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UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC. 20549

FORM 20-F

|o                                            | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|-------------------------------------------- | ----------------------------------------------------------------------------------------------
|OR                                          
|ý                                            | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934          
|For the fiscal year ended: December 31, 2002
|OR                                          
|o                                            | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934      
|Commission file number: 1-14870             

Sanpaolo IMI S.p.A.(Formerly Istituto Bancario San Paolo di TorinoIstituto Mobiliare Italiano S.p.A.)
(Exact name of Registrant as specified in its charter)

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Italy(Jurisdiction of incorporation of organization)

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Piazza San Carlo 156, 10121 Turin, Italy(Address of principal executive offices)

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Securities registered or to be registered pursuant to Section 12(b) of the Act.

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|Title of each class                                                                    |  | Name of each exchange on which registered
|-------------------------------------------------------------------------------------- |  | -----------------------------------------
|American Depositary Shares, each representing 2 Ordinary Shares of €2.8 par value each |  | The New York Stock Exchange*             
|Ordinary Shares of €2.8 par value each (the "Shares")                                  |  | The New York Stock Exchange              

Securities registered or to be registered pursuant to Section 12(g) of the Act:

|                                                                                           |  | None(Title of Class) |  | 
|------------------------------------------------------------------------------------------ |  | -------------------- |  | 
|Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
|                                                                                           |  | None(Title of Class) |  | 

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

Not applicable

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days.

Yes ý      No o

Indicate
by check mark which financial statement item the registrant has elected to follow.

Item 17 ý      Item 18 o

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TABLE OF CONTENTS

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|                                                                    |  |                                                         |  | Page
|------------------------------------------------------------------- |  | ------------------------------------------------------- |  | ----
|Presentation of Information                                         |  | 1                                                      
|Forward-Looking Statements                                          |  | 1                                                      
|PART I                                                              |  | 3                                                      
|ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS       |  | 3                                                      
|ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE                     |  | 3                                                      
|ITEM 3. KEY INFORMATION                                             |  | 3                                                      
|A.                                                                  |  | Selected Financial Data                                 |  | 3   
|B.                                                                  |  | Selected Statistical Information                        |  | 10  
|C.                                                                  |  | Risk Factors                                            |  | 35  
|ITEM 4. INFORMATION ON SANPAOLO IMI                                 |  | 37                                                     
|A.                                                                  |  | History and Developments of Sanpaolo IMI                |  | 37  
|B.                                                                  |  | Business Overview                                       |  | 58  
|C.                                                                  |  | Organizational Structure                                |  | 82  
|D.                                                                  |  | Property, Plants and Equipment                          |  | 82  
|ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS                |  | 82                                                     
|A.                                                                  |  | Operating Results                                       |  | 82  
|B.                                                                  |  | Liquidity and Capital Resources                         |  | 113 
|C.                                                                  |  | Contractual Obligations and Commitments                 |  | 119 
|D.                                                                  |  | Trend Information                                       |  | 120 
|E.                                                                  |  | Significant Accounting Policies                         |  | 120 
|F.                                                                  |  | Recent Accounting Developments                          |  | 123 
|ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                  |  | 126                                                    
|A.                                                                  |  | Directors and Senior Management                         |  | 126 
|B.                                                                  |  | Compensation                                            |  | 133 
|C.                                                                  |  | Board Practices                                         |  | 138 
|D.                                                                  |  | Employees                                               |  | 139 
|E.                                                                  |  | Share Ownership                                         |  | 142 
|ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS           |  | 143                                                    
|A.                                                                  |  | The Major Shareholders                                  |  | 143 
|B.                                                                  |  | Related Party Transactions                              |  | 145 
|ITEM 8. FINANCIAL INFORMATION                                       |  | 147                                                    
|A.                                                                  |  | Consolidated Statements and Other Financial Information |  | 147 
|B.                                                                  |  | Significant Changes                                     |  | 150 
|ITEM 9. LISTING DETAILS                                             |  | 150                                                    
|A.                                                                  |  | Performance of Sanpaolo IMI Share Prices                |  | 150 
|B.                                                                  |  | Markets                                                 |  | 152 
|ITEM 10. ADDITIONAL INFORMATION                                     |  | 153                                                    
|A.                                                                  |  | Memorandum of Articles of Association                   |  | 153 
|B.                                                                  |  | Foreign Investment                                      |  | 154 
|C.                                                                  |  | Exchange Controls and Material Contracts                |  | 155 
|D.                                                                  |  | Taxation                                                |  | 156 
|E.                                                                  |  | Documents on Display                                    |  | 161 
|ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |  | 161                                                    
|ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES     |  | 169                                                    
|PART II                                                             |  | 170                                                    
|ITEM 13. DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES             |  | 170                                                    
|                                                                    |  |                                                         |  |     

i

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|ITEM 14. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  | 170
|------------------------------------------------------------------------------------ |  | ---
|ITEM 15. CONTROLS AND PROCEDURES                                                     |  | 170
|ITEM 16. RESERVED                                                                    |  | 170
|PART III                                                                             |  | 170
|ITEM 17. FINANCIAL STATEMENTS                                                        |  | 170
|ITEM 18. FINANCIAL STATEMENTS                                                        |  | 170
|ITEM 19. EXHIBITS                                                                    |  | 170
|CERTIFICATION                                                                        |  |    
|CERTIFICATION                                                                        |  |    
|CERTIFICATION                                                                        |  |    
|CERTIFICATION                                                                        |  |    

ii

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PRESENTATION OF INFORMATION

Sanpaolo IMI S.p.A. ("Sanpaolo IMI" or the "Parent Bank") publishes consolidated financial statements which are included elsewhere in this annual report (the
"Consolidated Financial Statements") for Sanpaolo IMI and its consolidated subsidiaries constituting the Sanpaolo IMI Group (the "Sanpaolo IMI Group" or the "Group") in euro, the lawful currency of
Italy and eleven other member states of the European Union ("EU").

In
this annual report, references to "U.S. dollars", "dollars" or "$" are to the United States dollars; references to "euro", "Euro" or "€" are to the euro; and
references to "lire" or "Lit." are to the Italian lira, the former Italian non-decimal denomination of the euro. On January 1, 1999, the Italian lira became a member currency of the
euro at a fixed conversion rate of €1 = Lit. 1,936.27. For purposes of this annual report, "billion" means a thousand million. The noon buying rate in the City of New York for
cable transfers in foreign currencies as announced by the Federal Reserve Bank of New York for customs purposes (the "Noon Buying Rate") for the euro in effect on June 10, 2003 was
€1 = $1.1686.

This
annual report contains translations of certain euro amounts into U.S. dollars at specified rates. Unless otherwise specified, the translations of euro into U.S. dollars have been
made at the Noon Buying Rate for the euro in effect on December 31, 2002, which was €1 = $1.0485. That rate may differ from the actual rates during the year used in the
preparation of Sanpaolo IMI's Consolidated Financial Statements, and dollar amounts in this annual report may differ from the actual dollar amounts that were translated into euro in the preparation of
the Consolidated Financial Statements.

The
Consolidated Financial Statements included in this annual report have been prepared in accordance with generally accepted accounting principles in Italy, including Legislative Decree
No. 87 of January 27, 1992, which implemented European Commission ("EC") Directive 86/635, and the Bank of Italy regulations of January 16, 1995, supplemented by the accounting
principles issued by theConsiglio Nazionale dei Dottori Commercialisti e dei Ragionieri(collectively, "Italian GAAP"), which differ in certain
significant respects from generally accepted accounting principles in the United States ("U.S. GAAP"). For a summary of the significant differences between Italian GAAP and U.S. GAAP, please see
Note 32.1 to the Consolidated Financial Statements.

As
used in this annual report Shares means only the ordinary shares of €2.8 par value of Sanpaolo IMI and not theAzioni
Privilegiate(as defined below). See "Item 4. Information on Sanpaolo IMIHistory and Developments of Sanpaolo IMISignificant Developments
During 2002Cardine".

From
time to time, this annual report gives information concerning Sanpaolo IMI's market share in a particular market or segment. In such cases, the figures are derived from official
sources, such as the Bank of Italy, or industry bodies, such as the Italian Banking Association.

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. This annual report contains forward-looking statements
which reflect management's current views on Sanpaolo IMI Group's business, strategy and financial performance. Statements that are not about facts or events that have already occurred, including
statements about the Group's or management's beliefs or expectations, are forward-looking statements. Words or phrases such as "will likely result", "are expected to", "will continue", "is
anticipated", "estimate", "target", "goal", "project" or similar expressions are intended to identify forward-looking statements but are not the exclusive means of doing so. Forward-looking statements
include, but are not limited to, statements under the following headings:



1

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The
following important factors could cause the Group's actual results to differ materially from those projected or implied in any forward-looking statements:



The
foregoing factors should not be construed as exhaustive and speak only as of the date hereof. The Group undertakes no obligation to release publicly the result of any revisions to
these forward-looking statements which may be made to reflect events or circumstances after the date hereof, including, without limitation, changes in the Group's business or acquisition strategy or
planned capital expenditures, or to reflect the occurrence of unanticipated events.

Certain
forward-looking statements involve statements about risks and uncertainties that could significantly affect expected results and are based upon assumptions of future events which
may not prove to be accurate. In particular, this document includes forward-looking statements relating, but not limited, to the Group's potential exposures to various types of market risk. Certain of
the market risk disclosures are dependent on choices about key model characteristics and assumptions and are subject to various limitations. See "Item 11. Quantitative and Qualitative Disclosures
about Market Risk". By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future
gains and losses could differ materially from those that have been estimated.

Due
to such uncertainties and risks, readers should not place undue reliance on such forward-looking statements which speak only as of the date of this annual report. Sanpaolo IMI
assumes no responsibility for updating such forward-looking statements.

2

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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The Sanpaolo IMI Consolidated Financial Statements for the years ended December 31, 2001 and December 31, 2002 have been audited by
PricewaterhouseCoopers S.p.A. ("PricewaterhouseCoopers"), independent auditors.

The
Sanpaolo IMI Consolidated Financial Statements for the years ended December 31, 1998, 1999 and 2000 have been audited by Arthur Andersen S.p.A., independent auditors.

The
financial information set forth below has been selected from, and should be read in conjunction with, the audited Consolidated Financial Statements and notes thereto included
elsewhere in this annual report.

The
audited consolidated statement of income for the year ended December 31, 2002 and the consolidated balance sheet at December 31, 2002 reflect full consolidation of the
results of Cardine (as defined below) from January 1, 2002.

The
audited consolidated statement of income for the year ended December 31, 2000 and the consolidated balance sheet at December 31, 2000 reflect full consolidation of the
results of Banco di Napoli (as defined below) from July 1, 2000.

Sanpaolo
IMI was formed from the merger in 1998 of Istituto Bancario San Paolo di Torino S.p.A. ("San Paolo") and Istituto Mobiliare Italiano S.p.A. ("IMI").

3

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Reclassified Consolidated Statement of Income

The following table shows reclassified consolidated statement of income data for the years indicated:

|                                                                                       |  | Year ended December 31, |  
|-------------------------------------------------------------------------------------- |  | ----------------------- | -
|
|
|Reclassified consolidated statement of income(1)                                       |  |                         |  
|Interest income and similar revenue(3)                                                 |  | 8,728                   |  
|Interest expense and similar charges(4)                                                |  | (4,955                  | )
|                                                                                       |  |                         |  
|Net interest income                                                                    |  | 3,773                   |  
|                                                                                       |  |                         |  
|Net commission and other dealing revenues(5)                                           |  | 2,809                   |  
|Profits/(losses) on financial transactions and investment income(6)                    |  | 286                     |  
|Profits/(losses) of companies carried at equity and dividends on equity investments(7) |  | 292                     |  
|                                                                                       |  |                         |  
|Net interest and other income                                                          |  | 7,160                   |  
|                                                                                       |  |                         |  
|Payroll(8)                                                                             |  | (2,856                  | )
|Other administrative costs(9)                                                          |  | (1,528                  | )
|Indirect taxes and similar dues(10)                                                    |  | (264                    | )
|Administrative costs                                                                   |  | (4,648                  | )
|Other operating income, net(11)                                                        |  | 358                     |  
|Adjustments to intangible and tangible fixed assets(12)                                |  | (510                    | )
|Operating income                                                                       |  | 2,360                   |  
|Adjustments to goodwill merger and consolidation differences(13)                       |  | (212                    | )
|Provisions for risks and charges(14)                                                   |  | (261                    | )
|Adjustments to loans and provisions for guarantees and commitments, net(15)            |  | (604                    | )
|Adjustments to financial fixed assets, net(16)                                         |  | (561                    | )
|Income before extraordinary items                                                      |  | 722                     |  
|Net extraordinary income(17)                                                           |  | 296                     |  
|Income before taxes and minority interests                                             |  | 1,018                   |  
|Income taxes(18)                                                                       |  | (450                    | )
|Change in reserve for general banking risks(19)                                        |  | 364                     |  
|Net income attributable to minority interest(20)                                       |  | (43                     | )
|Reversal of second half income Banco di Napoli Group                                   |  |                        |  
|Net income                                                                             |  | 889                     |  
|Net income/loss after minority interests in accordance with U.S. GAAP                  |  | (1,120                  | )

The following item numbers refer, where appropriate, to the item numbers shown in the Audited Consolidated Financial
Statements of Sanpaolo IMI for the years ended December 31, 2002, 2001, 2000, 1999 and 1998.

4

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5

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6

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Per Share Data

The following table shows certain per Share (as defined below) and other data for the years indicated:

|                                                                       |  | Year ended December 31,
|---------------------------------------------------------------------- |  | -----------------------
|
|
|Per Share Data                                                         |  |                        
|Income before extraordinary items per Share at year end                |  | 0.50                   
|Income before extraordinary items per Share outstanding at year end(1) |  | 0.50                   
|Net income per Share at year end                                       |  | 0.61                   
|Net income per Share outstanding at year end(1)                        |  | 0.61                   
|Net income per average number of Shares                                |  | 0.62                   
|Sanpaolo IMI Share price at year end(3)                                |  | 6.20                   
|Dividend per Share at year end(4)                                      |  | 0.30                   
|Shareholders' equity per Share outstanding at year end(1)              |  | 7.27                   
|Shares at year end                                                     |  | 1,448,831,982          
|Shares outstanding at year end(1)                                      |  | 1,448,831,981          
|Average number of Shares                                               |  | 1,430,467,541          
|ITALIAN GAAP                                                           |  |                        
|Basic earnings per share (in euro)(5)                                  |  | 0.48                   
|U.S. GAAP                                                              |  |                        
|Basic earnings/loss per share (in euro)(5)                             |  | (0.68                  
|Diluted earnings/loss per share (in euro)(5)                           |  | (0.68                  

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7

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Consolidated Balance Sheet and Other Data

The following table shows certain consolidated balance sheet and other data at the dates indicated:

|                                                    |  | At December 31, |  
|--------------------------------------------------- |  | --------------- | -
|
|
|Consolidated Balance Sheet                          |  |                 |  
|Total assets(1)                                     |  | 203,773         |  
|Net loans(2)                                        |  | 148,701         |  
|Due to banks(3)                                     |  | 24,456          |  
|Marketable debt securities and subordinated debt(4) |  | 58,174          |  
|Minority interests(5)                               |  | 334             |  
|Capital                                             |  | 5,144           |  
|Other reserves                                      |  | 5,393           |  
|Shareholders' equity under Italian GAAP(6)          |  | 10,537          |  
|Shareholders' equity under U.S. GAAP                |  | 14,934          |  
|Consolidated Ratios                                 |  |                 |  
|Profitability Ratios                                |  |                 |  
|Net interest margin(7)                              |  | 2.40            | %
|Return on average total assets(8)                   |  | 0.43            | %
|Return on assets at year end(9)                     |  | 0.44            | %
|Return on average shareholders' equity(10)          |  | 8.28            | %
|Return on equity at year end(11)                    |  | 8.44            | %
|Capital Ratio                                       |  |                 |  
|Shareholders' equity to total assets at year end    |  | 5.17            | %
|Credit Quality Data                                 |  |                 |  
|Doubtful loans(12)                                  |  | 2,892           |  
|Doubtful loans as a percentage of net loans(13)     |  | 1.94            | %

The financial statements for December 31, 1998 and for the year then ended were prepared in lire and translated into euros at the fixed
rate of exchange of Lit. 1,936.27 = €1.

The following item numbers refer, where appropriate, to the corresponding item numbers shown in the Audited Consolidated Financial Statements of Sanpaolo IMI at
December 31, 2002, 2001, 2000, 1999 and 1998.

8

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Exchange Rates

The following table shows, for the period indicated, certain information regarding the Noon Buying Rate for the Italian lira, expressed in Italian lire, per U.S.
dollar.

|Year ended December 31, |  | High  |  | Low   |  | Average(1) |  | At Period End
|----------------------- |  | ----- |  | ----- |  | ---------- |  | -------------
|1998                    |  | 1,828 |  | 1,592 |  | 1,737      |  | 1,654        

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On
January 1, 1999, the Italian lira became a member currency of the euro at a fixed conversion rate of €1 = Lit. 1,936.27. The following table shows, for
the periods indicated, certain information regarding the Noon Buying Rate for the euro, expressed in U.S. dollars per euro.

|Year ended December 31,      |  | High   |  | Low    |  | Average(1) |  | At Period End
|---------------------------- |  | ------ |  | ------ |  | ---------- |  | -------------
|1999                         |  | 1.1812 |  | 1.0016 |  | 1.0588     |  | 1.0070       
|2000                         |  | 1.0335 |  | 0.8270 |  | 0.9207     |  | 0.9388       
|2001                         |  | 0.9535 |  | 0.8425 |  | 0.8909     |  | 0.8901       
|2002                         |  | 1.0485 |  | 0.8594 |  | 0.9495     |  | 1.0485       
|2003 (through June 10, 2003) |  | 1.1870 |  | 1.0361 |  | 1.0978     |  | 1.1686       

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The
following table shows the high and low exchange rates between the euro and the U.S. dollar, expressed in U.S. dollars per euro, during the last six months:

|Month                             |  | High   |  | Low   
|--------------------------------- |  | ------ |  | ------
|January 2003                      |  | 1.0861 |  | 1.0361
|February 2003                     |  | 1.0875 |  | 1.0708
|March 2003                        |  | 1.0900 |  | 1.0545
|April 2003                        |  | 1.1180 |  | 1.0621
|May 2003                          |  | 1.1853 |  | 1.1200
|June 2003 (through June 10, 2003) |  | 1.1870 |  | 1.1686

9

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Beginning January 4, 1999, the Shares commenced trading on themercato telematico azionario("Telematico"), managed by Borsa Italiana S.p.A. ("Borsa Italiana") in euro. Fluctuations in the exchange rate between the euro and the U.S. dollar will
affect the U.S. dollar equivalent of the euro price of the Shares and the price of the Sanpaolo IMI American Depositary Shares ("ADSs") on the New York Stock Exchange ("NYSE"). Cash dividends will be
paid by Sanpaolo IMI in euro, and exchange rate fluctuations will also affect the U.S. dollar amounts received by owners of ADSs upon conversion by the depositary of dividends on the underlying
Sanpaolo IMI Shares.

B. Selected Statistical Information

Average Balances and Interest Rates

The following tables show average balances and interest rates for the Group for the years ended December 31, 2002, 2001 and 2000. For purposes of these
tables, (i) average balances have been determined based on daily figures for interest-earning assets and interest-bearing liabilities of Sanpaolo IMI, Banco di Napoli Cardine, Banca Fideuram
S.p.A. ("Banca Fideuram") and Banca Opi S.p.A. ("Banca Opi"), and on end of the quarter figures for all the other assets and liabilities of the Group; management believes that the average figures
below present substantially the same trend as would be presented by daily averages; (ii) interest income derived from, and interest expenses associated with, transactions treated under Italian
GAAP as hedging activities are reflected in the income and expense information; accordingly, interest income and expense in the following tables vary somewhat from the amounts presented in the
Consolidated Financial Statements; (iii) tax-exempt income has not been calculated on a tax-equivalent basis because the effect of such calculations would not be
significant; and

10

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(iv) the
average balance of non-accruing loans has been included in the average balance of loans and leases to non-credit institutions.

|                                                                                   |           | Year ended December 31, |        
|---------------------------------------------------------------------------------- | --------- | ----------------------- | -------
|
|
|
|Assets:                                                                            |           |                         |        
|Interest-earning assets Interest-earning deposits and loans to credit institutions |           | 12,120                  |        
|                                                                                   | Euro     |                         | 11,421 
|                                                                                   | Non euro |                         | 699    
|Reverse repurchase agreements                                                      |           | 5,992                   |        
|                                                                                   | Euro     |                         | 5,264  
|                                                                                   | Non euro |                         | 728    
|Trading account securities and investment                                          |           | 17,351                  |        
|                                                                                   | Euro     |                         | 13,022 
|                                                                                   | Non euro |                         | 4,329  
|Loans and leases to non-credit institutions                                        |           | 118,868                 |        
|                                                                                   | Euro     |                         | 108,197
|                                                                                   | Non euro |                         | 10,671 
|Other interest-earning assets from Banco di Napoli(2)                              |           | 2,735                   |        
|Total interest-earning assets                                                      |           | 157,066                 |        
|                                                                                   | Euro     |                         | 140,639
|                                                                                   | Non euro |                         | 16,427 
|Non-interest-earning assets                                                        |           | 50,299                  |        
|                                                                                   |           |                         |        
|Total assets                                                                       |           | 207,365                 |        
|                                                                                   |           |                         |        

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11

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|                                                                                                                    |           | Year ended December 31, |        
|------------------------------------------------------------------------------------------------------------------- | --------- | ----------------------- | -------
|
|
|
|Liabilities and Shareholders' Equity:                                                                               |           |                         |        
|Interest-bearing liabilities Deposits, short-term borrowings and medium- and long-term debt from credit institution |           | 19,643                  |        
|                                                                                                                    | Euro     |                         | 12,792 
|                                                                                                                    | Non Euro |                         | 6,851  
|Short-term borrowings and medium- and long-term debt from non-credit institutions                                   |           | 66,888                  |        
|                                                                                                                    | Euro     |                         | 60,742 
|                                                                                                                    | Non Euro |                         | 6,146  
|Repurchase agreements                                                                                               |           | 8,671                   |        
|                                                                                                                    | Euro     |                         | 8,671  
|                                                                                                                    | Non Euro |                         |       
|Securities and subordinated liabilities(2)                                                                          |           | 54,085                  |        
|                                                                                                                    | Euro     |                         | 51,864 
|                                                                                                                    | Non euro |                         | 2,221  
|Total interest-bearing liabilities                                                                                  |           | 149,287                 |        
|                                                                                                                    | Euro     |                         | 134,069
|                                                                                                                    | Non-Euro |                         | 15,218 
|Non-interest-earning liabilities:                                                                                   |           |                         |        
|Other liabilities                                                                                                   |           | 46,853                  |        
|Minority interest in consolidated subsidiaries                                                                      |           | 490                     |        
|Total non-interest-bearing liabilities                                                                              |           | 47,343                  |        
|Shareholders' equity                                                                                                |           |                         |        
|Common shares                                                                                                       |           | 5,144                   |        
|Other shareholders' equity                                                                                          |           | 5,591                   |        
|Total shareholders' equity(3)                                                                                       |           | 10,735                  |        
|                                                                                                                    |           |                         |        
|Total liabilities and shareholders' equity                                                                          |           | 207,365                 |        
|                                                                                                                    |           |                         |        

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Change in Net Interest IncomeVolume and Rate Analysis

The following table shows the allocation, by category of interest-earning assets and interest-bearing liabilities and by currency, of changes in the Group's net
interest income among changes in average volume, changes in average rate and changes in rate/volume for the year ended December 31, 2002

12

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compared
to the year ended December 31, 2001 and for the year ended December 31, 2001 compared to the year ended December 31, 2000.

|                                                                                        |           | Year ended December 31, |      
|--------------------------------------------------------------------------------------- | --------- | ----------------------- | -----
|
|
|
|
|Interest Income                                                                         |           |                         |      
|Interest-earning deposits and loans to credit institution                               |           | (139                    | )    
|                                                                                        | Euro     |                         | (84  
|                                                                                        | Non-Euro |                         | (58  
|Reverse purchase agreements                                                             |           | 144                     |      
|                                                                                        | Euro     |                         | 136  
|                                                                                        | Non-Euro |                         | 6    
|Trading account securities and investment                                               |           | 142                     |      
|                                                                                        | Euro     |                         | 137  
|                                                                                        | Non-Euro |                         | 1    
|Loans and leases to non-credit institutions:                                            |           | 1,849                   |      
|                                                                                        | Euro     |                         | 1,886
|                                                                                        | Non-Euro |                         | 13   
|Other interest earnings from Banco di Napoli(1)                                         |           | (58                     | )    
|Total interest income                                                                   |           | 1,800                   |      
|                                                                                        | Euro     |                         | 1,896
|                                                                                        | Non-Euro |                         | (42  
|Interest Expense                                                                        |           |                         |      
|Deposits, short-term borrowings and medium- and long-term debt from credit institutions |           | 77                      |      
|                                                                                        | Euro     |                         | 99   
|                                                                                        | Non-Euro |                         | (20  
|Short-term borrowings and medium- and long-term debt from non-credit institutions       |           | 359                     |      
|                                                                                        | Euro     |                         | 352  
|                                                                                        | Non-Euro |                         | (45  
|Repurchase agreements                                                                   |           | 69                      |      
|                                                                                        | Euro     |                         | 69   
|                                                                                        | Non-Euro |                         |     
|Securities and subordinated liabilities                                                 |           | 623                     |      
|                                                                                        | Euro     |                         | 650  
|                                                                                        | Non-Euro |                         | (33  
|Total interest expense:                                                                 |           | 1,146                   |      
|                                                                                        | Euro     |                         | 1,202
|                                                                                        | Non-Euro |                         | (97  

---

13

---

Interest-Earning Assets: Margin and Spread

The following table shows the Group's average yield, net yield and spread, including the effect of hedging, for the years ended December 31, 2002, 2001 and
2000.

|                 |           | Year ended December 31, |     
|---------------- | --------- | ----------------------- | ----
|
|
|Average yield(1) |           | 5.20                    |     
|                 | Euro     |                         | 5.42
|                 | Non-euro |                         | 3.32
|Net yield (2)    |           | 2.40                    |     
|                 | Euro     |                         | 2.59
|                 | Non-euro |                         | 0.80
|Spread(3)        |           | 2.26                    |     
|                 | Euro     |                         | 2.45
|                 | Non-euro |                         | 0.59

---

Return on Equity and Assets

The following table shows certain selected financial ratios which have been derived from average balance sheet information and the Consolidated Financial
Statements.

|                                                                        |  | Year ended December 31,
|----------------------------------------------------------------------- |  | -----------------------
|
|
|Net income as percentage of:                                            |  |                        
|Average total assets                                                    |  | 0.43                   
|Average shareholders' equity(1)                                         |  | 8.28                   
|Dividends as percentage of net income                                   |  | 49.18                  
|Average shareholders' equity as a percentage of average total assets(1) |  | 5.18                   

---

Securities Portfolio

At December 31, 2002, securities held by the Group were carried on the Group's consolidated balance sheet at a book value of
€22,560 million, representing 11.07% of its total assets. The aggregate book value and the aggregate market value of securities held by the Group issued by the Italian
government and Italian government agencies were €9,019 million, €9,101 million and €11,343 million,
€11,369 million, respectively, at December 31, 2002 and 2001. The Group does not otherwise hold securities issued or guaranteed by any one entity or obligor, other than
the Italian government, whose carrying value represents more than 10% of consolidated shareholders' equity.

14

---



The following table shows the book value and the market value of the Group's securities by type and domicile of issuer at the dates indicated. For a discussion of
how the Group values its securities, see Note 10 to the Consolidated Financial Statements.

|               |                                | Year ended December 31,
|-------------- | ------------------------------ | -----------------------
|
|
|
|Domestic:      |                                |                        
|               | Government                     |                        
|               | Corporate and other securities |                        
|               | Equity and other(1)            |                        
|               |                                |                        
|               | Total domestic                 |                        
|               |                                |                        
|International: |                                |                        
|               | Government                     |                        
|               | Corporate and other securities |                        
|               | Equity and other(1)            |                        
|               |                                |                        
|               | Total international            |                        
|               |                                |                        
|               | Total Securities               |                        
|               |                                |                        

---



The following table shows the maturities and weighted average yield of the securities held by the Group by type and domicile of issuer at December 31,
2002. Yield on tax-exempt obligations has not

15

---

been
calculated on a tax-equivalent basis because the effect of such a calculation would not be material.

|               |                                 | At December 31, 2002 |        
|-------------- | ------------------------------- | -------------------- | -------
|
|
|Domestic:      |                                 |                      |        
|               | Government                      |                      | 2,743  
|               | Corporate and other securities  |                      | 794    
|               | Equity and other                |                      | 1,593(2
|               |                                 |                      |        
|               | Total domestic                  |                      | 5,130  
|               |                                 |                      |        
|International: |                                 |                      |        
|               | Government                      |                      | 109    
|               | Corporate and other securities  |                      | 2,036  
|               | Equity and other                |                      | 1,002  
|               |                                 |                      |        
|               | Total international             |                      | 3,147  
|               |                                 |                      |        
|               | Total Securities                |                      | 8,277  
|               |                                 |                      |        
|               | Total Securities (market value) |                      | 8,318  
|               | Weighted average yield(3)       |                      | 2.87   

---

Loan Portfolio

The Group's loan portfolio includes securities purchased under agreements to resell and loans to other banks. Loans, including principal not yet due and principal
and interest due but not yet collected, are stated at their estimated realizable value, taking into account the financial condition of borrowers in difficulty and any debt-servicing
problems faced by individual industrial sectors or the country in which such borrowers are residents, See "Risk Elements in the Loan PortfolioNon-accrual of
interest" below and Note 10 to the Consolidated Financial Statements. The assessment performed also takes into consideration any guarantees received, market prices (where applicable) and
general difficulties experienced by the different categories of borrowers. Estimated realizable value is determined following a detailed review of loans outstanding during the year, considering the
degree of risk associated with the various forms of lending and the risk of default inherent in loans that are currently performing normally. The estimated realizable value of doubtful loans,
excluding loan exposed to country risk, takes into consideration not only the likelihood of eventual recovery, but also any total or partial failure to generate income and delayed repayments of
doubtful loans. These value adjustments are made directly to the loan value, and not against any reserve account.

When
it has been determined that a loan is impaired, the Group makes either a value adjustment to the loan, which is charged directly to income, or a provision, which is charged to
income through allowance for possible loan losses. See "Risk Elements in the Loan PortfolioAllowance for possible loan losses and value adjustments to Loans" below. In this
Selected Statistical Information section, the term "net loans" refers to the amount of loans shown on the face of the balance sheet. Net loans are

16

---

net
of any value adjustments (losses charged directly to income) and net of any allowance for possible loan losses. The term "total loans" refers to loans net of any value adjustments, but before
deduction of the allowance for possible loan losses. Total loans do not appear on the face of the balance sheet, but are set forth under "Total loans to customers" and "Total loans to banks" in
Note 12 to the Consolidated Financial Statements.

At
December 31, 2002, the Group's net loans amounted to €148,701 million (72.97% of total assets). The allowance for loan losses amounted to
€4,636 million (3.02% of total loans). Total domestic loans amounted to €121,109 million (79% of total loans), while total international loans amounted to
€32,228 million. At December 31, 2002, secured loans to customers other than banks amounted to €131,301 million, equal to approximately 88.3% of
the Group's total net loans. In addition to loans, at December 31, 2002 the Group had loan commitments (certain and not certain to be called) amounting to
€27,574 million and guarantees amounting to €20,483 million.



The following table shows, at the dates indicated, the Group's total loans divided into domestic and international loans, broken down by loans to the public
sector, banks and other private sector customers.

|                                     |  | At December 31, |    
|------------------------------------ |  | --------------- | ---
|
|
|
|Domestic:                            |  |                 |    
|Government and other public entities |  | 13,065          |    
|Banks and credit institutions        |  | 5,132           |    
|Non-financial business               |  | 92,882          | (2)
|Other(3)                             |  | 10,030          |    
|                                     |  |                 |    
|Total domestic                       |  | 121,109         |    
|International:                       |  |                 |    
|Government                           |  | 438             |    
|Banks and credit institutions        |  | 16,904          |    
|Other                                |  | 14,886          | (4)
|Total international                  |  | 32,228          |    
|                                     |  |                 |    
|Total domestic and international     |  | 153,337         |    
|                                     |  |                 |    

---

17

---



The Group's principal lending instruments are overdrafts on current accounts, repurchase agreements and medium- and long-term loans including mortgage
loans to public entities originated by Banca Opi.

The
following table shows, as the dates indicated, the net loans of the Group by type of facility.

|                                 |  | At December 31, | 
|-------------------------------- |  | --------------- | 
|
|
|
|Mortgages and industrial loans   |  | 59,651          | 
|Other forms of finance           |  | 28,024          | 
|Loans to banks                   |  | 10,326          | 
|Current account overdrafts       |  | 17,574          | 
|Reverse repurchase agreements(3) |  | 14,262          | 
|Advances with recourse           |  | 3,484           | 
|Import-export loans              |  | 3,090           | 
|Finance leases                   |  | 4,266           | 
|Personal loans                   |  | 3,782           | 
|Discounted notes                 |  | 1,067           | 
|Factoring                        |  | 1,717           | 
|Subordinated loans(3)            |  | 123             | 
|Non-performing loans(3)          |  | 1,335           | 
|                                 |  |                 | 
|Net loans(3)                     |  | 148,701         | 
|                                 |  |                 | 

---

The Sanpaolo IMI Group provides credit services to a wide and diversified range of individual and corporate customers, predominantly in the
Italian domestic market. The Sanpaolo IMI Group also grants medium- and long-term loans, consisting both of industrial and real estate mortgage loans.

The
Sanpaolo IMI Group's lending business is divided between (i) installment loans, which consist primarily of mortgages (including mortgage loans to public entities originated by
Banca Opi) and industrial loans, and (ii) non-installment loans, including demand loans (principally current account overdrafts) and loans which are expected to be repaid in a
single payment.



Mortgage loans consist primarily of (1) residential mortgages to individuals for private residences, (2) loans to co-operative
institutions in the housing industry, and (3) commercial construction loans secured by the underlying real property. Residential mortgages to individuals for private residences are typically
repaid in monthly installments. Loans to building contractors or to co-operative institutions in the housing industry and commercial construction loans secured by the underlying real
property are repaid in six month installments. Mortgage loans include loans to public entities, which historically have received full government support in Italy. Sanpaolo IMI does not believe that
these loans present a significant credit risk.

Residential
mortgages have a maximum loan to value ratio of 75% (starting from May 1, 2003 the maximum loan to value ratio was increased to 80% as envisaged under current Italian
regulations) with maturities of up to 30 years, at fixed or floating rates of interest (or a combination of the two, at the customer's option).

18

---

The
process for recovering against collateral through the Italian legal system often consists of a series of judicial auctions, which successively reduce the ultimate potential recovery
and which currently last an average of five and a half years. Sanpaolo IMI's policy is to limit the value of each loan to 80% of the value of the premises, in the case of mortgages; up to 50% of the
cost of construction at the time of loan origination, in the case of construction loans; and up to 75% of renovation costs at the time of loan origination, in the case of renovation costs. These
limits are reduced if appropriate in light of the credit analysis performed on each borrower. Sanpaolo IMI believes that the value of the collateral on its mortgage loans covers its exposure. Sanpaolo
IMI makes provisions or adjustments whenever such coverage is no longer deemed to be sufficient.



Other forms of finance principally include short-term loans to (Italian and foreign) non-financial institutions and individuals, other
than loans covered by the "Mortgages and industrial loans" category discussed above.



Loans to banks principally include mandatory reserves deposits and current accounts.

The
following table shows net loans by maturity at December 31, 2002.

|                               |  | At December 31, 2002 | 
|------------------------------ |  | -------------------- | 
|
|
|Mortgages and industrial loans |  | 9,772                | 
|Other forms of finance         |  | 20,215               | 
|Loans to banks                 |  | 9,001                | 
|Current account overdrafts     |  | 17,554               | 
|Repurchase agreements          |  | 14,236               | 
|Advances with recourse         |  | 3,482                | 
|Import-export loans            |  | 2,942                | 
|Finance leases                 |  | 1,476                | 
|Discounted notes               |  | 942                  | 
|Personal loans                 |  | 1,716                | 
|Factoring loans                |  | 1,005                | 
|Subordinated loans             |  |                     | 
|Non-performing loans(2)        |  |                     | 
|                               |  |                      | 
|Net loans                      |  | 82,341               | 
|                               |  |                      | 

---



At December 31, 2002, a single borrower, the Italian Ministry of Economy and Finance (€2.38 billion), accounted for 1.6% of Sanpaolo
IMI Group's net loans. The largest 20 total loan exposures accounted for 14.18% of Sanpaolo IMI Group's total loan portfolio, while the largest 50 total loan exposures accounted for 20.92%.

19

---

At
December 31, 2002, the Group had six "significant risk exposures", defined by the Bank of Italy as positions that exceeded 10% of consolidated shareholders' equity for
supervisory purposes. See "Item 4. Information on Sanpaolo IMIBusiness OverviewThe Italian Banking System: Supervision and RegulationLending Limits".

The
six "significant risk exposures" for supervisory purposes that the Group had as of December 31, 2002 amounted to a total of €11.448 billion. One of the
"significant risk exposures" is to Fiat (as defined below). See "Item 4. Information on Sanpaolo IMIHistory and Developments of Sanpaolo IMISignificant Developments During
2002FiatItalenergiaEdison".

The
six "significant risk exposures" for supervisory purposes that the Group had as of December 31, 2002, relate to major Italian utility, transportation, telecommunications and
industrial groups.

The
following table shows, at the dates indicated, the distribution of the Group's net loans by category of borrower:

|                                   |  | At December 31, | 
|---------------------------------- |  | --------------- | 
|
|
|
|Building and construction industry |  | 6,558           | 
|Commercial and similar activities  |  | 21,802          | 
|Industrial                         |  | 28,306          | 
|Governments                        |  | 7,237           | 
|Other public agencies              |  | 6,244           | 
|Transportation                     |  | 4,790           | 
|Agriculture                        |  | 2,043           | 
|Finance, insurance, leasing, etc.  |  | 13,985          | 
|Banks                              |  | 22,000          | 
|Communications(4)                  |  | 1,171           | 
|Foreign non-financial business     |  | 9,010           | 
|Other                              |  | 25,555          | 
|                                   |  |                 | 
|Total                              |  | 148,701         | 
|                                   |  |                 | 

---

20

---





The following table shows, at the dates indicated, the geographic distribution of net loans (including securities purchased under agreement to resell and loans to
banks) by general location of the customer as reported to the Bank of Italy:

|                       |                           | At December 31,                      |        
|---------------------- | ------------------------- | ------------------------------------ | -------
|
|
|
|Loans to residents(2): |                           |                                      |        
|                       | Northern Italy            |                                      | 70,375 
|                       | Central Italy             |                                      | 22,100 
|                       | Southern Italy            |                                      | 24,462 
|                       |                           |                                      |        
|                       | Total to residents(2)     |                                      | 116,937
|                       |                           |                                      |        
|                       | Loans to non-residents(2) |                                      | 31,764 
|                       |                           |                                      |        
|                       |                           | Total to residents and non-residents |        
|                       |                           |                                      |        

---



The following table shows, at the dates indicated, a breakdown of the amounts outstanding of fixed rate and floating rate loans due after one year.

|              |  | At December 31, 2002
|------------- |  | --------------------
|
|
|
|Fixed rate    |  | 21,593              
|Floating rate |  | 37,491              
|              |  |                     
|Total         |  | 59,084              
|              |  |                     

---



For the years ended December 31, 2002, 2001 and 2000, foreign country outstandings are those outstandings (i) to residents outside of Italy in euros
or in a currency different from the currency of the borrower and (ii) in the local currency of the borrower but not hedged or funded in such currency by a counterparty resident in the same
country. Foreign country outstandings include outstandings in euros in countries (other than Italy) which have adopted the euro as their currency, and which have been funded, in euros, in a country
different from the country in which the amounts are outstanding. The outstandings include net loans to customers and to banks, other advances, securities and other monetary assets, but exclude finance
provided within the Group, and loans guaranteed by SACE (an Italian government agency which provides export credit insurance) or by supranational organizations.

The
following table shows, at the dates indicated, the aggregate amount of the Group's cross-border outstandings where outstandings in the borrower's country exceeded 1% of the Group's
total

21

---

assets.
The geographic breakdown is based on the country of the borrower or guarantor of ultimate risk.

|               |  | At December 31,
|-------------- |  | ---------------
|
|
|France         |  | 2,344          
|United Kingdom |  | 3,438          
|United States  |  | 845            
|Germany        |  | 1,637          

The
following table shows, at the dates indicated, the total amount for each type of borrower and the aggregate amount of the Group's cross-border outstandings where outstandings in the
borrower's country exceeded 0.75% of the Group's total assets. Undrawn lines of credit are disclosed to the extent that management considers them to be material. The geographic breakdown is based on
the country of the borrower or the guarantor of ultimate risk.

|Loans and monetary assets |                | Government |    | Banks and
credit
institutions |       | Commercial
industrial
and others |       | Net local
country claims |       | Total |       | Guarantees and
commitments
|------------------------- | -------------- | ---------- | -- | ----------------------------- | ----- | -------------------------------- | ----- | ------------------------ | ----- | ----- | ----- | --------------------------
|
|At December 31, 2002      |                |            |    |                               |       |                                  |       |                          |       |       |       |                           
|                          | France         |            | 2  |                               | 908   |                                  | 412   |                          | 1,022 |       | 2,344 |                           
|                          | United Kingdom |            |   |                               | 3,078 |                                  | 345   |                          | 15    |       | 3,438 |                           
|                          | United States  |            |   |                               | 433   |                                  | 54    |                          | 359   |       | 846   |                           
|                          | Germany        |            |   |                               | 1,582 |                                  | 43    |                          | 12    |       | 1,637 |                           
|                          |                |            |    |                               |       |                                  |       |                          |       |       |       |                           
|                          | Total          |            | 2  |                               | 6,001 |                                  | 854   |                          | 1,408 |       | 8,265 |                           
|                          |                |            |    |                               |       |                                  |       |                          |       |       |       |                           
|At December 31, 2001      |                |            |    |                               |       |                                  |       |                          |       |       |       |                           
|                          | France         |            | 2  |                               | 221   |                                  | 711   |                          | 1,095 |       | 2,029 |                           
|                          | United Kingdom |            |   |                               | 1,298 |                                  | 482   |                          | 19    |       | 1,799 |                           
|                          | United States  |            | 45 |                               | 450   |                                  | 105   |                          | 683   |       | 1,283 |                           
|                          | Germany        |            |   |                               | 189   |                                  | 11    |                          | 148   |       | 348   |                           
|                          |                |            |    |                               |       |                                  |       |                          |       |       |       |                           
|                          | Total          |            | 47 |                               | 2,158 |                                  | 1,309 |                          | 1,945 |       | 5,459 |                           
|                          |                |            |    |                               |       |                                  |       |                          |       |       |       |                           
|At December 31, 2000      |                |            |    |                               |       |                                  |       |                          |       |       |       |                           
|                          | France         |            | 1  |                               | 421   |                                  | 592   |                          | 622   |       | 1,636 |                           
|                          | United Kingdom |            |   |                               | 1,630 |                                  | 1,024 |                          | 16    |       | 2,670 |                           
|                          | United States  |            | 46 |                               | 718   |                                  | 2,693 |                          | 64    |       | 3,521 |                           
|                          | Germany        |            |   |                               | 937   |                                  | 1,110 |                          |      |       | 2,047 |                           
|                          |                |            |    |                               |       |                                  |       |                          |       |       |       |                           
|                          | Total          |            | 47 |                               | 3,706 |                                  | 5,419 |                          | 702   |       | 9,874 |                           
|                          |                |            |    |                               |       |                                  |       |                          |       |       |       |                           



The Group analyzes the risk elements in its loan portfolio based on Italian regulations and industry practice and on applicable local regulations and industry
practices in other countries where the Group does business. Its loan classification policies and procedures differ in significant respects from those followed by banks in the United States.

The
Group divides its loan portfolio into five broad categories:



22

---



|                                                                                                                                     |                          | At December 31, |      
|------------------------------------------------------------------------------------------------------------------------------------ | ------------------------ | --------------- | -----
|
|
|
|Loans past due by more than 90 days (but still classified asin bonis):                                                               |                          |                 |      
|Domestic                                                                                                                             |                          | 837             |      
|                                                                                                                                     | Outstanding principal(2) |                 | 718  
|                                                                                                                                     | Unpaid installments(3)   |                 | 119  
|International                                                                                                                        |                          | 2               |      
|                                                                                                                                     | Outstanding principal(2) |                 |     
|                                                                                                                                     | Unpaid installments(3)   |                 | 2    
|                                                                                                                                     |                          |                 |      
|Total                                                                                                                                |                          | 839             |      
|                                                                                                                                     |                          |                 |      
|Restructured loans or loans in course of restructuring                                                                               |                          |                 |      
|                                                                                                                                     | domestic                |                 | 295  
|                                                                                                                                     | International           |                 | 8    
|                                                                                                                                     |                          |                 |      
|Total                                                                                                                                |                          | 303             |      
|                                                                                                                                     |                          |                 |      
|Problem loans(incagli)                                                                                                               |                          |                 |      
|                                                                                                                                     | domestic                |                 | 1,644
|                                                                                                                                     | International           |                 | 123  
|                                                                                                                                     |                          |                 |      
|Total                                                                                                                                |                          | 1,767           |      
|                                                                                                                                     |                          |                 |      
|Non-performing loans(sofferenze)                                                                                                     |                          |                 |      
|                                                                                                                                     | domestic                |                 | 3,856
|                                                                                                                                     | International           |                 | 449  
|                                                                                                                                     |                          |                 |      
|Total                                                                                                                                |                          | 4,305           |      
|                                                                                                                                     |                          |                 |      
|Total loans overdue by more than 90 days, non-performing, restructured loans and loans in course of restructuring, and problem loans |                          | 7,214           |      
|As a percentage of all total loans                                                                                                   |                          | 4.7             | %    

---

In
2002, loans past due by more than 90 days were €839 million, an increase of 42.2% compared to 2001. The increase is attributable to the Cardine Merger
(as defined below). Cardine contributed an aggregate of €329 million in loans past due by more than 90 days. In 2002, the loans past due by more

23

---

than
90 days of Sanpaolo IMI, without Cardine, were €510 million, a decrease of 13.6% compared to 2001.

In
2002, non-performing loans were €4,305 million, an increase of 39.8% compared to 2001. The increase is primarily attributable to the Cardine Merger
(as defined
below). Cardine contributed an aggregate of €960 million of non-performing loans. In 2002, non-performing loans of Sanpaolo IMI, without Cardine, were
€3,345 million, an increase of 8.6% compared to 2001.



In bonis, or performing loans includes loans past due by more than 90 days which are not otherwise
classified. Under Italian practice and Bank of Italy regulations, a loan may be classified asin bonis, even though the loan is 90 days past due
as to principal, interest or both. Under these circumstances, the loan is stillin bonis, but it generates default interest. Sanpaolo IMI writes down
the entire amount of such default interest, regardless of the possibility of the default interest being paid. Sanpaolo IMI does not write down the regular interest on such loans because they are still
considered performing.

Sanpaolo
IMI classifies loans past due by more than 90 days asin bonisif:



If
a loan that is overdue by more than 90 days fails to satisfy one or both of the above criteria, it will be classified among theincaglior thesofferenze, as the case may be.

Performing
loans are valued on a general basis, except for the positions of certain companies under observation, which are assessed on a case-by-case basis.
General adjustments to performing loans are calculated by the individual subsidiaries on a historical-statistical basis. For the Parent Bank and domestic commercial networks, this method is integrated
by a
centralized portfolio model based on the risk management methodologies used to monitor and control credit risks.

The
Parent Bank's historical/statistical method, which essentially provides a historical valuation of the portfolio risk level, is organized as follows:



The
portfolio model which, characterized by valuation tables, provides the extent of the loss which might be suffered the following year, is based essentially on the following elements:



24

---



The
"expected losses" resulting from a reasoned comparison of the two models, constitute the parameter of reference utilized to calculate the "general reserve" destined to cover the
default risk on performing loans. This calculation is aligned to what is assumed to be a fair value, determined also considering specific factors pertaining to the portfolio and to valuations of the
expected evolution of the economic cycle.

Restructured loans or loans in course of restructuring; these loans are subject to valuation on a case-by-case
basis.

Incagli, or problem loans; these loans are subject to valuation on a case-by-case basis.

Sofferenze, or non-performing loans; these loans are subject to valuation on a case-by-case basis.

Loans exposed to country risk; these are loans to borrowers resident in countries with debt-servicing difficulties, and are
normally adjusted on a general basis by applying writedown percentages that are not lower than those specified by the Italian Banking Association. However, where specific loans exposed to country risk
have underlying guarantees, the level of credit risk hedging offered by the underlying guarantees are taken into account when evaluating the specific loans. Underlying guarantees are not taken into
account for certain specific positions presenting particular risks; such positions are assessed on a case-by-case basis, using objective criteria for the applicable category of
risk.

The
five categories above are currently used within the Sanpaolo IMI Group and are reported in the explanatory notes to the financial statements for 2002 (see Note 12 to the
Consolidated Financial Statements) according to the principles in force during the period.

The
Group reports the amounts of loans falling within these categories to the Bank of Italy in accordance with its regulations.

In
the absence of information which may enable the management to assess the financial difficulties of borrowers, the objective criteria based on (in the case of installment loans) the
non-payment of installments may result in loans being classified as problem or non-performing loans later than would be the case in the United States. Since many loan payments
are due only on a semiannual basis, a significant proportion of problem loans are loans where a delay in scheduled payments has exceeded three semiannual installments, although the Group does classify
many loans, particularly non-installment loans, when the delay in expected payments is much shorter than the applicable period.

Sanpaolo
IMI Group's loan portfolio is monitored on an ongoing basis both centrally and at branch or subsidiary level in order to identify potential problems as early as possible and to
evaluate the prospects of recovery and estimated losses with respect to problem and non-performing loans (see "Item 11. Quantitative and Qualitative Disclosures about Market Risk"). In
addition, for
accounting purposes, each non-performing loan, problem loan, restructured loan or loan in the course of restructuring, or loan exposed to country risk is evaluated on an ongoing basis and,
if secured, a specific provision or adjustment is made for the expected loss in accordance with the policies and procedures described below. The entire performing loan portfolio is evaluated for
accounting purposes every three months on an aggregate basis.

Loans,
including principal not yet due and principal and interest due but not yet collected, are stated at their estimated realizable value, taking into account the financial condition
of borrowers in difficulty and any debt servicing problems faced by individual industrial sectors or the country in which such borrowers are residents. See "Non-accrual of
interest" below. The following table shows, at the dates indicated, the Group's total classified loans by category of loan classification, except for loans exposed to country risk, which are discussed
in "loans exposed to country risk" below. The table below follows U.S. practice and shows total loans that are past due by more than 90 days. With the exception of total loans that are past due
by more than 90 days, all other information in this section of the annual report, including credit quality ratios, follows Italian regulations and industry practices which (in

25

---

comparison
to U.S. practice and in the absence of information which may enable the management to assess the financial difficulties of borrowers) result in fewer loans classified in the applicable
categories.



The classification of risk elements in the loan portfolio as discussed herein is in compliance with the applicable prudential standards determined by the Bank of
Italy. Under such prudential standards, as implemented by Sanpaolo IMI, potential problem loans are included amongincaglior problem loans.
Management believes that the classification adequately reflects the risk elements contained in the loan portfolio of the Sanpaolo IMI Group.



Guarantees and commitments giving rise to credit risk are recorded at the total value of the exposure, while the related risk is assessed on the basis described
in relation to loans. Expected losses in relation to guarantees and commitments are covered by the related provision. Where the Group has taken over, through a guarantee, the lending risk ("seller
protection") of a loan, exposures to the debtors underlying credit derivatives are included among the commitments.



Under the Bank of Italy regulations, as implemented by Sanpaolo IMI policies, Sanpaolo IMI classifies a loan as non-performing
(sofferenze):



In
addition, effective January 1, 2000 Sanpaolo IMI's policy, which is derived from the Bank of Italy regulations, has been to classify all loans with periodic payments, whether
amortizing or not, as non-performing when both (a) a borrower fails to pay a specified number of installments when due and (b) the amount of the overdue payments, net of
default interest, is equal to or above 20% of Sanpaolo IMI's exposure to the borrower (net of default interest).

The
number of missed installments that will cause a loan to be treated as non-performing depends upon the number of installments required contractually and the term of the
loan, as follows:

|Installment period |  | Term of
36 months or less |  | Term of
over 36 months
|------------------ |  | ------------------------- |  | ----------------------
|Monthly            |  | 8                         |  | 10                    
|Quarterly          |  | 5                         |  | 7                     
|Semiannually       |  | 3                         |  | 4                     
|Annually           |  | 6 months after 2          |  | 6 months after 2      

26

---

The
following table shows, at the dates indicated, the amount of Sanpaolo IMI Group's non-performing loans by customer group and economic sector and as a percentage of total
non-performing loans.

|                                                                  |  | December 31,
|----------------------------------------------------------------- |  | ------------
|
|
|Non-performing loans to non-financial businesses and individuals: |  |             
|Building and construction industry                                |  | 786         
|Wholesale and retail trade                                        |  | 546         
|Other sales and distribution services                             |  | 471         
|Agriculture, forestry, fisheries                                  |  | 274         
|Food, beverages, tobacco                                          |  | 149         
|Textiles, footwear, clothing                                      |  | 139         
|Hotels and public services                                        |  | 130         
|Metals                                                            |  | 78          
|Electronics, electrical goods, EDP                                |  | 81          
|Transportation services                                           |  | 55          
|Industrial and agricultural machine                               |  | 56          
|Mining, minerals                                                  |  | 75          
|Miscellaneous industrial products                                 |  | 71          
|Paper, printing, publishing                                       |  | 42          
|Chemicals                                                         |  | 44          
|Means of transport                                                |  | 37          
|Rubber, plastics                                                  |  | 26          
|Oil and gas, electric utilities                                   |  | 17          
|Communications                                                    |  | 1           
|                                                                  |  |             
|Total to residents of Italy                                       |  | 3,078       
|                                                                  |  |             
|Total to non-residents of Italy                                   |  | 297         
|Total non-performing loans related to non-financial businesses    |  | 3,375       
|                                                                  |  |             
|Other:                                                            |  |             
|Individuals and other operators                                   |  | 765         
|Financial institutions                                            |  | 151         
|Credit institutions                                               |  | 10          
|Other public agencies                                             |  |            
|Governments                                                       |  | 4           
|                                                                  |  |             
|Total non-performing loans                                        |  | 4,305       
|                                                                  |  |             

---

The increase in the amount of non-performing loans at year-end 2002 compared to year-end 2001 is attributable
primarily to the merger with Cardine.



Under the Bank of Italy guidelines, as implemented by Sanpaolo IMI policies, Sanpaolo IMI classifies a loan as a problem loan
(incagli) when the borrower is experiencing financial difficulties that are likely to be temporary and which can be resolved within a reasonable time. A
"reasonable time" is defined as a maximum of 12 months unless Sanpaolo IMI has agreed with the borrower on a rescheduling of payments and the borrower is making payments paying in accordance
with that schedule. A current account overdraft may be classified as a problem loan if the borrower has exceeded

27

---

the
established credit limit for a period of time that would suggest that the borrower is experiencing financial difficulties.

Installment
loans are classified as problem loans based on a variety of criteria, including as a result of a borrower's non-installment loan being classified as a problem
loan; conversely, a non-installment loan may be classified as a problem loan, among other reasons, as a result of a borrower's installment loan being classified as a problem loan.

In
addition, Sanpaolo IMI's policy has been to classify installment loans, whether amortizing or not, as problem loans when both (a) a borrower fails to pay a specified number of
installments when due and (b) the amount of the overdue payments, net of default interest, is equal to or above 20% of Sanpaolo IMI's exposure to the borrower (net of default interest).

The
number of missed installments that will cause a loan to be treated as a problem loan depends upon the number of installments required contractually and the term of the loan, as
follows:

|Installment period |  | Term of
36 months or less |  | Term of
over 36 months
|------------------ |  | ------------------------- |  | ----------------------
|Monthly            |  | 5                         |  | 7                     
|Quarterly          |  | 3                         |  | 5                     
|Semiannually       |  | 2                         |  | 3                     
|Annually           |  | 6 months after 1          |  | 6 months after 1      



Under the Bank of Italy guidelines, Sanpaolo IMI classifies a loan as restructured when a syndicate of banks (or a single bank) agrees to a delay in payment of
the loan or re-negotiates the loan at lower-than-market rates; a loan is classified as in course of restructuring when the borrower has applied for consolidation of
debt to its banks not more than 12 months previously.



Loans exposed to country risk are set by the Italian Banking Association under the Bank of Italy guidelines, with the exception of
case-by-case valuations of specific positions which, on the basis of objective criteria, are valued consistent with the loan category to which they relate. They do not include
loans guaranteed by entities in a non-classified country.

Country
risk is classified in four categories by the Bank of Italy, focusing in particular on credit history, access to the international markets, ratios of debt to gross national
product and to exports, debt service ratio and potential and actual extraordinary events for each country. At December 31, 2002, the Group's net exposure in all countries classified as
presenting some risk by the Italian Banking Association was €110 million.



Accrual of interest is treated differently for installment and non-installment loans. In accordance with Italian law on the enforcement of loan
contracts, the Group continues to accrue contractual interest on the non-overdue principal of installment loans if the Group has not accelerated the loan, even if the loan is classified as
problem or non-performing, except where the borrower is in bankruptcy. The Group capitalizes and includes in the loan balance such accrued but unpaid contractual interest. Such capitalized
interest is subject to allowance and adjustments as discussed in "Allowance for possible loan losses and value adjustments to Loans" below. In 2002, the Group included in income before
allowances and adjustments €105 million (which €59 million is attributable to the Cardine group) of unpaid contractual interest with respect to classified
loans.

28

---

Contractual
interest does not accrue on non-installment loans that are classified as non-performing, but it generally accrues on non-installment
problem loans, except in certain circumstances.

For
installment loans, default interest (interessi di mora) is calculated at a penalty rate on all past due payments of principal and
contractual interest. Moreover, the Group has had a policy of treating all default interest as irrecoverable and non-accruing. However, default interest is capitalized with a matching
specific allowance, resulting in no net balance sheet effect, whereas for non installment loans, default interest is calculated at the contractual interest rate.

Payments
of default interest are accounted for on a cash basis. The amount of default interest collected by Sanpaolo IMI in 2002 was €51 million.

Neither
contractual interest nor default interest is calculated on loans to borrowers who have been declared bankrupt or are in bankruptcy proceedings. At December 31, 2002,
approximately 29.8% of Sanpaolo IMI Group's net non-performing loans were to such borrowers.



Sanpaolo IMI Group records loan provisions through allowances for possible loan losses, which may be deducted from income for tax purposes only in specified
amounts over time as discussed below, and through adjustments to the value of loans, which may be made only in the limited circumstances but which are immediately deductible for tax purposes.

Under
Italian tax law, allowances for possible losses in loans to customers and allowances for provisions for general credit risk are immediately deductible from taxable income up to
0.6% of the amount of loans to customers, net of adjustments, at year-end, until the cumulative allowance for general credit risk totals a maximum of 5% of the amount of such loans.
Following changes in Italian tax law in 2000, allowances for possible loans losses over 0.6% may be deducted from taxable income on a straight-line basis over nine years. Generally,
provisions for loans to banks are not deductible from taxable income until the loss is realized.

As
noted in "Loans exposed to country risk" above, the Sanpaolo IMI Group makes provisions for loans exposed to country risk in accordance with percentages not lower than
those set by the Italian Banking Association under the Bank of Italy regulations, and these loans are shown net of such provisions on the balance sheet. Such provisions are generally subject to the
0.6% deductibility limit.

Loans,
including principal not yet due and principal and interest due but not yet collected, are stated at their estimated realizable value, taking into account the financial condition
of borrowers in difficulty and any debt-servicing problems faced by individual industrial sectors or the country in which such borrowers are residents. Allowances for possible loan losses
are shown in a notation on the balance sheet, while value adjustments, which are made directly to the value of loans, are not separately noted, except for value adjustments related to the current
year.

Guarantees,
commitments, risks and charges are subject to valuation by Sanpaolo IMI Group using the same criteria applicable to loans and, where necessary, a provision for possible
losses is recorded in the statement of income and balance sheet.

29

---



The following table shows, for the years indicated, details of the changes in the Group's allowances for possible loan losses as they affected the balance sheet and statement of income.

|                                                |  | Year ended December 31, |  
|----------------------------------------------- |  | ----------------------- | -
|
|
|Opening balances                                |  | 3,271                   |  
|Charge off:                                     |  |                         |  
|Reported provision                              |  | 791                     |  
|Value adjustments charged directly to income    |  | 12                      |  
|Total charge off                                |  | 803                     |  
|Recoveries:                                     |  |                         |  
|Reversal taken to income                        |  | (167                    | )
|Recoveries of value adjustments taken to income |  | (40                     | )
|Change in estimated loss on loans               |  | (95                     | )
|Total recoveries                                |  | (302                    | )
|Net charge off                                  |  | 501                     |  
|Other charges:                                  |  |                         |  
|Loans closed or cashed out                      |  | (363                    | )
|Acquisitions and disposals(l)                   |  | 970                     |  
|Gross up to reflect default interest            |  | 184                     |  
|Other                                           |  | 73                      |  
|Total other                                     |  | 864                     |  
|Ending balances                                 |  | 4,636                   |  

---

The
following tables show, at the dates indicated, a breakdown of the allowance for loan losses by category:

|                                     |  | At December 31, 2002 | 
|------------------------------------ |  | -------------------- | 
|
|
|Domestic                             |  |                      | 
|Government and other public entities |  | 6                    | 
|Credit institutions                  |  | 2                    | 
|Non-financial businesses             |  | 3,186                | 
|Other                                |  | 87                   | 
|International                        |  | 407                  | 
|                                     |  |                      | 
|Unallocated                          |  | 948                  | 
|                                     |  |                      | 
|Total                                |  | 4,636                | 
|                                     |  |                      | 

30

---

|                                     |  | At December 31, 2001 | 
|------------------------------------ |  | -------------------- | 
|
|
|Domestic                             |  |                      | 
|Government and other public entities |  | 9                    | 
|Credit institutions                  |  | 1                    | 
|Non-financial businesses             |  | 2,105                | 
|Other                                |  | 115                  | 
|International                        |  | 342                  | 
|                                     |  |                      | 
|Unallocated                          |  | 699                  | 
|                                     |  |                      | 
|Total                                |  | 3,271                | 
|                                     |  |                      | 

|                                     |  | At December 31, 2000 | 
|------------------------------------ |  | -------------------- | 
|
|
|Domestic                             |  |                      | 
|Government and other public entities |  | 3                    | 
|Credit institutions                  |  | 1                    | 
|Non-financial businesses             |  | 2,741                | 
|Other                                |  | 94                   | 
|International                        |  | 282                  | 
|                                     |  |                      | 
|Unallocated                          |  | 545                  | 
|                                     |  |                      | 
|Total                                |  | 3,666                | 
|                                     |  |                      | 

|                                     |  | At December 31, 1999 | 
|------------------------------------ |  | -------------------- | 
|
|
|Domestic                             |  |                      | 
|Government and other public entities |  | 1                    | 
|Credit institutions                  |  | 1                    | 
|Non-financial businesses             |  | 2,781                | 
|Other                                |  | 129                  | 
|International                        |  | 341                  | 
|                                     |  |                      | 
|Unallocated                          |  | 205                  | 
|                                     |  |                      | 
|Total                                |  | 3,458                | 
|                                     |  |                      | 

31

---

|                                     |  | At December 31, 1998(3) | 
|------------------------------------ |  | ----------------------- | 
|
|
|Domestic                             |  |                         | 
|Government and other public entities |  | 85                      | 
|Credit institutions                  |  | 2                       | 
|Non-financial businesses             |  | 2,599                   | 
|Other                                |  | 211                     | 
|International                        |  | 329                     | 
|                                     |  |                         | 
|Unallocated                          |  | 244                     | 
|                                     |  |                         | 
|Total                                |  | 3,470                   | 
|                                     |  |                         | 

---

The
following table shows certain credit quality ratios at the dates indicated:

|                                                                                         |  | At December 31,
|---------------------------------------------------------------------------------------- |  | ---------------
|
|
|Loan loss allowance for non-performing loans as percentage of total non-performing loans |  | 68.99          
|Loan loss allowance for problem loans as percentage of total problem loans               |  | 31.98          
|Loan loss allowance for loans as percentage of total loans                               |  | 3.02           
|Non-performing loans as percentage of total loans:                                       |  |                
|Total                                                                                    |  | 2.81           
|Net                                                                                      |  | 0.87           
|Problem loans as percentage of total loans:                                              |  |                
|Total                                                                                    |  | 1.15           
|Net                                                                                      |  | 0.78           
|Net charge off as percentage of average loans and leases to non-credit Institutions      |  | 0.42           

The
following table shows certain statistics related to total loans at dates indicated:

|                                                                    |  | At December 31, |  
|------------------------------------------------------------------- |  | --------------- | -
|
|
|
|Total loans                                                         |  | 153,337         |  
|Net charge off as a percentage of total loans                       |  | 0.33            | %
|Total allowance at the end of period as a percentage of total loans |  | 3.02            | %

---

32

---



Funding Sources

The principal components of the Group's funding are customer deposits (demand and saving accounts), repurchase agreements, certificates of deposit ("CDs"), bonds,
subordinated debt and interbank funding. Domestic current and saving accounts are primarily interest-bearing accounts. CDs and bonds are issued both by Sanpaolo IMI, its international branches,
Sanpaolo IMI Bank (International) and Banca IMI Group, and have maturities ranging from three months to 10 years. The Group's retail customers are the main source of the Group's funding.

At
December 31, 2002, funding in euro represented approximately 87.22% of the Group's total funding.

The
following table shows the source and type of the Group's funding at the dates indicated:

|                              |  | At December 31, | 
|----------------------------- |  | --------------- | 
|
|
|Customer funds:               |  |                 | 
|Current accounts              |  | 52,197          | 
|Saving accounts               |  | 18,116          | 
|Repurchase agreements         |  | 12,917          | 
|CDs                           |  | 7,310           | 
|Bonds                         |  | 39,447          | 
|Commercial papers             |  | 4,139           | 
|Other(1)                      |  | 2,924           | 
|                              |  |                 | 
|Unsubordinated customer funds |  | 137,050         | 
|Subordinated liabilities      |  | 6,613           | 
|                              |  |                 | 
|Total customer funds          |  | 143,663         | 
|                              |  |                 | 
|Due to banks:                 |  |                 | 
|Due to central banks          |  | 1,775           | 
|Due to other banks            |  | 22,680          | 
|                              |  |                 | 
|Total due to banks            |  | 24,455          | 
|                              |  |                 | 
|Total funding                 |  | 168,118         | 
|                              |  |                 | 

---

The
following table shows deposits at the dates indicated:

|                                     |  | At December 31, 2002 |  | At December 31, 2001 |   | At December 31, 2000 | 
|------------------------------------ |  | -------------------- |  | -------------------- | - | -------------------- | 
|
|
|Domestic:                            |  |                      |  |                      |   |                      | 
|Non interest bearing demand deposits |  | 560                  |  |                     |   | 484                  | 
|Interest bearing demand deposits     |  | 45,639               |  | 2.43                 | % | 35,033               | 
|Savings deposits                     |  | 20,424               |  | 2.14                 | % | 18,345               | 
|Certificates of deposit              |  | 3,352                |  | 2.95                 | % | 2,386                | 
|                                     |  |                      |  |                      |   |                      | 

33

---

|International:                                                                                           |  |        |  |      |   |        |  |      |   |        |  |      |  
|-------------------------------------------------------------------------------------------------------- |  | ------ |  | ---- | - | ------ |  | ---- | - | ------ |  | ---- | -
|Foreign demand deposits with government and other public entities and with banks and credit institutions |  | 198    |  | 2.06 | % | 44     |  | 3.29 | % | 91     |  | 2.57 | %
|Other foreign demand deposits                                                                            |  | 3,587  |  | 1.76 | % | 3,897  |  | 2.40 | % | 3,478  |  | 2.34 | %
|Other foreign savings deposits and certificates of deposits                                              |  | 14,565 |  | 3.33 | % | 13,434 |  | 4.21 | % | 20,521 |  | 4.89 | %

The
following tables show short-term borrowings:

|                                                                              |  | At December 31, 2002 |  
|----------------------------------------------------------------------------- |  | -------------------- | -
|
|
|Amount outstanding at December 31, 2002                                       |  | 16,313               |  
|Weighted average interest rate of the amount outstanding at December 31, 2002 |  | 3.20                 | %
|Maximum amount outstanding at month-end during the year                       |  | 25,083               |  
|Average amount outstanding during the year                                    |  | 21,019               |  
|Weighted average interest rate during the year                                |  | 3.45                 | %

|                                                                              |  | At December 31, 2001 |  
|----------------------------------------------------------------------------- |  | -------------------- | -
|
|
|Amount outstanding at December 31, 2001                                       |  | 14,230               |  
|Weighted average interest rate of the amount outstanding at December 31, 2001 |  | 3.46                 | %
|Maximum amount outstanding at month-end during the year                       |  | 22,075               |  
|Average amount outstanding during the year                                    |  | 16,726               |  
|Weighted average interest rate during the year                                |  | 3.96                 | %

|                                                                              |  | At December 31, 2000 |  
|----------------------------------------------------------------------------- |  | -------------------- | -
|
|
|Amount outstanding at December 31, 2000                                       |  | 12,714               |  
|Weighted average interest rate of the amount outstanding at December 31, 2000 |  | 4.76                 | %
|Maximum amount outstanding at month-end during the year                       |  | 15,690               |  
|Average amount outstanding during the year                                    |  | 10,673               |  
|Weighted average interest rate during the year                                |  | 3.62                 | %

34

---

C. Risk Factors

Market declines and volatility can materially adversely affect revenues and profits.

Conditions in the financial markets in Italy and elsewhere, materially affect the Group's businesses. An overall market downturn can adversely affect the Group's
business and financial performance. Market declines can adversely affect the credit quality of the Group's assets and could increase the risk that a greater number of Group's customers would default
on their loans or other obligations.

Protracted market declines can reduce liquidity in the markets, making it harder to sell assets and leading to material losses.

In some of the Group's businesses, protracted adverse market movements, particularly asset price declines, can reduce the level of activity in the market or
reduce market liquidity. These developments can lead to material losses if the Group cannot close out deteriorating positions in a timely way. This may especially be the case for assets of the Group
for which there are not very liquid markets to begin with. Assets that are not traded on stock exchanges or other public trading markets, such as derivatives contracts between banks, may have values
that the Group calculates using models other than publicly quoted prices. Monitoring the deterioration of prices of assets like these is difficult and could lead to losses that the Group did not
anticipate.

Even where losses are for the accounts of clients of the Group, the clients may fail to repay the Group, leading to material losses for the Group, and
the Group can be harmed.

While the Group's clients would be responsible for losses the Group incurs in taking positions for their accounts, the Group may be exposed to additional credit
risk as a result of their need to cover the losses. The Group's business may also suffer if the Group's clients lose money and the Group loses the confidence of clients in its products and services.

The Group's investment banking revenues may decline in adverse market or economic conditions.

