30th Efma Convention: L d hi i t il fiLeadership in retail finance13 p.m. & 14 March 2008 - Paris

Roberto NicastroDeputy Chief Executive OfficerUnicredit GroupUnicredit Group

EFMA: BUILDING THE FIRST TRULY EUROPEANEFMA: BUILDING THE FIRST TRULY EUROPEAN FINANCIAL SERVICES GROUP OVERCOMING THE HURDLES OF EUROPE’S FRAGMENTATION THROUGH CROSS-BORDER MARKET SEGMENTATION

EFMA 30th Convention

Roberto Nicastro Deputy CEO Unicredit Group

Paris, 14 March 2008

Unicredit saw an exceptional growth, pursuing a diversification path that led to a strong internationalization

TOTALREVENUES

(€ bn)

EMPLOYEES BRANCHES

p g

1993 PRIVATISATION: Credito Italiano first Italian State-owned bank to be privatised 17,158 8142,2

1998 – 2000 UNICREDITO CREATION AND INTEGRATION: merger and integration of 7 Italian banks

65,047 3,9319,3

2001 – 2003 REORGANISATION BY CLIENT SEGMENT: 3 segment banks established 69,062 4,56310,5

2005 – 2006HVB GROUP MERGER AND INTEGRATION: new Group full divisionalisation; mergers of Group banks in CEE countries

132,480(1) 7,26923,5(2)

2007Expected

CAPITALIA MERGER: strengthening position in Italy

NEW ACQUISITIONS IN CEE: announcement of two 29,9 169,816(3) 9,633

3

Expectednew deals in Ukraine and Kazakhstan

(1) KFS Group consolidated proportionally(2) IFRS(3) Full Time Equivalents, with KFS at 100%

Unicredit now ranks among world wide top players

Market Cap in Eurozone (Euro bn)1 Market Cap World Wide (Euro bn)1

UniCredit

SCH

64.7

70.8

CCB

ICBC

119.9

181.0

BBVA

BNP Paribas

IntesaSP

49 5

56.8

59.7

B k f Chi

BoA

HSBC

110.3

113.5

Deutsche Bank

ING

BBVA

46.8

38.5

49.5

Citigroup

JP Morgan Chase

Bank of China 105.1

91.8

84.2

Credit Agricole

Fortis

Soc Generale

30.7

36.6

30.8 UniCredit

Mitsubishi UFJ

SCH

64.9

70.8

64.7g

4

1) As of 21 January 2008 - Source: Thomson Financial

With a unique broad foothold in Europe

0,5-1%1%-3%

5

1% 3%3%-10%

>10%

This generated some complexity

UNPARALLELED EUROPEAN FRANCHISE

B ki ti i 23 t i (1)

FOUR CORE MARKETS

Banking operations in 23 countries(1)

More than ~40 million customersAbout 10,000 branches

FOUR CORE MARKETS

Italy: #2, ~16% market share(2)

Germany: #3, ~5% market share(2)

Austria: #1, ~19% market share(2)

SPREAD REVENUE PORTFOLIO

GLOBAL PRODUCT FACTORIES

MIB: a strong regional player with leading position in CEE

CEE: the biggest investor in the regionSPREAD REVENUE PORTFOLIO Other 8%

CEE 18%

Total Revenues

MIB: a strong regional player with leading position in CEE (#2 ECM and M&A in 2006)Pioneer, a global player: AuM(3) ~290 bnLeasing: European leader as for new production(4)

Credit cards: a strong platform with ~11 mln credit cards issued, ( f hi h 6 5 l i CEE(5)) #5 i E d #1 i T k

Austria 10%

Italy 47%

Germany 17% (of which 6.5 mln in CEE(5)), #5 in Europe and #1 in TurkeyGermany 17%

NOTE: Year-end 2006 data, referred to UniCredit + Capitalia + ATF +USB Groups (combined pro forma)

6

ATF +USB Groups (combined pro-forma) Source: UniCredit, Capitalia, ATF, USB 2006 data

(1) Including ATF(2) Market shares and rankings calculated on customer loans, considering only loans to domestic customers for Germany(3) As of March 07, including Pioneer Austria and Capitalia. (4) After merger with Capitalia, almost ex-aequo with Lombard Finance(5) Cards already activated

