Annual Report 2013 - UBI Banca International

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Annual Report 2013 - UBI Banca International
ANNUAL REPORT
2013
UBI BANCA INTERNATIONAL S.A.
Luxembourg
Registered Office: 37A, avenue J.F. Kennedy
R.C. Luxembourg: B.61018
P.O. Box 308 – L-2013 Luxembourg
Banking Group UBI Banca
www.ubibanca.lu
Madrid Branch
Torre Espacio
Planta 45
P° Castellana, 259
E-28046 Madrid
Munich Branch
Nymphenburgerstraße 5
D-80335 München
Postfach 10 03 01
D-80077 München
ANNUAL REPORT
For the Sixteenth Fiscal Year
January 1st, 2013 – December 31st, 2013
Meeting of Shareholders of March 25th, 2014
1
CONTENTS
Highlights............................................................................................................... page 3
Board of Directors and Independent Auditors....................................................... page 4
Divisions, Staff Units and Branches...................................................................... page 4
Auditors’ Report .................................................................................................... page 7
Board of Directors’ Report to the Annual Meeting of Shareholders .................... page 9
Balance Sheet as at December 31st, 2013 .............................................................. page 18
Statement of off-balance sheet items as at December 31st, 2013........................... page 20
Statement of Profit and Loss for the year ended as at December 31st, 2013 ......... page 21
Notes to the Annual Accounts as at December 31 st, 2013 ................................... page 22
2
Highlights (Euro/millions)
Dec. 31st, 2013
Dec. 31st, 2012
Deposits from customers (1)
1.661,1
2.010,2
Institutional debt certificates
3.074,8
2.266,5
Securities from customers on custody
2.781,7
2.498.3
Loans and Advances to customers
767,6
973,7
Shareholders Equity
126,2
125,5
Operating Margin
11,05
16,3
Net Income/(Loss)
(11,4)
0,8
(1)
Including debts evidenced by certificates placed with non institutional clients
The Ordinary General Meeting of Shareholders of March 25th, 2014 resolved to carry
forward the loss to the next Financial Year, such as proposed by the Board of Directors.
Consequently, regulatory capital after allocation of result amounts to EUR 114,9 m.
3
BOARD OF DIRECTORS
As of March 25th, 2014
Chairman (as of June 10 th, 2013)
Vice Chairman
Chief Executive Officer
Director
Director
Director
Director
Chairman (up to April 30 th, 2013)
Director
Director
Director (as of December 9 th, 2013)
Pietro Gussalli Beretta
Costantino Vitali
Massimo Amato
Stefan Grundmann
Guy Harles
Massimo Merola
Juan Perez Calot
Flavio Pizzini
Giorgio Ricchebuono
Vincenzo Sardone
Elvio Sonnino
INDEPENDENT AUDITORS
As of March 25th, 2014
Deloitte Audit S.à r.l.
Luxembourg
DIVISIONS, STAFF UNITS AND BRANCHES
Corporate Banking Division
Alessandro Maggi
Head of Division and Deputy General Manager
Member of the Management Committee
Madrid Branch
Alessandro Maggi
Gabriel Gomez Medina
Arturo Guijarro Saiz
Enrique Salomone Merello
Maria Sanz Ruiz
Munich Branch
Vitale Bonacina
Lucio Benaglia
Alessandro Moretuzzo
Corporate Banking & Factoring Desk Benelux
Roberto Rampino
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Private & Wealth Structures Division
Manlio Unfer
Head of Division and Deputy General Manager
Member of the Management Committee
Asset Management
Eddy Heynderickx
Wealth Structures
Roberto Rampino
Private Banking
Davide Dolfini
John Sanctobin
Renato Strillacci
Private Banking Spain
Eduardo Ripollés
UBI Trustee S.A.
Massimo Lodi
Finance Division
Giancarlo Plebani
Chief Financial Officer and Joint General Manager
Member of the Management Committee
Treasury & Capital Markets
Massimo Monzini
Giovanni Palai
Accounting and Reporting
Paolo Crapanzano
Clients Accounts Administration
Marylène Ska
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Internal Control, Reconciliation & Collection Office
Rita Bernardo
Human Resources
Maria Grazia Serra
Operations Division
Sonja Colli
Chief Operating Officer and Deputy General Manager
Member of the Management Committee
Operations
Carlo Antonicelli
Nicolas Pisanu
Information Technology, Organization & Branches Support
Sonja Colli
Nicola Losito
Credit Department
Stefano Alliata
Risk Management
Massimo Politi
Internal Audit
Michel Di Tore
Legal, Compliance and Secretary General
Christian Pedone
François Gratz
6
REPORT OF THE REVISEUR D’ENTREPRISES AGREE
To the Board of Directors of UBI Banca International S.A. Luxembourg:
Report on the annual accounts
Following our appointment by the General Meeting of the Shareholders dated March 26, 2013, we
have audited the accompanying annual accounts of UBI Banca International S.A., which comprise
the balance sheet as at December 31, 2013 and the profit and loss account for the year then ended
and a summary of significant accounting policies and other explanatory information.
Responsibility of the Board of Directors for the annual accounts
The Board of Directors is responsible for the preparation and fair presentation of these annual
accounts in accordance with Luxembourg legal and regulatory requirements relating to the
preparation of the annual accounts, and for such internal control as the Board of Directors
determines is necessary to enable the preparation of annual accounts that are free from material
misstatement, whether due to fraud or error.
Responsibility of the réviseur d’entreprises agréé
Our responsibility is to express an opinion on these annual accounts based on our audit. We
conducted our audit in accordance with International Standards on Auditing as adopted for
Luxembourg by the Commission de Surveillance du Secteur Financier. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance whether the annual accounts are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the annual accounts. The procedures selected depend on the réviseur d’entreprises agréé’s
judgement, including the assessment of the risks of material misstatement of the annual accounts,
whether due to fraud or error. In making those risk assessments, the réviseur d’entreprises agréé
considers internal control relevant to the entity’s preparation and fair presentation of the annual
accounts in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Board of Directors, as well as evaluating the overall presentation
of the annual accounts.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinion
In our opinion, the annual accounts give a true and fair view of the financial position of UBI
Banca International S.A. as of December 31, 2013, and of the results of its operations for the
year then ended in accordance with Luxembourg legal and regulatory requirements relating to the
preparation of the annual accounts.
Emphasis of Matter
We draw attention to Note 3 “Loans and advances to credit institutions and customers” and Note
34 “Significant post balance sheet events” to the annual accounts which describes in detail the
uncertainties relating to the quantification of the credit risk for one major debtor of the Bank which
entered on March, 1 2013 under the scope of Section 5.bis of the Spanish Bankruptcy Law (“Ley
22/2003 de 9 de Julio 2003”). On March 3, 2014 one restructuring offer has been filed with the
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Bankruptcy Court and is subject to creditors’ approval. In the case that the creditors do not approve
the restructuring offers, the debtor entity maybe put into non-voluntary liquidation. The outcome
of the decision of the creditors cannot be reliably assessed as of December 31, 2013. The Bank
has estimated the provision for loan losses as of December 31, 2013 based on the assumptions
that the creditors of the entity will approve the restructuring offer allowing the entity to continue
its activities and that the Bank will continue to provide liquidity to the debtor in accordance with
the current factoring contractual agreement. Should an agreement not be reached the Bank would
likely incur losses higher than the amount of the current provisions for doubtful loans.
The parent company of the Bank has confirmed its irrevocable commitment i) to proceed with
the recapitalisation of the Bank in the case that additional losses in respect to this debtor would
cause the regulatory capital of the Bank to fall below the minimum threshold and ii) to cover any
additional residual exposures of the Bank against this debtor in excess of the 25% of the regulatory
capital of the Bank, once the outcome of the ongoing insolvency procedure will be finalised and
after accounting for any possible value adjustment resulting thereof. Our opinion is not qualified
in respect of this matter.
Report on other legal and regulatory requirements
The management report, which is the responsibility of the Board of Directors, is consistent with
the annual accounts.
For Deloitte Audit, Cabinet de révision agréé
Emmanuelle Miette, Réviseur d’entreprises agréé
Partner
March 10, 2014
8
BOARD OF DIRECTORS’ REPORT
TO THE ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholders,
The global economy showed some signs of recovery during 2013, especially with reference to the
United States. The return to a growth path is also evident in Europe, both for core and peripheral
countries, in a context of exceptionally-low interest rates.
The markets in which your Bank develops its business (mainly Italy, Benelux, Spain and Germany)
followed a common economic trend with some differences: whilst Italy’s GDP remained in a
stagnant mood, only increasing during the fourth quarter of the year, Spain showed some stronger
signs of recovery and Germany continued reinforcing its growth. Unemployment has decreased in
all three countries compared to 2012 figures.
Considering the lack of inflationary pressures in the Eurozone, the ECB continued in easing its
monetary policy, acting through conventional measures, by reducing its reference rate twice in the
year to 0,25%, and through unconventional monetary policy instruments (e.g. LTRO and SMP).
On June 26, 2013, the European Commission has adopted the Basel III regulatory framework by
transposing in a Directive (the Capital Requirement Directive - CRD IV) and in a Regulation (Capital
Requirement Regulation – CRR) its main features. The local regulator (CSSF) has transposed this
new framework, which will become effective in 2014, through Circular 13/570. Moreover, early in
2014, the CSSF issued a new Circular (14/583) and a Regulation (14-01), specifying some aspects
of the prudential regulation, still under the discretionary power of local regulators, in terms of own
funds structure, capital buffers, large exposures, leverage and liquidity.
The total number of banks registered for supervision in Luxembourg as of December 31, 2013
is 147 (up from 142 a year earlier), and total employment in the local banking sector amounts to
26,231 (-1,1% on 2012). The overall income of the Luxembourg banking sector increased by 6,1%
over 2012; this rise is determined by a strong improvement of other net income items, which is
mainly driven by the increase of the market value of the banks’ securities portfolio. The operating
income of the Luxembourg banks declined by 2,7% on a yearly basis, with a net interest margin
down by 9%, partially offset by net commissions revenues (+6,8%). In 2013 general expenses have
increased by 2,4% compared to 2012, and so have staff costs (+4,2%).
Overview
The Bank’s Parent Company, Unione di Banche Italiane S.c.p.a. (hereinafter in short UBI Banca)
is a cooperative group listed on the Milan Stock Exchange with a market capitalization of Euro
4.4 bn. as of December 31, 2013; its stock is included in the FTSE/MIB Index. UBI Banca ranks
fifth in the Italian banking market, with a total domestic branch network of about 1.700 branches.
Its ratings from international rating agencies Standard & Poor’s, Moody’s and Fitch, at the date of
this report, are respectively A-3, P-3 and F2 on the short term, and BBB-, Baa3 and BBB+ on the
long term, with negative outlooks.
Consistently with UBI Group strategies, your Bank provides through its headquarters in
Luxembourg and its branches in Madrid and Münich corporate banking and private banking/
wealth management services. Target clients are mostly based in Italy, Benelux, Spain and
Germany and in the core countries of continental Europe, who require cross-border assistance for
trade, investments or portfolio management. The customer base concentrates in the middle market
(affluent and high-net-worth individuals; mid-sized and large corporations), which is the natural
target of the UBI Group. Retail services outside the Italian domestic market, as well as investment
banking and proprietary trading, remain outside the scope of the Bank’s activities.
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The credit portfolio has decreased during 2013, as a consequence of a policy which has pursued
the downsizing of all the large single-name exposures. The Bank’s funding from customers has
also decreased vis-à-vis 2012, as a consequence of the lower liquidity needs and of the repricing
action on some marginal deposits.
The Bank acts as an issuer of Euro Commercial Papers (hereinafter ECP) and French Certificates
of Deposit (CD), offered to international institutional investors and fully guaranteed by the parent
company UBI Banca. ECP and CD may be denominated in any major currency, with maturities
ranging between 1 and 365 days, and up to a maximum outstanding amount of Euro 11 bn. The
liquidity raised through these issues is placed with the parent company. ECP have been assigned
ratings by Fitch and Moody’s whilst CD have been rated by Standards & Poor’s. The global
outstanding amount of the two programmes sums up to about Euro 3.2 bn. as of December 31,
2013 and represents the main component of the Bank’s total assets.
Financial year 2013 closes out with a gross operating profit, before depreciation, provisions and
taxes, of Euro 11,05 m. versus Euro 16,32 m. in 2012. The major revenue and cost items which
have contributed to the gross profit are analysed below.
On the revenue side, net interest income decreased from Euro 25,4 m. in 2012 to Euro 19,9 m. in
2013, due to the reduced stock of loans to customers (Euro 767,6 m. versus Euro 973,7 m. in 2012).
