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Sofia, April 17 th , 2008 ICT Media, Banking Forum

Triple merger – Integration Program Bulbank, HVB Bank Biochim and Hebros bank 2006-2007 IT Integration Cluster Kristin Krumov Pepa Koleva. Sofia, April 17 th , 2008 ICT Media, Banking Forum. … AND TO BECOME A MAJOR BANKING GROUP …. UniCredit Group – at a glance 2. Employees: over 170,000

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Sofia, April 17 th , 2008 ICT Media, Banking Forum

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  1. Triple merger – Integration ProgramBulbank, HVB Bank Biochim and Hebros bank2006-2007 IT Integration ClusterKristin KrumovPepa Koleva Sofia, April 17th, 2008 ICT Media, Banking Forum

  2. … AND TO BECOME A MAJOR BANKING GROUP … UniCredit Group – at a glance2 Employees: over 170,000 Customers: over 40 million Branches: over 9,000 Banking operations in 23 countries International network spanning 50 countries Global player in asset management:€ 270 bn3 in managed assets Strong regional player in Investment Bankingwith leading position in CEE 2

  3. UniCredit is the strongest financial partner in Bulgaria Comprehensive banking network Key indicators1) • Over 4000 employees • Over one million clients • About 260branches • Appx.BGN 9bln assets as of end 2007 • BGN 5bln total loans • BGN6.4bln attracted funds • BGN 1.1bln shareholders’ equity 1) As of Q3 2007 results

  4. Market leader in Bulgaria Number one positions in: • Assets • Total Loans • Business loans • Attracted funds • Shareholders equity • Profit

  5. Recent awards for UniCredit Bulbank Best Bank in Bulgaria 2006, 2007 Best Bank in Bulgaria 2006, 2007 Best Agent Bank in Bulgaria 2006, 2007 Bank of the Year in Bulgaria 2006

  6. IT Integration of the three banks was designed as pure merger to the platform of the smallest bank, following the already started Integration of ex-Biochim and ex-Hebros Clients Accounts Business Processes IT Systems Clients Accounts

  7. Later changed to “best-of-bread” approach: review of the processes and IT systems and selection of the best ones, increasing the scope and complexity of IT projects ERP, eChannels, Credit Underwriting, Reporting, DWH Core banking system With upgrade and full migration Treasury & Payments Group solutions The business processes followed the selected IT systems with improvements if necessary

  8. IT Integration Cluster – structure in workstreams Product catalog Business workstreams Service model Business requirements Function Workstream Training design and execution Onsite Assistance and HelpDesk execution UAT testing, Data quality assurance Handouts Preparation and delivery Roll-out (Training, Assistance, UAT Testing) Business and Functional Analysis Processes and Roles Design Norms & Regulations definition and delivery Business and Ops support, Branch Sizinng Organization Development Software solutions Implementation System Integration (middleware and Interfaces) System Parameterization, Data Conversion Testing, Post Rollout support Application Analysis & Implementation I T IT Infrastructure design Data Centers implementation Network and distributed systems upgrade User Profiling and Security, Service management IT Infrastructure

  9. IT INTEGRATION MASTERPLAN

  10. 2nd 10th Hebros migrations Biochimmigration Bulbankmigration 18th 18th 1st 11th 16th Unicredit Bulbank OVERALL INTEGRATION TIMELINE Mock migrations Go-live decision Go-live Apr. ‘07 May ‘07 Jun. ‘07 Jul. ‘07 26th 2nd 2nd Legal merge Tech. merge

  11. Technological complexity Operative model deployment complexity Migration complexity IT AND ORGANIZATION IMPLEMENTATION STRATEGY Added Value • we are implementing the most flexible and scalable solution out of the former bulgarian implementations and one of the leading market IT systems for the mid size banks – offering reduced time-to-market for new products/services with a lower TCO compared to the legacy system • the flexibility of the system (scalable architecture, web based interface, high degree of parameterization) and the selected satellites enable the rollout of the new business and operative model and will support the time to market of the bank for future process enhancements and new products. Implementation Strategy HE BB BIO April, 10th May, 7th July, 2th The front-loading of technological complexity on the smaller bank balances the additional migration and operative model complexity coming from HVB Biochim and Bulbank today BB upgrade “Backbone” release(CBS&Sat)

