Exhibit 11.1  Report on corporate governance and
adherence to the code of conduct for listed companies  
   INDEXINTRODUCTION
  3THE COMPANY
  3a) Organization
  3b) Composition of share capital and majority shareholders
  4c) The role of the Parent Bank and the SANPAOLO IMI Group
  5BOARD OF DIRECTORS
  6a) Composition and duration
  6b) Executive and non-executive Directors  the Chairman and the Deputy
  Chairmen
  7c) Independent and non-independent Directors
  7d) Offices of Director or Statutory Auditor held in other companies
  7e) Functions of the Board of Directors
  9f) Board meetings
  10EXECUTIVE COMMITTEE AND MANAGING DIRECTORS
  11TECHNICAL COMMITTEES
  12a) Remuneration and Personnel Policies Technical Committee
  13b) Audit Technical Committee
  13c) Group Risks Technical Committee
  14d) Ethical Committee
  15NOMINATION AND REMUNERATION OF THE DIRECTORS
  15a) Nomination
  15b) Remuneration
  16CENTRAL MANAGEMENT
  16THE INTERNAL CONTROL SYSTEM
  17TRANSACTIONS WITH RELATED PARTIES
  18TREATMENT OF CONFIDENTIAL INFORMATION
  19INTERNAL DEALING
  20RELATIONS WITH SHAREHOLDERS
  20SHAREHOLDERS MEETINGS
  21BOARD OF STATUTORY AUDITORS
  22a) Nomination, composition and duration
  22b) Functions and powers of the Board of Statutory Auditors
  22c) Offices of Director or Statutory Auditor held in other listed
  companies
  24AUDITS
  24  2 
   Introduction Within the context of ever
increasing attention to governance profiles and transparent communication to
the market, as instruments to maximize shareholder value, SANPAOLO IMI has
adhered to the aims and indications of the Code of Conduct for Listed Companies
since its issue. Recognizing the validity of
the model of corporate governance contained in the Code - drawn up on the basis
of international best practice - the Company continues to follow its principles
and introduces a model of corporate governance with the aim of guaranteeing
adequate sharing of responsibilities and powers, correctly balancing the
functions of management and control, also in the light of the experiences of
the more evolved financial markets. The beginning of this Report
supplies a brief profile of the Company and its organization, while the
subsequent paragraphs are dedicated to describing the SANPAOLO IMI corporate
governance system, paying special attention to the attributions and
responsibilities of the Company bodies, the nomination methods and the duration
in office of their components and the rules for their renewal, as well as
relationships with shareholders and institutional investors. Three tables
summarizing the structure of the Board of Directors, the Internal Committees
and the Board of Statutory Auditors, as well as the general application of the
Code, are added as appendixes. The Company SANPAOLO IMI  Limited
company with Registered office in Turin and Secondary offices in Rome and
Bologna is a Bank registered in the roll of banks and Parent Bank of the
SANPAOLO IMI Banking Group, registered in the roll of banking groups. The
Company, in accordance with Art. 4 of the Articles of Association, accepts
deposits from the public and exercises various forms of credit, in Italy and
abroad, and may perform, within the legal limits in force, all transactions and
banking and financial services and every other instrumental transaction or
transaction linked with achieving the corporate aim. The Company is listed with
the Mercato Telematico Azionario organized and managed by Borsa Italiana S.p.A.
and with the New York Stock Exchange. a)
Organization In accordance with the Italian legislation on listed companies, and in
the light of the adherence to the Code of Conduct, the SANPAOLO IMI
organization is characterized by the presence of the following Company bodies:  the Shareholders Meeting, a
Body which expresses company intentions the decisions of which, adopted in
conformity to the law and the Articles of Association, restrict all
shareholders, including those who are absent or dissenting;  the Board of Directors,
nominated by the Shareholders Meeting for a period of three years and holder
of all Company management powers;  the Chairman of the Board of
Directors  nominated by the Shareholders meeting from among the members of
the same Board  is the legal representative of the Company before third
parties and for legal purposes, and also presides over the Executive Committee,
of which he is a rightful member;  the Executive Committee and
the Technical Committees (Remuneration and Personnel Policies Technical
Committee, Audit Technical Committee, Group Risks Technical Committee and
Ethical Committee), set up within the Board and made up of its members; the
Executive Committee is the Body delegated to carry out important administration
functions, while the other Committees perform advisory services, preliminary
enquiries and control activities;  two Deputy Chairmen 
nominated by the Board of Directors from among its members  are rightful
members of the Executive Committee and assume all the Chairmans powers and the
legal representation of the Company before third parties and for legal purposes
in the event of his absence or impediment, according to the order of succession
established by the Board;  3 
   three Managing Directors 
nominated by the Board of Directors, which organizes their assignments  are
rightful members of the Executive Committee and hold, individually, the legal
representation of the Company before third parties and for legal purposes in
the event of the absence or impediment of the Chairman and the Deputy Chairmen;  the Central Management,
nominated by the Board of Directors  as an alternative to nominating one or
more General Managers  establishes the number of members and provides for
attribution of the competencies as well as the allocation of the functions
among them;  the Board of Statutory
Auditors  nominated by the Shareholders Meeting for a period of three years
and composed of five Auditors and two Supplementary Auditors  supervises the
observance of the law and the Articles of Association and, generally, the
administrative, organizational and accounting system, as well as the Companys
internal control system.  The attributions and
operating standards of the Company bodies are contained in the legal and
regulatory provisions, in the Articles of Association and in the decisions made
by the Boards; the operating standards of the Shareholders Meeting are also
governed by special Regulations. b) Composition of share capital and majority shareholders The Companys capital, as
resulting from Art. 6 of the Articles of Association, is 5,144,064,800.00 euro
fully paid, which comprises 1,448,831,982 registered ordinary shares and
388,334,018 preference shares which do not give entitlement to vote in the
ordinary shareholders meetings. Preference shares were
introduced  in accordance with letter a) of subsection 3 of Art. 28 of D. Lgs
153/1999  in July 2002, in conjunction with the incorporation of Cardine
Banca, implementing that provided for by the letter of intent signed by
Compagnia di San Paolo, Fondazione Cassa di Risparmio di Padova e Rovigo and
Fondazione Cassa di Risparmio in Bologna. Said shares, which give entitlement
to vote only in the extraordinary shareholders meetings, are now held by
Compagnia di San Paolo, Fondazione Cassa di Risparmio di Padova e Rovigo and
Fondazione Cassa di Risparmio in Bologna. The preference, or privilege,
consists in the pre-emption right in the case of capital repayment and in the
right to an allocation of the net income of 5% of the nominal share value, as
well as the right to accumulate the dividend still to be received with that
matured over the subsequent two years. Other advisory agreements
currently exist between Compagnia di San Paolo, IFIL S.p.A., Società Reale
Mutua di Assicurazioni S.p.A. and CDC IXIS Italia Holding S.A., and will expire
on 13 April 2004. An excerpt of all the
aforementioned agreements is available on the Banks website. On the basis of the
Shareholders Book and other available information, as of 26 March 2004,
SANPAOLO IMI has about 185,000 shareholders. A table listing the main
shareholders, directly and/or indirectly holding shares of the share capital
with voting rights is printed below: Shareholder
  
  Percentage
  of total capital
  
  Percentage
  of ordinary capitalCompagnia di San Paolo
  
  14.48
  
  7.50Fondazione CR Padova e Rovigo
  
  10.80
  
  4.38Santander Central Hispano
  
  8.61
  
  10.92Fondazione CR in Bologna
  
  7.69
  
  3.12Giovanni Agnelli & C.
  
