Bond Banco BPM SpA 1.83% ( XS2063556117 ) in EUR

Banco BPM SpA

100 % ▲

Italy

XS2063556117 ( in EUR )

1.83% per year ( payment 1 time a year)

30/09/2026 - Bond has expired

Prospectus brochure of the bond Banco BPM S.p.A XS2063556117 in EUR 1.83%, expired

Banco BPM S.p.A. is a major Italian banking group formed through the merger of Banco Popolare and Banca Popolare di Milano, offering a wide range of financial services to individuals, businesses, and public administrations.

The Bond issued by Banco BPM SpA ( Italy ) , in EUR, with the ISIN code XS2063556117, pays a coupon of 1.83% per year.
The coupons are paid 1 time per year and the Bond maturity is 30/09/2026

BASE PROSPECTUS

BANCO BPM S.P.A.
(incorporated as a joint stock company (società per azioni) in the Republic of Italy)
25,000,000,000
Euro Medium Term Note Programme

This base prospectus (the "Base Prospectus") constitutes a base prospectus for the purposes of Article 5.4 of Directive 2003/71/EC,
as amended or superseded (the "Prospectus Directive"). Under this 25,000,000,000 Euro Medium Term Note Programme (the
"Programme"), BANCO BPM S.p.A. (the "Issuer" or the "Bank" or "Banco BPM") may from time to time issue non-equity
securities in the meaning of Article 22 paragraph 6(4) of Commission Regulation (EC) No. 809/2004 of 29 April 2004, as amended,
which may be governed by English law (the "English Law Notes") or Italian law (the "Italian Law Notes" and together with the
English Law Notes, the "Notes") denominated in any currency agreed between the Issuer and the relevant Dealer (as defined below).
The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will not exceed
25,000,000,000 (or its equivalent in other currencies calculated as described in the Programme Agreement described herein), subject
to increase as described herein. In the event of such increase, a supplement to this Base Prospectus will be prepared by the Issuer,
which shall be approved by the CSSF in accordance with Article 13 of the loi relative aux prospectus pour valeurs mobilières dated
10 July 2005, as amended (the "Luxembourg Prospectus Law").
The Notes may be issued on a continuing basis to one or more of the Dealers specified under "Description of the Programme" and
any additional Dealer appointed under the Programme from time to time by the Issuer (each a "Dealer" and together the "Dealers"),
which appointment may be for a specific issue or on an ongoing basis. References in this Base Prospectus to the "relevant Dealer"
shall, in the case of an issue of Notes being subscribed by more than one Dealer, be to all Dealers agreeing to subscribe such Notes.
Amounts payable under the Notes may be calculated by reference to EURIBOR, or to LIBOR, in each case as specified in the relevant
Final Terms. As at the date of this Base Prospectus, EURIBOR is provided and administered by the European Money Markets Institute
("EMMI"), and LIBOR is provided and administered by ICE Benchmark Administration Limited ("ICE"). At the date of this Base
Prospectus, ICE and EMMI are both authorised as benchmark administrators, and included on, the register of administrators and
benchmarks established and maintained by the European Securities and Markets Authority ("ESMA") pursuant to Article 36 of
Regulation (EU) No. 2016/1011 (the "Benchmarks Regulation").
An investment in Notes issued under the Programme involves certain risks. The principal risk factors that may affect the ability
of the Issuer to fulfil its obligations under the Notes are discussed under "Risk Factors" below.
The Base Prospectus has been approved by the Luxembourg Commission de Surveillance du Secteur Financier (the "CSSF") which
is the Luxembourg competent authority for the purpose of the Prospectus Directive and Luxembourg Prospectus Law as a base
prospectus issued in compliance with the Prospectus Directive and the Luxembourg Prospectus Law for the purpose of giving
information with regard to the issue of Notes issued under the Programme during the period of twelve months following the date
hereof. Application has also been made to the Luxembourg Stock Exchange for Notes issued under the Programme to be admitted to
trading on the regulated market of the Luxembourg Stock Exchange and to be listed on the Official List of the Luxembourg Stock
Exchange. References in this Base Prospectus to Notes being listed (and all related references) shall mean that such notes have been
admitted to trading on the regulated market of the Luxembourg Stock Exchange (Bourse de Luxembourg) and have been "listed" on
the Official List of the Luxembourg Stock Exchange. The Luxembourg Stock Exchange's regulated market (the "Regulated Market")
is a regulated market for the purposes of Directive 2014/65/EU (as amended, "MiFID II"). Notice of the aggregate nominal amount
of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and any other terms and conditions not contained herein
which are applicable to each Tranche (as defined under "Terms and Conditions of the English Law Notes" or "Terms and Conditions
of the Italian Law Notes") of Notes will be set out in the relevant final terms (the "Final Terms") or in a separate prospectus specific
to such Tranche (the "Drawdown Prospectus"). With respect to Notes to be listed on the Luxembourg Stock Exchange, the Final
Terms or Drawdown Prospectus, as the case may be, will be filed with the CSSF. In the case of a Tranche of Notes which is the subject
of a Drawdown Prospectus, each reference in this Base Prospectus to information being specified or identified in the relevant Final
Terms shall be read and construed as a reference to such information being specified or identified in the relevant Drawdown Prospectus
unless the context requires otherwise. By approving the Base Prospectus, the CSSF gives no undertaking as to the economic or
financial opportuneness of the transaction or the quality and solvency of the Issuer in line with the provisions of Article 7(7) of the
Luxembourg Prospectus Law.
The Programme provides that Notes may be listed or admitted to trading, as the case may be, on such other or further stock exchange(s)
or markets as may be agreed between the Issuer and the relevant Dealer. The Issuer may also issue unlisted Notes and/or Notes not
admitted to trading on any market.
As at the date of this Base Prospectus, payments of interest and other proceeds in respect of the Notes may be subject to withholding
or deduction for or on account of Italian substitute tax (imposta sostitutiva), in accordance with Italian Legislative Decree No. 239 of
1 April 1996, as amended and supplemented from time to time, and any related regulations. Upon the occurrence of any withholding
or deduction for or on account of imposta sostitutiva from any payments under the Notes, neither the Issuer nor any other person shall
have any obligation to pay any additional amount(s) to any holder of the Notes. For further details see the section entitled "Taxation
 Italian taxation".
The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended, (the "Securities Act")
or with any securities regulatory authority of any state or other jurisdiction of the United States, and notes in bearer form are subject
to U.S. tax law requirements. The Notes may not be offered, sold or (in the case of Notes in bearer form) delivered within the United
States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act ("Regulation S"))
except in certain transactions exempt from the registration requirements of the Securities Act.

