Shareholders' equity

Over 2010, operating assets generated cash amounting to € 317.1 million; in particular, operations generated a positive flow of €946 million, financial activities absorbed liquidity totalling € 3.6 billion, and financial liabilities generated cash amounting to about € 3 billion. Since the liquidity absorbed by investment activities amounted to € 163.9 million and that absorbed by funding activities amounted to € 148 (€ 150 million of dividends paid), net liquidity generated during the year amounts to € 5.2 million.

The net consolidated shareholders’ equity pertaining to the Parent Bank and the net consolidated profit are obtained from the net shareholders’ equity and profit for the year of Banca Carige through the following changes:

RECONCILIATION STATEMENT OF BANCA CARIGE SHAREHOLDERS' EQUITY AND INCOME AND CONSOLIDATED FIGURES (FIGURES IN THOUSANDS OF EURO)

 
Shareholders' equity Income statement
Balance as at 12/31/2010 - Banca Carige 3,813,228 180,601
Variations on book value 554 57,307
Value adjustments to allocated gains -3,249 -754
Share options survey - subsidiaries -10,845 -154
Amortised goodwill (previous accounting periods) -43,298 -
Dividends distributed by subsidiaries and written off -55,966 -55,966
Dividends distributed by associated companies and written off -5,564 -5,564
Other -676 1,771
Consolidated balance as at 12/31/2010 3,694,184 177,241

In line with legal and supervisory regulations, and in compliance with the Code of Conduct for Listed Companies, in order to ensure sound, prudent management which combines business profitability with a consistent assumption of risks and operations based on criteria of transparency and correctness, the Parent Bank set up an internal control system (the “Internal Control System or ICS”) suitable to continuously detect, measure and verify the typical risks of the company’s business.

From the operating point of view, the ICS includes 3 levels of control:

  1. Line controls (1st level) for the purpose of ensuring the correct performance of operations; these are carried out by the operating structures or included in the supporting IT procedures;
  2. Risk management controls (2nd level) aimed at defining the methods for measuring risk and verifying compliance with the limits assigned to the various operating departments. These are assigned to structures other than productive departments: The Officer in charge of preparing the company’s accounting documents, Risk Management (which includes the Ratings System Validation Office), Credit Monitoring, Planning and Management Control, Insurance Company Planning and Control, Compliance (which includes the Anti-Money Laundering Department);
  3. Internal Audit (3rd level) is carried out by the Internal Audit departments (which are different and independent from the production structures), and is aimed at controlling operational regulatory and the performance of risks, monitoring compliance with internal and external regulations.

The organisation of the Internal Control System is explained in further detail in Part E of the Explanatory Notes(“Information on risks and risk hedging policies”) in the Consolidated Financial Statements and the “Report on corporate governance and the ownership structure for 2010” available on the websitewww.gruppocarige.it.

The Parent Bank performs orientation and supervisory functions as regards all risks, in particular by managing, in an integrated context, the Pillar 1 and Pillar 2 risks, in accordance with the provisions contained in the Supervisory Instructions of the Bank of Italy (Circular No. 263 of 27 December 2006 and subsequent updates).

The banks of the Group operate within specific limits of independence and avail themselves of their own supervisory structures.

As mentioned, the different risk categories are monitored by the 2nd level control functions, and the results are subject to the periodic reporting to the Board of Directors, the Executive Management and the Managerial Committees (ALCO and ICAAP).

An independent risk management office was established at the insurance company subsidiaries in addition to an independent system of internal controls, which, in coordination with the auditing structures of the Parent Bank, comprise a further management-organisational type control over the insurance sector.

The analyses are supported by regulatory models and by more advanced methodologies which made it possible to expand the range of risks monitored over time and to improve the assessment of the capital adequacy, from both a regulatory and an economic perspective.

The analyses of the impact on capital of the second pillar regulations (ICAAP) confirm the solid capitalisation of the Group: more specifically, the requirements on the risks not taken into account by the first pillar regulations are offset by the savings on capital generated by the application of more advanced methods on the credit and market risks.

Please refer to part E of the Explanatory Notes - “Information on risks and risk hedging policies” - for an overview of the typical risks for the Group banking and insurance activities, and the measures employed to mitigate these risks.

As regards solvency ratios, the Group confirms its compliance with the expected thresholds for all risk indicators of Banca d’Italia (Bank of Italy) currently in force and calculated on the basis of Instructions for the compilation of reports on the regulatory capital and prudential coefficients (Bank of Italy’s circular no. 155 of 18 December 1991), as well as compliance with new prudential supervisory instructions for banks (Bank of Italy circular no. 263 of 27 December 2006). The Regulatory Capital is equal to € 2,001.3 million.

