Banking study Unicredit Group July2009

BANKING IN CEE:CHALLENGING TIMES BUT RECOVERY ON THE HORIZON

UniCredit Group CEE Strategic Analysis

August 2009

2

EXECUTIVE SUMMARY

! Prospects start to materialize for a recovery of world growth. When confirmed, this will boostrecovery in CEE 2010 will show a positive regional growth, below potential however

! Strong regional differentiation is confirmed, with Central Europe better prepared to catch theinternational recovery. The performance of different banks in the same market can widely differ.

! Markets are out of a “liquiditycrisis mood” – credit quality and risk appetite today’s keyconstraints for CEE banking.

! Medium term: “CEE convergence story” holds, but the banking model has to be rebalanced! Financial penetration will continue. The pace of growth will moderate, with availability of funding

(domestic or external) the main driver. Changing competition allows for leaner structure of costs

! Cost of risk to stays high in 2009 and 2010, representing a constraint for banking profitability

! The changing competitive environment means also opportunities! All CEE players have been affected by the crisis – access to funding, credit quality and

business/network diversification the determinants of future success

! New entrants might take opportunities, while unfocused players might exit the market

! No big changes expected for the top committed international players

! Winners – new entrants or consolidated players, with a good risk appetite for CEE, able toleverage on strong funding position (both through a strong domestic network or throughinternational channels) and with sound risk

! Policy implications from the crisis:! IMF securing firm commitment from international banks active in the region

! Funding remains an issue but is not the key obstacle for lending growth – transferring the risk themain channel to unlock the credit market. Policy actions should be directed towards such target

3

AGENDA

How the CEE banking landscape has changed in theshort term

Banking through the crisis

International players winners and losers

Policy actions

4Note: (1) CEE17: Poland, Hungary, Czech R., Slovakia, Slovenia, Lithuania, Latvia, Estonia, Romania, Bulgaria, Croatia, BosniaH, Serbia,Turkey, Ukraine, Russia and KazakhstanSource: UniCredit Group CEE Strategic Analysis, CEE Research

SIGNS OF RECOVERY IN US AND WESTERN EUROPE PROVIDE A BOOSTTO CEE STILL 2010 IMPLIES GROWTH BELOW POTENTIAL ANDCOUNTRIES CONFIRM TO BE VERY DIFFERENT

7

5

2

1

3

6

8

2005 2006 2007 2008 2009 2010 2011

Real GDP % yoy growth

CEE17(1)

EMU12

USA

Avg CEE 2000’08

3.51.15.5CEE17(1)

5.13.02.3Kazakstan

3.30.87.4Russia

3.60.512.5Ukraine

4.53.25.2Turkey

1.30.74.8Serbia

0.81.03.0BosniaH.

1.70.24.9Croatia

2.50.55.2Romania

2.53.06.0Bulgaria

6.51.912.5Lithuania

7.23.915.0Latvia

6.02.112.8Estonia

2.30.64.2Slovenia

3.51.65.4Slovakia

3.50.73.2Czech Rep.

2.51.96.4Hungary

3.11.91.4Poland

201120102009Real GDP growth (%)

5

OUT OF A “LIQUIDITYCRISIS MOOD”, BUT FUNDING AVAILABILITY ANDCOSTS REMAIN A CONSTRAINT FOR CEE BANKING

0

50

100

150

200

250

300

350

400

450

2005 2006 2007 2008 2009F0%

5%

10%

15%

20%

25%

Volumes (l.s.)% on total liab. (r.s.)

Country Risk Premium5Y CDS (USD, bp)

CEE external liabilities(1)

! External liabilities for CEEbanking sector close to !450 bn(almost 30% due to Russia) …

! … representing some 21% oftotal liabilities of CEE banks

! Out of the crisis mood, but cost offunding for CEE countriesremains high

! CDS for CEE countries halvedsince midMarch to around 300bp(x1.8 vs Aug 2008) on average

(1) CEE17Source: UniCredit Group CEE Strategic Analysis

0

250

500

750

1,000

Poland

Hungary

CzechRep.

Slovakia

Latvia

Romania

Bulgaria

Croatia

Turkey

Ukraine

Russia

Kazakhstan

Dec 08 July 29, 2009

3,274 1,507

! bn

6Notes: (1) Romania and Turkey as of April 2009; (2) Nominal growth rates are corrected for the exchange rate changes weighted by the relevance ofFX in loans' volumes in the previous period. This allows to have an idea of growth of loans and deposit which is independent from the pure effect ofdepreciation of the currency. Source: UniCredit Group CEE Strategic Analysis

BANKS ARE REBALANCING THE LOANS/DEPOSITS GAP

Total banking system deposits(1), (2)(May 09 vs Dec 08 % change FX adj)

6.6

2.60.50.82.1

1.2

5.1

1.21.7

3.60.1

3.10.30.5

1.2

3.0

2.1

8.8

CEE Total

PolandHungaryCzech R.SlovakiaSlovenia

EstoniaLatvia

Lithuania

BulgariaRomaniaCroatia

BosniaH.Serbia

TurkeyUkraineRussia

Kazakhstan

114

108138

7183

142

195241

187

126125129123142

80223

126171

CEE Total


EstoniaLatvia

Lithuania


BosniaH.Serbia

TurkeyUkraineRussia

Kazakhstan

Dec08 May09

Loantodeposits ratio (1)(banking system level, %)