The Group's investment banking revenues, in the form of financial advisory and underwriting fees, directly relate to the number and size of the transactions in
which the Group participates and are susceptible to adverse effects from sustained market downturns. These fees and other revenues are
generally linked to the value of the underlying assets and therefore decline as asset values decline. In particular, the Group's revenues and profitability could sustain material adverse effects from
a significant reduction in the number or size of debt and equity offerings and merger and acquisition transactions.

The Group may generate lower revenues from brokerage and other commission-and fee-based businesses.

Market downturns are likely to lead to declines in the volume of transactions that the Group executes for its customers and, therefore, to declines in the Group's
non-interest revenues. In addition, because the fees that the Group charges for managing its clients' portfolios are in many cases based on the value or performance of those portfolios, a
market downturn that reduces the value of the Group's clients' portfolios or increases the amount of withdrawals would reduce the revenues the Group receives from its asset management and private
banking and custody businesses.

Even
in the absence of a market downturn, below-market performance by the Group mutual funds may result in increased withdrawals and reduced inflows, which would reduce the revenue the
Group receives from its asset management business.

35

---

If the Group is unable to successfully integrate its mergers and acquisitions and to fully implement the reorganization of its structure, the Group's
future earnings and share price may be materially and adversely affected.

As a result of its acquisition of (and merger with) Banco di Napoli S.p.A. ("Banco di Napoli"), and merger by incorporation of Banca Cardine S.p.A. ("Cardine"),
the Group is exposed to the risk of not successfully integrating Banco di Napoli's and Cardine's employees, products, services and systems with those of the rest of the Group. If the Group is not
successful in this integration effort, it may not be able to realize the anticipated synergies and other benefits. To successfully integrate Banco di Napoli and Cardine, the Group was restructured in
2001 and the Group is focusing on the development and implementation of a "Macchina operativa intragruppo" ("MOI") an intragroup operating platform.

The
Group's future earnings, as well as the future value of the Group's Shares and ability to compete effectively, may be materially and adversely affected should the Group fail to
achieve the anticipated benefits from acquisitions and the reorganization or should the Group's costs to achieve these benefits be higher than expected.

The Group's risk management policies, procedures and methods may leave the Group exposed to unidentified or unanticipated risks, which could lead to
material losses.

The Group has devoted significant resources to developing its risk management policies, procedures and assessment methods and intends to continue to do so in the
future. Nonetheless, the Group's risk management techniques and strategies may not be fully effective in mitigating the Group's risk exposure in all economic market environments or against all types
of risk, including risk that the Group fails to identify or anticipate. Some of the Group's qualitative tools and metrics for managing risk are based upon the Group's use of observed historical market
behavior. The Group applies statistical and other tools to these observations to arrive at quantifications of its risk exposures. These tools and metrics may fail to predict future risk exposures.
These risk exposures could, for example, arise from factors the Group did not anticipate or correctly evaluate in its statistical models. This would limit the Group's ability to manage its risks. The
Group's losses thus could be significantly greater than the historical measures indicate. In addition, the Group's quantified modeling does not take all risks into account. The Group's more
qualitative approach to managing those risks could prove insufficient, exposing it to material unanticipated losses. If existing or potential customers believe the Group's risk management is
inadequate, they could take their business elsewhere. This could harm the Group's reputation as well as its revenues and profits.

Intense competition, especially in the Italian market, where the Group has the largest single concentration of its businesses, could materially hurt the
Group's revenues and profitability.

Competition is intense in all of the Group's primary business areas in Italy and the other countries in which the Group conducts its business, including other
European countries and the United States. The Group derived approximately 86% of its net revenues in 2002 from Italy, a mature market where competitive pressures have been increasing quickly. If the
Group is unable to continue to respond to the competitive environment in Italy with attractive product and service offerings that are profitable for the Group, the Group may lose market share in
important areas of its business or incur losses on some or all of its activities. In addition, downturns in the Italian economy could add to the competitive pressure, through, for example, increased
price pressure and lower business volumes for Sanpaolo IMI and its competitors to try to capture.

The Group's results are affected by events which are difficult to anticipate.

The Group's earnings and business are affected by general economic conditions, the performance of financial markets, interest rate levels, currency exchange
rates, changes in laws and regulation,

36

---

changes
in the policies of central banks, particularly the Bank of Italy and the European Central Bank (the "ECB"), and competitive factors, in each case on a regional, national or international
level. Each of these factors can change the level of demand for the Group's products and services, and change the risk to the Group of providing such products and services. For instance, changes in
general economic conditions, the performance of financial markets, interest rate levels and the policies of central banks may affect, positively or negatively, the Group's financial performance by the
demand for the Group's products and services, the credit quality of borrowers and counterparties, the interest rate margin realized by the Group between its lending and borrowing costs, and the value
of the Group's investment and trading portfolios. Changes in laws and regulations may affect, positively or negatively, the Group's ability to provide certain products and services, and the cost of
complying with such laws and regulations.

The
Group has economic, financial market, credit, legal and other specialists who monitor economic and market conditions and government policies and actions. However, because it is
difficult to predict with accuracy changes in economic or market conditions or in governmental policies and actions, it is difficult for the Group to anticipate the effects that such changes could
have on its financial performance and business activities.

The
Group is also exposed to operational risk. In order to conduct its activities, the Group must be able to process operationally a large number of transactions, of varying complexity,
across numerous and diverse products and services, in different currencies, for different clients, subject to a number of different legal and regulatory regimes, and in different locations. The
Group's systems and processes are designed to ensure that the operational risks associated with its activities are appropriately controlled. Any breakdown or weakness in these systems could negatively
affect the Group's financial performance and business activities.

The
Group is also exposed to market risk. For a discussion of market risk factors, please see "Item 11. Quantitative and Qualitative Disclosures about Market Risk".

Devaluations of assets and write-downs could adversely affect the Group's financial conditions and results of operations.

Future events in the capital markets and in credit ratings of market participants may result in substantial impairment to the Group's assets at any time
Impairment charges may adversely affect the Group's results from operations and financial condition.

ITEM 4. INFORMATION ON SANPAOLO IMI

A. History and Developments of Sanpaolo IMI

Incorporation, Length of Life and Domicile

Sanpaolo IMI is incorporated as a limited liability company (Società per Azioni or S.p.A.) under the laws of Italy. Sanpaolo IMI was created on
November 1, 1998 by the merger (the "Merger") of Sanpaolo and IMI. Sanpaolo IMI is the legal successor of both Sanpaolo and IMI. The life of Sanpaolo IMI, according to its charter, will last
until December 31, 2100. Pursuant to Article 2504 bis of the Italian Civil Code, all rights previously exercised and all obligations and liabilities previously incurred by Sanpaolo and
IMI have automatically passed on to Sanpaolo IMI.

After
the Merger, Sanpaolo IMI changed its name to "Istituto Bancario San Paolo di TorinoIstituto Mobiliare Italiano S.p.A." and subsequently to "Sanpaolo IMI S.p.A.". The
name Sanpaolo IMI S.p.A. was adopted by a resolution of the extraordinary shareholders' meeting held on April 30, 1999 and the change of name became effective on June 2, 1999 with the
approval of the Tribunal of Turin.

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Sanpaolo
IMI is registered with the Company Registrar under number "06210280019" and with the Bank of Italy as a bank and, together with its subsidiaries, as a banking group under
numbers 5084,9,0
and 1025.6, respectively. Sanpaolo IMI is the reporting bank ("capogruppo") of the Sanpaolo IMI Group for regulatory purposes and, as capogruppo, is
responsible for monitoring the Group's activities and maintaining the relationship with the Bank of Italy.

Sanpaolo
IMI's registered office is located at Piazza San Carlo 156, Turin and its secondary offices are Viale dell'Arte 25, Rome, and Via Farini 22, Bologna. Sanpaolo IMI can be
contacted by telephone at +39-0115551.

History and Development

In the 1930s, the Italian banking industry went through a period of reorganization and regulation in the course of which IMI was established as a public law
entity (Ente di Diritto Pubblico) in 1931 and Sanpaolo became a public law credit institution (Istituto di Credito di Diritto
Pubblico) in 1932. In the context of the reformed banking regulation, which lasted until the beginning of the 1990s, the main focus of IMI's activities was towards medium-and
long-term lending to promote the development of the Italian industrial sector, including lending for public works and export finance, while Sanpaolo's activities were directed more towards
short-term commercial banking, together with certain separately accounted sections for activities such as mortgage and industrial lending, in its home base.

In
the 1990s, certain reforms were introduced into the Italian banking sector. In particular, the Bank of Italy relaxed certain restrictions on the opening of new branches and Sanpaolo
was thus encouraged to continue to expand beyond its traditional home base in Piedmont. The Italian government also sought to encourage a greater private sector involvement in banking through the
conversion of charitable foundations with banking businesses (such as Sanpaolo) into separate charities and businesses and through the sale of stakes in state-controlled banks (such as IMI). These
developments were to be effected through a series of legal measures, including tax incentives, to strengthen the capital structure of the banking sector (the first of which was Law No. 218 of
July 30, 1990 (the "Amato Law")) and through direct sales by the Italian Ministry of Economy and Finance (the "Ministry of Economy and Finance"), previously known as the Ministry of Treasury,
of state-controlled holding companies.

Pursuant
to the Amato Law, Sanpaolo was established as a Società per Azioni as of December 31, 1991, under the name Istituto Bancario San Paolo di Torino
Società per Azioni. In 1992, approximately 21% of Sanpaolo's share capital was floated in Italy and the shares traded on the Stock Exchange Automated Quotation International System of
the London Stock Exchange Limited ("SEAQ International").

The
charitable foundation, Compagnia di San Paolo, indirectly remained majority shareholder until 1997, when six long-term shareholders and four medium-term
shareholders purchased 22% of Sanpaolo's share capital, while a further 31% was sold in an Italian public offering and a global institutional offering. Following the Bank of Italy's approval, Sanpaolo
becamecapogruppo.

IMI
became aSocietà per Azioniin 1991. There was no public market for IMI's shares prior to 1994. In that year, as part
of the government's direct privatization campaign, the Ministry of Treasury and several other shareholders in IMI took part in a global offering (the "Global Offering") of more than
one-third of IMI's share capital. In connection with the Global Offering, IMI's shares were listed on the Italian Stock Exchange and its American Depository Shares (each ADS representing
three shares) were listed on the New York Stock Exchange, and the shares were also listed on SEAQ International. In 1995, shares in IMI held by the Ministry of Treasury were privately placed with
Italian and European financial institutions and private industrial companies. In July 1996, IMI lead-managed the third offering of its own shares by the Ministry of Treasury, to
institutional investors in Italy, Europe and the United States.

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The Merged Group

During the second half of the 1990s the banking sector in Italy and worldwide went through a phase of rationalization and consolidation. In Europe, this
consolidation was also influenced by the introduction of the euro, with Italy joining the European economic and monetary union and the replacement of the lira by the euro at the beginning of 2002. In
light of these developments, new Italian banking groups were created or consolidated. The Italian Government and the Bank of Italy encouraged such developments. The managements of both Sanpaolo and
IMI determined that, to compete effectively in the changing Italian and European banking environments, a larger size and an appropriate merger partner would be a positive development and would also
provide the basis for further aggregation and consolidation in the sector.

The
Merger was completed as of November 1, 1998. For accounting and tax purposes, the Merger became effective as of January 1, 1998. Sanpaolo IMI's shares and ADSs (each
ADS representing two shares) are listed on, respectively,Mercato Telematico Azionarioin Italy and the New York Stock Exchange. The ADS depository is
JPMorgan Chase Bank.

In
1999, in the context of the increasing consolidation of banking and financial services in Italy, Sanpaolo IMI reached an agreement with Assicurazioni Generali S.p.A. ("Generali"), an
insurance company, whereby Sanpaolo IMI would acquire control of Banco di Napoli group, while Generali would take over the insurance business of Istituto Nazionale delle Assicurazioni S.p.A. ("INA").

During
2000, Sanpaolo IMI acquired control of the Banco di Napoli group. In 2002, Banco di Napoli was merged into Sanpaolo IMI. The merger with Banco di Napoli became effective, for
corporate law purposes, as of December 31, 2002 and, for accounting purposes, as of January 1, 2002. See "Significant Developments During 2002Banco di Napoli".

In
January 2001, Sanpaolo IMI acquired a stake of approximately 11% in Cardine Banca S.p.A. ("Cardine"), the savings bank resulting from the merger of the Cassee Venete and the
Cassa di Risparmio di Bologna S.p.A., both operating in the North East of Italy. In 2002, Cardine was merged into Sanpaolo IMI. The merger became effective, for corporate law purposes, as of
June 1, 2002 and, for accounting purposes, as of January 1, 2002. See "Significant Developments During 2002Cardine".

In
Italy, there are no specific legal rules or accounting principles concerning the accounting treatment of business combinations, including mergers. As a result, merger accounting in
Italy has developed on the basis of certain rules, including tax rules, specifically applicable to merger transactions and combines aspects of the U.S. purchase and pooling of interests methods of
accounting.

The
Italian practice does not require a choice between two mutually exclusive methods but depends rather on the provisions of the business combination agreement. Under Italian practice,
combinations that are effected through the exchange of shares, assets and liabilities (at historical values) are generally aggregated, as in a consolidation process, net of intercompany eliminations;
shareholders' equity is also aggregated, after elimination of cross-holdings.

The
mergers by incorporation undertaken by Sanpaolo (and by Sanpaolo IMI, as applicable) were accounted for, under Italian GAAP, as follows:



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Significant Developments During 2002

Cardine

In January 2001, Sanpaolo IMI acquired from Fondazione Cassa di Risparmio di Venezia a 10.9% equity stake in Cardine in exchange for 27.5 million
Shares, valued at €516 million. The 27.5 million Shares represented a 1.96% equity stake in Sanpaolo IMI. In May 2002, Sanpaolo IMI sold to the Compagnia di San
Paolo a 8% equity stake in Cardine. See "Ownership structure of Sanpaolo IMI upon completion of the Cardine Merger".

In
December 2001, the boards of directors of Sanpaolo IMI and of Cardine approved a plan to merge Cardine into Sanpaolo IMI (the "Cardine Merger"). The plan for the Cardine Merger
was presented to the Bank of Italy (which, in accordance with Italian law, requires any such plan to be informally presented to the Bank of Italy before it is submitted to boards of directors for
formal approval) in October 2001 and was approved by the Sanpaolo IMI shareholders and by the Cardine shareholders in March 2002.

The
Cardine Merger provided for the merger of Cardine into Sanpaolo IMI, and was effective from January 1, 2002, for accounting and tax purposes, and, from June 1, 2002,
for corporate law purposes. It was structured as a stock-for-stock merger in which holders of Cardine ordinary shares received 1.7950 Shares for each Cardine common share
exchanged.

In
connection with the Cardine Merger, Sanpaolo IMI increased its share capital by €1,211.6 million by issuing 432.7 million Shares, which were allocated to
the Cardine shareholders other than Sanpaolo IMI and Cardine, in exchange for 267.8 million ordinary shares of Cardine. In connection with the Cardine Merger, Sanpaolo IMI used
48 million treasury Shares.



The two largest shareholders of Cardine were two charitable foundations: the Fondazione Cassa di Risparmio di Padova e Rovigo ("Fondazione CRPR") with a 40.2%
beneficial ownership interest in Cardine, and the Fondazione Cassa di Risparmio in Bologna ("Fondazione CRB" and, together with Fondazione CRPR, the "Cardine Foundations") with a 28.6% beneficial
ownership interest in Cardine.

In
a letter of intent dated October 18, 2001 (the "Letter of Intent") the Compagnia di San Paolo and the Cardine Foundations (collectively the "Foundations") had agreed to the
voluntary conversion (the "Conversion") of Shares held by the Foundations into preferred shares of a special class (the "Azioni Privilegiate"). See
"Item 7. Major Shareholders and Related Party TransactionsThe Major Shareholders". The Conversion occurred on June 1, 2002. Pursuant to the Cardine Merger and to
the Conversion, as of December 31, 2002, the Foundations have a 15% interest in the ordinary share capital of Sanpaolo IMI.

The
Conversion was made pursuant to Law 461 of December 23, 1998 enacted by legislative decree 153 of May 17, 1999 (collectively, the "Ciampi Law") which allows the
ordinary shares of banking institutions, such as Sanpaolo IMI, held by charitable banking foundations, such as the Foundations, to be converted into preferred shares of a special class. The Azioni Privilegiatehave priority over the Shares in respect of dividends and are currently entitled to vote only at extraordinary shareholders'
meetings. In 2012, theAzioni Privilegiateheld by the Foundations will be converted back into Shares with full voting rights.

The Azioni Privilegiatewill be converted into Shares, by operation of law, if they are transferred to a different beneficial owner. The
conversion ratio of theAzioni Privilegiateinto Shares will be one-to-one.

In
January 2002, the Foundations formed Fondacosocietâ di gestione del risparmio("Fondaco SGR") a special purpose
asset management company. The Compagnia di San Paolo has a 40%

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beneficial
ownership interest in Fondaco SGR, the Cardine Foundations have a 40% beneficial ownership in Fondaco SGR and Ersel Finanziaria S.p.A. (an independent investment management advisor), has a
20% beneficial ownership in Fondaco SGR.

Pursuant
to the Letter of Intent, the Foundations will contribute for a period of 10 years (the "Fondaco Contribution") their 15% interest in the ordinary share capital of
Sanpaolo IMI (the Shares that were not subject to the Conversion) to Fondaco SGR. Fondaco received the applicable asset management licenses in the first quarter of 2003.

The
Fondaco Contribution hinges on the separation of the beneficial ownership of the contributed Shares, which will remain to the Foundations, from the exercise of the related voting
power in the ordinary shareholders' meetings of Sanpaolo IMI, for which Fondaco SGR will have full and discretionary responsibility.

In
addition to the Shares subject to the Fondaco Contribution, Compagnia di San Paolo holds 157,341,052Azioni Privilegiate(equivalent to
an 8.6% stake in the total share capital of Sanpaolo IMI), Fondazione CRPR holds 134,968,267Azioni Privilegiate(equivalent to a 7.3% stake in the
total share capital of Sanpaolo IMI) and Fondazione CRB holds 96,024,699Azioni Privilegiate(equivalent to a 5.2% stake in the total share capital of
Sanpaolo IMI).

The
Compagnia di San Paolo entered into the Agreement Among Shareholders (as defined in Item 7 below) with other shareholders of Sanpaolo IMI. Upon completion of the Fondaco
Contribution, Fondaco SGR will be solely entitled to exercise the rights of the Compagnia di San Paolo under the Agreement Among Shareholders. Fondaco SGR will solely be entitled to enter into
agreements relating to the Foundations interest in Sanpaolo IMI. The Conversion has decreased the role of the Foundations in ordinary shareholders' meetings and particularly in the nomination of the
directors of Sanpaolo IMI. The Fondaco Contribution will further decrease such role. The ownership structure, as contemplated by the Letter of Intent, confirms the introduction of new stable
shareholders. In accordance with the Letter of Intent,Caisse des Dépôts et Consignations("CDC") became a party to the
Agreement Among Shareholders. See "Item 7. Major Shareholders and Related Party TransactionsThe Major ShareholdersAgreement Among Shareholders".

The
board of directors of Sanpaolo IMI was enlarged in order to include members designated by Fondazione CRPR, Fondazione CRB and CDC.



In December 2001 Sanpaolo IMI and Compagnia di San Paolo entered into certain agreements relating to the Group's equity holdings in order to further
streamline the Group structure. Pursuant to these agreements, Sanpaolo IMI agreed to sell to Compagnia di San Paolo an 8% stake in Cardine. The 8% stake in Cardine sold to the Compagnia di San Paolo
was part of the 10.8% stake in Cardine that Sanpaolo IMI held before the merger with Cardine.

For
the 8% stake in Cardine, Compagnia di San Paolo paid to Sanpaolo IMI €439,652,420; for the same amount Compagnia di San Paolo sold to Sanpaolo IMI:



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The
Compagnia di San Paolo and Sanpaolo IMI agreed on a valuation for the 8% stake in Cardine of €439,652,420. The valuation was established by making reference to the
value that resulted from applying the exchange ratio used in the Cardine merger (1.795 Shares for each ordinary share of Cardine) to the average value of the Shares during the period from
December 27, 2001 to January 18, 2002. Such value was discounted for the dividend paid by Cardine.

The
value of the assets sold by the Compagnia di San Paolo was determined as follows:



A
fairness opinion was issued by Schroder Salomon Smith Barney with respect to the agreements between the Compagnia di San Paolo to Sanpaolo IMI.

For
further streamlining transactions including the Compagnia di San Paolo, see below under "Rationalizations effortsRationalization of the Group's presence in private
equity".

Banco di Napoli

In 2000, Sanpaolo IMI acquired the control of Banco di Napoli, a commercial bank based in Naples.

On
March 6, 2002, Sanpaolo IMI announced the launch of a public tender offer for 126,991,859 savings shares of Banco di Napoli representing 99.15% of the outstanding Banco di
Napoli saving shares (6.37% of the total share capital of Banco di Napoli). Pursuant to the public offer, Sanpaolo IMI offered €1.30 in cash for each tendered savings share of Banco di
Napoli. The public tender offer was not made to any holder of Banco di Napoli savings shares resident in the United States. The public tender offer was completed on April 19, 2002 and was
accepted by the holders of 115,465,209 savings shares of Banco di Napoli (90.15% of the outstanding savings shares of Banco di Napoli). The amount paid by Sanpaolo IMI for the shares tendered pursuant
to the public tender offer was approximately €150 million.

On
November 25, 2002, the extraordinary shareholders' meetings of Sanpaolo IMI and of Banco di Napoli approved the merger of Banco di Napoli into Sanpaolo IMI. The merger became
effective from January 1, 2002, for Italian accounting and tax purposes, and from December 31, 2002 for corporate law purposes.

In
order to complete the merger of Banco di Napoli into Sanpaolo IMI, the Banco di Napoli savings shares were exchanged for Shares. The exchange ratio was six Banco di Napoli saving
shares for one Share. Sanpaolo IMI held 111,765,709 and other investors held 16,311,650 savings shares of Banco di Napoli. 2,718,608 Sanpaolo IMI treasury Shares were exchanged for the outstanding
Banco di Napoli savings shares. No capital increase was necessary for Sanpaolo IMI to complete the merger.

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Fiat is controlled by IFIL, a shareholder of Sanpaolo IMI and a party to the Agreement Among Shareholders. See "Item 7. Major Shareholders and Related Party
TransactionsThe Major ShareholdersAgreement Among Shareholders". IMI Investimenti, a company of the Sanpaolo IMI Group, in June 1999 entered into a consultive
agreement with IFIL, Assicurazioni Generali S.p.A. and Deutsche Bank relating to the 1.48% interest in Fiat held by IMI Investimenti. The consultive agreement is non-binding.

Sanpaolo
IMI and IFIL have, directly or indirectly, two comon directors/executive officer. Mr. Marocco is a Director of both Sanpaolo IMI and IFIL. Mr. Marrone is a
Director of Sanpaolo IMI and is the chief executive officer of IFI, a subsidiary of IFIL. See "Item 6. Directors, Senior Management and EmployeesDirectors and Senior Management".



The Fiat group is one of Italy's largest industrial groups. Fiat's core business, the production of cars, is carried out by Fiat Auto S.p.A. ("Fiat Auto"). In the
first quarter of 2003 the Fiat group's share of the European car market, in terms of sales, was 7.9%, in sixth place among European car producers. Source: first quarter 2003 data of
ACEAEuropean data base. In recent years, Fiat Auto has incurred significant losses. In 2002 and in the first quarter of 2003, the Fiat group had consolidated losses of
€4.263 billion and €699 million, respectively. As of December 31, 2002 and as of March 31, 2003, the net consolidated debt of the Fiat group
was €3.8 billion and €5.2 billion, respectively.

In
2002 and in 2003, Fiat's group credit rating was downgraded to below investment grade by the major rating agencies. The outlook attributed by the major rating agencies to Fiat's debt
is negative.

The
Sanpaolo IMI Group, like other major Italian banking groups, has a material credit exposure to the Fiat group. In 2002, the highest exposure of the Sanpaolo IMI Group to the Fiat
group was of €3.010 billion. This exposure was recorded as of January 1, 2002. Of that exposure, €1.470 billion was to the Italenergia group (as
defined below) which, at that time, was consolidated with the Fiat group. As described below, in September 2002 Fiat sold to Sanpaolo IMI and to other Italian banks a 14% interest in
Italenergia Bis (as defined below). The sale reduced Fiat's interest in the Italenergia group from 38.6% to 24.6%. Because of the sale, the Italenergia group (and its debt) was deconsolidated from the
Fiat group. Because of the deconsolidation, the exposure of the Sanpaolo IMI Group to the Fiat group decreased significantly in 2002. In the first half of 2003 the exposure of the Sanpaolo IMI Group
to the Fiat group continued to decrease. As of June 1, 2003, such exposure was €1.180 billion. The exposures of the Sanpaolo IMI Group to the Fiat group take into account
the 1.48% interest in Fiat held by the Sanpaolo IMI Group. In 2002 the value of such interest was written down by €82 million. See "Item 5. Operating and Financial Review and
ProspectsOperating Results".

The
exposures of the Sanpaolo IMI Group to the Fiat group discussed above have been calculated in accordance with the EU Large Exposures Directive as implemented by the Bank of Italy.
See "Item 5. The Italian Banking System: Supervision and RegulationLending Limits". The exposures, include all exposures whether on or off-balance sheet (equity interests,
securities, loans and guarantees, undrawn lines of credit and derivatives) adjusted for undrawn lines of credit, certain kinds of collateral, and guarantees (or corresponding financial instruments
such as credit derivatives) from banks or governments.

On
June 26, 2003 the Fiat group announced a new business plan. Under the business plan, the Fiat group declared its intention to focus on the vehicle production and component sector.
Pursuant to the business plan, Fiat is expected to raise €1,842 million from a rights issue. The rights issue is expected to be launched in July 2003. Approximately 70% of the rights
issue will be underwritten by a

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syndicate
of financial institutions, including Banca IMI. The Sanpaolo IMI Group, through its wholly owned subsidiary Imi Investimenti, has also decided to participate in the rights issue in
connection with its equity stake in Fiat. The disbursement of Imi Investimenti in connection with its participation in the rights issue is expected to be approximately €30 million.

The financial results of the Fiat group discussed herein have been extracted from publicly available information. Sanpaolo IMI assumes no responsibility for the
accuracy of such results.



On May 27, 2002, Fiat, on the one hand, and Sanpaolo IMI, Capitalia S.p.A. ("Capitalia") (formerly Banca di Roma S.p.A.) and Banca Intesa S.p.A.
("Intesa"), on the other hand entered into a framework agreement (the "Fiat Framework Agreement") which supports Fiat's strategic and industrial plan. Unicredito Italiano S.p.A. ("Unicredito" and,
together with Sanpaolo IMI, Capitalia and Intesa, the "Participating Banks") also became a party to the Fiat Framework Agreement.

The
Fiat Framework Agreement contemplates:





Pursuant to the Fiat Framework Agreement, on July 26, 2002, the Participating Banks agreed to grant to Fiat a €3 billion loan (the
"Fiat Convertible Facility"), consisting mainly of a conversion of Fiat's current short-term debt owed to the Participating Banks. The Fiat Convertible Facility is a mandatorily
convertible facility. The maturity of the Fiat Convertible Facility is September 2005. The Sanpaolo IMI Group's participation in the Fiat Convertible Facility amounted to
€400 million.

In
addition to the Participating Banks, the Monte dei Paschi di Siena group, Banca Nazionale del Lavoro S.p.A., ABN AMRO Bank N.V. and BNP Paribas S.A. participated in the Fiat
Convertible Facility.

The
Fiat Convertible Facility contemplates, as its ordinary means of repayment, the conversion of the outstanding unpaid balance, at the maturity date, into Fiat ordinary shares (the
"New Fiat Shares").

The
number of New Fiat Shares that will be issued in repayment of the Fiat Convertible Facility will correspond to (1) the arithmetic average between €15.5 and the
weighted average of the share price of Fiat ordinary shares in the six or three months preceding the issuance of the New Fiat Shares, divided by (2) the outstanding balance at maturity.

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If
Fiat will issue the New Fiat Shares, the holders of the Fiat Convertible Facility will offer the New Fiat Shares to the shareholders of Fiat in accordance with the
pre-emptive rights granted by Italian law.

Sanpaolo
IMI and IFIL have agreed that, if the New Fiat Shares are issued, IFIL will use its best efforts to avoid the application of the provisions of Italian law relating to
cross-ownership between listed companies. See "Item 10. Additional InformationForeign InvestmentSecurities Regulations". IFIL has agreed to use its best efforts to avoid,
without financial cost to Sanpaolo IMI, limitations originating from the cross-ownership between Sanpaolo IMI and Fiat and to allow Sanpaolo IMI to exercise full voting rights in respect of any shares
in Fiat that Sanpaolo IMI may hold.



Pursuant to the Fiat Framework Agreement, the Participating Banks agreed to acquire a 51% interest in the European retail consumer loans operations of FIDIS.

In
March 2003, the Participating Banks entered into a purchase agreement for the acquisition from Fiat Auto of 51% of FIDIS Retail Italia S.p.A ("FIDIS Retail"), the newly formed
holding company of FIDIS' European consumer loans operations at a price (as described below) of approximately €400 million. The total investment of each Participating Bank,
including Sanpaolo IMI, is of approximately €100 million.

In
order to acquire the interest in FIDIS Retail, the Participating Banks established a company known as Synesis Finanziaria S.p.A. ("Synesis"). Each participating Bank holds 25% of
Synesis.

On
May 27, 2003, Synesis acquired a 51% interest in FIDIS Retail upon payment of a first tranche of €253 million. A second tranche of
€118 million will be paid between July and September 2003. An adjustment to the purchase price will be made before the end of 2003. The adjustment will be on the basis of
the financial results of FIDIS Retail. It is expected that, with the adjustment, the final purchase price for the 51% interest in FIDIS Retail will be approximately
€400 million.

The
Participating Banks and Fiat Auto also have entered into agreements relating to the corporate governance of FIDIS Retail. Pursuant to such agreements, the board of directors of FIDIS
Retail will consist of six members, of which four will be designated by Synesis and two by Fiat Auto. The chairman of the board of directors, will be one of the directors designated by Synesis; the
deputy chairman of the board of directors will be one of the directors designated by Fiat Auto. Subject to certain exceptions which require a qualified quorum, the board of directors of FIDIS Retail
will adopt its resolutions, including those relating to important corporate events, by simple majority. A qualified majority of 60% of the share capital is required for certain decisions for which the
extraordinary shareholders' meeting of FIDIS Retail is responsible.

Fiat
Auto will have a call option to buy back the 51% interest in FIDIS Retail held by Synesis. The call option will be exercisable between January 2004 and January 2006.
The exercise price of the call option will allow the Participating Banks to recuperate their investment and allows for a variable increase determined in accordance with the time of exercise of the
option. In the event of a change in control of Fiat Auto or of the sale by Fiat Auto of its 49% interest in FIDIS Retail, Fiat Auto will have to purchase, or cause a third party to purchase, the 51%
interest in FIDIS Retail held by Synesis at a price in line with the price contemplated by the call option.

The
sale of the 51% equity interest in FIDIS Retail permitted the Fiat group to reduce its consolidated gross financial indebtedness by approximately €6 billion.

On
May 20, 2003, the Participating Banks extended a three year €2.5 billion line of credit to FIDIS Retail. Each Participating Bank contributed equally to
the line of credit. The line of credit amends the

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debt
profile of FIDIS Retail which, before the extension of the line of credit, consisted primarily of intercompany lines of credit guaranteed by Fiat.



Italenergia S.p.A. ("Italenergia") was the holding company which acquired, in a public tender offer in July 2001, Montedison S.p.A., the holding company of
Edison S.p.A. ("Edison"), Italy's second largest utility group.

Until
May 2002, before the Italenergia Reorganization (as described below), the major shareholders of Italenergia included Fiat (with a 38.6% interest) and
Electricité de France ("EDF" with a 18% interest). A 23.4% interest in Italenergia was held by Sanpaolo IMI, Capitalia and Intesa (collectively the "Banking Shareholders"). Until
May 2002, the Group held, through IMI Investimenti, a 7.82% equity interest in Italenergia.

The
voting rights of EDF in Italenergia, or its successor companies, are limited to 2% of the outstanding Italenergia shares. The limitation is due to Italian Law No. 301 of 2001.

Although
Fiat did not control the absolute majority of Italenergia shares, according to the Bank of Italy's interpretations of the applicable large exposure regulations, Italenergia's
debt had to be consolidated with that of Fiat, unless Fiat disposed of its interest in Italenergia.

In
June 2002 the Banking Shareholders, Fiat and EDF, as applicable, agreed to the following:



In December 2002, after the Italenergia shareholders transferred their interests in Italenergia to Italenergia Bis, Edison was merged into Italenergia. The
merged entity adopted the name Edison S.p.A. ("New Edison"). The shares of New Edison are listed on the Milan stock exchange. At the time of the merger, New Edison launched a capital increase for
€2.095 billion. The capital increase was completed in May 2003. Sanpaolo IMI's participation in the capital increase amounted to €66 million,
representing a 1.6% interest in New Edison.

Sanpaolo
IMI and EDF have agreed to extend the Put and Call Options to the newly acquired New Edison shares for an amount of €41 million.

After
the capital increase, Italenergia Bis controled approximately 62% of the share capital of New Edison.

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In September 2002, Fiat entered into a sale agreement with the Banking Shareholders for the sale of a 14% interest in Italenergia Bis to the Banking
Shareholders. The Sanpaolo IMI Group purchased a 4.66% interest in Italenergia Bis from Fiat. The purchase increased Sanpaolo IMI's equity interest in Italenergia Bis from 7.82% to 12.48%.

The
Banking Shareholders paid €548.4 million for the 14% interest in Italenergia Bis they purchased from Fiat. The Sanpaolo IMI Group paid
€182.8 million for its additional 4.66% interest. The price was based upon the independent valuation from an expert that was provided in connection with the merger of Edison
into Italenergia.

Because
of the Fiat Sale, the interest of Fiat in Italenergia decreased from 38% to 24%. The decrease allowed Fiat to deconsolidate the Italenergia Bis and New Edison debt from its
balance sheet. This led to a €1.098 billion decrease in the exposure of the Sanpaolo IMI Group to the Fiat group and a concurrent increase in the Sanpaolo IMI Group's exposure
to Italenergia by the same amount.



The Put and Call Options relate to the 24.6% interest in Italenergia Bis held by the Banking Shareholders before the Fiat Sale. Pursuant to the Put and Call
Options, each Banking Shareholder will have the right to sell ("Put Options") to EDF its interest in Italenergia Bis. EDF will have the right to buy ("Call Options") from each Banking Shareholder such
interests. The Put Options will be exercisable in February 2005. The Call Options will be exercisable in March 2005. The exercise price of the Put and Call Options allows the
Participating Banks to recuperate their investment and contemplates a predetermined premium. Furthermore, the exercise price of the Put and Call Options allows the Participating Banks to participate
in any potential up side relating to the performance of the Italenergia group.



In connection with the 14% interest in Italenergia Bis purchased by the Banking Shareholders pursuant to the Fiat Sale, the Banking Shareholders, Fiat and EDF
agreed to the following:



It
should be noted that, in connection with the Fiat Put Option, the Banking Shareholders and Fiat have agreed to a tag along/drag along structure. Pursuant to the tag along/drag along
structure, if the Fiat Put Option is exercised:



The
prices agreed for the optional divestitures described herein will allow the Participating Banks to recuperate their investment and contemplate a predetermined premium. Furthermore,
the prices allow the Participating Banks to participate in any potential up side relating to the performance of the Italenergia group.

47

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At the end of September 2002, when the Italenergia group was deconsolidated from the Fiat group, the exposure of the Sanpaolo IMI Group to the Italenergia
Group was €1.098 billion. In December 2002, the Banking Shareholders extended two lines of credit for an aggregate amount of €2.3 billion to New
Edison. The lines of credit were extend to refinance the debt incurred in connection with the Italenergia acquisition of Edison in July 2001. The debt to be refinanced consisted of:



As
of March 31, 2003, the exposure of the Sanpaolo IMI Group to the Italenergia Group was €1.656 billion. As of June 1, 2003, the exposure had
decreased to €1.300 billion. The exposure of the Sanpaolo IMI Group to the Italenergia Group is expected to be reduced further by the repayment of the
€750 million bridge loan and the term loan.



On October 8, 2002, Sanpaolo IMI sold all the outstanding shares of Banca Sanpaolo Invest S.p.A. ("Banca Sanpaolo Invest") to Banca Fideuram. Banca
Sanpaolo Invest is a company of the Group specialized in personal financial services. The shares were valued at €603.8 million, net of the extraordinary dividend of
€8.7 million issued in July 2002. In exchange, Sanpaolo IMI received 71 million ordinary shares of Banca Fideuram and €10 million in cash.
These shares were issued through an increase of the capital of Banca Fideuram from €236.4 to €254.9 million. Following the transaction, the Sanpaolo IMI Group's
stake in Banca Fideuram increased to 73.4%.

This
transaction strengthens the leadership position of Sanpaolo IMI in the Personal Financial Services Business Area (as described below), to which Sanpaolo IMI attributes strategic
priority, and furthers the Group's rationalization efforts of its operating structure. Furthermore, it will increase the development and full exploitation of Banca Sanpaolo Invest's potential, and
allow the co-ordination of the financial planner networks, through the adoption of consistent marketing and brand policies.



As part of the Group's efforts to increase the focus and specialization of each Business Areas' activities, the Nuova Holding Sanpaolo IMI S.p.A. ("Old NHS") was
restructured and renamed IMI Investimenti S.p.A. ("IMI Investimenti"). A new entity was created, Sanpaolo IMI Private Equity S.p.A. ("Sanpaolo IMI Private Equity"), to which the private equity and
merchant banking activities of IMI Investimenti were transferred prior to the reorganization and the adoption of the new corporate name by IMI Investimenti. See
"CardineStreamlining of Group's equity holding through transactions involving Sanpaolo IMI and Compagnie di San Paolo" above.

Sanpaolo
IMI Private Equity, with its head office in Bologna and with an initial capital of €245 million, has as its objective to strengthen and consolidate its
position in the private equity market by focusing on risk capital raising for small- and medium-sized companies.

IMI
Investimenti, which, after the restructuring of its activities, had a net shareholders' equity of €566 million, will focus on the management of its equity
portfolio, including the Group's major industrial interests.

48

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In
2002, Sanpaolo IMI acqured the outstanding minority stakes in IMI Investimenti and in Sanpaolo IMI Private Equity. Certain stakes were acquired from parties related to Sanpaolo IMI.
See "Item 7. Major Shareholders and Related Party TransactionsRelated Party Transactions".



On October 15, 2002, Cassa di Risparmio di Firenze ("CRF") agreed to sell its 20.24% holding in Eptaconsors S.p.A. ("Eptaconsors") to Sanpaolo IMI for
€19 million. This sale, added to its existing 40.48% holding, allowed Sanpaolo IMI to become the majority shareholder of Eptaconsors. The transaction was completed on
January 29, 2003.

Eptaconsors
is active in asset management and securities dealing. At the end of February 2003, Eptaconsors and its subsidiaries, in the mutual funds sector, managed assets of
approximately €13 billion, with a 2.8% share of the Italian mutual fund market.

This
acquisition is part of the rationalization of the Group's equity investments activities. It will strengthen its position in the major markets and will allow the Group to better use
Eptaconsors potential.



On December 17, 2002, the Sanpaolo IMI Group agreed to sell to Banca Popolare di BergamoCredito Varesino Group ("Centrobanca") 80% of the
ordinary shares of IMIWeb Bank S.p.A. ("IMIWeb"), specialized in online trading. The sale was completed on May 13, 2003. The price of €6.2 million, was set at 80% of the
difference between interest-earning assets and interest-bearing liabilities of IMIWeb at December 31, 2002, and will be increased by an amount proportional to the company profits for the next
three years. The Group will continue to hold 20% of the outstanding shares of IMIWeb.

On
March 3, 2003, Sanpaolo IMI agreed to sell to Santander Central Hispano its 50% share of the capital of Banca Finconsumo S.p.A. ("Banca Finconsumo"), which they jointly owned.
The agreement is part of the rationalization efforts in the Group's equity investment activities. It provides for the initial sale of 20% of Banca Finconsumo for a price of
€60 million. The remaining 30% will be subject to respective sale and purchase options, exercisable from the end of 2003 for a period of 12 months for a price of
€80 million. The sale is conditional on the granting by the Bank of Italy of the necessary authorizations. If the sale is completed, the price will represent for Sanpaolo IMI a
total gross capital gain of €123 million.



The MOI, or integrated operating structure, is a business and IT operating platform, designed to enable the Group to enhance its operational structures and to
allow the integration of other companies, most notably Banco di Napoli and Cardine, following their merger by incorporation into Sanpaolo IMI. It is also capable of being extended to other current
business partners or future partners in the continuing consolidation of the banking industry in Italy and elsewhere.

The
MOI covers the information systems, the auxiliary support systems and back office functions of the Sanpaolo network. The MOI has been extended to the Banco di Napoli network (which,
through the Southern Territorial Direction, also includes the former Sanpaolo branches in the region) and is in the process of being extended to the Cardine network.

The
project is proceeding according to timetable and budget.

49

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Sanpaolo IMI has taken steps to strengthen its operational capabilities in foreign countries offering significant growth opportunities. Sanpaolo IMI
Internazionale S.p.A. ("Sanpaolo IMI Internazionale") was formed in order to reinforce and control the Group's presence in strategic countries through acquisitions and alliances.



Banka Koper DD ("Banka Koper") is Slovenia's fourth largest bank in terms of total assets and operates through a network of 37 branches concentrated in the area
of Ljubljana, Slovenia's capital and largest city.

In
November 2001, Sanpaolo IMI acquired an initial 15% stake in Banka Koper for €37 million and launched a public tender offer for all of the other
outstanding shares of Banka Koper. The public tender offer granted to the Banka Koper shareholders who accepted the offer a nontransferable put option on the Banka Koper shares not tendered in the
public offer. The put option will be exercisable between December 31, 2002 and July 31, 2006 and the exercise price per share will be €457 per share, the same price per
share that Sanpaolo IMI paid pursuant to the public tender offer.

The
public tender offer expired on February 25, 2002 and was accepted by the holders of 250,271 shares of Banka Koper, (47.1% of Banka Koper's share capital), raising Sanpaolo
IMI's stake in Banka Koper to 62.1%. The cost of the public offer to Sanpaolo IMI was €116 million.

In
compliance with the authorization for the purchase granted by the Bank of Slovenia, Sanpaolo IMI will limit its voting rights in Banka Koper to 32.99% of Banka Koper's share capital.



In July 2001, Sanpaolo IMI announced a co-operation agreement with the French banking group CDC. The agreement contemplated future
co-operation in the fields of asset management, private equity, capital markets and project finance.

Pursuant
to the collaboration agreement the CDC group acquired, in October 2001, a 2% stake in Sanpaolo IMI for €323 million. Sanpaolo IMI, through an
exchange of shares with the Eulia group, the financial alliance between the CDC group and the Caisse d'Epargne ("CDE") group, acquired a 3.5% stake in CDC Ixis, the investment bank of the CDC group,
also for €323 million.

In
connection with this exchange of shares, in December 2001, Sanpaolo IMI, CDC and other affiliates of CDC entered into an agreement pursuant to which the Sanpaolo IMI Group and
the CDC group agreed:



The
agreement will expire on December 31, 2003.

50

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In
February 2002, CDC became a party to the agreements between Compagnia di San Paolo and other shareholders of Sanpaolo IMI. See "Item 7. Major Shareholders and Related Party
TransactionsThe Major ShareholdersAgreement Among Shareholders".

In
September 2002, an agreement was reached among Sanpaolo IMI Private Equity, CDC Ixis Private Equity and Bayerische Landesbank Equity Management for the constitution of the
Eagle Fund, the first pan European private equity fund focusing on investments in small- and medium-sized European businesses, particularly in Italy, France and Germany.

In
particular, in November 2002, an agreement in the private equity field was prepared, focusing on the development of a joint analysis of closed end investment funds in the
infrastructure sector and in public-private partnership initiatives. It provides for the evaluation of joint investment opportunities in Italy, France and at EU level. It also aims to create a common
strategy for institutional investors and EU institutions. In this regard, Sanpaolo IMI's subsidiaries involved in the public works and infrastructure sector, particularly Banca OPI and its subsidiary
FIN.OPI, will be involved in the implementation of the project.

On
October 11, 2002, Sanpaolo IMI Private Equity and CDC-Pme (a subsidiary of CDC) entered into an agreement with the French government for their participation in a
new investment fund which will invest in French regional funds investing in small- and medium-sized local businesses. The fund will be worth €70 million, and the investors will
include the European Investment Fund.



In 2002, Sanpaolo IMI and Santander Central Hispano agreed to jointly participate in the wholesale distribution of mutual funds of independent asset managers. The
collaboration provides for the acquisition by Sanpaolo IMI of a 50% share of the capital of Allfunds Bank S.A. ("Allfunds Bank"), a wholly owned subsidiary of Santander Central Hispano. Allfunds Bank
is involved in the placement of investment funds with institutional customers.

Sanpaolo
IMI and Santander Central Hispano intend to develop the joint venture in order to consolidate their leadership positions at the European level and will, in this regard, seek to
identify potential strategic partners in the main European markets.



The dimensional complexity of the Group following the Cardine Merger revealed the need for increased governance and co-ordination efforts, ensuring
that common objectives and
close connections exist among all the operating areas and maintaining the efficiency of the Group's operations and the quality of its customer service.

To
reach these goals, and to comply with the instructions issued by the regulatory authorities, CONSOB and Borsa Italiana, the Group drafted a Business Regulation Framework ("BRF"),
approved by the Sanpaolo IMI board of directors on March 26, 2002. The BRF defines the Group's global organizational structure, basic operational principles, areas of competence and
responsibilities of the central structures, as well as the Group's co-ordination mechanisms and instruments. The BRF aims to do this in a manner consistent with the directives issued by
the Bank of Italy.

The
underlying principles of the BRF are:



51

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Upon the merger by incorporation of Cardine into Sanpaolo IMI, the controlling stakes in the bank networks of the Cardine group were transferred to Cardine
Finanziaria S.p.A. ("Cardine Finanziaria"). Cardine Fianziaria is a newly incorporated, wholly-owned subsidiary of Sanpaolo IMI. See "Item 5. Operating and Financial Review and
ProspectsResults of Operations".

Cardine
Finanziaria is responsible for co-operating with and assisting the Parent Bank with respect to activities involving the direction, governance, and control of the
Cardine bank network.

In
2002, the Group implemented measures to maximize the opportunities for synergies arising from the Cardine Merger and the incorporation of Banco di Napoli into Sanpaolo IMI. To that
end, the Group:



The integration of the Sanpaolo and Banco di Napoli networks is part of a major plan to develop and rationalize the distribution networks of the Group. The
distribution model, introduced at the end of the
third quarter of 2002, is designed to target customer segments with an improved and more effective response to the different needs of retail and business customers.

The
project provides for the organization of the Group branch networks into operating structures aimed at three sectors:



The
aim of the project is to introduce to all Group networks the distribution model already successfully adopted by the Sanpaolo Network and based upon the specialization of the
branches.



The public sector, which includes financing and advisory services for local public entities and former municipal companies in relation with infrastructure and
public works, offers interesting development prospects for the years to come. The Group operates in this sector through Banca OPI, which has continued the tradition of IMI and Sanpaolo.

52

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In
January 2003, following the merger of Banco di Napoli into Sanpaolo IMI and in line with the rationalization efforts, activities in the public works and infrastructure sector
of Banco di Napoli were transferred to Banca OPI.

Recent Developments



On February 11, 2003, the board of directors of Sanpaolo IMI announced a business plan for 2003-2005 (the "2003-2005 Business
Plan"). The 2003-2005 Business Plan confirms the focus of the Group on the Italian banking market.

The
operational targets for the 2003-2005 Business Plan include:



The
strategic priorities of the 2003-2005 Business Plan includes:



The
Group plans to consolidate the position it has reached in the Italian banking market. The Group achieved its position through investments as well as through internal and external
growth in recent years.

The
Group plans to focus on lending to Italian households and companies. In the company market, the Group will emphasize lending to small and medium sized companies. This emphasis on
households and small and medium sized companies has already been reflected by progressive diversification of the loan portfolio with a reduction in the exposure to major groups in Italy and abroad,
both as a percentage and in absolute in terms, and an increase in financing to households and smaller companies. This trend will be strengthened throughout Italy. The Group's companies specializing in
innovative financial products (Banca IMI and Sanpaolo IMI Private Equity) will also focus on households and on the small and medium sized company segment.

The
integration process will focus first on the integration of Sanpaolo Banco di Napoli branches and on the development of a new distribution model. The model envisages the creation of a
single branch network which will use a single operating system and be organized geographically to combine branch specialization by customer segment with a strong coordination of all operating points,
which are are all the points of access (from branches to ATMs) to the network. The model will be extended to the Cardine network in 2004.

In
asset management, the strategy adopted by the Sanpaolo network (which focuses mainly in the north-west of Italy) achieved significant results. The 2003-2005
Business Plan contemplates exporting the strategy to the networks operating in the south and the north-east of Italy. The Sanpaolo IMI Wealth Management Business Area (as described below)
will continue to focus on product innovation and performance. The 2003-2005 Business Plan contemplates the consolidation of the Group's position in the Italian mutual fund market.

The
2003-2005 Business Plan also contemplates the rationalization and integration of the Group's human resources, with a reduction of more than 2,000 employees by 2005. The
reduction will be achieved through rationalization and integration of the banking networks and of the Central Functions (as described below), the use of available provisions relating to personnel
rationalizations as provided by the collective bargaining agreement for Italian employees of the sector and welfare funds provided by applicable Italian laws.

53

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The
2003-2005 Business Plan contemplates:



The
2003-2005 Business Plan contemplates a strict policy of structural rationalization and cost containment including the rationalization of the Central Functions.



On February 25, 2003, Sanpaolo IMI Internazionale approved the launch of a public offer for all the outstanding shares of the Hungarian bank Inter-Europa
Bank ("Inter-Europa"), of which Sanpaolo IMI already owned a 32.5% share. Inter-Europa's remaining outstanding shares are held by Santander Central Hispano (10%) and other leading international
institutional investors and minority stockholders (approximately 45% of the outstanding shares are listed on the Budapest Stock Exchange). The public offer closed on April 15, 2003. The public
offer was priced at 2,000 Hungarian fiorints per share, representing a premium of 2.1% compared to the closing price of the share on February 24, 2003, and 9.2% and 22.7% compared to the
average price of the share for the 30 and 180 days periods before the approval. The total cost paid by Sanpaolo IMI Internazionale was, approximately, €30 million.
Pursuant to the public offer the Group's interest in Inter-Europa increased from 32.5% to 85.22%.



The Group's results for the first quarter of 2003 were announced on May 14, 2003. In the first quarter of 2003, the Group recorded the following results:



54

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The
increases are primarily attributable to the Cardine Merger.



The Budget Law for 2003, approved by the Italian Parliament on December 23, 2002, introduced different types of tax amnesties, which entitle taxpayers to
settle tax periods still open to tax assessment (1997-2001 for direct taxes and 1998-2001 for value added tax), as well as to define tax assessments and tax litigations in
progress, by paying a reduced amount of taxes and without any administrative penalty or financial charge.

As
a result of the amnesties, the taxpayer is also protected, for the years settled, from future tax assessment and, if not formally aware that a criminal procedure has already
commenced, from the application of Italian criminal tax law.

The
Sanpaolo IMI Group has decided to take advantage of certain available tax amnesties. The total cost for the Group was approximately €48 million, of which
€20 million were already included in the provisions reflected in the financial statements for the year ended December 31, 2002 and €28 million will
affect net income for the year ended December 31, 2003.

The
recourse to the tax amnesties has to be viewed in the perspective of a transaction rather than as an application for the amnesty of specific past conduct. Therefore, any decision of
the Group on the subject has been taken comparing the potential cost of settlement with the benefit that might result.



In 2003, the Fondazione Cassa dei Risparmi di Forlì, the major shareholder of Cassa dei Risparmi di Forlì disclosed to Sanpaolo IMI
its intention to exercise a put option relating to 11.66% of the share capital of Cassa dei Risparmi di Forlì for a total price of €90 million. Pursuant to the
exercise of the put option, on May 12, 2003, Sanpaolo IMI acquired an 8.75% stake in Cassa dei Risparmi di Forlì for €68 million. With the acquisition of
such stake Sanpaolo IMI's interest in Cassa dei Risparmi di Forlì increased from 21.02% to 29.77%.



In June 2003, Sanpaolo IMI launched a public tender offer for the outstanding ordinary shares of Banca Popolare dell'Adriatico S.p.A. ("Banca Popolare
dell'Adriatico"). Before the launch of the public
tender offer, the Group controlled 71.76% of the share capital of Banca Popolare dell'Adriatico. Banca Popolare dell'Adriatico is one of the banks of the Cardine network.

The
public tender offer for the outstanding shares of Banca Popolare dell'Adriatico closed on June 19, 2003. According to the data received by Banca IMI, the intermediary for
acceptances relating

55

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to
the tender offer, shares representing 26.38% of the share capital of Banca Popolare dell'Adriatico were tendered.

The
tenders, together with the stake in Banca Popolare dell'Adriatico previously held by the Group, increased the stake of the Group to 98.14% of the share capital of Banca Popolare
dell'Adriatico.

Pursuant
to applicable Italian law, Sanpaolo IMI intends to exercise its right to purchase the remaining outstanding shares of Banca Popolare dell'Adriatico at a price to be determined
by a court-appointed expert. Upon such purchase Sanpaolo IMI intends to request the delisting of the shares of Banca Popolare dell'Adriatico from the Italian Stock Exchange.



On
June 19, 2003, in the context of the strategic alliance that exists between, on the one hand, the Sanpaolo IMI Group and, on the other hand, the CDE and CDC French banking
groups, the parties announced that they were discussing broadening the spectrum of their co-operation within the main areas of the banking business (including retail banking, investment
banking, asset management and private equity), and ways to improve the quality of the services that they currently provide to their customers.

In
this respect, the Sanpaolo IMI Group and the CDE group are currently considering an agreement with the objective of creating a new financial institution active in the French small and
medium-enterprise banking market. The transaction would include the acquisition of a stakewhich could be a majority stakein Banque Sanpaolo S.A. ("Banque Sanpaolo") by the
CDE group.

As
of the date of this annual report, no discussions had taken place in connection with the valuation of Banque Sanpaolo.

In
2001, Sanpaolo IMI entered into a collaboration agreement with CDC, an affiliate of CDE, pursuant to which CDC acquired a stake in Sanpaolo IMI and Sanpaolo IMI acquired a stake in
CDC Ixis. See "Item 4.Information on Sanpaolo IMIDevelopments During 2002Collaboration with CDC".

In
2002, CDC became a party to the Agreement Among Shareholders (as defined below). See "Item 7. Major Shareholders and Related Party TransactionsThe Major
ShareholdersAgreement Among Shareholders". Isabelle Bouillot, who became a Director of Sanpaolo IMI in March 2002 is thePrésident du
Directoirof CDC Finance and CDC Ixis, a company of the CDC group. See "Item 6.Directors, Senior Management and EmployeesDirectors and Senior
Management".



Other recent developments are disclosed under "Significant Developments During 2002" above. See "CardineOwnership structure of Sanpaolo
IMI upon completion of the Cardine MergerThe Fiat GroupFIDISItalenergia ReorganizationExposure of the Sanpaolo IMI group to the Italenergia
groupPurchase by Sanpaolo IMI of the Cassa di Risparmio di Firenze stake in EptaconsorsOther rationalization initiativesIntegration with Cardine and Banco di
NapoliActivity in the public works and infrastructure sector and in the tax collection sector".

56

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Principal Capital Expenditures and Divestitures

The following table shows the Group's principal capital expenditures for the years ended December 31, 2002, 2001 and 2000. For purposes of this table
"principal capital expenditure" means any capital expenditure in excess of €100 million.

|Company                                              |  | Country  |  | Description                                    |  | Financing             |  | Amount Invested
|---------------------------------------------------- |  | -------- |  | ---------------------------------------------- |  | --------------------- |  | ---------------
|
|Capital Expenditures 2000                            |  |          |  |                                                |  |                       |  |                
|Cassa di Risparmio di Firenze                        |  | Italy    |  | Acquisition of 15% equity stake                |  | Internal              |  | 387            
|Banco di Napoli                                      |  | Italy    |  | Acquisition of 97.65% ordinary equity stake    |  | Internal and External |  | 3,006          
|Wargny Associés                                      |  | France   |  | Acquisition of 95.02% equity stake             |  | Internal              |  | 103            
|Santander Central Hispano                            |  | Spain    |  | Increase of equity stake from 2% to 3.05%      |  | Internal              |  | 708            
|Fiat                                                 |  | Italy    |  | Acquisition of 2.2% ordinary equity stake      |  | Internal              |  | 220            
|                                                     |  |          |  |                                                |  |                       |  |                
|Total 2000                                           |  |          |  |                                                |  |                       |  | 4,424          
|Capital Expenditures 2001                            |  |          |  |                                                |  |                       |  |                
|Banca Cardine                                        |  | Italy    |  | Acquisition of 10.9% equity stake              |  | Internal              |  | 516            
|Cassa dei Risparmi di Forlí                          |  | Italy    |  | Acquisition of 21% equity stake                |  | Internal              |  | 169            
|ENI                                                  |  | Italy    |  | Acquisition of 0.26% equity stake              |  | Internal              |  | 143            
|CDC IXIS                                             |  | France   |  | Acquisition of 3.88% equity stake              |  | Internal              |  | 323            
|Italenergia                                          |  | Italy    |  | Acquisition of 7.82% equity stake              |  | Internal              |  | 248            
|Banka Koper                                          |  | Slovenia |  | Acquisition of 15% equity stake                |  | Internal              |  | 37             
|                                                     |  |          |  |                                                |  |                       |  |                
|Total 2001                                           |  |          |  |                                                |  |                       |  | 1,436          
|Capital Expenditures 2002                            |  |          |  |                                                |  |                       |  |                
|Banka Koper                                          |  | Slovenia |  | Increase of equity stake from 15% to 62.1%     |  | Internal              |  | 116            
|Banco di Napoli                                      |  | Italy    |  | Increase of saving shares from 0.85% to 87.26% |  | Internal              |  | 144            
|Compagnia di San Paolo Investimenti Patrimoniali Spa |  | Italy    |  | Acquisition of 100% equity stake               |  | Internal              |  | 230            
|IMI Investimenti Spa                                 |  | Italy    |  | Increase of equity stake from 51% to 100%      |  | Internal              |  | 179            
|NHS Spa                                              |  | Italy    |  | Increase of equity stake from 51% to 100%      |  | Internal              |  | 127            
|Italenergia Bis                                      |  | Italy    |  | Increase of equity stake from 7.82% to 12.48%  |  | Internal              |  | 183            
|                                                     |  |          |  |                                                |  |                       |  |                
|Total 2002                                           |  |          |  |                                                |  |                       |  | 979            

57

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The
following table shows the Group's principal capital divestitures for the years ended December 31, 2002, 2001 and 2000. For purposes of this table "principal capital
divestiture" means any capital divestiture in excess of €100 million.

Company

Description

Proceeds(in millions of €)Capital Divestitures 2000Crediop

Sale of 40% equity stake

403Total 2000



403Capital Divestitures 2001Montedison

Sale of 6.2% equity stake

339Beni Stabili

Sale of 10.7% equity stake

111Total 2001



450Capital Divestitures 2002Cardine Banca Spa

Sale of 8.61% equity stake

473Banca Agricola Mantovana

Sale of 8.49% equity stake

110Total 2002



583


From
January 1, 2003 through June 10, 2003, there were neither principal capital expenditures nor principal capital divestitures.

Public Tender Offers

No public tender offer in respect of Sanpaolo IMI's Shares has been made from January 1, 2002 to date.

For
a description of the public tender offers made by Sanpaolo IMI for the shares of Cardine, Banca Koper, Banco di Napoli, Inter-Europa Bank and Banca Popolare dell'Adriatico, see
"Significant Developments During 2002" and "Recent Developments" above.

B. Business Overview

At December 31, 2002, the Group was one of the leading banking groups in Italy by total assets (€203.8 billion), loans to customers
(€126.7 billion) and customers' financial assets (€356.3 billion), of which 38.5% was represented by direct customer deposits
(€137 billion), 36.9% by assets under management (€131.5 billion) and 24.6% by assets under administration (€87.7 billion). At the
same date, the Group had 3,069 branches in Italy, together with 74 branches (of which 62 retail branches in France through its subsidiary Banque Sanpaolo) and 17 representative offices abroad.

Sanpaolo
IMI Group is a full service banking group which provides a broad range of credit and financial products and services to its customers in Italy and abroad. The Group's business
consists of banking, asset management and capital markets activities, as well as certain other banking-related services. The Group's principal banking operations are retail banking, corporate banking
(including advisory and project finance), investment banking, merchant banking, asset management (including private banking services and insurance), mortgage banking and medium- and
long-term lending. In addition, the Group has an active treasury and trading operation. Sanpaolo IMI's capital markets activities including acting as a specialist in the Italian government
bond market, as a leading

58

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underwriter
and trader in the Italian domestic equity market, and as lead manager in Eurobond issues and warrants.

The
significant subsidiaries of the Group at December 31, 2002 are as follows:

|Name                                        |  | Registered
Offices |  | Ownership held by   |  | %      |  | Voting rights at
shareholders' meeting %
|------------------------------------------- |  | ------------------ |  | ------------------- |  | ------ |  | ----------------------------------------
|Banca IMI                                   |  | Italy              |  | Sanpaolo IMI        |  | 100.00 |  | 100.00                                  
|Banca Fideuram                              |  | Italy              |  | Sanpaolo IMI        |  | 64.10  |  | 64.10                                   
|                                            |  |                    |  | Invesp              |  | 9.28   |  | 9.28                                    
|Banca Opi                                   |  | Italy              |  | Sanpaolo IMI        |  | 100.00 |  | 100.00                                  
|Fideuram Asset Management (Ireland) Limited |  | Ireland            |  | Banca Fideuram      |  | 100.00 |  | 100.00                                  
|Sanpaolo Imi International SA               |  | Luxembourg         |  | Sanpaolo IMI        |  | 100.00 |  | 100.00                                  
|Imi Investimenti                            |  | Italy              |  | Sanpaolo IMI        |  | 100.00 |  | 100.00                                  
|Cardine Finanziaria                         |  | Italy              |  | Sanpaolo IMI        |  | 100.00 |  | 100.00                                  
|Cassa di Risparmio di Padova e Rovigo       |  | Italy              |  | Cardine Finanziaria |  | 100.00 |  | 100.00                                  
|Cassa di Risparmio di Venezia               |  | Italy              |  | Cardine Finanziaria |  | 100.00 |  | 100.00                                  
|Cassa di Risparmio in Bologna               |  | Italy              |  | Cardine Finanziaria |  | 100.00 |  | 100.00                                  

CHART

Banca
IMI, the Group's investment bank, is involved in securities dealing both for its own account and for customers, the raising of risk and debt capital for companies, as well as
consulting in corporate finance. It uses its own subsidiaries, excluding IMIWeb Bank.

Banca
Fideuram has a network of 3,520 financial planners, in addition to 1,234 Banca Sanpaolo Invest planners, and 87 branches in Italy. It operates using its own specialized companies
dedicated to asset management services.

Banca
OPI provides financial services to the public sector, with particular emphasis on the financing of infrastructure investments and works. During the year the bank was strengthened
by the contribution, by the Parent Bank, of the entire shareholding in FIN.OPI (former Compagnia di San Paolo Investimenti Patrimoniali). As of January 1, 2003, this also includes the
activities in the public works sector previously performed by Banco di Napoli.

IMI
Investimenti manages the major industrial holdings with emphasis on the amount, the impact in terms of "significant exposures" and the strategic importance attributed by the Group.

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Cardine
operates in North East Italy, through the 841 branches of the seven bank networks: Cassa di Risparmio di Padova e Rovigo, Cassa di Risparmio in Bologna, Cassa di Risparmio di
Venezia, Cassa di Risparmio di Udine e Pordenone, Cassa di Risparmio di Gorizia, Banca Agricola di Cerea and Banca Popolare dell'Adriatico. During the year, Cardine performed the activities associated
with its integration with the Sanpaolo IMI Group, the rationalization of its operations and the focus on its business of reference.

Sanpaolo
IMI International S.A. is a financial company, holding a significant stake in Santander Central Hispano.

Organization by Sectors

The Group is active in four sectors. Each sector comprises different business areas. Each business area has, within the Group, a certain level of autonomy and is
subject to individual monitoring and budgeting activities.

|Sector                                  |  | Business Area                                                                                                                                                                      
|--------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Domestic Banking Network                |  | Sanpaolo Network and Consumer Banking
Cardine
Italian Networkformer Banco di Napoli
Banca OPI
Large Groups and Structured Finance
Other Italian Networks
Tax Collection Activities
|Personal Financial Services             |  | Banca Fideuram                                                                                                                                                                     
|Wealth Management and Financial Markets |  | Sanpaolo IMI Wealth Management
Eptaconsors
Banca IMI
Sanpaolo IMI Private Equity                                                                                                   
|International Activities                |  | Banque Sanpaolo (France)
Foreign Network
Sanpaolo IMI Internazionale                                                                                                               

As
of December 31, 2002, the Group's four sectors were structured as follows:



The
three networks, servicing the retail and business markets, provide national coverage through approximately 3,000 branches.

The
Domestic Banking Network sector also includes:



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IMI
Investimenti is the holding company of the large strategic stakes in unaffiliated companies held by the Group. IMI Investimenti manages the major industrial holdings of the Group
with particular reference to the amount, the impact in terms of "significant exposures" and the strategic importance attributed by the Group. In 2002, IMI Investimenti's equity portfolio was divided
among the following sectors: Utilities & Energy (66%), Telecommunications (22%), Automotive (8%) and other (4%).

The
Group also has Central Functions. The Central Functions include:



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The
following chart provides an overview of the internal operational organization of the Sanpaolo IMI Group as of December 31, 2002:

CHART

---

62

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Allocation of Net Income per Business Area in 2002

CHART

The
allocation does not reflect the Central Functions and IMI Investimenti. In 2002, the Central Functions and IMI Investimenti had negative returns primarily due to the write-downs of
equity stakes in Santander Central Hispano and Fiat. See "Item 5.Operating and Financial Review and ProspectsOperating ResultsNet value adjustments and
provisions for loan losses and equity in earnings of unconsolidated subsidiaries and adjustments to goodwill, merger and consolidation differences2002 compared with 2001".

2002 Allocated Capital per Business Area

CHART

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Domestic Banking Network



In 2002, the Sanpaolo Network and Consumer Banking Business Area operated through the following business units:



The
major initiatives undertaken during 2002 were aimed at strengthening the position of the Sanpaolo Network and Consumer Banking Business Area with the private and retail customer
market segments, and at developing relations with creditworthy companies. The Sanpaolo Network and Consumer Banking also implemented measures in preparation for the integration of the distribution
structures of Banco di Napoli in view of the incorporation of Banco di Napoli into Sanpaolo IMI on December 31, 2002.

The
measures aimed at strengthening Sanpaolo Network's position with the private and retail customer sectors were:



The
expansion of the services of the Sanpaolo Network and Consumer Banking Business Area for businesses was pursued with the launch of targeted commercial projects, including:



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Significant
efforts were also made to integrate the distribution structures of the Sanpaolo Network and those of Italia Network, the former Banco di Napoli Italian Network. The
unification of the two network IT systems occurred in the first half of 2003, and the framework for the integrated management of the territory and commercial policies has already been established. The
Sanpaolo Network in particular was reorganized into 23 territorial areas, four of which operate in the Southern Italian regions traditionally served by Banco di Napoli, each with exclusive
responsibility for both Sanpaolo and Banco di Napoli branches.



Cardine operates in North East Italy, through the 841 branches of the seven bank networks it controls: Cassa di Risparmio di Padova e Rovigo, Cassa di Risparmio
in Bologna, Cassa di Risparmio di Venezia, Cassa di Risparmio di Udine e Pordenone, Cassa di Risparmio di Gorizia, Banca Agricola di Cerea and Banca Popolare dell'Adriatico (the "Cardine Networks").

In
2002, Cardine pursued its integration with the Group, through the rationalization of its operations and the focusing on its core business. The main initiatives included:





In 2002, Banco di Napoli operated in the regions of Southern Italy through a network of 725 branches.

On
November 25, 2002, the extraordinary shareholders' meetings of Sanpaolo IMI and of Banco di Napoli approved the merger by incorporation of Banco di Napoli into Sanpaolo IMI,
effective (for corporate law purposes) from December 31, 2002 and effective (for accounting and tax purposes) from January 1, 2002. This transaction is part of the plan of integration
and rationalization of the Sanpaolo, Banco di Napoli and Cardine networks. See "Item 4.Information on Sanpaolo IMIHistory and Developments of Sanpaolo
IMISignificant Developments During 2002Internal Group DevelopmentsIntegration with Cardine and Banco di Napoli".

The
Southern Territorial Direction, made up of the Naples, Campania, Apulia and Calabro-Lucana Areas, based in Naples and directly supervised by the Sanpaolo Network was established on
December 31, 2002; it will be subsequently spun off into Sanpaolo Banco di Napoli.

The
activities of Banco di Napoli in 2002 were primarily aimed at focusing its operations on its traditional geographical areas and at disposing of certain non-core assets.
The major initiatives included:



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Towards
the end of 2002, measures to integrate the distribution structures of Sanpaolo Network and the former Banco di Napoli Italian Network were implemented. Such measures included the
transition to the MOI.



Banca OPI provides financial services to the public sector, with a particular focus on the financing of infrastructure investments and public works. In 2002,
Banca OPI was strengthened by the conferral, by the Parent Bank, of the entire shareholding in FIN.OPI. As of January 1, 2003, this also includes the activities in the public works sector
previously performed by Banco di Napoli.

In
2002, the Banca OPI Business Area:





The management of relations with the 30 major groups of domestic and international importance, as well as project financing (for energy, oil and gas and
telecommunications sectors) and specialized structured lending (acquisition, LBO, real estate) were centralized to optimize the risk/performance profile, in two specialist units: Large Groups and
Structured Finance. The two specialist units form the Large Group and Structured Finance Business Area.

The
results of the Structured Finance unit were affected, on the one hand, by prolonged difficulties in specific markets, which made it necessary to increase provisions for some
projects, and on

66

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the
other hand, by the increase in the finance acquisition sector, with the definition of significant transactions, the economic effects of which will become more evident in the years to come.



The other Italian Networks Business Area operates in the domestic market through the distribution networks of the Cassa di Risparmio di Firenze and the Cassa dei
Risparmi di Forlì. The Group owns respectively 19.5% and 21% of each entity. The exercise of a put option by the Fondazione Cassa dei Risparmi di Forlì will increase the
Group's holding to 29.77%. See "Item 4.Information on Sanpaolo IMIHistory and Developments of Sanpaolo IMIRecent DevelopmentsCassa dei
Risparmi di Forli".

Personal Financial Services



The Banca Fideuram Business Area has a network of 3,520 financial planners. The Banca Fideuram Business Area operates through its own asset management companies.

In
2002, Banca Fideuram:



The
integration with Banca Sanpaolo Invest, which is part of the measures to strengthen the Group's leadership position in the Personal Financial Services sector, aims to:



Wealth Management and Financial Markets



The Sanpaolo IMI Wealth Management Business Area provides asset management products and services both to the Group's internal distribution networks and to
institutional investors, associated networks and third-party networks. The Sanpaolo IMI Wealth Management Business Area was established in April 2001 through the contribution by the Parent Bank
to the Sanpaolo IMI Wealth Management holding company of the subsidiaries involved in mutual funds, portfolio management and life insurance.