Cross border financial companies face a common scenario

Different evolution of Wholesale vs Retail (Wholesale with quick globalization, Retail slower but moving forward)

European banking market split in two blocksEuropean banking market split in two blocks− Private Banks, strongly performance oriented− Cooperative/State owned banks

Economies of scale and scope driving cross-border M&A frenzy but complexity and political sensitiveness playing a relevant rolecomplexity and political sensitiveness playing a relevant role

Consumer and Corporate needs are in convergence− However regulations and taxations (more than culture) still

generating fragmentation

7

Similar trends are hitting all Countries

Eurozone banks’ unit margins

Continuing population ageing

80

Dependency Ratio (over 65/15-64)

40

50

60

70

80

JapanUnited StatesEuro area

Customer dis-trust vs banks

0

10

20

30

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

MIFID directiveConsumer LendingMortgage

Consumer protection focus

8

MortgageSEPABanking fees cancellations by regulators

Source: Unicredit Research on ECB Data

Similar trends are hitting all Countries

787570655860

80

100 Online Banking Users: US(million)

I i f t 5849

33312818

110

20

40

60

1999 2001 2003 2005 2007 2009E

Increasing usage of remotechannels

1999 2001 2003 2005 2007 2009E

77

66

85 Average Satisfaction Eu(TRIM Index)

45

65

Mei

da

nanc

e IT

taile

r

Telc

o

Aut

o

ealth

rave

l

Recent funding cost increase

100

110Euro Area, spread emissioni bancarie (A+/A) egovernative, (10 anni)

Euro area, spread banking issues (A/A+)d t i 10

M

Fin

Ret T H T

70

80

90

governative, (10 anni)and government issues, 10 years

Strong pressure on margins(eg mortgage)

9Source: BCG study, 40

50

60

2-Jun-07 12-Jul-07 21-Aug-07 30-Sep-07 9-Nov-07 19-Dec-07 28-Jan-08

( g g g )

Unicredit Group has taken a clear route

Specialize around customers (Divisional model) across border

Cluster governance by strategic focus area

Exploit global product factoriesExploit global product factories

Build identity across the borders

10

UCG model: focus on custome centric “Divisions” across borders empowered by Global Factoriesp y

§ CFOCROSTRATEGIC HR

§§

Poland’s CEE Global BankingWealthR t il Markets CEE Global Banking Services

Corporate WealthManagementRetail

Unicredit Financing

Asset Management

Divisional model in place, with focus on customers

Asset Management

…

Commercial Banking run by Division across Italy, Germany and AustriaGrowth markets (Poland and CEE) locally focused to capture high growth opportunitiesGlobal businesses (AM, Unicredit Financing, …) run on a global basis

Divisions fully responsible for definition of strategy targets and execution guidelines

11

Divisions fully responsible for definition of strategy, targets and execution guidelinesRegional Entities contribute to strategy definition, and responsible for execution as well as achievement of targets

UCG Retail built common service models for each customer segment across borders …g

AffluentAffluentAffluent Customers

Individuals with more than 100K € I.A.1

Affluent Customers

Individuals with more than 100K € I.A.1

FIRST: best in class advisory model aimed at creating mid-term value2 customer sub-segments

FIRST: best in class advisory model aimed at creating mid-term value2 customer sub-segments

than 100K € I.A.1than 100K € I.A.1

Mass MarketMass

Market Si lifi d ff lif l b d d iSi lifi d ff lif l b d d iMarket

Individuals with more than 100K € I.A.

Market

Individuals with more than 100K € I.A.

Simplified offer, life cycle based advisory7 customer sub-segmentsSimplified offer, life cycle based advisory7 customer sub-segments

Small BusinessSmall Business Business Class: integrated company-entreprenour advisory model, remote Business Class: integrated company-entreprenour advisory model, remote

Companies with less than 3Mn € turnoverCompanies with less than 3Mn € turnover

advisory for very small companies4 customer sub-segmentsadvisory for very small companies4 customer sub-segments

12

… thanks to structured exchange of innovations and best practices generated in different Countriesp g

