INTERIM CONSOLIDATED
FINANCIAL REPORT 30 June
2010
INTERIM CONSOLIDATED
REPORT
THE June 30, 2010
Banca Apulia Spa Registered Office Via Tiberio Solis
No 40-71016 San Severo (FG) Registered in the
business of Foggia No 00148520711 Belonging to the
banking group "Veneto Banca Holding"
C ONTENTS 2
OFFICERS 4
GROUP PROFILE 5
PROGRESS REPORT ON OPERATIONS 7
1. D ATI highlights and G ROUP B Hip PULIA 8
2. THE MACROECONOMIC FRAMEWORK 9
2.1. The international situation 9
2.2. The Italian economy 10
2.3. The economy Puglia 11
2.4. The banking market 12
3. COMPLETING THE PROCESS OF INTEGRATION IN GROUP bancApulia VENETO 13
BANK AND NEW STRUCTURAL ORGANIZATION
4. THE OPERATING STRUCTURE AND 'BUSINESS AND SUPPORT 14
4.1. The distribution 14
4.2. Staff 15
5. TO FINANCIAL PRODUCTS AND STALLATION perceived market as "risky" 15
6. RATINGS 16
7. L 'EVOLUTION OF THE MAIN COMPANIES OF THE GROUP B Hip PULIA 17
7.1. bancApulia 17
7.2. Apulia prontoprestito 19
FINANCIAL STATEMENTS 21
S TATE CONSOLIDATED BALANCE SHEET 22
CONSOLIDATED ONTO C 23
U TILE FOR ACTION 24
P ONSOLIDATED of consolidated comprehensive income 25
P ONSOLIDATED OF CHANGES IN EQUITY 26
R ENDICONTO CONSOLIDATED 28
NOTES TO CONSOLIDATED 30
ACCOUNTING POLICIES 31
P ART A.1 GENERAL 31
Section 1 - Statement of compliance with international accounting
standards 31
Section 2 - Basis of preparation 31
Section 3 - Scope and consolidation methods 32
Section 4 - Events after the reporting date of the interim financial 34
Section 5 - Other Matters 34
Section 6 - Major events occurred in the first half 38
Section 7 - Risks and uncertainties relating to the second half of the year 38
and outlook
A.2 P ART ON THE MAIN BALANCE SHEET ITEMS 39
A.3 I nformation ON FAIR VALUE 53
OPERATING PERFORMANCEIN THE CONSOLIDATED 57
T HE BALANCE SHEET 57
Assets managed on behalf of customers 57
Credit management 60
Financial assets and interbank position 62
ECONOMIC RESULTS 63
The income statement at a glance 63
Net interest income 64
Total revenues 64
Management costs 64
The operating margin 65
The result from ordinary activities before tax 65
Net income for the period 65
C ONTENTS 3
Tangible assets 66
INFORMATION ON RISKS 69
The audit and risk management 69
INFORMATION ON CREDIT RISK 73
INFORMATION ON CONSOLIDATED EQUITY 76
P ONSOLIDATED RECONCILIATION OF EQUITY AND 'HIGHLIGHTED PROFIT FOR
THE PERIOD 79
BUDGET IN FIRST HALF OF THE B AND HIP C APOGRUPPO THAN IN
INTERIM CONSOLIDATED FINANCIAL STATEMENTS June 30, 2009
O PERATIONS Combinations companies or lines D 'COMPANY 80
O PERATIONS WITH RELATED PARTIES 81
I nformation INDUSTRY 83
INFORMATION REGARDING MANAGEMENT AND COORDINATION 86
FINANCIAL STATEMENTS OF VENETO BANCA HOLDING 88
S TATE SHEET 88
C ONTO THE ECONOMIC 89
AGGREGATE DATA AND PROFORMA 90
CERTIFICATION OF THE PRESIDENT OF THE BOARD OF 94
DIRECTORS AND EXECUTIVE OFFICER
THE PREPARATION OF THE COMPANY'S FINANCIAL
S OCIAL S 4
ELECT
OFFICERS FOR YEAR 2010
BOARD OF DIRECTORS
P RESIDENT C HIRO V INCENZO
V ICE P RESIDENT C ONSOLI V INCENZO
CONSIGLIERI Roberto Bernardotto
Francesco Biasia
Armando Bressan
Gaetano Caberlotto
Catalano Giuseppe Pasquale Roberto
Angelo Luigi Cirillo
Chirò Eloisa Angela Giovanna
Comunello Piero
Fania Richard
Walter Filippin
Flavio Trinca
AUDITORS
P RESIDENT Philip Duodo
S Indigo and FFETTIVI John Palasciano
Sannoner Eugenio Roberto Giorgio
INDIGO S S UPPLENTI Michele Battle
Sonego Bruno
DIRECTORATE GENERAL
D IRECTOR G ENERAL Giulio Simonelli
G ENERAL C ONDIRETTORE Piccarreta Cataldo
COMPANY REVIEW
Deloitte & Touche Spa
GROUP PROFILE 5
GROUP PROFILE
The Banca Apulia Spa and its subsidiaries have become part of the largest banking group in
Veneto Banca Holding since January 2010.
This consolidated half of the Bank Apulia is still published under Article 154-ter of Legislative
Decree no. 58/98. For further references see the introduction of the part of accounting
policies.
It should be noted however that Veneto Banca Holding a special issue six-monthly report also
includes data of the Apulia.
Following are details of the above shows the profile of the group in Veneto Banca Holding which
also includes the consolidation of Banca Apulia and its subsidiaries.
GROUP PROFILE 6
PROGRESS
REPORT ON
OPERATIONS
THE June 30, 2010
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 8
1. HIGHLIGHTS AND INDICES OF GROUP APULIA
ECONOMIC V ALUES, ECONOMIC INDICATORS AND KEY MANAGEMENT 1)
ECONOMIC VALUES Jun-09
(euro/ 000) Jun-10 (Pro-forma) absolute change % change
Gross interest margin 46.347 59.670 -13.323 -22.3%
Operating income 62.888 78.930 -16.042 -20.3%
Operating Costs -62.450 -64.844 2.394 -3.7%
Operating profit 438 14.086 -13.648 -96.9%
Net income (loss) -5.929 1.028 -6.957 ns
EQUITY AND OPERATING AMOUNTS Dec-09
(In millions of euro) Jun-10 (Pro-forma) absolute change % change
Gross non-interest income to bank 11.079 11.158 -79 -0.7%
Total funding 6.551 6.467 84 1.3%
Direct deposits 4.809 4.827 -17 -0.4%
Indirect funding 1.742 1.640 102 6.2%
of which asset management 552 519 32 6.2%
of which assets under administration 1.190 1.121 70 6.2%
Loans to customers 4.528 4.691 -163 -3.5%
Interest bearing assets 5.326 6.055 -729 -12.0%
Total assets 5.935 6.358 -423 -6.7%
Shareholders' equity 330 340 -10 -2.9%
Dec-09
Financial ratios (%) Jun-10 (Pro-forma) absolute change % change
Direct deposits / Total assets 81.0% 75.9% 5.1% 6.7%
Loans to customers / Total assets 76.3% 73.8% 2.5% 3.4%
Loans to customers / Direct deposits 94.1% 97.2% -3.0% -3.1%
Dec-09
CREDIT RISK KEY RATIOS (%) Jun-10 (Pro-forma) absolute change % change
Net doubtful loans / Loans to customers 2.57% 2.39% 0.18% 7.7%
Net impaired loans / Loans to customers 1.41% 0.95% 0.46% 48.0%
Net doubtful loans / Equity 35.25% 32.93% 2.32% 7.0%
Jun-09
PROFITABILITY RATIOS '(%) Jun-10 (Pro-forma) absolute change % change
2)
ROE -4.47% 0.76% -5.23% ns
3)
ROA 0.02% 0.52% -0.50% -96.7%
Gross interest margin / interest-bearing assets 1.74% 1.97% -0.23% -11.7%
Operating income / interest-bearing assets 2.36% 2.61% -0.25% -9.4%
Net income / interest-bearing assets -0.22% 0.03% -0.26% ns
Gross interest margin / Operating income 73.70% 75.60% -1.90% -2.5%
Cost / Income ratio 4) 99.30% 82.15% 17.15% 20.9%
Dec-09
STRUCTURAL AND PRODUCTIVITY RATIOS Jun-10 (Pro-forma) absolute change % change
Average employees 902 928 -26 -2.7%
Number of branches 5) 106 106 0,0 0.0%
Loans to customers per employee (in millions) 5,0 5,1 0,0 -0.8%
Total funding per employee (in millions) 7,3 7,0 0,3 4.2%
Gross non-interest income to bank per employee
12,3 12,0 0,3 2.1%
(In millions)
Operating income per employee
139,4 170,2 -30,8 -18.1%
(In thousands)
NOTES
1) Please note that balances economic intermediate represented here are determined according to a reclassification of EC Management Statements.
For a discussion of the main
reference is made to the premise of the paragraph concerning the examination of the
differences between the accounting representation and the one proposed here,
financial results for the year. It also states that in order to make consistent, comparable and therefore, the two reference periods have been prepared
a pro-forma in December 2009 that it considers part of the Group Apulia also the former Meridian Bank
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 9
as if the aggregation had already occurred in the previous year. Please refer to what stated in the section
"aggregated data and pro forma" appearing in paragraph 2 of section 3 of Part 2 of accounting policies.
2) This indicator is determined in relation to average assets for the period (net of net income and shareholders' minority
interests).
3) This indicator ("Return on Assets) is the ratio of Total Gross operating profit and net assets;
4) Determined as the ratio of operating costs (administrative costs, staff costs and adjustments to tangible
and intangible assets) and operating income management.
5) Including ATM cash.
2. THE MACROECONOMIC FRAMEWORK
The world economic recovery, which began as early as the second half of 2009, continued
during the first months of 2010, albeit with uneven patterns, characterized by growth rates
higher or lower in emerging economies, the United States and Japan, but still modest in the
euro area and the United Kingdom.
In the first quarter of 2010 was also noted good recovery 6 to the trading of goods and
services, with lackluster growth rates for emerging economies in Asia thanks to both the
sustained growth of domestic demand that the central role they play in international
production chains. Overall, however, the progress made - even though it stood at over 10% a
year - was not sufficient to fully recover the level of trading volume reached in 2008.
Between March and June, despite the gradual improvement in the macroeconomic, financial market
tensions have arisen, however, triggered by concerns about the sustainability of public debt in some
countries in the Eurozone, namely Greece, Portugal, Ireland and Italy all. Since the end of April, in fact, the
market volatility increased sharply, triggering - next to a huge fall in stock prices and a parallel increase in
the risk premium on corporate bonds - tensions on the conditions in the interbank markets and the
reduction of yields government bonds issued by countries considered less risky. Faced with these tensions
in Europe was therefore launched a robust plan for financial support and many countries have adopted or
announced measures to consolidate public finances.
2.1. THE INTERNATIONAL SITUATION 7
In the United States in the first quarter of 2010, GDP grew in real terms by 3.7% on an annualized
basis, a net decrease as compared to 5.0% in the final quarter of 2009. Output growth has slowed
further since then - 2.4% - in the second quarter.
Economic activity was particularly supported by the inventory cycle and the acceleration of
private consumption, which rose on average during the first six months of 1, 5%, however,
still hampered by the unfavorable conditions of the labor market and a weak balance sheets
that in two months from April to May have traced the rate of increase to just over 2% per
annum despite the disposable income has risen by 6%.
As for the Euro area, the first part of 2010 was generally characterized by weak GDP growth of 0.2% and
slightly over 0.1% in the previous quarter.
Major contributions are derived, in this case, changes in stocks, especially exports, rose by 2.1%
compared with 1, 8 in the previous quarter, which benefited from gains in competitiveness since the
end of last year and the expansion of world demand. In this regard, it should be noted the
simultaneous strong increase in imports which have partially reduced the positive contribution of
outflows.
Domestic demand, however, marked a further decline, derived from the stagnation of private
consumption (-0.1%) and a further reduction in investment (-1.2%).
Overall, since the recovery, and until the first quarter of this year, real GDP rose by 0.7%, with a dynamic
of similar intensity in Italy and more lively in Germany and in France (1, 5 and 1.2%, respectively), but
there is still much lower than the level before the crisis.
The first indications of economic activity also foreshadow a hardening of manufacturing growth in the
second quarter of 2010, driven primarily by higher orders from abroad also favored by the weakening of
the euro, for a 4.0% increase over the period from January to March , compared to domestic demand is
slow to consolidate both in terms of consumption and investment spending.
In the UK, GDP growth, while positive, is decelerating from the previous quarter: in the first three
months of the calendar year has marked a development of 1, 2% against the previous 1.7% at end-
2009. This slowdown is explained by the lower contribution deriving from the inventory cycle,
accompanied by substantial immobility of household consumption.
6 Source OECD
7 Source:
Bank of Italy Economic Bulletin
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 10
In the first quarter of this year, the Japanese GDP increased by 4.6%, registering a significant
increase compared to -1.1% last period of 2009, related to the high growth in exports, nearly 30,
6%, supported by strong demand from other Asian economies. It is also slightly strengthened the
momentum of domestic demand, which has benefited from the positive recovery of stocks.
The latest economic indicators point out, however, an easing of growth in the second quarter.
The growth of gross domestic product in the major emerging countries has been revived in
the first quarter, according to early indications, it should keep up a fast pace in the second,
despite in some cases signs of weakening.
In particular, China's GDP has increased in the first half of 11, 1% a year, a further
acceleration from the rate of growth last quarter of 2009 amounted to 10.7% in the wake of
enlargement and the increase in consumption investment.
Even in India, thanks to support exports and investments in the first quarter has seen a
dramatic increase, equal to 8, 6% on the previous twelve months, gross domestic product
that has significantly outpaced the 6.5% achieved in previous quarter.
Double-digit increase in Brazil, where the GDP in the first quarter of 2010 increased by 11, 4% per annum
benefiting from strong growth in investment, does not affect significantly the simultaneous slowdown in
consumer spending and the negative contribution net foreign demand. The available economic indicators
suggest, however, a slowdown in the second quarter.
In Russia the economic situation is improving compared to 2009 and, thanks to the gradual rise in oil
prices in the second quarter has seen the return to values more robust growth rate of GDP, estimated at
the end of June to 5.2% , on the other hand remains still weak domestic demand. In the first quarter of
2010, the economic situation has improved even in the countries of Central and Eastern Europe. The GDP,
which is supported almost entirely by the dynamics of stocks, in fact, increased by 2.0% a year in Poland
and the Czech Republic and 3.6% in Hungary, while it attenuated the negative trend in Romania. The latest
economic indicators also report a new strengthening of economic activity in all four countries in the second
quarter.
As regards price developments, the first part of the notes rather heterogeneous dynamics. While the U.S.
consumer price inflation fell (June 2010) 1, 1%, reflecting the slowdown in energy prices in the Euro -
after fluctuating around 1 per cent between the end of 2009 early 2010 - has risen about half a percentage
point, driven by the acceleration of energy prices, amounting to 1 June, 4%. Within the register, however,
significant differences among the major countries, with larger decreases in the presence of more acute
financial difficulties (Spain, Portugal and Ireland).
In the UK the price inflation has remained at high levels on average, reaching 3.2% in June.
During the same period in Japan has maintained a negative trend, recording a further decline
in the overall index by 0.7% from a year earlier.
About the Emerging Countries, in June, reported an increase of 2.9% in consumer price
inflation in China, mainly a result of the acceleration in prices on food, and continued in India
for a high rate of inflation to 'wholesale, the next 10.6%, driven by growth of the components
of the fund.
During the first half of 2010 the labor market continued to be an important component of brake on
recovery. The euro area, in particular, despite a slowdown in the downward trend in the level of
employment and - only for the services sector - even to a substantial stabilization, continues to show an
unemployment rate still at high levels, close to 10 %, only Germany has improved, albeit marginally, this
indicator.
Best is, however, the situation in the United States, where - despite the employment levels
have not shown significant signs of recovery - there has been a further improvement in the
unemployment rate in June at 9.5%, which leads him to re-align levels of the previous twelve
months after the peak reached in late 2009.
2.2. THE ITALIAN SITUATION
In the first quarter of 2010, in Italy the domestic product grew by 0.4% over the fourth
quarter of 2009, reversing the sign of the trend previously observed.
The biggest contribution came from exports, variations in which the run-up has exceeded 5%.
Domestic demand is still rather weak both on the fixed investment and inventories than on
household consumption.
For the second quarter's economic indicators do not foreshadow substantial changes: the
growth will continue thanks to higher exports, partly offset by a trend of investment that is
affected by uncertainty about future demand conditions and by a large margin of spare
production capacity yet.
It should be noted, however, some recovery of industrial activity, characterized by increases in
production of 1, 7% and 2% respectively in the first and second quarters. The dynamics of the
orders, especially for the foreign component, has strengthened, supported by improved price
competitiveness derived from the further depreciation of the euro.
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 11
Manufacturing productivity rose in the first quarter from a year earlier for the reduction in
hours worked and in March there has been a first positive figure - after a period characterized
by a negative - on the profitability of businesses.
With regard to employment, economic recovery in the first quarter has enabled us to maintain
employment levels still substantially on year-end levels, recorded in March, a positive variation of
0.1%. The phenomenon has also affected mainly the services sector and covered only the northern
and central regions.
The data at the end of June 8th show, however, as the employment rate of the population of
working age (15-64 years) is further decreased by 0.6% over the previous twelve months,
helping to bring the unemployment rate to net seasonal factors 8, 5% with a 0.7% increase
over June 2009.
After the rise of the beginning of the year, determined largely by higher prices of energy products, the
dynamics of consumer prices in Italy is relatively stable, partly due to the continuing weakness in
household consumption. In June, the national index has in fact registered an annual increase of 1, 3%,
with a change in fact, nothing compared to the previous month.
The trend towards higher were recorded in the items of expenditure relating to transport
(3.7%), Other goods and services (3.3%) and Education (2.5%), while the changes were
most significant negative trend Communications occurred in the sectors (-1.0%) and Food
and non-alcoholic beverages (-0.3%).
On the basis of the harmonized between the countries of the Euro, by March, the inflation
differential against the average of Italy was canceled, in the last two years had remained
almost always positive.
2.3. L 'ECONOMY PUGLIESE
According to the analysis by the Bank of Italy, the turnover in industry excluding construction
declined in Puglia 13 percent in real terms in 2009, after the more moderate decline in the
previous year. The downturn has affected almost two thirds of the companies in all major
sectors, and appears more pronounced than in the rest of the South. On the basis of
qualitative indicators, in the summer of 2009 saw a partial recovery in industrial activity, in
early 2010, the production has stabilized at year-end levels.
Industrial investment declined by over a third, reflecting the intense drop in demand and the low degree of
capacity utilization, which fell to minimum levels during the years. The reduced financing capacity of
companies have contributed to the slow process of accumulation.
Exports at current prices fell by over a fifth, in line with the national average. The sectors of
mechanical and steel, are more sensitive to the dynamics of the business cycle, have seen
reductions in the most intense, and those of fashion and furniture have been hit by the crisis during
a difficult strategic repositioning urged by the increasing competition from low cost countries
Labour, by contrast, the moderate growth of exports has eased the fall in production levels in the
food industry.
In early 2010, the confidence has returned to better: companies reported positive expectations on
production and would have arrested the destocking. However, according to 40 per cent of the
companies recovery is rapid and the turnover is expected to return to pre-crisis levels until 2012.
The prospects do not appear to be more favorable from the firms that had undertaken restructuring
even before the crisis.
In 2009 the production value of the construction sector decreased by 2 percent in real terms and this trend
continued into the first months of 2010. The residential sector continued to slump last year, reflecting the
weakness in the housing market despite a considerable growth in the restructuring. Instead, the fund
increased public works.
The effects of the crisis on the labor market have been significant. Employment in Puglia decreased by 3.8
percent, far more intense than in the South and the national average, and the decline of 2009 reported the
number of employees from 2005 levels. The self-employed, young people and graduates have recorded
greater reductions. The unemployment rate rose by one percentage point to 12.6 percent. It nearly tripled
the use of the Wage Supplementation Fund (CIG) and has increased almost the same, the number of
workers who undertake to give up looking for work, discouraged by the perceived difficulties of the
moment. In March 2010, in particular the industrial sector, trade and handicrafts from Puglia, shows a very
negative because of layoffs, surpassing the 7.5 million total hours authorized cash equal to approximately
40% of the South. There is growth in both hours of unemployment compensation granted ordinary (30%
on the month of February) and the hours of extraordinary cash (41%). In March, the industry Apulia
showed the highest number of ordinary hours of layoffs were the engineering industry, which absorbs
8 Source: ISTAT Press July 30, 2010
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 12
54% of the total awarded, followed by the garment industry and that of leather. The sectors
that have recorded a number of hours have been rather minor: the extraction of non-metallic
minerals, the activities related to agriculture and transport.
In the first quarter of 2010, total bank loans in Puglia, adjusted for the accounting effect of
securitizations, increased by 4.0 percent on-year, compared with a contraction at the national
level.
Loans to companies in the rest of Italy has been reduced, showed an increase in Puglia by 2.3
per cent and this trend has focused on companies with at least 20 employees and operating in
the construction and services. Credit to households grew by 7.2 Puglia per cent more than at
the national level and with a slight acceleration from the previous quarter, after the
prolonged downturn that began in 2006.
In the first three months of 2010 interest rates on short-term loans on outstanding transactions to
customers resident and the annual percentage rate (APR) on new loans to medium and long term
are slightly reduced (from 5.7 and 3.1 per cent). The average rate on current accounts free
acknowledged remained essentially unchanged at the end of 2009.
The annual flow of new bad debts in relation to loans in Puglia, at 2.5 percent, has risen
compared to previous quarters, mainly as a result of developments in the government sector,
the increase was higher than the national average.
The annual rate of increase of bank consumer households and businesses has fallen to 2.4 percent, lower
than the figure reported to Italy and the growth of deposits held by households consumption has eased to
3.2 percent, a value slightly higher than the national average
2.4. The banking market
At the end of May 9th to the uses of Italian banks to the private sector reached 1.553 billion
euros, recording an annual increase of 2.5%.
Of this amount, 1.359 billion euros are well related to loans granted to households and non-
financial corporations, making reference to the same period in 2009 with an advance from
less than 1, 8%.
The growth was in fact determined by the only sector in the medium term, increased an
annualized 4.4% over the same period, the short-term loans fell by about 4.7%, compared to
the deceleration dynamics of the preceding months.
With regard to the sectors of destination in the period under review also confirms the decisive
contribution of families, which in the first five months saw an increase of 7.8%. In this context,
among the most significant items, there are the loans for the purchase of property, grew by about 8,
5%, a significant acceleration compared to 4.6% in the same month in 2009.
There remains, however, the trend is still weak in funding for non-financial businesses, which in late May
to quantify a decrease of 1, 5%. Considering the areas of activity, the dynamics of the liveliest were
observed with regard to the sector of transport services, both sea and air (12.6%) and internal (6.6%) and
that of agricultural, forestry and fishing (5.4%).
Earlier in the year, credit quality has further deteriorated in absolute terms, highlighted by an annual
increase in gross NPLs of close to 40% in relation to the amount of loans, from 2.7% the previous twelve
months to 3.69% in May 2010.
Similar trends were observed with respect to loans net of depreciation, increased by 45.6% in
the year in absolute terms, while their effect on total loans reached 2.14% compared with 1,
5% in 2009.
At the end of May, the Italian banks reconfirm - an increase of 6.0% - the positive trend in
bank deposits, noted in the preceding six months. The total amount of savings deposits,
current accounts, certificates of deposit and bonds to customers resident has therefore
exceeded the 2.006 billion euros.
The individual components have revealed dynamic rather heterogeneous, with customer deposits growing
by 9.5% against 5.6% achieved in the same period the previous year, and bonds - grew by 1, 2% - a
marked deceleration compared to 17.7% in May 2009.
Appear on the other hand picking operations repos, increased by around 50% after the sharp
decline last year, while there are still downhill collecting statistics, which in May saw a decrease of
6.1 % over the previous year.
In June 2010 the weighted average rate on total loans to households and non-financial corporations has
declined in line with the impulses of the ECB and the development of conditions in the interbank market
will, at 3.66%, below 65 basis points compared to the corresponding 2009.
9 ABI Monthly Outlook July 2010
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 13
In parallel, the average rate of bank deposits from customers (which includes the return of
deposits, bonds and repo Euro applied to the household sector and non-financial) stood at 1,
44%, a reduction by 40 basis points compared to the previous twelve months.
With regard to assets under administration and management, at the end of May 2010, the securities
in custody with Italian banks (both in management held directly by customers) amounted to 1.525
billion euros, of which approximately 45% is held directly by households consumers.
The bank had assets under management in March 2010 - according to data from the
statistical bulletin of the Bank of Italy - amounted to more than 92 billion euros, an increase
of 21%. The total assets of the portfolio management of individual banks, mutual funds and
SIM in Italy was at the end of the first quarter of 2010 of 412.7 billion euros, marking an
annual growth of 24%. Compared with the previous twelve months there is also increasing
the assets of mutual funds and SICAV Italian open and abroad, at the end of June amounted
to 441.3 billion euros, marking a growth of around 10%.
3. COMPLETING THE PROCESS OF INTEGRATION IN bancApulia VENETO
BANCA GROUP AND THE NEW ORGANIZATIONAL STRUCTURE
During the period under review was formally concluded the project that led to the merger of
Banca Meridiana bancApulia and subsequent integration of the new reality in the Veneto
Banca Group.
In particular, on January 13, 2010 Financial Capitanata transferred to Veneto Banca Holding a share
corresponding to 42.39% of the share capital of bancApulia, certifying its participation in 10.14% and
while the entire increase in the subscribed share capital of Banca Meridiana, already approved on
December 10, 2010, shedding its equivalent, equal to Euro 93 million. Following the capital increase,
Financial Capitanata has acquired a fraction equal to 41.13% of the share capital of Meridian Bank,
controlled by Veneto Banca Holding with 58.73%.
On January 25, 2010, was entered into the merger by incorporation of Banca Meridiana
bancApulia, the last step of the complex integration project that led to entry of that company
and its subsidiaries, in the Veneto Banca Group .
