Analyse Fusion Bpi Bvn

Company report Italy

3 November 2006

Accumulate

Banca Pop. Verona Novara

(unchanged) 11/ 0 2 / 20 0 6

Banks

24 v v ds v dv s dy 23

Price

22 21

EUR 21.43

20 19 18

Target Price

17

EUR 22.90

16 15 Oct 05 Nov 05 Dec 05

Jan 06

Feb 06 M ar 06 Apr 06 M ay 06 Jun 06

B . P OP .VERONA NOVA RA

Jul 06

Aug 06 Sep 06

Oct 06 Nov 06

DJ Sto xx B anks (Rebased)

Source: Datastream

Benchmark rebased to stock price

(EUR) Total Income (m) Gross Operating Profit (GOP) ( EBT (m) Net Profit (reported) (m) Shareholders Equity (m) GOPPS EPS (adj.) BVPS DPS P/GOP P/E (adj.) P/BV (adj.) Dividend Yield (%) Cost/Income (%) ROE (adj.) (%)

12/04 2,330 870 712 412 3,717 2.35 1.19 9.17 0.50 5.9 11.7 1.5 3.6 62.7 12.2

12/05 12/06e 12/07e 12/08e 2,484 2,732 2,937 3,139 1,097 1,322 1,467 1,609 981 1,296 1,288 1,408 597 816 773 845 4,021 4,576 4,992 5,477 2.94 3.52 3.91 4.29 1.54 1.92 2.06 2.25 9.92 11.33 12.44 13.73 0.70 0.95 0.96 1.00 5.1 6.1 5.5 5.0 9.8 11.1 10.4 9.5 1.5 1.9 1.7 1.6 3.3 4.4 4.5 4.7 55.8 51.6 50.0 48.7 14.9 16.8 16.2 16.1

EUR 22.90 Accounting Standard/Since

IFRS/2005

Reuters/Bloom berg

BPVN.MI/BPVN IM

Share price on 02/11/2006 (EUR) Target price (EUR) Market capitalisation (EURm) No. of shares (m) Free float Daily avg. no. trad. sh. 12 mth Daily avg. trad. vol. 12 mth (m) Price high 12 mth (EUR) Price low 12 mth (EUR) Abs. perf. 1 mth Abs. perf. 3 mth Abs. perf. 12 mth Local index DJ Stoxx or EuroStoxx 50 EPS 06-04 CAGR

21.43 22.90 8,043.0 375.3 100.0% 2,462,700 51.19 23.42 15.80 -2.6% -5.0% 35.5% S&PMIB No 27.4%

Shareholders:

A tough challenge for a team with a proven track record •

After an initial negative reaction due to the high price paid to win BPI’s approval of the merger project, we believe that the market will find solace in a rapid and effective integration of the two banking groups, thanks to the proven track record of the BPVN management team.

•

On the revenue side, the targeted synergies (EUR 280m) correspond to 6.8% of the combined revenue base (or almost twice the new assessment in the BIN-SPI merger) and half of it is expected to come from a partial realignment of BPI’s employee productivity to the best practice of the BPVN group. We cast some doubts on this productivity realignment, mainly concerning its phasing. Therefore, the successful execution of revenue synergies will be crucial, and we prudently include in our numbers only half of the target, i.e. EUR 140m vs. EUR 280m. Despite our prudent approach, BPVN is still trading at a P/E of 12.1x in 2007 and 10.2x in 2008 post-synergies, at a discount on other Italian peers. Therefore, we give BPVN an Accumulate rating and EUR 22.9 target price.

•

The ongoing analysis with respect to Cattolica Assicurazioni concerning a partial integration with BPVN will continue until end November and will be submitted to BPI’s BoD, which should evaluate with complete freedom whether to launch the project.

Luigi Tramontana

+39 02 4344 4239

[email protected]

Banca Pop. Verona Novara

CONTENTS Investment case......................................................................................................3 Creating Italy’s biggest Popolare bank ................................................................4 The Cattolica option....................................................................................................5 Active capital management.........................................................................................5

Value creation .........................................................................................................6 The effect on our estimates ........................................................................................8

Conclusions ............................................................................................................9 Banca Pop. Verona Novara: Summary tables ...................................................10