Net commissions slightly increased to Euro 10,3 m. from Euro 10,1 m. in 2012. Out of total net
commissions, Euro 2,1 m. stem from trading fees on clients’ orders; Euro 1,1 m. from guarantees
fees; Euro 1,1 m. from asset management and fiduciary fees; whereas the balance arises from
various administrative services, such as account maintenance, custody and payments, factoring.
Net profits from financial operations amount to Euro 1,04 m. versus Euro -0,12 m. in 2012 mainly
due to profit taking strategies put in place on the Bank’s structural portfolio in the last quarter of
the 2013. The Bank’s Treasury, in November 2013, took advantage of the favourable moment in
the bonds market, by selling the residual proprietary portfolio positions.
On the cost side, total operating expenses sum up to Euro 20,7 m. (about +5% over 2012). Staff
expenses, at Euro 10,4 m., representing 51,3% of the general administrative expense, registered an
increase of 7,4% on a yearly basis, due to one-off charges related to some settlement agreements
for early departures; the balance arises from the wages indexation registered in October. Overhead
expenses, at Euro 9,9 m., slightly increased by 2,4% vis-à-vis 2012.
Since total operating revenues amount to Euro 31,8 m. and total operating costs to Euro 20,7 m.,
the resulting cost/income ratio stands at 65%.
The overall situation of impaired loans has been significantly impacted by the default of one of the
major borrowers of the Bank. This default was announced on March 1, 2013, when the Bank was
informed that its client had applied for protection under the scope of Section 5 bis of the Spanish
Bankruptcy Law. This specific provision provides legal coverage to a debtor, before a formal request
of a bankruptcy proceeding, granting a three months grace period for entering into negotiations with
its main creditors in order to readdress its financial situation. On April 5, 2013, the Borrower, which
did not file any audited Financial Statements for Financial Year 2012, informed the C.N.M.V. (the
“Comision Nacional del Mercado de Valores”, the Spanish Stock Exchange Regulator) that the
Company’s Board of Directors resolved to apply for admission to a voluntary insolvency procedure
in the scope of the Spanish Bankruptcy Law. This default has unearthed accounting irregularities in
the borrower’s books, which had materially understated its financial debt. As a result, an amount of
Euro 86 m. has been acknowledged by the Bankruptcy Court as being the total credit attributable
to your Bank, of which Euro 41 m. have materialized after the insolvency filing, as a consequence
of unexpected accounting irregularities linked to the factoring operations.
At the date of this Report, the insolvency procedure is expected to come to an end by July 2014,
through the implementation of a restructuring plan which pursues the operational continuity of the
borrower and has been submitted to the vote of the creditors on March 3, 2014.
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As at December 31, 2013, the total stock of impaired loans amounts to Euro 132,4 m., covered
by Euro 54,4 m. of specific provisions. Doubtful loans sum up to Euro 96.5 m. with related loss
provisions at Euro 36,1 m.: the increase vis-à-vis 2012 final figures is largely attributable to the
classification as impaired position of the exposures related to the default described above. On the
other hand, the Bank has prudentially reclassified amongst non-performing loans, some exposures
previously classified as doubtful loans, for an amount of Euro 16,4 m., mainly composed by
two positions with an average coverage ratio of 48% of specific provisions. As a consequence
of the above, the total stock of non-performing loans, net of recoveries and write-offs, sums
up at Euro 35,9 m. and is covered by Euro 18,3 m. of specific provisions. Total net provisions
for specific loan losses charged against 2013 profit and loss account have amounted to Euro
16,6 m. The provisioning policy against doubtful loans keeps into account the value, estimated in
a conservative manner, of all pledges and mortgages held by the Bank, so that the Board believes
existing provisions fairly reflect the loss probability on all identified positions.
The reduction of the total credit portfolio has determined a reduction of the provisions for collective
impairment on performing loans, decreased to Euro 1,91 m. from Euro 2,12 m. a year earlier; this
stock has been set aside in order to create a buffer against future unforeseen credit losses, and
confirms the commitment of the Board to a conservative accounting policy.
Provisions have been booked also with respect to the Bank’s participation to the Luxembourg
depositors’ protection scheme (AGDL) for an amount of Euro 280 thousand and the new AGDL
fund now amounts to Euro 861 thousand.
Tax provisions on income have been booked for a total amount of Euro 0,687 m., of which Euro
0,233 m. due in Spain and Euro 0.454 m. due in Germany. In Luxembourg only the Net Worth Tax
has been booked, for an amount of Euro 600.000.
As a result of the provisioning policy described above, Financial Year 2013 closes with a loss of
Euro 11,378,117.
As at year end 2013, the Bank’s solvency ratio stands at 11,66% (10,08% in 2012), versus a
minimum supervisory requirement of 9%, and its liquidity ratio stands at 85,90% (79,30% in
2012) versus a minimum requirement of 30%.
In conclusion, although profitability has been under pressure due to credit issues, all indicators of
balance sheet solidity have continued to improve over last year.
Funding from customers decreased to Euro 1,660.8 m. (Euro 2,010.2 m. in 2012), of which Euro
1,568.1 m. are deposits from private and corporate clients, and Euro 92,7 m. are medium term
certificates of deposit issued by the Bank without parent company guarantee and placed with its
clients. In an environment of exceptionally low interest rates, the total cost of funding provided
by customers declined over 2013; this effect has partially offset the reduction of lending revenues,
produced by a lower stock of credits to customers.
The value of securities deposited at the Bank on behalf of customers has increased from Euro
2,453 m. to Euro 2,728 year-on-year basis (+11%), as a consequence of a general appreciation in
market prices of bonds and shares. These figures remain largely exposed to the fluctuating market
prices of shares held in custody on behalf of a few large corporate clients.
Internal audit activities have been regularly performed all through the year according to plan, and
have included in their range of action the operations of the two foreign branches. The Internal
Audit function reported periodically to the Board of Directors and audit recommendations have
been implemented and followed up in order to improve security in the Bank’s operations. In order
to improve the Bank’s risk governance, the Board of Directors has approved the establishment
of an Audit Committee, which will advise the Board in its supervisory role upon the audit and
compliance areas: this Committee will start operating as of January 1, 2014.
The Compliance Function has ensured prompt and full adherence of the Bank to anti-money
laundering legislation and best practices in the conduct of its business. It has handled professionally
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and with mutual satisfaction its relationships with local Prosecutors and other relevant authorities
in the AML field.
The Compliance Officer is part of the Legal, Compliance and Secretary General Unit that handles
customers’ claims, which have remained negligible during the year; as at year end, no material
litigation was pending with clients. He is also actively working in ensuring the full adherence of
the Bank policy to the above mentioned Private Wealth Management Charter of Quality.
The Bank has retained in 2013 its status as a Qualified Intermediary vis-à-vis the U.S. authorities,
as well as its European passport for free cross-border services in many European Union countries;
the process of implementing FATCA regulation is at its final stage and will be completed during
next year.
Management of risks
As required by Supervisory authorities, the present section provides a summary of the risk policies
and guidelines implemented by the Bank in the ordinary course of its business.
Such policies and guidelines are strictly dependent upon Group policies, set by the Parent Company
in the framework of its overall supervision and guidance responsibilities.
The Bank’s Risk Management Function operates within the framework defined by specific internal
policies, developed in 2009 and inspired by Group guidelines. Its mission is the control of interest
rate, liquidity and operational risks; furthermore, similar controls are performed by the Parent
Company Risk Management Function, and double-checked with the Bank.
Liquidity risk reporting has been improved by implementing, since April 2010, a new gap analysis
requested by the Central Bank of Luxembourg in application of its regulations 2009/4; this new
report shows the liquidity gaps of the bank over a period of five days and the liquid stock available
to cover possible net outflows.
The short term liquidity position of the Bank, as shown by the daily liquidity report, is closely
monitored by the Risk Management Unit that, within a boundary framework of limits and early
warnings, compares both daily gaps and cumulative five-days gaps with daily liquid stock. The
Treasury department and the Management are promptly informed in case a breach occurs.
Lending risks are analyzed by the Credit Departments of the branches and the Luxembourg
headquarter, approved by the Bank’s appropriate decision-making body, and monitored both by the
Bank and by the Parent Company’s Credit Risk Management Function, which duly consolidates at
Group level all credit risks undertaken vis-à-vis the same borrower.
Aside from lending, counterparty risk is negligible in the financial markets activities, since most
deposits, foreign exchange and derivative contracts on interest rates are negotiated with the
centralized UBI Group Treasury Function: lines are allocated within global limits set by the Parent
Company International Division on a Group-wide basis. Issuer risk on the securities held for the
Bank’s own trading portfolio is regulated by the internal Powers & Authorities, and supervised
by the Parent Company Finance Division, which monitors the overall Group exposure by issuer.
Payments are handled by dedicated back-office teams at headquarters and branches, which also
operate the Target system to which the Bank is a direct participant in Luxembourg, Spain and
Germany (where it is also a member of SEPA): security is pursued through segregation of duties
and double controls at input and message validation, as well as by a daily double check performed
by separate Internal Control functions, reporting directly to branch and headquarter Management.
In the course of 2013 market risks have not been a component of the Bank’s business model, since
the Bank is not a market maker in any financial instrument and it mostly focuses on best execution
of financial transactions on behalf of its customers. Treasury mismatching policies are limited
to the very short term and such as to put at risk, under severely adverse market conditions, a
12
small fraction of the Bank’s expected profits. They are monitored through a gap analysis produced
by the Risk Management function. The Notes to the Financial Accounts provide a fair view of
the interest rate sensitivity of the Bank, and of the credit risk associated to derivative financial
instruments. Treasury is centralized at Luxembourg headquarters, which therefore perform all
funding activities in favor of its foreign branches and ensure a centralized supervision over
mismatching and liquidity risks.
Capital requirements, both for regulatory purposes and internal policy guidelines, are constantly
monitored, and an ICAAP procedure is implemented according to regulations and best practices.
Foreign exchange positions, which might only be generated for very limited amounts by the
execution of clients orders, are squared daily; overnight position limits are tightly set (not to exceed
Euro 1 m.), and are monitored daily by the Bank’s Risk Management Function. The Bank does
not take positions of its own, and all client business concentrates in the spot and outright markets.
Management of foreign exchange trading is also centralized at Luxembourg headquarters, which
operate on behalf of the branches.
The Bank does not trade in options and futures for its own account; it offers, however, exchangetraded options on shares to a limited number of its clients at its Luxembourg headquarters. In these
cases, when clients sell options, a credit decision is taken and underlying assets are pledged in
order to secure the delivery risk.
Settlement risks are minimized by trading shares and bonds with a limited number of counterparts,
approved by top management and belonging to major international financial Groups.
The Bank monitors the so called “operational risks” based on a common set of procedures and
criteria implemented at Group level by the Parent Company’s Risk Management Function; results
are regularly reported to the Parent Company. The Bank calculates its capital requirement with the
“standardized” approach.
Following the issuance of CSSF Circular 10/496, as amended by the Circular 11/505, the Bank has
modified its own policies on remuneration and bonuses, introduced during 2010 in accordance with
specific UBI Group guidelines. These policies are intended to foster prudent risk management at
all levels of the organization, and exclude any guaranteed bonus or golden parachute for Directors
or top managers; no Director is remunerated with a variable fee according to results. A formal
bonus system has been introduced, applicable to all staff, which is triggered if the Bank’s annual
profits hit the budgeted results, and only once the Group has attained its global targets; the related
bonus pool is set by the Parent Company, as a share of a consolidated pool, and is distributed to
staff based on the results of a formal performance assessment procedure, these individual bonuses
not exceeding in any case 35% of annual gross salary. For a restricted group of high ranking
executives, the entitlement to bonus is triggered both by individual Bank’s results and by Group
consolidated results. This same principle applies to the CEO, in whose case the cap is set at
50% of annual gross salary but 70% of the amount is subject to a four-year deferral mechanism,
with the possibility to cancel this deferred entitlement as foreseen in the claw-back adjustment
mechanisms.
Considering the final net result of the Bank, no amount for performance bonuses has been
provisioned with respect to the year 2013.
As requested by the CSSF circular 11/506 the Bank has adopted an internal procedure concerning its
stress testing program. The document specifies all relevant aspects in terms of internal governance
as well as of principles and methodologies applied to the stress test framework. The Bank has
adopted a threefold approach: single risk scenarios, global risks scenarios and a reverse stress
scenario; direct stress testing scenarios are characterized by two degrees of severity (medium and
high) while reverse stress testing is conducted through a qualitative analysis.
The stress test program is set to perform one test a year, the result of which are included in the
ICAAP report and presented to the Board of Directors.
13
Private Banking, Investment Management and Wealth Structures
Private Banking and Wealth Structures
This activity continues to be offered from the Luxembourg headquarters of the Bank, since its
international branches do not perform investment and related services; it targets an international set of
affluent and high net-worth individuals, to whom a wide array of specialized and tailor-made services
are offered, such as estate planning, investment advice and discretionary portfolio management.