The merger - which took place on the basis of an exchange ratio of 5 new shares for every four
shares of Bank bancApulia Meridiana - became fully effective in law since May 10, 2010, the date
coincides with that of the migration of database bancApulia of the information system used by the
Veneto Banca Group, regarding the accounting and tax became effective has been established since
1 January 2010.
With the completion of the transaction described above, the parent Veneto Banca Holding became the
owner of 50.67% stake in bancApulia, while keeping intact their captains financial investment, has
certified its holding to 25.85%. At the date of legal effect of the merger, May 10, 2010, shareholders'
agreements were signed between Veneto Banca Holding and Financial captains, relating to the governance
of the "new" bancApulia.
By virtue of the operation of incorporation of Banca Meridiana, bancApulia can now count on a
network of 106 branches distributed in 7 regions, 14 retail outlets puntofinanziario Apulia, Apulia
prontomutuo 3 outlets, 300 ATMs, a bank product gross more than 11 billion euros and around 900
employees. The new capital will increase the size and the new reality and play a primary role in the
development of manned territories or in southern Italy and along the Adriatic.
The merger, due to the substantial absence of spatial overlap with Meridian Bank, will achieve
the following benefits:
- the realization of economies of scale and scope, relying on the larger size of the new entity
and rationalization of the central functions;
- the achievement of adequate levels of profitability, with the gradual reduction in the cost /
income ratio through the alignment of commercial networks, the full exploitation of
centers of excellence and product factories;
- the execution of an important project that will allow dimensional strengthening the competitive
position by leveraging on the strong local roots of the two companies.
The new organizational structure bancApulia develops in the form of Bank Network in the
organization of the Veneto Banca group divided according to a federal multi-business model.
This model is developed in a holding company exercising functions of strategic planning,
governance and control over the entire group, from the Italian Banks Networks which is
responsible for commercial positions in the area of responsibility, established by the Foreign
Banks to manage the business in the countries of 'Eastern Europe and from enabled product
companies to assist in highly specialized and targeted to the banks of the Group.
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 14
The Bank competes Network:
- The Presidium of the markets and customers on the territory of competence;
- achieve the objectives determined by the parent company;
- operation of supply chain network;
- coordination of the commercial push on the individual customer segments;
- the operational management of customers;
- resource management.
These objectives are secured through a structure headed by the Director General, assisted by the Deputy
General Manager, making use of the direct collaboration of the Departments listed below, each of which
shall be responsible for the management and achievement of objectives in their area of expertise:
- Directions in staff in the Directorate General;
They provide support activities and direct assistance to the Director General;
- Administration and Technical Resources
Ensures the adequacy of organizational structures, processes and business tools, as well as the
administrative and financial authorities of the Treasury.
- Credit Department
Oversees the management of credit risk and related policies.
- Market Direction
Provides management and objectives of the whole business of the Bank.
- Human Resources
Ensure, in line with the strategic guidelines of the parent company, the implementation of management
policies and staff development.
The branch network has been divided into n. 7 All who follow the development of commercial areas of expertise
and are headed by the Directorate market in particular "area and Bari Bari Sud", "Bari Nord and Northern Tableland
Area", "Area of Campania and Basilicata North", "Area Gargano and headed "Area" Ionica "," Area Molise, Abruzzo
and Marche "and" Salento area. "
4. THE STRUCTURE AND BUSINESS OPERATIONS AND SUPPORT 4.1. The
distribution
4.1.1. The doors
At June 30, 2010, bancApulia is present in Italy with a branch network consisting of 106 units (of which 2
ATM cash), distributed among the regions of Abruzzo, Basilicata, Campania, Lazio, Marche, Molise and
Puglia. The result is due to the sum of No 52 branches and bancApulia No 54 Meridian Bank branches
arising from incorporating.
The network is completed by the presence in the area of external networks, consisting of no 14 direct
outlets of Apulia puntofinanziario - financial advisers and no network 3 stores direct prontomutuo Apulia -
network brokers.
During the half year just ended was closed in Lecce agency for territorial overlap with other branch
deriving from Meridian Bank, then to transfer it to another place with high potential.
31/12/2009
Distribution branches / Province 30/6/2010
(Pro-forma)
Ascoli Piceno 3 3
Avellino 4 4
Bari 21 21
Brindisi 8 7
BAT 4 4
Campobasso 1 1
Chieti 2 2
Foggia 20 20
Lecce (*) 14 15
Macerata 1 1
Matera 6 6
Pescara 2 2
Potenza (*) 14 14
Rome 1 1
Taranto 5 5
Total bancApulia 106 106
(*) The data include TREASURY BRANCHES
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 15
4.2. STAFF
4.2.1. The organic
At June 30, 2010, the total resources of the Bank and its subsidiaries, including that of staff in
payroll expense, net of separations (n. 68 units), including those assets (No 3 units),
amounted to 872 units.
Detailed analysis on the allocation of resources between central management and distribution
network, bancApulia, shows an even distribution, with employees Coating net role that
account for 76% of the total workforce used.
31/12/2009
Employee Distribution 30/6/2010 (Pro-forma)
No % No %
1) bancApulia 808 869
Head Branch employees 183 22% 264 30%
Branch network employees 625 76% 605 69%
Subtotal 808 100% 869 100%
2) Apulia prontoprestito 33 31
3) Apulia previdenza 31 31
TOTAL
872 931
With regard to postings, it is reported that the June 30, 2010 bancApulia has three detachments in
operation (1 from Banca Popolare di Intra and 2 by the holding company), while the resources listed on the
payroll of the Bank but operationally active in other Group companies (and bancApulia which recovers the
costs) amounted to 68 units (2 operational resources in Banca Italo Romena, a security in Apulia, in Apulia
prontoprestito 2, 15 at Veneto Banca Holding Montebelluna or Carifac, 40 functional detachments at Veneto
Banca Holding in San Severo and 8 functional detachments at Veneto Banca Holding in Bari).
5 Exposure to financial products perceived by the market as "risky"
Since 2008, financial markets were characterized by a context of high volatility, stemmed, in part by
expansionary monetary policies implemented by major global central banks. In this economic and
financial environment, we recall the claims made by supervisors, according to which financial
institutions are required to provide a broad and adequate information in their financial statements
in relation to those financial products from the market perceived as highly risky and relation to the
methodologies applied in the evaluation of complex financial instruments and / or illiquid securities,
including collateralized debt obligations (CDOs), mortgage-backed securities on real estate (RMBS),
commercial mortgage-backed securities (CMBS), other special purpose vehicles ( SPE) and finance
products to leverage (leveraged finance).
Both bancApulia that its subsidiaries do not hold directly or indirectly related to subprime
mortgage exposures and similar.
Moreover, operations in structured financial instruments of credit of third parties is not
significant and limited exposure to cash in the following financial assets:
a credit-linked notes, guaranteed capital, ranked in the portfolio of assets available for
sale with a carrying value at June 30, 2010 of approximately € 1.8 million, which were
made in the interim period adjustments positive in equity accounted for € 90 000;
a single investment in a hedge fund that invests in Italian law ABS securities, classified in
the trading book for a book value at 30 June 2010 of € 387,000 on which they were
recorded, during the interim period, gains of approximately € 108 000 recorded in the
income statement;
Fund Linked Note classified in a portfolio of assets available for sale with a carrying value at June 30,
2010 of approximately € 2.7 million and on which, during the period under review has been carried
out - such as IAS 39, paragraph 1, in compliance with internal policy that defines the threshold of
significance (60%) and durability (24 months) for the identification of situations
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 16
impairment - an impairment of approximately € 700 thousand, calculated on the basis of an
assessment of fair value made by an independent third party that meets the requirements of
professionalism.
As of June 30, 2010, and its subsidiary bancApulia Apulia prontoprestito have a total
outstanding under the full recognition of their ten securitizations, including six of bancApulia,
three of Meridian Bank and one of Apulia prontoprestito, perfected under the law 130 / 99.
6. The rating
The ratings assigned to debt bancApulia were reviewed by Moody's, in February 2010, raised up
from the "D" to "D" rating on financial strength. This assessment reflects the increase in capital and
liquidity arising from certain synergies following the merger of Banca Meridiana bancApulia and the
entry of the Gruppo Veneto Banca.
Following is the summary of ratings assigned by Moody's to bancApulia:
MOODY'S
Short-term debt (short-term Issuer Default) Prime-2
Debt in the medium to long term (Long-term
IDR) Baa2
Outlook Stable
Financial Strength (Bank Financial Strength) D
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 17
7. STATUS OF MAJOR COMPANIES OF 'GROUP APULIA
The following tables highlight the economic, asset management and some indicators of the
main Group companies Apulia in the first half of the year.
7.1 bancApulia
ECONOMIC VALUES, ECONOMIC INDICATORS AND KEY MANAGEMENT
ECONOMIC VALUES Jun-09 Absolute
Jun-10 change Change%
(€ 000) (Pro-forma)
Gross interest margin 42.170 48.790 -6.619 -13.6%
Operatng income 65.928 70.683 -4.755 -6.7%
Operating expenses -60.388 -59.792 -596 1.0%
Operating profit 5.540 10.891 -5.351 -49.1%
Net income (loss) -798 2.977 -3.776 ns
EQUITY AND OPERATING AMOUNTS Dec-09 Absolute
Jun-10 change Change%
(In millions of euro) (Pro-forma)
Gross non-interest income to bank 10.440 10.450 -10 -0.1%
Total funding 6.300 6.211 89 1.4%
Direct deposits 4.558 4.571 -13 -0.3%
Indirect funding 1.742 1.640 102 6.2%
of which asset management 552 519 32 6.2%
of which assets under administration 1.190 1.121 70 6.2%
Loans to customers (excluding liquidity
vehicles) 4.140 4.239 -99 -2.3%
Interest-bearing assets 5.003 5.526 -522 -9.5%
Total assets 5.287 5.735 -449 -7.8%
Shareholders' equity 267 269 -3 -1.0%
Dec-09 Absolute
Financial ratios (%) Jun-10 change Change%
(Pro-forma)
Direct deposits / Total assets 86.22% 79.70% 6.53% 8.2%
Loans to customers / Total assets 78.31% 73.91% 4.40% 6.0%
Loans to customers / Direct deposits 90.82% 92.74% -1.92% -2.1%
Dec-09 Absolute
CREDIT RISK KEY RATIONS (%) Jun-10 change Change%
(Pro-forma)
Net doubtful loans / Loans to customers 2.67% 2.49% 0.18% 7.1%
Net impaired loans / Loans to customers 1.43% 1.02% 0.42% 40.9%
Net doubtful loans / Equity 41.41% 39.19% 2.22% 5.7%
Jun-09 Absolute
PROFITABILITY RATIOS '(%) Jun-10 change Change%
(Pro-forma)
Annualized ROE -0.60% 2.21% -2.80% -127.0%
Annualized ROA 0.23% 0.44% -0.21% -47.2%
Gross interest margin / interest-bearing
assets 1.69% 1.77% -0.08% -4.5%
Operating income / interest-bearing
assets 2.64% 2.56% 0.08% 3.0%
Cost / Income Ratio 91.60% 84.59% 7.01% 8.3%
STRUCTURAL AND Jun-10 Dec-09 Absolute Change%
change
PRODUCTIVITY RATIOS (Pro-forma)
Employees used (average) 839 870 -32 -3.6%
Number of branches 106 106 0 0.0%
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 18
At the end of the first half of 2010, the gross product of the Institute San Severo bank stood
at € 10.4 billion, virtually unchanged compared to last December.
The Bank's total deposits reached at the end of semester fee of € 6.3 billion, highlighting an
improvement of '1.4% compared to end-of 2009, which in absolute terms translates into an
increase of about 89 million €.
Within this aggregate, direct deposits registered a slight reduction of about 13 million,
reaching an altitude of close to € 4.6 billion (-0.3%).
In the same period, the indirect funding stood at around 1.7 billion euro, which is progress in the
order of 6.2 percentage points compared to end-of-December. Contributed positively to the
evolution of the aggregate assets under management that the administered component, an increase
respectively of 32 and 70 million €.
At the end of June 2010, the amount of loans and advances (excluding vehicles cash) stood at € 4.1
billion, highlighting the six months under review decreased by 99 million euro (-2.3%).
At the end of the semester, the net assets of the Bank, including net income for the year in
training, showed a reduction of about 3 million, reaching 269 million by the end of December
2009 to the current 267 million euro.
Examine the economic aggregates, in June 2010, the interest margin stood at 42.2 million euro,
marking a decrease in the order of 13.6 percentage points over the same period of 2009. This trend
can be explained on the one hand with the loss of income relating to overdraft charges and the
other with the erosion of margins on the component unit funding from customers, the effect directly
attributable to the level of market interest rates and only partly balanced by the increase in volumes
traded.
Would be very positive trend in net commission income, which in late June have almost reached
22.0 million euro, representing an increase of more than 20 percentage points over the same period
in 2009. In order to pull the industry's development it should be noted in particular the resumption
of intermediation of savings and the contribution of the introduction of new types of services rely on
commission for customers.
Considering also the contribution of dividends amounting to € 2.0 million, the result of trading
amounted to 375 000 €, and the balance of other income / expenses, loss of approximately €
630 thousand, we arrive to an operating income of € 65.9 million of management, down 6.7%
on the figure for June 2009.
At the end of the first half of 2010, operating expenses have reached the amount of € 60.4 million,
showing, in comparison with the comparative performance in the first half of 2009, a modest
increase of a percentage point. In the aggregate, the personnel expenses totaled € 30.2 million, an
increase of 5.9 percentage points, and other administrative expenses, net of recoveries reclassified
for management of taxes and stamp duties, they are placed at 26.6 million euro, down 2.3% on the
figure recorded at end-June 2009. Among the most important items of expenditure, in addition to
costs related to royalties paid to consortia amounted to EUR 3.4 million (primarily related to
criminal Cedacri), there are the fees for services rendered in outsourcing by the parent company,
approximately 3 2 million €.
As a result of the dynamics set out above, the gross operating surplus showed a significant
decrease in the order (-49.1%), rising from 10.9 million at the end of June 2009 to about 5.5
million of the semester just ended.
The overall profitability of the period was also conditioned by the provisions for risks and
charges and by appropriations made in defense of prudential risk associated with credit
delivery. With regard to the latter component, at the end of the first half of 2010, the cost of
credit, which is the manifestation accounting valuation adjustments on loans, was just under
€ 3.4 million, a reduction compared to about 4.7 million set aside at the end of June 2009.
These phenomena have led to a net loss of approximately € 800 thousand, down from the same period of
2009, which ended with a profit of about EUR 3.0 million.
As regards, finally, the operating structure, to June 30, 2010 the Institute was used to count
on a workforce of 808 resources and a distribution network of 106 branches, mostly deployed
in the regions of Puglia, Molise and Abruzzo.
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 19
7.2 Apulia prontoprestito
ECONOMIC VALUES, ECONOMIC INDICATORS AND KEY MANAGEMENT
ECONOMIC VALUES Absolute Change
Jun-10 Jun-09 change %
(€ 000)
Gross interest margin 3.982 6.971 -2.989 -42.9%
Operating income -148 7.161 -7.309 ns
Operating expenses -2.131 -2.390 259 -10.8%
Operating profit -2.279 4.771 -7.050 ns
Net income (loss) -4.250 20 -4.270 ns
EQUITY AND OPERATING VALUES Absolute Change
Jun-10 Dec-09 change %
(In millions of euro)
Gross non-interest income to bank 1.063 1.204 -141 -11.70%
Direct deposits 192 235 -43 -18.40%
Loans to customers 871 968 -97 -10.07%
Total assets 938 1.030 -92 -8.91%
Shareholders' equity 233 237 -4 -1.79%
Absolute Change
Financial ratios (%) Jun-10 Dec-09 change %
Direct deposits / Total assets 20.5% 22.9% -2.38% -10.41%
Loans to customers / Total assets 92.8% 94.0% -1.19% -1.27%
STRUCTURAL AND Absolute Change
Jun-10 Dec-09 change %
PRODUCTIVITY RATIOS
Average employees 32 30 2 6.67%
Loans from customers per
27 32 -5 -15.59%
employee (in millions)
Gross non-interest income to bank
33 40 -7 -17.22%
per employee (in millions)
At the end of the first half of 2010, the Company's product gross bank amounted to EUR 1.1
billion, marking a decrease of 141 million over the December last year, corresponding to a
decrease in the order of 12 percentage points.
At the end of June 2010, direct funding of the Company, consisting entirely of securities
issued in connection with securitization transactions, amounted to 192 million euro, showing
a decrease of 18.4% compared to end-of 2009 in absolute terms translates into a reduction of
about 43 million €.
The amount of loans and advances stood at 871 million euro, highlighting the six months
under review decreased by 97 million Euros, or about 10 percentage points.
At the end of six months, the company's equity, including net income for the period, recorded
a reduction of about 4 million, rising from 237 million at end-December 2009 to the current
233 million euro.
Examine the economic aggregates, at the end of the first half of 2010 net interest income,
which includes the result of hedging, totaled 4.0 million euro, marking a decrease in the order
of 43 points percent over the same period of 2009. This trend is mainly attributable to net
income from hedging on interest rate risk, which was affected by market interest rates.
Increasing the negative impact, albeit marginal, net commission income, which in the end of
June came close to a deficit of € 260,000, showing a decrease of € 175,000 over the same
period in 2009.
Considering also the result of evaluation of derivatives trading, a loss of about 2.7 million euro, and
the balance of other income / expense, a loss of about € 1.2 million, we get a gross income
management amounted to € -148 thousand, a net decline from profit of 7.2 million earned in the
same period in 2009 ..
PROGRESS REPORT ON THE OPERATIONS AT 30 June 2010 20
At the end of the first half of 2010, operating expenses have reached the amount of € 2.1
million, showing, in comparison with the comparative performance in the first half of 2009, a
reduction in the order of 10.8 percentage points. In the aggregate, the personnel expenses
totaled approximately one million euro, an increase of 9.5 percentage points, the other
administrative expenses were also placed at about one million euro, But showing a decline of
21.6% on the figure recorded at end-June 2009.
As a result of the dynamics set out above, the gross operating surplus showed a reversal of
sign, from a profit of EUR 4.7 million in June 2009 to a loss of about 2.3 million of the
semester just ended.
The overall profitability of the period was also conditioned by the provisions for risks and
charges and by appropriations made in defense of prudential risk associated with credit
delivery. With regard to the latter component, at the end of the first half of 2010, the cost of
credit, which is the manifestation accounting valuation adjustments on loans, was just under
€ 3.5 million, a reduction compared to about 4.2 million set aside at the end of June 2009.
These phenomena have led to a net loss of approximately € 4.3 million, down compared to the
corresponding period in 2009 almost ended in a draw. Please note that this result is determined by
structural factors outside the Company's business, but the valuation of derivatives and the commission
rebates to customers for the lapses. Also, please note that the income statement in future periods will
benefit, as well as the proceeds from the new production, including the initial sales transaction related to
commission income already received from Apulia prontoprestito and will be expensed under amortization
of individual loans, net of refreshments to customers for the lapses.
FINANCIAL STATEMENTS
THE June 30, 2010
FINANCIAL STATEMENTS June 30, 2010 22
CONSOLIDATED BALANCE SHEET
(In thousands of Euro)
Assets 30/6/2010 31/12/2009
10. Cash and cash equivalents 38.075 14.190
20. Financial assets held for trading 15.064 61.263
30. Financial assets at fair value - 461
40. Financial assets available for sale 249.426 621.694
60. Loans to banks 533.525 179.973
70. Loans to customers 4.527.832 3.372.931
80. Hedging derivatives 18.338 5.286
90. Fair value of financial assets
hedged 31.822 23.481
100. Investments 21 21
110. Reserves attributable to reinsurers - 14.001
120. Tangible assets 45.252 31.667
130. Intangible assets 7.027 7.752
Of which:
- Goodwill 5.844 5.591
140. Tax assets 17.348 9.275
a) current 3.033 2.936
b) deferred 14.315 6.339
150. Non-current assets held for
disposal 246.354 1.361
160. Other activities 205.083 84.057
Total assets 5.935.167 4.427.413
Liabilities and shareholders’ equity 30/6/2010 31/12/2009
10. Due to banks 371.333 865.236
20. Due to customers 2.175.118 1.116.019
30. Securities issued 2.633.299 1.938.860
40. Trading financial liabilities 12.204 2.492
50. Financial liabilities at fair value 1.032 473
60. Hedging derivatives 48.044 30.274
80. Tax liabilities 3.746 2.096
a) current 841 1.350
b) Deferred 2.905 746
90. Liabilities associated with assets held for sale 236.936 271
100. Other liabilities 98.340 57.611
110. Provision for employee severance 12.703 5.591
120. Provisions for risks and expenses: 12.303 5.067
a) pension and similar obligations - 3
b) other funds 12.303 5.064
130. Technical reserves - 206.089
140. Revaluation reserves (3.706) 499
170. Reserves 210.313 86.873
180. Share premium 18.779 19.199
190. Capital 39.944 19.700
210. Minority Shareholders 70.708 71.968
220. Net income (loss) (5.929) (905)
Total liabilities and shareholders’ equity 5.935.167 4.427.413
FINANCIAL STATEMENTS June 30, 2010 23
CONSOLIDATED INCOME STATEMENT
(In thousands of Euro)
Voices 30/6/2010 30/6/2009
10. Interest receivable and similar income 96.238 99.389
20. Interest payable and similar charges (49.376) (61.016)
30. Net interest income 46.862 38.373
40. Commission income 23.614 5.816
50. Fee and commission expenses (3.779) (1.488)
60. Net commission income 19.835 4.328
70. Dividends and similar income 214 93
80. Net income from trading (2.485) 212
90 Net income from hedging (515) (442)
100. Gains (losses) on disposal of: 1.204 403
a) loans 87 -
b) financial assets available for sale 388 340
d) financial liabilities 729 63
Net income from financial assets and
110. liabilities
at fair value (6) -
120. Operating income 65.109 42.967
130. Impairment / write-backs for
impairment of: (7.830) (7.124)
a) loans (6.888) (6.993)
b) financial assets available for sale (918) (131)
d) other financial transactions (24) -
140. Net income from financial activities 57.279 35.843
150. Net premiums - 13.402
160. Other income / expenses from
insurance - (12.153)
170. Net income from financial and
Insurance activities 57.279 37.092
180. Administrative costs: (61.748) (34.952)
a) staff costs (31.304) (16.928)
b) Other administrative costs (30.444) (18.024)
190. Net provisions for risks and expenses (924) 149
200. Adjustments / write-backs tangible
assets (3.227) (2.152)
210. Adjustments / write-backs on
Intangible assets (282) (589)
220. Other net operating income 1.591 3.946
230. Operating expenses (64.590) (33.598)
240. Net income (loss) from equity investments (193) -
Net income (loss) from continuing
280. operations
before tax (7.504) 3.494
Taxes on income from continuing
290. operations
(585) (2.588)
Net income (loss) from continuing
300. operations after tax
(8.089) 906
310. Net income (loss) of assets held for
905 -
sale, net of taxes
320. Net income (loss) (7.184) 906
Net income (loss) attributable to minority
330. interests (1.255) 6
340. Net income (loss) attributable to
(5.929) 900
Parent Company
FINANCIAL STATEMENTS June 30, 2010 24
EARNINGS PER SHARE
IAS 33 requires disclosure of earnings per share, commonly known by the acronym EPS
"Earnings per share", which is calculated according to the following definitions:
"Basic EPS", calculated by dividing net income by the weighted average number of ordinary shares
issued;
"Diluted EPS", calculated by dividing net income by the weighted average number of
shares outstanding, taking into account the classes of dilutive instruments.
AVERAGE NUMBER OF DILUTED ORDINARY SHARE CAPITAL
The average number of ordinary shares used as denominator in calculating Basic and Diluted
EPS was determined using the number of shares outstanding as at the end of each month, net
of treasury shares on the same dates.
30/6/2010 30/6/2009
Weighted average number of ordinary
shares
computable for basic EPS 23.747.996 17.000.000
Weighted average number of ordinary
shares
computable for Diluted EPS 23.747.996 17.000.000
OTHER INFORMATION
Earnings per share 30/6/2010 30/6/2009
Net Profit / (Loss) (in thousands of Euro) (5.929) 900
Basic EPS (Euro) - 0,05
Diluted EPS (Euro) - 0,05
FINANCIAL STATEMENTS June 30, 2010 25
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
The prospectus shows as "other comprehensive income net of tax" changes in the value of assets
recorded in the period compensation valuation reserves (net of taxes).
