Section 1 – Consolidated share capital

A. Qualitative information

Capital management concerns a set of policies and decisions necessary to establish capital levels that are consistent with the assets and risks taken on by the bank. Banca IFIS Group is subject to the capital adequacy requirements established by the Basel Committee in accordance with the rules set by the Bank of Italy. On the basis of these rules, at the consolidated level, the ratio between capital and risk-weighted assets must be at least 8%.

The activity of ensuring that supervisory and capital adequacy requirements are met is dynamic and based on objectives set right from the planning stage. An initial check is carried out during the allocation of budget objectives: the risks are quantified and the compatibility of ratios checked on the basis of expected growth trends for loans, other assets and the income statement items.

Compliance with capital adequacy requirements is achieved through a payout policy, the definition of strategic financial operations (share capital increases, convertible loans etc.) and the management of lending policy.

Compliance with regulatory capital ratios is monitored during the year and on a quarterly basis.

The Group’s capital adequacy is further analysed and monitored every time an extraordinary operation is planned. In these cases, based on available information regarding said operations, the Banca IFIS Group estimates the impact on capital adequacy ratios and considers the necessary measures, if any, to meet requirements.

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 shares can be bought 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 recognised under 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 with a value of 7,355 thousand Euro, yielding losses for 489 thousand Euro which, in compliance with international accounting standards, were recognised under capital reserves.

  • following the merger of Toscana Finanza S.p.A., it allocated to Toscana Finanza’s non-controlling shareholders who had not exercised their right of withdrawal 1,611,633 treasury shares, with 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 capital reserves. Although the shares were transferred in the first few days of January 2012, the transaction has already been recognised in these financial statements in accordance with the provisions of the IASs/IFRSs.

The balance at the end of the year is therefore 997,190 treasury shares, for a value of 3,968 thousand Euro and a nominal value of 997 thousand Euro.

B. Quantitative information

B.1 Consolidated share capital: breakdown by type of entity

Equity items

Banking group

Insurance companies

Other companies

Consolidation eliminations & adjustments

31.12.2011

Share capital

53.811

-

-

-

53.811

Share premiums

72.371

-

-

-

72.371

Reserves:

91.270

-

-

-

91.270

Equity instruments

-

-

-

-

-

Treasury shares (-)

(3.968)

-

-

-

(3.968)

Valuation reserves:

(43.737)

-

-

-

(43.737)

- Available for sale financial assets

(36.900)

-

-

-

(36.900)

- Property, plant and equipment

-

-

-

-

-

- Intangible assets

-

-

-

-

-

- Hedging of investments in foreign operations

-

-

-

-

-

- Cash flow hedges

-

-

-

-

-

- Exchange differences

(6.837)

-

-

-

(6.837)

- Non-current assets under disposal

-

-

-

-

-

- Actuarial gains (losses) on defined benefit plans

-

-

-

-

-

- Amounts of valuation reserves relating to subsidiaries

-

-

-

-

-

valued at equity

-

-

-

-

-

- Specific revaluation laws

-

-

-

-

-

Profit (loss) for the year (+/-) of the Group and minority interests

26.535

-

-

-

26.535

Equity

196.282

-

-

-

196.282

B.2 Valuation reserves of available for sale assets: composition

Assets/amounts

Banking group

Insurance companies

Other entities

Consolidation eliminations & adjustments

31.12.2011

Positive reserve

Negative reserve

Positive reserve

Negative reserve

Positive reserve

Negative reserve

Positive reserve

Negative reserve

Positive reserve

Negative reserve

1. Debt securities

961

(38.031)

-

-

-

-

-

-

961

(38.031)

2. Equity instruments

183

(13)

-

-

-

-

-

-

183

(13)

3. O.E.I.C. units

-

-

-

-

-

-

-

-

-

-

4. Loans

-

-

-

-

-

-

-

-

-

-

Total

1.144

(38.044)

-

-

-

-

-

-

1.144

(38.044)

Total 31.12.2010

452

5.913

-

-

-

-

-

-

452

5.913

B.3 Valuation reserves of available for sale assets: annual changes

Debt Securities

Equity instruments

O.E.I.C. units

Loans

1. Opening balance

(5.636)

175

-

-

2. Increases

685

7

-

-

2.1 Fair value gains

685

7

-

-

2.2 Reversal to income statement of negative reserves:

-

-

-

-

- from impairment losses

-

-

-

-

- from realisation

-

-

-

-

2.3 Other increases

-

-

-

-

3. Reductions

-

-

-

-

3.1 Fair value losses

(32.119)

(12)

-

-

3.2 Impairment losses

(32.119)

(12)

-

-

3.3 Reversal to income statement of

-

-

-

-

positive reserves: -from realisation

-

-

-

-

3.4 Other reductions

-

-

-

-

4. Closing balance

-

-

-

-

1. Opening balance

(37.070)

170

-

-

Section 2 – Regulatory capital and capital ratios

2.1 Scope of application of the law

Regulatory capital and capital ratios have been calculated in accordance with the provisions of Bank of Italy’s Circular no. 155.