  3.83
  
  4.86Deutsche Bank AG
  
  2.00
  
  2.54Mediobanca
  
  1.93
  
  2.45Fondazione Cariplo
  
  1.74
  
  2.21Caisse des Depots et Consignations
  
  1.70
  
  2.16Società Reale Mutua di Assicurazioni
  
  1.54
  
  1.94Ente CR Firenze
  
  1.53
  
  1.94Credit Lyonnais SA
  
  1.50
  
  1.91Fondazione CR Venezia
  
  1.50
  
  1.90  4 
   c)
The role of the Parent Bank and the SANPAOLO IMI Group The Company is the Parent
Bank of the SANPAOLO IMI Banking Group, composed of the same Parent Bank and
the banking, financial and instrumental companies  with registered offices in
Italy and abroad  controlled directly or indirectly. In its capacity as Parent
Bank, the Company holds the role of reference-point for the Bank of Italy and,
in exercising its direction, address and coordination activities, issues the
necessary provisions to the members of the Banking Group for implementing the
instructions received from the Bank of Italy in the interest of Group
stability. For this purpose SANPAOLO IMI asks the Group companies for news,
figures and relevant reports and also verifies compliance with the provisions
issued as instructed by the Bank of Italy. The Administrators of the
subsidiaries must implement the Parent Bank provisions and supply every piece
of information useful to its issue to the Parent Bank. The SANPAOLO IMI Group is based upon the specialization of the
professional skills of the production, distribution and service units and is
mainly structured in four business sectors:  Domestic Banking Networks 
including the Sanpaolo Network, the former Cardine bank networks and Sanpaolo
Banco di Napoli  dedicated to the retail and business markets throughout the
whole country. The banking networks are flanked by specialist units to serve domestic
clients: Banca OPI, which provides consultancy and medium- and long-term
financing to public bodies for infrastructure works, GEST Line, which manages
the Groups tax collection activities, as well as trustee, consumer credit and
leasing companies. This sector also includes the Other Italian Networks, which
handles the Groups shareholdings in Cassa di Risparmio di Firenze, Cassa dei
Risparmi di Forlì and Banca delle Marche;  Personal Financial Services,
which manages the offer of financial services by the Banca Fideuram group
financial planner network;  Wealth Management and
Financial Markets, which include the companies controlled directly by Sanpaolo
IMI Wealth Management, dedicated to providing asset management products (mutual
funds, portfolio management and insurance) to the Group networks and associated
networks, as well as institutional investors and other networks; Banca IMI, the
Groups investment bank, whose business priorities concern, on the one side,
the supply of specialist services to companies and institutional customers and,
on the other, the development of structured products distributed to retail
customers and corporate customers through the Groups networks; Sanpaolo Imi
Private Equity, whose aim is to strengthen and consolidate the Groups activity
and presence in the private equity sector, mainly through the promotion and
management of closed-end investment funds;  International Activities, which includes the Parent
Banks Foreign Network, limited to corporate lending, and Sanpaolo IMI
Internazionale, established to develop the presence in foreign countries of
strategic interest through growth initiatives such as acquisitions and
alliances. *
* * On 13 February 2004, the
SANPAOLO IMI Board of Directors approved a project to reorganize the Groups
insurance activities, which provides for concentrating the insurance business 
currently split into several production platforms: Sanpaolo Vita, Sanpaolo
Life, Fideuram Vita and Noricum Vita together with Egida (jointly controlled with
Reale Mutua Assicurazioni) and Fideuram Assicurazioni in the damages branch 
with the aim of simplifying and rationalizing its presence in a sector of
strategic interest, taking advantage of opportunities for development and
creating an insurance pole to lead the market. The transaction will be
accomplished in the time technically compatible with obtaining authorization
from the Bank of Italy and with the necessary requirements. *
* * To equip the Bank with a suitable self-regulation instrument comprising
the essential principles of the Groups organization and the fundamental rules
of the subsidiaries direction and coordination model, the Board of Directors
approved the Group Regulations, which define the Groups entire structure, the
basic principles on which it operates, the areas of competence and the
responsibilities of the Central Functions of the Parent Bank, as well as the
mechanisms and instruments used to coordinate the entire Group.  5 
   SANPAOLO IMI has also
introduced a Group investment policy, attributable to fundamental principles of
finance, which indicates behavioral rules for the consistent issue of customer
investment services. To ensure adequate
dissemination of the Groups strategic addresses among top management, their
rendering into plans and budgets and their accomplishment, a Group Management
Committee has been set up to analyze, compare and evaluate the Groups global
management trend. The Committees main activities concern the sharing of
general strategic addresses, information on the general management trend and
the progress of the main projects underway, as well as the analysis and
in-depth investigation of the decisions which are important to the Group as a
whole. This Committee, to which the Chairman of the Parent Bank participates,
usually has a monthly meeting which is attended by the Managing Directors of
SANPAOLO IMI, the Heads of the Groups main distribution networks and Heads of
Parent Bank specialist Functions; on the basis of specific needs, it may also
be extended to the managers of the various Group departments. Board of Directors a)
Composition and duration In accordance with Art. 14 of
the Articles of Association, the Company is administered by a Board of
Directors composed of a number of members variable from 7 to 20, as decided by
the Shareholders Meeting, which will nominate one of them Chairman. The SANPAOLO IMI Board of Directors in office at the time of publication
of this Report was nominated by the Shareholders Meeting of 30 April 2001 and
subsequently by the Shareholders Meeting of 5 March 2002 (1), and is composed of 18 Directors, listed below with
their specific roles:  Rainer Masera
  
  ChairmanPio Bussolotto
  
  Managing DirectorAlberto Carmi
  
  DirectorGiuseppe Fontana
  
  DirectorRichard Gardner
  
  DirectorAlfonso Iozzo
  
  Managing DirectorMario Manuli
  
  DirectorLuigi Maranzana
  
  Managing DirectorAntonio Maria Marocco
  
  DirectorVirgilio Marrone
  
  DirectorAbel Matutes
  
  DirectorIti Mihalich
  
  DirectorAnthony Orsatelli
  
  DirectorEmilio Ottolenghi
  
  DirectorOrazio Rossi
  
  Deputy ChairmanGian Guido Sacchi Morsiani
  
  DirectorEnrico Salza
  
  Deputy ChairmanRemi François Vermeiren
  
  Director  The Banks website reports
short biographical and professional notes of the Directors in office. 
 1The
Directors Antonio Maria Marocco and Anthony Orsatelli were nominated last year
by the Board of Directors, in accordance with Art. 2386 of the Italian Civil
Code, following the resignations of Gabriele Galateri and M.me Bouillot, and
subsequently confirmed by the Shareholders Meeting of 25 November 2003.  6 
   The term in office of all the
members of the Board of Directors is envisaged until the approval of the
financial statements for 2003. The renewal of the Board is planned for the
Shareholders Meeting of 28/29 April 2004. The Board of Directors has
nominated Piero Luongo, Head of General Secretarial Management, as Board
Secretary. b) Executive and non-executive Directors  the Chairman and the Deputy
Chairmen The Board of Directors is
mainly composed of Non-executive Directors, having no operational delegated
powers and/or no directional functions in the Company, and the pursuance of
their respective duties in meetings of the Deliberative Bodies and Technical
Committees is reserved to them. They will be in sufficient number to guarantee
that their judgment has determinant weight when making decisions. More specifically, the
Managing Directors will be considered as Executive Directors, in relations to
their role of executive management and promotion of activities for the Company,
as stated by the Articles of Association, while all the remaining members of
the Board are to be considered as Non-executive Directors. The Chairman of the Board of
Directors is also a Non-executive Director: the current Company structure,
resulting from the Articles of Association and decisions of the Board, state
that the Chairmans functions are distinct from those of the Managing Directors.
The Board has assigned no operational delegated powers to the Chairman, except
for, pursuant to the Articles of Association, the responsibilities to
coordinate the activities of the Company, the legal representation and the
power to take, in agreement with the relevant Managing Director, any urgent
provision in the interest of the Company, referring such to the Board of
Directors or the Executive Committee at its next meeting. The Deputy Chairmen 
nominated, in accordance with Art. 15 of the Articles of Association, by the
Board of Directors from among its members  are also Non-executive Directors,
having not been assigned operational delegated powers by the Board and being
solely capable of assuming, to all effects, the powers of the Chairman pursuant
to Art. 18 of the Articles of Association, in event of his absence or
impediment, in the order established by the Board. c) Independent and non-independent Directors The Board of Directors
periodically checks the existence of the independence of the Non-executive
Directors on the basis of the definition contained in the Code of Conduct and
also with reference to the instructions supplied by the individuals involved. Considering the nature of the
agreements existing among certain shareholders and relative financial
arrangements between SANPAOLO IMI and the same shareholders, the following are
to be considered non-independent directors by virtue of their offices among the
shareholders: Anthony Orsatelli
Virgilio Marrone
Iti Mihalich As regards the remaining non-executive
Directors, there are no elements such as not to satisfy the requirements of
independence. Each Director has undertaken
to promptly inform the Board should he cease to be independent. d) Offices of Director or Statutory Auditor held in other companies Following is a list of the offices of Director or Statutory Auditor
currently held by SANPAOLO IMI Directors in Companies  7 
   listed in regulated markets, including those abroad, in financial,
banking, insurance or other significant-sized companies:  DIRECTOR
  
  OFFICE
  
  COMPANYMASERA Rainer
  
  Chairman
  
  Banca Fideuram
  S.p.A.Member of the
  Board of Directors
  
  BEI  European
  Investment BankBUSSOLOTTO Pio
  
  Managing Director
  
  Cassa di
  Risparmio di Padova e Rovigo S.p.A.Director
  
  Cassa di
  Risparmio di Firenze S.p.A.Director
  
  Banca delle
  Marche S.p.A.CARMI Alberto
  
  /
  
  /FONTANA Giuseppe
  
  Director
  
  Banca Fideuram
  S.p.A.Director
  
  Banca Popolare di
  Sondrio S.c.r.l.GARDNER Richard
  
  /
  
  /IOZZO Alfonso
  
  Chairman
  
  Sanpaolo Banco di
  Napoli S.p.A.Chairman
  
  Banca OPI S.p.A.Director
  
  Nhs Mezzogiorno
  Sgr S.p.A.Member of the
  Supervisory Board
  
  CDC IxisMANULI Mario
  
  Chairman and
  Managing Director
  
  Fin.M. S.r.l.Director
  
  Manuli Rubber Industries
  S.p.A.Director
  
  Manuli Stretch
  S.p.A.Director
  
  Terme di Saturnia
  S.r.l.Director
  
  Tamburi
  Investment Partners S.p.A.Director
  
  Cassa di
  Risparmio di Firenze S.p.A.MARANZANA Luigi
  
  Chairman
  
  Banca
  dIntermediazione Mobiliare Imi S.p.A.Chairman
  
  Sanpaolo Imi
  Wealth Management S.p.A.Director and
  Member of the Executive Committee
  