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 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.
Prohibition of Sales to 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 are not intended to be offered, sold or otherwise made available to and 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: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II or (ii) a customer within
the meaning of Directive (EU) 2016/97 (as amended, the "Insurance Distribution Directive"), where that customer would not qualify
as a professional client as defined in point (10) of Article 4(1) of MiFID II. Consequently no key information document required by
Regulation (EU) No 1286/2014 (as amended 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.

ARRANGER
Citigroup

DEALERS

Banca Akros S.p.A. - Gruppo Banco BPM
Banca IMI
Barclays
BNP PARIBAS
BofA Merrill Lynch
Citigroup
Crédit Agricole CIB
Credit Suisse
Deutsche Bank
Goldman Sachs International
HSBC
J.P. Morgan Securities plc
Mediobanca
Nomura
Société Générale Corporate & Investment Banking
UBS Investment Bank

The date of this Base Prospectus is 12 July 2019.

RESPONSIBILITY STATEMENT
The Issuer (the "Responsible Person") accepts responsibility for the information contained in this
Base Prospectus. To the best of the knowledge of the Issuer (having taken all reasonable care to
ensure that such is the case) the information contained in this Base Prospectus is in accordance with
the facts and does not omit anything likely to affect the import of such information.
Subject as provided in the relevant Final Terms, the only persons authorised to use this Base
Prospectus in connection with an offer of Notes are the persons named in the relevant Final Terms
as the relevant Dealer or the Managers, as the case may be.
Copies of Final Terms will be available from the registered office of the Issuer and the specified office
set out below of each of the Paying Agents (as defined below) and, in the case of listed Notes, will be
published on the website of the Luxembourg Stock Exchange (www.bourse.lu).
This Base Prospectus is to be read in conjunction with all documents which are deemed to be
incorporated herein by reference (see "Documents Incorporated by Reference" below) and with any
supplements hereto. This Base Prospectus shall be read and construed on the basis that such
documents are incorporated in and form part of this Base Prospectus.
Neither the Dealers nor the Trustee nor any of their respective affiliates have authorised this Base
Prospectus or any part thereof nor independently verified the information contained herein.
Accordingly, no representation, warranty or undertaking, express or implied, is made and no
responsibility or liability is accepted by the Dealers or the Trustee or any of their respective affiliates
as to the accuracy or completeness of the information contained or incorporated in this Base
Prospectus or any other information provided by the Issuer in connection with the Programme. No
Dealer or the Trustee accepts any liability in relation to the information contained or incorporated
by reference in this Base Prospectus or any other information provided by the Issuer in connection
with the Programme.
No person is or has been authorised by the Issuer, the Dealers or the Trustee to give any information
or to make any representation not contained in or not consistent with this Base Prospectus or any
other document entered into in relation to the Programme or any information supplied by the Issuer
or such other information as is in the public domain and, if given or made, such information or
representation must not be relied upon as having been authorised by the Issuer, any of the Dealers
or the Trustee.
Neither this Base Prospectus nor any other information supplied in connection with the Programme
or any Notes (a) is intended to provide the basis of any credit or other evaluation or (b) should be
considered as a recommendation by the Issuer, any of the Dealers or the Trustee that any recipient
of this Base Prospectus or any other information supplied in connection with the Programme or any
Notes should purchase any Notes. Each investor contemplating purchasing any Notes should make
its own independent investigation of the financial condition and affairs, and its own appraisal of the
creditworthiness, of the Issuer and the Group (as defined herein). Neither this Base Prospectus nor
any other information supplied in connection with the Programme or the issue of any Notes
constitutes an offer or invitation by or on behalf of the Issuer, any of the Dealers or the Trustee to
any person to subscribe for or to purchase any Notes.
Neither the delivery of this Base Prospectus nor the offering, sale or delivery of any Notes shall in
any circumstances imply that the information contained herein concerning the Issuer is correct at
any time subsequent to the date hereof or that any other information supplied in connection with the
Programme is correct as of any time subsequent to the date indicated in the document containing the
