In light of the uncertainties related to the Covid-19 epidemic, and the recommendations issued by the European Central Bank, the Board of Directors resolved not to distribute dividends on 2019 results. The Board will consider proposing a dividend distribution by the end of this year, taking into account the evolution of the economic situation. In item 2, we recommend that shareholders approve the proposed allocation of net income.

In item 5, shareholders are called to a binding vote on the remuneration policy. The quality of disclosure is very good, and the executive variable remuneration is adequately structured to realize an alignment of interests between executives and shareholders in the long term. However, we have concerns over the very high fixed remuneration of the CEO (€2.6 million, almost 200% of the median at European banks), which is used to calculate the variable remuneration. Therefore, we recommend opposition. Due to our concerns over fixed remuneration, we also recommend shareholders to oppose the remuneration paid in 2019 (advisory vote in item 6).

On February 17, Intesa Sanpaolo announced the intention to launch an offer on UBI Banca, offering a consideration of 1.7 Intesa Sanpaolo shares for every UBI Banca share tendered to the offer. In item 11 (EGM), it is proposed to authorize the Bank to issue up to maximum 1.95 billion shares (11.1% of the share capital) in connection with the offer. The exchange ratio implies a price of €4.254 for each UBI Banca share on the date of the announcement, corresponding to a 38.6% premium on the latest six-month volume-weighted average share price of UBI Banca. The transaction is expected to generate approximately €730 million pre-tax annual synergies, enlarging the Bank's customer base by more than 3 million clients. Non-Performing Loans are expected to decrease from current 7.6% of total loans to customers to below 4%. In our opinion, the transaction is in the best long-term interests of Intesa Sanpaolo and its shareholders. Considering as reasonable the maximum dilutive effects on shareholders' rights, and taking into account the fairness opinions issued by the independent advisers, we recommend approval.