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Banca CR Firenze
Lino Moscatelli
Managing Director
Merrill Lynch Banking & Insurance CEO Conference 2005
London, 4 - 6 October 2005
Setting the Agenda for 2010
2
• Where we are at the end of the 2003-2005 Plan
• Future Opportunities
Table of Contents
3
Full perimeter
of consolidation
Banca CR Firenze Group Structure
Banca CR FirenzeBanca CR Firenze
CR PistoiaCR Pistoia
CR SpeziaCR Spezia
CR CivitavecchiaCR Civitavecchia
CR OrvietoCR Orvieto
CR MirandolaCR Mirandola
InfogroupInfogroup CentrovitaCentrovita
CRF Gestion IntCRF Gestion Int
CeritCerit
SRTSRT
FindomesticFindomestic
Centro FactoringCentro Factoring
Centro LeasingCentro LeasingCitylifeCitylife
50%
100%
100%
60%
68,1%
51%
73,6%
99,9%
100%
51%
47,7%
37,5%80%
68,1%
CRF Foundation39,9%
Sanpaolo18,7%
BNP Paribas6,6%
Market27,2%
Others7,6%
Retail Banking
Assets Management
Tax Collection
IT Services
Consumer credit & Financial Services
4
352 326441
129
407
295
0
100
200
300
400
500
600
700
800
900
1994 1999 2004
Interest Margin Non-interest Income
4.404
7.618
12.177
0
1.500
3.000
4.500
6.000
7.500
9.000
10.500
12.000
13.500
1994 1999 2004
Net loans to customers
Consolidated Key Figures for 1994-2004 (*)
(*) 2004 data on a proforma basis and including Findomestic consolidated at equity
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
1994 1999 2004
Direct Funding AuC AuM
Total financial assets
12.491
21.812
33.847
20
69
102
0
20
40
60
80
100
120
1994 1999 2004
Net incomeTotal Income
5
2004 Resuls vs Targets
• Achieved growth in overall profitability
– EPS at 9 cents/Euro, ahead of target
– Cost / Income at 66%, ahead of target. Ample room for further improvement
0,0900,088
0,104
0,085
0,076
2002 2003 2004 2005
Business Plan Actual
66.0%
67.8%
65.1%
67.6%67.1%
2002 2003 PF 2004 2005
Business Plan Actual
EPS Cost/Income
6
The Italian macroeconomic scenario
• Italian growth prospects remain uncertain
• Banks P&Ls remain sound, but may be affected by:
– Growing indebtedness of small enterprises
– Non banking players competing in funding and treasury management
– Families tending to reduce the number of bank accounts
– Banks’ approach too focused on selling rather than on clients’ expectations
7
Our Strategic Guidelines
• Internal network expansion
• Service quality
• Improvement of customer satisfaction
• Development of new businesses
• Further efficiency improvement
• Group integration
Multi-channel architecture
GrowthGrowth
Quality of relationQuality of relation
Cost controlCost control
8
Expected results
GrowthGrowth
New branchesNew branchesNew customersNew customers
Profit increase
9
Network & Percentage of Territorial Coverage
Region Branches %
As at 30/6/2005
518 branches in all
< 1
1 < = 5
5 <= 15
> 15
Number of branches per 100,000 inhabitants
Tuscany 337 65%Liguria 51 10%Latium 50 10%Umbria 42 8%Emilia Romagna 29 6%Lombardy 8 2%Veneto 1 0%Total 518 100%
Arezzo 35
Terni 23
Grosseto 16
Prato 15
Lucca 22
Leghorn 9
Siena 19
Perugia 19
Viterbo 14
Pisa 13
Pistoia 53
Mantova 8
Modena 18 Bologna 8
Florence 137
Rome 36
Massa-Carrara 18
La Spezia 51
Verona 1
Parma 2
Reggio Emilia 1
Financial advisors
10
Profit increase
Expected results
Quality of relationsQuality of relations
New branchesNew branchesNew customersNew customers
Better management Better management of current of current customerscustomers
Profit increase
New proceduresNew procedures
11
Commercial Position: IndividualsBusiness Areas
Bank’s Positioning
Bu
sin
es
s G
row
th
Note: The dimension of the bubble shows the current importance of the Business Area in terms of margins
Pension schemes
Personal insurances
Consumer credit
Mortgages
Cash -payments
Investments
High growth potential
Only potential for selective
investments to improve
service quality and maintain
market shares
Potential for further
investments to improve the
bank’s position and exploit good
growth ratios
12
Commercial Position: “SMEs & Corporates” (≥2.5 M€ Turnover)Business Areas
Ind.& Spec. credit
Leasing1Domestic payables/receivables
Currencies
Factoring1
Structured finance
Agriculture Financing
Foreign payables/ receivables
Internationalization serv.