  Banca Fideuram
  S.p.A.Director
  
  Sanpaolo Imi
  Internazionale S.p.A.MAROCCO Antonio
  Maria
  
  Director
  
  Ifil S.p.A.Director
  
  Reale Mutua di
  AssicurazioniMARRONE Virgilio
  
  /
  
  /MATUTES Abel
  
  /
  
  /MIHALICH Iti
  
  Chairman
  
  Società Reale
  Mutua di AssicurazioniChairman
  
  Banca Reale
  S.p.A.Chairman
  
  Rem Assicurazioni
  S.p.A.Chairman
  
  Reale ImmobiliChairman
  
  Blue AssistanceChairman
  
  La Piemontese
  Assicurazioni S.p.A.Chairman
  
  La Piemontese
  Vita S.p.A.Chairman
  
  Italiana
  Assicurazioni S.p.A.Chairman
  
  I.S.E. S.p.A.Chairman
  
  Reale Seguros
  Generales S.A.Chairman
  
  Reale Vida 
  Compania de Seguros y Reaseguros S.A.Chairman
  
  Reale Asistencia
   Compania de Seguros S.A.Chairman
  
  Agemut  Sociedad
  de Agencia de Seguros de Mutral S.A.Chairman
  
  Reale Sum 
  Agrupacion de Interes EconomicoChairman
  
  Inmobiliaria
  Grupo Asegurador Reale S.A.Chairman
  
  Eficalia Servicios
  S.A.Chairman
  
  Rem Vie S.A.Deputy Chairman
  
  Ala Assicurazioni
  S.p.A.Director
  
  Friulcassa S.p.A.Director
  
  Sara
  Assicurazioni S.p.A.Director
  
  Sara Vita S.p.A.  8 
   ORSATELLI Anthony
  
  President du
  Directoire
  
  CDC Ixis S.A.President du
  Directoire
  
  CDC Ixis Capital
  Markets S.A.Membre du
  Directoire
  
  Caisse Nationale
  des Caisses dEpargne S.A.President du
  Conseil de Surveillance
  
  CDC Ixis
  Securities S.A.Vice-President du
  Conseil de Surveillance
  
  CDC Ixis Lcf
  RothSchild Midcaps S.A.Membre du Conseil
  de Surveillance
  
  Sogeposte S.A.Membre du Conseil
  de Surveillance
  
  CDC Ixis
  Financial Guaranty Holding S.A.Membre du Conseil
  de Surveillance
  
  CDC Ixis
  Financial Guaranty S.A.Membre du Conseil
  de Surveillance
  
  CDC Ixis
  Financial Guaranty Europe S.A.Membre du Conseil
  de Surveillance
  
  CDC Ixis Asset
  Management S.A.Membre du Conseil
  de Surveillance
  
  Ecureuil Gestion
  S.A.Membre du Conseil
  de Surveillance
  
  Ecureuil Gestion
  FCP S.A.Membre du Conseil
  de Surveillance
  
  Gimar Finance
  S.C.A.Membre du Conseil
  de Surveillance
  
  CDC Ixis Private
  Capital Management S.A.President du
  Conseil dAdministration
  
  CDC SPPresident du
  Conseil
  
  Nexgen Financial
  Holding LimitedPresident du
  Conseil
  
  Nexgen Re LimitedChairman of the
  Board of Directors
  
  CDC Ixis Capital
  Markets North AmericaChairman of the
  Board of Directors
  
  CDC Commercial
  Paper Corp.Chairman of the
  Board of Directors
  
  CDC Financial
  Products Inc.Chairman of the
  Board of Directors
  
  CDC Mortgage
  Capital Inc.Chairman of the
  Board of Directors
  
  CDC Derivatives
  Inc.Chairman of the
  Board of Directors
  
  CDC Funding Corp.Chairman of the
  Board of Directors
  
  CDC Municipal
  Products Inc.Chairman of the
  Board of Directors
  
  CDC Servicing
  Inc.Member of the
  Board of Directors
  
  CDC Ixis North
  AmericaMember of the
  Board of Directors
  
  CDC Securities
  Inc.Member of the
  Board of Directors
  
  CDC Ixis AM US
  CorporationMember of the Board
  of Directors
  
  Euroclear Plc.Member of the
  Board of Directors
  
  CDC Ixis
  Financial Guaranty Services Inc.Member of the
  Board of Directors
  
  CDC Ixis
  Financial Guaranty North America Inc.Member of the
  Board of Managers
  