4.8

2.87.5

5.711.4

0.8

0.7

0.70.1

3.51.3

4.2

1.78.9

1.83.6

3.2

1.0

CEE Total


EstoniaLatvia

Lithuania


BosniaH.Serbia

TurkeyUkraineRussia

Kazakhstan

Total banking system Loans(1),(2)(May 09 vs Dec 08 % change FX adj)

7

0%

3%

6%

9%

2004 2005 2006 2007 2008

CEE LatAm Asia

(1) Incl. loans classified under substandard, doubtful and loss categories; in Ukraine, data refer to problem credits (overdue and doubtful); in Kazakhstan, data refer todoubtful loans under category 2,4,5 and bad loans; LatAm: Argentina, Bolivia, Brazil, Chile, Colombia, Paraguay, Peru, Uruguay, Venezuela; Asia: Indonesia, Korea,Malaysia, Philippines, Singapore, Thailand; (2) CEE aggregate including Kazakhstan and Serbia since 2006; (3) April 2009Source: UniCredit Group CEE Strategic Analysis, local CBs, IMF

Impaired Loans Ratio (Total Banking System, % of Gross Loans)(1),(2)

DETERIORATION IN CREDIT QUALITY IS TODAY’S CHALLENGE

Baltics

26.0%

15.2%

4.9%

4.5%

n.a.

3.3%

n.a.

17.8%

n.a.

4.0%

4.1%

n.a.

5.7%

May09

1527bp16.2%10.8%7.5%Kazakhstan

250bp13.9%12.7%8.9%Russia(3)262bp3.7%2.3%Ukraine

106bp4.1%3.5%3.0%Turkey

Broader Europe

n.a.2.4%0.7%Latvia

137bp2.7%1.9%1.4%Estonia

32bp5.1%4.8%4.8%Croatia

439bp16.6%13.4%10.8%Romania(3).2bp3.2%3.2%2.8%Bulgaria

SEE

78bp3.5%3.2%2.9%Slovakia

81bp3.7%3.3%3.0%Czech R.

99bp5.3%4.3%4.1%Hungary

148bp5.0%4.2%4.1%Poland

Central Europe

YTDMar09Dec08Sep08

Due to differences in national accounting and supervisory regimes, NPL data are not fully comparable across regions/countries

8

AGENDA

How the CEE banking landscape has changed in the shortterm


International players – winners and losers

Policy actions

9

THE LONG TERM POTENTIAL OF THE CEE REGION IS INTACT

Real income convergence in CEE (1)

(1) CEE incl. new EU member states, Croatia and Turkey; calculation based on GDP per capita expressed in dollar termsSource: UniCredit Group CEE Strategic Analysis, IMF, ECB

0

200

400

600

800

5,000 15,000 25,000 35,000 45,000

Financial deepening process(% of GDP and PPS in dollar terms)

GDP per capita

Totalbankingassets

Western Europe

CEE

The story of economic and income convergence towards the standards ofWestern countries, as well as the potential related to the banking sector

penetration gap, continue to hold

0%10%20%30%40%50%60%70%80%90%100%

Euroarea

CzechR.

SlovakR.

Estonia

Hungary

Lithuania

Latvia

Poland

Croatia

Russia

Turkey

Rom

ania

Bulgaria

Belarus

Kazakh.

Serbia

Ukraine

BosniaH.

GDP per capita (PPP) % of Eurozone

10

KEY COMPETITIVE ADVANTAGES

Dependency on externalfunding

More moderate“convergence”

Change in demand – simplerproducts / services

Risk appetite and cost of risk

Substantial change in thecompetitive framework

!More balanced banking model; lending tied to funding strategies! Strong advantage for banks with a widespread networkand/or strong and motivated foreign owner

! Retail network crucial for deposit gathering! Lending growth to restart from corporate! In retail, a structural gap holds for mortgage, while consumercredit already at international standards

The crisis opening the way to leaner structures and deflating“bubbles” in staff and network costs

Quality of existing loan portfolio key in determining whetherbanks will be forced to concentrate on risk control or mightstart leveraging on new opportunities

! Stronger state role

! New entrants profiting from others’ risk aversion

! Systemic banks with long term approach might benefit,provided adequate risk appetite

KEY CONSTRAINTS

CEE BANKING THE MEDIUMTERM SCENARIO IMPLIES NEWCONSTRAINTS AND NEW COMPETITIVE ADVANTAGES

11

FINANCIAL PENETRATION MODERATING BUT CONTINUING; CREDITEXPANSION MORE TIED TO DEPOSITS’ GROWTH

Loan growth more tied to deposits expansion(Loans / deposits ratio, %)(1)

20%

30%

40%

50%

60%

70%

80%

2005 2007 2009 2011 2013 2015

Loans/GDP Deposits/GDP

Banking penetration to moderate(CEE Loans and Deposits, % on GDP)(1)

