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VB_reportsandaccounts_2004

VIEWS: 12 PAGES: 279

  • pg 1
									REPORTS AND ACCOUNTS
               2004
2004 CORPORATE OFFICERS                                                            4
MESSAGE FROM THE CHAIRMAN                                                          6
INDEX                                                                              8
CALL OF SHAREHOLDERS’ MEETING                                                     10
DIRECTORS’ REPORT ON OPERATIONS                                                  11
PROPOSAL FOR THE REPORTS AND ACCOUNTS
APPROVAL AND PROFIT ALLOCATION                                                    92
CONSOLIDATED FINANCIAL STATEMENT
AS AT 31 DECEMBER 2004                                                            93
STATUTORY AUDITOR’S REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENT                                                 147
INDIPENDENT AUDITOR’S REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENT                                                 151
FINANCIAL STATEMENT AS AT 31 DECEMBER 2004                                       153
STATUTORY AUDITOR’S REPORT ON THE
FINANCIAL STATEMENT                                                              265
INDIPENDENT AUDITOR’S REPORT ON THE
FINANCIAL STATEMENT                                                              269
MEETING REPORT AND RESOLUTIONS                                                   272
THE COMMERCIAL NETWORK                                                           273




On the cover: detail of Antonio Canova's plaster model “Amore e Psiche stanti”
Veneto Banca Management Centre - Montebelluna, Italy, via Feltrina Sud 250
REPORTS AND ACCOUNTS 2004
3 9 TH F I N A N C I A L Y E A R




ANNUAL GENERAL MEETING 30 APRIL 2005

translation from the italian original which remains the definitive version




Limited liability public cooperative company - Member of the Register of Businesses in Treviso no. 00208740266
Shareholders’ equity as at 31/12/2004 Euro 581.893.070,98 - Member of Fondo Interbancario di Tutela dei Depositi
the group structure 2
     LOCATION AND COMMERCIAL
     NETWORK

                            LOMBARDIA           FRIULI VENEZIA GIULIA
                            17                  7




                                                                                                        Belluno




                                                                                                                    Treviso
                                                           VENETO
                                                           92
                                                                                          Vicenza




                                                                                                                   Venezia
                                                                                 Verona             Padova


                                                                                               Rovigo




                                                                                                     PUGLIA AND BASILICATA




                                                                                                                              location and commercial network 3
                                                                                                     30

                                        LAZIO
                                            1




AN ITALIAN AND INTERNATIONAL GROUP

VENETO BANCA GROUP COMMERCIAL NETWORK
AS AT 31 DECEMBER 2004                                         Branches     % of total

Veneto                                                               92          63%
Other northern Italian regions                                       24          16%
Central Italy                                                         1           1%
South Italy                                                          30          20%
TOTAL NO. OF ITALIAN BRANCHES                                       147         100%

Branches outside Italy:

Romania                                                                 6
Hong Kong(1)                                                            1
(1) Representation office
                                 2004 CORPORATE OFFICIERS

                                                                           BOARD OF DIRECTORS

                                                           Chairman        Trinca Flavio*

                                                     Vice Chairman         Antiga Franco*

                                                            Directors      Biasia Francesco*
                                                                           Caberlotto Gaetano
                                                                           De Bortoli Vitale
                                                                           Filippin Walter
                                                                           Gallina Alessandro*
                                                                           Miotto Ireneo
                                                                           Munari Leone
                                                                           Nardi Innocente
                                                                           Perissinotto Gian Quinto*
                                                                           Vardanega Giuseppe
                                                                           Virago Graziano
                                                                           Zago Bruno
                                                                           Zoppas Gianfranco


                                                                           BOARD OF STATUTORY AUDITORS

                                                           Chairman        Fanti Fanio

                                                                Auditors   Stiz Michele
                                                                           Xausa Diego
2004 corporate officiers 4




                                                 Alternate Auditors        Facchinello Remo
                                                                           Mazzocato Martino


                                                                           BOARD OF STATUTORY ARBITRATORS

                                                           Chairman        Chiaventone Adolfo

                                                          Arbitrators      Merlo Pietro Giorgio
                                                                           Schileo Giuseppe

                                               Alternate arbitrators       Barilà Francesco
                                                                           Pizzolotto Renato


                                                                           GENERAL MANAGEMENT

                                                  General Manager          Consoli Vincenzo

                                             Vice General Manager          Bressan Armando
                                                                           Fagiani Mosè
                                                                           Feltrin Romeo
                                                                           Gallea Mauro


                                                                           INDIPENDENT AUDITORS

                                                                           PricewaterhouseCoopers spa


                             * Members of Executive Committee
CHAIRMAN AND GENERAL MANAGER




                                                                chairman and general manager 5

 Chairman of Veneto Banca,   General Manager of Veneto Banca,
 Flavio Trinca               Vincenzo Consoli
                                  MESSAGE FROM THE CHAIRMAN
                              Dear Shareholder,

                              At its meeting on 29 March, the Board of Directors of Veneto Banca approved the draft of the
                              financial statements for the financial year 2004.

                              The year just ended has been a demanding, yet very satisfactory year: demanding as regards the
                              uncertain economic and financial scenario, on the international and domestic fronts, still
                              influenced by political and economic tensions that have not made the Company’s operations any
                              easier; satisfactory because the profits of all the subsidiaries, and therefore Group profits, were in
                              line with expectations.

                              During 2004, the Group successfully passed the scheduled inspections by the Banca d’Italia,
                              affecting Veneto Banca, Banca Meridiana and Banca Italo-Romena. It was also one of the first
                              Italian banking institutions to obtain quality certification for six of its so-called“sites”relating to the
                              PattiChiari project, an initiative set up by the Italian Banking Association to promote a more
                              transparent approach in customer relations.
                              Two qualified institutions have thus certified the value and transparency of corporate data and the
                              quality of the Bank’s work, recognising the validity of the adopted model and the possibility of
                              achieving the aim of autonomy.
                              These recognitions are the just reward for the Board of Directors, the bank and to you, the
                              Shareholders, who have always supported our company.

                              Before analysing the figures on the reports and accounts, I would like to say a few words about the
                              world of the Banche Popolari Italiane, a group to which this Bank proudly belongs. This category is
message from the chairman 6




                              now the focus of attention and debate with regard to the entire economic and financial world, as
                              never before. The Banche Popolari (36 still in operation) represent 23.4% of the Italian banking
                              market and in less than 10 years have almost doubled the number of branches, going from 4,326
                              in 1995 to 7,240 in 2004.
                              This system has represented a real economic and financial benchmark, and its operations have
                              supported the development of entire regions, breathing life into the network of SMEs and
                              households. Today, the Banche Popolari are taking on a leading role in credit strategies, becoming
                              protagonists even in areas which once seemed to be the exclusive domain of national or
                              international banks. The model has certainly been revalued, recognised and is greatly appreciated.
                              The above represents a confirmation of the validity of the project undertaken eight years ago, when
                              we decided to follow the route towards autonomy with great determination. Over a fairly short
                              space of time, this Bank has managed to carve out a significant space for itself, and is now one of
                              the leading independent banks in Veneto, close to its companies and its customers.

                              To compete, the Company has had to grow, focusing on areas rich in economic potential, gradually
                              creating a “federal” type of structure. Veneto Banca is the Parent Company around which the
                              subsidiary banks revolve, in turn being deeply rooted in their respective local areas, together with
                              the “product”or service companies that guarantee a high level of quality and complete the offer.

                              As is known, the project has required significant investments and the awareness that it would take
                              time to make it fully operational.
                              This strategy is now starting to bear fruit, and the 2004 figures show how all the Group companies
                              have grown significantly, reaching the targets of profitability, solidity and growth more quickly than
                              expected.
                              The ideal accounting tool to rely on is therefore the consolidated reports and accounts, which further
                              describe the activities and results of the Parent Company and the subsidiaries.
                              Starting with the most obvious figure: net profit has touched Euro 55.4 million, marking an
                              important growth of 36.2%.
Volumes are also growing significantly, well above the average for the banking system. Total
deposits reached Euro 9.3 billion (up by 14.5%). Direct deposits exceed Euro 5.2 billion, marking a
significant 18.9% rise, confirming the real appreciation shown by the market. Indirect deposits,
while facing the problems created by nervous, fragile and volatile markets, exceed Euro 4.1 billion,
registering an appreciable 9.3% increase.

Loans to customers reached Euro 5.2 billion, with a percentage increase of 19.2%, confirming the
intense activities with regard to SMEs and households. The figure is particularly significant in view of
the fact that it accompanies an index of 0.7% in the net non-performing loans/loans ratio, confirming
the quality of the network in which the Group operates and the focus given to monitoring credit risk.
Shareholders’ equity, including subordinated loans, totals no less than Euro 844 million. ROE, at
9.8%, and the cost/income ratio at 61.4% confirm how the Veneto Banca Group operates efficiently
and effectively, although experiencing a constant, demanding growth phase (to date there are 153
branches and almost 1,700 employees).

With regard to the results of Veneto Banca, considered on an individual level, 2004 has been an
outstanding year. Net profit was Euro 45.7 million, with a growth of 13.9%. This is a significant
result as it is entirely attributable to traditional management. The capital gain of approximately Euro
33 million deriving from the completed sale of 80% of the insurance company Claris Vita was
allocated to the reserve for general banking risk, to mark the clear distinction between extraordinary
and ordinary events.
The trend in volumes bears witness to the positive activity in the sales network and the recognition
by the market. Total deposits reached Euro 7.6 billion (up by 13.1%). In detail, direct deposits
exceeded Euro 4 billion, up by 18.3%, marking an increase above the system average. Indirect
deposits were recorded at over Euro 3.5 billion, with an increase of more than 7.6%.
The growth in loans, up by 15.9%, was also significant. They reached Euro 4.1 billion.Veneto Banca




                                                                                                           message from the chairman 7
is continuing to provide strong support for the local area, and the production network represented
by SMEs in particular, at a time when the international agreements known as “Basel 2”concerning
banks’ capital requirements are about to be launched, and fears related to credit limitation are
becoming increasingly widespread.

Apart from the abovementioned 80% sale of the insurance company Claris Vita, the following
significant events that marked 2004 deserve a special mention:
    - acquisition of the Banca del Garda from the Credem group (although this was formally
        completed at the beginning of 2005). The bank has 10 branches operating in the province of
        Verona, Padua and Rovigo;
    - the meeting resolution that approved the early conversion of the remainder of the existing
        convertible bond loans;
    - the official inauguration of the new Management Centre along Via Feltrina.

The extremely high turnout at this last event, which was from many standpoints extremely exciting
in terms of its significance, confirmed that this Bank is now a well-established point of reference
for the entire local area.

Thank you for your attention, and on behalf of the Board of Directors please accept my best regards.

I hope to see you at the next Shareholders’ Meeting on 30 April 2005.

Warmest regards.
                                          THE CHAIRMAN
                                          (Dr. Flavio Trinca)



Montebelluna, 29 March 2005
              INDEX

          DIRECTORS’ REPORT ON OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . Page 11
           1. Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     ”   13
           2. World economic review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                ”   14
                2.1 Macroeconomic scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   ”   14
                2.2 The local economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            ”   17
                2.3 Financial markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          ”   18
                2.4 Banking and parabanking market . . . . . . . . . . . . . . . . . . . . . . .                         ”   19
           3. Direction and control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            ”   20
                3.1 The three-year plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            ”   20
                3.2 Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ”   20
                3.3 The integration process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ”   23
                3.4 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ”   24
                3.5 Extraordinary operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               ”   28
           4. Banking activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ”   29
                4.1 The sales structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            ”   29
                4.2 Product areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        ”   31
                4.3 Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      ”   35
                4.4 Advertising and communication . . . . . . . . . . . . . . . . . . . . . . . .                        ”   35
INDEX 8




           5. Control and support activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   ”   36
                5.1 The internal control system . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  ”   36
                5.2 Risk assessment and management . . . . . . . . . . . . . . . . . . . . . .                           ”   37
                5.3 Technological and administrative/organisational services . . .                                       ”   40
                5.4 Transparency in banking operations, complaints management,
                    prevention and security, personal data protection . . . . . . . . . .                                ”   41
                5.5 Bank of Italy inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               ”   43
           6. Trend in consolidated operations . . . . . . . . . . . . . . . . . . . . . . . . . . .                     ”   43
                6.1 Operational development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  ”   43
                6.2 Equity and capital adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . .                    ”   52
                6.3 Profitability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ”   55
           7. Report on Parent Company’s operations . . . . . . . . . . . . . . . . . . . . .                            ”   59
                7.1 The operating performance . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    ”   60
                7.2 Equity and capital adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . .                    ”   69
                7.3 Profitability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ”   72
           8. Trends in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           ”   76
                8.1 Banks and financial companies . . . . . . . . . . . . . . . . . . . . . . . . .                      ”   77
                8.2 Product companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ”   86
           9. Significant events occurring after year end . . . . . . . . . . . . . . . . . .                            ”   91
          10. Business outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ”   91

          PROPOSAL FOR THE REPORTS AND ACCOUNTS APPROVAL
          AND PROFIT ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        ”   92
CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 93


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS . . .                                                          ”    98
Part a - Accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            ”   100
Part b - Balance sheet information . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    ”   107
Part c - Information on the consolidated profit and loss account . . .                                        ”   135
Part d - Other information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ”   142

ANNEXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ”   143

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    ”   147

INDIPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    ”   151


VENETO BANCA FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  ”   153


NOTES TO THE FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . .                                       ”   158




                                                                                                                        INDEX 9
Part a - Accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            ”   158
Part b - Balance sheet information . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    ”   165
Part c - Information on the profit and loss account . . . . . . . . . . . . . .                               ”   201
Part d - Other information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              ”   209


ANNEXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     ”   211

STATUTORY AUDITORS’ REPORT
ON THE FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .                             ”   265

INDIPENDENT AUDITORS’ REPORT
ON THE FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .                             ”   269
                                        CALL OF SHAREHORDERS’ MEETING
                                    The Shareholders are summoned to participate to the Ordinary Shareholders’
                                    Meeting on first call on Friday 29 April 2005 at 8.00 a.m., and on second call
                                    on the following day

                                                        SATURDAY 30 APRIL 2005 at 9.00 a.m.

                                    at the Veneto Banca Management Centre located in Montebelluna, Via
                                    Feltrina Sud no. 250, for the discussion of the following



                                                                        AGENDA


                                    Subject 1°) - Appointment of three Directors, the Board of Statutory Auditors
ordinary sharehorders’ meeting 10




                                                  and their Chairman and the Board of Statutory Arbitrators;
                                    Subject 2°) - Reports of the Board of Directors and the Board of Statutory
                                                  Auditors , presentation of the Reports and Accounts as at 31
                                                  December 2004 and related resolutions;
                                    Subject 3°) - Calculation of attendance fees to be paid to the Directors for the
                                                  financial year 2005;
                                    Subject 4°) - Determination of emoluments for the Statutory Auditors for the
                                                  three year period 2005/2007.




                                    Notice published according to art. 21 of the Company By-laws in the Official Gazette no. 67
                                    dated 22 March 2005.
                                                    DIRECTORS’ REPORT
                                                        O N O P E R AT I O N S




"Montebelluna, Via Mercato vecchio"
Massimiliano Porcelli - Branch of Sernaglia della Battaglia (TV)
                                        INTRODUCTION
                                     The consolidated financial statements for the Veneto Banca Group were drawn
                                     up by the Parent Company in accordance with the accounting standards and
                                     methods set forth in Leg. Decree 87/92. They provide a consolidated statement
                                     of the assets, liabilities and financial results of each company in the Group.

                                     The following subsidiaries were consolidated using the integral method: Banca
                                     di Bergamo spa, Banca Italo-Romena spa, Banca Meridiana spa, Claris Factor
                                     spa, Claris Finance srl, Claris Leasing spa and Veneto Ireland Financial Services
                                     Ltd (VIFS). Draft financial statements closing on 31 December 2004, already
                                     approved by the respective Boards, will be submitted to the respective
                                     shareholders’ meetings to be held prior to the Veneto Banca meeting.
                                     In contrast, Claris Assicurazioni srl, Claris Broker spa, Claris Vita spa,
                                     Immobiliare Italo Romena srl, Palladio Finanziaria spa and Sintesi 2000 srl
                                     were valued by the equity method as although they are subsidiaries or the
                                     Parent Company has voting rights over or equal to one fifth, they do not
                                     conduct banking, financial or other activities pertinent to the Group or have a
                                     different accounts structure compared to the Parent Company and therefore
                                     the corresponding numerical comparison would not be suitably representative.

                                     In the Parent Company’s portfolio, apart from the equity investments in
                                     consolidated Companies, there are other equity investments. However, a
                                     significant influence is not held in any of these, considering that the Group’s
                                     stake is less than 20% of the share capital of each Company. These equity
                                     investments have thus been valued at cost.
directors’ report on operations 12




                                        COMPOSITION OF THE
                                        VENETO BANCA GROUP
                                     As at 31 December 2004 the Veneto Banca Group consisted of the following
                                     Companies:

                                     PARENT COMPANY:
                                     • Veneto Banca scparl

                                     SUBSIDIARIES OF BANKING GROUP:
                                     • Banca di Bergamo spa
                                     • Banca Italo-Romena spa
                                     • Banca Meridiana spa
                                     • Claris Factor spa
                                     • Claris Finance srl
                                     • Claris Leasing spa
                                     • Immobiliare Italo Romena srl
                                     • Veneto Ireland Financial Services Itd (VIFS)

                                     GROUP SUBSIDIARIES:
                                     • Claris Assicurazioni srl
                                     • Claris Broker spa

                                     GROUP AFFILIATES:
                                     • Claris Vita spa
                                     • Palladio Finanziaria spa
                                     • Servizi Internazionali e Strutture Integrate 2000 srl (Sintesi 2000)
    1. HIGHLIGHTS

VENETO BANCA GROUP – PERFORMANCE HIGHLIGHTS
ECONOMIC/FINANCIAL VALUES AND KEY MANAGEMENT
FIGURES

ECONOMIC VALUES (in Euro thousand)                  2004        2003      abs. var.   % var.

Interest margin                                  169,766      152,155      17,611     11.6%
Earning margin                                   286,159      263,147      23,012      8.7%
Operating expenses                              -164,679     -152,817     -11,862      7.8%
Profit on ordinary activities                     74,129       67,629       6,500      9.6%
Net profit                                        55,352       40,646      14,706     36.2%

FINANCIAL AND OPERATING
VALUES (in Euro million)                            2004        2003      abs. var.   % var.

Gross banking income                              14,544      12,525        2,018     16.1%
Total deposits                                     9,337       8,158        1,179     14.5%
Direct deposits                                    5,234       4,403          831     18.9%
Indirect deposits                                  4,103       3,755          348      9.3%
   of which: managed savings                       1,747       1,641          106      6.5%
   of which: administered savings                  2,356       2,114          241     11.4%
Loans to customers                                 5,207       4,368          839     19.2%
Performing assets                                  6,094       5,171          923     17.9%
Total assets                                       6,644       5,758          886     15.4%
Shareholders’ equity
(net of subordinated loans)                          662          559         103     18.4%
Shareholders’ equity
(including subordinated loans)                       844          641         203     31.6%

STRUCTURAL RATIOS (%)                               2004        2003      abs. var.




                                                                                               directors’ report on operations 13
Direct deposits/Total assets                       78.8%       76.5%         2.3%
Loans to customers/Total assets                    78.4%       75.9%         2.5%
Loans to customers/Direct deposits                 99.5%       99.2%         0.3%

CREDIT QUALITY RATIOS (%)                           2004        2003      abs. var.

Net non-performing loans/Loans to customers         0.7%        0.7%             -
Net watch-list/Loans to customers                   1.2%        0.7%         0.5%
Net non-performing loans/Shareholders’ equity       4.5%        4.7%        -0.2%

PROFITABILITY RATIOS (%)                            2004        2003      abs. var.

R.O.E.                                              9.8%        8.8%         1.2%
R.O.A.                                              2.1%        2.2%        -0.1%
Interest margin/Performing assets                   2.8%        2.9%        -0.1%
Earning margin/Performing assets                    4.7%        5.1%        -0.4%
Net profit/Performing assets                        0.9%        0.8%         0.1%
Interest margin/Earning margin                     59.3%       57.8%         1.5%
Cost/Income ratio                                  61,4%       61,1%         0,3%

EQUITY RATIOS (%)                                   2004        2003      abs. var.   % var.

Tier I                                             8,41%       7,40%        1,01%     13,6%
Solvency ratio                                    10,76%      11,40%       -0,64%     -5,6%

STRUCTURAL AND PRODUCTIVITY RATIOS                  2004        2003      abs. var.   % var.

Average no. of employees (*)                        1,621       1,524           97     6.4%
Number of bank branches
(including virtual branch)                            153         147           6      4.1%
Customer loan per employee                          3,213       2,867         346     12.1%
Total deposits per employee                         5,762       5,355         407      7.6%
Gross banking income per employee                   8,975       8,222         753      9.2%
Earning margin per employee                           177         173           4      2.2%
* Average no. of employees of banks and wholly consolidated companies at year end.
                                             2. WORLD ECONOMIC REVIEW

                                     2.1. MACROECONOMIC SCENARIO
                                     During 2004, expansion of the international economic cycle continued to be
                                     strong, although there was a gradual slowdown after the exceptionally high levels
                                     of last year. This trend was caused by the favourable rates that made a particular
                                     contribution to the strong development of emerging economies, led by Asian
                                     economies, and by the continuing growth in the US.
                                     However, this trend was affected by the prolonged rise in the oil price. During
                                     October this exceeded $50 per barrel on the London market, although a slight
                                     decrease was recorded during the latter part of the year.
                                     Inflationary pressures were limited, on the whole.
                                     During 2004 the Dollar also gradually weakened, against the Euro in particular.
                                     After the recovery in value of the early part of the year, the US currency gradually
                                     continued to lose ground, hitting a low against the European currency towards
                                     the end of the year.


                                      MAJOR EXCHANGE RATES

                                      1.40                                                                                                                                 145



                                      1.35
                                                                                                                                                                           140


                                      1.30
directors’ report on operations 14




                                                                                                                                                                           135

                                      1.25


                                                                                                                                                                           130
                                      1.20



                                      1.15                                                                                                                               125
                                         Dec 03    Jan 04     Feb 04      Mar 04        Apr 04   May 04   Jun 04   Jul 04   Aug 04   Sep 04   Oct 04     Nov 04     Dec 04
                                              Euro / Dollar     Euro / Yen (scale of right)                                                            Source: Bloomberg




                                     2.1.1. USA
                                     Growth remained dynamic in the United States, with GDP up by 4.4% on 2004.
                                     Influences on this result included private consumption, up by 3.8% compared to
                                     3.3% in 2003. During 2004 we also witnessed a gradual increase in employment,
                                     with positive effects in terms of real disposable income, although in recent
                                     months this trend has experienced a slowdown due to the persistently high level
                                     of oil prices and the moderate growth in real salaries.
                                     Positive effects were also seen from the increase in private investments, up by
                                     10% as against last year’s 5.1% increase, and from the increase in public
                                     spending, equivalent to 2 percentage points.
                                     However, the balance of trade deficit continues to grow, amounting to almost
                                     $ 586 billion, as against the previous 518 billion.
                                     In terms of inflation, 2004 saw a 2.8% rise in the cost of living, up on 2003.
                                     With regard to monetary policy, during the year, the Federal Reserve raised the
                                     rate 5 times on federal funds by 0.25 of a point, taking it from 1% to 2.25%, while
                                     still maintaining price stability as a priority target.
                                                         2.1.2. EUROLAND
                                                         During 2004, Euroland registered a recovery after the modest growth of last year,
                                                         with GDP up by 1.8%.
                                                         Looking at the trend in the main European economies, an acceleration can be
                                                         found in Germany. After the slight drop last year, it returned to positive growth
                                                         of 1.2%. Improvements were also seen in France, with an increase in GDP of
                                                         0.6% in 2003 to a 2.1% increase in 2004, and to a lesser extent for Italy, up by 1%,
                                                         against the 0.3% of last year.
                                                         2004 saw a recovery in both private consumption, up to 1.8% from last year’s
                                                         1.2%, and fixed investments. The latter in particular, after the dip of 0.5% of 2003,
                                                         were once again on the increase at a rate equal to 2.2%.
                                                         Greater dynamism was also seen in foreign trade, with a sustained increase of
                                                         exports, up by 6.6%, and imports, up by 6.2%.
                                                         In terms of consumer price trends, inflation was recorded at 2.1%, in line with the
                                                         2003 figure. However, unlike last year, the discrepancies between the various
                                                         member countries were reduced.
                                                         In terms of monetary policy, the Central European Bank maintained a cautious
                                                         approach, as the result of a more modest, slower cyclical recovery stage compared
                                                         to other economies. It left the key refinancing rate unchanged at 2% for all of
                                                         2004, thus reducing the differential between the discount rates in Euroland and
                                                         the USA from 100 to –25 basis points.


EUROLAND INTEREST RATES

 2.3                                                                                                                                           4.7




                                                                                                                                                     directors’ report on operations 15
2.25
                                                                                                                                               4.5

 2.2

                                                                                                                                               4.3
2.15


 2.1                                                                                                                                           4.1


2.05
                                                                                                                                               3.9

  2

                                                                                                                                               3.7
1.95


 1.9                                                                                                                                         3.5
  Dec 03        Jan 04        Feb 04       Mar 04      Apr 04    May 04    Jun 04    Jul 04   Aug 04    Sept 04   Oct 04     Nov 04     Dec 04
           6 Months Euribor            10 years swap rates                                                                 Source: Bloomberg



                                                         2.1.3. ITALY
                                                         As already mentioned, Italian GDP grew by 1%. However, this result is still lower
                                                         than that obtained by the main European countries.
                                                         The standstill in private consumption and the reduction in investments had a
                                                         negative impact on the trend in domestic demand. In particular, reduced
                                                         spending power following a more marked inflation rate compared to the
                                                         European average, and a general collapse of confidence, weighed heavily on
                                                         household expenditure. This last aspect is also related to inflation that is
                                                         perceived to be higher than official estimates.
                                                         However, fixed investments returned to positive growth levels, after the decrease
                                                         recorded during 2003.
                                                         In line with Euroland, 2004 saw, although to a lesser degree, a recovery in foreign
                                                         trade with increases in both exports and imports. Again, during the past financial
                                                         year, an improvement in the balance of payments was seen, compared to 2003.
                                     The rate of inflation, equal to 2.3%, although down on 2003, is at higher levels
                                     than the European average.
                                     In terms of the labour market, the decrease in the unemployment rate continues,
                                     now at approximately 8.1%. This level is slightly lower than the prevailing value
                                     in Euroland countries. On the whole, the employment demand remained stable,
                                     despite the stagnation in economic activity in past years, with an annual average
                                     growth in those in work of just under 1%.


                                       HARMONIZED CONSUMER PRICE INDEX                                      GDP AT CONSTANT PRICES

                                     3.5                                                                    5



                                      3                                                                     4



                                     2.5                                                                    3



                                      2                                                                     2



                                     1.5                                                                    1



                                      1                                                                     0
                                           1999       2000         2001       2002   2003       2004            1999       2000     2001       2002   2003       2004
                                           Euroland          USA      Italy           Source: ISTAT - BCE       Euroland      USA      Italy           Source: ISTAT - BCE
directors’ report on operations 16




                                     2.1.4. ROMANIA
                                     The growth trend in the Romanian economy remained solid, and its GDP
                                     increased by 8.1% during the first nine months of 2004. The greatest contribution
                                     to this increase can be ascribed to the rise in household consumption, particularly
                                     linked to the increase in real income and the greater ease of access to medium
                                     and long term loans.
                                     Public spending, influenced by the cost of preparations for local elections, also
                                     recorded an increase compared to 2003.
                                     Industrial production grew, led by the growth in intermediate products destined
                                     to meet a growing demand, both internally and externally. This trend was also
                                     accompanied by an improvement in labour productivity and by a reduction in the
                                     rate of unemployment.
                                     In addition, the inflation rate continued to fall, as it has been doing for several
                                     years. The short term interest rate was also down, following the expansion
                                     initiatives of the Central Romanian Bank, falling below 18%.
                                     In terms of exchange rates, 2004 saw a strengthening of the ROL both against the
                                     Dollar and the Euro, with variations of –10.8% and –3.5% respectively.
2.2 THE LOCAL ECONOMY

2.2.1. VENETO
Signs of recovery were also seen for the Veneto economy, after a less than brilliant
2003.

Industrial production for 2004, after last year’s decrease, was up once again with
an increase of 1.4%. However, the recovery in sales was more marked, up by
4.3%.
At industry level, the best performances were seen in the food and beverage
industry, machine tools and metal production. Although still weak, the textile and
clothing industry also recovered, while the paper, printing and publishing and
wood industries experienced problems.
In terms of size, the larger companies with more than 250 employees recorded
the most growth in terms of sales, while medium sized companies took the lead
in terms of production. Greater difficulties, however, were experienced by smaller
companies.
At a provincial level, Padua and Belluno were the most dynamic areas, both in
terms of sales and production. Positive changes, but to a lesser extent, were found
in the provinces of Verona and Vicenza, while Treviso and especially Venice
experienced more problems.

In terms of commercial trade, the improvement for Veneto’s manufacturing
industries continued, with a 4.6% increase in exports. The most noticeable
changes were found in the electric and electronic machinery, printed paper and
publishing industries.




                                                                                       directors’ report on operations 17
Still on this front, the most active provinces were Padua,Vicenza and Belluno. The
situation was more static, however, in Verona, Venice and Treviso, while Rovigo
experienced problems.

The number of companies registered with Chambers of Commerce is still
positive, with a regional increase of 1.13%. In particular, there is a favourable
trend for all provinces, particularly in Verona, up by 1.99% and Venice, up by
1.28%.

TOTAL REGISTERED BUSINESSES (no.)             2004              2003      Change %

Belluno                                      17,357            17,223         0.78%
Padua                                       104,144           103,468         0.65%
Rovigo                                       29,056            28,731         1.13%
Treviso                                      93,071            92,100         1.05%
Venice                                       81,038            80,016         1.28%
Verona                                       97,547            95,640         1.99%
Vicenza                                      84,378            83,762         0.74%

Total Veneto                                506,591           500,940         1.13%
Source: InfoCamere


2.2.2. PUGLIA AND BASILICATA
Conflicting signs are also emerging from the economy of Puglia and Basilicata.
After a negative 2003, 2004 recorded a significant recovery in exports for Puglia,
while foreign trade was still static in Basilicata.
In both regions, there was a recovery in fixed investments, both in construction
and in plant and machinery.
In line with the national trend, 2004 confirmed consumption as being generally
static, with disposable household income experiencing modest growth in
Basilicata, and remaining almost unchanged in Puglia.
An uncertain situation was also found in the labour market. In view of an overall
                                     employment rate that was slightly up on 2003, and a reduction in the
                                     unemployment rate in Basilicata, this indicator actually increased in Puglia.

                                     2.2.3. Province of Bergamo
                                     From the enquiry conducted by Unioncamere, Confindustria and the Region of
                                     Lombardy, it emerges that despite a regional situation showing weak recovery,
                                     industrial production in the Province of Bergamo during 2004 displayed a slightly
                                     negative result. Overall, this indicator fell by 0.3%, although at the same time
                                     there were large differences between industries. The difficult period for the textile
                                     and clothing industry is continuing, which still has a significant impact on the
                                     province’s industry, while the mechanics sector appears to be decidedly on the
                                     way to recovery.
                                     Going against the regional trend, sales on the internal market also fell, while
                                     there was a positive increase in foreign demand, although less noticeable than
                                     the average for Lombardy.
                                     However, turning our attention towards more prospective factors, such as orders
                                     placed with companies from both domestic and external markets, the economic
                                     scenario looks stronger.
                                     In terms of prices, 2004 witnessed an increase in the price of raw materials,
                                     especially in the metalworking, transport, rubber, plastic and mechanics
                                     industries, that has not, at least for the moment, transferred to the value of
                                     finished products, which increased moderately.
                                     Finally, the problems within the labour market remain, with a drop in
                                     employment levels, associated with an overall reduction in turnover, with both
                                     entry and exit rates falling.
directors’ report on operations 18




                                     2.3. FINANCIAL MARKETS
                                     During 2004 the positive trends begun in the world’s main financial markets last
                                     year continued, although on the whole they were less intensive.
                                     In particular, the S&P 500 rose by 9%, Nasdaq 100 by 10.44% and the Nikkey
                                     index on the Japanese stock exchange rose by 7.6%.
                                     In Europe, on the other hand, the Dax index on the German stock exchange rose
                                     by 7.3% and the DJ Euro Stoxx 50 index, incorporating Europe’s main stock, by
                                     6.9%. The financial markets registering the greatest rise included the Milan stock
                                     exchange, with the Mib30 index up by 16.86%.

                                       TREND IN MAJOR STOCK MARKETS (30 DECEMBER 2003 = 100)

                                      120


                                      115


                                      110


                                      105


                                      100


                                       95


                                       90
                                       Dec 03       Jan 04   Feb 04       Mar 04   Apr 04       May 04   Jun 04        Jul 04        Aug 04   Sep 04   Oct 04    Nov 04      Dec 04
                                                Mib 30                S&P 500               Nikkey 225            DJ Euro Stoxx 50                              Source: Bloomberg


                                     The bond markets, however, were characterised by a sustained demand and a
                                     general reduction in the risk premium, with a marked reduction in spreads.
2.4. BANKING AND PARABANKING MARKET

2.4.1. BANKING ACTIVITIES
In terms of funding activity, 2004 ended with a growth in direct deposits of 7.16%
compared to the 6.28% increase for 2003, corresponding to a total increase in
stock equal to Euro 67.7 billion. Within the aggregate, there was a significant
increase in bonds, up by 10.09% compared with 8.65% in 2003, while customer
deposits were up by 5.43%, against 4.94% for last year.
With regard to the various technical forms, a slowdown in the deposits on current
accounts can be seen. The trend in REPOS experienced a further reduction, as for
the subscription of CDs over both the short, and medium to long term. Foreign
loans rose.

Total loans by Italian banks rose by Euro 57.5 billion during the past financial
year, corresponding to 6.03%, in line with the 2003 figure. Looking at the
breakdown, the clear prevalence of loans in Euros emerges, representing 98.3%
of the total.
In addition, the difficult trend in the short and medium-long term elements
remains, with a further reduction in the short term loans sector, down by 3.73%
after the fall of 1.75% recorded during 2003. Leading the growth in loans were
medium to long term loans, up by 13.62%.
The growth in consumer credit remains high, with a rate of growth at the end of
2004 of 15.4%, in line with the relative figure for 2003, together with the sector of
residential loans, up by nearly 20%.

During 2004 the level of non-performing loans, net of write-downs, registered a




                                                                                        directors’ report on operations 19
slight increase. In November it achieved a total value of Euro 22,236 million with
a net increase of Euro 794 million, equal to +3.7% compared to the same period
of 2003. The ratio of net non-performing loans/total loans registered at 2.01%, in
line with the 2003 figure.
The loans/deposits ratio, finally, was maintained at approximately 108%.
Again in December 2004, there was a slight increase in the banks’ securities
portfolio, registering a change of +4%, with a value of Euro 5.7 billion.

2.4.2. LEASING AND FACTORING
During 2003 the leasing market recorded a fall of 15.04%, following the reduced
investments in durable goods made during the year as a result of tax incentives
in 2002 that had led businesses to anticipate expenditure.
However, 2004 saw a good recovery in investments. According to the findings of
the professional association ASSILEA, there was an 18.6% increase for a total
volume of Euro 38,082 million. Increases by individual sector were as follows:
industrial vehicles +13.2%, capital goods +17.3%, real estate +19.3%.

In the factoring market, after a 2003 that was largely stable in terms of credits
assumed, 2004 recorded a more sustained increase equivalent to around 8
percentage points.
In terms of breakdown of loans by business sector, there was a gradual increase
in sales involving public authorities as the counterparty, reaching approximately
12% of the total.
                                        3. DIRECTION AND CONTROL

                                     3.1. THE THREE-YEAR PLAN
                                     The Strategic Plan for the three-year period 2004-2006, approved in February
                                     2004, defined the profitability, efficiency and value creation targets to be achieved
                                     for the period.

                                     The Plan reconfirmed the need to develop ordinary activities, focusing on growth
                                     along internal lines and making the most of synergies with the acquired
                                     companies.
                                     The Group, focusing on its network of branches as the hub of its distribution
                                     model, will see a clear reinforcement of its presence in the provinces where it has
                                     most recently opened, through the Parent Company and also via subsidiary
                                     banks.

                                     As far as customers are concerned, the decision has been made to nurture and
                                     develop relations with traditionally served areas, increasing supervision and the
                                     focus on the changing needs and requirements of private customers (medium to
                                     high income) and of small businesses.

                                     Along with the increase in size of the network, far-reaching changes have been
                                     planned for the distribution model. Having identified the best organisational
                                     solutions to ensure optimal supervision of segments with high added value, the
                                     focus was on maximising the business time available to be dedicated to customer
                                     management and to improving prompt responses in this regard, also by
directors’ report on operations 20




                                     streamlining branch operations.

                                     3.2. PROJECTS
                                     During the financial year, many initiatives aimed at putting the plans into practice
                                     were set up, on the basis of a well-defined operational plan that gave rise to a
                                     number of projects.

                                     The following sections describe the main lines of intervention.

                                     3.2.1 DEVELOPMENT OF THE SALES NETWORK
                                     A three-year branch opening plan has been drawn up with regard to the Group’s
                                     development programmes. This is based, apart from on the potential found in
                                     each local area, on certain strategic guidelines that, revolving around a close-knit
                                     system of bases in the province of Treviso, and a wider spread over the remaining
                                     areas, involve:
                                     - for the Parent Company, an important entry into Verona and the surrounding
                                       province, a significant strengthening of its presence in Padua, consolidation of
                                       coverage in the area around Vicenza, and the creation of a link between
                                       Pordenone and Udine;
                                     - for the Banca di Bergamo, consolidation of its presence in the same province;
                                     - for the Banca Meridiana, strengthening of its presence in the regions where it
                                       currently operates;
                                     - for the Banca Italo-Romena, diffusion of its presence in those areas of Romania
                                       with the highest potential.

                                     During the financial year, all the internal operational processes designed to
                                     accurately implement the opening programme referred to above were put in
                                     place.
3.2.2. REVIEW OF CUSTOMER SEGMENTATION
The new strategic directions outlined in the three-year industrial plan mainly
focus on significantly increasing sales efficiency and improving organisational
efficiency.

A new organisational and sales model for the entire sales network has been
outlined to interpret these new directions. It is aimed at improving operational
performance for the entire Group. In this sense, new roles and new
organisational systems have been identified to emphasise active management of
customer relations.

With regard to this last aspect, the entire customer base has been divided into
segments in order to classify the various profiles of needs and services in a
uniform way. The various segments were then matched to dedicated managers
with a relevant professional profile. However, it should be pointed out that the
organisational model involves maintaining the branch manager as a key figure
for all segments; in other words the customers were not divided, but only
classified into segments.
A process of identifying the skills possessed by all personnel in the Parent
Company was then set up, with the aim of identifying specific training
requirements.
The training programme is underway and will ensure that this need is met. The
result will be a significant step forward in terms of the quality offered in customer
services, ensuring valid support for the achievement of planned overall
objectives. Once this new model has been fully implemented, it will be applied to
all banks in the Group accordingly.




                                                                                        directors’ report on operations 21
3.2.3. OPTIMISATION OF THE NETWORK AND DEDICATED
         DISTRIBUTION MODELS
Before outlining the new model described above, a procedure for analysing the
Parent Company’s branches was developed within the Company. This was aimed
at ensuring correct identification and constant monitoring of staff requirements
and operational roles throughout the entire sales network.

During this analysis, it was possible to identify the operational areas marked by
recoveries in efficiency. Each of these areas was analysed, and specific
planning, organisational and IT initiatives were outlined, that could lead to a
significant reduction in human resources to be allocated to customer contact
and relations.

Certain initiatives have already been developed, involving:
- a new procedure to support the insurance sector, enabling automated policy
  management and the display of the customer’s status;
- a new automatic system that enables decentralised management of conditions,
  by giving increased authority on prices to network structures, ensuring a more
  timely response to the customer and a higher quality service.

The other initiatives are in progress and involve:
- the updated, punctual valuation of each security deposited by the customer at
  the Group’s banks. This will enable the overall position of each securities
  deposit to be obtained in real time at every branch in the network;
- a new organisational set-up for the customer mortgage loans service. The new
  model will favour the prompt allocation of the financing requested, developing
  new IT support to simplify the whole process and decentralising certain
  obligations to peripheral structures, giving them increased loan facilities.
                                     3.2.4. BASEL II AND MANAGEMENT OF MARKET, CREDIT AND
                                               OPERATIONAL RISKS
                                     The regulatory agreement known as “Basel II” establishes a more direct link
                                     between the risks a bank assumes vis-à-vis the creditor counterparties and the
                                     regulatory capital to be held, determined on the basis of various inputs such as
                                     the other party’s rating, the loss rate in the event of insolvency and the exposure
                                     to be expected in this case. A special feature of the New Agreement is the
                                     possibility for the credit intermediaries to choose between a standardised
                                     (simplified) approach and an internal rating based approach, split into basic and
                                     advanced modes.
                                     This last mode, towards which the Veneto Banca Group is directed, involves using
                                     internally estimated data for loss rates in the event of insolvency (Loss Given
                                     Default) and for exposure at default. The related estimating procedures must be
                                     validated by the Supervisory Authority and must therefore respond to precise
                                     requirements in terms of quality and quantity.
                                     The legislation in question is particularly interesting, not only in terms of
                                     procedure and assessment, but also in relation to the organisational components
                                     it affects. It is fundamentally important that the new assessment and
                                     management procedures are an integral part of the processes of assignment,
                                     monitoring of exposure and pricing definition.
                                     Towards the end of the financial year the Parent Company set up a new planning
                                     work group with the aim of improving the Group’s market, credit and operational
                                     risk management and to bring all the subsidiaries into line with the requirements
                                     of Basel 2.
                                     Currently, the requirements of Veneto Banca are being dealt with, and operations
                                     will then be extended to all the subsidiaries. This project, which is obviously far-
directors’ report on operations 22




                                     reaching and liable to changes, both in terms of legislation and operational
                                     effects which are continually being updated, is aimed at bringing the Group fully
                                     into line with the planned requirements.

                                     3.2.5. INTRODUCTION OF THE INTERNATIONAL
                                             ACCOUNTING PRINCIPLES (IAS)
                                     In a wider context, aimed at improving information to the financial markets and
                                     harmonising the criteria for drafting financial statements at EC level, the
                                     European Commission, through the ongoing standardisation process, has
                                     implemented the International Accounting Principles (IAS/IFRS 1 ) issued by the
                                     IASB as at 31 December 2004, although with certain limitations.

                                     Following implementation of the EC Directive no. 1606/2002, Italy took
                                     advantage of the planned option to extend application of the IAS/IFRS to the
                                     consolidated financial statements of Italian banks pursuant to art. 1 of the
                                     legislative decree 385/1993, starting from the financial year commencing on 1
                                     January 2005.
                                     From 1 January 2006, banks and financial brokers subject to supervision by the
                                     Banca d’ Italia will therefore have to draft their financial statements for the year
                                     in line with the IAS/IFRS.

                                     To deal with and manage the process of transition to the new accounting
                                     principles suitably, the Parent Company has formed an internal multidisciplinary
                                     working group, aimed at studying and evaluating the consequences.

                                     Adaptations to the company’s IT system, in collaboration with SEC Servizi, are
                                                                                                                            1 IAS: International Accounting Standards
                                     also being implemented.
                                                                                                                             IFRS: International Financial Reporting
                                                                                                                                   Standards
The actions taken will enable this important change to be handled suitably and
will ensure the Bank correctly implements the new legal provisions.

3.3. THE INTEGRATION PROCESS
The following issues related to intra-Group integration are also linked to
implementation of the three-year industrial plan.

The Group’s organisational model rests on the centralising from the Group’s
banks towards the Parent Company of most of the operations that can be defined
as not directly customer-related, while all commercial relations management is
left to the subsidiaries.

To continue with implementing this organisational set-up in 2004, steps were
taken to extend the new model for the control of “administrative expenses”,
already in operation since 2003 with the Parent Company, via the support of the
Gesprov procedure, now in operation in the other banks.
The roles and processes for the new model have thus been outlined as a result of
the increased complexity of the Group.
The extension of this new model was also accompanied by a specific definition of
cost categories and related facilities that will, in the future, enable full surveillance
by the Parent Company and a more effective management control of monthly
final balances compared to the defined budgets.

The activity of operational integration for the Group’s banks also continued. This
was conducted via the specific mapping and comparison between organisational
models in the individual sectors of the subsidiaries with similar models outlined




                                                                                            directors’ report on operations 23
at the Parent Company. The aim is to bring the various banks and companies fully
and coherently into line.
To this end, new regulations are being drawn up for the integrated management
of regulations within the Group, and specific internal regulations in line with the
new corporate set-ups are about to be introduced.

Particular attention has also been given to the internal organisational set-up of
the subsidiary Banca Italo-Romena, and its integration with the Parent Company.
The aim of this initiative is to define, activate and put into operation an overall
governance model, in line with the Group’s systems, the foreign bank network,
the business environment, the size of the Bank and the planned volume and
economic targets.
                                     3.4 PERSONNEL

                                     3.4.1. STAFF STRUCTURE
                                     One of the basic values of the Veneto Banca Group’s development, highlighted by
                                     the strategic plan, comes from its people, who are considered to be one of the
                                     most important elements to ensure the quality of results and who take an active
                                     part in corporate life.

                                     The overall staff of the Veneto Banca Group as at 31 December 2004 totalled 1,671
                                     employees, with a net increase of 72 staff on an annual basis.

                                     Bank/Company                         2004           % for '04   2003          % for '03   abs. var.

                                     Veneto Banca                      1,169                70.0%    1,105            69.1%          64
                                     Banca Meridiana                     251                15.0%      283            17.7%         -32
                                     Banca di Bergamo                    103                 6.2%       85             5.3%          18
                                     Banca Italo-Romena                  110                 6.6%       87             5.4%          23
                                            Italy                          6                 0.4%        7             0.4%          -1
                                            Romania                      104                 6.2%       80             5.0%          24
                                     Tot. banks consolidated by
                                     the integral method               1,633               97.7%     1,560           97.6%           73
                                     Claris Factor                         7                0.4%         8            0.5%           -1
                                     Claris Leasing                       13                0.8%        12            0.8%            1
                                     VIFS                                  4                0.2%         5            0.3%           -1
                                     Tot. subs. consolidated by
                                     the integral method                    24              1.4%       25             1.6%           -1
                                     Claris Assicurazioni                    9              0.5%        9             0.6%            0
                                     Claris Broker                           5              0.3%        5             0.3%            0
                                     Tot. subs. consolidated by
                                     the equity method                      14              0.8%       14             0.9%            0
                                     Group total                       1,671                100%     1,599            100%           72
directors’ report on operations 24




                                     With regard to the Parent Company, recruitment activities were particularly
                                     intense during the year. Almost 5,000 job applications were received and
                                     examined, confirming the fact that the “local bank” continues to be particularly
                                     attractive for young people with a medium to high level of education. More than
                                     1,000 preliminary and secondary interviews were held, leading to the
                                     employment of 94 staff, both in first time employment or coming from other
                                     professional backgrounds.
                                     Turnover remained within limited values.

                                     The distribution of the workforce between central management and the
                                     distribution network shows, on the whole, a slight increase in the weight of the
                                     central structure, going from 34.3% to 35.9%.

                                                                           2004                                   2003
                                     Bank/Company                  Head Network                 %         Head Network               %
                                                              Office Staff   Staff                   Office Staff    Staff

                                     Veneto Banca                   456           713       39.0%            423       682      38.3%
                                     Banca Meridiana                 47           204       18.7%             39       244      13.8%
                                     Banca di Bergamo                25            78       24.3%             20        65      23.5%
                                     Banca Italo-Romena              34            76       30.9%             28        59      32.2%
                                     Claris Factor                    7             0      100.0%              8         0     100.0%
                                     Claris Leasing                  13             0      100.0%             12         0     100.0%
                                     VIFS                             4             0      100.0%              5         0     100.0%
                                     Claris Assicurazioni             9             0      100.0%              9         0     100.0%
                                     Claris Broker                    5             0      100.0%              5         0     100.0%
                                     Group total                    600          1,071      35.9%            549     1,050      34.3%


                                     The increased number of staff employed in central management offices was
                                     justified by the need to deal with the growing complexity and requirements of
                                     controlling the Group. The increase found in the Parent Company was caused by
                                                services carried out on behalf of the other Companies, which by contrast have a
                                                more streamlined structure and are highly oriented towards sales activity.

                                                In terms of breakdown, at year end the Group’s workforce numbered 38
                                                executives, 490 managers and 1,143 office staff and general assistants, distributed
                                                as follows:

                                                Bank/Company                                             CATEGORY
                                                                                      Executives   Managers Office staff Gen. assistants

                                                Veneto Banca (*)                              31        367            767            4
                                                Banca Meridiana                                1         64            185            1
                                                Banca di Bergamo                               3         39             60            1
                                                Banca Italo-Romena                             1         11             95            3
                                                Claris Factor                                  1          3              3            0
                                                Claris Leasing                                 1          4              8            0
                                                VIFS                                           0          2              2            0
                                                Claris Assicurazioni                           0          0              9            0
                                                Claris Broker                                  0          0              5            0
                                                Group total                                   38        490           1,134           9


                                                3.4.2. TRAINING
                                                During 2004 the Veneto Banca Group confirmed its major focus on training,
                                                considered to be an essential, fundamental tool for the professional development
                                                of staff, for the implementation of organisational changes and to provide a
                                                constant guarantee of quality in customer service.
                                                Training activities are also an essential tool for the adaptation of individual skills,
                                                the best way to develop a Group culture, and for the progressive, rapid
                                                integration of the more recently acquired banks and companies.




                                                                                                                                           directors’ report on operations 25
                                                The offer of courses in the “electronic catalogue” was thus extended, along the
                                                guidelines followed in previous years. This catalogue has now become essential
                                                for heads of departments and their workers, pursuing a growing correlation
                                                between the skills possessed and the expertise required by their roles.
                                                In 2004, an important structural change was made to the catalogue, allowing each
                                                employee to have his or her own Annual Personal Training Plan, including dates,
                                                during the first few months of the year. This certainly aided organisation of both
                                                training and work activities, and thus enabled benefits to be obtained more
                                                readily from training.
                                                A further increase in training activities was recorded, totalling 6,608 days,
                                                involving almost all employees.

                                                                       Bank/Company                  Training days

                                                                       Veneto Banca                           5,451
                                                                       Banca Meridiana                          496
                                                                       Banca di Bergamo                         356
                                                                       Banca Italo-Romena                       157
                                                                       Claris Factor                              4
                                                                       Claris Leasing                            30
                                                                       VIFS                                      78
                                                                       Claris Assicurazioni                      15
                                                                       Claris Broker                             21
                                                                       Group total                            6,608


                                                In particular, the Parent Company benefited from 5,451 training days in total,
                                                amounting to 4.6 days per capita, on average, up by 0.2% compared to last year.

                                                As regards the Banca di Bergamo, apart from the participation in courses held at
(*) The figure includes detached employees at
    other Group companies                       the Veneto Banca offices, specific training initiatives were organised on site,
                                                allowing employees to benefit more readily from these activities. On average 3.5
                                     training days per person were held.

                                     For the Banca Meridiana, certain important training initiatives were held, in line
                                     with the plans for the Group. Training activity resulted in 2 training days per
                                     capita, on average.

                                     A specific training programme was also outlined for the Banca Italo-Romena,
                                     aligned with the changing markets and the organisational developments in
                                     progress. The activities resulted in 157 days, involving both management and
                                     operational staff in the central structures and the Romanian and Italian sales
                                     network.
                                     Apart from the necessary training in technical and professional, management and
                                     executive areas, “project” training initiatives were implemented. Some of these
                                     include:

                                     • PattiChiari
                                       This project represented the natural development of the Group’s mission, in
                                       other words the attainment of excellence in customer service.
                                       The quality certification obtained for the Cantieri Risparmio e Servizi (Savings
                                       and Services Work Groups) in September 2004 marked the end of an intensive
                                       training programme, held between January and June, with a combination of
                                       distance and application classroom training. For the Parent Company in
                                       particular, this involved:
                                       - 675 colleagues for distance training of the Savings work group;
                                       - 362 colleagues for application training of the same Savings work group;
                                       - 678 colleagues for the distance training of the Services work group;
directors’ report on operations 26




                                       - 266 colleagues for the application training of the same Services work group;
                                       giving a total of 439 classroom training days.
                                       Distance training on the other hand was carried out over 474 days.
                                       The subsidiaries of the Banca di Bergamo and Banca Meridiana were also
                                       directly involved in this project.
                                       It involved taking part in a project that was very demanding for the bank, at a
                                       commercial and central level. It responded immediately with significant
                                       results, acknowledged by the certifiers, who highlighted strengths as being a
                                       high degree of involvement and ability on the part of the staff, and a clear
                                       orientation towards the principles of disclosure, comprehensibility and
                                       comparability that lie behind the “PattiChiari”processes.

                                     • Training project for the staff of “Organisational Systems”
                                       Achievement of the efficiency and effectiveness targets indicated in the
                                       Strategic Plan and the new organisational set-up stimulated an early,
                                       suitable development of the professional role carried out by the
                                       Organisational Systems department.
                                       To this end a structured training schedule was organised, with the aim of
                                       giving the department a more centralised role, to optimise corporate
                                       functioning, focusing its activities on greater planning content and strategic
                                       value.
                                       This schedule was developed during the first few months of the year, with the
                                       aim of better qualifying the staff of the Organisational Systems department,
                                       dealing with issues such as: organisational development, process analysis and
                                       improvement, dimensioning techniques, project management and others. This
                                       was a high level training schedule that backed up the classroom sessions with
                                       practical trials and procedural and content-related checks on the analyses
                                       carried out.
• Segmentation/portfolio creation and active customer management
  Implementing the directives of the industrial three-year plan, the new
  “distribution model” was adopted. During 2004 this included the creation of
  portfolios and the segmentation of Veneto Banca’s customers. This procedure
  was then made available to the other Group companies.
  The primary objectives have been recognised as increasing the orientation
  towards sales efficiency and service quality, by optimising work processes
  between the centre and the periphery, and the specialisation of customer
  advisory services.
  The project’s complexity and strategic value required maximum involvement
  by all areas of the company, by the network and management, and the
  coherent reorientation of the structure and processes aimed at the new
  distribution model.
  It was therefore essential to provide the best information possible throughout
  the organisation and to implement specific training initiatives aimed at
  acquiring skills and achieving the behaviour required by the new model, via a
  communications plan and a training schedule.
  The communications activity was set up via a series of evening meetings and
  mini-conventions with the entire sales network and the Heads of
  Management Departments, with the aims of illustrating and discussing the
  project for segmentation and portfolio creation, understanding the impact of a
  system-based vision of personalised customer management for all staff and
  departments involved in adapting the communications procedures between
  Management departments and the Network.
  This was followed by the training activity directed at Area Managers and
  related staff, as the first step towards investigating and learning about the




                                                                                       directors’ report on operations 27
  ways of implementing the project, as well as to define the responsibilities for
  its implementation in the branch structure, thus ensuring supervision during
  the implementation stage.

During 2004 training activities were also important for our in-house trainers, who
have an increasingly valuable role in Veneto Banca, and in the processes of
integration with the other Group companies. The aim was to improve their
communication and classroom management skills, and therefore the level of
training initiatives they provide.

3.4.3. PROFESSIONAL DEVELOPMENT AND VOCATIONAL
        TRAINING
2004 involved Human Resources in various projects related to personnel
development.

One of the highlights of these is certainly the introduction of the “skills system”.
This management approach, characterised by the focus on the professional and
managerial culture of operators on the sales network, providing a more in-depth
knowledge of people, enables the improvement of the effectiveness and
efficiency of management tools (training, professional development, career plans
etc.) in order to create relative uniformity in terms of professionalism and
managerial skills.
The survey of professional skills for workers in the Parent Company’s Network
and the Banca di Bergamo was completed during 2004, and the survey for the
Banca Meridiana was prepared in order to make available all the information on
the professional skills of Group personnel.

This was followed by an analysis and project for developing staff potential. The
                                     initiative, set up in 2003, is aimed at facilitating the growth and development of
                                     professional skills for the coverage of key corporate positions, with a view to
                                     managing staff with potential for promotion.
                                     A number of employees from the various Group companies took part in the
                                     analysis and development sessions and were promoted to roles of responsibility
                                     within their companies and other Group companies. In particular, with reference
                                     to the Parent Company, 15 new branch managers were appointed during the
                                     year, chosen from among internal staff.

                                     Finally, with regard to the Banca Italo-Romena, a performance assessment
                                     system was drawn up, in line with the tools already used by the Parent Company
                                     and the other subsidiaries.

                                     Along with the “incentives system”, already in place for the sales network, the
                                     new MBO (Management by Objectives) system was introduced, involving the direct
                                     or indirect assignment of corporate, departmental and individual targets to the
                                     majority of Central Management staff. The implementation of an incentives
                                     system, aimed at promoting the results pursued in terms of quantity, quality and
                                     profitability, also involved from an economic point of view, professional figures
                                     working at various levels in the Central Management departments and staff
                                     covering positions of responsibility in managing workers or projects.

                                     3.4.4. EMPLOYMENT POLICIES
                                     A careful survey was made of non-salary payments used at the various Group
                                     companies in order to provide a single, uniform base to be adopted during 2005.
                                     With regard to the Banca Meridiana, after complex trade union negotiations, an
directors’ report on operations 28




                                     agreement was reached to reduce the workforce, mainly relying on the
                                     “Redundancy Fund” in order to reduce the economic and social impact on
                                     employees and to lay the foundations for re-launching the company.

                                     3.5. EXTRAORDINARY OPERATIONS
                                     During 2004, control of the insurance company Claris Vita was transferred to the
                                     large Austrian group Uniqa Versicherungen AG. On 30 June, an agreement was
                                     signed between the parties for the sale of 80% of Claris Vita’s capital. The
                                     contract, after the required authorisations from the Supervisory Authority had
                                     been obtained, was completed on 16 December.
                                     The sale was motivated mainly by the changes caused by the legislation issued by
                                     the Basel Committee on Banking Supervision (known as Basel 2) that will lead to
                                     a considerable increase in weight of the asset requirements for investments in the
                                     insurance sector.
                                     With this transaction, that also involved setting up an important collaboration
                                     with the Austrian company Uniqa, the Veneto Banca Group can offer its
                                     customers a more extended, higher quality range of insurance products.

                                     During the financial year, an agreement was reached to acquire 51.163% of the
                                     Banca del Garda, the sale of which was completed in January 2005. Last
                                     November, all the necessary organisational and IT initiatives required to integrate
                                     this new purchase into the Group were carried out. Migration to the Group’s IT
                                     system took place in February of this year and the new Bank began operations
                                     using the instruments and products of the Veneto Banca Group.
   4. BANKING ACTIVITIES

4.1. THE SALES STRUCTURE
The Veneto Banca Group operates in the national and Romanian market using a
traditional type of distribution structure. In Italy, alongside the fixed network,
alternative sales and customer contact methods are used, aimed at strengthening
the branches’ sales activity.

4.1.1. THE BRANCH NETWORK
As at 31 December 2004 the branch network of the Veneto Banca Group was
made up of 153 units.

Geographic expansion, aimed at strengthening the operational base in the local
area and better supervising the established areas of operation, has seen a growth
in the network, compared to the 2003 figure, of 6 branches.

The openings particularly involved Veneto with the opening of the branch at S.
Biagio di Callalta, the second agency at Castelfranco Veneto and the Mestrino
branch, and Lombardy, where the Banca di Bergamo opened branches at
Clusone, Madone, Sant’Omobono Terme and Sarnico, all located in the same
province.
Finally, from March, the Banca Italo-Romena also became operational in the city
of Bacau with the opening of its sixth Romanian branch.
On the other hand, there were no changes to the number of branches of the
Banca Meridiana with the opening of the new Agency 1 at Potenza, replacing the




                                                                                                                    directors’ report on operations 29
Grottole branch.


 BRANCH TREND                                                                                       (units)


1997                             55    55


1998                             56    56


1999                                  61    61


2000                                             79 2 81


2001                                              82    4        12 98


2002                                                        94    4     12              30 140


2003                                                             99   6      12               30 147


2004                                                         100        7     16               30   153

       0        20        40           60          80             100             120   140         160       180

           Veneto Banca        Banca Italo-Romena                Banca di Bergamo         Banca Meridiana




From the end of January of this financial year, the Banca del Garda spa also
became part of the Group.
The heart of the bank’s operations are based in the province of Verona, and it has
a network of 10 branches. Its integration is fully in line with the Veneto Banca
Group’s plans for geographic expansion.
                                     Finally, with regard to the other operational outlets, as at 31 December 2004 the
                                     Group had 160 ATM and 2,766 POS terminals at its disposal.

