - - - - - - - - -1.1 completely guaranteed - - - - - - - - - - - - -1.2 partly guaranteed - - - - - - - - - - - - -2. Secured exposures to customers 2,039,014 766,120 69,959 111,868 - - - - - 5,114 59,706 879,996 1,892,7632.1 completely guaranteed 1,694,291 690,842 39,125 88,739 - - - - - 4,494 47,068 827,308 1,697,5762.2 partly guaranteed 344,723 75,278 30,834 23,129 - - - - - 620 12,638 52,688 195,187155


A.3.3 Impaired cash exposures towards guaranteed banks and customersValue of exposuresAmount guaranteedCollateral guaranteesPropertySecuritiesOther assetsGovernment andcentral banksOther publicinstitutionsGuarantees (fair value)Credit derivativesBanksFinancialcompaniesInsurancecompaniesNon-financialcompaniesPersonal guaranteesOther subjectsGovernment andcentral banksOther publicinstitutionsCredit commitmentsBanksFinancialcompaniesInsurancecompaniesNon-financialcompaniesOther subjects31.12.20071. Secured exposures tobanks- - - - - - - - - - - - - - - - - - - - -1.1 over 150% - - - - - - - - - - - - - - - - - - - - -1.2 between 100% and 150% - - - - - - - - - - - - - - - - - - - - -1.3 between 100% and 100% - - - - - - - - - - - - - - - - - - - - -1.4 under 50% - - - - - - - - - - - - - - - - - - - - -2. Secured exposures tocustomers1,252,336 2,799,413 1,821,172 19,144 39,154 - - - - - - - - 13 156 - - 75,081 844,693 2,799,413 -2.1 over 150% 385,005 1,861,212 1,333,601 8,106 21,121 - - - - - - - - - - - - 39,229 459,155 1,861,212 -2.2 between 100% and 150% 133,488 236,469 109,237 1,842 3,756 - - - - - - - - - - - - 29,489 92,145 236,469 -2.3 between 100% and 100% 690,982 678,163 376,168 8,083 13,256 - - - - - - - - 13 156 - - 6,208 274,279 678,163 -2.4 under 50% 42,861 23,569 2,166 1,113 1,021 - - - - - - - - - - - - 155 19,114 23,569 -Surplus fair value, guarantee156


A.3.4 Impaired "off balance sheet" exposures towards guaranteed banks and customersGuarantees (fair value)Value of exposuresAmount guaranteedCollateral guaranteesPropertySecuritiesOther assetsGovernment andcentral banksOther publicinstitutionsCredit derivativesBanksFinancialcompaniesInsurancecompaniesNon-financialcompaniesPersonal guaranteesOther subjectsGovernment andcentral banksOther publicinstitutionsCredit commitmentsBanksFinancialcompaniesInsurancecompaniesNon-financialcompaniesOther subjects31.12.2007Surplus fair value, guarantee1. Secured exposures to banks - - - - - - - - - - - - - - - - - - - - -1.1 over 150% - - - - - - - - - - - - - - - - - - - - -1.2 between 100% and 150% - - - - - - - - - - - - - - - - - - - - -1.3 between 100% and 100% - - - - - - - - - - - - - - - - - - - - -1.4 under 50% - - - - - - - - - - - - - - - - - - - - -2. Secured exposures to customers 24,953 46,824 1,358 4,322 2,656 - - - - - - - - - - - - - 38,488 46,824 -2.1 over 150% 2,878 26,112 - 1,325 613 - - - - - - - - - - - - - 24,174 26,112 -2.2 between 100% and 150% 1,165 1,537 - 82 - - - - - - - - - - - - - - 1,455 1,537 -2.3 between 100% and 100% 18,690 18,325 1,358 2,752 1,574 - - - - - - - - - - - - - 12,641 18,325 -2.4 under 50% 2,220 850 - 163 469 - - - - - - - - - - - - - 218 850 -157


B. DISTRIBUTION AND CONCENTRATION OF CREDITB.1 By-sector distribution of cash exposures and "off balance sheet" exposures towards customersGovernment and central banks Other public institutions Financial companiesA. Cash exposuresGross ExposureSpecific valueadjustmentsPortfolio valueadjustmentsNet ExposureA.1 Non-performing loans - - - - 24 23 - 1 27,773 12,021 - 15,752A.2 Problem loans - - - - 1,329 927 - 402 144,522 69,403 - 75,119A.3 Restructured exposures - - - - - - - - - - - -A.4 Expired exposures - - - - 126 - 11 115 828 - 102 726A.5 Other exposures 517,936 X 6,005 511,931 96,025 X 4 96,021 1,647,920 X 10,246 1,637,674TOTAL 517,936 - 6,005 511,931 97,504 950 15 96,539 1,821,043 81,424 10,348 1,729,271B. Exposures "off balance sheet"B.1 Non-performing loans - - - - - - - - - - - -B.2 Problem loans - - - - - - - - 26 - - 26B.3 Other impaired assets - - - - - - - - 131 - - 131B.4 Other exposures 435 - - 435 18,825 - 29 18,796 486,689 - 4,846 481,843TOTAL 435 - - 435 18,825 - 29 18,796 486,846 - 4,846 482,000Gross ExposureSpecific valueadjustments31.12.2007 518,371 - 6,005 512,366 116,329 950 44 115,335 2,307,889 81,424 15,194 2,211,27131.12.2006 308,889 - 293 308,596 178,801 553 42 178,206 2,426,418 8,561 12,753 2,405,104Portfolio valueadjustmentsNet ExposureGross ExposureSpecific valueadjustmentsPortfolio valueadjustmentsNet Exposure158


B.1 By-sector distribution of cash exposures and "off balance sheet" exposures towards customers (cont.)Insurance companies Non-financial companies Other subjectsA. Cash exposuresGross ExposureSpecific valueadjustmentsPortfolio valueadjustmentsNet ExposureA.1 Non-performing loans 26 19 - 7 1,969,313 1,393,796 115 575,402 911,076 564,577 3 346,496A.2 Problem loans - - - - 620,103 140,743 58 479,302 214,671 49,951 7 164,713A.3 Restructured exposures - - - - 149,400 14,424 1 134,975 - - - -A.4 Expired exposures - - - - 126,333 - 9,118 117,215 125,541 - 10,927 114,614A.5 Other exposures 23,106 X - 23,106 24,721,841 X 53,106 24,668,735 8,427,396 X 19,240 8,408,156TOTAL 23,132 19 - 23,113 27,586,990 1,548,963 62,398 25,975,629 9,678,684 614,528 30,177 9,033,979B. Exposures "off balance sheet"B.1 Non-performing loans - - - - 46,951 - - 46,951 4,096 - - 4,096B.2 Problem loans - - - - 29,764 - 1 29,763 2,988 - - 2,988B.3 Other impaired assets - - - - 12,964 - - 12,964 942 - - 942B.4 Other exposures 30,888 - 47 30,841 5,118,365 - 6,440 5,111,925 325,438 - 481 324,957TOTAL 30,888 - 47 30,841 5,208,044 - 6,441 5,201,603 333,464 - 481 332,983Gross ExposureSpecific valueadjustments31.12.2007 54,020 19 47 53,954 32,795,034 1,548,963 68,839 31,177,232 10,012,148 614,528 30,658 9,366,96231.12.2006 39,097 12 33 39,052 33,588,569 1,586,482 84,643 31,917,444 9,769,763 726,056 38,378 9,005,329Portfolio valueadjustmentsNet ExposureGross ExposureSpecific valueadjustmentsPortfolio valueadjustmentsNet Exposure159


B.2 Breakdown of Loans to Non-Financial Resident EnterprisesBreakdown by branch of economic activity 31.12.2007Other services for sale 6,926,426Sales, recovery and repairs 4,188,973Construction and public works 2,894,681Agricultural and industrial machines 1,020,044Electric material and equipment 768,763Other branches of activity 9,386,264TOTAL 25,185,151B.3 National distribution of cash exposures and "off balance sheet" exposures towards customersITALYOTHER EUROPEANCOUNTRIESAMERICA ASIA REST OF WORLDExposures/Geographical areasGrossNet Gross Net Gross Net Gross Net Gross NetExposure Exposure Exposure Exposure Exposure Exposure Exposure Exposure Exposure ExposureA. Cash exposuresA.1 Non-performing loans 2,897,709 934,334 6,382 3,092 47 12 3,117 87 957 132A.2 Problem loans 833,392 640,317 146,826 79,133 406 86 - - - -A.3 Restructured exposures 149,400 134,975 - - - - - - - -A.4 Expired exposures 251,922 231,870 899 795 3 2 2 2 1 1A.5 Other exposures 34,584,592 34,504,061 590,488 583,398 338,912 338,162 14,115 14,082 4,338 4,140TOTAL 38,717,015 36,445,557 744,595 666,418 339,368 338,262 17,234 14,171 5,296 4,273B. Exposures "off balance sheet"B.1 Non-performing loans 51,047 51,047 - - - - - - - -B.2 Problem loans 32,578 32,577 200 200 - - - - - -B.3 Other impaired assets 14,037 14,037 - - - - - - - -B.4 Other exposures 5,840,076 5,828,292 92,127 92,076 45,017 45,014 3,420 3,415 - -TOTAL 5,937,738 5,925,953 92,327 92,276 45,017 45,014 3,420 3,415 - -31.12.2007 44,654,753 42,371,510 836,922 758,694 384,385 383,276 20,654 17,586 5,296 4,27331.12.2006 45,043,803 42,601,172 896,878 883,940 356,751 355,393 11,265 10,830 2,833 2,421B.4 Geographical distribution of cash exposures and "off balance sheet" exposures towards banksExposures/Geographical areasA. Cash exposuresGrossExposureITALYNetExposureOTHER EUROPEANCOUNTRIESGrossExposureNetExposureGrossExposureAMERICA ASIA REST OF WORLDNetExposureGrossExposureNetExposureGrossExposureNetExposureA.1 Non-performing loans - - 19,465 7,457 20,383 273 - - - -A.2 Problem loans - - - - - - - - - -A.3 Restructured exposures - - - - - - - - - -A.4 Expired exposures - - - - - - - - - -A.5 Other exposures 6,181,515 6,181,515 2,181,056 2,180,533 9,923 9,923 1,951 1,951 516,784 516,777TOTAL 6,181,515 6,181,515 2,200,521 2,187,990 30,306 10,196 1,951 1,951 516,784 516,777B. Exposures "off balance sheet"B.1 Non-performing loans - - - - - - - - - -B.2 Problem loans - - - - - - - - - -B.3 Other impaired assets - - - - - - - - - -B.4 Other exposures 423,890 422,838 317,851 317,808 18,000 17,998 7,918 7,917 1,929 1,929TOTAL 423,890 422,838 317,851 317,808 18,000 17,998 7,918 7,917 1,929 1,92931.12.2007 6,605,405 6,604,353 2,518,372 2,505,798 48,306 28,194 9,869 9,868 518,713 518,70631.12.2006 4,639,772 4,639,490 1,388,701 1,375,027 48,469 28,125 25,742 16,310 10,154 10, 144160


C. SECURITISATIONS AND TRANSFER OF ASSETSQUANTITATIVE INFORMATIONC.1.8 Special purpose entities belonging to the Banking GroupThe securitisation operations carried out pursuant to Law no. 130, dated 30 th April 1999, and involved performingand non performing loans of Banca Antonveneta. These operations were carried out respectively through the specialpurpose entity Antenore Finance S.p.a., Theano Finance S.p.A, Giotto Finance S.p.A. and Giotto Finance 2 S.p.A. Thefollowing tables set forth the updated quantitative factors as at 31 December, 2006, in regard to these operations.161


ANTENORE FINANCE SPASUMMARY STATEMENT FOR SECURITISED ASSETS AND ISSUED SECURITIES31.12.2007 31.12.2006A. Securitised assetsA.1) Loans – Purchase price 193,835,014Net vale adjustment 74,061,504Adjusted residual purchase price 119,773,510B. Use of cash from credit managementB.1) OthersB.1 a) Cash and cash equivalents on BAPV Padua current accounts 1,602 1,633,252B.1 b) Cash and cash equivalents on ABN AMRO London current accountsB.1 c) Cash and cash equivalents on BNP PARIBAS Milan current accounts 43,121 10,130B.1 d) Cash and cash equivalents on BAPV Luxembourg current accounts 99,089 3,160,511143,812 4,812,048C. Securities issuedC.1) Class A – Senior 38,533,500C.2) Class B – Senior 20,000,000C.3) Class C – Junior 165,895,000239,788,500D. Loans receivedE. Other liabilitiesE.1) Due to Special Purposed Entities 133,812 128,658E.2) Interest expense accruals on securities 277,036E.3) Accruals of commissions for servicing 347,994E.4) Accrued liabilities in Interest Rate Swaps 49,282E.5) Other accrued liabilities 10,000 23,354143,812 826,324F. Interest expense on securities issued (*)F.1) Interest on Class A – Senior securities 1,503,482 1,939,385F.2) Interest on Class B – Senior securities 952,598 838,245F.3) Interest on Class C – Senior securities 2,131,290F.4) Balance of Interest Rate Swap charges 293,945 1,164,4634,881,315 3,942,093G. Commissions of the transaction (*)G.1) for servicing 3,221,888 1,690,509G.2) for other servicesG.2 a) Expense reimbursement to Special Purpose Entities 167,145 171,661G.2 b) Treasury management 25,000 25,000G.2 c) Securities administration and listing expenses 30,000 20,000G.2 d) Commissions on guarantees received 84,792 93,785G.2 e) Commissions for non-use of the line of credit 42,361 50,694G.2 f) Ratings Agency Commissions 29,394 31,8333,600,580 2,083,482H. Other chargesH.1) Net adjustments to loans 2,756,775 454,447H.2) Banking fees 148 348H.3) Losses on credit collection 88,511,705 8,153,931H.4) Write downs of default interest 7,959,303 11,740,066H.5) Extraordinary expenses 51,39099,279,321 20,348,792I. Interest generated by securitised assets (*)I.1) Default interest on securitised loans 7,959,303 11,740,066L. Other income (*)L.1) Gains on credit collection 37,275,54 6,359,795L.2) Interest income, net of taxes, on bank deposits 395,640 170,679L.3) Extraordinary income 252,504 21,304L.4) Net write-backs on loans 76,818,279 10,182,659L.5) Extraordinary income - Write-off Junior Notes 85,462,133200,203,610 16,734,437(*) Items inserted according to the accrual principle.The structure and form of the summary statement are in line with the provisions of the ruling of the Bank of Italy on 29 th March2000 (G.U. n. 78 of 3 rd April 2000).162


THEANO FINANCE SPASUMMARY STATEMENT FOR SECURITISED ASSETS AND ISSUED SECURITIES31.12.2007 31.12.2006A. Securitised assetsA.1) Loans – Purchase price 265,804,712Net vale adjustment 144,337,297Adjusted residual purchase price 121,467,415B. Use of cash from credit managementB.1) OthersB.1 a) Cash and cash equivalents on BAPV Padua current accounts 247,052 123,367B.1 b) Cash and cash equivalents on ABN AMRO London current accounts 30,808B.1 c) Cash and cash equivalents on BNP PARIBAS Milan current accounts 24,314 7,930B.1 d) Cash and cash equivalents on BAPV Luxembourg current accounts 158,294 17,771,368429,660 17,933,473C. Securities issuerC.1) Class C – Junior 202,087,038D. Loans received202,087,038E. Other liabilitiesE.1) Due to Special Purposed Entities 420,660 225,644E.2) Interest expense accruals on securities 2,231,378E.3) Accruals of commissions for servicing 1,363,128E.4) Due to BNP for commissions 9,000 9,000429,660 3,829,150F. Interest expense on securities issued (*)F.1) Interest on Class C – Junior securities 2,717,518 5,437,0482,717,518 5,437,048G. Commissions of the transaction (*)G.1) for servicing 1,510,227 2,939,325G.2) for other services:G.2 a) Expense reimbursement to Special Purpose Entities 220,789 231,957G.2 b) Treasury management 25,000 25,000G.2 c) Securities administration and listing expenses 18,000 18,000G.2 d) Commissions on guarantee receivedG.2 e) Ratings Agency Commissions1,774,016 3,214,282H. Other chargesH.1) Net adjustments to loans 3,492,821 6,085,434H.2) Banking fees 147 348H.3) Losses on credit collection 172,472,742 18,509,424H.4) Write downs of default interest 5,008,012 8,120,946H.5) Extraordinary expenses 34,569181,008,291 32,716,152I. Interest generated by securitised assets (*)I.1) Default interest on securitised loans 5,008,012 8,120,946L. Other income (*)L.1) Gains on credit collection 61,415,569 26,235,566L.2) Interest income, net of taxes, on bank deposits 356,676 327,938L.3) Extraordinary income 25,197 124,215L.4) Net write-backs on loans 147,830,118 12,800,185L.5) Extraordinary income - Write-off class C 37,379,553(*) Items inserted according to the accrual principle.247,007,113 39,487,904The structure and form of the summary statement are in line with the provisions of the ruling of the Bank of Italy on 29 th March2000 (G.U. n. 78 of 3 rd April 2000).163


GIOTTO FINANCE SPASUMMARY STATEMENT FOR SECURITISED ASSETS AND ISSUED SECURITIES31.12.2007 31.12.2006A. Securitised assetsA.1) Loans 287,236,424 383,714,058A.2) Default interest receivable 25,552 22,256287,261,976 383,736,314B. Use of cash from credit managementB.2) Capital notesB.3) OthersB.3 a) Cash and cash equivalents on BAPV Padua current accounts 2,554,542 2,819,899B.3 b) Cash and cash equivalents on ABN AMRO london current ccounts 4,946,089 5,644,191B.3 c) Cash and cash equivalents on PARIBAS Milan current accounts 52,510 43,009B.3 d) Cash and cash equivalents on BAPV Luxembourg current accounts 21,910,598 25,708,107B.3 e) Transitory account for mortgage instalments 215,942 258,884B.3 f) Accrued income on securitised mortgages 1,012,792 1,127,963B.3 g) Accrued IRS income 126,695 454,99630,819,168 36,057,049C. Securities issuedC.1) Class A – Senior 164,170,760 260,436,220C.2) Class B – Senior 53,000,000 53,000,000C.3) Class C – Junior 93,810,000 93,810,000310,980,760 407,246,220D. Loans receivedE. Other liabilitiesE.1) Due to Special Purposed Entities 105,684 105,699E.2) Interest expense accruals on securities 2.,20,303 2,824,508E.3) Accruals of commissions for servicing 68,330 91,298E.4) Commissions and expenses payable 4,250 17,028E.5) Amounts to be paid to BAPV 1,749,317 2,149,246E.6) Other accrued liabilities 9,8614,457,745 5,187,779F. Interest expense on securities issued (*)F.1) Interest expense on Class A – Senior securities 8,869,569 9,717,615F.2) Interest expense on Class B – Senior securities 2,574,635 1,937,992F.3) Interest expense on Class C – Junior securities 1,902,258 1,902,258F.4) Variable Return on Class C – Junior securities 7,795,974 9,607,366F.5) Balance of Interest Rate Swap charges (2,519.,94) (3,639,239)18,622,542 19,525,992G. Commissions of the transaction (*)G.1) for servicing 307,852 406,052G.2) for other services:G.2 a) Expense reimbursement to Special Purpose Entities 125,768 131,000G.2 b) Treasury management 25,000 25,000G.2 c) Securities administration and listing expenses 18,000 18,000G.2 d) Commissions on guarantee received 48,056 50,695G.2 e) Ratings Agency Commissions 14,812 23,625539,488 654,372H. Other chargesH.1) Net adjustments to loans 148 406H.2) Banking fees 4,558,070 5,476,183H.3) Losses on credit collection 541,642 936,931H.4) Write downs of default interest 119 149H.5) Extraordinary expenses 3,685 18,2645,103,664 6,431,933I. Interest generated by securitised assets (*)I.1) Interest on purchased mortgage loans 18,141,632 19,633,368I.2) Default interest collected 109,154 115,450I.3) Default interest accrued but not collected 25,552 22,25618,276,338 19,771,074L. Other income (*)L.1) Gains on credit collection 207,626 341,852L.2) Interest income, net of taxes, on bank deposits 765,666 603,665L.3) Extraordinary income 282,908 323,585L.4) Net write-backs on loans 16,431 37,0921,272,631 1,306,194(*) Items inserted according to the accrual principle.The structure and form of the summary statement are in line with the provisions of the ruling of the Bank of Italy on 29 th March2000 (G.U. n. 78 of 3 rd April 2000).164


GIOTTO FINANCE 2 SPASUMMARY STATEMENT FOR SECURITISED ASSETS AND ISSUED SECURITIES31.12.2007 31.12.2006A. Securitised assetsA.1) Loans 331,269,989 403,115,530A.2) Default interest receivable 22,111 17,376331,292,100 403,132,906B. Use of cash from credit managementB.1) OthersB.1 a) Cash and cash equivalents on BAPV Padua current accounts 620,921 1,269,226B.1 b) Cash and cash equivalents on ABN AMRO london current ccounts 5,998,711 6,120,566B.1 c) Cash and cash equivalents on PARIBAS Milan current accounts (3,118) 106B.1 d) Cash and cash equivalents on BAPV Luxembourg current accounts 15,420,004 16,628,498B.1 e) Transitory account for mortgage instalments 119,204 234,840B.1 f) Accrued income on securitised mortgages 1,280,671 1,259,550B.1 g) Accrued IRS income 5 75,647B.1 h) Other debtors 7,290,57830,726,976 25,588,433C. Securities issuedC.1) Class A – Senior 273,135,384 341,351,568C.2) Class B – Senior 24,000,000 24,000,000C.3) Class C – Junior 49,490,000 49,490,000346,625,384 414,841,568D. Loans receivedE. Other liabilitiesE.1) Due to Special Purposed Entities 107,904 94,799E.2) Interest expense accruals on securities 3,026,181 2,950,507E.3) Accruals of commissions for servicing 79,414 96,672E.4) Commissions and expenses payable 10,000 15,307E.5) Amounts to be paid to BAPV 1,051,751E.6) Other accrued liabilities 4,0963,227,595 4,209,036F. Interest expense on securities issued (*)F.1) Interest expense on Class A – Senior securities 13,342,454 12,094,720F.2) Interest expense on Class B – Senior securities 1,202,373 914,081F.3) Interest expense on Class C – Junior securities 501,773 501,774F.4) Variable return on Classe C securities 1,051,751F.5) Balance of Interest Rate Swap charges (595,948) 371,40514,450,652 14,933,731G. Commissions of the transaction (*)G.1) for servicing 343,353 414,736G.2) for other services:G.2 a) Expense reimbursement to Special Purpose Entities 135,512 127,694G.2 b) Treasury management 27,500 27,500G.2 c) Securities administration and listing expenses 13,500 13,500G.2 d) Commissions on guarantee received 19,962 21,058G.2 e) Ratings Agency Commissions 15,000 15,000554,827 619,488H. Other chargesH.1) Net adjustments to loans 160 421H.2) Banking fees 2,856,496 3,192,741H.3) Losses on credit collection 1,092,256 1,323,809H.4) Write downs of default interest 55 91H.5) Extraordinary expenses 2,344 7,7693,951,311 4,524,831I. Interest generated by securitised assets (*)I.1) Interest on purchased mortgage loans 19,297,881 18,630,073I.2) Default interest collected 90,104 84,631I.3) Default interest accrued but not collected 22,112 17,37619,410,097 18,732,080L. Other income (*)L.1) Gains on credit collection 177,650 227,797L.2) Interest income, net of taxes, on bank deposits 575,391 438,886L.3) Extraordinary income 233,056 258,030L.4) Net write-backs on loans 1,055,958 11,9452,042,055 936,658(*) Items inserted according to the accrual principle.The structure and form of the summary statement are in line with the provisions of the ruling of the Bank of Italy on 29 th March2000 (G.U. n. 78 of 3 rd April 2000).165


Section 2MARKET RISK2.1 INTEREST RATE RISKREGULATORY TRADING PORTFOLIOQUANTITATIVE INFORMATION1. Regulatory trading portfolio: distribution by residual duration of the cash financial assetsand liabilities and financial derivativesNo tables are provided given that a sensitivity analysis is provided in the following paragraph.2. Regulatory trading portfolio: internal models and other methods for sensitivity analysisThe following table illustrates the exposure of the trading portfolio to interest rate risk, expressed in terms ofVaR, in relation to the final amount, initial amount, average amount, and minimum and maximum assumedduring 2007:/000 Euro VaR28/12/2007VaR29/12/2006Average VaR2007Minimum VaR2007Maximum VaR2007Interest Rate Risk 985 987 1.291 721 2,0962.500.000VaR Interest rate risk BAPV Group 2007VaR Rischio di tasso Gruppo BAPV - anno 20072.000.0001.500.0001.000.000500.000002/01/200722/01/200711/02/200703/03/200723/03/200712/04/200702/05/200722/05/200711/06/200701/07/200721/07/200710/08/200730/08/200719/09/200709/10/200729/10/200718/11/200708/12/200728/12/2007166


2.3 PRICE RISKREGULATORY TRADING PORTFOLIOQUANTITATIVE INFORMATION2. Regulatory trading portfolio: distribution of exposures in capital notes and stock exchange rates for themain countries in the listing marketNo tables are provided given that a sensitivity analysis is provided in the following paragraph.3. Regulatory trading portfolio: internal models and other methods for sensitivity analysisThe following table illustrates the exposure of the trading portfolio to price risk, expressed in terms of VaR, inrelation to the final amount, initial amount, average amount, and minimum and maximum assumed during 2007:Average VaR Minimum VaR Maximum VaR/000 Euro VaR28/12/2007 VaR 29/12/2006200720072007Stock market risk 186 206 489 93 1,4812.500.000VaR Stock market risk BAPV Group - 2007VaR Azionario Gruppo BAPV - anno 20072.000.0001.500.0001.000.000500.000002/01/200722/01/200711/02/200703/03/200723/03/200712/04/200702/05/200722/05/200711/06/200701/07/200721/07/200710/08/200730/08/200719/09/200709/10/200729/10/200718/11/200708/12/200728/12/2007167


2.4 PRICE RISKBANK PORTFOLIOQUANTITATIVE INFORMATION1. Bank portfolio: cash exposures in capital notes and interests in collective investment undertakingsType of exposure/ValueBalance-sheet valueListedUnlistedA. Capital notes 211,156 222,529A.1 Shares 211,156 222,529A.2 Innovative equities - -A.3 Other capital notes - -B. Collective Investment undertaking - -B.1 Italian - -- harmonised open - -- non harmonised open - -- closed - -- reserved - -- speculative - -B.2 From other EU countries - -- harmonized - -- non harmonised open - -- non harmonised closed - -B.3 From non EU countries - -- open - -- closed - -31.12.2007 211,156 222,529168


2.5 EXCHANGE RATE RISKQUANTITATIVE INFORMATION1. Distribution by currency of assets, liabilities and derivativesItemsUS dollar Sterling YenCurrenciesCanadiandollarSwiss francOthercurrencies1. Impaired financial 1,190,175 37,410 23,768 29,730 55,611 18,981A.1 Debt securities 7,740 1 - - - -A.2 Capital notes 2,152 24,228 - - - -A.3 Loans to banks 370,883 8,728 701 12,896 9,651 11,433A.4 Loans to customers 809,400 4,453 23,067 16,834 45,960 7,548A.5 Other financial activities - - - - - -B. Other activities 3,566 1,704 177 204 835 421C. Financial liabilities 1,221,796 68,666 52,818 35,271 56,246 39,993C.1 Due to banks 905,592 45,986 49,321 34,041 51,500 12,430C.2 Due to customers 269,861 22,680 3,497 1,230 4,746 8,495C.3 Debt securities 46,343 - - - - 19,068C.4 Other liabilities 7,594 925 320 248 178 5E. Financial derivatives 934,732 311,470 272,233 49,164 8,163 92,378- Options 352,792 127,609 209,723 47,924 - 66,398- long positions 176,387 65,434 111,542 26,309 - 34,883- short positions 176,405 62,175 98,181 21,615 - 31,515- Other derivatives 581,940 183,861 62,510 1,240 8,163 25,980- long positions 302,887 110,022 36,644 1,236 3,542 11,966- short positions 279,053 73,839 25,866 4 4,621 14,014Total assets 1,673,015 214,570 172,131 57,479 59,988 66,251Total liabilities 1,684,848 205,605 177,185 57,138 61,045 85,527Excess/deficit (+/-) -11,833 8,965 -5,054 341 -1,057 -19,276169


2. Internal models and other methods for sensitivity analysisThe following table illustrates the exposure of the trading portfolio to exchange rate risk, expressed in terms of VaRat year end, in relation to the final amount, initial amount, average amount, and minimum and maximum:Average VaR Minimum VaR Maximum VaR/000 Euro VaR28/12/2007 VaR 29/12/2006200720072007Exchange rate risk 212 97 283 92 5412.500.000VaRVaRRischioExchangedi cambioRateGrupporisk BAPVBAPVGroup- anno- 200720072.000.0001.500.0001.000.000500.000002/01/200722/01/200711/02/200703/03/200723/03/200712/04/200702/05/200722/05/200711/06/200701/07/200721/07/200710/08/200730/08/200719/09/200709/10/200729/10/200718/11/200708/12/200728/12/2007170


2.6 DERIVATIVE FINANCIAL INSTRUMENTSA.1 Trading Portfolio for Supervisory Purposes: Notional Values at the End of the Year and Average Values for the YearTransaction/Underlying CategoryDebt securities and interestratesEquity securities stockindicesExchange rates and gold Other stocks 31.12.2007 31.12.2006Listed Unlisted Listed Unlisted Listed Unlisted Listed Unlisted Listed Unlisted Listed Unlisted1. Forward rate agreement - - - - - - - - - - - -2. Interest rate swap - 12,627,543 - - - - - - - 12,627,543 - 8,866,7723. Domestic currency swap - - - - - - - - - - - -4. Currency interest rate swap - - - - - - - - - - - -5. Basis swap - 2,136,138 - - - - - - - 2,136,138 - 2,144,0366. Stock index swaps - - - - - - - - - - - -7. Real estate index swaps - - - - - - - - - - - -8. Futures 360,700 - 105,410 - - - - - 466,110 - 254,227 -9. Capital options - 12,007,416 - - - - - - - 12,007,416 - 6,384,363- Acquired - 6,872,304 - - - - - - - 6,872,304 - 4,001,678- Issued - 5,135,112 - - - - - - - 5,135,112 - 2,382,68510. Floor options - 3,191,882 - - - - - - - 3,191,882 - 1,710,066- Acquired - 1,451,817 - - - - - - - 1,451,817 - 1,049,243- Issued - 1,740,065 - - - - - - - 1,740,065 - 660,82311. Other options 4,844,735 948,443 1,706,335 3,444,861 - 1,286,424 - - 6,551,070 5,679,728 1,649,796 1,904,384- Acquired 2,000,000 391,273 853,174 1,661,257 - 648,586 - - 2,853,174 2,701,116 173,966 1,141,034- Plain vanilla 2,000,000 391,273 853,174 1,661,257 - 648,586 - - 2,853,174 2,701,116 173,966 1,141,034- Exotic - - - - - - - - - - - -- Issued 2,844,735 557,170 853,161 1,783,604 - 637,838 - - 3,697,896 2,978,612 1,475,830 763,350- Plain vanilla 2,000,000 557,170 834,275 1,783,604 - 637,838 - - 2,834,275 2,978,612 296,953 753,300- Exotic 844,735 - 18,886 - - - - - 863,621 - 1,178,877 10,05012. Forward contracts 168,019 9,141 228,773 10 - 1,114,132 - - 396,792 1,123,283 - 891,725- Acquisitions 165,807 8,357 96,984 5 - 634,058 - - 262,791 642,420 - 446,294- Sales 2,212 784 131,789 5 - 476,025 - - 134,001 476,814 - 438,887- Currency swaps - - - - - 4,049 - - - 4,049 - 6,54413. Other derivative contracts - 100,000 - - - - - 1,329 - 101,329 - 1,252Total 5,373,454 31,020,563 2,040,518 3,444,871 - 2,400,556 - 1,329 7,413,972 36,867,319 1,904,023 21,902,598Average values 413,343 2,386,197 156,963 264,990 - 184,658 - 102 570,306 2,835,948 146,463 1,684,815171


A.2 Bank Portfolio: notional values of end of period and half-period - A.2.1 hedgingTransaction/Underlying CategoryDebt securities andinterest ratesEquity securities stockindicesExchange rates andgoldOther stocks 31.12.2007 31.12.2006Listed Unlisted Listed Unlisted Listed Unlisted Listed Unlisted Listed Unlisted Listed Unlisted1. Forward rate agreement - - - - - - - - - - - -2. Interest rate swap - 2,847,030 - - - - - - - 2,847,030 - 3,913,4573. Domestic currency swap - - - - - - - - - - - -4. Currency interest rate swap - - - - - 66,872 - - - 66,872 - 71,9505. Basis swap - 1,755,470 - - - - - - - 1,755,470 - 2,328,0256. Stock index swaps - - - - - - - - - - - -7. Real estate index swaps - - - - - - - - - - - -8. Futures - - - - - - - - - - - -9. Capital options - 31,751 - - - - - - - 31,751 - 116,752- Acquired - 6,751 - - - - - - - 6,751 - 91,752- Issued - 25,000 - - - - - - - 25,000 - 25,00010. Floor options - 207,092 - - - - - - - 207,092 - 236,842- Acquired - 207,092 - - - - - - - 207,092 - 236,842- Issued - - - - - - - - - - - -11. Other options - 6,681 - 53,834 - - - - - 60,515 - 319,061- Acquired - - - 26,917 - - - - - 26,917 - 133,323- Plain vanilla - - - 26,917 - - - - - 26,917 - 133,323- Exotic - - - - - - - - - - - -- Issued - 6,681 - 26,917 - - - - - 33,598 - 185,738- Plain vanilla - 6,681 - 26,917 - - - - - 33,598 - 185,738- Exotic - - - - - - - - - - - -12. Forward contracts - - - - - - - - - - - -- Acquisitions - - - - - - - - - - - -- Sales - - - - - - - - - - - -- Currency swaps - - - - - - - - - - - -13. Other derivative contracts - - - - - - - - - - - -Total - 4,848,024 - 53,834 - 66,872 - - - 4,968,730 - 6,986,087Average values - 372,925 - 4,141 - 5,144 - - - 382,210 - 537,391172


A.2 Bank Portfolio: notional values of end of period and half-period - A.2.2 Other derivativesTransaction/Underlying CategoryDebt securities andinterest ratesEquity securities andstock indicesExchange Rates andGoldOther Stocks 31.12.2007 31.12.2006Listed Unlisted Listed Unlisted Listed Unlisted Listed Unlisted Listed Unlisted Listed Unlisted1. Forward rate agreement - - - - - - - - - - - -2. Interest rate swap - - - - - - - - - - - -3. Domestic currency swap - - - - - - - - - - - -4. Currency interest rate swap - - - - - - - - - - - -5. Basis swap - - - - - - - - - - - -6. Stock index swaps - - - - - - - - - - - -7. Real estate index swaps - - - - - - - - - - - -8. Futures - - - - - - - - - - - -9. Capital options - - - - - - - - - - - -- Acquired - - - - - - - - - - - -- Issued - - - - - - - - - - - -10. Floor options - - - - - - - - - - - -- Acquired - - - - - - - - - - - -- Issued - - - - - - - - - - - -11. Other options - - - - - - - - - - - 4,128,772- Acquired - - - - - - - - - - - 2,023,017- Plain vanilla - - - - - - - - - - - 2,023,017- Exotic - - - - - - - - - - - -- Issued - - - - - - - - - - - 2,105,755- Plain vanilla - - - - - - - - - - - 2,105,755- Exotic - - - - - - - - - - - -12. Forward contracts - - - - - - - - - - - -- Acquisitions - - - - - - - - - - - -- Sales - - - - - - - - - - - -- Currency swaps - - - - - - - - - - - -13. Other derivative contracts - - - - - - - - - - - -Total - - - - - - - - - - - 4,128,772Average values - - - - - - - - - - - 317,598173


A.3 Derivatives: Purchase and Sale of Underlying SecuritiesTransaction/Underlying CategoryDebt securities and interestratesEquity securities and stockindicesExchange Rates andGoldOther Stocks 31.12.2007 31.12.2006Listed Unlisted Listed Unlisted Listed Unlisted Listed Unlisted Listed Unlisted Listed UnlistedA. Regulatory trading portfolio: 5,373,454 26,606,424 2,040,518 429,242 - 2,141,903 - 1,330 7,413,972 29,178,899 1,742,372 19,916,4461. Transactions with exchange of capital 168,019 9,141 736,021 10 - 2,141,903 - - 904,040 2,151,054 37,037 1,438,979- Acquisitions 165,807 8,357 320,116 5 - 996,051 - - 485,923 1,004,413 20,037 757,441- Sales 2,212 784 415,905 5 - 842,278 - - 418,117 843,067 17,000 631,827- Currency swaps - - - - - 303,574 - - - 303,574 - 49,7112. Transactions without exchange of capital 5,205,435 26,597,283 1,304,497 429,232 - - - 1,330 6,509,932 27,027,845 1,705,335 18,477,467- Acquisitions 2,000,000 14,201,159 733,206 200,562 - - - 665 2,733,206 12,602,386 263,679 8,518,992- Sales 3,205,435 14,196,124 571,291 228,670 - - - 665 3,776,726 14,425,459 1,441,656 9,958,475- Currency swaps - - - - - - - - - - - -B. Bank portfolio: - 1,198,203 - - - - - - - 1,198,203 - 9,173,586B.1 Hedging - 1,198,203 - - - - - - - 1,198,203 - 5,044,8141. Transactions with exchange of capital - - - - - - - - - - - 2,762,008- Acquisitions - - - - - - - - - - - 2,013,336- Sales - - - - - - - - - - - 748,672- Currency swaps - - - - - - - - - - - -2. Transactions without exchange of capital - 1,198,203 - - - - - - - 1,198,203 - 2,282,806- Acquisitions - 1,180,203 - - - - - - - 1,180,203 - 1,461,204- Sales - 18,000 - - - - - - - 18,000 - 821,602- Currency swaps - - - - - - - - - - - -B.2 Other derivatives - - - - - - - - - - - 4,128,7721. Transactions with exchange of capital - - - - - - - - - - - -- Acquisitions - - - - - - - - - - - -- Sales - - - - - - - - - - - -- Currency swaps - - - - - - - - - - - -2. Transactions without exchange of capital - - - - - - - - - - - 4,128,772- Acquisitions - - - - - - - - - - - 2,023,017- Sales - - - - - - - - - - - 2,105,755- Currency swaps - - - - - - - - - - - -174


A.4 "Over the counter" financial derivatives: Positive Fair Value – Counterparty RiskCounterparties/Underlying securitiesDebt and Interest Rate Securities Capital Securities and Stock Indices Exchange Rates and Gold Other StocksGrossvalue priorto nettingGrossvalueafternettingFutureExposureGrossvalueprior tonettingGrossvalueafternettingFutureExposureGrossvalueprior tonettingGrossvalueafternettingFutureExposureGrossvalueprior tonettingGrossvalueafternettingFutureExposureDifferent UnderlyingSecuritiesA. Regulatory trading portfolioA.1 Governments and Central Banks - - - - - - - - - - - - - -A.2 public bodies - - - - - - - - - - - - - -A.3 Banks 139,187 - 188,375 85,058 - 91,460 9,685 - 16,611 680 - 4,408 - -A.4 Financial companies 46,252 - 18,293 1,169 - 2,838 1,494 - 1,377 - - - - -A.5 Insurance - - - - - - - - - - - - - -A.6 Non-financial companies 51,676 - 104,262 3,755 - 570 6,540 - 7,375 - - - - -A.7 Other companies 610 - 1,187 571 - 964 - - - - - - - -31.12.2007 237,725 - 312,117 90,553 - 95,832 17,719 - 25,363 680 - 4,408 - -31.12.2006 162,907 - 211,231 20,467 - 27,587 3,452 - 5,408 8,423 - 19,333 - -B. Bank portfolioB.1 Governments and Central Banks - - - - - - - - - - - - - -B.2 Public bodies - - - - - - - - - - - - - -B.3 Banks 81,898 - 27,741 - - - 3,184 - 939 - - - - -B.4 Financial companies 28,632 - 4,006 - - - - - - - - - - -B.5 Insurance - - - - - - - - - - - - - -B.6 Non-financial companies - - - - - - - - - - - - - -B.7 Other companies - - - - - - - - - - - - - -31.12.2007 110,530 - 31,747 - - - 3,184 - 939 - - - - -31.12.2006 160,407 - 78,133 113,628 - 171,259 2,553 - 3,598 - - - - -AfternettingFutureExposure175


A.5 "Over the counter" financial derivatives: Negative Fair Value – Financial RiskCounterparties/Underlying securitiesDebt and Interest Rate SecuritiesGrossvalue priorto nettingGrossvalueafternettingFutureExposureCapital Securities and StockIndicesGrossvalueprior tonettingGrossvalueafternettingFutureExposureExchange Rates and GoldOther StocksDifferent UnderlyingSecuritiesA. Regulatory trading portfolioA.1 Governments and Central Banks - - - - - - - - - - - - - -A.2 public bodies - - - - - - - - - - - - - -A.3 Banks 121,176 - 181,206 85,164 - 74,571 13,022 - 17,832 107 - 2,620 - -A.4 Financial companies 15,322 - 17,934 9,190 - 5,371 1,791 - 2,240 - - - - -A.5 Insurance - - - - - - - - - - - - - -A.6 Non-financial companies 64,258 - 92,006 3,650 - 426 1,952 - 3,526 - - - - -A.7 Other companies 923 - 1,376 - - - - - - 540 - 3,797 - -31.12.2007 201,679 - 292,522 98,004 - 80,368 16,765 - 23,598 647 - 6,417 - -31.12.2006 134,069 - 192,867 24,076 - 33,000 5,315 - 7,002 7,936 - 17,598 - -B. Bank portfolioB.1 Governments and Central Banks - - - - - - - - - - - - - -B.2 Public bodies - - - - - - - - - - - - - -B.3 Banks 97,996 - 16,542 - - - 6,781 - 2,269 - - - - -B.4 Financial companies 13,267 - 2,198 - - 1,525 - - - - - - - -B.5 Insurance - - - - - - - - - - - - - -B.6 Non-financial companies 78 - 104 - - - - - - - - - - -B.7 Other companies - - - - - 90 - - - - - - - -31.12.2007 111,341 - 18,844 - - 1,615 6,781 - 2,269 - - - - -31.12.2006 163,933 - 32,545 111,152 - 152,543 4,534 - 3,598 - - - - -Grossvalueprior tonettingGrossvalueafternettingFutureExposureGrossvalueprior tonettingGrossvalueafternettingFutureExposureAfternettingFutureExposure176


A.6 Residual duration of "over the counter" financial derivatives: notional valuesUnderlying asset/Residual durationUp to 1 yearOver 1 year andup to 5 yearsOver 5 years 31.12.2007A. Regulatory trading portfolio 22,299,727 10,538,853 3,341,888 36,180,468A.1 Financial derivatives on debt securities and interest rates 19,854,535 10,126,201 3,341,888 33,322,624A.2 Financial derivatives on capital securities and stock indexes 164,044 265,200 - 429,244A.3 Financial derivatives on exchange rates and gold 2,279,819 147,452 - 2,427,271A.4 Financial derivatives on other securities 1,329 - - 1,329B. Bank portfolio 6,132,623 2,154,942 289,639 8,577,204B.1 Financial derivatives on debt securities and interest rates 5,991,662 1,966,146 289,639 8,247,447B.2 Financial derivatives on capital securities and stock indexes 3,000 50,835 - 53,835B.3 Financial derivatives on exchange rates and gold 137,961 137,961 - 275,922B.4 Financial derivatives on other securities - - - -31.12.2007 28,432,350 12,693,795 3,631,527 44,757,67231.12.2006 13,014,436 14,596,338 5,406,683 33,017,457177


Section 3LIQUIDITY RISKQUANTITATIVE INFORMATION1. Time distribution for residual contractual maturity of financial assets and liabilitiesCurrency: EUROEntry/Time bandOn demandFrom more From morethan 1 day to than 7 days7 days to 15 daysFrom morethan 15days to 1monthFrom over 1month up to3 monthsFrom over 3months up to6 monthsFrom over 6months up to1 yearFrom over 1year up to 5yearsOver 5 yearsEntry/TimebandCash assets 9,799,896 1,032,787 755,386 2,502,227 4,980,218 1,886,823 2,313,350 10,148,988 10,480,082 1,092,060A.1 Government bonds - - - - 43,517 7 - 132,354 253,403 XA.2 Listed debt securities with innovation of capital - - - - 4,186 4,067 1,937 86,251 109,733 XA.3 Other debt securities 94 - - 4,998 1,035 2,873 75,046 349,119 273,193 XA.4 Interests in collective investment undertakings 50 - - - - - - - - XA.5 Loans 9,799,752 1,032,787 755,386 2,497,229 4,931,480 1,879,876 2,236,367 9,581,264 9,843,753 861,822- Banks 992,698 799,301 363,143 1,778,461 3,491,624 39,483 5,780 296,807 126,397 7,730- Customers 8,807,054 233,486 392,243 718,768 1,439,856 1,840,393 2,230,587 9,284,457 9,717,356 854,092Cash liabilities 16,939,797 1,012,066 811,421 3,096,202 5,142,704 2,718,766 2,825,825 6,774,975 3,968,457B.1 Deposits 16,629,132 676,655 539,099 2,345,168 3,273,661 31,494 10,925 39,524 773,233- Banks 183,810 657,500 475,996 2,345,121 3,235,154 31,265 10,232 37,587 501,281 X- Customers 16,445,322 19,155 63,103 47 38,507 229 693 1,937 271,952 XB.2 Debt securities 300,412 21,595 12,603 88,579 453,909 925,927 1,814,119 3,698,959 785,278 XB.3 Other liabilities 10,253 313,816 259,719 662,455 1,415,134 1,761,345 1,000,781 3,036,492 2,409,946 XOperations "off balance sheet" 470,700 738,225 53,515 160,739 1,061,509 180,668 158,058 129,741 - -C.1 Financial derivatives with exchange of capital 360,700 628,225 53,515 160,739 1,061,509 180,668 158,058 129,741 -- long positions 360,700 260,095 32,388 82,711 250,757 92,734 64,134 97,316 - X- short positions - 368,130 21,127 78,028 810,752 87,934 93,924 32,425 - XC.2 Deposits and loans to be received - - - - - - - - -- long positions - - - - - - - - - X- short positions - - - - - - - - - XC.3 Irrevocable commitments to grant finance 110,000 110,000 - - - - - - -- long positions - 110,000 - - - - - - - X- short positions 110,000 - - - - - - - - XCurrency: US DOLLAREntry/Time bandOn demandFrom moreFrom over From overFrom moreFrom more From over 1From overthan 73 months 6 monthsOver 5 Entry/Timethan 1 daythan 15 days month up to1 year updays to 15up to 6 up to 1years bandto 7 daysto 1 month 3 monthsto 5 yearsdaysmonths yearCash assets 52,122 61,045 53,374 298,536 319,896 77,092 11,585 151,401 151,959 -A.1 Government bonds - - - - - - - - - XA.2 Listed debt securities with innovation of capital - - - - - - - - - XA.3 Other debt securities - - - - - - - - - XA.4 Interests in collective investment undertakings - - - - - - - - - XA.5 Loans 52,122 61,045 53,374 298,536 319,896 77,092 11,585 151,401 151,959 932- Banks 6,286 25,134 35,203 196,452 98,013 9,053 85 93 - -- Customers 45,836 35,911 18,171 102,084 221,883 68,039 11,500 151,308 151,959 932Cash liabilities 240,974 174,388 75,311 371,565 236,457 9,679 3,118 107,533 - -B.1 Deposits 240,171 173,405 73,244 368,361 227,013 9,679 - - -- Banks 6,564 137,151 73,244 368,361 227,013 9,679 - - - X- Customers 233,607 36,254 - - - - - - - XB.2 Debt securities - - - - 3,395 - - 43,366 - XB.3 Other liabilities 803 983 2,067 3,204 6,049 - 3,118 64,167 - XOperations "off balance sheet" 34,685 186,366 21,324 116,889 281,234 137,070 149,593 59,085 -C.1 Financial derivatives with exchange of capital - 151,681 21,324 116,889 281,234 137,070 149,593 59,085 - -- long positions - 72,673 7,623 64,184 148,254 65,353 83,152 28,815 - X- short positions - 79,008 13,701 52,705 132,980 71,717 66,441 30,270 - XC.2 Deposits and loans to be received 34,202 34,202 - - - - - - -- long positions 34,202 - - - - - - - - X- short positions - 34,202 - - - - - - - XC.3 Irrevocable commitments to grant finance 483 483 - - - - - - -- long positions - 483 - - - - - - - X- short positions 483 - - - - - - - - X178