Il presente documento è stato redatto da Luigi Tramontana che svolge funzioni di analista presso Banca Akros SpA ("Banca Akros"), soggetto responsabile della produzione del documento stesso. Banca Akros - banca autorizzata anche alla prestazione di servizi di investimento con provvedimento di Banca d’Italia del 14/11/1996, iscritta all’albo delle Banche al n. 5328, appartenente al Gruppo Bipiemme Banca Popolare di Milano (il “Gruppo”) e soggetta all’attività di direzione e coordinamento di Banca Popolare di Milano (la “Capogruppo”) - ha prodotto il presente documento per i propri clienti istituzionali (“operatori qualificati” così come definiti all’art. 31 del Regolamento Consob in materia di Intermediari). Esso è distribuito dal giorno 3 novembre 2006. Banca Akros, ai sensi degli artt. 69 quater e quinquies del Regolamento Consob in materia di Emittenti, dichiara di non avere propri rilevanti interessi finanziari negli strumenti finanziari oggetto del presente documento ovvero rilevanti conflitti di interesse derivanti da rapporti con l’emittente detti strumenti finanziari (l’”Emittente”) ovvero, più in generale, derivanti da operazioni descritte nel presente documento. Banca Akros dichiara di non essere a conoscenza della sussistenza di rilevanti interessi finanziari e/o di rilevanti conflitti di interesse della Capogruppo nei confronti dell’Emittente. L’analista Luigi Tramontana, che ha redatto il presente documento, ha maturato una significativa esperienza presso Banca Akros e altri intermediari. L’analista e i suoi familiari non detengono Strumenti Finanziari emessi dall’Emittente, né svolgono ruoli di amministrazione, direzione o consulenza per l’Emittente, né l’analista riceve bonus, stipendi o altre forme di retribuzione correlate, direttamente o indirettamente, al successo di operazioni di investment banking. Banca Akros, nell’ultimo anno, ha pubblicato sulla società oggetto di analisi tre studi in data 26 e 31 ottobre 2006. La Banca rende disponibili ulteriori informazioni, ai sensi delle disposizioni Consob di attuazione dell’art. 114, comma 8 del D.Lgs 58/98 (TUF) ed in particolare ai sensi dell’art. 69 quinquies, comma 2, del Regolamento Emittenti, presso il proprio sito internet (si veda http://bancaakros.webank.it/akros/sito.nsf/homepage). Le informazioni e le opinioni contenute in questo documento si basano su fonti ritenute attendibili. La provenienza di dette informazioni e il fatto che si tratti di informazioni già rese note al pubblico è stata oggetto di ogni ragionevole verifica da parte di Banca Akros. Banca Akros tuttavia, nonostante le suddette verifiche, non può garantire in alcun modo né potrà in nessun caso essere ritenuta responsabile qualora le informazioni alla stessa fornite, riprodotte nel presente documento, ovvero sulla base delle quali è stato redatto il presente documento, si rivelino non accurate, complete, veritiere ovvero corrette. Il documento è fornito a solo scopo informativo; esso non costituisce proposta contrattuale, offerta o sollecitazione all’acquisto e/o alla vendita di strumenti finanziari o, in genere, all’investimento, né costituisce consulenza in materia di investimenti. Banca Akros non fornisce alcuna garanzia di raggiungimento di qualunque previsione e/o stima contenuto nel documento stesso. Inoltre Banca Akros non assume alcuna responsabilità in merito a qualsivoglia conseguenza e/o danno derivante dall’utilizzo del presente documento e/o delle informazioni in esso contenute. Le informazioni o le opinioni ivi contenute possono variare senza alcun conseguente obbligo di comunicazione in capo a Banca Akros, fermi restando eventuali obblighi di legge o regolamentari. E’ vietata la riproduzione e/o la ridistribuzione, in tutto o in parte, direttamente o indirettamente, del presente documento, non espressamente autorizzata.

Page 2

Banca Pop. Verona Novara

Investment case After an initial negative reaction due to the high price paid to win BPI’s approval of the merger project, we believe that the market will find solace in a rapid and effective integration of the two banking groups, thanks to the proven track record of the BPVN management team. The successful execution of revenue synergies will be crucial, and we prudently include in our numbers only half of the target, or EUR 140m vs. EUR 280m. Despite our prudent approach, BPVN is still trading at a P/E of 12.1x in 2007 and 10.2x in 2008 post-synergies, at a discount to other Italian peers. Therefore we give to BPVN an Accumulate rating and EUR 22.9 target price. On the revenue side, the targeted synergies (EUR 280m) correspond to 6.8% of the combined revenue base (or almost twice the new assessment in the BIN-SPI merger) and half of it is expected to come from a partial realignment of BPI’s employee productivity to the best practice of the BPVN group. We cast some doubts on this productivity realignment, mainly concerning its phasing, considering that: •

the productivity realignment is still under way in the BPN network, 5 years after the announcement of the BPV-BPN merger; although it is true that BPV announced these productivity-alignment targets only 3 years ago (in November ’03), it confirms our view that more time is needed to deliver them compared to the current merger plan;