  CDC Ixis AM US
  LLCOTTOLENGHI Emilio
  
  Chairman
  
  Vis S.p.A.Managing Director
  
  La Petrolifera
  Italo Rumena S.p.A.Director
  
  Argus Fund S.p.A.ROSSI Orazio
  
  Chairman
  
  Cassa di
  Risparmio di Padova e Rovigo S.p.A.Chairman
  
  Sanpaolo Imi
  Internazionale S.p.A.SACCHI MORSIANI
  Gian Guido
  
  Chairman
  
  Cassa di
  Risparmio in Bologna S.p.A.Deputy Chairman
  
  Finemiro Banca
  S.p.A.SALZA Enrico
  
  Managing Director
  
  Tecno Holding
  S.p.A.Director
  
  Thera It Global
  CompanyVERMEIREN Remi
  François
  
  Member
  Supervisory Board
  
  Euronext NV 
  AmsterdamMember
  Supervisory Board
  
  Credit
  Commerciale de France  Parigi  e)
Functions of the Board of Directors The Board of Directors is
responsible for strategic direction and is the holder of all Company management
powers. In particular, in accordance
with subsection 2 of Art. 16 of the Articles of Association, the Board of
Directors is competent to approve the resolutions concerning the merger, in the
cases provided for by Articles 2505 and 2505 bis of the Italian Civil Code, the
opening and closure of secondary offices, the reduction of capital when a
shareholder resigns, adaptations of the Article of Association to regulatory
instructions. Moreover, in accordance with the subsequent subsection 3, the
following are also reserved to the exclusive competence of the Board: resolutions regarding general
management, the approval and modification of a general provision concerning
work relationships, the acquisition and sale of shareholdings which change the
composition of the Banking Group, the appoint-  9 
    ment of offices as provided
for by subsection 1 of Art. 20 of the Articles of Association (General
Managers, Deputy General Managers, Central Managers);  the determination of the
criteria for the coordination and management of Group Companies and for the
execution of the instructions issued by the Bank of Italy.  Lastly, on the basis of the
Banks Articles of Association and the current delegated powers, the Board of
Directors is also responsible for: the examination and approval
of the Companys and Groups strategic, industrial and financial plans as well
as the approval of the Regulation concerning the Groups corporate governance;  the nomination and the
attribution of mandates to the Executive Committee and the Managing Directors
as well as the related definition of the limits, means of exercise and periods
of time within which the delegated Bodies must report to the Board on the
activities carried out during the exercise of the mandates conferred to them;  the determination of the
Managing Directors remuneration and of those who hold particular offices, as
well as the subdivision of the variable part of the amount due to the
individual members of the Board, after the examination of the proposals for the
Remuneration and Personnel Policies of the Technical Committee and having heard
the Board of Statutory Auditors;  the approval of general risk
management policies;  the supervision on general
performance, paying special attention to situations of conflicts of interest,
taking into particular consideration the information received from the
Executive Committee, the Managing Directors and the Audit Technical Committee,
and periodically comparing the results achieved with those planned;  the examination and approval
of major economic, balance sheet and financial transactions, defined on the
basis of quantitative and qualitative criteria (such as loans of more than one
fifth of the equity of the Company, loans of more than 10 million euro,
acquisition or loss of control of insurance companies and acquisition of
shareholdings of more than 100 million euro); the verification of the adequacy
of the Companys and Groups general organizational and administrative
structure;  the presentation to
Shareholders of the reports concerning the agenda of the Shareholders
Meetings;  the approval of relevant
transactions with related parties.  f)
Board meetings The calling of the Board of
Directors, ordinarily every two months (Art. 17 of the Articles of
Association), or at the request of at least three Directors, or one Managing
Director, or on the basis of the powers which the law gives to the Statutory
Auditors, falls to the Chairman, every time he sees fit. The Chairman, who, in
accordance with the Articles of Association, is responsible for the
coordination of the work of the Board of Directors, presides over the meetings
and sets the agenda - taking account of the motions proposed by the Managing
Directors, on the basis of the powers of attorney conferred  and ensures that
adequate information on the matters under discussion are supplied to all
Directors. The calling of Directors and
Statutory Auditors for the meetings of the Board of Directors is made in
advance and in reasonable time to allow sufficient information on the subjects
under discussion and is followed by the advance documentation necessary to
ensure the best informed performance by the Directors in the fulfillment their
tasks. The rule of advance information may only be waived in cases of
particular urgency or requirements of confidentiality; on such occasions there
will still be a full treatment of each subject and particular attention to the
content of the documents not sent in advance. The SANPAOLO IMI Articles of Association allow the meetings of the Board
of Directors to be held through telecommunication networks, as long as the
exact identity of those legitimately authorized to attend is guaranteed and it
is possible for all participants to intervene, in real time, on all the subjects
and to see, receive and transmit documents. At least the Chairman and the
Secretary must be present on the premises in which the Board meeting has been
called, where it is considered as held.  10 
   The meetings of the Board of
Directors may be attended, without voting rights, by the Managers of Head
Office Directions or Functions, to supply information and data concerning the
practices submitted for examination by the Board, representatives of the independent
auditors and external consultants, in relation to matters on the agenda, which
might require specific technical expertise. The SANPAOLO IMI Board of
Directors met 17 times during 2003; as in the past, the Directors attendance
of board meetings was significantly high and constant (about 90%), ensuring a
systemic contribution by all its members to the management of corporate and
Group affairs, fully exploiting the important professional skills available to
group advantage. Given the regular schedule
thus far adopted by the Bank, a similar number of meetings may also be assumed
for the year in course, 4 of which have already been held. In compliance with
the Regulations of Borsa Italiana, SANPAOLO IMI presented the calendar of
corporate events for 2004 to the market in December 2003, stating the date of
the board meetings for approval of the economic and financial figures. Executive Committee and Managing Directors In accordance with Art. 15 of
the Articles of Association, the Board of Directors nominates from among its
members the Executive Committee (of which the Chairman, presiding, the Deputy
Chairmen and the Managing Directors are members ex officio), setting the number
of members, delegated powers, term of office, operating rules and powers. The Board
also nominates, determining their attributions, one or more Managing Directors. The Executive Committee is
currently composed of eight Directors, of which five non-executive, three of
which independent: Rainer Masera Pio Bussolotto Alfonso Iozzo Luigi Maranzana Virgilio Marrone Iti Mihalich Orazio Rossi Enrico Salza The Secretary of the Board of
Directors acts as Secretary of the Executive Committee. The Board has attributed to
the Executive Committee powers to be exercised within the context of the strategies,
the addresses and plans laid out by the same Board, with faculty of sub-power
of attorney and the obligation to report quarterly to the Board on the activity
performed, the decision made and the powers of attorney conferred. In
particular, the Executive Committee has been given powers concerning loan issue
and, generally, operational powers regarding the recovery of loans, assumption
of economic burdens, legal and prelegal proceedings on non-recovered assets and
liabilities, administration procedures against the Company and shareholdings 
except in the case of exclusive competence of the Board of Directors, pursuant
to Art. 16 of the Articles of Association - personnel and expenditure. The
Executive Committee has also been given, in general, the faculty to assume any
urgent provision in the interests of the Company, referring them to the Board
at its next meeting. The Executive Committee, the
Statutory Auditors having their powers set by law, is called to meet whenever
the Chairman considers appropriate and, by company practice, around twice a
month. The Committee met 20 times during 2003, with an average attendance by
Directors of 97%. *
* * 11 
   The Board has conferred to
the Managing Directors, each separately, powers to be exercised within the
context of their respective competencies as well as strategies, directions and
plans made by the same Board, with faculty of sub-delegation and the obligation
to report quarterly to the Board on the activity undertaken, decisions made and
mandates conferred. The distribution of the areas
of responsibility among the Managing Directors originates from the
identification of operational and market contexts with similar characteristics
and from the decision to maximize specializations and competencies. Another aim
is to achieve maximum sharing of Group targets and successful coordination
between different, yet correlated operating areas, in order to maximize
operating efficiency and supply a service of excellence to all customers. In particular, the following
specific competencies have been attributed: the Managing Director Pio
Bussolotto is assigned responsibility for the North East Territorial Direction,
established following the merger by incorporation of Cardine Finanziaria into
SANPAOLO IMI in support of the bank-networks belonging to the former Cardine
group operating in the Triveneto (comprising the regions Veneto, Friuli Venezia
Giulia and Trentino Alto Adige) and Emilia areas, with the functions of supervising
the related commercial and credit activities, coordinating the operations of
the Sanpaolo branches in the respective territorial settings and promoting
development activities, addressing and exploiting the business opportunities
offered by the market of reference. The Managing Director in question is also
assigned responsibility for shareholdings in other domestic banks and for the
GEST Line tax collection company, as well as the control of Group operation and
supervision of purchasing and logistics;  the Managing Director Alfonso
Iozzo is in charge of banking and lending activities to households, companies
and public entities, through the direct responsibility for the Sanpaolo
Network, Sanpaolo Banco di Napoli, Banca OPI and Banca Popolare dellAdriatico
S.p.A., as well as the Groups corporate identity. In order to accentuate the
operational integration between the various Group banks, the Managing Director
in question has also been assigned the centralized control of Group lending,
including large risks, and responsibility for the Macchina Operativa Integrata;  the Managing Director Luigi
Maranzana is assigned responsibility for specialist businesses, with particular
reference to the financial planner networks (Banca Fideuram and Banca Sanpaolo
Invest), investment banking (Banca Imi), asset management (Sanpaolo Imi Wealth
Management), financial markets and international banking. The Financial
Statements, as well as other central Functions of the Group near to the
above-mentioned markets, such as Group Finance, Risk Management and
Correspondent Banks, refer to the Managing Director in question.  Considering the
aforementioned competencies, the Board has conferred to the Managing Directors
powers concerning loan issue and, more generally, operational, Group guarantees
to financial institutions, financial risk management and control, recovery of
loans, assumption of economic burdens, legal and prelegal proceedings on
non-recovered assets and liabilities, administration procedures against the
Company, shareholdings and costs, as well as powers in matters concerning
personnel and structures within the context of the management directions
approved by the administrative bodies. The Managing Directors have
been assigned, in general and within the context of their respective
attributions, or in the execution of decisions made by superior Bodies, all
powers necessary for the ordinary management of the Company, unless otherwise
reserved specifically to other Bodies pursuant to the Articles of Association
or by exclusive mandate of the Board of Directors. In accordance with Art. 17
of the Articles of Association, the proposals to the Board of Directors and the
Executive Committee are formulated by the Managing Directors on the basis of
the conferred delegated powers. In particular, the Managing Directors are
responsible for proposals related to the general organization of the Company,
to credit and business areas as well as personnel management. Technical Committees The Board of Directors is supported in its institutional functions by
Technical Committees made up from its members - as per subsection three of Art.
15 and in accordance with the provisions made in the Code of Conduct - with
consultative, management and control functions.  12 
   As well as responding to the
division of responsibilities between Directors, considering the number of
offices held by each of them, Committees are composed on the basis of the
Professional characteristics of the Directors, to guarantee adequate coverage
of the thematic areas delegated to the Committees. a) Remuneration and Personnel Policies Technical Committee The Remuneration and
Personnel Policies Technical Committee is composed of nine Directors, of which
six non-executive, four of which independent: Enrico Salza (Chairman) Giuseppe Fontana Mario Manuli (2) Virgilio Marrone (3) Iti Mihalich Orazio Rossi Pio Bussolotto Alfonso Iozzo Luigi Maranzana  In particular, the Committee
has the role of evaluating, in agreement with the Chairman of the Board of
Statutory Auditors and referring to the Board of Directors, the remuneration of
the Directors with particular offices and examining the total remuneration
structure of the Directors, also taking account of any presence in the
Corporate Bodies of subsidiary Companies; to consider in depth the issues
concerning the general direction for top management remuneration and management
policies at Company and Group level, as well as the approval and modification
of the general arrangements concerning work relationships (such as, for
example, the Combined Company Contract). The involvement of the
Managing Directors is envisaged in the limits inherent in the definition of the
general directions of top management remuneration and management policies and
of a general nature concerning work relationships. Resolutions concerning
Committee members are always made in absence of those directly involved. The Remuneration and
Personnel Policies Technical Committee met six times during 2003. b)
Audit Technical Committee The Audit Technical
Committee, set up by the Board of Directors in June 1998, is composed of four
non-executive Directors, three of whom independent: Giuseppe Fontana (Chairman) Virgilio Marrone Emilio Ottolenghi Enrico Salza The Chairman of the Board of
Statutory Auditors and the Managing Directors take part in the work; Report and
Audit Management Heads as well as, where necessary, the Heads of the other
Functions involved with the specific issues handled, take part in the meetings
as speakers. 
 2Mario
Manuli intervenes in activities concerning the evaluation of the remuneration
of Directors with special offices and the complex structure for the
remuneration of Directors. 3Virgilio
Marrone intervenes to consider in depth the issues concerning the general