Line
items 30/6/2010 30/6/2009
10. Net income (loss) (7.184) 906
Other comprehensive income, net of
taxes
20. Financial assets available for sale (4.193) 2.050
60. Cash flow hedges - (472)
70. Exchange differences - -
90. Actuarial Profit(Loss) on defined benefits
plans 37 -
110. Total other comprehensive income (net of
tax) (4.156) 1.578
120. Comprehensive income (Items10 +110) (11.340) 2.484
Consolidated comprehensive income
130. pertaining
to minority interests (1.260) (114)
Consolidated comprehensive income
140. pertaining to
Parent Company (10.080) 2.598
STATEMENT OF CHANGES IN SHAREHOLDERS 'EQUITY AS ON 30/6/2010 (In thousands of Euro)
(*) the item includes dividends of consolidated subsidiaries attributable to minority interests
Allocation of
Changes during the year
previous year’s profit
Comprehensive income for the
Balance as on 1 / 1 / 2010
Change in opening balances
Shareholders’ equity transactions
Balance as on 31/12/2009
t
As on 30/6/2010
Other allocations(*)
year as on 30/6/2010
Dividends and
As on 30/6/2010
Shareholders' equity
Minority interests
Changes in reserves
Reserves
Stock options
Distribution of
Extraordinary
instruments
Derivatives
Change in
Transactions
Issue of new
Purchase of
Treasury
dividends
shares
shares
Actions
Equity
Share capital: 19.700 - 19.700 - - - 20.244 - - - - - - 39.944 69.755
a) ordinary shares 17.000 - 17.000 - - - 20.244 - - - - - - 37.244 69.755
b) other shares 2.700 - 2.700 - - - - - - - - - - 2.700 -
Share premium
19.199 - 19.199 - - - (420) - - - - - - 18.779 1.464
reserves
Reserves: 86.873 - 86.873 (2.365) - 238 125.567 - - - - - - 210.313 749
a) profit 86.873 - 86.873 (2.365) - 238 - - - - - - - 84.746 749
b) other - - - - - - 125.567 - - - - - - 125.567 -
Valuation reserves 499 - 499 - - (54) - - - - - - (4.151) (3.706) (5)
Equity instruments - - - - - - - - - - - - - - -
Treasury shares - - - - - - - - - - - - - - -
Net income (loss)
(905) - (905) 2.365 (1.460) - - - - - - - (5.929) (5.929) (1.255)
For the year
Shareholders’ equity of
125.366 - 125.366 - (1.460) 184 145.391 - - - - - (10.080) 259.401 -
Group
Shareholders' equity
71.968 - 71.968 - - - - - - - - - (1.260) - 70.708
Minority interests
STATEMENT OF CHANGES IN SHAREHOLDERS 'EQUITY AS ON 30/6/2009(In thousands of Euro)
(*) the item includes dividends of consolidated subsidiaries attributable to minority interests
Allocation of
Changes during the year
previous year’s profit
Comprehensive income for the
Balance as on 1 / 1 / 2009
Change in opening balances
Shareholders’ equity transactions
Balance as on 31/12/2008
t
As on 30/6/2009
Other allocations(*)
year as on 30/6/2009
Dividends and
As on 30/6/2009
Shareholders' equity
Minority interests
Changes in reserves
Reserves
Stock options
Distribution of
Extraordinary
instruments
Derivatives
Change in
Transactions
Issue of new
Purchase of
Treasury
dividends
shares
shares
Actions
Equity
Share capital: 19.700 - 19.700 - - - 20.244 - - - - - - 19.700 69.755
a) ordinary shares 17.000 - 17.000 - - - 20.244 - - - - - - 17.000 69.755
b) other shares 2.700 - 2.700 - - - - - - - - - - 2.700 -
Share premium 19.199 - 19.199 - - - (420) - - - - - - 19.199 1.464
reserves
Reserves: 81.694 - 81.694 4.918 - 261 125.567 - - - - - - 86.873 571
a) profit 81.694 - 81.694 4.918 - 261 - - - - - - - 86.873 571
b) other - - - - - 125.567 - - - - - - - -
Valuation reserves (6.147) - (6.147) - - - - - - - - - 1.698 (4.449) (120)
Equity instruments - - - - - - - - - - - - - -
Treasury shares - - - - - - - - - - - - - -
Net income (loss) 7.166 - 7.166 (4.918) (2.248) - - - - - - - 900 900 6
For the year
Shareholders’ equity of 121.612 - 121.612 - (2.248) 261 145.391 - - - - - 2.598 122.223 -
Group
Shareholders' equity 72.609 - 72.609 - (780) (39) - - - - - - (114) - 71.676
Minority interests
FINANCIAL STATEMENTS June 30, 2010 28
CONSOLIDATED CASH FLOW STATEMENT
INDIRECT METHOD
(In thousands of Euro)
A. OPERATING ACTIVITY 30/6/2010 30/6/2009
1. Operation 17.790 22.152
- Operating income (-) (7.184) 906
- gains/losses on financial assets held for trading and on
assets/liabilities designated at fair value through profit and loss
1.268 (64)
(-/+)
- Gains / losses on hedging activities (- /+) (527) 131
- Adjustments to / recoveries on impairment (+/ -) 8.445 7.326
- Adjustments / write-backs on intangible and tangible
3.509 2.741
assets (+/-)
- Net provisions for risks and charges and other costs / income
(+/-) 924 59
- Net premiums to be collected (-) 817 31
- Other income / insurance charges to be collected (+/-) 11.928 6.041
- Taxes not paid (+) 585 2.529
- net adjustments to/recoveries on disposal groups net of tax
effect (-/+)
276 -
- Other adjustments (-) (2.251) 2.452
2. Cash generated from / used in financing activities (1.450.195) (94.937)
- Financial assets held for trading 50.117 100.164
- Financial assets at fair value (130) (105)
- Financial assets available for sale 153.440 (168.068)
- Due from banks: (348.281) (4.535)
- Due from banks: other loans (14.577) 11.303
- Loans to customers (1.147.366) (26.590)
- Other assets (143.398) (7.106)
3. Cash generated / absorbed by financial liabilities 1.329.594 80.746
- Due to banks: (404.792) (44.640)
- Due to banks: other (90.090) 86.185
- Due to customers 1.059.528 22.760
- Securities issued 687.181 16.112
- Financial liabilities held for trading 2.843 (537)
- Financial liabilities measured at fair value 1.163 105
- Other liabilities 73.761 761
Net cash used in operating activities (102.811) 7.961
B. Investment activities
1. Cash generated from - 84
- Sales of equity investments - -
- Dividends received from investments - -
- Sale of financial assets held to maturity - -
- Sales of tangible assets - 84
- Sales of intangible assets - -
- Sales of subsidiaries and businesses - -
2. Liquidity absorbed by (17.235) (3.118)
- Purchases of equity investments - -
- Purchases of financial assets held to maturity - -
- Purchases of tangible assets (16.930) (2.525)
- Purchase of intangible assets (305) (593)
- Purchases of subsidiaries and businesses - -
Net cash flow from investment activities (17.235) (3.034)
C. FINANCING ACTIVITIES -
- Issue / purchase of treasury shares 145.391 -
- Issue / purchase of equity instruments - -
- Distribution of dividends and other (1.460) (3.028)
Net cash generated from financing activities 143.931 (3.028)
NET LIQUID ASSETS GENERATED (ABSORBED) DURING THE YEAR 23.885 1.899
Key:
() Generated
(-) absorbed
FINANCIAL STATEMENTS June 30, 2010 29
RECONCILIATION
(In thousands of Euro)
Balance sheet items 30/6/2010 30/6/2009
Cash and cash equivalents at beginning of year 14.190 12.832
Total cash generated / used during the year 23.885 1.899
Cash and cash equivalents: effect of exchange rate
changes - -
Cash and cash equivalents at the end of the year 38.075 14.731
NOTES TO
CONSOLIDATED
THE June 30, 2010
ACCOUNTING POLICIES 31
ACCOUNTING POLICIES
A.1 General
NTRODUCTION
L 'article 154 ter of Legislative Decree no. 58/98 (Consolidated Finance Act) provides that
within sixty days from the end of the first half of listed issuers who have Italy as the home
Member State shall publish a financial report containing:
• the interim management report, which must bear the major events that have occurred in the first half of
the year and their impact on the condensed interim financial statements, a description of the principal risks
and uncertainties for the remaining six months of disclosures on related parties;
• The condensed interim financial statements, prepared in accordance with international accounting
standards (IAS / IFRS);
• Manager responsible for the endorsement;
• the report of the auditors, if drafted.
Despite being controlled by the Veneto Banca group, the Bank has issued securities listed
Apulia is therefore subject to the drafting of the interim financial statements and other
controls as company prepares the document at the consolidated level.
Please note that the term "parent", unless otherwise indicated, refers to the consolidation of
Banca Apulia.
SECTION 1 - D TATEMENT OF COMPLIANCE WITH INTERNATIONAL ACCOUNTING
STANDARDS
The condensed consolidated balance sheet at June 30, 2010 (hereinafter the "condensed" or
simply "Report") prepared on the same principles and accounting methods used for preparing
the annual budget and in accordance with IAS 34 "Interim Financial Reporting ", applying the
summary, and should be read in conjunction with the previous financial year ended 31
December 2009.
SECTION 2 - GENERAL PRINCIPLES FOR THE PREPARATION P
The condensed consolidated balance sheet of Banca Apulia has been prepared, pursuant to Legislative
Decree no. 38/2005, art. 3, paragraph 1, in application of International Accounting Standards International
Accounting Standard (IAS) and International Financial Reporting Standards (IFRS) as endorsed by the
European Commission under the procedure laid down in Regulation (EC) No 1606/2002.
The diagrams of the financial report are prepared in accordance with the provisions of the Bank of
Italy laid down in Circular No 262, 22 December 2005 and subsequent updates, and were not
drafted in summary form. The condensed consolidated financial statements comprise the balance
sheet, income statement, statement of comprehensive income, statement of changes in
shareholders 'equity, the cash flow statement and explanatory notes provided in summary form,
inclusive of directors' report on the progress management, in line with instructions issued by the
Bank of Italy Circular No 262, December 22, 2005. The financial report is also accompanied by a
certificate of legal representative of the company and the manager responsible for preparing
corporate accounting documents provided pursuant. 154-bis, paragraph 5, of Legislative Decree no.
58/1998.
The interim consolidated financial statements have been prepared on a going concern in
accordance with the accrual principle and using the historical cost modified with respect to
the measurement of financial assets held for trading, available-for sale, those measured at
fair value, and all outstanding derivative financial assets and liabilities of certain specific
characteristics, which evaluation was carried out in accordance with the principle of "fair
value or fair value.
The carrying amounts of assets and liabilities, which are the subject of hedging, are adjusted
to take account of changes in fair value of the share attributable to the hedged risk.
Offsetting assets and liabilities and costs and revenues are made only when required or
permitted by a Standard or an interpretation.
In accordance with art. 5, paragraph 2, of Legislative Decree no. 28 February 2005 38, the
consolidated report is prepared using the euro as currency. In particular, in line with
instructions issued by the Bank of Italy, all of the information contained in the financial
statements and the notes are in thousands of Euro, unless otherwise specified.
INFORMATION ON GOING
The joint paper by the Bank of Italy / Consob / Isvap No 2 of 6 February 2009 and the next document
number 4 of 3 March 2010 concerning the application of IAS / IFRS - which has no prescriptive content
itself, but merely refers to a timely implementation of existing rules and principles
ACCOUNTING POLICIES 32
accounting standards - will recommend the inclusion in the interim and annual financial
reports for information on business continuity, financial risks borne by the company, the work
of inspection carried out on the possible existence of an impairment of assets and the
uncertainty in 'use of estimates.
With regard to business continuity administrators have found in going operational and financial position in
the evolution of situations that call into question the ability of the company and the Group can continue to
operate normally. The directors therefore consider that the financial structure is such as to ensure the
continuity of the company and the Group in the near future. On the basis of reasonable expectation that the
financial report as at 30 June 2010 has therefore been prepared on a going concern. For more details on
please refer to the set later in Section 7
- Risks and uncertainties relating to the second half of the year and outlook. With reference to
the financial risks it should be noted that the same, taking also into account the current
business operations, were the subject of detailed analysis is under the interim management
report notes that as part of "The activity of control and risk management. "
Lastly, with respect to the uncertainty on the use of estimates in the process of preparing the
financial statements, the notes to Part A - Accounting Policies, A.1 - General, Section 5 -
Other aspects, has been introduced a special section titled "Use of estimates and assumptions
in preparing the interim consolidated financial statements."
SECTION 3 - REA AND METHODS OF CONSOLIDATION
C WARD AND PREPARATION OF CONSOLIDATION
These consolidated financial statements in the treatment of shares in subsidiaries is based
exclusively on the principle described below.
Under the method of full consolidation of the budget items expose all of the assets, liabilities,
operations off-balance sheet, costs and revenues bancApulia and its subsidiaries, except
those eliminated each other in the consolidation process, namely: a) investments in
subsidiaries and the respective shares of those companies' assets, b) all other intercompany
transactions.
Differences arising from consolidation are treated for accounting purposes as set out in IFRS 3.
The consolidation of insurance companies has been made in accordance with the accounting
policy stated before applying the "purchase method (IFRS 3 paragraph 14).
The consolidation of the Real Estate Fund investment in the subsidiary Apulia Apulia service
spa, in the first half of 2007, gave his entire real estate portfolio is due to de facto control of
the Fund by the Group.
In fact, controlling the majority of the shares of the fund, the Group retains all the risks and
benefits incidental to ownership of properties sold, IAS 27 does not include any exception to the
consolidation of the financial statements of the Fund regarding its legal connotation.
Companies included in consolidation are therefore those of bancApulia has control of both law
and in fact directly or indirectly through its subsidiaries.
As required by "sic12" 10, were included in the consolidated accounting data also "above the
line of special purpose vehicles set up under Law 130/99 in relation to the securitization of
loans that occurred over the years. These companies are considered "controlled" by law
(Apulia Finance Srl) or fact (for all others).
The controlling interests and shareholdings in companies deemed irrelevant in the context of the
consolidated financial statements are not consolidated in the balance sheet and assets under 100
"Participations". For the criteria for inclusion, deletion and evaluation of these spartecipazioni see
the next Section 7. Part A.2
A REA OF CONSOLIDATION
There were no changes in the scope of consolidation compared to the situation on December
31, 2009.
10 Interpretation provided by the "Standing Interpretation Committee" of the IASB
ACCOUNTING POLICIES 33
1. Investments in exclusive subsidiaries
Type of Investment Relationship Availability
Registered
Name of companies office report % votes
(1) Participating company % Share (2)
A. Companies
A.1 Fully consolidated
1. Banca Apulia Spa San Severo
(Parent)
2. Apulia prontoprestito spa San Severo 1 Banca Apulia Spa 70,46
3. Apulia Service San Severo 1 Banca Apulia Spa 100
4. Apulia Finance Srl San Severo 1 Banca Apulia Spa 51
5. Apulia Finance n. 2 srl Conegliano 4 Banca Apulia Spa 10
Apulia Mortgages Finance n. 3
6. srl Conegliano 4 Banca Apulia Spa 10
7. Apulia Finance n. 4 srl Conegliano 4 Banca Apulia Spa 10
8. Apulia Finance n. 5 Supply Ltd. Conegliano 4 Apulia emergency loan spa 10
9. Apulia security spa Milan 1 Apulia Spa Service / Banca 100
Apulia Spa
10. Apulia Assicurazioni spa in Milan 1 Apulia Service Spa / Banca 100
liquidazione
Apulia Spa
Key:
(1) Report Type:
1 = majority of the voting rights at ordinary
2 = dominant influence in the ordinary meeting
3 = agreements with other shareholders
4 = other forms of control
5 = single management art. 26, paragraph 1 of "D. Lgs.
87/92 "6 = single management art. 26, paragraph 2, of
the "Leg. 87/92 "7 = joint control
(2) Voting at ordinary meeting
Unless otherwise indicated, the fee corresponds to the availability percentage of the votes at
the meeting.
2. More information
A GGREGAZIONI BUSINESS
In terms of the business combinations accounting standard and IFRS 3, as amended by
Regulation 495/2009, and the related IAS 27 in its new version approved by Regulation
494/2009, both applicable, as required, from 2010 .
The transfer of control of a company (or group of activities and assets, conducted and
managed together) constitute a business combination.
During the first half of 2010 was made the merger by incorporation of Banca Meridiana. This
operation is excluded from the scope of IFRS 3 as carried out under the "Under Common Control",
as that is Apulia Bank Banca Meridiana are companies within the perimeter of the Gruppo Veneto
Banca Holding.
PROFORMA
In order to make comparable and consistent results of the previous year has been put in
place a pro-forma data of the Bank and the Bank Apulia Meridiana.
For the preparation of schedules have been used in the following documents:
Banca Apulia budget to 31.12.2009 and 30.06.2009
meridian bank balance at 31.12.2009 and 30.06.2009
A those statements were made appropriate adjustments to reflect the retroactive effects of the
merger as if it had occurred already in the previous year.
Particularly in view of the different objectives of the pro-forma than a normal budget, since
the effects are calculated differently, the balance sheet and income statement should be read
and interpreted separately and without searching for links between the two accounting
documents .
The assumptions taken as a basis for the preparation of pro forma data are as follows:
it was considered that the increase in the share capital of Banca Meridiana Euro 93
million had already occurred in 2009;
the sums resulting from this increase were considered "financial resources", as it is
assumed that they represent cash available to the company;
these resources were considered to be fruitful and has been calculated on the interest
rate to a 3-month Euribor monthly average;
have also been reported in the previous year and any costs arising directly attributable to
the merger (migration costs, penalties, exodus of employees);
Finally, the eliminations were made of lots existing in 2009 between the Bank and
Banca Apulia Meridiana.
ACCOUNTING POLICIES 34
SECTION 4 - WINDS AND AFTER THE DATE OF INTERIM BALANCE SHEET
On 24/07/2010 was signed between the bancApulia and Alindro Limited (acting as advisor to an
investment fund under Luxembourg law), a binding offer for the sale of 84, 46% of Apulia security.
In addition to the necessary legal due-diligence-tax, the offer includes a contract for the "exclusive"
period of 50 days during which shareholders in Apulia security agree not to take any initiative with
other entities for the sale thereof. It 'is understood that the transaction is subject to the approval
ISVAP.
SECTION 5 - THERE ISSUES
U SING OF ESTIMATES AND ASSUMPTIONS IN THE PREPARATION OF THE INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
The condensed consolidated financial statements requires the use of estimates and assumptions
that may cause significant effects on the values of the balance sheet and income statement, and the
disclosures relating to assets and liabilities reported in financial statements. The development of
such estimates involves using available information and subjective evaluations, also based on
historical experience, which is used to formulate reasonable assumptions for the detection of
business events. By their nature, estimates and assumptions used may vary from period to period
and, therefore, not be excluded that in future years budgeted for the current values may differ
significantly as a result of changing subjective evaluations.
The main cases for which it is most required the use of subjective judgments by management
are:
quantification of impairment losses on loans and, in general, other financial assets;
The fair value of financial instruments to be used for reporting purposes in the budget;
the use of valuation models for determining the fair value of financial instruments not
quoted in active markets;
assessment of the adequacy of the value of goodwill and other intangible assets;
quantification of employee benefit obligations and provisions for risks and charges;
estimates and assumptions in determining the current taxes and the recoverability of
deferred tax assets;
demographic assumptions (related to the perspective of the insured population mortality)
and financial (arising from the possible evolution of financial markets) are used to
structure the insurance products and in establishing the basis for calculation of
supplementary.
The description of the accounting policies applied on the main budgetary aggregates information
provides the details necessary to identify the main assumptions and subjective judgments used in
preparing the condensed consolidated financial statements. For more detailed information
concerning the composition and values of inclusion of the items affected by the estimates in
question becomes, instead, I refer to specific sections of the notes.
M CHANGES TO IAS / IFRS
For the preparation of the consolidated financial report have been adopted the same
principles and accounting methods used for the preparation of annual consolidated financial
statements at December 31, 2009, to which reference is made for details, supplemented by
the following information relating to the accounting principles IAS / IFRS and related
interpretations SIC / IFRIC approved by the European Commission until 30 June 2010, whose
application is mandatory as from 1 January 2010.
The introduction of the new standards, amendments and interpretations, which is listed
below, however, has not resulted in a significant effect on the consolidated half.
IAS 1 "Presentation of Financial Statements
It 'been made clear that a liability that the issuer is obligated to repay to the holder's option,
by issuing its own equity within 12 months after the balance sheet date should not be
classified as current liabilities.
IAS 7 "Cash Flow"
E 'was clarified that only those expenses which are recognized as assets in the balance sheet
can be classified as cash flows from investing activities.
IAS 17 "Leases"
Changes the rule which provides that the leasing of land is still classified as operating leases, where the
contract does not provide for the transfer of ownership at the end of the contract
ACCOUNTING POLICIES 35
itself. Following the amendment, when the lease covers both land with buildings, an entity must
verify the classification as an operating lease or financial separately for the two elements, according
to the rules laid down in paragraphs 7-13, bearing in mind that a important factor is the fact that
the land they normally have an indefinite economic life.
IAS 32 "Financial Instruments: Disclosure" (Reg with approved EC No 1293/2009)
In October 2009 the IASB issued an amendment which provides that if the allowances are
issued in proportion to all shareholders of the same class for a fixed amount of currency,
these rights should be classified as equity, regardless of the currency the exercise price.
The amendment is effective for annual periods beginning on or after 1 February 2010 or after.
IAS 36 "Impairment of assets"
E 'was clarified in the definition of "cash-generating unit (CGU), which each CGU for the purposes of
impairment testing, can not be larger than an operating segment as defined in paragraph 5 of IFRS
8, before 'aggregation permitted by paragraph 12 of the same.
IAS 38 "Intangible Assets"
Some clarifications have been included on the recognition of intangible assets in business
combinations, consistent with the amendments to IFRS 3 with the review carried out in 2008.
IAS 39 "Financial Instruments: Recognition and Measurement" (approved by Reg EC No 839/2009)
On July 31, 2008, the IASB issued amendments to IAS 39 referred to as "tools that can be
designated as hedging," whereby it is clear that the inflation risk can be covered only under certain
conditions and that a purchased option can not be designated in full (intrinsic value and time value)
to cover a risk unidirectional (one-sided risk) of a scheduled operation (forecast transaction), it
does not generate a perfectly effective hedge.
The amendment should be applied to the first financial year starting after June 30, 2009.
IAS 39 "Financial Instruments: Recognition and Measurement" and IFRIC 9 'Reassessment of
Embedded Derivatives "(approved by Reg EC No 1171/2009)
On March 12, 2009, the IASB issued amendments to IAS 39 and IFRIC 9 called "Embedded
Derivatives". The amendment clarifies the accounting treatment of embedded derivatives for
entities that have applied the amendment to IAS 39 Reclassification of financial assets issued and
approved in 2008. The amendment clarifies that for instruments reclassified from category "Fair
value through profit and loss" must be checked for any embedded derivatives, which, if they make
such provisions, must be removed and recorded separately. The amendment should be applied
retrospectively in annual periods ending after June 30, 2009.
IAS 39 - Financial Instruments: Recognition and Measurement
Changes have been made relating to contracts arising from business combinations, the options for early
repayment and cash flow hedges. With regard to contracts arising from business combinations, paragraph
2, Lett. g) of IAS 39 requires that contracts between a buyer and a seller in a business combination, in
order to buy or sell an acquiree at a future date, do not fall within the scope of IAS 39. With the
amendment in question was clarified that this exemption is limited to contracts between a buyer and a
selling shareholder to buy or sell an acquiree, which will produce a business combination, which is
adjusted at a future date pending necessary approvals and the completion of the legal processes. As for the
early repayment options, it was determined that an option whose exercise price not refund an amount
equal to the current value of the spread of interest lost by the lender for the period corresponding to the
remaining life of the contract must be separate from the contract host. With regard to cash flow hedges,
you have changed the wording used to explain the criteria under which gains and losses on the hedging
instrument should be reclassified to the income statement.
IFRS 2 "Share-Based Payment" (approved by Reg EC No 244/2010)
The amendment, issued by the IASB June 18, 2009, clarifies that fall within the scope of the
agreements in principle under which a subsidiary receives goods or services by employees or
vendors who are paid by the parent (or other entity of Group), which assumes an obligation to
transfer cash or other assets for an amount based on the price of the shares in the subsidiary or
parent company. An entity that receives goods or services such as share-based payments should
account for those goods or services, no matter what the entity in the group enters into the
transaction, and does not detect that the transaction is settled in shares or cash.
Were excluded from the scope of the principle of share-based payments related to business
combinations between entities under common control and joint ventures.
ACCOUNTING POLICIES 36
IFRS 3 "Business Combinations" and IAS 27 "Consolidated and Separate Financial
Statements" (a type-Reg EC No And No. 494/2009 495/2009)
On January 10, 2008, the IASB issued a revised IFRS 3 "Business Combinations" and IAS 27
"Consolidated and Separate." The main changes are the elimination of IFRS 3 to assess the
individual assets and liabilities at fair value in any subsequent acquisition, in the case of
acquisitions of subsidiaries in several stages. In addition, if the company does not acquire 100%
interest, the share of net assets attributable to minority interests are measured either at fair value
(full goodwill), or using the method currently required by IFRS 3. The revised standard also
provides for the income statement charge for all costs related to the business and the recognition of
liabilities at the acquisition date for conditional payments.
In the amendment to IAS 27, the IASB has determined that the changes in the amount of interest
that do not constitute a loss of control should be treated as equity transactions and must have
shareholders' equity. In addition, it is determined that where a parent company sells control of their
own undertaking, but continues to hold an interest in society, should evaluate the retained
investment at fair value and any profits or losses resulting from the loss of control income
statement. Finally, the amendment to IAS 27 requires that all losses attributable to minority
interests are allocated to the share of net assets of third parties, even when they exceed their share
attributable to the capital of the investee. The new rules must be applied prospectively (to IFRS 3)
and retrospectively (for IAS 27) the business combination is effected from 1 January 2010, for
annual financial statements with closure.
IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations"
The change, the entity must apply for accounting periods beginning on or after 1 July 2009,
states that if a company is committed to a sale plan involving loss of control of a subsidiary,
all the assets and liabilities the subsidiary should be reclassified as assets held for sale, even
if after the sale the company will retain a minority interest in subsidiary.
E 'was also introduced for clarification on disclosures mandatory.
IFRS 8 "Operating Segments"
It 'been made clear that the assets attributable to each sector should be given only if these
assets are part of the information provided to senior management.
IFRIC 9 'Reassessment of Embedded Derivatives
Following the revision of IFRS 3 was necessary to state that the purpose of interpretation remains
the same, but with the amendment clarifies that it does not apply to derivatives contracts acquired
in a business combination with an aggregation of entities under joint control, with a joint venture. E
'excluded from the scope of this interpretation the acquisition of associates. If an entity makes use
of early IFRS 3 revised this interpretation, then it follows the process appropriate information.
IFRIC 12 "Service Concession Agreements" (approved by Reg EC No 254/2009)
On November 30, 2006, IFRIC issued an interpretation regarding the granting to private parties by the
state or public infrastructure to develop, manage and maintain; interpretation distinguishes two cases, ie
that in which the entity receives financial asset in order to construct / develop infrastructure that in which
the entity receives an intangible asset represented by the right to be compensated for the use of. In both
cases, the financial assets / intangible asset is initially measured at fair value and then follow the rules of
their measurement of the reference class. The interpretation is effective from 1 January 2010.
IFRIC 15 'Agreements for the construction of buildings "(approved by Reg EC No 636/2009)
On July 3, 2008, IFRIC issued the interpretation that draws a distinction on the buildings under
construction, depending on the type of contract / agreement. In essence, it introduces a distinction
between cases where the manufacturer provides the service of building the one in which it sells good. In
the first case, the entity providing the service record revenues based on the percentage of completion of
construction (IAS 11) in the second case, revenues are recorded as a function of time when you lose
control of the property. This interpretation must be applied from 1 January 2010.