  12. ERP Atlantis Derivatives Wallstreet, Opus Human resources Hermes Domestic securities FO Finalyzer AML BA-CA, DWH reports Securities Backoffice FC Securities DWH Reporting FCRPT APPLICATION LANDSCAPE MIGRATION PATH @HEBROS/BIOCHIM GOLIVE Landscape before HEBROS/BIOCHIM GOLIVE Landscape @HEBROS/BIOCHIM GOLIVE Cards DM Cards Online channels FX & MM Wallstreet, FX Studio Foreign payments AZV/SWIFT MERVA Cards SUCard Online channels FX & MM Wallstreet, FX Studio Foreign payments AZV/SWIFT MERVA Cards DM Cards Utility payments Upsos Biochim rel Utility payments Upsos Core banking system FlexCube v5.2 Core banking system KBI Retail e-banking Hebros e-banking Core banking system FlexCube v7.1 1st rel. Retail e-banking BB On-line Corporate e-banking Multicash Corporate e-banking Multicash, Derivatives Wallstreet, Opus Domestic securities FO Finalyzer Securities Backoffice Finalyser Integration layer Integration layer Reporting ALVIS/CIMIS Middleware X-BOX (1st rel) Retail & SMEs Underwriting Loans Corporate Underwriting Blana Retail & SMEs Underwriting Febo 1 & 2 Corporate Underwriting ACE Trade Finance FC Trade finance DWH Reporting ALVIS, MIS, Stat Rep, CIMIS Light GL / ERP Oracle Financials Human resources Hermes AML BA-CA, DWH reports Integration layer Integration layer (2° release) • CARDS and UPSOS application parameterization for the HEBROS/BIOCHIM products • FLEXCUBE Core Banking system HEBROS/Biochim products; Biochim’s gaps developed and products parameterized • XBOX upgraded foe BBOnline and Multicash ERP application upgraded with implementation of purchasing functionalities Same application as of previous release New/Upgraded application / module

  13. ERP Atlantis Derivatives Wallstreet, Opus Human resources Hermes Domestic securities FO Finalyzer AML BA-CA, DWH reports Securities Backoffice FC Securities APPLICATION LANDSCAPE MIGRATION PATH @ BULBANK GOLIVE Landscape HEBROS/BIOCHIM GOLIVE TO BE Landscape @BULBANK GOLIVE Online channels FX & MM Wallstreet, FX Studio Foreign payments AZV/SWIFT MERVA Cards SU/DM Cards Online channels FX & MM Wallstreet, FX Studio Foreign payments AZV/SWIFT MERVA Cards DM Cards Utility payments Upsos Utility payments Upsos Core banking system FlexCube v7.1 1st rel. Core banking system ICBS Retail e-banking bb Online Core banking system FlexCube v7.1 1st rel. Retail e-banking BB On-line Multicash Corporate e-banking Multicash, Opus Domestic securities FO Finalyzer Securities Backoffice Finalyser OPICS Telebank Telebank Integration layer Integration layer Reporting ALVIS/CIMIS Middleware X-BOX (3rd rel) Retail & SMEs Underwriting Loans Corporate Underwriting Blana Trade Innovation SWIFT Alliance Retail & SMEs Underwriting Febo 1 & 2 Corporate Underwriting ACE Trade Finance FC Trade finance DWH DWH Reporting ALVIS, MIS, Stat Rep, CIMIS Light, TRM Reporting ALVIS, MIS, Stat Rep, CIMIS Light GL / ERP Oracle Financials Human resources Hermes AML BA-CA, DWH reports Integration layer Integration layer (2° release) • CARDS and UPSOS application are upgraded, due to parametrization for the BULBANK products • FLEXCUBE Core Banking system is upgraded with Bulbank’s gaps developed and products parametrized • XBOX upgraded due to Telebank and business-related functionalities rollout, also minor enhancements to the integration layer are needed • MIS is upgraded, due to Treasury Risk Management delivery • ERP application upgraded with implementation of purchasing functionalities Same application as of previous release New/Upgraded application / module

  14. Application Workstream (1/2)

  15. Application Workstream (2/2)

  16. Infrastructure Workstream (1/2)

  17. Infrastructure Workstream (2/2) Not defined as a project, but very important process – takeover of application administration and End-Of-Day processing

  18. IT Integration facts • 18 months for overall program (implementation of 2 releases and 3 data conversions) • More than 10 main application systems with more than 60 modules/satellites • More than 100 interfaces developed (also using middle ware) • More than 200 people involve in IT Integration (without rollout assistance staff) • 13 Vendors in applications, and 12 in Infrastructure were involved • 3x3 mock (trial) conversions and 3 real • 3 access tests, 3 operational tests, and 12 stress tests performed • 7 test environments in parallel for core system and 2 test environments for every satellite • Detailed project plan of the overall Integration 6000 rows. 4000 of them in IT&Orga Cluster • More than 3000 end users trained and migrated in unified domain

  19. Lessons Learned • Time driven program – to ensure tools for ‘pushing/monitoring’ • Total management commitment – to set/follow priorities (in this case that time is the most important) • Schemes for staff motivation, based on time achievement of results • Role of the consultant – type of involvement • Strong rules for Change Management – business to confirm the requirements, processes, products • Strong monitoring of project plans execution – consultants played role of ‘pushing the followers’ • Delay bigger than 2-3 weeks – immediately establish crash program to recover • Proper teams sizing, roles in the projects – flexible re-sizing, movement of people in the roles if necessary • Parallel execution of tasks, parallel tracking of overlapping migrations • Proper risk assessment, especially in ‘GO-not GO’ decisions – tools to measure, balance workarounds • To ensure proper handover from projects to regular operations • To ensure stabile support of ‘old’ systems during the heavy transformation program

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