2005 SOCIAL RESPONSIBILITY REPORT - UBI Banca · This is the third edition of the Social...
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2005 SOCIAL RESPONSIBILITY REPORT
Transcript of 2005 SOCIAL RESPONSIBILITY REPORT - UBI Banca · This is the third edition of the Social...
2005SOCIAL RESPONSIBILITY REPORT
2005
SO
CIA
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ESP
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SIB
ILIT
Y R
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RT
INDEX
1. INTRODUCTION 3Letter from the Chairman 5Content of the document 6Methodology 7
2. IDENTITY 9Our profile 11Our history 13Our mission 19Corporate governance 23Key values 33Activities and results 37
3. THE SOCIAL AND ENVIRONMENTAL REPORT 45Stockholders and investors 55Human resources 65Customers 87Territory 107Suppliers 117Environment 123The competitive system (compete and cooperate) 135The community (public administration) 139
4. THE ECONOMIC REPORT 143Determination and distribution of added value 145
5. IMPROVEMENT GOALS 151
6. AUDITOR’S REPORT 155Questionnaire 159
This English version is availabe for the convenience of the reader.It is a translation of the italian original version “Bilancio Sociale 2005” that takes precedence.
1. INTRODUCTION
4 5Introduction
LETTER FROM THE CHAIRMAN
CONTENT OF THE DOCUMENT
METHODOLOGY
INTRODUCTIONDear Reader,This is the third edition of the Social Responsibility Reportfor the Banca Lombarda Group, a document that supple-ments the Annual Report with a view to communicating withall stakeholders.
The topics of Social Responsibility and Business Ethics havebecome increasingly important in recent years. In this con-text, this report seeks to increase further the transparencyof the Group for those who see us as a reliable and efficientpartner, worthy of the confidence expressed by all ourstakeholders.
Compared with the past edition, this document contains even more information toexplain our activities over the past twelve months.
As in the past, the report has been audited in order to provide stronger assuranceregarding the quality of the quali/quantitative information presented.
One of the most important innovations this year is the presentation of the Group’s Codeof Ethics, as further evidence of our desire to ensure that the daily efforts made by all ouremployees comply with the rules of conduct for dealings with all parties who interactwith the Banca Lombarda Group. As stated in the Methodology, the current edition of the Group’s Social ResponsibilityReport takes account of the recommendations contained in the recent ABI volume onReporting to stakeholders, which was prepared with active input from our Bank. Thisdocument notes that the Social Responsibility or Sustainability Report should not mere-ly be a formal document, but rather a means for explaining the “Economic ValueGenerated” via a transparent and complete reconstruction of the various relationshipsand the connections between them.
In directly operational terms, key performance indicators have been prepared specifi-cally to identify, on a more timely and precise basis, the factors contributing to thebank’s competitive advantage that do not emerge from an analysis of the standardaccounting schedules.
The constant challenges that the market sets the banking system - ever more global andcompetitive - require us to become increasingly attentive and active partners of ourstockholders, customers, suppliers, employees and reference community, in order tosatisfy their economic and social expectations to the greatest possible extent.
We trust that you will find the Group’s Social Responsibility Report interesting and,therefore, a useful and effective tool for assessing the depth of our commitment thatcontributes to the ongoing process of dialog and discussion.
The ChairmanGino Trombi
7Introduction
6
CONTENT OF THE DOCUMENT
The Banca Lombarda Group hereby presents the third edition of its Social Responsibility Report.
The Social Responsibility Report comprises the following sections:
- Identity: summarises the key elements that clearly distinguish the Banca Lombarda Group
as an economic, legal and social entity within the overall context in which it operates;
- The social and environmental report: explains the nature and basis of the Banca
Lombarda Group’s interactions with its stakeholders;
- The economic report: identifies the volumes and values generated and distributed via the
activities and organization of the Group;
- Improvement goals: given the intrinsic nature of the document, oriented towards con-
stantly improving the way activities are reported to all stakeholders, the Group is commit-
ted to achieving its full economic and social potential while, at the same time, improving
the quality of its communications and the level of transparency;
- Opinion of the independent auditors: evaluates the Group’s compliance with current
reporting standards and best practice.
Certain changes have been made to this edition:
- Even more information has been provided; this includes further details about the Group’s
customers and on the training and professional development of employees; there is fur-
ther discussion of the direct environmental impact of the Group’s activities, such as paper
consumption and the generation of special waste;
- the information provided generally covers the values for all or the main Group companies,
and not just the Retail Banks;
- the Group’s Code of Ethics, which is attached to this document (available only in the italian
version).
METHODOLOGY
The Group Social Responsibility Report for 2005 has been prepared in accordance with the
guidelines drawn up by GBS (the Social and Environmental Accounting Study Group), using as
the main point of reference the “Manual for the Preparation of Social Responsibility Reports by
the Banking Sector” and the subsequent volume on “Reporting to Stakeholders - a guide for
banks” published by ABI (the Italian Banking Association). Reference was made to this last doc-
ument, in particular, for the preparation of schedules that analyze the generation and distribu-
tion of Value Added, and for the development of summary indicators for the Group.
The presentation of the topics required or recommended by the above guidelines has been
adapted to reflect the specific identity and needs of the Banca Lombarda Group.
All financial data and information have been taken from the 2005 consolidated financial state-
ments, as restated and reclassified in accordance with the guidelines.
Quantitative information relating to other areas of the Group Social Responsibility Report
was identified and measured using the methodologies considered most appropriate
under the circumstances.
In particular, where phenomena can be identified in full, their parameters have been meas-
ured directly in order to maximize the reliability of the information presented in the Social
Responsibility Report.
Where this was not possible, the value of the parameters has been estimated with reference
to the best available information or to sample data.
The quantitative data and information gathered and processed were drawn from the IT sys-
tems, the accounting system and paper-based records. Various functions within the Group
were involved in these phases to ensure that the data was checked and processed correctly.
The methodology used to prepare the Group Social Responsibility Report and the contents
of this Report have been approved by the Board of Directors of Banca Lombarda S.p.A., the
parent bank.
2. IDENTITY
THE PRESENCE OF A BROAD STOCKHOLDER BASE AND THE HISTORY OF
THE VARIOUS BANKS WITHIN THE BANCA LOMBARDA GROUP ARE VITAL
ASPECTS OF THE GROUP’S IDENTITY.
THE GROUP IS GUIDED BY A LONG-TERM STRATEGIC VISION WHICH
REJECTS ANY LOGIC OF A SPECULATIVE NATURE.
IT IS ORIENTED TOWARDS THE CREATION OF STABLE, LASTING VALUE FOR
ALL STOCKHOLDERS.
MANAGEMENT IS PRUDENT, BUT MOTIVATED BY GROWTH, TAKING CARE
WHEN SELECTING BUSINESS TO MEASURE AND EVALUATE THE FINANCIAL
AND OPERATIONAL RISKS AS CAREFULLY AS POSSIBLE, TO ENSURE AN
ADEQUATE AND PROPER RETURN ON INVESTMENT.
THE GROUP’S WORK ETHIC AND APPROACH TO OPERATIONS IS BASED
ON MUTUAL RESPECT AND COOPERATION, AS WELL AS ON STAFF RELIA-
BILITY, PROFESSIONALISM AND EFFICIENCY AT ALL LEVELS.
THE GROUP HAS IMPORTANT HISTORICAL ROOTS AND A WIDESPREAD
PRESENCE IN THE TERRITORIES IN WHICH IT OPERATES. THESE RELATIONS
ARE GEARED TO THE CREATION OF CUSTOMER LOYALTY THROUGH
RESPECT FOR THE CUSTOMER, PROFESSIONAL SUPPORT AND RELIABILITY,
AS REINFORCED BY CONSTANT DISCUSSIONS AND COLLABORATION
WITH LEADING OPERATORS THAT ARE PART OF THE AREA’S ECONOMIC
AND INDUSTRIAL FABRIC. THE GROUP REMAINS COMMITTED TO SUSTAIN-
ING THE DEVELOPMENT OF ITS TERRITORY WHILE, AT THE SAME TIME, PRE-
SERVING THE BANK’S POTENTIAL VIA THE CAREFUL AND EFFECTIVE SELEC-
TION OF LENDING BUSINESS.
OUR PROFILE
THE GROUP'S ROOTS ARE LINKED WITH THE
HISTORY OF THE BANKS THAT FOUNDED
AND JOINED IT ALONG A PATH OF COMMON
GROWTH
““OUR HISTORY
14 15Our history
OUR ROOTS
RECENT HISTORY
OUR HISTORY
OUR ROOTS
The Banca Lombarda Group was created at the
end of 1998 by the merger of Credito Agrario
Bresciano with Banca San Paolo di Brescia; since
then, it has grown enormously in terms of vol-
umes, scope of consolidation, range of compa-
nies, organization and distribution network.
The Group’s roots lie in the history of the originating banks and the banks that have joined
it over time.
These banks originated from economic and social initiatives that had charitable aims and
their history is intertwined with that of the local territory: ties formed by more than one hun-
dred years of collaboration and development that underpin the Group’s current identity
and structure.
- Credito Agrario Bresciano (CAB) was founded in 1883 with the mission to meet the finan-
cial needs of agriculture in the territory around Brescia. It gradually made a name for itself
in the local economy, partly via the promotion of special entities that were set up to pro-
vide assistance to farmers, carry out research into agriculture and animal husbandry, and to
finance public works.
- Banca San Paolo di Brescia was founded in 1888 and, in addition to banking, it also had
charitable aims via the provision of support for various associations and persons active in
the area. The bank was fully committed to supporting initiatives in the fields of education,
the arts and social assistance.
- Banca di Valle Camonica was founded in 1872 with the intention of creating a credit institu-
tion with programmes and purposes inspired by the Christian-Catholic ethic, thus assuring
investors that their savings would be employed in a useful and profitable way, while also
sustaining the ongoing transformation of the local economy.
- Cassa di Risparmio di Cuneo was founded in 1855 with solidarity as its inspiration, in com-
mon with many of the savings banks that arose in Italy during the 19th century, the purpose
being to manage savings for the benefit of the less well-off and to fight usury.
- Banca del Monte di Lombardia has its roots in antiquity; Banca del Monte di Lombardia
was formed in 1987 on the merger of Banca del Monte di Milano, founded in 1483 as a
pawnbroking institution, with Banca del Monte di Pavia e Bergamo which, in turn, originat-
ed from Monte di Pavia founded for humanitarian purposes in 1493 by Bernardino da Feltre,
a Franciscan monk.
- Cassa di Risparmio di Tortona was founded in 1911 to support the development of the
local economy.
- Lastly, the more recent Banco di San Giorgio was set up in 1987, initially in the form of a
cooperative bank and later transformed into a joint stock company.
17Our history
16
RECENT HISTORY
1998
CAB and Banca San Paolo di Brescia, the two Brescia banks, were merged to form Banca Lombarda.
The banking activity carried on by CAB and Banca San Paolo di Brescia was spun off into a
new company called Banco di Brescia. The equity investments previously held by Banca San
Paolo di Brescia and CAB in Banca di Valle Camonica and Banca San Giorgio, respectively,
remained under the control of Banca Lombarda.
A federal-type organizational model was selected, with a Parent Bank responsible for man-
agement policy, coordination and control, and federated Retail Banks, whose mission is
prevalently commercial, with some degree of operational autonomy designed to preserve
and develop direct links with the territory.
1999 – 2000
Control of Cassa di Risparmio di Tortona and Banca Regionale Europea was acquired during
this period: through them, Banca Lombarda now has an important presence in Piedmont and
a stronger position in Lombardy.
Banco di Brescia was also divisionalized by customer segment (retail, private banking and
corporate) to improve the service provided by creating a deeper and more specialised rela-
tionship with customers.
Together with Cattolica Assicurazioni, Lombarda Vita was formed as a captive insurance com-
pany to manage life assurance policies for the Group’s customers.
2001
Common functions were centralized and IT systems were integrated by setting up Lombarda
Sistemi e Servizi. This also helped combine the identity of a federal group with the consoli-
dation of a unified system of governance, partly with a view to achieving significant
economies of scale.
2002
Work was completed on the divisionalization by customer segment of all of the Retail Banks.
Grifogest SGR SpA was acquired, reinforcing the Group’s presence in the asset management
sector.
2003
Banca Idea, now known as Banca Lombarda Private Investment, was bought with a view to
expanding the activities of the Group’s financial consultants and its private banking business.
2004
Caboto International SA was purchased, as was the financial consultancy business of Banco
Desio.
A representative office was opened in Shanghai, to provide international support for the
Group’s corporate customers seeking to enter the Chinese market.
A joint venture was formed in China with a local company, Guodu Securities Co., in theasset
management sector, with a view to entering the Chinese retail market.
2005 and early 2006
Veneta Factoring was absorbed by CBI Factor during 2005, thus combining the Group’s two
Italian factoring companies in order to rationalize operations and release further synergies
with regard to costs and revenues.
Subsequently, at the end of 2005, various transactions were carried out to strengthen activities
in a number of business areas.
The network of financial consultants benefited from the purchase from Banca Popolare
dell’Etruria e del Lazio of its financial consultancy business, while banking activities were
strengthened by purchasing the residual minority interest in Banca Cassa di Risparmio di
Tortona, which was then absorbed by Banca Regionale Europea.
“ THE MAIN AIM OF THE BANCA LOMBARDA
GROUP IS TO PROVIDE FIRST-RATE BANKING
SERVICES AND CREDIT FACILITIES TO HOUSE-
HOLDS AND SMES
“OUR MISSION
21Our mission
20
RESPECT FOR THE CUSTOMER
STAFF PROFESSIONALISM
CONSTANT INNOVATION AND THE OPTIMIZATION OFPROCESSES
OUR MISSION
RESPECT FOR THE CUSTOMER
The Group aims to consolidate its relation-
ships with customers by constantly improving
service and product quality.
The creation of customer loyalty is consid-
ered a fundamental objective, considering
the huge effort needed to acquire new cus-
tomers and the size of the investment made to
ensure customer satisfaction.
STAFF PROFESSIONALISM
Motivation, a sense of belonging and profes-
sional training for all human resources are con-
sidered the best ways to increase and maintain the Group’s competitive capability.
As an entrepreneurial institution of primary importance, the Group aims to attract the
best professional profiles in the sector and retain the most talented individuals.
CONSTANT INNOVATION AND THE OPTIMIZATION OF PROCESSES
Innovation in terms of products, services, access channels and organisation is a critical success
factor for the maintenance of high levels of competitiveness. Technology is also seen as an
effective way to provide services more efficiently and to lower operating costs.
The Banca Lombarda Group’s investment decisions and operating policies are based on
selective criteria.
Banca Lombarda carries on its business in a responsible manner, complying with its Charter
of Values and Code of Ethics, in full awareness of its institutional role.
The Group has a reputation among its stakeholders as a solid and reliable bank that operates
fairly and openly in all internal and external dealings.
CORPORATE GOVERNANCE IS GENERALLY
UNDERSTOOD TO COMPRISE ALL THOSE
PROCESSES, POLICIES, PRACTICES, RULES
AND BODIES THAT INFLUENCE BOTH HOW A
COMPANY IS ADMINISTERED AND ITS TRANS-
PARENCY. THIS INCLUDES THE RELATIONS
BETWEEN THE VARIOUS STAKEHOLDERS
INVOLVED AND THE OBJECTIVES ESTAB-
LISHED FOR THE COMPANY
““CORPORATE GOVERNANCE
25Corporate Governance
STOCKHOLDERS’ MEETING
The Stockholders’ Meeting is held once a year to approve the financial statements and when-
ever needed to decide on any other matters within its sphere of competence.
THE BOARD OF DIRECTORS
The Board of Directors plays a central role in the organization, being responsible for all func-
tions involving corporate strategy and policy-making, as well as for ensuring that all necessary
and appropriate controls are in place to monitor the performance of the bank.
The Board of Directors has 21 members and currently has a majority of Independent Directors.
They are defined as Independent Directors in accordance with the Code of Conduct for Listed
Companies, namely:
1. they do not have, directly, indirectly or on behalf of third parties, nor have they had in the
recent past, economic relations with the company, its subsidiaries, the executive directors,
the stockholder or group of stockholders that controls the company, of a significance that
might condition the independence of their judgment;
2. they do not hold, directly, indirectly or on behalf of third parties, equity interests allowing
them to control or exercise significant influence over the company, nor do they participate
in stockholders’ agreements to control the company;
3. they are not close family members of the company’s executive directors or of persons who
find themselves in the situations mentioned in points 1 and 2 above.
On the other hand, given the powers granted to him by the Board, the Chief Executive Officer
is to be considered an Executive Director.
24
CORPORATE GOVERNANCE
Banca Lombarda, which is listed on the Italian
stock exchange, has always been sensitive to
questions of corporate governance. It has aligned
its organizational structure with the principles of
good management, the requirements of the arti-
cles of association and the recommendations of
the Code of Conduct for Listed Companies pre-
pared by Borsa Italiana.
Banca Lombarda’s system of corporate gover-
nance includes the following bodies:
• Stockholders’ Meeting;
• Board of Directors;
• Executive Committee;
• Chairman;
• Chief Executive Officer;
• General Manager;
• Board of Statutory Auditors.
STOCKHOLDERS’ MEETING
THE BOARD OF DIRECTORS
EXECUTIVE COMMITTEE
THE CHAIRMAN
THE CHIEF EXECUTIVE OFFICER
THE GENERAL MANAGER
THE BOARD OF STATUTORY AUDITORS
COMPENSATION COMMITTEE
INTERNAL CONTROL COMMITTEE
INTERNAL RULES FOR RELATED-PARTY TRANSACTIONS
INTERNAL DEALING
REGULATIONS FOR THE PROCESSING OF INFORMATION
THE SYSTEM OF INTERNAL CONTROLS
THE ORGANIZATIONAL MODEL PURSUANT TO DECREE 231/2001
THE GROUP’S CODE OF ETHICS
27Corporate Governance
26
The Board generally meets once a month and, on an extraordinary basis, any time the need arises.
The Board of Directors met 14 times during 2005.
The present Board of Directors, as appointed at the Stockholders’ Meeting held on 29 April
2005, comprises:
EXECUTIVE COMMITTEE
The Board of Directors has appointed an Executive Committee comprising 8 directors and
delegated its powers to this committee. In particular, it has attributed to the Executive
Committee all powers for the ordinary administration of the Bank, except for some that are
the exclusive responsibility of the Board. The Executive Committee met four times in 2005.
THE CHAIRMAN
The Chairman legally represents the Bank versus third parties and in court, with the right to
appoint attorneys and legal counsel, and, if proposed by the Chief Executive Officer, in situa-
tions of particular urgency he can take decisions that would normally be made by the Board
of Directors or the Executive Committee. Any such decisions must be reported to the Board
at its next meeting.
The Chairman allocates and distributes the amounts set aside for donations, on the basis and
in the manner decided by the Board of Directors.
THE CHIEF EXECUTIVE OFFICER
The Board of Directors has delegated to the Chief Executive Officer the power to supervise
the ordinary administration of the Bank and coordinate the activities of Banca Lombarda, the
Parent Bank, with those of its subsidiaries, in compliance with the guidelines laid down the
Board of Directors, and with the assistance of the General Manager.
THE GENERAL MANAGER
The General Manager leads the executive team and performs his duties within the scope of
the powers granted to him by the Board of Directors.
THE BOARD OF STATUTORY AUDITORS
The Board of Statutory Auditors, which comprises 3 serving members and 2 alternate mem-
bers, has responsibility for checking and ensuring that the Company is managed correctly in
accordance with the law, the Articles of Association, stockholders’ resolutions and other regulations.
COMPENSATION COMMITTEE
A Compensation committee has been set up as part of the Board, consisting primarily of non-
executive directors. The Committee makes proposals to the Board for the remuneration of
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Trombi dr. Gino
Folonari dr. Alberto
Bazoli avv. Giovanni
Faissola avv. Corrado
Cera prof. Mario
Bellini avv. Luigi
Bertolotto dr. Piero
Borlenghi dr. Sergio
Camadini dr. Giuseppe
Cattaneo prof. Mario
Fidanza Virginio
Gussalli Beretta dr. Pietro
Lucchini dr. Giuseppe
Manzoni dr. Federico
Martinelli prof. Felice
Minelli ing. Giovanni
Nocivelli cav. Luigi
Rampinelli Rota avv. Pierfrancesco
Rodella Adriano
Viglietta Matteo
Zaleski ing. Romain
Chairman
Senior Vice Chairman
Vice Chairman
Chief Executive Officer
Secretary
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
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29Corporate Governance
28
Directors with special duties. When the Committee makes decisions, the persons directly con-
cerned abstain. With input from the Chief Executive Officer, the Committee also makes pro-
posals regarding the remuneration of senior management.