•

prior to the merger with BPV, the BPN network was selling a limited product range, due to the lack of product factories in the group; this is not the case of BPI, which has a wide product range in wealth management, in investment banking and in other niche markets;

•

the BPI network is characterised by a majority (55%) of small branches (less than 5 employees), where cross-selling opportunities are more limited than in large branches; the 2006-09 business plan that BPI presented last April provides for the grouping of these branches and the consequent disposal of the smaller ones and of those located in areas where BPI has less than 2% market share – therefore we see a risk of double counting between this plan and the merger plan with BPVN.

To conclude, we expect only EUR 360m synergies vs. EUR 500m targeted by 2010. This implies a dilutive effect of nearly 7% on our 2008e pro-forma numbers and an almost neutral effect only in 2009. The ongoing analysis with respect to Cattolica Assicurazioni concerning a partial integration with BPVN will continue until end November and will be submitted to BPI’s BoD, which should evaluate with complete freedom whether to launch the project. Potential synergies of a partial Cattolica-BPVN merger should be mainly on the revenue side and should exceed EUR 200m after the BPVN-BPI deal. According to press rumours, prior to the tie-up Cattolica could spin-off 100% of Duomo Assicurazioni, 50% of Lombarda Vita and 3% of Banca Lombarda to other parties. Our preliminary assessment on the value of these assets is in the region of EUR 0.8-1bn. If the partial integration with Cattolica goes through, it will give the new group the opportunity to rationalise its Life bancassurance agreements, as BPVN currently has two joint-ventures (one with Cattolica and the other with Fondiaria-Sai), while BPI has a joint-venture with UK’s Aviva and a distribution agreement with Unipol group. But the merger with Cattolica is primarily aimed at developing P&C bancassurance, both via the bundling of P&C policies with banking products (like mortgages) or the direct sale of P&C products at banks’ branches, and via the cross-fertilisation of the two customer bases, turning Cattolica’s clients into customers of the banking group.

Page 3

Banca Pop. Verona Novara

Creating Italy’s biggest Popolare bank BP Italiana agreed in mid-October to merge with BPVN to create Gruppo Bancario Popolare (GBP) on the basis of a 0.43x exchange ratio (ex ordinary dividends) plus an early extraordinary BPI dividend of EUR 2.17/sh. Depending on the BPVN market price and considering that we forecast an ordinary dividend of EUR 0.95 per BPVN share, the implied valuation of BPI is the following: BPVN offer on BPI BPVN mkt price 23.0 22.5 22.0 21.5 21.0 20.5 20.0 19.5 19.0

BPI Valuation 11.1 10.9 10.7 10.5 10.3 10.0 9.8 9.6 9.4

Source: BANCA AKROS

The preliminary timetable for the merger project is the following: November ’06: Confirmatory data room December ’06: BPVN and BPI BoDs will approve the merger project and related business plan and call the EGMs to approve the deal February ’07: EGMs to approve the merger and the distribution of a EUR 2.17 extraordinary dividend to BPI shareholders March ’07: Merger act and constitution of the new group (GBP) The merger will create the third largest Italian banking group and the biggest among Popolari banks, with a nearly 7% branch market share at national level thanks to almost 2,200 branches rooted in the wealthiest centre-north of Italy, as the networks of the two banks have a perfect geographical fit. 3rd Italian branch network…

… rooted in wealthiest Centre-north

Source: BPVN

Source: BPVN

The new group will have total assets worth EUR 111bn, total loans and direct funding of EUR 73bn (5th in Italy), AUM worth EUR 48bn (4th in Italy), ranking as the largest cooperative bank in the country.