Services are provided by a team of multinational Private Bankers, who assist the clientele in its
investment decisions and in the execution of its ordinary banking business. The Private Banking
Department has evolved by offering cross-services between traditional private banking (investment
advice; best execution of orders) and wealth structuring, through solutions of financial engineering
or trusts.
A growing demand has been registered during 2013 for those services related to the “family business”,
which the Bank provides through its subsidiary UBI Trustee S.A., and which supports clients in
estate and succession planning.
The decision of the Luxembourg Government to adhere, as of 2015, to the intra-E.U. automatic
exchange of information on financial revenues has confirmed the validity of the Bank’s commercial
policies which target tax-compliant customers only, and will deploy its full effects over the next
couple of years, by contributing to the redesign of the business model in this market segment.
Asset Management
The Asset Management team provides its support to private banking both through discretionary
portfolio management and through advisory services which are made available to clients within
the framework of the MIFID rules. These services are integrated, for purposes of quality assurance,
within the UBI Group thanks to a strict cooperation with the Group asset management operations.
The regain of confidence on the financial markets in the second half of the year as well the continuing
downward trend on interest rates have contributed to generate positive performances on all managed
portfolio profiles for 2013.
The Bank continues to apply a multi-brand distribution policy for financial products, offering clients
its Group SICAVs (UBI Sicav) as well as third parties funds, hedge funds and insurance products,
in addition to direct investments in equities and bonds on all major markets. The Bank acts as a
custodian bank for the assets of different Luxembourg insurance companies, upon agreement of
the Luxembourg supervisory authority for the insurance industry; in this capacity, it may receive a
mandate to invest the assets of the individual policies.
Corporate banking
The lending activity of the Bank has been hugely affected by the crisis of one of its major borrowers;
in order to safeguard its balance sheet structure and its solvency equilibrium, the Bank has adopted
a very conservative approach, by downsizing both its country and single-name risk exposure. This
led to an overall reduction of the loan book, year-on-year, from Euro 974 m to Euro 768 m.
At the Luxembourg headquarters, lending policies towards corporate clients focus on servicing
well known counterparts on structured or corporate finance transactions, through direct term loans
or participations to syndicated loans. Commercial lending and trade related facilities have been
implemented in the second part of 2012 and are planned for further developing within the Bank’s
three years industrial plan.
Margin loans are made available to private banking clients, guaranteed by pledge on liquid assets,
in order to allow them temporary financing without divesting their portfolios. Also, credit cards
facilities are made available, on a fully collateralised basis.
14
At the Madrid and Munich branches commercial lending and trade-related facilities (import/
export finance, letters of credit) are the core activities, with a special focus placed on the factoring
business. Factoring is offered both in the direct and the reverse form, and with or without recourse;
its turnover was about Euro 1.08 bn. in Spain and Euro 404 m. in Germany.
The breakdown by economic sectors of the credit portfolio is quite well balanced, and mostly
focused on energy and wholesale distribution.
The Bank’s branches and subsidiaries
The Madrid Branch, which started operations on June 1, 2008, provides a wide range of prime
corporate clients with credit facilities in the form of factoring, confirming, lending, trade-related
loans and guarantees: factoring and confirming account for about 53% of total loans at year end. At
the end of 2013, the Branch had total loans amounting to Euro 394 m. and guarantees outstanding
for about Euro 36 m., with doubtful loans for Euro 91,8 m.; net loss for the year was Euro 9,2 m.
and total staff employed 16.
The Munich Branch, which started operations as of July 1, 2008, offers its corporate clients lending,
factoring, trade finance and guarantees facilities, in addition to all payment services through its
SEPA and Target membership. At the end of 2013, it had total loans amounting to Euro 221 m. and
guarantees outstanding for Euro 14 m., with doubtful loans amounting at Euro 1,5 m.; net profit
for the year was Euro 0,669 m. and total staff employed 11.
Both Branches serve either Italian corporations doing business, through exports or direct
subsidiaries, in Spain and Germany, or Spanish and German corporations with business interests
in the Italian market.
UBI Trustee S.A., a fully owned subsidiary based in Luxembourg and established on December 18,
2009, offers advisory services in wealth structuring as well as trustee services to a selected
number of clients who wish to set up a trust under U.K. law in order to achieve estate planning
objectives. The company, which employs a staff of four, has a share capital of Euro 250,000 and
has successfully closed the 2013 financial year with total fee revenues of Euro 1 m. and a net profit
of about Euro 30 thousand.
The activity performed by UBI Trustee S.A. is mainly instrumental to the offer of sophisticated
services to Group clients, both private and corporate. To this extent UBI Trustee participated
actively to the marketing initiatives realized by UBI Banca International during 2013.
With an Extraordinary General Meeting of the UBI Capital Singapore Pte Ltd, held on June 14, 2013,
it was resolved to put the Bank’s subsidiary into a voluntary winding-up procedure; in the meantime,
its Board of Directors has resigned and the Liquidators of the Company have been appointed.
Since then, the Company has neither clients nor employees and it has also ceased holding its CMS
(Capital Market Services) license granted by the local Regulator (MAS). On December 31, 2013
the winding-up procedure is almost concluded and all debts have been settled, with the exception
of the Liquidators’ fees.
The fiscal declarations for the period 2012 and 2013 (up to June 14, 2013) have been filed and the
approval by the local authorities to the cancellation of the Company from the local commercial
registry is expected within the year-end, since it has no pending fiscal issues.
Future outlook
Both the financial and the business outlook for 2014 are dependent upon the successful
restructuring of the defaulted debt related to the large corporate client of the Bank, mentioned
in an earlier section of this report. Whilst at the date of this report the loan-loss provisions set
15
aside against 2013 income are consistent with the available information and the probability of
recovery, should a worse-case scenario materialize (such as the winding up of the counterparty,
or a haircut higher than expected), then the Bank might suffer further losses and might require a
capital injection in order to protect its solvency ratio at a 9% threshold or above. To this end, its
controlling shareholder UBI Banca S.c.p.A. has released a written binding commitment to cover
any capital shortfall and preserve a solid equity level.
Allocation of profits
Consistently with the financial results registered during 2013, no dividend will be paid to
shareholders.
EUR
Financial result for the fiscal year 2013
(11.378.117)
5% to legal reserves
–
Allocation to free reserves
–
Dividend distribution
0
The Board hereby reaffirms the Bank’s commitment to serve its clients according to the best
professional standards, and wishes to thank its staff for operating in the constant pursuit of such
standards.
Luxembourg, March 7, 2014
16
17
BALANCE SHEET
AS AT DECEMBER 31, 2013 (expressed in EUR)
ASSETS
Notes
CASH IN HAND, BALANCES WITH
CENTRAL BANKS AND
POST OFFICE BANKS
2013
2012
EUR
EUR
31
55.395.142
LOANS AND ADVANCES TO
225.722.855
3, 31
CREDIT INSTITUTIONS:
Repayable on demand
308.538.810
112.921.106
3.745.976.256
3.020.760.986
4.054.515.066
3.133.682.092
767.630.050
973.749.140
4, 5, 8, 31
–
88.789.872
SHARES AND OTHER
VARIABLE-YIELD SECURITIES
4, 31, 8
11
11
PARTICIPATING INTERESTS
4, 6, 8
149.489
1.211.324
SHARES IN AFFILIATED UNDERTAKINGS
4, 7, 8
250.000
250.000
Other loans and advances
LOANS AND ADVANCES TO
CUSTOMERS
DEBT SECURITIES AND
OTHER FIXED-INCOME SECURITIES
Issued by other borrowers
3, 31
INTANGIBLE ASSETS
9
5.304.029
6.643.505
TANGIBLE ASSETS
10
759.901
1.003.482
OTHER ASSETS
11
5.259.818
2.700.836
PREPAYMENTS AND
ACCRUED INCOME
15
7.179.936
9.830.320
4.896.443.442
4.443.583.437
TOTAL ASSETS
The accompanying notes form an integral part of these annual accounts.
18
UBI BANCA
INTERNATIONAL S.A.
LIABILITIES
Notes
AMOUNTS OWED TO CREDIT
INSTITUTIONS:
Repayable on demand
With agreed maturity dates or periods of notice
12, 31
AMOUNTS OWED TO CUSTOMERS:
2013
2012
EUR
EUR
11.631.206
16.871
12.546.781
16.704.450
24.177.987
16.721.321
1.065.796.938
749.718.322
12, 31
Other debts:
Repayable on demand
With agreed maturity dates or periods of notice
502.289.816
1.155.374.968
1.568.086.754
1.905.093.290
3.167.926.963
2.371.628.187
DEBTS EVIDENCED BY CERTIFICATES
Debt securities in issue
13, 31
OTHER LIABILITIES
14
9.881.152
6.968.182
ACCRUALS AND DEFERRED INCOME
15
4.996.404
10.571.121
17, 18
3.751.560
2.239.566
3.927.588
1.912.575
5.991.126
5.840.163
500.000
500.000
PROVISIONS
Provisions for taxation
Other provisions
FUND FOR GENERAL BANKING RISKS
SUBSCRIBED CAPITAL
16
70.613.580
70.613.580
SHARE PREMIUM ACCOUNT
16
37.286.954
37.286.954
RESERVES
16
18.360.639
17.587.121
(11.378.117)
773.518
4.896.443.442
4.443.583.437
(LOSS)/PROFIT FOR THE FINANCIAL YEAR
TOTAL LIABILITIES
The accompanying notes form an integral part of these annual accounts.
19
STATEMENT OF OFF-BALANCE SHEET ITEMS
AS AT DECEMBER 31, 2013 (expressed in EUR)
Off Balance Sheet
Notes
CONTINGENT LIABILITIES
Of which
Guarantees and assets pledged as collateral security
20, 31
COMMITMENTS
Of which
Credit confirmed, not used
21, 31
FIDUCIARY TRANSACTIONS
23
UBI BANCA
INTERNATIONAL S.A.
2013
2012
EUR
EUR
69.114.627
89.536.747
64.876.620
86.109.186
45.129.535
98.772.154
44.305.552
98.174.582
60.483.774
52.055.555
The accompanying notes form an integral part of these annual accounts.
20
STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED
AS AT DECEMBER 31, 2013 (expressed in EUR)
Notes
INTEREST RECEIVABLE AND SIMILAR
INCOME
UBI BANCA
INTERNATIONAL S.A.
2013
2012
EUR
EUR
39.051.393
76.159.169
144.838
1.956.478
(19.116.186)
(50.737.074)
INCOME FROM TRANSFERABLE SECURITIES
4.632
66.232
INCOME FROM PARTICIPATING INTERESTS
4.632
66.232
Of which
Income arising from fixed-income securities
INTEREST PAYABLE AND SIMILAR
CHARGES
COMMISSION RECEIVABLE
14.668.612
13.283.892
COMMISSION PAYABLE
(4.344.845)
(3.201.525)
1.044.593
(124.722)
450.668
615.227
(20.246.453)
(19.300.529)
(10.390.002)
(9.674.376)
Wages and salaries
(8.359.840)
(7.874.150)
Social security costs
Of which:
Social security costs relating to pensions
(1.243.483)
(1.251.546)
(877.719)
(881.747)
33
(9.856.451)
(9.626.153)
9, 10
(2.075.713)
(2.568.140)
NET PROFIT/(LOSS) ON FINANCIAL OPERATIONS
OTHER OPERATING INCOME
25
GENERAL ADMINISTRATIVE EXPENSES:
a) Staff costs
28
Of which
b) Other administrative expenses
VALUE ADJUSTMENTS IN RESPECT OF
TANGIBLE AND INTANGIBLE ASSETS
OTHER OPERATING CHARGES
26
(460.837)
(444.907)
VALUE ADJUSTMENTS IN RESPECT
OF LOANS AND ADVANCES
AND PROVISIONS FOR CONTINGENT
LIABILITIES AND FOR COMMITMENTS
3
(37.379.448)
(7.030.521)
VALUE RE-ADJUSTMENTS IN RESPECT
OF LOANS AND ADVANCES
AND PROVISIONS FOR CONTINGENT
LIABILITIES AND FOR COMMITMENTS
3
18.312.297
1.440.395
VALUE ADJUSTMENTS ON SECURITIES HELD
AS FINANCIAL FIXED ASSETS,
PARTICIPATING INTERESTS AND
SHARES IN AFFILIATED UNDERTAKINGS
7
–
(3.241.534)
TAX ON PROFIT ON ORDINARY
ACTIVITIES
27
(686.830)
(3.317.944)
(10.778.117)
1.598.019
(600.000)
(824.501)
(11.378.117)
773.518
(LOSS)/PROFIT ON ORDINARY ACTIVITIES
AFTER TAX
OTHER TAXES NOT SHOWN UNDER
THE PRECEDING ITEMS
27
(LOSS)/PROFIT FOR THE FINANCIAL YEAR
The accompanying notes form an integral part of these annual accounts.