direction for top management remuneration and management policies at Company
and Group level, as well as the approval and modification of the general
arrangements concerning work relationships.  13 
   The Audit Committee has the
responsibility of analyzing the problems and relevant practices with the
possibility to make specific analyses of subjects to be investigated further,
with reference to the evaluation of the internal control system. The Committee
also evaluates the adoption of the best corrective measures proposed to deal
with omissions and anomalies found in the audit processes, both internally and
with the independent auditors. In particular, the Committee: assists the Board of
Directors in carrying out the tasks of setting the guidelines and periodic
checks of the operational adequacy and effectiveness of the internal control
system of the Parent Bank and the Group Companies;  evaluates the working plans
prepared by internal control and receives their periodic reports;  evaluates, together with the
auditors and representatives of the companies responsible for the matter, the
adequacy of the accounting principles used and their consistency for the
publication of the consolidated financial statements;  evaluates the proposals
formulated by the independent auditors for their responsibilities, as well as
the working plan set out for the audit and the results contained in the report
and letter of suggestions;  maintains close contacts with
the Board of Statutory Auditors, through the participation of its Chairman at
meetings, so as to allow reciprocal and timely information on the relevant
subjects for the system of internal controls;  refers to the Board of
Directors, at least every six months, on the occasion of the approval of the
annual and half year report, activity undertaken and the adequacy of the
Groups system of internal controls;  performs further tasks
assigned to it by the Board of Directors, particularly in relation with the
independent auditors;  preliminarily evaluates
relevant transactions with related parties.  The Audit Technical Committee
also performs the tasks and functions assigned to it as a Regulatory Body, in
accordance with D. Lgs 231/2001, as regards the administrative responsibility
of the companies. As well as intervening on
more strictly pertinent matters, the Audit Committee also examined other
general issues in 2003, including: the impact of the New Basel Capital Accord
on the methodologies used within the Bank; the criteria and guidelines
concerning the attribution of further assignments to Group companies
Independent Auditors, with the aim of preserving the independence of the
auditors; the security management of Internet banking services offered by SANPAOLO
IMI, in order to guarantee an adequate level of protection for the strategic
choices made by the Bank in the sector; the instructions issued by the
Securities and Exchange Commission on internal controls and auditing. In the course of 2003 the
Committee met on 17 occasions. c)
Group Risks Technical Committee The Group Risks Technical
Committee has the responsibility of establishing the Groups risk strategies
and policies, supplying guidelines for defining risk measurement methodologies
and criteria. It is currently composed of eight Directors, of which five
non-executive, four of which independent: Rainer Masera (Chairman) Anthony Orsatelli Emilio Ottolenghi Orazio Rossi Remi François Vermeiren Pio Bussolotto Alfonso Iozzo Luigi Maranzana  The Group Risks Technical Committee met eight times during 2003.  14 
   d)
Ethical Committee The Ethical Committee, set up
in 2001, is currently composed of seven Directors, all of which non-executive
and independent: Abel Matutes (Chairman) Rainer Masera Alberto Carmi Richard Gardner Mario Manuli Antonio Maria Marocco Remi François Vermeiren The Committee in question has
the responsibility of investigating and evaluating the principles to be
presented to the Board of Directors for the identification of a corporate
ethical-environmental policy, monitoring internally to which extent the chosen
principles have been adopted and supervising the publication of the Social
Report and the guidelines for the external communication of corporate policy in
this area. The Ethical Committee is also responsible for proposing the
definition of codes of conduct and approving adherence to declarations of
principles or bodies in the sector and has given its positive judgment on the
Ethical Code of SANPAOLO IMI, approved by the Banks Board of Directors in
2003. Together with the Social
Report, this document provides the general reference of the ethical principles
and values of the Group and the corpus for the criteria of conduct for its Directors,
employees and co-workers, in every operating context and geographical area. The
Ethical Code provides details on the principles of honesty, fairness, faith,
loyalty, integrity and respect of the law and the legitimate interests of all
people and bodies with which the Group companies operate; the Code regulates
the implementation of the abovementioned criteria, the training activity and
the methods used for its dissemination, also providing instructions for
application in the case of violation of its provisions. The Ethical Code has been
brought to the knowledge of all Group employees, in the belief that total
adherence and consistent application of its principles, in relations with
customers and other Bank and Group Company interlocutors, create the basis for
a long-term relationship of trust; the Code has also been transmitted to the
Group companies so that its contents can be disseminated among the respective
Administrative bodies. In the course of 2003 the
Ethical Committee met on 3 occasions. Nomination and remuneration of the Directors a)
Nomination The Banks Articles of
Association do not contain a particular procedure for nominating Directors,
hence this takes place on the basis of the proposals presented during the
Shareholders meeting, with the presentation of the curricula and professional
experiences of the candidates. So far there has been no need
to create a special Committee within SANPAOLO IMI for the presentation of
nominations to the office of Director, given the nature of the task, which
falls within the context of the competencies of shareholders, and the alert and
attentive character of the latter as regards attendance of the shareholders
meetings and presenting suitable candidates for the corporate office. Their
choice is focused on profiles of high standing with a wide range of different
professional and managerial experiences in domestic and international contexts. It should be emphasized that - in the light of the current regulations
concerning requisites of respectability and professionalism required for the
bank Directors - the presentation of nominations implies the performance of
adequate checks by  15 
   those presenting candidates
regarding the personal and professional characteristics of their candidates.
The Board has 30 days from the date of nomination to check that the
above-mentioned requisites exist, in conformity to the legal dispositions
issued by the Bank of Italy. b)
Remuneration The current system for
remuneration of SANPAOLO IMI Directors, according to the criteria established
by the shareholders as of 30 April 2001 and 29 April 2003, is largely based on
the following: 1)a fixed annual part,  2)a variable part, linked to
results achieved, and determined with reference to the bases and parameters
approved by the Shareholders Meeting,  3)a fixed sum including
allowances for each attendance at meetings of Corporate bodies,  while, pursuant to the
Articles of Association, the Directors have the right to reimbursement of
expenses caused by their office. The Board of Directors
supervises the distribution to the Directors of the variable part, having heard
the opinion of the Board of Statutory Auditors and, pursuant to subsection nine
of Art. 15 of the Articles of Association, sets the remuneration of the
Directors with particular duties as set out in the Articles of Association,
having heard the opinion of the Board of Statutory Auditors, and also takes
advice from the Remuneration and Personnel Policies Technical Committee. In particular, for 2003, the
Board of Directors, upon proposal by the aforementioned Committee, established: 1)for the Chairman and Managing
Directors, a fixed remuneration and a variable part related to the achievement
of specific targets in Bank and Group results, together with the stock option
plans (illustrated in detail in the current Annual report) structured in a
fixed and variable component fixed to share performance;  2)for the Deputy Chairmen, a
fixed emolument related to the office, linked to their commitment to replace
the Chairman in his absence or impediment, directly taking over the
responsibilities involved.  The Board of Directors - in
accordance with the abovementioned Art. 15 of the Articles of Association,
having heard the opinion of the Board of Statutory Auditors - has set an
additional payment for the Director who are members of the Technical Committees
and for the Chairman of the Audit Technical Committee, considering the
extensively diversified area of operation of the abovementioned Committee. Details of the payments to
the Directors are shown in the Explanatory Notes to the Parent Bank Financial
Statements. Central Management The Central Management -
nominated, in accordance with Art. 20 of the Articles of Association, by the
Board of Directors, in alternative to the nomination of the General Manager(s)
and Deputy General Manager(s), is managed by the Managing Directors and its
Members, in their respective areas of expertise, implement the decisions made
by the Board, the Executive Committee, the Chairman and the Managing Directors,
manage all current affairs, supervise the structure and operation of
Departments and organize the assignments and destinations of personnel,
excluding Executives. They can also delegate, with internal and continuing
provisions, certain powers of theirs to Executives and other Head Office
personnel, area and branch managers. The Central Management is currently composed of the following Managers:  Audit Management, who
evaluates the functionality of the whole internal control system of the Parent
Bank and its operating units and identifies anomalous trends and violations of
procedures and regulations;  16 
   Human Resources Management,
who ensures the qualitative and quantitative composition of the Groups human
resources required for current and future needs of the individual
organizational units;  Sanpaolo Network Management -
split into Private & Retail Division and Companies Division - for
supervision of the territorial organization of the Bank and guaranteeing the
interface with the other Group networks, to harmonize the various commercial
development components;  Group Credit Management, with
the task of optimizing the quality of the Groups credit activities, minimizing
the credit risk consistent with the returns targets set, and direct management
of the domestic and international Groups, as well as supervision of structured
finance transactions;  General Secretarial
Management, comprising legal and corporate competencies, the management of
shareholdings and corporate development, the management of external relations
and relationships with institutional investors;  Management of Macchina
Operativa Integrata for overseeing the integrated information system and back
office processes of the domestic banking networks and Parent Bank functions;  Group Finance Management, comprising the entire
Groups financial management as well as treasury activities and portfolio
management activities of the domestic banking networks. In consideration of the
SANPAOLO IMI listing on the New York Stock Exchange and in observance of the Sarbanes - Oxley Act, as well as the
pertinent rules adopted by the SEC on the matter, a special Disclosures
Committee has been set up, composed of certain members of Central Management
and the Heads of certain Central Functions, chaired by the Annual Report
Manager, in his capacity as Chief Financial
Officer, with the task of cooperating with all the Company bodies to
accomplish their duties and fulfill their responsibilities regarding the
accuracy and promptness of the disclosure activity, as well as the creation and
effective operation of the control and procedure system applied to the
production of the same report. *
* * The remuneration system of
the Companys Central Management (as happens for Group management) is
characterized by the clear personalization of the retributive schedule applied
to each of its Members, based, as well as on a fixed part, on the increasing
use of the variable component. The current management by objectives model is,
in particular, closely related to the strategic aims of the Industrial Plan,
with the application of a corrective mechanism that links the payment of the
cited variable component to the achievement of a global business objective,
made up, for 2003, of the Groups ordinary gross income. The internal control system The internal control system
is a fundamental and vital element to the company processes aimed at
guaranteeing, through the control of related risks, the correct management of
the Bank and the Group in view of achieving the set aims and, at the same time,
the defense of the interests of stakeholders. As a bank and Parent Bank of
a banking group, SANPAOLO IMI is subject to a specific Bank of Italy regulation
which, as regards the issue in question, in line with the recommendations
adopted internationally, is marked by a limited prescriptive indication in
favor of principles of reference and by stimulating the top management for the
development of highly efficient and effective control systems: in accordance
with the Supervisory Regulations issued by the Bank of Italy, competitiveness,
medium- and long-term stability and the possibility of guaranteeing healthy and
prudent management cannot be obtained without a correctly functioning internal
control system and the development of a solid company culture on the matter. At SANPAOLO IMI the internal control system and the appointed structure
are particularly widespread and organized to control effectively the typical
risks inherent in the corporate activity and monitor the economic and financial
situation of the Company and the Group.  17 
   These responsibilities are
given  as well as to the Audit Technical Committee mentioned earlier - to a
special Structure known as Audit Management which, reporting directly to the
Managing Directors, is necessarily independent of the operating structures and
in carrying out its activities, it is not denied access to data, archives and
company assets. Audit Management has the
responsibility for evaluating the functioning of the complete system of
internal controls of the Group, controlling operations and risk management
performance as well as bringing to the attention of the Board of Directors and
Top Management possible improvements in risk management policies, measurements,
instruments and procedures; control is extended to Group companies directly and
through the coordination of the corresponding subsidiaries structures. The
Management is split into three Functions: Parent Bank and Bank Networks Audits,
with the mission of evaluating the internal control system to control risks and
identify anomalies and violations of procedures with reference to the corporate
centre units of the Parent Bank, the various central and outlying units of the
Sanpaolo Network Management and the Foreign Network as well as Sanpaolo Banco
di Napoli and the former Cardine bank networks; Subsidiaries Audit, with the
mission of controlling the auditing functions of the subsidiaries, in order to
guarantee consistent controls and adequate attention to the various types of
risk, also through an independent investigation and verification activity by
way of examination of periodical informative flows, as well as interventions on
the premises of the same Companies; Compliance, with the mission of ensuring
the conformity of company processes with legal provisions and the supervisory