Page 4

Banca Pop. Verona Novara

The Cattolica option The ongoing analysis with respect to Cattolica Assicurazioni concerning a partial integration with BPVN will continue to end November and will be submitted to BPI’s BoD, which should evaluate with complete freedom whether to launch the project. According to press rumours, prior to the tie-up Cattolica could spin-off 100% of Duomo Assicurazioni, 50% of Lombarda Vita and 3% of Banca Lombarda to other parties. Our preliminary assessment on the value of these assets is in the region of EUR 0.8-1bn (see table below). Cattolica is rumoured to be in talks with Mapfre, the Spanish insurer, to sell a minority interest in the spun-off assets. Cattolica spin-off (EUR m)

Premiums

Value

100% Duomo Ass.(1)

540

432

50% Lombarda Vita

670

160

-

200

460

184

3% Banca Lombarda sub-Total Eurosav (2)

792

Total (1) After merger with UniOne; (2) Value accounted at 50% after spin-off of Persona Life

976 Source: BANCA AKROS

Should the deal materialise, we expect a valuation for 100% of Cattolica Assicurazioni, before any spin-off, of at least EUR 50 per share, or EUR 2.4bn. Therefore, the “core business” due to be merged with BPVN would be in the region of EUR 1.4-1.6bn, or EUR 29.5-33.8 per Cattolica share. To conclude, the exchange ratio of an all-paper offer by BPVN would be 0.625-0.715x. If the partial integration with Cattolica goes through, it will give the opportunity to GBP to rationalise its Life bancassurance agreements, as BPVN currently has two joint-ventures (one with Cattolica and the other with Fondiaria-Sai), while BPI has a joint-venture with UK’s Aviva and a distribution agreement with Unipol group. But the merger with Cattolica is primarily aimed at developing P&C bancassurance, both via the bundling of P&C policies with banking products (like mortgages) or the direct sale of P&C products at banks’ branches, and via the cross-fertilisation of the two customer bases, turning Cattolica’s clients into customers of the banking group. Potential synergies of a partial Cattolica-BPVN merger should be mainly on the revenue side and were estimated in EUR 100-150m at run rate (in 3Y time) before the BPVN-BPI merger. Therefore, the synergies should exceed EUR 200m after the BPVN-BPI deal.

Active capital management In the light of the outcome of the ongoing analysis with Cattolica, a number of capital optimisation actions will be considered, such as issuance of hybrid instruments (preference shares, preferred securities, etc.), disposal of nonstrategic stakes, securitization of performing loans. The NPL ratio is expected to be 1.14% while the Tier1 ratio will be almost 6% and solvency ratio 9% after the EUR 1.5bn dividend distribution by BPI, which in a forward-looking growth scenario will be compensated by BPVN excess capital. The group expects to be cash-generating from 2008 onwards.

Page 5

Banca Pop. Verona Novara

2007-2010e Tier 1 ratio

Source: BPVN

According to our numbers, the Tier1 ratio should be equal to 6.2% in 2007 proforma (Core Tier1 at 5.7%), as the EUR 500m of ex-BPI preference shares will be fully booked, while they currently exceed the 15% threshold of BPI Tier 1 ratio and are therefore booked at half of their value. To raise the Tier1 ratio to 6.5%, the new group would have to raise EUR 250m of Tier1 capital or reduce RWA by EUR 3.5bn. We remind investors that the new group could also raise up to EUR 544m from ex-BPI warrant conversion between 1st July 2008 and 21st December 2010 (exchange ratio 0.526 and EUR 11 strike price). 2007e Tier1 ratio (EUR m) RWA Tier 1 extra-dividend Tier1 ratio Core Tier1

BPI 34,322 2,762 - 1,520 3.6% 2.8%

2007 BPVN 56,144 4,164 0 7.4% 7.4%

New group 90,466 7,161 - 1,520 6.2% 5.7%

Source: Banca Akros

Value creation One-off integration costs are seen at EUR 300m, while expected synergies are equal to EUR 500m at run rate in 2010, o/w EUR 220m (or 44%) on the cost side and EUR 280m (or 56%) on the revenue side. Targeted synergies (EUR m) and phasing

Source: BPVN

Page 6

Banca Pop. Verona Novara

On the cost side, the targeted synergies (see next chart) correspond to almost 9% of the combined cost base (in line with the first assessment in the B. Intesa – SanPaolo IMI merger) and should come from personnel lay-offs (41% or EUR 90m) through management of employees’ exit due to running churn-rate (3% per year), corresponding to ca. 1,300 redundancies; from IT/back-office rationalisation (30% or EUR 66m) thanks to the migration to the single BPVN IT platform; and from rationalisation of head offices and improved purchasing power (29% or EUR 64m). These synergies do not look aggressive, especially concerning personnel costs. We believe the mgmt has given up the idea of heavy cuts in the workforce to gain BPI’s personnel approval of the merger in the EGM. Cost synergies composition (EUR m)

