Obligation Intesa Sanpaolo SpA 4.972% ( XS1822957103 ) en EUR

Intesa Sanpaolo SpA

100 % ⇌

Italie

XS1822957103 ( en EUR )

4.972% par an ( paiement annuel )

18/05/2028 - Obligation échue

Prospectus brochure de l'obligation Intesa Sanpaolo S.p.A XS1822957103 en EUR 4.972%, échue

Intesa Sanpaolo S.p.A. est une banque italienne multinationale, l'une des plus grandes d'Europe, offrant une large gamme de services bancaires et financiers aux particuliers, aux entreprises et aux institutions.

L'Obligation émise par Intesa Sanpaolo SpA ( Italie ) , en EUR, avec le code ISIN XS1822957103, paye un coupon de 4.972% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 18/05/2028

PROSPECTUS

INTESA SANPAOLO S.p.A.
(incorporated as a società per azioni in the Republic of Italy)
as Issuer and, in respect of Notes issued by Intesa
Sanpaolo Bank Ireland p.l.c. and Intesa Sanpaolo Bank Luxembourg S.A., as Guarantor (where indicated in the relevant Final Terms)
and
INTESA SANPAOLO BANK IRELAND P.L.C.
(incorporated with limited liability in Ireland under registered number 125216)
as Issuer
and
INTESA SANPAOLO BANK LUXEMBOURG S.A.
(a public limited liability company (société anonyme) incorporated in the Grand Duchy of Luxembourg as a credit institution and registered with the register of trade and
companies of Luxembourg under number B13859)
as Issuer
70,000,000,000
Euro Medium Term Note Programme
Under the 70,000,000,000 Euro Medium Term Note Programme (the "Programme") described in this prospectus (the "Prospectus"), Intesa Sanpaolo
S.p.A. ("Intesa Sanpaolo" or the "Bank"), Intesa Sanpaolo Bank Ireland p.l.c. ("INSPIRE") and Intesa Sanpaolo Bank Luxembourg S.A. (previously
known as Société Européenne de Banque S.A.) ("Intesa Luxembourg") (together, the "Issuers" and, each of them, an "Issuer") may issue notes
("Notes") on a continuing basis to one or more of the Dealers named on page 36 and any additional Dealer appointed under the Programme from time
to time (each a "Dealer" and together the "Dealers"). References in this Prospectus to the "relevant Dealer" shall be, in the case of an issue of Notes
to more than one Dealer, to the lead manager of such issue and, in the case of an issue of Notes to one Dealer, to such Dealer.
The Notes will be constituted by an amended and restated trust deed dated 18 December 2017 (as amended, supplemented and/or restated from time to
time, the "Trust Deed") between the Issuers and The Law Debenture Trust Corporation p.l.c. (the "Trustee"). The payments of all amounts due in
respect of the Notes issued by INSPIRE and Intesa Luxembourg ("Guaranteed Notes") will be unconditionally and irrevocably guaranteed by Intesa
Sanpaolo pursuant to the Trust Deed and the relevant Deed of Guarantee (as defined herein).
Pursuant to the Programme, the Issuers may issue Notes denominated in any currency agreed with the relevant Dealer. The minimum denomination of
all Notes issued under the Programme shall be 100,000 and integral multiples of 1,000 in excess thereof (or its equivalent in any other currency as at
the date of issue of the Notes). The aggregate nominal amount of all Notes from time to time outstanding under the Programme will not exceed
70,000,000,000 (or its equivalent in other currencies calculated as described herein).
An investment in Notes issued under the Programme involves certain risks. For a discussion of these risks, see "Risk Factors" below.
This Prospectus has been approved as a base prospectus issued in compliance with Directive 2003/71/EC, as amended, (the "Prospectus Directive").
Application has been made by the Issuers for Notes during the period of twelve months after the date hereof to be listed on the Official List of the
Luxembourg Stock Exchange and admitted to trading on the regulated market of the Luxembourg Stock Exchange, which is a regulated market for the
purposes of the Markets in Financial Instruments Directive 2004/39/EC. In addition, pursuant to Article 18 of the Prospectus Directive, the Issuers
have requested the CSSF (as defined below) to issue a certificate of approval of this Prospectus, together with a copy of this Prospectus, to the Central
Bank of Ireland in its capacity as competent authority in Ireland. Under the Luxembourg law of 10th July, 2005, on prospectuses for securities, as
amended from time to time, which implements the Prospectus Directive, (the "Luxembourg Prospectus Law") prospectuses relating to money market
instruments having a maturity at issue of less than 12 months and complying also with the definition of securities are not subject to the approval
provisions of Part II of such law. By approving this Prospectus the Commission de Surveillance du Secteur Financier (the "CSSF") assumes no
responsibility with regards to the economic and financial soundness of any transaction under this Programme or the quality and solvency of the Issuer
in accordance with the provisions of Article 7(7) of the Luxembourg Prospectus Law.
The Programme also allows for Notes to be unlisted or to be admitted to listing, trading and/or quotation by such other or further listing authorities,
stock exchanges and/or quotation systems as may be agreed with the relevant Issuer. Notes issued pursuant to the Programme may also be rated or
unrated. Where an issue of Notes is rated, its rating will be specified in the Final Terms. A rating is not a recommendation to buy, sell or hold
securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. Whether or not each credit rating
applied for in relation to the relevant Series of Notes will be issued by a credit rating agency established in the European Union and registered under
Regulation (EC) No 1060/2009 (as amended) (the "CRA Regulation") will be disclosed in the Final Terms. In general, European regulated investors
are restricted from using a rating for regulatory purposes if such rating is not issued by a credit rating agency established in the European Union and
registered under the CRA Regulation (or is endorsed and published or distributed by subscription by such a credit rating agency in accordance with the
Regulation) unless (1) the rating is provided by a credit rating agency not established in the EEA but endorsed by a credit rating agency established in
the EEA and registered under the CRA Regulation or (2) the rating is provided by a credit rating agency not established in the EEA which is certified
under the CRA Regulation. The European Securities and Markets Authority (the "ESMA") is obliged to maintain on its website,
www.esma.europa.eu/page/List-registered-and-certified-CRAs, a list of credit rating agencies registered and certified in accordance with the CRA
Regulation.
Joint Arrangers
Banca IMI
Deutsche Bank