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The
main initiatives realized by the Sanpaolo IMI Wealth Management Business Area in 2002 concerned:



In
the context of the Group's restructuring, during the first half of 2002, Banco di Napoli Asset Management was transferred to the Sanpaolo IMI Wealth Management Business Area, which
also acquired from Banca Fideuram 30% of Sanpaolo IMI Institutional Asset Management, a company dedicated to management activities for institutional investors. Sanpaolo IMI Alternative Investments
SGR, a company dedicated to the management of hedge funds, also became operational. In the third quarter of 2002, Sanpaolo Fiduciaria was sold to the Parent Bank. In January 2003 the
acquisition of the shares held by Sanpaolo Bank Luxembourg in Sanpaolo IMI Wealth Management Luxembourg was completed.



The Banca IMI Business Area covers securities dealing both for its own account and for customers, the raising of risk and debt capital for companies, as well as
consulting in corporate finance.

In
2002, with reference to corporate finance and capital markets activities, the Banca IMI Business Area:



As
a corporate finance consultant, Banca IMI was retained in several Italian and European transactions.



The Sanpaolo IMI Private Equity Business Area is responsible for the private equity activities of the Group, with the strategic goal of strengthening and
consolidating its presence in this sector, which is characterized by high growth potential in the medium term.

The
objective of the Sanpaolo IMI Private Equity Business Area is to operate as a reference for venture capital investments in small- and medium-sized companies, supporting their
possibilities of growth, consolidation and reorganization. Accordingly, the Sanpaolo IMI Private Equity Business Area

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is
concentrating its efforts on promotion, management and placement of closed-end private equity funds.

The
Sanpaolo IMI Private Equity Business Area heads the subsidiaries specialized in the management of closed-end security investment funds (Sanpaolo IMI Fondi Chiusi SGR and
NHS Mezzogiorno SGR), several foreign subsidiaries instrumental to the management of international closed-end investment funds (including the SIPEF Fund) and the Group's merchant banking
activities.

The
measures implemented in 2002 were focused on centralizing within Sanpaolo IMI Private Equity's private equity assets acquired in the merger with Cardine, as well as those headed by
Eptaconsors. The business-organizational model provides for the attribution to Sanpaolo IMI Private Equity of the centralized co-ordination, control and performance of services for
subsidiaries, and an advisory role for international closed-end funds.

Also
programmed is the participation in a new investment fund promoted by the French government in support of small- and medium-sized local companies, following an agreement signed with
CDC-Pme and the European Investment Fund.

International Activities



Banque Sanpaolo operates in France, through a network of 62 branches, with a customer base of 125,000 private customers with a medium/high savings potential and
small- and medium-sized companies.

In
2002 Banque Sanpaolo pursued its efforts to focus its network activities in its core customer sectors.



The Foreign Network Business Area is responsible for the foreign network of the Parent Bank composed, following the transfer of Cardine's operating points, of 12
branches, 18 representative offices (including a new office in Madrid in January 2003) and one operating desk, as well as the Irish subsidiary Sanpaolo IMI Bank Ireland. The Foreign Network
Business Area has a direct presence in 26 countries.

To
strengthen the position in its core markets, the organization of the Foreign Network Business Area is based on three regional offices (Americas, Europe and Asia) to direct and control
the various operating points. Moreover, to optimize the synergies with Sanpaolo IMI Internazionale, the latter was assigned, in 2003, the hierarchical responsibility for the six representative offices
in Central-Eastern Europe, which will continue to remain, from the corporate point of view, within the Parent Bank.

The
activity, targeted at the development of business to encourage the internationalization of Italian companies and to increase the presence of foreign multinationals on the Italian
market, was marked by the selectivity of relations and a focus on safeguarding the quality of assets rather than increasing operating volumes, in a market environment characterized by general economic
uncertainty and growing levels of risk in the corporate sector. The Foreign Network Business Area concentrated, on the one hand, on consolidating the position achieved in the European context and, on
the other hand, on reducing the total risk with foreign counterparties, especially from the United States, through major diversification in both the number of customers and economic sectors.

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The Sanpaolo IMI Internazionale Business Area was formed for the purpose of developing and supervising the presence of the Group in those foreign countries deemed
to be of strategic interest through transactions involving acquisitions and alliances.

In
December 2002, the transfer to the Sanpaolo IMI Internazionale Business Area of the equity investments held by the Group in Central-Eastern Europe and in the Mediterranean Area
was approved, subject to approval by the local authorities. The shareholdings include:



In
2002, the Sanpaolo IMI Internazionale Business Area performed the activities necessary to the completion of the start up phase of San Paolo Internazionale and in preparation for the
transfer of equity investments. Progress continued on initiatives aimed at exploiting the potential of the two most recently acquired banks, Banka Koper and West Bank: for this purpose measures aimed
at enabling the sharing of the Group's know-how in the operating areas that offer greater development opportunities in the reference markets were identified and undertaken.

It
should also be noted that, on February 25, 2003, Sanpaolo IMI Internazionale approved the launch of a public tender offer for the shares of the Hungarian bank Inter-Europa
Bank.

Distribution Network

The merger with Cardine and, subsequently, the incorporation of Banco di Napoli and the establishment of the Southern Territorial Direction strengthened the
Group's distribution network. See "Item 4.Information on Sanpaolo IMIHistory and Developments of Sanpaolo IMISignificant Developments During
2002Internal Group DevelopmentsIntegration with Cardine and Banco di Napoli".

As
of December 31, 2002, the Group had a network of 3,069 banking branches in Italy. The branches were located as follows:



The
remaining 12.5% of the Group network is situated in Central Italy, where there are more than 400 branches of Cassa di Risparmio di Firenze, in which Sanpaolo IMI holds a 19.5%
interest and with which distribution agreements have been signed. Sanpaolo IMI also has relationships with Cassa dei Risparmi di Forlì, which has about sixty branches mainly operating
in the Northeast of Italy.

The
strengthening of the branch networks realized via the specialization of branches to deal with their reference customer sectors led to the creation of 129 "company branches" in the
Sanpaolo Network; similar specialization initiatives regarded the Banco di Napoli and Cardine networks.

In
2002, the Group confirmed its commitment to new distribution channels, such as telephone and internet banking, to complement the traditional banking network. The Sanpaolo Network in
particular carried out commercial development activities with regard to the services offered through direct

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channels,
expanding their functionality and strengthening the customer service instruments. As of December 31, 2002, the number of retail customers able to operate in an integrated way through
traditional channels and direct channels rose to 325,000, an increase of more than 145,000 since the end of 2001, and Internet banking business customers exceeded 19,000. As of December 31,
2002, the Cardine network had approximately 57,000 telephone and Internet banking customers.

As
of December 31, 2002, services to retail customers were delivered through a network of automatic teller machines, including 1,899 Sanpaolo ATMs, 979 Cardine ATMs and 895
Banco di Napoli ATMs, and through point of sale terminals of the Sanpaolo Network (27,064), Cardine (18,619) and Banco di Napoli (10,100).

The
Group's distribution also includes, as of December 31, 2002, 4,955 financial planners, taking into account the acquisition of Banca Sanpaolo Invest by Banca Fideuram in 2002.
The transaction will increase the commercial effectiveness of the sales network, enabling strategic co-ordination of the financial planners, the adoption of a range of common products and
consistent brand and marketing policies.

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The
Group operates abroad through a network of 136 branches, of which 62 are Banque Sanpaolo branches in France, and 18 representative offices.

Distribution network (Italy and abroad)

At 12/31/02

At 12/31/01

% Change
12/31/02-12/31/01Banking branches and area offices

3,205

2,289

40.0Italy

3,069

2,212

38.7Sanpaolo IMI

2,115

1,376

53.7Abroad

136

77

76.6Banque Sanpaolo

62

59

5.1Representative offices

17

18

(5.6
)Financial planners

4,955

5,506

(10.0
)Banca Fideuram

3,520

3,795

(7.2
)Banca Sanpaolo Invest

1,234

1,494

(17.4
)


|Distribution network (Italy at 12/31/02)                                       |  | Sanpaolo IMI |  | Banco di Napoli |  | Cardine |  | Other(1) |  | Total
|------------------------------------------------------------------------------ |  | ------------ |  | --------------- |  | ------- |  | -------- |  | -----
|
|Northwest (Piedmont, Val d'Aosta, Lombardy, Liguria)                           |  | 980          |  | 70.5            |  | 3       |  | 0.4      |  | 13   
|Northeast (Veneto, Trentino Alto Adige, Friuli Venezia-Giulia, Emilia Romagna) |  | 107          |  | 7.7             |  | 1       |  | 0.1      |  | 706  
|Center (Tuscany, Marches, Umbria, Lazio, Abruzzo, Molise)                      |  | 127          |  | 9.1             |  | 110     |  | 15.2     |  | 122  
|South & Islands (Campania, Apulia, Basilicata, Calabria, Sicily, Sardinia)     |  | 176          |  | 12.7            |  | 611     |  | 84.3     |  | 0    
|                                                                               |  |              |  |                 |  |         |  |          |  |      
|Banking branches and area offices in Italy                                     |  | 1,390        |  | 100.0           |  | 725     |  | 100.0    |  | 841  
|                                                                               |  |              |  |                 |  |         |  |          |  |      

---

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The Italian Banking System: Supervision and Regulation



Italy's banking industry was regulated for over 50 years under the Banking Act of 1936, a law that set out the structure of the banking industry and
regulated specialized banking institutions. The application of the Banking Act of 1936 led to fragmentation and shielded the Italian banking system from competition. During the 1990s, the Italian
banking system underwent a reorganization and consolidation process which led to growth in the average size of banks and in the number of their branches while reducing the total number of banks.

The
reorganization is the consequence of changes in banking regulations as well as the competitive stimulus resulting from the liberalization of European financial markets and the
introduction of the euro. The main steps of the regulatory changes were the enactment of the Amato Law, the privatization process, the implementation of EU directives and the Legislative Decree
No. 385 of September 1, 1993 (the "Consolidated Banking Law").

The
current system allows the banks to decide which banking and related financial activities to engage in and which structures to adopt, subject only to generally applicable rules of
prudence and the banks' own bylaws. The current Italian banking regulations now largely mirrors the EU Second Banking Directive. The effect of the regulatory changes and Europe-wide
liberalization has been a significant increase in competition and consolidation in the Italian banking industry.



The Amato Law, encouraged consolidation and banks controlled by governmental and public law entities to adopt a joint-stock structure and to strengthen their
capital bases. Private participation in the newly formed joint stock companies was permitted and encouraged, butuntil the coming into force of Law No. 474 of July 30, 1994
(the "Privatization Law")governmental and other public entities minority shareholding were permitted only if it appeared to be in the public interest and subject to prior governmental
authorization.

The
process has accelerated by the implementation of the Privatization Law and the Decree of the Minister of Economy and Finance (the "Dini Directive"), enacted respectively in July and
November 1994. It was such statutes that permitted and promoted the sale of majority holdings of banks owned by the Ministry of Economy and Finance and by Italian banking foundations
(considered public law entities) to the private sector. Certain fiscal incentives have been provided for Italian banking foundations to reduce their stakes in a bank that converted into a joint-stock
company under the Amato Law to below 50%. If such requirements were met by the end of 1999, all capital gains arising from the public offerings or sales would be tax-free.

Furthermore,
to encourage the reform, new incentives have been introduced pursuant to the Ciampi Law, which reorganizes the regulatory framework over the Italian banking foundations.
Those incentives were under the scrutiny of the European Commission, pursuant to the procedure applicable to incentives which may affect fair competition. However, the European Commission decided on
August 22, 2002, that fiscal measures introduced in 1998 and 1999 in favour of banking foundations are not subject to the European Union's state aid rules. This is because the European
Commission did not consider as economic activities the management of own assets and the use of proceeds to extend grants to not-for-profit organizations.

Pursuant
to the Ciampi Law, the banking foundations that modified their bylaws and progressively divested their stakes in banks and only maintain control interests in entities dealing
with social purposes, are considered as private not for profit organizations with social purposes. The Ministry of

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Treasury
(currently Ministry of Economy and Finance) is in charge of authorizing the sales of holdings in banks owned by foundations; the sales must be in compliance with criteria of transparency and
non-discrimination.

In
accordance with Article 11 of Law No. 448 of 2001 (the "2002 Budget law"), the deadline for the banking foundations to dispose of their control of banking institutions
was extended for three years. The Ciampi Law initially set the deadline for the disposals at June 2003. The longer term contemplated by the 2002 Budget Law is conditional upon the banking
foundations entrusting their stakes in banking institutions to asset management companies "società di gestione del risparmio" which must
be selected pursuant to certain criteria and must manage the stakes in a professional manner, independently of the foundations. This term was extended to June 2006 for the banking foundations
with net equity not in excess of €200 million or operations in Italian autonomous regions "regioni a statuto speciale".



Effective January 1, 1993, the distinction between "ordinary credit institutions" and "special credit institutions" was formally eliminated (Legislative
Decree No. 481 of December 14, 1992). Banking activities are now performed by a single category of credit institution (banche), which can
collect and
demand savings deposits from the public, issue bonds and grant medium-and long-term credit, whether subsidized or not, subject to regulations issued by the Bank of Italy.

Italian
banks are now either (a) banks incorporated as joint-stock companies (Società per Azioni) owned directly or
indirectly by the private sector or by banking foundations, (b) co-operative banks (banche popolariand banche di credito cooperativo), or
(c) residual public law entities, governed by special regulations. In addition to the banking business, and
subject to their bylaws and to financial services regulation, banks may engage in all the business activities that are subject to mutual recognition under the EU Second Banking Directive, and in
certain other financial activities not listed therein.

European
credit institutions may conduct banking business in Italy as well as those business activities that are subject to mutual recognition and are authorized to be carried out in
their home country, provided that the Bank of Italy is informed by the entity supervising the relevant EU credit institution. Such supervising entity retains control over the relevant EU credit
institution (rule of "home-country control").



Effective January 1, 1994, the Consolidated Banking Law repealed and replaced, among others, the Banking Act and Legislative Decree No. 481. Among
the provisions of the Consolidated Banking Law are those concerning the role of the supervisory authorities; the definition of banking and related activities; the authorization of banking activities;
the acquisition of equity participation in banks; banking supervision (on an unconsolidated and consolidated basis); special bankruptcy procedures for banks, and the supervision of financial
companies. The resulting regulatory framework of Italian banking system is described below.



Under the Consolidated Banking Law, the supervision and regulation of Italian banks are exercised by:



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Minister of Economy and Finance.The Minister of Economy and Finance has broad powers in relation to banking and other
financial activities. Such powers include:



The
Minister of Economy and Finance may, in cases of urgency, adopt measures which generally belong to CICR and may also fine banks and their managers with administrative sanctions and
rule the mandatory liquidation (liquidazione coatta amministrativa) or the extraordinary management (amministrazione
straordinaria).

Bank of Italy.The Bank of Italy implements the policies set forth by CICR by adopting regulations and instructions
concerning the following four main areas:



The
Bank of Italy supervises the banking institutions through its own auditing body, granting authorizations and examining the reports that banks are required to file on a regular basis.
The main supervisory powers include: the review of financial statements and statistical data; the preliminary review of amendments to bylaws; inspections; and verification of capital ratios, reserve
requirements and exposure limits.

The
Bank of Italy conducts inspections of all credit institutions through its supervisory staff of auditors. Matters covered by an examination include the accuracy of reported data,
compliance with banking regulations, and bylaws. Specific areas of audit include compliance with exposure and other prudential limits.

The
Bank of Italy requires all banks to report interim balance sheets on a monthly basis.

The
principal objectives of the regulation are the protection of depositors and the stability and efficiency of the financial system.



Pursuant to Section 19 of the Consolidated Banking Law, the Bank of Italy's prior authorization is required in the event that acquisition of shares
(together with the shares already held) reaches or exceeds 5% of the voting rights or leads to a situation of control of an Italian bank. Prior authorization by the Bank of Italy is also required when
the 10%, 15%, 20%, 33% or 50% threshold of voting rights is triggered.

Following
the introduction in October 1999 of certain new regulations, the authorization from the Bank of Italy must also be obtained before any irrevocable commitment to buy a
significant stake in a bank.

In
the case of purchases (or sales) which could lead to controlling interest in a bank, the request for authorization to the Bank of Italy must also be preceded (by not more than
30 days) by a preliminary notification to the Bank of Italy concerning the main elements of the transaction (timetable, methods and sources of finance).

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The Bank of Italy may grant the authorization subject to conditions likely to ensure the sound and prudent management of the bank. Persons who, directly or indirectly engage in
significant business activity in economic sectors other than banking and finance may not be authorized to acquire shares of a bank which, when added to those already held, would represent more than
15% of the voting rights or control of the bank.

The
Bank of Italy as well as CONSOB (the Italian securities and stock exchange regulator), when the bank is a listed company, must be notified of any agreement, however concluded, which
involves an Italian bank or could lead to a joint exercise of voting rights in a bank or in the parent company of such bank.



The Interbank Deposit Guarantee Fund (Fondo Interbancario di Tutela dei Depositi) (the "Guarantee Fund"),
established in 1987 by the principal Italian banks, protects depositors against the risk of insolvency of the bank and the loss of their deposited funds. Sanpaolo has been a member of the Guarantee
Fund since 1987.

According
to the amended Consolidated Banking Law, enacted in 1996 (pursuant to EU Directive No. 94/19), a bank's membership in the Guarantee Fund is compulsory and must
have a minimum coverage of Lit. 200 million (€103,291) per depositor.

Deposits
covered by the Guarantee Fund are mainly those of ordinary customers, namely repayable funds in the form of deposits, bank drafts and other similar instruments; bearer deposits,
bonds and deposits placed by other credit institutions for their own account have been excluded. Furthermore, the guarantee scheme does not cover deposits of government and local authorities,
financial and insurance companies, and mutual funds.

Capital Adequacy Requirements



The implementation of the Basle Committee's risk-based capital guidelines is based on the EU's "Own Funds Directive" and the "Solvency Ratio
Directive". Under these risk-based capital guidelines, implemented since 1992 by the Bank of Italy, a bank's capital adequacy assessment is based on the ratio of its total capital to the
risk-adjusted value of its assets and off-balance sheet exposures. It should be noted that the Basle Committee is currently reviewing certain guidelines. A bank's capital is
composed of primary capital and supplementary capital. The consolidated total of primary and supplementary capital of a bank may not be less than 8% (or 7% on an unconsolidated basis) of the bank's
risk-weighted assets.

Primary
capital (Tier I) consists of: paid-in equity capital, retained earnings, funds for general banking risks, and innovative capital instruments such as preferred
shares; minus: treasury stock, intangible assets and losses for the preceding and current fiscal years. Innovative capital instruments can be included in Tier I capital only for up to 15% of the
capital including such instruments. Any amount in excess of that level can be included in supplementary capital as hybrid capital instruments.

Supplementary
capital (Tier II) capital consists of: asset revaluation reserves, general loan loss reserves, hybrid capital instruments and subordinated loans, minus: net
unrealized losses from investments in securities. Starting in March 1998, supplemental assets may include 35% of the net unrealized gains on interests in non-banking and
non-financial companies listed on a regulated market. 50% of any net losses must be deducted from supplemental assets, as already provided for net losses on securities. Tier II capital
cannot exceed Tier I capital. There are also limitations on the maximum amount of certain items of Tier II capital, such as subordinated debt which may not exceed 50% of Tier I capital.

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To
assess the capital adequacy of banks under the risk-based capital guidelines, a bank's capital is related to the total of the risk-adjusted values of its
assets and off-balance-sheet exposures. The various categories of assets are assigned one of five risk weightings: 0%, 20%, 50%, 100% and 200%.

The
capital adequacy ratios are applied to the sum of primary and supplementary capital, less equity investments and certain quasi-equity capital instruments in, and subordinated loans
to, affiliated credit and financial institutions.

There
is an ongoing negotiation to define, in the guidelines of the Basle Committee,inter alia, the system balancing the risk of credit,
and to introduce a specific requirement for the operational risks. The new agreement may enter into force in 2004.



In March 1997, on the basis of EU directive 92/6 and in response to the increased activity of Italian banks in securities intermediation, the Bank of Italy
requested specific consolidated capital requirements, in order to carry out securities intermediation activities. The requirements concern the various classes of risk involved and apply to all
securities not held to maturity (i.e., trading account securities and available-for-sale investment securities).

The
risks covered by the capital requirements are:



In
February 2000, the Bank of Italy, pursuant to EU directive 98/31, introduced the possibility (subject to prior authorization) for banks to use their own internal models to
calculate capital requirements to cover market risks. The models may use commodity position risk and total portfolio exchange rate risk. In 2000, certain other modifications to the regulatory
framework on market risk concerning the calculation of commodity position risk and new methods of valuing options became effective. See Note 18 to the Consolidated Financial Statements.

Lending Limits

The Bank of Italy issued certain instructions in respect of the EU Large Exposure directive in October 1993. From November 1993 until the end of
1998, all loans made by a bank to a single borrower or group of affiliated borrowers (together with all other exposures as defined by the EU Large Exposure directive) could not exceed 40% of the
bank's own funds (as defined pursuant to the EU Own Funds directive). Since January 1999, this ceiling has been lowered to 25% of the bank's own funds. However, in accordance with the
provisions of the EU Large Exposure directive permitting the grandfathering of excess exposures, the Bank of Italy's instructions provide that weighted exposures in excess of the applicable thresholds
would not be required to be reduced immediately upon effectiveness

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of
such directive's limitations in 1994, but would need to be gradually brought within specific limits. Such limits took effect at the beginning of 1997 and declined over time (60% of own funds from
1997 to 1998, 40% from 1998 to 2001, and 25% thereafter).

A
specific limit applies to loans to companies which are affiliated with banks (i.e., companies in which a bank holds a stake of 20% or more) and to loans to shareholders holding a stake
of 15% or more in a bank. Such specific limit provides that these exposures cannot exceed 20% of the bank's own funds as specified by the Bank of Italy regulations.

In
addition, the amount of a bank's large exposuresdefined as exposures individually exceeding 10% of the bank's own fundsmay not, in the aggregate, exceed
eight times the bank's own funds. Under the Bank of Italy's instructions, loans and other exposures are assigned one of four risk weightings (0%, 20%, 50% or 100%), largely depending on the identity
of the debtor or guarantor.

These
concentration limitations will apply to banking groups on a consolidated basis, although the activities of securities dealing firms (società
di intermediazione mobiliare, "SIMs"), belonging to a banking group are not to be taken into account in assessing the group's exposures. In addition, banks belonging to a
banking group are individually subject to a 40% limitation on weighted exposures to a single borrower or group of affiliated borrowers.

As
of December 31, 2002, the Group had six large exposures. See "Item 3. Key InformationSelected Statistical InformationLoan PortfolioLoans
by Category of Borrower" and Note 21 in the Notes to Consolidated Financial Statements.

Equity Participations by Banks

Banks are permitted to make equity investments in all types of companies, subject to rules enacted by the Bank of Italy. Generally, equity participations by a
bank in all types of companies may not in the aggregate exceed, together with real estate investments, the bank's consolidated capital. These rules require prior authorization for equity investments
exceeding 10% of the consolidated capital of the acquiring bank or 10% or 20% of the capital stock (or otherwise entailing the taking of control) of the bank, financial or insurance company being
acquired and for taking control of ancillary banking service companies. Investments in insurance companies exceeding in the aggregate 40% of the bank's consolidated capital (and 60% of its
unconsolidated capital) are not authorized.

Moreover,
equity participations in companies other than banks or financial or insurance companies may not exceed (i) 15% of the bank's consolidated capital (or 7.5% for
investments in unlisted companies), (ii) 3% of the bank's consolidated capital for investments in a single company or group of companies, or (iii) 15% of the capital stock of the company
whose shares are being acquired by the bank. The limit described in (iii) does not apply if the value of the participation and the sum of all the other investments exceeding the 15% owned by
the bank, do not exceed 1% of its consolidated capital.

Higher
limits are applied by the Bank of Italy upon request bybanche abilitate(authorized banks), which are banks with at least
€1 billion in capital and which meet the solvency ratios, and for the so-calledbanche specializzate(specialized
banks), which are banks that collect mainly medium- and long-term funds, take no demand deposits, have capital in excess of €1 billion and meet the solvency ratios.
The Bank of Italy has named Sanpaolo IMI as abanca abilitata. Therefore, Sanpaolo IMI is empowered to purchase over 15% of the capital of a
non-financial company, as long as both the value of the participation and the sum of all other investments exceeding the 15% limit do not exceed 2% of its consolidated capital. The
aggregate of the participations in non-financial companies cannot, in any event, exceed 50% of Sanpaolo IMI's consolidated capital (or 25% of its consolidated capital for investments in
unlisted companies); investments in a single non-financial company or group of companies may not exceed 6% of the bank's consolidated capital.

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Medium- and Long-Term Credit and Funding Activity

The regulations permit all banks to provide, without restriction, medium- and long-term credit to borrowers other than companies. The granting of
medium- and long-term credit is permitted without limit to those banks whose shareholders' equity exceeds €1 billion as well as to former special credit
institutions, regardless of the amount of their shareholders' equity, and to those banks whose liability structure is principally founded on funding raised in the medium- and long-term
markets.

Other
banks may extend medium- and long-term credit within the limit of 30% of total funding. Furthermore, the regulations include rules concerning control of the change in
maturities as well as methods that empower the Bank of Italy to identify the banks most exposed to the risk of losses linked to interest-rate fluctuations.

With
reference to the provisions concerning funding activity, the regulations provide the opportunity for all banks to collect savings from the public in any form permitted by law. Banks
are also permitted to use various instruments such as bonds, certificates of deposit, and other funding instruments, which can also be issued in the form of subordinated or perpetual debt for funding
activities.

Mandatory Reserves

The ECB and the Bank of Italy require that banks based in Italy must keep obligatory cash reserves, directly or indirectly through an intermediary bank, with the
Bank of Italy.

The
amount of the reserve is calculated on a monthly basis at a 2% rate on the total of the following assets subject to the reserve requirements: liabilities from deposits and off
balance sheet liabilities, excluding liabilities due to other banks, to the ECB and to other national central banks. There is no applicable portion for deposits and debt securities issued with a
maturity of more than two years or repayable with notice of more than two years and for repurchase agreements.

The
reserve can be amended by banks for the whole amount during a particular month as long as the average amount of the daily balances is not less than the required reserve. The Bank of
Italy pays interest on the reserve at the average refinancing rates set by ECB for that month. Sums in excess of the reserve required do not receive interest. In the case of contravention of the
requirements of the obligatory reserve, the ECB may impose proportional fines on the bank (or intermediary bank).

Financial Intermediaries

The Consolidated Banking Law also governs certain financial activities performed by non-banking entities, which, in order to be allowed to deal with
the public, must be enrolled in a general register kept by the Ministry of Economy and Finance. Such regulated financial activities are as follows: acquiring equity investments, granting loans in any
form (including leasing activities) and performing payment or brokerage services in foreign currency. Pursuant to Law 130 of April 30, 1999, relating to securitizations, the transferring of
assets to special purpose vehicles and the collection of credits and cashier services are to be considered among such regulated financial activities.

Financial
intermediaries that deal with the public may engage in the activities listed above and, subject to specific authorization, derivatives trading activities for their own accounts
and placement of financial instruments, are required to observe the rules for clarity of contractual conditions set forth in the Consolidated Banking Law. Further provisions set forth requirements for
the probity of the participants and for the probity and professional competence of their business representatives.

The
financial intermediaries have also to be enrolled in a special register (provided for in Section 107 of Decree N. 385 of 1993, the "Special Register") kept by the Bank of
Italy, if they meet certain objective criteria, defined by the Ministry of Economy and Finance, and corresponding to the

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activities
they perform, their size and their debt to equity ratio. These intermediaries are subject to the oversight of the Bank of Italy, which, in August 1996, issued regulations concerning
various aspects of capital requirements and risk management. Financial intermediaries must also comply with the rules governing the regular and consolidated annual financial statements of banks.

Securities Market Control and Legislation

The Italian implementing provisions (Law No. 415 of 1996, "Eurosim Law") of the European Directives on investment services (No. 93/22/EEC of May 10,
1993) and market risk capital requirements (No. 93/6/EEC of March 15, 1993), allowed banks to operate directly in regulated securities markets. Restrictions on access by foreign banks and
investment firms to the Italian investment services sector have also been removed.

In
1998, the regulations introduced by the Eurosim Law have been reorganized within the framework of the Consolidated Securities Law approved by Legislative Decree No. 58 of
February 24, 1998, (the "Consolidated Securities Law").

The
Consolidated Securities Law contains rules concerning the prudential supervision applicable to intermediaries that provide investment services (including the requirement to use
guarantee systems as protection against crises) and to intermediaries that offer collective investment management services (mutual funds and open-end investments companies). Other sections
of the Consolidated Securities Law concern standards for organization and management of financial markets, centralized management of financial instruments, methods for soliciting investments and
corporate governance of companies that have listed securities.



The organization and management of the regulated markets is reserved to joint stock corporations: Borsa Italiana, for instance, runs the Italian stock market,
(which includes, electronic share market "telematico", Star segment, Nuovo Mercato, Mercato Ristretto, Covered Warrants Market and Premi Market), the
Italian derivatives market (IDEM and MIF), the after hours market (TAH) and the Fixed Income Market (MOT and EuroMOT). All the Italian regulated markets are entered into a list kept by CONSOB. CONSOB
continues to exercise supervisory control over listed companies, intermediaries and the markets, as well as the correctness and intelligibility of the information required of companies issuing listed
securities and other forms of solicitation relating to securities. CONSOB is also empowered to verify compliance with the legislation regarding insider trading and to report infringements to the
public prosecutors.



Securities market participants in Italy include (subject to partially different conditions) investment firms such as SIMs, financial intermediaries the persons
entered in the Special Register and banks. These intermediaries are under the control of CONSOB and the Bank of Italy, and have to observe prudential regulations governing, among other matters, the
professional brokerage of and dealing in securities, underwriting, asset management, retail distribution of securities and advisory services regarding investments in securities.



A specific category of authorized intermediaries, SGR (società di gestione del risparmio) and SICAV
(società di investimento a capitale variabile) are in charge of the marketing, promotion, organization and the ownership of mutual funds
and management of SICAVs (even if established by third parties). The rules concerning the investment limits of mutual funds, with respect to single sectors or companies and overall minimum portfolio
diversification, have been set by the Ministry of Economy and Finance. The

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reform
introduced by the Consolidated Securities Law allows SGRs, supervised by the Bank of Italy for those aspects concerning financial stability and risk management policies, to operate in the
sector of asset management.



A section of the Consolidated Securities Law is devoted to the corporate governance of listed companies. This section contains, among others, new provisions
concerning both voluntary and mandatory tender offers; in particular, the disclosure of interests held by the shareholders, of interlocking interests and of shareholder agreements has been made more
stringent. The board of statutory auditors has been given broader powers to examine the management of the company, and further measures to protect minority shareholders have been added. The
Consolidated Securities Law introduces a special system for the voting of proxies at the shareholders' meetings of listed companies and for the solicitation and collection of such proxies; CONSOB
regulations set forth methods and procedures.

In
particular, the regulations governing public offers provides for the compulsory launch of a public offer for all ordinary outstanding shares of any Italian company listed on an
Italian regulated market when the shareholding exceeds a certain limit (30% of the target company's share capital). This rule applies to any purchase of shares (with certain exceptions set out in a
CONSOB regulation) completed directly or through subsidiaries or acting in concert with third parties.

The
compulsory public offer for all shares may be waived when the shareholding threshold is preceded by a partial offer (at least 60% of the ordinary shares) and CONSOB approves the
exemption according to certain conditions (including the approval of minority shareholders).

In
1999, a committee, coordinated by the Chairman of Borsa Italiana (the "Committee") and composed of representatives of Italian banks, industries, insurance companies and associations
of issuers and investors, prepared a code of self-regulation (the "Code"), a model of corporate governance that emphasizes the role and the responsibilities of the board of directors and
ensures a balanced division of power among the executive and non-executive members of the board of directors, the auditing functions and the relation with all the shareholders.

The
importance of the Code, which is not compulsory, was immediately appreciated by the market and the board of directors of Sanpaolo IMI adopted the Code in 2000. Borsa Italiana
currently requires all companies applying for listing onTelematicoto submit a statement comparing their corporate governance model to the model of the
Code.

In
2002, the Committee revised the Code to reinforce the independence of the non-executive members of the board of directors, the correct handling of confidential
information, the responsibility of the board of directors for the internal control system and the compliance with criteria of substantial and procedural fairness with reference to the transactions
with related parties.

In
January 2003, the Italian Government approved a reform of corporate law, governing limited liability and joint-stock companies and co-operatives, which will come
into force in 2004.

The
main innovations introduced by the reform with regard to companies relate to their governance. Together with the "ordinary" system, which is the current organizational structure
which entails management and supervisory bodies (the board of directors or sole director and the board of statutory auditors), the new rules provide for two other models; the "single" system and the
"dual" system. A company will be able to elect which corporate governance system it wants to implement.

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The
following are the three models of governance which companies will be able to adopt:



C. Organizational Structure

See "Item 4. Information on Sanpaolo IMIBusiness Overview".

D. Property, Plants and Equipment

Sanpaolo IMI owns the headquarters buildings of Sanpaolo IMI Group, located in Turin, and secondary offices located in Rome and in Bologna. In addition, Sanpaolo
IMI owns or leases other properties in Italy and abroad which are used for Group operations or leased to third parties.

Sanpaolo
IMI has conducted an audit of any environmental issues that may affect the use of its assets. Full details of this analysis are expected to be published in its "Social Report"
(Bilancio Sociale) which will be made available in English and Italian upon application. The Social Report considers direct environmental impact (energy
consumption,,recyclable publication expenses, waste disposal, atmospheric emissions and water consumption) and indirect impact (financings of environmentally sensitive projects and ethical investment
funds).

Management
believes that Sanpaolo IMI is compliant with all relevant environmental standards in Italy and abroad and pursues a policy of adherence to best international practices.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. Operating Results

The following discussion is based on and should be read in conjunction with the Consolidated Financial Statements which have been prepared in accordance with
Italian GAAP. Italian GAAP differs in certain significant respects from U.S. GAAP. For a summary of the significant differences between Italian GAAP and U.S. GAAP, see Note 32 to the
Consolidated Financial Statements. The Consolidated Financial Statements included in this report have not been reclassified in order to comply with the format required for the consolidated statements
of income and balance sheets of bank holding companies pursuant to Regulation S-X under the U.S. Securities laws, but have been presented in the same format as that used in the
consolidated financial statements included in Sanpaolo IMI's annual and interim reports to shareholders prepared pursuant to Italian law.

IntroductionPresentation of Results

In the review that follows, we discuss the unaudited reclassified consolidated statement of income for the year ended December 31, 2002, which is
reconciled to the audited consolidated statement of

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income
for the year ended December 31, 2002 (as explained in "Results of Operations" below), and compare the results for each line item with those for the year ended December 31, 2001.
Following such discussion and comparison we compare the results for each line item for the year ended December 31, 2002 with the unaudited pro forma results for the year ended
December 31, 2001. The preparation of the unaudited pro forma results for the year ended December 31, 2001 is discussed below under "Explanatory Notes to the 2001 Pro Forma". The key
assumption of the unaudited pro forma results for the year ended December 31, 2001, and the reason for providing them, is the inclusion of the results of Cardine as if the merger with Cardine
had occurred on January 1, 2001 and Cardine had been fully consolidated from that date. Management believes the pro forma results for 2001 are helpful in showing the trend underlying Sanpaolo
IMI's financial results in 2002 because the pro forma results are based on a scope of consolidation that is more consistent with that of 2002.

We
also discuss the reclassified, consolidated statement of income for the year ended December 31, 2001, which is reconciled to the audited consolidated statement of income for
the year ended December 31, 2001 (as explained in "Results of Operations" below), and compare the results for each line item with the unaudited pro forma results for the year ended
December 31, 2000, which include the results of Banco di Napoli and the Wargny group as if these entities had been acquired on January 1, 2000 (rather than during the year) and had been
fully consolidated from that date. The preparation of the unaudited pro forma results for the year ended December 31, 2000 is discussed below under "Explanatory Notes to the 2000 Pro Forma".
The unaudited pro forma results included in this annual report were not required to be prepared in accordance with the requirements of article 11 of Regulation S-X, under the U.S. Securities
laws, and were not prepared in accordance thereto. The unaudited pro forma results, included in this annual report, are presented in the same format used in the consolidated
financial statements included in the Group's annual and interim reports to shareholders, prepared pursuant to Italian laws.

Management
believes the pro forma results for 2000 are helpful in showing the trends underlying Sanpaolo IMI's financial results in 2001 because the pro forma results are based on a
scope of consolidation that is more consistent with that of 2001 than is the case for the reclassified 2000 results.

For
purposes of the tables in the discussion that follows:



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IntroductionThe Italian Economy and the Italian Banking Sector

The Euro Zone and the Italian Economy

In 2002, economic growth in the euro zone (consisting of the 12 member states of the EU which have adopted the euro) decreased to 0.8% compared to a growth rate
of 1.5% in 2001. The weak economic growth was the result of low domestic consumption, which was only partially mitigated by an increase in exports. In 2002, the average inflation rate for the euro
zone was 2.2%. The low inflation rate and the deterioration in economic conditions in the euro zone led the ECB to reduce its policy rate by 50 basis points, from 3.25% to 2.75%.

Italy's
GDP grew by 0.4% in 2002, a rate below the euro zone average. The inflation rate, measured by the household consumer price index ("HCPI"), averaged 2.5% for the year. In 2002,
the Italian unemployment rate fell slightly from 9.1% to 9.0%.

Despite
Italy's weak economic performance, its public deficit decreased to 2.3% of GDP in 2002 from 2.6% of GDP in 2001. Italian government debt decreased to 106.7% of GDP in 2002 from
109.5% of GDP in 2001.

The Italian Banking Sector

Historically, the Italian banking sector has been fragmented and largely shielded from foreign competition. That situation has been changing in the last several
years. The process of consolidation in the Italian banking sector continued in 2002, although at a slower pace compared to 2001.

The
aggregate amount of loans by banks in Italy increased by 5.9% in 2002 compared to 2001, primarily due to the strong growth in demand by households. Loans to companies were affected
by the reduced growth in investments and financing transactions, especially in the internet and telecommunications sectors.

The Italian Equity Market

In 2002, the capitalization of the Italian equity market fell from €592 billion (48.7% of GDP) to €458 billion
(36.6% of GDP). The main Italian stock indices, MIBTEL and MIB3O, lost, respectively, 23.5% and 26% of their value compared to 2001. The finance and banking sectors underperformed the market. Average
daily trading volumes of equities decreased by 4% in 2002 compared to 2001.

Asset Management

In 2002, the asset management businessincluding mutual funds, portfolio management and life insurancesuffered from the instability of
the stock market and the increase in financial markets' volatility. Funds managed by Italian intermediaries decreased by 9.4% to €466 billion compared to 2001. In particular,
the poor performance of the major international stock markets in the second and third quarters of 2002 adversely affected the final results of equity and balanced funds. Assets under management
benefited, however, from strong growth in life insurance.

Results of Operations

N.B: The numbers to the left of the line items in the tables contained in the following sections refer to the statutory classification for
the audited consolidated statement of income under Italian GAAP except for items 10.a), 10.b), 60.a), 70.a), 70.b), 90.a), 90.b), 110.a), 110.b), 120.a), 200.a) and 200.b), which reflect management's
reclassification of the results of operations of the Group. Certain numbers in the tables reflect rounding used in the reclassification of the audited consolidated statement of income, and may differ
slightly from the corresponding numbers in the audited consolidated statement of income.

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In
2002, the results of the Sanpaolo IMI Group were overall adversely affected by the negative market conditions, discussed above under "IntroductionThe Italian
Economy
and the Italian Banking Sector", which led to a general reduction in Sanpaolo IMI's net income compared to 2001.

The
Group's results for the year ended December 31, 2002, were affected by the consolidation of Cardine's results with those of Sanpaolo IMI following the merger with Cardine,
which led to increases in interest income and similar revenues, net interest and other banking income, net commissions and other dealing revenues and operating income compared to the year ended
December 31, 2001. The results attributable to Cardine, which for purposes of this discussion are referred to as the "Cardine Activities", accounted for:



The
term "Cardine Activities" includes all results attributable to Cardine for the year ended December 31, 2002, with the sole exception of the following, none of which, individually or in the
aggregate, were material:



Excluding
the Cardine Activities, the results of the Sanpaolo IMI Group were affected not only by the negative market conditions mentioned above, but also by:



In
the face of these negative results, Sanpaolo IMI's board of directors decided to utilize €364 million of the Group's reserves for general banking risks. This
decision was also made in order to be able to utilize the full amount of a tax credit that had accrued to Sanpaolo IMI. As a result of this write-back, net income for the year ended
December 31, 2002, amounted to €889 million, a decrease of 26.1% compared to the year ended December 31, 2001 (€1,203 million). Without the
write-back, net income for 2002 would have been €525 million, a decrease of 56.4% compared to 2001.

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For the year ended December 31, 2002, Return on Equity ("ROE"), representing net income after minority interests as a percentage of monthly average shareholders' equity, decreased
to 8.3% from 15.5% in 2001 (12.9% in 2001 Pro Forma).

Net interest income2002 compared with 2001

The following table compares net interest income in 2002, 2001 and 2001 pro forma.

|      |  |                                                                           |  | 2002   |   | 2001   |   | 2001
Pro Forma
(unaudited) |  
|----- |  | ------------------------------------------------------------------------- |  | ------ | - | ------ | - | -------------------------- | -
|10    |  | Interest income and similar revenues                                      |  | 8,693  |   | 8,016  |   | 10,451                     |  
|10.a) |  | Dividends from equity investments under 20% of stake, treated as interest |  |       |   | 4      |   | 4                          |  
|10.b) |  | Interest margin of Banca IMI Group (1)                                    |  | 35     |   | 94     |   | 94                         |  
|20    |  | Interest expense and similar charges                                      |  | (4,955 | ) | (5,326 | ) | (6,590                     | )
|      |  |                                                                           |  |        |   |        |   |                            |  
|      |  | Net interest income                                                       |  | 3,773  |   | 2,788  |   | 3,959                      |  
|      |  |                                                                           |  |        |   |        |   |                            |  

---

Net
interest income earned by the Group in 2002 amounted to €3,773 million, a 35.3% increase compared to 2001. Net interest income was affected by:



The
results of the former Sanpaolo IMI Group (excluding the Cardine Activities) were adversely affected by: (i) a decrease in the contribution attributable to the difference
between interest-earning assets and interest-bearing liabilities (such positive difference is referred to herein as "Fund Imbalance"). The decrease in the contribution is due to both a decrease in
Fund Imbalance and to a decrease in earnings from investing such Fund Imbalance, and (ii) the general decrease in interest rates, that was only partly offset by an increase in the average
balances of demand deposits and
medium-and long-term loans to customers.The three-month Euribor rate fell by 39 basis points in end-period terms to 2.96% in December 2002 from 3.35% in
December 2001, and by 95 basis points in average terms. The return on the ten-year Italian Treasury bonds (BTP), in average terms, showed a reduction of 14 basis points compared to
2001.

In
2002, the average balance of interest-earning assets of the Group increased by 24.2% to €157,066 million from €126,462 million in 2001,
due to an increase of 26.43% (€33,422 million) attributable to the Cardine Activities, partially offset by a decrease of 2.2% (€2,818 million)
attributable to the former Sanpaolo IMI Group (excluding the Cardine Activities). The average amount of loans to customers, excluding reverse repurchase agreements, increased by 32.3% to
€118,868 million in 2002 from €89,839 million in 2001, primarily due to the merger with Cardine.

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In
terms of interest bearing liabilities, the average balance in 2002 increased by 24.7% to €149,287 million from €119,744 million in 2001,
primarily due to the merger with Cardine (an increase of 25.1%, or €30, 056 million). The average balance of customer deposits, excluding repurchase agreements, increased by
27.2% to €66,888 million in 2002 from €52,586 million in 2001, primarily due to the merger with Cardine (an increase of 24.5%) and the growth of both
short-term and medium- and long-term deposits.

Compared
to the Group's pro forma results for the year ended December 31, 2001, net interest income in 2002 decreased by 4.7%, for the same reasons discussed above with respect to
the former Sanpaolo IMI Group.

Compared
to pro forma 2001, the average balance of interest-earning assets of the Group decreased by 4.8% from €164,957 million. The average amount of loans to
customers, excluding repurchase agreements, increased by 2.1% from €116,462 million in pro forma 2001. In terms of interest-bearing liabilities, the average balance decreased by
3.1% from €154,079 million in pro forma 2001. There was an increase of 2.9% in the average balance of customer deposits, excluding repurchase agreements, primarily due to the
growth of both short-term (+3.4%) and medium- and long-term deposits (+2.2%).

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The
following table compares average interest rates in 2002, 2001 and 2001 Pro Forma.

|                                                    |  | 2002    |  | 2001  |  | 2001 Pro Forma (unaudited)
|--------------------------------------------------- |  | ------- |  | ----- |  | --------------------------
|
|
|Interest-earning assets                             |  | 157,066 |  | 8,166 |  | 5.20                      
|Loans to customers                                  |  | 118,868 |  | 6,732 |  | 5.66                      
|In €                                               |  | 108,197 |  | 6,362 |  | 5.88                      
|In foreign currency                                |  | 10,671  |  | 370   |  | 3.47                      
|Due from banks                                      |  | 12,120  |  | 399   |  | 3.29                      
|In €                                               |  | 11,421  |  | 386   |  | 3.38                      
|In foreign currency                                |  | 699     |  | 13    |  | 1.86                      
|Securities                                          |  | 17,351  |  | 750   |  | 4.32                      
|In €                                               |  | 13,022  |  | 599   |  | 4.60                      
|In foreign currency                                |  | 4,329   |  | 151   |  | 3.49                      
|Reverse repurchase agreements                       |  | 5,992   |  | 185   |  | 3.09                      
|In €                                               |  | 5,264   |  | 173   |  | 3.29                      
|In foreign currency                                |  | 728     |  | 12    |  | 1.65                      
|Other interest earning assets from Banco di Napoli |  | 2,735   |  | 100   |  | 3.66                      
|Non-interest earning assets(l)                      |  | 50,299  |  |       |  |                           
|                                                    |  |         |  |       |  |                           
|Total assets                                        |  | 207,365 |  | 8,166 |  |                           
|                                                    |  |         |  |       |  |                           
|Interest-bearing liabilities                        |  | 149,287 |  | 4,393 |  | 2.94                      
|Due to customers                                    |  | 66,888  |  | 1,022 |  | 1.53                      
|In €                                               |  | 60,742  |  | 866   |  | 1.43                      
|In foreign currency                                |  | 6,146   |  | 156   |  | 2.54                      
|Securities issued                                   |  | 48,132  |  | 2,152 |  | 4.47                      
|In €                                               |  | 46,856  |  | 2,117 |  | 4.52                      
|In foreign currency                                |  | 1,276   |  | 35    |  | 2.74                      
|Due to banks                                        |  | 19,643  |  | 596   |  | 3.03                      
|In €                                               |  | 12,792  |  | 416   |  | 3.25                      
|In foreign currency                                |  | 6,851   |  | 180   |  | 2.63                      
|Repurchase agreements                               |  | 8,671   |  | 290   |  | 3.34                      
|In €                                               |  | 8,671   |  | 290   |  | 3.34                      
|In foreign currency                                |  |        |  |      |  |                          
|Subordinated liabilities                            |  | 5,953   |  | 333   |  | 5.59                      
|In €                                               |  | 5,008   |  | 290   |  | 5.79                      
|In foreign currency                                |  | 945     |  | 43    |  | 4.55                      
|Non interest-bearing liabilities(1)                 |  | 47,343  |  |       |  |                           
|Shareholders' equity(2)                             |  | 10,735  |  |       |  |                           
|                                                    |  |         |  |       |  |                           
|Total liabilities and shareholder's equity          |  | 207,365 |  | 4,393 |  |                           
|                                                    |  |         |  |       |  |                           
|Net interest income                                 |  |         |  | 3,773 |  |                           

---

88

---

For
purposes of the table above average balances have been determined based on daily figures for interest-earning assets and interest-bearing liabilities of Sanpaolo IMI, Banco di
Napoli, Cardine, Banca Fideuram and Banca Opi S.p.A. ("Banca Opi") and on end of the quarter figures for all the other assets and liabilities of the Group; management believes that the average figures
below present substantially the same trend as would be presented by daily averages.

Net interest income2001 compared with 2000 Pro Forma

The net interest income earned by the Group in 2001 amounted to €2,788 million, a 3% decrease against 2000 Pro Forma.

The
following table compares net interest income in 2001, 2000 Pro Forma and 2000.

|      |  |                                                                           |  | 2001   |   | 2000
Pro Forma
(unaudited) |   | 2000   |  
|----- |  | ------------------------------------------------------------------------- |  | ------ | - | -------------------------- | - | ------ | -
|
|10    |  | Interest income and similar revenues                                      |  | 8,016  |   | 8,441                      |   | 7,622  |  
|10.a) |  | Dividends from equity investments under 20% of stake, treated as interest |  | 4      |   | 4                          |   | 4      |  
|10.b) |  | Interest margin of Banca IMI(1)                                           |  | 94     |   | 69                         |   | 69     |  
|20    |  | Interest expense and similar charges                                      |  | (5,326 | ) | (5,640                     | ) | (5,123 | )
|      |  |                                                                           |  |        |   |                            |   |        |  
|      |  | Net interest income                                                       |  | 2,788  |   | 2,874                      |   | 2,572  |  
|      |  |                                                                           |  |        |   |                            |   |        |  

---

The
decrease in net interest income earned by the Group in 2001 was also affected by the following non-recurring factors:



Excluding
the above mentioned factors, the decrease in Group net interest income would have been 1.4% instead of 3%. This decrease was primarily attributable to the progressive
contraction in market interest rates and spreads which began towards the end of 2000 and continued throughout 2001. The 3-month Euribor rate decreased by 1.54%, from 4.88% at the end of
2000 to 3.35% at the end of 2001. The average 3-month Euribor rate for the whole of 2001 was 4.27%, 11 basis points lower than in 2000. In 2001, on average, the rate on the
10-yearBuoni del Tesoro Poliennali("BTP"), an Italian government bond, fell by 40 basis points.

In
2001, the yield on the Group's interest-bearing assets was 5.88%, 23 basis points lower than in 2000; the cost of interest-bearing liabilities decreased by 19 basis points, from 4.07%
to 3.88%. The

89

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average
spread on customer deposits and loans, excluding reverse repurchase agreements, was 2.81% in 2001, compared with 2.94% in 2000.

The
average balances of the Group's interest-earning assets in 2001 decreased by 1.8% compared with 2000 Pro Forma; the average volume of customer loans, excluding reverse repurchase
agreements, increased by 3.4% in 2001. On the liabilities side in 2001, there was a 1.5% decrease in the average volume of customer deposits, excluding repurchase agreements, which resulted in a 4.7%
reduction in debt securities issued by the Group.

The
following table compares average interest rates in 2001, 2000 Pro Forma and 2000 Restated. The figures in the column labeled "2000 Restated" are from the unaudited, restated
consolidated

90

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statement
of income for the year ended December 31, 2000, and reflect consolidation of Banco di Napoli at equity.

|                                                    |  | 2001    |  | 2000 Pro Forma
(unaudited) |  | 2000 Restated
(unaudited)(1)
|--------------------------------------------------- |  | ------- |  | -------------------------- |  | ----------------------------
|
|
|Interest-earning assets                             |  | 126,462 |  | 7,440                      |  | 5.88                        
|Loans to customers                                  |  | 89,839  |  | 5,721                      |  | 6.37                        
|in €                                               |  | 79,444  |  | 5,214                      |  | 6.56                        
|in foreign currency                                |  | 10,395  |  | 507                        |  | 4.88                        
|Due from banks                                      |  | 15,388  |  | 654                        |  | 4.25                        
|in €                                               |  | 13,417  |  | 564                        |  | 4.20                        
|in foreign currency                                |  | 1,971   |  | 90                         |  | 4.57                        
|Securities                                          |  | 14,563  |  | 743                        |  | 5.10                        
|in €                                               |  | 10,253  |  | 507                        |  | 4.94                        
|in foreign currency                                |  | 4,310   |  | 236                        |  | 5.48                        
|Repurchase agreements                               |  | 2,798   |  | 126                        |  | 4.50                        
|in €                                               |  | 2,201   |  | 98                         |  | 4.45                        
|in foreign currency                                |  | 597     |  | 28                         |  | 4.69                        
|Other interest earning assets from Banco di Napoli |  | 3,874   |  | 196                        |  | 5.06                        
|Non-interest earning assets(l)                      |  | 45,047  |  |                            |  |                             
|                                                    |  |         |  |                            |  |                             
|Total assets                                        |  | 171,509 |  | 7,440                      |  |                             
|                                                    |  |         |  |                            |  |                             
|Interest-bearing liabilities                        |  | 119,744 |  | 4,652                      |  | 3.88                        
|Due to customers                                    |  | 52,586  |  | 1,319                      |  | 2.51                        
|in €                                               |  | 45,291  |  | 1,032                      |  | 2.28                        
|in foreign currency                                |  | 7,295   |  | 287                        |  | 3.93                        
|Securities issued                                   |  | 36,738  |  | 1,857                      |  | 5.05                        
|in €                                               |  | 34,944  |  | 1,761                      |  | 5.04                        
|in foreign currency                                |  | 1,794   |  | 96                         |  | 5.35                        
|Due to banks                                        |  | 18,014  |  | 847                        |  | 4.70                        
|in €                                               |  | 10,725  |  | 514                        |  | 4.79                        
|in foreign currency                                |  | 7,289   |  | 333                        |  | 4.57                        
|Repurchase agreements                               |  | 7,109   |  | 313                        |  | 4.40                        
|in €                                               |  | 7,109   |  | 313                        |  | 4.40                        
|in foreign currency                                |  |        |  |                           |  |                            
|Subordinated liabilities                            |  | 5,297   |  | 316                        |  | 5.97                        
|in €                                               |  | 4,281   |  | 256                        |  | 5.98                        
|in foreign currency                                |  | 1,016   |  | 60                         |  | 5.91                        
|Non interest-bearing liabilities(2)                 |  | 43,997  |  |                            |  |                             
|Shareholders' equity(3)                             |  | 7,246   |  |                            |  |                             
|                                                    |  |         |  |                            |  |                             
|Total liabilities and shareholder's equity          |  | 171,509 |  | 4,652                      |  |                             
|                                                    |  |         |  |                            |  |                             
|Net interest income                                 |  |         |  | 2,788                      |  |                             

---

91

---

For
purposes of the table above average balances have been determined based on daily figures for interest-earning assets and interest-bearing liabilities of Sanpaolo IMI and Banco di
Napoli and on month-end figures for Banca Fideuram, Sanpaolo IMI International, Banca IMI and IMI Bank (Lux) S.A.; and at June 30 and December 31 of each of the indicated
years for all other assets and liabilities of the Group; management believes that the average figures below present substantially the same trend as would be presented by daily averages.

Net interest and other banking income2002 compared with 2001

The Group's net interest and other banking income in 2002 was €7,160 million, an increase of 21.8% compared to 2001.

The
increases in net interest income is explained above under "Net interest income2002 compared with 2001".

The
increases in net commissions and other dealing revenues, in profits/(losses) on financial transactions and dividends on shares, and in profits of companies carried at equity and
dividends on equity investments are explained below under "Net commissions2002 compared with 2001", "Profits on financial transactions and dividends on
shares2002 compared with 2001", and "Profits of companies carried at equity and dividends on equity investments2002 compared with 2001", respectively.

The
following table sets forth the principal components of the Group's net interest and other banking income for 2002, 2001 and 2001 Pro Forma.

Compared
to the Group's pro forma results for the year ended December 31, 2001, net interest and other banking income decreased by 5.1% from
€7,543 million.

|                                                                           |  | 2002  |  | 2001  |  | 2001
Pro Forma
(unaudited)
|-------------------------------------------------------------------------- |  | ----- |  | ----- |  | --------------------------
|
|Net interest income                                                        |  | 3,773 |  | 2,788 |  | 3,959                     
|Net commissions and other dealing revenues                                 |  | 2,809 |  | 2,608 |  | 3,056                     
|Profits/(losses) on financial transactions and dividends on shares         |  | 286   |  | 274   |  | 300                       
|Profits of companies carried at equity and dividends on equity investments |  | 292   |  | 207   |  | 228                       
|                                                                           |  |       |  |       |  |                           
|Net interest and other banking income                                      |  | 7,160 |  | 5,877 |  | 7,543                     
|                                                                           |  |       |  |       |  |                           

Net interest and other banking income2001 compared with 2000 Pro Forma

The Group's net interest and other banking income in 2001 was €5,877 million, a decrease of 4.7% compared with 2000 Pro Forma.

The
decrease in net interest is explained above under "Net interest income2001 compared with 2000 Pro Forma".

The
decreases in net commissions and other dealing revenues and in profit/(losses) on financial transactions are explained below under "Net commissions2001
compared with 2000 Pro Forma" and "Profits on financial transactions and dividends on shares2001 compared with 2000 Pro Forma", respectively.

92

---

The
increase in profits of companies carried at equity and dividends on equity investments is explained below under "Profits of companies carried at equity and dividends on
equity investments2001 compared with 2000 Pro Forma".

The
following table sets forth the principal components of the Group's net interest and other banking income for 2001, 2000 Pro Forma and 2000.

|                                                                           |  | 2001  |  | 2000
Pro Forma
(unaudited) |  | 2000 
|-------------------------------------------------------------------------- |  | ----- |  | -------------------------- |  | -----
|
|Net interest income                                                        |  | 2,788 |  | 2,874                      |  | 2,572
|Net commissions and other dealing revenues                                 |  | 2,608 |  | 2,852                      |  | 2,641
|Profits on financial transactions and dividends on shares                  |  | 274   |  | 296                        |  | 263  
|Profits of companies carried at equity and dividends on equity investments |  | 207   |  | 147                        |  | 146  
|                                                                           |  |       |  |                            |  |      
|Net interest and other banking income                                      |  | 5,877 |  | 6,169                      |  | 5,622
|                                                                           |  |       |  |                            |  |      

Net commissions and other dealing revenues2002 compared with 2001

The following table sets forth the principal components of the Group's net commission and other dealing revenues for 2002 and 2001.

|       |  |                                                                                          |  | 2002  |   | 2001  |   | 2001
Pro Forma
(unaudited) |  
|------ |  | ---------------------------------------------------------------------------------------- |  | ----- | - | ----- | - | -------------------------- | -
|
|40     |  | Commission income                                                                        |  | 3,467 |   | 3,312 |   | 3,849                      |  
|50     |  | Commission expense                                                                       |  | (671  | ) | (714  | ) | (803                       | )
|70.a)  |  | Income from sale of merchant banking activities, other income from leasing activities(1) |  | 27    |   | 17    |   | 17                         |  
|110.a) |  | Loss from merchant banking activities, other charges on the leasing activities(2)        |  | (14   | ) | (7    | ) | (7                         | )
|       |  | Net commissions and other dealing revenues                                               |  | 2,809 |   | 2,608 |   | 3,056                      |  

---

Net
commissions and other dealing revenues for the year ended December 31, 2002, amounted to €2,809 million, an increase of 7.7% compared to 2001. The
increase was due to an increase of 17.6%, or €460 million, in net commissions and other dealing revenues attributable to the Cardine Activities, offset in part by a decrease of
9.9%, or €259 million, attributable to the former Sanpaolo IMI Group (excluding the Cardine Activities).

The
results of the former Sanpaolo IMI Group (excluding the Cardine Activities) were affected by the generally negative trend in the performance of the financial markets, which adversely
affected asset management and securities brokerage revenues. In particular, commissions from asset management, securities brokerage and advisory services decreased by 15.7% to
€1,492 million in 2002 from €1,770 million in 2001. This decrease was attributable to the fall in the value of assets under

93

---

management
resulting from the negative performance of equity markets generally and a shift in customers' financial assets towards shorter term and lower risk investments, partly offset by a 9.1%
increase in fees from deposits and current accounts.

Commissions
from asset management, securities brokerage and advisory services represented approximately 59.6% of total net commissions and other dealing revenues compared to 67.9% in
2001. The ratio of net commissions and other dealing revenues to administrative costs was 60.4% for the year ended December 31, 2002, a decrease from 72.4% in 2001. The ratio of net commissions
and other dealing revenues to payroll costs decreased to 98.4% in 2002 from 117.4% in 2001.

Compared
to the Group's pro forma results for the year ended December 31, 2001, net commissions and other dealing revenues decreased by 8.1% from
€3,056 million.

Commissions
from asset management, securities brokerage and advisory services decreased by 14.5% from €1,957 million in pro forma 2001. The proportion of total net
commission and other dealing revenues represented by asset management commissions decreased from 52% in pro forma 2001 to 49.4% in 2002. Compared to pro forma 2001, fees from deposits and current
accounts increased by 13.8% to €438 million from €385 million.

The
ratios of net commissions and other dealing revenues to, respectively, administrative costs and payroll costs were 60.4% and 98.4% in 2002 compared to 65.8% and 106.8% in 2001 Pro
Forma.

Net commissions2001 compared with 2000 Pro Forma

The following table sets forth the principal components of the Group's net commission and other dealing revenues for 2001, and 2000 Pro Forma and 2000.

|       |  |                                                                                          |  | 2001  |   | 2000
Pro Forma
(unaudited) |   | 2000  |  
|------ |  | ---------------------------------------------------------------------------------------- |  | ----- | - | -------------------------- | - | ----- | -
|
|40     |  | Commission income                                                                        |  | 3,312 |   | 3,683                      |   | 3,452 |  
|50     |  | Commission expense                                                                       |  | (714  | ) | (837                       | ) | (817  | )
|70.a)  |  | Income from sale of merchant banking activities, other income from leasing activities(1) |  | 17    |   | 13                         |   | 13    |  
|110.a) |  | Loss from merchant banking activities, other charges on the leasing activities(2)        |  | (7    | ) | (7                         | ) | (7    | )
|       |  | Net commissions and other dealing revenues                                               |  | 2,608 |   | 2,852                      |   | 2,641 |  

---

Net
commissions, and other dealing revenues in 2001 amounted to €2,608 million, a decline of 8.6% compared to 2000 Pro Forma. The decrease is attributable to the
asset management and securities brokerage areas, primarily due to lower asset management fees resulting from the decrease in market value of assets and lower brokerage fees resulting from lower
trading volumes. In 2001, commission income in the asset management and securities brokerage areas decreased by 15.4% while commissions deriving from the placement of insurance products increased by
26.7% (from €86 million in 2000 Pro Forma to €109 million in 2001).

94

---

The
decrease in net commissions and other dealing revenues was mitigated by the increase in commissions from loans and guarantees which increased from
€200 million in 2001 to €233 million in 2000 Pro Forma. The increase in commissions from loans and guarantees is mainly attributable to the participation
of Sanpaolo IMI in syndicated loans.

The
ratio of net commissions to administrative costs was 72.4% for the year ended December 31, 2001, a decline from 79.8% in 2000 Pro Forma. The ratio of net commissions to
payroll costs also fell, from 126.4% in 2000 Pro Forma to 117.4% for the year ended December 31, 2001, but net commissions remained more than sufficient to cover payroll costs.

Profits on financial transactions and dividends on shares2002 compared with 2001

The following table sets forth the principal components of the Group's profits on financial transactions and dividends on shares for 2002, 2001 and 2001 Pro
Forma.

|      |  |                                                                  |  | 2002 |   | 2001 |  | 2001
Pro Forma
(unaudited)
|----- |  | ---------------------------------------------------------------- |  | ---- | - | ---- |  | --------------------------
|
|30.a) |  | Dividends and other revenues from shares and other equities      |  | 410  |   | 263  |  | 273                       
|60.a) |  | Profits (losses) on financial transactions(1)                    |  | (124 | ) | 11   |  | 27                        
|      |  |                                                                  |  |      |   |      |  |                           
|      |  | Profits (losses) on financial transactions & dividends on shares |  | 286  |   | 274  |  | 300                       
|      |  |                                                                  |  |      |   |      |  |                           

---

Profits
on financial transactions and dividends on shares in 2002 were €286 million, a 4.4% increase compared to 2001. The results were positively affected by an
increase from dividends and other revenues from shares and other equities, partially offset by losses on financial transactions. The dividends and other revenues from shares and other equities, as
well as the losses on financial transactions, reflect the brokerage activities of the Group.

Compared
to the Group's pro forma results for the year ended December 31, 2001, profits on financial transactions and dividends on shares decreased by 4.7% to
€286 million from €300 million.

Profits on financial transactions and dividends on shares2001 compared with 2000 Pro Forma

The following table sets forth the principal components of the Group's profits on financial transactions and dividends on shares for 2001, 2000 Pro Forma and
2000.

|      |  |                                                                  |  | 2001 |  | 2000
Pro Forma
(unaudited) |  | 2000
|----- |  | ---------------------------------------------------------------- |  | ---- |  | -------------------------- |  | ----
|
|30.a) |  | Dividends and other revenues from shares and other equities      |  | 263  |  | 169                        |  | 169 
|60.a) |  | Profits (losses) on financial transactions (1)                   |  | 11   |  | 127                        |  | 94  
|      |  |                                                                  |  |      |  |                            |  |     
|      |  | Profits (losses) on financial transactions & dividends on shares |  | 274  |  | 296                        |  | 263 
|      |  |                                                                  |  |      |  |                            |  |     

---

Profits
on financial transactions and dividends on shares in 2001 were €274 million, a 7.4% decrease compared to 2000 Pro Forma. The results were adversely
affected by the difficult market

95

---

conditions
in general, which had a particularly negative impact on the Group's investment banking activity.

Profits of companies carried at equity and dividends on equity investments2002 compared with 2001

The following table sets forth the principal components of the Group's profits of companies carried at equity and dividends on equity investments for 2002, 2001
and 2001 Pro Forma.

|     |  |                                                                                     |  | 2002 |  | 2001 |  | 2001
Pro Forma
(unaudited)
|---- |  | ----------------------------------------------------------------------------------- |  | ---- |  | ---- |  | --------------------------
|
|     |  | Dividends and other revenues on equity investments(1)                               |  | 155  |  | 128  |  | 146                       
|170. |  | Income (losses) from investments carried at equity                                  |  | 137  |  | 79   |  | 82                        
|     |  |                                                                                     |  |      |  |      |  |                           
|     |  | Profits (losses) of companies carried at equity and dividends on equity investments |  | 292  |  | 207  |  | 228                       
|     |  |                                                                                     |  |      |  |      |  |                           

---

Profits
from companies carried at equity and dividends from minority shareholdings were €292 million for the year ended December 31, 2002, an increase of
41.1% compared to 2001. This item consisted of:



Compared
to the Group's pro forma results for the year ended December 31, 2001, profits from companies carried at equity and dividends from minority shareholdings increased by
28.1% from €228 million.

96

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Profits of companies carried at equity and dividends on equity investments2001 compared with 2000 Pro Forma

The following table sets forth the principal components of the Group's profits of companies carried at equity and dividends on equity investments for 2001, 2000
Pro Forma and 2000.

|     |  |                                                                                     |  | 2001 |  | 2000
Pro Forma
(unaudited) |  | 2000
|---- |  | ----------------------------------------------------------------------------------- |  | ---- |  | -------------------------- |  | ----
|
|     |  | Dividends and other revenues on equity investments(1)                               |  | 128  |  | 58                         |  | 59  
|170. |  | Income (losses) from investments carried at equity                                  |  | 79   |  | 89                         |  | 87  
|     |  |                                                                                     |  |      |  |                            |  |     
|     |  | Profits (losses) of companies carried at equity and dividends on equity investments |  | 207  |  | 147                        |  | 146 
|     |  |                                                                                     |  |      |  |                            |  |     

---

Profits
from companies carried at equity and dividends on minority shareholdings were €207 million for the year ended December 31, 2001, an increase of
40.8% compared to 2000 Pro Forma. This item consisted of the following:



97

---



Operating expenses2002 compared with 2001

The following table sets forth the principal components of the Group's operating expenses for 2002, 2001 and 2001 Pro Forma.

|     |  |                                                           |  | 2002   |   | 2001   |   | 2001
Pro Forma
(unaudited) |  
|---- |  | --------------------------------------------------------- |  | ------ | - | ------ | - | -------------------------- | -
|
|80.  |  | Administrative costs                                      |  |        |   |        |   |                            |  
|80.  |  | a) payroll                                                |  | (2,856 | ) | (2,221 | ) | (2,862                     | )
|80.  |  | b) other                                                  |  | (1,792 | ) | (1,379 | ) | (1,785                     | )
|     |  | other administrative costs                                |  | (1,528 | ) | (1,180 | ) | (1,519                     | )
|     |  | other indirect taxes                                      |  | (264   | ) | (199   | ) | (266                       | )
|     |  |                                                           |  |        |   |        |   |                            |  
|     |  | Total administrative costs                                |  | (4,648 | ) | (3,600 | ) | (4,647                     | )
|70.  |  | b) other operating income(1)                              |  | 395    |   | 263    |   | 402                        |  
|110. |  | b) other operating expenses(2)                            |  | (37    | ) | (29    | ) | (49                        | )
|90.  |  | b) Adjustments to intangible and tangible fixed assets(3) |  | (510   | ) | (393   | ) | (479                       | )
|     |  |                                                           |  |        |   |        |   |                            |  
|     |  | Operating expenses                                        |  | (4,800 | ) | (3,759 | ) | (4,773                     | )
|     |  |                                                           |  |        |   |        |   |                            |  

---

Operating
expenses for the year ended December 31, 2002 were €4,800 million, an increase of 27.7% compared to 2001, primarily due to the consolidation of
Cardine's operating expenses as a result of the merger with Cardine (€1,014 million).

Payroll
costs in 2002 increased by 28.6% to €2,856 million from €2,221 million in 2001. This increase was due primarily to Cardine
Activities (€633 million).

Payroll
costs for the former Sanpaolo IMI Group (excluding the Cardine Activities) remained substantially stable. This result was obtained despite contractual pay increases resulting
from the renewal of the national collective labor agreement governing the Italian banking sector, owing to a reduction in the number of employees of the Parent Bank, including the former Banco di
Napoli (which was merged into it on December 31, 2002).

Other
administrative costs in 2002 increased by 29.5% to €1,528 million from €1,180 million in 2001, primarily due to the Cardine Activities
(€344 million). The remainder related primarily to the rationalization of the Group's corporate structure, the development and promotion of new products and certain
non-recurring costs incurred in early 2002 as a result of the introduction of euro notes and coins.

Depreciation
and amortization of tangible and intangible fixed assets in 2002 amounted to €510 million, a 29.8% increase from €393 million
in 2001. This increase was due to the Cardine Activities (€81 million), capital investments made to strengthen and specialize the Group's commercial network, and capital
investments to improve and integrate the Group's information technology systems.

98

---

Compared to the Group's pro forma results for the year ended December 31, 2001, operating expenses increased by only 0.6% from €4,773 million.

Payroll
costs in 2002 compared to pro forma 2001 decreased slightly from €2,862 million. Other administrative costs were almost unchanged from
€1,519 million in pro forma 2001. Overall, total administrative costs compared to pro forma 2001 remained virtually unchanged (€4,648 million compared to
€4,647 million), evidence of the Group's success in maintaining strict control over its administrative costs despite the impact of integration and restructuring costs resulting
from the Group's expansion in recent years.