same. The Dealers and the Trustee expressly do not undertake to review the financial condition or
affairs of the Issuer or the Issuer and the Group during the life of the Programme or to advise any
investor in the Notes of any information coming to their attention. Investors should review, inter alia,
the most recently published documents incorporated by reference into this Base Prospectus when
deciding whether or not to purchase any Notes.
The Notes have not been and will not be registered under the Securities Act or with any securities
regulatory authority of any state or other jurisdiction of the United States, and notes in bearer form
are subject to U.S. tax law requirements. The Notes may not be offered, sold or (in the case of Notes

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in bearer form) delivered within the United States or to, or for the account or benefit of, U.S. persons
as defined in Regulation S under the Securities Act except in certain transactions exempt from the
registration requirements of the Securities Act. See "Subscription and Sale".
This Base Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any Notes
in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such
jurisdiction. The distribution of this Base Prospectus and the offer or sale of Notes may be restricted
by law in certain jurisdictions. The Issuer, the Dealers and the Trustee do not represent that this
Base Prospectus may be lawfully distributed, or that any Notes may be lawfully offered, in
compliance with any applicable registration or other requirements in any such jurisdiction, or
pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such
distribution or offering. In particular, no action has been taken by the Issuer, the Dealers or the
Trustee which would permit a public offering of any Notes outside the European Economic Area or
distribution of this Base Prospectus in any jurisdiction where action for that purpose is required.
Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Base Prospectus
nor any advertisement or other offering material may be distributed or published in any jurisdiction,
except under circumstances that will result in compliance with any applicable laws and regulations.
Persons into whose possession this Base Prospectus or any Notes may come must inform themselves
about, and observe, any such restrictions on the distribution of this Base Prospectus and the offering
and sale of Notes. In particular, there are restrictions on the distribution of this Base Prospectus and
the offer or sale of Notes in the United States, the European Economic Area (including the United
Kingdom and the Republic of Italy) and Japan. See "Subscription and Sale".
This Base Prospectus has been prepared on the basis that 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 Base Prospectus as completed
by the relevant Final Terms in relation to the offer of those Notes may only do so in circumstances in
which no obligation arises for the Issuer 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. Neither the Issuer nor any Dealer have authorised,
nor do they authorise, the making of any offer of Notes in circumstances in which an obligation arises
for the Issuer or any Dealer to publish or supplement a prospectus for such offer.
This Base Prospectus includes forward-looking statements. These include statements relating to,
among other things, the future financial performance of the Issuer and the Group, plans and
expectations regarding developments in the business, growth and profitability of the Group and
general industry and business conditions applicable to the Group. The Issuer has based these
forward-looking statements on its current expectations, assumptions, estimates and projections
about future events. These forward-looking statements are subject to a number of risks, uncertainties
and assumptions that may cause the actual results, performance or achievements of the Group or
those of its industry to be materially different from or worse than these forward-looking statements.
The Issuer does not assume any obligation to update such forward-looking statements and to adapt
them to future events or developments except to the extent required by law.
All references in this document to: "Euro", "euro" and "" refer to the currency introduced at the
start of the third stage of European economic and monetary union pursuant to the Treaty on the
Functioning of the European Union, as amended; "U.S. dollars", "U.S.$" and "$" refer to United
States dollars being the currency of the United States of America; "Sterling" refers to the currency
of the United Kingdom; "yen" refers to the currency of Japan; and references to the "Banco BPM
Group" or the "Group" are to BANCO BPM S.p.A. and its subsidiaries.
STABILISATION
In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the
Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable
Final Terms or, as the case may be, Drawdown Prospectus 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 may