                                     LOCATION OF BRANCHES/ATM/POS             BRANCHES                ATM            POS

                                     Treviso (*)                                     70                 75          1,332
                                     Vicenza                                          9                  8            158
                                     Venice                                           4                  5            184
                                     Padua                                            5                  5             66
                                     Belluno                                          2                  2             55
                                     Verona                                           1                  2             14
                                     Pordenone                                        6                  7             98
                                     Udine                                            1                  1             34
                                     other provinces in the Veneto area               -                  -             23
                                     Total for Triveneto                             98                105          1,964
                                     Milan                                            1                  -              9
                                     Rome                                             1                  1             43
                                     other provinces                                  -                  -             63
                                     Total for Veneto Banca                         100                106          2,079
                                     Bergamo                                         16                 16            101
                                     other provinces in Lombardy                      -                  -             10
                                     Total for Banca di Bergamo                      16                 16            111
                                     Avellino                                         1                  1             68
                                     Bari                                             9                 11            153
                                     Brindisi                                         5                  5             99
                                     Matera                                           6                 10             98
                                     Potenza                                          9                 11            152
                                     other provinces                                  -                  -              6
                                     Total for Banca Meridiana                       30                 38            576
                                     Treviso                                          1                  0              0
                                     Romania                                          6                  0              0
                                     Total for Banca Italo-Romena                     7                  0              0
                                     Group total                                    153                160          2,766
directors’ report on operations 30




                                     4.1.2. NEW CHANNELS
                                     After a relatively static period, 2004 was marked by a clear tendency, by some of
                                     the most important competitors in the mobile networks (banks, stockbrokers and
                                     insurance companies) to intensify integration, restructuring and redistribution
                                     operations between the banking, insurance and financial promotion channels.

                                     In this regard, a considerable impulse came from the customers’ very favourable
                                     response to Internet Banking that is at the heart of Italian banks’ multi-channel
                                     strategy.
                                     The internet channel is a considerable help for agents and financial promoters in
                                     selling banking services to customers, who can benefit from all the services
                                     without being restricted by time or space, even when away from the actual
                                     branch.
                                     More than 4.3 million private customers are able to access the internet services
                                     offered by Italian banks, representing approximately 11.7% of the 37 million
                                     banking customers.

                                     During the year, the Group’s distribution strategy was, as mentioned, influenced
                                     by the sale of 80% of the equity investment in Claris Vita, mainly motivated by
                                     changes caused by the Basel 2 legislation.
                                     This transaction led to a review of the overall distribution model, highlighting the
                                     focus on the traditional network by limiting the operations of the network of
                                     financial promoters to the area of Triveneto only. As at 31 December 2004 there
                                     were 23 promoters working in this area.




                                                                                                                            (*) includes the online branch
4.2. PRODUCT AREAS
2004 saw a slight recovery in the flow of household savings destined for financial
activity.
Despite the positive trends recorded by the markets, a certain degree of caution
prevailed nevertheless, in decisions regarding savings allocation. Once again,
these involved a predominance of defensive financial instruments, with the
primary objective being to protect the value of the investment.
Against this background, the trend in current accounts was thus particularly
active.
With regard to asset management, along with a clear resizing of the weight of
mutual investment funds in the household portfolio, we witnessed a growth in
the quota of shares and equity investments, mainly thanks to the positive
performance of the stock markets and greater customer interest in stock
investments over the medium to long term.

The very positive trend in the demand for credit from households and businesses
was supported by the longer-term element, with loans being redirected towards
the medium-long term sector.

4.2.1. INVESTMENT PRODUCTS
Considering the scenario for 2004, the Group’s overall sales activities were
particularly focused on products with guaranteed or secured capital, or those with
a medium to low risk profile.

The issue and sale of structured bond loans successfully continued. As these
provide guaranteed capital on expiry, they meet the demands being expressed by




                                                                                       directors’ report on operations 31
customers.

With regard to managed savings and insurance products, mutual investment
funds and insurance products with a high financial profile performed well.
Focusing on the end customer was also essential for this sector during 2004, and
took the form of maintaining high quality standards in terms of the offer, and
backing up the comprehensive product range with our consultants’ expertise.
The Group has continued to operate according to a multibrand system, using
new reporting and independent analysis tools, thanks to the agreement signed
with “Morningstar”. This decision means that it can also ensure the correct focus
on customers’ varying needs and their “risk profiles”during difficult times for the
industry, while simultaneously protecting customers from possible conflicts of
interest from financial brokers, offering them the possibility of diversifying their
financial portfolio in real terms. This set-up enables a wide variety of choices as
to geographical areas, investment currency, management style, risk type and
sectors.

The market has continued to show its approval of insurance-related investment
products, and index linked products in particular, which give greater protection
for invested capital, influenced by the volatile markets and the Cirio and Parmalat
affairs. In this regard it is interesting to note the good performance of the
placements made.
The thriving life insurance sector has also been strengthened by the significant
results both with regard to recurring and single-premium products.

Finally, the performance of non-life insurance products should also be
mentioned. A particular highlight is the results for the motor product, up by
24.5% as to the number of policies and by 12.1% for paid premiums. In this
sector, confirmed by the interest aroused by national media, the “Polizza Merlino”
                                     has attracted considerable success. As this policy offers insurance cover for
                                     confiscation of the driver’s licence, it is certainly a novelty for the Italian market.
                                     Also in this case, not only has the capacity to present the client with high quality
                                     yet competitive products been important, but especially the capacity to offer
                                     qualified assistance in post-sales operations carried out via“Claris Assicurazioni”.

                                     4.2.2. LOAN PRODUCTS
                                     The Veneto Banca Group has always demonstrated its strong focus on this sector,
                                     so much so that it was one of the first Italian banks to adhere to the “European
                                     Code of Conduct”, a specific protocol intended to define loan standards.

                                     The favourable level of interest rates also continued to produce positive effects for
                                     the provision of residential loans during 2004.
                                     The business conducted in this sector was considerable, especially regarding the
                                     development of products with features that are attractive to customers, allowing
                                     the Group’s banks to take part in a sector which is certainly extremely
                                     competitive.

                                     The work therefore focused on preparing a broad catalogue of products,
                                     characterised by high levels of quality, new products, diversification and
                                     adaptability to customers’ needs.
                                     Among the most successful products, also in terms of their innovative value,
                                     mention should certainly be made of the “Mutuotutto Trasgressivo”, that enables
                                     financing up to 120% of the survey value, the “Cap&Floor” loan, specifically
                                     designed to protect the debtor from possible interest rate variations, and finally
                                     the “Mutuo Elastico”, designed to guarantee a constant rate over time.
directors’ report on operations 32




                                     Operations relating to agreements with professional associations and bodies also
                                     proceeded with positive results. In this regard, the “Convenzione Provincia di
                                     Treviso”, an agreement signed with the Provincial Authority to encourage first-
                                     time buyers in the province, was particularly significant.

                                     Consumer credit also grew at a significant pace. This activity has been developed
                                     with the personal loans supplied directly by the Group’s banks and through
                                     commercial agreements with specialised companies, with proven, consolidated
                                     experience, such as Findomestic and Linea.
                                     In this field, the leading products include “Carta Aura”, the most successful
                                     revolving credit card in Italy. During the financial year it recorded a particularly
                                     interesting trend in terms of the number of cards placed, with overall growth of
                                     nearly 20%.

                                     4.2.3. SERVICE/PAYMENT PRODUCTS
                                     In a scenario marked by a strong preference for liquidity, the current account is
                                     certainly a priority tool, especially in relation to developing new customers, and
                                     is the favoured vehicle for the increase of cross selling.

                                     During the financial year, activities in the current accounts sector, referring to
                                     private customers, focused particularly on promoting the current account
                                     package “Conto Libero”, with its three profiles “Bianco”, ”Arancio”and ”Blu”.
                                     The product has been designed to align itself with a market that is ever more
                                     aware and attentive as regards current account charges, aimed at managing
                                     everyday needs.
As regards electronic money, the wide range of debit and credit cards, and the
offer of prepaid cards has met the numerous demands of customers and the
various targets, guaranteeing the Group’s competitiveness.
The stock of debit and credit cards continued to record a positive trend.
In terms of numbers, debit cards increased by 10.8%, being distributed among
products with differentiated limits and methods of use, while credit cards
recorded an increase of 5.1% compared to the previous financial year.

Bank                                 2004                          2003
                            Debit   Credit Revolving      Debit   Credit Revolving
                            cards    cards     cards      cards    cards     cards

Veneto Banca              40,283    44,413    6,487     35,737    42,514     6,096
Banca Meridiana           15,815     6,430      769     15,389     6,231         -
Banca di Bergamo           2,289     2,352       44      1,580     1,847         -
Total                     58,387    53,195    7,300     52,706    50,592     6,096
% incr. '04/'03            10.8%     5.1%     19.8%


4.2.4. OPERATIONS WITH BUSINESS CUSTOMERS
Sales activity dedicated to corporate customers was also particularly intensive
during 2004, in line with the planned strategic guidelines.

The wide, diversified range of products available, continually being updated, has
given a targeted response to the various financial problems faced by corporate
customers.
As regards financing for SMEs, a sector in which the Group’s banks have
traditionally operated, special attention was reserved to loans for investments




                                                                                     directors’ report on operations 33
and/or specific requirements, apart from requirements related to the usual
treasury flexibility.
The products made available to companies tend to allow them to choose the
term/rate combination that best meets their needs.
In addition, special emphasis was given to loans that enable access to the
incentives provided for by public regulations, and those provided by professional
bodies.

In the foreign sector, despite the problematic situation in Italian exports, where
the growing loss of competitiveness is now accompanied by the high level of the
Euro compared to the Dollar, the sales network has in any event managed to
increase its traded volumes by 9.8%.
The increase affected all banks in the Group, with significant trends even in
relation to the size of each bank. Veneto Banca, which achieved Euro 3.9 million,
closed with an increase of 9.4%, while the Banca di Bergamo and Banca
Meridiana recorded two-figure growth rates, equal to 12.1% and 26.7%
respectively.

In addition, the trend in the trading portfolio was also positive. In 2004 this
produced an overall increase of 8.4%.
Looking at the Group as a whole, the Parent Company’s result was particularly
significant, especially with regard to absolute values. Its activity increased by
10.2%. However, the growth for the Banca di Bergamo and Banca Meridiana was
also entirely satisfactory.

As regards electronic services, POS development activity was again significant.
There are now 2,766 active terminals with an increase of 8.4% compared to the
previous year. In this context, the Parent Company’s result was particularly
                                     important, with a growth of 9.7% for the year, going from 1,896 to 2,079
                                     terminals.
                                     In the remote banking sector, operations focused on the “Web CBI”product. As at
                                     31 December 2004 this numbered 2,636 active stations, compared with the
                                     previous 1,897. The growth significantly affected both the Parent Company, that
                                     recorded 2,377 units at the end of December, and the subsidiaries of the Banca di
                                     Bergamo and Banca Meridiana that more than doubled the number of active
                                     stations during the year.

                                     In order to deal with companies’ requirements for exchange rate risk
                                     management, business in OTC derivatives continued, through the activities of
                                     the Parent Company and the Banca di Bergamo.

                                     The Local Authority Treasury Service expanded its customer portfolio and
                                     operations, increasing the number of managed current accounts by 11.6%,
                                     reaching 336 at the end of 2004.

                                     The long term vehicle leasing business continued with good results, closing the
                                     financial year with a total of 1,040 vehicles leased by the Parent Company alone.

                                     Via the subsidiary Claris Broker, an important agreement was signed for
                                     collaboration with a leading French company for insurance and customer credit
                                     management. This agreement, aimed at selling credit insurance policies, meets
                                     the needs of companies, also in view of the application of the “Basel 2”
                                     assessment criteria.
directors’ report on operations 34




                                     In the context of the specific business conducted with reference to the
                                     “corporate” segment, the participation in Sintesi 2000 must certainly be
                                     highlighted. This company, whose business has gradually become more focused
                                     on supporting entrepreneurs in the Far East, offers high added value activities for
                                     those facing international competition, thanks to its direct branch office in Hong
                                     Kong, by evaluating the level of risk in various markets. The opening of the
                                     Shanghai office, scheduled for the second half of this year, will provide further
                                     concrete support to Italian businesses in developing projects and initiatives in
                                     China.

                                     4.3. MARKETING
                                     Marketing activities were mainly focused on continually reinforcing the brand, in
                                     particular working on spreading its reputation and bringing the communicative
                                     styles of the various Group companies into line, including layouts and sales
                                     outlets.

                                     The strategy, begun during the past financial year, aimed at supporting the
                                     network’s sales actions continued during 2004, through the most appropriate
                                     combinations of communications materials and methods.
                                     In particular, with regard to sales communication, the focus was on products with
                                     greater appeal, such as “Mutuotutto Trasgressivo”, motor insurance, current
                                     account packages and consumer credit, using attractive high-impact graphics and
                                     slogans to capture the public’s attention.
                                     A variety of means were used for this activity, with great attention being given to
                                     the costs/benefits ratio. Moving posters were used (public buses) and static ones
                                     (street hoardings) together with a careful plan of advertising in the local and
                                     specialised press, and also using the radio and local TV.
4.4. ADVERTISING AND COMMUNICATION
The commitment and resources invested in promoting and strengthening the
image of the Group and its subsidiaries was also important during the financial
year in question.

During 2004, events management was certainly focused in this direction,
involving top level initiatives.
Particularly significant among these was the “Meeting with Jeremy Rifkin”, the
well-known American economist, who attracted about 500 people to Veneto
Banca’s Management Centre, enhancing Veneto Banca’s role as a positive, pro-
active member of the economic and cultural scene.
The strong link between the bank and the production network was confirmed
with the sponsorship of the Annual Meeting of Unindustria Treviso, as well as the
20th edition of the Rapporto Osem, an in-depth analysis of the sports footwear
industry.

A major event was the inauguration of the new Management Centre which has
played a very important part in strengthening the image and visibility of the
Group, even during its first year of operation.
There were also a number of important, exciting and profile-raising cultural
events that included the photography exhibition by Elio Ciol, a master of the art
of black and white photography.

4.4.1. CULTURAL AND SOCIAL ACTIVITIES
The commitment of the Fondazione Veneto Banca in a social and cultural
context also continued during 2004, with particular regard to its traditionally




                                                                                         directors’ report on operations 35
served areas.
The initiatives carried out were directed at maintaining the quality of life and civil
development in the branch areas, with a special emphasis on solidarity and social
unease, as well as culture and popular traditions, the recovery and conservation
of artistic and environmental assets, healthcare and education.

The total amount paid out in 2004 was Euro 590 thousand, distributed as follows:
- solidarity, 41%;
- culture and popular traditions, 37%;
- art and restoration works, 13%;
- amateur sports, 4%;
- other, 5%.

The most significant initiatives carried out in the area of social solidarity were the
payments to the Centro Sociale Parravicini di Vittorio Veneto, the Cooperativa Sociale
Sol.Co. of Treviso and finally to the Centro Educativo Occupazione Disabili (Training
centre for disabled people) “La Casa di Michela” at Quinto di Treviso.
In addition, financing continued for the three-year programme for the Fondazione
per il Sostegno delle Strutture Sanitarie Cardiovascolari (Foundation for
Cardiovascular Hospitals) at Mirano, the promoter of important research
initiatives.

Support for the provincial music institutes and the Palio del Vecchio Mercato at
Montebelluna was also reconfirmed during 2004.
With regard to initiatives aimed at promoting and restoring artistic heritage in the
region, the Foundation took an active part in the “Progetto Chiese di Venezia” and
in the important restoration works at the “Oratorio di Villa Guidini”, in the
Municipality of Zero Branco.
                                     Finally, the Foundation once more took an active part in the sector of youth and
                                     amateur sports.



                                        5. CONTROL AND SUPPORT ACTIVITIES

                                     5.1. THE INTERNAL CONTROL SYSTEM
                                     The internal control system is the combination of rules, procedures and
                                     organisational structures that, in compliance with the laws, directives of the
                                     Supervisory Authority and corporate strategies, enables proper management of
                                     all the Bank’s activities. It involves the Board of Directors, the Statutory Board of
                                     Auditors, Management and all personnel in various roles.
                                     In Veneto Banca and its subsidiaries, this system is set up in accordance with the
                                     directions of the Supervisory Authority. It includes:

                                     - line controls, aimed at ensuring that operations are conducted properly. These
                                       are carried out by the business units themselves, incorporated into the
                                       procedures or carried out in the back office activities of the various operational
                                       units (branches and central operational departments);

                                     - risk management controls, aimed at helping to define risk assessment
                                       procedures, to check compliance with the limits assigned to the various
                                       operational departments and to check that operations are in line with the
                                       individual areas of production, with the set risk/return targets. These checks are
                                       entrusted to the central departments of Planning for management control,
                                       Loans for credit security and Risk Management for market and operational
directors’ report on operations 36




                                       risks;

                                     - internal audit activities, aimed at identifying anomalous trends, breaches of
                                       procedure and regulations, and to assess the functioning of the overall internal
                                       audit system. These are conducted on an ongoing basis, periodically or at
                                       random, also through on site checks, by Controls Management.

                                     To ensure the objectives are achieved, the internal control system is continually
                                     updated and adapted to the various activities of the Bank and its subsidiaries. The
                                     control system envisaged for the Parent Company Veneto Banca is also fully
                                     operational for the subsidiaries of the Banca di Bergamo and Banca Meridiana.
                                     For the Banca Italo-Romena, which uses a Romanian information system,
                                     different from the one used by the other banks in the Group, auditing checks
                                     were brought into line during the financial year with the same methodology used
                                     in Veneto Banca.

                                     With regard to internal auditing activities, checks on the Parent Company’s
                                     central structures were further refined, with particular reference to the financial
                                     sector.
                                     During the financial year 2004, 728 checking activities were completed, of which
                                     172 were remote and 556 on site, at the Parent Company’s central and peripheral
                                     locations and companies where the bank has a majority shareholding.
5.2. RISK ASSESSMENT AND MANAGEMENT

5.2.1. ASSESSMENT AND MANAGEMENT OF CREDIT RISKS

5.2.1.1. CREDIT ALLOCATION
During 2004 implementation of the various components of the TCQ system
(Total Credit Quality) continued to see a gradual improvement in the assessment
and management of credit risk, also in view of the important new developments
outlined by the Basel committee in the context of the new legislation regarding
changes to Banks’ assets, the definitive version of which was issued in June 2004.
The new Basel agreement (known as Basel 2), that will replace the one currently
in force with effect from 2007, introduces various new features in terms of
evaluating both credit and operational risks, changing both the procedure for
assessment and the calculation tools used for weighted assets.
With the TCQ system, the Bank has implemented an approach based on internal
ratings. This system requires continual monitoring to improve its performance
and integrate its functions. Only when a database with enough historic depth
becomes available we will be able to proceed with an estimate of the likelihood
of default and loss in the event of insolvency by using own data.
Likewise, the Risk Management department also equipped itself with a credit risk
and management analysis application during 2004. This is designed to provide,
via a learning model based on anagraphical, balance sheet, trend-related data,
and feedback from the Bank of Italy’s Risk Centre, the likelihood of default for
both retail and corporate customers. The aim is to implement the initial analyses
on the risk profile/loan return and carry out simulations concerning the absorbed
capital. This application is currently in use for the customers of Veneto Banca and




                                                                                      directors’ report on operations 37
will subsequently be extended to the other companies in the Veneto Banca Group.

5.2.1.2 SYSTEMATIC SECURITY
The Credit Security Service ensures the constant remote monitoring of the credit
risk for customer relations of the Bank and Group companies, and takes the
necessary action to eliminate or mitigate the risks deriving from anomalous
relations.
It guarantees the correct classification of performing entries and those under
surveillance, and, acting on the opinion of the Legal Department, establishes if
and when to transfer them to the watch list or non-performing loans.

It also updates the credit risk monitoring and control processes, ensuring full
consistency with corporate policies and with the directives of the Supervisory
Authority.

5.2.2. TREND IN FINANCIAL RISKS AND CONTROL
          PROCEDURES ADOPTED
During the financial year, the Group’s Financial Risk Regulations were updated
and brought more into line with the current operating reality. These regulations
arose from the need for a more incisive coordination and more efficient
management of risk within the Group’s Finance sector, aimed at governing the
type of risks regulated, the limits and authorities in operation relating to the
activities carried out by the Parent Company and all the subsidiaries, the duties
of the bodies and departments in charge of operating on the markets and the
internal control system.
The department in charge of the Risk Management process, whose aim is to
assess and control the Veneto Banca Group’s exposure to market, credit and
operational risks, identifies specific, specialised structures with the tasks of
                                     monitoring and control.
                                     The Board of Directors has the task of defining the overall degree of risk aversion
                                     and therefore the operational limits.
                                     The General Management has the task of guaranteeing compliance with risk
                                     policies and procedures.
                                     The Risks Committee has the task of evaluating – at an overall level and for each
                                     Group company – the risk profiles achieved and thus the capital consumption, for
                                     supervisory or economic purposes, together with the trend in the risk/return
                                     ratios.
                                     The Finance Committee has the task of examining the performances achieved by
                                     the various business units and checking the risks taken, in relation to the limits
                                     assigned, by studying the summary reports produced by the Risk Management.
                                     This committee also evaluates the investment opportunities in the financial
                                     markets with the aim of shared risk/return.
                                     These committees were implemented in line with the activity of refining the
                                     instruments to assess the various risk types.

                                     5.2.2.1 MONITORING OF MARKET RISKS
                                     The model for calculating market risks only considers the risk for the generic
                                     portfolio and not the specific risk (of the counterparty). During the year, we
                                     attempted, by implementing internal analysis modules, to take into account the
                                     specific risk element, at least for the financial products in the portfolio, mainly
                                     subject to this important peculiarity.
                                     Currently, risk monitoring covers 100% of Veneto Banca’s trading portfolio and
                                     the portfolio of VIFS. The credit risk relating to 15% of this portfolio is measured
                                     using an internal calculation model, implemented according to the proposals of
directors’ report on operations 38




                                     the leading international financial institutions, following the requirements issued
                                     by the Supervisory Authority.
                                     During the year, Veneto Banca used the Murex system to calculate the daily VaR
                                     for the portfolio, with a 99% confidence interval, on a historic basis. During the
                                     year Murex was also extended to VIFS. Currently, our subsidiary also uses a
                                     parametric Bloomberg VaR which appears to be more appropriate for the specific
                                     nature of the portfolio held. For both portfolios, the findings are obtained daily.
                                     The future developments in the system for calculating market risk are directed
                                     towards achieving an efficient, effective and more complete system of monitoring
                                     and managing market risk managed outside the front office Murex system, as
                                     recommended by the Supervisory Authority. This system will be equipped with a
                                     database, with market trends on rates and exchange rates to evaluate the
                                     financial instruments, used to implement stress testing and back testing.
                                     For the Group, as at 31 December 2004, the 10 day VaR with a 99% confidence
                                     interval totalled Euro 1,054,000 2, divided into the following types of financial
                                     instruments:
                                     - Euro 321,730 for the share portfolio;
                                     - Euro 884,500 for the bond portfolio;
                                     - Euro 23,950 for the exchange rate position.

                                     5.2.2.2. RATE AND LIQUIDITY RISK CONTROL
                                     With effect from the first half of 2003, a process was set up designed to quantify
                                     and manage financial flows in an integrated manner. The methods used enable
                                     monitoring of the following risk types:
                                     - The interest risk, determined by the time lag in due dates and the timing of
                                       repricing of the interest rate for the bank’s assets and liabilities. Where there are
                                       market rate fluctuations, this mismatching causes a variation in the expected           2 The amount takes into consideration the
                                       interest rate that can be quantified using the maturity gap techniques, looking          correlation between the portfolios.
  at the short term, in other words the current financial year. If on the other hand
  the view taken is over the long term, adopting the market values perspective,
  the sensitivity analysis technique is used, designed to quantify the impact on
  capital of a variation in market rates.
- The liquidity risk, deriving from the problems the bank may experience in
  dealing with the cash expenditure caused by the time lag in creating liquidity
  flows, relating to both capital and interest, payable and receivable.
To monitor these risks the Veneto Banca Group relies on the advice of Prometeia
and the software they use (ALMPro). The banks currently monitored with these
techniques are only the three commercial ones (Veneto Banca, Banca di Bergamo
and Banca Meridiana), while those for Veneto Ireland Financial Services and
Claris Leasing are currently being set up.

The banking book management policy has traditionally been limited to merely
covering all the risk positions. There is a possibility that, although within the
context of the limits defined in the regulations, a more active management of
positions may be implemented in the near future, in order to seize opportunities
with regard to medium term interest rates.

As at 31 December 2004 the risk exposure for the three banks with regard to rates
and liquidity has remained within the limits established in the Group’s Financial
Risk Regulations.

5.2.2.3. OPERATIONAL RISKS
Operational risk is caused by many factors, including the lack of respect for
administrative procedures (authorisations, respect for powers, completeness of




                                                                                       directors’ report on operations 39
documentation), the failure of security procedures, IT system faults, other
structural malfunctioning or staff error.
To prevent or reduce possible losses caused by operational risks,Veneto Banca has
directly dealt with the setting up and activation of a procedure aimed at
regulating access to the IT applications and access for all the Bank’s operators.
In Veneto Banca, operational risks are also governed by the internal control
system, already outlined for some of the main corporate departments, which
contains the checks that the manager of the business unit must carry out, at his
or her own responsibility.
In addition, a project aimed at systematically collecting operating losses is being
studied (setting up of an internal database) through standardised processes
involving the entire organisation, both central and peripheral. This data collection
process will form the starting point for a more in-depth qualitative evaluation of
the Bank’s exposure to operating risks, in order to increase the effectiveness and
promptness of corrective measures.
                                     5.3. TECHNOLOGICAL AND
                                          ADMINISTRATIVE/ORGANISATIONAL
                                          SERVICES
                                     In terms of organisation and information technology, 2004 was marked by two
                                     main lines of planning initiatives. The first was aimed at completing and
                                     consolidating the Group’s organisational set-up, ensuring the full operation of
                                     all the best solutions and their effective, efficient functioning. The second
                                     involved the direction and creation of a series of initiatives intended to
                                     implement the strategic guidelines laid down in the Group’s industrial three-
                                     year plan.

                                     During 2004 all the projects aimed at centralising non-sales activities at the
                                     Parent Company were continued, keeping all the aspects relating to customer
                                     relations management at the peripheral structures.
                                     The extension of the new model for governing and controlling administrative
                                     expenses to subsidiary banks was a step in this direction. It has been in operation
                                     at the Parent Company since 2003.

                                     The initiative that completely redefined the regulations for business in OTC
                                     derivatives was very important. Via an inter-functional working group, involving
                                     various Group organisations, the following were redefined: the target customers
                                     for this activity, the products to be offered, the operations and risk profiles to be
                                     included, the lines of credit and absorption, and monitoring and risk control
                                     operations.
                                     To back up the redrafted regulations, development of the integration of IT
                                     support tools continued, based around the front office Murex procedure.
directors’ report on operations 40




                                     During the year, planning initiatives imposed by the banking system’s legislative
                                     restrictions were also carried out. The most significant of these was the
                                     adaptation to the new IAS accounting principles in line with the legal obligations
                                     that took effect from 1 January 2005. The activities carried out involved significant
                                     commitment, affecting almost all the corporate structure both in terms of work
                                     carried out and training of the personnel involved.

                                     Equally important was the commitment made necessary by the adaptation to the
                                     Basel 2 directives, that required a planning structure to comply with the deadline
                                     on 1 January 2007. This will also require a significant effort in terms of
                                     implementation for this year. Supporting this commitment will be the extension
                                     to all banks in the Group of the tools for assigning an internal rating to all
                                     customers. This will be guaranteed by the project, already in operation since 2002,
                                     known as “Total Credit Quality”, which is being finalised.
5.4. TRANSPARENCY IN BANKING OPERATIONS,
     COMPLAINTS MANAGEMENT, PREVENTION
     AND SECURITY, PERSONAL DATA
     PROTECTION

• Transparency in banking operations
Veneto Banca and the other Group banks continued their work in the context of
the project PattiChiari. This is an important long-term initiative promoted by the
ABI (Italian Banking Association). The project, created with the aim of improving
relations between banks and their customers, fits in well with the Group’s values,
transparency being one of the basic elements of its business.


• Privacy law 196/2003
On 1 January 2004, the new Data Protection Code came into force.
The correct, full application of the legislative decree 196/2003 required a great
deal of formal and substantial obligations that have had a great impact on the
company’s organisational set-up.
The joint provisions of the law and the minimum and obligatory security
measures complementing it have led to internal regulations being analysed and
updated, not only for information and IT systems, but also for paper archives, all
work procedures and the environments where personal data is processed, those
responsible for processing and the methods they use, directly or indirectly
involving every sector, office or department in the company.
In June 2004, the update to the Security Planning Document was drafted
(“Security Measures adopted by Veneto Banca for the protection of personal




                                                                                      directors’ report on operations 41
data”) following the directions contained in the technical regulations attached to
the legal text (Appendix B to the legislative decree 196/2003).
The document took steps to:
- list the processing of personal data carried out in the capacity of data holder,
  the processes and technological structures used;
- analyse the risks to which data is subject;
- outline the organisational structures dealing with data processing and the
  related distribution of tasks and responsibilities;
- outline the measures put in place for the physical protection of premises;
- outline the measures put in place to guarantee integrity of data;
- outline the measures put in place to guarantee confidentiality and control
  access to data;
- outline the measures put in place to ensure availability of data;
- outline the criteria and procedures for restoring data availability after it has
  been destroyed or damaged;
- outline the training schedule for those dealing with processing;
- outline the plan to update the internal regulations.

• Law 231/2001
The legislative decree 231/2001 introduces a form of objective responsibility into
the Italian legal system, what is known as “administrative corporate liability” for
bodies and companies deriving benefits from certain well-defined offences
committed by directors, managers and employees in the interests of the
organisation. It is a new, real, business risk.

This law, forming part of an international scenario that tends to overcome the
principle of companies not being held criminally liable, combines the essential
elements of the penal and administrative systems, subjecting the company to
criminal proceedings with financial and prohibitive penalties.
                                     To date, the law refers to precise types of offence, introduced in subsequent
                                     periods: offences against public authorities, coinage offences, corporate offences,
                                     offences relating to terrorism and offences against the individual.
                                     This type of responsibility arises if the offence is committed in the interests of or
                                     to the benefit of the organisation itself by:
                                     1. individuals considered to be “executive” (those carrying out functions of
                                         representation, administration or direction of the organisation or one of its
                                         financially and functionally independent units, as well as by those responsible
                                         for its management and control). In this case the organisation is responsible,
                                         unless evidence is provided to the contrary, to be supplied by adopting a
                                         special prevention model drawn up according to legal directives;
                                     2. individuals subject to the direction and supervision of executives: in this case,
                                         the organisation is only responsible if committing the offence was made
                                         possible by the failure of the executives to carry out their obligations of
                                         direction and supervision. The legislative decree 231/2001 also states that “in
                                         any case the lack of observance of the direction and supervision obligations is
                                         excluded if the organisation, prior to committing the offence, adopted and
                                         effectively implemented a model for organisation, management and control
                                         designed to prevent offences of the type which was committed”.

                                     Having said that, relying on the advice of a specialist external company, a project
                                     was set up to adopt all the procedures required by law to protect the Bank from
                                     possible situations of administrative liability pursuant to the legislative decree
                                     231/2001 and in particular to prepare a specific“organisational model”as required
                                     by law, in conformity with the guidelines of the Italian Banking Association,
                                     approved by the Ministry of Justice and, as such, designed to prevent possible
directors’ report on operations 42




                                     liability being attributed to the Bank pursuant to the said law.
                                     Adoption of the abovementioned organisational model, the only way to avoid
                                     application of penalties, is not obligatory, but is an opportunity that Veneto Banca
                                     has taken, by setting up “Progetto 231” towards the end of 2004. This will be
                                     concluded with the preparation and implementation of the model and the
                                     procedures mentioned above during this financial year.
                                     It is also planned to extend this model to the other Group companies, duly
                                     adapted.

                                     • Related party transactions
                                     With regard to the companies’ adoption of rules to ensure the transparency and
                                     substantial and procedural correctness for any transactions with related parties,
                                     and also to provide suitable information in the directors’ report, it has been
                                     agreed to indicate the largest amounts in infra-group transactions in the notes
                                     to the consolidated financial statements, under the analysis of the breakdown
                                     of balance sheet items.
                                     For related parties other than Group companies, the supply relations for goods
                                     and services within the Group concerning the usual type of business of the
                                     companies involved are represented along with the customer operations as
                                     they are always made with a purpose, amount due, procedure or timeframe
                                     that is similar to the one normally used in customer relations.
                                     No atypical or unusual transactions were recorded during 2004.
                                                     5.5. BANCA D’ITALIA INSPECTION
                                                     During 2004 the Banca d’Italia carried out a scheduled inspection at the Parent
                                                     Company, the Banca Italo-Romena and the Banca Meridiana.
                                                     The inspections did not highlight any significant anomalies in terms of operation
                                                     or management.
                                                     The extent of the inspections carried out by the Supervisory Authority, involving
                                                     the strategic and organisational profiles and the overall structure of the
                                                     inspections, confirmed the good quality of the companies subjected to
                                                     inspection, and certify that the Group is in a suitable position to continue its
                                                     development operations with determination.



                                                        6. TREND IN CONSOLIDATED
                                                        OPERATIONS
                                                     6.1. OPERATIONAL DEVELOPMENT
                                                     During 2004, the Group’s operations developed in an external scenario that was
                                                     more favourable to banking and financial brokerage, and showed a few weak
                                                     signs of recovery compared to the previous financial year.
                                                     Although we did not see a significant recovery in consumption or income, the
                                                     climate of confidence highlighted a trend reversal, and gradually built up,
                                                     especially in the second half of the year, partly recovering from the drop recorded
                                                     in 2003.
                                                     This increased confidence resulted in a gradual increase in the impact of the
                                                     medium and long term component of household savings.
                                                     The trend in the demand for loans and consumer credit was also lively during




                                                                                                                                           directors’ report on operations 43
                                                     2004.
                                                     Loans to companies also recorded sustained increases, despite the general
                                                     economic figures which recorded rather modest growth.

  BREAKDOWN
  OF CUSTOMERS                                       Against this background the Group managed to make perfectly satisfactory
  BY SEGMENT                                   (%)
                                                     progress, achieving excellent results, both with respect to the development of
                                                     traded volumes and the customer base and in terms of income.
    14 Affluent              13 POE
        private
                                                     The following sections show the main results achieved during the financial year.
   3 VIP
  private                           4 Corporate
                                                     6.1.1. CUSTOMER BASE AND SALES SEGMENTS
                                                     At the end of the year, with regard to the segments of customers served 3, the
                                                     Group relied on a structure made up of approximately 83% private customers
                                                     and other, of whom approximately 17% belonged to the high income segment.
                                                     The remaining 17% were businesses, divided into small business and corporate,
                                                     with 13% and 4% respectively.
                        66 Universal Private         The main component, including “universal” and residual private customers,
                        and residuals
                                                     representing 66% of the customer base on average, is distributed differently
                                                     among the three4 different banks. For Veneto Banca this segment represents 64%
3 Private customers were segmented in relation
                                                     of customers. The percentage drops to 43% for the Banca Bergamo, rising to 81%
 to the estimate of the size of their assets held    in Banca Meridiana.
 throughout the entire financial system,             The above shows that the Parent Company and Banca Meridiana are more
 divided into VIP, Affluent and Universal.
 Companies, divided into Corporate and               oriented towards retail, while the Banca di Bergamo has a customer structure
 Small     Businesses     (Piccoli     Operatori     with a larger number of corporate and small business customers, representing
 Economici - POE), were segmented on the
                                                     32% overall compared to the 16% for Veneto Banca and the 12% for Banca
 basis of sales, or in the absence of this, the
 credit granted.                                     Meridiana.
4 Not including customers of the Banca Italo-
 Romena.
                                      CUSTOMER STRUCTURE BY SEGMENT AND BANK                                                                                                                        (%)

                                     90%


                                     80%




                                                                                                                                                          81
                                     70%
                                                   64



                                     60%


                                     50%




                                                                                                  43
                                     40%


                                     30%


                                     20%




                                                                                                                            20
                                                                                                                  18
                                                                  16




                                     10%




                                                                                                                                   12
                                                                         12




                                                                                                                                                                                  11
                                                                                                         6




                                                                                                                                                                          6




                                                                                                                                                                                            1
                                                          4




                                                                                                                                                                   1
                                                                                 4




                                      0%
                                                          VENETO BANCA                                 BANCA DI BERGAMO                                        BANCA MERIDIANA

                                             Universal and Residual private customers   VIP private customers          Affluent private customers       POE         Corporate


                                     With regard to the breakdown of volumes, a study of the data shows a certain
                                     balance in the weight of the various segments, in terms of deposits. Viceversa,
                                     when looking at loans, the clear focus on the companies’ sector can be seen,                                   BREAKDOWN
                                     channelling 45% of the aggregate, and on small businesses, representing 27%.                                   OF LOANS
                                                                                                                                                    BY SEGMENT                                       (%)
directors’ report on operations 44




                                     The margins by segment were also largely in line with the volumes breakdown.
                                                                                                                                                          6 VIP private        4 Affluent private
                                     The absolute dominance of the corporate and small business segments can be
                                     seen with regard to the financial spread.
                                     On the contrary, the income contribution made by services to private customers
                                                                                                                                                                                            27 POE
                                     seems to be more significant. At the end of the financial year this represented
                                     approximately 60% of the service margin.

                                     6.1.2. FINANCIAL AGGREGATES
                                     In 2004 gross banking income displayed a 16.1% increase. This rise, caused by
                                     important growth both in administered volumes and in loans, led the total
                                                                                                                                                                             45 Corporate
                                     aggregate to exceed Euro 14.5 billion.                                                                           18 Universal
                                                                                                                                                      and Residual private
                                     GROSS BANKING INCOME (in Euro million)
                                                                                         2004                    2003               % var.
                                                                                                                                                    BREAKDOWN
                                     Loans to customers                                  5,207                   4,368              19.2%           OF TOTAL DEPOSITS
                                     Direct deposits                                     5,234                   4,403              18.9%           BY SEGMENT                                       (%)
                                     Indirect deposits                                   4,103                   3,755               9.3%
                                     GROSS BANKING INCOME                               14,544                  12,525              16.1%           21 Corporate                         26 Universal
                                                                                                                                                                                         and Residual
                                                                                                                                                                                         private
                                     This advance also had an impact on average unit productivity that increased from
                                     Euro 8.2 to Euro 9.0 million during the year.

                                     Traded volumes by branch also registered a clear improvement, exceeding Euro
                                     97 million as against the previous 87 million.


                                                                                                                                                                                        20 VIP private

                                                                                                                                                             19 Affluent private
                                                                                                                                                      14 POE
                                                                                                                                                4 Non sono compresi i clienti di Banca Italo-
                                                                                                                                                    Romena.
6.1.2.1. CUSTOMER DEPOSITS
As at 31 December 2004 administered customer volumes reached Euro 9,337
million with an increase of 14.5%.

TOTAL CUSTOMER DEPOSITS (in Euro million)
                                      2004            2003              % var.      % for '04

Due to customers                      3,088           2,482              24.4%
Securities issued                     2,137           1,908              12.0%
Deposits in administration               10              13             -26.1%
Direct customer deposits              5,234           4,403              18.9%        56.1%
Managed savings                       1,747           1,641               6.5%
Administered savings                  2,356           2,114              11.4%
Indirect customer deposits            4,103           3,755               9.3%        43.9%
TOTAL CUSTOMER DEPOSITS               9,337           8,158             14.5%


Both components showed a positive trend, although the greater degree of activity
in direct deposits confirmed that there is still a high degree of uncertainty among
savers.

The trends highlighted meant that the financial year closed with a breakdown
marking a further shrinkage of the indirect component, from 46% to 43.9%.

% BREAKDOWN OF CUSTOMER DEPOSITS
                                2004            2003             2002        2001       2000

Direct deposits                       56.06     53.97         47.71         44.81      43.22
Indirect deposits                     43.94     46.03         52.29         55.19      56.78


All Companies in the Group contributed to achieving the above result, with




                                                                                                directors’ report on operations 45
contributions relative to the specific nature of the activities carried out and the
extent of operations, as described in more detail below.

DIRECT DEPOSITS (in Euro million)
                                      2004    2003      % var.      % for '04       % for '03

Veneto Banca                          4,047   3,422 18.3%                 77.3%        77.7%
Banca di Bergamo                        461     333 38.4%                  8.8%         7.6%
Banca Italo-Romena                      100      50 101.0%                 1.9%         1.1%
Banca Meridiana                         718     611 17.4%                 13.7%        13.9%
Claris Factor                            57     127 -54.9%                 1.1%         2.9%
Claris Leasing                            7       7   1.3%                 0.1%         0.2%
VIFS                                    127     127   0.0%                 2.4%         2.9%
Adjustments and cancellations          -283    -274   3.3%                -5.4%        -6.2%
TOTAL DIRECT DEPOSITS                 5,234   4,403     18.9%           100.0%       100.0%


INDIRECT DEPOSITS (in Euro million)
                                      2004    2003      % var.      % for '04       % for '03

Veneto Banca                          3,533   3,282       7.6%            86.1%       87.4%
Banca di Bergamo                        292     182      60.2%              7.1%        4.8%
Banca Meridiana                         335     370      -9.5%              8.2%        9.9%
Adjustments and cancellations           -56     -79     -28.6%             -1.4%       -2.1%
Total indirect deposits               4,103   3,755       9.3%           100.0%      100.0%
TOTAL CUSTOMER DEPOSITS               9,337   8,158      14.5%
                                     6.1.2.2. DIRECT DEPOSITS
                                     Direct customer deposits as at 31 December 2004 totalled Euro 5,234 million,
                                     with an increase of 18.9% compared to the 2003 result.

                                     DIRECT DEPOSITS (in Euro million)
                                                                                  2004          2003     % var.         % for '04        % for '03

                                     Due to customers:                            3,088     2,482        24.4%                59.0%        56.4%
                                     - current accounts                           2,665     2,063        29.2%                50.9%        46.9%
                                     - savings deposits                             249       250         -0.4%                4.8%         5.7%
                                     - other accounts                                 6        16       -60.1%                 0.1%         0.4%
                                     - factoring transactions                        12         0            n.s.              0.2%         0.0%
                                     - REPOS                                        155       153          1.6%                3.0%         3.5%
                                     Securities issued:                           2,137     1,908        12.0%                40.8%        43.3%
                                     - bonds                                      1,900     1,617        17.5%                36.3%        36.7%
                                     - CDs                                          191       134        43.0%                 3.7%         3.0%
                                     - discounting of commercial papers               0       117      -100.0%                 0.0%         2.7%
                                     - other securities                              45        40        13.5%                 0.9%         0.9%
                                     Deposits in administration                      10        13       -26.1%                 0.2%         0.3%
                                     DIRECT CUSTOMER DEPOSITS                     5,234     4,403        18.9%            100.0%          100.0%


                                     The significant progress shown by the aggregate as a whole was produced both                                        BREAKDOWN
                                                                                                                                                         OF CUSTOMER DEPOSITS
                                     by current accounts, up by 29.2%, and by the securities issued, which mainly rose                                   AS AT 31/12/2004                             (%)
                                     due to the considerable amount of bond issues, with a net flow during the year
                                                                                                                                                             2.7 Factoring       0.4 Other accounts
                                     of over Euro 283 million.                                                                                                transactions          0.9 Other securities
                                                                                                                                                            3.5 REPOS                 0.3 Deposits
                                                                                                                                                           3.0 CDs                    in admin.
                                     As at 31 December 2004 the aggregate was made up of current accounts as to
                                     50.9% and by savings deposits as to 4.8%. 36.3% and 3.7% were represented by
                                     bonds and CDs respectively, while the remaining part included customer REPOS
                                     of 3%.
directors’ report on operations 46




                                     These important results were achieved with the effective contribution of all
                                     Group companies.
                                     In particular, the Parent Company confirmed a very positive trend for 2004,
                                     recording growth of 18.3%.                                                                                               36.7 Bonds              46.8 Current
                                                                                                                                                                                      accounts
                                                                                                                                                          5.7 Savings deposits
                                     Similarly positive was the growth in volumes collected by the Banca di Bergamo,
                                     which closed with a 38.6% increase, and the Banca Meridiana, with a 17.4%
                                     increase.
                                     Finally, the Banca Italo-Romena almost doubled its customer deposits, exceeding
                                     Euro 100 million.

                                      DIRECT DEPOSITS                                                                    (in euro million)


                                     1997             1,064


                                     1998               1,154


                                     1999                 1,249


                                     2000                       1,764


                                     2001                               2,021


                                     2002                                   2,429 162     519     38


                                     2003                                                  3,422       333        611    50


                                     2004                                                                4,047          461        718     100


                                            0           1,000             2,000           3,000              4,000              5,000            6,000
                                                Veneto Banca        Banca di Bergamo            Banca Meridiana           Banca Italo-Romena


                                     NOTE: The figures are shown gross of intra-Group relations.
                                                       6.1.2.3. INDIRECT DEPOSITS
                                                       As at 31 December 2004 indirect deposits, calculated on the basis of year-end
                                                       current values for the component financial activities totalled Euro 4,103 million,
                                                       with an increase of 9.3% compared to the figure for the end of 2003.

                                                       INDIRECT DEPOSITS (in Euro million)
                                                                                                         2004        2003          % var.     % for '04        % for '03

                                                       Deposits in administration                        2,356       2,114         11.4%         57.4%             56.3%
                                                       Government bonds                                    798         701         13.9%         19.5%             18.7%
                                                       Bonds                                             1,090       1,020           6.8%        26.6%             27.2%
                                                       Shares and other securities                         468         393         18.8%         11.4%             10.5%
                                                       Managed savings                                   1,747       1,641           6.5%        42.6%             43.7%
                                                       Funds                                             1,207       1,184           2.0%        29.4%             31.5%
                                                       Assets management                                   107         108          -1.7%         2.6%              2.9%
                                                       Life insurance                                      434         349         24.4%         10.6%              9.3%
                                                       TOTAL INDIRECT DEPOSITS                           4,103       3,755          9.3%        100.0%             100.0%


                                                       Despite the abovementioned improvement in the financial and economic
                                                       scenario, the impact of the element in administration remains high. At year end
                                                       this aggregate totalled Euro 2,356 million with an increase of 11.4% compared to
                                                       December 2003 and an impact of 57.4% on the total.

                                                       The managed savings component, on the other hand, reached Euro 1,747 million,
                                                       marking an increase of 6.5%.
                                                       In terms of individual items under managed savings, mutual investment funds
                                                       increased moderately and life insurance recorded an excellent result. However,
                                                       the assets managed as funds remained almost unchanged.




                                                                                                                                                                              directors’ report on operations 47
                                                        INDIRECT DEPOSITS                                                                      (in euro million)


                                                       1997            636         366


                                                       1998          547                   766


                                                       1999         512                              1,343


                                                       2000                  824                                 1,512


                                                       2001                         1,243                                  1,348


                                                       2002                                              2,022                               1,452


                                                       2003                                               2,114                                          370
                                                                                                                                                     1,641


                                                       2004                                                      2,356                                     1,747
 PREMIUM COLLECTION 2004
 BY PRODUCT                                                   0        500         1,000         1.500       2,000       2,500       3,000     3,500       4,000      4,500
 TYPE                    (%)
                                                                  Administered savings               Managed savings
         1.4 Theft/Fire/   0.5 Death/LTC
              Non-life
                             0.4 Accident/Illness
1.9 Unit Claris Vita                                   With regard to insurance products which, as mentioned, made a positive
                               0.1 Guarantee
  5.1 Motor/                                           contribution to development of the aggregate, ending the financial year with an
       other
                                                       increase of over 24%, the overall collection of premiums for the year related to life
                                                       products and pension funds for about 28%, while more financial products such
                                                       as the index and unit linked products represented more than 64%.




  27.9 Life/Pension fund      62.7 Index Claris Vita
                                     The growth in indirect deposits was caused by the positive trend in similar
                                     aggregates relating to Veneto Banca and the Banca di Bergamo, which increased
                                     by 7.6% and 60.3% respectively.
                                     However there was a reduction of 9.4% for the Banca Meridiana, essentially
                                     caused by the transformation of bonds issued by the former Banca Mediterranea
                                     into own bonds.

                                      BREAKDOWN OF INDIRECT DEPOSITS                                                         (in euro million)


                                     1997                   1,002


                                     1998                           1,313


                                     1999                                      1,855


                                     2000                                                   2,336


                                     2001                                                      2,545        56


                                     2002                                                                    3,051         360       150


                                     2003                                                                          3,282         370 182


                                     2004                                                                                3,533       335      292


                                            0       500        1,000        1,500      2,000        2,500        3,000       3,500         4,000    4,500

                                                Veneto Banca           Banca Meridiana               Banca di Bergamo

                                     NOTE: The figures are shown gross of intra-Group relations.
directors’ report on operations 48




                                     6.1.3. CREDIT MANAGEMENT
                                     Although the economic recovery did not give rise to a clear reversal in the local
                                     economic and production cycle, the Group’s activities continued to thrive.

                                     As at 31 December 2004 loans to customers totalled Euro 5,207 million,
                                     highlighting an increase of 19.2% compared to the end of the previous financial year.


                                      LOANS TO CUSTOMERS                                                                     (in euro million)


                                     1997             941


                                     1998              1,107


                                     1999                   1,383


                                     2000                              2,001


                                     2001                                           2,622


                                     2002                                                            3,673


                                     2003                                                                          4,368


                                     2004                                                                                         5,207


                                            0             1,000             2,000            3,000               4,000             5,000            6,000


                                     The contribution made by the various corporate components to overall growth
                                     was widespread and certainly significant.
                                     Among others, there was a particularly sparkling performance of the Banca
                                     Meridiana and the Banca Italo-Romena with respective increases of 56.3% and
                                     74.5%.
                                          LOANS TO CUSTOMERS (in Euro million)
                                                                              2004     2003    % var.   % for '04   % for '03

                                          Veneto Banca                         4,115   3,551   15.9%       79.0%       81.3%
                                          Banca di Bergamo                       490     377   29.9%        9.4%        8.6%
                                          Banca Italo-Romena                     167      96   74.5%        3.2%        2.2%
                                          Banca Meridiana                        449     287   56.3%        8.6%        6.6%
                                          Claris Factor                          115     114    1.0%        2.2%        2.6%
                                          Claris Leasing                         317     266   19.1%        6.1%        6.1%
                                          VIFS                                    13      13    0.0%        0.2%        0.3%
                                          Adjustments and cancellations         -458    -336   36.4%       -8.8%       -7.7%
                                          TOTAL LOANS TO CUSTOMERS             5,207   4,368   19.2%     100.0%      100.0%


                                          During the year, growth in the aggregate was led mainly by the medium-long
                                          term component, within which mortgage loans played the most significant part,
                                          recording an increase of over 78%.

                                          LOANS TO CUSTOMERS (in Euro million)
                                                                             2004      2003    % var.   % for '04   % for '03

                                          Current accounts                     1,591   1,536    3.6%       30.6%       35.2%
                                          Import-export loans                    225     218    3.2%        4.3%        5.0%
                                          Assets sold from the trading
                                          portfolio                               41     61    -33.3%       0.8%        1.4%
                                          Mortgage loans                       1,351    758     78.3%      26.0%       17.4%
                                          Unsecured loans                        168    189    -11.0%       3.2%        4.3%
                                          Non-regulated subsidies on current
                                          account and other credits            1,392   1,229    13.3%      26.7%       28.1%
                                          Non-performing loans                    38      32    19.9%       0.7%        0.7%
                                          Credits for leasing transactions       317     261    21.3%       6.1%        6.0%
                                          Credits for factoring transactions     113      91    23.8%       2.2%        2.1%
                                          Other technical forms                    5      18   -69.7%       0.1%        0.4%
                                          Provisions for adjustment




                                                                                                                                directors’ report on operations 49
                                          of the assets                          -36     -24   38.6%       -0.6%       -0.6%
                                          Loans to customers, net              5,207   4,368   19.2%     100.0%      100.0%
                                          Credit commitments                     296     259   14.2%
                                          TOTAL LOANS TO CUSTOMERS             5,503   4,627   18.9%


                                          A study of the other items shows the modest trend recorded by current accounts
                                          and foreign loans, while there was a more marked growth in subsidies and other
                                          credits, up by 13.3%, and in loans for leasing and factoring transactions, up by
                                          21.3% and 23.8% respectively.

                                          Credit commitments also recorded a positive trend, totalling 14.2%, caused
                                          entirely by commercial commitments, which went from Euro 207.2 to 250.6
                                          million over the twelve month period.

                                          6.1.4. DOUBTFUL LOANS TO CUSTOMERS
                                          In 2004, although there were no significant improvements in the operational
                                          scenario, there was no significant deterioration of credit quality.

                                          The Bank’s constantly high level of attention towards the supply of credit, and
                                          the continual credit risk classification and monitoring activities regarding
                                          relations with customers of Veneto Banca and the other Group Companies,
                                          together with the solidity in the local economic and production system and the
                                          quality of businesses, confirmed the excellent level of the degree of risk in the
                                          loans portfolio achieved in recent years, one of the lowest in the Italian banking
                                          system.

                                          As at 31 December 2004 the ratio of net non-performing loans to loans equalled
5 Source: ABI – Monthly Outlook – March
                                          0.72%, compared with the average of 2.03% recorded by Italian banks 5.
 2005
                                     Following a change to the criteria for classifying watch-list entries, on the other
                                     hand these increased. Their impact on total loans to customers was 2%. Also in
                                     this case, this value is still considerably below the similar figure for the banking
                                                                 6
                                     system, recorded at 6.5% .

                                     DOUBTFUL LOANS (in Euro million)
                                                                                   2004               2003         % var.

                                     Non-performing loans                           37.9              31.6         19.9%
                                        of which interest on delayed payment         0.2               1.7        -87.9%
                                     Watch-list                                     60.2              30.0        100.9%
                                     Restructured loans                              8.2               0.0            n.s.
                                     Total doubtful loans                          106.4              61.6         72.7%
                                     Performing loans                            5,100.3           4,305.9         18.4%
                                     Total loans to customers                    5,206.7           4,367.5         19.2%
                                                                                                                       -1
                                     %non-performing loans (*)/loans              0.72%             0.69%          0.04%
                                     (*) net of interest on delayed payment


                                     6.1.5. SECURITIES PORTFOLIO AND TREASURY
                                     During 2004, the financial markets continued, though to a lesser degree, along
                                     the positive trend that began during the previous financial year. Simultaneously,
                                     the international economic cycle recorded healthy growth, although it slowed
                                     down towards the end of the year compared to growth during the first few
                                     months of 2004, and there were different rates of growth between the main
                                     economies.

                                     Against this macroeconomic scenario, the Group maintained a limited risk profile
directors’ report on operations 50




                                     while simultaneously attempting to seize the opportunities offered by the
                                     financial markets, especially through trading and switching on stock and bond
                                     markets.

                                     With regard to the Parent Company, the stock in the trading portfolio was almost
                                     unchanged, while the assets of the Irish subsidiary, which is the financial branch
                                     operating on the international markets, saw an increase of 42% compared to the
                                     previous year.
                                     This increase largely depended on the subsidiary’s need to acquire a ceiling of
                                     variable rate securities to meet the needs of the Group banks as regards REPOS
                                     transactions with ordinary customers. Despite the increase in stock, the market
                                     risks of this portfolio were nevertheless kept at limited levels, far lower than the
                                     assigned limits.

                                     The investment portfolio, referring to both the Parent Company and Veneto
                                     Ireland Financial Services, fell slightly compared to the previous year.
                                     The market value of the positions recorded a considerable improvement, also due
                                     to the shrinkage of the credit spreads and the reduction in interest rates, going
                                     from the capital loss of 2,021,628 recorded at the end of 2003 to a capital gain of
                                     Euro 2,936,670.

                                     Regarding the investment portfolio of the Irish subsidiary, the improvement
                                     compared to the end of 2003 was equally significant thanks to the generalised
                                     shrinkage of the credit spreads. Capital losses went from Euro 3,599,475
                                     to Euro 474,239.


                                                                                                                             6 Source: Prometeia
PORTFOLIO OF OWN SECURITIES (in Euro million)
                                  2004        2003      % var.    % for '04   % for '03

VENETO BANCA
Investment securities              130.2     138.9       -6.3%      39.0%       41.8%
Securities                         127.0     136.4       -6.9%
Funds                                3.2       2.6       25.0%
Trading securities                 203.6     193.1        5.4%      61.0%       58.2%
Securities                         201.0     188.4        6.7%
Equity shares                        2.6       4,7      -45.5%
TOTAL OWN SECURITIES               333.8     332.0       0.5%

VENETO IRELAND FINANCIAL
SERVICES
Investment securities              101.7     103.0       -1.3%      12.3%       15.5%
Securities                          93.8      94.8        -1.1%
Funds                                7.9       8.2        -3.3%
Trading securities                 724.8     561.4       29.1%      87.7%       84.5%
Securities                         357.2     250.3       42.7%
Equity shares                        2.6       3.1      -15.2%
Funds                              365.0     308.0       18.5%
TOTAL PORTFOLIO OF
OWN SECURITIES                     826.4     664.4      24.4%


6.1.5.1. TREASURY ACTIVITIES
During 2004 activity on the interbanking market for deposits and currency swaps
was carried out by the Treasury Service to cover liquidity requirements according
to efficiency criteria.

The following table shows the net year-end position for 2004 and 2003, relating
to amounts due and loans to banks.




                                                                                          directors’ report on operations 51
INTERBANK RELATIONS (in Euro million)
                                                     2004          2003         % var.

VENETO BANCA
Loans to banks                                    366.9            279.1         31.5%
Due to banks                                     -495.2           -684.2        -27.6%
Net liquidity position                           -128.3           -405.1        -68.3%
BANCA DI BERGAMO
Loans to banks                                        40.4          24.5        64.7%
Due to banks                                         -31.5         -23.5        34.0%
Net liquidity position                                 8.9           1.0       758.8%
BANCA MERIDIANA
Loans to banks                                       296.3         350.8       -15.5%
Due to banks                                         -16.6          -4.1       306.6%
Net liquidity position                               279.7         346.7       -19.3%
BANCA ITALO-ROMENA
Loans to banks                                     71.1             29.0       144.9%
Due to banks                                     -111.9            -50.7       120.7%
Net liquidity position                            -40.7            -21.6        88.2%
Loans to banks                                    289.2            250.0         15.7%
Due to banks                                     -325.9           -444.2        -26.6%
CONSOLIDATED NET LIQUIDITY POSITION                  -36.8        -194.2        -81.1%


The year end values show the clear improvement achieved in Veneto Banca’s net
liquidity position on the interbanking market compared to the previous year.
This result was mainly achieved due to the issuing on the Euromarket of a senior
bond loan of Euro 250 million and a Lower Tier2 subordinated loan for Euro 100
million.

According to the Group’s Financial Risk Regulations, the treasury activities for all
the banks in the Group, in both Euros and in the main foreign currencies, is
carried out at Veneto Banca’s Treasury Service, in line with the principles of
centralisation.
                                     The decision for integrated liquidity management comes from the need to limit
                                     the interest rate risk for subsidiaries and to reduce adjustment costs.

                                     As for the previous financial year, Banca Meridiana also maintained a positive
                                     liquidity position for 2004, while Banca di Bergamo was a net borrower.

                                     Finally, the growth of activities for the Banca Italo-Romena led to a further
                                     absorption of liquidity from the Parent Company by opening credit in Euros and
                                     Dollars, thus subject to market conditions.

                                     • Loans/deposits ratio
                                     The liquidity position continued to benefit from a fully balanced ratio between
                                     customer loans and deposits, also for 2004.
                                     As at 31 December 2004 the ratio was recorded at 99.5%, showing a slight
                                     increase on the previous 99.2%.


                                      GROUP TREND IN LOANS/DIRECT DEPOSITS

                                     6,000                                                                                                                  140%



                                                                                                                                                            120%
                                     5,000


                                                                                                                                                            100%
                                     4,000

                                                                                                                                                            80%
directors’ report on operations 52




                                     3,000

                                                                                                                                                            60%

                                     2,000
                                                                                                                                                            40%


                                     1,000
                                                                                                                                                            20%



                                        0                                                                                                                   0
                                                1997          1998            1999         2000             2001               2002           2003   2004
                                             Loans                    Direct deposits                Loans/Direct deposits (scale on right)




                                     6.2. EQUITY AND CAPITAL ADEQUACY

                                     6.2.1. SHAREHOLDERS’ EQUITY
                                     As at 31 December 2004 consolidated shareholders’equity including profit for the
                                     year and the reserve for general banking risk, totalled Euro 661.9 million
                                     compared with the Euro 558.9 million for the end of 2003.

                                     The increase was mainly caused by the allocation to the reserve for general
                                     banking risk of the capital gain arising from the sale of 80% of the capital held in
                                     the insurance company Claris Vita and the increased profit for the year.

