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Merrill Lynch Merrill Lynch BankingBanking & & Insurance ConferenceInsurance Conference

““ManagingManaging ComplexityComplexity””

Giorgio Giorgio SprianoSpriano

Head of Head of CorporateCorporate DevelopmentDevelopment

77thth OctoberOctober 20042004

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DISCLAIMER

This presentation has been prepared by Sanpaolo IMI and provides information on the management’s business plans and strategies. As such, the presentation contains forward-looking information which reflects management’s current views with respect to certain future events and the financial performance of the Group. These views are based upon assumptions of future events which may not prove to be accurate and actual results may differ materially from those projected or implied in the forward-looking statements. Undue reliance should not, therefore, be placed on such forward-looking information and Sanpaolo IMI assumes no responsibility to update any such forward-looking information.

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AGENDA

! Complexity in the business environment

! Addressing the challenge

! Encouraging results

4

FROM STRUCTURAL DRIVERS TO CHANGE

0

100000

200000

300000

400000

500000

600000

31/1

2/19

9531

/12/

1996

31/1

2/19

9731

/12/

1998

31/1

2/19

9931

/12/

2000

31/1

2/20

0131

/12/

2002

31/1

2/20

03

0

2

4

6

8

10

12

Italian mutual funds Euribor

FROM STRUCTURAL DRIVERS TO CHANGE

From the lira to the euro

From 15,500 branches (in 1989) to 30,500 (in 2003)From tightly regulated to a deregulated

banking industry

From 75% stake controlled to more than 80% assets in

public companies

From state ownership to public companies

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TO GREATER COMPLEXITY IN THE MACROTO GREATER COMPLEXITY IN THE MACRO--SCENARIO (I)SCENARIO (I)

80.0%

100.0%

120.0%

140.0%

160.0%

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

(1986=100%)

Industrial production in US

Industrial production in Europe

Industrial production in Italy

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TO GREATER COMPLEXITY IN THE MACROTO GREATER COMPLEXITY IN THE MACRO--SCENARIO (II)SCENARIO (II)

80,0%

100,0%

120,0%

140,0%

160,0%

180,0%

200,0%

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

35,0%

Ho us eho ld s pending P ublic s pendingDis po s able inco me Savings ra tio (rhs )

(in % o f d ispo sab le inco me)(in 199 5 p rices ; 19 8 0=10 0%)

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TO GREATER COMPLEXITY IN THE SAVINGS MARKET (I) TO GREATER COMPLEXITY IN THE SAVINGS MARKET (I)

Mutual funds (% GDP)

19.6% 20.2%

11.3%

27.7%32.8%

40.0%

22.7%

30.4%

42.5%

17.0%

Italy UK Germany France Spain

1997

2003

0%

20%

40%

60%

80%

100%

Italy UK Germany France Spain

OtherLiquidityBondsBalancedEquity

Mutual funds breakdown as of 31/12/2003

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TO GREATER COMPLEXITY IN THE SAVINGS MARKET (II) TO GREATER COMPLEXITY IN THE SAVINGS MARKET (II)

Breakdown of Italian life insurance stock

6.0%4.9%

3.2%2.4%

8.6%

France Italy Spain Germany UK

2000 2001 2002 2003

Life insurance penetration levels

52%48%

Traditional

Unit linked,index linked

Source: Ania, 2003

Non-life insurance penetration levels

12.5%

12.3%

14.7%

60.5%

Motor Accident & Health Property protection Other

Source: Ania, 2003

Breakdown of main non-life classes in italy (%)

3.2%2.6%

3.2%3.8%

France Italy Spain Germany UK

2000 2001 2002 2003

4.8%

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TO GREATER COMPLEXITY IN REGULATORY ISSUESTO GREATER COMPLEXITY IN REGULATORY ISSUES

! IFRS

! Basel II

! Proposed legislation on savings market

! Pension reform

1992/93

“Amato Reform”

1995

“Dini Reform”

1997

“Prodi Reform”

! Increasing the retirement age ! Introducing contributory pensions ! Incentivising complementary pension schemes