INTERNAL CONTROL COMMITTEE
An Internal Control Committee has been set up as part of the Board. It is responsible for
checking that all internal functions are carried on properly, so that the system of internal
controls is as effectively as possible.
As part of its checks, the Internal Control Committee met 9 times during 2005 and paid par-
ticular attention to evaluating the Group’s system of internal controls, especially with
regard to the management of credit risk and the system for measuring and monitoring
operating risk. The Committee also assessed matters regarding the preparation of the
financial statements, including the effects of Decree 37 of 6 February 2004 and certain
aspects regarding the Bank’s regulatory structure.
INTERNAL RULES FOR RELATED-PARTY TRANSACTIONS
In accordance with Borsa Italiana’s recommendations contained in the Code of Conduct
for Listed Companies, Banca Lombarda has approved its own “Internal Rules for Related-
Party Transactions”.
This regulation lays down guidelines and criteria for identifying related-party transactions,
which must be approved by the Board of Directors. Such transactions also include those
carried out between Group companies, if they are material from an economic, capital or
financial point of view. If they are not conducted in the ordinary course of business and on
standard market terms, the related-party transactions carried out by subsidiaries must be
authorized by the Board of Directors of the subsidiary concerned and communicated
immediately to the Parent Bank.
The regulation also defines behavioural guidelines for such transactions to ensure that they
are correct in substance and in line with procedures.
INTERNAL DEALING
In order to adopt the rules issued by Borsa Italiana, which became effective on 1 January
2003, Banca Lombarda prepared a code of conduct which was approved by the Board of
Directors during the meeting held on 11/12/2002.
Following Italy’s implementation of the Market Abuse Directive 2004/72/EC and Consob’s
adoption of the corresponding enabling regulations, the law introduced an obligation to
communicate to the market all transactions in the company’s financial instruments carried
out by “relevant persons” and by those closely associated with them.
As a result, as confirmed by Borsa Italiana, its internal dealing rules were abrogated from
the date the new provisions became effective, which was 1 April 2006.
In order to adopt the new rules, on 22 March 2006 the Board of Directors approved, with
effect from 1 April 2006, the new “Regulations for transactions carried out by relevant per-
sons and persons closely associated with them” in accordance with current law.
The new regulations more or less reiterate Borsa Italiana’s rules on internal dealing.
The “relevant persons” required to report their activities have been identified as the direc-
tors, statutory auditors, members of senior management and the head of the finance
department of Banca Lombarda e Piemontese S.p.A. and the persons closely associated
with them.
The following transactions do not have to be disclosed:
a) transactions totalling less than 5,000 euro in any one year; if derivatives are involved,
the amount is calculated with reference to the underlying shares;
b) transactions between relevant persons and those closely associated with them;
c) transactions carried out by the listed issuer and by its subsidiaries.
REGULATIONS FOR THE PROCESSING OF INFORMATION
For the purpose of ensuring proper control over confidential information relating to Banca
Lombarda e Piemontese S.p.A. and its subsidiaries, the Board of Directors has also
approved a set of new regulations called: “Internal Regulations for managing and han-
dling confidential information and communicating documents and information externally”.
These Regulations identify the persons in charge of managing this information and define
the rules of conduct to be adopted by directors, statutory auditors and employees of
Banca Lombarda and its subsidiaries, as well as the procedures for communicating docu-
ments and information externally, with particular reference to price-sensitive information.
As a suitable tool for the identification of persons with access to privileged information, as
envisaged by art. 115 bis of Decree 58/98 and the related enabling regulations, a “Register
of persons with access to privileged information about Banca Lombarda and its finan-
cial instruments” has been set up at Group level to record the following information:
1. the identity of the persons who have access to privileged information because of their
job or profession, or in view of their activities on behalf of the entity required to maintain
the Register;
31Corporate Governance
30
2. the reason for which the person is listed in the Register;
3. the registration date of each update.
The person concerned is promptly informed that this information has been recorded.
THE SYSTEM OF INTERNAL CONTROLS
Banca Lombarda has adequate internal control and risk management systems, which com-
ply with the supervisory instructions issued by the Bank of Italy.
The system of internal controls is designed to ensure the correctness and propriety of all
corporate processes, safeguard asset values, and ensure the reliability and completeness
of accounting and operational information.
The Internal Auditing department is responsible for checking that the activities of the
organization are carried out on a proper basis and for assessing the functioning of the sys-
tem of internal controls.
THE ORGANIZATIONAL MODEL PURSUANT TO DECREE 231/2001
At the meeting held on 12 May 2004, the Board of Directors approved the structure of the
organisation, management and control model required by Decree 231/2001 (on the admin-
istrative responsibilities of companies), appointing in Banca Lombarda a “collegiate
body” comprising the heads of the Corporate and Legal Secretariat, Human Resources
and Group Auditing Departments, coordinated by an independent Director.
This step was taken in the conviction that adoption of this Model - quite apart from the
Decree, which says that it is voluntary and not obligatory - represents a valid tool for rais-
ing the awareness of everyone working at the Parent Bank and at Group companies, so
that they will always performing their duties properly and in a manner that prevents the
crimes envisaged in the decree.
In accordance with the corporate governance principles and guidelines adopted by the
Group, Banca Lombarda has taken steps to make this Model known to Group companies,
proposing that they should implement it and make any adjustments needed to reflect local
circumstances.
During 2005, to ensure that Model is constantly updated and effectively implemented fol-
lowing legislative changes, particularly with reference to the question of market abuse and
the protection of small investors, the Parent Bank’s Control Unit initiated a project to verify
and update the Model with support from external consultants, partly to obtain an inde-
pendent opinion on the work carried out.
In particular, the mapping of activities at risk of abuse and their related supervision has
been reviewed and updated. Risk areas have been recognised, internal controls and pro-
cedures evaluated, and action plans identified and classified on a priority basis.
Consequently, a plan has been prepared to extend the organisational model by means of
specific rules for conduct and controls within each sensitive process and activity, in order
to strengthen organisational supervision.
In this context, the Organisational Model has been updated with regard to the rules by
which the Control Unit functions, together with the related information flows, the discipli-
nary system and the system for reporting violations and training/information. The revised
Model was reviewed by the Board of Directors on 14 March 2006.
THE GROUP’S CODE OF ETHICS
The Board also discussed the adoption of the Group’s Code of Ethics, which forms an inte-
gral part of the organisational model.
Particular attention was paid to the provision of training/information on this matter. Training
sessions involving the entire management of Banca Lombarda were held during the fourth
quarter of 2005, supplementing the IT support already available as part of the corporate
regulatory system.
KEY VALUES
35Key values
34
SENSE OF RESPONSABILITY
THE ABILITY TO LISTEN AND RESPECT FOR CUSTOMERS
INNOVATION
RESPECT FOR LEGAL RIGHTS AND EQUAL OPPORTUNTY
TRADITION AND TERRITORIAL ROOTS
KEY VALUES
The Group’s Charter of Values approved by the
Board of Directors of Banca Lombarda, the Parent
Bank, consists of the following principles.
SENSE OF RESPONSIBILITY
The Banca Lombarda Group bases all its efforts
on the serious acceptance of responsibility at
all levels within the organization. In concrete
terms, this translates into fair dealing, openness
and continuity of relationships. Continuity is
considered the cornerstone of the relationship
of trust that exists between the Bank and its
customers, stockholders, employees and the
entire community.
Fair dealing versus all stakeholders is the basis
of all actions and initiatives; indeed, it must
inspire everything that the Bank does: there is
no economic objective, however interesting
and attractive, that can be pursued without paying proper attention to the rules and reg-
ulations that govern how we operate; there can be no lasting success if we ignore the
rules and the respect that lie at the basis of community life and preservation of the envi-
ronment. Openness is pursued not only as a regulatory requirement, but also as a distin-
guishing factor: dialogue and clarity represent the basis of lasting relationships and a
good reputation.
THE ABILITY TO LISTEN AND RESPECT FOR CUSTOMERS
Banca Lombarda intends to present itself to customers as an attentive and professional
partner, well aware of the responsibilities that stem from its role as a financial and bank-
ing intermediary. In order to respect the true needs of customers, the Group believes it
to be of vital importance to listen to them and discuss their requirements. This helps to
direct the Bank’s competitive skills towards the creation of products and services that
meet the various profiles of demand.
INNOVATION
For the Group, innovation is a value on which to base its competitive ability. It is also the best
way to update products and services to reflect the changing needs of customers, while
exploiting to the full the technological developments that lower costs and improve the quali-
ty of internal processes.
RESPECT FOR LEGAL RIGHTS AND EQUAL OPPORTUNITY
The Group operates responsibly in compliance with the fundamental principles of the
Italian legal system, sharing the principles of legality, freedom of thought and equal
opportunity. The Group rejects any form of discrimination or prejudice, whether inside or
outside the organization, based on race, sex, religious confession, political beliefs or any
other social or personal condition, other than the fair and honest requisites needed to
operate within the law and achieve the Group’s business objectives.
TRADITION AND TERRITORIAL ROOTS
The Group is convinced that its business history, constant interaction with its territory, and
the mark left by its founders and later personalities, all constitute a valuable heritage. This
must not be forgotten, but kept alive and modern thanks to an innovative vision that is
open to change.
ACTIVITIES AND RESULTS
38 39Activities and results
ACTIVITIES AND RESULTS
Formed at the end of 1998, on the merger of Banca
San Paolo di Brescia and Credito Agrario
Bresciano, the Banca Lombarda Group has subse-
quently grown almost fivefold. In particular, total
assets have increased from about 8 billion euro to
38.3 billion euro at the end of 2005.
At that date, Banca Lombarda ranked 9th in Italy
for banking products (loans to customers, direct
and indirect deposits) and was placed 12th
among listed Italian credit institutions, with a
market capitalization at year end of almost 4 bil-
lion euro.
The federal model has played an important role in
supporting the aggregation process by which the
Group has reached its present size and configura-
tion, with seven federated commercial banks
operating in Italy.
The new Group structure facilitated the aggregat-
ing force of the Parent Bank and the rapid integration of other banks as they were acquired,
while safeguarding their brand names in view of their value in terms of customer loyalty.
The objectives of united and efficient management are guaranteed by Banca Lombarda as the
Parent Bank, which represents the Group’s “centre of governance and control”. Banca
Lombarda carries out all functions involving management policy, coordination and control. It
also performs the operational and support functions that have been centralised in order to
strengthen the organization and make management more effective, thus exploiting all syner-
gies to the full.
The formation of Lombarda Sistemi e Servizi at the beginning of 2001 completed the process
of centralizing and rationalizing the information & communication technology (ICT) functions,
as well as real estate and general services, with the achievement of significant economies of scale.
2002 saw the completion of the plan to rationalize the distribution networks of the Group’s
commercial banks, assigning a specific territory for each one to develop. The model of prod-
ucts and services on offer was also refined and focused on the specific needs of customers
by divisionalizing the commercial organization by customer segment (retail, private banking
and corporate).
Subsequently, a plan was implemented to restructure and simplify the near-banking compa-
nies. Veneta Factoring was absorbed by CBI Factor.
The network of financial consultants has been expanded over the past four years, rapidly
reaching the breakeven point; the network has virtually doubled from 308 consultants in 2001
to 553 in 2005.
1 The two Groups that together gave rise to the Banca Lombarda Group, prior to their merger, had total assets of 8.9 billion euro and7.3 bilion euro for, respectively, CAB and the Banca San Paolo Group.
2 Source: Prometeia.
41Activities and results
40
The following chart shows the structure of the Group at the end of 2005.
At the end of 2005, the Banca Lombarda Group had total loans of 28.2 billion euro, direct
deposits of 28.9 billion euro and indirect deposits of 46.8 billion euro.
The Group operates in various financial segments, in addition to the various activities that
comprise its core business: granting credit, taking deposits and managing collection and pay-
ment services. The operating segments include: asset management (indirect deposits of 26.2
billion euro managed in 2005), bancassurance (6.4 billion euro in insurance reserves, leasing
(1.7 billion euro in loans to customers), factoring (turnover of 3.8 billion euro) and consumer
credit (loans totaling 717 million euro).
The Banca Lombarda Group is one of the largest Italian banking groups in terms of loans and
direct deposits, with a market share that has grown over time to more than 2% (2.1% in asset
management).
It has a network of 787 branches (including two abroad, in France and Luxembourg) and 553
financial consultants. The Group’s territorial presence is concentrated in the north-west of Italy,
with particularly significant market shares in its provinces of origin: Brescia (28% of loans and
42.4% of deposits, including bonds issued), Cuneo (18.8% and 28.9%), Pavia (10.8% and 13.8%)
and Alessandria (10.3% and 12.2%).
The Group’s operations have the following characteristics:
• a significant level of profitability; ROE, i.e. the ratio of net income to equity, was 12% in 2005;
• a high level of efficiency: with a cost/income ratio, i.e. administrative costs as a proportion
of net interest and other banking income, of 58.1%;
• excellent quality of loans: the proportion of net non-performing loans to total loans is 0.80%;
• staff productivity is good and rising, both in terms of deposits and loans per capita and in
terms of net interest and other banking income per capita.
* Joint venture with Cattolica Assicurazioni
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43Activities and results
42
OBJECTIVES, PLANS AND STRATEGIES FOR THE FUTURE
The Group intends to pursue a growth path that ensure competitive performance, having
regard for the level of risk accepted, in order to properly remunerate the stockholders and
take pro-active responsibility in dealings with all stakeholders.
This combined objective translates into a plan to realign the various sources of profitabili-
ty, efficiency and risk, to achieve levels of excellence compared with the Group’s leading
competitors.
The principal areas of action for the pursuit of the Group’s objectives are:
• greater focus on traditional banking activities and on retail customers, partly by review-
ing and simplifying commercial policies and the product and services available, there-
by making a better use of capital and maximizing Economic Value Added (EVA);
• a search for economies of purpose and greater specialization, partly by reviewing and
enhancing the strategic alliances and agreements with external partners and other play-
ers, especially those involving activities that are expected to achieve the highest rates of
growth, such as consumer credit, leasing, bancassurance and supplementary pensions;
• the pursuit of economies of scale and greater effectiveness via the rationalisation and sim-
plification of the Group’s corporate and organizational structure, and the elimination of any
remaining duplications;
• the ongoing improvement of distribution channels, via technological and process innova-
tions and the territorial repositioning of the network, to take best advantage of the com-
plementary nature of the various channels.
The sustainability of these objectives over the medium/long term depends on the ability to consol-
idate and strengthen our image as a highly reliable Group, truly attentive to the needs of customers
and constantly in search of the highest quality.
This will enable us to consolidate and strengthen over time the confidence of an increasing number
of customers (present and future), who will recognize and accept the principles underlying our way
of being a bank.
All this must be achieved by identifying the concrete action to be taken and spreading a
corporate culture that guides and consistently enhances the value of the Group’s human
capital.
The action to enhance and direct the development of our Human Capital includes:
- the identification of potential;
- the activation of an assessment center for a population selected with reference to certain cri-
teria indicative of potential, in order to give priority to investment in the persons selected in a
specific and structured manner;
- the completion of the survey of knowledge, with a view to identifying gaps to be covered by
training activities;
- the definition of strategies for the professional development and management of personnel
in order to meet business requirements and cover turnover within the Group;
- consistent with the Group’s commercial and organizational objectives, training programs will
be expanded in terms of content and volume, providing both standard and personalized
courses having regard for the knowledge already acquired;
Other Groupwide action at all levels includes the improvement of internal communications,
and a project to sustain effectively the sense of belonging, corporate identity and external
image, thus facilitating the internal transfer of information and know-how.
Maximization of the measurable quality of the services provided is a strategic objective for
the maintenance of the value created over time. In this regard, a new project will guide the
search for maximum quality at all levels by defining quality in the various contexts and iden-
tifying agreed mechanisms for measuring it effectively.
3311//1122//22000055 3311//1122//22000044OOPPEERRAATTIINNGG IINNDDIICCAATTOORRSS
Indicators off employee efficiency (thousands of euro)
Loans to customers/average number of employees
Net interest and other banking income/average number of employees
Total customer deposit/average number of employees
Equity indices
Equity/Loans to customers
Equity/Total customer deposits
Capital adequacy ratio
Tier 1 ratio (Basic capital/Weighted assets)
Total capital ratio (Capital for supervisory purpose/Weighted assets)
Profitability indices
ROE (Return on Equity)
Cost/income ratio (Operating costs/net interest and other banking income )
Risk indicator
Net non-perfoming loans/net loans to custumers
Coverage of non-performing loans
Net problem loans/net loans to customers
3,734
181
10,008
7.1%
2.6%
5.8%
9.7%
12.0%
58.1%
0.80%
53.4%
1.03%
3,521
174
9,364
6.9%
2.6%
5.9%
10.1%
10.9%
61.7%
0.80%
50.4%
1.13%
3.THE SOCIAL AND ENVIRONMENTAL REPORT
3. THE SOCIAL ANDENVIRONMENTAL REPORT
VALUE IS CREATED EVERY DAY BY FOCUSING ON
THE QUALITY OF THE SERVICES PROVIDED TO
CUSTOMERS, CONSISTENT WITH THE VALUES
UNDERPINNING THE GROUP’S OPERATIONS
AND THE INTERESTS OF ALL STAKEHOLDERS““
THE SOCIAL AND ENVIRONMENTAL REPORT
48 49The social and environmental report
THE SOCIAL AND ENVIRONMENTAL REPORT
In carrying on its activities, the Banca Lombarda
Group deals with a wide range of counterparties
and legitimate interest groups, which are gene-
rally referred to as “stakeholders”. Certain of
these fall into well defined categories, while
others are not so clear and organized.
The stockholders provide the risk capital that makes it possible to do business and grow. They
determine the strategic direction and objectives to be pursued by the Group so that opera-
tions are oriented towards the stable, sustainable and lasting creation of value, in compliance
with the rules and professional ethics and full acceptance of the institutional responsibilities of
a banking group.
The Persons who work for the Group, whether as employees or financial consultants, contri-
bute their professionalism, skills and integrity and represent the principal asset of the business
and a critical factor for its success. The motivation and daily commitment of collaborators
makes a decisive contribution to the growth of the Group which, in turn, generates opportu-
nities for professional growth and security for their future.
Customers are the focus of business activities and the final recipients of the banking services
provided. The achievement of maximum customer satisfaction is a priority objective that dri-
ves operating decisions and commercial policies, while making every effort to inform and
educate them.
MAIN STAKEHOLDERS
Stakeholders Customers
Human resources Community and environment
Financial System
Suppliers
Public Institutions
51The social and environmental report
50
Relations with public institutions concern the regulatory sphere, giving rise to the obli-
gation to comply with all of the legal provisions that govern the Group’s activity, as well
as to pay taxes and social security contributions. For many years, the Group has also pro-
vided specific banking services to local authorities.
The Group’s relations with the financial and banking system derive from normal inter-
bank activities.
Relationships with institutional authorities (the Bank of Italy, Consob, Borsa Italiana and
other financial institutions) are of a regulatory nature, involving the punctual and com-
plete implementation by the Group of all regulatory instructions. The Group also colla-
borates with various trade associations.
The Group’s contribution to the development of the Community primarily involves the
performance of banking activities that contribute significantly to the development of the
local economy, remunerating the savings of families, granting loans and creating
employment, both directly (employees) and indirectly (businesses financed and sup-
pliers). The Group also contributes to the community via specific support for various ini-
tiatives in the artistic, cultural, educational and sporting fields, as well as for associations
and voluntary work.
The development of the Group’s activities, via the consolidation of its market position and the
growth of profitability, generates value for the benefit of all the above counterparts.
Value Added is defined as the increase in value generated by the production and distri-
bution of goods and services as a result of combining the various factors of production.
The allocation of the value added by the Group during 2005 among the various stake-
holders is shown in the value added schedule included in the “Economic Report”.
The format for this schedule is based on the model recommended by ABI, the Italian
Banking Association. Value Added derives from the difference between revenues (value
of production) and consumption.
The value added report comprises two sections:
• Schedule of Total Value Added determined by deducting consumption from net revenues3;
• Allocation of Total Value Added among the various categories of stakeholder.
In 2005, the activities of the Banca Lombarda Group generated Gross Total Value Added of
1,126.6 million euro. This amount was allocated among the various stakeholders in the per-
centages shown in the following chart4.
Performance over the past two years reflects an increase in Gross Total Value Added of more
than 10%, despite unfavorable conditions in the economic cycle and the growing level of
competition in the banking sector.
