Banca CR Firenze

Lino Moscatelli

Managing Director

Merrill Lynch Banking & Insurance CEO Conference 2005

London, 4 - 6 October 2005

Setting the Agenda for 2010

2

• Where we are at the end of the 2003-2005 Plan

• Future Opportunities

Table of Contents

3

Full perimeter

of consolidation

Banca CR Firenze Group Structure

Banca CR FirenzeBanca CR Firenze

CR PistoiaCR Pistoia

CR SpeziaCR Spezia

CR CivitavecchiaCR Civitavecchia

CR OrvietoCR Orvieto

CR MirandolaCR Mirandola

InfogroupInfogroup CentrovitaCentrovita

CRF Gestion IntCRF Gestion Int

CeritCerit

SRTSRT

FindomesticFindomestic

Centro FactoringCentro Factoring

Centro LeasingCentro LeasingCitylifeCitylife

50%

100%

100%

60%

68,1%

51%

73,6%

99,9%

100%

51%

47,7%

37,5%80%

68,1%

CRF Foundation39,9%

Sanpaolo18,7%

BNP Paribas6,6%

Market27,2%

Others7,6%

Retail Banking

Assets Management

Tax Collection

IT Services

Consumer credit & Financial Services

4

352 326441

129

407

295

0

100

200

300

400

500

600

700

800

900

1994 1999 2004

Interest Margin Non-interest Income

4.404

7.618

12.177

0

1.500

3.000

4.500

6.000

7.500

9.000

10.500

12.000

13.500

1994 1999 2004

Net loans to customers

Consolidated Key Figures for 1994-2004 (*)

(*) 2004 data on a proforma basis and including Findomestic consolidated at equity

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

1994 1999 2004

Direct Funding AuC AuM

Total financial assets

12.491

21.812

33.847

20

69

102

0

20

40

60

80

100

120

1994 1999 2004

Net incomeTotal Income

5

2004 Resuls vs Targets

• Achieved growth in overall profitability

– EPS at 9 cents/Euro, ahead of target

– Cost / Income at 66%, ahead of target. Ample room for further improvement

0,0900,088

0,104

0,085

0,076

2002 2003 2004 2005

Business Plan Actual

66.0%

67.8%

65.1%

67.6%67.1%

2002 2003 PF 2004 2005

Business Plan Actual

EPS Cost/Income

6

The Italian macroeconomic scenario

• Italian growth prospects remain uncertain

• Banks P&Ls remain sound, but may be affected by:

– Growing indebtedness of small enterprises

– Non banking players competing in funding and treasury management

– Families tending to reduce the number of bank accounts

– Banks’ approach too focused on selling rather than on clients’ expectations

7

Our Strategic Guidelines

• Internal network expansion

• Service quality

• Improvement of customer satisfaction

• Development of new businesses

• Further efficiency improvement

• Group integration

Multi-channel architecture

GrowthGrowth

Quality of relationQuality of relation

Cost controlCost control

8

Expected results

GrowthGrowth

New branchesNew branchesNew customersNew customers

Profit increase

9

Network & Percentage of Territorial Coverage

Region Branches %

As at 30/6/2005

518 branches in all

< 1

1 < = 5

5 <= 15

> 15

Number of branches per 100,000 inhabitants

Tuscany 337 65%Liguria 51 10%Latium 50 10%Umbria 42 8%Emilia Romagna 29 6%Lombardy 8 2%Veneto 1 0%Total 518 100%

Arezzo 35

Terni 23

Grosseto 16

Prato 15

Lucca 22

Leghorn 9

Siena 19

Perugia 19

Viterbo 14

Pisa 13

Pistoia 53

Mantova 8

Modena 18 Bologna 8

Florence 137

Rome 36

Massa-Carrara 18

La Spezia 51

Verona 1

Parma 2

Reggio Emilia 1

Financial advisors

10

Profit increase

Expected results

Quality of relationsQuality of relations

New branchesNew branchesNew customersNew customers

Better management Better management of current of current customerscustomers

Profit increase

New proceduresNew procedures

11

Commercial Position: IndividualsBusiness Areas

Bank’s Positioning

Bu

sin

es

s G

row

th

Note: The dimension of the bubble shows the current importance of the Business Area in terms of margins

Pension schemes

Personal insurances

Consumer credit

Mortgages

Cash -payments

Investments

High growth potential

Only potential for selective

investments to improve

service quality and maintain

market shares

Potential for further

investments to improve the

bank’s position and exploit good

growth ratios

12

Commercial Position: “SMEs & Corporates” (≥2.5 M€ Turnover)Business Areas

Ind.& Spec. credit

Leasing1Domestic payables/receivables

Currencies

Factoring1

Structured finance

Agriculture Financing

Foreign payables/ receivables

Internationalization serv.