Currency: STERLINGEntry/Time bandOn demandFrom morethan 1 dayto 7 daysFrom morethan 7days to 15daysFrom morethan 15days to 1monthFrom over1 monthup to 3monthsFrom over3 monthsup to 6monthsFrom over6 monthsup to 1yearFrom over1 year upto 5 yearsOver 5yearsEntry/TimebandCash assets 8,638 156 10 1,970 453 547 292 1,106 - -A.1 Government bonds - - - - - - - - - XA.2 Listed debt securities with innovation of capital - - - - - - - - - XA.3 Other debt securities 1 - - - - - - - - XA.4 Interests in collective investment undertakings - - - - - - - - - XA.5 Loans 8,637 156 10 1,970 453 547 292 1,106 - -- Banks 6,861 - - 1,868 - - - - - -- Customers 1,776 156 10 102 453 547 292 1,106 - -Cash liabilities 19,810 45,123 1,042 1,868 - 836 - - - -B.1 Deposits 19,810 45,123 1,042 1,868 - 836 - - -- Banks 205 43,090 - 1,868 - 836 - - - X- Customers 19,605 2,033 1,042 - - - - - - XB.2 Debt securities - - - - - - - - - XB.3 Other liabilities - - - - - - - - - XOperations "off balance sheet" 2,045 54,201 40,169 22,637 135,448 49,421 11,803 - -C.1 Financial derivatives with exchange of capital - 52,156 40,169 22,637 135,448 49,421 11,803 - -- long positions - 45,151 20,104 10,453 69,082 25,314 5,650 - - X- short positions - 7,005 20,065 12,184 66,366 24,107 6,153 - - XC.2 Deposits and loans to be received 2,045 2,045 - - - - - - -- long positions 2,045 - - - - - - - - X- short positions - 2,045 - - - - - - - XC.3 Irrevocable commitments to grant finance - - - - - - - - -- long positions - - - - - - - - - X- short positions - - - - - - - - - XCurrency: YENEntry/Time bandOndemandFrom morethan 1 dayto 7 daysFrom morethan 7days to 15daysFrom morethan 15days to 1monthFrom over1 monthup to 3monthsFrom over3 monthsup to 6monthsFrom over6 monthsup to 1yearFrom over1 year upto 5 yearsOver 5yearsEntry/TimebandCash assets 628 1,119 2,356 7,163 7,497 5,312 - - - -A.1 Government bonds XA.2 Listed debt securities with innovation of capital XA.3 Other debt securities XA.4 Interests in collective investment undertakings XA.5 Loans 628 1,119 2,356 7,163 7,497 5,312 - - - -- Banks 584 - 424 - - - - - - -- Customers 44 1,119 1,932 7,163 7,497 5,312 - - - -Cash liabilities 5,769 31,891 - - 15,158 - - - - -B.1 Deposits 5,769 31,891 - - 15,158 - - - -- Banks 2,331 31,832 - - 15,158 - - X- Customers 3,438 59 - - - - - XB.2 Debt securities XB.3 Other liabilities XOperations "off balance sheet" 42,442 57,051 10 66,414 87,699 85,941 15,799 - -C.1 Financial derivatives with exchange of capital - 14,609 10 66,414 87,699 85,941 15,799 - -- long positions - 4,918 5 32,243 56,804 45,209 9,013 X- short positions - 9,691 5 34,171 30,895 40,732 6,786 XC.2 Deposits and loans to be received 42,442 42,442 - - - - - - -- long positions 42,442 - - - - - - X- short positions - 42,442 - - - - - XC.3 Irrevocable commitments to grant finance - - - - - - - - -- long positions X- short positions X179


Currency: SWISS FFRANCEntry/Time bandOn demandFrom morethan 1 dayto 7 daysFrom morethan 7days to 15daysFrom morethan 15days to 1monthFrom over1 month upto 3monthsFrom over3 monthsup to 6monthsFrom over6 monthsup to 1yearFrom over1 year upto 5 yearsOver 5yearsEntry/TimebandCash assets 1,179 11,327 2,232 18,267 17,789 4,822 - - - -A.1 Government bonds XA.2 Listed debt securities with innovation of capital XA.3 Other debt securities XA.4 Interests in collective investment undertakings XA.5 Loans 1,179 11,327 2,232 18,267 17,789 4,822 - - -- Banks 1,178 8,461 - - - 17- Customers 1 2,866 2,232 18,267 17,789 4,805Cash liabilities 5,478 3 - - 20,548 30,217 - - - -B.1 Deposits 5,478 3 - - 20,548 30,217 - - -- Banks 735 - - - 20,548 30,217 - - X- Customers 4,743 3 - - - - - - XB.2 Debt securities - - - - - - - - XB.3 Other liabilities XOperations "off balance sheet" 6,043 9,132 70 - 3,722 1,283 - - -C.1 Financial derivatives with exchange of capital - 3,089 70 - 3,722 1,283 - - -- long positions - 2 - - 3,237 302 - - - X- short positions - 3,087 70 - 485 981 - - - XC.2 Deposits and loans to be received - - - - - - - - -- long positions - - - - - - - - - X- short positions - - - - - - - - - XC.3 Irrevocable commitments to grant finance 6,043 6,043 - - - - - - -- long positions - 6,043 - - - - - - - X- short positions 6,043 - - - - - - - - XCurrency: Other currenciesEntry/Time bandFrom moreOn demand than 1 dayto 7 daysFrom morethan 7days to 15daysFrom morethan 15days to 1monthFrom over1 month upto 3monthsFrom over3 monthsup to 6monthsFrom over6 monthsup to 1yearFrom over1 year upto 5 yearsOver 5yearsEntry/TimebandCash assets 9,382 - 4,620 8,657 5,922 9,340 1,065 7,999 1,657 -A.1 Government bonds - - - - - - - - - XA.2 Listed debt securities with innovation of capital - - - - - - - - - XA.3 Other debt securities - - - - - - - - - XA.4 Interests in collective investment undertakings - - - - - - - - - XA.5 Loans 9,382 - 4,620 8,657 5,922 9,340 1,065 7,999 1,657- Banks 8,222 - 3,917 7,274 4,926 - - - -- Customers 1,160 - 703 1,383 996 9,340 1,065 7,999 - 18Cash liabilities 6,484 32,319 3,959 7,274 6,064 - - 18,856 - -B.1 Deposits 6,484 32,319 3,959 7,274 6,064 - - - -- Banks 1,151 31,884 - 7,274 6,064 - - - - X- Customers 5,333 435 3,959 - - - - - - XB.2 Debt securities - - - - - - - 18,856 - XB.3 Other liabilities - - - - - - - - - XOperations "off balance sheet" 1,748 10,354 1,861 5,101 48,778 36,706 31,040 - -C.1 Financial derivatives with exchange of capital - 8,606 1,861 5,101 48,778 36,706 31,040 - -- long positions - 4,174 1,189 3,029 25,272 18,300 17,771 - - X- short positions - 4,432 672 2,072 23,506 18,406 13,269 - - XC.2 Deposits and loans to be received - - - - - - - - -- long positions - - - - - - - - - X- short positions - - - - - - - - - XC.3 Irrevocable commitments to grant finance 1,748 1,748 - - - - - - -- long positions - 1,748 - - - - - - - X- short positions 1,748 - - - - - - - - X180


2. Distribution of financial liabilities by sectorExposure/CounterpartyGovernmentand centralbanksOther publicinstitutionsFinancialcompaniesInsurancecompaniesNon-financialcompaniesOther subjects1. Due to customers 46,356 324,927 1,185,104 477,994 4,168,296 13,607,8652. Short-term securities - 142 647,657 187,131 56,225 4,438,2323. Financial liabilities held for trading - - 38,030 1,410 82,773 161,1954. Financial liabilities designated at fair value - - - - - -31.12.2007 46,356 325,069 1,870,791 666,535 4,307,294 18,207,29231.12.2006 65,046 379,253 1,847,443 957,952 4,449,784 22,965,0573. National distribution of financial liabilitiesExposure/CounterpartyITALYOTHEREUROPEANCOUNTRIESAMERICAASIAREST OFWORLD1. Due to customers 19,235,259 499,670 42,834 4,801 27,9782. Due to banks 1,658,770 11,995,140 64,784 2,023 84,2513. Short-term securities 3,529,991 1,478,276 300,331 - 20,7894. Financial liabilities held for trading 163,963 111,144 8,301 - -5. Financial liabilities designated at fair value - - - - -31.12.2007 24,587,983 14,084,230 416,250 6,824 133,01831.12.2006 30,470,421 11,540,314 476,064 4,294 100,698181


182


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Section 1Shareholders' equityA. QUALITATIVE INFORMATIONThe Group’s assets are appropriate for its present economic and equity structure, both in individual terms and as requiredby the Bank of Italy.In planning the future development of the Group’s activities, adherence to the minimum regulatory capital requirementneeded to sustain growth in loans in both quantitative and qualitative terms, and more generally in relation to underlyingrisk, is constantly monitored.B. QUANTITATIVE INFORMATIONPlease refer to "Part B – Information on the Consolidated Balance Sheet" – Liabilities – Sections 15 and 16.185


Section 2Shareholders' equity and regulatorycapital bank ratios2.1 Area of Application of RegulationsWe note that, in compliance with regulations for thecalculation of the consolidated equity and adequacyratios only the data provided by the banks, financial andoperating companies belonging to the banking group orthat were consolidated on a proportional basis was used.We further note that there are no restrictions orimpediments involving the transfer of equity componentsbetween group companies.2.2 Bank Capital for Supervisory PurposesA. Qualitative information1. Tier I CapitalThe tier 1 capital includes the following net shareholders’equity items (amounts in thousands of euro):a) entirely paid in share capital: 926,266 (item 190of the balance sheet liabilities);b) issue premiums: 2,188,152 (item 180 of thebalance sheet liabilities);c) other reserves: 189,527 (item 170 of thebalance sheet liabilities for the portionconcerning the banking group);d) minority interests: 39,667 (item 210 of thebalance sheet liabilities for the part concerningthe banking group, not including the profitsattributable to minority interests):e) loss for the year: 5,411 (not including the part ofprofit or loss concerning companies which do notbelong to the banking group).Furthermore, the following are applicable to theformation of the tier 1 capital (amounts in thousands ofeuro):f) increases: Innovative equities (preferredsecurities): 300,000 (included under item 30“Short term securities” of the balance sheetliabilities), the main features of which aredescribed in table 3.2 “Detail of item 30Securities issued: subordinated securities”;g) decreases: intangible fixed assets: 845,182(item 130 of the balance sheet assets);2. Tier II CapitalThe following elements make up the tier II capital(amounts in thousands of euro):a) revaluation reserves – financial assets availablefor sale – positive balance: 8,884 (includedunder item 140 of the balance sheet liabilities,excluding the portion of shareholdings in banksand financial companies and the portionconcerning companies which do not belong tothe banking group);b) valuation reserves – special laws on revaluation:70,129 (included in item 140 of the balancesheet liabilities);c) hybrid equity increase instruments andsubordinated liabilities (insofar as the includedportion): 1,268,717 (included under item 10“Due to banks” and 30 “Outstanding securities”in the balance sheet liabilities), the mainfeatures of which are described in tables 1.2“Detail of item 10 Due to banks: subordinatedpayables” and 3.2 “Detail of item 30 Securitiesissued: subordinated securities”;Furthermore, the negative IAS/IFRS prudential filtershave been reduced: 4,442 representing 50% of the totalvaluation reserve amount as under point a) above.3. Tier III CapitalThere is no tier III capital.The overall regulatory capital (total capital) of 4,057,046thousand euro is the sum of the tier I and tier II capital,net of the deduction provided for equity investments ininsurance companies exceeding 20% (79,261 thousandeuro).186


B. QUANTITATIVE INFORMATIONExposure/Counterparty 31.12.2007 31.12.2006A. Tier 1 capital before applying prudential filters 2,793,019 2,811,746B. Prudential filters of tier 1 capital:B.1 positive prudential IAS/IFRS filters (+) - -B.2 negative prudential IAS/IFRS filters (-) - -C. Tier 1 capital before element deduction (A+B) 2,793,019 2,811,746D. Elements to be deducted from Tier 1 capital - -E. Total Tier 1 (C-D) 2,793,019 2,811,746F. Tier 2 capital before applying prudential filters 1,347,730 1,571,962G. Prudential filters of tier 2 capital -4,442 -68,436G.1 positive prudential IAS/IFRS filters (+) - -G.2 negative prudential IAS/IFRS filters (-) -4,442 -68,436H. Tier 2 capital before element deduction (F+G) 1,343,288 1,503,526I. Elements to be deducted from Tier 2 capital - -L. Total Tier 2 capital (H-I) 1,343,288 1,503,526M. Elements to be deducted from total tier 1 and tier 2 capital 79,261 75,027N. Regulatory capital (E+L-M) 4,057,046 4,240,245O. Tier 3 capital -P. Regulatory capital included Tier 3 capital (N+O) 4,057,046 4,240,245187


2.3 Capital Adequacy - Quantitative informationValue/CategoriesUnweighted ValuesWeightedamounts/Requisites31.12.2007 31.12.2006 31.12.2007 31.12.2006A. RISK ASSETSA.1 CREDIT RISK 46,838,109 48,923,272 39,043,329 40,530,033STANDARD METHODOLOGYCASH ASSETS 41,816,564 43,813,126 34,493,139 35,983,0641. Exposures (other than capital notes and other subordinated assets) towards (or guaranteed by): 34,258,724 36,586,824 30,223,226 31,761,9161.1 Governments and Central Banks 2,832,787 2,695,006 34,068 29,5421.2 Public bodies 112,347 175,735 22,469 37,4721.3 Banks 1,418,138 2,506,219 271,240 485,0391.4 Other parties (other than mortgage loans on residential and non-residential properties) 29,895,452 31,209,864 29,895,449 31,209,8632. Mortgage loans on residential properties 5,700,815 5,107,756 2,850,408 2,553,8783. Mortgage loans on non residential properties - - - -4. Stock, equity investments, and subordinated assets 381,466 502,120 413,689 553,8705. Other cash assets 1,475,558 1,616,426 1,005,817 1,113,401OFF BALANCE SHEET ASSETS 5,021,545 5,110,146 4,550,190 4,546,9691. Guarantees and commitments to (or guaranteed by:): 4,724,523 4,646,354 4,480,182 4,436,8951.1 Governments and Central Banks 46,150 51,477 - -1.2 Public bodies 24,481 23,780 4,896 4,7561.3 Banks 221,177 170,365 42,570 31,4141.4 Other subjects 4,432,473 4,400,732 4,432,473 4,400,7252. Derivative contracts to (or guaranteed by): 297,022 463,791 70,009 110,0742.1 Governments and Central Banks - - - -2.2 Public bodies - - - -2.3 Banks 261,675 406,074 52,335 81,2152.4 Other subjects 35,347 57,718 17,674 28,859B. REGULATORY CAPITAL REQUISITESB.1 CREDIT RISK 3,123,466 3,242,403B.2 MARKET RISK 127,161 69,5121. STANDARD METHODOLOGY X X 127,161 69,512Of which:+ risk of position on debt securities X X 47,033 32,041+ position risk on capital securities X X 60,725 27,198+ exchange rate risk X X 2,668 -+ other risks X X 16,735 10,2722. INTERNAL MODELS X X - -Of which:+ risk of position on debt securities X X - -+ position risk on capital securities X X - -+ exchange rate risk X X - -B.3 OTHER PRUDENTIAL REQUISITES X X 30,792 75,975B.4 TOTAL PRUDENTIAL REQUIREMENTS (B1 + B2 + B3) X X 3,281,419 3,387,889C. RISK ASSETS AND ADEQUACY RATIOSC.1 Risk-weighted assets X X 41,017,741 42,348,618C.2 Tier 1 capital/Risk-weighted assets (Tier 1 capital ratio) X X 6.81% 6.64%C.3 Regulatory capital/Risk-weighted assets (Total capital ratio) X X 9.89% 10.01%188


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1 - Information on directors' and executives' feesSALARIES OF EXECUTIVES WITH STRATEGIC RESPONSIBILITIESAmounts in €/thousand 31.12.2007a) Short-term employee benefits 8,930b) Post-employment benefits 225c) Other long-term benefits 20d) Termination pay 755e) Share-based payments -Total salaries of executives with strategic responsibilities 9,930-DIRECTORS' FEESAmounts in €/thousand 31.12.2007a) - Directors 9,406TOTAL 9,4062 - Information on transactions with related partiesThe following tables illustrate total assets, liabilities, guarantees and commitments as well as economic data regarding transactions between BancaAntonveneta and related parties.All transactions with related parties are part of the bank's ordinary business and are made up primarily or current account-related operations or other typesof funding. The economic aspects of said relations reflect market conditions.Balance Sheet data€/thousand ASSETS LIABILITIES GUARANTEES LOANSA. Parent company 206,303 10,188,978 3,128 -B. Economic entities with joint control or significant influence in the Group - 970 27,833 -C. Parent companies 3,741,052 521,342 3,950 -D. Associated companies 211,090 15,650 76 -E. Joint ventures in which the bank is an investee company 58,563 353,500 900 -F. Executives with strategic responsibilities for the body or its parent company 311,169 71,947 23,330 200G. Other related parties 252,105 45,588 11,868 36,125Income Statement data€/thousandINTERESTINCOMEINTERESTEXPENSEFEE ANDOTHERINCOMEFEE ANDOTHEREXPENSEA. Parent company 10,360 343,443 52,109 60,184B. Economic entities with joint control or significant influence in the Group 9 5,381 280 -C. Parent companies 43,681 3,642 15,267 126D. Associated companies 7,265 94 1,585 1,469E. Joint ventures in which the bank is an investee company 81 14,184 305 -F. Executives with strategic responsibilities for the body or its parent company 22,203 2,016 914 10G. Other related parties 14,386 684 670 85191


Scope of Consolidation and Preparation of the Consolidated Financial StatementsCompanies consolidated by integral methodPercentage investmentDirectIndirectInterbanca S.p.A. 99.991%Interbanca International Holding S.a. 99.991%BIOS Interbanca S.p.A. 81.828%La Cittadella S.p.A. 99.167%Salvemini S.r.l. 100.000%Antonveneta Capital L.L.C. I 100.000%Antonveneta Capital L.L.C. II 100.000%Antonveneta Capital Trust I 100.000%Antonveneta Capital Trust II 100.000%Giotto Finance S.p.A. 98.000%Giotto Finance 2 S.p.A. 98.000%Antenore Finance S.p.A. 98.000%Theano Finance S.p.A. 98.000%Antonveneta ABN AMRO Bank S.p.A. 55.000%Antonveneta ABN AMRO S.G.R. S.p.A. 55.000%Antonveneta ABN AMRO Investment Funds Limited 55.000%Antonveneta Immobiliare S.p.A. 100.000%The net equity method has been used to value the companies which are subsidiaries, but do not carry out banking or financial activities,or activities instrumental to the Group, as well as equity investments on which the Parent Bank has significant influence. The companiesin said category are set forth in the table below:Companies accounted for with equity methodPercentage investmentDirectIndirectAntonveneta Vita S.p.A. 50.000%Antonveneta Assicurazioni S.p.A. 50.000%Padova 2000 Iniziative Immobiliari S.p.A. 45.010%Costruzioni Ecologiche Moderne S.p.A. 40.197%Sidermo S.r.l. in liquidazione 32.250%192


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The report and financial statements have been translated from those issued in Italy, from Italian to English,solely for the convenience of international readers.194


INDIVIDUAL FINANCIAL STATEMENTS DATA(data in millions of Euro)DIRECTDEPOSITS25,160INDIRECTDEPOSITS36,198LOANS TOCUSTOMERS30,5950 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000NUMBEROF BRANCHES9,389NUMBER OFEMPLOYEES996195


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Dear Shareholders,In addition to illustrating the economic and financialchanges that took place in 2007, this reportaccompanying the consolidated financial statementscontains a full description of events that affected thecorporate structure of ABN AMRO Bank and the resultingeffects on the activation of strategies according to whichoperations at Banca Antonveneta took shape.Further information on the activity performed and theresults achieved by Banca Antonveneta during 2007 areoutlined below.The results for financial year 2007Based on the strategies set forth in the “2007-2008Industrial Plan,” in the year that recently ended BancaAntonveneta’s activity was centred on satisfying theincreasing needs of its clientele by developing initiativesin the consumer sector, supporting businesses andimplementing services targeted to the private segment;insofar as operations in the latter sector, BancaAntonveneta has acquired from ABN AMRO Bank itsdedicated division, effective as from 1 July 2007.The corporate issues faced by ABN AMRO Bank whichare described in the paragraph on governance, coupledwith increased competition in the business environmentand the tensions in the financial markets, ended upslowing down activation of the Plan and theachievement of the objectives set for 2007, especially interms of brokered volumes and therefore of revenuesfrom asset management; furthermore, the accounts forthe period were negatively impacted by specific eventsof a non-recurring nature, which are described below.The financial year ended with a net loss of 15.1 millioneuro, compared to the profits of 293.3 million euro ofthe previous year.Compared to 2006, total revenues dropped byapproximately 100 million euro (-5.3%). Thisperformance was mainly the result of increases in theinterest margin (approximately 15 million euro, +1.4%)and the aggregate value consisting of dividends and theresult of trading (approximately 35 million euro overall,+41.2%) on the positive side; on the negative side, thedrop in the ne t balance in other operating income(-32 million euro, -15%), the commission componentwhich dropped on account of the adoption of morecompetitive price policies, and the marked contractionof other revenues of a financial nature (-112 millioneuro, -92.9%).The unfavourable performance of total operating incomeis to a great extent explained by the different impact onthe accounts of the two financial years of non recurringevents consisting mainly of: the lower contribution of netproceeds from disposals of equity investments (31million euro compared to 92.5 million euro in 2006), thewrite-down of the interest in Hopa S.p.A. (48 millioneuro) and finally, the positive contribution of theaforementioned disposal of non-performing loans (14million euro compared to 1.4 million euro of the trancherealised in 2006). If the overall effect of the abovementioned components in the comparison of the twofinancial years were not considered, the change inrevenue would be substantially null.Operating expenses increased by approximately 126million euro compared to the previous year (+11.3%),mainly on account of the increased personnel expenses,which amounted to 111 million euro (+19.1%).Furthermore, this item was affected by non-recurringcharges of 61 million euro that related to incentives forvoluntary termination benefits provided to the personneland the allowances for the employee departure plan in2008, which were only partially offset by 17 million euroof benefits from the application of the new regulation onSeverance Indemnities; conversely, allowances of 11million euro were recuperated from personnel costs in2006. If the effect of the aforementioned items were nottaken into account in both financial years, the increasein the personnel costs would amount to approximately9%, reflecting the allowance for the recent renewal ofthe labour contract and the policy of the Bank in 2007which was aimed at reinforcing, including qualitatively,the commercial network and the coordination structures.The aggregate value of the adjustments and theallowances amounted to a total of 374 million euro,which represents an increase of 119 million euro over2006. On the one hand, this discounts the increasesfrom the loan adjustments (+84 million euro, 7 of whichderive from the aforementioned loan disposal operation),in conjunction with a policy of carefully evaluation of theBank’s positions and on the other hand, of the chargeslinked to the tax dispute on the BELL S.A. shareholding(14 million euro) and the impairment of the financialassets (16 million euro, mainly referable to ItaleaseS.p.A., BELL S.A. and Palladio Finanziaria).The taxes on the income taxes for the year affected thecurrent profits much more so than in 2006, largelybecause of the extraordinary impact (of approximately64 million euro) of the assessment of deferred tax assetsand liabilities, due to the decrease in the IRES[corporate income tax] rate (from 33% to 27.5%) asprovided by the Finance Law for 2008.199


With reference to the brokered volumes, the fundingpolicy followed by the Bank, which is based on thereplacement of short term securities by indirect depositsand supported also by the specific agreements forfinancing under favourable terms concluded with ABNAMRO Bank, was negatively affected, particularly asfrom the second semester of 2007, by the badperformance of the asset management department.As at 31 December 2007, the total deposits amounted to61,358 million euro, down by 2.0% compared to the62,602 million euro at the end of 2006. In particular, the4.3% drop in direct deposits (25,160 million euro) wasmainly due to bonds, while the indirect deposits (36,198million euro) dropped by only 0.3% compared to the12.4% drop in the asset management area and theincrease of 6.7% for administered deposits.At the same date, the loans to customers amounted to30,595 million euro, increasing by 2.0% on an annualbasis. The increase in the loans is due to the “mediumand long term” component and mortgage loans inparticular (+6.5%) which are granted to the commercialas well as the consumer clientele.After having proceeded to acquire 458 million euro ofnon-performing loans from the securitisation companyAntenore Finance (180 million euro) and Theano Finance(278 million euro), last month Banca Antonvenetaconcluded a transaction involving the disposal ofproblem loans and bad debts. This transaction involvedthe sale without recourse of these loans both for theBank (approximately 1.1 billion euro including theadjustments made over time) and the securitisationcompany Antenore Finance (39 million euro) and TheanoFinance (994 million euro). Between 31 December 2006and 31 December 2007, the net impaired loansdecreased by 6.6%, including as an effect of theaforementioned disposal, with a hedging level of 53.4%down from 54%.Business PoliciesDuring 2007, the Bank's business policies were centredaround new products and services that respond better tomarket demand and are more competitive in terms ofprice.Three new advertising campaigns promoting packagecurrent accounts were launched in order to attract newcustomers and retain existing ones. The “member getmember” initiative which was directed towards privatecustomers that are holders of a “Systema” accountprovided a discount on the service fee depending on thenumber of new customers presented; the offer wasnamed “costo zero” and involved the Systema, InTeam (which targets businesses and has now beenrenamed Working Team) and Conto Pro (forfreelance professionals) opened in 2007 and offered thepossibility of zeroing the service charge and theproduction and account statement expenses completelyby 31 st December of last year; the “più usi, menopaghi” (the more you use the less you pay) campaigntargeted holders of Systema accounts, making itpossible to gradually reduce the monthly service chargeuntil its complete removal, in return for increased usageof the individual services.Last July the new Conto Internet account was developedspecifically for customers who prefer using alternativechannels to traditional ones while there are no chargesor commissions for some transactions that take placedirectly at the branch. In September, a new product waslaunched in Padua (with the intention of extending it tothe entire network) which targeted university students(Dr. Jecko) with favourable conditions and numerouspromotional initiatives.To further reinforce relations with the family segment,the housing loan segment was increased considerablywith a series of new products:• the Mutuo Easy 5 which aims to facilitate youngpeople in the purchase of their “starter home”and provides for fixed low instalments for the firstfive years which repay only interest andthereafter provides the possibility of selecting therate, on several occasions and without addedcosts. This is a 40 year loan which covers up to90% of the value of the property;• the Mutuo Liquidità, which consists of a loanguaranteed by mortgage on a property that isalready owned by the applicant. This loan can beused for various purposes such as paying offother loans or for purchases required forlaunching a business;• the new product for refinancing of housing loansgranted by other institutions, which involves thesubrogation of the Bank in the rights of theprevious creditor, pursuant to the “Bersani Bis”Legislative Decree (which was converted into Law40/2007). The replacement offer, which aims toimprove the conditions of the preceding loanagreement and to reduce the instalment amount,including through extension of the loan’s durationup to 40 years, does not involve penalties forrepayment of the old loan or the payment of bankcharges and refinancing taxes on the new loan.Furthermore, two new types of personal loans wereproposed, the Eco Prestito, which is specifically forbuilding renovations and the production ofenvironmentally sustainable energy sources (which havebecome attractive on account of the 2007 tax measures)and the Prestito Premio di Rottamazione, whichaccompanies the scrapping loan.For the private sector, the activity of which had beenpreviously carried out by AAA Bank and was acquired by200


Banca Antonveneta in 2007, a new service model wasintroduced which is based on support from RelationshipManagers, Investment Advisors and Account Managersand which aims to strengthen relations with customersand improve the level of service offered. Furthermore, inorder to further expand the total offer, agreements wereconcluded with third party companies for the distributionof the mutual funds of two of the best asset managersand place structured products that are specificallytailored for private customers. Insofar as procedures areconcerned, a new application platform was created withwhich to manage the financial position and theperformance of customer portfolios.In the managed savings department, the Bank continuedto distribute the AAA Bank and AAA S.g.r. products,including in particular the Expert funds which weremarketed as from the end of 2006 and managed forabsolute return, even if the placement activity wasgenerally slowed down by the negative state of themarket.The placement of Antonveneta Vita policies continued, inparticular those with a higher financial component, thoselinked to separate managements and the new EliosPrevidenza 2007, distributed from last June following therevision of the regulations on complementary socialsecurity.During 2007, the Bank was very active in the debit cardssector, for which new products were introduced, newprocedures implemented and targeted advertising waslaunched.For credit cards, the Mastercard family was expandedwith the distribution of new versions named Classic Plus,Gold Plus and Platinum Plus, that feature greatersecurity (as they contain a microchip and require a PINcode instead of signature), greater transparency in costs("all inclusive" fee is free for the first year and thendecreases as use of the card increases, with interestrates on instalment payments that are among the loweston the market) and greater flexibility (with thepossibility of selecting whether to repay in full orproceed in revolving credit mode, as well as to vary thetype of instalment and the day of the month in which itis charged. In order to increase the use of cards andnumber of transactions, two contests were organised incollaboration with Mastercard, which were named “Winyou vacation expenses” and “The gifts never stopcoming.” Furthermore, the new Servizio messaggi OnLine (On Line message service) began operating, whichallows customers to check all transactions in real timevia an SMS; finally, an agreement was concluded withAutostrade per l’Italia, which provides the possibility ofincluding the Telepass Family on the credit cards, for aparticularly competitive fee.For debit cards, the OLI-On Line to Issuer programbegan, which provides for the authorisation towithdraw/pay with international debit cards is granteddirectly by the Bank, exclusively in relation tothe available balance in the account, thereby doing awaywith the risk of overdrafts.At the end of 2007, over 475 thousand debit cards, 350thousand credit cards and about 34 thousand prepaidcards were in circulation, with increases of +2%, +15%,and +26% over 2006. The overall transaction volumefrom all credit cards was 1,168 million euro, which is anannual increase of 4.6%; for debit cards, the volumesurpassed 3.1 billion euro, which is an increase of morethan 1% compared to 2006.Insofar as operations, the replacement of the P.O.S.terminals with microcircuit terminals continued; at theend of 2007, the latter were 80% of the total terminals,which is above the average for the System. Morepartnerships were formed with important corporategroups to assist in increasing the transactions carriedout through physical and virtual P.O.S.s and to makepayments on line through terminals connected to navalsatellite networks. On 31 st December 2007,approximately 65,000 physical and approximately 1,100"virtual" terminals were in operation; on that same date,the number of transactions with debit cards had reachedalmost 71 million euro for an amount of approximately4.2 billion euro; there were approximately 53 millionuses of credit cards, for a total amount of approximately4.5 billion euro.The banking services via internet and telephone weresupplemented with a new operation that allowscustomers to directly give transfer orders to be executedin the Eurozone (cross border transfers) and manage therelative limits.There were 85 thousand users connected to the ByBankservice at the end of 2007, with an annual growth of25%; the orders given by customers exceeded 720thousand, while the on line trading had over 300thousand orders to buy and sell securities.Also in the “virtual banking” area, in 2007 Antonvenetaparticipated in the new Corporate Banking Interbancario(CBI2), which is fully compatible with the correspondingEuropean schemes. At the moment, the service allowscompanies to communicate, directly through theInternet, with Italian and European partners to arrangecollections and payments on the basis of SEPA (SingleEuro Payment Area) schemes; in the near future, theproject will be extended further to also allow electronicdocumentation, such as invoices, to be exchanged. Thepositive trend continued for remote banking services,with a 34% overall increase in positions; even betterresults were achieved in a “Proposing Bank” capacity(approximately +53%). At the end of 2007, the overallconnections reached 72 thousand (compared to 53thousand at the end of 2006), of which over 50thousand in a “Proposing Bank” capacity.201


Insofar as the activity on financial markets, the evolutionof which has been set forth in the specific paragraph ofthe report accompanying the consolidated financialstatements, during 2007 the Bank increased recourse toloans that are part of the Credit Facility Agreemententered into with ABN AMRO Bank, so as to replace thesecuritised funding in a phase characterised by thetendency of customers to prefer more diversifiedinvestment products, with yields that are higher than fortraditional bank bonds.Forex activity made the Bank's presence significant onthe major currency markets, with more efficient pricingfor its customers. The activity involving derivatives withcorporate customers also continued through thebroadening of the proposals that now include commodityderivatives. For securitised derivatives in particular, theBank has continued to consolidate its presence on theSEDEX market of the Borsa Italiana and to develop itsmarket making activity on index and rate linkedproducts.Operations management and internal controlsDuring 2007, considerable effort was dedicated torealising the initiatives aimed at supporting the Bank’scommercial policies, increasing efficiency, especiallyinsofar as credit and adapting the structures to the newdomestic and international regulations.Particular attention was paid to carrying out activitiesrelated to market abuse; we then adapted proceduresand our internal organization to apply the MiFIDDirective (effective as from last November 1), while theactivities for compliance with the provisions concerningthe so-called “dormant accounts”, the process for whichwill be complete in 2008, are underway. Furthermore,following transposition into the domestic legislativesystem (Legislative Decree 231/2007) of the EUDirectives on prevention and comparison of antilaunderingand funding for terrorism, the New ClientTake ON – NCTO system has been set up as has the RiskRe – Assessment – RRA process, which is aimed atincreasing knowledge of the existing customers andverifying the reliability of the information providedand/or acquired, on the basis of the “Know Your Client”(KYC) principle.As part of the Business Community project, the testingof the operational Continuity Plan for critical processeswas carried with positive results and included twoDisaster Recovery tests and two Crisis Managementdrills; furthermore, as part of the outsourcing contractconcluded with Roma Servizi Informatici S.p.A., weverified the appropriateness of the I.C.T. Recovery Plansinsofar as the rules established by the Banca D’Italia,those set forth by ABN AMRO Bank and the internationalbest practices.The activities aimed at reinforcing the control system(methods and instruments) and the internal auditingstructure continued, also following the impactsconnected to the staff departures and the requirementsfor integration with ABN AMRO Bank. The activitiescarried out in compliance with the SupervisoryInstructions regarding the system of controls, resulted ingeneral and sectoral checks within the distribution andcentral structures.Meanwhile, the Bank continued to update and streamlinethe systems for the measurement of credit risks, also inorder to align them as provided in the Bank of Italycircular n. 263 of 27 th December 2006 (which transposedcommunity directives 2006/48/EC and 2006/49/EC andthe document “International Convergence of CapitalMeasurement and Capital Standards. New RegulationScheme” of the Basel Committee on BankingSupervision). Further "operational experimentation” ofthe rating models developed for small and medium sizecompanies, small businesses and individuals was carriedout on the one hand and valuation models of "loss givendefault” (LGD) and “exposure at default” (EAD) wereimplemented on the other in order to comply with themost recent indications set by domestic supervisionauthorities and the Basel Committee on BankingSupervision on advanced internal models, Furthermore,the models for acceptance scores on mortgages andpersonal loans dedicated to the retail segment werereleased and made operational.202


Distribution ChannelsDuring 2007, Banca Antonveneta opened two new branches, one in Milan, Lombardy and one in Catania, Sicily, therebybringing the total number of branches, including the Luxembourg branch, to 996.BANCA ANTONVENETA - NETWORK AS AT 31 DECEMBER 2007RegionsNo. ofbranchesPIEDMONT 42VALLE D'AOSTA 1LIGURIA 12LOMBARDY 110VENETO 289FRIULI-VENEZIA GIULIA 66TRENTINO-ALTO ADIGE 2EMILIA-ROMAGNA 98MARCHE 34TUSCANY 21UMBRIA 1LAZIO 87ABRUZZI 7MOLISE 2CAMPANIA 26PUGLIA 71BASILICATA 2CALABRIA 28SICILY 96Total Itailan Network 995Foreign network 11422110 289981221663417872269622871TOTAL 996Human ResourcesDuring 2007, the process aimed at rationalising andfunctionally re-allocating the personnel in order toimprove operations and efficiency continued. Inparticular, the commercial network and coordinatingstructures were reinforced, thus inversing the tendencyto reduce staff that had emerged in recent years.As at 31 st December 2007, there were 9,389 BancaAntonveneta employees, compared to 9,239 at the endof 2006, which is an increase of 150 employees. Inparticular, there were 594 staff departures, 98 of whichwere due to the disposal, last April 1 st , of part of the lineof business that processed data to Roma ServiziInformatici which belongs to the E.D.S. Group and 294following the activation of the labour agreements on thevoluntary departure of employees; there were 744 newstaff entries, of which 75 were due to the acquisition ofthe private business line of AAA Bank.Last December, Banca Antonveneta and the labourunions reached an agreement on the activation of a newplan for voluntary personnel departures that coversemployees that are close to retirement and those thatcan use the exemptions provided by the "SolidarityFund" for credit institution employees, which is held bythe INPS (Social Security Agency). This agreement willbecome effective in 2008.During 2007, the Bank aimed to increase the quality ofthe personnel, through professional development andtraining and to reduce the average age of the staff,including through a recruitment campaign of a significantscale which, thanks to the careful selection of thecandidates, resulted in a significant increase of staff withdegrees (which increased from 28% at the end of 2006to 32% at the end of 2007).Insofar as training is concerned, the initiativesundertaken in 2007 involved approximately 20,000employees, which more than doubled the 9000employees of 2006, for a total of approximately 28,000man days.203


Legislative Decree No. 196/2003 (“The PrivacyAct”)In relation to the provisions set out in the legislativedecree above, we hereby announce that BancaAntonveneta updated the Security ProgrammeDocument.The Organisation, management and control modelpursuant to Legislative Decree 231/2001Concerning compliance with the provisions set forthwithin Legislative Decree 231/2001 (on theadministrative liability of legal persons, companies andassociations not constituting legal persons), during 2007the Company began updating its own Organization andManagement model that was approved by the Board ofDirectors in its meeting held on 6 th March 2008.204


The Economic and Financial TrendsDear Shareholders,Having provided an overview of the main events and management strategies that shaped the Bank’s operations in 2007,we illustrate the results achieved and the changes in the main aggregates of the balance sheet and income statement.The preparation criteria for the financial statements and the accounting figures are analytically outlined in the "Notes tothe Accounts."Customers' depositsTotal depositsAs at 31 December 2007, total deposits consisting of direct and indirect customer deposits amounted to 61,358 millioneuro, which represents a decrease of 2% compared to the 62,602 million euro at the end of 2006. During the year, theBank continued the funding policy it had initiated in 2006, which is based on increasing indirect deposits and concurrentlyreducing bond issues, which was made possible on account of the agreements concluded with ABN AMRO Bank.As from the second half of last year, the worsening of the negative phase for the managed saving department, with thedrop in the main market indices, negatively influenced the placement of Group products with customers, even though, atthe level of overall indirect deposits, this phenomenon was almost entirely offset by the concurrent growth in administeredsavings.Direct and indirect deposits(€/thousand) 31.12.2007 31.12.2006 % ChangesDirect deposits 25,159,906 26,291,066 -4.3%Indirect deposits 36,198,076 36,311,219 -0.3%Total deposits 61,357,982 62,602,285 -2.0%Direct depositsAt the end of 2007, direct deposits reached 25,160 million euro, which is lower by 4.3% than the amount as at 31December 2006.Direct deposits by technicalchannels(€/thousand)31.12.2007 31.12.2006 % ChangesDue to customers- current accounts and deposits 16,543,840 16,997,958 -2.7%- time deposits 393,737 404,021 -2.5%- other payables 2,892,942 2,138,108 +35.3%Total due to customers 19,830,519 19,540,087 +1.5%Short-term securities:- bonds 3,852,346 5,039,097 -23.6%- subordinated securities 1,074,422 1,201,101 -10.5%- other securities 402,619 510,781 -21.2%Total short-term securities 5,329,387 6,750,979 -21.1%Direct customer deposits 25,159,906 26,291,066 -4.3%205


The drop in direct savings is due to the reduction in short-term securities (-21.1%), which followed the failure to renewthe matured bonds.Insofar as the “Due to Customers” items, the 1.5% growth in 2007 was the result of the increases in repurchaseagreements with ordinary customers and consumer households in particular.DIRECT DEPOSIT(in millions of Euro)DIRECT DEPOSIT(%)30,00029,00028,00027,00026,00029,20027,91826,29125,160BONDS21.18%OTHERDEPOSITS11.50%25,00024,00023,0002004 2005 2006 2007TERMSDEPOSITS1.56%CURRENT ANDDEMANDDEPOSITS65.76%Indirect depositsAs at 31 December 2007, indirect deposits of 36,198 million euro were slightly lower (-0.3%) than at 31 December 2006(36,311 million euro), despite the negative drop of 5.6% in the fourth quarter of 2007, which was due to the worseningof the negative phase that the managed assets department went through and the drop in market values. During 2007,the assets of the Private Banking department acquired from AAA Bank were added to the total. These consisted almostentirely of securities held in custody and administered securities.Indirect deposits(at market values)(€/thousand)31.12.2007 31.12.2006 % Changes- securities under management 1,074,248 1,522,723 -29.5%- mutual investment funds and SICAV's 6,690,271 7,667,885 -12.7%- technical insurance reserves 3,956,014 4,188,337 -5.5%Assets under management 11,720,533 13,378,945 -12.4%Administered savings 24,477,543 22,932,274 +6.7%Indirect deposits 36,198,076 36,311,219 -0.3%At the individual component level, administered savings (24,478 million euro) increased by 6.7%, thanks mainly to theplacement of structured products, the contribution of which was higher than in 2006 (1.4 billion euro compared to 1.2billion euro). Assets under management (11,721 million euro) dropped by 12.4%, most of which was concentrated in Q42007 (-12.2%); indeed, compared to the net deposits of mutual funds and managed assets which was negative by 1.3billion euro for the entire year, the net outflows in Q4 alone amounted to 1.7 billion euro. Conversely, inflows from lifeassurance policies were positive in the last quarter of the year by over 100 million euro, compared to a negative balanceof 320 million euro in the first nine months of 2007.During 2007, the placement of the Abn Amro Investment Funds S.A. SICAV continued and resulted in a net inflow ofapproximately 130 million euro, despite the net outflow in the fourth quartet (1.2 billion euro); at the end of the year, ittotalled 2,926 million euro, which is 5% lower than as at 31 December 2006, on account of the drop in current values.206


INDIRECT DEPOSITS(in millions of Euro)INDIRECT DEPOSITS(%)40,00035,00030,00028,43533,584 36,311 36,198GPM2.97%MUTUALFUNDS18.48%25,00020,00015,00010,0005,0000MANAGEDSAVINGS67.62%TECHNICALRESERVES10.93%2004 2005 2006 2007Loans to customersAs at 31 December 2007, loans to customers totalled 30,595 million euro, up 2% on the 29,990 million euro at the end of2006.Customer loans by technical channels 31.12.2007 31.12.2006 % Changes(€/thousand)Current accounts 6,341,182 6,405,777 -1.0%Mortgage loans 12,099,747 11,356,303 +6.5%Credit cards, personal loans and loans against salaries 712,807 634,461 +12.3%other loans 9,610,050 9,633,830 -0.2%Non-performing loans 1,831,460 1,960,011 -6.6%Loans to customers 30,595,246 29,990,382 +2.0%During the year, Banca Antonveneta continued its policy aimed at spreading the risk, the quality and the profitability ofthe loan portfolios; the new loans were targeted to families as well as companies, in particular those operating inmanufacturing and services which were more affected by the expansion phase of the economic cycle.The increase in the loans for the year (up by +2.6% net of non-performing loans) is due to the “medium and long term”component (+4.3%) and mortgages in particular (+6.5%) which are granted to the commercial as well as the consumerclientele. Among said loans, housing loans continued along their upward trend, though at decreased rates compared to2006. The positive trend of housing loans, the size of which (5,786 million euro) increased by approximately 10.9% in2007, also on account of the approximate amount of 1.4 billion euro disbursed in the year.The consumer loans were also up by 12.3% on an annual basis.As at 31 December 2007, there were no loans classified as “high risk.”LOANS TO CUSTOMERS(in millions of Euro)LOANS TO CUSTOMERS(%)31,00030,00029,00028,00027,31328,31929,990 30,595OTHERLOANS31.41%NONPERFORMINGLOANS5.99%MORTGAGES39.55%27,00026,00025,0002004 2005 2006 2007CREDITCARDS, ETC.2.33%CURRENTACCOUNTS20.73%207