This growth was principally due to the better performance of revenues (especially interest,
other income and trading activities) compared with the more modest increase in consump-
tion, assisted by the containment of administrative expenses and the cost of lending.
3 Revenues consist of interest and commission income, dividends, profits from trading, hedging and the sale of loans and assets,other operating income and income from equity investments; consumption, on the other hand, consists of interest and commissionexpense, other administrative expenses, value adjustments and provisions.
4 The component of value added referred to as “the Business” reflects the self-financing generated by the Group. More specifically,this represents the undistributed profits earned during the year plus depreciation and amortization.
TTOOTTAALL CCOONNSSOOLLIIDDAATTEEDD GGRROOSSSS VVAALLUUEE IINN 22000055 ((11,,112266..66 mmiilliioonn eeuurroo))
Minority interests4.0%
Stockholders11.4%
Business15.5%
Community0.4%
Public institutions23.7%
Human resources44.9%
53The social and environmental report
52
The value added generated for the various stakeholders has changed as follows:
• The value added attributable to the stockholders rose by 14.8% in 2005 to 128.9 million euro.
This reflects consolidated net income not reinvested and derives from the growth in net
income for the year.
• The value added allocated to human resources rose by 3.9% (to 506 million euro). This is
the most significant caption and includes not only payroll costs, but also the commissions
recognized to those involved in the placement of the Group’s products and services, and
the fees of the directors and statutory auditors5.
• The value added allocated to the Public Administration (267.4 million euro in 2005) has risen
by 16.8% due to the improvement in profitability, despite a modest reduction in the effec-
tive tax rate with respect to the prior year.
• The portion allocated to the community amounted to 4.4 million euro in 2005; this repre-
sents growth over the year of 15.8%.
• There was a significant increase (+12.5%) in the value added attributable to The Business
(174.6 million euro in 2005), which represents the self-financing retained by the Group. This
comprises undistributed net income, depreciation and amortization.
• Lastly, the portion of net income allocated to minority interests has increased by 11.2 mil-
lion euro (+33%), to 45.3 million euro at the end of 2005; this comprises the value genera-
ted by the Group for the minority stockholders of the Parent Bank’s direct and indirect
subsidiary companies; it mainly derives from the net income for the year of Banca
Regionale Europea.
See the section that follows the Social and Environmental Report for the detailed schedules
that show the calculation and allocation of value added.
5 The directors’ and statutory auditors’ fees are relatively low compared with the other amounts comprising the value added allo-cated to human resources.
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112288,,99
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OUR STOCKHOLDERS ARE MAINLY SMALL
AND MEDIUM-SIZED SAVERS, FIRMS AND
ENTREPRENEURS, NON-PROFIT ORGANIZA-
TIONS AND FOUNDATIONS, ESSENTIALLY
BASED IN THE COMMUNITIES WHERE THE
GROUP HAS IT HISTORICAL ROOTS.
BANCA LOMBARDA IS TRULY A “PUBLIC
COMPANY”, WITH A SHAREHOLDER BASE OF
AROUND 44,000 STOCKHOLDERS.
““STOCKHOLDERS
56 57Stockholders
BANCA LOMBARDA STOCK
BANCA LOMBARDA’S RATINGS
THE ETHICAL RATING OF BANCA LOMBARDA
COMMUNICATIONS
STOCKHOLDERS
The stockholders are almost equally split between
physical persons (44%) and legal persons (56%).
The first category essentially comprises small and
medium-sized savers, while the second consists of
companies, non-profit organizations and institutio-
nal investors. They principally derive from the
communities where the Group has it historical
roots (about 80% of the total are resident in the
provinces of Brescia, Cuneo and Milan). Foreign
investors hold a significant and stable interest in
the Group (about 8%, almost all of whom are
based in EU nations).
With regard to the stockholders that are legal persons, non-profit organizations and institutio-
nal investors represent 17.9% and 11.6% respectively of the overall total.
Physical persons hold an average of about 3,300 shares, essentially unchanged with respect to
2004, worth about 40,000 euro.
Analysis by age indicates a marked bias towards the older age brackets: more than 70% of the
stockholders who are physical persons are over 50 years of age, while 40% are over 65.
BBRREEAAKKDDOOWWNN OOFF TTHHEE CCAAPPIITTAALL SSTTOOCCKK
Individuals44.1%
Institutionalinvestitors
11.6%
Not-for-profit17.9%
Other legalentities26.4%
Legalentities55.9%
Centre-South3.1%
Aboroad7.9%
North-East5.2%
Other North-West0.6%
Prov. Cuneo6.5%
Other Lombardy3.6%
Prov. Milano13.4%
Prov. Brescia59.6%
2005
Centre-South2.7%
Aboroad7.4%
North-East6.5%
Other North-West0.6%
Prov. Cuneo6.3%
Other Lombardy3.6%
Prov. Milano14.2%
Prov. Brescia58.6%
2004
GGEEOOGGRRAAPPHHIICC BBRREEAACCKKDDOOWWNN
59Stockholders
58
From the creation of Banca Lombarda at the end of 1998, about 300 stockholders have been
members of a voting and blocking syndicate that strengthens the internal cohesion of the
Group and facilitates its growth.
At the end of 2005, syndicated shares represent about 48.7% of the total share capital.
This agreement, which is renewed every three years, covers the exercise of voting rights at
extraordinary meetings held to change the articles of association. It also restricts the transfer
of shares that have been syndicated.
The agreement that expired in 2004 was renewed until 31 December 2007.
At the end of 2005, Banca Lombarda’s share capital amounted to 322,292,258 euro, represen-
ted by 322,292,258 ordinary shares, par value 1 euro each.
A further 29.3 million shares were issued in 2006, with a total value of 342.8 million euro, pur-
suant to the mandate granted at the Extraordinary Meeting held in 2003, as part of imple-
mentation of the 2006-2008 Business Plan approved by the Board of Directors on 14 March
2006. The enthusiastic take up of the capital increase clearly demonstrated the confidence of
our stockholders in the Group, their appreciation of the results achieved and the underlying
professionalism and commitment displayed.
BANCA LOMBARDA STOCK
Banca Lombarda is listed on the MTA (Mercato Telematico Azionario), the official screen-
based equities market run by Borsa Italiana.
The bank is part of the “Blue Chip” segment, comprising securities with a market capitalization
of more than 800 million euro.
At the end of 2005, the total capitalization (number of shares in circulation multiplied by the
stockmarket price) was about 3.9 billion euro. Following the recent capital increase, the mar-
ket capitalization at the end of July 2006 was about 4.6 billion euro.
Banca Lombarda’s shares in recent years have offered stockholders a constant stream of divi-
dends and remarkable price stability, even at times of major market fluctuations.
This stability emerges clearly from a comparison of the stockmarket performance of Banca
Lombarda shares with the S&P/Mib basket and the Mib banking index over a sufficiently long
period of time.
For example, between the start of 2001 and the end of 2005, the Banca Lombarda share price
rose by 10%, compared with a fall during the same period of 10.2% in the Mibtel index and
5.3% in the Mib Banking index.
From April 2006, Banca Lombarda is part of the Midex, a synthetic index for the shares of listed
companies with a medium-sized capitalization; Banca Lombarda’s stock has the second-largest
weighting within this basket.
BBRREEAAKKDDOOWWNN OOFF IINNDDIIVVIIDDUUAALL SSTTOOCCKKHHOOLLDDEERR OOFF TTHHEE BBAANNCCAA LLOOMMBBAARRDDAA GGRROOUUPP BBYY AAGGEE
81 & over5.4%
Up to 356.2%
36-5020.5%
51-6533.8%
66-8034.1%
BBAANNCCAA LLOOMMBBAARRDDAA SSHHAARREE
112200
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110000
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mmaagg--0055
■■ BBAANNCCAA LLOOMMBBAARRDDAA ■■ MMIIBBTTEELL ■■ MMIIBB BBAANNKKIINNGG
61Stockholders
In May 2006, Standard & Poor’s revised its outlook for the Group from stable to positive,
reflecting the improvement in the capitalization of the Group, together with the good level of
efficiency and the quality of our assets.
The opinion of our Group expressed by all three agencies is undoubtedly positive, recogni-
sing our high asset quality, low risk profile and revenue stability.
For completeness, the rating of Banca Lombarda by the three agencies is presented
below against their individual rating scales.
60
The Group has always given preference to policy decisions that result in long-term and sustai-
nable value creation, avoiding any kind of speculative approach.
The results achieved are reflected both in higher net income and an increased dividend per share.
As stated in the 2006-2008 Business Plan, the stockholder remuneration policy is expected to
remain positive in the coming years; the payout ratio (percentage of net income allocated to
dividends) should remain around 50%.
BANCA LOMBARDA’S RATINGS
Ratings represent the assessment by independent, specialist private agencies of a firm’s cre-
dit risk or the ability of an issuer to meet its payment commitments. As shown below, the code
used varies depending on the agency concerned and belongs to two macrocategories:
investment and speculative. Banca Lombarda is considered to represent an investment, given
the very good level of solvency.
The three international rating agencies that current track Banca Lombarda confirmed their
ratings in 2005.
SSIIGGNNIIFFIICCAANNTT DDAATTAA AANNDD IINNDDIICCAATTOORRSS FFOORR BBAANNCCAA LLOOMMBBAARRDDAA SSHHAARREESS ((aammoouunnttss iinn EEuurroo))
22000055 IIAASS 22000044 IIAASS 22000033 BBEEFFOORREEIIAASS
AAGGEENNCCYY SSHHOORRTT--TTEERRMMDDEEBBTT
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((mmiinn.. EE--mmaaxx.. AA))
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SSUUPPPPOORRTT((mmiinn.. 11--mmaaxx.. 55))
Moody’s P-1 A2 Stable C+
Fitch Ratings F1 A Stable B/C 3
Standard & A-2 A- PositivePoor’s
Note that the indicator for “financial strength” provided by Moody’s reflects the possibility that the Bank might need external supportfrom the Group’s stockholders or official institutions.The “individual” index given by Fitch represents a summary rating of a bank’s intrinsic strength (profitability, financial equilibrium, mana-gement capability, operating context, commercial network), on the assumption that it cannot rely on obtaining any kind of external sup-port. The “support” indicator, on the other hand, concerns their view about access to concrete and timely external support (from theState or key institutional stockholders) should the Bank, in hypothetical circumstances, find itself in difficulty.Ratings at 30 June 2006
Market prices at year-end 12.04 9.82 10.08
Market cap. at year-end (in millions of euro) 3,881 3,150 3,191
Stockholders’ equity per share* 6.19 5.72 5.96
Consolidated earnings per share* 0.74 0.62 0.35
Dividend per share 0.40 0.35 0.30
*calculated using the no. of shares at year-end.
SSTTAANNDDAARRDD && PPOOOORR’’SS MMOOOODDYY’’SS FFIITTCCHHRRAATTIINNGGSS
SShhoorrtttteerrmm
A-1+A-1A-2A-3BCD
LLoonngg tteerrmmAAAAA+AAAA-A+AA-
BBB+BBBBBB-BB+BBBB-B+BB-
CCC+CCCCCC-CCC
SShhoorrtttteerrmm
Prime-1Prime-2Prime-3
Not prime
LLoonngg tteerrmmAaaAa1AA2AA3A1A2A3
BAA1BAA2BAA3BA1BA2BA3B1B2B3
CAACAC
SShhoorrtttteerrmm
F1+F1F2F3BCD
LLoonngg tteerrmmAAAAA+AAAA-A+AA-
BBB+BBBBBB-BB+BBBB-B+BB-
CCC+CCCCCC-CCC
DDDDDD
■■ RRAATTIINNGG BBAANNCCAA LLOOMMBBAARRDDAA ■■ SSPPEECCUULLAATTIIVVEE GGRRAADDEE
63Stockholders
62
THE ETHICAL RATING OF BANCA LOMBARDA
In addition to the important opinions of the above rating agencies, there are a number of
international agencies that provide opinions on the sustainability of results, social and envi-
ronmental performance, respect for the environment and the rights of employees.
These ratings generally make reference to samples drawn from companies with the largest
capitalizations, thus penalizing Banca Lombarda stock which is not covered by them.
The bank’s stock is however included in the AXIA CSR index, comprising the 30 Italian com-
panies with a CSR rating that falls within a given range of values, prepared by Axia Financial
Research; in particular, this agency has allocated a summary rating of “B++” to Banca
Lombarda, which reflects the good performance of the bank with respect to the reference
standards (especially the excellent approach to the local economy and the commitment to
respecting the principle of equal rights and opportunities for employees).
Although not present in the Ecapital indices (not due to a poor ethical rating, but for reasons
of comparability with other market indices), the stock has nevertheless received a good
“E+” rating, largely due to the strong performance regarding corporate governance and, in
general, relations with customers and stockholders.
COMMUNICATIONS
In addition to the timely market announcements made in accordance with the disclosure
requirements for listed companies, Banca Lombarda also organizes periodic meetings with
financial analysts and the press to provide more detailed insight into the Group’s results and
operating performance.
Summaries of these meetings are published via press releases and reported on our institu-
tional website in a reserved area entitled “Investor Relations”, which also includes: informa-
tion on the annual, half-yearly and quarterly financial statements; press releases and various
documents of interest to stockholders and the general public.
During 2005, Banca Lombarda issued 24 press releases, including 11 of a financial nature
(annual report, interim results, acquisitions and corporate operations); 5 of a commercial natu-
re (launch of new products and agreements with institutional counterparts) and 8 of an insti-
tutional nature (appointments, calendar of stockholders’ meetings, opening of
Representative Office, etc.).
In particular, activities in support of the opening of the Representative Office in Shanghai inclu-
ded the involvement of top management and Brescia-based institutions.
External communications also took the form of interviews given by top management and
those in charge of the holding and Group companies.
The Group also attracted considerable attention from the press, with the publication of more
than 200 articles in the main national newspapers (Il Sole 24 Ore, Milano Finanza, Corriere della
Sera and others) and in local newspapers (Giornale di Brescia, Brescia Oggi, La Provincia
Pavese, Il Corriere d’Alba).
The news contained in our press releases was also published on the web by various sites spe-
cializing in economic and financial information.
In addition, Banca Lombarda publishes all these press releases on its own website
www.bancalombarda.it
The website was expanded considerably during 2006, as part of the constant improvement of
institutional communications, thus increasing the availability of corporate documentation in line
with best practice, while also improving accessibility, usability, speed and ease of navigation.
HUMAN RESOURCES ARE CONSIDERED TO BE OF
FUNDAMENTAL IMPORTANCE TO THE BUSINESS.
THE DEDICATION AND PROFESSIONALISM OF
EMPLOYEES ARE ESSENTIAL VALUES FOR THE
SHARING AND ACHIEVEMENT OF THE OBJECTI-
VES SET BY THE GROUP AND ALL THE COMPANIES
WITHIN IT.
““HUMAN RESOURCES
67Human resources66
CREATION OF NEW JOBS
PERSONNEL SELECTION
TRAINING IN ORDER TO GROW AND COMPLETE
CAREER DEVELOPMENT AND INCENTIVES SYSTEMS
EQUAL OPPORTUNITIES
OTHER SOCIAL ASPECTS
EMPLOYMENT CONTRACTS
SUPPLEMENTARY PENSIONS AND ACCIDENT/HEALTHCARECOVER
STAFF BENEFITS
HEALTH AND SAFETY IN THE WORKPLACE
ACCIDENT PREVENTION
ABSENCES
DIALOG WITH THE TRADE UNIONS
HUMAN RESOURCES
The Group is therefore committed to develo-
ping the abilities and skills of each employee, so
that their energy and creativity can be fully
expressed in the realization of their potential. In
this context, the Group offers all employees the
same opportunities for professional growth,
ensuring that each is treated equally, based on
merit, without any discrimination due to gender,
age, disability, religion, nationality, ethnic origin,
political beliefs or union affiliation.
CREATION OF NEW JOBS
At the end of 2005 the Banca Lombarda Group had a
total of 7,562 employees, unchanged with respect to
2004 (7,562). Most employees live in the north-west of
Italy, although many reside in central Italy, confirming
the Group’s contribution towards the creation of jobs
in the main areas where we are present6.
In aggregate terms, net of intercompany transfers, 255 people were hired in 2005, including 2
deriving from the inclusion of the Representative Office in Shanghai (China) within the scope
of consolidation. There were 257 resignations during the year, partly due to normal staff tur-
nover and partly because they were able to access the Solidarity Fund.
These numbers highlight that voluntary early retirement has been accompanied by an appre-
ciable level of recruitment involving young persons starting work and others with experience.
The staff turnover ratio (the number of resignations during the year as a percentage of the
number of employees at the start of the year) was 3.4%, down from 5.0% in 2004. The figures
for resignations and recruitments do not include short-term contracts that were renewed on
expiry or converted into more permanent forms of employment.
6 The number of employees at the end of the year refers to those on the books of the Group companies included in the line-by-lineconsolidation. Moreover, new hires and resignations have been measured with reference to all Banca Lombarda Group compa-nies consolidated line-by-line, with the exclusion of foreign companies. For these, the net change in the number of employees bet-ween 31 December 2004 and 2005 has been considered. The following charts analyze employees by length of service, age, education, gender, grade and type of employment contract,based on the personnel on the books of the companies included in the line-by-line consolidation, with the exclusion of MercatiFinanziari, Banca Lombarda International, Veneta Finanziera, Gestioni Lombarda Suisse and 14 employees of Banco di Brescia’s andBanca Regionale Europea’s foreign branches. For the analysis of absences, reference has been made to the personnel on thebooks with the exclusion of Mercati Finanziari, Banca Lombarda International, Financiera Veneta, Gestioni Lombarda Suisse and 14employees of Banco di Brescia’s and Banca Regionale Europea’s foreign branches.
CCHHAANNGGEE IINN TTHHEE NNUUMMBBEERR OOFF EEMMPPLLOOYYEEEESS IINN 22000055
7,562
31.12.2004 New hires Leavers New Companies 31.12.2005
+255 -257 +2 7,562
69Human resources
68
Resignations as a proportion of the number of employees at the start of the year were stable
(1.8%), confirming the high level of loyalty to the Group.
The following analysis was made category by category to understand the reasons for peo-
ple leaving the Bank during 2005.
In 2005, the Group again made use of the Solidarity Fund as a way to achieve greater
flexibility in handling the process of corporate restructuring and reorganization.
Important projects involving Group companies have been discussed with trade union
representatives with a view to defining the means of access to the “Solidarity Fund to
support incomes, employment and retraining of banking personnel”.
Implementation of a framework protocol defined at Group level, together with subse-
quent enabling agreements signed at company level, made it possible during the
period for 51 employees, generally of a certain age, to take voluntary early retirement
or pre-retirement.
Against these departures, our replacement policy was to hire people only for those
positions envisaged by the new organizational model, with the recruitment of young
talent with special focus on the new forms of professional skill.
The hiring of these new resources has expanded the younger age bands; at present,
employees not over the age of 40 represent more than 50% of the total, while about
40% of staff have been with the Bank for not more than 10 years.
PERSONNEL SELECTION
The progressive consolidation of the Group demonstrates that human resources represent
the principal source of competitive advantage and are one of its fundamental assets.
Personnel research, recruitment and selection is an established and ongoing process
within the Group.
This process is well structured, with a view to identifying human resources with aptitude and
considerable potential.
The Human Resources Department of Banca Lombarda e Piemontese performs search,
recruitment and selection activities on behalf of the entire Group.
Candidates without any previous experience in banking are selected using suitable profiling
techniques that take account of the various needs of the bank and the professional expecta-
tions of individuals.
