SOBRE LA FRECUENCIA DE TIPOS DE COCCIONES

The macroeconomic context

The economy

Thanks to the key contribution of monetary and fiscal stimuli, 2010 saw a trend towards recovery in the economy, but also, conversely, severe tensions due to government debt quotations in the Eurozone.

The international environment was favourable. Global production and trade flows grew at a relatively sustained pace throughout the year, although only emerging countries can be said to have returned to their values prior to the financial crisis and the recession. The GDP rebound was more than 4% in Japan and reached 2.8% in the United States.

Italy’s GDP rose 1.2%, less than the Eurozone average. Growth was driven by internal demand and inventories, whereas the marked increase in imports generated an overall negative net export value. Domestic demand benefited from the positive trend in investment in means of transport and especially in machinery, favoured by tax incentives; despite the contraction in real disposable income, household consumption also grew, benefiting from a marked decrease in the propensity to save.

The level of official ECB rates remained unchanged during the year. The Central Bank continued to fully meet the demand for liquidity through open-market operations and extended the current extraordinary operation regime up to April 2011. However, in the second half of the year, European banks only renewed part of their maturing repurchase agreements, generating a two- thirds reduction in excess reserves. Euribor rates were consequently subject to modest upward pressure: the monthly rate rose 33 basis points on 0.45% at year-end 2009. During the year, demand for liquidity became increasingly concentrated: a number of peripheral banking systems (in Ireland, Portugal, Spain and Greece) were absorbing a much higher proportion of ECB funds than their economic weight. While Euribor rates showed modest increases, medium and long-term IRS rates continued to decline until the last week in August, which saw the start of a strong bounce-back. However, on the 5-year maturities, at year-end 2010 the rates (2.47%) were still 34 basis points lower than the previous year.

The sovereign debt crisis hit Greece in the early months of 2010, forcing the Eurogroup to launch with the IMF a substantial multi- year financial support and tax austerity programme. Far from reassuring the markets, the laborious launch of the aid package, which took place on 2 May, was accompanied by severe tensions on all peripheral markets, forcing Ecofin as early as 9 May, to announce a special European financial stabilisation mechanism to Member States in difficulties, and to promote an agenda for the reform of macroeconomic and fiscal surveillance. Concurrently, the ECB launched a government bond purchase programme, leading to the overall withdrawal of 73.5 billion euro bonds from the secondary market by the end of the year.

After some months of easing, in autumn the crisis deepened once again, forcing Ireland and Portugal to issue government bonds at high costs. While Portugal continued to refinance on the market, at the end of November Ireland was forced to seek financial support from the EU and IMF on account of the profound distress of its banking system. The resolution of the Irish crisis did not assuage the investors’ doubts as to the refinancing capabilities of other Eurozone countries or on the inadequacy of the current safeguarding mechanisms; consequently, the risk premiums on government debt remained high. The BTP-Bund spread on 10-year maturities, which had risen from 75 to 144 basis points in the second quarter of 2010, peaked at 201 basis points at the time of Ireland’s crisis, thereafter fluctuating between 153 and 186 basis points, more than double the levels at the start of the year. The Italian bond spread performance was relatively better than that of the other peripheral European countries, including Spain. The loss of confidence in European government debt was also reflected in euro exchange rates. The exchange rate against the US dollar saw a loss of 31 points from December 2009 to June 2010, when it hit a low of 1.19. Thereafter, the curve turned upwards, also driven by the positive performance of rate spread, reaching a peak of 1.42 US dollars; however, the renewed deepening of the crisis in autumn weakened it once again in the last two months of the year. The impact of the crisis was even stronger on the exchange rate of the euro with the Swiss franc, which went from 1.49 at year-end 2009 to 1.25 at 31 December 2010.

The financial markets

Throughout 2010, the performance of the international stock markets was very uneven, with contrasting trends and high levels of price volatility.

At the start of the year, the stock indexes lost ground on account of the uncertainties on the actual strength of the economic recovery under way and, as concerned European markets, due to the early signs of the Greek crisis. Thereafter, between February and early April, the trend returned to positive, driven by 2009 results which were overall better than consensus forecasts, and by favourable liquidity conditions.

