Opportunities

in Italian Regional Banks

HSBC Italian Banks Conference

London - January 19th, 2006

Lino MoscatelliManaging Director

2

102

69

20

1994 1999 2004

Net income

705

317

150

265

1,250

1994 1999 2004

Shareholdings

Group

Parent Company

14.0%

9.6%

2.9%

1994 1999 2004

ROE (adj.)7.2%

2.2%

-9.5%

1994 1999 2004

EVA

Growth Over The Years

3

Italian leader in consumer credit

through FINDOMESTIC Banca

9M 2005 ROE (annualised) 13.6%

Group network 527

MAIN FIGURES

Customers 1,000,000

Market Share loans 11.0 %

funding 15.8 %

Customer loans € 12.9 bn

Total funding € 36.8 bn

Banca CR Firenze Group

The outward expansion from its traditional business territory led to the transformation into a multi-regional banking group

Investments in consumer credit increased profitability and stabilised P&L

CR MIRANDOLA

CRCIVITAVECCHIA

CR ORVIETO

CR PISTOIA

CR SPEZIA

33442

8 1

28

46

51

Financialadvisors

4

Recent Achievements

The 2000 IPO has produced an evolution process which led to

Group perimeter enlargement

Financial assets growth

Focus on consumer credit

New structure for the branches network

Profitability increase

Capital allocation optimization

Value creation

5

A Strategic Choice: Consumer Credit

22%18%28% 33% 35%

2000 2001 2002 2003 2004

A fast growing business well-blended into a pure retail group

Profitable capital allocation:

The additional 15% capital stake (from 35% to 50%) was bought in 2001 at 1.7x book value

Findomestic average ROE 20%.

Consumer credit weight*

* Consumer credit pre-tax income / Consolidated pre-tax income. Goodwill excluded

35% stake

50% stake

6

A local, retail banking group aiming to be competitive in the long term cannot solely count on the local roots advantage and on a friendly approach

Today, the group’s mission must also include:

a diversified and technically advanced market approach (through branches & remote banking) in order to offer services and competitive prices

a high level of professional competence

a range of high quality products as wide as that offered by a large domestic competitor

a customer approach that is less focused on sales results and more on clients’ expectations

The Future for Regional Banks: What Mission?

7

Three separate channels, three different networks, one sales supervision

313 retail branches focused on mass market, affluent and small business customers

A close-knit network coverage thanks to 17 Corporate Centers and 16 Private Banking Centers

Synergies between channels: Corporate/Private Bkg. and Retail/Corporate

Network figures refer solely to Group’s banks where the model has been implemented.

Clients figures refer to Parent Company

Advanced Market Approach

Head of Commercial Dept.

RETAIL BRANCHES CORPORATE CENTERS PRIVATE BKG. CENTERS

633,000clients*

11,000clients*

6,000clients*

8

Personnel & Customer Management

The rollout involved some 800 employees (1/3 of parent company network headcount)

Banking activities in branches had to evolve: multi-tasking has given way to specialized retail branches

High percentage of branch managers moved to Corporate Centers. Consequently, a great number of training courses for new managers covering the empty positions was required

High value vocational courses offered to Corporate Portfolio Managers (at Bocconi University of Milan)

Assitance to clients adapting to the new banking environment

9

Application of the advanced market approach to the entire Group network

Additional personnel shift from back-office to sales

Subsidiaries will then develop as networks only

The Network: Future Developments

NETWORK / TOTAL EMPLOYEES RatioTARGETS

84%

CR0

77%

CRM

73%

CRC

83%

CRS

76%

CRP

90% 85% 85% 85% 90%

CR Mirandola will merge in July 2006

CR Civitavecchia: target achieved

10

Individuals Segment

Generates the greatest value

Is characterized by high propensity to save but also...

