Capital Allocation & Strategic Opportunities

for Banca CR Firenze Group

UBS Italian Financial Services Conference

Milan - February 2 and 3, 2006

Lino MoscatelliManaging Director

2

Recent Achievements

The 2000 IPO has produced an evolution process which led to

Group perimeter enlargement

Financial assets growth

Focus on consumer credit

New structure for the branches network

Profitability increase

Capital allocation optimization

Value creation

3

102

69

20

1994 1999 2004

Net income

705

317

150

265

1,250

1994 1999 2004

Shareholdings

Group

Parent Company

14.0%

9.6%

2.9%

1994 1999 2004

ROE (adj.)7.2%

2.2%

-9.5%

1994 1999 2004

EVA

Growth Over The Years

4

Italian leader in consumer credit

through FINDOMESTIC Banca

9M 2005 ROE (annualised) 13.6%

Group network 527

MAIN FIGURES

Customers 1,000,000

Market Share loans 11.0 %

funding 15.8 %

Customer loans € 12.9 bn

Total funding € 36.8 bn

Banca CR Firenze Group

The outward expansion from its traditional business territory led to the transformation into a multi-regional banking group

Investments in consumer credit increased profitability and stabilised P&L

CR MIRANDOLA

CRCIVITAVECCHIA

CR ORVIETO

CR PISTOIA

CR SPEZIA

33442

8 1

28

46

51

Financialadvisors

5

Tuscany65%

Emilia R.6%

Latium10%

Liguria10%

Umbria8%

Lombardy1%

Growth provided business diversification

The Group is present in 6 central Italian regions (3 in 2000)

Tuscany continues to lose ground: it represents 65% of the branches and 67% of the loan book

2000-2005 Perimeter Enlargement

Other3%

Tuscany67%

Emilia R.7%

Latium9%

Liguria6%

Umbria5%

Lombardy3%

Latium9%

Umbria9%

Tuscany82%

2005 branches 2005 loans

6

Three separate channels, three different networks, one sales supervision

313 retail branches focused on mass market, affluent and small business customers

A close-knit network coverage thanks to 17 Corporate Centers and 16 Private Banking Centers

Synergies between channels: Corporate/Private Bkg. and Retail/Corporate

Network figures refer solely to Group’s banks where the model has been implemented.Clients shown in figures refer to the Parent Company

Advanced Market Approach

Head of Commercial Dept.

RETAIL BRANCHES CORPORATE CENTERS PRIVATE BKG. CENTERS

633,000clients*

11,000clients*

6,000clients*

7

Capital Allocation

With the introduction of the IAS Segment Report and following the implementation of the Basel II methods, a business unit capital allocation model has been perfected*.

Shareholders’ equity (capital, reserves, minority interests and net income) is allocated depending on:

credit risks - Advanced Basel II or Bank of Italy

method

market risks - Bank of Italy method

transformation risks - Basel II (Pillar II)

operative risks - Standardized Basel II approach

business risks - equal to the value of the single-product companies

* Only indicative figures are reported on the following slides. The definite figures will be published in the first Segment Report which is scheduled to be released on occasion of the 2005 Annual Report

8

Capital Allocation - Business Units

Retail - Parent company branches, Financial advisors network

Corporates - Corporate centers, relations with government services, tax collection

Private Banking - Private banking centers

Other Group banks - branches of CRP, CRS, CRO, CRC, CRM

Wealth Mgmt. - Centrovita (bancassurance), BCRF Gestion Internationale (mutual fund co.)

Corporate Center - Finance, Consumer credit, Banking related companies (leasing, factoring…), Group Management and Coordination, Instrumental companies

9

Business Units - First Findings

Equity

Nopat Rorac C/I

12% 29% 30% 74%

RETAIL OTHER GROUP BANKSEquit

yNopat Rorac C/I

20% 20% 12% 71%

*Source: companies’ reports

Good income performance

Cost/income in line with that of other bank’s comparable retail units

The new market approach has not been applied yet

Room for a commercial efficiency improvement

Aggregate figuresEquit

yNopat Rorac C/I

32% 49% 19% 73%

Retail Units - Cost / Income*

Bank A 71% Bank D 62%Bank B 75% Bank E 89%Bank C 69%

Average 74%Bank F 82%

10

Business Units - First Findings (2)

Equity

Nopat Rorac C/I

1% 4% 90% 52%

PRIVATE BANKING WEALTH MANAGEMENTEquit

yNopat Rorac C/I

5% 14% 21% 37%

Good capital returns and good cost/income ratios

The Private Banking segment needs to have its brand name acknowledged by a wider public in order to increase its market share

Wealth management companies performance (bancassurance & mutual funds) is tied to the retail unit’s growth

11

Individuals Segment

Generates the greatest value

Is characterized by high propensity to save but also...