In the second quarter, the stock markets, particularly in the peripheral European countries, suffered the heavy impact of the sovereign debt crisis, with sharp falls in prices; fears of new potential losses in the European financial system and renewed concerns as to the extent of the economic recovery, generated a marked increase in risk aversion among investors.

However, the start of the third quarter saw a trend reversal: the markets showed a significant recovery in prices, which continued until the beginning of October. The turnaround was driven by generally improved half-year results and sustained favourable liquidity conditions; economic recovery continued at a moderate rate, albeit at a slower pace than in the early months of the year. Finally, in the last months of 2010, the markets were once again hit by the impact of the European sovereign debt crisis, with the “peripheral” markets being the worst affected by the fear of a knock-on effect. The investors’ risk aversion remained unusually high for most of 2010, reflecting strong concerns for the public finance imbalances affecting a number of Eurozone countries.

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The macroeconomic context and the banking system

The macroeconomic context

The economy

Thanks to the key contribution of monetary and fiscal stimuli, 2010 saw a trend towards recovery in the economy, but also, conversely, severe tensions due to government debt quotations in the Eurozone.

The international environment was favourable. Global production and trade flows grew at a relatively sustained pace throughout the year, although only emerging countries can be said to have returned to their values prior to the financial crisis and the recession. The GDP rebound was more than 4% in Japan and reached 2.8% in the United States.

Italy’s GDP rose 1.2%, less than the Eurozone average. Growth was driven by internal demand and inventories, whereas the marked increase in imports generated an overall negative net export value. Domestic demand benefited from the positive trend in investment in means of transport and especially in machinery, favoured by tax incentives; despite the contraction in real disposable income, household consumption also grew, benefiting from a marked decrease in the propensity to save.

The level of official ECB rates remained unchanged during the year. The Central Bank continued to fully meet the demand for liquidity through open-market operations and extended the current extraordinary operation regime up to April 2011. However, in the second half of the year, European banks only renewed part of their maturing repurchase agreements, generating a two- thirds reduction in excess reserves. Euribor rates were consequently subject to modest upward pressure: the monthly rate rose 33 basis points on 0.45% at year-end 2009. During the year, demand for liquidity became increasingly concentrated: a number of peripheral banking systems (in Ireland, Portugal, Spain and Greece) were absorbing a much higher proportion of ECB funds than their economic weight. While Euribor rates showed modest increases, medium and long-term IRS rates continued to decline until the last week in August, which saw the start of a strong bounce-back. However, on the 5-year maturities, at year-end 2010 the rates (2.47%) were still 34 basis points lower than the previous year.

The sovereign debt crisis hit Greece in the early months of 2010, forcing the Eurogroup to launch with the IMF a substantial multi- year financial support and tax austerity programme. Far from reassuring the markets, the laborious launch of the aid package, which took place on 2 May, was accompanied by severe tensions on all peripheral markets, forcing Ecofin as early as 9 May, to announce a special European financial stabilisation mechanism to Member States in difficulties, and to promote an agenda for the reform of macroeconomic and fiscal surveillance. Concurrently, the ECB launched a government bond purchase programme, leading to the overall withdrawal of 73.5 billion euro bonds from the secondary market by the end of the year.

After some months of easing, in autumn the crisis deepened once again, forcing Ireland and Portugal to issue government bonds at high costs. While Portugal continued to refinance on the market, at the end of November Ireland was forced to seek financial support from the EU and IMF on account of the profound distress of its banking system. The resolution of the Irish crisis did not assuage the investors’ doubts as to the refinancing capabilities of other Eurozone countries or on the inadequacy of the current safeguarding mechanisms; consequently, the risk premiums on government debt remained high. The BTP-Bund spread on 10-year maturities, which had risen from 75 to 144 basis points in the second quarter of 2010, peaked at 201 basis points at the time of Ireland’s crisis, thereafter fluctuating between 153 and 186 basis points, more than double the levels at the start of the year. The Italian bond spread performance was relatively better than that of the other peripheral European countries, including Spain. The loss of confidence in European government debt was also reflected in euro exchange rates. The exchange rate against the US dollar saw a loss of 31 points from December 2009 to June 2010, when it hit a low of 1.19. Thereafter, the curve turned upwards, also driven by the positive performance of rate spread, reaching a peak of 1.42 US dollars; however, the renewed deepening of the crisis in autumn weakened it once again in the last two months of the year. The impact of the crisis was even stronger on the exchange rate of the euro with the Swiss franc, which went from 1.49 at year-end 2009 to 1.25 at 31 December 2010.