The selection process consists of two separate steps:
- a introductory one-to-one interview
- a group interview at the assessment center
Around 700 recruitment interviews were carried out in 2005. Of these, 320 candidates passed
% LEAVERS IN 2005 ON THE NUMBER OF EMPLOYEESAT THE START OF THE YEAR (TOTAL 3.4%)
% LEAVERS IN 2004 ON THE NUMBER OF EMPLOYEESAT THE START OF THE YEAR (TOTAL 5.0%)
0.2% other
pre-retirement
contract expiry
retirement
resignation
0.7%
0.2%
0.4%
1.8%
0.3% other
pre-retirement
contract expiry
retirement
resignation
2.1%
0.3%
0.6%
1.6%
PPRROOFFEESSSSIIOONNAALLGGRRAADDEESS
MMIIDDDDLLEE
MMAANNAAGGEERREEXXEECCUUTTIIVVEESS TTOOTTAALLRREEAASSOONN FFOORR
RREESSIIGGNNIINNGG
Pre-retirement 59.4% 45.1% 0.0% 100.0%
Resignations 68.6% 31.4% 0.0% 100.0%
Retirement 43.8% 37.5% 18.8 % 100.0%
Contract expiry 100.0% 0.0% 0.0% 100.0%
Other 70.6% 29.4% 0.0% 100.0%
TTOOTTAALL 6655..11%% 3322..55%% 22..44%% 110000..00%%
BBRREEKKDDOOWWNN BBYY PPEERRIIOODD OOFF SSEERRVVIICCEE AATT 3311..1122..22000055
20-30 years15.8%
31-40 years34.7%
41-50 years33.2%
51-65 years16.3%
6-10 years10.8%
11-15 years17.9%
Over 15 years42.1%
Up to 5 years29.2%
BBRREEAAKKDDOOWWNN BBYY AAGGEE AATT 3311..1122..22000055
71Human resources
70
the first selection and moved on to the second phase. Of these, 125 were then hired and pla-
ced in first-level job positions.
New hires are provided constant support for their professional development from the time
they are allocated to a particular department. Targeted training gives them a series of ban-
king skills, while also developing and refining the individual aptitudes and characteristics that
were identified during the selection process.
The employees of the Banca Lombarda Group have a good level of formal education: 71%
have a high school diploma and 23.5% have a university degree. Of the latter, most are gra-
duates in economics or law.
TRAINING IN ORDER TO GROW AND COMPETE
The training activities designed and implemented by the Banca Lombarda Group during
2005 represent an important step in the implementation of the established programs and
methodologies.
Two projects were commenced in October to develop and optimize modular training for
specific roles within the Group. In particular, the Group “Course Catalog” project will
establish a specific training path for each role with the retail, holding and product-speci-
fic companies; the “Skills identification project” will identify the knowledge possessed
by each employee with respect to that envisaged for each role, so that any gaps can be
covered by targeted modular training.
In particular, the training paths will comprise various modules (technical, operational,
commercial, etc.) to provide the knowledge required by those who work with customers
and the companies within the Group.
The following new training courses were prepared during 2005 and added to those already
available:
- new hire induction training;
- basic course in finance for Core Customer Contacts;
- course on credit and loans for Core Customer Contacts and HNWI (high net worth indivi-
duals) Managers;
- course on credit and loans for S.B.O (small business owners) Managers and Branch
Managers;
- advanced course in finance for HNWI Managers;
- course on bancassurance for Retail, Corporate and Branch Managers;
Training for employees within the Holding Company and central departments of the Retail
Banks covers regulatory, operational and technical matters relevant to their duties and speci-
fic tasks. In this last area, constant on-line training is available, with numerous innovations, such
as: Banking Transparency, Privacy, Ratings and Basel II, Reform of Company Law,
Administrative Responsibility of Legal Persons (Decree 231), Regulations and Safety (Law 626)
in the workplace. The methodology adopted reflects the way training is taken by offering e-
learning support on practical matters or prior to classroom training. More complex matters
involving technical knowledge and operational and commercial behavior are covered in the
classroom, using in-house teachers.
In other words, training provides a competitive edge that guarantees the value added expected
by internal and external customers, as part of the creation of confidence and long-term relations.
Once again, considerable attention was dedicated to the PattiChiari (Transparency) project
during 2005, involving all decentralized locations as part of the certification process required
in order to retain the PattiChiari logo.
BBRREEAAKKDDOOWWNN BBYY LLEEVVEELL OOFF EEDDUUCCAATTIIOONN AATT 3311..1122..22000055
High schooldiploma
71,0%
University degree23,5% Middle school
diploma5,5%
73Human resources
72
Collaboration with the MIP (Milan Polytechnic) on the Pegasus Master program has also
continued with a view to drawing out the best and motivating young talent within the
Group. Work with ABI Training also continued in relation to the 9th edition of the Banking
and Financial Diploma, another highly motivating initiative for young talents.
Overall, the number of days devoted to training in 2005 was around 20,500. This was
lower than in the prior year, since activities in 2004 included special training on com-
mercial matters and the Pattichiari project, with all banks involved in the first-time certi-
fication of the 8 initiatives concerned; this special program involved about 6,000 man-
days of training.
The training provided by the principal companies in the Group is analyzed below:
The end-of-course questionnaires confirm that the matters covered were well recei-
ved, both in terms of their technical content and with regard to the training methodo-
logy followed; for example, out of 4,592 participants, 84% declared their courses to be
so “useful” or “very useful” that they would recommend them to their colleagues.
CAREER DEVELOPMENT AND INCENTIVE SYSTEMS
The whole Group applies the same policies with regard to career paths. Each Company is
independent as far as decision-making is concerned, but acts within the guidelines laid down
by Banca Lombarda, the Parent Bank.
The objective of the Banca Lombarda Group is to develop and consolidate its in-house pro-
fessional skills. Steps have therefore been taken to establish training paths that enable emplo-
yees to grow and broaden their range of skills in relation to their current tasks and their pro-
spects for professional development.
The system of personnel evaluation, a key tool in planning employee development, has been
simplified in operational terms and is now easier for managers to use following the introduc-
tion of a web interface.
The bonus system for all professionals is linked to quali/quantitative objectives and has been
updated for consistency with Group objectives, placing greater emphasis on rewarding the
achievement of teamwork objectives.
IINN--HHOOUUSSEECCOOUURRSSEESS
SSEELLFF--TTRRAAIINNIINNGG
EE--LLEEAARRIINNGG
EEXXTTEERRNNAALL
CCOOUURRSSEESSTTOOTTAALLCCOOMMPPAANNYY
Banca lombarda 1,046 152 356 1,554
Banco di Brescia 6,441 2,738 92 9,271
Banca Regionale 4,935 1,197 90 6,222Europea
Banca di 1,161 282 9 1,452Vallecamonica
Cassa di Risp. di 354 121 4 472Tortona
Banco di S. Giorgio 307 63 8 378
Lombarda Sistemi 612 19 289 920Servizi
TTOOTTAALL MMAANN//DDAAYYSS 1144,,885566 44,,557722 884488 2200,,227766
In-house courses 14,856 22,660 12,098
External courses 848 1,016 1,338
e-learning
Self-training 4,572 3,368 3,380
TTOOTTAALL 2200,,227766 2277,,004444 1166,,881166
22000055 22000044 22000033
22000055 TTRRAAIINNIINNGG DDAAYYSS== 2200,,227766
Managemnetskills7%
Bankingregulations
9%
Other28% Product, sales
& marketing29%
Bankingtechniques
27%
75Human resources
OTHER SOCIAL ASPECTS
The Banca Lombarda Group fully respects and applies the recruitment regulations for
handicapped workers laid down by Law 68/1999, as well as their treatment pursuant to
Law 104/1992. The provisions of Decree 151/2001 are applied in relation to parental leave
and appropriate steps have been taken to provide clear and useful advice to emplo-
yees wishing to use such periods of leave.
All Group companies give particular attention to the situation regarding employees
with a disabled spouse and/or children, envisaging annual action that includes econo-
mic support.
EMPLOYMENT CONTRACTS
The breakdown of personnel by type of employment contract at the end of 2005 is shown in
the following chart.
The Group has been using new forms of labor contracts in an attempt to obtain greater flexibi-
lity. These include part-time contracts which also happen to meet the needs of certain types of
workers (especially young people entering the job market for the first time or students who
work to finance their studies).
A certain recourse to fixed-term contracts and other forms of flexible working introduced by the
“Biagi Law” was made in 2005, especially in relation to the management of integration proces-
ses and reorganizations.
These contracts help young people in search of work. Those hired on fixed-term contracts filled
74
EQUAL OPPORTUNITIES
The principle of equal rights and equal opportunity is one of the Group’s key values. It
follows that the assessment of new members of staff at the time of hiring or when defi-
ning career paths is done without reference to their gender, race, social background or
religious beliefs.
The Group employs around 2,800 women (37.5% of the total).
The following graphs provide a breakdown of male and female employees by grade.
Males67.3%
Females32.7
Males62.3%
Females37.7%
RREECCRRUUIITTMMEENNTT BBRREEAAKKDDOOWWNN BBYY GGEENNDDEERR
2005 2004
Middle-managers
11.6%
Prof.grades87.9%
Executives0.5%
Middle-management
37.5%
Prof.grades 59.0%
Executives3.5%
FFEEMMAALLEESS MMAALLEESS
22000044
Middle-management
30.0%
Prof.grades67.4%
Executives2.6%
Middle-management
28.7%
Prof.grades68.8%
Executives2.5%
22000055
77Human resources
76
50.6% of new jobs; of course, people who have worked on fixed-term contracts obtain prefe-
rence if a permanent position becomes available.
Steps have been taken to favor access to part-time contracts as this meets the needs of many
employees. This complies with the new Collective Labour Contract and the provisions of
Decree 61/2000. The proportion of part-time workers in 2005 was around 8.1% at Group level.
The use of flexible workhours (extra-standard hours, distribution within the week “4x9”,“6x6”, etc.)
was also encouraged, as envisaged by the new contract. These particular solutions make it
possible to obtain a closer match between the opening hours of the branches and the rela-
ted central support (e.g. Call Center) and the needs of customers. We are also looking into
the possibility of making greater use of temporary, multiperiod and remote workers, espe-
cially with a view to coping with repetitive work at the back offices of Lombarda Sistemi e
Servizi and the administrative areas of Banca Lombarda.
SUPPLEMENTARY PENSIONS AND ACCIDENT/HEALTHCARE COVER
The attention that the Group dedicates to supplementary pensions and healthcare for
employees is confirmed by the availability to all employees of the major Group compa-
nies of pension schemes, healthcare assistance and additional insurance cover, over and
above the obligatory national schemes.
The supplementary pensions are provided through “contractual” in-house pension funds
(in the form of unofficial associations) or through the companies’ participation in sector or
“open-ended” pension funds.
Group companies pay a contribution to these pension funds on behalf of employees and,
where foreseen, individual employees’ severance pay may also be transferred to them, in
accordance with agreements with the trade unions, the articles of association/regulations
or the law.
All major Group companies have either healthcare assistance funds (in the form of unoffi-
cial associations), to pay the medical expenses of employees or their families, or have
taken out sickness policies with insurance companies. The contributions or premiums are
paid by the company and, in certain cases, by the members, in application of specific
agreements with the trade unions.
We also offer supplementary cover for industrial accidents. In addition to the insurance
provided by INAIL, we have arranged policies with leading insurance companies that will
pay out a capital sum in the event of a serious accident (causing the death or permanent
invalidity of an employee); most Group employees are also insured in the event of death
for whatever reason.
22000044
Fixedterm
50.6%
Long term49.4%
Longterm
44.9%
Fixedterm55.1%
22000055
BBRREEAAKKDDOOWWNN OOFF SSTTAAFFFF BBYY TTYYPPEE OOFF CCOONNTTRRAACCTT AATT 3311..1122..22000055
Other types0.8%
Part-time8.1%
Fixedterm3.9%
Long term87.1%
79Human resources
78
STAFF BENEFITS
As ever, great attention is paid to the creation of a high quality working environment and
to the provision of services and benefits designed to assist employees with their daily
needs, so that they can be more effective and balance their working hours with their
family commitments.
With regard to the consumption of meals – an increasing need in today’s commuter environ-
ment - Group companies make a considerable effort to manage employee canteens, reach
agreements with bar and restaurants, and provide “luncheon vouchers”. In this regard, com-
mencing in 2006, the employees of Group companies operating in Brescia will be able to
enjoy the new catering facilities established in modern and attractive premises close to the
Brescia2 management center.
With regard to the needs of commuters and the related environmental effects, active coope-
ration has continued with the office of the Mobility Manager for the Municipality of Brescia
(within the Mobility and Traffic Division of the Environment Department), together with the
principal institutions and companies in the Brescia area. The objective is to reduce traffic
around the town, together with the related fumes, in view of legislative requirements (Decree
dated 27 March 1998 issued by the Ministry of the Environment: the so-called “Ronchi
Decree”) and the approach agreed at international level (commencing with the 1992 UN
Conference on the Environment and Development, as followed up by the Kyoto Protocol in
December 1997 and the 2002 G8 Summit held in Johannesburg).
Focus on the family includes economic assistance for the children of employees who are
studying at middle and upper schools and university. These grants cover the entire
period of their education, as envisaged by the national payroll contracts and in-house
agreements. Help is also provided for the disabled children or spouses of employees,
if they are living under the same roof.
In the above context, the Human Resources department within the Parent Company is
also working with other companies in the area to establish a multi-firm nursery for the
children of families living or working in Brescia, which will open in early 2006.
Banca Lombarda also provides tax assistance to Group employees in connection with
the filing of their annual tax returns (Form 730). This includes the provision of a new and
intuitive IT tool (GE730web) which can be used directly and easily by employees.
The principal Group companies also provide economic and operational support for the
Social Club for employees of the Banca Lombarda e Piemontese Group (GID). This has
been active since 2000 in various regions throughout the nation, especially in Lombardy,
Piedmont, Liguria and Lazio, with about 4,000 members (including 800 pensioners) toge-
ther with their families. These important facilities offer members and their families pre-
cious occasions for recreation and cultural events and guarantee them advantageous
access to services.
81Human resources
80
HEALTH AND SAFETY IN THE WORKPLACE
COMPANY ORGANIZATION AND RULES REGARDING SAFETY
Special attention continues to be given to the harmonization and updating of the rules gover-
ning the implementation of current legislation on health and safety in the workplace, not least
to align to way the Group operates and is organized with the objectives set by the legislator;
with regard to the retail banks which have many small units spread throughout their territories,
organizational guidelines on safety have been prepared and instructions issued that involve
all managers in the daily activities associated with the protection of health and safety in the
workplace.
With a view to providing all operating units with the documentation needed by the local
health authorities in the event of an inspection, the file prepared includes a new version of the
“general emergency plan” containing updated instructions on how to behave during a rob-
bery, as well as a “risks sheet” prepared with reference to the general risk assessment carried
out by the Prevention and Protection Department on behalf of each Group company.
SYSTEM FOR CONTINUOUS IMPROVEMENT
• Constant monitoring of risks, training and education
The continuous updating of the assessment of risk at decentralized locations means that the
functions concerned are effectively involved in the management of improvements, with a
view to achieving greater consistency between technical priorities (determined with referen-
ce to the extent of the risk involved) and the investment made.
This monitoring is accompanied by constant work to make employees and managers aware
of the issues regarding the application of the Group’s safety system. In line with the criteria
laid down by the Prevention and Protection Department and in collaboration with the
Company Doctor, numerous classroom training sessions are held for emergency and first-aid
staff, together with the day of specific training provided to new hires.
The effectiveness of this classroom and e-learning training is monitored constantly using spe-
cial IT tools, as well as by reviewing the questionnaires that are completed by participants at
the end of each training session.
THE ROLE OF THE COMPANY DOCTOR
The banking sector and services in general are known to have a low incidence of accidents:
the most common risk in this context, which consists of “office” work, relates to the use of
computer terminals. Although these do not cause accidents directly, but may give rise to
muscular problems if not used properly and, more rarely, sight problems. The Banca
Lombarda e Piemontese Group has therefore adopted over time a careful system of moni-
toring and inspections with the involvement of the Company Doctor, with a view to ensuring
that workstations are and remain ergonomic; the Company Doctor also provides careful
medical supervision, via a program of specialist medical examinations for all employees
exposed to the above risks, while also taking account of the requirements of employees who
have special health needs even if, by law, they do not need to be monitored.
In view of this and to facilitate direct contact with the Company Doctor by all employees, a
dedicated e-mail address is being opened so that all employees can reach the Company
Doctor for both ordinary and non-routine matters, with a guarantee of privacy.
83Human resources
82
SPECIAL PROJECTS FOR THE FURTHER PROTECTION OF EMPLOYEE HEALTH
• Evaluation of safety matters linked to the risk of robberies
The Group has attained high standards in the protection provided against routine bank-
related risks, accordingly the competent functions have focused their attention on the
so-called “emerging risks”, the first of which is the risk of robbery faced by the retail
banks.
The inclusion of robbery risk in the evaluation of risks to be considered under Law 626
has meant adopting suitable systems for monitoring and reporting the security mea-
sures adopted, the internal regulations applied, the location of criminal phenomena
and their frequency, the organisation of specific training courses for all branch per-
sonnel, as well as timely verification of any adverse consequences for the members of
staff involved.
A special, highly innovative project for the achievement of these objectives envisages:
- introduction by the Prevention and Protection department of a computerized system
for “assessing and managing robbery risk”, in addition to normal Auditing and
Security activities;
- establishment of a cross-functional team, coordinated by the manager of the
Prevention and Protection team within the Holding Company, in order to develop a
Security Manual for distribution throughout the Group;
- development of training by specialists from the organizational/procedural and medi-
cal/prevention fields, with a view to establishing standard behavior that minimizes the
psycho-physical consequences for the employees affected; this project involves a full
day of classroom training for all employees of the retail banks;
- adoption for the first time in Italy of specific “post-robbery medical support” metho-
dologies, coordinated by the Company Doctor together with a team of psycholo-
gists, and the anonymous completion of a questionnaire by all personnel affected by
criminal acts over the past two years, in order to obtain epidemiological data on the
true extent of the “robbery related stress” phenomenon.
The provision of information and training about robbery risk in completed by giving all
employees a copy of the “Anti-robbery Guide” prepared by ABI together with the police,
with input from the Security Manager of Lombarda Sistemi e Servizi.
• Evaluation of the risk of radon in the workplace
Radon gas is a natural, radio-active chemical produced by the “nuclear decay” of
radium, which is present in the Earth’s crust in highly variable quantities, and the-
refore in various types of construction materials (cement, rubble, earthenware,
granite etc.).
Radon disperses rapidly in the atmosphere, but in closed environments (homes, schools,
workplaces etc.) the concentrations may represent an excessive risk, since the gas is
highly toxic in proportion to the length of exposure to it.
Commencing from 2003, as required by specific laws, the Group has implemented stan-
dardized risk evaluation procedures with support from recognized laboratories and an
experienced consultant in the field of protection against radio activity: this work has
involved more than 300 branches throughout the nation, including the floors above
ground, even this is not currently required by law, whenever there are doubts about
potential risks for the health of employees.
A working party has also been formed to identify possible technical and organiza-
tional solutions for reducing the concentration of gas and the exposure of persons to
its effects.
Investigation and analysis by the working party will obtain significant information
about the functioning of air-conditioning and ventilation equipment in the premises
concerned, since the concentration of radon is considerably affected by the air supply
and its humidity.
85Human resources
84
ACCIDENT PREVENTION
As confirmed by the statistics published by INAIL, the banking sector tends to have a medium
to low risk profile in terms of industrial accidents. The Bank’s own statistics confirm that there
are very few accidents at work. There were 71 during 2005 (77 in 2004) resulting in 1,336 days
of sick leave (1,494 in 2004). The accident frequency index7 in 2005 this came to 5.5 (6.0 in 2004),
with a similar change in the gravity index8, calculated in terms of the number of days of sick
leave per million accidents, which was 103.2 in 2005 (115.5 in 2004). The trend in these indices is
shown in the following graphs.
The most frequent type of accident occurs when employees are travelling, not when they are
at their place of work.
In order to limit the risk of accidents as much as possible, the Group pays particular attention to:
• providing information and training on professional risks to all employees;
• timely supervision of all maintenance work;
• plan for action to improve the work environment, carried out with the help of the Company
Doctor to ensure the adoption of correct design standards.
These concern the ergonomics of workstations, structures, plant, machinery and other
equipment.
ABSENCES
The following table gives a breakdown of days of absence for various reasons, including holidays,
time off in lieu, paid leave and others. The total number of days off in 2005 was around 370,000, down
from 381,000 in 2004. 71% was by professional staff, 27% by middle managers and 2% by executives.
DIALOG WITH THE TRADE UNIONS
The Banca Lombarda Group has maintained relations at various levels with the trade unions
during 2005, focusing on shared values involving the centrality and importance of persons
“both as individuals and within the organizations that represent them” (see art. 2 Constitution),
such as the Unions: an important counterpart of management, given the high degree of unio-
nization within the Group (in percentage terms) which is essentially stable at more than 81%
of active employees.
The renewal of the 1999 national payroll agreement on 12 February 2005 was of particular
importance. This has revised and broadened the negotiating tools available and increased
the opportunities for discussion with the Unions, identifying “Delegations within the Group
with responsibility for covering topics of common interest to employees at the various Group
companies.