50%

70%

90%

110%

130%

2005 2007 2009 2011 2013 2015

(1) CEE17; Source: UniCredit Group CEE Strategic Analysis

130%EMU: 127%EMU: 107%

12

RECOVERY GROUNDED ON SOUND BASIS: CORPORATE FINANCING TORESTART FIRST, MORTGAGE MARKET FAR FROM SATURATED

RETAIL BUSINESS! The households sector facing the crisis – less demand forconsumption and credit

! The mortgage market is far from saturated, while consumercredit penetration is already relatively high in aninternational comparison

! Households debt to restart, but with a lower pace of growthand mostly oriented towards secured lending

CORPORATE BUSINESS! CEE will remain the “manufacturing arm” of Old Europe,and further offshoring of Western manufacturing activitytowards the East is visible

! Lending towards SME and corporation is resuming earlierthan retail lending – Potential is still present: room tosubstitute for corporations’ selffinancing

Source: UniCredit CEE Strategic Analysis

6%

38%

CEE EMU12

7% 7%

CEE EMU12

Mortgages % GDP(1)

Consumer Financing % GDP(1)

Corporate loans % GDP(2)

(1) CEE: Bulgaria, Croatia, Czech, Hungary, Poland, Romania, Russia, Slovakia, Turkey; (2) CEE17

24%

52%

9%

6%

CEE EMU12

Leasing &Factoring

13

0

5

10

15

20

25

30

35

40

2006 2008 2009 2010 2011 2015

2009 MARKS A CORRECTION IN TERMS OF REVENUES GENERATION;2010 REMAINS SUBDUED, WITH FULL RECOVERY FROM 2011

0,0

0,5

1,0

1,5

2,0

2,5

3,0

2006 2008 2009 2010 2011 2015

! bn

18%

02468101214161820

2006 2008 2009 2010 2011 2015

! bn

! bn

Central Europe SEE

Baltics

Note: CE (Central Europe) includes Poland, Czech Republic, Hungary, Slovakia and Slovenia; SEE (South Eastern Europe) includesRomania, Bulgaria, Croatia, Serbia, Bosnia; Broader Europe includes Turkey, Russia, Ukraine and Kazakhstan;

Source: UniCredit Group CEE Strategic Analysis

..%Revenues CAGR(2006’08; 2008’11; 2011’15)

Net other noninterest income

Net interest income

0.5%

24%1.3%

0

20

40

60

80

100

120

140

2006 2008 2009 2010 2011 2015

Broader Europe! bn

7.2% 15%

16%

15%7%

27%

1.3%

16%

14

A STRUCTURAL CHANGE IN THE COST STRUCTURE

Costtoincome ratio (%)


40

45

50

55

60

2005 2008 2011 2014

CE SEEBaltics Broader Europe

Number of branches (ths)

! Cost savings programmescoming into the spotlight

! Branch expansion planshalted by almost all bankinggroups operating in the region

+0.3%

+5.2%

+1.7%

+13.5%

+24.4%

2%

11.8

14.7

56.2

11.7

14.0

59.7

10.1

9.6

31.0

CE

SEE

BroaderEurope

200520082011

15

IMPAIRED LOANS TO PEAK IN 2010, BUT COST OF RISK ALREADYCONVERGING

Impaired loans ratio(1)

(% of gross loans)

0%

5%

10%

15%

20%

25%

2005 2007 2009 2011 2013 2015

CE Baltics

SEE Broader Europe

Cost of risk(%, Provisions(2) / avg loans)

0%

2%

4%

6%

8%

2005 2007 2009 2011 2013 2015

CE Baltics

SEE Broader Europe

(1) Substandard, doubtful and loss on average gross loans; in Ukraine, data refer to problem credits (overdue and doubtful); inKazakhstan, data refer to doubtful loans under category 2,4,5 and bad loans; (2) Generic + Specific


16


Size of banking profitsof each period

Return on Assets

1.5%

1.0%

0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0% Central Europe RussiaSEE UA and KZTurkey Baltics

avg 2007'08 avg 2010'112009

Russia TK

TK

TK

CE

CE

Russia

Russia

SEE

SEE

BalticsUA and KZ

CE

avg 2011'15

Baltics

UA and KZCE

TK

Baltics

BANKING PROFITABILITY SUBDUED IN THE SHORT TERM – AS COST OFRISK IS THE MAIN CAUSE, SINGLE PLAYERS CAN PERFORM QUITEDIFFERENTLY FROM THE MARKET

17

AGENDA



International players– winners and losers

Policy actions

18

Total Assets(1)EUR bn

Net Profit(2)EUR mn

Number ofBranches

Countries ofpresence(3)

OTP

KBC

Raiffeisen

Erste

UniCredit

IntesaSP

121.6 2,577

1,569

4,005

3,231

2,099

1,940

2,609

1,781

1,573

19

16

7

12

16

11

9

SocGen 1,201

112%

..% Contribution of CEE in Group Net Profit (After tax, after minority interests)

Notes: (1) 100% of total assets, and profit after tax (before minority interests) for controlled companies (stake > 50%) and pro rata for non controlled companies (stake < 50%). (2) After tax,before minority interest. (3) Including direct and indirect presence in the 25 CEE countries, excluding representative offices. (4) KBC Group recorded a loss in 2008. (5) SocGen includingProFin Bank in Ukraine.Source: UniCredit Group CEE Strategic Analysis

1,078

958

(4)

53%

2051%

157%

41%

5%

n.s.

