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Intesa Sanpaolo well above comprehensive assessment capital requirements

Turin - Milan, October 28th 2014 – Intesa Sanpaolo notes the announcements made today by the European Central Bank and the European Banking Association regarding the results of the 2014 EU-wide Comprehensive Assessment. This was carried out on the balance sheets of the European banks as at December 31st 2013 by the aforementioned authorities and consisted of an asset quality review (AQR), as well as an exercise examining the impact of a negative macroeconomic scenario on banks’ capital (Stress Test).

The Intesa Sanpaolo Group’s Common Equity Tier 1 ratio (CET1 ratio) as resulted from the comprehensive assessment was well above the thresholds required by this assessment.

Compared with the starting-point figure of 11.95% (1), the Group’s CET1 ratio, including the capital gain deriving from the stake in the Bank of Italy (2) (approximately 1.8 billion euro) as well as the other capital measures carried out in 2014 (3) (approximately 0.4 billion euro), came in at:

- 12.47% under the AQR, with excess capital of approximately 12.7 billion euro above the 8% threshold;

- 11.97% under the Stress Test baseline scenario (4), with excess capital of approximately 11.6 billion euro above the 8% threshold;

- 9.02% under the Stress Test adverse scenario (4), with excess capital of approximately 10.9 billion euro above the 5.5% threshold (5).

The Group’s CET1 ratio, not including the capital gain deriving from the stake in the Bank of Italy and the other capital measures carried out in 2014, came in at:

- 11.70% under the AQR (6), with excess capital of approximately 10.5 billion euro above the 8% threshold;

- 11.23% under the Stress Test baseline scenario (4)(7), with excess capital of approximately 9.4 billion euro above the 8% threshold;

- 8.31% under the Stress Test adverse scenario (4)(8), with excess capital of approximately 8.7 billion euro above the 5.5% threshold.

Specifically, the exercise has confirmed that the Intesa Sanpaolo Group’ s balance sheet is solid in all the five areas included in the AQR. In detail (before taxes):

1. for the credit sample selected, as at December 31st 2013, adjustments to provisions on non-performing exposures are limited to 466 million euro (9). Information currently available makes it possible to estimate that, on the basis of the trend of the coverage ratio of this sample since December 31st 2013, approximately half of these adjustments have already been included in the results for the first half of 2014;

2. for the projection of findings to the entire credit portfolio selected for the AQR, adjustments to provisions on non-performing exposures are immaterial (eight million euro) (10);

3. for the collective provisioning calculated solely for the purpose of this exercise, adjustments to provisions amount to 498 million euro (11). The collective provisioning has been based on the conservative criteria of the Challenger Model, that are different from the accounting criteria and, therefore, bear no impact on the income statement and balance sheet results. The aforementioned amount does not include the benefit from the offsetting of excess coverage and shortfall coverage among portfolio categories within the total performing credit exposure, envisaged by current supervisory rules though not permitted under the conservative criteria of this exercise. On the basis of estimates made by the Group in accordance with the rules envisaged in the ECB methodological manual, if this offsetting was included, adjustments to provisions would be lower than 100 million euro;

4. for the Credit Value Adjustment of financial derivatives, no adjustments (12);

5. for level-3 fair value assets, including derivatives, adjustments are immaterial (650,000 euro) (13).

Finally, compared with the starting-point figure of 6.24% (14), the Intesa Sanpaolo Group’s leverage ratio (based on the CRD4/CRR definition) came in at 6.12% under the AQR (15).

"The excellent results of the Comprehensive Assessment confirm the great strengths of the Intesa Sanpaolo Group, something I'm proud to be able to state on behalf of all my colleagues in our Bank" commented Carlo Messina, CEO of Intesa Sanpaolo.

"Intesa Sanpaolo's capital strength is amongst the very best at an international level, as demonstrated by the European Central Bank's exercise. We have excess capital of 12.7 billion Euros in the context of the Asset Quality Review and 10.9 billion Euros in the context of the adverse scenario of the Stress Test, confirming what we set out in the Bank's most recent Business Plan. These are results that further reinforce the credibility of our dividend distribution policy and of the projected 170 billion Euros of new medium and long term lending over the life of the Plan for companies and households".

"Having successfully passed the challenging test of the Comprehensive Assessment, which I believe represents an important pillar of Banking Union and also a significant step forward for the European Union itself, we can look ahead with calm determination to meeting the objectives set out in our Business Plan".
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(1) Item A6 of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB (this item, in accordance with the criteria set out in the assessment, does not include the capital gain deriving from the stake in the Bank of Italy, although this was booked in the financial year 2013)
(2) Item C1 of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB
(3) Item H of the enclosed template Results of the Comprehensive Assessment
(4) Adjusted down by such an impact that would bring it to the lowest capital level over the 2014-2016 three-year period
(5) Item I of the enclosed template Results of the Comprehensive Assessment
(6) Item B3 of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB
(7) Item B5 of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB
(8) Item B7 of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB
(9) Item D1 and column D.C of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB
(10) Item D1 and column D.D of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB
(11) Item D1 and column D.E of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB
(12) Item D11 and column D.I of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB
(13) Item D12 and column D.I of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB
(14) Item F1 of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB
(15) Item F3 of the enclosed template for the 2014 COMPREHENSIVE ASSESSMENT OUTCOME prepared by the ECB
 

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