Formato Encuesta de Seguridad

These comments relate to the reclassified pro-forma financial statements contained in the previous pages in which the contributions of both former parent banks, BPU Banca Scpa and Banca Lombarda e Piemontese Spa, have been reconstructed for the entire first half of 2007 and also for the 2006 first half comparison period.

The compulsory financial statements contained in the pages that follow, however, present the following: for 2007 the income statement of the former BPU Banca for the entire first half and of the former Banca Lombarda e Piemontese for the second quarter only; for 2006 the historical income statement of BPU Banca. UBI Banca ended the first half of 2007 with a pro-forma net profit of 821,4 million euro compared to 738,5 million pro-forma recorded in the same period of 2006 (+11,2%).

If the most significant non recurring items are excluded, presenting a negative balance by 59,9 million in 2007 (of which 49,2 for integration costs) and a positive balance by 82 million in 2006 (of which 59,8 million for the disposal of equity investments and 23,3 million for the Pramerica earn-out), pro-forma profit in the first six months of 2007 amounted to 881,3 million compared to 656,6 million in 2006, an improvement of 34,2%.

Profit before tax on continuing operations amounted to 846 million, an improvement of 19,3% (+35,5% net of non recurring items), the result of the positive performance of all income items with the sole exception of net interest income, which is structurally negative because of the particular type of activity performed by UBI Banca. More specifically, operating income rose from 920,1 million to 1.101,7 million euro, which more than compensated for the trend for operating costs, which rose from 234,9 million to 254,1 million.

The performance for the main items of operating income was as follows:

- net interest income fell from -56,4 million to -91,2 million in relation to the greater interest

expense on securities in issue, which rose from 140 to approximately 305 million as a result of the increased stock of international issues in the EMTN programme which was only partly offset by the improvement in the margin from banks and from increased interest on loans to customers;

- dividends received totalled 970,8 million compared to 728,3 million received in 2006. In

detail, 905,6 million relate to equity investments in subsidiary and associate companies, while 57,9 million relate to available-for-sale assets (34,7 million in the first half of 2006) of which 55,1 million were Banca Intesa Sanpaolo dividends (31,9 million in 2006). The remainder consisted of dividends on financial assets held for trading (5,9 million) and on income from OICR units (collective investment instruments) (1,4 million);

- net commissions were positive by 8,1 million (1 million in 2006). This aggregate includes

commission items connected with the operational support functions performed by the Parent Bank with regard to network banks, for which UBI Banca incurs commission expenses which are then invoiced on the basis of specific intragroup contracts;

- net profit from trading and hedging was positive by 42,8 million compared to 84,8 million in

2006; the latter however included non recurring income from the disposal of equity investments amounting to 61,6 million euro (of which 58 million from the disposal of Banca Italease);

- other net operating income increased from 162,4 million to 171,2 million and included

income for services to group member companies amounting to 156,9 million (147,5 million in 2006).

Within operating costs, although staff costs benefited from the extraordinary positive component of the impact of the new staff severance provision regulations amounting to 5,5 million, they nevertheless increased by 9,4% to 124,9 million, primarily as a result of contract renewals and general growth in remuneration as well as incentives and bonuses. The increase in administrative expenses, which rose to 92,9 million (+2,5%), was more contained.

The balance on net provisions was negative by 1,4 million euro, compared to the again negative balance of 4,6 million in 2006, the result of lower net provisions for liabilities and charges.

The item profits on the disposal of equity investments (-0,1 million) was affected by the absence of the positive contribution present in 2006 from the Pramerica earn-out (+28,8 million).

Taxes on income for the period were positive by 24,6 million (+29,3 million in 2006) in relation

to the reduced taxation on dividends received following the reform of IRES (corporation tax) which more than compensated for the following non recurring items:

- 1,8 million relating to the reform of staff severance payments;

- 7,4 million in relation to the “tax wedge” legislation;

- 7 million due to the non recoverability of the tax credit for the tax loss in the first three months of the year relating to the former Banca Lombarda, following the reply received from the tax authorities to the appeal presented on 29th _{January 2007 concerning the method of}

applying the UBI fiscal consolidation. As a consequence, the credit posted as at 31st _March

2007 was charged to the income statement in the half year accounts1_.

