1.4 Procesos Electorales
1.4.2 Estrategias de campañas electorales
1. General aspects
With reference to the risks management model, the governance was streamlined according to the One4C project in order to achieve higher levels of efficiency and ensure a strong control on risk related topics. The “CRO Italy” function was assigned all the credit and risk management responsibilities for UniCredit S.p.A as well as the overall Italian perimeter and the managerial coordination of the relevant risk management functions in the Italian Legal Entities of the Group.
In addition, credit risk organizational structures and processes were revised in 2012 in order to get aligned with regulatory requirements and improve the Group efficiency. The new organizational structure for credit risk, operational since January 14, 2013, is described in the next section with specific reference to structures and responsibilities.
During the first quarter of 2012 the Group Credit Risk Strategies were released, consistent with the Group “risk appetite” and Pillar II metrics. Also in accordance with Pillar II, concentration risk was updated in respect of single name concentration risk (so-called Bulk Risk) and at industry level. In addition, in order to further improve the process and methodologies to be used in the development of credit risk strategies and stress tests on credit risk, the relevant internal regulations were updated.
UniCredit SpA continues its intense effort to extend Basel 2 principles to the entire perimeter. With specific reference to credit risk, it is currently authorized to use internal estimates for PD, LGD and EAD parameters for its own loan portfolio (Sovereigns, Banks, Multinational Enterprises and Global Project Finance transactions) and for loan portfolios such as corporate and retail exposures. With regard to the EAD parameter, pending approval for the use of internal models, the parameters defined according to the Foundation approach are currently used, with the exception of Private Mortgage Loans for which an internal EAD model is already being used for regulatory purposes.
The stress testing activities on credit risk, consistent with the requirements of the Regulators, have been performed on the basis of a common scenario internationally defined. The exercise was carried out following the guidelines of the European Banking Authority (EBA) in coordination with the Bank of Italy and other national Regulators involved, the European Systemic Risk Board (ESRB), the European Central Bank (ECB) and the European Commission. The impacts of the simulation have been evaluated both in terms of income, considering the impacts on provisions and profit / loss of the year, both at balance sheet level where the impacts on minimum capital requirements (Pillar I) have been considered. During the year a project was carried out to implement the stress test calculation engine on the Group's IT platform, the completion of which will result in an integrated IT solution applicable to the Group and the main legal entities.
In the course of 2012 the control activity for the identification of major business groups - those with an exposure exceeding two percent of the consolidated regulatory capital (Top Group) - became operational and was carried out by a special dedicated unit within Risk Management. The activity focused on the definition and periodic review of the "Top Group", which includes both industrial and financial groups. Special support initiatives were also organized by providing methodological and technical assistance aimed at facilitating the above activity in respect of groups not directly supervised by that unit.
Within the scope of the Italian business, we further strengthened the processes and procedures supporting loan disbursement, monitoring and debt collection: a single application was released at Group level though which all business groups, both local and global, can be mapped; the general database was supplemented with information on companies provided by external providers concerning adverse events, insolvency proceedings, protests and bankruptcies. A new tool was also released for credit risk monitoring of the Large Corporate segment.
In order to improve our assessment of real estate companies new rating models were introduced, targeted to these types of counterparties. In September 2012 we introduced a new rating model for mortgage loans granted to retail customers. Rating models were adjusted consistent with the new definition of default at 90 days.
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To complete the process of simplification and control of the loan supply chain, the Italian loan disbursement and monitoring units (Credit Operations Italy) were streamlined by setting up 7 local units each responsible for the entire local portfolio (Corporate, SME Corporate and Individuals).
Loan monitoring after disbursement was improved by:
defining specific controls on medium to long-term mortgage loans to corporate and retail customers;
releasing new features for the management of contractual covenants;
increasing control on loans backed by mutual guarantee institutions or counter guaranteed by public funds. With regard to the
management of guarantees, control on legal validity was further strengthened.
In order to continue providing adequate support to the economy the range of financing provided to exporting companies was expanded (also through agreements with Sace). We also provided support to the areas affected by the earthquake in May 2012, both by participating in the initiatives promoted by ministerial decrees and through the Group own initiatives.
