FCA Bank Group Consolidated financial statements...1.21% 1.24% 1.92% 31.12.2015 31.12.2016 31.12.2017 1.58% 1.43% Non performing loans • monitoring of credit performance, with prompt

Consolidated financial statements

December 31, 2019

FCA Bank Group

FCA Bank S.p.ARegistered office: Corso G. Agnelli, 200 - 10135 Turin – www.fcabankgroup.com - Paid-up Share Capital: Euro 700,000,000 - , Turin Companies Register n. 08349560014, - Tax and VAT Code 08349560014 - Entered in the Bank Register n. 5764 - Holding of FCA Bank Banking Group - Entered in the Banking Group Register - Cod. ABI 3445 - Entered in Single Register of Insurance Intermediaries (RUI) N. D00016456, Member of the National Interbank Deposit Guarantee Fund.

FCA Bank Group

December 31, 2019

CONSOLIDATED FINANCIAL STATEMENTS.

Consolidated financial statements December 31, 2019• 2

• 3

INTRODUCTION

The consolidated financial statements of the FCA Bank Group for the year

ended December 31, 2019 have been prepared in accordance with the Interna-

tional Accounting Standards (IAS) and the International Financial Reporting

Standards (IFRS), in keeping with Bank of Italy’s instructions laid down in

circular no. 262 of December 22, 2005 (6th update of November 30, 2018).

The formats and manner of preparation of the accounts are mandated by these

rules and standards.

The consolidated financial statements consist of the Statement of financial

position, the Income statement, the Statement of comprehensive income, the

Statement of changes in equity, the Statement of cash flows and the Notes and

are complemented by the board of directors’ report on the Group’s operating

results and financial conditions. Comments are supported by the reclassified

income statement, certain financial ratios and alternative performance indica-

tors; the tables with the relevant reconciliations are included in the report on

operations.

The consolidated financial statements were prepared with clarity and provide a

true and fair view of the financial condition, cash flows and operating results for

the financial year. In addition, they are accompanied by the Board of Statutory

Auditors’ report and the independent auditors’ opinion pursuant to Legislative

Decree no. 39 of January 27, 2010.

Disclosures of significant events, presentations to investors and public disclo-

sures pursuant to Regulation EU 575/2013 are available the website of the FCA

Bank Group (www.fcabankgroup.com).

The Consolidated Non-Financial Statement, compliant to Legislative Decree no.

254 of December 30, 2016, which illustrates environmental, social and person-

nel-related issues is attached to the consolidated financial statements.

Information on the remuneration required by art. 123-ter of the TUF and by the

Basel Third Pillar (see Pillar 3) is also published and made available on the web-

site according to the related approval procedures.


KEY FIGURES

0.25%On average portfolio

3.9%On average portfolio

28.6%Cost / Income Ratio

-293€/MLNNet operating expenses

-66€/MLNCost of risk

1,025€/MLN Net banking income andrental margin

13,730€/MLNNew retail, leasing and rental volumes

1.7MLNRetail, leasing and rental active contracts

48.1%Total commercial penetration

27.5€/MLDEnd of period portfolio

• 5

18Countries

279,628Long term, short term rental fleetand fleet management

2,280Employees

18BrandsFIAT - ALFA ROMEO - LANCIA - ABARTH - JEEPFIAT PROFESSIONAL - CHRYSLER - MASERATI - FERRARIJAGUAR - LAND ROVER - ERWIN HYMER GROUP - RAM DODGE - ASTON MARTIN - MORGAN - HARLEY DAVIDSON MV AGUSTA

14.20 % CET 1 Ratio

10.62 %Leverage Ratio

666€/MLNOperating Income

467€/MLNNet profit


ABSTRACT

GEOGRAPHICAL FOOTPRINT

• 25

GOVERNANCE• 18

CEOEDITORIAL

• 10

GROUPSTRUCTURE

• 24

• 7

CONSOLIDATEDFINANCIALSTATEMENTS

• 92

BUSINESSLINES

• 27

REPORT ONOPERATIONS

• 42

INDEPENDENTAUDITORS'REPORTON THECONSOLIDATEDFINANCIALSTATEMENTS

• 298


CONTENTS

Editorial 10

Board of directors, board of statutory auditors and external auditors 16

Fca Bank Group – Presentation and milestones 20

Profile of the Fca Bank Group 22

Group structure 24

Geographical footprint 25

The business lines 27

REPORT ON OPERATION 42

Macroeconomic scenario, the automotive market and financial markets 45

Significant events and strategic transactions 46

Commercial policies 48

Financial strategy 52

Cost of risk and credit quality 61

Results of operations 69

Equity and capital ratio 75

Organization and human resources 79

Information technology 82

Internal control systems 86

Other information 88

• 9

CONSOLIDATED FINANCIAL STATEMENTS 92

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 102

Part A - Accounting policies 104

Part B - Information on the consolidated balance sheet 144

Part C - Information on the consolidated income statement 187

Part D - Consolidated comprehensive income 208

Part E - Information on risk and related risk management policies 209

Part F - Information on consolidated equity 275

Parte G - Business combinations 278

Parte H -Related-party transactions 279

Parte L - Segment Reporting 282

Parte M - Leasing reporting 284

COUNTRY BY COUNTRY REPORTING - DATA AS AT 31/12/2019 - 286

STATUTORY'S AUDITORS’ REPORT ON THE CONSOLIDATEDFINANCIAL STATEMENT 288

INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATEDFINANCIAL STATEMENT 298

ANNEX - CONSOLIDATED NON-FINANCIAL STATEMENT AS AT DECEMBER 31, 2019 310

Consolidated financial statements December 31, 2019

Discipline and the courage of innovation. If it were possible – and maybe in a not-too-distant future it will be – a course of study should be held on these two subject matters. This because the ability to envision the future, adapting to changed life circumstances, is probably in the nature of every human being and, as such, should be developed, nurtured and stimulated. After all, over the past few years FCA Bank and Leasys have been traveling this road of innovation and adaptation with great motivation and confidence.

Change is a challenge that needs to be met head on in all the sectors in which we operate, from banking and insurance to mobility, to the development of alternative technologies. Three fronts where the FCA Bank Group is and will always be a leading force. All this can happen only if rigor and discipline in the innovative process are used as our lodestar in making hard decisions and if the flame of the courage to change deeply ingrained behaviours and habits, even when they seem efficient and well-established, is kept constantly alive. Those who cannot see opportunity in the epoch-making changes that we are experiencing, as well as those who keep focusing on the past instead of the future and are not stimulated and motivated by the challenges of modernity will inevitably fall behind.

DISCIPLINE AND THE COURAGE OF INNOVATION

"Change is a challenge that needs to be met head on in all the sectors in which we operate, from banking and insurance to mobility, to the development of alternative technologies."

GIACOMO CARELLICEO & General Manager

• 10

Editorial • 11

The easy access to our services, navigation on our websites

and use of our new Customer Portal made for pleasant, fast and, most of all,

effective customer experiences.

There are different examples in history that we could take as our inspiration, such as those of great banking and industrial groups that created systems that allowed all employees, at every level and in every sector, to indicate based on their specific experience what the best processes and products would be to be successful in the market. These company experiments, which we have been conducting for years also at FCA Bank, continue to foster growth and development.

Participation of all employees to the development of the digital bank and new and pioneering mobility services, transforming radically customer interaction processes through secure and direct online channels, is evidence that teamwork is a guarantee of future success. Our financial statements for 2019 tell the story of our positive performance. Our year-end net outstanding portfolio reached €27.5 billion while net profit for the year just ended was €467 million. Thanks to everybody’s contribution, commercial penetration (48.1%), new loan, lease and rental contracts, which totalled €13,730 million, grew. In addition, also our Group’s recognition and prestige improved, as easy access to our services, navigation on our websites and use of our new Customer Portal made for pleasant, fast and, most of all, effective customer experiences.

The new pre-scoring and digital onboarding platforms made a substantial contribution to the full digitalization of our services, while all of Leasys’s mobility services - from pay-per-use to car sharing, to the first revolutionary car subscription service in Italy with CarCoud, to all the innovative short- and long-term car rental solutions – made this company a recognized

mobility pioneer in Italy and in Europe. The new credit card dedicated to the FCA Group’s brands, and the management online of loans and leases, made customer experience even more fluid and interesting. In addition, thanks to the multiple European partnerships with insurance providers, FCA Bank will continue to provide a broad range of tailor-made services, starting precisely from the technological infrastructure represented by FCA’s connected vehicles.

Our international growth process saw the creation of FCA Capital Maroc in 2019, thanks to the partnership with Wafalasaf, to provide loan and lease financing services to customers in Morocco, where the Bank has already been active for years in dealer financing. Moreover, Leasys’s opening in Poland brought to eight the number of countries in which the rental and mobility company of the Group can provide its services.

All these initiatives are witness to a process based on solid ground, and are a clear indication that the discipline and the courage of innovation are part of our DNA.

We will try to be always one step ahead of the others, to support customers and to stand next to them in the face of future challenges, promoting the sustainability and usability of our financing solutions and accompanying the electrification of the automotive industry with innovative mobility offers.


“The financial structure is a pillarof our development.”

FRANCO CASIRAGHIDeputy General Manager & Chief Financial Officer

FINANCIAL TRANSACTIONS: RETURN TO AN EXPANSIONARY MONETARY POLICY.

The first half of 2019 saw a return of financial markets to normalcy, as the volatility of late 2018 waned.

In a macroeconomic context still marked by the continuing trade tensions between United States and China and the Brexit uncertainty, the European economy called for the central banks to continue with their unconventional monetary policies. In particular, on March 7, 2019 the European Central Bank (ECB) announced the third series of targeted longer-term refinancing operations (TLTRO-III), which represented an opportunity for banks starting from September 2019, and on September 12, 2019 it cut the interest rate on the deposit facility by 10 basis points (to – 0.50). The ECB also announced a new Quantitative Easing phase, which calls for asset purchased for €20 billion a month, starting from November 1, 2019, thus confirming its dovish stance, in keeping with the extraordinary measures introduced since June 2014, which

• 12

Editorial • 13

In December 2019 the FCA Bank Group completed

its first TLTRO-III operation for €100 million.

proved effective in transmitting lower interest rates from the financial sector to the private sector. In parallel, starting from October 2, 2019, the ECB began the publication of a new risk-free interest rate for the euro area, known as “euro short-term rate” (€STR) and designed to replace EONIA.

The ECB’s extraordinary measures resulted in narrower spreads in the marketplace and a temporary but significant downward shift of the yield curve, which hit a record low when the entire 1-/20-year segment entered negative territory.

Against this backdrop, the FCA Bank Group JV was extended until December, 31 2024, with a clear indication of continuity and the renewed confidence of the shareholders that have started it in 2006.

In the year under review, the FCA Bank Group continued to be active in capital markets, with three public placements and three private placements of senior unsecured notes for a total of €2.9 billion under its “Euro Medium Term Note” program.In particular, starting in September 2019, the FCA Bank Group took advantage of the JV’s new time horizon by pricing a new issue under the above-mentioned program, maturing in November 2024, at a fixed rate of 0.50%, and by completing a “stand-alone” issue for CHF 125 million, maturing in 2023, thus extending its maturity profile.

In addition to relying on the lines of credit made available by the shareholder Crédit Agricole Consumer Finance, the FCA Bank Group continued to expand further its lines of credit with other banks, and for longer

durations, attesting to the Group’ strong ties with the international banking community.

The diversification of funding sources continued, thanks to both the continuing growth of Conto Deposito – the online savings product developed by FCA Bank, with total inflows amounting to €1.1 billion – and the new commercial paper issues under the ECP program, to raise short-term debt in the money market to meet limited and temporary liquidity requirements.

All these transactions allowed the FCA Bank Group to secure the funds necessary to support the business, strengthening in the meantime both the liquidity profile and the liability structure.

Regarding use of the foregoing ECB’s refinancing operations, in December 2019 the FCA Bank Group completed its first TLTRO-III operation for € 100 million.

Lastly, in November 2019 a note placement was completed for a vehicle called A-Best Seventeen S.r.l., established to securitize retail receivables in Italy, for a total amount of €912.6 million. The placement of all the classes of securities – Senior, Mezzanine and Junior minus a 5% retention required by regulations – made it possible not only to fund assets but also to reduce risk-weighted assets, in keeping with the applicable regulations.

Consolidated financial statements december 31, 2019• 14

HIGHLIGHTS

FCA BANK AND LEASYSEXPANSION IN EUROPEANMARKETSALAIN JUAN European Markets pag. 37

ALBERTO GRIPPO Chief Executive Officier Leasyspag. 41

NEW MOBILITY & CARCLOUD

GIULIO VIALEFCA Bank Italiapag. 50

E-WALLET ANDCREDIT CARDS:FCA BANK'S EXPERIENCE

THE WEB FINANCECALCULATOR, INNOVATION TOSERVE CUSTOMERS BETTERMARCELLA MERLI Sales & Marketingpag. 55

Highlights • 15

COMPLIANCE AND TRANSPARENCY:FCA BANK'S ADDED VALUEPATRIZIO LATTANZI Compliance & Supervisory Relationspag. 81

CROSS PATH PROGRAM& INNOVACTION

ANDREA BARCIOHuman Resourcespag.84

LUCA POLLANOICT, Digital & Data Governancepag. 67

DIGITALIZATION


Board of Directors, Board of Statutory Auditors and External Auditors

Board of directors • 17

Ernst & Young S.p.A.

* independent directors1 appointed on 26/11/2019² appointed on 26/11/20193 appointed on 31/01/2020

Board of Directors

Board of Statutory Auditors

External Auditors

ChairmanStéphane Priami 3

Managing Director and General ManagerGiacomo Carelli

DirectorsPaola De Vincentiis*Andrea Faina Andrea Giorio*Olivier GuilhamonBernard ManuelliDavide MeleRichard Keith PalmerValérie Wanquet

ChairmanFrancesco Pisciotta

Statutory AuditorsGiovanni Ossola Vittorio Sansonetti 1

Alternate Statutory AuditorsValter Cantino 2 Davide Chiesa


GOVERNANCE1. Giacomo Carelli: Chief Executive Officier & General Manager2. Mauro Aimetti: Internal Audit3. Andrea Barcio: Human Resources4. Simone Basili: Dealer Financing5. Olivier Broc: Credit6. Franco Casiraghi: Chief Financial Officer and Deputy General Manager7. Rolando D'Arco: Business Development8. Emanuela Demarchi: Risk & Permanent Control

22

99

31

10 11

44

12 13

Governance • 19

9. Enrico Favale: Legal Affairs & Procurement10. Alberto Grippo: Chief Executive Officier Leasys11. Alain Juan: European Markets12. Patrizio Lattanzi: Compliance & Supervisory Relations13. Stefano Leucci: Data Protection14. Marcella Merli: Sales & Marketing 15. Luca Pollano: ICT Digital & Data Governance16. Alberto Sibille: Corporate Affairs & Process Governance17. Giulio Viale: FCA Bank Italia

5 77 888

1414 15 16

66

17

4


Presentation and milestones

FCA BANK GROUP

FCA Bank S.p.A. is an equally held joint venture between FCA Italy S.p.A. (a Fiat Chrysler Automobile Group company) and CA Consumer Finance S.A. (a Crédit Agricole Group company).FCA Bank operates in 17 European markets and in Morocco and acts as the partner of reference for Fiat Chrysler Automobiles brands (Fiat, Lancia, Alfa Romeo, Fiat Professional, Abarth, Maserati, Chrysler and Jeep) for the prestigious manufacturers Ferrari, Jaguar Land Rover and the Erwin Group, Europe’s largest manufacturer of motorhomes and campervans. The FCA Bank Group has been supporting the automotive sector in Italy and Europe for over 90 years.SAVA (Società Anonima Vendita Automobili), a financial company designed to help Italian households to buy a car, was established on April 25, 1925, in Turin, when the “509” model was launched (the first Fiat car sold on credit). On 11 April of the same year Fiat took over the company.Starting January 1, 1931, in its capacity as sole shareholder, Fiat decided to provide financing only to buyers of its cars. In 1938 SAVA also began to finance sales of used cars on instalments. Over the past few decades the Company has been expanding its business beyond the national borders, in EU and non-EU countries.In 2003, SAVA was placed under Fidis Retail Italia S.p.A., whose shareholders eventually included Banca Intesa, Sanpaolo IMI, Capitalia and Unicredit with a collective 51% equity interest, on one side, and Fiat, which held the remaining 49%, on the other. In December 2006, Fiat Auto S.p.A. and Crédit Agricole S.A. established an equally-held joint venture to provide financial and rental services in Europe. Fiat Auto Financial Services S.p.A. was born.In July 2008, a cooperation agreement is signed with Jaguar Land Rover, while in 2009, the Company became the captive of all Chrysler brands in Europe (Chrysler, Jeep and Dodge). After signing a partnership agreement with Maserati in September 2013, FGA Capital started Maserati Financial Services. In November 2013, the equally-held joint venture between Fiat and Crédit Agricole was extended until December 2021. On January 16, 2015, FGA Capital obtained a banking license in Italy and changed its name

to FCA Bank S.p.A., thus becoming the parent company of an international banking group with a direct presence in 18 countries. In July of the same year, Erwin Hymer Group and FCA Bank announced a new collaboration and the creation of Erwin Hymer Group Finance.In August 2016, FCA Bank signed an agreement with Ferrari Financial Services S.p.A., the Ferrari financial services company, to acquire a controlling interest in Ferrari Financial Services GmbH, which operates in Germany, Switzerland and UK, becoming the only financial partner of the prestigious automotive brand in Europe. In October, the bank further diversified its o�ering by launching Conto Deposito, an innovative savings product available only online. 2017 is characterized by the growing internationalization of Leasys in Europe and in particular in Spain, France, Germany and Great Britain. In October, FCA Bank debuted with “Conto Deposito” in Germany.On February 15, 2018, FCA Italy S.p.A. ("FCA"), Crédit Agricole S.A. ("CASA") and Crédit Agricole Consumer Finance S.A. ("CACF") have concluded an agreement for the extension until December 31, 2022 of their Joint Venture. In the same month the partnership with Jaguar Land Rover was renewed. In March FCA Bank announces the new partnership with Aston Martin Lagonda and Morgan Motor Company. On October 1, Leasys S.p.A. acquired 100% of the share capital of Win Rent S.p.A.. FCA Bank has thus created the conditions for the development of its activity in short-term rental. Finally, before the end of the year, the partnership have been sealed with Harley Davidson, MV Agusta and Dodge and Ram European importers.June saw the birth of the Leasys Mobility Stores, the new integrated mobility system created by industry-pioneer Leasys. On July 19, 2019, FCA Italy (“FCA”) and Crédit Agricole Consumer Finance (“CACF”) entered into an agreement to extend FCA Bank, their equally-held joint venture, until December 31, 2024.In context of FCA Bank’s growth plans in Europe, among others, FCA Capital Maroc was founded to supports FCA customers with innovative financial solutions.In October LeasysCarCloud was launched, the first mobility subscription model in Italy.

FCA Bank Group • 21

1925

SAVA (Società Anonima Vendita Automobili) was founded.

2019

FCA Italy (“FCA”) and Crédit Agricole Consumer Finance (“CACF”) entered into an agreement to extend FCA Bank, their equally-held joint venture, until 2024.

2015

FGA Capital S.p.A. obtained a banking license in Italy and changed its name to FCA Bank S.p.A..

2006

Fiat Auto S.p.A. and Crédit Agricole S.A. established an equally-held joint venture to provide financial and rental services in Europe.


Profile of the FCA Bank Group

Fiat Chrysler Automobiles (FCA) designs, engineers, manufactures and sells vehicles and related post-sale services, spare parts, components and systems through 159 manufacturing facilities, 87 research and development centres worldwide, with dealers and distributors in over 140 countries. The Group operates in the automotive market under the Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, Ram and Maserati brands and provides post-sale services and spare parts uner the Mopar brand. The Group’s businesses include Comau (production systems), Magneti Marelli (components) and

In 2006, Crédit Agricole Consumer Finance and Fiat Auto set up an equally-owned joint venture called Fiat Group Automobiles Financial Services, which was eventually renamed FGA Capital in 2009. This partnership was subsequently extended to Jaguar Land Rover, Chrysler, Dodge and Jeep. With managed outstandings of €92 billion at December 31, 2019, Crédit Agricole Consumer Finance is a leading player in the consumer credit market. It offers its customers and partners financing solutions that are flexible, responsible and tailored to their needs. With a presence in 17 countries in Europe, as well as in China and Morocco, Crédit Agricole Consumer Finance uses its know-how and expertise to ensure that the customer loyalty policies of its partners, be them vehicle manufacturers, distributors,

Fiat Chrysler Automobiles (FCA)

Crédit Agricole Consumer Finance

Teksid (ironworks). In addition, it provides, car loan, lease and rental services to support the automotive business through subsidiaries or financial partners (such as captive companies, affiliates, joint ventures with prime banking and/or financial institutions and specialized operators). The company is listed on the New York Stock Exchange (“FCAU”) and on the MTA (Mercato Telematico Azionario) (“FCA”) in Italy. FCA operates through companies located in over 40 countries and has business relationships with customers in over 140 countries.

dealers, banks or institutional organisations become a commercial success Customer satisfaction being at the heart of its strategy, Crédit Agricole Consumer Finance provides them with the means of making informed choices about their projects. The company innovates and invests in digital technologies to offer customers and partners the best solutions, thus developing a new lending experience with them.

Profile of the FCA Bank Group • 23

100%

50%

Fiat Chrysler Automobiles

FCA ITALY S.p.A.

100%

50%

Crèdit Agricole Consumer Finance


FCA Capital France S.A. (FR) (4) Leasys S.p.A. (IT)99,99%

100%

100%

100%

99,99%

50%

50%

100%

100%

100%

100%

100%

100%

100%

100%

100%

99,99%

100%

100%

FCA Leasing France SNC (FR) (5) Leasys S.p.A. (Spanish Branch)

FCA Dealer Services UK Ltd (UK) Leasys S.p.A. (Belgian Branch)

FCA Capital Hellas S.A. (GR) (2) Leasys France S.A.S. (FR) FCA Insurance Hellas S.A. (GR) (3) Leasys Nederland B.V. (NL)

Clickar S.r.l. (7) FCA Bank GmbH (AT) (1)

FCA Dealer Services Portugal S.A. (PT) FCA Leasing GmbH (AT)

FCA Capital RE DAC (IE)

Legal entity

FCA Bank GmbH (Hellenic Branch)

Branch

FCA Capital Suisse S.A. (CH)

FCA Bank Deutschland GmbH (DE)

Ferrari Financial Services GmbH (DE) (6)

Ferrari Financial Services GmbH (UK Branch)

FCA Capital Danmark A/S (DK)

FCA Capital Danmark A/S (Branch Finland)

FCA Capital Norge AS (NO)

FCA Capital Sverige AB (SE)

FCA Capital España EFC S.A. (ES)

FCA Dealer Services España S.A. (ES)

FCA Dealer Services España (Morocco Branch)

FCA-Group Bank Polska S.A. (PL)

FCA Capital Portugal IFIC S.A. (PT)

FCA Bank S.p.A. (Irish Branch)

FCA Automotive Services UK Ltd (UK) Leasys S.p.A. (German Branch)

FCA Capital Nederland B.V. (NL)

Leasys UK Ltd (UK)

Leasys Rent S.p.A. (IT)

Leasing Polska Sp.Zo.o. (PL) (8)

Note:(1) FCA Bank GmbH (AT) - Fidis S.p.A. holds 25% while the remaining 25% is held by

CA Consumer Finance S.A..(2) FCA Capital Hellas S.A. (GR) - 1 share is held by individual.(3) FCA Insurance Hellas S.A. (GR) - 1 shares is held by individual.(4) FCA Capital France S.A. (FR) - 5 shares are held by individuals.(5) FCA Leasing France SNC (FR) - Remaining shareholding interest is held by Leasys France S.A.S..(6) Ferrari Financial Services GmbH (DE) - FCA Bank holds 50% + 1share; remaining shareholding interest is held by Ferrari Financial Services S.p.A..(7) Effective 6th November 2019 Leasys S.p.A. holds 100% of share capital of the new company Clickar S.p.A..(8) Effective 21th November 2019 Leasys S.p.A. holds 100% of share capital of

Leasys Polska Sp. Zo.o. (already subsidiary of FCA Bank S.p.A. as FCA Leasing Polska Sp. Zo.o.) The company is still part of the Banking Group.

Banking Group Other Companies

FCA Bank S.p.A. (Belgian Branch)

100% 100%

100%

100%

Group structure

Geographical footprint • 25

Geographical footprint

Legal entity

Branch

Legend

FCA Bank GmbH (AT)

FCA Leasing GmbH (AT)


FCA Capital Norge AS (NO)


FCA Capital España EFC S.A. (ES)

FCA Dealer Services España S.A. (ES)

Leasys S.p.A. (Spanish Branch)

FCA Bank S.p.A. (IT)

FCA Capital Suisse S.A. (CH)

FCA Bank Deutschland GmbH (DE)

Ferrari Financial Services GmbH (DE)

Leasys S.p.A. (German Branch)

FCA Dealer Services UK Ltd (UK)

FCA Automotive Services UK Ltd (UK)

Leasys UK Ltd (UK)

FCA Capital Portugal IF IC S.A. (PT)

FCA Dealer Services Portugal S.A. (PT) FCA Capital Hellas S.A. (GR)

FCA Insurance Hellas S.A. (GR)

FCA Bank GmbH (Hellenic Branch)

FCA Bank S.p.A. (Irish Branch)

FCA Capital RE DAC (IE)

Ferrari Financial Services GmbH (UK Branch)

Leasys S.p.A. (IT)

Leasys Rent S.p.A. (IT)

Clickar S.r.l. (IT)

FCA Capital France S.A. (FR)

FCA Leasing France SNC (FR)

FCA Capital Nederland B.V. (NL)

FCA Bank S.p.A. (Belgian Branch)


FCA-Group Bank Polska S.A. (PL)

FCA Capital Sverige AB (SE)

Leasys S.p.A. (Belgian Branch)

Leasys France S.A.S. (FR)

Leasys Nederland B.V. (NL)

Leasys Polska Sp.Zo.o. (PL)


Net banking income and rental margin

Net operating expenses

Cost of risk

Operating income

Other income/ (expense)

Profit before task

Net income

OutstandingAverage

End of year

Ratio Net banking income and Rental margin(on Average Outstanding)

Cost/Income ratio

Cost of risk (on Average Outstanding)

CET1

Total Capital ratio (TCR)

Economic data (€/mln) 31/12/2019 31/12/2018

1,025

(293)

(66)

666

(28)

638

467

26,348

27,539

3.89%

28.55%

0.25%

14.20%

15.82%

954

(277)

(44)

633

(85)

548

388

24,375

26,805

3.91%

29.02%

0.18%

12.45%

14.02%

Resultsof operations

• 27

The businesslinesBANKING – WHOLESALE FINANCING

Dealer Financing Portfolio END OF YEAR (€/BLN)

The business lines

8.231.12.2018

7.331.12.2017

6.031.12.2016

31.12.2019 7.1

4.831.12.2015

Dealer Financing Portfolio END OF YEAR BY MARKET (€/MLN)

The Dealer Financing business continued to be paramount for FCA Bank, in its role as captive bank for FCA, Ferrari, Maserati, JLR, Hymer and other significant manufacturers.Still with the objective of supporting the sales of cars and commercial vehicles through different types of financing (mainly through factoring arrangements), FCA Bank has developed a product range capable of meeting all dealer requirements and of supporting effectively the sale of vehicles to “large customers” with domestic and international operations.

In terms of business performance, the credit portfolio at the end of December 2019 was 13% lower than the comparable 2018 amount, in keeping with expectations. The drop was due mainly to a optimized management of new car

inventories by the dealer network, as confirmed also by the average credit portfolio, which in 2019 amounted to €7.1 billion, in line with the comparable 2018 figure. In any case, the general trend made it possible to post positive results in terms of both net banking margin (2.80%) and net profit, amounting to €106 million, largely in line with the 2018 result.Italy continues to be the main market, thanks to the strategic importance of FCA’s distribution network, which accounts for 40% of the credit portfolio.This percentage increases to slightly less than 80% if account is taken of the volumes handled also in Germany, France and Spain.


Poland

Switzerland

Netherland

Austria

Denmark, Sweden, Norway

Portugal

Greece

United Kingdom

Belgium

Spain, Morocco

France

Germany

Finland

Italy

159

201

349

351

556

789

1,513

156

152

137

119

12

2,643

4

The business lines • 29

Retail Financing NEW ORIGINATIONS IN 2019 BY MARKET (€/MLN)

NEW ORIGINATION (€/MLN)

BANKING – RETAIL FINANCING

Retail Financing

8,000

9,000

10,000

11,000

12,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

8,642

10,495

11,588 11,659

10,660

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019

Switzerland

Belgium

Portugal

Netherland

Poland

Denmark and Sweden

Austria

Spain

United Kingdom

France

Germany

Greece

Italy

289

311

328

692

1,151

1,236

2,758

193

160

144

127

57

4,213


END OF YEAR(€/BLN)

Retail Financing END OF YEAR BY MARKET (€/MLN)

Retail Financing

16.00

18.00

11.0

13.0

14.415.8

16.9

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019

14.00

12.00

10.00

8.00

6.00

4.00

2.00

0

Portugal

Austria

Poland

Denmark and Sweden

Netherland

Greece

Switzerland

Spain and Morocco

France

United Kingdom

Germany

Belgium

Italy

192

196

343

887

1.004

1.613

4.095

192

158

128

76

74

7.931


FCA Bank offers its customers a wide range of products: not only financial but also insurance solutions to adequately meet the needs of the end customer.

Partners’ sales network intermediation is crucial for the commercial activity and also in 2019 the search for an increasingly profitable integration between the various business lines was confirmed. To support sales FCA Bank has continued to improve a series of instruments aimed at increasing not only customer satisfaction, but also its loyalty.With particular reference to the insurance offer, FCA Bank has confirmed its willingness to collaborate with the leading companies in the market, in order to build a complete range of products, ranging from insurance coverage in case of events that personally involve the customer to those dedicated to the vehicle and its use.

The financial and insurance offer converge in a single relationship with the customer, which simplifies and helps the management and payment of the vehicle and services connected to it.

Financed Volumes by Product 2019

AUTO LOANS

LEASING

PCP

8%

24% 68%


Rental Portfolio (MLN/ €)

MOBILITY - RENTAL

Rental Portfolio by Product (thousand of units)

1,600

1,800

2,000

2,200

1,400

1,200

1,000

800

600

400

200

0

930

1,124

1,391

1,701

2,071

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019

FLEET MANAGMENT

RENTAL259.3

20.3


Rental Additions (thousand of units)

1.41.7

2.2

2.8

3.5

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0

69.5

85.799.8

110.8

133.6

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019

120.0

140.0

100.0

80.0

60.0

40.0

20.0

0

In October Leasys CarCloud was launched, the first mobility subscription in Italy. This is a sustainable model that embraces car disownership and fosters the ability to move freely. By subscribing to a mobility services, a customer can choose at any time and throughout Italy the vehicle best suited to any situation.

Thus, the FCA Bank Group has proved once again its ability to meet the different rental and mobility requirements of all sorts of customers, from large to small and medium companies, to self-employed professionals and individuals. Sales of off lease cars continue under the Clickar trademark, through the largest online platform in Italy devoted to sector operators and private individuals.

FCA Bank operates in the Rental sector through its Leasys subsidiary. In December, Leasys made further progress in its internationalization process by setting up an operation in Poland, thus bringing to 8 the countries in which it is operational (Italy, France, Germany, Spain, the Netherlands, United Kingdom, Belgium and Poland), and continuing to pursue international growth.

June 2019 saw the launch of the new Leasys Mobility Stores, which bring to life the concept of “Living Mobility”, the new integrated mobility system that confirms Leasys’s role as a pioneer in the industry, with the objective of providing a full range of mobility services to customers who show a growing preference for tailor-made solutions.

End of Year Rental Portfolio (€/BLN)


Intermediate Insurance Gross Written Premiums (€/MLN)

INSURANCE AND SERVICING

500

600

400

300

200

100

0

415.7

496.8532.9 523.7 524.7

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019


Gross Written Premiums per Insurance Product 2019 (€/MLN)

OtherInsurances

CPI

Motor Insurance Extended

Warranty

GAP

15%

15%

13%

5%52%

events, vandalism and shattered glass; • Kasko & Collision. Kasko insurance covers damages in case of collision with another vehicle, fixed and mobile object collision, vehicle overturning and roadway departure. Collision insurance kicks in only in case of collision with another identified vehicle;• Warranty Extension, which extends the manufacturer’s standard guarantee period with a range of solutions that cover customer expenses in case of vehicle breakdown. All the financing and insurance solutions described are adapted to local standards, to meet customer requirements in the various European markets in which FCA Bank operates.

In 2019 the bank sold about 2 policies per financing contract, for a total of €525 million in premiums collected.

FCA Bank provides a wide range of credit- and vehicle-protection insurance products and services in connection with financing contracts.Below, a list of the main insurance services provided in the various European markets is provided: • Credit Protection Insurance, which releases customers from the obligation to repay, in whole or in part, their debt in the presence of specific sudden and/or unexpected events; • GAP (Guaranteed Asset Protection) Insurance, which protects the value of the vehicle purchased, in case of theft or total loss, with the payment of the vehicle for the full value for a given number of years after purchase or a substantial payment, which may vary depending on the laws applicable in the country; • Glass/vehicle etching, an important anti-theft measure;• Third-party liability insurance, which may or may not be financed;• Theft and fire policy which, when it is financed throughout the term of the contract, covers theft, fire, robbery, natural events, socio-political


"IN 2019 THIS STRATEGY TRANSLATED INTO

THE LAUNCH OF A RETAIL OPERATION IN MOROCCOTHROUGH A WHITE LABEL

AGREEMENT."


FCA Bank and Leasys expansion in european markets

Over the past few years, FCA Bank began expanding its activities in Europe, and elsewhere, to better grasp the business opportunities that might materialize in supporting the business of its captive brands. In 2019 this strategy translated into, among others, the launch of a retail operation in Morocco, through a White Label Agreement with one of the most important local financial operators, Wafasalaf, which is part of the Gruppo Crèdit Agricole Consumer Finance Group.

The partnership – which was named FCA Capital Maroc, in keeping with the corporate names used in the rest of Europe - is clearly intended to support FCA Bank in its pursuit of growth in Morocco. By using FCA Bank’s know-how and experience in the provision of innovative financing products in terms of mobility, access and flexibility, the new company is designed to become a key reference for all the customers that want to finance the purchase of an FCA

vehicle and a partner for the network of dealers that it has been financing since 2017. This White Label Agreement will also allow FCA Bank to improve its know-how on the Moroccan market in terms of customer profile and risk management in view of any further steps in the future.

ALAIN JUAN European Markets


The size of the automotive market in Europe (European Union + EFTA) grew on the previous year, reaching 15.8 million vehicles. New car registrations increased in Germany (+5%), Poland (+4.5%), Greece (+10.3%) and Switzerland (+3.9%) and decreased slightly in Portugal (-2%), UK (-2.4%) and Spain (-4.8%).

AUTOMOTIVE MARKET

MARKET AND AUTOMOTIVE BRANDS DEVELOPMENT

15.8 millionnew car and

commercial vehicle registrations.


FCA registered 1.1 million vehicles, achieving 6.7% market share. Attention is called to the launch of the Alfa Romeo Giulietta MY 2019, designed to meet the requirements of every customer. Against this background, FCA Bank supported this launch with U-Go, the innovative peer-to-peer platform whereby Leasys’s customers can share their rented vehicles when they are not using them. The combination of Giulietta and U-Go are synonymous with style and mobility.

Jaguar and Land Rover sold approximately 90 thousand cars during 2019. In particular, Land Rover introduced the new Range Rover Evoque (March).

Maserati delivered approximately 5,300 vehicles and launched the new Trofeo version of its successful Levante SUV.

The FCA Bank Group’s global penetrations for these three brands were (in brackets the variation compared to 2018):• 48.1% FCA brands (+1.1 percentage points);• 49.6% JLR brands (-0.5 percentage points);• 41.1% Maserati (-2.8 percentage points)

FCA Bank’s commercial penetration regarding Ferrari registrations was nearly 25.4%, with €487 million in volumes financed (compared to €461 million in 2018, with a 6% increase).

The collaboration arrangement with the Erwin Hymer Group generated €147 million in volumes financed (up 43% on 2018).

FCA BANK’S PARTNERS

48.1% Brand FCA (+1.1%)

49.6% Brand JLR (-0.5%)

41.1% Maserati (-2.8%)

"WITH LEASYS CARCLOUD, FOR A FIXED MONTHLY FEE CUSTOMERS CAN ACCESS

DIFFERENT VEHICLES, WITH THE POSSIBILITY TO CHANGE

THEM ANYTIME, ON THE BASIS OF THEIR NEEDS."



ALBERTO GRIPPO Chief Executive Officier Leasys

New mobility & CarCloud

Disownership is the mega-trend that is driving the global mobility sector. Now more than ever, modern consumers are looking for clarity and flexibility as well as the possibility to use products and services continuously without owning them. This trend characterizes customers not for what they might own but for the experiences that they might want to live, with the result that the production and sale of goods and services now emphasize sustainability over time.

Leasys, the leader in long-term car rental in Italy, is now of the most dynamic operators in the European mobility sector and has been the first to grasp this trend, and in the most convincing manner, by emphasizing innovation. In October 2019, it launched Leasys CarCloud, the first “mobility subscription” service.

With Leasys CarCloud, for a fixed monthly fee customers can access different vehicles, with the possibility to change them anytime, on the basis of their needs. They can have a small car when they drive in the city or an SUV or a station wagon for weekend outings or the summer holidays.Thus, CarCloud is a highly innovative mobility solution that meets in full the most exacting demands for flexibility. The subscription has no time limits. Customers

can start, renew monthly or leave at any time. The activity can be managed digitally with zero bureaucracy. To use the service, all customers have to do is to purchase the subscription that best suits their requirements, register in the program online and select the desired vehicle. This vehicle can then be picked up within 48 hours at one of the 150 Leasys Mobility Stores participating in the Leasys CarCloud located throughout Italy or even delivered at home.

If customers wish to change to another model included in the subscription, they can do so by making a reservation online. The replacement can be carried out also by returning the vehicle in one’s possession to a Leasys Mobility Store and pick up another at a different Store. This is ideal for people who travel by airplane or by train and intend to use their subscription once they arrive at their destination. Leasys CarCloud has been a first in the sector, taking in the first two months since inception in Italy more than 3,000 orders. It is definitely a best practice to be exported to other Countries. Car subscription is a further step in the strategy of Leasys, the Mobility Pioneer.

REPORT ON OPERATIONSDECEMBER 31, 2019

• 42 Consolidated financial statements December 31, 2019

Report on operations • 43

Significant event and strategic transactions 46

Commercial policies 48 Financial strategy 52

Cost of risk and credit quality 61

Residual values 68

Results of operations 69

Equity and capital ratio 75

Organization and human resources 79

Information technology 82

Internal control system 86

Other information 88


• 45

Macroeconomic scenario, the automotive market and financial marketsIn 2019 global trade showed a slight recovery, with signs of improvement on the tariff front between United States and China (a first trade agreement was signed in December), even though prospects remain uncertain. The Central Banks continued to maintain an accommodative stance.

In the euro area economic activities were affected mainly by a weaker manufacturing sector, which is particularly important in Germany, while the service sector remained in a growth mode. Projections made in December by the Eurosystem estimate a 1.2% growth rate for the GDP in the euro area in 2019. Regarding monetary policy, the ECB’s Governing Council adopted a package of expansionary measures to address cyclical risks and weak price prospects. However, recent estimates call for a rate of inflation lower than the 2% threshold for the next three years.

Credit showed signs of expansion, with respect to both households and non-financial companies. In particular, business lending grew faster in France and Germany and less so in Spain and Italy. Non-performing loans fell further in the first three quarters of 2019.

Report on operations

Regarding the automotive market, new car registrations (European Union + EFTA) at the end of December 2019 rose by 1.2% on the comparable figure for 2018, to 15.8 million. Of the five most important European car markets (Germany, United Kingdom, France, Italy and Spain), Germany was up 5% on 2018, while France and Italy were up 1.9% and 0.3%, respectively. For their part, the United Kingdom and Spain posted sharp drops, with -2.4% and –4.8%, respectively.


Significant events and strategic transactions

Renewal of Joint Venture On July 19, 2019, FCA Italy (“FCA”) and Crédit Agricole Consumer Finance (“CACF”) signed an agreement to extend their equally-held Joint Venture in FCA Bank S.p.A. until December 31, 2024. This extension will strengthen FCA Bank’s business model, enabling it to complete its commercial offering and to enhance profitability.

Bank of Italy’s Audit The Bank of Italy performed an audit of FCA Bank S.p.A.’s policies and practices in relation to transparency in banking and financial transactions and services under articles 115 et seq. of Legislative Decree 385 of September 1, 1993, which was completed January 2018. The audit, which involved also interviews with company functions, required certain adjustments to the consolidated financial statements as of December 31, 2018 and December 31, 2019. The audit resulted without significant impact on the annual result.

Italian Antitrust Authority AGCMOn May 15, 2017, the Italian Anti-Trust Authority (Autorità Garante della Concorrenza e del Mercato - AGCM) announced the launch of an inquiry into nine car financing operators, or “captives”, which represent the industry in almost its entirety, and two trade associations Assofin “Associazione Italiana del Credito al Consumo e Immobiliare” and Assilea “Associazione Italiana Leasing”) to ascertain if there was any violation of the TFEU (Article 101 of the Treaty on the Functioning of the European Union – Anti-competitive agreements) in the automotive financing industry.

FCA Bank S.p.A. (“Company”) was one of the nine operators covered by the inquiry, which was intended to investigate alleged exchanges of information. AGCM communicated that the procedure, which

was scheduled to end on July 31, 2018, was extended until December 31, 2018. The decision was served to the company on January 9, 2019 indicating that the AGCM found the company, together with the other captives, had been exchanging commercially sensitive information via direct contacts, as well as through the local industry associations Assofin and Assilea, with a view – according to the AGCM – to coordinating their commercial strategies with respect to car loans and leasing offerings, in breach of the TFEU.

The AGCM imposed a total sanction of euro 678 million to the involved parties, and specifically fined the Company euro 178.9 million. While it respects AGCM’s work, the Company feels that the accusations outlined in the decision are inaccurate. To that end, the Company thinks that the reasons to challenge that decision are pertinent and should be pursued.As such, the Company have filed an appeal with the Regional Administrative Court (“TAR”) against the decision and has requested a stay of payment of the fine.

On April 4, 2019, the TAR of the Lazio Region, accepted the request for a suspension of the enforceability of the fine with order no. 3348 and set the hearing on the merits for February 26, 2020.

Leasys – Car City Club On December 13, 2019, the liquidation of Car City Club Srl in Liquidazione was completed. As of the same date, the company ceased to exist and was stricken off the Companies Register.

FCA - PSA On October 31, 2019, FCA published a press release announcing that the Supervisory Board of Peugeot S.A. and the Board of Directors of FCA have each unanimously agreed to work towards a full combination of their respective businesses by way of a 50/50 merger.

• 47

Outlook for 2020In 2019 commercial activities were quite positive, in the context of stronger ties with the served automotive brands, and translated into significant financial results.The FCA Bank Group will continue to cooperate with the manufacturing partners, supporting them in the launch of the new products planned for 2020 and the consolidation of those already introduced in the market. In this economic context, the Board of Directors thinks that FCA Bank’s sound financial and organizational structure makes the Group ready to react to any deterioration of the conditions in which it operates as well as, on the other hand, ready to grasp any opportunity that should materialize.FCA Bank is in a position to support the commercial activities of its manufacturing partners - Fiat Chrysler Automobiles, Jaguar Land Rover, Maserati, Ferrari, Aston Martin, Morgan Motor Company and Erwin Hymer Group – as well as those of the other partner brands, promoting the financing, insurance and rental and mobility solutions best suited to meet the needs of dealers and end customers.

Merger of FCA-Group Bank Polska An agreement to carry out the cross-border merger of FCA Group Bank Polska with and into FCA Bank S.p.A. was signed on December 19, 2019 and recorded in the Turin Companies Register on December 24, 2019.

In keeping with the agreement, the merger took effect for legal, tax and accounting purposes on January 1, 2020. As of this date FCA Bank S.p.A. operates in Poland through a branch.The merger turned out to be the best tool to face effectively the competition resulting from the expansion and globalization processes under way in the banking and financial system, on one side, and to look for additional qualitative growth opportunities that would allow the bank to fulfil the existing potential, on the other.



Commercial policies

Thus, there are 18 brands that work with FCA Bank. Regarding the geographical scope, FCA Bank is firmly present in 17 European countries and in Morocco, where in October a partnership was also entered into with Wafasalaf to provide FCA customers with innovative financing solutions for their car purchases.

In the countries in which FCA Bank operates, total new car registrations in 2019 amounted to 16.1 million while FCA Bank disbursed financing in the amount of €13.7 billion. Regarding the brands of the FCA Group, total financing stood at €10.5 billion, with a 3% increase in respect of 2018.For the Jaguar and Land Rover brands, total financing grew by 5% compared to the previous year, to €2.4 billion.

Business development during 2019In 2019 FCA Bank firmed up the cooperation with the new commercial partners. For Aston Martin in particular, the first half of 2019 posted excellent results, with total volumes financed in the amount of €35.4 million. In April, the agreement with Morgan Motor Company for the management of loans to end customers was extended also to the United Kingdom.

In the motorcycle sector, the cooperation arrangement with Harley Davidson became operational in Spain, Poland and Portugal (in January, April and September, respectively) while June saw the start of the activity with MV Agusta in Italy, France, Germany and United Kingdom.

• 49Report on operations

Yearly Originations (€/MLN)

9,572

11,61912,052

13,28913,730

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019

12,000

14,000

10,000

8,000

6,000

4,000

2,000

0

The commercial penetration for the Group brands (registrations of new financed vehicles/total new FCA Group vehicles registrations) reached 48.1% in 2019 (+1.2% in respect of 2018).

Total penetration

The penetration for JLR brands stood at 49.6%, while for Maserati at 41.1%. Total penetration for all the brands served reached 48.1%, compared to 47.1% of last year.

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019

35

40

45

50

30

25

20

15

10

0

46.7%

43.3%

47.1%

48.1%45.6

%


E-Wallet and credit cards: FCA Bank’s experience

Since its transformation into a bank four years ago, FCA Bank has been constantly diversifying its offering. To that end, 2019 witnessed the bank’s entry into the complex and dynamic world of credit cards. FCA Bank’s credit card is the first milestone in a broader strategy setting that will create many contact points among the carmaker, the dealer network and the FCA Bank Group, an ideal situation to generate benefits for customers and new sales opportunities by providing competitive services. FCA Bank’s experience in this ever-changing environment – suffice to think of the recent offering of open banking platforms and the presence of new dynamic players that intensify competition – translated into the launch of the credit card, first with the Group’s employees and subsequently in the open market. Eventually, the offering was expanded to five new personalized credit cards, each with the graphics of the FCA brand to enhance the customer’s loyalty to, and identification with, the brand.The FCA Bank credit cards feature such innovative contents and functionalities as My Budget - which makes it possible to choose the favourite repayment method, whether in instalment or in a lump-sum, by customizing the amount of the instalment until the last day of the month – and My Control, which can be used to manage comfortably one’s payments, by enabling or disabling online purchases, use abroad or cash withdrawals.

Every credit card issued comes with access to the FCA Bank Club, the free-of-charge program that rewards loyalty on the basis of one’s purchases.In addition to products and services by prestigious partners, the Club makes available discount vouchers on other FCA Bank products, such as the reduction of processing fees associated with a loan or lease application or the upgrade of the interest rate on the Bank’s Conto Deposito and programs related to services such as short-term car rental.

All these functionalities and benefits can be accessed anytime in a simple and secure manner from one’s smartphone through the My FCA Bank app.

This will be the battlefield for the next challenge, create amazement in the car finance market with the launch of the closed-circuit FCA Bank loyalty card. Distributed through the dealer network, this loyalty card will allow customers to earn points that can be applied toward purchases within the FCA Bank Club by repaying the monthly loan instalment as well as to convert it into an actual Visa credit card directly from the My FCA Bank Customer Area.

The offering of banking products will include in the near future such digital payment facilities as e-Wallet and Payment Hud. In fact, the development of mega trends such as “connected vehicles”, “self-driving vehicles”

GIULIO VIALE FCA Bank Italia


and “electrification” will lead inevitably to the creation of wide ranges of services that customers will be able to use while they travel or while they wait for their EV to charge.

These will be in addition to mobility management services (e.g. parking, fuelling, intermodal ticketing), to the new mobility access models determined by disownership (sharing of one’s vehicle, vehicle in “cloud” with fee- or subscription-based payments), and services rendered directly to the vehicle (e.g. apps downloaded over the air on one’s onboard computer, remote door opening/closing to enable third-party services).As such, we can expect that a large number of

transactions will be generated in the near future in connection with these new services, i.e. “in-vehicle payment”, and FCA Bank intends to act as an infrastructure that enables in-vehicle payments, by operating a Group Payment Hub capable of handling all these transactions at a highly competitive cost for its customers. Moreover, FCA Bank intends to develop and integrate into vehicles the e-Wallet (digital wallet that can contain different payment tools) for all Group customers, allowing them to authorize purchases in relation to the context (one click, one tap fingerprints, voice command, face-ID) and providing larger discounts as well as exclusive services through a complete and simple user experience.


Financial strategy

The Treasury function manages the Group’s liquidity and financial risks, in accordance with the risk management policies set by the Board of Directors.

The Group’s funding strategy is designed to: • maintain a stable and diversified funding source structure; • manage liquidity risk; • minimize the exposure to interest rate, currency and counterparty risks, within the scope of low and pre-set limits. In 2019, the Treasury department raised the cash necessary to fund the Group’s activity, at competitive terms and conditions so as to improve the net interest margin.

The most important activities completed in 2019 included: • three public placements of euro-denominated bonds issued by FCA Bank S.p.A. (through its Irish branch) for a total amount of €2,300 million; • three private placements of bonds issued by FCA Bank S.p.A. (through its Irish branch) for a total amount of €600 million;

• a stand-alone issue of bonds denominated in Swiss francs by FCA Capital Suisse S.A. (guaranteed by FCA Bank S.p.A.) for a total amount of CHF 125 million;• the placement of Euro Commercial Paper issued by FCA Bank S.p.A. (through its Irish branch) for a total amount of €385 million;• securitization of retail receivables in Italy, by a vehicle called A-Best Seventeen S.r.l., for a total amount of €912.6 million, with the placement in the market of Senior, Mezzanine and Junior notes (minus the 5% retention required by regulations); • renewal of securitization programs:

- Erasmus Finance DAC, relating to receivables due from German, French and Spanish dealers, for up to €1,290 million- Fast 3 S.r.l., relating to receivables due from Italian dealers, for up to €1,000 million- Nixes Six PLc, relating to receivables due from UK customers, for up to GBP 670 million- Nixes Seven B.V., relating to receivables due from German customers, for up to €540 million;

• the net increase of new bank loans provided

Interest rates trend

IRS 5 yearsIRS 3 yearsIRS 2 years

0.3%

0.2%

0.1%

0.0%

-0.1%

-0.2%

-0.3%

-0.4%

-0.5%

-0.6%01/2019 02/2019 03/2019 04/2019 05/2019 06/2019 07/2019 08/2019 09/2019 10/2019 11/2019 12/2019


Financial structure and funding sources

Crédit Agricole Group

Financial institutions

Securitizations

Bank deposits

MTN

Equity

Central Banks

Commercial Papers

Non-financial liabilities

Total

11%

19%

18%

4%

28%

10%

4%

1%

5%

100%

DescriptionAs a % of total

funding sources As a % of total

liabilities and equity

12%

19%

19%

4%

30%

11%

4%

1%

100%

The table below shows the financial structure and funding sources as of December, 31 2019:

• 53

to different Group companies, for a total amount of €700 million;• an increase of €200 million in deposits from the public, which brought total deposits to over €1.1 billion at December 31, 2019.

"THE YEAR AHEAD WILL SEE SIGNIFICANT IMPROVEMENTS

FOR THE FINANCE CALCULATOR, WHICH IS CONSTANTLY

CHANGING TO INCORPORATE NEW TECHNOLOGICAL

SOLUTIONS AND TO PROVIDE AN INCREASINGLY BETTER

CUSTOMER EXPERIENCE."



MARCELLA MERLI Sales & Marketing

The Web Finance Calculator, innovation to serve customers better.

In a world where digitalization is no longer a new frontier, but a solid base on which to build integrated solutions and services, customer experience has taken centre stage and a key role in the development of new products and systems. Access and customization are the two features that consumers consider paramount in their buying process, in reaction to the many inputs that they receive and the increasingly important personal needs. FCA Bank’s Finance Calculator came to life in 2006 as a communication tool made available by Sava, which eventually became FCA Bank, on its website. Today it is a pan-European platform present in over 300 touchpoints which, in light of the 1 million daily interactions that it generates, qualifies as a shopping tool, allowing customers to research and customize the best car financing solutions. In fact, the Finance Calculator makes it possible to simulate one’s monthly payment by choosing from the range of available options – traditional loan repayable in monthly instalments, lease and solutions with guaranteed future value – including insurance and additional services and permitting a comparison among the different alternatives. The service can be accessed through the websites of the FCA Bank Group either on a stand-alone basis or on an integrated basis, with the car configurators of the Brands, the dealers and the stock locators. The service is available for all the FCA, Maserati, Jaguar and Land Rover

brands and for all the types of vehicle, whether new, used or immediate delivery. The year ahead will see significant improvements for the Finance Calculator, which is constantly changing to incorporate new technological solutions and to provide an increasingly better customer experience. The new 3.0 version will be integrated into the systems in place in every market, making it possible to release new user functionalities. New developments include the evaluation of the trade-in value of one’s car, the addition of Leasys’s rental products and the possibility to look for vehicles consistent with one’s monthly expense budget. In addition, the integration with the functionalities of the current pre-scoring platform and the future development of e-commerce tools will enable users to see their credit application approved and to reserve the offer, with a 100% digital customer journey. All this can be obtained by just accessing the Web Finance Calculator.In FCA Bank’s strategic vision innovation is a will always be at the customer’s service.


Funding sources

Equity

Third Parties

Securitisation

MTN

Crédit Agricole Group

Central Bank

Time Deposit

C Ps

The chart shows how the strategy to diversify the funding sources firmed up over the years. In particular, the banking licence obtained in 2015 made it possible to resort to the European Central Bank and to benefit from the further diversification resulting from the launch of

“Conto Deposito” in 2016 and “Euro Commercial Papers” in 2018.All these actions enabled FCA Bank to continue to secure the liquidity necessary to fund the growing business and to strengthen its liability profile.

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019

24%

15%

11%

28%

17%

18%

13%

10%

34%

16%

8%5%

19%

11%

10%

35%

17%

7%

2%3%

10%

31%

20%

4%

22%

10%

19%

12%

11%

30%

19%

4%

1%4%

1%



FINANCIAL RISK MANAGEMENT

FCA BANK’S PROGRAMS AND ISSUES

Interest-rate risk management policies, which are intended to protect net interest margin from the impact of changes in interest rates, provide for the maturities (interest reset dates) of liabilities to match the maturities of the asset portfolio. It is worthy of note that the Group’s risk management policies allows the use of interest rate derivatives only for hedging purposes. Maturity matching is achieved also through more liquid derivative instruments, such as interest rate swaps and forward rate agreements (the Group’s risk management policies do not allow the use of instruments other than “plain vanilla”, such as exotic instruments).

The strategy pursued during the year involved constant and full hedging of the risk in question, thereby offsetting the effect of interest rate and market volatility.

In terms of currency risk, the Group’s policy does not contemplate the creation of foreign currency positions. As such, non-euro portfolios are usually funded in the matching currencies; where this is not possible, risk is hedged through foreign exchange swaps (it is worthy of note that Group risk management policies allow the use of foreign exchange transactions solely for hedging purposes). Counterparty risk exposure is minimized, according to the criteria set out by Group risk management policies, by depositing excess liquidity with the central bank and performing day-to-day transactions with primary banks. Use of very-short-term investment instruments is limited to short-term deposits and repurchase agreements with European government securities as underlying. Regarding transactions in interest rate derivatives (carried out solely under ISDA standard agreements), counterparty risk is managed solely through the clearing mechanisms under EMIR.

FCA Bank’s issues are managed, as detailed in the following table, through: • the Euro Medium Term Note (EMTN) program, with FCA Bank S.p.A. as issuer (through its Irish branch). At December 31, 2019 the program had an aggregate maximum nominal amount of €12 billion and approximately €8.6 billion in notes outstanding. The notes and the program have been assigned FCA Bank S.p.A.’s long-term rating by Moody’s, Standard & Poor’s and Fitch;• stand-alone bonds denominated in Swiss francs issued by FCA Capital Suisse S.A. and guaranteed by FCA Bank S.p.A. At December 31, 2019 there were three bonds outstanding for a total amount of 400 million Swiss francs. These bonds have been assigned FCA Bank S.p.A.’s long-term rating by Moody’s and Fitch;• the Euro Commercial Paper program with FCA Bank S.p.A. as issuer (through its Irish branch). At December 31, 2019 the program had an aggregate maximum nominal amount of €750 million and approximately €230 million in commercial paper outstanding. The program has been assigned FCA Bank S.p.A.’s short term rating by Moody’s.