Source: BPVN

On the revenue side, the targeted synergies (see next chart) correspond to 6.8% of the combined revenue base (or almost twice the new assessment in the BINSPI merger) and half of it is expected to come from a partial realignment of BPI’s employee productivity to the best practice of the BPVN group. Revenue synergies composition (EUR m)

Source: BPVN

We cast some doubts on this productivity realignment, mainly concerning its phasing, considering that: •

the productivity realignment is still under way in the BPN network, 5 years after the announcement of the BPV-BPN merger; although it is true that BPV announced these productivity-alignment targets only 3 years ago (in November

Page 7

Banca Pop. Verona Novara

’03), it confirms our view that more time is needed to deliver them compared to the current merger plan; •

prior to the merger with BPV, the BPN network was selling a limited product range, due to the lack of product factories in the group; this is not the case of BPI, which has a wide product range in wealth management (Bipitalia Gestioni and Arca in Asset Mgmt, Eurovita in Life assurance, Banca Valori in Private banking), in investment banking (Efibanca in corporate finance, Centrosim in brokerage) and in other niche markets (Bipitalia Ducato in consumer credit, Bipielle Leasing (recently sold to Banca Italease) in leasing, etc.);

•

the BPI network is characterised by a majority (55%) of small branches (less than 5 employees), where cross-selling opportunities are more limited than in large branches; the 2006-09 business plan that BPI presented last April provides for the grouping of these branches and the consequent disposal of the smaller ones and of those located in areas where BPI has less than 2% market share – therefore we see a risk of double counting between this plan and the merger plan with BPVN.

In conclusion, we believe than in the 4-year plan horizon only half, or EUR 140m, of the targeted synergies will be delivered.

The effect on our estimates According to the bank’s management, the merger should have a substantially neutral effect on 2008e pro-forma EPS and a positive impact of over 10% on 2010e pro-forma numbers. As stated previously, we are more prudent on the productivity realignment phasing and, therefore, we expect only EUR 360m synergies vs. EUR 500m targeted by 2010. As shown in the next table, this implies a dilutive effect of nearly 7% on our 2008e pro-forma numbers and an almost neutral effect only in 2009. BPVN-BPI Financial Targets (EUR m)

2007 BPI

2008 BPI

BPVN

New group

BPI

BPVN

New group

1,795

2,937

4,732

1,951

3,139

5,090

2,096

3,356

5,453

Oper. costs

- 1,053

- 1,433

- 2,486

- 1,079

- 1,493

- 2,572

- 1,106

Oper. profit

742

1,505

2,246

872

1,647

2,518

990

1,801

2,792

Pre-tax profit

616

1,288

1,904

733

1,408

2,141

841

1,539

2,380

Revenues

BPVN New group

2009

-

1,555

-

2,661

phasing

28%

58%

85%

Synergies

100.8

208.8

306

revenues

39.2

81.2

119

costs

61.6

127.6

187

one-off charge

-84

-90

-81

PTP after syn.

1,920

2,259

2,605

tax rate taxes Net profit

36.7% -

226 390

38.5% -

496 773

37.9% -

728 1,192

36.7% -

269 464

-

38.5%

37.9%

542

-856

845

1,404

36.6% -

308 533

-

38.5%

37.8%

593

-986

924

1,619

n.shares

682

375

669

682

375

669

682

375

669

EPS (EUR)

0.57

2.06

1.78

0.68

2.25

2.10

0.78

2.46

2.42

19.2

10.4

16.1

9.6

14.0

8.7

BPVN dilution P/E (x)

-13.4% 12.1

-6.7% 10.2

-1.6% 8.9

Source: BANCA AKROS

Page 8

Banca Pop. Verona Novara

Considering also the issue of up to 49.5m shares consequent upon the conversion of ex-BPI warrants between 1st July 2008 and 21st December 2010, we calculate a fully diluted EPS of EUR 1.95 in 2008 and of EUR 2.25 in 2009, with a potential full dilution of BPVN shareholders of 13% in ’08 and 8.4% in ’09 (see next table). In the hypothesis that the EUR 544m deriving from the warrants’ exercise are reinvested at CoE of 7.4%, the fully diluted EPS would be EUR 2.0 in ’08 and EUR 2.3 in ’09, while the full dilution would be equal to 10.5% in ’08 and 6% in ’09. BPVN full dilution 2008e