Dealers
Banca IMI
Barclays
BNP PARIBAS
BofA Merrill Lynch
Citigroup
Commerzbank
Crédit Agricole CIB
Credit Suisse
Deutsche Bank
Goldman Sachs International
HSBC
Intesa Sanpaolo S.p.A.
J.P. Morgan
Morgan Stanley
Natixis
NatWest Markets
Société Générale Corporate & Investment Banking
UBS Investment Bank

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The date of this Prospectus is 18 December 2017
IMPORTANT INFORMATION
This Prospectus comprises a base prospectus for each Issuer for the purposes of Article 5.4 of the
Prospectus Directive.
Any person (an "Investor") intending to acquire or acquiring any securities from any person (an
"Offeror") should be aware that, in the context of an offer to the public as defined in the Prospectus
Directive, the Issuer may be responsible to the Investor for the Prospectus only if the Issuer is acting in
association with that Offeror to make the offer to the Investor. Each Investor should therefore verify with
the Offeror whether or not the Offeror is acting in association with the Issuer. If the Offeror is not acting
in association with the Issuer, the Investor should check with the Offeror whether anyone is responsible
for the Prospectus for the purposes of Article 6 of the Prospectus Directive as implemented by the
national legislation of each EEA Member State in the context of the offer to the public, and, if so, who
that person is. If the Investor is in any doubt about whether it can rely on the Prospectus and/or who is
responsible for its contents it should seek legal advice.
Intesa Sanpaolo, INSPIRE and Intesa Luxembourg accept responsibility for the information contained in
this document. To the best of the knowledge of each of Intesa Sanpaolo, INSPIRE and Intesa
Luxembourg, having taken all reasonable care to ensure that such is the case, the information contained in
this document is in accordance with the facts and does not omit anything likely to affect the import of
such information.
The previous paragraph should be read in conjunction with the second paragraph above. Subject as
provided in the applicable Final Terms, the only persons authorised to use this Prospectus in connection
with the issue of any Tranche of Notes are the persons named in the applicable Final Terms as the
relevant Dealer(s).
AN INVESTOR INTENDING TO ACQUIRE OR ACQUIRING ANY NOTES FROM AN OFFEROR
WILL DO SO, AND OFFERS AND SALES OF THE NOTES TO AN INVESTOR BY AN OFFEROR
WILL BE MADE, IN ACCORDANCE WITH ANY TERMS AND OTHER ARRANGEMENTS IN
PLACE BETWEEN SUCH OFFEROR AND SUCH INVESTOR INCLUDING AS TO PRICE,
ALLOCATIONS AND SETTLEMENT ARRANGEMENTS. THE ISSUER WILL NOT BE A PARTY
TO ANY SUCH ARRANGEMENTS WITH INVESTORS (OTHER THAN THE DEALERS) IN
CONNECTION WITH THE OFFER OR SALE OF THE NOTES AND, ACCORDINGLY, THIS
PROSPECTUS AND ANY FINAL TERMS WILL NOT CONTAIN SUCH INFORMATION. THE
INVESTOR MUST LOOK TO THE OFFEROR AT THE TIME OF SUCH OFFER FOR THE
PROVISION OF SUCH INFORMATION. THE ISSUER HAS NO RESPONSIBILITY TO AN
INVESTOR IN RESPECT OF SUCH INFORMATION.
This Prospectus should be read and construed together with any supplements hereto and with any other
information incorporated by reference herein and, in relation to any Tranche (as defined herein) of Notes,
should be read and construed together with the relevant Final Terms (as defined herein).
Intesa Sanpaolo, INSPIRE and Intesa Luxembourg have confirmed to the Dealers that this Prospectus
(including for this purpose, each relevant Final Terms) contains all information which is (in the context of
the Programme, the issue, offering and sale of the Notes and the Guarantee of the Notes) material; that
such information is true and accurate in all material respects and is not misleading in any material respect;
that any opinions, predictions or intentions expressed herein are honestly held or made and are not
misleading in any material respect; that this Prospectus does not omit to state any material fact necessary
to make such information, opinions, predictions or intentions (in the context of the Programme, the issue,
offering and sale of the Notes and the Guarantee of the Notes) not misleading in any material respect; and
that all proper enquiries have been made to verify the foregoing.
No person has been authorised to give any information or to make any representation not contained in or
not consistent with this Prospectus or any other document entered into in relation to the Programme or
any information supplied by Intesa Sanpaolo, INSPIRE and Intesa Luxembourg or such other information
as is in the public domain and, if given or made, such information or representation should not be relied
upon as having been authorised by Intesa Sanpaolo, INSPIRE, Intesa Luxembourg, the Trustee or any
Dealer.
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No representation or warranty is made or implied by the Dealers or any of their respective affiliates, and
none of the Dealers or any of their respective affiliates makes any representation or warranty or accepts
any responsibility as to the accuracy or completeness of the information contained in this Prospectus.
Neither the delivery of this Prospectus nor any Final Terms, nor the offering, sale or delivery of any Note