The financial markets

Throughout 2010, the performance of the international stock markets was very uneven, with contrasting trends and high levels of price volatility.

At the start of the year, the stock indexes lost ground on account of the uncertainties on the actual strength of the economic recovery under way and, as concerned European markets, due to the early signs of the Greek crisis. Thereafter, between February and early April, the trend returned to positive, driven by 2009 results which were overall better than consensus forecasts, and by favourable liquidity conditions.

In the second quarter, the stock markets, particularly in the peripheral European countries, suffered the heavy impact of the sovereign debt crisis, with sharp falls in prices; fears of new potential losses in the European financial system and renewed concerns as to the extent of the economic recovery, generated a marked increase in risk aversion among investors.

However, the start of the third quarter saw a trend reversal: the markets showed a significant recovery in prices, which continued until the beginning of October. The turnaround was driven by generally improved half-year results and sustained favourable liquidity conditions; economic recovery continued at a moderate rate, albeit at a slower pace than in the early months of the year. Finally, in the last months of 2010, the markets were once again hit by the impact of the European sovereign debt crisis, with the “peripheral” markets being the worst affected by the fear of a knock-on effect. The investors’ risk aversion remained unusually high for most of 2010, reflecting strong concerns for the public finance imbalances affecting a number of Eurozone countries.

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During 2010, the S&P index rose 12.8%, in line with the rise in the DJ Composite (+13.1%). The performance of the main European indexes was very varied. DAX closed the year with a significant increase (+16.1%), reflecting the recovery of the German economy; FTSE 100 rose by 9.0%, whereas the CAC 40 index recorded a slight decrease (-3.3%). The Euro Stoxx remained largely unvaried (+0.5%, after falling by -10% at mid year). The Chinese stock market posted a marked decline, with the Sse Composite index falling by -14.5%, whereas the Japanese Nikkei posted a more moderate decline, closing the year at -3.0%.

The Italian stock market performed less brilliantly than the major Eurozone indexes, reflecting the investors’ greater aversion for the “peripheral” markets of the area and the greater relative weight of the financial segment. The FTSE All Shares index fell 11.5% from the beginning of the year (-16% at mid year), whereas the FTSE MIB lost 13.2% (-17% in June 2010). Mid-cap stocks continued to perform better than blue chips: in particular, the FTSE Italia STAR index closed 2010 with a slight increase (+2.9%).

The performance of the European corporate bond market in 2010 was uneven by segment and type of security. The investment grade segment recorded overall negative performance, particularly marked for financial securities. The derivatives segment also posted substantial losses, due to the increase in risk premiums for all the main European iTraxx indexes (Credit Default Swap indexes). The non-investment grade bond segment continued to record a positive performance, with a narrowing of rate spreads. After a slightly negative start of the year, the market had commenced to move towards a decrease in risk premiums, driven by the reassuring signals coming from the macroeconomic scenario. Subsequently, however, the tensions generated by the Greek crisis triggered an intense correction phase, which deepened following the Irish crisis and due to the fears of contagion spreading to the other peripheral Eurozone countries.

The emerging economies and markets

In 2010 the GDP growth of the emerging economies gained considerable momentum (exceeding 7% based on International Monetary Fund estimates, compared to 2.6% in 2009). The pace of growth was stronger in the regions and countries which proved able to replace the original stimuli provided by fiscal policy and foreign trade with autonomous growth in private domestic demand. The fastest growth rates were recorded by the emerging economies of Asia, led by China and India, whose preliminary growth estimates are around 10%, and by those of Latin America, with Brazil, whose GDP rose more than 7%. As for MENA (Middle East and North Africa), oil producing countries benefited from the renewed growth trend in gas and oil prices and demand, while non-oil producers benefited from the greater foreign revenues (exports, money transfers from migrant workers and tourism) as well as from international capital flows. GDP growth in Egypt, which had been 5.3% in the fiscal year that ended in June 2010, in the following quarter rose to 6%. Again in 2010, mean GDP growth in Gulf countries was close to 5%.