ISSUER INSTRUMENT ISIN MARKETSETTLEMENT

DATEMATURITY

DATE AMOUNT

(MLN)

FCA Bank S.p.A. - Irish Branch
















FCA Capital Suisse SA





Public

Public

Public

Public

Public

Public

Public

Private

Private

Public

Public

Private

Public

Private

Public

Private

Public

Public

Public

Private

Private

XS1220057472

XS1383510259

XS1435295925

XS1497682036

XS1598835822

XS1697916358

XS1753030490

XS1757829079

XS1793286664

XS1881804006

XS1954697923

XS1983383545

XS2001270995

XS2016113420

XS2051914963

XS2072086049

CH0326371413

CH0370943620

CH0498400586

XS1967698975

XS2028909898

17-Apr-15

23-Mar-16

21-Jun-16

29-Sep-16

13-Apr-17

12-Oct-17

17-Jan-18

22-Jan-18

16-Mar-18

21-Sep-18

21-Feb-19

16-Apr-19

24-May-19

20-Jun-19

13-Sep-19

24-Oct-19

29-Jun-16

25-Jul-17

23-Oct-19

20-Mar-19

12-Jul-19

17-Apr-20

23-Sep-20

21-Jan-21

29-Sep-21

15-Nov-21

12-Oct-20

17-Jun-21

22-Jan-20

16-Mar-20

21-Feb-22

21-Jun-22

16-Apr-21

24-Nov-22

20-Jul-21

13-Sep-24

24-Oct-22

29-Nov-21

24-Jul-20

23-Oct-23

18-Mar-20

10-Jul-20

700

500

500

400

800

800

850

240

240

600

650

200

800

200

850

200

100

175

125

130

100

EUR

EUR

EUR

GBP

EUR

EUR

EUR

EUR

EUR

EUR

EUR

EUR

EUR

EUR

EUR

EUR

CHF

CHF

CHF

EUR

EUR

FCA Bank programs and issuances


RATING SIGNIFICANT RISK TRANSFER TRANSACTIONS

TLTRO-III

On May 9, 2019, Fitch raised FCA Bank’s short term rating. The ratings assigned to FCA Bank at December 31, 2019 are as follows.

On November 27, 2019 a placement was completed for the Class A, B, C, D, E and M notes issued by A-Best Seventeen S.r.l. in connection with the securitization of car loans originated in Italy by FCA Bank S.p.A..

The transaction allowed the optimization of the level of risk-weighted assets as a result of a “significant risk transfer” for prudential purposes, in keeping with Regulation (EU) no. 575/2013 (“CRR”), as subsequently amended by Regulation (EU) no. 2401/2017.

Entity OutlookLong Term

RatingShort Term

RatingLong Term

Deposits Rating

Moody’s

Fitch

Standard & Poor's

Baa1

BBB+

BBB

P-2

F1

A-2

Baa1

-

-

Stable

Stable

Negative

The ECB’s third series of targeted longer-term refinancing operations (TLTRO-III), starting from September 2019, represents an opportunity for banks and an effective tool in transmitting competitive interest rates from the financial sector to the private sector. TLTRO-III will enable banks to borrow at the interest rate applicable to the ECB’s deposit facility for up to three years.

In December 2019, the bank finalized the first transaction under the TLTRO-III program for €100 million.


Cost of risk and credit quality

Cost of risk The FCA Bank Group’s cost of risk is a function of such factors as:• core captive activities: support to the dealer network, loans and leases and mobility offerings for end customers;• conservative credit policies: from the acceptance phase based on ratings, scores, decision engines;

31.12.2018

31.12.2019

1.21% 1.24%

1.92%31.12.2015

31.12.2016

31.12.2017

1.58%1.43%

Non performing loans

• monitoring of credit performance, with prompt detection of performance deterioration situations through early warning indicators;• effective credit collection actions.

This makes it possible to maintain a low level of non-performing loans and customers/contracts showing a risk increase.


Cost of risk and unemployement

2015 2016 2017 2018 2019

9.0%

0.4%

8.2%

0.3%

7.6%

0.2%

7.0%

0.2%

6.4%

0.3%

Cost of risk/Average portfolio Ratio Unemployement (Source Eurostat, Eu 27 countries, December 2019)

At 0.25%, the Cost of Risk was again excellent and in line with budget, despite the uncertainty

looming over the Euro area and the automotive sector.

160

140

120

100

80

60

40

20

0

83

55 43 4470 66

109116144145145

0.93%

0.30%0.44%0.57%

0.75%0.78%

0.91%0.89%

0.20% 0.18% 0.25%

2009

2010

2011

2012

2013

2014

2015

2017

2016

2018

2019

Cost of risk (€/MLN) Cost of risk (%)



SCORING MODELS TO EVALUATE “RETAIL” CREDIT RISK

RATING MODELS TO EVALUATE “CORPORATE” RISK

the performance of such models and recommending corrective actions in the presence of a deteriorated predictive ability; • drafting the Group’s scoring procedures and policies.

To develop scoring models, FCA Bank has been using reliable partners, sector leaders with adequate professional skills and the use of rigorous and advanced statistical methodologies. In September 2019, the Board of Directors approved the insourcing of the activities to develop scoring models, under the supervision of central credit. The goal is to create a competence centre that would serve the Group companies for the development of all the scorecards use din the credit process (acceptance, anti-fraud, collection) starting from 2020.

From a quantitative point of view, during the second half of 2019 the Retail business line saw the approval of a new scorecard for private customers in Denmark while a new scorecard is being approved for private customers in Greece. The Rental business line, for its part, witnessed the approval and implementation of a new scorecard for companies in Italy while a new scorecard is being approved, still in Italy, for private and self-employed customers. It is worthy of note that in the second half of 2019, the development of a new tool began to monitor scorecards, through an automated and faster process, thereby allowing the implementation of any necessary corrective action even more rapidly.

power and probability of default.It is noted that the operational mechanisms for the use of systems to rate corporate counterparties and the development of scorecards, as well as the setting of the cut-off for retail counterparties, are matters that fall within the purview of the Board of Directors, which sets the specific guidelines to be applied by management in day-to-day operations.

The evaluation of corporate customers is based on a comprehensive combined use of two systems, developed in cooperation with the pertinent technical staff of the two shareholders. The first, which is called CRISP, is intended mainly to evaluate the counterparty’s equity. The second, which is called ANADEFI, emphasizes instead the counterparty’s earning

In assessing the creditworthiness of retail credit applicants, scorecards are one of the main decision-making drivers utilized by the FCA Bank Group.Scorecards are statistical models that identify the probability of risk associated with the customer/application and the ensuing classification in the rejection or acceptance area through the application and an approved cut-off value.The use of statistical models ensure an objective, transparent, structured and consistent assessment of all the information related to the customer and the financing required.The evaluation of a customer’s creditworthiness is based mainly on the outcome of the scorecards and the application of the rules governing credit approval (such as control over external negative events, status of internal risks, etc.).

In the cases where the input of a credit analyst is required, the final credit decision can be confirmed or revised, where necessary. Currently, the FCA Bank Group uses 32 scorecards based on country, type of customer and, where possible, type of product. FCA Bank has adopted an organizational model intended to improve the Parent Company’s level of service to Group companies. In this context, the central credit function is responsible, for all the markets, for: • supervising the development of credit evaluation models, ensuring their quality;• monitoring constantly and continuously


CREDIT QUALITY (Item 40b - Loans and receivables with customers) (€/thousand)

DESCRIPTION

31/12/2019 31/12/2018

Grossexposure

Grossexposure

Netexposure

Netexposure

Allowance for loan and lease

Allowance for loan and lease

Bad exposures

Unlikely to pay

Non Performing Past due

Non-performing loans

Performing loans

Total

125,027

102,832

71,534

299,393

23,876,501

24,175,894

111,536

122,391

53,831

287,758

23,574,135

23,861,893

(84,544)

(35,417)

(26,854)

(146,815)

(123,990)

(270,805)

(83,607)

(38,737)

(23,836)

(146,180)

(127,705)

(273,885)

40,483

67,415

44,680

152,578

23,752,511

23,905,089

27,929

83,654

29,995

141,578

23,446,429

23,588,008

DESCRIPTION

31/12/2019 31/12/2018

Grossexposure

weight

Grossexposure

weight

Netexposure

weight

Netexposure

weight

Coverageratio

Coverageratio

Bad exposures

Unlikely to pay

Non Performing Past due

Non-performing loans

Performing loans

Total

0.52%

0.43%

0.30%

1.24%

98.76%

100.00%

0.47%

0.51%

0.23%

1.21%

98.79%

100.00%

0.17%

0.28%

0.19%

0.64%

99.36%

100.00%

0.12%

0.35%

0.13%

0.60%

99.40%

100.00%

67.62%

34.44%

37.54%

49.03%

0.52%

1.12%

74.96%

31.65%

44.28%

50.80%

0.54%

1.15%

The credit quality is confirmed at an excellent level, with non-performing loans representing 0.64% of total net exposure. The net exposure of non-performing loans amounted to euro 153 million compared to a total net exposure of euro 24 billion.

Allowance for loans and lease losses amounted to euro 271 million at the end of 2019, compared to euro 274 million at the end of 2018; gross exposure for impaired loans amounted to euro 299 million compared to euro 288 million at the end of 2018.


"CUSTOMERS NEED ONLY TO ENTER FINANCIAL

DATA TO LEARN IN REAL TIME WHETHER THE SELECTED

FINANCING PLAN IS FEASIBLE."


LUCA POLLANO ICT, Digital & Data Governance

Digitalization

In a hyper-connected world, digital transformation plays an increasingly important role for the bank. The digital transition actually entails a paradigm change from a traditional product-centric strategy to a customer-centric one. In 2019, in agreement with the digitalization roadmap defined, FCA Bank focused on this customer-centric vision to design processes and solutions to encourage customers to establish a solid and long-standing trust-based relationship.

PRE-SCORINGKnowledge is the word at the foundation of the pre-scoring project, which came to life to add value both to the potential customer and the dealer by providing a preliminary and immediate answer on the customer’s ability to access a financing plan by FCA Bank chosen online while configuring a vehicle on the brand’s website. Once the amount of the monthly instalment is calculated online with the finance calculator, thanks to pre-scoring customers need only to enter little but necessary financial data to learn in real time whether the selected financing plan is feasible. Dealers, for their part, will receive though pre-scoring the result of the credit assessment, which will be used either to expedite completion of the credit application process or to provide customers with an alternative financing solution, in case the plan selected online is inconsistent with their repayment capabilities.In July 2019, the project was successfully launched in Germany, the pilot market; eventually this winning strategy was rolled out in Italy, Spain, Belgium, the Netherlands and Austria.

DIGITAL ONBOARDINGAs the optimal financing plan is chosen, the data entered and pre-scoring results received, customers who then go to the dealer will receive all the benefits

deriving from the digital onboarding project: digital signature, filing and dematerialization of all the documentation designed to finalize the contract. In Spain and Portugal, countries where such solution is adopted by over 80% of customers, the benefits are clear: better customer experience, thanks to a transparent and secure process, greater security and more structured communications between the dealer and the bank. The year just ended was important for this project as this solution was introduced successfully also in Greece, Belgium, the Netherlands, France and Poland, after its launch in Spain, Portugal, Italy, Germany and Austria.

CUSTOMER PORTALAs the contract is signed and the sale process completed, the bank’s objective is to set up a communication channel for customers that might be used as needed. From a smartphone, a tablet or a personal computer, customers can access FCA Bank’s Customer Portal, to obtain updated information in real time or to update their personal information by using easy and intuitive tools. Customer are provided a tool that is:

• easy: a single area to monitor closely all car financing and lease contracts signed and banking products, so as to manage them conveniently and rapidly;

• intuitive and secure: easy-to-use solution for all customers from any device and secure through the use of a one-time password to confirm any action;

• customized: customers are offered the possibility to receive personalized solutions through the portal. The project, which had already gone live in Italy, Germany, Austria and UK, was launched successfully in 2019 in France, Poland, Belgium and the Netherlands.


Residual values

Regarding long-term rentals, residual risk on rented vehicles is generally borne by the rental car company, save for specific arrangements with third parties. In this case, residual risk is represented by the difference between the market value of the vehicle at the end of the contract and the carrying amount of the vehicle. Leasys and its subsidiaries, which are not part of the banking group, and FCA Capital Danmark A/S are the Group companies operating in the long-term rental business.

Residual value is the value of the vehicle when the related loan or lease contract expires. The Bank is exposed to residual value risks in connection with loan and lease contracts with customers that can return the vehicle at the end of such contracts. Trends in the used vehicle market may entail a risk for the holder of the residual value. This risk is basically borne by the dealers throughout Europe, with the exception of the UK market, where the risk is managed, regularly monitored, mitigated with specific procedures and covered through specific provisions by the bank. FCA Bank has long adopted Group guidelines and processes to manage and monitor residual risk on an ongoing basis.

euro/mln 20182017 31/12/19

Consumer loans and leases:

Residual Risk borne by Group FCA Bank

of which UK market

Provisions for residual value

924

803

912

700

1,102

687

37

euro/mln 20182017 31/12/19

Long-Term Rental:

Residual Risk borne by Group FCA Bank

Provisions for residual value

894 1,230 1,497

24

Results of operations



Cost of risk

Operating income

Other income / (expense )

Profit before tax

Net income

Outstanding

Average

End of year

Ratio

Net banking income and rental margin (on average outstanding)

Cost/Income ratio

Cost of risk (on average outstanding)

Ratio

CET1

Total Capital Ratio (TCR)

954

(277)

(44)

633

(85)

548

388

24,375

26,805

3.91%

29.02%

0.18%

12.45%

14.02%

Economic data (€/mln) 31/12/2019 31/12/2018

1,025

(293)

(66)

666

(28)

638

467

26,348

27,539

3.89%

28.55%

0.25%

14.20%

15.82%



(+1%) compared to the previous year. FCA Bank improved its commercial penetration (which went up by 2.1% on 2018), reaching 48.1%, generating total financed volumes for the year in the amount of €13.7 billion, up 3% on 2018.

The average outstanding portfolio for the period rose by 8% on 2018, mainly thanks to the Rental business line (+27%). Also the average outstanding portfolio of the Retail financing business increased (+9%) while that of the Dealer financing business was largely stable

Cash and cash balances

Financial assets designated at fair value with effects on comprehensive income

Financial assets valued at amortized costs:

a) Loans and receivables with banks

b) Loans and receivables with customers

Hedging derivatives

Changes in fair value of portfolio hedge items

Insurance reserves attributable to reinsures

Property, plant and equipment

Intangible assets

Tax assets

Other assets

Total assets

Total liabilities

Net equity

363

10

25,745

2,157

23,588

36

27

10

2,547

247

273

1,279

30,535

27,657

2,878

Balance sheet data (€/mln) 31/12/2019 31/12/2018

585

10

25,903

1,997

23,905

37

48

13

3,197

263

300

1,350

31,705

28,534

3,171


Outstanding End of Year (€/MLN)

Deal

erRe

tail

Rent

al

31.12.2015

17,249

20,755

23,936

26,805 27,539

31.12.2016

31.12.2017

31.12.2018

31.12.2019

21,000

24,000

27,000

30,000

18,000

15,000

12,000

9,000

6,000

3,000

0

11,016

13,002

6,047

1,706

7,319 8,226

2,239

2,818

16,889

7,142

14,378

15,760

4,827

1,406

3,508

Average Portfolio (€/MLN)

Deal

er fi

nanc

ing

Reta

il Fi

nanc

ing

Rent

al

31.12.2015

16,088

18,498

21,797

24,375

26,348

31.12.2016

31.12.2017

31.12.2018

31.12.2019

21,000

24,000

27,000

18,000

15,000

12,000

9,000

6,000

3,000

0

10,452

11,768

5,150

1,579

6,174 7,118

1,9062,317

13,71714,940

4,232

1,404

2,939

16,247

7,162


Income Rental Margin

portfolio, in line with the comparable metric at the end of 2018, thanks also to the constant cooperation with the commercial partners.

Net banking income and rental margin for the period rose by €70.9 million, to €1,024.8 million, thanks to higher volumes and a lower cost of funds. Net banking income and rental margin accounted for 3.9% of the average outstanding

800

900

1.000

1.100

700

600

500

400

300

200

100

0

667.4

731.6

840.5

953.91.024.8

31.12.2015

31.12.2016

31.12.2017

31.12.2018

31.12.2019

3.9%3.9%4.0%4.1% 3.9%

Income Margin (€/MLN)

Income Margin/Average Portfolio Ratio (%)


Net Operating Expenses

Operating e°ciency combined with the ability of profit to grow relatively faster than costs resulted in a cost/income ratio of 28.6%, continuing the improvement process under way for a number of years.

At 0.25% of the average outstanding portfolio, the cost of risk was excellent also in 2019 and was in line with budget, despite the uncertainty hanging over the euro area and the automotive sector. In absolute terms, the cost of risk

Cost of Risk

Cost of Risk (€/MLN)

Cost of Risk / Average Portfolio Ratio (%)

settled at €66 million, with an increase on the previous year also as a result of the increase in financed volumes.

In absolute terms, net operating costs rose by approximately €15.8 million on 2018, in keeping with the increase of the average outstanding portfolio and the investments made to support the Group’s growth.

Net Operating Expenses (€/MLN)

Cost income ratio (% annual basis)

300

250

200

150

100

50

0

235,7 245,0263,7

276,8 292,6

31.12.2018

31.12.2019

31.12.2017

31.12.2016

31.12.2015

31%29% 29%

33%35%

70

80

60

50

40

30

20

10

0

70.166.2

55.1

42.7 44.1

31.12.2015

31.12.2019

31.12.2016

31.12.2017

31.12.2018

0.25%

0.20%0.18%

0.30%

0.44%

Relazione e bilancio consolidato 31 Dicembre 2019• 74

In terms of net result, the period ended with a net profit of €467.1 million, up 20% on the comparable year figure.

The increase in net profit was due to the lower tax burden on Leasys S.p.A., in relation to the super-depreciation of investments in tangible assets.

Operating profit for 2019 amounts to €666 million, up to 4.4% copared to the previous year (€663 million). The pre-tax profit totals €638 million reflecting an increase of approximately €90.4 million (up 17%) on the comparable year amount.

Expenses include the contribution to the Single Resolution Fund for €7.7 million.

Profit before tax and Net profit (€/MLN)


Pre-tax Profit

Net Profit

450

500

550

600

650

400

350

300

250

200

150

50

0

249.1

311.6

416.5

521.1547.6

467.1

638.0

382.5 388.4359.4

31.12.2015

31.12.2016

31.12.2017

31.12.2018

30.06.2019


Impieghi di fine periodo (€/MLN)

improvement, as it rose to 14.20%.Regarding the liquidity ratios, LCR reached 282% while NSFR was 106%. The profitability ratios also improved, thanks to the excellent results for the period.RONE (Return on Normative Equity) calculated considering the average Normative Equity and a 9.5% capital requirement for RWA, stood at 23.25%.

At December 31, 2019, the Total Capital Ratio was 15.82%, reflecting an improvement over the comparable metric at the end of 2018. Such improvement was in essence due to the inclusion in CET 1 of the net profit for the year ended December 31, 2019 pursuant to article 26, paragraph 2, of Regulation (EU) n. 575/2013 of the European Parliament and of the Council and Decision (EU) 2015/656 of the European Central Bank (ECB/2015/4). To this end, formal acceptance by the ECB was obtained.CET 1 (Profit Included) – which is calculated by including profit for the year after dividends, if declared, in line with the same rules as those applicable at the end of 2018 - showed an

Equity and capital ratio

Common Equity Tier 1 - CET1

Additional Tier 1 - AT1

Tier 1 - T1

Tier 2 - T2

Total Capital

Risk-weighted assets (RWA)

REGULATORY RATIOS

CET1

Total Capital ratio (TCR)

LCR

NSFR

OTHER RATIOS

Leverage Ratio

RONE (Net Profit/Average Normative Equity)

2,724,100

5,555

2,729,655

337,406

3,067,061

21,877,598

12.45%

14.02%

259%

110%

10.22%

18.69%

Own Funds and ratios(€/000) 31/12/2019 31/12/2018

3,001,472

5,584

3,007,056

337,046

3,344,102

21,142,442

14.20%

15.82%

282%

106%

10.62%

23.25%


RECONCILIATION BETWEEN RECLASSIFIED AND REPORTED FINANCIAL STATEMENT FIGURES

10. Interest income and similar revenue

20. Interest expenses and similar charges

40. Fee and commission income

50. Fee and commision expenses

80. Net income financial assets and liabilities held for trading

90.Fair value adjustments in hedge accounting

100. Profits (losses) on disposal or repurchase of

a) financial assets at amortized cost

130. Impairment losses on:


160.Net premium earned

170. Net other operating income/ charges from insurance activities

200. Net provision for risks and charges

210. Impairment on tangible assets

230. Other operating income/charges

Net Banking Income

190. Administrative costs


220. Impairment on intangible assets

210. Impairment on tangible assets



50. Fee and commision expenses

130. Impairment losses on:



Cost of risk


190. Administrative costs


Other income/expenses

300. Tax expense related to profit or loss from continuing operations

Income taxes

Net profit

903

(242)

164

(43)

1

(2)

1

(1)

1

2

1

(361)

530

954

(270)

7

(11)

(2)

(1)

(277)

(12)

(19)

(13)

(44)

(84)

(1)

-

(85)

(159)

(159)

388

1.1

1.3

2.1

2.2

4.1

5.1

6.1

8.1

10.1

11.1

13.3

14.1

16.1

12.1

13.3

15.1

14.1

16.1

2.2

8.1

16.1

13.3

12.1

16.1

21.1

Reconciliation between reported income statement and reclassified income statement (€/mln) 31/12/2019 31/12/2018

Ref. Notes to the financial statements

Part C

930

(237)

148

(33)

(0)

(6)

1

(1)

1

(1)

2

(427)

647

1,025

(267)

(1)

(14)

(11)

0

(293)

(12)

(46)

(8)

(66)

(0)

(12)

(16)

(28)

(171)

(171)

467

With reference to the items of the above representation, when there is not a correspondence to the items of the

Consolidated Income Statement, please see the references to the Notes to the Consolidated financial statements.


(*) The item includes assets related to the rental business

(**) The item includes the consignment for euro 147 million and receivables from customers relating to the rental business for euro 561 million.

Oustanding

90. Property, plant and equipment (*)

130. Other assets (**)

10.b) Deposits from customers

80. Other liabilities

40.b) Loans and receivables with customers not included in the outstanding

40.b) Loans and receivables with customers

Allowance for loans Management data

90. Property, plant and equipment

130. Other assets

10.b) Deposits from customers


40.b) Loans and receivables with customers not included in the outstanding

Allowance for loans with customers Item 40.b)

Reconciliation between outstanding and loans and receivables with customers (€/mln)

31/12/2019 Ref. Notes to t

he financial statements

27,539

(3,092)

(709)

2

145

291

24,176

Part B 9.1 FS Assets


Part B 1.1 FS Liabilities

Part B 8.1 FS Liabilities



305

-

(34)

-

-

-

271


RECONCILIATION BETWEEN PARENT COMPANY AND CONSOLIDATED EQUITY

Equity and profit for the year of FCA Bank S.p.A.

Equity and profit of subsidiaries less non-controlling interests

Consolidation adjustments:

Elimination of carrying amount of consolidated companies

Intercompany dividends

Other consolidation adjustments

Equity and profit attributable to FCA Bank S.p.A.’s shareholders

Equity and profit attributable to non-controlling interests

Consolidated equity and net profit

443,354

283,337

(266,279)

-

(266,877)

598

460,412

6,663

467,075

Equity Of which, profit for the year

1,832,245

2,317,426

(1,033,430)

(1,010,652)

-

(22,778)

3,116,241

54,931

3,171,172


Organization and human resources

For this section please refer to the Consolidated Non-Financial Statement.


"COMPLIANCE MEANS ADHERENCE TO RULES,

A NON-NEGOTIABLE VALUE WHICH FCA BANK PRESERVES AND

ADVANCES WITH ALL ITS ENERGIES."


PATRIZIO LATTANZICompliance & Supervisory Relations

Compliance and transparency: FCA Bank’s added value

Compliance means adherence to rules, a non-negotiable value which FCA Bank preserves and advances with all its energies, in relation to each activity performed. This translates into confidence for its customers, who can count on a banking intermediary that treats compliance as the cornerstone of its operations. FCA Bank is convinced that, to engage in fair business practices, it is necessary to disseminate an adequate compliance culture among all the people who act in its name. To that end, during the year, the bank launched a number of initiatives involving, among other things, in-depth training activities and employees and collaborators kept constantly up to date on competition and personal data protection. In addition to the dissemination of a compliance culture, FCA Bank is convinced that it is necessary to set up a rigorous set of internal rules and regulations that might inform and guide the conduct of all employees and collaborators, so that these might abide by primary and secondary legislation.

To that end, FCA Bank kept constantly updated its own set of policies, rules and procedures, paying special attention to new regulations enacted during the year. Lastly, in keeping with its own Code of Conduct, FCA Bank upgraded its safeguards in place in the antitrust area and firmed up those established to protect the right/duty of each employee to report conduct considered inappropriate, ensuring the anonymity of the tipper.


Information technology

started in connection with the Bank of Italy’s procedure to manage collateralized loans;• lease securitization, which is intended to allow the securitization of the credit component of leased assets, excluding all the other components; • New Financial Calculator 3.0, creating a new tool, to allow potential customers to use a more effective and intuitive tool to calculate proposed long-term-rental financing and product emulator starting from a specific monthly payment. The new tool, available on all digital front-ends, will be connected with the corporate back-ends in real time;• the Pre-Scoring Project will be implemented in early 2020 also in Italy and its integration with the Financial Calculator 3.0 will start the Company’s process toward eCommerce; • the functionalities in the Customer Area of FCA Bank’s website were improved, to allow a better User experience, by activating the integration of a single digital identity (Single Sign On) with the banking product Conto Deposito;• RCA Generali project, to manage the new financing provided for connected and unconnected vehicles, with the replacement of the current provider, UK-based AM Trust, in light of Brexit (exit of UK from the European Union).

Moreover, FCA Bank has started a process to

In keeping with the Group’s digitalization process, the Information and Communication Technology firmed up its actions to upgrade the operating systems necessary to achieve the dematerialization of the sale process in Consumer Financing, making it possible to achieve the 60% digitalization target by 2019. In the second half the digitalization process involved obtaining Web Machine’s privacy consent by further strengthening the process in line with the applicable laws and regulations.

In the second half of 2019, the following projects were managed to strengthen compliance: • the IFRS 16 project was completed, to enable management of “IFRS 16 – Leases”, which governs lease agreements for entities that use international financial reporting standards;• NCB: New Corporate Backbone, i.e. the new Pan-European tool that makes it possible to manage “Credit Dossiers” through a workflow containing the approval process and automatic calculation with the new powers; • New Default Definition, which entails a new calculation of this corporate indicator.

In parallel, the Company decided to invest in projects intended to enhance its profitability:• in the second half of 2019, to support the activity of the Treasury department, the ABACO (i.e. Collateralized Bank Assets) project was


The year just ended saw the beginning of the process to standardize the systems of Leasys Rent, the short-term rental company purchased by Leasys to meet new market requirements, in anticipation of new trends, and to meet the needs of web customers, creating new and innovative products, such as the subscription-based CarCloud platform.

Also the RPA (Robotic Process Automation) project, for automating repetitive and low-value-added corporate processes, was completed across FCA Bank. The project involved also Leasys in 2019 and will be exported to the European Markets in 2020. In 2019 the RPA project activated progressively 40 robots, covering HQ, BU and Leasys processes, thus confirming the strategic plan to automate repetitive activities in many functional areas of FCA Bank, with the resulting reduction of personnel expenses and the reallocation of Business resources to higher value-added activities. In 2020 the remaining 50 robots will be released, thus completing the last instalment of the RPA project.

The department managed the developments related to the creation of the applications for the on-line auction of used cars for private individuals and Brokers, to support Clickar, a new company.

The department released also, for the benefit of JLR, the new Pan-European Customer Portal and the new JLR Pre-Scoring system, providing customers with a user experience in line with the carmaker’s expectations.

redefine all the central Treasury systems, to upgrade and make more effective the tool to analyse the department’s benefit. In the meantime, activities began on the CFO Database project, intended to create a database containing accounting data, with a high level of detail, for all the legal entities and subsidiaries of FCA Bank and Leasys, which will enable the automated feeding of the Consolidated Financial Statements and Supervision application and the automated upload of the planning module data.

Also the BI’s new Roadmap was redefined, in view of the replacement of the Company’s DataWarehouse system with a more innovative Data Lake system, capable of hosting the most up-to-date communication tools now and in the near future. The new tool will be able to host new objects and will make it possible to perform a detail analysis to design and develop the new Customer Centricity model.

With that in mind, the Company reconsidered the Customer Care tool, by selecting in the constantly evolving market a solution better than the current one, in light of the rapid changes in corporate requirements. Thus, starting from the end of 2020, FCA Bank’s Markets and Leasys will see the implementation of the new Salesforce system, starting from the countries that do not have an integrated Customer Care tool yet.

Moreover, the Markets are working in close cooperation with the central activities for the Pan-European Pre-Scoring, Customer Portal and Residual Value projects. The Residual Value project is intended to provide a common starting base for the calculation of the residual value of corporate assets, basing the recalculation on a single provider.

In the Foreign Markets the strategy to upgrade operating and accounting systems based on the approach by cluster was still unfolding while the rollouts started in 2015 for the creation of IT platforms to cover the Retail and Long Term Rental business lines continued to take place. In 2020, there will be releases in Denmark, Portugal, Poland, France and Spain.


ANDREA BARCIO Head of Human Resources

Cross Path Program & Innovaction

In 2016 the FCA Bank Group launched Cross-Path, an international and inter-functional professional development program designed to form a pool of young talents by attracting brilliant new university graduates. An accurate selection process led to the identification of a restricted group of high-potential candidates who entered a fast-track program to foster professional growth in terms of leadership and technical skills. Key features of the program were job rotation and international breadth. Through a series of 24-month assignments, the trainees had the opportunity to test their mettle in different roles in different core areas of our industry (Credit, Finance e Sales & Marketing) and to gain experience in one of the 18 markets in which the Group operates. In this way, these rookies developed a precious knowledge of the business and its processes through constant on-the-job training, but also through group and individual training initiatives focused on soft and hard skills. A process that was definitely demanding and challenging, but one in which Management believes and invests with the intent of training future leaders, capable and competent professionals who can meet tomorrow’s challenges. To that end, one of the characteristics of “Cross-Path” was the activation of a dedicated mentoring program, where senior managers selected from among the members of the Leadership team followed trainees individually along their growth path, providing the type of guidance that supported them throughout the duration of the program.

After 4 years, those trainees have been assigned to challenging and stimulating roles, in 7 different countries (as an example:; market CFO, head of Marketing & Business Development of a Leasys market, Marketing Manager for European markets with Leasys, etc.).The positive feedback received from both the trainees and management confirmed the success of the initiative and prompted the bank to set up another inter-functional and international “Cross-Path” program. In the first quarter of 2020, the new group of high-potential candidates, with a passion for automotive and finance, will be selected. The candidates will have ambitious goals and the opportunity to be involved in different assignments. The FCA Bank Group’s commitment, and its attention to employee development themes, go also beyond the “Cross-Path” program. Since 2017 a number of training programs have been developed in Rental and Retail with the intent of giving a chance also to internal staff to prove themselves in interdisciplinary professional challenges and to participate in innovative and training initiatives (i.e. (i.e. hackaton, business games, special projects, virtual training, etc.).Following completion in 2019 of the Strategic Thinking Path program, which was started in 2017, FCA Bank launched an additional corporate initiative called InnovAction, to develop feasible and innovative business solutions that might enable it to be competitive in the market, meeting, and where possible anticipating, customer needs.


"A PROCESS IN WHICH MANAGEMENT BELIEVES AND INVESTS WITH THE INTENT OF TRAINING FUTURE LEADERS, CAPABLE AND COMPETENT PROFESSIONALS WHO CAN

MEET TOMORROW’S CHALLENGES."

With management’s help, eight strategic areas of our business were identified and matched with specific projects with which to work. Participants are a heterogeneous and international group, made up of 48 colleagues coming from a variety of markets and with different corporate seniorities. The 8 teams identified worked on a single project, with support from an internal tutor in terms of expertise, know-how and leadership. The program consists of three main phases, a kick-off workshop held in June, involving a one-day-and-a-half gathering where participants and tutors, with help from external facilitators

and innovation experts, worked on the creation of the teams and the sharing of methods and tools to be used for the development of projects; six months of project work, during which participants worked from a remote location; and a final day to be held in early 2020, where the teams will present their projects to the Leadership Team. To overcome the geographical distance and the functional and hierarchical differences within the organization, virtual and team coaching sessions were held to enhance agile working and virtual remote collaboration capabilities.


Internal control systems


• 87

INTERNAL CONTROL FUNCTIONS

INTERNAL BOARD COMMITTEES

COMMITTEES INVOLVED IN THE INTERNAL CONTROL SYSTEM






Other information

The specific risks that can give rise to obligations for the Company are evaluated when the relevant provisions are made and are reported in the notes to the financial statements, together with significant contingent liabilities. In this section, reference is made to risk and uncertainty factors related essentially to the economic, regulatory and market context which can produce e²ects for the Company’s performance. The Company’s financial condition, operating performance and cash flows are a²ected first of all by the various factors that make up the macroeconomic picture in which it operates, including increases and decreases in gross domestic product, consumer and business confidence levels, trends in interest, exchange and unemployment rates.

The Group’s activity is mainly linked to the performance of the automotive sector, which is historically cyclical. Bearing in mind that it is hard to predict the breadth and length of the di²erent economic cycles, every macroeconomic event (such as a significant drop in the main end markets, the solvency of counterparties, the volatility of financial

PRINCIPAL RISKS AND UNCERTAINTIES

Brexit The exit of the United Kingdom from the European Union had been set originally for March 29, 2019. However, the UK government stumbled into a number of di�culties to have Parliament ratify the treaty signed with the European Union on 14 November 2015. In fact, the House of Commons rejected the treaty three times. This led to the resignation of Prime Minister Theresa May in June and the postponement of Brexit (which was first scheduled for October 31, 2019 and then rescheduled for January 31, 2020). With

markets and interest rates) can impact the Group’s prospects and its financial and operating results.

The FCA Group abides by the laws and regulations of every country in which it operates. Most of the legal proceedings we are involved in relate to disputes due to missed payments by customers and dealers in the course of our ordinary business activities.

Our provisions “for risks and charges”, and the close monitoring of the legal proceedings under way, allow us to assess quickly their possible eects on our accounts.


the election of new Prime Minister Boris Johnson, on December 12, 2019, the House of Commons approved on December 20, 2019 the Withdrawal Bill proposed by the Government. This Bill calls, among others, for:• The entry into a transition period until December 31, 2020, to negotiate a new treaty for the trade of goods and services; until the end of 2020, trade relations will be governed by the rules and regulations currently in force and, in the absence of a deal, trade relations will be managed without any specific agreement;• The repeal of the Benn Act, which in the previous legislature required the government to ask Brussels for an extension of Brexit, in case of no deal.

Regarding the activities of FCA Bank, which operates in the UK through three companies engaging in retail financing, dealer financing and rental, last year a risk assessment process was undertaken in keeping with the guidelines set out in the “Opinion of the European Banking Authority on preparations for the withdrawal of the United Kingdom from the European Union” (EBA/Op/2018/05), published on June 25, 2018.The Company’s Board of Directors could, in turn, review a specific assessment prepared by management which, starting from a stress scenario defined by the Bank of England, focused on three specific themes; trends in new car registrations, residual values and the outlook for credit risk in case of hard Brexit. As of the assessment date, no significant economic impacts on the UK subsidiaries were brought to light.

FCA Bank S.p.A. is not subject to direction and coordination of other companies or entities. Companies under the control (direct or indirect) of FCA Bank S.p.A. have identified it as the entity that performs direction and coordination activities, pursuant to Article 2497-bis of the Italian Civil Code. This activity involves setting the general strategic and operating guidelines for the Group, which then are translated into the implementation of general policies for the management of human and financial resources, and marketing/ communication. Furthermore, coordination of the Group includes centralized treasury management and internal audit services. This allows the subsidiaries, which retain full management and operational autonomy, to achieve economies of scale by availing themselves of professional and specialized services with increasing levels of quality and to concentrate their resources on the management of their core business.

On December 20, 2019, an interim dividend of €180 million was distributed to the shareholders, as per resolution of the Board of Directors dated December 13. 2019

In line with Bank of Italy’s instructions on the preparation of banks’ financial statements, it is noted that:a) in the period under review the Group did not carry out any significant research and development activities;b) the Group does not hold and did not purchase and/or sell shares or interests of the controlling companies in the period under review.

DIRECTION AND COORDINATION ACTIVITIES

DIVIDEND AND RESERVE DISTRIBUTIONS

OTHER REGULATORY DISCLOSURES


10 INTEREST INCOME AND SIMILAR REVENUES

80 NET INCOME FINANCIAL ASSETS AND LIABILTIES HELD FOR TRADING

40 FEE AND COMMISSION INCOME

FINANCIAL REVENUE

of which insurance

100 PROFITS (LOSSES) ON DISPOSAL OR REPURCHASE OF FINANCIAL

ASSETS AT AMORTIZED COST

160 NET PREMIUM EARNED

170 NET OTHER OPERATING INCOME/ CHARGES FROM INSURANCE ACTIVITIES

TOTAL FINANCIAL REVENUE

20 INTEREST EXPENSES AND SIMILAR CHARGES

90 FAIR VALUE ADJUSTMENTS IN HEDGE ACCOUNTING

50 FEE AND COMMISSION EXPENSES

Fee and commission expenses

Insurance credit cost

TOTAL FINANCIAL COST

130 IMPAIRMENT LOSSES ON LOANS

Impairment losses on loans

Impairment losses on loans

180 NET PROFIT FROM FINANCIAL AND INSURANCE ACTIVITIES

190 ADMINISTRATIVE COSTS

Administrative costs

Administrative costs

200 NET PROVISIONS FOR RISKS AND CHARGES

Net provisions for risks and charges



210 IMPAIRMENT ON TANGIBLE ASSETS

Depreciation of rental assets (rental business)

Depreciation of tangibles asset

220 IMPAIRMENT ON INTANGIBLE ASSETS

230 OTHER OPERATING INCOME / CHARGES

Rental income/charges (rental business)

Eexpense recoveries and credit collection expenses

Impairment of rental receivables (rental business)

Other

240 OPERATING COSTS

290 TOTAL PROFIT OR LOSS BEFORE TAX FROM CONTINUING OPERATIONS

300 TAX EXPENSE RELATED TO PROFIT OR LOSS FROM CONTINUING OPERATIONS

330 NET PROFIT OR LOSS

340 MINORITY PORTION OF NET INCOME (LOSS)

350 HOLDINGS INCOME (LOSS) OF THE YEAR

Consolidated income statement details and reconciliation with reclassified income statement (€/mln)

31/12/2019 Reclassified Income

Statements Items

930(0)

1481,078248

11

(1)1,079(237)

(6)(46)(33)(12)

(289)(47)(46)(1)

744(279)(267)(12)

12

(1)(0)

(438)(427)(11)(14)623647

0(8)

(16)(106)638

(171)467

-467

NBI

NBI

NBI

NBI

COR

COR

NBI

NOE

OTH

NBI

NOE

OTH

NBI

NOE

NOE

NBI

NOE

COR

OTH

TAX


Net Banking Income

Net Operating Expenses

Cost of risk

Other income / (expense)

Profit before tax

Tax expense

Net profit

Reclassified Income Statements Items (€/mln) 31/12/2019

1,025

(293)

(66)

(28)

638

(171)

467

NBI

NOE

COR

OTH

TAX

Turin, 21st February 2020On behalf of the Board of Directors

Chief Executive O�cer and General ManagerGiacomo Carelli

CONSOLIDATED FINANCIAL STATEMENTS


Consolidated statement of financial position 94

Consolidated income statement 96

Consolidated statement ofcomprehensive income 97

Consolidated statement ofchanges in equity 98

Consolidated statement ofcash flow 100

Reconciliation 101

Consolidated financial statements • 93


Consolidated statement of financial position

10. Cash and cash balances

30. Financial assets measured at fair value through other comprehensive income (FVOCI)

40. Financial assets measured at amortized cost

a) Loans and advances to banks

b) Loans and advances to customers

50. Hedging derivatives

60. Changes in fair value of portfolio hedge items (+/-)

70. Equity Investments

80. Insurance reserves attributable to reinsurers


100. Intangible assets

of which:

- goodwill

110. Tax assets

a) current

b) deferred

120. Non-current assets and disposal groups classified as held for sale

130. Other assets

Total assets

362,536

9,634

25,744,698

2,156,691

23,588,007

35,940

27,417

44

9,596

2,546,620

247,098

183,183

274,013

84,294

189,719

-

1,278,860

30,536,456

ASSETS (€/thousand) 31/12/2019 31/12/2018

585,272

9,807

25,903,033

1,997,944

23,905,089

36,930

48,145

44

13,159

3,196,737

262,573

183,183

299,861

98,829

201,032

-

1,350,171

31,705,732


10. Financial liabilities at amortised cost

a) Deposits from banks

b) Deposits from customers

c) Debt securities in issue

20. Financial liabilities held for trading


60. Tax liabilities

a) current

b) deferred


90. Provision for employee severance pay

100. Provisions for risks and charges

a) committments and guarantees given

b) post-retirement benefit obligations

c) other provisions for risks and charges

110. Insurance reserves

120. Revaluation reserves

150. Reserves

155 Interim dividends

160. Share premium

170. Share capital

190. Minorities (+/-)

200. Net Profit (Loss) for the year (+/-)

Total liabilities and shareholders' equity

26,207,022

9,807,112

1,822,725

14,577,185

3,729

53,920

192,392

51,335

141,057

927,779

11,626

251,818

-

43,121

208,697

10,662

(35,608)

1,588,613

-

192,746

700,000

48,397

383,360

30,536,456

LIABILITIES AND SHAREHOLDERS' EQUITY (€/thousand) 31/12/2019 31/12/2018

26,933,628

10,278,046

1,798,752

14,856,829

3,407

91,533

238,205

55,162

183,043

1,014,431

11,726

225,504

-

49,954

175,550

16,127

(26,989)

1,970,072

(180,000)

192,746

700,000

54,931

460,413

31,705,732


Consolidated income statement

10. Interest income and similar revenues

of which: interest income calculated using effective interest method

20. Interest expenses and similar charges

30. Net interest margin

40. Fee and commission income

50. Fee and commission expenses

60. Net fee and commission

80. Net income financial assets and liabilities held for trading

90. Fair Value adjustments in hedge accounting

100. Profits (losses) on disposal or repurchase of:

a) Financial asstets valued at amortized cost

120. Operating income

130. Net impairment/reinstatement for credit risk:

a) Financial asstets valued at amortized cost

150. Net profit from financial activities

160. Net premium earned

170. Net other operating income/charges from insurance activities

180. Net profit from financial and insurance activities

190. Administrative costs:

a) payroll costs

b) other administrative costs

200. Net provisions for risks and charges

b) other net provisions

210. Impairment on property, plant and equipment

220. Impairment on intangible assets


240. Operating costs

250. Profit (loss) on equity investments

290. Total profit or loss before tax from continuing operations

300. Tax expense related to profit or loss from continuing operations

310. Total profit or loss after tax continuing

330. Net profit or loss

340. Minority portion of net income

350. Holding income (loss) of the year

903,452

891,299

(242,050)

661,402

164,176

(54,986)

109,191

551

(1,801)

1,162

1,162

770,504

(20,728)

(20,728)

749,776

561

2,073

752,411

(268,189)

(169,033)

(99,156)

(75,800)

-

(75,800)

(363,518)

(11,008)

513,698

(204,819)

-

547,592

(159,228)

388,364

388,364

5,004

383,360

Item (€/thousand) 31/12/2019 31/12/2018

930,283

921,626

(236,835)

693,448

147,780

(45,893)

101,887

(45)

(6,187)

1,462

1,462

790,566

(47,388)

(47,388)

743,178

1,243

(867)

743,554

(278,443)

(175,030)

(103,413)

805

-

805

(437,816)

(13,963)

624,267

(105,149)

(400)

638,005

(170,930)

467,075

467,075

6,663

460,413


Consolidated statement of comprehensive income10. Profit (loss) for the year

Other comprehensive income after tax not reclassified to profit or loss

70 Defined-benefit plans

Other comprehensive income after tax reclassified to profit or loss

110 Exchange rate differences

120 Cash flow hedging

170 Total other comprehensive income after tax

180 Other comprehensive income (Item 10+170)

190 Total comprehensive income (loss) attributable to non - controlling interests

200 Total comprehensive income (loss) attributable to owners of the parents

388,364

1,710

1,710

(7,369)

(4,332)

(3,037)

(5,659)

382,705

4,990

377,715

Items (€/000) 31/12/2019 31/12/2018

467,075

(6,930)

(6,930)

13,518

16,035

(2,517)

6,588

473,663

6,533

467,130


Consolidated statement of changes in equity as of 31/12/2019 and 31/12/2018

Clos

ing

bala

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as a

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12/2

018

Chan

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alan

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Bala

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as a

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/01/

2019

ALLOCATION ON PROFIT

FROM PREVIUS YEAR

CHANGES DURING THE YEAR

Equi

ty a

s at

31/

12/2

019

Equi

ty a

ttrib

utab

le to

Par

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Com

pany

's s

hare

hold

ers

as a

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Non-

cont

rolli

ng in

tere

sts

as a

t 31

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2019

Rese

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Divid

ends

and

othe

r allo

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Chan

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Equity transactions

Cons

olid

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New

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Deriv

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shar

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Stoc

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Chan

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in

vest

men

ts

Share capital:

a) common shares 703,389 703,389 - - - - 703,389 700,000 3,389

b) other shares - - - - - - - - - -

Share premium reserve 195,623 195,623 - - - - 195,623 192,746 2,877

Reserves:

a) retained earnings 1,625,784 - 1,625,784 388,364 (2,022) - - - - 2,012,126 1,970,072 42,053

b) other - - - - - - - - - - - - -

Valutation reserve (35,651) - (35,651) 2,022 - 6,588 (27,041) (26,990) (51)

Equity instruments - - - - - - - - - - - -

Interim dividends - - - - (180,000) - (180,000) (180,000) -

Treasury shares - - - - - - - -

Profit (loss) for the year 388,364 - 388,364 (388,364) - - - - - - - 467,075 467,075 460,413 6,663

Equity 2,877,509 - 2,877,509 - - - - (180,000) - - - - 473,663 3,171,172 - -

Equity attribut-able to parent Company's shareholders

2,829,111 - 2,829,111 - - - - (180,000) - - - - 467,130 - 3,116,241 -

Interests 48,397 - 48,397 - - - - - - - - - 6,533 - - 54,931

€/thousands


€/thousands

Esis

tenz

e al

31/

12/2

017

Chan

ges

in o

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Bala

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as a

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ALLOCATION ON PROFIT

FROM PREVIUS YEAR

CHANGES DURING THE YEAR

Equi

ty a

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31/

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018

Equi

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Par

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8

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Rese

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Cons

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ares

Stoc

k op

tions

Chan

ges i

n eq

uity

inve

smen

ts

Share capital:

a) common shares 703,389 703,389 - - - - 703,389 700,000 3,389

b) other shares - - - - - - - - - -

Share premium reserve 195,623 (17,393) 195,623 - - - 195,623 192,746 2,877

Reserves:

a) retained earnings 1,360,856 - 1,343,463 282,528 (207) - - - - 1,625,784 1,588,613 37,171

b) other - - - - - - - - - - - - - -

Valutation reserve (29,992) - (29,992) - (5,659) (35,651) (35,608) (43)

Equity instruments - - - - - -

Interim dividends (100,000) - (100,000) 100,000 - - - - - - - - - - - - -

Treasury shares - - - - - - - -

Profit (loss) for the year 382,528 - 382,528 (382,528) 388,364 388,364 383,360 5,004

Equity 2,512,404 (17,393) 2,495,011 - - (207) - - - - - - - 382,705 2,877,509 - -

Equity attribut-able to parent Company's shareholders

2,469,082 (17,494) 2,451,588 - - 191) - - - - - - - 377,715 - 2,829,111 -

Interests 43,322 101 43,423 - - (16) - - - - - - - 4,990 - - 48,397


Consolidated statement of cash flow (direct method)

A. OPERATING ACTIVITIES

1. Business operations

- interest income (+)

- interest expense (-)

- fee and commission income (expense) (+/-)

- personnel expenses (-)

- net earned premiums (+)

- Other insurance income/expenses (+/-)

- other expenses (-)

- other revenue (+)

- taxes and levies (-)

2. Cash flows from increase/decrease of financial assets

- financial assets held for trading

- financial assets at fair value with impact on other comprehensive income

- financial assets at amortized cost

- other assets

3. Cash flows from increase/decrease of financial liabilities

- fiancial liabilities at amortized cost

- financial liabilities held for trading

- other liabilities

Cash flows generated by/(used for) operating activities

B. INVESTING ACTIVITIES

1. Cash flows generated by

- sales of property, plant and equipment

2. Cash flows used for

- purchases of property,plant and equipment

- purchases of intangible assets

Cash generated by / (used for) investing activities

C. FINANCING ACTIVITIES

- dividend and other distributions

Cash generated by / (used for) financing activities

CASH GENERATED /(USED) DURING THE YEAR

898,845

878,555

(219,085)

109,191

(169,033)

561

2,073

(71,900)

518,679

(150,195)

(3,375,375)

(3,412)

(9,634)

(2,358,765)

(1,003,563)

3,786,448

2,823,537

7,103

955,808

1,309,918

305,284

305,284

(1,253,142)

(1,232,375)

(20,767)

(947,858)

-

-

362,060

€/thousand 31/12/2019 31/12/2018

1,124,247

1,046,770

(282,470)

101,982

(160,372)

1,243

(867)

(50,731)

606,688

(137,997)

(502,530)

3,435

(173)

(340,728)

(165,064)

839,939

778,103

(3,756)

65,592

1,461,655

418,825

418,825

(1,477,745)

(1,449,225)

(28,520)

(1,058,920)

(180,000)

(180,000)

222,735

• 101Consolidated financial statements

Reconciliation

Cash and cash equivalents - opening balance

Cash generated (used) during the year

Cash and cash equivalents - closing balance

476

362,060

362,536

€/thousand 31/12/2019 31/12/2018

362,536

222,735

585,272

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Notes to the consolidated financial statements • 103

Part A - Accounting policies 104

Part B - Information on the consolidatedbalance sheet 144

Part C - Information on the consolidatedincome statement 187

Part D - Consolidated comprehensiveincome 208

Part E - Information on risk and relatedrisk management policies 209

Part F - Information on consolidatedequity 275

Part G - Business combinations 278

Part H - Related-party transactions 279

Part L - Segment reporting 282

Part M -Leasing reporting 284


Part A - Accounting policies

Statement of compliance with International Financial Reporting Standards The consolidated financial statements as of and for the year ended December 31, 2019 have been prepared in accordance with the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and the related interpretations by the International Financial Reporting Interpretations Committee (IFRIC), as endorsed by the EU Commission with Regulation no 1606 of July 19, 2002 and transposed into the Italian legal system with Legislative Decree no. 38 of February 28, 2005, up to December 31, 2017.Bank of Italy, whose powers in relation to the accounts of banks and financial companies subject to its supervision were laid down by Legislative Decree no. 87/92 and confirmed by the above-mentioned Legislative Decree, established the formats of the accounts and the notes used to prepare these financial statements through circular no. 262 of December 22, 2005, as amended.This amendment derive essentially from the mandatory application, from January 1, 2019, of the IFRS 16:• l’IFRS 16 “Leasing”. The new accounting standard issued by the IASB in January 2016 and endorsed by the European Commission through Regulation no. 1986/2017, replaced IAS 17 “Leases”, IFRIC 4 “Determining whether an arrangement contains a lease”, SIC 15 “Operating leases – Incentives” and SIC 27 “Evaluating the substance of transactions involving the legal form of a lease”, with effect from January 1, 2019, and established the requirements for accounting for lease contracts.

Basis of preparationThe consolidated financial statements consist of the Statement of financial position, the Income statement, the Statement of comprehensive income, the Statement of changes in equity, the Statement of cash flows and the Notes as well as

a board of directors’ report on Group operations.The financial statements and the notes show the amounts for the year just ended at December 31, 2019 well as the comparative figures at December 31, 2018. The FCA Bank Group’s consolidated financial statements were prepared in accordance with IAS 1 and the guidelines of Banca d’Italia’s circular no. 262 of December 22, 2005, 6th update of November 30, 2018. In particular:• Formats of the consolidated Statement of financial position, Income statement and notes.The statement of financial position and the income statement do not contain items with zero balances in the year just ended and in the previous one.• Consolidated statement of comprehensive income.The statement of comprehensive income reflects, in addition to net profit for the year, other items of income and expenses divided between those that can be reversed and those that cannot be reversed to income statement.• Consolidated statement of changes in equity.The consolidated statement of changes in equity shows the composition and changes in equity for the year under review and the comparable period. The items are allocated between the amounts attributable to the Parent Company’s shareholders and non-controlling interests.• Consolidated statement of cash flows.The Consolidated Statement of cash flows is prepared under the direct method.• Unit of account.Amounts in the financial statements and the notes are in thousands of euros.• Going concern, accrual basis of accounting and consistency of presentation of financial statements.The Group is expected to remain viable in the foreseeable future. Accordingly, the financial statements for the year ended December 31, 2019 were prepared on the assumption that the Company is a going concern, in accordance with the accrual basis of accounting and consistent with the financial statements for the previous year.There were no departures from the application of IAS/IFRSs.

SECTION 1

SECTION 2

A.1 - GENERAL INFORMATION


Scope and methods of consolidationThe consolidated financial statements as of

SECTION 3

December 31, 2019 include the accounts of the Parent Company, FCA Bank S.p.A., and its direct and indirect Italian and foreign subsidiaries, as required by IFRS 10. They reflect also the entities, including structured entities, in relation to which the Parent Company has exposure or rights to variable returns and the ability to a�ect those returns through power over them. To determine the existence of control, the Group considers the following factors:• the purpose and design of the investee, to identify the entity’s objectives, the activities that give rise to its returns and how such activities are governed;• the power over the investee and whether the Group has contractual arrangements, which attribute it the ability to govern the relevant activities; to this end, attention is paid only to substantive rights, which provide practical governance capabilities;• the exposure to the investee to determine whether the Group has arrangements with the investee whose returns vary depending on the investee’s performance.If the relevant activities are governed through voting rights, control may be evidenced by considering potential or actual voting rights, the existence of any arrangements or shareholders’ agreements giving the right to control the majority of the voting rights, to appoint the majority of the members of the board of directors or otherwise the power to govern the financial and operating policies of the entity.Subsidiaries may include any structured entities, where voting rights are not paramount to determine the existence of control, including special purpose vehicles (SPVs). Structured entities are considered subsidiaries where: • the Group has the power, through contractual arrangements, to govern the relevant activities;• the Group is exposed to the variable returns deriving from their activities.The Group does not have any investments in joint ventures.

Risks and uncertainties related to the use of estimates In accordance with IFRSs, management is required to make assessments, estimates and assumptions which a²ect the application of IFRSs and the amounts of reported assets, liabilities, costs and revenues and the disclosure of contingent assets and liabilities. The estimates and the relevant assumptions are based on past experience and other factors considered reasonable under the circumstances and are adopted to determine the carrying amount of assets and liabilities.In particular, estimates were made to support the carrying amounts of certain significant items of the consolidated financial statements as of December 31, 2019, in accordance with IAS/IFRSs and the above-mentioned guidelines. Such estimates concerned largely the future recoverability of the reported carrying amounts in accordance with the applicable rules and based on a going concern assumption. Estimates and assumptions are revised regularly and updated from time to time. In case performance fails to meet expectations, carrying amounts might di²er from original estimates and should, accordingly, be changed. In these cases, changes are recognized through profit or loss in the period in which they occur or in subsequent years.The main areas where management is required to make subjective assessments include:• recoverability of receivables and, in general, financial assets and the determination of any impairment;• determination of the fair value of financial instruments to be used for financial reporting purposes; in particular, the use of valuation models to determine the fair value of financial instruments not traded in active markets;• quantification of employee provisions and provisions for risks and charges;• recoverability of deferred tax assets and goodwill.


NAMEREGISTERED

OFFICECOUNTRY OF

INCORPORATION (*)

TYPE OF RELATIONSHIP

(**)

PARENT COMPANY

(***)

SHARING %

FCA Bank S.p.A.

Leasys S.p.A.

Clickar S.r.l.

FCA Capital France S.A.

Leasys France S.A.S.

FCA Leasing France SNC

FCA Bank Deutschland GmbH

FCA Automotive Services UK Ltd

FCA Dealer Services UK Ltd

Leasys UK Ltd

Leasys Rent S.p.A.

FCA Capital Espaňa EFC S.A.

FCA Dealer Services Espaňa S.A.

FCA Capital Portugal IFIC S.A.

FCA Dealer Services Portugal S.A.

FCA Capital Suisse S.A.

Leasys Polska Sp.Zo.o.

FCA-Group Bank Polska S.A.

FCA Capital Nederlands B.V.

Leasys Nederland B.V.

FCA Capital Danmark A/S

FCA Bank GmbH

Ferrari Financial Services GmbH

FCA Leasing GmbH

FCA Capital Hellas S.A.

FCA Insurance Hellas S.A.

FCA Capital RE DAC

FCA Capital Sverige AB

FCA Capital Norge AS

Turin - Italy

Turin - Italy

Turin - Italy

Trappes - France

Trappes - France

Trappes - France

Heilbronn - Germany

Slough - UK

Slough - UK

Slough - UK

Bolzano - Italy

Alcala de Henares - Spain

Alcala de Henares - Spain

Lisbon - Portugal

Lisbon - Portugal

Schlieren - Switzereland

Warsaw - Poland

Warsaw - Poland

Lijnden - Netherlands

Lijnden - Netherlands

Glostrup - Denmark

Vienna - Austria

Pullach - Munchen

Vienna - Austria

Athens - Greece

Athens - Greece

Dublin - Ireland

Kista - Sweden

Barum - Norway

Rome - Italy

Rome - Italy

Fiumicino - Italy

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

2

1

1

1

1

1

1

1

Leasys S.p.A.

Leasys S.p.A.

FCA Capital France SA

Leasys S.p.A.

Leasys S.p.A.

Leasys S.p.A.

Leasys S.p.A.