2. Credit Risk Management Policy
2.1 Organization
The credit risk organization in UniCredit S.p.A. breaks down into two levels:
functions with responsibilities at Group level;
functions with responsibilities at Country level.The functions with responsibilities at Group level are:
o the Group Credit Risk department which, inter alia, is responsible for: defining the Group regulations on credit risk;
defining credit strategies and limits; carry out stress tests and portfolio analysis;
monitor the concentration of credit risk through dedicated limits;
preparing the reports needed for monitoring the trend of the loan portfolio;
monitoring the loan portfolio, by assessing its overall quality and managing the quality of riskier asset buckets; o the Group Credit Transactions department which - inter alia - is responsible for the evaluation, monitoring and supervision of
Large Credit Transactions, through the following activities:
evaluating credit proposals to be submitted to the "Group Transactional Credit Committee" and/or the "Group Credit Committee" and formulating expert opinions to be submitted to these committees;
within its delegated powers, deciding or issuing non-binding credit opinions (NBCO) in respect of credit proposals for Financial Institutions, Banks and Sovereigns (FIBS) and Special Products (e.g. ABS, Securitization, etc.)
acting as Group competence team, issuing expert advice on credit proposals submitted by the Legal Entities in
relation to structured finance (LPAC1 and Special Products) and FIBS transactions;
monitoring FIBS counterparties, the companies in the CIB portfolio, Structured Finance transactions and Debt-to-
Equity positions arising in the course of restructuring activities
coordinating and guiding restructuring and workout activities carried out by the Group Legal Entities on the basis of defined areas/thresholds
o the Group Risks Control department which, among other activities, is responsible for:
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ensuring the development, management and continuous evolution of models, rating tools, credit risk measurement
tools for the overall portfolio and credit risk methodologies.
coordinating the implementation of the Basel regulation on credit risk and ensuring the relevant disclosure to
corporate governance Bodies and Supervisory Authorities.
Group level validation of the methodologies for measuring credit risk, the relevant processes and the IT and data
quality components, in order to verify their compliance with regulatory requirements and internal standards. assigning the rating to certain types of relevant counterparties (Top Banking and Top Corporate);
deciding, within its delegated powers, or submitting proposals to the relevant decision-making Bodies for rating
override in respect of Group Wide rating systems.
At Country level, steering and credit risk control activities, as well as the conducting of “operational” activities (e.g. credit delivery, performance monitoring, etc.) falls under the responsibility of CRO controlled subsidiaries.
In UniCredit S.p.A., these functions are carried out by the organizational units under “CRO Italy”, reporting to “Group CRO” and specifically:
the “Risk Management Italy” department responsible - among other activities - for the governance and control of credit risk
within the “Country Chairman Italy” area of responsibility (including Consumer Finance products). With respect to credit risk, the department consists of the following units:
o the Credit Risks Portfolio Analytics department which, inter alia, is responsible for:
monitoring and predicting the risk composition of the loan portfolio in terms of credit quality, cost of risk, RWA and capital requirement for UniCredit S.p.A. group and for preparing the required reporting.
o the Credit Policies & Products Italy department which, inter alia, is responsible for:
defining the loan process/product rules relating to the disbursement, monitoring, restructuring and
workout steps, for UniCredit S.p.A. group.
o the Credit Risk Methodologies department which, inter alia, is responsible for:
defining and managing the methodologies on credit risk management. These methodologies refer to
credit risk measurement models for all customer segments.
o the Rating Desk Italy department which, inter alia, is responsible for:
deciding, within its delegated powers, or submitting proposals to the relevant bodies on rating override with respect to local rating systems for the measurement of credit risk of UniCredit S.p.A. business segments.
the Central Credit Risk Underwriting department which, inter alia, is responsible for: o coordinating the activities of the 'Regional Industry Team Leaders', o ensuring that RIT decision-making activities are properly carried out,
o coordinating and managing lending to UniCredit S.p.A. customers in relation to Consumer Finance products,
o preliminary and administrative activities for transactions to be submitted to the Italian Transactional Credit
Committee and the Italian Special & Transactional Credit Committee;
the Territorial Credit Risk Underwriting department which, inter alia, is responsible for the following activities (excluding those that fall within the Central Credit Risk UW areas of responsibility):
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o management of lending falling within the area of responsibility of the Regional Industry team no. 6. It consists of the following structures:
o RIT 6 Real Estate
o Local Credit HUB
the Loans Administration department which - inter alia- is responsible for the following activities: o monitoring administrative activities after the loan has been granted/disbursed
o management of subsidized loans
o lending and administrative activities relating to mutual guarantee institutions
o coordination and management of activities after disbursement of Mortgages by ensuring the quality and integrity of information assets and risk minimization; decisions on loan applications falling within its responsibility.
