CONCLUSIONES

PRODUCT/SERVICE INNOVATION AND THE SALES AND MARKETING POLICY

During the first half of 2008, the activity of Private Banking & Wealth Management was oriented to the pursuit of the commercial objectives in relation to Private Customers and the development of investment products and services for the Group customers, thus seizing the opportunities offered by the Mifid regulations.

In light of the extension of portfolio management to different market segments and innovation of supply, the Group also introduced Private Investments and Alta Gamma, the multiline portfolio management lines already included in the catalogue for the Private Segment, into the Corporate segment. In addition, the Group launched Gestione Liquidità, the first monetary line of management exclusively targeted at the Corporate market, specialized only in securities.

THE PARTNERSHIP WITH AXA IN THE INSURANCE AREA

The bancassurance business resulting from the joint venture between Axa and MPS Vita was very productive:

• The consolidation of the range of retail products focused on the development of the Family range, with the re-styling of “Accumulator Investimento”, the introduction of the recurrent premium version of “Double Engine” and the start of the marketing of “Vita Sicura” and “Patrimonio Sicuro”, targeted at the protection of assets and the family, respectively;

• With reference to Private Customers, the Group launched “Double Prestige”. This Branch I revaluable insurance policy is particularly innovative since it gives the customers the opportunity of choosing between the annual payment of interest or their capitalization. The Group also reviewed the range of Unit- linked policies for the Private segment and expanded the portfolios of funds which can be selected from 40 funds to 100 multimanager funds;

• The Group marketed “Investimento TOP” targeted at the SMEs, Local Authorities and Foundations, for the management of structural liquidity; • The Group launched 9 Index products and is gradually re-aligning the supply

of Biverbanca with the other Group Networks.

As regards compliance with the Mifid regulations, the Group complied with the provisions in relation to the mandates placed before the enforcement of Mifid and repaid the customers any return commissions collected on the funds, effective 1 July 2008. The Private “core” supply was reviewed in accordance with two guidelines: (i) the full replacement of one -line management system with the new multiline system (18 lines), diversified by management style, financial instruments and investment areas/units. Therefore, the customers can invest their assets in several management lines by executing one contract; (ii) the planning of a high range catalogue to be shared with the corporate segment.

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On the front of Mutual Funds and SICAVs, the Group launched Bright Oak Secure World Fund, the first guaranteed-capital Fund of the Group, which participates in the performance of a basket of world indices and guarantees invested capital upon maturity.

With reference to third parties’ funds, in a logic of continuous improvement of the global quality of supply, the Group introduced two prestigious international investment firms (UBS and AXA), thereby confirming the Group’s multibrand strategy. In the first half of 2008, the Group continued to consolidate the multibrand platform of MPS Banca Personale, which includes 17 asset management firms among the most prestigious in the world.

The Group continued to look for new solutions of Innovative Finance which can meet the customers’ requirements. The issue of the “Morgan Stanley Flexible Europe” (6th tranche) certificate was flanked by (i) three issues linked with the growth of a basket of agricultural commodities and one issue linked with the trend of a few Chinese companies, in view of increasing industrial business in the months following the Olympics, in addition to (ii) a placement linked with European inflation.

With reference to the Wealth Management operations and the development of the professional advisory model, the Group completed the release of the new Advisory Platform to the Affluent and Private markets of Banca MPS, Banca Toscana and Banca Agricola Mantovana. The release to MPS Banca Personale started in June 2008. The new platform develops the different advisory models previously used in different market segments, and provides “advanced” advisory services in relation to contract-based investments, in compliance with the Mifid provisions. The “advanced” advisory service is flanked by the already existing “basic” advisory service, with the former associated with the use of the Advice platform, which ensures compliance of recommended proposals with the investors’ profile, in a portfolio logic.

As regards the development of the instruments of relation support and commercial monitoring, during Q1 2008, the Group presented Demo Private of the new Advice platform, with a first training stage which directly involved each Private Center. As a result of the implementation of the avanced advisory contract in the Advice platform, the Group released other tools, such as “Gestione sottoscrizione PAC”, which dynamically manages the sale of the funds included in a proposal. The Wealth Risk Management Unit contributes valuably to the smooth operations of the Group Wealth Management platform. The Unit deals with the measurement, monitoring and control of the risks and return in relation to the investment services provided to the Customers. The main objective is to ensure overall compliance of the customers’ risk/return profile with the risk inherent in the portfolios held, and minimize reputational risks, i.e. the risk of deterioration of the customers’ confidence. In the first half of 2008, the Wealth Risk Management model was extended to Banca Antonveneta which was integrated in relation to the Group Mifid logic as of 1 July 2008.

From the viewpoint of organization, in the area of asset management in general and portfolios under management in particular, the Group pursued the activities oriented to finetune and operate the Group center of competence (Fund Management Area), with the objective of creating a centralized Area, based on a single operational model, for the management of the funds of Retail and Private Customers, MPS Banca Personale and institutional management by the Group Banks.