2009e

Shares fully diluted (m)

718

718

EPS fully diluted (EUR)

1.95

2.25

-13.1%

-8.4%

11.0

9.5

BPVN full dilution P/E (x) Source: BANCA AKROS

Conclusions After an initial negative reaction due to the high price paid to win BPI’s approval of the merger project, we believe that the market will find solace in a rapid and effective integration of the two banking groups, thanks to the proven track record of the BPVN management team. The successful execution of revenue synergies will be crucial, and we prudently include in our numbers only half of the target, or EUR 140m vs. EUR 280m. Despite our prudent approach, BPVN is still trading at a P/E of 12.1x in 2007 and 10.2x in 2008 post-synergies, at a discount on other Italian peers (see next table). The valuation discount would be confirmed also with fullydiluted EPS figures. Therefore, we give BPVN an Accumulate rating and EUR 22.9 target price. P/E BANCA INTESA

P/BV (adj.)

2006

2007

2008

2006

2007

2008

14.4

13.8

11.5

2.2

1.7

1.5

BANCA MPS

16.4

13.6

11.7

2.1

1.9

1.8

BANCHE POPOLARI UNITE

12.9

12.1

10.9

1.7

1.6

1.4

CAPITALIA

16.7

13.4

11.2

2.3

2.1

1.9

SAN PAOLO IMI

15.6

14.2

12.6

2.3

2.2

2.0

UNICREDITO ITALIANO

15.0

12.7

10.8

2.4

2.1

1.9

Average

15.2

13.3

11.4

2.2

1.9

1.7

Source: BANCA AKROS

Upcoming Corporate Events Calendar D ate

E v e nt T ype

D e s c ript io n

P e rio d

14/11/06

Results

Q3 06 Results

2006Q3

Page 9

Banca Pop. Verona Novara

Banca Pop. Verona Novara: Summary tables P R O F IT & LO S S ( E UR m ) Int e re s t Inc o m e Co mmissio ns Trading inco me Other Inco me and Dividends N o n- int e re s t inc o m e T o t a l Inc o m e Operating Co sts Other Operating P ro visio ns G ro s s O pe ra t ing P ro f it ( G O P ) Lo ans P ro visio n Other P ro visio ns O pe ra t ing pro f it ( O P ) A sso ciates Extrao rdinary Items Go o dwill A mo rtisatio n Results fro m Financial Investments General B anking Risks P ro visio ns E a rnings B e f o re T a x ( E B T ) Tax Tax rate M ino rities P reference dividends N e t P ro f it ( re po rt e d) Earnings B efo re Tax (adj.) Net P ro fit (adj.) B A LA N C E S H E E T ( E UR m ) Due fro m B anks Custo mer Lo ans Securities Int e re s t E a rning A s s e t s ( IE A ) Go o dwill Other A ssets T o tal A ssets Due to B anks Custo mer Depo sits Other liabilities S ha re ho lde rs E quit y M ino rities Equity O T H E R IT E M S ( E UR m ) T o t a l M a rk e t C a p Shareho lders Equity (GW A dj.) RWA A ssets Under M anagement M A R G IN S A N D R A T IO S Interest Inco me gro wth No n Interest Inco me gro wth G ro s s O pe ra t ing P ro f it gro wt h Custo mer Lo ans gro wth Depo sits gro wth Interest Inco me/A vg. IEA C o s t / Inc o m e Lo an Lo ss P ro visio ns/A vg. Cust. Lo ans Lo an Lo ss P ro visio ns/RWA NP L ratio (gro ss) NP L co verage R O E ( a dj.) Tier1 P ayo ut ratio KE Y M A R KE T R A T IO S P /GOP P /E (repo rted) P / E ( a dj.) P /B V P / B V ( a dj.) P /A NA V Dividend yield (gro ss) P E R S H A R E D A T A ( E UR ) GOP P S EP S (repo rted) E P S ( a dj.) B VP S B V P S ( a dj.) A NA VP S DP S