                                     During December 2004, a new subordinated loan of Euro 100 million was issued,
                                     taking the total shareholders’ equity to Euro 844 million, with an increase of
                                     31.6% compared to December 2003.
SHAREHOLDERS' EQUITY (in Euro thousand)
                                                                         2004              2003                % var.
Reserve for general banking risks                                   39,057                 6,057            544.8%
Negative consolidation differences                                      40                    40              0.0%
Minority interests                                                  19,956                19,071              4.6%
Share capital                                                       98,647                95,069              3.8%
Issue premiums                                                     304,798               281,016              8.5%
Reserves                                                           138,499               111,538             24.2%
   legal reserve                                                    34,860                30,583             14.0%
   other reserves                                                  103,639                80,955             28.0%
Revaluation reserves                                                 5,554                 5,554              0.0%
Profit/loss brought forward                                              0                   -53           -100.0%
Profit for the year                                                 55,352                40,646             36.2%
Total shareholders' equity                                         661,903               558,938               18.4%
Subordinated liabilities                                           181,814                82,065               121.5%
TOTAL SHAREHOLDERS' EQUITY AND
SUBORDINATED LIABILITIES                                           843,717               641,003               31.6%


  CONSOLIDATED SHAREHOLDERS’ EQUITY                                                        (in euro million)


1997                       229


1998                        235


1999                         242


2000                              271          108


2001                                            391                  155




                                                                                                                         directors’ report on operations 53
2002                                                  428                  155


2003                                                                 559           82              370


2004                                                                               662                    182

       0        100        200           300          400          500           600       700           800       900

           Shareholder’s equity         Subordinated liabilities


The Parent Company’s share capital as at 31 December 2004 was made up of
32,882,038 shares with a unit face value of Euro 3.00 for a total of Euro 98,646,114,
distributed between 16,041 shareholders compared with 15,636 at the end of 2003.

6.2.2. CAPITAL FOR SUPERVISORY PURPOSES AND
          MINIMUM RATIOS
As at 31 December 2004 capital for supervisory purposes amounted to Euro 674
million, with an increase of Euro 218 million compared to the previous twelve months.

Tier I capital – made up of capital, the reserve for general banking risk and
reserves, net of intangible fixed assets and goodwill – amounted to Euro 527
million, with an increase of Euro 124 million on December 2003.

Tier II capital, equal to Euro 185 million, increased as a result of the new
subordinated loan by about Euro 100 million.

CAPITAL FOR SUPERVISORY PURPOSES (in Euro million)
                                                  2004                                     2003                % var.

Tier I capital                                                            527               403                 30.6%
Tier II capital                                                           185                86                115.9%
Items to be deducted                                                      -38               -33                 14.7%
CAPITAL FOR SUPERVISORY PURPOSES                                          674               456                47.8%
                                       Compared to values for the Parent Company, the Group’s equity include entries
                                       typical of consolidation operations, in other words positive and negative
                                       consolidation differences, positive or negative differences from the valuation of
                                       stakes in shareholders’ equity, and positive or negative minority interests.


                                         TREND IN CAPITAL FOR SUPERVISORY PURPOSES                                               (in euro million)

                                      700                                                                                                         674
                                      650

                                      600

                                      550
                                                                                                                                                  527
                                      500
                                                                                               487
                                                                                                                                456
                                      450
                                                                                                                      414
                                                                                                                                403
                                      400
                                                                                   355
                                      350
                                                                                               333
                                      300
                                                                                                               277
                                                                  227                243
                                      250
                                              223
                                              214                       220
                                      200
                                                1998               1999              2000        2001            2002             2003         2004
                                               Tier I capital              Total capital




                                       Weighted risk assets also registered a growing trend, going from Euro 5,447 to
                                       6,261 million, corresponding to an increase of 14.9%.

                                       The exposure to credit and market risks also demonstrated a limited increase,
directors’ report on operations 54




                                       registering at Euro 501 million.


                                         TREND IN WEIGHTED RISK ASSETS                                                          (in euro million)

                                     6,500
                                                                                                                                              6,261
                                     6,000
                                                                                                                                5,447
                                     5,500
                                                                                                                                               5,543
                                                                                                              5,025
                                     5,000
                                                                                                                                      5,022
                                     4,500
                                                                                                                        4,303
                                     4,000

                                     3,500
                                                                                              3,152
                                     3,000
                                                                                                      3,048
                                     2,500
                                                                                 2,325
                                     2,000
                                                                1,642                 2,245
                                     1,500
                                             1,369                 1,542
                                             1,264
                                     1,000
                                                1998               1999              2000        2001            2002             2003         2004
                                               Credit risks                   Total risks



                                       In view of the equity trends shown above and the trend in risk activities
                                       considered as a whole, the Group’s capital position recorded a net improvement
                                       compared to the end of 2003, showing a surplus of Euro 173 million.
 SHAREHOLDERS’ EQUITY                                                  (in euro million)


1998           110           114


1999            116           111


2000                   186                 169


2001                           252                           235


2002                                             402    12


2003                                               436        20


2004                                                         501              370
                                                                            173


       0        100          200     300          400          500    600       700     800

           Minimum requirements      Shareholders’ equity



The positive trend recorded by the overall Shareholders’ equity position was
reflected in the clear progress in equity increase ratios.
Tier I went from 7.40% at the end of 2003 to 8.41%, while the Total Risk Ratio
ended 2004 at 10.76%.

6.2.3. RATING
Standard & Poor’s also confirmed the positive rating assigned to the Veneto
Banca Group for 2004.




                                                                                              directors’ report on operations 55
STANDARD & POOR’S RATING                                             2004             2003

Short term debt                                                       A-2              A-2
Medium-long term debt                                                BBB+             BBB+


Rating stability, although against an operational background that in recent years
has certainly suffered from the effects of the economic standstill, expresses the
confidence shown in the Group’s ability to deal successfully with more
problematic situations, maintaining its solidity and profitability at entirely
satisfactory levels.
We therefore consider that taking into account the equity, profitability, credit
quality and the modest tendency to risk, as well as the results of the recent
inspection by the Supervisory Authority, there is the possibility of receiving an
even higher rating.

6.3. PROFITABILITY
The Veneto Banca Group ended the financial year with a net consolidated profit
of Euro 55.4 million, up by 36.2% compared to the 40.6 million for the previous
year.

The aggregation of the economic figures for the Group companies, the
consolidation adjustments and the cancellation of intra-Group relations gives the
following reclassified profit and loss account:
                                     RECLASSIFIED PROFIT AND LOSS ACCOUNT (in Euro thousand)
                                                                      2004     2003     % var.               % for’04(*)   % for’03(*)

                                     Financial spread                       163,699 146,455        11.8%          57.2%         55.7%
                                     Dividends                                6,067    5,700         6.4%           2.1%          2.2%
                                     Interest margin                        169,766 152,155        11.6%          59.3%         57.8%
                                     Income from services, net               61,832   53,428       15.7%          21.6%         20.3%
                                     Profit on financial transactions        28,145   30,015        -6.2%           9.8%        11.4%
                                     Other operating income, net             26,416   27,549        -4.1%           9.2%        10.5%
                                     Earning margin                         286,159 263,147          8.7%       100.0%        100.0%
                                     Operating expenses:                   -164,679 -152,817         7.8%       -57.5%        -58.1%
                                         personnel costs                    -96,461 -89,415          7.9%        -33.7%        -34.0%
                                         other administrative expenses      -68,218 -63,402          7.6%        -23.8%        -24.1%
                                     Gross operating profit (loss)          121,480 110,330        10.2%          42.5%         41.9%
                                     Amortisation and depreciation          -22,421 -20,127        11.4%           -7.8%         -7.6%
                                     Provisions for risks and charges        -2,960     -471      528.5%           -1.0%         -0.2%
                                     Provisions and write-backs             -27,776 -26,300          5.6%          -9.7%       -10.0%
                                     Write-downs of financial
                                     fixed assets                              848     -2,174 -139.0%              0.3%         -0.8%
                                     Profit/loss eq. investments valued
                                     by the equity method                    4,958     6,371      -22.2%          1.7%           2.4%
                                     Profit on ordinary activities          74,129    67,629        9.6%         25.9%         25.7%
                                     Balance of extraordinary operations    40,234      -401          n.s.       14.1%          -0.2%
                                     Change in reserve for general
                                     banking risk                           -33,000         0         n.s.       -11.5%          0.0%
                                     Income taxes for the year              -25,061   -25,893      -3.2%          -8.8%         -9.8%
                                     Minority interests                        -950      -689      37.9%          -0.3%         -0.3%
                                     NET PROFIT FOR THE YEAR                55,352    40,646      36.2%          19.3%         15.4%
                                     (*) The % impact is measured on the earning margin

                                     All Group companies contributed to this performance, although to varying
                                     degrees. The increase in the contribution to the overall result of the Banca Italo-
                                     Romena should be mentioned in particular, from 4% to 6%, Banca Meridiana,
directors’ report on operations 56




                                     from 1.3% to 3.7%, and Claris Leasing, up from 1.6% to 3.7%.

                                     CONSOLIDATED PROFIT (in Euro thousand)
                                     Bank / Company                     2004              2003     % var.      % for '04    % for '03

                                     Veneto Banca                           45,658    40,077       13.9%          82.5%        98.6%
                                     Banca di Bergamo                        1,712     1,394       22.8%           3.1%         3.4%
                                     Banca Italo-Romena                      3,299     1,640      101.1%           6.0%         4.0%
                                     Banca Meridiana                         2,006       517      287.9%           3.6%         1.3%
                                     Claris Factor                           2,594     2,014       28.8%           4.7%         5.0%
                                     Claris Leasing                          2,009       648      210.1%           3.6%         1.6%
                                     VIFS                                   11,278    11,082        1.8%          20.4%        27.3%
                                     Profit/loss eq. investments valued
                                     by the equity method                    4,958        6,371    -22.2%          9.0%        15.7%
                                     Other consolidation adjustments
                                     and cancellations                      -18,162   -23,098      -21.4%        -32.8%        -56.8%
                                     GROUP TOTAL                            55,352    40,646       36.2%       100.00%       100.00%


                                     On the contrary, the consolidation adjustments went down, going from Euro 23.1
                                     to 18.2 million. This positive result was however partially offset by the reduction
                                     of 22.2% in the profits from companies valued by the equity method.

                                     PROFIT/LOSS OF COMPANIES VALUED BY THE EQUITY METHOD (in Euro thousand)
                                                                     2004     2003    % var.   % for '04     % for '03

                                     Claris Assicurazioni                       79           21   276.2%           1.6%         0.3%
                                     Claris Broker                             -42            2       n.s.        -0.8%         0.0%
                                     Claris Vita                             1,720        4.394   -60.9%          34.7%        69.0%
                                     Immobiliare Italo Romena                   18            5   260.0%           0.4%         0.1%
                                     Palladio Finanziaria                    3,210        1.977    62.4%          64.7%        31.0%
                                     Sintesi 2000                              -27          -28    -3.6%          -0.5%        -0.4%
                                     TOTAL PROFIT/LOSS OF
                                     COMPANIES VALUED BY
                                     THE EQUITY METHOD                       4,958        6,371    -22.2%       100.0%        100.0%
While the profit for Claris Vita went down from Euro 4.4 to 1.7 million, there was
an increase in the profit of Palladio Finanziaria, whose share for the Veneto Banca
Group went from 2 to Euro 3.2 million.

Adjustments to the positive consolidation differences were largely stable.

Although there were changes to the breakdown, there were no significant
changes in the overall adjustment of intra-Group dividends.

DIVIDEND ADJUSTMENTS (in Euro thousand)
                                                      2004         2003        % var.

Claris Factor                                     -1,900          -1,875         1.3%
Claris Leasing                                      -200               0
Claris Vita                                         -975          -4,029      -75.8%
Palladio Finanziaria                              -1,247            -520      139.8%
Veneto Ireland Financial Services                -11,782          -9,599       22.7%
TOTAL DIVIDEND ADJUSTMENTS                       -16,104         -16,023        0.5%


6.3.1. INTEREST MARGIN
The financial spread rose by 11.8%, going from Euro 146.5 to 163.7 million,
thanks to the growth in traded volumes that compensated well for the reduction
in the rates bracket.

Dividends reached Euro 6.1 million compared to the Euro 5.7 million for 2003.
Euro 899 thousand of these come from equity investments in companies outside
the Group.




                                                                                         directors’ report on operations 57
The interest margin including dividends amounted to Euro 169.8 million, up by
11.6% compared to the Euro 152.2 million for the previous financial year.
The contribution of the Parent Company Veneto Banca was around 70.2%, Banca
Meridiana 15.1%, Banca di Bergamo 7.7%, Veneto Ireland Financial Services
5.7%, Banca Italo-Romena 4.7%. Finally, the contributions of Claris Factor and
Claris Leasing were respectively 2.9% and 2.7%. Adjustments and cancellations
had an impact of 8.9%.

6.3.2. EARNING MARGIN
The earning margin, increasing by around 9%, came in at Euro 286.2 million
compared to the 263.1 for 2003. The Parent Company’s contribution increased up
to 73.1%, while the contributions of the other Group companies generally
decreased.

Contributing to this result was the good performance in service margin, going
from Euro 53.4 to Euro 61.8 million.

NET COMMISSIONS AND FEES (in Euro thousand)
                                   2004     2003        % var.   % for '04   % for '03

Guarantees provided                  2,762    2,240     23.3%        4.5%        4.2%
Management, brokering and
consulting services                 26,161   21,299     22.8%       42.3%       39.9%
Collection and payment services      9,560    9,269      3.1%       15.5%       17.3%
Servicing for securitisation
activities                             254       72    252.8%        0.4%        0.1%
Other services                      23,096   20,548     12.4%       37.4%       38.5%
TOTAL SERVICE MARGIN                61,833   53,428     15.7%      100.0%     100.0%
                                     On the contrary, profits on financial transactions were largely stable while
                                     remaining at significant levels, going from Euro 30 to 28.1 million, together with
                                     other net income, down from Euro 27.5 to 26.4 million.

                                     6.3.3. OPERATING EXPENSES
                                     Costs increased overall by 7.8%, going from Euro 152.8 to Euro 164.7 million,
                                     due to the impact of increases in personnel costs, which rose from Euro 89.4
                                     to Euro 96.5 million, and other administrative expenses, rising from Euro 63.4
                                     o Euro 68.2 million.

                                     OTHER ADMINISTRATIVE EXPENSES (in Euro thousand)
                                                                       2004       2003     % var.    % for '04    % for '03

                                     Real estate costs                  9,955     9,977     -0.2%       14.6%        15.7%
                                     Information technology            16,929    16,075      5.3%       24.8%        25.4%
                                     Security                           1,638     1,585      3.3%        2.4%         2.5%
                                     Communications                    12,579    10,529     19.5%       18.4%        16.6%
                                     Misc. expenses                    14,462    13,033     11.0%       21.2%        20.6%
                                     Other costs                        2,469     3,128    -21.1%        3.6%         4.9%
                                     Indirect taxation and charges     10,186     9,075     12.2%       14.9%        14.3%
                                     TOTAL OTHER ADMINISTRATIVE
                                     EXPENSES                          68,218    63,402     7.6%       100.0%      100.0%


                                     In terms of the contribution to the consolidated figure, Veneto Banca’s operating
                                     expenses represented 72% of Group operating expenses. The impact for the other
                                     main Companies was 13.5% for Banca Meridiana, 7.8% for Banca di Bergamo
                                     and 3.7% for Banca Italo-Romena.

                                     The cost/income ratio, which is a good indicator of the Company’s efficiency, was
directors’ report on operations 58




                                     61.4%, substantially in line with last year’s result. The result achieved is basically
                                     close to the banking system average.

                                     6.3.4. PROFIT (LOSS) ON ORDINARY ACTIVITIES
                                     Supported by the positive income trend, which more than compensated for the
                                     growth in costs, the gross operating profit (loss) registered at Euro 121.5 million,
                                     up by 10.2% on the 110.3 million of the previous year.

                                     As far as ordinary activities are concerned, related profit reached Euro 74.1
                                     million, against the 67.6 million for 2003, after having calculated amortisations of
                                     Euro 22.4 million, provisions for risks and charges of Euro 3 million, provisions
                                     and net write-downs of loans of Euro 27.8 million, net write-backs of financial
                                     fixed assets of Euro 848 thousand and finally profits attributable to equity
                                     investments valued by the equity method of 5 million.

                                     6.3.5. EXTRAORDINARY OPERATIONS AND NET PROFIT
                                     Extraordinary operations recorded a positive result, following the sale of 80% of
                                     Claris Vita, which was entirely absorbed by the provision to the reserve for
                                     general banking risk, of Euro 33 million.
                                     After the allocation to the provision for taxation of Euro 25.1 million and the
                                     retrocession of minority interests of Euro 950 thousand, consolidated net
                                     profit amounted to Euro 55.4 million, up by 36.2% compared to the 40.6
                                     million for 2003.
  CONSOLIDATED NET PROFIT                                              (in euro million)


1997                   13.8


1998                       15.8


1999                              18.6


2000                                              30.7


2001                                                            41.8


2002                               19.6


2003                                                          40.6


2004                                                                               55.4


    0.0             10.0                  20.0      30.0        40.0        50.0              60.0


The positive result achieved during the year has enabled asset profitability to
be maintained at very attractive levels, with a ROE registering at 9.8%, on the
increase compared to the 8.8% for the previous year and well positioned with
regard to the banking system average. This result is in line with the Company’s
strong desire to achieve profits enabling a balanced, and especially long-
lasting, relationship to be maintained with the customers and the area of
operation.




                                                                                                     directors’ report on operations 59
    7. REPORT ON PARENT COMPANY’S
       OPERATIONS

VENETO BANCA – PERFORMANCE HIGHLIGHTS

ECONOMIC/FINANCIAL VALUES AND KEY MANAGEMENT
FIGURES

ECONOMIC VALUES (in Euro thousand)                  2004       2003    abs. var.          % var.

Interest margin                                   119,233    111,293     7,940             7.13%
Earning margin                                    210,146    195,149    14,997             7.68%
Operating expenses                               -118,563   -107,847   -10,716             9.94%
Profit on ordinary activities                      60,479     60,145       334             0.55%
Net profit                                         45,658     40,077     5,581            13.93%

FINANCIAL AND OPERATING
VALUES (in Euro million)                            2004       2003    abs. var.          % var.

Gross banking income                              11,695     10,255      1,440            14.03%
Total deposits                                     7,580      6,704        876            13.06%
Direct deposits                                    4,047      3,422        625            18.27%
Indirect deposits                                  3,533      3,282        250             7.63%
   of which: managed savings                       1,541      1,464         76             5.22%
   of which: administered savings                  1,992      1,818        174             9.57%
Loans to customers                                 4,115      3,551        564            15.87%
Performing assets                                  5,226      4,615        611            13.25%
Total assets                                       5,527      4,899        628            12.82%
Shareholders’ equity
(net of subordinated loans)                          628        538          89           16.58%
Shareholders’ equity
(including subordinated loans)                       809        620        189            30.47%
                                     STRUCTURAL RATIOS (%)                             2004            2003    abs. var.     % var.

                                     Direct deposits/Total assets                 73.23%         69.85%          3.37%        4.83%
                                     Loans to customers/Total assets              74.44%         72.48%          1.96%        2.71%
                                     Loans to customers/Direct deposits          101.66%        103.76%         -2.10%       -2.02%

                                     CREDIT QUALITY RATIOS (%)                         2004            2003    abs. var.     % var.

                                     Net non-performing loans/Loans
                                     to customers                                     0.69%       0.71%         -0.02%      -2.92%
                                     Net watch-lists/Loans to customers               0.94%       0.60%          0.34%      56.11%
                                     Net non-performing loans/Shareholders’
                                     equity                                           3.50%       4.04%         -0.54%      -13.27%

                                     PROFITABILITY RATIOS (%)                          2004            2003    abs. var.     % var.

                                     R.O.E.                                        8.45%          9.14%         -0.69%       -7.50%
                                     R.O.A.                                        1.88%          2.19%         -0.31%      -13.95%
                                     Interest margin/Performing assets             2.28%          2.41%         -0.13%       -5.40%
                                     Earning margin/Performing assets              4.02%          4.23%         -0.21%       -4.91%
                                     Net profit/Performing assets                  0.87%          0.87%          0.01%        0.60%
                                     Interest margin/Earning margin               56.74%         57.03%         -0.29%       -0.51%
                                     Cost/Income ratio                            61.05%         59.28%          1.77%        2.98%

                                     EQUITY RATIOS (%)                                 2004            2003    abs. var.     % var.

                                     Tier I                                       10.71%         10.26%         0.45%        4.39%
                                     Solvency ratio                               13.53%         11.40%         2.13%       18.68%

                                     STRUCTURAL AND PRODUCTIVITY
                                     RATIOS                                            2004            2003    abs. var.     % var.

                                     Average no. of employees                          1,138       1,063            75        7.06%
                                     Number of bank branches                             100          99             1        1.01%
                                     Customer loan per employee                        3,616       3,340           275        8.24%
                                     Total deposits per employee                       6,661       6,307           354        5.61%
directors’ report on operations 60




                                     Gross banking income per employee                10,276       9,647           629        6.52%
                                     Earning margin per employee                         185         184             1        0.59%


                                     7.1. THE OPERATING PERFORMANCE

                                     7.1.1. FINANCIAL AGGREGATES
                                     In 2004 the Bank recorded highly satisfactory profits, closing the financial year
                                     with a gross banking income up by 14%.
                                     The overall aggregate reached Euro 11,695 million, with significant increases in
                                     all sectors.

                                     GROSS BANKING INCOME (in Euro million)                            2004       2003       % var.

                                     Loans to customers                                            4,115         3,551        15.9%
                                     Direct deposits                                               4,047         3,422        18.3%
                                     Indirect deposits                                             3,533         3,282         7.6%
                                     GROSS BANKING INCOME                                         11,695        10,255       14.0%


                                     7.1.1.1. ASSET MANAGEMENT
                                     As at 31 December 2004 the assets managed increased by 13.1%, going from
                                     6,704 million at the end of 2003 to Euro 7,580 million.

                                     TOTAL CUSTOMER DEPOSITS (in Euro million)
                                                                       2004                    2003           % var.       % for '04

                                     Due to customers                         2,125            1,729           22.9%
                                     Securities issued                        1,917            1,691           13.4%
                                     Deposits in administration                   5                2          120.7%
                                     Direct customer deposits                 4,047            3,422           18.3%         53.4%
                                     Managed savings                          1,541            1,464            5.2%
                                     Administered savings                     1,992            1,818            9.6%
                                     Indirect customer deposits               3,533            3,282            7.6%         46.6%
                                     TOTAL DEPOSITS                           7,580            6,704          13.1%
Although both are on the increase, also for 2004 the direct sector shows more
vitality if compared to indirect deposits, confirming that there is still a high
degree of uncertainty among savers as regards savings instruments with a higher
level of risk.

The trend analysis of the deposits structure shows a further reduction of
indirect deposits of more than 3 percentage points, also for the year in
question.

% BREAKDOWN OF CUSTOMER DEPOSITS
                    2004     2003                            2002          2001                 2000         1999

Direct deposits              53.39           51.04       44.32            44.26             43.02           40.23
Indirect deposits            46.61           48.96       55.68            55.74             56.98           59.77


7.1.1.2. DIRECT DEPOSITS
Direct customer deposits as at 31 December 2004 totalled Euro 4,047 million,
with an increase of 18.3% compared to the total recorded at the end of 2003.

 DIRECT DEPOSITS                                                                        (in euro million)


1997                1,064


1998                 1,154


1999                    1,249


2000                                 1,764




                                                                                                                       directors’ report on operations 61
2001                                         2,021


2002                                                 2,429


2003                                                                            3,422


2004                                                                                             4,047


       0      500      1,000     1,500          2,000        2,500      3,000           3,500      4,000       4,500


The aggregate trend mainly depended on the increase marked by current
accounts, up by 22.2%, and the securities issued, where the increase was mainly
due to the issuing of own bonds, which were in excess of Euro 1,747 million at
the end of the financial year.

DIRECT DEPOSITS (in Euro million)
                                              2004      2003          % var.        % for '04            % for '03

Due to customers:                            2,125      1,729          22.9%              52.5%            50.5%
  current accounts                           1,727      1,414          22.2%              42.7%            41.3%
  savings deposits                             134        128            4.8%              3.3%             3.7%
  on maturity or with notice                   264        188          40.5%               6.5%             5.5%
  of which REPOS                               121        129           -5.9%              3.0%             3.8%
Securities issued:                           1,918      1,691          13.4%              47.4%            49.4%
  bonds                                      1,747      1,544          13.1%              43.2%            45.1%
  CDs                                          171        107          59.9%               4.2%             3.1%
  other securities                                         40        -100.0%               0.0%             1.2%
Deposits in administration                       5          2         120.7%               0.1%             0.1%
DIRECT CUSTOMER DEPOSITS                     4,047      3,422         18.3%
                                     As at 31 December 2004 the aggregate was therefore made up as to 46% of                      BREAKDOWN
                                                                                                                                  OF CUSTOMER DEPOSITS
                                     current accounts and savings deposits; 43.2% and 4.2% represented, respectively,             AS AT 31/12/2004                            (%)
                                     bonds and CDs, while the remaining 6.5% included customer REPOS as to
                                     approximately 3%.                                                                                              4 CDs     0 Deposits
                                                                                                                                                              in admin.
                                     With regard to the breakdown of the previous financial year, the further                       3 Savings deposits            4 Others on
                                                                                                                                                                  maturity or with
                                     reinforcement in current accounts and securities can be seen, compared to a                                                  notice
                                     reduction in the entries on maturity.

                                     These trends therefore had an impact on the residual life of the aggregate,
                                     causing a growing impact on the entries falling due within 18 months and a slight
                                     shift in favour of deposits on demand. On the other hand, the long term sector
                                     appears to be clearly falling.

                                     % BREAKDOWN BY RESIDUAL LIFE                                                                                              43 Current
                                                                                                                                                  3 REPOS      accounts
                                     CUSTOMER DEPOSITS                                                                            43 Bonds
                                                         2004    2003         2002    2001     2000    1999      1998     1997

                                     On demand               46.04   45.12   52.02    47.50   45.07    50.91     48.89   46.78
                                     Within 18 months        25.85   22.94   16.28    22.32   14.54    17.58     26.93   27.96
                                     Over 18 months          28.11   31.94   31.70    30.18   40.39    31.51     24.18   25.26


                                     • Breakdown by area of activity
                                     The breakdown of deposits according to the customers’area of business confirms
                                     the high impact of households. As at 31 December 2004 they amounted to 55.7%,
                                     while business and non-financial companies represented 31.7%.
                                                                                                                                  DISTRIBUTION OF DIRECT
                                                                                                                                  DEPOSITS BY SECTOR
                                     • Distribution by business province                                                          AS AT 31/12/2004                            (%)
                                     The geographic distribution by customer area of residence shows, on the one
directors’ report on operations 62




                                     hand, the continuing strong attachment to their origins, on the other hand the                                  7.2 Others
                                                                                                                                  0.7 P.A. and              4.7 Financial and
                                     significant opening up towards the more recently settled provinces, which is                        public             insurance companies
                                     further confirmation of the positive outcome of the development plan.                         Institutions


                                     CUSTOMER DEPOSITS – distribution by customer area of residence
                                                                              % for 2004            % for 2003           % var.

                                     Treviso                                          54.6               60.4              -5.8
                                     Vicenza                                          10.1               10.5              -0.5
                                     Rome                                              6.3                3.5               2.8
                                     Milan                                             5.5                6.0              -0.5
                                     Venice                                            4.8                4.8               0.0
                                     Pordenone                                         3.5                3.1               0.4   31.7 Businesses and non         55.7 Households
                                     Padua                                             3.3                3.1               0.2   financial companies
                                     Other provinces                                  11.9                8.6               3.3
                                     TOTAL FOR ITALY                                 100.0              100.0


                                     7.1.1.3. INDIRECT DEPOSITS
                                     The positive trend in indirect deposits also continued during 2004. It
                                     demonstrated an increase of 7.6% over the previous year. As at 31 December
                                     2004 it actually registered Euro 3,533 million, compared with 3,282 million at the
                                     end of 2003.

                                     This development, although less appreciable than the trend in deposits, is
                                     important as it reaffirms the growth trend for this aggregate, which has always
                                     been maintained in recent years, despite a market scenario which certainly does
                                     not encourage the development of financial investments.
                                                        INDIRECT DEPOSITS                                                                    (in euro million)


                                                       1997            636         366


                                                       1998          547                   766


                                                       1999         512                              1,343


                                                       2000                  824                                 1,512


                                                       2001                         1,214                            1,331


                                                       2002                                      1,681                           1,370


                                                       2003                                        1,818                             1,464


                                                       2004                                              1,992                            1,541


                                                              0        500         1,000         1,500       2,000       2,500    3,000       3,500      4,000      4,500

                                                                  Administered savings               Managed savings



                                                       From a structural point of view, despite the mentioned improvement in the
                                                       economic and financial situation, the impact of the administered component
                                                       remains at high levels. At year end, this last aggregate amounted to 1,992 million,
                                                       with an increase of 9.6% compared to December 2003.
                                                       The increase was largely due to the positive trend in government bonds and
                                                       bonds; the shareholding component, on the other hand, recorded a decrease of
                                                       2.3%.




                                                                                                                                                                            directors’ report on operations 63
                                                       INDIRECT DEPOSITS (in Euro million)
                                                                                                          2004       2003        % var.      % for '04     % for '03

                                                       Deposits in administration                        1,992       1,818        9.6%         56.4%             55.4%
                                                       Government bonds                                    655         561       16.8%         18.6%             17.1%
                                                       Bonds                                             1,020         933        9.3%         28.9%             28.4%
                                                       Shares and others                                   316         324       -2.3%          9.0%              9.9%
                                                       Managed savings                                   1,541       1,464        5.2%         43.6%             44.6%
                                                       Funds                                             1,092       1,072        1.8%         30.9%             32.7%
                                                       Assets under management                              97         100       -2.3%          2.8%              3.0%
                                                       Life insurance                                      352         293       20.2%         10.0%              8.9%
                                                       TOTAL INDIRECT DEPOSITS                           3,533       3,282        7.6%        100.0%         100.0%


                                                       Managed savings reached Euro 1,541 million, recording an increase of 5.2%.

                                                       In the context of managed savings, the trend of single items showed a slight
 PREMIUMS COLLECTED 2004                               increase for mutual investment funds, while there was a limited fall for the assets
 BY PRODUCT
 TYPE                    (%)                           under management.
                                                       Specifically, Euro 1,092 million was reached with regard to the mutual investment
         1.5 Theft/Fire/   0.6 Death/LTC
              Damage                                   funds, that continue to represent more than 30% of indirect deposits, with an
                             0.5 Accidents/Illness
2.2 Claris Vita Unit                                   increase of approximately 2%.
                              0.1 Deposits
  6.3 Motor/
      Other
                                                       The placement of insurance products also made a positive contribution to
                                                       progress for the aggregate, closing the financial year with a highly significant
                                                       increase of 20.2%.
                                                       The breakdown of premiums collected during 2004 shows the prevailing impact
                                                       recorded by financial products, with the index linked products representing
                                                       around 56% of the premiums collected over the twelve month period.
                                                       However, activities concerning life insurance and integrated pensions were also
  32.8 Life/Integrated        56.0 Claris Vita Index
  pensions                                             significant, for which premiums collected represented little less than 33% of the
                                                       total.
                                     With regard to the current stock, as at 31 December 2004 the unit linked stock
                                     amounted to Euro 70.3 million and the index linked stock amounted to Euro
                                     174.3 million.

                                     7.1.2. CREDIT MANAGEMENT
                                     The financial year 2004 confirmed once again the Bank’s strong propensity
                                     towards supporting the local economy, although with the necessary level of
                                     attention, even during a difficult general economic situation.
                                     As at 31 December 2004 the Bank’s loans reached Euro 4,115 million, recording
                                     an increase of just under 16% compared to the previous year.
                                     The significance of this increase can be better understood in the light of the much
                                     more modest increase found at banking system level, which was 6% during
                                          7
                                     2004 .


                                      LOANS TO CUSTOMERS                                                               (in euro million)


                                     1997               920


                                     1998                 1,084


                                     1999                         1,375


                                     2000                                         1,975


                                     2001                                                     2,485


                                     2002                                                                 3,026
directors’ report on operations 64




                                     2003                                                                            3,551


                                     2004                                                                                        4,115


                                            0     500         1,000       1,500       2,000       2,500      3,000     3,500         4,000     4,500



                                     The analysis of the trend of the various technical forms clearly shows the decisive
                                     contribution of mortgage loans that recorded an annual increase of 75.3%,
                                     representing just under 24% of total loans.
                                     Also significant was the contribution of other subsidies, up by 9.7%, and current
                                     accounts, whose shares of the total amounted respectively to 28% and 35%.

                                     LOANS TO CUSTOMERS (in Euro million)
                                                                         2004                   2003       % var.      % for '04       % for '03

                                     Current accounts                              1,416        1,369       3.4%             34.4%           38.6%
                                     Mortgage loans                                  982          560      75.3%             23.9%           15.8%
                                     Unsecured loans                                 162          171      -5.4%              3.9%            4.8%
                                     Other subsidies                               1,158        1,056       9.7%             28.1%           29.7%
                                     Foreign subsidies                               206          200       3.1%              5.0%            5.6%
                                     Trading portfolio                                26           30     -13.8%              0.6%            0.8%
                                     Other credits                                   135          138      -2.2%              3.3%            3.9%
                                     Net non-performing loans                         30           27      12.3%              0.7%            0.7%
                                     Net customer loans                            4,115        3,551      15.9%        100.0%           100.0%
                                     Credit commitments                              492          523       -5.8%
                                     TOTAL LOANS TO CUSTOMERS                      4,607        4,074      13.1%




                                                                                                                                                       7 Abi Monthly Outlook – Annual Report 2004
                                                         The trend highlighted has certainly had some effect on the distribution by
                                                         residual life, which shows a shift towards the medium/long term. The items with
                                                         a residual life of over 18 months, that at the end of 2003 represented just under
                                                         30%, reached 34% in December 2004, a percentage which has never been
                                                         achieved in recent years. The impact of loans on demand, down to 24.8%
                                                         compared to the previous 26.8% and the items with a duration of less than 18
                                                         months, were down by more than 2%, falling to 41.2%.

                                                         % DISTRIBUTION BY RESIDUAL LIFE OF LOANS TO CUSTOMERS
                                                                               2004   2003    2002   2001  2000              1999       1998     1997

                                                         On demand               24.82    26.81   32.17    24.63   27.82     28.96      36.24   39.51
                                                         Up to 18 months         41.24    43.36   45.61    48.89   45.54     41.04      41.34   42.11
                                                         Over 18 months          33.95    29.83   22.22    26.48   26.64     30.00      22.42   18.38


                                                         In terms of currency structure, the trend in operations for 2004 reaffirmed the
                                                         tendency of gradual reduction of the foreign currency component, which had
                                                         already begun in the past few years, to the extent that it only has an impact of
                                                         8.4% against the previous 10.7%.

                                                         % BREAKDOWN OF LOANS TO CUSTOMERS
                                                                             2004     2003                2002        2001           2000        1999

                                                         Euro                     91.61       89.33       87.37      81.25           79.48      82.76
                                                         Foreign currency          8.39       10.67       12.63      18.75           20.52      17.24
 DISTRIBUTION OF LOANS
 BY SECTOR AS
 AT 31/12/2004                                  (%)
                                                         • Geographic distribution
                        22 Other     0 States            As already mentioned for deposits, a notable shift in geographic distribution in
           4 Producer   operators
                                                         favour of the non-traditional provinces could also be seen with regard to loans to




                                                                                                                                                         directors’ report on operations 65
           households                   1 Other public
                                        bodies           customers at the end of 2004.
                                                         The data show a resizing of the share held by the provinces of Treviso and
                                                         Vicenza, which move from 59.1% to 58.2% and 18.8% to 15.8% respectively, in
                                                         opposition to a widespread increase among the other business areas.

                                                         LOANS TO CUSTOMERS – distribution by customers’ province of residence
                                                                                                    % for '04             % for '03             % var.

                                                         Treviso                                           58.2                59.1               -0.9
                                                         Vicenza                                           15.8                18.8               -3.0
   12 Financial                61 Non financial          Venice                                             5.9                 5.4                0.5
   institutions                companies
                                                         Pordenone                                          4.6                 4.1                0.5
                                                         Padua                                              4.4                 3.6                0.8
                                                         Other provinces                                   11.1                 9.0                2.1
 BREAKDOWN OF LOANS
 BY ECONOMIC ACTIVITY
 AS AT 31/12/2004                               (%)      • Distribution by activity type and economic sector
                                                         The distribution of loans by economic activity sector highlights the clear
                  13 Trade services, recoveries
                               and reparations           prevalence of loans to non-financial companies, which represented 61% of the
31 Other           26 Other services                     total, and to households, which claimed a share of approximately 22%.
branches                     for sale


                                                         With regard to the distribution of loans to the production system, concerning the
                                                         various activity sectors, the year-end data reconfirmed the good level of
                                                         diversification. This characteristic puts the Company’s loans portfolio in a good
                                                         position, reiterating its strong focus on overall credit risk management.

                                                         • Concentration of loan portfolio
                                                         During 2004 the data relating to the degree of concentration of the loan
                               12 Building and public
                                                         portfolio recorded further improvements compared to the situation at the end
                               works                     of 2003, quantifying the share of loans used, held by the top 50 customers at
                   9 Textiles, leather & footwear,
                   clothing                              11.8%, as against the previous 14.4%.
           9 Other industrial products
                                     Also in this case, the reduced value is a clear indicator of the degree of
                                     diversification of the loan portfolio, and as a result, its overall quality.

                                     CONCENTRATION OF LOANS TO CUSTOMERS (in Euro million)
                                                                   2004       2003                      % for '04     % for '03

                                     Top 10 customers                            158         193             3.8%         5.4%
                                     Top 20 customers                            259         308             6.3%         8.7%
                                     Top 30 customers                            343         391             8.3%        11.0%
                                     Top 50 customers                            487         513            11.8%        14.4%
                                     TOTAL LOANS TO CUSTOMERS                  4,115       3,551           100.0%      100.0%
                                     NOTE: values net of loans to companies of the Veneto Banca Group

                                     7.1.3. DOUBTFUL LOANS TO CUSTOMERS
                                     At the end of the financial year the non-performing loans, net of adjustments,
                                     amounted to Euro 29.9 million.
                                     The watch-list entries amounted to Euro 38.5 million.

                                     Therefore, the total non-performing loans amounted to Euro 77 million.

                                     DOUBTFUL LOANS TO CUSTOMERS (in Euro million)
                                                                                  2004                       2003       % var.

                                     Non-performing loans                                    29.9             26.6      12.3%
                                       of which on delayed payment interest                   1.5              1.5       -0.7%
                                     Watch-list                                              38.5             21.4      80.0%
                                     Restructured loans                                       8.2              0.0          n.s.
                                     Total doubtful loans                                    76.7             48.0      59.6%
                                     Performing loans                                     4,037.9          3,502.8      15.3%
                                     TOTAL LOANS TO CUSTOMERS                             4,114.6          3,550.9      15.9%
directors’ report on operations 66




                                     %non-performing loans (*)/loans                      0.69%            0.71%         -2.3%
                                     (*) net of on delayed payment interest

                                     In view of the trends described above, the net ratio of non-performing loans to
                                     total loans closed the financial year at 0.69%, marking a further improvement
                                     compared to the previous 0.71%, also confirming the excellent position with
                                     regard to the banking system for 2004.


                                       TREND FOR NON PERFORMING LOANS                                                     (%)

                                     4.00



                                     3.00



                                     2.00



                                     1.00



                                     0.00
                                             1997        1998        1999        2000       2001    2002       2003    2004
                                            Net non-performing loans/loans to customers



                                     The constant focus on managing credit risk which has always distinguished the
                                     Bank’s policy, has at last led to a strengthening of the index of performing loans
                                     hedging from 0.51% at the end of 2003 to 0.58% for the financial year in
                                     question.
7.1.4. SECURITIES PORTFOLIO AND TREASURY
During 2004, the financial markets continued, although to a less noticeable
extent, with the positive trend that began during the previous financial year.
Simultaneously, the international economic situation recorded a strong
expansion, although there was a slowdown towards the end of the year
compared to the growth in the early part of 2004, nevertheless demonstrating
different growth speeds among the main economies.

During the financial year, the Bank maintained a limited risk profile,
simultaneously attempting to seize the opportunities that the financial markets
were able to offer, especially via trading and switching activities on stock and
bond markets.

The stock on the trading portfolio did not show significant changes.

The investment portfolio also remained almost unchanged compared to the
previous year.

There was a significant improvement under the risk profile position that, due to
the narrowing of the loan spreads and the reduction in interest rates, went from
a capital loss of Euro 2,021,628 at the end of 2003 to a capital gain of Euro
2,936,670.

PORTFOLIO OF OWN SECURITIES (in Euro million)
                                  2004        2003     % var.   % for '04   % for '03

Investment                         130.2     138.9     -6.3%      39.0%       41.8%




                                                                                        directors’ report on operations 67
Securities                         127.0     136.4     -6.9%
Funds                                3.2       2.6     25.3%
Trading                            203.6     193.1       5.4%     61.0%       58.2%
Securities                         201.0     188.4       6.7%
Equity shares                        2.6       4.7     -45.1%
TOTAL PORTFOLIO OF
OWN SECURITIES                     333.8     332.0      0.5%


• Treasury activities
During 2004, activities on the interbanking market recorded a decrease, mainly
due to the issue on the Euromarket of a senior bond loan of Euro 250 million and
a subordinated Lower Tier II loan of Euro 100 million.

Net liquidity at year end showed a negative imbalance of Euro 128 million, a clear
improvement when compared to the situation at the end of 2003.

INTERBANKING RELATIONS (in Euro million)
                                                     2004        2003         % var.

Loans to banks                                        367          279         31.5%
Due to banks                                         -495         -684        -27.6%
NET LIQUIDITY POSITION                               -128         -405        -68.3%
                                     • Loans/deposits ratio
                                     A more even ratio between loans and deposits made a positive contribution to
                                     the liquidity position. Thanks to the increase recorded by customer deposits, this
                                     went from 103.8% at the end of 2003 to 101.7% recorded as at 31 December 2004.
                                     If one considers only the Euro element, the ratio between customer loans and
                                     deposits falls to 96.4%.


                                      TREND OF LOANS/ DIRECT DEPOSITS

                                     4,500                                                                                                   140%


                                     4,000
                                                                                                                                             120%

                                     3,500
                                                                                                                                             100%
                                     3,000


                                     2,500                                                                                                   80%


                                     2,000                                                                                                   60%

                                     1,500
                                                                                                                                             40%
                                     1,000

                                                                                                                                             20%
                                      500


                                        0                                                                                                    0
                                                1997          1998            1999         2000                  2001   2002   2003   2004
directors’ report on operations 68




                                             Diret deposits           Loans               Loans/Deposits ratio




                                     7.1.5. RELATIONS WITH GROUP COMPANIES
                                     With reference to relations held with other Group Companies, forming part of
                                     normal interbanking activities, please refer to the table 3.2 in the notes to the
                                     financial statements.
                                     The prices regulating these relations are directly linked to market conditions or
                                     on the basis of costs incurred.

                                     The supply of services, consultancy and detached personnel distributed by the
                                     Parent Company are, on the contrary, regulated by specific internal outsourcing
                                     contracts, within which the related economic conditions are set out.
                                     These agreements, based on the criteria of congruity and disclosure, are drawn
                                     up in the Company’s interests and without conflicts of interest. The
                                     abovementioned structure is in line with the organisational model adopted by
                                     the Group itself, which means that business not directly related to customers is
                                     centralised at Veneto Banca, leaving the subsidiaries to handle all the commercial
                                     relations.

                                     Further information is also provided in the specific sections of this report and the
                                     notes to the financial statements dealing with infra-Group relations.
7.2. EQUITY AND CAPITAL ADEQUACY

7.2.1. SHAREHOLDERS’ EQUITY
In December 2003, shareholders’ equity, including profit and the reserve for
general banking risk, totalled Euro 627.6 million, compared with 538.3 million in
2003.

The growth in equity was mainly determined by:
- the allocation to the reserve for general banking risk of the capital gain on the
  sale of 80% of the capital held in the insurance company Claris Vita;
- the increase in reserves, with particular reference to the item “other reserves”;
- the modest setting up of accounts carried out to meet the demands of newly-
  acquired customers in areas where branches have recently opened.

SHAREHOLDERS’ EQUITY (in Euro thousand)
                                                              2004      2003       % var.

Reserve for general banking risk                          39,057        6,057     544.8%
Share capital                                             98,646       95,068       3.8%
Issue premiums                                           304,765      280,983       8.5%
Reserves                                                 133,871      110,540      21.1%
   legal reserve                                          33,012       29,004      13.8%
   other reserves                                        100,859       81,536      23.7%
Revaluation reserves                                       5,554        5,554       0.0%
Profit for the year                                       45,658       40,077      13.9%
Total shareholders’ equity                               627,551      538,279      16.6%
Subordinated liabilities                                 181,814       82,065     121.5%
TOTAL SHAREHOLDERS’ EQUITY AND
SUBORDINATED LIABILITIES                                 809,365      620,344      30.5%




                                                                                              directors’ report on operations 69
Equity exceeded Euro 809 million with the inclusion of subordinated liabilities,
quantified as at 31 December 2004 at 181.8 million due to the issuing of the new
subordinated loan “Veneto Banca subordinated 2004/2014 Step Up – Floating
rate bonds on the Euromarket (lower tier II)”, for a face value of Euro 100 million.


  SHAREHOLDERS’ EQUITY                                                 (in euro million)


1997                     228


1998                       234


1999                       241


2000                         265    108


2001                               367            155


2002                                     409            155


2003                                               538           82


2004                                                            628      182


       0                 200              400                 600         800         1.000

           Shareholders’ equity      Subordinated liabilities
                                     Share capital as at 31 December 2004 was therefore made up of 32,882,038 shares
                                     with a unit face value of Euro 3.00 for a total of Euro 98,646,114.
                                     On the same date, the Bank numbered 16,041 Shareholders, with an increase of
                                     405 units compared to December 2003.

                                     7.2.2. CAPITAL FOR SUPERVISORY PURPOSES AND
                                              MINIMUM RATIOS
                                     As at 31 December 2004 capital for supervisory purposes amounted to Euro 737
                                     million, up by 34.3% compared to the end of 2003.

                                     CAPITAL FOR SUPERVISORY PURPOSES (in Euro million)
                                                                                                       2004         2003          % var.

                                     Tier I capital                                                     583          494          18.1%
                                     Tier II capital                                                    184           85         116.9%
                                     Items to be deducted                                               -30          -30           0.0%
                                     CAPITAL FOR SUPERVISORY PURPOSES                                   737          548         34.3%


                                     Tier I capital – made up of share capital, reserve for general banking risk and
                                     reserves, net of intangible fixed assets and goodwill – reached Euro 583 million,
                                     with an annual increase of Euro 89 million, largely caused by the positive change
                                     in the reserve for general banking risk.

                                     The increase recorded in Tier II capital, as at 31 December 2004 totalling Euro 184
                                     million, essentially depended on the issuing of the new 100 million subordinated
                                     loan placed last December.
directors’ report on operations 70




                                       TREND IN CAPITAL FOR SUPERVISORY PURPOSES                                    (in euro million)

                                     750
                                                                                                                                  737
                                     700

                                     650

                                     600
                                                                                                                                  583
                                                                                                                    548
                                     550
                                                                                                        504
                                     500                                                   496                            494
                                     450

                                     400
                                                                            352                               367
                                     350
                                                                                                 343
                                     300

                                     250          222        226
                                                                                     241
                                     200    213                      219
                                             1998             1999            2000           2001        2002       2003        2004
                                            Tier I capital           Total capital




                                     Weighted risk assets, calculated according to the Supervision Authority
                                     regulations, also demonstrated an upwards trend, going from Euro 4,810 million
                                     to Euro 5,445 million, corresponding to an increase of 13.2%.

                                     This increase was largely due to the greater credit risks that, with an annual
                                     growth of 11.5%, came in at Euro 5,105 million.
  On the other hand, exposure to market risks, even in accordance with current
  strategic indications, proved to be more limited, registering at approximately Euro
  258 million.


    TREND IN WEIGHTED RISK ASSETS                                                                     (in euro million)

                                                                                                                            5,449
5,500

5,000                                                                                               4,810                   5,105

4,500
                                                                                    4,364                   4,579

4,000
                                                                                            3,922
3,500
                                                                   3,258

3,000                                                                       3,113
                                                 2,515
2,500
                                                           2,419
2,000
                            1,871

1,500                               1,677
         1,374
         1,257
1,000
              1998              1999                2000              2001             2002            2003               2004
             Credit risks              Total risks




  The Bank’s capital position, given the trends outlined above and the performance
  of risk weighted assets considered as a whole, showed a clear improvement
  compared to the end of 2003, closing the financial year with a surplus of Euro 356
  million.




                                                                                                                                       directors’ report on operations 71
   SHAREHOLDERS’ EQUITY                                                                               (in euro million)


  1998               96                126


  1999                    131               95


  2000                          176                             176


  2001                                 228                                          268


  2002                                                   305                         198


  2003                                                      336                             212


  2004                                                             381                                        370 356


         0            100              200                300              400        500            600            700          800

              Minimum                                     Shareholders’ equity



  The positive trend recorded by the overall shareholders’ equity was supported by
  the clear improvement in the leverage ratios.
  Tier I actually went from 10.26% at the end of 2003 to 10.71%, while the Total Risk
  Ratio ended 2004 at 13.53% compared to the previous 11.40%.
                                     7.3. PROFITABILITY
                                     2004 closed with an entirely satisfactory result. The Bank actually exceeded Euro
                                     45.6 million, achieving a 14% growth in terms of net profit.

                                     RECLASSIFIED PROFIT AND LOSS ACCOUNT (in Euro thousand)
                                                                                     2004             2003         % var.

                                     Financial spread                                 97,134        92,738          4.7%
                                     Dividends                                        22,099        18,555         19.1%
                                     Interest margin                                 119,233       111,293          7.1%
                                     Service margin                                   70,419        63,789         10.4%
                                     Profit on financial transactions                 20,495        20,067          2.1%
                                     Earning margin                                  210,146       195,149          7.7%
                                     Operating expenses:                            -118,563      -107,847          9.9%
                                        personnel cost                               -70,447       -64,115          9.9%
                                        other administrative expenses                -48,116       -43,732         10.0%
                                     Gross operating profit (loss)                    91,583        87,302          4.9%
                                     Amortisation and depreciation                    -9,722        -7,834         24.1%
                                     Other operating charges                            -419          -156        168.1%
                                     Provisions and write-backs                      -21,171       -18,908         12.0%
                                     Provisions for risks and charges                   -641           -84        659.5%
                                     Write-downs of financial fixed assets               848          -174       -587.3%
                                     Profit (loss) on ordinary activities             60,479        60,145          0.6%
                                     Balance of extraordinary operations              32,969        -2,384            n.s.
                                     Change in reserve for general banking risk      -33,000             0            n.s.
                                     Income taxes for financial year                 -14,790       -17,684        -16.4%
                                     NET PROFIT FOR THE YEAR                         45,658         40,077         13.9%


                                     The result achieved does not therefore take into account the Euro 33 million
                                     increase in the reserve for general banking risk, arising from the allocation of the
                                     capital gain realised from the sale of the 80% stake in Claris Vita.
directors’ report on operations 72




                                     The growth in the earning margin and the controlled increase in operating
                                     expenses both contributed to the positive revenue trend. These phenomena laid
                                     the foundations for the solid profit in ordinary activities.

                                     In terms of revenue, growth was supported on the one hand by the interest
                                     margin, pulled up by the positive trend in credit brokering and also by the good
                                     performance of the “dividends” item, and on the other hand by the brilliant
                                     performance of net revenue from services.
                                     The increase in administrative expenses, slightly higher than the growth in
                                     revenue, partially balanced out the contribution to the increase in “gross
                                     operating profit (loss)”.

                                     7.3.1. THE INTEREST MARGIN
                                     As at 31 December 2004 the interest margin had exceeded Euro 119.2 million,
                                     signalling an increase of almost Euro 8 million, equivalent to 7.1%.
                                     Growth in the aggregate was caused both by the development of the financial
                                     element, deriving almost exclusively from the customer deposit and loan
                                     activities, that was recorded at 4.7% during the year, and from the increased
                                     dividends collected, up by more than 19%.

                                     Development of the financial spread essentially depended on the increase in
                                     traded volumes. Interest rates, on the other hand, remained almost stable
                                     compared to the asset element, while the cost of deposits recorded a slight
                                     increase, consolidating a trend that had already been highlighted during 2003.

                                     As far as the dividends from equity investments item is concerned, up by 19.1%
                                     despite the sale of 80% of the insurance company Claris Vita, the significant
                                     contribution of the Irish subsidiary and Palladio Finanziaria should be noted. The
                                     results recorded for the company Claris Leasing and Claris Factor were good, also
                                     in absolute terms.
However, the contribution of other dividends was also significant.

DIVIDENDS FROM EQUITY INVESTMENTS (in Euro thousand)
                               2004       2003     % var.               % for '04   % for '03

Banca di Bergamo                             0          0
Banca Meridiana                              0          0
Banca Italo-Romena                           0          0
Dividends from equity investments
in other banks (*)                          0          0
Veneto Ireland Financial Services      11,782      9,599     22.7%
Palladio Finanziaria (ex-Atene)         1,247        333    274.5%
Dividends from financial inv. (*)      13,029      9,932     31.2%         70.2%      53.5%
Claris Vita                               975      3,975    -75.5%
Claris Factor                           1,900      1,200     58.3%
Claris Leasing                            200          0
Dividends from instrumental
equity investments (*)                  3,075      5,175    -40.6%         16.6%      27.9%
Other sundry dividends                  5,995      3,448     73.9%         32.3%      18.6%
TOTAL DIVIDENDS FROM
EQUITY INVESTMENTS                     22,099     18,555     19.1%
(*) only the leading subsidiaries of the Veneto Banca Group have been considered


7.3.2. EARNING MARGIN
During 2004 the increased earning margin exceeded Euro 210.1 million, up by
7.7% compared to 2003. This result was caused, apart from by the positive interest
margin trend, by the excellent result achieved in the service margin. As at 31
December 2004, these last two aggregates represented 56.7% and 33.5% of the
earning margin respectively. Profits on financial transactions were also up on last
year, representing almost 10% of the earning margin.




                                                                                                directors’ report on operations 73
7.3.2.1. THE SERVICE MARGIN
The service margin ended the year with an increase of 10.4% on the previous
year, registering at Euro 70.4 million. This performance confirms the positive
trend for this item, that was already up by more than 20 percentage points in 2003
compared to the previous financial year.

SERVICE MARGIN (in Euro thousand)
                                         2004       2003     % var.     % for '04   % for '03

Management of indirect deposits        21,633     20,028      8.0%          30.7%      31.4%
Net income on sales activity           37,496     31,701     18.3%          53.2%      49.7%
Other credits                          11,290     12,060     -6.4%          16.0%      18.9%
TOTAL SERVICE MARGIN                   70,419     63,789     10.4%


The increase recorded in 2004 is the result of the excellent performance of “net
income on sales activity”, up by more than 18%, and revenue relating to the
management of indirect deposits, up by 8%. In the first case, a special impulse
came from the commission flows related to current account management, to
which were added the considerable contributions from overseas and corporate
portfolio management activity.
With regard to management of indirect deposits, the greatest contribution came
from the managed element and from insurance products, that recorded a very
positive performance over the course of the year.

On the contrary,“other income” fell by 6.4%, however this only represents 16%
of the aggregate total.
Among the components in the last item, we would highlight the growing
contribution from the recoveries for business carried out on behalf of other
Group companies, up by 35.2%. Within this aggregate, both recoveries for
detached personnel working at the subsidiaries and the income relating to
                                     services provided under outsourcing agreements to other Group companies
                                     increased.

                                     OTHER INCOME (in Euro thousand)                          2004         2003         % var.

                                     Invoicing of services to Group banks                     4,090        3,025         35.2%
                                        for detached personnel                                2.194        1,699         29.1%
                                        for outsourcing contracts                             1,896        1,326         43.0%
                                     Other sundry income                                      7,200        9,035        -20.3%
                                     TOTAL OTHER INCOME                                   11,290          12,060         -6.4%


                                     7.3.2.2. PROFITS ON FINANCIAL TRANSACTIONS
                                     As at 31 December 2004 the profits and losses on financial transactions were
                                     higher than the levels achieved in 2003, reaching Euro 20.5 million. This result is
                                     particularly due to the good performance of securities and exchange rate
                                     management, for which profits achieved an annual increase of 16% and 55.2%
                                     respectively. The income contribution from exchange rate and interest risk
                                     hedging operations with corporate customers remained stable, and represented
                                     more than 53% of this item at year-end.

                                     7.3.3. OPERATING PROFIT (LOSS)
                                     2004 closed with a gross operating profit (loss) of Euro 91.6 million, signalling an
                                     improvement of 4.9% compared to 2003.
                                     This trend is the result of the combined effect of the abovementioned trend in
                                     income flows and the increased growth in operating expenses that partially
                                     absorbed the positive contribution.

                                     7.3.3.1. OPERATING EXPENSES
directors’ report on operations 74




                                     During the financial year, operating expenses were up by 10.2%, reaching Euro
                                     118.6 million at the end of December.

                                     Looking at the details, the figures have already displayed increases both in
                                     personnel costs and for other administrative expenses, which in both cases were
                                     quantified at 10%.

                                     With regard to personnel costs, a Euro 6.3 million increase was recorded, taking
                                     this item to over Euro 70.4 million. The increase was caused, apart from by the
                                     increase in personnel, going from 1,105 to 1,169 staff, also by the increase in the
                                     average cost per employee of 3.4 percentage points. This is largely attributable to
                                     the recent renewal of the National Labour Agreement. As mentioned above,
                                     other administrative expenses also showed an upward trend, rising by 10% to
                                     reach Euro 48.1 million. The growth in this aggregate was fairly even for the
                                     various sectors, not registering peaks except for the item other administrative
                                     expenses, especially following the effects on the profit and loss account of the new
                                     investments made.

                                     OTHER ADMINISTRATIVE EXPENSES (in Euro thousand)
                                                                      2004       2003            % var.   % for '04   % for '03

                                     Real estate costs                       7,359    6,965       5.7%       15.3%       15.9%
                                     Information technology                 12,439   11,877       4.7%       25.9%       27.2%
                                     Security                                1,673    1,542       8.5%        3.5%        3.5%
                                     Communications                          3,611    3,604       0.2%        7.5%        8.2%
                                     Other administrative expenses          15,766   13,196      19.5%       32.8%       30.2%
                                     Indirect taxation and charges           7,268    6,548      11.0%       15.1%       15.0%
                                     TOTAL OTHER ADMINISTRATIVE
                                     EXPENSES                               48,116   43,733      10.0%     100.0%      100.0%


                                     In view of the above, the cost/income ratio deteriorated slightly, but its value was
                                     nevertheless a slight improvement on the 61.6%8 seen at banking system level.                8 Prometeia estimates
 GROSS PROFIT / COST INCOME



                                                                                                87.3
  GROSS
 PROFIT
 (in Euro                                                                                           91.6
 million)


                                                                59.3
   COST
 INCOME
     (%)                                                         61.0


          0.0                 20.0              40.0                 60.0                    80.0             100.0
                2003                   2004


7.3.7. PROFIT ON ORDINARY ACTIVITIES
Profit on ordinary activities at the end of 2004 was Euro 60.5 million, an increase
of 0.6% compared to the previous twelve months.
This profit was achieved after making write-downs on fixed assets of Euro 9.7
million, of which 1.5 related to real estate, net write-downs of loans for Euro 21.2
million, provisions for risks and charges of Euro 641 thousand and other
operating charges for Euro 419 thousand.

7.3.8. EXTRAORDINARY OPERATIONS AND NET PROFIT
Profit on extraordinary operations incorporated the capital gain arising from the
abovementioned sale of 80% of the equity investment in the insurance company
Claris Vita. As at 31 December 2004, therefore, extraordinary net profit totalled
Euro 33 million, making a variation to the reserve for general banking risk of the




                                                                                                                      directors’ report on operations 75
same amount.

Finally, the reduced impact of taxation compared to the 2003 figure enabled
closure of the financial year with a net profit of Euro 45.7 million compared with
the 40.1 for 2003, recording an increase of 13.9%. 2004 was thus in line with the
trend recorded in recent years that has led to profit levels almost being tripled
compared to 1998.


 net profit                                                                           (in euro million)


1997                    12.9


1998                            15.5


1999                                   18.1


2000                                                     28.5


2001                                                                    34.1


2002                                                          30.4


2003                                                                                  40.1


2004                                                                                                45.7


   0. 0         5.0    10.0          15.0     20,0     25.0      30.0          35.0      40.0          45.0   50.0



Thanks to the positive income performance, asset profitability was also
maintained at good levels, taking ROE to 8.45%. This value was entirely
satisfactory when compared with expectations for the banking system.
                                        8. TRENDS IN SUBSIDIARIES

                                     As at 31 December 2004 Veneto Banca’s equity investments totalled Euro 411.2
                                     million, with a decrease of Euro 41.9 million compared to the previous financial
                                     year.

                                     EQUITY INVESTMENTS (in Euro thousand)      2004       2003     abs. var.     % var.

                                     Equity investments in Group companies   327,103    384,166      -57,063     -14.9%
                                     Other equity investments                 84,059     68,855       15,204      22.1%
                                     Total                                   411,162    453,021      -41,859     -9.24%


                                     The event responsible for the trend shown was the previously mentioned sale of
                                     80% of the share capital of Claris Vita to Uniqa Versicherungen AG, a leading
                                     Austrian insurance company.
                                     This change was only partially offset by the increased value in the equity
                                     investment in Banca Meridiana, that went from Euro 103.1 to Euro 115.5 million
                                     as a result of the capital increase carried out during the year, and the payment to
                                     the Banca Italo-Romena of the last tranche of the calls relating to the capital
                                     increase subscribed on 12 April 2001.