regulations that govern the various sectors of activity. A quarterly report on the
results of the activity is presented to the Board of Directors and the Audit
Technical Committee. There are regular, continuous
reports between Audit Management and the other Control bodies and, in
particular, to the Board of Statutory Auditors, to which constant information
and cooperation are ensured through the attendance of the Audit Committee
meetings by the Chairman of the Board and the periodical report by the Head of
Audit Management, in the context of the sessions of the same Board, on the
results of the activities performed. *
* * Moreover, in order to
implement the provisions of Legislative Decree 231/2001, on the matter of
administrative responsibility of legal bodies, and also taking account of the
existing internal control system, SANPAOLO IMI has approved the reference
principles for adoption of the models of organization, management and control
pursuant to the abovementioned Decree, as well as conferral of the
qualification of supervisory body to the Audit Technical Committee, with
contextual attribution of the powers and prerogatives necessary to perform the
supervisory activities in question. Transactions with related parties The Board of Directors of
SANPAOLO IMI has identified the parties correlated to the Bank and defined a Group
procedure for the deliberation of transactions with such correlated parties,
aimed at setting competencies and responsibilities, as well as indicating the
informative flows between the structures of the Bank and the Companies directly
and indirectly controlled. To provide maximum
transparency, the Bank has included in the setting of the related parties all
those adhering to the current parasocial contracts between SANPAOLO IMI
shareholders, including the holding companies of said shareholders, as well as
the Executives of the Parent Bank Central Management. In particular, in terms of transactions with significant correlated
parties referred to the Parent Bank, they have been reserved to the exclusive
deliberative competence of the Board of Directors, following screening by the
Audit Committee.  In order to individuate the
requirements of significance, the following limits have been set:  a)50,000.00 euro, in the case
of atypical or unusual transactions;  18 
   b)10 million euro, in the case
of loans and other transactions at standard conditions, undertaken with
correlated parties outside the Group;  c)500 million euro, in the case
of loan transactions at standard conditions undertaken with Group correlated
parties, or 50 million euro in the case of other transactions at standard
conditions undertaken with Group correlated parties.  The significant transactions
entered into by subsidiaries with the correlated parties of the Parent Bank
have been reserved to the deliberative competence of the Board of Directors of
the company concerned; in any case the subsidiary must submit its proposal to
the approval of the Parent Bank in the case of transactions with values which
are at least equivalent to the limits stated below: a)50,000.00 euro for atypical
or unusual transactions with correlated parties;  b)10 million euro for all
transactions, loans and otherwise, at standard conditions with correlated
parties outside the Group and otherwise.  As part of the procedure, in
the preliminary stage of atypical or unusual transactions, the competent
structures must be assisted by independent experts called to express an opinion
on the economic conditions and/or legitimacy and/or the technical aspects of
the transaction. For significant transactions, the Head of the Parent Group
Structure competent to propose or approve the transaction, will assess whether
or not to make use of the assistance of independent experts on the basis of the
non-repetitive nature and relevance of the transaction. The resolution proposals
related to transactions with related parties, even when they are delegated to
company bodies other than the Board of Directors, must state that the
transaction is with a related party and always include a brief description of
the characteristics, methods, terms and conditions of the transactions,
indicating the related parties with whom the transaction is entered into, the
reasons for and economic effects of the accomplishment of the transaction, the
methods used to determine the price and the evaluations of its adequacy, as
well as any indications supplied by independent experts. If the correlated party is
the subject to exercise functions of management, administration and control of
the Bank, the procedure pursuant to Art. 136 of the Testo Unico Bancario
(Consolidated Banking Law) will also be applied. The provisions adopted by the
Parent Bank, in its capacity as company listed on the New York Stock Exchange
are excepted, in implementation of the United States discipline on the matter
of transactions with Group representatives. Following the approval of the
transactions with correlated parties, the Functions of the Parent Bank and the
subsidiaries must present a quarterly report to the Audit Committee and the
Board of Directors of the Parent Bank, in accordance with Art. 150 of D. Lgs
58/1998, and must, if necessary, implement immediate or periodical informative
duties to the market. Treatment of confidential information Within SANPAOLO IMI, the
institutional task of external communication  which also includes price
sensitive information is the responsibility of the Chairman and the Managing
Directors, supported by Investor Relations, while the task of entertaining
relations with the press and other national and international communications is
the responsibility of Media Relations. Confidential information is treated following an internal procedure
approved by the Board of Directors, taking account of best practice, and
coordinates the principles and recommendations contained in communications from
the Regulatory Authorities. This procedure, reaffirming the obligation of
confidentiality, in the corporate interest and the interest of Directors and
Statutory Auditors, also reaffirms the value which the Company recognizes in
terms of principles of market efficiency and transparency as well as the
criteria of duty, clarity and continuity of information, on which communication
toward the public is based. The procedure also defines the circumstances when
the obligation to communicate arises and the means of communication.  19 
   In implementing the legal and
regulatory provisions, in addition to the above mentioned procedure, specific
instructions have been transmitted to subsidiaries to ensure an efficient
informative flow and timely respect for the requirements of transparency by the
Group to the market. Lastly, in compliance with
the rules of the Sarbanes - Oxley Act and the pertinent provisions adopted by
the SEC, the listing of SANPAOLO IMI on the New York Stock Exchange means that
the Company must respect certain specific communication methods. In this
context, as already mentioned above, the Disclosures Committee has been set up
- composed of Heads of Central Management and Central Functions - with the task
of supporting all the Company bodies to accomplish their duties and fulfill
their responsibilities regarding the accuracy and promptness of the disclosure
activity. Internal Dealing Pursuant to provisions
introduced by Borsa Italiana in the Regulation of Markets and in the related
Instructions on the matter, aimed at the disclosure of transactions of purchase
and sale undertaken by the Directors and by other relevant people in the
stocks of listed Companies to which they belong and of the main subsidiaries,
in December 2002, the Board of Directors approved the Code of Conduct of
Relevant People and of SANPAOLO IMI S.p.A. for transactions involving the
Groups listed financial instruments and for communication to the market. The Code governs, with
legally binding effectiveness, the communication to the public of transactions
in Group listed stocks undertaken by subjects (relevant people) who have
access, in virtue of the office held in the same Group, to a privileged strategic
vision and are therefore able to direct, with a deeper perception of the
opportunities offered by the market, their own investment choices. In accordance with the
provisions of the Code and on the basis of the information received, the Bank
communicates to the market  by the tenth day on which the stock market is open
following the last day of each calendar quarter  the transactions undertaken
during such period by subjects identified as relevant people or equivalent, the
total amount of which is equal to or more than 50,000.00 euro, and having as
the object listed stocks of the Group or financial instruments, as defined in
the regulatory provisions. Among the transactions subject to communication, are
those having as their object the American Depositary Receipts (ADRs) negotiated
on the New York Stock Exchange, while the transactions undertaken in the
exercise of purchase or subscription rights  regulated within the context of
stock option plans  or option rights, are not considered. Without delay  and by the
first day the stock exchange is open following receipt of communication of the
transaction by the relevant person  the Bank communicates to the market the
transactions undertaken by the same subjects which amount, individually or
collectively, to more than 250,000 euro. In the Code of Conduct,
provision has also been made for the Board of Directors to establish  for
specific periods of time  prohibitions or restrictions for relevant people or
equivalent regarding the execution of the above-mentioned operations. SANPAOLO IMI has communicated
promptly to the market the adoption of the Code of Conduct and subsequent
amendments, making the updated document available on its website. Relations with shareholders SANPAOLO IMI has set up already internal company structures dedicated to
managing relations with institutional investors, shareholders and the main
operators in the domestic and international financial community, and to
guaranteeing the systematic dissemination of thorough and prompt information on
Group activities, strategies and results, also in the light of the indications
formulated on the matter by the Consob and the principles contained in the
Market Information Guide  20 
   on corporate information
published in 2002 by Forum Ref. These competencies are currently attributed to
Investor Relations and the Company Secretariat. During 2003 the Bank pursued
its opening towards the market, especially in conjunction with the publication
of the financial statements and periodical results, through meetings with
investors and financial analysts in the main geographic areas. Furthermore  to encourage
further communication with investors and in the context of the practice of
correct, accurate and transparent communication  the Bank uses the
www.sanpaoloimi.com website to provide news on the profile of the SANPAOLO IMI
Group and the Banks shareholders, economic-financial information on the Group
(financial statements, half year reports and quarterly share performances as
well as summary tables), press releases issued by the Company and the annual
calendar of relevant corporate events as well as information on relevant or
extraordinary transactions. The site also provides news about the meetings
organized periodically with financial analysts, to which anyone who is
interested can participate directly or by conference call. The website also includes a
section dedicated explicitly to the Banks corporate governance structure,
containing this report, documents and information concerning its organization
(Company bodies, Articles of Association and Regulations for meetings), the
Group organization and the procedures and principles of conduct adopted by the
Company in general and with reference to specific issues (internal dealing
code, conduct during transactions with related parties, Ethical Code). In the context of the
aforementioned section of the website there is an e-mail address
(investor.relations@sanpaoloimi.com) where users can request information or documentation. Shareholders meetings SANPAOLO IMI encourages
extensive attendance of the Shareholders meetings: the informative material
prepared in view of the meetings is usually promptly forwarded, together with
notification of the meeting called, to the shareholders who attended the
previous meetings, at their domiciles; the documentation on the subjects on the
agenda is also available on the Banks website. The Shareholders meetings
are attended by the Company Directors, who make a useful contribution to the
meeting. Moreover - to allow best use of the discussion and to regulate the
meeting, without restricting or affecting the rights of each shareholder to
express his/her opinion and ask for clarification regarding the agenda 
SANPAOLO IMI has implemented a shareholders meeting Regulation which is made
available to shareholders before every meeting, together with the documentation
prepared specifically for the Shareholders meeting. This Regulation is not an
appendix to the Articles of Association and has been approved by the Ordinary
shareholders meeting which is competent to approve any related amendments,
also to guarantee greater flexibility and prompt adaptation of the text to the
needs that the experience of its application might suggest. The Regulation governs, among
other things, the intervention in and attendance of the Shareholders meeting,
the verification of the legitimate right to intervene and access to the meeting
room, the voting methods, interventions by the Directors and Auditors and also
the Chairmans powers. The Company does not deem it
necessary to proceed to specific initiatives designed to amend the capital
percentage ceilings contemplated by current regulation for actions and
prerogatives to safeguard minorities. The SANPAOLO IMI Shareholders meeting met twice during 2003: on 29
April and 25 November. The subjects discussed during these meetings include, in
particular, the approval of the financial statements for 2002 and the approval
of the project for the merger by incorporation of Cardine Finanziaria as well
as the adaptation of the Articles of Association to the corporate law reform.  21 
   Board of Statutory Auditors a) Nomination, composition and duration In accordance with Art. 19 of
the Articles of Association, the Board of Statutory Auditors is elected by the
Shareholders Meeting through the voting list and in observance of a procedure
which accounts for the timely publication of the candidacies and ensures within
it a representation of minority shareholders. The lists of candidates -
which can be presented by the shareholders who, either alone or with other
shareholders, represent at least 1% of the shares with voting rights in the
Ordinary shareholders meeting - must be published in at least two national
daily newspapers, including one financial newspaper, at least 10 days before
the day fixed for the Shareholders Meeting on first call, and deposited at the
registered office together with the curriculum vitae of each candidate and
declarations with which the individual candidates accept their candidacy and
affirm, under their own responsibility, the absence of causes of ineligibility
and incompatibility, as well as the existence of the requirements prescribed by
current regulations and the Articles of Association to hold the office of
Statutory Auditor. The SANPAOLO IMI
Shareholders meeting, held on 30 April 2002, nominated the Board of Statutory
Auditors for 2002/2003/2004. Two lists were presented
during this meeting: list no. 1 by Compagnia di San Paolo S.r.l.  then holder
of 16.13% if the share capital, and list no. 2 by Fondazione Cassa di Risparmio
di Venezia  then holder of 1.96% of the share capital. The list that obtained most
votes was list no. 1. Therefore, in accordance with subsection 12 of the
aforementioned Art. 19, this list presented in the progressive order as listed,
three Auditors and one Supplementary Auditor, while the two remaining Auditors
and one Supplementary Auditor were taken from the other list (4): Mario Paolillo
  