Credit QualityAs at 31 December 2007, net non-performing loans (1,831 million euro) dropped by 6.6% on an annual basis, also onaccount of the aforementioned disposal of non-performing loans. The hedging level rose to 54% from the 53.4% recordedat 31 December 2004.As at 31 December 2007, performing loans amounted to 28,764 million euro, which is representative of an annualincrease of 2.6% and a hedging level of 0.25% (0.30% in 2006). On that same date, the loans in question representedover 94% of total loans, compared to 93.5% in December 2006.The drop in non-performing loans, given the increase of the performing loans, resulted in a positive recomposition of theoverall loans to customers portfolio.Performing and impaired loansNET POSITION% Degree of coverage(customer loans - net position in thousands ofeuro and hedging level)31.12.2007 31.12.2006 % Changes 31.12.2007 31.12.2006Non-performing 841,425 1,038,655 -19.0% 69.2% 66.1%Watchlist 637,357 622,674 +2.4% 25.8% 24.4%Restructured loans 134,221 109,002 +23.1% 9.7% 6.8%Past due and excess loans 218,457 189,680 +15.2% 8.4% 7.9%Total impaired loans 1,831,460 1,960,011 -6.6% 54.0% 53.4%Country risk 163 143 +14.0% 25.2% 24.3%Total performing loans 28,763,623 28,030,228 +2.6% 0.25% 0.30%Loans to customers 30,595,246 29,990,382 +2.0% 6.8% 7.2%Among impaired loans, non-performing loans gross of value adjustments amounted to 2,733 million euro from 3,063million euro as at 31 December 2006; net of value adjustments, non-performing loans dropped to 841 million euro from1,039 million euro as at 31 December 2006). The ratio between non-performing loans (at balance sheet values) and thetotal loans to customers was equal to 2.8% compared to 3.5% as at 31 December 2006. The hedging percentageincreased to 69.2%, compared to 66.1% as at 31 December 2006.As mentioned in the initial part of this report, last December, Banca Antonveneta disposed of non-performing loanswithout recourse amounting to approximately 1,094 million euro, gross of adjustments over time. Previously, the Bankhad acquired from the securitisation special purpose entities Antenore Finance and Theano Finance non-performing loansof 180 million euro and over 278 million euro, gross of adjustments, respectively.Watchlist loans, net of value adjustments, amounted to 637 million euro (623 million euro in December 2006), with ahedging level of 25.8% (24.4% as at 31 December 2006). As part of its disposal of non-performing loans, the Bankdisposed of watch list loans of 14.4 million euro, gross of adjustments.Net restructured loans amounted to 134 million euro (109 million euro as at 31 December 2006), with a hedging index of9.7% (6.8 % at the end of 2006) and net past due and excess loans were at 218 million euro (190 million euro as at 31December 2006) with a hedging index of 8.4% (7.9% as at 31 December 2006).Financial assetsAs at 31 December 2007, financial assets amounted to approximately 1,747 million euro, up by 14% compared to the1,532 euro as at 31 December 2006. The change is attributable to the increases in the trading portfolios (+45.4%) andthe assets available for sale (+17.4%), against a significant reduction (-50.4%) in the portfolio of assets designated atfair value.208


Financial Assets(€/thousand)31.12.2007 31.12.2006 % ChangesHeld for trading 1,009,642 694,477 +45.4%Designated at fair value 180,179 363,061 -50.4%Available for sale 556,706 474,315 +17.4%Held to maturity - - -Total 1,746,527 1,531,853 +14.0%Overall, as at 31 December 2007, 58% of the portfolio was composed of assets held for trading, 32% of available for saleassets while for the remaining 10% there were no securities classified among the financial assets held to maturity.Insofar as the trading portfolio, the trading activity was decreased for speculative reasons; the investment policy adoptedfavoured variable interest securities or in any case those which carried a very low interest rate risk, had good ratings andwere issued by government or banks, with maturities of less than 5 years. One part of the bond portfolio consists ofstructured securities arising from the placement and trading activity with customers.The assets available for sale portfolio contains 250 million fixed rate, long term securities issued by the Italiangovernment, as part of the Bank’s overall ALM.The value of the junior securities in the portfolio, which derive from securitisations carried out by Banca Antonveneta in2000-2002, has decreased considerably to approximately 134 million euro, compared to 441 million euro as at 31December 2006. The drop is due to the conclusion of the transactions carried out by Padova Finance, Theano Finance andAntenore Finance. As at 31 December 2007, the portfolio of assets designated at fair value included only securities fromsecuritisation of performing loans carried out in 2001 and 2002 (Giotto Finance and Giotto Finance Due).There are no bonds that can be directly connected with exposures to US subprime or alt-A mortgages among the financialassets.Position on the interbanking marketAt the end of 2007, the Bank was a “net buyer” in the interbanking market for 6.1 billion euro, compared to 4.3 billioneuro as at 31 December 2006. The amount of the exposure is largely due to the new funding policy which was describedin detail above and the financing agreements concluded with ABN AMRO Bank.Position on the interbankingmarket(€/thousand)31.12.2007 31.12.2006 % ChangesLoans to banks 7,770,652 6,407,196 +21.3%Due to banks 13,901,310 10,719,309 +29.7%Difference -6,130,658 -4,312,113 +42.2%The management of the treasury was focused on optimising maturities and forecasting, to the maximum extent possible,the trends of the market while limiting the interest rate risk.209


Equity investmentsBanca Antonveneta’s equity investment portfolio, in compliance with the IAS/IFRS, contains equity securities that relateto companies consolidated either fully or according to the equity method. As at 31 December 2007, this portfolio included17 investments, recorded on the balance sheet at an overall book value of 609.9 million euro. If Interbanca, which wasclassified during 2007 under “non-current assets and groups of assets held for sale” were included (recorded at a bookvalue exceeding 890.4 million euro), the balance would amount to 1,500.4 million euro.Without taking Interbanca into account, during the year there was a net decrease in the book value of equity investmentsof 1.5 million euro, due to the downward changes amounting to 3 million euro (disposal of the equity investment inCerere S.r.l. and application of the impairment test to the equity investment in La Citadella S.p.A.) and increases of 1.5million (subscription of the capital increase in Antonveneta Assicurazioni S.p.A.).Shareholders' equityAs at 31 December 2007, shareholders' equity including the losses for the year, amounted to 3,516 million euro, which isa 2.8% decrease compared to the 3,618 million euro as at 31 December 2006. The decrease is mainly due to thereduction (87 million euro) of the valuation reserve).The regulatory capital was 3,933 million euro, while Tier 1 capital was approximately 2,972 million euro.NET SHAREHOLDERS' EQUITY(in millions of Euro)4,0003,0003,1833,2843,6183,5162,0002004 2005 2006 2007As regards capital ratios, the ratio between regulatory capital and total weighted assets amounted to 11.4%; in particular,the ratio between Tier 1 capital and total weighted assets was equal to 8.6%.210


Income StatementThe Income Statement for 2007 recorded a net loss of 15.1 million euro, compared to the 293.3 million euro profit in2006.The most significant components of the income statement, which has been re-classified and balanced-down, arecommented on below.Banca Antonveneta2007 2006 Change %Reclassified Income Statement (thousands of euro)Interest margin 1,058,550 1,044,031 +1.4%Other operating income 721,408 836,104 -13.7%Of which: Net commissions 412,303 417,323 -1.2%Net profit on trading 35,954 59,911 -40.0%Profit/loss on other financial instruments 8,546 120,603 -92.9%Dividends and profits on equity investments 82,263 23,785 +245.9%Other operating income/charges 182,342 214,482 -15.0%Gross operating income 1,779,958 1,880,135 -5.3%Payroll costs 691,589 580,497 +19.1%Other administrative expenses 500,306 481,350 +3.9%Adjustments/write-backs to tangible and intangible fixed assets 42,027 46,422 -9.5%Total operating costs 1,233,922 1,108,269 +11.3%Operating result 546,036 771,866 -29.3%Net adjustments/write-backs for loan impairment 315,091 230,723 +36.6%Other net adjustments and allowances 58,904 23,970 +145.7%Net income (loss) on disposal of investments -233 -271 -14.0%Profit before taxes 171,808 516,902 -66.8%Income taxes 186,953 229,102 -18.4%Profit on discontinued operations 0 5,467 -100.0%Profit (loss) for the period -15,145 293,267 n.a.As at 31 December 2007, operating income dropped by 5.3% to 1,780 million euro compared to 1,880 million euro in2006. In further detail, the interest margin (1,059 million euro) increased by 1.4%, while other operating incomedropped by 13.7% to 721 million euro from 836 million in 2006. This latter decrease was affected by the steep decreasein the balance of profit/losses on other financial instruments (8.5 million), which in 2006 was 121 million euro andincluded 92.5 million in capital gains realised by the Bank from the partial disposal of its shareholding in Banca ItaleaseS.p.A.. The 2007 balance was mainly determined: negatively, by the write-down (48 million) of Banca Antonvenetashareholdings in Hopa S.p.A. and the loss connected with the transaction involving the disposal of non-performing loans(over 40 million euro); positively, by the profits (approximately 51 million), again connected to the aforementioneddisposal, deriving from the redemption of the securities of securitisation firms Antenore Finance and Theano Finance andthe capital gains (31 million euro) from the sale of equity investments, among which we note the partial disposals ofBanca Italease and Mastercard and the total disposal in Borsa Italiana.Profit on trading, including also the contribution of the dividends and profits on equity investments amounted to over 118million, which is a significant increase (+41.2%) compared to the 84 million for 2006.211


Net commissions (412 million euro) and other operating income/charges (182 million) decreased respectively by 1.2%and 15%, mainly on account of the aforementioned adoption by the bank of more competitive price policies. Indeed,within net commissions, there were decreases on commission on guarantees granted (-7.1%) and other services(-18.4%), consisting mainly of commissions on loans to customers and expense recovery, which together represent 27%of net commissions; within operating income, there was a decrease in expense recovery on liabilities (-12.8%) of overone half of the income gross of fees. Furthermore, the development of the main function of management, placement andadministration of assets, resulted in an increase of 21.9% of the net commissions component (approximately 170 millioneuro, or 41% of the total) which refers to the “management, brokerage and consulting” activity. Among these, the netcommissions on securities placement (32 million euro) more or less doubled while the commissions on the distribution ofthird party services (102 million euro) increased by 19.8%.Without considering the revenues from the above-mentioned non-recurring income and expenses, the amount recordedin the year would have been substantially in line with 2006.Operating costs amounted to approximately 1,234 million euro, an increase of 11.3% compared to the 1,108 million euroof 2006. In particular, the payroll costs amounted to 692 million euro, compared to the 580 million euro of 2006, mainlyon account of the expenses accompanying the staff departure (61 million euro). Furthermore, the 2007 figure waspositively affected by lower expenses (17 million euro), due to the amendments introduced by the new TFR [StaffSeverance Indemnity] regulations, while the 2006 figure benefited from recoveries from allowances of 11 million euro.Other administrative expenses exceeded 500 million euro, with an annual increase of 3.9%; the total includes theinstalments for the data processing activities sold to the E.D.S. Group, due to which there was a decrease inamortisation/depreciation and staff expenses.At the end of 2007, the cost/income ration was 69.3%, a percentage which drops to 66.4% if the above-mentioned nonrecurringincome and expenses are not taken into account.Due to the above-mentioned dynamics, the operating result amounted to 546 million euro, which is lower than the 772million euro or 2006.RESULTS FOR THE YEAR(IN THOUSANDS OF EURO)350,000300,000250,000200,000150,000100,00050,0000-50,000318,928116,164293,267-15,145Net adjustments and allowances were 374 million euro compared to 255 million euro in 2006; in particular, the netadjustments on loans amounted to 315 million euro compared to 231 million euro in 2006. The approximately 59 millioneuro of the other net adjustments and allowances includes 14 million euro of allowances for risks and charges, followingthe already mentioned transaction with the Internal Revenue Service, connected to failure of Luxembourgian companyBELL S.A. to settle the taxes in Italy (Irpeg 2001); the total also includes 16 million euro in value adjustments forimpairment of financial assets (which refer mainly to the shareholdings in Italease S.p.A., BELL S.A. and PalladioFinanziaria).Income taxes amounted to approximately 187 million euro, compared to 229 million for the previous year; the significantimpact on the current operating profits, which were completely cancelled out by tax expenses, is partly due to the IRAP,the assessment base of which is not very sensitive to the result before taxes, but mostly to the extraordinary effect (ofapproximately 64 million) of the assessment of the deferred tax assets and liabilities that are connected to the decreasein the IRES rate (from 33% to 27.5%), as provided by the Finance Law for 2008.212


Relevant events occurred after the closing of 2007 Financial StatementsHOPA S.p.A.In the 31.12.2007 Financial Statements, among the assets designated at fair value, the Bank valued € 0.70 its share inHOPA (No. 65,951,416 shares), which corresponds to 4.773% of joint stock, classified among assets designed at fairvalue.As already reported in the press at the beginning of March 2008, due to the particularly negative trend of Telecomshares, starting from February 2008, and to HOPA inability to build up the granted warrantees on the existing loans, theexecution on its Telecom shares was levied and the shares themselves were sold in the market to allow a refund of theexisting loans. Such a sale determined a significant capital loss for HOPA considering the charging values of TelecomItalia shares in its own Financial Statements.The trend of Telecom share therefore caused an impairment of HOPA net financial situation, with a consequent negativeimpact on the FV of the investment. Such an event has a negative outcome on a new valuation, estimated around 0.33 €per share, with an overall impact of € 42.2m (net € 40.5m), attributable respectively to Banca Antonveneta for € 24.4m(net € 22.7m) and to its subsidiary Interbanca for € 17.8 (equals to the net). Such an event will be mirrored in 2008Financial Statements.Banca Italease S.p.A.This is a financial asset held by the Parent and classified under the available for sale portfolio. As at 31st December 2007,the stock amount, € -7.6m, was ascribed to P&L on the basis of a new value of € 9.175 per share (reference price as at28th December € 9.567).In the first part of 2008, following the market negative trend, the exchange rate of the share decreased, and as at 17 thMarch its market value was € 5.285, with a negative effect on the evaluation stocks of € 21.8m.Outlook for 2008Please see the same Chapter of the Directors’ Consolidated Report.213


Destination of 2007 financial resultsDear shareholders,we propose the approval of this Financial Statements, closed as at 31 December 2007, which is nowsubmitted to you, and the carrying over of € 15,145,066.37 loss.Padua, March 19 th 2008The Chairman of the Board of DirectorsFrancesco SpinelliResolutions of the 24 th April 2008 Ordinary Shareholders’ MeetingOn April 24 th 2008, the Ordinary Partners’ Meeting summoned for the first meeting and held by Dr. FrancescoSpinelli, Chairman of the Board of Directors, deliberated to approve the Financial Statements closed as at 31December 2007 and to bring the loss of € 15,145,066.37 into the new financial year.214


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Collegio SindacaleAntonveneta SpaStatutory Auditors’ Report to the Banca Antonveneta S.p.A. Shareholders’ Meeting on theIndividual Financial Statements as at 31.12.2007Dear Shareholders,During the fiscal year ended as at 31 December 2007, we performed the supervisory activity providedfor by law according to the standards of conduct recommended by the National Boards of CharteredAccountants, also taking into account the recommendations issued by Consob through itscommunications and the Bank of Italy’s supervisory instructions.That being stated, we acknowledge that:- We attended all Shareholders’ Meetings, as well as all the meetings held during the year by theBoard of Directors, the Executive Committee, the Internal Auditing Committee and theRemuneration Committee and Directors submitted to us periodical report on operations carried outand on the most significant economic, financial and equity transactions entered into by the Bankand its subsidiaries;- We supervised the functioning of the internal auditing and administrative-accounting system, withthe purpose of evaluating its suitability to the company’s needs, as well as its reliability inrepresenting company operations;- We assessed compliance with rules governing the drawing up of the Individual FinancialStatements, prepared according to international IAS/AFRS accounting standards adopted by theEuropean Union as well as to the regulations issued in implementation of art. 9 of LegislativeDecree no. 38/2005, and of Consolidated Group Financial Statements and Reports on Operations,through direct reviews, specific information gathered by the Auditing Company and meetings withthe Managing Director.We moreover provide the following information.1. The most significant economic and financial transactions carried out by the Bank and itssubsidiaries comply with the law and with the articles of association. Based on the availableinformation, we ascertained that such transactions were not explicitly imprudent, hazardous ormarked by conflict of interest and that they did not jeopardise the integrity of company property.2. We did not find any atypical and/or unusual transactions with third, related and intra-groupparties. In the reports on operations and notes to the accounts, the Directors specified andoutlined the major transactions entered into with third, related and intra-group parties anddescribed the features and economic effects thereof. We also ascertained the existence oforganisation procedures, in force within the Group, guaranteeing that business transactions withthe above-mentioned parties were entered into according to market conditions.3. We believe that the information on operations indicated in point 2 above and provided by Directorsis accurate.220


4. During the fiscal year 2007, the Bank appointed Reconta Ernst & Young S.p.A. for three tasks, otherthan legal auditing and the auditing of the half-year financial report. Their fees, excluding out-of-pocketexpenses and VAT, are summarised below:- 32,200 € for Theano Finance half-year reviews- 33,700 € for Antenore Finance half-year reviews- 30,000 € for subscribing and reviewing income tax returns.5. During 2007 neither complaints pursuant to art. 2408 of the Italian Civil Code or claims from thirdparties were received.6. During the fiscal year, the Board of Statutory Auditors gave its consent, as provided for in art. 136 ofLegislative Decree no. 385/1993 (Banking and Credit Consolidation Act) for no. 331 transactions directlyor indirectly entered into by Bank exponents vis-à-vis the Bank itself.7. During the fiscal year, the Board of Statutory Auditors did not express any of advisory opinions providedfor by law.8. During the same fiscal year, no. 19 Board of Directors’ meetings, no. 13 Executive Committee meetings,no. 12 Internal Auditing Committee meetings and no. 1 Remuneration Committee meeting were held.The Board of Statutory Auditors held no. 9 meetings.9. We held meetings with exponents of the Independent Auditing Company, pursuant to paragraph 2 ofart. 150 of Legislative Decree no. 58/1998, and no significant data or information emerged that shouldbe set forth in this report.10. In conclusion, we attest that our supervisory activity has brought to light no omissions, censurableevents or irregularities that should be reported to the Authorities in charge of auditing or toShareholders.11. Finally, within the limits of the authority granted us, we give our consent to the approval of the 2007Financial Statements Report on Operations, as submitted by the Board of Directors.Padua, April 2 nd 2008The Board of Statutory AuditorsGianni Cagnoni – ChairmanAlberto Dalla Libera – AuditorGianbattista Guerrini – Auditor221


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COMPANY FINANCIAL STATEMENTSBALANCE SHEETBalance sheet - AssetsItems 31.12.2007 31.12.200610. Cash and balances 409,362,221 310,663,00720. Financial assets held for trading 1,009,642,269 694,476,62530. Financial assets designated at fair value 180,179,243 363,061,02940. Financial assets available for sale 556,706,345 474,314,66860. Loans to banks 7,770,651,770 6,407,196,39170. Loans to customers 30,595,246,178 29,990,381,91980. Hedging derivatives 25,100,522 66,187,084100. Equity Investments 609,938,673 1,474,426,428110. Tangible fixed assets 121,250,449 127,431,318120. Intangible fixed assets 804,754,243 790,699,030of which:- goodwill 762,024,208 761,719,756130. Tax assets 429,805,387 747,453,308a) current 115,823,471 171,186,720b) prepaid 313,981,916 576,266,588140. Non-current assets and groups of assets held for sale 890,428,080 27,441,540150. Other Assets 1,218,529,726 1,464,638,256TOTAL ASSETS 44,621,595,106 42,938,370,603226


Balance Sheet - Liabilities and shareholders' equityItems 31.12.2007 31.12.200610. Due to banks 13,901,309,994 10,719,308,97520. Due to customers 19,830,519,135 19,540,086,85330. Short-term securities 5,329,386,942 6,750,979,40740. Financial liabilities held for trading 283,408,007 177,652,31160. Hedging derivatives 12,753,124 17,850,14980. Tax liabilities 12,937,239 258,258,038a) current 2,401,917 146,179,618b) deferred 10,535,322 112,078,420100. Other liabilities 1,156,370,861 1,303,645,401110. Employees’ severance 241,652,919 281,063,188120. Provisions for risks and charges: 337,598,862 271,231,044a) pension fund and similar provisions 39,674,799 41,422,573b) other provisions 297,924,063 229,808,471130. Valuation reserve 29,863,862 117,045,463150. Equity instruments 8,551,329 8,551,329160. Reserves 377,969,365 85,012,787170. Issue premiums 2,188,152,036 2,188,152,036180. Share capital 926,266,497 926,266,497200. Net profit (loss) for the period -15,145,066 293,267,125TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 44,621,595,106 42,938,370,603227


Income StatementItems 31.12.2007 31.12.200610. Interest income and similar items 2,318,543,436 1,781,378,05520. Interest expense and similar items (1,259,992,879) (737,347,168)30. Interest margin 1,058,550,557 1,044,030,88740. Fee and commission income 502,065,017 508,563,73450. Fee and commission expenses (89,762,356) (91,240,411)60. Net commissions 412,302,661 417,323,32370. Dividends and similar income 85,115,659 23,753,51080. Net profit on trading 35,953,732 59,911,25490. Net profit on hedging operations 1,068,697 478,008100. Profit (loss) on disposal or repurchase of: 34,067,353 105,229,419a) loans (40,484,855) 5,980,075b) financial assets available for sale 71,440,033 96,659,429c) financial liabilities 3,112,175 2,589,915110. Net profit from financial assets designated at fair value (26,589,983) 14,895,926120. Earning margin 1,600,468,676 1,665,622,327130. Net write-downs/write-backs for deterioration of: (331,006,330) (229,513,131)a) loans (315,091,261) (230,723,119)b) financial assets available for sale (16,306,187) (940,580)c) other financial transactions 391,118 2,150,568140. Net financial profit 1,269,462,346 1,436,109,196150. Administrative expenses: (1,191,894,490) (1,061,846,820)a) personnel costs (691,588,892) (580,497,015)b) other administrative expenses (500,305,598) (481,349,805)160. Net allocations to provisions for risks and charges (42,989,447) (25,179,812)170. Net write-down/write-back of tangible fixed assets (24,958,286) (24,504,179)180. Net write-down/write-back of intangible fixed assets (17,068,806) (21,918,492)190. Other operating income/charges 182,341,989 214,482,283200. Operating expenses (1,094,569,040) (918,967,020)210. Profit (loss) on equity investments (2,852,248) 31,553240. Profit (loss) on disposal of investments (232,704) (271,130)250. Profit (Loss) on ordinary activities before taxes 171,808,354 516,902,599260. Income taxes for the year on ordinary activities (186,953,420) (229,102,212)270. Profit (Loss) on ordinary activities net of taxes (15,145,066) 287,800,387280. Income (loss) after tax from groups of assets held for sale - 5,466,738290. Profit (loss) for the year (15,145,066) 293,267,125228


Statement of changes in consolidated shareholders' equity for 2007Allocation of net profit(loss)Change for the periodOperations on shareholders' equity carried out in the periodAmounts as at31/12/2006Changes toopeningbalancesAmounts as at01/01/2007ReservesDividendsand otherusesChanges inreservesNew shareissuesPurchase ofown sharesExtraordinarydistribution ofdividendsChanges inEquityinstrumentsEquityderivativesStock optionsNet income(loss) as at31/12/2007Shareholders'equity as at31/12/2007Share capital:a) ordinary shares 926,266,497 926,266,497 926,266,497b) other shares - - -Share premium reserve 2,188,152,036 2,188,152,036 2,188,152,036Reserves:a) profits 550,236,143 -465,223,356 85,012,787 293,267,125 378,279,912b) other -465,223,356 465,223,356 - -310,547 -310,547Revaluation reserves:a) available-for-sale 113,650,577 113,650,577 -87,181,601 26,468,976b) cash flow hedges - - -c) other 3,394,886 3,394,886 3,394,886Equities 8,551,329 8,551,329 8,551,329Own shares - - -Net profit (loss) for the period 293,267,125 293,267,125 -293,267,125 -15,145,066 -15,145,066NET SHAREHOLDERS' EQUITY 3,618,295,237 - 3,618,295,237 - -87,492,148 -15,145,066 3,515,658,023The amount of 310,547 € presented in the item "Reserves: b) other" refers back to the value recognised in a business combination under common contro l operation, which is notconsidered within the discipline of company aggregations, as provided by IFRS 3, and therefore it was treated as a negative amount among the Reserves in Shareholders' Equity.We modified the opening amount of “Reserves” as at 1 st January 2007 by reclassifying under “Profit Reserves” the amount relating to “FTA Reserve” of € 465,223,356.229


Statement of changes in consolidated shareholders' equity for 2006Amounts as at31/12/2005Changes toopeningbalancesAmounts as at01/01/2006Allocation of net profit(loss)ReservesDividendsand otherusesChanges inreservesChange for the periodOperations on shareholders' equity carried out in theperiodNew shareissuesPurchase of ownsharesExtraordinarydistribution ofdividendsChanges inEquityinstrumentsEquityderivativesStock optionsNet income(loss) as at31/12/2006Shareholders'equity as at31/12/2006Share capital:a) ordinary shares 926,266,497 - 926,266,497 - - 926,266,497b) other shares - - - - - -Share premium reserve 2,188,152,036 - 2,188,152,036 - - 2,188,152,036Reserves: - - - - - -a) profits 434,072,456 - 434,072,456 116,163,687 - 550,236,143b) other -465,223,356 - -465,223,356 - - -465,223,356Revaluation reserves: - - - - - -a) available-for-sale 72,466,476 - 72,466,476 - - 41,184,101 113,650,577b) cash flow hedges - - - - - -c) other 3,394,886 - 3,394,886 - - 3,394,886Equities 8,551,329 - 8,551,329 - - 8,551,329Own shares - - - - - -Net profit (loss) for the period 116,163,687 - 116,163,687 -116,163,687 - 293,267,125 293,267,125NET SHAREHOLDERS' EQUITY 3,283,844,011 - 3,283,844,011 - - 41,184,101 293,267,125 3,618,295,237230


CASH FLOW STATEMENT (Direct method)31.12.2007 31.12.2006A. OPERATING ACTIVITIES1. Management 476,776,991 644,692,955- interest income received 2,299,216,429 1,781,378,055- interest expense paid (1,239,857,577) (737,347,168)- dividends and similar income 62,849,696 5,903,877- net commissions 412,302,661 417,323,323- payroll costs (697,092,449) (580,497,015)- other expenses (500,587,030) (481,349,805)- other income 334,733,408 462,917,162- taxes and duties (194,788,147) (229,102,212)- expenses/income from discontinued operations held for sale net of taxes - 5,466,7382. Cash flow generated/absorbed from/by financial assets (2,222,688,755) (4,259,451,783)- financial assets held for trading (316,201,058) (448,408,521)- financial assets designated at fair value 156,291,803 8,032,037- financial assets available for sale (185,879,465) 93,341,950- loans to customers (1,002,665,580) (1,984,606,189)- loans to banks: on demand 449,050,400 (2,199,545,796)- loans to banks: other loans (1,811,845,862) 502,502,000- other assets 488,561,007 (230,767,264)3. Cash flow generated/absorbed from/by financial liabilities 1,874,150,379 3,462,360,943- due to banks: on demand 46,393,059 5,139,079,321- due to banks: other payables 3,135,607,960 (249,501,000)- due to customers 290,432,282 (252,193,210)- short-term securities (1,384,534,231) (1,347,106,203)- trading financial liabilities 105,755,696 110,028,876- other liabilities (319,504,387) 62,053,159Net cash flow generated/absorbed from/by operating activities 128,238,615 (152,397,885)B. INVESTMENT ACTIVITIES1. Cash flow generated from 20,914,931 205,634,667- sale of equity investments (1,351,033) 187,785,034- dividends collected on equity investments 22,265,964 17,849,6332. Cash flow absorbed by (49,901,436) (36,689,594)- purchase of shareholdings - -- purchase of tangible fixed assets (18,777,417) (16,551,356)- purchase of intangible fixed assets (31,124,019) (20,138,238)Net cash flow generated/absorbed by investing activities (28,986,505) 168,945,073C. DEPOSIT ACTIVITIES- issue/purchase of own shares - -- issues/purchases of equity instruments - -- distribution of dividends and other objectives - -Net cash flow generated/absorbed from/by deposit activities - -NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS DURING PERIOD 99,252,110 16,547,188RECONCILIATIONBalance sheet items 31.12.2007 31.12.2006Cash and cash equivalents at beginning of period 310,663,007 294,634,217Net increase (decrease) in cash and cash equivalents during the period 99,252,110 16,547,188Cash and balances: effect of changes in exchange rates (552,896) (518,398)Cash and balances at the close of the financial year 409,362,221 310,663,007231


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A.1 - GENERALSection 1 - Statement of compliance with theInternational Accounting Standards (IAS/IFRS)In application of Legislative Decree n. 38 of 28 thFebruary 2005, the financial statements of BancaAntonveneta as at 31 December 2007 were drawn upin compliance with the international accountingstandards issued by the International AccountingStandards Board (IASB) and relevant interpretationsby the International Financial Reporting InterpretationCommittee (IFRIC) in the text approved by theEuropean Commission, as per EU Regulation No. 1606dated 19 th July 2002.The financial statements and the notes to the accountswere drawn up as required by the decision of the Bankof Italy issued on 22 nd December 2005, exercising thepowers granted it by art. 9 of Legislative Decree38/2005 on "instructions for the preparation offinancial statements and consolidated financialstatements of banks and financial companies that areparent companies of banking groups.”For the preparation of these financial statements, thestandards effective as at 31 December 2007 wereapplied (including the SIC and IFRIC interpretationdocuments), as well as approved by European UnionRegulations.Section 2 – General principles of preparationThese Financial Statements comprise the BalanceSheet, Income Statement, Statement of Changes inShareholders’ Equity, Cash Flow statement and Notesto the Accounts, and are accompanied by the Reporton Operations.The Financial Statements are drawn up in units ofEuro, except for the Notes to the Accounts, which aredrawn up in thousands of Euro, and are based on thefollowing general preparation standards set forth inparagraphs 13 to 41 of IAS 1:Going Concern Basis. Assets, liabilities, and “offbalance sheet” transactions are valued based onbusiness continuity.Accrual Basis of Accounting. Income and expensesare recognised on the accrual basis principle ofaccounting.Presentation Consistency. Presentation andclassification criteria of statement items areretained from one period to the next, unless theiramendment is required by an InternationalAccounting Principle (IAS/IFRS) or by anInterpretation (SIC) or unless it is necessary toenhance the significance and reliability of theaccounts. In case of amendment, the new criteria -as far as possible - are adopted retroactively andspecify the nature, reason and amount of theitems being amended. Item presentation andclassification comply with the provisions set forthby the Bank of Italy on banking financialstatements.Separate Presentation of Similar Classes. Incompliance with the provisions issued by the Bankof Italy on banking financial statements, similaritem classes are shown separately, if significant.Different elements, where significant, arepresented separately.No Offsetting Rule. Except for the requirements ofan International Accounting Standard (IAS/IFRS)or Interpretation (SIC) or for the provisions of theBank of Italy on banking financial statements,assets, liabilities, as well as expenses and incomeshall not be offset.Comparative Information. With reference to all theinformation included in these financial statements -also qualitative ones when these are useful for abetter understanding – the previous fiscal year’scorresponding figures are shown, unless otherwiserequired by an International Accounting Standardor relevant Interpretation.The financial statements were prepared using thehistorical cost method, except in the cases ofderivative financial instruments, financial assets andliabilities held for trading and designated as at fairvalue and available for sale financial assets which arerecognised at fair value.The book value of the assets and liabilities which areused in fair value hedging transactions which wouldotherwise have been recognised at cost have beenadjusted to take into account the changes in fair valuethat are attributable to the hedged risks.SECTION 3 - Events occurred after the referencedate of the Financial StatementsPlease refer to the special section within the Directors’Report - Consolidated.SECTION 4 - Other aspectsThe Financial Statements were audited by theindependent auditor Reconta Ernst & Young.237


A.2 – PART RELATING TO THE MAIN ITEMSFinancial assets held for tradingClassification criteriaThis category comprises debt and equity-basedsecurities and the positive fair value of derivativecontracts held for the purpose of generating shorttermincome and resulting from the change in theirprice. Derivative contracts embedded in complexfinancial instruments are included in this category, andare recognised separately when:the economic characteristics and risks of thederivative are not strictly correlated with theeconomic characteristics and risks of the primarycontract;a separate instrument with the same conditions ofthe embedded derivative would constitute itself aderivative contract;the hybrid (combined) instrument is not recordedunder financial assets or liabilities held for trading,nor under those designated at fair value.Recognition and derecognition criteriaFinancial assets are first recognised on the settlementdate of debt and equity-based securities and on thesubscription date for derivative contracts.When first recognised, financial assets held for tradingare valued at cost (i.e. the instrument’s fair value),without taking into account transaction expenses orincome directly attributable to the instrument itself.Financial assets are derecognised upon expiry ofcontractual rights on cash flows generated by theassets themselves or when the financial asset is sold,thus substantially transferring all the relevant risksand benefits.Valuation criteria and recognition of incomeAfter initial recognition, financial assets held fortrading are designated as at fair value and anychanges in fair value are recorded in the incomestatement.The fair value determination of financial instrumentsbeing classified in this portfolio is based on activemarket prices, on the prices provided by marketplayers or on internal evaluation models, which aregenerally used in the financial industry, and it takesinto account all risk factors related to instruments andrefer to market data, such as:methods based on the measurement of listedinstruments which have similar characteristics;measurement of the actual value of cash flowsgenerated by the instrument;measurement models of option prices;measurements of recent and comparabletransactions.Equity-based securities not being listed on an activemarket and related derivative instruments, whose fairvalue cannot be reliably determined according to theabove-mentioned guidelines, are recorded at cost.Financial assets available for saleClassification criteriaAssets available for sale include financial assets, otherthan derivative instruments, that are not separatelyrecorded under Receivables, Assets held for trading,Assets designated at fair value or Assets held tomaturity.In particular, this category comprises securitiesserving as corporate liquidity reserves, securitiesarising from equity investments in underwritingsyndicates, convertible bonds acquired in performingmerchant banking operations, shareholdings notincluded in the trading portfolio and not qualifiable asmajority, associated and joint-control interests, privateequity investments included, as well as the quota ofsubscribed syndicated loans that is ever since disposedof.Recognition and derecognition criteriaFinancial assets are first recognised under thiscategory on the settlement date of debt and equitybasedsecurities and on disbursement date of loans.When first recognised, financial assets are valued atcost (i.e. the instrument’s fair value), includingtransaction expenses or income directly attributable tothe instrument itself. If the recognition is due to areclassification of Assets held to maturity, the bookvalue corresponds to its fair value upon disposal.Financial assets are derecognised upon expiry ofcontractual rights on cash flows generated by theassets themselves or when the financial asset is sold,thus substantially transferring all the relevant risksand benefits.Valuation criteria and recognition of incomeOnce they are first recognised, assets available for saleare still designated at fair value and their interest isrecorded in the income statement (as per theapplication of the amortised cost), while the profit orloss generated by changes in fair value are booked in aspecific Shareholders’ Equity Reserve until the financialasset is derecognised or an impairment is recorded. Atthe time of disposal or recognition of a loss of value,238


the accumulated profit or loss are transferred to theincome statement.Equity-based securities not being listed on an activemarket and whose fair value cannot be reliablydetermined according to the above-mentionedguidelines are recorded at cost.At the end of every financial year or quarter, theportfolio is tested for impairment. If impairment isfound, the change is recorded in the incomestatement.If the grounds underlying impairment cease to existafter impairment has been recorded, relevant writebacksare recorded in the income statement in thecase of credit and debt securities, or in shareholders'equity in the case of equity-based securities. The totalwritten back cannot in any event exceed the amortisedcost which would have applied to the instrument in theabsence of previous write-downs.Financial assets held to maturityClassification criteriaThis category includes debt securities listed on anactive market with fixed or definable payments or fixedmaturity that are objectively intended or capable to beheld to maturity. If for a change in intention orcapability, an investment is no longer deemed asappropriate to be held to maturity, it is reclassified asavailable for sale.Recognition and derecognition criteriaFinancial assets are first recognised on settlementdate.Upon first recognition, financial assets comprised inthis category are valued at cost, including any directlyattributable income and expense.Financial assets are derecognised upon expiry ofcontractual rights on cash flows generated by theassets themselves or when the financial asset is sold,thus substantially transferring all the relevant risksand benefits.Valuation criteria and recognition of incomeOnce they are first recognised, financial assets held tomaturity are valued at their amortised cost throughthe effective interest rate method. Profits or losses onassets held to maturity are shown in the incomestatement when such assets are derecognised orimpaired, as well as through the amortisation process.At the end of every financial year or quarter, theportfolio is tested for impairment. If impairment isfound, the loss is represented by the differencebetween the asset's book value and the current valueof future estimated cash flows, discounted at theoriginal effective interest rate. The resulting value isrecorded in the income statement.If the grounds underlying impairment cease to existafter impairment has been recorded, relevant writebacksare recorded in the income statement.ReceivablesClassification criteriaReceivables include loans to customers and banks,whether directly granted or acquired by third parties,requiring fixed-term or definable-term payments, notlisted on an active market or originally classified underFinancial assets available for sale.Receivables also include commercial loans, repurchaseagreements, financial leases and securities that arepurchased through subscription or private placement,with fixed-term or definable-term payments, and notlisted on active markets. As regards loans acquiredwithout recourse, these are included amongreceivables once it is established that contractualclauses do not exist substantially altering theassignee's risk exposure and the assignor's assumptionof the risk.Recognition and derecognition criteriaReceivables are first recognised on disbursement dateor, in the case of debt securities, on settlement date,based on the financial instrument's fair value, which isequal to the amount granted or the subscription price,including income and expenses that are directlyattributable to the individual receivable and aredefinable since the beginning of the transaction, ifsubsequently settled. Expenses which, despite havingthe above characteristics, are subject toreimbursement by the debtor or which may beconsidered normal internal administrative costs areexcluded.When the net granted amount does not correspond tothe asset’s fair value, due to the application of aninterest rate that is significantly lower than the marketrate or the rate normally applied to similar financing,receivables are first recognised for an amount equal tofuture cash flows discounted at an appropriate rate.The difference from the amount granted or thesubscription price is directly recognised in the incomestatement.In particular, repurchase agreements are booked aspayables when the spot amount is earned, while theyare recorded under receivables when the spot amountis paid.Sold loans are derecognised as assets only if suchdisposal involved a substantial transfer of all their risksand benefits. If, on the other hand, the risks andbenefits relating to sold loans are not transferred, thesold loan remains recorded among assets, even thoughthe loan ownership was legally and effectivelytransferred. Where the substantial transfer of risks andbenefits cannot be determined, sold loans arederecognised from the balance sheet if no control hasbeen maintained over potential risks and benefits. Onthe other hand, if such a control is kept, even partially,239


eceivables are recognised for their residual amount,which is calculated based on the exposure to valuechanges in sold loans and on the variations of theircash flows. Finally, sold loans are derecognised if thecontractual rights to receive the relevant cash flowsremain unaltered, with the concomitant assumption ofan obligation to pay only such cash flows to thirdparties.Valuation criteria and recognition of incomeOnce they are first recognised, receivables are bookedat their amortised cost through the effective interestrate method. The amortised cost corresponds to thefirst recognised value, including or excluding capitalreimbursements, value adjustments and amortisation– calculated through the effective interest rate method– of the difference between the amount granted andthe fixed-term repayable amount, which typicallyrefers to income and expenses directly relating to theindividual loan. The effective interest rate is the ratecomparing the current value of future cash flowsgenerated by the loan, in terms of principal andinterest, with the amount disbursed, including incomeand expenses associated with the loan itself. Thisaccounting method, through a financial logic, allowseconomic effect of initial income and expenses to bespread over the loan's expected residual duration.Estimated cash flows and the contractual duration ofthe receivable take into account all contractual clausesthat may potentially affect amounts and expiry,without considering any forecast losses. The effectiveinterest rate initially recognised (original ratio) is thatused to discount expected cash flows, andconsequently determines the amortised cost followingthe first recognition.The amortised cost method is not used for short-termreceivables making the effect of the discountapplication negligible. These receivables are measuredat historical cost, and related income and expensesrecorded in the income statement in a linear fashionfor the entire contractual duration of the receivable. Asimilar discount is applied to non fixed term orrevocable loans.While preparing financial statements and half-yearfinancial reports, the Bank investigates receivables inorder to identify those which, following eventsoccurred after their recognition, show objectiveimpairments.A receivable is considered to be impaired when theBank is unlikely to collect the amount due or anequivalent value based on the original contractualconditions.This category of receivables includes non-performingloans, problem loans, restructured loans, bad debts orloans past due for over 180 days according to theprovisions of the Rule issued by the Bank of Italy,consistently with the IAS.Non-performing loans are analytically assessed, andthe value adjustment to each loan corresponds to thedifference between the book value upon its evaluation(amortised cost) and the current value of expectedfuture cash flows, calculated by applying the originaleffective interest rate. Estimated cash flows take intoaccount expected recovery times, the estimatedrealisable value of any guarantees, as well as expensesexpected to be incurred to recover credit exposure.Value re-establishments connected with the passing oftime are located under write-backs.The original effective rate of each loan remainsunaltered in time, although the relationship isrestructured involving a change in the contractual rateand also when the relationship actually does no longerbear contractual interest. Value adjustments arerecorded in the income statement.The original value of receivables is restored infollowing fiscal years when the reasons determining itsadjustment no longer exist, provided that suchvaluation is objectively connected with an eventoccurring after such value adjustment. Write-backs arestated in the income statement, and may under nocircumstances exceed the amortised cost that theloans would have had if previous adjustments had notbeen made.Receivables for which individual objective losses werenot identified (i.e. normally performing loans),including those granted to counterparties living incountries at risk, are collectively impaired. Suchimpairment is recorded for grades of loans in the samecredit risk category, with relative loss percentagesestimated on the basis of historical series based onobservable elements at the measurement date, whichenables latent losses to be estimated for each categoryof receivable. Collective value adjustments arerecorded in the income statement.Every fiscal year or half-year end, any additional valueadjustment or write-back is differentially determined,with reference to all performing loans existing on thesame date.Income (loss) from loans are booked in the P&L:- when the at issue asset is cancelled, to item100 a) Profit (loss) on disposal or repurchaseof loans- when the asset incurred in a value reduction,to item 130 a) Net adjustments/write-backs forimpairment of loans.The measurement criteria adopted for cash loans tocustomers and banks were also used for the collectivemeasurement of guarantees. Resulting values arebooked to other liabilities.Financial assets designated at fair valueClassification criteriaFinancial assets designated at fair value, which arestated in the income statement, include securities forwhich the fair value option envisaged in IAS 39 wasadopted, as per applicable conditions.240


Recognition and derecognition criteriaThe same recognition and derecognition criteria usedfor financial assets held for trading were applied.Valuation criteria and recognition of incomeThe same valuation criteria adopted for financial assetsheld for trading are used.Interest income is booked under the income statementitem “Interest income and similar income”. Profits andlosses on disposals, as well as capital gains and lossesfollowing valuation are recorded under the incomestatement item “Net profit on financial assetsdesignated at fair value”.Hedging transactionsRecognition criteriaHedging activities are designed to neutralise the risk ofpotential losses that a determinate element or group ofelements (the hedged element) may carry due to adeterminate risk, through the use of profits carried ona different element or group of elements (the hedginginstrument), in the event in which the specific riskshould effectively occur.Within the hedging scope contemplated in IAS 39, thefollowing types of hedging are adopted:fair value hedge; it is intended to hedge theexposure to the fair value change in a bookingentry due to a particular risk;cash flow hedge; it is intended to hedge theexposure to changes in future cash flows due toparticular risks associated with booking entries.Valuation criteria and recognition of incomeHedging derivatives are designated at fair value. In thecase of fair value hedging, the fair value change in thehedged element is offset by the fair value change inthe hedging instrument. This offsetting is recognisedthrough the recording in the income statement of fairvalue changes referring to both the hedged element(with respect to changes due to the underlying risk)and the hedging instrument. Any difference,representing the partial inefficiency of the hedging,consequently corresponds to the net economic effect.In the case of cash flow hedging, fair value changes inthe derivative instrument are recorded in theshareholders' equity, for the efficient part of thehedging, while the same are stated in the incomestatement only when, with reference to the hedgeditem, cash flows to be offset change.The fair value determination is based on active marketprices, as defined above, on the prices provided bymarket players or on internal evaluation models, whichare generally used in the financial industry, take intoaccount all risk factors related to instruments and referto market data, such as:methods based on the measurement of listedinstruments which have similar characteristics;measurement of the actual value of cash flowsgenerated by the instrument;measurement models of option prices.A derivative instrument is a hedging instrumentprovided that the relationship between the hedged andhedging instrument is formally documented, and ifeffective as of when the hedge commences and,potentially, for all its duration.The hedging efficiency depends on whether fair valuechanges in the hedged instrument or in the relevantexpected cash flows are offset by the fair valuechanges in the hedging instrument. Thus, thisefficiency arises from the comparison between theabove-mentioned changes, taking into account thepurpose pursued by the company when the hedge isexecuted.The hedging relationship is efficient when fair valuechanges (or cash flow changes) in the hedgingfinancial instrument substantially offset changes in thehedged instrument, for the risk being hedged.Such efficiency is assessed at year end or whilepreparing quarterly financial reports through:perspective assessments, evidencing theapplication of the hedging accounting system asthey prove its expected efficiency;retrospective assessments, showing the hedgingefficiency level achieved in the period to whichthey refer. In other words, they measure theextent to which effective results depart fromperfect hedging.If these assessments do not confirm the hedgingefficiency, the accounting of hedging transactions isdiscontinued, according to what outlined above, andthe hedging derivative contract is reclassified undertrading instruments.Equity InvestmentsClassification criteriaThis item includes investments in subsidiaries, jointlycontrolledcompanies and associates.Subsidiaries are intended as companies in which theBank holds over 50% of the voting rights or in which,according to particular legal relationships oragreements, the power of controlling the investee isgranted.241


Jointly-controlled companies are companies in which,according to contractual, shareholder or other type ofagreements, operations are managed and directors areappointed jointly.Finally, associates are intended as companies in whichthe Bank exercises heavy influence. The Bank isconsidered to exercise heavy influence if it holds 20%or more of the voting rights; heavy influence can besignalled also by other circumstances, such asparticipation in the decision-making process, wherethe Group has the power to heavily influence themanagement and financial decision-making process ofthe investee.Recognition and derecognition criteriaFinancial assets included in this category are firstrecognised on the settlement date. When firstrecognised, financial assets are valued at cost.Financial assets are derecognised upon expiry ofcontractual rights on cash flows generated by theassets themselves or when the financial asset is sold,thus substantially transferring all the relevant risksand benefits.Valuation criteria and recognition of incomeFollowing initial recognition, equity investments arevalued at cost except when it is proven that the valueof an equity investment is impaired, the recoverablevalue of the equity investment itself is estimated,taking into account the greater of the current value ofthe future cash flows that can be generated by theequity investment (its value in use) and its fair value,excluding the expenses related to the final disposal ofthe investment.If the equity investment's recoverable value is lowerthan its book value, the relevant difference isrecognised in the income statement.If the grounds for impairment cease to exist afterimpairment has been recorded, relevant write-backsare recorded in the income statement.Tangible fixed assetsClassification criteriaThe item includes land, real estate used in operations,property investments, technical systems, furniture,furnishings, and equipment of any kind.Real estate used in operations is defined as that heldfor the supply of services or for administrativepurposes, while real estate investments are those heldfor the purpose of receiving rents or of evaluating theinvested capital or for both the reasons above.This item also includes assets used within the scope offinancial leasing contracts, even though their legalowner is the lessor.Recognition and derecognition criteriaTangible fixed assets are first valued at cost including,in addition to the purchase price, any ancillaryexpenses directly attributable to the purchase andcommissioning of the asset.Tangible fixed assets are derecognised from theincome statement when disposed of or when use of theasset is permanently discontinued and from itsdismissal no future economic benefits are expected.Costs of an incremental nature are recognised asadditions to the asset value. Ordinary maintenancecosts are recognised directly in the income statement.Valuation criteria and recognition of incomeAfter initial recognition, tangible fixed assets, includingreal estate not used in operations, are measured atcost, net of depreciation and impairment. Such assetsare depreciated over the full term of their useful liveson a straight-line basis, with the exception of land.Land, whether purchased independently or togetherwith relative buildings, has an indefinite useful life andhence is not subject to depreciation. If its value isincluded in the value of the building, by virtue of thecomponent approach application, it is considered as anasset that can be separated from the building; the landvalue and the building value are split based onindependent expert appraisals on fully-owned buildingsand buildings whose ownership percentage isconsidered significant.Every fiscal year or half-year end, when there areelements implying an asset being impaired, the asset’sbook value and recovery value are compared; thelatter is equal to the greater of the fair value, net ofany sales costs, and the relevant current value of theasset, that is the current value of future cash flowsgenerated by the asset. Resulting adjustments arerecorded in the income statement. If the grounds forimpairment cease to exist, a write-back is booked,which may under no circumstances exceed the valuethe asset would have had if previous impairments hadnot occurred, net of depreciation.Intangible fixed assetsClassification criteriaIntangible fixed assets are recognised in theshareholders' equity only if:they are identifiable;the entity controls them;expected future benefits arising from these assetsare likely to be attributed to the entity;the asset's cost can be reliably evaluated.242