Operating expenses2001 compared with 2000 Pro Forma

The following table sets forth the principal components of the Group's operating expenses for 2001, 2000 Pro Forma and 2000.

|     |  |                                                           |  | 2001   |   | 2000
Pro Forma
(unaudited) |   | 2000   |  
|---- |  | --------------------------------------------------------- |  | ------ | - | -------------------------- | - | ------ | -
|
|80.  |  | Administrative costs                                      |  |        |   |                            |   |        |  
|80.  |  | a) payroll                                                |  | (2,221 | ) | (2,256                     | ) | (1,929 | )
|80.  |  | b)other                                                   |  | (1,379 | ) | (1,316                     | ) | (1,147 | )
|     |  | other administrative costs                                |  | (1,180 | ) | (1,109                     | ) | (958   | )
|     |  | other indirect taxes                                      |  | (199   | ) | (207                       | ) | (189   | )
|     |  |                                                           |  |        |   |                            |   |        |  
|     |  | Total administrative costs                                |  | (3,600 | ) | (3,572                     | ) | (3,076 | )
|70.  |  | b) other operating income(1)                              |  | 263    |   | 278                        |   | 237    |  
|110. |  | b) other operating expenses(2)                            |  | (29    | ) | (31                        | ) | (24    | )
|90.  |  | b) Adjustments to intangible and tangible fixed assets(3) |  | (393   | ) | (330                       | ) | (299   | )
|     |  |                                                           |  |        |   |                            |   |        |  
|     |  | Operating expenses                                        |  | (3,759 | ) | (3,655                     | ) | (3,162 | )
|     |  |                                                           |  |        |   |                            |   |        |  

---

Payroll
costs for the year ended December 31, 2001, declined by 1.6% to €2,221 million compared to 2000 Pro Forma. This resulted from the savings achieved
by Banco di Napoli following staff reductions and the effects of spinning off the supplementary staff pension fund, as well as from a more flexible approach to remuneration which made it possible to
restrict the variable part of the payroll, in line with the decline in the Group's revenues.

Other
administrative costs, however, increased by 6.4% compared to 2000 Pro Forma, totaling €1,180 million for the year ended December 31, 2001. This
increase is primarily attributable to certain non-recurring charges incurred by the Group in the latter part of the year in connection with the development of information technology
systems, the Cardine Merger and the completion of preparations for the physical introduction of the euro notes and coins. The non-recurring charges incurred in connection with the Cardine
Merger consist primarily of items such as legal and consulting fees.

99

---

Depreciation
and amortization of tangible and intangible fixed assets in 2001 amounted to €393 million, an increase compared to 2000 Pro Forma of 19.1%, this
increase was mainly the result of the higher capital investments made to strengthen the Group's distribution channels in the second half of 2000.

Net value adjustments and provisions for loan losses and equity in earnings of unconsolidated subsidiaries and adjustments to goodwill, merger and consolidation
differences2002 compared with 2001

The
following table sets forth the principal components of the Group's net value adjustments and provisions for loan losses and equity in the earnings of unconsolidated subsidiaries, as
well as adjustments to goodwill, merger and consolidation differences, in 2002, 2001 and 2001 Pro Forma.

|       |  |                                                                                                          |  | 2002   |   | 2001 |   | 2001 Pro
Forma
(unaudited) |  
|------ |  | -------------------------------------------------------------------------------------------------------- |  | ------ | - | ---- | - | -------------------------- | -
|
|100    |  | Provisions for risks and charges                                                                         |  | (261   | ) | (136 | ) | (214                       | )
|120.   |  | Adjustments to loans and provisions for guarantees and commitments                                       |  | (889   | ) | (635 | ) | (891                       | )
|120.a) |  | Writedowns to securities considered as adjustments to loans                                              |  | (8     | ) |     |   |                           |  
|130    |  | Writebacks of adjustment to loans and provisions for guarantees and commitments                          |  | 320    |   | 278  |   | 374                        |  
|140    |  | Provisions to the reserve for possible loan losses                                                       |  | (27    | ) | (11  | ) | (23                        | )
|       |  |                                                                                                          |  |        |   |      |   |                            |  
|       |  | Adjustments to loans and provisions for guarantees and commitments, net                                  |  | (604   | ) | (368 | ) | (540                       | )
|150    |  | Adjustment to financial fixed assets                                                                     |  | (569   | ) | (235 | ) | (255                       | )
|160    |  | Writebacks of adjustment to financial fixed assets                                                       |  | 8      |   | 2    |   | 2                          |  
|       |  |                                                                                                          |  |        |   |      |   |                            |  
|       |  | Adjustment to financial fixed assets, net                                                                |  | (561   | ) | (233 | ) | (253                       | )
|       |  |                                                                                                          |  |        |   |      |   |                            |  
|       |  | Net value adjustment and provision for loan losses and equity in earnings of unconsolidated subsidiaries |  | (1,426 | ) | (737 | ) | (1,007                     | )
|90.a)  |  | Adjustments to goodwill, merger and consolidation differences(1)                                         |  | (212   | ) | (150 | ) | (172                       | )
|       |  |                                                                                                          |  |        |   |      |   |                            |  

---

Provisions
for risks and charges and net adjustments to loans and financial fixed assets for the year ended December 31, 2002, amounted to €1,426 million, a
93.5% increase from €737 million in 2001. This increase was due in part to the consolidation of Cardine's results (€291 million) with those of Sanpaolo
IMI as a result of the merger with Cardine, but also to the adverse impact of the weak economy on the Group's general credit risk profile, specific loans and the value of certain equity investments.

The
main components of the €1,426 million total were as follows:



100

---



Amortization
of goodwill and positive differences arising on consolidation and on application of the equity method amounted to €212 million in 2002, a 41.3%
increase from €150 million in 2001. The increase is primarily due to the extraordinary adjustment to goodwill relating to Banca Fideuram's French subsidiary, Fideuram Wargny,
for a total of €45 million, to reflect the negative performance of financial markets and a more prudent valuation of Fideuram Wargny's financial prospects.

Compared
to the Group's pro forma results for the year ended December 31, 2001, provisions for risks and charges and net adjustments to loans and financial fixed assets increased
by 41.6% from €1,007 million; and amortization of goodwill and positive differences arising on consolidation and on application of the equity method increased by 23.3% from
€172 million.

101

---



The following table sets forth the principal components of the Group's net value adjustments and provisions for loan losses and equity in the earnings of
unconsolidated subsidiaries, as well as adjustments to goodwill, merger and consolidation differences, for 2001, 2000 Pro Forma and 2000.

|      |  |                                                                                                          |  | 2001 |   | 2000 Pro Forma
(unaudited) |   | 2000 |  
|----- |  | -------------------------------------------------------------------------------------------------------- |  | ---- | - | -------------------------- | - | ---- | -
|
|100   |  | Provisions for risks and charges                                                                         |  | (136 | ) | (346                       | ) | (323 | )
|120   |  | Adjustments to loans and provisions for guarantees and commitments                                       |  | (636 | ) | (693                       | ) | (647 | )
|130   |  | Writebacks of adjustment to loans and provisions for guarantees and commitments                          |  | 278  |   | 429                        |   | 417  |  
|140   |  | Provisions to the reserve for possible loan losses                                                       |  | (11  | ) | (8                         | ) | (8   | )
|      |  |                                                                                                          |  |      |   |                            |   |      |  
|      |  | Adjustments to loans and provisions for guarantees and commitments, net                                  |  | (368 | ) | (272                       | ) | (238 | )
|150   |  | Adjustment to financial fixed assets                                                                     |  | (235 | ) | (36                        | ) | (35  | )
|160   |  | Writebacks of adjustment to financial fixed assets                                                       |  | 2    |   | 15                         |   | 15   |  
|      |  |                                                                                                          |  |      |   |                            |   |      |  
|      |  | Adjustment to financial fixed assets, net                                                                |  | (233 | ) | (21                        | ) | (20  | )
|      |  |                                                                                                          |  |      |   |                            |   |      |  
|      |  | Net value adjustment and provision for loan losses and equity in earnings of unconsolidated subsidiaries |  | (737 | ) | (639                       | ) | (581 | )
|90.a) |  | Adjustments to goodwill, merger and consolidation differences(1)                                         |  | (150 | ) | (176                       | ) | (90  | )
|      |  |                                                                                                          |  |      |   |                            |   |      |  

---

Provisions
for risks and charges and net adjustments to loans and financial fixed assets for the year ended December 31, 2001 amounted to €737 million, a
15.3% increase compared to €639 million in 2000 Pro Forma.

The
adjustments made in 2001 reflect the higher general provisions for lending risks that were made for prudential reasons. These provisions increased to
€368 million from €272 million in 2000 Pro Forma, as a result of the deterioration in general economic conditions, and were designed to:



Adjustments
to financial fixed assets in 2001 were €235 million, an increase of 553% compared to €36 million in 2000 Pro Forma. These
adjustments reflected primarily the write-down of the Group's equity investments; the largest adjustments related to holdings in Santander Central Hispano
(€80 million), Fiat (€72 million), Olivetti S.p.A. (€19 million) and Hutchinson 3G S.p.A. (€19 million).

Amortization
of goodwill and positive differences arising on consolidation and on application of the equity method amounted to €150 million, a decrease of 14.8%
compared to 2000 Pro Forma.

102

---



The following table sets forth the principal components of the Group's extraordinary income for 2002, 2001 and 2001 Pro Forma:

2002

2001

2001 Pro Forma (unaudited)(in millions of €)190.

Extraordinary income

575

660

702200.b)

Reclassified extraordinary expenses(1)

(279
)
(269
)
(288
)Net extraordinary income

296

391

414


---

Net
extraordinary income for the year ended December 31, 2002 was €296 million, a decrease of 24.3% from €391 million in 2001.

Net
extraordinary income in 2002 included:



An
extraordinary expense of €96 million was incurred in connection with the sale of derivative products related to the sale of the Group's equity stake in Banca
Agricola Mantovana.



The following table sets forth the principal components of the Group's extraordinary income for 2001, 2000 Pro Forma and 2000:

2001

2000 Restated (unaudited)

2000(in millions of €)190.

Extraordinary income

660

470

451200.

Extraordinary expenses

(269
)
(68
)
(55
)Net extraordinary income

391

402

396


Net
extraordinary income for the year ended December 31, 2001 was €391 million, a 2.7% decline compared to €402 million in 2000 Pro
Forma. Extraordinary income for 2001 included:



103

---



Extraordinary
expenses included €114 million in provisions made by Banco di Napoli for risks and charges that could arise in connection with its supplementary
staff pensions and €31 million of severance bonus incentives for voluntary redundancies. For further details concerning the €114 million Banco di Napoli
provision.



The following table sets forth the minority interest in income of consolidated subsidiaries for 2002 and 2001:

2002

2001

2001 Pro Forma (unaudited)(in millions of €)250.

Minority interests

(43
)
(101
)
(106
)


Minority
interests related to consolidated subsidiaries were €43 million in 2002 compared to €101 million in 2001, primarily due to the
lower net income attributable to minority shareholders and the purchase of Banco di Napoli savings shares.



The following table sets forth the minority interest in income of consolidated subsidiaries for 2001, 2000 Pro Forma and 2000:

2001

2000 Pro Forma (unaudited)

2000(in millions of €)250.

Minority interests

(101
)
(102
)
(94
)


Minority
interests related to consolidated subsidiaries were €101 million in 2001 compared to €102 million in 2000 Pro Forma, primarily due
to the stability of net income attributable to minority shareholders of NHS and Banca Fideuram.



The following table sets forth the principal components of the Group's income taxes for 2002 and 2001:

2002

2001

2001 Pro Forma (unaudited)(in millions of €)240.

Income taxes

(450
)
(318
)
(517
)


For
the year ended December 31, 2002, the Group's effective tax rate was 44.2%, a significant increase compared to the effective rate of 19.6% in 2001. The effective rate in 2001
had benefited from:



104

---



Consequently,
management believes that the 2001 tax rate of Sanpaolo IMI was lower than normal, and that the 2002 tax rate reflects a normal level of taxation in Italy.



The following table sets forth the principal components of the Group's income taxes for 2001, 2000 Pro Forma and 2000:

2001

2000 Pro Forma (unaudited)

2000(in millions of €)240.

Income taxes

(318
)
(770
)
(785
)


Income
taxes have been calculated in accordance with Italian tax legislation. See Note 18 to the Consolidated Financial Statements.

The
Group's effective tax rate for the year ended December 31, 2001 was 19.6%, a significant decrease compared to the effective rate of 36.6% Pro Forma in 2000. This was largely
due to:



In
line with past practice, the calculation of the taxes for the year ended December 31, 2001, disregarded the tax benefits granted by the Ciampi Law for the merger of San Paolo
and IMI and for the acquisition of Banco di Napoli. Such benefits were disregarded because of the EU ruling that considered Ciampi Law, as state aid in violation of applicable EU regulations.



The following table sets forth the Group's net income for 2002 and 2001:

2002

2001

2001 Pro
Forma
(unaudited)(in millions of €)Net Income

889

1,203

1,376


In
2002 Sanpaolo IMI's board of directors decided to utilize €364 million of the Group's reserves for general banking risks. This decision was also made to take
full advantage of a tax credit that had accrued to Sanpaolo IMI. As a result of this write-back, net income for the year ended December 31, 2002, amounted to
€889 million, a decrease of 26.1% compared to the year ended December 31, 2001. Without the write-back, net income for 2002 would have been
€525 million, a decrease of 56.4% compared to 2001.

105

---



The following table sets forth the Group's net income for 2001, 2000 Pro Forma and 2000:

2001

2000 Pro Forma
(unaudited)

2000(in millions of €)Net Income

1,203

1,231

1,292


Net
income was €1,203 million in 2001 compared to €1,231 million in 2000 Pro Forma, a decrease of 2.3%. The decrease was due to the
individual factors described above.

Significant Reconciling Differences Between Italian GAAP and U.S. GAAP

The Consolidated Financial Statements of the Group are prepared in accordance with Italian GAAP which varies in certain significant respects to U.S. GAAP.

While
under Italian GAAP the Group recorded net income of €889 million, €1,203 million and €1,292 million for the
years ended December 31, 2002, 2001 and 2000, respectively, under U.S. GAAP the Group recorded a net loss of €1,120 million for the year ended December 31, 2002
and net income of €571 million and €1,003 million for the years ended December 31, 2001 and 2000, respectively. This section discusses the
significant reconciling differences between Italian GAAP and U.S. GAAP which had a material effect on the U.S. GAAP reconciliation of the Group. For other significant reconciling differences see
Note 32 to the Consolidated Financial Statements.



Under Italian GAAP, business combinations involving the exchange of stock are usually accounted for using a method similar to the "pooling of interest" method as
applied under U.S. GAAP. The difference between the "pooling of interest" method, as applied by Italian GAAP, and the "pooling of
interests" method as it used to be recognized under U.S. GAAP, is that under Italian GAAP the consolidation of the merged entity is accounted for at the beginning of the year in which the business
combination occurred. Under U.S. GAAP, business combinations are accounted for using the purchase method. The different methods lead to a different valuation of the acquired assets and liabilities,
and to different amounts of goodwill and other intangible and tangible assets being recognized. The differences are as follows:



106

---



Under Italian GAAP, the Group maintains a reserve to cover general business risks that forms part of shareholders' equity in compliance with international
supervisory standards and Bank of Italy instructions. Changes to this reserve are reflected in the income statement. Net income for 2002 includes a credit of €364 million in
relation to the release of the reserve to cover the negative impact on net income of devaluing certain listed equity investments and also to take full advantage of a tax credit that would have
expired. Under U.S. GAAP, general provisions for potential losses are not allowed and, consequently, the entire amount of the reserve recorded for the year was subject to a reverse entry. Under U.S.
GAAP, the adjustment to net income was €1 million and €(2) million for the years ended December 31, 2001 and 2000, respectively.



Under Italian GAAP certain voluntary employees termination costs are recorded on the basis of the estimated potential liability the company will incur. Under U.S.
GAAP the expenses related to voluntary termination plans are recorded when the employees accept the offer. The timing difference in recognition of provisions has resulted in an adjustment to net
income of €(74) million for the year ended December 31, 2002 reflecting recognition of the costs of these plans at a later time under U.S. GAAP. The adjustment to net income was
€(77) million for the year ended December 31, 2001. There was no adjustment for the year ended December 31, 2000.



Under Italian GAAP, acquisition costs for new life insurance contracts are expensed as incurred by the Group's life insurance companies, whereas under U.S. GAAP
are deferred and amortized over the useful life of the contracts. Furthermore, there are differences in the calculation of the unearned revenue liability and expense reserve adjustments. These
differences resulted in an adjustment to net income of €(123) million, €(55) million and €(21) million for the years ended December 31,
2002, 2001 and 2000, respectively.



The tax effects of certain applicable reconciliation items described above are included in the total difference in income taxes between Italian GAAP and U.S.
GAAP. The tax effects of the individual items are calculated by multiplying the relevant reconciliation items by the effective tax rates of the tax jurisdictions in which the entities with the
reconciling items reside. These tax effects will reverse in future years as the related reconciliation items reverse the impact on net income as described in previous paragraphs.

Explanatory Notes to the 2001 Pro Forma

The 2001 Pro Forma assumes the consolidation of the Cardine group from January 1, 2001. The 2001 Pro Forma also assumes the proportional consolidation of
Banka Koper from January 1, 2001.

107

---

The
proportional consolidation of Banka Koper was first reflected in the Group's consolidated financial statements from March 31, 2001.

The
preparation of the 2001 Pro Forma is based on the consolidated 2001 financial statements of the Sanpaolo IMI Group, which is reconciled to the audited consolidated 2001 financial
statements (column "a" of the following tables) and of the Cardine group (column "b" of the following tables).

The
figures of the Cardine group for the first three quarters of 2001 have been adjusted in accordance with criteria which are consistent with those used by the Sanpaolo IMI Group for
the year-end financial statements with regard to the effects of the Ciampi Law. See "Item 4.Business OverviewItalian Banking
RegulationsOverview". Taxes have been restated without taking account of the incentive provided by the Ciampi Law and further provisions have been made to neutralize the prior benefits
provided by the Ciampi Law. Furthermore, the figures for the Cardine group have been adjusted to take into account the elimination of the extraordinary component, net of the related tax effect, as a
result of the change of valuation principles of the securities trading portfolio made in 2001 and attributable on an accrual basis to 2000.

To
prepare the 2001 Pro Forma, the following adjustments were made:



108

---



2001 Pro Forma: Statement of reclassified consolidated statement of income for the year ended December 31, 2002 (unaudited)

|                                                                          |                                     | Sanpaolo
IMI Group
(a) |        | Cardine
group
(b) |      | Sanpaolo
IMI
acquisition of
own Shares
(c) |      | Effects of
the Cardine Merger
(d) |      | Other
adjustments
(e) |     | Banka Koper pro forma contribution
(f) |     | Sanpaolo IMI Group 2001 Pro Forma
(unaudited)
(g)=(a+b+c+d+e+f) |       
|------------------------------------------------------------------------- | ----------------------------------- | ---------------------- | ------ | ----------------- | ---- | ------------------------------------------ | ---- | --------------------------------- | ---- | --------------------- | --- | -------------------------------------- | --- | --------------------------------------------------------------- | ------
|
|Net interest income                                                       |                                     | 2,788                  |        | 1,186             |      | (22                                        | )(3) |                                  |      |                      |     | 7                                      |     | 3,959                                                           |       
|Net commissions and other net dealing revenues                            |                                     | 2,608                  |        | 439               |      |                                           |      |                                  |      |                      |     | 9                                      |     | 3,056                                                           |       
|Profits and losses from financial transactions and dividends on shares    |                                     | 274                    |        | 25                |      |                                           |      |                                  |      |                      |     | 1                                      |     | 300                                                             |       
|Profits from companies carried at equity and dividends from shareholdings |                                     | 207                    |        | 21                |      |                                           |      |                                  |      |                      |     |                                       |     | 228                                                             |       
|Net interest and other banking income                                     |                                     | 5,877                  |        | 1,671             |      | (22                                        | )    |                                  |      |                      |     | 17                                     |     | 7,543                                                           |       
|Administrative costs                                                      |                                     | (3,600                 | )      | (1,029            | )    |                                           |      |                                  |      |                      |     | (18                                    | )   | (4,647                                                          | )     
|                                                                          | personnel                          |                        | (2,221 | )                 | (630 | )                                          |     |                                   |     |                       |    |                                        | (11 | )                                                               | (2,862
|                                                                          | other
    administrative
    costs |                        | (1,180 | )                 | (332 | )                                          |     |                                   |     |                       |    |                                        | (7  | )                                                               | (1,519
|                                                                          | indirect duties
    and taxes      |                        | (199   | )                 | (67  | )                                          |     |                                   |     |                       |    |                                        |    |                                                                 | (266  
|Other operating income, net                                               |                                     | 234                    |        | 107               |      |                                           |      |                                  |      |                      |     | 12                                     |     | 353                                                             |       
|Adjustments to tangible and intangible fixed assets                       |                                     | (393                   | )      | (83               | )    |                                           |      |                                  |      |                      |     | (3                                     | )   | (479                                                            | )     
|Operating income                                                          |                                     | 2,118                  |        | 666               |      | (22                                        | )    |                                  |      |                      |     | 8                                      |     | 2,770                                                           |       
|Adjustments to goodwill and merger and consolidation differences          |                                     | (150                   | )      | (28               | )    |                                           |      | (4                                | )(4) | 18                    | (5) | (8                                     | )   | (172                                                            | )     
|Provisions and net adjustments to loans and financial fixed assets        |                                     | (737                   | )      | (263              | )    |                                           |      |                                  |      |                      |     | (7                                     | )   | (1,007                                                          | )     
|Income before extraordinary items                                         |                                     | 1,231                  |        | 375               |      | (22                                        | )    | (4                                | )    | 18                    |     | (7                                     | )   | 1,591                                                           |       
|Net extraordinary income                                                  |                                     | 392                    |        | 22                | (1)  |                                           |      |                                  |      |                      |     |                                       |     | 414                                                             |       
|Income before taxes                                                       |                                     | 1,623                  |        | 397               |      | (22                                        | )    | (4                                | )    | 18                    |     | (7                                     | )   | 2,005                                                           |       
|Income taxes for the period                                               |                                     | (318                   | )      | (209              | )(2) | 9                                          | (3)  |                                  |      |                      |     | 1                                      |     | (517                                                            | )     
|Change in reserve for general banking risks                               |                                     | (1                     | )      | (5                | )    |                                           |      |                                  |      |                      |     |                                       |     | (6                                                              | )     
|Income attributable to minority interests                                 |                                     | (101                   | )      | (5                | )    |                                           |      |                                  |      |                      |     |                                       |     | (106                                                            | )     
|Net income                                                                |                                     | 1,203                  |        | 178               |      | (13                                        | )    | (4                                | )    | 18                    |     | (6                                     | )   | 1,376                                                           |       

---

109

---

2001 Pro Forma: Statement of reclassified consolidated balance sheet as of December 31, 2001 (unaudited)

|                                                                             |                                                 | Sanpaolo
IMI Group
(a) |         | Cardine
group
(b) |        | Sanpaolo IMI acquisition of own Shares
(c) |     | Proper
merger
effects
(d) |      | Other
adjustments
(e) |            | Banka Koper pro forma
contribution
(f) |     | Sanpaolo IMI Group pro forma
(unaudited)
(g)=(a+b+c+d+e+f)
|---------------------------------------------------------------------------- | ----------------------------------------------- | ---------------------- | ------- | ----------------- | ------ | ------------------------------------------ | --- | ------------------------- | ---- | --------------------- | ---------- | -------------------------------------- | --- | ----------------------------------------------------------
|
|Assets                                                                       |                                                 |                        |         |                   |        |                                            |     |                           |      |                       |            |                                        |     |                                                           
|Cash and deposits with central banks and post offices                        |                                                 | 818                    |         | 331               |        |                                           |     |                          |      |                      |            | 23                                     |     | 1,172                                                     
|Loans                                                                        |                                                 | 118,627                |         | 32,686            |        |                                           |     |                          |      | (397                  | )          | 430                                    |     | 151,346                                                   
|                                                                             | due from banks                                 |                        | 21,571  |                   | 5,053  |                                            |    |                           |     |                       | (282       | )(2)                                   | 94  |                                                           
|                                                                             | loans to customers                             |                        | 97,056  |                   | 27,633 |                                            |    |                           |     |                       | (115       | )(2)(3)                                | 336 |                                                           
|Dealing securities                                                           |                                                 | 18,819                 |         | 5,561             |        |                                           |     |                          |      |                      |            | 177                                    |     | 24,557                                                    
|Fixed assets                                                                 |                                                 | 10,098                 |         | 1,932             |        |                                           |     | (105                      | )    | (36                   | )          |                                       |     | 11,889                                                    
|                                                                             | investment
    securities                      |                        | 3,308   |                   | 714    |                                            |    |                           |     |                       | (36        | )(4)                                   |    |                                                           
|                                                                             | equity investments                             |                        | 4,697   |                   | 327    |                                            |    |                           | (105 | )(1)                  |           |                                        | (21 | )                                                         
|                                                                             | intangible fixed
    assets                    |                        | 367     |                   | 75     |                                            |    |                           |     |                       |           |                                        | 2   |                                                           
|                                                                             | tangible fixed
    assets                      |                        | 1,726   |                   | 816    |                                            |    |                           |     |                       |           |                                        | 19  |                                                           
|Differences arising on consolidation and on application of the equity method |                                                 | 1,053                  |         | 212               |        |                                           |     | 38                        | (1)  | (132                  | )(5)       | 72                                     |     | 1,243                                                     
|Other assets                                                                 |                                                 | 20,776                 |         | 2,334             |        |                                           |     |                          |      | 48                    | (3)(4)     | 62                                     |     | 23,220                                                    
|                                                                             |                                                 |                        |         |                   |        |                                            |     |                           |      |                       |            |                                        |     |                                                           
|Total assets                                                                 |                                                 | 170,191                |         | 43,056            |        |                                           |     | (67                       | )    | (517                  | )          | 764                                    |     | 213,427                                                   
|                                                                             |                                                 |                        |         |                   |        |                                            |     |                           |      |                       |            |                                        |     |                                                           
|Liabilities                                                                  |                                                 |                        |         |                   |        |                                            |     |                           |      |                       |            |                                        |     |                                                           
|Payables                                                                     |                                                 | 134,706                |         | 35,717            |        | 445                                        |     |                          |      | (303                  | )          | 720                                    |     | 171,285                                                   
|                                                                             | due to banks                                   |                        | 27,922  |                   | 8,834  |                                            |    |                           |     |                       | (303       | )(2)                                   | 29  |                                                           
|                                                                             | due to customers
    and securities
    issued |                        | 106,784 |                   | 26,883 |                                            | 445 |                           |     |                       |           |                                        | 691 |                                                           
|Provisions                                                                   |                                                 | 3,246                  |         | 1,024             |        | (9                                         | )   |                          |      |                      |            | 17                                     |     | 4,278                                                     
|                                                                             | for taxation                                   |                        | 901     |                   | 326    |                                            | (9  | )                         |     |                       |           |                                        | 1   |                                                           
|                                                                             | for termination
    indemnities                |                        | 734     |                   | 221    |                                            |    |                           |     |                       |           |                                        |    |                                                           
|                                                                             | for risks and
    charges                      |                        | 1,568   |                   | 177    |                                            |    |                           |     |                       |           |                                        | 16  |                                                           
|                                                                             | for pensions and
    similar                   |                        | 43      |                   | 300    |                                            |    |                           |     |                       |           |                                        |    |                                                           
|Other liabilities                                                            |                                                 | 17,752                 |         | 2,502             |        | 22                                         |     |                          |      |                      |            | 33                                     |     | 20,309                                                    
|Subordinated liabilities                                                     |                                                 | 5,607                  |         | 222               |        |                                           |     |                          |      |                      |            |                                       |     | 5,829                                                     
|Minority interests                                                           |                                                 | 698                    |         | 95                |        |                                           |     |                          |      |                      |            |                                       |     | 793                                                       
|Shareholders' equity                                                         |                                                 | 8,182                  |         | 3,496             |        | (458                                       | )   | (67                       | )(1) | (214                  | )(3)(4)(5) | (6                                     | )   | 10,933                                                    
|                                                                             |                                                 |                        |         |                   |        |                                            |     |                           |      |                       |            |                                        |     |                                                           
|Total liabilities                                                            |                                                 | 170,191                |         | 43,056            |        |                                           |     | (67                       | )    | (517                  | )          | 764                                    |     | 213,427                                                   
|                                                                             |                                                 |                        |         |                   |        |                                            |     |                           |      |                       |            |                                        |     |                                                           

---

110

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Explanatory Notes to the 2000 Pro Forma

The 2000 Pro Forma assumes that Banco di Napoli and the Wargny Group were acquired and fully consolidated from January 1, 2000, rather than from
July 1, 2000 for Banco di Napoli and from November 30, 2000 for Wargny.

The
2000 Pro Forma relates solely to the statement of income for 2000 and not to the balance sheet because, as of December 31, 2000, Banco di Napoli and the Wargny Group were
already fully consolidated.

The
2000 Pro Forma reclassified consolidated statement of income is based on the reclassified consolidated statement of income for the year ended December 31, 2000, of:



The
Banco di Napoli and Wargny Group accounts have been restated using the same accounting principles as Sanpaolo IMI.

In
order to reflect the consolidation of Banco di Napoli and Wargny the following adjustments were made:



111

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2000 Pro Forma reclassified consolidated statement of income (unaudited)

|                                                                          |                             | Sanpaolo
IMI Group |        | Sanpaolo
IMI Group
restated
(1)
(A) |        | Banco di
Napoli
(B) |      | Wargny
group
(C) |     | Effect of
consolidating
the companies
belonging to the
Banco di Napoli
group and of
the adjustments
to shareholders'
equity
(D) |     | Pro forma
adjustments
(E) |      | Sanpaolo
IMI Group
pro forma
(unaudited)
(F)=(A+B+C+D+E) |       
|------------------------------------------------------------------------- | --------------------------- | ------------------ | ------ | ----------------------------------- | ------ | ------------------- | ---- | ---------------- | --- | ------------------------------------------------------------------------------------------------------------------------------- | --- | ------------------------- | ---- | -------------------------------------------------------- | ------
|
|Net Interest Income                                                       |                             | 2,572              |        | 2,168                               |        | 788                 |      |                 |     | 3                                                                                                                               |     | (85                       | )(2) | 2,874                                                    |       
|Net commissions and other net dealing revenues                            |                             | 2,641              |        | 2,469                               |        | 312                 |      | 48               |     | 23                                                                                                                              |     |                          |      | 2,852                                                    |       
|Profits/(losses) from financial transactions and dividends on shares      |                             | 263                |        | 255                                 |        | 31                  |      | 5                |     | 5                                                                                                                               |     |                          |      | 296                                                      |       
|Profits from companies carried at equity and dividends from shareholdings |                             | 146                |        | 159                                 |        | 8                   |      |                 |     | (3                                                                                                                              | )   | (17                       | )(3) | 147                                                      |       
|Net interest and other banking income                                     |                             | 5,622              |        | 5,051                               |        | 1,139               |      | 53               |     | 28                                                                                                                              |     | (102                      | )    | 6,169                                                    |       
|Administrative costs                                                      |                             | (3,076             | )      | (2,652                              | )      | (854                | )    | (44              | )   | (22                                                                                                                             | )   |                          |      | (3,572                                                   | )     
|                                                                          | -payroll                    |                    | (1,929 | )                                   | (1,620 | )                   | (594 | )                | (22 | )                                                                                                                               | (20 | )                         |     |                                                          | (2,256
|                                                                          | -other administrative costs |                    | (958   | )                                   | (859   | )                   | (226 | )                | (22 | )                                                                                                                               | (2  | )                         |     |                                                          | (1,109
|                                                                          | -indirect duties and taxes  |                    | (189   | )                                   | (173   | )                   | (34  | )                |    |                                                                                                                                 |    |                           |     |                                                          | (207  
|Other operating income, net                                               |                             | 213                |        | 187                                 |        | 56                  |      |                 |     | 4                                                                                                                               |     |                          |      | 247                                                      |       
|Adjustments to tangible and intangible fixed assets                       |                             | (299               | )      | (237                                | )      | (90                 | )    | (1               | )   | (2                                                                                                                              | )   |                          |      | (330                                                     | )     
|Operating income                                                          |                             | 2,460              |        | 2,349                               |        | 251                 |      | 8                |     | 8                                                                                                                               |     | (102                      | )    | 2,514                                                    |       
|Adjustments to goodwill and merger and consolidation differences          |                             | (90                | )      | (89                                 | )      |                    |      | (8               | )   | (1                                                                                                                              | )   | (78                       | )(4) | (176                                                     | )     
|Provisions and net adjustments to loans and financial fixed assets        |                             | (581               | )      | (454                                | )      | (373                | )    | 1                |     | 187                                                                                                                             |     |                          |      | (639                                                     | )     
|Income before extraordinary items                                         |                             | 1,789              |        | 1,806                               |        | (122                | )    | 1                |     | 194                                                                                                                             |     | (180                      | )    | 1,699                                                    |       
|Net extraordinary income                                                  |                             | 396                |        | 369                                 |        | (398                | )    | 1                |     | 430                                                                                                                             |     |                          |      | 402                                                      |       
|Income before taxes                                                       |                             | 2,185              |        | 2,175                               |        | (520                | )    | 2                |     | 624                                                                                                                             |     | (180                      | )    | 2,101                                                    |       
|Income taxes for the period                                               |                             | (785               | )      | (795                                | )      | 245                 |      | (2               | )   | (255                                                                                                                            | )   | 37(5                      | )    | (770                                                     | )     
|Change in reserve for general banking risks                               |                             | 2                  |        | 2                                   |        | 367                 |      |                 |     | (367                                                                                                                            | )   |                          |      | 2                                                        |       
|(Income)/Loss attributable to minority interests                          |                             | (94                | )      | (90                                 | )      |                    |      | (2               | )   | (10                                                                                                                             | )   |                          |      | (102                                                     | )     
|Reversal of second half income Banco di Napoli group                      |                             | (16                | )      |                                     |        |                     |      |                  |     |                                                                                                                                 |     |                           |      |                                                          |       
|Pro forma net income                                                      |                             | 1,292              |        | 1,292                               |        | 92                  |      | (2               | )   | (8                                                                                                                              | )   | (143                      | )    | 1,231                                                    |       

---

112

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B. Liquidity and Capital Resources

Liquidity

See table in "Item 3. Key InformationSelected Statistical InformationFunding Sources".

The
following table sets forth the principal sources of funding for the Group by geographical distribution.

|      |  | 12/31/02                     |  | 12/31/01 |  |       
|----- |  | ---------------------------- |  | -------- |  | ------
|
|1.    |  | Principal sources of funding |  |          |  |       
|      |  | 1.1 due to banks             |  | 5,989    |  | 9,509 
|      |  | 1.2 due to customers         |  | 72,667   |  | 8,318 
|      |  | 1.3 securities issued        |  | 36,872   |  | 10,923
|      |  | 1.4 other accounts           |  | 4,937    |  | 884   
|      |  |                              |  |          |  |       
|Total |  | 120,465                      |  | 29,634   |  | 18,019
|      |  |                              |  |          |  |       
|2.    |  | Guarantees and commitments   |  | 31,109   |  | 8,195 

113

---

For Sanpaolo IMI, as a financial institution, sources of funding and certain off-balance-sheet transactions are the principal
components of its obligations and future commitments to make future payments under contracts.

The
majority of the funding is short-term: demand deposits make up approximately 40%, demand and short-term funding (up to three months' maturity) together make
up approximately 60%, while the balance is composed of fixed-and floating-rate funding including subordinated debt. The following table, which sets forth, as of December 31, 2002,
the principal components of Sanpaolo IMI's sources of funding and off-balance-sheet transactions by residual maturity, provides information of when those obligations and future commitments
will fall due.

|                               |                          | Specified maturity (as of December 31, 2002)
|------------------------------ | ------------------------ | --------------------------------------------
|
|
|1. Sources of funding          |                          |                                             
|1.1 due to banks               |                          | 3,036                                       
|1.2 due to customers           |                          | 61,357                                      
|1.3 securities issued:         |                          |                                             
|                               | bonds                   |                                             
|                               | certificates of deposit |                                             
|                               | other securities        |                                             
|1.4 subordinates liabilities   |                          |                                            
|                               |                          |                                             
|Total funding                  |                          | 67,241                                      
|                               |                          |                                             
|Off-balance sheet transactions |                          | 18,523                                      

In the course of 2002, Sanpaolo IMI made substantial investments to develop its business. To ensure the maintenance of solvency ratios appropriate
to the business, Sanpaolo IMI issued subordinated debt for a total of €1,001 million.

114

---

The
following table analyzes the subordinated debt issued by Sanpaolo IMI by currency and maturity.

|Loans                                         |  | Book value
as of
12/31/02 |  | Original
currency |  | Interest
rate |      | Issue date |  | Maturity
date |   | Book value
as of
12/31/01
|--------------------------------------------- |  | ------------------------- |  | ----------------- |  | ------------- | ---- | ---------- |  | ------------- | - | -------------------------
|
|Preferred Securities in Euro                  |  | 1,000                     |  | 1,000             |  | 8.126         | %(a) | 11/10/00   |  | (b            | ) | 1,000                    
|Total innovative capital instruments (Tier 1) |  | 1,000                     |  |                   |  |               |      |            |  |               |   | 1,000                    
|Notes in US dollars                           |  | 158                       |  | 165               |  | floating      |      | 07/12/93   |  | 07/30/03      |   | 188                      
|Notes in US dollars                           |  | 85                        |  | 89                |  | floating      |      | 09/24/93   |  | 09/24/03      |   | 101                      
|Notes in US dollars                           |  | 90                        |  | 94                |  | floating      |      | 11/30/93   |  | 11/30/05      |   | 107                      
|Notes in Canadian dollars                     |  | 91                        |  | 151               |  | floating      |      | 11/10/93   |  | 11/10/03      |   | 107                      
|Notes in Euro                                 |  | 356                       |  | 362               |  | floating      |      | 06/30/94   |  | 06/30/04      |   | 356                      
|Notes in Euro                                 |  |                          |  |                  |  | floating      |      | 12/30/96   |  | 01/20/02      |   | 27                       
|Subordinated loan in Italian lire             |  | 13                        |  | 25,000            |  | 5.10          | %    | 06/01/98   |  | 06/01/03      |   | 26                       
|Subordinated loan in Italian lire             |  | 31                        |  | 60,000            |  | 5.30          | %    | 01/01/98   |  | 01/01/03      |   | 62                       
|Subordinated loan in Italian lire             |  | 29                        |  | 56,000            |  | floating      |      | 02/01/98   |  | 02/01/03      |   | 57                       
|Subordinated loan in Euro                     |  | 500                       |  | 500               |  | 6.38          | %    | 04/06/00   |  | 04/06/10      |   | 500                      
|Subordinated loan in Euro                     |  | 350                       |  | 350               |  | floating      |      | 04/06/00   |  | 04/06/10      |   | 350                      
|Subordinated loan in Euro                     |  | 997                       |  | 1,000             |  | floating      |      | 09/27/00   |  | 09/27/10      |   | 1,000                    
|Subordinated loan in Euro                     |  | 300                       |  | 300               |  | 5.55          | %    | 07/31/01   |  | 07/31/08      |   | 300                      
|Subordinated loan in Euro                     |  | 191                       |  | 200               |  | 5.16          | %    | 10/02/01   |  | 10/02/08      |   | 200                      
|Subordinated loan in Euro                     |  | 499                       |  | 500               |  | floating      |      | 06/28/02   |  | 06/28/12      |   |                         
|Subordinated loan in Euro                     |  | 53                        |  | 54                |  | 4.90          | %(c) | 07/15/02   |  | 07/15/12      |   |                         
|Subordinated loan in Euro                     |  | 147                       |  | 147               |  | 4.32          | %(d) | 12/04/02   |  | 12/04/12      |   |                         
|Subordinated loan in Euro                     |  | 297                       |  | 300               |  | 5.38          | %    | 12/13/02   |  | 12/13/12      |   |                         
|Subordinated loan in US dollars               |  | 95                        |  | 100               |  | floating      |      | 09/15/93   |  | 09/15/03      |   | 113                      
|Notes in Euro                                 |  | 148                       |  | 150               |  | 5.75          | %    | 09/15/99   |  | 09/15/09      |   | 146                      
|Notes in Italian lire                         |  | 12                        |  | 25,635            |  | floating      |      | 10/15/93   |  | 10/15/03      |   | 25                       
|Notes in Italian lire                         |  | 6                         |  | 12,650            |  | floating      |      | 06/15/93   |  | 06/15/03      |   | 17                       
|Subordinated loan in Italian lire             |  | 209                       |  | 404,115           |  | floating      |      | 06/30/97   |  | 08/01/04      |   |                         
|Subordinated loan in Euro                     |  | 199                       |  | 200               |  | floating      |      | 10/01/99   |  | 10/01/09      |   | 200                      
|Subordinated loan in Euro                     |  | 150                       |  | 150               |  | floating      |      | 10/12/99   |  | 10/12/09      |   | 106                      
|Subordinated loan in Euro                     |  | 8                         |  | 8                 |  | floating      |      | 12/22/00   |  | 12/22/10      |   | 8                        
|Subordinated loan in Euro                     |  | 9                         |  | 12                |  | 1.00          | %    | 04/27/01   |  | 04/27/06      |   |                         
|Subordinated loan in Euro                     |  | 1                         |  | 1                 |  | floating      |      | 09/20/01   |  | 09/20/06      |   | 1                        
|                                              |  |                           |  |                   |  |               |      |            |  |               |   |                          
|Total subordinated liabilities (Tier 2)       |  | 5,024                     |  |                   |  |               |      |            |  |               |   | 3,997                    
|Subordinated loan in Euro                     |  | 440                       |  | 466               |  | 5.55          |      | 10/03/00   |  | 04/03/03      |   | 460                      
|Subordinated loan in Euro                     |  | 149                       |  | 150               |  | floating      |      | 11/06/00   |  | 05/06/03      |   | 150                      
|                                              |  |                           |  |                   |  |               |      |            |  |               |   |                          
|Total subordinated liabilities (Tier 3)       |  | 589                       |  |                   |  |               |      |            |  |               |   | 610                      
|Total                                         |  | 6,613                     |  |                   |  |               |      |            |  |               |   | 5,607                    
|                                              |  |                           |  |                   |  |               |      |            |  |               |   |                          

---



115

---



The
working capital requirements of the Group are fully met through its funding strategies and Sanpaolo IMI believes that its credit standing will continue to give it access to both
traditional and innovative funding.

There
are no legal or economic restrictions on the ability of subsidiaries to transfer funds to Sanpaolo IMI in the form of cash dividends, loan or advances and the impact such
restrictions have on the ability of the company to meet its cash obligations.

Shareholders' Equity

Group shareholders' equity as of December 31, 2002 amounted to €10,537 million, net of own Shares held by the Parent Bank. Changes
during the year were as follows:

|                                             |                                                          | Changes in
shareholders' equity |      
|-------------------------------------------- | -------------------------------------------------------- | ------------------------------- | -----
|
|Shareholders' equity as of January 1, 2002   |                                                          | 8,182                           |      
|Decreases                                    |                                                          | (1,141                          | )    
|                                             | Dividends                                               |                                 | (773 
|                                             | Exchange and other adjustments                          |                                 | (4   
|                                             | Use of reserves for general banking risks               |                                 | (364 
|Increases                                    |                                                          | 3,496                           |      
|                                             | Merger with Cardine Banca                               |                                 | 2,063
|                                             | Capital                                                 |                                 | 1,212
|                                             | Share premium reserve                                   |                                 | 851  
|                                             | Decrease in own Shares held by the Parent Bank          |                                 | 294  
|                                             | Portion of tax benefits from the Banco di Napoli merger |                                 | 250  
|                                             | Net income for the year(1)                              |                                 | 889  
|                                             |                                                          |                                 |      
|Shareholders' equity as of December 31, 2002 |                                                          | 10,537                          |      
|                                             |                                                          |                                 |      

---

Besides
the distribution of the 2001 dividend and the net income for 2002, the changes compared with the figures at the end of December 2002 reflect:



116

---



Own Shares

As of December 31, 2002, the own Shares held by the Group were 4,940,751, equal to 0.27% of the equity capital and booked at market value in the dealing
portfolio for €31 million, in line with the treatment by the Group subsidiaries in their financial statements.

Group
transactions with Sanpaolo IMI Shares during 2002 were the following:



As
of December 31, 2002, the Parent Bank held just one own Share in its portfolio, with €2.8 nominal value, for a book value of €7.41:

As
of December 31, 2002, Banca IMI, in relation to its institutional dealing activity, held 815,564 Sanpaolo IMI Shares in its portfolio (€2 million nominal
value), booked at a fair value of €10 million.

During
the year Banca IMI purchased 46,589,230 Shares (€130 million nominal value), for a cost of €452 million, and sold 45,810,050 Shares
(€128 million nominal value) for a total outlay of €441 million.

As
of December 31, 2002, Banca IMI held 1,594,744 Shares in its portfolio (€4 million nominal value), booked at a fair value of
€10 million.

As
of December 31, 2002, IMI Investimenti held 219,190 Sanpaolo IMI Shares in its dealing portfolio (€1 million nominal value), booked at a fair value of
€1.4 million. The Shares arise from the conversion of Cardine Banca shares into Sanpaolo IMI Shares following the merger between the two banks.

Following
the merger with Cardine Banca, the number of Sanpaolo IMI Shares in the Group's portfolio increased by 3,126,815 shares (€9 million total nominal value)
due to the contribution of several companies of the former Cardine group. The total number of these Shares, which remained unchanged in the period following the merger, was thus composed as of
December 31, 2002:



117

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Regulatory Capital and Capital Adequacy

The following table sets forth the Tier I and the Tier II capital levels and the relative ratios of the Sanpaolo IMI group at December 31, 2002 and 2001.
According to the Bank of Italy regulations, the ratios set forth with respect to the capital of Sanpaolo IMI have been calculated net of any dividend distributions. The ratios reflect the Bank of
Italy clarifications made in its technical note of August 3, 2001.

|                                               |  | At December 31, |  
|---------------------------------------------- |  | --------------- | -
|
|
|Tier I capital                                 |  |                 |  
|Share capital                                  |  | 5,144           |  
|Additional paid-in capital                     |  | 708             |  
|Reserves(2)                                    |  | 4,349           |  
|Preferred Securities in €                      |  | 1,000           |  
|Less: intangible assets                        |  | (1,436          | )
|                                               |  |                 |  
|Tier I capital                                 |  | 9,765           |  
|Tier II capital                                |  |                 |  
|Revaluation reserves                           |  | 22              |  
|Subordinated debt                              |  | 4,348           |  
|Other positive items                           |  | 75              |  
|Other negative items                           |  | (39             | )
|                                               |  |                 |  
|Tier II capital                                |  | 4,406           |  
|                                               |  |                 |  
|Less: financial investments                    |  | (470            | )
|Total Tier I and Tier II capital ("Own Funds") |  | 13,701          |  
|                                               |  |                 |  
|Tier III capital subordinated loans            |  | 589             |  
|                                               |  |                 |  
|Total Tier I, Tier II and Tier III capital     |  | 14,290          |  
|Weighted assets (€/mil)                        |  |                 |  
|Lending risk                                   |  | 123,575         |  
|Market risk                                    |  | 9,588           |  
|Other requirements                             |  | 550             |  
|                                               |  |                 |  
|Total assets                                   |  | 133,713         |  
|Capital adequacy ratios (%)                    |  |                 |  
|Tier I capital/Total risk-weighted assets      |  | 7.3             | %
|Total capital/Total risk-weighted assets       |  | 10.7            | %

---

118

---

Material Commitments for Capital Expenditures

See "Item 4. Information on Sanpaolo IMIHistory and Developments of Sanpaolo IMIRecent DevelopmentsFiat and Italenergia"
above for information concerning Sanpaolo IMI's material commitments for capital expenditures.

C. Contractual Obligations and Commitments



The following table presents the Group's contractual cash obligations at December 31, 2002.

|                              |  | December 31, 2002 Payments due by
maturity (in € millions) |  |       
|----------------------------- |  | ---------------------------------------------------------- |  | ------
|
|Long-term debt(1)             |  | 18,673                                                     |  | 30,175
|Lease obligations             |  | 23                                                         |  | 37    
|Other contractual obligations |  | 118                                                        |  | 29    
|                              |  |                                                            |  |       
|Total                         |  | 18,814                                                     |  | 30,241
|                              |  |                                                            |  |       

---



The following table presents the Group's other commercial commitments at December 31, 2002.

|                                 |  | December 31, 2002
Commitment expiration
(in € millions) |  |      
|-------------------------------- |  | ------------------------------------------------------- |  | -----
|
|Guarantees and commitments       |  |                                                         |  |      
|lines of credit                 |  | 15,628                                                  |  | 3,424
|guarantees                      |  | 13,517                                                  |  | 4,961
|stand-by repurchase obligations |  | 4,140                                                   |  | 18   
|other commitments               |  | 1,977                                                   |  | 1,289
|                                 |  |                                                         |  |      
|Total                            |  | 35,262                                                  |  | 9,692
|                                 |  |                                                         |  |      

Lines
of credit represent commitments to extend credit, to lend to banks and to customers in accordance with contractual provision. These commitments are usually for a fixed period. The
total amount of unused commitments do not necessarily represent future cash requirements as these commitments often expire undrawn. See Note 21 to the Consolidated Financial Statements.



The Group is not significantly involved in off-balance sheet arrangements, particularly those involving special purposes entities, or "SPEs". By
December 31, 2002, the Group had only been involved in three securitizations, through two of its subsidiaries. The securitizations involved:



119

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The
Group has not entered into any other transactions, arrangements and other relationships with unconsolidated entities or other persons that are reasonably likely to materially affect
liquidity or the capital resources. See Note 22 to the Consolidated Financial Statements.

D. Trend Information

The board of directors approved the results of the Sanpaolo IMI Group for the first quarter of 2003 on May 13, 2003. See "Item 4Information on
Sanpaolo IMIHistory and Developments of Sanpaolo IMIRecent DevelopmentsUnaudited results of the first quarter of 2003".

Despite
difficult market conditions, the results of the first quarter of 2003 confirmed the signs of recovery which were already visible in the final months of 2002.

The
net income recorded in the first quarter of 2003 was consistent with the growth performance set out in the budget for 2003. Management also confirmed its objectives for 2005 as
described in the 2003-2005 Business Plan which contemplates, for 2005, an ROE of approximately 15% and a cost/income ratio of less than 55%. See "Item 4. Information on Sanpaolo
IMIHistory and Developments of Sanpaolo IMIRecent DevelopmentsThe 2003-2005 Business Plan".

In
a scenario marked by a general economic weakness, and on the basis of the income recorded in the first quarter of 2003, management believes the Group will be less vulnerable to
negative performances in financial markets.

The
economic recovery expected for the end of 2003 may be delayed to 2004; that may in part offset the positive trend shown in the first months of 2003, particularly in relation to net
interest income. Nevertheless, the Group believes that its 2003-2005 Business Plan, based on the strategy of reinforcing its position in the domestic market and, in particular, in the
Italian market for smaller companies and the household sector, including consumer finance and retail mortgages, will lead to a progressive improvement in ROE. In addition, the benefits of cost
containment and the integration of the Group's bank networks should lead to improved benefits in the cost/income ratio.

E. Significant Accounting Policies

Significant accounting policies with respect to our Italian GAAP financial statements

The discussion and analysis of our results of operations and financial condition are based on our consolidated financial statements, which have been prepared in
accordance with Italian GAAP. The preparation of these financial statements requires management to apply accounting methods and policies that are based on difficult or subjective judgments, estimates
based on past experience and assumptions determined to be reasonable and realistic based on the related circumstances. The application of these estimates and assumptions affects the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of income and expenses during the reporting period. Actual results
may differ from these estimates given the uncertainty surrounding the assumptions and conditions upon which the estimates are based. We have summarized below our accounting policies that require the
more subjective judgment of our management in making assumptions or estimates regarding the effects of matters that are inherently uncertain and for which changes in conditions may significantly
affect the results reported in the combined and consolidated financial statements.

120

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Detailed
information regarding accounting policies is provided in Note 10 to the Consolidated Financial Statements.



The Group provides for losses existing in its loan book so as to state its loan portfolio at its estimated realizable value. The assessment performed takes into
consideration any guarantees or other security received, market prices (where applicable) and general economic conditions experienced by different categories of borrower.

Estimated
realizable value is determined following a detailed review of loans. This review is conducted on a timely basis (as appropriate for the type of loan) and is consolidated for
all loans outstanding at the end of the period. The review considers the degree of risk associated with the various forms of lending and also the risk of default inherent in performing loans as a
result of general economic circumstances.

The
general provision against performing loans is calculated on a statistical basis, which provides a historical valuation of portfolio risk. These provisions are integrated, at the
Parent Bank level and commercial networks, by a portfolio model based on risk management methodologies used for monitoring and controlling credit risks.

The
specific provision against doubtful loans involves estimating the amount and timing of future financial flows arising, discounting those flows at an appropriate rate and estimating
the enforceability and amount which may be recovered through the sale of any security held or calling of any guarantees.

Determining
the allowance for loan losses requires specific judgments and estimates based upon the above factors. Changes in the estimates and assumptions used in determining the
allowance for loan allowance could have a direct impact on the provision and could result in a change in the allowance.



Quoted market prices in active and liquid markets are the most reliable measure of fair value of financial instruments because they accurately represent the
prices paid for and received for financial assets and liabilities. However, if such prices are not readily determinable, the Group calculates fair value based on either internal valuation models or
management's estimate of amounts that could be realized under current market conditions, assuming an orderly liquidation over a reasonable period of time. Certain financial instruments, including OTC
derivatives, are valued using pricing models that consider, among other factors, contractual and market prices, credit, yield curve volatility factors and/or prepayment rates of the underlying
positions. The main areas of judgment in applying these models are:



The
use of different pricing models and assumptions could produce materially different estimates of fair value.This will result in changes in the carrying value of the financial
instrument where they are carried at fair value. Where the instrument is carried at amortized cost, or the lower of cost and market value, changes in their estimated fair value, arising from changes
in management's assumptions on the above variables, may result in a write-down in their value. In this case, it will also be necessary for management to exercise judgment as to whether or
not changes in the underlying valuation assumptions are only temporary.

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The Group capitalizes acquired goodwill and amortizes it over its useful economic life. There is a rebuttable presumption that the useful economic life of
purchased goodwill is limited and does not exceed 20 years from the date of acquisition. This assessment involves management making judgments and assumptions over:



Different
assumptions and judgments may lead to a different amortization charge being recognized in income during the period.

Under
U.S. GAAP, goodwill is no longer amortized and therefore the Group must also consider at least annually whether the current carrying value of the goodwill is impaired. The Group
evaluates impairment using a two-step process. First, the Group compares the aggregate fair value of the reporting unit to its carrying amount, including goodwill. If the fair value
exceeds the carrying amount, no impairment exists. If the carrying amount of the reporting unit exceeds the fair value, then the Group compares the implied fair value, defined below, of the reporting
unit's goodwill with its carrying amount. If the carrying amount of the goodwill exceeds the implied fair value, then goodwill impairment is recognized by writing the goodwill down to the implied fair
value.

The
first element of this allocation is based on the areas of the business expected to benefit from the synergies derived from the acquisition. The second element reflects the allocation
of the net assets acquired and the difference between the consideration paid for those net assets and their fair value. This allocation is reviewed following business reorganizations. The carrying
value of the operating unit, including the allocated goodwill, is compared to its fair value to determine whether any impairment exists. A detailed calculation may need to be carried out taking into
consideration changes in the
market in which a business operates (e.g. competition activity, regulatory change). In the absence of readily available market price data to value the reporting units, judgment is required to:



Changes
in either of these variables could potentially impact upon whether or not any impairment is recognized.



The Group participates directly and indirectly into defined benefit pension schemes for part of its employees. The pension cost for these schemes is assessed in
accordance with the advice of a qualified actuary. This cost is annually charged to the income statement. In determining this cost the actuarial value of the assets and liabilities of the scheme are
calculated. This involves modeling their future growth and requires management and the actuary to make assumptions as to factors such as:



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There
is an acceptable range in which these estimates can validly fall. If different estimates within that range had been selected the cost recognized in the income statement could be
significantly altered.



The Group recognizes deferred tax assets and liabilities for the estimated future tax effects of temporary differences between the book value of the assets and
liabilities and their fair value for tax purposes, net operating loss carry forwards and tax credits. The recognition of deferred tax assets is subject to management's judgment based on available
evidence that they are likely to be recovered. In the event that we determine that we would not be able to realize all or part of our deferred tax assets in the future, an adjustment to our deferred
tax assets would be charged to income tax expense in the period that the determination was made.



Provisions are made for risks, charges and likely liabilities whose timing and extent cannot be determined at period-end or at the time the financial
statements are prepared. The use of different estimates or assumptions by management could produce different provisions for risk and charges.



We include a reconciliation of net income and stockholders' equity between Italian GAAP and U.S. GAAP within Note 32 to the Consolidated Financial
Statements. The preparation of this reconciliation requires management to consider accounting policies under U.S. GAAP to determine whether or not a difference in GAAP exists, and to quantify the
amount of that difference where appropriate. These policies may also be based on difficult or subjective judgments, estimates based on past experience and assumptions determined to be reasonable and
realistic based on the related circumstances.

Unless
indicated otherwise, all of the significant accounting policies identified above, are equally critical to preparation of the U.S. GAAP reconciliation, and involve similar judgment
and assumptions by management.

F. Recent Accounting Developments

Developments under Italian GAAP

The European Commission issued a Regulation in 2002 requiring all listed companies to adopt International Financial Reporting Standards in their consolidated
financial statements commencing January 1, 2005. The Group is considering the implications of such a requirement and would expect first to prepare consolidated financial statements in
accordance with International Accounting Standards and International Financial Reporting Standards issued by the International Accounting Standards Board for the year ended December 31, 2005.

Developments under U.S. GAAP



SFAS 143 "Accounting for Asset Retirement Obligations" was issued in June 2001 and is effective for fiscal years beginning after June 15,
2002, although early adoption is encouraged. SFAS 143 requires that the fair value of an asset retirement obligation be recognized in the balance sheet in the period in which it is incurred and
then charged to the profit and loss account over the useful economic life of the asset.

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Adoption
is not expected to have a material impact upon net income and stockholders' equity as determined under U.S. GAAP if it was currently in force.

SFAS 146: "Accounting for Costs Associated With Exit or Disposals"

SFAS 146 "Accounting for Cost Associated with Exit or Disposal Activities" was issued in June 2002 and is effective for exit or disposal activities
that are initiated after December 31, 2002. SFAS 146 requires that the fair value of a liability for a cost associated with an exit or disposal activity be recognized when the liability
is incurred and nullifies EITF 94-3 which requires the recognition of a liability at the date of an entity's commitment to an exit plan.

Adoption
is not expected to have a material impact upon net income and stockholders' equity as determined under U.S. GAAP if it was currently in force.

SFAS 148: "Accounting for Stock-Based CompensationTransition and Disclosurean amendment of FASB Statement
No. 123"

SFAS 148 "Accounting for Stock-Based CompensationTransition and Disclosurean amendment of FASB Statement No. 123" was
issued in December 2002. It amends SFAS 123 to provide alternate methods of transition for entities voluntarily adopting a fair value based method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of SFAS 123. The Statement amends SFAS 123 "Accounting for Stock-Based Compensation" to provide alternative methods of transition
for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS 148 also amends the disclosure requirements of SFAS 123. SFAS 148
is effective for fiscal years ending after December 15, 2002.

Sanpaolo
IMI does not currently intend to change to the fair value based method of accounting for stock-based employee compensation and therefore the transition methods are not
applicable.

EITF Issue 02-03: "Issues Involved In Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading
and Risk Management Activities"

The Emerging Issues Task Force released EITF 02-3 "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts
Involved in Energy Trading and Risk Management Activities" in November 2002. In EITF 02-3 the FASB staff clarified that, in the absence of (a) quoted market prices in an
active market, (b) observable prices of other current market transactions or (c) other observable data supporting a valuation technique, the transaction price
represents the best information available with which to estimate fair value at the inception of the arrangement for all derivatives.

With
respect to these criteria, the impact on the reported results for 2002 was not material. Sanpaolo IMI is currently assessing the potential impact of EITF02-03 upon net
income and stockholders' equity as determined under U.S. GAAP in 2003.

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FIN 45: "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Othersan
Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34"

FIN 45 "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Othersan Interpretation
of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34" was issued in November 2002. It addresses disclosure requirements for guarantors in respect of
guarantees issued (including guarantees embedded in other contracts) and requires recognition of a liability to be recognized for all obligations assumed under guarantees issued. The measurement
requirements are effective for guarantees issued from January 1, 2003.

Sanpaolo
IMI is currently assessing the potential impact of FIN45 upon net income and stockholders' equity as determined under U.S. GAAP in 2003.

FIN 46: "Consolidation of Variable Interest Entitiesan interpretation of ARB No. 51"

FIN 46 "Consolidation of Variable Interest Entitiesan interpretation of ARB No. 51" was issued in January 2003. This addresses the
criteria to be applied when determining whether certain special purpose entities (variable interest entities) should be consolidated and requires disclosures to be made if the involvement with an
unconsolidated variable interest entity is significant. Many variable interest entities have commonly been referred to as special purpose entities or off-balance sheet structures, but the
guidance applies to a larger population of entities. The Statement requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from
the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. Until now, one company generally has included another entity in its consolidated
financial statements only if it controlled the entity through voting interests. The Group will be subject to the consolidation requirements of FIN 46 for all variable interest entities created after
January 31, 2003, within its financial statements for the year ended December 31, 2003, while all other variable interest entities, if any, that existed before February 1, 2003,
will be considered within the first fiscal year beginning after June 15, 2003, which means within the Group's financial statements for the year ended December 31, 2004.

Sanpaolo
IMI is currently assessing the potential impact of FIN 46 upon net income and stockholders' equity as determined under U.S. GAAP.

SFAS 149: "Amendment of Statement 133 on Derivative Instruments and Hedging Activities"

SFAS 149 "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" was issued in April 2003. The Statement amends and clarifies
financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities
under SFAS 133 "Accounting for Derivative Instruments and Hedging Activities". This Statement is effective prospectively for contracts entered into or modified after June 30, 2003 and
prospectively for hedging relationships designated after June 30, 2003.

Sanpaolo
IMI is currently assessing the potential impact of SFAS 149 upon net income and stockholders' equity as determined under U.S. GAAP.

SFAS 150: "Accounting For Certain Financial Instruments with Characteristics of both Liabilities and Equity"

SFAS 150 "Accounting For Certain Financial Instruments with Characteristics of both Liabilities and Equity" was issued in May 2003. The Statement
improves the accounting for certain financial

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instruments
that, under previous guidance, issuers could account for as equity and requires that these instruments be classified as liabilities in statements of financial position. This Statement is
effective prospectively for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after
June 15, 2003. This statement shall be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the
Statement and still existing at the beginning of the year of adoption.

Sanpaolo
IMI is currently assessing the potential impact of SFAS 150 upon net income and stockholders' equity as determined under U.S. GAAP.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

Board of Directors

The following table sets forth, as of June 10, 2003, the names of the members of the board of directors (the "Board") of Sanpaolo IMI, their current
position, and the year of appointment as director. The current Board's mandate will expire as of the date of the shareholders' general meeting called to approve the financial statements for the year
ending December 31, 2003.

|Name                       |  | Age |  | Position          |  | Appointed |    
|-------------------------- |  | --- |  | ----------------- |  | --------- | ---
|Rainer Stefano Masera      |  | 59  |  | Chairman          |  | 1997      | (1)
|Isabelle Bouillot          |  | 54  |  | Director          |  | 2002      |    
|Pio Bussolotto             |  | 67  |  | Managing Director |  | 2002      |    
|Alberto Carmi              |  | 79  |  | Director          |  | 2000      |    
|Giuseppe Fontana           |  | 49  |  | Director          |  | 1998      |    
|Richard Gardner            |  | 75  |  | Director          |  | 2001      |    
|Alfonso Iozzo              |  | 60  |  | Managing Director |  | 2001      |    
|Mario Manuli               |  | 63  |  | Director          |  | 2001      |    
|Luigi Maranzana            |  | 62  |  | Managing Director |  | 1997      |    
|Antonio Maria Marocco      |  | 68  |  | Director          |  | 2003      |    
|Virgilio Marrone           |  | 56  |  | Director          |  | 1998      |    
|Abel Matutes Juan          |  | 61  |  | Director          |  | 2001      |    
|Iti Mihalich               |  | 71  |  | Director          |  | 1997      |    
|Emilio Ottolenghi          |  | 71  |  | Director          |  | 1995      |    
|Orazio Rossi               |  | 71  |  | Deputy Chairman   |  | 2002      | (2)
|Gian Guido Sacchi Morsiani |  | 68  |  | Director          |  | 2002      |    
|Enrico Salza               |  | 66  |  | Deputy Chairman   |  | 1998      | (3)
|Rémi François Vermeiren    |  | 63  |  | Director          |  | 1998      |    

---

For
a discussion of the election of the board of directors see "Item 7. Major Shareholders and Related Party TransactionsThe Major ShareholdersAgreement Among
Shareholders".

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Senior Management

The following table sets forth the members of the senior management (the "Senior Managers") of Sanpaolo IMI as of June 10, 2003, their age, positions with
Sanpaolo IMI and year of appointment.

|Name                    |  | Age |  | Position                           |  | Appointed
|----------------------- |  | --- |  | ---------------------------------- |  | ---------
|Luigi Maranzana         |  | 62  |  | Managing Director                  |  | 1997     
|Alfonso Iozzo           |  | 60  |  | Managing Director                  |  | 2001     
|Pio Bussolotto          |  | 67  |  | Managing Director                  |  | 2002     
|Aldo Gallo              |  | 54  |  | Head of Audit Department           |  | 1999     
|Maurizio Montagnese     |  | 47  |  | Head of Human Resources Department |  | 1999     
|Pier Luigi Curcuruto    |  | 53  |  | Head of MOI Department             |  | 2000     
|Massimo Mattera         |  | 58  |  | Head of Credit Management Group    |  | 2000     
|Piero Luongo            |  | 48  |  | Head of General Secretariat        |  | 2001     
|Bruno Picca             |  | 53  |  | Head of Sanpaolo Network           |  | 2001     
|Carlo Giuseppe Angelini |  | 56  |  | Head of Accounting Department      |  | 2002     
|Stefano Del Punta       |  | 43  |  | Head of Group Finance Department   |  | 2002     

Biographical Data

The
following is selected biographical data of the Directors:

Rainer Stefano Maserahas been Chairman of Sanpaolo IMI since April 30, 2001. Previously he was General Manager of IMI
(1988-1998) and Managing Director of Sanpaolo IMI (1998-2001). He has also served in the Italian government as technical minister of budget and economic planning
(1995-1996). He has been a Director of the European Investment Bank since 1996 and was Deputy Chairman of the Associazione Bancaria Italiana until June 2000, in which he remains a
member of the Executive Committee.

Isabelle Bouillotbecame a Director in March 2002. She isPrésident du
Directoirof the French group CDC Finance CDC Ixis and she has various responsibilities within the CDC Finance CDC Ixis Group's companies. She has wide experience in the French
public and private sectors including Deputy Director of the Economic and Finance Minister's Cabinet (1983), President of the Union de Banques à Paris (1985), economic adviser to the
President of the French Republic (1989) and Budget Director to the Economic and Finance Minister (1991).

Pio Bussolottojoined the board of directors as Managing Director in March 2002, having held the same position in Cardine. In 2001,
he became a member of the board of directors of the Interbank Deposit Guarantee Fund. He was previously a Director of the Padua Chamber of Commerce and of Mediovenezie Banca. He was Secretary General
of the Fondazione Cassa di Risparmio di Padova e Rovigo until 1996.

Alberto Carmiis currently Chairman of Travertino Toscana, one of Italy's leading producers and finishers of marble, and also manages his
family's agricultural estates. He has been Chairman of the Ente Cassa di Risparmio di Firenze since January 1993.

Giuseppe Fontanais a Director of the Fontana group. He was a Director of IMI from 1995 until 1998 and became a Director of Sanpaolo IMI
following the merger in that year. He has also served as a Director of various Sanpaolo IMI Group companies.

Richard Gardneris Professor of Law and International Organization at Columbia Law School and Counsel to Morgan Lewis. He became a
Director of Sanpaolo IMI in April 2001. His career spans the diplomatic and political worlds. In particular, he served as U.S. Ambassador to the Republic of Italy

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from
1977 to 1981 and to Spain from 1993 to 1997. He is also a member of the International Capital Markets Advisory Committee of the New York Stock Exchange.

Alfonso Iozzois Managing Director of Sanpaolo IMI. He joined Sanpaolo in 1961 and became a Director of Sanpaolo in 1995 and of Sanpaolo
IMI in 2001. He was Deputy Chairman of the Associazione Bancaria Italiana from 1995 to 1997.

Mario Manulibecame a Director of Sanpaolo IMI in April 2001. He has been an executive of companies within the Manuli group since
1980 and was also a Director of the Banca Regionale Europea between March 2000 and October 2001.

Luigi Maranzanahas been Managing Director of Sanpaolo IMI since 1998, having been Managing Director of Sanpaolo from 1997 and General
Manager since 1995. He played a major role in building up Sanpaolo's network outside Italy; especially in Europe, the United Kingdom and the United States. In his last foreign assignment he held the
position ofPrésident du Directoireof Banque Sanpaolo in France.

Antonio Maria Maroccohas been a Notary in Italy since 1963. He became a Director of Sanpaolo IMI in April 2003. He has been a
member of the board of directors of Società Reale Mutua di Assicurazioni since 1986 and of IFIL S.p.A. since 2003, as well as an adviser of Fondazione Cassi di Risparmio di Torino since
2000. He is a member of the Committee for Olympic Games "Torino 2006". He is also an author of several publications in legal and fiscal matters.

Virgilio Marronehas spent his business career at IFI, where he was responsible for research and development before becoming Joint General
Manager in 1993.

Abel Matutes Juanbecame a Director of Sanpaolo IMI in April 2001. His political and diplomatic career includes appointment not
only in Spain and within the EU but also relations with Latin America and the rest of the world.

Iti Mihalichis a Director of several insurance companies in Italy, France and Spain as well as of Sanpaolo IMI. He is currently Chairman
of Immobiliare Errecidi (Milan) and REM VIE (Paris) as well as Deputy Chairman of Ala Service Assicurazioni (Milan).

Emilio Ottolenghihas been a Director of La Petrolifera Italo Rumena since 1957. In 1982, he became a Director of Euromobiliare and, in
1988, Deputy Chairman of Credito Romagnolo, taking the chairmanship in 1993. In the same year, he became a Director of Cassa di Risparmio in Bologna. He became a Director of IMI in 1994 and of
Sanpaolo in the following year as Deputy Chairman.

Orazio Rossiwas formerly Chairman of Cardine Banca until 2000. He joined the board of directors of Sanpaolo IMI and was appointed Deputy
Chairman in March 2002. He is currently a member of the board of directors of the Associazione fra le Casse di Risparmio Italiane and the Associazione Bancaria Italiana in which latter he is
also a member of the Executive Committee. He was previously a member of the board of directors of the Rovigo Chamber of Commerce and of Federalcasse Banca.

Gianguido Sacchi Morsianiwas formerly Deputy Chairman of Cardine and became a Director of Sanpaolo IMI in March 2002. He was a
professor of law until 1997 with a special interest in EU integration of legislation. He has also been a member of the Italian Finance Minister's Technical Committee and a Director of ICCRI, the
Italian savings banks' central institute.