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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. Such stabilising shall be conducted in accordance
with all applicable laws and rules. Any loss or profit sustained as a consequence of any such over-
allotment or stabilising shall, as against the Issuer, be for the account of the Stabilising Manager(s)
and the Lead Manager(s).

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CONTENTS

Page
RISK FACTORS .......................................................................................................................................... 1
DESCRIPTION OF THE PROGRAMME ................................................................................................. 35
DOCUMENTS INCORPORATED BY REFERENCE ............................................................................. 44
TERMS AND CONDITIONS OF THE ENGLISH LAW NOTES ........................................................... 46
TERMS AND CONDITIONS OF THE ITALIAN LAW NOTES ............................................................ 81
FORM OF THE NOTES .......................................................................................................................... 117
FORM OF FINAL TERMS ...................................................................................................................... 119
USE OF PROCEEDS ............................................................................................................................... 133
SELECTED CONSOLIDATED FINANCIAL DATA ............................................................................ 134
DESCRIPTION OF THE ISSUER AND THE GROUP .......................................................................... 140
TAXATION ............................................................................................................................................. 177
SUBSCRIPTION AND SALE ................................................................................................................. 186
GENERAL INFORMATION .................................................................................................................. 190

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RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under Notes issued
under the Programme. Most of these factors are contingencies which may or may not occur and the Issuer
is not in a position to express a view on the likelihood of any such contingency occurring.
In addition, factors which are material for the purpose of assessing the market risks associated with Notes
issued under the Programme are also described below.
The Issuer believes that the factors described below represent the principal risks inherent in investing in
Notes issued under the Programme, but the inability of the Issuer 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 Issuer based on information currently available to it or which it may not currently be able to
anticipate. Prospective investors should also read the detailed information set out elsewhere in this Base
Prospectus and reach their own views prior to making any investment decision.
Words and expressions defined in the "Terms and Conditions of the English Law Notes" and "Terms and
Conditions of the Italian Law Notes" below or elsewhere in this Base Prospectus have the same meaning
in this section.
FACTORS THAT MAY AFFECT THE ISSUER'S ABILITY TO FULFIL ITS OBLIGATIONS
UNDER NOTES ISSUED UNDER THE PROGRAMME
Risks related to the impact of global macro-economic factors, the Euro Area sovereign debt crisis
and the national and international political climate on the performance of the Issuer and of the Banco
BPM Group
Risks related to the impact of global macro-economic factors
The performance of the Banco BPM Group is influenced by: Italian and EU-wide macroeconomic
conditions, the conditions of the financial markets in general, and in particular, by the stability and trends
in the economies of those geographical areas in which Banco BPM conducts its activity. The earning
capacity and solvency of the Banco BPM Group are affected, inter alia, by factors such as investor
perception, long-term and short-term interest rate fluctuations, exchange rates, liquidity of financial
markets, availability and costs of funding, sustainability of sovereign debt, family incomes and consumer
spending, unemployment levels, inflation and property prices. Adverse changes in these factors, especially
during times of economic and financial crisis, could result in potential losses, an increase in the Issuer's
and/or the Banco BPM Group's borrowing costs, or a reduction in value of its assets, with possible negative
effects on the business, financial condition and/or results of operations of the Issuer and/or the Banco BPM
Group.
Overall, 2017 was characterized by a global economic recovery. In the favourable international and
European scenario, Italy recorded a period of economic recovery, increasing its GDP compared to previous
recent years. Although still wide, the gap with the best performing economies of the Eurozone was reduced
in 2017.
Subsequently, an inconclusive general election in Italy in March 2018 led to a prolonged period of
negotiation among the rival parties and the Italian president and a coalition government was finally formed
at the beginning of June 2018. This resulted in market instability and the economic implications of the
policies of the new Italian government remain uncertain.