The restructuring/reorganization work with the Group, such as that carried out in the Factoring
sector during 2005 with the absorption of Veneta Factoring S.p.A. by CBI Factor S.p.A., has
always been completed following the positive outcome of the union procedures required by
law and contract, which examine the potential adverse consequences of such processes for
employees and identify solutions to mitigate them.
7 The accident frequency index is calculated as (no. of accidents/ no. of hours worked) x1,000,000. The number of hours worked isobtained by multiplying the average number of employees by 7.5 (average hours worked per day) x 250 (average number of wor-king days in the year).
8 The accident gravity index is calculated in a similar way, replacing the number of accidents with the number of days of sick leave.
AACCCCIIDDEENNTT FFRREEQQUUEENNCCYY RRAATTIIOO AACCCCIIDDEENNTT GGRRAAVVIITTYY RRAATTIIOO
6.05.5
115.5
103.2
2004 2005 2004 2005
AABBSSEENNCCEESS
72.1%
0.1%0.4%
0.7%0.9%
0.1%
0.7%
3.0%
8.0%
14.0%
Leave to donate blood
Accidents
Public office and community commitments
Unpaid leave, disciplinary measures, etc.
Wedding and other tipe of leave
Strikes
Leave to attend trade union meetings
Maternity and other leave for family reason:
Sick leave
Vacation, overtime recovery and courses
THE GROUP IS WELL AWARE THAT CUSTOMERS
ARE OUR MOST IMPORTANT ASSET AND THAT
THE VALUE OF THIS ASSET DEPENDS ON THE
STABILITY AND INTENSITY OF THE RELATIONS-
HIP THAT EACH CUSTOMER HAS WITH OUR
GROUP; THIS ASSET MAKES A KEY CONTRIBU-
TION TO THE CREATION OF VALUE BY THE
GROUP.
““CUSTOMERS
88 89Customers
CUSTOMERS
The Group is also aware that products and ser-
vices must meet the requirements of customers,
and so the organizational model is divisionali-
zed by segment and structured on a federal
basis with a view to maintaining grassroots con-
tact with the local economies concerned
THE CENTRAL ROLE OF THE CUSTOMER
IN DEFINING OBJECTIVES
The Group would like to present itself to custo-
mers not so much as a “transaction bank” but,
increasingly, as a “relationship bank” that is
proactive and able to propose highly profes-
sional solutions for specific customer profiles
and needs.
To achieve this result, the Group is taking a num-
ber of measures, including: adjustment of the
organization, training to develop the professio-
nal skills of employees, the adoption of tools to support the commercial efforts of the dis-
tribution network, improved customer segmentation so that the product range can be
focused better, and the launch of new products.
THE CENTRAL ROLE OF THE CUSTOMER IN OUR ORGANIZATIONAL MODEL
The Group’s retail banks have adopted the divisional model since 2002.
This involves the presence of operating units, specialized by segment and autonomous
in their local territories, such as Areas and Branches which are dedicated to retail custo-
mers, Business Units for Corporate customers, and area Relationship Managers for
Private Banking customers.
The objective is to pursue the principal areas for improvement identified over time and
consolidate the positive experiences of the various banks within the Group; accordingly,
the model adopted in based on the more effective coordination of the local business
of all segments, in order to increase commercial effectiveness while assuring appro-
priate levels of efficiency and quality service for customers.
This have involved the introduction of territorial Areas in 2005, for the decentralized mana-
gement of operations, that are integrated at segment level; these offices became fully
operational at the start of 2006.
The guidelines for this change were as follows:
• make decisions closer to the company, simplifying the system of reporting between
retail units and central offices;
• increase the level of commercial and banking coordination between all seg-
ments, while maintaining the characteristics of commercial segmentation and divi-
sionalization;
• identify standard solutions that retain the individual identities of each bank, with the
adoption of two separate models for Large Banks and for Small Banks, drawing on
positive experience to date;
• increase the degree of autonomy and banking professionalism at local level;
• make branches more efficient in commercial and operational terms via the provision of
centralized support.
At present, the Group’s customers are allocated between the following segments:
- Retail (households with funds under administration of less than 500,000 euro and SMEs
with a turnover of less than 1.5 million euro),
- Corporate (larger companies with a turnover of more than 1.5 million euro);
- and Private (individuals with funds under administration by the Group of more than
500,000 euro).
THE CENTRAL ROLE OF THE CUSTOMER IN DEFINING OBJECTIVES
THE CENTRAL ROLE OF THE CUSTOMER IN OUR ORGANIZATTIONAL MODEL
WHO ARE OUR CUSTOMERS
THE CENTRAL ROLE OF THE CUSTOMERS IN OUR DISTRIBUCTIONMODEL – INTERNET AND VIRTUAL CHANNELS
TRASPARENCY VERSUS CUSTOMERS
THINK OF THE CUSTOMERS, INNOVATE THE OFFER
COMPLAINTS
90 91Customers
WHO ARE OUR CUSTOMERS
With reference to the geographical breakdown of lending by the retail banks, about 90%
is concentrated in the north-west of Italy.
The following map confirms the penetration of the Group in certain areas, showing
market share on a regional basis and highlighting the strength of the Group in north-
west Italy.
The sizes of these segments, in terms of the number of relationships at Group level at 31
December 2005, are shown in the following chart. In addition to these segments, there are
around 1,600 institutional customer accounts.
At year-end, Group customers had more than 28.2 billion euro of loans and 75.7 billion euro of
funds under administration.
The six retail banks (Banco di Brescia, Banca Regionale Europea, Banca di Valle
Camonica, Banco di San Giorgio, Cassa di Risparmio di Tortona and Banca Lombarda
Private Investment) generate the large majority of these volumes; they are analyzed
below by segment.
CCUUSSTTOOMMEERR BBAASSEE
3355,,000000 RReettaaiill // SSmmaallll bbuussiinneessss ((ffoorr lleeaassiinngg && ffaaccttoorriinngg))
2244,,000000CCoorrppoorraattee
112211,,550000RReettaaiill // SSmmaallll bbuussiinneessss
4499,,000000PPrriivvaattee aannddccoonnssuullttaannttss
996666,,550000RReettaaiill // IInnddiivviidduuaallss
225500,,000000 RReettaaiill // IInnddiivviidduuaallss ((ffoorr ccoonnssuummeerr ccrreeddiitt))
BBRREEAAKKDDOOWWNN OOFF DDIIRREECCTT DDEEPPOOSSIITTSS BBYY CCOOUUNNTTEERRPPAARRTTYY
55.0%
3.7%
40.4%
0.9%
66.9%
3.3%
11.9%
17.9%
BBRREEAAKKDDOOWWNN OOFF LLOOAANNSS BBYY CCOOUUNNTTEERRPPAARRTTYY
■■ RREETTAAIILL ■■ PPRRIIVVAATTEE ■■ CCOORRPPOORRAATTEE ■■ IINNSSTTIITTUUZZIIOONNAALL
BBRREEAAKKDDOOWWNN OOFF IINNDDIIRREECCTT DDEEPPOOSSIITTSS BBYY CCOOUUNNTTEERRPPAARRTTYY
6.0%
26.6%
51.3%
16.1%
■■ RREETTAAIILL ■■ PPRRIIVVAATTEE ■■ CCOORRPPOORRAATTEE ■■ IINNSSTTIITTUUZZIIOONNAALL
MMAARRKKEETT SSHHAARREE OOFF LLEENNDDIINNGG TTOO CCUUSSTTOOMMEERRSS BBYY RREEGGIIOONN
OOvveerr 44%%
BBeettwweeeenn 00..55%% aanndd ll’’11..55%%
BBeellooww 00..55%%
NNoott pprreesseenntt
92 93Customers
Customers can choose alternate ways of dealing with the Bank, based on their particular
needs and without being penalized in terms of costs and operating complications.
In line with the technological evolution of the market in recent years, there have been consi-
derable innovations in the ways that services can be accessed. In addition to the branches,
there is now a more widespread network of financial consultants, while new electronic chan-
nels have been developed. In the Group’s strategic vision, technology represents an impor-
tant lever by which to optimize product proposals, improve the quality perceived by custo-
mers, make the process of distribution of products and services more efficient and reinforce
the security of data transmission and protection.
The Extensive virtual banking service provided by the Banca Lombarda Group enables custo-
mers to obtain information about their current accounts and securities and carry out transac-
tions, choosing between the Internet, the Contact Center and SMS messages sent to their
mobile phones.
The virtual banking services were enhanced during the year to more closely reflect customer
requirements, with further improvements in usability and the range of functions available.
In particular, the “new” Extensive was released to the retail banks between the end of
December 2005 and early 2006, with improved graphics and more intuitive navigation, as well
as better information and tools, especially with regard to trading online.
The security of the “virtual” channels is very important to the Group: in this regard, a section
was created during the year that deals exclusively with information on and the prevention of
IT fraud, which can be consulted both on Extensive and on the public websites of the retail
banks. This educational effort has been supported by specific action to increase significantly
The breakdown of lending by Group companies to they various types of customer is shown
below. Companies represent about 42% of the total, while households account for around 245
of lending; family businesses, including artisans, professionals, retailers and other small opera-
tors, account for 10% of the total.
An analysis of loans by economic sector highlights the weighting of services (49%), followed
by industry (31%) and construction (14%); lastly, agriculture and food processing account for
6% of the total.
THE CENTRAL ROLE OF THE CUSTOMER IN OUR DISTRIBUTION MODEL
– INTERNET AND VIRTUAL CHANNELS
In order to facilitate and simplify access to the services offered by the Banca Lombarda
Group, the sales networks have been organized as a system that converges on the customer.
BBRREEAAKKDDOOWWNN OOFF LLEENNDDIINNGG BBYY TTYYPPEE OOFF CCUUSSTTOOMMEERRSS
Companies42%
Insurance andfinancial companies
23%
Public entities1%
Household24%
Familybusiness
and artisan10%
BBRREEAAKKDDOOWWNN OOFF LLOOAANNSS BBYY EECCOONNOOMMIICC SSEECCTTOORR
Other service28%
Commerce andhotel service
21%
Construction14%
Other manufacturingindustry
10%
Mechanical engineeringand steel industry
17%
Mining andenergy industry
4%
Agricolture andfood processing
industry6%
95Customers
94
The Banca Lombarda Group has taken a number of measures to make staff more aware of the
importance of the PattiChiari initiatives and the need to inform customers about them.
Various forms of communication have been used to facilitate access to information on the
PattiChiari project:
• introduction of exhibition totems for branches containing Pattichiari brochures on
each initiative;
• having obtained the PattiChiari certifications, a campaign was launched to communicate
this event in the main newspapers in the Group’s territory;
• customers were informed by a notice at the foot of their statements of account and by a
banner on the websites of the retail banks.
Again as part of the “PattiChiari” project, during 2005 the Group took part in the preparatory
work for two new initiatives.
The objective of the ninth initiative, called “Comparing financial investments”, is to help
customers understand their investment needs and make investment decisions with greater
awareness, using a range of information and communication tools available from the bank,
via the Internet and by telephone.
The tenth initiative, called “Changing account”, follows the strategic approach adopted by
the PattiChiari project, based on simplicity, clarity and understandability. The objective is to
remove the information barriers that customers may encounter when enquiring about the clo-
sure of a current account, as well as to make the process simpler and more efficient.
The Banca Lombarda Group will take part in these two initiatives from the start, which is plan-
ned for the second half of 2006.
the level of security perceived by customers: for example, the activation of a system of aler-
ting via SMS when credit cards are used and bank transfers are made.
The Banca Lombarda Group has also decided to adopt the recommendation of the “Stanca
Law”; the websites of the Group’s banks have been developed with reference to the regu-
latory instructions, so that differently-able persons can access them and navigate in accor-
dance with precise standards (guidelines level AA , CSS2 and XHTML 1.0).
Lastly, the websites of the retail banks now include a new service, devised in collaboration
with leading humanitarian associations, that enables credit card and Bankpass donations to
be made via the Internet.
TRANSPARENCY VERSUS CUSTOMERS
The “Patti Chiari” project, which the leaders of the banking industry were keen to develop to
put bank/customer relationships onto a new and more positive footing, began at the end of
2003 with the launch of the first eight initiatives. These were designed to reassure customers
regarding the transparency, clarity and comparability of the products offered at branches.
The project comprising various working parties on such topics as investments, credit and
loans, and services. To make each of these initiatives highly visible to the general public, a Patti
Chiari logo was devised so that customers could immediately recognise the banks that had
decided to comply with these high quality standards in their dealings with customers, including
certification.
At the end of 2004, the Banca Lombarda Group had commenced all of the PattiChiari initiatives
and the following Group banks had already obtained certification for these eight initiatives:
Banco di Brescia, Banca Regionale Europea, Banca di Valle Camonica, Banco di San Giorgio
and Cassa di Risparmio di Tortona.
FFAARROO
OOnn--lliinnee
iiddeennttiiffiiccaattiioonn
ooff tthhee nneeaarreesstt
BBaannccoo mmaatt
LLiisstt ooff llooww
rriicckk--llooww
yyiieelldd
bboonnddss
CClleeaarr iinnffoorrmm
aattiioonn aabboouutt
ssuubboorrddiinnaatteedd
ssttrruuccttuurreedd
bbaannkk bboonnddss
GGeenneerraall
ccrriitteerriiaa
ffoorr aasssseessssiinngg
tthhee bboorrrroowwiinngg
ccaappaacciittyy
ooff SSMMEEss
CCoommppaarriissoonn
ooff ccuurrrreenntt
aaccccoouunntt tteerrmmss
BBaassiicc
bbaannkkiinngg
sseerrvviicceess
AAvveerraaggee
rreessppoonnssee
ttiimmeess
ffoorr llooaann
aapppplliiccaatt
iioonnss bbyy ssmmaallll
GGuuaarraanntteeeedd
ttiimmeess ffoorr
aacccceessss ttoo
aammoouunnttss ppaaiidd
iinn bbyy cchheecckk
PPAATTTTIICCHHIIAARRII IINNIITTIIAATTIIVVEESS
96 97Customers
THINK OF THE CUSTOMER, INNOVATE THE OFFER
BANCASSURANCE FOR HOUSEHOLDS
There were major changes in this sector during 2005: the new regulatory instructions from
ISVAP introduced significant new rules for the protection of savers who decide to invest in
insurance products.
Adopting these legislative requirements, the Group has worked with Lombarda Vita to update
all the contracts and forms, introducing transparent and complete information that enables
customers to assess properly their investment alternatives.
In addition, within the product range, the catalog of “traditional” policies (with guaranteed capi-
tal and minimum yield) was updated during 2005 with the presentation of the new “Risparmio
Plus” and “Risparmio Plus Coupon” policies, which improve of the previous versions due to
lower costs and much smaller redemption penalties.
Among the Loss Cover products, further improvements were made to the “Prestito Protetto”
policy in 2005. This policy covers the risk of not being able to pay the residual balance of a loan,
on a temporary or permanent basis.
The changes made include increases in the amount of insurable capital, the maximum age for
subscribers and the maximum duration of cover.
BANCASSURANCE FOR YOUNG PEOPLE
The range available to young people was completed during 2006 with the launch of the
“PrFvilegio” insurance savings plan, a regular premiums policy that enables those who have
just started to earn to save part of their income in a flexible, low cost program without the
restrictions of a pension plan.
The versatility of this product means that it is available to everyone, enabling savers to build
up their capital over the years, with just a small commitment, so that they can start a business,
finance advanced courses of study or make a major purchase.
ASSET MANAGEMENT
With regard to asset management, the placement has begun of a new family of flexible, non-
harmonized funds (Capitalgest FlexFree, FlexFree2 and FlexFree4) whose commission struc-
ture envisages the elimination of commissions in the event of adverse performance that
exceeds predetermined levels. In this way, the Group will share any unsatisfactory fund per-
formances with the customer.
SFMPRE CARD: LOYALTY PROGRAMS FOR THE COMMUNITY
Among the various “monetary” products, the SFMPRE credit card is the most oriented
towards social responsibility programs. These considerations have led to various new initiati-
ves for those with a SFMPRE credit card, which is distributed by all Group banks.
Holders of the SFMPRE Card earn points which can be converted into prizes selected from
an extensive catalog.
The catalog also offers an opportunity to donate the prize to worthy social initiatives. The fol-
lowing projects and bodies listed in the 2005/2006 catalogue achieved particularly satisfac-
tory results in terms of fund raising:
A Caritas meal – Mensa popolare “Madre Eugenia Menni”, aimed at people who are home-
less for whatever reason.
The pre-lesson modules offered by the Italian Red Cross as evidence of forward thinking in
the fight against all forms of suffering.
LOANS FOR HOUSEHOLDS
In order to keep the range of services for households constantly linked with the socio-demo-
graphic development of the population and real demand, the Group launched a new range
of services in 2005 that target the atypical workers who are playing an increasingly significant
role in modern Italian society.
The new product is a natural part of the established Mutuo Chiaro range and is branded as
‘Mutuo Chiaro – Linea Giovani con contratto di lavoro Atipico’ (range for young people with
non-standard contracts).
98 99Customers
LOANS FOR BUSINESS INNOVATION
In the area of lending for business innovation, significant action has been taken following stu-
dies carried out in 2005. In particular, an agreement has been reached with AIB involving the
allocation by Banca Lombarda of up to 100 million euro for unsecured loans in support of
innovation and development projects.
Initially, on an experimental basis, the project has been limited to the province of Brescia,
given the novelty of the customer approach through a special Innovation booth opened at
the Industrial Association of Brescia. The product is distinctly innovative since it uses an algo-
rithm to link pricing with the counterpart’s class of risk and the proposed project’s certified
level of innovation.
LEASING FOR THE ENVIRONMENT
Since 1998 SBS Leasing has paid special attention to the integration of economic and envi-
ronmental objectives, with the development of renewal energy sources (IAFR) in view of the
restrictions on greenhouse gas emissions imposed by the Kyoto protocol.
In this regard, various plants for the production of energy from renewable sources have been
financed. Such sources include the sun, wind, water and geothermic resources, and the gene-
ration of electricity from vegetable products, or from organic or inorganic waste.
Again in this area, innovative “derivative” financial instruments have also been presented for
the hedging of risk, in order to provide safeguards for borrowers with floating-rate loans.
In order to ensure that product and services meet the expectations of customers, technical
and other improvements have been made to our personal loans, with the presentation of
an innovative new range of loans: PRESTIFACILE.
This is a personal loan repayable over up to 60 months, which offers customers a rare
degree of flexibility: the possibility for customers to vary the installment payments (increa-
se or decrease them), make an early repayment or delay the payment of the installments
falling due.
SMALL BUSINESSES: CUSTOMER-ORIENTED APPROACH
The special nature of entrepreneurial activity in our long-established territories requires
us to dedicate particular attention to the small business segment.
To improve our understanding of the characteristics of these customers, further segmen-
tation was introduced in 2005 so that relations can be founded on mutual confidence
backed by commercial products and services that address their requirements. In parti-
cular, 4 clusters were identified that group small businesses by the type of relationship
they require with the Group’s banks.
The following clusters were identified: Small Corporate (customers whose transactions
reflect the profile of large companies, despite the lack of scale), Balanced (customers
whose lending and borrowing is strictly matched), Deposits&Collections (operators
whose transactions involve the significant use of collection and payment instruments
back by substantial liquidity), and Private (micro-firms whose volumes and types of trans-
actions make them closer to Private customers than structured businesses).
INITIATIVES FOR COMPANIES
These initiatives provide support for change and the needs of firms, taking advantage
where possible of the opportunities offered by bodies and organisms active in the local
area. An example consists of the agreement between ABI and the tax authorities to help
solve the age-old problem of VAT recoveries, with a specific line of credit for advances
against the amount recoverable on advantageous terms.
In addition, in order help firms to grow and improve their competitive position, the range
of innovative products has been broadened to include, for example, a line of credit for
digita l’innovations and the provision of consultancy associated with loans that envisage
participation in risk capital (even in business start-up situations), now that the Merchant
Banking sector of Banco di Brescia has received accreditation from the Ministry of
Productive Activities.
100 101Customers
services to help them grow, benefit from the donations that they receive and solve any rela-
ted legal and fiscal problems. To this end, the dedicated function carefully monitors changes
in the legislation governing the sector, providing up-to-date information to specific customers
(available in a special area of the website).
The function also examines the possibilities for financing specific projects designed to
develop and modernize non-profit businesses, using entrepreneurial criteria; this requires,
of course, that these projects have an economic return that enables recipients to repay the
finance received.
In the delicate area of fund raising, the Banco is able to activate simple and rapid fund-raising
tools via its website, both as an ongoing activity and for “special events”, such as those invol-
ving certain national non-profit organizations.
