As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/02/04  Sanpaolo Imi SpA                  CB                    19:64M  Banca Fideuram SpA                Merrill Corp/New/FA

Document/Exhibit                   Description                      Pages   Size 

 1: CB          Rights/Exchange/Tender Offer Notification/Response  HTML     33K 
 2: EX-1.0      Underwriting Agreement                              HTML     30K 
 3: EX-2.0      Plan of Acquisition, Reorganization, Arrangement,   HTML     33K 
                          Liquidation or Succession                              
 4: EX-3.0      Articles of Incorporation/Organization or By-Laws   HTML    107K 
 5: EX-4.0      Instrument Defining the Rights of Security Holders  HTML     72K 
 6: EX-5.0      Opinion re: Legality                                HTML    139K 
 7: EX-6.0      Opinion re: Discount on Capital Shares              HTML    642K 
 8: EX-7.0      Opinion re: Liquidation Preference                  HTML    511K 
 9: EX-8.0      Opinion re: Tax Matters                             HTML     12K 
10: EX-9.0      Voting Trust Agreement                              HTML    191K 
11: EX-10.0     Material Contract                                   HTML     17K 
12: EX-11.0     Statement re: Computation of Earnings Per Share     HTML     83K 
13: EX-12.0     Statement re: Computation of Ratios                 HTML  11.61M 
14: EX-13.0     Annual or Quarterly Report to Security Holders      HTML   7.78M 
15: EX-14.0     Material Foreign Patent                             HTML   8.74M 
16: EX-15.0     Letter re: Unaudited Interim Financial Information  HTML   2.53M 
17: EX-16.0     Letter re: Change in Certifying Accountant          HTML   2.23M 
18: EX-17.0     Letter re: Departure of Director                    HTML   2.08M 
19: EX-18.0     Letter re: Change in Accounting Principles          HTML     15K 

 

 

Transparency and financial discipline

 

Annual Report 2001

 

 

THINK private.

 

 

 

 

 

Mission

 

Banca Fideuram brings private investors highly-sophisticated portfolio management services that were previously available to institutional investors only.

 

LETTER TO SHAREHOLDERS AND CUSTOMERS
CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

 

 

Assets under management (AUM)

(in billions of euros)

 

		2001		2000		% change
Mutual funds		16.3		25.3		-36
Private banking		14.7		9.6		+53
Insurance / Pension funds		6.5		5.7		+14
Securities / Current accounts		11.2		8.9		+26
		48.7		49.5		-2

 

 

 

 

Net inflows

(in billions of euros)

 

		2001		2000		% change
Mutual funds		(7.0	)	1.6		-538
Private banking		6.5		3.8		+71
Insurance / Pension funds		0.9		0.7		+29
Securities / Current accounts		3.3		1.5		+120
		3.7		7.6		-51

 

 

Network

 

		2001		2000		% change
Private bankers		3,795		3,782		—

 

 

 

Financial highlights

(consolidated figures in millions of euros)

 

		2001		2000		% change
Net commissions		493.8		408.2		+21
Total net interest and net revenues		600.8		546.7		+10
Administrative costs and depreciation of assets		(302.5	)	(252.0	)	+20
Income from operating activities		226.8		252.5		-10
Net income		225.9		223.7		+1
E.V.A. (mln. euros)		151.5		163.8		-8
R.o.E. (%)		25.5		29.5		-14
Cost income ratio (%)		50.3		46.1		+9

 

 

1

 

INTRODUCTION

 

LETTER TO SHAREHOLDERS AND CUSTOMERS

 

 

The crisis in the markets and the value of transparency

 

2001 was a year that the financial industry is unlikely to forget.

 

It was the second consecutive year in which the stock markets turned in a negative performance, something that had not happened since 1973-74.

 

2001 reconfirmed a number of accepted truths. Firstly that the financial markets are dominated by uncertainty, which is greatest in the short term, and secondly that ours is a cyclical business.

 

No one had foreseen a global crisis on this scale. After the first quarter of 2001, which is to say 12 months on from the beginning of the “correction”, and after three US interest rate cuts and falls that saw the NASDAQ down 63.5% and S&P 500 down 24% from their peak values, the worst was thought to be over.

 

Unfortunately, no one had realised that this crisis was different from those of the past 20 years, which we had learned how to interpret and control, and was instead similar to those of the late 19th century, caused by overinvestment (this time in information technology) during a period of low inflation and falling profits.

 

That is why we were unable to reduce the impact of this crisis on our customers’ investments as much as we would have liked, despite limiting the damage through portfolio diversification and rigorously maintaining the quality of our assets under management, which was and continues to be of the highest level at all times.

 

We always talk straight with our customers and if current market trends mean that prior investment targets are no longer realistic, we handle the situation with the greatest possible transparency.

 

Last year saw us analysing the lessons of the crisis in rigorous detail, developing many technical advancements and enhancing the sophisticated coverage of our product range.

 

This work has further strengthened Banca Fideuram’s position as a manager of long-term financial investments, confirming that the long-term is, indeed, the only investment horizon that enables a portfolio to be optimised using appropriate risk-management techniques.

 

2

 

 

Results

 

Notwithstanding the dire market conditions, Banca Fideuram turned in a solid performance, with positive net inflows of 3.7 billion euros and consolidated net income of 225.9 million euros, in line with the previous year.

 

Moreover, net inflows were positive in every single month of the year excepting September. In addition, inflows from insurance premiums rose to 1,359 million euros (1,082 million in 2000). This result augurs well for our work in the years to come. Thanks to these net inflows and notwithstanding the negative performance of the markets, Assets Under Management (AUM) fell by only 2% compared to year-end 2000.

 

2001 marked the end of the three-year growth plan launched in 1999 with the objective of:

• Achieving net inflows of between 16.9 and 19.6 billion euros

• Recruiting 1,200 new private bankers

• Obtaining a consolidated ROE of 30% in the last year.

 

At the end of the period we had:

• Achieved net inflows of 17.6 billion euros, 4% more than our minimum target

• Recruited 1,307 new private bankers

• Obtained a consolidated ROE of 25.5% (after having reached 29.5% in 2000).

 

In short, we achieved two out of our three targets.

 

3

 

In addition, the quality of growth achieved is also worthy of emphasis.

 

Firstly, the cost of organic growth (ratio of marketing costs to net inflows) was in the region 2.5%, in line with projections. The cost of the assets under management that could have been obtained through an external acquisition would have been much greater, as indeed would have been the risk involved.

 

Secondly, the private bankers recruited during the three-year period achieved above-average productivity for the banking system as a whole, in line with Banca Fideuram standards. AUM per private banker averaged 7.2 million euros (“class of 1999”), 5.4 million (2000) and 3.1 million (2001). These figures compare more than favourably with the 3.7 million euros average AUM per financial consultant for Italy as whole*, irrespective of seniority and therefore the time spent accumulating the assets concerned.

 

Thirdly, although ROE was lower than planned in 2001, consolidated net profits were higher at 608 million euros rather than the 558 million planned. The fall in ROE between 2000 and 2001 wasn’t just the result of stable net profits, but also of 10% growth in shareholders’ equity, which currently amounts to over 1/6 of our consolidated assets.

 

Banca Fideuram thus emerged from the 1999-2001 three-year plan as a considerably bigger player (AUM + 51%) that at the same time continues to achieve high profitability and capitalisation.

 

 

These results were achieved thanks to the confidence our customers place in us, as well as the unstinting dedication and expertise of the Bank and Group Companies’ staff, and above all of the 3,800 private bankers in the Fideuram Network.

 

* Excluding Banca Fideuram

 

4

 

Market prospects and scenario

 

Although the short-term market prospects have improved significantly since the 4th quarter of 2001, they are still far from clear.

 

There is still considerable uncertainty regarding the timing and extent of the recovery due to the continuing influence of a large number of economic and geopolitical unknowns.

 

The medium term prospects are easier to outline, being influenced, amongst other salient elements, by demographic factors (ageing of the population and increase in life expectancy) and related pensions matters: the over-seventies will account for 30% of the Italian population by 2020.

 

The need to maintain an adequate standard of living after retirement will, in this context and in the light of the likely restrictive measures regarding public pensions, lead to a steady increase in private savings.

 

The age structure of the workforce will be particularly favourable in this respect between now and the end of the decade, since the over-thirty-gives, the age group with the highest earning and saving power, will reach their highest absolute and relative levels.

 

 

We find ourselves, in short, with a window of opportunity that is of particular interest for the provision of pensions services as part of effective long-term financial planning.

 

5

 

Strategic planning

 

Although reasonably optimistic, we consider it preferable to adopt a prudent short-term economic scenario for planning purposes, working on the assumption that there will be a slow recovery and continued high market volatility.

 

We have consequently suspended the launch of our next three-year plan, which was due in the fourth quarter of last year, in consideration of the fact that the market prospects are far from clear. It would, indeed, have been too risky to fix long-term targets in conditions of great uncertainty.

 

We therefore decided to concentrate on our 2002 annual plan, while continuing a strategic initiative to further strengthen our long-term partnership with our private bankers.

 

This plan is centred on two main criteria: realism and the creation of value.

 

We aim to create value by extending the length of our customer relationships. This strategic choice of increasing the duration of revenues is in tune with the needs of private investors in a context where the onus for creating pensions “reserves” has shifted from the public sector to the private individual.

 

 

The 2002 plan has two main operating targets:

•                  Total net inflows of at least 3 billion euros.

•                  New life insurance premium inflows of 1.5 billion euros, an increase of 50% on 2001.

 

The target for total net inflows takes into account the exceptionally unfavourable circumstance that we have two consecutive years of negative stock market performance behind us.

 

6

 

The 2002 plan does, however, allow for increasing the target without any cost increases if the stock markets improve significantly during the first half of the year.

 

The premium inflows target reflects our strategic choice to increase the importance of life insurance in our business. There are a number of reasons for this in addition to the needs of customers considered above:

•                  Life policies with annuity options are perhaps the most natural representative of the financial planning that is the distinctive competency of our model of modern private banking.

•                  The long duration of these policies (10-15 years) is consistent with the objective of optimising investment through our strategic asset allocation systems.

•                  An investor’s tolerance of short-term volatility is greater for programmes with explicit long-term pensions objectives.

 

As stated previously, the plan includes expanding our policies for incentivising the loyalty of our private bankers.

 

This new plan, named “Fideuram Partnership”, is focused on those private bankers that achieve a portfolio of at least 15 million euros at the end of 2002. A sum shall be set aside for this portfolio that increases in proportion to AUM. This sum, which will be invested in pensions policies, shall be paid to the beneficiary upon their retirement providing assets under management have not fallen below the 15 million euro threshold.

 

The end purpose of the “Fideuram Partnership” is to further consolidate and extend the duration of assets under management by increasing the recognition we afford the loyalty of our private bankers. This initiative, which is above all right and proper where our top partners are concerned, also reflects our assessment that it will be more appropriate at this stage to focus on our strongest current resources rather than to pursue recruitment policies that require a significant financial commitment while also carrying an element of risk.

 

The same cautious approach to new investments has led us to focus our internationalisation strategy on France at this stage.

 

7

 

Banque Privée Fideuram-Wargny has now begun operations and is engaged in implementing the 2002-2004 plan for advancing the “Fideuram model” of private banking. Its target is to achieve net inflows of 1 billion euros in this three-year period.

 

Internationalisation is not an easy business. It requires long-term commitment, focus, independent local management and the ability to adapt effectively. Applying these rules consistently will ensure our success.

 

Transparency and financial discipline

 

We are well aware that the financial industry’s belle époque of the Eighties and Nineties has probably come to an end.

 

The markets are looking for new equilibrium as the 2000-2001 crisis comes to an end.

 

We are confident that we have a clear mission in the years ahead, in particular to help customers make up for a pensions deficit that has reached unacceptable proportions. Moreover, we are equally confident that it is a mission we have both the competencies and resources to fulfil.

 

Greater virtues are however required in the more complex economic scenario that characterises the beginning of this century.

 

Fortunately investors and the markets have now adopted a zero-tolerance position regarding any form of slick financial gimmick. They have likewise made clear their appreciation of the qualities of transparency and financial discipline.

 

Total respect for these values has been a constant cornerstone of our approach to our customers, our strategic planning and our relationships with the financial community and markets.

 

 

8

 

BOARD OF DIRECTORS

 

Mario Prati*		Chairman
Franca Cirri Fignagnani*		Deputy Chairman
Ugo Ruffolo*		Managing Director
Carlo Giuseppe Angelini*		Director
Italo Cacopardi*		Director
Giorgio Forti		Director
Giampietro Nattino		Director

 

* Members of the Executive Committee
Giovanni Campanini		Secretary to the Board of Directors

 

BOARD OF AUDITORS

 

Mario Paolillo		Chairman
Vito Codacci Pisanelli		Statutory auditor
Gian Paolo Grimaldi		Statutory auditor

 

GENERAL MANAGEMENT

 

Ugo Ruffolo		General Manager
Mario Cuccia		Joint General Manager
Claudio Sozzini		Deputy General Manager

 

AUDITING COMPANY

 

PricewaterhouseCoopers S.p.A.

 

 

9

 

GROUP STRUCTURE AS AT 1.1.2002

 

 

10

 

Managed savings environment

 

Assets (source Bank of Italy)

(in billions of euros)

 

		2000		1999		1998		1997		1996
Household financial assets in Italy (HFA)		2,602		2,569		2,342		2,062		1,811
Managed savings (MS)		830		850		692		468		343
• Mutual funds		450		475		372		190		102
• Private banking		392		370		281		194		135
• Life insurance technical reserves		165		138		106		85		68
• Pension funds		76		73		56		54		54
• Adjustments		(253	)	(206	)	(123	)	(55	)	(16	)
MS as % of HFA		32	%	33	%	30	%	23	%	19	%

 

Flows (source Bank of Italy)

(in billions of euros)

 

		2000		1999		1998		1997		1996
Household financial assets in Italy (HFA)		97		94		71		78		90
Managed savings (MS)		10		69		193		102		64
• Mutual funds		(7	)	61		162		73		30
• Private banking		33		54		75		44		26
• Life insurance technical reserves		27		32		21		18		11
• Pension funds		4		5		3		3		(1	)
• Adjustments		(47	)	(83	)	(68	)	(36	)	(2	)
MS as % of HFA		10	%	73	%	272	%	131	%	71	%

 

11

 

Key ratios

 

		2001		2000		1999		1998		1997
Net income (million euros)		225.9		223.7		157.9		152.2		107.4
EVA (million euros)		151.5		163.8		108.9		99.7		53.9
R.o.E. (%)		25.5		29.5		23.4		25.9		20.6
Cost / income ratio (%)		50.3		46.1		50.3		46.4		48.7
Shareholders’ equity (million euros)		1,047.3		948.4		791.3		713.3		612.4
Net income per share (euros)		0.2484		0.2460		0.1736		0.1674		0.1182
Net income / average Assets under management (%)		0.46		0.48		0.42		0.53		0.47
Banca Fideuram market share of household financial assets in Italy (%)		n.a.		1.90		1.69		1.37		1.23
Total consolidated Balance sheet assets (million euros)		12,641.1		10,925.5		9,753.3		8,449.5		6,772.8
including: assets of insurance companies (million euros)		6,453.9		5,620.1		4,983.9		4,409.7		3,765.6
Assets under management (million euros)		48,662		49,497		43,499		32,166		25,440
Net inflows (million euros)		3,671		7,656		6,225		4,306		3,239
Private bankers (no.)		3,795		3,782		3,509		3,168		2,813
Employees (no.)		1,771		1,715		1,417		1,221		1,180
Branches (no.)		82		74		63		57		53
Private banker’s offices (no.)		99		97		100		102		99
Issuer credit rating (Standard & Poor’s)		long term: A+		short term: A-1				outlook: positive

 

n.a. = not available

 

GLOSSARY

 

EVA™(Economic Value Added): is calculated by subtracting the shareholder’s expected return on the consolidated shareholders’ equity (cost of capital) from the net income. The expected return equals the net return on 12-month Treasury Bills issued at the beginning of the year plus a market risk premium which is assumed to be constant at 4.5 percent over the periods concerned.

R.o.E.: the ratio between net income and average of shareholders’ equity at the beginning and at the end of the period.

Cost / income ratio: operating costs/total net interest and net revenues. Operating costs comprise administrative expenses plus the depreciation of tangible and intangible assets, excluding the amortisation of goodwill.

Shareholders’ equity: the sum of share capital, all reserves, negative consolidation differences and net income.

Total consolidated Balance sheet assets: comprises the assets of the consolidated companies plus the assets of the Group’s insurance companies.

Assets under management: this item comprises two subitems: (a) managed savings and (b) not managed savings.

(a)          Managed savings includes the assets under management of     mutual funds, the equities of pension funds, private banking and the technical reserves of life insurance activities.

(b)         Not managed savings includes securities deposited with the bank (excluding units in the Group’s mutual funds), the technical reserves of P&C insurance activities and current accounts balances.

Net inflows: gross inflows net of repayments and sales.

Private bankers: professionals in the italian national register of financial advisers.The number includes insurance consultants (in training).

Branches: unit with banking facilities of Banca Fideuram only.

 

12

 

Banca Fideuram Share Information

 

		2001		2000		1999		1998		1997		1996		1995
Share price
• period end (euros)		9.006		14.860		11.890		6.096		4.058		1.713		0.946
• maximum (euros)		15.752		20.050		11.890		7.156		4.129		1.960		1.047
• minimum (euros)		5.025		9.957		4.691		3.165		1.676		0.920		0.850
Market capitalisation (million euros)		8,189		13,512		10,811		5,543		3,690		1,557		860
Price / Net income per share		36.2		60.4		68.7		36.4		34.3		20.0		14.8
Price / Book value		7.8		14.2		13.7		7.8		6.0		2.9		1.8

 

 

13

 

CONTENTS

 

Consolidated financial statements and notes
•   Consolidated Balance sheet (reclassified)
•   Consolidated Statement of income (reclassified)
Main results and closing of the three year plan
•    Banca Fideuram Group results
•    Close of the 1999/2001 three year growth plan and new 2002 plan
Operating results
•    Assets and inflows
•    Life insurance
•   Embedded value and embedded value earnings of life insurance, mutual funds and private banking businesses
Financial results
•    Consolidation area
•    Analysis of the Statement of income
•    Asset and liability management
•    Consolidated shareholders’ equity
•    Reconciliation of the parent company’s shareholders’ equity and results with those of the Group
•    Consolidated balance sheet and statement of income including the balance sheets and statements of income of the Group’s insurance companies consolidated on a line-by-line basis
Human resources, products and services
•    Private bankers and employees
•    Fideuram online
•    Research and development products and activities
•    Systems and information management
Expansion abroad
•    Foreign Banks
Supplementary information
•    Internal audit
•    Subsequent events and business outlook for the current year
Consolidated financial statements
•    Balance sheet
•    Statement of income
•    Notes to the consolidated financial statements
•    Statement of consolidated cash flows
Independent auditors’ report

 

14

 

 

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

 

15

 

CONSOLIDATED BALANCE SHEET

 

(RECLASSIFIED)

 

		31.12.2001		31.12.2000		Change
		Euros		Euros		Euros		%
		(mln.)		(mln.)		(mln.)
ASSETS
Cash and deposits with central banks		29.3		11.4		17.9		157
Loans:
• loans to customers		484.8		343.3		141.5		41
• due from banks		3,389.1		3,015.0		374.1		12
Dealing securities		1,302.9		846.4		456.5		54
Fixed assets:
• Investment securities		25.5		36.4		(10.9	)	30
• Equity investments		301.1		308.4		(7.3	)	2
• Intangible and tangible fixed assets		90.7		86.1		4.6		5
Goodwill arising on consolidation and application of the equity method		81.4		100.9		(19.5	)	19
Other assets		482.4		557.5		(75.1	)	13
TOTAL ASSETS		6,187.2		5,305.4		881.8		17
LIABILITIES AND SHAREHOLDERS’ EQUITY
Payables:
• due to customers		3,560.2		2,720.4		839.8		31
• due to banks		506.9		468.6		38.3		8
• securities issued		3.4		3.3		0.1		3
Provisions		162.2		181.1		(18.9	)	10
Other liabilities		703.1		773.8		(70.7	)	9
Subordinated liabilities		200.5		200.0		0.5		—
Minority interests		3.6		9.8		(6.2	)	63
Shareholders’ equity:
• Share capital		236.4		236.4		—		—
• Reserve for own shares		400.0		—		400.0		n.s.
• Other reserves		183.7		487.0		(303.3	)	n.s.
• Negative goodwill upon consolidation and application of the equity method		1.3		1.3		—		—
• Net income		225.9		223.7		2.2		1
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		6,187.2		5,305.4		881.8		17

 

n.s. = not significant

All percent changes are expressed as absolute values.