FCA Capital Hellas SA



100.00

100.00

100.00

100.00

99.99

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

50.00

50.0001

100.00

99.99

99.99

100.00

100.00

100.00

1. INVESTMENTS IN CONTROLLED SUBSIDIARIES

(*) If di�erent from Registered O�ce(**) Relation Type:1 = majority of voting rights at ordinary meetings2 = dominant influence at ordinary meeting(***) If di�erent from FCA Bank S.p.A.

The table below shows the companies included in the scope of consolidation.


3. INVESTMENTS IN SUBSIDIARIES WITH SIGNIFICANT NON-CONTROLLING INTERESTS

3.1 Non-controlling interests, availability of non-controlling interests’ voting rights and dividends paid to non-controlling interests

Pursuant to IFRS 10, FCA Bank GmbH (Austria), a 50%-held subsidiary and Ferrari Financial Services GmbH a 50.0001%-held subsidiary are included in the consolidation area.

Nixes Six PLc

Nixes Seven B.V.

Fast 3 S.r.l.

Erasmus Finance DAC

A-BEST TEN S.r.l. IN LIQUIDAZIONE

A-BEST ELEVEN UG

A-BEST TWELVE S.r.l.

A-BEST THIRTEEN FT

A-BEST FOURTEEN S.r.l.

A-BEST FIFTEEN S.r.l.

A-BEST SIXTEEN UG

A-BEST SEVENTEEN S.r.l.

NAME COUNTRY

London - UK

Amsterdam - Netherlands

Milan - Italy

Dublin - Ireland

Conegliano (TV) - Italy

Frankfurt am Main - Germany


Madrid - Spain





The structured entities related to securitization transactions, whose details are provided below, are fully consolidated:

NAMEAVAILABILITY OF

NON-CONTROLLING INTERESTS' VOTING TIGHTS (%)

NON-CONTROLLING INTERESTS (%)

DIVIDENDS DISTRIBUTED TO NON-CONTROLLING

INTERESTS

FCA Bank GmbH (Austria)

Ferrari Financial Services GmbH (Germany)

50%

49.99%

-

-

50%

49.99%



3.2 Investments in subsidiaries with significant non-controlling interests.

Total assets

Finacial assets

Financial liabilities

Equity

Net interest income

Net fee and commission income

Banking income

Net result from investment activities

Net result from investment and insurance activities

Operating costs

Profit (loss) before taxes from continuing operations

Net profit (loss) for the period

611,351

602,167

546,630

49,969

18,522

(147)

18,408

17,272

17,272

(8,968)

8,304

5,330

FERRARI FINANCIAL SERVICES GMBH (GERMANY) 31/12/2019 31/12/2018

681,310

671,580

607,940

58,140

21,300

329

21,332

20,069

20,069

(8,973)

11,096

8,086

Total assets

Financial assets

Financial liabilities

Equity

Net interest income

Net fee and commission income

Banking income

Net result from investment activities

Net result from investment and insurance activities

Operating costs

Profit (loss) before taxes from continuing operations

Net profit (loss) for the period

311,175

308,899

258,386

46,520

8,105

322

8,427

8,730

8,730

(2,274)

6,455

4,738

FCA BANK GMBH (AUSTRIA) 31/12/2019 31/12/2018

246,994

244,956

195,241

51,753

8,644

407

9,052

8,882

8,882

(2,260)

6,622

5,242

(amounts in thousands of euros)

(amounts in thousands of euros)

The table below provides financial and operating highlights of FCA Bank GmbH and of Ferrari Financial Services GmbH before intercompany eliminations required by IFRS 12:


In preparing the consolidated financial statements, the financial statements of the Parent Company and its subsidiaries, prepared according to IAS/IFRSs, are consolidated on a line-by-line basis by aggregating together like items of assets, liabilities, equity, income and expenses.The carrying amount of the parent’s investment in each subsidiary and the corresponding portions of the equity of each such subsidiary are eliminated. Any di²erence arising during this process – after the allocation to the assets and liabilities of the subsidiary – is recognized as goodwill on first time consolidation and, subsequently, among other reserves. The share of net profit pertaining to non-controlling interests is indicated separately, so at to determine the amount of net profit attributable to the Parent Company’s shareholders.Assets, liabilities, costs and revenues arising from

CONSOLIDATION METHODS intercompany transactions are eliminated.The financial statements of the Parent Company and those of the subsidiaries used for the consolidated financial statements are all as of the same date.For foreign subsidiaries, which prepare their accounts in currencies other than the euro, assets and liabilities are translated at the exchange rate prevailing on the balance sheet date, while revenues and costs are translated at the average exchange rate for the period.Exchange di�erences arising from the conversion of costs and revenues at the average exchange rate and the conversion of assets and liabilities at the reporting date are reported in profit or loss in the period.Exchange di�erences arising from the equity of consolidated subsidiaries are recognized in other comprehensive income and reversed to profit and loss when loss of control over the subsidiaries’ occurs. The exchange rates used to translate the financial statements at December 31, 2019 are as follows:

31/12/2019Medium

31/12/2019 31/12/2018Medium

31/12/2018

Polish Zloty (PLN)Danish Crown (DKK)Swiss Franc (CHF)GB Pound (GBP)Norwegian Krone (NOK)Moroccan Dirham (MAD)Svedish Krona (SEK)

4.2577.4721.0850.8519.864

10.74010.447

4.3007.4661.1120.8789.851

10.76410.589

4.3017.4671.1270.8959.948

10.95110.255

4.2617.4531.1550.8859.597

11.08310.258

To prepare the consolidated financial statements use was made of the following:• financial statements at December 31, 2019 of the Parent Company FCA Bank S.p.A.;• accounts as of December 31, 2019, approved by the competent bodies and functions, of the other fully consolidated companies, as adjusted to take into account the consolidation process and, where necessary, to comply with the Group’s accounting policies.

5. OTHER INFORMATION

Subsequent eventsNo events occurred after the balance sheet date which should result in adjustments of the

Other information The consolidated financial statements and the Parent Company’s financial statements were audited by EY S.p.A. pursuant to Legislative Decree no. 39 of January 27, 2010.

SECTION 4

SECTION 5

consolidated financial statements as of December 31, 2019.However, it is noted that the Group monitors closely the events in their evolution and the economic impact of the COVID-19 (Corona virus) emergency. At this moment, there is not enough evidence for a thorough assessment of the e²ects.


IFRS 16 - LeasesThe new standard constitutes an innovation in that it established that leases be reported in entities' balance sheets, thus enhancing the visibility of their assets and liabilities.IFRS 16 repeals the distinction between operating leases and finance leases (for the lessee), requiring that all lease contracts be treated as finance leases. Short-term contracts (12 months) and those involving low value items (e.g. personal computers) are exempted from this treatment.The new standard will take effect on January 1, 2019, Early adoption is permitted provided that also IFRS 15, Revenue from Contracts with Customers, is applied.

Amendments to IFRS9Under IFRS 9, a debt instrument can be measured at amortized cost or at fair value through other comprehensive income, provided that the contractual cash flows are ‘solely payments of principal and interest on the principal amount outstanding’ (the SPPI criterion) and the instrument is held within the appropriate business model for that classification. The amendments to IFRS 9 clarify that a financial asset passes the SPPI criterion regardless of the event or circumstance that causes the early termination of the contract and irrespective of which party pays or receives reasonable compensation for the early termination of the contract.The amendments specified that the early termination can result from a contractual term or from an event outside the control of the parties, such as a change in law or regulation leading to the early termination of the contract.The amendments must be applied retrospectively; earlier application is permitted.The amendment provides specific transition provisions if it is only applied in 2019 rather than in 2018 with the remainder of IFRS 9.The amendments are intended to apply when the prepayment amount approximates to unpaid amounts of principal and interest plus or minus an amount that reflects the change in a benchmark interest rate.This implies that prepayments at current fair value or at an amount that includes the fair value of the cost to terminate an associated hedging instrument, will normally satisfy the SPPI criterion only if the other elements of the change in fair value, such as the effects of credit risk or liquidity, are small.Under IFRS 9, a debt instrument can be measured at amortized cost or at fair value through other comprehensive income, provided that the contractual cash flows are ‘solely payments of principal and interest on the principal amount outstanding’ (the SPPI criterion) and the instrument is held within the appropriate business model for that classification. The amendments to IFRS 9 clarify that a financial asset passes the SPPI criterion regardless of the event or circumstance that causes the early termination of the contract and irrespective of which party pays or receives reasonable compensation for the early termination of the contract.

IFRIC 23 - Uncertainty over Income Tax TreatmentThe standard clarifies the accounting treatment for uncertainties in accounting for income tax. The entity needs to evaluate the probability that the relevant tax authority accepts the accounting treatment of income tax.If it is probable that the tax authority does not accept the accounting treatment, IFRIC 23 proposes two methods to reflect the uncertainty in the calculation of income tax:- the most likely amount that the tax authority will accept

EC ENDORSEMENT REGULATION

DATE OFPUBBLICATION

DATE OFAPPLICATION

DESCRIPTIONOF STANDARD/AMENDMENT

1986/2017

498/2018

1595/2018

November 9, 2017

March 26, 2018

October 24, 2018

January 1, 2019

January 1, 2019

January 1, 2019

INTERNATIONAL FINANCIAL REPORTING STANDARDS ENDORSED BY THE EUROPEAN UNION WITH EFFECT APPLICABLE AS OF JANUARY 1, 2019 As required by IAS 8, the table below shows the new international financial reporting standards, or the amendments of standards already effective, which took effect as of January 1, 2019.


Annual Improvements to IFRS Standards 2015-2017 Cycle By Regulation (EU) 2019/412 of March 14, 2019 the Commission, in the framework of its regular activity aimed at streamlining and clarifying the standards, adopted the new provisions introduced by the IASB in its Annual Improvements to International Financial Reporting Standards 2015-2017 Cycle (annual improvements) published by the IASB on December 12, 2017. These new provisions include amendments to IAS 12 – Income Taxes, IAS 23 - Borrowing Costs, IFRS 3 - Business Combinations and IFRS 11 – Joint Arrangements.

IFRS 3 Business Combinations - The amendments clarify that, when an entity obtains control of a business that is a joint operation, it applies the requirements for a business combination achieved in stages, including remeasuring previously held interests in the assets and liabilities of the joint operation at fair value. In doing so, the acquirer remeasures its entire previously held interest in the joint operation. An entity applies those amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2019. Earlier application is permitted.

IFRS 11 Joint Arrangements - A party that participates in, but does not have joint control of, a joint operation might obtain joint control of the joint operation in which the activity of the joint operation constitutes a business as defined in IFRS 3. The amendments clarify that the previously held interests in that joint operation are not remeasured. An entity applies those amendments to transactions in which it obtains joint control on or after the beginning of the first annual reporting period beginning on or after January 1, 2019. Earlier application is permitted.

IAS 12 Income Taxes - The amendments clarify that the income tax consequences of dividends are linked more directly to past transactions or events that generated distributable profits than to distributions to owners. Therefore, an entity recognizes the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events. An entity applies those amendments for annual reporting periods beginning on or after January 1, 2019.Earlier application is permitted. When an entity first applies those amendments, it applies them to the income tax consequences of dividends recognized on or after the beginning of the earliest comparative period.

IAS 23 Borrowing Costs - The amendments clarify that an entity treats as part of general borrowings any borrowing originally made to develop a qualifying asset when substantially all of the activities necessary to prepare that asset for its intended use or sale are complete. An entity applies those amendments to borrowing costs incurred on or after the beginning of the annual reporting period in which the entity first applies those amendments.

An entity applies those amendments for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted.

412/2019 March 15, 2019 January 1, 2019

1595/2018 October 24, 2018 January 1, 2019 (e.g. in case of a binary choice – cost deduction accepted or rejected totally);- the sum of amounts weighted by the probability that the tax authority will accept each one of them (e.g. when there are different possible answers by the authority).


DATE OFPUBBLICATION

DATE OFAPPLICATION



Amendment to IAS 19By the same Regulation, amendments to IAS 19 – Plan Amendment, Curtailment or Settlement have been adopted. The objective of the amendments is to clarify that, after the amendment, curtailment or settlement of the defined benefit plan, entities shall use the updated assumptions from remeasurement of their net defined liability (asset) for the remainder of the reporting period.The amendments to IAS 19 require that, upon occurrence of an amendment/curtailment of a defined benefit plan, entities are required to update the actuarial assumptions used to determine the current service cost (i.e. the amount of the present value of a defined benefit obligation resulting from employee service in the current period) and the net interest on the net liability (asset) for the remainder of the annual reporting period, that is the period between the date of the amendment/curtailment and the closing of the current annual period.The previous version of IAS 19 required - in case of amendment/curtailment of a defined benefit plan, before calculating past service costs – the remeasurement of the net liability (asset) by using the fair value of the assets held by the plan and current actuarial assumptions while it did not require explicitly the update of the actuarial assumptions underlying the current service cost and the net interest following the amendment of the plan. Given the diversity of practices adopted by entities, the amendments in question specify that the entity is required to update the actuarial assumptions following the amendment/ curtailment of the plan using the most recent information.

Amendment to IAS 28 The amendments clarify that an entity applies IFRS 9 - Financial Instruments to long-term interests in an associate or joint venture to which the equity method is not applied.In applying IFRS 9, an entity does not take account of any losses of the associate or joint venture, or any impairment losses on the net investment, recognized as adjustments to the net investment in the associate or joint venture that arise from applying IAS 28 Investments in Associates and Joint Ventures.To illustrate how entities apply the requirements in IAS 28 and IFRS 9 with respect to long-term interests, the IASB also published an illustrative example.The amendments are applied retrospectively, with certain exceptions. Early application of the amendments is permitted and must be disclosed.

402/2019

237/2019

March 14, 2019

February 11, 2019

January 1, 2019

January 1, 2019


DATE OFPUBBLICATION

DATE OFAPPLICATION



Amendment to IAS 1 and IAS 8.

The IASB clarified in IAS 1 – Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” the definition of “material” and aligned such definition with that used in the Conceptual Framework and in the IFRS.Information is material if omitting or misstating it could reasonably affect the decisions that the primary users of financial statements make on the basis of those financial statements.

Amendment to IFRS 9, IAS 39 e IFRS 7: interest rate benchmark reform.

The IASB has issued amendments to IFRS 9, IAS 39 and IFRS 7 that modifies IFRS 9 and IAS 39 hedge accounting policies.The amendment will take effect on January 1, 2020, but early adoption is permitted. The European Commission identified both EONIA and EURIBOR, which are managed by the European Money Market Institute (EMMI), as critical benchmark rates, pursuant to the BMR.

2075/2019

2104/2019

Amendment to IFRS 9, IAS 39 and IFRS 7

December 6, 2019

December 10, 2019

January 20, 2020

January 1, 2020

January 1, 2020

January 1, 2020

ACCOUNTING STANDARDS, AMENDMENTS AND IFRS AND IFRIC INTERPRETATIONS ENDORSED BY THE EUROPEAN UNION, NOT YET MANDATORILY APPLICABLE AND NOT ADOPTED EARLY BY THE GROUP AT DECEMBER 31, 2019

Amendments to References to the Conceptual Framework in IFRS Standards

The IASB issued on on 29 March 2018 a revised version of its Conceptual Framework for Financial Reporting that underpins IFRSs. This instrument helps to ensure that the Standards are conceptually consistent and that similar transactions are treated the same way, providing useful information for investors and others. The Conceptual Framework also assists companies in developing accounting policies when no IFRS Standard applies to a particular transaction; and it helps stakeholders more broadly to understand the Standards better. The revised Conceptual Framework includes: a new chapter on measurement; guidance on reporting financial performance; improved definitions and guidance - in particular the definition of a liability; and clarifications in important areas, such as the roles of stewardship, prudence and measurement uncertainty in financial reporting.


DATE OFPUBBLICATION

DATE OFAPPLICATION



Amendment to IFRS 3.The IASB, in the updated version of IFRS 3 - Businesscombinations, changed the definition of company.The new definition shows that the purpose of the company is to provide products and services to customers, while the previous definition focused on the purpose of producing outcome in the form of dividends, lower costs or other benefits economic for investors or others. Companies apply to business combinations the new definition starting from the operations having date of stipulation later than January 1, 2020.

IFRS 17 - Insurance contractsOn May 18, 2017, the IASB issued IFRS 17 - Insurance Contracts which applies to annual reporting periods beginning on or after 1 January 2021.The new standard, which deals with accounting for insurance contracts (previously known as IFRS 4), intends to improve the understanding of investors, among others, of insurers’ risk exposure, operating performance and financial position. The IASB published a final version after a long consultation phase. IFRS 17 is a complex standard which will include certain key differences from the current accounting treatment regarding the measurement of liabilities and the recognition of profits.IFRS 17 applies to all insurance contracts. The accounting model of reference, the General Model, is based on the present value of expected cash flows, the identification of a risk adjustment and a contractual service margin (“CSM”), which cannot be negative and represents the present value of unearned profit, to be released to profit or loss in each period with the passage of time.

Amendment to IFRS 3

IFRS 17 - Insurance contracts

October 22, 2018

May 18, 2017

January 1, 2020

January 1, 2021

ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET ENDORSED BY THE EUROPEAN UNION

STANDARD/ AMENDMENT

DATE OFPUBBLICATION

DATE OFAPPLICATION




RegulationsIFRS 16 replaced IAS 17 and the relevant interpretations and will take e²ect on or after January 1, 2019. IFRS 16 lays down the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for most leases by following a single accounting model.

The objective of IFRS 16 is to ensure that lessors and lessees report information that faithfully represents lease transactions. The information provides a basis for users of financial statements to assess the e²ects of leases on the entity’s financial condition, operating results and cash flows.

IFRS 16 introduces significant changes to manner in which lease transactions are accounted for by both lessors and lessees, in that it introduces a single accounting model for leases with a term of more than 12 months, unless the underlying asset is of low value. Specifically, the main change entails the removal of the distinction, introduced by IAS 17, between operating lease and finance lease. From now on, all lease transaction must be accounted for in the same way, with the recognition of an asset and a liability. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a liability representing its obligation to make lease payments. A lessee measures right-of-use assets similarly to other non-financial assets (such as property, plant and equipment) and lease liabilities similarly to other financial liabilities. As a consequence, a lessee recognizes depreciation of the right-of-use asset and interest on the lease liability. In a cash flow statement, a lessee separates the total amount of cash paid into principal (presented within financing activities) and interest (presented within the operating or financing activity) in accordance with IAS 7.

The lease asset is the right to use the underlying asset and is presented in the

ExemptionsIFRS 16 applies to all types of leases, that is contracts that convey to the lessee the right to control the use of an identified asset for a period of time (use period) in exchange for consideration.

IFRS 16 does not require a company to recognize assets and liabilities for short-term leases or for leases whose underlying asset is of low value. Short-term means a contract expiring after no more than 12 months while an underlying asset is of low value if its price, new, does not exceed €5 thousand.

In addition, the IASB decided to extend the exemption of short-term leases to include contracts for which it is not reasonably certain that their term exceeds 12 months, considering the probability of exercise of the extension or extinguishment options The FCA Bank Group decided to apply both exemptions.

TRANSITION TO IFRS 16

statement of financial position either as part of property, plant and equipment or as its own line item. IFRS 16 substantially reflects the lessor accounting requirement in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, using he same classification principle as IAS 17.

Transition method FCA Bank Group chose to carry out the first time adoption of IFRS 16 through the modified retrospective approach. Under this approach the cumulative effect of initially applying IFRS 16 is recognized at the date of initial application and comparative figures for the year preceding the first time adoption of IFRS 16 are not restated. As such, the 2019 financial statements are not comparable in terms of right of use and the corresponding lease liability.

The impacts on Own FundsThe increase in RWA resulting from the registration of the total rights of use, weighted 100%, has an impact on CET 1 of less than 1 bp.

IFRS 16 project In 2018 a working group was established within the Consolidated Accounts function of the FCA Bank Group, to identify all lease contracts, evaluate the key information contained in each of them and assess the qualitative and quantitative impacts of the new IFRS. The macro-phases of the project can be summarized in the following activities: • Preliminary analyses performed at the central level (mainly related to accounting themes); • Specific training on IFRS 16 provided to all of the FCA Bank Group companies; • Questionnaire prepared by each Group company and document gathering; • Review of results and identification of pertinent contract types; • Analysis of contractual clauses to identify the cases of inclusion/exclusion from the scope of IFRS 16; • Quantification of the impact deriving from the first time adoption of IFRS 16 at the consolidated level.

The effects of first time adoption of IFRS 16 The adjustment to the opening statement of financial position following adoption of IFRS 16 by using the modified retrospective approach resulted in an increase in total assets, as a result of the recognition of the new rights of use at Group level, of less than 1% and a total increase in liabilities (due to lessor) for the same amount.

First time adoption did not have any impact on equity. On first time adoption IFRS 16 suggests a practical expedient that allows the company not to re-determine the scope of application (IFRS 16.C3) but to apply the standard only to leases identified in accordance with the requirements of IAS 17 and IFRIC 4. Regarding the comparative data, it is noted that the Group’s choice to implement the first time adoption of IFRS 16 according to the modified retrospective approach exempts it from restating comparative data.

The tables to the side show the effect of adoption of IFRS 16.



30/06/2018

CONSOLIDATED FINANCIAL STATEMENT OF FINANCIAL POSITION

CONSOLIDATED INCOME STATEMENT


Total assets


b) Deposits from customers

200. Net Profit (Loss) for the year (+/-)

Total liabilities and shareholders' equity

20. Interest income and similar revenues

30. Net interest margin

120. Operating income

150. Net profit from financial activities

180. Net profit from financial and insurance activities

190. Administrative costs:

b) other administrative costs

210. Impairment on property, plant and equipment


240. Operating costs

290. Total profit or loss before tax from continuing operations

310. Total profit or loss after tax continuing

330. Net profit or loss

350. Holding income (loss) of the year

Assets (€/thousand)

Liabilities and shareholders’ equity (€/thousand)

Item (€/thousand)

31/12/2019

31/12/2019

2019

51,699

51,699

51,724

51,724

(25)

51,699

(612)

(612)

(612)

(612)

(612)

8,675

8,675

(8,312)

224

587

(25)

(25)

(25)

(25)


This section shows the accounting policies adopted to prepare the consolidated financial statements as of December 31, 2019. Such description is provided with reference to the

recognition, classification, measurement and derecognition of the different assets and liabilities.

This category includes the financial assets that meet both the following conditions:• the financial asset is held under a business model whose objective is achieved both through the collection of expected contractual cash flows and through sale (Hold to Collect and Sell business model), and • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI Test” passed).

This caption also includes equity instruments, not held for trading, for which the option was exercised upon initial recognition of their designation at fair value through other comprehensive income.In particular, this caption includes:• debt securities that can be attributed to a Hold to Collect and Sell business model and that have passed the SPPI test;• equity interests, that do not qualify as investments in subsidiaries, associates or joint ventures and are not held for trading, for which the option has been exercised of their designation at fair value through other comprehensive income;• loans that are attributable to a Hold to Collect and Sell business model and have passed the SPPI Test, including the portions of syndicated loans subscribed that are originally intended to be sold and are part of a Hold to Collect and Sell business model.

According to the general rules established by IFRS 9 on the reclassification of financial assets (except for equity instruments, for which no

reclassification is permitted), reclassifications to other categories of financial assets are not permitted unless the entity changes its business model for those financial assets. In such cases, which are expected to be highly infrequent, the financial assets may be reclassified from those measured at fair value through other comprehensive income to one of the other two categories established by IFRS 9 (Financial assets measured at amortized cost or Financial assets measured at fair value through profit or loss). The transfer value is the fair value at the time of the reclassification and the effects of the reclassification apply prospectively from the reclassification date. In the event of reclassification from this category to the amortized cost category, the cumulative gain (loss) recognized in the valuation reserve is allocated as an adjustment to the fair value of the financial asset at the reclassification date. In the event of reclassification to the fair value through profit or loss category, the cumulative gain (loss) previously recognized in the valuation reserve is reclassified from shareholders’ equity to net income (loss).Initial recognition of financial assets occurs at settlement date for debt securities and equity instruments and at disbursement date for loans.On initial recognition, assets are recorded at fair value, including transaction costs and revenues directly attributable to the instrument.

After initial recognition, the Assets classified at fair value through other comprehensive income, other than equity instruments, are measured at fair value, with the recognition in profit or loss of the impact resulting from the application of the amortized cost, the impairment effects and any exchange rate effect, whereas the other

1. FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (FVOCI)

A.2 - MAIN ITEMS IN THE FINANCIAL STATEMENTS



instruments classified as stage 2 (performing for which there has been a significant increase in credit risk since the initial recognition date) and as stage 3 (credit impaired exposures), a lifetime expected loss for the financial instrument is recognized. Equity instruments are not subject to the impairment process.

Financial assets are derecognized solely if the sale leads to the substantial transfer of all the risks and rewards connected to the assets.Conversely, if a significant part of the risks and rewards relative to the sold financial assets is maintained, they continue to be recorded in financial statements, even though their title has been transferred. When it is not possible to ascertain the substantial transfer of risks and rewards, the financial assets are derecognized where no control over the assets has been maintained. If this is not the case, when control, even partial, is maintained, the assets continue to be recognized for the entity’s continuing involvement, measured by the exposure to changes in value of assets disposed and to variations in the relevant cash flows. Lastly, financial assets sold are derecognized if the entity retains the contractual rights to receive the cash flows of the asset, but signs a simultaneous obligation to pay such cash flows, and only such cash flows, without significant delay to third parties.

gains and losses resulting from a change in fair value are recognized in a specific shareholders’ equity reserve until the financial asset is derecognized.Upon the total or partial sale, the cumulative gain or loss in the valuation reserve is transferred, in whole or part, to the income statement.

Equity instruments, for which the choice has been made to classify them in this category, are measured at fair value and the amounts recognized in Other comprehensive income cannot be subsequently transferred to profit or loss, not even if they are sold. The only component related to these equities that is recognized through profit or loss is their dividends. Fair value is determined on the basis of the criteria already described for Financial assets designated at fair value through profit or loss.For the equities included in this category, which are not quoted on an active market, the cost approach is used as the estimate of fair value only on a residual basis and in a small number of circumstances, i.e., when all the measurement methods referred to above cannot be applied, or when there are a wide range of possible measurements of fair value, in which cost represents the most significant estimate.

Financial assets measured at fair value through other comprehensive income – both in the form of debt securities and loans – are subject to the verification of the significant increase in credit risk (impairment) required by IFRS 9, in the same way as Assets measured at amortized cost, with the consequent recognition through profit or loss of a value adjustment to cover the expected losses. More specifically, for instruments classified as stage 1 (i.e., financial assets at origination, when not impaired, and instruments for which there has not been a significant increase in credit risk since the initial recognition date), a 12-month expected loss is recognized on the initial recognition date and at each subsequent reporting date. For


This category includes the financial assets (in particular loans and debt securities) that meet both the following conditions: • the financial asset is held under a business model whose objective is achieved through the collection of expected contractual cash flows (Hold to Collect business model), and • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI Test” passed). More specifically, the following are recognized in this caption: • loans to banks in their various forms that meet the requirements referred to in the paragraph above; • loans to customers in their various forms that meet the requirements referred to in the paragraph above; • debt securities that meet the requirements referred to in the paragraph above. This category also includes the operating loans and receivables connected to the provision of financial activities and services as defined by the Consolidated Law on Banking and the Consolidated Law on Finance (e.g. for the distribution of financial products and servicing activities). According to the general rules established by IFRS 9 on the reclassification of financial assets, reclassifications to other categories of financial assets are not permitted unless the entity changes its business model for those financial assets. In such cases, which are expected to be highly infrequent, the financial assets may be reclassified from the amortized cost category to one of the other two categories established by IFRS 9 (Financial assets measured at fair value through other comprehensive income or Financial assets measured at fair value through profit or loss). The transfer value is the fair value at the time of the reclassification and the effects of the reclassification apply prospectively from the reclassification date. Gains and losses resulting from the difference between the amortized cost of a financial

2. FINANCIAL ASSETS MEASURED AT AMORTIZED COST

asset and its fair value are recognized through profit or loss in the event of reclassification to Financial assets measured at fair value through profit or loss and under Shareholders’ equity, in the specific valuation reserve, in the event of reclassification to Financial assets measured at fair value through other comprehensive income. Initial recognition of the financial asset occurs at settlement date for debt securities and at disbursement date for loans. On initial recognition, assets are recorded at fair value, including transaction costs and revenues directly attributable to the instrument. In particular, for loans, the disbursement date is usually the same as the date of signing of the contract. Should this not be the case, a commitment to disburse funds is made along the subscription of the contract, which will cease to exist upon disbursement of the loan. The loan is recognized based on its fair value, equal to the amount disbursed or subscription price, inclusive of the costs/revenues directly attributable to the single loan and determinable from inception, even when settled at a later date. Costs that, even with the aforementioned characteristics, are reimbursed by the borrower or are classifiable as normal internal administrative costs are excluded.After the initial recognition, these financial assets are measured at amortized cost, using the effective interest method. The assets are recognized in the balance sheet at an amount equal to their initial carrying amount less principal repayments, plus or minus the cumulative amortization (calculated using the effective interest rate method referred to above) of the difference between this initial amount and the amount at maturity (typically attributable to costs/income directly attributable to the individual asset) and adjusted by any provision for losses. The effective interest rate is the rate that exactly discounts estimated future cash payments of the asset, as principal and interest, to the amount disbursed inclusive of the costs/revenues attributable to that financial asset. This measurement method uses a financial approach and allows distribution of the economic effect


expected credit loss to a 12-month expected credit loss for the instrument. These financial assets, when they are performing, are subject to an assessment, aimed at establishing the value adjustments to be recognized in the financial statements, at the level of individual loan (or “tranches” of securities), according to the risk parameters consisting of Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD), derived from the AIRB models, and duly adjusted to take account of the provisions of IFRS 9. If, in addition to a significant increase in credit risk, there is also objective evidence of impairment, the amount of the loss is measured as the di�erence between the carrying amount of the asset – classified as “non-performing”, like all the other relationships with the same counterparty – and the present value of the estimated future cash flows, discounted using the original e�ective interest rate. The amount of the loss, to be recognized through profit or loss, is established based on individual measurement or determined according to uniform categories and, then, individually allocated to each position, and, takes account of forward-looking information and possible alternative recovery scenarios. Non-performing assets include financial assets classified as bad, unlikely-to-pay or past due by over ninety days according to the rules issued by the Bank of Italy, in line with the IAS/IFRS and EU Supervisory Regulations. The expected cash flows take into account the expected recovery times and the estimated realizable value of any guarantees. The original e�ective rate of each asset remains unchanged over time even if the relationship has been restructured with a variation of the contractual interest rate and even if the relationship, in practice, no longer bears contractual interest. If the reasons for impairment are no longer applicable following an event subsequent to the registration of impairment, recoveries are recorded in the income statement. The size of the recovery must not lead the carrying value of the financial asset to exceed the amortized cost had no

of the costs/income directly attributable to a financial asset over its expected lifetime. The amortized cost method is not used for assets, measured at historical cost, whose short duration makes the e²ect of discounting negligible, or for assets without a definite maturity or revocable loans. The measurement criteria are closely linked to the inclusion of these instruments in one of the three stages of credit risk established by IFRS 9, the last of which (stage 3) consists of non-performing financial assets and the remaining (stages 1 and 2) of performing financial assets. With regard to the accounting representation of the above measurement e²ects, the value adjustments for this type of asset are recognized in profit or loss: • on initial recognition, for an amount equal to the 12-month expected credit loss; • on subsequent measurement of the asset, when the credit risk has not increased significantly since initial recognition, in relation to changes in the amount of adjustments for the 12-month expected credit losses; • on subsequent measurement of the asset, when the credit risk has increased significantly since initial recognition, in relation to the recognition of adjustments for expected credit losses over the contractually agreed remaining lifetime of the asset; • on subsequent measurement of the asset, where – after a significant increase in credit risk has occurred since initial recognition – the increase is no longer “significant” due to the alignment of the cumulative value adjustments to take account of the change from a lifetime


impairment losses been recognized in previous periods. Recoveries on impairment with time value effects are recognized in net interest income. In some cases, during the lifetime of these financial assets, and of loans in particular, the original contractual conditions may be subsequently modified by the parties to the contract. When the contractual clauses are subject to change during the lifetime of an instrument, it is necessary to verify whether the original asset should continue to be recognized in the balance sheet or whether, instead, the original instrument needs to be derecognized and a new financial instrument needs to be recognized. In general, changes to a financial asset lead to its derecognition and the recognition of a new asset when they are “substantial”.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:• the rights to receive cash flows from the asset have expired; or• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.


Hedging derivatives are stated at fair value. Specifically:• in the case of cash flow hedges, derivatives are recognized a their fair value. Any change in the fair value of the e�ective part of the hedge is recognized through OCI, in item 120. “Valuation reserve” while any change in the fair value of the ine�ective part of the hedge is recognized through profit or loss in item 90.• in the case of fair value hedges, any change in the fair value of the hedging instrument is recognized through profit or loss in item 90. “Net result of hedging activity”. Any change in the fair value of the hedged item, attributable to the risk hedged with the derivative instrument, is recognized through profit and loss as an o�setting entry of the change in the carrying amount of the hedged item.

The fair value of derivative instruments is calculated on the basis of interest and exchange rates quoted in the market, taking into account the counterparties’ creditworthiness, and reflects the present value of the future cash flows generated by the individual contracts.Gains or losses on derivatives hedging interest rate risk are allocated either to “Interest and similar income” or “Interest and similar expenses”, as the case may be.

A derivative contract is designated for hedging activities if there is a formal document of the relationship between the hedged instrument and the hedging instrument and whether the hedge is e�ective since inception and, prospectively, throughout its life.

A hedge is e�ective (in a range between 80% and 125%) when the changes in the fair value (or cash flows) of the hedging financial instrument almost entirely o�set the changes in hedged item with regard to the risk being hedged.E�ectiveness is assessed at every year-end or interim reporting date by using:• prospective tests, to demonstrate an expectation of e�ectiveness in order to qualify for hedge accounting;• retrospective tests, to ensure that the hedging

Hedging derivatives are intended to o²set potential losses/gains on a specific item or group of items, attributable to a specific risk, through the gains/losses generated on another instrument or group of instruments in the event that the specific risk in question materializes. The FCA Bank Group hedges its exposure to the interest rate risk associated with receivables arising from instalment loans and bonds issued at fixed interest rates with derivatives designated as fair value hedges. Derivatives entered into to hedge the variable interest rate risk associated with the debt of the companies engaged in long-term rental are designated as cash flow hedges.Only derivatives entered into with a counterparty not belonging to the Group may be treated as hedging instruments.

3. HEDGING DERIVATIVES


Macro hedging is considered highly effective if, like fair value hedges, at inception and in subsequent periods the changes in fair value of the hedged amount are offset by the changes in fair value of the hedging derivatives in the range of 80% to 125%.

relationship has been highly effective throughout the reporting period, measuring the extent to which the achieved hedge deviates from a perfect hedge.

If the tests fail to demonstrate hedge effectiveness, hedge accounting, as indicated above, is discontinued and the derivative contract is reclassified to held-for-trading financial assets or financial liabilities and is therefore measured in a manner consistent with its classification. In case of macro hedging, IAS 39 permits the establishment of a fair value hedge for the interest rate risk exposure of a designated amount of financial assets or liabilities so that a group of derivative contracts can be used to offset the changes in fair value of the hedged items as interest rates vary.

Macro hedges cannot be applied to a net position being the difference between financial assets and liabilities.


Investments in joint ventures (IFRS 11) as well as in companies subject to significant influence (IAS 28) are recognized with the equity method.The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment separately.The statement of profit or loss reflects the Group’s share of the results of operations of the associate or joint venture. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.Under the equity method, the investment in an associate or a joint venture is initially recognized at cost.If there is any evidence that the value of an investment has been impaired, the recoverable value of the investment is estimated, taking account the present value of the future cash flows that it will generate, including its disposal value.If the recovery value is lower than book value, the difference is recorded in the income statement.In subsequent periods, if the reasons for the impairment cease to exist, the original value may be restored through the income statement.

This item includes furniture, fixtures, technical and other equipment and assets related to the leasing business.These tangible assets are used to provide goods and services, to be leased to third parties, or for administrative purposes and are expected to be utilized for more than one period.This item consists of:• assets for use in production• assets held for investment purposes.

Assets held for use in production are utilized to provide goods and services as well as for administrative purposes and are expected to be used for more than one period. Typically, this category includes also assets held to be leased under leasing arrangements.This item includes also assets provided by the Group in its capacity as lessor operating lease agreements.

Assets leased out include vehicles provided under operating lease agreements by the Group’s long-term car rental companies. Trade receivables to be collected in connection with recovery procedures in relation to operating leases are classified as “Other assets”. Operating lease agreements with a buyback clause are also included in “Other assets”.Tangible assets comprise also leasehold improvements, whenever such expenses are value accretive in relation to identifiable and separable assets. In this case, classification takes place in the specific sub-items of reference in relation to the asset.Asset held for investment purposes refer to investment property as per IAS 40, i.e. properties held (owned or under a finance lease) in order to receive rental income and/or an appreciation of the invested capital.Tangible assets are initially recognized at cost, inclusive of purchase price and all the incidental charges incurred directly to purchase and to put the asset in service. Costs incurred after purchase are only capitalized if they lead to an increase in the future economic benefits deriving from the asset to which they relate. All other costs are recorded in the income statement as incurred.

4. INVESTMENTS

5.PROPERTY, PLANT AND EQUIPMENT


Subsequently, tangible assets are recognized at cost, less accumulated depreciation and impairment losses.Depreciation is calculated on a straight line basis considering the remaining useful life and value of the asset.At every reporting date, if there is any evidence that an asset might be impaired, the book value of the asset is compared with its realizable value – equal to the greater of fair value, net of any selling costs, and the value in use of the asset, defined as the net present value of future cash flows generated by the asset.

Any impairment losses and adjustments are recorded in the income statement, item 210 “Impairment/reinstatement of tangible assets”.If the reasons that gave rise to the impairment no longer apply, then the loss is reversed for the amount that would restore the asset to the value that it would have had in the absence of any impairment, less accumulated depreciation.Initial direct costs incurred in the negotiation and execution of an operating agreement are added

to the leased assets in equal instalments, based on the length of the agreement.Tangible assets are derecognized upon disposal or when they are retired from production and no further economic benefits are expected from them. Any difference between the selling price or realizable value and the carrying amount is recognized through profit or loss, item 280 “Gains (losses) from the sale of investments”.


consistent with the function of the intangible asset.Indefinite-life intangible assets, including goodwill, are not amortized but are tested every year for impairment both individually and at the level of cash generating units. Every year (or whenever there is evidence of impairment) goodwill is tested for impairment. To this end, the cash generating unit to which goodwill is to be attributed is identified. The amount of any impairment is calculated as the difference between the carrying amount of goodwill and its recoverable value, if lower. Recoverable value is equal to the greater of the fair value of the cash generating unit, less any selling costs, and the relevant value in use.Any adjustments are recognized in the income statement, item 270. “Goodwill impairment”. No reversal of impairment is permitted for goodwill.

Intangible assets are derecognized upon disposal or when and no further economic benefits are expected from them. Any difference between the selling price or realizable value and the carrying amount is recognized through profit or loss, item 280 “Gains (losses) from the sale of investments”.

Intangible assets are non-monetary long-term assets, identifiable even though they are intangible, controlled by the Group and which are likely to generate future economic benefits.Intangible assets include mainly goodwill, software, trademarks and patents.Goodwill arising in a business combination is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests) and any previous interest held over the fair value of net identifiable assets acquired and liabilities assumed.In the case of software generated internally the costs incurred to develop the project are recognized as intangible assets provided that the following conditions are met: technical feasibility, intention to complete, future usefulness, availability of sufficient technical and financial resources and the ability to measure reliably the costs of the project.Intangible assets are recognized if they are identifiable and originated from legal or contractual rights.

Intangible assets purchased separately and/or generated internally are initially recognized a cost and, except for goodwill, are amortized on a straight line basis over their remaining useful life.Subsequently, they are measured at cost net of accumulated amortization and any accumulated impairment losses. The useful life of intangible assets is either definite or indefinite.Definite-life intangibles are amortized over their remaining useful life and are tested for impairment every time there is objective evidence of a possible loss of value. The amortization period of a definite-life intangible asset is reviewed at least once every year, at year end. Changes in the useful life in which the future economic benefits related to the asset will materialize result in changes in the amortization period and are considered as changes in estimates. The amortization of definite-life intangible asset is recognized in the income statement in the cost category

6.INTANGIBLE ASSETS

• 130


Tax assets and liabilities are recognized in the consolidated statement of financial position in line item 110. “Tax assets” on the asset side and line item 60. “Tax liabilities” on the liability side.In accordance with the balance sheet method, current and deferred taxes are accounted for as follows:• current tax assets, that is payments in excess of taxes due under applicable national tax laws;• current tax liabilities, or taxes payable under applicable national tax laws;• deferred tax assets, that is income taxes recoverable in future years and related to:

• deductible timing di²erences;

• unused tax loss carry-forwards; and

• unused tax credits carried forward;• deferred tax liabilities, that is income tax amounts payable in future years due to the excess of income over taxable income due to timing di²erences.

Current and deferred tax assets and liabilities are calculated by applying national tax laws in force and are accounted for as an expense (income) in accordance with the same accrual basis of accounting applicable to the costs and revenues that generated them.Generally, deferred tax assets and liabilities arise in the cases where the deductibility of a cost or the taxability of a revenue is deferred with respect to their recognition.Deferred tax assets and liabilities are recognized on the basis of the tax rates that, at the balance sheet date, are expected to be applicable in the year in which the asset will be realized or the liability extinguished, on the basis of the tax legislation in force, and are periodically revised to take account of any change in legislation.Deferred tax assets are recognized, to the extent that they can be recovered against future income. In accordance with IAS 12, the probability that there is su°cient taxable income in future should be verified from time to time. If the analysis reveals that there is no su°cient future income, the deferred tax assets

7.CURRENT AND DEFERRED TAXATION

are reduced accordingly.Current and deferred taxes are recognized in the income statement, item 300 “Income tax on continuing operations”, with the exception of those taxes related to items recognized, in the current or in another year, directly through equity, such as those related to gains or losses on available-for-sale financial assets and those related to changes in the fair value of cash flow hedges, whose changes in value are recognized, on an after-tax basis, directly in the statement of comprehensive income in the “Valuation reserve”.Current tax assets are shown in the balance sheet net of current tax liabilities whenever the following conditions are met:• existence of an enforceable right to o�set the amounts recognized;• the parties intend to settle the assets and liabilities in a single payment on a net basis or to realize he asset and simultaneously extinguish the liability.

Deferred tax assets are reported in the Statement of financial position net of deferred tax liabilities whenever the following conditions are met:• existence of a right to o�set the underlying current tax assets with current tax liabilities; and• both deferred tax assets and liabilities relate to income taxes applied by the same tax jurisdiction on the same taxable entity or on di�erent taxable entities that intend to settle the current tax assets and liabilities on net basis (typically in the presence of a tax consolidation agreement).



Post-employment benefits and similar obligationsPost-employment benefits are established in accordance with labor agreements and are qualified as defined-benefit plans.Obligations associated with employee defined-benefit plans and the relevant pension costs associated to current employment are recognized based on actuarial estimates by applying he projected unit credit method. Actuarial gains/losses resulting from the valuation of the liabilities of the defined-benefit plan are recognized through Other Comprehensive Income (OCI) in the “Valuation reserve”. Such re-measurements are not reclassified to profit or loss in subsequent periods.”The discount rate used to calculate the present value of the obligations associated with post-employment benefits changes depending on the country/currency in which the liability is denominated and is set on the basis of yields, at the balance sheet date, of bonds issued by prime corporates with an average maturity consistent with that of the liability. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.”

8.PROVISIONS FOR RISKS AND CHARGES

Other provisionsOther provisions for risks and charges relate to costs and charges of a specified nature and existence certain or probable but whose amount or date of payment is uncertain on the balance sheet date. Provisions for risks and charges are made solely whenever:a) there is a current (legal or constructive) obligation as a result of a past event;b) fulfilment of this obligation is likely to be onerous;c) the amount of the liability can be reliably estimated.When the time value of money is significant, the amount of a provision is calculated as the present value of the expenses that will supposedly be incurred to extinguish the obligation.This item includes also long-term benefits to employees whose expenses are determined with the same actuarial criteria as those of the defined-benefit plans. Actuarial gains or losses are all recognized as incurred through profit or loss.


Financial liabilities held for trading include mainly derivative contracts that are not designated as hedging instruments.These financial liabilities are recognized initially at their fair value initially and subsequently until they are extinguished, with the exception of derivative contracts to be settled with the delivery of an unlisted equity instrument whose fair value cannot be determined reliably and that, as such, are recognized at cost.

10.FINANCIAL LIABILITIES HELD FOR TRADING

11.INSURANCE ASSETS AND LIABILITIES

The items bank borrowings, Due to customers and Securities outstanding include the financial instruments (other than financial liabilities held for trading and recognized at their fair value) issued to raise funds from external sources. In particular, securities outstanding reflect bonds issued by Group companies and securities issued by the SPEs in relation to receivable securitization transactions.These financial liabilities are recognized on the date of settlement at fair value, which is normally the amount collected or the issue price, less any transaction costs directly attributable to the financial liability.Subsequently, these instruments are recognized at their amortized cost, on the basis of the e²ective interest method. The only exception is short-term liabilities, as the time value of money is negligible, which continue to be recognized on the basis of the amount collected.

Financial liabilities are derecognized when they reach maturity or are extinguished. Derecognition takes place also in the presence of a buyback of previously issued securities. The di²erence between the carrying amount of the liability and the price paid to buy it back is recognized through profit or loss, item 100.c) “Gains (Losses) on buyback of financial liabilities”.

9.FINANCIAL LIABILITIES AT AMORTISED COST

IFRS 4 defines insurance contracts as contracts under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder (or a party designated by the policyholder) if a specified uncertain future event (the insured event) adversely a�ects the policyholder.The Group’s insurance activity concerns the reinsurance of life and non-life insurance policies sold by insurance companies to customers of consumer credit companies to protect the payment of the debt.The items described below reflect, as prescribed by paragraph 2 of IFRS 4, the operating and financial e�ects deriving from the reinsurance contracts issued and held.In essence the accounting treatment of such products calls for the recognition:• in items 160. “Net premiums” and 170. “Income (losses) from insurance activities” of the income statement, (i) of the premiums, which include the premiums written for the year following the issue of contracts, net of cancellations; (ii) changes in technical provisions, reflecting the variation in future obligations toward policyholders arising from insurance contracts; (iii) commissions for the year due to


intermediaries; (iv) cost of claims, redemptions and expirations for the period;• in item 110. “Technical provisions”, on the liability side, of the obligations toward policyholders, calculated individually for every contract with the prospective method, on the basis of demographic/financial assumptions currently used by the industry;• in item 80. “Technical provisions ceded to reinsurers”, on the asset side, the obligations attributable to reinsurers.

12. OTHER INFORMATION


Employee Severance FundThe FCA Bank Group has established different defined-benefit and defined-contribution pension plans, in line with the conditions and practices in the countries in which it carries out its activities.In Italy, the Employee Severance Fund is treated as “post-employment benefits”, classified as:• “defined-contribution plan” for the severance amounts accrued to employees as of 1 January 2007 (effective date of Legislative Decree no. 252 on the reform of supplementary pension funds), both in case the employee exercised the option to allocate the sums attributable to him/her to supplementary pension funds and in case the employee opted for the allocation of these sums to INPS’s Treasury fund. For these sums, the amount accounted for as personnel expenses is determine on the basis of the contributions due without applying actuarial calculation methods;• “defined-benefit plan”, recognized on the basis of its actuarial value as determined by using the projected credit unit method, for the severance amounts accrued until 31 December 2006. These amounts are recognized on the basis of their actuarial value as determined by using the projected credit unit method. To discount these amounts to present value, the discount rate was determined on the basis of yields of bonds issued by prime corporates taking into account the average remaining duration of the liability, as weighted by the percentage of any payment and advance payment, for each payment date, in relation to the total amount to be paid and paid in advance until the full amount of the liability is extinguished.

Costs related to the employee severance fund are recognized in the income statement, item no. 190.a) “Administrative expenses: personnel expenses” and include, for the part relating to the defined-benefit plan (i) service costs related to companies with less than 50 employees; (ii) interest cost accrued for the year, for the defined-contribution part; (iii)

Revenue recognitionRevenue from contracts with customers is recognized, when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount can be reliably quantified. In particular, for all financial instruments measured at amortized cost, such as loans and receivables to customers and banks, and interest-bearing financial assets classified as AFS, interest income is recorded using the effective interest rate (EIR) and classified under “Interest and similar income”.Commissions receivable upon execution of a significant act or upon the rendering of a service are recognized as revenue when the significant act has been completed or when the services are provided. On the other hand, commissions related to origination fees received by the entity relating to the creation or acquisition of a financial asset are deferred and recognized as an adjustment to the effective rate of interest.Revenues from services are recognized when the services are rendered.Dividends are recognized in the year in which their distribution is approved.

the severance amounts accrued in the year and credited to either the pension funds or to INPS’s Treasury fund.On the Statement of financial position, item 90 “Employee severance fund” reflects the balance of the fund exiting at 31 December 2006, minus any payment made until December 31, 2019. Item 80 “Other liabilities” – “Due to social security institutions” shows the debt accrued at December 31, 2019 relating to the severance amounts payable to pension funds and INPS’s Treasury fund.Actuarial gains and losses, reflecting the difference between the carrying amount of the liability and the present value of the obligation at year-end, are recognized in the consolidated statement of comprehensive income without reclassification to profit or loss (that is through equity in the Valuation reserve), in accordance with IAS 19 Revised.


Cost recognitionCosts are recognized as they are incurred. Costs attributable directly to financial instruments measured at amortized cost and determinable since inception, regardless of when the relevant outlays take place, flow to the income statement via application of the effective interest rate.Impairment losses are recognized as incurred.

Finance leasesLease transactions are accounted for in accordance with IAS 17.In particular, recognition of a lease agreement as a lease transaction is based on the substance that the agreement on the use of one or more specific assets and whether the agreement transfers the right to use such asset.A lease is a finance lease if it transfers all the risks and benefits incidental to ownership of the leased asset; if it does not, then a lease is an operating lease.

For finance lease agreements where the FCA Bank Group acts as lessor, the assets provided under finance lease arrangements are reported as a receivable in the statement of financial position for a carrying amount equal to the net investment in the leased asset. All the interest payments are recognized as interest income (finance component in lease payments) in the income statement while the part of the lease payment relating to the return of principal reduce the value of the receivable.

Foreign currency transactions Foreign currency transactions are entered, upon initial recognition, in the reference currency by applying to the foreign currency amount the exchange rate prevailing on the transaction date. At every interim and year-end reporting date, items originated in a foreign currency are reported as follows:• cash and monetary items are converted at the exchange rate prevailing at the reporting date;• non-monetary items, recognized at historical cost, are converted at the exchange rate prevailing on the date of the transaction;• non-monetary items, recognized at fair value, are converted at the exchange rate prevailing at the reporting date.

Exchange rate differences arising from the settlement of monetary items and the conversion of monetary items at exchange rates other than the initial ones, or those used to translate the previous year’s accounts, are recognized in the income statement as incurred. When a gain or a loss related to a non-monetary item is recognized through OCI, the exchange rate difference related to such item is also recognized through OCI.By converse, when a gain or a loss is recognized through profit or loss, the exchange rate difference related to such item is also recognized through profit or loss.


Use of estimates Financial reporting requires use of estimates and assumptions which might determine significant effects on the amounts reported in the Statement of financial position and in the Income statement, as well as the disclosure of contingent assets and liabilities. The preparation of these estimates implies the use of the information available and subjective assessments, based on historical experience, used to make reasonable assumptions to record the transactions. By their nature the estimates and assumptions used may vary from one year to the next and, as such, so may the carrying amounts in the following years, significantly as well, as a result of changes in the subjective assessments made.

The main cases where subjective assessments are required include:• quantification of losses on loans and receivables, investments and, in general, on financial assets;• evaluation of the recoverability of goodwill and other intangible assets;• quantification of employee provisions and provisions for risks and charges;• estimates and assumptions on the recoverability of deferred tax assets.

The estimates and assumptions used are periodically and regularly updated by the Group. Variations in actual circumstances could require that those estimates and assumptions are subsequently adjusted. The impacts of any changes in estimates and assumptions are recognized directly in profit or loss in the period in which the estimates are revised, if the revision impacts only that period, or also in future periods, if the revision impacts both the current and future periods.Following are the key considerations and assumptions made by management in applying IFRS and that could have a significant impact on the amounts recognized in the consolidated financial statements or where there is significant risk of a material adjustment to the

Recoverability of deferred tax assetsThe Group had deferred tax assets on deductible temporary differences and theoretical tax benefits arising from tax loss carryforwards. The Group has recorded this amount because it believes that it is likely to be recovered.In determining this amount, management has taken into consideration figures from budgets and forecasts consistent with those used for impairment testing and discussed in the preceding paragraph on the recoverable amount of non-current assets.

Moreover, the contra accounts that have been recognized (i.e. deferred tax assets not recognized to the extent that it is not probable that taxable profit will be available against which the unused tax losses or unused tax credits can be utilized) are considered to be sufficient to protect against the risk of a further deterioration of the assumptions in these forecasts, taking account of the fact that the net deferred assets so recognized relate to temporary differences and tax losses which, to a significant extent, may be recovered over a very long period, and are therefore consistent with a situation in which the time needed to exit from the crisis and for an economic recovery to occur extends beyond the horizon implicit in the abovementioned estimates.

carrying amounts of assets and liabilities during a subsequent financial period.


Pension plans and other post-employment benefitsEmployee benefit liabilities with the related assets, costs and net interest expense are measured on an actuarial basis, which requires the use of estimates and assumptions to determine the net liabilities or net assets.The actuarial method takes into consideration parameters of a financial nature such as the discount rate and the expected long term rate of return on plan assets, the growth rate of salaries as well as the likelihood of potential future events by using demographic assumptions such as mortality rates, dismissal or retirement rates.

In particular, the discount rates selected are based on yields curves of high quality corporate bonds in the relevant market. The expected returns on plan assets are determined considering various inputs from a range of advisors concerning long-term capital market returns, inflation, current bond yields and other variables, adjusted for any specific aspects of the asset investment strategy. Salary growth rates reflect the Group’s long-term actual expectation in the reference market and inflation trends. Changes in any of these assumptions may have an effect on future contributions to the plans

Liabilities and contingent liabilitiesThe Group makes provisions for pending disputes and legal proceedings when it is considered probable that there will be an outflow of funds and when the amount of the losses arising therefrom can be reasonably estimated. If an outflow of funds becomes possible but the amount cannot be estimated, the matter is disclosed in the notes. The Group is the subject of legal and tax proceedings covering a range of matters which are pending in various jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the outflow of funds which will result from such disputes. Moreover, the cases and claims against the Group often derive from complex and difficult legal issues which are subject to a different degree of uncertainty, including the facts and circumstances of each particular case, the jurisdiction and the different laws involved. In the normal course of business the Group monitors the stage of pending legal procedures and consults with legal counsel and experts on legal and tax matters. It is therefore possible that the provisions for the Group’s legal proceedings and litigation may vary as the result of future developments of the proceedings under way.


In 2019 no inter-portfolio transfers were made.

According to IFRS 13, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). IFRS 7 introduces instead the definition of “fair value hierarchy”. This standard calls for fair value to be determined in accordance with a three-level hierarchy based on the significance of the inputs used in such measurement. The objective is to set the price at which the asset can be sold.

The three levels are as follows:• Level 1 (L1): quoted prices (without adjustments) in an active market – as defined by IFRS 9 – for the assets and liabilities to be measured;• Level 2 (L2): inputs other than quoted market prices included within Level 1 that are observable either directly (prices) or indirectly (derived from prices) in the market;• Level 3 (L3): inputs that are not based on observable market data.

The methods adopted by the Company to determine fair value are illustrated below:

QUALITATIVE DISCLOSURES

A.3 - INFORMATION ON TRANSFERS BETWEEN PORTFOLIOS OF FINANCIAL ASSETS

A.4 - INFORMATION ON FAIR VALUE


• Austrian government bonds purchased by the Austrian subsidiary, quoted in regulated markets (caption: “Financial assets designated at fair value with effects on comprehensive income”);• bonds issued by FCA Bank S.p.A and the subsidiaries in Ireland and Switzerland under the Euro Medium Term Notes programme and listed in regulated markets (Caption: “Financial liabilities valued at amortized cost – c) debt certificates including bonds”);• bonds issued in connection with securitization transactions, placed with the public or with private investors, by different Group entities (Caption: Financial liabilities valued at amortized cost – c) debt certificates including bonds”). For listed bonds issued in connection with securitization transactions, reference to prices quoted by Bloomberg. Financial assets and liabilities classified as (L2), whose fair value is determined by using inputs other than quoted market prices that are observable either directly (prices) or indirectly (derived from prices) in the market, refer to: • OTC trading derivatives to hedge securitization transactions;• OTC derivatives entered into to hedge Group companies’ receivables.

Receivable portfolio (caption:”Financial assets valued at amortized cost – Loans and receivables with customers”), borrowings and other issued bonds, not quoted, are classified in L3.Derivatives are measured by discounting their cash flows at the rates plotted on the yield curves provided by Bloomberg. Receivables and payables are measured in the same way. In accordance with IFRS 13, to determine fair value, the FCA Bank Group considers default risk, which includes changes in the creditworthiness of the entity and its counterparties.

In particular:• a CVA (Credit Value Adjustment) is a negative amount that takes into account scenarios in which the counterparty fails before the company and the company has a positive exposure to the counterparty. Under these scenarios, the company incurs a loss equal to the replacement value of the derivative; • a DVA (Debt Value Adjustment) is a positive amount that takes into account scenarios in which the company fails before the counterparty and the company has a negative exposure to the counterparty. Under these scenarios, the company obtains a gain for an amount equal to the replacement cost of the derivative.