Enrico Salzais a businessman with a wide experience in Italy and abroad. He has served on many industry and academic bodies and was
formerly Deputy Chairman ofII Sole-24 Ore, the leading Italian financial newspaper. He was Deputy Chairman of Sanpaolo from 1984 until 1995
and became Deputy Chairman of Sanpaolo IMI in 2001.

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Rémi François Vermeirenis President of KBC Bank and President of the Executive Committee of KBC Bank and
Insurance Holding. He became a Director of Sanpaolo IMI in 1998 following KBC's entry as a shareholder in Sanpaolo. He is also a member of the Executive Committee of Credit Comercial de France and of
the Supervisory Board of Euronext as well as deputy chairman of Vlaams Economisch Verbond.

The
following is selected biographical data of the Senior Managers (other than of Messrs Maranzana, Iozzo, and Bussolotto whose selected biographical data is presented above):

Aldo Gallois responsible for the Audit Department having pursued his career within Sanpaolo IMI covering various posts in different
sectors.

Maurizio Montagneseis responsible for Sanpaolo IMI Group Human Resources. Previously he held similar posts in Gruppo Unicredito, Cassa di
Risparmio di Verona and Gruppo Olivetti.

Pier Luigi Curcurutois responsible for the Integreated Operation Vehicle. He has pursued his professional career with various companies,
including Italtel, System & Management, EDS Europa and Banca Popolare di Milano.

Massimo Matterais responsible for the Group Credit Management department and was previously responsible for Large Corporate. Prior to the
merger of Sanpaolo S.p.A. and IMI he pursued his professional career in IMI where he held posts in various sectors.

Piero Luongois the Corporate Secretary and General Counsel. Prior to the merger of Sanpaolo S.p.A. and IMI he pursued his professional
career in IMI covering various posts.

Bruno Piccais reponsible for the Sanpaolo Network having pursued his career within Sanpaolo IMI holding various posts in different
sectors including Financial Control and Planning.

Carlo Giuseppe Angeliniis responsible for the Accounting Department. Prior to the merger of Sanpaolo and IMI he pursued his professional
career at IMI covering various positions.

Stefano Del Puntais responsible for Group Finance. Prior to the merger of Sanpaolo S.p.A. and IMI he pursued his professional career in
IMI where he held posts in various sectors, in particular certain foreign subsidiaries.

Other principal directorships

The following table sets forth the main offices of Directors and Statutory Auditors in companies quoted on regulated markets. The table also sets forth the
offices of the Sanpaolo IMI Directors in banking, financial and insurance companies.

|Director      |  | Office                                             |  | Company                                                                       
|------------- |  | -------------------------------------------------- |  | ------------------------------------------------------------------------------
|Rainer Masera |  | Chairman
Member of the Board of Directors
Chairman |  | Sanpaolo IMI International S.A.
European Investment Bank
Banca Fideuram S.p.A.
|              |  |                                                    |  |                                                                               

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|Isabelle Bouillot     |  | President du DirectoirePresident of the Supervisory Board
President
President of the Supervisory Board
Member of the Supervisory Board
President
Member of the Supervisory Board
Administrator
Member of the Supervisory Board
Member of the Board of Directors
Member of the Board of Directors
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Board of Directors
Member of the Supervisory Board
Director
President of the Board of Directors |  | CDC FinanceCDC Ixis S.A.
CDC Ixis Financial Guaranty Holding S.A.
CDC Ixis Financial Guaranty North America Inc.
CDC Ixis Capital Markets S.A.
CDC Ixis Securities S.A.
CDC Ixis North America
CDC Ixis Asset Management S.A.
CDC Ixis AM US Corporation
CDC Ixis Private Capital Management S.A.
CDC Ixis Private Equity S.A.
CDC Ixis Immo S.A.
CDC Ixis Italia Holding S.A.
Accor
Caisse Nationale des Caisses d'Epargne
Compagnie de Saint Gobain
CNP Assurances
Compagnie Financiére Eulia S.A.
Société de Gestion de CDC
euro Obligations
|--------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Pio Bussolotto        |  | Managing Director
Managing Director
Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Cardine Finanziaria S.p.A.
Cassa di Risparmio di Padova e Rovigo S.p.A.
Sanpaolo IMI International S.A.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Giuseppe Fontana      |  | Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Banca Popolare di Sondrio                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Alfonso Iozzo         |  | Director
Director
Member of the Supervisory Board
Chairman                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Sanpaolo IMI International S.A.
NHS Mezzogiorno SGR S.p.A.
CDC FinanceCDC Ixis S.A
Banca OPI S.p.A.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Mario Manuli          |  | Managing Director
Vice Chairman and Managing Director
Director
Director                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Manuli Rubber Industries S.p.A.
Manuli Packaging S.p.A.
Terme di Saturnia S.r.l.
Web Equity S.p.A.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Luigi Maranzana       |  | Chairman
Chairman
Director
Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | Sanpaolo IMI Wealth Management S.p.A.
Banca IMI S.p.A.
Sanpaolo IMI International S.A.
Sanpaolo IMI Internazionale S.p.A.                                                                                                                                                                                                                                                                                                                                                                                                                       
|Antonio Maria Marocco |  | Director
Director
Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Società Reale Mutua di Assicurazioni S.p.A.
Società Reale Immobili S.p.A
IFIL S.p.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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|Iti Mihalich            |  | Director
Director
Vice Chairman
Director
Managing Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Chairman
Director
Director
Director |  | Aci Global S.p.A.
Agemut Sociedad de Agencia de Seguros de Mutral
Ala Service S.p.A.
Banca Reale S.p.A.
Italiana Assicurazioni S.p.A.
La Piemontese Assicurazioni S.p.A.
La Piemontese Vita S.p.A.
Reale AsistenciaCompania de Seguros S.A.
Reale Autos y Seguros Generales S.A.
Reale Immobili
Reale SumAgrupacion de Interes Economico
Reale Vida S.A.
Rem Assicurazioni S.p.A.
Inmobiliaria Grupo Asegurador Reale S.A.
Rem Vie S.A.
Sara Assicurazioni S.p.A.
Sara Vita S.p.A.
Reale Mutua di Assicurazioni
|----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Emilio Ottolenghi       |  | Director
Director
Managing Director
Member of the Supervisory Board
Chairman                                                                                                    |  | Sanpaolo IMI International S.A.
Autostrade
La Petrolifera Italo Rumena S.p.A.
Solving International Parigi
VIS S.p.A.                                                                                                                                                                                                                                                                                                                                                                                            
|Orazio Rossi            |  | Chairman
Chairman
Chairman
Director
Director
Director                                                                                                                           |  | Cardine Finanziaria S.p.A.
Cassa di Risparmio di Padova e Rovigo S.p.A.
Sanpaolo IMI Internazionale S.p.A.
Cassa di Risparmio di Udine e Pordenone S.p.A.
Sanpaolo IMI International S.A.
Eptaconsors S.p.A.                                                                                                                                                                                                                                                                                                     
|Gianguido               |  | Chairman                                                                                                                                                                        |  | Cassa di Risparmio in Bologna S.p.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Sacchi Morsiani         |  | Vice Chairman
Vice Chairman
Vice Chairman
Vice Chairman vicario
Director                                                                                                        |  | Eptaconsors S.p.A.
Cardine Finanziaria S.p.A.
GE.RI.CO. S.p.A.
Finemiro Banca S.p.A.
Cassa di Risparmio di Venezia S.p.A.                                                                                                                                                                                                                                                                                                                                                                                        
|Enrico Salza            |  | Managing Director
Director
Director                                                                                                                                             |  | Tecnoholding S.p.A.
Sanpaolo IMI International S.p.A.
Thera It Global Company                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Rémi François Vermeiren |  | Chairman
President of the Executive Committee                                                                                                                                   |  | KBC Bank
KBC Bank and Insurance Holding Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

131

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Board of Statutory Auditors

At least two of the members of Sanpaolo IMI's Board of Statutory Auditors must be elected by minority shareholders. In case any of the statutory auditors ceases
for any reason to serve in such capacity, the alternate auditor automatically replaces him until the next shareholders' meeting, at which a replacement will be appointed by the shareholders.

The
statutory auditors are called to serve for a three-year term and may be reappointed. Statutory auditors are required to attend the general meeting of shareholders, board
of directors meetings and Executive Committee meetings.

The
Board of Statutory Auditors is responsible for reviewing the management of Sanpaolo IMI and controlling the compliance with applicable laws and regulations with its bylaws. In
addition, the Board of Statutory Auditors assesses and monitors the adequacy of Sanpaolo IMI's structure, its internal review mechanisms, and its bookkeeping systems. The statutory auditors are also
responsible for reviewing the exchange of information system between Sanpaolo IMI and its subsidiaries, to ensure compliance with legal reporting requirements.

The
following table sets forth, as of June 10, 2003, the names of the members of the Board of Statutory Auditors of Sanpaolo IMI, who were appointed by the general meeting of
shareholders on April 30, 2002, for the three years 2002-2004.

|Name                |  | Age |  | Position                     
|------------------- |  | --- |  | -----------------------------
|Mario Paolillo      |  | 72  |  | Chairman of Board of Auditors
|Aureliano Benedetti |  | 67  |  | Auditor                      
|Maurizio Dallocchio |  | 45  |  | Auditor                      
|Paolo Mazzi         |  | 56  |  | Auditor                      
|Enrico Vitali       |  | 42  |  | Auditor                      
|Stefania Bortoletti |  | 36  |  | Alternate Auditor            
|Antonio Ottavi      |  | 83  |  | Alternate Auditor            

Independent Auditors

The
financial statements of Sanpaolo IMI are required to be audited by an independent auditing firm whose assignment has to be approved by the general meeting of shareholders that
approves the annual financial statements. The general meeting of shareholders' resolution authorizing such appointment must be furnished to CONSOB together with the Board of Statutory Auditors'
opinion on the appointment. According to Italian law, such appointment is for three years and the general meeting of shareholders may not appoint the same external auditors for more than three
consecutive three-year terms. The report issued at the end of the audit is defined as an opinion with or without qualification and not a "certification". Arthur Andersen S.p.A. has
audited, as required by Italian law, the financial statements of Sanpaolo IMI, and its predecessor since the fiscal year ending December 31, 1992 and terminated its assignment with the opinion
for the fiscal year 2000. PricewaterhouseCoopers was appointed by the general meeting of shareholders of April 28, 2000 for the three year term 2001-2003.

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B. Compensation

The following tables set forth the compensation paid to or accrued by Directors and Statutory Auditors of Sanpaolo IMI for the year ended December 31,
2002:

|Surname and Name                       |  | Description of
office          |  | Time
in
office                     |  | Remuneration
for the
office |   | Non-
monetary
benefits |  | Bonuses
and other
incentives
(1) |   | Other
compensation(2) |  
|-------------------------------------- |  | ------------------------------ |  | ---------------------------------- |  | --------------------------- | - | ---------------------- |  | -------------------------------- | - | --------------------- | -
|
|MASERA Rainer Stefano                  |  | Chairman(3)                    |  | January 1, 2002 December 31, 2002 |  | 656                         |   | 13                     |  | 400                              |   | (a                    | )
|ROSSI Orazio                           |  | Deputy Chairman                |  | March 5, 2002 December 31, 2002   |  | 86                          |   |                        |  |                                  |   | 315                   |  
|SALZA Enrico                           |  | Deputy Chairman(3)             |  | January 1, 2002 December 31, 2002 |  | 112                         |   |                        |  | 124                              |   | 27                    |  
|BUSSOLOTTO Pio                         |  | Managing Director              |  | March 5, 2002 December 31, 2002   |  | 507                         |   |                        |  | 413                              |   | (b                    | )
|IOZZO Alfonso                          |  | Managing Director(3)           |  | January 1, 2002 December 31, 2002 |  | 656                         |   |                        |  | 413                              |   | (c                    | )
|MARANZANA Luigi                        |  | Managing Director(3)           |  | January 1, 2002 December 31, 2002 |  | 656                         |   |                        |  | 413                              |   | (d                    | )
|BOUILLOT Isabelle                      |  | Director                       |  | March 5, 2002 December 31, 2002   |  | 47                          |   |                        |  |                                  |   | 26                    |  
|CARMI Alberto                          |  | Director                       |  | January 1, 2002 December 31, 2002 |  | 62                          |   |                        |  | 93                               |   |                       |  
|FONTANA Giuseppe                       |  | Director                       |  | January 1, 2002 December 31, 2002 |  | 82                          |   |                        |  | 116                              |   | 62                    |  
|GALATERI DI GENOLA E SUNIGLIA Gabriele |  | Director(3)                    |  | January 1, 2002 December 31, 2002 |  | 71                          |   |                        |  | 116                              |   | 26                    |  
|GARDNER Richard                        |  | Director                       |  | January 1, 2002 December 31, 2002 |  | 60                          |   |                        |  | 47                               |   |                       |  
|MANULI Mario                           |  | Director                       |  | January 1, 2002 December 31, 2002 |  | 65                          |   |                        |  | 70                               |   |                       |  
|MARRONE Virgilio                       |  | Director                       |  | January 1, 2002 December 31, 2002 |  | (e                          | ) |                        |  | (e                               | ) |                       |  
|MATUTES JUAN Abel                      |  | Director                       |  | January 1, 2002 December 31, 2002 |  | 59                          |   |                        |  | 47                               |   |                       |  
|MIHALICH Iti                           |  | Director(3)                    |  | January 1, 2002 December 31, 2002 |  | 92                          |   |                        |  | 116                              |   | 27                    |  
|OTTOLENGHI Emilio                      |  | Director                       |  | January 1, 2002 December 31, 2002 |  | 63                          |   |                        |  | 109                              |   | 98                    |  
|SACCHI MORSIANI Gianguido              |  | Director                       |  | March 5, 2002 December 31, 2002   |  | 53                          |   |                        |  |                                  |   | 304                   |  
|VERMEIREN Remi Francois                |  | Director                       |  | January 1, 2002 December 31, 2002 |  | 56                          |   |                        |  | 8                                |   |                       |  
|ARCUTI Luigi                           |  | Honorary Chairman(4)           |  | January 1, 2002 December 31, 2002 |  |                             |   |                        |  | 47                               |   |                       |  
|ALBANI CASTELBARCO VISCONTI Carlo      |  | Director(4)                    |  |                                    |  |                             |   |                        |  | 39                               |   |                       |  
|BOTIN Emilio                           |  | Director(4)                    |  |                                    |  |                             |   |                        |  | 8                                |   |                       |  
|INCIARTE Juan Rodriguez                |  | Director(4)                    |  |                                    |  |                             |   |                        |  | 47                               |   |                       |  
|MASINI Mario                           |  | Director(4)                    |  |                                    |  |                             |   |                        |  | 47                               |   |                       |  
|SCLAVI Antonio                         |  | Director(4)                    |  |                                    |  |                             |   |                        |  | 31                               |   |                       |  
|VERCELLI Alessandro                    |  | Director(4)                    |  |                                    |  |                             |   |                        |  | 23                               |   |                       |  
|PAOLILLO Mario                         |  | Chairman of Statutory Auditors |  | January 1, 2002 December 31, 2002 |  | 105                         |   |                        |  |                                  |   | 240                   |  
|BENEDETTI Aureliano                    |  | Statutory Auditor              |  | January 1, 2002 December 31, 2002 |  | 69                          |   |                        |  |                                  |   | 116                   |  
|DALLOCCHIO Maurizio                    |  | Statutory Auditor              |  | January 1, 2002 December 31, 2002 |  | 71                          |   |                        |  |                                  |   | 21                    |  
|                                       |  |                                |  |                                    |  |                             |   |                        |  |                                  |   |                       |  

133

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|MAZZI Paolo       |  | Statutory Auditor |  | April 30, 2002 December 31, 2002 |  | 50 |  |  |  |  |  |    | 
|----------------- |  | ----------------- |  | --------------------------------- |  | -- |  |  |  |  |  | -- | 
|VITALI Enrico     |  | Statutory Auditor |  | April 30, 2002 December 31, 2002 |  | 46 |  |  |  |  |  |    | 
|MIGLIETTA Angelo  |  | Statutory Auditor |  | January 1, 2002 April 30, 2002   |  | 23 |  |  |  |  |  | 98 | 
|RAGAZZONI Ruggero |  | Statutory Auditor |  | January 1, 2002 April 30, 2002   |  | 23 |  |  |  |  |  | 78 | 

---



The
aggregate compensation for the year ended December 31, 2002 for the Senior Managers was approximately €6 million, including the compensation received by
certain Senior Managers for positions within the Group that they no longer cover. The above-mentioned compensation includes bonuses and other retirement benefits of approximately
€2.5 million.

Sanpaolo
IMI pays annual bonuses to the Managing Directors based on corporate performance, measured primarily in relation to profitability. The annual bonuses also reflect the
achievement of economic targets planned for the Group and for the areas of responsibility of each Managing Director's sectors.

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Stock option plan for the year ended December 31, 2002

The shareholders' meeting held on July 31, 1998 authorized the board of directors to introduce incentive plans in favor of Group managers by means of
rights issues for amounts agreed subsequently of up to €40 million (14,285,714 Shares).

In
accordance with this mandate, the board of directors on February 9, 1999, launched the first plan, granting to the Managing Directorsas they were also General
Managersand 56 other executives a total of 6,772,000 rights, a third of which could be exercised from 2000, a third from 2001 and the other third from 2002 and not beyond March 31,
2003 (extended by the board of directors on July 30, 2002 to March 31, 2004), at a subscription price of €12.396 per Share. At the meeting held on June 27, 2000,
the board of directors launched a second plan, assigning to the Managing Directorsas they were also General Managersand 122 other executives a total of 3,378,270 rights,
which could be exercised from 2003 and not beyond March 31, 2005, at a subscription price of €16.45573 per Share.

On
December 18, 2001, the board of directors approved a third stock option plan, structured as follows:



The
Shareholders' Meeting, held on April 30, 2002 authorized the board of directors to introduce new incentive plans in favor of Group managers by means of rights issues, for
amounts of up to €51,440,648 (18,371,660 Shares.)

In
accordance with this mandate the board of directors, on December 17, 2002 introduced a new incentive plan, structured as follows:



135

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The
board of directors on May 14, 2002, on the basis of previous authorization by the shareholders' meeting held on April 30, 2002, launched a stock option plan for the
Chairman and the Managing Directors, for the period 2001-2003. The board of directors was authorized to use treasury shares to service the plan. The plan is structured as follows:



In
2002, the board of directors approved the first bonus issue of Shares to employees of Sanpaolo IMI Bank in service on June 27, 2002. The bonus was linked to the 2001
productivity premium paid in May 2002 and the level of remuneration of each employee.

14,427
employees, 72.5% of those entitled, elected to receive Shares, which amounted to 1,912,373 Shares with a reference cost per Share of €10.0196 (calculated according
to the current tax standards), for a commitment of €19.2 million. Those Shares will not be eligible for sale for a period of three years.

Finally,
on March 4, 2003, the board of directors approved a second bonus issue of Shares to the employees of Sanpaolo IMI Bank which is connected to the level of the remuneration
and the productivity premium for 2002 which will be paid in 2003.

136

---

If
the rights assigned and not yet exercised in 2002 (4,305,834) were to be exercised, this would entail further increases in capital of €12,056,335 million and
the booking of additional paid-in capital of €41,318,783 million.

Number of
shares

Average
exercise price €

Market price €Development of stock option plans in 2002Rights at January 1, 2002

11,654,104

13.66497

12.041
(a)New rights assigned in 2002 to executives

5,455,000

7.1264

6.703
(b)New rights assigned to Chairman and Managing Director

1,650,000

12.6244

11.742
(c)Rights exercised in 2002





Rights expired in 2002(d)

-245,000

14.3989

Right at December 31, 2002

18,514,104

10.9061

6.200
(e)Of which: exercisable at December 31, 2002(f)








---

As
of December 31, 2002, under the 1999-2001 stock option plan, senior managers other than the Managing Directors had exercised 175,000 rights. Rainer Stefano Masera
had exercised 246,666 options. As of such date an additional 1,834,500 options had been exercised by other managers.

|         |  | Options Assigned as of December 31, 2002 |  | Options Exercisable as of December 31, 2002
|-------- |  | ---------------------------------------- |  | -------------------------------------------
|
|
|12.396   |  | 4,305,834                                |  |                                           
|16.45573 |  |                                         |  | 3,208,270                                  
|12.7229  |  |                                         |  |                                           
|12.6244  |  |                                         |  |                                           
|7.1264   |  |                                         |  |                                           
|Total    |  | 4,305,834                                |  | 3,208,270                                  

---

137

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C. Board Practices

Directors' Benefit Arrangements on Termination

As of June 10, 2003, two Directors are entitled to compensation if not re-elected for the 2004-2006 term. The amount of
compensation to which each such Director would be entitled is an amount equivalent to one year's remuneration during the 2001-2003 term. In effect, these arrangements preserve and defer a
termination benefit to which the two Directors would have been entitled had they remained senior management employees. The compensations were granted to the Directors by a resolution of the board of
directors and not by contractual arrangements. Except as discussed herein, there are no service contracts between any Director and Sanpaolo IMI providing for benefits upon termination of service.

Internal Audit Department andComitato Audit

The Bank of Italy's orientation on supervisory activities in recent years concentrates on verifying that banks have an adequate level of efficiency and control.
This has led the Bank of Italy to revise its regulatory instructions on matters of internal control.

The
approach, which reflects international developments, features a limited number of prescriptive measures, preferring to establish a set of principles for banks to follow; the idea is
also to stimulate the management to develop highly effective systems of internal control.

The
terminology used by the Bank of Italy, "System of Internal Control", introduces a strong concept of innovation: no longer controls involving purely formal checks, but integrated by a
series of control subsystems to monitor all kinds of risks by operating in an integrated manner at all levels of the organization.

The
internal auditing function is also called upon as part of this new approach to direct its efforts towards checking the adequacy of the organization as a whole, evaluating the
company's ability to achieve its objectives with efficiency and effectiveness.

In
Sanpaolo IMI this task is entrusted to a separate Internal Auditing Department which has the necessary independence from the operating structures as it reports directly to the three
Managing Directors. In carrying out its duties, the Internal Audit Department is not subject to any limits in its access to company information, archives and assets, as foreseen in the Internal Audit
Regulations approved by the board of directors in December 1999, which extend to the whole Group a system of internal controls that allows the Parent Bank to exercise effective control over the
Group's overall risk exposure.

The
Internal Audit Department has to evaluate the adequacy of the Group's overall system of internal controls, check that operations are carried out properly and that the risk trend is
kept under control; it also has to bring to the attention of the board of directors and of the Senior Managers any improvements that could be made to the Group's risk management policies, measurement
tools and procedures.

The
Internal Audit Department reports on its activities on a quarterly basis to the board of directors, as well as to theComitato Audit.
TheComitato Audithas been formed pursuant to applicable Italian regulations.

TheComitato Auditconsists of the following non-executive and independent directors:



138

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Mr. Marrone,
who was elected to the board of directors pursuant to the Agreement Among Shareholders and, therefore, is not an independent Director is also a member of the Comitato Audit. The Managing Directors and
the Chairman of the Board of Statutory Auditors, as well as the Heads of the Accounting Department and of the
Audit Department in their respective capacities, take part in the meetings of theComitato Audit.

The Comitato Auditnormally meets monthly; in 2002 theComitato Auditmet 16 times. The Comitato Auditanalyzes the issues and the relevant policies in order to assess, in the context of its evaluation of the internal control system, issues
which should be further investigated. TheComitato Auditalso evaluates the adoption of the most appropriate corrective measures in order to deal with
omission and anomalies of the audit processes, both internally and with the independent auditors.

In
particular theComitato Audit:



TheComitato Auditalso undertakes the responsibilities and functions relating to it as a regulatory body pursuant to legislative decree
no. 231 of 2001.

D. Employees

The total number of employees of the Sanpaolo IMI Group at the end of 2002 was 45,650. Excluding the former Cardine group (as of December 31, 2001) and
Banka Koper personnel, Group personnel at the end of 2002 included 34,097 employees, 931 less than at the end of 2001.

At
the end of 2002 the Parent Bank had 28,036 employees, a decrease of 973 against 2001 (573 new employees and 1,546 departures). The comparison is based on pro forma figures that
include Banco di Napoli, notwithstanding the spin-off of the tax collection activities, and 24 employees of Cardine's foreign branches acquired by the Parent Bank in June 2002.

The
Group's rationalization plan continued in 2002. Given this policy, the incentive plan to encourage voluntary severance continued and was accepted by a total of more than 1,100
employees. This also results from a generational change, as younger people and those with specialist professional skills are hired.

139

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The
following table shows the Group's total headcount at the dates indicated:

|                   |  | At December 31, 2002 |  | At December 31, 2001 |  | Change 12/31/02-12/31/01 | 
|------------------ |  | -------------------- |  | -------------------- |  | ------------------------ | 
|
|
|Year-end headcount |  | 45,650               |  | 100.0                |  | 46,556                   | 
|Executives         |  | 881                  |  | 1.9                  |  | 834                      | 
|Managers           |  | 14,387               |  | 31.5                 |  | 14,479                   | 
|Other employees    |  | 30,382               |  | 66.6                 |  | 31,243                   | 

The
comparison is influenced by the reclassification of "Executives" of Banco di Napoli.



December 31, 2002Domestic banking

35,878Italy

26,031Luxembourg(International Private Banking)

102Austria(International Private Banking)

9Switzerland(International Private Banking)

17Cardine(Cardine Finanziaria and its seven bank networks)

9,719Wealth Management and Financial Markets

1,058Italy

908Luxembourg

85United States

45United Kingdom

13Japan

7Personal Financial Services

1,880Italy

1,503France

247Luxembourg

100Ireland

9Switzerland

21Foreign and International Business

2,248Foreign Network

111France

1,239Ireland

12Romania

399Slovenia (Banka Koper)

487Corporate Center

4,586Italy

4,553Portugal

2Luxembourg

1United Kingdom

30


In
2002, on average the Parent Bank had approximately 36 temporary employees.

140

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National collective contracts in Italy are generally negotiated between the national association of banks and the national unions. The relations of the individual
banks with their employees must be based on and comply with the guidelines set out by the national collective contracts. The national collective contract for non-management staff (which
covers almost all Sanpaolo lMI employees), signed on July 11, 1999, expired, for the economic terms, on December 31, 2001, and will expire, for all other binding terms, on
December 31, 2003.

Agreement
on the economic terms of the national collective contract was reached April 4, 2002, with provision for an increase in salaries equal to 5.4% over two years (3.8% for
the year 2002 and 1.6% for the year 2003). The new terms also include significant cuts in seniority pay, bonuses and the starting salary for newly hired employees; moreover, hirings are made more
flexible as a result of the adoption of temporary or part-time contracts.

At
a company level in May 2001, Sanpaolo IMI signed the renewal of the second-level collective agreement, which introduced several important innovations, such as the definition of
the new professional skills and a stock purchasing plan for all employees. In 2001, Sanpaolo IMI also increased its staff performance-related bonus schemes. The incentive scheme, extended to all areas
of Sanpaolo IMI during the year 2001, covers almost 100% of personnel. It is directly related to the achievement of set targets and provides for cash bonus payments, calculated and communicated in
advance, both for the branch managers and for the staff.

At
the end of 2002, Sanpaolo IMI and the trade unions entered into agreements relating to labor contracts for the personnel of the former Banco di Napoli. See "Item 4. Information
on Sanpaolo IMIHistory and Developments of Sanpaolo IMISignificant Developments in 2002Internal Group DevelopmentsIntegration with Cardine and Banco
di Napoli".

At
the end of 2002, negotiations relating to the reduction of personnel and the rationalization of the Group's human resources as envisaged by the 2003-2005 Business Plan
started. See "Item 4. Information on Sanpaolo IMIHistory and Developments of Sanpaolo IMIRecent DevelopmentsThe 2003-2005
PlanSignificant Developments in 2002Internal Group DevelopmentsIntegration with Cardine and Banco di Napoli".

The
negotiations were concluded in June 2003. Agreements were reached to access the "Fondo di solidarietà per il sostegno del reddito,
dell'occupazione e della riconversione e riqualificazione professionale del Personale del Credito" a specialized national welfare fund, in the credit contractual sector, of the
INPS (as defined below). The welfare fund allows, on a voluntary basis, personnel to retire prior to the terms prescribed by applicable laws and other statutory provisions.



Sanpaolo IMI provides certain retirement benefits to its employees. From December 31, 1990, Sanpaolo and its employees began to make certain contributions
to theIstituto Nazionale per la Previdenza Sociale("INPS"), the state-run pension scheme, which provides a flow of income to employees
upon retirement.

Until
December 31, 1990, employees of Sanpaolo were entitled to retirement benefits from theCassa di Previdenza, a private pension
scheme funded by Sanpaolo and by Sanpaolo's employees. In accordance with the Amato Law, Sanpaolo was no longer due to make payments to theCassa di
Previdenzaafter December 31, 1990. After December 31, 1990, those employees who were employed by Sanpaolo as of that date became entitled to receive from the Cassa di
Previdenzasupplemental benefits which, when added to the payments from INPS, provide such employees with equivalent retirement coverage as was
previously extended to them under theCassa di Previdenzaplan before December 31, 1990. Approximately 9,500 employees of Sanpaolo IMI will
benefit from this retirement plan. As of

141

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December 31,
2002 Sanpaolo IMI had set aside a total of €117.8 million during the previous years with respect to this specific retirement coverage.

Sanpaolo
IMI has also created theFondo Pensioni del Gruppo Sanpaolo IMI, a private pension fund to which employees can make tax
deductible contributions. Sanpaolo IMI itself pays tax deductible contributions to the same fund on behalf of such employees.

Furthermore,
pursuant to Italian legislation, Sanpaolo IMI annually sets aside for every employee a certain amount (equal to the employee's annual salary divided by 13.5), and upon
retirement, pays the employee the sum of such amounts adjusted for inflation. Sanpaolo IMI accrues this fund on its balance sheet.



Overall, Sanpaolo IMI considers satisfactory the relations with its employees. Approximately three-quarters of the employees belong to one of the nine national
unions, representing both employees and middle-management. This is in accordance with data from the Italian banking sector.

E. Share Ownership

Investments in Sanpaolo IMI and in the companies it controls held by the directors, statutory auditors and managing directors of Sanpaolo IMI and by other persons
as per Article 79 of CONSOB Resolution no. 11971 of 5/14/99 are as follows:

|Name                       |  | Company      |  | How held  |  | Shared held on December 31, 2001 |  | Shares acquired
during 2002 |  | Shares sold during 2002 |  | Shares held on December 31, 2002
|-------------------------- |  | ------------ |  | --------- |  | -------------------------------- |  | --------------------------- |  | ----------------------- |  | --------------------------------
|Bussolotto Pio             |  | Sanpaolo IMI |  | Direct    |  | 3,000                            |  |                            |  |                        |  | 3,000                           
|Carmi Alberto              |  | Sanpaolo IMI |  | Spouse    |  | 10,000                           |  |                            |  |                        |  | 10,000                          
|Fontana Giuseppe           |  | Sanpaolo IMI |  | Direct    |  | 0                                |  | 30,000                      |  | 30,000                  |  |                                
|Iozzo Alfonso              |  | Sanpaolo IMI |  | Direct    |  | 7,087                            |  |                            |  |                        |  | 7,087                           
|Masera Rainer              |  | Sanpaolo IMI |  | Direct    |  | 180,900                          |  |                            |  | 30,900                  |  | 150,000                         
|                           |  |              |  | Spouse    |  | 27,500                           |  |                            |  |                        |  | 27,500                          
|Matutes Juan Abel          |  | Sanpaolo IMI |  | Affiliate |  | 761,517                          |  |                            |  |                        |  | 761,517                         
|Milalich Iti               |  | Sanpaolo IMI |  | Direct    |  | 6,000                            |  | 2,000                       |  |                        |  | 8,000                           
|Ottolenghi Emilio          |  | Sanpaolo IMI |  | Direct    |  | 320,000                          |  |                            |  |                        |  | 320,000                         
|                           |  |              |  | Affiliate |  | 4,110,000                        |  | 548,731                     |  |                        |  | 4,658,731                       
|                           |  |              |  | Spouse    |  | 4,000                            |  |                            |  |                        |  | 4,000                           
|Rayneri Alessandro         |  | Sanpaolo IMI |  | Affiliate |  | 15,000                           |  | 3,000                       |  |                        |  | 18,000                          
|                           |  |              |  | Spouse    |  | 0                                |  | 2,000                       |  | 0                       |  | 2,000                           
|Rossi Orazio               |  | Sanpaolo IMI |  | Direct    |  | 52,593.50                        |  |                            |  | 0.50                    |  | 52,593                          
|                           |  | Sanpaolo IMI |  | Spouse    |  | 0                                |  | 34,000                      |  |                        |  | 34,000                          
|Sacchi Morsiani Gian Guido |  | Sanpaolo IMI |  | Direct    |  | 33,000                           |  | 200,591.25                  |  | 33,591                  |  | 200,000                         
|Salza Enrico               |  | Sanpaolo IMI |  | Direct    |  | 500                              |  |                            |  |                        |  | 500                             
|                           |  |              |  | Spouse    |  | 1,250                            |  |                            |  |                        |  | 1,250                           

Any
senior manager or director, as of December 31, 2002, owned less than 1% of the Shares of Sanpaolo IMI.

142

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. The Major Shareholders

Agreement Among Shareholders

On April 24, 2001, the Compagnia di San Paolo entered into agreements (collectively the "Agreement Among Shareholders"), to consult and
co-ordinate the voting at the shareholders' meeting of Sanpaolo IMI called for April 2001 with IFI/IFIL and Societá Reale Mutua di Assicurazioni (Compagnia di San
Paolo, IFI/IFIL and Societá Reale Mutua di Assicurazioni, collectively, the "Parties"). The Agreement Among Shareholders was extended on February 25, 2002 to include CDC Ixis
Italia Holding S.A. ("CDC Ixis") a company belonging to the CDC group.

On
April 24, 2003, IFI transferred to IFIL its interest in Sanpaolo IMI. While IFIL remains a party to the Agreement Among Shareholders, IFI is no longer a party to it.



The Agreement Among Shareholders concerns 352,647,310 Shares representing 16.21% of the ordinary capital and 19.20% of the total capital of Sanpaolo IMI, taking
into consideration theAzioni Privilegiateheld by the Compagnia di San Paolo.



Following
the Fondaco Contribution, Fondaco SGR will solely be entitled to enter into agreements relating to the Foundation Interests in Sanpaolo IMI. See "Item 4. Information on
Sanpaolo IMISignificant Developments during 2002CardineOwnership structure of Sanpaolo IMI upon completion of the Cardine Merger".



The Parties will consult from time to time to exchange opinions concerning the status of their interests as shareholders of Sanpaolo IMI.



Each Party has agreed not to modify in any way, for the entire duration of the Agreement Among Shareholders, as described below, except with the prior written
consent of the other Party, its

143

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shareholding
in the capital of Sanpaolo IMI. The Parties, directly or indirectly, or through any intervening personnel or entity:



Notwithstanding
the foregoing, the Compagnia di San Paolo has the right to reduce its shareholding in the capital of Sanpaolo IMI.



The Agreement Among Shareholders will terminate automatically and will no longer have effect the 15th day preceding the date of the shareholders'
meeting of the bank called to approve the financial statements for the year ending December 31, 2003.

In
addition, the Agreement Among Shareholders terminates automatically upon the occurrence of either:



Other Agreements

The Compagnia di Sanpaolo reserves the right to make similar consultative agreements with other shareholders of Sanpaolo IMI. In such case, the Compagnia di
Sanpaolo will give notice to the other parties to the Agreement Among Shareholders, and such parties may withdraw, without any penalty, from the Agreement Among Shareholders within 15 days
following the notice.

Sanpaolo
IMI and the CDC group entered into an agreement relating to their exchange of shares which occurred in 2001. See Item 4.Information on Sanpaolo
IMIHistory and Developments of Sanpaolo IMIDevelopments During 2002Collaboration with CDC.

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Table of Major Shareholders

The following table sets forth, as of June 10, 2003, the Sanpaolo IMI shareholders holding 1% or more of the outstanding Sanpaolo IMI Shares, with their
corresponding interests in Sanpaolo IMI.

|Shareholders (direct and/or indirect)    |  | Ordinary
Shares |  | Azioni
Privilegiate |  | Total Shares |  | % of total
capital
1,837,166,000
Shares(1) |   | % of ordinary capital 1,448,831,982 Shares(2) |  
|---------------------------------------- |  | --------------- |  | ------------------- |  | ------------ |  | ------------------------------------------ | - | --------------------------------------------- | -
|Compagnia di San Paolo                   |  | 108,662,399     |  | 157,341,052         |  | 266,003,451  |  | 14.479                                     | % | 7.500                                         | %
|Fondazione CRPR                          |  | 63,487,817      |  | 134,968,267         |  | 198,456,084  |  | 10.802                                     | % | 4.382                                         | %
|Fondazione CRB                           |  | 45,174,581      |  | 96,024,699          |  | 141,199,280  |  | 7.686                                      | % | 3.118                                         | %
|Santander Central Hispano                |  |                |  |                    |  | 117,064,449  |  | 6.372                                      | % | 8.080                                         | %
|IFIL                                     |  |                |  |                    |  | 70,371,000   |  | 3.830                                      | % | 4.857                                         | %
|Deutsche Bank AG                         |  |                |  |                    |  | 67,642,211   |  | 3.682                                      | % | 4.669                                         | %
|Credito Emiliano Holding S.p.A.          |  |                |  |                    |  | 40,200,642   |  | 2.189                                      | % | 2.776                                         | %
|Monte dei Paschi di Siena                |  |                |  |                    |  | 37,545,168   |  | 2.044                                      | % | 2.213                                         | %
|Fondazione Cariplo                       |  |                |  |                    |  | 32,057,549   |  | 1.745                                      | % | 2.213                                         | %
|Caisse des Dépots et Consignations (CDC) |  |                |  |                    |  | 31,294,572   |  | 1.703                                      | % | 2.160                                         | %
|Templeton Global Advisers Ltd            |  |                |  |                    |  | 28,316,530   |  | 1.541                                      | % | 1.954                                         | %
|Società Reale Mutua di Assicurazioni     |  |                |  |                    |  | 28,285,876   |  | 1.540                                      | % | 1.952                                         | %
|Ente Cassa di Risparmio di Firenze       |  |                |  |                    |  | 28,050,000   |  | 1.527                                      | % | 1.936                                         | %
|Fondazione Cassa di Risparmio di Venezia |  |                |  |                    |  | 27,088,729   |  | 1.474                                      | % | 1.870                                         | %

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Differences in Voting Rights

Certain classes of voting rights were created in connection with the Cardine Merger. See "Item 4. Information on Sanpaolo IMISignificant Developments
during 2002CardineOwnership structure of Sanpaolo IMI upon completion of the Cardine Merger".

Number of Record Holders in the United States

As of June 11, 2003, there were 7,024,764 ADSs outstanding, representing 14,049,528 Shares or approximately 0.970% of Sanpaolo IMI's ordinary share
capital; as of such date, there were 24 holders of record of Sanpaolo IMI ADSs.

B. Related Party Transactions

Material Related Party Transactions

In May 2002, Sanpaolo IMI sold 8% of Cardine to the Compagnia di San Paolo. The sale was part of the streamlining of the Group's equity holders. See "Item
4. Information on Sanpaolo IMIHistory and Developments of Sanpaolo IMISignificant Developments during 2002CardineStreamlining of Group's equity
holding through transactions including Sanpaolo IMI and Compagnia di Sanpaolo".

As
part of the streamlining of the Group's equity holdings, certain Directors of the Group and affiliates thereof sold minority stakes in Old NHS, the company whose shares were a
material portion

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of
the assets sold by the Compagnia di San Paolo in the above referenced transaction, to Sanpaolo IMI. The sale of such minority stakes were for cash. Sanpaolo IMI paid approximately
€9.4 million for a 2.56% stake in Old NHS. Concurrently the Directors of the Group and the affiliates thereof which sold their stakes in Old NHS to Sanpaolo IMI, purchased
Cardine shares from Sanpaolo IMI for the amount that they were due for the interest in Old NHS that they sold to Sanpaolo IMI. The valuations of the stakes in Old NHS and of the Cardine shares
transferred pursuant to these transactions is the same as the valuations made in the above referenced transaction between Sanpaolo IMI and Compagnia di San Paolo. See "Item 4.Information
on Sanpaolo IMIA. History and Developments of Sanpaolo IMISignificant Developments During 2002CardineStreamlining of Group's equity holding through
transactions involving Sanpaolo IMI and Compagnia di San Paolo".

Other
material related party transitions include:



There
are outstanding loans to a party of the Agreement Among Shareholders, see "Item 4. Information on Sanpaolo IMIHistory and Developments of Sanpaolo
IMIDevelopments During 2002FiatControl of Fiat", to members of the board of directors and to Senior Managers. All such loans were made in the ordinary course of
business, on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions and did not involve more than the normal risk of
collectibility or present other unfavorable features.

Any
loans to members of the board of directors and Senior Managers comply with applicable laws and regulations and with Sanpaolo IMI's policy on loans.

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Loans and Guarantees Given



December 31, 2002

December 31, 2001(in millions of €)Directors

39

44Statutory Auditors






The
amounts indicated above include loans granted to and guarantees given by the Group to the Directors and Statutory Auditors, €0.1 million, and
to companies and banks identified pursuant to article 136 of the Consolidated Banking Act, €38.7 million, including the drawdown against credit lines granted to the
latter.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

See the Consolidated Financial Statements and related notes in the F-pages.

See
"Item 17. Financial Statements".

Sanpaolo
IMI's dividend policy is to maximize dividend payout while complying with the standards of a well capitalized financial institution.

Legal Proceedings

The Group is subject to certain claims and is a party to a large number of legal proceedings relating to the normal course of its business. Although it is
difficult to determine the outcome of such claims and proceedings with certainty, Sanpaolo IMI believes that liabilities related to such claims and proceedings are unlikely to have, in the aggregate,
a material adverse effect on the Group's financial condition or results of operations.



With its Decision C 3955 dated December 11, 2001, the European Commission declared incompatible with the European Community law the tax break provided by
the Ciampi Law in case of mergers of banks or of banking groups and has ordered the Italian government to suspend these facilities and to retrieve from the banks the sums that correspond to the
facilities which they had taken advantage of. In compliance with the decision of the European Community, the Italian Government, with the Law Decree No. 282 of December 24, 2002, has
ordered the restitution of the fiscal benefits before December 31, 2002. In compliance with the Law Decree, Sanpaolo IMI paid out the total amount of €200 million on
December 31, 2002, using the sums that were previously appropriated to a specific fund.

The
above-mentioned decision by the European Commission has been appealed by the Italian Government and by the banks involved (including Sanpaolo IMI) before the European Courts. The
judgment is still pending. However, the outcome of this judgment is not expected to have an adverse effect on the Sanpaolo IMI Group. In case of an adverse ruling, the obligation of paying out the
sums settled in December 2002 would be confirmed, while, whereas, in case of a positive ruling, the Sanpaolo IMI Group would have the right to the restitution of the paid amounts.



In light of declining interest rates in Italy, various regulations were issued in 1999 which imposed upon the entire Italian banking sector a review of interest
rates on loans subsidized totally or partially by the public sector, if so requested by the borrowers or loan sponsors. Article 29 of Law no. 133 of 1999 on low-interest
residential mortgage loans is the act with the largest potential impact on the Sanpaolo IMI Group. If implemented, the regulation is expected to apply retroactively from July 1, 1999.

147

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The Italian banking sector is seeking to prevent the application of the act. Sanpaolo IMI and other new banks filed an appeal against the implementing decree, Ministerial Decree 110 of
March 24, 2000, which was decided by the Regional Administrative Court of Lazio against the banks. A new appeal is currently pending. For the act to become applicable, the Ministry of Economy
and Finance will have to establish, pursuant to Article 145.62 of the Budget Law of 2001, an "actual global average rate" applicable to the residential mortgage loans covered by the act. On
March 31, 2003, the Ministry of Economy and Finance established that the rate will be 12.61%, applicable to installments maturing after July 1, 1999. Sanpaolo IMI has set aside
sufficient funds to comply with the decree.



Two other regulations have been issued, one under Law no. 226 of 1999 on assistance to flood victims in the Piedmont region and one under
Article 128 of Law no. 388 of 2000 on subsidized agricultural loans, which have the same effect of imposing upon the entire Italian banking sector a review of interest rates on certain
subsidized loans, if so requested by the borrowers or loan sponsors.

In
connection with Law no. 226 of 1999 Sanpaolo IMI took in 2001, appropriate steps to conform to the new regulation, whose negative effects were not significant in 2002 and are
not expected to be significant in the following years.

For
Article 128 of no. Law 388 of 2000 to become applicable, an implementing Ministerial Decree will have to be issued. No such Decree has yet been issued. If implemented, the
regulation is expected to apply to interest accruing on the relevant loan from the date on which a request for renegotiation of the applicable interest rate is made. The interest rates that will apply
to the Group's outstanding loans that are covered by the regulation will not be known until the implementing procedure described above has been resolved and negotiations with requesting borrowers or
loan sponsors are completed.



The Italian banking system is characterized by the relatively large proportion of overdraft financing provided through current accounts. A borrowing is made
whenever a customer's drawings exceed the credit balance in the account. An overdraft customer is granted a maximum overdraft limit on the basis
of Sanpaolo IMI's lending criteria, and the customer can draw on the overdraft facility. Debit interest on overdraft facilities is typically charged quarterly and at a floating rate. Overdrafts are
demand loans and are generally not subject to repayment schedules.

With
three innovative judgments rendered in 1999 against some Italian banks, the Italian High Court (Corte di Cassazione) declared invalid
the practice of Italian banks to capitalize interest income on a quarterly basis. The practice has been subsequently reasserted in two judgments rendered in 2002.

In
order to clarify the issue after these decisions, the Italian Government (with Decree no. 342 of 1999) enacted the validity of the above mentioned practice, for the current
accounts opened before April 22, 2000 (the date of its promulgation), while required that interest income and interest charges must be capitalized on the same time basis for the current
accounts opened after April 22, 2000.

In
a ruling published October 17, 2000, the Italian Constitutional Court (Corte Costituzionale) decided that the provisions of
Decree no. 342 of 1999 were unconstitutional to the extent they apply to current accounts opened before the promulgation of this legislative measure. The Constitutional Court did not express an
opinion on the substantive issue of whether the practice to capitalize interest income for current accounts opened before April 22, 2000 was permitted under Italian Civil law, but established
that Italian Parliament had not delegated sufficient power to the Italian Government to enact such a provision. The outcome of the dispute is uncertain. Some judges rendered contrasting decisions. At
present the number of the actions brought against Sanpaolo IMI is not very large and is has not increased since the above mentioned judgments of the High Court.

148

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Decree Law no. 394 of December 29, 2000 on usury was enacted into law on February 27, 2001. This law applies to any installments on
fixed-rate mortgage loans due after January 2, 2001, and requires banks to renegotiate outstanding loans on the basis of a "substitute rate" of 9.96% for residential and business
mortgage loans, reduced to 8% for residential mortgage loans of up to €77,469 for the purchase of a primary residence (provided it is not considered a luxury home).

During
2001 and 2002 Sanpaolo IMI Group took appropriate steps to conform to the law and the negative impact of renegotiated fixed-rate mortgage rates is gradually
decreasing. Going forward, management does not expect this law to have a material adverse effect on the Group.



In 2002, CONSOB brought an administrative proceeding against Sanpaolo IMI Asset Management SGR S.p.A. ("Sanpaolo IMI Asset Management" a company of the Group
operating in the asset management business), claiming that the positive result of an investment fund was obtained to the detriment of two other funds in the absence of an adequate audit system.

Sanpaolo
IMI Asset Management responded to CONSOB, asserting that there is no connection among the performances of the three funds and that it always took appropriate measures as far as
internal controls are concerned. On December 24, 2002, CONSOB fined Sanpaolo IMI Asset Management €499,000. Sanpaolo IMI Asset Management has appealed the fine. The appeal is
currently pending and it is not currently possible to anticipate its outcome.



In December 2000, banks belonging to the Cardine Group (CRPR, CRB and Cassa di Risparmio di Gorizia) assigned their tax collection business to Ge. Ri. Co.
S.p.A. giving an unlimited guaranty to the assignee for any possible capital loss, contingency or negative variations that could arise subsequent to this assignment. The guaranty applies to risks
relating to the period before December 31, 2000 and is valid until December 31, 2005.

During
2002, the Ministry of Finance brought a claim against Ge. Ri. Co. for certain alleged irregularities on the part of some tax collectors before December 2000, demanding
compensation for damages for non-collected taxes. Any claims that Ge. Ri. Co. may have to pay in the future as a result of this proceeding are covered by the guaranty now assumed by
Sanpaolo IMI. Such claims are numerous but their individual amount is not significant; furthermore, the relevant proceedings are still pending and it is not currently possible to determine their
outcome or their duration. Sanpaolo IMI has set aside a specific fund (Rischie Oneri Diversi) to cover these amounts.



Fideuram Vita is involved in a dispute with the tax authorities regarding the years from 1985 to 1987. Fideuram Vita obtained a favorable judgment in the first
instance, but substantially unfavorable decisions were issued against it in the subsequent appeals. Fideuram Vita has appealed to the High Court (Corte de
Cassazione), as it is still confident that the case should be resolved in its favor. If, however, the adverse ruling is confirmed, the potential liability for Fideuram Vita
would not be material, but would however become significant (albeit covered by existing reserves) if subsequent open years (from 1997 onwards) were also contested. Based on expert opinions, and taking
into account the positive evolution of the dispute and the fact that the case involves a practice that is universally applied by the insurance industry, Fideuram Vita has not made any specific
provision for this risk.

149

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Furthermore,
in December 2002, the Sanpaolo Life Ltd. ("Sanpaolo Life") subsidiary received notification of a dispute issued by the tax police
(Guardia di Finanza) in respect of a tax audit at Banca Sanpaolo Invest S.p.A ("Banca Sanpaolo Invest").

With
respect to the Sanpaolo Life products sold by Banca Sanpaolo Invest and by other Sanpaolo IMI Group distribution channels on behalf of the insurance broker with which Sanpaolo Life
has a distribution agreement, the tax police claim that Sanpaolo Life is effectively an Italian business and therefore its products are subject to Italian taxation.

On
the basis of a detailed review performed with the assistance of Group tax experts and qualified external consultants, it has been confirmed that the allegations of the tax police are
founded.

No
accruals have been made to cover the potential liability arising from the notice, as they cannot be calculated with sufficient reliability since the tax authorities have not yet made
any appraisal of the situation.



Cirio S.p.A. ("Cirio") is a large Italian company engaged primarily in the food industry. In 2002 the Cirio group defaulted on its debt. The Cirio group has
outstanding debt securities (the "Cirio Debt Securities") with a nominal face value of approximately €1,125 million.

As
of June 25, 2003, in connection with Cirio's default, CONSOB is reviewing the procedures followed by financial institutions, including Sanpaolo IMI, in connection with the sale
to retail investors of Cirio Debt Securities. At this stage, the review consists of random evaluations of transactions with retail clients in connection with such sales.

Sanpaolo
IMI believes that appropriate procedures were followed in connection with the sale to its clients of Cirio Debt Securities. At this early stage no forecast can be made of the
outcome of CONSOB's review related to the Cirio Debt Securities or of other proceedings, if any, related thereto.

Dividends

The total dividend paid by Sanpaolo IMI each year has been approved by the annual shareholders' meeting. The dividends related to each year are paid in the
following year to which they relate. Dollar amounts have been converted at the Noon Buying Rate in effect on the respective payment dates.

Year

Dividends per Share in Lire/€

Dividends per Share in U.S.$1998

Lit. 900

U.S.$0.491999

Lit.1,000/€0.52(1)

U.S.$0.45(2)2000

Lit.1,100/€0.57(3)

U.S.$0.49(4)2001

€0.57

U.S.$0.53(5)2002

€0.30

U.S.$0.47


---

150

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B. Significant Changes

See "Item 4. Information on Sanpaolo IMIHistory and Developments of Sanpaolo IMIRecent Developments".

ITEM 9. LISTING DETAILS

A. Performance of Sanpaolo IMI Share Prices

The Sanpaolo IMI Share price began 2002 at €12.041 and ended at €6.20 at December 30, 2002. This fall represented a loss of
48.5% of the Share's value. For the same period, the Milan banking share index lost 27.2% of its value.

On
June 10, 2003, the closing Share price was €8.18, an increase of 31.87% from the beginning of 2003. During the same period the Milan indices, covering the top
30 companies and the banking sector, recovered by 6.87% and 14.36%, respectively.

The
principal trading market for the Sanpaolo IMI Shares is onTelematicounder the symbol "SPI". The Sanpaolo IMI Shares and ADSs are
also traded on SEAQ International, the London Stock Exchange's quotation system for equity securities of non-UK incorporated companies. Sanpaolo IMI ADSs, each representing two Sanpaolo
IMI Shares, have been listed on the NYSE under the symbol "IMI" since November 2, 1998. JPMorgan Chase Bank is Sanpaolo IMI's Depositary and issues the American Depositary Receipts ("ADRs")
evidencing ADSs.

a)    The
following table lists the reported annual high and low prices of Sanpaolo IMI Shares for 1998, and annual high and low prices of Sanpaolo IMI Shares from 1999 to
2002. From January 4, 1999, the Sanpaolo IMI Shares began trading onTelematicoin euro. The prices for 1998 have been restated (based on the
Fixed €/Lira Exchange Rate of Lit. 1,936.27 = €1 established on December 31, 1998) as if the Sanpaolo IMI Shares had been trading in euro since the
beginning of the period.

Year

High (*)(**)(€)

Low (*)(**)(€)1998

16.274

8.7171999

16.071

10.9702000

20.800

11.4832001

18.893

8.7642002

13.702

5.2312003 (through June 10, 2003)

8.204

5.796


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151

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b)    The
following table lists the reported high and low prices of Sanpaolo IMI Shares onTelematicoand the reported high and
low prices of Sanpaolo IMI ADSs on the NYSE for each quarter of 2001 and 2002 and for the first two quarters of 2003.

Telematico(1)

NYSEHigh

Low

High

Low2001First quarter

18.89

14.00

36.00

24.50Second quarter

16.58

14.53

29.50

25.60Third quarter

15.38

8.77

26.00

15.20Fourth quarter

13.33

10.53

23.95

18.742002First quarter

13.48

10.55

23.75

18.15Second quarter

13.70

9.48

24.80

18.05Third quarter

10.09

5.69

20.72

11.40Fourth quarter

7.83

5.23

15.92

10.372003First quarter

7.03

5.80

15.09

12.47Second quarter (through June 10, 2003)

8.20

6.31

17.00

13.66


---

As
of June 11, 2003, there were 7,024,764 ADSs outstanding, representing 14,049,528 Shares or approximately 0.970% of Sanpaolo IMI ordinary share capital; as of the same date,
there were 24 holders of record of Sanpaolo IMI ADSs.

c)     The
following table lists the reported high and low market prices of Sanpaolo IMI ADSs for the most recent six months:

Months

High

LowJanuary 2003

15.09

12.47February 2003

14.45

12.90March 2003

14.89

12.65April 2003

16.76

13.66May 2003

18.66

16.15June 2003 (through June 10, 2003)

19.30

18.10


The
Sanpaolo IMI ADS quotation is presented in the decimal equivalent of the fractional quotation for January 2001 and thereafter in decimal form following the decimalization of
all stocks quoted on the NYSE.

B. Markets

Clearance and Settlement of Sanpaolo IMI Shares

The settlement of stock exchange transactions is facilitated by a joint stock company (Monte Titoli SpA., "Monte Titoli") which carries out the activity of
central depository; the company's shares are currently owned by certain of the major Italian banks and financial institutions. Most Italian banks, brokers and securities dealers have securities
accounts as participants with Monte Titoli.

The
Legislative Decree No. 213/98, regulating the adoption of the euro has also established that securities listed on regulated markets could no longer be represented by physical
certificates. These provisions were effective as of October 5, 1998, for the securities previously entered into a centralized securities depositary system and, as of January 1, 1999, for
all other securities.

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As
a consequence of this, all listed securities must be actually entered into central depositories, and the operations concerning them have to be done by book entry. For this reason,
beneficial owners of Sanpaolo IMI Shares must hold their interests through specific accounts with any of the participants in Monte Titoli. The beneficial owners of Sanpaolo IMI Shares held with Monte
Titoli may transfer their shares, collect dividends, create liens and exercise other rights with respect to those Sanpaolo IMI Shares through such accounts.

Beneficial
owners of Sanpaolo IMI Shares may also hold their interests through Euroclear and Clearstream and may transfer the Sanpaolo IMI Shares, collect dividends and exercise other
shareholders' rights through Euroclear or Clearstream. Investors may request Euroclear or Clearstream to transfer their Shares to an account of such holders with a participant having an account with
Monte Titoli.

Securities Trading in Italy

Sanpaolo IMI Shares are listed in Milan and New York, respectively onTelematicoand NYSE, and are traded on
London's SEAQ International.

As
specified above (see "Item 4. Information of Sanpaolo IMIBusiness OverviewThe Italian Banking System: Supervision and Regulation"), Borsa Italiana is the
joint stock company organizing and managing the regulated markets for financial instruments. Borsa Italiana replaced the administrative body Consiglio di Borsa and in January 1998 was finally
privatized. The shares of Borsa Italiana are currently owned by financial intermediaries and primarily Italian Banks: Sanpaolo IMI holds as of December 31, 2001, through its subsidiaries a 7.5%
share of the capital of Borsa Italiana.

The
ordinary Shareholders' Meeting of the market company is entitled, according to Section 62, Legislative Decree n. 58/1998, to issue rules establishing the condition and
procedures for the admission, exclusion and suspension of market participants and financial instruments to and from trading, and those for the conduct of trading and any obligations of market
participants and issuers.

According
to current Borsa Italiana regulations, a three-day rolling cash settlement period applies to all trades of equity securities in Italy. Any person, through an
authorized intermediary, may purchase or sell listed securities. An "official price", calculated for each security as a weighted average of all trades effected during the trading day and a "reference
price", calculated for each security as a weighted average of the last 10% of trades effected during such day are reported daily. Each of these prices is net of the quantity traded using the
cross-order function.

In
particular market conditions, Borsa Italiana may, with reference to markets, categories of financial instruments or individual instruments:



Prior
to January 13, 2002 Sanpaolo IMI Shares were traded only in minimum lots of prescribed size (or multiples thereof), determined for the Sanpaolo IMI in 50 Shares. After
January 13, 2002 Sanpaolo IMI Shares may be traded without any minimum lot restriction. The Shares are included in the index of the 30 largest companies on Telematicoin terms of capitalization and
liquidity ("MIB30").

Since
February 19, 1996, call and put options are traded on the Italian derivatives market, which includes the Sanpaolo IMI Shares.

Sanpaolo
IMI ADSs have not at any time been suspended from trading on the NYSE (nor has trading at any other time been halted).

153

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ITEM 10. ADDITIONAL INFORMATION

A. Memorandum of Articles of Association

As reported in Article 4 of the Bylaws, Sanpaolo IMI has as its purpose the collection of deposits from the public and the business of lending in its
various forms, in Italy and abroad.

Sanpaolo
IMI can undertake, within the limits of the regulations in force, all banking and financial transactions and services as well as any other transaction in the way of business and
in whatever way related to the achievement of its corporate objective.

Sanpaolo
IMI in its capacity as Reporting Bank for the Bank of Italy purposes of the Sanpaolo IMI Banking Group according to the terms of Article 61 of Legislative Decree 385 of
September 1,
1993issues, in the exercise of its function of management and coordination, instructions to the members of the Group for the execution of the instructions issued by the Regulatory
Authorities in the interests of stability of the Group itself as a whole.

There
are neither provision in the Bylaws concerning limitations in the right to hold securities nor concerning:



The
board of directors, in compliance with Italian law, determine the remuneration of Directors with particular responsibilities, having heard the opinion of the board of statutory
auditors. In compliance with Italian law, the compensation of the Directors is determined by the shareholders' meeting and not by the board of directors. The borrowing powers of Sanpaolo IMI are
regulated by Italian law.

The
share capital is divided into ordinary orAzioni Privilegiate. Shares have dividend rights. Dividends not claimed within five years
following the day on which they are available are retained by Sanpaolo IMI and placed to reserves, as provide for the Article 22 of the Bylaws.

Every
ordinary share confers the right to one vote in ordinary and extraordinary meetings. Every Preferred Share confers the right to one vote only in extraordinary meetings.

The
Shareholders' Meeting is ordinary or extraordinary according to the terms of the law and can be called in Italy not necessarily at the registered office.

The
ordinary Shareholders' Meeting is called at least once a year within four months of the end of the financial year or, when particular circumstances demand, within six months.

The
extraordinary Shareholders' Meeting is called to approve matters reserved to it by law or by the articles of association.

Participation
and representation in the Shareholders' Meeting are regulated by Italian law.

There
are no provisions in the Bylaws which have been designed to prevent a change in control.

B. Foreign Investment

There are no limitations imposed by Italian law on the rights of non-residents of Italy or foreign persons to hold or vote shares other than those
limitations described below, which apply equally to all owners of such shares. The Sanpaolo IMI Bylaws do not provide for any limitations.

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Securities Regulations

Pursuant to Italian securities laws, any holding of any direct or indirect interest in excess of 2%, 5%, 7.5%, 10%, and higher multiples of 5%, in the voting
shares of a listed company must be notified to CONSOB and the company within the five trading days following the acquisition (the same communication has to be done for the reduction of such interest
below the above specified percentages). The voting rights relating to the Shares for which the required notifications have not been given may not be exercised. Cross-ownership between listed companies
may not exceed 2% of their respective voting Shares. Likewise, cross-ownership between a listed company and an unlisted company may not exceed 2% of the voting Shares of the listed company or 10% of
the voting Shares of the unlisted company. The 2% threshold may be increased to 5% pursuant to an agreement between the companies approved by the ordinary shareholders' meeting of the two companies.
Pursuant to CONSOB interpretation of cross-ownership (release of October 10, 1999) foreign companies are treated as unlisted companies. Italian listed companies' stake in a foreign company may
not exceed 10% of such foreign company's stake in the Italian listed company exceeds 2%, conversely a foreign company may not exceed the 2% limit if the Italian company owing more than 10% of such
foreign company. Any Shares held in excess of such thresholds may not be voted and must be sold by one of the companies as specified by applicable law. Shares held through subsidiaries, fiduciaries or
intermediaries are taken into account for the purposes of calculating these ownership thresholds. However, those provisions on cross-ownership do not apply when a controlled company purchases the
shares of a controlling company, within certain limits provided by law and following the approval of the controlled company ordinary shareholders' meeting.

Furthermore,
any agreement, in whatever form, intended to regulate the exercise of voting rights in a listed company (or in the company or companies controlling a listed company),
together with any of its
subsequent amendments, renewal or termination, must be: (i) notified to CONSOB, within five days from its execution; (ii) disclosed to the public through the publication, in abstract
form, in one Italian newspaper having general circulation, within ten days from its execution; and (iii) deposited in the companies' Register at the site where such listed company has its
registered office, within 15 days from its execution.

The
same requirements are also mandated for agreements, in whatever form, that (a) impose an obligation of prior consultation for the exercise of voting rights in a listed company
and in its controlling companies; (b) contain undertaking limiting the transferability of the shares and other securities granting rights for the acquisition or subscription of the Shares;
(c) provide for the acquisition of the Shares and securities hereon; and (d) contemplate or cause the exercise, also in association with other person, of dominant influence on the listed
company that issued the shares and on its controlled entities.

Based
on the Consolidated Securities Law, the duration of the above mentioned agreements cannot exceed three years. Each party to the agreement can withdraw from such an agreement by
giving a six-month notice, unless otherwise provided in the agreements.

Banking Regulations

The requests for the purchase of more than 5% of the capital of an Italian bank, made by any national of a State other than an EU Member State, that applies
discriminatory measures with regards to similar acquisitions by an Italian national must be reported to the Ministry of Economy and Finance Minister. The President of the Italian Council of Ministers
may deny such authorization upon the Ministry of Economy and Finance Minister's proposal.

For
the other purchase requirements or limitations provided for Italian banking legislation, see "Item 4. Information on Sanpaolo IMIBusiness OverviewThe
Italian Banking System: Supervision and RegulationParticipation in the Share Capital of a Bank".

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Antitrust Regulations

In accordance with Italian antitrust laws, the Bank of Italy, upon consultation with the Italian antitrust Authority, is required to prohibit acquisitions of sole
or joint control over a bank that would create or strengthen a dominant position in the domestic market or a significant part thereof. However, if the
acquiring party and the party to be acquired surpass certain turnover thresholds, the antitrust approval for the acquisition falls within the exclusive jurisdiction of the EU Commission.

C. Exchange Controls and Material Contracts

Exchange Controls

As a general rule, the residents of Italy may hold foreign currency and foreign securities of any kind, within and outside Italy. Non-residents may
invest in Italian securities without restriction and may export cash, instruments of credit and securities, in both foreign currency and Euro, representing interest, dividends, other asset
distributions and the proceeds of dispositions.

Certain
procedural requirements, however, are imposed by law. Investments, disinvestments and any transfer of cash or bearer securities to and from Italy, whether by residents or
non-residents of Italy, for amounts exceeding €10,329.14 must be made through a banking or other authorized intermediary, including banks located outside Italy.
Non-corporate residents of Italy effecting transfers to and from Italy in excess of €10,329.14 in one year without using domestic authorized banks and other financial
intermediaries must disclose them in their annual tax declarations. For corporate residents there is no requirement for such declaration because such information is contained in their financial
statements. Non-corporate residents must also give details in their tax declarations of financial assets held outside Italy at the end of the fiscal year and of transfers in excess of
€10,329.14 to, from, within and between foreign countries in connection with such assets during the fiscal year. No declaration is required from such non-corporate
residents in respect of foreign investments and foreign income-earning assets that are exempt from income tax or subject to withholding tax in Italy.

Authorized
banks, financial and trust companies and other professional intermediaries are required to maintain records of transfers of cash and bearer securities in excess of
€10,329.14 into and out of Italy made on behalf of individuals, non-profit entities and business enterprises. Such records must be kept for five years and may be inspected
at any time by Italian tax and judicial authorities.

There
can be no assurance that the present regulatory, environment in or outside Italy will endure or that particular policies presently in effect will be maintained, although Italy is
required to maintain certain regulations and policies by virtue of its membership in the EU and other international organizations and its adherence to various bilateral and multilateral international
agreements.

D. Taxation

The following summary describes the material Italian tax and U.S. federal tax consequences of the acquisition, ownership and sale of Shares, including Shares
represented by ADSs evidenced by ADRs, that are generally applicable to U.S. holders who own Shares or ADSs as capital assets. For these purposes, a U.S. holder is a beneficial owner who is:



and
who qualifies for the benefits of the current income tax convention between the United States and Italy (the "Income Tax Convention"). Special rules apply to U.S. holders that are also residents
of Italy. This summary does not discuss the treatment of Shares or ADSs that are held in connection with a

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permanent
establishment or fixed base through which a beneficial owner carries on business or performs personal services in Italy.

This
discussion is based on the tax laws and practices of Italy and the United States currently in effect, as well as the Income Tax convention. These laws may change, possibly with
retroactive effect. This discussion does not address state, local or other foreign tax consequences. This discussion is based in part upon representations of the Depositary and assumes that each
obligation provided for in, or otherwise contemplated by, the Deposit Agreement and any related agreement will be performed in accordance with its respective terms. The U.S. Treasury has expressed
concerns that parties to whom ADRs are pre-released may be taking actions that are inconsistent with the claiming, by U.S. holders of ADRs, of foreign tax credits for U.S. federal income
tax purposes. Accordingly, the analysis of the creditability of Italian taxes described below could be affected by future actions that may be taken by the U.S. Treasury.

Please
note that this discussion does not address all of the tax consequences that may be relevant in light of a U.S. holder's particular circumstances. In particular, it does not
address U.S. holders subject to special rules, including:



Holders
should consult their own tax advisors with regard to the application of Italian and U.S. federal tax laws to the Shares or ADSs, and any tax consequences arising under the laws
of any state, local or other foreign taxing jurisdictions. For purposes of the Income Tax Convention, the current estate tax
convention between the United States and Italy (the "Estate Tax Convention"), Italian tax and U.S. federal tax law, holders of ADRs evidencing ADSs will be treated as owners of the Shares represented
by those ADSs, and the discussion of tax consequences to holders of ADSs applies as well to holders of Shares.

This
discussion assumes that Sanpaolo IMI is not a passive foreign investment company for 2002, as described more fully below.

Italian Taxation



Italian law provides for the withholding of income tax at a 27% rate on dividends paid by Italian resident companies to shareholders who are not residents of
Italy for tax purposes (the rate is 12.50% in case of dividends from saving sharesazioni di risparmio). Reduced rates (normally 15%) apply
to non-resident shareholders who are entitled to, and comply with, procedures for claiming benefits under an income tax convention. Italy has concluded income tax conventions with over 70
foreign countries, including all of the members of the European Community, Argentina, Australia, Brazil, Canada, Japan, New Zealand, Norway, Switzerland, United States and some countries in Africa,
Middle East and Far East.

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Under
the Income Tax Convention, dividends derived and beneficially owned by U.S. holders are subject to Italian withholding tax at a reduced rate of 15%. In the case of dividends
derived by a U.S. partnership, the reduction of the withholding tax under the treaty is only available to the extent such dividends are subject to U.S. tax in the hands of the partners.

As
to dividends derived in respect of shares held in the centralized deposit system managed by Monte Titoli, instead of the 27% withholding tax mentioned above, a substitute tax, at the
same 27% rate, applies. Such substitute tax is levied by the custodian of the shares.

Since
the Shares underlying Sanpaolo IMI ADRs are sub-deposited with Monte Titoli, no withholding tax will be applied by Sanpaolo IMI directly, and the substitute tax will be
applied by the custodian. The depositary's instructions specify the procedures that U.S. ADR holders must follow in order to obtain a reduction of the rate of the substitute tax to 15% pursuant to the
Income Tax Convention.

According
to Italian law, in order to obtain a reduced rate under the Income Tax Convention, the following procedure must be followed. The custodian must receive, in a timely manner (in
accordance with the custodian's requirements) prior to the dividend payment date:



The
custodian may advise the depositary, and the depositary will advise U.S. holders, of an additional limited period in which the custodian is willing to receive claims for the 15%
reduced treaty rate.

If
the custodian does not receive the required documentation on a timely basis, or if in the custodian's judgment the documentation fails to satisfy the requirements of Italian law for
any reason, U.S. holders will not be entitled to obtain the reduced treaty rate at source and instead must claim a refund of 12% of the dividend (representing the difference between the 27% ordinary
rate and the 15% reduced treaty rate) directly from the Italian tax authorities. Extensive delays have been encountered by U.S. holders seeking refunds from the Italian tax authorities.

Italian
law provides an alternative mechanism under which non-resident shareholders can claim a refund of up to four-ninths of Italian withholding taxes on
dividend income by establishing to the Italian tax authorities that the dividend income was subject to income tax in
another jurisdiction in an amount at least equal to the total refunds claimed. U.S. holders should consult their own tax advisors concerning the possible availability of these additional refunds,
which traditionally have been payable only after extensive delays.

Distribution
of additional Shares to beneficial owners with respect to their ADSs that are made as part of a pro rata distribution to all shareholders of Sanpaolo IMI generally will not
be subject to Italian tax.