2003 1,19 5 .0 695.5 128.6 193.9

2004 1,17 7 .9 751.2 99.9 301.4

2005 1,2 9 0 .7 985.5 96.8 110.7

2006e 1,3 7 9 .6 1,045.6 236.0 71.0

2007e 1,4 6 9 .4 1,132.2 240.0 95.9

2008eC A GR 08/ 03 5 .2 % 1,5 4 3 .1 1,212.0 250.0 134.2

2 ,2 13 .0 -1,338.6 -21.8 8 5 2 .6 -147.9 -12.6 6 9 2 .1 20.1 -86.0 -63.5 0.0 0.0 5 6 2 .7 -228.4 39.8% -11.0

2 ,3 3 0 .4 -1,427.2 -33.1 8 7 0 .1 -151.0 -9.1 7 10 .1 42.0 -10.4 -29.9 0.0 0.0 7 11.7 -283.5 38.9% -16.6

2 ,4 8 3 .7 -1,356.7 -29.8 1,0 9 7 .2 -135.6 -1.5 9 6 0 .1 0.0 21.3 0.0 0.0 0.0 9 8 1.4 -368.5 36.9% -15.9

2 ,7 3 2 .2 -1,372.9 -37.3 1,3 2 2 .0 -155.7 0.0 1,16 6 .3 0.0 129.6 0.0 0.0 0.0 1,2 9 5 .9 -464.3 35.4% -15.6

2 ,9 3 7 .5 -1,432.8 -37.3 1,4 6 7 .4 -179.6 0.0 1,2 8 7 .9 0.0 0.0 0.0 0.0 0.0 1,2 8 7 .9 -495.8 37.9% -19.3

3 ,13 9 .3 -1,492.6 -37.3 1,6 0 9 .4 -201.9 0.0 1,4 0 7 .5 0.0 0.0 0.0 0.0 0.0 1,4 0 7 .5 -541.9 37.9% -21.1

3 2 3 .3 712.2 438.6

4 11.5 752.0 438.8

5 9 7 .0 960.1 575.7

8 16 .1 1,166.3 722.5

7 7 2 .7 1,287.9 772.7

8 4 4 .5 1,407.5 844.5

6,051.9 31,949.0 5,268.7 4 3 ,2 6 9 .6 325.9 5,009.9 4 8 ,6 0 5 .4 3,328.8 36,233.0 5,424.7 3 ,4 7 1.0 147.9

4,094.5 36,333.6 6,738.6 4 7 ,7 5 9 .5 322.6 5,236.1 5 3 ,3 18 .3 6,281.4 37,617.8 5,590.7 3 ,7 16 .8 111.7

5,848.4 40,275.9 10,438.6 5 6 ,5 6 2 .9 322.6 2,872.8 5 9 ,7 5 8 .3 8,099.6 42,984.1 4,536.5 4 ,0 2 1.0 117.1

6,123.0 46,219.7 11,064.9 6 3 ,4 0 7 .6 322.6 3,133.7 6 6 ,8 6 3 .9 10,317.4 46,516.6 5,321.2 4 ,5 7 6 .0 132.7

6,123.0 50,841.6 11,618.2 6 8 ,5 8 2 .8 322.6 3,328.2 7 2 ,2 3 3 .6 11,015.1 50,348.8 5,725.6 4 ,9 9 2 .1 152.0

6,123.0 55,417.4 12,082.9 7 3 ,6 2 3 .2 322.6 3,517.6 7 7 ,4 6 3 .4 11,141.8 54,506.8 6,164.4 5 ,4 7 7 .3 173.1