IFRIC 16 Hedges of a net investment in foreign operations (approved by Reg EC No
460/2009)
On July 3, 2008, IFRIC issued the interpretation which has been clarified that you can cover, for accounting
purposes, the exposure to exchange rate risk controlled entities subject to significant influence and joint
ventures. In particular, the risk can be covered regards the exchange rate differences between the
functional currency of the foreign entity and the functional currency of the parent. The interpretation also
clarifies that in the case of hedges of net investments in foreign operations, the hedging instrument can be
held by any company within the group, provided that the requirements of IAS 39 are met, and that in case
of sale of the stake, for determining the value to be reclassified from equity to the income statement
should apply IAS 21
ACCOUNTING POLICIES 37
"The effects of currency conversion." This interpretation must be applied for annual periods
beginning after June 30 in 2009.
IFRIC 17 "distributed to members of non-cash" (approved by Reg EC No 1142/2009)
On November 27, 2008 was issued IFRIC 17, which governs the issue of distribution of dividends in the
form other than money (eg, property, businesses, investments, etc ...). In particular, it is determined that
in such cases the assets distributed as dividends should be measured at fair value at the time of
distribution and any difference between fair value and carrying value is to be included in the income
statement. The interpretation does not apply to distributions of assets that (i) involving entities under
common control, (ii) do not deal with the shareholders of the same class equally, or (iii) relate to the
interest in a subsidiary that you do not lose control . If applicable, the distribution may be preceded by the
classification in IFRS 5, in which case the rules of IFRS 5 to pay the dividend. The construction, which must
be applied from 1 January 2010.
IFRIC 18 "Transfers of Assets by customers" (approved by Reg EC No 1164/2009)
On January 29, 2009 was issued IFRIC 18, which governs the accounting treatment of fixed assets received
from clients and used to connect customers to the same network and / or the provision of goods and
services. On the assumption that the entity receives an asset that can be defined as such (ie the entity has
control of such activities), the entity enters the property taken at fair value (IAS 16), compared with that
business, 's entity enters a gain related to the period of service to the customer. If there is no fixed
deadline for the delivery of services, the period for registration of income can not exceed the useful life of
the asset transferred. If the service will end with the simple connection to a network, the revenue is
recorded when the connection itself. The construction, which must be applied for annual periods beginning
at a later date to October 31, 2009.
O ptions to fiscal consolidation
In 2004 was exercised jointly by the parent bancApulia spa and spa service companies in the Group Apulia
option for the tax system of taxation on a consolidated basis at the national level provided for in Articles
117-129 of the DPR 22 December 1986, no 917 (Income Tax Code). This option, which was valid for the tax
years 2004-2006, was renewed in 2007 by the same companies for the period 2007-2009, in 2010 for the
years 2010-2012.
Also in 2009 joined the company for the period 2009-2011 Prontoprestito Apulia, Apulia
Apulia Retirement and Insurance.
The benefits of exercise of the option for the group tax election are mainly related to the application of tax
to a single total taxable income equal to the sum of earnings / losses taxed companies listed above which
have exercised the option, and consequently a single debt / tax credit, also for the companies participating
in the national consolidation, the interest accrued in favor of other consolidated subsidiaries are deductible
up to the amount of interest payable by the parties to be consolidated in respect of third parties, to an
extent full and not reduced, as provided by art. 96 of the Consolidated Income Tax.
The accession of bancApulia the taxation of the group with the above-mentioned subsidiaries
involves an expansion of administrative responsibilities summarized as follows:
solely responsible for the fulfillment of obligations related to the determination of total
global income statement;
joint and several liability of the major taxes assessed, penalties and interest related to the
total income of each consolidated;
joint and several liability with all participating companies for non-payment due under the
consolidated tax return.
A bancApulia this end has taken steps to prepare the "consolidation of contracts" governing relations
between the parties to the above mentioned subsidiaries and the consolidated taxation bancApulia itself,
which have been subject to specific approval by the respective Boards of Directors.
In that regard, they found the specific regulatory arrangements for transfer of credits and tax
debts and bancApulia between the member companies, and the method of downgrading the
benefits achieved by the parent company to subsidiaries.
ACCOUNTING POLICIES 38
SECTION 6 - M AJOR EVENTS HAPPENED IN HALF
On January 13, 2010 Capitanata Finance Ltd has signed the entire share capital increase of
Meridian Bank, which was approved by the Extraordinary Meeting on 10 December 2009,
paying the related value of approximately Euro 93 million.
Veneto Banca Holding On the same day, following stock transfer and signing of agreements with
Financial captains' agreement concerning the governance and management of bancApulia (bank
under Italian law, with headquarters in San Severo (FG), Via Tiberio Solis No 40), has acquired de
facto control of bancApulia, being able to exercise a dominant influence pursuant to art. 2359,
paragraph 1, of the Civil Code, art. And Article 23 of the TUB. 93 of the CFA.
Both operations have preceded the signing, which took place on January 25, 2010, the acts
necessary to the most complex corporate transaction that involved Meridian Bank through a
merger by incorporation of the same in bancApulia, whose legal effect is on 10 May 2010. By
virtue of these operations bancApulia and its subsidiaries have become part of the Veneto
Banca Group.
SECTION 7 - R ISCHIA AND UNCERTAINTIES FOR THE SECOND HALF OF
'FINANCIAL AND OUTLOOK
The market environment within which the group will operate Apulia is presented, in the second half
of 2010, still highly uncertain, characterized by the persistence of the problems imposed by the
severe economic and financial crisis, whose impact on the operation are not yet all resolvable.
Despite the deepest point of the crisis is now behind us, many remain unresolved on the timing and
modalities of recovery, still dependent on emergency measures put in place by the central banks to
support liquidity.
In this scenario, however, sees a steady improvement in the macroeconomic framework at the
international level, bancApulia intends to continue the process of developing its distribution
network with the opening in the next three years, of nine new branches in order to strengthen the
garrison in the historic provinces settlement and surrounding areas.
The overall management of the Apulia recorded early in the second half of 2010, a decrease of supply of
the dispenser of the fifth and delegations of payment, over the same period of 2009, as the subsidiary
Apulia prontoprestito initiated a review process operational models and controls on distribution networks,
in accordance to the statement of the Supervisory Body in relation to supplies of the fifth and similar
operations. The company, in fact, in light of important developments which have affected the field of
supply of the fifth in recent months, is developing a new business model aimed at supporting the
development of direct delivery of supplies and delegations of the fifth Payment through the distribution
network of the parent bancApulia - doubled as a result of the merger with Banca Meridiana - Carifac and
sister. The company also is considering the possibility of increasing the volume delivered through a more
widespread distribution assigned to an "external network" direct and specialized. It is therefore expected
in the last quarter of 2010, the set up of the new distribution system in order to strengthen margins and to
conduct a gradual increase in volumes delivered.
In economic terms, overall profitability will continue to depend upon money acting as an
intermediary, whose profitability is expected to accelerate through the development of intermediate
masses with customers and the expected recovery in market interest rates.
The expected improvement in sentiment in financial markets should allow recovery of
revenues related to the management of savings, both through the growth of the average
stock in management for the return of investor tools to higher risk profile -plants with higher
unit margins.
The trend in operating costs will be influenced by the integration of Banca Meridiana
bancApulia with the development as well as ordinary commercial operations. In both cases
have been provided important rationalization measures which should ensure a significant
reduction of the overall cost base.
On the other hand, the fragility of the operating environment will now reflect negatively on the
overall profitability of the group companies Apulia, considering the time lag with which you
experience the non-performing loans in crisis situations and, consequently, will be precisely the
impact of adjustments to loans to be the real critical factor accounts for the year.
ACCOUNTING POLICIES 39
A.2 The main items
The following are the accounting policies adopted for the preparation of condensed consolidated
financial statements. The statement of principles is adopted by reference to the classification,
recognition, measurement and derecognition of assets and liabilities.
1. Financial assets HELD FOR TRADING
C WARD CLASSIFICATION
They are classified as financial assets held for trading financial instruments that are held with the
intention of generating profits in the short term from the fluctuation of prices of such instruments
and derivatives not designated as hedging instruments, in particular:
debt securities listed and unlisted companies;
equity securities listed;
Unlisted equity securities only if its fair value can be determined reliably;
derivatives, except for those designated as hedging instruments, which present the balance sheet date
fair value is positive if the fair value of a derivative contract then becomes negative, the same is
accounted for as financial liabilities of
negotiation.
The derivative is a financial instrument or other contract with all three of the following characteristics:
a) its value changes in response to changes in a specified interest rate, the price of a financial
instrument, the price of a commodity, the exchange rate of foreign currency, an index of prices
or rates, a credit rating or An index of credit or other variables;
b) does not require an initial net investment or an initial net investment requires less than
what would be required by other types of contracts that we can expect similar responses
to changing market factors;
c) will be adjusted at a future date.
Make up the category of financial derivatives and the credit. Among the first fall term contracts for the sale
of securities and currencies, derivatives with underlying security and those without underlying linked to
interest rates, indices or other assets and derivatives contracts on currencies.
The credit derivatives refer to those contracts that transfer credit risk underlying a particular
activity by the person who buys protection to the person who sells protection. In these
transactions the subject of the transaction is the credit risk in connection with a final
borrower of funds.
Derivative contracts also include those embedded in other complex financial instruments which
have been subject to separate from the host instrument because:
- the economic characteristics and risks of the embedded derivative are not closely related
to the economic characteristics and risks of the host contract;
- built-in tools, even if separated, meet the definition of a derivative;
- hybrid instruments to which they belong are not measured at fair value through profit and
loss account of changes in value.
C WARD REGISTRATION
Initial recognition of financial assets occurs on the settlement date for debt and equity and
the subscription date for derivative contracts.
On initial recognition, financial assets held for trading are measured at cost, defined as the
fair value of the instrument, not including costs or income directly attributable to the
instrument, which are recognized immediately in earnings.
Any embedded derivatives in contracts that are not strictly related to the same complex and have the
features to meet the definition of derivative are recorded separately from the host contract and measured
at fair value as financial assets held for trading, while the host contract is applied the accounting policy
your reference. This separation takes place if:
the economic characteristics and risks of the embedded derivative are not closely related
to the economic characteristics and risks of the host contract;
built-in tools, even if separated, meet the definition of a derivative;
hybrid instruments to which they belong are not measured at fair value through profit
and loss account of changes in value.
C WARD RATING
After initial recognition, financial assets held for trading are measured at fair value and the
corresponding changes in the income statement.
To determine the fair value of financial instruments traded in an active market, are used market prices
(bid-ask prices or average prices). In the absence of an active market, are used assessment methods and
valuation models that take into account all risk factors related to the tools and are based on observable
market data such as: methods based on evaluation of listed instruments with similar characteristics,
calculations of discounted cash flows, models of pricing options, readings taken in recent comparable
transactions. Gains and losses on disposal or redemption and unrealized gains and losses arising
ACCOUNTING POLICIES 40
from changes in fair value of trading, are included in Net income from trading (item 80 of the
income statement).
Equity securities and related derivatives, which is not possible to determine the fair value
reliably in accordance with the above guidelines, are carried at cost adjusted in the face of a
statement of losses for impairment.
C WARD OF CANCELLATION
Financial assets held for trading are derecognised when the contractual rights to cash flows
from the financial assets expire or when the financial asset is disposed of by transferring
substantially all the risks and benefits associated with it.
In the event that the bank sells a financial asset classified in its trading portfolio, the proceeds of the
disposal date of his transfer (settlement date).
Securities received as part of a contract that provides for the resale and securities delivered
as part of a contract that provides for the repurchase, are not registered or transferred from
the budget.
2. Financial assets AVAILABLE FOR SALE
C WARD CLASSIFICATION
Are included in this category are non-derivative financial assets not otherwise classified as
receivables, assets held for trading assets valued at fair value, or assets held to maturity.
In particular, this item is included in equity investments not held for trading and do not
qualify as subsidiaries, associates and joint ventures.
C WARD REGISTRATION
Initial recognition of financial assets occurs on the settlement date for debt or equity and its
payment in case of loans.
On initial recognition, assets are recorded at cost, defined as the fair value of the instrument,
including any costs or income directly attributable to the instrument. If the inscription is a result of
reclassification from assets held to maturity, the carrying amount is the fair value at the time of
transfer.
C WARD RATING
After initial recognition, assets held for sale continue to be valued at fair value, with the recognition in the
income statement of the remuneration of the instrument calculated using the methodology of the IRR,
whereas the gains or losses arising from changes in fair value are recorded in a specific equity reserve until
the financial asset is not cleared or not detected a loss of value. On disposal or recognition of a loss in
value, the cumulative gain or loss shall be repaid to the income statement.
For control of situations that involve a loss for impairment and the determination of the
amount, the Bank, using its experience with evaluation, uses all available information based
on facts that have already occurred and on observable data on the valuation date.
In relation to debt, the information is deemed relevant mainly for the purpose of any
impairment losses are as follows:
existence of significant financial difficulty of the issuer, as shown by non-compliance or
non-payment of interest or principal;
probability of initiation of bankruptcy proceedings;
disappearance of an active market securities;
worsening economic conditions that affect cash flows of the issuer;
downgrading of the creditworthiness of the issuer, when accompanied by other negative news
on the financial situation of the latter.
With respect to equity securities, the information is relevant to consider the highlight of
impairment losses include the verification of changes in the technological, market, economic
or legal environment in which the issuer. A significant or prolonged decline in fair value of an
equity instrument below its cost is considered objective evidence of impairment.
The losses for impairment of equity securities can not determine backs included in the income
statement when they do not the reason for the devaluation. These times therefore of interest
to specific equity reserve.
The recovery of value related to debt securities is recognized through the income statement,
the extent of the impairment previously charged to income.
In relation to debt securities classified as available for sale the collection of performance
based on the technique of amortized cost is budgeted in the income statement, similar to the
effects related to changes in exchange rates.
Changes in exchange rates relating to equity available for sale are recognized in the specific
equity reserve.
Equity securities for which it is not possible to determine the fair value reliably in accordance with the
ACCOUNTING POLICIES 41
above guidelines, are carried at cost adjusted in the face of a statement of losses for
impairment.
The verification of the existence of objective evidence of impairment is performed at each
balance sheet or interim.
If the reasons for impairment cease to exist following an event occurring after the recognition of
impairment, write-backs are made with recognition in the income statement in the case of loans or
debt securities, and equity in the case of equity securities. The amount of recovery is not, in any
case exceed the amortized cost of the instrument would have had no previous corrections.
C WARD OF CANCELLATION
Financial assets are derecognised when the contractual rights to cash flows from the financial
assets expire or when the financial asset is disposed of by transferring substantially all the
risks and benefits of the financial assets.
3. Financial assets HELD TO MATURITY
C WARD CLASSIFICATION
Are classified in this category of debt securities with fixed or determinable payments and
fixed maturity that has the intention and ability to hold to maturity.
C WARD REGISTRATION
Initial recognition of financial assets occurs on the settlement date.
On initial recognition, financial assets classified in this category are measured at cost
including any directly attributable costs and revenues.
C WARD RATING
After initial recognition, financial assets held to maturity are measured at amortized cost
using the effective interest rate method.
Gains and losses related to assets held to maturity are recognized in income when the assets
are removed or have suffered an impairment, as well as through the amortization process.
When the balance sheet and interim financial statements, is carried out to verify the existence
of objective evidence of impairment.
If such evidence exists, the amount of the loss is measured as the difference between the
asset's carrying amount and the present value of estimated future cash flows discounted at
original effective interest rate. The amount of the loss is recognized in the income statement.
If the reasons for impairment cease to exist following an event occurring after the
recognition of impairment, write-backs are made with recognition in earnings, up to the loss
recognized.
C WARD OF CANCELLATION
Financial assets are derecognised when the contractual rights to cash flows from the financial
assets expire or when the financial asset is disposed of by transferring substantially all the
risks and benefits associated with it.
Membership in this category is subject to the rules that limit their movement. A company can not be
classified as held to maturity financial assets if the current year and the previous two have been
sold or reclassified before maturity a not insignificant amount of investments held to maturity other
than sales or reclassifications that:
are so close to the deadline that changes in interest rates may not have a significant
impact on the fair value of financial activity;
take place after the company earned substantially all of the original capital through
scheduled payments or prepayments;
can be attributed to an isolated event, outside the control of the company, non-recurring
and could not reasonably be expected.
4. CREDITI
C WARD CLASSIFICATION
The loans include loans to customers and banks, both directly provided and purchased from
third parties, which include fixed or determinable payments that are not quoted in an active
market and which were not originally classified as financial assets available for sale held for
trading or designated at fair value.
The item credits also include commercial loans, repurchase transactions, the receivables from
finance leases and unlisted debt securities purchased in the subscription or private
placement, with payments determined or determinable, characterized by the appearance of a
prevalence credit with respect to the financial and whose purchase is substantially similar to
a loan granted.
ACCOUNTING POLICIES 42
Included in receivables, funding originated as part of factoring in the face of advances
received on the portfolio with recourse that is written into the budget of the donor
counterpart. With regard to loans acquired without recourse, the same are included in claims
after finding that the contractual clauses that significantly alter the risk exposure of the
transferee.
C WARD REGISTRATION
The first registration of a claim is the date of delivery or, in the case of a debt, the date of settlement,
based on the fair value of financial instrument, equal to the amount paid, or subscription price, including
costs / income directly attributable to the individual loan and determinable from the outset of the
operation, although paid at a later date. Costs are excluded that, although these specifications are subject
to repayment by the debtor or counterparty are classifiable as normal internal administrative costs.
For credit transactions may be concluded on terms different from those of the fair market
value is determined using appropriate valuation techniques, the difference of the amount paid
or the subscription price is charged directly to income.
The contango contracts and repurchase transactions with repurchase or repo transactions are
recognized as the collection or use. In particular, the sales transactions in cash and
repurchase agreements are recorded as liabilities in the budget for the amount received spot,
while the repo transactions and repo transactions are recorded as a credit for the amount
paid to ready.
C WARD RATING
After initial recognition, loans are measured at amortized cost, the value of initial enrollment decreased /
increased principal repayments, adjustments / write-backs and amortization - calculated by the method of
effective interest rate - the difference between the amount paid or redeemable at maturity, which typically
cost / income recognized directly to the individual loan. The effective interest rate is determined by
calculating the rate that equals the present value of future flows of credit, principal and interest, the
amount disbursed inclusive of costs and income attributable to the loan. This method of accounting, using a
financial logic, allows you to distribute the economic effect of the cost / income on the expected residual
life of the loan. The estimate of cash flows and the duration of the loan contract takes into account all
contractual terms which may affect the amounts and maturities (for example, lapses, exercisable options),
without considering the expected loss on the loan. The effective interest rate is initially recognized that the
original is always used to discount the expected cash flows and determine the amortized cost, after initial
recognition.
The amortized cost method is not used for loans whose short-term is considered negligible
the effect of applying the logic of discounting, they are therefore measured at historical cost.
A similar criterion is applied to loans without a defined maturity or withdrawal.
At each annual or interim financial statements is carried out a survey aimed at identifying
those claims that as a result of events occurring after entry, display objective evidence of
possible impairment.
The information that is deemed relevant mainly for the purpose of this review are as follows:
existence of significant financial difficulty of the obligor / issuer, as shown by non-
compliance or non-payment of interest or principal;
probability of initiation of bankruptcy proceedings;
worsening economic conditions that affect cash flows of the borrower / issuer;
been problems in the debt service on the part of the country of residence of the debtor / issuer;
downgrading of the creditworthiness of the obligor / issuer, when accompanied by other
negative news on the financial situation of the latter;
economic situation of individual product sectors.
The evaluation also takes into account the guarantees.
For the classification of impaired loans in the different risk categories (pain, impaired loans,
and restructured exposures due exposure), the Bank refers to the regulations issued on the
Bank of Italy.
Based on the criteria established by the Bank of Italy impaired loans covered by the individual
assessments are as follows:
loans: loans to borrowers in default or in substantially similar situations;
Substandard loans: loans to borrowers in temporary difficulties objective situation is
solvable in a reasonable period of time;
Restructured loans: loans to borrowers for which the Group, due to the deteriorating
economic and financial conditions of the borrower agrees to change the original
contractual terms (eg terms of rescheduling, debt reduction and / or interest) to give
in a loss;
outstanding loans or overdraft impaired: exposures to non-classified into the above categories of
risk, which at the end of the period have expired loans or overdraft due by more than 90 or 180
days in accordance with the Bank of Italy on identification of impaired exposures expired or
unauthorized.
ACCOUNTING POLICIES 43
Impairment losses attributable to each impaired loan are given by the difference between their
value and the amortized cost thereof. The recoverable amount is the present value of expected cash
flows of principal and interest calculated on the basis of each loan:
the value of contractual cash flows net of expected losses, estimated taking into
account the specific capacity to fulfill the obligations of the debtor and any guarantee
or security taken;
the expected recovery time is estimated in accordance with the procedures in place
for the recovery of the claim;
the internal rate of return the original at the time the credit is now ruined.
This has occurred even if a subsequent restructuring of the relationship that has led
to the change in the contractual rate and even if the ratio becomes, in practice, non-
interest bearing contract.
The impairment of the individual claims of the group related to all loans.
The impairment an individual has been carried out in such a manner as required by IAS 39,
discounting the estimated realizable value of receivables in relation to the expected recovery
time.
In particular:
for non-performing loans were used to calculate the following parameters:
a) expected recovery by operators of the position;
b) Expected recovery time estimated on the basis of historical statistics and monitored by
managers;
c) discount rates "historic", represented by the contractual rates at the time
of the classification of the position as doubtful.
for claims of problem loans were used to calculate the following parameters:
a) likelihood of problem loans to go bad debts, estimated on the basis of
historical statistics using the historical claims;
b) loss given default (estimated based on historical statistics using a database
of bad debts "closed") to current values;
for unpaid debts / overdrafts have been impaired to use the following calculation parameters:
a) probability of the outstanding claim / bordering switch to grounding / suffering,
estimated on the basis of historical statistics using the historical claims;
b) loss given default (estimated based on historical statistics using a database
of bad debts "closed") to current values.
I claims for which were not identified individually objective evidence of loss that is generally
performing loans, shall be submitted to a collective loss of value. This assessment is for
homogeneous categories of loans with similar characteristics in terms of credit risk and the
percentage of loss are estimated considering time series, which allow you to estimate the value of
the latent loss in each loan category.
The estimate of expected future nominal cash flows is based on the parameters of
"probability of default (PD probability of default) and" loss given default (LGD - loss given
default) and the flows calculated are discounted using the effective interest rate of each
report.
The original effective rate of each loan remains unchanged over time has taken a restructuring of
the relationship that has led to the change in the contractual rate and even if the ratio becomes, in
practice, non-interest bearing contract.
The value adjustment is recognized in the income statement.
The original value of loans is restored in subsequent years to the extent that the reasons that
led to the correction provided that such valuation is objectively linked to an event occurring
after the impairment. The recovery in value is recorded in the income statement, and may in
no case exceed the amortized cost of the loan would have had no previous corrections.
Among the backs it includes the positive effects related to the return discounting the effect
resulting from the progressive reduction in the estimated time of recovery of the credit
impaired.
At each balance sheet date and interim financial statements, any additional adjustments or
write-backs are recalculated in differential mode with reference to the entire portfolio of
performing loans at that date.
C WARD OF CANCELLATION
Loans are removed from the balance sheet assets are considered when finally sunk or
transferred only if the transfer involved the transfer of all the risks and benefits associated
with credit. On the other hand, if they have been kept the risks and benefits related to loans
sold, these continue to be recognized as an asset of the budget, even though legal ownership
of the loan has been transferred.
If it is not possible to ascertain the substantial transfer of risks and benefits, debts are
derecognised if it was not maintained any control over them. Otherwise, storage, even in part, of
such control involves the maintenance of the loans in an amount equal involvement, measured by
the exposure to changes in value of the receivables sold and the cash flow of the same.
ACCOUNTING POLICIES 44
5. Financial assets VALUED AT FAIR VALUE
C WARD CLASSIFICATION
The portfolio of financial assets at fair value are allocated those titles for which it was decided to
apply the so-called "fair value option under IAS 39. Consequently, activities may be designated at
fair value through profit or loss in cases of:
elimination or reduction of evaluative inconsistencies (of financial instruments related to
each other) to allow a more reliable information in the budget;
inclusion of instruments with embedded derivatives that meet certain conditions in order
not to proceed with the spin off of the same by the host instrument, valued at fair value
as a whole;
Managing a group of financial assets, financial liabilities or both, and its performance is
evaluated based on the fair value (fair value) according to a documented risk
management or investment strategy, and information about the group is provided
internally on that basis to management personnel.
C WARD 'S REGISTRATION
Initial recognition of financial assets occurs on the settlement date (settlement date) if on
schedule by the settled practice of the market (regular way), otherwise the contract date
(trade date). In case of detection of financial assets at the settlement date, the gains and
losses recognized between the trade date and the settlement date are recognized in the
income statement.
Financial assets at fair value are recognized initially at fair value which generally corresponds
to the amount paid. The costs and proceeds from the transaction are recognized directly in
earnings.
C WARD RATING
After initial activities are aligned to its fair value.
The fair value of quoted investments in active markets is determined by reference to market
prices (prices "bid") recognized on the balance sheet date. For investments where the price is
not available in an active market, fair value is determined using valuation models and
estimation methods that take into account all risk factors related to the tools and are based
on observable data on the market, where available. These techniques can be considered the
prices recorded for recent similar transactions concluded under market conditions,
calculations of discounted cash flows, models of pricing options and other techniques
commonly used by market participants.
Gains and losses on disposal or redemption and unrealized gains and losses arising from
changes in fair value over the cost of acquisition as determined by the weighted average cost
on a daily basis, are expensed in the period which emerge under the heading "Net value of
assets and financial liabilities at fair value (item 110 of income).
C WARD OF CANCELLATION
Financial assets are derecognised when the contractual rights to receive cash flows from
financial activities is extinguished, or where they are transferred substantially all risks and
benefits of holding that particular activity.
6. O PERATIONS OF COVERAGE
C WARD CLASSIFICATION
This line item derivative contracts designated as effective hedging instruments which on their
balance sheet presenting a positive fair value
T IPOLOGIA COVERAGE
The hedging transactions are intended to offset potential losses on a particular item or group
of items, attributable to a particular hazard, using the profits to be detected on a different
element or group of items where that risk should actually occur .
