4.1. APPOINTMENT AND SUBSTITUTION (as per Art. 123-bis, para. 1, letter l), CFA)

Members of the Board of Directors are appointed on the basis of lists presented by shareholders. Candidates are listed in sequential order and their number in any case must not exceed the maximum number of members established by the Articles of Association (fifteen).

Only shareholders who, alone or together with others, own at least 1% of ordinary shares at the time of submittal have the right to submit lists. A lower ownership threshold is possible and – by virtue of current legislation – it must be indicated in the notice convening the Shareholders’ Meeting called to vote on appointment of the members of the Board of Directors.

Board members are elected as follows:

1) all directors except one are elected, according to the sequential order with which they are indicated on the list, from the list obtaining the highest number of votes at the Shareholders’ Meeting;

2) one director is elected from the list obtaining the highest number of votes at the Shareholders’ Meeting and that, pursuant to Article 147-ter, paragraph 3, of the CFA is in no way connected, not even indirectly, with the shareholders who submitted or voted for the list that came first in terms of the number of votes.

If just one list of candidates is submitted, the names indicated on that list are elected as members of the Board of Directors, up to the number of directors to be elected less one, who is elected by the Shareholders’ Meeting there and then, based on a simple majority but excluding from the vote the shareholders who submitted the single list, and based on the proposal of the shareholders not excluded from the right to vote.

The lists must be accompanied by:

- information relating to the identity of shareholders who have presented lists, stating the percentage of shares held as a whole;

- a declaration by shareholders other than those who own, also jointly, a controlling or relative majority interest, certifying the absence of connections with the latter, as indicated in Article 147-ter of the CFA and Article 144-quinquies of the Consob Issuers’ Regulation;

- exhaustive information on candidates’ personal and professional characteristics, as well as by a declaration by the candidates themselves certifying possession of the requirements established by law and acceptance of their candidacy.

Candidates who do not meet the requirements of integrity, professionalism and independence established by Article 26 of Legislative Decree no. 385/1993 (CBA – Consolidated Banking Act) cannot be included in lists. In addition, each list must indicate at least two candidates meeting the requirements of independence established both by the Corporate Governance Code for Listed Companies prepared by Borsa Italiana S.p.A. and by Article 148, paragraph 3 of Legislative Decree no. 58/1998. These candidates must be positioned, on the list, in the first four positions of the sequential order.

The list failing to observe the above rules will be considered not to have been submitted.

With reference to the election of members of the Board of Directors (presentation of lists by the twenty-fifth day prior to the date of the Meeting, information supporting the lists and their composition), procedures are underway to fully update the Articles of Association. In particular, the project to amend the Articles of Association has taken into account:

  • the provisions introduced by Legislative Decree no. 27 of 27 January 2010 which transposed in Italy Directive 2007/36/EC referring to exercise of the rights of shareholders of listed companies;

  • paragraph 1-ter of Article 147-ter of the CFA on the balance between categories, also in light of the consultation document issued by Consob on 9 December 2011 and containing a possible amendment to the “Issuers’ Regulation” (later implemented with Consob resolution no. 18098 of 8 February 2012).

In any case, at least two members of the Board of Directors must meet the independence requirements established both by the Corporate Governance Code for Listed Companies prepared by Borsa Italiana and by Article 148, paragraph 3 of Legislative Decree no. 58/1998.

If, during the year, fewer than two directors are found to meet such requirements, the Board will resolve the lapse of one or of two of its members who have ceased to meet such requirements, based on a criterion of shorter tenure, or, in the case of equal tenure, or lower age, and will co-opt one or two independent members. For any substitution of Board members, without prejudice to the case of cessation of all Directors, legal provisions hold good, without application of the list vote.

In the event of cessation of the director elected from the list that obtained the highest number of votes at the Shareholders’ Meeting and that, pursuant to Article 147-ter , paragraph 3 of the CFA is in no way connected, not even indirectly, with the shareholders who submitted or voted for the list that came first in terms of number of votes, the Board will first check the continued availability of the candidates listed in the list, according to the latter’s sequential order, and will co-opt members based on this criterion of preference.

Succession Plans

The Banca IFIS shares do not belong to the FTSE-Mib Index; the Board of Directors has not yet evaluated the adoption of a succession plan for executive directors.

4.2. COMPOSITION (as per Art. 123-bis, para. 2, letter d), CFA)

The composition of the Board in office as at FY2011 year-end, as shown also in Table 2 attached to this Report, was as follows:

  • Sebastien Egon Fürstenberg (Chairman);

  • Alessandro Csillaghy (Deputy Chairman; Executive Director);

  • Giovanni Bossi (CEO);

  • Roberto Cravero (Independent Director; Lead Independent Director);

  • Leopoldo Conti;

  • Andrea Martin (Independent Director);

  • Marina Salamon;

  • Riccardo Preve (Independent Director);

  • Francesca Maderna (Independent Director).