To this end, in March 2008, the Group centralized “traditional” institutional fund management and “absolute return” fund management as of July 2008.

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Preliminary contacts held with the Customers – oriented to illustrating the reasons underlying this transaction - were followed by centralization itself. During the first half of 2008, with reference to the initiatives aiming at developing and centralizing the Group asset management operations, the Group completed the transfer of the portfolios managed by AXA Sim, later transferred to MPSBP. Finally, the Group identified the most appropriate operational modes in order to achieve the objectives of the planned integration of Antonveneta.

On the front of sales and marketing initiatives, late in January 2008 the Private Area activated “Sviluppo in Rete”, an initiative oriented to intensify the Networks’ capacity of penetration and capture flows of unsatisfied Customers, leaving other competitors. In particular, the Group finetuned some actions of intensive development of prospect customers through joint local initiatives of the Private Centres and the Centralized Relations Unit of the Private Area, thus matching the specialists’ know-how of the Area and the account managers’ experience of the geographical territory.

COMMUNICATIONS

• With reference to communications, the Group conducted an advertising and press campaign in support of “Sviluppo in Rete” for the purpose of acquiring new market shares through the consolidation of the brand in the private banking business. Two events were orchestrated in support of this initiative in Florence and Bologna in relation to the protection trustand the real estate investment policy.

• In the first half of 2008, the cycle of meetings covering “The financial world: scenarios and expectations for 2008” - which is expected to involve 12 among the major Italian financial centres in 2008 – was held in Turin, Milan, Bologna, Mantua, Florence, Naples, Viareggio and Catania, with the participation of about 1,000 current and potential customers. The first two Advice Days held are part of a string of 8 events focused on the presentation of the range of products supplied by the investment firms which are partners of the Group.

In June 2008, the Group launched an initiative of development and consolidation in Tuscany and Umbria, with the objective of matching other initiatives (e.g. Sviluppo in Rete) and the enhancement of the tool of commercial communications in relation to specific customers’ targets. In this framework, the Group organized a specific event in Florence covering real estate issues, with the participation of important real estate experts. In June the Group also started “Trust di Protezione”, an initiative involving specific professional categories (e.g. doctors, engineers, lawyers etc….) and providing them with a valuable tool to protect their wealth. The pilot city of this initiative was Bologna, where it was presented during a specific event concerning capital optimization with a specialist section dedicated to the Protection Trust. The latest initiative launched late in June has the objective of creating new opportunities of contact and development of the share of wallet of the existing Private Customers, through the enhancement of trust instruments, stressing the fact that the Trust is an instrument of testamentary succession for the management/administration of the wealth of specific customer targets.

54 ◊ OPERATING RESULTS

The Private Banking and Wealth Management Area faced the critical situation of the markets and increasing customers’ preference to liquidity, by orienting the commercial placements toward asset management products and bonds. As a result, direct funding progressed considerably year on year (+19% in terms of average volumes), with indirect funding dropping by 9.9%, adversely affected by the remix of the portfolios and the consequences of declining stock quotations, which considerably depreciated the value of the assets administered or managed on behalf of the Customers.

Total income of Private Banking & Wealth Management came to roughly EUR 88.1 million, dropping by 12.6% y-o-y, due to the effects of the market crisis which compromised continuing and brokerage commissions (decreasing volumes managed/shift to bond and monetary lines/reduction of portfolio turnover). Interest income increased by 9.4%, benefitting from the hefty development of direct funding. The Net Operating Profit stood at EUR 20 million with a decrease of 40.4%. The cost/income ratio was 76.5% (65% in June 2007).

The companies contributing to Private Banking & Wealth Management include:

- MPS Banca Personale purchased Axa Sim in April 2008 and posted a loss of EUR 3.5, with a clear y-o-y improvement (+42%) (loss as of June 2007: -EUR 6.0 million).

- Monte Paschi Monaco S.A.M., a newly established Monaco-law company, resulting from the acquisition – early in October 2007 – of the business of the Monaco branch of Monte Paschi Banque, specialized in the management of Private customers, posted a profit of about EUR 1 million in the first half of 2008.

(in milioni di euro) 30/06/08 % chg yoy

INCOME AGGREGATES

Net interest income 33,3 9,4%

Net commissions 52,9 -21,8%

Financial income (loss) 1,9 -29,7%

Net Financial income (loss) 88,1 -12,6%

Net adjustments for impairment of loans and

financial assets 0,7 -58,1%

Operating expenses 67,3 2,8%

Net operating income 20,0 -40,4%

CAPITAL AGGREGATES

Performing loans 742,6 3,0%

Due to customers and securities 5.740,7 35,8%

Assets under management 11.873,5 -7,7%

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