                                     The corporate structure at the end of 2004 thus included the following
                                     subsidiaries:
                                     - the three commercial banks:
                                       • Banca di Bergamo
                                       • Banca Meridiana
directors’ report on operations 76




                                       • Banca Italo-Romena
                                     - the financial company:
                                       • Veneto Ireland Financial Services
                                     - the special purpose companies:
                                       • Claris Assicurazioni
                                       • Claris Broker
                                       • Claris Factor
                                       • Claris Finance
                                       • Claris Leasing
                                       • Immobiliare Italo Romena

                                     The “other equity investments” item includes non-significant investments, in
                                     other words those where Veneto Banca’s interest is less than 50% of share capital.
                                     The subsidiaries subject to considerable control are significant here, including
                                     Claris Vita, Sintesi 2000 and Palladio Finanziaria.

                                     With regard to the remaining equity investments, the main changes were as
                                     follows:
                                     • Arca SGR spa – during August a further 452,000 shares were acquired. The
                                       equity investment percentage exceeded 2%.
                                     • Centrosim spa – the investment was increased following approval of the
                                       capital increase resolved by the bank last year in January. The equity
                                       investment percentage remains unchanged.
                                     • Dutch Romanian Trading Group srl – during the financial year, expenses
                                       were incurred for market research and consultancy, and payment was made
                                       to settle the share purchase that took place in 2003.
                                     • Sec Servizi spa – the capital increase resolved by the company in April 2004
                                       led to expenditure relating to the subscription of 1,347,215 new shares.
                                     • Veneto Sviluppo spa – approval of the capital increase led to a payment of
                                       approximately Euro 6,500, for the subscription of 2,498 new shares.
• Est Capital Sgr spa – set up at the start of 2004, the company operates in
  collective asset management; the Bank has a 10% stake.

The following sections give a brief summary of the report on operations for the
main Group companies.

8.1. BANKS AND FINANCIAL COMPANIES

8.1.1. BANCA DI BERGAMO
ECONOMIC/FINANCIAL VALUES AND KEY MANAGEMENT
FIGURES

Area of activity: banking
Registered office: Via Camozzi, 10 – 24121 – Bergamo
Amount of equity investment: 60.07%

ECONOMIC VALUES (in Euro thousand)                  2004       2003   abs. var.   % var.
Interest margin                                    12,979    10,378     2,602     25.1%
Earning margin                                     20,489    16,673     3,816     22.9%
Operating expenses                                -12,924   -10,365    -2,559     24.7%
Profit on ordinary activities                       3,431     1,932     1,499     77.6%
Net profit                                          1,712     1,394       318     22.8%

FINANCIAL AND OPERATING
VALUES (in Euro thousand)                           2004       2003   abs. var.   % var.
Gross banking income                            1,242,177   891,307   350,870     39.4%
Total deposits                                    752,610   514,478   238,132     46.3%
Direct deposits                                   460,970   332,568   128,402     38.6%
Indirect deposits                                 291,640   181,910   109,730     60.3%




                                                                                           directors’ report on operations 77
   of which: managed savings                       71,537    56,320    15,217     27.0%
   of which: administered savings                 220,103   125,590    94,513     75.3%
Loans to customers                                489,566   376,829   112,737     29.9%
Performing assets                                 535,040   401,400   133,640     33.3%
Total assets                                      555,357   413,158   142,198     34.4%
Shareholders’ equity
(net of subordinated loans)                       42,211     40,499     1,712      4.2%

STRUCTURAL RATIOS (%)                               2004       2003   abs. var.   % var.
Direct deposits/Total assets                      83.00%     80.49%     2.51%       3.1%
Loans to customers/Total assets                   88.15%     91.21%    -3.06%      -3.4%
Loans to customers/Direct deposits               106.20%    113.31%    -7.11%      -6.3%

CREDIT QUALITY RATIOS (%)                           2004       2003   abs. var.   % var.
Net non-performing loans/Loans to customers        0.14%     0.13%     0.01%       7.7%
Net watch-list/Loans to customers                  1.21%     0.74%     0.47%      63.5%
Net non-performing loans/Shareholders’ equity      1.70%     1.07%     0.63%      58.9%

PROFITABILITY RATIOS (%)                            2004       2003   abs. var.   % var.
R.O.E.                                             4.30%     3.53%      0.77%     21.8%
R.O.A.                                             1.53%     1.67%     -0.14%     -8.4%
Interest margin/Performing assets                  2.43%     2.59%     -0.16%     -6.2%
Earning margin/Performing assets                   3.83%     4.15%     -0.32%     -7.7%
Net profit/Performing assets                       0.32%     0.35%     -0.03%     -8.6%
Interest margin/Earning margin                     63.3%     62.2%      1.10%      1.8%
Cost/Income ratio                                  70.2%     71.1%     -1.27%     -1.3%

EQUITY RATIOS (%)                                   2004       2003   abs. var.   % var.
Tier I                                             8.19%     9.56%     -1.37%     -14.3%
Solvency ratio                                     8.19%     9.57%     -1.38%     -14.4%

STRUCTURAL AND PRODUCTIVITY RATIOS                  2004       2003   abs. var.   % var.
Average no. of employees                              97         81        16     19.8%
Number of bank branches                               16         12         4     33.3%
Customer loans per employee                        5,047      4,652       395      8.5%
Total deposits per employee                        7,759      6,352     1,407     22.2%
Gross banking income per employee                 12,806     11,004     1,802     16.4%
Earning margin per employee                          211        206         5      2.6%
                                     2004 concluded successfully if one considers the difficult situation for the
                                     national and international economy and the modest growth in the banking
                                     industry.

                                     The increase in gross banking income was particularly significant. This went from
                                     Euro 891.3 million in 2003 to 1.242 million at the end of 2004, recording a 39.4%
                                     increase.
                                     There was also an improvement in terms of productivity, with an increase in gross
                                     banking income per employee of close to 16.4%.

                                     Financial activities managed on behalf of customers, including both direct and
                                     indirect deposits, totalled Euro 752.6 million at the end of the year, recording a
                                     significant increase of 46.3% compared to the end of the previous financial year.
                                     Direct customer deposits went from 332.6 to approximately Euro 461 million,
                                     which means an increase of 128.4 million, corresponding to 38.6%. Among the
                                     types of account making up the aggregate, the percentage impact of current
                                     accounts was particularly significant, equal to 58.1%, and bonds, equal to 36.1%.
                                     The direct element, while recording a reduced impact on total deposits compared
                                     to 2003 (-3.4%), made a 61.2% contribution.

                                     The increase in indirect deposits was more significant. This was up by 60.3%,
                                     reaching Euro 292 million.
                                     Within this sector the managed element recorded a 27% increase, less than
                                     that for administered savings which amounted to 75.3%. The percentage
                                     breakdown between administered and managed savings was 75.5% to 24.5%
                                     respectively.
directors’ report on operations 78




                                     At the end of the financial year 2004, loans to customers totalled approximately
                                     Euro 490 million with a percentage increase of 29.9% compared to 2003.
                                     With regard to the various items making up the aggregate, although the increase
                                     was generalised, it particularly affected mortgage loans, corporate loans and
                                     current accounts, increasing by 64.1%, 21.2% and 17.8% respectively.
                                     The distribution of customer loans, divided by category and line of business,
                                     shows an increased opening up of credit towards the corporate sector, in line
                                     with the Bank’s strategy of establishing long-lasting relations with the many
                                     small and medium sized enterprises that make up the local industrial and
                                     economic fabric.

                                     In 2004 the ratio of net non-performing loans/loans remained at outstanding
                                     levels, registering at only 0.14%, compared with 0.13% for 2003.
                                     Watch-list entries, although they increased to Euro 5.9 million, only represent
                                     1.2% of loans to customers.

                                     As at 31 December 2004 the Bank’s securities portfolio was only made up of
                                     trading securities, of Euro 5 million.

                                     In economic terms, the financial year 2004 ended with a net profit of Euro 1.7
                                     million, up by 22.8% compared to that achieved in 2003.
                                     The earning margin increased by 22.9% compared to the previous financial year,
                                     reaching Euro 20.5 million.
                                     The greatest contribution to this increase came from the interest margin, which
                                     represented 63.3% of the earning margin. With a 25.1% increase, it closed 2004
                                     with approximately Euro 13 million. The result was achieved due to the good
                                     performance of the traded volumes, that compensated for the reduction in rates.
The service margin represented 25.4% of the earning margin. Despite the
negative trend in the financial markets, it increased by 34.5%, reaching Euro 5.2
million. Within this, profit on indirect deposits were 31.2%, while profit on
banking services represented 68.8%.
Profits on financial transactions had an impact on the earning margin of 11.3%.
This aggregate recorded a decrease of 4.9%, while highlighting significant
volumes of Euro 2.3 million, mainly due to activities in the corporate segment.

Operating expenses increased by 24.7%, less than the increase recorded at the
end of 2003, and absorbed 63.1% of the earning margin.
This increase was almost entirely due to the increase in sales activities which
generated further recruitment of staff for the four new branches, and greater
recourse to services supplied by SEC and by the Parent Company.
Personnel costs represented 51.3% of operating expenses, and were up by 25.9%,
a more sustained growth than 2003. However, administrative expenses had an
impact of 48.7% on total expenses and were up by 23.4%, also slowing down
compared to the previous year.
Finally, amortisations, write-downs of loans and other minimum provisions
amounted to Euro 4.1 million, with an impact of approximately 20.2% on the
earning margin.

The Bank’s shareholders’ equity including profit totalled Euro 42.2 million for the
financial year just ended.
Capital for supervisory purposes amounted to Euro 40.4 million and was more
than adequate for the minimum threshold required.




                                                                                      directors’ report on operations 79
As regards the operational structure, during 2004 four new branches were
opened in the province of Bergamo, which took the Bank’s distribution
network to 16 branches at the end of the financial year. As a result of this
expansion, the Bank’s workforce increased by 18 staff, reaching a total of 103 at
the end of the year.

2005 will be a year for expanding the distribution network and as a result, for
further development in terms of volumes and customers. No less important will
be the aim to increase profitability and increase market share.
                                     8.1.2. BANCA MERIDIANA
                                     ECONOMIC/FINANCIAL VALUES AND KEY MANAGEMENT
                                     FIGURES

                                     Area of activity: banking
                                     Registered office: Via Amendola, 205/3 – 70126 – Bari
                                     Amount of equity investment: 99.39%

                                     ECONOMIC VALUES (in Euro thousand)                       2004         2003    abs. var.   % var.
                                     Interest margin                                        25,571       22,640      2,931      13.0%
                                     Earning margin                                         38,991       35,771      3,220       9.0%
                                     Operating expenses                                    -26,889      -28,480      1,591      -5.6%
                                     Profit on ordinary activities                           4,591        2,193      2,398     109.3%
                                     Net profit                                              2,006          517      1,489     288.1%

                                     FINANCIAL AND OPERATING
                                     VALUES (in Euro thousand)                                2004         2003    abs. var.   % var.
                                     Gross banking income                               1,500,989     1,268,122    232,867      18.4%
                                     Total deposits                                     1,052,467       980,913     71,554       7.3%
                                     Direct deposits                                      717,530       611,158    106,372      17.4%
                                     Indirect deposits                                    334,937       369,755    -34,818      -9.4%
                                        of which: managed savings                         134,718       120,085     14,633      12.2%
                                        of which: administered savings                    200,219       249,670    -49,451     -19.8%
                                     Loans to customers                                   448,522       287,209    161,313      56.2%
                                     Performing assets                                    746,902       640,163    106,738      16.7%
                                     Total assets                                         814,160       691,621    122,539      17.7%
                                     Shareholders’ equity
                                     (net of subordinated loans)                            38,616       24,311     14,305     58.8%
                                     Shareholders’ equity
                                     (including subordinated loans)                         48,741       34,311     14,430     42.1%

                                     STRUCTURAL RATIOS (%)                                    2004         2003    abs. var.   % var.
directors’ report on operations 80




                                     Direct deposits/Total assets                          88.16%       88.37%     -0.21%      -0.2%
                                     Loans to customers/Total assets                       55.11%       41.53%     13.58%      32.7%
                                     Loans to customers/Direct deposits                    62.51%       46.99%     15.51%      33.0%

                                     CREDIT QUALITY RATIOS (%)                                2004         2003    abs. var.   % var.
                                     Net non-performing loans/Loans to customers            0.89%         0.49%     0.40%      81.1%
                                     Net watch-list/Loans to customers                      1.98%         1.53%     0.45%      29.2%
                                     Net non-performing loans/Shareholders’ equity          8.20%         4.12%     4.08%      99.0%

                                     PROFITABILITY RATIOS (%)                                 2004         2003    abs. var.   % var.
                                     R.O.E. (*)                                             6.64%        2.17%       4.47%     205.7%
                                     R.O.A.                                                 2.69%        2.52%       0.17%       6.6%
                                     Interest margin/Performing assets                      3.42%        3.54%      -0.11%      -3.2%
                                     Earning margin/Performing assets                       5.22%        5.59%      -0.37%      -6.6%
                                     Net profit/Performing assets                           0.27%        0.08%       0.19%     232.6%
                                     Interest margin/Earning margin                        65.58%       63.29%       2.29%       3.6%
                                     Cost/Income ratio                                     76.22%       88.37%     -12.15%     -13.8%

                                     EQUITY RATIOS (%)                                        2004         2003    abs. var.   % var.
                                     Tier I                                                 6.11%         3.73%     -2.38%     -63.8%
                                     Solvency ratio                                         8.05%         5.59%     -2.46%     -44.0%

                                     STRUCTURAL AND PRODUCTIVITY RATIOS                       2004         2003    abs. var.   % var.
                                     Average no. of employees                                  251           283       -32     -11.3%
                                     Number of bank branches                                    30            30         0       0.0%
                                     Customer loan per employee                              1,787         1,015       772      76.1%
                                     Total deposits per employee                             4,193         3,466       727      21.0%
                                     Gross banking income per employee                       5,980         4,481     1,499      33.5%
                                     Earning margin per employee                               155           126        29      22.9%
                                     (*) Calculated on average equity net of profit and subordinated liabilities


                                     In 2004 Banca Meridiana recorded an improvement in both revenue and traded
                                     volumes.
                                     Its good performance was encouraged by the company restructuring that Banca
                                     Meridiana has undergone in recent years and by the gradual integration into the
Veneto Banca Group.

Gross banking income increased by more than 18 percentage points.
Financial activities managed on behalf of customers, including both direct and
indirect deposits, totalled Euro 1,052 million at year end, with a 7.2% increase
compared to the end of the previous year.
In particular, direct deposits from customers went from Euro 611.1 to 717.5
million, up by 106 million (+17.4%), thus improving the already high growth rate
recorded during the last financial year. However, indirect deposits fell by
approximately 9.4%. This figure suffered from the effects of the operation to
transform bonds issued by other counter parties into own bonds: net of this
effect, even this item would have increased. Within this aggregate, the fall
recorded in deposits in administration was thus partially balanced out by the
growth in managed savings of 12.2%, caused mainly by the good performance in
insurance products.

Loans to customers at the end of December 2004 totalled Euro 448.5 million, up
by 56% compared to 2003.
This increase was made possible by the Bank’s recent reorganisation, giving a
new impulse to sales activities. The results achieved in 2004 in terms of volumes
employed confirm the satisfactory development of the Bank over the financial
year, which should help to make it a point of reference for local customers,
whether private or corporate.
Non-performing loans, while remaining at very low levels, recorded a slight
increase. The ratio of non-performing loans to loans went from 0.49% to 0.89%.
Figures relating to the quality of the loan portfolio are also satisfactory even in




                                                                                      directors’ report on operations 81
terms of diversification between lines of business.

With regard to revenue, the financial year ended positively, recording a net profit
of Euro 2 million, an increase of 288% compared to the financial year 2003.

The considerable increase recorded in traded volumes supported the increase in
the interest margin, equal to Euro 25.6 million, representing more than 65% of
the earning margin at the end of the year.

The service margin closed with a total of Euro 12.8 million, made up for the most
part of net fees and commissions from services for a total of Euro 10.7 million,
profits on financial transactions of Euro 583 thousand and other operating
income of Euro 2.3 million.

The earning margin thus reached Euro 38.9 million, showing an increase of 9%.

Operating expenses were down on the year 2003, registering at just over Euro
26.9 million (-5.6% compared to 2003). Both the trend in administrative expenses
amounting to Euro 11.8 million and personnel costs of Euro 15.1 million
contributed to this fall.
The significant reduction recorded in this last item, of 5.1%, was caused by the
signing of a redundancy agreement at the beginning of 2004, which led to 33
employees being pensioned off.

The cost/income ratio, given from the comparison between operating expenses
and the earning margin improved, falling to 76% from the 88% recorded in 2003.

In terms of structure, 2004 involved considerable consolidation of the sales
network.
                                     In the context of reorganisation of the distribution network, the licence for the
                                     Grottole branch was transferred to the new branch at Potenza, with the aim of
                                     ensuring a stronger business base in areas with greater business potential.
                                     The size of the Bank’s distribution network is therefore unchanged, still
                                     numbering 30 branches. In the first few months of 2005, however, the branches
                                     of Manfredonia and San Giovanni Rotondo were opened, with the aim of
                                     expanding business in the Foggia region.

                                     8.1.3. BANCA ITALO-ROMENA
                                     ECONOMIC/FINANCIAL VALUES AND KEY MANAGEMENT
                                     FIGURES

                                     Area of activity: banking
                                     Registered office: Viale Nino Bixio, 1 – 31100 – Treviso
                                     Amount of equity investment: 92.31%

                                     ECONOMIC VALUES (in Euro thousand)                  2004      2003   abs. var.   % var.
                                     Interest margin                                    7,893     3,154     4,740     150.3%
                                     Earning margin                                    13,092     7,447     5,645      76.8%
                                     Operating expenses                                -6,195    -4,816    -1,379      28.6%
                                     Profit on ordinary activities                      4,806     1,437     3,369     234.5%
                                     Net profit                                         3,299     1,640     1,659     101.1%

                                     FINANCIAL AND OPERATING
                                     VALUES (in Euro thousand)                           2004      2003   abs. var.   % var.
                                     Gross banking income                             267,952   146,372   121,580     83.1%
                                     Direct deposits                                  100,478    50,340    50,139     99.6%
                                     Loans to customers                               167,473    96,032    71,441     74.4%
directors’ report on operations 82




                                     Performing assets                                240,316   127,454   112,862     88.6%
                                     Total assets                                     252,792   139,505   113,287     81.2%
                                     Shareholders’ equity                              37,157    30,217     6,940     23.0%

                                     STRUCTURAL RATIOS (%)                               2004      2003   abs. var.   % var.
                                     Direct deposits/Total assets                      39.75%    36.08%                10.2%
                                     Loans to customers/Total assets                   66.25%    68.84%                -3.8%
                                     Loans to customers/Direct deposits               166.68%   190.77%               -12.6%

                                     CREDIT QUALITY RATIOS (%)                           2004      2003   abs. var.   % var.
                                     Net non-performing loans/Loans to customers       0.33%     0.18%                 86.9%
                                     Net watch-list/Loans to customers                 4.23%     1.41%                199.4%
                                     Net non-performing loans/Shareholders’ equity     1.49%     0.56%                165.0%

                                     PROFITABILITY RATIOS (%)                            2004      2003   abs. var.   % var.
                                     R.O.E. (*)                                       10.57%     6.24%                 69.4%
                                     R.O.A.                                            3.83%     2.38%                 60.7%
                                     Interest margin/Performing assets                 3.28%     2.47%                 32.7%
                                     Earning margin/Performing assets                  5.45%     5.84%                 -6.7%
                                     Net profit/Performing assets                      1.37%     1.29%                  6.7%
                                     Interest margin/Earning margin                   60.29%    42.35%                 42.4%
                                     Cost/Income ratio                                53.99%    74.49%                -27.5%

                                     EQUITY RATIOS (%)                                   2004      2003   abs. var.   % var.
                                     Tier I                                           18.02%    27.31%                -34.0%
                                     Solvency ratio                                   18.02%    27.31%                -34.0%

                                     STRUCTURAL AND PRODUCTIVITY RATIOS                  2004      2003   abs. var.   % var.
                                     Average no. of employees                              99        82        17     21.3%
                                     Number of bank branches                                7         6         1     16.7%
                                     Customer loan per employee                         1,692     1,177       515     43.7%
                                     Total deposits per employee                        1,015       617       398     64.5%
                                     Gross banking income per employee                  2,707     1,794       913     50.9%
                                     Earning margin per employee                          132        91        41     45.1%
                                     (*) Calculated on average equity net of profit
The Banca Italo-Romena closed the financial year 2004 with a very attractive
profit of Euro 3.3 million, up by 101.1% on the previous financial year (1.6
million), due to the achievement of important sales aims.

As at 31 December 2004, the Bank’s distribution network was formed of 6
agencies located throughout Romania, and a non-operational counter at the
Treviso branch. In March, the Bacau branch was opened, adding to the agencies
in Bucharest, Timisoara, Arad, Cluj-Napoca and Oradea. Four more branches are
scheduled to open during the current financial year, subject to approval by the
Banca d’Italia.

Gross banking income increased by 83.1%, going from Euro 146.4 to 268 million
thanks to the excellent growth recorded in both direct deposits, which almost
doubled compared to 2003, and loans granted to customers, up by 74.4%.

Direct deposits reached volumes over and above expectations, registering at
Euro 100.5 million as against the 50.3 million recorded at the end of 2003. This
was due to the trend in deposits from sales network customers, increasing from
Euro 50.3 to 75.5 million, and the issuing, on 30 December 2004, of a bond loan
of Euro 25 million, entirely subscribed by the Veneto Group’s company Ireland
Financial Services.
The breakdown of direct deposits by currency shows a strengthening of deposits
in Euros and other currencies to the detriment of deposits in Rol. The percentage
of deposits in Rol thus fell from 31.2% for 2003 to 26.9%.

The growth in loans to customers, although less dramatic, was also significant




                                                                                       directors’ report on operations 83
and took the volumes from Euro 96 million in 2003 to more than Euro 167 million
at the year-end.
The breakdown by currency confirmed the domination of loans in Euros and
other currencies, with a share of more than 95.2% of the total, remaining
substantially in line with last year’s levels. Loans in Rol continued to represent a
minimal percentage of the Bank’s own loan portfolio, remaining at around 5%.
As at 31 December 2004 doubtful loans reached Euro 7.6 million and were made
up of Euro 554 thousand of non-performing loans and Euro 7.1 million of watch-
list entries. The non-performing loans/loans ratio, although slightly up, came in
at 0.33%, maintaining excellent levels.

At the end of 2004, the Bank was able to count on a client base of 6,094 units,
most of whom refer to the agencies of Bucharest and Timisoara, although the
other branches are also acquiring their own customer portfolio.

During the financial year, activities on the interbanking market were marked by
the treasury service centralised with the Parent Company. Overall, the Bank
increased its interbanking exposure, towards Veneto Banca in particular, in order
to support the sharp increase in loans. The growth in loans to the National Bank
of Romania should also be highlighted, relating to the obligatory reserve in Rol
and Dollars.

As at 31 December 2004, shareholders’ equity, including annual profit and the
reserve for general banking risk, totalled Euro 37.2 million compared to Euro 30.2
million at the end of 2003.
Capital for supervisory purposes, which was identical to Tier I capital, amounted
to Euro 34.3 million, with an increase of Euro 4.5 million compared to the
previous financial year.
                                     In terms of revenue, the interest margin, equal to Euro 7.9 million, increased by
                                     more than 150% compared to 2003. In view of interest receivable which had more
                                     than doubled, interest expense only increased by 62.2%. The increase compared
                                     to the margin accounted for in the previous financial year was mainly due to the
                                     increased traded volumes. The interest margin thus came to represent 60.3% of
                                     the earning margin, as against 42.4% in 2003.
                                     The service margin amounted to Euro 3.3 million, surpassing the 2003 results by
                                     approximately Euro 1.5 million, corresponding to an increase of 84.6%. Among
                                     the main items making up this aggregate, we should highlight the good result for
                                     fees on collection and payment services, on credit commitments and loans. On
                                     the other hand, services relating to credit/debit cards and safety deposit boxes are
                                     at the introductory stage, and are expected to generate further revenue for the
                                     next financial year.
                                     Profits on financial transactions, that only refer to operations in exchange rates,
                                     amounted to Euro 1.8 million.
                                     Considering the above, during 2004 the earning margin rose to Euro 13.1 million,
                                     with a growth of almost Euro 5.7 million, equal to 76.8%.

                                     Overall, operating expenses came to Euro 6.2 million, recording an increase of
                                     28.6% on an annual basis.
                                     Personnel costs, equal to Euro 2.4 million, increased by 17.1% as a result of the
                                     employment of new personnel to strengthen the distribution network. The Bank’s
                                     workforce as at 31 December 2004 totalled 110, of which 104 were at the
                                     Romanian branch and 6 at the Treviso office, compared to the 87 staff at the end
                                     of the financial year 2003. The increase was due to 37 new employees and 14
                                     resignations. The staff at central management increased during the year from 28
directors’ report on operations 84




                                     to 34, and that of the sales network from 59 to 76. A reduction of the weight of
                                     the central structure on the total workforce can thus be seen, from 32.2% to
                                     30.9%.

                                     Other administrative expenses reached Euro 3.8 million, up by approximately
                                     37%. Among others, significant growth was seen in expenses for maintenance of
                                     furniture and fittings, insurance premiums and costs for detached personnel.
                                     The cost/income ratio, which is good indicator of corporate efficiency, improved
                                     compared to last year, going from 74.5% to 54%.

                                     After write-downs of loans of Euro 885 thousand, amortisation and depreciation
                                     of Euro 1.015 million, provisions for risks and charges of Euro 192 thousand,
                                     extraordinary charges of Euro 49 thousand and allocations to the provision for
                                     taxation of Euro 1.5 million, net profit, as mentioned, came in at Euro 3.3 million.
                                     This enabled asset profitability to be maintained at very attractive levels, with a
                                     ROE recorded at 10.6%, as against 6.2% for the previous financial year.
8.1.4 VENETO IRELAND FINANCIAL SERVICES
ECONOMIC/FINANCIAL VALUES AND KEY MANAGEMENT
FIGURES

Area of activity: finance
Registered office: IFSC, 1 North Wall Quay – Dublin 1 (Ireland)
Amount of equity investment: 100.00%

ECONOMIC VALUES (in Euro thousand)                    2004      2003    abs. var.   % var.
Interest margin                                       9,682    10,335      -654      -6.3%
Net income on services and financial transactions     3,873     4,842      -969     -20.0%
Earning margin                                       13,554    15,177    -1,623     -10.7%
Operating expenses                                   -1,242    -1,495       253     -16.9%
Profit on ordinary activities                        12,312    13,682    -1,370     -10.0%
Net profit                                           11,278    11,082       195       1.8%

FINANCIAL AND OPERATING
VALUES (in Euro thousand)                             2004      2003    abs. var.   % var.
Trading portfolio                                   360,127   253,674   106,453     42.0%
Investment portfolio                                101,661   102,999    -1,338     -1.3%
Performing assets                                   477,190   370,024   107,166     29.0%
Total assets                                        521,855   419,466   102,389     24.4%
Shareholders’ equity (including annual profit)      138,278   138,082       195      0.1%

STRUCTURAL RATIOS (%)                                 2004      2003    abs. var.   % var.
Shareholders’ equity/Total assets                    26.5%     32.9%                -19.5%
Portfolio total/Total assets                         88.5%     85.0%                  4.1%

PROFITABILITY RATIOS (%)                              2004      2003    abs. var.   % var.
R.O.E. (*)                                           8.88%     8.73%                  1.8%
Net profit/Total assets                              2.16%     2.64%                -18.2%




                                                                                             directors’ report on operations 85
Interest margin/Performing assets                    2.03%     2.79%                -27.4%
Earning margin/Performing assets                     2.84%     4.10%                -30.7%
Cost/Income ratio                                    9.16%     9.85%                 -7.0%
(*) Calculated on average equity net of profit


Veneto Ireland Financial Services, apart from acting as a support for overall
financial strategies, manages the Group’s securities portfolio, benefiting from the
significant tax advantages in the Dublin market.
To this end the Company has received overall capital of Euro 254 million, divided
into equity of Euro 127 million and subordinated loans of the same amount.
For the other funding requirements, it relies on both the Parent Company’s
resources and loans sourced on the international market.

At the end of the financial year its securities portfolio totalled Euro 461.8 million, of
which Euro 101.7 million were invested and Euro 360.1 million available for trading.
Among the fixed assets, mention should be made of the two Junior securities relating
to the securitisation carried out in 2002 and 2003 by the Parent Company and the
subordinated bond loan issued by the Banca Meridiana, 99% owned by Veneto Banca.

The Company ended the financial year with a net profit of Euro 11.3 million, up
by 1.8% compared to the previous financial year.

The interest margin totalled Euro 9.7 million, a decrease compared to the 6.3%
for the previous financial year due to a slight dip in market rates, although it had
increased its securities portfolio by more than Euro 100 million.

Net income and profits on financial activities reached Euro 3.9 million, a decrease
of 20% compared to 2003, mainly due to more moderate trading activity in
accordance with the Group’s plans, governed by the Financial Risks Regulations,
to reduce the risk factors in the managed portfolio.
                                     The earning margin thus came in at Euro 13.6 million, a decrease of 10.7%
                                     compared to the previous year.

                                     Personnel costs totalled Euro 565 thousand, a fall of 33.7% compared to the past
                                     financial year as a result of the reorganisation carried out during the last quarter
                                     of 2003.

                                     Finally, other administrative expenses and amortisation and depreciation totalled
                                     Euro 677 thousand, up by 5.3% compared to 2003.

                                     Profit on ordinary activities was therefore Euro 12.3 million, a decrease of 10%
                                     compared to the 2003 profits, for the reasons outlined above.

                                     Profit on extraordinary activities, determined by gains made from the sale of fixed
                                     securities, ended the financial year at Euro 720 thousand.

                                     Income taxes, which totalled Euro 1.8 million, reduced the final net profit to the
                                     Euro 11.3 million quoted above.

                                     8.2. PRODUCT COMPANIES

                                     8.2.1. CLARIS LEASING
                                     ECONOMIC/FINANCIAL VALUES AND KEY MANAGEMENT
                                     FIGURES

                                     Area of activity: leasing
directors’ report on operations 86




                                     Registered office: Via Dei Prata, 14 - 31100 - Treviso
                                     Amount of equity investment: 100.00%

                                     ECONOMIC VALUES (in Euro thousand)                       2004      2003    abs. var.   % var.
                                     Interest margin                                          4,472     3,631       841      23.2%
                                     Earning margin                                           5,162     4,137     1,025      24.8%
                                     Operating expenses                                      -1,583    -1,241      -342      27.6%
                                     Profit on ordinary activities                            3,404     1,227     2,177     177.5%
                                     Net profit                                               2,009       648     1,361     210.1%

                                     FINANCIAL AND OPERATING
                                     VALUES (in Euro thousand)                                2004      2003    abs. var.   % var.
                                     Loans to customers                                     323,472   267,378    56,094     21.0%
                                     Shareholders’ equity (including profit for the year)    22,404    20,595     1,809      8.8%

                                     CREDIT QUALITY RATIOS (%)                                2004      2003    abs. var.   % var.
                                     Net non-performing loans/Loans to customers             0.02%     0.07%     -0.05%     -68.8%
                                     Net non-performing loans/Shareholders’ equity            0.3%      0.9%     -0.60%     -65.3%

                                     PROFITABILITY RATIOS (%)                                 2004      2003    abs. var.   % var.
                                     R.O.E. (*)                                              9.96%     3.26%      6.70%     205.5%
                                     Interest margin/Earning margin                         88.01%    89.20%     -1.19%      -1.3%
                                     Cost/Income ratio                                      32.32%    31.86%      0.46%       1.4%

                                     STRUCTURAL AND PRODUCTIVITY RATIOS                       2004      2003    abs. var.   % var.
                                     Average no. of employees                                    12        12         -      0.0%
                                     Customer loans per employee                             26,956    22,281     4,675     21.0%
                                     Earning margin per employee                                430       345        85     24.8%
                                     (*) Calculated on average equity net of profit


                                     Sales activity was mainly directed towards the sector of Veneto Banca Group
                                     companies, and especially towards customers of the Parent Company and the
                                     Banca di Bergamo, while direct activities remained marginal.
During 2004, 697 contracts were taken out, for a total asset cost of Euro
135,484,871 and a contract countervalue (sum of advances, sum of rentals and
redemptions) of Euro 153,382,751. The division of asset cost by type was as
follows: motor vehicles 4.5%, industrial vehicles 2.9%, industrial assets 31.5%,
leisure yachts 1.3% and real estate 59.8%.

At the end of the financial year the loans relating to contracts receivable totalled
Euro 323 million, while the total of fixed assets relating to assets under
construction or subject to delivery and consequently awaiting activation of the
financial lease agreements was Euro 38.7 million.

Overall, the Company ended 2004 with a net profit of Euro 2 million, up by 210%
compared to 2003.
The interest margin rose by 23.2%, reaching Euro 4.5 million, while the earning
margin was recorded at Euro 5.2 million, up by 24.8%. Operating expenses went
from Euro 1.2 to 1.6 million, up by 27.6%.

Credit quality is still excellent, with an impact on non-performing loans on the
total loans of almost nil.
Considering the solidity of loans and the appropriacy of the provisions for risks
and charges already set up compared to the volume of current loans with an
impact of little under 1%, it was considered sufficient to limit the provision for the
year to Euro 90.2 thousand, formed entirely of analytical write-downs on entries
classified as non-performing.

8.2.2. CLARIS FACTOR




                                                                                         directors’ report on operations 87
ECONOMIC/FINANCIAL VALUES AND KEY MANAGEMENT
FIGURES

Area of activity: factoring
Registered office: Piazza G.B. Dall’Armi, 1 – 31044 – Montebelluna (TV)
Amount of equity investment: 100.00%

ECONOMIC VALUES (in Euro thousand)                 2004     2003    abs. var.   % var.
Interest margin                                   5,004     4,210       794     18.9%
Earning margin                                    6,345     5,281     1,065     20.2%
Operating expenses                               -1,567    -1,376      -191     13.9%
Profit on ordinary activities                     4,779     3,905       874     22.4%
Net profit                                        2,594     2,014       581     28.8%

FINANCIAL AND OPERATING
VALUES (in Euro thousand)                          2004     2003    abs. var.   % var.
Turnover                                        316,655   296,795    19,860       6.7%
Gross banking income                            172,248   241,420   -69,172     -28.7%
Direct deposits                                  57,161   127,071   -69,911     -55.0%
Loans to customers                              115,088   114,349       739       0.6%
Total assets                                    116,702   139,352   -22,650     -16.3%
Shareholders’ equity                              7,369     6,674       694      10.4%

STRUCTURAL RATIOS (%)                              2004     2003    abs. var.   % var.
Loans to customers/Direct deposits              201.34%   89.99%    111.35%     111.4%

CREDIT QUALITY RATIOS (%)                          2004     2003    abs. var.   % var.
Net non-performing loans/Loans to customers      2.34%     2.53%     -0.19%      -7.5%
Net non-performing loans/Shareholders’ equity   39.26%    40.31%     -1.05%      -2.6%

PROFITABILITY RATIOS (%)                           2004     2003    abs. var.   % var.
R.O.E. (*)                                      54.99%    43.92%    11.07%      25.2%
Interest margin/Earning margin                  78.87%    79.73%    -0.86%      -1.1%
Cost/Income ratio                               24.79%    26.18%    -1.39%      -5.3%
                                     STRUCTURAL AND PRODUCTIVITY RATIOS                     2004     2003   abs. var.   % var.
                                     Average no. of employees                                  7        8        -1     -12.5%
                                     Customer loans per employee                          16,441   14,294     2,147      15.0%
                                     Total deposits per employee                           8,166   15,884    -7,718     -48.6%
                                     Gross banking income per employee                    24,607   30,178    -5,571     -18.5%
                                     Earning margin per employee                             906      660       246      37.3%
                                     (*) Calculated on average equity net of profit


                                     The national factoring market, after the positive results of past years and the
                                     substantial stability of 2003, recorded signs of a slow-down in the financial year
                                     just ended, as shown by the first findings of the professional association.

                                     Despite everything, for Claris Factor 2004 ended with a net profit of Euro 2.6
                                     million, up by 28.8%.

                                     In particular, a financial spread was recorded of Euro 5 million, up by 18.9%
                                     thanks to the favourable performance of deposits and to efficient lending policies.
                                     The trend in the service margin was also positive, up by 25%.

                                     In terms of costs, there was a positive change of 13.9%, with an increase,
                                     however, less than proportional to the income performance. This performance is
                                     due to increased personnel costs, up by 6.6%, but especially to the increase in
                                     other administrative expenses, amounting to 18.7%.

                                     Credit quality continues to remain high, with an impact of net non-performing
                                     loans to loans net of the position guaranteed by the Parent Company of 0.6%, a
                                     slight drop compared to the 2003 figure.
                                     The provisions for adjustments totalled Euro 1,573 thousand of which 323
directors’ report on operations 88




                                     thousand were in view of analytical write-downs on non-performing loans and
                                     Euro 1,250 thousand for standard write-downs.

                                     Finally total loans were consolidated at Euro 104 million, while the Company’s
                                     shareholders’ equity including profit for the year reached Euro 7.4 million.

                                     8.2.3. CLARIS ASSICURAZIONI
                                     ECONOMIC/FINANCIAL VALUES AND KEY MANAGEMENT
                                     FIGURES

                                     Area of activity: insurance agency
                                     Registered office: Piazza G.B. Dall’Armi, 1 – 31044 – Montebelluna (TV)
                                     Amount of equity investment: 100.00%

                                     ECONOMIC VALUES (in Euro thousand)                     2004     2003   abs. var.   % var.
                                     Production value                                      2,843    2,556       287     11.2%
                                     Service costs                                         2,169    2,025       144      7.1%
                                     Personnel cost                                          347      324        22      6.9%
                                     Total cost of sales                                   2,656    2,485       172      6.9%
                                     Difference between production value
                                     and cost of sales                                       187       71       115     160.9%
                                     Net profit                                               79       21        58     271.6%

                                     FINANCIAL AND OPERATING
                                     VALUES (in Euro thousand)                              2004     2003   abs. var.   % var.
                                     Fixed assets                                            201      246       -45     -18.2%
                                     Working capital                                       4,992    2,438     2,555     104.8%
                                     Payables                                              4,981    2,552     2,428      95.1%
                                     Shareholders’ equity including profit for the year      171       92        79      86.3%

                                     RATIOS                                                 2004     2003   abs. var.   % var.
                                     R.O.E. (*)                                           97.68%   32.44%   65.24%      201.1%
                                     Cost/Income ratio (with amortisations)               93.44%   97.20%   -3.76%       -3.9%
                                     Misc. expenses/Production value                      78.25%   81.70%   -3.45%       -4.2%
                                     (*) Calculated on average equity net of profit
The Company’s target is to distribute and manage, both via the Group
Companies and directly, insurance contracts of any kind. It is also responsible for
conducting important operational, commercial and training support, on behalf of
the banking sales network, as well as after-sales assistance.
During 2004 it achieved a net profit of Euro 79.2 thousand, up by 21.3 thousand
on the previous year.

Fees receivable came in at Euro 2.8 million with an increase of 11.2% compared
to the 2.6 million for 2003. The result can mainly be attributed to the production
of the bank distribution network.

Cost of sales, up by 6.9%, increased less than income, enabling a slight
improvement in the cost/income ratio.

The profit on traditional management was Euro 187 thousand, as against 71
thousand for 2003.

8.2.4. CLARIS BROKER
ECONOMIC/FINANCIAL VALUES AND KEY MANAGEMENT
FIGURES

Area of activity: insurance brokering
Registered office: Via Serena, 63 – 31044 – Montebelluna (TV)
Amount of equity investment: 100.00%

ECONOMIC VALUES (in Euro thousand)             2004       2003    abs. var.    % var.




                                                                                        directors’ report on operations 89
Production value                                839        859         -20     -2.4%
Cost of sales                                   839        819          20      2.4%
   of which personnel cost                      168        160           8      4.7%
Financial income and charges                    -16        -15           1      0.9%
Net profit                                      -42          2         -44

FINANCIAL AND OPERATING
VALUES (in Euro thousand)                      2004       2003    abs. var.    % var.
Premiums collected                            7,990      7.303         687      9.4%
Fixed assets                                     79        183        -104    -57.0%
Receivables                                   1,489      5,246      -3,757    -71.6%
Payables                                      1,383      5,237      -3,854    -73.6%
Total assets                                  1,575      5,459      -3,884    -71.2%
Shareholders’ equity (including profit
for the year)                                   110        153         -42    -27.6%

STRUCTURAL RATIOS                              2004       2003    abs. var.    % var.
Shareholders’ equity/Total assets             7.02%      2.79%      4.23%     151.6%
Credits/Total assets                          94.5%      96.1%     -1.60%      -1.7%


During 2004, Claris Broker’s activities generated commission income for a total of
Euro 838.9 thousand, a decrease of 2.4% compared to 2003. At the same time
total costs came in at Euro 838.8 thousand, up by 2.4%.
The net profit on financial operations showed a loss of Euro 15.5 thousand.
Together with the negative balance for extraordinary operations, this produced a
gross pre-tax result of Euro -19.2 thousand. As a result of taxes, net profit finally
came in at Euro -42 thousand.
                                     8.2.5. PALLADIO FINANZIARIA
                                     ECONOMIC/FINANCIAL VALUES AND KEY MANAGEMENT
                                     FIGURES

                                     Area of activity: financial
                                     Registered office: Strada Statale SS Padana verso Verona, 6 - 36100 - Vicenza
                                     Amount of equity investment: 21.21%

                                     ECONOMIC VALUES (in Euro thousand)                       2004         2003      abs. var.     % var.
                                     Financial spread, net of dividends                      2,631        1,007            1,624   161.3%
                                     Interest margin                                        12,128        1,937           10,191   526.1%
                                     Income on services and financial transactions           6,170        4,899            1,271    25.9%
                                     Earning margin (*)                                     25,376       14,950           10,426    69.7%
                                     Operating expenses                                     -7,593       -6,454           -1,139    17.6%
                                     Net profit                                             15,063        5,526            9,537   172.6%

                                     FINANCIAL AND OPERATING
                                     VALUES (in Euro thousand)                                2004         2003      abs. var.     % var.
                                     Loans to customers                                     69,063       30,090        38,973      129.5%
                                     Bonds and other fixed income securities                30,262       45,502       -15,240      -33.5%
                                     Shares, quotas and other variable
                                     income securities                                      14,172       19,433        -5,261      -27.1%
                                     Equity investments                                     52,114       63,859       -11,745      -18.4%
                                     Performing assets                                     213,857      178,169        35,688       20.0%
                                     Total assets                                          222,951      192,336        30,615       15.9%
                                     Shareholders’ equity
                                     (including profit for the year)                       180,303      132,131           48,172   36.5%

                                     STRUCTURAL RATIOS (%)                                    2004         2003      abs. var.     % var.
                                     Shareholders’ equity/Total assets                     80.87%        68.70%       12.17%        17.7%
                                     Loans to customers/Total assets                       30.98%        15.64%       15.34%        98.0%
directors’ report on operations 90




                                     Equity investments/Total assets                       23.37%        33.20%       -9.83%       -29.6%

                                     PROFITABILITY RATIOS (%)                                 2004         2003      abs. var.     % var.
                                     R.O.E. (**)                                           10.32%         4.53%        5.79%       127.8%
                                     Earning margin/Total assets                           11.38%         7.77%        3.61%        46.5%
                                     Cost/Income ratio                                     32.22%        46.63%      -14.41%       -30.9%
                                     (*) Including profits /losses of equity investments valued at shareholders’ equity
                                     (**) Calculated on average equity net of profit


                                     Palladio Finanziaria, which conducts merchant banking activities, ended 2004
                                     with a net profit of Euro 15 million, representing the best result ever obtained by
                                     the Group.
                                     During the financial year just ended, equity investments were disposed of,
                                     achieving significant capital gains. In addition, significant dividends were
                                     generated from current equity investments.

                                     Excellent results are also being obtained from management of the “Fondo Star”.
                                     Returns on investments are proceeding in line with forecasts, to the extent that
                                     there is a possibility of launching a new, similar Fund so that investments can
                                     continue to be made while awaiting sale of the portfolio.

                                     Finally, it should be mentioned that in December 2004 the amount of accrued
                                     taxes is not significant. This is mainly a result of the tax settlement to which the
                                     Company has agreed. This amount is classified among other assets, as it is amply
                                     covered by the tax credits entered in the settlement.
   9. SIGNIFICANT EVENTS OCCURRING
      AFTER YEAR END

Following closure of the financial year, the acquisition of Banca del Garda spa was
certainly one of the highlights.

In terms of assets, mention should also be made of the early conversion, in the
first few months of the year, of the last third of the subordinated convertible loans
“Veneto Banca 2000/2007 2%”and “Veneto Banca 2001/2007 1.5%”, as envisaged
by the integrated capitalisation plan approved during the final quarter of 2004
and in accordance with the resolution of the shareholders’ meeting on 2
December 2004.



   10. BUSINESS OUTLOOK

A positive trend is forecast for this financial year, on the basis of prospects for the
banking system and encouraging internal opportunities.

The Group will continue with its expansion programme, both by accurately
implementing its branch programme with the opening of a significant number of
sales outlets by the Parent Company and subsidiary banks, located throughout
their respective areas of operation, and by increasing market share. This will be
pursued via a policy which is very attentive to the demands of traditional
customers, formed of both private individuals and SMEs.




                                                                                          directors’ report on operations 91
In terms of income, a further improvement in the profit on ordinary activities has
been confirmed, with regards to the prospects for Veneto Banca and its main
subsidiaries, whose contribution to overall profitability can be considered as
increasingly significant.

With regard to the main income areas, the actions taken are directed towards
increasing the interest margin in proportion with the traded volumes, via a
selected pricing policy, more in line with the risks assumed and expectations in
terms of market rates.
Recovery will also be important in terms of income from services, pursued via
intensive diversification of the service products offered. Managed savings, also in
consideration of the demanding targets that the Group has set itself, should
represent an important springboard for the growth of this economic aggregate.

At the same time, careful monitoring of costs, also by activating new process
analysis procedures, should lead to increased efficiency, taking the cost/income
ratio, already positive, to outstanding levels.
                                                        PROPOSAL FOR THE REPORTS AND
                                                        ACCOUNTS APPROVAL AND PROFIT
                                                        LOCATION

                                                    Dear Shareholders,

                                                    In compliance with legal and statutory provisions, we are submitting for your
                                                    attention the financial statements for the year 2004, made up of the balance
                                                    sheet, the profit and loss account and the notes to the financial statements,
                                                    together with the relative annexes and report on operations.

                                                    We therefore propose the following distribution of the net profit of
                                                    Euro 45,658,170.71:


                                                    • to the “legal reserve” in the amount of 10%
                                                      of the total net profit                                     Euro     4,565,817.07
                                                    • to the “extraordinary reserve”                              Euro    21,979,923.89
                                                    • to the Shareholders for the 2004 dividend in the amount
                                                      of Euro 0.55 per share                                      Euro    18,085,120.90
                                                    • to the Board of Directors in the amount of 2.50% after
                                                      deducting the allocation to the legal reserve pursuant
                                                      to art. 47 of the Company By-laws                           Euro     1,027,308.84
                                                    Total                                                         Euro    45,658,170.71




                                                    Dear Shareholders,
proposal for the reports and accounts approval 92




                                                    I extend my regards and many thanks for their collaboration to the central and
                                                    peripheral offices of the Banca d’Italia, and in particular to the Governor Antonio
                                                    Fazio, the Treviso Branch Manager Corrado de Gioia-Carabellese and his deputy
                                                    Giuseppe Manitta.
                                                    Thanks are also due to the Associazione Nazionale fra le Banche Popolari (National
                                                    Association of Popular Banks) and personally to the Chairman, Carlo Fratta
                                                    Pasini and the General Manager Giorgio Carducci, and also to the Associazione
                                                    Bancaria Italiana (Italian Banking Association) and its Chairman Maurizio Sella,
                                                    as well as the Ufficio Italiano Cambi (Italian Exchange Control Office) and the
                                                    Istituto Centrale delle Banche Popolari Italiane.
                                                    Our esteem for their professionalism, commitment and sense of responsibility,
                                                    demonstrated at all times, go to the General Manager Vincenzo Consoli, to the
                                                    Deputy General Managers Armando Bressan, Mosè Fagiani, Romeo Feltrin and
                                                    Mauro Gallea and to all personnel, at all levels.



                                                    Montebelluna, 29 March 2005

                                                    on behalf of the Board of Directors
                                                    The Chairman
                                                    Dr. Flavio Trinca
                            C O N S O L I D AT E D F I N A N C I A L
                                                 S TAT E M E N T S
                            A S AT 3 1 D E C E M B E R 2 0 0 4




"Declivi" Hills and vines in Valdobbiadene
Marco Pagin - Branch of Villorba (TV)
                                                                    BALANCE SHEET

                                                              ASSETS (amounts in Euro thousand)                                            2004                                 2003


                                                              10    Cash and balances with central banks and post offices                39,853                               50,635
                                                              20    Treasury bonds and similar instruments eligible for
                                                                    refinancing with central banks                                        2,149                               59,783
                                                              30    Loans to banks:                                                     289,173                              249,950
                                                                    (a) on demand                                             51,399                            78,657
                                                                    (b) other receivables                                    237,774                           171,293
                                                              40    Loans to customers                                                 5,206,675                            4,367,529
                                                                    of which:
                                                                    - deposits in administration                               4,744                             2,109
                                                              50    Bonds and other debt securities:                                    492,905                              351,324
                                                                    (a) issued by government                                 136,516                            96,919
                                                                    (b) issued by banks                                      112,579                            69,028
                                                                        of which:
                                                                        own securities                                        21,241                             9,833
                                                                    (c) issued by financial institutions                     142,111                            70,803
                                                                        of which:
                                                                        own securities                                            0                                     0
                                                                    (d) issued by others                                     101,699                           114,574
                                                              60    Shares, quotas and other equity securities                           16,647                               18,840
                                                              70    Equity investments                                                   88,569                               72,652
                                                                    a) valued by the equity method                            48,752                            33,497
consolidated financial statements as at 31 december 2004 94




                                                                    b) other                                                  39,817                            39,155
                                                              80    Equity investments in Group companies                                   378                               51,161
                                                                    a) valued by the equity method                              378                             51,161
                                                                    b) other                                                      0                                     0
                                                              90    Positive consolidation differences                                   75,975                               80,709
                                                              100   Positive differences arising from shareholders’ equity                4,126                               18,331
                                                              110   Intangible fixed assets                                              30,290                               35,472
                                                                    of which
                                                                    - start-up costs                                              1                                111
                                                                    - goodwill                                                16,336                            17,244
                                                              120   Tangible fixed assets                                               139,870                              126,731
                                                              150   Other assets                                                        220,385                              239,746
                                                              160   Prepayments and accrued income:                                      37,056                               35,348
                                                                    a) accrued income                                         33,535                            30,890
                                                                    b) prepayments                                             3,521                             4,458
                                                                        of which:
                                                                        - issue discount on securities                            0                                     0

                                                              TOTAL ASSETS                                                             6,644,051                            5,758,211




                                                                                    VICE GENERAL MANAGER                                     GENERAL MANAGER
                                                                                      CHIEF ACCOUNTANT                                    Accountant Vincenzo Consoli
                                                                                   Accountant Armando Bressan
STATO Patrimoniale    (in Euro)


LIABILITIES (amounts in Euro thousand)                              2004                                 2003


10    Due to banks:                                              325,937                              444,172
      (a) on demand                                  122,834                               93,114
      (b) on maturity or with notice                 203,103                              351,058
20    Due to customers:                                         3,087,833                            2,482,254
      (a) on demand                                 2,744,590                           2,248,523
      (b) on maturity or with notice                 343,243                              233,731
30    Securities issued:                                        2,136,508                            1,907,863
      (a) bonds                                     1,899,682                           1,617,029
      (b) certificates of deposit                    191,426                              133,884
      (c) other securities                            45,400                              156,950
40    Deposits in administration                                   9,829                               13,296
50    Other liabilities                                          158,638                              189,435
60    Accruals and deferred income:                               10,603                               12,733
      (a) accrued expenses                             6,627                                8,442
      (b) deferred income                              3,976                                4,291
70    Employees’ severance fund                                   26,850                               26,001
80    Provisions for risks and charges:                           43,627                               39,208
      (a) pensions and similar benefits                    0                                     0
      (b) provisions for taxation                     26,291                               26,568
      (c) consolidation provision for
          future risks and charges                         0                                     0




                                                                                                                 consolidated financial statements as at 31 december 2004 95
      (d) other provisions                            17,336                               12,640
90    Credit risk reserve                                            509                                2,246
100   Reserve for general banking risk                            39,057                                6,057
110   Subordinated liabilities                                   181,814                               82,065
120   Negative consolidation differences                              40                                   40
140   Minority interests                                          19,956                               19,071
150   Share capital                                               98,647                               95,069
160   Issue premiums                                             304,798                              281,016
170   Reserves:                                                  138,499                              111,538
      (a) legal reserve                               34,860                               30,583
      (b) reserve for own equity shares or quotas          0                                     0
      (c) statutory reserves                               0                                     0
      (d) other reserves                             103,639                               80,955
180   Revaluation reserves                                         5,554                                5,554
190   Loss brought forward                                             0                                   -53
200   Profit for the year                                         55,352                               40,646

TOTAL LIABILITIES                                               6,644,051                            5,758,211




                              CHAIRMAN                               STATUTORY AUDITORS
                             Dr. Flavio Trinca                            Dr. Fanio Fanti
                                                                 Dr. Michele Stiz, Dr. Diego Xausa
                                                                   GUARANTEES AND COMMITMENTS

                                                              (amounts in Euro thousand)                                 2004                                2003


                                                              10   Guarantees provided                                 296,040                             259,279
                                                                   of which:
                                                                   - acceptances                               5,909                            3,123
                                                                   - other guarantees                        290,131                          256,156
                                                              20   Commitments                                         349,440                             236,836
                                                                   of which:
                                                                   - for sale with repurchase operation      156,484                                   0
consolidated financial statements as at 31 december 2004 96




                                                                                 VICE GENERAL MANAGER                       GENERAL MANAGER
                                                                                   CHIEF ACCOUNTANT                      Accountant Vincenzo Consoli
                                                                                Accountant Armando Bressan
      PROFIT AND LOSS ACCOUNT

(amounts in Euro thousand)                                               2004                               2003


10    Interest income and similar items                               265,174                             247,027
      of which:
      - on amounts due from customers                       235,333                            214,098
      - on debt securities                                   22,789                             25,480
20    Interest expense and similar items                              101,475                             100,572
      of which:
      - on amounts due to customers                          36,343                             29,960
      - on securities issued                                 51,731                             44,973
30    Dividends and other income:                                       6,067                               5,700
      (a) from shares, quotas and other equity securities     5,168                              4,791
      (b) from equity investments                              899                                 909
      (c) from equity investments in Group companies             0                                    0
40    Fee and commission income                                        73,197                              63,447
50    Fee and commission expenses                                      11,365                              10,019
60    Profit (loss) on financial transactions                          28,145                              30,015
70    Other operating income                                           27,180                              28,115
80    Administrative expenses:                                        164,679                             152,817
      (a) personnel costs                                    96,461                             89,415
          of which:
          - wages and salaries                               67,382                             63,330
          - social security charges                          18,658                             16,243




                                                                                                                    consolidated financial statements as at 31 december 2004 97
          - employees’ severance                              3,543                              3,395
          - pensions and similar benefits                     3,016                              2,692
      (b) other administrative expenses                      68,218                             63,402
90    Write-downs of tangible and intangible fixed assets              22,421                              20,127
100   Provisions for risks and charges                                  2,960                                471
110   Other operating charges                                             764                                566
120   Write-downs of loans and provisions
      for guarantees and commitments                                   30,741                              27,593
130   Write-backs of loans and provisions
      for guarantees and commitments                                    2,965                               1,628
140   Provisions to credit risk reserves                                    0                                335
150   Write-downs of financial fixed assets                                44                               2,174
160   Write-backs of financial fixed assets                               892                                  0
170   Profit (loss) attributable to equity investments
      valued by the equity method                                       4,958                               6,371
180   Profit on ordinary activities                                    74,129                              67,629
190   Extraordinary income                                             49,092                               5,247
200   Extraordinary charges                                             8,858                               5,648
210   Extraordinary profit (loss)                                      40,234                                -401
230   Change in reserve for general banking risk                      -33,000                                  0
240   Income taxes for the year                                        25,061                              25,893
250   Minority interests                                                 -950                                -689

260   PROFIT FOR THE YEAR                                              55,352                              40,646




                              CHAIRMAN                                    STATUTORY AUDITORS
                             Dr. Flavio Trinca                                 Dr. Fanio Fanti
                                                                      Dr. Michele Stiz, Dr. Diego Xausa
                                                        NOTES TO THE CONSOLIDATED
                                                        FINANCIAL STATEMENTS

                                                       PRESENTATION AND CONTENTS OF THE
                                                       CONSOLIDATED FINANCIAL STATEMENTS

                                                    The consolidated financial statements are made up of the balance sheet, the
                                                    profit and loss account and the notes to the financial statements, and they are
                                                    supplemented with the Board of Directors’ report, as established by Legislative
                                                    Decree No. 87/92, which, in pursuance of the European Community Directives
                                                    No. 86/635 and No. 89/117, regulates the annual and consolidated accounts of
                                                    banks.

                                                    The notes to the financial statements explain and analyse the consolidated
                                                    financial statements, and they contain the information required by Legislative
                                                    Decree No. 87/92, the ruling of Banca d’Italia No. 14 dated 16 January 1995
                                                    and other laws. Although not specifically requested, complementary
                                                    information is also provided about all matters that are deemed necessary to
                                                    give a true and fair view. Therefore, the following documents are attached to
                                                    the notes to the financial statements:
                                                    A - Statement of changes in the consolidated shareholders’ equity;
                                                    B - Map of the Veneto Banca Group.

                                                    The consolidated financial statements are audited by PricewaterhouseCoopers
notes to the consolidated financial statements 98




                                                    spa, which was entrusted with this task for the three-years period 2004-2006.



                                                       CONSOLIDATION AREA

                                                    The consolidation area, which is unchanged as compared to the previous
                                                    financial year, comprises the Parent Company Veneto Banca and the significant
                                                    equity investments mentioned in the special statement attached to these notes
                                                    (Annex B).



                                                       CONSOLIDATION CRITERIA
                                                    All subsidiaries performing banking, financial or other activities pertaining to
                                                    the Group are consolidated using the line-by-line consolidation method.
                                                    Subsidiaries that do not perform banking, financial or other activities
                                                    pertaining to the Group and affiliates in which the Group holds a significant
                                                    equity investment are assigned a value equal to the corresponding share of
                                                    their shareholders’ equity, including the profit and loss result for the period.
                                                    The leasing company is consolidated based on the financial statements drawn
                                                    up according to the financial method.

                                                    The draft financial statements of the consolidated companies as at 31
                                                    December 2004 have been prepared by the respective Boards of Directors prior
                                                    to approval of the Group consolidated financial statements by the Board of
                                                    Directors of Veneto Banca, and they are to be approved by the respective
                                                    Shareholders’ Meetings, which shall take place before the Parent Company
                                                    Shareholders’ Meeting is held.
The key consolidation criteria used are as follows:

A) LINE-BY-LINE CONSOLIDATION
This method consists in the line-by-line consolidation of the balance sheet and
profit and loss account items of the subsidiaries.
After allocating to minority interests their shares of equity and profit and loss
for the period, the book value of the equity investments consolidated using this
method is recorded as a contra-entry to the respective share of the
shareholders’ equity as at the date of first consolidation, and the surplus
resulting from this comparison is entered under the items “positive/negative
consolidation differences”.
The consolidation process generated goodwill of 75,975 thousand Euros. This
amount reflects the surplus of the acquisition cost of equity investments in
Banca Italo-Romena, Banca di Bergamo, Banca Meridiana as compared to the
corresponding equity shares resulting from the financial statements of these
companies. It is entered in the consolidated balance sheet under item 90
“positive consolidation differences”, and, for the purposes of the financial
statements, it is usually amortized over a period of 10-20 years with regard to
the expected future economic life of the investment.
Dividends distributed within the Group are adjusted and allocated to reserve,
being already included in profits (losses) for previous years.
Dividends recorded on an accrual basis are reversed, since they are already
included in the profit and loss results of the consolidated companies.
The most significant receivable/payable existing as at 31 December 2004 and
the most important revenue/cost items between the companies included in the
consolidation area have been eliminated.




                                                                                    notes to the consolidated financial statements 99
The financial statements of the consolidated companies, prepared according to
patterns different from those established for banks, have been conformed to
the latter.

B) CONSOLIDATION BY THE EQUITY METHOD
Equity interests valued under the equity method are adjusted to the share of
shareholders’ equity attribuitable to the Group and resulting from the financial
statements of subsidiaries as of the date of first consolidation. The adjustment
of the value of these equity investments upon first consolidation is entered
under the items “positive/negative consolidation differences”.
Positive differences arising from shareholders’ equity are amortised over a
10-year period.