The Shareholders’ Meeting that appointed the Board took place on 29 April 2010. Two lists were submitted: one by the majority shareholder “LA SCOGLIERA S.p.A.” and one by the shareholder “PREVE COSTRUZIONI S.p.A.” (which certified the absence of connections with the controlling shareholder). Below we show, for both of them, the list of candidates, the list of those elected and the percentage of votes obtained in relation to voting capital:

List submitted by the majority shareholder "LA SCOGLIERA S.p.A."

List of candidates

List of those elected

Percentage of votes obtained

Sebastien Egon Fürstenberg

Roberto Cravero

Andrea Martin

Francesca Maderna

Alessandro Csillaghy

Giovanni Bossi

Leopoldo Conti

Marina Salamon

Andrea Di Giusto

Sebastien Egon Fürstenberg

Roberto Cravero

Andrea Martin

Francesca Maderna

Alessandro Csillaghy

Giovanni Bossi

Leopoldo Conti

Marina Salamon

96.39%

List submitted by the shareholder "PREVE COSTRUZIONI S.p.A."

List of candidates

List of those elected

Percentage of votes obtained

Riccardo Preve

Giovanni Angioni

Riccardo Preve

3.49%

Below we show a summary of each director’s personal and professional characteristics (pursuant to Article 144-decies of the Consob Issuers’ Regulation) based on the declarations provided by each of them and attached to the lists, as well as on any subsequent updates notified by those concerned.

Chairman of the Board of Directors – Sebastien Egon Fürstenberg

Sebastien Egon Fürstenberg has been active in the factoring sector for over 25 years. In 1983 he founded the company I.Fi.S. S.p.A. – Istituto di Finanziamento e Sconto (now Banca IFIS S.p.A.).

As from 1992 he was the Sole Director and, as from 2 February 2009, Chairman of the Board of Directors of La Scogliera S.p.A., a company whose purpose is to purchase, manage and sell investments in banks and financial companies and which holds the majority equity interest in Banca IFIS S.p.A..

Deputy Chairman – Alessandro Csillaghy

Alessandro Csillaghy has been the Bank’s Deputy Chairman since 1996, performing an executive role to develop the Bank’s presence abroad, by means of contacts with local institutions and foreign entrepreneurs designed to further Banca IFIS’s foreign commercial business.

In particular, he has set up representative offices in Central Europe in Bucharest and Timisoara in Romania and in Budapest in Hungary. He is the head of the Budapest representative office and, since April 2010, the officer in charge of the Paris branch.

Chief Executive Officer – Giovanni Bossi

A graduate in Economics & Commerce and a licensed professional accountant, Giovanni Bossi has been registered in the Italian public register of approved statutory auditors since 1992. In the past he has taught at the faculty of Finance Science and Law at Rome’s Luiss University.

As a self-employed professional he provided consulting services to industrial and financial groups, also controlled by European public companies, located in Northern Italy, as well as to Italian companies in relation to the design and development of industrial and financial activities in East European countries.

He has been CEO of the Issuer since May 1995 and, since 2 February 2009, also CEO of La Scogliera S.p.A.

Director – Leopoldo Conti

A law graduate, Leopoldo Conti has practised professionally as a lawyer since 1986, doing so at the Genoa courts. He mainly provides consulting services and assistance to companies. He has built up many years of experience holding office in various companies. He was Chairman of the Board of Directors of Achab S.r.l., a food processing company and a member of the Board of Directors of Advance Medical S.r.l., a manufacturer of medical-surgical aids, and of I.Fi.S. SIM S.p.A., a securities brokerage company.

Director – Roberto Cravero

A graduate in Economics & Commerce and registered in the Biella register of licensed professional accountants since 1984, Roberto Cravero has been a member of the Auditor Training Commission of the Italian National Council of Professional Accountants for two mandates.

He is registered with no. 16616 in the Italian public register of approved statutory auditors (as published in the Italian Official Gazette no. 31- bis on 21/04/1995).

He has performed consulting and advisory activities in the corporate finance area. At present he holds office as a Director or Statutory Auditor in various industrial and financial companies.

Director – Andrea Martin

A graduate in Economics & Commerce, Andrea Martin is registered with the Venice orders of Labour Consultants and of Professional Accountants & Accounting Experts; since 1986 he’s registered with the register of statutory auditors. Since 1993 he is registered in the central list of expert auditors for fiduciary and audit firms.

He has performed consulting services for some provincial associations of Veneto manufacturers, as well as for their consortia and service companies, for the Venice Public Prosecution Department for bankruptcy and corporate crimes, and has followed numerous creditor arrangement procedures. He has held offices as chairman, deputy chairman, executive committee member and internal statutory auditor of banks, financial and tax-collection entities. He has also been an external auditor for various public entities and public and private cultural foundations.

