The Fitch rating

On 3 June 2011, Fitch Ratings International confirmed Banca IFIS’s rating at “BBB-“.

In particular, Fitch confirmed the Long Term rating at “BBB-”, the Short-Term rating at “F3”, and revised the outlook from stable to negative, following the major growth that the Group is recording in a market which is still weak, and given the credit quality which remains a significant cost in the Bank’s income statement and a slight concentration of the business following the newly declared strategy of operating in the pharmaceutical industry.

On 30 November 2011 Banca IFIS disclosed it was no longer availing itself of Fitch's ratings on the issuer since it is not expecting to issue any debt securities requiring it in the near future.

Report on Corporate Governance and Shareholding Structure

Pursuant to article 123 bis, paragraph three, of Legislative Decree no. 58 of 24 February 1998 (the Consolidated Law on Banking), a report, separate from this Directors’ report, was prepared. It was approved by the Board of Directors and published together with the draft financial statements at 31 December 2011. This report is also available in the ‘Investor Relations’ section of the Bank’s internet site www.bancaifis.it.

The Report on Corporate Governance and Shareholding Structure has been drawn up according to the format provided by Borsa Italiana.

Together with this Report, the “Report on Remuneration” prepared pursuant to art. 123 ter of the Consolidated Law on Finance, was also made available.

Privacy measures

In compliance with article 34, paragraph 1, letter g) of Legislative Decree no. 196 of 30 June 2003 (the Personal Data Protection Code), the group periodically updates its ‘Personal Data Protection Document’ in which the measures taken to guarantee protection of processed personal data are set out.

Parent Company management and coordination

Pursuant to articles 2497 to 2497 sexies of the Italian Civil Code, it is outlined that the parent company La Scogliera S.p.A. does not carry out any management and coordination activities with respect to Banca IFIS, notwithstanding art. 2497 sexies of the Italian Civil Code, since the management and coordination of investee financial companies and banks is expressly excluded from La Scogliera’s corporate purpose.

National consolidated tax regime

Banca IFIS, together with the parent company, La Scogliera S.p.A., opted for the application of group taxation (tax consolidation) in accordance with articles 117 et seq of Presidential Decree no. 917/86.

Transactions between these companies were regulated by means of a private written agreement between the parties, signed in the month of May 2010. This agreement lapses after three years. Banca IFIS has an address for service of notices of documents and proceedings relating to the tax periods for which this option is exercised at the office of La Scogliera S.p.A., the consolidating company.

Under this tax regime, Banca IFIS’s taxable income is transferred to La Scogliera S.p.A. which is responsible for calculating the overall group income. Following this decision, at 31 December 2011 Banca IFIS recognised payables due to the parent company amounting to 3,320 thousand Euro. This amount takes into account the offset of the parent company’s tax losses in accordance with the procedure applicable under both this regime and the specific agreements the companies entered into.

In 2011 Banca IFIS completed the acquisition of Toscana Finanza S.p.A.

This company was the consolidator of the two investee companies Fast Finance S.p.A. and TF Sec S.r.l.

After the acquisition, as highlighted in other parts of this report, the merger plan to incorporate Toscana Finanza into Banca IFIS was implemented. Following the Toscana Finanza merger and considering existing plans for its subsidiaries, calling for the liquidation of TF Sec and the incorporation of Fast Finance in 2012, it was decided to announce the interruption of group taxation for these companies. Accordingly, the subsidiaries will independently calculate their income and pay the corresponding taxes from as soon as the year ended at 31 December 2011.

Transactions on treasury shares

The Shareholders’ Meeting of 29 April 2011 renewed the authorisation to buy and sell treasury shares, pursuant to article 2357 ff of the Italian Civil Code, as well art. 132 of Legislative Decree 58/98, establishing a price range within which the shares can be bought, in this case between a minimum of 2 Euro and a maximum of 20 Euro, for a total amount of 20 million Euro. The Meeting also established that the authorisation lapses after 18 months from the date the resolution was passed.

At 31 December 2010 Banca IFIS held 2,229,017 treasury shares worth 13,498 thousand Euro (average carrying amount 6.06 euro per share) and a nominal value of 2,229 thousand Euro.

During 2011 Banca IFIS made the following transactions on treasury shares:

  • it bought, at an average price of 4.33 Euro, 2,842,352 treasury shares worth 12,316 thousand Euro and a nominal value of 2,842 thousand Euro;

  • it sold, at an average price of 4.88 Euro, 1,052,141 treasury shares worth 5,139 thousand Euro and a par value of 1,052 thousand Euro, realising losses of 1,712 thousand Euro which, in compliance with international accounting standards, were recorded under the capital reserves;

  • it distributed to shareholders, as part of the dividend from 2010 earnings, 1,410,405 treasury shares, for a value of 5.22 Euro each and worth overall 7,355 thousand Euro, yielding losses for 489 thousand Euro which, in compliance with international accounting standards, were recognised under the capital reserves.

  • following the merger of Toscana Finanza S.p.A., it granted the non-controlling shareholders of Toscana Finanza who had not exercised their right of withdrawal 1,611,633 treasury shares, with a swap a ratio of 7 Banca IFIS’s ordinary shares for every 23 Toscana Finanza’s ordinary shares, for a value of 6,373 thousand Euro, realising losses for 778 thousand Euro which, in compliance with international accounting standards, were recognised under the capitalequity reserves. Although the shares were granted in the first few days of January 2012, it has already been recognised in these financial statements in accordance with the provisions of the IASs/IFRSs.

The remaining balance at the end of the year totalled 997.190 treasury shares for a value of 3.968 thousand Euro and a nominal value of 997 thousand Euro.

Related party transactions

In compliance with the provisions of Consob resolution no. 17221 of 12 March 2010 and subsequently amended by means of Resolution no. 17389 dated 23 June 2010, the procedure relating to transactions with related parties, approved by the Board of Directors on 1 December 2010, was prepared. This document was published in the “Investor Relations” section of the Bank’s website www.bancaifis.it.

During 2011 no significant transactions with related parties were undertaken.

For information on individual related party transactions, please refer to part H of the notes.

Research and development activities

Due to its activity, the group did not implement any research and development programs during the year.