shall, in any circumstances, create any implication that the information contained in this Prospectus is true
subsequent to the date hereof or the date upon which this Prospectus has been most recently amended or
supplemented or that there has been no adverse change, or any event reasonably likely to involve any
adverse change, in the condition (financial or otherwise) of Intesa Sanpaolo, INSPIRE, Intesa
Luxembourg and Intesa Sanpaolo's other consolidated subsidiaries (the "Intesa Sanpaolo Group") since
the date hereof or the date upon which this Prospectus has been most recently amended or supplemented
or that any other information supplied in connection with the Programme is correct at any time
subsequent to the date on which it is supplied or, if different, the date indicated in the document
containing the same.
The distribution of this Prospectus and any Final Terms and the offering, sale and delivery of the Notes in
certain jurisdictions may be restricted by law. Persons into whose possession this Prospectus or any Final
Terms comes are required by each of Intesa Sanpaolo, INSPIRE, Intesa Luxembourg and the Dealers to
inform themselves about and to observe any such restrictions. For a description of certain restrictions on
offers, sales and deliveries of Notes and on the distribution of this Prospectus or any Final Terms and
other offering material relating to the Notes, see "Subscription and Sale". In particular, neither the Notes
nor the guarantee thereof have been or will be registered under the United States Securities Act of 1933
(as amended) (the "Securities Act") and are both subject to U.S. tax law requirements. Subject to certain
exceptions, Notes may not be offered, sold or delivered within the United States or to U.S. persons.
Notes may be offered and sold outside the United States in reliance on Regulation S under the Securities
Act ("Regulation S").
Neither this Prospectus nor any Final Terms constitutes an offer or an invitation to subscribe for or
purchase any Notes and neither should they be considered as a recommendation by Intesa Sanpaolo,
INSPIRE, Intesa Luxembourg, the Trustee, the Dealers or any of them that any recipient of this
Prospectus or any Final Terms should subscribe for or purchase any Notes. Each recipient of this
Prospectus or any Final Terms shall be taken to have made its own investigation and appraisal of the
condition (financial or otherwise) of Intesa Sanpaolo, INSPIRE, Intesa Luxembourg and the Intesa
Sanpaolo Group.
The maximum aggregate principal amount of Notes outstanding and guaranteed at any one time under the
Programme will not exceed 70,000,000,000 (and for this purpose, any Notes denominated in another
currency shall be translated into euro at the date of the agreement to issue such Notes (calculated in
accordance with the provisions of the Dealer Agreement as defined under "Subscription and Sale")). The
maximum aggregate principal amount of Notes which may be outstanding and guaranteed at any one time
under the Programme may be increased from time to time, subject to compliance with the relevant
provisions of the Dealer Agreement.
This Prospectus has been prepared on the basis that, except to the extent that sub-paragraph (ii) below
may apply, any offer of Notes in any Member State of the European Economic Area which has
implemented the Prospectus Directive (each, a "Relevant Member State") will be made pursuant to an
exemption under the Prospectus Directive, as implemented in that Relevant Member State, from the
requirement to publish a prospectus for offers of Notes. Accordingly any person making or intending to
make an offer in that Relevant Member State of Notes which are the subject of an offering contemplated
in this Prospectus as completed by final terms in relation to the offer of those Notes may only do so (i) in
circumstances in which no obligation arises for the Issuers or any Dealer to publish a prospectus pursuant
to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the
Prospectus Directive, in each case, in relation to such offer, or (ii) if a prospectus for such offer has been
approved by the competent authority in that Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent authority in that Relevant Member State
and (in either case) published, all in accordance with the Prospectus Directive, provided that any such
prospectus has subsequently been completed by final terms which specify that offers may be made other
than pursuant to Article 3(2) of the Prospectus Directive in that Relevant Member State and such offer is
made in the period beginning and ending on the dates specified for such purpose in such prospectus or
final terms, as applicable and the Issuers have consented in writing to its use for the purpose of such offer.
Except to the extent sub-paragraph (ii) above may apply, neither the Issuers nor any Dealer have
authorised, nor do they authorise, the making of any offer of Notes in circumstances in which an
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obligation arises for the relevant Issuer or any Dealer to publish or supplement a prospectus for such
offer.