CEE, % share inGroup Assets

85.4

79.3

71.6

65.9

42.5

35.2

309

186

12

54

39

20

6

7

100

(5)

UNICREDIT GROUP IS THE LARGEST PLAYER IN CEE, WELL DIVERSIFIED,WITH 12% OF GROUP ASSETS IN THE REGION

DATA AS OF2008

19

ALL INTERNATIONAL PLAYERS ACTIVE IN CEE AFFECTED BY THECRISIS

32.5 30.8

25.8

6.5 4.8 4.2 3.6

75.9

68.8

46.1

15.3

34.1

16.0

9.8

UCG ISP SOC GEN ERSTE KBC RAFFEISEN OTP

July 29, 2009

31/12/2007

2,500

1,000

500

2,000

3,500

UCG RI Erste KBC SoGen ISP OTP

Share Price (August 2008=100)

Market Capitalization (in bn Euro) Group Profits in 2008 (after tax, after minorities, mn !)

Profits in CEE

Profits at Group level

0

20

40

60

80

100

Aug08 Sep08 Oct08 Nov08 Dec08 Jan09 Feb09 Mar09 Apr09 May09 Jun09

UCG Raiffeisen

Erste KBC

Soc. Gen OTP

Intesa San Paolo

20

9.2

8.9

7.2

9.4

10.3

7.2

11.0

3.6

3.8

4.7

4.8

5.7

5.9

6.0

6.5

7.9

11.4

8.9

10.6

11.0

SocGen

KBC

Raiffeisen

EFG

Piraeus

UCG

Erste

NBG

IntesaSP

OTP

Equity/ Assets

Tier 1

MOST OF THE INTERNATIONAL BANKS ACTIVE IN CEE APPLYING FORSTATE SUPPORT

1 SocGen: including EUR 1.7bn tier 1 increase and 2nd issue planned (before August 2009) of 1.7bn Tier 1, excluding floor impact; Erste: including EUR 2.7bn tier 1 increase; KBC: includingEUR 3.5bn + EUR 2bn of non voting core capital securities; Piraeus Bank: including EUR 370mln preferred shares to Greek State, NBG: including EUR 350mln preferred shares; Eurobank:including 950mn preference shares to Greek State; UCG: including EUR 3bn capital increase, but excluding EUR 4bn of government capital instruments; Intesa SP: excluding EUR 4bn“Tremonti Bonds”; Raiffeisen: including EUR 1.75bn core capital to Republic of Austria and EUR 500 mn participation capital to other shareholders; OTP excluding EUR 20mn capital injectionfrom EBRD. Source: UniCredit Group Strategy and Business Development, CEE Strategic Analysis

" KBC issued !3.5 bn core capital securities to theBelgian state + !2 bn nondilutive core capital to theFlemish Regional Government

" SocGen issued !1.7 bn of deeply subordinated notesto the French government. Further !1.7 bn of preferredshares or debt is planned to be issued

" Erste Group will raise participation capital up to !2.7bn and agreed to issue as well !6 bn of Austriangovernment’ s guaranteed bonds

" Raiffeisen Group will issue participation capital up to!1.75 bn, in the form of core capital to the Austriangovernment. RZB issued as well !1.5 bn of Austriangovernment’ s guaranteed bonds

" UniCredit is negotiating the terms related to theissuance of government capital instruments for up to!4 bn, to be subscribed by the Austrian and Italiangovernment

" Intesa SanPaolo will issue !4 bn of subordinated debtinstruments to be subscribed by the Italian government

" NBG, Piraeus Bank and Eurobank EFG increasedcapital by issuing preference shares to the Greek state

Major CEE banking groups applying forgovernment aid

Capital ratios, %Mar. 2009(1)

21

50

100

150

200

250

50 100 150

Group

CDS(5Y,July2009)

CDS (weighted avg of country CDS(1), 5Y, July 2009)

MARKETS PRICEIN CEE RISK, APPRECIATING DIVERSIFICATION

Size of the bubble:

total assets at

Group level (bn !)

(1) weighted for total assets of the player in each market and relevance of CEE in total Group assets; CDS have been updated as of July 29th

UniCredit

KBC

Erste

RZB

Intesa SP

SocGen

CDS of CEE major players and of theircountries of presence (Credit Default Swaps 5Y,Group and weighted avg of CEE countries)

CDS Evolution of CEE major player(Credit Default Swaps, 5Y)

0

100

200

300

400

500

Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09

UCG Raiffeisen

Soc Gen Erste

KBC ISP

22

! THREATS

State influence to increase

New entrants might considerthe market, taking advantage oflower prices and untouched longterm potential

! THREATS

State influence to increase

New entrants might considerthe market, taking advantage oflower prices and untouched longterm potential

Bankingenvironment

CEEPlayers

! STRENGHTS

Incumbents with:

(1) strong presence in themarket, (2) long termcommitment and (3) adequaterisk appetite might turn out to beclear winners