Intangible fixed assets include goodwill and long-termsoftware applications.Goodwill represents the positive difference betweenthe purchase cost and the fair value of assets andliabilities acquired.Other intangible fixed assets are recorded if they canbe identified and arise from legal or contractual rights.Recognition and derecognition criteriaGoodwill is represented by the purchase cost surplusincurred compared to the fair value of assets on thepurchase date and other property acquired.Intangible fixed assets can be recorded as goodwillonly when the positive difference between the fairvalue of purchased assets and the purchase cost of theequity investment (including ancillary expenses)represents the future profitability of the equityinvestment (goodwill).If such difference is negative (badwill) or the goodwilldoes not prove the investee's future profitability, sucha difference is directly recognised in the incomestatement.Other intangible fixed assets are stated at cost,adjusted for any ancillary expenses only if the futureeconomic benefits resulting from the asset are likely tobe realised and if the asset cost can be reliablydetermined. On the other hand, the intangible fixedasset cost is stated in the income statement for thefinancial year in which it was incurred. Intangible fixedassets are derecognised from shareholders' equityupon disposal and if no future economic benefits areexpected.Valuation criteria and recognition of incomeEvery year and any time impairment is found, anassessment is carried out on the sustainability of thegoodwill recorded. To this end, units generating cashflows and to which goodwill can be attributed areidentified. The amount of any impairment isdetermined based on the difference between thecarrying value of goodwill and its recovery value, iflower. Such recovery value is equal to the greater ofthe fair value of the unit generating cash flows, net ofany sales costs, and the relevant current value.Resulting write-backs are recorded in the incomestatement.The cost of intangible fixed assets having a defineduseful life is amortised on a straight-line basis,according to their residual useful life. If their useful lifecannot be defined, they are not amortised, and thefixed asset’s book value is only tested for adequacyperiodically.At the end of every financial year or when impairmentis found, the recovery value of the asset is estimated.The loss, recognised in the income statement, is equalto the difference between the book value andrecoverable value of the asset.Non-current assets for saleLiabilities associated with groups of assets heldfor saleThese items include non-current assets and relevantliabilities, as well as groups of discontinued assets andliabilities held for sale.These assets or liabilities, as envisaged in IFRS 5, arevalued at the lower of their book value and fair value,net of disposal costs. Relating income and expenses(net of tax effect) are recognised in the incomestatement under a separate item.Debts and securities issuedClassification criteriaDue to banks, Due to customers and Securities issuedinclude the various types of interbanking and customerfunding and the deposits made through certificates ofdeposit and bonds issued, therefore net of anyrepurchased amounts. These also include debts issuedby the Bank as lessor within the scope of financialleasing transactions.Recognition and derecognition criteriaSuch financial liabilities are first recorded upon receiptof the amounts collected or upon the issue of debtsecurities.The first recognition is carried out based on theliabilities' fair value, which is normally equal to thecollected amount or issue price, adjusted according toany additional income and expenses directlyattributable to individual funding or issues and notreimbursed by the creditor. Internal costs of anadministrative nature are excluded.Financial liabilities are derecognised when expired orextinguished. Derecognition is made even where thepreviously issued securities are subsequentlyrepurchased. The difference between the liability bookvalue and the amount paid to repurchase it isrecognised in the income statement. The marketplacement of own securities following their repurchaseis considered as a new issue, and the new placementprice is booked without affecting the incomestatement.Valuation criteria and recognition of incomeOnce they are first recognised, financial liabilities arevalued at the cost amortised according to the effectiveinterest rate method.When the time factor is negligible, exception is madefor short-term liabilities, which are still booked basedon the collected amount and whose possibly recordedcosts are recognised on a line-by-line basis in theincome statement for the contractual duration of theliability.243


Financial liabilities held for tradingThis item includes the negative value of tradingderivative contracts designated at fair value, ofderivative contracts involving other financialinstruments and of liabilities, which are alsodesignated at fair value, arising from technicaloverdrafts generated by securities tradingtransactions.The criteria for recognition, derecognition, valuationand recognition of income statement items are thesame as those illustrated for the financial assets heldfor trading.Staff severance indemnityPursuant to IAS 19 “Employee bonuses”, up to 31December 2006, staff severance indemnity was anobligation for the Bank to grant a defined benefit atthe moment the employment relationship ceased, andwas determined based on actuarial logic, in compliancewith that set forth by IAS 19.This benefit was considered a defined-benefitobligation and thus, the matured debt due toemployees was determined based on the current valueof the accrued part of the benefit which the employeewould receive upon disbursement, and wasattributable to periods of employment during which theemployee provided his services (P.U.C. – ProjectedUnit Credit Method).The scheme service costs were recorded under payrollcosts as net accrued benefits for the period, benefitspertaining to previous financial years which have notyet been accounted for, interest accrued, expectedincome generated by the scheme assets, and actuarialprofits and losses.The latter were recognised according to the “corridor”method, which is the combined surplus of the profitsand losses existing at the end of the previous fiscalyear, compared to the greater of 10% of the currentvalue of the benefits generated by the scheme and10% of the fair value of the scheme assets.Following the reform of supplementary pension plans,which was implemented with Legislative Decree252/2005, integrated with the new provisions includedin the 2007 Budget Law and subsequent implementingdecrees:the quotas of staff severance indemnity maturedas at 31 December 2006 remain with thecompany, and are considered as a “definedbenefit” plan, as the company is obliged to pay toemployees, in the cases set forth by law, theamounts determined pursuant to art. 2120 of theItalian Civil Code. The change compared to theprevious situation involved the model’s actuarialassumptions, which must include the assumptionsof salary increase set forth in art. 2120 of theItalian Civil Code (application of a fixed rate of1.5%, and of 75% of the ISTAT inflation index)and not those rates estimated by the Bank;the quotas maturing starting from 1 st January2007 must be allocated, based on the employees’choice, to supplementary pension plans, or be heldby the company, thus comprising a “definedcontributionplan”, as the Bank’s obligationtowards employees shall cease upon payment ofthe fund quotas matured.Based on the above, as from 1 January 2007:the obligation for the quotas matured as at 31December 2006 is recorded according to the rulesfor defined-benefit plans. This means that theobligation for benefits matured by employees mustbe assessed using actuarial techniques;the obligation for the quotas maturing from 1 stJanuary 2007, as a result of supplementarypension plans or the INPS (National Social SecurityAgency) treasury account, is recorded based onthe contributions owed for each year.The actuarial valuation of staff severance indemnitywas carried out taking into consideration the effects ofthe regulatory changes which result in the curtailmentof staff severance indemnity from 1 January 2007, asa result of the provision of § 111 of IAS 19.As provided by IAS 19, this curtailment was recordedin the income statement, taking into account actuarialprofits and losses not previously recorded due to theapplication of the corridor method.Other employee benefits (i.e. retirement premiumsand contributions) are covered in IAS 19 as they aredefined benefit plans, and they are recognised asliabilities, while the single amount payable to eachemployee is estimated on the basis of actuarialmethods.Provisions for risks and chargesClassification criteriaThis item includes allowances for current obligationsoriginated by a past event, whose payment is certainor highly probable, but whose amount and time ofsettlement are uncertain.Recognition criteriaAllowances are booked to this item only where:there is a current (legal or implicit) obligationarising from a past event;resources aimed at generating economic benefitswill be probably used to fulfil such obligation;the obligation amount can be reliably estimated.No allowances are allocated for potential andimprobable liabilities, although a description of thenature of the liability is nonetheless provided in theNotes to the Accounts.244


Valuation criteria and recognition of incomeThe allowances reflect the best possible estimate onthe basis of the elements at our disposal, andprovisions are recognized in the income statement.Where the temporal period is significant, allowancesare discounted using current market discount rates. The effectof such a discount is recognised in the income statement.Foreign currency transactionsRecognition criteriaForeign currency transactions are recorded in thebalance sheet currency upon initial recognition, byapplying the exchange rate in force on the transactiondate to the foreign currency amount.Valuation criteria and recognition of incomeAt the end of every financial year or quarter,statement entries in foreign currency are measured asfollows:monetary assets and liabilities are converted at theexchange rate in force on the closing date;non-monetary items valued at historic cost areconverted at the exchange rate valid on thetransaction date;non-monetary entries designated at fair value in aforeign currency are converted using the spotexchange rates in force on the closing date.Translation differences deriving from the settlement ofmonies or from the conversion of monies at exchangerates different from the initial conversion rates, orfrom conversion in previous financial statements, arerecorded in the income statement for the period inwhich they arise.When a profit or loss relating to a non-monetaryelement is recognised in shareholders' equity, thetranslation difference relating to the element is alsorecognised in shareholders' equity. On the other hand,while a profit or loss is recognised in the incomestatement, the relevant translation difference is alsorecorded in the income statement.The euro conversion of foreign investees’ financialstatements is carried out by applying the exchangerates in force on the reference balance sheet date.Translation differences in the consolidated investees'equity are recorded under consolidated reserves andrecognised in the income statement only in thefinancial year in which the equity investment isdisposed of.Tax Assets and LiabilitiesIncome taxes are calculated in accordance withtaxation laws in force. The tax burden is representedby total current and deferred taxes used indetermining the profit or loss for the year.Income taxes are recorded in the income statement,with the exception of taxes relating to asset andliability items of shareholders' equity.The Bank recognises the effects relating to current andanticipated taxes, by applying the existing tax rates.Allowances for income taxes are determined based ona prudential forecast of the current, prepaid anddeferred tax burden.Deferred taxes are calculated on all temporarydifferences in existence as at 31 December among thetax values of the assets and liabilities and therespective financial statement values, except fortemporary differences deriving from initial recognition:of goodwill;of an asset or liability in a transaction that is not abusiness combination and does not affect the profitfor the year for the purpose of the financialstatements, or the taxable profit or loss.Timing differences may be:taxable, that is they will be taxed in determiningthe tax income for future years when the bookvalue of the asset or liability is realised orextinguished;deductible, that is they will be deducted fordetermining the tax income for future years whenthe book value of the asset or liability is realised orextinguished.Prepaid tax assets represent income taxes that can berecovered in future years through:deductible timing differences;unpaid taxation liabilities carried forward.Prepaid tax assets are booked when there is arecovery possibility, which is valued based on the Bankand Group ability to generate continuing positive taxincome, due to the exercise of the option relating to"tax consolidation".Deferred tax liabilities represent taxes due in futureyears and referring to taxable timing differences.All deferred tax liabilities are recognised in thefinancial statements.Prepaid and deferred tax assets and liabilities aresystematically valued in order to take into account anychanges involving tax laws or rates.The tax allowance balance is further adjusted in orderto face the expenses that may arise from alreadynotified audits or in any case from existing litigationwith tax authorities.245


OTHER INFORMATIONExpenses related to improvements on third-partyassetsExpenses for the improvement of third-party buildingsare capitalised, taking into consideration that for theduration of the leasing contract the user will controlassets and take advantage of the future economicbenefits arising therefrom. These expenses areamortized for a period that may not exceed theduration of the leasing contract.Dividends and recognition of incomeIncome is recognised when received or in any casewhen the future economic benefits are likely to bereceived and these benefits can be reliably quantified.In particular:interest on arrears, where provided for in thecontract, is recorded in the income statement onlyupon its effective collection;dividends are recorded in the income statement atthe date on which their distribution is decided;income arising from the brokerage of tradingfinancial instruments, which is determined by thedifference between the transaction price and theinstrument fair value, is recognised in the incomestatement upon recording of the transaction if thefair value can be determined with reference torecent parameters or transactions that may beobserved on the same market in which theinstrument is traded. Income relating to financialinstruments for which the above-mentionedmeasurement is not possible is recognised in theincome statement for the duration of thetransaction.Allowances for guarantees and commitmentsIndividual and collective allowances relating toestimated future disbursements connected with thecredit risk of guarantees and commitments, which aredetermined by applying the same principles outlinedabove with respect to receivables, are recorded asOther liabilities, in accordance with the instructionsprovided by the Bank of Italy.246


247


248


ASSETSSection 1Cash and cash equivalents - Entry 101.1 Cash and cash equivalents: breakdown31.12.2007 31.12.2006a) Cash 409,362 310,663b) Demand deposits at central banks - -Total 409,362 310,663249


Section 2Financial assets held for trading - Entry 202.1 Financial assets held for trading: breakdown by productItems/Value31.12.2007 31.12.2006Listed Non-listed Listed Non-listedA. Cash assets1. Debt securities 222,924 445,728 181,090 295,4991.1 Structured securities 114,619 157,127 81,954 200,9501.2 Other debt securities 108,305 288,601 99,136 94,5492. Equity securities 52,099 8,983 8,727 273. Interests in collective investment undertakings 50 - 4,599 3,0254. Loans - - - -4.1 Income from repurchase agreements - - - -4.2 Other - - - -5. Non-performing Assets - - - -6. Assets sold and not written off 22,389 17,424 14,855 31,765Total A 297,462 472,135 209,271 330,316B. Derivative instruments1. Financial derivatives: 20,541 219,504 7,621 147,2691.1 trading 20,541 218,325 7,621 139,3881.2 connected with the fair value option - 623 - 4461.3 other - 556 - 7,4352. Credit Derivatives - - - -2.1 trading - - - -2.2 connected with the fair value option - - - -2.3 other - - - -Total B 20,541 219,504 7,621 147,269Total (A+B) 318,003 691,639 216,892 477,585250


2.2 Financial assets held for trading: breakdown by debtors/issuersItems/Value 31.12.2007 31.12.2006A. CASH ACTIVITIES1. Debt securities 668,652 476,589a) Governments and Central Banks 44,309 56,853b) Other public entities 9,508 8,612c) Banks 571,313 400,812d) Other issuers 43,522 10,3122. Equity securities 61,082 8,754a) Banks 10,370 1,026b) Other issuers: 50,712 7,728- insurance companies 21,791 202- financial companies 1 6,259- non-financial companies 28,920 1,267- other - -3. Interests in collective investment undertakings 50 7,6244. Loans - -a) Governments and Central Banks - -b) Other public entities - -c) Banks - -d) Other parties - -5. Non-performing Assets - -a) Governments and Central Banks - -b) Other public entities - -c) Banks - -d) Other parties - -6. Assets sold and not written off 39,813 46,620a) Governments and Central Banks - 14,855b) Other public entities - -c) Banks 39,813 31,765d) Other issuers - -Total A 769,597 539,587B. DERIVATIVE INSTRUMENTS - -a) Banks 157,925 113,564b) Customer 82,120 41,326Total B 240,045 154,890Total (A+B) 1,009,642 694,477251


2.3 Financial assets held for trading: derivative instrumentsType of derivative/Underlying assetA) Listed derivativesInterestratesCurrenciesand goldEquitysecuritiesReceivables Other 31.12.2007 31.12.20061. Financial derivatives: - - 20,541 - - 20,541 7,621With exchange of capital - - 6,791 - - 6,791 289- Options acquired - - 6,778 - - 6,778 289- Other derivatives - - 13 - - 13 -Without exchange of capital - - 13,750 - - 13,750 7,332- Options acquired - - 13,750 - - 13,750 7,332- Other derivatives - - - - - - -2. Credit Derivatives: - - - - - - -With exchange of capital - - - - - - -Without exchange of capital - - - - - - -B) Non-listed derivativesTotal A - - 20,541 - - 20,541 7,6211. Financial derivatives: 182,886 14,990 20,948 - 680 219,504 147,269With exchange of capital - - - - - - -- Options acquired - - - - - - -- Other derivatives - - - - - - -Without exchange of capital 182,886 14,990 20,948 - 680 219,504 147,269- Options acquired 85,256 14,990 20,948 - 680 121,874 90,396- Other derivatives 97,630 - - - - 97,630 56,8732. Credit Derivatives: - - - - - - -With exchange of capital - - - - - - -Without exchange of capital - - - - - - -Total B 182,886 14,990 20,948 - 680 219,504 147,269Total (A+B) 182,886 14,990 41,489 - 680 240,045 154,8902.4 Cash financial assets held for trading, other than those sold and not written off, and other than impaired:annual changesType of derivative/Underlying assetDebt securitiesEquitysecuritiesInterests incollectiveinvestmentundertakingsLoans 31.12.2007A. Opening balance 476,589 8,754 7,624 - 492,967B. Increases 5,481,075 3,676,037 1,325 - 9,158,437B1. Purchases 5,417,618 3,636,631 1,285 - 9,055,534B2. Positive fair value changes 5,429 2,485 - - 7,914B3. Other changes 58,028 36,921 40 - 94,989C. Decreases 5,289,012 3,623,709 8,899 - 8,921,620C1. Sales 4,954,510 3,522,334 8,799 - 8,485,643C2. Redemptions 280,502 - - - 280,502C3. Negative fair value changes 10,724 1,034 85 - 11,843C4. Other changes 43,276 100,341 15 - 143,632D. Closing balance 668,652 61,082 50 - 729,784252


Section 3Financial assets designated at fair value - Entry 303.1 Financial assets designated at fair value: breakdown by productItems/Value31.12.2007 31.12.2006Listed Non-listed Listed Non-listed1. Debt securities - 134,013 - 303,7701.1 Structured securities - 49,678 - 115,8361.2 Other debt securities - 84,335 - 187,9342. Equity securities - 46,166 - 59,2913. Interests in collective investment undertakings - - - -4. Loans - - - -4.1 Structured - - - -4.2 Other - - - -5. Non-performing Assets - - - -6. Assets sold and not written off - - - -Total - 180,179 - 363,061Cost - 211,403 - 362,7723.2 Financial assets designated at fair value: breakdown by debtors/issuersItems/Value 31.12.2007 31.12.20061. Debt securities 134,013 303,770a) Governments and Central Banks - -b) Other public entities - -c) Banks - -d) Other issuers 134,013 303,7702. Equity securities 46,166 59,291a) Banks - -b) Other issuers: 46,166 59,291- insurance companies - -- financial companies 46,166 59,291- non-financial companies - -- other - -3. Interests in collective investment undertakings - -4. Loans - -a) Governments and Central Banks - -b) Other public entities - -c) Banks - -d) Other parties - -5. Non-performing Assets - -a) Governments and Central Banks - -b) Other public entities - -c) Banks - -d) Other parties - -6. Assets sold and not written off - -a) Governments and Central Banks - -b) Other public entities - -c) Banks - -d) Other parties - -Total 180,179 363,061253


3.3 Financial assets designated at fair value, other than those sold and not written off, and other than impaired:annual changesDebtsecuritiesEquitysecuritiesInterests incollectiveinvestmentundertakingsLoans 31.12.2007A. Opening balance 303,770 59,291 - - 363,061B. Increases 36,558 13,565 - - 50,123B1. Purchases - 13,565 - - 13,565B2. Positive fair value changes 935 - - - 935B3. Other changes 35,623 - - - 35,623C. Decreases 206,315 26,690 - - 233,005C1. Sales 160,262 - - - 160,262C2. Redemptions 12,505 - - - 12,505C3. Negative fair value changes 5,469 26,690 - - 32,159C4. Other changes 28,079 - - - 28,079D. Closing balance 134,013 46,166 - - 180,179254


Section 4Financial assets available for sale - Entry 404.1 Financial assets available for sale: breakdown by productItems/Value31.12.2007 31.12.2006Listed Non-listed Listed Non-listed1. Debt securities 92,892 25,495 71,615 170,5221.1 Structured securities - 15,647 - 21,9921.2 Other debt securities 92,892 9,848 71,615 148,5302. Equity securities 106,151 59,680 133,552 60,4742.1 Designated at fair value 106,151 34,298 133,552 34,0932.2 Designated at cost - 25,382 - 26,3813. Interests in collective investment undertakings - - 11,508 6,7144. Loans - - - -5. Non-performing Assets - - - -6. Assets sold and not written off 257,874 14,614 4,852 15,078Total 456,917 99,789 221,527 252,7884.2 Financial assets available for sale: breakdown by debtors/issuersItems/Value 31.12.2007 31.12.20061. Debt securities 118,387 242,137a) Governments and Central Banks 100,612 80,038b) Other public entities - -c) Banks 17,477 18,302d) Other issuers 298 143,7972. Equity securities 165,831 194,026a) Banks 56,033 125,837b) Other issuers: 109,798 68,189- insurance companies - -- financial companies 44,326 27,912- non-financial companies 65,465 27,576- other 7 12,7013. Interests in collective investment undertakings - 18,2224. Loans - -a) Governments and Central Banks - -b) Other public entities - -c) Banks - -d) Other parties - -5. Non-performing Assets - -a) Governments and Central Banks - -b) Other public entities - -c) Banks - -d) Other parties - -6. Assets sold and not written off 272,488 19,930a) Governments and Central Banks 257,874 4,852b) Other public entities - -c) Banks 14,614 15,078d) Other parties - -Total 556,706 474,315255


4.3 Financial assets available for sale: hedged assetsHedged assetsAsset/Type of hedging 31.12.2007 31.12.2006Negative Cash flows Negative Cash flow1. Debt securities - - - -2. Equity securities - - 2,394 -3. Interests in collective investment undertakings - - - -4. Loans - - - -5. Portfolio - - - -Total - - 2,394 -4.4 Financial assets available for sale: assets with specific hedgingItems/Value 31.12.2007 31.12.20061. Financial assets with specific hedging of fair value - 2,394a) interest rate risk - -b) price risk - 2,394c) exchange rate risk - -d) credit risk - -e) more risks - -2. Financial assets with specific hedging of cash flow - -a) interest rate risk - -b) exchange rate risk - -c) other - -Total - 2,394256


4.5 Financial assets available for sale, other than those sold and not written off, and other than impaired:annual changesDebtsecuritiesEquitysecuritiesInterests incollectiveinvestmentundertakingsLoans 31.12.2007A. Opening balance 242,137 194,026 18,222 - 454,385B. Increases 359,837 149,244 4,737 - 513,818B1. Purchases 321,717 106,344 1,063 - 429,124B2. Positive fair value changes 1,181 24,916 - - 26,097B3. Write-backs - - - - -- charged to income statement - X - - -- charged to shareholders' equity - - - - -B4. Transfers from other portfolios - - - - -B5. Other changes 36,939 17,984 3,674 - 58,597C. Decreases 483,587 177,439 22,959 - 683,985C1. Sales 181,515 70,342 22,937 - 274,794C2. Redemptions 34,487 - - - 34,487C3. Negative fair value changes 501 88,862 22 - 89,385C4. Impairment write-downs - 16,306 - - 16,306- charged to income statement - 16,306 - - 16,306- charged to shareholders' equity - - - - -C5. Transfers to other portfolios - - - - -C6. Other changes 267,084 1,929 - - 269,013D. Closing balance 118,387 165,831 - - 284,218As far as debt titles are concerned, it must be underlined that:- under item B.1 “Purchases” there are purchases of multi-year Treasury Bonds for € 320,674 thousand.- under item B.5 “Other variations” there are profits deriving from sale for € 30,632 thousand.- item C.1 “Sales” includes sales of multi-year Treasury Bonds for € 50,143 thousand and sales of Theano junior titles for € 131,372thousand.- under item C.6 “Other variations” there are assets sold and not written-off for € 252,558.As far as capital titles are concerned, it must be highlighted that:- under item B.1 “Purchases” there are purchases of Banca Italease shares for € 50,515 thousand, of Telecom shares for € 31,004thousand and London Stock Exchange shares for € 18,114 thousand.- under item B.5 “Other variations” there are profits deriving from sale for € 17,984 thousand.- item C.1 “Sales” includes sales of Banca Italease shares for € 29,162 thousand, sales of Italian Stock Exchange shares for€ 18,114 thousand and sales of ABN AMRO shares for € 15,120 thousand.257


Section 6Loans to banks - Entry 606.1 Loans to banks: breakdown by productType of transaction/Value 31.12.2007 31.12.2006A. Loans to Central Banks 195,743 220,1891. Term deposits - -2. Reserve requirements 195,743 220,1893. Active repurchase agreements - -4. Other items - -B. Loans to banks 7,574,909 6,187,0071. Current accounts and demand deposits 474,405 899,0102. Term deposits 2,711,238 3,011,5453. Other loans: 4,381,536 2,268,3343.1 Income from repurchase agreements 4,221,691 2,061,6153.2 Financial lease - -3.3 Other 159,845 206,7194. Debt securities: - -4.1 Structured securities - -4.2 Other debt securities - -5. Non-performing Assets 7,730 8,1186. Assets sold and not written off - -Total (book value) 7,770,652 6,407,196Total (fair value) 7,770,652 6,407,196258


Section 7Loans to customers - Entry 707.1 Loans to customers: breakdown by productType of transaction/Value 31.12.2007 31.12.20061. Current accounts 6,341,182 6,405,7772. Active repurchase agreements - 7,1873. Mortgages 12,099,747 11,356,3034. Credit cards, personal loans and loans on one's wages 712,807 634,4615. Financial lease - -6. Factoring - -7. Other transactions 9,608,488 9,624,3398. Debt securities: 1,562 2,3048.1 Structured securities - -8.2 Other debt securities 1,562 2,3049. Non-performing Assets 1,831,460 1,960,01110. Assets sold and not written off - -Total (book value) 30,595,246 29,990,382Total (fair value) 31,334,880 30,041,5357.2 Loans to customers: breakdown by debtors/issuersType of transaction/Value 31.12.2007 31.12.20061. Debt securities 1,562 2,304a) Governments - -b) Other public entities - -c) Other issuers 1,562 2,304- non-financial companies 1,562 2,304- financial companies - -- insurance - -- other - -2. Loans to: 28,762,224 28,028,067a) Governments 4 3b) Other public entities 86,605 148,802c) Other parties 28,675,615 27,879,262- non-financial companies 19,323,055 19,071,951- financial companies 991,978 971,142- insurance 81 25,584- other 8,360,501 7,810,5853. Impaired assets: 1,831,460 1,960,011a) Governments - -b) Other public entities 518 1,143c) Other parties 1,830,942 1,958,868- non-financial companies 1,139,175 1,179,080- financial companies 68,746 4,560- insurance 7 19- other 623,014 775,2094. Assets sold and not written off: - -a) Governments - -b) Other public entities - -c) Other parties - -- non-financial companies - -- financial companies - -- insurance - -- other - -Total 30,595,246 29,990,382259


7.3 Loans to customers: assets with specific hedgingType of transaction/Value 31.12.2007 31.12.20061. Loans subject to specific fair value hedges 4,797 104,850a) interest rate risk 4,797 104,850b) exchange rate risk - -c) credit risk - -d) more risks - -2. Loans with specific hedging of cash flow: - -a) interest rate risk - -b) exchange rate risk - -c) other - -Total 4,797 104,850260


Section 8Hedging derivative contracts - Entry 808.1 Hedging derivative contracts: breakdown by type of contract and underlying assetsType of derivative/Underlying assetA) Listed derivativesInterest ratesCurrencies andgoldEquity securities Receivables Other 31.12.20071. Financial derivatives: - - - - - -With exchange of capital - - - - - -- Options acquired - - - - - -- Other derivatives - - - - - -Without exchange of capital - - - - - -- Options acquired - - - - - -- Other derivatives - - - - - -2. Credit Derivatives: - - - - - -With exchange of capital - - - - - -Without exchange of capital - - - - - -Total A - - - - - -B) Non-listed derivatives -1. Financial derivatives: 25,101 - - - - 25,101With exchange of capital - - - - - -- Options acquired - - - - - -- Other derivatives - - - - - -Without exchange of capital 25,101 - - - - 25,101- Options acquired 3,880 - - - - 3,880- Other derivatives 21,221 - - - - 21,2212. Credit Derivatives: - - - - - -With exchange of capital - - - - - -Without exchange of capital - - - - - -Total B 25,101 - - - - 25,10131.12.07 (A+B) 25,101 - - - - 25,10131.12.06 (A+B) 64,555 - 1,632 - - 66,1878.2 Hedging derivative contracts: breakdown by hedged portfolio and type of hedgingFair ValueCash flowTransaction/Type of hedgingSpecificRate riskGenericExchangeCredit risk Price risk Additional riskrate riskSpecific Generic1. Financial assets available for sale - - - - - X - X2. Receivables 36 - - X - X - X3. Financial assets held to maturity X - - X - X - X4. Portfolio X X X X X - X -Total assets 36 - - - - - - -1. Financial liabilities 25,065 - - X - X - X2. Portfolio X X X X X - X -Total liabilities 25,065 - - - - - - -261


Section 10Equity investments - Entry 10010.1 Investments in subsidiary companies, jointly-controlled companies or companies subject to significant influence:information on investment relationshipsCompany name Head Office Share %Availability ofvotes %A. Wholly-controlled companies1. Antonveneta ABN Amro Bank SpA Milan 55.000% 55.000%2. Antonveneta Immobiliare SpA Padua 100.000% 100.000%3. Salvemini Srl Padua 100.000% 100.000%4. Antenore Finance SpA Padua 98.000% 98.000%5. Giotto Finance SpA Padua 98.000% 98.000%6. Giotto Finance 2 SpA Padua 98.000% 98.000%7. Theano Finance SpA Padua 98.000% 98.000%8. Antonveneta Capital L.L.C. I Delaware 100.000% 100.000%9. Antonveneta Capital L.L.C. II Delaware 100.000% 100.000%10. Antonveneta Capital Trust I Delaware 100.000% 100.000%11. Antonveneta Capital Trust II Delaware 100.000% 100.000%12. La Cittadella SpA Padua 99.167% 99.167%B. Jointly-controlled companies1. Antoniana Veneta Popolare Assicuraz. SpA Trieste 50.000% 50.000%2. Antoniana Veneta Popolare Vita SpA Trieste 50.000% 50.000%C. Companies subject to significant influence1. Padova 2000 Iniziative Immobiliari SpA Padua 45.010% 45.010%2. Costruzioni Ecologiche Moderne SpA Rome 40.197% 40.197%3. Sidermo Srl in liquidazione Mortegliano 32.251% 32.251%10.2 Investments in subsidiary companies, jointly-controlled companies or companies subject to significant influence:accounting informationCompany nameTotal assetsTotalrevenuesProfit (Loss)Shareholders’equityBalancesheetvaleFair valueA. Wholly-controlled companies1. Antonveneta ABN Amro Bank SpA 113,925 26,425 13,203 84,009 27,442 X2. Antonveneta Immobiliare SpA 590,597 46,202 22,533 564,635 508,602 X3. Salvemini Srl 17,975 1,415 318 8,392 5,612 X4. Antenore Finance SpA 178 1 1 95 98 X5. Giotto Finance SpA 147 2 1 95 98 X6. Giotto Finance 2 SpA 177 2 7 122 98 X7. Theano Finance SpA 216 1 - 89 98 X8. Antonveneta Capital L.L.C. I 79,804 - - 10 10 X9. Antonveneta Capital L.L.C. II 220,202 - - 10 10 X10. Antonveneta Capital Trust I 79,609 - - 5 5 X11. Antonveneta Capital Trust II 220,005 - - 5 5 X12. La Cittadella SpA 23,240 1,428 -325 678 995 XB. Jointly-controlled companies1. Antoniana Veneta Popolare Assicuraz. SpA 101,060 380 506 16,045 6,920 X2. Antoniana Veneta Popolare Vita SpA 4,250,022 29,086 29,985 144,191 51,642 XC. Companies subject to significant influence1. Padova 2000 Iniziative Immobiliari SpA 19,969 -1,244 -323 129 - -2. Costruzioni Ecologiche Moderne SpA 136,001 12,035 68 19,779 8,304 -3. Sidermo Srl in liquidazione 128 39 -1,564 71 - -TOTAL 5,853,255 115,772 64,410 838,360 609,939 -N.B.: Total income means:- Banks and financial institutions earning margin (as per Bankit's informal instruction at the ABI (Italian Banking Association) meeting on 23/11/05)- Insurance companies: TECHNICAL account result- Other companies: value of production .262


10.3 Investments: annual changes31.12.2007 31.12.2006A. Opening balance 1,474,426 1,689,621B. Increases 28,943 11,236B.1 Acquisitions 1,501 1,007B.2 Write-backs - -B.3 Revaluations - -B.4 Other changes 27,442 10,229C. Decreases 893,430 226,431C.1 Sales 150 26C.2 Value adjustments 2,852 -C.3 Other changes 890,428 226,405D. Closing balance 609,939 1,474,426E. Total revaluations - -F. Total adjustments 33,181 30,329The amount of € 27,442 thousand is the value of the Bank’s shareholding in Antonveneta ABN Amro Bank S.p.A., which in 2006 had been classifiedunder item 140 – assets “Non-current assets and groups of assets for sale”.The amount of € 890,428 thousand refers to the shareholding in Interbanca S.p.A., which in this financial year has been classified under item 140 –assets “Non-current assets and groups of assets for sale”.263


Section 11Tangible fixed assets - Entry 11011.1 Fixed assets: breakdown of assets designated at costAsset/Value 31.12.2007 31.12.2006A. Assets for functional use1.1 property 56,622 61,551a) land 85 85b) buildings 43 46c) fixtures and furnishings 17,911 17,197d) electronic systems 14,043 15,791e) other 24,540 28,4321.2 acquired under financial lease - -a) land - -b) buildings - -c) fixtures and furnishings - -d) electronic systems - -e) other - -Total A 56,622 61,551B. Assets held for investment2.1 property 64,628 65,880a) land 34,644 34,644b) buildings 29,984 31,2362.2 acquired under financial lease - -a) land - -b) buildings - -Total B 64,628 65,880Total (A+B) 121,250 127,431264


11.3 Fixed assets for functional use: annual changesLand Buildings FurnitureElectronicsystemsOther 31.12.2007A. Gross opening balance 85 57 35,474 43,201 67,641 146,458A.1 Reductions of total net values - 11 18,277 27,410 39,209 84,907A.2 Net opening balance 85 46 17,197 15,791 28,432 61,551B. Increases: - - 6,625 4,981 7,914 19,520B.1 Acquisitions - - 6,624 4,980 7,901 19,505B.2 Costs of capitalised improvements - - - - - -B.3 Write-backs - - - - - -B.4 Positive changes of fair value charged to: - - - - - -a) shareholders' equity - - - - - -b) income statement - - - - - -B.5 Positive goodwill on exchange rate - - - - - -B.6 Transfers from properties held as investments - - - - - -B.7 Other changes - - 1 1 13 15C. Decreases: - 3 5,911 6,729 11,806 24,449C.1 Sales - - 44 441 29 514C.2 Amortisation and depreciation - 3 5,867 6,058 11,759 23,687C.3 Value adjustments on impairments charged to: - - - - - -a) shareholders' equity - - - - - -b) income statement - - - - - -C.4 Negative changes of fair value charged to: - - - - - -a) shareholders' equity - - - - - -b) income statement - - - - - -C.5 Negative exchange differences - - - - - -C.6 Transfer to: - - - - - -a) tangible assets held for investment - - - - - -b) assets for sale - - - - - -C.7 Other changes - - - 230 18 248D. Net closing balance 85 43 17,911 14,043 24,540 56,622D.1 Reductions of total net values - 14 24,144 33,468 50,968 108,594D.2 Gross closing balance 85 57 42,055 47,511 75,508 165,216E. Designation at cost 85 43 17,911 14,043 24,540 56,622265


11.4 Tangible assets held for investment: annual changes31.12.2007LandBuildingsA. Opening balance 34,644 31,236B. Increases - 19B.1 Acquisitions - -B.2 Costs of capitalised improvements - 19B.3 Net positive changes of fair value - -B.4 Write-backs - -B.5 Positive exchange differences - -B.6 Transfers from property to functional use - -B.7 Other changes - -C. Decreases - 1,271C.1 Sales - -C.2 Amortisation and depreciation - 1,271C.3 Net negative changes of fair value - -C.4 Value adjustments on impairments - -C.5 Negative exchange differences - -C.6 Transfers to other asset portfolios - -a) properties for functional use - -b) non-current assets for sale - -C.7 Other changes - -D. Closing balance 34,644 29,984E. Designation at fair value 34,644 34,324Amortisation and depreciation have been calculated at the rates considered as representative of the remaining useful lives of the tangible assets.The amortisation and depreciation for the first year is calculated on the basis of the actual time the asset was used.Rate (%)Furniture 12Furnishings 15Ordinary office machinery 12Vehicles used for transportation 20Residential furnishings 15Electronic office machines 20EAD machines 20EAD equipment 15Mobile phones 20Loading and unloading equipment 7.5Security installations 15Various installations 15Various specific machinery 10Various types of equipment 15Armoured vans 20Alarms 30Internal communications installations 25Internal telephone installations 8Cars 25266


Section 12Intangible fixed assets - Entry 12012.1 Intangible assets: breakdown by type of asset31.12.2007 31.12.2006Asset/ValueLimiteddurationUnlimiteddurationLimiteddurationUnlimiteddurationA.1 Goodwill X 762,024 X 761,720A.2 Other intangible assets 42,730 - 28,979 -A.2.1 Assets designated at cost: 42,730 - 28,979 -a) Internally generated intangible assets - - - -b) Other activities 42,730 - 28,979 -A.2.2 Assets designated at fair value: - - - -a) Internally generated intangible assets - - - -b) Other activities - - - -Total 42,730 762,024 28,979 761,72012.2 Intangible assets: annual changesGoodwillOther intangible assets:internally generatedOther intangible assets: otherLim Unlim Lim Unlim31.12.2007A. Gross opening balance 761,720 - - 118,377 - 880,097A.1 Reductions of total net values - - - 89,398 - 89,398A.2 Net opening balance 761,720 - - 28,979 - 790,699B. Increases 304 - - 30,820 - 31,124B.1 Acquisitions 304 - - 30,820 - 31,124B.2 Increases in internal intangible assets X - - - - -B.3 Write-backs X - - - - -B.4 Positive changes of fair value X - - - - -- to shareholders' equity X - - - - -- to income statement X - - - - -B.5 Positive exchange differences - - - - - -B.6 Other changes - - - - - -C. Decreases: - - - 17,069 - 17,069C.1 Sales - - - - - -C.2 Value adjustments - - - 17,069 - 17,069- Amortisation or depreciation X - - 17,069 - 17,069- Write-downs - - - - - -+ Shareholders' equity X - - - - -+ income statement - - - - - -C.3 Negative changes of fair value - - - - - -- to shareholders' equity X - - - - -- to income statement X - - - - -C.4 Transfers to non-current assets held for sale - - - - - -C.5 Negative exchange differences - - - - - -C.6 Other changes - - - - - -D. Net closing balance 762,024 - - 42,730 - 804,754D.1 Adjustments of total net values - - - 106,467 - 106,467E. Gross closing balance 762,024 - - 149,197 - 911,221F. Designation at cost 762,024 - - 42,730 - 804,754CAPTIONLim: limited duration .Unlim: unlimited durationAmortisation of software has been calculated at a rate of 33%.The amortisation and depreciation for the first year is calculated on the basis of the actual time the asset was used.267


Section 13Tax assets and tax liabilitiesEntry 130 of assets and Entry 80 of liabilities13.1 Assets for prepaid taxes: breakdownIRES (corporation tax)Timingdifferences31.12.2007 31.12.2006Tax effect(27.5% tax rate)TimingdifferencesTax effect (33%tax rate)Write-downs of loans 1,140,834 313,730 1,108,039 365,653Provisions for risks and charges 306,085 84,173 293,503 96,856Perdite fiscali 30,703 8,443 - -Write-downs of equity investments (Legislative Decree 209/2002) - - 7,291 2,406CFV securities portfolio 11,850 3,259 217,629 71,818AFS securities portfolio 1,832 504 63,494 20,953HFT securities portfolio 1,169 321 364 120Securities under liabilities - - - -Beni mobili 2,957 813 - -Capitalised costs 8,522 2,344 17,503 5,776Administrative expenses 6,499 1,787 8,762 2,891Other - - 63 21Deferred tax assets 1,510,451 415,374 1,716,648 566,494Deferred tax liabilities - compensated -101,392Total prepaid taxes 313,982IRAP (regional business tax)Timingdifferences31.12.2007 31.12.2006Tax effect(4.50% tax rate)TimingdifferencesTax effect(4.25% taxrate)Write-downs of loans - - - -Provisions for risks and charges - - 2,898 123CFV securities portfolio - - 217,549 9,246AFS securities portfolio 2,631 118 364 15Securities under liabilities - - - -Capitalised costs 146 7 748 32Administrative expenses 2,252 101 8,338 354Other - - 63 3Deferred tax assets 5,029 226 229,960 9,773Deferred tax liabilities - compensated -226Total prepaid taxes -268


13.2 Deferred tax liabilities: breakdownIRES(corporation tax)Timingdifferences31.12.2007 31.12.2006Tax effect(27.5% taxrate)TimingdifferencesTax effect (33%tax rate)Asset capital gains 16,702 4,593 33,405 11,024Property 11,226 3,087 11,999 3,960Moveable property 1,269 349 977 322Intangible assets- goodwill 283,603 77,992 218,301 72,039Intangible assets- software 9,109 2,505 2,795 922AFS securities portfolio 9,314 2,561 20,162 6,653CFV securities portfolio 89 24 14 5HFT securities portfolio 2,485 683 996 329Revaluations of securities - Derivatives - - - -Write-downs of securities under Liabilities - - - -Staff severance pay 33,164 9,120 19,351 6,386Liabilities for employee departure 1,738 478 1,738 574Other - - - -Deferred tax liabilities 368,699 101,392 309,738 102,214Deferred tax assets - compensated - -101,392 - -Total deferred taxes - - 309,738 102,214IRAP(regional business tax)Timingdifferences31.12.2007 31.12.2006Tax effect(4.50% taxrate)TimingdifferencesTax effect(4.25% taxrate)Asset capital gains 190 9 379 16Property 109 5 8,650 367Moveable property 1,269 57 977 41Intangible assets- goodwill 195,873 8,813 218,301 9,278Intangible assets- software 9,109 410 2,795 119Revaluations of securities - CFV - - 14 1Revaluations of securities - HFT - - 997 42Revaluations of securities - AFS 32,598 1,467 - -Revaluations of securities - Derivatives - - - -Write-downs of securities under Liabilities - - - -Other - - - -Deferred tax liabilities 239,148 10,761 232,113 9,864Deferred tax assets - compensated - -226 - -Total deferred taxes - 10,535 232,113 9,864269


13.3 Changes in prepaid taxes (contra-item of income statement)IRES(corporationtax)IRAP(regionalbusiness tax)31.12.2007 31.12.20061. Initial amount 566,494 9,773 576,267 667,6212. Increases 96,182 32 96,214 56,2372.1 Prepaid taxes recognised in the period 93,247 32 93,279 56,237a) relating to previous periods - 24 24 11,157b) due to changes in accounting policy - - - -c) write-backs - - - -d) other 93,247 8 93,255 45,0802.2 New taxes or increases in tax rates - - - -2.3 Other increases 2,935 - 2,935 -3. Decreases 247,500 9,697 257,197 147,5913.1 Prepaid taxes cancelled in the period 182,711 9,668 192,379 138,998a) reversals 182,711 9,330 192,041 110,723b) write-downs for unrecoverability - 338 338 28,275c) changes in accounting policy - - - -3.2 Reductions in tax rates 64,386 - 64,386 -3.3 Other decreases 403 29 432 8,5934. Final amount 415,176 108 415,284 576,267Item 2.3 “Other increases” (€ 2,935 thousand) is due to a reclassification of an equivalent amount highlighted under item 3.3 “Other decreases” of table13.5 – Assets.As a consequence, such an amount did not have any impact on the PL in the 2007 Financial Statements.13.4 Changes in deferred taxes (contra-item of income statement)IRES(corporation tax)IRAP(regionalbusiness tax)31.12.2007 31.12.20061. Initial amount 95,697 9,865 105,562 91,1172. Increases 32,504 3,824 36,328 28,0112.1 Deferred taxes recognised in the period 32,504 3,824 36,328 28,011a) relating to previous periods - 577 577 225b) due to changes in accounting policy - - - -c) other 32,504 3,247 35,751 27,7862.2 New taxes or increases in tax rates - - - -2.3 Other increases - - - -3. Decreases 29,310 4,395 33,705 13,5663.1 Deferred taxes cancelled in the period 15,344 4,386 19,730 7,432a) reversals 15,344 43 15,387 7,432b) due to changes in accounting policy - - - -c) other - 4,343 4,343 -3.2 Reductions in tax rates 13,277 - 13,277 -3.3 Other decreases 689 9 698 6,1344. Final amount 98,891 9,294 108,185 105,562Item 3.3 “Other decreases” (€ 138 thousand) is due to a reclassification of an equivalent amount highlighted under item 2.3 “Other decreases” of table13.6 – Assets.As a consequence, such an amount did not have any impact on the PL in the 2007 Financial Statements.270