21
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
1. GENERAL
UBI Banca International S.A. (the “Bank”) was incorporated in Luxembourg on October 1, 1997,
under the name of CAB International S.A.. Following an extraordinary shareholders’ meeting on April
19, 1999, the Bank’s changed its name to Banca Lombarda International S.A..
At an extraordinary shareholders’ meeting on June 13, 2002, the share capital of the Bank was increased
from EUR 10.200.000 to EUR 19.958.340, through the issuance of 19.134 new shares of EUR 510 par
value fully underwritten by Banca Lombarda S.p.A. for a total amount of EUR 13.975.902 (including
a share premium of EUR 4.217.562). The underwriting took place through the contribution in kind by
Banca Lombarda S.p.A. of 32.000 ordinary shares in Artesia Bank Luxembourg S.A., representing the
entire share capital of the latter. Banca Lombarda International S.A. and Artesia Bank Luxembourg S.A.
were subsequently merged on July 21, 2002 and with accounting effects retroactive as of January 1, 2002.
At an extraordinary shareholders’ meeting on June 26, 2007, the share capital of the Bank was increased
from EUR 19.958.340 to EUR 43.267.380, through the issuance of 45.704 new shares of EUR 510
par value fully underwritten by UBI Banca S.c.p.a. for a total amount of EUR 40.750.230 (including
a share premium of EUR 17.441.190). The underwriting took place through the contribution in kind
by UBI Banca S.c.p.a. of 40.000 ordinary shares in BPU Banca International S.A., representing the
entire share capital of the latter. Banca Lombarda International S.A. and BPU Banca International
Luxembourg S.A. were subsequently merged on June 26, 2007 and with accounting effects retroactive
as of April 1, 2007. The Bank changed its name to UBI Banca International S.A..
On April 15, 2008, the Bank registered UBI Banca International S.A., Madrid Branch, with the Bank
of Spain. Effective May 31, 2008, the Bank acquired the net assets of Financera Veneta EFC a group
entity providing factoring services. These net assets were subsequently transferred to the Madrid
Branch in June 2008. The Madrid Branch operates banking activities according to current Spanish law
provisions, and including leasing and factoring.
On June 26, 2008, in the framework of a group reorganisation, another bank of UBI Group, Banca
Popolare di Bergamo, became a shareholder of the Bank through the contribution in kind of its branch
located in Munich, Germany. As a result of this operation 3,906 shares with a par value of EUR 510
were issued for EUR 1.992.060 with a share premium of EUR 1.507.716. The Munich Branch is
specialised in the lending business and factoring.
On January 6, 2009, following an extraordinary meeting of shareholders, the Bank increased its share
capital by issuing 24.079 additional shares with a par value of EUR 510 amounting to EUR 12.280.290
with a share premium of EUR 386 per share amounting to EUR 9.294.494, involving a total increase
by EUR 21.574.784.
On December 10, 2010 the Bank finalised an intra-group corporate operation: after having obtained
all relevant authorisations from Luxembourg and Italian authorities, the Bank merged with the
Luxembourg Branch of Banco di Brescia S.p.A. (hereafter “the Branch”) through the transfer of all
assets and liabilities of the Branch to the Bank. The merger had been submitted to the regime of the
demergers (“scissions”) as provided for in articles 285 to 308 (with the exception of article 303) of the
Luxembourg law on commercial companies dated August 10, 1915, as amended. Banco di Brescia
S.p.A. transferred to the Bank its Luxembourg Branch, consisting in the private and corporate bank
activities for companies and private clients and, more particularly, all assets and liabilities pertaining
thereto (including the employment contracts), as contemplated in the Contribution Agreement signed
on December 10, 2010, and the terms and conditions regulating the Branch of activity transfer. The
extraordinary meeting of shareholders, held on December 10, 2010, resolved to increase the share
capital of the Bank by EUR 1.531.020 so as to raise it from its current amount of EUR 57.539.730 to
EUR 59.070.750 by issuance of 3.002 new shares of the Bank, with a nominal value of EUR 510 each,
22
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
together with an aggregate share premium of EUR 1.368.912. Banco di Brescia S.p.A. subscribed all
newly issued 3.002 shares.
On April 3, 2012, an Extraordinary Meeting of Shareholders, resolved to increase the share capital
of the Bank by EUR 11.542.830 by converting some free reserves in capital for EUR 7.090.530 and
by cash subscription for EUR 4.452.300. The share capital increased from EUR 59.070.750 to EUR
70.613.580 by the issue of 22.633 new shares and the booking of a share premium amounting EUR
3.457.080.
The objective of this capital increase was to prepare the Bank to the acquisition from Banque de Dépôt
et de Gestion S.A., Lausanne (a Swiss subsidiary of UBI Group) of its Singapore subsidiary BDG
Singapore Private Ltd, planned for the end of May 2012. The operation has been duly finalized on
May 30, 2012, and the subsidiary changed its name into UBI Capital Singapore Pte Ltd..
On October 22, 2012, within a reorganization of UBI Banca Group, Banca Regionale Europea S.p.A.,
Cuneo absorbed Banco di San Giorgio S.p.A., Genova: the consequence of the merger was that the
shareholder Banco di San Giorgio S.p.A. became Banca Regionale Europea S.p.A., without any
modification of its capital share.
After a full impairment of its fully owned subsidiary UBI Capital Singapore Pte at the end of financial
year 2012, due to the poor results and the difficult environment in which the company had to develop
business, the Bank resolved during the first half of 2013 to liquidate its subsidiary. The liquidation
procedure started on June 14, 2013 and at the end of 2013 is still ongoing waiting for the Tax Clearance
by the Tax Authorities in Singapore.
As of December 31, 2013, the Bank is authorized to perform all banking activities as defined by the
Luxembourg law.
The Bank is a subsidiary of Unione di Banche Italiane S.c.p.a., whose registered office is at Piazza
Vittorio Veneto, 8, Bergamo, Italy. The consolidated financial statements of Unione di Banche Italiane
S.c.p.a. are available at its head office.
Therefore, the Bank is exempt from the requirement to establish consolidated accounts and a
consolidated management report on the basis of the criteria set out by the Luxembourg law of June 17,
1992 as amended.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The annual accounts have been prepared in conformity with the legal and regulatory requirements
applicable in the Grand-Duchy of Luxembourg. The accounting policies and the valuation principles
are determined and applied by the Board of Directors, except those which are defined by law and by
the Luxembourg Supervisory Authority the Commission de Surveillance du Secteur Financier (CSSF).
The preparation of annual accounts requires the use of certain critical accounting estimates. It also
requires the Board of Directors to exercise its judgment in the process of applying the accounting
policies.
The Board of Directors makes estimates and assumptions that affect the reported amounts of assets
and liabilities in the next financial year. Estimates and judgments are continually evaluated and are
based on historical experience and other factors, including expectations and future events under the
circumstances.
The books and records of the Bank are kept in euro (“EUR”) and the annual accounts have been
prepared using the following significant accounting policies:
23
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
2.1
Reclassification of prior year comparative figures
Certain prior year comparatives in the Profit and Loss Account have been reclassified to conform to the
current year’s presentation. These changes primarily relate to the realignment of the Income from the subcaption shares and other variable yield securities to the sub-caption Income from participating interest.
2.2
Foreign currencies translation
The Bank uses a multi-currency accounting system, which consists of recording each transaction in the
respective currency of the transaction based on position accounts.
The year-end exchange rates of the main currencies used by the Bank are summarised as follows:
1 EUR
1 EUR
1 EUR
1 EUR
1 EUR
=
=
=
=
=
2013
1,3791 USD
1,2276 CHF
8,8591 SEK
7,4593 DKK
0,8337 GBP
1 EUR
1 EUR
1 EUR
1 EUR
1 EUR
=
=
=
=
=
2012
1,3194 USD
1,2072 CHF
8,582 SEK
7,461 DKK
0,8161 GBP
The translation of accounts in a currency other than EUR is done in accordance with the following
criteria:
• Assets and liabilities expressed in a foreign currency other than EUR are translated at
year-end rates;
• Income and expenses in foreign currencies are translated into EUR at exchange rates
applicable at the date of their recording in the statement of profit and loss;
• The exchange differences resulting from the valuation of spot positions are recorded in
the profit and loss account in the current year;
• Foreign exchange gains and losses resulting from spot transactions hedged by forward
transactions (“swaps”) are neutralized through “Prepayment and accrued income” and
“Accruals and deferred income” accounts. Differences arising due to the gap between
spot and forward exchange rates are amortised in the profit or loss accounts on a prorate
temporis basis”.
Foreign currency swap transactions have not been contracted during the year.
2.3
Financial derivative instruments
2.3.1
Interest rate swaps
The Bank has entered into interest rate swaps for the purpose of hedging underlying specific term
loans. The accrued interest, either receivable or payable, are recorded on a prorata basis in the
profit and loss account and are included in the captions Interest receivable/payable and similar
income/charges over the period of the respective contracts.
The revaluation of these swap transactions used for hedging purpose does not affect the result of
the financial year.
2.3.2
Forward foreign exchange contracts
Forward foreign exchange transactions, which are exclusively contracted on behalf of customers,
are covered by reverse forward foreign exchange transactions and do not have a valuation impact
24
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
on the profit and loss account. Unrealised valuation gains on uncovered forward foreign exchange
transactions are not accounted for in the profit and loss account for the year, whereas unrealised
valuation losses are recorded under “Other provisions”.
Uncovered forward foreign exchange transactions have not been contracted during the year.
The calculation of the unrealised gains or losses is based on the forward exchange rate for each
currency applied to all outrights with the same maturity date.
2.3.3
Options
For the options traded over the counter and unallocated to determined assets or liabilities, the premiums
received or paid appear on the balance sheet until the exercise or the expiration date of the options, if the
option is not exercised before that date. Commitments on written options are booked off balance sheet.
Option contracts entered into for hedging purposes are not marked to market-to-market.
Option contracts traded on a regulated market and entered into for the purpose of hedging identical
reverse options also traded on a regulated market, are booked as follows: as the position on these
instruments is closed, the result arising from premiums received and paid is accounted for in the profit
and loss account.
2.4
Loans, advances and debts
The loans, advances and debts repayable on demand include amounts, which can be withdrawn
at any time without notice or with a 24 hours notice. The term loans and advances and term debts
include amounts whose residual maturity exceeds 24 hours.
Loans and advances are stated at disbursement value less repayment made and any value
adjustments required. As mentioned under “2.8 value adjustments”, the policy of the Bank is to
set up specific value adjustments for doubtful loans in accordance with the circumstances and for
the amounts specified by the Board of Directors. These value adjustments are deducted from the
asset account balances concerned.
Accrued interest not received is recorded under the heading “Prepayments and accrued income”
on the asset side of the balance sheet.
Debts are recorded under liabilities at the amount of reimbursement.
Where the amount to be repaid is greater than the amount received, the difference may be recorded
in the assets, and must be disclosed separately in the balance sheet or in the notes to the annual
accounts. This difference must be amortised on an annual basis over a reasonable period, which
cannot exceed the date of repayment of the debt (this option does not apply to differences resulting
from debts arising from transactions on a primary market, for which provisions must be made).
Premiums are recognised prorata temporis over the life of the debt.
2.5
Securities
Debts securities and other fixed-income securities and shares and other variable-yield securities
are allocated into three different categories of portfolio that are valued in accordance with their
specific rules:
• Investment portfolio
• Structural portfolio
• Trading portfolio
25
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
2.5.1
UBI BANCA
INTERNATIONAL S.A.
Investment portfolio
Securities held in the investment portfolio are intended to be held in the long term and, in case of
fixed-income securities, until maturity.
The debt securities and other fixed-income securities are recorded at acquisition date in the balance
sheet at acquisition cost, which includes incidental expenses but excludes accrued interest. Except
for zero coupon bonds, accrued interest since the last coupon date or since issuance are recorded
in the transitory account until the next coupon date. Accrued interest related to zero coupon bonds
are recorded in the portfolio account, in addition to the purchase price of the underlying security.
Premiums and discounts related to securities classified in the investment portfolio and resulting
from the difference between the acquisition price and the reimbursement amount at maturity are
recorded prorata temporis in the liabilities, respectively the assets under the caption “Accruals and
deferred income”, respectively “Prepayments and accrued income”. Premiums and discounts are
considered as interest expense and interest income respectively.
Share and other variable-yield securities, as well as share in affiliated undertakings and participating
interests having the characteristics of financial fixed financial assets and classified under
investment portfolio are recorded at acquisition cost, including incidental expenses. Companies in
which the Bank directly or indirectly exercise a significant influence are considered to be affiliated
undertakings. Participating interests comprise rights in the capital of other undertakings, the
purpose of which is to contribute to the activity of the company through a durable link.