For listed bonds issued in connection with private securitization transactions, reference is provided by prime banks active in the market taking as reference equivalent transactions, or made to the nominal value of the bonds or the fair value attributed by the banking counterparty that subscribed to them. The Group uses measurement methods (mark to model) in line with those generally accepted and used by the market. Valuation models are based on the discount of future cash flows and the estimation of volatility; they are reviewed both when they are developed and from time to time, to ensure that they are fully consistent with the objectives of the valuation.

These methods use inputs based on prices prevailing in recent transactions on the instrument being measured and/or prices/quotations of instruments with similar characteristics in terms of risk profile.


A.4.5 FAIR VALUE HIERARCHYA.4.5.1 Assets and liabilities valued at fair value on a recurring basis: breakdown by fair value levels

Legend: L1 = Level 1 L2 = Level 2 L3 = Level 3

-

-

-

-

-

36,930

-

-

36,930

3,407

91,533

94,940

31/12/2019

L1 L1L2 L2L3 L3

Assets and liabilities valued at fair value 31/12/2018

1. Financial assets valued at fair value with impact on income statement

of which

a) Financial assets held for trading

b) Financial assets designated at fair value

c) Other financial assets compulsorily assessed at fair value

2. Financial assets valued at fair value with impact on overall profitability

3. Cover derivatives

4. Tangible assets

5. Intangible assets

Total


2. Financial liabilities designated at fair value

3. Cover derivatives

Total

-

-

-

-

9,807

-

-

-

9,807

-

-

-

-

-

-

-

-

9,634

-

-

-

9,634

-

-

-

0

-

-

-

35,940

-

-

35,940

3,729

-

53,920

57,649

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

QUANTITATIVE DISCLOSURES


A.5 INFORMATION REGARDING “DAY ONE PROFIT/LOSS”

A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis: distributions for levels of fair value

1,997,960

-

-

1,997,960

-

-

-

L1BV BV L1L2 L2L3 L3

1. Financial assets valued

at amortized cost

2. Available for sale financial

assets

3. Non current assets classified

as held for sale

Total

1. Financial liabilities measured

at amortized cost

2. Liabilites included in disposal

group classified as hfs

Total

-

-

-

-

9,439,872

-

9,439,872

25,903,033

-

-

25,903,033

26,933,628

-

26,933,628

25,744,698

-

-

25,744,698

26,207,022

-

26,207,022

-

-

-

-

7,831,589

-

7,831,589

2,156,711

-

-

2,156,711

-

-

-

23,953,234

-

-

23,953,234

18,318,466

-

18,318,466

23,615,424

-

-

23,615,424

18,585,456

-

18,585,456

BV = Book Value L1 = Leve 1 L2 = Leveo 2 L3 =Leve 3

31/12/2019Assets / Liabilities not measured at fair value or mea-sured at fair value on a non-recurring basis

31/12/2018

IFRS 7, Paragraph 28 regulates the particular case in which, in the event that the purchase of a financial instrument calculated at fair value but not listed in market the transaction cost, that generally represent the best estimate at fair value in an initial basis, diverges to the fair value determined with the evaluative technics adopted by the entity.

In this case an evaluative profit/loss is realized

and an adequate informative note for class of financial instrument must be provided at the purchase place.At December 31, 2019, in the Consolidated Financial Statement this case is not present.


Part B - Information on the consolidated balance sheet

This item includes cheques, cash and cash equivalent items.

ASSETS

SECTION 1 CASH AND CASH BALANCES - ITEM 10

1.1 Cash and cash balances: breakdown

a) Cash

b) Demand deposits with Central Banks

Total

34

362,502

362,536

Total31/12/2019

Total31/12/2018

26

585,246

585,272


The item mainly includes a bond issued by the Austrian government and held by FCA Bank GmbH (Austria) and FCA Bank Polska S.A.; these are mandatory deposits required by the local Central Bank.

SECTION 3 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - ITEM 30

3.1 Financial assets at fair value through other comprehensive income: breakdown by product

-

-

-

-

-

-

Total31/12/2019

L1 L1L2 L2L3 L3Item/Values

Total31/12/2018

1. Debts securities

1.1 Structured securities

1.2 Other debt securities

2. Equity instruments

3. Loans

Total

9,807

-

9,807

-

-

9,807

9,634

-

9,634

-

-

9,634

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Legend: L1 = Level 1 L2 = Level 2 L3 = Level 3


3.2 Financial assets at fair value through other comprehensive income: breakdown by borrowers/issuers

1. Debt securities

a) Central Banks

b) Public sector entities

c) Banks

d) Other financial companies

of which: insurance companies

e) Non financial companies


a) Banks

b) Other issuers:

- other financial companies


- non financial companies

- others

3. Loans

a) Central Banks


c) Banks



e) Non financial companies

f) Households

Total

9,634

-

9,634

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

9,634

Total31/12/2019

Items/Values Total31/12/2018

9,807

-

9,807

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

9,807


3.3 Financial assets at fair value through other comprehensive income: gross value and total accumulated impairments

-

-

-

-

-

-

-

-

-

x

-

-

-

-

-

Gross value

First stage

First stage

Second stage

Second stage

Third stage

Third stage

of which: instruments

with low credit risk

Partial accumulated write-offs*

Total accumulated impairments

Debt securities

Loans

Total 31/12/2019

Total 31/12/2018

of which:

purchased or originated

creditimpaired

9,807

-

9,807

9,634

x

-

-

-

-

x

-

-

-

-

-

-

-

-

-

-

-

-

x

x

-

Note:

(*) Value shown for information purposes.


SECTION 4 FINANCIAL ASSETS AT AMORTISED COST - ITEM 40

4.1 Financial assets at amortised cost: breakdown by product of loans and advances to banks

Total 31/12/2019Fair value Fair valueBook value Book value

Total 31/12/2018

First and second

stage

First and second

stage

of which: acquired or originated

credit


credit

Third stage

Third stageL1 L1L2 L2L3 L3

A. Receivables to Central Banks

1. Time deposits

2. Compulsory reserves

3. Repos

4. Others

B. Receivables to banks

1. Loans

1.1 Current accounts and demand deposits

1.2. Time deposits

1.3 Other loans:

- Repos

- Finance leases

- Others

2. Debts securities

2.1 Structured securities

2.2 Other debt securities

Total

566,008

27,867

27,884

-

510,257

1,431,935

1,431,935

1,403,493

-

28,442

26,764

1,490

188

-

-

-

1,997,944

615,449

41,233

14,433

-

559,783

1,541,242

1,541,242

1,498,680

12,142

30,420

25,367

-

5,054

-

-

-

2,156,691

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

x

x

x

x

-

-

x

x

x

x

x

x

-

-

-

-

-

x

x

x

x

-

-

x

x

x

x

x

x

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

566,008

x

x

x

x

1,431,952

1,431,952

x

x

x

x

x

x

-

-

-

1,997,960

615,449

x

x

x

x

1,541,262

1,541,262

x

x

x

x

x

x

-

-

-

2,156,711

-

x

x

x

x

-

-

x

x

x

x

x

x

-

-

-

-

-

x

x

x

x

-

-

x

x

x

x

x

x

-

-

-

-

Type of transaction/Values


Bank deposits and current accounts include funds available on current accounts or deposited by SPVs totaling €842 million (€883 million at December 31, 2018). Liquidity is restricted as per each relevant securitization contract. A breakdown by SPV is provided below:

During the year a new securitization started: A-Best Seventeen S.r.l..The Liquidity Reserve is designed to meet any cash shortfalls for the payment of interest on senior securities and certain specific expenses.The funds held in current accounts or as bank deposits are used for:• acquisition of new portfolio of receivables/loans;• repayment of notes;• payment of interest on “senior” notes;• SPE operating costs.

SPV 31/12/2019 31/12/2018

A-Best Seventeen S.r.l.

A-Best Ten S.r.l. in liquidazione

A-Best Eleven UG

A-Best Twelve S.r.l.

A-Best Thirteen FT

A-Best Fourteen S.r.l.

A-Best Fifteen S.r.l.

A-Best Sixteen UG

Nixes Six Plc

Nixes Seven B.V.

Erasmus Finance DAC

Fast 3 S.r.l.

TOTAL

-

29,835

21,137

70,679

34,496

160,041

93,027

55,038

56,195

39,322

273,800

49,170

882,740

45,579

-

10,636

58,112

28,504

164,241

94,461

48,633

61,412

42,494

263,301

24,863

842,236

Bank deposits and current accounts also include short-term deposits held temporarily with banks and year-end current account balances resulting from ordinary operating activities.


4.2 Attività finanziarie valutate al costo ammortizzato: composizione merceologica dei crediti verso clientela

With reference to the table Reconciliation between outstanding and loans and receivables with customers, in the Outstanding are included the following items:- “Deposits from customers” for €208 million;- “Other loans” for €83 million.FactoringThis item includes:• receivables arising from sales to the dealer network for €12 million factored on a non-recourse basis by the FCA Group; however, since this amount was in excess of the lines of credit available, the associated risk was not transferred to the factors;• receivables arising from sales to the dealer network for €6.1 billion, factored on a non-recourse basis by the commercial partners to companies of FCA Bank Group; of which, assets of SPE Fast 3 S.r.l for €1.5 billion and Erasmus Finance DAC for €1.3 billion, consolidated in accordance with IFRS 10; FCA Bank

Deutschland GmbH (Germany), FCA Capital France S.A. (France) and FCA Capital Espana EFC S.A. (Spain) are the originators of Fast 3 S.r.l..

Other loansThis item includes credit financing mainly concerned with fixed instalment car loans and personal loans.The receivables comprise the amount of transaction costs/fees calculated in relation to the individual loans by including the following:• grants received in relation to promotional campaigns;• fees received from customers;• incentives and bonuses paid to the dealer network;• commissions on the sale of ancillary products.Receivables include €7.3 billion relating to SPEs for the securitization of receivables, as reported in accordance with IFRS 10.

Total 31/12/2019

Fair value Fair valueBook value Book value

Total 31/12/2018

First and second

stage

First and second

stage

of which: acquired

or originated credit impaired financial assets

Third stage

Third stageL1 L1L2 L2L3 L3

1. Loans

1.1.Current accounts

1.2. Repos

1.3. Mortgages

1.4. Credit cards, personal

loans and wage assignemnt

1.5 Finance leases

1.6. Factoring

1.7. Other loans

2. Debt securities

2.1. Structured securities

2.2. Other debt securities

Total

23,752,511

207,986

-

-

112,270

6,095,998

6,267,886

11,068,371

-

-

-

23,752,511

23,446,429

57,456

-

-

86,751

5,640,285

7,158,739

10,503,198

-

-

-

23,446,429

152,578

349

-

-

536

32,500

82,979

36,214

-

-

-

152,578

141,578

528

-

-

418

23,156

83,095

34,381

-

-

-

141,578

-

x

x

x

x

x

x

x

-

-

-

-

-

x

x

x

x

x

x

x

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

x

x

x

x

x

x

x

-

-

-

-

-

x

x

x

x

x

x

x

-

-

-

-

23,953,234

x

x

x

x

x

x

x

-

-

-

23,953,234

23,615,424

x

x

x

x

x

x

x

-

-

-

23,615,424

Type of transaction/Values of which:

acquired or originated

credit impaired financial assets


4.3 Financial assets at amortised cost: breakdown by borrowers/issuers of loans and advances to customers

4.4 Financial assets at amortised cost: gross value and total accumulated impairments

This item includes loans granted to the FCA Group dealer network to fund network development, commercial requirements in handling used vehicles and to meet specific short/medium term borrowing requirements.

The item includes as well the loans to legal entity of retail business classified in this item in accordance with the definition of Bank of Italy of consumer credit.

-

-

-

-

-

152,578

129

524

-

113,920

38,004

152,578

Total31/12/2019

First and second

stage

First and second

stage

Third stage

Third stage

of which: acquired or

originated credit impaired financial

assets

of which: acquired

or originated credit impaired financial assets

Type of transaction / Values

Total 31/12/2018

1. Debt securities

a) Public sector entities

b) Other financial company


c) Non financial companies

2. Loans to:

a) Public sector entities

b) Other financial company


c) Non financial companies

d) Households

Total

-

-

-

-

-

23,752,511

21,665

267,661

40

10,124,082

13,339,102

23,752,511

-

-

-

-

-

23,446,429

2,158

187,772

18

10,009,810

13,246,689

23,446,429

-

-

-

-

-

141,578

27

164

-

101,492

39,895

141,578

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Note:(*) Value shown for information purposes.

-

880,247

880,247

622,749

-

-

16,643,315

16,643,315

16,106,550

x

-

47,917

47,917

46,772

-

Gross value

First stage

First stage

Second stage

Second stage

Third stage

Third stage

of which: instruments

with low credit risk

Partial accumulated

write-offs*

Total accumulated impairments

Debt securities

Loans

Total 31/12/2019

Total 31/12/2018

of which: purchased

or originated credit impaired

-

24,994,198

24,994,198

25,103,861

x

-

76,073

76,073

76,718

x

-

146,815

146,815

145,386

-

-

299,393

299,393

286,964

-

-

344

344

303

-


SECTION 5 HEDGING DERIVATIVES - ITEM 50

5.1 Hedging derivatives: breakdown by hedging type and fair value hierarchy

35,159

1,771

-

-

-

36,930

9,834,617

416,439

-

-

-

10,251,056

7,922,166

170,758

-

-

-

8,092,924

FV 31/12/2019 FV 31/12/2018NV31/12/2019

L1 L1L2 L2L3 L3

NV31/12/2018

A. Financial derivatives

1. Fair Value

2. Cash flows

3. Net investment in foreign

subsidiaries

B. Credit derivatives

1. Fair Value

2. Cash flows

Total

-

-

-

-

-

-

-

-

-

-

-

-

35,503

437

-

-

-

35,940

-

-

-

-

-

-

-

-

-

-

-

-

This item reflects the fair value of the derivative contracts entered into the hedge interest rate and exchange rate risks.The notional amount of the cash flow hedge refers to the derivatives used to hedge the exposure to interest rate risk on long-term rental activities.

Legend:NV= Notional Value L1= Level 1 L2= Level 2 L3= Level 3


5.2 Hedging derivatives: breakdown by hedged portfolios and hedging type

Fair Value

Micro-hedge

equity instruments

and equity indices risk

debt securities

and interest rates risk

currencies and gold

others Macro-hedge

commo-dities

Micro-hedge

Net Investments

on foreign subsidiaries

Cash-flow hedges

1. Financial assets at fair through

other comprehensive income

2. Financial assets at

amortised cost

3. Portfolio

4. Other transactions

Total assets

1. Financial Liabilities

2. Portfolio

Total liabilities

1. Expected transactions

2. Financial assets and

liabilities portfolio

-

-

x

-

-

x

-

-

23,361

x

23,361

x

x

-

3,016

x

-

3,016

-

x

-

x

x

-

x

x

-

-

x

x

-

x

x

-

x

x

-

-

x

x

-

x

x

-

-

x

-

-

-

x

-

x

x

-

-

x

-

-

-

x

-

-

x

x

x

-

x

-

x

-

-

x

1,771

x

x

x

-

-

x

x

x

x

-

x

x

8,782

x

8,782

x

-

-

x

-

Transactions / Hedging type

credit Macro-hedge

The value of the macro-hedge portfolio refers to the loan portfolio hedge, according to the Fair Value Hedge method (macrohedge).The value relating to the micro-hedge refers to the coverage of the interest rate risk on bonds issued.


SECTION 6 VALUE ADJUSTMENT OF FINANCIAL ASSETS SUBJECT TO MACRO-HEDGE - ITEM 60

SECTION 7 EQUITY INVESTMENTS - ITEM 70

6.1 Value adjustment of macro-hedged financial assets: breakdown by hedged portfolios

7.1 Equity investments: information on shareholders’ equity

1. Positive adjustment

1.1 of specific portfolios:

a) financial assets at amortised cost

b) financial assets at fair value through other comprehensive income

1.2 overall

2. Negative adjustment

2.1 of specific portfolios:

a) financial assets at amortised cost

b) financial assets at fair value through other comprehensive income

2.2 overall

Total

33,511

-

-

-

33,511

(6,094)

-

-

-

(6,094)

27,417

Total31/12/2019

Total31/12/2018

60,135

-

-

-

60,135

(11,990)

-

-

-

(11,990)

48,145

Value adjustment of macro-hedged financial assets / Values

Denominations Vote availability %Participating share %

Legal residence

B. Companies under significant influence

1. CODEFIS S.C.P.A.

2. FCA SECURITY S.C.P.A.

3. FCA SECURITY S.C.P.A.

4. OSEO S.A.

FCA BAnk S.p.A.

FCA BAnk S.p.A.

Leasys S.p.A.

FCA Capital France S.A.

30%

0,21%

0,10%

0,003%

Turin, Italy

Turin, Italy

Turin, Italy

Turin, Italy


SECTION 8 INSURANCE RESERVES ATTRIBUTABLE TO REINSURERS - ITEM 80

8.1 Insurance reserves attributable to reinsurers: breakdown

A. No-life business

A1. Premiums reserves

A2. Claims reserves

A3. Other insurance reserves

B. Life business

B1. Mathematical reserves

B2. Reserves for amounts to be disbursed

B3. Other reserves

C. Technical reserves for investment risks to be borne by the insured

C1. Reserves for contracts with performances connected to investment

funds and market indices

C2. Reserves arising from pension fund management

D. Total insurance reserves attributable to reinsurers

5,485

4,537

948

-

4,111

3,200

911

-

-

-

-

9,596

Total31/12/2019

Total31/12/2018

4,635

3,993

642

-

8,524

2,978

5,546

-

-

-

-

13,159


TABELLA1. Owened assets

a) lands

b) buildings

c) furniture

d) electronic system

e) other

2. Leased assets

a) lands

b) buildings

c) furniture

d) electronic system

e) other

Total

of which: obtained by the enforcement of collateral

2,472,619

-

33

6,230

139

2,466,217

74,001

-

-

7

-

73,994

2,546,620

-

Total31/12/2019

Activities/Values Total31/12/2018

3,145,075

-

238

6,336

119

3,138,382

51,662

-

-

86

215

51,361

3,196,737

-

SECTION 9 PROPERTY, PLANT AND EQUIPMENT - ITEM 90

9.1 Property, plant and equipment used in the business: breakdown of assets carried at cost

Total amortization equal to €444 million is mainly due to tangible assets in relation to Operating lease.

With reference to the table above, please consider that the item “Owned assets e) others” includes €3,092 million that in the table Reconciliation between outstanding and loans and receivables with customers are represented in the Outstanding.


9.6 Property, plant and equipment used in the business: annual changes

A. Gross opening balance

A.1 Total net reduction value

A.2 Net opening balance

B. Increases:

B.1 Purchasing

- of which business combinations

B.2 Capitalised expenditure on improvements

B.3 Write-backs

B.4 Increases in fair value allocated to

a) equity

b) profit & loss

B.5 Positive exchange differences

B.6 Transfer from investment properties

B.7 Other changes

C. Decreases:

C.1 Disposals


C.2 Amorization

C.3 Impairment losses allocated to

a) equity

b) profit & loss

C.4 Decreases in fair value allocated to

a) equity

b) profit & loss

C.5 Negative exchange difference

C.6 Transfer to:

a) property, plant and equipment held for

investment

b) non-current assets and group of assets

held for sale

C.7 Other changes

D. Net closing balance

D.1 Total net reduction in value

D.2 Final gross balance

E. Carried at cost

3,322,314

(775,693)

2,546,620

1,524,520

1,449,225

-

13,428

10,714

-

-

-

2

-

51,150

874,403

418,549

-

444,576

3,954

-

3,954

-

-

-

2

-

-

-

7,323

3,196,737

(1,213,233)

4,409,970

-

OtherElectronic systems

FurnituresBuildingsLands Total

3,279,762

(739,551)

2,540,211

1,521,974

1,447,050

-

13,428

10,714

-

-

-

-

x

50,781

872,441

417,891

-

443,588

3,954

-

3,954

-

-

-

-

-

x

-

7,008

3,189,743

(1,176,103)

4,365,846

-

2,333

(2,194)

139

332

244

-

-

-

-

-

-

2

x

86

137

-

-

89

-

-

-

-

-

-

2

-

x

-

47

334

(2,283)

2,617

-

40,104

(33,867)

6,237

1,590

1,307

-

-

-

-

-

-

-

x

283

1,405

378

-

759

-

-

-

-

-

-

-

-

x

-

268

6,422

(34,626)

41,048

-

115

(81)

33

624

624

-

-

-

-

-

-

-

-

-

420

280

-

140

-

-

-

-

-

-

-

-

-

-

-

238

(221)

459

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-


SECTION 10 INTANGIBLE ASSETS - ITEM 100

10.1 Intangible assets: breakdown by asset type

Total31/12/2019

Finite life

Finite life

Indefinite life

Indefinite lifeAssets/Values

Total 31/12/2018

A.1 Goodwill

A.1.1 attributable to the group

A.1.2 attributable to minorities

A.2 Other intangible assets

A.2.1 Assets carried at cost

a) Intangible assets generated internally

b) Other assets

A.2.2 Assets measured at fair value

a) Intangible assets generated internally

b) Other assets

Total

79,390

79,390

-

79,390

-

-

-

79,390

63,914

63,914

-

63,914

-

-

-

63,914

183,183

183,183

-

-

-

-

-

-

-

-

183,183

183,183

183,183

-

-

-

-

-

-

-

-

183,183


10.2 Intangible assets: annual changes

GoodwillIndefinite

LifeIndefinite

LifeFinite Life Finite Life

Other intangible assets: others

Other intangible assets: internally generated

Total

A. Opening balance

A.1 Total net reduction in value

A.2 Net opening balance

B. Increases

B.1 Purchases


B.2 Increases in intangible assets

generated internally

B.3 Write-backs

B.4 Increases in fair value

- to equity

- to P&L statement

B.5 Positive exchange differences

B.6 Other changes

C. Decreases

C.1 Disposals


C.2 Write-downs

- Amortisations

- Depreciations

+ equity

+ P&L statement

C.3 Decreases in fair value

- to equity

- to P&L statement

C.4 Transfer to non-current assets

held for sale

C.5 Negative exchange differrences

C.6 Other changes

D. Net closing balance

D.1 Total net write-down

E. Gross closing balance

F. Carried at cost

229,181

(45,998)

183,183

-

-

-

x

x

-

x

x

-

-

-

-

-

-

x

-

x

-

-

x

x

-

-

-

183,183

(45,998)

229,181

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

256,515

(192,600)

63,914

29,623

28,520

-

-

-

-

-

-

-

1,103

14,147

-

-

13,963

13,963

-

-

-

-

-

-

-

-

184

79,390

(192,601)

271,991

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

485,696

(238,598)

247,097

29,623

28,520

-

-

-

-

-

-

-

1,103

14,147

-

-

13,963

13,963

-

-

-

-

-

-

-

-

184

262,573

(238,599)

501,172

-


10.3 Other information

The item “Goodwill” includes:• €78.4 million relating to the Italian subsidiary Leasys S.p.A.;• €101.9 million of goodwill relating to dealer financing business and arising on the reorganization of the FCA Bank Group which occurred in 2006 and 2007; in particular:

• €50.1 million related to the recognition - by the subsidiary Fidis Servizi Finanziari S.p.A., which merged into the Holding FCA Bank on March 1st, 2008 - of goodwill arising on the transfer of the “Network finance and other financing” business and the acquisition of the “Holding Division” from Fidis S.p.A.;

• €15 million related to the acquisition of the Fidis Servizi Finanziari S.p.A. Group, which was eventually merged into the parent Company;

• €36.8 million related to the acquisition of certain European companies engaged in dealer financing;

• €1.5 million of goodwill as a result of the first consolidation of the company Ferrari Financial Services GmbH; on November 7, 2016 FCA Bank S.p.A. acquired a majority stake in Ferrari Financial Services GmbH (“FFS GmbH”) for a total purchase price of €18.6 million upon consummation of the share purchase agreement entered into by the parties;• €1.4 million of goodwill as a result of the first consolidation of the company Win Rent S.p.A. in the FCA Bank Group, on October 1st, 2018.

The item “Other intangible assets” mainly refers to:• licenses and software of FCA Bank for €49 million;• royalties of Leasys S.p.A. for €21 million.

The CGU’s carrying amount The carrying amount of a CGU must be determined consistently with the criteria guiding the estimation of its recoverable amount. From the standpoint of a banking firm, the cash flows generated by a CGU cannot be identified without considering the cash flows of financial assets/liabilities, given that these result the firm’s core business. Following this approach (i.e. “equity valuation”), the carrying amount

Impairment test of goodwillAccording to IAS 36 – Impairment of Assets, goodwill must be tested for impairment every year to determine its recoverable amount. Therefore, on every reporting date the Group tests goodwill for impairment, estimating the relevant recoverable amount and comparing it with its carrying amount to determine whether the asset is impaired.

Definition of CGUsTo test goodwill for impairment – considering that goodwill generates cash flows only in combination with other assets – it is necessary first of all to attribute it to an organizational unit that enjoys relative operational autonomy and is capable of generating cash flows. Such cash flows must be independent of other areas of activity but interdependent within the organizational unit, which is aptly defined as cash generating unit (CGU). IAS 36 suggests that it is necessary to correlate the level at which goodwill is tested with the level of internal reporting at which management monitors the entity’s operations. The definition of this level depends solely on the organizational models and the attribution of management responsibilities over the direction of the operational activity and the relevant monitoring. For FCA Bank Group, the CGU relevant for goodwill allocation are identified in Dealer Financing business unit, in Leasys S.p.A. and in Ferrari Financial Services GmbH business.


Determining the discount rate to calculate the present value of cash flows In determining value in use, cash flows were discounted to present value at a rate that reflects current considerations on market trends, the time value of money and the risks specific to the business. The discount rate used – given that it was a financial firm – was estimated solely in terms of equity valuation, that is considering only the

Results of the impairment test Goodwill was tested for impairment on the reporting date, without any impairment loss.In particular, for the Dealer Financing line the test was performed by adopting the definition of CGU described above.The underlying assumptions to calculate the recoverable amounts of the CGUs reflect past experience and earnings forecasts approved by the competent corporate bodies and officers and are consistent with external sources of information, particularly:• the discount rate of 7.19% was calculated as cost of capital, considering a risk-free interest rate of -0.19%, a risk premium for the company of 6.48% and a beta of 1.14;• the estimated growth rate was 1.4%.

A sensitivity analysis was performed by simulating a change in significant parameters such as an increase in the discount rate up to 1% or a decrease in the growth rate “g”. After such analysis the recoverable amount is confirmed to be higher than the carrying amount.

Criteria to estimate the value in use of a CGU The value in use of the CGUs was determined by discounting to present value their expected cash flows over a five-year forecast period. The cash flow of the fifth year was assumed to grow in perpetuity (at a rate indicated with the notation “g”, to determine terminal value. The growth rate “g” was set on the basis of a consistent medium-term rate of inflation in the euro zone).

From the standpoint of a banking/financial company, the cash flows generated by a CGU cannot be identified without considering the cash flows of financial assets/liabilities, given that these arise from the company’s core business. In other words, the recoverable amount of the CGUs is affected by the above cash flows and, as such, must include also financial assets/liabilities. Accordingly, these assets and liabilities must be allocated to the CGU of reference.In light of the above, it would be rather fair to say that the cash flows of the individual CGUs are equivalent to the earnings generated by the individual CGUs. Accordingly, it was assumed that the free cash flow (FCF) corresponds to the Net Profit of a CGU under valuation.

of the CGU can be determined in terms of free cash flow to consolidated equity, including non-controlling interests.

cost of capital (Ke), in keeping with the criteria to determine cash flows that, as already shown, include also the inflows and outflows associated with financial assets and liabilities. The cost of capital was then calculated by using the Capital Asset Pricing Model (CAPM). Based on this model, cost of capital is calculated as the sum of a risk-free return and a risk premium, which in turn, depends on the risk specific to the business (such risk reflecting both industry risk and country risk).


SECTION 11 TAX ASSETS AND TAX LIABILITIES - ASSETS ITEM 110 AND LIABILITIES ITEM 60

11.1 Assets for anticipated levy

11.2 Deferred tax liabilities: breakdown

- P&L Exchange

- Patrimony exchange

Total

- P&L Exchange

- Patrimony exchange

Total

176,660

13,059

189,719

139,931

1,126

141,057

31/12/2019

31/12/2019

31/12/2018

31/12/2018

185,863

15,170

201,032

181,917

1,126

183,043


11.3 Variation of deferred tax assets (balancing P&L)

1. Opening balance

2. Increases

2.1 Deferred tax assets arisen during the year

a) related to previous fiscal year

b) due to change in accounting criteria

c) write-backs

d) others

2.2 New taxes or increases in tax rates

2.3 Other increases

- of which Business combination

3. Decreases

3.1 Deferred tax assets derecognised during the year

a) reversals of temporary differences

b) write-downs of non-recoverable items

c) due to change in accounting criteria

d) others

3.2 Reduction in tax rates

3.3 Other decreases:

a) conversion into tax credit under Italian Law 214/2011

b) others

4. Closing balance

156,364

38,145

37,611

140

-

-

37,471

-

534

472

17,849

10,129

10,033

-

-

96

1,384

6,336

-

6,336

176,660

31/12/2019 31/12/2018

176,660

40,057

40,057

748

-

-

39,310

-

-

30,854

25,847

23,334

-

-

2,513

252

4,755

-

4,755

185,863

The deferred tax assets on previous tax losses, booked by the susbsidiary Leasys S.p.A., amount to €42 million as at December 31, 2019.


11.5 Deferred tax liabilities: annual changes (balancing P&L)

11.6 Variation of the anticipated levy (in exchange of Balance Sheet)

1. Opening balance2. Increases2.1 Deferred tax liabilities arisen during the year

a) related to precedent fiscal yearb) due to change in accounting criteriac) others

2.2 New taxes or increases in tax rates2.3 Other increases3. Decreases3.1 Deferred tax liabilities derecognised during the year

a) reversals of temporary differencesb) due to change in accounting criteriac) others

3.2 Reduction in tax rates3.3 Other decreases4. Closing balance

111,099 44,499 44,424

114 -

44,310 31 44

15,667 10,881 10,033

- 848

4,626 161

139,931

31/12/2019 31/12/2018

139,931 59,050 58,986 17,067

- 41,918

- 65

17,065 11,194 11,170

- 24

1,118 4,753

181,917

1. Opening balance2. Increases2.1 Deferred tax assets arisen during the year

a) related to previous fiscal yearsb) due to change in accounting criteriac) others

2.2 New taxes or increases in tax rates2.3 Other increases3. Decreases3.1 Deferred tax liabilities derecognised during the year

a) reversals of temporary differencesb) Write-downs of non-recoverable itemsc) due to change in accounting criteriad) others


2,620 10,882 10,822

-9,381 1,501

- -

443 401

- - -

401 -

42 13,059

31/12/2019 31/12/2018

113,059 2,111 2,111

- -

2,111 - - - - - - - - - -

15,170

The item includes deferred tax assets recognized through equity as calculated on the cash flow hedge reserve relating to the future

cash flows of hedging derivatives and the fiscal effect on the AOCI reserve.


11.7 Deferred tax liabilities: annual changes ( balancing Net Equity)

1. Opening balance2. Increases2.1 Deferred tax liabilities arisen during the year

a) related to previous fiscal yearb) due to change in accounting criteriac) others

2.2 New taxes or increase in tax rates2.3 Other increases3. Decreases3.1 Deferred tax liabilities derecognised during the year

a) reversals of temporary differencesb) due to change in accounting criteriac) others


- 1,126 1,126

- 1,126

- - - - - - - - - -

1,126

31/12/2019 31/12/2018

1,126 - - - - - - - - - - - - - -

1,126


SECTION 13 OTHER ASSETS – ITEM 130

13.1 Other assets: breakdown

1. Due from employees

2. Receivables arising from sales and services

3. Sundry receivables

receivables arising from insurance services

receivables in the process of collection

security deposits

reinsurance assets

other

4. Operating lease receivables

5. Consignment Stock

6. Accrued income

Total

3,225

214,434

367,982

26,584

718

1,807

14,606

324,267

471,636

210,641

10,942

1,278,860

31/12/2019Breakdown 31/12/20183,175

153,369

502,215

25,093

1,370

1,811

13,973

459,968

527,056

147,315

17,041

1,350,171

With reference to the above representation, please consider that items “Consignment stock” and “Operating lease receivables” are represented net of provision (euro 34 million) in the table Reconciliation between outstanding and loans and receivables with customers.The item “Receivables arising from sales and services” includes receivables from incentives and services.

The item “Receivables arising from insurance services” relates mainly to the Parent Company and the subsidiary Leasys S.p.A. and includes sums due from insurance companies for the payment of commissions.“Reinsurance activities” relate to the Irish subsidiary.

“Receivables arising from operating leases” amount to €527 million and the value of the vehicles purchased by the leasing companies under buyback arrangements with the seller – thus not accounted for as non-current assets – for a total of €301 million.

The item “Goods on consignment” reflects the value of the vehicles owned by FCA Dealer Services UK Ltd., FCA Dealer Services Espana (Branch Morocco), FCA Capital Norge, FCA Capital Sverige and FCA Capital Danmark (Branch Finland). These vehicles are held by FCA dealers awaiting their sale.


SECTION 1 FINANCIAL LIABILITIES AT AMORTISED COST ITEM 10

1.1 Financial liabilities at amortised cost: breakdown by product of deposits from banks

LIABILITIES

Totale 31/12/2019

Fair value Fair value

Totale 31/12/2018

BV BVL1 L1L2 L2L3 L3

1. Loans from central banks

2. Loans from banks

2.1 Other current accounts and

demand deposits

2.2 Time deposits

2.3 Loans

2.3.1 Repos

2.3.2 Other

2.4 Liabilitiesrelating to commitments

to repurchase own equity instruments

2.5 Lease payables

2.6 Other liabilities

Total

1,313,243

8,964,804

33,888

-

8,930,316

119,270

8,811,046

-

-

600

10,278,046

x

x

x

x

x

x

x

x

x

x

-

x

x

x

x

x

x

x

x

x

x

-

x

x

x

x

x

x

x

x

x

x

10,989,736

1,217,880

8,589,233

105,798

-

8,483,434

189,753

8,293,681

-

-

-

9,807,112

x

x

x

x

x

x

x

x

x

x

-

x

x

x

x

x

x

x

x

x

x

-

x

x

x

x

x

x

x

x

x

x

10,013,177

Type of transactions/Values

This item includes mainly borrowings from banks, of which €3,536 million from the Crédit Agricole Group at arm’s length.

Legend:BV= Book Value L1= Level 1 L2= Level 2 L3= Level 3


1.2 Financial liabilities at amortised cost: breakdown by product of deposits from customers

Total 31/12/2019


Total 31/12/2018


1. Current accounts and demand deposits

2. Time deposits

3. Loans

3.1 Reverse repos

3.2 Other

4. Liabilities relating to commitments to

repurchase own equity instruments

5. Lease payables


Total

259,955

843,600

403,342

-

403,342

-

51,681

240,173

1,798,752

x

x

x

x

x

x

x

x

-

x

x

x

x

x

x

x

x

-

x

x

x

x

x

x

x

x

1,793,965

266,081

742,554

320,093

-

320,093

-

-

493,997

1,822,725

x

x

x

x

x

x

x

x

-

x

x

x

x

x

x

x

x

-

x

x

x

x

x

x

x

x

1,845,591


Other loans include €300 million of advances factored on a non-recourse basis and retail liabilities and security deposits made by private individuals in relation to finance leases.

Other liabilities include mainly advances factored on a recourse basis for € 170 million.

With reference to the above representation, please consider that a portion of the item “Others” (€2 million) is included in the item “Outstanding” in the table Reconciliation between outstanding and loans and receivables with customers.



1.3 Financial liabilities at amortised cost: breakdown by product of debt securities in issue

1.4 Breakdown of subordinated debts/deposits

Total 31/12/2019


Totale31/12/2018


A. Debts securities

1. Bonds

1.1 structured

1.2 other

2. Other securities

2.1 structured

2.2 other

Total

14,856,252

-

14,856,252

578

-

578

14,856,829

9,439,872

-

9,439,872

-

-

-

9,439,872

-

-

-

-

-

-

-

5,534,187

-

5,534,187

578

-

578

5,534,765

14,576,562

-

14,576,562

624

-

624

14,577,185

7,831,589

-

7,831,589

-

-

-

7,831,589

-

-

-

-

-

-

-

6,726,064

-

6,726,064

624

-

624

6,726,688

Type of securities/Values

A.1 Subordinated debts

- banks

- customers

A.2 Non subordinated debts

- banks

- customers

B.1 Subordinated deposits

- banks

- customers

B.2 Non subordinated deposits

- banks

- customers

Total

330,526

330,526

-

11,299,312

9,476,587

1,822,725

-

-

-

14,577,185

8,643,364

5,933,821

26,207,023

31/12/2019 31/12/2018

330,485

330,485

-

11,746,313

9,947,561

1,798,752

-

-

-

14,856,830

3,302,792

11,554,038

26,933,628



SECTION 2 FINANCIAL LIABILITIES HELD FOR TRADING - ITEM 20

2.1 Financial liabilities held for trading: breakdown by product

Total 31/12/2019

Fair value Fair value*

Fair value*

Fair value

Total 31/12/2018

NV NV

L1 L1L2 L2L3 L3

A. Financial liabilities

1. Deposits from banks

2. Deposits from customers

3. Debt securities

3.1 Bonds

3.1.1 Structured

3.1.2 Other bonds

3.2 Other securities

3.2.1 Structured

3.2.2 Other

Total (A)

B. Derivative instruments

1. Financial derivatives

1.1 Trading

1.2 Linked to fair value option

1.3 Other

2. Credit derivatives

2.1 Trading

2.2 Linked to fair value option

2.3 Other

Totale (B)

Totale (A+B)

-

-

-

-

-

-

-

-

-

-

x

x

x

x

x

x

x

x

x

x

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

3,407

-

-

3,407

-

-

-

-

3,407

3,407

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

x

x

x

x

x

x

x

-

x

x

x

x

x

x

x

x

x

x

-

-

-

-

-

-

-

-

-

-

x

x

x

x

x

x

x

x

x

x

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

3,729

-

-

3,729

-

-

-

-

3,729

3,729

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

x

x

x

x

x

x

x

-

x

x

x

x

x

x

x

x

x

x


This item reflects the negative change in the derivative financial instruments hedging the securitization transactions entered into with the same banks as those involved in such transactions.

Legenda

NV = Nominal or Notional ValueL1 = Level 1L2 = Level 2L3 = Level 3(*) Fair value calculated excluding changes in credit worthiness of the issuer after issue date.


This item reflects the fair value of the derivative contracts entered into to hedge interest rate risks. Changes in value in these contracts, according to the fair value method, are reported through profit and loss, in item 90 “Gains (losses) on hedging activities” of the income statement.

SECTION 4 HEDGING DERIVATIVES - ITEM 40

4.1 Hedging derivatives: breakdown by hedging type and by levels

Fair value 31/12/2019 Fair value 31/12/2018NV31/12/2019

NV31/12/2018

L1 L1L2 L2L3 L3


1) Fair value

2) Financial flows

3) Foreign investments


1) Fair value

2) Financial flows

Total

13,432,019

11,185,900

2,246,119

-

-

-

-

13,432,019

-

-

-

-

-

-

-

-

91,533

79,131

12,402

-

-

-

-

91,533

-

-

-

-

-

-

-

-

14,265,349

12,047,119

2,218,230

-

-

-

-

14,265,349

-

-

-

-

-

-

-

-

53,920

46,820

7,100

-

-

-

-

53,920

-

-

-

-

-

-

-

-

Legend:NV = Notional ValueL1 = Level 1L2 = Level 2L3 = Level 3


4.2 Hedging derivatives: breakdown by hedged portfolios and type of hedging

Fair Value

Debt securities

and interest rates

Equitiy instruments

and equity indcesx

Currencies and gold

Foreign invest.

Credit Commo-doties

Others

Cash flow

Micro-hedge

1. Financial assets valuated

at fair value with impact on

total profitability

2. Financial assets valued

to amortized cost

3. Portfolio

4. Other operations

Total assets

1. Financial liabilities

2. Portfolio

Total liabilities

1. Expected transactions

2. Portfolio of financial assets

and liabilities

-

-

X

-

-

19,048

X

19,048

X

X

-

X

X

-

-

X

X

-

X

X

-

2,635

X

-

2,635

-

X

-

X

X

-

-

X

-

-

-

X

-

X

X

X

X

X

-

-

-

X

-

X

X

X

X

X

-

-

-

X

-

X

X

X

X

57,449

X

57,449

X

-

-

X

1

-

-

X

-

-

361

X

361

-

X

X

X

-

X

-

X

-

-

X

12,041

X

X

X

-

-

X

X

-

X

-

Transactions/Type of hedge

The generic column shows the amount of derivative contracts hedging the retail receivable portfolio. Such contracts have been accounted for with the fair value hedge (macro hedge). The cash flow hedges refer to derivative contracts hedging interest rate risk. Such contracts, which are used for long-term rental activities, are recognized in accordance with the cash flow hedge method.

Macro-hedge

Micro-hedge

Macro-hedge


SECTION 6 TAX LIABILITIES - ITEM 60

SECTION 8 OTHER LIABILITIES - ITEM 80

SECTION 7LIABILITIES INCLUDED IN DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE - ITEM 70

8.1 Other liabilities: breakdown

For information on this section, see section 11 of the assets.

For information on this section, see section 12 of the assets.

The item “Operating lease payables” mainly includes payables for the purchase of cars and for services rendered to the Group’s long-term-rental companies.With reference to the above representation, please consider that €145 million are represented in the item “Outstanding” of the table Reconciliation between outstanding and loans and receivables with customers.

Line item “Payables for goods and services” includes:

- the provision of administrative, tax and payment services at arm’s length by companies of the FCA Group;- incentives payable to the FCA Group’s dealer network;- charges payable to dealers and banks, mainly in connection with the Parent Company’s operations.

The item “Due to insurance companies” mainly relates to sums due by the parent company and the subsidiary Leasys.

1. Due to employees

2. Operating lease payables

3. Due to social security institutions

4. Sundry payables

- Payables for goods and services

- Due to insurance companies

- Due to customers

- Reinsurance activities

- Others

- Accrued expenses and deferred income

Total

5,808

466,078

4,666

451,227

147,719

58,958

12,335

1,195

169,676

61,344

927,779

Total31/12/2019

Total31/12/2018

6,183

536,346

4,924

466,978

147,923

62,798

11,885

-

187,352

57,020

1,014,431


SECTION 9 PREVISION FOR EMPLOYEE SEVERANCE PAYITEM 90

9.1 Provision for employee severance pay: annual changes

A. Opening balance

B. Increases

B.1 Provision of the year

B.2 Other increases

C. Decreases

C.1 Severance payments

C.2 Other decreases

D. Closing balance

Total

12,298

140

(13)

153

812

701

111

11,626

11,626

31/12/2019 31/12/2018

11,626

275

5

270

175

134

41

11,726

11,726

This item reflects the residual obligation for severance indemnities, which was required until December 31, 2006 under Italian legislation to be paid to employees of Italian companies with more than 50 employees upon termination of employment. This severance can be paid in part to employees during their working lives, if certain conditions are met.

Post-employment benefits, as reported in the statement of financial position, represent the present value of this defined benefit obligation,

as adjusted for actuarial gains and losses and for costs relating to labor services not previously recorded.

Provisions for defined benefit pension plans and the annual cost recorded in the income statement are determined by independent actuaries using the projected unit credit method.


9.2 Other information

Changes in defined benefit obligations (IAS 19, paragraphs 140 and 141)

Defined benefit obligation as of 01/01/2019

a. Service cost

b. Interest cost

c. Curtailment

d. Other costs

e. Employer's contribution

f. Interest income on plan assets

g.1 Return on plan assets greater/(less) than discount rate

g.2 Return on plan assets greater/(less) than demographic assumptions

g.3 Net actuarial (gain)/loss: others

h. Plan participants' contributions

i. Past service costs/(income) and curtailment (gains) and losses

l. Intercompany transactions

m. Other changes

Total defined benefit obligations as of 31/12/2019

11,626

-

18

-

-

-

-

869

(14)

135

(892)

-

(22)

5

11,726

In order to complete the required assessments it is necessary to adopt the appropriate demographic and economic assumptions referred to:• mortality rates• disability

• employees leaving the company (resignation or layoff)• applications for anticipation• future employees career (hypothetical promotions to higher categories included)• purchasing power evolution

Discount rates

Estimated future salary increases rate (inflation included)

Expected inflation

Mortality rate

Yearly employees outflow average

0.63%

1.17%

1.50%

SI2018 (modified on the basis of historical data)

5.71%

Main actuarial AssumptionsITALY

TFR

Description of the main actuarial assumptions (IAS 19, paragraph 144)

Particularly, based on the FCA Bank S.p.A., following assumptions have been adopted:


SECTION 10 PROVISIONS FOR RISKS AND CHARGES - ITEM 100

10.1 Provisions risk and charges: breakdown

10.2 Provisions for risks and charges: annual changes

1. Provisions for credit risk on commitments and financial guarantees given

2. Provisions for other commitments and other guarantees given

3. Pensions and other post-retirement benefit obligations

4. Other provisions for risks and charges

4.1 legal and tax disputes

4.2 obligations for employees

4.3 others

Total

-

-

43,121

208,697

5,856

21,098

181,743

251,818

Total31/12/2019Items/Components

Total31/12/2018

-

-

49,954

175,550

5,677

22,791

147,082

225,504

Provisions for other commitments and other guarantees

given

Other provisions for risks and

charges

Pensions and other

post-retire-ment benefit

obligations

Total

A. Opening balance

B. Increases

B.1 Provisions for the year

B.2 Changes due to pass of time

B.3 Changes due to discount-rate changes

B.4 Other changes

- of which business aggregation operations

C. Decreases

C.1 Use during the year

C.2 Changes due to discount-rate changes

C.3 Other changes

- of which business aggregation operations

D. Closing balance

-

-

-

-

-

-

-

-

-

-

-

-

-

208,697

33,141

23,446

-

-

9,695

-

66,288

39,036

22,641

4,611

-

175,550

43,121

10,760

2,651

-

-

8,109

-

3,927

3,927

0

0

-

49,954

251,818

43,901

26,097

-

-

17,804

-

70,215

42,963

22,641

4,611

-

225,504


10.5 Provision for retirement benefits and similar obligations

Description of the main actuarial assumptions

2. Changes in the year of net liabilities (assets) with defined benefits and redemption rights

3. Information on the fair value of plan assets

Changes in defined benefit obligation

Defined benefit obligation as of the prior period end date

a. Service cost

b. Interest cost

c. Curtailment

d. Other costs

e. Employer's contribution

f. Interest income on plan assets

g.1 Return on plan assets greater/(less) than discount rate

g.2 Return on plan assets greater/(less) than demographic assumptions

g.3 Net actuarial (gain)/loss: others

h. Plan participants' contributions

i. Past service costs/(income) and curtailment (gains) and losses

l. Intercompany transactions

m. Other changes


31/12/2019

80,088

1,964

1,474

-

330

-

-

9,233

(1,025)

3,293

(3,152)

13

4

332

92,555

Changes in plan assets

Fair value of plan assets as of the prior period end date

a. Interest income on plan assets

b. Employers contribution

c. Disbursements from plan assets

d. Return on plan assets greater/(less) than discount rate

e. Other changes


31/12/2019

36,967

837

1,787

(1,044)

4,395

(341)

42,601


Referring to provision for retirement benefits, the actuarial amounts of provisions for defined benefit pension plans, required according to IAS 19, are determined by independent actuaries using the projected unit credit method, as described in Part A – Accounting Policies.

This item includes provisions for pension plans set up by foreign subsidiaries for €50 million (mainly Germany and UK, for €29 million and €13 million, respectively).

The following table shows the main actuarial assumptions used for pension plans, distinguished by country (Italy and “Other countries”). The table also includes actuarial assumptions for the Italian post-employment benefits (“Trattamento di Fine rapporto – TFR”).

4. Description of the main actuarial assumptions

Discount rates

Estimated future salary increases

rate (inflation included)

Expected inflation

Mortality tables

Yearly employees outflow average

Other post-employment benefit plans

Other long-term employee benefits

Pension plans

Other post-employment benefit plans

Other long-term employee benefits

ITALY OTHER COUNTRIES

Main actuarial Assumptions

1.01%

2.78%

2.50%

1.15%

2.00%

1.80%

0.79%

2.19%

1.74%

0.63%

1.17%

1.50%

0.63%

1.17%

1.50%

5.71% 5.71% 2.87% 2.25% 3.00%

SI2018 (modified on the basis of

historical data)

AVÖ 2018-P "Angestellte"

MR/FR; BVG 2015 / GT;

RT 2018 G; TH/TF 2000-2002;

AG Prognosetafel 2018; S2PxA tables / CMI 2017 1.25% pa LTR

AVÖ 2018-P "Angestellte";

TH/TF 2000-2002; EAE21012p;

GUS 2018

RT 2018 G; GUS 2018


10.6 Provisions for risks and charges: breakdown

1. Other provisions for employees

2. Provisions for tax risks

3. Reserves for legal disputes

4. Provisions for risks and charges related to operating leases

5. Provisions for sundry risks

Total

21,098

3,342

5,561

37,011

141,685

208,697

Total31/12/2019

Total31/12/2018

18,139

326

847

23,732

132,506

175,550

Provision for risks and charges related to operating leasesThis provision mainly consists of provisions for future maintenance and insurance costs for cars provided under operating lease contracts.

Provision for tax risksThis item refers to provisions in connection with tax ligation and related charges.

Provisions for sundry risksThis item reflects:• provisions of €37 million for risks related, in the UK market, to the remaining value of the vehicles purchased with PCP (Personal Contract Purchase) loans and the customers’ option to terminate voluntarily their contract, under local laws;

• provisions of euro €60 million for the sanction imposed by AGCM.

The balance of these provisions reflects the risks in various markets related to the residual value of the vehicles, the respect of local regulations (i.e. consumer protection and anti-trust) and, more generally, to business risks.


SECTION 11 INSURANCE RESERVES - ITEM 110

Section 11 – Insurance reserves

Direct business

Total31/12/2019

Indirect business

Total31/12/2018

A. No-life business

A.1 Premiums reserves

A2. Claims reserves

A3. Other insurance reserves

B. Life business

B1. Mathematical reserves

B2. Reserves for amounts to be disbursed

B3. Other reserves

C. Technical reserves for investment risks to be borne

by the insured

C1. Reserves for contracts with performances connected

to investment funds and market indices

C2. Reserves arising from pension fund management

D. Total technical reserves

6,656

5,691

965

-

9,471

3,308

6,163

-

-

-

-

16,127

6,656

5,691

965

-

9,471

3,308

6,163

-

-

-

-

16,127

-

-

-

-

-

-

-

-

-

-

-

-

6,094

5,041

1,053

-

4,568

3,556

1,012

-

-

-

-

10,662


SECTION 13 GROUP SHAREHOLDERS’ EQUITY - ITEMS 120, 130, 140, 150, 160, 170 AND 180

13.1 "Share capital" and "treasury shares": breakdown

A. Share Capital

A.1 Ordinary shares

A.2 Savings shares

A.3 Preferred shares

A.4 Other shares

B. Own shares

B.1 Ordinary shares

B.2 saving shares

B.3 preferred shares

B.4 other shares

700,000

-

-

-

-

-

-

-

Total31/12/2019

Total31/12/2018

700,000

-

-

-

-

-

-

-


A. Issued shares as at the beginning of the year- fully paid-up- not fully paid-up

A.1 Treasury shares (-)A.2 Shares outstanding: opening balanceB. IncreasesB.1 New issues

- against payment:- business combination transaction- bonds converted- warrants exercised- others

- free:- to employees- to directors- others

B.2 Sales of treasury sharesB.3 Other changesC. DecreasesC.1 CancellationC.2 Purchase of treasury sharesC.3 Business tranferredC.4 Other changesD. Shares outstanding:closing balanceD.1 Treasury shares (+)D.2 Shares outstanding as at the end of the year

- fully paid-up- not fully paid-up

----------------------------

Ordinaries OthersItems/Types

700,000700,000

--

700,000------------------

700,000-

700,000700,000

-

13.2 Share capital - number of shares owned by the Parent Company: annual changes

Share capital is fully paid in. It consists of 700,000,000 shares with a nominal value of €1 each and, at year-end 2019, was unchanged from the previous year.

13.4 Net profit reserve: other informationGroup reserves amount to €1,956 million and include: legal reserve, statutory reserve, valuation reserves and other reserves.The legal reserve, set up as provided for by law, must be at least one fifth of share capital. Should the reserve decrease, it must be reintegrated by allocating at least one twentieth of net income for the year.The valuation reserves amount to negative

€27 million and include reserves of cash flow hedge derivatives for -€7 million, exchange rate valuation reserves (relating to fully consolidated investments) for +€4 million as well as legally required revaluation reserves deriving from the revaluation of property and equipment for €454 thousand and the negative reserve on actuarial profits (losses) from defined benefit pension plans for -€25 million.


14.1 Breakdown of item 210 "Shareholders' equity: minorities"

SECTION 14 NON CONTROLLING INTERESTS - ITEMS 190Non-controlling interests is attributable to FCA Bank GmbH, Ferrari Financial Services GmbH and other minorities.

14.2 Equity instruments: breakdown and annual changes

Equity investments in consolidated companies with minority interests

1. Ferrari Financial Services GmbH

2. FCA Bank GmbH

Others investments

Total

1. Minority equity - Ordinary shares

2. Minority equity - Shares - Parent Company (-)

3. Minority equity - Equity instruments

4. Minority equity - Share premium reserve

5. Reserves

6. Valuation reserves

7. Minority equity - Net income (loss)

Total

23,260

25,106

31

48,397

3,389

2,877

37,170

(43)

5,004

48,397

31/12/2019

31/12/2019

Company name 31/12/2018

31/12/2018

29,024

25,876

31

54,931

3,389

2,877

42,053

(51)

6,663

54,931


Other information1. Commitments and financial guarantees given

Firststage

Total31/12/2018

Thirdstage

Secondstage

Total31/12/2019

Nominal value on financial releaseobligations and guarantees

Commitment to supply funds

a) Central banks


c) Banks


e) Non-financial companies

f) Households

Financial guarantees issued

a) Central banks


c) Banks


e) Non-financial companies

f) Households

4,962,089

-

-

-

-

4,960,091

1,998

120,224

-

-

120,224

-

-

-

2,675,731

-

-

-

-

2,674,866

865

120,224

-

-

120,224

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

4,962,089

-

-

-

-

4,960,091

1,998

120,224

-

-

120,224

-

-

-

The item refers to:• revocable commitments subblied by the Group to dealers – item e) Non financial companies;• revocable commitments supplied by the Group to credit card owners – item f) Households.

Financial guarantees issued are sureties entrusted as guarantee to Tax Office.


3. Assets used to guarantee own liabilities and commitments

It should be noted that item 3 “Financial asset valued at amortized cost” includes assets encumbrance deriving from securitization operations.

It should also be noted that, in relation to the loans received from BCE following the involvement to the TLTRO refinancing program, were pledged as collateral senior notes for €1.4

1. Financial assets at fair value through profit or loss

2. Financial assets at fair value through other comprehensive income

3. Financial assets at amortised cost


of which:of which: inventories of property, plant and equipment

-

-

7,791,723

-

-

Total31/12/2019Portfolios

Total31/12/2018

-

-

7,961,997

-

-

billion – arising from FCA Bank securitization operations whose notes were not included in the Balance Sheet.


7. Financial liabilities aubject to accounting offsetting or under master netting agreements and similar agreements

Related amounts not subjectto accounting

offsetting

Gross amount of the financial

liabilities (a)

Financial assets offset

in balance sheet

(b)

et amount of the financial

liabilities reportes in

balance sheet

(c = a-b)Financial

instruments (d)

Cash collateral received

(e)

Net amount (f = c-d-e)

Net amount

Instrument type 31/12/2019 31/12/2018

1. Derivatives

2. Repos

3. Securities lending

4. Other operations

Total 31/12/2019

Total 31/12/2018

2,996

119,270

-

1,200,000

1,322,266

1,050,000

-

-

-

1,200,000

1,200,000

1,050,000

2,996

119,270

-

-

122,266

-

1,296

119,270

-

-

120,566

-

1,700

-

-

-

1,700

-

-

119,270

-

-

-

x

-

189,753

-

-

x

-

6. Financial assets subject to offsetting in the financial statements or subject to netting framework arrangements or similar agreements

Related amounts not subject

to accounting offsetting

Gross amount of financial assets

(a)

Amount of financial liabilities offset in

balance sheet (b)

Net amount of financial

assets reported in

balance sheet

(c = a-b)Financial

instruments (d)

Cash deposit received in guarantee

(e)

Net amount (f = c-d-e)

Net amount

Instrument type 31/12/2019 31/12/2018

1. Derivatives

2. Repos

3. Securities lending

4. Others

Total 31/12/2019

Total 31/12/2018

3,015

26,764

-

1,200,000

1,229,779

1,050,000

-

-

-

1,200,000

1,200,000

1,050,000

3,015

26,764

-

-

29,779

-

2,876

26,764

-

-

29,640

-

139

-

-

-

139

-

-

26,764

-

-

26,764

x

-

25,367

-

-

x

-

Netting refers to loans and deposits regulated under specific netting agreements which as such were presented net according to IAS 32.