Integration costs recognised in the first half amounted to 76 million euro (before tax of 26,8 million) and were as follows:

staff leaving incentive costs of 43,5 million;

administrative expenses and staff costs, for industrial consultancy services, communication and advertising of 6,6 million;

net impairment losses on property, plant and equipment and intangible assets of 25,9 million, attributable to write-offs of software and hardware which will be decommissioned following the choice of the new IT target system.

An analysis of balance sheet items shows direct funding from customers at the end of June 2007 (liability items 20 and 30 on the balance sheet) amounting to 16,9 billion euro (including securities in issue of 15,5 billion), compared to 14,1 billion at the end of 2006 (including securities in issue of 13,1 billion) and 10,9 billion in June 2006 (including securities in issue of 10,1 billion).

The progressive increase in funding (+54,6% annually) is largely attributable to funding activity on international markets performed by the Parent Bank and in the past by both BPU Banca and by Banca Lombarda e Piemontese. The Euro Medium Term Notes (EMTN) bonds outstanding at the end of June amounted to 13,9 billion (11,6 billion in December and 8,8 billion in June 2006), with growth of 57,8% over twelve months.

The EMTNs included subordinated issues for a nominal value of 2,5 billion, unchanged compared to December, against a nominal value of 2,1 billion in June 2006.

For further details of the EMTN programmes, exhaustive information is given in the section “Direct funding”.

Considered net of EMTN issues, direct funding amounted to 3 billion euro compared to 2,5 billion at the end of 2006 (+21,7% in six months) and 2,1 billion in June 2006 (+41% over twelve months).

Lending to customers reached almost 8 billion euro at the end of June 2007 compared to 6,5

billion at the end of December (+22,2% in the first half) and 6 billion in June 2006 (+33,2% on an annual basis).

The financing activity of UBI Banca is performed principally for Group member companies and more specifically for companies operating in the leasing sector (BPU Esaleasing, SBS Leasing and SILF) and the factoring sector. The growth in the item is therefore attributable to intragroup financing requirements.

1 The loss could in reality be recovered if UBI Banca recorded a fiscal profit in coming years, a rather uncertain prospect, considering the particular nature of the activities it performs.

The net interbank position was negative by 1,1 billion, compared to -3,3 billion at the end of 2006 and -5,3 billion in June 2006. Consistent with its role as the centralised manager of Group liquidity, UBI Banca progressively increased its interbank investment over twelve months, channelling institutional funds acquired on international markets to Group member companies.

Total financial assets (asset items 20, 30, 40 and 50 on the balance sheet) amounted to 9,7 billion euro, almost unchanged compared to June 2006 but down compared to 9,9 billion at the end of 2006.

The change in the first half of the year was the result of the following performance:

- financial assets held for trading rose to 5,3 billion from 4,1 billion in December. The

increase is attributable mainly to greater investments in debt securities, recognised in part within assets transferred but not derecognised because they are used for repurchase agreement transactions.

Units held in OICR (collective investment instruments) (0,7 billion) also increased – they also include hedge fund investments made to maximise return (see the section “Financial activities) - as did financial derivatives (0,6 billion).

Assets held for trading included ABS (Asset Backed Securities) amounting to 137 million, of which more than 80 million consisting of “Collateral Bond Obligations” (CBO Jersey) with the underlying capital in European government securities, while the remainder consisted of the Orio Finance securitisations;

- financial assets recognised at fair value consisted exclusively of capitalisation insurance certificates amounting to 1.890 million (1.625 million the nominal value invested plus interest capitalised and matured), down from 3.307 million at the beginning of the year (2.944 million nominal) as a result of the programme to reimburse those policies which, as a result of the rise in market interest rates, no longer generate a satisfactory return. In detail, 37 policies were reimbursed in advance for a nominal value of 1.569 million in the first half. Furthermore a policy held by Centrobanca with a nominal value of 250 million was acquired by UBI Banca, while the remaining change is due to the effects of the interest capitalised and matured;

- available-for-sale financial assets, inclusive of the investment in Banca Intesa San Paolo

amounting to 775 million, recorded no significant change and amounted to 1.247 million; - held-to-maturity financial assets remained virtually unchanged at 1.240 million.

The transfer from Banca Regionale Europea to the Parent Bank of the business consisting of depository bank activities resulted in the generation of goodwill amounting to 8,6 million.

Capital ratios as at 30th _{June 2007 consisted of a tier 1 ratio (tier 1 capital/risk weighted}

assets) of 22,81% and a total capital ratio (supervisory capital/risk weighted assets) of 35,28%.