The types of hedging transactions are used:
1) fair value hedges (fair value hedge), aims to hedge exposure to changes in the fair value
of a budgeted item attributable to a particular risk;
2) cash flow hedges (cash flow hedge), aims to hedge exposure to variability in future cash flows
attributable to specific risks associated with balance sheet;
3) an investment in foreign currency: relates to the coverage of risks of an investment in
expressed in a foreign currency;
Please note that Apulia is the Group has used only the type of coverage referred to in paragraph 1).
ACCOUNTING POLICIES 45
C WARD RATING
Hedging derivatives are measured at fair value, in particular:
in the case of fair value hedges, it compensates for the change in fair value of the hedged item
and the change in fair value of the hedging instrument. Such compensation is recognized by the
recognition in the income statement of changes in value, covering both the hedged item (as far
as the changes produced by the underlying risk factor) and the hedging instrument in writing to
its fair value. Any difference, representing the partial ineffectiveness of the hedge, is a result of
the net economic effect;
in the case of cash flow hedges, changes in fair value of the derivative are reported in
equity for the effective portion of the roof, and are recognized in earnings only when, with
reference to the hedged, there is a variation of the flow of body to compensate. The
ineffectiveness is recognized in the income statement.
The derivative is designated as a hedge if there is a formal documentation of the relationship
between the hedged item and the hedging instrument and it is highly effective when coverage
begins and, prospectively, over a lifetime thereof.
The effectiveness of the hedge depends on the extent to which changes in fair value of the
hedged its expected cash flows are offset by those of the hedging instrument. The
effectiveness is appraised by comparing the aforementioned changes, in view of the intent
pursued by the company when the hedge was put in place.
Is considered effective (within the limits of range 80-125%) when the changes in fair value
(or cash flows) of the financial instrument cover almost completely neutralize the variations
of the hedged item, for the type of risk being coverage.
The assessment of effectiveness is made at each balance sheet date using:
prospective tests, justifying the application of hedge accounting, as they demonstrate the
expected effectiveness of the hedge in future periods;
retrospective tests, which show the degree of effectiveness of the coverage achieved in
the period covered. In other words, measure what the actual results differed from the
perfect cover.
C WARD OF CANCELLATION
Hedging derivatives are removed from the balance sheet assets in the event of a sale if the
same has resulted in the transfer of all the risks and benefits associated with derivatives
themselves. If the tests do not confirm the effectiveness of the hedge, hedge accounting, as
set out above, the contract is broken and the hedging derivative is reclassified as trading
instruments.
In the event of termination of coverage for reasons other than the realization of the hedged item,
changes in the value of the latter, in the budget until the maintenance of an effective hedge, are
recorded in the income statement according to the technique of amortized cost, in the case of
interest-bearing financial instruments, or in a single solution in other cases.
7. C OMPANIES
C WARD CLASSIFICATION
In portfolio investments "include investments in companies in which the Group exercises
significant influence. The remaining shares (minority) are classified as financial assets
available for sale and treated accordingly.
C WARD REGISTRATION
Investments are recorded at acquisition value including additional charges.
C WARD RATING
If there is evidence that the value of an investment may be impaired, we proceed to estimate
the recoverable amount of the investment, taking into account the present value of future
cash flows that may be generated, including the value of its ultimate disposal .
If the recoverable amount is less than book value, the difference is recorded in the income
statement under "net income (loss) from investments."
If the reasons for impairment cease to exist following an event occurring after the
recognition of impairment, write-backs are made with recognition in earnings.
Dividends from investments are recognized when the assembly will act to pay for and are
allocated in "dividends and similar income".
The item "gains (losses) of associates" are allocated any impairment losses and subsequent
recoveries of value that might occur.
C WARD OF CANCELLATION
Investments are derecognised when the contractual rights to cash flows from the financial
assets expire or when the investment is disposed of by transferring substantially all the risks
and benefits associated with it.
ACCOUNTING POLICIES 46
8. A CTIVITIES MATERIALS
C WARD CLASSIFICATION
Tangible assets include land, buildings used, real estate investment, technical installations,
furniture and furnishings and equipment of any kind.
These are tangible assets held for use in the production or supply of goods and services, for
rental to others, or for administrative purposes and are expected to use more than one period.
Also included under this item of the goods used in finance leases, even though the legal
ownership of those remains to the lessor.
Are defined as "instrumental properties, those held for the provision of services or for
administrative purposes, are defined as" investment property "held for collecting rents and /
or held for capital appreciation.
Among the tangible assets are also included costs for leasehold improvements, when they are
separable from the goods themselves (where such costs are not autonomous functionality
and usability, but the same expected future benefits are recognized as "other assets" and are
depreciated over the shorter period to provide for themselves and usability improvements to
the remaining duration of the lease).
The value of tangible assets also contribute to the advances made for the acquisition and
restructuring of assets not yet entered the production process, and it is not subject to
depreciation.
The tangible assets that meet the conditions required by IFRS 5 are classified as "non-current
assets held for sale".
C WARD REGISTRATION
Tangible fixed assets are initially recognized at cost, which includes, in addition to the
purchase price, any costs directly attributable to the purchase and operation of the property.
The costs of maintenance resulting in an increase in future economic benefits are charged to
the value of assets, other maintenance costs are expensed.
C WARD OF ASSESSMENT AND COLLECTION OF ITEMS
Tangible assets, including non-business properties, are stated at cost less any amortization
and impairment losses, according to the "cost model" referred to in paragraph 30 of IAS 16.
Fixed assets are depreciated over their useful lives, using as depreciation on straight-line
method, except for:
land, whether acquired individually or embedded in the value of buildings, as they have an
indefinite useful life. In cases where the value is contained in the value of the building by the
application of the approach for components are considered separable assets from the building,
the division between the value of land and the value of the building is on the basis of valuations
of independent experts for the property held only "sky-earth"
heritage, as the useful life of a work of art can not be estimated and its value is normally
set to increase over time.
For assets acquired during the year, depreciation is calculated on a daily basis from the date of
entry into use of the asset. For goods supplied and / or disposed of during the year, depreciation is
charged on a daily basis until the date of sale and / or disposal.
If there is evidence that the activity may have suffered a material loss of value, a comparison is made
between the carrying value of the asset and its salvage value, the lower of the fair value, less costs to sell,
and its use-value of the asset, ie the present value of future cash flows generated by the asset. Any
adjustments are recognized in earnings.
Where are the reasons that led to the recognition of the loss, it gives rise to a recovery in
value, which may not exceed the value of the asset would have had, net of depreciation
calculated in the absence of previous impairment losses.
Cancellation Policy
Property and equipment are removed from the balance sheet on disposal or when the asset is
permanently withdrawn from use and from its disposal are not expected future economic
benefits.
Gains and losses from the retirement or disposal of tangible assets are determined as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognized in the
income statement the same day they are eliminated from the accounts.
ACCOUNTING POLICIES 47
9. A CTIVITIES ASSETS
C WARD CLASSIFICATION
IAS 38 defines intangible assets as identifiable non-monetary assets, without physical substance. The
characteristics necessary to meet the definition of intangible assets are:
identifiability
control over a resource
existence of future economic benefits.
In the absence of any of the above characteristics, the cost to acquire or generate it internally
is recognized as an expense when it is incurred.
Goodwill included in intangible assets such as the positive difference between purchase price and the fair
value of assets and liabilities acquired in business combinations (business combinations), is represented in
accordance with IFRS 3, future economic benefits from assets that can not be identified individually or
separately recognized in the accounts.
Other intangible assets are recognized as such if they are identifiable and arise from
contractual or legal rights.
C WARD REGISTRATION AND EVALUATION
An intangible asset may be recorded as goodwill when the positive difference between the
fair value of assets acquired and their cost of acquisition is representative of future earnings
capacity of participation (goodwill).
If that difference is negative (badwill) or in the event that the goodwill can not find capacity to
generate future income of the subsidiary, the difference is recognized directly in earnings. With a
year (or whenever there is evidence of impairment) is a test of adequacy of the value of goodwill.
To this end, the generating unit is identified in a cash award goodwill (cash generating unit).
The amount of impairment is determined based on the difference between the carrying value of goodwill
and its salvage value, whichever is less. This recovery value is equal to the lesser of the fair value of the
cash-generating unit, net of any costs to sell and its value in use. The resulting adjustments are recognized
in earnings.
Other intangible assets are stated at cost, adjusted for any extra charges if it is probable that
future economic benefits attributable to materialize and if the cost of the asset can be reliably
determined.
The cost of intangible assets is amortized on a straight-line basis over its useful life. If the useful
life is indefinite not depreciate, but only to periodic review, at least annually, the adequacy of the
carrying value of fixed assets.
At each balance sheet date, there is evidence of impairment, we proceed to estimate the
recovery value of the business. The amount of the loss, profit or loss is equal to the difference
between the asset's carrying amount and the recoverable amount.
C WARD OF CANCELLATION
An intangible asset is eliminated from the balance sheet on disposal and where no future
economic benefits.
Depreciation is calculated using criteria based on the time passing.
10. A NON-CURRENT ACTIVITIES HELD FOR SALE
P ASSIVITÀ ASSOCIATED GROUPS HELD FOR SALE OF ASSETS
Are entered in the above heading the assets or liabilities or groups of assets / liabilities held
for sale. The sale may relate to the sale of a line of business that its divestiture from the
productive process.
As required by IFRS 5 are recorded the assets or liabilities or groups of assets and liabilities
when the sale or termination is considered highly likely, and in any case it can be concluded
within one year of their classification.
Activities or groups of assets / liabilities held for sale are valued at the lower of carrying
amount and fair value less costs to sell. The related income and expenses are displayed in a
special section of the income statement, net of taxes.
Among the activities held for sale from 30.06.2010 also falls spa Apulia security for which
was signed offer to sell as detailed in Section 4 of the previous section A.1 (events after the
balance sheet date months).
11. F Iscala CURRENT AND DEFERRED
The Group records the effects related to current taxes and deferred tax using the tax rates in
force.
Income taxes are recognized in the income statement, except those relating to items charged
or credited directly to equity.
The provision for income taxes is determined based on a conservative estimate
ACCOUNTING POLICIES 48
current tax burden, prepaid and deferred. In particular, those deferred tax assets and
liabilities are determined based on temporary differences - no time limits - of the value
attributed to an asset or a liability according to the criteria and the corresponding figures
used for tax purposes.
The deferred tax assets are recognized in the budget to the extent that there is a likelihood of
their recovery, assessed on the basis of the ability of the company concerned, with generate
positive taxable income.
The deferred tax liabilities are recognized in the balance sheet and taxation related to the
underlying balance sheet items under suspension of taxes of the Parent "taxable only in the
hypothesis of distribution" is not included, either because of the unavailability of the
components of net assets in which such items are included, whether they are not expected to
occur in the foreseeable future the conditions for its taxation.
The consistency of the deferred tax is also adequate to meet obligations that may arise from the
findings already reported or otherwise from disputes with tax authorities.
The assets and liabilities for deferred tax assets and liabilities are systematically evaluated to
take account of possible changes in regulations or tax rates, or any other subjective
situations of the companies concerned.
12. F ROVISIONS FOR RISKS AND CHARGES
Provisions for risks and charges include provisions related to current obligations arising from
a past event for which it is probable an outflow of economic resources for the fulfillment of
the obligation, provided that this can be a reliable estimate of the amount.
Where time is material, provisions are discounted using current market rates. A provision is
recognized in the income statement.
Among the "other" in addition to provisions for legal obligations or relationships related to work or
litigation, are also included appropriations made for the constitution of reserves necessary for the
provision of bonuses to employees as required by contract rules business. Although these funds
have been determined based on a report of an independent actuary to adopt the method provided in
IAS 19. The characteristics of the Group's expectations, the method does not apply the "corridor",
that are recognized gains and losses regardless of their size.
13. D EBIT SECURITIES ISSUED
C WARD CLASSIFICATION
Due to banks, Due to customers, securities issued and subordinated liabilities include various
forms of interbank and customer and collection through certificates of deposit and bonds in
circulation, net, therefore, of any amounts also repurchased to rescheduling.
C WARD REGISTRATION
Initial recognition of these financial liabilities are on receipt of the money raised or the issue
of debt securities.
The first recognition is based on the fair value of liabilities, usually equal to the amount
collected or the issue price, plus any costs and income directly attributable to the transaction
of borrowing or issue and not reimbursed by the creditor. Excludes internal administrative
costs.
The fair value of financial liabilities may be issued below than the market is the object of
special respect and the difference between the market value is recognized directly in
earnings.
The component of the convertible bonds that have the characteristics of a liability is recognized in
the balance sheet as a debt, net of issuance costs. Issuance, the fair value of the debt component is
determined using the market price of an equivalent non-convertible bonds, such amount is classified
as a long-term debt, is adjusted through the amortized cost to its extinction conversion or
redemption. The remainder of the amount collected is given conversion option and is recognized in
equity under the heading 160 "equity".
C WARD RATING
After initial recognition, financial liabilities are measured at amortized cost using the effective
interest rate method.
An exception is the short-term liabilities or to view, where the time factor is negligible, which
remain registered for the value received and the costs of which are attributed where appropriate,
charged to the income statement linearly over the term of the contract liabilities.
C WARD OF CANCELLATION
Financial liabilities are derecognised when they have expired or settled.
ACCOUNTING POLICIES 49
The cancellation takes place even under repurchase previously issued securities. The
difference between the carrying amount of the liability and the amount paid to acquire it is
recorded in the income statement.
The re-market their securities after their purchase is considered as a new issue with the new registration
IPO price, with no effect on the income statement.
14. P TRADING financial liabilities
C WARD CLASSIFICATION
This item includes the negative value of trading derivatives at fair value and liabilities, which
are also measured at fair value, which originate from short positions generated from trading
in securities.
C WARD RATING
All trading liabilities are measured at fair value determined in the manner described in the
section on "financial assets held for trading".
15. P financial liabilities VALUED AT FAIR VALUE
C WARD CLASSIFICATION
Portfolio in financial liabilities at fair value are allocated those titles for which it was decided
to apply the so-called "fair value option. Consequently, liability may be designated at fair
value through profit or loss in cases of:
elimination or reduction of inconsistencies evaluation to allow a more reliable information
in the budget;
assessment instruments with embedded derivatives.
management of a group of financial assets, financial liabilities or both, and its
performance is evaluated based on the fair value (fair value) according to a documented
risk management or investment strategy, and information about the group is provided
internally on that basis to management personnel
In line with these indications have been placed in that category structured instruments issued
(Hybrid debt instruments whose return is linked to equity instruments, or currency, or credit
instruments or indices) and those subject to funding availability.
C WARD 'S REGISTRATION
Financial liabilities at fair value are recognized initially at fair value which generally
corresponds to the amount received. The costs and proceeds from the transaction are
recognized directly in the income statement, except for any fees collected by the Bank in
advance (up-front fees) accounted for pro-rata basis.
C WARD RATING
After initial liabilities are aligned at their fair value.
The fair value of listed securities issued in active markets is determined by reference to market
prices recorded on the date of the balance sheet. For unlisted securities issued in an active market,
fair value is determined using valuation models and estimation methods that take into account all
risk factors related to the tools and are based on observable market data where available. These
techniques can be considered the prices recorded for recent similar transactions concluded under
market conditions, calculations of discounted cash flows, models of pricing options and other
techniques commonly used by market participants.
Gains and losses realized on the redemption and unrealized gains and losses arising from changes in fair
value than the issue price, are expensed in the period in which they emerge, the "net result of assets and
liabilities financial assets at fair value. " The cost of interest on debt instruments is classified as interest
expense and similar charges.
C WARD OF CANCELLATION
Financial liabilities are derecognised when the obligation specified in the contract is
extinguished. The repurchases of their liabilities are regarded as an extinguishment of the
liability or part of it. The difference between the carrying amount of the liability settled
amount paid to buy is recorded in the income statement.
In the case of repurchase of securities previously issued, there shall all'elisione amount of the
related assets and liabilities. Any subsequent sale of outstanding securities repurchased shall
be treated, for accounting purposes as a new issue, re-entered the new price, with no effect
on the income statement.
ACCOUNTING POLICIES 50
16. O PERATIONS IN FOREIGN CURRENCY
R ILEVAZIONE INITIAL
The functional currency used corresponds to its economic environment in which it operates,
and coincides with that of the budget or the Euro.
Transactions in foreign currencies are recorded at the time of initial recognition, in currency, by
applying to the foreign currency exchange rate prevailing on the date of the transaction.
R ILEVAZIONI NEXT
At each annual or interim financial statements, the balance sheet items in foreign currencies
are valued as follows:
monetary items are translated at the exchange rate on the closing date;
non-monetary items carried at historical cost are translated at the exchange rate at the
date of the transaction;
non-monetary items carried at fair value are translated using the exchange rate at the
date of closing.
Exchange differences arising on the settlement of monetary items or on translating monetary items
at rates different from those of the initial conversion, or conversion of the previous financial
statements, are recognized in the income statement for the period in which they arise.
When a gain or loss on a non-monetary item is recognized in equity, the exchange difference
on that element is also recognized in equity. By contrast, when a gain or loss is recognized in
the income statement is recorded in the income statement also change the relative difference.
The conversion into euro of the financial statements of the foreign subsidiary is calculated by
applying exchange rates prevailing at the balance sheet date.
Exchange differences on assets of consolidated subsidiaries are recognized in the
consolidated balance sheet and reserves to the income statement only in the year in which
the investment is disposed of.
The costs and revenues in foreign currencies are recorded at the exchange rate prevailing at the time of
booking.
17. INSURANCE AND LIABILITIES TO ACTIVITIES
Technical reserves
The macro-includes commitments arising from contracts within the scope of IFRS 4, or contracts, as a
result of the classification process, have found place among the "insurance contracts", with or without
discretionary participation feature ( "DPF"), or between the "investment contracts" with "DPF. The
technical reserves for these products, in accordance with IFRS 4, were determined in accordance with
existing accounting standards (known as "Local GAAP").
17.1. Technical reserves for direct business - life business
They are made in accordance with art. 36 of Legislative Decree no. 209/2005 and analytically
determined based on actuarial assumptions appropriate, in accordance with the rules
identified by the Institute of Supervision:
Mathematical reserves: calculated for insurance policy with prospective method, are valued on the
basis of pure premiums, without adjustments for the boots, the combined effect of Articles. 24 and 25
of Legislative Decree no. 174/1995, as amended by art. 79 of Legislative Decree no. 173/1997. The
earmarked reserves are adequate, their commitments to policyholders, and in any event no less than
the surrender value. Among the mathematical reserves are also set aside additional reserves against
specific risks:
- additional reserve for interest rate risk: the provision applies to all contracts for
which there is a guarantee of minimum rate of interest under ISVAP 1801-G,
21/02/2001, and was calculated on the basis of ' joint analysis of assets and
liabilities relating to the separate management "Apulia Invest", taking into account a
long-term time horizon;
- additional reserve for risk of degression rates: the provision applies to all contracts for
which performance revaluation the last performance of the separate management
certificate being distributed is greater than that in the course of ripening;
- reserve for additional demographic risks: it is calculated, according to ISVAP 1380-G,
21/12/1999, in relation to demographic risks associated with annuities sold both as a
shell or as a main contractual options, the evaluation of the provision is held account
of the early disqualification of contracts and the propensity of policyholders to receive
the payment of rent.
Premium reserves of supplementary insurance: insurance for insurance is calculated
analytically, as provided by art. 32 of Legislative Decree no. 173/1997 for the
establishment of reserves for casualty insurance premiums.
Reserve for outstanding claims: relate to amounts due for repayment, reported claims, capital at
maturity and accrued income not yet paid in full or in part at the end of the year,
ACCOUNTING POLICIES 51
determined on the basis of an objective technical assessment, in accordance with art. 34
of Legislative Decree no. 173/1997.
Other technical provisions: the provision for future expenses (art. 25, paragraph 8, of Legislative
Decree no. 174/1995) allows for administrative costs and commissions expected to incur on the basis
of careful evaluation, is determined for each contract in force at the end of the year, based on the
loads required by the various forms of tariff is a premium is a single annual premium.
Among the other technical provisions, is also classified the component relating to the commitment
originated from the deferral of gains or losses attributable to policyholders, the recognition of which
is through the application of the cd Shadow Accounting. This liability represents the Company's
commitment substantially in relation to components of unrealized gain on investments
to cover the Separate Account attributable to policyholders, which they will be recognized only
if and when actually realized upon disposal of assets.
The insurance liabilities lurking in the financial statements are subject to an adequacy test ("LAT"), subject
to the test by comparing the reserves, net of any deferred costs, with the present value of future
contractual cash flows and those connected with them (as the cash flow of the costs of liquidation), which
are obtained by projecting the expected future cash flows generated by the portfolio as at the valuation
date, taking into account realistic assumptions (current best estimate).
If the test revealing insufficient technical provisions in the budget, net of capitalized acquisition costs and
intangible assets, the entire deficiency is recognized in the income statement.
17.2. Technical reserves for direct business - Non-Life
They are made in accordance with art. 37 of Legislative Decree no. 209/2005 and determined
in accordance with the provisions of the valuation methods set out by the Institute of
Supervision:
Unearned premium: in accordance with art. 32 of Legislative Decree no. 173/1997, includes
the reserve for unearned premium and, where necessary conditions are met, the reserve for
unexpired risks.
The reserve for unearned premium is calculated analytically for each contract, with the method
of pro-rata basis, based on gross premiums written, net acquisition commissions and other
acquisition costs, limited to direct costs. The reserve for unexpired risks, determined on a per
branch, represents the value to be set aside to cover the risks borne by the end of the year
after, if the total amount of estimated cost of claims expected, with reference to policies in the
portfolio, and higher than the estimated reserves for unearned premiums plus installments are
due, net of acquisition costs for the insurance premium split.
To calculate the risks, the Company reserves - which until the year ended December 31, 2006
had used the procedure provided for in the empirical ISVAP No 360 D of 21 January 1999,
based on the relationship between claims and earned premiums of the current generation - has
opted, starting from the year ended December 31, 2007 for the adoption of the procedure set
out in Regulation No 16 ISVAP issued March 4, 2008.
The Company has introduced a forecasting model based on the loss ratio and earned premiums
for the last three years, believing that reasonable estimation method for the determination of
the reserve risk in the next year.
Aging reserves of sickness: it is intended to offset the worsening of the risk due to the increasing age
of the insured during the period, no provisions were made for age-related stocks as the portfolio of
health insurance does not include contracts have multi-year duration, although duration of one year
or provide the insurer's obligation to renew at maturity (art. 25, paragraph 1, of Legislative Decree
no. 175/1995).
Claims reserve: it represents the total amount of the sums based on a prudent
evaluation, are necessary to cover payment of claims open at year end and not yet paid
in full or in part, and the related liquidation expenses . The reserve is estimated at a level
equal to the ultimate cost of the accident, under art. 33, paragraph 2, of Legislative
Decree no. 173/1997. Demounting the historical trends related to the provision for
claims confirm the adequacy of assessments.
Costs of liquidation: liquidation expenses have been allocated directly to individual branches. The
methodology for calculating the provision for claims, the ultimate cost, and the reserve for unexpired risks
fulfill the requirements of IFRS 4 for the purpose of verifying the adequacy of technical reserves of non-
life.
18. O THERE INFO
T REATMENT OF END OF STAFF REPORT
The provision for employee severance shall be entered on the basis of its actuarial value, as
determined by independent actuaries to the group.
For the purposes of discounting, using the projected unit credit that provides the projection of
future payments based on historical statistics and analysis of the demographic curve and updating
of such financial flows based on a market interest rate. The contributions in each year are treated as
separate units, measured and evaluated individually for the purposes of determining the final
obligation. The rate used for discounting is determined as the average rate corporate bonds on the
valuation dates, weighted by the percentage of the amount paid in advance and, for each maturity,
the total payable and advance to the final extinction of 'totality of the debt.
ACCOUNTING POLICIES 52
The cost of the plan are recorded as personnel costs as a net amount of contributions, contributions of
expertise from previous years not yet accounted for, accrued interest, expected revenues from the
activities of plan, and profits / losses.
Gains and losses are immediately recognized in earnings.
S CAPITAL INSTRUMENTS
This item includes the total amount of the equity component of convertible bonds into shares
as instruments of equity, other than capital and reserves, determined in accordance with IAS
32, when the convertible bond is settled, this component is reclassified .
R ECOGNITION OF REVENUES
Revenues are recognized when received or when it is probable that future benefits will be received, and
these benefits can be quantified reliably. In particular:
the interest is recognized on a pro rata basis based on the contractual interest rate or the actual
application in the case of amortized cost;
dividends are recorded in the income statement when it is allocated for distribution "IAS
18 paragraph 30 c;
revenues from the brokerage of securities trading, as determined by the difference
between the transaction price and the fair value of the instrument are recognized in the
income statement when the transaction if the fair value is determined with reference to
parameters or recent transactions observed in the same market where the instrument is
negotiated;
other fees are recognized using the accrual principle.
CARTOLARIZZAZIONI
The group has perfected over the years of securitizations on the sale of loan portfolios to
special purpose vehicle established for that purpose.
With the entry into force of the IAS / IFRS, it is believed that the special purpose vehicle under Law
130/1999 can continue to recognize only in the securitization notes. Since the securitized loans are by law
a "special fund" for the benefit of holders of securities issued by special purpose vehicles to finance the
purchase of the loans, these assets and liabilities comply with the conditions of paragraph 19 of IAS 39
(the so-called pass-through agreement) for the derecognition of assets bought and sold. Instead,
companies will continue to cancel all sellers from the assets sold its assets only if they have transferred
substantially all risks and rewards associated with these activities.
With respect to securitization transactions under Law 130/1999, entered into before the date of
transition to IFRS (January 1, 2004), shows that IFRS 1 provides a specific exception to the rules on
derecognition for the supply of financial assets put in place before that date (see IFRS 1, paragraphs
27 and 27A). Under this exception, for securitization transactions carried out before 1 January 2004,
the company may decide to continue to apply the previous accounting rules, or apply IAS 39
retrospectively from a date chosen by 'undertaking.
Only for a securitization (conducted in 2003 by former Meridian Bank) has been invoked this exception. All
other securitisations carried out by both the Bank Apulia, and the former Meridian Bank, which from Apulia
prontoprestito receivables sold were re-entered in the balance sheet at June 30, 2010.
C CRITERIA FOR DETERMINING THE FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the value at which an asset could be exchanged or a liability could be
extinguished, in a free negotiation between parties with equal bargaining power.
