Rome, May 6th 2014

Eugenio VirgutiEugenio VirgutiXBRL Italia Partner of SOVEGA IT Systems

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Agenda

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618 Confidis operating on the Italian territory as at last December

60 Confidis (approx 10%) are supervised by the Bank of Italy (Supervised Confidi’s) and account for 73% of all guarantee volumes

Since the introduction of Basel II, strong industry restructuring, including mergers and acquisition, to put up with growing competition, lower margins and increasing capital requirements for banks, which in turn require better quality of guarantees issued

CONFIDI’s – What They Are and How They Work

SME’s participate in Confidis by paying annual subscription fees

Confidis and Banks sign an agreement which covers all loans guaranteed by Confidis. The agreement defines terms and conditions.

CONFIDI’s – What They Are and How They Work

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Current issues

…however….

assessment of borrowing firms is only carried out by the lending bank, with no proprietary evaluation on the part of Confidis

Confidis rely on banks’ creditworthiness evaluation and they only look for counter guarantee mechanisms (albeit partial and/or subject to specific conditions)

Confidis not informed on the firm’s risk dynamics unless the firm defaults and the bank calls on the guarantee

Need to improve the guarantee-issuing assessment process and

implement units to measure and manage profitability and credit risks

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Need of co-operation between banks and Confidis

Use of IT systems to promptly identify early warning signs of distress (no

relying on lenders’ information)

More focus on internal controls (as required by Bank of Italy regulations)

Holistic approach to define flow of

information between banks and Confidis

Current Issues

An XBRL-driven Exchange of Information

Confidi Data BaseBanks Confidi’s

Value Added Service Providersie. Galileo, SEC, OASI, HP EDS, Aubay ELSAG, CABEL, TREND

Engineering, others

Direct Data Management or Through Independent Third

Parties

Shared investments and higher efficiency

to achieve critical mass of guarantees

volumes

Higher independence of service providers

Certification of Reference Data

Model

Automated Data Flows (no manual activities and no

misinterpretations)

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1. Define a unique data model (semantic data model) complying with Confidis

information needs in order to:

a. Meet risk management and monitoring needs

b. Meet supervisory reporting requirements

2. Implement a project to define the means, the tools, the business units, the

competencies, resources and structures required to develop a consolidated

Banks-Confidis database that enables uploading, updating and maintenance of

loan-related information

3. Participation of all stakeholders involved (Confidis Associations, banking

system, single Confidis, IT and regulatory reporting service providers, Bank of

Italy, legal/operations consultants, etc.)

An XBRL-driven Exchange of Information

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XBRL Confidi Project – Major Steps

The project is comprised of two phases:

1.a regulatory reporting phase, where banks and Confidis agree on a common

reporting format and exchange data for the purposes of more accurately

complying with regulatory reporting requirements

2.a risk management phase, where data exchange between banks and Confidis

are XBRL-aggregated for better credit risk assessment

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XBRL Confidi Project – Major Steps

1. Definition of Data Point Model to meet Confidi’s needs in terms of risk

management and regulatory reporting requirements

2. Primary information required (definition of XBRL information hierarchies)• Master Data of Borrowing Firms• Loans received by single bank• Loan status (active, distressed, etc.)• Amortization Schedules

3. Return information to banks

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XBRL Confidi Project – Major Steps

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XBRL Confidi Project – Major Steps

Draft taxonomies have already been produced in February and instance creation is

currently under way. First phase should be completed by the end of June 2014.

Stakeholders Involved

1. XBRL ITALY2. Italian Confidi Associations3. Promoting Confidi Associations4. Confidis5. Italian Banking Association (ABI)6. Banks7. Bank of Italy8. Partner Universities9. Software Partners

• Infrastructure• Value Added Services

10.Advising Partners• Legal/Regulatory• Organisation

11.Others

Rome, May 6th 2014

Eugenio VirgutiEugenio VirgutiXBRL ItaliaPartner of SOVEGA IT Systems

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