He currently holds office as a member of the Board of Statutory Auditors of various public entities, companies and foundations.

Director – Marina Salamon

With a university degree in history (specialization in economic history), in 1982 Marina Salamon founded Altana S.p.A. one of the foremost European medium/high-end children’s apparel companies.

She controls Doxa S.p.A, Doxa Marketing Advice S.r.l., Connexia S.p.A., Duepuntozero Research S.r.l. and Doxa Metrics S.r.l.: these are some of the major Italian companies in the market research and web communication sector. The group also has minority interests in the companies The Visual Agency S.r.l. and Doxa Pharma S.r.l..

All entrepreneurial and financial undertakings are headed by the holding company Alchimia S.p.A., wholly owned, which is strongly present also in the real estate sector. Alchimia S.p.A. has also invested in the photovoltaic sector, through the construction or acquisition of solar parks in various Italian locations.

Director – Riccardo Preve

A graduate in sociology, in 1980 Riccardo Preve founded Preve Costruzioni S.p.A., a company operating in the building of infrastructures for public contracts which controls other companies in the road signs and construction sectors.

He has a strong presence in the real estate sector and has invested in the photovoltaic sector.

He currently covers the position of Chairman, CEO and Technical Director of various industrial companies and he is a Member of the Committee of Confindustria Cuneo.

He has many years of experience in various financial companies and was Chairman of Banca di Credito Cooperativo.

Director – Francesca Maderna

Francesca Maderna graduated in Economics & Commerce in 1988 and has been registered with the Belluno Order of Professional Accountants since 1990 and in the Italian public register of approved statutory auditors (with no. 33675) since 1995.

At present she holds the following offices: Sole Director of Immobiliare del Nord S.p.A., a company that manages property assets; Sole Director of Vitanova Srl, a leisure-boat charter company; and Director of Clinica Mediterranea S.p.A..

In addition, she has held directorships in various companies in the hollow-glass sector (AVIR Group).

On 16 February 2012 the Board made an overall assessment of the architecture of the corporate governance system adopted by Banca IFIS and carried out an analysis of the effectiveness of the way it functions with regard to the structure of its capital, strategic prospects, dimensions, operating complexity and the type of business of the Bank and the group, also in light of a “Note” issued by the Bank of Italy on 11 January 2012 on the application of supervisory provisions concerning the organisation and corporate governance of banks. From this it emerged, amongst other things, that a further expansion of the Board of Directors would be advisable at its next renewal and with the statutory mechanisms in force (list vote), including at least one person in possession of specific competence in the purchase and management of non-performing loans and/or tax receivables in view of the already started process of integration of the former Toscana Finanza Group.

Maximum number of offices held in other companies

The “Regulation on the maximum total number of offices that can be held by company officers” was approved by the Shareholders’ Meeting on 30 June 2009.

This Regulation first of all establishes that:

“The officers of Banca IFIS S.p.A. accept office and maintain it insofar as they believe themselves able to dedicate the necessary time to diligent performance of their tasks, taking into account both (a) the number and the quality of offices held in the management and control bodies of other companies and (b) the commitment required of them by their further professional activities and by association appointments held”.

For the purposes of calculation of the limits on the maximum total number of offices governed by the “Regulation”, the following items are relevant:

  • companies with shares listed in Italian or foreign regulated markets;

  • Italian or foreign companies, with shares not listed in regulated markets and that operate in the insurance and banking sectors and in the financial sector in general. As regards the latter sector, the only financial companies relevant are those subject to prudential supervision by the Bank of Italy and registered in the specific list indicated in Article 107 of Legislative Decree no. 385/1993. In the case of foreign companies, a evaluation of substantial equivalence is performed;

  • “companies of significant size” (“companies of significant size” are those that have individual shareholders’ equity of at least 100 million Euro based on the last approved set of annual accounts).

Conversely, offices held within the Banca IFIS Group or in companies other than those listed above, do not count.

In the Regulation “executive offices” mean the following offices:

- CEO

- General Manager

- Member of the Management Board

- Member of the Executive Committee

“Non-executive or control offices” mean the following offices:

- Member of the Board of Directors without proxies

- Standing member of the Board of Statutory Auditors

- Member of the Supervisory Board.

Besides the officer held in the Bank, an executive director:

  • cannot hold other executive offices in the companies identified, in terms of type or size, as relevant for the purposes of the Regulation;

  • can hold up to a maximum of 5 (five) offices as non-executive director or statutory auditor in such companies.

Besides the office held in the Bank, a non-executive director cannot hold more than 10 (ten) offices as director or statutory auditor, of which not more than 2 (two) executive offices, in other companies identified, in terms of type or size, as relevant for the purposes of the Regulation.