13.5 Changes in prepaid taxes (offset against shareholders' equity)IRES IRAP 31.12.2007 31.12.20061. Initial amount - - - -2. Increases 3,477 118 3,595 -2.1 Deferred taxes recognised in the period 338 118 456 -a) relating to previous periods 328 - 328 -b) due to changes in accounting policy - - - -c) other 10 118 128 -2.2 New taxes or increases in tax rates - - - -2.3 Other increases 3,139 - 3,139 -3. Decreases 3,279 - 3,279 -3.1 Deferred taxes cancelled in the period 306 - 306 -a) reversals 306 - 306 -b) due to changes in accounting policy - - - -c) other - - - -3.2 Reductions in tax rates 38 - 38 -3.3 Other decreases 2,935 - 2,935 -4. Final amount 198 118 316 -As for the amount under item 3.3 “Other decreases”, please refer to the post note to table 13.3 – Assets.13.6 Changes in deferred taxes (offset against shareholders' equity)IRES IRAP 31.12.2007 31.12.20061. Initial amount 6,516 - 6,516 4,3492. Increases 5,579 1,467 7,046 3,9912.1 Deferred taxes recognised in the period 2,303 1,467 3,770 3,991a) relating to previous periods - - - -b) due to changes in accounting policy - - - -c) other 2,303 1,467 3,770 3,9912.2 New taxes or increases in tax rates - - - -2.3 Other increases 3,276 - 3,276 -3. Decreases 9,594 - 9,594 1,8243.1 Deferred taxes cancelled in the period 9,554 - 9,554 1,824a) reversals 9,478 - 9,478 1,824b) due to changes in accounting policy - - - -c) other 76 - 76 -3.2 Reductions in tax rates 40 - 40 -3.3 Other decreases - - - -4. Final amount 2,501 1,467 3,968 6,516As for the amount under item 2.3 “Other increases”, please refer to the post note to table 13.4 – Assets.13.7 Other informationTax assets – current taxes: breakdown31.12.2007 31.12.2006IRES (corporation tax) 89,323 74,161IRAP (regional business tax) 50,506 60,231Indirect taxation and charges 33,237 34,013Taxes concerning foreign branches 1,410 2,782Total current tax assets 174,476 171,187Current tax liabilities - compensated -58,653 -Total current tax assets 115,823 171,187Tax liabilities – current taxes: breakdown31.12.2007 31.12.2006IRES (corporation tax) 15,592 80,126IRAP (regional business tax) 41,831 53,594Indirect taxation and charges 2,402 8,309Taxes concerning foreign branches 1,230 4,151Total current tax liabilities 61,055 146,180Current tax assets - compensated -58,653 -Total current tax liabilities 2,402 146,180271


Section 14Non-current assets and groups of assets held for sale and associated liabilities- Entry 140 of assets and Entry 90 of liabilities14.1 Non-current assets and groups of assets held for sale: breakdown by type of asset31.12.2007 31.12.2006A. Single assetsA.1 Investments 890,428 27,442A.2 Fixed assets - -A.3 Intangible assets - -A.4 Other non-current assets - -Total A 890,428 27,442B. Groups of assets (operating units sold)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 customers - -B. 7 Investments - -B. 8 Fixed assets - -B. 9 Intangible assets - -B.10 Other activities - -Total B - -C. Liabilities associated with non-current assets held for saleC.1 Debts and payables - -C.2 Securities - -C.3 Other liabilities - -Total C - -D. Liabilities associated with groups of assets held for saleD. 1 Due to banks - -D. 2 Due to customers - -D. 3 Securities issued - -D. 4 Trading financial liabilities - -D. 5 Financial liabilities designated at fair value - -D. 6 Provisions - -D. 7 Other liabilities - -Total D - -272


Section 15Other assets - Entry 15015.1 Other assets: breakdown31.12.2007 31.12.2006Tax assets held with the Revenue Office:- Capital 94,698 96,379- Interests 57,674 55,507Revenue Office advances on employee severance pay 9,343 12,858Third party cheques 1,069 12,025Grants due on facilitated-rate transactions 7,680 8,354Securities portfolio former BNA internal fund 27,120 23,684Branch-specific entries 2,353 54,312Transitory transactions on securities 18,973 34,343Outstanding bills and checks 83 13,332Premiums paid on stock options 4,833 4,535Sundry items being processed 29,922 40,959Bank cheques and drafts being processed 354,401 343,262Suspended direct taxes 1,636 1,661Interest due from SBF 26,302 25,332Commissions due 39,746 34,141Invoices due 4,062 301Credit-Debit cards to be charged 43,353 25,490Substitute tax on goodwill 81,743 91,992Restructuring costs of third-party branches 31,075 28,469Other items 219,793 409,627Accrued income and prepayments 162,671 148,075Total 1,218,530 1,464,638273


LIABILITIESSection 1Due to banks - Entry 101.1 Due to banks: breakdown by productType of transaction/Value 31.12.2007 31.12.20061. Due to central banks - -2. Due to banks 13,901,310 10,719,3092.1 Current accounts and demand deposits 153,333 106,9402.2 Time deposits 5,439,213 5,165,3922.3 Loans 8,056,612 5,432,0202.3.1 Financial lease - -2.3.2 Other 8,056,612 5,432,0202.4 Payables for commitments to reacquire own asset instruments - -2.5 Liabilities in respect of assets sold and not written off from the accounts 252,152 14,9572.5.1 Reverse repurchase agreements 252,152 14,9572.5.2 Other - -2.6 Other payables - -Total 13,901,310 10,719,309Negative 13,901,310 10,719,3091.2 Detail of entry 10 "Due to customers": subordinated payablesType of transaction/ValueMaturitydateInterest rate(nominal annualright applicable asat 31.12.2007)31.12.2007“ABN AMRO Bank N.V.“ floating rate subordinated lower tier II loan 10.10.2016 5.047% 400,000274


Section 2Due to customers - Entry 202.1 Due to customers: breakdown by productType of transaction/Value 31.12.2007 31.12.20061. Current accounts and demand deposits 16,543,840 16,997,9582. Term deposits 393,737 404,0213. Third-party funds under administration 11,439 13,4034. Loans 2,821,355 2,072,9234.1 Financial lease - -4.2 Other 2,821,355 2,072,9235. Payables for commitments to reacquire own asset instruments - -6. Liabilities in respect of assets sold and not written off from the accounts 60,148 51,7826.1 Passive repurchase agreements 60,148 51,7826.2 Other - -7. Other debts - -Total 19,830,519 19,540,087Negative 19,830,519 19,540,087275


Section 3Securities issued - Entry 303.1 Securities issued: breakdown by productType of security/Value31.12.2007 31.12.2006BS valueFairvalueBS valueA. Listed securities - - - -1. bonds - - - -1.1 structured - - - -1.2 other - - - -2. other securities - - - -2.1 structured - - - -2.2 other - - - -B. Non-listed securities 5,329,387 5,123,831 6,750,979 6,780,0111. bonds 4,926,768 4,721,212 6,240,199 6,269,2311.1 structured (*) 55,557 55,557 84,504 81,6101.2 other 4,871,211 4,665,655 6,155,695 6,187,6212. other securities 402,619 402,619 510,780 510,7802.1 structured - - - -2.2 other 402,619 402,619 510,780 510,780(*) Embedded Index/Equity option 540FairvalueTotal 5,329,387 5,123,831 6,750,979 6,780,0113.2 Detail of entry 30 "Securities issued": subordinated securitiesLoanAmount inoriginalcurrency(million)Book value31/12/06(thousandseuro)Issue date Maturity date Interest rateBook value31/12/07€/1000Preferred securities 1 st tranche (a) Euro 80 80,000 21/12/2000 (b) Eur.3m+3,75 80,000Preferred securities 2 nd tranche (a) Euro 220 220,000 27/06/2001 (b) Eur.3m+3,10 220,000Hybrid subord.convert.loan code 1335640 Lira 1,700,990 43,339 01/07/1999 01/07/2009 1% annuo 44,210Subordinated loan code 3381500 Euro 75 75,571 01/11/2002 01/11/2012 Eur.3m 75,732Subordinated loan code 3385610 Euro 125 125,411 01/12/2002 01/12/2007 Eur.3m+0,40 -Subordinated loan code 3450380 Euro 200 203,273 31/03/2003 31/03/2008 Eur.3m+0,10 199,971Subordinated loan code 16728861 Euro 450 453,507 23/04/2003 24/04/2013 (c) 454,509Total 1,201,101 1,074,422.(a) The remuneration shown for preferred securities is that in force until 21 st December 2010 and 27 th June 2011.The spread will subsequently be increased by 50% on the same reference base.(b) Notes are unredeemable. Banca Antonveneta will only exercise the power to totally or partially redeem notes after 21 st December, 2010 and 27 th June2011 respectively.(c) Coupons until 30/04/2008 at Euribor 3 m. increased by 0.90, coupons following and until maturity at Euribor 3 m. increased by 1.50%.Prior to the authorisation by the Bank of Italy, the Bank has the power to reimburse in advance loans past due for over 18 months since issue date.The subordination clause states that in the case of Bank liquidation, redemption will be subordinated to the repayment of all other creditors not similarlysubordinated..276


3.3 Securities issued: securities used for specific hedging31.12.2007 31.12.20061. Securities with specific hedging of fair value: 1,229,826 1,983,263a) interest rate risk 1,229,826 1,983,263b) exchange rate risk - -c) more risks - -2. Securities with specific hedging of cash flow: - -a) interest rate risk - -b) exchange rate risk - -c) other - -277


Section 4Financial liabilities held for trading - Entry 404.1 Trading financial liabilities: breakdown by product31.12.2007 31.12.2006Type of transaction/Valuenominal fair valuenominal fair valueFV*value listed non-listedvalue listed non-listedFV*A. Cash liabilities1. Due to banks 249 2,591 - - 15,215 18,302 - -2. Due to customers 6,880 28,677 - - - - - -3. Debt securities - - - - - - - -3.1 Bonds - - - - - - - -3.1.1 Structured - - - X - - - X3.1.2 Other bonds - - - X - - - X3.2 Other securities - - - - - - - -3.2.1 Structured - - - X - - - X3.2.2 Other - - - X - - - XTotal A 7,129 31,268 - - 15,215 18,302 - -B. Derivative instruments1. Financial derivatives - 61,784 190,356 - - 42,779 116,571 -1.1 Trading X 61,784 188,625 X X 42,779 104,613 X1.2 Connected with the fair value option X - 1,192 X X - 4,869 X1.3 Other X - 539 X X - 7,089 X2. Credit Derivatives - - - - - - - -2.1 Trading X - - X X - - X2.2 Connected with the fair value option X - - X X - - X2.3 Other X - - X X - - XTotal B X 61,784 190,356 X X 42,779 116,571 XTotal (A+B) X 93,052 190,356 X X 61,081 116,571 XFV* = fair value, calculated excluding changes in value due to change in issuer's creditworthiness since the date of issue..278


4.4 Trading financial liabilities: derivative instrumentsType of derivative/Underlying assetInterestratesCurrenciesand goldEquitysecuritiesReceivables Other 31.12.2007 31.12.2006A) Listed derivatives1. Financial derivatives: 36,945 - 24,839 - - 61,784 42,779With exchange of capital - - 8,883 - - 8,883 722- Options issued - - 8,869 - - 8,869 722- Other derivatives - - 14 - - 14 -Without exchange of capital 36,945 - 15,956 - - 52,901 42,057- Options issued 36,945 - 15,956 - - 52,901 42,057- Other derivatives - - - - - - -2. Credit Derivatives: - - - - - - -With exchange of capital - - - - - - -Without exchange of capital - - - - - - -Total A 36,945 - 24,839 - - 61,784 42,779B) Non-listed derivatives - -1. Financial derivatives: 147,239 14,072 28,399 - 646 190,356 116,571With exchange of capital - - - - - - -- Options issued - - - - - - -- Other derivatives - - - - - - -Without exchange of capital 147,239 14,072 28,399 - 646 190,356 116,571- Options issued 51,257 14,072 28,399 - 646 94,374 63,294- Other derivatives 95,982 - - - - 95,982 53,2772. Credit Derivatives: - - - - - - -With exchange of capital - - - - - - -Without exchange of capital - - - - - - -Total B 147,239 14,072 28,399 - 646 190,356 116,571Total (A+B) 184,184 14,072 53,238 - 646 252,140 159,3504.5 Trading financial cash liabilities (not including “technical overdrafts” ): yearly variationsDue to banksDue tocustomersSecuritiesissued31.12.2007A. Opening balance 18,302 - - 18,302B. Increases 368,803 504,535 - 873,338B1. Issues - - - -B2. Sales 358,911 502,501 - 861,412B3. Positive fair value changes 28 - - 28B4. Other changes 9,864 2,034 - 11,898C. Decreases 384,514 475,858 - 860,372C1. Acquisitions 384,123 469,703 - 853,826C2. Reimbursements - - - -C3. Negative fair value changes - - - -C4. Other changes 391 6,155 - 6,546D. Net closing balance 2,591 28,677 - 31,268279


Section 6Hedging derivative contracts - Entry 606.1 Hedging derivative contracts: breakdown by type of contract and underlying assetsA) Listed derivativesType of derivative/Underlying assetInterestratesCurrenciesand goldEquityReceivables Other 31.12.2007securities1. Financial derivatives: - - - - - -• With exchange of capital - - - - - -- Options issued - - - - - -- Other derivatives - - - - - -• Without exchange of capital - - - - - -- Options issued - - - - - -- Other derivatives - - - - - -2. Credit Derivatives: - - - - - -• With exchange of capital - - - - - -• Without exchange of capital - - - - - -B) Non-listed derivativesTotal A - - - - - -1. Financial derivatives: 12,753 - - - - 12,753• With exchange of capital - - - - - -- Options issued - - - - - -- Other derivatives - - - - - -• Without exchange of capital 12,753 - - - - 12,753- Options issued 31 - - - - 31- Other derivatives 12,722 - - - - 12,7222. Credit Derivatives: - - - - - -• With exchange of capital - - - - - -• Without exchange of capital - - - - - -Total B 12,753 - - - - 12,75331.12.06 (A+B) 12,753 - - - - 12,75331.12.05 (A+B) 17,733 - 117 - - 17,8506.2 Hedging derivative contracts: breakdown by hedged portfolio and type of hedgingFair ValueCash FlowTransaction/Type of hedgingSpecificRateriskExchangerateriskCreditriskPriceriskMorerisksGeneric Specific Generic1. Financial assets available for sale - - - - - X - X2. Receivables - - - - - X - X3. Financial assets held to maturity X - - X - X - X4. Portfolio X X X X X - X -Total assets - - - - - - - -1. Financial liabilities 12,753 - - - - X - X2. Portfolio X X X X X - X -Total liabilities 12,753 - - - - - - -280


Section 8Tax liabilities - Entry 80See Section 13 under assetsSection 10Other liabilities - Entry 10010.1 Other liabilities: breakdown31.12.2007 31.12.2006Due to Revenue Office for third parties 59,890 41,768Amounts available to customers 38,304 32,358Premiums received on stock options - -Payroll duties and contributions 12,710 16,044Translation differences on portfolio transactions - -Transitory funds Single taxation regime 1,817 2,603Suspended direct taxes 94 94Sundry items being processed 600,582 738,968Transitory transactions on securities 32,286 27,823Trade payables 54,631 54,912Special employee management social security contributions 23,052 22,212Bank transfers awaiting execution 8,019 2,101Voluntary employee departure incentives 32,136 55,624Branch-specific entries 1,733 4,612Off-balance-sheet revaluation transactions - contra-item - -Other items 126,599 144,325Prepayments and deferred income 164,518 160,201Total 1,156,371 1,303,645281


Section 11Provision for staff severance pay - Entry 11011.1 Provision for staff severance pay: annual changes31.12.2007 31.12.2006A. Opening balance 281,063 294,449B. Increases 20,533 28,198B.1 Allowances for the period 19,824 28,173B.2 Other increases 709 25C. Decreases 59,943 41,584C.1 Liquidations carried out 34,470 35,996C.2 Other decreases 25,473 5,588D. Closing balance 241,653 281,063Under item C.2 “Other decreases” there are the transfers towards other welfare funds for € 24,247 thousand and due to the Treasury for the paymentof 11% of taxes for € 1,046 thousand.11.2 Provision for staff severance pay: other information31.12.2007 31.12.2006Opening balance 281,063 294,449Severance pay disbursed in the period 28,564 30,723Advances to personnel 5,906 5,273Transfer to company retirement fund 18,540 4,715Transfer to INPS treasury funds 5,887 -Lodgement of 11% tax 1,046 873Total decreases 59,943 41,584Allowances for the period 19,824 28,173Other Increases 709 25Total increases 20,533 28,198Final balance 241,653 281,063Staff Severance Indemnity (TFR)Severance indemnities are governed by art. 2120 of the Italian Civil Code. Employees have the right to exercise these rights whenemployment is terminated for whatever reason. In the International ccounting Standards issued by the IASB, severance indemnitiesare covered under paragraphs 132 and 143 of IAS 19, which govern the presentation of the indemnities in the financial statementsand the calculation of severance pay indemnities. In particular, paragraph 140 explicitly states the requirement of carrying out thevaluations with consideration taken of the time when the services will be rendered and determining their corresponding averagepresent value. The actuarial valuation of severance indemnities is carried out according to the “defined benefit” method, using the“projected unit credit method” as set forth in paragraphs 64 to 66 of IAS 19. This method consists in carrying out valuations thatexpress the average present value of the retirement benefit obligations accrued on the basis of the service the employee hasrendered up to the time the valuation is performed.The impact of the amendment and curtailment accountingAs from 1st January 2007, the impact on the value of the defined benefit obligation produced by rule amendments must be considered by accountingits effects according to the dispositions of IAS 19.The effects deriving from the becoming effective of the amendment consist, for Banca Antonveneta SpA, Interbanca SpA, Antonveneta ImmobiliareSpA, AAA Bank and AAA Sgr SpA, in a curtailment of Severance Indemnity Fund. According to what provided by § 111 of IAS 19, such a curtailmentmust be immediately taken into account in the P&L of the respective companies.282


The actuarial assumptions used in the valuationsInsofar as the selection of the actuarial assumptions, IAS 19 requires that the assumptions adopted be objective, that is neitherimprudent nor excessively prudent, and compatible between themselves, that is such as to reflect the economic relations among thevarious variables upon which the technical evaluation is based.With proper reference to the aforementioned evaluation methods, the following assumptions have therefore been adoptedconcerning the actuarial evaluation as at 31 December 2007:Demographic fundamentalsThese consist of the probabilities and conditions that could entail a change in assets, such as:- death, to this end, the most recent mortality table available was used as a reference, This is ISTAT 2000;- Total and/or partial disability, the frequency of disability as reported by the INPS is used as a reference;- Retirement due to old age and long service. The calculation of the probability of termination due to retirement was carried outwith account taken of the rules set by the applicable Currently, the age set for retirement is 65 for men and 60 for women. Thelong service requirements, as set forth by the applicable regulations, are: 57 years of age with 35 years of social insurancecontributions, that is, independently of age, 38 year of contributions for 2004 and 2005, 39 years of c ontribution for 2006 and2007 and 40 years from 2008 onwards. The so-called “voluntary redundancy” opportunities, which regulate the beginning of theretirement pension payments.The following assumptions were also taken into consideration:• the probability of early exercise, i.e., the probability that the employee will exercise the right to receive a part of the accrued severanceindemnity earlier. It should be noted that, despite the fact that the conditions under which article 2120 allows such a right to be exercised by theemployee are very limited, the Parent Company has provided for some ameliorative conditions at the collective agreement level. A distribution ofthe frequency of early exercise of the severance indemnity and a distribution of the accrued severance indemnity have been constructed on thebasis of the data provided. Given the better conditions offered by the supplementary agreement, the early exercise event is influenced by thecircumstance of having already received an advance. Distinct frequencies have therefore been calculated: in the case of previous exercise thefrequency is 4.7% while in the other case it is 3.7%. Distinct distributions have been calculated for the advance severance indemnity as well:taicipataSenz% PAID INADVANCENOPREVIOUSADVANCEWITHPREVIOUSADVANCE10% 1.6% 4.4%20% 1.6% 13.8%30% 6.8% 13.8%40% 4.7% 14.5%50% 2.6% 15.7%60% 18.4% 32.1%70% 64.2% 5.7%a zion283


• The turn/over rates, as the events concerning the settlement by the company of the severance indemnities accrued by the employee and thematuring of the loyalty bonus, where applicable. The turn/over rates used, which are separated by gender, age and years of service with thecompany, are shown in the table below:LENGTH OF YEARS SERVEDAGESUP TO 2 3 - 5 6 - 10 11 - 20 over 20M A L E SUp to 20 0.000 0.000 0.000 0.000 0.00021 - 30 0.012 0.007 0.000 0.000 0.00031 - 40 0.000 0.010 0.017 0.013 0.00041 - 50 0.000 0.000 0.000 0.003 0.00851 - 60 0.000 0.000 0.000 0.000 0.008over 60 0.000 0.000 0.000 0.067 0.008F E M A L E SUp to 20 0.000 0.000 0.000 0.000 0.00021 - 30 0.005 0.000 0.000 0.000 0.00031 - 40 0.010 0.000 0.011 0.008 0.00041 - 50 0.000 0.000 0.000 0.004 0.01551 - 60 0.000 0.000 0.000 0.000 0.000over 60 0.000 0.000 0.000 0.000 0.000ssaCon anticipazione• overall contribution of the individual length of service. As it is not possibile to acquire the information per employee on the date ofregistration with the Compulsory General Insurance System, which is necessari in order to determine the overall contribution of the individuallenght of service, we have estimated the length of service by age and gender, on the basis of our experience.CLASSES OF LENGTH OF SERVICEAGESWITHIN THE COMPANY0 - 2 3 - 5 6 - 10 11 - 20 over 20M A L E SUp to 21 0.0 0.0 0.0 0.0 0.021 - 30 1.0 1.0 1.0 1.0 0.031 - 40 5.0 4.0 3.0 1.5 0.041 - 50 21.0 16.0 14.0 5.0 2.051 - 55 25.0 24.0 20.0 15.0 4.0over 56 34.0 27.0 22.0 16.0 5.0F E M A L E SUp to 20 0.0 0.0 0.0 0.0 0.021 - 30 1.0 1.0 0.5 0.5 0.031 - 40 4.0 3.0 3.0 1.0 0.041 - 50 19.0 17.0 12.0 4.0 3.051 - 55 20.0 18.0 13.0 5.0 4.0over 56 28.0 22.0 18.0 8.0 5.0Financial and economic basesWe refer to paragraph 72 of IAS 19:• the rates of inflation. These are set accordino to the Budget and Planning Report for 2008-2007 (28 th June 2007):YEARRATE2008 0.0172009 AND ONWARDS 0.015284


• discount rate. The financial basis used for the actuarial evaluations as at 31 st December 2007 has been developed an the basis of swap rateswith appropriate maturities, as at 27 th December 2007. The rates have been used to discount the short-term payments and, for longer terms, thediscount rate was estimated by extrapolating the current market rates along the yield curve in question.SPOTRATES28.12.2006 28.12.20071y 4.0220 4.78602yr 4.1175 4.60603yr 4.1125 4.56554yr 4.1230 4.57735yr 4.1200 4.59986yr 4.1260 4.62237yr 4.1365 4.64508yr 4.1505 4.69409yr 4.1665 4.739410yr 4.1880 4.774412yr 4.2210 4.861515yr 4.2735 4.950920yr 4.2970 5.016225yr 4.2955 5.001730yr 4.2755 4.9433Based on the overall data provided, remuneration levels by qualification(employees, executives and directors) and length of service with the companywere created. For the directors, there is no trend along which a remuneration level can be constructed: a rate of increase of 1% was thereforeassumed, independently of the length of service. The change in the salary levels involves both compensation for severance indemnities and for theFPLD [Workers’ Pension Fund], using the same rate of increase. For the latter, assumptions regarding the increase in remuneration in real terms weremade (that is, differentiated insofar as the inflation dynamic), of 1%. Furthermore, the probability of moving from the employee to the executive levelwas calculated separately by gender and length of service.285


Section 12Allowances for risks and charges - Entry 12012.1 Provisions for risks and charges: breakdownItems/Values 31.12.2007 31.12.20061. Company pension funds 39,675 41,4232. Other allowances for risks and charges 297,924 229,8082.1 litigation 195,913 200,4782.2 personnel fees 50,215 -2.3 other 51,796 29,330Total 337,599 271,23112.2 Provisions for risks and charges: annual changesPensionfundsOtherprovisions31.12.2007A. Opening balance 41,423 229,808 271,231B. Increases 1,702 98,592 100,294B.1. Allowances for the period 210 94,430 94,640B.2. Changes due to passing of time 397 4,162 4,559B.3 Changes due to changes in discount rate - - -B.4 Other increases 1,095 - 1,095C. Decreases 3,450 30,476 33,926C.1 Utilization during the period 3,337 25,092 28,429C.2 Changes due to changes in discount rate - - -C.3 Other decreases 113 5,384 5,497D. Closing balance 39,675 297,924 337,59912.3 Defined-benefit company pension funds12.3.1 Integrated pension funds (FIP) - (ex-Banca Popolare Veneta employees)Funds as at 31.12.2006 2,245During the period disbursements were made:relating to the 1956 agreement, to 14 beneficiaries for 58relating to the 1982 agreement, to 22 beneficiaries for 233for a total of: 291At end of period the fund was integrated with a contribution from the Bank, to cover the actuarial reserve, for 60Funds as at 31.12.2007 2,014286


12.3.2 Personnel pension fund (ex-Banca Nazionale dell’Agricoltura employees)Fund as at 31.12.2006 29,769Increases: 733Interest on cash and cash equivalents 2005 23Income from property (outstanding) 20Interest and profit on bonds and government bonds 690Various creditors -Decreases: 1,750Pensions granted 1,584Contributions paid to un-entitled beneficiaries -Contributions transferred to FAP BAPV and other funds -Settlement of principal due to entitled beneficiaries 53Municipal tax on properties -Substitute tax law no. 335 of 08.08.1995 113Indirect taxation and charges -Consulting fees -Costs for Supervisory Body -Total 28,752Interest accruals on own securities 362Fund as at 31.12.2007 29,114The fund was so investedProperty -Securities 27,120Interest accruals on securities 362Total of invested securities 27,482Various debtors -Various creditors -Cash and cash equivalents at the Institute 1,632Total 29,11412.3.3 Loyalty bonus fundFund as at 31.12.2006 9,409Increases for the period: 885Interest cost 397Service cost 488Decreases for the period: 1,747Pay-offs in 2007 financial year 1,409Actuarial losses 338Fund as at 31.12.2007 8,547The loyalty bonus which is governed by the supplementary company agreements, is a right accruing to employees when they reach the length ofservice which has been set. As this falls under the category of long term services, it is covered by IAS 19 in paragraphs 126-131 and is regulated in asimplified manner compared to the post employment benefits. Despite this major advantage. The loyalty bonus is calculated using the same methodthat is used for defined benefits, through application of the projected unit credit method.12.4 Other provisions for risks and chargesOpeningbalance2007NetUtilizationsNetprovisionsFinal balanceFund for country risk guarantees and commitments 19 - 4 23 19Fund for claw back actions 105,551 16,779 8,131 96,903 105,551Fund for litigation, operational risks and various disputes 94,927 7,178 11,261 99,010 94,927Fund for various future charges 29,311 1,135 73,812 101,988 29,311Total provisions for risks and charges – other provisions 229,808 25,092 93,208 297,924 229,8082006287


Section 14Patrimonio dell'impresa - Voci 130,150,160,170,180,190 e 20014.1 Company assets: breakdownItems/Value 31.12.2007 31.12.20061. Share capital 926,266 926,2662. Issue premiums 2,188,152 2,188,1523. Reserves 377,970 85,0134. (Own shares) - -5. Valuation reserve 29,864 117,0466. Equity instruments 8,551 8,5517. Profit (loss) for the year -15,145 293,267Total 3,515,658 3,618,29514.2 "Capital" and "Own shares": breakdownThe Bank's shared capital is totally constituted by ordinary shares.The Bank does not detain own-issue shares in its portfolio.14.3 Capital - Number of shares: annual changesEntry/Type Ordinary OtherA. SHARES ISSUED: OPENING BALANCE 308,755,499 -A.1 Own shares (-) - -A.2 Opening balance of existing shares 308,755,499 -- fully paid-up 308,755,499 -- partially paid-up - -B. INCREASES - -B.1 New issues - -• paid issues: - -- business combination operations - -- bond conversions - -- exercising of warrant - -- other - -• free issues: - -- in favour of employees - -- in favour of directors - -- other - -B.2 Sale of own shares - -B.3 Other changes - -C. DECREASES - -C.1 Cancellation - -C.2 Acquisition of own shares - -C.3 Business disposal operations - -C.4 Other changes - -D. SHARES ISSUED: CLOSING BALANCE 308,755,499 -D.1 Treasury stock (+) - -D.2 Existing shares at end of period 308,755,499 -- fully paid-up 308,755,499 -- partially paid-up - -288


14.5 Income reserves: other information31.12.2007Legal reserve 185,253Reserve for own shares 51,646Reserves in bylaws - extraordinary 64,682FTA profits reserve -382,909Profit brought forward 447,172Profit reserve unavailable Art.6 D.Leg.38/05 12,436Total profit reserve 378,28014.6 Equities: breakdown and annual changes31.12.2007A. Opening balance 8,551B. Increases -B1. Sales -B2. Other changes -C. Decreases -C1. Purchases -C2. Redemptions -C3. Other changes -D. Closing balance 8,55114.7 Revaluation reserves: breakdownEntries/Elements 31.12.2007 31.12.20061. Financial assets available for sale 26,469 113,6512. Tangible fixed assets - -3. Intangible fixed assets - -4. Foreign investment hedges - -5. Cash flow hedges - -6. Exchange differences - -7. Non-current assets for sale - -8. Special revaluation laws 3,395 3,395Total 29,864 117,04614.8 Revaluation reserves: annual changesFinancialassetsavailablefor saleTangiblefixedassetsForeignIntangibleinvestmentfixed assetshedgesCash flowhedgesExchangedifferencesNoncurrentassets forsaleSpecialrevaluationlawsA. Opening balance 113,651 - - - - - - 3,395B. Increases 33,481 - - - - - - -B.1 Increases in fair value 26,097 - - - - - - XB.2 Other changes 7,384 - - - - - - -C. Decreases 120,663 - - - - - - -C.1 Reductions in fair value 89,363 - - - - - - XC.2 Other changes 31,300 - - - - - - -D. Closing balance 26,469 - - - - - - 3,395289


14.9 Revaluation reserves of financial assets available for sale: breakdownAsset/Value31.12.2007 31.12.2006PositivereserveNegativereservePositivereserveNegativereserve1. Debt securities 1,497 1,736 7,687 1,0332. Equity securities 31,094 4,232 112,871 4,8123. Interests in collective investment undertakings - 154 - 1,0624. Loans - - - -Total 32,591 6,122 120,558 6,90714.10 Revaluation reserves of financial assets available for sale: annual changesDebtsecuritiesEquitysecuritiesInterests incollectiveinvestmentundertakings1. Opening balance 6,654 108,059 -1,062 -2. Positive changes 3,956 28,137 930 -2.1 Increases in fair value 1,181 24,916 - -2.2 Reversal to income statement of negative reserves 1 124 930 -- from impairment - - - -- from disposal 1 124 930 -2.3 Other changes 2,774 3,097 - -3. Negative changes 10,849 109,334 22 -3.1 Reductions in fair value 479 88,862 22 -3.2 Reversal to income statement of positive reserves:due to realisation 10,370 20,472 - -3.3 Other changes - - - -4. Closing balance -239 26,862 -154 -Loans290


Other information1. Guarantees and commitmentsOperations 31.12.2007 31.12.20061) Guarantees of a financial nature 809,984 843,406a) Banks 21,517 11,544b) Customer 788,467 831,8622) Guarantees of a commercial nature 2,159,273 2,076,178a) Banks 21,696 37,724b) Customer 2,137,577 2,038,4543) Irrevocable commitments to grant finance 1,554,993 1,173,778a) Banks 329,986 306,195i) certain utilization 289,453 264,431ii) uncertain utilization 40,533 41,764b) Customer 1,225,007 867,583i) certain utilization 99,973 12,946ii) uncertain utilization 1,125,034 854,6374) Commitments underlying credit derivatives: - -protective sales - -5) Assets lodged as security for third-party bonds - -6) Other commitments 135,443 12,363Total 4,659,693 4,105,7254. Management and brokerage on behalf of third partiesType of service 31.12.20071. Trading of financial instruments on behalf of third parties 1,307,240a) Acquisitions 653,6201. settled 653,6202. not settled -b) Sales 653,6201. settled 653,6202. not settled -2. Assets under management -a) individual -b) collective -3. Security custody and administration 36,342,709a) third-party securities on deposit: connected with activity of Custodian Bank (excluding assets under management) 2,167,7681. securities issued by the bank that prepares the financial statements -2. other securities 2,167,768b) third-party securities on deposit (excluding assets under management): other 32,627,6681. securities issued by the bank that prepares the financial statements 4,215,0432. other securities 28,412,625c) third-party securities deposited at third parties 27,221,994d) own securities deposited at third parties 1,547,2734. Other transactions -291


292


293


294


Section 1Interest - Entries 10 and 201.1 Interest income and similar income: breakdownEntry/Technical formPerforming financial assetsDebt securitiesLoansImpairedfinancial assetsOther Assets 31.12.2007 31.12.20061. Financial assets held for trading 28,999 - - - 28,999 11,9392. Financial assets available for sale 10,329 - - - 10,329 8,7703. Financial assets held to maturity - - - - - -4. Loans to banks 188,168 218,302 - - 406,470 131,1465. Loans to customers 643 1,701,755 140,117 - 1,842,515 1,587,6306. Financial assets designated at fair value 18,525 - - - 18,525 19,0897. Hedging derivatives X X X - - 15,7048. Assets transferred but not written off 5,243 - - - 5,243 4,2159. Other Assets X X X 6,462 6,462 2,885Total 251,907 1,920,057 140,117 6,462 2,318,543 1,781,3781.2 Interest income and similar income: spreads on hedging activitiesItems/Value 31.12.2007 31.12.2006A. Positive spreads on transactions of:A.1 Specific hedging of fair value of assets - 4,308A.2 Specific hedging of fair value of liabilities - 77,110A.3 Generic hedging of interest rate risk - -A.4 Specific cash flow hedging of financial assets - -A.5 Specific cash flow hedging of financial liabilities - -A.6 Generic cash flow hedging - -TOTAL POSITIVE SPREADS (A) - 81,418B. Negative spreads on transactions of:B.1 Specific hedging of fair value of assets - (4,834)B.2 Specific hedging of fair value of liabilities - (60,880)B.3 Generic hedging of interest rate risk - -B.4 Specific cash flow hedging of financial assets - -B.5 Specific cash flow hedging of financial liabilities - -B.6 Generic cash flow hedging - -TOTAL NEGATIVE SPREADS (B) - (65,714)C. BALANCE (A-B) - 15,7041.3 Interest income and similar income: other informationItems/Value 31.12.2007 31.12.20061.3.1 Interest income on financial assets in foreign currency 61,137 50,8151.3.2 Interest income on financial leasing operations - -1.3.3 Interest income on receivables with third-party assets under administration 1,698 1,447Total 62,835 52,262295


1.4 Interest expense and similar charges: breakdownEntry/Technical form Payables Securities Other liabilities 31.12.2007 31.12.20061. Due to banks (608,010) X - (608,010) (267,649)2. Due to customers (335,019) X (55) (335,074) (234,034)3. Short-term securities X (244,487) - (244,487) (234,403)4. Financial liabilities held for trading - - - - -5. Financial liabilities designated at fair value - - - - -6. Financial liabilities associated with assets sold and not written off (5,081) - - (5,081) -7. Other liabilities X X (1,828) (1,828) (1,261)8. Hedging derivatives X X (65,513) (65,513) -Total (948,110) (244,487) (67,396) (1,259,993) (737,347)1.5 Interest expense and similar charges: spreads on hedging activitiesEntries/Sectors 31.12.2007 31.12.2006A. Positive spreads on transactions of:A.1 Specific hedging of fair value of assets 1,888 -A.2 Specific hedging of fair value of liabilities 57,129 -A.3 Generic hedging of interest rate risk - -A.4 Specific cash flow hedging of financial assets - -A.5 Specific cash flow hedging of financial liabilities - -A.6 Generic cash flow hedging - -Total positive spreads (A) 59,017 -B. Negative spreads on transaction of: - -B.1 Specific hedging of fair value of assets (1,770) -B.2 Specific hedging of fair value of liabilities (61,446) -B.3 Generic hedging of interest rate risk - -B.4 Specific cash flow hedging of financial assets (61,314) -B.5 Specific cash flow hedging of financial liabilities - -B.6 Generic cash flow hedging - -Total negative spreads (B) (124,530) -C. Balance (A-B) (65,513) -1.6 Interest expense and similar charges: other informationOther information 31.12.2007 31.12.20061.6.1 Interest expense on liabilities in foreign currency (55,322) (51,166)1.6.2 Interest expense on liabilities for financial leasing operations - -1.6.3 Interest expense on third-party assets under administration (55) (63)Total (55,377) (51,229)296


Section 2Commissions - Entries 40 and 502.1 Commission income: breakdownType of service/Value 31.12.2007 31.12.2006a) Guarantees 26,257 28,390b) Credit derivatives - -c) Management, brokerage and consulting services: 173,092 143,4871. trading of financial instruments 12,657 12,3912. currency trading 8,672 9,9423. funds under management 546 1623.1 individual 546 1623.2 collective - -4. safe custody and administration of securities 7,860 8,5975. depository bank 3,221 2,9056. placement of securities 32,004 16,4617. order collection 5,167 4,9278. consulting activities 564 2,6209. distribution of third party services 102,401 85,4829.1 assets under management 73,094 61,6719.1.1 individual 6,514 5,7139.1.2 collective 66,580 55,9589.2 insurance products 29,307 23,8119.3 other products - -d) Payment and collection services 175,937 189,623e) Services for servicing securitisation transactions 5,456 5,609f) Services for factoring transactions - -g) Tax collection services - -h) Other services 121,323 141,455Total 502,065 508,564The amount of € 10,581 thousand as of 31/12/2006 has been reclassified from item c) 5. “Management, intermediation andconsulting services: secretary bank” under item c) 9.1.2 “Management, intermediation and consulting services: corporate capitalmanagements”.2.2 Commission income: products and services distribution channelsChannel/Value 31.12.2007 31.12.2006a) At own branches: 134,951 91,5241. funds under management 546 1622. placement of securities 32,004 16,4613. services and products of third parties 102,401 74,901b) Off-premises offer: - -1. funds under management - -2. placement of securities - -3. services and products of third parties - -c) Other distribution channels: - -1. funds under management - -2. placement of securities - -3. services and products of third parties - -297


2.3 Commission expense: breakdownService/Value 31.12.2007 31.12.2006a) Guarantees received (38) (161)b) Credit derivatives - -c) Management and brokerage services: (3,565) (4,388)1. trading of financial instruments (1,864) (2,004)2. currency trading (26) (40)3. funds under management: (159) (201)3.1 own portfolio (159) (201)3.2 portfolio of third parties - -4. safe custody and administration of securities (1,516) (2,143)5. placement of financial instruments - -6. off premises offer of financial instruments, products and services - -d) Payment and collection services (75,982) (81,392)e) Other services (10,177) (5,299)Total (89,762) (91,240)298


Section 3Dividends and similar income - Entry 703.1 Dividends and similar income: breakdownEntry/Income31.12.2007 31.12.2006DividendsIncome frominterests incollectiveinvestmentundertakingsDividendsIncome frominterests incollectiveinvestmentundertakingsA. Financial assets held for trading 57,773 876 - -B. Financial assets available for sale 4,200 - 5,190 714C. Financial assets at fair value - - - -D. Investments 22,266 X 17,850 XTotal 84,239 876 23,040 714299


Section 4Net profit on trading - Entry 804.1 Net profit on trading: breakdownTransactions / Income itemsCapital gain(A)Profits fromtrading(B)Losses(C)Losses fromtrading(D)Net income[(A+B)-(C+D)]1. Trading financial assets 7,914 37,827 (11,843) (90,159) (56,261)1.1 Debt securities 5,429 35,910 (10,724) (4,800) 25,8151.2 Capital notes 2,485 1,877 (1,034) (85,345) (82,017)1.3 Interests in collective investment undertakings - 40 (85) (14) (59)1.4 Loans - - - - -1.5 Other - - - - -2. Financial liabilities held for trading - 4,286 - (11,898) (7,612)2.1 Debt securities - - - - -2.2 Other - 4,286 - (11,898) (7,612)3. Other financial assets and liabilities: exchange differences X X X X 7,0194. Derivative instruments 46,004 720,064 (29,836) (643,424) 92,8084.1 Derivatives: 46,004 720,064 (29,836) (643,424) 92,808- On debt securities and interest rates 43,544 389,206 (20,298) (331,802) 80,650- On capital securities and stock indexes 1,171 306,281 (9,538) (286,679) 11,235- On currencies and gold X X X X -- Other 1,289 24,577 - (24,943) 9234.2 Credit derivatives - - - - -Total 53,918 762,177 (41,679) (745,481) 35,954300


Section 5Net profit on hedging - Entry 905.1 Net profit on hedging: breakdownIncome items/Values 31.12.2007 31.12.2006A. Income relating to:A.1 Fair value hedging derivatives 5,372 -A.2 Hedged financial assets (fair value) - -A.3 Hedged financial liabilities (fair value) - 26,285A.4 Cash flow hedging derivatives - -A.5 Assets and liabilities in foreign currencies 50 -Total income from hedging activities (A) 5,422 26,285B. Charges relating to:B.1 Fair value hedging derivatives - (25,807)B.2 Hedged financial assets (fair value) - -B.3 Hedged financial liabilities (fair value) (4,353) -B.4 Cash flow hedging derivatives - -B.5 Assets and liabilities designated in foreign currencies - -Total charges from hedging activities (B) (4,353) (25,807)C. Net profit on hedge activities (A-B) 1,069 478301


Section 6Profit (losses) on disposal/reacquisition - Entry 1006.1 Profits (Losses) on disposal/reacquisition: breakdownEntry/Income element31.12.2007 31.12.2006Profits Losses Net result Profits Losses Net resultImpaired financial1. Loans to banks - - - - - -2. Loans to customers - (40,485) (40,485) 5,980 - 5,9803. Financial assets available for sale 73,187 (1,747) 71,440 96,770 (111) 96,6593.1 Debt securities 30,632 (43) 30,589 184 (87) 973.2 Capital notes 38,879 (774) 38,105 95,620 (2) 95,6183.3 Interests in collective investment undertakings 3,676 (930) 2,746 904 (22) 8823.4 Loans - - - 62 - 624. Financial assets held to maturity - - - - - -Total assets 73,187 (42,232) 30,955 102,750 (111) 102,639Financial liabilities1. Due to banks - - - - - -2. Due to customers - - - - - -3. Short-term securities 3,446 (334) 3,112 3,125 (535) 2,590Total liabilities 3,446 (334) 3,112 3,125 (535) 2,590302


Section 7Net profit/(loss) from financial assets and liabilities designated at fair value -Entry 1107.1 Net change in value of financial assets/liabilities valued at fair value: breakdownTransactions/Income itemsCapital gainProfit forrealisationLossesLossrealisationNet profit(A) (B) (C) (D) [(A+B)-(C+D)]1. Impaired financial 935 26,233 (32,159) (21,599) (26,590)1.1 Debt securities 935 26,225 (5,469) (21,599) 921.2 Capital notes - - (26,690) - (26,690)1.3 Interests in collective investment undertakings - - - - -1.4 Loans - 8 - - 82. Financial liabilities - - - - -2.1 Securities issued - - - - -2.2 Due to banks - - - - -2.3 Due to customers - - - - -3. Assets and liabilities in foreign currencies: exchange differences X X X X -4. Derivative instruments - - - - -4.1 Financial derivatives - - - - -- on debt securities and interest rates - - - - -- on capital securities and stock indexes - - - - -- on currencies and gold X X X X -- other - - - - -4.2 Credit derivatives - - - - -Total 935 26,233 (32,159) (21,599) (26,590)303


Section 8Net value adjustments for loans and receivables impairments - Entry 1308.1 Net value adjustments for loans and receivables impairments: breakdownWrite-downs(1)Write-backs(2)Transactions/Income itemsWrite-OffsSpecific Specific PortfolioOtherPortfoliofrom otherinterest write-backsfrominterestotherwritebacks31.12.2007(1)-(2)31.12.2006(1)-(2)A. Loans to banks (135) (27) - 599 61 - 13 511 (588)B. Loans to customers (30,162) (548,426) (3,971) 80,371 172,868 - 13,718 (315,602) (230,135)C. Total (30,297) (548,453) (3,971) 80,970 172,929 - 13,731 (315,091) (230,723)8.2 Net value adjustments for impairments of financial assets available for sale: breakdownWrite-downs(1)Write-backs(2)Transactions/Income items Specific SpecificWrite-Offs Other From interestOther writebacks31.12.2007(1)-(2)31.12.2006(1)-(2)A. Debt securities - - - - - (80)B. Capital notes - (16,306) X X (16,306) (861)C. Interests in collective investment undertakings - - X - - -D. Loans to banks - - - - - -E. Loans to customers - - - - - -F. Total - (16,306) - - (16,306) (941)8.4 Net value adjustments for impairments of other financial operations: breakdownTransactions/Income itemsWrite-downs(1)Write-backs(2)Specific Specific PortfolioPortfolioOther writebacksOther writebacksWrite-Offs Otherinterestinterest31.12.2007(1)-(2)31.12.2006(1)-(2)A. Guarantees - (4) - - - - 1,430 1,426 4,558B. Credit derivatives - - - - - - - - -C. Commitments to grant finance - - - - - - - - -D. Other operations - (1,035) - - - - - (1,035) (2,407)E. Total - (1,039) - - - - 1,430 391 2,151304


Section 9Administrative expenses - Entry 1509.1 Personnel costs: breakdownType of expense/Value 31.12.2007 31.12.20061) Personnel (671,269) (574,163)a) wages and salaries (444,056) (406,748)b) social security costs (116,504) (110,459)c) severance pay indemnities - -d) employee benefit plan costs - -e) allocation to staff severance pay (19,824) (26,991)f) allocation to pension and similar funds: (60) (100)- defined contribution (60) (100)- defined benefit - -g) payments to complementary external retirement benefit plans (18,857) (20,907)- defined contribution (18,857) (20,907)- defined benefit - -h) costs deriving from payment agreements based on own asset instruments - -i) other benefits in favour of personnel (71,968) (8,958)2) Other personnel (11,447) (1,666)3) Directors (8,873) (4,668)Total (691,589) (580,497)9.2 Average number of employees by categoryType 31.12.2007- Personnel 9,301a) executives 151b) total managers 3,892- of which: 3 rd and 4 th level 1,529c) remaining personnel 5,258- Other Personnel 46Total 9,3479.3 Defined-benefit company pension funds: Total costsType of provisions 31.12.2007Personnel pension fund FIPP - Banca Antoniana (2,192)Personnel pension fund FIP - Banca Popolare Veneta -Personnel pension fund FAP - Banca Popolare Veneta (14,956)Pension funds PAP/LUX (2)Personnel pension fund - Credito Lombardo (326)Personnel pension fund - Previbank/Kreditna (892)Personnel pension fund - Casdic/Previp ex Molfetta (489)Total (18,857)305