A value adjustment is made if the Board of Directors considers that there exists a durable
depreciation in their value at the balance sheet date.
Income from shares is accounted for at ex-dividend date. Income from fixed-income securities is
accounted for on an accrual basis.
2.5.2
Structural portfolio
Securities held in the structural portfolio are intended to be held in the medium term for the
purpose of interest income and capital gains.
Securities classified in the structural portfolio are valued at the lower of cost or market. If no
official quotation is available, valuation is made at the probable realisable value or at a price which
most closely corresponds to the intrinsic value of the securities. Unrealised depreciation in value
is recorded in the annual accounts in the caption “Net profit/(loss) on financial operations”.
In cases where fixed-income securities are acquired at a premium, the difference between
acquisition cost and redemption value is written off in instalments to profit and loss and recorded
as “interest payable and similar charges”. Instalments are charged pro rata temporis over the life
of the security. The cumulative amortisation from the date of acquisition is included in “Accruals
and deferred income” on the liability side of the balance sheet.
In cases where fixed-income securities are acquired at a discount and cost is used as the basis of
valuation, the difference between acquisition cost and redemption value is taken to profit and loss
account at the date of maturity or date of disposal, if earlier.
Income from shares is accounted for at ex-dividend date. Income from fixed-income securities is
accounted for on an accrual basis.
26
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
2.5.3
UBI BANCA
INTERNATIONAL S.A.
Trading portfolio
Securities held in the trading portfolio are intended to be held in the short term.
Securities classified in the trading portfolio are valued at the lower of cost or market. If no official
quotation is available, valuation is made at the probable realisable value or at a price which most
closely corresponds to the intrinsic value of the securities. Unrealised depreciation in value is
recorded in the annual accounts in the caption “Net profit on financial operations”.
Income from shares is accounted for at ex-dividend date. Income from fixed-income securities is
accounted for on an accrual basis.
2.6
Tangible and intangible assets
The tangible and intangible assets are recorded at their acquisition cost less depreciation. These
assets, whose useful economic life is limited, are depreciated over their estimated useful life on a
straight line basis.
The depreciation rates used are as follows:
Formation costs
Goodwill (*)
Leasehold improvements
Machinery & Equipment
Automobiles
Computer equipment & software
20%
10% - 20%
20%
20%
33%
10-25%
(*) The goodwill arising from the acquisition of Banco di Brescia Luxembourg Branch on December 10, 2010 by the Bank is a tax deductible expense in Luxembourg.
In case of a permanent reduction in value, appropriate write-downs are recorded at balance sheet
date.
The Bank resolved to amortize the goodwill relating to the merger with Banco di Brescia,
Luxembourg Branch on a 10 years period (instead of 5 years as foreseen in the Law of June 17,
1992, as modified). The Bank applied the derogation envisaged in art. 2(5) of the law because
of the economic reality and nature of assets and liabilities acquired with the merger. The assets
and liabilities of the absorbed entity, migrated to the Bank books, were a portfolio of loans and
deposits of private and corporate customers. A 10 years amortization is in line with the time
horizon used by the expert in the framework of the Branch evaluation and with the period accepted
by the Tax Authorities.
2.7
Debt evidenced by certificates
Debts evidenced by certificates are presented at their redemption amounts. Transaction costs and
premiums/ discounts are amortised in the profit and loss account on a straight line basis over
the life of the debt through item “Accruals and deferred income” or “Prepayments and accrued
income”.
2.8
Value adjustments
Value adjustments include provisions for bad debts, provisions for value adjustments on securities
in portfolio, amortisation and depreciation of tangible and intangible assets. For a determined
asset, the adjustments are deducted from the nominal value of the asset or from the acquisition
cost. The related assets are thus presented net of any value adjustments.
27
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
The value adjustments related to the interest on doubtful debts are determined as follows: accrued
interest or interest receivable on doubtful debts are fully provided for, whereas for receivable
for which the interest can be reasonably considered as non recoverable the Bank stops accruing
interest and any accrued interest up to that point is reversed.
2.9
Lump-sum provision
In accordance with the Luxembourg tax legislation, it is the Bank’s policy to establish a lump
sum provision for risk exposures, as defined in the legislation governing prudential supervision of
banks. The purpose of the provision is to take account of risks that are likely to occur but which
have not yet been identified as at the date of preparation of the annual accounts.
Pursuant to the Instructions issued by the “Directeur des Contributions” on December 16, 1997,
the provision, recorded as a tax exemption, is made before taxation and may not exceed 1,25% of
the Bank’s risk exposures.
The lump-sum provision for risk exposures is broken down in proportion to the weighting of the
items that form of the basis for its calculation, between:
• A portion which is deemed to represent a value adjustment, and which is deducted from
the assets items which constitute risk exposures; and
• A portion which is deemed to represent a provision attributable to credit risk associated
with off-balance sheet items, foreign exchange risk and market risk, and which is booked
under “Other provisions”
2.10
Fund for general banking risks
The Bank has created a fund for general banking risks in 2000 for an amount of EUR 500.000.
The fund is intended to cover particular risks associated with banking operations. Increases or
decreases to this fund are determined based on the profit after tax, but before determining the
profit of the financial year and are not subject to any limitations.
2.11
Taxes
Taxes are accounted for on an accrual basis, based on the profit and loss account for the year under
review.
Based on the tax treaties concluded between Luxembourg, Germany and Spain respectively, profits
and wealth attributable to the Munich and Madrid branches of the Bank are exempt from taxation in
Luxembourg. The Munich and Madrid branches are subject to taxation in their respective countries,
Germany and Spain.
Consequently, the Luxembourg entity is only subject to Corporate Income Tax, Municipal Business
Tax and Net Wealth Tax in Luxembourg.
Tax provisions are disclosed in the caption “provisions for taxation” while tax advances are included
in the caption “other assets” (see Note 11).
2.12
Repurchase agreements and reverse repurchase agreements
The Bank enters into purchases (sales) of securities and financial instruments under agreements
to resell (repurchase) those securities at a certain date in the future at a fixed price. Securities
purchased with a firm commitment to resell at future dates are not recognised on the balance
sheet. The amounts paid for the purchase of the securities are recognised as a receivable in loans
and advances to either credit institutions or customers. Securities sold with a firm commitment
to repurchase at future dates continue to be recognized on the balance sheet and are measured in
28
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
accordance with the accounting policy of the category to which they relate. The proceeds from
the sale of the securities are reported as amounts owed to either credit institutions or customers.
The difference between the purchase (sale) and resell (repurchase) price is recognised on an
accrual basis over the period of the transaction as interest income (expense).
3. LOANS AND ADVANCES TO CREDIT INSTITUTIONS AND CUSTOMERS
Loans and advances to credit institutions are split in accordance with their remaining maturity as
follows:
Loans and advances to credit institutions
At sight
Less than 3 months (other than at sight)
3 months to 1 year
2013
EUR
2012
EUR
308.538.810
3.665.294.942
80.681.314
4.054.515.066
112.921.106
2.994.709.145
26.051.841
3.133.682.092
Loans and advances to credit institutions include amounts paid by the Bank for a total of EUR
249.839.632 (2012: EUR 292.593.229) in the context of purchase of investments subject to
commitment to resell them at a future date under reverse repurchase agreements contracted with
the Parent Company.
Loans and advances to customers are split in accordance with their remaining maturity as follows:
2013
EUR
Loans and advances to customers
At sight
Less than 3 months
3 months to 1 year
1 year to 5 years
Greater than 5 years
Specific value adjustments
Lump-sum provision allocation
414.780.867
62.684.537
92.071.606
170.414.827
84.020.974
(54.436.026)
(1.906.735)
767.630.050
2012
EUR
563.673.081
86.321.090
69.582.955
232.411.774
44.451.072
(20.571.379)
(2.119.453)
973.749.140
On December 31, 2013 the Bank set up a lump-sum provision taking into consideration in-bonis nonguaranteed assets which constitute risk exposure of EUR 1.906.735 (2012: EUR 2.119.453).
Specific value adjustments include an amount of EUR 34.976.589 that relates to the provision on
the Bank’s exposure to one major customer of the Branch in Madrid, an important multinational
Company, which entered on March 1, 2013 under the scope of Section 5.bis of the Spanish Bankruptcy
Law (“Ley 22/2003 de 9 de Julio 2003”). In 2013 the defaulted entity has initiated discussions with
its creditor banks in order to restructure its debt and avoid non-voluntary liquidation. Until March
3, 2014 restructuring proposals will need to be submitted to the bankruptcy court. The creditors of
the entity need to approve with 51% quorum one of the restructuring proposals until April 3, 2014.
If none of the restructuring proposals is approved by the creditors of the entity, the bankruptcy court
will put the entity into non-voluntary liquidation.
29
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
The above mentioned provision as of December 31, 2013 is analyzed per type of exposure as follows:
Type of exposure
Direct exposure
Other exposure
Total
Exposure (EUR)
% provision
43.956.782
70%
41.420.049
10%
85.376.831
Provision (EUR)
30.769.747
4.206.842
34.976.589
For the above direct exposures of EUR 43,956,782 the provision has been determined to 70% of
the balance which represents the best estimate of the sustainable debt of the group and is consistent
with the current proposals’ haircut levels negotiated by the entity and the creditors.
The above reported as “other exposures” of EUR 41.420.049 relate to financing arrangements that
are supported by some local subsidiaries of the group which are currently not under an insolvency
procedure and have formally acknowledged their co-obligation.
The above amount of provision of EUR 34.976.589 has been recorded in the income statement
under the caption “Value adjustment in respect of loans and advances and provisions for contingent
liabilities and for commitments”.
Concerning the large exposures of the Bank, the Parent Bank in Italy, namely Unione di Banche
Italiane S.c.p.a guarantees exposures greater than 25% of the Bank’s own funds (for the amount
exceeding the 25% threshold). Consequently, at the end of June 2013, the Bank requested the
exercise of the guarantee issued by its Parent Bank, with respect to the defaulted borrower above.
In this context, Unione di Banche Italiane S.c.p.a. paid in 2013 the amount of EUR 17.262.517 to
the Bank which has been recorded in the income statement under the caption “Value re-adjustment
in respect of loans and advances and provisions for contingent liabilities and for commitments”.
In addition to the above exposures presented in the table above, the Bank continues to support
with working capital some operating subsidiaries of the defaulted borrower that are not involved
in the bankruptcy procedure, through a non-recourse factoring with notification agreement. The
credit risk of this exposure is linked to final customers of the entities and not to the group. As of
December 31, 2013, the total amount of outstanding assigned invoices from the operating entities’
amounts to EUR 41.116.000 and corresponds to sales of the operating entities to a large number
of third parties customers (more than 1.000 customers).
The Board of Directors of the Bank has estimated the above levels of provision based on the
information available to the Bank as at December 31, 2013. Based on the scenarios developed
by the Bank, even in the case where future events will affect the ability of the non-defaulted
co-obligating subsidiaries of the entity to serve the existing financing agreements and additional
provisions will be required to cover 70% of the balance of the “other exposures”, the “solvency
Ratio” of the Bank will still be sufficient to meet current minimum regulatory capital requirements.
As described above, the uncertainties relating to the estimation of the respective provision will
be removed in the following months and the credit risk will be able to be reliably estimated
during the first half of 2014. The finalization of the restructuring procedure could impact the future
profitability of the Bank and its capital adequacy ratio requirements.
Considering that, as of December 31, 2013, it is not possible to quantify the risk of additional losses
given the fact that the insolvency procedure is on-going, the Parent Bank has confirmed through a
comfort letter dated July 9, 2013 i) its irrevocable commitment to proceed with the recapitalization
of the Bank at the occurrence of losses as resulting from the outcome of the insolvency procedures,
should the regulatory capital of the Bank be lower than the thresholds established from time to
time by the CSSF and ii) its irrevocable commitment to cover any additional residual exposures
of the Bank against this debtor in excess of the 25% of the regulatory capital of the Bank, once
30
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
the outcome of the ongoing insolvency procedure will be finalised and after accounting for any
possible value adjustment resulting thereof.