In addition, a number of uncertainties remain in the current macroeconomic environment, namely: (a) trends
in the economy and the prospects of recovery and consolidation of the economies of countries like the US
and China, which have shown consistent growth in recent years; (b) the outcome of the commercial dispute
between the US and China, which could have an effect on international trade and therefore global
production; (c) future development of the European Central Bank's ("ECB") monetary policy in the Euro
area, the Federal Reserve System, and in the Dollar area, and the policies implemented by other countries
aimed at promoting competitive devaluations of their currencies; (d) the sustainability of the sovereign debt
of certain countries and related recurring tensions on the financial markets; and (e) the consequences and
potential lingering uncertainties caused by the Brexit vote.
All of these factors, in particular in times of economic and financial crisis, could result in potential losses,

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an increase in the Issuer's and/or the Banco BPM Group's borrowing costs, or a reduction in value of its
assets, with possible negative effects on the business, financial conditions and/or results of operations of
the Issuer and/or the Banco BPM Group.
Risks related to the crisis of the Euro Area sovereign debt
The global financial crisis contributed to and accelerated the worsening of public debt problems in
European Union countries with large public debts and budget deficits, causing the most damage to banks
that had greater exposure to domestic sovereign debt and a revaluation of sovereigns' credit risk. As a
consequence, in several euro-area countries yield spreads on government bonds with respect to the German
Bund widened markedly and domestic banks' funding capacity was affected, especially in the wholesale
segment. The repercussions of the global economic slowdown and market turmoil were particularly severe
in Italy.
From autumn 2011, the ECB implemented important measures to support the European economy and
financial stability, including: the SMP (Securities Market Programme) that entails the purchase of
government securities by the ECB itself; the provision of liquidity to banks through the purchase of covered
bonds, and provisions of loans to banks.
In September 2012, the ECB Council approved the plan for secondary market purchases by the ECB of
Eurozone sovereign debt securities with a maturity of between one and three years and without setting any
quantitative limit (so-called Outright Monetary Transactions). The plan was to be complemented by the
ESM's (European Stability Mechanism) measures on the primary market upon the imposition of conditions
(in the form of macroeconomic adjustments or preventive financial assistance, being the so-called Enhanced
Conditions Credit Line or ECCL).
On 5 June 2014, the ECB announced its decision to conduct a series of Targeted Longer-Term Refinancing
Operations (TLTROs) over a period of two years, aimed at improving and supporting bank lending to the
euro area non-financial private sector.
On 22 January 2015, the ECB launched its Expanded Asset Purchase Programme (more commonly known
as Quantitative Easing), under which the ECB began purchasing euro-denominated, investment-grade
securities issued by euro area governments and European institutions up to Euro 60 billion each month. The
programme was intended to be carried out until September 2016, and in any case until there were signs of
a sustained adjustment in the path of inflation or deflation that is consistent with the aim of achieving
inflation rates approaching 2%.
On 10 March 2016, with a view to further facilitating access to funding in the EU and achieving inflation
rates of 2%, the ECB announced an increase of the monthly average amount of security purchases under
"Quantitative Easing" programme, from Euro 60 billion to Euro 80 billion, expanding the asset purchase
to the bonds issued by non-financial entities with high credit ratings, which was reduced back to Euro 60
billion from April 2017.
As part of the liquidity support action, the ECB introduced a new series of Targeted Longer-Term
Refinancing Operations (TLTRO-II) with even more favourable terms: counterparties had access to
financing for up to 30 per cent of the stock of loans eligible as at 31 January 2016 and interest rates
applicable to the transactions were those that applied to the Eurosystem's main refinancing transactions at
the time of each such transaction and for its entire duration.
On 13 December 2018, the Governing Council of the ECB decided to end the net purchases under the
Quantitative Easing programme in December 2018, but announced that it "intends to continue reinvesting,
in full, the principal payments from maturing securities purchased under the Asset Purchase Programme
for an extended period of time past the date when it starts raising the key ECB interest rates, and in any
case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary
accommodation ".
On 7 March 2019, the Governing Council of the ECB decided to launch a new series of quarterly targeted
longer-term refinancing operations ("TLTRO-III"), starting in September 2019 and ending in March 2021,
each with a maturity of two years. Under TLTRO-III, financial institutions will be entitled to borrow up to
30% of the stock of eligible loans as at 28 February 2019 at a rate indexed to the interest rate on the main
refinancing operations over the life of each operation. According to the ECB's press release announcing