! STRENGHTS

Incumbents with:

(1) strong presence in themarket, (2) long termcommitment and (3) adequaterisk appetite might turn out to beclear winners

!WEAKNESSES

Credit quality problems erodingprofitability

Incumbents might be forced toretreat as dealing with strict riskcontrolFunding constraint

!WEAKNESSES

Credit quality problems erodingprofitability

Incumbents might be forced toretreat as dealing with strict riskcontrolFunding constraint

WINNERS AND LOSERS TIMES OF CHANGE BRING STRONGOPPORTUNITIES FOR THOSE ABLE TO CATCH THEM

! OPPORTUNITIES

Long term growth potentialunchanged

Weaker competitive pressuresin the local market, with somecompetitors strongly constrainedby their strategies

! OPPORTUNITIES

Long term growth potentialunchanged

Weaker competitive pressuresin the local market, with somecompetitors strongly constrainedby their strategies

23

AGENDA



International players– winners and losers

Policy actions

24

THE INTERNATIONAL COMMITMENT (FROM IMF AND OTHER IFI) IS HIGH –INTERNATIONAL BANKS ACTIVE IN THE REGION PLAY THEIR PART TOO

1 2Intensity ofthesupport(1)

International supportIMF Plans 2008’09, USD

(1) Intensity of IMF support: 1) lower than 5% of GDP; 2) higher than 5% but lower than 10%; 3) higher than 10% of GDP; For Polandsupport is under the short term facility program. Source: IMF, UniCredit CEE Strategic Analysis,

Ukraine 16.5 bn

Poland20.5 bn

Belarus2.5 bn

Latvia2.4 bn

Romania26 bn

SRB4 bn

Hungary15.7 bn

3

Turkey>30 bnpossible

BH1.6 bn

!Strong commitment of all IFI to support the region

! IMF asking international banks active in the regionto formally sign bilateral agreements with thelocal Central Banks to:

! keep their global crossborder exposure tospecific countries constant

! to participate in Central Bank stress testingexercises and commit to high capital ratios forthe subsidiaries even under stress scenarios

!Commitments have been requested andsigned for Serbia, Romania, Hungary andBosniaH., and clearly prove internationalbanks long term interest in the market

25

TO FACE THE CRISIS IN CEE, NOT ONLY FUNDING BUT CREDITGUARANTEE SCHEMES OR OTHER RISK SHARING MECHANISMS

! Funding remains a constraint, but not the key one for banksin CEE

! With credit quality and in general risk being the mainconcerns, banks are hindered in new business development

! Risk sharing mechanism and credit risk guarantee schemesimportant tools to unlock lending

26

ANNEX – TOP PLAYERS BY COUNTRY

27

(1) Hungary, Estonia and Romania including foreignbranches; Slovenia: 3 savings banks included; Estonia:foreign branches included (Sep 2008); Croatia: savingsbanks excluded; excluding banks under liquidation inUkraine; Euro Area 2007

(2) Estonia and Lithuania 2007; Croatia: June 2008; Ukraineincluding divisions; Euro Area 2007

CEE BANKING SYSTEM – MORE THAN ! 2,000 BN MARKET IN TERMS OFTOTAL ASSETS, STILL WITH A FINANCIAL PENETRATION GAP ANDSTRONG ROLE OF INTERNATIONAL PLAYERS

(3) Population aged 15+ having a business relationship with a bank

(4) Branches of foreign banks excluded in Poland, while included inHungary (OTP assumed as majority foreign capital); market shares inEstonia, Latvia and Lithuania based on top 10 banks (representing99%, 88% and 99% of total banking system assets, respectively);Turkey: 17% if JVs are not included; data for Russia refer to Top 50Russian Banks; Euro Area data refer to EU15 (2007)

(5) Including Slovenia for EMU area (2007); in Hungary, OTPmortgage bank not included

Central EuropePoland 649 386 54% 67% 46% 263 86 155 51 145 47Hungary 48 166 80% 89% 57% 129 129 69 69 49 49Czech R. 37 191 82% 97% 62% 157 115 72 53 95 70Slovakia 23 233 85% 96% 74% 66 97 32 47 40 60Slovenia 24 335 99% 30% 59% 49 132 32 85 20 55BalticsEstonia 15 199 NA 97% 95% 22 138 16 100 8 50Latvia 27 109 NA 61% 68% 33 141 21 91 9 37Lithuania 84 203 NA 88% 82% 27 82 21 64 11 32SEEBulgaria 30 368 50% 84% 57% 37 108 25 74 20 60Romania 42 306 55% 88% 54% 85 67 51 41 41 32Croatia 33 275 89% 91% 76% 49 106 34 72 28 60Bosnia 30 240 55% 91% 75% 11 86 7 59 6 49Serbia 34 333 75% 75% 46% 21 70 13 41 10 33Broader EuropeTurkey 50 123 71% 31% 62% 330 74 164 37 201 45Ukraine 184 509 83% 52% 34% 89 102 67 77 33 38Russia 1108 175 89% 11% 48% 676 67 392 39 306 31Kazakhstan 37 162 NA 15% 75% 73 79 47 51 27 29CEE17 2,455 242 74% 47% 55% 2,118 73 1,218 42 1,050 36Euro Area 6,101 578 99% 28% 44% 31,631 346 11,649 127 9,832 107