The criteria for determining the fair value of securities, are as follows:
Securities classified in an active market:
It is assumed that the fair value of financial instruments traded on an "active market":
- for equities and debt securities listed on the Stock Exchange Italy reference price of
the last 11 trading day;
- for equities and debt securities listed on foreign stock exchanges with the reference
price (or other equivalent price) on the last day of the period provided that the stock
price is sufficiently liquid and / or trusted;
- for UCITS (investment funds and fund) the official price (or other equivalent price)
the proportion of the last day of the reporting period.
- for all types of securities generally, when available and reliable price information
provided by other sources such as Bloomberg, qualified individual contributors (eg
Cabot, UBM, etc ...) or squares alternative to the official listing of where the financial
instrument to be priced continuity with the objective;
- for equity securities included in the portfolio of assets available for sale fair value is taken
as the market price of last trading day of the year.
11 on the Italian Stock Exchange trading session of the Reference Price is the weighted average price for the last 10% of the volume treated.
ACCOUNTING POLICIES 53
Securities classified as a market focus:
When not available or considered unreliable as no price specified above, it is assumed that the fair
value of financial instruments traded on an "inactive market":
- for debt securities the fair value determined using the Murex application, or
alternatively, if the instrument is not censibile in this application, the fair value is
determined on the basis of expected cash flows and discount factors (expressed by
the swap curve provided by 'information provider Bloomberg on the relevant date).
In determining the fair value of these securities is taken account of "counterparty
risk" and / or "liquidity risk". To this end, the price of securities resulting from the
application of this methodology which is adjusted credit spreads corresponding to the
counterparty credit risk associated with the issuer;
- for the actions of the banks last price approved by the shareholders of the issuing
bank;
- for UCITS (investment funds and fund) the last value of the share reported by the
Management Company;
- for insurance contracts funded by the surrender value determined in accordance with
the terms of issue.
- for equity securities for which fair value can not be trusted to an extent determined
by the rules given above are stated at cost, adjusted to take account of any significant
decreases in value.
- for private equity funds and the like, the fair value is determined based on the latest
available NAV provided by the Management Company.
- Investment in equities included in the portfolio of assets available for sale if a significant amount,
we can assume that the fair value resulting from independent assessments when available, or,
failing that, the value corresponding to the share of equity held latest approved financial
statements of the company;
- for participation is not significant amount of retained their cost.
The criteria for determining the fair value of derivatives are as follows:
derivative contracts traded on regulated markets:
fair value is taken as the market price of last trading day of the year;
derivatives OVER THE COUNTER:
fair value is taken as the market value at the date given in the following ways depending
on the type of contract:
- Interest rate contracts: the market value is the so-called "replacement cost" as determined
by discounting the differences, to settlement dates planned between flows calculated at the
rates of contract and expected cash flows calculated at market rates, objectively
determined at year end of current maturities;
- option contracts on securities and other valuables: the market value is the "reward
theory" at the reference date, determined using the Black-Scholes formula or other
equivalent criteria;
- Forward currency: the market value is the exchange rate "term" current at that date,
for a period appropriate to the transactions being valued;
- forward transactions in securities, commodities or precious metals: the market value
is the price "to the term" current at that date, for maturities corresponding to those of
the underlying asset;
- in the case of particularly complex derivatives can be taken as a fair value of the
assessment provided by qualified contributors.
A.3 INFORMATION ON FAIR VALUE
M CHANGES TO IAS 39 AND ALL 'IFRS 7 OF 13 October 2008
The International Accounting Standards Board (IASB), in October 2008, published an amendment to
IAS 39 and IFRS 7, as incorporated into the European Union Regulation No. 1004 dated October 15,
2008. Changes made to allow, only in "rare circumstances" - such as the crisis that hit financial
markets during the third quarter of 2008 - Amendment of the portfolio of membership of certain
financial instruments, in particular, becomes possible:
reclassify a financial asset portfolio outside the HFT (trading), when they no longer held for
selling or repurchasing in the short, categorized HTM (held to maturity), L & R (grants and
loans) or AFS (available for sale);
reclassify financial assets from the portfolio as AFS (available for sale) at the L & R
portfolio (loans and credits) in the case of unlisted securities, in addition to the
reclassification of the HTM portfolio previously granted by the standard.
ACCOUNTING POLICIES 54
The purpose of the amendment is to solve the problem of loss of meaning of certain market prices during
illiquid markets and / or panic in these stages, allowing financial institutions in general and to companies
applying IAS / IFRS reduce the volatility of income (if the securities belong to the transfer of trading) and
wealth (if the securities to be transferred belong to the portfolio available for sale). For reclassifications
made by October 31, 2008, the principle has allowed, as a transitional rule, the power to backdate the
effect until the deadline of 1 July 2008 and at identifying the current crisis in financial markets as an event
for ' application of rare circumstances.
To overcome the problem of data comparison with previous financial statements, has been
made compulsory to include adequate disclosure, highlighting the gains and losses were
recorded in the absence of the exercise of that power.
Apulia The Bank and its subsidiaries have not availed themselves of that option and have not
done any reclassification of the portfolio.
A.3.1 T RASFERIMENTI BETWEEN PORTFOLIOS
Apulia in the group there were no transfers of portfolios
A.3.2 G IERARCHY OF FAIR VALUE
The International Accounting Standards Board (IASB) in March 2009, published an amendment to
IFRS 7 "Financial Instruments: Disclosures", implemented by EU Regulation No 1165 of November
27, 2009, applicable from 1 January 2009.
That Amendment requires that the valuation of financial instruments at fair value are classified according
to the following hierarchy of levels that reflect the significance of the inputs used in the assessments:
Level 1: quotes (without adjustments) measured on an active market - as defined by IAS
39 - for the asset or liability being measured;
Level 2: Inputs other than quoted prices referred to above, which are directly observable
(prices) or indirectly (derived from the prices) on the market;
Level 3: inputs that are not based on observable market data.
Based on those definitions, starting in 2009, then proceeded to classify its securities.
ACCOUNTING POLICIES 55
A.3.2.1 PORFOLIO ACCOUNTING: BREAKDOWN BY LEVEL OF FAIR VALUE
Financial assets / liabilities 30/6/2010 31/12/2009
measured at fair value Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
1. Held
1.300 13.175 589 51.786 9.477 -
for trading
2. Financial assets
- - - - - -
at fair value
3. Financial assets available
167.681 33.302 48.442 316.505 109.085 13.554
for sale
4. Hedging derivatives - 18.338 - - 5.286 -
A. Banking Group 168.681 64.815 49.031 368.291 123.848 13.554
1. Held
- - - - - -
for trading
2. Financial assets
- - - - 461 -
at fair value
3. Financial assets available
- - - 170.026 5.540 6.983
for sale
4. Hedging derivatives - - - - - -
B. Insurance companies - - - 170.026 6.001 6.983
Total (A+B) 168.681 64.815 49.031 538.317 129.849 20.537
1. Financial liabilities
905 11.299 - - 2.492 -
held for trading
2. Financial liabilities
- - 1.032 - - -
at fair value
3. Hedging derivatives - 48.044 - - 30.274 -
A. Banking Group 905 59.343 1.032 - 32.766 -
1. Financial liabilities
- - - - - -
held for trading
2. Financial liabilities
- - - - 458 15
at fair value
3. Hedging derivatives - - - - - -
B. Insurance companies - - - - 458 15
Total (A+B) 905 59.343 1.032 - 33.224 15
A.3.2.2 CHANGE IN FINANCIAL ASSETS AT FAIR VALUE (LEVEL 3)
Financial assets
Held for Available
Valued at
the for Hedging
fair value
trading sale
1. Opening balance - - 13.537 -
2. Increases 591 - 36.029 -
2.1 Purchases 152 - 36 -
2.1.1 Business combinations
- - 1.009
2.2 Net profit attributed to: 3 - 384 -
2.2.1 Income Statement 3 - - -
- Including capital gains 3 - - -
2.2.2 Shareholders' equity X X 384 -
2.3 Transfers to other levels 432 - 34.462 -
2.4 Other increases 4 - 138 -
3. Decreases 2 - 1.123 -
3.1 Sales 2 - 39 -
3.2 Reimbursement - - - -
3.3 Losses charged to: - - 1.039 -
3.3.1 Income Statement - - 917 -
- Of which depreciation - - - -
3.3.2 Shareholders' equity X X 122 -
3.4 Transfers to other levels - - - -
3.5 Other decreases
- - 45 -
4. Closing balance 589 - 48.443 -
ACCOUNTING POLICIES 56
A.3.2.3 CHANGE OF FINANCIAL LIABILITIES AT FAIR VALUE (LEVEL 3)
Financial liabilities
Held for
Valued at
the Hedging
fair value
trading
1. Opening Balance - - -
2. Increases - 1.032 -
2.1 Purchases - - -
2.1.1 Business combinations
1.024
2.2 Net profit attributed to: - - -
2.2.1 Income Statement - 3 -
- Including capital gains - - -
2.2.2 Shareholders' equity X X -
2.3 Transfers to other levels - 1.024 -
2.4 Other increases - 5 -
3. Decreases - - -
3.1 Sales - - -
3.2 Refunds - - -
3.3 Losses charged to: - - -
3.3.1 Income Statement - - -
- Of which depreciation - - -
3.3.2 Shareholders' equity X X -
3.4 Transfers to other levels - - -
3.5 Other changes in
- - -
decrease
4. Closing balance - 1.032 -
OPERATING PERFORMANCE- THE BALANCE SHEET 57
PERFORMANCE IN THE CONSOLIDATED
NTRODUCTION
At the end of 2009, the Group Apulia was divided into nine operating companies:
bancApulia, team leader;
Apulia prontoprestito - employee loans;
Apulia Service - real estate services;
Apulia Finance Srl, Apulia Finance n. 2, No Apulia Mortgages Finance 3, Apulia Finance n. 4,
Apulia Finance 5 Supply;
Apulia insurance - the insurance company and reinsurance life Apulia
Real Estate Investment Fund;
Apulia insurance - insurance company and reinsurance risks other than (in
liquidation).
In January 2010, with effect from May 10, 2010, bancApulia incorporated, by merger,
Meridian Bank, controlled by Veneto Banca Holding, parent company of the Gruppo Veneto
Banca. As a result of the merger and related corporate transactions, bancApulia and its
subsidiaries have become part of the Veneto Banca Group.
In addition, during the first half of the year was begun the process of liquidation of Apulia
Insurance and is under implementation of the divestiture process Apulia security.
T HE BALANCE SHEET
At the end of the first half year, the gross product of the banking group has exceeded the
threshold of EUR 11 billion, a slight reduction compared to stocks of the previous year end (-
79 million euro, -0.7%).
GROSS BANKING INCOME (in millions of euro)
Absolute change
30/06/2010 31/12/2009 change %
(Pro-forma)
Loans to customers 4.528 4.691 -163 -3.5%
Direct deposits 4.809 4.827 -17 -0.4%
Indirect Deposits 1.742 1.640 102 6.2%
Gross banking income 11.079 11.158 -79 -0.7%
Assets managed on behalf of customers
Overall, assets under management for clients - represented by the direct deposits, by assets
under custody and assets under management - has amounted to almost EUR 6.6 billion, up
slightly from last year's end.
In the aggregate, the direct component revealed a slight decrease of 17 ml euro (-0.4%),
generated by the reduction of the Notes in circulation amounted to € 28 ml and partially
mitigated the increase Due to customers that in the interim period increased by EUR 12
million.
Growth in the indirect funding that, at the end of the semester, points to the increase in
assets under management to EUR 32 million (6.2%) and administered for 70 million euro
compared with the end of last year, with a growth rate 6.2%.
OPERATING PERFORMANCE- THE BALANCE SHEET 58
Total deposits from customers (in millions of euro)
absolute
30/06/2010 31/12/2009 change Change %
(Pro-forma)
Due to customers 2.175 2.163 12 0.6%
Securities issued 2.633 2.662 -28 -1.1%
Financial liabilities measured at
fair value 1 3 -1 -59.0%
Direct deposits from customers 4.809 4.827 -17 -0.4%
Asset under management 552 519 32 6.2%
Assets under administration 1.190 1.121 70 6.2%
Indirect customer deposits 1.742 1.640 102 6.2%
Total Deposits 6.551 6.467 84 1.3%
Decreases, reaching 73.4%, the incidence of the direct component on the overall mass
administered on behalf of customers.
COMPOSITION% Customer Deposits
30/06/2010 31/12/2009
(Pro-forma)
Direct deposits 74.6
73.4% %
Indirect 25.4
deposits 26.6% %
Direct deposits
At the end of the first half of 2010, direct consolidated reached a consistency of 4.8 billion euro
recorded in absolute terms decreased by € 24 million, which translates into a reduction in the order
of 0.4 points percent year to date.
With reference to the various components of the aggregate, the category of "Due to customers"
stood at € 2.2 billion, marking a slight increase compared to end-of 2009 amounted to EUR 12
million (0.6% ). The industry's development has been supported mainly by raising the current
account, which has put in place an advance of 81 million euro, corresponding to a percentage
increase of 4.3% every six months. To this has been matched by the decline in repurchase of 63
million euro (-25.7%).
In the same period, the category of "Outstanding" was reduced by about 28 million (-1.1%).
Direct Deposits (in millions of euro)
31/12/2009 Absolute change
30/06/2010 (Pro-forma) change. %
Due to customers: 2.175 2.163 12 0.6%
Current accounts 1.987 1.906 81 4.3%
Time deposits 1 0 1 ns
Repurchase agreements 181 243 -63 -25.7%
Other loans 2 0 2 ns
Other payables 4 13 -9 -68.1%
Securities issued 2.633 2.662 -28 -1.1%
Financial liabilities at fair value 1 3 -1 -59.0%
Direct customer deposits 4.809 4.827 -17 -0.4%
With reference to the composition of the technical form at the end of June 2010, the
collection of the current account was the item most prevalent, with an incidence of 41.3% on
the total funding from customers, among other types of funding, confirmation is always
important source of funding represented by securities issued, with an incidence in the order
of 55 percentage points, while the collection presents a significant decline in repo collocatasi
3.8% of customer deposits.
OPERATING PERFORMANCE- THE BALANCE SHEET 59
Indirect funding
At the end of the first half of 2010, the stock of indirect funding for the Group has exceeded
EUR 1.7 billion, posting a growth of 102 million compared to year-end stocks last.
INDIRECT DEPOSITS (million €)
31/12/2009 Absolute
30/06/2010 change change %
(Pro-forma)
Assets under administration 1.190 1.121 70 6.2%
Government Bonds 674 613 61 10.0%
Bonds 332 330 2 0.7%
Other shares 184 178 6 3.5%
Assets under management 552 519 32 6.2%
Funds 312 302 10 3.3%
Portfolio management 9 3 5 ns
Life insurance (*) 231 214 17 8.0%
Total Indirect 1.742 1.640 102 6.2%
(*) Figures as at 30 June 2010 for companies Uniqa security, Uniqa Life and CNP Vita, 30 April 2010 for all other companies.
In the aggregate, the administered component stood at almost € 1.2 billion, marking an
advance of 70 million compared to last year-end stocks (6.2%). To support the sector be
noted in particular the positive development of government securities, which showed a
growth of over 60 million (10.0%).
Also increasing the management component to 32 ml (6.2%), driven mainly by the growth of the life
insurance sector (17 ml, 8.0%) and that relating to the Funds (10 ml, 3.3%).
The dynamics described above have remained almost constant, around 68.3%, the incidence
of the indirect component managed overall.
OPERATING PERFORMANCE- THE BALANCE SHEET 60
Credit management
At the end of June 2010, the stock of loans to the economy amounted to EUR 4.5 billion,
showing a decrease of € 163 million in absolute terms (-3.5%) compared to previous years.
With reference to the individual forms, the phenomenon certainly far more relevant to the sector of
consumer credit during the past six months from 944 ml to 839 ml of euro (-11.1%). This process
has been driven by the contraction of the dispenser supplies the fifth and delegations of payment
from Apulia prontoprestito which - following the statement of the Bank of Italy on 10 November
2009 in relation to supplies of the fifth and similar operations - initiated a process of revision of
business models and controls on distribution networks.
Loans to Customers (in millions of euro)
Absolute change
30/06/2010 31/12/2009 change %
(Pro-forma)
Current accounts 482 486 -4 -0.9%
Repurchase agreements 0 32 -32 -100.0%
Mortgages 2.691 2.722 -31 -1.1%
Credit cards, personal loans and
Salary loans 839 944 -105 -11.1%
Other transactions 236 274 -38 -13.8%
Impaired assets 280 233 47 20.0%
Total loans and advances 4.528 4.691 -163 -3.5%
OPERATING PERFORMANCE- THE BALANCE SHEET 61
Customer loans of doubtful
At the end of the first half of 2010, the net exposure of non-performing loans, on a consolidated
basis, totaled EUR 280 million, showing an impact on their total loans to customers to increase from
4.98% last year-end 6,18% in June 2010.
The growth dynamics of impaired assets, both in terms of gross exposure net of depreciation,
it is symptomatic of the rest in the wake of exceptional severity of the recession that has
gripped the real economy during the past year and extend over time its negative effects on
credit quality.
Positions within the aggregate bad debts, net of adjustments, have reached an amount of €
116 million, indicating an effect on the overall balance of loans and advances amounted to
2.57% (2.39% to end of December 2009). We are also increasing problem loans due loans
and net: the former amounted to EUR 64 million, expressing a level of incidence of 1, 41%
(from 0.95% at end-December) and the second cluster has reached 99 million €, with a
percentage of total loans amounted to 2.18% (1st, 63% recorded at the end of 2009).
Doubtful debts' (in million €)
AS AT 30 June 2010
Gross Value Net loans Coverage
TYPE OF LOAN
adjustmen
loans t % ratio
Doubtful 190 74 116 2.57% 38.82%
Non performing 66 3 64 1.41% 4.05%
Restructured loans 1 0 1 0.02% 0.03%
Past due loans / over 180 days 99 0 99 2.18% 0.54%
Total impaired loans 357 77 280 6.18% 21.59%
Performing Loans 4.254 6 4.248 93.82% 0.13%
Total loans to customers 4.611 83 4.528 100.00% 1.80%
AS AT 31 December 2009 (pro forma)
Gross Value Net Coverage
TYPE OF LOAN
adjustmen
loans t loans % ratio
Doubtful 182 70 112 2.39% 38.46%
Non performing 49 4 45 0.95% 8.63%
Restructured loans 0 0 0 0,00 -
Past due loans / over 180 days 77 0 77 1.63% 0.59%
Total impaired loans 308 75 234 4.98% 24.22%
Performing Loans 4.463 5 4.458 95.02% 0.10%
Total loans to customers 4.771 79 4.691 100.00% 1.66%
As regards the coverage of non-performing loans, provisioning policies pursued by cautionary at the
end of June 2010 the total value adjustments amounted to EUR 77 million, expressing a percentage
of 21,59% of gross.
OPERATING PERFORMANCE- THE BALANCE SHEET 62
Financial assets and interbank position
At the end of June 2010, the total stock of financial assets of the Group amounted to EUR 252
million, showing a decrease of 391 million compared to end-of-December, equivalent to a change in
the order of 60 percentage points every six months .
FINANCIAL ASSETS (in millions of euro)
Absolute change
30/06/2010 31/12/2009 change %
(Pro-forma)
Financial assets / Liabilities for trading 3 61 -58 -95.3%
Financial assets held for trading 15 68 -53 -77.9%
Fianncial assets for trading -12 -7 -5 64.7%
Financial assets available for sale 249 583 -333 -57.2%
Total net financial assets 252 644 -391 -60.8%
In the aggregate, the portfolio of "Assets available for sale" has highlighted the most
significant decrease, going from 583 million last year-end to the current € 249 million, a
decrease of 333 million in absolute terms (-57.2%).
It also noted the decline in the net on the "Financial assets held for trading" which has seen
essentially zero by the position.
As for the treasury activities, which took place on a centralized at the parent company, the
Court observes that during the period, net interbank position has reversed the sign from a
negative balance of 110 million at end-December to the surplus 162 million of the semester
just ended.
TOTAL FUNDING (in millions of euro)
31/12/2009
Items (millions of euro) 30/06/2010 (Pro-forma) var. ass. var. %
Loans to banks 534 713 -179 -25.1%
Due to banks -371 -823 452 -54.9%
Net interbank position 162 -110 273 ns
OPERATING PERFORMANCE- Economic results 63
THE RESULTS OF THE FIRST HALF
NTRODUCTION
The following tables, we intend to present a summary of the financial results achieved by the
Group in the first half of Apulia, with particular reference to the dynamics of the main
aggregates earnings over the same period of 2009.
To this end, an income statement has been prepared, 12 for management reclassified to allow for
more efficient reading of the phenomena that have contributed to the result for the period.
It also states that the intermediate balances in June 2010 are net of the Apulia Apulia
security assurances and the economic value of which briefly merged into item 310 "Net non-
current assets held for sale".
THE INCOME STATEMENT IN SUMMARY
The extremely difficult operating environment for the banking market - influenced by the effects of
the crisis affecting the international financial system and, subsequently, by a heavy downturn in the
real economy - has strongly influenced the outcome of the Group bancApulia period, which has
realized a loss of € 5.9 ml compared to one million euro profit achieved in the same period last year.
The negative result is mainly due to the result of hedging derivatives prontoprestito of Apulia, the
burden of credit and the impact of exceptional costs relating to the migration of the information
system.
Jun-09 Absolute change
Jun-10 (Pro-forma) change %
Net interest income 46.347 59.670 -13.323 -22.3%
Net commission 20.454 17.460 2.994 17.1%
Dividends and other similar income 214 93 121 130.1%
Profits on trading and Att. Fin. -2.292 -46 -2.246 ns
Other expense (income) from operations -1.834 503 -2.338 ns
Net income from insurance 0 1.249 -1.249 -100.0%
Operating income 62.888 78.930 -16.042 -20.3%
Personnel Costs -31.304 -30.965 -339 1.1%
Other administrative expenses -27.042 -29.170 2.128 -7.3%
Adjustments to tangible and intangible assets -4.105 -4.709 605 -12.8%
12 With regard to the reclassification of management, the interventions most relevant iGuard r have the following items:
a) Net interest includes, in addition to the balance of net interest income (item 30 C / E), including net income
from hedging activities (item 90 C / E). The aggregate were also adjusted for derivatives swap spreads on
securitization (pertaining to the vehicle) and other charges, respectively, traced the outcome of the
negotiations and the division of other income / expense.
b) Net commission income: in the voice were also brought back the recovery of the costs of sending
statement of account, accounting entered in item 190 "Other net operating income".
c) Net trading income and valuation of financial assets: this item includes profits on trading (item 80 C / E), the
gain or loss on disposal of financial assets available for sale (item 100 B) and financial liabilities (item 100 D).
Within this aggregate also includes the change in value of financial assets at fair value (item 110 C / E) and
value adjustments of financial assets above (item 130 B). Finally, they are reclassified within the fund flows
resulting from the swap spreads on securitization (vehicle component), balancing the economic effect of the
differential attributable to the originator, already included in the caption.
d) Other net operating income: this includes mainly aggregate revenues and other non-characteristic components
of cost or non-recurring income. Compared with the accounting (190 C / E), have been purified recoveries of
taxes in advance on behalf of customers, the recoveries for the costs of sending your bank statements and
component value adjustments related to renovations and maintenance on assets third. Within the item were
instead relocated to the other charges securitization transactions, Chartered Accountants in 20 C / E "Interest
expense and similar charges". Excluding these adjustments, the balance was brought back in for management
of operating income.
e) Other administrative expenses: the cluster has been modified with respect to item 150 of B by the
deduction of income tax recoveries and deferred taxes on behalf of customers, accounts allocated to
the item 190 "Other net operating income".
f) Impairment / write-backs on tangible and intangible assets: this item includes the component of value
adjustments related to restructuring and maintenance of leasehold.
g) Value adjustments to receivables and other assets: This aggregate includes gains (losses) on sale of
receivables (item 100 A), the net adjustments to loans (item 130) including those relating to other
financial operations (item 130 D).
OPERATING PERFORMANCE- Economic results 64
Operating expenses -62.450 -64.844 2.394 -3.7%
Operating profit 438 14.086 -13.648 -96.9%
Net adjustments to loans and other assets -6.825 -8.861 2.036 -23.0%
Net provisions for risks and expenses -924 -339 -585 172.6%
Net income (loss) on investments (other
components) -193 0 -193 ns
Net income (loss) on disposal of investments 0 -5 5 -100.0%
Income before taxes -7.504 4.881 -12.385 ns
Useful non-current assets held for sale -585 -3.847 3.262 -84.8%
Taxes on income from continuing operations 905 905 ns
Net income (loss) attributable to minority
interests 1.255 -6 1.261 ns
Net income (loss) -5.929 1.028 -6.957 ns
Net interest income
At the end of the first half year, the gross interest income, including income net of hedging,
totaled 46.3 million euro, marking a reduction of over 13 million euro in absolute terms,
equivalent a slowdown in the order of 22 percentage points compared with the end of June.
Please note that this reduction was partly influenced by the accounting reclassification,
already mentioned in the introduction, which has purged from the edge of the consolidated
financial results achieved by the companies being sold Apulia Apulia Retirement and
Insurance, amounting to € 4 million.
Total revenues
At the end of the first half of 2010, the Group's revenues amounted to € 62.9 million, a
reduction of 16 million euro on the data, comparing the end of June 2009 (-20.3% change in
the trend ).
As regards the main determinants of this result, it has already shown that the net interest income
amounted to € 46.3 million, has experienced an evolution influenced the start of the sale process for
two companies of the Group, the modification of the legislation relating to overdraft charges and,
finally, by reducing the intermediation spread resulting from the dynamics of the market rate. The
return of the money management is confirmed as the predominant component of operating income,
highlighting a funding level of 74%, a slight decrease compared with the end of June 2009.
After that, net commission income, with an amount of € 20.5 million, have revealed an
increase of about 3 million Euros over the end of June last year (17.1%).
The overall result of trading activity recorded at the end of half of a loss of 2.3 million euro,
mainly due to the negative performance of the fund obtained from Apulia prontoprestito.
It has also finally negative balance of the item other operating charges / income, amounting
to 1.8 million, compared with profit of 0.5 million the same period last year, due to its
inclusion in the budget contingent liabilities related to the closing of a transaction on policies
Index.