Part C - Information on the consolidated income statementSECTION 1 INTERESTS - ITEMS 10 AND 20

1.1 Interest income and similar revenue: breakdown

1. Financial assets at fair value through P&L:

1.1 Financial assets held for trading

1.2 Financial assets designated at fair value

1.3 Other financial assets mandatorily at fair value

2. Financial assets at fair value through other

comprehensive income

3. Financial assets at amortised cost:

3.1 Credits to banks

3.2 Credits to customers


5. Other assets

6. Financial liabilities

Total

of which: interest income on credit impaired

of which: interest income on financial leasing

-

-

-

-

162

891,299

1,391

889,908

(13,990)

20,807

5,173

903,452

-

-

-

-

-

-

X

X

X

X

(16,838)

23,259

X

6,420

-

-

-

-

-

-

162

921,626

33,226

888,400

(16,838)

23,259

2,075

930,283

-

-

-

-

-

-

-

913,179

33,226

879,953

X

X

X

913,179

-

-

-

-

-

-

162

8,447

-

8,447

X

X

X

8,609

-

-

Totale31/12/2018

Otheroperations

Total 31/12/2019

LoansDebt securitiesItems/Technical forms


1.2 Interest and similar income: other information

1.2.1 Interest income from financial assets denominated in currency

1.2.2 Interest income from financial leases

1.3 Interest expense and similar charges: breakdown

Interest income from currency assets

Interest income from leasing

167,878

451,041

2019

2019

Items

Items

2018

2018

160,540

509,148


1.1 Debts to central banks

1.2 Debts to banks

1.3 Debts to customers

1.4 Debt securities in issue


3. Financial liabilities designated at fair value

4. Other liabilities and funds


6. Financial assets

Total

121,151

-

83,899

37,252

X

-

-

X

X

X

121,151

113,496

X

X

X

113,496

-

-

X

X

X

113,496

X

X

X

X

X

-

-

2,774

(585)

X

2,189

234,646

-

83,899

37,252

113,496

-

-

2,774

(585)

-

236,835

250,706

69

77,494

31,772

141,371

-

347

2,930

(15,174)

3,241

242,076

Totale31/12/2018

Other transactions

Total 31/12/2019

SecuritiesDebtsItems/Technical forms


Interest expense on liabilities held in foreign currency

Interest expense on finance lease transactions

A. Positive differentials related to hedging operations:

B. Negative differentials related to hedging operations:

C. Net differential (A-B)

(44,714)

(1)

15,174

(13,990)

1,186

2019

2019

2019

Items

Items

Items

2018

2018

2018

(42,238)

(1)

585

(16,838)

(16,254)

1.4 Interest expense and similar charges: other information

1.4.1 Interest expenses on liabilities denominated in currency

1.4.2 Interest expenses on financial lease

1.5 Differentials related to hedging operations


SECTION 2 COMMISSIONS - ITEMS 40 E 50

2.1 Fees and commissions income: breakdown

a) guarantees given

b) credit derivatives

c) management, brokerage and consultancy services:

1. securities trading

2. currency trading

3. portfolio management

3.1. individuals

3.2. collectives

4. custody and administration of securities

5. custodian bank

6. placement of securities

7. reception and transmission of orders

8. advisory services

8.1. relating to investments

8.2. relating to financial structure

9. distribution of third party services

9.1. porfolios management

9.1.1. individuals

9.1.2. collectives

9.2. insurance products

9.3. other products

d) collection and payment services

e) securitisation servicing

f) services for factoring operations

g) tax collection services

h) management of multilateral trading facilities

i) holding and management of current account

j) other services

Total

-

-

62,618

-

-

-

-

-

-

-

-

-

-

-

-

62,618

-

-

-

61,435

1,183

328

-

21,602

-

-

-

79,626

164,173

Total31/12/2019Type of services/Values

Total31/12/2018

-

-

58,159

-

-

-

-

-

-

-

-

-

-

-

-

58,159

-

-

-

56,939

1,220

1,499

2,728

15,986

-

-

-

69,408

147,780


2.2 Fees and commissions expenses: breakdown

a) guarantees received

b) credit derivatives

c) management and brokerage services

1.trading financial instruments

2. currency trading

3. portfolios management

3.1 own portfolio

3.2 third party portfolio

4. custody and administration securities

5. placement of financial instruments

6. off-site distribution of financial instruments, products and services

d) collection and payment services

e) other services

Total

(3,431)

-

-

-

-

-

-

-

-

-

-

(12,447)

(39,108)

(54,986)

Total31/12/2019Services/Values

Total31/12/2018

(2,138)

-

-

-

-

-

-

-

-

-

-

(15,013)

(28,742)

(45,893)

With reference to the “Reconciliation between reported income statement and reclassified income statement” please see that the total of the item 50 equal to €46 millions is broken down, coherent with the mentioned managerial representation, in the following groups:• “guarantees received” in the present table also include insurance costs referred to the credit risk coverage on part of dealer financing portfolio for a total of €12 million classified as “risk cost” at the managerial representation scope;

•residual €33 million are included in “Net banking income”.

The item “Payment and collection services” mainly represents cost for the collection of finance lease payments and retail loan instalments.


SECTION 4 GAINS (LOSSES) ON FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADING - ITEM 80

4.1 Gains and losses on financial assets and liabilities held for trading: breakdown

1. Financial assets held for trading

1.1 Debt securities

1.2 Equity instruments

1.3 Units in investment funds

1.4 Loans

1.5 Others


2.1 Debt securities

2.2 Debts

2.3 Others

Financial assets and liabilities: exchange differences

3. Derivatives

3.1 Financial derivatives:

- On debt securities and interest rates

- On equity securities and share indices

- On currency and gold

- Others

3.2 Credit derivatives

of which: economic hedges linked to the

fair value option

Total

-

-

-

-

-

-

-

-

-

-

x

1,892

1,892

1,892

-

x

-

-

x

1,892

-

-

-

-

-

-

(8)

-

-

(8)

x

(1,589)

(1,589)

(1,589)

-

x

-

-

x

(1,597)

-

-

-

-

-

-

-

-

-

-

x

(1,043)

(1,043)

(1,043)

-

x

-

-

x

(1,043)

-

-

-

-

-

-

(8)

-

-

(8)

(45)

8

8

8

-

-

-

-

-

(45)

-

-

-

-

-

-

-

-

-

-

x

748

748

748

-

x

-

-

x

748

Net result

[(A + B) - (C + D)]

Capital losses (C)

Losses from negotiation

(D)

Incomes from negotiation

(B)

Capital gains (A)

Transactions / P&L items

The items reflect changes in the fair value of assets and liabilities held for trading.


SECTION 5 FAIR VALUE ADJUSTMENTS IN HEDGE ACCOUNTING ITEM 90

5.1 Fair value adjustments in hedge accounting: breakdown

A. Incomes from:

A.1 Fair value hedging instruments

A.2 Hedged financial assets (fair value)

A.3 Hedged financial liabilities (fair value)

A.4 Cash-flow hedging derivatives

A.5 Assets and liabilities denominated in currency

Total incomes on hedging activities (A)

B. Charges on

B.1 Fair value hedging instruments

B.2 Hedged financial assets (fair value)

B.3 Hedged financial liabilities (fair value)

B.4 Cash-flow hedging derivatives

B.5 Assets and liabilities denominated in currency

Totale oneri dell'attività di copertura (B)

C. Net hedging result (A-B)

of which: result of hedges on net exposures

35,116

34,181

25,531

-

3,317

98,145

(65,149)

(11,882)

(21,307)

-

(1,609)

(99,947)

(1,802)

-

Total31/12/2019P&L items/Values

Total31/12/2018

38,033

33,807

26,124

-

3,094

101,058

(69,271)

(13,089)

(19,134)

-

(5,751)

(107,245)

(6,187)

-

This item reflects the changes in fair value of derivative contracts recognized as Fair Value Hedge.


SECTION 6 GAINS AND LOSSES ON DISPOSALS/REPURCHASES ITEM 1006.1 Gains and losses on disposals/repurchases: breakdown

Total 31/12/2019

Items / P&L items

Total 31/12/2018

Losses LossesGains GainsNet profit

Net profit

Financial assets


1.1 Loans and receivables with banks

1.2 Loans and receivables with customers

2. Financial assets at fair value through


2.1 Debt securities

2.2 Loans

Total assets

Financial liabilities at amortised cost

1. Deposits from banks

2. Depositsfrom customers

3. Debt securities in issue

Total liabilities

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

1,162

-

1,162

-

-

-

1,162

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

1,162

-

1,162

-

-

-

1,162

-

-

-

-

-

1,462

-

1,462

-

-

-

1,462

-

-

-

-

-


SECTION 8 NET IMPAIRMENT / REINSTATEMENT FOR CREDIT RISK - ITEM 130

8.1 Net impairment for credit risk relating to financial assets at amortised cost: breakdown

Write-downs (1) Write - backs (2)

Third stageFirst and second

stage

First and second

stage

Third stage

Write-off Others

A. Loans and advances to banks

- loans

- debt securities


impaired loans

B. Loans and advances to customers

- loans

- debt securities


impaired loans

Total

-

-

-

-

(29,390)

(29,390)

-

-

(29,390)

-

-

-

-

-

-

-

-

-

-

-

-

-

(85,331)

(85,331)

-

-

(85,331)

-

-

-

-

26,593

26,593

-

-

26,593

-

-

-

-

40,740

40,740

-

-

40,740

-

-

-

-

(47,388)

(47,388)

-

-

(47,388)

-

-

-

-

(20,728)

(21,402)

674

-

(20,728)

Transactions/P&L items

Total31/12/2019

Total 31/12/2018

With reference to the “Reconciliation between reported income statement and reclassified income statement” please see that the total of the item 130 equal to 47 millions is broken down, coherent with the mentioned managerial representation, in the following groups:• in the net banking income for €1 milion;• residual €46 million is included in the “Cost of risk”.


SECTION 10 NET PREMIUMS - ITEM 160

10.1 Net premiums: breakdown

A. Life business

A.1 Gross premiums accounted (+)

A.2 Reinsurance premiums ceded (-)

A.3 Total

B. Non-life business

B.1 Gross premiums accounted (+)

B.2 Reinsurance premiums ceded (-)

B.3 Change in gross value of premiums reserves (+/-)

B.4 Change in premium reserve ceded to reinsures (+/-)

B.5 Total

C. Total net premiums

3,618

(3,256)

362

3,463

(1,389)

(649)

(544)

881

1,243

-

X

-

-

X

-

-

-

-

3,618

(3,256)

362

3,463

(1,389)

(649)

(544)

881

1,243

3,559

(3,203)

356

1,511

(1,360)

541

(487)

205

561

Total 31/12/2018

Indirect business

Total 31/12/2019

Direct business

Premiums from insurance


SECTION 11 OTHER NET INSURANCE INCOME/EXPENSES ITEM 170

11.1 Other net insurance income/expenses: breakdown

11.2 Breakdown of "Net change in technical reserves"

1. Net change in insurance provisions

2. Claims accrued and paid during the year

3. Other income and expenses from insurance

Total

1. Life business

A. Mathematical reserves

A.1 Gross annual amount

A.2 (-) Amount attributable to reinsurers

B. Other insurance reserves

B.1 Gross annual amount

B.2 (-) Amount attributable to reinsurers

C. Insurance reserves for investment risks to be borne by the insured

C.1 Gross annual amount

C.2 (-) Amount attributable to reinsurers

Total "life business reserves"

2. Non-life business

Change in provisions for non-life business other than claims provisions,

net of amounts ceded to reinsurers

123

(236)

2,186

2,073

55

549

(494)

-

-

-

-

-

-

55

69

Total31/12/2019

Total31/12/2019

Items

Net change in insurance reserves

Total31/12/2018

Total31/12/2018

(736)

(184)

53

(867)

(515)

(5,151)

4,636

-

-

-

-

-

-

(515)

(221)


11.3 Breakdown of Claims accrued and paid during the year

Life business: charges relating to claims, net of reinsurance ceded

A. Amounts paid

A.1 Gross annual amount

A.2 (-) Amount attributable to reinsurers

B. Change in reserve for amounts payable

B.1 Gross annual amount

B.2 (-) Amount attributable to reinsurers

Total life business claims

Non-life business: charges relating to claims, net of recoveries

and reinsurance ceded

C. Amounts paid

C.1 Gross annual amount

C.2 (-) Amount attributable to reinsurers

D. Change in recoveries net of amount ceded to reinsures

E. Change in claims reserves

E.1 Gross annual amount

E.2 (-) Amount attributable to reinsurers

Total non-life business claims

(182)

(1,822)

1,640

-

-

-

(182)

(54)

(538)

484

-

-

-

-

(54)

Total31/12/2019Charges for claims

Total31/12/2018

(152)

(1,519)

1,367

-

-

-

(152)

(32)

(320)

288

-

-

-

-

(32)


11.4.1 Other income/expense (net) from insurance activities - Life business

11.4.2 Other income/expense (net) from insurance activities - Non life business

11.4 Breakdown of “Other income/expenses arising from insurance business”

Non-life insurance

A. Revenues

- Other technical revenues net of reinsurance ceded

- Revenues and unrealized capital gains related to investments in favor

of insured parties who bear the risk

- Change in commissions and Other acquisition costs to be amortized

- Other revenues

B. Expenses

- Other technical expenses net of reinsurance ceded

- Acquisition commissions

- Other acquisition expenses

- Collection commissions

- Other expenses

Total Non- life business (A - B)

1,138

-

-

1,138

(19)

-

-

-

-

(19)

1,119

Total 2019 Total 2018

25

-

-

25

25

Life insurance

A. Revenues

- Other technical revenues net of reinsurance ceded

- Revenues and unrealized capital gains related to investments in favour


- Change in commissions and Other acquisition costs to be amortized

- Commissions and profit-sharing received from reinsurers

- Other revenues

B. Expenses

- Other technical expenses net of reinsurance ceded

- Expenses and unrealized capital losses related to investments in favour


- Acquisition commissions

- Other acquisition expenses

- Collection commissions

- Other expenses

Total Life business (A - B)

843

-

-

-

-

843

(187)

-

-

-

-

-

(187)

656


28

-

-

-

28

28


SECTION 12 ADMINISTRATIVE EXPENSES - ITEM 190

12.1 Staff expenses: breakdown

12.2 Average number of employees by category

1) Employees

a) wages and salaries

b) social obligation

c) severance pay

d) social security costs

e) allocation to employee severance pay provision

f) provision for retirements and similar provisions

- a contribuzione definita

- a benefici definiti

g) versamenti ai fondi di previdenza complementare esterni:

- defined contribution

- defined benefit

h) costs arising from share-based payments

i) other employee benefits

2) Other staffs in activity

3) Managers and statutory auditors

4) Staffs collocated to retirement

Total

(154,730)

(103,677)

(27,078)

(3,143)

(244)

(18)

(4,536)

(1,524)

(3,012)

(2,264)

(2,259)

(5)

-

(13,770)

(19,203)

(1,096)

-

(175,030)

(149,346)

(101,253)

(26,436)

(2,733)

(4)

-

(2,439)

(1,528)

(911)

(2,377)

(2,372)

(5)

-

(14,104)

(18,766)

(919)

-

(169,033)

Total 31/12/2018

Total 31/12/2019

Type of expense/Sectors

1. Employees

a) senior managers

b) managers

c) remaining employees staff

2. Others staff

Total

2,258

30

467

1,761

-

2,258


2,280

37

478

1,765

-

2,280


12.3 Defined benefit company retirement funds: costs and revenues

12.4 Other employee benefits

12.5 Other administrative expense: breakdown

1. Consulting and professional services

2. EDP costs

3. Rents and utilities

4. Indirect and other taxes

5. Advertising and promotion expenses

6. Other expenses

Total

(20,531)

(31,457)

(9,559)

(9,049)

(7,032)

(21,527)

(99,156)

(17,560)

(35,491)

(10,294)

(10,613)

(7,839)

(21,616)

(103,413)

With reference to pension funds, please refer to the movement shown in item 100. “Provisions for risks and charges of Liabilities”.

The balance of other benefits to employees as at December 31, 2019 amounted to euro thousand 13,770.

Item / SectorTotal

31/12/2018Total

31/12/2019

With reference to the “Reconciliation between reported income statement and reclassified income statement” please see that the total of the item 190 equal to €278 millions is broken down, coherent with the mentioned managerial representation, in the following groups:• €266 million are included in the net operating expense; • €12 million are included in the other operating expenses and income.


SECTION 13 NET PROVISIONS FOR RISKS AND CHARGESITEM 200

13.3 Net provisions for risks and charges: breakdown

On December 31, 2019 the value of provisions for risks and charges is €805 thousand, for managerial scope these provisions are aggregated as follow:• write-backs are included in Net Banking income for a total of €2 million;

• in net operating costs are included €1 million of write-backs referred to provisions to other risks and charges.

1. Provisions for risks and charges related to operating leases

1.1 Future maintenance provision

1.2 Self-insurance provision

2. Provisions to other risks and charges

3. Technical insurance reserve

4. Legal risks

Total

(13,998)

(12,579)

(1,419)

(6,047)

-

(272)

(20,317)

14,191

14,191

-

6,690

-

241

21,122

(11,496)

(10,757)

(739)

(82,998)

-

(43)

(94,537)

8,801

8,773

28

9,676

-

260

18,737

Wtite-backs

Wtite-backs

Write-downs

Write-downs

31/12/2019 31/12/2018


With reference to “Reconciliation between reported income statement and reclassified income statement”:• in the item “Net banking income” are included Rental amortized costs for €427 million

• in “Net operating expenses” are included amortizing amortized costs referred to other fixed assets for €11 million (office furniture and fitting, electronic system and others).

SECTION 14 NET VALUE ADJUSTMENTS/WRITE- BACKS ON PROPERTY, PLANT AND EQUIPMENTITEM 210

14.1 Net value adjustments/write-backs on property, plant and equipment: breakdown

A. Property, plant and equipment

A.1 Owned

- Used in the business

- Rights of use acquired through lease

A.2 Acquired through finance lease

- Used in the business

- Rights of use acquired through lease

A.3 Inventories

Total

(444,576)

(397,241)

(47,335)

-

-

-

x

(444,576)

(3,954)

(3,954)

-

-

-

-

-

(3,954)

10,714

10,714

-

-

-

-

-

10,714

(437,816)

(390,481)

(47,335)

-

-

-

-

(437,816)

Net result

(a + b - c)

Impairment losses

(b)

Write-backs(c)

Depreciation(a)

Asset/P&L items


With reference to “Reconciliation between reported income statement and reclassified income statement” please see intangible amortized costs are included in “net operating expenses”.

SECTION 15 NET VALUE ADJUSTMENTS/WRITE-BACKS OF INTANGIBLE ASSETS - ITEM 220

15.1 Net value adjustments/write-backs on intangible assets: breakdown

A. Intangible assets

A.1 Owned

- Generated internally by the company

- Other

A.2 Rights of use acquired through lease

Total

(13,963)

(26)

(13,937)

-

(13,963)

-

-

-

-

-

-

-

-

-

-

(13,963)

(26)

(13,937)

-

(13,963)

Net risult(a + b - c)

Impairment losses

(b)

Write-backs(c)

Depreciation(a)

Asset/P&L items


SECTION 16 OTHER OPERATING EXPENSES/INCOME - ITEM 230

16.1 Other operating expenses: breakdown

16.2 Other operating incomes: breakdown

1. Credit collection expenses

2. Information charges

3. Other expenses:

3.1 operating lease charges

3.2 finance lease charges

3.3 contract expenses

3.4 sundry charges

Total

1. Expense recoveries

2. Income from operating leases

3. Income fron finance lease

4. Sundry income

Total

(10,226)

(2,253)

(395,857)

(324,006)

(11,054)

(13,868)

(46,929)

(408,336)

32,698

862,734

94

26,508

922,034

(8,142)

(1,482)

(468,693)

(388,163)

(15,614)

(6,911)

(58,104)

(478,417)

36,720

1,046,603

712

18,649

1,102,684

Items

Items

Total 31/12/2018

Total31/12/2018

Total31/12/2019

Total 31/12/2019

With reference to “Reconciliation between reported income statement and reclassified income statement” of the report on operations please see the item 230 amount “other operating income/charges” equal to €621 million is allocated as follow:• other operating income for €647 million are allocated in the “Net banking income”;

• other operating charges for €8 million are included in “Cost of risk”;• other operating charges related to retail are included for €16 million in “Other operating income/charges”


SECTION 21 TAX EXPENSES (INCOME) FOR THE PERIOD FROM CONTINUING OPERATIONS - ITEM 300

21.1 Tax expense (income) relating to profit or loss from continuing operations: breakdown

21.2 Reconciliation of theoretical tax liability and actual tax liability recognized

1. Current taxes (-)

2. Change of current taxes of previous years (+/-)

3. Reduction of current taxes for the year (+)

3. bis Reduction of current taxes for the year due tax credit under Law 214/2011 (+)

4. Change of deferred tax assets (+/-)

5. Change of deferred tax liabilities (+/-)

6. Tax expenses for the year (-) (-1+/-2+3+ 3 bis +/-4+/-5)

(148,329)

(1,890)

-

-

19,824

(28,833)

(159,228)

(150,935)

12,722

-

-

13,958

(46,674)

(170,930)

P&L items/SectorsTotal

31/12/2018Total

31/12/2019

This item reflects taxes for the year and the change in deferred tax assets and liabilities occurred during the same period.

Profit for the year before taxes

Theoretical tax liability

Increase effect of permanent differences

Decrease effect of permanent differences

Consolidation effect

Actual tax liability (A)

IRAP - Theoretical tax liability

Increase effect of permanent differences

Decrease effect of permanent differences

Consolidation effect

IRAP - Actual tax liability (B)

Prior years tax adjustments (C)

Actual tax liability recognized A+B+C

638,005

175,451

1,323

(70,591)

44,352

150,536

35,537

1,334

(8,484)

351

28,738

(8,344)

170,930

2019


SECTION 23 MINORITY PROFIT (LOSS) OF THE YEAR - ITEM 340

23.1 Breakdown of item 340 “Minority gains (losses)”

1. FCA Bank GmbH

2. Ferrari Financial Services GmbH

Others investments

Total

1,777

2,665

562

5,004

2,109

4,041

513

6,663

Companies name 31/12/201831/12/2019

The profit attributable to minority interests amounted to 6,663 thousand of euro, attributable to FCA Bank GmbH and Ferrari Financial Services GmbH.

The Holding capital consists of 700,000,000 share with a nominal value of euro 1 each.

SECTION 25 EARNINGS PER SHARE

25.1 Average number of ordinary shares


Part D - Consolidated comprehensive income

10. Profit (Loss) of the year

Other comprehensive income after tax not to be recycled to income statement

70. Defined benefit plans

100. Tax expenses (income) relating to items not reclassified to profit or loss

Other comprehensive income after tax to be recycled to income statement

120. Exchange differrences:

a) value change

b) transfer to the income statement

c) other changes

130. Cash flow hedges:

a) changes in fair value

b) transfer to the income statement

c) other changes

180. Tax expenses (income) relating to items reclassified to profit or loss

190. Total of other comprehensive income after tax

200. Other comprehensive income (Items 10+190)

210. Consolidated comprehensive income attributable to minorities

220. Consolidated comprehensive income attributable to Parent Company

31/12/2019 31/12/2018

467,075

(6,930)

(7,796)

866

13,518

16,035

16,035

(3,761)

(3,761)

1,244

6,588

473,663

6,533

467,130

388,364

1,710

2,111

(401)

(7,369)

(4,332)

-

-

(4,332)

(4,539)

(4,539)

-

-

1,501

(5,659)

382,705

4,990

377,715

Items


Part E - Information on risk and related risk management policiesThe FCA Bank Group attributes significant importance to risk measurement, management and control as key conditions to ensure sustainable growth in such a highly complex and dynamic economic context as the current one.Risk monitoring and control is carried out by second- (Compliance and Risk & Permanent Control) and third-level (Internal Audit) functions.

The identification and mapping of risks is an ongoing process, to improve risk management and to update the map of risks to which the Group is exposed.The FCA Bank Group, in its capacity as a Group 2 bank with consolidated or separate assets in excess of €3.5 billion, uses standardized methods to measure all its risks. FCA Bank places great emphasis on risk management, as a condition to ensure the generation of reliable and sustainable value in a risk-controlled environment. The risk management strategy aims to attain a global and coherent overview of risks, considering both the macroeconomic scenario and the Group’s risk profile, fostering the development of a risk culture and enhancing a transparent and accurate representation of risk.The Group’s risk underwriting strategies are summarized in its Risk Appetite Framework (RAF), approved by the Board of Directors. The RAF is designed to ensure that the risks taken are in line with the shareholders’ expectations, taking into account the Group’s risk position and the current economic and business conditions. The framework sets out risk propensity limits and the controls established for the overall risk profile and the main specific risks. The RAF is an organic and structured approach, which extends from the Risk Management function to the Group as a whole to:• ensure that the Board of Directors and management are properly involved in the Group’s risk management;• combine strategic policies and business choices with risk propensity;

• ensure that shareholder value and returns are generated;• comply with all regulatory requirements;• activate a structured approach for the management, implementation and monitoring of the Risk Appetite Framework at all Group levels;• define precisely roles and responsibilities in case of breaches of risk propensity and to foster dialogue among the areas concerned at both Parent and Subsidiary level.

The above principles are applicable both at Group level and at business unit or company level. In case of external growth, these general principles will be applied considering the specific characteristics of the market and the competitive context in which growth takes place. Thus, the Risk Appetite Framework is the backdrop against which the Group manages its risks, with the definition of general risk appetite and the ensuing structure of the risk management process, the overall risk profile, and the principal specific risks of the Group. Management of the overall risk profile derives from the definition of general principles and is structured on the basis of limits, to ensure that the Group is always compliant with the minimum solvency, liquidity and profitability levels, including under severe stress conditions. In addition, the Group aims to maintain the desired operational, reputational and compliance risk profiles.

The definition of the Risk Appetite Framework is a comprehensive process driven by the Chief Risk Officer, which calls for close cooperation with the Chief Financial Officers and the heads of the various Business Units. It is developed in keeping with the ICAAP and ILAAP processes and is the key reference for the development of the budget and the business plan. In this way, consistency is established between the strategy and the risk underwriting policy, on one side, and the planning and budgeting process, on the other.The definition of the Risk Appetite Framework and the consequent operational limits on the


main specific risks, the use of risk measurement tools in the context of credit management processes and operational risk control, the useof capital-at-risk measures to report company performance and the internal capital adequacy assessment are key steps in the operational process to implement risk management strategies, defined by the Board of Directors, along the Group’s entire decision-making chain.

Current and prospective Total Internal Capital is calculated on an annual basis for regulatory purposes - with “event-based” redeterminations, in case of significant

organizational and/or strategic changes – and is otherwise monitored constantly through reviews of capital plans by Risk and Permanent Control, with the support of the Finance department.


SECTION 1 RISKS OF THE ACCOUNTING CONSOLIDATED PERIMETERQUANTITATIVE DISCLOSURES

A. Credit quality

A.1 Performing and non-performing credit exposures: amounts, adjustments, changes, and economic breakdown

A.1.1 Breakdown of financial assets by portfolio and credit quality (carrying value)

Portfolios/quality

Unlikelyto pay

Bad exposure

TotalNon performingpast due

exposure

Performingpast due

exposure

Other performing

past due exposure




3. Financial assets designated at fair value

4. Other financial assets mandatorily

at fair value

5. Financial assets as held for sale

Total 31/12/2019

Total 31/12/2018

40,546

-

-

-

-

40,546

27,930

67,415

-

-

-

-

67,415

83,656

44,679

-

-

-

-

44,679

29,995

388,497

-

-

-

-

388,497

391,712

25,361,895

9,807

-

-

-

25,371,702

25,221,042

25,903,032

9,807

-

-

-

25,912,840

25,754,332


A.1.2 Breakdown of financial assets by portfolio and credit quality (gross and net values)

Impaired Not impaired

Gross exposure

Gross exposure

Overall writedowns

of value

Overall writedowns

of value

Net exposure

Net exposure

Overall partial

write-off*

Total (net

exposition)




3. Financial assets designated at fair value

4. Other financial assets mandatorily at

fair value

5. Financial assets held for sale

Total 31/12/2019

Total 31/12/2018

299,704

-

-

-

-

299,704

287,758

(147,064)

-

-

-

-

(147,064)

(146,180)

152,640

-

-

-

-

152,640

141,578

269

-

-

-

-

269

-

25,873,860

9,807

x

x

-

25,883,667

25,740,459

(123,468)

-

X

X

-

(123,468)

(127,705)

25,750,392

9,807

-

-

-

25,760,199

25,612,754

25,903,032

9,807

-

-

-

25,912,840

25,754,332

Portfolios/quality

1. Financial assets held for trading


Total 31/12/2019

Total 31/12/2018

Low credit quality assets Other assets

Cumulated losses Net exposure Net exposure

-

-

-

-

-

-

-

1

-

36,930

36,930

35,940

Portfolios/quality

(*) Value shown for information purposes.


SECTION 2 RISKS OF THE PRUDENTIAL CONSOLIDATED PERIMETER


1.1 Credit risk

determine the exposure at default in relation to counterparty risk.To calculate capital requirements for CVA (Credit Valuation Adjustment) risk, the Group adopts the standardized method as per article 384 of Regulation (EU) n. 575/2013 (CRR).

Credit risk is the risk that unexpected changes in creditworthiness cause a borrower’s default, producing unforeseen losses in on- and off-balance-sheet exposures. Credit risk includes also counterparty risk, that is the risk that a counterparty in a transaction involving specific instruments (financial and credit derivatives, repurchase agreements, securities/commodities borrowing, margin loans) defaults before the cash flows of the transaction are finally settled. For the Group, this risk arises in its core operations, that is: • loans and leases to buyers of vehicles of its manufacturing partners (Retail business line); • loans to the dealers of the manufacturing partners (Dealer financing business); • holding and control of equity interest in commercial firms that are not part of the Banking Group in Italy and in Europe. Moreover, the bank provides funding support to its subsidiaries through lines of credit and guarantees to external lenders.

To calculate the internal capital required for credit risk, the Group, in agreement with Circular 285 of the Bank of Italy for class 2 banks, uses the standard methodology for the calculation of capital requirements under Pillar I.

Following the transformation into a bank, the regulatory classification of exposures has been set up in keeping with the legal framework of reference. With the upgrade of its information systems, the Parent Company developed in 2015 the tools for the application of the new criteria and for meeting the relevant supervisory reporting obligations. To calculate the internal capital required for counterparty risk, in the same vein as the credit risk calculated with the standard methodology, the Group applies the current value method to

2.1 Organizational aspectsThe FCA Bank Group’s credit policies are designed in essence to foster the assumption of risks that must be: • controlled;• reasonable;• contained within certain limits.

The FCA Bank Group has a specific Credit Manual intended to: • support the analysis of the parties responsible for credit approvals; • set and maintain the quality of credit standards; • meet the customers’ credit requirements; • take the commercial opportunities provided by the possibility to develop new financing products in markets and limit losses.The combination of the criteria listed must ensure the profitability of financing transactions.

1.OVERVIEW

2.CREDIT RISK MANAGEMENT POLICIES


• analysing any other matter delegated to it by the Board of Directors;• making decisions, within the scope of its powers, on requests for credit approvals coming from the Market and analysing the requests to be submitted to the Board of Directors. The Board may delegate to the Board Executive Credit Committee (BECC) when the date of the first Board meeting is not consistent with the urgency of decisions to be made in credit matters.

The HQ Internal Credit Committee is responsible for:• approving credit applications within the limits established by the delegated powers;• preparing for approval credit applications that exceed the limits set by the delegated powers;• evaluating and changing the Credit Manuals of the Parent and Local Companies within the Governance of the FCAB Group Credit Guidelines;• evaluating, approving or submitting to the competent bodies the Markets’ requests on credit policy issues in relation to the rules laid down by the Parent Company; • evaluating and approving powers delegated to the markets.

The Local Credit Committees are responsible for:• determining the application at local level of general policies and the approaches for credit approvals, control and collections by adapting the General Principles and Rules of the FCA Bank Group to the local reality; • formalizing and updating the Market’s Manual of Credit Policies; • analysing the situation of credit exposures and credit limits; • determining, within the scope of its responsibilities, the limits and the process to approve lines of credit (to be formalized in the Market’s Manual of Credit Policies);• determining the powers delegated within its own organizational structure, to be

2.2 Management, measurement and control systemsRoles and responsibilitiesIn this context, the FCA Bank Group manages credit risk through a specific allocation of roles and responsibilities involving: • the Board of Directors;• the Board Executive Credit Committee;• the Credit Committee of the Parent Company;• the HQ Internal Credit Committee• the Local Credit Committees.

Regarding credit, the Board of Directors is responsible for:• setting credit risk policies and any amendment thereto;• adopting and approving the power delegation system and any change thereof;• approving periodically the changes to the cut-off of the scorecards (matter delegated to the Credit Committee);• establishing periodically the credit approval limits attributed to the Credit Committee and the single Country Managers.

The Board Executive Credit Committee is responsible, pursuant to the authority vested in it by the Board of Director, for approving matters falling within the Board’s purview that need to be addressed urgently, before the next scheduled Board meeting.

The Parent Company’s Credit Committee is responsible for: • proposing credit policies to the Board of Directors (and possible changes thereof);• defining signatory powers within the range set periodically by the Board of Directors for each FCA Bank business; • managing and defining the changes to be made to the scorecards (with the CFO’s obligation to report every six months to the Board of Directors); • reviewing and analysing risk performances;


submitted for approval to the HQ Internal Credit Committee of the Parent Company; • approving credit applications within the limits set by the delegated powers.

2.3 Measurement methods for expected lossesWith the introduction of IFRS 9 in the Dealer Financing and Retail businesses and with a simplified approach in the rental business line, the bank currently makes provisions for losses in view of expected credit losses in a forward-looking perspective, as well as in a historical perspective.

Expected credit losses (ECL) are measured as follows:

ECL= PDxLGDx EAD

• probability of default. Likelihood of a default by a counterparty or of a contract in a pre-established time horizon;• Loss given default. Loss that the bank would incur determined by the likelihood of a default by a counterparty or of a contract in a pre-established time horizon;• Exposure at default. Exposure at the time of default.

In order to include a forward looking impact on ECL, two satellite models have been developed, one for retail and one for dealer financing. The forward looking models output is a “calibrated PD” taking into account the forward looking aspects based on the two macroeconomic scenarios, baseline and adverse.

In order to develop the two scenarios, following a significant analysis, some macroeconomic variables (ex. GDP, euribor), have been used both for retail and dealer financing models.Furthermore, for retail model, also some “business” variables have been considered (ex. Registrations, Market share).The weight to be assigned to each scenario

2.4 Credit risk mitigation techniques The FCA Bank Group has developed its own model for managing and mitigating risks in keeping with the guidelines of the Group Credit Manual, with reference to: • monitoring of specific KRIs (Key Risk Indicators);• second-level control activities carried out by the R&PC – GRM with specific reference to Credit review, Dealer Financing review and Collection review;• Credit Risk Mitigation (CRM) policy.

Monitoring of specific KRIsThe R&PC – GRM department monitors constantly the credit portfolio, surveying for every business line (Retail, Dealer Financing and Rental) the performance of specific KRIs and compliance with the risk limits in place: • Non Performing Loans (NPL) Ratio, which is calculated as the ratio of non-performing exposures to total exposures at the end of the month; • Cost of Risk (CoR) Ratio, which is calculated

is approved by the Provisioning Committee together with the forward looking models. At current stage the weight for the baseline scenario is 80% while, the weight of the adverse scenario is 20%.

The frequency of the forward looking update is at least on half year basis. The frequency can be higher in case of significant changes of macroeconomic scenarios/business variables or following a request by the management.

The portfolio is divided in 3 buckets, with the classification of credits in stages depending on the level and change over time of the credit risk.

Changes in stages can be due both to a deteriorated credit risk or to an improved credit risk.


to provide adequate reports to the Parent Company’s Dealer Financing department.

Credit Risk Mitigation (CRM) policyBased on guidance from the Supervision Authority on the implementation, for prudential purposes, of Credit Risk Mitigation (CRM) techniques, the Parent Company, FCA Bank, designed a policy to govern such techniques. Specifically, such policy calls for contracts ancillary to the exposure or other tools and techniques that reduce credit risk in ways that affect positively the calculation of capital requirements.

Currently, FCA Bank S.p.A. adopts, for prudential purposes, credit risk mitigation techniques that include the use of the following tools:• cash collateral for derivative arrangements;• repurchase agreements – REPO;• offset accounting.

The policy is intended to define:• the general nature of credit risk mitigation (CRM) techniques;• the requirements that guarantees have to meet to be considered for credit risk mitigation purposes; • the credit risk mitigation tools used by FCA Bank.

In this case, the policy sets out the general and specific principles of credit risk mitigation as provided for by the CRR, chapter 4, section 1, articles 192 et seq. Anything not specifically provided for by the policy is governed by the CRR. The CRM techniques recognized in the calculation of capital requirements fall under two general categories:• “funded credit protection”, where the reduction of the credit risk on the exposure of an institution derives from the right of that institution, in the event of default of the counterparty or on the occurrence of other specified credit events relating to the counterparty, to liquidate, or to obtain transfer or appropriation of, or to retain certain assets or amounts, or to reduce the amount of the exposure to, or to replace it with, the amount

as the ratio of total provisions to the average exposure calculated at the end of the month; With specific reference to the Retail business, the R&PC – GRM department monitors also the performance of: • SIR n, calculated as the number of contracts of a given generation (n) with two or more instalments overdue as a share of total production for the same generation; • Collection indicators, expressed as a % of the total outstanding in collection; • Litigation indicators, expressed as a % of the total outstanding in litigation.

GuaranteesIn analysing a credit application, the bank and the other group companies may indicate that approval of the financing is subject to the posting of collateral by the customer. Risk mitigation techniques are used mainly in the Dealer Financing business. Below, a summary is provided of the guarantees allowed by the credit policies in place: • guarantees in rem: pledges, deposits, mortgages.• guarantees in personam: bank and insurance guarantees, sureties. • other types: third-party funds, comfort letters, retention of title, bank guarantees, buyback obligations. In the event that guarantees other than those allowed are offered, or guarantees are offered with characteristics other than those contemplated in the bank’s procedures, the single subsidiaries must request authorization (or ratification) from the Parent Company to set the credit limit. To ensure that guarantees are fully effective, the Parent Company has put in place specific checks to ensure that they all contain the following elements: • certainty of the issue date, which is obtained by adding a date and by complying and executing the necessary formalities; • simultaneousness with the financing; • reference to the underlying contract.Every subsidiary is responsible for managing guarantees and collateral (definition of adequate coverage contents, validity checks, checks of renewal and expiration dates) and


of the difference between the amount of the exposure and the amount of a claim on the institution (Ref. article 4 of CRR, paragraph 58). • “unfunded credit protection” where the reduction of the credit risk on the exposure of an institution derives from the obligation of a third party to pay an amount in the event of the default of the borrower or the occurrence of other specified credit events (Ref. article 4 of CRR, paragraph 59).

Second-level control activities carried out by the R&PC – GRM departmentIn the context of second-level control activities, the R&PC – PC department is responsible for the following activities:

1. Credit Reviews, which involve a number of reviews of the activity carried out: by the Retail area to:- check compliance with the Group’s credit policies and the applicable procedures; - verify the proper input of data into the system both for the credit applications approved automatically and for the credit applications analysed by the Acceptance unit of the Retail & Corporate Underwriting department;- determine any training requirements;- identify potential concentration risks;- recommend solutions to maintain “acceptable” credit standards.

by the Dealer Financing area to:- ensure that the control plan for the wholesale business is properly implemented and executed with the required frequency;- recommend solutions to improve the control plan;- check the proper input of data into the system and their consistency with the approved lines of credit and the limits for significant transactions;- bring to light critical results of the process and consider the proper corrective actions to be planned.

2. Collection Reviews, which involve a number of reviews of the collection activity to: - ensure the proper application of the Group’s

guidelines;- recommend solutions to improve the collection process; - check the proper input of data into the system;- assess the level of application of local collection rules; - determine any training requirements.

The Stress Test on Credit risk concerns the portfolio and the relating IFRS9 parameters evolution (Retail and Corporate business lines). The starting point of the stress test is the projection of the main bank metrics and exogen variables (such as Unemployment rate, GDP per Country..), estimated with ARIMA models through a dedicated tool. The stress impact is regularly updated and included in the Pillar II Capital calculation.For details of the internal policies and rules in relation to the foregoing, reference is made to the following procedures: • Credit Review Retail Procedure;• Dealer Financing Review Procedure;• Collection Review Procedure.


3.1 Management strategies and policiesHistorically, FCA Bank has low non-performing loan (NPL) levels, significantly lower than the average for the European banking sector. As the holding company of a Group operating in different markets, FCA Bank:• sets out the NPL strategy within the RAF, the risk strategy, and the consolidated budget with subsequent allocation at the Market level;• defines the portfolio’s performance indicators and early warning indicators;• issues guidelines in the area of NPL collection within the FCA Bank Group Credit Guidelines, with reference to the various phases and possible actions for recovery. These guidelines are then implemented by the single Group companies, based on their size, local rules and regulations, their organization and their NPL levels;• defines, in keeping with domestic and European regulations, the credit classification rules for the business lines for the proper reporting and management of non-performing exposures.

Forbearance policies set out:• in keeping with the provisions of the applicable regulations, the criteria to identify forborne exposures;• eligible forbearance measures;• the rules for the implementation of forbearance measures, such as agreement with the customer, the assessment of the measures that best fit the customers, in light of their specific characteristics, counterparty analysis;• the limits for the implementation of forbearance measures; • monitoring and actions to be taken in case of unpaid sums; • the classification of these exposures as forborne and non-performing exposures.

3.2 Write-offsIn the Group Credit Guidelines, FCA Bank laid down the principle whereby exposures considered uncollectible must be promptly written off or otherwise offset by provisions equal to 100% of their amount.

3.NON-PERFORMING CREDIT EXPOSURES

4.COMMERCIAL RENEGOTIATION FINANCIAL ASSETS AND FORBORNE EXPOSURES



A. Credit quality A.1 Non-Performing and performing credit exposure: amounts, writedowns, changes, distribution by business activity

A.1.1 Prudential consolidation: distribution of financial assets by past-due buckets (book values)

First stage

Portfolios / risk stages

Second stage Third stage

From 1 day to

30 days

From 1 day to

30 days

From 1 day to

30 days

Over 30 days until

90 days

Over 30 days until

90 days

Over 30 days until

90 days

Over 90

days

Over 90

days

Over 90

days

1. Financial assets at

amortized cost

2. Financial assets at fair value

through other comprehensive

income


Totale 31/12/2019

Totale 31/12/2018

236,485

-

-

236,485

275,434

600

-

-

600

7,541

923

-

-

923

217

250,146

-

-

250,146

232,182

94,992

-

-

94,992

80,002

38,105

-

-

38,105

2,737

2,727

-

-

2,727

1,939

2,317

-

-

2,317

2,145

90,221

-

-

90,221

82,560


A.1.2 Prudential Consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions

p.1

First stage assets

Sources / risk stages

Second stage assets

Overall write-downs

Financial assets

at amortised

cost

Financial assets

held for sale

Financial assets

held for sale

Financial assets

at amortised

cost

Financial assets at fair value

through other

comprehen-sive

income

Financial assets at fair value

through other

comprehen-sive

income

of which: individual

writedowns


writedowns

of which: collective

writedowns


writedowns

Total opening adjustments

Increases in acquired or originated

financial assets

Cancellations different from write-offs

Net value adjustments / write-backs

for credit risk

Contractual changes without

cancellation

Changes in the estimation methodology

Write-offs non recorded directly in the

income statement

Other changes

Total closing adjustments

Recoveries from financial assets

subject to write-off

Write-offs recorded directly

in the income statement

78,262

1,127

-

8,618

-

-

(126)

(12,035)

75,846

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

46,468

25

-

3,793

-

-

-

(2,446)

47,840

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

180

-

-

-

-

-

-

(130)

50

-

-

52

-

-

283

-

-

-

-

335

-

-

78,082

1,127

-

8,618

-

-

(126)

(11,905)

75,796

-

-

46,416

25

-

3,510

-

-

-

(2,446)

47,505

-

-


A.1.2 Prudential Consolidation - Financial assets, loan commitments and financial guarantees given: changes in overall impairments and provisions

p.2

Third stage assets

Total value adjustments

Sources / risk stages

Total provisions on commitments to disburse funds and financial

guarantees issued

Financial assets

measured at amortized

cost

Financial assets

held for sale

Financial assets

measured at fair value

with an impact

on total profitability


writedowns


writedowns

First stage

Second stage

Third stage

Of which: impaired financial

assets acquired or originated

Total

139,080

822

(21,889)

28,791

-

-

(21,680)

16,216

141,340

245

(1,075)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

33,444

800

-

889

-

-

(936)

1,310

35,507

-

(623)

105,636

22

(21,889)

27,902

-

-

(20,744)

14,906

105,833

245

(452)

-

-

-

-

-

-

-

-

-

-

-

263,810

1,974

(21,889)

41,202

-

-

(21,806)

1,735

265,026

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Total opening adjustments

Increases in acquired or originated

financial assets

Cancellations other than write-offs

Net value adjustments / write-backs

for credit risk

Contractual changes without cancellation

Changes in the estimation

methodology

Write-offs non recorded directly

in the income statement

Other changes

Total closing adjustments

Recoveries from financial assets

subject to write-off

Write-offs recorded directly in the

income statement


A.1.3 Financial assets, commitments to provide funds and guarantees as long as they are issued: transfers between different credit risk stages (gross and nominal values)

A.1.4 Prudential Consolidation - On- and off-balance sheet credit exposures with banks: gross and net values

Gross exposure / Par value

From second stage to

first stage

From first to second

stage

Transfers between first stage and second stage

Transfers between second stage to thirth stage

Transfer between first stage and thirth stage

From thirth to first

step

From second to third step

From thirth to second

step

From first to thirth

step

1. Financial assets valued at amortized cost

2. Financial assets at fair value through other

comprehensive income


4. Commitments to provide funds and financial

guarantees issued

Total 31/12/2019

Total 31/12/2018

444,162

-

-

-

444,162

667,197

284,402

-

-

-

284,402

888,503

36,455

-

-

-

36,455

50,853

11,603

-

-

-

11,603

10,892

70,100

-

-

-

70,100

77,122

15,241

-

-

-

15,241

46,581

Portofolios/risk stages

Exposure types /values

Gross exposure

PerformingNon

performing

Total valueadjustments

and totalprovisions

Net Exposure

Overall partial

write-off*

A. On-balance sheet credit exposures

a) Bad exposures

- of which: forborne exposures

b) Unlikely to pay


c) Non-performing past due


d) Performing past due


e) Other performing exposures


Total (A)

B. Off-balance sheet credit exposures

a) Non-performing

b) Performing

Total (B)

Total (A+B)

-

-

-

-

-

-

x

x

x

x

-

-

x

-

-

x

x

x

x

x

x

-

-

1,951,602

-

1,951,602

X

1,876

1,876

1,953,478

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

1,951,602

-

1,951,602

-

1,876

1,876

1,953,478

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

* Value shown for information purposes.


A.1.5 Prudential Consolidation - On- and off-balance sheet credit exposures with customers: gross and net values

Exposure types /values

Gross exposures

PerformingNon

performing

Total value adjustments

and total provisions

Net exposure

Overall partial

write-off*

A. Credit exposures for cash

a) Non performing loans


b) Probable defaults


c) Impaired expired exposures


d) Expired exposures not impaired


e) Other non-impaired exposures


Total (A)

B. Non-balance sheet credits exposures

a) Impaired

b) Not impaired exposures

Total (B)

Total (A+B)

117,651

2,853

102,761

14,749

71,534

530

x

x

x

x

291,946

-

x

-

291,946

x

x

x

x

x

x

425,992

194

23,372,587

3,660

23,798,579

x

-

-

23,798,579

79,084

2,733

35,403

6,042

26,854

86

37,822

16

85,863

11

265,026

-

-

-

265,026

38,567

120

67,358

8,707

44,680

444

388,170

178

23,286,724

3,649

23,825,499

-

-

-

23,825,499

269

-

-

-

-

-

-

-

-

-

269

-

-

-

269

* Value shown for information purposes.


A. 1.7 Prudential Consolidation - On-balance sheet credit exposures with customers: changes in gross non-performing exposures

A. Opening balance (gross amount)

- of which sold non-cancelled exposures

B. Increases

B.1 transfers from performing loans

B.2 Transfer from acquired or originated impaired financial assets

B.3 transfer from other non-performing exposures

B.4 contractual changes without cancellations

B.5 other increases

C. Decreases

C.1 transfers to performing loans

C.2 write-offs

C.3 collections

C.4 sales proceeds

C.5 losses on disposals

C.6 transfers to other non-performing exposures

C.7 contractual changes without cancellations

C.8 other decreases

D. Closing balance (gross amounts)


53,779

782

39,321

25,266

-

258

-

13,798

21,567

2,691

-

9,457

-

-

5,375

-

4,044

71,534

8,664

Unlikely to pay

Bad exposuresSources/ categories

Non-performing past due

122,265

6,417

73,203

21,339

-

2,823

-

49,042

92,707

586

-

71,184

-

-

3,564

-

17,373

102,761

12,753

103,270

9,293

79,707

20,088

-

6,889

-

52,730

65,326

201

24,249

7,938

5,011

21,889

1,014

-

5,024

117,651

20,634

Detail statement on impaired credit exposures (Bad exposures, Unlike to pay, Non performing past due) and not impaired is provided in the tables of "Credit quality" contained in Part E of the notes to the consolidated financial statements. In this area, in line with the regulations of the Bank of Italy, specific information is also provided on the so-called exposures with measures of "forbearance". For forbearance means those concessions in terms of modification and/or refinancing of an existing credit, against a debtor solely by reason of, or to prevent, a State of financial

distress that could adversely affect its ability to fulfil contractual obligations originally assumed, and that would not have been granted to other debtor with similar risk profile not in financial distress. Concessions must be identified at the level of the individual line of credit and may cover exposures of debtors classified as performing that in non-performing status. In any case, exposures renegotiated should not be considered forborne when the debtor is not a situation of financial distress.


A.1.7bis Prudential Consolidation - On-balance sheet exposures with customers: changes by credit quality in gross forborne

A. Opening balance (gross amount)


B. Increases

B.1 transfers from performing non-forborne exposures

B.2. Transfers from performing forbone exposures

B.3. transfers from non-performing forborne exposures

B.4 transfers from non-performing non-forborne exposures

B.4 other increases

C. Decreases

C.1 Transfers to performing non-forborne exposures

C.2 transfers to performing forbone exposures

C.3 transfers to non-performing forborne exposures

C.4 write-offs

C.5 collections

C.6 sales proceeds

C.7 losses on disposals

C.8 other decreases

D. Closing balance (gross amounts)


33,045

-

1,235

1,154

X

-

80

-

30,425

10

-

X

-

723

-

-

29,618

3,854

-

Forborne exposures: non-performingSources/Quality

Forborne exposures: performing

24,664

1,145

2,812

160

383

X

95

2,174

9,344

-

X

-

X

921

3

-

8,420

18,132

4,596


A.1.9 Prudential Consolidation - On-balance sheet non-performing credit exposures with customers: changes in overall write-downs

of which: forborne

exposures

Total

Bad exposures Unlikely to pay Non-performing past due

of which: forborne

exposures

Total of which: forborne

exposures

Total

A. Opening balance overall amount of writedowns


B. Increases

B.1 Write-downs of acquired or originated impaired financial assets

B. 2 other write-downs

B.3 losses on disposal

B.4 transfers from other categories of non-performing exposures

B. 5 contractual changes without cancellations

B.6 other increases

C. Reductions

C.1 write-backs from valuation

C.2 write-backs from collection

C.3 gains on disposal

C.4 write-offs

C.5 transfers to other categories of non-performing exposures

C. 6 contractual changes without cancellations

C.7 other decreases

D. Closing balance overall amount of writedowns


77,470

9,712

45,195

1,132

10,596

32

4,973

-

28,462

43,581

9,276

628

1,494

24,249

204

-

7,730

79,084

15,971

3,615

364

85

X

10

3

64

-

9

967

-

-

-

-

14

-

953

2,733

244

38,713

3,909

17,682

-

7,248

-

1,346

-

9,088

20,991

2,180

1,386

-

-

3,241

-

14,184

35,403

6,342

8,191

233

565

X

23

-

3

-

540

2,714

23

4

-

-

43

-

2,644

6,042

923

23,815

961

10,374

408

3,242

-

1,015

-

5,709

7,686

2,186

677

-

-

3,889

-

935

26,854

2,547

2,782

-

85

X

44

-

3

-

38

2,782

-

19

-

-

19

-

2,744

86

-

Sources/Categories


A.2 Classification of credit exposure based on external and internal ratings

A.2.1 Distribution of financial assets, commitments to disburse funds and financial guarantees issued: for external rating classes (gross values)

External rating classes

Exposures Class 1

Class 5

Class2

Class 6

Class 3

Without rating

Class 4

Total

A. Financial assets valued at amortized cost

- First stage

- Second stage

- Third stage

B. Financial assets valued at fair value with impact on

overall profitability

- First stage

- Second stage

- Third stage

C. Financial assets held for sale

- First stage

- Second stage

- Third stage

Total (A+B+C)

of which: impaired financial assets acquired or originated

D. Commitments and financial guarantees given

- First stage

- Second stage

- Third stage

Total (D)

Total (A+B+C+D)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

26,032,320

24,871,757

868,617

291,946

9,807

9,807

-

-

-

-

-

-

26,042,127

-

-

-

-

-

26,042,127

26,032,320

24,871,757

868,617

291,946

9,807

9,807

-

-

-

-

-

-

26,042,127

-

-

-

-

-

26,042,127


A.3. Breakdown of guaranteed credit exposures by type of guarantee

A.3.1 Prudential Consolidation - Secured on-balance and off-balance sheet credit exposures with banks

p.1Personal guarantees (2)

Credit derivativesCollaterals (1)

Central counterparties

SecuritiesProperty Financial

leases

Gross exposure

Other collaterals

Netexposure

CLNProperty

mortgages

Other derivatives

1. Secured on-balance sheet credit exposures

1.1 totally secured

- of which non-performing

1.2 partially secured


2. Secured off-balance sheet credit exposures

2.1 totally secured




26,764

26,764

-

-

-

-

-

-

-

-

24,044

24,044

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

24,039

24,039

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-


A.3.1 Prudential Consolidation - Secured on-balance and off-balance sheet credit exposures with banks

p. 2Personal guarantees (2)

Credit derivatives

Other derivatives

Signature loans

BanksPublic sector

entitiesBanks

Other financial

companies

Other financial

companiesOther

entitiesOther

entitiesTotal

(1)+(2)

1. Secured on-balance sheet credit exposures

1.1 totally secured




2. Secured off-balance sheet credit exposures:

2.1 totally secured




-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

24,039

24,039

-

-

-

-

-

-

-

-


A.3.2 Prudential consolidation - Secured on-balance and off-balance sheet credit exposures with customers

A.3.2 Prudential consolidation - Secured on-balance and off-balance sheet credit exposures with customers

p.1

p.2

Personal Guarantees (2)

Credit derivativesCollaterals (1)

Central counterparties

SecuritiesProperty Financial

leases

Gross exposure

Other collaterals

Net exposure

CLNProperty

mortgages

Other derivatives

1. Secured on-balance sheet credit exposures:

1.1 totally secured





2.1 totally secured


2.2. partially guaranteed


12,005,672

6,199,035

63,457

5,806,637

107,627

-

-

-

-

-

11,828,073

6,092,017

32,462

5,736,056

71,079

-

-

-

-

-

45,210

-

-

45,210

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

42,572

-

-

42,572

-

-

-

-

-

-

6,092,017

6,092,017

32,462

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Personal Guarantees (2)

Credit derivatives

Other derivatives

Signature loans

Banks

Public sector

entitiesBanks

Other financial

companies

Other financial

companiesOther

entitiesOther

entitiesTotal

(1)+(2)

1. Secured on-balance sheet credit exposures:

1.1 totally secured





2.1 totally secured


2.2. partially guaranteed


-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

474,767

-

-

474,767

16,893

-

-

-

-

-

372,899

-

-

372,899

-

-

-

-

-

-

882,214

-

-

882,214

5,631

-

-

-

-

-

7,909,680

6,092,017

32,462

1,817,663

22,524

-

-

-

-

-


B. DISTRIBUTION AND CONCENTRATION OF CREDIT EXPOSURES

B.1 Prudential consolidation - Sectoral distribution of cash and off-balance sheet exposures to customers

p.1

Total write-downs

Net exposure

Public administration Financial companies Financial companies (of which: insurance companies)

Total write-downs

Net exposure

Total write-downs

Net exposure


A.1 Non-performing loans

- of wich: forborne exposures

A.2 Unlikely to pay


A.3 Impaired past due exposures


A.4 Not impaired exposures


Total (A)


B.1 Non-performing exposures

B.2 Performing exposures

Total (B)

Total (A+B) 31/12/2019

Total (A+B) 31/12/2018

30

-

-

-

91

-

22,176

-

22,297

-

-

-

22,297

2,185

43

-

-

-

64

-

121

-

228

-

-

-

228

45

48

-

27

-

187

4

242,449

23

242,711

-

-

-

242,711

250,957

34

-

3,700

3,685

88

-

595

-

4,417

-

-

-

4,417

5,037

-

-

-

-

-

-

-

-

-

-

-

-

-

18

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Exposures/Counterparts


B.1 Prudential consolidation - Sectoral distribution of cash and off-balance sheet exposures to customers

p.2Non-financial companies Families

Total write-downs

Net exposure

Total write-downs

Net exposure




A.2 Unlikely to pay






Total (A)




Total (B)

Total (A+B) 31/12/2019

Total (A+B) 31/12/2018

26,277

42

61,020

7,118

29,393

75

10,805,137

955

10,921,827

-

-

-

10,921,827

11,472,329

46,112

2,620

17,757

2,069

14,098

38

68,549

3

146,516

-

-

-

146,516

125,386

12,275

78

6,312

1,588

15,009

365

12,605,069

2,849

12,638,664

-

-

-

12,638,664

13,121,189

33,143

114

13,947

289

12,605

48

54,171

25

113,866

-

-

-

113,866

136,116

Exposures/Counterparts


B.2 Prudential consolidation - Distribution of BS and Off-BS credit exp. to customers

B.2 Prudential consolidation - Distribution of BS and Off-BS credit exp. to customers

p.1

p.2

Total value

adjustments

Net exposures

Italy Other european countries United States

Net exposures

Total value

adjustments

Net exposures



A.2 Unlikely to pay



Total (A)




Total (B)

Total (A+B) 31/12/2019

Total (A+B) 31/12/2018

6,744

46,666

8,373

11,507,060

11,568,843

-

-

-

11,568,843

11,690,029

35,064

27,374

8,183

49,883

120,505

-

-

-

120,505

122,278

31,886

20,692

36,306

12,167,771

12,256,655

-

-

-

12,163,443

13,156,649

44,268

8,029

18,671

73,553

144,521

-

-

-

144,521

144,304

-

-

-

-

-

-

-

-

-

-

Exposures / Geographical

Total value

adjustments

Net exposures

United States Asia Rest of the world

Net exposures

Total value

adjustments

Total value

adjustments



A.2 Unlikely to pay



Total (A)




Total (B)

Total (A+B) 31/12/2019

Total (A+B) 31/12/2018

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Exposures / Geographical


B.3 Prudential Consolidation - Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area

B.3 Prudential Consolidation - Distribution of on-balance and off-balance sheet credit exposures with banks by geographic area

p.1

p.2

Overall write-downs

Net exposure

Italy Other european countries United states

Net exposure

Overall write-downs

Net exposure


A.1 Bad exposures

A.2 Unlikely to pay

A.3 Non-performing past-due

A.4 Performing exposures

Total (A)




Total (B)

Total 31/12/2019

Total 31/12/2018

-

-

-

912,631

912,631

-

-

-

912,631

1,137,552

-

-

-

-

-

-

-

-

-

-

-

-

-

1,038,971

1,038,971

-

1,876

1,876

1,040,847

1,245,238

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Esposizioni/Aree geografiche

Overall write-downs

Net exposure

United States Asia Rest of the world

Net exposure

Overall write-downs

Overall write-downs


A.1 Bad exposures

A.2 Unlikely to pay

A.3 Non-performing past-due

A.4 Performing exposures

Total (A)




Total (B)

Total 31/12/2019

Total 31/12/2018

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Exposures / Geographical areas


B.4 Large exposures

Based on regulatory provisions, the number large exposures was determined by the reference to unweighted exposures in excess of 10% of eligible capital as defined by EU Regulation 575/2013 (CRR). The 'exposures' are defined as the sum of on-balance sheet assets at risk and and off-balance transactions (excluding those deducted from eligible capital) with a customer or a group of related customers, without applying weighting factors.