  Chairman
  
  taken from list no. 1Aureliano Benedetti
  
  Auditor
  
  taken from list no. 1Maurizio Dallocchio
  
  Auditor
  
  taken from list no. 2Paolo Mazzi
  
  Auditor
  
  taken from list no. 1Enrico Vitali
  
  Auditor
  
  taken from list no. 2Stefania Bortoletti
  
  Supplementary Auditor
  
  taken from list no. 2  In accordance with subsection
14 of Article 19 of the Articles of Association, the chair of the Board is
taken by Mario Paolillo, the latter being at the top of the list which received
the most votes. *
* * The Shareholders meeting of
30 April 2002 also established the payment due to the members of the Board of
Auditors for the three year-period of office (including allowances) for
attendance of every meeting and without affecting the Auditors right to
reimbursement of expenses produced by their office. b)
Functions and powers of the Board of Statutory Auditors The Board of Statutory
Auditors  which met 19 times during 2003, with an 86% average attendance by
Auditors  is called 
 4The
Meeting on 30 April 2002 elected two Supplementary Auditors, pursuant to
subsection 1 of Art. 19 of the Articles of Association. Antonio Ottavi,
Supplementary Auditor taken from list no. 1, handed in his resignation,
effective from 19 January 2004. The nomination of a new Supplementary Auditor
is provided for by the agenda of the Shareholders meeting of 28/29 April 2004;
the decision will be taken in accordance with subsection 16 of Art. 19 of the
Articles of Association by the relative majority, without the vote listing
procedure.  22 
   upon to supervise the
observance of the law and the Articles of Association, the observance of the
principles of correct management and the adequacy of the organizational
structure, for the areas of competence, of the internal control system and the
companys administrative-accounting system, as well as the adequacy of the
provisions given by the company to its subsidiaries to fulfill the
communication and information obligations provided for by the law. In carrying out its duties
the Board of Statutory Auditors has extensive powers of inspection and internal
investigation, it may call the Shareholders meeting  in cases provided for by
the law, the Board and the Executive Committee, appeal against the resolutions
of the Shareholders meeting and the Board and report irregularities in
management to the Court, also with reference to subsidiaries. The Board also
immediately informs the Consob and the Bank of Italy of irregularities in
supervisory activities. The Board of Auditors attends
all the meetings of the Board of Directors and the Executive Board and
therefore is constantly informed of the activities carried out by the Company.
Moreover, in compliance with Art. 150 of D.Lgs 58/1998 and Art. 17 of the
Articles of Association and in order to guarantee that all the information
needed to exercise effectively its functions are made available to the Board of
Statutory Auditors, the Board of Directors refers promptly, at least quarterly,
to the Board on the activities performed and the major economic, financial and
balance sheet transactions performed by the company or the subsidiaries as well
as, in particular, potentially conflicting transactions. To implement the legal
provisions and the Articles of Association, a special organization procedure
has been created; it defines the competencies and responsibilities of the Bank
functions involved in the informative process between the Board of Directors
and the Board of Statutory Auditors. The activities referred by the Board are,
in any case, promptly reported to the Board of Statutory Auditors in a specific
communication addressed to its Chairman. The informative activity in
question is organized into reports on Group activities, which analyze the
operating trend and major economic, financial and balance sheet transactions,
the exercise of powers of attorney within the Parent Bank and potentially
conflicting transactions, with particular reference to transactions with
related parties. The extensive informative activity in question is not just
functional to the performance of the Board of Statutory Auditors supervisory
activities, but also allows all the Directors to carry out aware and informed
observance of company operations. *
* * In relation to the quotation
on the United States stock market, SANPAOLO IMI took direct measures during the
year to respond fully to the instructions given by the SEC implementing the
Sarbanes-Oxley Act, also with regard to the obligation to set up (by 25 July 2005)
an audit committee which meets specific standards. The analysis of the new
regulation has led to the belief that SANPAOLO IMI can assign, for the moment,
the audit committee functions to be implemented immediately  such as the
obligation for independent auditors to refer and discuss the critical
accounting policies and alternative treatments under GAAP and the obligation
for pre-approval of assignments to independent auditors  to the Board of
Statutory Auditors, without influencing the ordinary competencies and
responsibilities assigned to the latter under Italian law. The Board of Statutory
Auditors already holds extensive powers and responsibilities established by the
law and Italian regulations, as well as by Consob recommendations, and the
choice made appears consistent with the concentration of control competencies
within this Body. Specifically, the assignment of the compulsory auditing appointment, as
well as further appointments to the same auditors, have already been approved
by the Board of Statutory Auditors. The latter has therefore given a better
definition - on the basis of the Italian and American provisions made to
safeguard the autonomy of the independent auditors - of general criteria for
the assignment of audit and non audit appointments to the Groups main and
secondary auditors, as well as to others belonging to their network. These
criteria must be observed by the company Functions of the Parent Bank and the
Subsidiaries, which will continue to be responsible for the appointments assigned
to them.  23 
   Naturally, in this
prospective, the Audit Committee set up within the Board of Directors on the
basis of the Code of Conduct maintains the attributions established by the
Code, as the articulation of the primary management responsibility of the
internal control system. c)
Offices of Director or Statutory Auditor held in other listed companies  Considering that the assumption of a relevant number of offices could
make it difficult to fulfill their duties in a proper manner, the SANPAOLO IMI
Articles of Association state that the members of the Board of Statutory
Auditors cannot hold more than fives offices of Auditor in other listed
companies; the need to ensure unitary control of the Group has also led to the
express exclusion of offices held in Subsidiaries from the above restriction.  Following is a list of the offices of Director or Statutory Auditor in
other companies listed in Italian regulated markets, currently covered by the
SANPAOLO IMI Auditors:   SINDACO
  