Renminbi is currently not freely convertible and conversion of Renminbi through banks outside the PRC
is subject to certain restrictions. Investors should be reminded of the conversion risk with
Renminbi-denominated products. In addition, there is a liquidity risk associated with
Renminbi-denominated products, particularly if such investments do not have an active secondary market
and their prices have large bid/offer spreads. Renminbi-denominated products are denominated and
settled in Renminbi available outside the PRC, which represents a market which is different from that of
Renminbi available in the PRC.
In this Prospectus, references to "U.S." or "USD" are to United States dollars, references to "STG" or "£"
are to the lawful currency of the United Kingdom, references to "EUR", "euro", "euros" or "" are to the
currency introduced at the start of the third stage of European Economic and Monetary Union and as
defined in Article 2 of Council Regulation (EC) No. 974/98 of 3rd May, 1998 on the introduction of the
euro, as amended, references to "Renminbi" and "CNY" are to the lawful currency of the People's
Republic of China (excluding the Hong Kong Special Administrative Region of the People's Republic of
China, the Macau Special Administrative Region of the People's Republic of China and Taiwan) (the
"PRC") and references to "S$" are to the lawful currency of Singapore. References to a "regulated
market" have the meaning given to that expression by Article 14 of the Markets in Financial Instruments
Directive 2004/39/EC.
Certain figures included in this Prospectus have been subject to rounding adjustments; accordingly,
figures shown for the same category presented in different tables may vary slightly and figures shown as
totals in certain tables may not be an arithmetic aggregation of the figures which precede them.
IMPORTANT EEA RETAIL INVESTORS if the Final Terms in respect of any Notes includes a
legend entitled "Prohibition of Sales to EEA Retail Investors", the Notes,, from 1 January 2018 are not
intended to be offered, sold or otherwise made available to and, with effect from such date, should not be
offered, sold or otherwise made available to and, with effect from such date, should not be offered, sold
or otherwise made available to any retail investor in the European Economic Area ("EEA"). For these
purposes, a "retail investor" means a person who is one (or more) of: (a) a retail client as defined in point
(11) of Article 4(I) of Directive 2014/65/EU ("MiFID II"); (b) a customer within the meaning of
Directive 2002/92/EC (the "IMD"), where that customer would not qualify as a professional client as
defined in point (10) of Article 4(I) of MiFID II; or (c) not a qualified investor as defined in Directive
2003/71/EC (as amended (including by Directive 2010/73/EU), the "Prospectus Directive").
Consequently no key information document required by Regulation (EU) No 1286/2014 (the "PRIIPs
Regulation") for offering or selling the Notes or otherwise making them available to retail investors in
the EEA has been prepared and therefore offering or selling the Notes or otherwise making them
available to any retail investor in the EEA may be unlawful under the PRIIPS Regulation.
MIFID II product governance / target market The Final Terms in respect of any Notes will include a
legend entitled "MiFID II Product Governance" which will outline the target market assessment in
respect of the Notes and which channels for distribution of the Notes are appropriate. Any person
subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration
the target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its
own target market assessment in respect of the Notes (by either adopting or refining the target market
assessment) and determining appropriate distribution channels.
A determination will be made in relation to each issue about whether, for the purpose of the MiFID
Product Governance rules under EU Delegated Directive 2017/593 (the "MiFID Product Governance
Rules"), any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise
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neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the
purpose of the MIFID Product Governance Rules.
STABILISATION
In connection with the issue of any Tranche of Notes under the Programme, the Dealer or Dealers
(if any) named as the Stabilisation Manager(s) (or persons acting on behalf of any Stabilisation
Manager(s)) in the applicable Final Terms may over-allot Notes or effect transactions with a view
to supporting the market price of the Notes at a level higher than that which might otherwise
prevail. However, stabilisation may not necessarily occur. Any stabilisation action or
over-allotment may begin on or after the date on which adequate public disclosure of the terms of
the offer of the relevant Tranche of Notes is made and, if begun, may cease at any time, but it must
end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60
days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or
over-allotment must be conducted by the relevant Stabilisation Manager(s) (or persons acting on
behalf of any Stabilisation Manager(s)) in accordance with all applicable laws and rules.