Such presentation criteria result in the inclusion in the financial statement table for large exposures of entities that present an unweighted exposure in excess of 10% of eligible capital, for the purpose of large risk.

A. Amount (book value)

B. Amount (weighted value)

C. Number

(€/000) Total 31/12/2019

1,475,358

440,112

2


C. SECURITIZATION TRANSACTIONS


rating agencies. On the other hand, private placements do not entail the assignment of a rating to the Securities.Mezzanine and Junior Securities are placed with a view to improving the efficiency of the risk-weighted assets associated with the securitized portfolio, as mentioned above.

Securitization transactions can be either revolving – where the Originator can assign from time to time additional receivables in accordance with the restrictions outlined in the securitization contract, for a pre-established period of time, so as to keep the existing portfolio at the same level as that at the time of issue – or amortizing, where the originator cannot assign additional receivables and the portfolio starts amortizing from the moment the ABSs are issued.At the end of the revolving period, or from the time the ABSs are issued in case the transaction is amortizing, ABSs are repaid in the pre-determined order as the portfolio amortizes.

Strategies and processes underlying the securitization of loans and leases Securitization transactions, undertaken pursuant to Law 130/1999, are carried out by FCA Bank to achieve four objectives:• diversification of funding sources: securitizations are a significant alternative source of funding to customer deposits for the Company;• improvement of liquidity position: the Company’s potential ability to securitize its receivables provides significant support to its liquidity position. The excellent results of the transactions carried out so far, together with the operating companies’ reputation in the role of servicers, guarantee in fact immediate access to this instrument, in case of difficulties in the other financial markets of reference;• optimization of the cost of funds: the structures used to carry out the securitizations and the quality of the receivables assigned make it possible, by receiving higher ratings, to obtain competitive funding costs;• improved efficiency of the risk-weighted assets associated with the securitized portfolio.

The securitization transactions carried out by FCA Bank pursuant to Law no. 130/1999 involve the purchase of receivable portfolios with proceeds from the placement of Asset-Backed Securities (ABSs) issued in different classes: Senior, Mezzanine and Junior.

Where permitted by market conditions, Senior but also Mezzanine and Junior Securities can be offered to European professional investors or can be placed privately, in whole or in part. Since FCA Bank obtained its banking license, Senior Securities can be used also for refinancing operations with the European Central Bank, in which case the Securities are subscribed, and therefore retained, by the Originator.In public placements, to Senior and Mezzanine Securities are assigned a rating by at least two

Revolving structure Transactions with a revolving structure, as described above, can call for the SPV to purchase, for a pre- established period of time, additional receivable portfolios with the same legal and financial structure and a similar risk profile, funding the purchase both with the proceeds from the collection of receivables in the portfolio existing at the time of issue of the ABSs, and assigned previously by the Originator, and with proceeds from the placement of additional ABSs issued within the limits of the program.

At the end of the revolving phase, the ABSs issued are repaid as the underlying receivables are collected.

The revolving structure allows the fixed costs of the transaction to be amortized over a longer period of time, thereby optimizing the cost of the transaction.


Liquidity managementThe Originator may be required in every transaction, and in ways that can differ formally from one another, to make available a liquidity line or a cash deposit to the SPV.

The amount is established by contract and is such as to allow the vehicle to meet temporary liquidity shortfalls (typically, at payment dates) that could occur in applying the waterfall payment structure described below.

Waterfall structureThe payment waterfall identifies priorities in the allocation of the cash available within the SPV.Typically, securitization transactions have a similar waterfall structure, which calls for a pre-established payment order to be followed.In the case of transactions originated from retail receivables, where there is typically a distinction between income (i.e. the discount deriving from the receivable assignment) and principal of the receivables collected by the SPV, the waterfall provides - in a simplified way - for the following types of payment:

INCOME:a) Vehicle expenses (mainly expenses related to the service providers of the transaction);

b) Swap (required by contract to hedge the SPV against interest rate risk);

c) Servicer compensation;

d) Interest on the ABSs;

e) Liquidity line repayment/interest;

f) Provisions for past due receivables;

g) Other items.

PRINCIPAL:(a) Any payments required but not made in relation to the above income waterfall;

(b) Purchase of receivables (during the revolving period);(c) Repayment of ABS issued (at the end of any revolving period);(d) Other items.In the case of transactions originated from dealer financing receivables, given the different portfolio characteristics, cash management arrangements are in place so that upon receiptof the following:a) Current account balance;b) Release of funds from structure on the cash reserve;c) Receivable collections;d) Issue of new senior ABS, if any,e) Issue of new junior ABS, if any.

The following payments are made:a) Vehicle expenses;b) Interest on senior ABSs;c) Provision of funds in the structure on the cash reserve;d) Purchase of receivables (during the revolving period);e) Repayment of senior ABSs;f) Interest on junior ABSs;g) Any repayment of junior ABS.


Servicing activityThe Servicer of securitization transactions is always the Originator.The role of servicer of the transactions requires compliance with several qualitative standards related to the proper management of the assets underlying the notes issued by the SPV and an adequate organizational structure in terms of management and specialized personnel.

From an operational point of view, the Servicer:• manages existing contracts according to its own credit and collection policies and the law, in agreement with the SPV and the trustee/representative of noteholders of the transaction, with reporting obligations also to the rating agencies in case of significant events;• records collections and recoveries, transferring the relevant amounts. Collections by the servicer of the various transactions are transferred to the SPV according to a pre-established schedule in each transaction (typically every day) and are kept in interest-paying current accounts until the next payment date. The funds are then used to make payments in accordance with the waterfall structure or, alternatively, in case of transactions in Warehouse Phase or in ABS Revolving Phase, until when they can be used to pay for the purchase of additional receivables;• monitors, reports on and checks the transaction (the roles of Paying Agent/Calculation Agent/Agent Bank are assigned to a different bank).

The Servicer receives compensation on an arm’s length basis.

Rating agenciesThe securitization transactions have been structured in such a way as to obtain, in case of public placements, at least the AA rating for the Senior ABSs issued by the SPV. For all the existing publicly traded senior and mezzanine ABSs (excluding junior ones), ratings were obtained from at least two of the four main

Performance of securitizationsThe assigned receivable portfolios delivered excellent performances, as indicated in the reports produced by the Servicer and in the reports prepared by the Calculation Agent (for the benefit of investors, in the case of publicly traded ABSs).

This is attested also, in some cases, by the upgrade of the ratings assigned by the agencies to certain ABSs.The portfolios are well within the limits and fully compliant with the restrictions set within the different transactions and no event took place which made the portfolio non-compliant in terms of the triggers monitored.The triggers related to the portfolio are monitored, regarding the transactions originated from retail receivables, on every date of assignment (no monitoring is carried out for amortizing transactions because their portfolios are static, i.e. they are not subject to changes due to revolving assignments, and receive a rating from the rating agencies only at the beginning of the transaction. Accordingly, the monitoring of the performance is for information purposes only).

Regarding transactions originated from dealer financing receivables, triggers and portfolio performances are monitored at least once a month and the assigned receivables show a regular performance.

rating agencies (Standard&Poor’s, Moody's Investor Service, DBRS and Fitch Ratings). The ABSs placed privately may or may not receive a (if assigned, it is normally private) rating, depending on the needs of the investor. Junior ABS are not assigned a rating.


The tables attached in the next paragraph summarize the information related to the main securitization transactions existing at December 31, 2019.It is worthy of note that these transactions, which had Group companies as originators, were completed in the year just ended or in previous years. In every case, at the end of the


amortization period, the Originator exercised the clean-up option, as provided for by the relevant contracts, whereby the Originator reserves the right - upon reaching a minimum portfolio amount provided for by contract - to buy back the remaining portfolio to complete the transaction:

SPV Clean-up date

FIRST Italian Auto Transaction S.p.A.

SECOND Italian Auto Transaction S.p.A.

ABSOLUTE FUNDING S.r.l.

FCC FAST

A-BEST THREE Plc

NIXES/A-BEST

QUASAR

NIXES TWO/A-BEST TWO

A-BEST SIX

STAR

A-BEST FIVE

A-BEST EIGHT

NIXES THREE

NIXES FOUR

FCT FAST 2

A-BEST SEVEN

A-BEST FOUR

NIXES FIVE

A-BEST NINE

A-BEST TEN

28/07/2006

29/09/2006

22/02/2008

27/11/2008

10/07/2009

21/04/2011

13/05/2011

01/10/2011

15/07/2013

15/01/2014

20/05/2014

16/03/2015

31/03/2015

01/06/2015

30/07/2015

15/11/2016

22/11/2016

21/09/2017

24/04/2018

23/02/2019


Characteristics of securitization transactions

EUR /000 A-BEST SIXTEEN UG A-BEST FIFTEEN S.r.l.

Start date december-18 may-17

Transaction type Public Public

Originator FCA Bank Deutschland GmbH FCA Bank S.p.A.

Servicer FCA Bank Deutschland GmbH FCA Bank S.p.A.

Arranger BAML / Crédit Agricole-CIB / LBBW Banca IMI / Unicredit / Crédit Agricole - CIB

Joint Lead Manager BAML / Crédit Agricole-CIB / LBBW Banca IMI / Unicredit / Crédit Agricole - CIB

Underlying assets German AutoLoans Italian AutoLoans

Currency (CCY) EUR EUR

Transfer of collections (frequency) daily daily

Programme Amount CCY/000 NA NA

Notes outstanding Amount % Coupon (bps) Amount % Coupon (bps)

Class A (Senior) 520,686 85.0% 1M E+40 650,954 86.2% 1M E+40

Class B (Mezzanine) 18,000 2.9% 1M E+80 5,000 0.7% 1M E+75

Class C (Mezzanine) 20,000 3.3% 1M E+150 43,000 5.7% 1M E+250

Class D (Mezzanine) 16,000 2.6% 1M E+250 15,000 2.0% 1M E+343

Class E (Mezzanine) 11,000 1.8% 1M E+350 10,000 1.3% 1M E+464

Class M/M1/Junior (Subordinated) 26,600 4.3% VR 30,900 4.1% 1M E+717

Class M2 (Subordinated) 100 0.0% VR

ABS Tranches at issue Amount % Tranche Amount % Tranche

Class A (Senior) 540,000 85.5% 5% RETAINED 911,000 89.8% 5% RETAINED

Class B (Mezzanine) 18,000 2.8% 100% RETAINED 5,000 0.5% 100% RETAINED

Class C (Mezzanine) 20,000 3.2% 100% RETAINED 43,000 4.2% 5% RETAINED

Class D (Mezzanine) 16,000 2.5% 100% RETAINED 15,000 1.5% 5% RETAINED

Class E (Mezzanine) 11,000 1.7% 100% RETAINED 10,000 1.0% 5% RETAINED

Class M/M1/Junior (Subordinated) 26,600 4.2% 100% RETAINED 30,900 3.0% 5,18% RETAINED

Class M2 (Subordinated) 100 0.0% 100% RETAINED

Current rating S&P Moody's Moody's DBRS

Class A (Senior) AAA Aaa Aa3 AAA

Class B (Mezzanine) AA Aa1 A1 AAA

Class C (Mezzanine) A A1 A2 AA

Class D (Mezzanine) BBB Baa1 Baa2 AH

Class E (Mezzanine) BB+ Ba1 Baa3 AL

Junior Tranche (Subordinated) Unrated Unrated

NOTE

(1) Programme limit funded by third counterparties

NA = Not applicabile

WAL (aa) = Weighted Average Life (years)

VR = Variable Return

1M E = Euribor 1 month

1M L = Libor 1 mese


Coupon (bps) = base rate + margin


EUR /000 A-BEST FOURTEEN S.r.l. A-BEST THIRTEEN FT

Start date may-16 december-15

Transaction type Public Public

Originator FCA Bank S.p.A. FCA CAPITAL España E.F.C.

Servicer FCA Bank S.p.A. FCA CAPITAL España E.F.C.

Arranger Banca IMI / Unicredit / Crédit Agricole - CIB Unicredit /Citibank

Joint Lead Manager NA Unicredit / Citibank / Crédit Agricole - CIB

Underlying assets Italian AutoLoans Spanish AutoLoans



Programme Amount CCY/000 NA NA


Class A (Senior) 1,487,000 88.7% 40 143,908 57.3% 1M E+40

Class B (Mezzanine) 50,000 3.0% 75 43,700 17.4% 1M E+140

Class C (Mezzanine) 33,300 2.0% 250 - 0.0% -

Class D (Mezzanine) 43,000 2.6% 343 - 0.0% -

Class E (Mezzanine) 18,200 0.0% 464 - 0.0% -

Class M/M1/Junior (Subordinated) 44,500 2.7% 717 63,500 25.3% VR

Class M2 (Subordinated) 100 0.0% VR - 0.0% -

ABS Tranches at issue Amount % Tranche Amount % Tranche

Class A (Senior) 1,487,000 88.7% 100% RETAINED 222,500 71.3% PUBLIC

Class B (Mezzanine) 50,000 3.0% 100% RETAINED 36,500 11.7% 100% RETAINED

Class C (Mezzanine) 33,300 2.0% 100% RETAINED - 0.0% -

Class D (Mezzanine) 43,000 2.6% 100% RETAINED - 0.0% -

Class E (Mezzanine) 18,200 1.1% 100% RETAINED - 0.0% -

Class M/M1/Junior (Subordinated) 44,500 2.7% 100% RETAINED 53,000 17.0% 100% RETAINED

Class M2 (Subordinated) 100 0.0% 100% RETAINED - 0.0% -

Current rating Fitch DBRS Fitch DBRS

Class A (Senior) AA AA AAA AAA

Class B (Mezzanine) A A AAA AAA

Class C (Mezzanine) BBB+ BBB (high) NA

Class D (Mezzanine) BB+ BBH NA

Class E (Mezzanine) BB BBL NA


NOTE






1M L = Libor 1 mese




EUR /000 A-BEST TWELVE S.r.l. A-BEST ELEVEN UGStart date august-15 march-15Transaction type Public PublicOriginator FCA Bank S.p.A. FCA Bank Deutschland GmbHServicer FCA Bank S.p.A. FCA Bank Deutschland GmbHArranger Unicredit / Banca IMI LBBW / Crédit Agricole - CIBJoint Lead Manager Banca IMI / Unicredit / Crédit Agricole - CIB LBBW / Crédit Agricole - CIBUnderlying assets Italian AutoLoans German AutoLoansCurrency (CCY) EUR EUR Transfer of collections (frequency) daily dailyProgramme Amount CCY/000 NA NA Notes outstanding Amount % Coupon (bps) Amount % Coupon (bps)Class A (Senior) 64,200 36.4% 1M E+40 - 0.0% 1M E+45

Class B (Mezzanine) 72,000 40.9% 1M E+125 13,677 20.1% 1M E+75 Class C (Mezzanine) - 0.0% - 15,000 22.0% 200 Class D (Mezzanine) - 0.0% - 13,000 19.1% 300 Class E (Mezzanine) - 0.0% - - 0.0% - Class M/M1/Junior (Subordinated) 40,000 22.7% VR 26,500 38.9% 2.000 Class M2 (Subordinated) - 0.0% - - 0.0% - ABS Tranches at issue Amount % Tranche Amount % Tranche Class A (Senior) 688,000 86.0% PUBLIC 454,000 86.7% PUBLIC Class B (Mezzanine) 72,000 9.0% 100% RETAINED 15,000 2.9% PUBLICClass C (Mezzanine) - 0.0% - 15,000 2.9% 100% RETAINEDClass D (Mezzanine) - 0.0% - 13,000 2.5% 100% RETAINED Class E (Mezzanine) - 0.0% - - 0.0% - Class M/M1/Junior (Subordinated) 40,000 5.0% 100% RETAINED 26,500 5.1% 100% RETAINEDClass M2 (Subordinated) - 0.0% - - 0.0% - Current rating Fitch DBRS S&P Moody'sClass A (Senior) AA AAAClass B (Mezzanine) AA AAA AA+ AaaClass C (Mezzanine) NA AA Aaa

Class D (Mezzanine) NA A AaaClass E (Mezzanine) NA NAJunior Tranche (Subordinated) Unrated Unrated

NOTE






1M L = Libor 1 mese




EUR /000 A-BEST SEVENTEEN S.r.l.Start date november -19Transaction type PublicOriginator FCA Bank S.p.A.Servicer FCA Bank S.p.A.Arranger Banca IMI / Unicredit / Crédit Agricole - CIBJoint Lead Manager Banca IMI / Unicredit / Crédit Agricole - CIB / SANTANDERUnderlying assets Italian AutoLoansCurrency (CCY) EUR Transfer of collections (frequency) daily Programme Amount CCY/000 NA Notes outstanding Ammontare % Coupon (bps) Class A (Senior) 810,000 88.8% 1M E+70

Class B (Mezzanine) 27,000 3.0% 1M E+125 Class C (Mezzanine) 18,000 2.0% 1M E+180 Class D (Mezzanine) 23,400 2.6% 1M E+285 Class E (Mezzanine) 9,900 0.0% 1M E+385Class M/M1/Junior (Subordinated) 24,300 2.7% 6.875 Class M2 (Subordinated) - 0.0% - ABS Tranches at issue Ammontare % Tranche Class A (Senior) 810,000 88.8% 5% RETAINED Class B (Mezzanine) 27,000 3.0% 5% RETAINEDClass C (Mezzanine) 18,000 2.0% 5% RETAINEDClass D (Mezzanine) 23,400 2.6% 5% RETAINEDClass E (Mezzanine) 9,900 1.1% 5% RETAINEDTitoli M/M1/Junior (Subordinated) 24,300 2.7% 5% RETAINED Class M2 (Subordinated) - 0.0% - Current rating Fitch DBRSClass A (Senior) AA AAAClass B (Mezzanine) A+ AAHClass C (Mezzanine) BBB+ AALClass D (Mezzanine) BB+ BBBLClass E (Mezzanine) BB+ BH

Junior Tranche (Subordinated) Unrated

NOTE






1M L = Libor 1 mese




NOTE






1M L = Libor 1 mese



Data expressed in thousand Nixes Seven B.V. Nixes Six PLc

Start date september-17 december-13

Transaction type Private Private

Originator FCA Bank Deutschland GmbH FCA Automotive Services UK Ltd

Servicer FCA Bank Deutschland GmbH FCA Automotive Services UK Ltd

Arranger Citibank / BAML/Crédit Agricole-CIB/Unicredit Citibank /Crédit Agricole-CIB/ HSBC / NATWEST

Underlying assets German AutoLoans and Leasing UK AutoLoans

Currency (CCY) EUR GBP


Programme Amount CCY/000 540,000,000 (1) 670,000,000 (1)


Class A (Senior) 540,280 88.6% NA 655,404 68.7% NA

Class B (Mezzanine) NA 0.0% NA NA 0.0% NA

Class C (Mezzanine) NA 0.0% NA NA 0.0% NA

Class D (Mezzanine) NA 0.0% NA NA 0.0% NA

Junior Tranche (Subordinated) 65,015 11.4% VR 297,965 31.3% VR

Current rating (private)

Class A (Senior) Unrated Unrated

Class B (Mezzanine) NA NA

Class C (Mezzanine) NA NA

Class D (Mezzanine) NA NA

Class E (Mezzanine)



EUR /000 Fast 3 S.r.l. Erasmus Finance DAC

Start date december-15 june-06

Transaction type Private Private

Originator FCA Bank S.p.A. FCA BANK DEUTSCHLAND GMBHFCA CAPITAL FRANCE SA

FCA DEALER SERVICES ESPANA SA

Servicer FCA Bank S.p.A. FCA BANK DEUTSCHLAND GMBH FCA CAPITAL FRANCE SA

FCA DEALER SERVICES ESPANA SA

Arranger Crédit Agricole-CIB / Banca IMI Crédit Agricole-CIB / BAML

Underlying assets ItalianDealers' Payables

German / French / SpanishDealers' Payables



Programme Amount CCY/000 1,000,000,000 (1) 1,290,000,000 (1)


Class A (Senior) 881,658 64.9% NA 1,187,709 72.1% NA

Class B (Mezzanine) NA 0.0% NA NA 0.0% NA

Class C (Mezzanine) NA 0.0% NA NA 0.0% NA

Class D (Mezzanine) NA 0.0% NA NA 0.0% NA

Junior Tranche (Subordinated) 477,303 35.1% VR 458,749 27.9% VR

Current rating (private)

Class A (Senior) Unrated Unrated

Class B (Mezzanine) NA NA

Class C (Mezzanine) NA NA

Class D (Mezzanine) NA NA

Class E (Mezzanine)


NOTE






1M L = Libor 1 mese




C.1 Prudential Consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset

p.1

JuniorMezzanine

On Balance-sheet exposures

Senior

Type of securitised assets/exposures Write-downs/write-backs

Write-downs/write-backs


Book Value

Book Value

Book Value

A. Totally derecognised from Balance Sheet

Factoring

of which non-performing

Other loans


B. Partially derecognised from Balance Sheet

Factoring


Other loans


C. Not derecognised from Balance Sheet

Factoring


Other loans


-

-

-

-

-

-

-

-

-

-

99,407

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

408,849

-

221,046

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

529,918

-

575,276

-

-

-

-

-

-

-

-

-

-

-

-

-


C.1 Prudential Consolidation - Exposure from the main "in-house" securitisation transaction broken down by type of securitised asset

p.2

JuniorMezzanine

Guarantees given

Senior

Type of securitised assets/exposures Write-downs/write-backs



Net exposure

Net exposure

Net exposure

A. Totally derecognised from Balance Sheet

Factoring


Other loans


B. Partially derecognised from Balance Sheet

Factoring


Other loans


C. Not derecognised from Balance Sheet

Factoring


Other loans


-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

17,632

-

185,638

-

-

-

-

-

-

-

-

-

-

-

-

-


C.3 Prudential Consolidation - SPVs for securitisations

C.4 Prudential Consolidation - Special Purpose Vehicles for securitisation not included in the consolidation

Name of securitization/Name of vehicle

Assets Liabilities

Country of incorporation

Consolidation Credits SeniorOthers JuniorDebt securities

Mezzanine

A-BEST THIRTEEN FT


A-BEST ELEVEN UG



NIXES SIX PLc

NIXES SEVEN B.V.

FAST 3 S.r.l.

ERASMUS FINANCE DAC

A-BEST SIXTEEN UG

Line-by-line

Line-by-line

Line-by-line

Line-by-line

Line-by-line

Line-by-line

Line-by-line

Line-by-line

Line-by-line

Line-by-line

247,621

156,300

58,530

868,561

686,960

1,100,888

538,606

1,512,148

1,312,252

585,211

-

-

-

-

-

-

-

-

-

-

-

59,889

11,956

48,825

103,778

52,249

42,494

28,963

311,784

48,633

143,908

64,200

13,677

810,000

650,954

770,338

504,280

881,558

1,187,709

520,686

43,700

72,000

28,000

78,300

73,000

-

-

100

408,749

65,000

63,500

40,000

26,500

24,300

31,000

350,217

65,015

477,303

50,000

26,600

Madrid - Spain

Conegliano (TV) - ItalY



Conegliano (TV) – Italy

London – UK

Amsterdam – Netherlands

Milan - Italy

Dublin - Ireland

Francoforte sul Meno - Germania

Not applicable to the Group.


C.6 Prudential Consolidation - Consolidated securitisation vehicles

C.5 Prudential Consolidation - Servicer activities - "In-house" securitisations: collections of securitised loans andredemptions of securities issued by the securitisation's vehicle"

Servicer

Securitised assets

(end of period)

Loans collected

during the year

Percentage of securities redeemed (end of period)Percentage of redeemed securities (end of period)

Vehicle entityNon-

performingNon-

performingImpaired Impaired ImpairedPerforming Performing In bonis In bonis In bonis

Senior Mezzanine Junior


FCA Bank S.p.A. - 868,561 66,223 2,160 - - - - - -

A-BEST TEN S.r.l.In liquidazione

FCA Bank S.p.A. - - - 7,419 - 100% - 100% - 100%


FCA Bank S.p.A. 520 155,780 217,100 4,297 - - - - - -


FCA Bank S.p.A. 1.111 685,850 465,951 6,611 - - - - - -

Fast 3 S.r.l. FCA Bank S.p.A. - 1,512,148 1,361,560 6,644,926 - - - - - -

A-BEST ELEVEN UG

FCA BANK

DEUTSCHLAND GMBH1,135 57,395 - 83,279 - - - - - -

A-BEST SIXTEEN UG

FCA BANK


Nixes Seven B.V.FCA BANK


Nixes Six PLcFCA AUTOMOTIVE

SERVICES UK 1,100,888 607,264

A-BEST THIRTEEN FT

FCA CAPITAL España

E.F.C.5,922 241,699 - - - - - - - -

Erasmus Finance DAC

FCA DEALER

SERVICES ESPANA S.A.2,468 287,711 2,468 1,455,062 - - - - - -

Erasmus Finance DAC

FCA CAPITAL FRAN-

CE S.A.- 340,806 - 398 - - - - - -

Erasmus Finance DAC

FCA BANK

DEUTSCHLAND GMBH466 680,801 - 3,041,417 - - - - - -

Nixes Six PLc

Nixes Seven B.V.

Fast 3 S.r.l.

Erasmus Finance DAC

A-BEST TEN S.r.l. IN LIQUIDAZIONE

A-BEST ELEVEN UG


A-BEST THIRTEEN FT

A-BEST FOURTEEN S.r.l.


A-BEST SIXTEEN UG


Country of incorporationName of vehicle

London - UK

Amsterdam – Netherlands

Milan - Italy

Dublin – Ireland




Madrid - Spain






D.SALES TRANSACTIONS

A. Financial assets sold and not not fully derecognised


Financial assets sold and fully recognised Associated financial liabilitiesof which

non-performing

Book value

Book value

of which: subject to

securitization transactions

of which: subject to

securitization transactions

of which: subject to sale

sgreements with

repurchase obligation

of which: subject to sale

sgreements with

repurchase obligation

A. Financial assets held for trading

1. Debt securities


3. Loans

4. Derivatives

B. Other financial assets mandatorily at fair value

1. Debt securities


3. Loans

C. Financial assets designated at fair value

1. Debt securities

2. Loans

D. Financial assets at fair value through


1. Debt securities


3. Loans

E. Financial assets at amortised cost

1. Debt securities

2. Loans

Total 31/12/2019

Total 31/12/2018

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

7,413,053

-

7,413,053

7,413,053

7,582,095

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

7,067,078

-

7,067,078

7,067,078

7,130,412

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

143,711

-

143,711

143,711

198,662

x

x

x

x

x

-

-

x

-

-

-

-

-

-

x

-

17,092

-

17,092

17,092

9,355

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

5,674,261

-

5,674,261

5,674,261

6,029,914

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

5,639,858

-

5,639,858

5,639,858

5,690,160

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

119,270

-

119,270

119,270

189,753

D.1 Prudential Consolidation - Financial assets sold and fully recognised and associated financial liabilities: book value


B. Financial assets sold and fully deleted with recognition of continuous involvement


In addition to what has already been outlines in “C – Securitization Transactions”, to which reference is made, FCA Bank engages in sales pursuant to Law 52/1991 (Factoring) which are carried out to achieve two results:• improvement of liquidity position;• ideconsolidation of certain assets, in the event that the sale is on a non-recourse basis.

Types of transactionsTransactions are mainly of two types:• Revolving factoring transactions;• Non-revolving factoring transactions.

Revolving factoring transactions

In these transactions, the buyer (Factor) purchases receivables at a specified frequency, over a pre-defined time period.The Originator can sell, periodically, new receivables in accordance with the terms and conditions of the sale agreement.The purchase of such receivable portfolios is financed by the Factor.At the end of the sale period, the portfolio begins to amortize and the funds borrowed are repaid.

Non-revolving factoring transactions

In these transactions the Factor purchases the receivables offered by the seller. The purchase of these receivables is financed by the Factor, on the basis of the loans provided to the single borrowers sold.


1.2 Market Risks

That is the reason why derivatives do not attract capital charges for market risk (Pillar I), pursuant to the rules on supervisory returns, and are instead entered in the banking book, the portfolio which contains financial instruments that attract capital charges for credit and counterparty risks, as defined by the cited supervisory rules.

Market risk is the risk of loss from trading in financial instruments (held-for-trading portfolio), currencies and commodities due to market trends and the issuer’s situation. The types of market risk to which the FCA Bank Group is exposed are exchange rate risk and position risk.The types of market risk to which the FCA Bank group is exposed are exchange rate risk and position risk.Exchange risk is related to financial transactions towards subsidiaries adopting currency different from Euro. At December 31, 2019 the impact of this kind of risk is not relevant as net balance amount in foreign currency is below the minimum threshold.

The position risk is related to derivatives transactions. This kind of risk is entirely linked to derivatives finalized at reducing interest rate risk, as the Company doesn’t hold securities for other aims. FCA Bank doesn’t perform trading activities and, as a consequence, is not exposed to market risks.

In accordance with the definition of “Trading Book” of EU Regulation no. 575/2013 (CRR), derivative instruments held by the Group should not be classified as “held for trading” as there is no trading intent in connection with them. In fact, these derivatives were entered into to hedge the interest rate risk of collateral posted for securitization transactions. In addition, the rating agencies require the use of hedging derivatives to assign investment grade ratings.

A. GENERAL ASPECTS

E. PRUDENTIAL CONSOLIDATION Credit risk measurement models


1.2.1 Interest rate risk and price risk - Regulatory trading book

Main management process of position risk consist in keeping exposure towards each counterparty below the threshold in coherence with a minimum credit rating as defined in ‘Asset and Liability policy’ and measured by rating stated by main rating agencies. As stated in Section A. General Aspects, the Group at the year-end closing doesn’t hold any financial instruments classified in the Regulatory Trading Portfolio.

A. OPERATIONAL PROCESSES AND METHODS FOR MEASURING INTEREST RATE RISK AND PRICE RISK



1.2.2 Interest rate and price risk - Banking Book

The FCA Bank Group’s has an exposure to interest rate risk to the extent that changes in interest rates affect its interest spreads. More specifically, the risk lies in the mismatch or gap between the reset dates (date when the interest rate is set: for fixed-rate instruments this is the maturity date while for floating-rate instruments this is the end of the interest period) for assets and liabilities.

Regarding interest rate risk management, Treasury, which does not act in a profit center capacity, executes solely risk hedging activities, thereby minimizing the impact deriving from the volatility of interest rates. This activity is carried out also for the Group’s subsidiaries. Risk mitigation occurs through derivative transactions entered into on the basis of standard contracts (ISDA, International Swaps and Derivatives Association).To calculate interest rate risk exposure, the following methodologies have been used:• Reset Gap Analysis: this methodology is designed to determine the difference between the amount of assets and liabilities with a reset date in the same time bucket. Maturity gap is the difference between the total value of the assets and liabilities maturing/showing a reset date in a specific bucket. Maturity gaps are grouped in buckets and totaled within each such bucket. This difference in called Gap Mismatch Index. Management processes of financial risks, as defined by Group policy, establish that Gap Mismatch can’t exceed ±10% for each temporal phase;• Duration Analysis: this methodology is designed to determine the difference between the duration of assets and that of liabilities analyzed by reset date. In particular, the assets maturing/resetting in a given month are totaled and discounted to present value at the appropriate rate, as calculated on the basis of the interest rates prevailing in the market at

A. GENERAL ASPECTS, OPERATIONAL PROCESSES AND METHODS FOR MEASURING INTEREST RATE RISK AND PRICE RISK


the end of the month under analysis. The sum of all the assets so discounted, as weighted by their effective term to maturity in months, divided by the total of all discounted assets, is called asset duration. The liabilities maturing/resetting in a given month are totaled and discounted to present value at the appropriate rate, as calculated on the basis of the interest rates prevailing in the market. The sum of all the liabilities so discounted, as weighted by their effective term to maturity in months, divided by the total of all discounted assets, is called liabilities duration. The difference between asset duration and liabilities duration as a percentage share of asset duration is called duration gap index. Financial risk management sets maximum limits for the duration gap index, which cannot deviate for more than ± 5%; To ensure compliance with the limits set at the consolidated level by the Asset & Liability Policy, Treasury uses derivative instruments, such as interest rate swaps, to remedy any mismatches by aligning the reset date profiles of assets and liabilities.


Treasury is responsible for:• carrying out hedging transactions;• controlling the trading process;• defining the hedging strategy within the limits set by ALM Internal Committee.• carrying out on an ongoing basis, through its own staff, first-level controls on interest rate risk, exchange risk and position risk.

ALM is responsible for:• monitoring the interest rate risk and exchange risk for the currencies in which the Company’s and the Group operates;• monitoring the position risk and liquidity risks (LCR and NSFR), both at the final level and at the forecast level;• preparing reports for the ALM Internal Committee; • carrying out on an ongoing basis, through its own staff, first-level controls on interest rate hedging exchange risk and position risk;• performing the required stress tests;• carrying out B/O activities on the Treasury department’s transactions;

Risk & Permanent Control: is responsible for performs systematic controls on the proper application of Treasury/ALM & FR procedures.

Organizational structureTo manage interest rate risk in an accurate and balanced manner, the Group has established a specific corporate governance structure. To this end, certain Committees/Meetings are mainly for information purposes and are also intended to set out general strategies to hedge the financial and market risks to which the Group is exposed, particularly: • Board of Directors is responsible for managing, setting policies and reviewing the compliance, and appropriateness, of the risk management structure; • Advisory Board is responsible for monitoring the Company’s and the Group’s position on interest rate risk and liquidity risk; • Finance & Control Committee is responsible for monitoring the Company’s and the Group’s position on market risk and to define strategies to hedge significant risks;• Group Internal Risk Committee is responsible for setting policies on, and monitoring the proper working of, the Group’s internal control system and is convened whenever there is a crisis situation;

ALM Internal Committee (I.C) is responsible for:

• monitoring the consistency between the interest rate risk hedging transactions approved and those executed every month; • approving the risk hedging transactions to be carried out every month;• evaluating extraordinary financial transactions, liabilities and financial expenses;• evaluating and monitoring capitalization level.


while floatings are connected to different temporal bands on the basis of the rate negotiation date;• each temporal band includes assets and liabilities, obtaining the net position;• the net position of every band is multiplied per weighting factors, obtained as product between an theoretical rates variation and an estimate of the modified duration in relation to each bands. The result is equivalent to a parallel shock for 200 bps on rates. To calculate these elements the Group makes assumptions defined in "Attachment C – Banking portfolio tax interest rate” of the Circular 285/2013.• weighted positions, referred to different bands, are added up obtaining an estimate of the actual figures variation, in consideration of the theoretical rate shock (net total weighted position).

Stress tests to evaluate interest rate risk are performed on a quarter bais.

Interest rate risk measurement methodInterest rate risk in banking portfolio (IRRBB) refers to the risk current or perspective related to the assets and profits deriving from hostile interest rates trends. As a fact, interest rates fluctuation, implicates an actual value variation and, in future cash flows, change as a consequence the collateral of the assets, liabilities and off-balances, in addition to profits. Furthermore, interest rates variations influence the connected profits and losses elements.Interest rate risk stress tests are enclosed in the “Integrated Stress Testing Framework”, whom structure provides a quantification model of figure influenced by primitive variables, both exogenous and endogenous, on selected meters and indicators. In particular, meters identified for the interest rate stress are “Interest Rate Risk Internal Capital” and il ”Interest Rate Risk Indicator”.

Compliant with the Circular 285/2013 of the Bank of Italy (Title III, section I, enclosed C), FCA Bank Group measure the interest rate risk through the simplified method.The object of the test is to evaluate interest rate impact on the sensitive portfolio as a result of a ±200 rate basis point shock. Calculation method splits risky positions in temporal bands on the basis of the applied rate (fix or floating). Capital requirement is obtained adopting a series of compensation procedures through short and long positions belonging to different ageing bands.To achieve if the risk indicator, calculated as correlation between the sum of the net positive weighted expositions and the Own Funds (Tier 1), is within the attention threshold, 20%, (in line with requirements of the Circular 285/2013 of the Bank of Italy), following activities are performed:• portfolio assets and liabilities are classified in 14 temporal bands taking in consideration their composition. In particular fix rate assets and liabilities are classified for residual maturity



1. Banking portfolio: distribution by maturity (repricing date) of financial assets and liabilities

1 to 5 years

6 months to 1 year

On demand

5 to 10 years

Up to 3 months

Over 10 years

3 to 6 months

Unspecified maturityType / Residual maturity

1. Cash assets1.1 Debt securities

- with early repayment option- others

1.2 Loans to banks1.3 Loans to customers

- c/c- others loans- with early repayment option- others

2. Cash liabilities2.1 Debts to customers

- c/c- others debts- with early repayment option- others

2.2 Debt to banks- c/c- others debts

2.3 Debt securities- with early repayment option- others

2.4 Other liabilities- with early repayment option- others

3. Financial derivatives3.1 With underlying title

- Options+ Long positions+ Short positions

- other derivatives+ Long positions+ Short positions

3.2 Without underlying title- Options

+ Long positions+ Short positions

- Others derivatives+ Long positions+ Short positions

4. Other off-balance sheet transactions+ Long positions+ Short positions

3,400,735 - - -

1,895,916 1,504,819

55,906 1,448,914

- 1,448,914

291,481 259,137 258,941

196 -

196 32,345 32,345

- - - - - - - - - - - - - - - - - - - - - - - - -

3,272,473 - - -

55,591 3,216,883

24,303 3,192,580

- 3,192,580

11,704,023 298,627

683 297,944

- 297,944

3,887,817 -

3,887,817 7,517,579

- 7,517,579

- - -

28,841,352 2,088,664

- - -

2,088,664 1,044,3321,044,332

26,752,688 - - -

26,752,688 16,749,339 10,003,349

- - -

1,856,185 - - - 6

1,856,179 -

1,856,179 -

1,856,179 2,977,974

87,297 -

87,297 -

87,297 2,190,677

- 2,190,677

700,000 -

700,000 - - -

2,857,739 - - - - - - -

2,857,739 - - -

2,857,739 1,683,500 1,174,239

- - -

5,068,331 503

- 503

12 5,067,816

- 5,067,816

- 5,067,816 2,479,170

534,839 -

534,839 -

534,839 383,100

- 383,100

1,561,231 -

1,561,231 - - -

3,896,893 - - - - - - -

3,896,893 - - -

3,896,893 1,588,089 2,308,804

- - -

11,659,882 9,305

- 9,305

77 11,650,500

- 11,650,500

- 11,650,500

6,183,337 184,926

- 184,926

- 184,926 920,968

- 920,968

5,077,443 2,897,256 2,180,187

- - -

16,690,807 - - - - - - -

16,690,807 - - -

16,690,807 5,194,193

11,496,614 - - -

519,440 - - - -

519,440 -

519,440 -

519,440 2,882 2,882

- 2,882

- 2,882

- - - - - - - - -

232,115 - - - - - - -

232,115 - - -

232,115 -

232,115 - - -

56 - - - -

56 -

56 -

56 578

- - - - - - - -

578 -

578 - - -

- - - - - -- - - - - - - - - - -

-- - - - -- -- -

27,989 27,989

- 27,989

- 27,989

- - - - - - - - - - - - - - - - - - - - - - - - - - -


1.2.3 Exchange risk

The Company’s policy doesn’t allow to detain amount in foreign currency. As a consequence, financial operations in foreign currencies are exchanged in Euro and, sometimes, made by derivatives (Foreign Exchange Swap) according to ISDA standard.

Exchange risk at the year end is not relevant as net balance amount in foreign currency is below the minimum threshold (2% of Regulatory Capital).

As stated in Section A. General Aspects, the Group at the year-end doesn’t hold any financial instruments classified in the Regulatory Trading Portfolio.

A. OVERVIEW, MANAGEMENT PROCESSES AND RISK MEASUREMENT METHODS


1.3 Derivative instruments and hedging policies

1.3.1 Trading derivative instruments


The Group uses IRS designated as cash flow micro hedges to manage the interest rate risk on its financial liabilities.Effectiveness is measured by comparing the change in fair value of the interest rate swaps and the change in fair value of the hedged instrument.The effectiveness test is met if the result of the hedge (percentage difference between the change in fair value of the interest rate swaps and the change in fair value of the hedged instrument) ranges from 80%-125%.The effectiveness test is met also when the value of the hedged instrument is greater than the value of the derivative instrument (in absoluteterms) at the observation date.

• the nominal amount of the portfolio and the notional value of the derivative projected from the last observation date (September 30, 2019) to the reporting date (December 31, 2019).The retrospective effective test is met is the changes in notional value of the derivative instrument are highly effective in offsetting the changes in nominal value of the hedged instruments since the last observation date (September 30, 2019).

The Group’s risk management policies only allow use of plain vanilla derivatives.The FCA Group hedges its interest rate risk on instalment loans provided and bonds issued through interes rate hedging instruments designated as fair value hedges.In particular, the Group hedges the interest rate risk on the outstanding portfolio with the fair value macro hedging methodology.

Hedge effectiveness The Group tests the effectiveness of the fair value macro hedge at the end of every reporting period, whether annual or interim, by using:• prospective tests, which justifies hedge accounting, to the extent that they show hedge effectiveness;• retrospective tests, which show the degree of effectiveness of the hedge in the period of reference. In other words, they measure the extent to which the hedge relationship deviates from perfect hedge.

Prospective tests compare: 1. the run-off of the fixed-rate Retail portfolio

outstanding at the observation date (hedged instrument);

2. the run-off of swaps outstanding at theobservation date (notional value).

Both run-offs are compared by maturity range. The effectiveness test is met if, for every maturity range, the average value of the portfolio is greater than the average value of the derivative instruments.

The retrospective test compares:• the nominal value of the portfolio and the notional value of the derivatives outstanding, whose starting date precedes the date of the last observation period (September 30, 2019);

FAIR VALUE HEDGING ACTIVITIES

CASH FLOW HEDGES, HEDGED INSSTRUMENTS


1.3.2 Accounting hedging policies



A.1 Hedging financial derivatives: notional values at the end of the period

A. Hedging financial derivatives

Total 31/12/2019 Total 31/12/2018

Over the counter

Underlying assets / Type of derivatives

Over the counter

without central counterparties without central counterpartiesOrganized

marketsOrganized

marketsCentral Counterparties

Central Counterparties

with netting

agreements

with clearing

arrangements

without netting

agreements

without clearing

arrangements

1. Debt securities and

interest rates

a) Options

b) Swap

c) Forward

d) Futures

e) Others

2. Equity instruments and

stock indexes

a) Options

b) Swap

c) Forward

d) Futures

e) Others

3. Currencies and gold

a) Options

b) Swap

c) Forward

d) Futures

e) Others

4. Commodities

5. Other

Total

20,421,938

-

20,421,938

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

20,421,938

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

533,685

-

533,685

-

-

-

-

-

-

-

-

-

1,044,332

-

-

1,044,332

-

-

-

-

1,578,017

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

19,509,242

-

19,509,242

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

19,509,242

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

997,726

-

997,726

-

-

-

-

-

-

-

-

-

641,358

-

-

641,358

-

-

-

-

1,639,084

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-


A.2 Hedging financial derivatives: positive and negative fair value - breakdown by product

Types of derivatives

Positive fair value

a) Options

b) Interest rate swap

c) Cross currency swap

d) Equity swap

e) Forward

f) Futures

g) Others

Total

Negative fair value

a) Options

b) Interest rate swap

c) Cross currency swap

d) Equity swap

e) Forward

f) Futures

g) Others

Total

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

32,318

-

-

3,016

-

-

35,334

-

78,698

-

-

2,635

-

-

81,333

-

35,450

-

-

459

-

-

35,909

-

46,369

-

-

2,210

-

-

48,579

-

32,318

-

-

-

-

-

32,318

-

78,337

-

-

-

-

-

78,337

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

3,016

-

-

3,016

-

361

-

-

2,635

-

-

2,996

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

33,702

-

-

-

-

-

33,702

-

45,387

-

-

-

-

-

45,387

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

1,748

-

-

459

-

-

2,207

-

982

-

-

2,210

-

-

3,192

Total 31/12/2019 Total 31/12/2018

Positive and negative fair value

Over the counter Over the counter

Without central counterparties Without central counterpartiesOrganized markets

Organized markets

Changes in value used to assess hedge ineffectiveness

Total31/12/2018

Central Counterpar-

ties

Central Counter-

parties

With netting

agreements

With netting

agreements

Without netting

agreements

Without netting

agreements

Total31/12/2019


A.3 OTC hedging financial derivatives - notional values, positive and negative fair value by counterparty

Contracts included in netting agreement

1) Debt securities and interest rates

- notional value

- positive fair value

- negative fair value

2) Equity instruments and stock indexes

- notional value



3) Currencies and gold

- notional value



4) Commodities

- notional value



5) Others

- notional value



Contracts included in netting agreement


- notional value




- notional value




- notional value



4) Commodities

- notional value



5) Others

- notional value



X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

20,421,938

32,317

78,337

-

-

-

-

-

-

-

-

-

-

-

-

-

533,685

-

361

-

-

-

1,044,332

3,015

2,635

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Other entitiesBanks Other financial companiesUnderlyings assets

Central Counterparties


A.4 Residual life of OTC hedging credit derivatives: notional values

TotalOver 1 year up to 5 year

Over 5 yearUnderlying / Residual maturity

Up to 1 year

A.1 Financial derivative contracts on debt securities

and interest rates

A.2 Financial derivative contracts on equity securities

and stock indexes

A.3 Financial derivative contracts on currencies and gold

A.3 Financial derivative on commodities

A.5 Other financial derivatives

Total 31/12/2019

Total 31/12/2018

6,788,561

-

1,044,332

-

-

7,832,893

7,141,582

14,108,325

-

6,317

-

-

14,114,642

15,072,600

60,000

-

(6,317)

-

-

53,683

134,242

20,956,886

-

1,044,332

-

-

22,001,218

22,348,426


1.3.3 Other information on derivatives instruments (trading and hedging)

A.1 OTC financial and credit derivatives: net fair value by counterparties

A. Financial and credit derivatives

Other entities

Banks Other financial

companies

Centralcounterparties



- notional amount




- notional amount




- notional amount



4) Commodities

- notional amount



5) Other

- notional amount




1) Hedge purchase

- notional amount



2) Hedge sale

- notional amount



20,421,938

32,318

78,337

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

4,343,728

1

3,767

-

-

-

1,044,332

3,015

2,635

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-


1.4. Banking Group – Liquidity Risk

Liquidity risk reflects the Company’s inability to meet its obligations as they come due. Specifically, liquidity risk involves the Company’s inability to renew, extend, refinance, in whole or in part, its borrowings in its various forms, whether structured or unstructured.

To facilitate the proper identification and management of liquidity risk, it is worthy of note that:• the Group’s financial management activities are centralized at Parent Company level, where the Treasury department is responsible for the proper financial management of all the subsidiaries. Moreover, all structured finance transactions are negotiated and managed at the central level;• the Parent is the only Group company with a rating assigned by Fitch Ratings, Moody’s e Standard&Poor’s. In this sense, all bank accounts and lines of credit are managed at the central level;• all of the Group companies refer to the Parent Company for their borrowing requirements through negotiations for the most appropriate financing instruments.

The Group manages this risk by matching assets and liabilities in terms of amounts and maturities. This management activity, together with the availability of substantial lines of credit (including those by Crédit Agricole, the banking shareholder), allows the Company and its subsidiaries to reduce to a minimum their liquidity risk. Liquidity conditions are measured monthly by currency (Euro, British pound, Swiss franc, Danish krone, Swedish Krona, Norwegian Krone, Polish zloty and Moroccan Dirham).

The liquidity risk management model hinges around such key activities as:• management of operating liquidity and structural liquidity, including the use of regularly revised and updated cash flow schedules;

A. OVERVIEW, MANAGEMENT PROCESSES AND METHODS FOR MEASURING LIQUIDITY RISK


• constant monitoring of cash flows and adoption of metrics to measure and control exposure to liquidity risk (maturity mismatch approach); • setting limits to the exposure and concentration regarding liquidity risk;• stress tests to evaluate risk exposure under stressful conditions; • preparation of the Contingency Funding Plan intended to define the roles and responsibilities, the processes, actions to undertake and the identification of risk mitigation techniques to be adopted in case a sudden liquidity crisis.

The methodological approach adopted by the FCA Bank Group to measure risk requires – with reference to both operating liquidity and structural liquidity - the calculation of the:• Maturity Ladder, which is used to calculate, monitor and control any liquidity shortfall by maturity bucket; and• Cumulative Liquidity Gap, which is used to calculate progressive cash flows and identifies the presence of any negative cash flows that would require hedging.

The Group, consistent with the Basel III framework, calculates:• the Liquidity Coverage Ratio (LCR) every month;• the Net Stable Funding Ratio (NSFR) every quarter.

With reference to the liquidity coverage ratio, the Group manages any requirements through instruments that comply with the FCA Bank Group’s liquidity policy. The high-quality liquidity assets (HQLA) necessary to meet the liquidity coverage ratio are managed, at the consolidated level, by the Treasury department of the Parent Company, the only exception being the foreign subsidiaries, which are subject to similar LCR requirements set by local supervision authorities.


To this end, it is noted that, starting November 16, 2018, FCA Bank S.p.A. opened a direct account with the Bank of Italy. As such, the level of HQLA necessary to meet the pre-established objectives is achieved through deposits with the Central Bank and through open market transactions.

Liquidity ratiosLiquidity ratios, provided by Basilea III, at December 31, 2019 are equal to:• Liquidity Coverage Ratio (LCR) 282%;• Net Stable Funding Ratio (NSFR) 106%.

Regulatory threshold have been exceeded at the year end but also in interim reporting.



1.Time breakdown by contractual residual maturity of financial assets and liabilities

6 months to

1 year

3 to 6 months

7 to 15 days

1 to 7 days

On demandItems / time

1 to 5 years

15 days to

1 month

Over 5 years

1 to 3 months

Unspe-cified

maturity

On-balance sheet assets

A.1 Government securities

A.2 Other debt securities

A.3 Units in investment funds

A.4 Loans

- Banks

- Customers

On-balance sheet liabilities

B.1 Deposits and current accounts

- Banks

- Customers

B.2 Debt securities

B.3 Other liabilities

Off-balance sheet transactions

C.1 Physically settled fin. derivatives

- Long positions

- Short positions

C.2 Cash settled Fin. derivatives

- Long positions

- Short positions

C.3 Deposit to be received

- Long positions

- Short positions

C.4 Irrevocable commitments to disburse funds

- Long positions

- Short positions

C.5 Written guarantees

C.6 Financial guarantees received

C.7 Physically settled cred. derivatives

- Long positions

- Short positions

C.8 Cash settled Cred. derivatives

- Long positions

- Short positions

3,047,562

-

-

-

3,047,562

1,890,948

1,156,614

292,165

291,969

32,344

259,625

-

196

-

-

-

-

-

-

-

4,890,106

-

-

-

-

-

-

158,697

-

-

-

158,697

2,719

155,978

15,708

683

-

683

-

15,025

-

-

-

-

-

-

-

-

-

-

-

-

-

-

179,459

-

-

-

179,459

88

179,371

97,026

-

-

-

-

97,026

284,768

284,768

845

-

-

-

-

-

-

-

-

-

-

-

392,667

-

-

-

392,667

-

392,667

352,640

19,091

-

19,091

318,262

15,287

736,750

736,750

4,670

7,840

-

-

-

-

-

-

-

-

-

-

1,868,957

-

-

-

1,868,957

494,118

1,374,839

2,132,869

25,957

-

25,957

521,227

1,585,685

22,815

22,815

11,117

13,328

-

-

-

-

8,955

-

-

-

-

-

2,152,964

503

-

-

2,152,461

34,608

2,117,853

2,956,797

86,381

-

86,381

897,686

1,972,730

-

-

16,594

18,991

-

-

-

-

1,153

-

-

-

-

-

5,959,759

-

-

-

5,959,759

695,000

5,264,759

3,500,478

533,154

-

533,154

1,860,793

1,106,531

-

-

26,637

42,104

-

-

-

-

-

-

-

-

-

-

12,669,575

9,305

-

-

12,660,270

520

12,659,750

14,863,172

178,524

-

178,524

11,239,982

3,444,666

-

-

60,713

93,889

-

-

-

-

112,028

-

-

-

-

-

513,861

-

-

-

513,861

-

513,861

361,449

-

-

-

578

360,871

-

-

974

263

-

-

-

-

31,181

-

-

-

-

-

27,884

-

-

-

27,884

27,884

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Self-Securitization Transactions and European Central Bank Refinancing Operations

At the year end there was a self-securitization transactions in place – A-Best Fourteen S.r.l.. FCA Bank has subscribed all liabilities issued. Financial activities underlying securities are referred to retail portfolio. At December 31, 2019, the total amount received by FCAB through refinancing operations with the European Central Bank was euro 1.8 billion.It is worthy of note that these self-securitization transactions, used in connection with these operations, had all the requirements to be readily placed in the market.



1.5 Banking Group – Operational Risks

Operational risk is the risk of incurring losses for inadequate or failed internal processes, people or systems or from external events, including legal risk. Operational risk covers also, among others, losses deriving from frauds, human errors, disruptions from external events, breakdowns of systems, contractual defaults, natural catastrophes. Operational risk includes legal risk (which includes money-laundering risk) but not strategic and reputational risks. With that in mind, the bank’s most significant risk is associated with the losses deriving from external frauds. To calculate the internal capital required for operational risk, FCA Bank, in keeping with the provisions of Circular 285/2013 of the Bank of Italy for class 2 banks, uses the Basic Indicator Approach (BIA) to calculate capital requirements under Pillar I.

The Organizational Model to manage operational risk implemented at Group level calls for the presence of the following players: • an Operational Risk Management function (as part of the Risk & Permanent Control department), which defines and develops the methodologies, the policies and the procedures to detect, evaluate, monitor, measure and mitigate operational risks; • single organizational units within the bank and the group companies that participate actively, with different levels of responsibility and involvement, in operational risk management processes through the identification of the principal (effective and potential) risks that might arise in day-to-day operations and ongoing risk monitoring within the scope of their duties and responsibilities.

The Organizational Model to manage operational risk unfolds in the following processes:• mapping of operational risks by company

A. OVERVIEW, MANAGEMENT PROCESSES AND METHODS FOR MEASURING OPERATIONAL RISK


process, in their expected and unexpected nature (annual update or following structural process changes); • quarterly survey of loss events; • analysis and classification of risk and loss events and definition, where necessary, of risk management and mitigation actions.

Classification of operational risk eventsOperational risk events have been classified over the years on the basis of FCA Bank’s specific experience as follows: • internal fraud;• external fraud;• employment relationship and safety at work; • customers, products and professional practices; • damage to tangible assets;• operation disruptions and information systems breakdowns; • process execution and management.

The Risk & Permanent Control (R&PC) department monitors, on a quarterly basis, developments in KRIs, such as: • external frauds (only for Retail business):

- Fraud Trend = Number of frauds per year;- Through The Door (TTD) Frauds / whole TTD;- Frauds Avoided / Frauds Detected.

• In addition the following indicators are calculated:

- OR Cost = Total Loss Data (including frontier risk) / Net Banking Income;- "Pure" OR Cost = Total Loss Data (excluding frontier risk) / Net Banking Income.


Organizational structure The roles and responsibilities of FCA Bank S.p.A.’s structures involved in operational risk management can be summarized as follows:

Local Operational Risk ManagerPart of the Risk & Permanent Control department, this Manager is responsible for organizing and maintaining the operational risk management process in the single Market, to ensure compliance with the methodologies and standards set out by the Parent Company.In fulfilling his duties, this managerial figure interacts with counterparties identified at process level in the single operational areas. These counterparties are responsible for detecting and reporting, in agreement with their immediate supervisors, the operational loss events occurred in the period and any change in the processes monitored analysing their possible risks.

Local Operational Risk Committee At least once a quarter, this Committee evaluates and approves mitigation actions, reviews the status of corrective action agreed-upon in the presence of operational risk events occurred.

To support the Operational Risk Management framework, FCA Bank is equipped with an IT tool that consists of two modules, one to collect operational loss data and the other to map the operational risks detected in the different company processes.