RECONCILIATION BETWEEN SHAREHOLDERS’ EQUITY AND
PROFIT FOR THE YEAR SHOWN AS PER THE FINANCIAL
STATEMENTS OF THE PARENT BANK AND THE VALUE
REPORTED IN THE CONSOLIDATED FINANCIAL
STATEMENTS AS AT 31 DECEMBER 2004

The reconciliation between the shareholders’ equity as at 31 December 2004
and the profit for the year ended on that date reported in the consolidated
financial statements, and those of the Parent Bank is as follows:
                                                                                                             Share capital   Profit (loss) Shareholders’
                                                                                                       and equity reserves   for the year        equity

                                                     Balances of the statutory financial statements
                                                     of the Parent Company                                       581,893         45,658        627,551
                                                     Elimination of the carrying amount of
                                                     consolidated equity investments
                                                     • difference between the carrying amounts
                                                        and corresponding equity shares                           -82,256                       -82,256
                                                     • Group share of results by subsidiaries                                    11,947          11,947
                                                     • positive consolidation differences                          80,709        -4,734          75,975
                                                     Elimination of the effects deriving from transactions
                                                     among consolidated companies and other adjustments
                                                     • dividends from consolidated companies                        3,882         -3,882              0
                                                     • adjustments for leasing contracts within the Group              31             79            110
                                                     • adjustments for application of uniform accounting
                                                        policies among consolidated companies                        -118           -676           -794
                                                     Effects concerning non-consolidated companies
                                                     • results concerning the valuation
                                                        of non-consolidated companies                             -17,226          4,803        -12,423
                                                     • positive differences arising from shareholders’ equity       6,605         -2,479          4,126
                                                     • sales of equity investments                                 11,148          6,702         17,850
                                                     • adjustments for application of uniform accounting
                                                        policies among consolidated companies                        -295            156           -139
                                                     • elimination of dividends                                     2,222         -2,222              0
                                                     Shareholders’ equity and profit (loss) for the year
                                                     of the Group                                                586,595         55,352        641,947
                                                     Minority interests in shareholders’ equity
                                                     and profit (loss) for the year                                19,006           950          19,956
                                                     CONSOLIDATED SHAREHOLDERS’ EQUITY
                                                     AND PROFIT (LOSS)                                           606,601         56,302        661,903
notes to the consolidated financial statements 100




                                                          PART A - ACCOUNTING POLICIES

                                                     The consolidated financial statements are prepared pursuant to applicable laws,
                                                     taking into consideration the accounting principles applied in Italy to correctly
                                                     interpret such laws and in accordance with the following general valuation criteria:
                                                     • Consistency of application: the accounting policies are applied continuously over
                                                       time, except for what is expressly stated herein with reference to the securities
                                                       section.
                                                     • Substance over form: whenever possible, substance shall prevail over form, and
                                                       the time of settlement of a transaction shall prevail over the time of
                                                       negotiation so as to give a correct picture of the financial situation.
                                                     • Going concern: the valuations in the financial statements are made based on the
                                                       prospect that the business shall continue in operational existence.
                                                     • Prudence: reference is made only to the profit achieved as at the end of the
                                                       financial year, except for the provisions of specific valuation criteria. The risks
                                                       and losses pertaining to the financial year and that have become known after
                                                       the close of the financial year are also taken into account.
                                                     • Accrual principle: income and charges are recorded on an accrual basis.
                                                     • Separate valuation: on-balance sheet and off-balance sheet assets and liabilities
                                                       are valued separately, which means that no global valuations are made, except
                                                       for what is stated under valuation consistency.
                                                     • Valuation consistency: the on-balance sheet and off-balance sheet assets and
                                                       liabilities that are connected to each other are valued consistently, which
                                                       means that homogeneous criteria are used.

                                                     The principles adopted, which are listed below, have been defined in agreement
                                                     with the Board of Statutory Auditors, when provided for by relevant regulations.
   SECTION 1 - EXPLANATION OF THE
   VALUATION CRITERIA

1. LOANS, GUARANTEES AND COMMITMENTS

QUALITATIVE INFORMATION ON CREDIT RISKS
The classification of anomalous loans (non performing loans, watch-list loans,
restructured loans, etc.) is based on recording criteria established by supervisory
regulations.
In detail:
• Loans are classified as “non performing loans” if debtors are insolvent. The
   estimated recoverable amount is determined based on the valuation of the
   debtor’s equity and existing personal and real securities.
• Loans are classified as “watch-list loans” when debtors are in temporary
   difficulties, but they are expected to overcome them in a reasonable lapse of
   time. Arrangements classified as such are managed by the Legal Department,
   which monitors their continuation or the payment of the outstanding debt.
   The estimated recoverable amount of watch-list loans is determined in the
   same way as for non performing loans.
• Loans are classified as “loans under rescheduling”when the counterparty has
   debts with several banks and it applied for consolidation.
• Loans are classified as “restructured loans” when they are issued by several
   banks, which grant a debt moratorium renegotiating debts at lower rates than
   market rates. The Legal Department manages also this category. These loans




                                                                                       notes to the consolidated financial statements 101
   are valued using the same criteria as those used for non performing loans and
   watch-list loans.
• Loans to counterparties resident in countries not belonging to the OECD area
   are classified as “non-guaranteed loans exposed to country risk”.

CREDIT ACCOUNTING POLICIES
The value of on-balance sheet credits, including accrued contract interest and
interest on delayed payment, is equal to their estimated recoverable amount.
This value is obtained by deducting from the total credit amount the expected
principal and interest losses, defined according to specific analyses for non
performing loans, watch-list loans, restructured loans and loans under
rescheduling, and on a lump-sum basis for the remaining items. Performing
loans to customers and watch-list loans arising from the so-called “physiological
risk” have been written down on a lump-sum basis with a percentage equal for
all items, also determined according to the historical trend of the losses incurred,
the product category to which customers belong, the geographic operational area
and any other aspect pertaining to the entries.
The original value of credits shall be reinstated in the following years if the
reasons for write-downs cease to exist.

ACCOUNTING POLICIES FOR GUARANTEES AND
COMMITMENTS
The guarantees provided are entered at the total value of the commitment
undertaken.
Any losses in these operations are reflected through accruals to provisions for
risks and charges.
Securities and foreign exchanges to be received are entered at the forward price
established by contract with the counterparty.
Commitments to allocate funds, undertaken towards counterparties and
                                                     customers, are entered at the amount to be settled. Definitely sold loans (non-
                                                     recourse loans) have been written-off from the consolidated financial statements,
                                                     and the write-downs or write-backs have been charged to the Profit and Loss
                                                     Account at an amount equal to the difference between the consideration received
                                                     and the value at which they had been entered in the consolidated financial
                                                     statements.

                                                     2. SECURITIES AND “OFF-BALANCE SHEET”
                                                        TRANSACTIONS (OTHER THAN FOREIGN
                                                        CURRENCY TRANSACTIONS)

                                                     Beginning in 2004, the weighted average cost method was adopted for the
                                                     valuation of securities rather than the LIFO method on a yearly basis, which was
                                                     utilised until the financial year ending 31 December 2003. For trading securities
                                                     listed on regulated markets, market value has been used.
                                                     The change has not produced any significant results.

                                                     2.1 INVESTMENT SECURITIES
                                                     The securities classified as financial fixed assets represent a stable investment for
                                                     the Company, since they are bound to be used in the long run, and consequently
                                                     they are recorded and valued at the acquisition cost. However, the cost value is
                                                     reduced in case of losses that are deemed to be other than temporary.
                                                     The original cost shall be reinstated in the following years if the reasons for the
                                                     write-down cease to exist.
                                                     Unlisted investment securities are valued at historical cost.
notes to the consolidated financial statements 102




                                                     Issue spreads are calculated according to the provisions of art. 8 of Legislative
                                                     Decree dated 27/12/1994, including the amount accrued in taxable income for the
                                                     year.

                                                     2.2 TRADING SECURITIES
                                                     Securities not classified as financial fixed assets are valued at market value, if
                                                     listed on regulated markets; at the lower of the cost, determined according to the
                                                     daily weighted average cost method and the market price, if not listed.
                                                     Market value is determined:
                                                     • with regard to securities traded in organized markets, by taking the reference
                                                         price on the closing date of the period;
                                                     • with regard to unlisted Italian and foreign securities, from the estimated
                                                         recoverable amount, obtained by discounting back all future financial flows at
                                                         current market rates, taking into account the spreads attributable to issuing
                                                         bodies for the risk associated thereto, and from the exact prices obtainable
                                                         from information circuits normally used all over the world and objectively
                                                         determinable.
                                                     The original cost of securities not listed on regulated markets whose value has
                                                     previously been written down shall be reinstated in the following years if the
                                                     reasons for the write-down cease to exist.
                                                     REPOS according to which the transferee shall resell the securities for forward
                                                     delivery are entered as deposit and loan financial transactions. The deposit cost
                                                     and loan income, consisting in the matured coupons of securities and the spread
                                                     between the spot price and forward price of such securities, are entered as
                                                     interest on an accrual basis.
                                                     Issue spreads have been calculated according to the provisions of art. 8 of
                                                     Legislative Decree dated 27/12/1994, including the amount accrued in the taxable
                                                     income for the year.
“OFF-BALANCE SHEET” TRANSACTIONS (OTHER THAN
FOREIGN CURRENCY TRANSACTIONS)
Derivatives are valued as follows:

a) Derivatives for the hedging of assets and liabilities for trading purposes or
   connected to other assets and liabilities:
   • listed and unlisted hedging derivatives for trading purposes available as at
     close of the financial year are valued according to the assets/liabilities
     hedged or connected thereto;
   • over the year, spreads are recorded on an accrual basis as interest income
     and interest expense according to the proceeds or costs generated by the
     assets/liabilities hedged, or based on the period of validity of contracts in
     case of connected securities or general hedging.

b) Trading derivatives:
   • listed derivatives are valued at book value, and capital losses, if any, are
     entered in the profit and loss account as loss on financial transactions
     with “other liabilities”as a contra-entry;
   • derivatives non listed in regulated markets are valued individually by
     discounting future cash flows using the market interest rate curve at 31
     December 2004. Any resulting capital losses are recorded in the profit and
     loss account as losses from financial transactions with counterparties
     “other liabilities”;
   • unlisted derivatives traded for client accounts, as for brokers, are valued
     taking into account the creditworthiness of the counterparty, with the




                                                                                       notes to the consolidated financial statements 103
     result being provided for in the reserve for risks and charges;
   • over the year, both the spreads realised and the margins paid and/or
     collected upon contract signature are entered under the item“profit (loss) on
     financial transactions”.

c) Spreads on unlisted non-trading derivatives coming to maturity over the year,
   are recorded on an accrual basis as interest income and interest expense
   according to the proceeds or costs generated by the assets/liabilities hedged,
   or based on the period of validity of contracts in case of connected securities
   or general hedging.

d) The premiums paid or collected for option trading are entered under “other
   assets” or “other liabilities” respectively. These premiums are debited or
   credited to the profit and loss account if the option is not exercised. The
   premium value for exercised options on securities is added to or deducted
   from the costs or proceeds relating to the purchased or sold security.

e) “Off-balance sheet” security transactions, that is, transactions having a value
   date in a successive financial period are valued using the same criteria as those
   established for the categories of “trading securities”. “Off-balance sheet”
   transactions connected between each other or with portfolio securities are
   valued consistently with each other.

f) Commissions and final up-fronts, consisting in the advance collection or
   payment of an amount of money pertaining to the contract, which will no
   longer be returned to (by) customers, are recorded in the financial year in
   which the contracts are signed.
                                                     3. EQUITY INVESTMENTS
                                                     Pursuant to art. 18, par. 1, of Legislative Decree No. 87/1992, equity investments
                                                     are valued at acquisition cost, determined based on the purchase or subscription
                                                     price or the value assigned upon allotment. Equity investments are written down
                                                     in case of losses deemed to be other than temporary according to par. 2, second
                                                     sentence of the aforementioned art. 18. The original value is reinstated in the
                                                     following years if the reasons for the write-down cease to exist.

                                                     Dividends are recorded in the financial year in which they are collected.

                                                     4. ASSETS AND LIABILITIES IN FOREIGN
                                                        CURRENCY (INCLUDING “OFF-BALANCE
                                                        SHEET” TRANSACTIONS)
                                                     Foreign currency transactions are recorded at the time of settlement.
                                                     Assets, liabilities and “off-balance sheet”spot transactions in foreign currency are
                                                     converted in Euro at the exchange rates ruling at year-end; the effect of such
                                                     valuation is charged to the profit and loss account.
                                                     “Off-balance sheet”forward transactions are valued:
                                                     • in case of hedging transactions, at the exchange rate ruling at year-end; the
                                                        spreads between the forward and spot exchange rate of such transactions are
                                                        entered in the profit and loss account according to a temporal distribution
                                                        consistent with the recording of interest arising from hedged assets or
                                                        liabilities;
                                                     • in case of trading transactions, at the corresponding forward exchange rates
                                                        ruling at year-end;
notes to the consolidated financial statements 104




                                                     • unlisted trading currency options are valued individually using current market
                                                        values, and capital losses, if any, are entered in the profit and loss account as
                                                        loss on financial transactions;
                                                     • unlisted currency options for brokerage on behalf of customers are valued
                                                        taking into account the creditworthiness of the counterparties, the relevant
                                                        result is provided for in a reserve for risks and charges.
                                                     Equity investments in foreign currency are entered at the historical demand rate,
                                                     while investment and trading securities in foreign currency are written down or
                                                     up at the exchange rate ruling at year-end.
                                                     Costs and proceeds in foreign currency are entered at the exchange rate ruling at
                                                     the time of recording.
                                                     As to the conversion of the year-end balances resulting from the accounts of the
                                                     Bucharest branch, such conversion is performed according to the “temporal
                                                     method”.
                                                     Therefore:
                                                     • the conversion of monetary assets and liabilities is performed using the
                                                        exchange rate ruling at the date of the consolidated financial statements;
                                                     • non-monetary assets and liabilities, recorded at historical costs, are converted
                                                        at the exchange rates ruling at the dates when assets were purchased,
                                                        liabilities incurred and the share capital and equity reserves set up;
                                                     • the profit and loss account items are converted at the current exchange rate
                                                        ruling at year-end for practical reasons and taking into account the little
                                                        variance as compared to the average exchange rate for the period, except for the
                                                        amortisations converted at the same exchange rate as the assets they refer to.
                                                     The unbalance resulting from the adoption of difference exchange rates is
                                                     entered in the profit and loss account under exchange rate differences.
5. TANGIBLE FIXED ASSETS
They are recorded at the acquisition cost, including the accessory charges
incurred, adjusted for some goods in pursuance of specific monetary revaluation
laws; the amount entered in the financial statements is obtained by deducting the
write-downs carried out from the book value so defined.
Tangible fixed assets are depreciated in each financial year on a straight-line basis
according to economic/technical charges based on the residual life of the assets.
This principle is also in line with fiscally allowed charges.
Maintenance and repair expenses that do not imply an increase in the net worth
of assets are charged to the profit and loss account for the year, while the
expenses implying an increase are entered under the specific technical fixed
assets to which they refer.
The real properties used pursuant to financial leases are recorded under tangible
fixed assets, and they are depreciated based on the charges of the corresponding
assets.

6. INTANGIBLE FIXED ASSETS
They are entered under assets at the acquisition cost, including accessory charges,
subject to approval of the Board of Statutory Auditors if necessary, and they are
systematically amortised according to their potential use.
The paid goodwill is entered under assets and amortised over a five-year or
longer period based on its estimated useful life.

7. OTHER ASPECTS




                                                                                        notes to the consolidated financial statements 105
OTHER RECEIVABLES AND PAYABLES
Other receivables and payables are entered at face value. With regard to
receivables, this value is equal to the estimated recoverable amount.

ACCRUALS AND PAYABLES
These items include shares of costs and proceeds relating to several years in order
to comply with the accrual principle.
They are calculated taking into account, with regard to interest, the rates
applicable to each agreement, and, with regard to costs and proceeds, elements
that are certain and the accrual principle.
Some of them are directly added to the liability accounts to which they refer, since
this representation is more technically appropriate.

DEPOSITS IN ADMINISTRATION
They represent the debt existing at year-end towards third party assignors.

EMPLOYEES’ SEVERANCE FUND
This item reflects, net of advances, the benefits accruing to employees on payroll
as at close of the financial year, determined according to Law No. 297 dated 29
May 1982.

PROVISIONS FOR RISKS AND CHARGES
The provision for taxation includes allocations for current and deferred taxes
payable, as well as for the risk arising from fiscal disputes, if any.
The provision for current taxes is a reasonable forecast of the chargeable amount,
determined according to applicable tax regulations.
Deferred taxes have been calculated by applying the income statement liability
method established by IAS 12 according to the specific provisions of Banca
d’Italia. In particular, the provisions for taxation include liabilities for deferred
                                                     taxes arising from taxable temporary differences that are expected to be paid. No
                                                     provision for deferred taxes is made for equity reserves set up free of tax, since at
                                                     present no transactions are expected to be carried out that would determine their
                                                     taxation. Deferred tax assets, originating from deductible temporary differences
                                                     whose collection can reasonably be deemed to be certain based on future
                                                     expected taxable income are entered under other assets.

                                                     OTHER PROVISION
                                                     Other provisions are made to reflect losses of the guarantees provided and
                                                     commitments undertaken, as well as to provide for certain or probable liabilities,
                                                     whose amount or date of occurrence, however, cannot be determined at the close
                                                     of the financial year or at the date of preparation of these financial statements.

                                                     PROVISION FOR GENERAL BANKING RISK
                                                     This provision is used to hedge the general business risk and, therefore, it is
                                                     included in the shareholders’ equity.

                                                     SUBORDINATED LIABILITIES
                                                     The value entered in the financial statements corresponds to the face value of the
                                                     loan.

                                                     STOCKS OF CONSUMABLES
                                                     Year-end stocks of stationery and printing supplies or promotional articles are
                                                     entered by applying to the stocks the last cost price for the goods of that kind.
                                                     These stocks are recorded under item “other assets” with “administrative
notes to the consolidated financial statements 106




                                                     expenses”as a contra-entry.



                                                        SECTION 2 - ADJUSTMENTS AND TAX
                                                        PROVISIONS

                                                     In compliance with Article 7, comma 1 of Legislative Decree no. 37 of 6 February
                                                     2004, which rescinds articles 15, comma 3 and 39, comma 2 of Legislative Decree
                                                     no. 87/92 allowing adjustments and provisions exclusively on the basis of tax
                                                     regulations, previous tax timing differences have been duly written off.
                                                     The effects of this elimination are recorded as extraordinary income, and any tax
                                                     deferrals have been accounted for.

                                                     2.1 VALUE ADJUSTMENTS RECORDED ONLY IN
                                                         PURSUANCE OF TAX REGULATIONS
                                                     No value adjustments were carried out.

                                                     2.2 PROVISIONS MADE ONLY IN PURSUANCE OF TAX
                                                         REGULATIONS
                                                     No provisions were carried out.
      PART B - BALANCE SHEET
      INFORMATION
     SECTION 1 - LOANS

BREAKDOWN OF ITEM 10 “CASH AND BALANCES WITH
CENTRAL BANKS AND POST OFFICES”

                                                                 31/12/2004         31/12/2003

Notes and coins                                                        39,257            47,860
Demand deposits and other available assets                                596             2,743
Demand postal current accounts                                              0                32
TOTAL                                                                  39,853            50,635


BREAKDOWN OF ITEM 30 “LOANS TO BANKS”

                                                                 31/12/2004         31/12/2003

Loans to central banks                                               69,092              49,316
Deposits with banks                                                 188,538             123,954
Currents accounts for services rendered                              31,438              34,638
Loans                                                                     0              38,585
Other technical forms                                                   105               3,457
TOTAL                                                               289,173             249,950


1.1 DETAILS OF ITEM 30 “LOANS TO BANKS”




                                                                                                   notes to the consolidated financial statements 107
                                                                 31/12/2004         31/12/2003

a)   loans to central banks                                            72,149            49,316
b)   bills eligible for refinancing with central banks                      0                 0
c)   credits for financial leases                                           0                 0
d)   REPOS                                                                  0                 0
e)   loan of securities                                                     0                 0


1.2 CASH LOANS TO BANKS

Value/categories                                         Gross            Total              Net
                                                      exposure     write-downs          exposure

A. Doubtful loans                                           0                   0             0
   A.1 Non performing loans                       0                0                0
   A.2 Watch-list                                 0                0                0
   A.3 Loans being restructured                   0                0                0
   A.4 Restructured loans                         0                0                0
   A.5 Non-guaranteed loans
        exposed to country risk                   0                0                0
B. Performing loans                                   289,173                   0       289,173
                                                     1.3 TREND OF DOUBTFUL LOANS TO BANKS

                                                     Reasons/categories                                Non    Watch-list          Loans   Restructured   Non-guaranteed
                                                                                                performing                        being          loans            loans
                                                                                                      loans                restructured                      exposed to
                                                                                                                                                            country risk


                                                     A. Starting gross exposure
                                                        as at 31/12/2003                                 0            0              0              0                 0
                                                        A.1 of which for interest
                                                              on delayed payment                         0            0              0              0                 0
                                                     B. Increases                                        0            0              0              0                 0
                                                        B.1 Performing loan inflows                      0            0              0              0                 0
                                                        B.2 Interest on delayed payment                  0            0              0              0                 0
                                                        B.3 Transfer from other doubtful
                                                              loan categories                            0            0              0              0                 0
                                                        B.4 Other increases                              0            0              0              0                 0
                                                     C. Decreases                                        0            0              0              0                 0
                                                        C.1 Disbursements for performing
                                                              loans                                      0            0              0              0                 0
                                                        C.2 Write-offs                                   0            0              0              0                 0
                                                        C.3 Collections                                  0            0              0              0                 0
                                                        C.4 Gains on sales                               0            0              0              0                 0
                                                        C.5 Transfer to other doubtful
                                                              loan categories                            0            0              0              0                 0
                                                        C.6 Other decreases                              0            0              0              0                 0
                                                     D. Final gross exposure
                                                        as at 31/12/2004                                 0            0              0              0                 0
                                                        D.1 of which for interest
                                                              on delayed payment                         0            0              0              0                 0


                                                     1.4 TREND OF TOTAL ADJUSTMENTS OF LOANS TO BANKS

                                                     Reasons/categories                            Non Watch-list        Loans Restructured Non-guaranteed Performing
notes to the consolidated financial statements 108




                                                                                            performing                   being        loans          loans      loans
                                                                                                  loans           restructured                 exposed to
                                                                                                                                              country risk


                                                     A. Starting total adjustments
                                                        as at 31/12/2003                            0           0            0            0               0           0
                                                        A.1 of which for interest on
                                                               delayed payment                      0           0            0            0               0           0
                                                     B. Increases                                   0           0            0            0               0           0
                                                        B.1 Write-downs                             0           0            0            0               0           0
                                                        B.1.1 of which for interest on
                                                               delayed payment                      0           0            0            0               0           0
                                                        B.2 Utilizations of the
                                                               credit risk reserve                  0           0            0            0               0           0
                                                        B.3 Transfer from other
                                                               loan categories                      0           0            0            0               0           0
                                                        B.4 Other increases                         0           0            0            0               0           0
                                                     C. Decreases                                   0           0            0            0               0           0
                                                        C.1 Write-backs for valuation               0           0            0            0               0           0
                                                        C.1.1 of which for interest on
                                                               delayed payment                      0           0            0            0               0           0
                                                        C.2 Write-backs for collection              0           0            0            0               0           0
                                                        C.2.1 of which for interest on
                                                               delayed payment                      0           0            0            0               0           0
                                                        C.3 Write-offs                              0           0            0            0               0           0
                                                        C.4 Transfer to other
                                                               loan categories                      0           0            0            0               0           0
                                                        C.5 Other decreases                         0           0            0            0               0           0
                                                     D. Final total adjustments
                                                        as at 31/12/2004                            0           0            0            0               0           0
                                                          D.1    of which for interest on
                                                                 delayed payment                    0           0            0            0               0           0
BREAKDOWN OF ITEM 40 “LOANS TO CUSTOMERS”

                                                                   31/12/2004            31/12/2003

Ordinary current accounts                                             1,591,002              1,535,654
Import-export loans                                                     224,605                217,598
Assets sold from the trading portfolio                                   40,694                 61,019
Mortgage loans                                                        1,351,238                757,894
Unsecured loans                                                         168,485                189,313
Other non-regulated subsidies on current
account and other credits                                             1,393,162              1,229,083
Outstanding credits                                                      37,922                 31,630
Credits for leasing                                                     316,765                261,090
Credits for factoring                                                   113,292                 90,526
Other technical forms                                                     5,428                 17,912
Provisions for adjustment of the assets                                 -35,918                -24,190
TOTAL                                                                 5,206,675              4,367,529


1.5 DETAILS OF ITEM 40 “LOANS TO CUSTOMERS”

                                                                   31/12/2004            31/12/2003

a) bills eligible for refinancing
   with central banks                                                    14,756                 19,567
b) credits for financial leases                                               0                      0
c) REPOS                                                                      0                      0
d) loan of securities                                                         0                      0


1.6 SECURED LOANS TO CUSTOMERS

                                                            31/12/2004                   31/12/2003




                                                                                                         notes to the consolidated financial statements 109
a) from mortgages                                            1,567,874                         879,432
b) from pledges on:                                            159,704                          84,838
   1 - cash deposits                            60,334                          28,854
   2 - securities                               41,468                          39,916
   3 - other assets                             57,902                          16,068
c) from guarantees of:                                       1,127,836                       1,035,050
   1 - Governments                                 0                               0
   2 - other public institutions               2,818                           2,215
   3 - banks                                  19,015                          22,423
   4 - other operators                     1,106,003                       1,010,412
TOTAL                                                        2,855,414                       1,999,320


1.7 CASH LOANS TO CUSTOMERS

     Value/categories                               Gross               Total                      Net
                                                 exposure        write-downs                  exposure

A. Doubtful loans                                138,195               31,837                 106,358
   A.1 Non performing loans         63,207                   25,285               37,922
   A.2 Watch-list                   66,739                    6,552               60,187
   A.3 Loans being
       restructured                      0                        0                     0
   A.4 Restructured loans            8,249                        0                 8,249
   A.5 Non-guaranteed loans
       exposed to country risk              0                     0                      0
B. Performing loans                             5,129,683              29,366                5,100,317
                                                     1.8 TREND OF DOUBTFUL LOANS TO CUSTOMERS

                                                     Reasons/categories                                 Non         Watch-list              Loans       Restructured Non-guaranteed
                                                                                                 performing                                 being              loans          loans
                                                                                                       loans                         restructured                        exposed to
                                                                                                                                                                        country risk


                                                     A. Starting gross exposure
                                                        as at 31/12/2003                             52,836          33,594                    0                  0                0
                                                        A.1 of which for interest
                                                              on delayed payment                      1,737               0                    0                 0                 0
                                                     B. Increases                                    33,493         105,305                    0             8,249                 0
                                                        B.1 Performing loan inflows                   3,425         102,198                    0             8,249                 0
                                                        B.2 Interest on delayed payment                 397           1,452                    0                 0                 0
                                                        B.3 Transfer from other
                                                              doubtful loan categories               29,358               0                    0                  0                0
                                                        B.4 Other increases                             313           1,655                    0                  0                0
                                                     C. Decreases                                    23,123          72,160                    0                  0                0
                                                        C.1 Disbursements for
                                                              performing loans                            0           1,376                    0                  0                0
                                                        C.2 Write-offs                               12,716             207                    0                  0                0
                                                        C.3 Collections                              10,387          41,197                    0                  0                0
                                                        C.4 Gains on sales                               16               0                    0                  0                0
                                                        C.5 Transfer to other doubtful
                                                              loan categories                             0          29,358                    0                  0                0
                                                        C.6 Other decreases                               4              22                    0                  0                0
                                                     D. Final gross exposure
                                                        as at 31/12/2004                             63,207          66,739                    0             8,249                 0
                                                          D.1 of which for interest on
                                                              delayed payment                          201                  0                  0                  0                0


                                                     1.9 TREND OF TOTAL WRITE-DOWNS OF LOANS TO
notes to the consolidated financial statements 110




                                                         CUSTOMERS

                                                     Reasons/categories                         Non Watch-list        Loans           Restructured Non-guaranteed         Performing
                                                                                         performing                   being                  loans          loans               loans
                                                                                               loans           restructured                            exposed to
                                                                                                                                                      country risk


                                                     A. Initial total adjustments
                                                        as at 31/12/2003                   21,432       3,635                    0                  0                 0     21,170
                                                        A.1 of which for interest
                                                                on delayed payment            142           0                    0                  0                 0          0
                                                     B. Increases                          12,407       5,563                    0                  0                 0     13,703
                                                        B.1 Write-downs                    10,497       5,563                    0                  0                 0     13,609
                                                        B.1.1 of which for interest
                                                                on delayed payment               5             0                 0                  0                 0            0
                                                        B.2 Utilization of the
                                                                credit risk reserve              0             0                 0                  0                 0            0
                                                        B.3 Transfer from other
                                                                loan categories             1,605           0                    0                  0                 0          0
                                                        B.4 Other increases                   305           0                    0                  0                 0         94
                                                     C. Decreases                           8,555       2,646                    0                  0                 0      5,506
                                                        C.1 Write-backs
                                                                for valuation                   64        600                    0                  0                 0            0
                                                        C.1.1 of which for interest
                                                                on delayed payment               0             0                 0                  0                 0            0
                                                        C.2 Write-backs
                                                                for collection                689              86                0                  0                 0          24
                                                        C.2.1 of which for interest
                                                                on delayed payment             17           0                    0                  0                 0          0
                                                        C.3 Write-offs                      7,797         261                    0                  0                 0      5,482
                                                        C.4 Transfers to other
                                                                loan categories                  0      1,605                    0                  0                 0            0
                                                        C.5 Other decreases                      5         94                    0                  0                 0            0
                                                     D. Final total adjustments
                                                        as at 31/12/2004                   25,285       6,552                    0                  0                 0     29,366
                                                          D.1    of which for interest
                                                                 on delayed payment             44             0                 0                  0                 0            0
   SECTION 2 - SECURITIES

BREAKDOWN OF SECURITIES BY TYPE

                                                       31/12/2004               31/12/2003

Debt securities                                           495,054                  411,107
- Treasury bonds and similar
  instruments eligible for refinancing
  with central banks                           2,149                 59,783
- Bonds and other debt securities            492,905                351,324
Shares, quotas and other equity securities                 16,647                   18,840
TOTAL                                                     511,701                  429,947
of which:
- Investment securities                                    94,853                  104,918
- Trading securities                                      416,848                  325,029


2.1 INVESTMENT SECURITIES
Items/Values                                 Balance-sheet value              Market value

1. Debt securities                                         83,760                   87,011
1.1 Government bonds                               0                      0
    - listed                                       0                      0
    - unlisted                                     0                      0
1.2 Other securities                          83,760                 87,011
    - listed                                       0                      0
    - unlisted                                83,760                 87,011
2. Equity securities                                       11,093                    8,333
    - listed                                       0                      0
    - unlisted                                11,093                  8,333




                                                                                             notes to the consolidated financial statements 111
TOTAL                                                      94,853                   95,344


2.2 ANNUAL CHANGES IN INVESTMENT SECURITIES


A. Opening balance                                                                 104,918
B. Increases                                                                        16,983
   B1. Purchases                                                     15,435
   B2. Write-backs                                                        0
   B3. Transfers from the
       trading portfolio                                                  0
   B4. Other changes                                                  1,548
C. Decreases                                                                        27,048
   C1. Sales                                                         16.125
   C2. Redemptions                                                      313
   C3. Write-downs                                                        0
       of which:
       - other than temporary write-downs                                0
   C4. Transfers to the
       trading portfolio                                              9,134
   C5. Other changes                                                  1,476
D. Final stocks                                                                     94,853


2.3 TRADING SECURITIES
Items/Values                                 Balance-sheet value              Market value

1. Debt securities                                        411,294                  415,293
1.1 Government bonds                          21,124                 21,124
    - listed                                  21,124                 21,124
    - unlisted                                     0                      0
1.2 Other securities                         390,171                394,169
    - listed                                 259,025                258,717
    - unlisted                               131,146                135,452
2. Equity securities                                        5,554                    5,554
    - listed                                   5,554                  5,554
    - unlisted                                     0                      0
TOTAL                                                     416,848                  420,847
                                                     2.4 ANNUAL CHANGES IN TRADING SECURITIES


                                                     A. Opening balance                                                                         325,029
                                                     B. Increase                                                                              1,305,273
                                                        B1. Purchases                                                       1,266,908
                                                             - Debt securities                                              1,149,264
                                                               + government bonds                                             465,021
                                                               + other securities                                             684,243
                                                             - Equity securities                                              117,644
                                                        B2. Write-backs and revaluations                                       13,374
                                                        B3. Transfers from the investment portfolio                             9,134
                                                        B4. Other changes                                                      15,857
                                                     C. Decreases                                                                             1,213,454
                                                        C1. Sales and redemptions                                           1,173,719
                                                             - Debt securities                                              1,050,224
                                                               + government bonds                                             491,407
                                                               + other securities                                             558,817
                                                             - Equity securities                                              123,495
                                                        C2. Write-downs                                                         1,040
                                                        C3. Transfers to the investment portfolio                                   0
                                                        C5. Other changes                                                      38,695
                                                     D. Final stocks                                                                              416,848




                                                        SECTION 3 - EQUITY INVESTMENTS
                                                     3.1 SIGNIFICANT EQUITY INVESTMENTS

                                                         Designation                        head office          type        share       profit     investment proportion           % votes consolidated
                                                                                                                    of     holders’      (loss)      investing          %        available in   balance-
                                                                                                          arrangement       equity                   company                   the Ordinary        sheet
notes to the consolidated financial statements 112




                                                                                                                   (1)                                                        Shareholders’       values
                                                                                                                                                                                    Meeting
                                                     A. Consolidated companies
                                                     A.1 integral method
                                                         1. Veneto Banca scarl              Montebelluna             1     809,365      45,658
                                                         2. Claris Factor spa               Montebelluna             1       7,369       2,594          A1.1      100.000           100.000         xxx
                                                         3. Veneto Ireland Financial
                                                            Services ltd.                   Dublino                  1     138,279      11,278          A1.1      100.000           100.000         xxx
                                                         4. Banca Italo-Romena spa          Treviso                  1      37,157       3,299          A1.1       92.308            92.308         xxx
                                                         5. Banca di Bergamo spa            Bergamo                  1      42,211       1,712          A1.1       60.068            60.068         xxx
                                                         6. Banca Meridiana spa             Bari                     1      38,615       2,006          A1.1       99.385            99.385         xxx
                                                         7. Claris Leasing spa              Treviso                  1      22,404       2,009          A1.1      100.000           100.000         xxx
                                                         8. Claris Finance srl              Roma                     1          10           0          A1.1       70.000            70.000         xxx
                                                     A.2 proportional method
                                                     B. Equity investments valued by the    equity method
                                                        1. Claris Assicurazioni srl         Montebelluna             1         170          79          A1.1      100.000           100.000         170
                                                        2. Claris Broker spa                Montebelluna             1         111         -42          A1.1      100.000           100.000         111
                                                        3. Claris Vita spa                  Milano                   8      52,415       1,676          A1.1       20.000            20.000      11,344
                                                        4. Immobiliare Italo Romena srl     Bucarest                 1          96          18          A1.1      100.000           100.000          96
                                                        5. Sintesi 2000 srl                 Milano                   8          96         -81          A1.1       33.333            33.333          32
                                                        6. Palladio Finanziaria srl         Vicenza                  8     180,922      15,132          A1.1       21.212            21.212      38,377
                                                     C. Other significant equity investments
                                                     (1) Type of arrangement:
                                                     1 = control according to Art. 2359 of Italian Civil Code, Par. 1, No. 1 (majority of voting rights in the Ordinary Shareholders’ Meeting)
                                                     2 = control according to Art. 2359 of Italian Civil Code, Par. 1, No. 2 (dominant influence in the Ordinary Shareholders’ Meeting)
                                                     3 = control according to Art. 23 of the Italian Consolidation Act (T.U.), Par. 2, No. 1 (arrangements with other Shareholders)
                                                     4 = other forms of control
                                                     5 = unitary management according to Art. 26, Par. 1, of the “decree”
                                                     6 = unitary management according to Art. 26, Par. 2, of the “decree”
                                                     7 = joint control
                                                     8 = associate company
3.2 ASSETS AND LIABILITIES INVOLVING GROUP COMPANIES

                                        31/12/2004   31/12/2003
a) Assets
   1. loans to banks                             0            0
       of which: subordinated                    0            0
   2. loans to financial institutions        5,444        6,111
       of which: subordinated                    0            0
   3. loans to other customers               3,118          368
       of which: subordinated                    0            0
   4. bonds and other debt securities       44,720          370
       of which: subordinated                    0            0
b) Liabilities
   1. due to banks                          10,008            0
   2. due to financial institutions            751        2,188
   3. due to other customers                 4,670        5,604
   4. securities issued                        208            0
   5. subordinated liabilities                   0            0
c) Guarantees and commitments
   1. guarantees provided                       8           49
   2. commitments                               0          343


3.3 ASSETS AND LIABILITIES INVOLVING SUBSIDIARIES
    (OTHER THAN GROUP COMPANIES)

                                        31/12/2004   31/12/2003
a) Assets
   1. loans to banks                        54,315       44,617
       of which: subordinated                    0            0
   2. loans to financial institutions       21,359       22,704
       of which: subordinated                    0            0




                                                                  notes to the consolidated financial statements 113
   3. loans to other customers              13,000       16,588
       of which: subordinated                    0            0
   4. bonds and other debt securities            0          342
       of which: subordinated                    0            0
b) Liabilities
   1. due to banks                          31,014       46,799
   2. due to financial institutions         20,968        1,785
   3. due to other customers                 3,836           13
   4. securities issued                          0            0
   5. subordinated liabilities                   0            0
c) Guarantees and commitments
   1. guarantees provided                      186         162
   2. commitments                          116,347           0


3.4 BREAKDOWN OF ITEM 70 “EQUITY INVESTMENTS”

                                        31/12/2004   31/12/2003
a) In banks
   1. listed                                14,777       14,105
   2. unlisted                               5,591        5,756
b) In financial institutions
   1. listed                                 1,800        1,800
   2. unlisted                              40.875       34.389
c) Other equity investments
   1. listed                                     0        1.972
   2. unlisted                              25,526       14,630
TOTAL                                       88,569       72,652
                                                     3.5 BREAKDOWN OF ITEM 80 “EQUITY INVESTMENTS IN
                                                         GROUP COMPANIES”

                                                                                                         31/12/2004   31/12/2003
                                                     a) In banks
                                                        1. listed                                                0            0
                                                        2. unlisted                                              0            0
                                                     b) In financial institutions
                                                        1. listed                                                0            0
                                                        2. unlisted                                              0            0
                                                     c) Other equity investments
                                                        1. listed                                                0             0
                                                        2. unlisted                                            378        51,161
                                                     TOTAL                                                     378        51,161


                                                     3.6 ANNUAL CHANGES IN EQUITY INVESTMENTS

                                                     3.6.1 EQUITY INVESTMENTS IN GROUP COMPANIES

                                                     A. Opening balance                                                   51,161
                                                     B. Increases                                                         59,443
                                                        B1. Purchases                                        15,989
                                                        B2. Write-backs                                           0
                                                        B3. Revaluations                                          0
                                                        B4. Other changes                                    43,454
                                                     C. Decreases                                                        110,226
                                                        C1. Sales                                            95,616
                                                        C2. Write-downs                                           0
                                                            of which: other than temporary write-downs            0
notes to the consolidated financial statements 114




                                                        C3. Other changes                                    14,610
                                                     D. Final stocks                                                        378
                                                     E.   Total revaluations                                                  0
                                                     F.   Total adjustments                                                   0


                                                     3.6.2 OTHER EQUITY INVESTMENTS

                                                     A. Opening balance                                                   72,652
                                                     B. Increases                                                         48,577
                                                        B1. Purchases                                        32,247
                                                        B2. Write-backs                                         892
                                                        B3. Revaluations                                          0
                                                        B4. Other changes                                    15,438
                                                     C. Decrease                                                          32,660
                                                        C1. Sales                                            32,225
                                                        C2. Write-downs                                          44
                                                            of which: other than temporary write-downs           44
                                                        C3. Other changes                                       390
                                                     D. Final stocks                                                      88,569
                                                     E.   Total revaluations                                                  0
                                                     F.   Total adjustments                                                  44
     SECTION 4 - TANGIBLE AND INTANGIBLE
     FIXED ASSETS

4.1 ANNUAL CHANGES IN TANGIBLE FIXED ASSETS

                                              Property      Furniture        Total

A.    Opening balance                         103,070         23,661       126,731
B.    Increases                                 6,393         30,537        36,930
      B1. Purchases                             4,920         21,278        26,198
      B2. Write-backs                               0              0             0
      B3. Revaluations                              0              0             0
      B4. Other changes                         1,473          9,259        10,732
C.    Decreases                                 8,298         15,493        23,791
      C1. Sales                                    49            242           291
      C2. Write-downs:
           a) depreciation                        1,591       15,124        16,715
           b) other than temporary
              write-downs                             0            0             0
      C3. Other changes                           6,658          127         6,785
D.    Final stocks                            101,165         38,705       139,870
E.    Total revaluations                          4,265            0         4,265
F.    Total adjustments:
      a) depreciation                            16,386       44,979        61,365
      b) other than temporary write-downs             0            0             0


Depreciation is calculated according to the methods described under valuation
criteria, by applying the charges defined by applicable laws.




                                                                                     notes to the consolidated financial statements 115
BREAKDOWN OF ITEM 110 “INTANGIBLE FIXED ASSETS”

                                                          31/12/2004    31/12/2003
Goodwill                                                      16,336        17,244
Software purchases                                             1,517         2,325
Restructuring charges for leased facilities                    6,266         8,543
Other intangible fixed assets                                  6,171         7,360
TOTAL                                                         30,290        35,472


4.2 ANNUAL CHANGES IN INTANGIBLE FIXED ASSETS

A.    Opening balance                                                       35,472
B.    Increases                                                              2,657
      B1. Purchases                                            2,657
      B2. Write-backs                                              0
      B3. Revaluations                                             0
      B4. Other changes                                            0
C.    Decreases                                                              7,839
      C1. Sales                                                    0
      C2. Write-downs:
           a) amortisation                                     7,132
           b) other than temporary write-downs                     0
      C3. Other changes                                          707
D.    Final stocks                                                          30,290
E.    Total revaluations                                                        0
F.    Total adjustments:
      a) amortisation                                                       19,788
      b) other than temporary write-downs                                        0
                                                        SECTION 5 - OTHER ASSET ITEMS

                                                     5.1 BREAKDOWN OF ITEM 150 “OTHER ASSETS”

                                                                                                         31/12/2004       31/12/2003

                                                     Advances on suppliers’ invoices                            243            1,502
                                                     Portfolio operations to be settled                      20,541           22,944
                                                     Interest and commissions receivable                      7,371           10,292
                                                     Securities transactions                                  1,530            1,490
                                                     Foreign operations to be settled                         4,707            9,160
                                                     Entries to be settled by “proxy” procedure              38,120           18,381
                                                     Current account cheques under negotiation               22,310            1,967
                                                     Loans due from Treasury                                 46,259           74,839
                                                     Deferred tax assets                                      6,811            6,750
                                                     Off-balance sheet operations                             1,606            1,589
                                                     Premiums for options and similar instruments             1,767            1,439
                                                     Outstanding and protested bills and cheques                 41               63
                                                     Balance reconciliation with subsidiaries                 2,162            6,596
                                                     Other assets                                            66,917           82,734
                                                     Total                                                  220,385          239,746


                                                     5.2 BREAKDOWN OF ITEM 160 “PREPAYMENTS AND
                                                         ACCRUED INCOME”

                                                                                                         31/12/2004       31/12/2003
                                                     Accrued income from
                                                     - Interest receivable on securities                     13,196           11,618
                                                     - Interest on loans to customers                         7,144            9,481
                                                     - Interest on loans with banks                             549              685
notes to the consolidated financial statements 116




                                                     - Spreads on off-balance sheet operations               12,409            8,807
                                                     - Other items                                              237              299
                                                     Total accrued income                                    33,535           30,890
                                                     Prepayments of
                                                     - Insurance premiums                                       237                1
                                                     - Other prepayments                                      3,284            4,457
                                                     Total prepayments                                        3,521            4,458
                                                     TOTAL PREPAYMENTS AND ACCRUED INCOME                    37,056           35,348


                                                     5.3 ADJUSTMENTS FOR PREPAYMENTS AND ACCRUED
                                                         INCOME

                                                     The Company did not take advantage of the option to directly adjust, by either
                                                     increasing or decreasing, the asset and liability accounts to which prepayments
                                                     and accrued income refer.

                                                     5.4 DISTRIBUTION OF SUBORDINATED ASSETS

                                                                                                         31/12/2004       31/12/2003

                                                     a) Loans to banks                                            0                0
                                                     b) Loans to customers                                   13,000           13,000
                                                     c) Bonds and other debt securities                      30,024           20,302
   SECTION 6 - DEBTS

BREAKDOWN OF ITEM 10 “DUE TO BANKS”

                                         31/12/2004   31/12/2003

Current accounts for services rendered       29,655       62,766
Deposits                                    118,641      247,595
Loans                                       122,677      100,328
REPOS                                        54,964       33,483
TOTAL                                       325,937      444,172


6.1 DETAILS OF ITEM “DUE TO BANKS”

                                         31/12/2004   31/12/2003

a) REPOS                                     54,964       33,483
b) loan of securities                             0            0


BREAKDOWN OF ITEM 20 “DUE TO CUSTOMERS”

                                         31/12/2004   31/12/2003

Due to customers:
- current accounts                        2,665,349    2,062,771
- savings deposits                          248,844      249,958
- other agreements                            6,378        6,422
- factoring                                  11,878       10,121
- REPOS                                     155,384      152,982




                                                                   notes to the consolidated financial statements 117
TOTAL                                     3,087,833    2,482,254


6.2 DETAILS OF ITEM “DUE TO CUSTOMERS”

                                         31/12/2004   31/12/2003

a) REPOS                                    155,384      152,982
b) loan of securities                             0            0


BREAKDOWN OF ITEM 30 “SECURITIES ISSUED”

                                         31/12/2004   31/12/2003

Securities issued:
- bonds                                   1,899,682    1,617,030
- certificates of deposit                   191,426      133,883
- discounting of commercial papers           45,400      116,950
- other items                                     0       40,000
TOTAL                                     2,136,508    1,907,863


BREAKDOWN OF ITEM 40 “DEPOSITS IN ADMINISTRATION”

Funds received from:

                                         31/12/2004   31/12/2003

The Treasury                                     21           43
Veneto Sviluppo spa                           4,723        2,109
Other public institutions                     5,085       11,144
TOTAL                                         9,829       13,296
                                                        SECTION 7 - PROVISIONS

                                                     CHANGES OCCURRED IN ITEM 70 “EMPLOYEES’
                                                     SEVERANCE FUND”


                                                     A. Opening balance                                                       26,001
                                                     B. Increases                                                              3,540
                                                        B1. Allocations                                           3,524
                                                        B2. Other changes                                             6
                                                     C. Decreases                                                              2,691
                                                        C1. Utilizations                                          2,255
                                                        C2. Other changes                                           436
                                                     D. Final stocks                                                          26,850


                                                     7.1 BREAKDOWN OF ITEM 90 “CREDIT RISK RESERVES”

                                                                                                             31/12/2004   31/12/2003

                                                     Credit risk reserve for interest on delayed payment             0         1,596
                                                     Credit risk reserve                                           509           650
                                                     TOTAL                                                         509         2,246


                                                     7.2 CHANGES IN ITEM 90 “CREDIT RISK RESERVES”
                                                         OCCURRED IN THE FINANCIAL YEAR


                                                     A. Opening balance                                                        2,246
                                                     B. Increases                                                                  0
notes to the consolidated financial statements 118




                                                        B1. Allocations                                              0
                                                        B2. Other changes                                            0
                                                     C. Decreases                                                              1,737
                                                        C1. Utilizations                                            161
                                                        C2. Other changes                                         1,576
                                                     D. Final stocks                                                            509


                                                     BREAKDOWN OF ITEM 80 “PROVISIONS FOR RISKS AND
                                                     CHARGES”

                                                                                                             31/12/2004   31/12/2003

                                                     a) Pensions and similar provisions                               0            0
                                                     b) Provision for taxation                                   26,291       26,568
                                                     c) Provisions for risks and charges: other provisions       17,336       12,640
                                                     TOTAL                                                       43,627       39,208


                                                     BREAKDOWN OF ITEM 80 B) “PROVISIONS FOR TAXATION”

                                                                                                             31/12/2004   31/12/2003

                                                     Provision for current direct taxes                          24,572       25,044
                                                     Indirect taxes and dues                                      1,719        1,524
                                                     TOTAL                                                       26,291       26,568
CHANGE IN ITEM 80 B) “PROVISIONS FOR RISKS AND
CHARGES: PROVISION FOR TAXATION” OCCURRED IN THE
FINANCIAL YEAR


A. Opening balance                                                26,567
B. Increases                                                      26,278
   B1. Allocations                                   26,278
   B2. Other changes                                      0
C. Decreases                                                      26,554
   C1. Utilizations                                  26,554
   C2. Other changes                                      0
D. Final stocks                                                   26,291


7.3 BREAKDOWN OF ITEM 80 D) “PROVISIONS FOR RISKS
    AND CHARGES: OTHER PROVISIONS”

                                                 31/12/2004   31/12/2003

Provisions for risks and charges                     17,336       12,323
Provisions for risks and charges associated to
capital losses on credit derivatives                     0          317
TOTAL                                                17,336       12,640


CHANGES OCCURRED IN ITEM 80 “PROVISIONS FOR
RISKS AND CHARGES”


A. Opening balance                                                12,639
B. Increases                                                       5,755




                                                                           notes to the consolidated financial statements 119
   B1. Allocations                                    5,748
   B2. Other changes                                      7
C. Decreases                                                       1,058
   C1. Utilizations                                   1,058
   C2. Other changes                                      0
D. Final stocks                                                   17,336


DEFERRED TAXES


A. Deferred tax assets
   1. Initial amount                                               7,133
   2. Increases                                                    2,112
      2.1 Prepaid taxes arising in the year           2,106
      2.2 Other increases                                 6
   3. Decreases                                                     876
      3.1 Prepaid taxes cancelled in the year          876
      3.2 Other decreases                                0
    4. Final amount                                                8,369

B. Deferred tax liabilities
   1. Initial amount                                                383
   2. Increases                                                     633
      2.1 Deferred taxes arising in the year           632
      2.2 Other increases                                1
   3. Decreases                                                     130
      3.1 Deferred taxes cancelled in the year         130
      3.2 Other decreases                                0
    4. Final amount                                                 886
                                                        SECTION 8 - SHARE CAPITAL, EQUITY
                                                        RESERVES, RESERVE FOR GENERAL
                                                        BANKING RISK AND SUBORDINATED
                                                        LIABILITIES
                                                     BREAKDOWN OF THE SHAREHOLDERS’ EQUITY AND
                                                     SUBORDINATED LIABILITIES

                                                     Item       Description                                  31/12/2004               31/12/2003

                                                     item 100 Reserve for general banking risk                   39,057                    6,057
                                                     item 110 Subordinated liabilities                          181,814                   82,065
                                                     item 120 Negative consolidation differences                     40                       40
                                                     item 140 Minority interests                                 19,956                   19,071
                                                     item 150 Share capital                                      98,647                   95,069
                                                     item 160 Issue premiums                                    304,798                  281,016
                                                     item 170 Reserves:                                         138,499                  111,538
                                                              a) legal reserve                      34,860                   30,583
                                                              b) reserve for own equity shares
                                                                 or quotas                               0                        0
                                                              c) statutory reserves                      0                        0
                                                              d) other reserves                    103,639                   80,955
                                                     item 180 Revaluation reserves                                5,554                    5,554
                                                     item 190 Loss brought forward                                    0                      -53
                                                     item 200 Profit for the year                                55,352                   40,646
                                                     TOTAL SHAREHOLDERS’ EQUITY                                 843,717                  641,003


                                                     The movements of the items making up the shareholders’ equity are detailed
                                                     in Annex A.
notes to the consolidated financial statements 120




                                                     BREAKDOWN OF ITEM 100 “RESERVE FOR GENERAL
                                                     BANKING RISK”
                                                                                                                   31/12/2004         31/12/2003

                                                     Reserve for general banking risk                                     39,057           6,057


                                                     BREAKDOWN OF ITEM 110 “SUBORDINATED LIABILITIES”

                                                                                                                   31/12/2004         31/12/2003

                                                     Subordinated liabilities                                         181,814             82,065


                                                     BREAKDOWN OF ITEM 120 “NEGATIVE CONSOLIDATION
                                                     DIFFERENCES”
                                                                                                                   31/12/2004         31/12/2003

                                                     Negative consolidation differences                                      40              40


                                                     BREAKDOWN OF ITEM 140 “MINORITY INTERESTS”

                                                                                                                   31/12/2004         31/12/2003

                                                     Minority interests                                                   19,956          19,071


                                                     BREAKDOWN OF ITEM 150 “SHARE CAPITAL”

                                                                                                                   31/12/2004         31/12/2003

                                                     Share capital                                                        98,647          95,069


                                                     BREAKDOWN OF ITEM 160 “ISSUE PREMIUMS”

                                                                                                                   31/12/2004         31/12/2003

                                                     Issue premiums                                                   304,798            281,016
BREAKDOWN OF ITEM 170 “EQUITY RESERVES”

                                                               31/12/2004               31/12/2003

a)   legal reserve                                                 34,860                   30,583
b)   reserve for own equity shares or quotas                            0                        0
c)   statutory reserves                                                 0                        0
d)   other reserves:                                              103,639                   80,955
     - extraordinary reserve                        95,949                     73,265
     - taxed reserve                                     3                          3
     - taxed reserve Art. 4 Law No. 823/73             100                        100
     - capital gain reserve from facilitated
        allotment Law No. 218/90                     1,796                      1,796
     - reserve for share buyback                     4,132                      4,132
     - special reserve Legislative
        Decree No. 153/99                            1,659                      1,659


BREAKDOWN OF ITEM 180 “REVALUATION RESERVES”

                                                               31/12/2004               31/12/2003

Revaluation reserves:                                               5,554                    5,554
- Law No. 576/75                                       327                        327
- Law No. 72/83                                      3,226                      3,226
- Law No. 413/91                                     2,001                      2,001


BREAKDOWN OF ITEM 190 “LOSS BROUGHT FORWARD”

                                                                     31/12/2004         31/12/2003

Loss brought forward                                                            0              -53




                                                                                                     notes to the consolidated financial statements 121
BREAKDOWN OF ITEM 200 “PROFIT FOR THE YEAR”

                                                                     31/12/2004         31/12/2003

Profit for the year                                                         55,352          40,646


8.2 CAPITAL AND MINIMUM REQUIREMENTS FOR
    SUPERVISORY PURPOSES AS AT 31/12/2004

                                                                                        31/12/2004

A. Capital for supervisory purposes
   A.1 Tier I capital                                                         526,846
   A.2 Tier II capital                                                        185,336
   A.3 Items to be deducted                                                    38,363
   A.4 Capital for supervisory purposes                                                    673,819
B. Minimum requirements for supervisory purposes
   B.1 Credit risks                                                           443,406
   B.2 Market risks                                                            45,879
        of which- risks of the trading portfolio                   44,461
        Exchange rate risks                                         1,418
        B.2.1 Third-level subordinated loans                            0
   B.3 Other minimum requirements
        for supervisory purposes                                               11,594
   B.4 Total minimum requirements for supervisory purposes                                 500,879
C. Risk-weighted assets and adequacy ratios
   C.1 Weighted risk assets                                                              6,260,988
   C.2 Tier I capital/weighted risk assets                                      8.41%
   C.3 Capital for supervisory purposes/weighted risk assets                   10.76%
                                                        SECTION 9 - OTHER LIABILITY ITEMS

                                                     9.1 BREAKDOWN OF ITEM 50 “OTHER LIABILITIES”

                                                                                                     31/12/2004   31/12/2003

                                                     Various securities transactions                      3,248        3,003
                                                     Interest and fees to be credited to customers            1            3
                                                     Provisions for staff expense                         9,816       10,724
                                                     Various suspense entries                             1,382           56
                                                     Currency spreads on portfolio activities            33,913       45,209
                                                     Due to suppliers                                    18,357       23,900
                                                     Due to Treasury                                     14,181       13,335
                                                     Amounts available to customers                      24,656       20,630
                                                     Foreign operations to be settled                     1,603        9,077
                                                     Creditors for premiums on sold call options          1,891        1,447
                                                     Creditors for payment and collection services          626          168
                                                     Off-balance sheet operations                         2,696           40
                                                     Credit contra-entries for evaluation of
                                                     off-balance sheet operations                         8,644            0
                                                     Portfolio operations to be settled                   9,062        7,618
                                                     Other liabilities                                   28,562       54,225
                                                     TOTAL                                              158,638      189,435


                                                     9.2 BREAKDOWN OF ITEM 60 “ACCRUALS AND DEFERRED
                                                         INCOME”

                                                                                                     31/12/2004   31/12/2003

                                                     Accrued expenses for
                                                     - Interest on REPOS                                    472          447
notes to the consolidated financial statements 122




                                                     - Spreads on off-balance sheet operations            4,348        6,239
                                                     - Interest on loans to customers                       267          202
                                                     - Interest on credits with banks                     1,056        1,406
                                                     - Other items                                          484          148
                                                     Total accrued expenses                               6,627        8,442
                                                     Deferred income on
                                                     - Interest on discount operations                    1,456        1,873
                                                     - Interest on loans to customers                     1,433          873
                                                     - Interest on credits with banks                       621        1,008
                                                     - Other items                                          466          537
                                                     Total deferred income                                3,976        4,291
                                                     TOTAL ACCRUALS AND DEFERRED INCOME                  10,603       12,733


                                                     9.3 ADJUSTMENTS FOR ACCRUALS AND DEFERRED
                                                     INCOME

                                                                                                     31/12/2004   31/12/2003

                                                     a) Liability items:
                                                        1. accruals for interest payable:
                                                           - on bonds                                    12,585       12,362
                                                           - on certificates of deposit                     940          476
                                                     b) Asset items                                           0            0
                                                     TOTAL                                               13,525       12,838
   SECTION 10 - GUARANTEES AND
   COMMITMENTS

10.1 BREAKDOWN OF ITEM 10 “GUARANTEES PROVIDED”

                                                          31/12/2004         31/12/2003

a) Commercial guarantees                                     240,488            207,165
b) Financial guarantees                                       55,552             52,114
c) Pledged assets                                                  0                  0
TOTAL                                                        296,040            259,279


10.2 BREAKDOWN OF ITEM 20 “COMMITMENTS”

                                                          31/12/2004         31/12/2003

a) Commitments certain to be called on                       196,225            164,470
b) Commitments uncertain to be called on                     153,215             72,366
TOTAL                                                        349,440            236,836


10.3 PLEDGED ASSETS OF OWN DEBITS

                                                    31/12/2004               31/12/2003

a) Mortgages                                                 0                        0
b) Pledges                                              50,000                   50,000
   - cash deposits                              0                        0
   - securities                            50,000                   50,000
   - other stocks                               0                        0




                                                                                          notes to the consolidated financial statements 123
TOTAL                                                   50,000                   50,000


10.4 UNUSED LINES OF CREDIT

                                                          31/12/2004         31/12/2003

a) Central banks                                                      0               0
b) Other banks                                                   64,414          64,414
                                                     10.5 FORWARD TRANSACTIONS

                                                     Transaction                                hedging           trading          other
                                                     categories                             transactions     transactions   transactions

                                                     1.    Trading                                    0         643,072          21,265
                                                     1.1   Securities                                 0         189,200          21,265
                                                           - purchases                                0         177,750          21.265
                                                           - sales                                    0          11,450               0
                                                     1.2   Currencies                                 0         453,872               0
                                                           - currency against currency                0          81,700               0
                                                           - purchases against Euros                  0         202,032               0
                                                           - sales against Euros                      0         170,140               0
                                                     2.    Deposits and loans                         0           56,829              0
                                                           - to provide                               0           13,382              0
                                                           - to receive                               0           43,447              0
                                                     3.    Derivative contracts                779,821        6,834,649          96,132
                                                     3.1   With capital swaps                   23,695          982,216               0
                                                           a) securities                        23,695          469,338               0
                                                              - purchases                            0          179,019               0
                                                              - sales                           23,695          290,319               0
                                                           b) currencies                             0          512,878               0
                                                              - currency against currency            0           26,681               0
                                                              - purchases against Euros              0          110,000               0
                                                              - sales against Euros                  0          376,196               0
                                                           c) other stocks                           0                0               0
                                                              - purchases                            0                0               0
                                                              - sales                                0                0               0
                                                     3.2   Without capital swaps               756,126        5,852,434          96,132
                                                           a) currencies                         8,000            8,449           8,000
                                                              - currency against currency            0                0               0
                                                              - purchases against Euros          8,000                0           8,000
                                                              - sales against Euros                  0            8,449               0
notes to the consolidated financial statements 124




                                                           b. other stocks                     748,126        5,843,985          88,132
                                                              - purchases                      615,762        3,059,004          87,132
                                                              - sales                          132,364        2,784,981           1,000


                                                     10.6 CREDIT DERIVATIVE CONTRACTS

                                                     Transaction                                                  trading         other
                                                     categories                                              transactions   transaction

                                                     1.    Protection buyers                                      15,000              0
                                                     1.1   With capital swaps                                     12,500              0
                                                     1.2   Without capital swaps                                   2,500              0
                                                     2.    Protection sellers                                          0              0
                                                     2.1   With capital swaps                                          0              0
                                                     2.2   Without capital swaps                                       0              0


                                                     Credit derivative contracts are aimed at transferring the underlying credit risk
                                                     of a reference obligation from the protection buyer to the protection seller.
                                                     In these cases, the subject of the transaction is the credit risk borne by a
                                                     reference entity.
     SECTION 11 - CONCENTRATION AND
     DISTRIBUTION OF ASSETS AND
     LIABILITIES

11.1 SIGNIFICANT EXPOSURES

As at 31 December 2004 there are not “significant exposures” according to
supervisory regulations:

                                                            31/12/2004       31/12/2003

a) amount                                                            0           94,789
b) number                                                            0                1


Based on the provisions of the Supervisory Authority, a loan granted to a
“customer” and weighted according to specific rules is defined as a “significant
exposure” when it is equal to or higher than 10% of the capital for supervisory
purposes held by the bank providing the loan.
“Customer” means an individual or a “group of connected customers”,
meaning two or more subjects that constitute a single unit in terms of risk,
since:
a) one of them has a power of control over the other or others (“legal”
    connection);
or:
b) regardless of the existence of control agreements, there are such links
    between the subjects that, in all probability, if one of them were in financial




                                                                                          notes to the consolidated financial statements 125
    difficulties, the other or all the others would encounter difficulties in
    repaying the debt (“financial” connection).