Total assetsBanks(no.)(1)

Branches(mn

inhabit.)(2) % of GDPTOP 5(5) ! bn % of

GDP! bn ! bn

Bankingpenetration

(3)

Total gross loans Total deposits

Foreign

banks(4)

% of

GDP

Market share

DATA AS OF 2008

Source: CEE Strategic Analysis, Bank Austria Market Research and ECB

28

Total Assets 2008 (! bn), market share and ownership

0

0.5

1

1.5

2

2.5

Raiffeisen Bank UniCredit Group HypoAlpeAdriaMostar

HypoAlpeAdriaBanja Luka

NLB RazvojnaBanka Banja

Luka

Intesa SanPaoloBanka

VolksbankSarajevo

NLB TuzlanskaBanka Tuzla

Nova BankaBanja Luka

20.4%19.1%*

11.6%9.1%

6.1% 4.8% 4.1% 3.8%

Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)

(UniCreditGroup)

Source: CEE Strategic Analysis

(RaiffeisenInternational)

(BayerischeLandesbank)

(NLB/KBC) (IntesaSanPaolo)

(NLB/KBC) (foreignprivatecapital)

3.4%

(VolksbankInternational)

TOP BANKS IN BOSNIA AND HERZEGOVINA

* Including UniCredit Bank Mostar & UniCredit Bank Banja Luka

** including HypoAlpeAdria Banja Luka


20.7%**

9.8%***

*** including NLB Tuzlanska Banka

29

Total Assets (! bn), market share and ownership

0

1

2

3

4

5

6

UniCreditBulbank

DSK Bank UnitedBulgarian Bank

RaiffeisenBank

Eurobank EFG FirstInvestmentBank

Piraeus Bank SG Express Alpha Bank,Sofia Branch

CorporateCommercial

Bank

15.8%

12.5%11.1%

9.9%

7.8%

6.1% 6.0%

3.6% 3.1%


(UniCreditGroup)

(OTPGroup)


(NationalBank ofGreece)

(majorityprivatecapital)

(EurobankEFG)

(PiraeusGroup)

(AlphaGroupGreece)

(SociétéGénéraleGroup)

3.0%

(majoritylocal privatecapital)

TOP BANKS IN BULGARIA



30


0

2

4

6

8

10

12

14

ZagrebackaBanka

Privredna BankaZagreb

ERSTE &Steiermärkische

Bank

RaiffeisenbankAustria

Hypo AlpeAdriaBank

SociétéGénérale

Splitska Banka

HrvatskaPostanskaBanka

OTP BankaHrvatska

Volksbank PodravskaBanka

24.3%*

18.2%**

12.1%11.2%*

9.9%***7.3%

3.9%*3.4%

2.0%


(UniCreditGroup)

(IntesaSanPaolo)


(ERSTEGroup)



(State) (OTPGroup)

(majorityforeign

ownership)

0.7%


TOP BANKS IN CROATIA

* Including mortgage bank

** including mortgage bank & Medimurska Banka

*** pro forma including Slavonska BankaSource: CEE Strategic Analysis


31

0

5

10

15

20

25

30

Ceskasporitelna

CSOB KomercniBanka

UniCredit Bank Raiffeisenbank ING Bank CitibankEurope Branch

GE MoneyBank

Commerzbank Volksbank



TOP BANKS IN CZECH REPUBLIC

18.0% 17.5%

15.1%

6.9%

4.5%3.2% 2.6%* 2.4%

1.2%2.2%

(KBCGroup)

(ERSTEGroup)

(UniCreditGroup)

(ING Group)(RaiffeisenInternational)

(GE Capital) (Commerzbank)


(CitiGroup)(SociétéGénéraleGroup)

* Data as of 3Q 2008



32


0

2

4

6

8

10

12

Swedbank SEB Bank Sampo Pank(Branch)

Nordea Pank(Branch)

EestiKrediidipank

Dnb Nord(Branch)

TallinnaÄripank

Marfin Bank(Branch)

UniCredit BankEstonianBranch

ParexPank(Branch)

48.9%

21.1%

11.9% 11.2%

1.6% 1.2% 1.0% 0.8% 0.8%


(Swedbank) (SEBGroup)

(NordeaGroup)

(DanskeBank Group)

(UniCreditGroup)

(LatvianBusinessBank)

(ParexGroup)


0.5%

(MarfinPopular

Bank Group)

TOP BANKS IN ESTONIA

(DNB NordGroup)



33

0

5

10

15

20

25

30

OTP (incl.MortgageBank)

K&H CIB MKB RaiffeisenBank

ERSTE UniCredit Bank(incl. Mortgage

Bank)

Budapest Bank FHB Bank (incl.MortgageBank)

Citibank



(InternationalCapital/ (state)Golden Share)

(KBCGroup)

(IntesaSanPaolo)


(ERSTEGroup)


(UniCreditGroup)

(GECapital)

(CitiGroup)(no majorityshareholder)