2004

“Maroni Reform”

! Retirement age further increased (starting from 2008) ! Possibility of choice between company pension schemes and individual

schemes! Fiscal benefits increased for lower income workers and those close to

retirement

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AGENDA

! Complexity in the business environment

! Addressing the challenge

! Encouraging results

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ADDRESSING THE CHALLENGE ADDRESSING THE CHALLENGE

! Integration of branch network

! Concentration of marketing strategies

! Extending customer service models

! Building on brand value

Strengthening the core branch banking

business

In established businesses:

! Asset Management

! Life business Specialisation

In new businesses:

! Non-life business

! Consumer credit

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TECHNICAL INTEGRATION OF BRANCH BANKING NETWORK COMPLETEDTECHNICAL INTEGRATION OF BRANCH BANKING NETWORK COMPLETED

IT merger of Banca Popolare dell’Adriatico

(10th October 04)

Merger of Crup and Carigo

Rebranding of all networks banks

Migration of Cassa di Risparmio in Bologna

onto SPIMI IT platform (April 04)

Full acquisition of Banca Popolare dell’Adriatico

20042003

Migration of Cassa di Risparmio di Venezia

onto SPIMI IT platform (March 04)

Integration of Banco di Napoli

Migration of Friulcassa onto SPIMI IT platform

(June 04)

Integration of Cerea Bank in Cariparo

Migration of Cariparo onto SPIMI IT platform

(July 04)

Merger of Cardine Finanziaria

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ONE NETWORK BUT WITH LOCAL BRANDSONE NETWORK BUT WITH LOCAL BRANDS

≥ 5 % - < 12%≥ 2 % - < 5%≥ 1% - < 2%< 1%

≥ 12 % - < 20%≥ 20%

Local brands national coverage

Retail Headquarters

! Single head office on single operating and back office platform

! Divisional model to meet needs of customer segments and ensure necessary co-ordination

Area Management

! Local character maintained through brand and legal entity

! Empowers area management structure to manage and coordinate different local market and customer needs

Branch network

! 3,000 branches with good national foot print and high concentration coverage

! Specialisation through dedicated branches and modular approach to branch business

! Multi-channel approach

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ONE NETWORK TO SERVE ALL CUSTOMER SEGMENTSONE NETWORK TO SERVE ALL CUSTOMER SEGMENTS

BRANCH BANKING INTEGRATION AND SPECIALISATION

Asset management

Wealth Management (life insurance and asset management)

Insurance

Banco di Napoli

SME

Private & RetailSanpaoloNetwork

Cardine

Investment banking

Pre-integration of branch network

Investment banking

Post-integration of branch network

Marketing strategies are developed within product factories

Marketing strategies are developed within the network

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LEVERAGING ON CUSTOMER SERVICE MODELSLEVERAGING ON CUSTOMER SERVICE MODELS

Cultura

Strumenti

!Investment Policy

Objectives

! To develop the relationship with customers

! To offer a higher quality service

! To improveprofitability

Culture

Management Analysis

Instruments

Areas

!Communication events!Training

!CRM Workstation!Market and product information

!Customer portfolio analysis− Reporting− Asset allocation− Model portfolio simulation

!Portfolio benchmarking!Commercial analysis

Portfolio details Risk analysisAnalysis of customer needs and risk profile

Rebalancing using product matrix

Flows management

Business process

Completed projects

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LEVERAGING ON STRONG CORPORATE BANKING COMPETENCESLEVERAGING ON STRONG CORPORATE BANKING COMPETENCES

Interest based revenues from

loans

48%

Interest based revenues from

financial activities

8%

Non interest based

revenues

44%

172

8

130

10

38

753

23

574

Branches

Staff

Branches

Staff

Branches

Staff

Branches

Staff

North-West

North-East (*)

Tuscany-Emilia

South Central Italy

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317

Branches

StaffAT 4

AT 5

AT 2

AT 13

AT 18

49

979

Branches

Staff

Lombardia

AT 14

2

60

Branches

Staff

South

AT 7

Short term loans: Risk adjusted spread

Counterparty rating

Pri

ce

(*) Roll out in progress

The specialised network:

! 151 outlets

! 63 teams

Revenue Breakdown (2003)

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BUILDING ON BRAND VALUEBUILDING ON BRAND VALUE

1. business and customer relationships;

2. national and international recognition;

3. motivation and sense of corporate identity in employees.