 

16

 

CONSOLIDATED STATEMENT OF INCOME

 

(RECLASSIFIED)

 

		2001		2000		Change
		Euros		Euros		Euros		%
		(mln.)		(mln.)		(mln.)
Interest income and similar revenues		222.6		174.0		48.6		28
Interest expense and similar charges		(157.5	)	(103.9	)	(53.6	)	52
Net dealing profits		10.7		(0.5	)	11.2		n.s.
Net interest income		75.8		69.6		6.2		9
Net commissions		493.8		408.2		85.6		21
Income from investments carried at equity		7.9		48.4		(40.5	)	84
Other revenues, net		23.3		20.5		2.8		14
Total net interest and net revenues		600.8		546.7		54.1		10
Administrative costs		(272.5	)	(224.4	)	(48.1	)	21
Gross operating income		328.3		322.3		6.0		2
Adjustments:
• to intangible and tangible fixed assets		(54.6	)	(58.3	)	3.7		6
• to loans and provisions for guarantees and commitments		(3.8	)	(3.0	)	(0.8	)	27
• to financial fixed assets		—		—		—		—
Write-backs of financial fixed assets		0.2		—		0.2		—
Provisions for risks and charges		(44.3	)	(9.2	)	(35.1	)	n.s.
Write-backs of loans and provisions for guarantees and commitments		1.0		0.7		0.3		43
Operating income		226.8		252.5		(25.7	)	10
Net extraordinary income		10.4		1.7		8.7		n.s.
Income before taxes and minority interests		237.2		254.2		(17.0	)	7
Income taxes		(11.1	)	(30.5	)	19.4		64
Net income attributable to minority interests		(0.2	)	—		(0.2	)	—
Net income		225.9		223.7		2.2		1

 

17

 

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES - MAIN RESULTS

 

BANCA FIDEURAM GROUP RESULTS

 

The Banca Fideuram Group’s 2001 results - which are largely the same as the preliminary results presented in the quarterly report as at 31.12.2001 approved on 12 February - are now presented in the annual report, together with the operations embarked on during the financial year in response to an economic scenario that had changed radically from the past.

 

2001 was indeed marked by one of the worst crises to hit the international financial markets in post-war years, a crisis that had already started in the second half of 2000 and culminated in the collapse of the stock markets after the events of September 11th.

 

Under these circumstances, the operating results of the Banca Fideuram Group were very positive, having enabled us both to meet the targets of our 1999-2001 three-year growth plan and achieve financial results that were in line with those for 2000.

 

 

Consolidated net income for the 2001 financial year was 225.9 million euros (58.3 million in the first quarter, 60.3 million in the second, 51.7 million in the third and 55.6 million in the fourth) compared to 223.7 million in 2000. Notwithstanding the general economic situation, profitability continued to be high, with an R.o.E. of 25.5%, down from 29.5% in 2000.

 

 

Assets under management totalled 48.7 billion euros at the end of December 2001, 2% down from the figure of 49.5 billion as at 31.12.2000, but a significant recovery from the lows of September (45.3 billion).

 

 

18

 

The change in assets under management during the year was the result of net inflows of 3.7 billion euros countered by a negative performance effect totalling 4.5 billion euros. These net inflows were mostly generated in the areas of asset management funds and non-discretionary savings, which totalled 6.5 and 3.3 billion euros respectively, partially offset by negative net inflows in mutual funds. The insurance result was also very good, with 1,359 million euros life premiums written (+25% on 2000) and net inflows for the sector totalling 834 million (+14% compared to 2000).

 

 

As at 31.12.2001, the Network had grown to 3,544 private bankers (professionals in the Italian national register of financial advisers) and 251 insurance consultants for a total of 3,795 (compared to 3,782 as at 31.12.2000). Staff numbers rose to 1,771 employees (1,715 as at 31.12.2000), including the 221 employees in our French companies. Bank branches totalled 82 and private bankers’ offices 99 at the end of the financial year (+11% and +2% respectively on the figures as at 31.12.2000), providing increasingly widespread coverage of Italy at the service of the Group’s 629,000 customers.

 

Comparing the 2001 financial results with those for the previous financial year (that included only one month of Fideuram Wargny’s business, acquired in December 2000, which had a negative effect on the 2001 consolidated results to the tune of approximately 7 million euros after the amortisation of goodwill totalling 8 million euros) highlights the following salient aspects:

 

•                  Total net interest and net revenues rose 54.1 million euros (+10%) due to a considerable increase of 85.6 million in net commission income (+21%), a 6.2 million improvement in net interest income (+9%) and 2.8 million growth in other net revenues (+14%), as well as a 40.5 million euro fall (-84%) in income from investments carried at equity.

 

 

•                  A 6 million euro increase (+2%) in gross operating income as a result of the growth in total net interest and net revenues, partially offset by a parallel rise of 48.1 million euros (+21%) in administrative costs, 38.3 million of which were due to Fideuram Wargny.

 

19

 

 

•                  Operating income fell 25.7 million euros (-10%), above all as a result of a 35.1 million increase in provisions for risks and charges principally to cover the risk of not recovering the advance commission paid to those private bankers recruited between 1998 and 2001.

•                  Income taxes decreased by 19.4 million euros (-64%), due to non-recurrent factors.

•                  Net income grew by 2.2 million euros (+1%).

 

 

CLOSE OF THE 1999-2001 THREE-YEAR GROWTH PLAN AND NEW 2002 PLAN

 

The main target of the 1999-2001 growth plan was to achieve net inflows of between 16.9 and 19.6 billion euros in the three-year period, which was achieved with total net inflows of 17.6 billion (6.2 billion in 1999, 7.7 billion in 2000 and 3.7 billion in 2001). The plan’s recruitment targets were also achieved, with the Network growing by 1,307 private bankers in the three-year period (576 in 1999, 482 in 2000 and 249 in 2001) compared to 1,200 provided for in the plan, most of them from commercial banks.

 

Compared to the figures at the launch of the plan, the Group’s assets under management grew 51%, net income was up 48% and the Banca Fideuram share price rose 42% (comparing the average for the last quarter of 2001 with that for the last quarter of 1998).

 

 

20

 

The total cost of this growth (mainly consisting of the annual and three-year bonuses payable to private bankers, the three-year bonus payable to staff and the provisions for guaranteed minimum commission), was recorded in the accounts in full over the three-year period and amounted to approximately 445 million euros or 2.5% of total net inflows in the 1999-2001 period, in line with the upper cost range initially estimated.

 

As stated on more than one occasion, the size of the three-year bonus was linked to the Banca Fideuram share price in the last quarter of 2001. In order to prevent external and contingent factors exerting a downward effect on the value of this incentive notwithstanding the good operating and financial results achieved through the success of the growth plan, the Bank offered its private bankers and employees the option of deferring the reference period for calculating the incentive by one year, so that it would be carried out on the basis of stock exchange prices for the last quarter of 2002 rather than 2001. This offer was accepted with a majority and does not involve any additional charges in the 2002 Statement of Income apart from the related hedging cost.

 

A plan has been launched for 2002 while awaiting the finalisation of a new three-year growth plan that has had its launch temporarily postponed due to the continuing uncertain economic scenario and associated risk of error in setting medium-term targets. The main elements of this 2002 plan are:

•                  A minimum net inflows target of 3 billion euros, subject to upward revision in the event of positive financial market trends.

•                  An increased focus on insurance, with a target of 1.5 billion euros of new life premiums written (approximately 50% more than 2001).

•                  A medium-to-long term Network loyalty scheme that rewards those maintaining the value of their portfolio of assets under management, with an incentive for all private bankers who have a portfolio of more than 15 million euros as at 31.12.2002. The resultant provision to be set aside, which should total between 170 and 200 million euros (approximately 0.4% of anticipated total assets under management as at 31.12.2002) and be amortised over ten years starting from the 2003 financial year, will be paid to those who have maintained the initial value of their portfolio net of performance effect as at their date of retirement or 31.12.2012.

 

21

 

OPERATING RESULTS

 

ASSETS AND INFLOWS

 

Assets under management

(mln. Euros)

 

						change
		31.12.2001		31.12.2000		amount		%
Mutual funds		16,293		25,295		(9,002	)	-36
Private banking		14,681		9,597		5,084		53
Insurance:		6,468		5,702		766		13
• life		6,455		5,690		765		13
• P&C		13		12		1		8
Pension funds		48		31		17		55
Securities		9,360		7,723		1,637		21
Current accounts		1,812		1,149		663		58
TOTAL AUM		48,662		49,497		(835	)	-2

 

Assets under management totalled 48.7 billion euros at year end, 2% down on the figure as at 31.12.2000 (49.5 billion). Managed savings (comprising mutual funds, private banking, life insurance and pension funds) totalled 37.5 billion euros, amounting to approximately 77% of assets under management (40.6 billion as at 31.12.2000, corresponding to 82% of total assets under management). Within this, private banking assets under management increased by over 53%, rising from 9.6 billion euros as at 31.12.2000 to 14.7 billion as at 31.12.2001.

 

The uncertain international financial situation led to a temporary change in the composition of savings, with non-discretionary savings growing at the expense of managed savings, as can be seen from the increase in securities, repurchase agreements and current account assets from 8.9 to 11.2 billion euros during the past twelve months as a result of customers temporarily investing in liquidity instruments.

 

Fideuram Gestioni Patrimoniali S.I.M. and our foreign subsidiaries Fideuram Bank (Luxembourg), Fideuram Bank (Suisse) and Fideuram Multimanager Fund all made significant contributions to this strong growth in private banking assets under management.

 

The former performed strongly where assets under management were concerned thanks to net inflows for the year of over 6 billion euros, almost double the 3.2 billion euros achieved in 2000. Third-party assets under management as at 31.12.2001 thus amounted to 13.6 billion euros compared to 8.7 billion as at 31.12.2000 (+56%).

 

The private banking assets under management of our subsidiaries abroad totalled 1.1 billion euros at year-end (having been 0.9 billion as at 31.12.2000). Net inflows for the year were 0.4 billion euros (having been 0.6 billion in 2000).

 

Net inflows

(mln. Euros)

 

						change
		2001		2000		amount		%
Mutual funds		(6,974	)	1,626		(8,600	)	-529
Private banking		6,451		3,780		2,671		71
Life insurance		834		730		104		14
Pension funds		28		19		9		47
Securities		2,763		1,362		1,401		103
Current accounts		569		139		430		309
TOTAL NET INFLOWS		3,671		7,656		(3,985	)	-52

 

Net inflows for the year were strongly affected by the continued crisis in the financial markets and fell 52% from the record amount achieved in 2000. Net inflows in funds and fiduciary asset management were negligible for the entire system in 2001, whereas they were positive to the tune of 30 billion euros in 2000 (source: Sole 24 Ore using Assogestioni data).

 

The Group’s net inflows were above all generated in the areas of private banking and non-discretionary savings. The former confirmed its driving role, benefiting from customers transferring from mutual funds, and amounted to over 70% more than the already high figure achieved in 2000. The latter, consisting of securities, repurchase agreements and current accounts, attracted customers interested in reducing the risk level of their investments while waiting for the markets to recover. The fall in net inflows to 3.7 billion euros from 7.6 billion in 2000 resulted from a drop in gross premiums written, while terminations remained largely stable, testifying to the strength of the Network during even the worst moments of the crisis.

 

22

 

LIFE INSURANCE

 

During 2001 Fideuram Vita achieved significant growth in revenues on the previous year, with premiums written rising over 25% (1,333 million euros compared to 1,063 million in 2000) when the market average was approximately 10%. New products performed outstandingly, showing an increase of more than 36% on the figures for 2000.

 

The strong results obtained in 2001 were once again due to the success of linked contract products. The year in fact saw unit-linked products (up 6% on the previous year) joined by index-linked products again (not offered in 2000), which brought in additional revenues of over 250 million euros.

 

Fideuram Vita extended its range of products, launching a Personal Pension Plan on the market - another class III product, in this case designed to serve the complementary pension needs formulated by Italian Legislative Decree 47/2000. The additional revenues brought in have been quite modest so far, in line with market trends.

 

Single premiums further increased their domination of new products (non-traditional products), accounting for 91% of premiums.

 

Net technical reserves at year end amounted to 6,455 million euros (+13% on the previous year).

 

Life insurance: premiums written

(mln. Euros)

 

		2001		2000		% change
Linked products		1,000		703		42
single		914		633		44
annual		21		41		-49
subsequent		65		29		124
Traditional and other products		333		360		-7
single		50		45		11
annual		1		4		-75
subsequent		282		311		-9
Total		1,333		1,063		25
single		964		678		42
annua		22		45		-51
subsequent		347		340		2

 

EMBEDDED VALUE AND EMBEDDED VALUE EARNINGS OF LIFE INSURANCE MUTUAL FUNDS AND PRIVATE BANKING BUSINESSES

 

In order to provide a more complete analysis of the factors underlying the generation of value, this report provides an estimate of the embedded value of the Banca Fideuram Group and an analysis of the value added during 2001.

 

An embedded value is an actuarially determined estimate of the economic value of the company, excluding any value attributable to future new business.

 

Embedded value earnings, defined as the change in the embedded value over a period, after adjustment for any capital movements such as dividends and capital injections, provide a measure of the company’s performance during the period in terms of its ability to generate value.

 

The embedded value as at 31 December 2001 and the value added during 2001 have been determined by the firm of management consultants and actuaries Tillinghast - Towers Perrin, using data and information provided by Banca Fideuram and its subsidiary companies.

 

The calculation of embedded values requires the use of numerous assumptions with respect to future business, operating, and economic conditions, and other factors, many of which are beyond the control of the Banca Fideuram Group. Although the assumptions used represent estimates which the Group and Tillinghast - Towers Perrin consider to be reasonable, actual future operating conditions and actual future experience may vary from that assumed in the calculation of the embedded values, and such variations may be material. Consequently, the inclusion of embedded value information herein should not be regarding as a representation by the Banca Fideuram Group, Tillinghast - Towers Perrin, or any other person, that the stream of future after tax profits used to determine the embedded values will be achieved.

 

23

 

Embedded value

 

The embedded value of a company comprises the sum of adjusted shareholders’ net assets and the value of business in force at the valuation date. The value of in-force business has been calculated on a consolidated basis in respect of the Group’s life insurance, mutual fund and private asset management businesses, with the exclusion of the Wargny Group.

 

Adjusted shareholders’ net assets are based on published net assets adjusted to reflect the market value of the underlying assets. For the purposes of this valuation, goodwill relating to subsidiary companies, including the Wargny Group, has been eliminated.

 

The value of in-force life insurance business is the present value of the projected stream of future after-tax profits that are expected to be generated by the policies in force at the valuation date, assuming assets equal to the technical reserves, less a charge for the cost of holding an amount of solvency capital.

 

The value of in-force asset management business is similarly defined as the present value of the projected stream of future after-tax profits expected to be generated by the mutual fund contracts and private asset management mandates in-force at the valuation date.

 

The stream of future after-tax profits is determined using realistic assumptions for future operating conditions as regards such items as investment returns, inflation, expenses, taxation, lapse, disinvestment, surrender and mortality rates.

 

The discount rates used to calculate the present values are determined with reference to the prevailing levels of interest rates, and include a loading to reflect the risk that the assumptions chosen to project the future profits may not be borne out in practice.

 

Life insurance undertakings are generally required to maintain a level of capital in excess of technical reserves in order to demonstrate solvency. For the purposes of this disclosure, the cost of solvency capital has been based on a level of 100% of the EU minimum solvency requirements. Assets backing this solvency capital can be considered as being locked-in and are projected to earn an after-tax rate of investment return, which is less than the risk-adjusted discount rates used in the calculation of the value of in-force business.

 

The annual charge for the cost of maintaining solvency capital is represented by the difference between the after-tax amount earned on assets backing solvency capital and the amount expected in accordance with the risk adjusted discount rate. The cost of solvency capital is the present value of these annual charges over the outstanding life of the policies in force.

 

Embedded value as at 31 December 2001

 

The following table shows the embedded value as at 31 December 2001, and, for comparative purposes, the equivalent values as at 31 December 2000. To facilitate comparison, the embedded value as at 31 December 2000 has been restated to eliminate the goodwill associated with the Wargny acquisition (82 million euros), and the initial assumption changes (114 million euros) as described in the half-yearly report and accounts as at 30 June 2001.

 

Embedded value

(mln. Euros)

 

		31.12.2001		31.12.2000
Consolidated net assets (1)		1,047		948
Adjustments to consolidated net assets (2), (3)		(74	)	(77	)
Adjusted net assets		973		871
Value of in-force life insurance business (3), (4), (5)		453		442
Value of in-force asset management business (3), (5)		1,623		1,893
Value of in-force business		2,076		2,335
Embedded value		3,049		3,206

 

(1) After minority interests

(2) After elimination of goodwill, including Wargny

(3) After tax, where appropriate

(4) After cost of solvency capital

(5) Valued on a consolidated line of business basis

 

24

 

The consolidated net assets as shown above are equal to those reported in the consolidated balance sheet net of minority interests. The adjustments to net assets as at 31 December 2001 relate primarily to (i) the after-tax effects of marking shareholders’ assets to market, including properties, (ii) the elimination of intangible assets, including goodwill, and (iii) certain minor after-tax adjustments on asset valuations to maintain consistency with the valuation of in-force business.

 

The values of the in-force life insurance and asset management businesses are calculated on a consolidated line of business basis, after minority interests, using assumptions considered appropriate at the valuation date. The risk discount rate used is 8% as at 31 December 2000 and 31 December 2001. The value of in-force life insurance business is shown after an allowance for the cost of holding solvency capital.

 

The risk discount rate appropriate to an individual shareholder or investor depends upon the investor’s own requirements, tax position and perception of the risks associated with the realisation of future profits. To judge the impact of using alternative discount rates, the following table shows the sensitivity of the embedded value as at 31 December 2001 to the use of discount rates respectively 0.5% lower and higher than the central rate.

 

Embedded value as at 31 December 2001

(mln. Euros)

 

Discount rate		7.5	%	8.0	%	8.5	%
Consolidated net assets (1)		1,047		1,047		1,047
Adjustments to consolidated net assets (2), (3)		(74	)	(74	)	(74	)
Adjusted net assets		973		973		973
Value of in-force life insurance business(3), (4), (5)		472		453		435
Value of in-force asset management business (3), (5)		1,662		1,623		1,585
Value of in-force business		2,134		2,076		2,020
Embedded value		3,107		3,049		2,993

 

(1) After minority interests

(2) After elimination of goodwill, including Wargny

(3) After tax, where appropriate

(4) After cost of solvency capital

(5) Valued on a consolidated line of business basis

 

Embedded value earnings

 

The embedded value earnings of the Banca Fideuram Group are equal to the sum of the change in the embedded value and the dividends distributed in the period, as shown in the following table.

 

Embedded value earnings in 2001

(mln. Euros)

 

Change in embedded value in period		(157	)
Dividends distributed in period		127
Embedded value earnings		(30	)

 

The embedded value earnings can be divided into two major components:

 

•                  Value added before new business comprising (i) expected return, based on the assumptions underlying the opening embedded value; (ii) experience variances, resulting from differences between actual experience and the assumptions used at the start of the year, before the impact of new sales in the year; (iii) changes in assumptions for future operating experience, excluding economic and tax assumptions; (iv) changes in assumptions for future economic conditions, including investment returns, tax rates and the risk discount rate.

•                  The value added by new business in the period, determined initially at the point of sale on end-period assumptions, and then accumulated at the risk discount rate to the end of the period. Full allowance is made for all costs associated with the acquisition of new business, including provisions for incentive payments to Private bankers. For the purpose of this disclosure, new life insurance business is defined as new policies issued (amounting to approximately 22 million euros of recurrent premiums and 964 million euros of single premiums), while new asset management business is defined to be the sum of the net inflows for all those clients with positive net

 

25

 

retail inflows (amounting to 1,926 million euros of mutual funds and 1,860 million euros of private asset management business). The value added by new business excludes the positive contribution arising from transfers from mutual funds and Personal Financial Planning to private asset management, which has been classified under experience variances.

 

These components for 2001 are shown in the following table.

 

Components of embedded value earnings in 2001

(mln. Euros)

 

Value added before new business		0
Expected return		227
Experience variances		(471	)
Changes in operating assumptions		0
Changes in economic assumptions		(24	)
Total value added before new business		(268	)
Value added by new business
Life insurance		48
Asset management		190
Total value added by new business		238
Embedded value earnings		(30	)

 

Expected profits, based on the start-year assumptions amounted to 227 million euros. The variances from the assumptions used at the start of the year reduced earnings in the period by 471 million euros in aggregate. These arise from numerous sources, primarily negative variances associated with investment performance, both realised and unrealised, on asset management business (354 million euros) and life insurance business (47 million euros). Other negative factors include the extraordinary provisions to cover risks associated with advance commissions paid to Private bankers (23 million euros), and a provision for the resolution of the legal cession with Consap (18 million euros).

 

There were no significant operating assumption changes. The changes to economic assumptions reduced earnings by 24 million euros, which relate to the reduction in expected future investment returns on traditional life insurance business.

