The Funding of Sustainable Development

1. The Funding of Sustainable Development EMN Annual Conference Milan - 5 June 2009

2. UBI Banca was formed on 1 April 2007 following the merger of the Banche Popolari Unite Group and the Banca Lombarda e Piemontese Group Birth of the Banca Mutua Popolare della Città e Provincia di Bergamo then renamed Banca Popolare di Bergamo (BPB) 1869 Birth of the BPU Banca Group from the integration of BPB-CV and BPCI 2003 Birth of the Società per la Stagionatura e l’Assaggio delle Sete ed Affini (later renamed Banca Popolare Commercio e Industria BPCI) 1888 Acquisition of Centrobanca by BPB-CV, Birth of Banca 24-7 (BPB-CV Group) 2000 Acquisition of Banca Carime by BPCI 2001 Acquisition of Banca Popolare di Ancona (BPA) by BPB-CV. Birth of the BPB-CV Group 1996 1st April 2007 Birth of UBI Banca following the merger of the BPU Banca Group and the BancaLombarda e Piemontese Group Merger of BPB and Credito Varesino (BPB-CV) 1992 2000Acquisition of Banca Regionale Europea* by Banca Lombarda. The Group takes the name of Banca Lombarda e Piemontese Group 1998Merger of CAB and BSPB with the creation of Banca Lombarda as parent company and contribution of branch network of CAB and BSPB to Banco di Brescia 1992Acquisition of Banco di San Giorgio (BSG) by CAB 1963BSPB acquires Banca di Valle Camonica (BVC) 1888Birth of the Banca San Paolo di Brescia (BSPB) 1883Birth of the Credito Agrario Bresciano (CAB) *Banca Regionale Europea was created in 1994 following the merger between Cassa di Risparmio di Cuneo and Banca del Monte di Lombardia

3. Market share < 2% The UBI Group: Predominant Retail Business and Strong Northern Italian Franchise First Italian cooperative banking Group by market capitalization (6,3 bln€*), organized as a federal model, comprising nine network banks and several highly specialized product companies, offering a wide range of financial services and products. 2 Northern Italy:** 71% deposits 84% loans 65% branches 12 Group activity focussed on the Retail segment 4 million clients**, mainly retail; at network bank level approx. 77% of revenues are generated by retail customers, 17% by corporate customers and 6% by private banking clients As at 31 March 2009: Total loans : 96,9 bln€ (96,4 as at 31.12.2008) Total direct funding: 95,7 bln€ (97,2 as at 31.12.2008) Total indirect funding : 73,4 bln € (74 as at 31.12.2008) • Good credit quality: as at 31st March 09, NPL/total loans: 0,98%, net impaired loans /total loans: 1,3% - cost of credit 66 bps Low risk profile: Funding mainly from customer base (86%) and limited recourse to international financial markets (14%) Defensive business mix: focus on commercial customer business, with a non aggressive commercial policy No exposure to subprime mortgages and related instruments 888 1 44 222 56 58 8 113 22 18 121 6 122 103 43 1 124 2% <= Mkt Share < 5% 5% <= Mkt Share < 15% Mkt Share >= 15% 1.964 branches in Italy + 9 branches abroad Number of branches as at 24 March 2009 Market shares as at Sept 2008 * As at 26 May 2009 ** As at 30 September 2008

4. Close to 4 Million Clients with a Very Large Retail Component*** * Calculated as Net Interests + Net Commissions by market over Markets Total (Retail + Corporate + Private)** Includes other Retail clients *** Commercial segmentation: Private: Assets > 500k Euro, Mass Market: Assets < 50k Euro, Affluent: Assets of 50 – 500k Euro; Small Business turnover < 5 Euro Million, Corporate Core: Turnover 5 – 150 Euro Million, Large: Turnover > 150 Euro Million

5. The Group structure (1/2): Multi-functional Federal Model, Highly Integrated at Commercial, Organizational and Financial Level with Centralised Risk Monitoring Parent Bank: UBI Banca Mission Management, co-ordination and control Leading business functions Provision of key support services Centralised risk monitoring 9 Network Banks Product companies Mission Presence in reference markets Distinctive capability to understand and serve local economies Drivers Service model differentiated by customer segment Sharing of the same organizational structure Sharing of tools and services provided by parent company Mission Competitive product and services offering, in line with market best practice Drivers Continuous product innovation Ability to listen to distribution network requirements