BREAKDOWN OF CONSOLIDATED REGULATORY CAPITAL (figures in thousands of euro)
 
12/31/10 (1) 9/30/10 12/31/09 12/31/08
Tier 1 capital: positive elements (a) 3,450,918 3,408,669 3,395,427 3,297,610
Share capital 1,810,426 1,809,792 1,809,807 1,801,053
Reserves 413,267 413,280 354,352 234,933
Additional paid-in capital 1,022,942 1,021,616 1,021,261 1,018,289
Profit for the period 44,383 4,081 50,107 83,435
Innovative capital instruments (h) 159,900 159,900 159,900 159,900
Tier 1 capital: negative elements (b) 1,775,682 1,785,839 1,663,061 1,662,941
Goodwill 1,698,474 1,710,843 1,587,598 1,604,306
Other negative elements 77,208 74,996 75,463 58,635
Prudential filters for regulatory capital (c) -113,599 -114,602 -81,767 -109,290
Deductions (d) 97,521 92,851 91,293 14,213
Total Tier 1 capital (e = a-b+c-d) 1,464,116 1,415,377 1,559,306 1,511,166
Core Tier 1 Capital (e-h) (2) 1,304,216 1,255,477 1,399,406 1,351,266
Tier 2 capital (f) 858,717 840,066 754,708 823,914
Deductions (g) 339,812 350,294 350,012 350,085
Regulatory capital (e+f-g) 1,983,021 1,905,149 1,964,002 1,984,995
Tier 3 Capital
45,741 22,864 97,175 99,675
Tier 3 calculable portion (3) 18,238 19,411 22,915 31,493
Regulatory capital including Tier 3 2,001,259 1,924,560 1,986,917 2,016,488
Tier 3 subordinated loans not calculable in the Tier 3 27,503 3,453 74,260 68,182
(1) Figures as at 30/9/2010 result from accounting and management estimates, as the official consolidated figures (Information form "1") are provided only every six months (in June and December). (2) It includes savings shares since, with the approval of the changes to the articles of association which will be proposed during the Shareholders' Meeting on 29/4/2011, they will have the requirements for inclusion in Core Tier 1. (3) It is a subordinated Tier 2 calculated as Tier 3.

The Group shows Total Capital Ratio (9.1%), Tier 1 Ratio (6.7%) and Core Tier 1 Ratio (6.0%) indicators higher than the supervisory limits with an excess capital of € 250.3 million.

CONSOLIDATED REGULATORY CAPITAL AND SOLVENCY RATIOS (figures in thousands of euro)

Situation as at
 
12/31/10 9/30/10 12/31/09 12/31/08
Regulatory capital



Core Tier 1 Capital 1,304,216 1,255,477 1,399,406 1,351,266
Tier 1 capital 1,464,116 1,415,377 1,559,306 1,511,166
Regulatory capital including Tier 3 2,001,259 1,924,560 1,986,917 2,016,488
Weighted assets



Credit risk 19,726,863 18,508,673 17,580,575 16,819,000
Market risk 319,313 339,830 401,166 551,363
Operational risk 1,841,225 1,831,148 1,831,148 1,726,625
Other prudential requirements - - - -
Total weighted assets 21,887,400 20,679,651 19,812,888 19,096,988
Capital requirements  
 
 
 
Credit risk 1,578,149 1,480,694 1,406,446 1,345,520
Market risk 25,545 27,186 32,093 44,109
Operational risk 147,298 146,492 146,492 138,130
Other prudential requirements - - - -
Total 1,750,992 1,654,372 1,585,031 1,527,759
Subordinated loans covering market risks - - - -
Surplus capital 250,267 270,188 401,886 488,729
Solvency ratios (%)



Tier 1 capital/Credit risk weighted assets 7.4% 7.6% 8.9% 9.0%
Regulatory capital/Credit risk weighted assets 10.1% 10.3% 11.2% 11.8%
Core Tier 1/Total Risk-Weighted Assets (1) 6.0% 6.1% 7.1% 7.1%
Tier 1 capital/Total weighted assets 6.7% 6.8% 7.9% 7.9%
Regulatory capital including Tier 3 capital/Total weighted assets 9.1% 9.3% 10.0% 10.6%
(1) It includes savings shares since changes to the articles of association which will be presented during the next Shareholders' Meeting on 29/04/2011 will qualify them as Core Tier 1.

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Part F - Information on shareholders' equityPdf444.22 KB

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