SUPPORT FOR OVERCOMING DIFFICULTIES: ATMS FOR THE BLIND AND VISUALLY IMPAIRED
There are around 1,200,000 blind and visually impaired people in Italy.
The Banca Lombarda Group has always been conscious of the problems faced by visually
impaired people using ATMs; indeed, it was the first bank in Italy to install Bancomat terminals
that can be used by those with visual difficulties.
Banco di Brescia currently has 15 ATMs in operation that provide verbal instructions.
The objective, shared by the Unione Italiana Ciechi (Italian Blind Association), is to avoid any
kind of discrimination, aiming to integrate blind people by giving them normal access to ban-
king services.
These ATMs have been positioned in closed premises to safeguard users’ security and privacy
and are located throughout the City of Brescia as recommended by the Unione Italiana Ciechi.
This service was developed not only for the blind, but also for that part of our clientele who, for
various reasons, may have problems accessing the service, such as old people and foreigners.
Another tool developed to help the blind and the visually impaired to use banking services is
CompilaAssegno (cheque filler). This tool, which is available at all Banco di Brescia branches,
is a sort of stencil that can be used to fill in checks, with a series of empty spaces and expla-
nations in Braille of how to use them.
CUSTOMER LOYALTY
The ability to maintain customer relations over time is given considerable attention
within the Group. At present, the retention rate of private and small business customers
is measured for Banco di Brescia and Banca Regionale Europea, the Group’s two lar-
gest banks.
As a result, biomass plants, hydroelectric generators and photovoltaic installations have been
constructed and brought into operation. There was a significant increase in this type of acti-
vity during 2005.
In addition, a number of our recycling plants provide a further service to the community, over
and above the generation of clean energy, since they also generate steam for public heating
purposes, thus replacing the old, highly polluting oil and gas boilers used by families and
public bodies, at a fuel cost that is no longer economic.
INITIATIVES FOR NOT-FOR-PROFIT ORGANIZATIONS
The varied world of not-for-profit entities is becoming an increasingly important part of the
value added created within Italy. Today, it even represents a benchmark and competition for
profit-making enterprises.
Banco di Brescia has decided to make a clear commitment to this segment by establishing a
Non-profit entities and institutions function with the retail division.
This function is dedicated to developing and monitoring relations with this vast and diverse
world, which ranges from religious institutions to voluntary organizations and to sporting and
cultural associations of all kinds.
In particular, the Bank makes series of financing instruments to this sector, as well as consulting
102 103Customers
COMPLAINTS
The complaints received by Group banks over the last three years are analyzed by
type below:
There was a reduction in the total number of complaints in 2005, despite a 14% increase
in complaints about financial intermediation; this increase is attributable to complaints
about the Cirio, Parmalat and Argentine bonds, as discussed below.
With regard to the complaints about banking services and products in 2005, 532 com-
plaints were received about compound interest (compared with 835 in 2004 and 37 in
2003), partly due to the recent ruling handed down by the Court of Cassation.
This indicator measures the percentage of customers with at least a current account at
the start of the year who still have at least the same relationship with their bank at the
end of the year.
As shown in the following chart, the retention rate for private customers in 2005 was
slightly lower than the average for the sample of banks taking part in ABI’s periodic moni-
toring (30 banks). By contrast, the indicator for the two banks outperformed the ABI sam-
ple in the two prior years. This slippage was mainly due to the one-time effect of closing
“dormant accounts” (current accounts without movement for more than 180 days which
have a negative balance) in accordance with the Basel 2 recommendations. Excluding this
effect, the Group’s retention rate in 2005 would again have led the ABI sample.
At the same date, the retention rate for small business customers is in line with the System at
around 90%.
The Group is aware of the strategic importance of increasing the retention rate and has taken
two separate steps to contain departures:
• a new project is currently in progress to identify and improve the elements that have the
greatest impact on customer satisfaction;
• another ongoing project uses specific statistical analysis to predict with reasonable notice
those customers with the greatest probability of closing their relations with the Group. This
notice period will be used to analyze the issues considered by the customer and present
commercial proposals that impede the closure and are satisfactory for both the customer
and the Group.
The results of these two projects are expected to be commercially useful from early in 2007.
RREETTEENNTTIIOONN RRAATTEE –– 22000055
AAvveerraaggee BBBBSS –– BBRREE AAvveerraaggee BBBBSS –– BBRREE nneett ooffcclloosseedd ddoorrmmaanntt aaccccoouunnttss
AABBII SSaammppllee
92.86
93.41 93.37
Source: ABI and SDA Bocconi analysis based on data from a sample of 31 banks
NNOO.. OOFF CCOOMMPPLLAAIINNTTSS
2005 2004 2003
2,184 2,218 1,064
2005 2004 2003
1,547 1,661 884
2005 2004 2003
637 557 180
OOFF WWHHIICCHH BBAANNKKIINNGG
PPRROODDUUCCTTSS AANNDD SSEERRVVIICCEESSTTOOTTAALLOOFF WWHHIICCHH FFIINNAANNCCIIAALL
IINNTTEERRMMEEDDIIAATTIIOONN
Source: for the total number of complaints, feedback from ABI’s Complaints Monitoring Service. For the number of complaints relating toFinancial Intermediation, feedback from Consob. The number of complaints for Banking Products and Services was calculated by deductingthose relating to Financial Intermediation from the total number of complaints. The complaints related to the following banks: Banca Lombarda, Banco di Brescia, Banca Regionale Europea, Banca di Valle Camonica,Banco di San Giorgio, Banca Cassa di Risparmio di Tortona and Banca Lombarda Private Investment.
104 105Customers
With regard to the outcome of complaints involving the various investment and related
services (brokerage complaints), less than 10% were settled by making payments to the
customers concerned.
INDUSTRIAL BANKRUPTCIES
CIRIO BONDS
In the case of Cirio, it is worth reiterating that the banks of the Banca Lombarda Group
did not take part in any of the consortiums that placed these bonds, nor did they encou-
rage anyone to invest in them.
If they bought and sold Cirio bonds, it was exclusively at the specific request of the
customers concerned.
Sales to customers prior to the date that each bond issue was announced were negligible.
Only a very minor amount of brokerage commissions were received in total and there
were no movements of bonds from the investment portfolios of Group banks. Any tra-
ding was on behalf of third parties, including the receipt and transmission of orders to
the market.
Lastly, as further proof of the Banca Lombarda Group’s professionalism and lack of con-
flict of interest, it is worth pointing out that the Group has no credit exposure whatsoe-
ver towards companies within the Cirio Group.
For these reasons, there was only a limited number of complaints from customers of
banks belonging to the Banca Lombarda Group.
PARMALAT
The Parmalat affair, one of the biggest bankruptcies in Italian history, exploded in 2003
and is still being investigated. It has hit the interests of the banks that financed the
Parmalat Group, as well as those of investors holding Parmalat bonds.
Once again, the banks of the Banca Lombarda Group did not take part in any of the con-
sortiums that placed these bonds, nor did they encourage anyone to invest in them. If
they bought and sold bonds, it was exclusively at the specific request of the customers
concerned.
The Banca Lombarda Group has helped customers holding Parmalat bonds with the
formalities needed to check their creditor status in the proceedings opened at the
Parma Court.
ARGENTINE BONDS
At the beginning of 2005, the Republic of Argentina launched a plan to restructure its
debt, announcing a public purchase and exchange offering. Banca Lombarda was par-
ticularly active and willing to help any of its customers involved in the default of the
Argentine State, to ensure that they had sufficient background information to assess the
principal aspects of this offer.
On this occasion, the banks of the Banca Lombarda Group distributed the document
prepared – for investors that had given a mandate to look after their interests – by the
Association for the Protection of Investors in Argentine Securities (otherwise known as
“Task Force Argentina” or “TFA” for short).
This Association was set up by the Italian banks to assist, give advice and represent the
interests of Italian investors in Argentine bonds, as part of the restructuring of the
foreign debt of public and private Argentine entities.
It is worth emphasising that the final decision regarding the acceptability of the terms
and conditions contained in the purchase and exchange offer document was left enti-
rely up to the individual investor.
Acceptances by investors represented just over 50% of the amount invested.
THE GROUP’S BANKS ARE AN INTEGRAL PART
OF THE LOCAL ECONOMIES IN WHICH THEY
ARE ACTIVE. THE GROUP WORKS TO CONSOLI-
DATE ITS RELATIONS WITH THE COMMUNITY,
MAKING VARIOUS CONTRIBUTIONS TO THE
LOCAL ECONOMIES CONCERNED. TO ENSURE
THE MAXIMUM EFFECTIVENESS OF THESE PAY-
MENTS, NOW AND FOR THE FUTURE, THE
ACTION MAINLY RELATES TO ONGOING WORK
FOR THE DEVELOPMENT OF THE COMMUNITY
““TERRITORY
108 109Territory
TERRITORY
This section covers the sponsorship support pro-
vided to the community by the Parent and retail
banks, discussing the most significant action by
type: cultural, artistic, social and sporting.
EDUCATION AND PROFESSIONAL TRAINING
The Banca Lombarda Group has made numerous
contributions in the field of education and profes-
sional training, both via financial support in the
form of scholarships and grants, and collaboration
in economic and sector studies, congresses and
meetings.
In 2005 Banca Lombarda funded eleven scholars-
hips (totalling 90,000 euro) for particularly deser-
ving young graduates studying for a Masters
degree in Finance at Brescia University.
Banca Lombarda has also funded two three-year
study grants for the Faculty of Mathematics, Physics and Natural Sciences at Brescia’s Sacro Cuore
Catholic University, while also maintaining the grants made in prior years.
Banco di Brescia is a member of ISFOR 2000 (Higher Institute for Training and Research) which,
on joining the Università & Impresa consortium in 2000, has taken an active part in the design
and delivery of post-graduate Master degrees intended to create a pool of professionals
representing management material. The consortium is becoming the most authoritative point
of reference in the field of higher education, not only for industrial firms but also for the other
categories that comprise Brescia’s economic and social fabric.
Banco di Brescia has supported for many years the Associazione Bresciana per lo Studio e il
Lavoro (ABSL) which awards a prize every year for the best undergraduate theses on mana-
gement topics.
The Bank also continues to collaborate with Brescia University in the publication of a periodic
report entitled “Economics and Finance at Brescia’s Manufacturing Companies”.
Banca Regionale Europea has sponsored a masters decree at Pavia University, which uses
its services. Together with Turin Polytechnic, study grants have been made available for stu-
dents at the Mondovì location. The Bank has also provided speakers at seminars organized
by faculties located in its territory, and held meetings on financial matters at advanced edu-
cation establishments.
Banca di Valle Camonica has dedicated special attention to primary education, providing
finance for specific educational projects and the purchase of teaching materials. Support for
the study of wine-growing activities in the Brescia area has been provided by sponsoring a
“Master in the development of wine areas”, promoted by Milan University together with
Brescia’s Provincial Wine-growing Center.
EDUCATION AND PROFESSIONAL TRAINING
CULTURE, ART AND MUSIC
SPORT
CHARITABLE DONATIONS AND SOCIAL INITIATIVES
110 111Territory
In 2005, Banco di Brescia confirmed its commitment to the spreading of top class culture by
support for one of the city’s most important artistic events. In particular, following completion
of the “Monet, the Seine, the Nymphs” exhibition, support was renewed for the “Van Gogh
and Gauguin – adventure with new color” and “Millet - Sixty masterpieces from the Museum
of Fine Arts in Boston” exhibitions held at the Santa Giulia Museum from October 2005.
Banco di Brescia has also contributed to the music field by offering quality concerts in small
centers, which are too often overlooked by major musical events; during the summer of 2005,
the Bank sponsored the “le settegiornatedelgarda” events (seven days on Garda) and, more
generally, the “harmonies under the castle” music festival, which renewed its success in the
field of Italian classical music.
Turning to Banca Regionale Europea, 2005 marked the 150th anniversary of Cassa di Risparmio
di Cuneo; Banca Regionale Europea played an active part in the program of celebrations
organized by the Foundation, cooperating in the preparation of a multimedia project com-
prising three volumes of history, a CD Rom holding a collection of “Rassegna” and “Risorse”
magazines, and a DVD that presents the institutional activities of the Foundation.
Banca Regionale Europea has confirmed its strategy in the finance/culture sector, working
together with a series of top flight partners. Continuing its long-term collaboration, the Bank
sponsored the most important annual exhibition at the Poldi Pezzoli Museum in Milan, dedi-
cated to “The Black Knight by Giovanni Battista Moroni”. Again in Milan, support was provi-
ded to the Diocesano Museum for the “Carlo and Federico, the voice of the Borromeo family
in Spanish Milan” exhibition. It was also the sole sponsor of the “Prohibited drawings of
Gustav Klimt” exhibition promoted by the Municipality of Pavia.
In the field of publishing, during 2005 Banca Regionale Europea continued to publish its half-
yearly magazine “Rassegna”, with a distribution of 38,000 copies to leading customers, insti-
tutions, opinion leaders and employees. This publication deals with topics ranging from eco-
nomics and finance to culture, in collaboration with personalities with an international stan-
ding. The “Third report on economics and finance at manufacturing firms” was also published,
with two editions for Cuneo and Pavia prepared together with the local Industrial Unions.
In terms of literature, the Bank sponsored the Librex Montale Poetry Prize, awarded in Milan,
and the “Scrittorincittà” review of international publishing, promoted by the Municipality of
Cuneo. In the music sector, support has continued for the La Scala theater in Milan, the Società
del Quartetto in Milan, and the Fraschini theater in Pavia, with the sponsorship of various high
profile events.
Banca di Valle Camonica has supported numerous events aimed at divulging knowledge
about the natural and historical heritage of its territory of origin, with particular reference to
the Valle Camonica, Franciacorta and Valtellina.
CULTURE,ART AND MUSIC
During 2005 the Group continued its efforts to spread knowledge of the historical and artistic
heritage of the Brescia area and Lombardy in general, by the publication of “Lombardia goti-
ca e tardogotica. Arte e architettura”. (Gothic and Late Gothic Lombardy, Art and
Architecture). This volume continues the series inaugurated in 2002 with “Lombardia
Medievale. Arte and architettura” (Medieval Lombardy. Art and Architecture), continued in
2003 with “Lombardia Rinascimentale. Arte e architettura” (Renaissance Lombardy, Art and
Architecture) and in 2004 with “Lombardia barocca e tardobarocca. Arte e architettura”
(Baroque and Late Baroque Lombardy, Art and Architecture).
Banca Lombarda is also a sponsoring member of the Diocesan Museum of Brescia, as well as
a sustaining member of the “Milan per La Scala” Foundation and “The Venice International
Foundation”.
The Parent Bank has sponsored various musical events, such as: a collection of recordings of
the music of major musicians entitled “Testimonianze Musicali”, which in 2005 reached its 7th
edition; the concert season of “Itinerari nella Musica”, organised by the Società dei Concerti
di Brescia.
Various other important initiatives saw the joint involvement of the Parent Bank and Banco di
Brescia. In particular:
• as part of the Brescia and Bergamo International Piano Festival which commemorates
Arturo Benedetti Michelangeli, the concert was given by the London Philharmonic
Orchestra conducted on this special occasion by Riccardo Muti, who was presented with
the “Arturo Benedetti Michelangeli” award;
• the opening work of the Opera Season at Brescia’s Teatro Grande (“Rigoletto” by
Giuseppe Verdi).
112 113Territory
centre of Tortona and able to host over 100 people at each event. Around one hundred social
and cultural events were held there during 2005.
Banco di San Giorgio made a grant towards the renovation of the Santo Stefano Protomartire
church at Castelvittorio.
The Bank also edited and support the publication of the volume entitled “Genova e la storia
della finanza: una serie di primati?”, which follows on naturally from the “La Casa di San
Giorgio: il potere del credito” conference held as part of the “Genova Capitale Europea
della Cultura 2004” event that was sponsored by Banco di San Giorgio.
SPORT
The entire Banca Lombarda Group actively supported professional and amateur sporting initia-
tives throughout 2005.
Banco di Brescia has continued to support Brescia Calcio, thus confirming once again the histo-
rical ties between the Bank and the city.
Support was also provided to the Radio105 - Foppapedretti Bergamo female volleyball team
(Female Division A1), which one of Italy’s leading teams (Cup in 2004, Italian Supercoppa and
European Champions League in 2005).
In addition, Banco di Brescia has sponsored Giochi Sportivi Studenteschi di Rugby, organized
by the regional committee of the Italian Rugby Federation; it also supports another hundred
or so local sports initiatives, including sponsorship of Leonessa Pallanuoto (National Division
A1) and A.S. Rugby Bresciana.
Banco di Brescia promotes a golf tournament which is disputed on the best Italian greens; fur-
ther sponsorship is granted to local tennis and sailing clubs.
Sponsorship was provided for the promotion and spread of the works of local artisans and
gastronomy, with support for the “Mostre mercato” held in the medieval streets.
A new project was commenced in 2005 regarding religious and civil architecture in the
Lombardy Alps. This project involves the study of monastic architecture, pievan structures and
the development of private construction commencing from Medieval times. The results of the
first phase have been collected together in the volume entitled “Monachesimo e territorio”;
in addition to describing the principal characteristics of the monastic monuments in the pro-
vinces of Brescia, Bergamo, Sondrio, Lecco and Como, this work also investigates the effects
of the second verb (labora) of the principal imperative (ora et labora) suggested by the
“Benedictine Rule”.
Efforts have been dedicated to safeguarding and restoring historical monuments; in particu-
lar, restoration work was carried out on the Church of Our Saviour at Capo di Ponte, the St.
Peter and St. Paul Hermitage at Bienno and numerous parish buildings located in areas where
the Bank is active.
A special contribution was made to the restoration at Cevo of the “Croce del Papa”, a monu-
mental work by Enrico Job and Giovanni Gianese created to celebrate the beatification of
Giuseppe Tovini in Brescia on 20 September 1998.
In this music field, support was provided for the “Incontri Musicali in ricordo del Papa Paolo
VI”, which entertain each summer the tourists and residents of Ponte di Legno.
Support was also given to the Music Associations with a more restricted territorial influence,
but which are very active and effective in the education of young people.
Banca Cassa di Risparmio di Tortona sponsored the exhibition organized by the Municipality
of Tortona of the best paintings by Angelo Barabino, a celebrated local artist and disciple of
Pelizza da Volpedo. This was a major cultural event for the town, attracting many visitors and
promoting the image of the Tortona area.
The Bank also worked with Fondazione Cassa di Risparmio di Tortona to organize an art exhi-
bition at national level entitled “Venezia Prima della Biennale” – Palazzo Guidobono in
Tortona. This important event involved the presentation of 45 paintings by some of Italy’s prin-
cipal 19th century artists.
Support was also provided to the Associazione Amici della Musica for the organization of the
“Christmas Concert” as part of the XXVIIth concert season.
As part of the promotion of the territory, a grant was made to “Strada del Vino dei Colli
Tortonesi” Association, which promotes, organizes and coordinates incisive action in the
Tortona area, making the best of its cultural and touristic attractions.
Lastly, the Bank is always willing to help the cultural development of its territory by making its
premises available for cultural events.
For example, it often lets local associations use its Conference Room, which is located in the
114 115Territory
CHARITABLE DONATIONS AND SOCIAL INITIATIVES
Of particular importance is the Group’s support for charitable initiatives in favor of enti-
ties and institutions operating in the field of welfare.
The Group believes that banks can play a special role in promoting collective initiatives
for ethical and humanitarian ends.
The widespread presence of branches throughout the territory, the fiduciary relationship
between banks and their customers and the institutional role that they have always pla-
yed in the community can act as a basis on which to build initiatives to gather funds for
humanitarian ends.
In 2005 the Banca Lombarda Group allocated a total of 4.4 million euro (3.8 million euro
in 2004 and 3.5 million euro in 2003) for this purpose. The majority of this amount went to
Fondazione CAB and Fondazione Banca San Paolo di Brescia, while the rest went to cul-
tural associations, hospitals, schools, universities and religious bodies.
Among the initiatives in favor of the territory we should mention the fact that Banca
Lombarda makes available to local citizens, free of charge, its Conference Room located
in the head office in Via Cefalonia, Brescia. This structure, which can hold more than 300
people, is used by trade associations, professional institutes, foundations and entities
that organize training courses, professional education, scientific presentations and other
meetings there.
Banca di Valle Camonica has provided support to the Valle Camonica and Basso Sebino
local health authorities for the purchase of diagnostic equipment, as well as sponsoring
various publications intended to promote health via the prevention of illnesses and to
increase awareness of the needs of persons who are differently able.