With respect to credit risk, the department consists of the following units:
o Loan Administration Network
o Mortgages Loans Administration
o Subsidized Loans
o Mutual Guarantee Institutions & Public Guarantees
o Loan Admin Service & Support
o Analysis & Advisory Performing
o Documents certifications and preliminary analysis
the Special Credit & Credit Risk Monitoring Italy department which, inter alia, is responsible for:
o monitoring trends in credit risk, in the recovery of past-due and unpaid loans (including the classification as
doubtful/non-performing loans within the granted authority) and ensuring the applicability and implementation of recovery strategies and actions;
o oversight of activities aimed at reducing the cost of credit risk associated with irregular and problem loans; o making decisions, within its delegated powers, on positions under restructuring or workouts.
The department consists of the following structures:
o INC portfolio Italy which, with reference to corporate customers classified as non revoked doubtful loans, is in
charge of the coordination and conduct of a credit strategy aimed at withdrawing from or restructuring the position, o Special Credit Support & Administration Italy, responsible for supervising the cost of risk and for performing
administrative and accounting activities within its own remit
o Workout Italy, which is responsible for coordinating and conducting the management of workout positions with
regard to customers with exposures below a certain threshold
o Restructuring Italy, which, with respect to customers with exposures below a certain threshold, is responsible for coordinating and conducting the management of restructuring positions and monitoring compliance with the terms of the restructuring plan and any agreed covenants
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o Territorial Credit Risk Monitoring Italy, which is responsible for the coordination and management of credit
monitoring through performance monitoring and the definition of corrective actions in coordination with the Central Credit Risk Monitoring Italy department.
o Central Credit Risk Monitoring Italy department which, through decision-making activities, is responsible for
coordinating and directing monitoring activities carried out by the local structures, excluding retail customers; it is also responsible for the monitoring and centralized management of overdue payments relating to Private customers.
o Customer Recovery, which is responsible for managing and supporting monitoring and credit collection processes
and for the classification as problem loans of customers in the Individuals, Small Business and Mid Enterprises segments
o Special Credit Legal support, which is responsible for providing specialized/specific Legal support to the Special Credit units
o Large / MNC Workout & NCP Management, which is responsible for coordinating and conducting the management
of workout positions with an exposure above a specified threshold
o Large & MNC Restructuring, which, with respect to customers with exposures above a certain threshold, is
responsible for coordinating and conducting the management of restructuring positions and monitoring compliance with the terms of the restructuring plan and any agreed covenants.
In addition to that, with respect to credit risk specific committees are active:
the “Group Credit Committee”, in charge of discussing and approving credit proposals within its responsibility, including
“restructuring” and “workout” positions, relevant strategies and corrective actions to be taken (including classification of status when applicable) for “watchlist” positions, specific limits for transactions related to debt capital markets on Trading Book, single issuer exposure limits on Trading Book;
the “Group Credit and Cross-Border Risks Committee”, responsible for monitoring credit and cross-border risks at Group
level, for submitting credit and cross-border risk strategies, policies, methodologies and limits to the “Group Risk Committee” - for either approval or information - as well as regular reporting on risk portfolio and profile in relation to the above risks; the "Group Transactional Credit Committee" which has decision-making functions, within its delegated authority (resolutions
and / or non-binding opinions to the Group Entities), and / or advisory functions on matters within the remit of Senior Bodies, with regard to credit proposals, including "restructuring" and "workout" positions; strategies and relevant corrective actions to be taken for “watchlist” files, specific limits for transactions related to debt capital markets, single issuer exposure limits on Trading book;
the "Italian Transactional Credit Committee", which has decision-making functions within its delegated powers and / or advisory functions for matters within the remit of Senior Bodies, is responsible, with regard to UniCredit S.p.A. counterparties, (excluding FIBS counterparties) for credit proposals (including "restructuring" and "workout" positions), the classification status of positions, strategies and corrective actions for "Watchlist" positions, transactions concerning pawn loans and issue of non- binding opinions to the Italian Legal Entities of the Group;
the “Group Rating Committee”, responsible for taking decisions and/or issuing non-binding opinions to the Group Legal
Entities on rating override proposals;
the "Italian Special & Transactional Credit Committee", which is responsible, within its delegated powers, for the evaluation and approval or, for positions within the remit of Senior Bodies, the issue of advisory opinions on restructuring and workout positions, as well as positions of customers managed by the "Special Credit Italy" department.
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AS AT DECEMBER 31, 2012