 

New business in 2001 added 238 million euros to embedded value earnings, of which 190 million euros related to asset management business and 48 million euros from life business. As previously communicated, the sale of index linked products with capital guarantees and participation in the performance of equity markets contributed significantly in the second half of 2001 to the total volume of new business. In the light of the market crisis the Group opted to give preference to customer relationships at the expense of a lower level of profitability, giving rise to a temporary reduction in average new business margins

 

The table below shows the sensitivity of the value added by new business to the use of alternative discount rates.

 

Value added by new business in 2001

(mln. Euros)

 

Discount rate		7.5	%	8.0	%	8.5	%
Life insurance business (1), (2), (3)		51		48		46
Asset management business (1), (3)		194		190		185
Value added by new business		245		238		231

 

(1) After tax, where appropriate

(2) After cost of solvency capital

(3) Valued on a consolidated line of business basis

 

Assumptions

 

Embedded value accounting, in common with any valuation method based on projections of future earnings, necessarily involves a degree of subjectivity when establishing the assumptions to be used. Banca Fideuram Group, with the assistance of Tillinghast -

 

26

 

Towers Perrin, has sought to employ appropriate assumptions, in a consistent fashion, for all its lines of business.

 

The principal assumptions and bases used as at 31 December 2001 are given below:

•                  A risk discount rate of 8% was used for all lines of business.

•                  The gross market rate of investment return on benchmark Italian 10-year government bonds was taken to be 5.2% (5.25% in 2000), and total return on equities was taken to be 7.75% (the same as in 2000). Liquidity was assumed to earn 3.7%.  Equivalent benchmarks were used for other territories.

•                  The rate of return on assets backing life technical reserves was determined based on the actual asset duration and mix, using the benchmarks shown above. The average investment return on new non-linked investments on this basis is 4.9% (5.3% in 2000). The impact of the emergence of unrealised gains within the Italian segregated funds is considered within the value of in-force business.  Projected market rates of return on unit-linked life insurance, mutual funds and managed asset management portfolios were determined in accordance with the asset composition of each fund. Average returns on this basis, before charges, are 6.25% for unit-linked funds and 6.65% for mutual funds and private banking business.

•                  Projected profits in Italy have been subjected to a tax charge (allowing for the aggregate impact of Irpeg and Irap) at rates of 40% until 2002, and 39% thereafter. Profits projected to arise in foreign subsidiaries have been taxed at normal local rates, allowing for the impact of taxation on profits remitted to Italy. For Irish domiciled companies this gives an aggregate tax charge (local taxation plus tax on dividends to be received) of 17.8% in 2002 and 14.25% thereafter. Allowance has been made for the impact of tax-exempt income in Fideuram Vita.

•                  Future experience for mortality, annuity take-up rates, lapse, surrender, and other exits, including rates of total and partial withdrawals on unit-linked and asset management business has been based on recent analysis of the operating experience of the Banca Fideuram Group, supplemented by market knowledge where necessary.

•                  General and administrative expenses associated with the life insurance and asset management business, at the consolidated level, have been subdivided by line of business, and fully allocated into investment, acquisition and maintenance expenses. Maintenance expenses expressed as per-policy amounts are assumed to increase with inflation at 3%.

•                  Commissions and other payments to private bankers in respect of life and asset management business have been based on recent operating experience, on a consolidated line of business basis. Allowance has been made in the value added by new business for the cost of incentive payments payable under the 1999-2001 growth plan.

•                  Life business contract charges, terms and conditions, including surrender value bases, policyholder profit participation, management fees, and other charges, have been assumed to remain unaltered at the levels prevailing at the valuation date.

•                  Commissions and other charges on asset management business have been projected assuming that the prevailing rates at the valuation date are maintained.

•                  For the 2001 valuation account has been taken of the corporate restructuring in Luxembourg and the establishment of Fideuram Asset Management in Ireland, both effective 1 January 2002.

•                  The cost of solvency capital for life insurance business has been determined on the basis of 100% of the EU minimum requirement based on the composition of consolidated net assets, with the

 

27

 

appropriate taxation charge, allowing for the beneficial impact of DIT. The spread between the discount rate and after-tax earned rate on this basis is approximately 3%. The cost of solvency capital on these assumptions which has been allowed for in the value of in-force life business calculated using the central discount rate is 46 million euros as at 31 December 2001.

 

28

 

FINANCIAL RESULTS

 

CONSOLIDATION AREA

 

Our subsidiaries abroad underwent significant rationalisation between the end of 2001 and beginning of the current year.

 

In France, the subsidiaries of the Fideuram Wargny Group were reduced from 8 to 6 and, in particular, the two holding companies heading the group were merged into a single company in November, while Banque Privée Fideuram Wargny took over Societé de Bourse. The shareholdings in the French companies also changed during the year following the acquisition of minority holdings, consequently reducing the proportion of shareholders’ equity and consolidated income accounted for by minority interests. In addition, the company names were changed to incorporate the Fideuram brand name.

 

In Luxembourg, the corporate restructuring, effective from 1.1.2002, involved the merger of five product-companies (Fonditalia, Interfund Advisory, Fideuram Fund, Fideuram Multimanager Fund and International Securities Advisory), which were taken over by Fideuram Gestions.

 

Lastly, the company Fideuram Asset Management Ireland was founded in Ireland last October. This company, which is wholly-owned by Banca Fideuram, provides asset management in Luxembourg mutual funds.

 

The end of this section contains the Group balance sheet and statement of income, including the balance sheets and statements of income of the insurance companies consolidated on a line-by-line basis, with the aim of facilitating an understanding of the Group’s activities and results in all their complex variety.

 

Holdings consolidated on a line-by-line basis as at 31.12.2001

 

 

		REGISTERED		OWNERSHIP
NAME		OFFICE		direct %		indirect %		total %
Banca Fideuram		Milan		—		—		—
Banque Privée Fideuram Wargny		Paris		—		94.81		94.81
Fideuram Asset Management		Dublin		100.00		—		100.00
Fideuram Bank (Luxembourg)		Luxembourg		99.98		0.01		99.99
Fideuram Bank (Suisse)		Zurich		—		99.99		99.99
Fideuram Capital Sim		Milan		100.00		—		100.00
Fideuram Fiduciaria		Rome		100.00		—		100.00
Fideuram Fondi		Rome		99.25		—		99.25
Fideuram Gestioni Patrimoniali Sim		Milan		100.00		—		100.00
Fideuram Gestions		Luxembourg		99.98		0.01		99.99
Fideuram Multimanager Fund		Luxembourg		99.20		0.79		99.99
Fideuram Wargny Active Broker		Paris		—		94.81		94.81
Fideuram Wargny Gestion		Paris		—		94.67		94.67
Financière Fideuram		Paris		94.96		—		94.96
Fonditalia Management		Luxembourg		99.96		0.03		99.99
Interfund Advisory		Luxembourg		99.92		0.07		99.99
International Securities Advisory		Luxembourg		99.98		0.01		99.99
Société de Gestion du Fonds Commun de Placement Fideuram Fund		Luxembourg		99.20		0.79		99.99
Sogesmar		Paris		—		94.06		94.06
Wargny Gestion S.A.M.		Monaco		—		94.46		94.46

 

Holdings consolidated using the equity method as at 31.12.2001

 

		REGISTERED		OWNERSHIP
NAME		OFFICE		% direct		% indirect		total %
Fideuram Assicurazioni		Rome		100.00		—		100.00
Fideuram Vita		Rome		99.75		—		99.75
Sanpaolo IMI Institutional Asset Management		Milan		—		30.00		30.00

 

29

 

ANALYSIS OF THE STATEMENT OF INCOME

 

The items that contributed to the 2001 net result are analysed and compared to those for 2000 with reference to the reclassified consolidated statement of income presented above. The companies in the French Fideuram Wargny Group were consolidated in full, as was the case in the 2001 half-year report, whereas these companies had practically no effect on the consolidated financial statements for the previous year given that they were only acquired in December. It was not considered necessary to prepare a specific pro-forma Statement of Income since the contribution these companies make to Banca Fideuram’s consolidated statement of income is negligible, and any significant components have been indicated in the notes on the individual lines in the statement of income. Fideuram Wargny’s contribution to Banca Fideuram’s consolidated 2001 result, including the amortisation of goodwill totalling 8 million euros, was - as noted above - negative to the tune of approximately 7 million euros. Fideuram Wargny is engaged in a growth plan based on the “Fideuram model” of private banking and the results stated also reflect typical start-up expenses that will continue for a number of years. The consolidated net income for the 2001 financial year was 225.9 million euros (223.7 million in 2000). The result for the year was influenced by the following salient factors in particular:

•                  A fall in the income of Fideuram Vita, whose statement of income before tax included an extraordinary provision of 31 million euros to cover one possible definition of relations with CONSAP (the Public Insurance Service Concessionaire) regarding the question of compulsory reinsurance cessions to INA (the National Insurance Institute), as well as losses of 56 million euros on dealing securities.

•                  A provision for risks and charges of 38 million euros to cover the potential risk of not recovering the advance commission paid to private bankers recruited between 1998 and 2001.

•                  A one-off positive tax component of 31 million euros resulting from the corporate restructuring of our foreign asset management operations.

 

Net interest income

 

		2001		2000		change
Interest income and similar revenues		222.6		174.0		48.6
Interest expense and similar charges		(157.5	)	(103.9	)	(53.6	)
Net dealing profits		10.7		(0.5	)	11.2
Net interest income		75.8		69.6		6.2

 

Net interest income increased from 69.6 to 75.8 million euros (6.1 million of which were attributable to Fideuram Wargny), above all due to the considerable income from net dealing profits, which moved from a 0.5 million loss to 10.7 million profit, partly thanks to Fideuram Wargny’s contribution of approximately 4 million.

 

Net commission income and other net revenues

 

		2001		2000		change
Net commission income		493.8		408.2		85.6
Income from investments carried at equity		7.9		48.4		(40.5	)
Other revenues, net		23.3		20.5		2.8
Total		525.0		477.1		47.9

 

Net commission income

 

Net commission income rose from 408.2 million euros to 493.8 million, approximately 30.7 million euros of which were contributed by Fideuram Wargny. The considerable increase in net commission income was the balance of a fall in commission income of 39.5 million euros and a fall in commission expense and other payments due to the Network of 125.1 million. Net commission income comprised net management fees, net front-end fees and other net commission income.

 

•                  Net management fees totalled 513.3 million euros, an increase of 33.9 million (+7%), despite the unfavourable market scenario, as a result of the larger share of assets under management accounted for by products with higher added value. The increase in this type of commission is almost entirely due to private banking, the entry threshold for which was lowered, enabling the Bank to reach a new and larger customer segment. In addition, although

 

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discretionary assets under management as at 31.12.2001 were down on the figure as at 31.12.2000, the average figure for the year 2001 was up almost 700 million euros on 2000.

 

 

 

•                  Net front-end fees totalled 95.3 million euros, down 24.2 million (-20%) notwithstanding the contribution of approximately 25 million from Fideuram Wargny, following a fall in subscriptions to mutual funds (partly as a result of the aforementioned migration to asset management funds that don’t have front-end and switch fees) and in brokerage fees, the latter due to the lower volumes of securities traded. In addition, commissions on public offering activities fell (from approximately 9 to 1 million euros) due to the slowdown in the market for these operations.

 

Results of main public offerings

 

Company		Number of shares requested		Number of shares allocated		Value allocated
						(mln.Euros)
Snam Rete Gas		37,463,000		15,077,000		41.8
Orange		1,416,096		1,328,525		12.6
Juventus F.C.		2,160,500		2,160,500		7.8
I Viaggi del Ventaglio		648,500		648,500		2.8
Campari		50,900		50,900		1.5

 

•                  The item Other net commission income had a debit balance of 114.8 million euros, down 75.9 million (-40%). It mainly comprised incentives to the Network, both annual incentives (40.1 million euros in 2001 compared to 71.5 million in 2000) linked to net inflows and the year’s recruitment targets, and incentives connected with the 1999-2001 three-year growth plan, totalling 57.5 million in 2001 (102.8 million in 2000).

 

 

Income from investments carried at equity

 

Income from investments carried at equity amounted to 7.9 million euros. This result was 40.5 million euros lower than that for 2000, mainly due to Fideuram Vita’s net income falling from 45.1 to 4.8 million. This Company’s pre-tax result suffered from an extraordinary provision of 31 million euros to cover estimated losses resulting from relations with CONSAP (the Public Insurance Service Concessionaire) regarding compulsory

 

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reinsurance cessions to INA (the National Insurance Institute). An additional negative factor was the company’s financial management performance, which contributed only 15.7 million euros compared to 31.2 million in 2000 as a result of losses of 56.4 million euros on dealing securities (23.8 million in 2000). Fideuram Vita’s technical account, on the other hand, had a positive balance of 23.7 million euros (28.8 million in 2000).

 

Other revenues, net

 

Other net revenues totalled 23.3 million euros, an increase of 2.8 million on 2000, and mainly comprised amounts recharged to customers for indirect taxes.

 

Administrative costs

 

		2001		2000		change
Total net interest and net revenues		600.8		546.7		54.1
Administrative costs		(272.5	)	(224.4	)	(48.1	)
Gross operating income		328.3		322.3		6.0

 

Administrative costs  amounted to 272.5 million euros, 48.1 million up on the previous financial year. The increase came from higher personnel expenses (+10.2 million euros) and an increase in the item other expenses (+37.9 million). Fideuram Wargny accounted for 38.3 million euros of this increase, 20.3 of which were personnel expenses.

 

The rise in the Group’s personnel expenses from 109.4 to 119.6 million euros was due to a 27 million euro rise in the payroll that was mainly due to 276 additional human resources (221 belonging to the French companies), while staff incentives related to the three-year plan fell 16.8 million.

 

The main increases under the item other administrative costs, which totalled 152.9 million euros (115 million in 2000), were cost increases of 18 million at Fideuram Wargny and 19.9 million for the other Group companies. The latter included approximately 8 million euros of Information Technology costs and approximately 4 million in management consultancy fees for strengthening our asset management activities, calculating embedded value and evaluating territorial potential.

 

 

Adjustments,write-backs and provisions

 

		2001		2000		change
Adjustments to intangible and tangible fixed assets		(54.6	)	(58.3	)	3.7
Adjustments to loans and provisions for guarantees and commitments		(3.8	)	(3.0	)	(0.8	)
Adjustments to financial fixed assets		—		—		—
Write-backs of financial fixed assets		0.2		—		0.2
Provisions for risks and charges		(44.3	)	(9.2	)	(35.1	)
Write-backs of loans and provisions for guarantees and commitments		1.0		0.7		0.3
Total		(101.5	)	(69.8	)	(31.7	)

 

Adjustments, write-backs and provisions for risks and charges had a debit balance that increased from 69.8 to 101.5 million euros. This included 54.6 million euros in adjustments to intangible and tangible fixed assets. 24.6 million euros of the latter concerned amortisation of goodwill and goodwill arising on consolidation, approximately 8 million euros of which regarded Fideuram Wargny. Depreciation on intangible and tangible assets accounted for the remaining 30 million euros.

 

Provisions for risks and charges amounted to 44.3 million euros, an increase of 35.1 million compared to 2000, as a result of provisions set aside totalling approximately 38 million euros to cover the risk of not recovering the advance commission paid until now to those private bankers recruited between 1998 and 2001.

 

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Extraordinary items, income taxes and operating result

 

		2001		2000		change
Operating income		226.8		252.5		(25.7	)
Net extraordinary income		10.4		1.7		8.7
Income before taxes		237.2		254.2		(17.0	)
Income taxes		(11.1	)	(30.5	)	19.4
Minority interest in net income		(0.2	)	—		(0.2	)
Net income		225.9		223.7		2.2

 

Extraordinary  items had a credit balance of 10.4 million euros, 8.7 million up on the previous financial year, mainly as a result of the French subsidiary Fideuram Wargny Active Broker (formerly Wargny Mesactions) selling its online discount brokerage, which generated revenues of approximately 7 million euros.

 

Income taxes came to 11.1 million euros, 19.4 million less than in 2000, approximately 2 million of which related to Fideuram Wargny. The main reason for this decrease was a one-off tax saving of 31 million euros obtained after restructuring those subsidiaries operating in the asset management sector in Luxembourg (as stated in the section on the consolidation area above).

 

ASSET AND LIABILITY MANAGEMENT

 

Loans to ordinary customers amounted to 484.8 million euros (including 430 million in secured loans), up 141.5 million on 31.12.2000. Non-performing loans net of write-downs amounted to 2 million euros (0.4% of the portfolio) compared to 1.9 million at the end of 2000 (0.5%).

 

 

Deposits by ordinary customers totalled 3,560.2 million euros, an increase of 839.8 million on the figure at the close of 2000, due mainly to the extensive use customers made of repurchase agreements while waiting for the stock markets to stabilise. Excluding the balances of companies in the Sanpaolo IMI Group and receipts as a depository bank for mutual funds, deposits totalled approximately 2,500 million euros (1,870 million as at 31.12.2000). The number of private investor deposit accounts rose to 318,000 (293,000 at the end of 2000).

 

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Dealing securities showed a significant increase on the figure at the end of the previous financial year (1,302.9 million euros compared to 846.4 million as at 31.12.2000). They were composed almost entirely of fixed-income securities, half of which were issued by the associate company IMI Bank (Lux) and approximately 30% by the Italian government.  Securities holdings totalled 25.5 million euros, 10.9 million less than the figure as at 31.12.2000.

 

Fideuram Vita’s securities holdings, including those where the investment risks are borne by the policyholder (amounting to 2.2. billion euros), totalled over 6 billion euros, 18% up on the 5.1 billion as at 31.12.2000. Investment securities (composed entirely of bonds) accounted for 2.7 billion, while dealing securities (0.3 billion of which were shares) amounted to 1.1 billion and the remainder were mainly investments in  unit-linked funds.

 

 

The Group continued to be a net lender on the interbank market, with total deposits of 2,882.2 million euros (2,546.4 million as at 31.12.2000).

 

 

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CONSOLIDATED SHAREHOLDERS’ EQUITY

 

Consolidated shareholders’ equity as at 31.12.2001 amounted to 1,047.3 million euros, an increase of 98.9 million (+10%) on the figure as at 31.12.2000, when it reached 948.4 million euros. The changes in the related accounts are set out in the Notes to the Consolidated Financial Statements. The reconciliation of the net income and shareholders’ equity of the parent company Banca Fideuram with the corresponding consolidated amounts is set out below.