Management costs
At the end of the first half of the year, operating expenses - which include administrative
expenses, personnel expenses and write-downs on tangible and intangible assets - amounted
to € 62.5 million, a reduction of about 2.4 million versus the same period last year (-3.7%).
Within the sector, personnel costs amounted to € 31.3 million, a slight increase compared to June last year,
amounting to EUR 0.3 million (1.1%). Other administrative expenses, adjusted according to operational
criteria already mentioned in the introduction, showed a much better dynamics, standing at € 27.0 million
(-2.1 million, -7.3%).
Finally, the net write-downs on tangible and intangible assets totaled € 4.1 million, a decrease of
about 0.6 million since the end of June 2009.
OPERATING PERFORMANCE- Economic results 65
The operating margin
As a general summary of the dynamics recorded by the aggregates examined so far, at the
end of the first half of the operating margin stood at € 0.4 million, a figure which shows a
sharp decline over the same period of 2009, when this item amounted to € 14.1 million.
The result from ordinary activities before tax
Compared to the comparison of the first half of 2009, the aggregate appears to be positively
influenced by lower write-downs stopped at 6.8 million (-2.0 million euro; -23.0%), while
negative results to be the ' impact of provisions for risks and charges amounted to € 0.9
million (0.6 million).
Extraordinary operations contributed negatively to the outcome of the period, due to the loss
from investments of Apulia Insurance for about 0.2 million €.
From the foregoing, in late June 2010 before tax from continuing operations made a loss of 7.5
million euro, marking a significant turnaround compared to the corresponding period of 2009, the
predicted results have had a significant found the result of hedging derivatives prontoprestito of
Apulia, the burden of credit and the impact of exceptional costs relating to the migration of the
information system.
Net income for the period
Considering also the impact of taxes, amounting to € 0.6 million, net of discontinued
operations held for sale (Apulia Apulia Retirement and Insurance), approximately 0.9 million
euro, and the loss of relevance third, 1.2 million, bancApulia closed the first half of 2010 with
a loss of € 5.9 ml.
Tangible assets 66
TANGIBLE ASSETS – Item 120
TANGIBLE ASSETS: BREAKDOWN OF ASSETS CARRIED AT A COST
Assets / Values 30/6/2010 31/12/2009
A. Operating assets
1.1 Owned 45.075 31.444
a) land 2.359 2.359
b) buildings 26.564 21.302
c) Furniture 2.614 611
d) electronic equipment 2.124 2.310
e) other 11.414 4.862
1.2 Leased 177 223
a) land - -
b) buildings -
c) Furniture 14 17
d) electronic equipment - 1
e) other 163 205
Total A 45.252 31.667
B. Investment property
2.1 Property
a) land - -
b) buildings - -
2.2 Leased
a) land - -
b) buildings - -
Total B - -
Total (A+B) 45.252 31.667
This line item of tangible assets (property, plant, machinery and other tangible assets) used
in the business governed by IAS 16.
Tangible assets 67
Tangible assets for business use: Annual changes
Furnitur Electrical Total
Land Buildings e Other
Equipment 30/6/2010
A. Gross opening balance 2.359 26.413 2.819 13.424 24.980 69.995
A.1 Total net impairment - 5.111 2.191 11.113 19.913 38.328
A.2 Opening net balance 2.359 21.302 628 2.311 5.067 31.667
B. Increases 5.874 2.353 241 8.502 16.970
B.1 Purchases - 240 38 78 631 987
B.1.1 Business combinations 5.634 2.315 163 7.871 15.983
Capitalized expenditure on
B.2 improvements - - - - - -
B.3 Write-backs - - - - - -
B.4 Positive changes in fair value
- - - - -
recognized in:
a) equity - - - - - -
b) Income statement - - - - - -
B.5 Exchange gains - - - - - -
B.6 Transfers from assets held for
- - - - - -
investment purposes
B.7 Other changes - - - - - -
C. Decreases - 612 353 428 1.992 3.385
C.1 Sales - - - 5 35 40
C.2 Depreciation - 612 296 423 1.910 3.241
C.3 Adjustments for impairment
- - - - - -
recognized in:
a) equity - - - - - -
b) income statement - - - - - -
C.4 Negative changes in fair value
- - - - - -
recognized in:
a) equity - - - - - -
b) income - - - - - -
C.5 Negative exchange differences - - - - - -
C.6 Transfers to: - - - - - -
a) tangible assets held for
- - - - - -
investment
b) assets held for sale - - 57 - 47 104
C.7 Other changes - - - - - -
D. Net closing inventory 2.359 26.564 2.628 2.124 11.577 45.252
D.1 Total net impairment - 6.480 3.992 10.548 31.543 52.563
D.2 Gross closing inventory 2.359 33.044 6.620 12.672 43.120 97.815
E. Carried at cost 2.359 269.564 2.628 2.124 11.577 45.252
Tangible assets 68
TOTAL CONSOLIDATED COMPREHENSIVE INCOME
Table of consolidated comprehensive income
The prospectus shows as "other comprehensive income net of tax" changes in the value of assets
recorded in the period compensation valuation reserves (net of taxes).
Net
Items
Gross
Amount Income Tax amount
10. Net income (loss) X X (7.184)
Other comprehensive income
20. Financial assets available for sale (6.304) 2.111 (4.193)
a) Fair value variaizioni (6.095) 2.044 (4.051)
b) Transfer to income statement (209) 67 (142)
- Adjustments for impairment - - -
- Gains / losses on disposals (209) 67 (142)
c) other changes - - -
30. Tangible assets - - -
40. Intangible assets - - -
50. Hedges of foreign investments - - -
a) Fair value changes - - -
b) Transfer to income statement - - -
c) other changes - - -
60. Cash flow hedges - - -
a) Fair value changes - - -
b) Transfer to income statement - - -
c) other changes - - -
70. Exchange differences - - -
a) Fair value changes - - -
b) Transfer to income statement - - -
c) other changes - - -
80. Non-current assets held for sale - - -
a) Fair value changes - - -
b) Transfer to income statement - - -
c) other changes - - -
90. Gains (losses) on defined benefit plans 104 (67) 37
Share of revaluation reserves relating to equity investments
recognised
100. in shareholders’ equity - - -
a) Fair value changes - - -
b) Transfer to income statement - - -
- Adjustments for impairment - - -
- Gains / losses on disposals - - -
c) other changes - - -
110. Total other income components (6.200) 2.044 (4.156)
120. Comprehensive income (item 10110) X X (11.340)
Consolidated comprehensive income attributable to
130 minority interests X X (1.260)
Consolidated comprehensive income attributable to the
140 Parent Company X X (10.080)
INFORMATION ON 69
RISKS
THE WORK OF CONTROL AND RISK MANAGEMENT
INTRODUCTION
The condensed consolidated financial statements have been prepared in the going concern basis.
Uncertainties related to the current macroeconomic environment and issues relating to liquidity
risks, credit and profitability were in fact found to be significant and not such as to cast doubt on
the going concern, in consideration of the Bank's profitability in recent years and good quality of
lending.
With the entry into the group Veneto Banca Holding all control and risk management have
adapted to the rules defined by the parent Veneto Banca Holding.
It therefore reflects the information risk as defined by the Holding.
THE RISK PROFILE OF G ROUP V ENET B ANCA
Veneto Banca Group, which owns bancApulia, works exclusively as a commercial bank, the
present - through the activities of its subsidiaries - as well as on the national territory, even
abroad, in Eastern Europe - Romania, Moldova and Croatia - and Ireland.
Within the typical, oversees both the business areas directly related to traditional banking which
those related to financial services such as leasing, factoring and consumer credit, which adds the
operations carried out in order to treasury management and property portfolio and trading in the
securities markets and currency markets.
In carrying out these activities, the Group is to be routinely exposed, albeit with different degrees
of relevance, the types of the operational risk inherent characteristic.
In conjunction with the implementation of the new supervisory regulations, introduced in December 2006
with the Bank of Italy Circular No 263 and the subsequent implementation of the internal process of self
assessment sheet (cd ICAAP 13), has started a systematic process for analyzing, measuring, monitoring
and risk management identified as relevant for the Group.
Among these, the main categories are recognized as important due to the following types:
credit risk and counterparty, which represents the possibility that an unexpected change in
the creditworthiness of a counterparty against whom there is an exposure, in a corresponding
unexpected change the market value of the credit rating. The CCR is a case of credit risk: this
is the risk that the counterparty to a transaction concerning certain financial instruments
could default before the settlement of the transaction itself;
market risk, which refers to changes in the value of a financial instrument or a portfolio of financial
instruments caused by unexpected changes in market conditions. This risk typically occurs on positions in
the trading (Trading Book) 14;
operational risk, by which means the risk of incurring losses resulting from inadequate or failed
internal processes, people and systems or from external events;
interest rate risk, which refers to the potential impact of unexpected changes in interest rates may
have on current profits and the value of net assets of the Bank. This risk typically occurs on
positions in the banking book (Banking Book);
liquidity risk is the risk that the bank is unable to meet its obligations at maturity;
concentration risk, which is the risk arising from exposures to counterparties, groups of
related counterparties, counterparties in the same industry or engaged in the same activities
or belonging to the same geographical area;
strategic risk, which is related to the possible decrease in profits or capital arising from changes in
operating environment or bad business decisions, improper implementation of decisions, from lack
of responsiveness to changes in the competitive environment. Under this category fall also is the
fact the country risk, which derives from the Group abroad;
reputational risk, which is related to the possible decrease in profits or capital arising from negative
perception of the image of the bank by customers, counterparties, shareholders of the bank,
13 Internal Capital Adequacy Assessment Process
14 The general distinction between banking and trading book portfolio is determined by the following definitions:
the Banking Book includes all loans and deposits resulting mainly from traditional businesses to customers
Retail and Corporate (including Investment Banking);
Trading Book, however, includes all activities of the bank's proprietary trading in financial instruments traded on
market.
The main difference between these two segments lies in the different purpose that characterizes them: while the Banking
Book is geared towards maintaining, over time, the positions of the trading book is oriented to trading in the very short term
(day by day, intraday). The distinction between banking and trading book, moreover, is also reflected in the different
accounting rules applicable to the two segments (as the reference values for the banking book are those of accounting for
the trading book are those of the market). The practical approach adopted by Veneto Banca Holding for the separation
between banking and trading book has relied on the identification of the portfolio of trading book (the portfolio Held For
Trading Group), the Banking Book, by difference, is the total HFT net asset portfolio.
INFORMATION ON 70
RISKS
investors or supervisors;
residual risk, reported the possibility that the accepted techniques for mitigating credit risk, as collateral or
financial, used by the bank are less effective than expected.
For the Government of the risks described above were adopted appropriate Risk Policy, under which
laid down the procedures for monitoring and defense organization by defining the operational limits
and / or business process and control. It was also made when the nature and characteristics of the
individual risk permit, to define the methodologies used for calculation of the Group balance sheet
in terms of maximum unexpected loss.
Policies and objectives of management and risk control
Veneto Banca Group bases its operations - and extraordinary - prudently, limiting as much as
possible the associated risk exposure, according to both the need for stability in the banking
that the attitude to risk and the spirit of mutual members / co-operative Institute.
The main objectives that the Group intends to pursue through careful policy management and
overall business risks are, in short, bring him to the following points:
steady growth in corporate value;
value creation for shareholders to the extent appropriate with respect to financing
alternatives, but comparable in terms of risk and return;
fragmentation of high credit risk, also in line with the target sales representative, or
families and small and medium size enterprises;
assumption of market risk to a limited extent, consistent with the commercial
vocation of the Group;
exposure to interest rate structure to a low level;
exclusion of risk unrelated to core businesses and accurate evaluation of initiatives
involving new types of risk;
development of methodologies for risk monitoring complete and accurate in the sense
that they can go in the future to the recognition of internal risk models also for the
purpose of prudential supervision;
transparency towards the market risk exposure.
In order to protect the financial strength and reputation of the Group with respect to adverse
events, Veneto Banca Group has set up organizational structures, processes, resources -
human and technological - and expertise to ensure the identification, control and
management of all the risks associated with its operations typical.
In particular, it should be noted that the entire process to be chaired and coordinated by the Parent
Holding Banca Veneto, home to the people and the structures responsible for monitoring and managing the
various risks.
In this process, which winds through several levels of the organization, the key role is played,
however, by the Board of Directors of Parent, which is responsible for the establishment of
guidelines and strategic policies relating to risk and the ' approval of strategic and operational
limits and the relevant guidelines.
On these issues, in support of the Board of Directors and the CEO, with regard to the powers
conferred upon, by the Group Risk Committee, whose role and responsibilities are clarified and
formalized in special regulations. In particular, the Group Risk Committee assists the CEO and the
Board of Directors of the Parent in the formulation of strategies and policies of risk by providing the
tools and information needed for informed decision-making capacity. This Committee is assigned
the objective of proposing actions to maximize the use of the capital of the Group and individual
companies, while the risk appetite of the company within the limits established by the Board of
Directors and adopted by the Governing Bodies the individual companies.
The central role assigned by the Group to control risk is reflected in the management and
control model that is based on some basic principles, such as:
the clear identification of responsibilities in their recruitment;
the adoption of systems of measurement and control in line with international best practices;
the separation between the organizational units responsible for managing and functions involved in the
audit.
These principles are formalized and made explicit in the Policy Manual of the risks identified as relevant.
These guidance documents - proposed and validated by the Group Risk Committee, subject to the approval
of the Board of Directors of the Company and subsequently endorsed by the Boards of Directors of the
subsidiaries - are to govern the scope of the risks regulated, meaningful indicators and monitored periodic
monitoring and thresholds
INFORMATION ON 71
RISKS
operating limits, how to manage the spill, the stress tests applied and the organizational structure
- Organs and corporate functions - Member of the conduct of activities regulated by the
relative allocation of roles and responsibilities.
The Basel 2: the regulatory requirements and activity planning
In compliance with the Circular 263 of the Bank of Italy, Veneto, the Parent Bank has prepared and
sent in the month of April 2010 the Monitoring Body Report usual ICAAP. Meanwhile, second-
locating the existing prudential regulations, continued improvement of the program plan to
strengthen and consolidate the tools and solutions for self-assessment process overall capital
adequacy of banks.
At present, for the determination of regulatory capital requirements, the Group uses standard
methodologies provided by the Bank of Italy for credit and market risks and the approach for
measuring operational risk.
As regards the second pillar, have been used, in combination, standard methodologies and
models, limiting them to the measurement of market risks, interest rate and policy.
In parallel, however, continued activity on the multidisciplinary project with the SEC and primary
services consulting firm for the development and implementation of rating models tailored on
customers and businesses following an approach Internal Rating Based (IRB), the natural evolution
of the model standardized. Given the particular complexity of the Group's portfolio size and
structure of society has been conducted yet in the past year, a detailed analysis to develop the path
of adoption of the rating.
E 'was eventually set up a three-year program which provides, in accordance with the provisions of
legislation on Basel 2 - Pillar, to respect the constraint of the requirement of use in the period 2011-
2013 with the hypothesis validated by Bodies Supervision of 1 January 2014. This program, which
began last quarter of the previous year, forecasts for the current year an intensive multidisciplinary
intervention plan with the objective to review and integrate:
segmentations and associated risk rating models;
operational processes of credit and supply chain
organizational structures and the instruments to support.
As part of prudential regulation, which addresses the need to give proper and full communication
about the risk governance (the "third pillar") in order to facilitate a more accurate assessment of
the soundness and risk exposure of banks by market participants, has been published on the
website of the parent institution of the document "Information to the public under the provisions of
surveillance of banks (Circular No 263, December 27, 2006), "articulated in specific synoptic tables
that refer to the quantitative and qualitative information that has been made known.
THE SYSTEM OF INTERNAL CONTROLS
The system of internal controls, consisting of the set of rules, procedures and organizational structures
that - in violation of the provisions of the Supervisory and strategies - provides the proper management of
all activities of the Bank, involving with different roles, the Board of Directors, the Board, senior
management and all staff.
Veneto Banca Holding as part of planning, coordination and control of the Group, set up the
system of internal controls of the parent company of the network banks and product
companies to allow control of both the strategic choices of the Group as a whole , and balance
management of the individual components.
For this purpose it is continually updated and adjusted for the different activities of the Holding and
its subsidiaries from the same. The system of internal controls established by the parent company is
fully operational network banks Italian Veneto Banca, Banca Popolare di Intra and BancApulia and
is being further rationalization setting Gruppo Veneto Banca in for foreign holdings, from which
Central Directorate of Internal Audit Parent performs spot checks, in addition to those performed by
the local audit function.
Inspection of branches and the central structures of the parent company and the retail banks, and
other subsidiaries, are carried out and the evaluation of the results of checks with the audited units
according to the priorities established on the basis of the concept of "residual risk ".
INFORMATION ON 72
RISKS
In 2009, the Central Internal Audit Department has initiated a review process methodology
and tools of control, the deployments are affecting the Central Internal Audit until 2011.
With regard to auditing and control, the Central Internal Audit has carried out verification
activities on site and remotely, by the drawing by the system, revisions to processes and
extraordinary investigations, defense issues, money laundering and advice and support to
other business functions.
INFORMATION ON CREDIT RISK 73
INFORMATION ON CREDIT RISK
QUANTITATIVE INFORMATION
A. QUALITY OF CREDIT
A.1 INSTALLATION CREDIT AND IMPAIRED AND PERFORMING: AMOUNTS,
ADJUSTMENTS, DYNAMICS, ECONOMIC AND REGIONAL DISTRIBUTION
A.1.1 Distribution of financial assets by portfolio and credit quality (value)
Banking group Other companies
Past due
restructured
Doubtful
Substa
Total
Other
Impaired
her
ass
ndard
Portfolio / Quality
ets
Ot
loans
loans 30/06/201
h
n
b
E
o
x
s
0
t
i
i
i
loans
D
u
u
b
o
t
f
l
h
n
b
E
o
x
s
t
i
i
i
1. Financial assets held for
- 889 - 1.050 12.738 - -
trading
14.677
2. Financial assets available
- - - - 176.336 - -
for sale 176.336
3. Financial assets held to
- - - - - - -
maturity -
4. Loans to banks - - - - 533.413 - 112 533.525
5. Loans to customers 116.373 63.763 975 99.396 4.247.325 - - 4.527.832
6. Financial assets at fair
- - - - - - - -
value
7. Financial assets held for 246.354
- - - - - - 246.354
sale
8. Hedging derivatives - - - - 18.338 - - 18.338
Total 30/06/2010 116.373 64.652 975 100.446 4.988.150 - 246.466 5.517.062
Total 31/12/2009 97.468 33.674 - 48.080 3.638.741 - 236.284 4.054.247
INFORMATION ON CREDIT RISK 74
A.1.2 Distribution of credit exposures by portfolio and credit quality (gross and net)
Performin
Impaired assets g Total
30/6/2010
Portfolio / Quality Gross loans Specific Gross Portfolio Net
(net loans)
adjustmen Net adjustment
ts loans loans s loans
A. Banking group
Financial assets
1. held for 1.949 (10) 1.939 X X 12.738 14.677
trading
Financial assets
2. available for - - - 176.336 - 176.336 176.336
sale
Financial assets
3. held to - - - - - -
maturity
4. Loans to banks - - - 533.413 - 533.413 533.413
5. Loans to customers 357.090 (76.583) 280.507 4.253.546 (6.221) 4.247.325 4.527.832
Financial assets
6. - - - X X - -
measured at fair
value
Financial assets
7. - - - - - - -
held for sale
8. Hedging derivatives - - - X X 18.338 18.338
Total A 359.039 (76.593) 282.446 4.963.295 (6.221) 4.988.150 5.270.596
Other companies
B. included in the
consolidation
Financial assets
1. held for - - - - X - -
trading
Financial assets
2. available for - - - X - - -
sale
Financial assets
3. held to - - - - - - -
maturity
4. Loans to banks - - - 112 - 112 112
5. Loans to customers - - - - - - -
Financial assets
6. - - - X X - -
measured at fair
value
Financial assets
7. - - - 246.354 - 246.354 246.354
held for sale
8. Hedging derivatives - - - X X - -
Total B - - - 246.466 - 246.466 246.466
Total 30/06/2010 359.039 (76.593) 282.446 5.209.761 (6.221) 5.234.616 5.517.062
Total 31/12/2009 237.346 (58.124) 179.222 3.810.745 (1.990) 3.875.025 4.054.247
INFORMATION ON CREDIT RISK 75
A.1.3 Banking Group - Credit exposures and off-balance-sheet banks: gross and net
Specific value
adjustments Portfolio
Gross Net
Type of loan / Values value
loans loans
adjustments
A. Cash loans
a. Doubtful - - X -
b. Substandard - - X -
c. Restructured - - X -
d. Past due - - X -
e. Other assets 606.089 X - 606.089
Total A 606.089 - - 606.089
B. Off balance sheet loans
a. Impaired - - X -
b. Other 20.697 X - 20.697
Total B 20.697 - - 20.697
Total (A+B) 626.786 - - 626.786
A.1.6 Banking Group - Credit exposures to off-balance sheet and cash to customers: gross and
net
Specific Portfolio
Gross Net
Type of loan / Values value value
loans loans
adjustments adjustments
A. Cash loans
a. Doubtful 190.228 (73.855) X 116.373
b. Substandard 66.454 (2.691) X 63.763
c. Restructured 975 - X 975
d. Past due 99.433 (37) X 99.396
e. Other assets 4.365.097 X (6.221) 4.358.876
Total A 4.722.187 (76.583) (6.221) 4.639.383
B. Off balance sheet loans
a. Impaired 7.826 (10) X 7.816
b. Other 439.927 X 439.927
Total B 447.753 (10) 447.743
Total (A+B) 5.169.940 (76.593) (6.221) 5.087.126
INFORMATION ON CONSOLIDATED 76
EQUITY
Consolidated shareholders' equity
SECTION 1 - CONSOLIDATED EQUITY
A. QUALITATIVE INFORMATION
Consolidated shareholders' equity represents the size of the assets owned by the Group and
consists of all those elements that do not fall within the definition of assets or liabilities in
accordance with the methods of measurement and quantification established by international
accounting standards.
Great attention is paid to the adequacy of the Group's shareholders' equity in relation to the
prospects for development and evolution of risk.
B. QUANTITATIVE INFORMATION
The increase of 134 million during the period is attributable to the assets contributed by
Meridian Bank, following its incorporation into Banca Apulia.
The above figure also takes account of the capital increase made by the bank in Meridian last
January amounted to € 93 million.
SHAREHOLDERS’ EQUITY, GROUP: COMPOSITION
30/6/2010 31/12/2009
1. Capital 39.944 19.700
2. Share premium 18.779 19.199
3. Reserves 210.313 86.873
4. (Treasury Shares) - -
a) Parent company - -
b) controlled - -
5. Revaluation reserves (3.706) 499
6. Equity instruments - -
7. Net income (loss) attributable to the
(5.929) (905)
group
Total 259.401 125.366
.
'SHARECAPITAL "AND" TREASURY SHARES: COMPOSITION
The capital was fully subscribed and paid up and was made up of 37,243,987 ordinary shares
of par value Euro 1.00 each and no 2,700,000 preference shares of Euro 1.00 to Euro
39,943,987.00 exact total.
For the cancellation of the assets of Meridian Bank, the Bank took steps to issue number
Apulia 20,243,987 compared to the exchange established in Apulia against 4 5 actions Bank
shares in Banca Meridiana.
By the closing date of the period are not included in the portfolio shares in issue.
INFORMATION ON CONSOLIDATED 77
EQUITY
SHARE CAPITAL - NUMBER OF SHARES OF PARENT COMPANY: ANNUAL CHANGES
Items / Types Ordinary Other
A. Initial number of shares 17.000.000 2.700.000
- Fully paid 17.000.000 2.700.000
- Not fully paid - -
A.1 Treasury shares (-) - -
A.2 Outstanding shares: opening balance 17.000.000 2.700.000
B. Increases 20.243.987 -
B.1 New Issues 20.243.987 -
- With payment 20.243.987 -
- Operations of business combinations 20.243.987 -
- Conversion of bonds - -
- Exercise of warrants - -
- Other - -
- Without payment - -
- To employees - -
- To directors - -
- Other - -
B.2 Sale of treasury shares - -
B.3 Other changes - -
C. Decreases -
C.1 Cancellation - -
C.2 Purchase of treasury shares - -
C.3 Disposal of businesses - -
C.4 Other changes - -
D. Shares outstanding: closing balance 37.243.987 2.700.000
D.1 Treasury shares (+)
D.2 Shares at year end 37.243.987 2.700.000
- Fully paid 37.243.987 2.700.000
- Not fully paid - -
REVALUATION RESERVES OF AVAILABLE-FOR-SALE FINANCIAL ASSETS:
COMPOSITION
Eliminations on
Banking group Other companies 30/6/2010
Insurance
Consolidation
Companies
Assets / Values adjustments
Reserve Reserve Reserve Reserve Reserve Reserve Reserve Reserve Reserve Reserve
positive negative positive negative positive negative positive negative positive negative
1. Debt securities - (4.374) 3.731 (2.719) - - - (690) 3.731 (7.783)
2. Equity securities 440 (13) - - - - - - 440 (13)
3. UCITS Units - (119) 1 - - - - - 1 (119)
4. Loans - - - - - - - - - -
Total 30/06/2010 440 (4.493) 3.732 (2.719) - - - (690) 4.172 (7.915)
Total 31/12/2009 925 (6.478) 797 (1.031) - - - - 1.722 (7.509)
SHAREHOLDERS' EQUITY PERTAINING TO MINORITY INTERESTS: COMPOSITION
30/6/2010 31/12/2009
1. Capital 69.755 69.755
2. Share premium 1.464 1.464
3. Reserves 749 734
4. (Treasury Shares) - -
5. Revaluation reserves (5) 5
6. Equity instruments - -
7. Net income (loss) attributable to
(1.255) 10
Minority interests
Total 70.708 71.968
The "Minority interests" fell by 1.3 million over the previous year-end last year, reaching 70.7
million Euro.
INFORMATION ON CONSOLIDATED 78
SHAREHOLDERS’ EQUITY
SECTION 2 - CAPITAL AND CAPITAL RATIOS BANK
2.1 A COPE ENFORCEMENT
For the purposes of the rules of supervision, the Bank Apulia spa, while ensuring at least one
financial company, can not be considered the parent of a banking group in what already is in
turn controlled by another bank (Veneto Banca Holding), which is the parent company.