4. TRANSFERABLE SECURITIES
Transferable securities shown under the various items “Debt securities and other fixed-income
securities”, “Shares and other variable-yield securities”, “Shares in affiliated undertakings”,
“Participating interests” may be broken down as follows into listed and unlisted securities:
2013
Listed
EUR
Cost
Debt securities and other fixed-income securities
Shares and other variable-yield securities
Participating interests
Shares in affiliated undertakings
2013
Unlisted
EUR
–
–
–
–
–
–
11
149.489
3.491.534
3.641.034
Provisions (specific value adjustments)
Net amount (EUR)
2013
Total
EUR
–
11
149.489
3.491.534
3.641.034
(3.241.534)
399.500
2012
Listed
EUR
Cost
Debt securities and other fixed-income securities
Shares and other variable-yield securities
Participating interests
Shares in affiliated undertakings
2012
Unlisted
EUR
89.055.903
–
–
–
89.055.903
–
11
1.211.324
3.491.534
4.702.869
Provisions (specific value adjustments)
Net amount (EUR)
2012
Total
EUR
89.055.903
11
1.211.324
3.491.534
93.758.772
(3.507.565)
90.251.207
5. DEBT SECURITIES AND OTHER FIXED-INCOME SECURITIES
Transferable securities shown under “Debt securities and other fixed-income securities” may be
analysed as follows:
2013
EUR
2012
EUR
Investment portfolio
Structural portfolio
–
–
–
80.000.000
9.055.903
89.055.903
Value adjustments
–
–
(266.031)
88.789.872
31
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
As of December 31, 2012, debt securities and other fixed income securities included:
• An investment of EUR 80.000.000 (EMTN issued by UBI Banca Group) with a maturity
date of January 26, 2013. This security was reimbursed on maturity date.
• Four fixed income securities that were sold during the last quarter of 2013 for a total
amount of EUR 9.038.884.
Net amortised values of premiums and discounts since the acquisition date for the debt securities
and other fixed-income securities amount to:
2012
EUR
Premiums
Discounts
2012
EUR
4.839
616
–
–
6. PARTICIPATING INTERESTS
As at December 31, 2013, the Bank directly held shares in participating interests in the following
company:
Company
Corporation Financière
Européenne SA.
Registered Office
Proportion
of capital held (%)
Book value
Luxembourg
0,30%
149.489
As at December 31, 2013, the Bank held unquoted participating interests into Corporation
Financière Européenne S.A., a Luxembourg registered company offering asset management and
other related financial services in Switzerland, for EUR 149.489 (2012: EUR 1.211.324) i.e. the
0.30% of its share capital (2012: 2.4309%).
As at June 20, 2013, the Bank signed a “Share Purchase Agreement” by which Corporation Financière
Européenne S.A. bought back 241.911 shares on a total of 275.968 of the Bank’s participation.
As at December 31, 2013 and 2012, the Bank has no participating interests in credit institutions.
7. SHARES IN AFFILIATED UNDERTAKINGS
As of December 31, 2013, the Bank directly held shares in the share capital of the following
affiliated undertakings:
Net Book
value
(EUR)
Shareholders’
equity
December 31,
2013
(EUR) (*)
Profit/(Loss)
for the financial
year ended 2013
(EUR)
Registered
Office
Proportion
of capital
held (%)
UBI Trustee S.A.
Luxembourg
100%
250.000
406.665
34.106
UBI Capital Singapore
Pte Ltd (in liquidation)
Singapore
100%
–
322.719 (**)
(1.528.119) (**)
Company
Including the Profit/Loss for the year.
(*)
As per unaudited annual accounts as at December 31, 2013.
(**)
As at December 31, 2013, the Bank held unquoted shares in affiliated undertakings for a purchase
price of EUR 3.491.534 (2012: EUR 3.491.534). A value adjustment of EUR 3.241.534 has been
made on UBI Capital Singapore Pte Ltd..
32
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
As of December 31, 2013 and 2012, the Bank has a participation of 100% for an amount of EUR
3.241.534 in a subsidiary based in Singapore, UBI Capital Singapore Pte Ltd..
At the end of 2012, due to the poor performance of the subsidiary and the stagnation in the
business development, the Bank decided to fully impair the value of participation.
During the first half of 2013, the Bank resolved to liquidate its subsidiary. The liquidation procedure
started on June 14, 2013 and at the end of 2013 is still ongoing waiting for the Tax Clearance by
the Tax Authorities in Singapore. The liquidation closing is expected for 2014 and no liabilities
shall result for the Bank.
As at December 31, 2013 and 2012, the Bank has no shares in credit institutions.
8. MOVEMENTS IN FINANCIAL FIXED ASSETS
During 2013, the movements in financial fixed assets can be summarised as follows (in EUR):
Debt securities and
other fixed-income
securities (note 5)
Participating
interests (note 6)
Shares in affiliated
undertakings (note 7)
Total
Additions
Accumulated
Value
Adjustments
as of
December 31,
2013
Net Book
Value as of
December 31,
2013
Net Book
Value as of
December 31,
2012
Acquisition
cost as of
January 1,
2013
Disposals
80.000.000
(80.000.000)
–
–
–
80.000.000
1.211.324
(1.061.835)
–
–
149.489
1.211.324
3.491.534
84.702.858
–
(81.061.835)
–
–
(3.241.534)
(3.241.534)
250.000
399.489
250.000
81.461.324
Disposals of debt securities are explained by a security matured in January 2013 (see Note 5).
Disposals of participating interest result from the partial sale of the shares in Corporation Financière
Européenne S.A..
9. INTANGIBLE ASSETS
During 2013, the movements in intangible assets were as follows:
Acquisition
cost
January 1,
2013
Additions
Value
Adjustment
of the year
Disposals
Accumulated
Value
Adjustments
as of
December 31,
2013
Net Book
Value as of
December
31, 2013
Net Book
Value as of
December 31,
2012
Formation costs
Goodwill
–
–
(110.200)
–
–
(732.808)
(7.678.153)
2.005.786
2.738.594
Software
–
–
–
9.683.939
7.085.528
390.012
(4.510)
(996.681)
(4.172.787)
3.298.243
3.904.911
16.879.667
390.012
(4.510) (1.729.489) (11.961.140)
5.304.029
6.643.505
Total Intangible
Assets (EUR)
110.200
Goodwill corresponds to the purchase of Artesia Bank Luxembourg S.A. for EUR 2.161.576, the
acquisition of the Madrid Branch for EUR 1.122.655, the acquisition of the Munich Branch for EUR
3.499.776 and the acquisition in 2010 of UBI Banco di Brescia Luxembourg Branch for EUR 2.899.932.
33
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
10. TANGIBLE ASSETS
During 2013, the movements in tangible assets were as follows:
Acquisition
cost
January 1,
2013
Leasehold
Improvements
Machinery &
Equipment
Computer equipment
& software
Total Tangible Assets
(EUR)
Additions
Accumulated
Value
Value
Adjustments
Adjustment
as of
of the year
December
31, 2013
Disposals
285.160
–
–
1.573.707
44.006
1.836.206
3.695.073
(27.826)
Net Book
Value as of
December
31, 2013
Net Book
Value as of
December 31,
2012
(253.746)
31.414
59.240
–
(183.943) (1.409.511)
208.202
348.138
58.637
(14.161)
(134.455) (1.360.397)
520.285
596.104
102.643
(14.161)
(346.224) (3.023.654)
759.901
1.003.482
11. OTHER ASSETS
Other assets are analysed as follows:
2013
EUR
1.469.370
17.309
2.461.710
1.311.429
5.259.818
Short term receivables
Premium on options purchased
Tax advances
Other
2012
EUR
691.833
29.093
672.874
1.307.036
2.700.836
The amount comprised in the caption “Other” is mainly composed of withholding tax for EUR
645.896 (2012: EUR 494.942) and VAT to receive for EUR 287.357 (2012: EUR 97.116).
The caption “Short term receivables” is mainly composed of unsettled transactions for clients
accounts.
12. AMOUNTS OWED TO CREDIT INSTITUTIONS AND CUSTOMERS
The split of the amounts owed to credit institutions and customers according to their remaining
maturity is as follows:
Amounts owed to credit institutions
At sight
Less than 3 months
3 months to 1 year
1 year to 5 years
34
2013
EUR
2012
EUR
11.631.206
4.522.500
6.569.281
1.455.000
24.177.987
16.871
5.252.500
9.921.950
1.530.000
16.721.321
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
2013
EUR
Amounts owed to customers
At sight
Less than 3 months
3 months to 1 year
1 year to 5 years
2012
EUR
1.065.796.938
355.130.078
89.043.738
58.116.000
1.568.086.754
749.718.322
1.020.569.609
134.805.359
–
1.905.093.290
2013
EUR
92.726.963
1.186.500.000
1.888.700.000
3.167.926.963
2012
EUR
105.138.586
1.242.000.000
1.024.489.601
2.371.628.187
13. DEBTS EVIDENCED BY CERTIFICATES
Debts evidenced by certificates are split as follows:
Certificates of Deposit to customers
French Certificates of Deposit
Euro Commercial Paper
Debts evidenced by certificates are split in accordance with their remaining maturity as follows:
2013
EUR
Less than 3 months
3 months to 1 year
1 year to 5 years
2012
EUR
3.075.200.000
31.400.000
61.326.963
2.266.489.601
5.850.000
99.288.586
3.167.926.963
2.371.628.187
Certificates of Deposit to customers
The issue program of Certificates of Deposit (“Bons de Caisse”), amounts to EUR 92.726.963 at
the end of 2013 (EUR 105.138.586 at the end of 2012). These certificates are direct, unconditional,
unsubordinated and unsecured obligations of the Bank and rank pari passu with any other similar
obligation. They receive an ISIN Code and are issued in a dematerialized form hence they are
also freely transferable. No physical delivery is foreseen. Clients Certificates of Deposit consist
in 1.761 debt certificates, with a nominal value of EUR 50.000 and 129 debt certificates with a
nominal value of USD 50.000 each. Interests in EUR are paid on a 3 or 6 month basis at Euribor
+ margin. Interests in USD are paid on a 3 month basis at Libor + margin.
French Certificates of Deposit
The Bank established on September 22, 2010 (modified on December 17, 2010) a EUR 5.000.000.000
(five billion euro) “Certificats de Dépôt” Program for the issuance of French Certificates of Deposit.
They are governed by and construed in accordance with French law. The payments of principal and
interest in respect of the Certificates of Deposit are irrevocably and unconditionally guaranteed by
the Parent Company of UBI Banca International S.A., Unione di Banche Italiane S.c.p.a..
Euro Commercial Paper
The Bank established on August 13, 2010 (modified on December 20, 2010) a EUR 6.000.000.000
(six billion euro) Euro Commercial Paper Program for the issuance of euro-commercial paper
35
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
notes. The notes are governed by and construed in accordance with English law. The payments of
principal and interest in respect of the notes are irrevocably and unconditionally guaranteed by the
parent company of UBI Banca International S.A., Unione di Banche Italiane S.c.p.a..
14. OTHER LIABILITIES
Other liabilities are split as follows:
2013
EUR
Short term payables
Premiums on options written
Sundry creditors
Preferential creditors
Others
2012
EUR
7.442.170
17.309
305.764
1.689.865
426.044
4.823.210
29.094
53.923
1.850.843
211.112
9.881.152
6.968.182
The amount in caption “Short term payables” is mainly composed of unsettled transactions for
client accounts and includes an amount of EUR 265.932 (2012: EUR 2.899.386) concerning a
credit entry in favour of a customer, subject to approval by authorities.
15. TRANSITORY ACCOUNTS
“Prepayments and accrued income” in the assets and “Accruals and deferred income” in the
liabilities mainly consist of accrued interest income and expense.
16. CAPITAL AND RESERVES
The evolution of the capital and the reserves for 2013 can be summarised as follows:
Subscribed
Capital
At the beginning
of the year
70.613.580
Transfer from special
reserve to free reserve
–
Allocation of prior year
profit
–
At the end of the year
70.613.580
Share
premium
account
Legal
reserve
37.286.954
3.343.029
–
Special
reserve
for NWT
(Note 27)
Free
reserve
9.307.600
4.936.492 17.587.121
773.518
Total
reserve
Prior year
profit
– (1.985.500)
1.985.500
–
–
734.842
773.518
(773.518)
7.656.834 18.360.639
–
–
38.676
-
37.286.954
3.381.705
7.322.100
Subscribed capital and share premium
As of December 31, 2013, the subscribed and fully paid capital of the Bank is made up of 138.458
(2012: 138.458) shares with a par value of EUR 510 each. The Bank’s shareholders, as of December
31, 2013, are the following four banks, all of them belonging to UBI Banca S.c.p.a. Group:
Shareholders
UBI Banca Scpa – Bergamo
Banco di Brescia S.p.A. – Brescia
Banca Popolare di Bergamo S.p.A. – Bergamo
Banca Regionale Europea S.p.A. - Cuneo
36
Shares
Shares
126.268
7.591
4.375
224
91,20 %
5,48 %
3,16 %
0,16 %
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
Legal reserve
Under Luxembourg law an amount equal to at least 5% of the annual net profits must be allocated
to a legal reserve until equals 10% of the issued share capital. This reserve is not available for
dividend distribution.