 

 

RECONCILIATION OF THE PARENT COMPANY’S SHAREHOLDERS’ EQUITY AND RESULTS WITH THOSE OF THE GROUP

 

(IN THOUSANDS OF EUROS)

 

 

		2001				2000
		Shareholders’ equity		including: Net income for the year		Shareholders’ equity		including: Net income for the year
Parent company financial statement balances		942,027		238,611		830,711		409,570
Statutory results of subsidiaries:
• consolidated line-by-line		307,695		307,695		329,870		329,870
• carried at equity		7,060		7,060		47,359		47,359
Amortisation of goodwill:
• current year		(23,975	)	(23,975	)	(16,436	)	(16,436	)
• previous years		(97,716	)	—		(81,280	)	—
Excess over book value of:
• Companies consolidated line by line		12,791		—		13,909		—
• Companies carried at equity		206,759		—		179,305		—
Dividends net of tax credit:
• related to income in the previous financial year		—		—		—		(225,254	)
• related to income for the financial year		(302,736	)	(302,736	)	(346,879	)	(346,879	)
Other consolidation adjustments:
• deferred taxes on the income of foreign subsidiaries		(1,599	)	889		(2,574	)	22,758
• write-back of intra-group goodwill and related amortisation, net of tax effect:
Fideuram Vita		(4,766	)	794		(5,560	)	794
Fideuram Fondi		—		—		—		1,995
• other differences		1,775		(2,408	)	21		(38	)
Consolidated financial statement balances		1,047,315		225,930		948,446		223,739

 

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CONSOLIDATED BALANCE SHEET INCLUDING
THE BALANCE SHEETS OF THE GROUP’S INSURANCE COMPANIES
CONSOLIDATED ON A LINE-BY-LINE BASIS

 

		31.12.2001		31.12.2000
		Euros (mln.)		Euros (mln.)
ASSETS
Cash		29.3		11.4
Due from banks		3,391.0		3,016.6
Loans to customer		541.9		387.0
Trading securities		1,328.4		882.9
Minor investments		9.9		5.2
Tangible fixed assets:		64.5		66.4
• Immovable property used by Insurance companies		6.6		6.5
• Other immovable property used for operating purposes		37.3		39.5
• Equipment, furniture and furnishings		20.6		20.4
Intangible fixed assets:		119.5		133.2
• Goodwill		81.4		101.5
• Other intangible fixed assets		38.1		31.7
Investments by Insurance companies:		6,069.9		5,186.3
• Dealing securities		3,342.4		1,830.5
• Investment securities		2,689.6		3,316.4
• Immovable property		37.9		39.4
Other assets		1,086.7		1,236.5
TOTAL ASSETS		12,641.1		10,925.5
LIABILITIES
Due to banks		506.9		468.6
Due to customers		3,450.2		2,595.3
Provisions:		6,673.7		5,887.2
• Technical reserves of Insurance companies		6,476.7		5,699.4
• Taxation		50.2		116.3
• Other provisions		146.8		71.5
Other liabilities		760.1		817.5
Subordinated liabilities		198.5		198.0
Minority interests		4.4		10.5
Share capital		236.4		236.4
Reserves		585.0		488.3
Net income		225.9		223.7
TOTAL LIABILITIES		12,641.1		10,925.5

 

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CONSOLIDATED STATEMENT OF INCOME INCLUDING
THE STATEMENTS OF INCOME OF THE GROUP’S INSURANCE COMPANIES
CONSOLIDATED ON A LINE-BY-LINE BASIS

 

		2001		2000
		Euros (mln.)		Euros (mln.)
Net interest income:		110.9		105.8
• Interest earned by Insurance companies*		45.2		35.6
• Other interest		65.7		70.2
Net commissions		477.3		391.7
Dealing profits:		(19.0	)	5.8
• Profits of Insurance companies		(29.7	)	6.2
• Other profits		10.7		(0.4	)
Results of insurance operations:		43.9		49.6
• Premium income		1,342.0		1,072.0
• Losses (claims), other charges and production costs, net		(1,399.9	)	(1,197.3	)
• Financial revenues from insurance operations		101.8		174.9
Other revenue (expenses), net		23.7		20.5
Gross margin		636.8		573.4
Administrative costs:		(287.4	)	(237.6	)
• Payroll		(127.1	)	(117.9	)
• Other administrative costs		(160.3	)	(119.7	)
Depreciation and provisions		(104.7	)	(72.7	)
Income before taxes and minority interests		244.7		263.1
Net extraordinary income		(19.3	)	0.9
Income taxes		0.7		(40.2	)
Net income attributable to minority interests		(0.2	)	(0.1	)
Net income		225.9		223.7

 

* net of allocation to Customers

 

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HUMAN RESOURCES, PRODUCTS AND SERVICES

 

PRIVATE BANKERS AND EMPLOYEES

 

Notwithstanding the unfavourable situation on the financial markets and strong competitive pressure, the Banca Fideuram Network had grown to 3,544 private bankers (professionals in the Italian national register of financial advisers) and 251 insurance consultants at the end of 2001, making a total of 3,795 (compared to a total of 3,782 as at 31.12.2000, when the number of insurance consultants was, however, almost double). Decisions to enter into and terminate agency relationships were always taken with the aim of continually improving the expertise and professionalism of our Network. Most of the private bankers recruited were high-profile professionals from the front offices of commercial banks.

 

Private bankers

 

 

Year		Beginning		in		out		Net		End
2001		3,782		249		236		13		3,795
2000		3,509		482		209		273		3,782

 

Our training activities for Banca Fideuram private bankers continued during 2001 with the provision of refresher training and new training tools, as well as two important initiatives. The first consisted in designing a new course on sales techniques for our most recent private bankers, based on the most effective communication techniques for creating and maintaining consultancy relationships that meet and exceed customer expectations over the years. The second involved the launch of an e-learning platform for delivering a complete spectrum of self-learning training tools online, bringing significant benefits in terms of control over the training process and easy updating of the training tools themselves.

 

A series of new activities coordinated to accompany the development of our product range has been planned for 2002.

 

 

Bank branches and private bankers’ offices distributed throughout Italy totalled 82 and 99 respectively at the end of the financial year (compared to 74 and 97 as at 31.12.2000).

 

 

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Banca Fideuram continued to enhance the value of its staff, engaging in an ongoing program to develop the professional skills required to advance its business. The total number of Group employees was practically unchanged at year-end despite the rising number of areas covered and steady increase in operating volumes. Indeed, the increase from 1,715 employees as at 31.12.2000 (21 of whom were on fixed-term contracts) to 1,771 as at 31.12.2001 (27 fixed-term) was partially due to the opening of Fideuram Bank (Suisse).

 

A multi-channel search approach has been adopted to ensure effective recruitment, implemented through collaborative initiatives with universities, specialist schools and institutes of higher education, as well as through advertising on specialist Internet sites and in the press. This recruitment drive, split equally between male and female professionals under the age of 30, was mainly targeted at graduates of outstanding potential, in particular where the managements of our Online Services department (10 recruits), Organisation & Systems department (10 recruits) and Planning & Control department (6 recruits) were concerned. In addition, 2001 also saw 39 members of staff on employment and training contracts who had received special training convert to open-ended contracts of employment.

 

 

The training programme designed to involve all staff in special organisational skills development areas in rotation also continued during 2001. At the same time a series of programmes was developed to improve individual staff skills regarding advanced information technology products, office automation and foreign languages. Lastly a special training programme on the euro changeover was implemented, providing formal teaching sessions and self-teaching over the company intranet. Total training activities amounted to 4,650 person days (+9% on 2000), 3,615 of which concerned initiatives that were organised internally to meet specific staff requirements, while 1,035 involved attending external seminars, conferences and courses.

 

Personnel

 

		31.12.2001		31.12.2000
Banca Fideuram		1,163		1,150
Subsidiaries
Fideuram Assicurazioni		23		24
Fideuram Bank (Luxembourg)		94		96
Fideuram Bank (Suisse) *		20		—
Fideuram Capital Sim		70		51
Fideuram Fiduciaria		4		4
Fideuram Fondi		23		22
Fideuram Gestioni Patrimoniali Sim		37		36
Fideuram Gestions		15		14
Fideuram Vita		101		98
Gruppo Fideuram Wargny **		221		220
TOTAL FOR SUBSIDIARIES		608		565
TOTAL FOR BANCA FIDEURAM GROUP		1,771		1,715

 

* Company in operation since the beginning of 2001

** Acquired in December 2000

 

FIDEURAM ONLINE

 

Over 57,000 customers were subscribed to Banca Fideuram’s online services at the end of 2001. Online trading accounted for 24% of all the Bank’s brokerage activities, with approximately 340,000 orders and a total volume traded in excess of 1.2 billion euros. Our online services achieved high standards of efficiency and were widely praised for their quality and customer service. The growth of our online operations, which also included over 23,000 instructions received through online current accounts and funds, was accompanied by a dynamic initiative that brought in a number of important new developments including:

•                  The extension of our online trading to the major international stock markets (New York, Frankfurt and Paris), as well as to warrants and covered warrants.

•                  The subscription of public offerings/IPOs.

•                  Portfolio risk evaluation for informed investment choices.

 

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•                  Mobile phone text message alerts providing stock market and customer service information (opening, closing, reaching of customer-set thresholds and execution of instructions).

 

Further new developments are planned for 2002, including  a new online trading platform, new Fonditalia contracts, a range of standard portfolios to help customers in their investment choices and access to private banking information.

 

RESEARCH AND DEVELOPMENT PRODUCTS AND ACTIVITIES

 

Banca Fideuram’s corporate strategy aims to change our product mix. We are in fact shifting from generic mutual funds towards asset management in personalised funds, while also working to increase structured savings (asset management funds, personal financial planning and life insurance) - including for lower customer segments than those where they have traditionally been offered  - at the expense of liquid savings (mutual funds and securities trading). A wide range of new developments were introduced in 2001, salient amongst which were:

•                  The extension of customised asset management to customers with assets of 100,000 to 350,000 euros.

•                  The expansion of our unit-linked policies in order to take changes in the Italian pension system into account, launching a new personal pension plan to exploit the opportunities offered by new tax benefits for pensions provisions.

•                  The introduction of new Fonditalia and Interfund sectors specially for the Eurozone and USA, offering customers further investment opportunities in the “Cyclicals”, “T.M.T.”, “Defensive” and “Financials” sectors.

 

Our main project for 2002 involves upgrading our financial planning tools in order to develop a programme for supporting our customers’ financial profiles that is able to form the basis for building and maintaining our relations with them both now and in the future. We are also working on expanding our product range still further to offer all our different customer segments even greater choice. The most significant projects planned in the field of financial planning services involve:

•                  Launching a new line of personalised fiduciary asset management solutions for high net worth and upper affluent customers that are tailored to their risk preferences.

•                  Adding a new unit-linked line with the same financial characteristics as personalised fiduciary asset allocation. Customers who are not interested in financial planning will be offered a choice of alternative services:

•                  Speculative products that invest in funds, securities, markets and sectors that leading management companies abroad consider to be of special interest, also available in multi-manager options.

•                  Global Index personalised fiduciary asset management with a specified risk profile that is stable over time.

 

SYSTEMS AND INFORMATION MANAGEMENT

 

In addition to the IT and organisational projects implemented to support new products and services, the following main initiatives were completed during 2001:

•                  The development of a new foreign information system.

•                  The development of a new portal for unified access to the Bank’s applications by private bankers and employees.

•                  Completion of all the IT interventions and other activities required to prepare for the euro changeover at year-end (including private banking, insurance products, loans and our marketing information system in particular).

•                  Launching the revision of our marketing information system for private bankers in intranet architecture.

•                  Completion of our new asset management fund  project and replacement of our personal financial planning system.

•                  Connection of all our agency private bankers (approximately 3,000) to the Banca Fideuram local network, including the connection of offices that were previously off-line and increasing the bandwidth of all connections.

 

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•                  The creation of a virtual private network infrastructure over the Internet for all those private bankers who connect to the Bank’s system from home, private offices or other locations.

•                  The introduction of application management contracts with a view to achieving greater control of software suppliers and related costs and to separating the activities undertaken by in-house staff and external personnel.

 

The most important work planned for 2002, in addition to completing those projects already in progress, includes the following:

•                  The complete revision of our financial planning tools for upper affluent and high net worth customers.

•                  The development of tools supporting the launch of a new line of tactical investment products.

•                  The preparation of a feasibility study followed, if appropriate, by the total reformulation of the administration procedure adopted for our funds’ securities holdings.

•                  The further development of our asset management fund system to support the extension of our  private banking products and services.

•                  The development of a complete system for managing derivatives products.

 

EXPANSION ABROAD

 

FOREIGN BANKS

 

Fideuram Bank (Suisse) was created through the conversion of Turis AG in early 2001 following the sale of Banca Fideuram’s holding to its subsidiary Fideuram Bank (Luxembourg). Fideuram Bank (Luxembourg) financed the purchase through a fifteen-year subordinated loan of 10 million euros from Banca Fideuram. The Swiss Bank started operations at its Zurich and Lugano offices in March, concentrating exclusively on private banking and the distribution of the Group’s Luxembourg  asset management fund service in particular. Net income in the first year of business totalled 0.1 million euros, helped by an extraordinary contribution from Fideuram Fund for its management fund investment activities.

 

The growth in the commercial operations of  Fideuram Bank (Suisse) was accompanied by a decrease in private banking activities in Luxembourg. In addition to acting as a “product factory” for customers outside Luxembourg and as a supplier of administrative services for our Swiss subsidiary, Fideuram Bank (Luxembourg) has continued in its important role as a depositary bank for the Group’s investment bodies. Fideuram Bank (Luxembourg) ended the financial year with net income of 9.7 million euros.

 

In France, the plan for restructuring the Fideuram Wargny Group reached its crux with Financière Wargny’s conversion to a bank and its name change to Banque Privée Fideuram Wargny, which was completed in the second half of 2001. This reorganisation was preparatory to launching the growth plan - in which Banque Privée Fideuram Wargny plays a central role -for transplanting an appropriately adapted version of the Fideuram business model in France. The plan’s targets include recruiting 200 private bankers and achieving 1.7 billion euros assets under management during the 2002-2004 three-year period. The cost of implementing the plan, which envisages developing new private banking activities for middle/upper affluent customers alongside traditional brokerage and

 

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financial analysis activities, was financed by a capital increase of 15 million euros. This private banking will be focused on asset management in the Group’s Luxembourg funds and on insurance products from Fideuram Vita, which will operate in France through a permanent local office that is due to open in the first half of 2002. Banque Privée Fideuram Wargny has begun establishing a distribution network by recruiting its first private bankers, who are employees of the Bank in line with French practice.  Banque Privée Fideuram Wargny ended the 2001 financial year with a net loss of 1.9 million euros.

 

SUPPLEMENTARY INFORMATION

 

INTERNAL AUDIT

 

The operating structure of the Audit team remained unchanged from last year, although the number of auditors decreased by one, taking the total to 32. The design work for developing the computer tool for monitoring the behaviour of our private bankers was completed in the second half of the financial year. Upon completion of the related feasibility study, we were also able to identify the scope for applying similar monitoring techniques to employees. A total of 4,591 written complaints were received overall for the year 2001 compared to 5,701 in 2000, an improvement of 19%. The average response time to customers was 20 days, as in the previous year.

 

SUBSEQUENT EVENTS AND BUSINESS OUTLOOK FOR THE CURRENT YEAR

 

There were no significant events subsequent to the close of the year able to influence the economic and financial position of Banca Fideuram or the Banca Fideuram Group apart from the restructuring - with effect from 1.1.2002 - of the Luxembourg subsidiaries described above. Net inflows as at the end of February 2002 totalled 584 million euros. Assets under management at that date amounted to 48,842 million euros.  The Group’s performance is, moreover, expected to remain strong where profitability is concerned, and it is envisaged that consolidated net income in 2002 will be in line with the figure for the 2001 financial year unless there are substantial changes in the markets.

 

THE BOARD OF DIRECTORS

 

12 March 2002

 

42

 

 

CONSOLIDATED FINANCIAL STATEMENTS

 

43

 

CONSOLIDATED FINANCIAL STATEMENTS

 

CONSOLIDATED BALANCE SHEET
(FIGURES IN THOUSANDS OF EUROS)

 

				31.12.2001		31.12.2000
ASSETS
10		Cash and deposits with central banks		29,259		11,438
20		Treasury securities and similar bills eligible for refinancing with central banks		329,881		193,068
30		Due from banks:		3,389,128		3,015,004
		a) repayable on demand		845,796		2,065,607
		b) other deposits		2,543,332		949,397
40		Loans to customers		484,757		343,288
50		Bonds and other debt securities:		992,823		679,378
		a) public issuers		47,229		74,649
		b) banks		850,504		552,732
		c) financial institutions		5,000		—
		d) other issuers		90,090		51,997
60		Shares, quotas and other equities		5,718		10,449
70		Equity investments		4,562		4,754
		b) other		4,562		4,754
80		Investments in Group companies:		296,559		303,624
		a) carried at equity		296,410		303,468
		b) other		149		156
90		Goodwill arising on consolidation		73,229		88,691
100		Goodwill arising upon application of the equity method		8,172		12,235
110		Intangible fixed assets		33,510		26,815
		including: goodwill		—		583
120		Tangible fixed assets		57,233		59,240
150		Other assets		450,414		520,861
160		Accrued income and prepaid expenses:		31,999		36,530
		a) accrued income		24,207		16,883
		b) prepaid expenses		7,792		19,647
TOTAL ASSETS				6,187,244		5,305,375

 

Chairman of the Board of Directors Mario Prati

Managing Director and General Manager Ugo Ruffolo

Administration and Reporting Director Paolo Bacciga

 

44

 

				31.12.2001		31.12.2000
LIABILITIES AND SHAREHOLDERS’ EQUITY
10		Due to banks:		506,908		468,616
		a) repayable on demand		166,572		125,475
		b) time or notice deposits		340,336		343,141
20		Due to customers:		3,560,217		2,720,417
		a) repayable on demand		2,897,606		2,082,323
		b) time or notice deposits		662,611		638,094
30		Securities issued:		3,406		3,320
		b) certificates of deposit		—		—
		c) other securities		3,406		3,320
50		Other liabilities		680,885		756,915
60		Accrued expenses and deferred income:		22,161		16,720
		a) accrued expenses		22,106		16,674
		b) deferred income		55		46
70		Severance fund		28,792		26,218
80		Provisions for risks and charges:		133,366		154,924
		a) pensions and similar commitments		—		—
		b) taxation		47,936		111,263
		d) other provisions		85,430		43,661
110		Subordinated liabilities		200,547		200,000
120		Negative goodwill arising upon consolidation		1,342		1,342
130		Negative goodwill arising upon application of the equity method		—		—
140		Minority interests		3,647		9,799
150		Capital		236,406		236,406
160		Additional paid-in capital		—		110,732
170		Reserves:		571,383		363,973
		a) legal reserve		47,281		46,959
		d) other reserves		524,102		317,014
180		Revaluation reserve		12,254		12,254
200		Net income		225,930		223,739
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				6,187,244		5,305,375

 

GUARANTEES AND COMMITMENTS

 

10		Guarantees given		78,416		63,166
		including: other guarantees		78,416		63,166
20		Commitments		1,437,859		252,047

 

Chairman of the Board of Directors Mario Prati

Managing Director and General Manager Ugo Ruffolo

Administration and Reporting Director Paolo Bacciga

 

45

 

CONSOLIDATED STATEMENT OF INCOME
(FIGURES IN THOUSANDS OF EUROS)

 

						2001		2000
10		Interest income and similar revenues				222,586		174,041
		including from:		• loans to customers		25,355		17,240
				• debt securities		69,143		32,537
20		Interest expense and similar charges				(157,489	)	(103,901	)
		including on:		• deposits from customers		(123,495	)	(70,198	)
				• securities issued		(10,404	)	(9,768	)
30		Dividends and other revenues:				595		91
		a) from shares, quotas and other equities				7		37
		b) from equity investments				588		54
		c) from investments in Group companies				—		—
40		Commission income				871,183		910,646
50		Commission expense				(377,356	)	(502,447	)
60		Dealing profits (losses)				10,683		(383	)
70		Other operating income				22,966		20,653
80		Administrative costs:				(272,534	)	(224,421	)
		a) payroll				(119,581	)	(109,390	)
		including:	• wages and salaries			(83,463	)	(77,257	)
			• social security contributions			(24,262	)	(21,084	)
			• severance indemnities			(4,823	)	(4,297	)
			• pensions and other commitments			(2,027	)	(2,588	)
		b) other administrative costs				(152,953	)	(115,031	)
90		Adjustments to intangible and tangible fixed assets				(54,628	)	(58,342	)
100		Provisions for risks and charges				(44,317	)	(9,202	)
110		Other operating expenses				(208	)	(205	)
120		Adjustments to loans and provisions for guarantees and commitments				(3,817	)	(2,971	)
130		Write-backs of loans and provisions for guarantees and commitments				1,037		653
150		Adjustments to financial fixed assets				(1	)	(1	)
160		Write-backs of financial fixed assets				162		15
170		Income (losses from investments carried at equity)				7,948		48,349
180		Operating income				226,810		252,575
190		Extraordinary income				15,211		4,257
200		Extraordinary expenses				(4,820	)	(2,538	)
210		Net extraordinary income				10,391		1,719
240		Income taxes				(11,081	)	(30,522	)
250		Minority interests				(190	)	(33	)
260		Net income				225,930		223,739

 

Chairman of the Board of Directors Mario Prati

Managing Director and General Manager Ugo Ruffolo

Administration and Reporting Director Paolo Bacciga

 

46

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

FORM AND CONTENT OF THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATION PRINCIPLES
FUNCTIONAL CURRENCY
DATE OF CONSOLIDATION
FINANCIAL STATEMENTS USED
PART A - ACCOUNTING POLICIES
Section 1 - Statement of accounting policies
Section 2 - Adjustments and provisions for taxes
PART B - NOTES TO THE CONSOLIDATED BALANCE SHEET
Section 1 - Loans
Section 2 - Securities
Section 3 - Subsidiaries and other minor investments
Section 4 - Tangible and intangible fixed assets
Section 5 - Other assets
Section 6 - Payables
Section 7 - Provisions
Section 8 - Capital and reserves
Section 9 - Other liabilities
Section 10 - Guarantees and commitments
Section 11 - Concentration and distribution of assets and liabilities
Section 12 - Administration and trading on behalf of third parties
PART C - NOTES TO THE CONSOLIDATED STATEMENT OF INCOME
Section 1 - Interest
Section 2 - Commissions
Section 3 - Dealing profits and losses
Section 4 - Administrative costs
Section 5 - Adjustments, write-backs and provisions
Section 6 - Other Statement of income items
Section 7 - Other information on the Consolidated statement of income
PART D - OTHER INFORMATION
Section 1 - Directors and Statutory Auditors

 

47

 

FORM AND CONTENT OF THE CONSOLIDATED FINANCIAL STATEMENTS

 

The consolidated financial statements as at 31.12.2001 comprise the present Notes and Directors’ Report in addition to the Consolidated Balance Sheet and Consolidated Statement of Income as provided for by Italian Legislative Decree No. 87 of 27.1.1992 and the Governor of the Bank of Italy’ s Regulations of 16.1.1995. The consolidated financial statements comprise the accounts of Banca Fideuram and of those banking, finance and related companies operating both in Italy and abroad in which it directly holds a majority of the share capital.