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Italian
companies are required to supply to the Italian tax authorities certain information concerning the identity of non-resident shareholders in connection with the
payment of dividends. Shareholders are required to provide their Italian tax identification number, if any, or alternatively, in the case of individuals, their name, address and place and date of
birth, or in the case of legal entities and partnerships, their name, country of establishment and address, and the information required for individuals with respect to one of their representatives.

Non-resident
shareholders are also required to provide their foreign tax identification number.

In
the case of ADSs owned by non-Italian residents, Sanpaolo IMI understands that the provision of information concerning the depositary, in its capacity as holder of record
of the Shares, will satisfy these requirements. Sanpaolo IMI will be required to provide information concerning non-resident beneficial owners of Shares, however, to the extent such owners
wish to benefit from reduced withholding tax rates on dividends under an income tax convention, and claims for such benefits therefore must be accompanied by the required information.



The Italian capital gains tax is not applicable if (i) the seller is a non-resident without a permanent establishment in Italy, (ii) the
Shares (or ADSs) are listed on a stock exchange and (iii) during any 12-month period the seller does not dispose of Shares (or ADSs) that comprise a "qualified shareholding". For
Shares listed on a stock exchange, a "qualified shareholding" consists of shares which entitle the holder to exercise more than 2% of the voting rights of the company or represent more than 5% of the
share capital.

Since
the Shares (and ADSs) are listed, capital gains realized on the sale of non-qualified shareholdings in Sanpaolo IMI by non-resident holders without a
permanent establishment in Italy are not subject to capital gains tax provided that the Shares disposed are not a "qualified shareholding". In addition, the exemptions from capital gains tax that are
available pursuant to a Treaty (as defined below) applies. The capital gains rate applicable to sales of qualified shareholdings equals 27%.

Pursuant
to the U.S.-Italian income tax convention (the "Treaty"), a U.S. resident will not be subject to capital gains tax unelss the Shares or ADSs form part of the business property
of a permanent establishment of the holder in Italy or pertain to a fixed base available to a holder in Italy for the purpose of performing independent personal services. U.S. residents who sell
Shares or ADSs may be required to produce appropriate documentation establishing that the above mentioned conditions of non-taxability pursuant to the Treaty have been satisfied if capital
gains tax would otherwise be applicable.



Pursuant to Law 383 of October 18, 2001, inheritance and gift tax no longer applies to inheritance and gift transfers made since October 25, 2001.
Gift transfers to persons other than the spouse, ascendants or descendants or relatives within the 4th degree will be subject to transfer taxes ordinarily applicable to transfers for consideration, if
any, when the value of the gift to each person exceeds €180,759.91; the tax applies only to the amount in excess thereof.



No transfer tax is payable upon the transfer of Shares through an officially recognized stock exchange. Transfers of Shares or ADSs outside an officially
recognized stock exchange are also

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exempted
from the payment of transfer tax provided that the parties entering into the agreement pursuant to which the transfer takes place are:



In
any other case, transfer tax is currently payable at the following rates:



The
change of a depository (e.g., Euroclear, Clearstream or Monte Titoli) not involving a transfer of the ownership of the transferred Shares or ADSs will not trigger the Italian
transfer tax.

Apart
from the above exemptions and exclusions, there are questions regarding applicability of the transfer tax to the transfer of ADRs, since ADRs are not shares themselves. In general,
with respect to U.S. holders, the transfer tax will not be applicable on transfers of Sanpaolo IMI Shares or ADRs. However, in the case of transfers which are not executed on an official stock
exchange and are entered into with an Italian counterparty other than a bank or other authorized financial intermediary or an investment fund, it is advisable that U.S. holders consult their own tax
advisors concerning the applicability of this transfer tax. Deposits and withdrawals of Shares in return for ADSs by non-Italian residents will not be subject to the transfer tax.

United States Federal Income Taxation



Distributions made with respect to the Shares or ADSs (other than certain pro rata distributions of Shares or ADSs), before reduction for any Italian tax
withheld, will generally constitute foreign source dividend income for U.S. federal income tax purposes to the extent such distributions are made from Sanpaolo IMI current or accumulated earnings and
profits, as determined in accordance with U.S. federal income tax principles. A U.S. holder will not be entitled to claim a dividends-received deduction for dividends paid on the Shares or ADSs. Under
recently enacted legislation, dividends received by noncorporate U.S. holders on Shares or ADRs may be subject to U.S. federal income tax at lower rates than other types of ordinary income if certain
conditions are met. You should consult your own tax advisor regarding the application of this new legislation to your particular circumstances.

The
amount of any cash distribution paid in euros, including the amount of any Italian tax withheld, will be equal to the U.S. dollar value of such euros on the date of receipt by the
Depositary in the case of U.S. holders of ADSs, or by the U.S. holder in the case of U.S. holders of Shares, regardless of whether the payment is in fact converted into U.S. dollars. Gain or loss, if
any, recognized on the sale or other disposition of such euros will be U.S. source ordinary income or loss. The amount of any distribution of property other than cash will be the fair market value of
such property on the date of distribution.

Subject
to certain limitations and restrictions, Italian taxes withheld from distributions at the rate provided in the Income Tax Convention will be eligible for credit against a U.S.
holder's U.S. federal income tax liability. Italian taxes withheld in excess of the rate provided in the Income Tax Convention will generally not be eligible for credit against a U.S. holder's federal
income tax liability.

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The
limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed with respect to the
Shares or ADSs will generally constitute "passive income" or, in the case of certain U.S. holders, "financial services income". U.S. holders should consult their tax advisors concerning the foreign
tax credit implications of the payment of these withholding taxes.



A U.S. holder will recognize capital gain or loss for U.S. federal income tax purposes on the sale or exchange of Shares or ADSs in the same manner as the holder
would on the sale or exchange of any other shares of stock held as capital assets. As a result, a U.S. holder will generally recognize capital gain or loss for U.S. federal income tax purposes equal
to the difference between the amount realized and such holder's adjusted basis in the Shares or ADSs. The gain or loss will generally be U.S. source income or loss. U.S. holders should consult their
own tax advisors about the treatment of capital gains, which may be taxed at lower rates than ordinary income for non-corporate taxpayers, and capital losses, the deductibility of which
may be limited.



A U.S. holder may, under certain circumstances, be subject to information reporting and backup withholding with respect to dividends or the proceeds of any sale,
exchange or redemption of ADSs or Shares unless the U.S. holder:



Any
amount withheld under these rules will be creditable against a U.S. holder's U.S. federal income tax liability if the U.S. holder provides the required information to the U.S.
Internal Revenue Service. If a U.S. holder is required to and does not provide a correct taxpayer identification number, the U.S. holder may be subject to penalties imposed by the U.S. Internal
Revenue Service.



Based on proposed regulations, Sanpaolo IMI does not expect to be considered a "passive foreign investment company" ("PFIC") for U.S. federal income tax purposes
for 2002. However, this is a factual determination that must be made annually and thus there can be no assurance that Sanpaolo IMI will not be considered a PFIC for any taxable year. In addition,
there can be no assurance that the proposed regulations will be finalized in their current form. If Sanpaolo IMI were treated as a PFIC for any taxable year during which a U.S. holder held Shares or
ADSs, certain adverse consequences could apply to the U.S. holder.

E. Documents on Display

Sanpaolo IMI is required by Italian law and the regulatory authorities to make available to the public certain documents. These include principally the financial
statements of the Group and of the Parent Bank, the Articles and By-laws and any other documents relating to shareholders' resolutions. Attached as exhibits to this annual report are
Articles and By-laws and the Corporate Governance Code.

Segreteria
Societaria at Piazza San Carlo 156, 10121 Turin, Italy.

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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General

The Group is strongly committed to risk management and control. The Group's risk management and control is based on three principles:



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The policies relating to the acceptance of credit and financial risks are defined by the Parent Bank's board of directors and Executive Committee with support from the Group Risks
Technical Committee and from certain operating committees.

The
Parent Bank also performs general risk management and control functions and makes risk-acceptance decisions in the case of particularly large risks. The Parent Bank is
supported by a Risk Management Department.

A
limited autonomy is assigned to each Business Area generating credit and/or financial risks. Each Business Area generating credit and/or financial risk has its own control structure.

Financial Risk Management and Control



The main body responsible for the management and control of financial risks is the board of directors of the Parent Bank. It defines the criteria and strategic
issues concerning market risks, allocates capital on the basis of the expected risk/return profile and approves the operating risk limits for the Parent Bank and the guidelines for the subsidiaries.

The
Group Financial and Market Risks Committee ("CRFMG") is responsible for defining risk measurement criteria and methodologies, the structure of the Parent Bank and Business Areas'
risks limits and verifying the Group companies' risk profile. The CRFMG consists of the Managing Directors, the heads of the Business Areas and the Risk Management Department.

The
Risk Management Department, a department of the Parent Bank, is responsible for developing risk monitoring methods and proposals regarding the system of operating risks limits for
the various lines of business of Sanpaolo IMI and of the Group. The Risk Management Department is also
responsible for the measurement of risks existing in the various operating units and for monitoring the Business Areas compliance with the limits set by the board of directors and Executive Committee
of the Parent Bank.

The
individual Business Areas measure their financial risks, using approved methodologies, models and a system of limits consistent with the Parent Bank's global policy.



The financial risk measurement methods used by the Group consist mainly of:





VaR modeling is a statistical technique that produces an estimate of the potential loss in a portfolio over a specified holding period which is statistically
unlikely to be exceeded more than once during the given holding period. The Group uses a model based on historical volatility and correlations between the individual risks of each currency made up of
short and long-term interest rates, exchange rates and equity prices. The Group's model is based on the last 250 trading days, a 10-day holding period and a 99% confidence
level. VaR models have certain limitations; they are more reliable during normal market conditions and historical data may fail to predict the future. VaR results, therefore, cannot guarantee that
actual risk will follow the statistical estimate. As a result, management also relies on other tools, such as Sensitivity Analysis and Worst Case Scenario.

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This method quantifies the change of value in the portfolio following adverse movements of the risk factors. For interest rate risk, adverse movement is defined
as a parallel and uniform shift of 100 basis points of the interest rate curve. For the main companies in the banking book (Sanpaolo IMI, Banco di Napoli, Cardine networks, Banca Opi, Banque
Sanpaolo), a measure of net interest income at risk is also applied. Net interest income at risk is the potential change in net interest income resulting from a parallel and instantaneous shock of
±25 basis points in the level of interest rates over the next 12 months. This measurement shows the effect of the changes in interest rates on the portfolio.
The measurement excludes assumptions regarding future changes in the assets and liabilities mix, and, therefore, cannot be considered a predictor of the future level of the Group's net interest
income.



This method establishes a risk measurement (maximum potential loss), which represents the worst possible economic result of those obtained in various hypothetical
scenarios. The method is designed to represent a significant shock to current market parameters on the basis of a holding period of one day and accumulating the losses deriving from the various risk
factors in absolute value. The idea underlying the determination of the shocks to be assigned to the risk factors is to ensure a high degree of prudence. The objective of the method is to quantify and
limit the maximum potential loss that could arise in extreme market conditions.



The market risks generated by the Group's banking book, which includes all assets and liabilitiesincluding related hedging
derivativesnot included in the trading book, are monitored by means of Sensitivity Analysis, together with measurement of the VaR.

The
financial risk generated by the Group's lending activities (asset and liability management) in 2002 was slightly higher than the average level which could be established for 2001,
appropriately restated including the measurements of Cardine.

During
2002, the potential loss on the fair value of lending activities, measured using the sensitivity analysis, had an average value of €231 million, with a
minimum and a maximum of €185 million and €279 million respectively. The potential loss on the fair value of lending activities (assessed on a comparable,
pro forma, consolidation basis) during 2002 was 15% higher than in 2001. The increase is attributable to the Group operating policies aimed at maximizing the fair value of the portfolio, in relation
to the expected scenarios with regard to interest rates.



|         |  | 2002  |  | 2001 Pro Forma*
|-------- |  | ----- |  | ---------------
|
|Average  |  | 230.6 |  | 199.2          
|Low      |  | 184.9 |  | 150.5          
|High     |  | 278.7 |  | 269.6          
|Year-end |  | 251.1 |  | 269.6          

---

The
VaR of the lending activities during 2002 fluctuated around the average value of €97 million, amounting to €105 million at
December 31, 2002, compared to €115 million at December 31, 2001 (not including Cardine).

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In
2002, the exchange risk generated by lending activities was not material.

As
of December 31, 2002, under the assumption of a 25 basis point rise in interest rates, the sensitivity of the net interest income for companies in the banking book was
€20 million, corresponding to 0.5% of the consolidated annual net interest income. As of December 31, 2002, under the assumption of a 25 basis point decrease in interest
rates, the sensitivity of the net interest income for companies in the banking book was euro -19 million.



Equity investments held in quoted companies not consolidated on a line-by-line basis or at net equity showed a market value, at
December 31, 2002 prices, of €1,338 million, €291 million of which was held by the subsidiary IMI Investimenti. The market value of the equity
investments showed, according to prices at December 31, 2002, a net potential capital gain on book value of €17 million.

The
VaR method is used to measure the market risk of the equity investments portfolio, although the fluctuations in the value do not directly influence the Group's statement of income,
given that such investments are accounted at cost.

In
2002, the VaR related to minority investments in listed companies, recorded an average level of €248 million, with a minimum of
€166 million and a maximum of €302 million. At December 31, 2002, the VaR related to minority investments in listed companies was
€226 million, lower than the level observed at December 31, 2001 (€297 million) because of the reduction in the value of the portfolio.



|         |  | 2002 |  | 2001 Pro Forma*
|-------- |  | ---- |  | ---------------
|
|Average  |  | 248  |  | 266            
|Low      |  | 166  |  | 215            
|High     |  | 302  |  | 326            
|Year-end |  | 226  |  | 297            

---



Most of these risks are concentrated in Banca IMI and its subsidiaries and arise from dealing in fixed income securities, equity securities, currency and other
derivatives.

The
VaR of trading activities registered an average value during 2002 of €8.8 million, fluctuating between a minimum of €3 million and a
maximum of €15 million. As of December 31, 2002, the VaR of trading activities was €14.4 million, an increase against the
€6.9 million recorded as of December 31, 2001. The increase is mainly due to the increase in volume of equity transactions.

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|                       |  | December 31,
2002 |   | Average |   | Low |  | High |  | December 31,
2001
Pro Forma |   | Average
Pro Forma* |  
|---------------------- |  | ----------------- | - | ------- | - | --- |  | ---- |  | --------------------------- | - | ------------------ | -
|
|Interest rate risk     |  | 8.8               |   | 4.1     |   | 0.1 |  | 9.5  |  | 5.5                         |   | 2.5                |  
|Exchange rate risk     |  | 0.4               |   | 0.5     |   | 0.1 |  | 2.8  |  | 0.5                         |   | 0.5                |  
|Equity price risk      |  | 9.9               |   | 6.9     |   | 1.3 |  | 13.8 |  | 3.9                         |   | 6.7                |  
|Diversification effect |  | (4.7              | ) | (2.8    | ) |    |  |     |  | (3.0                        | ) | (2.2               | )
|Total                  |  | 14.4              |   | 8.8     |   | 3.0 |  | 15.0 |  | 6.9                         |   | 7.5                |  

---

In
addition to VaR, the Worst Case Scenario technique is used to monitor the impact of potential losses that might arise under extreme market conditions. The development of the maximum
potential daily loss was largely stable in 2002, in terms of potential risks, always fluctuating around the yearly average of €33 million.

MAXIMUM POTENTIAL DAILY LOSS FROM TRADING (€/million)

CHART

In
2002, back testing showed the prudent nature of the internal measurement techniques used, considering the volatility observed on the markets during the period. In 2002, actual losses
were never higher than the risk measures expressed in terms of maximum potential loss, while the trading results exceeded the ex-ante VaR, measured on a daily basis, in just two cases.

Credit Risk Management and Control



The Group's organizational structure seeks to maximize the efficiency of the credit risk management and control process by means of:



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Sanpaolo
IMI has established lines of conduct to be followed when taking on credit risk; these rules are to be applied throughout the Group. They provide for approval levels limits
defined in terms of total Group credit exposure to a particular counterparty, differentiated principally according to the counterparty's rating (which can be an internal rating or an agency rating).
The first level of approval limits applies to each individual Business Area or subsidiary, which in turn defines the approval limits to be delegated to its branches. Transactions in excess of these
limits must be submitted to the appropriate body within the Parent Bank, consisting of (according to the increased level of exposure) the Group Credit Committee (composed of the joint Managing
Directors and the heads of the Credit and Risk Management functions), the Executive Committee and the board of directors.

Credit
risks on financial institutions are all monitored centrally by the CRFMG, which also has decision-making authority on issues related to country risk. The tasks of the Financial
Institutions Credit Risk Committee and of the Country Risk Committee were allocated to the CRFMG in 2001.

In
terms of credit risk control, the Risk Management Department is responsible for defining, updating and monitoring the risk measurement techniques used by the Parent Bank and by the
Group as a whole, ensuring that they are constantly in line with industry best practice. The Risk Management Department is also responsible for analyzing the risk profile of the Parent Bank and the
Group and for proposing any corrective action. Furthermore, the Risk Management department is responsible for measuring the exposure of larger borrowers, monitoring the risk measurements carried out
by the risk control units in the various Business Areas for consistency and accuracy, and preparing summary reports for the Parent Bank's senior management on changes in credit quality and on the use
of capital by the Business Areas.

The
risk control units operating within the individual Business Areas are responsible for measuring and monitoring their Business Area's portion of the loan book.



Sanpaolo IMI has developed a series of instruments to ensure analytical control over the quality of loans to customers and financial institutions, as well as
exposures subject to country risk.

For
loans to customers, various grading models have been developed. These differ according to the counterparty's size and industry sector. These models make it possible to summarize the
counterparty's credit quality in a single rating measurement, which reflects the probability of default in a period of one year, calibrated to the average level of economic cycle. By means of
statistical calibrations, these ratings have been made fully consistent with the ones awarded by rating agencies, forming one overall
scale of reference. Back-testing analyses carried out to date, comparing insolvency forecasts with actual defaults, confirm that, in management's view, the models used are reliable.

The
credit quality management of Sanpaolo Network's banking book, (households, small businesses and SMEs) is supported through a system which classifies customers into risk categories,
based on an evaluation by the loan officers. The risk categories are specifically linked to the frequency of credit line reviews and recovery actions. Lastly, the credit quality control function uses
an early warning system to identify any anomalous situations as early as possible.

For
banking and financial counterparties, a scoring system has been devised which classifies financial institutions on a scale consistent with those used by the rating agencies. The risk
class constitutes the basic level of information, which is integrated with the type and duration of the transaction, as well as the level of collateral. This leads to the setting of maximum credit
limits for each counterparty. In the case of transactions covered by bank guarantees, the creditworthiness of the counterparty being guaranteed is also taken into consideration in determining the
maximum limit.

166

---

Lastly,
for country risk, ratings are assigned on the basis of a model that takes into consideration the views of rating agencies and other specialized institutions, market information
and internal assessments.

These
ratings are not just a direct instrument with which to monitor credit risk, but also constitute a primary element for the credit risk portfolio model, which summarizes the
information on asset quality in terms of risk indicators, including the expected loss and capital at risk. The expected loss is the product of probability of default (derived from the rating),
exposure at default and loss given default. Loss given default is measured with reference to an economic, as opposed to accounting, concept of loss comprehensive of legal costs, calculated prudently
on the recoveries from disputes on a discounted base. The "expected" loss represents the average of the loss distribution, while the capital at risk is defined as the maximum "unexpected" loss which
the Group could incur with a confidence level of 99.95%.

Sanpaolo
IMI also pays a great deal of attention to the innovative proposals concerning credit risks made by the Basel Committee for the reform of the Basel Accord on Capital, which,
among other things envisages using internal ratings for calculating capital requirements. In management's view, the measurement techniques used by the Group appear to be in line with the proposed
methods.



This refers to all of the Group's on- and off-balance sheet credit exposures. The credit risk analysis, which was initially applied to the
Parent Bank's loan book, has been gradually extended to the main subsidiaries that take on credit risk, namely Banco di Napoli, Banca OPI, Sanpaolo IMI Bank Ireland, Sanpaolo Leasing and the Cardine
bank networks. The loan book analyzed represents more than 90% of the Group's risk-weighted assets.

In
terms of exposure, the analytical rating covers 75% of the credit portfolio. Unrated counterparties (mostly households with residential mortgages) have been given average probability
of default, based on actual default experience for the preceding years. Analytical ratings covered more than 90% of counterparties in other sectors.



In relation to the combination of analytical ratings, just under half are represented by ratings of specialized agencies, while the remainder are internal
ratings; the latter are by large the prevailing ones in the corporate sector.

167

---

DRAWDOWNS AS OF DECEMBER 31, 2002 OF THE LOAN PORTFOLIO BY RATING SOURCE (percentages)

CHART

DRAWDOWNS AS OF DECEMBER 31, 2002 OF THE LOAN PORTFOLIO BY LEVEL OF RATING (percentages)

CHART

Loans
to customers to which an analytical rating has been assigned, which represent the main reference of the credit risk management model, show a high credit quality, with a portion of
investment grade loans (from AAA to BBB) equal to three quarters of the total and substantially stable during 2002.

The
expected loss of the portfolio considered, at the end of 2002, accounted for 0.50% of loans. The expected loss measure has been taken into account in establishing the amount of
general writedown to cover the inherent risk in performing loans.

The
economic capital was equal to 4.20% of loans; on the basis of the impact simulations made, it was substantially in line with the requirement deriving from the current proposal of the
New Basel Capital Accord, calculated according to the advanced methods.

168

---

The
concentration risk fell considerably during 2002: exposure to the largest 20 corporate groups registered a reduction of approximately €2.3 billion and, because
of the Cardine Merger, the proportion of the total portfolio represented by such exposure fell from 16.5% to 11.4%. This led to a recomposition of the portfolio, on the one hand, toward operators in
the public sector and, on the other hand, towards small- and medium-sized companies and households.

The Management and Control of Other Risks

Sanpaolo IMI also considers two other types of risk in its models: operational risk and business risk.

Operational riskis defined as the risk of incurring losses as a result of four macro categories of events: fraud, legal risks (including
non-performance of contractual obligations), weaknesses in internal control or information systems, and natural calamities. A database of significant events that took place in the last ten
years has been used for each category. From the database it was possible to identify the impact in terms of losses from public sources of information. The empirical distributions of losses calculated
in this way are estimated by means of distribution theories according to the extreme value theory. The risk capital is defined as the minimum measurement, net of existing insurance policies, needed to
face the maximum potential loss with a confidence level of 99.95%; the method also provides for the application of a correction factor to take account of the effectiveness of internal controls in the
various operating areas.

It
should be noted that this method was developed with the intention of allocating to the Business Areas and to the Group as a whole a quantity of capital adjusted to the potential of
these types of events. The control of operating risks is carried out through the definition of internal rules and procedures, the observance of which is verified by the Audit Direction of the Parent
bank.

The
measurement method is evolving, especially with regard to the improvement of statistical calculation engines, the determination of the economic effect linked with the effectiveness
and intensity of internal controls and the development of scenario analyses. Work also continues on the extension of the databases related to operating losses and exposure indicators, both through the
continuous updating of the internal databases and through the participation in consortium initiatives with leading banking groups for shared use of the same; this activity has been developed at a
national level by helping to set up the DIPO (Database Italiano delle Perdite OperativeItalian Database of Operational Losses) Consortium
and at an international level by acting as a founder member of the ORX (Operational Riskdata Exchange association) Consortium.

These
developments are in line with the advanced methods of determination of the capital requirements provided for by the proposal of the New Basel Capital Accord and are also consistent
with the best practices emerging from the international work groups operating in this field, with which Sanpaolo IMI actively co-operates.

Business risk(also called strategic risk) is the risk of incurring losses as a result of changes in the macro- or micro-economic scenario
which could jeopardize the ability to generate income, typically by reducing operating volumes or compressing margins.

This
is evaluated through the break down of the Business Area assets, on the basis of the respective cost and revenue structures, into fundamental "industrial" business sectors (such as
consulting and distribution). The Business Areas are then allocated a level of capitalization in line with the norm for companies operating in the same type of activity.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

169

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PART II

ITEM 13. DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15. CONTROLS AND PROCEDURES

Within 90 days prior to the date of this annual report, Sanpaolo IMI, under the supervision and with the participation of its management, including the Managing
Directors and the Head of Accounting Department, performed an evaluation of the effectiveness of Sanpaolo IMI's disclosure controls and procedures. Based on this evaluation, the Managing Directors and
the Head of Accounting Department, concluded that Sanpaolo IMI's disclosure controls and procedures are effective for gathering, analyzing and disclosing the information that Sanpaolo IMI is required
to disclose in the reports it file under the Securities Exchange Act of 1934, within the time periods specified in the SEC's
rules and forms. Sanpaolo IMI's management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature can provide only reasonable
assurance regarding management's control objectives. There have been no significant changes in Sanpaolo IMI's internal controls or other factors that could significantly negatively affect internal
controls subsequent to the date of their evaluation.

ITEM 16. RESERVED

PART III

ITEM 17. FINANCIAL STATEMENTS

The following financial statements, together with the report of PricewaterhouseCoopers thereon, are filed as part of this annual report:

|                                                          |  | Page
|--------------------------------------------------------- |  | ----
|Index to Consolidated Financial Statements 2002           |  | F-1 
|Report of Independent Auditors                            |  | F-2 
|Consolidated Balance Sheet                                |  | F-10
|Consolidated Statement of Income                          |  | F-12
|Consolidated Statement of Changes in Shareholders' Equity |  | F-13
|Notes to Consolidated Financial Statements                |  | F-14

ITEM 18. FINANCIAL STATEMENTS

Not applicable.

ITEM 19. EXHIBITS

The following exhibits are filed as part of this annual report:

Exhibit



170

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 2002

|                                                          |  |                                                                                              |  | Page 
|--------------------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | -----
|Report of Independent Auditors                            |  | F-2                                                                                         
|Consolidated Balance Sheet                                |  | F-10                                                                                        
|Consolidated Statement of Income                          |  | F-12                                                                                        
|Consolidated Statement of Changes in Shareholders' Equity |  | F-13                                                                                        
|Notes to Consolidated Financial Statements                |  | F-14                                                                                        
|(1)                                                       |  | Form and content of the Consolidated Financial Statements                                    |  | F-14 
|(2)                                                       |  | Scope of Consolidation                                                                       |  | F-14 
|(3)                                                       |  | Modalities and effects of the consolidation of the former Cardine Group Companies            |  | F-15 
|(4)                                                       |  | Methods and effects of the consolidation of equity investments acquired during the year 2000 |  | F-16 
|(5)                                                       |  | Consolidation principles                                                                     |  | F-16 
|(6)                                                       |  | Financial statements used for consolidation                                                  |  | F-17 
|(7)                                                       |  | Changes to the accounting policies                                                           |  | F-18 
|(8)                                                       |  | Audit of the consolidated financial statements                                               |  | F-18 
|(9)                                                       |  | Comparison with the quarterly accounts as of December 31, 2002                               |  | F-18 
|(10)                                                      |  | Description of accounting policies                                                           |  | F-18 
|(11)                                                      |  | Adjustments and provisions recorded for fiscal purposes                                      |  | F-30 
|(12)                                                      |  | Loans                                                                                        |  | F-30 
|(13)                                                      |  | Securities                                                                                   |  | F-43 
|(14)                                                      |  | Investments                                                                                  |  | F-49 
|(15)                                                      |  | Tangible and intangible fixed assets                                                         |  | F-78 
|(16)                                                      |  | Other assets                                                                                 |  | F-82 
|(17)                                                      |  | Payables                                                                                     |  | F-88 
|(18)                                                      |  | Provisions                                                                                   |  | F-90 
|(19)                                                      |  | Capital, equity reserves, reserve for general banking risks and subordinated liabilities     |  | F-106
|(20)                                                      |  | Other liabilities                                                                            |  | F-113
|(21)                                                      |  | Guarantees and commitments                                                                   |  | F-115
|(22)                                                      |  | Concentration and distribution of assets and liabilities                                     |  | F-125
|(23)                                                      |  | Administration on dealing on behalf of third parties                                         |  | F-133
|(24)                                                      |  | Interest                                                                                     |  | F-135
|(25)                                                      |  | Commission                                                                                   |  | F-137
|(26)                                                      |  | Profits (losses) on financial transactions                                                   |  | F-139
|(27)                                                      |  | Administrative costs                                                                         |  | F-141
|(28)                                                      |  | Adjustments, writebacks and provisions                                                       |  | F-143
|(29)                                                      |  | Other consolidated statement of income captions                                              |  | F-148
|(30)                                                      |  | Other information regarding the consolidated statement of income                             |  | F-151
|(31)                                                      |  | Other information                                                                            |  | F-152
|(32)                                                      |  | Significant Differences between Italian and U.S. General Accepted Accounting Principles      |  | F-170

F-1

---



Report of Independent Auditors

To
the Shareholders of
Sanpaolo Imi S.p.A.

We
have audited the accompanying consolidated balance sheets of Sanpaolo Imi S.p.A. and its subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements
of income, of cash flows and of changes in shareholders' equity for each of the two years in the period ended December 31, 2002. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of certain consolidated subsidiaries,
which statements reflect "total assets" of 12 percent and 22 percent of the related consolidated totals as of December 31, 2002 and 2001, respectively, total "net interest" income
of 2 percent and 24 percent of the related consolidated totals for each of the two years in the period ended December 31, 2002 and total "net interest and other banking income" of
4 percent and 33 percent of the related consolidated totals for each of the two years in the period ended December 31, 2002 Those statements were audited by other auditors whose
report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for these companies, is based solely on the report of the other auditors.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

In
our opinion, based on our audits and the report of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Sanpaolo Imi S.p.A. and its subsidiaries at December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the two years in the period ended
December 31, 2002 in conformity with the Italian law governing consolidated financial statements and generally accepted accounting principles in Italy.

For
a more immediate understanding of the consolidated financial statements, we draw your attention to the following circumstances, more widely described in the Report on Operation and
in the Explanatory Notes to the consolidated financial statements:



The
Sanpaolo Imi SpA's consolidated statements of income, of cash flows and of changes in shareholders' equity for the year ended December 31, 2000, were audited by other
independent accountants who have ceased operations. Those independent accountants expressed an unqualified opinion on those consolidated statements in their report dated April 2, 2001.

The
accounting principles referred to above vary in certain significant respects from accounting principles generally accepted in the United States. The application of the latter would
have affected the determination of consolidated net income expressed in Euro for each of the two years in the period ended December 31, 2002 and the determination of consolidated shareholders'
equity also expressed in Euro at December 31, 2002 and 2001 to the extent summarized in Note 32 to the consolidated financial statements.

Turin,
April 10, 2003

PricewaterhouseCoopers
SpA

/s/
Sergio Duca
Sergio Duca
(Partner)

F-2

---

THE
FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN SPA AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN SPA.

Report of Independent Public Accountants

| |  | Arthur Andersen SpAGalleria San Federico 54
10121 Torino
| |  | --------------------------------------------------------
| |  | www.andersen.com                                        

To
the Stockholders and the Board of Directors of
Sanpaolo IMI S.p.A.:

We
have audited the accompanying consolidated financial statements of Sanpaolo IMI S.p.A. (the "Bank", formerly Istituto Bancario San Paolo di Torino Istituto Mobiliare Italiano S.p.A.)
and Subsidiaries (collectively referred to as "Sanpaolo IMI" or the "Group") comprising the consolidated statements of condition of Sanpaolo IMI S.p.A. and Subsidiaries as of December 31, 2000
and the related consolidated statements of income, cash flows and changes in stockholders' equity for each of the three years ended December 31, 1999 and 2000. The preparation of these
financial statements is the responsibility of Sanpaolo IMI's directors. Our responsibility is to express an opinion on these consolidated financial statements taken as a whole based on our audit. We
did not audit the financial statements of Banca di Intermediazione Mobiliare IMI S.p.A., Banca Opi S.p.A., Banque Sanpaolo S.A. and other less significant subsidiaries which statements reflect, in
2000, total assets and total interest income and similar revenues of 26.1 percent and 17.6 percent of the related consolidated totals. Those statements were audited by other auditors
whose report has been furnished to us and our opinion, insofar as it relates to the amounts included for those entities, is based solely on the report of the other auditors.

We
conducted our audits in accordance with generally accepted auditing standards in the United States. These standards require that we plan and perform the audit to obtain reasonable
assurance about
whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits and
the reports of other auditors provide a reasonable basis for our opinion.

In
our opinion, based on our audit and the reports of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Sanpaolo IMI S.p.A. and Subsidiaries as of December 31, 2000 and the results of their operations and their cash flows for each of the two years in the period ended
December 31, 2000, in conformity with generally accepted accounting principles in Italy applied on a consistent basis.

Accounting
practices used by Sanpaolo IMI in preparing the consolidated financial statements referred to above conform with generally accepted accounting principles in Italy, but do not
conform with accounting principles generally accepted in the United States. A description of these differences and the reconciliation of consolidated net income and stockholders' equity to U.S.
generally accepted accounting principles is set forth in Note 32 to the above described consolidated financial statements.

F-3

---

For
a better understanding of the consolidated financial statements, attention is drawn to the following information and matters, more fully described in the explanatory notes:



Turin,
Italy
April 2, 2001

|/s/ Arthur Andersen S.p.A. |  | 
|-------------------------- |  | 

F-4

---

Deloitte &
Touche Italia S.p.A.
Via della Moscova, 3
20121 Milano
Italia

Tel:
+39 02 290371
Fax: +39 02 6572876
www.deloitte.it

REPORT OF INDEPENDENT AUDITORS

To the Stockholders and the Board of Directors of
Banca d'Intermediazione Mobiliare IMI S.p.A.

We have audited the balance sheet of Banca d'Intermediazione Mobiliare IMI S.p.A. (the "Bank") as of December 31, 2002, and the related statements of
income, cash flows and changes in stockholders' equity for the year then ended (all expressed in Euro). Such financial statements were previously provided to you and are not enclosed herewith. These
financial statements are the responsibility of the Bank's directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We
conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those Standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Banca d'Intermediazione Mobiliare IMI S.p.A. as of
December 31, 2002, and the results of its operations and its cash flows for the year then ended in conformity with the Italian law governing financial statements and generally accepted
accounting principles in Italy.

Milan,
Italy
March 25, 2003

/s/
Deloitte & Touche

F-5

---

THE
FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN SPA AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN SPA.

|Report of Independent AccountantsTo the Stockholders and the Board of
Directors of Sanpaolo IMI S.p.A.: |  | Arthur Andersen SpAGalleria San Federico 54
10121 Torino www.andersen.com
|------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------

We
have audited the balance sheets of Banco di Napoli S.p.A. (the "Bank") as of December 31, 2001, and the related statements of income, of cash flows and of changes in
stockholders' equity for the year then ended (all expressed in Euro). Such financial statements were previously provided to you and are not enclosed herewith. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We
conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Banco di Napoli S.p.A. as of December 31, 2001 and
the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in Italy, as provided by the Italian regulation governing financial
statements.

Accounting
principles generally accepted in Italy, as provided by the Italian regulation governing financial statements, vary in certain significant respects from accounting principles
generally accepted in the United States of America. The application of the latter would have affected the determination of net income expressed in Euro for the year ended December 31, 2001 and
the determination of stockholders' equity also expressed in Euro at December 31, 2001.

Rome,
Italy
April 5, 2002
/s/Arthur Andersen SpA

F-6

---

THE
FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN SPA AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN SPA

Report of Indipendent Accountants

|To the Stockholders and the Board of
Directors of Sanpaolo IMI S.p.A: |  | Arthur Andersen SpAGalleria San Federico 54
10121 Torino www.andersen.com
|--------------------------------------------------------------------- |  | -------------------------------------------------------------------------

We
have audited the balance sheets of Sanpaolo IMI Asset Management SGR S.p.A. (the "Company") as of December 31, 2001, and the related statements of income, of cash flows and of
changes in stockholders' equity for the year then ended (all expressed in Euro). Such financial statements were previously provided to you and are not enclosed herewith. These financial statements are
the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We
conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sanpaolo IMI Asset Management SGR S.p.A. as of
December 31, 2001 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in Italy, as provided by the Italian
regulation governing financial statements.

Accounting
principles generally accepted in Italy, as provided by the Italian regulation governing financial statements, vary in certain significant respects from accounting principles
generally accepted in the United States of America. The application of the latter would have affected the determination of net income expressed in Euro for the year ended December 31, 2001 and
the determination of stockholders' equity also expressed in Euro at December 31, 2001.

Turin,
Italy
March 6, 2002

/s/Arthur
Andersen SpA

F-7

---

LOGO

REPORT OF INDEPENDENT AUDITORS

To
the Shareholders of
Banca d'Intermediazione Mobiliare IMI SpA

We
have audited the consolidated statement of income, change in shareholders' equity and cash flows of Banca d'Intermediazione Mobiliare IMI SpA (the "Company") for the year ended
December 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We
conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Banca d'Intermediazione
Mobiliare IMI SpA for the year ended 31 December 2000, in conformity with the Italian law governing financial statements and generally accepted accounting principles in Italy.

Milan,
27 March 2001

PricewaterhouseCoopers
SpA

/s/
Fabrizio Piva

Fabrizio
Piva
(Partner)

F-8

---

LOGO

REPORT OF INDEPENDENT AUDITORS

To
the Shareholders of
Banca OPI SpA (former IMI Lease SpA)

We
have audited the statement of income, change in shareholders' equity and cash flows of Banca OPI SpA (the "Company") for the year ended 31 December 2000. These financial
statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We
conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Banca OPI SpA for the year ended
31 December 2000, in conformity with the Italian law governing financial statements and generally accepted accounting principles in Italy.

Rome,
28 March 2001

PricewaterhouseCoopers
SpA

/s/Fabrizio
Piva

Fabrizio
Piva
(Partner)

F-9

---



CONSOLIDATED BALANCE SHEET

|ASSETS       |  | 12/31/02                                                                     |  | 12/31/01
|------------ |  | ---------------------------------------------------------------------------- |  | --------
|
|10.          |  | Cash and deposits with central banks and post offices                        |  |         
|20.          |  | Treasury bills and similar bills eligible for refinancing with central banks |  |         
|30.          |  | Due from banks:                                                              |  |         
|             |  | a) repayable on demand                                                       |  | 4,975   
|             |  | b) other deposits                                                            |  | 17,025  
|40.          |  | Loans to customers                                                           |  |         
|             |  | including:                                                                   |  |         
|             |  | loans using public funds                                                    |  | 206     
|50.          |  | Bonds and other debt securities                                              |  |         
|             |  | a) public entities                                                           |  | 8,628   
|             |  | b) banks                                                                     |  | 5,079   
|             |  | including:                                                                   |  |         
|             |  | own bonds                                                                   |  | 1,774   
|             |  | c) financial institutions                                                    |  | 1,132   
|             |  | including:                                                                   |  |         
|             |  | own bonds                                                                   |  | 8       
|             |  | d) other issuers                                                             |  | 1,983   
|60.          |  | Shares, quotas and other equities                                            |  |         
|70.          |  | Investments                                                                  |  |         
|             |  | a) carried at equity                                                         |  | 426     
|             |  | b) other                                                                     |  | 2,798   
|80.          |  | Investments in Group companies                                               |  |         
|             |  | a) carried at equity                                                         |  | 840     
|90.          |  | Goodwill arising on consolidation                                            |  |         
|100.         |  | Goodwill arising on application of the equity method                         |  |         
|110.         |  | Intangible fixed assets                                                      |  |         
|             |  | including:                                                                   |  |         
|             |  | start-up costs                                                              |  | 2       
|             |  | goodwill                                                                    |  | 16      
|120.         |  | Tangible fixed assets                                                        |  |         
|140.         |  | Own shares                                                                   |  |         
|             |  | (par value €14 million)                                                      |  |         
|150.         |  | Other assets                                                                 |  |         
|160.         |  | Accrued income and prepaid expenses                                          |  |         
|             |  | a) accrued income                                                            |  | 2,063   
|             |  | b) prepaid expenses                                                          |  | 789     
|             |  | including:                                                                   |  |         
|             |  | discounts on bond issues                                                    |  | 236     
|             |  |                                                                              |  |         
|Total assets |  | 203,773                                                                      |  | 170,485 
|             |  |                                                                              |  |         

F-10

---

|LIABILITIES AND SHAREHOLDERS' EQUITY       |  | 12/31/02                                                      |  | 12/31/01
|------------------------------------------ |  | ------------------------------------------------------------- |  | --------
|
|10.                                        |  | Due to banks                                                  |  |         
|                                           |  | a) repayable on demand                                        |  | 2,952   
|                                           |  | b) time deposits or with notice period                        |  | 21,504  
|20.                                        |  | Due to customers                                              |  |         
|                                           |  | a) repayable on demand                                        |  | 60,458  
|                                           |  | b) time deposits or with notice period                        |  | 24,822  
|30.                                        |  | Securities issued                                             |  |         
|                                           |  | a) bonds                                                      |  | 39,447  
|                                           |  | b) certificates of deposit                                    |  | 7,310   
|                                           |  | c) other                                                      |  | 4,804   
|40.                                        |  | Public funds administered                                     |  |         
|50.                                        |  | Other liabilities                                             |  |         
|60.                                        |  | Accrued expenses and deferred income                          |  |         
|                                           |  | a) accrued expenses                                           |  | 1,622   
|                                           |  | b) deferred income                                            |  | 542     
|70.                                        |  | Provision for employee termination indemnities                |  |         
|80.                                        |  | Provisions for risks and charges                              |  |         
|                                           |  | a) pensions and similar commitments                           |  | 343     
|                                           |  | b) taxation                                                   |  | 670     
|                                           |  | c) other                                                      |  | 1,768   
|90.                                        |  | Reserve for possible loan losses                              |  |         
|100.                                       |  | Reserve for general banking risks                             |  |         
|110.                                       |  | Subordinated liabilities                                      |  |         
|130.                                       |  | Negative goodwill arising on application of the equity method |  |         
|140.                                       |  | Minority interest                                             |  |         
|150.                                       |  | Capital                                                       |  |         
|160.                                       |  | Additional paid-in capital                                    |  |         
|170.                                       |  | Reserves                                                      |  |         
|                                           |  | a) legal reserve                                              |  | 1,029   
|                                           |  | b) reserve for own shares                                     |  | 31      
|                                           |  | d) other reserves                                             |  | 2,610   
|180.                                       |  | Revaluation reserves                                          |  |         
|200.                                       |  | Net income for the year                                       |  |         
|                                           |  |                                                               |  |         
|Total liabilities and shareholders' equity |  | 203,773                                                       |  | 170,485 
|                                           |  |                                                               |  |         

|GUARANTEES AND COMMITMENTS |  | 12/31/02          |  | 12/31/01
|-------------------------- |  | ----------------- |  | --------
|
|10.                        |  | Guarantees given: |  |         
|                           |  | Including:        |  |         
|                           |  | acceptances      |  | 167     
|                           |  | other guarantees |  | 20,316  
|20.                        |  | Commitments       |  |         

F-11

---

CONSOLIDATED STATEMENT OF INCOME

|     |  |                                                                                  |  | 2002   |   | 2001   |   | 2000   |  
|---- |  | -------------------------------------------------------------------------------- |  | ------ | - | ------ | - | ------ | -
|
|10.  |  | Interest income and similar revenues                                             |  |        |   | 8,693  |   |        |  
|     |  | including from:                                                                  |  |        |   |        |   |        |  
|     |  | loans to customers                                                              |  | 6,936  |   |        |   | 5,999  |  
|     |  | debt securities                                                                 |  | 995    |   |        |   | 1,026  |  
|20.  |  | Interest expense and similar charges                                             |  |        |   | (4,955 | ) |        |  
|     |  | including on:                                                                    |  |        |   |        |   |        |  
|     |  | deposits from customers                                                         |  | (1,445 | ) |        |   | (1,600 | )
|     |  | securities issued                                                               |  | (2,203 | ) |        |   | (2,112 | )
|30.  |  | Dividends and other revenues                                                     |  |        |   | 565    |   |        |  
|     |  | a) from shares, quotas and other equities                                        |  | 410    |   |        |   | 263    |  
|     |  | b) from equity investments                                                       |  | 155    |   |        |   | 134    |  
|40.  |  | Commission income                                                                |  |        |   | 3,467  |   |        |  
|50.  |  | Commission expense                                                               |  |        |   | (671   | ) |        |  
|60.  |  | Profits (losses) on financial transactions                                       |  |        |   | (98    | ) |        |  
|70.  |  | Other operating income                                                           |  |        |   | 422    |   |        |  
|80.  |  | Administrative costs                                                             |  |        |   | (4,648 | ) |        |  
|     |  | a) personnel                                                                     |  | (2,856 | ) |        |   | (2,221 | )
|     |  | including:                                                                       |  |        |   |        |   |        |  
|     |  | wages and salaries                                                              |  | (2,061 | ) |        |   | (1,600 | )
|     |  | social security charges                                                         |  | (618   | ) |        |   | (471   | )
|     |  | termination indemnities                                                         |  | (140   | ) |        |   | (109   | )
|     |  | pensions and similar commitments                                                |  | (37    | ) |        |   | (41    | )
|     |  | b) other                                                                         |  | (1,792 | ) |        |   | (1,379 | )
|90.  |  | Adjustments to intangible and tangible fixed assets                              |  |        |   | (753   | ) |        |  
|100. |  | Provisions for risks and charges                                                 |  |        |   | (261   | ) |        |  
|110. |  | Other operating expenses                                                         |  |        |   | (50    | ) |        |  
|120. |  | Adjustments to loans and provisions for guarantees and commitments               |  |        |   | (889   | ) |        |  
|130. |  | Writebacks of adjustments to loans and provisions for guarantees and commitments |  |        |   | 320    |   |        |  
|140. |  | Provisions to the reserve for possible loan losses                               |  |        |   | (27    | ) |        |  
|150. |  | Adjustments to financial fixed assets                                            |  |        |   | (569   | ) |        |  
|160. |  | Writebacks of adjustments to financial fixed assets                              |  |        |   | 8      |   |        |  
|170. |  | Income (losses) from investments carried at equity                               |  |        |   | 137    |   |        |  
|     |  |                                                                                  |  |        |   |        |   |        |  
|180. |  | Income from operating activities                                                 |  |        |   | 691    |   |        |  
|     |  |                                                                                  |  |        |   |        |   |        |  
|190. |  | Extraordinary income                                                             |  |        |   | 575    |   |        |  
|200. |  | Extraordinary expenses                                                           |  |        |   | (248   | ) |        |  
|     |  |                                                                                  |  |        |   |        |   |        |  
|210. |  | Extraordinary items, net                                                         |  |        |   | 327    |   |        |  
|     |  |                                                                                  |  |        |   |        |   |        |  
|230. |  | Change in reserve for general banking risks                                      |  |        |   | 364    |   |        |  
|240. |  | Income taxes                                                                     |  |        |   | (450   | ) |        |  
|250. |  | Minority interests                                                               |  |        |   | (43    | ) |        |  
|255. |  | Elimination of second half Income of the Banco di Napoli Group(*)                |  |        |   |       |   |        |  
|     |  |                                                                                  |  |        |   |        |   |        |  
|260. |  | Net income for the year                                                          |  |        |   | 889    |   |        |  
|     |  |                                                                                  |  |        |   |        |   |        |  

---

F-12

---

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

|                                                                                    |                                            | Capital
Stock |       | Reserves |     | Retained
Earnings |      | Total  |      
|----------------------------------------------------------------------------------- | ------------------------------------------ | ------------- | ----- | -------- | --- | ----------------- | ---- | ------ | -----
|
|Balance at December 31, 1999                                                        |                                            | 3,926         |       | 3,396    |     | 1,050             |      | 8,372  |      
|                                                                                    |                                            |               |       |          |     |                   |      |        |      
|Appropriation of net income after Minority Interest for 1999:                       |                                            |               |       |          |     |                   |      |        |      
|                                                                                    | to reserves                                |               |      |          | 326 |                   | (326 | )      |     
|                                                                                    | dividends                                  |               |      |          |    |                   | (724 | )      | (724 
|Decrease of the reserve for general banking risks                                   |                                            |              |       | (2       | )   |                  |      | (2     | )    
|Offsetting of goodwill on consolidation(1)                                          |                                            |              |       | (1,027   | )   |                  |      | (1,027 | )    
|Exercise of stock options                                                           |                                            | 5             |       | 18       |     |                  |      | 23     |      
|Undistributed dividends on own shares held by the Parent Bank                       |                                            |              |       | 2        |     |                  |      | 2      |      
|Cancellation of reserves for deferred taxes and other tax effects on reserves       |                                            |              |       | 98       |     |                  |      | 98     |      
|Revaluation ex L. 342 11/21/00                                                      |                                            |              |       | 12       |     |                  |      | 12     |      
|Differences arising on the translation of foreign currency                          |                                            |               |       |          |     |                   |      |        |      
|                                                                                    | Financial Statements and other adjustments |               |      |          | 4   |                   |     |        | 4    
|Net income after Minority Interest                                                  |                                            |              |       |         |     | 1,292             |      | 1,292  |      
|                                                                                    |                                            |               |       |          |     |                   |      |        |      
|Balance at December 31, 2000                                                        |                                            | 3,931         |       | 2,827    |     | 1,292             |      | 8,050  |      
|                                                                                    |                                            |               |       |          |     |                   |      |        |      
|Appropriation of net income after Minority Interest for 2000:                       |                                            |               |       |          |     |                   |      |        |      
|                                                                                    | to reserves                                |               |      |          | 505 |                   | (505 | )      |     
|                                                                                    | dividends                                  |               |      |          |    |                   | (787 | )      | (787 
|Changes in the reserve for general banking risks                                    |                                            |              |       | 1        |     |                  |      | 1      |      
|Offsetting of goodwill on consolidation                                             |                                            |              |       |         |     |                  |      |       |      
|Exercise of stock options                                                           |                                            | 1             |       | 4        |     |                  |      | 5      |      
|Undistributed dividends on own shares held by the Parent Bank                       |                                            |              |       |         |     |                  |      |       |      
|Withdrawal from reserves to pay the tax on equity                                   |                                            |              |       |         |     |                  |      |       |      
|Revaluation ex L. 342 11/21/00                                                      |                                            |              |       |         |     |                  |      |       |      
|Net effect of currency traslation of some affiliates' account and other adjustments |                                            |              |       | 4        |     |                  |      | 4      |      
|Net income after Minority Interest                                                  |                                            |              |       |         |     | 1,203             |      | 1,203  |      
|                                                                                    |                                            |               |       |          |     |                   |      |        |      
|Balance at December 31, 2001                                                        |                                            | 3,932         |       | 3,341    |     | 1,203             |      | 8,476  |      
|                                                                                    |                                            |               |       |          |     |                   |      |        |      
|Appropriation of net income after Minority Interest for 2001:                       |                                            |               |       |          |     |                   |      |        |      
|                                                                                    | to reserves                                |               |      |          | 430 |                   | (430 | )      |     
|                                                                                    | dividends                                  |               |      |          |    |                   | (773 | )      | (773 
|Changes in the reserve for general banking risks                                    |                                            |              |       | (364     | )   |                  |      | (364   | )    
|Merger with Cardine Banca                                                           |                                            |               |       |          |     |                   |      |        |      
|                                                                                    | increase of capital                       |               | 1,212 |          |    |                   |     |        | 1,212
|                                                                                    | change in reserves                        |               |      |          | 851 |                   |     |        | 851  
|Portion of tax benefits from the Banco Napoli merger                                |                                            |              |       | 250      |     |                  |      | 250    |      
|Revaluation ex L. 342 11/21/00                                                      |                                            |              |       |         |     |                  |      |       |      
|Net effect of currency traslation of some affiliates' account and other adjustments |                                            |              |       | (4       | )   |                  |      | (4     | )    
|Net income after Minority Interest                                                  |                                            |              |       |         |     | 889               |      | 889    |      
|                                                                                    |                                            |               |       |          |     |                   |      |        |      
|Balance at December 31, 2002                                                        |                                            | 5,144         |       | 4,504    |     | 889               |      | 10,537 |      
|                                                                                    |                                            |               |       |          |     |                   |      |        |      

---

F-13

---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)    FORM AND CONTENT OF CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000

The Bank's consolidated financial statements for 2002 have been prepared pursuant to Decree 87 of January 27, 1992, which implemented EEC Directive 86/635.
They also take into account the requirements contained in the Bank of Italy instructions dated July 30, 1992 and subsequent amendments. For all matters not governed by special regulations,
reference has been made to the Italian Civil Code and to national accounting standards.

In
compliance with current rules, the financial statements have been prepared in millions of Euro. The consolidated financial statements comprise the consolidated balance sheet, the
consolidated statement of income and these explanatory notes. They are accompanied by the Board of Directors' Report on Operations.

These
Consolidated explanatory notes are presented with comparative figures taken from the financial statements as of December 31, 2001 and provide all the information required by
law, including any supplementary information considered necessary to give a true and fair view of the Group's financial position. The tables provided for by law and the details required by the Bank of
Italy are numbered in accordance with Bank of Italy instructions or based on the date of the relevant Instructions.

The
following schedules are attached to the consolidated financial statements:



It
should also be mentioned that Note 18 "Provisions" contain the information required by CONSOB (Communication 1011405 of February 15, 2001) from banks quoted on regulated
markets.

(2)    SCOPE OF CONSOLIDATION

The scope of line-by-line consolidation reflects the SANPAOLO IMI Banking Group as recorded in the appropriate register in compliance with
art. 64 of Decree 385 dated September 1, 1993, with the exception of certain minor investments whose balance sheet and statement of income results have little or no effect on the consolidated
financial statements, or because they have been put into liquidation or listed for disposal. In addition to SANPAOLO IMI S.p.A. (the Parent Bank), the Banking Group comprises those directly and
indirectly controlled subsidiaries which carry out banking, finance or other activities which complement those of the Parent Bank.

The
scope of line-by-line consolidation excludes Società per la Gestione di Attività S.p.A. (Sga), the shares of which have been
handed over as a pledge with voting right to the Treasury Ministry as part of the special procedures described in Note 16Other assets.

The
scope of line-by-line consolidation also excludes those companies for which a formal decision has been taken to dispose of them.

Equity
investments under the assumption of joint control are consolidated on a proportional basis.

Investments
in subsidiaries whose activities differ from banking, financing and those of the rest of the Group, i.e. those that are excluded from the scope of consolidation for the
above-mentioned reasons, are valued using the equity method, together with holdings in companies subject to significant

F-14

---

influence
where the Group controls at least 20% of the voting rights in the ordinary meeting (i.e. associated companies).

The
principal changes in the line-by-line and proportional consolidation area when compared to December 31, 2001 concern:



The
change of the company name of NHS S.p.A. to Sanpaolo IMI Private Equity S.p.A. should also be noted.

Companies
consolidated on a line-by-line or proportional basis and investments carried at equity are listed in Note 14.

(3)    MODALITIES AND EFFECTS OF THE CONSOLIDATION OF THE FORMER CARDINE GROUP COMPANIES

For the first time inclusion in the consolidated financial statements of the former Cardine Group companies, following the merger by incorporation of the Parent
Bank Cardine Banca S.p.A. into SANPAOLO IMI S.p.A., reference has been made to the shareholders' equity of the newly-consolidated companies and to the related book values as of January 1, 2002,
this being the reference date of the transaction, for accounting and tax purposes. For the purposes of alignment to the accounting principles of the SANPAOLO IMI Group, the reference net shareholders'
equities have been appropriately adjusted in order to reflect the discounting of doubtful loans of the former Cardine Group (€63 million net of the related tax effect), as well
as the losses on investment securities (€23 million net of the related tax effect).

The
first time consolidation of the former Cardine Group shareholdings revealed positive and negative goodwill differences on line-by-line consolidation and on
net equity for, respectively, €314 million and €299 million. The positive differences have been allocated as follows:



Considering
that, as mentioned earlier, the merger by incorporation of Cardine Banca has an accounting effect as of January 1, 2002, the SANPAOLO IMI consolidated statement of
income for the

F-15

---

year
2002 reflects the financial flow of the former Cardine Group companies line-by-line for the whole period.

(4)    METHODS AND EFFECTS OF THE CONSOLIDATION OF EQUITY INVESTMENTS ACQUIRED DURING THE YEAR 2000.

The three follow main investments are reflected in the consolidated accounts as indicated below:



(5)    CONSOLIDATION PRINCIPLES

The main consolidation principles adopted are as follows:

The
book value of equity investments in consolidated companies, held by the Parent Bank or by other Group companies, is offset against the corresponding portion of the Group's share of
the

F-16

---

company's
net equityadjusted where necessary to bring the company into line with Group accounting principlesincluding their assets and liabilities on a
line-by-line basis in accordance with the "full consolidation method". The off setting of book value against shareholders' equity is carried out on the basis of values current
at the time the investment was consolidated for the first time, or at the time the controlling interest was acquired. Where possible, any differences arising are allocated to the assets and
liabilities of the related consolidated companies, or, for the quota attributable to the Group on the basis of the application of the equity ratios, to "negative or positive goodwill" arising on
consolidation, depending on whether the value of the investment is higher or lower than the shareholders' equity.

Investments
in companies carried at equity are recorded in the financial statements at the amount equal to the corresponding portion of their shareholders' equity. Any balance not
assignable to the assets or liabilities of the companies concerned at the time this method is first implemented, is booked to "positive/negative goodwill arising on application of the equity method".
In the years after the first year of consolidation, the adjustment of the value of these investments is booked under "Negative goodwill arising on application of the equity method" and to "Profit
(losses) from investments carried at equity" for, respectively, the changes referring to reserves and those referring to the result of the company in which the investment is held.

"Positive
goodwill" arising on the application of line-by-line consolidation, proportional consolidation or from the equity method is deducted from the total
"negative goodwill" already existing, or which arose during the same year, and up to the total amount. Investments acquired to be re-sold as part of the merchant banking activity are not
offset in this way. Positive goodwill differences which are not offset against negative differences are amortized over a period corresponding to the use of the investment (see
Note 16Other assets..

Receivables,
payables, off-balance sheet transactions, and costs and revenues, as well as any gains and losses relating to significant transactions between consolidated Group
companies, are eliminated. By way of exception, given the provisions of art. 34, Decree. 87/92, costs and revenues
arising from intra-Group trading in financial instruments and currency are not eliminated if such transactions were carried out under normal market conditions.

Financial
statements denominated in currencies not included in the euro-zone are converted into euro at year-end rates of exchange. Differences arising on the
conversion of shareholders' equity captions using these closing rates of exchange are allocated to consolidated reserves, unless they are offset by specific hedging transactions.

Adjustments
and provisions made in the financial statements of the Parent Bank and of other companies consolidated on a line-by-line basis solely for fiscal
purposes, are eliminated from the Consolidated Financial Statements.

(6)    FINANCIAL STATEMENTS USED FOR CONSOLIDATION

The financial statements used for the line-by-line consolidation process are those prepared as of December 31, 2002, as approved by
the boards of the subsidiaries concerned. They have been adjusted, where necessary, for consistency with Group accounting policies. The financial statements of subsidiaries operating in the financial
leasing sector and included in consolidation, have been prepared using the financial lease method, which is essentially consistent with Group accounting policies.

Investments
with no controlling interests have been valued according to the net equity method, made on the basis of the latest or draft financial statements available.

F-17

---

(7)    CHANGES TO THE ACCOUNTING POLICIES

The accounting policies used in the preparation of the 2002 balance sheet and statement of income are consistent with those used for the Group's 2001and 2000
consolidated financial statements.

Changes adopted in 2001

Dividends from direct subsidiaries, beginning from 2001, are booked in the year that they accrue, rather than in the year that they are receivable. The treatment
was approved by the Board of Directors of the Parent Company at the meeting on April 10, 2001.

The
treatment above mentioned does not impact on the consolidated financial statement, because the dividends from subsidiaries consolidated line by line are eliminated within the
consolidation process.

Changes adopted in 2000

No changes were adopted in 2000.

(8)    AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements and those of the Parent Bank, have been subjected to an audit by PricewaterhouseCoopers S.p.A., in accordance with the
shareholders' resolution dated April 28, 2000, which appointed the firm as auditors for the 2001/2003 three-year period.

For
the year 2000, the consolidated financial statement, as well as the Parent Bank's financial statements, were audited by Arthur Andersen S.p.A.

(9)    COMPARISON WITH THE QUARTERLY REPORT AS OF DECEMBER 31, 2002

The Consolidated Financial Statements, prepared using the final accounting information of the Parent Bank and its subsidiaries, include a number of changes
compared with the Quarterly report as of December 31, 2002, which was presented on February 11, 2003 and which provided advance information concerning the Group's results for the year
end.

The
differences however are not significant and do not alter the substance of the report already published. They relate primarily to:



(10)    DESCRIPTION OF ACCOUNTING POLICIES

The accounting policies adopted are communicated to and, where required by law, approved by the Board of Statutory Auditors. These policies are consistent with
those applied as of December 31, 2001 and 2000 except for the changes discussed in the introduction to these explanatory notes.

F-18

---

Loans, guarantees and commitments

Loans

Loans, comprising principals not yet due and principals and interest due but not yet collected, are stated at their estimated realizable value, taking into
account the solvency of borrowers in difficulty and any debt-servicing problems faced by individual industrial sectors or the countries in which borrowers are resident. The assessment
performed also takes into consideration any guarantees received, market prices and negative market trends involving the consistent loan categories. Estimated
realizable value is determined following a detailed review of outstanding loans, considering the degree of risk associated with the various forms of lending and the risk of default inherent in loans
that are currently performing normally. The estimated realizable value of doubtful loans (non-performing, problem and restructured loans, loans being restructured and loans to companies
under observation, assessed on a case-by-case basis) takes into consideration not only the likelihood of eventual recovery, but also any total or partial failure to generate
income and delayed repayments.

In
detail:



F-19

---



The
Parent Bank's historical/statistical method, which essentially provides a historical valuation of the portfolio risk level, is organized as follows:



The
portfolio model which, characterized by valuation tables, provides the extent of the loss which might be suffered the following year, is based essentially on the following elements:



The
"expected losses" resulting from a reasoned comparison of the two models, constitute the parameter of reference utilized to calculate the "general reserve" destined to cover the
default risk on performing loans. This calculation is aligned to what is assumed to be a fair value, determined also considering specific factors pertaining to the portfolio and to valuations of the
expected evolution of the economic cycle.

For
the purpose of classifying loans as non-performing, problem, restructured or exposed to country-risk, reference is made to current Bank of Italy regulations
on the subject, integrated by internal instructions establishing automatic rules and criteria for the transfer of loans within the various risk categories.

Doubtful
loans are classified to the various risk categories (non-performing, problem, restructured and being restructured) by the operating structures coordinated by the
central departments responsible for the supervision of credit control.

After
review by the central departments responsible for the control and recovery of loans, the resulting estimated realizable values are formally approved by the committees and other
levels within the organization empowered to make such decisions.

Default
interest accrued during the period is eliminated from the statement of income since, for the sake of prudence, collection is considered unlikely.

Writedowns,
both specific and general, are made by an adjustment to reduce the value of the asset recorded in the balance sheet on the basis of the aforementioned criteria. The original
values may be reinstated by means of writebacks, when the reasons for such writedowns cease to apply.

As
regards the method used to calculate discounting adjustments, these are determined to reflect the difference between:



The
discounted present value of cash flows is determined by reference to expected cash receipts, the timing of such receipts and an appropriate discount rate.

F-20

---

The
timing and extent of expected cash receipts are determined using detailed calculations provided by the departments responsible for loan evaluation and, if these are not available,
then estimates and general statistics from historical data and studies of the business sectors concerned are used.

With
regard to the discount rate, at December 31, 2002, the Parent Bank used the average reference rate of 5.5%, determined as the appropriate approximate average performance at
the date of inception of the doubtful loan portfolio and calculated on the basis of the contractual rates actually applied by the Parent Bank on medium-long term loans (fixed and floating
rate) and on short term loans (floating rate). Considering the need to simplify and reduce data processing costs, it is deemed that such average rate is sufficiently approximate to the result which
would have been obtained had current contractual rates been applied to transactions now classified as doubtful loans. A similar approach has been adopted by the subsidiaries; using reference rates
appropriate to the markets concerned for foreign companies.

The
discounting process automatically means that there will be writebacks to discounted loans: in fact, the mere passage of time, with the consequent approach of the expected collection
deadlines, implies an automatic reduction in the implicit financial charges previously deducted from the value of the loans.

Loans
for which the Group acquired protection against the risk of non-performance as part of derivative contracts ("buyer protection") continue to be booked in the financial
statements among loans secured by personal guarantees.

Loans deriving from financing and deposit contracts

These are recorded at the amount disbursed. Loans backed by discounted notes, acquired within the scope of lending activities, are recorded in the financial
statements at their nominal value, while the portion pertaining to future years is recorded among deferred income.

Reverse repurchase agreements on securities

Reverse repurchase agreements that require the holder to resell securities when the agreement matures are treated as lending transactions. The amounts disbursed
in this way are therefore recorded as loans. Income from lending, comprising interest coupons on securities and the differential between the spot and forward prices for such securities, are recorded
on an accruals basis as interest in the statement of income.

Loan of securities

Transactions involving the loan of securities guaranteed by funds freely available to the lender are treated in the same way as repurchase agreements on
securities. Securities loaned, not guaranteed by sums of money, are reported in the financial statements as a combination of two functionally-linked transactions: a loan to and a deposit from a third
party (or vice versa). These transactions are essentially the same as repurchase agreements, which means that the securities loaned remain in the portfolio of the lender.

Finance leases

Lease transactions are recorded using the financial accounting methodology, which states lease contracts and transactions in such a way as to disclose their
economic substance. This approach, which recognizes the financial nature of lease transactions, treats the excess of total lease payments over the

F-21

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cost
of the related asset as interest income. Such income is credited to the statement of income with reference to the residual principal and the pre-determined rate of return, taking into
consideration the end-of-lease purchase value of the asset. Accordingly, the balance of loans under finance leases reported in the consolidated financial statements essentially
represents the outstanding principal on loans to customers and installments due but not yet collected.

Guarantees and commitments

Guarantees and commitments giving rise to lending risk are recorded at the total value of the exposure, while the related risk is assessed on the basis described
in relation to loans. Expected losses in relation
to guarantees and commitments are covered by the related provision. Commitments include exposures to underlying borrowers for derivatives on loans for which the Group has taken over the lending risk
("seller protection").

Derivatives on loans

Seller protectionDerivative contracts on loans which involve seller protection are recorded to caption 20 "commitments" according to their
theoretical value. If payment of a fixed amount is expected, the amount recorded is that of the final sum established by the contract.

Buyer
protectionDerivative contracts on loans which involve buyer protection are booked to the underlying asset among loans secured by personal guarantees.

Derivative
contracts on loans are classified as belonging to the dealing portfolio (trading book) when the bank is holding them for trading. Derivatives on loans not included in the
trading book are classified to the banking book.

Derivative
contracts on loans belonging to the trading book are valued individually, taking into consideration the credit and financial risk inherent in the contracts.

Derivative
contracts on loans belonging to the banking book are valued:



The
premium paid or collected on contracts belonging to trading book is recorded among premiums for options (caption 150 under assets and caption 50 under liabilities of the balance
sheet).

Contracts
belonging to banking book are recorded as commission income or expense entries according to whether the amount is collected or paid (respectively captions 40 and 50 of the
statement of income).

Securities and off-balance sheet transactions (other than foreign currency transactions)

Investment securities

Investment securities due to be held by the Group over the long term with a view to stable investments are valued at "the average daily cost", adjusted to reflect
accruals for the year of issue and dealing discounts (the latter being the difference between the purchase price and the related redemption price, net of issue discounts yet to mature).

F-22

---

Such
securities are written down to reflect any lasting deterioration in the solvency of the issuers and the ability of the related nations to repay debt. Investment securities may also
be written down in consideration of market trends in accordance with the first subsection of art. 18 of Decree 87/92. The original value is reinstated if the reasons for any writedowns cease to apply.

Dealing securities

Securities held for dealing and treasury purposes are stated at fair value, adjusted to reflect accrued issue discounts as follows:



Any
transfers between the investment and dealing portfolios are made on the basis of the book value of the securities transferred at the time of the transaction; book value is determined
using the method applicable to the originating portfolio. The related economic effects are reported in caption 60. "Profits (losses) on financial transactions" if the portfolio of origin is a dealing
portfolio, and in caption 150. "Adjustments to financial fixed assets" if the portfolio of origin is an investment portfolio. Securities transferred and still held at year-end are valued
using the method applicable to the destination portfolio.

Commitments to buy or sell for securities transactions to be settled

Commitments to buy are valued on the basis applicable to the destination portfolio. The value of commitments to sell, on the other hand, takes into consideration
the contractual forward sale price.

Equity investments

Equity investments which are neither consolidated on a line-by-line basis or valued at equity, are stated at cost, increased to reflect
past revaluations at the time the company was transformed and the effect of mergers, determined on a LIFO basis with annual increments. Cost is written down to reflect any permanent losses in value,
taking into account any reductions in the equity value of the companies concerned and in the trend in exchange rates for those investments held at historical rates. The original value of equity
investments is reinstated if the reasons for any writedowns cease to apply.

Equity
investments can also be written down in consideration of the market trend, in accordance with the first subsection of art. 18 of Decree 87/92.

With
reference to investments held in Isveimer and in Sga, any charges which the Parent Bank may be called on to bear to cover losses incurred by group companies, will be covered through
measures taken in accordance with Law 588/96, accomplished with the procedures provided by the Ministerial Decree of September 27, 1974, as revealed in Note (16).

F-23

---

Dividends
from investments that are not consolidated line-by-line or valued at equity are recorded, together with the related tax credits, at the moment in which
the tax credit becomes collectible, usually in the year in which dividends are declared and collected.

Foreign currency assets and liabilities (including off-balance sheet transactions other than derivatives)

With the introduction of the Euro, the term foreign currency refers to all currencies outside the EMU.

Assets and liabilities denominated in foreign currency

Assets and liabilities denominated in foreign currencies or indexed to foreign exchange movements, as well as financial fixed assets funded in foreign currencies
or indexed to foreign exchange movements, are valued using spot exchange rates applicable at year end. Equity investments denominated in foreign currencies subject to local exchange control
restrictions (non-convertible currencies) stated in currencies other than those of use, and those not fully or partially hedged by a deposit in the currency of the investment are stated,
with regard to the part financed in currencies other than those of use, at the historical rates of exchange applying at the time of acquisition.

Foreign
currency costs and revenues are stated using the exchange rates applying at the time they arose.

Unsettled spot and forward currency transactions

Unsettled spot and forward currency transactions carried out for hedging purposes are valued in the same way as the assets and liabilities being hedged, whether
they are recorded on or off the balance sheet.

Transactions
not carried out for hedging purposes are valued:



The
effect of these valuations is debited or credited to the statement of income.

Tangible fixed assets

Tangible fixed assets are stated at purchase cost, including related charges and the cost of improvements. Purchase cost may have been restated on
transformations, at the time of mergers or as a result of applying monetary revaluation laws.

Operating
assets are depreciated on a straight-line basis over their residual useful lives. Tangible fixed assets are written down in cases where there is a permanent loss in
value, regardless of how much depreciation has already been accumulated. The value of such assets is reinstated in future accounting periods if the reasons for any writedowns no longer apply.

Ordinary
maintenance and repairs, which do not determine an increase in their usefulness and/or useful life, are expensed in the year in which they are incurred.

F-24

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Intangible fixed assets

Intangible fixed assets are stated at purchase or production cost, including related charges, and amortized over the period they are expected to benefit, as
described below:



Other aspects

Own shares

Own shares purchased by the Parent Bank are valued at cost, determined using the "average daily cost" method, as they are classed as long-term
investments. The main reason for the Parent Bank buying its own shares is to use them in strategic deals that require the availability of such shares (e.g. share exchanges as part of the acquisition
of equity investments, cooperation agreements and other corporate finance deals). Shares of the Parent Bank purchased by subsidiaries for dealing purposes are valued at their market value
corresponding to the "official quotation of the year-end closing date".