Structured Best Practice

Sharing

Joint Initiatives

Best PracticeReplication

Initial Information

Sharing SharingSharing

•Ad hoc •Local projects •Joint multi- •Best practice workshops

•Document sharing

•Cross Border

based on recognized cross-border best-practices

country projects

•Common service models

database•Prioritization of realignment

•Continuous C oss o deCompetence Center Roles

best p act ces•Teams to include experts from other

se ce ode sdefinition

•Creation of products equal in all Countries

Co t uousinnovation screening and sharing

other Countries

in all Countries

E bl IT l tf t li d

13

Enabler: common IT platforms, centralized governance

Few examples of UGC Retail cross-Country initiatives

Unique “Business Class” service model for Small Business all over the CountriesRemote advisory model for micro-businessCommon CRM models integrating best-of-breed innovations of all CountriesCross Border Credit: extension guarantee for daugther companies in foreign Countries where UCG is present Mirrored accounts with instant balances updates between CountriesMirrored accounts with instant balances updates between CountriesCurrent accounts benefits packageJoint best of breed cross-border IT platform, by integrating best practices present in all Countries – expected beginning 2010

14

The governance is clustered into strategically differentiated areas: the Retail example

Integrate quicly and flawlessly Capitalia network:

p

Retail Italy

Become 5,000 branches entity in Italy with more than 20% MS

Continue to pursue customer base enlargement

Realize integration synergies

Complete turnaround and relaunch growth and people motivation:

Complete turnaround of unprofitable Mass Market and Small Business segmentsRetail Business segments

Grow with selectivity, become the best bank in serving Affluent segment

Germany&Austria

Keep cost of risk under tight control

15

Global Platforms to Exploit Specialization Excellence: Unicredit Consumer Financing

The Ambition: Tier 1 European player by 2011

20 25 b € t k t 10 b ( k t h f 6 8%)

g

20 - 25 bn € stock vs current 10 bn (market share of 6-8%)

~3 bn € revenues, growth pace over 2x market

7 UCG core European markets

N° 3 in PBT in the European CF league tableN 3 in PBT in the European CF league table

~ 2 bn € discounted EVA value creation for the Group

Th St t lid t d ti

Leverage existing sizeable UCG Retail distribution

Develop selectively alternative channels to accelerate

The Strategy: consolidate and grow captive business and develop new client acquisition

Develop selectively alternative channels to accelerate new clients acquisition (global partnerships, third party networks, direct channels, in branch corners)

Develop world wide best in class Credit Risk organization, processes and toolsprocesses and tools

Dedicated IT unit to speed up expansion

Build top notch capabilities: global talents recruiting and dedicated international expamsion teams

16

p

Global Platforms to Exploit Specialization Excellence: Pioneer Investments

Over Euro ~290 bn AUM(1)

Pioneer data as at the end of December 2006, where not specified

London

AUM(1)

~5 bn in alternative AUM

New YorkBoston

Miami

Dublin

MadridParis Munich

Hong Kong

WarsawPrague

Geneva

Beijing

Tel Aviv

~ 300 investment professionals worldwide

Miami

Singapore

Hong KongMilan

Geneva

2,127 employees worldwide (as at December 31, 2006)

Buenos Aires SydneyDistribution across 22 countries worldwide

17(1) Including Pioneer Austria

The glue is a common identity and a culture based on customer service

STATUSNEW BRANDSlovak Rep.

Q4/07

Ukraine

Bulgaria

Czech Rep.

Build a recognizable brand in the

Q4/07

Croatia

SerbiaMontenegro

BIH

region

Differentiate from competitors leveraging on extensive network

Hungary

Baltic area

gRomania

g gstrength

Support customer acquisition

Q4/07

Q3/07

Final decision to be taken

Russia

Slovenia

Poland

Focus on business sustainabilityand customer satisfaction

Turkey

Germany

Austria New brand launched

18

Italy

Few challenges exist to complete the path to become a truly European bankp

Local regulators prove somehow shy at accepting cross-border governance models, one have to pioneer solutions and strive for acceptanceacceptance

MIFID and other Eu regulations aims in principle to protect customers. But local regulators apply different interpretation and adoption time− Multi-country players have to deal with an un-needed complexity –

which customers behaviours differences itself wouldn’t requirewhich customers behaviours differences itself wouldn t require

Pressure to reduce / eliminate prices by regulators is often made in f i ith th C t i ith t t ki i t tname of comparison with other Countries without taking into account

differences in customer behaviour and sophistication

19