Candidates for appointment as a Director or Statutory Auditor of Banca IFIS S.p.A. must provide the Bank with an updated statement of the management, direction and control offices held by each of them.

Following appointment, the Company’s Directors and Statutory Auditors promptly notify the Corporate Affairs Department of Banca IFIS S.p.A. of any changes affecting the offices held by them in the management and control bodies of other companies.

The Board of Directors of Banca IFIS S.p.A. has the authority to accord possible exceptions, also temporary, to the maximum limit in the Regulation. At the time of writing of this Report, no such exceptions had been accorded.

As part of the submittal of the lists for the appointments made by the Shareholders’ Meeting on 29 April 2010, all candidates declared – when accepting their candidacy and possible appointment – that they had perused the “Regulation” and checked that they did not hold a number of offices in other companies exceeding the related limits.

No significant changes in this respect were notified subsequent to appointment.

Offices held by Directors of Banca IFIS S.p.A. as at 31 December 2011 in the management and control bodies of other companies “relevant” for the purposes of the said Regulation, based on the information provided by those directors, were as follows:

Members

Office held in Banca IFIS

Offices held in other companies

Sebastien Egon Fürstenberg

Chairman

--

Alessandro Csillaghy

Deputy Chairman

--

Giovanni Bossi

C.E.O.

--

Roberto Cravero

Director

a)

PARMALAT SPA (Standing Statutory Auditor)

 

b)

CASSA LOMBARDA SpA (Bank) (Director)

FIDOR SpA (Fiduciary co. – static admin.) (Director)

FIDUCIARIA OREFICI SpA (Securities dealing firm) (Director)

ANTHILIA SGR (Chairman of the Board of Statutory Auditors)

 

c)

ERMENEGILDO ZEGNA HOLDITALIA SpA (Standing Statutory Auditor)

 

Leopoldo Conti

Director

--

Andrea Martin

Director

--

Marina Salamon

Director

c)

IllY SpA (Director)

Riccardo Preve

Director

--

Francesca Maderna

Director

--

4.3. ROLE OF BOARD OF DIRECTORS (as per Art. 123-bis, para. 2, letter d), CFA)

In FY2011 17 meetings of the Board of Directors were held, each lasting about 3 hours on average. Percentage attendances are shown in Table 2 attached to this Report.

Since the beginning of 2012 up to the date of approval of this Report 3 Board meetings have been held, including the one during which the Report was approved. The number of Board meetings in 2012 is expected to be in line with that of the previous financial year and in any case not less than 12.

In fulfilment of the obligations established, for listed issuers, by Article 2.6.2 of the Market Regulation of Borsa Italiana S.p.A., the Board of Directors annually approves the Corporate Events Calendar, to be notified to Borsa Italiana, for disclosure to the public, within the deadline of 30 (thirty) days after the end of the previous corporate financial year.

In particular, the Calendar specifies, within the framework of Board meetings established for the new financial year, the dates fixed for the approval of draft financial statements, interim financial report and quarterly reports, as w ell as the date scheduled for the Shareholders’ Meeting for the approval of the financial statements.

In the meeting of 22 September 2011 the Board approved some non-significant amendments to the already existing “Regulation for procedures for calling meetings and for operation of the Board of Directors’ Meeting”. The Regulation establishes that:

  • the documentation supporting discussion of agenda items is sent to each Director and Statutory Auditor by e-mail or fax by the end of the second day before the date fixed for the meeting, without prejudice to urgent cases when documentation is made available by the end of the day before the meeting and in any case as soon as possible;

  • such documentation is sent, on the Chairman’s instructions, by the Bank’s Corporate Affairs Department;

  • when the Chairman deems it advisable in relation to the contents of the topic and related resolution – also in order to avoid abusive disclosure of confidential information, made possible by the means of communication instruments used quite apart from the intentions of those concerned – the briefing documentation can be provided directly at the meeting, advising Directors and Statutory Auditors of this beforehand by the deadline indicated above so that, if they deem it appropriate, they can in any case have access to the information at the Company’s registered office by the end of the day before the meeting and in any case as soon as available.

Pursuant to the Articles of Association, Board meetings are attended by the General Manager with consultative functions. In addition, pursuant to the aforesaid “Regulation”, the Chairman can invite to attend Board meetings managers or other employees of the Company or other parties or external advisors, whose presence is deemed useful by the Chairman in relation to the matters to be addressed. During 2011 meetings were also attended by the Corporate Accounting Reporting Officer and by the employee called to act as secretary. There was also occasional attendance by the Head of the Credit Assessment Area, to aid the Board in the assessment of some assignment dossiers, and by the Head of the Organization & Information Systems Area when topics were addressed concerning the latter’s related activities and responsibilities. Lastly, the Internal Audit Officer and the Compliance Officer, responsible also for the Anti-Money Laundering Function, directly illustrate their reports and work plans to directors, in accordance with the current supervisory regulation enacted by the Bank of Italy.