CERTAIN DEFINITIONS
Intesa Sanpaolo is the surviving entity from the merger between Banca Intesa S.p.A. and Sanpaolo IMI
S.p.A., which was completed with effect from 1st January, 2007. Pursuant to the merger, Sanpaolo IMI
S.p.A. merged by incorporation into Banca Intesa S.p.A. which, upon completion of the merger, changed
its name to Intesa Sanpaolo S.p.A. Accordingly, in this Prospectus:
(i)
references to "Intesa Sanpaolo" are to Intesa Sanpaolo S.p.A. in respect of the period since 1st
January, 2007 and references to the "Intesa Sanpaolo Group" are to Intesa Sanpaolo and its
subsidiaries in respect of the same period;
(ii)
references to "Banca Intesa" or "Intesa" are to Banca Intesa S.p.A. in respect of the period prior
to 1st January, 2007 and references to the "Banca Intesa Group" are to Banca Intesa and its
subsidiaries in respect of the same period; and
(iii)
references to "Sanpaolo IMI" are to Sanpaolo IMI S.p.A. in respect of the period from 1st
January, 2007 and references to "Sanpaolo IMI Group" are to Sanpaolo IMI and its subsidiaries
in respect of the same period.

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CONTENTS

Page
RISK FACTORS .......................................................................................................................................... 1
GENERAL DESCRIPTION OF THE PROGRAMME ............................................................................. 37
INFORMATION INCORPORATED BY REFERENCE .......................................................................... 45
FURTHER PROSPECTUSES AND SUPPLEMENTS ............................................................................. 49
FORMS OF THE NOTES .......................................................................................................................... 50
MONTE TITOLI NOTES .......................................................................................................................... 54
TERMS AND CONDITIONS OF THE NOTES ....................................................................................... 55
OVERVIEW OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM .............. 97
FORM OF FINAL TERMS ........................................................................................................................ 99
DESCRIPTION OF INTESA SANPAOLO S.P.A. ................................................................................. 114
OVERVIEW OF THE FINANCIAL INFORMATION OF THE INTESA SANPAOLO GROUP ........ 139
OVERVIEW OF THE FINANCIAL INFORMATION RELATING TO INTESA SANPAOLO BANK
IRELAND P.L.C. ..................................................................................................................................... 148
DESCRIPTION OF INTESA SANPAOLO BANK LUXEMBOURG S.A. ........................................... 156
INTESA SANPAOLO BANK LUXEMBOURG S.A. OVERVIEW OF THE ANNUAL STATEMENT
OF FINANCIAL POSITION ................................................................................................................... 160
TAXATION ............................................................................................................................................. 164
PRC CURRENCY CONTROLS RELATING TO RENMINBI .............................................................. 190
SUBSCRIPTION AND SALE ................................................................................................................. 192
GENERAL INFORMATION .................................................................................................................. 199
ANNEX 1 FURTHER INFORMATION RELATED TO INFLATION LINKED NOTES .................... 203