9.4 Other benefits in favour of personnelType 31.12.2007 31.12.2006External training courses for employees (662) (347)Internal courses with external teaching staff (1,717) (1,196)Accommodation, rent due, condominium fees (1,494) (1,389)Scholarships and grants to employee children (512) (711)Voluntary employee departure plan (50,222) -One-off voluntary employee departure incentives (11,976) (119)Insurance companies (1,572) (1,936)Assessment of employee soc. security fund (FAD) (3,322) (3,207)Other items (491) (53)Total (71,968) (8,958)9.5 Other administrative expenses: breakdownType of expense/Value 31.12.2007 31.12.2006Fees to external professionals (33,991) (37,606)Stationery and printed materials (5,975) (4,213)Insurance companies (8,625) (8,282)Post & telephone costs (23,209) (22,702)surveillance and armoured transport (11,549) (10,882)Advertising (18,719) (18,626)Rent expenses (86,759) (87,671)Car leases (2,951) (2,761)Data processing (60,614) (30,644)Litigation costs (32,914) (31,086)title searches and information (7,117) (10,857)association dues (2,461) (2,266)Maintenance costs for fixed assets (16,482) (17,884)Hire and maintenance of hardware (6,505) (19,331)Maintenance of software (13,108) (15,561)Lighting, water, heating (12,610) (11,952)Various transport costs (3,594) (3,712)Own cars (petrol, lubricants etc.) (989) (1,086)Fees to the board of statutory auditors (232) (343)data transmission (8,165) (8,323)Cleaning (6,881) (6,744)Newspapers, magazines, books (784) (736)Entertainment expenses (466) (732)Intercompany costs (4,302) -Sundry expenses (6,167) (4,168)Administrative expenses (375,169) (358,168)Indirect taxes and fees:Non-deductible VAT (62,719) (56,990)Municipal tax on properties (88) (101)Stamp duty and special tax on stock exchange contracts (47,277) (47,696)Other indirect taxes and fees (15,053) (18,395)Indirect taxation and charges (125,137) (123,182)Total other administrative expenses (500,306) (481,350)306


Section 10Net allowances for risks and charges - Entry 16010.1 Net allowances for risks and charges: breakdownType/Value 31.12.2007 31.12.2006Provision for claw back actions (8,131) (15,672)Allowance for risks and charges (23,597) (9,508)Allowance for litigation, operating risks and various disputes (11,261) -Total (42,989) (25,180)Section 11Net value adjustments to tangible assets - Entry 17011.1 Net value adjustments to tangibles: breakdownAsset/Income itemAmortisation andDepreciationValueadjustments onimpairments(b)Write-backsNet result(a)(c) (a+b-c)A. Tangible assetsA.1 Own (24,958) - - (24,958)- For functional use (23,687) - - (23,687)- For investment (1,271) - - (1,271)A.2 Acquired under financial lease - - - -- For functional use - - - -- For investment - - - -Total (24,958) - - (24,958)Section 12Net value adjustments to intangible assets - Entry 18012.1 Net value adjustments to intangibles: breakdownAsset/Income itemAmortisation andDepreciationValueadjustments onimpairments(b)Write-backsNet result(a)(c) (a+b-c)A. Intangible assetsA.1 Own (17,069) - - (17,069)- Internally generated by the company - - - -- Other (17,069) - - (17,069)A.2 Acquired under financial lease - - - -Total (17,069) - - (17,069)307


Section 13Other operating overheads - Entry 19013.1 Other operating overheads: breakdownType of cost/Amount 31.12.2007 31.12.2006Deferred tax assets - -Amortization of expenses for improvements to third-party assets (9,154) (6,148)Interest on payment system errors (13,499) (9,914)Reimbursement of credit card fraud (3,259) (3,302)Losses due to robbery, cash theft (3,427) (2,926)Losses from passive litigations - fund-exceeding amount (1,786) -Other items (5,497) (2,989)Total (36,622) (25,279)13.2 Other operating income: breakdownType of income/Amount 31.12.2007 31.12.2006Rental income 1,862 1,878Recovery of taxes from third parties 56,878 60,441Recovery of expenses on deposits and overdrafts 117,505 134,708Recovery of insurance premiums 11,732 10,349Interest on payment system errors 9,435 7,376Recovery of expenses from claims 5,881 7,151Insurance compensation 2,170 3,335Other items 13,501 14,523Total 218,964 239,761308


Section 14Profits (Losses) from investments - Entry 21014.1 Profits (Losses) from investments: breakdownIncome item/Value 31.12.2007 31.12.2006A. Income - 531. Revaluations - -2. Profits from disposal - 533. Write-backs - -4. Other positive changes - -B. Charges (2,852) (21)1. Write-downs - -2. Value adjustments from impairments (2,001) -3. Losses from disposal (851) (21)4. Other negative changes - -Net income (2,852) 32Item B.2 “Value adjustments from impairment” includes the depreciation of La Cittadella S.p.A.Item B.3 “Losses from disposal” includes the loss for the sale of Cerere S.r.l.Section 17Profits (Losses) on investments disposal - Entry 24017.1 Profits (Losses) on investments disposal: breakdownIncome item/Value 31.12.2007 31.12.2006A. Property - 4- Profits from disposal - 7- Losses from disposal - (3)B. Other activities (233) (275)- Profits from disposal 15 40- Losses from disposal (248) (315)Net income (233) (271)309


Section 18Taxes on income from continuing operations - Entry 26018.1 Taxes on income from continuing operations: breakdownItem/ValueIRES(corporation tax)IRAP(regionalbusiness tax)Other taxes 31.12.2007 31.12.20061. Current taxes (-) - (41,831) (10,248) (52,079) (120,107)2. Change in current taxes for previous periods (+/-) 2,335 107 2,761 5,203 (3,196)3. Reduction in current tax payable for fiscal year (+/-) 26,602 - - 26,602 -4. Changes in prepaid taxes (+/-) (154,253) (9,665) - (163,918) (91,354)5. Change in deferred taxes (+/-) (3,331) 570 - (2,761) (14,445)6. Income taxes for the period (-) (-1+/-2+3+/-4+/-5) (128,647) (50,819) (7,487) (186,953) (229,102)18.2 Reconciliation of theoretical fiscal charge and effective fiscal chargeIRES (corporation tax)Corporateincome tax %(IRES)Corporate income taxes with nominal rate application 56,697 33.00Effect of tax increases:Losses from securities 32,733 19.05Sundry administrative expenses 1,718 1.00Allowance to provisions 7,080 4.12Telephone costs 1,051 0.61Effect of changing rate on deferred tax 63,256 36.82Other increases 2,155 1.25Total increases 107,993 62.85Effect of tax decreases:Dividends (26,612) -15.49Capital gains on securities (6,716) -3.91Othed decreases (231) -0.13Lower tax attributable to prior years (2,484) -1.45Total decreases (36,043) -20.98Total tax changes 71,950 41.87Corporate income taxes accounted for in P&L 128,647 74.87IRAP (regional business tax)Regional tax onbusinessactivities (IRAP)Regional taxes on business activities with nominal rate application 7,302 4.25Effect of tax increases:Personnel costs 28,623 16.66Net adjustments to loans 15,788 9.19Allowances for risks and charges 1,827 1.06Charges in corporate income tax pertaining to losses from securities 3,189 1.86Charges in corporate income tax pertaining to other increases 655 0.38Other increases 700 0.41Rate increases resolved upon by regions 6,533 3.80Total increases 57,315 33.36effect of tax decreases:Dividends (3,580) -2.08Profits/losses from immobilized securities (2,915) -1.70"Tax wedge" deduction (2,625) -1.53Charges in corporate income tax pertaining to other decreases (13) -0.01Effect of changing rate on deferred tax (3,451) -2.01Lower tax attributable to prior years (87) -0.05Other decreases (1,127) -0.66Total decreases (13,798) -8.04Total tax changes 43,517 25.32Regional taxes in business activities accounted for in P&L 50,819 29.57%310


Section 19Income (loss) after tax from non-current assets held for sale - Entry 28019.1 Income (loss) after tax from groups of assets held for sale: breakdownIncome items/Values 31.12.2007 31.12.20061. Income - -2. Charges - -3. Income from measurement of groups of assets and related liabilities - -4. Profits (losses) from disposal - 5,4675. Taxes and fees - -Profit (Loss) - 5,46719.2 Detail of income taxes on groups of assets/liabilities held for sale31.12.2007 31.12.20061. Current taxes (-) - (2,693)2. Changes in prepaid taxes (+/-) - -3. Changes in deferred taxes (+/-) - -4. Income taxes for period (-1+/-2+/-3) - (2,693)Section 21Earnings per share21.1 Average number of diluted ordinary shares2007Weighted average of ordinary shares for determining BASIC earnings per share 308,755,499Convertible bonds - average of potential ordinary shares 2,201,581Weighted average of ordinary shares for determining DILUTED earnings per share 310,957,08021.2 Other informationEarningsWeightedaverage ofeuroordinary sharesBASIC earnings per share - 308,755,499 -DILUTED earnings per share - 310,957,080 -311


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Section 1CREDIT RISKQUALITATIVE INFORMATION1. General IssuesThe principal objective of the Bank’s credit activity isto protect asset quality in accordance with the principalwhereby a distinct division is drawn betweencommercial responsibilities and credit functions.These objectives were pursued in carrying out ordinaryoperations of investigation, appraisal ofcreditworthiness and issuing credit lines, as well as indeveloping specific projects aimed at the progressivecompliance with the Basel 2 principles.As regards alignment with the principles and criteria ofthe New Basel Agreements, the project concerning thereview of the credit processes aims to add a syntheticopinion expressed through internal rating systems,during the investigation phase and the actual issuingof the loan (including through a review of the powersdelegated), in the management as a well as theperformance monitoring of loans granted.2. Credit risk management policies2.1 Organisational factorsThe bank’s credit process is regulated in stages as partof the Internal Auditing System, the purpose being toidentify the criteria required to manage risk profiles,activities to be introduced to ensure correct applicationof said criteria, the structures responsible for carryingout these activities and the associated procedures.This process is split into separate stages and activitiesassigned to separate organisational divisions to ensurethe overall effectiveness, i.e. that it is capable ofachieving the preset objectives (effectiveness) anddoing this at an acceptable cost (efficiency).The credit process is divided into the following stages:Credit policyThe aim of the banks’ credit policy is to implementshort and long-term strategies to determine thefinancial resources required by the credit sector.Specifically, the final amount is established on thebasis of the results of the following analyses:• customers' financial needs;• growth rate of loans;• competitiveness and positioning of group productsand prices compared with competitors;• structure of deposits;• other restrictions imposed by public sector and/orregulatory standards;• the degree of inherent economic and financial riskand hence, income and equity potential to covercurrent and future risk;• internal structural and organisationalcharacteristics.Assessing the creditworthiness of loanapplicantsThe creditworthiness of loan applicants is assessed todetermine if they will be able to repay the loan and tocheck any compatibility between individual loanapplications and deciding how much and what kind ofcredit to grant. The purpose of the assessment is toquantify the associated economic risk as regards thepotential insolvency of the applicant, and the financialrisk resulting from failure to meet obligations inaccordance with agreed terms.Credit grantingThe risk of the associated operation is a centralconsideration in the lending process. This risk isdetermined on the basis of:• the extent of the credit being requested;• the purpose and structure of the credit (riskcategory).On the basis of the resultant risk rating, calculated asexplained above, decision-making powers are assignedfor the relative credit granting process, in accordancewith decision-making system risk managementcriteria.Monitoring creditsThe purpose of the bank’s credit control andmanagement activities is to constantly monitor theongoing solidity of the borrower's and guarantor'seconomic, financial and equity profile. The followingsteps are necessary parts of the process:• identify if any problems were recorded for loans overa previous period prior to the date of the periodiccheck;• select and examine any loans showing evidence ofimpairment (problem credits) as regards both technicalaspects and the creditworthiness of the borrower;• classify the loans examined as performing loans andproblem credits.Resultant problem loans are classified on the basis ofthe associated degree of risk into the risk categoriesused by the bank and in accordance with generalprinciples prescribed in Regulatory Provisions.315


Managing troubled creditsThe aim of the management of impaired credits (nonperformingloans, problem loans, rescheduled loans,past due and/or overrun loans) is to ensure that thenecessary action is taken to rehabilitate or recover theimpaired credit when the agreement can no longer becontinued due to prevailing circumstances.Measuring and controlling credit riskCredit risk must be measured in line with applicableregulations governing the financial statements ofbanks and also those of Regulatory Authorities. Inparticular, effective and potential losses in loans aredivided into:• specific losses (expected) or portfolio losses due tothe valuation of irregular credits;• portfolio losses (expected) due to the valuation ofperforming credits, and those linked to countryrisk;• unexpected losses, dependent on the variability ofthe counterparties’ insolvency rate, and therecovery rate in case of insolvency of the same, aswell as the geographic and sector diversification ofthe loans portfolio.2.2/2.3 Credit risk management,measurement and control systems/credit risk mitigation techniquesWithin the various phases of the credit process,suitable internal systems of identification,measurement, management and control of credit riskare used.In determining the credit policy and short-term/longtermdevelopment strategies, the following areidentified and outlined:• current risk deriving from credit activities thathave generated losses for the Bank;• potential risks deriving from credit activities thatcould in all probability generate losses for theBank;• the sustainability of development strategies interms of loan asset quality and in reference to theaforementioned risks;• the sustainability of development strategies inreference to the Bank’s organisational structure.Current risks inherent in impaired credits are carefullyassessed using the bank’s own system, monitoring thebank's exposure in troubled loan assets classified aspast due/overrun for more than 180 days, rescheduledloans, problem loans and non-performing loans. Saidmonitoring is carried out not just for developments inthe aforementioned loan classifications, but also bychecking inherent risk in the aforementioned loansagainst capital held to cover these risks through thecreation of allowances for bad debts.Current risks regarding performing loans and potentialrisks (unpredicted losses) are valued using portfoliologic and by monitoring the Group’s exposureaccording to Basel 2 principles. The aforementioneddegree of risk is constantly monitored using PD(probability of default) and LGD (loss given default)parameters and against trends resulting from thisquantification in order to check the consistency andsustainability of the Bank’s development strategies.The sustainability of development strategies as regardsassets, capital and reserves are checked on a regularbasis, taking care to cover current risks. Potential risksare monitored in relation to risks and reserves and it ischecked that they are consistent with the size andcomplexity of credit activities.From an organisational point of view, the sustainabilityof strategies is ensured by regularly checking theadequacy and operation (effectiveness and efficiency)of organisational processes to implement a generalsystem of internal controls. Said sustainability is alsoconstantly checked by way of appropriate budgetanalysis in each individual business unit in accordancewith risk-return discipline.During the credit granting process, applicants areassessed on the basis of information in the appraiser’spossession at the time credit is granted/renewed. Thisinformation is acquired directly from the customer andindirectly from banking industry databases and/orexternal information providers.Credit is granted in accordance with the powersformally delegated by the Board of Directors.On the whole, the underlying principle of this decisionmakingstructure is to contain the degree ofconcentration of risk, especially large risks andrelations with related parties, both in terms of creditquality and in economic/sector-based terms.The aforementioned mandate system approved by theBoard of Directors defines:• powers delegated in line with strategic guidelines;• concentration limits in relation to consolidatedregulatory capital, the central risk bureau and thebusiness segment of the counterparty, withspecific rules and greater severity for financialholding companies, bond issuingcompanies/groups and related parties;• resolution-making responsibilities, with subportfoliocompetences and "sensitive" measures,including for example medium-term in excess ofpreset amount/term limits, consolidation orrestructuring of liabilities, loans to footballassociations or to companies/groups in the radiotelevision,publishing industry etc., assignedcentrally to general management.316


As a final measure, specific regulations were passedand included in the General Regulations of the ParentBank, defining the latter's powers andcontrolling/coordination activities in terms of grantingcredit to other Group companies.Furthermore, since 2004, direct loans to counterpartiesworking in the arms industry (except for interventionscommissioned by the Armed Forces ornational/European police forces) have no longer beengranted, also as part of the Ethical Code adopted inthe meantime.Measurement systemsAs part of the global project to bring the bank into linewith the criteria and principles of Basel II and moregenerally to promote the effectiveness and efficiencyof the credit rating process, the bank has developedinternal credit risk rating systems. The aforementionedsystems were implemented taking into carefulconsideration the customer's specific businesssegment.The factors used to assign a customer to a specificsegment are drawn from personal and demographicdetails held on file. Specifically, these factors include:• area of economic activity;• turnover;• cash exposure towards the banking system;• overall loans.The current internal classification applied to customersincludes the following main distinctions:• business enterprises, split into Large corporate,corporate, small business, financial and insurance;• private entities, meaning consumer households;• State Entities;• Banks;• Other minor segments, including the publicadministration.In internal models, default is currently defined as:• bank non-performing loans;• adjusted non-performing loans;• problem loans;• bank or industry restructured loans;• unsettled/overrun loans more than 180 days oldincluded among objective problem loans (asdefined by the Accounting matrix).The bank's credit risk measurement models weredeveloped using the following information:• Financial information drawn from the internalarchive of financial statements of enterprises orconsumer households. Information on joint-stockcompanies are acquired automatically fromexternal public sources and entered into thespecific database after being reclassified andreconciled. For other forms of business andconsumer households, information is entereddirectly by our branches and then reconciled andreclassified as necessary to make it consistentwith all other financial information.• The Bank of Italy central risk bureau and theassociated risk bureau, comprising internalarchives on all loans granted in the nationalbanking industry to the bank’s counterpartycustomers.• Internal information, comprising informationmanaged by the bank's many specialistapplications for individual product types, whichallows us to extrapolate additional variablesstarting from the internal operating behaviour ofeach counterparty. The internal scoring system ispart of these information sources, used to helpgenerate input for the credit risk measuringsystem.• Qualitative information, comprising an internaldatabase in which historic qualitative informationon businesses is stored and used in connectionwith the aforementioned quantitative information.For the Corporate, Small Business and Privatesegments, the quantitative models have beenestimated statistically using historical series that coverthree years. These models were revised in 2007, usinglonger historical series so as to improve performanceand comply with the requirements for certificationgiven the advanced models.For the Large Corporate, Financial and Insurancesegment, the activities aimed at adopting appropriatemeasuring models that correspond to the holdingcompany’s approach and methods are currently beingplanned. For State Entities, Banks and the PublicAdministrations, we use the rating assigned by themajor rating agencies (Fitch, Moody’s and Standard &Poor’s). If the ratings of preceding agencies are notavailable, the classification used is that realised bySACE Spa, an Italian company that insures loansgranted to companies abroad.Measurements using the Small Business model arealso extended to minor segments (except Italian publicadministrations), given that for these counterpartiesthe internal information sources and/oraforementioned central risk bureaus can normally beeasily traced.Furthermore the following models are currently beingdeveloped for the Corporate, Small Business andPrivate segments:• exposure at default (EAD);• loss given default (LGD);• maturity.317


• internal operations in our bank relating to typicalcredit products;The objective of the EAD (exposure at default) modelis to estimate the credit exposure on the obligation inthe event of default by the customer. A “recalibration”of the EAD model has been planned for 2007, in orderto re-estimate the parameters of the underlyingeconometric models on the basis of up-to-dateinformation and the new definition of default adoptedto re-estimate the rating models. The “recalibration” ofthe EAD model will be completed by early 2008.As regards the LGD model, the aim is to measure thefraction of EAD following default (loss given default orseverity) and therefore the total amount that will notbe recovered given default. A new application has beenimplemented whereby current data managementprocesses for guarantees will be used not just forreporting purposes but also to use guarantees as afactor in mitigating risk. As for the EAD, a“recalibration” also of the LGD model has been plannedfor 2007, which will result in updated estimates inearly 2008 on the basis of information drawn fromlitigations recently settled. In the context of the creditrisk mitigation, a new operating procedure and processwere started aimed at supporting the gathering andmanagement of information connected with theguarantees, in line with the new provisions referred toin the Circular Letter no. 263 issued by the Bank ofItaly, and at obtaining the fair value of the guaranteesthemselves.With regards to maturity, a new algorithm wasdeveloped which takes into account the basicinformation of each individual transaction andcalculates the actual average maturity of thetransaction, in accordance with the provisions ofCircular Letter no. 263 of 27 th December 2006 issuedby the Bank of Italy (“New supervisory provisions forbanks”). The information on maturity, together withthe rating, the EAD and LGD models is used tocalculate Banca Antonveneta’s economic capital.The parameters defined by the aforementioned modelscombined with the probability of default of eachcounterpart are used to estimate the expected loss. Itshould also be noted that a portfolio model is alsobeing adopted which, drawing on the aforementionedvariables, makes it possible to measure "venturecapital" according to the directives and measurementsapplied by the Holding company.Controlling credit riskData generated by internal scoring system trendanalysis and the results of internal rating systems areused to identify situations requiring control.Based on appropriate algorithms developed tointercept problem credits and assign a severity rating,the risk analysis scoring system analyses the followinggroups of information:• operations in the national banking industry inferredfrom the central risk bureau and Bank of Italy,using distinctive algorithms for each type ofphenomenon and relevant variables prescribed inspecific applicable regulations;• operations in the national banking industry inferredfrom the associated central risk bureau, usingdistinctive algorithms for each type ofphenomenon and relevant variables prescribed inspecific applicable regulations;• adverse land registry entries and Court records,protested credit instruments.The availability of counterparty rating informationtogether with data on other components of credit riskfor each counterparty enabled suitable “early warning”models to be prepared. Said models are appropriatelycalibrated in line with the particular circumstances ofthe bank making them able to effectively and moreprematurely identify the critical factors of deterioratingcredits with resultant improvements in operatingmanagement performance and expectedimprovements in the quality of the credit portfolio.In relation to the extension of the concept of default tounsettled/overrun credits for more than 180 days,these positions continued to be the subject of intenseadministration during 2007 by way of specific actionsaiming to rehabilitate the problem and limit exposurewith such customers.Risk analysis controls are carried out at two levels:• at the individual level;• at the portfolio level.The aim of controls at the individual counterparty levelis to prevent any risk of customer default.Individual controls focus basically on three differentways of managing the troubled position:• Preventing the risk of default, which becomesevident from difficulties the counterparty hasencountered. Preventing also means anticipatingpotential default through the proper and objectiveinterpretation of balance sheet ratios for example,or internal/central risk bureau trend analysis;• Identification and notification of the problem toallow the account manager to take timely action;• Back analysis of the effectiveness of the actiontaken to deal with the problem (event) and of thepersistence of the causes of the counterparty’sproblems.Controls at the credit portfolio level aim to checkquality trends of the portfolio.318


In this type of control, typical credit risk data areexpressed at different portfolio "levels".The main “levels” are:• the portfolio in its entirety;• the various commercial segments (corporate, smallbusiness, retail and other) of the portfolio;• the portfolio by territorial organisation.When situations that do not comply with expectationsare encountered, more in-depth analysis is performedto determine the underlying causes: on the basis ofthe results of this analysis, the relevant centralfunctions are contacted to make sure appropriatecorrective action is taken.2.4 Impaired financial assetsThe technical and organisational procedures used tomanage and control impaired credits are determinedin relation to the respective degree of impairment.As regards problem, rescheduled and pastdue/overrun loans for more than 180 days, trendanalysis is performed in order to:• verify whether the counterparty's economicfinancialdifficulties can be reversed;• evaluate rehabilitation plans presented by debtors,outlining their capability to repay the loan withinthe terms of the plan, also taking into accountrequests for reduction in the rates applied to thecredits concerned;• examine the outcome of actions taken torehabilitate/recover problem credits (debtrescheduling plans, modification of type of credit,etc.) as well as any reasons for their possiblefailure;• determine expected losses analytically for problemand rescheduled loans and on a lump sum basisfor loans which have not been assessedindividually;The procedures for the classification of the debtorstake the above into account.A loan or is classified as problem loan and placed onwatch list in the case of positions that exhibit anirregular technical performance and negative aspects.Thus, classifications of the positions as problempositions must concern customers who areexperiencing temporary financial difficulties which canbe determined either subjectively (natural person orcompany) or on the basis of external elements(reference market, non-recurring events, etc.) thatcan influence the financial and economic stability ofthe debtor.The customers whom the bank brings action against(claims, injunctions, etc.) following extraordinaryevents are immediately classified as non-performing.The classification as restructured loans concernspositions for which the bank (individually or as part ofa pool of banks) owing to the deterioration of theeconomic-financial standing of the borrower, allowsthat the original contractual terms be changed in orderto avoid a loss. The restructured positions areconsidered as such from the time of redemption,unless two years following the restructuring agreementthe full solvency of the debtor is completely restoredand there are no insolvencies on any lines of credit(whether restructured or not).Past due and/or overrun loans covering the entireexposure towards debtors (other than those classifiedas non-performing, problem or restructured loans) ona continuous basis by a number of days which exceedsthe predefined threshold. To determine the amounts ofthe past due/overrun positions, the existing overdueand overrun loans on certain lines of credit are offsetby the existing margins on other lines of creditgranted to the same borrower.A non performing exposure can be changed into aperforming one if the borrower can be objectivelyshown to have reached a financial and economic levelthat will allow him to fulfil commitments towards thebank within the time period that has beencontractually agreed upon.As regards non-performing loans, risk control ispursued through the following activities:• credit facilities are withdrawn for any new loansand debtors urged to rectify their positions;• new positions are passed to internal/external legaldepartments to raise proceedings with debtorsand their respective guarantors;• checks are made on whether debtors whoseaccounts are already in credit recovery aremeeting the obligations undertaken;• a credit recovery programme is establishedwhereby loans are either sold or used insecuritisation operations;• expected losses on each position that exceed apreset limit are estimated analytically; those belowthis limit are estimated on a lump sum basis, alsousing indications generated by internal LGDquantification systems;• the adequacy of expected losses and potential ofrecovering the credit are checked on a regularbasis.A non-performing classification must be based on aninsolvency judgment and concern customers who areexperiencing financial difficulties of a permanentnature, based on the aforementioned judgment.319


QUANTITATIVE INFORMATIONA. LOAN ASSET QUALITYA.1 IMPAIRED AND PERFORMING EXPOSURES: AMOUNTS, VALUE ADJUSTMENTS,TRENDS, ECONOMIC AND GEOGRAPHICAL DISTRIBUTIONA.1.1 Distribution of financial assets by owner portfolio and by creditworthiness (book value)Portfolios/QualityNonperformingWatch listRestructuredLoansPast-DueLoansForcountryriskOther Assets 31.12.20071. Financial assets held for trading - - - - - 1,009,642 1,009,6422. Financial assets available for sale - - - - - 556,706 556,7063. Financial assets held to maturity - - - - - - -4. Loans to banks 7,730 - - - 10 7,762,912 7,770,6525. Loans to customers 841,425 637,357 134,221 218,457 163 28,763,623 30,595,2466. Financial assets designated at fair value - - - - - 180,179 180,1797. Financial assets under sale - - - - - - -8. Hedging derivatives - - - - - 25,101 25,10131.12.2007 849,155 637,357 134,221 218,457 173 38,298,163 40,137,52631.12.2006 1,046,773 622,674 109,002 189,680 218 36,054,713 38,023,060A.1.2 Breakdown of Financial Assets by Portfolio and Type (Gross and Net Values)Portfolios/QualityGrossExposureNon-performing AssetsSpecific AdjustmentsAdjustments of portfolioNetExposureGrossExposureOther AssetsPortfolioWritedownsNetExposureTotal(NetExposures)1. Financial assets held for trading - - - - X X 1,009,642 1,009,6422. Financial assets available for sale - - - - 562,465 5,759 556,706 556,7063. Financial assets held to maturity - - - - - - - -4. Loans to banks 39,848 32,118 - 7,730 7,762,924 2 7,762,922 7,770,6525. Loans to customers 3,978,276 2,126,760 20,056 1,831,460 28,835,342 71,556 28,763,786 30,595,2466. Financial assets designated at fair vale - - - - X X 180,179 180,1797. Financial assets under sale - - - - - - - -8. Hedging derivatives - - - - X X 25,101 25,10131.12.2007 4,018,124 2,158,878 20,056 1,839,190 37,160,731 77,317 38,298,336 40,137,52631.12.2006 4,259,395 2,275,063 16,203 1,968,129 35,022,662 91,456 36,054,931 38,023,060320


A.1.3 Exposure to Cash and Off-Balance Sheet Loans to Banks: Gross and Net ValuesA. CASH EXPOSURESType of exposure/ValuesGrossExposureSpecificWrite-downsPortfolioWrite-downsNetExposurea) Non-performing loans 39,848 32,118 - 7,730b) Problem loans - - - -c) Restructured exposures - - - -d) Expired exposures - - - -e) Country Risk 12 X 2 10f) Other assets 8,475,353 X - 8,475,353B. OFF BALANCE SHEET EXPOSURESTOTAL A 8,515,213 32,118 2 8,483,093a) Impaired - - - -b) Other 565,699 X 1,098 564,601TOTAL B 565,699 - 1,098 564,601A.1.4 Cash Exposures to Banks: dynamic of exposures which are impaired and subject to gross "country risk"Cause/CategoryWatchlistRestructuredLoansPast-DueLoansFor countryriskA. Gross initial exposure 50,153 - - - 90- of which: exposures transferred but not written off - - - - -B. Increases 23 - - - -B.1 entry from performing exposures - - - - -B.2 transfers from other categories of impaired exposure - - - - -B.3 other increases 23 - - - -C. Decreases 10,328 - - - 78C.1 exit towards performing exposures - - - - -C.2 write-offs 9,442 - - - -C.3 collections 886 - - - 76C.4 sale proceeds - - - - -C.5 transfers to other categories of impaired exposure - - - - -C.6 other decreases - - - - 2D. Gross final exposures 39,848 - - - 12- of which: exposures transferred but not written off - - - - -A.1.5 Cash Exposures to Banks: Trend of Total AdjustmentsCause/CategoryNonperformingNonperformingWatch listRestructuredLoansPast-Due LoansFor countryriskA. Initial total adjustments 42,035 - - - 15- of which: exposures transferred but not written off - - - - -B. Increases 185 - - - -B.1 value adjustments 185 - - - -B.2 transfers from other categories of impaired exposure - - - - -B.3 other increases - - - - -C. Decreases 10,102 - - - 13C.1 revaluation write-backs 660 - - - 10C.2 cash revaluations - - - - 3C.3 write-offs 9,442 - - - -C.4 transfers to other categories of impaired exposure - - - - -C.5 other decreases - - - - -D. Final total adjustments 32,118 - - - 2- of which: exposures transferred but not written off - - - - -321


A.1.6 Exposures for Cash and Off-Balance Sheet Loans to Customers: Gross and Net ValuesA. CASH EXPOSURESExposure Type/ValueGrossExposureSpecific WritedownsNetexposurea) Non-performing loans 2,732,632 1,891,207 - 841,425b) Problem loans 858,518 221,161 - 637,357c) Restructured exposures 148,613 14,392 - 134,221d) Expired exposures 238,513 - 20,056 218,457e) Country Risk 218 X 55 163f) Other assets 29,634,925 X 77,260 29,557,665B. OFF BALANCE SHEET EXPOSURESTOTAL A 33,613,419 2,126,760 97,371 31,389,288a) Impaired 97,506 - - 97,506b) Other 4,279,530 X 10,820 4,268,710TOTAL B 4,377,036 - 10,820 4,366,216A.1.7 Cash Exposures to Customers: dynamic of exposures which are impaired and subject to gross "country risk"Cause/CategoryWatchlistRestructuredLoansPast-DueLoansForcountry riskA. Gross initial exposures 3,062,797 823,616 116,946 205,883 189- of which: exposures transferred but not written off - - - - -B. Increases 1,088,096 874,048 49,961 1,049,613 207B.1 entry from performing exposures 3,738 772,830 19,235 1,001,529 -B.2 transfers from other categories of impaired exposure 530,793 20,442 23,192 - -B.3 other increases 553,565 80,776 7,534 48,084 207C. Decreases 1,418,261 839,146 18,294 1,016,983 178C.1 exit towards performing exposures 68 62,630 1,743 955,501 -C.2 write-offs 902,666 24,492 2,509 - -C.3 collections 191,680 189,451 11,001 - 178C.4 sale proceeds 319,259 11,432 - - -C.5 transfers to other categories of impaired exposure 4,588 550,996 3,041 15,802 -C.6 other decreases - 145 - 45,680 -D. Gross final exposures 2,732,632 858,518 148,613 238,513 218- of which: exposures transferred but not written off - - - - -A.1.8 Cash Exposures to Customers: Trend of Total AdjustmentsCause/CategoryPortfolioWritedownsNonperformingNonperformingWatch list RestructuredLoansPast-DueLoansForcountry riskA. Initial total adjustments 2,024,142 200,942 7,944 16,203 46- of which: exposures transferred but not written off - - - - -B. Increases 1,005,524 284,205 14,493 74,970 50B.1 value adjustments 479,658 278,954 11,036 74,970 50B.2 transfers from other categories of impaired exposure 142,883 2,808 3,457 - -B.3 other increases 382,983 2,443 - - -C. Decreases 1,138,459 263,986 8,045 71,117 41C.1 revaluation write-backs 153,309 57,910 4,072 71,117 1C.2 cash revaluations 78,947 35,244 944 - 40C.3 write-offs 902,666 24,492 2,509 - -C.4 transfers to other categories of impaired exposure 2,288 146,340 520 - -C.5 other decreases 1,249 - - - -D. Final total adjustments 1,891,207 221,161 14,392 20,056 55- of which: exposures transferred but not written off - - - - -322


A.2 CLASSIFICATION OF EXPOSURES BY EXTERNAL AND INTERNAL RATING CLASSESA.2.1 By-sector distribution of cash exposures and “off bilance sheet” exposures by externalrating classNo tables are provided given that the total for exposures with “external ratings” is relatively limited. .A.2.2 By-sector distribution of cash exposures and “off bilance sheet” exposures by internalrating classNo tables are provided given that internal ratings are not currently in use in credit risk management.323


A.3 DISTRIBUTION OF GUARANTEED EXPOSURES BY TYPE OF GUARANTEEA.3.1 Cash Exposures to Banks and Guaranteed CustomersValue ofexposuresPropertyReal Guarantees (1) Personal Guarantees (2)SecuritiesOtherassetsGovernmentsCredit derivativesOther publicinstitutionsBanksOthersubjectsGovernmentsCredit commitmentsOther publicinstitutionsBanksOthersubjects31.12.2007(1) + (2)1. Secured exposures to banks - - - - - - - - - - - - -1.1 completely guaranteed - - - - - - - - - - - - -1.2 partly guaranteed - - - - - - - - - - - - -2. Secured exposures to customers 21,618,640 13,224,841 537,213 1,251,504 - - - - - 354 417,714 5,632,911 21,064,5372.1 completely guaranteed 19,720,930 13,215,746 208,686 505,410 - - - - - 280 415,128 5,375,680 19,720,9302.2 partly guaranteed 1,897,710 9,095 328,527 746,094 - - - - - 74 2,586 257,231 1,343,607A.3.2 "Off balance sheet" exposures towards guaranteed banks and customersValue ofexposuresPropertyReal Guarantees (1) Personal Guarantees (2)SecuritiesOtherassetsGovernmentsCredit derivativesOther publicinstitutionsBanksOthersubjectsGovernmentsCredit commitmentsOther publicinstitutionsBanksOthersubjects31.12.2007(1) + (2)1. Secured exposures to banks - - - - - - - - - - - - -1.1 completely guaranteed - - - - - - - - - - - - -1.2 partly guaranteed - - - - - - - - - - - - -2. Secured exposures to customers 1,812,310 675,057 65,270 111,868 - - - - - 4,494 59,706 796,884 1,713,2792.1 completely guaranteed 1,597,794 674,914 37,311 88,739 - - - - - 4,494 47,068 745,268 1,597,7942.2 partly guaranteed 214,516 143 27,959 23,129 - - - - - - 12,638 51,616 115,485324


A.3.3 Impaired cash exposures towards guaranteed banks and customersGuarantees (fair value)Value of exposuresAmount guaranteedPropertyCollateral guaranteesSecuritiesOther assetsGovernment andcentral banksOther publicinstitutionsCredit derivativesBanksFinancialcompaniesInsurancecompaniesNon-financialcompaniesPersonal GuaranteesOther subjectsGovernment andcentral banksOther publicinstitutionsCredit commitmentsBanksFinancialcompaniesInsurancecompaniesNon-financialcompaniesOther subjects31.12.2007Surplus fair value,guarantee1. Secured exposures to banks - - - - - - - - - - - - - - - - - - - - -1.1 over 150% - - - - - - - - - - - - - - - - - - - - -1.2 between 100% and 150% - - - - - - - - - - - - - - - - - - - - -1.3 between 100% and 100% - - - - - - - - - - - - - - - - - - - - -1.4 under 50% - - - - - - - - - - - - - - - - - - - - -2. Secured exposures to customers 1,098,224 2,601,055 1,698,047 19,144 39,154 - - - - - - - - 13 4 - - - 844,693 2,601,055 -2.1 over 150% 335,825 1,757,767 1,269,385 8,106 21,121 - - - - - - - - - - - - - 459,155 1,757,767 -2.2 between 100% and 150% 84,132 180,701 82,958 1,842 3,756 - - - - - - - - - - - - - 92,145 180,701 -2.3 between 100% and 100% 644,026 641,023 345,388 8,083 13,256 - - - - - - - - 13 4 - - - 274,279 641,023 -2.4 under 50% 34,241 21,564 316 1,113 1,021 - - - - - - - - - - - - - 19,114 21,564 -325


A.3.4 Impaired "off balance sheet" exposures towards guaranteed banks and customersGuarantees (fair value)Value of exposuresAmount guaranteedPropertyCollateralguaranteesSecuritiesOther assetsGovernment andcentral banksOther publicinstitutionsCredit derivativesBanksFinancialcompaniesInsurancecompaniesNon-financialcompaniesPersonal guaranteesOther subjectsGovernment andcentral banksOther publicinstitutionsCredit commitmentsBanksFinancialcompaniesInsurancecompaniesNon-financialcompaniesOther subjects31.12.2007Surplus fair value,guarantee1. Secured exposures to banks - - - - - - - - - - - - - - - - - - - - -1.1 over 150% - - - - - - - - - - - - - - - - - - - - -1.2 between 100% and 150% - - - - - - - - - - - - - - - - - - - - -1.3 between 100% and 100% - - - - - - - - - - - - - - - - - - - - -1.4 under 50% - - - - - - - - - - - - - - - - - - - - -2. Secured exposures to customers 24,797 46,689 1,223 4,322 2,656 - - - - - - - - - - - - - 38,488 46,689 -2.1 over 150% 2,878 26,112 - 1,325 613 - - - - - - - - - - - - - 24,174 26,112 -2.2 between 100% and 150% 1,165 1,537 - 82 - - - - - - - - - - - - - - 1,455 1,537 -2.3 between 100% and 100% 18,534 18,190 1,223 2,752 1,574 - - - - - - - - - - - - - 12,641 18,190 -2.4 under 50% 2,220 850 - 163 469 - - - - - - - - - - - - - 218 850 -326


B. DISTRIBUTION AND CONCENTRATION OF CREDITB.1 By-sector distribution of cash exposures and "off balance sheet" exposures towards customers (con’t)Government and central banks Other public institutions Financial companiesGross ExposureSpecific valueadjustmentsPortfolio valueadjustmentsNet ExposureGross ExposureSpecific valueadjustmentsPortfolio valueadjustmentsNet ExposureGross ExposureSpecific valueadjustmentsPortfolio valueadjustmentsNet ExposureA. Cash exposuresA.1 Non-performing loans - - - - 24 23 - 1 13,053 10,648 - 2,405A.2 Problem loans - - - - 1,329 927 - 402 98,172 32,557 - 65,615A.3 Restructured exposures - - - - - - - - - - - -A.4 Expired exposures - - - - 126 - 11 115 828 - 102 726A.5 Other exposures 401,033 X 5,759 395,274 94,442 X 1 94,441 1,273,855 X 9,142 1,264,713TOTAL 401,033 - 5,759 395,274 95,921 950 12 94,959 1,385,908 43,205 9,244 1,333,459B. Exposures "off balance sheet"B.1 Non-performing loans - - - - - - - - - - - -B.2 Problem loans - - - - - - - - 26 - - 26B.3 Other impaired assets - - - - - - - - 131 - - 131B.4 Other exposures - - - - 18,825 - 29 18,796 375,747 - 4,843 370,904TOTAL - - - - 18,825 - 29 18,796 375,904 - 4,843 371,06131.12.2007 401,033 - 5,759 395,274 114,746 950 41 113,755 1,761,812 43,205 14,087 1,704,52031.12.2006 148,086 - - 148,086 177,386 553 39 176,794 1,666,706 7,356 10,078 1,649,272B.1 By-sector distribution of cash exposures and "off balance sheet" exposures towards customersInsurance companies Non-financial companies Other subjectsGross ExposureSpecific valueadjustmentsPortfolio valueadjustmentsNet ExposureGross ExposureSpecific valueadjustmentsPortfolio valueadjustmentsNet ExposureGross ExposureSpecific valueadjustmentsPortfolio valueadjustmentsNet ExposureA. Cash exposuresA.1 Non-performing loans 26 19 - 7 1,812,378 1,318,892 - 493,486 907,151 561,625 - 345,526A.2 Problem loans - - - - 546,628 138,188 - 408,440 212,389 49,489 - 162,900A.3 Restructured exposures - - - - 148,613 14,392 - 134,221 - - - -A.4 Expired exposures - - - - 112,045 - 9,017 103,028 125,514 - 10,926 114,588A.5 Other exposures 23,106 X - 23,106 19,463,054 X 43,261 19,419,793 8,379,653 X 19,152 8,360,501TOTAL 23,132 19 - 23,113 22,082,718 1,471,472 52,278 20,558,968 9,624,707 611,114 30,078 8,983,515B. Exposures "off balance sheet"B.1 Non-performing loans - - - - 46,951 - - 46,951 4,096 - - 4,096B.2 Problem loans - - - - 29,408 - - 29,408 2,988 - - 2,988B.3 Other impaired assets - - - - 12,964 - - 12,964 942 - - 942B.4 Other exposures 30,888 - 47 30,841 3,539,834 - 5,420 3,534,414 314,236 - 481 313,755TOTAL 30,888 - 47 30,841 3,629,157 - 5,420 3,623,737 322,262 - 481 321,78131.12.2007 54,020 19 47 53,954 25,711,875 1,471,472 57,698 24,182,705 9,946,969 611,114 30,559 9,305,29631.12.2006 39,097 12 33 39,052 25,222,327 1,502,305 70,388 23,649,634 9,669,137 722,802 38,172 8,908,163327


B.2 Breakdown of Loans to Non-Financial Resident Enterprises31.12.2007a) Other services for sale 5,457,002b) Sales, recovery and repairs 3,476,698c) Housing and public works 2,620,852d) Electric material and equipment 1,020,044e) Textiles, leather goods, footwear and apparel 768,763f) Other sectors 6,832,164Total 20,175,523B.3 National distribution of cash exposures and "off balance sheet" exposures towards customersExposures/Geographical areasITALYGrossExposureNetExposureOTHER EUROPEANCOUNTRIESGross NetExposure ExposureAMERICA ASIA REST OF WORLDGrossExposureNetExposureGross Net Gross NetExposure Exposure Exposure ExposureA. Cash exposuresA.1 Non-performing loans 2,722,692 838,494 5,819 2,700 47 12 3,117 87 957 132A.2 Problem loans 763,127 572,941 94,985 64,330 406 86 - - - -A.3 Restructured exposures 148,613 134,221 - - - - - - - -A.4 Expired exposures 238,474 218,422 33 30 3 2 2 2 1 1A.5 Other exposures 29,126,658 29,055,939 344,305 338,072 145,897 145,595 14,115 14,082 4,168 4,140TOTAL 32,999,564 30,820,017 445,142 405,132 146,353 145,695 17,234 14,171 5,126 4,273B. Exposures "off balance sheet"B.1 Non-performing loans 51,047 51,047 - - - - - - - -B.2 Problem loans 32,422 32,422 - - - - - - - -B.3 Other impaired assets 14,037 14,037 - - - - - - - -B.4 Other exposures 4,240,860 4,230,099 33,396 33,345 1,854 1,851 3,420 3,415 - -TOTAL 4,338,366 4,327,605 33,396 33,345 1,854 1,851 3,420 3,415 - -31.12.2007 37,337,930 35,147,622 478,538 438,477 148,207 147,546 20,654 17,586 5,126 4,27331.12.2006 36,288,663 33,949,301 457,815 447,190 162,364 161,330 11,265 10,830 2,632 2,350B.4 National distribution of cash exposures and "off balance sheet" exposures towards banksExposures/Geographical areasA. Cash exposuresITALYGrossExposureNetExposureOTHER EUROPEANCOUNTRIESGrossExposureNetExposureGrossExposureAMERICA ASIA REST OF WORLDNetExposureGrossExposureNetExposureGrossExposureNetExposureA.1 Non-performing loans - - 19,465 7,457 20,383 273 - - - -A.2 Problem loans - - - - - - - - - -A.3 Restructured exposures - - - - - - - - - -A.4 Expired exposures - - - - - - - - - -A.5 Other exposures 5,875,899 5,875,899 2,070,953 2,070,951 9,785 9,785 1,951 1,951 516,777 516,777TOTAL 5,875,899 5,875,899 2,090,418 2,078,408 30,168 10,058 1,951 1,951 516,777 516,777B. Exposures "off balancesheet"B.1 Non-performing loans - - - - - - - - - -B.2 Problem loans - - - - - - - - - -B.3 Other impaired assets - - - - - - - - - -B.4 Other exposures 293,773 292,721 249,921 249,878 12,158 12,156 7,918 7,917 1,929 1,929TOTAL 293,773 292,721 249,921 249,878 12,158 12,156 7,918 7,917 1,929 1,92931.12.2007 6,169,672 6,168,620 2,340,339 2,328,286 42,326 22,214 9,869 9,868 518,706 518,70631.12.2006 6,303,142 6,302,860 1,207,662 1,194,424 38,288 17,944 25,742 16,310 9,488 9,487328


C. SECURITISATIONS AND TRANSFER OF ASSETSC.1 SECURITISATIONSQUALITATIVE INFORMATIONBanca Antonveneta is the originator and servicer of two performing securitisations: the Bank has underwritten in fullthe subordinated part of the securities (Junior Notes) and granted credit lines to cover the loss in revenues collectedand/or greater disbursements compared to the budget.In addition, Banca Antonveneta guarantees the liquidity for the facilitation of the special purpose company'sobligations arising from the commitments assumed in its role as the custodian bank.The two performing transactions involved performing mortgage loans granted to private customers.The twofold objective was to achieve a more profitable management of such loan assets in view of the fact that, withthe same amount of credit risk, the profitability generated by the sale of these loans combined with the re-investmentof this liquidity produced greater returns than other similar financial investments, while reinvesting the liquiditygenerated from these transactions in new loans with similar technical features.The transfer of the loans was carried out according to the provisions of Law 130 of 30 th April 1999.The performance of the transactions is monitored constantly through the comparison of the revenues achieved andthose which were budgeted and checking of the trigger limits that have been established contractually.The office responsible for these controls sends a monthly report to the Board of Directors of the Special PurposeCompany, indicating total amounts collected and trigger levels reached.Being true sales transactions, securitised assets are no longer booked as assets in the financial statements of BancaAntonveneta. However, we note that as a result of this transaction, the values of Junior Notes (which areunderwritten in their entirety), the credit lines and guarantees granted and the interest rate swap contracts aresignificant. The latter were stipulated to mitigate securitisation risk.Risks faced by the Bank are periodically measured using specific models to evaluate Junior Notes and Interest RateSwaps. These models consider estimated amounts that will be recovered on outstanding loans and payments duethrough the year from the special purpose entity, according to the relative seniority of the agreement.The rating for the Senior Notes, Class A and Class B securities was expressed by the three main Agencies, Moody’s,Fitch Ratings and Standard & Poor’s. No rating is expressed for Junior (Class C) securities.During this operation, these Agencies improved the ratings of Senior Notes compared to those originally assigned:specifically, in 2007 Fitch Ratings Limited confirmed to Giotto Finance that the rating for Class A securities was AAAand revised upwards the rating of Class B, bringing it from AA to AAA.As for the two non-performing securitisations in existence as at 31 December 2006 and still in existence as at 30 June2007 connected with the sale without recourse of loans classified as “non-performing” at the transfer date, theoutstanding loans were transferred in their entirety during the second half of 2007. Subsequently, the seniorsecurities still outstanding as well as the junior securities were fully repaid.In 2007 Banca Antonveneta received total coupons on Junior Notes amounting to 25.0 million euro (taking bothperforming and non performing securitisations into account) and services commissions for 6.4 million euro.329