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this measure, these new operations will help to preserve favourable bank lending conditions and the smooth
transmission of monetary policy.
In recent years Italy has witnessed various downgrades of its sovereign rating and a fluctuating trend in the
10-year BTP/Bund spread. In 2012, the negative estimates for growth in Italy had an adverse impact on
Italian public debt with a downgrade of the rating assigned to Italy and an increase in the 10-year BTP/Bund
spread. This crisis continued into 2013.
As a result of moderate improvements in political and economic conditions in Italy there was a gradual
decrease of Italian Government and corporate bond risk premia in the period between 2014 and 2017. This
trend was interrupted in May 2018 after the inconclusive general elections of March 2018, during the
negotiations to form a coalition government, as financial markets feared the stability of any government
appointed and the critical positions of the involved parties towards the European Commission policies.
After three months of negotiation, the Five Star Movement and the Northern League who have in the past
expressed opposition to the Euro - received approval to form the new government. This period of
uncertainty led to an increase in the BTP/Bund spread to 288 basis points at the end of May 2018 with an
unprecedented widening of up to 120 basis points on the 2-4 year tenors, a segment that was pricing in the
redenomination risk.
A narrowing of the spread in the short-term segment of the sovereign curve occurred only in December
2018 when agreement was reached with the European Commission on the contents of the budget package.
The 10-year spread, which had stopped at 280 basis points in May 2018 (from 120 basis points in January
2018), reached 320 basis points in mid-November 2018, before returning to 255 basis points at the end of
2018. Certain material improvement in the Italian sovereign market, then led the 10-year spread to below
250 basis points in March 2019, this also because of the postponement of monetary policy normalisation
and the prospect of a new liquidity injection through the TLTRO-III.
Nonetheless, in Italy, a climate of uncertainty continues to prevail and this has brought the 10-year spread
to rise again to over 250 basis points, following the European Parliament elections.
The Group is exposed to Italian government bonds. Consequently, the Issuer is particularly exposed to any
adverse changes and fluctuations in the market for Italian government securities, the political situation and
the sovereign debt rating. A decrease in the market price for Italian government bonds could negatively
affect the value of its assets and therefore have an adverse effect on the Group's business, results of
operations, financial condition and cash flows. In addition, if the credit ratings of Italy and other relevant
countries deteriorate, the Issuer may be required to revise the risk weighting attributed to these assets for
the calculation of risk-weighted assets ("RWA"), which could have an adverse effect on the Issuer's capital
ratios. The Issuer may also be required to revise the discount criteria applied by counterparties in
refinancing transactions, such as in the ECB's TLTRO refinancing transactions, resulting in an increase in
the collateral required or a reduction in the liquidity obtained in relation to such collateral.
In addition, the lingering uncertainties arising from geopolitical tensions, including the Brexit vote and the
withdrawal of the UK from the European Union, could have a material adverse effect on the economies of
the EU Member States in general, and the Italian economy in particular, with a consequential upsurge of
the sovereign debt crisis.
Although in recent years the fiscal and macroeconomic imbalances that contributed to the Euro Area
sovereign's debt crisis have been reduced in several countries, there are still concerns about the possible
dissolution of the European Monetary Union, or the exit of individual countries from the monetary union
(with a possible return to local currencies), fostered, among other factors, by the electoral surge of anti- EU
parties across the euro area. Any scenario of this kind would generate unpredictable consequences.
All the factors described above, and particularly any re-emergence or further deterioration of the sovereign
debt crisis, could result in potential losses to the Issuer and/or the Banco BPM Group, an increase in its
borrowing costs, and/or a reduction in the value of its assets, with possible negative effects on the economic
and financial situation of the Issuer and/or of the Banco BPM Group.
Risks related to Italian economic conditions and political instability
The dynamics described in the previous paragraphs and the consequent effects on the Banco BPM Group's
activities are influenced by the international and Italian socioeconomic context and its impact on financial