...by a sentiment of mistrust in the banking system

Pensionschemes

Exp

ecte

d b

usin

ess g

row

th

Bank’s positioning

Consumer

creditMortgages

Personalinsuranc

e

Investments

Cash - Payments

High growth potential

High growth potential

Potential for further investments to exploit good growth ratios

Potential for further investments to exploit good growth ratios

Only potential for selective investments to improve service quality and maintain market shares

Only potential for selective investments to improve service quality and maintain market shares

The dimension of the bubbles shows the current importance of the Business Area in terms of margin

11

An approach more focused on client’s expectations means

Less but more personalised commercial proposals Greater effectiveness - Reinstating a trust relationship

CRM techniques are the most important tool to achieve the combination of the above aspects

The underlying Data Mining Platform furnishes a deeper knowledge of the client clusters and therefore facilitates the construction of a keener relationship

Furthermore, the branch managers’ improved professionalism, a customer satisfaction analysis and communication strategies that will be differentiated according to client segment will generate greater worth from the relationship

Individuals: A Structured Approach

12

Full use of the CRM instrument

Exploiting the generation turnover to facilitate the process

Individuals: What Next ?

64 campaigns launched and 92 events managed 450,000 commercial talks 456,000 customers with a next product assigned

only 50% of the portfolio managers regularly used the tool

In 2005

A propensity score for all the product range

The introduction of the customer satisfaction indices in the MBO Plans

13

SMEs & Corporates Segment

SMEs are now experiencing a dimensional growth and international expansion

Banks’ capacity to exploit Basel II will make certain banks more competitive

Exp

ecte

d

bu

sin

ess

gro

wth

Intl.services

Structured

finance

Bankguarantees

Factoring

Ind. & Spec.credit

Financial riskcoverage

Foreign payables/

receivables

Leasing

Agriculture financingDomestic payables/

receivablesCurrencies

Selective investments to follow market opportunities

Selective investments to follow market opportunities

Investments to exploit the expected growth of high margin products

Investments to exploit the expected growth of high margin products

Maintain

market shares

Maintain

market shares

Bank’s positioning

The dimension of the bubbles shows the current importance of the Business Area in terms of margin

14

SMEs & Corporates Segment

* Sum of all credit lines granted by the Italian banking system or by BCRF expressed in EUR thousand

(source: Bank of Italy and BCRF)

The figures below reflect the bank’s low capacity of attracting key clients

BCRF is a first choice bank for a small number of its clients (8%)

In the core clients group, BCRF obtains even lower percentages

The aim is to grow as the first choice bank for the core clients

from

to

BCRF clients who recognized the bank as a 1st choice bank

75 125 250 500 1,000 2,500 5,000 25,000125 250 500 1,000 2,500 5,000 25,000

Banks per client (Italy, avg.)

Credit needs covered by clients’ 1st choice bank (Italy)

1.0 1.2 1.7 2.4 3.2 4.4 6.3 10.3

99% 89% 76% 68% 61% 55% 46% 36%

46% 43% 18% 8% 4% 4% 2% 2%

AVG.

2.1

49%

8%

Granted loans (total*)

Core clients

15

SMEs & Corporates: How To Compete

BCRF has been among the first mid-sized groups to launch the IRB Advanced (Basel II) procedure

The capacity to correctly assess client risks will enable to:

Recuperate market share in the top-client segment Obtain a correct profit from risks related to the worst

clients

* Loans by rating refers to the Parent Company’s 65% corporate segment customer base. November 2005

Loans by rating*

Amounts

granted

Amounts

utilized

A1 A2 A3 A4 B1 B2 B3 B4 B5 B6 B7 B8 C1 C2

16

Remote Banking: Powering Up & Growing

A multi-channel approach is required today by both corporate and individual segments

The number of users is growing steadily and transactions are rising even faster

This approach is essential to acquire new, young clients in the 30-40 age group

Over-investments proved to be non-profitable but innovation must remain steadfast:

BCRF has been the first Italian bank to offer a DIGITAL TERRESTRIAL TV (DTT) remote banking service

17

The Generation Chance

Between 2006 and 2008 a large number of employees will reach the minimal age for retirement (about 450)

A great opportunity is at hand for organizational and commercial re-engineering which could allow a remarkable reduction of costs

~ 450

expected

retirements

Organisation

Technology

Replacements

Headcount

reduction

Group’s figures (estimates)

Opportunities

in Italian Regional Banks

HSBC Italian Banks Conference

London - January 19th, 2006

Lino MoscatelliManaging Director