QUANTITATIVE INFORMATIONC.1.1 Exposures deriving from securitisation operations classified by quality of underlying assetsCash Exposures Guarantees provided Credit linesSenior Mezzanine Junior Senior Mezzanine Junior Senior Mezzanine JuniorQuality of underlying asset/ExposureGrossExposureNet ExposureGrossExposureNet ExposureGrossExposureNet ExposureGrossExposureNet ExposureGrossExposureNet ExposureGrossExposureNet ExposureGrossExposureNet ExposureGrossExposureNet ExposureGrossExposureNet ExposureA. With own underlying assets: - - - - 143,300 133,539 - - - - - - 70,000 70,000 - - - -a) Impaired - - - - - - - - - - - - 50,000 50,000 - - - -b) Other - - - - 143,300 133,539 - - - - - - 20,000 20,000 - - - -B. With third-party underlying assets: - - - - - - - - - - - - - - - - - -a) Impaired - - - - - - - - - - - - - - - - - -b) Other - - - - - - - - - - - - - - - - - -330


C.1.2 Exposures deriving from principal "own" securitisation operations classified by type of securitised asset and by type of exposureCash Exposures Guarantees provided Credit linesSenior Mezzanine Junior Senior Mezzanine Junior Senior Mezzanine JuniorType of securitised asset/ExposureBalance-sheet valueValueadjustments/writebacksBalance-sheet valueValueadjustments/writebacksBalance-sheet valueValueadjustments/writebacksNet ExposureValueadjustments/writebacksNet ExposureValueadjustments/writebacksNet ExposureValueadjustments/writebacksNet ExposureValueadjustments/writebacksNet ExposureValueadjustments/writebacksNet ExposureValueadjustments/writebacksA. Completely derecognized from accounts - - - - 133,539 -4,534 - - - - - - 70,000 - - - - -A.1 Padova Finance N.1- Bonds - - - - - - - - - - - - - - - - - -A.2 Antenore Finance- Bad debts - - - - - - - - - - - - 50,000 - - - - -A.3 Theano Finance- Bad debts - - - - - - - - - - - - - - - - - -A.4 Giotto Finance- Performing loans - - - - 83,960 -5,469 - - - - - - 20,000 - - - - -A.5 Giotto Finance 2- Performing loans - - - - 49,579 935 - - - - - - - - - - - -B. Partially derecognized from accounts - - - - - - - - - - - - - - - - - -B.1 Securitisation name 1- Asset type - - - - - - - - - - - - - - - - - -B.2 Securitisation name 2- Asset type - - - - - - - - - - - - - - - - - -B.3 Securitisation name ...- Asset type - - - - - - - - - - - - - - - - - -C. Not deleted from accounts - - - - - - - - - - - - - - - - - -C.1 Securitisation name 1- Asset type - - - - - - - - - - - - - - - - - -C.2 Securitisation name 2- Asset type - - - - - - - - - - - - - - - - - -C.3 Securitisation name ...- Asset type - - - - - - - - - - - - - - - - - -331


C.1.4 Exposures towards securitisations classified by portfolio and by typeExposure/PortfolioFinancialassets heldfor tradingFinancialassets fairvalue optionFinancialassetsavailable forsaleFinancialassets heldto maturityReceivables 31.12.2007 31.12.20061. Cash Exposures - 133,539 - - - 133,539 377,444- "Senior" - - - - - - -- "Mezzanine" - - - - - - -- "Junior" - 133,539 - - - 133,539 377,4442. Exposures "off balance sheet" - - - - 70,000 70,000 -- "Senior" - - - - 70,000 70,000 70,000- "Mezzanine" - - - - - - -- "Junior" - - - - - - -C.1.5 Aggregate amount of securitised assets underlying junior securities or other forms of creditworthiness supportAsset/ValueTraditionalsecuritisationsSyntheticsecuritisationsA. Own underlying assets: 618,554 -A.1 Completely deleted 618,554 -1. Non-performing - X2. Watchlist - X3. Restructured Loans - X4. Past-Due Loans - X5. Other Assets 618,554 XA.2 Partially deleted - -1. Non-performing - X2. Watchlist - X3. Restructured Loans - X4. Past-Due Loans - X5. Other Assets - XA.3 Not deleted - -1. Non-performing - -2. Watchlist - -3. Restructured Loans - -4. Past-Due Loans - -5. Other Assets - -B. Third-party underlying assets: - -B.1 Non-performing loans - -B.2 Problem loans - -B.3 Restructured exposures - -B.4 Expired exposures - -B.5 Other activities - -C.1.6 Interests in special purpose entitiesInterestCompany nameHead office%Antenore Finance S.p.A. Via Porciglia, 14 - Padua 98.000%Theano Finance S.p.A. Via Porciglia, 14 - Padua 98.000%Giotto Finance S.p.A. Via Porciglia, 14 - Padua 98.000%Giotto Finance 2 S.p.A. Via Porciglia, 14 - Padua 98.000%332


C.1.7 Service activities - revenue of securitised loans and reimbursements of securities issued by the special purposeentitySecuritised assets(date of period end)Revenue fromreceivables collectedduring the yearPercentage of reimbursed securities(end of period figure)Special-Purpose VehicleNonperformingexposuresPerformingNonperformingexposuresPerformingSenior Mezzanine JuniorNonperformingPerformingassetsAssetsNonperformingPerformingassetsAssetsNonperformingAssetsPerformingassetsAntenore Finance S.p.A. - - 142,598 - 100.000% - - - 100.000% -Theano Finance S.p.A. - - 154,748 - 100.000% - - - 100.000% -Giotto Finance S.p.A. - 287,262 - 110,257 - 79.017% - - - 0.000%Giotto Finance 2 S.p.A. - 331,292 - 87,692 - 55.545% - - - 0.000%333


C.2 TRANSFERSC.2.1 Financial assets sold and not written offTechnical forms/PortfolioFinancial assetsheld for tradingFinancial assetsdesignated at fairvalueFinancial assetsavailable for saleFinancial assets heldto maturityLoans to banksLoans to customers31.12.2007 31.12.2006A B C A B C A B C A B C A B C A B CA. Cash assets - 39,813 91,526 - - - 253,022 19,466 42,610 - - - - - - - - - 312,301 66,5501. Debt securities - 39,813 91,526 - - - 253,022 19,466 42,610 - - - - - - - - - 312,301 66,5502. Equity securities - - - - - - - - - X X X X X X X X X - -3. O.I.C.R. - - - - - - - - - X X X X X X X X X - -4. Loans - - - - - - - - - - - - - - - - - - - -5. Non-performing Assets - - - X X X X X X X X X X X X X X X - -B. Derivative instruments - - - - - - - - - - - - - - - - - - - -31.12.2007 - 39,813 91,526 - - - 253,022 19,466 42,610 - - - - - - - - - 312,301 -31.12.2006 14,855 31,765 67,436 - - - - 19,930 41,738 - - - - - - - - - - 66,550Legend:A = financial assets transferred that were recognised in their entirety (balance sheet value)B = financial assets transferred that were recognised partially (balance sheet value)C = financial assets transferred that were recognised partially (full value)C.2.2 Financial liabilities in respect of financial assets sold and not written off from the accountsLiability/Asset portfolioFinancial assetsheld for tradingFinancial assetsdesignated atfair valueFinancial assetsavailable forsaleFinancial assetsheld tomaturityLoans to banksLoans tocustomers31.12.20071. Due to customers 39,813 - 19,466 - - - 59,279a) against fully recognised assets - - - - - - -b) against partly recognised assets 39,813 - 19,466 - - - 59,2792. Due to banks - - 253,022 - - - 253,022a) against fully recognised assets - - 253,022 - - - 253,022b) against partly recognised assets - - - - - - -31.12.2007 39,813 - 272,488 - - - 312,30131.12.2006 46,620 - 19,930 - - - 66,550334


Section 2MARKET RISK2.1 INTEREST RATE RISKREGULATORY TRADINGPORTFOLIOQUALITATIVE INFORMATIONA. General IssuesIn 2007, Banca Antonveneta’s trading portfolio wasorganised to maximise return on invested capital,keeping exposure to market risk within anacceptable limit.Steps taken to achieve this objective are part ofstrategic security portfolio management (mediumterm perspective), trading securities portfolio (shortterm perspective), financial instrument tradingmanagement, market launch of new productsintended mainly for the Group's retail and corporatecustomers and market making and liquidityguarantee through operations on the secondarymarket.The main sources of interest rate risk are to befound in:• managing cash flows generated by productcreation activities;• trading unlisted derivatives with third partybanks issuing structured bonds for which BancaAntonveneta acted as originator while alsoplacing the instruments across its network;• managing unlisted interest rate derivativesplaced with corporate customers to hedge risks;• market making in the SEDEX market of BorsaItalia Spa for covered warrants of its own issue;• trading and market making on structured bondsto guarantee the necessary liquidity for productsplaced on our network;• managing the bank’s securities portfolio, from atrading and a medium term perspective.structured securities from placement andsubsequent dealing with customers. This is asecurities in asset swap portfolio, generallyimmunised against the trend of underlying rates andindexes (stock indexes, basket of shares orexchanges). Their value changes mainly with themovement of the credit spreads related to theindividual issuers. Generally, these are seniorbanking issues of investment grade category.Banca Antonveneta has firmly established itspresence on Borsa Italiana's SEDEX market insofaras securitised derivative products, by expandingmarket making activity on products connected topreviously listed interest indexes and rates.At the end of December, Antonveneta’s overallportfolio (divided into HFT, CFV, AFS, L&R; the HTMportfolio was not used during the period underreview) amounted to approximately 1,200[BA1]million euro (including the securities held at theLuxembourg branch).The medium-term portfolio management featuredmainly investments in floating rate securities issuedby banks or government/supranational issuers andof an estimated average duration of 5 years. Duringthe year the portfolio was considerably scaled down,hence significantly reducing the effects caused bythe rising of credit spreads. It is noted that therewere no products directly or indirectly linked withthe US sub-prime or Alt-A market, and theinvestments in securities connected with third-partysecuritisations were negligible.In addition, long-term Italian government bondswere also purchased as part of the managementactivities of the Bank’s ALM.In terms of trading, the bank continued to performwell on the secondary market trading securitiesissued by other banks as regards the origination andplacement stages. The same positive performancewas also recorded in bond trading for retailcustomers. The proposed structures are mainly ofthe “step-up callable” or “capped” type. Theplacement of certificates continued, with particularfocus on equity protection structures, thanks towhich it was possible to partially absorb the slowingdown of markets.Trend trading predominantly for speculativepurposes was scaled down in order to focus on theshort-term bond portfolio, which mainly consists of335


B. Interest rate risk managementprocesses and measurement methodsOrganisational factorsThe Group’s market risk management process isregulated in stages as part of the Internal AuditingSystem, the purpose being to identify the criteriarequired to manage risk profiles, activities to beintroduced to ensure correct application of saidcriteria, the structures responsible for carrying outthese activities and the associated procedures. Thisprocess is split into separate stages and activitiesassigned to separate organisational divisions toensure the overall effectiveness, i.e. that it iscapable of achieving the preset objectives(effectiveness) and doing this at an acceptable cost(efficiency).The process is composed of the following phases:• investment policy;• assumption of risk;• risk measurement; and• risk control.Investment policyThe aim of the Group’s investment policy is toimplement short and long-term strategies todetermine the financial resources required by thefinancial investment. The quantification of theresources to assign to the segment is carried outtaking market risk into account, and is determinedbased on the results of analyses of forecastedperformance of the main macroeconomic variables,the principal markets of reference, domestic andinternational monetary policy, the characteristics ofthe company financial structure, the adjustedperformance for the risk of investments that have,public restrictions and supervisory regulations.Assumption of risk• maximum supportable loss in the year (VaR);• stop-loss, which takes into account both themaximum loss of the period of reference(holding period) and the net results recorded orlatent, deriving from financial investments.Risk measurementThe phase of measuring market risk involvescreating a measurement, whether inclusive of theentire investment portfolio owned or divided byinvestment segment (bonds, equity, currency, etc.),to indicate the risk deriving from investment infinancial instruments.In particular, market risk is determined taking intoaccount:• the market value of the financial instruments, tobe continuously adjusted (mark to market);• the underlying variables of the financialinstruments, which influence the value of saidinstruments (interest rates, prices, exchangerates, etc.);• the sensitivity of the market value of thefinancial instruments to a variation in the aboveunderlying variables;• the volatility, meaning the expected variationover a specified time frame of the variablesunderlying the financial instruments;• the "protection" desired (confidence interval,meaning the likelihood that the estimates madecould effectively be correct);• the correlation between different financialinstruments sensitive to the same underlyingvariable (interest rate, share price, exchangerate, etc.); and• the correlation between various portfolios offinancial instruments sensitive to differentunderlying variables.Risk must be continuously measured by the RiskManagement Unit, which also creates the reports forthe Bodies and company offices involved in thefinancial process.Short and long term investments in the sector offinancial instruments are made in accordance withthe risk/return discipline. Therefore, investments aremade in compliance with the operating limits set interms of:336


Risk controlRisk control is carried out on a continuous basis bythe financial risk control unit, in order to ascertain:• that operating limits insofar as acceptable lossesand accrued losses for the period (stop-loss) areabided by the departments and individual desks;• that the limits in terms of counterparty risks areadhered to.The risk control activity is also carried outperiodically by the internal audit department and theunits involved in the financial process to check:• the adequacy and functionality of the financingprocess;• that rules and criteria pertaining to riskmanagement are respected;• that the risk control activities and controls areperformed correctly;• that there are no critical areas which must beimmediately removed.Illustration of the method used toconstruct the internal modelThe Bank uses a VaR model as its main tool for dailymeasurement and control of exposure to marketrisk.VaR is a statistical measurement which estimatespotential losses caused by movements of risk factorswhich the trading portfolio is exposed to over apreset time frame and with a specific level ofstatistical confidence. As regards the parameters ofthe model used, following a prudential approach, thebank measures a VaR with a confidence interval of99%, over a holding period of one day.The positions subject to VaR calculation are those infinancial instruments (cash and derivatives), whichcan be classified as assets or liabilities belonging tothe trading portfolio.The VaR is measured on a daily basis, for each singledesk, by type of product and risk factor and it is sentto top management and other interesteddepartments.In order to calculate the VaR, the Bank has adoptedthe statistical method of historical simulation, usinga historical series spanning a two year period withequal weight given to all observations while thesimulated scenarios are defined according to thevariations in the historical market data (such asinterest rates, exchange rates and prices) used. Thehistorical series which the simulations are basedon is updated daily, inputting themost recent figure for each series, and excluding theoldest figure in time. The Bank has chosen thehistorical simulation method because it is not basedon any assumptions regarding the distribution ofreturns from financial instruments and, moreover,because it allows for estimating the riskiness ofinstruments with optional components by using thefull repricing technique instead of using numericalapproximation based on partial derivatives (knownas Greeks). Through the VaR, which is estimatedusing historical simulations, the aggregation of riskfactors takes place on the basis of correlations in thehistorical series of data used. Therefore, specificattention is paid to the synchronisation of the data insuch a way as to adequately include the correlatedstructure of the different instruments. Currently, theBank measures derivative instruments using fullrepricing with optional content (including implicitcontent), while for other types of financialinstruments, a Delta-Gamma approach is used.The current model covers general market risks(interest rate risk, exchange rate risk) and specificmarket risks (stock market risk). The specific risklinked to bond positions (issuer risk) is measuredusing traditional methods connected to the issuer’srating.The process of validating the strength of the modelex post is through a technique which is known asback testing. This technique compares the profit/lossdata of the portfolio to the VaR; in particular, thenumber of days in which the daily losses are higherthan the VaR measurements are counted. From astatistical point of view, in case of a VaR modelestimated with a confidence interval of 99%, anexception (i.e. a loss above the VaR) is expectedevery 100 working days. The Bank compares thetheoretical profits and losses (which assume that theportfolio remains unchanged for one day while notcounting commissions and any intra-day trading) ona daily basis with the VaR levels.Currently the Bank does not use the internal modelfor management of the market risks to calculate theasset requirements involved in these risks, while ituses VaR measurements (at the parent companylevel) to establish limits defined by the Board ofDirectors upon assumption of market risk.337


QUANTITATIVE INFORMATION1. Regulatory trading portfolio: distribution by residual duration (date of re-appreciation) ofthe cash financial assets and liabilities and financial derivativesNo tables are provided given that a sensitivity analysis is provided in the following paragraph.2. Regulatory trading portfolio: internal models and other methods for sensitivity analysisThe following table illustrates the exposure of the trading portfolio to interest rate risk, expressed in terms ofVaR, in relation to the final amount, initial amount, average amount, and minimum and maximum assumedduring 2007:/000 Euro VaR28/12/2007VaR29/12/2006AverageVaR 2007MinimumVaR 2007MaximumVaR 2007Interest Rate Risk 1,019 929 1,276 737 2,049VaR by Risk Factor (holding period 1 day, confidence interval 99%)2.500.000VaRRischio Rate di Risk tasso for BAPV BAPV - anno - 20072.000.0001.500.0001.000.000500.00002/1/2 00722/1/200711/2/20073/3/200723/3/200712/4/20072/5/2 00722/5/200711/6/20071/7/200721/7/200710/8/200730/8/200719/9/20079/10/200729/10 /200718/11 /20078/12/200728/12/2007338


2.2 INTEREST RATE RISKBANK PORTFOLIO0.543 billion euro at a fixed rate (of which 0.234 ZeroCoupon Issues);2.498 billion euro at a floating rate;QUALITATIVE INFORMATIONA. General factors, interest rate riskmanagement processes and measurementmethodsPrimary sources of interest rate riskAs regards, the portfolio of the bank’ own securities,with the classification introduced by the IAS effectivefrom 2005, which had a significant effect onmanagement and organisation, we note the following:• The AFS portfolio is mainly composed ofsecurities issued by governments or banks andincludes fixed rate securities acquired with theoverall management of the Bank’s ALM in mind.The management of these securities aims tomaximise the carry over the medium term, whileconcentrating on some necessary and specificareas (e.g. the need to provide securities withvarying types of guarantees) that affect theircomposition;• The FVTPL portfolio is composed of the juniortranches of the remaining securitisations carriedout in the past by BAPV (Giotto I and II), themain activity for which is mainly the carefulmonitoring and control in agreement with theCompany offices involved;• The LR portfolio is of a residual nature and iscurrently used for certain securities the featuresof which are appropriate for this area;• The HTM portfolio is not currently in use.Regarding the management objectives driving thebanking portfolio instruments we note:• optimising the cost of funding for bond issues;• minimising the variation in exposure in terms offair value.During 2007, bonds were issued of an overall notionalamount of 0.277 billion euro the issue were directedtowards the Bank’s retail customers.At the end of 2007, the total outstanding issues equalleda notional 4.927 billion euro, of which the followingnotional amounts:0.812 billion euro structured (including equity linked andrate structures);1.074 billion euro subordinated (of which 0.045 billioneuro at a fixed rate, 1.029 billion euro at a floating rate).During 2007, the notional values of the types of issueswere represented as follows:0.054 billion euro at a fixed rate;0.223 billion euro at a floating rate;There were no structured issues.During the year, no bonds were issued as part of theBank’s EMTN programme; the notional amount of suchissues, all floating rate and of a senior as well assubordinated nature, therefore remains at 2.750 billioneuro.The EMTN programme was not renewed in 2007; thesynergies with ABN AMRO NV insofar as fundingculminated in a 12 billion euro MLT Credit Facilityagreement. In the context of this framework agreement,Banca Antonveneta received financing in the amount of7.5 billion euro, all of which at a floating rate of interest,of which 2.5 billion euro in the year broken down asfollows:in mid-May:• 1 billion euro maturing in 2008at the end of June:• 0.5 billion euro maturing in 2008at the end of August:• 1 billion euro maturing in 2008Organisational structureThe Portfolio Management & Funding Office oversees,within the financial process, the management of theBank's portfolios that are relative to the AFS and HFTaccounting categories; furthermore, it is responsible forany operations involving the HTM, L&R e FVTPLportfolios, based on indications received from thecompetent company bodies.It also manages funding operations, including themanagement of the MLT Credit Facility, for which itdefines and proposes timelines for the Bank's issuesand/or financing, coordinating with the competentcompany units and organs when bond issues areconcerned.339


It is in charge of the Bank’s ALM transactions followingthe indications of the competent Bank organs.Interest rate risk management and controlprocessesOrganisational structureThe Strategic Asset & Liability Management System(ALMS), which has been operational within BancaAntonveneta since late 2000, is in charge of measuringthe Bank’s exposure in terms of interest rate andliquidity risk, using an internal model.The activities consist in a process of monitoring,measurement and management of interest rate andliquidity risk from a strategic point of view, aimed atguiding the choices of the operating units.The estimates are presented to and discussed by theALCO Committee on a monthly basis and guide themanagement and strategic choices of the Banking Book.Banca Antonveneta’s policy on interest rate riskexposure is aimed at stabilising and optimising theinterest income expected.Interest rate risk methodology and controlBanca Antonveneta uses ALM to estimate the impact ofvariations in the structure of interest rate risk on thebanking book, in terms of variation in financial incomeand variation in the economic value of shareholders’equity.A project was started in 2006 aimed at replacing themethods and systems used for ALM analyses with thoseused by the Parent Bank ABN AMRO and its subsidiaries.ABN’s approach led to a review of the models in use andto an integration of the policies in this field.The system implemented is characterised by the use ofquantitative methods for the determination of the riskpositions and a strategic perspective.The impact on the interest income projected over thecurrent financial year is estimated using dynamic modelssimulating the trend of interest rates and the changesexpected in the Bank’s operations over the time periodconsidered. These simulations are based on hypotheseson future reinvestment activity and strategy to create aprojection of the expected financial flows and estimatethe dynamic results in terms of profit and economicvalue. That is why the information on company policiesand bank pricing strategies provided by themanagement are extremely important.Positions with uncertain maturity play an important rolein estimating exposure. When formulating hypotheses onfuture financial flows generated by these positions,reference is made to their historical behaviour. Abehavioural model on sensitivity to rate risk is developedthrough the use of statistical techniques.B. Fair value hedge activitiesThe Bank’s main objective in terms of fair value hedgeactivities is to neutralise the interest rate risk,transforming the flows of hedged assets and liabilitiesfrom fixed rate to variable rate.Hedging of the bank portfolio is divided into the followingtypes:• convertible bonds issued by the Bank, whose fairvalue interest rate risk is hedged by interest ratederivatives;• loans to corporate customers at fixed rates, whosefair value interest rate risk is hedged by interest ratederivatives.Regarding the bond component, fair value hedging isperformed using interest rate swap contracts whichtransform the flows paid by the hedged instrument fromfixed rate into variable rate. Spread risk is not subject tohedge activities. There was no generic hedging. Anyhedging of fixed rate bonds was performed according tothe Bank’s overall ALM position.Loans to customers, when not managed under ALM, maybe subject to specific suitable hedging, for examplethrough IRS plain vanilla or structured contracts whichtransform the flows paid or collected from hedged loansfrom fixed rate into variable rate; during 2006 therewere no specific hedges on loans.In order to check the significance of the hedges carriedout and in compliance with the principles set forth by theIAS, efficiency tests based on the sensitivity analysis ofthe hedged instrument and the hedging derivative, theparallel shifting of the rate and the calculation of therelative fair value delta are carried out on a monthlybasis.C. Cash flow hedgingThe Bank has not interest rate risk hedges of the cashflow hedge type.340


QUANTITATIVE INFORMATIONSensitivity analysis in terms of interest incomeThe following describes the sensitivity analysis linked to a variation of +/- 200 bps in rates, in terms of interest income,recorded on the basis of forecasts over 12 months, taking into accounts hypotheses on changes in volumes and financialcharacteristics of the operations. The determination of these values is founded on the data from the end of the monthlyclosing period. The main scenarios used to calculate the impact on the interest income are a gradual reduction / increaseof 200 bps over the subsequent 12 months. The impact is expressed as a percentage of the expected interest income.INCOME AT RISKDec-07Gradual shock of +200 bps 6.02%Gradual shock of -200 bps -6.06%Sensitivity analysis expressed in terms of variation in shareholders’ equityThe following describes the sensitivity analysis linked to a variation of +/- 100 bps in interest rate, in terms of impact onshareholders’ equity, recorded as at 31 December 2007, based on a forecast over 12 months.ECONOMIC VALUE AT RISKDec-07Immediate shock of +100 bps 2.16%Immediate shock of -100 bps -2.19%341


2.3 PRICE RISKREGULATORY TRADING PORTFOLIOQUALITATIVE INFORMATIONGeneral factors and price risk management processes and measurement methodsAt the end of 2007 the quantity of shares in the portfolio (approximately 61.1 million euro in value) was significantlylower than the bond component. This is almost entirely due to the management of the delta component of portfoliosmade up by options on the main shares of the SPMIB index, on which the bank carries out market making. Units of fundsalready present in the portfolio were completely disposed of.Short-term trading on derivative instruments was scaled down to focus on managing the bond portfolio, which mainlyconsists of short/medium-term senior banking issue of investment grade. As these are predominantly represented bysecurities in asset swap, the trend risk components are very low and the value of the portfolio is mainly connected withthe trend of the issuers’ spreads.Finally, as far as securitised derivative products are concerned, the Bank has firmly established its presence on BorsaItaliana's SEDEX market with regards to both instruments on interest rates and on stock indexes.QUANTITATIVE INFORMATION1. Regulatory trading portfolio: cash exposure in capital notes and UCIType of exposure/ValuesBook valueListedNon-listedA. Capital notes 52,099 8,983A.1 Shares 52,099 28A.2 Innovative capital instruments - -A.3 Other capital notes - 8,955B. UCI 50 -B.1 Italian 50 -- harmonised open - -- non-harmonised open - -- closed 50 -- reserved - -- speculative - -B.2 From other EU countries - -- harmonised - -- non-harmonised open - -- non-harmonised closed - -B.3 From non-EU countries - -- open - -- closed - -31.12.2007 52,149 8,983342


2. Regulatory trading portfolio: distribution of exposures in capital notes and stock exchange rates for themain countries in the listing marketNo tables are provided given that a sensitivity analysis is provided in the following paragraph.3. Regulatory trading portfolio: internal models and other methods for sensitivity analysisThe following table illustrates the exposure of the trading portfolio to price risk, expressed in terms of VaR, in relationto the final amount, initial amount, average amount, and minimum and maximum assumed during 2007:VaR by Risk Factor (holding period 1 day, confidence interval 99%)/000 Euro VaR 28/12/2007 VaR 29/12/2006 Average VaR Minimum VaR Maximum20072007 VaR 2007Stock market risk 160 211 480 96 1,3922.500.000VaR VaR Azionario of BAPV BAPV shares - anno – 2007 20072.000.0001.500.0001.000.000500.00002/1/200722/1/200711/2/20073/3/200723/3/200712/4/20072/5/200722/5/200711/6/20071/7/200721/7/200710/8/200730/8/200719/9/20079/10/200729/10/200718/11/20078/12/200728/12/2007343


2.4 PRICE RISKBANK PORTFOLIOQUALITATIVE INFORMATIONA. General factors and price riskmanagement processes and measurementmethodsGeneral issuesEquity investments are classified in the followingportfolios, pursuant to IAS/IFRSs:a) capital notes representing fully consolidated equityinvestments and recognised in the shareholders’ equityare allocated in the “Equity investments” portfolio;b) Equity Investments that are expected to be soldduring the following financial year are classified in the“Non-current assets and groups of assets held for sale”portfolio;c) financial instruments representing minority interestsinside the portfolios Available For Sale ("AFS") and FairValue Option ("FVO") were reclassified; hereafter,together, under “Minority Interests”.During the financial year that has just closed, operationswere carried out in accordance with the provisions of theIndustrial Plan, continuing the rationalisation of theportfolio, also through disposal of equity investmentswithout financial and operational/commercial strategicvalue.Organisational factorsThe management of the bank portfolio regardingMinority Interests is assigned to the CorporateDevelopment & Equity Investments department which,under the coordination of the Corporate StrategyDivision, aside from the Parent Bank’s functions ofdirection, coordination and control, also performs its ownactivities, consistent with the objectives of value creationand the strategic guidelines resolved by the Board ofDirectors of the Bank.The decisions involving investment, divestiture andtransactions of a non-recurring nature are the exclusiveresponsibility of the Executive Committee and the Boardof Directors; the Corporate Development & EquityInvestment Department carries out analyses and makesproposals regarding development of activities involvingprojects or individual transactions. The proposals areappropriately documented and present the opportunitiesas well as any critical areas. The decisions made and theresults thereof are further checked periodically throughmanagement reports.Management, measurement and controlsystemsThe Corporate Development & Equity InvestmentDepartment periodically assesses Minority Interests.Following the introduction of the fair value as valuationcriterion, the adoption of the international accountingstandards required a higher information volume and hasalso led to an organisational change: the resources andtools initially used to create the database required for acorrect performance of the valuations are currentlyemployed to constantly update this information base andto prepare market/sector researches that helpimplement and improve the fair value estimates ofMinority Interests. Periodic updates are made, inparticular, in order to identify any changes in themultiples market and the sector yields.Following an analysis of the portfolio held, thepredefined threshold identified amounted to 300,000euro, related to the book value of the individual equityinvestment. Below this threshold it was deemedunnecessary to carry out a fair value estimate,considering the negligible volume of these investments(approximately 1% of the total AFS and FVO securities)(2) .Moreover, for these equity investments the Bank oftendoes not have relevant data and information allowing itto correctly estimate their value, given also their limitedamnsequently, in the absence of impairment or relevantinformation (e.g. direct transactions that unequivocallydefined their current value) these equity investments areheld at cost.In compliance with the provisions set forth within theIAS/IFRSs, the fair value of minority interests traded onregulated markets is calculated on the basis of theofficial market price as at 28 December 2007 (the lasttrading day in 2007). In the absence of an activemarket, the fair value is determined by applyingvaluation methods that are the most appropriate insofaras the characteristics of the security, of the companyand of the reference sector. To this purpose, thefollowing valuation methods are generally adopted: (i)direct transactions, (ii) method of comparable(2) However, it is noted that for equity investments of a valuebetween 100,000 euro and 300,000 euro, based on the latestfinancial statements available, the book value is essentially inline with the portion of shareholders’ equity.344


transactions, (iii) comparable transactions method,(iv) stock market multiples method, (v) analyticalmethods: financial, income and equity.Consistently with the logic for measuring anddetermining the fair value used in the valuationprocedure, various techniques were used, with referenceto the unique characteristics of the company beingvalued and the availability of data and information, alsowith regard to the difficulty in acquiring information.Should it not be possible to calculate the fair valuereliably or if the application of such methods isinappropriate on account of the excessive variability ofthe estimates, the cost of the equity investment is kept.In any case, all the equity investments undergo theimpairment test (aimed at identifying and valuating anydurable loss in value connected with the lowering payingcapacity of the issuer).Regarding the price risk, variations (also potential) inthe fair value are periodically monitored and estimatedusing the same instruments available for financialstatement valuations. Similarly, the profitability of theinvestment, both in terms of increase/decrease in equityand in economic terms, is monitored over time using ananalysis of economic results and the equity and financialstructure of the company.If there are signs of durable losses and/or difficulties ingenerating adequate returns on the investment (alsoindirect returns, benefiting the Bank’s traditionaloperations) or the strategic value of the equityinvestment in the company is decreased, the next phaseinvolves assessing the disposal of the investment.B. Price risk hedging activitiesFor equities representing Minority Interests, currentlythere are fair value hedging activities in place (in thecase where the price is generated by an active market orin the case of unlisted securities, whose fair value canvary following changes in sector and/or market rates orother circumstances linked to operations, or othercompany events) only for two equity investments,recognised in the financial statements at an irrelevantoverall value (135 thousand euro approximately). Onthese investments the Bank has two sale options, whichguarantee the collection of a price corresponding to theamount paid for the purchase of those shares(increased, if appropriate, with all the capital payments).In any event, attentive monitoring of such figures iscarried out, quickly adjusting the fair value when suchamounts undergo significant changes, with the intentionof studying possible hedging solutions, to be activated incase such instruments are considered necessary.345


QUANTITATIVE INFORMATION1. Banking portfolio: cash exposure in capital notes and UCIType of exposure/ValuesListedBook valueNon-listedA. Capital notes 106,151 105,846A.1 Shares 106,151 105,846A.2 Innovative capital instruments - -A.3 Other capital notes - -B. UCI - -B.1 Italian - -- harmonised open - -- non-harmonised open - -- closed - -- reserved - -- speculative - -B.2 From other EU countries - -- harmonised - -- non-harmonised open - -- non-harmonised closed - -B.3 From non-EU countries - -- open - -- closed - -31.12.2007 106,151 105,8462. Regulatory trading portfolio: internal models and other methods for sensitivity analysisCurrently, there is no sensitivity model available for price risk on the bank portfolio.In the Zenith project, the Bank is studying the use of this repository in order to identify the parameters requiredfor developing this methodology.346


2.5 EXCHANGE RATE RISKQUALITATIVE INFORMATIONA. General factors, exchange risk management processes and measurement methodsAlso in this case, trading for predominantly speculative purposes was scaled down in order to focus on managing thecommercial flows with customers, managed through appropriate delta hedging transactions carried out using foreignexchange currency spot or futures contracts and, for the structured part including barriers of the exotic type, throughback to back transactions concluded with major international banks as counterparties.B. Exchange rate risk hedging activitiesDeposits/loans in foreign currency are primarily made in order to satisfy the needs of customers, and are substantiallybalanced by reverse transactions in the same currency.QUANTITATIVE INFORMATION1. Distribution by currency of assets, liabilities and derivativesCurrenciesItemsUS dollar Sterling YenCanadiandollarSwiss francOthercurrenciesA. Financial Assets 810,570 35,501 23,768 17,401 55,611 18,924A.1 Debt securities 7,740 1 - - - -A.2 Capital notes 2,152 24,228 - - - -A.3 Loans to banks 350,737 8,697 701 12,896 9,651 11,376A.4 Loans to customers 449,941 2,575 23,067 4,505 45,960 7,548A.5 Other financial assets - - - - - -B. Other assets 3,566 1,704 177 204 835 421C. Financial liabilities 830,231 66,790 52,818 23,010 56,246 19,791C.1 Due to banks 562,515 44,113 49,321 21,813 51,500 11,296C.2 Due to customers 267,716 22,677 3,497 1,197 4,746 8,495C.3 Debt securities - - - - - -D. Other liabilities 7,594 925 320 248 178 5E. Financial derivatives 805,172 296,198 272,233 23,556 8,163 39,553- Options 240,384 112,337 209,723 22,316 - 13,574+ Long positions 119,546 57,798 111,542 13,505 - 8,471+ Short positions 120,838 54,539 98,181 8,811 - 5,103- Other derivatives 564,788 183,861 62,510 1,240 8,163 25,979+ Long positions 294,311 110,022 36,644 1,236 3,542 11,966+ Short positions 270,477 73,839 25,866 4 4,621 14,014Total assets 1,227,993 205,025 172,131 32,346 59,988 39,782Total liabilities 1,229,140 196,093 177,185 32,073 61,045 38,913Excess/deficit (+/-) - 1,147 8,932 - 5,054 273 - 1,057 869347


2. Internal models and other methods for sensitivity analysisThe following table illustrates the exposure of the trading portfolio to exchange rate risk, expressed in terms of VaR atyear end, in relation to the final amount, initial amount, average amount, and minimum and maximum assumed in2007:VaR by Risk Factor (holding period 1 day, confidence interval 99%)/000 Euro VaR 28/12/2007 VaR 29/12/2006 Average VaR Minimum VaR Maximum20072007 VaR 2007Exchange rate risk 200 84 274 69 5312.500.000VaR Exchange Rischio di cambio risk BAPV for BAPV - anno 2007 - 20072.000.0001.500.0001.000.000500.00002/1/200722/1/200711/2/20073/3/200723/3/200712/4/20072/5/200722/5/200711/6/20071/7/200721/7/200710/8/200730/8/200719/9/20079/10/200729/10/200718/11/20078/12/200728/12/2007348


2.6 DERIVATIVE FINANCIAL INSTRUMENTSA. FINANCIAL DERIVATIVESA.1 Trading Portfolio for Supervisory Purposes: Notional Values at the End of the Year and Average Values for the YearTransaction/Underlying CategoryDebt and InterestRate SecuritiesCapital Securities and StockIndicesExchange Rates and Gold Other Stocks 31.12.2007 31.12.2006Listed Non listed Listed Non listed Listed Non listed Listed Non listed Listed Non listed Listed Non listed1. Forward rate agreement - - - - - - - - - - - -2. Interest rate swap - 10,929,175 - - - - - - - 10,929,175 - 7,302,9503. Domestic currency swap - - - - - - - - - - - -4. Currency interest rate swap - - - - - - - - - - - -5. Basis swap - 1,619,464 - - - - - - - 1,619,464 - 1,510,7496. Stock index swaps - - - - - - - - - - - -7. Real estate index swaps - - - - - - - - - - - -8. Futures 360,700 - 105,410 - - - - - 466,110 - 254,227 -9. Capital options - 11,736,894 - - - - - - - 11,736,894 - 6,113,761- Acquired - 6,713,522 - - - - - - - 6,713,522 - 3,827,446- Issued - 5,023,372 - - - - - - - 5,023,372 - 2,286,31510. Floor options - 3,067,111 - - - - - - - 3,067,111 - 1,599,751- Acquired - 1,392,146 - - - - - - - 1,392,146 - 996,853- Issued - 1,674,965 - - - - - - - 1,674,965 - 602,89811. Other options 4,844,735 764,103 1,706,335 429,233 - 1,079,144 - - 6,551,070 2,272,480 1,649,796 1,767,466- Acquired 2,000,000 299,103 853,174 200,562 - 544,948 - - 2,853,174 1,044,613 173,966 1,072,575- Plain vanilla 2,000,000 299,103 853,174 200,562 - 544,948 - - 2,853,174 1,044,613 173,966 1,072,575- Exotic - - - - - - - - - - - -- Issued 2,844,735 465,000 853,161 228,671 - 534,196 - - 3,697,896 1,227,867 1,475,830 694,891- Plain vanilla 2,000,000 465,000 834,275 228,671 - 534,196 - - 2,834,275 1,227,867 296,953 684,841- Exotic 844,735 - 18,886 - - - - - 863,621 - 1,178,877 10,05012. Forward contracts 168,019 9,141 228,773 10 - 1,062,759 - - 396,792 1,071,910 - 799,280- Acquisitions 165,807 8,357 96,984 5 - 608,884 - - 262,791 617,246 - 396,427- Sales 2,212 784 131,789 5 - 450,851 - - 134,001 451,640 - 396,309- Currency swaps - - - - - 3,024 - - - 3,024 - 6,54413. Other derivative contracts - 100,000 - - - - - 1,329 - 101,329 - -Total 5,373,454 28,225,888 2,040,518 429,243 - 2,141,903 - 1,329 7,413,972 30,798,363 1,904,023 19,093,957Average values 413,343 2,171,222 156,963 33,019 - 164,762 - 102 570,306 2,369,105 146,463 1,468,766349


A.2 Bank Portfolio: notional values of end of period and half-periodA.2.1 HedgingTransaction/Underlying CategorySecurities and interestratesCapital Securitiesand Stock IndicesExchange Rates and Gold Other stocks 31.12.2007 31.12.2006Listed Non listed Listed Non listed Listed Non listed Listed Non listed Listed Non listed Listed Non listed1. Forward rate agreement - - - - - - - - - - - -2. Interest rate swap - 952,679 - - - - - - - 952,679 - 1,630,6513. Domestic currency swap - - - - - - - - - - - -4. Currency interest rate swap - - - - - - - - - - - -5. Basis swap - 250,398 - - - - - - - 250,398 - 386,7526. Stock index swaps - - - - - - - - - - - -7. Real estate index swaps - - - - - - - - - - - -8. Futures - - - - - - - - - - - -9. Capital options - 31,751 - - - - - - - 31,751 - 116,752- Acquired - 6,751 - - - - - - - 6,751 - 91,752- Issued - 25,000 - - - - - - - 25,000 - 25,00010. Floor options - 207,092 - - - - - - - 207,092 - 236,842- Acquired - 207,092 - - - - - - - 207,092 - 236,842- Issued - - - - - - - - - - - -11. Other options - 6,681 - - - - - - - 6,681 - 62,656- Acquired - - - - - - - - - - - 3,902° Plain vanilla - - - - - - - - - - - 3,902° Exotic - - - - - - - - - - - -- Issued - 6,681 - - - - - - - 6,681 - 58,754° Plain vanilla - 6,681 - - - - - - - 6,681 - 58,754° Exotic - - - - - - - - - - - -12. Forward contracts - - - - - - - - - - - -- Acquisitions - - - - - - - - - - - -- Sales - - - - - - - - - - - -- Currency swaps - - - - - - - - - - - -13. Other derivative contracts - - - - - - - - - - - -Total - 1,448,601 - - - - - - - 1,448,601 - 2,433,653Average values - 111,431 - - - - - - - 111,431 - 187,204350


A.3 Derivatives: Purchase and Sale of Underlying SecuritiesTransaction/Underlying CategoryDebt and Interest RateSecuritiesCapital Securities andStock IndicesExchange Rates andGoldOther Stocks 31.12.2007 31.12.2006Listed Non listed Listed Non listed Listed Non listed Listed Non listed Listed Non listed Listed Non listedA. Regulatory trading portfolio: 5,373,454 26,606,424 2,040,518 429,242 - 2,141,903 - 1,330 7,413,972 29,178,899 1,742,372 17,744,8601. Transactions with exchange of capital 168,019 9,141 736,021 10 - 2,141,903 - - 904,040 2,151,054 37,037 1,216,816- Acquisitions 165,807 8,357 320,116 5 - 996,051 - - 485,923 1,004,413 20,037 535,278- Sales 2,212 784 415,905 5 - 842,278 - - 418,117 843,067 17,000 631,827- Currency swaps - - - - - 303,574 - - - 303,574 - 49,7112. Transactions without exchange of capital 5,205,435 26,597,283 1,304,497 429,232 - - - 1,330 6,509,932 27,027,845 1,705,335 16,528,044- Acquisitions 2,000,000 12,401,159 733,206 200,562 - - - 665 2,733,206 12,602,386 263,679 7,774,872- Sales 3,205,435 14,196,124 571,291 228,670 - - - 665 3,776,726 14,425,459 1,441,656 8,753,172- Currency swaps - - - - - - - - - - - -B. Bank portfolio: - 1,198,203 - - - - - - - 1,198,203 - 2,433,653B.1 Hedging - 1,198,203 - - - - - - - 1,198,203 - 2,433,6531. Transactions with exchange of capital - - - - - - - - - - - 2,433,653- Acquisitions - - - - - - - - - - - 1,941,386- Sales - - - - - - - - - - - 492,267- Currency swaps - - - - - - - - - - - -2. Transactions without exchange of capital - 1,198,203 - - - - - - - 1,198,203 - -- Acquisitions - 1,180,203 - - - - - - - 1,180,203 - -- Sales - 18,000 - - - - - - - 18,000 - -- Currency swaps - - - - - - - - - - - -B.2 Other derivatives - - - - - - - - - - - -1. Transactions with exchange of capital - - - - - - - - - - - -- Acquisitions - - - - - - - - - - - -- Sales - - - - - - - - - - - -- Currency swaps - - - - - - - - - - - -2. Transactions without exchange of capital - - - - - - - - - - - -- Acquisitions - - - - - - - - - - - -- Sales - - - - - - - - - - - -- Currency swaps - - - - - - - - - - - -351


A.4 "Over the counter" financial derivatives: Positive Fair Value – Counterparty RiskCounterparties/Underlying securitiesDebt and Interest Rate SecuritiesGrossvalue priortonettingGross valueafternettingFutureExposureCapital Securities and StockIndicesGrossvalue priortonettingGross valueafternettingFutureExposureExchange Rates and Gold Other StocksGrossvalue priortonettingGross valueafternettingFutureExposureGrossvalue priortonettingGrossvalue afternettingFutureExposureDifferent UnderlyingSecuritiesA. Regulatory trading portfolioA.1 Governments and Central Banks - - - - - - - - - - - - - -A.2 public bodies - - - - - - - - - - - - - -A.3 Banks 124,589 - 183,865 20,272 - 32,698 9,461 - 16,418 680 - 4,408 - -A.4 Financial companies 12,613 - 17,903 - - - 903 - 1,083 - - - - -A.5 Insurance - - - - - - - - - - - - - -A.6 Non-financial companies 45,074 - 101,885 105 - 144 4,627 - 6,542 - - - - -A.7 Other companies 610 - 1,187 571 - 964 - - - - - - - -31.12.2007 182,886 - 304,840 20,948 - 33,806 14,991 - 24,043 680 - 4,408 - -31.12.2006 116,889 - 202,113 20,467 - 27,587 2,459 - 4,575 7,454 - 19,089 - -B. Bank portfolioB.1 Governments and Central Banks - - - - - - - - - - - - - -B.2 Public bodies - - - - - - - - - - - - - -B.3 Banks 21,446 - 22,215 - - - - - - - - - - -B.4 Financial companies 3,655 - 3,808 - - - - - - - - - - -B.5 Insurance - - - - - - - - - - - - - -B.6 Non-financial companies - - - - - - - - - - - - - -B.7 Other companies - - - - - - - - - - - - - -31.12.2007 25,101 - 26,023 - - - - - - - - - - -31.12.2006 64,555 - 67,522 1,632 - 1,652 - - - - - - - -AfternettingFutureExposure352