Numerous non-profit and voluntary associations have also benefited from support
by the Bank.
Banca Cassa di Risparmio di Tortona has continued to support the “Paolo VI”
Outpatients’ Rehabilitation Center for psychiatric illnesses at Casalnoceto. Following the
restructuring program approved by the Piedmont Region, this Center will provide health
and social services.
Banco di San Giorgio supports A.R.L.A.F.E. – Associazione Regionale Ligure affiliata alla
Federazione Emofiliaci, a regional charity that contributes to scientific research into haemo-
philia at Istituto G.Gaslini in Genoa, regarding the genetic therapy provided to children.
Banca Regionale Europea has confirmed its sponsorship for the 2005-2006 season of the “Bre
Banca Lannutti” volleyball team, which plays in Division A1 and earned distinction by winning the
Italian Cup. The Bank also provided first-time sponsorship to the Pavia football team which plays
in Division C1, and confirmed its traditional support for final stages of the Youth Games held in
Cuneo and Pavia.
Banca di Valle Camonica provided support, once again, for local, provincial, national and inter-
national sporting events held during 2005.
Local sponsorship included numerous sporting events (football championships promoted by
C.S.I. and A.N.S.P.I., cycle races, swimming competitions etc.).
At provincial level, the Bank assisted Unione Sportiva Darfo Boario with support for participation
in the Football Division D.
National sponsorship related to the organization of Trials for the Italian Marathon Championship,
while international sponsorship consisted in support for the famous “Maratona sentiero 4 luglio”,
which is held each year on the steep slopes of the Corteno Golgi, Brescia, as an event in the
world mountain running championship.
Attention was also focused on the youth sector, with grants to Sports Clubs and local Associations.
Special attention was dedicated to the Polisportiva Disabili Valle Camonica to help a number of
athletes take part in the Turin Winter Paraolympics.
Banco di San Giorgio sponsors U.C. Sampdoria (Football Division A). The bank also supports
local initiatives, including donations to the well-known waterpolo team Rari Nantes Nervi (natio-
nal championship).
THE PROCESSES OF PURCHASING AND SUP-
PLIER SELECTION ARE CARRIED OUT WITH THE
MAXIMUM TRANSPARENCY, FAIRNESS, PRO-
PRIETY AND IMPARTIALITY TOWARDS THIS
CATEGORY OF STAKEHOLDER, WHETHER THEY
ARE CURRENT SUPPLIERS OR JUST POTENTIAL
FUTURE SUPPLIERS.
““SUPPLIERS
119Suppliers
118
PROCUREMENT POLICIES
EXPENDITURE ANALYSIS
CODE OF ETHICS
DISPUTES AND LITIGATION
SUPPLIERS
Given the important contribution made by this cate-
gory to the production and supply of quality services
to customers by the Group, the selection of suppliers
and the determination of purchasing conditions are
also based on objective criteria that take account of
price, the ability to supply and guarantee timely servi-
ce of an appropriate level, and the honesty and inte-
grity of suppliers.
PROCUREMENT POLICIES
The Central Purchasing Department within
Lombarda Sistemi e Servizi, the Group company
responsible for procurement, further refined the pro-
cess of managing suppliers during 2005, introducing
three new strategic tools for the control and impro-
vement of the “pool of suppliers”: the Electronic
Directory of Suppliers, the System for supplier eva-
luation and the new Group purchasing procedures.
The EElleeccttrroonniicc DDiirreeccttoorryy ooff SSuupppplliieerrss comprises the list of suppliers administered by
Lombarda Sistemi e Servizi, being the suppliers that provide goods and services on an
ongoing basis, under contract, in the following areas: Information & Communication
Technology (ICT), the maintenance of real estate, and general services. The adoption of the
Electronic Directory, which is integrated with the Group’s accounting system, allows the stra-
tegic selection of the best suppliers and the monitoring of their performance.
The SSyysstteemm ffoorr ssuupppplliieerr eevvaalluuaattiioonn (Vendor Rating) is used to periodically assess the suppliers
included in the Directory using standardized and objective criteria that focus on the require-
ments of quality, price and stability, with a view to the constant improvement of the Supplier
Directory.
The ““PPuurrcchhaassiinngg PPrroocceedduurreess”” were issued to govern the work of the Central Purchasing
Department and guarantee the application of clear and transparent rules for the procurement
procedures applied by Lombarda Sistemi e Servizi, together with the related monitoring acti-
vities. The preparation of these procedures and the subsequent publication of the regulations
were part of work to improve and renew procurement processes.
121Suppliers
120
EXPENDITURE ANALYSIS
Analysis of suppliers9, highlighting the efforts made to rationalize the pool of suppliers
used.
The breakdown of expenditure on purchases in 2005 is as follows:
• 70% of total purchases related to commercial transactions with just over 56 suppliers
(compared with 60 last year); this represents only 4% of the total number of suppliers
used;
• a further 20% of purchases are made from 112 suppliers (compared with almost 130 last
year), representing about 10% of the total number of suppliers;
• the remaining 10% relates to 1,028 suppliers (compared with 1,300 in 2004); this repre-
sents 86% of total suppliers.
Given the same economic conditions and quality of service, the Group’s purchasing
policies give preference to firms present in the territories service by the Group’s banks,
thus helping to develop the relevant local economies. In particular, the geographical dis-
tribution of purchasing in 2005 is analyzed as follows:
• Lombardy: 70% of purchasing from 55% of total suppliers;
• Lazio: 11% of purchasing from 8% of total suppliers;
• Emilia Romagna: 7% of purchasing from 4% of total suppliers;
• Veneto: 6% of purchasing from 6% of total suppliers;
• Piedmont: 4% of purchasing from 15% of total suppliers.
CODE OF ETHICS
In order to communicate our Code of Ethics as widely as possible, the Group intends to
publish it soon on the Suppliers Portal operated by Lombarda Sistemi e Servizi, among the
documentation that suppliers are required to read.
DISPUTES AND LITIGATION
There are currently no disputes outstanding with active suppliers.
9 This analysis covers all suppliers administered by the responsibility centers within Lombarda Sistemi e Servizi, except for landlords,condominium costs, municipalities and utilities. The scope of the analysis also includes all suppliers administered by the Parent Bankwhich receive purchase order from the Central Purchasing Department (e.g. insurance, advertising etc.).
THE ENVIRONMENTAL POLICY OF THE BANCA
LOMBARDA GROUP IS FOCUSED ON REDU-
CING THE DIRECT ENVIRONMENTAL IMPACT OF
ACTIVITIES VIA THE MORE EFFICIENT USE OF
RESOURCES AND THE OPTIMAL MANAGEMENT
OF WASTE
““ENVIRONMENT
125Environment
124
THE ABIENERGIA CONSORTIUM
SCOPE OF REPORTING
ENERGY CONSUMPTION
WATER CONSUMPTION
PAPER CONSUMPTION
RECYCLED SPECIAL WASTE
CARBON DIOXIDE EMISSION (CO2)
THE NEW MANAGEMENT CENTER
ENERGY MANAGEMENT WITHIN THE BUILDING
ENVIRONMENT
Banking activities have a significant direct effect
on the environment in terms of energy and paper
consumption, while the production of waste deri-
ving from the use of consumable goods, atmo-
spheric emissions and water consumption is more
contained.
THE ABIENERGIA CONSORTIUM
Banca Lombarda is a member of the ABIENERGIA
consortium, which seeks to optimize the manage-
ment and use of energy by banks, and assist them
in their control over energy-related matters. In par-
ticular, with regard to the initiatives designed to
make employees more aware of how best to use
plant and equipment, air-conditioning, lighting
and sanitary equipment in a working environment,
ABIENERGIA has been commissioned to supply
the “Save the Environment with one click” guide.
10 This area was identified at the end of 2005. The reduction with respect to the 2004 Social Responsibility Report (-1.4%) reflects achange in the method of calculation, rather than a change in the locations concerned: the 2004 calculation took account of the smallarea not strictly related to banking activities.
11 Group employment has been defined as the average for each company of the total number of employees at the end of eachmonth.
Banca Lombarda seeks to use this guide to make employees aware of simple gestures which,
if applied systematically, will contribute significantly to the reduction of consumption in the office.
The proper use of office IT equipment and the intelligent use of air-conditioning facilities can,
in fact, considerably reduce consumption without any adverse impact on productive activities.
We are convinced that it would be very hard to achieve these goals and reduce consumption
without a significant change in mentality on the part of the staff, which means involving them
as much as possible in the environmental debate. Accordingly, all employees have received
the guide which deals with the separation of waste, the more rational use of water and ligh-
ting, and the use of electronic communications rather than written messages in order to redu-
ce paper consumption.
SCOPE OF REPORTING
The values quoted below relate to the following companies:Banca Lombarda, Banco di
Brescia, Banca Regionale Europea, Banca di Valle Camonica, Banco di San Giorgio, Banca
Cassa di Risparmio di Tortona, Banca Lombarda Private Investment, and Lombarda Sistemi e
Servizi. The calculation of the individual environmental performance indicators for 2005 makes
reference to a net usable surface area of 292 thousand sq.m.10 (unchanged with respect to 2004),
and total employment of 6,903 persons (+0.5% with respect to 2004)11.
127Environment
126
The data published partly derives from estimates, as will be explained – where necessary - in
the following sections. With respect to the previous edition and the established objectives for
improvement, the environmental report has been extended to include the consumption of
paper and the production of special waste, whether hazardous or not.
ENERGY CONSUMPTION
With regard to the optimization of the energy parameter at its various facilities, the Group has
carried out a careful analysis of the consumption of energy and other utilities, extending energy
management activities to all Group banks.
The analysis of utilities was performed both to optimize the supply contracts and to identify and
minimise installation losses, thereby achieving both physical and economic savings.
The Banca Lombarda Group has set up a series of initiatives designed to reduce energy con-
sumption and, above all, to change the mix of energy sources so as to reduce the consump-
tion of energy deriving from those with a greater environmental impact. The steps taken inclu-
de action at the time of renovating or opening new branches, including: the conversion of oil-
fired boilers to gas-fired boilers, the re-phasing of electrical installations to minimize transmis-
sion losses, the installation of highly efficient thermo-electric plant, and the insulation of the faci-
lities (cladding, shielding, double-glazing etc.).
Data on the consumption of energy and the various sources of supply indicate a reduction in
the use of fuel oil12, with a significant increase in the consumption of gas and district heating, fol-
lowing the addition of new users, the conversion of certain locations from fuel oil to gas, and
the continuation of the cold weather to the middle of spring13.
WATER CONSUMPTION
The figures for water consumption are more or less stable in terms of the overall amount and
average annual consumption per head16.
12 The fuel-oil data relates to deliveries made during the year to locations that use that form of energy, without taking account ofamounts held in tanks at year end.
13 The statistics for the overall consumption of combustible liquids and gas in 2004 have been revised in this report, to take accountof improvements in applying conversion factors between the various units of measure and the better allocation of invoiced costsbetween the two periods. With reference to the individual energy sources, the set conversion ratios are as follows: 1 m3 naturalgas = 10.69 kwh, , 1 litre diesel = 10.8 kwh.
14 The energy consumption per sq.m. has been calculated by reference to the area serviced by the specific energy source. Thismethod of calculation has also been applied in relation to the data for 2004.
15 Per capita energy consumption has been calculated with reference to the energy consumed from each energy source and thenumber of employees that work in the buildings covered by such sources.
16 The cost per liter has been determined as the average of the tariffs applied by the municipalities in which the buildings are loca-ted, weighted by the number of locations in each territory. The annual consumption of water has been calculated by dividing theannual expenditure by the cost per liter.
TTOOTTAALL EENNEERRGGYY CCOONNSSUUMMPPTTIIOONN
SSoouurrccee:: UUnniitt 22000044 22000055 CChhaannggeeCCoommppooss.. %%
22000055
Gas kWh 23,159,543 24,495,451 6% 30%
Liquid fuels kWh 7,082,352 6,611,209 -7% 8%
District heating kWh 6,039,155 6,386,736 6% 8%
Power kWh 42,888,997 44,687,477 4% 54%
Total energy kWh 79,170,047 82,180,873 4% 100%
PPEERRFFOORRMMAANNCCEE IINNDDIICCAATTOORRSS
1) In relation to usable sq. meters14
SSoouurrccee:: UUnniitt 22000044 22000055 CChhaannggee
Gas kWh/mq 112.8 119.3 6%
Liquid fuels kWh/mq 217.7 203.2 -7%
District heating kWh/mq 103.1 117.2 14%
Power kWh/mq 145 153 6%
Total energy kWh/mq 267 281 5%
2) ) In relation to no. of employees15
SSoouurrccee:: UU..dd..MM.. 22000044 22000055 CChhaannggee
Gas kWh/dip. 5,084 5,352 5%
Liquid fuels kWh/dip. 10,867 10,095 -7%
District heating kWh/dip. 3,631 3,822 5%
Power kWh/dip. 6,243 6,474 4%
Total energy kWh/dip. 11,524 11,905 3%
TTOOTTAALL WWAATTEERR CCOONNSSUUMMPPTTIIOONN
UUnniitt 22000044 22000055 CChhaannggee
Annual consumption m3 248,906 253,608 2%
129Environment
128
PAPER CONSUMPTION
As mentioned above, commencing from this edition of the social responsibility report, the
orders placed by Group companies for the various types of paper have been recorded;
it is assumed that the amounts ordered fully reflect annual consumption, since the quanti-
ties on hand at each operating unit are essentially the same at the end of each year.
The Group has taken numerous steps to contain and rationalize the hard-copy reports prin-
ted, giving preference to on-screen review and the elimination of print-outs that are not
strictly necessary.
This action, together with the decision to progressively implement the circulation of Group
regulations via the intranet, resulted in an overall 9% reduction in total paper consumption
during 200517; unit consumption has also decreased.
RECYCLED SPECIAL WASTE
Waste classified as special19 (hazardous or otherwise) that is produced and stored at the
premises of Group companies is delivered to authorized private companies selected with
reference to their certification (EMAS or ISO 14000 for neon lamps, cathode ray tubes, etc.)
and their membership of obligatory consortiums (for spent oil, batteries, etc.).
To ensure the proper separation of waste, all offices have special containers for solid urban
waste, scrap paper and empty toner cartridges.
When full, cleaning personnel remove these containers from the offices and store
them in a room allocated for this purpose in accordance with the safety provisions of
Decree 626/94.
The waste is then collected by an authorized transport firm and delivered to the appro-
priate recycling/treatment plants, depending on the nature of the waste concerned.
The waste collected is recycled as much as possible; it is only destroyed if the disposal unit
believes that recycling is not possible.
All waste was recycled in both 2004 and 2005.
17 With regard to the calculation of the number of A3 and A4 sheets used, reference has been made to the ream as a unit of volume,comprising 500 sheets. The total weight of each type of paper was determined with reference to a weight of 80g per m2 for A3and A4 sheets of laser 5 g paper.
18 The number of days worked, 250, considers that there are 52 weekends each year (the number of branches open on Saturdays is2% of the total) and 11 public holidays.
19 Special hazardous waste includes lead batteries, neon lights, electronic and other equipment containing hazardous components,and oil filters. Special non-hazardous waste includes paper, packaging, plastic, metal and empty toner cartridges.
PPEERRFFOORRMMAANNCCEE IINNDDIICCAATTOORRSS
1) In relation to no. of employees
UUnniitt 22000044 22000055 CChhaannggee
Annual consumption per
employee m3/person 36.23 36.74 1%
TTOOTTAALL PPAAPPEERR CCOONNSSUUMMPPTTIIOONN
UUnniittTTyyppee ooff ppaappeerr 22000044 22000055 CChhaannggee
Laser paper kg 400,500 344,100 -14%
A3 sheet kg 7,000 6,205 -11%
A4 sheet kg 470,013 465,325 -1%
Forms kg 223,498 189,443 -15%
Total kg 1,101,011 1,005,073 -9%
PPEERRFFOORRMMAANNCCEE IINNDDIICCAATTOORRSS
1) In relation to no. of employees
UUnniitt 22000044 22000055 CChhaannggee
Paper consumption kg/person 160 146 -9%
Consumption of A3 e A4 paper kg/person 69 68 -2%
2) In relation to days worked18
UUnniitt 22000044 22000055 CChhaannggee
A3 sheet num./day 2,800 2,482 -11%
A4 sheet num./day 376,010 372,260 -1%
AALLLL WWAASSTTEE RREECCYYCCLLEEDD
UUnniittTTyyppee ooff wwaassttee 22000044 22000055 CChhaannggee
special hazardous waste kg 2,470 2,335 -5.5%
special non-hazardous waste kg 557,540 525,219 -9.1%
Total waste kg 580,010 527,554 -9.0%
131Environment
130
The following points are relevant with regard to 2004:
• there was a 4% reduction in the paper waste sent for recycling (part of the “special non-
hazardous waste” caption), due to the reduction in consumption by 9%;
• with regard to the possibility of regenerating used toner cartridges, the Group only does
this for a limited number of brands (10% of annual cartridge consumption) due to the fre-
quent and serious breakdown of printers caused by the use of regenerated cartridges.
CARBON DIOXIDE EMISSIONS (CO2)
The Group has taken various measures to reduce energy consumption and contain the distance
traveled by employees for work, both via the use of new communications technology (virtual
classrooms, e-learning, video and teleconferences) and by using, where possible, car hire and
public transport.
THE NEW MANAGEMENT CENTER
Construction of the Banca Lombarda Group’s new headquarters was essentially completed
in 2004. The building therefore became fully operational in early 2005.
The construction of the Center was contracted to companies with UNI EN ISO 14001 certifica-
tion. During the construction work, these companies took all possible precautions to reduce
the environmental impact, including the installation on site of bins for the separation of waste
and the disposal of special waste: bins were also placed on each floor to collect tin cans, pla-
stic bags, plastic cups, etc.
The New Management Center was created to form a harmonious part of its surroundings,
seeking to put into practice a type of design that respects environmental needs. The archi-
tectural decisions were taken in relation to the requirements of the context in which the buil-
ding is located.
The outside of the building has a number of blank walls and large surfaces with various kinds
of doors and windows; in the first case, a ventilated facade system responds effectively to the
need to control heat dispersion.
20 The extent of atmospheric emissions was estimated using the following conversion factors: 0.55 kg CO2/kWh for power and dis-trict heating, 2.68 kg CO2/lt for liquid fuels, 2.93 kg CO2/tonne for gas, 0.156 kg CO2/km for travel by cars using diesel, 0.185 kgCO2/km for travel by cars using lead-free gas. The emissions deriving from the use of cars relate solely to company cars, whiledistance traveled was calculated from total annual fuel costs and the related cost per liter (average for the year).
PPEERRFFOORRMMAANNCCEE IINNDDIICCAATTOORRSS
1) In relation to no. of employees
TTyyppee ooff wwaassttee UUnniitt 22000044 22000055 CChhaannggee
special harzadous waste t/person 0.4 0.3 -5.9%
special non-hazardous waste t/person 84.1 76.1 -9.5%
Total waste t/person 84.4 76.4 -9.5%
TTOOTTAALL CCOO22 EEMMIISSSSIIOONNSS2200
UUnniittSSoouurrccee ooff eemmiissssiioonnss
22000044 22000055 CChhaannggee
from heating t of CO2 5,084 5,158 1%
from trasport t of CO2 1,339 1,334 -5%
from power t of CO2 23,589 24,578 4%
TOTAL t of CO2 30,072 31,071 3%
Direct
Indirect
PPEERRFFOORRMMAANNCCEE IINNDDIICCAATTOORRSS
1) In relation to usable sq. meters
SSoouurrccee ddii eemmiissssiioonnss UUnniitt 22000044 22000055 CChhaannggee
Heat energy per sq.m. kg of CO2/sq.m. 17 18 3%
Power per sq.m. kg of CO2/sq.m. 80 84 6%
TOTAL kg of CO2/sq.m. 97 102 5%
2) In relation to no. of employees
SSoouurrccee ddii eemmiissssiioonnss UUnniitt 22000044 22000055 CChhaannggee
CO2 emissions per employee kg ofCO2/person 4,377 4,501 3%
133Environment
132
The selection of transparent facades in glass was made with reference to the various types of
exposure, thus taking advantage of natural light while controlling the temperature at the same
time, so that natural illumination is available internally while reducing the loss of heat. The faca-
des are glazed, but depending on the direction they face, they are shielded in various ways
to filter and control the sunlight and obtain the best possible levels of thermal transmission.
The building is equipped with a supervision and coordination unit for all technical equipment,
ensuring the constant, integrated monitoring of internal environmental conditions.