Risk & Permanent ControlDepartment reporting directly to FCA Bank S.p.A.’s CEO responsible for mapping and measuring risks as well as supervising risk management processes, managing directly permanent second-line/second-level controls.

Central Operational Risk Committee This Committee operates within the context of the quarterly meetings held by the Internal Control Committee (ICC). The ICC is responsible for monitoring the results of the activities performed by the Internal Control functions of the Company (Risk & Permanent Control; Compliance; Internal Audit). The findings of control activities are reported to and discussed within the ICC.

Central Operational Risk ManagerPart of the Risk & Permanent Control department, this Manager is responsible for organizing and maintaining the operational risk management process in all the Group companies. To that end, it develops and implements a system of permanent controls to monitor risks associated with all company processes and an adequate reporting system on the qualitative level of the operational risk management process implemented at the local level.


Risk management frameworkThe Company has developed and implemented a risk management framework to identify and monitor areas of risk to the Company. A review of the risk management framework is undertaken at least on an annual basis.

Currency riskAll significant transactions of the Company are denominated in Euro with the exception of a small amount of business written in Poland. All bank accounts are held in Euro and Polish Zloty. The Company is not exposed to any significant currency risk.

Counterparty riskThe Company’s principal financial assets are insurance and other receivables, reinsurance assets and cash and cash equivalents.Counterparty risk related to the cash and cash equivalent balances is controlled through the setting of minimum credit rating requirements for counterparties, and by diversification requirements, set out in the investment policy of the Board.

SECTION 3 INSURANCE COMPANIES RISKS


3.1 Insurance risks

This sub-section outlines the disclosure required by IFRS 4, paragraphs 38, 39 a), 39 b) and 39A

Liquidity riskThe Company is exposed to monthly calls on its available cash resources mainly from claims arising from reinsurance contracts. Liquidity risk is the risk that cash may not be available to pay obligations when due at a reasonable cost. The Company manages its funds to ensure that an adequate amount of funds is available to meet such calls. Accordingly, cash available is invested in highly liquid deposits and instruments with banks and counterparties with good ratings.

Insurance riskThe risk attached to the reinsurance policies written by the Company is the possibility that an insured event occurs and the uncertainty of the amount of the resulting claim.The Company has developed its reinsurance underwriting strategy to diversify the type of insurance risks and within each of the types of risk, to achieve a sufficiently large population of risks to reduce the variability of the expected outcome. Risks covered include Life and Non-Life events with policy terms ranging from 1 month to 120 months. The Company engages an independent actuarial firm to review the technical provisions at the year-end.


SECTION 4 OTHER COMPANIES RISKS


4.1 – Securitization risks

The risk deriving from securitization transactions is that the economic substance of the transaction is not fully incorporated in risk assessment and management decisions.

The Company feels that the risk associated with securitizations might materialize only in the event that the bank calculates its capital requirements in relation to the position in the securitization instead of the underlying assets. Only in this case can there be a risk that the capital requirements in question do not reflect in full the actual risk of the transaction.

However, the accounting treatment of securitizations is irrelevant for their recognition for prudential purposes. In keeping with IFRS 9, securitized assets continue to be reported in the accounts based on the following considerations:a) the risks and benefits related to the portfolio sold have not been fully transferred to third parties; b) the seller continues to exercise control over the portfolio sold; c) the seller acts also as servicer.

In the case of traditional securitizations, where the Company subscribes the first loss tranche (junior notes), the quantification of this risk is incorporated in the internal capital set aside to face credit risk.

In this case, considering the dual role of receivable seller and investor in the subordinated note tranche, and considering the fact that (in line with supervisory instructions on securitizations, which establish that the risk-weighted amount of all investments in the same securitization cannot exceed the risk-weighted amount of the securitized assets calculated as though these had not been securitized) capital

requirements are calculated on the underlying assets and pursuant to Regulation (EU) no. 575/2013 (CRR), the quantification of this risk is included in internal capital facing credit risk.Thus, there is no uncertainty in the assessment of the economic nature of straight-forward securitizations in terms of calculation of capital requirements. On the other hand, in the event that securitization transactions are undertaken with the derecognition of receivables, FCA Bank performs a specific assessment of securitization risk in relation to the actual transfer of the credit risk associated with the securitized assets.

Therefore, the Company will not carry out a quantitative assessment (internal capital) to face this risk but will consider the methodologies and processes implemented to oversee and mitigate such risk. In that respect, the Company’s securitizations show either capital charges equal to the charges related to the assets sold (in line with supervisory instructions on securitizations which provide that the risk-weighted amount of all the positions in a securitization cannot exceed the risk-weighted amount of all the securitized assets calculated as if such assets had not been securitized) or, as in the case of A-Best Fifteen S.r.l. and A-Best Seventeen S.r.l., capital charges equal to those calculated on the basis of the bank’s positions in these securitizations.

As to the risk deriving from securitization transactions - that is that the economic substance of the transaction is not fully incorporated in risk assessment and management decisions, given that the cited A-Best Fifteen S.r.l. and A-Best Seventeen S.r.l. transactions involved a substantial transfer of


risk pursuant to article 243(2) of the Regulation (EU) no. 575/2013 (CRR), performing a specific assessment of the risk deriving from securitizations as well as methodologies and processes to oversee and mitigate this risk - no securitization risk is deemed to exist.

Thus, the Company feels that there is no doubt as to the economic nature of the securitizations indicated clearly as such for the calculation of capital requirements.

Organizational structureTo manage securitization risks, FCA Bank has implemented:• a comprehensive organizational model;• a process to identify, monitor and mitigate securitization risks, formalized in specific internal procedures.Every new securitization transaction structured by the Securitization and Risk Transfer unit of the Treasury department is validated by the CFO & Deputy General Manager, and is submitted for approval to the NPA Committee, chaired by the CEO & General Manager, by its first lines and the second-level internal control functions.The approval minutes and any opinions rendered by the second-level control functions of the Company are submitted, together with the product concept, to the Board of Directors for final approval.Securitization and Risk Transfer, a unit of the Treasury department, is responsible for:• structuring all of the Group’s transactions and the direct management (in Italy) and monitoring (abroad) of the servicing activities performed in connection with the securitization transactions as well as the management of relationships with rating agencies and investors;• performing 2.1-level controls. Level-1 controls are performed instead directly by the foreign markets.

Risk & Permanent Control - GRM defines and develops he methods and procedures to identify, evaluate, monitor, measure and mitigate secondlevel securitization risks. It also renders its opinion in the context of the NPA Committee.Internal Audit reviews, at least every three years, the degree of adequacy of the


internal control system and checks that the securitization transactions and the servicing activities of FCA Bank S.p.A. comply with the applicable regulations.The Company’s control instruments include the following processes:• review of all the documents and contracts of the transaction by the Treasury – Securitization and Risk Transfer department, in cooperation with internal and external counsel;• review of the fairness and financial attractiveness of the transaction overall by the Treasury - Securitization and Risk Transfer department;• second-level controls over securitization transactions fall also under the responsibility of Risk & Permanent Control.

All the transactions carried out so far have performed in line with expectations, both in terms of alignment of the cash flows with the forecasts made when the transaction was launched and in terms of compliance with the main triggers related to the portfolio.Furthermore, no implicit support techniques were applied to the transactions, no clean-up call clauses for amounts greater than 10% of the initial issue were introduced and there are no accelerated repayment provisions linked to excess spread levels.


Part F - Information on consolidated equitySECTION 1 CONSOLIDATED EQUITY

A. QUALITATIVE DISCLOSURES

The "Banking Group" differs, for the consolidation scope, from the financial statements prepared according to IAS/IFRS. The differences are largely attributable to the line-by-line consolidation, in the IAS / IFRS financial statements, of non-banking companies (mainly companies operating in the long-term rental business) that are not included in the "Banking Group".

The Own Funds, the minimum capital requirements and the resulting banking regulatory ratios were determined in accordance with the provisions contained in the Bank of Italy Circular No. 285 of December 17, 2013 (and subsequent updates) "Supervisory provisions for banks" and n. 286 of December 17, 2013 (and subsequent updates) "Instructions for completing the prudential reporting by banks”.


B. QUANTITATIVE DISCLOSURES

B.1 Consolidated Shareholders' Equity: breakdown by type of company

703,389

195,623

1,859,115

-

-

(26,989)

-

-

-

-

-

-

(6,670)

-

3,833

-

-

(24,657)

-

454

467,075

3,171,172

1,000

9,596

60

10,656

106,278

1,626

247,037

(4,101)

-

-

-

-

-

-

-

-

-

-

-

(4,101)

-

92,805

439,545

(107,278)

(1,626)

(256,632)

-

-

4,101

-

-

-

-

-

-

-

-

-

-

-

4,101

-

-

(92,866)

(450,201)

703,389

195,623

1,859,115

-

-

(26,989)

-

-

-

-

-

-

(6,670)

-

3,833

-

-

(24,657)

-

454

467,075

3,171,172

Prudential consolidationEquity items

Other companies

TotalConsolidation adjustments

and eliminations

Insurance companies

1. Share capital

2. Share premium reserve

3. Reserves


5. (Treasury shares)

6. Revaluation reserves:

- Equity instruments designated at fair value

through other comprehensive income

- Hedge accounting of equity instruments

designated at fair value through other comprehnsive income

- Financial assets at fair value through


- Property, plant and equipment

- Intangible assets

- Foreign investment hedges

- Cash flow hedges

- Hedging instruments [elements not designated]

- Exchange differences

- Non-current assets and disposal groups

held for sale

- Non-current assets and disposal groups held for sale

- Financial liabilities designated at fair value

through profit or loss (own creditworthiness changes)

- Actuarial gains (losses) on defined-benefit pension plan

- Portion of measurement reserves relating to

investments carried at equity

- Special revaluation laws

7. Profit (Loss) of the year (+/-) Minority interests

Total


B.4 Revaluation reserves related to defined benefit plans: annual changes

(19,620)

944

-

944

(6,930)

(6,930)

-

(25,606)

-

-

-

-

-

-

-

-

(2,137)

-

-

-

(1,966)

(1,966)

-

(4,103)

2,137

-

-

1,966

1,966

-

4,103

(19,620)

944

-

944

(6,930)

(6,930)

-

(25,606)

Banking Group

Changes in 2019

Other companies

TotalConsolidation eliminations and

adjustments

Insurance companies

1. Opening balance

2. Increases

2.1 Increases in fair value

2.2 Other changes

3. Decreases

3.1 Decreases in fair value

3.2 Other changes

4. Closing balance

SECTION 2 OWN FUNDS AND CAPITAL RATIOSFor this section please refer to the information about on own funds and capital adequacy disclosed in “Pillar 3”.


Part G -Business combinations

SECTION 1 BUSINESS COMBINATIONS COMPLETED IN THE YEAR

SECTION 2 BUSINESS COMBINATIONS COMPLETED AFTER YEAR-END

During the year, no business combinations of companies or business units, pursuant to IFRS 3, or transactions between entities under common control were carried out or approved.

As evidenced in the Report on Operations, an agreement to carry out the cross-border merger of FCA-Group Bank Polska with and into FCA Bank S.p.A. was signed on December 19, 2019 and recorded in the Turin Companies Register on December 24, 2019.In keeping with the agreement, the merger took effect for legal, tax and accounting purposes on January 1, 2020. As of this date FCA Bank S.p.A. operates in Poland through a branch.


Part H - Related-party transactions

1. INFORMATION ON KEY EXECUTIVE COMPENSATION

2. INFORMATION ON RELATED-PARTY TRANSACTIONS

Emoluments paid as of December 31, 2019 to the Parent Company’s directors amounted to 875 thousand of euro.Compensation paid to Parent Company’s statutory auditors as of December 31, 2019

Typically, related-party transactions take place at arm’s length. Intercompany transactions are carried out only after the mutual benefits of the parties involved are considered. In preparing the consolidated financial statements, balances arising from intercompany transactions are eliminated. The table below shows assets, liabilities, costs and revenues at December 31, 2019 by type of related party:

amounted to 263 thousand of euro.

No credits were granted to directors and statutory auditors and no guarantees were given.


Transactions with related parties: balance sheet

-

-

7,595

3,137

4,458

-

365,318

372,913

1,623,194

1,623,194

-

-

-

136,167

1,759,361

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

244,525

4,582

239,943

12,290

51,188

308,003

1,177,267

1,160,650

16,617

2,919

17,468

175,917

1,373,571

-

-

252,120

7,719

244,401

12,290

416,506

680,916

2,800,461

2,783,844

16,617

2,919

17,468

312,084

3,132,932

Shareholders

Amounts at 31/12/2019

Other related parties

TotalKey executive directors

Financial assets at FV with effects on P&L

- Financial assets held for trading

Financial assets at amortized cost

- Loans and receivables with banks

- Loans and receivables with customers

Hedging Derivatives

Other assets

Total assets

Financial liabilities at amortized cost

- Deposit from banks

- Deposit from customers

Financial liabilities held for trading

Derivatives

Other liabilities

Total liabilities


Transactions with related parties: income statement

100,989

(22,502)

6,579

(3,340)

(6,505)

30,806

-

-

-

-

(1,096)

-

94,759

(20,729)

41,701

(21,670)

(8,345)

52,862

195,748

(43,231)

48,280

(25,011)

(15,946)

83,669

Shareholders

Amounts at 31/12/2019

Other related parties

TotalKey executive directors

Interests and similar income

Interests and similar expenses

Fee and commission income

Fee and commission income

Administrative expenses

Other operating income/expenses

Disclosure of auditing fees and fees for services other than auditing pursuant to article 2427 paragraph 16 bis of the italian civil code

Audit

Audit related

Other services

Total

Servicer provider 31/12/2019Services

EY S.p.A.

EY S.p.A.

EY Advisory S.p.A.

2,.470

271

235

2,976


Part L - Segment reporting

Asset and performance figures by segment are shown in accordance with IFRS 8 – Operating Segments, with the adoption of the “full management approach”.The FCA Bank Group operates through three operating segments: Retail, Dealer Financing and Rental.Segment assets (accurate amounts) consist solely of receivables due from customers. At the end of 2019, the Retail segment had total assets of euro 16.9 billion, up 7.2% on December 31, 2018 while the Dealer Financing segment assets were down 13.3% on the comparable amount at December 31, 2018, settling at euro 7.1 billion. Rental assets, for their part, increased by 24.5 % on December 31, 2018, reaching euro 3.5 billion. As required by IFRS 8, it is noted that the group’s business is carried out in Europe. However, no management report is prepared which breaks down performance by foreign geographical area.

ASSETS AND PERFORMANCE BY SEGMENT


201

(38)

(1)

(2)

160

-

107

7,142

7,162

-

169

(76)

(9)

1

85

-

86

3,508

2,939

-

655

(179)

(57)

(27)

393

-

274

16,889

16,247

-

-

-

-

-

-

(171)

(171)

-

1,025

(293)

(66)

(28)

638

(171)

467

27,539

26,348

-

31/12/2019

Dealer financing

Segment reporting (€/mln) 31/12/2019

Other

31/12/2019

Total

31/12/2019

Rental

31/12/2019

Retail



Total cost of risk

Other net operating income

Profit before tax

Unallocated taxes

Net profit

Data as at 31/12/2019

Assets

End of period segment assets

Average segment assets

Unallocated assets

197

(39)

5

-

163

-

163

8,226

7,118

-

140

(68)

(13)

3

62

-

62

2,818

2,317

-

617

(170)

(36)

(88)

323

-

323

15,760

14,940

-

-

-

-

-

-

(159)

(159)

-

-

-

954

(277)

(44)

(85)

548

(159)

388

26,805

24,375

-

31/12/2018

Dealer financing

Segment reporting (€/mln) 31/12/2018

Other

31/12/2018

Total

31/12/2018

Rental

31/12/2018

Retail



Total cost of risk

Other net operating income

Profit before tax

Unallocated taxes

Net profit

Data as at 31/12/2018

Assets

End of period segment assets

Average segment assets

Unallocated assets


Part M - Leasing reporting

SECTION 1 - LESSEEQUALITATIVE DISCLOSURES QUANTITATIVE DISCLOSURES

In agreement with paragraphs 51-59 of IFRS 16, in the following notes additional information is provided on the lease contracts entered into by the FCA Bank Group as a lessee. Based on the analysis of the lease contracts falling within the scope of IFRS 16, the group identified as the most significant the property lease contracts that it had signed as a lessee, mainly for office space.

The group noted that at December 31, 2019 the rights to use assets under the lease contracts amounted to €51.7 million, including €8.3 million in accumulated depreciation. Lease debts as of the same date amounted to €51.7 million while interest expense on lease debts for 2019 amounted to €0.6 million.

The following table shows the maturities of the lease debts:

60 - 84 months

48 - 60 months

18 - 24 months

12 - 18 months

12 months€/000

84 - 120 months

24 - 36 months

120 - 180 months

36 - 48 months

> 180 months

Debt for leasing 8,168 2,975 2,721 4,927 4,336 4,151 7,542 8,328 8,568

There are no sub-lease contracts.

In keeping with the exemptions granted from the start, the FCA Bank Group elected not to apply IFRS 16 to contracts of up to 12 months and to contracts with the value of the

SECTION 2 – LESSOR QUALITATIVE DISCLOSURES

The FCA Bank Group provides finance and operating leases in the markets in which it operates, to support the automotive business of the FCA Group and the manufacturing partners.The FCA Bank Group engages in the car rental industry through its Leasys subsidiary, with an offering designed for large, medium and small companies as well as self-employed professionals and private individuals.

As lessor, the risk associated with the rights that FCA Bank retains on the underlying assets is managed through:

• buyback agreements;• collateral: security deposits;• personal guarantees: banking and insurance guarantees and sureties. In the case of contracts which call for FCA Bank to bear directly the residual value risk, as there is no buyback agreement in place with the dealer or the manufacturer, quarterly monitoring is performed to make provisions for such risk.

underlying asset, when such asset is new, of up to €5,000. In this case the payments related to these leases are treated as expenses, in line with the past.

-


2.1 Classification by time bucket of the payments to be received and reconciliation with the finance leases reported as assets.

3.1 Maturity analysis of the lease payments receivables


1. STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT INFORMATION

2. FINANCE LEASES

3. OPERATING LEASING

Reference is made to the tables in the sections on the statement of financial position and the income statement.

Up to1 year

Over 1 year up to 2 years

Over 2 years up to 3 years



For over 5 years

Total

Up to 1 year

Over 1 year up to 2 years




For over 5 years

Amount of the lease payments receivables

Reconciliation of the undiscounted lease payments

Not accrued gains (-)

Not guarantee residual value (-)

Lease payments

Total 31/12/2019Lease payments receivables

Total 31/12/2019Lease payments receivables

Maturity ranges

Maturity ranges

1,785,700

1,291,083

1,095,103

569,731

96,909

54,376

4,892,902

1,620,956

1,604,182

1,198,438

703,422

96,678

14,720

5,238,396

855,423

168,291

687,132

6,093,819

Turin, 21nd February 2020 On behalf of the Board of DirectorsChief Executive O�cer and General Manager

Giacomo Carelli


FCA Bank GmbH FCA Leasing GmbH

FCA Bank S.p.A. (Belgian Branch) Leasys S.p.A. (Belgian Branch)



FCA Capital France S.A. Leasys France S.A.S.

FCA Bank Deutschland GmbHFerrari Financial Services GmbHLeasys S.p.A. (German Branch)

FCA Capital Hellas S.A.FCA Insurance Hellas S.A. FCA Bank GmbH (Hellenic Branch)

FCA Capital RE DAC FCA Bank S.p.A. (Irish Branch)

FCA Bank S.p.A.Leasys S.p.A.Leasys Rent S.p.A. Clickar S.r.l.



FCA Capital Nederland B.V. Leasys Nederland B.V.

FCA-Group Bank Polska S.A. Leasys Polska Sp.Zo.o.

FCA Dealer Services Portugal S.A. FCA Capital Portugal IFIC S.A.

Ferrari Financial Services GmbH (UK Branch)FCA Automotive Services UK Ltd FCA Dealer Services UK Ltd Leasys UK Ltd

FCA Capital España EFC S.A.FCA Dealer Services España S.A. Leasys S.p.A. (Spanish Branch)



BANKFINANCIAL COMPANY

BANKNON-FINANCIAL COMPANY

FINANCIAL COMPANY

FINANCIAL COMPANY

FINANCIAL COMPANYNON-FINANCIAL COMPANY

BANKFINANCIAL COMPANY

NON-FINANCIAL COMPANY

FINANCIAL COMPANYFINANCIAL COMPANY

BANK

INSURANCE COMPANYBANK

BANKNON-FINANCIAL COMPANYNON-FINANCIAL COMPANYNON-FINANCIAL COMPANY

FINANCIAL COMPANY

FINANCIAL COMPANY

FINANCIAL COMPANYNON-FINANCIAL COMPANY

BANKNON-FINANCIAL COMPANY

NON-FINANCIAL COMPANYFINANCIAL COMPANY

FINANCIAL COMPANYFINANCIAL COMPANYFINANCIAL COMPANY


FINANCIAL COMPANYFINANCIAL COMPANY


FINANCIAL COMPANY

FINANCIAL COMPANY

COMPANYCOUNTRY BUSINESS

AUSTRIA

BELGIUM

DENMARK

FINLAND

FRANCE

GERMANY

GREECE

IRELAND

ITALY

MOROCCO

NORWAY

NETHERLAND

POLAND

PORTUGAL

UNITED KINDOM

SPAIN

SWEDEN

SWITZERLAND

Country by country reporting Data as at 31/12/2019FCA Bank Group companies by country and business:


BANK

FINANCIAL COMPANY

BANK


FINANCIAL COMPANY

FINANCIAL COMPANY

FINANCIAL COMPANY


BANK

FINANCIAL COMPANY


FINANCIAL COMPANY

BANK

INSURANCE COMPANY

BANK

BANK


FINANCIAL COMPANY

FINANCIAL COMPANY

FINANCIAL COMPANY


BANK



FINANCIAL COMPANY

FINANCIAL COMPANY


FINANCIAL COMPANY


FINANCIAL COMPANY

FINANCIAL COMPANY

7,4006,268

9,014(154)

7,167

318

58,429(2,591)

89,2398,120(81)

5,3701,652

571806

665,579(52,881)

1,012

245

11,542(296)

8,4914,554

3,0029,727

90,667(3,342)

58,049(1,231)

3,593

22,914

1,013,153

(222,587)

790,566

22

319

32

158

259378

2819

43

670516

2

2

338

6419

539

12021

9420

1

56

2,280

5,1232,643

3,658(1,431)

2,699

120

28,5118,799

71,3294,495(2,264)

3,2771,499

69176

539,28978,785

655

0

6,776131

3,9351,499

3,7768,927

62,3093,366

47,4611,036

2,559

14,626

903,835

(265,830)

638,005

(904)(69)

(765)

(594)

(29)

(14,661)(3,782)

(22,555)(1,384)

(907)(475)

(9)(22)

(97,748)5,928

(404)

(0)

(1,679)(25)

(1,764)(473)

(632)(2,222)

(12,268)(379)

(8,562)(505)

(568)

(3,023)

(170,480)

(450)

(170,930)

COUNTRY BUSINESS

OPERATINGINCOME(figures in thousandsof euro)

FULL TIMEEQUIVALENTEMPLOYEES

INCOME OR LOSSBEFORE TAX FROMCONTINUINGOPERATIONS(figures in thousands of euro)

TAX ONINCOME OR LOSS(figures in thousandsof euro)

AUSTRIA

BELGIUM

DENMARK

FINLAND

FRANCE

GERMANY

GREECE

IRELAND

ITALY

MOROCCO

NORWAY

NETHERLAND

POLAND

PORTUGAL

UNITED KINGDOM

SPAIN

SWEDEN

SWITZERLAND

Total group companies

Consolidation adjustments

Group consolidated

Pursuant to Art. 89 of Directive 2013/36/EU of European parliament and the Council (CRD IV):


STATUTORY’S AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENT AS AT DECEMBER 31, 2019

Statutory’s auditors’ report on the consolidated financial statement

• 289


Statutory’s auditors’ report on the consolidated financialstatement

• 291



• 293



• 295



• 297


AS AT DECEMBER 31, 2019

INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENT

Independent auditors’ report on the consolidated financial statement

• 299


• 301Independent auditors’ report on the consolidated financialstatement


Independent auditors’ report on the consolidated financialstatement

• 303



• 305



• 307



• 309

ANNEX CONSOLIDATED NON-FINANCIAL STATEMENTAS AT DECEMBER 31, 2019Prepared in accordance with Legislative Decree 254/16


Consolidated non-financial statement • 311

Introduction 312 Metohdological note 313 Letter to stakeholder 314

Group profile 315

FCA Bank stakeholder 317

Materiality matrix 319

Governance and risk management 320

Environmental aspects 333

Social aspects 334

Personnel management 345

Human rights 356

Fight against corruption 358

GRI content index 360


Introduction

Legislative Decree no. 254 of December 30, 2016, which implemented Directive 2014/95/EU, requires large companies and public interest entities to report non-financial information for the financial years starting on or after January 1, 2017.

In its capacity as a public interest entity with employees, financial position and net revenues in excess of the thresholds set by article 2 del D. Lgs. n. 254, FCA Bank Group publishes every year, as Annex to the Consolidated Financial Statements, the Consolidated Non-Financial Statement.

The FCA Bank Group’s Non-Financial Statement is prepared in accordance with article 4 of the foregoing Legislative Decree and the Referenced option of the Global Reporting Initiative Sustainability Reporting Standard (GRI Standard) published in 2016 by the Global Reporting Initiative (GRI), which constitute the most common and internationally recognized model in the area of non-financial disclosure.

FCA Bank Group, in accordance with the foregoing Decree, provides communication to its stakeholders on the non financial issues identified as relevant in light of a materiality analysis of the group’s activities and characteristics, to Prepared in accordance with Legislative Decree 254/16 ensure an understanding of the organizational model, the policies, the main risks and the performance indicators. The significant material topics for the FCA Bank Group are pointed out in the materiality matrix in the specific section and concern Governance and the following theme areas identified by Legislative Decree no. 254/2016:• Environment• Employees• Social

• Fight against internal and external corruption and bribery• Respect for Human Rights

As required by Legislative Decree 254/2016, the contents of this Statement were identified and chosen to provide a full understanding of the group’s activities, performance and results and their impact, also in view of the GRI Standards of relevance, inclusiveness, sustainability and completeness.

In the first phase of the analysis, the topics potentially relevant to FCA Group and our stakeholders were identified. This was done by taking into consideration:• Context, based on Sustainable Development in the European Union published by Eurostat and Reflection Paper towards a sustainable Europe by 2030 published by the European Commission; • sector benchmarking analysis;• revision of the Materiality matrix 2018.

In order to easily find information in this report, the GRI Content Index is in the end of the document.The Non Financial Statement is subject to a limited audit by EY S.p.A.. Reporting on relevant topics is guided, where possible, by the principles outlined by the Global Reporting Initiative (GRI), which represents the international reporting standard of reference.

1 Global Reporting Initiative (GRI) is a non-profit organization based on a network involving thousands of professionals and organizations engaging in many sectors. The GRI Reporting Framework is a universally accepted model to report the economic, environmental and social performance of an organization. GRI’s mission is to turn the sustainability report into standard practice and to allow all companies and organizations to prepare a report on their performance and their economic, environmental, social and governance impacts. GRI publishes the sustainability reporting guidelines on its web site: www.globalreporting.org


Methodological note

Reporting processAll the Company’s departments contributed to prepare the contents of the Consolidated Non Financial Statement 2019 and to the interaction with stakeholders. Data gathering is centralized and the procedure to prepare the Statement was established in 2018 to govern process, activities, roles and responsibilities of the group’s departments and bodies involved in the preparation, approval and publication of the document.

Reporting perimeterThe scope of the Consolidated Non-Financial Statement is the same as the scope of the Consolidated Financial Statements as of and for the year ended December 31, 2019. This is a section of the Report on Operations, forming an integral part of the documentation related to the 2019 Consolidated Financial Statements. In the reporting period, did not occur any significant changes in organizational aspects, participation and supply chain.Regarding the qualitative and quantitative data on social and environmental aspects, the scope of reporting corresponds to FCA Bank Group and its subsidiaries consolidated on a line-by-line basis. Any exceptions, with regard to the scope of this data, are clearly indicated throughout the Non Financial Disclosure.Non directly measurable quantitative data have been reported by making use of estimates, where necessary. The formulas and assumptions used to calculate quantitative indicators not expressly provided for by the GRI Standards are described in the following paragraph.

Assumptions and formulas not directly covered by gri standards Following are reported main definitions, assumptions and calculations not yet covered with GRI.• Customer Satisfaction Index• Dealer Satisfaction Index• Complaints• Leasys Mobility Stores

Customer and Dealer satisfaction indices are calculated as weghted average in respect of the answers received to the question related to the customer satisfaction in the questionnaire in a 1 to 5 range.With reference to complaints FCA Bank Group conforms to the CRD, enclosed I – Capital Requirements Directive (Legislation 2013/36/UE).

With reference to staff, the data reflect the headcount at December 31, 2019. Injuries frequency index is calculated using injuries number multiplied 1,000,000, divided per worked hours.


The 2019 results confirm the bank’s strategic choices and its ability to generate profits with a responsible business model. The FCA Bank Group is well aware that only responsible corporate growth fosters long-term development and reduces social and environmental risks.

Thus, the FCA Bank Group reiterates its commitment to the 3 dimensions of sustainability – in the environmental, social and governance areas – in keeping with the Company’s positioning inspired by its Corporate Social Responsibility philosophy.

In the environmental area, the FCA Bank Group’s e²ort is intended to minimize the negative impact on natural resources and on the global environment. The focus is constantly on the environmental performance of the group’s activities and on compliance with the applicable laws and regulations, in close cooperation with the automotive partners. In the social and human-resource development area, the objective is to allow all those who work for or with the FCA Bank Group to achieve their full potential in a safe and protected environment. The FCA Bank Group is committed to adopting all the measures necessary to provide safety and to protect the physical and mental health of its employees. A culture of injury prevention and risk awareness is promoted among workers through adequate training and information.

Still in the social area, the FCA Bank Group constantly raises the awareness of its directors, executives and sta² on non-discrimination issues. A work environment where uniqueness of all employees is kept in consideration, improves performance and increases

motivation. Aside from regulatory obligations, the FCA Group believes that diversity enhances performance and attractiveness. Advancing gender diversity means creating an open and responsible corporate culture that fosters teamwork and growth. This commitment is attested by concrete actions, such as the promotion of women to management positions and board committees or the integration of people with disabilities.

The FCA Bank Group invests energies in social programs, supporting them financially and encouraging its employees to engage in volunteer activities, to help and enliven the communities in which we live and work. The development of social initiatives and the support to di²erent associations are witness to our e²ort for the good of the community.

Lastly, our business plans are firmly rooted in the solid and sustainable creation of value, in conjunction with high levels of capitalization and the reduction of the business’s risk profile, with a focus on people and innovation.

Chief Executive O�cer and General ManagerGiacomo Carelli

Letter to stakeholder


SHAREHOLDER STRUCTURE

Group profile

FCA Bank is a joint venture between FCA Italy S.p.A. and CA Consumer Finance S.A., two leaders in their respective sectors. FCA Bank provides its financing products and services in 17 European countries and in Morocco to dealers and end customers of the brands of the FCA Group and other automotive partners.

100%

50% 50%

100%


FCA Bank S.p.A. - with registered office in Corso Giovanni Agnelli 200, Turin, Italy – is the

FCA Bank GmbH FCA Leasing GmbH

FCA Bank S.p.A. (Belgian Branch) Leasys S.p.A. (Belgian Branch)


FCA Capital France S.A. FCA Leasing France SNCLeasys France S.A.S.

FCA Bank Deutschland GmbHFerrari Financial Services GmbHLeasys S.p.A. (German Branch)

FCA Capital Hellas S.A.FCA Insurance Hellas S.A. FCA Bank GmbH (Hellenic Branch)


FCA Capital RE DAC FCA Bank S.p.A. (Irish Branch)

FCA Bank S.p.A.Leasys S.p.A.Leasys Rent S.p.A. Clickar S.r.l.


FCA Capital Nederland B.V. Leasys Nederland B.V.

FCA-Group Bank Polska S.A. Leasys Polska Sp.Zo.o.

FCA Dealer Services Portugal S.A. FCA Capital Portugal IFIC S.A.

Ferrari Financial Services GmbH (UK Branch)FCA Automotive Services UK Ltd FCA Dealer Services UK Ltd Leasys UK Ltd

FCA Capital España EFC S.A.FCA Dealer Services España S.A. Leasys S.p.A. (Spanish Branch)




COMPANYCOUNTRY

AUSTRIA

BELGIUM

DENMARK

FRANCE

GERMANY

GREECE

FINLAND

IRELAND

ITALY

NORWAY

NETHERLAND

POLAND

PORTUGAL

UNITED KINDOM

SPAIN

MOROCCO

SWEDEN

SWITZERLAND

GROUP STRUCTURE AND INTERNATIONAL PRESENCE

Parent Company of the FCA Bank Group with operations in 18 countries.


FCA Bank stakeholdersIn 2019 the FCA Bank Group mapped its stakeholders to promote di²erent engagement activities, on the basis of selected stakeholder categories.The group has implemented a multi-year plan of stakeholder engagement, so as to involve

gradually all the categories, in keeping with the GRI principle of Stakeholder Inclusiveness.Below, a map is provided of the FCA Bank Group’s stakeholders, as prepared in 2019:

In 2019 the following categories were involved:• Employees • Dealers• Shareholders• Suppliers

Shareholders Employees

Civil society Suppliers

Capital Marketand Investors

Public AdministrationInstitutions

Dealer Media

Business partners Retail Costumers

STAKEHOLDER


Materiality analysis

In 2019 the FCA Bank Group upgraded its materiality matrix. To that end, to identify topics considered relevant by both its stakeholders and the group itself, based on the recommendations of the GRI Standards, a structured process was implemented that took into account the perspectives of parties internal and external to the group, in accordance with the following phases and activities: • Identification of topics potentially relevant for the company and the stakeholders; • Selection and prioritization of topics and construction of the materiality matrix; • Validation of the materiality matrix by top management.

Within the context of this exercise, the materiality analysis took into account the effects of risks and opportunities related to the bank’s business. To identify the topics potentially relevant for the FCA Bank Group and its stakeholders, consideration was given to the following documents: • Sustainability reports of institutional entities;• Consolidated non financial statements of other domestic and international financial groups, to be used as benchmarks among the FCA Bank Group’s main peers;• The FCA Bank Group’s Code of Conduct for the commitments expressed and formalized therein;• The 2018 materiality matrix;• Internal interviews to the contact persons of the FCA Bank Group, who share the views of each function on topics, making it possible to focus on the key aspects and the main projects consistent with such aspects developed during the year.

The selection and prioritization of the relevant topics consists of two activities: • Direct involvement of the group’s external stakeholders; • Internal assessment by Top Management, taking into consideration the relevance of the

topics in relation to corporate activities and strategies.

Following the update of the materiality matrix for 2019, eleven topics were identified as relevant for the FCA Bank Group:• Contrasting corruption and promoting integrity in the business• Transparency in services and business, financial inclusion• Security, privacy and reliability of services• Green finance and sustainable mobility• Dealer and customer relations• Training and development of human resources• Economic performance and value creation• Innovation and digitalization• Employee health and safety• Welfare, employment and dialogue with social partners• Diversity, equal opportunities and human rights

In the following sections these topics are associated with each area of interest expressed by Legislative Decree 254/2016 (environmental aspects, social aspects, personnel management, human rights and fight against corruption).


Materiality matrix 2019

The results of the materiality analysis are depicted graphically through a Cartesian coordinate plane called Materiality matrix, which shows the interest for the company on the ordinate and the interest for the stakeholders on the abscissa.

Rele

vanc

e to

sta

keho

lder

Relevance to FCA Bank groupLOW HIGH

LOW

HIGH

Diversity, equal opportunitiesand human rights

Employee health and safety

Dealer and customer relations

Training and development ofhuman resources

Economic performance and value creation

Security, privacy and reliability of services

Transparency in services and business, financial inclusion

Green finance and sustainablemobility

Innovation and digitization

Welfare, employment anddialogue with social partners

Contrasting corruption andpromoting integrity in thebusiness

5,00

4,00

3,00

2,002,00 3,00 4,00 5,00

Welfare, employment anddialogue with social partners

This depiction makes it possible to evaluate the significance (i.e. the “materiality”) of every topic on the basis of its position with respect to both axes.


Governance and risk management

Group work to ensure the healthy and prudent management of the group, in compliance with existing regulations and the development trajectories that characterise them, with the Articles of Association, as well as the corporate targets for business development. The Corporate Governance structure comprises an administration and control system founded on the existence of an administrative body (the board of directors) and of the board of auditors.

the Board of Directors oversees sustainability activities with top management’s support; • The staff meeting, gathering the CEO and top management, supervises the sustainability aspects (e.g. the reporting process, the materiality analysis, the interaction with the stakeholders) and supports the Board of Directors in defining the governance of sustainability; • The Consolidated Financial Reporting

FCA Bank adopted a comprehensive set of rules and procedures that establish the responsibilities and inspire the conduct of our company boards and officers, in order to ensure sound, prudent management that achieves profitability while taking on risk in an informed manner and doing business with integrity.

Corporate Governance and Organisational Structure The Corporate Governance system and Organisational Structure adopted by FCA Bank

In 2019 the FCA Bank Group continued the actions undertaken in 2018 to strengthen its effort in the area of sustainability. The preparation of the FCA Bank Group’s Non Financial Statement for the year ended December 31, 2019 is based on the following structured process:• The Board of Directors approves the non financial statement together with the 2019 consolidated financial statements. Moreover,

CORPORATE GOVERNANCE

SUSTAINABILITY GOVERNANCE

STÉPHANE PRIAMI*Chairman

DAVIDE MELEDirector

VALÉRIE WANQUETDirector

BERNARD MANUELLIDirector

OLIVIER GUILHAMONDirector

ANDREA FAINADirector

ANDREA GIORIOIndipendent Director

PAOLA DE VINCENTIISIndipendent Director

* appointed on January 31, 2020

RICHARD K. PALMERDirector

GIACOMO CARELLICEO

General Manager


The internal control system

The Consolidated Non-Financial Statement, submitted to EY S.p.A., is published in the group’s Consolidated Annual Financial Statements on the corporate website and submitted to Consob by certified e-mail.

• First-level controls, which are carried out by the operational departments or are incorporated into the IT procedures to ensure the proper performance of day-to-day operations and the single transactions; • Second-level controls, which are designed to contribute to the definition of risk measurement methods and to check the consistency of operational activities with risk objectives. Such controls are performed by non-operational departments, particularly Risk & Permanent Control and Compliance & Supervisory Relations;• Third-level controls, which are performed by Internal Audit to identify unusual patterns, procedure and regulation breaches as well as to evaluate the functioning of the overall internal control system.

department reports to top management to define the sustainability reporting process and is responsible for coordinating the preparation of the non financial statement. The working group monitors the specific initiatives and gathers the data and information necessary for the statement.

To ensure sound and prudent management, the FCA Bank Group combines business profitability with informed risk-taking, adopting a fair conduct in operational activities. As such, the group has established an internal control system designed to detect, measure and constantly monitor the risks associated with its activity, involving directors and statutory auditors, control committees and functions, the Supervisory Board, the independent audit firm, senior management and the staff as a whole. Responsibility for the group’s internal control system rests with Internal Audit, Risk & Permanent Control, Compliance & Supervisory Relations. These functions – which are independent of one another in organizational terms – operate across the Company and the group and liaise with the corresponding functions of the subsidiaries. In particular, Compliance & Supervisory Relations and Risk & Permanent Control report to the CEO and General Manager while Internal Audit reports to the Board of Directors. From an operational point of view there are three types of control in place:


Internal AuditThe Internal Audit department reports directly to the Board of Directors and is responsible for third-level controls, reviewing, based on the annual audit plan approved by the Board of Directors, the adequacy of the system of internal control and providing the Board of Directors and management with a professional and impartial opinion on the effectiveness of internal controls.The head of Internal Audit is responsible for preparing the audit plan, on the basis of a periodic risk assessment, and coordinates the audit missions. He reports on the findings and progress of the audit plan from time to time to the Board of Directors, the Risk & Audit Committee, the Internal Control Committee and the Board of Statutory Auditors. Internal Audit is responsible for the internal review, at least once a year, of the ICAAP - to ensure that it functions properly and is compliant with the applicable rules – and the periodic examination of the process to evaluate individual risks.The internal audit process calls for each Company to map its own risks on an annual basis, by using a common methodology issued by the Parent Company. For those subsidiaries that do not have an internal audit function locally, risk mapping is performed by the Parent Company.Monitoring of the individual companies’ internal audit activities takes place through a system of quarterly reports on:• the progress of the audit plan and explanation of any deviations;• all the audits carried out during the quarter under review;• the status of implementation of the recommendations issued.

The Board of Directors is apprised regularly of the audit findings, the action plans undertaken, the progress of the plan and the level of implementation of the recommendations to the individual companies.

Risk and Permanent ControlThis function’s mission is to manage the risk control and prevention system. Risk & Permanent Control at the Parent Company level includes staff dedicated to permanent controls that are not involved in business activities. Second-level controls performed by Risk & Permanent Control concern all the risks considered peculiar in the management of Company’s day-to-day business operations, which are illustrated in the map included in the ICAAP/ILAAP Report.

The group has been upgrading its Risk Appetite Framework (“RAF”) since it was first implemented in 2015, so as to put into sharp focus the risk profile that the bank is willing to bear to pursue its strategic objectives. The RAF upgrade is approved and constantly monitored by the Board of Directors. The process to define the Risk Appetite Framework as a standard of reference to determine risk propensity, which sets in advance the risk/return targets that the group intends to achieve, fosters also the broader dissemination of a risk culture across the group.

The development of the group’s Risk Appetite Framework required the identification of therelevant risk measures considered significant by the group.Moreover, this function coordinates the consolidated ICAAP.Risk & Permanent Control (R&PC) is represented in every group company by a local contact.

The results of the second-level controls performed by Risk and Permanent Control are reported quarterly to the Internal Control Committee and described in the six-monthly and annual Internal Control Report.

THE CONTROL FUNCTIONS


The function is involved in the ex-ante assessment of compliance with the applicable regulations of all innovative projects, including new products and services.

Regarding anti-money-laundering and antiterrorism, the function assesses that the Company’s procedures are consistent with the objective of preventing and combating the breach of external (laws and regulations) and internal rules on anti-money-laundering and terrorist financing.

ComplianceThe objective of the Compliance & Supervisory Relations function is to oversee Compliance and Anti-Money-Laundering risk and managing relations with the Supervision Authorities.The head of the function is in charge of anti-money laundering and responsible for the reports of suspicious transactions. This manager also chairs the supervisory body of both the Company and its subsidiary Leasys S.p.A..The Compliance & Supervisory Relations department reports directly to the Company’s CEO and General Manager.The main Compliance & Supervisory Relations responsibilities concern directly the Company and, in terms of coordination and supervision, Leasys and the foreign markets.

More specifically, to evaluate the adequacy of internal procedures in preventing non-compliance with laws, rules and self-regulation provisions, the Compliance function:• identifies, in cooperation with the departments concerned, particularly Legal Affair, the rules applicable to the Company and the group, and evaluates their impact on activities, processes and procedures;• proposes procedural and organizational changes to ensure adequate control over noncompliance risk;• prepares reports for officers and governance bodies and other internal control functions;• assesses the effectiveness of procedural and organizational adjustments suggested to prevent non-compliance risk;• coordinates the activities of the supervisory body, ensuring that the compliance program under Legislative Decree 231/01 is constantly upgraded;• participates in the identification of training requirements and in personnel training activities to disseminate a corporate culture driven by the principles of honesty, integrity and compliance with the rules.

Risk & Audit CommitteePursuant to the supervisory provisions on corporate governance, the Risk & Audit Committee (RAC) provides support to the Board of Directors on risks and the internal control system as well as the proper use of accounting standards for the preparation of the separate and consolidated financial statements. With reference to risk management and control, the Committee supports the Board of Directors in:• defining and approving risk management strategies and policies; in connection with the Risk Appetite Framework (RAF), the Committee evaluates and makes recommendations for the Board of Directors to define and approve the risk objectives (“Risk Appetite”) and the risk tolerance threshold (“Risk Tolerance”);• verifying the proper implementation of risk management strategies, policies and RAF;• defining the policies and processes to evaluate corporate activities;• the preliminary review of the audit plan, the activity plans of second-level control functions and the periodic reports of the control functions to the Board of Directors;• assessing the adequacy of corporate

BOARD COMMITTEES


risk control functions, the internal control procedures and the reports necessary to ensure that the Board of Directors is properly and exhaustively informed.

The Committee consists of two independent Directors, of whom one is its chair on an annual rotation basis. The meetings of the Committee are attended, without voting rights, by the chairman of the board of statutory auditors and the head of Internal Audit, who acts as secretary.Meetings of the Committee can also be attended, without voting rights, by two other directors and by the heads of the second-level control functions.

Nomination CommitteePursuant to the supervisory provisions on corporate governance, the Nomination Committee supports the Board of Directors in the process for the nomination and co-optation of directors, in the Board’s self-assessment and in the CEO & General Manager succession process.

In accordance with the Articles of Association, the Committee makes recommendations and provides opinions to the Board of Directors, which in turn makes available to it the resources necessary to perform its tasks with the help of external consultants, within the limits set by the budget and through the Company’s departments.

The Committee was established on March 23, 2016, pursuant to a resolution of the Board of Directors, is made up since 30 June 2017 of 3 non-executive directors, including 2 independent members.The Committee is chaired by an independent director or, in his absence, by the other independent director.

Meetings of the Committee can be attended, depending on the topics covered, without

Remuneration CommitteePursuant to the supervisory provisions on corporate governance, the Remuneration Committee acts in a consultative and advisory capacity for the Board of Directors on remuneration and incentive practices and policies of the FCA Bank Group.Specifically, the Committee submits to the Board of Directors, after consultation with the CEO & General Manager, proposals on incentives, the document on remuneration policies and a report on their application (ex-post disclosure) for the annual approval by the shareholders at the general meeting.The Committee provides regularly to the Board of Directors and the shareholders adequate information on the activity performed. The Board of Directors makes available to it the resources necessary to perform its tasks with the help of external consultants, within the limits set by the budget and through the Company’s departments.

The Committee, established on March 23, 2016, pursuant to a resolution of the Board of Directors, is made up, temporarily, since June 30, 2017 of 3 non-executive directors, including 2 independent members.The Committee is chaired by an independent director or, in his absence, by the other independent director.

Meetings of the Committee can be attended, without voting rights, by the Chairman of the Board of Statutory Auditors (or by a Statutory Auditor designated by him), the CEO & General Manager, the heads of the control functions and the members of the Board of Directors.

voting rights, by the Chairman of the Board of Statutory Auditors or by a Statutory Auditor, the CEO & General Manager, the heads of the control functions or other key management functions, and other single directors.


To strengthen the Internal Control System, the group established, in addition to the above functions, the following committees.

Internal Control CommitteeThe mission of the Internal Control Committee (“ICC”) is to monitor the results of the activities performed by the Company’s functions responsible for the internal control system for the purpose of:• reviewing the findings of audit activities;• providing a progress report on action plans;• submitting the Audit Plan and related progress reports;• analyzing any problems and issues arising from the internal control system.

Moreover, it acts as the anti-fraud committee with the objective to monitor fraud events, the effectiveness of the fraud prevention systems in place and the adequacy of the control systems related to fraud detection.The ICC meets on a quarterly basis, and is attended, periodically, also by representatives from the internal control functions of both shareholders. Such meetings are a time where reports are made to senior management on the results of secondand third- level activities on progress with action plans implemented as a result of findings and recommendations, including findings and recommendations made after inspections by local supervision authorities.The involvement of the CEO and General Manager guarantees the high degree of effectiveness of the internal control system, given that he has a full and integrated overview of the findings of the audits performed, which permits implementation of the necessary corrective or remedial actions in case of flaws or anomalies.

Group Internal Risk CommitteeThe Group Internal Risk Committee (“GIRC”) engages in policy-setting and monitoring to ensure that the group’s internal control system prevents and manages risks effectively.The activity carried out is more analytical than that of the other control committees, as it explores in great detail, among others, the RAF and the Risk Strategy that every head of the group companies develops and submits to the GIRC every year, pursuant to the group Risk Management policy approved by the Board of Directors.In addition, the GIRC is convened whenever the market or the Company faces a liquidity crisis and - in its restricted form, which is referred to as NPA committee – evaluates and approves proposals of new products and activities coming from the markets.Meetings of the GIRC - which are chaired by the Managing Director and General Manager – are open to senior managers and, when called upon, to the Heads of the group companies.Attendance is also open to the heads of the three internal control functions, as observers without voting rights; in particular, Risk & Permanent Control provides an opinion on risk levels in the various areas and any hedging and mitigation thereof.In addition, in case of approval of new products and activities, Compliance & Supervisory Relations may exercise veto rights in relation to aspects falling within its purview.Participation of the control functions in this committee fosters critical interaction with the business units; accordingly such participation is both necessary and appropriate, so as to prevent the creation of an excessive distance between the control functions and the operational context, without prejudice to the indispensable professional autonomy of the control functions.The absence of voting rights for the control functions within the GIRC is further evidence, among others, to the separation between operational and control functions.

OTHER COMMITTEES INVOLVED IN THE INTERNAL CONTROL SYSTEM


Supervisory BoardWith reference to the prevention of administrative liability pursuant to Legislative Decree 231/01, the Supervisory Board has been established for the Parent Company and the Italian subsidiary Leasys S.p.A., to oversee the proper application o the Compliance Program and the Code of Conduct. The Supervisory Board: • meets at least once a quarter and reports periodically to the CEO and General Manager, the Board of Directors and the Board of Statutory Auditors;• performs periodic reviews on the ability of the Compliance Program to prevent the perpetration of offenses, relying usually on FCA Bank’s Compliance, Internal Audit and Risk &Permanent Control functions as well as the other functions as necessary from time to time. The Parent Company’s Supervisory Board is made up of the Head of Compliance and Supervisory Relations, the Head of Internal Audit and an external legal and penal expert who acts as Chair.

Board of Statutory Auditors The board is composed of three members and two alternates appointed for a period of three terms.To the Board of Statutory Auditors are assigned the tasks referred to in the first paragraph of art. 2403 of the Italian Civil Code and the rules governing banking activity.The Board of Statutory Auditors currently in office has been appointed by the Ordinary Shareholders Meeting held on 30 March 2018 for the financial years 2018 - 2020 and will expire with the approval of the financial statements of the last financial year.

Board Executive Credit CommitteeThe Board of Directors has delegated to the Board Executive Credit Committee (BECC) the credit approval decisions with which it is concerned, which, according to the current delegation of powers model, are not entrusted to the corporate bodies. This delegation is given in all cases where the date of the first scheduled.Board meeting is not compatible with the urgency of the credit decisions to be made.

FRANCESCO PISCIOTTAPresident

VITTORIO SANSONETTIAuditor*

GIOVANNI OSSOLAAuditor

DAVIDE CHIESAAlternate Auditor

VALTER CANTINOAlternate Auditor**

* appointed on July 1, 2019* * appointed on November 26, 2019


Internal control and risk management

• reliability and security of corporate information and IT procedures;• averting the risk that the intermediary is involved, even involuntarily, in illegal activities – with particular reference to those connected with money laundering, usury and the financing of terrorism;• compliance of operations with the law and supervisory regulations, as well as with internal policy, regulations and procedures.

The Internal Control SystemFCA Bank has provided itself with an internal control system directed towards continuously detecting, measuring and checking the risks connected to the performance of its own activity which involves the Corporate Bodies, the control functions and committees, the Supervisory Body, the Auditing Companies, Top Management and all staff.

The internal control system comprises the sum of rules, functions, structures, resources, processes and procedures that aim to ensure the achievement of the following aims:• checking the implementation of corporate strategy and policies;• the containment of risk within the limits indicated in the reference framework for determining the intermediary’s propensity to risk - Risk Appetite Framework “RAF”; • safeguarding the value of the assets and protection against losses;• effectiveness and efficiency of corporate processes;


Management objectives and policies

company operations are carried out in keeping with sound and prudent principles, operational limits, timely reporting to pre-established hierarchical levels and that appropriate corrective actions are taken to address any criticalities.

Furthermore, the adequacy of risk management is guaranteed by the active participation of Risk and Permanent Control in specific committees:• the Internal Control Committee (ICC), which coordinates the control functions (IA, C&SR, Risk And Permanent Control), and the set of internal control mechanisms;• the Group Internal Risk Committee (GIRC), which performs analyses and assessments, drives the risk strategy in managing and monitoring global and operational credit limits;• the ALM Meeting, which monitors and controls all financial risks (market and counterparty in liquidity management transactions) as well as interest rate and currency risks;• the New Product and Activity Committee, with the task of improving the management of risks specific to new activities and products that might change the company’s risk profile;• the Risk & Audit Committee (R&AC), established by the Board of Directors on 17 September 2014 in view of the transformation into a bank and in accordance with Bank of Italy’s instructions on corporate governance. The Risk & Audit Committee supports the Board of Directors on risks and the internal control system and the assessment for the proper use of accounting standards in consolidated and separate financial reports. In particular, it is responsible for all instrumental and necessary activities for the Board of Director to determine properly and effectively the Risk Appetite Framework and risk management policies.

Every foreign company ensures a suitable level of risk management in proportion to its size and activities and in accordance with the guidelines set out every year by the Parent Company.

FCA Bank attaches great importance to the measurement, management and control of risks.

In this particular case, the parent company plays a role of guidance, management and control of risks at group level, activating operational plans of action that allow a reliable coverage of all risk contexts.

The guiding principles of the risk management and control system are:• a clear identification of responsibilities in taking risks;• measurement and control systems in line with Supervisory provisions and with the most widely adopted solutions at the international level;• organizational separation between operational functions and control functions.

FCA Bank updates every year its risk strategy, setting the risk levels that the group considers adequate to its growth strategy. Through this strategy, which is submitted for approval to the Group Internal Risk Committee, the overall limits (alert thresholds) are set, together with the limits attributable to each group entity. This limit and/or alert threshold system is submitted for approval to the Board of Directors of the Parent Company, FCA Bank.

This framework is designed to ensure consistency among the business model, the strategic and budget plan, the ICAAP and ILAAP and the internal control system, setting maximum risk levels for the different areas.

In light of the above, it is noted that the risk management processes are based on such key factors as the defined governance profiles, the stated risk propensity and the identification of risk takers and are structured in keeping with the phases required by rules and regulations and contemplated by professional practice (identification, measurement/valuation, monitoring, reporting, criticality management).

For this reason, the risk management processes are considered adequate to ensure that


banking industry and are adequately tested and validated within the company.

The functioning of the internal control system is considered effective.

Such effectiveness is preserved over time thanks to maintenance and upgrading activities as well as the development of methodologies, organisational arrangements, processes, procedures, software applications and tools.

Risk and Permanent Control monitors risks through its annual control and activity plan, which includes:• the creation and upgrade of risk management procedures; • analysis and issuance of opinions on credit, financial and operational risk (e.g. NPA, Scoring, etc.);• support to HR in the development of training activities to disseminate an integrated risk culture (Claroline web platform).

FCA Bank’s risk management framework features the following aspects:• verification that company policies and strategies are implemented;• curbing of risk within the limits set out in the Bank’s Risk Appetite Framework (RAF);• protection of value of assets and against losses.

The foremost safeguard of the internal control system is the professionalism of the employees who, within the framework of the corporate organisational rules and references, are tasked with the duty of performing control activities, reviewing the relevant findings and assessing risk factors and related exposure levels prospectively. The employees assigned to Risk and Permanent Control, who are adequate in qualitative terms, have generally university level education in economics, mathematics and statistics and have a good knowledge of the regulatory and methodological aspects, suitable technical skills and professional expertise suited for the task.

The methodologies, models and software applications utilised are common in the

Non-financial risksIn addition to risks typical of the banking sector, the FCA Bank Group is also aware of the importance of monitoring non-financial risks:• strategic risk: it is the risk of incurring operating or capital losses due to inadequate company decisions, the wrong implementation of such decisions, an inappropriate allocation of resources or a lack of response to changes in the overall company context.• reputational risk: it is the current or prospective risk of operating or capital losses due to the negative perception of the bank’s image by customers, counterparts, shareholders, investors, authorities. The group considers this as an “indirect risk” in that it derives from other risk categories that can have also consequences for the bank’s image, including operational risk and compliance risk.• compliance risk: it is the risk of incurring judicial or administrative sanctions, significant financial losses or damage to the reputation after the violation of imperative norms (laws, rules, regulations) or self-regulation (e.g. articles of association, codes of conduct, codes of ethics). Thus, this risk can give rise to a reputational risk.• conduct risk: defined as the current or potential risk of losses deriving from the inadequate management of the financial services provided, including fraud or gross negligence. FCA Bank developed a method to monitor this risk, involving the survey of different indicators associated with the main dimensions related to conduct.

Specifically, Risk Management is responsible for the ongoing maintenance and upgrade of


this tool and the assessment of the relevant findings. The other corporate functions involved in the process to share the necessary data to upgrade the metrics currently used in the tool are Compliance, Internal Audit, Legal, Human Resources, Frauds Governance.

The key factors driven by the tool are as follows:• conduct, related to any case of inappropriate behavior by the bank (e.g. dissemination of asymmetric information, conflict of interests, fraudulent actions, unfair sale approach);• governance and strategy, that is lack of a risk culture, murky compensation and incentive system, inadequate definition of the code of conduct, lack of clarity for roles and responsibilities; • process, related to the performance of commercial activities, that is inadequate product development, poor accident management, inefficient back office operations;• external environment, related to the bank’s ability to adapt promptly to change, mainly regulatory and technological (that is lack/late learning of findings of supervision authorities, sketchy knowledge of regulatory amendments).