Main objectives of Sanpaolo’s Olympic sponsorship aim at increasing:

! Ticketing! Network TOROC! Temporary branches! ATM/POS in Olympics sites

! Meeting on sport values! Torch relay! Olympic Events

! Young project (18-30)! Sanpaolo Roadshow! Ticketing! Small Business offers

! Olympic credit cards! Olympic pre-paied cards! Young project (0-18)! Car loans (billboard)

! Cross selling Retail project! Cross selling Small Business

"Retention

"Acquisition

"Average revenues per product

"Cross selling

Increase in customer base

One-off revenues

Increase of average revenue per customer

Impact on net interest and other banking income

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SPECIFIC CUSTOMERSPECIFIC CUSTOMER--SEGMENT INITIATIVESSEGMENT INITIATIVES

Investment, new business processes, and commercial initiatives aim at increasing the number of customers and strengthening the relationship in high-potential customer segments.

The new Sanpaolo IMI brand dedicated to young people from 18 to 30 years old

For the increasingly important immigrant communities in Italy

The large, heterogeneous small business segment which characterises the Italian economy

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ADDRESSING THE CHALLENGE ADDRESSING THE CHALLENGE

! Integration of branch network

! Concentration of marketing strategies

! Extending customer service models

! Building on brand value

Strengthening the core branch banking

business

! Non-life business

! Consumer credit

Specialisation

! Asset Management

! Life business

In established businesses:

In new businesses:

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INSURANCE & PENSION PRODUCTSINSURANCE & PENSION PRODUCTS

Retail Private Corporate

Property protection(Theft, fire, TPL)

Personal protection(Accidents,

TCM, Dread Disease, LTC)

FIP, Open pension funds, Income products (lump sum, annuity, mixed)

Mixed, Traditional,Unit Linked,Index Linked

Income products (lump sum,

annuity, mixed)

Mixed, Traditional,Unit Linked Private

Property protection(Theft, fire, TPL)

Personal protection(Accidents,

TCM, Dread Disease, LTC)

Asset protection

Financial protection

Employee protection

Open and closed pension funds

Treasury products, other life products, TFR

investment products

P&CProtection

Pension

Investments/ savings

Need

s

Life/Pension

Pro

du

cts

Opportunity areas

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CONSUMER FINANCECONSUMER FINANCE

Mission:

to act as consumer credit specialist for the Group developing business both through its own sales network (27,000 point of sales and 2.8 million customers) and through the branch distribution network of the Group.

Marrying branch distribution capacity with specialist competences:

! in credit cards - revolving credit cards will be issued to SANPAOLO IMI family segment customers exploiting on one hand the customer base of the Group and on the other the specialist competencies of Finemiro notably in credit scoring and the credit recovery;

! in POS financing - Finemiro will look to leverage on contacts with retail distribution channels in order to increase its network of POS dealerships. The objective is to have 10,000 new dealers by 2005.

Target: to increase market share

Finemiro expects through business development projects and increased commercial effectiveness, to be able to increase its market share from 5% to 10%.

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AGENDA

! Complexity in the business environment

! Addressing the challenge

! Encouraging results

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ENCOURAGING RESULTSENCOURAGING RESULTS

Improving performance

Total Revenues (€ MM) Operating income (€ MM) Net income (€ MM)

+12.2%

Pro forma

1,3311,493

H103 H104Pro forma

3,660 3,799

H103 H104

+3.8% +56.7%

Pro forma

441

691

H103 H104

Based on:

! Consistent and coherent business strategy

! Good competitive positioning

! Healthy business mix

! Strong customer service models

! Real organic growth potential