Implementation

A task requiring immediate attention was and still is the integration of our units to develop a pro-forma group of companies into a strong market presence in the individual countries and a cross-regional network. Our current initiatives and projects are following these two lines.

Integration programme

At the beginning of 2006 we set up a cross-regional project management structure for implementing integration projects relating to our 22 banks in 16 countries. It comprises the following local projects:

• Merger countries: In countries with a multiple presence – Slovakia, the Czech Republic, Bulgaria, Romania, and Bosnia and Herzegovina – we are working on local integration of the entire business operations, processes and IT, with the objective of completing the mergers in 2007. Decisions concerning the core banking systems were an integral part of the projects, without losing sight of the long-term objective of a uniform IT platform. Banking operations in Slovakia, Romania and Bosnia and Herzegovina will use CORE02, BA-CA’s standard application system for CEE, while the system introduced in the Czech Republic is the new UniCredit Group system EuroSIG. For Bulgaria we decided to use FlexCube of iFlex, a system which will also be implemented in Russia.
• Integration countries comprise Russia, Estonia, Latvia and Lithuania, as well as Croatia and Turkey. In these countries without local mergers, work concentrates on full integration in the Group in respect of governance, management, regulatory reporting, management information system, risk management etc.
• Transformation countries refer to existing BA-CA subsidiaries (Slovenia, Serbia and Hungary). Here we concentrate on rebranding in line with Group standards.

Rebranding

UniCredit has decided to use a uniform brand structure for CEE to underline its performance capabilities and the standing of a leading international banking group. The Group will use the UniCredit Bank brand, amended by the local brand name for countries with a strong local presence, e.g. UniCredit Zagreba?ka banka, UniCredit Bulbank, UniCredit Tiriac Bank. The rebranding process is to be completed by the end of 2007.

Cross-border initiatives

Various cross-border initiatives are aimed at using the competitive advantages of our comprehensive network of operating units in 15 countries while benefiting locally from the strength and expertise of an international banking group. We want to use this double advantage in business with our customers. The above-mentioned brand architecture underlines the most visible feature of the CEE Division: the ability to serve customers across borders while meeting their individual needs by incorporating local specifics.

Some 20 cross-regional initiatives have been launched to meet this objective at several levels: in customer business; in management and organisation; and in HR management, communications and Global Banking Services.

In customer business, homogeneous customer segments and shared business models as well as efforts to standardise the product range are prerequisites for offering our customers access to our entire network from any location.

Global product lines such as Global Trade Finance, leasing, commercial real estate business have been established. They act as a vehicle for know-how transfer in the entire UniCredit Group, giving effect to the advantages of a large bank in smaller countries, too. Moreover, global product lines act as hubs linking supply (e.g. Western institutional investors) and demand.

Other initiatives which are under way have been launched to bundle asset management and investment banking activities; in this context, bundling does not mean centralising but creating a multipolar structure with optimal division of labour.

Uniform cross-regional management information systems (MISs) are preparing the ground for accountability and transparency of performance as a management principle for our Group. They are also a prerequisite for meeting Basel II requirements and for coordinating bank treasury operations and capital management.

We have also set up a cross-regional HR integration programme with tasks divided among different locations in the network. The objective of the programme is to develop local talent and a pool of cross-regional executives.

Global Banking Services (GBS), a global UniCredit division, performs an essential function in the entire integration process, maintaining cost effectiveness, unlocking synergies and using locational advantages in the long term with a best practice approach. Projects range from process design to IT harmonisation, facility management and Group-wide procurement. The cost synergies which GBS seeks to achieve are not only “quick wins” but will also enhance performance in customer business on a sustainable basis.