TOP BANKS IN HUNGARY

24.5%

10.3% 9.9% 8.8% 8.6% 8.5%

6.2%

3.0% 2.8% 2.6%



34


0

2

4

6

8

10

12

14

16

18

20

BTABank KazkommertsBank

Halyk SavingsBank

Alliance Bank ATF Bank BankCenterCredit

Nurbank Temirbank Eurasian Bank Kaspi Bank

24.5%

19.6%

13.6%

8.7% 8.3% 7.9%

2.5% 2.4% 2.3%


(State) (local privatecapital)

(localprivatecapital)

(KookminBank,Korea)

(UniCreditGroup)

(CaspianGroup, NL)

(State)

2.1%


TOP BANKS IN KAZAKHSTAN


(State)



35


0

1

2

3

4

5

6

7

8

Swedbank Parex banka* SEB Banka Nordea BankFinland Latvia

Branch

DnB NORDBanka

Rietumu Banka Aizkrauklesbanka

Mortgage Bank UniCreditBank**

LatvijasKrajbanka

22.7%

13.5% 13.0%

10.0%8.4%

4.9% 4.3% 4.1% 3.4%


(Swedbank) (State/EBRD)

(DnB NordBank)

(SEB Group) (majorityprivatecapital)

(NordeaGroup)

(UniCreditGroup)

(State)

3.0%

(Snoras BankLithuania)

TOP BANKS IN LATVIA


* data as of 3Q 08

** Including branches in Estonia and Lithuania



36


0

1

2

3

4

5

6

7

8

SEB Bank Hansabankas DnB Nord Bank Nordea BankLithuaniabranch

Danske bankLithuaniasubsidiary

Bank Snoras Ukio Bankas ParexBankas Siauliu Bankas UniCredit BankLithuaniabranch

28.8%

22.2%

14.6%

9.6%6.9% 6.3%

4.7%2.4% 2.3%


(SEBGroup)

(Swedbank) (majoritylocal privatecapital)

(DnB NordBank)

(DanskeGroup)

(NordeaGroup)

(UniCreditGroup)

(EBRD)

1.2%

(ParexGroup)

TOP BANKS IN LITHUANIA




37


0

0.2

0.4

0.6

0.8

1

1.2

CKB Prva banka Crne Gore HypoAlpeAdria Bank NLB MontenegrobankaPodgorica

Podgoricka Banka

34.3%

14.8% 14.6% 14.2%

6.7%


(OTPGroup) (Bayerische

Landesbank)

(SociétéGénérale Group)(NLB/KBC)

TOP BANKS IN MONTENEGRO



38

0

5

10

15

20

25

30

35

PKO BP Bank Pekao BRE Bank ING BSK BZWBK Bank Millenium Citibank Kredyt Bank BGK RaiffeisenBank


Market share in terms of total assets (accordingto IFRS, consolidated figures)

(UniCreditGroup)(State) (Commerz

bank)(INGGroup) (CitiGroup)(AIB Ltd) (Banco

ComercialPortugues)

(KBCGroup) (State)

TOP BANKS IN POLAND


12.9% 12.7%

7.9%

6.7%5.6%

4.5% 4.1% 3.7%3.3% 2.8%



39


0

2

4

6

8

10

12

14

16

18

BancaComercialaRomana

BancaRomanaPentru

Dezvoltare

Volksbank RaiffeisenBank

Alpha Bank UniCredit TiriacBank

BancaTransilvania

Bancpost CEC ING BankBranch

20.4%

15.7%

6.8% 6.0% 5.6% 5.5% 5.4% 4.8% 4.3%


(ERSTEGroup)




(AlphaBankGroup)

(EurobankEFG)

(UniCreditGroup)


(ING Group)

3.5%

(State)

TOP BANKS IN ROMANIA


Total Assets* 2008 (! bn), market share and ownership

* Total does not include Creditcoop

40


0

20

40

60

80

100

120

140

160

180

Sberbank VTB Group Gazprombank RosselkhozBank

Bank ofMoscow

Alfabank UniCredit Bank Raiffeisenbank Rosbank Uralsib

23.8%

12.1%

6.3%

2.9% 2.7% 2.4% 2.1% 2.0% 1.7%


(State) (RaiffeisenInternational)

(Moscow CityGovernment)

(Gazprom State)

(AlfaGroup)

(State) (UniCreditGroup)

1.5%

TOP BANKS IN RUSSIA

(State) (SociétéGénéraleGroup)




41


0

0.5

1

1.5

2

2.5

3

Banca IntesaBeograd

KomercijalnaBanka Beograd

RaiffeisenBank Beograd

Eurobank EFG Hypo Alpe Adria BankaBeograd

Unicredit Bank VojvodjanskaBanka

AIK Banka Nis SociétéGénérale

Banka Srbija

ProCredit BankBeograd

14.1%

9.6% 9.1%

7.0% 6.4%

5.0% 4.9% 4.7%4.0%


(IntesaSanPaolo)



(State) (ATEbankGroupGreece)

(EurobankEFG)

(UniCreditGroup)

(ProCredit,Frankfurt)


3.6%


TOP BANKS IN SERBIA



42

0

2

4

6

8

10

12

14

SlovenskaSporitelna

VUB Tatra Banka CSOB UniCredit Bank Dexia Banka Prva StavebnaSporitelna

ING Bank OTP Bank Volksbank



(ERSTEGroup)