2.2 Bank regulatory capital

A. Qualitative information

1. Tier 1 capital

The positive elements playing a part in the calculation of tier 1 capital are share capital, share premium accounts, reserves and the part of profit increasing the value of reserves. The negative elements include treasury shares held by the bank at the end of the year, intangible assets, and the negative balance between positive and negative reserves related to debt securities classified as "available for sale financial assets". Pursuant to the Bank of Italy's Regulation of 18 May 2010, the Banca IFIS Group excluded from the calculation valuation reserves related to securities issued by the central administrations of EU Member States.

2. Tier 2 capital

Tier 2 capital is composed of negative elements stemming from negative exchange differences arising from the consolidation of the foreign subsidiary.

3. Tier 3 capital

Tier 3 capital is not quantifiable due to the absence of elements.

B. Quantitative information

31.12.2011

31.12.2010

A. Tier 1 capital before application of prudential filters

230.784

206.510

B. Tier 1 prudential filters

-

-

B1 - IFRS prudential filters positive (+)

-

-

B2 - IFRS prudential filters negative (-)

-

-

C. Tier 1 capital gross of deductibles (A+B)

230.784

206.510

D. Deductibles to subtract from Tier 1 capital

16.257

-

E. Tier 1 total (C-D)

214.527

206.510

F. Tier 2 capital before application of prudential filters

170

(3.784)

G. Tier 2 prudential filters

(85)

-

G1- IFRS prudential filters positive (+)

-

-

G2- IFRS prudential filters negative (-)

(85)

-

H. Tier 2 capital gross of deductibles (F+G)

85

(3.784)

I. Deductibles to subtract from Tier 2 capital

6.837

-

L. Total Tier 2 capital (H - I)

(6.752)

(3.784)

M. Deductibles to subtract from Tier 1 and Tier 2 capital

-

-

N. Regulatory capital (E+L-M)

207.775

202.726

O. Tier 3 capital

-

-

P. Supervisory capital including TIER3 (N + O)

207.775

202.726

2.3 Capital adequacy

A. Qualitative information

As shown in the table on regulatory capital and capital ratios, the Banca IFIS Group, at 31 December 2010, had a ratio of tier 1 capital to risk-weighted assets of 11.5% and of regulatory capital to risk-weighted assets of 11.3%, exceeding the minimum requirement of 8%.

The increase on the previous year was due to the share capital increase in July 2010.

B. Quantitative information

Categories/Amounts

Non-weighted amounts

Weighted amounts/ requirements

31.12.2011

31.12.2010

31.12.2011

31.12.2010

A. RISK ASSETS

 

 

 

 

A.1 CREDIT RISK AND COUNTERPARTY RISK

4.025.066

2.823.794

1.710.364

1.621.454

1. Standardised approach

4.025.066

2.823.794

1.710.364

1.621.454

2. Internal rating method

-

-

-

-

2.1 Basic indicator approach

 

 

 

 

2.2 Advanced measurement approach

 

 

 

 

3. Securitisation programmes

-

-

 

-

B. REGULATORY CAPITAL REQUIREMENTS

 

 

 

 

B.1 CREDIT RISK AND COUNTERPARTY RISK

 

 

136.829

129.716

B.2 MARKET RISKS

 

 

1.930

1.893

1. Standard method

 

1.930

1.893

2. Internal models

 

 

 

-

3. Concentration risk

 

 

 

-

B.3 OPERATIONAL RISK

 

 

14.835

12.144

1. Basic indicator approach

 

 

14.835

12.144

2. Standardised approach

 

 

 

-

3. Advanced measurement approach

 

 

 

-

B.4 Other prudential requirements

 

 

 

-

B.5 Other calculation factors

 

 

 

-

B.6 Total prudential requirements

 

 

153.594

143.753

C. RISK ASSETS AND CAPITAL REQUIREMENT RATIOS

 

 

 

 

C.1 Risk-weighted assets

 

 

1.919.928

1.796.910

C.2 Tier 1/Risk-weighted assets (Tier 1 capital ratio)

 

 

11,17%

11,49%

C.3 Regulatory capital including TIER 3/Risk-weighted assets

(Total capital ratio)

 

 

10,82%

11,28%