Special reserve for net wealth tax
The special reserve for Net Wealth Tax (“NWT”) is a reserve whose objective is to free the
Bank of the Net Wealth Tax charge, in accordance with Luxembourg law (Note 27) and it can be
summarised as follows:
NWT 2007
NWT 2009
NWT 2010
NWT 2011
2013
EUR
2012
EUR
–
1.942.000
2.663.600
2.716.500
7.322.100
1,985,500
1.942.000
2.663.600
2.716.500
9.307.600
2013
EUR
2012
EUR
860.880
1.378.686
2.239.566
580.792
1.331.783
1.912.575
17. OTHER PROVISIONS
AGDL (Note 18)
Other provisions
Other provisions are mainly composed of Directors’ fees provision for EUR 130.137 (2012: EUR
118.115), of various provisions for suppliers for EUR 347.340 (2012: EUR 153.791), of audit fees
provision for EUR 132.320 (2012: EUR 122.881), of Service Level Agreement signed with UBI
Banca International S.A.’s parent company for EUR 22.165 (2012: EUR 155.600), of portion of
the lump-sum provision attributable to off balance sheet items for EUR 39.165 (2012: EUR -)
and of guarantee fees provision concerning Large Exposures greater than 25% of the Bank’s own
funds EUR 505.558 (2012: EUR 619.404).
18. THE LUXEMBOURG ASSOCIATION FOR THE GUARANTEE OF DEPOSITS
The Bank is a member of the “Association pour la Garantie des Dépôts, Luxembourg” (AGDL),
establishing a mutual guarantee scheme covering deposits made by customers of member credit
institutions (the “Guarantee”). AGDL approved its new statutes on December 17, 2010. Customers
guaranteed by the Association in virtue of their investment transactions include all natural persons
without distinction on grounds of nationality or residence of such persons. The Guarantee in virtue
of their investment transactions is likewise extended to companies governed by Luxembourg law
or by the law of another Member State of the European Community whose size is such that they
are authorised to establish abridged balance sheet pursuant to the law and those of comparable size
governed by the law of another Member State of the European Community.
With respect to each member, the Guarantee is limited to a maximum amount per depositor of EUR
100.000 or its foreign currency equivalent of the amount of his guaranteed cash deposits. No depositor
can receive more than this sum, regardless of the number of accounts or deposits held in the sole or
joint name of the depositor with the same credit institution.
37
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
The AGDL also covers claims arising out of investment transactions. The association shall reimburse
to the investor the amount of his guaranteed claim up to a maximum values equivalent in all currencies
to EUR 20.000.
Following three Icelandic banks incorporated in Luxembourg going into liquidation, the Bank
has been called by the AGDL to pay two installments in 2008 for an amount of EUR 251.791 and
three installments in 2009 for a total amount of 357.088. The maximum quota share of the Bank
(0,1962589%) in respect of this commitment was estimated at EUR 636.762.
During 2009, two amounts were reimbursed by the AGDL for EUR 169.247 and EUR 24.919. During
2010, three amounts were reimbursed by the AGDL for EUR 17.333, EUR 10.509 and EUR 55.239.
During 2011, two amounts were reimbursed by the AGDL for EUR 23.797 and EUR 15.163. During
2012, three amounts were reimbursed by the AGDL for EUR 4.320, EUR 17.870 and EUR 14.511.
During 2013, an amount of EUR 7.172 was reimbursed by the AGDL (see Note 25).
Nevertheless, the CSSF asked the Bank to increase its AGDL Provision up to 1% of guaranteed
deposits within December 31, 2016. The Bank resolved to book the needed complementary
amount of EUR 545.837 through two instalments of EUR 280.088 each in the Financial Years
2013 and 2014.
As at December 31, 2013 a provision of EUR 860.880 (2012: EUR 580.792) is recorded in the
annual accounts in respect of AGDL scheme.
2012
(In EUR)
AGDL Provision
Provision
580.792
280.088
580.792
280.088
Payment
Payable
–
–
2013
–
–
860.880
860.880
19. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
As of December 31, 2013, the equivalent of assets and liabilities denominated in currencies other than
EUR amounts to EUR 128.795.307 (2012: EUR 168.979.989) and EUR 128.554.591 (2012: EUR
168.518.585) respectively.
20. CONTINGENT LIABILITIES
At December 31, 2013 and December 31, 2012, guarantees and other direct substitutes for credit
exclusively represent the contingent liabilities.
21. COMMITMENTS
The Bank’s commitments may be analysed as follows:
2013
EUR
Forward purchase of assets
Forward sales of assets
Confirmed credits not used
411.703
412.280
44.305.552
45.129.535
38
2012
EUR
298.610
298.962
98.174.582
98.772.154
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
22. DERIVATIVE FINANCIAL INSTRUMENTS
The following derivative financial instruments are outstanding:
Notional
value
2013
EUR
Transactions linked to
foreign exchange rates:
Forward exchange contracts
Spot transactions not settled
Transactions linked to
interest rates:
Interest rate swaps
Transactions linked to
other market rates:
Options on variable-yield
securities
Positive
Fair Value
2013
EUR
Negative
Fair Value
2013
EUR
40.055.963
211.707
40.267.670
88.068
8.422
96.490
(82.182)
(6)
(82.188)
41.390.762
41.390.762
12.940
12.940
190.600
190.600
81.849.032
Notional
value
2012
EUR
Positive
Fair Value
2012
EUR
Negative
Fair Value
2012
EUR
55.218.420
151.906
55.370.326
247.996
662
248.658
(230.034)
(1)
(230.035)
(3.561.753)
(3.561.753)
42.358.648
42.358.648
13.135
13.135
(5.291.808)
(5.291.808)
NC
NC
NC
–
803.932
803.932
NC
NC
NC
NC
109.430
(3.643.941)
98.532.906
261.793
(5.521.843)
The outstanding forward currency and interest rate instruments (over the counter) are used for
hedging purposes.
The options on variable-yield securities (organised markets) have been entered into on behalf of
customers who have pledged to the Bank the underlying collateral. The Bank does not fair value
these derivatives on the basis of immateriality.
The table below presents the notional values for each category of derivative financial instruments as
at December 31, 2013 and 2012.
Financial instruments
December 31, 2013
(notional amounts)
Instruments linked to foreign
exchange rates
– forward currency transactions
– spot transactions not settled
Instruments linked to interest rates
Instruments linked to other market rates
Financial instruments
December 31, 2012
(notional amounts)
Instruments linked to foreign
exchange rates
– forward currency transactions
– spot transactions not settled
Instruments linked to interest rates
Instruments linked to other market rates
Less than
three months
Between three
months and
one year
Between one
year and five
years
More than five
years
Total
33.537.468
211.707
6.518.495
–
–
–
–
–
40.055.963
211.707
–
–
41.390.762
–
41.390.762
–
190.600
–
–
190.600
33.749.175
6.709.095
41.390.762
–
81.849.032
Less than
three months
Between three
months and
one year
Between one
year and five
years
More than five
years
Total
46.493.215
151.906
8.725.205
–
–
–
–
–
55.218.420
151.906
–
–
42.358.648
–
42.358.648
771.432
32.500
–
–
803.932
47.416.553
8.757.705
42.358.648
–
98.532.906
39
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
23. FIDUCIARY OPERATIONS
As of December 31, 2013 and 2012, there are no assets and liabilities resulting from fiduciary
operations, which are not expressively governed by the law of July 27, 2003.
24. MANAGEMENT AND AGENCY SERVICES
The Bank provides management and agency services to third parties in the following areas:
• Portfolio management and advice;
• Custody and administration of transferable securities;
• Fiduciary operations;
• Asset management;
• Syndicated loans facilities and factoring services.
25. OTHER OPERATING INCOME
The other operating income is split as follows:
2013
EUR
Release of tax provisions in excess
Rental income
Previous year VAT credit
AGDL Reimbursement (Note 18)
Service Outsourcing
Other
2012
EUR
632
66.786
2.564
48.000
300.350
199.357
7.172
28.142
36.701
27.541
47.586
301.064
450.668
615.227
The amount comprised in the caption “Other” mainly relates to the amount refunded by the
Government for vocational courses of EUR 16.076. The comparative amount of 2012 mainly related
to the reversal of a suppliers’ provision of EUR 116.629 and an amendment on a client’s time deposit
interest of EUR 72.207.
26. OTHER OPERATING CHARGES
As of December 31, 2013, the other operating charges are mainly composed of the AGDL
provision for EUR 280.089 (2012: EUR 36.701), a prior year tax adjustment EUR 2.429 (2012:
EUR 200.339), operational errors for EUR 28.864 (2012: EUR 129.718), closing customers’
accounts for EUR 20.156, non-recoverable tax for securities transactions for EUR 24.267.
27. TAXES
The Bank is liable for all taxes to which the credit institutions are subject to in Luxembourg and to
which the branches are subject to in Spain and Germany.
The Bank reduced its net wealth tax charge by considering it on the amount of the Corporate Income
tax. In order to comply with the law, following conditions need to be fulfilled:
• A reserve equivalent to five times the net wealth tax liability is created (see Note 16). A
new reserve has to be created each year. This requires a decision of the general meeting
of shareholders and this reserve has to appear in the commercial balance sheet. If the
profit of the year is sufficient to create the reserve, it is possible to transfer the profit of the
previous years to create such reserve; and
40
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
• This reserve is maintained for a period of at least five years after the year of the credit.
The amount of the wealth tax that can be reduced is the lower of the net wealth tax and corporate
income tax before tax credits, and the reduction will be equalled to one fifth of the reserve booked.
28. STAFF NUMBERS, ADVANCES AND CREDITS TO MEMBERS
OF THE DIFFERENT BODIES IN THE BANK
In 2013, the Bank employed an average number of personnel of 101 (2012: 97) who were registered
on its payroll.
As of December 31, 2013 and 2012, the personnel working for the Bank is detailed as follows:
Category
Management
Employees
TOTAL
2013
6
94
100
2012
6
95
101
As of December 31, 2013, remuneration paid to Management amounts to EUR 1.418.691 (6 people
concerned) (2012: EUR 1.176.710 (6 people concerned)).
In addition, a total amount of EUR 19.946 has been paid in 2013 as a pension plan in favour of
members of Management (2012: EUR 19.739).
As of December 31, 2013, two loans of total amount EUR 70.169 have been granted to members of
Management (2012: EUR 72.083).
41
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
29. RELATED PARTIES
The annual accounts as of December 31, 2013 and 2012 include the following related party balances
or transactions before value adjustments and lump sum provisions:
2013
EUR
2012
EUR
3.999.946.222
7.779.157
–
250.000
30.382
765.335
19.677.986
391.005.057
172.532
1.286.658
3.094.979.567
18.055.481
80.000.000
250.000
254.261
1.598.118
11.491.321
291.562.293
34.857
1.658.564
Off balance sheet
Forward exchange contracts
Interest Rate Swaps
–
41.390.762
4.350.253
42.358.648
Profit and loss account
Interest receivable and similar income
Interest payable and similar charges
Income from shares and other variable-yield securities
Commission receivable
Commission payable
Profit/(Loss) on financial operations
Other operating income
Wages and salaries
Others administrative expenses
Other operating expense
12.647.368
(2.120.423)
–
233.366
(1.840.327)
–
72.142
(478.829)
(242.394)
(28.818)
41.880.637
(4.687.176)
–
436.068
(1.820.031)
–
75.541
(355.827)
(211.003)
–
Balance sheet
Loans and advances to credit institutions
Loans and advances to customers
Debt securities and other fixed-income securities
Shares in affiliated undertakings
Other Assets
Prepayments and accrued income
Amounts owed to credit institutions
Amounts owed to customers
Other Liabilities
Accruals and deferred income
30. ASSETS HELD FOR THIRD PARTIES
As of December 31, 2013, the total assets held by the Bank on behalf of third parties amount to
EUR 2.781.766.969 (2012: EUR 2.498.265.375).
31. ADDITIONAL INFORMATION ON THE FINANCIAL INSTRUMENTS
As of December 31, 2013 and 2012, the Bank computes the integrated ratio for capital adequacy
purpose.
As of December 31, 2013 and 2012, except for the debts and other fixed-income securities, which
have been detailed in Note 4, all below primary financial instruments are unquoted.