11.2 DISTRIBUTION OF LOANS TO CUSTOMERS
     ACCORDING TO THE MAIN CATEGORIES OF
     BORROWERS

                                    31/12/2004         %       31/12/2003            %

a)   governments                            163      0,00              184         0,00
b)   other public institutions           45,452      0.87           53,727         1.23
c)   non-financial companies          3,325,373     63.87        2,835,889        64.93
d)   financial companies                139,754      2.68          142,733         3.27
e)   producer households                221,861      4.26          191,132         4.38
f)   other operators                  1,474,072     28.31        1,143,864        26.19
TOTAL                                 5,206,675    100.00        4,367,529       100.00


11.3 DISTRIBUTION OF LOANS TO NON-FINANCIAL
     COMPANIES AND RESIDENT PRODUCER

                                    31/12/2004         %       31/12/2003            %

a) other services for sale             847,297      26.13         697,414         23.93
b) trade services, recoveries
   and reparations                     440,663      13.59         406,572         13.95
c) housing and public works            390,437      12.04         337,838         11.59
d) textiles, leather and footwear
   products, clothing                  295,901       9.13         305,381         10.48
e) other industrial products           285,565       8.81         245,704          8.43
f) other branches                      982,328      30.30         921,057         31.61
TOTAL                                 3,242,191    100.00        2,913,966       100.00
                                                     11.4 DISTRIBUTION OF GUARANTEES PROVIDED
                                                          ACCORDING TO THE MAIN CATEGORIES OF
                                                          COUNTERPARTIES

                                                                                              31/12/2004             %      31/12/2003            %

                                                     a)   governments                                    0         0.00               0         0.00
                                                     b)   other public institutions                  1,037         0.35             708         0.27
                                                     c)   banks                                     11,933         4.03           8,046         3.10
                                                     d)   non-financial companies                  238,444        80.54         212,752        82.06
                                                     e)   financial companies                        4,534         1.53           6,234         2.40
                                                     f)   producer households                        5,288         1.79           4,708         1.82
                                                     g)   other operators                           34,805        11.76          26,831        10.35
                                                     TOTAL                                         296,040       100.00         259,279       100.00


                                                     11.5 GEOGRAPHIC DISTRIBUTION OF ASSETS AND
                                                          LIABILITIES

                                                     Items/Countries                                   Italy   Other EU           Other         Total
                                                                                                               countries       countries

                                                     1. Assets                                    5,537,824     175,484         294,241    6,007,549
                                                     1.1 Loans to banks                             250,389       4,608          34,176      289,173
                                                     1.2 Loans to customers                       4,992,492      22,361         191,822    5,206,675
                                                     1.3 Securities                                 294,943     148,515          68,243      511,701
                                                     2. Liabilities                               5,409,507       7,299         325,115    5,741,921
                                                     2.1 Due to banks                               282,235         881          42,821      325,937
                                                     2.2 Due to customers                         2,958,738       6,343         122,752    3,087,833
                                                     2.3 Securities issued                        1,976,891          75         159,542    2,136,508
                                                     2.4 Other accounts                             191,643           0               0      191,643
notes to the consolidated financial statements 126




                                                     3. Guarantees and commitments                 560,610       79,539           5,331     645,480


                                                     11.6 TEMPORAL DISTRIBUTION OF ASSETS AND LIABILITIES

                                                                                                                            duration set
                                                                                                                                        1/5 years          over 5 years        undeter-
                                                                                                       up to        3/12           fixed      floating     fixed floating        mined
                                                     Items/residual maturities        on demand     3 months      months            rate          rate      rate        rate   maturity       total
                                                     1.    ASSETS                     1,915,551    3,969,135    1,291,809     1,742,505    1,751,109     878,330 1,004,486     152,698 12,705,623
                                                     1.1 Treasury bonds
                                                         that can be refinanced               2            0           0              0        2,144           3         0           0        2,149
                                                     1.2 Loans to banks                  91,392      126,334      23,363              0        5,922           0     2,964      39,198      289,173
                                                     1.3 Loans to customers             939,955    1,287,317     687,627         98,656    1,177,293      30,716   871,611     113,500    5,206,675
                                                     1.4 Bonds and other
                                                         debt securities                     0        10,989       18,564       114,573      196,603      85,415    66,761           0     492,905
                                                     1.5 Off-balance sheet
                                                         operations                     884,202    2,544,495     562,255      1,529,276      369,147     762,196    63,150           0    6,714,721
                                                     2.    LIABILITIES                3,842,947    3,353,370    1,260,138     1,643,527    1,703,354     207,143   431,934       4,400 12,446,813
                                                     2.1 Due to banks                   117,835      161,038      33,855            317        8,492           0         0       4,400      325,937
                                                     2.2 Due to customers             2,744,594      309,064      34,173              2            0           0         0           0    3,087,833
                                                     2.3 Securities issued:               4,544      186,654     447,691        281,134    1,131,889      57,958    26,638           0    2,136,508
                                                         - bonds                          1,262       80,516     321,063        280,356    1,131,889      57,958    26,638           0    1,899,682
                                                         - certificates of deposit        3,282       60,738     126,628            778            0           0         0           0      191,426
                                                         - other securities                   0       45,400           0              0            0           0         0           0       45,400
                                                     2.4 Subordinated liabilities             0            0           0         53,349            0           0   128,465           0      181,814
                                                     2.5 Off-balance sheet
                                                         operations                     975,974    2,696,614     744,419      1,308,725      562,973     149,185   276,831           0    6,714,721
11.7 ASSETS AND LIABILITIES IN FOREIGN CURRENCY

                                                 31/12/2004               31/12/2003
a) ASSETS                                           510,421                  488,200
   1.   loans to banks                 123,808                   70,451
   2.   loans to customers             362,744                  395,327
   3.   securities                      20,480                   20,848
   4.   equity investments                 902                      166
   5.   other accounts                   2,487                    1,408
b) LIABILITIES                                      256,916                  248,875
   1.   due to banks                    90,825                  140,180
   2.   due to customers               151,409                  108,695
   3.   securities issued               14,683                        0
   4.   other accounts                       0                        0


11.8 SECURITISATION ACTIVITIES

Own Securitisation Activities
Securitisation in July 2002
During the course of financial year 2002 Veneto Banca completed the first
securitisation operation of a mortgage loan portfolio.
The securitisation operation involved the on-payment transfer, in accordance
with Law No. 130 dated 30 April 1999, of arrangements classified as performing
residential and commercial mortgage loans starting from 1 July 2002.
On this date Veneto Banca completed the transfer of loans to “Claris Finance srl”,
a special purpose vehicle incorporated in Italy according to Law No. 130/99 with
its head office in Rome, of which Veneto Banca holds a share equal to 70% of the




                                                                                       notes to the consolidated financial statements 127
share capital. The remaining share was underwritten by Stiching Solari, a
foundation incorporated in Holland.
The subjects of the securitisation are mortgage loans resulting as at 25 June
2002 from the accounts of Veneto Banca, classified as performing loans, in
compliance with the regulations issued by Banca d’Italia, which have the
following characteristics:
- loans guaranteed by a first financial mortgage, by which it is meant:
   (i) a first voluntary mortgage;
   (ii) a puisne voluntary mortgage, having one of the following characteristics:
        • senior mortgages are being cancelled or were granted to guarantee
          expired debts;
        • second voluntary mortgage, by which the initial amount of the loan
          transferred together with the residual debt guaranteed by the senior
          mortgage does not exceed 100% of the estimated value of the
          mortgaged estate, calculated when allocating the loan;
- the ratio between the amount of the original loan and the amount of the
   mortgage does not exceed 100%;
- the ratio between the amount of the original loan and the estimated value
   of the mortgaged estate, calculated when allocating the loan, does not
   exceed 100%;
- the ratio between the residual amount of the loan and the amount of the
   mortgage does not exceed 94%;
- the ratio between the amount of the residual debt and the estimated value
   of the mortgaged estate, calculated when allocating the loan, does not
   exceed 95%;
- they have at least one due and paid instalment;
- they have at most three monthly instalments due and not yet paid;
- the transferred borrowers are individuals or corporate bodies resident or
   domiciled in Italy;
                                                     - the loan date falls between 24 August 1989 [included] and 17 May 2002
                                                       [included];
                                                     - one of the following amortisation systems was adopted:
                                                       (i) “French-style” (“French-style” amortisation means the gradual
                                                             amortisation method by which each instalment is subdivided into a
                                                             share of principal increasing over time and intended to repay the loan
                                                             and a share of interest);
                                                       (ii) “straight-line” (“straight-line” amortisation means the method of
                                                             amortisation by which each instalment is subdivided into a share of
                                                             principal intended to repay the loan and a share of fixed-rate interest);
                                                       (iii) “personal” plan (“personal” amortisation means a plan agreed with the
                                                             borrower to satisfy its requirements and underwritten by the latter in the
                                                             loan document);
                                                       (iv) “declining balance” (“declining balance” amortisation means the method
                                                             of amortisation by which each instalment is subdivided into a share of
                                                             principal intended to repay the loan and a constant share of interest);
                                                     - the expiry date of the last instalment of the loans does not fall after 31 May
                                                       2027;
                                                     - they were fully allocated;
                                                     - the residual debt of each individual loan is greater than 500.00 Euros.

                                                     Furthermore, credits arising from loans resulting from the accounts of Veneto
                                                     Banca as at 30 June 2002, which present one or more of the following
                                                     characteristics, were excluded from the transfer:
                                                     a) loans for which the “American-style” amortisation system was adopted
notes to the consolidated financial statements 128




                                                        (“American-style” amortisation means the method of amortisation by which
                                                        each instalment is made up only of the share of interest, while the last
                                                        instalment also provides for the repayment of the entire principal amount);
                                                     b) loans originally provided and/or guaranteed by Veneto Sviluppo spa;
                                                     c) loans granted to employees of Veneto Banca or other Group companies;
                                                     d) loans provided to public institutions;
                                                     e) loans provided to religious institutions;
                                                     f) loans indexed at a rate established with a ministerial decree;
                                                     g) loans guaranteed by a cooperative or by a working guarantee consortium;
                                                     h) loans granted to companies incorporated in Italy as limited liability
                                                        companies, with interest rates set at the prime rate of ABI (Italian Bankers’
                                                        Association) and expiry date falling after 30 June 2003;
                                                     i) loans granted to limited liability cooperative companies;
                                                     j) loans whose management was transferred to the management subsidiary No.
                                                        95 of Veneto Banca, located in Montebelluna;
                                                     k) loans provided to subjects who are holders of another loan not meeting the
                                                        criteria necessary for the transfer in question.

                                                     Based on these principles, 4,257 positions were identified for an overall amount
                                                     of transferred loans equal to 372,803,095.29 Euros.
                                                     Claris Finance funded the purchase of loans through issuance of four classes of
                                                     bond securities (Asset Backed Securities) in July. The amounts deriving from the
                                                     collection of transferred loans were used only to service the securities issued and
                                                     pay the costs of the operation.
                                                     The characteristics of the portfolio were illustrated to the appointed rating
                                                     agencies “Fitch IBCA”and “Standard & Poor’s”, which assigned the ratings to the
                                                     bonds issued by the special purpose vehicle.
Bonds issued (Asset Backed Securities)

Class                              Rating         Amount                        Yield
A                                   AAA       346,700,000        Euribor 3m + 30 b.p.
B                                     AA       11,600,000        Euribor 3m + 45 b.p.
C                                    BBB       13,200,000       Euribor 3m + 170 b.p.
D                                 unrated       1,300,000         10% +/- add. return


The three tranches of rated securities are denominated in Euros, they carry
floating-rate quarterly coupons and have a sequential repayment schedule linked
to the collections from the underlying loan portfolio.
Class A, B and C securities, listed on the Luxembourg Stock Exchange, were
firmly underwritten by Schroder Salomon Smith Barney and subsequently placed
with institutional investors.
Class D bonds are denominated in Euros, they do not have an official rating and
their yield, besides the face yield, is determined residually and paid only insofar
as the collections from the transferred portfolio exceed the amount of expenses
and disbursements related to higher class bonds.

On behalf of Claris Finance srl, Veneto Banca manages, administers and collects
the transferred loans. Therefore, the Bank acts as the sole counterparty of the
customer, even if in the name and on behalf of the vehicle. This so-called
servicing contract also provides for dispute management.

Furthermore, a line of credit was made available by Veneto Banca to Claris
Finance, with the aim of providing liquid assets for the payment of interest on




                                                                                        notes to the consolidated financial statements 129
securities and management costs.

In order to guarantee the special purpose vehicle against the risks associated to
fluctuations in rates, given the diversity between the indexing parameters applied
on individual loans and the parameter set for the securities issued, Veneto Banca
and the special purpose vehicle carried out swap operations with the support of
Citibank N.A., London Branch.

The loans transferred were removed from the financial statements.

Securitisation in October 2003
During the course of financial year 2003 Veneto Banca, in cooperation with its
subsidiary Banca Meridiana, completed another securitisation operation of a
mortgage loan portfolio.
The securitisation operation involved the on-payment transfer, in accordance
with Law No. 130 dated 30 April 1999, of arrangements classified as performing
residential and commercial mortgage loans starting from 1 October 2003.
On this date Veneto Banca completed the transfer of loans to “Claris Finance
2003 srl”, a special purpose vehicle incorporated in Italy according to Law
No. 130/99 with its head office in Rome, of which Veneto Banca holds a share
equal to 4% of the share capital; the remaining share of 96% was underwritten
by Stiching Chessington, a foundation incorporated in Holland.
The subjects of the securitisation are mortgage loans resulting as at 30 September
2003 from the accounts of Veneto Banca and Banca Meridiana, classified as
performing loans, in compliance with the regulations issued by Banca d’Italia,
which have the following characteristics:
- they are provided to corporations, partnerships or individuals, in all cases
  resident or domiciled in Italy;
- they are fully allocated, in one or more solutions;
                                                     - they are guaranteed by a first financial mortgage on real estate having
                                                       residential or commercial characteristics, by which it is meant:
                                                       (a) a first legal voluntary mortgage;
                                                       or
                                                       (b) a puisne legal voluntary mortgage, if senior mortgages were cancelled or
                                                             are granted to Veneto Banca or, as regards these senior mortgages, the
                                                             obligations guaranteed by them were fully satisfied;
                                                     - their residual debt as at 23 September 2003 (included) does not exceed 95%
                                                       of the mortgage amount;
                                                     - their residual debt as at 23 September 2003 (included) does not exceed 95%
                                                       of the estimated value of the mortgaged estate (resulting from the last
                                                       estimate made when allocating the loan);
                                                     - they have at least one instalment due and paid within 23 September 2003
                                                       (included);
                                                     - the loan date falls between 18 December 1985 (included) and 31 August
                                                       2003 (included);
                                                     - they have one of the following amortisation systems:
                                                       (i) “French-style” (“French-style” amortisation means the gradual
                                                             amortisation method by which each instalment is constant and
                                                             subdivided into a share of principal increasing over time and intended to
                                                             repay the loan and a share of interest);
                                                       (ii) “personal” plan (“personal” amortisation means the method of
                                                             amortisation agreed individually with each transferred borrower);
                                                       (iii) “Italian-style” (“Italian-style” amortisation means the method of
                                                             amortisation by which each instalment is decreasing and subdivided into
notes to the consolidated financial statements 130




                                                             a constant share of principal intended to repay the loan and a share of
                                                             interest);
                                                     - the expiry date of the last instalment falls between 30 September 2003
                                                       (excluded) and 31 December 2028 (included);
                                                     - their residual debt as at 23 September 2003 (included) is equal to or higher
                                                       than 448.00 Euros;
                                                     - their residual debt as at 23 September 2003 (included) is lower than
                                                       2,500,000.00 Euros.

                                                     However, credits arising from loans resulting from the accounts of Veneto Banca
                                                     and Banca Meridiana as at 30 September 2003, which present one or more of the
                                                     following characteristics, were excluded from the transfer:
                                                     a) loans granted to employees of Veneto Banca scparl, Banca di Roma spa,
                                                         Banco di Sicilia spa, Claris Vita spa, Banca di Credito Cooperativo del Piave
                                                         e del Livenza scarl, Banca Popolare Asolo e Montebelluna scarl or of
                                                         companies of the Veneto Banca Group, or to individuals who were
                                                         employees of Banca di Roma spa, Banco di Sicilia spa, Claris Vita spa, Banca
                                                         di Credito Cooperativo del Piave e del Livenza scarl, Banca Popolare Asolo
                                                         e Montebelluna scarl or of companies of the Veneto Banca Group when the
                                                         loan was allocated;
                                                     b) loans provided to public institutions;
                                                     c) loans provided to religious institutions;
                                                     d) loans provided to subjects who were allocated another mortgage or landed-
                                                         property loan not meeting the criteria set forth herein;
                                                     e) loans for which the “American-style” amortisation system was adopted
                                                         (“American-style” amortisation means the method of amortisation by which
                                                         the principal amount has to be repaid upon the expiry date);
                                                     f) loans granted to real estate companies;
                                                     g) loans for which the relevant borrower required the early redemption as at
   23 September 2003 (included);
h) loans allocated in accordance to any laws, regulations or agreements
   providing for subsidies or benefits to principal and/or interest with regard
   to third parties of which either Veneto Banca scparl or Banca di Roma spa,
   Banco di Sicilia spa, Banca Popolare Asolo e Montebelluna scarl or Banca di
   Credito Cooperativo del Piave e del Livenza scarl has subsequently become
   creditor (so-called subsidized loans);
i) loans that, even if classified as performing as at 23 September 2003 (included),
   were restructured after the relevant date of stipulation;
j) loans with monthly instalments, having more than one instalment due and
   not paid as at 23 September 2003 (included), meaning an instalment that has
   remained unpaid for over 5 days after the relevant expiry date;
k) loans with quarterly, half-yearly or yearly instalments, having one or more
   instalments due and not paid as at 23 September 2003 (included), meaning
   instalments that have remained unpaid for over 5 days after the relevant
   expiry dates;
l) loans having a residual principal debt equal to 1,879,701.00 Euros or
   2,000,000.00 Euros.

Based on these principles, 3,466 positions were identified for Veneto Banca for
an overall amount of transferred loans equal to 277,872,187.71 Euros, and 1,491
positions were identified for Banca Meridiana for an overall amount of
transferred loans equal to 68,089,825.65 Euros.
Claris Finance 2003 funded the purchase of loans through issuance of five classes
of bond securities (Asset Backed Securities) in October. The amounts deriving




                                                                                          notes to the consolidated financial statements 131
from the collection of transferred loans were used only to service the securities
issued and pay the costs of the operation.
The characteristics of the portfolio were illustrated to the appointed rating
agencies “Moody’s” and “Standard & Poor’s”, which assigned the ratings to the
bonds issued by the special purpose vehicle.

Bonds issued (Asset Backed Securities)

Class                               Rating         Amount                         Yield

A                                    AAA       315,500,000        Euribor 3m + 30 b.p.
B                                      AA        9,000,000        Euribor 3m + 45 b.p.
C                                     BBB       20,200,000       Euribor 3m + 170 b.p.
D1                                 unrated       3,950,000           5% +/- add. return
D2                                 unrated       2,170,000           5% +/- add. return


The three tranches of rated securities are denominated in Euros, they carry
floating-rate quarterly coupons and have a sequential repayment schedule linked
to the collections from the underlying loan portfolio.
Class A, B and C securities, listed on the Luxembourg Stock Exchange, were
firmly underwritten by Deutsche Bank and subsequently placed with institutional
investors.
Class D1 - D2 bonds are denominated in Euros, they do not have an official rating
and their yield, besides the face yield, is determined residually and paid only
insofar as the collections from the transferred portfolio exceed the amount of
expenses and disbursements related to higher class bonds.

On behalf of Claris Finance 2003 srl, Veneto Banca manages, administers and
collects the transferred loans. Therefore, the Bank acts as the sole counterparty of
the customer, even if in the name and on behalf of the vehicle. This socalled
servicing contract also provides for dispute management.
                                                     Furthermore, a line of credit was made available by Veneto Banca and Banca
                                                     Meridiana to Claris Finance 2003 srl, with the aim of providing liquid assets for
                                                     the payment of interest on securities and management costs.

                                                     In order to guarantee the special purpose vehicle against the risks associated to
                                                     fluctuations in rates, given the diversity between the indexing parameters applied
                                                     on individual loans and the parameter set for the securities issued, Veneto Banca
                                                     and the special purpose vehicle carried out swap operations with the support of
                                                     Deutsche Bank.

                                                     The loans transferred were removed from the financial statements: the difference
                                                     between the book value of loans and the amount collected from the transfer
                                                     generated a profit, entered in the profit and loss account, equal to 2,936,351.68
                                                     Euros for Veneto Banca and 1,921,634.96 Euros for Banca Meridiana.

                                                     The costs relating to the structuring and realisation of the securitisation operation
                                                     were borne by the Veneto Banca and Banca Meridiana originators and entered
                                                     directly into the profit and loss account.

                                                     Securitisation Activities of Third Parties
                                                     At the end of financial year 2004 Veneto Banca doesn’t hold portfolio securities
                                                     coming from securitisation activities of third parties.



                                                        SECTION 12 - MANAGEMENT AND
notes to the consolidated financial statements 132




                                                        BROKERING ON BEHALF OF THIRD
                                                        PARTIES

                                                     12.1 STOCK TRADING

                                                                                                                31/12/2004     31/12/2003

                                                     Securities
                                                     a) Purchases:                                                   99,772       198,736
                                                        1. settled                                                   98,812       198,294
                                                        2. not settled                                                  960           442
                                                     a) Sales:                                                       86,107       102,821
                                                        1. settled                                                   85,969       102,059
                                                        2. not settled                                                  138           762

                                                     Listed derivatives
                                                     a) Purchases:                                                1,305,232      1,270,751
                                                         1. settled                                               1,303,687      1,270,751
                                                         2. not settled                                               1,545              0
                                                     b) Sales:                                                    1,614,247      1,575,941
                                                         1. settled                                               1,612,394      1,575,941
                                                         2. not settled                                               1,853              0


                                                     12.2 FUNDS UNDER MANAGEMENT

                                                                                                                31/12/2004     31/12/2003

                                                     Other securities                                               106,636       111,534
12.3 CUSTODY AND ADMINISTRATION OF SECURITIES

                                                         31/12/2004    31/12/2003

a) Third-party securities under custody                   4,690,698     4,518,098
b) Third-party securities lodged with third parties       4,307,928     4,283,889
c) Own securities lodged with third parties                 875,316       429,194


INFORMATION RELATED TO THE SECURITISATION
OPERATION OF 1 JULY 2002
The securitisation operation described in point 11.8 was carried out through the
special purpose vehicle “Claris Finance srl”, which is a subsidiary of the Veneto
Banca Group. Therefore, the grouping sheet of the securitized assets and the
securities issued by the aforesaid special purpose vehicle is shown hereafter, as
entered in the accounts of the company.

• Structure, form and valuation criteria used to compile the grouping
  sheet of the securitised assets and the securities issued
  The structure and form of the grouping sheet are in line with those laid down
  in the Ruling of Banca d’Italia dated 29 March 2000.
  The principles followed in compiling the sheet are those specified by
  Legislative Decree No. 87/92; all items indicated correspond to the values
  obtained from the accounts and the information system of the Servicer,Veneto
  Banca.

  In particular, the valuation criteria adopted by Claris Finance for the most




                                                                                    notes to the consolidated financial statements 133
  important items are listed below.

  1. Securitised assets - Loans
  Loans were recorded at the exit value representing the face value of the loans
  themselves.

  2. Loans of available assets - Loans to banks
  They are expressed at face value.

  3. Securities issued
  The securities issued are shown at their corresponding face values. The
  securities belong to the “limited recourse” category and are paid exclusively
  with sums deriving from the collection of the transferred loans.

  4. Interest, commissions, income and charges
  Costs and revenues concerning the securitised assets and the securities issued,
  interest, commissions, income, other charges and revenues are recorded
  according to the matching concept.
                                                     INFORMATION ON SECURITISATION ACTIVITIES
                                                     RELATING TO SPECIAL PURPOSE VEHICLES BELONGING
                                                     TO THE GROUP

                                                     Grouping sheet of the securitised assets as at 1 July 2002
                                                     (in Euro)

                                                     EEC                                                              Situation as at   Situation as at
                                                     code Description                                                    31/12/2004        31/12/2003

                                                     A.     Securitised assets                                         230,066,564       285,881,670
                                                     A1     Loans                                                      230,066,564       285,881,670
                                                     B.     Loan of available assets arising from credit management     23,867,765        98,379,738
                                                     B3     Other
                                                     B3 1   Capitalised costs                                              122,244           183,366
                                                     B3 2   Liquid assets                                               21,797,391        96,820,222
                                                     B3 3   Withholding                                                      9,349             7,611
                                                     B3 4   Loans to Veneto Banca for collections to be paid again         761,075               164
                                                     B3 5   Accrued income for interest rate swap                          977,680         1,173,931
                                                     B3 6   Accruals for interest receivable on securitised credits        195,588           189,981
                                                     B3 7   Prepayments                                                      4,438             4,463
                                                     TOTAL ASSETS                                                      253,934,329       384,261,408
                                                     C.     Securities issued                                          242,603,109       372,800,000
                                                     C1     Securities of A category                                   216,503,109       346,700,000
                                                     C2     Securities of B category                                    11,600,000        11,600,000
                                                     C3     Securities of C category                                    13,200,000        13,200,000
                                                     C4     Securities of D category                                     1,300,000         1,300,000
                                                     D.     Loans received                                               5,964,850         5,964,850
                                                     E.     Other liabilities                                            5,366,370         5,496,558
                                                     E1     Due to company management                                       10,805            10,509
                                                     E2     Due to Veneto Banca                                             17,759           367,597
                                                     E3     Due to suppliers                                                24,893            10,886
                                                     E4     Other debts                                                      9,349                 0
notes to the consolidated financial statements 134




                                                     E5 1   Accrued expenses for interest rate swap                      1,318,348         1,857,659
                                                     E5 2   Accrued expenses for interest on securities issued           3,929,710         2,986,459
                                                     E5 3   Accrued expenses for subordinated loan interest                 55,506           263,448
                                                     TOTAL LIABILITIES                                                 253,934,329       384,261,408
                                                     F.     Interest payable on securities issued                         9,794,358       12,771,725
                                                     F1     Securities issued Class A                                     5,960,279        9,887,659
                                                     F2     Securities issued Class B                                       302,945          346,320
                                                     F3     Securities issued Class C                                       510,000          564,329
                                                     F4     Securities issued Class D                                     3,021,134        1,973,417
                                                     G.     Commissions and fees relating to the operation                  117,032          112,560
                                                     G1     Servicing                                                        71,007           70,989
                                                     G2     Commissions to listing agent, trustee,
                                                            principal paying agent, operating bank                          25,000            25,034
                                                     G3     Commissions for rating                                          21,025            16,537
                                                     H.     Other charges                                                5,713,972        10,503,355
                                                     H1 1   Amortisation of capitalised costs                               61,122            61,122
                                                     H1 2   Recharge of company management costs                            56,626            53,130
                                                     H1 3   Interest expense on subordinated loan                          550,920           604,770
                                                     H1 4   Interest rate swap                                           5,001,437         9,767,850
                                                     H1 5   Anticipated loss on credits                                      1,213                 0
                                                     H1 6   Write-downs of witholding upon interest receivable               9,349                 0
                                                     H1 7   Other costs                                                     33,305            16,483
                                                     I.     Interest generated by securitised assets                    10,815,560        13,771,355
                                                     L.     Other revenue                                                4,809,802         9,616,285
                                                     L1     Bank interest receivable                                       454,855         1,279,721
                                                     L2     Interest rate swap                                           4,156,792         8,231,980
                                                     L3     Penalties for early redemption of loans and subsidies          192,505           104,012
                                                     L4     Other revenue                                                    5,650               572
                                                     RESULT OF THE SECURITISATION OPERATION                                        0                 0
12.4 CREDIT COLLECTION ON BEHALF OF THIRD PARTIES:
     DEBIT AND CREDIT ADJUSTMENTS

                                                       31/12/2004                    31/12/2003

a) “Debit” adjustments:                                 1,423,167                       988,050
   1. current accounts                      194,173                       209,977
   2. central portfolio                     960,908                       554,325
   3. cash                                   12,841                         5,866
   4. other accounts                        255,245                       217,882
b) “Credit” adjustments:                                1,467,158                     1,033,259
   1. current accounts                         2,819                           211
   2. transferors of bills and documents   1,463,901                     1,032,650
   3. other accounts                             438                           398


12.5 OTHER OPERATIONS

                                                                    31/12/2004       31/12/2003

Bills for collection “under reserve”                                 1,131,795          801,759
“Post-collection” bills                                                303,409          268,232
Total counter-value of third-party funds
under management                                                             0           11,544
GPM (asset management) offer from 1/1 to 31/12/2004                          0            2,204




    PART C - INFORMATION ON THE
    PROFIT AND LOSS ACCOUNT
   SECTION 1 - INTEREST




                                                                                                  notes to the consolidated financial statements 135
1.1 BREAKDOWN OF ITEM 10 “INTEREST INCOME AND
    SIMILAR ITEMS”

                                                       31/12/2004                    31/12/2003

a) on loans to banks                                        7,033                         6,174
   of which:
   - on loans to central banks                  963                         1,176
b) on loans to customers                                  235,333                       214,098
   of which:
   - on loans with third-party funds
      under administration                        0                              0
c) on debt securities                                      22,789                        25,480
d) other interest receivable                                   19                         1,275
e) positive balance of spreads of
   “hedging” operations                                        0                             0
TOTAL                                                     265,174                       247,027


1.2 BREAKDOWN OF ITEM 20 “INTEREST EXPENSE AND
    SIMILAR ITEMS”

                                                       31/12/2004                    31/12/2003

a) on due to banks                                          6,977                        22,196
b) on due to customers                                     36,343                        29,960
c) on securities issued                                    51,731                        44,973
   of which:
   - on certificates of deposit               3,459                         2,820
d) on third-party funds under
   administration                                              47                           40
e) on subordinated liabilities                              1,647                          894
f) negative balance of spreads
   of “hedging” operations                                  4,730                         2,509
TOTAL                                                     101,475                       100,572
                                                     1.3 DETAILS OF ITEM 10 “INTEREST INCOME AND SIMILAR
                                                         ITEMS”

                                                                                                           31/12/2004   31/12/2003

                                                     a) on currency assets                                     18,512        8,196


                                                     1.4 DETAILS OF ITEM 20 “INTEREST EXPENSE AND
                                                         SIMILAR ITEMS”

                                                                                                           31/12/2004   31/12/2003

                                                     a) on currency liabilities                                 7,286        5,106




                                                         SECTION 2 - COMMISSIONS

                                                     2.1 BREAKDOWN OF ITEM 40 “COMMISSIONS RECEIVABLE”

                                                                                                           31/12/2004   31/12/2003

                                                     a) guarantees provided                                     2,805        2,241
                                                     b) credit derivatives                                          0            0
                                                     c) management, brokering and consulting services:
                                                        1. stock trading                                          613          865
                                                        2. currency trading                                     2,423        2,069
                                                        3. funds under management
                                                           3.1) individual                                      1,435        1,561
                                                           3.2) collective                                          0            0
                                                        4. safe custody and administration of securities          770          807
notes to the consolidated financial statements 136




                                                        5. depositary Bank                                          0            0
                                                        6. placement of securities                             13,121       10,038
                                                        7. collection of orders                                 2,173        1,792
                                                        8. consulting services                                      0           50
                                                        9. distribution of third-party services
                                                           1) funds under management:
                                                              a) individual                                         0            0
                                                              b) collective                                        94          383
                                                           2) insurance products                                8,531        8,895
                                                           3) other products                                      362          119
                                                     d) collection and payment services                        13,048       11,534
                                                     e) servicing for securitisation activities                   254           72
                                                     f) rate and tax collection                                     0            0
                                                     g) other services                                         27,568       23,021
                                                     TOTAL                                                     73,197       63,447


                                                     2.2 DETAILS OF ITEM 40 “COMMISSIONS RECEIVABLE”:
                                                         DISTRIBUTION CHANNELS FOR PRODUCTS AND
                                                         SERVICES

                                                                                                           31/12/2004   31/12/2003

                                                     a) at own branches
                                                        1. funds under management                               1,624        1,561
                                                        2. placement of securities                             13,121       10,038
                                                        3. services and products of third parties               8,579        9,397
                                                     b) off-premises offer
                                                        1. funds under management                                  0            0
                                                        2. placement of securities                                 0            0
                                                        3. services and products of third parties                313            0
                                                     TOTAL                                                     23,637       20,996
2.3 BREAKDOWN OF ITEM 50 “COMMISSIONS PAYABLE”

                                                                           31/12/2004          31/12/2003

a) guarantees received                                                               43                 1
b) credit derivatives                                                                 0                 0
c) management, brokering and consulting services:
   1. stock trading                                                               1,267             2,017
   2. door-to-door selling of securities,
      products and services                                                           0                 0
   3. funds under management
      1) own portfolio                                                             321                  0
      2) portfolio of third parties                                                  0                  0
   4. safe custody and administration of securities
   5. placement of securities                                                       315               578
   6. off-premises offer of securities, products and services                     1,458             2,685
d) collection and payment services                                                3,488             2,265
e) other services                                                                 4,473             2,473
TOTAL                                                                           11,365             10,019




      SECTION 3 - PROFIT AND LOSS ON
      FINANCIAL TRANSACTIONS

3.1 BREAKDOWN OF ITEM 60 “PROFIT/LOSS ON FINANCIAL
    TRANSACTIONS”

Items/Transactions                          Transactions Transactions                 Other         Total
                                            on securities on currencies         transactions




                                                                                                            notes to the consolidated financial statements 137
A1.    Revaluations                                8,980                    0             0         8,980
A2.    Write-downs                                 8,282                    0             0         8,282
B.     Other profit (loss)                        15,794                7,717         3,936        27,447
TOTAL                                             16,492                7,717         3,936        28,145
1.     Government bonds                              241
2.     Other debt securities                      13,422
3.     Equity securities                           3,379
4.     Derivative contracts on securities           -550




      SECTION 4 - ADMINISTRATIVE
      EXPENSES

4.1 AVERAGE NUMBER OF EMPLOYEES BY CATEGORY

                                                       31/12/2004          31/12/2003      average 2004

a) managers                                                        38                35                37
b) third- and fourth-level managers                               245               238               242
c) other staff                                                  1,388             1,326             1,357
TOTAL                                                           1,671             1,599             1,636
                                                     BREAKDOWN OF ITEM 80 “ADMINISTRATIVE EXPENSES”

                                                                                                             31/12/2004                      31/12/2003

                                                     Indirect taxes and dues                                     10,186                           9,075
                                                     Expenses for purchase of non-professional
                                                     goods and services                                          25,044                          23,694
                                                     - office material and supply                    1,544                        1,671
                                                     - electricity, heating
                                                        and mains water                              2,101                        1,800
                                                     - transport and travel                          1,884                        1,403
                                                     - telephone, post, data transmission            4,850                        4,766
                                                     - leasing of software and microfiches             478                          450
                                                     - organization services and electronic
                                                        processing carried out by third parties       761                               80
                                                     - other organization services and electronic
                                                        processing                                  10,389                       10,595
                                                     - supervision                                     700                          709
                                                     - cleaning                                      1,399                        1,344
                                                     - transportation of valuables                     938                          876
                                                     Expenses for professional services                           5,296                           4,883
                                                     Rentals payable                                              8,354                           8,803
                                                     - real estate rentals                           6,455                        6,833
                                                     - machine rentals                               1,899                        1,970
                                                     Expenses for maintenance of furniture
                                                     and plants                                                   3,402                           2,980
                                                     Insurance premiums                                           2,185                           1,895
                                                     Other expenses                                              13,751                          11,462
                                                     - subscriptions                                 1,197                             895
                                                     - detached staff                                    0                             568
                                                     - remunerations to Directors and
                                                        Statutory Auditors                           1,950                        1,440
                                                     - membership fees                                 753                          597
                                                     - expenses for information and examination      1,537                        1,084
                                                     - advertising and entertainment                 5,845                        4,360
notes to the consolidated financial statements 138




                                                     - other expenses                                2,469                        3,128
                                                     TOTAL                                                       68,218                          63,402




                                                        SECTION 5 - WRITE-DOWNS,
                                                        WRITEBACKS AND PROVISIONS

                                                     BREAKDOWN OF ITEM 90 “WRITE-DOWNS OF TANGIBLE
                                                     AND INTANGIBLE FIXED ASSETS”

                                                                                                                          31/12/2004         31/12/2003

                                                     Intangible fixed assets:
                                                     Amortisation of restructuring charges
                                                     for leased facilities                                                     2,554              2,609
                                                     Software amortisation                                                     1,467              1,410
                                                     Other deferred costs                                                      3,046              3,320
                                                     Amortisation of consolidation differences                                 7,213              7,374
                                                     Tangible fixed assets:
                                                     Depreciation for real estate                                              1,723              1,166
                                                     Depreciation for furniture                                                6,418              4,248
                                                     TOTAL                                                                    22,421             20,127


                                                     BREAKDOWN OF ITEM 100 “PROVISIONS FOR RISKS AND
                                                     CHARGES”

                                                                                                                          31/12/2004         31/12/2003

                                                     Provisions                                                                2,960               471
5.1 BREAKDOWN OF ITEM 120 “WRITE-DOWNS OF LOANS
    AND PROVISIONS FOR GUARANTEES AND
    COMMITMENTS”
                                                          31/12/2004                    31/12/2003

a) write-downs of loans                                       29,741                        27,593
   of which:
   - lump-sum write-downs
     for country risk                                0                             0
   - other lump-sum write-downs                 14,336                        12,437
b) provisions for guarantees
   and commitments                                             1,000                            5
   of which:
   - lump-sum provisions
     for country risk                                0                              0
   - other lump-sum provisions                   1,000                              0
TOTAL                                                         30,741                        27,593


Breakdown of write-downs of loans:

                                                                       31/12/2004       31/12/2003

on non performing loans to customers:
  loss                                                                        179            1,222
  write-downs                                                              10,494            9,928
on watch-list to customers:
  analytical write-downs                                                    4,888            2,388
  lump-sum write-downs                                                        603               73
on restructured loans:
  loss                                                                         0                 0
  write-downs                                                                  0                 0
on other performing loans:




                                                                                                     notes to the consolidated financial statements 139
  lump-sum write-downs                                                     13,577           13,975
on credit derivatives:
  loss                                                                         0                 0
  write-downs                                                                  0                 5
TOTAL                                                                      29,741           27,593


BREAKDOWN OF ITEM 130 “WRITE-BACKS OF LOANS AND
PROVISIONS FOR GUARANTEES AND COMMITMENTS”

Write-backs are made up of:
                                                                       31/12/2004       31/12/2003

Recovery of credits amortised over previous years                           2,299             566
Collection of interest on delayed payment                                      17             952
Write-backs of depreciations occurred in previous years                       649             110
TOTAL                                                                       2,965            1,628


BREAKDOWN OF ITEM 140 “PROVISIONS TO CREDIT RISK
RESERVES”

                                                                       31/12/2004       31/12/2003

Credit risks for interest on delayed payment                                   0              335
Credit risks                                                                   0                0
TOTAL                                                                          0              335


BREAKDOWN OF ITEM 150 “WRITE-DOWNS OF FINANCIAL
FIXED ASSETS”

                                                                       31/12/2004       31/12/2003

Write-downs of investment securities                                          44             2,174
                                                     BREAKDOWN OF ITEM 160 “WRITE-BACKS OF FINANCIAL
                                                     FIXED ASSETS”

                                                                                                                31/12/2004   31/12/2003

                                                     Write-backs of investment securities                             892            0


                                                     BREAKDOWN OF ITEM 170 “PROFIT/LOSS ATTRIBUTABLE
                                                     TO EQUITY INVESTMENTS VALUED BY THE EQUITY
                                                     METHOD”

                                                                                                                31/12/2004   31/12/2003

                                                     Profit attributable to equity investments
                                                     valued by the equity method                                     4,958        6,371


                                                     BREAKDOWN OF ITEM 230 “CHANGE IN RESERVE FOR
                                                     GENERAL BANKING RISK”

                                                                                                                31/12/2004   31/12/2003

                                                     Utilization of the reserve for general banking risk            33,000           0


                                                     BREAKDOWN OF ITEM 240 “INCOME TAXES FOR THE
                                                     YEAR”

                                                                                                                31/12/2004   31/12/2003

                                                     1.   Current taxes (-)                                        -24,214      -25,083
notes to the consolidated financial statements 140




                                                     2.   Change in prepaid taxes (+/-)                              1,232         -971
                                                     3.   Change in deferred taxes (+/-)                            -2,079          161
                                                     4.   Income taxes for the year (-1 +/-2 +/-3)                 -25,061      -25,893




                                                          SECTION 6 - OTHER ITEMS OF THE
                                                          PROFIT AND LOSS ACCOUNT

                                                     6.1 BREAKDOWN OF ITEM 70 “OTHER OPERATING INCOME”

                                                                                                                31/12/2004   31/12/2003

                                                     Debits to third parties on deposits and current accounts       16,429       14,094
                                                     Rentals receivable                                                 26            1
                                                     Recovery of stamp duties and similar                            8,494        7,757
                                                     Income from securitisation activities                             446        4,858
                                                     Recovery of insurance premiums                                      0            4
                                                     Tax credits for revaluation of advances on severance pay           12           19
                                                     Other income                                                    1,773        1,382
                                                     TOTAL                                                          27,180       28,115


                                                     6.2 BREAKDOWN OF ITEM 110 “OTHER OPERATING
                                                         CHARGES”

                                                                                                                31/12/2004   31/12/2003

                                                     Financial lease rentals                                          313          228
                                                     Other charges                                                    451          338
                                                     TOTAL                                                            764          566
6.3 BREAKDOWN OF ITEM 190 “EXTRAORDINARY INCOME”

                                                          31/12/2004           31/12/2003

Contingent assets and non-existent liabilities                 3,771                2,501
Profit on sale:                                               44,966                1,492
- real estate                                         0                  36
- securities                                        907                 851
- equity investments                             44,018                 604
- other goods                                        41                   1
Collection of interest on delayed payment                       355                 1,254
TOTAL                                                         49,092                5,247


6.4 BREAKDOWN OF ITEM 200 “EXTRAORDINARY
    CHARGES”

                                                          31/12/2004           31/12/2003

Contingent liabilities and non-existent assets                 3,844                2,935
Loss on sale:                                                  4,666                1,555
- securities                                      3,916                    0
- equity investments                                376                  283
- other goods                                       374                1,272
Other                                               348                1,158
TOTAL                                                          8,858                5,648




   SECTION 7 - OTHER INFORMATION ON
   THE PROFIT AND LOSS ACCOUNT




                                                                                            notes to the consolidated financial statements 141
7.1 GEOGRAPHIC DISTRIBUTION OF INCOME

The geographic distribution of income is not such to require a detailed
breakdown in this section.
                                                         PART D - OTHER INFORMATION
                                                        SECTION 1 - DIRECTORS AND
                                                        STATUTORY AUDITORS

                                                     1.1 REMUNERATIONS

                                                                                                         31/12/2004   31/12/2003

                                                     a) Directors                                             1,651        1,527
                                                     b) Statutory Auditors                                      398          394


                                                     1.2 LOANS AND GUARANTEES PROVIDED

                                                                                                            Granted         Used

                                                     a) Directors
                                                        directly:
                                                        - cash loans                                         36,478       24,931
                                                        - credit commitments                                 26,167       26,106
                                                        indirectly:
                                                        - cash loans                                        228,422      143,986
                                                        - credit commitments                                 29,091       24,332
                                                     b) Statutory Auditors
                                                        directly:
                                                        - cash loans                                          3,234        1,430
                                                        - credit commitments                                      0            0
                                                        indirectly:
                                                        - cash loans                                          2,704        1,428
                                                        - credit commitments                                     26            0
notes to the consolidated financial statements 142




                                                     The credit lines were determined in compliance with Art. 136 of Legislative
                                                     Decree No. 385 dated 1 September 1993.



                                                     Montebelluna, 29 march 2005

                                                     For the Board of Directors
                                                     The Chairman
                                                     Dr. Flavio Trinca
   ANNEXES


A Statement of variations in the shareholders’ equity for the financial years
  ended as at 31 December 2003 and 2004

B The Veneto Banca Group structure




                                                                                ANNEXES 143
                 ANNEX A: STATEMENT OF VARIATIONS IN
                 THE SHAREHOLDERS’ EQUITY FOR THE FINANCIAL
                 YEARS ENDED AS AT 31 DECEMBER 2003 AND 2004



             (amounts in Euro thousand)                    Share          Legal    Extraordinary            Taxed    Revaluation    Reserve
                                                          capital   reserve and          reserve           reserve       reserve        for
                                                                           issue                     Law No. 823                      share
                                                                       premium                     dated 19/12/73                  buyback

             BALANCES AS AT 31 DECEMBER 2002             78,165      222,279           69,900                100         5,554      4,132

             Appropriation of the profit (loss)
             for 2002 according as per resolution taken
             by the Shareholders at the
             Annual Meeting of 26/4/2003:
             * to ordinary reserve                                      3,124
             * dividend to Shareholders
             * to extraordinary reserve                                                13,408
             * to the Board of Directors
             * to reduce loss brought forward
             Issue of subordinated bond
             Statute barred dividend                                       1
             Conversion of bond                         16,649        84,514
             Net increase in new share subscriptions       255         1,681
ANNEXS 144




             Changes in share capital deriving
             from consolidation                                                       -10,043
             Net profit for 2003
             BALANCES AS AT 31 DECEMBER 2003             95,069      311,599           73,265                100         5,554      4,132

             Appropriation of the profit (loss)
             for 2003 according as per resolution taken
             by the Shareholders at the
             Annual Meeting of 24/4/2004:
             * to ordinary reserve                                      4,525
             * dividend to Shareholders
             * to extraordinary reserve                                                19,322
             * to the Board of Directors
             * to reduce loss brought forward
             Issue of subordinated bond
             Statute barred dividends                                         1
             Conversion of bond
             Net increase in new share subscriptions       3,578      23,781
             Changes in share capital deriving
             from consolidation                                           -248           3,362
             Provision to reserve for general banking risk
             Net profit for 2004
             BALANCES AS AT 31 DECEMBER 2004             98,647      339,658           95,949                100         5,554      4,132
   Taxed       Reserve           Special           Special       Negative    Minority Subordinated       Profit     Net profit      Total
  reserve   for general    reserve Art. 7          reserve   consolidation   interests   liabilities   brought    for the year
and other      banking      Law No. 218     Leg.D. No.153      differences                             forward
 reserves          risk   dated 30/7/90     dated 17/5/99

       3       6,057             1,796             1,659              40     18,475      154,956         -228        19,588 582,476




                                                                                                                     -3,124
                                                                                                                    -13,288      -13,288
                                                                                                                    -13,408
                                                                                                                       -684         -684
                                                                                                          175          -175
                                                                                           28,272                                 28,272
                                                                                                                                       1
                                                                                        -101,163
                                                                                                                                   1,936




                                                                                                                                            ANNEXS 145
                                                                                596                                  11,091        1,644
                                                                                                                     40,646       40,646
       3       6,057             1,796             1,659              40     19,071        82,065         -53        40,646 641,003




                                                                                                                     -4,525
                                                                                                                    -15,845      -15,845
                                                                                                                    -19,322
                                                                                                                       -901         -901
                                                                                                           53           -53
                                                                                         100,192                                 100,192
                                                                                                                                       1
                                                                                              -443
                                                                                                                                  27,359

                                                                                885                                                3,999
              33,000                                                                                                              33,000
                                                                                                                     55,352       55,352
       3      39,057             1,796             1,659              40     19,956      181,814             0       55,352 843,717
             ANNEX B: THE VENETO BANCA GROUP
             STRUCTURE
ANNEXS 146
           S TAT U T O R Y AU D I T O R S ’ R E P O R T
                      O N T H E C O N S O L I D AT E D
                     F I N A N C I A L S TAT E M E N T S




"Il Meschio a Serravalle"
Giuliana Furlanetto - Administrative Headquarters, Montebelluna (TV)
                                      STATUTORY AUDITORS’ REPORT
                                      ON THE CONSOLIDATED
                                      FINANCIAL STATEMENTS

                                 Dear Shareholders,

                                 the draft of the consolidated financial statements for the year ended as at 31
                                 December 2004, which the Directors of the Parent Company Veneto Banca have
                                 communicated to us under the terms of the law, has been drawn up in
                                 compliance with the requirements referred to in Legislative Decree No. 87/92 and
                                 the operational regulations issued in these matters by Banca d’Italia according to
                                 Art. 5 of the above-mentioned Legislative Decree.

                                 The consolidated financial statements and profit and loss account, that are
                                 audited by PricewaterhouseCooper spa, can be summarised as follows:

                                 Balance sheet (in Euro thousand)
                                 Total assets                                                                6,643,817
                                 Liabilities                                              5,800,100
                                 Minority interests                                          19,956
                                 Shareholders’ equity                                       768,409
                                                                                                             6,588,465
                                 PROFIT FOR THE YEAR                                                           55,352
statutory auditors’ report 148




                                 Memorandum accounts (in Euro thousand)
                                 Guarantees provided                                        296,040
                                 Commitments                                                349,440
                                                                                                              645,480


                                 Profit and loss account (in Euro thousand)
                                 Profit on ordinary activities                                                  74,231
                                 Extraordinary profit                                                           40,234
                                 Change in reserve for general banking risk                                    -33,000
                                 Profit before taxes                                                            81,465
                                 Income taxes for the year                                                      25,163
                                 Profit for the year pertaining to third parties                                  -950
                                 PROFIT FOR THE YEAR                                                           55,352


                                 The Board of Directors’ report, which is in line with the consolidated financial
                                 statements, describes the events involving the Group in a sufficient manner,
                                 illustrates the performance of the companies included in the consolidation area
                                 during the course of financial year 2004, and contains all other information
                                 required by Art. 3 of Legislative Decree No. 87/92.

                                 With regard to the consolidated financial statements, we consider that the
                                 following shall be stated and confirmed:
                                 • the area of consolidation covers all and only the equity investments defined as
                                   significant according to Art. 25 of Legislative Decree No. 87/92. Therefore, the
                                   following companies have been consolidated using the integral method: Claris
                                   Leasing spa, carrying out leasing activities, Claris Factor spa, carrying out
                                   factoring activities, Veneto Ireland Financial Services ltd, carrying out financial
                                   activities on behalf of the Bank, Claris Finance srl special purpose vehicle for
                                   the 1st securitisation operation, Banca Italo-Romena spa, Banca di Bergamo
  spa and Banca Meridiana spa, all of them carrying out banking activities. Vice
  versa, the equity investments in Claris Assicurazioni srl, Claris Broker spa,
  Claris Vita spa, Immobiliare Italo Romena srl, Palladio Finanziaria spa and
  Sintesi 2000 srl have been consolidated using the equity method since,
  although they are subsidiaries and the Parent Company holds more than, or
  equal to, one fifth of the voting rights, they do not carry out banking, financial
  or other activities pertaining to the Group or have a structure of the financial
  statements that differs from that of the Parent Company and, therefore, cannot
  produce a corresponding, comparable numerical representation;

• the consolidation principles used conform with the requirements of the law;

• the notes to the financial statements provide detailed information on the items
  of the balance sheet and profit and loss account of the Group, and are drawn
  up in compliance with the regulations currently in force.

In accordance with its monitoring functions, the Board of Statutory Auditors
found that the procedures used to draw up the consolidated financial statements
were correct, and can therefore confirm that the draft of the consolidated
financial statements corresponds with the accounting records of the Parent
Company and the draft of the financial statements as at 31 December 2004,
approved by the subsidiaries’ Boards of Directors.



Montebelluna, 6 april 2005




                                                                                       statutory auditors’ report 149
Board of Statutory Auditors
Dr. Fanio Fanti
Dr. Michele Stiz
Dr. Diego Xausa
                                             INDIPENDENT
                                        AUDITORS’ REPORT




"Mestre - Nuovo polo economico"
Marco Pagin - Branch of Villorba (TV)
indipendent auditors’ report 152
                                F I N A N C I A L S TAT E M E N T S
                             A S AT 3 1 D E C E M B E R 2 0 0 4




"Castelfranco Veneto"
Massimiliano Porcelli - Branch of Sernaglia della Battaglia (TV)
                                                       BALANCE SHEET

                                                  ASSETS (amounts in Euro)                                                 2004                                     2003


                                                  10    Cash and balances with central banks
                                                        and post offices                                             23,987,131                               33,489,787
                                                  20    Treasury bonds and similar instruments
                                                        eligible for refinancing
                                                        with central banks                                            2,149,013                               59,782,889
                                                  30    Loans to banks:                                             366,914,763                              279,065,227
                                                        (a) on demand                                 49,999,076                            77,617,435
                                                        (b) other receivables                        316,915,687                           201,447,792
                                                  40    Loans to customers                                         4,114,554,411                            3,550,884,327
                                                        of which:
                                                        - loans with deposits in administration        4,744,097                             2,152,477
                                                  50    Bonds and other debt securities:                            325,882,574                              264,952,826
                                                        (a) issued by governments                    136,515,977                            96,918,954
                                                        (b) issued by banks                           23,478,111                            35,211,221
                                                            of which:
                                                            - own securities                          21,241,392                             9,832,771
                                                        (c) issued by financial institutions         162,025,792                           127,370,000
                                                            of which:
                                                            - own securities                                  0                                         0
                                                        (d) issued by others                           3,862,694                             5,452,651
financial statements as at 31 december 2004 154




                                                  60    Shares, quotas and other equity securities                    5,771,764                                7,285,370
                                                  70    Equity investments                                           84,058,759                               68,855,354
                                                  80    Equity investments in Group companies                       327,102,788                              384,165,573
                                                  90    Intangible fixed assets                                      19,897,043                               22,423,926
                                                        of which:
                                                        - start-up costs                                      0                                         0
                                                        - goodwill                                    16,336,309                            17,243,881
                                                  100   Tangible fixed assets                                        82,791,367                               73,923,378
                                                  130   Other assets                                                138,212,472                              120,214,457
                                                  140   Accrued income and prepayments:                              35,653,753                               33,857,381
                                                        (a) accrued income                            32,340,419                            30,052,415
                                                        (b) prepayments                                3,313,334                             3,804,966
                                                            of which:
                                                            - issue discount on securities                    0                                         0

                                                  TOTAL ASSETS                                                     5,526,975,838                            4,898,900,495




                                                                       VICE GENERAL MANAGER                                  GENERAL MANAGER
                                                                          CHIEF ACCOUNTANT                                Accountant Vincenzo Consoli
                                                                       Accountant Armando Bressan
STATO Patrimoniale (in Euro)

LIABILITIES (amounts in Euro)                                               2004                                     2003


10    Due to banks                                                   495,237,127                              684,203,608
      (a) on demand                                  354,349,419                             345,818,022
      (b) on maturity or with notice                 140,887,708                             338,385,586
20    Due to customers:                                             2,124,714,994                            1,728,817,786
      (a) on demand                                 1,861,049,768                          1,541,165,617
      (b) on maturity or with notice                 263,665,226                             187,652,169
30    Securities issued:                                            1,917,443,133                            1,691,191,249
      (a) bonds                                     1,746,754,848                          1,544,421,594
      (b) certificates of deposit                    170,688,285                             106,769,663
      (c) other securities                                     0                               39,999,992
40    Deposits in administration                                       4,744,097                                2,152,477
50    Other liabilities                                              116,614,899                              110,452,135
60    Accruals and deferred income:                                    9,589,132                               10,910,658
      (a) accrued expenses                             6,680,530                                7,591,577
      (b) deferred income                              2,908,602                                3,319,081
70    Employees’ severance fund                                       18,735,744                               16,992,966
80    Provisions for risks and charges:                               30,531,219                               32,296,621
      (a) pensions and similar benefits                        0                                         0
      (b) provisions for taxation                     17,294,016                               21,189,187
      (c) other provisions                            13,237,203                               11,107,434




                                                                                                                             financial statements as at 31 december 2004 155
90    Credit risk reserve                                                      0                                1,538,247
100   Reserve for general banking risk                                39,056,689                                6,056,689
110   Subordinated liabilities                                       181,814,252                               82,064,829
120   Share capital                                                   98,646,114                               95,068,380
130   Issue premiums                                                 304,765,227                              280,983,347
140   Reserves:                                                      133,870,876                              110,540,316
      (a) legal reserve                               33,011,812                               29,004,109
      (b) reserve for own equity shares or quotas              0                                         0
      (c) statutory reserves                                   0                                         0
      (d) other reserves                             100,859,064                               81,536,207
150   Revaluation reserves                                             5,554,164                                5,554,164
170   Profit for the year                                             45,658,171                               40,077,023

TOTAL LIABILITIES                                                   5,526,975,838                            4,898,900,495




                              CHAIRMAN                                       STATUTORY AUDITORS
                             Dr. Flavio Trinca                                    Dr. Fanio Fanti
                                                                         Dr. Michele Stiz, Dr. Diego Xausa
                                                       GUARANTEES AND COMMITMENTS

                                                  (amounts in Euro)                                                    2004                                   2003


                                                  10    Guarantees provided                                      492,447,697                            522,929,785
                                                        of which:
                                                        - acceptances                                5,229,918                           3,040,538
                                                        - other guarantees                         487,217,779                         519,889,247
                                                  20    Commitments                                               42,605,846                             63,968,160
                                                        of which
                                                        - for sale with repurchase oprations                0                                       0
                                                  30    Commitments given on credit derivatives                   15,000,000                              7,500,000
financial statements as at 31 december 2004 156




                                                                       VICE GENERAL MANAGER                              GENERAL MANAGER
                                                                         CHIEF ACCOUNTANT                             Accountant Vincenzo Consoli
                                                                      Accountant Armando Bressan
     PROFIT AND LOSS ACCOUNT

(amounts in Euro)                                                                                         2004                                             2003 (1)


10      Interest income and similar items                                                         187,409,468                                        180,141,160
        of which:
        - on loans to customers                                            168,521,759                                        159,648,050
        - on debt securities                                                12,423,933                                         15,434,224
20      Interest expense and similar items                                                         90,275,682                                         87,403,043
        of which:
        - on due to customers                                               23,597,037                                         21,429,700
        - on securities issued                                              47,784,246                                         38,756,526
30      Dividends and other income:                                                                22,098,756                                         18,554,782
        (a) from shares, quotas
             and other equity securities                                      5,095,689                                         2,921,892
        (b) from equity investments                                           2,145,571                                            859,372
        (c) from equity investments in Group companies                      14,857,496                                         14,773,518
40      Fee and commission income                                                                  55,668,936                                         49,250,269
50      Fee and commission expenses                                                                  8,498,847                                          9,211,971
60      Profit on financial transactions                                                           20,494,578                                         20,067,267
70      Other operating income                                                                     23,248,718                                         23,750,609
80      Administrative expenses:                                                                  118,562,752                                        107,847,147
        (a) Personnel costs                                                 70,447,109                                         64,114,649
             of which:




                                                                                                                                                                      financial statements as at 31 december 2004 157
             - wages and salaries                                           48,785,749                                         44,921,962
             - social security charges                                      13,559,402                                         11,393,751
             - employees’ severance                                           2,473,452                                         2,296,656
             - pensions and similar benefits                                  2,672,090                                         2,431,756
        (b) other administrative expenses                                   48,115,643                                         43,732,498
90      Write-downs of tangible and
        intangible fixed asstes                                                                      9,721,740                                          7,834,340
100     Provisions for risks and charges                                                               641,226                                             84,428
110     Other operating charges                                                                        418,553                                            156,145
120     Write-downs of loans and provisions
        for guarantees and commitments                                                             23,527,320                                         20,004,955
130     Write-backs of loans and provisions
        for guarantees and commitments                                                               2,356,336                                          1,405,217
140     Provisions to credit risk reserves                                                                    0                                           308,395
150     Write-downs of financial fixed assets                                                           44,267                                            173,929
160     Write-backs of financial fixed assets                                                          892,168                                                   0
170     Profit on ordinary activities                                                              60,478,573                                         60,144,951
180     Extraordinary income                                                                       39,263,417                                           1,835,732
190     Extraordinary charges                                                                        6,294,225                                          4,219,241
200     Extraordinary profit (loss)                                                                32,969,192                                          -2,383,509
210     Change in reserve for general banking risk                                                 33,000,000                                                    0
220     Income taxes for the year                                                                  14,789,594                                         17,684,419
230     PROFIT FOR THE YEAR                                                                        45,658,171                                         40,077,023




                                CHAIRMAN                                                                   STATUTORY AUDITORS
                               Dr. Flavio Trinca                                                                Dr. Fanio Fanti
                                                                                                       Dr. Michele Stiz, Dr. Diego Xausa

(1) As a result of the Legislative Decree 344/2003, which reformed the regulations on dividends and, to enable comparison between the figures from two financial
     years, the profit and loss account for the period to 31 December 2003 has been restated to remove the impact of tax credits on dividends. This restatement had
     a total impact of Euro 2,803,862 and specifically impacts account items “30 Dividends and other income” and “220 Income taxes for the year”.
                                            NOTES TO THE FINANCIAL
                                            STATEMENTS

                                            PRESENTATION AND CONTENTS OF THE
                                            FINANCIAL STATEMENTS

                                        The financial statements are made up of the balance sheet, the profit and loss
                                        account and the notes to the financial statements, and they are supplemented
                                        with the Board of Directors’ report, as established by Legislative Decree
                                        No. 87/92, which, in pursuance of the European Community Directives No.
                                        86/635 and No. 89/117, regulates the annual and consolidated accounts of banks.