4 ,4 0 2 .2 2,997.1 37,224.8 58,352.3

5 ,13 7 .6 3,209.1 41,041.1 66,670.3

5 ,6 14 .5 3,698.4 44,560.0 73,004.0

8 ,0 4 3 .3 4,253.4 51,346.0 75,380.9

8 ,0 4 3 .3 4,669.5 56,144.0 80,846.9

8 ,0 4 3 .3 5,154.7 60,893.8 86,785.0

-5.3%

-1.4%

9.6%

6.9%

6.5%

5.0%

10 .3 % 0.0% 6.2% 2.8% 6 0 .5 % 0.5% 0.4% 4.8% 39.6% 13 .0 % 7.9% 45.8%

2 .1% 13.7% 3.8% 2.6% 6 1.2 % 0.4% 0.4% 4.0% 39.1% 12 .2 % 7.6% 45.0%

2 6 .1% 10.9% 14.3% 2.5% 5 4 .6 % 0.4% 0.3% 3.2% 51.4% 14 .9 % 7.4% 43.7%

2 0 .5 % 14.8% 8.2% 2.3% 5 0 .2 % 0.4% 0.3% 2.8% 52.0% 16 .8 % 7.3% 43.7%

11.0 % 10.0% 8.2% 2.2% 4 8 .8 % 0.4% 0.3% 2.6% 52.0% 16 .2 % 7.4% 46.5%

9 .7 % 9.0% 8.3% 2.2% 4 7 .5 % 0.4% 0.3% 2.4% 52.0% 16 .1% 7.6% 44.5%

5.2 13.6 10 .0 1.3 1.4 1.4 3.4

5.9 12.5 11.7 1.4 1.5 1.5 3.6

5.1 9.4 9 .8 1.4 1.5 1.5 3.3

6.1 9.9 11.1 1.8 1.9 1.9 4.4

5.5 10.4 10 .4 1.6 1.7 1.7 4.5

5.0 9.5 9 .5 1.5 1.6 1.6 4.7

2.30 0.87 1.19 9.38 8 .5 0 8.50 0.40

2.35 1.11 1.19 10.04 9 .17 9.17 0.50

2.94 1.60 1.5 4 10.78 9 .9 2 9.92 0.70

3.52 2.17 1.9 2 12.19 11.3 3 11.33 0.95

3.91 2.06 2 .0 6 13.30 12 .4 4 12.44 0.96

4.29 2.25 2 .2 5 14.59 13 .7 3 13.73 1.00

7 .2 %

13 .6 %

15 .3 %

2 0 .1%

2 1.2 % 17 .6 % 14 .0 %

11.6 % 11.2 %

9 .8 % 8.5% 9 .6 %

11.5 % 10 .3 % 8 .3 %

13.2% 20.8% 13 .7 % 9.2% 10 .1% 10.1% 20.1%

Source: Company, Banca Akros estimates 2005 restated as IFRS proforma

Page 10

Banca Pop. Verona Novara

Recommendation system From the 18th October 2004, the Members of ESN use a New Recommendation System. The new ESN Recommendation System is Absolute. It means that each stock is rated on the basis of a total return, measured by the upside potential (including dividends) over a 6 months time horizon. The ESN spectrum of recommendations (or ratings) for each stock comprises 5 categories: Buy, Accumulate (or Add), Hold, Reduce and Sell (in short: B, A, H, R, S). Meaning of each rating or recommendation:

Banca Akros Ratings Breakdown

•

Buy: the stock is expected to generate a total return of over 15% during the next 6 months time horizon.

•

Accumulate: the stock is expected to generate a total return of 5% to15% during the next 6 months time horizon.

•

Hold: the stock is expected to generate a total return of 0% to 5% during the next 6 months time horizon

•

Reduce: the stock is expected to generate a total return of 0 to -15% during the next 6 months time horizon

•

Sell: the stock is expected to generate a total return below -15% during the next 6 months time horizon

Page 11

Caixa-Banco de Investimento Rua Barata Salgueiro, 33-5 1269-050 Lisboa Portugal Phone: +351 21 389 68 00 Fax: +351 21 389 68 98

Banca Akros Viale Eginardo, 29 20149 Milano Italy Phone: +39 02 43 444 389 Fax: +39 02 43 444 302

Caja Madrid Bolsa Serrano, 39 28001 Madrid Spain Phone: +34 91 436 7813 Fax: +34 91 577 3770

Equinet AG Gräfstraße 97 60487 Frankfurt am Main Tel: +49 69 – 58997 – 400 Fax:+49 69 – 58997 – 299

Egnatia Finance 8 Dragatsaniou Str. 105 59 Athens Greece Phone: +302 10 32 79 200 Fax: +302 10 32 48 694

CM - CIC Securities Avenue de Provence 6 75441 Paris Cedex 09 France Phone: +33 1 4596 7700 Fax: +33 1 4596 7788

Van Lanschot Bankiers Leonardo da Vinciplein 60 5223 DR ‘s-Hertogenbosch Netherlands Phone: +31 73 548 8724 Fax: +31 73 548 8577

Bank Degroof Rue de I’Industrie 44 1040 Brussels Belgium Phone: +32 2 287 91 16 Fax: +32 2 233 99 97

NCB Stockbrokers 3 George Dock, Dublin 1 Ireland Phone: +353 1 611 5611 Fax: +353 1 611 5781

Mandatum Securities Unioninkatu 22, P.O. Box 66, 00131 Helsinki Finland Phone: +358 10 236 10 Fax: +358 10 236 4755