***

Pursuant to Article 14 of the Articles of Association, besides the attributions that, mandatorily, cannot be delegated, matters that are the exclusive prerogative of the Board of Directors include:

- adaptations of the Articles of Association to regulatory requirements;

- strategic guidelines and operations as well as business and financial plans of the Group;

Purchase and disposal of equity investments, companies and/or company branches leading to changes in the group or investments or disinvestments exceeding 1% (one percent) of the shareholders’ equity reported in the Company’s latest financial statements approved.

***

The Board assesses on an ongoing basis, as part of its handling of matters for which it is responsible, the appropriateness of the Bank’s organizational, administration and general accounting set-up. In particular, during 2011 and at the beginning of 2012, it updated the General Regulations of the Bank and the Group Regulations. On 15 December 2011, as specified in Section 12 (Directors’ Interests and related-party transactions), the Board updated the “Procedure for related-party transactions” approved in 2010. The control model is calibrated according to the risk priorities characterizing the Bank’s core management. Each year a document on risk-management policies that identifies procedures for performing related controls is submitted to the Board of Directors for approval.

During 2011 and up to the date of this Report the dimensions and structure of the Banca IFIS Group developed significantly. The main stages of this development are summarised below:

  • voluntary takeover bid, promoted from 4 April 2011 until 10 May 2011, for all the ordinary shares of Toscana Finanza S.p.A., amounting to no. 30,594,476 shares, including no. 499,715 treasury shares in the portfolio (representing 1.63% of the Company’s share capital). This takeover bid involved a total of no. 23,637,292 ordinary shares of Toscana Finanza S.p.A., equal to 77.26% of the latter’s share capital;

  • signing, on 22 June 2011, of a deed integrating the Framework Agreement between Banca IFIS and the former shareholders of Toscana Finanza (signed in March 2010) for implementation of the Merger without the transfer of the assets and liabilities of Toscana Finanza S.p.A.;

  • on 27 December 2011 finalisation of the deed of merger of Toscana Finanza S.p.A. with Banca IFIS S.p.A. effective from 31 December 2011;

  • definition on 18 January 2012 of the positions of the “Key Figures” laid down by the above-mentioned Framework Agreement, regarding the latter and in light of the new development of the integration project of the former Toscana Finanza Group;

  • approval by the Board, on 19 January 2012, of the merger plan of Fast Finance S.p.A. with Banca Ifis S.p.A., subject to the approval of the Internal Audit Committee (the part of it composed solely of independent directors);

  • for the wholly owned subsidiary TF Sec Srl, which moreover does not meet the requirements for registration within the scope of consolidation of the banking group, the start of the winding-up procedure.

At the end of the integration of the former Toscana Finanza Group, the Banca IFIS Group will therefore be again composed of the Parent Company Banca IFIS S.p.A. and the wholly owned subsidiary IFIS FINANCE Sp. z o.o. - a factoring company located in Poland. Even though this company’s total contribution to consolidated turnover is extremely minor, Banca IFIS S.p.A. had equipped itself with some governance and control governance tools to set relations with the subsidiary in an appropriate frame work. It had been working constantly to refine these tools for accomplishing a single overall entrepreneurial design, also as regards the internal audit system and management of conflicts of interest; Banca IFIS S.p.A. further refined those tools when it acquired and consolidated the former Toscana Finanza Group.

***

The remuneration of the CEO and of the other directors vested with specific offices was established by the Board of Directors at the first meeting following its appointment by the Shareholders’ Meeting, which took place on the same date (29 April 2010), within the overall ceiling for directors’ remuneration and as per the “Policies” resolved by the Shareholders’ Meeting. The Board Resolution was passed also in the light of the opinion of the Remuneration Committee and Board of Statutory Auditors. On the same occasion the mechanism for calculating the variable part of the CEO’s remuneration – described in Section 9 of this Report – was also revised. Lastly, during 2010 the Board, having reviewed the specific committee’s proposals, also resolved on the overall remuneration of the other executive director. During 2011, as part of the process to bring the Banca IFIS Group in line with the development of the regulatory framework regarding remuneration and incentive policies and practices (a consequence, in March 2010, of the new Article 7 of the Corporate Governance Code of listed companies, regarding the remuneration of directors and the issuing, with provision of 30 March 2011, by the Bank of Italy, of new supervisory provisions “regarding remuneration and incentives policies and practices in banks and banking groups”), a mechanism was identified for adjusting the performance indicator already established for the variable part of the remuneration of the CEO with the aim of taking into account the level of capital resources and liquidity necessary for the activities undertaken. For further details, please refer to the Remuneration Report laid down by Article 123 ter of the CFA, which is available on the website www.bancaifis.it (in the “Investor Relations” section) and will be submitted to the Ordinary Shareholders’ Meeting.