                                        These notes, whose figures are in Euro thousands, shows and analyses the
                                        financial statements, and it contains the information in accordance to the
                                        aforementioned legislative decree, Banca d’Italia’s ruling No. 14 dated 16 January
                                        1995 and other laws. Although not specifically requested, complementary
                                        information is also provided about all matters that are deemed necessary to give
                                        a true and fair view.Therefore, the following documents are attached to the notes
                                        to the financial statements:
                                        A - Statement of variations in the shareholders’ equity;
                                        B - Revaluations sheet (art. 10, Act 72/83);
                                        C - List of equity investments;
notes to the financial statements 158




                                        D - Statement of cash flows;
                                        E - List of bonds convertible into shares (art. 2, lett. b, Pres.Decree 137/75);
                                        F - Financial statements of subsidiary or affiliate companies (art. 2429, par. 3 and
                                            4, of the Italian Civil Code).

                                        The financial statements are audited by PricewaterhouseCoopers spa, which was
                                        entrusted with this task for the three years period 2004-2006.



                                            PART A – ACCOUNTING POLICIES

                                        The financial statements are prepared pursuant to applicable laws, taking into
                                        consideration the accounting principles applied in Italy to correctly interpret such
                                        laws and in accordance with the following general valuation criteria:
                                        • Consistency of application: the accounting policies are constantly applied, from
                                          year to year, except when expressely reported in the following parts of these
                                          notes with reference to the securities section.
                                        • Substance over form: whenever possible, substance shall prevail over form, and
                                          the time of settlement of a transaction shall prevail over the time of negotiation
                                          so as to give a correct picture of the financial situation.
                                        • Going concern: the valuations in the financial statements are made based on the
                                          prospect that the business shall continue in operational existence.
                                        • Prudence: reference is made only to the profit achieved as at close of the
                                          financial year, except for the provisions of specific valuation criteria. The risks
                                          and losses pertaining to the financial year and that have become known after
                                          the close of the financial year are also taken into account.
                                        • Accrual principle: income and charges are recorded on an accrual basis.
                                        • Separate valuation: on-balance sheet and off-balance sheet assets and liabilities
  are valued separately, which means that no global valuations are made, except
  for what is stated under valuation consistency.
• Valuation consistency: the on-balance sheet and off-balance sheet assets and
  liabilities that are connected to each other are valued consistently, which means
  that homogeneous criteria are used.

The principles adopted, which are listed below, have been defined in agreement
with the Board of Statutory Auditors, when provided for by relevant regulations.



   SECTION 1 – EXPLANATION OF THE
   VALUATION CRITERIA

1. LOANS, GUARANTEES AND COMMITMENTS

QUALITATIVE INFORMATION ON CREDIT RISKS
The classification of anomalous loans (non performing loans, watch-list
loans, restructured loans, etc.) is based on recording criteria established by
supervisory regulations.
In detail:
• Loans are classified as “non performing loans” if debtors are insolvent. The
  estimated recoverable amount is determined based on the valuation of the
  debtor’s equity and existing personal and real securities.
• Loans are classified as “watch-list loans” when debtors are in temporary
  difficulties, but they are expected to overcome them in a reasonable lapse




                                                                                       notes to the financial statements 159
  of time.
  Arrangements classified as such are managed by the Legal Department,
  which monitors their continuation or the payment of the outstanding debt.
  The estimated recoverable amount of watch-list loans is determined in the
  same way as for non performing loans.
• Loans are classified as “loans under rescheduling” when the counterparty
  has debts with several banks and it applied for consolidation.
• Loans are classified as “restructured loans” when they are issued by several
  banks, which grant a debt moratorium renegotiating debts at lower rates
  than market rates. The Legal Department manages also this category. These
  loans are valued using the same criteria as those used for non performing
  loans and watch-list loans.
• Loans to counterparties resident in countries not belonging to the OECD
  area are classified as “non-guaranteed loans exposed to country risk”.

CREDIT ACCOUNTING POLICIES
The value of on-balance sheet credits, including accrued contract interest and
interest on delayed payment, is equal to their estimated recoverable amount. This
value is obtained by deducting from the total credit amount the expected
principal and interest losses, defined according to specific analyses for non
performing loans, watch-list loans, restructured loans and loans under
rescheduling, and on a lump-sum basis for the remaining items. Performing
loans to customers and watch-list loans arising from the so-called “physiological
risk”have been written down on a lump-sum basis with a percentage equal for
all items, also determined according to the historical trend of the losses incurred,
the product category to which customers belong, the geographic operational area
and any other aspect pertaining to the entries.
The original value of credits shall be reinstated in the following years if the
reasons for write-downs cease to exist.
                                        ACCOUNTING POLICIES FOR GUARANTEES AND COMMITMENTS
                                        The guarantees provided are entered at the total value of the commitment
                                        undertaken. Any losses on these operations are reflected through accruals to
                                        provisions for risks and charges.
                                        Securities and foreign exchanges to be received are entered at the forward price
                                        established by contract with the counterparty.
                                        Commitments to allocate funds, undertaken towards counterparties and
                                        customers, are entered at the amount to be settled.
                                        Definitely sold loans (non-recourse loans) have been written-off from the
                                        financial statements, and the write-downs or write-backs have been charged to
                                        the profit and loss account at an amount equal to the difference between the
                                        consideration received and the value at which they had been entered in the
                                        financial statements.

                                        2. SECURITIES AND “OFF-BALANCE SHEET”
                                           TRANSACTIONS (OTHER THAN FOREIGN
                                           CURRENCY TRANSACTIONS)

                                        Beginning in FY 2004, the weighted average cost method was adopted for the
                                        valuation of securities rather than the LIFO method on a yearly basis, which was
                                        utilised until the financial year ending 31 December 2003. For trading securities
                                        listed on regulated markets, market value has been used.
                                        The change has not produced any significant results.

                                        2.1 INVESTMENT SECURITIES
notes to the financial statements 160




                                        The securities classified as financial fixed assets represent a stable investment
                                        for the Company, since they are bound to be used in the long run, and
                                        consequently they are recorded and valued at the acquisition cost. However, the
                                        cost value is reduced in case of losses that are deemed to be other than
                                        temporary.
                                        The original cost shall be reinstated in the following years if the reasons for the
                                        write-down cease to exist.
                                        Unlisted investment securities are valued at historical cost.
                                        Issue spreads are calculated according to the provisions of art. 8 of Legislative
                                        Decree dated 27/12/1994, including the amount accrued in taxable income for
                                        the year.

                                        2.2 TRADING SECURITIES
                                        Securities not classified as financial fixed assets are valued at market value, if
                                        listed on regulated markets; at the lower of the cost, determined according to the
                                        daily weighted average cost method and the market price, if not listed.
                                        Market value is determined:
                                        • with regard to securities traded in organised markets, by taking the reference
                                           price on the closing date of the period;
                                        • with regard to unlisted Italian and foreign securities, from the estimated
                                           recoverable amount, obtained by discounting back all future financial flows at
                                           current market rates, taking into account the spreads attributable to issuing
                                           bodies for the risk associated thereto, and from the exact prices obtainable from
                                           information circuits normally used all over the world and objectively
                                           determinable.
                                        The original cost of securities not listed on regulated markets whose value has
                                        previously been written down shall be reinstated in the following years if the
                                        reasons for the write-down cease to exist.
                                        REPOS according to which the transferee shall resell the securities for forward
delivery are entered as deposit and loan financial transactions. The deposit cost
and loan income, consisting in the matured coupons of securities and the spread
between the spot price and forward price of such securities, are entered as
interest on an accrual basis.
Issue spreads have been calculated according to the provisions of art. 8 of
Legislative Decree dated 27/12/1994, including the amount accrued in the taxable
income for the year.

“OFF-BALANCE SHEET” TRANSACTIONS (OTHER THAN
FOREIGN CURRENCY TRANSACTIONS)
Derivatives are valued as follows:

a) Derivatives for the hedging of assets and liabilities for trading purposes or
   connected to other assets and liabilities:
   • listed and unlisted hedging derivatives for trading purposes available as at
     close of the financial year are valued according to the assets/liabilities
     hedged or connected thereto;
   • over the year, spreads are recorded on an accrual basis as interest income
     and interest expense according to the proceeds or costs generated by the
     assets/liabilities hedged, or based on the period of validity of contracts in
     case of connected securities or general hedging.

b) Trading derivatives:
   • listed derivatives are valued at book value, and capital losses, if any, are
     entered in the profit and loss account as loss on financial transactions with




                                                                                      notes to the financial statements 161
     “other liabilities”as a contra-entry;
   • non listed derivatives in regulated markets are valued individually by
     discounting future cash flows using the market interest rate curve at 31
     December 2004. Any resulting capital losses are recorded in the profit and
     loss account as losses from financial transactions with counterparties “other
     liabilities”;
   • unlisted derivatives traded for client accounts, as for brokers, are valued
     taking into account the creditworthiness of the counterparty, with the result
     being provided for in the reserve for risks and charges;
   • over the year, both the spreads realised and the margins paid and/or
     collected upon contract signature are entered under the item“profit (loss) on
     financial transactions”.

c) Spreads on unlisted non-trading derivatives coming to maturity over the year,
   are recorded on an accrual basis as interest income and interest expense
   according to the proceeds or costs generated by the assets/liabilities hedged,
   or based on the period of validity of contracts in case of connected securities
   or general hedging.

d) The premiums paid or collected for option trading are entered under “other
   assets” or “other liabilities” respectively. These premiums are debited or
   credited to the profit and loss account if the option is not exercised. The
   premium value for exercised options on securities is added to or deducted
   from the costs or proceeds relating to the purchased or sold security.

e) “Off-balance sheet” security transactions, that is, transactions having a value
   date in a successive financial period, are valued using the same criteria as
   those established for the categories of “trading securities”.“Off-balance sheet”
   transactions connected between each other or with portfolio securities are
                                          valued consistently with each other.

                                        f) Commissions and final up-fronts, consisting in the advance collection or
                                           payment of an amount of money pertaining to the contract, which will no
                                           longer be returned to (by) customers, are recorded in the financial year in
                                           which the contracts are signed.

                                        3. EQUITY INVESTMENTS
                                        Pursuant to art. 18, par. 1, of Legislative Decree No. 87/1992, equity investments
                                        are valued at acquisition cost, determined based on the purchase or subscription
                                        price or the value assigned upon allotment. Equity investments are written down
                                        in case of losses deemed to be other than temporary according to par. 2, second
                                        sentence of the aforementioned art. 18. The original value is reinstated in the
                                        following years if the reasons for the write-down cease to exist.

                                        Dividends are recorded in the financial year in which they are collected.

                                        4. ASSETS AND LIABILITIES IN FOREIGN
                                           CURRENCY (INCLUDING “OFF-BALANCE
                                           SHEET” TRANSACTIONS)
                                        Foreign currency transactions are recorded at the time of settlement.
                                        Assets, liabilities and “off-balance sheet”spot transactions in foreign currency are
                                        converted in Euro at the exchange rates ruling at year-end; the effect of such
                                        valuation is charged to the profit and loss account.
                                        “Off-balance sheet”forward transactions are valued:
notes to the financial statements 162




                                        • in case of hedging transactions, at the exchange rate ruling at year-end; the
                                          spreads between the forward and spot exchange rate of such transactions are
                                          entered in the profit and loss account according to a temporal distribution
                                          consistent with the recording of interest arising from hedged assets or
                                          liabilities;
                                        • in case of trading transactions, at the corresponding forward exchange rates
                                          ruling at year-end;
                                        • unlisted trading currency options are valued individually using current market
                                          values, and capital losses, if any, are entered in the profit and loss account as
                                          loss on financial transactions;
                                        • unlisted currency options for brokerage on behalf of customers are valued
                                          taking into account the creditworthiness of the counterparties, the relevant
                                          result is provided for in a reserve for risks and charges.
                                        Equity investments in foreign currency are entered at the historical demand rate,
                                        while investment and trading securities in foreign currency are written down or
                                        up at the exchange rate ruling at year-end.
                                        Costs and proceeds in foreign currency are entered at the exchange rate ruling at
                                        the time of recording.

                                        5. TANGIBLE FIXED ASSETS
                                        They are recorded at the acquisition cost, including the accessory charges
                                        incurred, adjusted for some goods in pursuance of specific monetary revaluation
                                        laws; the amount entered in the financial statements is obtained by deducting the
                                        write-downs carried out from the book value so defined.
                                        Tangible fixed assets are depreciated in each financial year on a straight-line
                                        basis according to economic/technical charges based on the residual life of the
                                        assets.
                                        This principle is also in line with fiscally allowed charges.
                                        Maintenance and repair expenses that do not imply an increase in the net worth
of assets are charged to the profit and loss account for the year, while the
expenses implying an increase are entered under the specific technical fixed
assets to which they refer.

6. INTANGIBLE FIXED ASSETS
They are entered under assets at the acquisition cost, including accessory charges,
subject to approval of the Board of Statutory Auditors if necessary, and they are
systematically amortised according to their potential use.
The paid goodwill is entered under assets and amortised over a five-year or
longer period based on its estimated useful life.

7. OTHER ASPECTS

OTHER RECEIVABLES AND PAYABLES
Other receivables and payables are entered at face value. With regard to
receivables, this value is equal to the estimated recoverable amount.

ACCRUALS AND PAYABLES
These items include shares of costs and proceeds relating to several years in order
to comply with the accrual principle.
They are calculated taking into account, with regard to interest, the rates
applicable to each agreement, and, with regard to costs and proceeds, elements
that are certain and the accrual principle.
Some of them are directly added to the liability accounts to which they refer, since
this representation is more technically appropriate.




                                                                                        notes to the financial statements 163
DEPOSITS IN ADMINISTRATION
They represent the debt existing at year-end towards third party assignors.

EMPLOYEES’ SEVERANCE FUND
This item reflects, net of advances, the benefits accruing to employees on payroll
as at close of the financial year, determined according to Law No. 297 dated 29
May 1982.

PROVISIONS FOR RISKS AND CHARGES
The provision for taxation includes allocations for current and deferred taxes
payable, as well as for the risk arising from fiscal disputes, if any.
The provision for current taxes is a reasonable forecast of the chargeable amount,
determined according to applicable tax regulations.

Deferred taxes have been calculated by applying the income statement liability
method established by IAS 12 according to the specific provisions of Banca
d’Italia. In particular, the provisions for taxation include liabilities for deferred
taxes arising from taxable temporary differences that are expected to be paid. No
provision for deferred taxes is made for equity reserves set up free of tax, since at
present no transactions are expected to be carried out that would determine their
taxation. Deferred tax assets, originating from deductible temporary differences
whose collection can reasonably be deemed to be certain based on future
expected taxable income are entered under other assets.
                                        OTHER PROVISION
                                        Other provisions are made to reflect losses of the guarantees provided and
                                        commitments undertaken, as well as to provide for certain or probable liabilities,
                                        whose amount or date of occurrence, however, cannot be determined at the close
                                        of the financial year or at the date of preparation of these financial statements.

                                        PROVISION FOR GENERAL BANKING RISK
                                        This provision is used to hedge the general business risk and, therefore, it is
                                        included in the shareholders’ equity.

                                        SUBORDINATED LIABILITIES
                                        The value entered in the financial statements corresponds to the face value of the
                                        loan.

                                        STOCKS OF CONSUMABLES
                                        Year-end stocks of stationery and printing supplies or promotional articles are
                                        entered by applying to the stocks the last cost price for the goods of that kind.
                                        These stocks are recorded under item “other assets” with “administrative
                                        expenses”as a contra-entry.



                                           SECTION 2 – ADJUSTMENTS AND TAX
                                           PROVISIONS

                                        In compliance with Article 7, comma 1 of Legislative Decree no. 37 of 6 February
notes to the financial statements 164




                                        2004, which rescinds articles 15, comma 3 and 39, comma 2 of Legislative Decree
                                        no. 87/92 allowing adjustments and provisions exclusively on the basis of tax
                                        regulations, previous tax timing differences are provided for.
                                        The effects of this elimination are recorded as extraordinary income, with notes
                                        on any related tax deferrals.

                                        2.1 VALUE ADJUSTMENTS RECORDED ONLY IN PURSUANCE
                                             OF TAX REGULATIONS
                                        No value adjustments were carried out.

                                        2.2 PROVISIONS MADE ONLY IN PURSUANCE OF TAX
                                             REGULATIONS
                                        No provisions were carried out.
      PART B – BALANCE SHEET
      INFORMATION
     SECTION 1 - LOANS

BREAKDOWN OF ITEM 10 “CASH AND BALANCES WITH
CENTRAL BANKS AND POST OFFICES”

                                                                31/12/2004   31/12/2003

Notes and coins                                                     23,983       33,464
Demand postal current accounts                                           4           25
TOTAL                                                               23,987       33,490


BREAKDOWN OF ITEM 30 “LOANS TO BANKS”

                                                               31/12/2004    31/12/2003

On demand                                                           49,999       77,617
• demand deposits                                                   14,372       31,735
• current accounts                                                  35,627       45,883
Other receivables                                                  316,916      201,448
Loans to central banks                                              34,858       25,746
Term deposits                                                      184,969      137,159
Loans                                                               97,089       38,544
TOTAL                                                              366,915      279,065


1.1 DETAILS OF ITEM 30 “LOANS TO BANKS”




                                                                                          notes to the financial statements 165
                                                               31/12/2004    31/12/2003

a)   loans to central banks                                         34,858       25,746
b)   bills eligible for refinancing with central banks                   0            0
c)   REPOS                                                               0            0
d)   loan of securities                                                  0            0


Loans to central banks as per item a) refer to the management account at the
Banca d’Italia.
The average rate of return on securities in FY 2004 was 2%, with an average worth
of about 36.385 million Euro.

1.2 CASH LOANS TO BANKS

Value/categories                                    Gross           Total           Net
                                                 exposure    write-downs       exposure

A. Doubtful loans                                        0             0              0
   A.1 Non performing loans                              0             0              0
   A.2 Watch-list                                        0             0              0
   A.3 Loans being restructured                          0             0              0
   A.4 Restructured loans                                0             0              0
   A.5 Non-guaranteed loans
       exposed to country risk                          0              0              0
B. Performing loans                               366,915              0        366,915
TOTAL                                             366,915              0        366,915


1.3 TREND OF DOUBTFUL LOANS TO BANKS
A table with details of the situation of doubtful loans towards banks cannot be
drawn up since there are no items included in this category and all the remaining
performing loans can be realised.
                                        1.4 TREND OF TOTAL ADJUSTMENTS OF LOANS TO BANKS
                                        The statement concerning the trend of total adjustments of loans to banks is not
                                        drawn up since no write-downs have been posted.

                                         BREAKDOWN OF ITEM 40 “LOANS TO CUSTOMERS”

                                                                                                     31/12/2004            31/12/2003

                                        Ordinary current accounts                                       1,444,020            1,388,536
                                        Assets sold from the trading portfolio                             25,532               29,625
                                        Carry-overs and loan REPOS                                         75,002               79,195
                                        Financial pooling                                                  54,957               56,317
                                        Mortgage loans                                                    982,000              560,261
                                        Unsecured loans                                                   161,892              171,085
                                        Other non-regulated subsidies on
                                        current account and other credits                               1,158,088            1,055,931
                                        Import-export loans                                               206,277              200,028
                                        Deposits in administration                                          4,744                2,152
                                        Outstanding credits                                                29,913               26,631
                                        Other technical forms                                                 290                  387
                                        Provisions for adjustment of the assets                           -28,161              -19,265
                                        TOTAL                                                           4,114,554            3,550,884


                                        The total amount of the distributed loans is expressed in the financial statements
                                        as a forecast of the value.

                                        1.5 DETAILS OF ITEM 40 “LOANS TO CUSTOMERS”
                                                                                                     31/12/2004            31/12/2003

                                        a) bills eligible for refinancing with central banks                 13,299            19,567
notes to the financial statements 166




                                        b) REPOS                                                             75,002            79,195
                                        c) loan of securities                                                     0                 0


                                        1.6 SECURED LOANS TO CUSTOMERS

                                                                                               31/12/2004                  31/12/2003

                                        a) from mortgages                                        1,080,898                    629,390
                                        b) from pledges on:                                         85,881                     64,533
                                           1 - cash deposits                          39,468                      18,273
                                           2 - securities                             23,326                      33,180
                                           3 - other stocks                           23,087                      13,080
                                        c) from guarantees of                                     859,682                     799,008
                                           1 - Governments                                 0                           0
                                           2 - other public institutions               2,818                       2,215
                                           3 - banks                                   2,303                       1,670
                                           4 - other operators                       854,561                     795,123
                                        TOTAL                                                    2,026,461                   1,492,931


                                        Loans towards customers, partly or totally secured for 2,026 million represent
                                        49.25% of the total.
1.7 CASH LOANS TO CUSTOMERS

Value/categories                               Gross                   Total                        Net
                                            exposure            write-downs                    exposure

A. Doubtful loans                            100,216                    23,514                   76,702
   A.1 Non performing              48,927                  19,014                  29,913
   A.2 Watch-list loans            43,040                   4,500                  38,540
   A.3 Loans being
       restructured                     0                         0                      0
   A.4 Restructured loans           8,249                         0                  8,249
   A.5 Non-guaranteed loans
       exposed to country risk          0                         0                        0
B. Performing loans                         4,061,513                   23,661                 4,037,852
TOTAL                                       4,161,729                   47,175                 4,114,554


1.8 TREND OF DOUBTFUL LOANS TO CUSTOMERS
                                                                                         Non guaranteed
                                                                                                  loans
                                    Non-performing Watch-list    Loans being Restructured    exposed to
Reasons/categories                            loans    loans    restructured        loans   country risk


A. Starting gross exposure
   as at 31/12/2003                         45,297   22,768               0            0              0
   A.1 of which for interest
         on delayed payment                  1,584        0               0           0               0
B. Increases                                25,239   84,526               0       8,249               0
   B.1 Performing loan inflows                 728   81,700               0       8,249               0
   B.2 Interest on delayed payment             353    1,452               0           0               0
   B.3 Transfer from other
         doubtful loan categories           24,158        0               0            0              0
   B.4 Other increases                           0    1,374               0            0              0
C. Decreases                                21,609   64,254               0            0              0




                                                                                                           notes to the financial statements 167
   C.1 Disbursements for
         performing loans                        0    1,376               0            0              0
   C.2 Write-offs                           11,829        0               0            0              0
   C.3 Collections                           9,764   38,720               0            0              0
   C.4 Gains on sales                           16        0               0            0              0
   C.5 Transfer to other doubtful
         loan categories                        0    24,158               0            0              0
   C.6 Other decreases                          0         0               0            0              0
D. Final gross exposure
   as at 31/12/2004                         48,927   43,040               0       8,249               0
    D.1 of which for interest on
        delayed payment                      1,557         0              0            0              0
                                        1.9 TREND OF TOTAL WRITE-DOWNS OF LOANS TO
                                            CUSTOMERS
                                        Reasons/categories                      Non Watch-list        Loans Restructured Non-guaranteed Performing
                                                                         performing                   being        loans          loans       loans
                                                                               loans           restructured                  exposed to
                                                                                                                           country risk


                                        A. Final total adjustments
                                           as at 31/12/2003                18,666      1,354             0            0              0     17,912
                                           A.1 of which for interest
                                                  on delayed payment           46          0             0            0              0          0
                                        B. Increases                        8,045      3,720             0            0              0     11,169
                                           B.1 Write-downs                  7,735      3,720             0            0              0     11,075
                                           B.1.1 of which for interest
                                                  on delayed payment             3          0            0            0              0           0
                                           B.2 Utilizations of credit
                                                  risk reserve                   0          0            0            0              0           0
                                           B.3 Transfers from
                                                  other loan
                                                  categories                  310          0             0            0              0          0
                                           B.4 Other increases                  0          0             0            0              0         94
                                        C. Decreases                        7,697        574             0            0              0      5,420
                                           C.1 Write-backs
                                                  for valuation                  64      140             0            0              0           0
                                           C.1.1 of which for interest
                                                  on delayed payment             0          0            0            0              0           0
                                           C.2 Write-backs
                                                  for collection              641          30            0            0              0           0
                                           C.2.1 of which for interest
                                                  on delayed payment           14           0            0            0              0          0
                                           C.3 Write-offs                   6,992           0            0            0              0      5,420
                                           C.4 Transfers to other
                                                  loan categories                0       310             0            0              0           0
                                           C.5 Other decreases                   0        94             0            0              0           0
notes to the financial statements 168




                                        D. Final total adjustments
                                           as at 31/12/2004                19,014      4,500             0            0              0     23,661
                                           D.1 of which for interest
                                               on delayed payment                30         0            0            0              0           0




                                              SECTION 2 - SECURITIES

                                        BREAKDOWN OF SECURITIES BY TYPE

                                                                                                    31/12/2004                       31/12/2003

                                        Debt securities                                                  328,031                          324,736
                                        - Treasury bonds and similar
                                          instruments eligible for refinancing
                                          with central banks                               2,149                        59,783
                                        - Bonds and other debt securities                325,882                       264,953
                                        Shares, quotas and other
                                        equity securities                                                    5,772                           7,285
                                        TOTAL                                                            333,803                          332,021
                                        of which:
                                        - Investment securities                                          130,192                          138,918
                                        - Trading securities                                             203,611                          193,103
2.1 INVESTMENT SECURITIES

Items/Values                           Balance-sheet value              Market value
1. Debt securities                                 127,000                   127,000
1.1 Government bonds                                     0                         0
    - listed                                0                       0
    - unlisted                              0                       0
1.2 Other securities                               127,000                   127,000
    - listed                                0                       0
    - unlisted                        127,000                 127,000
2. Equity securities                                 3,192                     3,170
    - listed                                 0                      0
    - unlisted                           3,192                  3,170
TOTAL                                              130,192                   130,170


The portfolio consists of securities that were specifically considered as fixed
assets, according to the relevant resolutions adopted upon purchase, in order to
obtain a steady inflow of funds in the medium-to-long term.
Moreover, it was deemed important to follow the criteria for the definition of
investment securities:
• Securities that are intended to be held as an investment cannot, as a principle,
  be sold before their natural maturity, except for extraordinary circumstances
  and, in any case, after resolution of the relevant administration body. By way of
  exception to this principle, security exchange and/or portfolio restructuring
  transactions can be carried out provided that they will not significantly change
  the portfolio values and that they are aimed at providing economic benefits in
  terms of profitability.
• The connected rate and exchange risks can be hedged by ad-hoc hedging




                                                                                       notes to the financial statements 169
  transactions.
• The allocation of securities in the examined section is based on an ad-hoc
  “framework resolution” of the relevant administrative body which establishes
  its percentage and absolute quantitative limits.

Derivative investment securities
During the year, steps were taken to close interest rate swap contracts linked to
debt securities listed in foreign regulated markets transferred to the trading
portfolio; the transfer and the successive valuation are undertaken on the basis of
the valuation resulting from the application, at the time of the transaction, of the
valuation rules applicable to the portfolio of origin, thus at cost. Closing the
contracts created a capital loss of Euro 3,729 thousand, which was recorded in
extraordinary charges.
                                        2.2 ANNUAL CHANGES IN INVESTMENT SECURITIES


                                        A. Opening balance                                                                 138,918
                                        B. Increases                                                                           642
                                           B1. Purchases                                                         0
                                           B2. Write-backs                                                       0
                                           B3. Transfers from the trading portfolio                              0
                                           B4. Other changes                                                   642
                                        C. Decreases                                                                         9,368
                                           C1. Sales                                                             0
                                           C2. Redemptions                                                       0
                                           C3. Write-downs                                                       0
                                               of which
                                               - lasting write-downs                                              0
                                           C4. Transfers to the trading portfolio                             9,134
                                           C5. Other changes                                                    234
                                        D. Final stocks                                                                    130,192


                                        2.3 TRADING SECURITIES

                                        Items/Values                                  Balance-sheet value             Market Value

                                        1. Debt securities                                       201,031                   204,897
                                        1.1 Government bonds                           21,124                21,124
                                            - listed                                   21,124                21,124
                                            - unlisted                                      0                     0
                                        1.2 Other securities                          179,907               183,773
                                            - listed                                  120,540               120,173
                                            - unlisted                                 59,367                63,600
                                        2. Equity securities                                        2,580                    2,580
                                            - listed                                     2,580                2,580
                                            - unlisted                                       0                    0
notes to the financial statements 170




                                        TOTAL                                                    203,611                   207,477


                                        The evaluation of the listed trading securities, resulted in a capital gain of Euro
                                        350.7 thousand, recorded in the profit and loss account. The valuation of unlisted
                                        securities resulted in a capital loss of Euro 33.1 thousand, recognised in the profit
                                        and loss account, and a capital gain of Euro 1,234.4 thousand not recognised in
                                        the profit and loss account; the valuation of securities transferred from the
                                        investment portfolio resulted in a capital gain of Euro 2,630.9 thousand which
                                        was not recognised in the profit and loss account.
                                        On the other hand write backs of securities depreciated in previous financial
                                        years and in the portfolio as well, amounted to 125.7 thousand Euro, debited, too,
                                        to the profit and loss account.
                                        As can be seen in the statement above, there are unrecorded increases in value in
                                        the balance sheet amounting to 3,866 thousand Euro compared to the market
                                        values, as defined in the previous Part A – Section 1 on evaluation criteria.
                                        The Bank maintained in its portfolio bonds it has issued amounting to 21,241.4
                                        thousand Euro purchased in negotiations with customers in the secondary
                                        market.

                                        Derivative trading securities
                                        Evaluation of the “Portugal” asset swap resulted in gain amounting to 179.7
                                        thousand Euro, calculated as the difference between the increase in value on
                                        securities amounting to 8,406.4 thousand Euro, recorded in the profit and loss
                                        account and the losses calculated on swaps amounting to 8,226.6 thousand Euro
                                        also recorded in the profit and loss account.
2.4 ANNUAL CHANGES IN TRADING SECURITIES


A. Opening balance                                                                          193,103
B. Increases                                                                                947,797
   B1. Purchases                                                           926,488
       - Debt securities                                                   811,332
         + government bonds                                                460,135
         + other securities                                                351,197
       - Equity securities                                                 115,156
   B2. Write-backs and revaluations                                          8,705
   B3. Transfers from the investment portfolio                               9,134
   B4. Other changes                                                         3,470
C. Decreases                                                                                937,289
   C1. Sales and redemptions                                               937,254
       - Debt securities                                                   817,477
         + government bonds                                                486,493
         + other securities                                                330,984
       - Equity securities                                                 119,777
   C2. Write-downs                                                              35
   C3. Transfers to the investment portfolio                                     0
   C5. Other changes                                                             0
D. Final stocks                                                                             203,611




      SECTION 3 – EQUITY INVESTMENTS
3.1 SIGNIFICANT EQUITY INVESTMENTS
Designation                                       Head    Shareholders’    Profit/      %     Balance
                                                 Office         equity        loss   share sheet value


A. Subsidiary companies




                                                                                                         notes to the financial statements 171
    1. Claris Factor spa                Montebelluna           7,369       2,594    100       4,155
    2. Claris Assicurazioni srl         Montebelluna             171          79    100          52
    3. Claris Broker spa                Montebelluna             110         -42    100         568
    4. Claris Leasing spa                    Treviso          22,404       2,009    100      20,000
    5. Claris Finance srl                      Roma               10           0     70           7
    6. Banca Italo-Romena spa                Treviso          37,157       3,299 92,308      31,193
    7. Banca di Bergamo spa                 Bergamo           42,211       1,712 60,068      28,589
    8. Banca Meridiana spa                       Bari         38,615       2,006 99,385     115,451
    9. Immobiliare Italo Romena srl         Bucarest              96          18    100          88
   10. Veneto Ireland Financial
        Services ltd                         Dublino         138,279      11,278     100    127,000
B. Significantly influenced companies
     1. Palladio Finanziaria spa             Vicenza         165,790      15,063 21,212       29,696
     2. Sintesi 2000 srl                      Milano              96         -81 33,333           59
     3. Claris Vita spa                       Milano          52,414       1,676     20       14,610
                                        3.2 ASSETS AND LIABILITIES INVOLVING GROUP
                                            COMPANIES

                                                                                             31/12/2004        31/12/2003

                                        a) Assets                                                700,193           543,151
                                           1. loans to banks                                     132,326            78,436
                                               of which: subordinated                                  0                 0
                                           2. loans to financial institutions                    440,565           336,977
                                               of which: subordinated                                  0                 0
                                           3. loans to other customers                               277               368
                                               of which: subordinated                                  0                 0
                                           4. bonds and other debt securities                    127,025           127,370
                                               of which: subordinated                                  0                 0
                                        b) Liabilities                                           411,187           441,746
                                           1. due to banks                                       350,125           363,601
                                           2. due to financial institutions                          751            23,968
                                           3. due to other customers                               4,540             5,203
                                           4. securities issued                                   55,771            48,974
                                           5. subordinated liabilities                                 0                 0
                                        c) Guarantees and commitments                            287,848           302,094
                                           1. Guarantees provided                                270,374           301,751
                                           2. Commitments                                         17,474               343


                                        In detail:
                                        item a.1 mutual accounts and demand deposits of Banca Italo-Romena spa,
                                                   Banca di Bergamo spa and Banca Meridiana spa;
                                        item a.2 loans granted to Claris Factor spa, Veneto Ireland Financial Services
                                                   ltd, Claris Leasing spa and Claris Finance srl, and current accounts
                                                   with Claris Leasing spa, Claris Factor spa and Veneto Ireland Financial
notes to the financial statements 172




                                                   Services ltd;
                                        item a.3 current accounts with Claris Broker spa and Claris Vita spa;
                                        item a.4 bonds of Veneto Ireland Financial Services ltd and Claris Finance srl;
                                        item b.1 mutual accounts and term deposist of Banca Italo-Romena spa, and
                                                   mutual accounts and payable REPOS of Banca di Bergamo spa and
                                                   Banca Meridiana spa;
                                        item b.2 current account deposits of Claris Finance srl;
                                        item b.3 current account deposits of Claris Assicurazioni srl and Claris Broker
                                                   spa;
                                        item c.1 guarantees issued on behalf of Claris Leasing spa, Claris Factor spa,
                                                   Claris Assicurazioni srl, Veneto Ireland Financial Services ltd, Banca
                                                   Italo-Romena spa, Banca di Bergamo spa and Banca Meridiana spa;
                                        item c.2 commitments to Banca di Bergamo spa.
3.3 ASSETS AND LIABILITIES INVOLVING SUBSIDIARIES
    (OTHER THAN GROUP COMPANIES)

                                                    31/12/2004       31/12/2003

a) Assets                                                79,752             63,002
   1. loans to banks                                     54,315             23,369
       of which: subordinated                                 0                  0
   2. loans to financial institutions                     8,359             22,704
       of which: subordinated                                 0                  0
   3. loans to other customers                           17,077             16,588
       of which: subordinated                                 0                  0
   4. bonds and other debt securities                         0                342
       of which: subordinated                                 0                  0
b) Liabilities                                           39,859             48,597
   1. due to banks                                       15,055             46,799
   2. due to financial institutions                      20,968              1,785
   3. due to other customers                              3,836                 13
   4. securities issued                                       0                  0
   5. subordinated liabilities                                0                  0
c) Guarantees and commitments                              186                162
   1. guarantees provided                                  186                162
   2. ommitments                                             0                  0


In details:
item a.1 our deposits in controlled banks;
item a.2 our current account loans towards controlled financial entities;
item a.3 our loan to controlled companies;
item a.4 bonds in the portfolio of controlled Italian banks;
item b.1 deposits and current accounts payable of controlled banks;




                                                                                     notes to the financial statements 173
item b.2 current accounts payable of controlled holding companies;
item b.3 current accounts payable of other controlled companies;
item c.1 guarantees issued to controlled companies.

3.4 BREAKDOWN OF ITEM 70 “EQUITY INVESTMENTS”
                                                    31/12/2004       31/12/2003

a) In banks                                              20,365             19,693
   1. listed                                             14,777             14,105
   2. unlisted                                            5,588              5,588
b) In financial institutions                             33,994             32,464
   1. listed                                              1,800              1,800
   2. unlisted                                           32,194             30,664
c) Other                                                 29,700             16,698
   1. listed                                                  0              1,972
   2. unlisted                                           29,700             14,726
TOTAL                                                    84,059             68,855
                                        3.5 BREAKDOWN OF ITEM 80 “EQUITY INVESTMENTS IN
                                            GROUP COMPANIES”

                                                                                                         31/12/2004         31/12/2003

                                        a) In banks                                                         175.233             159.245
                                           1. listed                                                              0                   0
                                           2. unlisted                                                      175.233             159.245
                                        b) In financial institutions                                        151.162             151.162
                                           1. listed                                                              0                   0
                                           2. unlisted                                                      151.162             151.162
                                        c) Other                                                                 708             73.759
                                           1. listed                                                               0                  0
                                           2. unlisted                                                           708             73.759
                                        TOTAL                                                               327.103             384.166


                                        Annex “D”to the notes to the financial statements shows in details all the equity
                                        investments of the Company.

                                        3.6 ANNUAL CHANGES IN EQUITY INVESTMENTS

                                        3.6.1 EQUITY INVESTMENTS IN GROUP COMPANIES

                                        A. Opening balance                                                                     384,166
                                        B. Increases                                                                            53,163
                                           B1. Purchases                                                     15,989
                                           B2. Write-backs                                                        0
                                           B3. Revaluations                                                       0
                                           B4. Other changes                                                 37,174
notes to the financial statements 174




                                        C. Decreases                                                                           110,226
                                           C1. Sales                                                         95,616
                                           C2. Write-downs                                                        0
                                               of which: oher than temporary write-downs                          0
                                           C3. Other changes                                                 14,610
                                        D. Final stocks                                                                        327,103
                                        E. Total revaluations                                                                        0
                                        F. Total adjustments                                                                         0


                                        In details:

                                        •   Item B1
                                            For purchase of shares of the following company
                                                                                       shares                    no.      Counter-value

                                        Banca Italo-Romena spa                               ordinary             (*)             3,615
                                        Banca di Bergamo spa                                 ordinary         35,277                  9
                                        Banca Meridiana spa                                  ordinary      2,396,143             12,365
                                        (*) This is the settlement of the remaining subscribed shares.

                                        •   Item B4
                                            Transfer profit of the following equity investments
                                                                                        shares                   no.      Counter-value

                                        Claris Vita spa                                      ordinary        60,000,000          37,174

                                        •   Item C1
                                            Transfer of the following equity investments
                                                                                       shares                    no.      Counter-value

                                        Claris Vita spa                                      ordinary        60,000,000          95,616

                                        •   Item C3
                                            Transfer of shares to other equity investments
                                                                                       shares                    no.      Counter-value

                                        Claris Vita spa                                      ordinary        15,000,000          14,610
3.6.2 OTHER EQUITY INVESTMENTS

A. Opening balance                                                                     68,855
B. Increases                                                                           47,849
   B1. Purchases                                                   32,205
   B2. Write-backs                                                    892
   B3. Revaluations                                                     0
   B4. Other changes                                               14,752
C. Decreases                                                                           32,645
   C1. Sales                                                       32,225
   C2. Write-downs                                                     44
       of which: other than temporary write-downs                      44
   C3. Other changes                                                  376
D. Final stocks                                                                        84,059
E.   Total revaluations                                                                    0
F.   Total adjustments                                                                    44

Following are the most significant transactions:

•    Item B1
     For purchase of shares of the following companies
                                                shares                no.       Counter-value
Veneto Sviluppo spa                                ordinary         2,498                   6
Sec Servizi spa                                    ordinary     1,347,215                 701
Arca SGR spa                                       ordinary       452,000                 589
Alpifin in liquidation srl                         ordinary        77,469                   1
Banca Credito Valtellinese scrl                       rights      514,000                 221
Est Capital sgr                                    ordinary        13,500                 141
Palladio Finanziaria spa                           ordinary    28,223,774              29.696
Treviso Glocal scarl                                                   (*)                 16
Dutch Romanian Trading Group                                          (**)                727
Centrosim spa                                      ordinary         1,784                 107




                                                                                                notes to the financial statements 175
(*) settlement for loss balance
(**) accessory charges

•    Item B2
     Write backs of the following equity investments
                                                                                Counter-value
Banca Popolare di Milano scarl                                                           892

•    Item B4
     Transfer profit of the following equity investments and transfer
     of shares from equity investments in Group companies
                                                                                Counter-value
Tim spa                                                                                   141
Claris Vita spa                                                                        14,610

•    Item C1
     Transfer of the following equity investments
                                                shares                no.       Counter-value
Banca Credito Valtellinese scrl                    ordinary                               221
Banca Credito Valtellinese scrl                       rights          514,000             182
Tim spa                                             savings           479,000           2,113
Palladio Finanziaria spa                           ordinary            20,000          29,696
Elsag supernet spa                                 ordinary             1,366              13

•    Item C2
     Write-down of the following equity investments
                                                                                Counter-value
Sintesi 2000 srl                                                                          28
Treviso Glocal scarl                                                                      16

•    Item C3
     Loss on trasfer of the following equity investments
                                                                                Counter-value
Euros spa Cefor & Istinform consulting                                                   108
Banca Credito Valtellinese scrl                                                           38
Elsag Supernet spa                                                                       152
Alpifin in liquidation srl                                                                77
                                             SECTION 4 – TANGIBLE AND
                                             INTANGIBLE FIXED ASSETS

                                        BREAKDOWN OF ITEM 100 “TANGIBLE FIXED ASSETS”

                                                                                                    31/12/2004    31/12/2003
                                        Property                                                        51,540        24,490
                                        Asset under construction                                           561        32,935
                                        Furniture and plant                                             28,617        12,680
                                        Furniture and plant – asset under construction                   2,073         3,818
                                        TOTAL                                                           82,791        73,923


                                        Fixed assets under construction refer to the advance on the new premises of the
                                        Pederobba branch. Since they are fixed assets in progress and since the relevant
                                        works and the subsequent recording have not been completed yet, no
                                        amortisation or depreciation was posted for such asset in FY 2004.

                                        4.1 ANNUAL CHANGES IN TANGIBLE FIXED ASSETS

                                                                                         Property     Furniture        Total
                                        A.   Opening balance                             57,425        16,498        73,923
                                        B.   Increases                                    2,811        19,170        21,981
                                             B1. Purchases                                2,811        12,522        15,333
                                             B2. Write-backs                                  0             0             0
                                             B3. Revaluations                                 0             0             0
                                             B4. Other changes                                0         6,648         6,648
                                        C.   Decreases                                    8,135         4,978        13,113
                                             C1. Sales                                        0           103           103
notes to the financial statements 176




                                             C2. Write-downs:                             1,485         4,761         6,246
                                                 a) depreciations                         1,485         4,761         6,246
                                                 b) other than temporary
                                                    write-downs                                0             0            0
                                             C3. Other changes                             6,650           114        6,764
                                        D.   Final stocks                                52,101        30,690        82,791
                                        E.   Total revaluations                            4,265             0        4,265
                                        F.   Total adjustments:
                                             a) depreciations                            16,386        41,707        58,093
                                             b) other than temporary
                                                 write-downs                                   0             0            0


                                        Changes are due to:
                                        Item B1 Property - Purchase of land near the Administrative Headquarters and
                                                 additional works on the same;
                                        Item B1 Furniture - purchase of ordinary and business operating, machines
                                                 and sundry equipment”, completion of furnishing of the
                                                 Administrative Headquarters;
                                        Item B4 Property and Furniture - gain on asset earnings, reclassification of the
                                                 Administrative Headquarters, breakdown of work undertaken in 2003
                                                 and reallocation of share from property;
                                        Item C1 Furniture - sale or retirement of obsolete and no long usable assets;
                                        Item C3 Property - reclassification of the Administrative Headquarters,
                                                 breakdown of work undertaken in 2003 and reallocation of share to
                                                 furniture;
                                        Item C3 Furniture - losses on disposal with transfer of assets and account
                                                 transfer of item under construction.
 Depreciation is calculated according to the methods described in the section
“Accounting policies”, applying the following rates:


Property                                                                          3%
Cars                                                                             25%
Electronic machines                                                              20%
Alarms                                                                           30%
Furniture                                                                        15%
Furniture and ordinary office machine                                            12%
Equipment with unit cost amounting to less than Euro 516.45                     100%


Half rates are applied to assets put into use during the year according to the tax
regulations.
In compliance with art. 10 of Act of 19 March 1983 No. 72 the annex B lists the
property of the Company for which monetary revaluations were posted in the
past.

BREAKDOWN OF ITEM 90 “INTANGIBLE FIXED ASSETS”

                                                              31/12/2004   31/12/2003

Goodwill                                                          16,336       17,244
Software purchases                                                 1,120        1,698
Other intangible fixed assets                                      2,441        3,482
TOTAL                                                             19,897       22,424


The item “goodwill” refers to the price paid for the purchase of the ex-Capitalia
branches, has been amortised over 20 years taking into account the assumptions




                                                                                        notes to the financial statements 177
on the growth of the business and the gradual profitability of the acquired
company.

4.2 CHANGES DURING THE YEAR IN INTANGIBLE FIXED
    ASSETS


A.    Opening balance                                                         22,424
B.    Increases                                                                1,204
      B1. Purchases                                               1,204
      B2. Write-backs                                                 0
      B3. Revaluations                                                0
      B4. Other changes                                               0
C.    Decreases                                                                3,731
      C1. Sales                                                       0
      C2. Write-downs:                                            3,476
          a) amortisation                                         3,476
          b) other than temporary write-downs                         0
      C3. Other changes                                             255
D.    Final stocks                                                            19,897
E.    Total revaluations                                                           0
F.    Total adjustments:                                                       9,980
      a) amortisations                                                         9,980
      b) other than temporary write-downs                                          0
                                             SECTION 5 - OTHER ASSET ITEMS

                                        5.1 BREAKDOWN OF ITEM 130 “OTHER ASSETS”

                                                                                                     31/12/2004   31/12/2003

                                        Advances on suppliers’ invoices                                      53           17
                                        Portfolio operations to be settled                               10,464        2,874
                                        Interests and commissions receivable                              3,904        7,267
                                        Securities transactions                                           1,121        1,489
                                        Foreign operations to be settled                                  4,707        9,160
                                        Entries to be settled by “proxy” procedure                       32,219       16,848
                                        Current account cheques under negotiation                        19,434       21,237
                                        Loans due from the Treasury                                      28,881       31,875
                                        Deferred tax assets                                               4,581        4,555
                                        Off-balance sheet operations                                        688        1,589
                                        Premiums for options and similar instruments                      1,701        1,361
                                        Outstanding and protested bills and cheques                          41           48
                                        Other assets                                                     30,418       21,894
                                        TOTAL                                                           138,212      120,214


                                        The item “loans due from the Treasury”includes:

                                                                                                     31/12/2004   31/12/2003

                                        Tax credit of previous FYs                                        7,744       18,944
                                        Tax advance on severance indemnity                                  262          334
                                        Revaluation of tax advance for severance indemnity                  187          175
                                        Irpeg/Irap advance payments                                       8,819        2,885
                                        Advance payment of tax witholding                                 4,911        5,131
                                        Stamp duties advance payments                                     3,315            0
                                        Paid witholding tax                                                 655          333
notes to the financial statements 178




                                        Advance substitute tax on medium-to-long term transactions        2,124          544
                                        VAT advance payment                                                  43          307
                                        VAT on tax collector’s fee to be recovered                          171          171
                                        Other tax credits                                                   650          247
                                        Tax credits on dividend                                               0        2,804
                                        TOTAL                                                            28,881       31,875


                                        5.2 BREAKDOWN OF ITEM 140 “PREPAYMENTS AND
                                            ACCRUED INCOME”

                                                                                                     31/12/2004   31/12/2003

                                        Accrued income from
                                        - Interest receivable on securities                              11,965        9,138
                                        - Interest receivable on REPOS                                      418          423
                                        - Spreads on off-balance sheet operations                        13,202       12,146
                                        - Interest on loans to customers                                  5,906        7,861
                                        - Interest on loans with banks                                      849          485
                                        Total accrued income                                             32,340       30,052
                                        Prepayments of
                                        - Insurance premiums                                                156          142
                                        - Other prepayments                                               3,158        3,663
                                        Total prepayments                                                 3,314        3,805
                                        TOTAL PREPAYMENTS AND ACCRUED INCOME                             35,654       33,857


                                        Prepayments and accrued income are calculated in accordance with the accrual
                                        principle.

                                        5.3 ADJUSTMENTS FOR PREPAYMENTS AND ACCRUED
                                             INCOME
                                        The Company did not take advantage of the option to directly adjust, by either
                                        increasing or decreasing, the asset and liability accounts to which prepayments and
                                        accrued income refer.
5.4 DISTRIBUTION OF SUBORDINATED ASSETS

                                                              31/12/2004   31/12/2003

a) loans to banks                                                     0            0
b) loans to customers                                                 0            0
c) bonds and other debt securities                                    0            0




     SECTION 6 - DEBTS

BREAKDOWN OF ITEM 10 “DUE TO BANKS”

                                                 31/12/2004                31/12/2003

On demand                                           354,349                   345,818
• Current accounts                    294,676                    332,985
• Demand deposits                      59,673                     12,833
On maturity or with notice                          140,888                   338,386
• Term deposits                        75,400                    279,988
• Loans                                 1,130                      1,769
• Carry-over and REPOS                 36,493                     27,262
• Gold subsidies                       27,865                     29,367
TOTAL                                               495,237                   684,204


6.1 DETAILS OF ITEM “DUE TO BANKS”

                                                              31/12/2004   31/12/2003

a) REPOS                                                          36,493       27,262
b) loan of securities                                                  0            0




                                                                                        notes to the financial statements 179
BREAKDOWN OF ITEM 20 “DUE TO CUSTOMERS”

                                                 31/12/2004                31/12/2003

On demand                                         1,861,050                 1,541,166
• savings deposits                     133,617                   127,528
• current accounts                   1,727,433                 1,413,637
On maturity or with notice                          263,665                   187,652
• term savings deposits                 1,663                      2,143
• term current accounts               140,847                     56,787
• carry-over and REPOS                121,150                    128,717
• other agreements                          5                          5
TOTAL                                             2,124,715                 1,728,818


6.2 DETAILS OF ITEM “DUE TO CUSTOMERS”

                                                              31/12/2004   31/12/2003

a) REPOS                                                         121,150      128,717
b) loan of securities                                                  0            0


BREAKDOWN OF ITEM 30 “SECURITIES ISSUED”

                                                 31/12/2004                31/12/2003

Bonds                                             1,746,755                 1,544,422
Certificates of deposit                             170,688                   106,770
• short term                          167,428                    105,160
• medium/long term                      1,574                      1,610
• matured                               1,686                          0
Other securities                                         0                     40,000
TOTAL                                             1,917,443                 1,691,191
                                        BREAKDOWN OF ITEM 40 “DEPOSITS IN ADMINISTRATION”

                                                                                                    31/12/2004     31/12/2003

                                        Deposits in administration                                        4,744         2,152


                                        Funds received from:

                                                                                                    31/12/2004     31/12/2003

                                        The Treasury                                                         21            43
                                        Veneto Sviluppo spa                                               4,723         2,109
                                        TOTAL                                                             4,744         2,152


                                        The net change during the financial year is due to:
                                        • Increase due to the management activity amounting to 3,270 thousand Euro.
                                        • Decrease due to return of fund received of 678 thousand Euro.
                                        The management activity resulted in the issuance of facilitated agriculture loans
                                        to customers as per Act 88/1980 and the application of several regional laws using
                                        funds received from Veneto Sviluppo spa.



                                           SECTION 7 - PROVISIONS

                                        CHANGES IN ITEM 70 “EMPLOYEES’ SEVERANCE FUND”
                                        OCCURRED IN THE FINANCIAL YEAR
notes to the financial statements 180




                                        A. Opening balance                                                             16,993
                                        B. Increases                                                                    2,473
                                           B1. Accruals                                                  2,473
                                           B2. Other changes                                                 0
                                        C. Decreases                                                                      680
                                           C1. Utilizations                                                295
                                           C2. Other changes                                               435
                                        D. Final stocks                                                                18,736


                                        In the loans to the Treasury the tax advance for severance payment accrued as at
                                        31 December 1996-1997 is entered according to the Law. Such advance payment
                                        amounts to 445.7 thousand of Euro, and, in accordance with art. 3 par. 213 of Act
                                        662/96 it was revaluated according to the criteria in the 4th par. of art. 2120 of the
                                        Italian Civil Code. The sum of 12.2 thousand of Euro, the result of the revaluation,
                                        was entered in the profit and loss account.

                                        7.1 BREAKDOWN OF ITEM 90 “CREDIT RISK RESERVES”
                                                                                                    31/12/2004     31/12/2003

                                        Interest on delayed payment                                          0          1,538
                                        TOTAL                                                                0          1,538
7.2 CHANGES IN “CREDIT RISK RESERVES” OCCURRED IN
    THE FINANCIAL YEAR

A.    Opening balance                                                         1,538
B.    Increases                                                                   0
      B1. Provisions                                                0
      B2. Other changes                                             0
C.    Decreases                                                               1,538
      C1. Utilization                                               6
      C2. Other changes                                         1,532
D.    Final stocks                                                                0


BREAKDOWN OF ITEM 80 “PROVISIONS FOR RISKS AND
CHARGES”
                                                           31/12/2004    31/12/2003
a) Pensions and similar provisions                                  0             0
b) Provision for taxation                                      17,294        21,189
c) Provisions for risks and charges: other provisions          13,237        11,107
TOTAL                                                          30,531        32,297


BREAKDOWN OF ITEM 80 B) “PROVISIONS FOR TAXATION”

                                                           31/12/2004    31/12/2003
Provision for current direct taxes                             16,004        19,873
Indirect taxes and dues                                         1,290         1,316
TOTAL                                                          17,294        21,189


CHANGE IN ITEM 80 B) “PROVISIONS FOR RISKS AND




                                                                                       notes to the financial statements 181
CHARGES: PROVISION FOR TAXATION” OCCURRED IN
THE FINANCIAL YEAR


A.    Opening balance                                                        21,189
B.    Increases                                                              16,106
      B1. Provisions                                          16,106
      B2. Other changes                                            0
C.    Decreases                                                              20,001
      C1. Utilizations                                        20,001
      C2. Other changes                                            0
D.    Final stocks                                                           17,294


PROVISIONS FOR TAXATION (ITEM 80 B)
The current share of the provision includes the payables for Ires/Irap taxes of the
financial year.
The advance payments deposited into the Treasury for the Ires and Irap taxes are
indicated as “other assets”(item 130).
As for the tax situation, all financial years until 1995 are concluded.
As for the inspection of the tax inspectors in 2002, for the part relating to the
verification of the facilitated provisions in the balance sheet regarding the former
Banca di Credito Cooperativo del Piave e del Livenza (“Basevi”Act for FY 1996),
the provincial tax commissioner of Treviso, passing sentence on 9 February 2004
which was filed on 8 March 2004, accepted the Bank’s appeal.
On 27 December 2004 the Agenzia delle Entrate di Treviso (Inland Revenue of
Treviso) gave notification of its assessment for the years 1997/1998 regarding
provisions in the financial statements relating to the former Banca di Credito
Cooperativo del Piave e del Livenza. Being in disagreement with the assessment,
the Bank filed an appeal with the Tax Commissioner on 17 February 2005.
On 30 December 2004, the Corte dei Conti, public prosecutor for the region of
Lazio, invited several credit institutions, including the former Banca di Credito
Cooperativo del Piave e del Livenza, to deduct, in accordance with article 5 of
                                        Legislative Decree n. 453 of 15 November 1993, which became Law no. 19 on 14
                                        January 1994, for alleged damage caused to the Ministero delle Finanze in terms
                                        of loss of tax receipts. The decisions were filed on 4 February 2005.
                                        Appeal was also made under article 38 of D.P.R. no. 602 on 29 September 1973,
                                        regarding the regional tax on production activities (Irap), for the majority of the
                                        amount relating to banking/insurance activities for the tax years from 2000 to
                                        2003.
                                        The Bank appealed under the same article cited above concerning the
                                        compatibility of the tax (Irap) with article 33 of Directive no. 77/388/CEE, for the
                                        tax years from 2000 to 2003 and for prepaid amounts relating to 2004.

                                        7.3 BREAKDOWN OF ITEM 80 C) “PROVISIONS FOR RISKS
                                            AND CHARGES: OTHER PROVISIONS”

                                                                                                                31/12/2004      31/12/2003

                                        Provision for risks and charges capital losses
                                        on credit derivatives                                                            0              317
                                        Other provisions                                                            13,237           10,790
                                        TOTAL                                                                       13,237           11,107


                                        The line “other provisions” is comprised of provisions of Euro 9,885 million for
                                        potential repeals and disputes, including the ones resulting from the merger of
                                        the former BCC del “Piave e Livenza”, of prudent provision of Euro 945 thousand
                                        on derivative transactions with clients, of Euro 1.082 million for renewal of the
                                        collective national labour contract, of Euro 1 million for guarantees given, of Euro
notes to the financial statements 182




                                        325 thousand for other matters including country risk on Brazilian securities.

                                        CHANGE IN ITEM 80 C) “PROVISIONS FOR RISKS AND
                                        CHARGES: OTHER PROVISIONS”

                                        A.    Opening balance                                                                       11,107
                                        B.    Increases                                                                              2,723
                                              B1. Provisions                                                          2,723
                                              B2. Other changes                                                           0
                                        C.    Decreases                                                                                593
                                              C1. Utilizations                                                          593
                                              C2. Other changes                                                           0
                                        D.    Final stocks                                                                          13,237


                                                                                      Balance as at                            Balance as at
                                                                                       31/12/2003     (Util.)     Provisions    31/12/2004

                                        c) Other provisions:
                                           2 - provisions for risks and charges             10,790      276           2,723          13,237
                                           3 - capital losses on credit derivatives            317      317               0               0
                                        TOTAL OTHER PROVISIONS                              11,107      593           2,723          13,237


                                        7.4 “DEFERRED TAX ASSETS”


                                        1.    Initial amount                                                                          4,938
                                        2.    Increases                                                                                 937
                                              2.1 Deferred tax asset arising in the year                                 937
                                              2.2 Other increases                                                          0
                                        3.    Decreases                                                                                 470
                                              3.1 Deferred tax asset cancelled in the year                               470
                                              3.2 Other decreases                                                          0
                                        4.    Final amount                                                                            5,405
7.5 “DEFERRED TAXES”


1.   Initial amount                                                              383
2.   Increases                                                                   570
     2.1 Deferred taxes arising in the year                         570
     2.2 Other increases                                              0
3.   Decreases                                                                   130
     3.1 Deferred taxes cancelled in the year                       130
     3.2 Other decreases                                              0
4.   Final amount                                                                824


The entries which genereted the deferred tax assets and liabilities set out above
refer to:


Deferred tax assets
Write-downs of loans to customers                                                201
Entertaining expenses                                                             87
Provisions for risks and charges                                               4,305
Charges for contract renewal                                                     357
Write-downs                                                                      455
TOTAL DEFERRED TAX ASSETS                                                      5,405

Deferred tax liabilities
Gains on tangible asset disposal taxable in 5 years                              254
Reversal of tax-driven adjustment                                                438
Interests on delayed payments                                                    132
TOTAL DEFERRED TAX LIABILITIES                                                   824
TOTAL LOSS ANTICIPATED/DEFERRED TAXES                                          4,581




                                                                                        notes to the financial statements 183
1. Deferred tax assets and liabilities related to events or transactions in
   the profit & loss account
To determine the amounts to be recognised in the financial statements deductible
and taxable temporary differences were identified; their identification had effects
on the profit and loss accounts of the financial years when the entries that
originated them were recorded, in terms of increasing on reducing the amount of
taxes that were paid.