Should
own shares be destined for stock incentive plans or stock option plans, they are classified at market value in special separate portfolios, in the same manner as dealing
securities.

Stock option plans

Stock incentive plans approved by the Parent Bank, which do not include the assignment of own shares, consist in the assignment of rights to subscribe to
increases in share capital against payment. Considering that neither Italian regulations nor Italian accounting policies provide specific instructions in this respect, the booking of these plans is
made by registering the increase in capital and the related additional paid in capital, at the time of subscription.

Payables

Payables are stated at their nominal value. The difference between the nominal value of loans received, or securities placed, and the amount actually received, is
recorded in the financial statements among deferrals and released to the statement of income on an accruals basis, in accordance with the repayment plan implicit in the funding transaction.
Zero-coupon securities are stated at their issue price plus accrued interest. Consistent with the policies described above, funding repurchase agreements that require the holder to resell
the securities acquired when the agreement matures are recorded among payables, as are related securities borrowing transactions.

Funding
repurchase agreements on securities issued by Group companies are not reported on the above basis if they are arranged by the issuing company concerned. In this case, they are
recorded as securities issued with a forward repurchase commitment.

F-25

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Provisions for employee termination indemnities

The provisions for employee termination indemnities represent the liability to each employee at period-end, accrued in accordance with current
legislation and payroll agreements.

Provisions for risks and charges

Provisions for risks and charges cover known or likely liabilities whose timing and extent cannot be determined at year-end or at the time the
financial statements are prepared.

Pensions and similar commitments

The pension fund, qualifiable as an "internal" pension fund, is set up by the Parent Bank to cover charges linked with integration of the pension paid to the
former IMI S.p.A. staff entitled to such payment integration and by some companies from the former Cardine Group. The contingency arising in this connection is assessed at year end on the basis of
independent actuarial appraisals, in order to determine the provisions to technical reserves needed to cover future pensions.

Taxation

The provision for taxation covers deferred taxes, income taxes and the regional tax on business activities, including those charged on units operating abroad. The
provision also takes into consideration current and potential disputes with the tax authorities.

Income
taxes are estimated prudently on the basis of the tax charges for the year, determined in relation to current tax legislation.

Deferred
taxation, determined according to the so called "balance sheet liability method", reflects the tax effect of provisional differences between the book value of assets and
liabilities and their value for tax purposes, which will lead to taxable and deductible amounts in future.

To
this end, taxable provisional differences are defined as those which will give rise to taxable income in future years (deferred capital gains, for example); while deductible
provisional differences are defined as those which will give rise to deductible amounts in future years (such as provisions and costs that can be deducted for tax purposes over a period of years, e.g.
general loan writedowns in excess of the fiscally deductible amount).

Deferred
tax liabilities are calculated by applying to each consolidated company the average tax rate to taxable provisional differences likely to generate a tax burden. Deferred tax
assets are calculated on deductible provisional differences if there is a reasonable certainty of recovery.

The
deferred taxation on equity reserves that will become taxable "however used" is charged against shareholders' equity. Deferred taxation relating to revaluations arising on conversion
to the Euro, credited to a specific reserve that will become taxable pursuant to art. 21 of Decree 213/98, is charged directly against this reserve.

No
provision is made for the Parent Banks' reserves subject to taxation only in the event of distribution. This is because such reserves are allocated to accounts that are not available
for distribution and because the events which would give rise to such taxation are not expected to occur.

Deferred
taxation on the equity items of consolidated companies is not booked if it is unlikely that any liability will actually arise, bearing in mind the permanent nature of the
investment.

F-26

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Deferred
tax assets and liabilities relating to the same kind of tax, applicable to the same entity and expiring in the same period, are offset against each other.

Deferred
tax assets are offset against income tax by booking them to the balance sheet under caption 150Other assets. Liabilities for deferred taxes are booked to the
balance sheet under sub-caption 80.bTaxationand are also offset against income tax.

If
the deferred tax (asset or liability) relates to transactions directly involving shareholders' equity without affecting the statement of income, it is debited or credited to
shareholders' equity.

Other provisions

Provisions for guarantees and commitments cover losses on guarantees given and, more generally, the contingencies associated with the Group's guarantees and
commitments and the exposures to derivative contracts on loans for which the Group has taken over the lending risk (seller protection).

Provisions
for other risks and charges cover estimated losses arising from legal action and, in particular, from repayments claimed by the receivers of bankrupt customers. They also
cover possible charges in connection with guarantees given on the sale of equity investments, possible charges in connection with
the Group's commitment to support the Interbank Deposit Guarantee Fund, possible charges in connection with the renegotiation of subsidized home mortgage loans (Law 133/99 and that dictated by Budget
Law 2001) and unsubsidized fixed rate mortgages (Law Decree 394 dated December 29, 2000, converted to Law 24 dated February 28, 2001) and possible charges in connection with other
potential liabilities.

Provisions
for other personnel charges comprise:



Reserve for general banking risks

This reserve covers the general business risks and, as such, forms part of shareholders' equity in compliance with international supervisory standards and Bank of
Italy instructions.

Accruals and deferrals

Accruals and deferrals are recognized in accordance with the matching principle.

Derivatives contracts

Derivatives on currency, securities, interest rates, stockmarket indices and other assets

Derivative contracts are valued individually using the methods applicable to the portfolio concerned (hedging contracts and non-hedging contracts).
The accounting principles and valuation criteria of derivative contracts are also applied to embedded derivatives which represent the

F-27

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components
of hybrid financial instruments and include both derivative and primary contracts. To this end, embedded derivative contracts are separate from primary contracts and are booked and valued
according to the following principles and criteria.

The
values determined are recorded separately in the balance sheet without offsetting assets and liabilities. Agreements between the parties to off-set reciprocal receivables
and payables in the case of default by one of the counterparties ("master netting agreement") are not relevant for disclosure purposes, but are taken
into consideration when assessing the counterparty's lending risk.

The
values determined by the contract valuation process (hedging and non-hedging) are adjusted on a case-by-case or a general basis, where
appropriate, in order to reflect the lending risk (counterparty and/or country risk) inherent in the contracts.

Hedging contracts

These are entered into with the aim of protecting the value of individual assets or liabilities, as well as any groups of assets or liabilities, on or off the
balance sheet, from the risk of market fluctuations. In the case of groups of assets or liabilities, the hedging objective is achieved via the use by the Group ofasset and
liability managementtechniques. A transaction will qualify as a hedge if the following documented conditions are met:



If
one of the conditions above ceases to apply, then the contract no longer qualifies.

Hedging
derivatives are valued on a basis consistent with the assets and liabilities being hedged. The related procedures for presentation in the financial statements are summarized
below:

Balance sheet:the relevant element of differentials or net interest on contracts hedging the interest arising from
interest-earning / bearing assets and liabilities is classified among "Accrued income" and/or "Accrued expenses". The relevant element of differentials on forward rate agreements hedging the interest
arising from interest-earning / bearing assets and liabilities is classified among "Prepaid expenses" and/or "Deferred income". The market value of contracts hedging the risk of price fluctuations,
and the effect of valuing contracts hedging the exchange risk on lending and funding activities (principal portion) using year-end spot exchange rates, are classified among "Other assets"
and/or "Other liabilities". Contracts hedging investment securities, or total loans and deposits, are valued at cost consistently with the assets and liabilities being hedged.

Statement of income:where derivative contracts are intended to hedge the interest arising from interest-earning / bearing
assets and liabilities, the related economic effect will form part of the net interest income on an accruals basis. In this case, the related differentials and margins are allocated either to interest
income or to interest expense, depending on their nature. If, on the other hand, the derivative contract hedges the risk of market price or exchange fluctuations (principal portion), then the revenues
or costs generated are treated as "Profits (losses) on financial transactions". More specifically, differentials and margins earned on derivative contracts hedging dealing securities are treated as
interest, if they relate to multiple-flow contracts (e.g. IRS) or to single-flow contracts where the duration of the underlying asset is less than one year (e.g. FRA); but as
profits (losses) on financial transactions, if they relate to single-flow contracts where the duration of the underlying asset is more than one year (e.g. futures and options).

F-28

---

Non-hedging derivative contracts

These are valued as follows:

Contracts on securities, interest rates, stockmarket indices and other assets:exchange traded contracts are stated at their
quoted market price on the last day of the period. Contracts linked to underlyings with observable market prices are stated on the basis of their financial value (replacement cost) determined with
reference to the observable market prices for underlyings. Other contracts are valued with reference to other elements determined on an objective and consistent basis.

Foreign currency derivatives:these are valued using the forward exchange rates ruling at period-end for the
maturity dates of the transactions subject.

The
related procedures for presentation in the financial statements are summarized below:

Balance sheet:the amounts determined from the valuation of non-hedging contracts are classified as "Other
assets" or "Other liabilities".

Statement of income:the economic effects of non-hedging derivative contracts are classified as "Profits (losses)
on financial transactions". The structure of this caption, according to the sectors of the financial instruments being traded (securities, currency, other financial instruments) and to the nature of
income/charges which they generate (valuations or not), is illustrated in a specific table in the explanatory notes.

Internal deals

The Parent Bank and the subsidiary Banca IMI have adopted an organizational structure based on specialized trading desks that have exclusive authorization to deal
in specific derivatives. This arrangement improves efficiency (lower transaction costs), improves management of market and counterparty risks, and the optimal allocation of specialized human
resources. These desks manage portfolios consisting of various types of derivatives and, sometimes, securities and operate within defined net risk limits.

The
desks serve as counterparties to other desks (which are also autonomous from an accounting point of view) that are not authorized to deal in the market.

With
regard to the accounting treatment of internal deals and their effect on income:



Settlement date

Currency and security transactions, interbank deposits and loans and the bills portfolio are recorded with reference to their settlement dates.

F-29

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(11)    ADJUSTMENTS AND PROVISIONS RECORDED FOR FISCAL PURPOSES

Value adjustments recorded solely for fiscal purposes

Adjustments recorded solely for fiscal purposes in the statutory financial statements of the Parent Bank and the companies included in consolidated have been
reversed upon consolidation.

The
Group has not recorded any adjustments solely for fiscal purposes during the year.

Provisions recorded solely for fiscal purposes

Provisions recorded solely for fiscal purposes by consolidated companies in their statutory financial statements have been reversed upon consolidation.

Provisions
to the reserve for possible loan losses made in accordance with tax laws by the subsidiary Banca OPI S.p.A. for €58 million have been eliminated from
the consolidated statement of income for the year.

(12)    LOANS

The Group's loan portfolio is analyzed below by type of counterparty:

12/31/02

12/31/01(€/mil)Due from banks (caption 30)

22,000

21,571Loans to customers (caption 40) (*)

126,701

97,056Total

148,701

118,627


---

Due from banks (caption 30)

Amounts due from banks include:

Detail of caption 30 "Due to banks" (table 1.1 B.I.)

12/31/02

12/31/01(€/mil)(a) Deposits with central banks

474

1,796(b) Bills eligible for refinancing with central banks



(c) Finance leases



(d) Repurchase agreements

11,500

6,678(e) Securities loaned

118

52


Deposits
with central banks as of December 31, 2002 include the compulsory reserve of €458 million with the Bank of Italy and other foreign central banks
(€786 million as of December 31, 2001).

F-30

---

Loans to customers (caption 40)

Loans to customers, which are analyzed by technical form in the Report on Group Operations, include:

Detail of caption 40 "Loans to customers" (table 1.2 B.I.)

12/31/02

12/31/01(€/mil)(a) Bills eligible for refinancing with central banks

18

15(b) Finance leases

4,266

2,253(c) Repurchase agreements

2,631

3,623(d) Securities loaned

13

129


The
increase in the caption "finance leases" refers mainly to the first time consolidation of the former Cardine Group companies Finemiro Leasing and Cardine Leasing (now merged with
Sanpaolo Leasint).

Secured
loans to customers, excluding those granted directly to Governments or other public entities, are detailed in the table below:

Secured loans to customers (table 1.3 B.I.) (*)

12/31/02

12/31/01(€/mil)(a)  Mortgages

31,588

21,826(b)  Pledged assets:1. cash deposits

706

2002. securities (**)

4,705

5,6983. other instruments

390

432(c)  Guarantees given by:1. Governments (***)

6,257

6,0912. other public entities

401

2533. banks

2,237

1,6504. other operators

18,139

12,122Total

64,423

48,272


---

Loans
to customers guaranteed by banks and other operators include €113 million of positions (€368 million as of December 31, 2001)
for which the Parent Bank purchased buyer protection against the risk of non-performance, by means of derivative contracts.

Secured
loans to customers and those granted directly to Governments or other public entities represent 61.5% of total loans to customers (62.7% as of December 31, 2001).

F-31

---

Degree of risk in loan portfolio

The principal and interest elements of loans are stated at their estimated realizable value by applying the policies described in detail in Note (10). The
related writedowns are effected via direct reduction of the balance sheet asset value of the loans concerned.

The
estimated realizable value of doubtful loans takes into account not only the likelihood of recovery, but also their total or partial lack of income generation and late repayment. The
global adjustments for discounting purposes as of December 31, 2002 are set at €272 million, €74 million of which is attributable to the former
Cardine Group (€192 million for SANPAOLO IMI Groupstand aloneand €94 million for former Cardine Group as
of December 31, 2001).

Analysis of loans to customers

Loans to customers for the years 2002 and 2001 are detailed in the tables below:

(Bank of Italy instructions dated 12/17/98)

|                                            |  |         |  |      
|------------------------------------------- |  | ------- |  | -----
|
|
|A.  Doubtful loans                          |  | 6,447   |  | 3,607
|A.1 Non-performing loans                    |  | 4,294   |  | 2,960
|A.2 Problem loans                           |  | 1,767   |  | 565  
|A.3 Loans currently being restructured      |  | 35      |  | 4    
|A.4 Restructured loans                      |  | 268     |  | 54   
|A.5 Unsecured loans exposed to country risk |  | 83      |  | 24   
|B. Performing loans                         |  | 124,854 |  | 993  
|                                            |  |         |  |      
|Total loans to customers                    |  | 131,301 |  | 4,600
|                                            |  |         |  |      

Non-performing
and problem loans include unsecured loans to residents of nations exposed to country risk, for a gross exposure of, respectively,
€2 million and €11 million, and which have been written down by €2 million and €9 million, respectively.

Commentary
on the effect of doubtful loans on the former Cardine Group aggregate accounts is provided in the subsequent tables which highlight the movements in gross doubtful loans and
indicate the balance referring to the former Cardine Group as of December 31, 2001.

(Bank of Italy instructions dated 12/17/98)

|12/31/01                                    |  | Gross exposure |  | Total
adjustments |  | Net Exposure
|------------------------------------------- |  | -------------- |  | ----------------- |  | ------------
|
|A.  Doubtful loans                          |  | 4,391          |  | 2,501             |  | 1,890       
|A.1 Non-performing loans                    |  | 3,069          |  | 2,139             |  | 930         
|A.2 Problem loans                           |  | 1,090          |  | 293               |  | 797         
|A.3 Loans currently being restructured      |  | 66             |  | 21                |  | 45          
|A.4 Restructured loans                      |  | 121            |  | 35                |  | 86          
|A.5 Unsecured loans exposed to country risk |  | 45             |  | 13                |  | 32          
|B. Performing loans                         |  | 95,899         |  | 733               |  | 95,166      
|                                            |  |                |  |                   |  |             
|Total loans to customers                    |  | 100,290        |  | 3,234             |  | 97,056      
|                                            |  |                |  |                   |  |             

F-32

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As
of December 31, 2001, non-performing loans include unsecured loans to residents of nations exposed to country risk, for a gross exposure of
€3 million, written down almost in full.

Analysis of loans to banks

Loans to banks for the years 2002 and 2001 are detailed below:

(Bank of Italy instructions dated 12/17/98)

|12/31/02                                    |  | Gross exposure |  | Total
adjustments |  | Net Exposure
|------------------------------------------- |  | -------------- |  | ----------------- |  | ------------
|
|A.  Doubtful loans                          |  | 77             |  | 25                |  | 52          
|A.1 Non-performing loans                    |  | 11             |  | 10                |  | 1           
|A.2 Problem loans                           |  |               |  |                  |  |            
|A.3 Loans currently being restructured      |  |               |  |                  |  |            
|A.4 Restructured loans                      |  |               |  |                  |  |            
|A.5 Unsecured loans exposed to country risk |  | 66             |  | 15                |  | 51          
|B. Performing loans                         |  | 21,959         |  | 11                |  | 21,948      
|                                            |  |                |  |                   |  |             
|Total loans to banks                        |  | 22,036         |  | 36                |  | 22,000      
|                                            |  |                |  |                   |  |             

Non-performing
loans include unsecured loans to residents of nations exposed to country risk, held in portfolio by the Parent Bank, for a gross exposure of
€9 million, written down by €8 million.

(Bank of Italy instructions dated 12/17/98)

|12/31/01                                    |  | Gross exposure |  | Total
adjustments |  | Net Exposure
|------------------------------------------- |  | -------------- |  | ----------------- |  | ------------
|
|A.  Doubtful loans                          |  | 86             |  | 28                |  | 58          
|A.1 Non-performing loans                    |  | 11             |  | 10                |  | 1           
|A.2 Problem loans                           |  |               |  |                  |  |            
|A.3 Loans currently being restructured      |  |               |  |                  |  |            
|A.4 Restructured loans                      |  |               |  |                  |  |            
|A.5 Unsecured loans exposed to country risk |  | 75             |  | 18                |  | 57          
|B. Performing loans                         |  | 21,522         |  | 9                 |  | 21,513      
|                                            |  |                |  |                   |  |             
|Total loans to banks                        |  | 21,608         |  | 37                |  | 21,571      
|                                            |  |                |  |                   |  |             

As
of December 31, 2001, non-performing loans include unsecured loans to residents of nations exposed to country risk, held in portfolio by the Parent Bank, for a
gross exposure of €7 million, written down in full.

Non-performing loans (table 1.4 B.I.)

12/31/02

12/31/01(€/mil)Non-performing loans (net amount, including default interest)

1,335

931


F-33

---

Movements in doubtful loans to customers

Movements in gross doubtful loans to customers during 2002 were as follows:

(Bank of Italy instructions dated 12/17/98)

|  | Description / Categories                              |  | Non-
performing
loans |  | Problem
loans |  | Loans
being
restructured |  | Restructured
loans |  | Unsecured
loans
exposed to
country risk
|- | ----------------------------------------------------- |  | --------------------- |  | ------------- |  | ------------------------ |  | ------------------ |  | ---------------------------------------
|
|A | Gross value as of January 1, 2002                     |  | 3,069                 |  | 1,090         |  | 66                       |  | 121                |  | 45                                     
|  | A.1 including: for default interest                   |  | 547                   |  | 38            |  |                         |  |                   |  |                                       
|B | Increases                                             |  | 2,069                 |  | 2,047         |  | 54                       |  | 196                |  | 55                                     
|  | B.1 inflows from performing loans                     |  | 205                   |  | 1,180         |  | 15                       |  | 8                  |  | 16                                     
|  | B.2 default interest                                  |  | 133                   |  | 34            |  |                         |  |                   |  |                                       
|  | B.3 transfers from other categories of doubtful loans |  | 446                   |  | 99            |  | 33                       |  | 40                 |  |                                       
|  | B.4 other increases                                   |  | 1,285                 |  | 734           |  | 6                        |  | 148                |  | 39                                     
|C | Decreases                                             |  | 844                   |  | 1,370         |  | 85                       |  | 49                 |  | 17                                     
|  | C.1 outflows to performing loans                      |  | 14                    |  | 210           |  |                         |  | 6                  |  | 9                                      
|  | C.2 write-offs                                        |  | 303                   |  | 68            |  |                         |  | 5                  |  |                                       
|  | C.3 collections                                       |  | 415                   |  | 585           |  | 8                        |  | 24                 |  | 5                                      
|  | C.4 disposals                                         |  | 41                    |  |              |  |                         |  |                   |  |                                       
|  | C.5 transfers to other categories of doubtful loans   |  | 37                    |  | 492           |  | 76                       |  | 13                 |  |                                       
|  | C.6 other decreases                                   |  | 34                    |  | 15            |  | 1                        |  | 1                  |  | 3                                      
|D | Gross value as of December 31, 2002                   |  | 4,294                 |  | 1,767         |  | 35                       |  | 268                |  | 83                                     
|  | D.1 including: for default interest                   |  | 641                   |  | 88            |  |                         |  |                   |  |                                       

"Other
increases" include a €1,771 million balance as of 1/1/2002 for the former Cardine Group, of which €1,078 million for
non-performing loans, €549 million for problem loans, €1 million for loans being restructured, €140 million for
restructured loans and €3 million for unsecured loans to risk countries.

F-34

---

Movements
in gross doubtful loans to customers during 2001 were as follows:

(Bank of Italy instructions dated 12/17/98)

|  | Description / Categories                              |  | Non-
performing
loans |  | Problem
loans |  | Loans
being
restructured |  | Restructured
loans |  | Unsecured
loans
exposed to
country risk
|- | ----------------------------------------------------- |  | --------------------- |  | ------------- |  | ------------------------ |  | ------------------ |  | ---------------------------------------
|
|A | Gross value as of January 1, 2001                     |  | 3,542                 |  | 1,341         |  | 17                       |  | 122                |  | 135                                    
|  | A.1 including: for default interest                   |  | 808                   |  | 41            |  | 3                        |  |                   |  |                                       
|B | Increases                                             |  | 840                   |  | 865           |  | 68                       |  | 17                 |  | 2                                      
|  | B.1 inflows from performing loans                     |  | 146                   |  | 708           |  | 56                       |  | 3                  |  |                                       
|  | B.2 default interest                                  |  | 127                   |  | 9             |  |                         |  |                   |  |                                       
|  | B.3 transfers from other categories of doubtful loans |  | 484                   |  | 34            |  | 8                        |  | 11                 |  |                                       
|  | B.4 other increases                                   |  | 83                    |  | 114           |  | 4                        |  | 3                  |  | 2                                      
|C | Decreases                                             |  | 1,313                 |  | 1,116         |  | 19                       |  | 18                 |  | 92                                     
|  | C.1 outflows to performing loans                      |  | 14                    |  | 165           |  | 1                        |  |                   |  | 7                                      
|  | C.2 write-offs                                        |  | 671                   |  | 47            |  | 1                        |  | 2                  |  |                                       
|  | C.3 collections                                       |  | 246                   |  | 400           |  | 17                       |  | 11                 |  | 85                                     
|  | C.4 disposals                                         |  | 112                   |  | 2             |  |                         |  |                   |  |                                       
|  | C.5 transfers to other categories of doubtful loans   |  | 34                    |  | 498           |  |                         |  | 5                  |  |                                       
|  | C.6 other decreases                                   |  | 236                   |  | 4             |  |                         |  |                   |  |                                       
|D | Gross value as of December 31, 2001                   |  | 3,069                 |  | 1,090         |  | 66                       |  | 121                |  | 45                                     
|  | D.1 including: for default interest                   |  | 547                   |  | 38            |  |                         |  |                   |  |                                       

Decreases
in non-performing loans mainly refer to the exclusion from the scope of consolidation of Sanpaolo Immobiliare S.p.A. (sold on July 2, 2001), as well as to
the completion by the Parent Bank of factoring deals for the assignment without recourse of loans involving 18,577 short-term loans. These loans, recorded for a gross value of
€640 million and a net value of €111 million, have been factored for €113 million.

F-35

---

Movements in gross doubtful amounts due from banks

Movements in gross doubtful amounts due from banks during 2002 were as follows:

(Bank of Italy instructions dated 12/17/98)

|  | Description / Categories                              |  | Non-
performing
loans |  | Problem
loans |  | Loans
being
restructured |  | Restructured
loans |  | Unsecured
loans
exposed to
country risk
|- | ----------------------------------------------------- |  | --------------------- |  | ------------- |  | ------------------------ |  | ------------------ |  | ---------------------------------------
|
|A | Gross value as of January 1, 2002                     |  | 11                    |  |              |  |                         |  |                   |  | 75                                     
|  | A.1 including: for default interest                   |  | 1                     |  |              |  |                         |  |                   |  |                                       
|B | Increases                                             |  | 1                     |  |              |  |                         |  |                   |  | 20                                     
|  | B.1 inflows from performing loans                     |  |                      |  |              |  |                         |  |                   |  |                                       
|  | B.2 default interest                                  |  |                      |  |              |  |                         |  |                   |  |                                       
|  | B.3 transfers from other categories of doubtful loans |  |                      |  |              |  |                         |  |                   |  |                                       
|  | B.4 other increases                                   |  | 1                     |  |              |  |                         |  |                   |  | 20                                     
|C | Decreases                                             |  | 1                     |  |              |  |                         |  |                   |  | 29                                     
|  | C.1 outflows to performing loans                      |  |                      |  |              |  |                         |  |                   |  |                                       
|  | C.2 write-offs                                        |  |                      |  |              |  |                         |  |                   |  |                                       
|  | C.3 collections                                       |  |                      |  |              |  |                         |  |                   |  | 29                                     
|  | C.4 disposals                                         |  |                      |  |              |  |                         |  |                   |  |                                       
|  | C.5 transfers to other categories of doubtful loans   |  |                      |  |              |  |                         |  |                   |  |                                       
|  | C.6 other decreases                                   |  | 1                     |  |              |  |                         |  |                   |  |                                       
|D | Gross value as of December 31, 2002                   |  | 11                    |  |              |  |                         |  |                   |  | 66                                     
|  | D.1 including: for default interest                   |  | 1                     |  |              |  |                         |  |                   |  |                                       

F-36

---

Movements
in gross doubtful amounts due from banks during 2001 were as follows:

(Bank of Italy instructions dated 12/17/98)

|  | Description / Categories                              |  | Non-
performing
loans |  | Problem
loans |  | Loans
being
restructured |  | Restructured
loans |  | Unsecured
loans
exposed to
country risk
|- | ----------------------------------------------------- |  | --------------------- |  | ------------- |  | ------------------------ |  | ------------------ |  | ---------------------------------------
|
|A | Gross value as of January 1, 2001                     |  | 14                    |  |              |  |                         |  |                   |  | 58                                     
|  | A.1 including: for default interest                   |  |                      |  |              |  |                         |  |                   |  |                                       
|B | Increases                                             |  | 1                     |  |              |  |                         |  |                   |  | 22                                     
|  | B.1 inflows from performing loans                     |  |                      |  |              |  |                         |  |                   |  |                                       
|  | B.2 default interest                                  |  |                      |  |              |  |                         |  |                   |  |                                       
|  | B.3 transfers from other categories of doubtful loans |  |                      |  |              |  |                         |  |                   |  |                                       
|  | B.4 other increases                                   |  | 1                     |  |              |  |                         |  |                   |  | 22                                     
|C | Decreases                                             |  | 4                     |  |              |  |                         |  |                   |  | 5                                      
|  | C.1 outflows to performing loans                      |  |                      |  |              |  |                         |  |                   |  |                                       
|  | C.2 write-offs                                        |  | 4                     |  |              |  |                         |  |                   |  |                                       
|  | C.3 collections                                       |  |                      |  |              |  |                         |  |                   |  | 5                                      
|  | C.4 disposals                                         |  |                      |  |              |  |                         |  |                   |  |                                       
|  | C.5 transfers to other categories of doubtful loans   |  |                      |  |              |  |                         |  |                   |  |                                       
|  | C.6 other decreases                                   |  |                      |  |              |  |                         |  |                   |  |                                       
|D | Gross value as of December 31, 2001                   |  | 11                    |  |              |  |                         |  |                   |  | 75                                     
|  | D.1 including: for default interest                   |  | 1                     |  |              |  |                         |  |                   |  |                                       

F-37

---



Movements during the years in adjustments made to loans granted to customers

Movements during 2002 in adjustments made to loans granted to customers were as follows:

(Bank of Italy instructions dated 12/17/98)

|  | Description / Categories                              |  | Non-
performing
loans |  | Problem
loans |  | Loans
being
restructured |  | Restructured
loans |  | Unsecured
loans
exposed to
country risk |  | Performing
loans
|- | ----------------------------------------------------- |  | --------------------- |  | ------------- |  | ------------------------ |  | ------------------ |  | --------------------------------------- |  | ----------------
|
|A | Total adjustments as of January 1, 2002               |  | 2,139                 |  | 293           |  | 21                       |  | 35                 |  | 13                                      |  | 733             
|  | A.1 including: for default interest                   |  | 547                   |  | 38            |  |                         |  |                   |  |                                        |  | 8               
|B | Increases                                             |  | 1,328                 |  | 553           |  | 7                        |  | 38                 |  | 16                                      |  | 442             
|  | B.1 adjustments                                       |  | 463                   |  | 254           |  | 3                        |  | 8                  |  | 7                                       |  | 251             
|  | B.1.1 including: for default interest                 |  | 133                   |  | 34            |  |                         |  |                   |  |                                        |  | 17              
|  | B.2 use of reserves for possible loan losses          |  | 3                     |  | 28            |  |                         |  |                   |  |                                        |  | 6               
|  | B.3 transfers from other categories of doubtful loans |  | 192                   |  | 108           |  | 4                        |  | 4                  |  | 3                                       |  | 6               
|  | B.4 other increases                                   |  | 670                   |  | 163           |  |                         |  | 26                 |  | 6                                       |  | 179             
|C | Decreases                                             |  | 507                   |  | 281           |  | 24                       |  | 19                 |  | 5                                       |  | 182             
|  | C.1 writeback from valuations                         |  | 54                    |  | 24            |  | 1                        |  | 8                  |  | 2                                       |  | 8               
|  | C.1.1 including: for default interest                 |  | 1                     |  | 1             |  |                         |  |                   |  |                                        |  |                
|  | C.2 writebacks of collections                         |  | 103                   |  | 50            |  | 1                        |  | 1                  |  |                                        |  | 11              
|  | C.2.1 including: for default interest                 |  | 37                    |  | 9             |  |                         |  |                   |  |                                        |  | 5               
|  | C.3 write-offs                                        |  | 303                   |  | 68            |  |                         |  | 5                  |  |                                        |  | 27              
|  | C.4 transfers to other categories of doubtful loans   |  | 26                    |  | 134           |  | 22                       |  | 4                  |  |                                        |  | 131             
|  | C.5 other decreases                                   |  | 21                    |  | 5             |  |                         |  | 1                  |  | 3                                       |  | 5               
|D | Total adjustments as of December 31, 2002             |  | 2,960                 |  | 565           |  | 4                        |  | 54                 |  | 24                                      |  | 993             
|  | D.1 including: for default interest                   |  | 641                   |  | 88            |  |                         |  |                   |  |                                        |  | 24              

"Other
increases" include € 970 million as of 1/1/2002 for the former Cardine Group, of which € 611 million for
non-performing loans, € 161 million for problem loans, € 25 million for restructured loans,
€ 1 million for unsecured loans to risk countries and € 172 million for performing loans.

As
of December 31, 2002 total adjustments include € 272 million (with € 74 million attributable to the
former Cardine Group) relating to the adoption of the policy for discounting doubtful loans (€ 192 million for the SANPAOLO IMI Groupstand
aloneand € 94 million for the former Cardine Group as of December 31, 2001). More specifically, writedowns for discounting purposes
total € 197 million on non-performing loans, € 60 million on problem loans and
€ 15 million on restructured loans and loans being restructured.

The
adjustments in value to performing loans to customers include a specific writedown of € 9 million booked by the Parent Bank to watchlist positions
for a gross exposure of € 201 million.

F-38

---

Movements
during 2001 in adjustments made to loans granted to customers were as follows:

(Bank of Italy instructions dated 12/17/98)

|  | Description / Categories                              |  | Non-
performing
loans |  | Problem
loans |  | Loans
being
restructured |  | Restructured
loans |  | Unsecured
loans
exposed to
country risk |  | Performing
loans
|- | ----------------------------------------------------- |  | --------------------- |  | ------------- |  | ------------------------ |  | ------------------ |  | --------------------------------------- |  | ----------------
|
|A | Total adjustments as of January 1, 2001               |  | 2,527                 |  | 458           |  | 5                        |  | 35                 |  | 29                                      |  | 587             
|  | A.1 including: for default interest                   |  | 808                   |  | 41            |  | 3                        |  |                   |  |                                        |  | 16              
|B | Increases                                             |  | 612                   |  | 214           |  | 21                       |  | 10                 |  |                                        |  | 211             
|  | B.1 adjustments                                       |  | 345                   |  | 168           |  | 19                       |  | 2                  |  |                                        |  | 209             
|  | B.1.1 including: for default interest                 |  | 127                   |  | 9             |  |                         |  |                   |  |                                        |  | 7               
|  | B.2 use of reserves for possible loan losses          |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | B.3 transfers from other categories of doubtful loans |  | 259                   |  | 28            |  | 2                        |  | 7                  |  |                                        |  | 1               
|  | B.4 other increases                                   |  | 8                     |  | 18            |  |                         |  | 1                  |  |                                        |  | 1               
|C | Decreases                                             |  | 1,000                 |  | 379           |  | 5                        |  | 10                 |  | 16                                      |  | 65              
|  | C.1 writeback from valuations                         |  | 69                    |  | 27            |  |                         |  | 4                  |  | 16                                      |  | 8               
|  | C.1.1 including: for default interest                 |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | C.2 writebacks of collections                         |  | 60                    |  | 36            |  | 4                        |  | 2                  |  |                                        |  | 5               
|  | C.2.1 including: for default interest                 |  | 20                    |  | 9             |  | 2                        |  |                   |  |                                        |  | 4               
|  | C.3 write-offs                                        |  | 671                   |  | 47            |  | 1                        |  | 2                  |  |                                        |  | 28              
|  | C.4 transfers to other categories of doubtful loans   |  | 21                    |  | 257           |  |                         |  | 2                  |  |                                        |  | 17              
|  | C.5 other decreases                                   |  | 179                   |  | 12            |  |                         |  |                   |  |                                        |  | 7               
|D | Total adjustments as of December 31, 2001             |  | 2,139                 |  | 293           |  | 21                       |  | 35                 |  | 13                                      |  | 733             
|  | D.1 including: for default interest                   |  | 547                   |  | 38            |  |                         |  |                   |  |                                        |  | 8               

As
already discussed, total adjustments include € 192 million relating to the adoption of a policy of actualizing doubtful loans. Writedowns for
discounting purposes total € 164 million on non-performing loans, € 21 million on problem loans and
€ 7 million on restructured loans and loans being restructured.

Value
adjustments to performing loans to customers and banks include € 20 million of specific writedowns by the Parent Bank to watchlist positions for
a gross exposure of € 233 million; € 6 million refer to a foreign subsidiary. The inherent risk associated with other performing
loans is covered by a general writedown of € 699 million.

F-39

---



Movements during 2002 in adjustments made to loans granted to banks were as follows:

(Bank of Italy instructions dated 12/17/98)

|  | Description / Categories                              |  | Non-
performing
loans |  | Problem
loans |  | Loans
being
restructured |  | Restructured
loans |  | Unsecured
loans exposed
to country risk |  | Performing
loans
|- | ----------------------------------------------------- |  | --------------------- |  | ------------- |  | ------------------------ |  | ------------------ |  | --------------------------------------- |  | ----------------
|
|A | Total adjustments as of January 1, 2002               |  | 10                    |  |              |  |                         |  |                   |  | 18                                      |  | 9               
|  | A.1 including: for default interest                   |  | 1                     |  |              |  |                         |  |                   |  |                                        |  |                
|B | Increases                                             |  | 1                     |  |              |  |                         |  |                   |  | 2                                       |  | 2               
|  | B.1 adjustments                                       |  |                      |  |              |  |                         |  |                   |  |                                        |  | 1               
|  | B.1.1 including: for default interest                 |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | B.2 use of reserves for possible loan losses          |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | B.3 transfers from other categories of doubtful loans |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | B.4 other increases                                   |  | 1                     |  |              |  |                         |  |                   |  | 2                                       |  | 1               
|C | Decreases                                             |  | 1                     |  |              |  |                         |  |                   |  | 5                                       |  |                
|  | C.1 writeback from valuations                         |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | C.1.1 including: for default interest                 |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | C.2 writebacks of collections                         |  |                      |  |              |  |                         |  |                   |  | 1                                       |  |                
|  | C.2.1 including: for default interest                 |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | C.3 write-offs                                        |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | C.4 transfers to other categories of doubtful loans   |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | C.5 other decreases                                   |  | 1                     |  |              |  |                         |  |                   |  | 4                                       |  |                
|D | Total adjustments as of December 31, 2002             |  | 10                    |  |              |  |                         |  |                   |  | 15                                      |  | 11              
|  | D.1 including: for default interest                   |  | 1                     |  |              |  |                         |  |                   |  |                                        |  |                

F-40

---

Movements
during 2001 in adjustments made to loans granted to banks were as follows:

(Bank of Italy instructions dated 12/17/98)

|  | Description / Categories                              |  | Non-
performing
loans |  | Problem
loans |  | Loans
being
restructured |  | Restructured
loans |  | Unsecured
loans exposed
to country risk |  | Performing
loans
|- | ----------------------------------------------------- |  | --------------------- |  | ------------- |  | ------------------------ |  | ------------------ |  | --------------------------------------- |  | ----------------
|
|A | Total adjustments as of January 1, 2001               |  | 13                    |  |              |  |                         |  |                   |  | 5                                       |  | 7               
|  | A.1 including: for default interest                   |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|B | Increases                                             |  | 1                     |  |              |  |                         |  |                   |  | 13                                      |  | 10              
|  | B.1 adjustments                                       |  |                      |  |              |  |                         |  |                   |  | 13                                      |  | 9               
|  | B.1.1 including: for default interest                 |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | B.2 use of reserves for possible loan losses          |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | B.3 transfers from other categories of doubtful loans |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | B.4 other increases                                   |  | 1                     |  |              |  |                         |  |                   |  |                                        |  | 1               
|C | Decreases                                             |  | 4                     |  |              |  |                         |  |                   |  |                                        |  | 8               
|  | C.1 writeback from valuations                         |  |                      |  |              |  |                         |  |                   |  |                                        |  | 8               
|  | C.1.1 including: for default interest                 |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | C.2 writebacks of collections                         |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | C.2.1 including: for default interest                 |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | C.3 write-offs                                        |  | 4                     |  |              |  |                         |  |                   |  |                                        |  |                
|  | C.4 transfers to other categories of doubtful loans   |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|  | C.5 other decreases                                   |  |                      |  |              |  |                         |  |                   |  |                                        |  |                
|D | Total adjustments as of December 31, 2001             |  | 10                    |  |              |  |                         |  |                   |  | 18                                      |  | 9               
|  | D.1 including: for default interest                   |  | 1                     |  |              |  |                         |  |                   |  |                                        |  |                

F-41

---

Loans
to customers and banks resident in nations exposed to country risk are analyzed below for the years 2002 and 2001:

Gross exposure as of 12/31/02including: unsecuredCountry

Total
(book value)book value

weighted value(€/mil)Brazil

75

39

39Romania

33

28

28Egypt

54

26

26Morocco

70

15

15Venezuela

14

12

11Argentina

95

8

8Tunisia

8

6

1Algeria

8

4

3Cameroon

2

2

2Costa Rica

2

2

Russian Federation

363

1

1Iran

60

1

1Philippines

11

1

1Yugoslavia

1

1

1Lebanon

32

1

Pakistan

32



Others

43

2

1Total gross exposure

903

149

138Total adjustments

39

39Net exposures as of 12/31/02

864

110


For
the purposes of these notes, the countries considered are those listed by the Italian Banking Association, for which, in the absence of specific guarantees, general adjustments have
been made.

Adjustments
to unsecured loans exposed to country risk have been made by applying the weighting criteria and the writedown percentages agreed industry-wide by the Italian
Banking Association, as mentioned above. Such writedowns are to cover all of the losses that might arise from those events that are typical to "country risk".

Secured
loans, amounting to € 754 million (€ 906 million as of December 31, 2001), are mainly insured by
SACE or equivalent entities and by surety bonds from banking operators in the OECD area. In addition, they comprise loans of € 158 million
(€ 255 million as of December 31, 2001) granted by the Parent Bank to a major customer resident in Russia that are guaranteed by receivables deriving from
supply contracts with leading West European companies. This collateral is deemed adequate to

F-42

---

cover
the lending risk. In compliance with Bank of Italy regulations, these loans are included in the calculation of country risk, which is deducted from the Bank's capital for supervisory purposes.

Gross exposure as of 12/31/01including: unsecuredCountry

Total
(book value)book value

weighted value(€/mil)Brazil

128

66

63Venezuela

19

15

15Egypt

16

11

11Morocco

95

7

7Argentina

78

6

5Algeria

9

5

4Cameroon

2

2

2Russian Federation

381

1

1Philippines

20

1

1Yugoslavia

1

1

1Indonesia

1

1

1Lebanon

49

1

Iran

59



Cayman Islands

34



Bermuda

30



Others

104

3

2Total gross exposure

1,026

120

113Total adjustments

31

31Net exposures as of 12/31/01

995

89


Other information relating to loans

Information regarding the distribution of loans, by category of borrower, business sector, geographical area, currency and liquidity, is provided in
Note (22).

(13)    SECURITIES

Securities owned by the Group are analyzed as follows:

12/31/02

12/31/01(€/mil)Treasury bills and similar bills eligible for refinancing with central banks (caption 20)

3,143

9,373Bonds and other debt securities (caption 50)

16,822

11,216Shares, quotas and other equities (caption 60)

2,595

1,528Total

22,560

22,117


"Treasury
bills and similar bills eligible for refinancing with central banks" represent securities which may be used for refinancing purposes; at the balance sheet date, securities had
not been used for this purpose.

F-43

---

Investment securities

Securities recorded in the consolidated financial statements include those which will be held long term by Group companies and declared as such in their financial
statements. The investment securities portfolio is analyzed as follows:

Investment securities (table 2.1 B.I)

|                   |                           | 12/31/02  |   | 12/31/01
|------------------ | ------------------------- | --------- | - | --------
|
|
|1. Debt securities |                           |           |   |         
|                   | 1.1 Government securities |           |   |         
|                   |                           | quoted   |   | 1,193   
|                   |                           | unquoted |   |        
|                   | 1.2 other securities      |           |   |         
|                   |                           | quoted   |   | 731     
|                   |                           | unquoted |   | 965     
|2. Equities        |                           |           |   |         
|                   | quoted                   |           |  |         
|                   | unquoted                 |           | 8 |         
|                   |                           |           |   |         
|Total              |                           | 2,897     |   | 3,010   
|                   |                           |           |   |         

The
comparison between the fair value and book value reveals net unrealized gains, for the Parent Bank and some subsidiaries, for € 24 million on
securities not covered by derivatives contracts and for € 89 million on hedged securities. The evaluation of related derivatives reveals potential losses for
€ 94 million (including € 18 million for operations entered into with Group companies operating on financial markets within
their brokerage activity).

"Other
securities", quoted and unquoted, mainly include securities held by the Parent Bank for € 1,043 million and by foreign subsidiaries for
€ 630 million. In particular, investments in securities in foreign Governments and public bodies amount to € 344 million, while
other investments, amounting to € 1,352 million are composed mainly of securities issued by leading companies in the European Union
(€ 833 million).

"Equities"
entirely comprise units in mutual funds included in the investment portfolios of the subsidiaries Sanpaolo IMI Private Equity S.p.A. and Cardine Finance P.L.C..

As
of December 31, 2001 the comparison between the fair value and book value of securities revealed a net unrealized, unrecorded gain of
€ 23 million on securities not hedged by derivative contracts and € 25 million on securities hedged by derivative contracts
pertaining to the Parent Bank. The evaluation of these derivatives revealed an unrealized loss of € 21 million.

"Other
securities", quoted and unquoted, mainly included securities held by Banco di Napoli for € 781 million, by foreign subsidiaries for
€ 557 million and by the Parent Bank for € 386 million. More specifically, the securities deriving from third party
securitisation deals amounted to € 429 million, investments in government securities (other than Italian) and those of public entities amounted to
€ 300 million, while other investments in securities, totaling € 995 million, were largely of primary European issuers.

F-44

---

"Equities"
entirely comprised units in mutual funds included in the investment portfolios of NHSNuova Holding SANPAOLO IMI S.p.A..

The
following table shows changes in investment securities during 2002:

Changes in investments securities during the year (table 2.2 B.I.)

(€/mil)A.
Opening balance as of January 1, 2002

3,308B.
Increases

1,502B1. purchases

768B2. writebacks

5B3. transfers from dealing portfolio

7B4. other changes

722C.
Decreases

1,913C1. sales

464C2. redemptions

769C3. adjustments

22including:long-term writedowns

18C4. transfers to dealing portfolio

432C5. other changes

226D.
Closing balance as of December 31, 2002

2,897


"Transfers
from dealing portfolio" at subcaption B3 refer to transfers by a foreign subsidiary.

Subcaption
B4. "Increasesother changes" includes € 678 million as of 1/1/2002 for the former Cardine Group,
€ 20 million exchange gains on securities denominated in foreign currency and € 5 million gains from dealings.

Subcaption
C5. "Decreasesother changes" includes € 165 million exchange losses on securities denominated in foreign currencies and
€ 3 million losses on dealings.

In
addition, subcaptions B4 and C5 also include accrued issue and dealing discounts.

Subcaption
C1. "Sales" includes €277 million sales carried out by the Parent Bank on the basis of resolutions passed by the Board of Directors of the Bank and
€187 million for other sales made by certain subsidiary companies in relation to the redefinition of business.

The
"adjustments" of €22 million reported in subcaption C3. reflect any permanent losses in value for €18 million (subsection 2 of art. 18
Decree 87/92), with the remainder of the adjustments made to reflect market value (subsection 1 of art. 18 Decree 87/92). Negative adjustments of a permanent nature have been determined according to
the deterioration in liquidity of borrowers in connection with securities or collaterals. When determining the adjustments, the prices supplied by the arrangers of the issues were also prudently
considered.

Subcaption
C4. "transfer to dealing portfolio" refers to transfers made by the Parent Bank.

The
positive net differences between reimbursements and book values (issue and dealing discounts) total €55 million and have been booked to the statement of income
on the basis of the

F-45

---

accruals
principle. More specifically, the Parent Bank shows a positive difference for €59 million and other foreign subsidiaries show a negative difference of
€4 million.

It
should be noted that movements in the investment portfolio are carried out by Group companies on the basis of resolutions passed by the Board of Directors and within the limits set by
them.

The
following table shows changes in investment securities during 2001:

Changes in investments securities during the year (table 2.2 B.I.)

(€/mil)A.

Opening balance as of January 1, 2001

6,671B.

Increases

1,090B1.

purchases

893B2.

writebacks

1B3.

transfers from dealing portfolio

4B4.

other changes

192C.

Decreases

4,453C1.

sales

1,311C2.

redemptions

1,611C3.

adjustments

11including:long-term writedowns

9C4.

transfers to dealing portfolio

1,382C5.

other changes

138D.

Closing balance as of December 31, 2001

3,308


"Transfers
from dealing portfolio" as per subcaption B3. are made up of investments held by a foreign subsidiary.

Subcaption
B4. "Increasesother changes" includes exchange differences on securities denominated in foreign currency for €159 million and dealing
discounts for €12 million.

Subcaption
C5. "Decreasesother changes" includes €118 million which is the net effect of eliminating intercompany positions less
€16 million of exchange losses on securities denominated in foreign currency.

In
addition, subcaptions B4. and C5. also include accrued issue and dealing discounts.

Subcaption
C1. "Sales" includes €1,223 million of sales carried out by the subsidiary Banco di Napoli according to indications given by its Board of Directors in
the resolutions about operations and €88 million of other sales made by certain foreign subsidiaries based on approvals given by local Supervisory Authorities.

The
adjustments reported in subcaption C3., for a total of €11 million, relate to a €9 million writedown of securities made by a subsidiary
of Banco di Napoli, and a €2 million writedown of securities to market value by the Parent Bank, pursuant to Art. 18 of Decree 87/92.

F-46

---

Caption
C4. "Transfer to dealing portfolio" essentially represents a transfer of €1,380 million made by Banco di Napoli in connection with its change in strategy.

A
comparison between the fair value and book value reveals gains of €21 million (issue and dealing discounts) which will be recorded in the statement of income on
an accrual basis. More specifically, Banco di Napoli shows gains of €33 million, the Parent Bank losses of €11 million and other foreign subsidiaries
losses of €1 million.

Dealing securities

These securities, held for treasury and dealing purposes, comprise:

Dealing securities (table 2.3 B.I.)

12/31/02

12/31/01Book value

Fair value

Book value

Fair value(€/mil)1. Debt securities1.1 Government securitiesquoted

7,248

7,248

9,626

9,626unquoted

43

43

57

571.2 other securitiesquoted

4,234

4,236

4,140

4,140unquoted

5,551

5,575

3,463

3,4712. Equitiesquoted

2,426

2,429

1,259

1,259unquoted

161

162

264

265Total

19,663

19,693

18,809

18,818


In
the reclassified consolidated financial statements, the dealing securities portfolio also includes €31 million of SANPAOLO IMI S.p.A. shares
(€10 million as of December 31, 2001), purchased by certain subsidiaries as part of their trading activities.

Gains
shown in the table for other quoted debt securities and other quoted equities refer to values quoted on small East European markets characterized by limited liquidity. These gains
are not reflected in the statement of income.

F-47

---

The
following table shows changes in dealing securities during 2002:

Changes in dealing securities during the year (table 2.4 B.I.)

|   |                                         |  | (€/mil)
|-- | --------------------------------------- |  | -------
|A. | Opening balance as of January 1, 2002   |  | 18,809 
|B. | Increases                               |  | 467,616
|   | B1. purchases                           |  | 459,007
|   | debt securities                         |  | 416,561
|   | Government securities                   |  | 257,501
|   | other securities                        |  | 159,060
|   | equities                                |  | 42,446 
|   | B2. writebacks and revaluations         |  | 187    
|   | B3. transfers from investment portfolio |  | 432    
|   | B4. other changes                       |  | 7,990  
|C. | Decreases                               |  | 466,762
|   | C1. sales and redemptions               |  | 463,760
|   | debt securities                         |  | 422,616
|   | Government securities                   |  | 263,639
|   | other securities                        |  | 158,977
|   | equities                                |  | 41,144 
|   | C2. adjustments                         |  | 180    
|   | C3. transfers to investment portfolio   |  | 7      
|   | C5. other changes                       |  | 2,815  
|D. | Closing balance as of December 31, 2002 |  | 19,663 

Subcaption
B4. "Increasesother changes" includes €5,738 million for the balance relating to the former Cardine Group and Banka Koper as of 1/1/2002.

F-48

---



The
following table shows changes in dealing securities during 2001:

Changes in dealing securities during the year (table 2.4 B.I.)

(€/mil)A.
Opening balance as of January 1, 2001

18,287B.
Increases

483,251B1. purchases

480,224debt securities

432,559Government securities

277,006other securities

155,553equities

47,665B2. writebacks and revaluations

194B3. transfers from investment portfolio

1,471B4. other changes

1,362C.
Decreases

482,729C1. sales and redemptions

481,310debt securities

433,095Government securities

278,023other securities

155,072equities

48,215C2. adjustments

107C3. transfers to investment portfolio

4C5. other changes

1,308D.
Closing balance as of December 31, 2001

18,809


Other information relating to securities

The composition of the securities portfolio is analyzed by geographical area, currency and liquidity in Note (22).

(14)    INVESTMENTS

Equity investments, reported in asset captions 70 and 80 of the balance sheet, are analyzed as follows:

12/31/02

12/31/01(€/mil)Equity investments (caption 70)

3,224

4,054Investments in Group companies (caption 80)

840

643Total

4,064

4,697significant investments carried at equity (table 3.1 B.I.)

1,266

982other investments carried at cost

2,798

3,715


F-49

---

Significant investments

Significant investments held by the Group, being those in subsidiary companies or in companies subject to significant influence, as defined in articles 4
and 19 of Decree 87/92, are indicated in the table below:

Significant investments (table 3.1 B.I.)

|   |  |                                                                 |  |               |  |   |  |       |  | Net
income
(loss)
(€/mil)
(**) |   |                        |  |        |  | Voting
rights at
shareholders'
meeting
% |  |     |    
|-- |  | --------------------------------------------------------------- |  | ------------- |  | - |  | ----- |  | ------------------------------ | - | ---------------------- |  | ------ |  | ---------------------------------------- |  | --- | ---
|
|
|
|A. |  | Companies consolidated on a line-by-line and proportional basis | 
|   |  | SANPAOLO IMI S.p.A. (Parent Bank)                               |  | Turin         |  |   |  | 9,956 |  | 764                            |   |                       |  |       |  |                                         |  |    |    
|A1 |  | Companies consolidated on a line-by-line basis                  | 
|1  |  | Alcedo S.r.l.                                                   |  | Padua         |  | 1 |  |      |  |                               |   | Cardine Finanziaria    |  | 100.00 |  | 100.00                                   |  | XXX | (A)
|2  |  | Banca Agricola di Cerea S.p.A.                                  |  | Verona        |  | 1 |  | 50    |  | 1                              |   | Cardine Finanziaria    |  | 100.00 |  | 100.00                                   |  | XXX | (A)
|3  |  | Banca Fideuram S.p.A.                                           |  | Milan         |  | 1 |  | 934   |  | 130                            |   | Sanpaolo IMI           |  | 64.10  |  | 64.10                                    |  | XXX |    
|   |  |                                                                 |  |               |  |   |  |       |  |                                |   | Invesp                 |  | 9.28   |  | 9.28                                     |  | XXX |    
|   |  |                                                                 |  |               |  |   |  |       |  |                                |   |                        |  |        |  |                                          |  |     |    
|   |  |                                                                 |  |               |  |   |  |       |  |                                |   |                        |  | 73.38  |  | 73.38                                    |  |     |    
|   |  |                                                                 |  |               |  |   |  |       |  |                                |   |                        |  |        |  |                                          |  |     |    
|4  |  | Banca d'Intermediazione Mobiliare IMI S.p.A. (Banca IMI)        |  | Milan         |  | 1 |  | 353   |  | 2                              |   | Sanpaolo IMI           |  | 100.00 |  | 100.00                                   |  | XXX |    
|5  |  | Banca IMI Securities Corp.                                      |  | United States |  | 1 |  | 149   |  | 2                              |   | IMI Capital Market USA |  | 100.00 |  | 100.00                                   |  | XXX |    
|6  |  | Banca OPI S.p.A.                                                |  | Rome          |  | 1 |  | 618   |  | 32                             |   | Sanpaolo IMI           |  | 100.00 |  | 100.00                                   |  | XXX | (B)
|7  |  | Banca Popolare dell'Adriatico S.p.A.                            |  | Teramo        |  | 1 |  | 266   |  | 10                             |   | Cardine Finanziaria    |  | 70.86  |  | 70.86                                    |  | XXX | (A)
|8  |  | Banca Sanpaolo Invest S.p.A.                                    |  | Rome          |  | 1 |  | 72    |  | 5                              |   | Banca Fideuram         |  | 100.00 |  | 100.00                                   |  | XXX | (C)
|9  |  | Banco di Napoli Asset Management S.G.R. p.A.                    |  | Naples        |  | 1 |  | 26    |  | 2                              |   | Sanpaolo IMI WM        |  | 100.00 |  | 100.00                                   |  | XXX | (D)
|10 |  | Banque Privée Fideuram Wargny S.A.                              |  | France        |  | 1 |  | 69    |  | (20                            | ) | Financiere Fideuram    |  | 99.86  |  | 99.86                                    |  | XXX |    
|11 |  | Banque Sanpaolo S.A.                                            |  | France        |  | 1 |  | 419   |  | 29                             |   | Sanpaolo IMI           |  | 100.00 |  | 100.00                                   |  | XXX |    
|   |  |                                                                 |  |               |  |   |  |       |  |                                |   |                        |  |        |  |                                          |  |     |    

F-50

---

|12 |  | Cardine Finance Plc                                                                    |  | Ireland    |  | 1 |  | 10    |   |    |   | Sanpaolo IMI                       |  | 99.97  |  | 99.97  |  | XXX |       
|-- |  | -------------------------------------------------------------------------------------- |  | ---------- |  | - |  | ----- | - | --- | - | ---------------------------------- |  | ------ |  | ------ |  | --- | ------
|   |  |                                                                                        |  |            |  |   |  |       |   |     |   | Cassa di Risparmio Padova e Rovigo |  | 0.01   |  | 0.01   |  | XXX |       
|   |  |                                                                                        |  |            |  |   |  |       |   |     |   | Cassa di Risparmio Venezia         |  | 0.01   |  | 0.01   |  | XXX |       
|   |  |                                                                                        |  |            |  |   |  |       |   |     |   | Cassa di Risparmio Bologna         |  | 0.01   |  | 0.01   |  | XXX |       
|   |  |                                                                                        |  |            |  |   |  |       |   |     |   |                                    |  |        |  |        |  |     |       
|   |  |                                                                                        |  |            |  |   |  |       |   |     |   |                                    |  | 100.00 |  | 100.00 |  |     | (A)   
|   |  |                                                                                        |  |            |  |   |  |       |   |     |   |                                    |  |        |  |        |  |     |       
|13 |  | Cardine Finanziaria S.p.A.                                                             |  | Padua      |  | 1 |  | 2,593 |   | 193 |   | Sanpaolo IMI                       |  | 100.00 |  | 100.00 |  | XXX | (A)(E)
|14 |  | Cardine Investimenti S.G.R. S.p.A. (subsequently Sanpaolo IMI Fondi Chiusi SGR S.p.A.) |  | Padua      |  | 1 |  | 1     |   |    |   | Sanpaolo IMI Private Equity        |  | 100.00 |  | 100.00 |  | XXX | (A)(F)
|15 |  | Cassa di Risparmio di Gorizia S.p.A.                                                   |  | Gorizia    |  | 1 |  | 77    |   | 1   |   | Cardine Finanziaria                |  | 100.00 |  | 100.00 |  | XXX | (A)   
|16 |  | Cassa di Risparmio di Padova e Rovigo S.p.A.                                           |  | Padua      |  | 1 |  | 706   |   | 80  |   | Cardine Finanziaria                |  | 100.00 |  | 100.00 |  | XXX | (A)   
|17 |  | Cassa di Risparmio di Udine e Pordenone S.p.A.                                         |  | Udine      |  | 1 |  | 144   |   | 7   |   | Cardine Finanziaria                |  | 100.00 |  | 100.00 |  | XXX | (A)   
|18 |  | Cassa di Risparmio di Venezia S.p.A.                                                   |  | Venice     |  | 1 |  | 306   |   | 44  |   | Cardine Finanziaria                |  | 100.00 |  | 100.00 |  | XXX | (A)   
|19 |  | Cassa di Risparmio in Bologna S.p.A.                                                   |  | Bologna    |  | 1 |  | 590   |   | 22  |   | Cardine Finanziaria                |  | 100.00 |  | 100.00 |  | XXX | (A)   
|20 |  | Esaban S.p.A.                                                                          |  | Naples     |  | 1 |  | (1    | ) | (10 | ) | Sanpaolo IMI                       |  | 100.00 |  | 100.00 |  | XXX | (G)(H)
|21 |  | Farbanca S.p.A.                                                                        |  | Bologna    |  | 4 |  | 11    |   |    |   | Sanpaolo IMI                       |  | 15.00  |  | 15.00  |  | XXX | (A)   
|22 |  | Fideuram Asset Management (Ireland) Ltd                                                |  | Ireland    |  | 1 |  | 186   |   | 185 |   | Banca Fideuram                     |  | 100.00 |  | 100.00 |  | XXX | (I)   
|23 |  | Fideuram Bank S.A.                                                                     |  | Luxembourg |  | 1 |  | 37    |   | 9   |   | Banca Fideuram                     |  | 99.99  |  | 99.99  |  | XXX |       
|   |  |                                                                                        |  |            |  |   |  |       |   |     |   | Fideuram Vita                      |  | 0.01   |  | 0.01   |  | XXX |       
|   |  |                                                                                        |  |            |  |   |  |       |   |     |   |                                    |  |        |  |        |  |     |       
|   |  |                                                                                        |  |            |  |   |  |       |   |     |   |                                    |  | 100.00 |  | 100.00 |  |     |       
|   |  |                                                                                        |  |            |  |   |  |       |   |     |   |                                    |  |        |  |        |  |     |       

F-51

---

|24 |  | Fideuram Bank (Suisse) A.G.                                                      |  | Switzerland            |  | 1 |  | 22  |   |    |   | Fideuram Bank                 |  | 99.95  |  | 99.95  |  | XXX |       
|-- |  | -------------------------------------------------------------------------------- |  | ---------------------- |  | - |  | --- | - | --- | - | ----------------------------- |  | ------ |  | ------ |  | --- | ------
|25 |  | Fideuram Capital SIM S.p.A.                                                      |  | Milan                  |  | 1 |  | 17  |   | 5   |   | Banca Fideuram                |  | 100.00 |  | 100.00 |  | XXX |       
|26 |  | Fideuram Fiduciaria S.p.A.                                                       |  | Rome                   |  | 1 |  | 3   |   |    |   | Banca Fideuram                |  | 100.00 |  | 100.00 |  | XXX |       
|27 |  | Fideuram Fondi S.p.A.                                                            |  | Rome                   |  | 1 |  | 30  |   | 9   |   | Banca Fideuram                |  | 99.25  |  | 99.25  |  | XXX |       
|28 |  | Fideuram Gestioni Patrimoniali SIM S.p.A.                                        |  | Milan                  |  | 1 |  | 11  |   | 4   |   | Banca Fideuram                |  | 100.00 |  | 100.00 |  | XXX |       
|29 |  | Fideuram Gestions S.A.                                                           |  | Luxembourg             |  | 1 |  | 18  |   | 3   |   | Banca Fideuram                |  | 99.94  |  | 99.94  |  | XXX |       
|   |  |                                                                                  |  |                        |  |   |  |     |   |     |   | Fideuram Vita                 |  | 0.06   |  | 0.06   |  | XXX |       
|   |  |                                                                                  |  |                        |  |   |  |     |   |     |   |                               |  |        |  |        |  |     |       
|   |  |                                                                                  |  |                        |  |   |  |     |   |     |   |                               |  | 100.00 |  | 100.00 |  |     | (J)   
|   |  |                                                                                  |  |                        |  |   |  |     |   |     |   |                               |  |        |  |        |  |     |       
|30 |  | Fideuram Wargny Active Broker S.A.                                               |  | France                 |  | 1 |  | 15  |   | (7  | ) | Banque Privée Fideuram Wargny |  | 99.99  |  | 99.99  |  | XXX |       
|31 |  | Fideuram Wargny Gestion S.A.                                                     |  | France                 |  | 1 |  | 4   |   |    |   | Banque Privée Fideuram Wargny |  | 99.85  |  | 99.85  |  | XXX |       
|32 |  | Fideuram Wargny Gestion S.A.M. (former Wargny Gestion S.A.M.)                    |  | Principality of Monaco |  | 1 |  | 5   |   |    |   | Banque Privée Fideuram Wargny |  | 99.50  |  | 99.50  |  | XXX |       
|33 |  | Fin. OPI S.p.A. (former Compagnia di San Paolo Investimenti Patrimoniali S.p.A.) |  | Turin                  |  | 1 |  | 232 |   | 1   |   | Banca OPI                     |  | 100.00 |  | 100.00 |  | XXX | (K)   
|34 |  | Financière Fideuram S.A.                                                         |  | France                 |  | 1 |  | 28  |   | (10 | ) | Banca Fideuram                |  | 94.95  |  | 94.95  |  | XXX |       
|35 |  | Finemiro Banca S.p.A.                                                            |  | Bologna                |  | 1 |  | 120 |   | 7   |   | Sanpaolo IMI                  |  | 96.68  |  | 96.68  |  | XXX | (A)   
|36 |  | Finemiro Leasing S.p.A.                                                          |  | Bologna                |  | 1 |  | 42  |   | 5   |   | Finemiro Banca                |  | 100.00 |  | 100.00 |  | XXX | (A)(L)
|37 |  | GE.RI.CO.-Gestione Riscossione Tributi in Concessione S.p.A.                     |  | Venice                 |  | 1 |  | (1  | ) | (8  | ) | Sanpaolo IMI                  |  | 100.00 |  | 100.00 |  | XXX | (A)   
|   |  |                                                                                  |  |                        |  |   |  |     |   |     |   |                               |  |        |  |        |  |     |       

F-52

---

|38 |  | IDEA S.A.                                                                                       |  | Luxembourg      |  | 1 |  |    |   |    |   | IMI Bank (Lux)              |  | 99.17  |  | 99.17  |  | XXX |       
|-- |  | ----------------------------------------------------------------------------------------------- |  | --------------- |  | - |  | --- | - | --- | - | --------------------------- |  | ------ |  | ------ |  | --- | ------
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   | Sanpaolo IMI International  |  | 0.83   |  | 0.83   |  | XXX |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  |        |  |        |  |     |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  | 100.00 |  | 100.00 |  |     |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  |        |  |        |  |     |       
|39 |  | IMI Bank (Lux) S.A.                                                                             |  | Luxembourg      |  | 1 |  | 75  |   | (1  | ) | Banca IMI                   |  | 99.99  |  | 99.99  |  | XXX |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   | IMI Investments             |  | 0.01   |  | 0.01   |  | XXX |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  |        |  |        |  |     |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  | 100.00 |  | 100.00 |  |     |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  |        |  |        |  |     |       
|40 |  | IMI Capital Markets USA Corp.                                                                   |  | United States   |  | 1 |  | 150 |   | (1  | ) | IMI Investments             |  | 100.00 |  | 100.00 |  | XXX |       
|41 |  | IMI Finance Luxembourg S.A. (former Independent Management for Institutional Advisory Co. S.A.) |  | Luxembourg      |  | 1 |  | (3  | ) | (9  | ) | IMI Investments             |  | 100.00 |  | 100.00 |  | XXX |       
|42 |  | IMI Investimenti S.p.A. (former NHS-Nuova Holding Sanpaolo IMI S.p.A.)                          |  | Turin           |  | 1 |  | 424 |   | (89 | ) | Sanpaolo IMI                |  | 100.00 |  | 100.00 |  | XXX | (M)(N)
|43 |  | IMI Investments S.A.                                                                            |  | Luxembourg      |  | 1 |  | 164 |   | 21  |   | Banca IMI                   |  | 99.99  |  | 99.99  |  | XXX |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   | Banca IMI Securities        |  | 0.01   |  | 0.01   |  | XXX |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  |        |  |        |  |     |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  | 100.00 |  | 100.00 |  |     |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  |        |  |        |  |     |       
|44 |  | IMI Real Estate S.A.                                                                            |  | Luxembourg      |  | 1 |  | 4   |   |    |   | IMI Bank (Lux)              |  | 99.99  |  | 99.99  |  | XXX |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   | Sanpaolo IMI International  |  | 0.01   |  | 0.01   |  | XXX |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  |        |  |        |  |     |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  | 100.00 |  | 100.00 |  |     |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  |        |  |        |  |     |       
|45 |  | IMIWeb Bank S.p.A.                                                                              |  | Milan           |  | 1 |  | 15  |   | (22 | ) | Banca IMI                   |  | 100.00 |  | 100.00 |  | XXX | (O)   
|46 |  | IMIWeb (UK) Ltd                                                                                 |  | United Kingdom  |  | 1 |  | 3   |   | (5  | ) | IMIWeb Bank                 |  | 100.00 |  | 100.00 |  | XXX |       
|47 |  | Invesp S.p.A.                                                                                   |  | Turin           |  | 1 |  | 428 |   | 113 |   | Sanpaolo IMI                |  | 100.00 |  | 100.00 |  | XXX | (P)   
|48 |  | Lackenstar Ltd                                                                                  |  | Ireland         |  | 1 |  |    |   |    |   | Sanpaolo IMI Bank Ireland   |  | 100.00 |  | 100.00 |  | XXX |       
|49 |  | LDV Holding B.V.                                                                                |  | The Netherlands |  | 1 |  | 187 |   | (11 | ) | Sanpaolo IMI Private Equity |  | 100.00 |  | 100.00 |  | XXX | (Q)   
|50 |  | NHS Investments S.A.                                                                            |  | Luxembourg      |  | 1 |  | 132 |   | (17 | ) | IMI Investimenti            |  | 99.99  |  | 99.99  |  | XXX |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   | LDV Holding                 |  | 0.01   |  | 0.01   |  | XXX |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  |        |  |        |  |     |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  | 100.00 |  | 100.00 |  |     |       
|   |  |                                                                                                 |  |                 |  |   |  |     |   |     |   |                             |  |        |  |        |  |     |       

F-53

---

|51 |  | NHS Luxembourg S.A.                                          |  | Luxembourg  |  | 1 |  | 13 |  | (8 | ) | Sanpaolo IMI Private Equity          |  | 99.99  |  | 99.99  |  | XXX |    
|-- |  | ------------------------------------------------------------ |  | ----------- |  | - |  | -- |  | -- | - | ------------------------------------ |  | ------ |  | ------ |  | --- | ---
|   |  |                                                              |  |             |  |   |  |    |  |    |   | LDV Holding                          |  | 0.01   |  | 0.01   |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  |        |  |        |  |     |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  | 100.00 |  | 100.00 |  |     | (Q)
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  |        |  |        |  |     |    
|52 |  | Prospettive 2001 S.p.A.                                      |  | Turin       |  | 1 |  | 49 |  | (6 | ) | Sanpaolo IMI                         |  | 100.00 |  | 100.00 |  | XXX | (P)
|53 |  | Sanpaolo Asset Management S.A.                               |  | France      |  | 1 |  | 3  |  | 2  |   | Banque Sanpaolo                      |  | 99.98  |  | 99.98  |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   | Societé Fonciere d'Investissement    |  | 0.01   |  | 0.01   |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   | Societé Immobiliere d'Investissement |  | 0.01   |  | 0.01   |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  |        |  |        |  |     |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  | 100.00 |  | 100.00 |  |     |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  |        |  |        |  |     |    
|54 |  | Sanpaolo Bail S.A.                                           |  | France      |  | 1 |  | 5  |  |   |   | Banque Sanpaolo                      |  | 99.97  |  | 99.97  |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   | Sanpaolo Mur                         |  | 0.01   |  | 0.01   |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   | Societé Fonciere d'Investissement    |  | 0.01   |  | 0.01   |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   | Societé Immobiliere d'Investissement |  | 0.01   |  | 0.01   |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  |        |  |        |  |     |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  | 100.00 |  | 100.00 |  |     | (B)
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  |        |  |        |  |     |    
|55 |  | Sanpaolo Bank (Austria) A.G.                                 |  | Austria     |  | 1 |  | 10 |  | 1  |   | Sanpaolo Bank                        |  | 100.00 |  | 100.00 |  | XXX |    
|56 |  | Sanpaolo Bank S.A.                                           |  | Luxembourg  |  | 1 |  | 95 |  | 62 |   | Sanpaolo IMI WM                      |  | 99.99  |  | 99.99  |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   | Sanpaolo IMI WM Luxembourg           |  | 0.01   |  | 0.01   |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  |        |  |        |  |     |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  | 100.00 |  | 100.00 |  |     |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  |        |  |        |  |     |    
|57 |  | Sanpaolo Bank (Suisse) S.A. (former SP Private Banking S.A.) |  | Switzerland |  | 1 |  | 15 |  | (4 | ) | Sanpaolo Bank                        |  | 99.98  |  | 99.98  |  | XXX |    
|58 |  | Sanpaolo Fiduciaria S.p.A.                                   |  | Milan       |  | 1 |  | 3  |  | 1  |   | Sanpaolo IMI                         |  | 100.00 |  | 100.00 |  | XXX | (R)
|59 |  | Sanpaolo Fonds Gestion S.n.c.                                |  | France      |  | 1 |  | 12 |  | 11 |   | Banque Sanpaolo                      |  | 80.00  |  | 80.00  |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   | Sanpaolo Asset Management S.A.       |  | 20.00  |  | 20.00  |  | XXX |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  |        |  |        |  |     |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  | 100.00 |  | 100.00 |  |     |    
|   |  |                                                              |  |             |  |   |  |    |  |    |   |                                      |  |        |  |        |  |     |    