Monitoring these risks is a necessary condition to generate and protect sustainable value over time. This activity reflects on aspects that the group considers as a priority - such as maintenance of a high service quality and customer satisfaction, transparency of the information on products and services, innovation, multichannel engagement, digitalization and data security - to guarantee the ethics and integrity of the business and to protect the brand.


Correlation material topics, potential risks and risk controls

Environmental aspects

Social aspects

Green finance and sustainable mobility

Innovation and digitalization

Security, privacy and reliability of services




Financing transactions and activities associated with negative impacts in environmental and climate change terms

This risk is mitigated by FCA Bank’s focus on the development and promotion of financing products and services with posi-tive environmental impacts, characterized by alternatives to traditional fuels and sustainable and shared mobility solutions.

An important pan-European project was started to have all the group companies operate their own portal, to provide custo-mers with a new communication channel and to manage better the information on retail financing contracts.

The group has a policy to manage pointe-dly and promptly any customer complaint, together with an internal control system aimed at intercepting and correcting potential situations of non-compliance in terms of transparency towards customers.

FCA Bank designed and implemented a solid system of IT security policies and procedures.

The group embraces the “Privacy by Desi-gn” principle, by integrating in the design and development of new products and services the data protection principle.

In-depth analyses of new threats are car-ried out regularly by applying the sector’s best practices to curb the risks detected; in addition, employees receive training on IT security.

On the web sites in the markets in which it operates, the FCA Bank Group makes avai-lable financial tools that allow customers to calculate their monthly payments and to structure autonomously the financing plans that best fit their requirements.

The FCA Bank Group distributed a digital Lead Management platform in all the countries in which it operates, integrated with the CRM processes of the Brands served.

Business sustainability and long-term value creation for all the group’s sta-keholders are the drivers of the group’s economic sustainability. Economic perfor-mance is monitored within the group RAF through different key indicators that allow Risk Management to check how value is created.

Digital solutions for customers are secure and protected by IT security systems (e.g. one-time password to confirm actions on the group’s portal).Other safeguards include: - at contractual level, specific SLAs desi-gned to ensure the availability of digital signature services 99.9% of the time. In addition, SLAs are in place to ensure that specific platform problems (for every market in scope) are addressed and solved;- detailed monthly analysis of the report sent by the supplier on contract-based SLAs;- summoning and manning of war rooms in case of problems affecting the entire market.

Provision of products unfit to meet customer needs and non-compliant with transparency rules and responsi-ble credit principles

Customer complaints on financing products and services provided

Customer data loss or theft

Risk of non-compliance with the rules and regulations on personal data pro-tection and transparency in banking and financial product distribution

Cyber attacks through e.g. malware and phishing, loss of critical assets, delays in managing IT incidents

Erroneous management of commercial offerings

Customer complaints, inadequate functioning of Customer Relationship Management processes

Credit risk, rating downgrade by rating agencies

Reputational risk due to non-compliance with applicable regulations

Service disruption and ensuing loss of business

Scope of Legislative Decree 254/2016 Material topic Potential risks Risk management


Social aspects

Training and development of human resources

Welfare, employment and dialogue with social partners

Employee health and safety

Diversity, equal opportu-nities and human rights

Contrasting corruption and promoting integrity in the business

Failure to upgrade information tech-nologies for internal operations and to meet regulatory requirements and customer expectations

Loss of knowledge and critical expe-riences for the business development; failure to upgrade skills

Loss of key staff, negative impact of turnover on business continuity, failure to attract talent

Enhanced conflict among social partners

Diminished sense of belonging and brand image

Prevention and Protection service disruption

Risk of non-compliance with rules and regulations on employee health and safety and with labour laws

Failure to provide training in health and safety

Failure to manage work-related stress

Risk of violation of equal opportunity, through discriminatory statements or behaviours

Non-compliance of the group with the rules and regulations on anti-corruption and any ineffectiveness of the Ethics Platform

Inadequate employee training and failure to upgrade company integrity skills

Plans are under way to digitalize the group’s operations.A contact person has been appointed in all the markets in scope for the digital onbo-arding project. In the course of the year, the single markets share with HQ proposals to improve the digital signature platform or to introduce new functionalities into it through surveys or specific assessments. These requests are considered by the digital ste-ering committee and, if approved, they are included in the supplier’s development plan. Starting from late 2019, different activities were started in the following areas: - Research and survey with associations, think tanks/universities on the progress of new technologies or areas of interest; - Scouting of innovations by start-ups/companies of interest and applicability for the bank.

This risk is mitigated by continuing mana-gerial and technical training of the target population, by coaching and by the leadership exercised by managers with their subordi-nates and by the professional family with its members.

This risk is mitigated through the annual Performance & Leadership Management, Ta-lent Review and Succession Plan processes.

On this topic, FCA Bank engages trade unions constantly, particularly through the imple-mentation of the commissions provided for by the Labour Agreement.

FCA Bank adopts various initiatives of Company engagement (i.e. web conference, convention, open door).

This risk is mitigated through:- The parties in charge of prevention and protection (RSPP and ASPP) can always be reached by telephone; - Fire prevention service active 24/7;- CA Security staff active whenever employe-es are at work;- Implementation of First Aid procedure in case of emergency on Saturdays, Sundays, and holidays.

On this topic FCA Bank prepared, and constantly updates, the procedures on the prevention and protection service. These pro-cedures are saved and updated in an internal repository (sharepoint) and can be consulted by all of the group’s employees.

The risk of non-compliance related to the fai-lure to provide training in health and safety is managed by monitoring the training activities recorded in the excel file, in the attendance register archives, final tests and participation certificates.

Failure to manage work-related stressThe risk of non-compliance related to work-related stress is managed through the two-year assessment of such risk (latest update December 2018). All documents related to this topic are filed both in paper form (SPP Archive) and in electronic form. The results of the assessment of work-related stress are eventually included in the risk assessment document (RAD).

A training plan has been established based on the Code of Conduct and the whistleblowing system.

This risk is mitigated by the periodic training program and the set of Internal Controls (e.g. the Code of Conduct and the Compliance Program under Legislative Decree 231/2001 for the Italian market and the group-wide anti-corruption program).

This risk is mitigated through the Mandatory Training Procedure, which entails an annual training program for FCA Bank’s employees and internal and external sale network, to disseminate a corporate culture inspired to the principles of honesty, fairness and re-spect for the spirit of the rules. The procedure is saved and updated in an internal repository (sharepoint) and can be consulted by all of the group’s employees.

Personnel management

Human rights

Fight against corruption


Environmental aspects

Why the topics are relevantEven though it does not have a formal environmental policy in place, introducing environmentally sustainable solutions is a key factor in the group’s strategies.

The FCA Bank Group shares the objective of building a sustainable and eco-friendly mobility, promoting the initiatives of car manufacturers both through its financing, leasing and sharing solutions and through the dealer network. The group is aware that electric mobility can be a reliable and competitive solution only if it is supported by a financing, distribution and access system and is prepared to play a growing role in the future, in cooperation with its manufacturing partners.

Green finance and sustainable mobilityFCA Bank Group has long been developing and improving its digital identity, mindful not only of customer experience but the environment as well. In fact, in 2019, thanks to its digitalization process it not only implemented the tools available to customers but it also enabled dealers to sign 80% of their contracts in a 100% paperless manner in the countries in which it is operational. In Germany, starting 1 October 2019, for every contract signed digitally it planted a tree, undertaking an initiative that soon will be extended to other countries. Plans are being made for 2020 in Italy, with commercial promotions and financial services linked to environmental sustainability projects.

In fact, as FCA Bank believes in an increasingly sustainable business, it began to embrace a new concept of mobility.

RELEVANT TOPICS

• Green finance and sustainable mobility

The first step was the recently-established partnership with Treedom, an Italian company operating in Europe since 2010, with the only platform in the world that makes it possible to plant a tree and follow its story online. That is how the FCA Bank forest was born, with thousands of real trees available to customers and all employees to contribute to reduce CO2 emissions, for a more informed mobility. The year just ended saw Leasys develop a large number of innovations focused on shared mobility and sustainability. The mobility service company owned by FCA Bank launched different products intended to meet the sustainability requirements of its customer and the market. From the first car subscription model launched in Italy – Leasys CarCloud, which makes cars available to customers in the city where they need them – to U-Go and I-Link, two original peer-to-peer car sharing platforms, which allow users to share their cars when they do not use them. In June 2019 Leasys rolled out the Leasys Mobility Stores, a network made up of over 300 retail outlets for the provision of mobility services to customers, announcing also an electrification plan for them, that is the construction of three EV charging stations for every store, for a total of over 1,200 stations by 2020.

Introducing sustainable mobility solutions is part and parcel of the group’s strategies.


Social aspects

Transparency in services and business, financial inclusionThe first principle laid down in the FCA Bank Group’s Code of Conduct concerns “Customer relations”, as the the trust and satisfaction of its customers and shareholders are the focus of the group’s actions.

In fact, FCA Bank is committed to providing its customers clear, complete and transparent information at any time; this is why the principles and regulation on transparency have been adopted through a comprehensive set of internal rules and policies. The procedures and policies implemented by the group govern al those aspects that can affect transparency with customers. Such aspects include, among others, the information to be provided to customers before establishing the business relationship, and after; the approval process, including credit checks, communications related to costs charged to customers; the advertising process; complaint management; the governance of the product supervision. In addition, also the distribution network should be inspired by, and based on, the transparency principles and practices, given its role as first contact point between potential customers and FCA Bank. For this reason, the relevant activities are monitored and adequate and regular training is provided.

For the FCA Bank Group Transparency is not just a set of rules to be observed but a tool intended to protect the interests of its customers, through a conduct driven by the principles of openness and fairness, to establish a relationship based on trust, on one side, and to protect the company and its shareholders, on the other, reducing any fine imposed and curbing reputational risk. A business model is considered virtuous only when every phase of it is focused on the interests of its customers and is sensitive to their needs and demands, starting from the design of the product, in the marketing stage, until it is implemented, including also attention to post-sale customer needs.

Why the topics are relevantThe FCA Bank Group attributes a central role to projects intended to foster the economic, social and civil growth of the markets in which it operates. The group’s effort aims to improve on an ongoing basis the quality of the service to, and relations with, customers so as to establish mutual trust in a context of transparency and ability to listen, which is considered paramount to monitor customer needs and their satisfaction, to adapt the services offered. In addition to improving the group’s services and performance, innovation and digitalization are used to pursue customer-centricity, to ensure utmost accessibility and transparency for the bank’s services. Digital tools have been introduced to facilitate an understanding of the financial instruments offered and their management, to enable customers to monitor their position by managing their contracts in an informed and responsible manner and to ensure a balance among digitalization, automation and privacy, so that customers can have a knowledge of and manage the personal data transferred to the bank.

RELEVANT TOPICS

• Transparency in services and business, financial inclusion• Security, privacy and reliability of services• Dealer and customerrelations• Economic performance and value creation• Innovazione e digitalizzazione


The FCA Bank Group bases its conduct on the customer’s perception of the Company, its products and processes, so as to separate what works properly from that which should be further improved. To that end, it is paramount to survey customer satisfaction through periodic surveys, ensuring a careful and proactive customer relation service and constantly analysing with a critical approach the complaints received. In view of this objective, in 2019 several surveys on customer satisfaction were carried out, together with a Mystery Shopping campaign focused on the duty of the dealer network to be transparent.Transparency means also to raise customers’ awareness regarding their rights and obligations. These objectives can be achieved only through a clear explanation of he characteristics of the product offered during the negotiation process, the delivery of a clear and exhaustive information package in the pre-contractual and in the contractual phases through the availability of different contact points. Digitalization and the large number of projects under way, such as the new Portal for customers, are but come examples of what FCA Bank is doing to pursue this objective.

In 2019 an important pan-European project was started, to ensue that all of the group companies have their own portal for customers. The objective is to provide customers with a new communication channel, to better manage the information related to retail financing contracts and interact more rapidly with FCA Bank’s back office, including in a self-service mode. For example, the new portal that will be activated in Italy should allow customers to check their Conto Deposito and to perform calculations, and submit any request for the early repayment of their loans. Regarding the foreign markets, the strategy to upgrade the information and accounting systems based on the approach by cluster has been consolidated. The related projects started in 2015, and currently under way, are designed to unify the different IT platforms utilized to manage the Retail financing and long-term

rental businesses. In January 2019, in France the new CRFS system was launched, to manage the retail sale process. The same initiative is under way in Italy, while a project to revise the information systems of Spain and Portugal, based on the CRFS platform, is due to begin shortly. The first phase, related to the front-end systems, is expected to go live by December 2019 while the back-end will be released in the second half of 2021.

Transparency is a central topic for the FCA Bank Group, also in light of the growing attention of the Italian and EU authorities. In fact, in the past few years the principle of transparency has been strengthened through the enactment of new rules and regulations, renewing and expanding its application to different sectors and products, such as banking, financial and insurance services. The key principle of the current regulatory framework is the provision to customers of clear and complete information, to ensure that informed choices are made, on the basis of one’s needs, with the purchase of products that meet customer requirements. Awareness and compliance must be, and will increasingly be so in the future, the drivers of a competitive approach, in line with market needs and demands, at the foundation of any conduct intended to attain leadership in the sector. For these reasons, the group will continue to be committed to achieving its objectives in the area of transparency.

Reference is made to the paragraph on “Significant events and strategic transactions” in the Report on Operations, in relation to the inquiry by the Anti-Trust Authority (AGCM) regarding the exchange of information in the car finance sector.


Transparency in commercial communication and in customer relationships

FCA Bank applies internal policies and procedures suited to ensure that the products offered to customers are consistent with their interests, objectives and characteristics. Moreover, these procedures describe the processes ad the tools implemented to prevent potential risks for customers and any conflict of interest. In particular, FCA Bank has adopted specific group policies that govern all the phases of a product lifecycle, starting from its design, offer and ongoing monitoring. In particular, attention is paid to the aspects related to the creation, launch and distribution of new products, relations with the distribution network and transparency obligations with customers.

ComplaintsIn accordance with the EBA guidelines, FCA Bank S.p.A. has adopted an internal policy for the management of complaints that aims to guarantee prompt and exhaustive responses to customers who file a complaint. Generally, a complaint means an expression of dissatisfaction presented by a natural or legal person with reference to the banking and financial services offered by the bank.The complaints shown in the table refer to the January – September 2019 period, banking scope. All complaints have been sent to the competent departments and solved within the terms set by local rules and regulations in every country (for example, local rules call for 30 days in Italy, 56 in the UK, 60 in Germany and France).

Transparency in FCA Bank S.p.A.

Banks and financial intermediaries are required to act in a fair and transparent manner with customers.

Rules and regulations on transparency in banking, financial and insurance services are designed, in keeping with the freedom of contract, to disclose to customers the key features of the contract and their changes, thus fostering competition in the financial and banking market. Adherence to transparency and fairness rules and principles in customer relations reduces legal and reputation risks and contributes to the sound and prudent management of the bank.

FCA Bank considers this a primary objective and, to provide customers with clear and transparent information, the bank provides this information in plain language, taking also concrete actions in the internal procedures that define the bank’s processes. To be as close as possible with customers, the Transparency section of FCA Bank Italia’s web site makes available, for the single Brands and products,


the main information document relating to the products and services offered. In addition to the documents related to the products and services offered the Transparency section of FCA Bank Italia’s web site published also:• “Consumer credit in plain language”, a guide prepared by the Bank of Italy to provide practical tips on how to select a loan and calculate its costs, illustrating also the main customer rights;

• “The Central Credit Register in plain language”, a guide prepared by the Bank of Italy;• Guide to the Ombudsman in plain language;• Guide to the use of the ABF Portal; • The table containing the average Annual Percentage Rates (APR), a key measure for anti-usury regulations; and• Information on Privacy ad banking transparency collected by the bank.

2019Complaints by geographical area 2018

N. ITALY

% complaints out of active contracts

N. AUSTRIA


N. DANMARK


N. FRANCE


N. GERMANY


N. GREECE


N. NETHERLANDS


N. POLAND


N. PORTUGAL


N. UNITED KINGDOM


N. SPAIN


N. SWITZERLAND


Total compliants

3,349

0.29%

17

0.10%

6

0.03%

32

0.02%

159

0.05%

14

0.07%

16

0.13%

8

0.03%

7

0.03%

613

0.33%

22

0.02%

9

0.03%

4,252

3,059

0.39%

45

0.12%

7

0.05%

43

0.04%

135

0.08%

28

0.10%

1

0.19%

15

0.03%

43

0.04%

820

0.41%

25

0.03%

18

0.04%

4,239

Complaints by geographical area


Security, privacy and reliability of servicesData protection e cyber security

In line with the results for the previous years, FCA Bank continues to pay special attention to the issues on the protection of the personal data processed within its organization and information systems, to ensure an adequate level of security for the confidentiality, integrity and availability of information and to protect the rights and interests of its customers and employees.

In keeping with the requirements of the General Data Protection Regulation 679/2016, the corporate governance model calls for: • a regulation that defines the organizational model, describing roles and responsibilities; in accordance with the Regulation, each employee is given a specific role in the area of personal data protection;• a solid system of policies and procedures, with special attention to the handling of personal data breaches to prevent, block or avoid the occurrence of this breach, indicating the activities, roles and responsibilities for the proper and quick resolution thereof; • a specific and innovative training program to disseminate, improve and enhance employee awareness of data protection issues.

The company is increasingly oriented to the proper implementation of the “Privacy by Design” principle, integrating in the design and development of new products and services the principles of data protection, including where necessary an impact assessment, in keeping with article 35, GDPR.

Moreover, to attract wide attention to personal data protection and to mitigate risks related to data confidentiality, integrity, availability and traceability, FCA Bank designed and implemented a solid system of IT security policies and procedures. In-depth analyses of new threats are performed

regularly by applying the industry’s best practices to manage the risks detected. To this end, the Company has improved employee awareness of these issues through specific training on IT security. The Company implemented internal procedures and tools to ensure that the parties concerned can exercise their rights. The group as a whole received and handled a very limited number of events recorded as potential incidents related to personal data. In particular, 13 complaints addressed by the organization were received from external sources while 1 complaint was received from regulation authorities that oversee data protection. The monitoring system and procedures also led to the identification of additional events with a potential impact on customer data, mainly in Germany and in the UK. These events did not have a significant impact on customers, in terms of leaks, thefts or losses of customer data.

To identify and prevent breaches of procedures and internal and sector rules, the architecture of the IT system and the internal control system undergo constant improvement. The group is committed to achieving its objectives in the area of transparency.


Dealer and customer relationsService quality and customer satisfaction

Over the years FCA Bank has developed processes for sales, contract management during the life of the financing and re-contact in the contract renewal phase with a view to achieving customer satisfaction and constant improvement. Against this backdrop, loyalty development has been one of the pillars of FCA Bank’s commercial strategy. In the past few years, within the different available offerings, products that encourage the replacement of the car at the end of the contract, as an alternative to the final balloon payment, have become increasingly important.FCA Bank has distributed a digital platform in every country in which it operates, integrated with the Customer Relationship Management (CRM) of the brand of reference, to manage in the best possible way the time when customers with contracts near the expiration date are contacted with new financing proposals, thereby fostering brand loyalty.The financial information of every customer is handled in a secure manner through FCA Bank’s systems while the connection with the industrial partner’s system allows its integration in the standard customer re-contact process by the dealer.Thanks to these activities and the integrated CRM systems, FCA Bank’s customer retention rate in its main markets is around 52% (source: New Car Buyer Survey 2018). This means that more than half of those who purchased an FCA group vehicle, with financing from FCA Bank, has eventually bought another group vehicle. This percentage is well above the customer retention rate observed in the case of customers who used a different type of payment (45%) (source: New Car Buyer Survey 2018).FCA Bank developed a complete market research system on the entire lifecycle of the customer, to monitor constantly the quality of its offering as perceived by customers and

dealers.One such market research is the Customer Satisfaction Survey, one of the oldest tools used by FCA Bank to check on an ongoing basis its customers’ satisfaction with both FCA and Jaguar Land Rover. The survey covers a wide range of sources of information on customers’ habits and their satisfaction areas, such as: the reasons for choosing the payment method, the “shopping around”, the means of communication utilized to obtain information on the chosen car, the assessment of the seller’s behavior, the satisfaction with the financing solution adopted and the service received from FCA Bank. The survey makes it possible to have a substantial time series, with certain key areas always present and other sections constantly updated to cope with new fact-gathering analyses. The survey format is the same for all the countries involved, making it possible to monitor the markets’ performance on key issues and to compare quality levels.In 2019 about 7,200 FCA customers (+13%) and 2,000 JLR customers (+18%) were interviewed by phone.In 2018, approximately 6,400 FCA customers and about 1,700 JLR customers were interviewed by telephone. The results confirm a constant improvement of the overall evaluation. The average satisfaction for the main markets is higher than 4, in continuity with 2018, on a 1-5 scale with the positive threshold at 3.7.

Sustainability for FCA Bank Group

On the websites in the markets in which it operates, FCA Bank makes available financial instruments that allow customers to calculate loan instalments and to work out independently repayment schedules more in keeping with one’s circumstances, in relation also the vehicle selected.FCA Bank is aware that, to be highly competitive and to build long-term relationships with customers, a financial company must run its business taking into account the economic, environmental and social impact deriving from it.


In view of sustainable development, FCA Bank is committed to providing its customers access to responsible credit based on the principles of fairness, responsibility and attention and offered on adequate terms and conditions and shown in a transparent and comprehensible manner, in full compliance of the applicable rules and regulations. This approach is monitored systematically in customer satisfaction surveys, which include a special focus on the fairness and transparency of the dealer’s salespeople when the financing solution is proposed.In relation to training activities, personnel’s awareness is constantly raised on the importance of using a clear and comprehensible language in the presentation of financial and insurance products.

Relationship with business partners and dealers

FCA Bank its relations with dealers by providing financing products that support sales of the brands of reference.With that in mind, every year FCA Bank performs a Dealer Satisfaction survey of the entire dealer network, with reference to the retail and dealer financing businesses, thus monitoring the quality of the service and verifying the standards offered.In this survey the dealers have a chance to express their opinion on FCA Bank, in general and for every phase of the service process, also with reference to the main market competitors.This makes it possible to create a detailed analysis of FCA Bank’s performance vis-à-vis the competition. In addition, suggestions on new products and services are received which help to improve FCA Bank’s products and services.In 2019 about 520 FCA dealers and 160 JLR dealers were interviewed.The results confirm a constant improvement of the overall evaluation. The average satisfaction for the main markets is higher than 4, in continuity with 2018, on a 1-5 scale with the positive threshold at 3.7.Sustainable management of suppliers

The FCA Group interacts with its suppliers on the basis of transparency, fairness and equal treatment, in line with the Code of Conduct approved by FCA Bank’s Board of Directors, which sets out the principles that inspire the group’s conduct in business.Based on the contracts signed with the group, suppliers are required to abide by the group’sCode of Conduct Goods and services are purchased locally under the responsibility of each group company. At the Parent Company level, the Procurement function guides and monitors, through the group policy, the purchases of goods and services and checks compliance with local procedures.Specifically, regarding the management of suppliers, the group policy sets out specific guidelines intended to evaluate and select new suppliers and to monitor regularly the existing ones.Regarding the selection of suppliers, the group policy calls for a number of background checks, with a financial and reputational focus, based on pre-defined criteria and formalized through specific evaluation matrices.As to monitoring, the policy contemplates periodic reviews based on the analysis of existing relationships, with the ensuing resolution of possible criticalities through formal action plans, monitored over time.The group manages the purchase of goods and services through two specific centralized software applications. Of these, one is managed at the Parent Company level, for ICT purchases, and the other, which has been operational for sometime now in Italy, is being introduced in all the European subsidiaries to purchase other goods and services.The application managed at the local level, on a central platform, allows for the standardization of the purchase process, from the request for approval of the expenditure to the issue of the purchase order.


Economic performance and value creationFinancial responsibility rests on the FCA Bank Group’s financial strength, a fundamental condition to ensure the long-term sustainability of the business and long-term value creation for all the group’s stakeholders. These topics are specifically referred to in the RAF and ICAAP documents.

Own funds Own funds represent the minimum capital requirements that banks are expected to meet to deal with risks under Pillar 1 (credit, market, foreign exchange, operational risk) and Pillar 2 (concentration, interest rate, liquidity, strategic, reputational risk) and are the main focus of the Supervisory Authority in judging the stability of the bank.As per the applicable regulations, the FCA Bank Group’s minimum total capital ratio required is 10.65% of risk-weighted assets. At December 31, 2019, the Total Capital Ratio was 15.82%.

Leverage ratioThe leverage ratio is a measure of a bank debt vis-à-vis its equity that was introduced to limit the level of indebtedness of the banking sector. At December 31, 2019 FCA Bank’s leverage ratio was 10.62%, above the regulatory requirements.

RatingOn May 9, 2019, Fitch raised FCA Bank’s shortterm rating. The ratings assigned to FCA Bank at December 31, 2019 are as follows:

FINANCIAL SOLIDARITY

Common equity tier 1 (CET 1) is made up of highquality components, mainly capital instruments (e.g. ordinary shares) and reserves. As per the applicable regulations, FCA Bank is expected to meet a minimum required CET 1 ratio of 7.15%. At December 31, 2019 the CET 1 ratio was 14.20%.

Entity OutlookLong Term

RatingShort Term

RatingLong Term Deposits

Rating

Moody’s

Fitch

Standard & Poor's

Baa1

BBB+

BBB

P-2

F1

A-2

Baa1

-

-

Stable

Stable

Negative


Long-term value creation

The statement of economic value generated and distributed provides an indication of how the FCA Bank Group created value for its stakeholders.

In 2019 the Group created economic value for a total of 929 million, distributing 69%.About 30% of the distributed economic value was allocated to employees, suppliers and service providers. Over 19% was allocated to shareholders, while 20% was allocated to Governments in the different jurisdictions in which the FCA Bank Group operates.

928,864

641,788

276,468

180,000

185,320

287,076

902,589

514,225

268,593

-

245,632

388,364

100.0%

69.1%

29.8%

19.4%

20.0%

30.9%

100.0%

57.0%

29.8%

0.0%

27.2%

43.0%

31/12/2019 31/12/2018(€/mln)

Economic value generated

Economic Value distributed

Employees, suppliers and service providers

Shareholders

Governments

Economic value retained by the group


930,281

(236,832)

147,875

(45,893)

(45)

(6,187)

1,462

-

-

(47,248)

-

1,243

(867)

805

(437,540)

622,210

(400)

928,864

(87,326)

(13,963)

(101,289)

(175,179)

(175,179)

-

(180,000)

(180,000)

-

(11,054)

(2,500)

(836)

(138,214)

(32,716)

(185,320)

-

(641,788)

(287,076)

(287,076)

903,452

(242,050)

164,176

(54,986)

551

(1,801)

1,162

-

-

(20,728)

-

561

2,073

-

(363,518)

513,697

-

902,589

(88,552)

(11,008)

(99,560)

(169,033)

(169,033)

-

-

-

(75,800)

(10,604)

-

-

(150,195)

(9,033)

(245,632)

-

(514,225)

(388,364)

(388,364)

31/12/2019 31/12/2018VALUE-ADDED STATEMENT

10. INTEREST INCOME AND SIMILAR REVENUES

20. INTEREST EXPENSES AND SIMIALR CHARGES

40. FEE AND COMMISSION INCOME

50. FEE AND COMMISSION EXPENSES

80. NET INCOME FINANCIAL ASSETS AND LIABILTIES HELD FOR TRADING

90. FAIR VALUE ADJUSTMENTS IN HEDGE ACCOUNTING

100. GAINS (AND LOSSES) ON DISPOSAL OF:

a) Financial assets at amortized cost

b) Financial assets at fair value with impact on overall profitability

c) Financial liabilities

130. NET IMPAIRMENT / WRITE-BACKS FOR CREDIT RISK RELATED TO:

a) Financial assets at amortized cost

b) Financial assets measured at fair value with an impact on overall profitability

160. NET PREMIUM EARNED

170. NET OTHER OPERATING INCOME/ CHARGES FROM INSURANCE ACTIVITIES

200. NET PROVISIONS FOR RISK AND CHARGES

210. IMPAIRMENT ON PROPERTY, PLAN AND EQUIPMENT

230. OTHER OPERATING INCOME / CHARGES

250. GAINS (AND LOSSES) OF EQUITY INVESTMENTS

A. TOTAL ECONOMIC VALUE GENERATED

190. ADMINISTRATIVE COSTS:

b) Other administrative costs

220. IMPAIRMENT ON INTANGIBLE ASSETS

ECONOMIC VALUE DISTRIBUTED TO SUPPLIERS

190. ADMINISTRATIVE COSTS:

a) Payroll costs

ECONOMIC VALUE DISTRIBUTED TO EMPLOYEES AND COWORKERS

340. MINORITY PORTION OF NET INCOME (LOSS)

PROFIT ATTRIBUTED TO SHAREHOLDERS

ECONOMIC VALUE DISTRIBUTED TO SHAREHOLDERS

200. NET PROVISIONS FOR RISKS AND CHARGES

other administrative expenses: indirect taxes and fees

other administrative expenses: penalties

other operating expenses / income: tax costs and recoveries on tax costs

300. TAX EXPENSE RELATED TO PROFIT OR LOSS FROM CONTINUING OPERATIONS

300. TAX EXPENSE RELATED TO PROFIT OR LOSS FROM CONTINUING OPERATIONS (DEFERRED)

ECONOMIC VALUE DISTRIBUTED TO THE PUBLIC ADMINISTRATION

other administrative expenses: liberality and sponsorships

B. TOTAL ECONOMIC VALUE DISTRIBUTED

RETAINED PROFITS

C. TOTAL ECONOMIC VALUE RETAINED BY THE GROUP


Innovation and digitalization In a hyper-connected world, digital transformation plays an increasingly important role for the bank. The digital transition actually entails a paradigm change from a traditional product-centric strategy to a customer-centric one. In 2019, in agreement with the digitalization roadmap defined, FCA Bank focused on this customer-centric vision to design processes and solutions to encourage customers to establish a solid and long-standing trust-based relationship.

PrescoringKnowledge is the word at the foundation of the pre-scoring project, which came to life to add value both to the potential customer and the dealer by providing a preliminary and immediate answer on the customer’s ability to access a financing plan by FCA Bank chosen online while configuring a vehicle on the brand’s website. Once the amount of the monthly instalment is calculated online with the finance calculator, thanks to pre-scoring customers need only to enter little but necessary financial data to learn in real time whether the selected financing plan is feasible. Dealers, for their part, will receive though pre-scoring the result of the credit assessment, which will be used either to expedite completion of the credit application process or to provide customers with an alternative financing solution, in case the plan selected online is inconsistent with their repayment capabilities. In July 2019, the project was successfully launched in Germany, the pilot market; eventually this winning strategy was rolled out in Italy, Spain, Belgium, the Netherlands and Austria.

Customer portalAs the contract is signed and the sale process completed, the bank’s objective is to set up a communication channel for customers that might be used as needed. From a smartphone, a tablet or a personal computer, customers can access FCA Bank’s Customer Portal, to obtain updated information in real time or to update their personal information by using easy and intuitive tools. Customer are provided a tool that is: • easy: a single area to monitor closely all car financing and lease contracts signed and banking products, so as to manage them conveniently and rapidly; • intuitive and secure: easy-to-use solution for all customers from any device and secure through the use of a one-time password to confirm any action;• customized: customers are offered the possibility to receive personalized solutions through the portal.

The project, which had already gone live in Italy, Germany, Austria and UK, was launched successfully in 2019 in France, Poland, Belgium and the Netherlands.

Digital onboardingAs the optimal financing plan is chosen, the data entered and pre-scoring results received, customers who then go to the dealer will receive all the benefits deriving from the digital onboarding project: digital signature, filing and dematerialization of all the documentation designed to finalize the contract. In Spain and Portugal, countries where such solution is adopted by over 80% of customers, the benefits are clear: better customer experience, thanks to a transparent and secure process, greater security and more structured communications between the dealer and the bank. The year just ended was important for this project as this solution was introduced successfully also in Greece, Belgium, the Netherlands, France and Poland, after its launch in Spain, Portugal, Italy, Germany and Austria.


Personnel management

Why the topics are relevant FCA Bank is a people company at the service of people. Its primary objective is to attract, retain and motivate highly qualified staff, as well as to reward those who advance, believe in and support company values with compensation structures linked to long-term value creation.

RELEVANT TOPICS

• Training and development of human resources• Welfare, employment and dialogue with social partners • Employee health and safety

ORGANIZATION AND HUMAN RESOURCES

As at December 31, 2019, the FCA Bank Group had a total headcount of 2,280, an increase of 22 employees over the end of the previous year.This increase is due mainly to the continuing internationalization process undertaken by Leasys.

The quantitative data are based on the actual headcount at December 31, 2019.


An analysis of the data shows that the two Italian companies account for 52% of total employees.At the end of December 2019 female employees represented 50.4% of the workforce, the average age of the group was 44.0 (44.4 for men and 43.6 for women), while average company seniority was 12.19 (11.27 years for men

Distribution of group employees as of December 31, 2019

35

158

304

1,186

141

4740 41 83 44116

5622 7

DK and Nordic Pole

Netherlands

Belgium

Italy

Austria

Ireland

France

Poland

Germany

Portugal

Greece

Spain and Morocco

United Kingdome

Switzerland

1,200

1.000

800

600

400

200

0

and 13.09 years for women). At the same date 6.2% of the workforce (141 employees, of whom 137 women) worked part-time.


Company seniority by sex

Age by sex Less than 3 years

3 to 5

6 to 10

11 to 20

21 to 30

31 or mor e

700

800

600

500

400

300

200

100

0

M

F

Less than 31 years

31 to 40

41 to 50

51 or more

700

900

800

600

500

400

300

200

100

0

259

102

121

304

170

344

157

394

165

7114350

115

299

278

419326

449

285

109


Hierarchy managers White collars

1,000

800

600

400

200

0

183

332

800

965

MF

Hierarchy level

29% of all employees had upper management responsibilities.

Materiality threshold of the number of non-employees The materiality threshold of the number of nonemployees – who perform the same activities as employees – as a share of the total workforce is set at 15% at group level. This threshold has never been reached.

Female Male Total

Fixed-term contract

Permanent employment contract

Total

19

1,113

1,132

44

2,236

2,280

25

1,123

1,148

Total number of employees – Breakdown by employment contract and sex


Turn-over

9.2

117

27

-

13

25

28

44

122

44

128

82

28

182

9.3

104

15

-

35

25

30

42

123

44

116

93

82

127

31/12/2019 31/12/2018Exits

% Termination rate

Motivation:

N. Resignations

N. Dismissal

N. Solidarity fund

N. Working contract expiration(fixed term)

N. Retirement

N. Other

By age:

N. <30 years

N. 30 - 50 years

N.>50 years

By gender:

N. Women

N. Men

By professional group:

N. Hierarchy managers

N. White collar

TrainingAlso for 2019, total training expenses for the group’s employees were adequate, even though close attention continued to be paid to costs.In addition to the usual emphasis placed on technical and Compliance training, in Italy and in the markets a specific training program was held on Code of Conduct. A total of 4,700 training days were held, with an average of 2.5 days per employee.

TRAINING AND DEVELOPMENT OF HUMAN RESOURCES


InnovactionFollowing completion in 2019 of the Strategic Thinking Path program, which was started in 2017, FCA Bank launched an additional corporate initiative called InnovAction, to develop feasible and innovative business solutions that might enable it to be competitive in the market, meeting, and where possible anticipating, customer needs. With management’s help, eight strategic areas of our business were identified and matched with specific projects with which to work. Participants are a heterogeneous and international group, made up of 50 colleagues coming from a variety of markets and with different corporate seniorities. The 8 teams identified worked on a single project, with support from an internal tutor in terms of expertise, know-how and leadership. The program consists of three main phases, a kick-off workshop held in June, involving a one-day-and-a-half gathering where participants and tutors, with help from external facilitators and innovation experts, worked on the creation of the teams and the sharing of methods and tools to be used for the development of projects; six months of project work, during which participants worked from a remote location; and a final day to be held in early 2020, where the teams will present

MANAGEMENT DEVELOPMENT TRACKS

1,923

1,001

922

6,502

3,396

3,106

38,323

18,892

19,431

16.9

16.7

17.1

2,258

1,120

1,138

9,474

4,997

4,477

39,493

21,102

18,391

17.5

18.8

16.2

31/12/2019 31/12/2018Training

N. number of employees trained

- of which women

- of which men

N. number of participation in courses (training sessions by employee)

- of which women

- of which men

N. total training hours

- of which women

- of which men

N. average training hours per employee

- of which women

- of which men

their projects to the Leadership Team. To overcome the geographical distance and the functional and hierarchical differences within the organization, virtual and team coaching sessions were held to enhance agile working and virtual remote collaboration capabilities.

CommunicationVisual identity is still a priority – FCA Bank’s magazine continued to be published in 2019. Two Institutional communication events took place, at mid-year and at year-end, where the CEO and the Management Team commented on the group’s performance and results to all employees, who participated either directly or via live stream. Mindful of the need to continue to strengthen Visual Identity and the Brand value, the Employer Branding project continued in Italy and in foreign markets, to enhance the Company’s visibility in the marketplace and to improve the selection and recruitment process through new interface channels. Closer ties were established with universities to attract promising young talent.


Performance Leadership ManagementThrough the PLM process, the FCA Bank Group guarantees the engagement of individual behaviors in view of the annual and long-term objectives of the company and the Shareholders.

The idea is to establish a transparent and bilateral communication process with all employees, to show them how they can contribute to the organization’s performance, how they are working to achieve effectively the agreed-upon objectives and, lastly, to provide them adequate support for their improvement and growth.

The “Performance and Leadership Management” program rests on two planks, focusing on the objectives and related results and on the individual attitudes and behaviors, so as to make people accountable and involving them directly in their growth process.In 2019, the CEO & General Managers and all the Material Risk Takers took part in the PLM, together with the rest of the staff, to engage each employee in reaching the strategic objectives.

It is noted that the PLM process is applied to all employees who worked at least six months during the year; as such, the 2018 figure was recast for a more consistent comparison.

96.70%

96.72%

96.69%

93.71%

94.09%

93.25%

97.86%

97.52%

98.04%

93.80%

94.47%

93.03%

31/12/2019 31/12/2018People evaluated in the year

Hierarchy managers

Women

Men

White collars

Women

Men

Cross Path ProjectIn 2016, the Company launched the Cross-Path project, an international and interfunctional growth program designed to identify people with high growth potential to be groomed in terms of leadership and interdisciplinary knowledge. The program’s duration is six years and involves tens of people who, through two-year assignments, are rotated in three markets and three different functions: Credit, Finance and Sales & Marketing. In early 2018, the participants began in their second role. All the positions in the various markets were identified for the third and last two-year period.

At the end of the program, the participants will have developed a solid knowledge of FCA Bank’s business and processes, thanks to their exposure to management and the skills and competencies developed through customized training. The key features of the program are:

• people involved: international mind-set, dynamic and open to the change that is typical in our business;• rotation and mobility: an interdisciplinary path in FCA Bank’s key functions;• international exposure: international assignments in the markets in which the group operates;• training: during the program the people receive training not only on compliance and risk but also on knowledge of company activities and skill development. During the process, special attention is paid to management training;• tutoring: the trainees are assigned a mentor selected from FCA Bank’s management team, who follows them for the entire work period and guides them on their growth path;• work on projects: on themes of strategic importance for the company.


The group supports fair choices in maternity, paternity and adoption, which encourage employees to balance their responsibilities as parents with their career. While labour rights may vary from country to country, parental leaves are granted to all employees to the extent necessary to comply with local laws. In certain countries, the group exceeds local requirements with dedicated policies.

Return-to-work and retention rates after parental leaves are two key indicators of the Company’s

ability in the medium/long term to provide employees professional growth opportunities and achieve a work-life balance.Also financial health is an important aspect of work-life balance. An FCA initiative in Italy called Conto Welfare allows employees to convert part of their pre-tax salary in an expense account that can be used for a wide range of health, welfare, care, education and pension services. In addition to the tax benefit, the Company provides an additional 5-10 percent to each expense account.

2,280

33

28

24

8

1

76%

71%

7

1,629

70%

31/12/2019

Total number of employees

Number of employees who have required parental leave in 2019

- of which women

Number of employees who have returned from parental leave confirming the same position

Number of employees currently in parental leave

Number of employees returned from parental leave who changed position within the same profes-

sional family

Percentage of employees returned from parental leave

- of which women

Collective bargaining and unionization

(number of collective bargaining and unionization done during the year)

Employees covered by collective labor agreement

(number of employeed having a collective labor agreement)

Parental leave and turnover

16,728

354

7,834

2,456

259

27,630

31/12/2019

N. Sickness

N. Injury (on the way to or from work, and at work)

N. Parental leave

N. Authorised leave (family-related, special leave)

N. Other reason

Total

Absences (number of calendar days)

WELFARE, EMPLOYMENT AND DIALOGUE WITH SOCIAL PARTNERS


Human resource management Regarding human resource welfare, attention is called to the following activities carried out during the year:

Organizational developmentThe year just ended saw the continuing attention paid to strengthen various human resource management processes and Governance mechanisms. Special emphasis was placed on:• the continuing implementation of the Data Protection organizational model, in accordance with the GDPR. In particular, the Data Protection Officer – appointed by the Board of Directors – is responsible for FCA Bank S.p.A. and all its branches. Furthermore, every branch has its own Data Protection Referent (BDPR). On the other hand, every subsidiary has its own autonomous Data Protection Officer and, depending on the size of the legal entity, also a Data Protection Office, to support the work of the Data Protection Officer. • the revision of FCA Bank SpA’s first-level organizational structure, with the assignment of responsibilities in the Digital, Process & Data Governance and Procurement areas to the following Functions:

• Process Governance to Corporate Affairs;• Digital and Data Governance to ICT;• Procurement to Legal Affairs.

• the launch in FCA Bank Italia of the Common Retail Financing System (CRFS) project which, in addition to Italy, concerns Spain, Morocco and Portugal. The objective of the project is to implement the new Retail Financing System, in keeping with the approved plan, benefitting from the experience of previous projects in other markets and taking into consideration the business requirements of the Markets involved in this project; • the appointment – on 22 February by the Board of Directors – of the Head of Retail & Insurance Product Development for FCA Bank

Italia and the Head of Insurance Distribution per FCA Bank S.p.A., based on the Italian Insurance Code and IVASS standard no. 40 of 2018; • the reorganization of the Sales & Marketing function, particularly with the creation of 3 units dedicated to the Brands of FCA, Jaguar & Land Rover and such other Partners as Ferrari, Aston Martin, Morgan, Harley Davidson, MV Agusta, Erwin Hymer Group; • the start and completion of the Leasys Polska project within Leasys, with the creation of the Leasys Polska subsidiary, in keeping with Leasys’s internationalization process;• the integration of Win Rent, which was acquired in October 2018, as an arm of Leasys engaged in short-term rental, with related rebranding to Leasys Rent. In particular, attention is called to the harmonization pay scales and the transition to FCA’s Specific Collective Labour Agreement (CCSL); • the start and completion in January 2020 of the cross-border merger of FCA-Group Bank Polska S.A. with and into FCA Bank S.p.A.From the standpoint of Industrial Relations, attention is called to the new Specific Collective Labour Agreement (CCSL) for the period 2019-2022, which as in the past reflects a profit-sharing rationale for employee bonuses as measured on an annual basis.

From the business point of view, the first half of 2019 saw the continuation of the “Leasys Internationalization” project, with the objective of creating shareholder value through the creation of a Europe-wide Rental group through the Leasys brand, which saw in 2017 with the creation of branches in Spain, Germany and Belgium and the rebranding of the companies operating in France and the UK; in 2018 the incorporation of the Leasys Nederland subsidiary; and in 2019 the establishment of the Leasys Polska subsidiary.

Furthermore, Leasys’s functions act as competence lines with respect to the rental branches/entities and, as such, they are responsible for providing guidelines (e.g. budgets, commercial targets, …), sharing best

WORKERS’ WELFARE AND SAFETY


practices in terms of know how, processes and systems and ensuring the monitoring and development of employee competences.

HEALTH AND SAFETY AT WORK

Work-related stressLimited the the Italian companies of the group, the assessment of stress-related work is updated every two years, except for cases of significant changes in the production process and the organization of labour to improve health and safety at work. The latest update of December 2018 placed the risk in the green area (non significant risk).

Health and safety training All employees (executives, supervisors, safety workers, workers’ safety representative, emergency and first aid staff) involved in any way in the preventive and permanent safety management system receive adequate training to fulfil their duties.They attend basic, specific and refresher courses held by the Company with internal instructors, who have in turn attended Train the Trainer courses, and external instructors. Courses are held during paid work hours and final tests are taken. All documents related to training (attendance records, final tests and certificates) are filed in paper and electronic form in the office of the Prevention and Protection Service.

In Italy, FCA Bank S.p.A. manages the risks for its employees’ health and safety as follows: • risk assessment;• identification and preparation of prevention and protection measures;• definition of an action plan in connection with a program intended to improve safety levels over time; • implementation of the actions planned in connection with the program;• definition of worker information and training plans;• residual risk management.

FCA Bank S.p.A. (in its capacity as Employer) with the cooperation of the Head of Prevention and Protection Service and the Competent Physicians, after consultation with Worker Representatives on Safety, prepares and updates the risk assessment document (latest update January 15, 2019), which contains: • the report on the assessment of all risks for health and safety at work, specifying the criteria adopted or such assessment;• a description of the prevention and protection measures adopted following the assessment;• the program of measures deemed appropriate to ensure the improvement of security levels over time.The assessment and the relevant document are updated whenever there are such significant changes in the corporate organization as to affect the exposure of workers to risk and following the two-year assessment of work-related stress risk.


Work injuries In the period under review, the group witnessed 30 injuries (13 men and 17 women), of which 12 at work and 18 on the way to work in Italy and in the markets where the group operates. In the work activities performed within the

Health and safety at work

18

12

30

7.48

17

14

31

7.80

31/12/2019 31/12/2018Injury rate

Number of injures "in itinere" (on the way to work or back from work)

Number of injuries happened at work

Total number of injuries

Frequency index (number of injuries x 1.000.000)/worked hours

Type of injuries by marketTotal Women Men

UK

Spain

Belgium

Germany

Italy

Number of injuriesof which at workof which in itinerereNumber of injuriesof which at workof which in itinerereNumber of injuriesof which at workof which in itinerereNumber of injuriesof which at workof which in itinerereNumber of injuriesof which at workof which in itinerere

651110110505

175

12

541110000404743

110000110101

1019

group (VDT workers), there are no individual protection devices (IPD) and no collective protection devices (CPD).None of the injuries reported had relevant consequences for the life and health of employees.

Other markets in which the group operates are excluded as no accidents were recorded.


Human rights

Diversity, equal opportunities and human rightsAll the group companies respect, and act to guarantee, diversity and equal opportunity rights for all employees.

For the FCA Bank Group, the Code of Conduct (hereinafter the “Code”) is an important tool designed to ensure that the work environment not only takes its inspiration but is founded on the highest ethical standards of corporate conduct. In fact, the Code includes a specific section devoted to social and environmental themes, providing guidelines to prevent and denounce discrimination, to preserve diversity and gender parity and to support the fight against harassment. Moreover, two principles contained therein are specifically devoted to ensure the implementation of an environmental protection and community support strategy.

Thus, FCA Bank’s integrity system lays the groundwork for the group’s corporate governance and includes a critical framework of principles, policies and procedures.

Lastly, the whistleblowing system makes it possible to report breaches of the Code and of any other rule, law and regulation (enacted at national and EU levels) applicable to the group companies (i.e. branches and subsidiaries). In fact, in keeping with the provisions of Circular no. 285 of the Bank of Italy, this system allows employees to report actions or events that

RELEVANT TOPICS

• Diversity, equal opportunities and human rights

Why the topics are relevantRespect for people’s fundamental rights is an important driver for the FCA Bank Group, in its role as an intermediary and in the value chain involving stakeholders and, especially, employees.

might breach the bank’s rules.

The Code of Conduct of the FCA Bank Group formalizes and enshrines clearly the commitment of all the group companies in handling tips from employees, so that they are analysed with due care and adequately investigated. The staff responsible for analysing such tips consider, first of all, alleged breaches of the Code, or of all the other applicable rules and regulations, considering the information available and possibly looking for more. In addition, this staff must pay proper attention to any other expression of concern or indication of problems raised by employees as also these circumstances need to be investigated properly. Lastly, the analysis activity can be carried out by resorting, if necessary, to qualified staff or subject experts. In the presence of proven illegal behaviours, the necessary and appropriate corrective actions are taken, regardless of the level or hierarchical position of the people involved. All the cases investigated are followed through until they are finally resolved. Confidentiality is a key principle. With the exception of certain limitations set by local regulations, tips can be submitted anonymously. All the information provided and the identity of the individual that submits the tip are shares on a need-to-know basis with those responsible for assessing the tip and investigating the alleged breach and who have the power to undertake the relevant corrective actions.

Retaliation is neither accepted nor tolerated. The FCA Bank Group prohibits expressly any member of the Company from exacting revenge or discriminating against tippers or against those who cooperated during the investigation. Whoever takes retaliatory action against these individuals will be subject to disciplinary action, which can involve also employee dismissal. The fundamental principles that inspire the conduct of the FCA Bank Group prohibit in fact any type of demotion, dismissal, suspension, threat, harassment, forced action or


intimidation activities against employees who reported unethical behaviours in good faith or participated in an investigation into actions or events contrary to Code. The FCA Bank Group fully respects human rights in its activities. In 2019 there were no complaints or disputes linked to discrimination against employees.

In 2019 a training program was activated and completed in relation to he new Code of Conduct and on the whistleblowing system for the group employees.

Furthermore, March saw the start of a digital communication campaign on the principles of the Code, completed in April, which was designed to strengthen further awareness of the topic for all the group employees.

Lastly, during the year the whistleblowing system was extended to France and Portugal.

In the past few years, brands of companies considered socially responsible have been receiving growing recognition, as CSR is a medium capable of enhancing customer loyalty and attracting high-level employees. In fact, these are key factors in improving profitability and achieving financial success in the long term.

The FCA Bank Group does and will make its best to abide by the highest standards of environmental and social responsibility.

The FCA Bank Group agrees with, and its Code of Conduct incorporates, the principles of the “Universal declaration of human rights” of the United Nations (“UN”), the Conventions of the International Labour Organization (“ILO”) and the Guidelines of the Organization for Economic Cooperation and Development (“OECD”).

With reference to the percentage of employees covered by a collective labour agreement, it is correct to consider it in light of the fact that the analysis is performed in contexts governed by varying labour requirements.

2,280

44

1,148

183

965

141

2,258

44

1,120

161

959

145

31/12/2019 31/12/2018

N. Total

Average age

Females

- of which Hierarchy managers

- of which White collars

Part-time (102)

N. Employees with part-time contract

Details of staff and female presence


Fight against corruption

Fight against corruption and business integrity As FCA Bank’s customers and employees can be affected, both positively and negatively, by the consequences generated by the business activities conducted, the FCA Bank Group has adopted guiding principles , to identify and apply the highest ethical standards in carrying out its business, through the adoption of the Code of Conduct (hereinafter the “Code”). This document is the milestone of the group’s conduct, which must be based on the fundamental and unquestionable principle of integrity. Integrity is the bedrock of the group’s corporate governance, which includes principles, policies and procedures resulting from the combination of the corporate experience, the constant monitoring of the regulatory framework of reference and best practices, together with the critical and comparative analysis of corporate ethics and compliance so that these might be used in a consistent and complementary manner in the approach adopted by the group.

Anti-corruption is currently included in FCA Bank’s Code of Conduct as an integral part of the inter-functional macro-context related to the prevention, control and management of

RELEVANT TOPICS

• Contrasting corruption and promoting integrity in the business

Why the topics are relevantThe group attributes utmost importance to the fight against corruption. The Code of Conduct, supported by the Ethics Platform for whistleblowing, is updated and maintained to ensure the integrity of the group and its employees, as well as the presence and management of an anonymous and secure whistleblowing channel. Also in 2019, in continuity with the previous year, no cases of corruption have been identified.

conflicts of interests. In particular, considering the fight against corruption as crucial for the pursuit of the greater of the company and the community in which we live and operate, the FCA Bank embraces and respects honesty, integrity, loyalty, transparency, and impartiality as the principles that inspire its daily conduct. The anti-corruption component incorporates all those fundamental principles underlying the application of measures intended to prevent, detect, discourage any corrupt practices, including also zero tolerance in case of proven corrupt conduct. Other areas regulated and monitored include gifts and invitations, discounts, conflicts of interests, patronage, sponsorship and lobbying activities, which are considered highly sensitive and, as such, they are duly regulated within the group’s regulatory framework and consequently integrated into the relevant processes. FCA Bank is committed to abiding constantly by the highest standards of honesty, integrity and fairness as principles that inspire the group’s conduct in its relationships within and without the bank and will not tolerate any type of corruption. In fact, corruption is prohibited, regulated and sanctioned by laws in nearly every country in which the group operates. The group Code adopted by FCA Bank establishes clearly and unequivocally that no one – directors, executives or other employees, agents or representatives – can, directly or indirectly, solicit or accept cash payments or any other gift or compensation (including gifts of any nature, with the only exception of small value commercial items, universally accepted and admitted by the applicable national laws and in accordance with the Code and all the applicable group policies and procedures) in relation to the work performed with the FCA Bank Group, under any circumstances and for any reason.

The current policies adopted together with the Governance model, the periodic Training program and the set of Internal Controls (e.g. Code of Conduct, Compliance Program for the Italian market) constitute a set of measures developed and implemented for the group to


have available a set of tools intended to prevent and/or minimize the risk of corruption, as well as to monitor the most sensitive areas and processes and possibly to identify promptly corruption events.The group supports and will continue to support the fight against corruption both through the existing tools and by keeping up its guard, mindful that the risk needs to be constantly monitored so as to strengthen further the current prevention system. This guarantees the presence of increasingly strong and effective measures, also raising further the awareness of employees and developing increasingly ad hoc and in-depth controls.

It is worth noting that the risk of corruption in the FCA Bank Group is considered lower compared to other sectors, where the business model is based on direct and frequent interactions with public authorities. However, to rationalize and improve further the approach to Anti-Corruption at group level, in 2018 a specific and pointed program was implemented and is currently under way.

The group’s anti-corruption program will be based on the following 4 pillars: • self-assessment matrix for the corruption risk • anti-corruption controls• anti-corruption training• group anti-corruption policy

Considering also the growing attention of the Italian and foreign authorities on anti-corruption and the constant propagation of criminal schemes, the group will continue to monitor developments in the national and international regulatory framework and to identify best practices, so as to strengthen adequately the current prevention system applied to the group’s processes and activities.


GRI content indexPage number

GRI 102: GENERAL DISCLOSURE

GRI Standard Disclosure

Organizational profile

102-1 Name of the organization

102-2 Activities, brands, products, and services

102-3 Location of headquarters

102-4 Location of operations

102-5 Ownership and legal form

102-6 Markets served

102-7 Scale of the organization

102-8 Information on employees and other workers

102-9 Supply chain

102-11 Precautionary Principle or approach

Strategy

102-14 Statement from senior decision-maker

Ethics and integrity

102-16 Values, principles, standards, and norms of behavior

Governance

102-18 Governance structure

Involvement of stakeholder

102-40 List of stakeholder group

102-41 Collective bargaining agreements

102-42 Identifying and selecting stakeholders

102-43 Approach to stakeholder engagement

Reporting practices

102-45 Entities included in the consolidated financial statements

102-46 Defining report content and topic Boundaries

102-47 List of material topics

102-48 Restatements of information

102-49 Changes in reporting

102-50 Reporting period

102-51 Date of most recent report

102-52 Reporting cycle

102-53 Contacts to request information regarding the report

102-55 GRI content index

102-56 External assurance

315

23; 315

316

316

315

316

69; 315; 316

345

315; 339

328

314

328

320

317

352

317

317

316

313

318; 319

313; 351

313; 318

313

313

313

1

360

312


Page number

GRI 200: ECONOMIC SERIES


Economic performance

103-1 Management approach

103-2 The management method and its components

103-3 Assessment of management methods

201-1 a Direct economic value generated and distributed

Anticorruption




205-2 b. Communication and training on anti-corruption policies and procedures

205-3 Confirmed incidents of corruption and actions taken

Anticompetitive behavior




206-1 Legal actions for anticompetitive behavior, anti-trust, and monopoly practices

341

341

341

342

358

358

358

358

358

336

336

336

336


Page number

GRI 400: SOCIAL


Employment




401-1 b. (partial) New employee hires and employee turnover

401-3 a., b., c., e. (partial) Parental leave

Health and safety




403-2 a. (partial) Types of injury and rates of injury, occupational diseases, lost days, and absenteeism,

and number of workrelated

Training and education




404-1 a.(i) Average hours of annual training per employee

404-3 Percentage of employees who receive periodic performance and professional

development assessments

Diversity and equal opportunities




405-1 b. Diversity of governance bodies and employees

Non discrimination




406-1 Incidents of discrimination and corrective actions taken

Consumer privacy




418-1 Complaints regarding the violation of privacy and the loss of customer data

Socio-economic compliance

103 Management approach

419-1 Non-compliance with social and economic regulations and laws

345

345

345

349

352

353; 354

353; 354

353; 354

355

349

349

349

349; 350

351

356

356

356

357

356

356

356

357

338

338

338

338

336

336


Page number

G4 - SECTOR GUIDE


Environment




EX FS1 Policies with specific environmental and social components applied to the business lines

333

333

333

333

Page numberKey Performance Indicators non GRI


- Own Funds

- Leverage ratio

- Rating Moody's


Customer Satisfaction

Dealer Satisfaction


Number of complaints

Green finance and sustainable mobility

Leasys Mobility Stores

341

341

341

339

339

337

333

FCA Bank S.p.A.Corso G. Agnelli, 20010135 Turinwww.fcabankgroup.com

Documents

FCA Bank Group Consolidated financial statements...1.21% 1.24% 1.92% 31.12.2015 31.12.2016 31.12.2017 1.58% 1.43% Non performing loans • monitoring of credit performance, with prompt