All deductible and taxable temporary differences were classified as time-defined
reversal differences, i.e. those differences where it was possible to identify the
period of reversal with certainty, in accordance with “Testo unico delle imposte
sui redditi (Tuir)”.

The differences reported originated from the provisions for risks and charges, for
write-downs on credits which exceeded fiscal limits (to be recovered with seven
years), entertaining expenses (to be recovered with five years), the capital gains
(to be taxed with five years), interest on delayed payments for non-performing
loans, and extraordinary income following the elimination of previous differences
in tax treatment.

In accordance with the principle of “reasonable certainty” that sufficient future
taxable income will be realised to allow the Company to effectively recover the
tax benefits, net temporary differences (deductible minus taxable ones) for each
financial year were compared to the taxable profits estimated for the years of the
business plan.

When the financial statements were prepared deferred tax liability, their balances
being lower, were offset against deferred tax assets. The procedure was carried
out taking into account what is provided for by the Banca d’Italia, which allows
it only when the deferred tax assets and liabilities refer to the same tax and expire
in the same period of time.
                                        2. Deferred tax assets and liabilities related to shareholders’ equity
                                        No deferred tax assets or liabilities have been credited or debited on items of
                                        shareholders’equities. Therefore, the related tables are not presented; as a
                                        consequence, they are not calculated in the relevant tables.

                                        Amounts and variations in the financial year concerning the deferred tax
                                        assets and liabilities related to shareholders’ equity not included in the
                                        sub-item 80 b) “provisions for taxation”
                                        No deferred tax liabilities have been recognised.

                                        Amounts and changes of the temporary taxable differences to which do not
                                        meet the requirements for recognition of deferred tax liabilities
                                        Temporary taxable differences which do not meet the requirements for
                                        recognition of deferred tax liabilities, since they refer to matters in items whose
                                        taxation is considered as unlikely, are the following:
                                        • tax free revaluation reserves as per Act 576/75 amounting to 328 thousand Euro;
                                        • tax free revaluation reserves as per Act 72/83 amounting to 3.226 million Euro;
                                        • tax free revaluation reserves as per Act 413/91 amounting to 2.001 million Euro.
                                        As for the mentioned reserves, the Bank did not provided for any deferred tax
                                        liabilities since the utilisation of the aforementioned reserves is considered as
                                        unlikely.



                                           SECTION 8 - SHARECAPITAL, EQUITY
                                           RESERVES, RESERVE FOR GENERAL
notes to the financial statements 184




                                           BANKING RISK AND SUBORDINATED
                                           LIABILITIES

                                        BREAKDOWN OF THE SHAREHOLDERS’ EQUITY AND
                                        SUBORDINATED LIABILITIES

                                        Item        Description                                  31/12/2004               31/12/2003

                                        item 100    Reserve for general banking risk                 39,057                    6,057
                                        item 110    Subordinated liabilities                        181,814                   82,065
                                        item 120    Share capital                                    98,646                   95,068
                                        item 130    Issue premiums                                  304,765                  280,983
                                        item 140    Reserves                                        133,871                  110,540
                                                    a) legal reserve                    33,012                   29,004
                                                    b) reserve for own equity shares
                                                        or quotas                            0                        0
                                                    c) statutory reserves                    0                        0
                                                    d) other reserves                  100,859                   81,536
                                        item 150    Revaluation reserves                              5,554                    5,554
                                        item 170    Profit for the year                              45,658                   40,077
                                        TOTAL SHAREHOLDERS’ EQUITY                                  809,365                  620,344


                                        The movements of the items making up the shareholders’ equity are detailed in
                                        Annex A.

                                        BREAKDOWN OF ITEM 100 “RESERVE FOR GENERAL
                                        BANKING RISK”

                                                                                                       31/12/2004         31/12/2003

                                        Reserve for general banking risk                                      39,057           6,057
BREAKDOWN OF ITEM 110 “SUBORDINATED LIABILITIES”

                                                         31/12/2004    31/12/2003

Subordinated liabilities                                    181,814        82,065


The item consists of the following bonded loans:

 “Veneto Banca convertible subordinated 2000-2007 1.5%”
• Issued on 31 March 2000 in 600,000 bonds with a per-capita nominal value of
  Euro 180.76 for a nominal total amount of Euro 108,455,948.81;
• Annual before tax interest rate postponed for 1.5% on the nominal value;
• Maturity: 1 April 2007;
• No acceleration clauses are in place;
• Subordination clauses; in case of dissolution or liquidation of the Bank, the
  bonds shall be reimbursed only after the other creditors who are not
  subordinated are reimbursed;
• Every bond shall be converted into 10 Veneto Banca common shares. The
  conversion can be carried out:
  - in the interval between 1/1 and 28/2 2005 (one third);
  - in the interval between 1/1 and 28/2 2006, (one third);
  - in the interval between 1/1 and 28/2 2007, (last third);
  - or, if the bond creditor wants, all the amount at expiration of the loan.

In FYs 2003 and 2004 the conversion of two thirds of the loan has been
anticipated; at the end of the period the value is Euro 37,010,954.05 expiring in




                                                                                    notes to the financial statements 185
April 2007. The Extraordinary Shareholders’ Meeting on 2 December 2004 gave
approval for early conversion of outstanding loan beginning 1 January 2005. On
the date of approval of the financial statements by the Board of Directors, the
loan was converted for Euro 36,280,684.

“Veneto Banca convertible subordinated 2001-2007 2%”
• Issued on 30 April 2001 in 249,999 bonds with a nominal per-capita value of
  Euro 186.00 for a total nominal value of Euro 46,499,814.00;
• Annual gross interest rate postponed for 2% of the nominal value;
• Expiration date 1 May 2007;
• No acceleration clauses are in place;
• Subordination clauses: in case of dissolution o liquidation of the Bank, the
  bonds shall be reimbursed only after the other creditors who are not
  subordinated are reimbursed;
• Every bond shall be converted into 10 Veneto Banca common shares. The
  conversion can be carried out:
  - in the interval between 1/1 and 28/2 2005 (one third);
  - in the interval between 1/1 and 28/2 2006, (one third);
  - in the interval between 1/1 and 28/2 2007, (last third).

In FYs 2003 and 2004 the conversion of two thirds of the loan has been
anticipated; at the end of the period the value is Euro 16,338,426.00 expiring on
May 2007.

The Extraordinary Shareholders’ Meeting on 2 December 2004 gave approval for
early conversion of outstanding loan beginning 1 January 2005. On the date of
approval of the financial statements by the Board of Directors, the loan was
converted for Euro 16,028,736.
                                        “Veneto Banca subordinated 2003/2013 Step Up (lower Tier II)”
                                        • Issued on 30 December 2003 in 28,272 bonds for a nominal per-capita value of
                                          Euro 1,000.00 for a total nominal value of Euro 28,272,000.00;
                                        • Rate indexed according to the Euribor 6-month rating (basis 365) recorded on
                                          the second working day (Target calendar) before the date of payment of the
                                          coupon, increased:
                                          - by 50 basis points for the first five years, until 30 December 2008;
                                          - by 100 basis points for the following five years, until 30th December 2013.
                                          The first coupon payable on 30 June 2004 is calculated according to the
                                          equivalent rate of 2.733% (1st semester 1.367%). As for the following coupons,
                                          if the day of rating of the coupon the Euribor 6-month rate (basis 365) is not
                                          rated, the rate of the first previous working day shall be used (Target calendar)
                                          in which such rate was officially recorded.
                                          Every coupon will be calculated with a rate according to the following formula:
                                          - Coupon = Euro 1,000 * (Euribor 6m basis 365 + %increase)/2, rounding up
                                             to the closest 0.001%. Moreover, the amount of the first coupon, referring to
                                             the minimum price of Euro 1,000.00, will be Euro 13.67 before taxes;
                                        • Expiration date: 30th December 2013;
                                        • Advance reimbursement shall be possible after at least eighteen months from
                                          the issuance date and with the previous authorization of Banca d’Italia, in
                                          accordance with the present regulation at the moment of the transaction;
                                        • Subordination clauses: in case of dissolution, liquidation or administrative
                                          forced liquidation of the Bank, the bonds shall be reimbursed only after all
                                          other creditors who are not subordinated, have been reimbursed.
notes to the financial statements 186




                                        "Veneto Banca subordinated 2004/2014 Step Up – Floating rate notes on the
                                        Euromarket (lower tier II)"
                                        • issued on 12 November 2004. 100,000 notes with nominal value of Euro
                                          1,000.00 each, for a total nominal value of Euro 100,000,000.00;
                                        • the coupons bear gross interest payable, with delayed payment, at the Euribor
                                          3 month rate (base 360) set on the second working day (Target calendar) prior
                                          to the date of payment, increased:
                                          - by 60 basis points for the first five years, until 12 November 2009;
                                          - by 120 basis points for the successive five years, until 12 November 2014.
                                          The first coupon payment on 12 February 2005 was calculated on the basis of a
                                          2.14% annual rate. For successive payments, whenever the Euribor 3 month
                                          (base 360) rate is not listed on the official calculation date, the rate of the first
                                          bank working day immediately following that date (Target calendar) shall be
                                          used.
                                          Each coupon shall be calculated at a rate based upon the following formula:
                                          - Coupon = (Euribor 3 m. + 60 b.p.) * GG/360 * 1,000, rounded to the nearest
                                             Euro cent. Therefore, the amount of the first coupon, based on the minimum
                                             holding of Euro 1,000.00, was Euro 7.24 gross of applicable taxes;
                                        • maturity date: 12 November 2014;
                                        • early redemption is permitted after at least five years have passed from the date
                                          of issue and subject to prior approval of Banca d’Italia, where permitted under
                                          the laws in effect at that time;
                                        • subordination clauses: state that, in the event of dissolution, liquidation, or
                                          forced liquidation under administration of the Bank, the bonds will be repaid
                                          only after all other creditors not having an equal subordination have been
                                          satisfied.
BREAKDOWN OF ITEM 120 “SHARE CAPITAL”

                                                                        31/12/2004       31/12/2003

Ordinary shares no. 32,882,038 (*)
with a per-capita value of Euro 3,00 (**)                                   98,646           95,068
(*) distributed among no. 16,041 Shareholders
(**) during the financial year, transactions for 295.988 shares have been carried out.


BREAKDOWN OF ITEM 130 “ISSUE PREMIUMS”
                                                                        31/12/2004       31/12/2003

Issue premiums                                                             304,765          280,983


BREAKDOWN OF ITEM 140 “RESERVES”

                                                          31/12/2004                     31/12/2003

a) legal reserve                                               33,012                        29,004
b) reserve for own equity shares or quotas                          0                             0
c) statutory reserves                                               0                             0
d) other reserves:                                            100,859                        81,536
   - taxed reserves for various risks           100,859                     81,536
TOTAL                                                         133,871                       110,540


BREAKDOWN OF “OTHER RESERVES”

                                                                        31/12/2004       31/12/2003

Extraordinary reserve                                                       93,169           73,847




                                                                                                      notes to the financial statements 187
Taxed reserve                                                                    3                3
Taxed reserve art. 4 Law No. 823/73                                            100              100
Capital gain reserve from
facilitated allotment Law 218/90                                              1,796           1,796
Reserve for share buyback                                                     4,132           4,132
Special reserve Legislative Decree No. 153/99                                 1,659           1,659
TOTAL                                                                      100,859           81,536


BREAKDOWN OF ITEM 150 “REVALUATION RESERVES”
                                                                        31/12/2004       31/12/2003

Revaluation as per Act No. 576/75                                               328             328
Revaluation as per Act No. 72/83                                              3,226           3,226
Revaluation as per Act No. 413/91                                             2,001           2,001
TOTAL                                                                         5,554           5,554


BREAKDOWN OF ITEM 170 “PROFIT FOR THE YEAR”

                                                                        31/12/2004       31/12/2003

Profit for the year                                                         45,658           40,077


COMPOSITION OF ASSET ITEMS CONCERNING THE SHARE
CAPITAL

Item          Description                                               31/12/2004       31/12/2003

item 110      Unpaid subscribed share capital                                     0              0
item 120      Own equity shares or quotas                                         0              0


The Bank does not have in its portfolio any shares of property and all transactions
involving the share capital have been regulated.
                                        8.1 CAPITAL AND MINIMUM REQUIREMENTS FOR
                                            SUPERVISORY PURPOSES

                                                                                                                      31/12/2004

                                        A.    Capital for supervisory purposes
                                              A.1 Tier I capital                                            582,988
                                              A.2 Tier II capital                                           183,414
                                              A.3 Items to be deducted                                       29,696
                                              A.4 Capital for supervisory purposes                                       736,706
                                        B.    Minimum requirements for supervisory purposes
                                              B.1 Credit risks                                              357,009
                                              B.2 Market risks                                               18,074
                                                   of which - Risks of trading portfolio        18,074
                                                              - Exchange rate risks                  0
                                              B.3 Third-level subordinated loans                                 0
                                              B.4 Other minimum requirements for
                                                   supervisory purposes                                       5,695
                                              B.5 Total requirements for supervisory purposes                            380,778
                                        C.    Risk-weighted assets and adequacy ratios
                                              C.1 Weighted risk assets                                                 5,445,125
                                              C.2 Tier I capital/weighted risk assets                                    10.71%
                                              C.3 Capital for supervisory purposes/weighted
                                                   risk assets                                                           13.53%


                                        Asset ratios
                                        The capital for supervisory purposes/weighted risk asset ratio expresses the
                                        individual solvency ratio the banks and banking groups have to comply with.
                                        As it is indicated in the statement above, Veneto Banca respects the percentage
                                        parameters established by the Supervisory Authority, and reported an asset
                                        surplus amounting to about 356 million Euro (A.4-B.5).
notes to the financial statements 188




                                             SECTION 9 - OTHER LIABILITY ITEMS

                                        9.1 BREAKDOWN OF ITEM 50 “OTHER LIABILITIES”

                                                                                                         31/12/2004   31/12/2003

                                        Various securities transactions                                       2,355        2,328
                                        Interest and fees to be credited to customers                             0            1
                                        Provisions for staff expenses                                         3,242        2,447
                                        Currency spreads on portfolio activities                             28,562       33,786
                                        Due to suppliers                                                      5,792       10,045
                                        Due to Treasury                                                      10,207        7,568
                                        Amounts available to customers                                       21,666       18,887
                                        Foreign operations to be settled                                      1,601        9,077
                                        Creditors for premiums on sold call options                           1,803        1,447
                                        Creditors for payment and collection services                           268          156
                                        Off-balance sheet operations                                              2           40
                                        Credit contra-entries for evaluation of
                                        off-balance sheet operations                                          8,644            0
                                        Portfolio operations to be settled                                    7,903        7,418
                                        Other liabilities                                                    24,570       17,252
                                        TOTAL                                                               116,615      110,452


                                        Payables to the inland Revenue relate to tax withheld by the Bank acting as
                                        withholding agent, to be paid in according to the procedures and within the dates
                                        set forth by the Law.
9.2 BREAKDOWN OF ITEM 60 “ACCRUALS AND DEFERRED
    INCOME”
                                                                   31/12/2004      31/12/2003

Accrued expenses for
- Interest on REPOS                                                       472             319
- Spreads on off-balance sheet operations                               5,550           5,960
- Interest on loans to customers                                          223              84
- Interest on credits with banks                                          246           1,138
- Other                                                                   189              90
Total accrued expenses                                                  6,680           7,592
Deferred income on
- Interest on discount operations                                         921           1,485
- Interest on loans to customers                                        1,367             826
- Interest on credits with banks                                          621           1,008
Total deferred income                                                   2,909           3,319
TOTAL ACCRUALS AND DEFERRED INCOME                                      9,589          10,911


Prepayments and accrued income are calculated according to the economic
accrual principles.

9.3 ADJUSTMENTS FOR ACCRUALS AND DEFERRED
    INCOME

Write-downs for accruals and deferred income are made directly in the
pertaining shareholders’ equities.

                                                      31/12/2004                   31/12/2003




                                                                                                notes to the financial statements 189
a) Liability items:                                       11,175                       12,002
   1. accruals for interest payable:
      - on bonds                             10,348                       11,533
      - on certificates of deposit              827                          469
b) Asset items                                                0                            0
TOTAL                                                     11,175                       12,002




    SECTION 10 – GUARANTEES AND
    COMMITMENTS

10.1 BREAKDOWN OF ITEM 10 “GUARANTEES PROVIDED”

                                                      31/12/2004                   31/12/2003

a) Commercial guarantees                                 176,524                      175,636
   - documentary credits                     13,649                       12,059
   - commericial acceptances                  5,230                        3,041
   - commercial endorsements and sureties   157,645                      160,536
b) Financial guarantees                                  315,924                      347,294
   - financial endorsements and sureties    315,924                      347,294
c) Pledged assets                                             0                            0
TOTAL                                                    492,448                      522,930


Commercial guarantees support specific commercial transactions, while financial
guarantess are linked to the regular payments of debt by the applicant.
                                        10.2 BREAKDOWN OF ITEM 20 “COMMITMENTS” AND
                                             ITEM 30 “COMMITMENTS ON CREDIT DERIVATIVES”
                                                                                             31/12/2004                      31/12/2003
                                        a) Commitments certain to be called on                    47,398                         21,463
                                           - loans and financing                   11,133                            6,315
                                           - stock purchase                        21,265                            7,648
                                           - other commitments                     15,000                            7,500
                                        b) Commitments uncertain to be called on                  10,208                         50,005
                                           - margin on line of credits               6,633                           6,631
                                           - commitments on issued put options           0                          40,000
                                           - other commitments                       3,575                           3,374
                                        TOTAL                                                     57,606                         71,468

                                        The risk linked to the guarantees issued and the commitments to distribute
                                        provisions is evaluated in the same fashion for the cash due. At present, losses
                                        resulting from such commitments are not expected.

                                        10.3 PLEDGED ASSETS OF OWN DEBITS
                                                                                             31/12/2004                      31/12/2003
                                        a) Mortgages                                                   0                              0
                                        b) Pledges                                                50,000                         50,000
                                           - cash deposits                              0                                0
                                           - securities                            50,000                           50,000
                                           - other values                               0                                0
                                        TOTAL                                                     50,000                         50,000


                                        10.4 UNUSED LINES OF CREDIT
notes to the financial statements 190




                                                                                                           31/12/2004        31/12/2003
                                        a) central banks                                                             0                 0
                                        b) other banks                                                               0                 0


                                        10.5 FORWARD TRANSACTIONS

                                        Transaction                                    hedging                  trading             other
                                        categories                                 transactions            transactions      transactions
                                        1.    Trading                                       0                 483,134                  0
                                        1.1   Securities                                    0                  32,715                  0
                                              - purchases                                   0                  21,265                  0
                                              - sales                                       0                  11,450                  0
                                        1.2   Currencies                                    0                 450,419                  0
                                              - currency against currency                   0                  81,700                  0
                                              - purchases against Euros                     0                 200,241                  0
                                              - sales against Euros                         0                 168,478                  0
                                        2.    Deposits and loans                            0                  18,903                  0
                                              - to provide                                  0                  11,133                  0
                                              - to receive                                  0                   7,770                  0
                                        3.    Derivative contracts                    726,409               6,057,087             95,132
                                        3.1   With capital swaps                       23,695                 624,177                  0
                                              a) securities                            23,695                 111,300                  0
                                                  - purchases                               0                       0                  0
                                                  - sales                              23,695                 111,300                  0
                                              b) currencies                                 0                 512,877                  0
                                                  - currency against currency               0                  26,681                  0
                                                  - purchases against Euros                 0                 110,000                  0
                                                  - sales against Euros                     0                 376,196                  0
                                              c) other stocks                               0                       0                  0
                                                  - purchases                               0                       0                  0
                                                  - sales                                   0                       0                  0
                                        3.2   Without capital swaps                   702,714               5,432,910             95,132
                                              a) currencies                             8,000                   8,449              8,000
                                                  - currency against currency               0                       0                  0
                                                  - purchases against Euros             8,000                       0              8,000
                                                  - sales against Euros                     0                   8,449                  0
                                              b) other stocks                         694,714               5,424,461             87,132
                                                  - purchases                         562,350               2,931,965             87,132
                                                  - sales                             132,364               2,492,496                  0
Derivative contracts refer to the following items:

                                                 hedging         trading          other
Transaction categories                       transactions   transactions   transactions

With capital swaps
• Options on securities
   Sale                                           23,695       111,300               0
   Forward transactions
   currency against currency                           0        17,871               0
   Options purchased against Euro                      0         8,810               0
   Purchase forward contract on currencies             0       107,219               0
   Purchase forward contract on currencies             0        50,615               0
   Sale forward contract on currencies                 0       328,362               0

                                                 hedging         trading          other
Without capital swaps                        transactions   transactions   transactions

• Purchase
  Options on currency purchases
  against Euros                                   8,000              0           8,000
  Basis swap                                          0        948,860               0
  Interest rate swap                            457,218      1,136,238               0
  Asset swap                                          0         20,000               0
  Interest rate floors                                0         55,453               0
  Cross currency swap                                 0        193,473               0
  Interest rate cap                               1,549         28,833           1,549
  Options on interest rates and indexes          85,583        549,108          85,583
• Sale
  Basis swap                                          0        948,860               0
  Interest rate swap                             32,364        643,293               0
  Asset swap                                    100,000         20,000               0
  Interest rate floors                                0         55,453               0
  Cross currency swap                                 0        238,959               0




                                                                                          notes to the financial statements 191
  Interest rate cap                                   0         28,724               0
  Options on interest rates and indexes               0        557,208               0


The value assigned to the forward transactions indicated in the table is the
following:
• For the trading of securities and currencies and for derivative contracts which
   could lead to an exchange in capitals (or other assets), the price of the contract
   itself according to the regulation. The derivative contracts negotiated in
   regulated markets with a daily payment of the spread of change (e.g. futures
   and options) are conventionally indicated with the nominal value calculated by
   multiplying the quantity by the specific ratio for a type of product and its strike
   or the contract strike price.
• For deposit and loan contracts, the amount to pay and receive.
• For derivative contracts which do not require forward exchange of capitals (e.g.
   contracts on interest rates or indexes), the nominal value of the reference
   capital.
Iterest rate derivative contracts are classified as “purchases”or “sales “depending
upon whether the Bank purchases or sells the fixed rate.
In the column “other transactions” there are the options included in the
structured stocks issued by the Bank.
In the section 3.2 “derivative contracts without capital exchange”the basis swaps
are included (contracts providing for the exchange of two indexed rates)
amounting to a nominal value of Euro 948,860,000.00 related to the transaction.
Such amount is included both in the purchases and the sales.
The evaluation of the derivative contracts valid as at 31 December 2004, except
for the trading and investmet asset swaps already reported in Section 2,
respectively on points 2.1 and 2.3, resulted in an increase in value of Euro
7,362,076.60 not recorded in the profit and loss account in accordance with the
principle of prudence and certainty.
                                        10.6 CREDIT DERIVATIVE CONTRACTS

                                        Transaction                                                        Trading            Other
                                        categories                                                    transactions      transactions

                                        1.    Protection buyers                                            15,000                 0
                                        1.1   With capital swaps                                           12,500                 0
                                        1.2   Without capital swaps                                         2,500                 0
                                        2.    Protection sellers                                           15,000                 0
                                        2.1   With capital swaps                                           12,500                 0
                                        2.2   Without capital swaps                                         2,500                 0


                                        Credit derivative contracts are aimed at transferring the underlying credit risk
                                        of a “reference obligation”from the “protection buyer”to the “protection seller”.
                                        In these cases, the subject of the transaction is the credit risk borne by a
                                        “reference entity”.
                                        The evaluation of the credit derivative contracts valid as at 31 December 2004,
                                        shows a neutral result.



                                              SECTION 11 - GEOGRAPHIC
                                              DISTRIBUTION AND CONCENTRATION OF
                                              ASSETS AND LIABILITIES

                                        11.1 SIGNIFICANT EXPOSURES
                                        As at 31 December 2004 there are not “significant exposures” according to
                                        supervisory regulations:

                                                                                                      31/12/2004        31/12/2003
notes to the financial statements 192




                                        a) amount                                                               0            94.789
                                        b) number                                                               0                 1


                                        The Supervisory Authority defines a loan granted to a “customer”and weighted
                                        according to specific rules as a “significant exposure”when it is equal to or higher
                                        than 10% of the capital for supervisory purposes held by the bank providing the
                                        loan.
                                        “Customer”means an individual or a “group of connected customers”, meaning
                                        two or more subjects that constitute a single unit in terms of risk, since:
                                        a) one of them has a power of control over the other or others
                                            (“legal”connection);
                                        or:
                                        b) regardless of the existence of control agreements, there are such links
                                            between the subjects that, in all probability, if one of them were in financial
                                            difficulties, the other or all the others would encounter difficulties in repaying
                                            the debt (“financial”connection).

                                        11.2 DISTRIBUTION OF LOANS TO CUSTOMERS ACCORDING
                                             TO THE MAIN CATEGORIES OF BORROWERS

                                                                              31/12/2004         %        31/12/2003             %

                                        a) Governments                               163       0.00               184          0.01
                                        b) other public institutions              32,464       0.79            40,275          1.13
                                        c) non-financial institutions          2,474,470      60.14         2,188,920         61.64
                                        d) financial institutions                510,739      12.41           441,028         12.42
                                        e) producer households                   170,862       4.15           146,023          4.11
                                        f) other operators                       925,856      22.50           734,455         20.68
                                        TOTAL                                  4,114,554     100.00         3.550.884       100.00
11.3 DISTRIBUTION OF LOANS TO NON-FINANCIAL
     COMPANIES AND RESIDENT PRODUCER HOUSEHOLDS

                                    31/12/2004         %     31/12/2003         %

a) other services for sale             677,156      25.78       590,898      25.44
b) trade services, recoveries
   and reparations                     332,413      12.66       277,840      11.96
c) housing and public works            308,336      11.74       261,768      11.27
d) textiles, leather and footwear
   products, clothing                  241,780       9.21       254,755      10.97
e) other industrial products           241,419       9.19       215,415       9.28
f) other branches                      825,279      31.42       721,637      31.07
TOTAL                                2,626,383     100.00     2,322,313     100.00


11.4 DISTRIBUTION OF GUARANTEES PROVIDED ACCORDING
     TO THE MAIN CATEGORIES OF COUNTERPARTIES

                                    31/12/2004         %     31/12/2003         %

a) Governments                               0       0.00             0       0.00
b) other public institutions             1,037       0.21           326       0.06
c) banks                                47,070       9.56        35,000       6.69
d) non-financial instutions            171,447      34.82       180,126      34.45
e) financial institutions              236,220      47.97       278,916      53.34
f) producer households                   4,240       0.86         4,223       0.81
g) other operators                      32,434       6.59        24,339       4.65
TOTAL                                  492,448     100.00       522,930     100.00


11.5 GEOGRAPHIC DISTRIBUTION OF ASSETS AND




                                                                                      notes to the financial statements 193
     LIABILITIES

Items/Countries                          Italy   Other EU         Other       Total
                                                 countries     countries

1.    Assets                        4,266,149    415,069       134,054 4,815,272
1.1   Loans to banks                  250,045      3,472       113,398   366,915
1.2   Loans to customers            3,929,816    176,190         8,548 4,114,554
1.3   Securities                       86,288    235,407        12,108   333,803
2.    Liabilities                   4,512,852       6,455      204,646 4,723,953
2.1   Due to banks                    451,336         881       43,020   495,237
2.2   Due to customers              2,072,695       5,499       46,521 2,124,715
2.3   Securities issued             1,802,263          75      115,105 1,917,443
2.4   Other accounts                  186,558           0            0   186,558
3.    Guarantees and commitments     506,552      41,470         2,032     550,054
                                        11.6 TEMPORAL DISTRIBUTION OF ASSETS AND LIABILITIES

                                                                                                            duration set
                                                                                                                        1/5 years           over 5 years        undeter-
                                                                                       up to         3/12          fixed       floating     fixed floating        mined
                                        Items/Residual maturities       on demand   3 months       months           rate           rate      rate        rate   maturity       total

                                        1.    Assets                    1,008,007   3,008,748     838,203     1,422,038       980,851     757,379   742,075     125,481    8,882,782
                                        1.1 Treasury bonds
                                            that can be refinanced              2           0           0             0         2,144           3         0           0        2,149
                                        1.2 Loans to banks                 49,999     169,523      15,446             0        97088            0         0      34,859      366,915
                                        1.3 Loans to customers            954,274   1,242,146     321,038        78,443       718,560      14,717   694,754      90,622    4,114,554
                                        1.4 Bonds and other
                                            debt securities                    0         626        1,686       225,271        34,715      63,340        245          0     325,883
                                        1.5 Off-balance sheet
                                            operations                      3,732   1,596,453     500,033     1,118,324       128,344     679,319    47,076           0    4,073,281
                                        2.    Liabilities               2,260,711   2,200,820   1,113,593     1,181,052     1,456,490     306,509   268,915       4,400    8,792,490
                                        2.1 Due to banks                  373,182     97,855       19,800             0             0           0         0       4,400      495,237
                                        2.2 Due to customers            1,860,902    241,467       22,344             2             0           0         0           0    2,124,715
                                        2.3 Securities issued:              1,686     91,943      428,693       180,241     1,130,284      57,958    26,638           0    1,917,443
                                            - bonds                             0     41,744      310,641       179,490     1,130,284      57,958    26,638           0    1,746,755
                                            - certificates of deposit       1,686     50,199      118,052           751             0           0         0           0      170,688
                                            - other securities                  0          0            0             0             0           0         0           0            0
                                        2.4 Subordinated liabilities            0          0            0        53,349           379     128,086         0           0      181,814
                                        2.5 Off-balance sheet
                                            operations                     24,941   1,769,555     642,756       947,460       325,827     120,465   242,277           0    4,073,281


                                        11.7 ASSETS AND LIABILITIES IN FOREIGN CURRENCY

                                                                                              31/12/2004                  31/12/2003
notes to the financial statements 194




                                        a) Assets                                                480,348                     461,152
                                             1.   loans to banks                    130,778                      78,407
                                             2.   loans to customers                345,328                     378,907
                                             3.   securities                          2,937                       3,167
                                             4.   equity investments                    892                         166
                                             5.   other accounts                        413                         504
                                        b) Liabilities                                           239,077                     220,747
                                             1.   due to banks                      100,169                     140,997
                                             2.   due to customers                  138,908                      79,749
                                             3.   securities issued                       0                           0
                                             4.   other accounts                          0                           0


                                        11.8 SECURITISATION ACTIVITIES

                                        Own securitisation activities
                                        Securitisation in July 2002
                                        During the course of financial year 2002 Veneto Banca completed the first
                                        securitisation operation of a mortgage loan portfolio.
                                        The securitisation operation involved the on-payment transfer, in accordance
                                        with Law No. 130 dated 30 April 1999, of arrangements classified as performing
                                        residential and commercial mortgage loans starting from 1 July 2002.
                                        On this date Veneto Banca completed the transfer of loans to “Claris Finance srl”,
                                        a special purpose vehicle incorporated in Italy according to Law No. 130/99 with
                                        its head office in Rome, of which Veneto Banca holds a share equal to 70% of the
                                        share capital. The remaining share was underwritten by Stiching Solari, a
                                        foundation incorporated in Holland.
                                        The subjects of the securitisation are mortgage loans resulting as at 25 June 2002
                                        from the accounts of Veneto Banca, classified as performing loans, in compliance
                                        with the regulations issued by Banca d’Italia, which have the following
                                        characteristics:
                                        - loans guaranteed by a first financial mortgage, by which it is meant:
    (i) a first voluntary mortgage;
    (ii) a puisne voluntary mortgage, having one of the following characteristics:
         • senior mortgages are being cancelled or were granted to guarantee
           expired debts;
         • second voluntary mortgage, by which the initial amount of the loan
           transferred together with the residual debt guaranteed by the senior
           mortgage does not exceed 100% of the estimated value of the mortgaged
           estate, calculated when allocating the loan;
-   the ratio between the amount of the original loan and the amount of the
    mortgage does not exceed 100%;
-   the ratio between the amount of the original loan and the estimated value of
    the mortgaged estate, calculated when allocating the loan, does not exceed
    100%;
-   the ratio between the residual amount of the loan and the amount of the
    mortgage does not exceed 94%;
-   the ratio between the amount of the residual debt and the estimated value of
    the mortgaged estate, calculated when allocating the loan, does not exceed
    95%;
-   they have at least one due and paid instalment;
-   they have at most three monthly instalments due and not yet paid;
-   the transferred borrowers are individuals or corporate bodies resident or
    domiciled in Italy;
-   the loan date falls between 24 August 1989 [included] and 17 May 2002
    [included];
-   one of the following amortisation systems was adopted:




                                                                                       notes to the financial statements 195
    (i) “French-style” (“French-style” amortisation means the gradual
          amortisation method by which each instalment is subdivided into a share
          of principal increasing over time and intended to repay the loan and a
          share of interest);
    (ii) “straight-line”(“straight-line”amortisation means the method of
          amortisation by which each instalment is subdivided into a share of
          principal intended to repay the loan and a share of fixed-rate interest);
    (iii) “personal” plan (“personal” amortisation means a plan agreed with the
          borrower to satisfy its requirements and underwritten by the latter in the
          loan document);
    (iv) “declining balance” (“declining balance” amortisation means the method
          of amortisation by which each instalment is subdivided into a share of
          principal intended to repay the loan and a constant share of interest);
-   the expiry date of the last instalment of the loans does not fall after 31 May
    2027;
-   they were fully allocated;
-   the residual debt of each individual loan is greater than Euro 500.00.

Furthermore, credits arising from loans resulting from the accounts of Veneto
Banca as at 30 June 2002, which present one or more of the following
characteristics, were excluded from the transfer:
a) loans for which the “American-style” amortisation system was adopted
   (“American-style” amortisation means the method of amortisation by which
   each instalment is made up only of the share of interest, while the last
   instalment also provides for the repayment of the entire principal amount);
b) loans originally provided and/or guaranteed by Veneto Sviluppo spa;
c) loans granted to employees of Veneto Banca or other Group companies;
d) loans provided to public institutions;
e) loans provided to religious institutions;
                                        f) loans indexed at a rate established with a ministerial decree;
                                        g) loans guaranteed by a cooperative or by a working guarantee consortium;
                                        h) loans granted to companies incorporated in Italy as limited liability
                                            companies, with interest rates set at the prime rate of ABI (Italian
                                            Bankers’Association) and expiry date falling after 30 June 2003;
                                        i) loans granted to limited liability cooperative companies;
                                        j) loans whose management was transferred to the management subsidiary
                                            No. 95 of Veneto Banca, located in Montebelluna;
                                        k) loans provided to subjects who are holders of another loan not meeting the
                                            criteria necessary for the transfer in question.
                                        Based on these principles, 4,257 positions were identified for an overall amount
                                        of transferred loans equal to 372,803,095.29 Euros.
                                        Claris Finance funded the purchase of loans through issuance of four classes of
                                        bond securities (Asset Backed Securities) in July. The amounts deriving from the
                                        collection of transferred loans will only be to service the securities issued and pay
                                        the costs of the operation.
                                        The characteristics of the portfolio were illustrated to the appointed rating
                                        agencies “Fitch IBCA”and “Standard & Poor’s”, which assigned the ratings to the
                                        bonds issued by the special purpose vehicle.

                                        Bonds issued (Asset Backed Securities)

                                        Class                               Rating          Amount                       Yield

                                        A                                    AAA        346,700,000       Euribor 3m + 30 b.p.
                                        B                                      AA        11,600,000       Euribor 3m + 45 b.p.
notes to the financial statements 196




                                        C                                     BBB        13,200,000      Euribor 3m + 170 b.p.
                                        D                                  unrated        1,300,000        10% +/- add. return


                                        The three tranches of rated securities are denominated in Euros, they carry
                                        floating-rate quarterly coupons and have a sequential repayment schedule linked
                                        to the collections from the underlying loan portfolio.
                                        Class A, B and C securities, listed on the Luxembourg Stock Exchange, were
                                        firmly underwritten by Schroder Salomon Smith Barney and subsequently placed
                                        with institutional investors.
                                        Class D bonds are denominated in Euros, they do not have an official rating and
                                        their yield, besides the face yield, is determined residually and paid only insofar
                                        as the collections from the transferred portfolio exceed the amount of expenses
                                        and disbursements related to higher class bonds.

                                        On behalf of Claris Finance srl,Veneto Banca manages, administers and collects
                                        the transferred loans.Therefore, the Bank acts as the sole counterparty of the
                                        customer, even if in the name and on behalf of the vehicle. This so-called
                                        servicing contract also provides for dispute management.

                                        Furthermore, a line of credit was made available by Veneto Banca to Claris
                                        Finance, with the aim of providing liquid assets for the payment of interest on
                                        securities and management costs.
                                        In order to guarantee the special purpose vehicle against the risks associated to
                                        fluctuations in rates, given the diversity between the indexing parameters applied
                                        on individual loans and the parameter set for the securities issued,Veneto Banca
                                        and the special purpose vehicle carried out swap operations with the support of
                                        Citibank N.A., London Branch.
                                        The loans transferred were removed from the financial statements.
Securitisation in October 2003
During the course of financial year 2003 Veneto Banca, in cooperation with its
subsidiary Banca Meridiana, completed another securitisation operation of a
mortgage loan portfolio.
The securitisation operation involved the on-payment transfer, in accordance
with Law No. 130 dated 30 April 1999, of arrangements classified as performing
residential and commercial mortgage loans starting from 1 October 2003.
On this date Veneto Banca completed the transfer of loans to“Claris Finance 2003
srl”, a special purpose vehicle incorporated in Italy according to Law No. 130/99
with its head office in Rome, of which Veneto Banca holds a share equal to 4% of
the share capital; the remaining share of 96% was underwritten by Stiching
Chessington, a foundation incorporated in Holland.
The subjects of the securitisation are mortgage loans resulting as at 30 September
2003 from the accounts of Veneto Banca and Banca Meridiana, classified as
performing loans, in compliance with the regulations issued by Banca d’Italia,
which have the following characteristics:
- they are provided to corporations, partnerships or individuals, in all cases
   resident or domiciled in Italy;
- they are fully allocated, in one or more solutions;
- they are guaranteed by a first financial mortgage on real estate having
   residential or commercial characteristics, by which it is meant:
   (a) a first legal voluntary mortgage;
   or
   (b) a puisne legal voluntary mortgage, if senior mortgages were cancelled or
        are granted to Veneto Banca or, as regards these senior mortgages, the




                                                                                     notes to the financial statements 197
        obligations guaranteed by them were fully satisfied;
- their residual debt as at 23 September 2003 (included) does not exceed 95% of
   the mortgage amount;
- their residual debt as at 23 September 2003 (included) does not exceed 95% of
   the estimated value of the mortgaged estate (resulting from the last estimate
   made when allocating the loan);
- they have at least one instalment due and paid within 23 September 2003
   (included);
- the loan date falls between 18 December 1985 (included) and 31 August 2003
   (included);
- they have one of the following amortisation systems:
   (i) “French-style” (“French-style” amortisation means the gradual
         amortisation method by which each instalment is constant and
         subdivided into a share of principal increasing over time and intended to
         repay the loan and a share of interest);
   (ii) “personal” plan (“personal” amortisation means the method of
         amortisation agreed individually with each transferred borrower);
   (iii) “Italian-style”(“Italian-style”amortisation means the method of
         amortisation by which each instalment is decreasing and subdivided into
         a constant share of principal intended to repay the loan and a share of
         interest);
- the expiry date of the last instalment falls between 30 September 2003
   (excluded) and 31 December 2028 (included);
- their residual debt as at 23 September 2003 (included) is equal to or higher
   than 448,00 Euros;
- their residual debt as at 23 September 2003 (included) is lower than
   2,500,000.00 Euros.

However, credits arising from loans resulting from the accounts of Veneto Banca
                                        and Banca Meridiana as at 30 September 2003, which present one or more of the
                                        following characteristics, were excluded from the transfer:
                                        a) loans granted to employees of Veneto Banca scparl, Banca di Roma spa, Banco
                                            di Sicilia spa, Claris Vita spa, Banca di Credito Cooperativo del Piave e del
                                            Livenza scarl, Banca Popolare Asolo e Montebelluna scarl or of companies of
                                            the Veneto Banca Group, or to individuals who were employees of Banca di
                                            Roma spa, Banco di Sicilia spa, Claris Vita spa, Banca di Credito Cooperativo
                                            del Piave e del Livenza scarl, Banca Popolare Asolo e Montebelluna scarl or of
                                            companies of the Veneto Banca Group when the loan was allocated;
                                        b) loans provided to public institutions;
                                        c) loans provided to religious institutions;
                                        d) loans provided to subjects who were allocated another mortgage or
                                            landedproperty loan not meeting the criteria set forth herein;
                                        e) loans for which the “American-style” amortisation system was adopted
                                            (“American-style” amortisation means the method of amortisation by which
                                            the principal amount has to be repaid upon the expiry date);
                                        f) loans granted to real estate companies;
                                        g) loans for which the relevant borrower required the early redemption as at 23
                                            September 2003 (included);
                                        h) loans allocated in accordance to any laws, regulations or agreements
                                            providing for subsidies or benefits to principal and/or interest with regard to
                                            third parties of which either Veneto Banca scparl or Banca di Roma spa, Banco
                                            di Sicilia spa, Banca Popolare Asolo e Montebelluna scarl or Banca di Credito
                                            Cooperativo del Piave e del Livenza scarl has subsequently become creditor
                                            (so-called subsidized loans);
notes to the financial statements 198




                                        i) loans that, even if classified as performing as at 23 September 2003
                                            (included), were restructured after the relevant date of stipulation;
                                        j) loans with monthly instalments, having more than one instalment due and
                                            not paid as at 23 September 2003 (included), meaning an instalment that has
                                            remained unpaid for over 5 days after the relevant expiry date;
                                        k) loans with quarterly, half-yearly or yearly instalments, having one or more
                                            instalments due and not paid as at 23 September 2003 (included), meaning
                                            instalments that have remained unpaid for over 5 days after the relevant
                                            expiry dates;
                                        l) loans having a residual principal debt equal to 1,879,701.00 Euros or
                                            2,000,000.00 Euros.

                                        Based on these principles, 3,466 positions were identified for Veneto Banca for an
                                        overall amount of transferred loans equal to 277,872,187.71 Euros, and 1,491
                                        positions were identified for Banca Meridiana for an overall amount of
                                        transferred loans equal to 68,089,825.65 Euros.
                                        Claris Finance 2003 funded the purchase of loans through issuance of five classes
                                        of bond securities (Asset Backed Securities) in October. The amounts deriving
                                        from the collection of transferred loans will only be to service the securities issued
                                        and pay the costs of the operation.
                                        The characteristics of the portfolio were illustrated to the appointed rating
                                        agencies “Moody’s”and “Standard & Poor’s”, which assigned the ratings to the
                                        bonds issued by the special purpose vehicle.
Bonds issued (Asset Backed Securities)

Class                               Rating          Amount                       Yeald

A                                    AAA        315,500,000       Euribor 3m + 30 b.p.
B                                      AA         9,000,000       Euribor 3m + 45 b.p.
C                                     BBB        20,200,000      Euribor 3m + 170 b.p.
D1                                 unrated        3,950,000          5% +/- add. return
D2                                 unrated        2,170,000          5% +/- add. return


The three tranches of rated securities are denominated in Euros, they carry
floating-rate quarterly coupons and have a sequential repayment schedule linked
to the collections from the underlying loan portfolio.
Class A, B and C securities, listed on the Luxembourg Stock Exchange, were
firmly underwritten by Deutsche Bank and subsequently placed with institutional
investors.
Class D1 - D2 bonds are denominated in Euros, they do not have an official rating
and their yield, besides the face yield, is determined residually and paid only
insofar as the collections from the transferred portfolio exceed the amount of
expenses and disbursements related to higher class bonds.

On behalf of Claris Finance 2003 srl,Veneto Banca manages, administers and
collects the transferred loans.Therefore, the Bank acts as the sole counterparty of
the customer, even if in the name and on behalf of the vehicle. This so-called
servicing contract also provides for dispute management.

Furthermore, a line of credit was made available by Veneto Banca and Banca




                                                                                          notes to the financial statements 199
Meridiana to Claris Finance 2003 srl, with the aim of providing liquid assets for
the payment of interest on securities and management costs.

In order to guarantee the special purpose vehicle against the risks associated to
fluctuations in rates, given the diversity between the indexing parameters
applied on individual loans and the parameter set for the securities issued,
Veneto Banca and the special purpose vehicle carried out swap operations with
the support of Deutsche Bank.

The loans transferred were removed from the financial statements: the difference
between the book value of loans and the amount collected from the transfer
generated a profit, entered in the FY 2003 profit and loss account, equal to
2,936,351.68 Euros for Veneto Banca.

The costs relating to the structuring and realisation of the securitisation operation
were borne by the Veneto Banca and Banca Meridiana originators and entered
directly into the profit and loss account.

Securitisation activities of third parties
At the end of financial year 2004 Veneto Banca doesn’t hold portfolio securities
coming from securitisation activities of third parties.
                                            SECTION 12 – MANAGEMENT AND
                                            BROKERING ON BEHALF OF THIRD
                                            PARTIES

                                        12.1 STOCK TRADING

                                                                                                                 31/12/2004      31/12/2003

                                        Securities
                                        a) Purchases:                                                               98,040         198,718
                                           1. settled                                                               97,079         198,276
                                           2. not settled                                                              960             442
                                        b) Sales:                                                                   86,074         102,606
                                           1. settled                                                               85,936         101,844
                                           2. not settled                                                              138             762

                                        Listed derivatives
                                        a) Purchases:                                                            1,303,304       1,270,475
                                           1. settled                                                            1,302,759       1,270,475
                                           2. not settled                                                            1,545               0
                                        b) Sales:                                                                1,612,330       1,573,463
                                           1. settled                                                            1,611,477       1,573,463
                                           2. not settled                                                            1,853               0


                                        12.2 FUNDS UNDER MANAGEMENT
                                                                                                                 31/12/2004      31/12/2003

                                        1. securities issued by the Bank drawing up
                                           the financial statements                                                       0               0
                                        2. other securities                                                         106,636         111,534
notes to the financial statements 200




                                        12.3 SAFE CUSTODY AND ADMINISTRATION OF SECURITIES

                                                                                                                 31/12/2004      31/12/2003

                                        a) third-party securities under custody                                   4,324,487       3,996,606
                                           1. Securities issued by the Bank drawing up
                                               the financial statements                                           1,176,065       1,122,552
                                           2. other securities                                                    3,148,422       2,874,054
                                        b) third-party securities lodged with third parties                       3,998,329       3,813,905
                                        c) own securities lodged with third parties                                 411,678         426,916


                                        Securities in safe custody and administration contracts are indicated with their
                                        face value.

                                        12.4 CREDIT COLLECTION ON BEHALF OF THIRD PARTIES:
                                             DEBIT AND CREDIT ADJUSTMENTS

                                        Third-party credits that have to be collected by the Bank within the framework of
                                        portfolio transactions are indicated in the financial statements according to the
                                        date of settlement principle, which brought about the following adjustments to
                                        the accounting books:

                                                                                                    31/12/2004                   31/12/2003
                                        a) “debit” adjustments":                                     1,222,250                      851,208
                                           1.   current accounts                          191,684                      191,112
                                           2.   central portfolio                         768,695                      437,688
                                           3.   cash                                        6,837                        4,923
                                           4.   other accounts                            255,034                      217,485
                                        b) “credit” adjustments":                                    1,250,813                      884,994
                                           1. current accounts                                  0                            0
                                           2. transferors of bills and documents        1,250,813                      884,994
                                           3. other accounts                                    0                            0
12.5 OTHER OPERATIONS

                                                                31/12/2004         31/12/2003

Bills for collection “under reserve"                               950,580            618,319
“Post-collection” bills                                            300,233            266,675
Total counter-value of third-party funds
under management                                                        0                   0
TOTAL                                                            1,250,813            884,994




     PART C - INFORMATION ON THE
     PROFIT AND LOSS ACCOUNT
   SECTION 1 - INTEREST

1.1 BREAKDOWN OF ITEM 10 “INTEREST INCOME AND
    SIMILAR ITEMS”

                                                   31/12/2004                      31/12/2003

a) on loans to banks                                    6,464                           5,059
   of which:
   - on loans to central banks              317                              725
b) on loans to customers                              168,521                         159,648
   of which:
   - on loans with deposits in
      administration                          0                                0
c) on debt securities                                  12,424                          15,434
d) other interest receivable                                0                               0




                                                                                                notes to the financial statements 201
e) positive balance of spreads of
   of “hedging” operations                                 0                               0
TOTAL                                                 187,409                         180,141


Interest on credits towards customers include the interests on delayed payment
amounting to 353 thousand Euro (308 thousand Euro in 2003).

1.2 BREAKDOWN OF ITEM 20 “INTEREST EXPENSE AND
    SIMILAR ITEMS”
                                                   31/12/2004                      31/12/2003

a) on due to banks                                     13,089                          24,001
b) on due to customers                                 23,597                          21,430
c) on securities issued                                47,784                          38,757
   of which:
   - on certificates of deposit            3,091                        2,133
d) on deposits in administration                           47                             40
e) on subordinated liabilities                          1,647                            894
f) negative balance of spreads
   of “hedging” operations                              4,110                           2,282
TOTAL                                                  90,276                          87,403


Interest income and similar items and interest expense and similar items, accrued
on credit and debit relations with the companies of the Group, amount to 5.37
million of Euro and 151 thousand of Euro respectively.

1.3 DETAILS OF ITEM 10 “INTEREST INCOME AND SIMILAR
    ITEMS”

                                                                31/12/2004         31/12/2003

a) on currency assets                                                8,838              7,330
   - loans to customers                                              8,838              7,330
                                        1.4 DETAILS OF ITEM 20 “INTEREST EXPENSE AND SIMILAR
                                            ITEMS”
                                                                                                 31/12/2004    31/12/2003

                                        a) on currency liabilities                                    3,848         4,965
                                           - due to customers                                         3,848         4,965


                                        BREAKDOWN OF ITEM 30 “DIVIDENDS AND OTHER INCOME”

                                        Company                                                  31/12/2004    31/12/2003

                                        Group companies:
                                        Claris Factor spa                                             1,900         1,200
                                        Claris Vita spa                                                 975         3,975
                                        Claris Leasing spa                                              200             0
                                        Veneto Ireland Financial Service ltd                         11,782         9,599


                                                                                                 31/12/2004    31/12/2003

                                        Other equity investments:
                                        Alleanza Assicurazioni spa                                       17            19
                                        Arca sgr                                                         55             0
                                        Palladio srl                                                  1,247           333
                                        Autostrada TO-MI spa                                              0            60
                                        Autostrade ordinarie                                              0            12
                                        Banca Centrale per il Leasing - Italease spa                     46            29
                                        Banca Antoniana Popolare Veneta scarl                             0             6
                                        Banca Piccolo Credito Valtellinese scarl                        103           103
                                        Banca Popolare di Milano scarl                                  231           231
                                        Banca Montepaschi spa                                             0             4
                                        Banca Popolare di Vicenza scarl                                   2             2
                                        Enel spa                                                        155           640
notes to the financial statements 202




                                        Eni spa                                                         112         1,621
                                        Factorit spa                                                      0            12
                                        Generali Assicurazioni spa                                       19            11
                                        Ifil spa                                                         68             0
                                        Intesa spa                                                       45             0
                                        Istituto Centrale delle Banche Popolari Italiane spa             42            84
                                        Italcementi spa                                                   0            28
                                        Italmobiliare spa                                                22             5
                                        London Stock Exchange                                         2,278             0
                                        Mediobanca Spa                                                   32             0
                                        Mondadori Spa                                                    22             0
                                        Mediocredito Trentino – Alto Adige spa                            2             1
                                        Mediocredito Friuli Venezia Giulia spa                            9             8
                                        San Paolo-Imi spa                                                12             0
                                        Servizi Interbancari spa                                          0             4
                                        Seat Pag Gialle spa                                             130             0
                                        Singer & Friedlander Gro                                      1,688             0
                                        Snam spa                                                         20             0
                                        Telecom Italia spa                                              161            92
                                        Tecnica spa                                                     273           280
                                        T.i.m.spa                                                       185            32
                                        Unicredito spa                                                   30            28
                                        Unione Fiduciaria spa                                             3             3
                                        Zignago spa                                                      17            52
                                        Other companies                                                216            81
                                        TOTAL                                                        22,099        18,555


                                        The rules regarding dividends were reformed by Legislative Decree 344/2003,
                                        which removed the tax credit mechanism and substituted it with the dividend
                                        exemption method. Therefore, to allow greater comparability with the figures
                                        from 31 December 2003, they have been restated - in both the profit and loss
                                        account and the breakdown presented above - to adjust for tax credits on
                                        dividends for the 2003 financial year. The total adjustment is equivalent to Euro
                                        2.8 million.
   SECTION 2 - COMMISSIONS

Fee and commission expenses and receivable concern the services offered and
received by the Bank during the course of its activity, both by customers and
related banks.

2.1 BREAKDOWN OF ITEM 40 “COMMISSIONS RECEIVABLE”

                                                           31/12/2004                   31/12/2003

a) guarantees provided                                          2,181                        1,850
b) credit derivatives                                               0                            0
c) management, brokering and
   consulting services                                         25,523                       23,906
   1. stock trading                                  587                          683
   2. currency trading                             2,119                        1,884
   3. funds under management                       1,529                        1,509
      3.1. individual                              1,529                        1,509
      3.2. collective                                  0                            0
   4. safe custody and administration
      of securities                                  595                          603
   5. depositary bank                                  0                            0
   6. placement of securities                     12,113                        9,408
   7. collection of orders                         1,457                        1,527
   8. consulting services                              0                            0
   9. distribution of third-party services         7,123                        8,292
      9.1. funds under management:                     0                            0
            9.1.1. individual                          0                            0
            9.1.2. collective                          0                            0
      9.2. insurance products                      6,762                        8,173
      9.3. other products                            361                          119




                                                                                                     notes to the financial statements 203
d) collection and payment services                              8,763                        7,901
e) servicing for securitisation activities                        254                           72
f) rate and tax collection                                          0                            0
g) other services                                              18,948                       15,521
TOTAL                                                          55,669                       49,250


2.2 DETAILS OF ITEM 40 “COMMISSIONS RECEIVABLE”

                                                                        31/12/2004      31/12/2003

Distribution channels for products and services
a) at own branches                                                          20,452          19,209
   1. funds under management                                                 1,529           1,509
   2. placement of securities                                               12,113           9,408
   3. services and products of third parties                                 6,810           8,292
b) off-premises offer                                                          313               0
   1. funds under management                                                     0               0
   2. placement of securities                                                    0               0
   3. services and products of third parties                                   313               0
TOTAL                                                                       20,765          19,209
                                        2.3 BREAKDOWN OF ITEM 50 “COMMISSIONS PAYABLE”

                                                                                                31/12/2004                        31/12/2003

                                        a) guarantees received                                             0                              1
                                        b) credit derivatives                                              0                              0
                                        c) management, brokering and
                                           consulting services                                       3,552                             5,088
                                           1. stock trading                             1,064                           1,845
                                           2. currency trading                              0                               0
                                           3. funds under management                      415                               0
                                               3.1 own portfolio                          415                               0
                                               3.2 portfolio of third parties               0                               0
                                           4. safe custody and administration
                                               of securities                                0                                 0
                                           5. placement of securities                     621                               560
                                           6. off-premises offer of securities
                                               products and services                    1,452                           2,683
                                        d) collection and payment services                           2,732                             1,795
                                        e) other services                                            2,215                             2,328
                                        TOTAL                                                        8,499                             9,212




                                             SECTION 3 - PROFIT AND LOSS ON
                                             FINANCIAL TRANSACTIONS
                                        3.1 BREAKDOWN OF ITEM 60 “PROFIT/LOSS ON FINANCIAL
                                            TRANSACTIONS”

                                        Items/Transactions                        Transactions Transactions             Other          Total
                                                                                  on securities on currencies     transactions
notes to the financial statements 204




                                        A1. Revaluations                                  126                 0             0            126
                                        A2. Write-downs                                  -410                 0             0           -410
                                        B. Other profit (loss)                         11,645             5,223         3,911         20,779
                                        TOTAL                                          11,361             5,223         3,911         20,495
                                        1.   Government bonds                             227
                                        2.   Other debt securities                      9.081
                                        3.   Equity securities                          2.470
                                        4.   Derivative contracts on securities          -417




                                             SECTION 4 - ADMINISTRATIVE
                                             EXPENSES

                                        4.1 AVERAGE NUMBER OF EMPLOYEES BY CATEGORY

                                                                                           31/12/2004          31/12/2003     average 2004

                                        a)   managers                                               31                26                 32
                                        b)   third- and fourth-level managers                      175               166                169
                                        c)   other staff                                           963               913                937
                                        TOTAL                                                     1,169             1,105              1,138
BREAKDOWN OF ITEM 80 B) “ADMINISTRATIVE EXPENSES”

                                                              31/12/2004                      31/12/2003

Indirect taxes and dues                                            7,268                           6,548
Expenses for purchase of non-professional
goods and services                                                18,065                          16,909
- office material and supply                        1,045                          1,103
- electricity, heating and mains water              1,651                          1,400
- transport and travel                              1,274                          1,238
- telephone, post, data transmission                3,372                          3,377
- leasing of software and microfiches                 413                            450
- other organization services and electronic
  processing carried out by third parties               87                               79
- other organization services and
  electronic processing                             8,091                          7,268
- supervision                                         442                            438
- cleaning                                          1,038                            990
- transportation of valuables                         653                            565
Expenses for professional services                                 3,619                           3,788
Rentals payable                                                    4,882                           5,358
- real estate rentals                               3,320                          3,524
- machine rentals                                   1,562                          1,834
Expenses for maintenance of furniture
and plants                                                         2,578                           2,244
Insurance premiums                                                 1,513                           1,354
Other expenses                                                    10,191                           7,531
- subscriptions                                     1,117                               853
- detached staff                                      400                                74
- remunerations to Directors and
  Statutory Auditors                                  777                               586
- membership fees                                     624                               548
- expenses for information
  and examination                                     997                            765
- advertising and transparency                      4,524                          3,398




                                                                                                           notes to the financial statements 205
- other expenses                                    1,752                          1,307
TOTAL                                                             48,116                          43,732




    SECTION 5 - WRITE-DOWNS, WRITE-
    BACKS AND PROVISIONS

BREAKDOWN OF ITEM 90 “WRITE-DOWNS OF TANGIBLE AND
INTANGIBLE FIXED ASSETS”

                                                                           31/12/2004         31/12/2003

Intangible fixed assets                                                         3,476              3,610
Tangible fixed assets                                                           6,246              4,225
TOTAL                                                                           9,722              7,834


                                                                           31/12/2004         31/12/2003

Intangible fixed assets:
Amortisation of restructuring charges for leased facilities                       640                845
Software amortisation                                                           1,152              1,027
Other deferred costs                                                            1,684              1,738

Tangible fixed assets:
Depreciation for real estate                                                    1,485              1,108
Depreciation for furniture                                                      4,761              3,116
TOTAL                                                                           9,722              7,834
                                        BREAKDOWN OF ITEM 100 “PROVISIONS FOR RISKS AND
                                        CHARGES”

                                                                                                             31/12/2004       31/12/2003

                                        Provisions for other charges
                                        (social security/assets))                                                  641               84


                                        5.1 BREAKDOWN OF ITEM 120 “WRITE-DOWNS OF LOANS
                                            AND PROVISIONS FOR GUARANTEES AND
                                            COMMITMENTS”

                                                                                                31/12/2004                    31/12/2003

                                        a) write-downs of loans                                     22,527                        20,005
                                           of which:
                                           - lump-sum write-downs
                                              for country risk                             0                             0
                                           - other lump-sum write-downs               11,500                        10,630
                                        b) provisions for guarantees
                                           and commitments                                           1,000                            0
                                           of which:
                                           - lump-sum provisions for country risk                       0                             0
                                           - other lump-sum provisions                  1,000                             0
                                        TOTAL                                                       23,527                        20,005


                                        Breakdown of write-downs of loans:

                                                                                                             31/12/2004       31/12/2003

                                        on non performing loans to customers:
                                          loss                                                                        0                0
notes to the financial statements 206




                                          write-downs                                                             7,732            8,870
                                        on watch-list loans to customers:
                                          analytical write-downs                                                  3,295             500
                                          lump-sum write-downs                                                      425               0
                                        on other performing loans:
                                          lump-sum write-downs                                                   11,075           10,630
                                        on credit derivatives:
                                          loss                                                                       0                 0
                                          write-downs                                                                0                 5
                                        TOTAL                                                                    22,527           20,005


                                        Write-downs for 11,027 thousand of Euro are due to analytical write-downs
                                        reported at the end of the financial year, aimed at restoring the estimated
                                        recoverable amount in loans, write-downs for 11,500 thousand of Euro, to lump-
                                        sum write-downs distributed between watch-list