Relations with national, European and international institutions and advocacy actions

During 2018, there were promoted on the one hand, initiatives to support innovation and growth, in line with European Union projects and objectives and, on the other, monitoring and advocacy activities before EU policy makers, so as to actively contributing to debates in related to the definition of regulations in the banking and financial world and in support of retail customers, with the ultimate aim of contributing to real economic recovery.

2018 was a particularly relevant year at European level for sustainability: several initiatives have been launched that have seen the active participation of the Intesa Sanpaolo Group since the beginning.
The Group has monitoring the European Commission's initiatives on how to stimulate sustainable finance (envisaged within the Capital Markets Union's package), as well as participation to the sustainable finance working group of the European Banking Federation (EBF). The main EBF’s working group has been organised in four technical sub-groups, where Intesa Sanpaolo has contributed in particular for the discussions on the creation of a European Taxonomy for sustainability and on incentives (both demand and offer-side) for further developing the funding of sustainable investments.

In addition, Intesa Sanpaolo has continued being parto of the European Commission's Group of Experts for the financing of the circular economy that will publish a report in early 2019.The legislative process related to the upcoming programme InvestEU that as of 2021 will replace the European Fund for Strategic Investments. The InvestEU programme will support four EU policy areas (sustainable infrastructure; research, innovation and digitisation; small and medium-sized businesses; and social investment and skills) providing for an EU budget guarantee that will back the investment projects of financial partners.

There is an ongoing coordination of internal and external working groups active on issues relating to banking digitalisation such as FinTech and payments, Distributed Ledger Technology, Blockchain, cloud, cyber security, artificial intelligence, privacy and, in general, the development of innovative digital solutions with the aim of promoting the Group's position in Europe.
The collaboration with EBF, which has seen the participation of Intesa Sanpaolo experts in the thematic working groups that defined the positions of the industry on the main European initiatives in the digital field, has continued on these issues.

The objective of these activities is to maintain a profitable exchange with the business structures on the challenges and opportunities emerging from the digititalisation process, with the aim of improving customer satisfaction and contributing to ensuring maximum protection of the Bank and its customers. In particular, in line with this latter objective, the Group became a member of the “Task Force Cybersecurity in Finance” promoted by the European Credit Research Institute (ECRI) and by the Centre for European Policy Studies (CEPS).
The Group, launched and coordinated a working group on the harmonization of incident reporting and continued to play a proactive role in the public-private Partnership on Cybersecurity, supported by the European Commission, to develop Innovative European solutions from a cybersecurity perspective. The Group was awarded a European tender thus obtaining EU funds for the development of a common application for the harmonisation of cyber incident reporting. Moreover, the Group took part to the Cyberscams campaign as part of the European Cyber Security Month in collaboration with the Europol and the EBF, having the aim of raising awareness, tracking risky behaviors and providing useful resources for online data protection. As regards payments, the Group has monitored the legislative developments of the new European Directive on payment Services (PSD2) and the relevant second-level legislation in order to ensure, in particular, adequate consumer protection and the security of electronic payments in the interaction with new payment service providers. As regards payments, the Group has monitored the legislative developments of the new European Directive on payment Services (PSD2) and the relevant second-level legislation in order to ensure, in particular, adequate consumer protection and the Security of electronic payments in the interaction with new payment service providers.

From the point of view of banking regulation and prudential requirements, the Bank tracked the legislative activities relating to:

• the revision of the legislation on capital requirements and management of banking crises;
• the completion of the Banking Union;
• the systemic risk reduction.

In particular, also from the prudential point of view, the bank has positioned itself by supporting proposals aimed at promoting green investments, infrastructural projects and investments in software. Furthermore the Bank has also promoted and obtained revised liquidity measures supporting factoring and trade finance, which are key for EU enterprises, in particular for those operating worldwide. The Bank has also stressed the need for further prudential measures to promote lending to the SMEs, which has been finally introduced.

The bank has closely monitored the regulatory proposals on non-performing loans, as they have a direct impact on credit-granting policies to different segments of clients. A fair calibration of all these measures will make the banking system more resilient and protect firms and depositors.
In addition, the Institutional Affairs Head Office Department collaborated with the other Departments of the Bank in the preparation of the Recovery Plan required by the Bank Recovery and Resolution Directive (BRRD) and coordinated internal working groups with the aim of deeply analysing the application of the requirements provided by the Directive to the Group.
As regards the financial markets, among others, the following were monitored and subject to advocacy:

• the directive proposal on the planned framework for enterprise restructuring, second chance and measures to increase the restructuring, bankruptcy efficiency;
• the other regulatory initiatives related to the Capital Markets Union (CMU), in particular with reference to covered bonds and securitisations;
  the Prospectus regulations;
• the revision of the European Market Infrastructure Regulation (i.e. EMIR 2.0 () and EMIR Refit Regulationst ;
• the evolution of second level regulations for MiFID Second Level II (Regulation on the transparency of financial transactions in securities) and EMIR (European Market Infrastructure Regulation).

The Bank has striven for the adoption by the EU of contingency measures to be adopted in case of hard-Brexit for i) certain categories of over-the-counter (OTC) derivatives and ii) for the temporary recognition of UK based Central counterparties.

The Group functions involved are kept constantly updated through periodic newsletters concerning European policies for growth, innovation, support to businesses, digital policies and those relating to banking and financial market regulations. Targeted updates (so-called EU Regulatory Alerts) are also sent, in the presence of significant news related to regulations that require particularly attention due to the impact they may have on the Group's strategy and activities and, depending on the priority indicated, require the definition of the Group's position to be presented to the European institutions and other stakeholders.

In order to make the activities of the internal working groups more effective, support and training are provided to Group Departments and Services, in particular through seminars aimed not only at presenting the peculiarities of the European legislative process and the possibility for the Group to influence its final decisions, but also at illustrating the status of the art of the most relevant incoming regulations.
Since the SSM (Single Supervisory Mechanism) was launched at the end of 2014, the Department maintains an ongoing relationship with the Single European Supervisor, coordinating the Group's annual supervision plan, aiming to ensure due consistency and uniformity in interaction processes with the supervisor and to promote a widespread culture of "supervisory awareness" to increasingly strengthen the capacity to respond to Supervisor's requests.