 

Investments in subsidiaries whose activities differ from those described above, being insurance activities, are valued using the equity method. The financial statements used for this purpose are those prepared in accordance with the accounting principles specific to the business sectors concerned.

 

Section 3 of Part B contains a list of the companies included in the consolidation area, together with investments carried at equity and, for completeness, investments valued at cost.

 

CONSOLIDATION PRINCIPLES

 

The consolidation principles applied comply with the provisions of Italian Legislative Decree 87/1992.

 

The book value of investments involving an equity interest of more than 50% is offset against the corresponding portion of shareholders’ equity. These adjustments are based on the book value of the investments at the time they were acquired.

 

The differences arising from these operations:

•                  are classified as assets in the Consolidated Balance sheet if positive (book value of the investment exceeds the related shareholders’ equity), and amortised over five years; however, the goodwill arising from the acquisition of investments in the French Fideuram Wargny Group companies is being amortised in equal instalments over ten years starting from the date of acquisition, a period that is regarded as appropriate considering the activities and growth plans of the companies acquired;

•                  are classified as liabilities in the Consolidated Balance Sheet if negative (book value of the investment lower than the related shareholders’ equity).

 

Minority interests in shareholders’ equity and in results for the period are classified separately.

 

The remaining holdings of between 20% and 50% are valued using the equity method.  The excess book value of the corresponding portion of shareholders’ equity at the time of the acquisition of the insurance company Fideuram Vita was classified as “Goodwill arising upon application of the equity method” and amortised over ten years, a period regarded as appropriate considering the average life of the subsidiary’s portfolio of insurance policies. The shortfall in book value with respect to the corresponding portion of shareholders’ equity is classified as “Negative goodwill arising upon application of the equity method”.

 

Changes in the value of shareholders’ equity subsequent to the date of calculating the above differences are classified as “Income (losses) from investments carried at equity” as appropriate.

 

Dividends recorded in the financial statements of the parent company in relation to investments consolidated line by line or using the equity method are written off. The related tax credit is deducted from income taxes for the financial year.

 

Intra-group balances and transactions between consolidated companies (incomes and expenses) are written off.

 

Where appropriate, deferred tax assets and liabilities are recorded in relation to the related consolidation adjustments.

 

The financial statement data of consolidated companies outside the Eurozone are translated to euros at the year-end exchange rates. Differences arising from the translation of these companies’ shareholders’ equity are classified as “Other reserves”.

 

Minor investments (holdings of less than 20%), the holding in the Group’s Fiscal Studies and Research Consortium (Consorzio Studi e Ricerche Fiscali) and the indirect holdings in a number of the French companies in the Fideuram Wargny Group, which are not considered significant for the purposes of consolidation, are valued at cost.

 

FUNCTIONAL CURRENCY

 

The consolidated financial statements are stated in thousands of euros.

 

DATE OF CONSOLIDATION

 

The reference date of the consolidated financial statements is the accounting reference date for Banca Fideuram and the other consolidated companies.

 

FINANCIAL STATEMENTS USED

 

The consolidated financial statements are prepared using the financial statements as at 31.12.2001 approved by the Boards of Directors concerned. Where necessary, they were reclassified to ensure consistency of presentation.

 

48

 

PART A

 

ACCOUNTING POLICIES

 

The consolidated financial statements have been prepared in accordance with the provisions of Italian Legislative Decree 87/1992 and the requirements of the Governor of the Bank of Italy’s Regulations of 16.1.1995. They also take into account the technical clarifications provided by the Bank of Italy and comply with the accounting principles laid down by the professional body of the Italian accounting profession (Consigli Nazionali dei Dottori Commercialisti e dei Ragionieri) or, in the absence thereof, by the International Accounting Standards Committee (IASC).

 

The accounting policies adopted are the same as those used to prepare the financial statements as at 31.12.2000.

 

The accounting policies adopted to prepare the consolidated financial statements are the same as those used for the parent company.

 

A - SECTION 1

 

STATEMENT OF ACCOUNTING POLICIES

 

1. LOANS, GUARANTEES AND COMMITMENTS

 

Loans

 

Loans to customers are recorded in the financial statements at their estimated realisable value.  This value is determined, with respect to the gross value of loans outstanding at year-end, by deducting estimated losses of principle and interest that take careful account of the solvency of specific non-performing, problem and restructured loans, as well as the general risk of future default inherent in other performing loans.

 

Any increase in the value of loans with respect to their estimated realisable value at the end of the prior year is credited to the statement of income item “Write-backs of loans and provisions for guarantees and commitments”.

 

Default interest is recognised to the extent considered recoverable. Discounted notes not yet due are recorded at nominal value, while the related interest not yet earned at year end is classified as “Deferred income”.

 

Amounts due from banks are stated at nominal value.  In addition, amounts due from certain banks resident in countries with high risk ratings are adjusted on a presumptive basis that takes the debt-servicing difficulties of the country of residence into account.

 

Guarantees and commitments

 

Guarantees given are recorded at the total value of the exposure, while commitments to pay out funds are recorded at the amounts to be paid.  Guarantees and commitments involving the assumption of credit risk are valued on the basis described regarding loans. 

Securities receivable are recorded at the forward price contractually agreed with the issuer.

 

2. SECURITIES AND OFF-BALANCE-SHEET TRANSACTIONS

 

(other than foreign currency transactions)

 

Securities transactions are recorded as at the time of settlement. Purchase and sale commitments are recorded on the same basis adopted to value securities holdings, set out below.  Even if the securities held are not listed, the related sale commitments are still valued on the same basis as listed securities.

 

Assets and derivative contracts are valued separately. When they are linked, however, the contracts are valued in the same way as the assets they hedge.

 

Repurchase agreements that require the holder to resell the securities acquired when the agreement matures are recorded as loans and payables in the financial statements. The cost of borrowing and revenues from lending, represented by the interest coupons due on securities and the difference between the spot and forward prices, are recorded as interest on an accruals basis in the statement of income.

 

Investment securities are valued at their historical purchase cost. The difference between purchase cost and the related redemption price of fixed-income securities is classified as an adjustment to the interest earned by such securities. This adjustment is made on an accruals basis in relation to the residual period until the securities mature.

 

Securities held for dealing and/or treasury management purposes are not deemed to be investment securities. They are valued as follows:

•                  If listed on regulated markets, they are valued at the official year-end quoted prices.

•                  If unlisted, they are valued at whichever is the lowest of the daily moving weighted average cost or estimated realisable value, determined in relation to the prices for similar securities quoted on regulated markets, and the current value of future financial flows, discounted at an appropriate market rate. This estimate also takes the solvency of the issuer into account.

 

The results of valuations performed using the above criteria are recorded in the statement of income item “Profits (losses) on financial transactions”. The original value of securities is reinstated if the reasons for any write-downs in previous financial years cease to apply.

 

3. SUBSIDIARIES AND MINOR INVESTMENTS

 

Investments in Group companies that are not consolidated line-by-line are valued using the equity method unless they represent minor or insignificant equity investments.

 

49

 

Other equity investments are valued at LIFO cost, using annual layers.

 

The book value is written down when the loss in value of an equity investment is deemed to be permanent.  The original value is reinstated if the reasons for any write-downs cease to apply.

 

Equity investments denominated in foreign currency and carried at cost are recorded using the exchange rates current at the time they were purchased.

 

4. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

(including off-balance-sheet transactions)

 

Foreign currency transactions are recognised at the time they are settled.

 

Assets, liabilities and spot off-balance-sheet transactions still to be settled are translated to Italian lire using the year-end exchange rates. The effect of this valuation is reflected in the statement of income.

 

Forward off-balance-sheet transactions entered into for hedging or trading purposes are valued using the spot or forward exchange rates applicable at year-end respectively.  The effect of this valuation is reflected in the statement of income.

 

Assets/liabilities and foreign currency derivative contracts are valued separately.

 

When they are linked, however, they are valued in the same way. The results of these valuations are recorded in the statement of income.

 

Trading contracts are valued using the forward exchange rates applicable at year end for the maturities of the contracts concerned.  Hedging contracts are valued using the spot exchange rates applicable at year-end.

 

5. TANGIBLE AND INTANGIBLE FIXED ASSETS

 

Tangible fixed assets are recorded at purchase cost, including related expenses, as increased by the cost of improvements and the revaluations recorded in prior years in accordance with related legislation.

 

Their book value is determined by deducting accumulated depreciation from the gross value defined above. This depreciation is calculated systematically on a straight-line basis over the residual useful lives of the assets concerned, starting from the year they enter service.

 

Tangible fixed assets used by third parties under finance lease arrangements are reflected in the consolidated financial statements using lease accounting methods.

 

Intangible fixed assets, including enjoyment rights and costs attributable to more than one year, are recorded with the agreement of the Board of Auditors, where required by law, and stated net of accumulated amortisation calculated systematically over their estimated useful lives, which do not exceed five years.

 

In previous financial years Banca Fideuram calculated the monetary revaluation of tangible fixed assets (mainly buildings) in accordance with Italian law for the values set out in Part B, section 4.

 

6. OWN SHARES

 

The own shares held for dealing purposes are valued at whichever is the lowest between cost and market price at the end of the financial year.

 

7. OTHER INFORMATION

 

Provision for employee severance indemnities

 

This represents the liability to all employees, accrued in accordance with current legislation and employment agreements.

 

Provisions for risks and charges

 

The Provision for taxation represents the liability for income taxes, estimated in accordance with current legislation, and includes the provision for deferred taxation.

 

Accounting principle No. 25 of the CNDCeR, the professional association for accountants in Italy (referred to in notice No. 99059010 of 30.7.1999 of the Italian National Commission for Listed Companies and the Stock Exchange (CONSOB), and the Bank of Italy regulations dated 3.8.1999) has been applied, in accordance with which deferred tax assets and liabilities are recognised in accordance with the accruals principle. Deferred tax assets and liabilities reflect the tax effect of timing differences between the book value of assets and liabilities and their value for tax purposes.

 

This provision also covers the taxes that the Bank expects to pay on the earnings of foreign equity investments, which will be taxable in the form of foreign dividends when they are collected in Italy.

 

The item “Income taxes” therefore consists of the sum of current taxes and changes in deferred tax assets and liabilities.

 

The item Other provisions covers known or likely liabilities and charges, the timing and amount of which cannot be determined with certainty at year end or by the date the financial statements are finalised. The provisions reflect the best estimates possible on the basis of the information available.

 

Revenues and expenses

 

Interest income and expense and other revenues and costs are recorded on an accruals basis in accordance with the matching principle. Default interest earned during the financial year is only recognised in the financial statements to the extent that it is deemed to be recoverable.

 

Effects of the introduction of the euro

 

The introduction of the euro did not require any changes to the accounting principles previously adopted. All the consolidated companies handled the matter in the same way in their accounting records.

 

50

 

The changeover did, however, entail costs that were principally for services to upgrade the information systems, which have already been recorded in the accounts in full.

 

A - SECTION 2

 

ADJUSTMENTS AND PROVISIONS FOR TAXES

 

No adjustments or provisions were recorded solely for tax purposes.

 

51

 

PART B

 

NOTES TO THE CONSOLIDATED BALANCE SHEET

 

B - SECTION 1

 

LOANS

 

1.1 Breakdown of item 30

 

“Due from banks”

 

		31.12.2001		31.12.2000
a) Due from Central Banks		93,709		30,416
b) Bills eligible for refinancing with Central Banks		—		—
c) Finance leases		—		—
d) Repurchase agreements		463,048		199,255
e) Securities loaned		—		—

 

None of the Group companies had any loans due from Argentine banks.

 

Analysis of loans to banks as at 31.12.2001

 

		CROSS VALUE		TOTAL ADJUSTMENTS		NET BOOK VALUE
A. Doubtful loans		407		122		285
A1. Non-performing loans		—		—		—
A2. Problem loans		—		—		—
A3. Loans currently being restructured		—		—		—
A4. Restructured loans		—		—		—
A5. Unsecured loans exposed to country risk		407		122		285
B. Performing loans		3,388,843		—		3,388,843

 

Movements in doubtful loans

 

		NON-PERFORMING LOANS		PROBLEM LOANS		LOANS CURRENTLY BEING RESTRUCTURED		RESTRUCTURED LOANS		UNSECURED LOANS EXPOSED TO COUNTRY RISK
A. Gross value as at 1.1.2001		—		—		—		—		282
A1. including: default interest		—		—		—		—		—
B. Increases		—		—		—		—		125
B.1 Transfers from performing loans		—		—		—		—		125
B.2 Default interest		—		—		—		—		—
B.3 Transfers from other categories of doubtful loans		—		—		—		—		—
B.4 Other increases		—		—		—		—		—
C. Decreases		—		—		—		—		—
C.1 Transfers to performing loan		—		—		—		—		—
C.2 Write-offs		—		—		—		—		—
C.3 Collections		—		—		—		—		—
C.4 Disposals		—		—		—		—		—
C.5 Transfers to other categories of doubtful loans		—		—		—		—		—
C.6 Other decreases		—		—		—		—		—
D. Gross value as at 31.12.2001		—		—		—		—		407
D.1 including: default interest		—		—		—		—		—

 

Adjustments to loans

 

		NON-PERFORMING LOANS		PROBLEM LOANS		LOANS CURRENTLY BEING RESTRUCTURED		RESTRUCTURED LOANS		UNSECURED LOANS EXPOSED TO COUNTRY RISK		PERFORMING LOANS
A. Total adjustments as at 1.1.2001		—		—		—		—		13		—
A1. including: default interest		—		—		—		—		—		—
B. Increases		—		—		—		—		109		—
B.1 Adjustments		—		—		—		—		109		—
B.1.1 including: default interest		—		—		—		—		—		—
B.2 Use of provisions for loan losses		—		—		—		—		—		—
B.3 Transfers from other categories of loans		—		—		—		—		—		—
B.4 Other increases		—		—		—		—		—		—
C. Decreases		—		—		—		—		—		—
C.1 Write-backs from year-end valuations		—		—		—		—		—		—
C.1.1 including: default interest		—		—		—		—		—		—
C.2 Write-backs following collections		—		—		—		—		—		—
C.2.1 including: default interest		—		—		—		—		—		—
C.3 Write-offs		—		—		—		—		—		—
C.4 Transfers to other categories of loans		—		—		—		—		—		—
C.5 Other decreases		—		—		—		—		—		—
D. Total adjustments as at 31.12.2001		—		—		—		—		122		—
D.1 including: default interest		—		—		—		—		—		—

 

52

 

 

1.2 Breakdown of item 40

“Loans to customers”

 

		31.12.2001		31.12.2000
a) Bills eligible for refinancing with Central Banks		7,659		—
b) Finance leases		—		959
c) Repurchase agreements		12,585		—
d) Securities loaned		—		—

 

Loans to customers totalling 484,757 thousand euros were secured by guarantees amounting to 430,572 thousand euros.

 

1.3 Secured loans to customers

 

a) Mortgages		60,340		51,828
b) Pledged assets:		355,255		221,202
1. cash deposits		—		201
2. securities		347,970		220,636
3. other instruments		7,285		365
c) Guarantees given by:		14,977		15,184
1. Governments		—		—
2. other public entities		—		—
3. banks		—		—
4. other operators		14,977		15,184

 

1.4 Non-performing loans

(including default interest)

 

		31.12.2001		31.12.2000
Book value		7,663		7,867
Adjustments		(5,594	)	(5,984	)
Estimated realisable value		2,069		1,883

 

1.5 Default interest

 

a) Non-performing loans
• book value		1,765		1,659
• adjustments		(1,765	)	(1,659	)
• estimated realisable value		—		—
b) Other deposits		—		—

 

Analysis of loans to customers as at 31.12.2001

 

		GROSS VALUE		TOTAL ADJUSTMENTS		NET BOOK VALUE
A. Doubtful loans		7,803		5,600		2,203
A1. Non-performing loans		7,663		5,594		2,069
A2. Problem loans		64		6		58
A3. Loans currently being restructured		—		—		—
A4. Restructured loans		76		—		76
A5. Unsecured loans exposed to country risk		—		—		—
B. Performing loans		489,364		6,810		482,554

 

Movements in doubtful loans

 

		NON-PERFORMING LOANS		PROBLEM LOANS		LOANS CURRENTLY BEING RESTRUCTURED		RESTRUCTURED LOANS		UNSECURED LOANS EXPOSED TO COUNTRY RISK
A. Gross value as at 1.1.2001		7,867		65		—		2,527		—
A1. including: default interest		1,659		—		—		—		—
B. Increases		3,767		2		—		108		—
B.1 Transfers from performing loans		715		—		—		—		—
B.2 Default interest		1,444		—		—		—		—
B.3 Transfers from other categories of doubtful loans		717		—		—		—		—
B.4 Other increases		891		2		—		108		—
C. Decreases		3,971		3		—		2,559		—
C.1 Transfers to performing loans		—		—		—		—		—
C.2 Write-offs		2,530		—		—		841		—
C.3 Collections		1,425		3		—		1,001		—
C.4 Disposals		—		—		—		—		—
C.5 Transfers to other categories of doubtful loans		—		—		—		717		—
C.6 Other decreases		16		—		—		—		—
D. Gross value as at 31.12.2001		7,663		64		—		76		—
D.1 including: default interest		1,765		—		—		—		—

 

Adjustments to loans

 

		NON-PERFORMING LOANS		PROBLEM LOANS		LOANS CURRENTLY BEING RESTRUCTURED		RESTRUCTURED LOANS		UNSECURED LOANS EXPOSED TO COUNTRY RISK		PERFORMING LOANS
A. Total adjustments as at 1.1.2001		5,984		7		—		1,274		—		4,124
A1. including: default interest		1,659		—		—		—		—		—
B. Increases		3,174		—		—		—		—		2,915
B.1 Adjustments		1,935		—		—		—		—		2,915
B.1.1 including: default interest		334		—		—		—		—		—
B.2 Use of provisions for loan losses		—		—		—		—		—		—
B.3 Transfers from other categories of loans		364		—		—		—		—		—
B.4 Other increases		875		—		—		—		—		—
C. Decreases		3,564		1		—		1,274		—		229
C.1 Write-backs from year-end valuations		81		1		—		—		—		—
C.1.1 including: default interest		—		—		—		—		—		—
C.2 Write-backs following collections		953		—		—		76		—		—
C.2.1 including: default interest		40		—		—		—		—		—
C.3 Write-offs		2,530		—		—		841		—		222
C.4 Transfers to other categories of loans		—		—		—		357		—		7
C.5 Other decreases		—		—		—		—		—		—
D. Total adjustments as at 31.12.2001		5,594		6		—		—		—		6,810
D.1 including: default interest		1,765		—		—		—		—		—

 

53

 

B - SECTION 2

 

SECURITIES

 

Balance Sheet classification		31.12.2001		31.12.2000
Treasury securities and similar bills eligible for refinancing with Central banks (item 20)		329,881		193,068
Bonds and other debt securities (item 50)		992,823		679,378
Shares, quotas and other equities (item 60)		5,718		10,449
Total		1,328,422		882,895

 

The item “Bonds and other debt securities” includes 676 million euros (447 million euros as at 31.12.2000) relating to repurchase agreements with IMI Bank Lux.

 

Analysis

 

Investment securities		25,518		36,446
Dealing securities		1,302,904		846,449
Total		1,328,422		882,895

 

Analysis of the difference between the book values and maturity values of fixed-income securities held for investment purposes

 

		31.12.2001						31.12.2000
		BOOK VALUE		MATURITY VALUE		HIGHER MATURITY VALUE		BOOK VALUE		MATURITY VALUE		HIGHER MATURITY VALUE
Government securities listed		946		947		1		921		921		—
Other securities listed		17,551		17,567		16		34,972		35,717		745
Other securities unlisted		6,921		6,916		(5	)	553		353		—

 

In accordance with a specific resolution of the Board of Directors, investment securities are held for the long term as stable investments and any disposals must be formally authorised by the Board.

 

2.1 Investment securities

 

		31.12.2001				31.12.2000
		BOOK VALUE		MARKET VALUE		BOOK VALUE		MARKET VALUE
1.Debt securities		25,418		29,866		31,345		31,338
1.1 Government securities		946		922		921		921
• listed		946		922		921		921
• unlisted		—		—		—		—
1.2 Other securities		24,472		28,944		30,424		30,417
• listed		17,551		22,028		29,871		29,864
• unlisted		6,921		6,916		553		553
2. Equities		100		100		5,101		5,853
• listed		100		100		5,101		5,853
• unlisted		—		—		—		—
Total		25,518		29,966		36,446		37,191

 

2.2 Changes in investment securities

 

		31.12.2001		31.12.2000
A. Opening balance		36,446		8,700
B. Increases		55,316		29,897
B1. Purchases		54,231		2,340
B2. Write-backs		48		21
B3. Transfers from dealing portfolio		612		22,503
B4. Other changes		425		5,033
C. Decreases		66,244		2,151
C1. Sales		56,851		1,982
C2. Redemptions		1,798		151
C3. Adjustments		7,025		18
including: permanent write-downs		11		18
C4. Transfers to dealing portfolio		—		—
C5. Other changes		570		—
D. Closing balance		25,518		36,446

 

The entire amount for 2000 was attributable to Turis, now Fideuram Bank (Suisse), which reclassified its securities holdings as investment securities.

