CREDEM Group: capital ratios significantly above 2018 SREP requirements assigned by ECB

Today, Credem Group received from European Central Bank (ECB), the final decision regarding capital requirements to be met within the Supervisory Review and Evaluation Process (SREP).

In detail, also for 2018, the 1% Pillar 2 requirement(3) was confirmed, therefore the minimum regulatory CET1 Ratio will be 7.375%(2). 9M2017 CET1 Ratio(1), amounting to 13.37%, showed a remarkable 600 bps buffer vs the minimum requirement.

With such a decision, ECB acknowledges soundness and effectiveness of Credito Emiliano strategies and processes for assessing and managing internal capital and recognizes that its arrangements, strategies and mechanisms ensure the sound management and coverage of the risks.

Similarly to what happened last year, Group's liquidity level is deemed adequate and no additional adjustment measure is required.

The judgment highlighted above confirms Credem Group's reliability and soundness, providing all Group's stakeholders with protection.

"This result", Nazzareno Gregori, Credem's General Manager, declared, "affirms how the strategic choices implemented over years proved to be effective and represents the foundation for development and growth plans that the Group is currently delivering. Asset quality, capital soundness and solidity", Gregori added, "are essential elements in order to preserve over time the trust of those customers which choose us as a reliable partner for their savings and corporate development plans".

In addition, ECB communicated the minimum requirements for Tier1 Ratio at 8.875% and for Total Capital Ratio at 10.875%. Once again, 9M2017 Group capital ratios were well above the regulatory levels, with Tier 1 Ratio(1) at 13.38% and Total Capital Ratio(1) at 15.07%.

1. Phased-in figure; pursuant to article 11, comma 2, 3, and 13, comma 2 of the EU regulation n. 575/2013 (CRR), banks controlled by a financial holding parent company are requested to meet the requirements set by such regulation on the base of the holding consolidated accounts. Because of this rule on capital ratios, the consolidation perimeter of the Group was changed, within the framework set by the prudential supervision. Therefore, capital ratios were calculated on Credemholding, which holds 77.33% of Credem Spa share capital. Pursuant to article 26, comma 2 of the EU regulation n. 575/2013 (CRR), the part of the 9M17 Net Profit for the Period, net of the portion to be designated to dividends, was not included into the calculation of capital reserves, as the 9M17 Report is not subject to independent audit. Though, the part of the 1H17 Net Profit for the Period, net of the portion to be designated to dividends, was indeed included into the calculation of capital reserves

2. Figure includes: i) minimum own funds requirement as defined by article 92(1)(a) of the EU regulation n. 575/2013 (CRR); ii) capital conservation buffer set by Bank of Italy and amounting to 1.875% for 2018 as defined by Circular no. 285 of 17 December 2013 - 18° update (https://www.bancaditalia.it/compiti/vigilanza/normativa/archivio-norme/circolari/c285/Aggiornamento-18-041016.pdf); iii) additional requirement to be held in excess of the minimum own funds requirement as defined by article 16(2)(a) of the EU regulation n. 575/2013 (CRR), assigned by ECB and set at 1%; iv) countercyclical capital buffer set by Bank of Italy at 0% for fourth quarter 2017 (https://www.bancaditalia.it/media/comunicati/documenti/2017-02/cs_20170922_CCyB_2017Q4-ita.pdf)

3. Additional requirement to be held in excess of the minimum own funds requirement as defined by article 16(2)(a) of the EU regulation n. 575/2013 (CRR) and assigned by ECB

Reggio Emilia, November 28th, 2017

CREDITO EMILIANO SPA

(Chairman) Giorgio Ferrari

Contacts:

02 77426202 - 0522 582075

rel@credem.it

0522 582785-2580

investor@credem.it

www.credem.it