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RISK FACTORS
The Issuers believe that the following risk factors may affect their ability to fulfil their obligations under
Notes issued under the Programme. Most of these risk factors are contingencies which may or may not
occur and the Issuers are not in a position to express a view on the likelihood of any such contingency
occurring.
In addition, risk factors which are material for the purpose of assessing the market risks associated with
Notes issued under the Programme are also described below.
The Issuers believe that the risk factors described below represent the principal risks inherent in investing
in Notes issued under the Programme, but the inability of the Issuers to pay interest, principal or other
amounts on or in connection with any Notes may occur for other reasons which may not be considered
significant risks by the Issuers based on information currently available to them or which they may not
currently be able to anticipate. Accordingly, the Issuers do not represent that the statements below
regarding the risk of holding any Notes are exhaustive.
Words and expressions defined in the "Terms and Conditions of the Notes" below or elsewhere in this
Prospectus have the same meaning in this section. Prospective investors should read the entire Prospectus.
Risk factors relating to the Issuers
The Intesa Sanpaolo Group is subject to risks that are an inherent part of its business activity.
These risks include credit risk, country risk, market risk, liquidity risk and operational risk, as
well as business risk and risks specific to our insurance business. The Intesa Sanpaolo Group's
profitability depends on its ability to identify, measure and continuously monitor these risks. As
described below, the Intesa Sanpaolo Group attaches great importance to risk management and
control to ensure reliable and sustainable value creation in a context of controlled risk.
The risk management strategy aims to achieve a complete and consistent overview of risks,
considering both the macroeconomic scenario and the Intesa Sanpaolo Group's risk profile, by
fostering a culture of risk-awareness and enhancing the transparent and accurate representation of
the risk level of the Intesa Sanpaolo Group's portfolios.
Risk-acceptance strategies are summarised in the Intesa Sanpaolo Group's Risk Appetite
Framework ("RAF"), approved by the Board of Directors.The RAF, introduced in 2011 to ensure
that risk-acceptance activities remain in line with shareholders' expectations, is established by
taking account of the Intesa Sanpaolo Group's risk position and the economic situation. The
framework establishes the general risk appetite principles, together with the controls for the overall risk
profile and the main specific risks

The general principles that govern the Intesa Sanpaolo Group's risk-acceptance strategy may be
summarised as follows:
the Intesa Sanpaolo Group is focused on a commercial business model in which domestic
retail activity remains the Intesa Sanpaolo Group's structural strength;
the Intesa Sanpaolo Group does not aim to eliminate risks, but rather attempts to understand
and manage them so as to ensure an adequate return for the risks taken, while guaranteeing
the Intesa Sanpaolo Group's solidity and business continuity in the long term;
Intesa Sanpaolo has a moderate risk profile in which capital adequacy, earnings stability, a
sound liquidity position and a strong reputation are the key factors to protecting its current
and prospective profitability;
Intesa Sanpaolo aims for a capitalisation level in line with its main European peers;
Intesa Sanpaolo intends to maintain strong management of the main specific risks (not
necessarily associated with macroeconomic shocks) to which the Intesa Sanpaolo Group may
be exposed;
the Intesa Sanpaolo Group attaches great importance to the monitoring of non-financial risks,
and in particular:
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it adopts an operational risk assumption and management strategy geared towards
prudent management and, also by establishing specific limits and early warnings,
it focuses on achieving an optimal balance between growth and earnings
objectives and the consequent risks;

for compliance risk, it aims to achieve formal and substantive compliance with
rules in order to avoid penalties and maintain a solid relationship of trust with all
of its stakeholders;

it works to ensure formal and substantive compliance with the provisions in
terms of legal liability with the aim of minimising claims and proceedings that it
is exposed to and that result in outlays;