***

The Board evaluates general operating progress on at least a quarterly basis, in particular when it reviews the financial reports required by Article 154-ter of the CFA and when a quarterly dashboard report is received by the top-management. This report summarizes, for each given period, overall operating performance in terms both of results achieved and risks taken on. The document examines the key metrics in terms of target/actual/deviation and of consequent impacts on operating manoeuvres.

***

Pursuant to the provisions of the Articles of Association highlighted earlier, the Board has the prerogative of prior review and approval of the transactions of the Issuer and its subsidiaries, when such transactions are of significant importance in strategic, economic, equity or financial terms. In such cases the following procedure is applied: the Board of Directors gives a mandate to the CEO to perform a feasibility study of the transaction, in order to assess its risks and opportunities. This study must contain all the parameters necessary to permit knowledgeable decision-making by the Board of Directors. The Board, after having reviewed the feasibility study, can either approve the transaction or ask for further in-depth analysis.

***

As regards the prior review and approval of transactions of the Issuer and its subsidiaries in which one or more directors have an interest, either directly or on behalf of third parties, or with related parties, those are the sole responsibility of the Board of Directors, and reference should be made to what is specified in Section 12 and to the “Procedure for related-party transactions”, available on the website www.bancaifis.it (in the “Investor Relations” section). The “Procedure” also regulates transactions that have to be resolved applying the formalities established by Article 136 of Legislative Decree no. 385/1993 (“TUB”, Consolidated Banking Act).

***

The Board has not established general criteria to identify transactions of significant strategic, economic, equity or financial importance for the Bank. The reason is due to the fact that the present arrangement of the Banca IFIS Group’s governance documentation (with special reference to documents concerning strategic planning and risk policies) already performs this function, including, at any given time, significant transactions.

The Board examined the issue of general criteria to identify related-party transactions of significant strategic, economic, equity or financial importance for the Bank when it approves and reviews the “Procedure for related-party transactions” mentioned earlier.

***

At its meeting on 8 April 2010 the Board of Directors – in view of the forthcoming Shareholders’ Meeting on 29 April 2010 and submittal of the lists of candidates to renew corporate bodies - evaluated the size, composition and operation of the Board and its Committees. This revealed, in particular:

  • the advisability of evaluating, case by case, the independence of any candidates owning minority interests in the Bank, also considering any other commercial, financial or professional dealings that might figure as “significant”;

  • an opinion of appropriateness, in relation to the Bank’s size and operating complexity, of a Board of Directors substantially similar to the one about to lapse in terms of size and assortment of professional skills, without prejudice to the desirability of moderate adaptation to growth of the Company’s size;

  • in the light of the evolution of some relevant regulatory frameworks, the recommendation to shareholders to include in their lists an adequate number of candidates classifiable as “independent” and the advisability of requiring, right from the time of appointment, the presence in the Remuneration Committee of directors and managers and for any stock option plans of a member with “appropriate knowledge and experience in financial matters to be evaluated by the Board of Directors at the time of appointment”.

The recent above-mentioned indications of the Bank of Italy on the supervisory provisions regarding corporate organisation and governance may, doubtlessly, lead to a further refinement of the process to identify the optimal composition and subsequent verification at the time of the next renewal of corporate bodies. The project to amend the Articles of Association under examination by the Bank of Italy should, for example, lead to a greater assortment of categories in observance of paragraph 1 ter of Article 147 ter of the CFA introduced by Article 1, paragraph 1 of Law no. 120 of 12/7/2011 and in light of the consultation document issued by Consob on 9 December 2011, containing a possible amendment of the “Issuers’ Regulation”.

The mentioned Note of the Bank of Italy dated 11 January 2012 states, amongst other things:

“The provisions on corporate governance already envisage that top-management bodies should be obliged to carry out periodic self-assessments; they appear to be necessary in order to ensure that the functioning of the bodies is constantly guaranteed, and also in order to identify any critical areas and to remedy them. Therefore it is essential that the self-assessment process is carried out with rigour and in depth: therefore, banks are reminded to pay specific attention to this obligation.

Therefore the parent company and the banks not belonging to banking groups are asked to send the Bank of Italy, by 31 March 2012, a document summarising the following: the methods used to carry out the self-assessment process; the profiles under analysis; any third parties involved in the assessment procedures and the methods used to select them; the main results which emerged and the actions taken to remedy identified weaknesses.”