Bank guarantees

Financialrisk coverage

Bank’s Positioning

Bu

sin

es

s G

row

th

Selective investments to follow the opportunities offered by our market

Maintain market shares

The dimension of the bubbles shows the current importance of the Business Area in

terms of margins

Investments to exploit the

expected growth of

high margin products

1) Seeking to increase commercial consistency with the product companies

Corporate = 2% of customers and 6% of total loans

13

Profit increase

Expected results

Cost control Cost control

New branchesNew branches

New proceduresNew procedures

StreamliningStreamlining

New customersNew customers

Better management Better management of current of current customerscustomers

Efficiency Efficiency improvementimprovementProfit increase

14

Current Organization Model

CRFCRFCRFCRF

CRCCRCCRCCRCCROCROCROCROCRPCRPCRPCRP CRMCRMCRMCRM CRSCRSCRSCRS

CENTRALIZED

SERVICES69,8%

83,7% 77,1% 83,0% 73,0% 76,3%

3,464 employees

(3,387 net, excludes

intercompany staff)

621 employees 170 employees 218 employees 189 employees 518 employees

Network/Total Employees

Current

Target

90,0% 85,0% 85,0% 85,0% 90,0%

XX,X%

XX,X%

15

Profit increase

Expected results

Multi-channel

architecture

New branchesNew branches

New proceduresNew procedures

New customersNew customers

Better management Better management of current of current customerscustomers

Profit increase

IT investments IT investments New services New services

Low pricesLow prices

StreamliningStreamlining

Efficiency Efficiency improvementimprovement

New organizationNew organization

Branch staffBranch staff reduction reduction

16

IT SystemCurrent applications architecture

Bank 1Bank 1

Teller SWTeller SW

Bank SWBank SW

Group SWGroup SW

Management & Regulatory

reporting

Management & Regulatory

reporting

Bank 2Bank 2

Teller SWTeller SW

Bank SWBank SW

Group SWGroup SW

Management & Regulatory

reporting

Management & Regulatory

reporting

Bank nBank n

Teller SWTeller SW

Bank SWBank SW

Group SWGroup SW

Management & Regulatory

reporting

Management & Regulatory

reporting

Co

mm

on

ser

vice

sC

om

mo

n s

ervi

ces

Common interfaceCommon interface

ATM - Internet - GSM

PDA - Digital TV

ATM - Internet - GSM

PDA - Digital TV

17

Common InterfaceCommon Interface

ATM - Internet

GSM - PDA

Digital TV

ATM - Internet

GSM - PDA

Digital TV

Costs control - ICT Management streamlining

Teller SWTeller SW

Co

mm

on

Ser

vice

sC

om

mo

n S

ervi

ces

Group SWGroup SW Management & Regulatory Reporting

Management & Regulatory Reporting

Data Integration MiddlewareData Integration Middleware

Bank 1 SWBank 1 SW Bank 2 SWBank 2 SW Bank n SWBank n SW

18

Multi-channel architecture

Common InterfaceCommon Interface

ATM - Internet

GSM - PDA

Digital TV

ATM - Internet

GSM - PDA

Digital TVTeller SWTeller SW

Cost reductionCost reductionCost reductionCost reduction Better service to Better service to customers customers

Better service to Better service to customers customers

Branches freed Branches freed from low value from low value

activities activities

Branches freed Branches freed from low value from low value

activities activities

19

Expected retirement

• A large number of employees will reach the minimal age for retirement and may leave the company between 2006-2008

PeriodH.R. who have reached or will reach retirement age

Banca CR Firenze Other Banks

2005 150

50

2006 1202007 802008 50

Total400

450

25Other Banks’Headquarters

250Parent Company’s

Network

150 Parent Company’s

Headquarters

25Other Banks’

Network

20

ReplacementReplacement

Expected retirement

Headcount reduction

RetirementRetirement

ReplacementReplacement

TechnologyTechnology

OrganizationOrganization