6. The Group structure (2/2) (listed cooperative Bank) provides management, co-ordination, control and supply of centralized services to the network MAIN PRODUCT COMPANIES 9 NETWORK BANKS 100.00% 361 branches ASSET MANAGEMENT UBI Pramerica (partnership with Prudential US) CONSUMER CREDIT B@nca 24-7 CORPORATE BANKING Centrobanca FACTORING UBI Factor LEASING UBI Leasing NON-LIFE BANCASSURANCE UBI Assicurazioni LIFE BANCASSURANCE Aviva Vita (Partnership with Aviva) Lombarda Vita (Partnership with Cattolica) ON LINE TRADING IW Bank (listed company) 100.00% 358 branches 59.95%(1) 291 branches 83.36%(2) 216 branches 99.29%(3) 259 branches 85.83%(4) 318 branches 82.96%(5) 59 branches 91.16%(6) 52 branches 38 branches924 financial advisors (7) 100.00% Number of branches updated as at 24 March 2009 (1) and 19.98% by Fondazione Cassa di Risparmio di Cuneo and 19.98% by Fondazione Banca del Monte di Lombardia and the rest by minority shareholders; (2) and 16.64% by Aviva SpA; (3) and the rest by minority shareholders; (4) and 14.15% by Aviva SpA and the remaining by minority shareholders; (5) and (6) by minority shareholders. Data as at 30 September 2008(7) Number of financial advisors as at 31 Dec 2008

7. 1 2 Clear separation between commercial and lending processes Divisional model (Retail, Private, Corporate) with customer segmentation (Mass Market, Affluent, Small Business, Private, Corporate) 3 Linearity of commercial processes by market between the Parent Company and the Network Banks 4 Relationship with the customers focused by segment with “specialized” account managers (Mass Market, Affluent and Small Business Account Managers, Corporate Account Managers and Private Bankers) 5 Commercial targets by Market and with differentiated KPIs according to the segment’s characteristics Distribution Model Specialized by Market as Enabling Factor of Commercial Approach Differentiated by Segment Distribution Structure Main Characteristics Commercial Area Commercial Area Parent Bank Parent Bank Private Retail Corporate General Management Network Bank Commercial Area Private Retail Corporate Retail TerritorialArea Private Banking Unit RetailBranch Corporate Banking Unit

8. Microcredit: Italy in the Europeancontext In recent years Italy has become a high immigration rate Country and according to a recent World Bank Study, the ratio of exclusion from financial services reaches 25% of the population, one of the highest the European Union. Nevertheless services in microfinance (especially microcredit) are under developed. Source: Overviewof the Microcredit Sector in the EuropeanUnion 2006-2007 EMN WorkingPaper n. 5

9. The problems of microcredit in Italy Political/Regulatory Context • Absence of dedicated regulation • Misinterpretation of the meaning: often considered as a social mean of support (redistribution of wealth – preferential and assistential welfare regime) instead of creation of new entrepreneurial opportunities. Microfinance organizations • Difficulty in raising funds • Low medium/long term economic sustainability • Limited results (in terms of credit facilities granted and beneficiaries reached) • Skill fragmentation and lack of scoring models • General Fragmentation (limited size and geographic distribution) • Difficulty in working with commercial banks (due to the compulsory regulation which must be respected) • Reliance especially on donations / guarantee funds and volunteer activities • Welfare model (very low or no interest rates and reduced attention to default rates)

10. MFIs from Italy Mostly small initiatives promoted on a local level by Public Administration or Banking Foundations. Almost none grants credit directly, the majority promote Guarantee Funds, leaving the loan facilities to Banking Institutions Source: www.microfinanza-italia.org

11. EIF Market Study Microlending (1/3) Survey Results - Funding • Funding model and terms are the biggest weaknesses of MFIs from both Eastern and Western Europe. • Not only lack of funding, but also missing strategy • Funding related needs: • Developing fund raising and long term funding strategies • Funding operational costs relating to growth and to increase outreach • Funding of incentives to scale up operations Scale from “1“ – weak to “4“ – strong.

12. Operational Model (1/2) • The organization needs to: • Adopt a professional, not an assistential, approach, • Assume the risk directly by granting credit • Pursue economic sustainability • Economies of scale (significant volumes and standardized processes) • Adequate rates to cover financial costs (access to credit vs. rate levels) • Moderate Default Probability ( “safety net” network + credit scoring) • Income Statement Integration (complementary revenues + territorial and/or communitarian funds) for coverage • Selection and Supportcosts • Creation of a Territorial Network

13. Key findings from the EIF Market Study Microlending: Potential Funding Model for MFIs in the EU • Different funding needs and sources • Financing of start-up costs, • Equity capital, • Temporary and over-time-decreasing subsidies for operational costs, • Budget to co-finance specific capacity building activities (Training, MIS, Mutual Exchange, etc.)

14. Operational Model Proposal • Funds for structural investments • Funds for supporting activity • Guarantee Funds • Target Individuation • Communication • Selection and Support • Territorial Network • Equity • Territorial Network • ComplementaryProducts and Services

15. The Expected Partnership Benefits Specialized Financial Intermediary Financial Partner • Positioning in a sector of high social value • Bespoken products focused on the defined target (ex. InItaly for immigrants) • Potential acquisition of new clientele • New bankable subjects • Partners of relevant social organizations • Equity • Support to the development of the territorial network • Network Banks (“corner in” branches) • Collateral Products and Services for Income Statement integration • Product Companies • Cost Control (synergies) • Institutional Recognition