Bank guarantees
Financialrisk coverage
Bank’s Positioning
Bu
sin
es
s G
row
th
Selective investments to follow the opportunities offered by our market
Maintain market shares
The dimension of the bubbles shows the current importance of the Business Area in
terms of margins
Investments to exploit the
expected growth of
high margin products
1) Seeking to increase commercial consistency with the product companies
Corporate = 2% of customers and 6% of total loans
13
Profit increase
Expected results
Cost control Cost control
New branchesNew branches
New proceduresNew procedures
StreamliningStreamlining
New customersNew customers
Better management Better management of current of current customerscustomers
Efficiency Efficiency improvementimprovementProfit increase
14
Current Organization Model
CRFCRFCRFCRF
CRCCRCCRCCRCCROCROCROCROCRPCRPCRPCRP CRMCRMCRMCRM CRSCRSCRSCRS
CENTRALIZED
SERVICES69,8%
83,7% 77,1% 83,0% 73,0% 76,3%
3,464 employees
(3,387 net, excludes
intercompany staff)
621 employees 170 employees 218 employees 189 employees 518 employees
Network/Total Employees
Current
Target
90,0% 85,0% 85,0% 85,0% 90,0%
XX,X%
XX,X%
15
Profit increase
Expected results
Multi-channel
architecture
New branchesNew branches
New proceduresNew procedures
New customersNew customers
Better management Better management of current of current customerscustomers
Profit increase
IT investments IT investments New services New services
Low pricesLow prices
StreamliningStreamlining
Efficiency Efficiency improvementimprovement
New organizationNew organization
Branch staffBranch staff reduction reduction
16
IT SystemCurrent applications architecture
Bank 1Bank 1
Teller SWTeller SW
Bank SWBank SW
Group SWGroup SW
Management & Regulatory
reporting
Management & Regulatory
reporting
Bank 2Bank 2
Teller SWTeller SW
Bank SWBank SW
Group SWGroup SW
Management & Regulatory
reporting
Management & Regulatory
reporting
Bank nBank n
Teller SWTeller SW
Bank SWBank SW
Group SWGroup SW
Management & Regulatory
reporting
Management & Regulatory
reporting
Co
mm
on
ser
vice
sC
om
mo
n s
ervi
ces
Common interfaceCommon interface
ATM - Internet - GSM
PDA - Digital TV
ATM - Internet - GSM
PDA - Digital TV
17
Common InterfaceCommon Interface
ATM - Internet
GSM - PDA
Digital TV
ATM - Internet
GSM - PDA
Digital TV
Costs control - ICT Management streamlining
Teller SWTeller SW
Co
mm
on
Ser
vice
sC
om
mo
n S
ervi
ces
Group SWGroup SW Management & Regulatory Reporting
Management & Regulatory Reporting
Data Integration MiddlewareData Integration Middleware
Bank 1 SWBank 1 SW Bank 2 SWBank 2 SW Bank n SWBank n SW
18
Multi-channel architecture
Common InterfaceCommon Interface
ATM - Internet
GSM - PDA
Digital TV
ATM - Internet
GSM - PDA
Digital TVTeller SWTeller SW
Cost reductionCost reductionCost reductionCost reduction Better service to Better service to customers customers
Better service to Better service to customers customers
Branches freed Branches freed from low value from low value
activities activities
Branches freed Branches freed from low value from low value
activities activities
19
Expected retirement
• A large number of employees will reach the minimal age for retirement and may leave the company between 2006-2008
PeriodH.R. who have reached or will reach retirement age
Banca CR Firenze Other Banks
2005 150
50
2006 1202007 802008 50
Total400
450
25Other Banks’Headquarters
250Parent Company’s
Network
150 Parent Company’s
Headquarters
25Other Banks’
Network
20
ReplacementReplacement
Expected retirement
Headcount reduction
RetirementRetirement
ReplacementReplacement
TechnologyTechnology
OrganizationOrganization