So they are not the provisions relating to:
Discipline of regulatory capital on a consolidated basis;
Discipline of the consolidated solvency ratio;
Discipline of the consolidated requirements for market risks;
Rules regarding minimum consolidated total capital requirement
Recommendations regarding the "large risks" on a consolidated basis.
It is therefore not possible to provide information on the species.
INFORMATION ON CONSOLIDATED 79
SHAREHOLDERS’ EQUITY
P ONSOLIDATED RECONCILIATION OF EQUITY AND 'PROFIT / LOSS FOR
THE YEAR HIGHLIGHTED IN THE INTERIM FINANCIAL STATEMENTS OF THE
BANK AND THOSE INDICATED IN THE INTERIM CONSOLIDATED
FINANCIAL STATEMENTS June 30, 2010
Consistent with the instructions Consob, the following is the reconciliation of shareholders' equity
at June 30, 2010 and the profit / loss for the period to that date, reflected in the consolidated
financial statements, and the bank's parent company resulting from the budget of the same the
same day:
Capital and Net income Shareholders’
reserves (loss) equity
Balances of the financial statements of the parent 267.546 (798) 266.748
Elimination of the carrying amount of consolidated
investments
- Eliminations on consolidation (8.941) - (8.941)
- Pro quota results achieved from investments - (1.781) (1.781)
- Consolidation differences 3.563 - 3.563
- Loss from closing of investments in consolidated
companies - (193) (193)
Elimination of transactions between
consolidated subsidiaries and other adjustments
- Dividends from consolidated companies 3.161 (3.161) -
- Standardization of measurement criteria between
consolidated companies
- 5 (5)
Shareholders' equity and net income (loss) attributable
to
group 265.329 (5.928) 259.401
Shareholders' equity and net income (loss) attributable
to minority interest 71.964 (1.256) 70.708
Shareholders' equity and consolidated net income
(loss) 337.293 (7.184) 330.109
The consolidated net assets attributable to the parent company of Euro 267 million, is more than 8
million euros compared to that resulting from the interim financial statements of the Parent. The
changes in consolidated shareholders' equity are shown in specific detail in the prospectus.
O PERATIONS Combinations companies or lines D 'COMPANY 80
Combination transactions concerning companies or lines of
azienza
During the first half of 2010 was made the merger by incorporation of Banca Meridiana. This
operation is excluded from the scope of IFRS 3 as carried out under the "Under Common Control",
as that is Apulia Bank Banca Meridiana are companies within the perimeter of the Gruppo Veneto
Banca Holding.
OPERATIONS WITH RELATED 81
PARTIES
TRANSACTIONS WITH RELATED PARTIES
The types of related parties as defined by IAS 24, Apulia significant for the group include:
the parent company;
subsidiaries;
associated companies;
managers with strategic responsibilities, meaning they directors, auditors and the
Director-General;
close relatives of key management personnel, meaning they (i) the partner and the
children of the subject, (ii) the children of the partner and (iii) the dependents of the
person or partner;
subsidiaries, jointly controlled and associated companies of key management personnel or
their close relatives.
All transactions with related parties were carried out according to criteria of substantial and
procedural fairness, under conditions similar to those applied in transactions with unrelated
third parties.
With respect to operations conducted with other related parties, states that are not found
atypical and / or unusual transactions of this nature, however, are not even done with
entities other than the related party transactions.
All operations related to the "obligations of corporate banking, art. 136 of Legislative Decree
no. 385/93, have been the subject of special board resolutions and in accordance with the
procedure set out in this regard by the Bank of Italy.
1. INFORMATION ON COMPENSATION OF KEY MANAGEMENT PERSONNEL
The amount of compensation paid to the exercise of management personnel, including their
convention in the Directors and the Auditors, is as follows:
Compensation to key management personnel
30/6/2010
strategic
Directors 195
Statutory auditors 70
Executives 927
Of which:
- Short-term benefits 893
- Benefit of the end of the employment
relationship 34
- Other long-term benefits -
- Benefits payable to employees upon termination
of
employment -
- Share-based payments -
Total 1.192
The emoluments of directors includes fees and allowances of office to them. Mayors for the amount
includes allowances and reimbursement of expenses.
The salaries of executives include the total amount of wages paid, both fixed and variable,
and the proportion of the indemnities matured during the year and the fees paid by the Bank
Insurance Fund.
OPERATIONS WITH RELATED 82
PARTIES
The credits, guarantees and collection related to directors and statutory auditors and
management personnel, including amounts relating to transactions entered into in
accordance with Article. 136 of Legislative Decree no. 385/93 with companies where these
subjects are concerned, are as follows:
Key
Statutory
(Amounts in thousands of
Directors auditors Management
Euro) Personnel
Direct Indirect Direct Indirect Direct Indirect
Total agreement 54 2.272 - - 344 178
Jobs (used) (*) - - - - 294 173
Credit commitments (Used)
(*) - 825 - - - -
Direct deposits (*) 564 3.682 - - 275 8
Indirect deposits (*) 369 1.140 - - 407 19
Interest income (**) - - - - 2 1
Interest expenses (**) 15 1 - - - -
Fee and commission income
and other
income (**) - 8 - - 1 -
Fee and commission expenses
(**) - - - - - -
(*) Balance at June 30, 2010
(**) Received / paid until June 30, 2010
2. INFORMATION ON TRANSACTIONS WITH RELATED PARTIES
During the 1st half of 2010, there were no reports of financial and economic nature into with
related parties, other than directors, auditors and management personnel, as already
highlighted in the preceding paragraph and other than subsidiaries, as included in the
consolidation.
SECTOR 83
INFORMATION
SEGMENT INFORMATION
With regard to segment reporting provided by the new rules IFRS 8, and in a manner
consistent with the approach of management (management approach), we expose the data of
income / assets divided in the following areas:
1. Banking Segment
2. Financial Segment
3. Insurance Segment
The data by sector are shown before intercompany balances, except in cases where intra-
group sales between businesses are operating within the same sector.
Adjustments
BANK FINANCIAL INSURANCE / Consolidated
Assets
Elimination
Segment Segment Segment s group
10. Cash and cash equivalents 38.075 - - - 38.075
20. Financial assets held for
15.064 - - - 15.064
trading
30. Financial assets at
- - - - -
fair value
40. Financial assets available for
221.471 27.959 - (4) 249.426
sale
60. Loans to banks 501.353 33.437 - (1.265) 533.525
70. Loans to customers 4.139.979 811.289 - (423.436) 4.527.832
80. Hedging derivatives 18.338 - - - 18.338
90. Fair value of
financial assets - 31.822 - - 31.822
hedging
100. Equity Investments 214.159 - - (214.138) 21
120. Tangible assets 44.901 81 - 270 45.252
130. Intangible assets 6.829 198 - - 7.027
Of which:
- Goodwill 5.844 - - - 5.844
140. Tax assets 11.457 4.367 - 1.524 17.348
a) current 2.681 352 - - 3.033
b) deferred 8.776 4.015 - 1.524 14.315
150. Non-current
3.469 - 264.570 (21.685) 246.354
assets held for sale
160. Other activities 179.615 28.616 - (3.148) 205.083
Total assets 5.394.709 937.769 264.570 (661.882) 5.935.167
SECTOR 84
INFORMATION
Adjustments
Liabilities and shareholders' BANKING FINANCIAL INSURANCE / Consolidated
Elimination
equity Segment Segment Segment s group
10. Due to banks 311.108 472.519 - (412.294) 371.333
20. Due to customers 2.191.307 2.452 - (18.641) 2.175.118
30. Securities issued 2.441.137 192.162 - - 2.633.299
40. Financial liabilities
6.717 5.487 - - 12.204
trading
50. Financial liabilities at
1.032 - - - 1.032
fair value
60. Hedging derivatives 16.318 31.726 - - 48.044
80. Tax liabilities 3.746 - - - 3.746
a) current 841 - - - 841
b) Deferred 2.905 - - - 2.905
Liabilities associated with
90. assets
- - 248.278 (11.342) 236.936
discontinued operations
100. Other liabilities 101.008 875 - (3.543) 98.340
Employee termination
110. indemnities
12.696 7 - - 12.703
Provisions for risks and
120. charges: 12.299 4 - - 12.303
b) other funds 12.299 4 - - 12.303
140. Revaluation reserves (4.028) - 1.013 (691) (3.706)
170. Reserves 211.708 (4.177) 6.684 (3.902) 210.313
180. Share premium 18.779 4.956 - (4.956) 18.779
190. Capital 70.358 236.000 8.704 (275.118) 39.944
210. Minority Shareholders - 9 - 70.699 70.708
220. Net income (loss) 524 (4.250) (109) (2.094) (5.929)
Total liabilities 5.394.709 937.769 264.570 (661.882) 5.935.167
INDUSTRY 85
Information
Adjustments
Banking Financial Insurance / Consolidated
INCOME
Elimination
Segment Segment Segment s group
10. Interest and
80.618 19.557 - (3.937) 96.238
Similar income
20. Interest and similar expense
(39.283) (14.329) - 4.236 (49.376)
30. Net interest income 41.335 5.228 - 299 46.862
40. Commission income 25.113 34 - (1.533) 23.614)
50. Fee and commission expense (3.734) (291) - 246 (3.3779)
60. Net commission income 21.379 (257) - (1.287) 19.835
70. Dividends and similar income 3.375 - (3.161) 214
80. Net income from
184 (2.669) - - (2.485)
Trading activities
90 Net income from hedging
731 (1.246) - - (515)
activities
100. Gains (losses) on disposal of: 1.202 2 - - 1.204
a) loans 87 - - 87
b) financial assets available
386 2 - - 388
for sale
d) financial liabilities 729 - - 729
Net income from financial
110. assets and
liabilities at fair value (6) - - - (6)
120. Operating income 68.200 1.058 - (4.149) 65.109
130. Impairment / write-backs
(4.376) (3.454) - - (7.830)
for impairment of:
a) loans (3.434) (3.454) - - (6.888)
b) financial assets available
(918) - - - (918)
for sale
d) other financial transactions (24) - - - (24)
140. Net income
63.824 (2.396) - (4.149) 57.279
Financial transactions
180. Administrative costs: (60.375) (2.087) - 714 (61.748)
a) staff costs (30.168) (1.052) - (84) (31.304)
b) Other administrative
expenses (30.207) (1.035) - 798 (30.444)
190. Net provisions
(920) (4) - - (924)
for contingencies
200. Impairment / write-backs
(3.215) (12) - - (3.227)
tangible assets
210. Impairment / write-backs
(251) (31) - - (282)
intangible assets
220. Other net operating income 3.532 (1.206) - (735) 1.591
230. Operating expenses (61.229) (3.340) - (21) (64.590)
240. Net income (loss)
- - - (193) (193)
investments
Net income (loss) on disposal
270. of
- - - - -
investments
280. Net income (loss)
continuing operations 2.595 (5.736) - (4.363) (7.504)
before taxes
290. Taxes on income from
(2.071) 1.486 - - (585)
continuing operations
300. Net income (loss) from
continuing operations after 524 (4.250) - (4.363) (8.089)
taxes
310. Net income (loss) of
assets held for sale, - - (109) 1.014 905
net of taxes
Net income (loss) for the
320. period 524 (4.250) (109) (3.349) (7.184)
Net income (loss) pertaining
330. to Minority interests
- - - - (1.255)
Net income (loss) pertaining
340. to the
- - - - (5.929)
Parent Company
INFORMATION REGARDING
MANAGEMENT AND
COORDINATION
I nformation ON 'MANAGEMENT AND COORDINATION 87
Information on the direction and coordination
Starting from the ongoing Bank Apulia SpA and its subsidiaries have joined the banking
group's Veneto Banca Holding.
On 30 June 2010, the Veneto Banca SCPA Holding owns 50.673% of Banca Apulia Spa. The group
Apulia is therefore subject to the oversight and coordination exercised by Veneto Banca Holding
scpa preparing the consolidated financial statements because the parent company.
Under Article 2497 of Civil Code following table shows the balance sheet and income
statement of the last financial statements approved by the parent Veneto Banca SCPA Holding
for the financial year ended 31.12.2009.
FINANCIAL STATEMENTS OF VENETO BANCA HOLDING 88
VENETO BANCA HOLDING S.C.P.A
BALANCE SHEET
(In Euros)
Assets 31/12/2009 31/12/2008
20. Financial assets held for
trading 278.751.387 354.238.453
30. Financial assets at fair value 2.513.837 -
40. Financial assets available for
sale 493.689.221 450.838.801
60. Loans to banks 2.681.822.551 3.801.023.887
70. Loans to customers 3.760.274.493 2.019.849.093
80. Hedging derivatives 99.880.559 70.245.273
100. Investments 2.854.845.444 2.759.306.091
110. Tangible assets 33.914.493 35.744.329
120. Intangible assets 657.718 952.111
Of which:
- Goodwill
130. Tax assets 37.246.007 36.479.183
a) current 20.742.587 9.901.938
b) deferred 16.503.420 26.577.245
150. Other activities 151.719.560 130.802.743
Total assets 10.395.315.270 9.659.479.964
Liabilities and shareholders’ equity 31/12/2009 31/12/2008
10. Due to banks 3.906.941.226 2.472.441.171
20. Due to customers 21.000.399 70.242.190
30. Securities issued 3.508.696.482 4.264.622.234
40. Financial liabilities held for trading 231.025.669 316.542.139
50. Financial liabilities at fair
value 20.235.465 100.141.043
60. Hedging derivatives 2.198.813 298.030
80. Tax liabilities 7.608.728 2.780.328
a) current 6.472.743 -
b) Deferred 1.135.985 2.780.328
100. Other liabilities 165.821.741 188.266.741
Provisions for employee termination
110. indemnities
5.788.888 5.925.772
120. Provisions for risks and expenses: 5.684.362 4.976.616
b) other funds 5.684.362 4.976.616
130. Revaluation reserves 11.052.117 4.241.006
150. Equity instruments 40.571 40.570
160. Reserves 289.663.463 313.835.882
170. Share premium 1.857.970.651 1.656.685.619
180. Capital 254.371.317 236.610.873
200. Net income (loss) for the year 107.215.378 21.829.750
Total liabilities and shareholders’ equity 10.395.315.270 9.659.479.964
FINANCIAL STATEMENTS OF VENETO BANCA HOLDING 89
VENETO BANCA HOLDING S.C.P.A
INCOME STATEMENT
(In Euros)
Items 31/12/2009 31/12/2008
10. Interest and similar income 176.602.059 190.280.315
20. Interest and similar expenses (198.453.486) (245.479.450)
30. Net interest income (21.851.427) (55.199.135)
40. Commission income 10.951.803 6.858.221
50. Fee and commission expenses (7.842.477) (5.845.848)
60. Net commission income 3.109.326 1.012.373
70. Dividends and similar income 80.491.767 67.099.953
80. Net income(losses) from
trading activities (12.192.464) (18.639.823)
90 Net income from hedging activities 1.032.085 (3.526)
Gains (losses) on disposals or
100. repurchase of :
25.972.195 2.676.143
a) loans (60.975) 15
b) financial assets available for sale 8.423.399 1.545.838
d) financial liabilities 17.609.771 1.130.290
Net income on financial assets and
110. liabilities designated at
fair value (5.040.014) (129.182)
120. Operating income 71.521.468 (3.183.197)
130. Impairment / write-backs for
impairment of: (646.627) (7.576.559)
b) financial assets available for sale (646.627) (7.576.559)
140. Net income from
financial transactions 70.874.841 (10.759.756)
150. Administrative costs: (77.130.817) (65.367.420)
a) staff costs (53.181.467) (44.499.309)
b) Other administrative costs (23.949.350) (20.868.111)
160. Net provisions for risks
and expenses (2.000.000) (87.288)
Value adjustments /write-backs of
tangible assets
170.
(3.410.861) (3.468.748)
180. Value adjustments / write-backs on
Intangible assets (421.016) (891.549)
190. Other operating income 37.794.365 40.079.861
200. Operating expenses (45.168.329) (29.735.144)
Net income (loss) on equity
210. investments 76.112.011 52.584.360
240. Net income (loss) on disposal of
investments - 17.067
250. Net income (loss) from continuing
Operations before taxes 101.818.523 12.106.527
260. Income taxes on
5.396.855 9.723.223
continuing operations
270. Net income (loss) from continuing
107.215.378 21.829.750
operations after-tax
290. Net income (loss) for the period 107.215.378 21.829.750
AGGREGATE DATA AND
PROFORMA
AGGREGATE DATA AND 91
PROFORMA
Aggregated data and proforma
Following the merger by incorporation of Banca Meridiana which was achieved on January 25, 2010
and legally effective May 10, 2010, in order to facilitate the understanding of the data from the two
pre-existing realities, the following is a scheme where the data are aggregated and pro-forma
consolidated balance sheet of Banca Apulia and Meridian Bank for the balance sheet at 31.12.2009
to 30.06.2009 and for the Income Statement.
For the preparation of schedules have been used in the following documents:
Banca Apulia budget to 31.12.2009 and 30.06.2009
meridian bank balance at 31.12.2009 and 30.06.2009
A those statements were made appropriate adjustments to reflect the retroactive effects of the
merger as if it had occurred already in the previous year.
Particularly in view of the different objectives of the pro-forma than a normal budget, since
the effects are calculated differently, the balance sheet and income statement should be read
and interpreted separately and without searching for links between the two accounting
documents .
The assumptions taken as a basis for the preparation of pro forma data are as follows:
it was considered that the increase in the share capital of Banca Meridiana Euro 93
million had already occurred in 2009;
the sums resulting from this increase were considered "financial resources", as it is
assumed that they represent cash available to the company;
these resources were considered to be fruitful and has been calculated on the interest
rate to a 3-month Euribor monthly average;
have also been reported in the previous year and any costs arising directly attributable to
the merger (migration costs, penalties, exodus of employees);
Finally, the eliminations were made of lots existing in 2009 between the Bank and
Banca Apulia Meridiana.
AGGREGATE DATA AND 92
PROFORMA
PROFORMA BALANCE SHEET AS ON 31.12.2009
(In thousands of Euro)
Adjustments Data
Assets APULIA MERIDIAN Aggregation Pro-forma Pro-forma
10. Cash and cash equivalents 14.190 18.294 32.484 32.484
20. Financial assets held for
61.263 7.023 68.286 68.286
trading
30. Financial assets at fair value 461 0 461 461
40. Financial assets available for sale 621.694 1.009 622.703 (40.000) 582.703
60.
Loans to banks 179.973 438.530 618.503 94.146 712.649
70. Loans to customers 3.372.931 1.373.125 4.746.056 (54.878) 4.691.178
80. Hedging derivatives 5.286 4.220 9.506 9.506
90. Remeasurement adjustment on hedging
23.481 0 23.481 23.481
financial assets
100. Investments 21 0 21 21
110 Technical reserves of reinsurers 14.001 0 14.001 14.001
120. Tangible assets 31.667 15.983 47.650 47.650
130. Intangible assets 7.752 266 8.018 8.018
Of which:
- Goodwill 5.591 253 5.844 5.844
140. Tax assets 9.275 6.059 15.334 15.334
a) current 2.936 2.231 5.167 5.167
b) deferred 6.339 3.828 10.167 10.167
150. Non-current assets and
1.361 1.361 1.361
discontinued operations
160. Other assets 84.057 67.724 151.781 (420) 151.361
Total assets 4.427.413 1.932.233 6.359.646 (1.152) 6.358.494
Corrections Data
Liabilities and shareholders’ equity APULIA MERIDIAN Aggregation Pro-forma Pro-forma
10. Due to banks 865.236 12.650 877.886 (54.878) 823.008
20. Due to customers 1.116.019 1.046.769 2.162.788 2.162.788
30. Securities issued 1.938.860 762.643 2.701.503 (40.000) 2.661.503
40. Financial liabilities held for trading 2.492 4.918 7.410 7.410
50. Financial liabilities at fair value 473 2.044 2.517 2.517
60. Hedging derivatives 30.274 919 31.193 31.193
80. Tax liabilities 2.096 828 2.924 (525) 2.399
a) current 1.350 470 1.820 (525) 1.295
b) Deferred 746 358 1.104 1.104
Liabilities associated with assets held
90. for
disposal 271 0 271 271
100. Other liabilities 57.611 34.261 91.872 4.357 96.229
110. Provision for employee termination
indemnities 5.591 7.505 13.096 13.096
120. Provisions for risks and charges: 5.067 6.847 11.914 11.914
a) pensions and similar obligations 3 0 3 3
b) other funds 5.064 6.847 11.911 11.911
130. Technical reserves 206.089 0 206.089 206.089
140. Revaluation reserves 499 (187) 312 312
170. Reserves 86.873 3.581 90.454 121.950 212.404
180. Share premium 19.199 0 19.199 (420) 18.779
190. Capital 19.700 49.194 68.894 (28.950) 39.944
210. Minority interests (+/ -) 71.968 0 71.968 71.968
220. Net income (loss) (905) 261 (644) (2.686) (3.330)
Total liabilities and shareholders’ 4.427.413 1.932.233 6.359.646 (1.152) 6.358.494
AGGREGATE DATA AND 93
PROFORMA
PRO FORMA INCOME STATEMENT AT 06/30/2009
(In thousands of Euro)
Voice Adjustment
s APULIA MERIDIAN Aggregation s Data
Pro-forma Pro-forma
10. Interest and similar income 99.389 37.421 136.810 (2.457) 134.353
20. Interest and similar expenses (61.016) (15.586) (76.602) 1.250 (75.352)
30. Net interest income 38.373 21.835 60.208 (1.207) 59.001
40. Commission income 5.816 11.472 17.288 2.804 20.092
50. Fee and commission expenses (1.488) (2.398) (3.886) 1 (3.885)
60. Net commission income 4.328 9.074 13.402 2.805 16.207
70. Dividends and similar income 93 93 93
80. Net income from trading activities 212 936 1.148 1.148
90 Net income from hedging activities (442) 105 (337) (337)
100. Gains (losses) on disposals of: 403 (17) 386 386
a) loans (32) (32) (32)
b) financial assets available for sale 340 340 340
d) financial liabilities 63 15 78 78
110. Net income on financial assets and liabilities
measured at fair value (554) (554) (554)
120. Operating income 42.967 31.379 74.346 1.598 75.944
130. Losses / recoveries on impairment of: (7.124) (1.835) (8.959) (8.959)
a) loans (6.993) (1.814) (8.807) (8.807)
b) financial assets available for sale (131) 1 (130) (130)
d) other financial transactions (22) (22) (22)
140. Net income from financial transactions 35.843 29.544 65.387 1.598 66.985
150. Net premiums 13.402 13.402 13.402
160. Other income / expenses from insurance (12.153) (12.153) (12.153)
170. Net income from banking and
37.092 29.544 66.636 1.598 68.234
Insurance activities
180. Administrative costs: (34.952) (23.935) (58.887) (4.357) (63.244)
a) staff costs (16.928) (13.744) (30.672) (293) (30.965)
b) Other administrative costs (18.024) (10.191) (28.215) (4.064) (32.279)
190. Net provisions for risks and expenses 149 (488) (339) (339)
Impairment / write-backs on property and
200. equipment (2.152) (1.409) (3.561) (3.561)
210. Impairment / write-backs on intangible assets (589) (2) (591) (591)
220. Other net operating income 3.946 1.263 5.209 (822) 4.387
230. Operating expenses (33.598) (24.571) (58.169) (5.179) (63.348)
270. Net income (loss) on disposal of investments (5) (5) (5)
Net income (loss) from continuing operations
280. before
taxes 3.494 4.968 8.462 (3.581) 4.881
290. Taxes on income from continuing operations
(2.588) (2.162) (4.750) 903 (3.847)
300. Net income (loss) after tax from con’ t oprerations.
906 2.806 3.712 (2.678) 1.034
320. Net income for the period 906 2.806 3.712 (2.678) 1.034
330. Net income (loss) attributable to minority interests (6) (6) (6)
340. Net income (loss) attributable to the
900 2.806 3.706 (2.678) 1.028
Parent company
CERTIFICATION OF
THE CHAIRMAN OF
THE BOARD OF
DIRECTORS AND
THE PERSON
RESPOSIBLE FOR
PREPARING THE
FINANCIAL
REPORTS
CERTIFICATION OF 95
BALANCE SHEET
CERTIFICATION OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS IN
ACCORDANCE WITH ART. 81-ter of CONSOB Regulation No. 11971 OF MAY
14, 1999, AS AMENDED
1. The undersigned Chirò Vincent, acting Chairman of the Board of Directors of Banca Apulia
Spa and Donato Cimarosa, as the manager responsible for preparing the financial reports of
Banca Apulia Spa, also taking into account the provisions of art. 154-bis, paragraphs 3 and 4,
of Legislative Decree 24 February 1998 58:
the adequacy with respect to the Company and
effective implementation,
of administrative and accounting procedures for the preparation of the condensed
consolidated during the first half of 2010.
2. The evaluation of the adequacy and effective application of administrative and accounting
procedures for the preparation of the interim consolidated financial statements at 30 June 2010 was
based on consistent processes to internal models of control. These processes are being adapted to
those that the parent Veneto Banca Holding is being adopted in the recent business and
organizational restructuring process that also involves the Group Apulia.
3. You also certify that:
3.1. the condensed consolidated financial statements:
a) is prepared in accordance with international accounting standards recognized in the
European Community under Regulation (EC) No 1606/2002 of the European Parliament
and the Council of 19 July 2002;
b) corresponds to the books and records;
c) been prepared in accordance with International Financial Reporting Standards as adopted by
the European Union, the measures taken to implement art. 9 of Legislative Decree no.
38/2005 and the provisions of art. 154-ter of Legislative Decree no. 24 February 1998 58 and
is capable of providing a true and fair view of assets and liabilities, of the issuer and the
undertakings included in the consolidation;
3.2. the interim management report shall contain at least references to important events that occurred
during the first six months of the year and their impact on the interim consolidated financial statements,
together with a description of the principal risks and uncertainties for the remaining six months of the
year. For issuers with shares listed Italy as a member state of origin, the interim management report shall
also contain information about significant transactions with related parties.
San Severo, 27 August 2010
Vincenzo Chirò Donato Cimarosa
Chairman of the Board Manager responsible
the company's financial