Care for the environment has resulted in the selection of technologically advanced design
and construction decisions, not only with regard to plant with a higher environmental impact
(power and air conditioning), but also in relation to minor plant (such as the irrigation system
for greenery at the side of the building, which uses collected rainwater).
The air conditioning system envisages: distributed and modular regulation of the primary air
convectors and ventilators that permit use calibrated to genuine necessity; refrigerator units
with heat recoverers so that the available heat can be used for summer post-heating, which is
needed to control the relative humidity in the environment; free-cooling air conditioning units
in both conference halls to limit the use of the refrigerator units and a heat source during the
mid-seasons; use of a sophisticated surveillance and regulation system that makes it possible
to optimize the functioning of all plant components by monitoring and guiding various probes.
The power system envisages the use of fluorescent light bulbs with high-yield electronic fee-
ders in all offices and differentiated light-up schedules, making it possible to limit the time that
the lights are on to the period when they are strictly necessary.
ENERGY MANAGEMENT WITHIN THE BUILDING
The new headquarters of the Banca Lombarda Group entered into service during May 2005.
Following an initial start-up and operational period, training sessions were held on energy
management for the building.
The considerable amount of information gathered by the system of supervision, which moni-
tors the climate and energy use in all parts of the building, has been used to identify best prac-
tices for plant operation and possible improvements that may reduce the consumption of
heat and energy.
The building’s monthly energy consumption is presented below.
No comparative information can be presented since the building entered into service during
the year and there are no comparative parameters for 2004 (Group employees were spread
among various buildings).
Nevertheless, based on early information relating to 2006, the careful monitoring of con-
sumption and the progress made in using the building’s installations more efficiently have
resulted in a steady reduction in consumption.
TTOOTTAALL EENNEERRGGYY
880000..000000
770000..000000
660000..000000
550000..000000
440000..000000
330000..000000
220000..000000
110000..000000
00
EEnnee
rrggyy
[[kkww
hh]]
jjaannuuaarryy
ffeebbrruuaarryymmaarrcchh
jjuunneeaapprriillmmaayy
sseepptteemmbbeerrjjuullyy
aauugguusstt
ddeecceemmbbeerr
ooccttoobbeerr
nnoovveemmbbeerr
THE BANCA LOMBARDA GROUP OPERATES AS AN
INTEGRAL PART OF THE ECONOMY AND THE BAN-
KING SYSTEM IN PARTICULAR
““
THE COMPETITIVE SYSTEM
136 137The competitive system
THE COMPETITIVE SYSTEM
RELATIONS WITH ITALIAN BANKS
The Banca Lombarda Group maintains relations
and works continually with the entire Italian ban-
king system.
In addition to normal interbank relations with the
principal banks, we also collaborate with Italian
and supranational banks that manage and disbur-
se grants and low-interest loans.
RELATIONS WITH FOREIGN BANKS
Efforts to develop relations with correspondent
banks abroad were particularly intense in 2005,
with a view to responding to the changing needs
of customers. At the end of 2005 the Banca
Lombarda Group had 25 cooperation agree-
ments with foreign banks in 22 different countries,
while the Group had around 2,300 correspondent
bank relations throughout the world, most of them in European countries such as Switzerland,
Germany, France, Spain, Great Britain, Romania and Bulgaria.
THE SUPERVISORY AUTHORITIES
Banca Lombarda and its Group are subject to regulatory supervision by the Bank of Italy.
Moreover, being a financial intermediary listed on the Stock Exchange, Banca Lombarda is also
subject to control and regulation by Consob and Borsa Italiana S.p.A.
The Group is in full compliance with all of the instructions and recommendations issued by these
authorities, with whom relations are based on complete transparency and collaboration.
ASSOCIAZIONE BANCARIA ITALIANA (ABI), THE ITALIAN BANKING ASSOCIATION
The Chief Executive Officer di Banca Lombarda, Corrado Faissola is a member of the Board
and the Executive Committee of Associazione Bancaria Italiana, which brings together all
the banks and credit institutions operating in Italy. In July 2006 he was appointed as
Chairman of ABI.
Various Group employees form part of ABI’s technical commissions and task forces.
The Group is a member of the following trade associations, either directly or through its
various subsidiaries:
• ABI: Associazione Bancaria Italiana;
• Assogestioni: Associazione delle Società per la gestione del risparmio (asset management);
• Assifact: Associazione delle Società di factoring;
• Assilea: Associazione delle Società di leasing;
• Assoreti: Associazione delle reti di promotori finanziari (financial consultants);
• Assosim: Associazione delle Società di intermediazione mobiliare (stockbroking);
• Assofin: Associazione delle Società di credito al consumo (consumer credit).
RELATIONS WITH ITALIAN BANKS
RELATIONS WITH FOREIGN BANKS
THE SUPERVISORY AUTHORITIESS
(ABI), THE ITALIAN BANKING ASSOCIATION
“THE COMMUNITY
THE PUBLIC ADMINISTRATION AND THE ITALIAN
STATE IN GENERAL REPRESENT INSTITUTIONAL PART-
NERS OF FUNDAMENTAL IMPORTANCE
“
140 141The Community
THE COMMUNITY
The State, the Local Authorities and the Public
Administration are key partners for the Group,
both to ensure that activities are conducted within
a framework that correctly allocates rights and
responsibilities, and with regard to the special
products offered to the Public Administration, that
improve (directly and indirectly) the quality of
their services to the community.
The Banca Lombarda Group pays over part of its
value added to the Public Administration in the
form of taxes and dues.
In particular, the total taxes paid in 2005 amounted
to 203.1 million euro; 151.2 million was allocated to
Central Government, while 51.9 million was paid
to the local authorities.
The Group also provides banking services (such
as the collection of water and gas bills, waste col-
lection taxes, nursery school and nursing home fees etc.) to various public authorities and has
many years’ experience in the provision of treasury management for entities.
The Group also stimulates such entities to develop their organizations by making innovative
proposals such as the introduction of on-line services for payroll management, the consulta-
tion of current accounts and treasury accounts, and the transmission of mandates and collec-
tion orders, free professional consulting for the entity’s cash management and for the activa-
tion of loans, and the organization of training and consulting sessions for the directors and
employees of such entities.
The activities of Public Bodies are assisted specifically by Extensive Enti, an IT package that
enables them to exchange of information and instructions with their treasury management
functions at the Group’s retail banks.
4. THE ECONOMICREPORT
4.THE ECONOMICREPORT
DETERMINATION AND DISTRIBUTIONOF VALUE ADDED
147Determination and distribution of value added
146
METHODOLOGIES
The following tables relate to the formation and distribution of consolidated value added, as defined
by the model proposed by ABI, the Italian Banking Association, in the volume entitled “Reporting to
Stakeholders - a guide for banks”, published during 2006. Value added, determined from the financial
and social accounting records, quantifies the wealth created by the firm for the benefit of the various sta-
keholders. This involves supplementing information extracted from the reclassified consolidated state-
ment of income with certain information provided in the notes. The following schedules for the calcula-
tion and distribution of Value Added are preceded by the reclassified consolidated balance sheet and
statement of income. The amounts for 2004 are presented for comparative purposes, bearing in mind
that the statement of income for that year does not include the effect of adopting international accoun-
ting standards (IAS) 32 and 39. For the sake of clarity, the schedules for calculating Value Added include
the individual statement of income captions that generate the various sub-totals. The schedule reporting
the distribution of Value Added was discussed briefly at the start of the social-environmental report.
BANCA LOMBARDA E PIEMONTESE
RECLASSIFIED CONSOLIDATED BALANCE SHEET (in thousands of euro)
BANCA LOMBARDA E PIEMONTESE
RECLASSIFIED CONSOLIDATED STATEMENT OF INCOME
(in thousands of euro)
AAsssseettss 3311//1122//220000553311//1122//22000044
((iinncclluuddiinngg IIAASS3322 && 3399))
CChhaannggeess 3311//1122//22000055 –– 3311//1122//22000044
AAmmoouunntt %%
Cash and cash equivalents 146,839 165,289 (18,450) (11.2%)
Loans to customers 28,229,071 26,506,328 1,722,743 6.5%
Due from banks 3,076,529 2,524,090 552,439 21.9%
Other financial assets 3,983,615 2,260,064 1,723,551 76.3%Investments 62,800 49,649 13,151 26.5%
Property, plant and equipment and intangible assets 1,468,985 1,478,581 (9,596) (0.6%)
Other assets 1,379,297 1,171,454 207,843 17.7%
Total assets 38,347,136 34,155,455 4,191,681 12.3%
LLiiaabbiilliittiieess 3311//1122//220000553311//1122//22000044
((iinncclluuddiinngg IIAASS 3322 && 3399))
CChhaannggeess 3311//1122//22000055 –– 3311//1122//22000044
AAmmoouunntt %%
Direct customer deposits 15,792,313 14,727,782 1,064,531 7.2%
Debt securities in issue(including subordinated liabilities) 13,117,374 12,328,944 788,430 6.4%
Total 28,909,687 27,056,726 1,852,961 6.8%
Due to banks 3,464,625 2,543,675 920,950 36.2%
Other financial liabilities 1,237,183 307,079 930,104 302.9%
Specific risk provisions 285,133 275,068 10,065 3.7%
Other liabilities 1,773,977 1,558,739 215,238 13.8%
Minority interests 444,167 379,975 64,192 16.9%
Equity
Capital stock and reserves 1,993,380 1,834,397 158,983 8.7%
Net income 238,984 199,796 39,188 19.6%
Total liabilities and equity 38,347,136 34,155,455 4,191,681 12.3%
3311//1122//220000553311//1122//22000044
((eexxcclluuddiinngg IIAASS 3322 && 3399))
CChhaannggeess 3311//1122//22000055 –– 3311//1122//22000044
AAmmoouunntt %%
Net interest income 829,513 804,735 24,778 3.1%
Dividends and similar revenues 19,690 28,318 (8,628) (30.5%)
Financial margin 849,203 833,053 16,150 1.9%
Net commission income 442,066 432,585 9,481 2.2%
Trading and hedging activities 78,302 46,382 31,920 68.8%
Net interest and other banking income 1,369,571 1,312,020 57,551 4.4%
Adjustments (78,833) (98,264) 19,431 (19.8%)
Adjustments to financial asset (24,208) (1,499) (22,709) -
Net financial income 1,266,530 1,212,257 54,273 4.5%
Administrative expenses (842,014) (806,819) (35,195) 4.4%
Payroll costs (505,983) (486,769) (19,214) 3.9%
Other amministrative expense (336,031) (320,050) (15,981) 5.0%
Provisions for liabilities and charges, net (15,656) (23,712) 8,056 (34.0%)
Adjustments to property, plant andequipment and intangible assets (67,435) (67,665) 230 (0.3%)
Other operating income/expenses 128,773 88,642 40,131 45.3%
Operating costs (796,332) (809,554) 13,222 (1.6%)Gains (losses) on shareholdings and
disposal of investments 9,392 6,911 2,481 35.9%Profit from ordinary activities before tax 479,590 409,614 69,976 17.1%
Income tax on ordinary activities (203,082) (175,732) (27,350) 15.6%
Profit from ordinary activities after tax 276,508 233,882 42,626 18.2%
Profit from discontinued operationsfor disposal, net of tax 7,801 0 7,801 -
Profit (loss) attributable to minorityinterests (45,325) (34,086) (11,239) 33.0%
Net income 238,984 199,796 39,188 19.6%
149Determination and distribution of value added
148
BANCA LOMBARDA E PIEMONTESE
ANALYSIS OF TOTAL VALUE ADDED
(in thousands of euro)
3311//1122//22000055FFiinnaanncciiaall
ssttaatteemmeenntt ccaappttiioonn
3311//1122//22000044CChhaannggeess
aammoouunntt %%
Interest income and similar revenues 1,438,703 1,359,878 78,825 5.8
Commission income 556,656 542,183 14,473 2.7
Dividends and similar revenues 19,690 28,318 (8,628) (30.5)
Net trading income 71,500 39,398 32,102 81.5
Net hedging gains (losses) 1,226 0 1.226 0
Gains (losses) on disposal or repurchase of: 5,576 6,984 (1,408) (20.2)
a) loans (594) (761) 167 (21.9)
b) financial assets available for sale 7,139 7,745 (606) (7.8)
c) financial assets held to maturity 0 0 0 0
d) financial liabilities (969) 0 (969) 0
Net results from financial assets and liabilities at fair value 0 0 0 0
Other operating income/expenses 128,773 88,642 40,131 45.3
Income (losses) from equity investments 8,539 7,510 1,029 13.7
A – TOTAL NET REVENUES 2,230,663 2,072,913 157,750 7.6
Interest expense and similar charges 609,190 555,143 54,047 9.7
Commission expense 114,590 109,598 4,992 4.6
Other administrative expense (net of indirect taxation) 271,676 266,896 4,780 1.8
Net impairment adjustments: 103,041 99,763 3,278 3.3
a) loans 78,833 98,252 (19,419) (19.8)
b) financial assets available for sale 24,208 1,499 22,709 n.s.
c) financial assets held to maturity 0 0 0 0
d) other financial assets 0 12 (12) (100.0)
Net provisions for risks and charges (net of donations and gifts) 11,256 19,912 (8,656) (43.5)
Net adjustments to property, plant and equipment (excluding depreciation) 0 0 0 0
Net adjustments to intangible assets (excluding amortization) 2,941 0 2,941 0
Net adjustments to goodwill 0 0 0 0
B – TOTAL CONSUMPTION 1,112,694 1,051,312 61,382 5.8
Net premium income 0 0 0 0
Net premium income 0 0 0 0
C - NET INSURANCE INCOME 0 0 0 0
D - GROSS VALUE ADDED FROM NORMAL BUSINESS ACTIVITIES 1,117,969 1,021,601 96,368 9.4
Net fair value adjustments of property,plant and equipment and intangible assets 0 0 0 0
Gains (losses) on disposal of investments 853 (559) 1,452 (242.4)
Profit from discontinued operations for disposal, net of tax 7,801 0 7,801 0
E - GROSS TOTAL VALUE ADDED 1,126,623 1,021,002 105,621 10.3
Amortization and depreciation 64,494 67,665 (3,171) (4.7)
10.
40.
70.
80.
90.
100.
110.
220.
240.
A=10+40+70+/-80+/-90
+/100+/110/+220+/-240
20.
50.
180.b
130.
190.
200.
210.
260.
B=20+50+180:b+/-130+/
-190+/-200+/-210-260
150.
160.
C=150+/-160
D=A-B+/-C
250.
270.
310.
E=D+/-250+/-270+/-310
BANCA LOMBARDA E PIEMONTESE
ANALYSIS OF NET TOTAL NET VALUE ADDED AND ITS DISTRIBUTION
(in thousands of euro)
3311//1122//22000055FFiinnaanncciiaall
ssttaatteemmeenntt ccaappttiioonn
3311//1122//22000044CChhaannggeess
aammoouunntt %%
F - NET TOTAL VALUE ADDED 1,062,129 953,337 108,792 11.4
Payroll 505,983 486,769 19,214 3.9
Other administrative costs: indirect taxes 64,355 53,154 11,201 21.1
Net provisions for risks and charges: donations and gifts 4,400 3,800 600 15.8
G - INCOME BEFORE INCOME TAXES 487,391 409,614 77,777 19.0
Income tax on operating activities 203,082 175,732 27,350 15.6
Profit (loss) attributable to minority interests 45,325 34,086 11,239 33.0
H - GROUP NET INCOME FOR THE YEAR 238,984 199,796 39,188 19.6
F=E-Amortizationand
depreciation
180.a
180.b
G=F-180.a-180.b
290.
330.
H=G-290-330
22000055 22000044CChhaannggeess
aammoouunntt %%
GROSS TOTAL VALUE ADDED 1,126,623 1,021,002 105,621 10.3
Allocated as follows:
Stockholders - Dividends distributed to the stockholders 128,917 112,290 16,627 14.8
Minority interest in net income for the year 45,325 34,086 11,239 33.0
Human resources 505,983 486,769 19,214 3.9
a) payroll: 505,983 486,769 19,214 3.9
- employment costs: cost of employees on permanent and fixed-term contracts 495,696 476,553 19,143 4.0
- cost of other collaborators 10,287 10,216 71 0.7
b) share of net income allocated to employees 0 0 0 0
System, bodies, institutions (Central and local government) 267,437 228,886 38,551 16.8
Indirect and capital taxes 64,335 53,154 11,201 21.1
Income taxes for the year - total 203,082 175,732 27,350 15.6
including income taxes attributable to central government 151,197 n.d. n.d. n.d.including income taxes attributable to local government 51,885 n.d. n.d. n.d.
Community and environment 4,400 3,800 600 15.8
Activities carried out in the public interest,mainly via Foundations 4,400 3,800 600 15.8
The Business 174,561 155,171 19,390 12.5
Retained earnings 110,067 87,506 22,561 25.8
Amortization and depreciation 64,494 67,665 -3,171 (4.7)
GROSS TOTAL GROSS VALUE ADDED 1,126,623 1,021,002 105,621 10.3>>
>>
5. IMPROVEMENT GOALS 5. IMPROVEMENT
GOALS
152 153Improvement Goals
IMPROVEMENT GOALS
The Banca Lombarda Group primarily intends to
continue and, if possible, improve the process of
social responsibility reporting that began in 2003.
One of the priorities of the Group is to develop
further the information contained in the Social
Responsibility Report, with the preparation of
additional details and inclusion of the key perfor-
mance indicators required by best practice in this
area; in this regard, commencing from the next
edition, the objectives for each category of stake-
holder will be specified in detail together with the
progress made towards achieving them.
In relation to Group Employees, further informa-
tion will be supplied about their career paths and
the projects carried out to create personalized
training plans for the specific roles covered.
For “Customers”, the information regarding the six
retail banks provided in this edition will be extended to include all indicators for the product
companies as well; further information will be added about the last two projects concerning
the Pattichiari (transparency) initiative; the principal actions designed to improve customer
loyalty will be presented in detail.
With regard to consumption, information will be provided on the work begun following the
organized and systematic collection of data about the environmental impact of waste pro-
duction and the consumption of energy and raw materials. This work is intended to prepare
specific action to reduce or contain physical consumption and costs.
In order to broaden awareness about Corporate Social Responsibility and related topics, a
glossary will be included to define the principal specialist terminology used, so that readers
will be able to understand the document more easily.
In addition, specific measures will be taken to improve and increase the distribution of the
document throughout the branch network and via the product companies and principal sta-
keholders. The document will also be supplied to a selected panel of ethical institutional inve-
stors, trade organizations and opinion leaders.
The Group’s Charter of Values will be distributed more widely to external stakeholders, via the
Internet and via its acceptance by suppliers.
The Bank also intends to reduce further the time taken to prepare, publish and distribute the
document.
AUDITOR’S REPORT
159Questionnaire
Dear Reader, our objective is to prepare a document that meets your expectations to an ever
greater extent; with a view to the constant improvement of our social responsibility reporting, we
have prepared a questionnaire that will give us feedback on the extent to which you and our other
stakeholders appreciate this initiative, and allow you to give us ideas and suggestions. The feed-
back from the questionnaires received in relation to our previous Social Responsibility Reports
was positive, although not very representative.
It will only take a few minutes to complete this brief questionnaire. You can send it in by mail, fax
or electronically, to the addresses indicated on the following page.
Thank you in advance for your precious collaboration and the time you have spent.
Which category of stakeholder do you belong to?
Human Resources Stockholder Customers Supplier Community Institution Other (specify)
❍ ❍ ❍ ❍ ❍ ❍ ❍-------------------------------
How would you evaluate the following aspects of the Social Responsibility Report?
(1 = poor; 2 = adequate; 3 = good; 4 = excellent)
Structure sufficiently clear ❍
Explanations sufficiently clear ❍
Completeness of information ❍
Graphics ❍
Overall assessment ❍
In your view, which was the best chapter overall? And the worst one?
______________________________________________________________________________
Have you found out anything about our Group thanks to the Social Responsibility Report that you
did not know before?
❍No ❍Yes, in particular:
______________________________________________________________________________
____________________________________________________________________________
Observations, comments, suggestions and requests for further explanation
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QUESTIONNAIRE
Dear Reader,The following contact details can be used to send in the questionnaire or ask for any clarifica-tion that you may need.
Banca LombardaResearch Dept.Via Cefalonia, 7425124 Brescia
Fax: +39 030 247 3736Tel.: +39 030 247 3318
Website: www.bancalombarda.ite-mail: [email protected]
2005SOCIAL RESPONSIBILITY REPORT
2005
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