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markets.
The Banco BPM Group primarily operates in Italy and in particular in Northern Italy. As of 31 December
2018, 1,380 of the overall 1,804 branches of the Banco BPM Group are located in Northern Italy, with
Lombardy, Piedmont and Veneto being the three regions with the highest number of branches (663, 209
and 212, respectively).
The business of the Banco BPM Group is particularly sensitive to adverse macroeconomic conditions in
Italy and in particular in Northern Italy. Any adverse economic condition in Italy could have a material
adverse effect on the business, results of operation or financial condition of the Banco BPM Group.
A return to declining or stagnating GDP, increasing or stagnating unemployment and poor conditions in
the capital markets in Italy could decrease consumer confidence and investment, and result in higher rates
of loan impairment and/or NPLs and default and insolvency, and cause an overall reduction in demand for
the Group's services. Any of the foregoing could have a material adverse effect on the Group's business,
results of operations and financial condition.
One of the elements creating economic uncertainty is the political situation in Italy. An inconclusive general
election in Italy in March 2018 led to a prolonged period of negotiation among the rival parties and the
Italian President and a coalition government was finally formed at the beginning of June 2018. Italy's
government submitted to the European Commission its draft 2019 budget that includes plans to increase
spending. The EC rejected the proposed budget for 2019 and requested the Italian government to review it.
At the end of December 2018, after a period marked by tensions between the European Commission and
Italy's government, an agreement was reached on the basis of a lower deficit. Since then, however, the
European Commission has made the first step towards an infringement procedure against Italy for excessive
debt, relating in particular to projections for the year 2020, and served a warning letter on the Italian
government on 29 May 2019.
The economic implications of the policies of the new Italian government remain uncertain. Political
instability, if material, could negatively affect the country's economic recovery, and changes to economic
policies, including the risk of a showdown with the European Commission, and/or political instability could
have a material adverse effect on the Group's business, results of operations and financial condition.
Risks related to the United Kingdom leaving the European Union
On 23 June 2016, the UK held a referendum on the country's membership of the European Union
("Brexit"). The results of Brexit showed that the majority of people who participated, voted to leave the
European Union. The referendum does not directly bind the government to specific actions.
On 29 March 2017, the United Kingdom notified the European Council of its intention to withdraw from
the European Union within the meaning and for the purposes of Article 50(2) of the Treaty on European
Union. Article 50(2) requires that, in the light of the guidelines provided by the European Council, the
Union shall negotiate and conclude an agreement with the United Kingdom, setting out the arrangements
for its withdrawal from the European Union (the "Withdrawal Agreement"), taking account of the
framework for its future relationship with the Union. Article 50 requires that such Withdrawal Agreement
shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European
Union and concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining
the consent of the European Parliament. Under Article 50(3) of the Treaty, the EU Treaties shall cease to
apply to United Kingdom from the date of entry into force of the withdrawal agreement or, failing that, two
years after the notification referred to in Article 50(2), unless the European Council, in agreement with the
Member State concerned, unanimously decides to extend this period.
The United Kingdom planned to withdraw from the European Union no later than 29 March 2019, however
such departure was delayed as the Parliament of the United Kingdom have so far not agreed to the
Withdrawal Agreement. As a result, the new deadline for the exit of the United Kingdom from the European
Union is 31 October 2019. However, such exit could be delayed once again if all European countries,
including the United Kingdom, were to agree to a further extension.
The outcomes of the negotiations around Brexit and the consequences of Brexit itself are still uncertain,
with respect to the European Union integration process, the relationship between the United Kingdom and
the European Union, and the impact on economies and European businesses. Accordingly, there can be no

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