(IntesaSanPaolo)

(KBCGroup)


(INGGroup)

(UniCreditGroup)

(DexiaGroup)

(Bausparkassen)

(OTPGroup)


TOP BANKS IN SLOVAKIA

* Including Istrobanka

19.7%

17.3% 16.7%

10.6%7.4%

3.1% 2.9% 2.6%4.3%

2.4%

12.5%*



43

0

2

4

6

8

10

12

14

16

NovaLjubljanskabanka

Nova kreditnabanka Maribor

Abanka Vipa UniCredit Bank SKB banka Banka Koper Banka Celje Hypo AlpeAdria Bank

SID banka d.d. Gorenjskabanka Kranj


30.2%

9.6%8.0%

6.1% 5.5% 5.3% 5.1% 4.8% 4.4%


(State, KBCGroup 30.6%)

(State) (NovaLjubljanskabanka 41%)

(majority localprivate capital)

(IntesaSanPaolo)


(UniCreditGroup)


(State)

3.8%


TOP BANKS IN SLOVENIA



44


0

10

20

30

40

50

60

Ziraat Isbank Garanti Akbank Yapi Kredi Vakifbank Halkbank Finansbank Denizbank ING

14.8%13.8%

12.6% 12.1%

9.0%

7.4% 7.2%

3.8%2.7%


(State) (Is BankPensionFund)

(DogusGroup & GEGroup)

(SabanciGroup &CitiGroup)

(State)(UniCreditGroup)

(DexiaGroup)


2.3%

(ING Group)

TOP BANKS IN TURKEY

(State)



45


0

1

2

3

4

5

6

7

8

PrivatBank RaiffeisenBank Aval

UniCreditGroup*

OschadBank Ukrsibbank Ukreximbank OTP Bank Alfa Bank Nadra Bank VTB Bank

8.7%

7.1%6.5%

6.2% 6.0%5.2%

3.6% 3.5% 3.3%




(UniCreditGroup)

(BNP ParibasGroup)

(VTBGroup)(State) (OTP

Group)(State)

3.1%

(Alfa Group)

TOP BANKS IN UKRAINE

* Ukrsotsbank and UniCredit Bank Ukraine




46

METHODOLOGY AND CONTACTS

METHODOLOGY

# In the ranking of international players, the CEE region includes the mentioned 17 CEE countries plus Albania, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Macedonia,

Moldova, Montenegro, Tajikistan and Uzbekistan.

# The analysis covers the following European Banking Groups: UniCredit Group, Erste, KBC, Raiffeisen, Société Générale, IntesaSanPaolo, OTP

# Data are according to IAS/IFRS (when not available, LAS are used), proforma 12M including deals closed as of May 2009. Data refer to consolidated

audited results (apart from a few exceptions where unconsolidated and/or unaudited data are used)

# The comparison among top banks at the individual country level (in terms of total assets) is based on local accounting standards, unconsolidated. The comparison

among top banks at the individual country level is based upon different standards across countries (IFRS/local standard, consolidated/unconsolidated), according to

the availability of data.

# Closing date: July 2009

Disclaimer. This document (the “Document”) has been prepared by UniCredito Italiano S.p.A. and its controlled companies1 (collectively the “UniCredit Group”). The Document is for information purposes only and is not intended as(i) an offer, or solicitation of an offer, to sell or to buy any financial instrument and/or (ii) a professional advice in relation to any investment decision. The Document is being distributed by electronic and ordinary mail to professionalinvestors and may not be redistributed, reproduced, disclosed or published in whole or in part. Information, opinions, estimates and forecasts contained herein have been obtained from or are based upon sources believed by theUniCredit Group to be reliable but no representation or warranty, express or implied, is made and no responsibility, liability and/or indemnification obligation shall be borne by the UniCredit Group visavis any recipient of the presentdocument and/or any third party as to the accuracy, completeness and/or correctness of any information contained in the Document. The UniCredit Group is involved in several businesses and transactions that may relate directly orindirectly to the content of the Document. Accordingly, the UniCredit Group may hold a position or act as market maker in any financial instrument mentioned in the Document. Information, which is not reflected in the Document,may therefore be available to persons connected with the UniCredit Group. The Document has been approved for distribution in UK by the London branch of UniCredit Banca Mobiliare S.p.A., regulated by the FSA for the conduct ofinvestment business in the UK. It has not been approved for distribution to or for the use of private customers, as defined by the rules of the FSA. The Document may not be distributed in USA, Canada, Japan or Australia.1) Including Koc Financial Service A.S., a joint venture established pursuant to the laws of Turkey, of which UniCredit Italiano S.p.A. has a 50 % shareholding. The definition of “control” is pursuant to Italian laws.

[email protected]

UniCredit Group, CEE Strategic Analysis

Debora Revoltella – Head

Carmelina Carluzzo, Matteo Ferrazzi, Anna Kolesnichenko,Fabio Mucci, Lisa Perrin, Bernhard Sinhuber, Gerd Stiglitz

Banking study Unicredit Group July2009

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