...by a sentiment of mistrust in the banking system

Pensionschemes

Exp

ecte

d b

usin

ess g

row

th

Bank’s positioning

Consumer

creditMortgages

Personalinsuranc

e

Investments

Cash - Payments

High growth potential

High growth potential

Potential for further investments to exploit good growth ratios

Potential for further investments to exploit good growth ratios

Only potential for selective investments to improve service quality and maintain market shares

Only potential for selective investments to improve service quality and maintain market shares

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

12

An approach more focused on client’s expectations means

Less but more personalized commercial proposals Greater effectiveness Reinstating a trust relationship

CRM techniques are the most important tool to achieve the combination of the above aspects

The introduction of the customer satisfaction indices in the MBO Plans will generate greater worth from the relationship

Individuals: A Structured Approach

13

The evolution of the Data Mining Platform will furnish a deeper knowledge of the client clusters facilitating the construction of a keener relationship

A propensity score will be assigned to all

products

A full use of the CRM instrument will be achieved also thanks to the generation turnover which will facilitate the process

64 campaigns launched and 92 events managed 450,000 commercial talks 456,000 customers with a next product assigned

only 50% of the portfolio managers regularly used the tool

In 2005

Individuals: What Next ?

14

Business Units - First Findings (3)

CORPORATESEquit

yNopat Rorac C/I

18% 9% 7% 57%

The overall result is still not satisfactory.

The unit’s result is affected by the negative contribution of tax collection

Thanks to the sale of the two tax collection companies and by focussing commercial actions on core corporate clients, the performance is expected to improve

15

SMEs & Corporates Segment

SMEs are now experiencing a dimensional growth and international expansion

Banks’ capacity to exploit Basel II will make certain banks more competitive

Exp

ecte

d

bu

sin

ess

gro

wth

Intl.services

Structured

finance

Bankguarantees

Factoring

Ind. & Spec.credit

Financial riskcoverage

Foreign payables/

receivables

Leasing

Agriculture financingDomestic payables/

receivablesCurrencies

Selective investments to follow market opportunities

Selective investments to follow market opportunities

Investments to exploit the expected growth of high margin products

Investments to exploit the expected growth of high margin products

Maintain

market shares

Maintain

market shares

Bank’s positioning

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

16

SMEs & Corporates Segment

* Sum of all credit lines granted by the Italian banking system or by BCRF expressed in EUR thousand

(source: Bank of Italy and BCRF)

The figures below reflect the bank’s low capacity of attracting core clients

BCRF is a first choice bank for a small number of its clients (8%)

In the core clients group, BCRF obtains even lower percentages

The aim is to grow as the first choice bank for the core clients

from

to

BCRF clients who recognized the bank as a 1st choice bank

75 125 250 500 1,000 2,500 5,000 25,000125 250 500 1,000 2,500 5,000 25,000

Banks per client (Italy, avg.)

Credit needs covered by clients’ 1st choice bank (Italy)

1.0 1.2 1.7 2.4 3.2 4.4 6.3 10.3

99% 89% 76% 68% 61% 55% 46% 36%

46% 43% 18% 8% 4% 4% 2% 2%

AVG.

2.1

49%

8%

Granted loans (total*)

Core clients

17

SMEs & Corporates: How To Compete

BCRF has been among the first mid-sized groups to launch the IRB Advanced (Basel II) procedure

The capacity to correctly assess client risks will enable to:

Recuperate market share in the top-client segment Obtain a correct profit from risks related to the worst

clients

* Loans by rating refers to the Parent Company’s 65% corporate segment customer base (November 2005) -.-.

Loans by rating*

Amounts

granted

Amounts

utilized

A1 A2 A3 A4 B1 B2 B3 B4 B5 B6 B7 B8 C1 C2

18

Business Units - First Findings (4)

Striving to attain greater internal efficiency through the centralization of governance functions, the shifting of personnel from back-office to sales and improvement of procedures

Findomestic’s contribution to Nopat and its capital return are excellent

Equity

Nopat Rorac C/I

44% 24% 7% 73%

CORPORATE CENTER

Findomestic (consumer credit)Equit

yNopat Rorac C/I

23% 31% 17% 50%of

which

19

Conclusion

For Banca CR Firenze to consolidate its position as a regional bank, strongly oriented towards value creation, the following elements are indispensable:

the consolidation of the retail banking vocation

the improvement of the quality level of the services offered to corporates

upkeeping the leadership in consumer credit

a central control structure operating with a greater efficiency

Capital Allocation & Strategic Opportunities

for Banca CR Firenze Group

UBS Italian Financial Services Conference

Milan - February 2 and 3, 2006

Lino MoscatelliManaging Director