  OFFICE
  
  COMPANYPAOLILLO Mario
  
  Chairman of Board of Statutory Auditors
  
  Banca Fideuram S.p.A.BENEDETTI Aureliano
  
  Chairman
  
  Cassa di Risparmio di Firenze S.p.A.DALLOCCHIO Maurizio
  
  Chairman
  
  Vemer Siber S.p.A.Director
  
  Aedes S.p.A.Director
  
  Marcolin S.p.A.Director
  
  Snia S.p.A.Director
  
  Sorin S.p.A.MAZZI Paolo
  
  /
  
  /VITALI Enrico
  
  /
  
  /BORTOLETTI Stefania
  
  /
  
  /   Audits Being a listed Company, the
accounting control activity of SANPAOLO IMI must, by law, be carried out by
independent auditors who are responsible for checking that the company accounts
are properly kept during the year, that the operating facts are correctly
booked and also for ensuring that the financial statements and the consolidated
financial statements correspond with the results of the accounting entries and
the checks carried out and that the same accounting documents conform to the
pertinent regulatory standards. The independent auditors issue appropriate
reports to express an opinion on the financial statements and the consolidated
financial statements as well as on the half year reports. The assignment of the
auditing appointment is proposed by the Board of Directors, also following
assessments by the Audit Committee, on the basis of bids presented by the
independent auditors interested; the proposal, together with the opinion of the
Board of Statutory Auditors, is presented to the Ordinary shareholders meeting
during the approval of the financial statements. The Shareholders meeting
confers the appointment for three years, renewable a maximum of two times, and
also determines the payment due to the company appointed. The independent auditors have
the right to obtain from the Directors documents and information useful to the
auditing activity and may carry out any checks, inspections and controls; it
promptly informs the Consob, Bank of Italy and the Board of Statutory Auditors
- with which it exchanges data and information of importance to their
respective tasks - of any facts considered discommendable. The attribution to the independent auditors of further tasks compatible
with their corporate purpose, must be approved by the Board of Directors after
being approved by the Board of Statutory Auditors.  24 
   The independent auditors
appointed by SANPAOLO IMI for 2001/2002/2003 is PricewaterhouseCoopers S.p.A..
At the Meeting called for 28/29 April 2004, the proposal to appoint the same
independent auditor for 2004/2005/2006 will be discussed. Turin, 26 March 2004 The
Board of Directors 25 
   Summary of the structure of Board of Directors and
Technical Committees  Board of
  DirectorsOffice
  
  Executive
  
  Non-
  executive
  
  Independent
  
  Number
  of other
  offices
  
  Executive
  Committee
  
  Remunera-
  tion and
  Personnel
  Policies
  Technical
  Committee
  
  Audit
  Technical
  Committee
  
  Group
  Risks
  Technical
  Committee
  
  Ethical
  CommitteeRainer Masera
  
  Chairman
  
  
  
  X
  
  X
  
  2
  
  X
  
  
  
  
  
  X
  
  XPio Bussolotto
  
  Managing Director
  
  X
  
  
  
  
  
  3
  
  X
  
  X
  
  
  
  XAlberto Carmi
  
  Director
  
  
  
  X
  
  X
  
  
  
  
  
  
  
  
  
  
  
  XGiuseppe Fontana
  
  Director
  
  
  
  X
  
  X
  
  2
  
  
  
  X
  
  XRichard Gardner
  
  Director
  
  
  
  X
  
  X
  
  
  
  
  
  
  
  
  
  
  
  XAlfonso Iozzo
  
  Managing Director
  
  X
  
  
  
  
  
  4
  
  X
  
  X
  
  
  
  XMario Manuli
  
  Director
  
  
  
  X
  
  X
  
  6
  
  
  
  X
  
  
  
  
  
  XLuigi Maranzana
  
  Managing Director
  
  X
  
  
  
  
  
  4
  
  X
  
  X
  
  
  
  XAntonio Maria Marocco
  
  Director
  
  
  
  X
  
  X
  
  2
  
  
  
  
  
  
  
  
  
  XVirgilio Marrone
  
  Director
  
  
  
  X
  
  
  
  
  
  X
  
  X
  
  XAbel Matutes
  
  Director
  
  
  
  X
  
  X
  
  
  
  
  
  
  
  
  
  
  
  XIti Mihalich
  
  Director
  
  
  
  X
  
  
  
  21
  
  X
  
  XAnthony Orsatelli
  
  Director
  
  
  
  X
  
  
  
  32
  
  
  
  
  
  
  
  XEmilio Ottolenghi
  
  Director
  
  
  
  X
  
  X
  
  3
  
  
  
  
  
  X
  
  XOrazio Rossi
  
  Deputy Chairman
  
  
  
  X
  
  X
  
  2
  
  X
  
  X
  
  
  
  XGian Guido Sacchi Morsiani
  
  Director
  
  
  
  X
  
  X
  
  2Enrico Salza
  
  Deputy Chairman
  
  
  
  X
  
  X
  
  2
  
  X
  
  X
  
  XRemi François Vermeiren
  
  Director
  
  
  
  X
  
  X
  
  2
  
  
  
  
  
  
  
  X
  
  XNumber of meetings held during 2003    Board of
  Directors
  
  17    Executive
  Committee
  
  20    Remuneration and
  Personnel Policies Technical Committee
  
  6    Audit Technical
  Committee
  
  17    Group Risks
  Technical Committee
  
  8    Ethical
  Committee
  
  3  26 
   Board of
Statutory Auditors Office
  
  Members
  
  Number of offices of Director or Statutory Auditor held in
  other companies listed in Italian regulatory marketsChairman
  
  Mario Paolillo
  
  1Auditor
  
  Aureliano Benedetti
  
  1Auditor
  
  Maurizio Dallocchio
  
  5Auditor
  
  Paolo Mazzi
  
  Auditor
  
  Enrico Vitali
  
  Supplementary Auditor
  
  Stefania Bortoletti
  
    Number of
meetings held during the calendar year: 19  Quorum
required for the presentation of lists by minorities for the election of one or
more members (ex Art. 148 TUF): 1% 27 
   Other
provisions of the code of conduct SI
  
  NO
  
  Summary of the reasons for any disagreement with the Code
  recommendations.System of
  powers of attorney and transactions with related partiesHas the Board of Directors
  attributed powers of attorney, setting their limits, methods of exercise and
  frequency of information?
  
  XHas the Board of Directors
  reserved the right to examine and approve transactions of particular
  economic, balance sheet and financial importance (including transactions with
  related parties)?
  
  XHas the Board of Directors
  established guidelines and criteria for identifying significant
  transactions?
  
  XAre the above guidelines
  and criteria described in the report?
  
  XHas the Board of Directors
  created special procedures for examining and approving transactions with
  related parties?
  
  XAre the procedures for
  approving transactions with related parties described in the report?
  
  XProcedures
  for the most recent nomination of directors and auditorsWere the candidacies for
  the office of director deposited at least ten days in advance?
  
  
  
  X
  
  The Banks Articles of Association do not contain a specific procedure for
  nominating Directors, so this takes place on the basis of the proposals
  presented during the Shareholders meeting, with the presentation of the
  curricula and professional experiences of the candidates.Were the candidacies for
  the office of director accompanied by thoroughly detailed information?
  
  
  
  XWere the candidacies for
  the office of director accompanied by an indication of suitability for the
  qualification as independent?
  
  
  
  XWere the candidacies for
  the office of auditor deposited at least ten days in advance?
  
  XWere the candidacies for
  the office of auditor accompanied by thoroughly detailed information?
  
  XMeetingsHas the company approved an
  Meeting Regulation?
  
  XIs the Regulation attached
  to the report (or is there an indication of where it can be
  obtained/downloaded)?
  
  XInternal
  controlHas the company nominated
  appointees to carry out the internal control activity?
  
  XAre the appointees
  hierarchically non dependent on managers of operating areas?
  
  XOrganizational unit
  appointed for internal control (pursuant to Art. 9.3 of the Code)
  
  Audit Management Manager:
  Aldo GalloInvestor
  relationsHas the company nominated
  an investor relations manager?
  
  XOrganizational unit and
  references (address/telephone/fax/e-mail) of the investor relations manager
  
  Investor Relations Manager:
  Dean Quinn
  Piazza San Carlo 156 10121Torino tel. 011 555 2593 
  fax 011 555 2737 
  e-mail dean.quinn@sanpaoloimi.com  28