with regard to reputational risk, it actively manages its image in the eyes of all
stakeholders and seeks to prevent and contain any negative effects on its image,
including through robust, sustainable growth capable of creating value for
all stakeholders.
The general principles apply both at Intesa Sanpaolo Group level and business unit or company
level. In the event of external growth, these general principles must be applied, by adapting them
to the specific characteristics of the market and the competitive scenario.
The Risk Appetite Framework thus represents the overall framework in which the risks assumed
by the Intesa Sanpaolo Group are managed, with the establishment of general principles of risk
appetite and the resulting structuring of the management of:
-
the overall risk profile; and
-
the Intesa Sanpaolo Group's main specific risks.
Management of the overall risk profile is based on the general principles laid down in the form of
a framework of limits aimed at ensuring that the Intesa Sanpaolo Group complies with minimum
solvency, liquidity and profitability levels even in case of severe stress. In addition, it aims to
ensure the desired reputational and compliance risk profiles.
Management of the main specific risks is aimed at determining the risk appetite that the Intesa
Sanpaolo Group intends to assume with regard to exposures that may represent especially
significant concentrations. Such management is implemented by establishing specific limits,
management processes and mitigation measures to be taken in order to limit the impact of
especially severe scenarios on the Intesa Sanpaolo Group. These risks are assessed also
considering stress scenarios and periodically monitored within the Risk Management systems.
The definition of the Risk Appetite Framework and the resulting operating limits for the main
specific risks, the use of risk measurement instruments in loan management processes and
controlling operational risk and the use of capital at risk measures for management reporting and
assessment of capital adequacy within the Intesa Sanpaolo Group, represent fundamental
milestones in the operational application of the risk strategy defined by the Board of Directors
along the Intesa Sanpaolo Group's entire decision-making chain, down to the single operating
units and to the single desk.
Risk-acceptance policies are defined by the Intesa Sanpaolo's Board of Directors and the
Management Control Committee, with management and control functions. The Board of
Directors carries out its activity through specific internal committees, among which the Risk
Committee. The corporate bodies are assisted by the action of management committees, among
which mention should be made of the Steering Committee, and receive support of the Chief Risk
Officer, reporting directly to the Chief Executive Officer.
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The Intesa Sanpaolo Group sets out these general principles in policies, limits and criteria applied
to the various risk categories (described below) and business areas , in a comprehensive
framework of governance, control limits and procedures.
Risk hedging, given the nature, frequency and potential impact of the risk, is based on a constant
balance between mitigation/hedging action, control procedures/processes and capital protection
measures, including in the form of stress tests.
Particular attention is dedicated to managing the short-term and structural liquidity position by
following specific policies and procedures to ensure full compliance with the limits set at Intesa
Sanpaolo Group level and operating sub-areas, in accordance with international regulations and
the risk appetite approved at Intesa Sanpaolo Group level.
The Intesa Sanpaolo Group also attached great importance to management of reputational risk ,
which it pursues not only through organisational units with specific duties of promotion and
protection of the company image, but also through ex-ante risk management processes (for
example, defining prevention and mitigation tools and measures in advance and implementing
specific, dedicated communication and reporting flows.
Assessments of each single type of risk for the Intesa Sanpaolo Group are integrated in a
summary amount - the economic capital - defined as the maximum "unexpected" loss the Intesa
Sanpaolo Group might incur over a year. This is a key measure for determining the Intesa
Sanpaolo Group's financial structure and risk tolerance and guiding operations, ensuring the
balance between risks assumed and shareholder return. It is estimated on the basis of the current
situation and also as a forecast, based on the budget assumptions and projected economic scenario
under ordinary and stress conditions. The assessment of capital is included in business reporting
and is submitted quarterly to the Intesa Sanpaolo Group Risk Governance Committee, the Risk
Committee and the Board of Directors, as part of the Intesa Sanpaolo Group's Risks Tableau de
Bord.
Intesa Sanpaolo S.p.A. performs a steering and coordination role with respect to the Group
Companies, aimed at ensuring effective and efficient risk management at Intesa Sanpaolo Group
level. For the corporate control functions in particular, there are two different types of models
within the Intesa Sanpaolo Group: (i) the centralised management model based on the
centralisation of the activities at Intesa Sanpaolo S.p.A. and (ii) the decentralised management
model that involves the presence of locally established corporate control functions that conduct
their activities under the direction and coordination of the same corporate control functions of
Intesa Sanpaolo S.p.A., to which they report in functional terms.