A.5 "Over the counter" financial derivatives: Negative Fair Value – Financial RiskCounterparties/Underlying securitiesDebt and Interest Rate SecuritiesGrossvalue priortonettingGross valueafternettingFutureExposureCapital Securities and StockIndicesGrossvalue priortonettingGrossvalue afternettingFutureExposureExchange Rates and Gold Other StocksGross valueprior tonettingGrossvalue afternettingFutureExposureGrossvalue priortonettingGross valueafternettingFutureExposureDifferent UnderlyingSecuritiesA. Regulatory trading portfolioA.1 Governments and Central Banks - - - - - - - - - - - - - -A.2 public bodies - - - - - - - - - - - - - -A.3 Banks 80,015 - 178,706 27,794 - 39,643 11,212 - 17,474 107 - 2,620 - -A.4 Financial companies 10,803 - 17,599 605 - 1,742 1,534 - 2,240 - - - - -A.5 Insurance - - - - - - - - - - - - - -A.6 Non-financial companies 55,497 - 89,122 - - - 1,326 - 3,497 - - - - -A.7 Other companies 923 - 1,376 - - - - - - 540 - 3,797 - -31.12.2007 147,238 - 286,803 28,399 - 41,385 14,072 - 23,211 647 - 6,417 - -31.12.2006 81,071 - 183,749 24,076 - 33,000 4,331 - 6,171 7,093 - 17,351 - -B. Bank portfolioB.1 Governments and Central Banks - - - - - - - - - - - - - -B.2 Public bodies - - - - - - - - - - - - - -B.3 Banks 11,045 - 12,624 - - - - - - - - - - -B.4 Financial companies 1,630 - 2,043 - - - - - - - - - - -B.5 Insurance - - - - - - - - - - - - - -B.6 Non-financial companies 78 - 104 - - - - - - - - - - -B.7 Other companies - - - - - - - - - - - - - -31.12.2007 12,753 - 14,771 - - - - - - - - - - -31.12.2006 17,733 - 21,934 117 - 97 - - - - - - - -AfternettingFutureExposure353


A.6 Residual duration of "over the counter" financial derivatives: notional valuesUnderlying asset/Residual durationUp to 1 yearOver 1 yearand up to 5yearsOver 5 years 31.12.2007A. Regulatory trading portfolio 18,846,079 9,057,891 2,894,394 30,798,364A.1 Financial derivatives on debt securities and interest rates 16,686,255 8,645,240 2,894,394 28,225,889A.2 Financial derivatives on capital securities and stock indexes 164,044 265,199 - 429,243A.3 Financial derivatives on exchange rates and gold 1,994,451 147,452 - 2,141,903A.4 Financial derivatives on other securities 1,329 - - 1,329B. Bank portfolio 1,163,677 282,380 2,544 1,448,601B.1 Financial derivatives on debt securities and interest rates 1,163,677 282,380 2,544 1,448,601B.2 Financial derivatives on capital securities and stock indexes - - - -B.3 Financial derivatives on exchange rates and gold - - - -B.4 Financial derivatives on other securities - - - -31.12.2007 20,009,756 9,340,271 2,896,938 32,246,96531.12.2006 10,608,280 7,468,979 3,450,351 21,527,610354


SECTION 3LIQUIDITY RISKQUALITATIVE INFORMATIONA. General factors, liquidity risk management processes and measurement methodsLiquidity risk measurements, provided by Strategic ALM Office located within Finance Function, are presented anddiscussed monthly to the members of ALCO Committee.Liquidity positions are measured through:1) A survey of cash imbalances subdivided into deadline ranges. The liquidity management policy is centred on themonitoring per time bucket of the net imbalance; short-term goal is to check the coherence between exposures andliquidity stocks; medium/long-term goal is to have a proper instrument available for the funding policies to beadopted. Group structural liquidity management aims to ensure a financial balance of the structure for deadlineswith time horizon over 1 year by trying to extend the deadline of liabilities in order to reduce less stable depositssources and at the same time to optimize the funding cost.2) To implement liquidity analysis, liquidity ratios are monitored, too. From the reclassification of the Balance Sheetaccording to the criterion of immediate liquidity and deferred liquidity, potential imbalances are pointed out.During 2006, following ABN’s policy, a Contingency Funding Plan and a Funding Crisis Committee were established inorder to cope with liquidity crisis situations.Medium-term funding activity is presently carried out and supported by the settlement of specific agreements with ABNAMRO N.V., that allowed the Bank to access to medium/long-term interbank loans as an alternative to delivering bondsfor institutional investors’ market.355


QUANTITATIVE INFORMATION1. Time distribution for residual contractual maturity of financial assets and liabilitiesCurrency: EuroEntry/Time bandOn demandFrom morethan 1 dayto 7 daysFrommorethan 7days to15 daysFrom morethan 15days to 1monthFrom over 1month upto 3 monthsFrom over 3months upto 6 monthsFrom over 6months upto 1 yearFrom over 1year up to 5yearsOver 5yearsUndeterminedCash assets 9,433,484 1,028,903 719,267 2,302,704 4,650,210 1,352,261 1,637,473 7,114,367 9,563,415 861,822A.1 Government bonds - - - - 43,517 7 - 98,342 253,403 XA.2 Listed debt securities - - - - 4,186 4,067 1,937 81,414 109,733 XA.3 Other debt securities 94 - - 4,998 1,035 2,873 75,045 276,097 270,426 XA.4 Interests in collective investment undertakings 50 - - - - - - - - XA.5 Loans 9,433,340 1,028,903 719,267 2,297,706 4,601,472 1,345,314 1,560,491 6,658,514 8,929,853 861,822- Banks 727,967 799,296 361,900 1,770,755 3,487,736 26,491 1,781 155,214 37,723 7,730- Customers 8,705,373 229,607 357,367 526,951 1,113,736 1,318,823 1,558,710 6,503,300 8,892,130 854,092Cash liabilities 16,746,813 886,149 598,733 2,378,350 3,658,446 2,251,058 2,315,871 5,490,063 3,435,472 -B.1 Deposits 16,437,082 559,155 327,106 1,638,178 2,028,112 180 2,729 145 568,940 -- Banks 157,035 540,000 270,006 1,638,131 2,028,105 15 2,100 - 296,988 X- Customers 16,280,047 19,155 57,100 47 7 165 629 145 271,952 XB.2 Debt securities 299,478 13,178 11,908 77,717 215,200 489,533 1,312,361 2,453,426 456,586 XB.3 Other liabilities 10,253 313,816 259,719 662,455 1,415,134 1,761,345 1,000,781 3,036,492 2,409,946 XOperations "off balance sheet" 470,700 738,225 53,515 160,739 1,056,913 180,668 158,058 63,247 - -C.1 Financial derivatives with exchange of capital 360,700 628,225 53,515 160,739 1,056,913 180,668 158,058 63,247 - -- long positions 360,700 260,095 32,388 82,711 246,161 92,734 64,134 30,822 - X- short positions - 368,130 21,127 78,028 810,752 87,934 93,924 32,425 - XC.2 Deposits and loans to be received - - - - - - - - - -- long positions - - - - - - - - - X- short positions - - - - - - - - - XC.3 Irrevocable commitments to grant finance 110,000 110,000 - - - - - - - -- long positions - 110,000 - - - - - - - X- short positions 110,000 - - - - - - - - XCurrency: US DollarEntry/Time bandOndemandFrom morethan 1 dayto 7 daysFrommorethan 7days to15 daysFrom morethan 15days to 1monthFrom over1 monthup to 3monthsFromover 3monthsup to 6monthsFrom over 6months upto 1 yearFromover 1year upto 5yearsOver 5yearsUndeterminedCash assets 50,315 61,045 52,777 270,996 244,001 59,524 373 61,770 7,617 -A.1 Government bonds - - - - - - - - - XA.2 Listed debt securities - - - - - - - - - XA.3 Other debt securities - - - - - - 1 122 7,617 XA.4 Interests in collective investment undertakings - - - - - - - - - XA.5 Loans 50,315 61,045 52,777 270,996 244,001 59,524 372 61,648 - -- Banks 6,105 25,134 35,203 177,315 97,980 9,000 - - - -- Customers 44,210 35,911 17,574 93,681 146,021 50,524 372 61,648 - -Cash liabilities 238,829 174,388 40,108 192,846 116,775 - 3,118 64,167 - -B.1 Deposits 238,026 173,405 38,041 189,642 110,726 - - - - -- Banks 6,564 137,151 38,041 189,642 110,726 - - - - X- Customers 231,462 36,254 - - - - - - - XB.2 Debt securities - - - - - - - - - XB.3 Other liabilities 803 983 2,067 3,204 6,049 - 3,118 64,167 - XOperations "off balance sheet" 34,685 186,366 21,324 116,889 232,324 76,204 148,235 59,085 - -C.1 Financial derivatives with exchange of capital - 151,681 21,324 116,889 232,324 76,204 148,235 59,085 - -- long positions - 72,673 7,623 64,184 123,799 34,920 82,473 28,815 - X- short positions - 79,008 13,701 52,705 108,525 41,284 65,762 30,270 - XC.2 Deposits and loans to be received 34,202 34,202 - - - - - - - -- long positions 34,202 - - - - - - - - X- short positions - 34,202 - - - - - - - XC.3 Irrevocable commitments to grant finance 483 483 - - - - - - - -- long positions - 483 - - - - - - - X- short positions 483 - - - - - - - - X356


Currency: SterlingEntry/Time bandOndemandFrommore than1 day to 7daysFrommore than7 days to15 daysFrommore than15 days to1 monthFrom over 1month up to 3monthsFrom over3 monthsup to 6monthsFrom over6 monthsup to 1yearFrom over1 year upto 5 yearsCash assets 8,606 156 10 1,970 453 62 16 - - -A.1 Government bonds - - - - - - - - - XA.2 Listed debt securities - - - - - - - - - XA.3 Other debt securities 1 - - - - - - - - XA.4 Interests in collective investment undertakings - - - - - - - - - XA.5 Loans 8,605 156 10 1,970 453 62 16 - - -- Banks 6,829 - - 1,868 - - - - - -- Customers 1,776 156 10 102 453 62 16 - - -Cash liabilities 19,807 45,123 1,042 - - 818 - - - -B.1 Deposits 19,807 45,123 1,042 - - 818 - - - -- Banks 205 43,090 - - - 818 - - - X- Customers 19,602 2,033 1,042 - - - - - - XB.2 Debt securities - - - - - - - - - XB.3 Other liabilities - - - - - - - - - XOperations "off balance sheet" 2,045 54,201 40,169 22,637 122,358 47,239 11,803 - - -C.1 Financial derivatives with exchange of capital - 52,156 40,169 22,637 122,358 47,239 11,803 - - -- long positions - 45,151 20,104 10,453 62,537 24,223 5,650 - - X- short positions - 7,005 20,065 12,184 59,821 23,016 6,153 - - XC.2 Deposits and loans to be received 2,045 2,045 - - - - - - - -- long positions 2,045 - - - - - - - - X- short positions - 2,045 - - - - - - - XC.3 Irrevocable commitments to grant finance - - - - - - - - - -- long positions - - - - - - - - - X- short positions - - - - - - - - - XOver 5yearsUndeterminedCurrency: Swiss FrancsEntry/Time bandOndemandFrommore than1 day to 7daysFrommore than7 days to15 daysFrommore than15 days to1 monthFrom over 1month up to3 monthsFrom over3 monthsup to 6monthsFrom over6 monthsup to 1yearFrom over 1year up to 5yearsCash assets 1,174 11,327 2,232 18,267 17,789 4,822 - - - -A.1 Government bonds - - - - - - - - - XA.2 Listed debt securities - - - - - - - - - XA.3 Other debt securities - - - - - - - - - XA.4 Interests in collective investment undertakings - - - - - - - - - XA.5 Loans 1,174 11,327 2,232 18,267 17,789 4,822 - - - -- Banks 1,173 8,461 - - - 17 - - - -- Customers 1 2,866 2,232 18,267 17,789 4,805 - - - -Cash liabilities 5,478 3 - - 20,548 30,217 - - - -B.1 Deposits 5,478 3 - - 20,548 30,217 - - - -- Banks 735 - - - 20,548 30,217 - - - X- Customers 4,743 3 - - - - - - - XB.2 Debt securities - - - - - - - - - XB.3 Other liabilities - - - - - - - - - XOperations "off balance sheet" 6,043 9,132 70 - 3,722 1,283 - - - -C.1 Financial derivatives with exchange of capital - 3,089 70 - 3,722 1,283 - - - -- long positions - 2 - - 3,237 302 - - - X- short positions - 3,087 70 - 485 981 - - - XC.2 Deposits and loans to be received - - - - - - - - - -- long positions - - - - - - - - - X- short positions - - - - - - - - - XC.3 Irrevocable commitments to grant finance 6,043 6,043 - - - - - - - -- long positions - 6,043 - - - - - - - X- short positions 6,043 - - - - - - - - XOver 5yearsUndetermined357


Currency: YENEntry/Time bandOndemandFrommore than1 day to 7daysFrommore than7 days to15 daysFrommore than15 days to1 monthFrom over 1month up to 3monthsFrom over3 monthsup to 6monthsFrom over6 monthsup to 1yearFrom over1 year upto 5 yearsCash assets 321 1,119 2,356 7,163 7,497 5,312 - - - -A.1 Government bonds - - - - - - - - - XA.2 Listed debt securities - - - - - - - - - XA.3 Other debt securities - - - - - - - - - XA.4 Interests in collective investment undertakings - - - - - - - - - XA.5 Loans 321 1,119 2,356 7,163 7,497 5,312 - - - -- Banks 277 - 424 - - - - - - -- Customers 44 1,119 1,932 7,163 7,497 5,312 - - - -Cash liabilities 5,769 31,891 - - 15,158 - - - - -B.1 Deposits 5,769 31,891 - - 15,158 - - - - -- Banks 2,331 31,832 - - 15,158 - - - - X- Customers 3,438 59 - - - - - - - XB.2 Debt securities - - - - - - - - - XB.3 Other liabilities - - - - - - - - - XOperations "off balance sheet" 42,442 57,051 10 66,414 87,699 85,941 15,799 - - -C.1 Financial derivatives with exchange of capital - 14,609 10 66,414 87,699 85,941 15,799 - - -- long positions - 4,918 5 32,243 56,804 45,209 9,013 - - X- short positions - 9,691 5 34,171 30,895 40,732 6,786 - - XC.2 Deposits and loans to be received 42,442 42,442 - - - - - - - -- long positions 42,442 - - - - - - - - X- short positions - 42,442 - - - - - - - XC.3 Irrevocable commitments to grant finance - - - - - - - - - -- long positions - - - - - - - - - X- short positions - - - - - - - - - XOver 5yearsUndeterminedCurrency: Other currenciesEntry/Time bandOndemandFrommore than1 day to 7daysFrom morethan 7days to 15daysFrommore than15 days to1 monthFrom over 1month up to3 monthsFrom over3 monthsup to 6monthsFrom over6 monthsup to 1yearFrom over1 year upto 5 yearsCash assets 8,160 - 4,620 8,657 5,549 9,340 - - - -A.1 Government bonds - - - - - - - - - XA.2 Listed debt securities - - - - - - - - - XA.3 Other debt securities - - - - - - - - - XA.4 Interests in collective investment undertakings - - - - - - - - - XA.5 Loans 8,160 - 4,620 8,657 5,549 9,340 - - - -- Banks 8,156 - 3,917 7,274 4,926 - - - - -- Customers 4 - 703 1,383 623 9,340 - - - -Cash liabilities 5,384 32,319 3,959 - 1,140 - - - - -B.1 Deposits 5,384 32,319 3,959 - 1,140 - - - - -- Banks 84 31,884 - - 1,140 - - - - X- Customers 5,300 435 3,959 - - - - - - XB.2 Debt securities - - - - - - - - - XB.3 Other liabilities - - - - - - - - - XOperations "off balance sheet" 1,748 10,354 1,861 1,483 31,092 13,442 6,866 - - -C.1 Financial derivatives with exchange of capital - 8,606 1,861 1,483 31,092 13,442 6,866 - - -- long positions - 4,174 1,189 1,220 16,429 6,668 5,684 - - X- short positions - 4,432 672 263 14,663 6,774 1,182 - - XC.2 Deposits and loans to be received - - - - - - - - - -- long positions - - - - - - - - - X- short positions - - - - - - - - - XC.3 Irrevocable commitments to grant finance 1,748 1,748 - - - - - - - -- long positions - 1,748 - - - - - - - X- short positions 1,748 - - - - - - - - XOver 5yearsUndetermined358


2. Distribution of financial liabilities by sectorExposure/CounterpartyGovernmentand centralbanksOther publicinstitutionsFinancialcompaniesInsurancecompaniesNon-financialcompaniesOther subjects1. Due to customers 46,356 324,927 1,185,104 478,024 4,168,296 13,627,8122. Short-term securities - 142 647,657 187,131 56,225 4,438,2323. Financial liabilities held for trading - - 38,030 1,410 82,773 161,1954. Financial liabilities designated at fair value - - - - - -31.12.2007 46,356 325,069 1,870,791 666,565 4,307,294 18,227,23931.12.2006 63,190 378,430 1,838,608 957,866 4,348,486 18,882,1383. National distribution of financial liabilitiesExposure/CounterpartyITALYOTHEREUROPEANCOUNTRIESAMERICAASIAREST OFWORLD1. Due to customers 19,255,206 499,670 42,864 4,801 27,9782. Due to banks 1,755,112 11,995,140 64,784 2,023 84,2513. Short-term securities 3,529,991 1,478,276 300,331 - 20,7894. Financial liabilities held for trading 163,963 111,144 8,301 - -5. Financial liabilities designated at fair value - - - - -31.12.2007 24,704,272 14,084,230 416,280 6,824 133,01831.12.2006 25,513,838 11,141,947 427,250 4,294 100,698359


Section 4OPERATIONAL RISKSQUALITATIVE INFORMATIONThe operational risk management system has beenregulated and introduced in Banca Antonveneta throughspecific Internal Regulations and consists of threefundamental elements:• corporate governance mechanisms• operational risk management process• internal control systemA. General factors, operating riskmanagement processes and measurementmethodsIn 2007 Banca Antonveneta implemented a system formanaging and measuring its risks which is adapted andcomplies with the preliminary regulatory requirementsbefore a Standardised method (TSA) is adopted inJanuary 2008. For Banca Antonveneta achieving thisobjective represented an intermediate stage towards thesubsequent adoption of advanced methods (AMA).The main objectives that Banca Antonveneta intends topursue through its operational risk management systemare:• to implement the rules, standards, methods andtypical tools of operational risk management inaccordance with the provisions issued by the Bank ofItaly and the guidelines of the international bestpractice;• to promote the spreading of a coherent andconsistent culture of managing operational risks andto raise awareness of the operational risk events towhich the entire company is subject, whether theyare actual or potential;• to ensure that all risks (actual or potential) in thevarious operational areas are correctly identified,measured, controlled and managed according toestablished, shared and constantly maintainedmethods and procedures, the overall purpose beingthe reduction of actual losses and prevention ofpotential ones, therefore improving its riskexposure;• to enable the management to manage operationalrisks in a proactive way and as an integral part oftheir daily activity, through accurate and timelyreports prepared for the various levels of theorganisation;• to periodically assess the operational risks andreport to the top management and the othercompany units affected by this type of risks• to make internal capital allocation processessensitive to operational risk, so they will beincreasingly more compliant and representative ofthe Bank’s actual exposure to such risk;• to prepare and manage the information to be sent tothe other companies outside the Bank (e.g. DIPO,etc.).Corporate governance mechanismsIn order to obtain an effective control of operational risk,Banca Antonveneta has defined its governancemechanisms – i.e. the company’s management bodiesand their roles and responsibilities around governanceand operational risk management - in a clear andconsistent way. In particular, a specific functiondedicated to monitoring and controlling OperationalRisks was introduced within the organisational structureand identified in the “Operational Risk Management”office. This office reports directly to the Chief RiskOfficer. The Operational Risk Sub-Committee was alsoset up within the Risk Committee. This sub-committee,made up by Banca Antonveneta’s first-levelmanagement, is the body that controls the OperationalRisk Management from a strategic point of view.Operational risk management processBanca Antonveneta has devised, implemented andactivated its operational risk management process,which aims at identifying, monitoring, mitigating andassessing operational risk.In order to achieve these objectives, the process isbroken down in the following components:• Classification of assets into the regular BusinessLines;• Collection and preservation of operational risk data;• Evaluation of risk exposure;• Reporting system;• Management use.a. Classification of assets into the regularbusiness linesBanca Antonveneta has defined its approach forclassifying assets into business lines and for calculatingthe minimum equity requirement.The value of the relevant indicator by business line isobtained by adopting a bottom-up approach, accordingto which the profitability data on the bank’s individualcustomer (management data) is allocated in the regularBusiness Lines, based on:360


• attributing the regular segment used to measurecredit risk to this data;• assigning the Business Line on the basis of theaforesaid segment and the nature of the product towhich the profitability data refers.b. Collection and preservation of operationalrisk datab.1 Management of historical operational riskeventsBanca Antonveneta has devised, regulated and activateda historical operational risk event management processwhich provides for specific stages dedicated to theidentification, investigation and management ofoperational loss events, involving the following entitiesin a structured way:• the Risk Collectors, the internal Bank roles that areresponsible for detecting and analysing operationalrisk events;• the Operational Risk Management (ORM) Office,whose tasks include the support to Risk Collectors aswell as the collection, control, preservation andtreatment of information.b.2 Operational Risk Assessment ProcedureBanca Antonveneta has also activated a process calledOperational Risk Assessment Procedure (ORAP). Its aimis to identify and assess in the early stages operational,legal and reputation risks generated by changesconnected with the introduction or significantamendment of products, processes, activities, systemsand organisational procedures and propose actions thatcan mitigate the risks identified and the acceptance ofthe residual risk.The main roles involved in the ORAP are:• the Business Owner, who proposes the change andrequests the activation of the ORAP;• the Stakeholders, who are affected by the changeand appointed to identify and analyse the risks;• the Operational Risk Management, which coordinatesthe procedure while also assessing its correctness,completeness and overall quality;• the Operational Risk Sub-Committee, which resolveson the acceptance of the risk brought to itsattention.c. Evaluation of risk exposureDuring the annual risk exposure evaluation process, arisk profile is attributed to the overall activity and to thevarious operational macro areas of the Bank. Thisprofile defines the residual risk in quality terms as high,medium or low. It is assigned through the joint analysisof the information coming from the collection andpreservation of operational risk data and from themanagement use process.d. Reporting systemBanca Antonveneta has established and activated itsown reporting system that provides and ensures theongoing availability of appropriate information onoperational risks to the management bodies and to themanagers of the functions involved.e. Management useBanca Antonveneta attaches great importance to themanagement of operational risks, with particularreference to the critical situations ensuing from thecollection processes and from the evaluation of riskexposure.In order to deal with these critical areas, a managementuse process has been established which aims atidentifying the most suitable mitigation areas, always incompliance with the “cost/benefits” principle that cansometimes lead to the acceptance of the risk.Once the critical risks have been proven by the ORMoffice, in accordance with this process a Risk Owner andStakeholders are identified and entrusted with theplanning and implementation of mitigating actions.In cases of particular significance, the process providesfor the involvement of a working table called “Risk andControl Table”, which is attended by the Risk Owner andBanca Antonveneta’s main control structures.In 2007 the management use process was activatedwhen necessary. Currently, analyses have been startedto define actions that can mitigate the main operationalrisks to which Banca Antonveneta is exposed.Internal control systemBanca Antonveneta has defined and activated its owninternal control system, which is composed of:• a process to self-evaluate the adequacy of theoperational risk management;• internal review, which includes in its inspectionscope also the system to manage operational riskand the self-evaluation process, on which it cancarry out specific assessments if it deems itnecessary. On an annual basis, the internal reviewfunction is required to perform an independentevaluation of the adequacy of the operational riskmanagement system and the self-evaluationprocess.361


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Section 1Company assetsA. QUALITATIVE INFORMATIONThe bank's assets are appropriate for its present economic and equity structure, both in individual terms and as laid downby the Bank of Italy.In planning the future development of the Bank’s activities, adherence to the minimum regulatory capital requirementneeded to sustain growth in loans in both quantitative and qualitative terms, and more generally in relation to underlyingrisk, is constantly monitored.B. QUANTITATIVE INFORMATIONYou are referred to "Part B – Information on the Balance Sheet" – Liabilities – Section 14.365


Section 2Shareholders’ equity and regulatory capital ratios2.1 Area of Application of RegulationsWe note that, in compliance with regulations for the calculation of the consolidated equity and adequacy ratios only thedata provided by the banks, financial and operating companies belonging to the banking group or that were consolidatedon a proportional basis was used.We further note that there are no restrictions or impediments involving the transfer of equity components between groupcompanies.2.2 Bank Capital for Supervisory PurposesA. Qualitative information1. Tier I CapitalThe tier 1 capital includes the following net shareholders’ equity items (amounts in thousands of euro):a) entirely paid in share capital: 926,266 (item 190 of the balance sheet liabilities);b) issue premiums: 2,188,152 (item 180 of the balance sheet liabilities);c) other reserves: 189,527 (item 170 of the balance sheet liabilities for the portion concerning the banking group);d) minority interests: 39,667 (item 210 of the balance sheet liabilities for the part concerning the banking group, notincluding the profits attributable to minority interests):e) loss for the year: 5,411 (not including the part of profit or loss concerning companies which do not belong to thebanking group).Furthermore, the following are applicable to the formation of the tier 1 capital (amounts in thousands of euro):f) increases: Innovative equities (preferred securities): 300,000 (included under item 30 “Short term securities” ofthe balance sheet liabilities), the main features of which are described in table 3.2 “Detail of item 30 Securitiesissued: subordinated securities”;g) decreases: intangible fixed assets: 845,182 (item 130 of the balance sheet assets);2. Tier II CapitalThe following elements make up the tier II capital (amounts in thousands of euro):a) revaluation reserves – financial assets available for sale – positive balance: 8,884 (included under item 140 of thebalance sheet liabilities, excluding the portion of shareholdings in banks and financial companies and the portionconcerning companies which do not belong to the banking group);b) valuation reserves – special laws on revaluation: 70,129 (included in item 140 of the balance sheet liabilities);c) hybrid equity increase instruments and subordinated liabilities (insofar as the included portion): 1,268,717(included under item 10 “Due to banks” and 30 “Outstanding securities” in the balance sheet liabilities), the mainfeatures of which are described in tables 1.2 “Detail of item 10 Due to banks: subordinated payables” and 3.2“Detail of item 30 Securities issued: subordinated securities”;Furthermore, the negative IAS/IFRS prudential filters have been reduced: 4,442 representing 50% of the total valuationreserve amount as under point a) above.3. Tier III CapitalThere is no tier III capital.The overall regulatory capital (total capital) of 4,057,046 thousand euro is the sum of the tier I and tier II capital, net ofthe deduction provided for equity investments in insurance companies exceeding 20% (79,261 thousand euro).366


B. QUANTITATIVE INFORMATIONExposure/Counterparty 31.12.2007 31.12.2006A. Tier 1 capital before applying prudential filters 2,972,489 3,001,999B. Prudential filters of tier 1 capital -240 -B.1 positive prudential IAS/IFRS filters (+) - -B.2 negative prudential IAS/IFRS filters (-) -240 -C. Tier 1 capital before element deduction (A+B) 2,972,249 3,001,999D. Elements to be deducted from Tier 1 capital - -E. Total Tier 1 (C-D) 2,972,249 3,001,999F. Tier 2 capital before applying prudential filters 1,027,253 1,192,007G. Prudential filters of tier 2 capital -7,571 -56,825G.1 positive prudential IAS/IFRS filters (+) - -G.2 negative prudential IAS/IFRS filters (-) -7,571 -56,825H. Tier 2 capital before element deduction (F+G) 1,019,682 1,135,182I. Elements to be deducted from Tier 2 capital - -L. Total Tier 2 capital (H-I) 1,019,682 1,135,182M. Elements to be deducted from total tier 1 and tier 2 capital 58,562 57,062N. Regulatory capital (E+L-M) 3,933,369 4,080,119O. Tier 3 capital - -P. Regulatory capital included Tier 3 capital (N+O) 3,933,369 4,080,119367


2.2 Capital Adequacy - Quantitative informationValue/CategoriesUnweightedValuesWeighted amounts/Requisites31.12.2007 31.12.2006 31.12.2007 31.12.2006A. RISK ASSETSA.1 CREDIT RISK 41,501,069 41,943,925 32,505,190 32,498,235STANDARD METHODOLOGYCASH ASSETS 38,344,286 38,906,023 29,611,694 29,687,0771. Exposures (other than capital notes and other subordinated assets) towards (or guaranteed by): 30,207,729 31,296,037 24,786,305 25,124,2341.1 Governments and Central Banks 2,623,289 2,434,635 33,973 29,4371.2 Public bodies 108,350 170,928 21,670 36,5101.3 Banks 3,416,960 4,520,242 671,535 888,0571.4 Other parties (other than mortgage loans on residential and non-residential properties) 24,059,130 24,170,232 24,059,127 24,170,2302. Mortgage loans on residential properties 5,683,451 5,088,235 2,841,726 2,544,1183. Mortgage loans on non residential properties - - - -4. Stock, equity investments, and subordinated assets 1,673,702 1,704,124 1,673,702 1,704,1245. Other cash assets 779,404 817,627 309,961 314,601OFF BALANCE SHEET ASSETS 3,156,783 3,037,902 2,893,497 2,811,1581. Guarantees and commitments to (or guaranteed by:): 3,129,161 2,968,327 2,887,743 2,796,4711.1 Governments and Central Banks 43,813 46,934 - -1.2 Public bodies 24,481 23,779 4,896 4,7561.3 Banks 220,445 129,041 42,424 23,1491.4 Other subjects 2,840,422 2,768,573 2,840,423 2,768,5662. Derivative contracts to (or guaranteed by): 27,622 69,575 5,754 14,6872.1 Governments and Central Banks - - - -2.2 Public bodies - - - -2.3 Banks 26,856 67,000 5,371 13,4002.4 Other subjects 766 2,575 383 1,287B. REGULATORY CAPITAL REQUISITESB.1 CREDIT RISK - - 2,275,363 2,274,876B.2 MARKET RISK - - 109,546 51,6591. STANDARD METHODOLOGY X X 109,546 51,659Of which:+ risk of position on debt securities X X 34,493 19,546+ position risk on capital securities X X 60,705 23,819+ exchange rate risk X X - -+ other risks X X 14,348 8,2942. INTERNAL MODELS X X - -Of which:+ risk of position on debt securities X X - -+ position risk on capital securities X X - -+ exchange rate risk X X - -B.3 OTHER PRUDENTIAL REQUISITES X X 27,699 69,628B.4 TOTAL PRUDENTIAL REQUIREMENTS (B1 + B2 + B3) X X 2,412,608 2,396,163C. RISK ASSETS AND REGULATORY RATIOSC.1 Risk-weighted assets X X 34,465,830 34,230,897C.2 Tier 1 capital/Risk-weighted assets (Tier 1 capital ratio) X X 8.62% 8.77%C.3 Regulatory capital/Risk-weighted assets (Total capital ratio) X X 11.41% 11.92%368


Breakdown of net shareholders' equity, according to art. 2427 n. 7 bis of the Italian Civil CodeType/DescriptionAmountPossibilityof use (1)%availableWithdrawals inpast three yearsCoverOtherlossesCAPITAL:Joint stock 926,266Capital reserves:Share premium reserve (2) 2,188,152 A, B, C 2,188,152 -Evaluation reserves:Art. 6 par. 1 b) ld 38/05 AFS reserves 26,469 2,188,152 -Other reserves 3,395 - -Profit reserve:Legal reserve 185,253 B 185,253 -Other reserves – capital instruments 8,551 - -Extraordinary statutory reserve 116,328 B 116,328 -Unavailable profit reserve art. 6 ld 38/05 12,436 -FTA reserve art. 6 ld 38/05 -382,909 B -Starting reserve for the acquisition of Private Abn Amro Bank -310 -Shareholdings’ evaluation reserve (Shareholders’ equity method) A, B -Revaluation reserve B -Profit brought forward 447,172 A, B, C 64,263 -Total reserves excluding joint stock and result of the period 2,604,537 2,553,996 -Non-distributable amount (3) 185,253 -Residual distributable amount 2,368,743 - 0Caption:A: for capital increaseB: for loss hedgingC: for distribution to shareholders(1) Excluding any other statutory restrictions, to be indicated as applicable.(2) Pursuant to art. 2431 of the Italian civil code, this reserve can be distributed in full only when the legal reserve reaches the limit set forth in article2430 of the Civil Code(3) This is the amount of the portion that cannot be distributed due to the reserve for net exchange rate gains, reserve from valuation of investmentscarried at equity, the reserve from derogations pursuant to par. 4 of article 2423, and part destined to covering long-term costs not yet amortised exart. 2426, n. 5369


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1. Information on the remuneration of directors and executivesFees to directors, board of auditors and general managers(Figures in thousands of Euro)DIRECTORSName Office Term of Office End of termFees for officein the bankdrafting thefinancialstatementsNon-cashbenefitsBonusesand otherincentivesFrancesco Spinelli *Banca AntonvenetaChairman from 01/01/07 to 31/12/07 31/12/2007 645InterbancaChairman from 01/01/07 to 31/12/07 300Antonveneta ABN AM RO FundsDirector from 01/01/07 to 31/12/07 12Augusto Fantozzi *Banca AntonvenetaDeputy Chairman from 01/01/07 to 31/12/07 31/12/2007 654Gilberto M uraroBanca AntonvenetaDeputy Chairman from 01/01/07 to 31/12/07 31/12/2007 200Piero Luigi M ontani *Banca AntonvenetaM anaging Director from 01/01/07 to 31/12/07 31/12/2007 956 8 2,007InterbancaDeputy Chairman from 01/01/07 to 31/12/07 71Nicolò AzzolliniBanca AntonvenetaDirector from 01/01/07 to 31/12/07 31/12/2007 192David Alan Cole (2)Banca AntonvenetaDirector from 01/01/07 to 31/12/07 31/12/2007 64Enrico Tommaso Cucchiani Banca AntonvenetaDirector from 01/01/07 to 18/09/07 (1) 57Antonveneta VitaChairman from 01/01/07 to 22/11/07 -Jan M aarten de Jong (2)Banca AntonvenetaDirector from 01/01/07 to 31/12/07 31/12/2007 86Guidalberto GuidiBanca AntonvenetaDirector from 01/01/07 to 31/12/07 31/12/2007 63InterbancaDirector from 01/01/07 to 31/12/07 35Leopoldo M azzarolliBanca AntonvenetaDirector from 01/01/07 to 31/12/07 31/12/2007 116Bernardus M aurice Oostendorp (2) Banca AntonvenetaDirector from 01/01/07 to 31/12/07 31/12/2007 63Alexander M ichael Pietruska (2) Banca AntonvenetaDirector from 01/01/07 to 31/12/07 31/12/2007 67Antonio Scala *Banca AntonvenetaDirector from 01/01/07 to 31/12/07 31/12/2007 131Giuseppe Stefanel *Banca AntonvenetaDirector from 01/01/07 to 31/12/07 31/12/2007 119InterbancaDirector from 01/01/07 to 31/12/07 -Giuliano TabacchiBanca AntonvenetaDirector from 01/01/07 to 31/12/07 31/12/2007 92Achille M ucciBanca AntonvenetaGeneral M anager from 01/01/07 to 12/02/07 47InterbancaM anaging Director from 01/01/07 to 31/12/07 (3) 100Antonveneta VitaDeputy Chairman from 01/01/07 to 22/05/07 (3) 40Antonveneta AssicurazioniDeputy Chairman from 01/01/07 to 22/05/07 (3) -Antenore FinanceDirector from 01/01/07 to 04/04/07 (3) 2Theano FinanceDirector from 01/01/07 to 04/04/07 (3) 2Antonveneta ABN AMRO BANK. Director from 01/01/07 to 04/04/07 (3) 40Otherfees372


Fees to directors, board of auditors and general managers(Figures in thousands of Euro)(Figures in thousands of Euro)AUDITORSName Office Term of Office End of termFees foroffice in thebank draftingthe financialstatementsNoncashbenefitsBonusesand otherincentivesOtherfeesGianni CagnoniBanca AntonvenetaChairman, Board of Statutory Auditors from 01/01/07 to 31/12/07 31/12/2007 80Antonveneta ImmobiliareChairman, Board of Statutory Auditors from 01/01/07 to 31/12/07 - 68Alberto Dalla LiberaBanca AntonvenetaPermanent Auditor from 01/01/07 to 31/12/07 31/12/2007 42InterbancaPermanent Auditor from 01/01/07 to 31/12/07 - 56Antonveneta Abn Amro Bank -Permanent Auditor from 01/01/07 to 31/12/07 - 18Giambattista GuerriniBanca AntonvenetaPermanent Auditor from 01/01/07 to 31/12/07 31/12/2007 40Enzo NalliBanca AntonvenetaAlternate Auditor from 01/01/07 to 31/12/07 -Leopoldo Rossi ChauvenetBanca AntonvenetaAlternate Auditor from 01/01/07 to 31/12/07 -La CittadellaPermanent Auditor from 01/01/07 to 31/12/07 - 8Salvemini s.r.l. -Permanent Auditor from 21/03/07 to 31/12/07 - 3Antenore Finance -Permanent Auditor from 01/01/07 to 05/09/07 -Chairman, Board of Statutory Auditors from 06/09/07 to 31/12/07 - 5Theano Finance -Permanent Auditor from 01/01/07 to 05/09/07 -Chairman, Board of Statutory Auditors from 06/09/07 to 31/12/07 - 5Giotto Finance -Permanent Auditor from 01/01/07 to 05/09/07 -Chairman, Board of Statutory Auditors from 06/09/07 to 31/12/07 - 5Giotto Finance 2 -Permanent Auditor from 01/01/07 to 05/09/07 -Chairman, Board of Statutory Auditors from 06/09/07 to 31/12/07 - 5* M embers of Banca Antonveneta Executive Committee(1) Resigned(2) Fees charged to ABN AM RO Bank NV - Amsterdam373


SALARIES OF EXECUTIVES WITH STRATEGIC RESPONSIBILITIES€/thousand31.12.2007a) Short-term employee benefits 6,975b) Post-employment benefits 225c) Other long-term benefits 20d) Termination pay 755e) Share-based payments -Total salaries of executives with strategic responsibilities 7,975DIRECTORS' FEES€/thousand31.12.2007a) - Directors 8,873Total 8,8732 - Information on transactions with related partiesThe following tables illustrate total assets, liabilities, guarantees and commitments as well as economic data regarding transactions between BancaAntonveneta and related parties.All transactions with related parties are part of the bank's ordinary business and are made up primarily or current account-related operations or other types orother types of funding. The economic aspects of said relations reflect market conditions.Balance Sheet data€/thousand ASSETS LIABILITIES GUARANTEES LOANSA. Parent company 50,771 10,142,131 3,128 -B. Economic entities with joint control or significant influence in the Group - 970 27,833 -C. Parent companies 3,727,173 521,195 3,950 -D. Associated companies 210,661 15,321 76 -E. Joint ventures in which the bank is an investee company 58,563 353,500 900 -F. Executives with strategic responsibilities for the body or its parent company 311,169 71,947 23,330 200G. Other related parties 252,105 45,569 11,868 36,125Income Statement data€/thousandINTERESTINCOMEINTERESTEXPENSEFEE ANDOTHERINCOMEFEE ANDOTHEREXPENSEA. Parent company 1,925 342,504 79 -B. Economic entities with joint control or significant influence in the Group 9 5,381 280 -C. Parent companies 43,681 3,532 47 -D. Associated companies 7,265 94 16 -E. Joint ventures in which the bank is an investee company 81 14,184 305 -F. Executives with strategic responsibilities for the body or its parent company 22,203 2,016 914 10G. Other related parties 14,386 684 670 -374


Information required by art. 2497 bis of the Italian civil codeFollowing are the separate and consolidated financial statement data of ABN AMRO Bank from the last approved financialstatements, for the period ended on 31 st December 2006, as required by article 2497 bis of the Italian civil code.375


376


377


EQUITY INVESTMENTS PURSUANT TO ART. 79 OF THE CONSOB REGULATIONAPPROVED WITH RESOLUTION N. 11971 OF 14/5/1999Pursuant to art. 79 of the Consob regulation approved with resolution n. 11971 of 14 th May 1999, as it is currently applicable, please be informed thatno Directors and no Statutory Auditors owned any Antonveneta shares in 2007.378


EQUITY INVESTMENTS Situation at 31 st december 2007CompanyHead OfficeSharecapitalShareunitvalueTotal no. OfsharesShares ownedOurshareNominalvalueBalancesheetvalueIASvaluation as31.12.2007Antenore Finance SpA Padova 100,000 1,000 100 98 98.00% 98,000 98,049 98,049Antonveneta ABN AMRO BANK SpA Milano 49,893,708 1 49,893,708 27,441,540 55.00% 27,441,540 27,441,540 27,441,540Antoniana Veneta Popolare Assicuraz. SpA Trieste 13,400,000 1 13,400,000 6,700,000 50.00% 6,700,000 6,920,072 6,920,072Antoniana Veneta Popolare Vita SpA Trieste 100,000,000 1 100,000,000 50,000,000 50.00% 50,000,000 51,642,188 51,642,188Antonveneta Capital L.L.C. I Delaware 10,000 1,000 10 10 100.00% 10,000 10,000 10,000Antonveneta Capital L.L.C. II Delaware 10,000 1,000 10 10 100.00% 10,000 10,000 10,000Antonveneta Capital Trust I Delaware 5,000 1,000 5 5 100.00% 5,000 5,000 5,000Antonveneta Capital Trust II Delaware 5,000 1,000 5 5 100.00% 5,000 5,000 5,000Antonveneta Immobiliare SpA Padova 35,045,610 1 35,045,610 35,045,610 100.00% 35,045,610 508,601,906 508,601,906Costruzioni Ecologiche Moderne SpA Roma 20,658,277 1 20,658,277 8,304,093 40.20% 8,304,093 8,304,093 8,304,093Giotto Finance 2 SpA Padova 100,000 1,000 100 98 98.00% 98,000 98,049 98,049Giotto Finance SpA Padova 100,000 1,000 100 98 98.00% 98,000 98,049 98,049La Cittadella SpA Padova 1,003,156 75,000,000 74,375,000 99.17% 994,796 994,796 994,796Padova 2000 Iniziative Immobiliari SpA Padova 102,000 1 200,000 90,020 45.01% 45,910 - -Salvemini Srl Padova 6,250,000 1 6,250,000 6,250,000 100.00% 6,250,000 5,611,881 5,611,881Sidermo Srl in liquidazione Mortegliano 1,601,370 1 1,601,370 516,456 32.25% 516,456 - -Theano Finance SpA Padova 100,000 1,000 100 98 98.00% 98,000 98,049 98,049TOTAL EQUITY INVESTMENTS 609,938,673 609,938,673379


Land and buildings owned at 31 st December 2007Articles 3 and 10 of Law. n. 72 of 19/03/83 and art. 25 of Law. n. 413 of 30/12/91ProvinceRevaluationIASFacefigure01/01/2004Total31/12/2007Accumulateddepreciation31/12/2007Bookvalue31/12/2007Campo San Martino PD 37,839 54,000 54,000 9,720 44,280Padua – Via Cittadella PD 2,042,951 2,630,000 2,630,000 485,800 2,144,200Padua – Via Marsala PD 3,240,808 4,315,000 4,315,000 903,089 3,411,911Padua – Via Verdi PD 1,668,714 2,045,000 2,045,000 121,736 1,923,264Piazzola sul Brenta PD 14,466 19,500 19,500 1,113 18,387Rome – Via del Corso 518 – Palazzo Rondinini RM -599,668 49,450,000 49,450,000 1,814,994 47,635,006Rome – Via Fiori 43 – Casal de’ Pazzi RM 1,213,605 6,045,900 6,045,900 228,515 5,817,385Rome – Via dei Colli Albani RM -12,218 65,000 65,000 - 65,000Marcellina RM 23,290 137,500 137,500 9,300 128,200Velletri RM -842 1,000 1,000 - 1,000Rovigo – Corso del Popolo RO 89,575 167,000 167,000 29,583 137,417Rovigo – Via Piva RO 1,134,183 1,380,000 1,380,000 180,058 1,199,942Monteiasi TA 57,544 75,000 75,000 9,600 65,400Trieste Via Crispi TS 332,811 560,000 560,000 100,801 459,199Trasaghis (1) UD 53,025 115,000 133,750 14,970 118,780Total 9,296,084 67,059,900 67,078,650 3.909.277 63,169,373Ownership acquired through usufruct in 2003 1,586,570Total land and buildings 9,296,084 67,059,900 67,078,650 3.909.277 64,755,944(1) During 2007 some expenses for improvements were capitalised for a total amount of € 18,750..380


INTERNATIONAL ACCOUNTING STANDARDS approved by the European CommissionIFRS 1 First-time adoption of international financial reporting standardsIFRS 2 Share-based paymentIFRS 3 Business combinationsIFRS 4 Insurance contractsIFRS 5 Non-current assets held for sale and discontinued operationsIFRS 6 Exploration and evaluation of mining resourcesIFRS 7 Financial instruments: integrating informationIFRS 8 Operating sectorsIAS 1 Presentation of financial statementsIAS 2 InventoriesIAS 7 Cash flow statementsIAS 8 Accounting policies, changes in accounting estimates and errorsIAS 10 Events after balance sheet dateIAS 11 Construction contractsIAS 12 Income taxesIAS 14 Segment reportingIAS 16 Property, plant and equipmentIAS 17 LeasesIAS 18 RevenueIAS 19 Employee benefitsIAS 20 Accounting for government grants and disclosure of government assistanceIAS 21 The effects of changes in foreign exchange ratesIAS 23 Borrowing costsIAS 24 Related party disclosuresIAS 26 Accounting and reporting by retirement benefit plansIAS 27 Consolidated and separate financial statementsIAS 28 Investments in associatesIAS 29 Financial reporting in hyperinflationary economiesIAS 30 Disclosures in the financial statements of banks and similar financial institutionsIAS 31 Interests in joint venturesIAS 32 Financial instruments: disclosure and presentationIAS 33 Earnings per shareIAS 34 Interim financial reportingIAS 36 Impairment of assetsIAS 37 Allowances, contingent liabilities and contingent assetsIAS 38 Intangible assetsIAS 39 Financial instruments: recognition and measurementIAS 40 Investment propertyIAS 41 Agriculture381


INTERPRETATIONS approved by the European CommissionIFRIC1 Changes in existing decommissioning, restoration and similar liabilitiesIFRIC2 Partners' shares in cooperating entities and similar instrumentsIFRIC4 Determining if an agreement includes a leasingIFRIC5 Rights deriving from co-interests in funds for dismantlings, re-establishments and environmental drainagesIFRIC6 Liabilities from participation in a specific market - Garbage from electric and electronic equipmentsIFRIC7 Application of the re-determination method pursuant IAS 29 Accounting information in hyper-inflationed economiesIFRIC8 Application scope of IFRS 2IFRIC9 Re-evaluation of incorporated derivativesIFRIC10 Intermediate financial statements and value enduring reductionIFRIC11 Operations with own and group sharesSIC 7 Introduction of the euroSIC 10 Government assistance - no specific relation to operating activitiesSIC 12 Consolidation - special purpose entitiesSIC 13 Jointly controlled entities - non-monetary contributions by venturersSIC 15 Operating leases - incentivesSIC 21 Income taxes - recovery of revalued non-depreciable assetsSIC 25 Income tax - changes in the tax status of an enterprise or its shareholdersSIC 27 Evaluating the substance of transactions involving the legal form of a leaseSIC 29 Disclosure - service concession agreementsSIC 31 Revenue - barter transactions involving advertising servicesSIC 32 Intangible assets - web site costs382


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