 

2.3 Dealing securities

 

		31.12.2001				31.12.2000
		BOOK VALUE		MARKET VALUE		BOOK VALUE		MARKET VALUE
1. Debt securities		1,285,547		1,285,558		843,094		843,112
1.1 Government securities		400,226		400,226		282,603		282,603
• listed		400,226		400,226		282,603		282,603
• unlisted		—		—		—		—
1.2 Other securities		885,321		885,329		560,491		560,509
• listed		147,460		147,460		79,669		79,669
• unlisted		737,861		737,869		480,822		480,839
2. Equities		17,357		17,705		3,355		3,441
• listed		16,661		16,661		3,054		3,054
• unlisted		696		1,044		301		387
Total		1,302,904		1,303,260		846,449		846,553

 

The item “Other securities - unlisted” includes securities totalling 676 million euros (447 million euros as at 31.12.2000) relating to repurchase agreements with IMI Bank Lux.

 

2.4 Changes in dealing securities

 

		31.12.2001		31.12.2000
A. Opening balance		846,449		621,335
B. Increases		16,292,541		6,590,543
B1. Purchases		16,206,477		6,581,268
• Debt securities		16,184,328		6,464,940
• Government securities		9,491,730		4,848,690
• Other securities		6,692,598		1,616,250
• Equities		22,149		116,328
B2. Write-backs and revaluations		665		821
B3. Transfers from investment portfolio		—		—
B4. Other changes		85,399		8,454
C. Decreases		15,836,086		6,365,429
C1. Sales		15,759,781		6,332,861
• Debt securities		15,736,122		6,219,909
• Government securities		9,376,347		4,929,988
• Other securities		6,359,775		1,289,921
• Equities		23,659		112,952
C2. Adjustments		2,404		3,300
C3. Transfers to investment portfolio		—		22,503
C5. Other changes		73,901		6,765
D. Closing balance		1,302,904		846,449

 

The item “Other changes” under increases (B4) principally comprises income from dealing in securities for the period.

 

The item “Other changes” under decreases (C5) principally comprises the issue discounts accrued at the end of the previous financial year.

 

54

 

B - SECTION 3

 

SUBSIDIARIES AND OTHER MINOR INVESTMENTS

 

3.1 Significant investments

 

														VOTING RIGHTS		CONSOLIDATED
														AT		BOOK VALUE
		TYPE		SHAREHOLDERS’						OWNERSHIP				SHAREHOLDERS’		(THOUSAND
NAME		RELAT.		EQUITY (*)			NET INCOME			HELD BY		%		MEETINGS		EUROS)
A. Companies consolidated line by line
A.1 Line-by-line basis
1. Banca Fideuram S.p.A. - Milan Capital EUR 236,406,370 in shares of EUR 0.26 each				Euro	942,026		Euro	238,611								—
2. Fideuram Bank (Luxembourg) S.A. Capital EUR 20,000,000 in shares of EUR 1,000 each		1		Euro	35,764		Euro	9,723		BF/FV		99.99	%	99.99	%	—
3. Fideuram Fiduciaria S.p.A. - Rome Capital EUR 1,551,000 in shares of EUR 517 each		1		Euro	2,035		Euro	312		BF		100.00	%	100.00	%	—
4. Fideuram Fondi S.p.A. - Rome Capital EUR 17,233,161 in shares of EUR 517 each		1		Euro	31,810		Euro	11,001		BF		99.25	%	99.25	%	—
5. Fonditalia Management Co. S.A. - Luxembourg Capital EUR 2,500,000 in shares of EUR 1,000 each		1		Euro	172,043		Euro	161,446		BF/FV		99.99	%	99.99	%	—
6. Interfund Advisory Co. S.A. - Luxembourg Capital EUR 125,000 in shares of EUR 100 each		1		Euro	63,745		Euro	63,607		BF/FV		99.99	%	99.99	%	—
7. International Securities Advisory Co. S.A. - Luxembourg Capital EUR 75,000 in shares without par value		1		Euro	5,999		Euro	5,916		BF/FV		99.99	%	99.99	%	—
8. Société de Gestion du Fonds Commun de Placement Fideuram Fund S.A. - Luxembourg Capital EUR 125,000 in shares of EUR 1,000 each		1		Euro	16,330		Euro	16,077		BF/FV		99.99	%	99.99	%	—
9. Fideuram Gestions S.A. - Luxembourg Capital EUR 1,000,000 in shares of EUR 100 each		1		Euro	11,780		Euro	10,365		BF/FV		99.99	%	99.99	%	—
10. Fideuram Gestioni Patrimoniali Sim S.p.A. - Milan Capital EUR 5,000,000 in shares of EUR 1 each		1		Euro	21,947		Euro	15,215		BF		100.00	%	100.00	%	—
11. Fideuram Capital Sim S.p.A. - Milan Capital EUR 9,250,000 in shares of EUR 1 each		1		Euro	24,723		Euro	12,061		BF		100.00	%	100.00	%	—
12. Fideuram Bank (Suisse) A.G. - Zurich Capital CHF 15,000,000 in shares of CHF 500 each		1		Chf	31,742		Chf	113		FBL		99.99	%	99.99	%	—
13. Fideuram Asset Management (Ireland) Ltd - Dublin Capital EUR 1,000,000 in shares of EUR 1,000 each		1		Euro	787		Euro	(213	)	BF		100.00	%	100.00	%	—
14. Financière Fideuram S.A.- Paris Capital EUR 140,637 in shares of EUR 15.3 each		1		Euro	37,601		Euro	(712	)	BF		94.96	%	94.96	%	—
15. Banque Privée Fideuram Wargny S.A. - Paris Capital EUR 6,058,554 in shares of EUR 26.75 each		1		Euro	88,567		Euro	(1,895	)	FF		94.81	%	94.81	%	—
16. Fideuram Wargny Gestion S.A. - Paris Capital EUR 155,000 in shares of EUR 15.5 each		1		Euro	3,076		Euro	476		BPFW		94.67	%	94.67	%	—
17. Wargny Gestion S.A.M. - Monaco Capital EUR 2,500,000 in shares of EUR 100 each		1		Euro	4,697		Euro	490		BPFW		94.46	%	94.46	%	—
18. Sogesmar S.A. - Paris Capital EUR 147,645 in shares of EUR 76.5 each		1		Euro	583		Euro	115		BPFW/FWG		94.06	%	94.06	%	—
19. Fideuram Wargny Active Broker S.A. - Paris Capital EUR 3,299,835 in shares of EUR 15.4 each		1		Euro	22,119		Euro	3,502		BPFW		94.81	%	94.81	%	—
20. Fideuram Multimanager Fund Management Co. S.A. (**) Capital EUR 125,000 in shares of EUR 1,000 each		1		Euro	447		Euro	322		BF/FV		99.99	%	99.99	%	—
B. Investments carried at equity
1. Fideuram Assicurazioni S.p.A. - Rome Capital EUR 6,966,000 in shares of EUR 516 each		1		Euro	12,640		Euro	2,077		BF		100.00	%	100.00	%	Euro	12,610
2. Fideuram Vita S.p.A. - Rome Capital EUR 53,040,000 in shares of EUR 5.2 each		1		Euro	285,971		Euro	4,751		BF		99.75	%	99.75	%	Euro	278,557
3. Sanpaolo Imi Institutional Asset Management S.p.A. - Milan Capital EUR 1,000,000 in shares of EUR 1 each		8		Euro	20,343		Euro	809		FC		30.00	%	30.00	%	Euro	5,213
C. Other significant investments
1. Studi e Ricerche Fiscali (Consortium) - Rome Consortium Fund EUR 258,228		8		Euro	258			—		BF		10.00	%	10.00	%	Euro	26

 

Legend

Type of relationship:

1 = Control as per sub-paragraph 1, No. 1, art. 2359 of the Italian Civil Code (majority of voting rights at general meeting)

8 = Associated company

BF= Banca Fideuram, FV= Fideuram Vita, FC= Fideuram Capital,

FF= Financière Fideuram, BPFW= Banque Privée Fideuram Wargny

FBL= Fideuram Bank (Lux)

 

(*) Including the net income shown in the next column

(**) Acquired by Fideuram Gestions S.A. with effect from 1.1.2002

 

55

 

Investments carried at cost are analysed below:

 

 

Name		BOOK VALUE		OWNERSHIP (%)
A. Investments in banks		—
B. Investments in financial institutions		35
Graviere Gestion - Paris		17		7.72
Hogep Hoche Gestion - Paris		18		10.0
C. Other investments		4,527
Euronext - Paris		4,427		0.67
Fondo Interbancario di Tutela dei Depositi		1		0.16
Istituto per l’Enciclopedia della Banca e della Borsa S.p.A. - Rome		3		0.35
Industrie Aeronautiche Meccaniche Rinaldo Piaggio S.p.A. Genoa(1)		—		3.86
S.W.I.F.T. S.C. - Brussels		5		0.02
Società Gestione Realizzo S.p.A. - Rome		87		0.63
S.I.A. Società Interbancaria per l’Automazione S.p.A. Milan		3		0.02
S.S.B. Società Servizi Bancari S.p.A. - Milan		1		0.02
Total		4,562

 

(1) Fully written down.

 

The above investments are included in assets item 70 b) “Other equity investments”.

 

Item 70 “Equity investments”

 

		31.12.2001		31.12.2000
b) Other
Euronext S.A.		4,427		—
Società Gestione Realizzo S.p.A.		87		84
Hogep Hoche Gestion S.A.		18		—
Graviere Gestion S.A.		17		—
S.W.I.F.T. S.C.		5		5
Istituto per l’Enciclopedia della Banca e della Borsa S.p.A.		3		3
S.I.A. Società Interbancaria per l’Automazione S.p.A.		3		4
S.S.B. Società Servizi Bancari S.p.A.		1		1
Fondo Interbancario di Tutela dei Depositi (Consortium)		1		1
Unionvita S.p.A.		—		4,656
Total		4,562		4,754

 

Item 80 “Investments in Group companies”

 

a) Carried at equity		296,410		303,468
Fideuram Vita S.p.A.		278,557		291,602
Fideuram Assicurazioni S.p.A.		12,640		11,609
Sanpaolo IMI Institutional Asset Management S.p.A.		5,213		257
b) Other		149		156
Studi e Ricerche Fiscali (Consortium)		26		39
WS Invest S.A.		—		34
Finomatic S.A.		8		8
Finance Gestion S.A.		77		38
W.D.W. S.A.		38		37
Total		296,559		303,624

 

3.2 Amounts due to and from Group companies

 

		Subsidiaries (*)		Companies subject to considerable influence		Parent company		Companies controlled by the parent		31.12.2001 total		31.12.2000 total
a) Assets
1. Due from banks		—		—		648		366,957		367,605		247,705
including: subordinated		—		—		—		—		—		—
2. Due from financial institutions		—		—		—		—		—		—
including: subordinated		—		—		—		—		—		—
3. Due from other customers		—		—		—		—		—		—
including: subordinated		—		—		—		—		—		—
4. Bonds and other debt securities		—		—		2,209		720,894		723,103		251,078
including: subordinated		—		—		—		—		—		—
b) Liabilities
1. Due to banks		—		—		44		327,158		327,202		35,742
2. Due to financial institutions		—		—		—		136		136		46
3. Due to other customers		113,465		180		—		248		113,893		66,296
4. Securities issued		—		—		—		—		—		—
5. Subordinated liabilities		2,000		—		—		—		2,000		1,033
c) Guarantees and commitments
1. Guarantees given		—		—		516		162		678		—
2. Commitments		—		—		—		175,226		175,226		10,550

 

(*) Subsidiaries consolidated using the equity method.

 

3.3 Amounts due to and from investments

 

(non-Group companies)		31.12.2001		31.12.2000
a) Assets
1. Due from banks		—		—
including: subordinated		—		—
2. Due from financial institutions		—		—
including: subordinated		—		—
3. Due from other customers		352		561
including: subordinated		—		—
4. Bonds and other debt securities		—		—
including: subordinated		—		—
b) Liabilities
1. Due to banks		—		—
2. Due to financial institutions		—		—
3. Due to other customers		—		—
4. Securities issued		—		—
5. Subordinated liabilities		—		—
c) Guarantees and commitments
1. Guarantees given		—		—
2. Commitments		—		—

 

3.4 Item 70 “Equity investments”

 

a) Investments in banks		—		—
1. listed		—		—
2. unlisted		—		—
b) Investments in financial institutions		35		—
1. listed		—		—
2. unlisted		35		—
c) Other investments		4,527		4,754
1. listed		4,427		—
2. unlisted		100		4,754
Total		4,562		4,754

 

56

 

3.5 Item 80 “Investments in Group companies”

 

		31.12.2001		31.12.2000
a) Investments in banks		—		—
1. listed		—		—
2. unlisted		—		—
b) Investments in financial institutions		5,336		374
1. listed		—		—
2. unlisted		5,336		374
c) Other investments		291,223		303,250
1. listed		—		—
2. unlisted		291,223		303,250
Total		296,559		303,624

 

3.6 Changes in investment portfolio

 

3.6.1 Investments in Group companies

 

A. Opening balance		303,624		293,920
B. Increases		12,887		52,954
B1. Purchases		43		121
B2. Write-backs		—		—
B3. Revaluations		8,186		48,534
B4. Other changes		4,658		4,299
C. Decreases		19,952		43,250
C1. Sales		47		52
C2. Adjustments				31
including: permanent write-downs		—		—
C3. Other changes		19,905		43,167
D. Closing balance		296,559		303,624
E. Total revaluations		206,222		218,886
F. Total adjustments		—		—

 

The changes in investments in Group companies relate solely to companies carried at equity.

 

The item “Revaluations” under increases (B3) reflects the increase in shareholders’ equity deriving from net income for the period.

 

The item “Other changes” under decreases (C3) principally comprises dividends paid by subsidiaries.

 

3.6.2 Other equity investments

 

A. Opening balance		4,754		4,749
B. Increases		4,464		6
B1. Purchases		—		—
B2. Write-backs		2		6
B3. Revaluations		—		—
B4. Other changes		4,462		—
C. Decreases		4,656		1
C1. Sales		—		—
C2. Adjustments		1		1
including: permanent write-downs		1		1
C3. Other changes		4,655		—
D. Closing balance		4,562		4,754
E. Total revaluations		—		—
F. Total adjustments		923		924

 

B - SECTION 4

 

TANGIBLE AND INTANGIBLE FIXED ASSETS

 

Item 120 “Tangible fixed assets”		31.12.2001		31.12.2000
Immovable property used for operating purposes		37,460		38,831
Plant and equipment		12,801		16,042
Furniture and furnishings		6,972		4,368
Total		57,233		59,240

 

4.1 Changes in tangible fixed assets

 

A. Opening balance		59,240		40,285
B. Increases		11,281		30,084
B1. Purchases		10,129		10,322
B2. Write-backs		—		—
B3. Revaluations		—		15,129
B4. Other changes		1,152		4,634
C. Decreases		13,288		11,129
C1. Sales		702		116
C2. Adjustments		12,078		10,744
a) depreciation		12,078		10,744
b) permanent write-downs		—		—
C3. Other changes		508		270
D. Closing balance		57,233		59,240
E. Total revaluations		17,741		19,185
F. Total adjustments:		121,080		108,340
a) depreciation		121,080		108,340
b) permanent write-downs		—		—

 

The total revaluations of tangible fixed assets (mainly buildings) regarded Banca Fideuram and resulted from applying Italy’s currency adjustment laws in 2000 and prior financial years.

 

Gross revaluations amounted to 48 million euros while the related sinking funds totalled 30 million as at 31.12.2001.

 

Item 110 “Intangible fixed assets”

 

Goodwill		—		583
Software purchase costs		19,418		13,754
Improvements to leasehold branch properties		9,292		7,336
Other deferred expenses		4,800		5,142
Total		33,510		26,815

 

The item “Goodwill” refers to the goodwill, amortised in full, arising in Fideuram Bank (Luxembourg) as a result of acquisitions.

 

57

 

4.2 Changes in intangible fixed assets

 

		31.12.2001		31.12.2000
A. Opening balance		26,815		35,206
B. Increases		25,633		22,994
B1. Purchases		25,086		17,924
B2. Write-backs		—		—
B3. Revaluations		—		—
B4. Other changes		547		5,070
C. Decreases		18,938		31,385
C1. Sales		93		22
C2. Adjustments		18,574		31,162
a) amortisation		18,574		31,162
b) permanent write-downs		—		—
C3. Other changes		271		201
D. Closing balance		33,510		26,815
E. Total revaluations		—		—
F. Total adjustments:		56,197		124,444
a) amortisation		56,197		124,444
b) permanent write-downs		—		—

 

B - SECTION 5

 

OTHER ASSETS

 

5.1 Item 150 “Other assets”

 

Clearing accounts and other receivables		94,677		216,692
Commissions and fess receivable		88,216		49,423
Deferred tax assets		61,676		85,407
Due from private bankers		54,838		34,701
Due from tax authorities		41,130		23,012
Transactions in progress		38,672		63,553
Withholding tax		37,312		11,214
Cash, cheques, coupons, prepaid stamp duty etc.		31,679		18,284
Effect of valuing off-balance-sheet transactions		1,561		17,835
Invoices issued		786		1,031
Other taxation		59		—
Adjustments		(192	)	(290	)
Total		450,414		520,861

 

The changes during the year related to the item “Deferred  tax assets” were as follows:

 

Opening balance		85,407		39,503
Deferred tax assets recognised in the period		35,825		53,357
Taxes reversing in the period		(59,556	)	(7,255	)
Closing balance		61,676		85,407

 

5.2 Item 160 “Accrued income and prepaid expenses”

 

		31.12.2001		31.12.2000
Accrued income		24,207		16,883
Interest on securities		17,996		9,018
Interest on amounts due from banks		5,338		7,543
Interest from loans to customers		331		287
Other		542		35
Prepaid expenses		7,792		19,647
Commissions on index bonus - Three-year plan		—		11,769
Commissions on financial products		54		248
Subordinated liabilities		4,107		4,637
Rental expense and insurance		544		1,398
Other		3,087		1,595
Total		31,999		36,530

 

5.3 Adjustments to accrued income and prepaid expenses

 

Accrued expenses and deferred income are all recorded separately and, accordingly, no balance sheet accounts have been adjusted to reflect these amounts.

 

5.4 Subordinated assets

 

a) Due from banks		—		—
b) Loans to customers		—		—
c) Bonds and other debt securities		6,711		4,805
Total		6,711		4,805

 

B - SECTION 6

 

PAYABLES

 

1.1 Breakdown of the item “Due to banks”

 

a) Repurchase agreements		58,899		—
b) Securities loaned		—		—

 

1.2 Breakdown of the item “Due to customers”

 

a) Repurchase agreements		679,560		647,853
b) Securities loaned		—		—

 

B - SECTION 7

 

PROVISIONS

 

Item 70 “Provision for employee severance indemnities” - changes during the period

 

Opening balance		26,218		24,106
Decreases:
• indemnities and advances paid		785		1,524
• other		589		365
• to Sanpaolo IMI Group pension fund (Italian Legislative Decree 124/1993)		605		355
Increases:
• provisions		4,553		4,272
• other		—		84
Closing balance		28,792		26,218

 

58

 

Subitem 80 a) “Pensions and similar commitments - Changes during the period

 

		31.12.2001		31.12.2000
Opening balance		—		624
Decreases:
• utilisation		—		624
Increases:
• provision		—		—
• other		—		—
Closing balance		—		—

 

This related to the pension fund for employees of Fideuram Bank (Luxembourg) which has in the meantime been closed.

 

Subitem 80 b) “Provisions for risks and charges - taxation - Changes during the period

 

Opening balance		111,263		64,505
Decreases:
• utilisation		93,106		54,026
• surplus		81		—
Increases:
• provision for income taxes		29,860		100,768
• other		—		16
Closing balance		47,936		111,263

 

The “Provision for taxation” includes the provision for deferred taxation, the changes for which were as follows in the period:

 

Opening balance		42,910		25,667
Deferred tax liabilities recognised in the period		6,318		41,454
Taxes reversing in the period		(42,510	)	(24,211	)
Other		(81	)	—
Closing balance		6,637		42,910

 

The subsidiary Fideuram Vita is in dispute with the Italian Inland Revenue regarding the 1985 to 1987 financial years. The dispute concerning the 1988, 1989 and 1990 financial years was settled as a result of the favourable judgement of the Regional Tax Commission filed on 27.7.2000, against which the Inland Revenue did not lodge an appeal within the period prescribed by law.