The self-assessment of top-management bodies was last conducted by the Board of Directors during the meeting of 16 February 2012. From the point of view of methods, it was felt that:

  • the criteria adopted to date (ex ante assessment in view of the presentation of lists of candidates, verification of the requirements of professionalism and integrity in the thirty days following appointment and assessments carried out annually at the time of the report on corporate governance and shareholding structures) allowed the Bank to be able to rely on adequate corporate bodies, in line with the composition considered to be optimal before the start of the appointment process;

  • such criteria were based on considerations deriving from the composition of the banking group, from the relevant fields of operations and from Banca IFIS’s status as a listed company.

The profiles under analysis can be summarised in the evaluation of the compliance of the structures and procedures with the two main regulatory references (supervisory provisions regarding corporate organisation and governance and corporate governance and the Corporate Governance Code for listed companies).

It seems advisable to point out:

  • that the Chairman Sebastien Egon Fürstenberg is also the majority shareholder and is responsible for promoting internal discussion, supervising the organisation of the board’s work and the circulation of information, while the leading independent director Roberto Cravero is a point of reference and coordination of the requests and contributions of non-executive, and in particular independent, directors to improve operation of the Board;

  • that the CEO Giovanni Bossi has the experience and expertise necessary for fulfilling many of the “types of operations” indicated below.

A table follows containing a comparison between the requirements of professionalism and skill considered necessary for composition purposes, such as – optimal quantities for the described operating areas of the Group and the actual composition of the Board of Directors.

Type of operations

Directors present

The Group’s core business in the factoring field leads us to consider the presence of professional figures coming from the entrepreneurial world to be useful

Francesca Maderna

Riccardo Preve

Marina Salamon

The current and future development of the factoring business at international level makes advisable the presence of people who know foreign markets and how to deal with the structures to be found in such markets.

Alessandro Csillaghy

The specific aspects of factoring also lead us to consider advisable the presence of people with significant legal knowledge of the sector

Leopoldo Conti

Operations involving the collection, utilisation and management of liquidity entails the need for specific experience and expertise in financial matters

Roberto Cravero

Andrea Martin

The integration of the former Toscana Finanza Group makes us believe that some specific expertise in the area of acquisition and management of non performing loans and tax receivables would be advisable

to be procured

At least one member (of the Remuneration Committee) must be in possession of adequate knowledge and experience in financial matters or remuneration policies

Roberto Cravero

Andrea Martin

At least one member (of the Control and Risks Committee) must be in possession of adequate experience in accounting and financial matters or risks management

Roberto Cravero

Andrea Martin

As far as the Board of Statutory Auditors is concerned, its current composition contains an appreciable assortment of expertise and includes elements with significant professional experience both in the most strictly professional and in the academic sphere, including the corporate, financial, fiscal and auditing fields.

***

The Shareholders’ Meeting has not authorized any exceptions to the ban on competition envisaged by Article 2390 of the Italian Civil Code.

4.4. DELEGATED BODIES AND OFFICERS

CEOs

In the model applied by Banca IFIS:

  • strategic supervision is performed by the Board of Directors;

  • operating management, without prejudice to the matters coming within the sole authority of the Board and/or powers not delegated by the Board of Directors, is performed by Top Management (consisting of the CEO, appointed by the Board from among its members, and the General Manager).

Management powers cover the following main areas:

  • human resources management;

  • granting and utilization of credit;

  • treasury;

  • spending management.

Distribution of management powers is calibrated on decreasing levels of authorization, from the Board of Directors to operating units.

The most significant limits in terms of value and area are summarized below, whereas systematic information flows exist concerning exercise of powers at any given time, as well as compliance with related quantitative limits:

Human resources management

As regards human resources management, the CEO is responsible for decisions concerning the start, management and cessation of managers’ employment, without prejudice to the authorities maintained by the Board for relations with key managers [i.e. strategically accountable] and/or those in staff functions serving the Board.

Granting and utilization of credit

As regards the granting of credit, the CEO has the authority to:

  • take on credit risks vis-à-vis third-party corporate counterparties for transactions lasting a maximum of 18 months, up to a maximum amount of 5,000,000 Euro or the lower amount of 2,500,000 Euro depending on the transactions’ type of risk. Higher limits are established for transactions featuring joint signature with the General Manager.

The CEO also has the power to:

  • suspend, reduce or revoke lines of credit in place, and to authorize their transformation into others of the same amount featuring similar or lower technical risk levels;

  • establish the split of the existing debtor credit ceiling between the individual assignors, while observing the overall limit approved by the relevant bodies and any sub-limits, establishing the related maximum pair ratio;

  • establish, for a multiple credit facility usable by parties belonging to the same group, its breakdown between the individual parties, while observing the overall limit approved by the relevant bodies and any sub-limits.