Eastern European countries performed differently according to their subgroups. Many countries (Slovakia, Slovenia and Hungary) returned to positive GDP growth values, also thanks to the recovery of exports to the EU. In CEE (Central and Eastern European) countries where Intesa Sanpaolo operates through subsidiaries, 2010 GDP growth is estimated at about 2%. The SEE (Southern and Eastern European) countries, where due to the weak financial position of households and enterprises the private sector reacted to the crisis with a sharp contraction in consumption and investment demand, displayed a slower recovery. In some of these countries, the recession continued into 2010, in particular, in Croatia and Romania; this was only partly balanced by the recovery recorded in Bosnia and Serbia and by the positive performance of Albania. In the SEE countries where Intesa Sanpaolo operates through its subsidiaries, the estimated GDP change in 2010 was still negative at -0.9%, but improved from -5.5% in 2009. Lastly, in the CIS countries GDP rebounded in 2010 to a growth rate of about 4%, after its marked -6.5% dip in 2009. These countries mostly benefited from the pick-up in commodity prices and demand (Russia) but also from domestic political stabilisation (Ukraine).

The recovery of the economy and the rise in commodity prices triggered a widespread acceleration of inflation. The trend rate of growth on a large sample of countries accounting for more than 70% of the total GDP of emerging countries rose to 6.2% in November 2010 from 5.7% at the end of 2009. The most significant accelerations were recorded in some Asiatic countries (China and Indonesia) and in Latin America (Brazil). Prices started to rise again, especially in the last part of the year, in the MENA countries. In Eastern European countries too the inflation rate, albeit decreasing in mean value compared to 2009 picked up again during the last part of 2010 driven by the increase in food prices due to the drought (Russia, Ukraine and Serbia) or as a result of fiscal measures (Romania).

During 2010, many emerging countries started to adopt restrictive monetary policy measures. This action was more intense and widespread in Asia and Latin America, where clear risks of overheating the economy and prices emerged. In Eastern Europe, the slowdown of inflation and the continuing weakness of the economic cycle had favoured, in the first half of 2010, a decline in monetary rates in some countries (Romania, Russia, Serbia, Ukraine and Hungary). However, in the second half of the year, new inflation pressures (Russia), coupled with currency weakness (Serbia and Hungary) prompted the monetary authorities to implement restrictive monetary actions.

On the capital markets, the stock market bull phase which had started in the second quarter of 2009 continued in 2010. The momentary correction of trends recorded in the second quarter of 2010, reflecting fears on the sustainability of growth, did not prevent the year from closing on a positive note.

In detail, in 2010 the MSCI Emerging Markets Index gained almost 12%, after rising by almost 60% in 2009. This index performed slightly worse than the US market (S&P Composite Index +12.8%) but better than the Euro area (-0.1%) and Japan (- 3%). The gains were led by the Asian stock markets (with the greatest increases recorded in Indonesia, Thailand and the Philippines), those of Latin America (Argentina, Chile and Peru) and in Eastern Europe (especially the Baltic countries and Ukraine). In the MENA region, Egypt, Morocco and Tunisia recorded two-digit rises. The weakness of some Central and South Eastern European countries reflects the concerns for the more uncertain outlook of the economy and financial markets in Europe. During 2010 the US dollar depreciated further against the emerging currencies (declining by 3.6% against the OITP – Other Important Trading Partners currencies). The strongest currencies were those of the countries with the fastest-growing economic outlook (mainly in Asia), those with the highest interest rates (especially in Latin America) and commodity-exporting countries (such as South Africa, Australia and some Latin American countries such as Chile and Peru). In Eastern Europe, certain currencies under a floating exchange rate regime of the SEE countries having the greatest external budget and financial imbalances

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(Romania, Serbia and Albania) but also those of some CEE countries (Hungary) depreciated against the euro, while the currencies of countries with fixed exchange rate (Bosnia and the Baltic countries) or quasi-fixed rates (Croatia) remained stable. The currencies of Russia and Ukraine remained stable against the US dollar, supported by the improvement in the financial environment, the favourable development of commodity prices and, in the case of Ukraine, also by greater political stability. The spreads on sovereign debt in most emerging countries of Latin America and Asia at the end of 2010 were narrower than end-