Irrespective of the control model adopted within their company, the corporate bodies of the Intesa
Sanpaolo Group companies are aware of the choices made by Intesa Sanpaolo S.p.A. and are
responsible for the implementation, within their respective organisations, of the control strategies
and policies pursued and promoting their integration within the Intesa Sanpaolo Group controls.
In view of compliance with the reforms of the previous accord by Basel Committee (Basel 3) the
Intesa Sanpaolo Group has undertaken adequate project initiatives, expanding the objectives of
the Basel 2 Project in order to improve the measurement systems and the related risk management
systems.
With respect to credit risks, the Intesa Sanpaolo Group received authorisation to use internal
ratings-based approaches since 31 December 2008 starting with the corporate portfolio.
Progressively, the scope of application has been gradually extended to include other portfolios, as
well as other Italian and international Intesa Sanpaolo Group companies in accordance with the
plan presented to the supervisory authorities.
The last update of the roll-out plan has been approved by the Board of Directors on its meeting
held on 25 July 2017 and submitted to the Supervisor on 2 August 2017.
As far as estimation of regulatory capital for counterparty risk is concerned, Banca IMI, Intesa
Sanpaolo and banks belonging to Banca dei Territori Division, are authorized for the use of
internal models both for derivative instruments and for securities financing transactions. An
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advanced methodology is also in place for managerial purposes - definition and measurement of
credit lines for substitution risk.
With regard to Operational Risk, the Intesa Sanpaolo Group obtained authorisation to use the
Advanced Measurement Approaches (AMA internal model) to determine the associated capital
requirement for regulatory purposes, with effect from the report as at 31 December 2009.
Credit Risk
Credit risk is the risk of losses due to the failure on the part of the Intesa Sanpaolo Group's
counterparties (customers) to meet their payment obligations to the Intesa Sanpaolo Group. Credit
risk refers to all claims against customers, mainly loans, but also liabilities in the form of other
extended credits, guarantees, interest-bearing securities, approved and undrawn credits, as well as
counter-party risk arising through derivatives and foreign exchange contracts. Credit risk also
consists of concentration risk, country risk and residual risks, both from securitisations and
uncertainty regarding credit recovery rates. Credit risk represents the chief risk category for the
Intesa Sanpaolo Group.
Intesa Sanpaolo has developed a set of instruments which allows analytical control over the
quality of the loans to customers and financial institutions.
Risk measurement uses rating models that are differentiated according to the borrower's segment
(Corporate, SME Retail, Retail, Sovereign, Italian Public Sector Entities, Financial Institutions).
These models make it possible to summarise the credit quality of the counterparty in a
measurement (the rating), which reflects the probability of default over a period of one year,
adjusted on the basis of the long run average default rate in order to consider an entire economic
cycle. In case of default, internal rating of loss given default (LGD) model measures losses on
each facility, including any downturn effect related to the economic cycle.
Ratings and mitigating credit factors (guarantees, technical forms and covenants) play a
fundamental role in the entire loan granting and monitoring process: they are used to set credit
strategies and loan granting and monitoring rules as well as to determine decision-making
powers.
The main characteristics of the probability of default (PD) and LGD models for Corporate, Banks
and Public Sector Entities, SME Retail and Retail Mortgages, which are validated for Basel II
advanced approaches, are the following:

PD model

Corporate and Banks and Public Sector Entities models are based on financial,
behavioural and qualitative data of the customers. They are differentiated
according to the market in question (domestic or international) and the size
bracket of the company. Specific models are implemented for specialised lending
(real estate development initiatives, project finance transactions, leveraged buy-
out acquisition finance and asset finance transactions). On 18 April 2017, the
Intesa Sanpaolo Group also received the authorisation from the ECB to use the
new internal rating systems for the Corporate portfolio, effective after 31 March
2017. With regard to the re-estimation of rating models, steps were taken, on the
one hand, to broaden the information set used for counterparty evaluation and, on
the other hand, efforts were made to simplify their framework. Finally, various
measures have been adopted that are aimed at favouring a through-the-cycle
profile of the probabilities of default produced by the models, consistently with
the relational-type commercial approach adopted by the Intesa Sanpaolo Group.

Banks and Public Sector Entities model, authorised on 9 March 2017 and
effective after 31 March 2017. The model is different for banks in mature
economies and banks in emerging countries. In short, the model consists of a
quantitative part and a qualitative part, differentiated according to mature and
emerging countries, a country rating component representing systemic risk, a
component relating to specific country risk for banks most closely correlated with
country risk, and finally, a module (the relationship manager's judgement) that
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