With the exception of financial conditions, whose definition is the prerogative of the Credit Committee or Board of Directors, the CEO also has the right to establish the financial conditions applicable to transactions undertaken with customers, without any type of limit.

Treasury

The most significant limit attributed to the CEO in this area (in a perspective of integrated asset & liability management) is equal to:

  • 5% in terms of the absolute value of weighted net exposure for each due-date range;

  • 10% in terms of overall weighted net exposure.

Spending management

Generally speaking, up to euro 1,000,000 for each spending instruction within the sphere of the annual forecasts contained in the Industrial Plan.

Pursuant to Article 15 of the Articles of Association, in emergencies the CEO can take decisions concerning any deal or transaction that is not the sole prerogative of the Board of Directors, informing the Chairman immediately and notifying the Board at the first subsequent meeting.

Chairman

The Chairman has not been given any management powers.

As he is the majority shareholder, the Chairman, via the corporate governance mechanisms described in this Report and particularly at shareholders’ meetings, plays a significant role in determining corporate strategies.

Executive Committee

The Articles of Association do not envisage the possibility of setting up an executive committee.

Reporting to Board

During 2011 the CEO did not take any emergency decisions pursuant to Article 15 of the Articles of Association.

The Board received reports on the exercising of management powers at different intervals depending on the subject of the power involved.

The rules for reporting on the use of powers are summarized below:

Trading of financial instruments issued by the Bank

At every meeting

Report on liquidity status

At every meeting

Composition of investment securities book

At every meeting

Credit-granting activity

Monthly

Report on use of powers relating to spending

Quarterly

Dashboard report (management report on overall operating progress in terms both of results and risks taken on)

Quarterly

Report on use of powers for Human Resources management

6-monthly

Training of personnel in prevention of money laundering

Annual

Incentive system (report on criteria adopted by Top Management)

Annual

4.5. OTHER EXECUTIVE DIRECTORS

There are no other directors considered executive directors because they hold:

  • office as the CEO or executive chairman of a strategically significant subsidiary;

  • management positions in the Bank or in a strategically significant subsidiary or in the parent company.

In addition to the CEO, the definition of “executive director” also includes the Deputy Chairman for his activities promoting the corporate image and commercial development in some foreign markets.

The rules for the calling and operation of the Board of Directors and for reporting on the use of executive powers form part of the initiatives undertaken to increase all directors’ awareness of corporate reality and dynamics.

4.6. INDEPENDENT DIRECTORS

The Board performs its own assessments of the requirements established by the Corporate Governance Code for directors classified as independent at the first meeting after appointment by the Shareholders’ Meeting. It also assesses, periodically, the directors’ level of independence. On 29 April 2010, after appointment, the Board ascertained that four of its members (Andrea Martin, Roberto Cravero, Francesca Maderna and Riccardo Preve) met independence requirements as per the criteria contained in the Corporate Governance Code for Listed Companies. This assessment was confirmed at the Board Meeting of 22 March 2012.

As regards the director Roberto Cravero, the Board of Directors officially noted that the latter met all the requirements established by Application Criterion 3.C.1 of the Code, except for the one under letter e), as he had been appointed as a Director of the Company on 27 April 1998 – a period when, among other things, the Company had not yet applied for authorization to operate as a bank (the latter activity started as of 1 January 2002) – and had thus held office as a Director for over 9 years out of the last 12. Notwithstanding this, the Board of Directors, in view of the declaration issued by Mr. Cravero concerning the modest impact of the fees paid to him by the Bank in relation to his business turnover, and in consideration of the independence of judgement he had shown during the mandates, believed, and believes, that Mr. Cravero meets the independence requirement established by Application Criterion 3.C.1. of the Corporate Governance Code.

In addition, the Board of Statutory Auditors, pursuant to Application Criterion 3.C.5. of the Corporate Governance Code, checked application of the criteria and verification procedures used by the Board of Directors to assess the independence of its members and deemed it compliant with the indications provided by the Corporate Governance Code.

During the year the independent directors did not meet without the other directors, as they found no need to do so.

4.7. LEAD INDEPENDENT DIRECTOR

In line with the guidelines established by the Corporate Governance Code for Listed Companies, as the Chairman of the Board of Directors is also the majority shareholder of La Scogliera S.p.A., and thus controls Banca IFIS, the Board of Directors has designated an independent Director as Lead Independent Director. The latter has the task of being the point of reference and coordination of the requests and contributions of (non-executive and in particular independent) Directors to improve operation of the Board, also ensuring that the information flows between Directors are constant and effective. The Lead Independent Director has the power to call, when deeming it appropriate or at the request of other Directors, specific meetings solely for independent Directors for significant matters relating to operation of the Board and/to company operations in general.

On 29 April 2010 the Board of Directors confirmed Roberto Cravero as Lead Independent Director for the 3-year period 2010-2012.