 

No notices of assessment have been received regarding the tax declarations submitted for 1991 to 1995 inclusive within the period specified by the law.

 

For the 1985, 1986 and 1987 financial years, the company obtained a favourable judgement at first instance but substantially against at second and third. Considering that this did not prejudice the possibility of its obtaining a favourable final judgement, Fideuram Vita has lodged an appeal in cassation. The potential cost to the company if the current judgement is confirmed would be minimal, but it could become significant (although it would still be amply covered by the existing reserves) if a similar case were to extend to subsequent financial years that are still open (from 1996 onwards).  Having taken expert counsel and also taken into account both the favourable progress of the case and the fact that the subject of the dispute results from practices that are universally adopted throughout the insurance sector, the subsidiary has not made any special provisions to cover the risk of losing the case.

 

7.2 Subitem 80 d) “Provisions for risks and charges - other”

 

Provision for legal disputes and claims from receivers		17,381		15,743
Provisions for financial consultants’ severance indemnities		22,218		19,809
Provisions for guarantees and commitments		904		904
Provisions for losses on commissions advanced		44,805		7,205
Other provisions		122		—
Total		85,430		43,661

 

The “Provisions for losses on commissions advanced” were calculated in relation to the estimated additional costs that the Bank would incur if the volume of business brought in by private bankers during their initial period of operations were to be less than that corresponding to the advance commission they are guaranteed for the same period. The increase from 7,205 to 44,805 thousand euros was due both to the rise in the number of private bankers and the increased risk of not recovering the advance commission for those recruited in the last period.

 

Subitem 80 d) “Provisions for risks and  charges - other provisions” changes during the period

 

		Legal disputes and claims from receivers		Consultants’ severance indemnities		Guarantees and commitments		Losses on commissions advanced		Other		total
												31.12.2001
Balance as at 31 December 2000		15,743		19,809		904		7,205		—		43,661
Decreases:
• utilisation		736		902		—		—		910		2,548
• others		—		—		—		—		—		—
Increases:
• provision		2,374		3,311		—		37,600		1,032		44,317
• others		—		—		—		—		—		—
Balance as at 31 December 2001		17,381		22,218		904		44,805		122		85,430

 

		Legal disputes and claims from receivers		Consultants’ severance indemnities		Guarantees and commitments		Losses on commissions advanced		Other		total
												31.12.2000
Balance as at 31 December 1999		16,098		14,467		904		4,614		170		36,253
Decreases:
• utilisation		975		432		—		—		387		1,794
• others		—		—		—		—		—		—
Increases:
• provision		620		5,774		—		2,591		217		9,202
• others		—		—		—		—		—		—
Balance as at 31 December 2000		15,743		19,809		904		7,205		—		43,661

 

B - SECTION 8

 

CAPITAL AND RESERVES

 

Item 90 “Goodwill arising on consolidation”

 

Item 120 “Negative goodwill arising upon consolidation”

 

		31.12.2001				31.12.2000
		Goodwill on consolidation				Goodwill on consolidation
Company		Positive (assets item 90)		negative (liabilities 120 item)		Positive (assets item 90)		negative (liabilities 120 item)
Fideuram Fiduciaria S.p.A.		—		649		—		649
Fideuram Fondi S.p.A.		—		418		—		418
Fonditalia Management Co. S.A.		—		—		11,615		—
Interfund Advisory Co. S.A.		—		—		58		—
International Securities Advisory Co. S.A.		—		—		31		—
Fideuram Gestioni Patrimoniali Sim S.p.A.		—		275		—		274
Financière Fideuram S.A.		73,229		—		76,987		—
Total		73,229		1,342		88,691		1,341

 

Goodwill arising upon consolidation is attributable to goodwill paid. Goodwill arising upon consolidation regarding Financière Fideuram is being amortised over ten years, a period that is regarded as appropriate considering the activities and growth plans of the companies acquired. In all other cases goodwill arising upon consolidation is amortised over five years.

 

59

 

The changes in goodwill arising upon consolidation are analysed below:

 

 

The changes in negative goodwill arising upon consolidation are analysed below:

 

 

Item 100 “Goodwill arising upon application of the equity method”

 

Item 130 “Negative goodwill arising upon application of the equity method”

 

		31.12.2001				31.12.2000
		goodwill from equity method				goodwill from equity method
Company		positive (item 100 assets)		negative (item 130 negative liabilites)		positive (item 100 assets)		negative (item 130 negative liabilites)
Fideuram Vita S.p.A.		8,172		—		12,235		—
Total		8,172		—		12,235		—

 

The changes in goodwill arising upon application of the equity method are analysed below:

 

 

These differences are attributable to goodwill.  They relate to the subsidiary Fideuram Vita and are being amortised over ten years, a period that is regarded as appropriate considering the type of investment concerned.

 

Item 140 “Minority interests”

 

		31.12.2001		31.12.2000
Minority interests		3,647		9,799

 

This item represents the minority interest in the shareholders’ equity of companies consolidated on a line-by-line basis. The balance of the item as at 31.12.2001 largely consisted of minority interests in the Fideuram Wargny Group.

 

Item 150 “Capital”

 

909,255,270 ordinary shares with a par value of 0.26 euros each

236,406

236,406

 

Item 160 “Additional paid-in capital”

 

Additional paid-in capital

—

110,732

 

Item 170 “Reserves”

 

Legal reserve		47,281		46,959
Reserve for own shares		400,000		—
Others		124,102		317,014
Total		571,383		363,973

 

The legal reserve and own shares reserve relate to the parent company.

 

The item other reserves principally comprises the net income of investments carried at equity and of the subsidiaries consolidated on a line-by-line basis.

 

Item 180 “Revaluation reserve”

 

Surplus balance of monetary reval. of property

12,254

12,254

 

This is the surplus balance of the monetary revaluation resulting from the application of Italian Law 342/2000 net of substitute tax paid.

 

Item 200 “Net income for the year”

 

Net income for the year

225,930

223,739

 

Statement of changes in consolidated shareholders’ equity

31.12.2001

 

		capital		additional paid-in capital		legal reserve		other reserves		negative goodwill from consolidation		negative goodwill from equity method		net income for the period		total consolidated shareholders’ equity
Balance as at 31 December 2000		236,406		110,732		46,959		329,268		1,342		—		223,739		948,446
Allocation of net income:
• reserves		—		(110,732	)	322		206,853		—		—		(96,443	)	—
• dividends		—		—		—		—		—		—		(127,296	)	(127,296	)
Other changes		—		—		—		235		—		—		—		235
Net income		—		—		—		—		—		—		225,930		225,930
Balance as at 31 December 2001		236,406		—		47,281		536,356		1,342		—		225,930		1,047,315

 

31.12.2000

 

		capital		additional paid-in capital		legal reserve		other reserves		negative goodwill from consolidation		negative goodwill from equity method		net income for the period		total consolidated shareholders’ equity
Balance as at 31 December 1999		234,795		112,343		38,734		246,174		1,376		—		157,872		791,294
Allocation of net income:
• reserves		—		—		8,225		65,120		—		—		(73,345	)	—
• dividends		—		—		—		—		—		—		(84,527	)	(84,527	)
Change following redenomination of share capital in euros		1,611		(1,611	)	—		—		—		—		—		—
Surplus balance of revaluation of immovable property		—		—		—		12,254		—		—		—		12,254
Other changes (*)		—		—		—		5,720		(34	)	—		—		5,686
Net income		—		—		—		—		—		—		223,739		223,739
Balance as at 31 December 2000		236,406		110,732		46,959		329,268		1,342		—		223,739		948,446

 

(*) Includes 4.3 million euros resulting from the increase in value of the investment in Fideuram Vita due to the revaluation of assets.

 

60

 

Item 110 “Subordinated liabilities”

 

		31.12.2001		31.12.2000
Subordinated liabilities		200,547		200,000

 

B - SECTION 9

 

OTHER LIABILITIES

 

9.1 Item 50 “Other liabilities”

 

		31.12.2001		31.12.2000
Due to private bankers		275,701		263,051
Clearing accounts and other payables		139,857		240,948
Amounts being processed		118,676		145,861
Payroll and contributions payable		42,122		34,242
Amounts relating to securities transactions		34,391		3,313
Due to suppliers		29,870		33,699
Due to tax authorities		17,823		16,506
Due to social security institutions		8,445		11,173
Non-liquid balances from portfolio transactions		5,733		3,658
Effect of valuing off-balance-sheet transactions		4,032		2,454
Amounts to be collected by customers		3,724		2,009
Cash-changeover		511		—
Total		680,885		756,915

 

9.2 Item 60 “Accrued expenses and deferred income”

 

Accrued expenses		22,106		16,674
Interest on amounts due to banks		2,044		3,158
Interest on amounts due to customers		3,151		2,309
Differentials on off-balance-sheet transactions		498		—
Subordinated liabilities		2,055		2,786
Differentials Index Bonus		10,653		—
Other		3,705		8,421
Deferred income		55		46
Commissions		55		46
Other		—		—
Total		22,161		16,720

 

9.3 Adjustments to reflect accrued expenses and deferred income

 

Accrued expenses and deferred income are all recorded separately and, accordingly, no balance sheet accounts have been adjusted to reflect these amounts.

 

B - SECTION 10

 

GUARANTEES AND COMMITMENTS

 

10.1 Item 10 “Guarantees given”

 

		31.12.2001		31.12.2000
a) Commercial guarantees		28,892		21,582
• guarantees		28,892		21,582
• lines of credit		—		—
b) Financial guarantees		49,524		41,584
• guarantees		49,524		41,584
c) Assets lodged in guarantee		—		—
• securities		—		—
Total		78,416		63,166

 

10.2 Item 20 “Commitments”

 

a) Commitments to grant finance (certain to be called on)		1,432,980		247,581
• purchases of securities not yet settled		177,290		31,760
• deposits and loans to be made to banks		1,230,065		202,807
• deposits and loans to be made to customers		25,625		13,014
• financial commitments: payment of residual 7/10ths of capital increase		—		—
• mortgages to be paid out to customers		—		—
b) Commitments to grant finance (not certain to be called on)		4,879		4,466
• commitments to the Interbank Deposit Guarantee Fund		4,879		4,466
• undrawn irrevocable lines of credit granted		—		—
Total		1,437,859		252,047

 

The commitments for 2001 mainly relate to Banca Fideuram and Fideuram Bank (Lux) regarding deposits to be made in early 2002.

 

10.3 Assets lodged to guarantee Group liabilities

 

Securities lodged to guarantee:

 

• advances from the Bank of Italy		—		34,966
• borrowing repurchase agreements with banks		—		—
• borrowing repurchase agreements with customers		666,371		447,432
• banker’s drafts		39,839		35,965
• other guarantee deposits		—		—
Total		706,210		518,363

 

10.4 Unused lines of credit available

 

a) Central Banks		27,287		11,461
b) Other banks		—		—
Total		27,287		11,461

 

61

 

10.5 Forward transactions

 

		31.12.2001						31.12.2000
		hedging		dealing		other		hedging		dealing		other
1. Purchase/sale of
1.1 Securities
• purchases		—		177,290		—		—		33,746		—
• sales		—		782,200		—		—		511,783		—
1.2 Currency
• currency against currency		—		16,172		—		3,361		447		—
• purchases against euro		—		39,033		—		12,181		40,704		—
• sales against euro		—		2,509		—		5,557		25,488		—
2. Deposits and loans
• to be disbursed		—		—		1,255,690		20,497		—		7,754
• to be received		—		—		1,656		195,095		—		54,602
3. Derivative contracts
3.1 With exchange of capital
a) securities
• purchases		—		—		—		—		—		—
• sales		—		—		—		—		—		—
b) currency
• currency against currency		—		—		—		—		2,983		—
• purchases against euro		—		—		—		—		17,000		—
• sales against euro		—		66,192		—		—		264,650		—
c) other instruments
• purchases		—		—		—		—		—		—
• sales		—		—		—		—		—		—
3.2 Without exchange of capital
a) currency
• currency against currency		—		—		—		—		—		—
• purchases against euro		—		—		—		—		—		—
• sales against euro		—		—		—		—		—		—
b) other instruments
• purchases		116,112		61,600		—		254,554		—		—
• sales		—		—		—		—		—		—

 

Derivative contracts without exchenge of capital include 116.1 million euros for hedging the index bonus incentive provided for in the 1999/2001 three-year plan and 61.6 million euros related to the new 2002 plan.

 

B - SECTION 11

 

CONCENTRATION AND DISTRIBUTION OF ASSETS AND LIABILITIES

 

11.1 Significant exposures

 

		31.12.2001		31.12.2000
a) Amount		—		—
b) Number		—		—

 

11.2 Distribution of loans to customers by category of borrower

 

a) Governments		—		—
b) Other public entities		—		11
c) Non-financial companies		90,462		70,207
d) Financial institutions		181		1,399
e) Family businesses		1,356		1,198
f) Other operators		392,758		270,473
Total		484,757		343,288

 

11.3 Distribution of loans to resident non-financial and family businesses

 

		31.12.2001		31.12.2000
Business sector:
a) 1a - other, sales services		45,875		25,063
b) 2a - construction and public works		15,006		12,620
c) 3a - commerce, salvage and repairs		11,034		6,424
d) 4a - fashion products		4,711		2,836
e) 5a - hotel services		3462		1,597
f) Other sectors		11,730		9,826

 

11.4 Distribution of guarantees given by main category of counter-debtor

 

a) Governments		—		—
b) Other public entities		—		—
c) Banks		678		1,192
d) Non-financial companies		27,622		38,981
e) Financial institutions		5,960		1,952
f) Family businesses		—		129
g) Other operators		44,156		20,912
Total		78,416		63,166

 

11.5 Geographical distribution of assets and liabilities

 

31.12.2001

 

		Italy		Other UE countries		Other countries		Total
1. Assets
1.1 Due from banks		1,608,631		1,359,864		420,633		3,389,128
1.2 Loans to customers		481,759		2,992		6		484,757
1.3 Securities		417,229		901,800		9,393		1,328,422
2. Liabilities
2.1 Due to banks		221,133		171,681		114,094		506,908
2.2 Due to customers		2,780,224		769,084		10,909		3,560,217
2.3 Securities issued		3,406		—		—		3,406
2.4 Other accounts		200,000		547		—		200,547
3. Guarantees and commitments		455,996		1,060,279		—		1,516,275

 

31.12.2000

 

		Italy		Other UE countries		Other countries		Total
1. Assets
1.1 Due from banks		1,826,180		744,166		444,658		3,015,004
1.2 Loans to customers		343,087		201		—		343,288
1.3 Securities		311,104		560,504		11,287		882,895
2. Liabilities
2.1 Due to banks		198,368		221,445		48,803		468,616
2.2 Due to customers		2,115,969		600,758		3,690		2,720,417
2.3 Securities issued		3,320		—		—		3,320
2.4 Other accounts		200,000		—		—		200,000
3. Guarantees and commitments		105,529		209,573		111		315,213

 

62

 

11.6 Maturities of assets and liabilities

 

Specified maturity

31.12.2001

 

						BETWEEN 3		BETWEEN 1 AND 5 YEARS				OVER 5 YEARS
Item / Residual maturity		ON DEMAND		UP TO 3 MONTHS		AND 12 MONTHS		FIXED RATE		FLOATING RATE		FIXED RATE		FLOATING RATE		UNSPECIFIED MATURITY		TOTAL
1. Assets		2,004,883		3,953,297		613,514		247,854		482,775		324		37,450		73,316		7,413,413
1.1 Treasury Securities eligible for refinancing		—		104,836		224,993		—		—		52		—		—		329,881
1.2 Due from banks		1,218,279		2,053,835		45,662		—		—		—		—		71,352		3,389,128
1.3 Loans to customers		376,396		14,852		25,346		243		28,345		271		37,340		1,964		484,757
1.4 Bonds and other debt securities		3,296		204,240		205,661		220,684		358,831		1		110		—		992,823
1.5 Off-balance-sheet transactions		406,912		1,575,534		111,852		26,927		95,599		—		—		—		2,216,824
2. Liabilities		3,436,780		2,101,165		368,734		143,422		237,741		53		200,007		—		6,487,902
2.1 Due to banks		186,764		250,991		69,153		—		—		—		—		—		506,908
2.2 Due to customers		2,890,990		646,497		22,730		—		—		—		—		—		3,560,217
2.3 Securities issued
• bonds		—		—		—		—		—		—		—		—		—
• certificates of deposit		—		—		—		—		—		—		—		—		—
• Other securities		3,406		—		—		—		—		—		—		—		3,406
2.4 Subordinated liabilities		—		—		—		547		—		—		200,000		—		200,547
2.5 Off-balance-sheet transactions		355,620		1,203,677		276,851		142,875		237,741		53		7		—		2,216,824

 

Specified maturity

31.12.2000

 

						BETWEEN 3		BETWEEN 1 AND 5 YEARS				OVER 5 YEARS
Item / Residual maturity		ON DEMAND		UP TO 3 MONTHS		AND 12 MONTHS		FIXED RATE		FLOATING RATE		FIXED RATE		FLOATING RATE		UNSPECIFIED MATURITY		TOTAL
1. Assets		2,625,340		1,037,774		663,363		209,056		483,409		4,204		38,581		13,343		5,075,070
1.1 Treasury Securities eligible for refinancing		—		51,188		67,505		30,675		40,850		2,850		—		—		193,068
1.2 Due from banks		2,135,478		382,440		475,625		—		10,000		—		—		11,461		3,015,004
1.3 Loans to customers		239,313		24,114		16,674		4,401		23,277		686		32,941		1,882		343,288
1.4 Bonds and other debt securities		478		25,514		92,271		169,265		387,527		668		3,655		—		679,378
1.5 Off-balance-sheet transactions		250,071		554,518		11,288		4,715		21,755		—		1,985		—		844,332
2. Liabilities		2,449,948		1,053,188		22,632		166,516		342,416		—		201,985		—		4,236,685
2.1 Due to banks		133,631		314,985		20,000		4		4		—		—		—		468,616
2.2 Due to customers		2,072,769		645,091		2,557		—		—		—		—		—		2,720,417
2.3 Securities issued
• bonds		—		—		—		—		—		—		—		—		—
• certificates of deposit		—		—		—		—		—		—		—		—		—
• Other securities		3,320		—		—		—		—		—		—		—		3,320
2.4 Subordinated liabilities		—		—		—		—		—		—		200,000		—		200,000
2.5 Off-balance-sheet transactions		240,228		93,112		75		166,512		342,420		—		1,985		—		844,332

 

The amounts with “unspecified maturity” include the compulsory reserve with the Bank of Italy and the non-performing loans of Banca Fideuram.

 

63

 

11.7 Assets and liabilities denominated in foreign currencies

 

		31.12.2001		31.12.2000
a) Assets		843,551		556,301
1. Due from banks		645,211		528,597
2. Loans to customers		14,532		4,888
3. Trading securities		54,660		22,719
4. Equity investments		18,704		—
5. Other accounts		110,444		97
b) Liabilities		710,315		240,827
1. Due to banks		143,977		108,275
2. Due to customers		412,436		132,552
3. Securities issued		—		—
4. Other accounts		153,902		—

 

11.8 Securitisation

 

		31.12.2001		31.12.2000
		5,000		—

 

Banca Fideuram owns stock, classified in the dealing portfolio, that represents the government securitisation of future receivables deriving from the sale of public real estate.

 

B - SECTION 12

 

ADMINISTRATION AND TRADING ON BEHALF OF THIRD PARTIES

 

12.1 Trading in securities

 

a) Purchases		340,573		461,049
1. settled		336,650		459,351
2. not settled		3,923		1,698
b) Sales		1,223,195		1,194,863
1. settled		1,207,869		1,190,135
2. not settled		15,326		4,728

 

12.2 Asset management

 

Market value of assets under management

14,672,396

10,280,615

 

The amount mainly regards the assets under management of Fideuram Gestioni Patrimoniali Sim and Fideuram Bank (Lux).