42
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
Analysis of financial instruments – Primary non-trading instruments
As of December 31, 2013, the primary financial instruments detail as follows, based on their
booking value after deduction of specific adjustments but before allocation of lump sum provision:
Less than 3
Months
3 Months to 1
Year
More than
5 Years
Undetermined
Total
Years
1 to 5
EUR
EUR
EUR
EUR
EUR
EUR
2013
Balance with Central Bank
Zone
A
55.360.644
–
–
–
–
55.360.644
Cash in hand and post office banks
Zone
A
34.498
–
–
–
–
34.498
Loans and Advances
Bank
Zone
A
3.968.308.108
78.000.000
–
–
–
4.046.308.108
Loans and Advances
Bank
Zone
B
5.525.644
2.681.314
–
–
–
8.206.958
Loans and Advances
Financial Institutions
Zone
A
59.495.628
27.885.585
92.368.215
29.515.000
–
209.264.428
Loans and Advances
Financial Institutions
Zone
B
589.080
3.000.000
–
–
–
3.589.080
Loans and Advances
Corporates
Zone
A
326.277.678
10.139.563
76.340.167
49.976.843
–
462.734.251
Loans and Advances
Corporates
Zone
B
13.683.872
–
–
–
–
13.683.872
Loans and Advances
Public Issuers
Zone
A
21.167.283
50.000.000
–
–
–
71.167.283
Loans and Advances
Individuals
Zone
A
6.621.736
1.046.458
1.106.446
322.288
–
9.096.928
Loans and Advances
Individuals
Zone
B
943
–
–
–
–
943
Debts and Other Fixed-Income
Securities
Public Issuers
Zone
A
–
–
–
–
–
–
Debts and Other Fixed-Income
Securities
Banks
Zone
A
–
–
–
–
–
–
Debts and Other Fixed-Income
Securities
Banks
Zone
B
–
–
–
–
–
–
Debts and Other Fixed-Income
Securities
Financial Institutions
Zone
A
–
–
–
–
–
–
Debts and Other Fixed-Income
Securities
Financial Institutions
Zone
B
–
–
–
–
–
–
Shares and other variable yield
Securities
Financial Institutions
Zone
A
–
–
–
–
11
11
Shares and other variable yield
Securities
Financial Institutions
Zone
B
–
–
–
–
–
–
Total of Primary Financial
Instruments
(Assets)
4.457.065.114
172.752.920
169.814.828
79.814.131
11
4.879.447.004
Less than 3
Months
3 Months
to 1 Year
1 Year to 5
Years
More than
5 Years
Total
EUR
EUR
EUR
EUR
EUR
2013
Deposits
Bank
Zone
A
16.153.706
6.569.281
1.455.000
-
24.177.987
Deposits
Public Bodies
Zone
A
338.245
-
-
-
338.245
Deposits
Financial Institutions
1.251.611.435
84.413.470
58.116.000
-
1.394.140.905
Deposits
Corporates
76.371.727
26.484
-
-
76.398.211
Deposits
Individuals
92.605.608
4.603.785
-
-
97.209.393
Debt evidenced by certificates
Other
3.075.200.000
31.400.000
61.326.963
-
3.167.926.963
16.285.779
16.599.232
7.569.380
28.660.236
69.114.627
5.440.324
22.348.732
6.742.481
10.597.998
45.129.535
4.534.006.824
165.960.984
135.209.824
39.258.234
4.874.435.866
Contingent liabilities
Commitments
Total of Primary Financial
Instruments
(Liabilities)
43
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
Analysis of financial instruments – Primary non-trading instruments
As of December 31, 2012, the primary financial instruments detail as follows, based on their
booking value after deduction of specific adjustments but before allocation of lump sum provision:
Less than 3
Months
3 Months to 1
Year
More than
5 Years
Undetermined
Total
Years
1 to 5
EUR
EUR
EUR
EUR
EUR
EUR
2012
Balance with Central Bank
Zone
A
225.646.055
–
–
–
–
225.646.055
Cash in hand and post office banks
Zone
A
76.800
–
–
–
–
76.800
Loans and Advances
Bank
Zone
A
3.107.599.981
26.051.841
–
–
–
3.133.651.822
Loans and Advances
Bank
Zone
B
30.270
–
–
–
–
30.270
Loans and Advances
Financial Institutions
Zone
A
82.670.926
52.086.610
81.717.321
24.568.011
–
241.042.868
Loans and Advances
Financial Institutions
Zone
B
1.671.187
3.175.000
116.667
–
–
4.962.854
Loans and Advances
Corporates
Zone
A
478.057.544
10.696.366
91.573.949
19.433.594
–
599.761.453
Loans and Advances
Corporates
Zone
B
40.975.116
–
–
–
–
40.975.116
Loans and Advances
Public Issuers
Zone
A
23.106.995
1.289.798
53.009.530
–
–
77.406.323
Loans and Advances
Individuals
Zone
A
7.436.677
1.335.181
2.494.307
449.467
–
11.715.632
Loans and Advances
Individuals
Zone
B
4.347
–
–
–
–
4.347
Debts and Other Fixed-Income
Securities
Public Issuers
Zone
A
–
–
–
–
–
–
Debts and Other Fixed-Income
Securities
Banks
Zone
A
80.000.000
–
2.347.000
–
–
82.347.000
Debts and Other Fixed-Income
Securities
Banks
Zone
B
–
–
–
–
–
–
Debts and Other Fixed-Income
Securities
Financial Institutions
Zone
A
–
–
6.210.040
232.832
–
6.442.872
Shares and other variable yield
Securities
Financial Institutions
Zone
A
–
–
–
–
11
11
Total of Primary Financial
Instruments
(Assets)
4.047.275.898
94.634.796
237.468.814
44.683.904
11
4.424.063.423
Less than 3
Months
3 Months
to 1 Year
1 Year to 5
Years
More than
5 Years
Total
EUR
EUR
EUR
EUR
EUR
2012
Deposits
Bank
Zone
A
5.269.371
9.921.950
1.530.000
-
16.721.321
Deposits
Public Bodies
Zone
A
800
-
-
-
800
Deposits
Financial Institutions
1.552.272.193
121.552.287
-
-
1.673.824.480
Deposits
Corporates
133.992.871
1.662.162
-
-
135.655.033
Deposits
Individuals
84.022.066
11.590.911
-
-
95.612.977
Debt evidenced by certificates
Other
2.266.487.601
5.850.000
99.288.586
-
2.371.626.187
Contingent liabilities
26.781.431
14.760.941
14.715.476
33.278.899
89.536.747
Commitments
34.719.745
39.971.328
10.687.321
13.393.760
98.772.154
4.103.546.078
205.309.579
126.221.383
46.672.659
4.481.749.700
Total of Primary Financial
Instruments
(Liabilities)
Zone A includes all member states of the European Union, together with all other full members of
OECD and those countries which have concluded special lending agreements with the International
Monetary Fund (“IMF”) or are party to the IMF General Lending Agreements.
44
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
Analysis of financial instruments – Derivative non trading instruments
As of December 31, 2013, the derivative financial instruments outstanding detail as follows, based on
their nominal value:
Financial derivative
instruments
Linked to foreign interest rates:
Swap contracts
Linked to foreign exchange rates:
Forward contracts
Spot transactions not settled
Linked to other market rates:
Options on variable-yield securities
Total of financial derivative
instruments (EUR)
At sight to 3
months
3 months
to 1 year
1 Year to 5
years
More than
5 years
2013
Total
2012
Total
–
–
41.390.762
–
41.390.762
42.358.648
33.537.468
6.518.495
–
–
40.055.963
55.218.420
211.707
–
–
–
211.707
151.906
–
190.600
–
–
190.600
803.932
33.749.175
6.709.095
41.390.762
–
81.849.032
98.532.906
All above derivative instruments, except options on variable-yield securities, are unquoted. None
of them are classified in the trading book of the Bank.
Credit Risk schedule of derivative financial instruments
The below schedule details the credit risk associated with the derivative financial instruments (except options
on variable-yield securities) of the Bank, concluded over-the-counter, based on the value at risk method.
December 31, 2013
Degree of solvability of
counterparties
Notional
amounts
Replacement
cost
Risk
equivalent
amounts
Net credit
exposures
Bank counterparties
- weighted at 20%
- weighted at 100%
Customer counterparties
- weighted at 75%
- weighted at 100%
Total (EUR)
61.420.173
20.029.411
41.390.762
20.238.259
20.238.259
–
81.658.432
26.138 (1)
26.138
–
70.352 (2)
70.352
–
96.490
407.248
200.294
206.954
202.383
202.383
–
609.631
433.386
226.432
206.954
272.735
272.735
–
706.121
(1)
(2)
This amount is the net fair value of the instruments linked to foreign exchange rates and interest rate swaps with Bank counterparties.
This amount is the net fair value of the instruments linked to foreign exchange rates with private customer counterparties.
December 31, 2012
Degree of solvability of
counterparties
Notional
amounts
Replacement
cost
Bank counterparties
- weighted at 20%
- weighted at 100%
Customer counterparties
- weighted at 75%
- weighted at 100%
Total (EUR)
69.990.483
27.631.835
42.358.648
27.738.491
5.347.315
22.391.176
97.728.974
24.798 (1)
24.798
–
15.438 (2)
(1)
(2)
–
15.438
40.236
Risk
equivalent
amounts
Net credit
exposures
488.111
276.318
211.793
277.263
53.473
223.790
765.374
512.909
301.116
211.793
292.701
53.473
239.228
805.610
This amount is the net fair value of the instruments linked to foreign exchange rates and interest rate swaps with Bank counterparties.
This amount is the net fair value of the instruments linked to foreign exchange rates with private customer counterparties.
Prior year figures have been restated in the above table in order to ensure comparability with current
year presentation.
45
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
Analysis by geographical area – Loans and advance, contingent liabilities and commitments
As of December 31, 2013, the loans and advances, contingent liabilities and commitments detail as
follows, based on their booking value after deduction of specific adjustments but before allocation
of lump sum provision:
Loans and
advances
Loans and
advances
Contingent
liabilities and
commitments
Contingent
liabilities and
commitments
Geographical areas
31.12.2013
EUR
31.12.2012
EUR
31.12.2013
EUR
31.12.2012
EUR
Italy
Luxembourg
USA
Great Britain
Netherlands
Belgium
Germany
Denmark
Switzerland
France
Greece
Panama
Austria
Turkey
Ireland
Iceland
Chile
Ecuador
British Virgin Islands
Spain
Portugal
Andorra
Argentina
Namibia
Saudi
Others
1.010.454.144
89.437.672
24.757.054
8.186.242
1.869.720
16.103.164
175.462.209
470.628
18.948.201
11.291.566
54.790
3.626.117
4.648.279
33.337.886
628.149
353.089
2.810.229
2.905.794
1.151
293.056.931
23.986.897
45.546
1.699.519
3.601.737
800
21.621.864
920.430.987
103.011.584
33.177.799
8.214.682
3.271.709
23.018.391
169.858.351
2.828.541
18.339.383
9.494.229
141.025
3.590.143
2.229.473
29.419.595
69.041
353.089
556.278
11.933.812
2.476
447.356.340
15.934.691
194.807
11.988.402
11.230.438
887.655
16.514.388
8.369.623
14.269.105
3.106.442
247.835
35.500
15.852.153
158.642
28.760
1.467.091
55.877
4.000
36.753
66.503.656
4.108.725
11.035.984
44.830.508
3.157.681
201.602
7.500
44.320
23.710.678
3.511.681
108.815
4.000
1.202.600
56.369
112.738
96.145.721
4.178.704
Total (EUR)
1.749.359.378
1.844.047.308
114.244.162
188.308.901
Within the program of the issuance of French Certificates of Deposit and Euro Commercial Paper
(Note 13), the Bank places the inflow liquidity with its Parent Company.
These amounts are not included in the table above as they are irrevocably and unconditionally
guaranteed by the Parent Company of UBI Banca International S.A., Unione di Banche Italiane
S.c.p.a..
32. GEOGRAPHICAL ANALYSIS OF INCOME
The Bank derives most of its income from transactions with customers and credit institutions
established in European Union countries.
46
NOTES TO THE ANNUAL ACCOUNTS
AS AT DECEMBER 31, 2013
UBI BANCA
INTERNATIONAL S.A.
33. AUDIT FEES
Fee billed to the Bank by Deloitte Audit S.à r.l., and other members firms of the Deloitte network
during the year are as follows:
(excluding VAT)
Audit fees
Audit related fees
TOTAL
2013
193.634
24.000
2012
184.000
24.000
217.634
208.000
Such fees are presented under “other administrative expenses” in the profit and loss account.
34. SIGNIFICANT POST BALANCE SHEET EVENTS
With respect to the insolvency procedure of one of the major customers of the Branch in Madrid,
discussed under Note 3 to these accounts, it should be noted that on March 3rd, 2014 one
restructuring proposal has been submitted to the competent bankruptcy Court, which is expected
to admit it or reject it on procedural grounds by March 14th; in case of admission, the deadline of
March 31st, 2014 would then apply for the creditors to vote in favor or against such a proposal.
Although at the date of these accounts it is not known whether a majority of creditors will approve
the restructuring plan, and although a certain number of uncertainties still remain with respect to
the individual position of the Bank, based on a preliminary assessment of its complex legal and
financial provisions the Board is of the opinion that, should this proposal be approved, the amount
of provisions already booked appears to be sufficient to cover the resulting haircut.
47

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