 

12.3 Custody and administration of securities

 

a) Third-party securities held on deposit		52,004,522		47,818,477
1. Securities issued by Banca Fideuram		55,524		52,933
• in custody		55,524		52,933
• as guarantees		—		—
2. Other securities		51,948,998		47,765,544
• in custody		51,410,404		47,444,974
• as guarantees		538,594		320,570
b) Third-party securities deposited with third parties		41,270,414		36,466,283
c) Portfolio securities deposited with third parties		1,297,618		874,370

 

12.4 Collection of receivables on behalf of third parties: credit and debit adjustments

 

a) Debit adjustments		936		732
1. current accounts		—		—
2. central portfolio		26		83
3. cash		134		255
4. other accounts		776		394
b) Credit adjustments		6,669		4,390
1. current accounts		168		288
2. transferors of notes and documents		6,501		4,102
3. other accounts		—		—

 

12.5 Other transactions

 

Unused traveller’s cheques

377

418

 

PART C

 

NOTES TO THE CONSOLIDATED
STATEMENT OF INCOME

 

C - SECTION 1

 

INTEREST

 

1.1 Item 10 “Interest income and similar revenues”

 

		2001		2000
a) On amounts due from banks		126,746		124,073
including: deposits with Central Banks		1,621		1,316
b) On loans to customers		25,355		17,240
c) On debt securities		69,143		32,537
d) Other interest income		1,342		191
e) Net differential on hedging transactions		—		—
Total		222,586		174,041

 

1.2 Item 20 “Interest expense and similar charges”

 

a) On amounts due to banks		23,384		23,305
b) On amounts due to customers		123,495		70,198
c) On securities issued		—		—
including: certificates of deposit		—		—
d) On third-party funds administered		—		—
e) On subordinated loans		10,404		9,768
f) Net differential on hedging transactions		—		629
g) Other interest		206		1
Total		157,489		103,901

 

1.3 Breakdown of item 10 “Interest income and similar revenues”

 

a) On assets denominated in foreign currencies

26,145

27,064

 

1.4 Breakdown of item 20 “Interest expense and similar charges”

 

a) On liabilities denominated in foreign currencies

13,453

38,732

 

64

 

C - SECTION 2

 

COMMISSIONS

 

2.1 Item 40 “Commission income”

 

 

		2001		2000
a) Guarantees given		221		224
b) Derivatives on loans		1		—
c) Management, dealing and consultancy services
1. dealing in securities		32,455		5,368
2. dealing in currency		52		59
3. asset management
3.1 individual		234,122		146,284
3.2 collective		397,653		521,027
4. custody and administration of securities		13,522		9,892
5. depositary bank		63,778		67,238
6. placement of securities		1,413		9,281
7. acceptance of instructions		44,042		79,715
6. consultancy services		10,781		7,638
9. distribution of services:
9.1 asset management:
a) individual		—		—
b) collective		—		—
9.2 insurance products		36,856		41,087
9.3 other products		—		—
d) Payement and collection services		3,440		3,543
e) Securitisation		—		—
f) Tax collection services		—		—
g) Other services		32,847		19,290
Total		871,183		910,646

 

Item “C6: placement of securities” is almost entirely composed of commissions earned on public offerings for sale.

The item “Other services” includes 8 million euros commissions on deposits and overdrawn current accounts.

 

2.2 Detail of item 40 “Commission income” Distribution network

 

a) own branches:
1. asset management		4,252		—
2. placement of securities		—		—
3. products of third parties		—		—
b) outside:
1. asset management		627,523		667,311
2. placement of securities		1,413		9,281
3. products of third parties		36,856		41,087

 

2.3 Item 50 “Commission expense”

 

a) Guarantees received		—		—
b) Derivatives on loans		—		—
c) Management and dealing services
1. dealing in securities		3,754		4,603
2. dealing in currency		54		51
3. asset management
3.1 own portfolio		—		—
3.2 third parties portfolio		—		—
4. custody and administration of securities		8,452		7,396
5. depositary bank		—		—
6. outside offering of securities, financial products and services		348,151		473,913
d) Payment and collection services		1,756		1,388
e) Other services		15,189		15,097
Total		377,356		502,447

 

C - SECTION 3

 

DEALING PROFITS AND LOSSES

 

3.1 Item 60 “Dealing profits (losses)”

 

		2001		2000
Securities transactions
A.1 Revaluations		762		741
A.2 Write-downs		(3,259	)	(3,329	)
B. Other profits (losses)		17,682		2,525
Total		15,185		(63	)
1. Government securities		4,582		1,919
2. Other debt securities		9,212		134
3. Equities		1,391		(2,116	)
4. Security derivatives		—		—
Currency transactions
A.1 Revaluations		—		—
A.2 Write-downs		—		—
B. Other profits (losses)		(5,189	)	(260	)
Total		(5,189	)	(260	)
Other transactions
A.1 Revaluations		—		—
A.2 Write-downs		—		—
B. Other profits (losses)		687		(60	)
Total		687		(60	)

 

C - SECTION 4

 

ADMINISTRATIVE COSTS

 

4.1 Average number of employees

 

a) Directors		55		53
b) Managers		401		278
c) Other employees		1,046		970
Total		1,502		1,301

 

The average number of employees was determined taking into account only those companies consolidated on a line-by-line basis.

 

Number of branches

 

Number of branches at the end of the period

86

75

 

The total as at 31.12.2001 comprised 82 branches of Banca Fideuram plus those in Zurich, Lugano, Luxembourg and Paris.

 

65

 

Item 80 “Administrative costs”

 

		2001		2000
a) Payroll costs:		119,581		109,390
• wages and salaries		83,463		77,257
• social security contributions		24,263		21,084
• severance indemnities		4,823		4,297
• pensions and other commitments		2,027		2,588
• others		5,005		4,164
b) Other administrative costs:		152,953		115,031
• consultancy and professional fees		25,764		15,977
• rentals and shared building costs		19,593		14,597
• indirect taxes		19,032		16,126
• data processing		12,378		5,940
• management of private bankers network		10,424		9,364
• software maintenance charges		8,571		6,545
• postage, telephone, electricity, telex and data transmission		8,503		7,548
• database, information and search services		5,205		2,951
• advertising		4,362		2,065
• equipment rentals		4,290		3,325
• printing and stationary		3,645		3,387
• maintenance of furniture, plant and equipment		3,515		3,051
• travel		3,058		3,121
• personnel expenses deductible for italian IRAP tax purposes		2,469		2,508
• Euro / year 2000 consultancy		1,899		604
• emoluments of Directors and Statutory Auditors		1,720		1,373
• transport and fitting-out of offices		1,534		1,650
• lighting		1,487		1,840
• security and transport of valuables		1,394		1,256
• insurance		1,335		855
• cleaning		1,097		1,033
• auditing		842		621
• interbank services		783		729
• others		10,053		8,565
Total		272,534		224,421

 

The item “Indirect taxes” principally comprised stamp duty and tax on stock market contracts that were almost entirely recharged to customers, as can be seen from item 70 “Other operating income”.

 

C - SECTION 5

 

ADJUSTMENTS,WRITE-BACKS AND PROVISIONS

 

Item 90 “Adjustments to intangible and tangible fixed assets”

 

a) Intangible fixed assets - amortisation of:		18,574		31,162
• goodwill upon transfer of Imigest business		—		13,715
• other goodwill		583		595
• improvements to leasehold properties		3,165		2,595
• software		13,827		13,871
• others		999		386
b) Tangible fixed assets depreciation of:		12,078		10,744
• immovable property		2,757		2,729
• furniture and furnishings		1,510		2,039
• others		7,811		5,976
c) Amortisation of purchased goodwill		23,976		16,436
Total		54,628		58,342

 

Item 100 “Provisions for risks and charges”

 

		2001		2000
• losses on commissions advanced		37,600		2,591
• legal disputes and claims from receivers		2,374		620
• private bankers’ severance indemnities		3,311		5,774
• other charges		1,032		217
Total		44,317		9,202

 

See the comment on item 7.2 subitem 80 d) in part B above regarding losses on commissions advanced.

 

5.1 Item 120 “Adjustments to loans and provisions for guarantees and commitments”

 

 

a) Adjustments to loans			3,817		2,971
including:	• general adjustments for country risk		110		—
	• other general adjustments		2,956		2,187
b) Provisions for guarantees and commitments			—		—
Total			3,817		2,971

 

Item 130 “Write-backs of loans and provisions for guarantees and commitments”

 

Write-backs due to:
• collection of loans previously written off		875		321
• collection of loans previously written down		115		47
• revaluation of loans previously written down		7		260
• collection of default interest previously written down		40		25
• guarantees and commitments		—		—
Total		1,037		653

 

Item 150 “Adjustments to financial fixed assets”

 

Losses on insignificant investments

1

1

 

Item 160 “Write-backs of financial fixed assets”

 

Gains on insignificant investments

162

15

 

C - SECTION 6

 

OTHER STATEMENT OF INCOME ITEMS

 

6.1 Item 70 “Other operating income”

 

 

Recovery of taxes		15,039		14,754
Recovery of expenses		5,400		5,239
Rental income		28		30
Other income		2,499		630
Total		22,966		20,653

 

6.2 Item 110 “Other operating expenses”

 

Other

208

205

 

66

 

Item 170 “Income from investments carried at equity”

 

		2001		2000
Fideuram Vita S.p.A.		5,628		46,036
Fideuram Assicurazioni S.p.A.		2,077		2,413
Sanpaolo IMI Institutional Asset Management S.p.A.		243		(100	)
Total		7,948		48,349

 

Fideuram Vita’s annual results were adversely affected by a 10.5 million euro write-off connected with the Enron affair.

 

6.3 Item 190 “Extraordinary income”

 

Sale of Mesaction.com		6,943		—
Out-of-period income and amounts not payable		5,774		3,526
Florence offices		1,549		—
Reversal of tax provisions		—		342
Gains on the disposal of tangible assets		50		12
Other income		895		377
Total		15,211		4,257

 

6.4 Item 200  “Extraordinary expenses”

 

		2001		2000
Out-of-period expenses and amounts not collectible		4,820		2,538

 

Item 240 “Income taxes”

 

Income tax costs were as follows:

 

Provision for taxation (net of tax credit)		23,542		59,329
Provision for deferred tax liabilities		6,318		41,439
Provision for income taxes		29,860		100,768
Reversal of deferred tax liabilities		(42,510	)	(24,144	)
Recognition of deferred tax assets		(35,825	)	(53,357	)
Reversal of deferred tax assets		59,556		7,255
Income taxes for the period		11,081		30,522

 

C - SECTION 7

 

OTHER INFORMATION ON THE CONSOLIDATED STATEMENT OF INCOME

 

7.1 Geographical distribution of revenues

This information is not provided since the revenues reported in items 10, 30, 40, 60 and 70 of the Statement of Income, totalling 1,128,013,000 euros (1,105,048,000 in 2000), were earned on markets that do not differ significantly from one another where the organisation of the Bank is concerned.

 

Transactions with Group companies

2001

 

		SUBSIDIARIES (*)		COMPANIES SUBJECT TO CONSIDERABLE INFLUENCE		PARENT COMPANY		COMPANIES CONTROLLED BY THE PARENT COMPANY		TOTAL
Item 10: Interest income and similar revenues		13		—		3,915		50,593		54,521
Item 20: Interest expense and similar charges		8,976		1		701		753		10,431
Item 30: Dividends and other revenues		—		—		—		—		—
Item 40: Commission income		43,152		—		—		933		44,085
Item 50: Commission expense		206		—		—		2,190		2,396
Item 70: Other operating income		991		—		89		7		1,087
Item 80: Administrative costs		1,279		—		382		—		1,661
Item 180: Extraordinary income		20		—		—		—		20
Item 200: Extraordinary expenses		—		—		—		—		—

 

2000

 

		SUBSIDIARIES (*)		COMPANIES SUBJECT TO CONSIDERABLE INFLUENCE		PARENT COMPANY		COMPANIES CONTROLLED BY THE PARENT COMPANY		TOTAL
Item 10: Interest income and similar revenues		17		—		2,171		11,569		13,757
Item 20: Interest expense and similar charges		2,146		—		692		295		3,133
Item 30: Dividends and other revenues		—		—		—		—		—
Item 40: Commission income		22,673		—		—		1,462		24,135
Item 50: Commission expense		—		—		—		2,186		2,186
Item 70: Other operating income		532		—		198		210		940
Item 80: Administrative costs		306		—		489		—		795
Item 180: Extraordinary income		—		—		—		—		—
Item 200: Extraordinary expenses		—		—		—		—		—

 

(*) Subsidiaries consolidated using the equity method.

 

67

 

PART D

 

OTHER INFORMATION

 

D - SECTION 1

 

DIRECTORS AND STATUTORY AUDITORS

 

1.1 Remuneration

 

		2001		2000
a) Directors		1,567		1,199
b) Statutory Auditors		153		174

 

Remuneration paid to Directors, Statutory Auditors and General Managers
(pursuant to article 78 of Consob resolution no.11971 of 14.5.1999)

 

SUBJECT

POSITION

REMUNERATION (IN THOUSANDS OF EUROS)

SURNAME AND NAME

POSITION HELD

TERM OF OFFICE

REMUNERATION

BENEFITS IN KIND

BONUS AND OTHER INCENTIVES

OTHER EMOLUMENTS

Prati Mario *

Chairman BF

april 00/2003

232

5

Chairman FB Lux

march 00/2003

45

Chairman FGP

april 00/2003

10

Chairman F Fund

march 00/2003

5

Chairman FG

march 00/dec. 01

10

Chairman FC

march 01/2003

10

Deputy Chairman FOI

march 00/dec. 01

14

5

Deputy Chairman FV

april 01/2004

26

Cirri Fignagnani Franca *

Deputy Chairman BF

april 00/2003

77

4

Director FOI

march 00/dec. 01

5

Ruffolo Ugo *

Managing Director BF

april 00/2003

52

128

General Manager BF

367

1

310

**

Forti Giorgio

Director BF

april 00/2003

26

2

Chairman FF

april 00/2003

44

Director FV

april 01/2004

10

Nattino Gianpietro

Director BF

april 00/2003

26

2

Deputy Chairman FF

april 00/2003

21

Paolillo Mario

Chairman of Board of Statutory Auditors BF

april 99/2002

26

2

Codacci Pisanelli Vito

Auditor BF

april 99/2002

22

2

Chairman of Board of Statutory Auditors FV

april 01/2004

15

Grimaldi Gian Paolo

Auditor BF

april 99/2002

18

2

Chairman of Board of Statutory Auditors FGP

april 01/2004

8

Chairman of Board of Statutory Auditors FC

april 00/2003

8

Auditor FV

april 01/2004

7

 

The list does not include Directors whose remuneration has been paid directly to their Company of origin.

 

**          To the General Manager Ugo Ruffolo is also due the index bonus incentive provided for the 1999/2001 three-year plan. The reference amount is 929.6 million euros, excluding the revaluation of share price in the last quarter of the current year.

 

*                 Members of the Executive Committee

 

BF - Banca Fideuram

FA - Fideuram Assicurazioni

FF - Fideuram Fondi

FGP - Fideuram Gestioni Patrimoniali Sim

FV - Fideuram Vita

FOI - Fonditalia Management

FC - Fideuram Capital Sim

FB Lux - Fideuram Bank (Luxembourg)

F Fund - Fideuram Fund

FG - Fideuram Gestions

 

68

 

STATEMENT OF CONSOLIDATED CASH FLOWS

 

(figures in thousands of euros)

 

		2001		2000
Funds generated from operations
Net income		225,930		223,739
Minority interest in net income		190		33
Adjustments to tangible and intangible fixed assets		54,628		58,342
Net adjustments to loans		2,780		2,318
Adjustments to equity investments valued at cost		(161	)	(14	)
Extraordinary items, net		(10,391	)	(1,719	)
Income from investments carried at equity		(7,948	)	(48,349	)
Change in provision for severance indemnities		2,574		2,112
Change in provision for pensions and indemnities		—		(624	)
Change in provision for taxation		(63,327	)	46,758
Change in other provisions for risks and charges		41,769		7,408
Change in accrued expense and deferred income		5,441		8,145
Change in accrued income and prepaid expenses		4,531		(15,680	)
FUNDS GENERATED FROM OPERATIONS		256,016		282,469
Funds used in investment activities
Change in tangible and intangible fixed assets		(39,791	)	(130,104	)
Change in equity investments		15,366		38,653
Change in dealing securities		(456,456	)	(225,112	)
Change in investment securities		10,929		(27,747	)
Change in bank deposits		(175,742	)	415,436
Change in loans		12,923		(33,278	)
Change in reverse repurchase agreements		(201,661	)	(193,296	)
Change in other investment activities		(73,055	)	(373,104	)
FUNDS USED IN INVESTMENT ACTIVITIES		(907,487	)	(528,552	)
Funds generated from financing activities
Change in reverse repurchase agreements		31,707		591,403
Change in securities issued		86		(3,328	)
Change in other borrowings		846,385		(739,608	)
Dividends paid		(127,296	)	(84,526	)
Change in other liabilities		(76,030	)	456,672
Subordinated liabilities		547		463
Change in minority interests		(6,342	)	9,413
Change in shareholders’ equity accounts		235		17,941
FUNDS GENERATED FROM FINANCING ACTIVITIES		669,292		248,431
Increase (decrease) in cash and liquid assets		17,821		2,348
Cash and liquid assets - Opening balance		11,438		9,090
CASH AND LIQUID ASSETS - CLOSING BALANCE		29,259		11,438

 

69

 

 

 

INDEPENDENT AUDITORS’ REPORT

 

70

 

INDEPENDENT AUDITORS’ REPORT

 

 

PricewaterhouseCoopers SpA

 

INDEPENDENT AUDITORS’ REPORT IN ACCORDANCE WITH ARTICLE 156 OF LEGISLATIVE DEGREE NO. 58 OF 24 FEBRUARY 1998.

 

To the shareholders of Banca Fideuram SpA

 

1                  We have audited the consolidated financial statements of the Banca Fideuram Group for the year ended 31 December 2001. The preparation of the financial statements is the responsibility of the directors of the company Banca Fideuram SpA. It is our responsibility to express a professional opinion on the financial statements based on our audit.

 

2                  We conducted our audit in accordance with the auditing principles and criteria recommended by the Italian National Commission for Listed Companies and the Stock Exchange (CONSOB). In accordance with the said principles and criteria, the audit was planned and conducted in such a way as to acquire every element necessary to ascertain that the consolidated financial statements are free of any material misstatements and as a whole reliable. The audit included tests on a sample basis on the probative elements supporting the balances and information contained in the financial statements, together with an assessment of the appropriateness and correctness of the accounting principles used, and of the extent to which the directors’ estimates are well-founded. We consider the audit to provide a reasonable basis for the expression of our professional opinion.

 

The financial statements of certain subsidiaries constituting approximately 1.3 percent of the consolidated total assets and 18.7 percent of the total net interest and net revenues have been audited by other auditors, who provided us with their related reports. Our opinion expressed in this report is also based on the audits carried out by other auditors insofar as it relates to the accounts of these companies included in the consolidated financial statements.

 

You are referred to our report issued on 27 March 2001 for the opinion on the prior year consolidated financial statements, which are presented for comparative purposes as required by law.

 

3                  It is our opinion that the consolidated financial statements of the Banca Fideuram Group as at 31 December 2001 have been properly prepared and give a clear, true and fair view of the Group’s financial position and of the results of its operations in compliance with Italian law governing consolidated financial statements.

 

Milan, 27 March 2002

 

PricewaterhouseCoopers SpA

 

Fabrizio Piva
(Auditor)

 

This report has been translated from the original, which was issued in accordance with Italian practice.

 

Sede legale: Milano 20124 Via Vittor Pisani 20 Tel. 0267831 Fax 0266981433 Cap. Soc. 3.754.400,00 Euro i.v., C.F. e P. IVA e Reg. Imp. Milano 12979880155 Iscritta all’Albo Consob – Altri uffici: Ancona 60123 Via Corridoni 2 Tel. 07136881 – Bari 70125 Viale della Repubblica 110 Tel. 0805429863 – Bologna 40122 Via delle Lame 111 Tel. 051526611 – Brescia 25124 Via Cefalonia 70 Tel. 0302219811 – Firenze 50129 Viale Milton 65 Tel. 0554627100 – Genova 16121 Piazza Dante 7 Tel. 01029041 – Milano 20122 Corso Europa 2 Tel. 0277851 – Napoli 80121 Piazza dei Martiri 30 Tel. 0817644441 – Padova 35137 Largo Europa 16 Tel. 0498762677 – Palermo 90141 Via Marchese Ugo 60 Tel. 091349737 – Parma 43100 V.le Tanara 20/A Tel. 0521242848 – Roma 00154 Largo Fochetti 29 Tel. 06570251 –  Torino 10129 Corso Montevecchio 37 Tel. 011556771 – Trento 38100 Via Manzoni 16 Tel. 0461237004 – Treviso 31100 Piazza Crispi 8 Tel. 0422542726 – Trieste 34125 Via Cesare Battisti 18 Tel. 0403480781 – Udine 33100 Via Marinoni 12 Tel. 043225789 – Verona 37122 Corso Porta Nuova 125 Tel. 0458002561

 

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English language version by
Michael Benis  BA  MITI

 

Mercurio S.r.l.

Studi di promozione pubblicitaria - Milan

 

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BANCA FIDEURAM 2 0 0 1

 

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www.fideuram.it

 

 

Banca Fideuram S.p.A.

 

Registered Office in Milan:

 

Corso di Porta Romana, 16 • 20122 Milano

Tel. (02) 85181 - Fax (02) 85185235

 

Permanent Secondary Office in Rome:

Piazzale Giulio Douhet, 31 • 00143 Roma

Tel. (06) 59021 • Fax (06) 59022634

 

Call center
800 - 099 300

 

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