F-54

---

|60 |  | Sanpaolo IMI Alternative Investments S.G.R. S.p.A.                                   |  | Milan         |  | 1 |  | 2   |  | (1   | ) | Sanpaolo IMI WM            |  | 100.00 |  | 100.00 |  | XXX | (S)
|-- |  | ------------------------------------------------------------------------------------ |  | ------------- |  | - |  | --- |  | ---- | - | -------------------------- |  | ------ |  | ------ |  | --- | ---
|61 |  | Sanpaolo IMI Asset Management S.G.R. S.p.A.                                          |  | Turin         |  | 1 |  | 42  |  | 8    |   | Sanpaolo IMI WM            |  | 100.00 |  | 100.00 |  | XXX |    
|62 |  | Sanpaolo IMI Bank (International) S.A.                                               |  | Madeira       |  | 1 |  | 181 |  | 5    |   | Sanpaolo IMI               |  | 69.01  |  | 69.01  |  | XXX |    
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   | Sanpaolo IMI International |  | 30.99  |  | 30.99  |  | XXX |    
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   |                            |  |        |  |        |  |     |    
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   |                            |  | 100.00 |  | 100.00 |  |     |    
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   |                            |  |        |  |        |  |     |    
|63 |  | Sanpaolo IMI Bank Ireland Plc                                                        |  | Ireland       |  | 1 |  | 516 |  | (8   | ) | Sanpaolo IMI               |  | 100.00 |  | 100.00 |  | XXX |    
|64 |  | Sanpaolo IMI Capital Company I Ll.c.                                                 |  | United States |  | 1 |  | 50  |  |     |   | Sanpaolo IMI               |  | 100.00 |  | 100.00 |  | XXX |    
|65 |  | Sanpaolo IMI Institutional Asset Management S.G.R. S.p.A.                            |  | Monza         |  | 1 |  | 20  |  |     |   | Sanpaolo IMI WM            |  | 85.00  |  | 85.00  |  | XXX | (T)
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   | Banca IMI                  |  | 11.72  |  | 11.72  |  | XXX |    
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   | IMI Bank (Lux)             |  | 3.28   |  | 3.28   |  | XXX |    
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   |                            |  |        |  |        |  |     |    
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   |                            |  | 100.00 |  | 100.00 |  |     |    
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   |                            |  |        |  |        |  |     |    
|66 |  | Sanpaolo IMI International S.A.                                                      |  | Luxembourg    |  | 1 |  | 810 |  | (233 | ) | Sanpaolo IMI               |  | 100.00 |  | 100.00 |  | XXX |    
|67 |  | Sanpaolo IMI Private Equity S.p.A. (former NHS S.p.A.)                               |  | Bologna       |  | 1 |  | 234 |  | (11  | ) | Sanpaolo IMI               |  | 100.00 |  | 100.00 |  | XXX | (U)
|68 |  | Sanpaolo IMI US Financial Co.                                                        |  | United States |  | 1 |  |    |  |     |   | Sanpaolo IMI               |  | 100.00 |  | 100.00 |  | XXX |    
|69 |  | Sanpaolo IMI Wealth Management S.p.A. (former Wealth Management Sanpaolo IMI S.p.A.) |  | Milan         |  | 1 |  | 685 |  | 123  |   | Sanpaolo IMI               |  | 100.00 |  | 100.00 |  | XXX |    
|70 |  | Sanpaolo IMI WM Luxembourg S.A. (former Sanpaolo Gestion Internationale S.A.)        |  | Luxembourg    |  | 1 |  | 17  |  | 42   |   | Sanpaolo IMI WM            |  | 88.22  |  | 88.22  |  | XXX |    
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   | Sanpaolo Bank              |  | 11.78  |  | 11.78  |  | XXX |    
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   |                            |  |        |  |        |  |     |    
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   |                            |  | 100.00 |  | 100.00 |  |     | (V)
|   |  |                                                                                      |  |               |  |   |  |     |  |      |   |                            |  |        |  |        |  |     |    

F-55

---

|71 |  | Sanpaolo Invest Ireland Ltd                         |  | Ireland        |  | 1 |  | 5   |  | 5  |   | Banca Sanpaolo Invest         |  | 100.00 |  | 100.00 |  | XXX |       
|-- |  | --------------------------------------------------- |  | -------------- |  | - |  | --- |  | -- | - | ----------------------------- |  | ------ |  | ------ |  | --- | ------
|72 |  | Sanpaolo Leasint S.p.A.                             |  | Milan          |  | 1 |  | 102 |  | 17 |   | Sanpaolo IMI                  |  | 100.00 |  | 100.00 |  | XXX | (B)(W)
|73 |  | Sanpaolo Mur S.A.                                   |  | France         |  | 1 |  | 3   |  |   |   | Banque Sanpaolo               |  | 99.99  |  | 99.99  |  | XXX |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   | Sanpaolo Bail                 |  | 0.01   |  | 0.01   |  | XXX |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  |        |  |        |  |     |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  | 100.00 |  | 100.00 |  |     | (B)   
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  |        |  |        |  |     |       
|74 |  | Sanpaolo Riscossioni Genova S.p.A.                  |  | Genoa          |  | 1 |  | 7   |  | 1  |   | Sanpaolo IMI                  |  | 100.00 |  | 100.00 |  | XXX |       
|75 |  | Sanpaolo Riscossioni Prato S.p.A.                   |  | Prato          |  | 1 |  | 4   |  |   |   | Sanpaolo Riscossioni Genova   |  | 63.76  |  | 63.76  |  | XXX |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   | Sanpaolo IMI                  |  | 36.24  |  | 36.24  |  | XXX |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  |        |  |        |  |     |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  | 100.00 |  | 100.00 |  |     |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  |        |  |        |  |     |       
|76 |  | SEP S.p.A.                                          |  | Turin          |  | 1 |  | 3   |  | 1  |   | Sanpaolo IMI                  |  | 100.00 |  | 100.00 |  | XXX |       
|77 |  | Sogesmar S.A.                                       |  | France         |  | 1 |  |    |  |   |   | Banque Privée Fideuram Wargny |  | 51.09  |  | 51.09  |  | XXX |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   | Fideuram Wargny Gestion       |  | 48.19  |  | 48.19  |  | XXX |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  |        |  |        |  |     |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  | 99.28  |  | 99.28  |  |     |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  |        |  |        |  |     |       
|78 |  | SP Immobiliere S.A.                                 |  | Luxembourg     |  | 1 |  |    |  |   |   | Sanpaolo Bank                 |  | 99.99  |  | 99.99  |  | XXX |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   | Sanpaolo IMI WM Luxembourg    |  | 0.01   |  | 0.01   |  | XXX |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  |        |  |        |  |     |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  | 100.00 |  | 100.00 |  |     |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  |        |  |        |  |     |       
|79 |  | Tobuk Ltd                                           |  | Ireland        |  | 1 |  |    |  |   |   | Sanpaolo IMI Bank Ireland     |  | 100.00 |  | 100.00 |  | XXX |       
|80 |  | Tushingham Ltd                                      |  | Ireland        |  | 1 |  |    |  |   |   | Sanpaolo IMI Bank Ireland     |  | 100.00 |  | 100.00 |  | XXX |       
|81 |  | West Bank S.A.                                      |  | Romania        |  | 1 |  | 5   |  | (6 | ) | Sanpaolo IMI                  |  | 72.39  |  | 72.39  |  | XXX | (A)   
|A2 |  | Companies consolidated with the proportional method | 
|1  |  | Banka Koper d.d.                                    |  | Slovenia       |  | 7 |  | 87  |  | 16 |   | Sanpaolo IMI                  |  | 62.10  |  | 32.99  |  | XXX | (X)   
|2  |  | Centradia Group Ltd                                 |  | United Kingdom |  | 7 |  | 6   |  | (7 | ) | Sanpaolo IMI                  |  | 29.03  |  | 29.03  |  | XXX |       
|3  |  | Centradia Ltd                                       |  | United Kingdom |  | 7 |  | 1   |  | (1 | ) | Centradia Group               |  | 100.00 |  | 100.00 |  | XXX |       
|4  |  | Centradia Services Ltd                              |  | United Kingdom |  | 7 |  | 1   |  | (1 | ) | Centradia Group               |  | 100.00 |  | 100.00 |  | XXX |       
|   |  |                                                     |  |                |  |   |  |     |  |    |   |                               |  |        |  |        |  |     |       

F-56

---

|5  |  | Finconsumo Banca S.p.A.                                                 |  | Turin          |  | 7 |  | 31 |  | 6   |   | Sanpaolo IMI                  |  | 50.00  |  | 50.00  |  | XXX | (Y) 
|-- |  | ----------------------------------------------------------------------- |  | -------------- |  | - |  | -- |  | --- | - | ----------------------------- |  | ------ |  | ------ |  | --- | ----
|6  |  | FC Factor S.r.l.                                                        |  | Turin          |  | 7 |  | 1  |  |    |   | Finconsumo Banca              |  | 100.00 |  | 100.00 |  | XXX |     
|B. |  | Investments carried at equity                                           | 
|B1 |  | Investments carried at equitysubsidiaries (***)                        | 
|1  |  | 3G Mobile Investments 2 S.A. (former Bernabé Mobile Investments 2 S.A.) |  | Belgium        |  | 1 |  | 52 |  | (7  | ) | IMI Investimenti              |  | 100.00 |  | 100.00 |  | 52  |     
|2  |  | Banca IMI (Nominees) Ltd                                                |  | United Kingdom |  | 1 |  |   |  |    |   | Banca IMI                     |  | 100.00 |  | 100.00 |  |    |     
|3  |  | Bonec Ltd                                                               |  | Ireland        |  | 1 |  |   |  |    |   | Sanpaolo IMI Bank Ireland     |  | 100.00 |  | 100.00 |  |    |     
|4  |  | Brokerban S.p.A.                                                        |  | Naples         |  | 1 |  | 2  |  | 1   |   | Sanpaolo IMI                  |  | 100.00 |  | 100.00 |  | 2   | (H) 
|5  |  | Cardine Financial Innovation S.p.A.                                     |  | Padua          |  | 1 |  | 1  |  |    |   | Cardine Finanziaria           |  | 100.00 |  | 100.00 |  |    | (A) 
|6  |  | Cedar Street Securities Corp.                                           |  | United States  |  | 1 |  |   |  |    |   | Banca IMI Securities          |  | 100.00 |  | 100.00 |  |    |     
|7  |  | Consorzio Studi e Ricerche Fiscali                                      |  | Rome           |  | 1 |  |   |  |    |   | Sanpaolo IMI                  |  | 50.00  |  | 50.00  |  |    |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   | Banca Fideuram                |  | 10.00  |  | 10.00  |  |    |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   | Banca IMI                     |  | 5.00   |  | 5.00   |  |    |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   | Banca OPI                     |  | 5.00   |  | 5.00   |  |    |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   | Cardine Finanziaria           |  | 5.00   |  | 5.00   |  |    |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   | Fideuram Vita                 |  | 5.00   |  | 5.00   |  |    | (Z) 
|   |  |                                                                         |  |                |  |   |  |    |  |     |   | Sanpaolo Leasint              |  | 5.00   |  | 5.00   |  |    |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   | Sanpaolo IMI Asset Management |  | 5.00   |  | 5.00   |  |    |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   | Sanpaolo IMI WM               |  | 5.00   |  | 5.00   |  |    |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   | IMI Investimenti              |  | 2.50   |  | 2.50   |  |    |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   | Sanpaolo IMI Private Equity   |  | 2.50   |  | 2.50   |  |    |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   |                               |  |        |  |        |  |     |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   |                               |  | 100.00 |  | 100.00 |  |     |     
|   |  |                                                                         |  |                |  |   |  |    |  |     |   |                               |  |        |  |        |  |     |     
|8  |  | CSP Investimenti S.r.l.                                                 |  | Turin          |  | 1 |  | 2  |  | (13 | ) | FIN.OPI                       |  | 100.00 |  | 100.00 |  | 2   | (AA)
|   |  |                                                                         |  |                |  |   |  |    |  |     |   |                               |  |        |  |        |  |     |     

F-57

---

|9  |  | Emil Europe '92 S.r.l.                                      |  | Bologna  |  | 1 |  | 4   |  |   |   | Cassa di Risparmio Bologna         |  | 90.55  |  | 90.55  |  | 3   | (A)    
|-- |  | ----------------------------------------------------------- |  | -------- |  | - |  | --- |  | -- | - | ---------------------------------- |  | ------ |  | ------ |  | --- | -------
|10 |  | Eptaventure S.p.A.                                          |  | Milan    |  | 1 |  |    |  |   |   | Sanpaolo IMI Private Equity        |  | 100.00 |  | 100.00 |  |    | (BB)   
|11 |  | Fideuram Assicurazioni S.p.A.                               |  | Rome     |  | 1 |  | 13  |  | 2  |   | Banca Fideuram                     |  | 100.00 |  | 100.00 |  | 13  |        
|12 |  | Fideuram Vita S.p.A.                                        |  | Rome     |  | 1 |  | 377 |  | 46 |   | Banca Fideuram                     |  | 99.78  |  | 100.00 |  | 372 |        
|13 |  | Immobiliare 21 S.r.l.                                       |  | Milan    |  | 1 |  |    |  | (1 | ) | Invesp                             |  | 90.00  |  | 90.00  |  |    |        
|   |  |                                                             |  |          |  |   |  |     |  |    |   | RSP                                |  | 10.00  |  | 10.00  |  |    | (Z)    
|   |  |                                                             |  |          |  |   |  |     |  |    |   |                                    |  |        |  |        |  |     |        
|   |  |                                                             |  |          |  |   |  |     |  |    |   |                                    |  | 100.00 |  | 100.00 |  |     |        
|   |  |                                                             |  |          |  |   |  |     |  |    |   |                                    |  |        |  |        |  |     |        
|14 |  | Immobiliare Nettuno S.p.A.                                  |  | Bologna  |  | 1 |  | 2   |  | 1  |   | Cassa di Risparmio Bologna         |  | 100.00 |  | 100.00 |  | 2   | (A)    
|15 |  | ISC Euroservice G.M.B.H.                                    |  | Germany  |  | 1 |  |    |  |   |   | Sanpaolo IMI                       |  | 80.00  |  | 80.00  |  |    | (A)    
|16 |  | NHS Mezzogiorno S.G.R. S.p.A.                               |  | Naples   |  | 1 |  | 2   |  |   |   | Sanpaolo IMI Private Equity        |  | 99.50  |  | 99.50  |  | 2   |        
|   |  |                                                             |  |          |  |   |  |     |  |    |   | NHS Luxembourg                     |  | 0.50   |  | 0.50   |  |    |        
|   |  |                                                             |  |          |  |   |  |     |  |    |   |                                    |  |        |  |        |  |     |        
|   |  |                                                             |  |          |  |   |  |     |  |    |   |                                    |  | 100.00 |  | 100.00 |  |     | (Q)(CC)
|   |  |                                                             |  |          |  |   |  |     |  |    |   |                                    |  |        |  |        |  |     |        
|17 |  | Obiettivo Società di Gestione del Risparmio (S.G.R.) S.p.A. |  | Milan    |  | 1 |  | 2   |  | (1 | ) | Banca IMI                          |  | 100.00 |  | 100.00 |  | 2   |        
|18 |  | PoseidonInsurance BrokersS.p.A.                           |  | Bologna  |  | 1 |  | 1   |  | 1  |   | Invesp                             |  | 100.00 |  | 100.00 |  | 1   | (A)(DD)
|19 |  | RSP S.r.l.                                                  |  | Turin    |  | 1 |  |    |  |   |   | Sanpaolo IMI                       |  | 100.00 |  | 100.00 |  |    |        
|20 |  | S.V.I.T. S.p.A.                                             |  | Padua    |  | 1 |  | 1   |  |   |   | Cassa di Risparmio Padova e Rovigo |  | 57.45  |  | 57.45  |  |    | (A)    
|21 |  | Sanpaolo IMI Capital Partners Ltd                           |  | Guernsey |  | 1 |  |    |  |   |   | Sanpaolo IMI Private Equity        |  | 99.00  |  | 99.00  |  |    |        
|   |  |                                                             |  |          |  |   |  |     |  |    |   | Sanpaolo IMI Management            |  | 1.00   |  | 1.00   |  |    | (Z)    
|   |  |                                                             |  |          |  |   |  |     |  |    |   |                                    |  |        |  |        |  |     |        
|   |  |                                                             |  |          |  |   |  |     |  |    |   |                                    |  | 100.00 |  | 100.00 |  |     | (Q)    
|   |  |                                                             |  |          |  |   |  |     |  |    |   |                                    |  |        |  |        |  |     |        
|22 |  | Sanpaolo IMI Internazionale S.p.A. (former New BPA S.r.l.)  |  | Padua    |  | 1 |  | 10  |  |   |   | Sanpaolo IMI                       |  | 100.00 |  | 100.00 |  | 10  | (A)    
|   |  |                                                             |  |          |  |   |  |     |  |    |   |                                    |  |        |  |        |  |     |        

F-58

---

|23 |  | Sanpaolo IMI Management Ltd            |  | United Kingdom |  | 1 |  |    |  |   |  | Sanpaolo IMI Private Equity       |  | 100.00 |  | 100.00 |  |    | (Q)        
|-- |  | -------------------------------------- |  | -------------- |  | - |  | --- |  | -- |  | --------------------------------- |  | ------ |  | ------ |  | --- | -----------
|24 |  | Sanpaolo Leasint G.M.B.H.              |  | Austria        |  | 1 |  |    |  |   |  | Sanpaolo Leasint                  |  | 100.00 |  | 100.00 |  |    |            
|25 |  | Sanpaolo Life Ltd                      |  | Ireland        |  | 1 |  | 31  |  | 15 |  | Sanpaolo Vita                     |  | 75.00  |  | 100.00 |  |    | (Z)        
|   |  |                                        |  |                |  |   |  |     |  |    |  | Banca Sanpaolo Invest             |  | 25.00  |  | 0.00   |  | 2   |            
|   |  |                                        |  |                |  |   |  |     |  |    |  |                                   |  |        |  |        |  |     |            
|   |  |                                        |  |                |  |   |  |     |  |    |  |                                   |  | 100.00 |  | 100.00 |  |     |            
|   |  |                                        |  |                |  |   |  |     |  |    |  |                                   |  |        |  |        |  |     |            
|26 |  | Sanpaolo Vita S.p.A.                   |  | Milan          |  | 1 |  | 331 |  | 55 |  | Sanpaolo IMI WM                   |  | 100.00 |  | 100.00 |  | 357 | (EE)       
|27 |  | Servizi S.r.l.                         |  | Bologna        |  | 1 |  | 2   |  | 1  |  | Finemiro Banca                    |  | 100.00 |  | 100.00 |  | 2   | (A)        
|28 |  | Societé Civile Les Jardins d'Arcadie   |  | France         |  | 1 |  |    |  |   |  | Banque Sanpaolo                   |  | 55.00  |  | 55.00  |  |    |            
|29 |  | Socavie S.N.C.                         |  | France         |  | 1 |  | 5   |  | 5  |  | Banque Sanpaolo                   |  | 99.80  |  | 99.80  |  | 5   |            
|   |  |                                        |  |                |  |   |  |     |  |    |  | Societé Fonciere d'Investissement |  | 0.20   |  | 0.20   |  |    | (Z)        
|   |  |                                        |  |                |  |   |  |     |  |    |  |                                   |  |        |  |        |  |     |            
|   |  |                                        |  |                |  |   |  |     |  |    |  |                                   |  | 100.00 |  | 100.00 |  |     |            
|   |  |                                        |  |                |  |   |  |     |  |    |  |                                   |  |        |  |        |  |     |            
|30 |  | Societé Fonciere d'Investissement S.A. |  | France         |  | 1 |  |    |  |   |  | Banque Sanpaolo                   |  | 100.00 |  | 100.00 |  |    |            
|31 |  | Societé Immobilière d'Investissement   |  | France         |  | 1 |  |    |  |   |  | Banque Sanpaolo                   |  | 99.98  |  | 99.98  |  |    |            
|   |  |                                        |  |                |  |   |  |     |  |    |  | Societé Fonciere d'Investissement |  | 0.02   |  | 0.02   |  |    | (Z)        
|   |  |                                        |  |                |  |   |  |     |  |    |  |                                   |  |        |  |        |  |     |            
|   |  |                                        |  |                |  |   |  |     |  |    |  |                                   |  | 100.00 |  | 100.00 |  |     |            
|   |  |                                        |  |                |  |   |  |     |  |    |  |                                   |  |        |  |        |  |     |            
|32 |  | UNI Invest S.A.                        |  | France         |  | 1 |  |    |  |   |  | Banque Sanpaolo                   |  | 100.00 |  | 100.00 |  |    |            
|33 |  | W.D.W. S.A.                            |  | France         |  | 1 |  |    |  |   |  | Banque Privèe Fideuram Wargny     |  | 99.56  |  | 99.56  |  |    |            
|34 |  | West Leasing S.A.                      |  | Romania        |  | 1 |  | 1   |  |   |  | West Bank                         |  | 88.30  |  | 88.30  |  | 1   | (A)        
|35 |  | West Trade Center S.A.                 |  | Romania        |  | 1 |  |    |  |   |  | Sanpaolo IMI                      |  | 75.00  |  | 75.00  |  |    | (A)        
|36 |  | BN Finrete S.p.A. (in liq.)            |  | Naples         |  | 1 |  | 1   |  |   |  | Sanpaolo IMI                      |  | 99.00  |  | 99.00  |  | 1   | (H)(FF)    
|37 |  | Cardine Suisse S.A. (in liq.)          |  | Switzerland    |  | 1 |  | 1   |  |   |  | Sanpaolo IMI                      |  | 99.00  |  | 99.00  |  | 1   | (A)(FF)(GG)
|   |  |                                        |  |                |  |   |  |     |  |    |  |                                   |  |        |  |        |  |     |            

F-59

---

|38 |  | Cariparo Ireland Plc (in liq.)              |  | Ireland       |  | 1 |  | 1  |   |  |  | Sanpaolo IMI                         |  | 99.94  |  | 99.94  |  | 1 | (FF)   
|-- |  | ------------------------------------------- |  | ------------- |  | - |  | -- | - | - |  | ------------------------------------ |  | ------ |  | ------ |  | - | -------
|   |  |                                             |  |               |  |   |  |    |   |   |  | Banca Agricola di Cerea              |  | 0.01   |  | 0.01   |  |  |        
|   |  |                                             |  |               |  |   |  |    |   |   |  | Banca Popolare dell'Adriatico        |  | 0.01   |  | 0.01   |  |  |        
|   |  |                                             |  |               |  |   |  |    |   |   |  | Cassa di Risparmio Gorizia           |  | 0.01   |  | 0.01   |  |  |        
|   |  |                                             |  |               |  |   |  |    |   |   |  | Cassa di Risparmio Udine e Pordenone |  | 0.01   |  | 0.01   |  |  |        
|   |  |                                             |  |               |  |   |  |    |   |   |  | Cassa di Risparmio Venezia           |  | 0.01   |  | 0.01   |  |  |        
|   |  |                                             |  |               |  |   |  |    |   |   |  | Cassa di Risparmio Bologna           |  | 0.01   |  | 0.01   |  |  |        
|   |  |                                             |  |               |  |   |  |    |   |   |  |                                      |  |        |  |        |  |   |        
|   |  |                                             |  |               |  |   |  |    |   |   |  |                                      |  | 100.00 |  | 100.00 |  |   | (A)    
|   |  |                                             |  |               |  |   |  |    |   |   |  |                                      |  |        |  |        |  |   |        
|39 |  | FISPAO S.p.A. (in liq.)                     |  | Turin         |  | 1 |  |   |   |  |  | FIN.OPI                              |  | 100.00 |  | 100.00 |  |  | (AA)   
|40 |  | Imifin S.p.A. (in liq.)                     |  | Rome          |  | 1 |  |   |   |  |  | Sanpaolo IMI                         |  | 100.00 |  | 100.00 |  |  |        
|41 |  | IMI Bank A.G. (in liq.)                     |  | Germany       |  | 1 |  | 1  |   |  |  | IMI Bank (Lux)                       |  | 95.24  |  | 95.24  |  | 1 | (FF)   
|   |  |                                             |  |               |  |   |  |    |   |   |  | Sanpaolo IMI International           |  | 4.76   |  | 4.76   |  |  |        
|   |  |                                             |  |               |  |   |  |    |   |   |  |                                      |  |        |  |        |  |   |        
|   |  |                                             |  |               |  |   |  |    |   |   |  |                                      |  | 100.00 |  | 100.00 |  |   |        
|   |  |                                             |  |               |  |   |  |    |   |   |  |                                      |  |        |  |        |  |   |        
|42 |  | Innovare S.r.l. (in liq.)                   |  | Naples        |  | 1 |  | 1  |   |  |  | Sanpaolo IMI                         |  | 90.00  |  | 90.00  |  | 1 | (H)(FF)
|43 |  | Picus S.p.A. (in liq.)                      |  | Bergamo       |  | 1 |  | (4 | ) | 1 |  | LDV Holding                          |  | 51.61  |  | 51.61  |  |  |        
|   |  |                                             |  |               |  |   |  |    |   |   |  | Sanpaolo IMI Private Equity          |  | 1.29   |  | 1.29   |  |  |        
|   |  |                                             |  |               |  |   |  |    |   |   |  |                                      |  |        |  |        |  |   |        
|   |  |                                             |  |               |  |   |  |    |   |   |  |                                      |  | 52.90  |  | 52.90  |  |   |        
|   |  |                                             |  |               |  |   |  |    |   |   |  |                                      |  |        |  |        |  |   |        
|44 |  | S. e P. Servizi e Progetti S.p.A. (in liq.) |  | Turin         |  | 1 |  |   |   |  |  | FIN.OPI                              |  | 100.00 |  | 100.00 |  |  | (AA)   
|45 |  | S.A.G.E.T. S.p.A. (in liq.)                 |  | Teramo        |  | 1 |  |   |   |  |  | Banca Popolare dell'Adriatico        |  | 99.98  |  | 99.98  |  |  | (A)    
|46 |  | Sanpaolo U.S. Holding Co. (in liq.)         |  | United States |  | 1 |  | 4  |   | 2 |  | Sanpaolo IMI                         |  | 100.00 |  | 100.00 |  | 3 | (FF)   
|47 |  | Se.Ri.T. S.p.A. (in liq.)                   |  | Teramo        |  | 1 |  |   |   |  |  | Banca Popolare dell'Adriatico        |  | 100.00 |  | 100.00 |  |  | (A)    
|   |  |                                             |  |               |  |   |  |    |   |   |  |                                      |  |        |  |        |  |   |        

F-60

---

|48 |  | Sicilsud Leasing S.p.A. (in liq.)                |  | Palermo    |      | 1 |  | 1   |  |   |   | FIN.OPI                            |  | 100.00 |  | 100.00 |  | 1   | (AA)(FF)
|-- |  | ------------------------------------------------ |  | ---------- | ---- | - |  | --- |  | -- | - | ---------------------------------- |  | ------ |  | ------ |  | --- | --------
|   |  | Other equity investments                         |  | 3          | (HH)
|   |  |                                                  |  |            |      |   |  |     |  |    |   |                                    |  |        |  |        |  |     |         
|   |  | Total investments carried at equitySubsidiaries |  | 840        |     
|   |  |                                                  |  |            |      |   |  |     |  |    |   |                                    |  |        |  |        |  |     |         
|B2 |  | Investments carried at equityOther              | 
|49 |  | Adriavita S.p.A.                                 |  | Trieste    |      | 8 |  | 17  |  | 3  |   | Cardine Finanziaria                |  | 24.50  |  | 24.50  |  | 4   | (A)     
|50 |  | Aeffe S.p.A.                                     |  | Rimini     |      | 8 |  | 49  |  | 5  |   | LDV Holding                        |  | 20.00  |  | 20.00  |  | 10  |         
|51 |  | Banque Michel Inchauspe S.A. (BAMI)              |  | France     |      | 8 |  | 29  |  | 4  |   | Banque Sanpaolo                    |  | 20.00  |  | 20.00  |  | 6   |         
|52 |  | Beaujon Immobilière                              |  | France     |      | 7 |  |    |  |   |   | Banque Sanpaolo                    |  | 50.00  |  | 50.00  |  |    |         
|53 |  | Cassa dei Risparmi di Forlì S.p.A.               |  | Forlì      |      | 8 |  | 216 |  | 20 |   | Sanpaolo IMI                       |  | 21.02  |  | 21.02  |  | 45  | (II)    
|54 |  | Cassa di Risparmio di Firenze S.p.A.             |  | Florence   |      | 8 |  | 969 |  | 71 |   | Sanpaolo IMI                       |  | 19.53  |  | 19.53  |  | 183 | (JJ)    
|55 |  | CBE Service S.p.r.l.                             |  | Belgium    |      | 8 |  |    |  |   |   | Sanpaolo IMI                       |  | 31.70  |  | 31.70  |  |    |         
|56 |  | Conservateur Finance S.A.                        |  | France     |      | 8 |  | 33  |  | 5  |   | Banque Sanpaolo                    |  | 20.00  |  | 20.00  |  | 7   |         
|57 |  | CR Firenze Gestion Internationale S.A.           |  | Luxembourg |      | 8 |  | 6   |  | 5  |   | Sanpaolo IMI                       |  | 20.00  |  | 20.00  |  | 1   |         
|58 |  | Egida Compagnia di Assicurazioni S.p.A.          |  | Turin      |      | 7 |  | 10  |  | 1  |   | Sanpaolo Vita                      |  | 50.00  |  | 50.00  |  |    | (Z)     
|59 |  | Eptaconsors S.p.A.                               |  | Milan      |      | 1 |  | 82  |  | (6 | ) | Invesp                             |  | 40.48  |  | 40.48  |  | 32  | (A)(KK) 
|60 |  | Esatri S.p.A.                                    |  | Milan      |      | 8 |  | 60  |  | 17 |   | Sanpaolo IMI                       |  | 31.50  |  | 31.50  |  | 19  |         
|61 |  | Eurosic S.A.                                     |  | France     |      | 8 |  | 33  |  | 3  |   | Banque Sanpaolo                    |  | 32.77  |  | 32.77  |  | 11  |         
|62 |  | Finnat Investments S.p.A.                        |  | Rome       |      | 8 |  | 1   |  |   |   | Invesp                             |  | 20.00  |  | 20.00  |  |    |         
|63 |  | HDI Assicurazioni S.p.A.                         |  | Rome       |      | 8 |  | 142 |  | 5  |   | Sanpaolo IMI                       |  | 28.32  |  | 28.32  |  | 38  |         
|64 |  | I.TRE Iniziative Immobiliari Industriali S.p.A.  |  | Rovigo     |      | 8 |  |    |  |   |   | Cassa di Risparmio Padova e Rovigo |  | 20.00  |  | 20.00  |  |    | (A)     
|65 |  | Immobiliare Colonna '92 S.r.l.                   |  | Rome       |      | 8 |  | 5   |  |   |   | FIN.OPI                            |  | 33.33  |  | 33.33  |  | 2   | (AA)    
|66 |  | Integra S.r.l.                                   |  | Belluno    |      | 8 |  |    |  |   |   | Cassa di Risparmio Padova e Rovigo |  | 29.65  |  | 29.65  |  |    |         
|67 |  | Inter-Europa Bank RT                             |  | Hungary    |      | 8 |  | 53  |  | 5  |   | Sanpaolo IMI                       |  | 32.51  |  | 32.51  |  | 8   | (LL)    
|   |  |                                                  |  |            |      |   |  |     |  |    |   |                                    |  |        |  |        |  |     |         

F-61

---

|68 |  | Lama Dekani d.d.                              |  | Slovenia        |  | 8 |  |   |  |    |   | Banka Koper                          |  | 78.41 |  | 78.41 |  | 1  | (MM)   
|-- |  | --------------------------------------------- |  | --------------- |  | - |  | -- |  | --- | - | ------------------------------------ |  | ----- |  | ----- |  | -- | -------
|69 |  | Liseuro S.p.A.                                |  | Udine           |  | 8 |  | 4  |  |    |   | Sanpaolo IMI                         |  | 35.11 |  | 35.11 |  | 1  | (A)    
|70 |  | Logiasit S.A.                                 |  | France          |  | 8 |  |   |  |    |   | Banque Sanpaolo                      |  | 33.34 |  | 33.34 |  |   |        
|71 |  | Noricum Vita S.p.A.                           |  | Bologna         |  | 8 |  | 26 |  | 4   |   | Cardine Finanziaria                  |  | 44.00 |  | 44.00 |  | 12 | (A)    
|72 |  | Padova 2000 Iniziative Immobiliari S.p.A.     |  | Padua           |  | 8 |  | 1  |  | 1   |   | Cassa di Risparmio Padova e Rovigo   |  | 45.01 |  | 45.01 |  |   | (A)    
|73 |  | Pivka Perutninarstvo d.d.                     |  | Slovenia        |  | 8 |  |   |  |    |   | Banka Koper                          |  | 26.36 |  | 26.36 |  | 1  |        
|74 |  | PROGEMA S.r.l.                                |  | Turin           |  | 8 |  |   |  |    |   | Finemiro Banca                       |  | 10.00 |  | 10.00 |  |   | (A)    
|   |  |                                               |  |                 |  |   |  |    |  |     |   | SEPServizi e Progetti               |  | 10.00 |  | 10.00 |  |   |        
|   |  |                                               |  |                 |  |   |  |    |  |     |   |                                      |  |       |  |       |  |    |        
|   |  |                                               |  |                 |  |   |  |    |  |     |   |                                      |  | 20.00 |  | 20.00 |  |    | (NN)   
|   |  |                                               |  |                 |  |   |  |    |  |     |   |                                      |  |       |  |       |  |    |        
|75 |  | Sanpaolo IMI Private Equity Scheme B.V.       |  | The Netherlands |  | 8 |  | 62 |  | (50 | ) | LDV Holding                          |  | 29.38 |  | 29.38 |  | 18 |        
|76 |  | Sifin S.r.l.                                  |  | Bologna         |  | 8 |  | 1  |  |    |   | Invesp                               |  | 30.00 |  | 30.00 |  |   | (A)(DD)
|77 |  | SinlocSistemi Iniziative Locali S.p.A.       |  | Turin           |  | 8 |  | 42 |  | 2   |   | FIN.OPI                              |  | 31.85 |  | 31.85 |  | 14 | (AA)   
|   |  |                                               |  |                 |  |   |  |    |  |     |   | Banca OPI                            |  | 8.15  |  | 8.15  |  | 3  |        
|   |  |                                               |  |                 |  |   |  |    |  |     |   |                                      |  |       |  |       |  |    |        
|   |  |                                               |  |                 |  |   |  |    |  |     |   |                                      |  | 40.00 |  | 40.00 |  | 17 | (NN)   
|   |  |                                               |  |                 |  |   |  |    |  |     |   |                                      |  |       |  |       |  |    |        
|78 |  | Società Friulana Esazione Tributi S.p.A.      |  | Udine           |  | 8 |  | 5  |  |    |   | Cassa di Risparmio Udine e Pordenone |  | 33.33 |  | 33.33 |  | 2  | (A)    
|79 |  | Società Gestione per il Realizzo S.p.A.       |  | Rome            |  | 8 |  | 21 |  | 7   |   | Sanpaolo IMI                         |  | 28.31 |  | 28.31 |  | 1  | (H)    
|   |  |                                               |  |                 |  |   |  |    |  |     |   | Banca Fideuram                       |  | 0.64  |  | 0.64  |  |   |        
|   |  |                                               |  |                 |  |   |  |    |  |     |   |                                      |  |       |  |       |  |    |        
|   |  |                                               |  |                 |  |   |  |    |  |     |   |                                      |  | 28.95 |  | 28.95 |  |    |        
|   |  |                                               |  |                 |  |   |  |    |  |     |   |                                      |  |       |  |       |  |    |        
|80 |  | Societé Civile du 41 Avenue Bouisson Bertrand |  | France          |  | 8 |  |   |  |    |   | Banque Sanpaolo                      |  | 25.00 |  | 25.00 |  |   |        
|81 |  | Societé Civile le Jardin de Nazareth          |  | France          |  | 8 |  |   |  |    |   | Banque Sanpaolo                      |  | 20.00 |  | 20.00 |  |   |        
|82 |  | Societé Civile Le Maestro                     |  | France          |  | 8 |  |   |  |    |   | Banque Sanpaolo                      |  | 20.00 |  | 20.00 |  |   |        
|   |  |                                               |  |                 |  |   |  |    |  |     |   |                                      |  |       |  |       |  |    |        

F-62

---

|83  |  | Societé Civile Res Club les Arcades            |  | France   |  | 8 |  |    |   |   |   | Banque Sanpaolo                    |  | 25.00 |  | 25.00 |  |  |        
|--- |  | ---------------------------------------------- |  | -------- |  | - |  | --- | - | -- | - | ---------------------------------- |  | ----- |  | ----- |  | - | -------
|84  |  | Societé Civile St. Gratien Village             |  | France   |  | 8 |  |    |   |   |   | Banque Sanpaolo                    |  | 30.00 |  | 30.00 |  |  |        
|85  |  | Splosna Plovba Portoroz d.d.                   |  | Slovenia |  | 8 |  |    |   |   |   | Banka Koper                        |  | 21.00 |  | 21.00 |  |  |        
|86  |  | Stoà S.c.p.a.                                  |  | Naples   |  | 8 |  | 1   |   |   |   | Sanpaolo IMI                       |  | 20.76 |  | 20.76 |  |  | (H)    
|87  |  | Summa Finance S.p.A.                           |  | Bologna  |  | 8 |  | 1   |   |   |   | Invesp                             |  | 39.90 |  | 39.90 |  |  | (A)(DD)
|88  |  | Trivimm S.p.A.                                 |  | Verona   |  | 8 |  | 2   |   |   |   | Sanpaolo IMI                       |  | 23.00 |  | 23.00 |  |  | (A)    
|89  |  | Wire Industries S.p.A.                         |  | Milan    |  | 8 |  | 19  |   | 1  |   | LDV Holding                        |  | 30.53 |  | 30.53 |  | 6 |        
|90  |  | Aeroporto di Napoli (in liq.)                  |  | Naples   |  | 8 |  |    |   |   |   | Sanpaolo IMI                       |  | 20.00 |  | 20.00 |  |  | (H)    
|91  |  | ChasefinChase Finanziaria S.p.A. (in liq.)    |  | Milan    |  | 8 |  |    |   |   |   | Finemiro Leasing                   |  | 30.00 |  | 30.00 |  |  | (A)    
|92  |  | Consorzio Agrario Prov.le di Rovigo (in liq.)  |  | Rovigo   |  | 8 |  | (6  | ) | 1  |   | Cassa di Risparmio Padova e Rovigo |  | 35.45 |  | 35.45 |  |  | (A)    
|93  |  | Consorzio Bancario SIR S.p.A. (in liq.)        |  | Rome     |  | 8 |  | 1   |   |   |   | Sanpaolo IMI                       |  | 32.84 |  | 32.84 |  |  | (OO)   
|94  |  | Finexpance S.p.A. (in liq.)                    |  | Chiavari |  | 8 |  | (9  | ) |   |   | Sanpaolo IMI                       |  | 30.00 |  | 30.00 |  |  | (OO)   
|95  |  | G.E.CAP. S.p.A. (in liq.)                      |  | Foggia   |  | 8 |  | (2  | ) | 1  |   | Sanpaolo IMI                       |  | 37.25 |  | 37.25 |  |  | (H)    
|96  |  | Galère 28 (in liq.)                            |  | France   |  | 8 |  |    |   |   |   | Banque Sanpaolo                    |  | 23.44 |  | 23.44 |  |  |        
|97  |  | Galileo Holding S.p.A. (in liq.)               |  | Venice   |  | 8 |  | (24 | ) | (1 | ) | Sanpaolo IMI                       |  | 31.52 |  | 31.52 |  |  | (OO)   
|98  |  | Italinfra Grandi Progetti S.p.A. (in liq.)     |  | Naples   |  | 8 |  | 1   |   |   |   | Sanpaolo IMI                       |  | 30.00 |  | 30.00 |  |  | (H)    
|99  |  | Mega International S.p.A. (in prior agreement) |  | Ravenna  |  | 8 |  | (2  | ) |   |   | Finemiro Banca                     |  | 48.00 |  | 48.00 |  |  | (A)    
|100 |  | Sofimer S.p.A. (in liq.)                       |  | Naples   |  | 8 |  | 3   |   |   |   | Sanpaolo IMI                       |  | 20.00 |  | 20.00 |  |  | (H)    
|    |  |                                                |  |          |  |   |  |     |   |    |   |                                    |  |       |  |       |  |   |        

F-63

---

|101 |  | Sviluppo di Nuove Iniziative S.p.A. (in liq.) |  | Genoa |      | 7 |  | 2 |  |  |  | Sanpaolo IMI |  | 50.00 |  | 50.00 |  |  | (H)
|--- |  | --------------------------------------------- |  | ----- | ---- | - |  | - |  | - |  | ------------ |  | ----- |  | ----- |  | - | ---
|    |  | Other investments                             |  | 1     | (HH)
|    |  |                                               |  |       |      |   |  |   |  |   |  |              |  |       |  |       |  |   |    
|    |  | Total investments carried at equityOther     |  | 426   |     
|    |  |                                               |  |       |      |   |  |   |  |   |  |              |  |       |  |       |  |   |    
|    |  | Total investments carried at equity           |  | 1,266 |     
|    |  |                                               |  |       |      |   |  |   |  |   |  |              |  |       |  |       |  |   |    

---

Notes to the table significant investments:

F-64

---

F-65

---



Among
the remaining investments held by the Group the most significant are listed below by amount invested (book value equal to or higher than €2.5 million):



|                                            |  |           |  | Ownership                            |  |       | 
|------------------------------------------- |  | --------- |  | ------------------------------------ |  | ----- | 
|
|
|
|AC.E.GA.S S.p.A.                            |  | Trieste   |  | Sanpaolo IMI Private Equity          |  | 1.08  | 
|                                            |  |           |  | Cassa di Risparmio Udine e Pordenone |  | 1.00  | 
|                                            |  |           |  |                                      |  |       | 
|                                            |  |           |  |                                      |  | 2.08  | 
|                                            |  |           |  |                                      |  |       | 
|AEM Torino S.p.A.                           |  | Turin     |  | IMI Investimenti                     |  | 1.47  | 
|AMPS S.p.A.                                 |  | Parma     |  | LDV Holding                          |  | 17.31 | 
|APSAzienda Padova Servizi S.p.A.           |  | Padua     |  | Cassa di Risparmio Padova e Rovigo   |  | 1.49  | 
|Autostrada BS-VR-VI-PD S.p.A.               |  | Verona    |  | Cardine Finanziaria                  |  | 5.80  | 
|Azimut S.p.A.                               |  | Viareggio |  | LDV Holding                          |  | 9.12  | 
|                                            |  |           |  | Sanpaolo IMI Private Equity          |  | 0.08  | 
|                                            |  |           |  |                                      |  |       | 
|                                            |  |           |  |                                      |  | 9.20  | 
|Banca d'Italia                              |  | Rome      |  | Sanpaolo IMI                         |  | 8.33  | 
|                                            |  |           |  | Cassa di Risparmio Bologna           |  | 6.20  | 
|                                            |  |           |  | Cassa di Risparmio Padova e Rovigo   |  | 1.20  | 
|                                            |  |           |  | Cassa di Risparmio Venezia           |  | 0.88  | 
|                                            |  |           |  | Cassa di Risparmio Udine e Pordenone |  | 0.47  | 
|                                            |  |           |  | Cassa di Risparmio di Gorizia        |  | 0.15  | 
|                                            |  |           |  |                                      |  |       | 
|                                            |  |           |  |                                      |  | 17.23 | 
|                                            |  |           |  |                                      |  |       | 
|Banca Popolare di Lodi S.c.r.l.             |  | Lodi      |  | IMI Investimenti                     |  | 1.42  | 
|Banco del Desarrollo S.A.                   |  | Chile     |  | Sanpaolo IMI                         |  | 15.72 | 
|Banksiel S.p.A.                             |  | Milan     |  | Sanpaolo IMI                         |  | 7.00  | 
|Banque Espirito Santo et de la Venetie S.A. |  | France    |  | Prospettive 2001                     |  | 18.00 | 
|Beni Stabili S.p.A.                         |  | Rome      |  | Invesp                               |  | 2.87  | 
|                                            |  |           |  | Sanpaolo IMI                         |  | 0.12  | 
|                                            |  |           |  |                                      |  |       | 
|                                            |  |           |  |                                      |  | 2.99  | 
|                                            |  |           |  |                                      |  |       | 
|BIAT S.A.                                   |  | Tunisia   |  | Sanpaolo IMI                         |  | 5.61  | 
|Borsa Italiana S.p.A.                       |  | Milan     |  | Banca IMI                            |  | 7.94  | 
|                                            |  |           |  | Sanpaolo IMI                         |  | 4.14  | 
|                                            |  |           |  | IMI Bank (Lux)                       |  | 0.43  | 
|                                            |  |           |  |                                      |  |       | 
|                                            |  |           |  |                                      |  | 12.51 | 
|                                            |  |           |  |                                      |  |       | 
|Cassa di Risparmio di Ferrara S.p.A.        |  | Ferrara   |  | Prospettive 2001                     |  | 1.29  | 
|CDC Finance IXIS S.A.                       |  | France    |  | Sanpaolo IMI                         |  | 3.45  | 
|Centrale dei Bilanci S.r.l.                 |  | Turin     |  | Sanpaolo IMI                         |  | 12.59 | 
|Centro Agroalimentare di Napoli S.c.p.A.    |  | Naples    |  | Sanpaolo IMI                         |  | 15.68 | 
|Centro Factoring S.p.A.                     |  | Florence  |  | Invesp                               |  | 10.81 | 
|                                            |  |           |  |                                      |  |       | 

F-66

---

|Centro Leasing S.p.A.                        |  | Florence   |  | Invesp                             |  | 12.33 |  | 15  | (B)(F)
|-------------------------------------------- |  | ---------- |  | ---------------------------------- |  | ----- |  | --- | ------
|Cimos International d.d.                     |  | Slovenia   |  | Banka Koper                        |  | 13.55 |  | 7   |       
|Compagnia Assicuratrice Unipol S.p.A.        |  | Bologna    |  | Invesp                             |  | 2.02  |  | 41  | (B)(F)
|Convergenza S.c.a.                           |  | Luxembourg |  | NHS Luxembourg                     |  | 10.00 |  | 8   |       
|Dyckerhoff A.G.                              |  | Germany    |  | IMI Investments                    |  | 7.76  |  | 28  |       
|                                             |  |            |  | IMI Finance                        |  | 4.36  |  | 17  |       
|                                             |  |            |  |                                    |  |       |  |     |       
|                                             |  |            |  |                                    |  | 12.12 |  | 45  | (G)   
|                                             |  |            |  |                                    |  |       |  |     |       
|Enel S.p.A.                                  |  | Rome       |  | IMI Investimenti                   |  | 0.04  |  | 13  |       
|Engineering Ingegneria Informatica S.p.A.    |  | Rome       |  | Sanpaolo IMI Private Equity        |  | 1.60  |  | 3   | (A)   
|Eni S.p.A.                                   |  | Rome       |  | IMI Investimenti                   |  | 0.20  |  | 107 |       
|Euromedia Venture Belgique S.A.              |  | Belgium    |  | NHS Luxembourg                     |  | 9.68  |  | 3   |       
|FIAT S.p.A.                                  |  | Turin      |  | IMI Investimenti                   |  | 1.48  |  | 80  |       
|Fin.Ser. S.p.A.                              |  | Padua      |  | Cassa di Risparmio Padova e Rovigo |  | 15.00 |  | 4   | (B)   
|FincantieriCantieri Navali Italiani S.p.A.  |  | Trieste    |  | IMI Investimenti                   |  | 1.21  |  | 4   |       
|                                             |  |            |  | Sanpaolo IMI                       |  | 0.76  |  | 3   | (E)   
|                                             |  |            |  |                                    |  |       |  |     |       
|                                             |  |            |  |                                    |  | 1.97  |  | 7   |       
|                                             |  |            |  |                                    |  |       |  |     |       
|Hutchinson 3G Italia S.p.A.                  |  | Milan      |  | NHS Investments                    |  | 5.58  |  | 145 |       
|                                             |  |            |  | 3G Mobile Investments 2            |  | 2.23  |  |    | (C)   
|                                             |  |            |  |                                    |  |       |  |     |       
|                                             |  |            |  |                                    |  | 7.81  |  | 145 |       
|                                             |  |            |  |                                    |  |       |  |     |       
|Istituto Enciclopedia Italiana S.p.A.        |  | Rome       |  | Sanpaolo IMI                       |  | 8.00  |  | 3   |       
|Istituto per il Credito Sportivo             |  | Rome       |  | Sanpaolo IMI                       |  | 10.81 |  | 19  |       
|Italenergia Bis S.p.A.                       |  | Turin      |  | IMI Investimenti                   |  | 12.48 |  | 431 |       
|Kiwi II Ventura Servicos de Consultoria S.A. |  | Madeira    |  | Sanpaolo IMI Private Equity        |  | 1.06  |  | 5   | (A)   
|Kredyt Bank S.A.                             |  | Poland     |  | Sanpaolo IMI                       |  | 5.20  |  | 28  | (B)   
|Merloni Termosanitari S.p.A.                 |  | Ancona     |  | LDV Holding                        |  | 6.05  |  | 22  |       
|                                             |  |            |  | Banca Popolare dell'Adriatico      |  | 1.37  |  | 5   | (B)   
|                                             |  |            |  |                                    |  |       |  |     |       
|                                             |  |            |  |                                    |  | 7.42  |  | 27  |       
|                                             |  |            |  |                                    |  |       |  |     |       
|Olivetti S.p.A.                              |  | Ivrea      |  | Invesp                             |  | 0.30  |  | 28  |       
|                                             |  |            |  | IMI Investimenti                   |  | 0.04  |  | 4   |       
|                                             |  |            |  |                                    |  |       |  |     |       
|                                             |  |            |  |                                    |  | 0.34  |  | 32  |       
|                                             |  |            |  |                                    |  |       |  |     |       
|Praxis Calcolo S.p.A.                        |  | Milan      |  | LDV Holding                        |  | 12.50 |  | 6   |       
|                                             |  |            |  | Sanpaolo IMI Private Equity        |  | 0.25  |  |    |       
|                                             |  |            |  |                                    |  |       |  |     |       
|                                             |  |            |  |                                    |  | 12.75 |  | 6   |       
|                                             |  |            |  |                                    |  |       |  |     |       
|Sagat S.p.A.                                 |  | Turin      |  | IMI Investimenti                   |  | 12.40 |  | 18  |       
|                                             |  |            |  |                                    |  |       |  |     |       

F-67

---

|Santander Central Hispano S.A.             |  | Spain                |  | Sanpaolo IMI                |  | 1.10 |  | 342 |    
|------------------------------------------ |  | -------------------- |  | --------------------------- |  | ---- |  | --- | ---
|                                           |  |                      |  | Sanpaolo IMI International  |  | 1.77 |  | 548 |    
|                                           |  |                      |  |                             |  |      |  |     |    
|                                           |  |                      |  |                             |  | 2.87 |  | 890 |    
|                                           |  |                      |  |                             |  |      |  |     |    
|Serenissima Infracom S.p.A.                |  | Verona               |  | Cardine Finanziaria         |  | 7.35 |  | 25  | (B)
|Simest S.p.A.                              |  | Rome                 |  | Sanpaolo IMI                |  | 4.01 |  | 6   |    
|Spinner Global Technology Fund Ltd         |  | Netherlands Antilles |  | Sanpaolo IMI Private Equity |  | 2.23 |  | 7   | (A)
|Transdev S.A.                              |  | France               |  | FIN.OPI                     |  | 7.00 |  | 9   | (H)
|Other equity investments                   |  |                      |  |                             |  |      |  | 55  |    
|                                           |  |                      |  |                             |  |      |  |     |    
|Total other significant equity investments |  | 2,798                | 
|                                           |  |                      |  |                             |  |      |  |     |    

---

Notes
to the table "other significant investments":

Composition of the investment portfolio

Analysis of caption 80 "Investments in Group companies"(Table 3.5 B.I.)

12/31/02

12/31/01(€/mil)(a) Investment in banks1. quoted



2. unquoted

1

1(b) Investment in financial institutions1. quoted



2. unquoted

23

13(c) Other investments1. quoted



2. unquoted

816

629Total

840

643


F-68

---

Analysis of caption 70 "Equity investments" (table 3.4 B.I.)

12/31/02

12/31/01(€/mil)(a) Investments in banks1. quoted

1,137

1,7402. unquoted

617

1,118(b) Investments in financial institutions1. quoted

11

102. unquoted

124

67(c) Other investments1. quoted

356

4142. unquoted

979

705Total

3,224

4,054


The
principle characteristics of the commitments and options on significant investments are provided below:



F-69

---



Detail
of the above commitments, where recorded to the financial statements, is provided in the memorandum accounts (caption 20 Guarantees and Commitments), in the Explanatory
Notes, in the table on forward transactions (Table 10.5 B.I. "Other transactions") and in the supplementary information requested by the Basel Committee on Banking Supervision and the
International Organization of Securities Commissions (IOSCO).

F-70

---

Changes during the year in the investment portfolio

The following table shows the changes during 2002 in the investment portfolio:

Investments in Group companies (Table 3.6.1 B.I.)

(€/mil)A. Opening balance as of January 1, 2002

643B. Increases

253B1. purchases

159B2. writebacks

B3. revaluations

B4. other changes

94C. Decreases

56C1. sales

11C2. adjustments

including:long-term writedowns

C3. other changes

45D. Closing balance as of December 31, 2002

840E. Total revaluations

69F. Total adjustments

823


Subcaption B1.
"Purchases" reflects the increase in share capital of Sanpaolo Vita S.p.A. (€70 million), of Fideuram Vita S.p.A.
(€74 million) and of Sanpaolo IMI Internazionale (€10 million). Furthermore, this caption also includes a total of €3 million for
investments made during the year for the formation of NHS Mezzogiorno SGR S.p.A. (€2 million) and for the purchase of Eptaventure S.p.A. (€1 million).

Subcaption B4.
"Other changes" includes the entry in portfolio of companies included in consolidation this year for the first time and, especially, the Cardine Group
(€12 million) and FIN.OPI S.p.A. (€14 million). Also included are increases in subsidiaries valued according to the net equity method
(€65 million) and income from the disposal of Datitalia Processing S.p.A. (€3 million).

Subcaption C3.
"Other changes" reflects the decrease (€17 million) following the line-by-line consolidation of Prospettive 2001
S.p.A., Esaban S.p.A. and Fideuram Asset Management (Ireland) Ltd. This subcaption is also affected by the decrease in value of subsidiary companies valued according to the equity method
(€27 million).

F-71

---

The
following table shows the changes during 2001 in the investment portfolio:

Investments in Group companies (Table 3.6.1B.I.)

(€/mil)A. Opening balance as of January 1, 2001

539B. Increases

140B1. purchases

108B2. writebacks

B3. revaluations

B4. other changes

32C. Decreases

36C1. sales

C2. adjustments

including:long-term writedowns

C3. other changes

36D. Closing balance as of December 31, 2001

643E. Total revaluations

43F. Total adjustments

408


Subcaption B1.
"Purchases" reflects the capital increases of Sanpaolo Vita (€100 million) and of Bernabé Mobile Investments 2 S.A.
(€2 million). It also includes €6 million of investment for the incorporation of Obiettivo Società di Gestione del Risparmio (S.G.R.)
S.p.A., Fideuram Asset Management (Ireland) Ltd and Esaban S.p.A.

Subcaptions B4.
and C3. "Other changes" reflect increases and decreases (also due to the payment of dividends to fully consolidated companies) in subsidiaries carried at equity.

F-72

---

The
following table shows the changes during 2002 in other equity investments:

Other equity investments (table 3.6.2 B.I.)

(€/mil)A. Opening balance as of January 1, 2002

4,054B. Increases

1,055B1. purchases

331B2. writebacks

3B3. revaluations

B4. other changes

721C. Decreases

1,885C1. sales

820C2. adjustments

542including:long-term writedowns

61C3. other changes

523D. Closing balance as of December 31, 2002

3,224E. Total revaluations

535F. Total adjustments

1,318


Subcaption B.1
"Purchases" mainly comprises investments made by the Parent Bank and by other Group companies in Italenergia Bis S.p.A. (€183 million), Borsa
Italiana S.p.A. (€51 million), Dyckerhoff A.G. (€45 million), Hutchinson 3G Italia S.p.A. (€15 million) and FIAT S.p.A.
(€15 million).

Subcaption B4.
"Other increases" includes:



Subcaption C1.
"Sales" refers to disposals by the Parent Bank (€603 million, of which €473 million refer to the disposal of Cardine
Banca S.p.A. shares and €110 million refer to the disposal of Banca Agricola Mantovana), by Sanpaolo IMI Private Equity S.p.A. (€83 million for the
minority shareholding in its own investment portfolio), by IMI Investimenti S.p.A. (€43 million), by Invesp S.p.A. (€25 million) and by Banque
Privée Fideuram Wargny (€17 million).

Subcaption C2.
"Adjustments" mainly reflects writedowns made by the Parent Bank and Sanpaolo IMI International S.A. in Santander Central Hispano S.A.
(€399 million) and by IMI Investimenti

F-73

---

S.p.A.
in Fiat S.p.A. (€82 million). (Detail of other adjustments is provided in Note 28Adjustments to financial fixed assets).

Subcaption C3.
"Other decreases" includes:



The
following table shows the changes during 2001 in other equity investments:

Other equity investments (table 3.6.2 B.I.)

(€/mil)A. Opening balance as of January 1, 2001

3,034B. Increases

2,018B1. purchases

1,703B2. writebacks

1B3. revaluations

B4. other changes

314C. Decreases

998C1. sales

493C2. adjustments

224including:long-term writedowns

224C3. other changes

281D. Closing balance as of December 31, 2001

4,054E. Total revaluations

115F. Total adjustments

670


Subcaption B.1
"Purchases" mainly comprises the following acquisitions of equity investments by the Parent Bank:



F-74

---



In
addition, significant investments have been carried out by NHSNuova Holding SANPAOLO IMI S.p.A. even through its subsidiaries (€632 million, of
which: €248 million in Italenergia S.p.A., €144 million in Hutchinson 3G Italia S.p.A. and €143 million in Eni S.p.A.).

Subcaption B4.
"Other changes" includes realized gains from the sale of investments (€294 million, of which €228 million from the
sale of the stake in Montedison S.p.A. by NHSNuova Holding SANPAOLO IMI S.p.A.; €50 million from the sale of part of the shareholding held by Invesp S.p.A. in Beni
Stabili S.p.A.; €14 million from the sale of investments in merchant banking sector). Furthermore, it includes the increase in value of significant investments carried at equity
(a total of €17 million).

The
subcaption C1. "Sales" refers to the prices of sales by NHS-Nuova Holding SANPAOLO IMI S.p.A., directly and through its subsidiaries, for
€358 million and by Invesp S.p.A. for €111 million.

The
subcaption C2. "Adjustments" essentially reflects writedowns made by NHSNuova Holding SANPAOLO IMI S.p.A. in FIAT S.p.A. for €72 million,
Hutchinson 3G Italia S.p.A. for €19 million, Banca Popolare di Lodi S.c.r.l. for €6 million, Enel S.p.A. for €4 million, as well as
writedowns by SANPAOLO IMI International in Santander Central Hispano for €80 million and by Invesp S.p.A. in Olivetti S.p.A. for €17 million (see
Note 28Adjustments to financial fixed assets).

The
subcaption C3. "Other decreases" include:



F-75

---



Amounts due to and from Group companies and investments (non-Group companies)

Amounts due to and from Group companies, as established in art. 4 of Decree 87/92, as well as subsidiaries and affiliated companies (non-Group
companies), are analyzed in the following tables::

Amounts due to and from Group companies (table 3.2 B.I.)

12/31/02

12/31/01(€/mil)(a) Assets1. due from banks



of which:subordinated



2. due from financial institutions(*)

31

490of which:subordinated

2

3. due from other customers

106

154of which:subordinated

65

4. bonds and other debt securities



of which:subordinated



Total assets

137

644(b) Liabilities1. due to banks

16

312. due to financial institutions

17

123. due to other customers

302

2194. securities issued

1,087

1515. subordinated liabilities



Total liabilities

1,422

413(c) Guarantees and commitments1. guarantees given

5

92. commitments



Total guarantees and commitments

5

9


---

F-76

---



Amounts due to and from investments (non-Group companies) (table 3.3 B.I.)

12/31/02

12/31/01(€/mil)(a)
Assets1. due from banks(*)

718

1,105of which:subordinated

30

202. due from financial institutions

1,824

751of which:subordinated

17

3. due from other customers

2,585

1,305of which:subordinated



54. bonds and other debt securities

108

9of which:subordinated

4

Total assets

5,235

3,170(b)
Liabilities1. due to banks(**)

923

1,4482. due to financial institutions

178

1733. due to other customers

484

2574. securities issued

9

5. subordinated liabilities

8

Total liabilities

1,602

1,878(c)
Guarantees and commitments1. guarantees given

847

1,1422. commitments

517

384Total guarantees and commitments

1,364

1,526


---

F-77

---

To
supplement the previous table, amounts due to and from affiliated companies (in which Group companies hold 20% or more, or 10% or more if quoted) are analyzed below:

Amounts due to and from affiliated companies

12/31/02

12/31/01(€/mil)(a)
Assets1. due from banks

21

91of which:subordinated

20

202. due from financial institutions

448

260of which:subordinated



3. due from other customers

202

13of which:subordinated



4. bonds and other debt securities

80

of which:subordinated

4

Total assets

751

364(b)
Liabilities1. due to banks

19

1102. due to financial institutions

23

3. due to other customers

148

204. securities issued

9

5. subordinated liabilities



Total liabilities

199

130(c)
Guarantees and commitments1. guarantees given

189

1792. commitments

3

23Total guarantees and commitments

192

202


(15)    TANGIBLE AND INTANGIBLE FIXED ASSETS

Tangible and intangible fixed assets comprise the following:

12/31/02

12/31/01(€/mil)Tangible fixed assets (caption 120)

2,229

1,726Intangible fixed assets (caption 110)

406

367Total

2,635

2,093


F-78

---

Tangible fixed assets (caption 120)

Tangible fixed assets comprise:

12/31/02

12/31/01(€/mil)Propertyoperating

1,716

1,422non-operating

256

60Furniture and installationselectronic equipment

138

146general and specific installations

51

43office furniture and equipment

66

54vehicles

2

1Total

2,229

1,726


The
following table shows the changes in tangible fixed assets during 2002

Changes in tangible fixed assets during the year (Table 4.1 B.I.)

(€/mil)A. Opening balance as of January 1, 2002

1,726B. Increases

1,121B1. purchases

218B2. writebacks

B3. revaluations

B4. other changes

903C. Decreases

618C1. sales

207C2. adjustments(a) depreciation

294(b) long-term writedowns

C3. other changes

117D. Closing balance as of December 31, 2002

2,229E. Total revaluations

1,358F. Total adjustments

2,786(a) accumulated depreciation

2,784(b) long-term writedowns

2


F-79

---

The
following table shows the changes in tangible fixed assets during 2001

Changes in tangible fixed assets during the year (Table 4.1 B.I.)

(€/mil)A. Opening balance as of January 1, 2001

1,793B. Increases

177B1. purchases

161B2. writebacks

B3. revaluations

B4. other changes

16C. Decreases

244C1. sales

17C2. adjustments(a) depreciation

214(b) long-term writedowns

C3. other changes

13D. Closing balance as of December 31, 2001

1,726E. Total revaluations

916F. Total adjustments

1,529(a) accumulated depreciation

1,528(b) long-term writedowns

1


Intangible fixed assets (caption 110)

Intangible fixed assets comprise:

12/31/02

12/31/01(€/mil)Merger differences from goodwill of merged companies



27Goodwill

16

8Software in use

198

183Software not yet in use

112

70Other deferred charges

80

79Total

406

367


The
differences arising on the mergers of Banca Provinciale Lombarda and Banco Lariano in 1993 are recorded in the financial statements since they represent goodwill relating to merged
companies. Such differences are stated net of the amounts allocated to the related assets acquired.

The
"software in use" caption refers to purchases of new packages for integration of the operating network procedure.

Amounts
registered under "software not yet in use" refer to modification and procedure changes for the development of application programs mainly ordered from third parties and not yet
completed.

F-80

---

Other
deferred charges include:



The
following table shows the changes in intangible fixed assets during 2002.

Changes in intangible fixed assets during the year (Table 4.2 B.I.)

(€/mil)A. Opening balance as of January 1, 2002

367B. Increases

373B1. purchases

242B2. writebacks

B3. revaluations

B4. other changes

131C. Decreases

334C1. sales

1C2. adjustments(a) amortization

260(b) long-term writedowns

16C3. other changes

57D. Closing balance as of December 31,2002

406E. Total revaluations

F. Total adjustments

1,019(a) accumulated amortization

994(b) long-term writedowns

25


The
following table shows the changes in intangible fixed assets during 2001.

F-81

---

Changes in intangible fixed assets during the year (Table 4.2 B.I.)

(€/mil)A. Opening balance as of January 1, 2001

359B. Increases

281B1. purchases

216B2. writebacks

B3. revaluations

B4. other changes

65C. Decreases

273C1. sales

7C2. adjustments(a) amortization

200(b) long-term writedowns

8C3. other changes

58D. Closing balance as of December 31, 2001

367E. Total revaluations

F. Total adjustments

677(a) accumulated amortization

669(b) long-term writedowns

8


The
cost incurred by the Group for the introduction of the Euro totals €99 million as of December 31, 2001. Of this amount,
€28 million was written off in 2001 and €15 million is still to be amortized in future years.

(16)    OTHER ASSETS

Consolidated asset captions 90, 100, 150 and 160, not commented upon previously, comprise the following:

|                                                                   |  | 12/31/02 |  | 12/31/01
|------------------------------------------------------------------ |  | -------- |  | --------
|
|Goodwiil arising on consolidation (caption 90)                     |  | 842      |  | 838     
|Goodwill arising on application of the equity method (caption 100) |  | 188      |  | 215     
|Other assets (caption 150)                                         |  | 20,494   |  | 18,585  
|Accrued income and prepaid expenses (caption 160)                  |  | 2,852    |  | 2,191   
|                                                                   |  |          |  |         
|Total                                                              |  | 24,376   |  | 21,829  
|                                                                   |  |          |  |         

F-82

---

Other assets (caption 150)

Analysis of caption 150 "Other assets" (Table 5.1 B.I.)

|                                                                                                                               |                                                                | 12/31/02 |     | 12/31/01
|------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------- | -------- | --- | --------
|
|Valuation of derivatives on interest rates and stockmarket indices                                                             |                                                                | 6,084    |     | 4,326   
|Effect of currency hedges, forex swap and cross-currency swap                                                                  |                                                                | 1,012    |     | 2,292   
|Unprocessed transactions(*)                                                                                                    |                                                                | 1,833    |     | 2,097   
|Deferred tax assets(**)                                                                                                        |                                                                | 1,697    |     | 1,681   
|Tax collection accounts                                                                                                        |                                                                | 1,379    |     | 1,531   
|Due from tax authorities:                                                                                                      |                                                                | 2,212    |     | 1,319   
|                                                                                                                               | prepaid current year direct taxes                             |          | 574 |         
|                                                                                                                               | tax credits relating to prior years                           |          | 558 |         
|                                                                                                                               | taxes paid in advance on termination indemnities (Law 662/96) |          | 79  |         
|                                                                                                                               | taxes withheld during the year                                |          | 252 |         
|                                                                                                                               | other credits                                                 |          | 749 |         
|Amounts in transit with branches and subsidiaries(*)                                                                           |                                                                | 1,444    |     | 1,229   
|Banco di Napoli loans to be restored ex Law 588/96                                                                             |                                                                | 580      |     | 840     
|Premiums paid on purchased options                                                                                             |                                                                | 1,066    |     | 526     
|Other items derivative contracts                                                                                               |                                                                | 341      |     | 271     
|Debt positions in FX to be settled                                                                                             |                                                                | 858      |     | 173     
|Checks and other instruments held                                                                                              |                                                                | 87       |     | 160     
|Banco di Napoli non-interest bearing deposits with the Bank of Italy                                                           |                                                                | 58       |     | 58      
|Net effect of translating funds from international agencies using current rates, with the exchange risk borne by third parties |                                                                | 31       |     | 46      
|Items relating to securities transactions                                                                                      |                                                                | 11       |     | 30      
|Transactions by foreign branches                                                                                               |                                                                | 8        |     | 20      
|Other                                                                                                                          |                                                                | 1,793    |     | 1,986   
|                                                                                                                               |                                                                |          |     |         
|Total                                                                                                                          |                                                                | 20,494   |     | 18,585  
|                                                                                                                               |                                                                |          |     |         

---

IMI Sir dispute

Other assets include €1.3 million which refer to the estimated realizable value of a loan the title to which was definitively judged by the
First Civil Section of the Supreme Court through sentence 2469/03, which confirmed, thereby justifying, sentence 2887 passed by the Rome Court of Appeal on September 11, 2001, by which
Consorzio Bancario SIR S.p.A. in liquidation is liable to pay the Bank the sum of €506 million. Instead, the sentence passed by the Supreme Court sustained the reason for burden
raised by Consorzio Sir, stating that Consorzio was not liable to pay the amount of interest matured on the loan from the date on which the appeal was served. The decision on whether or not the total
amount owed to the Bank by Consorzio should be reduced by approximately €14.5 million was referred by Supreme Court to another section of the Rome Appeal Court: if the trial
judge holds the claim amount unjustified, the sentence against the Consorzio to pay the sum of €506 million will be reduced accordingly.

F-83

---

The
same Supreme Court sentence passed final judgment on the right of Consorzio to be held harmless in respect of Mrs Battistella Primarosa (heir to Mr. Nino Rovelli) and of
Eurovalori S.p.A..

In
respect of its rights and with the aim of defending its prospects of recovering the amount owed, the Bank, by virtue of agreements with Consorzio, has assumed from the latter its
arguments against Mrs Battistella Primarosa, by taking appropriate defensive action.

As
in the previous year, for the purposes of preparing the financial statements, the book value of the loan subject to the Supreme Court sentence has been calculated in accordance with
national and international accounting principles for contingent assets and revenue recognition, on the basis of its
estimated realizable value. As a matter of fact, no events have taken place to date which would justify any form of adjustment to the valuation originally calculated for the purposes of the financial
statements as of December 31, 2001.

As
far as taxation is concerned, it should be noted that on payment of taxes owed for the year 2001, in accordance with the directives of the Tax Authorities, the Bank treated as taxable
income the gross income deriving from the sentence of the Court of Appeal of September 11, 2001, which has now become final (approximately €600 million, including
interest matured to December 31, 2001). This treatment did not have a significant impact on the 2002 financial statements, since the greater amount of tax payable, approximately
€213 million, has been offset against a deferred tax asset for the same amount, booked on the assumption that there is the likelihood of collection and/or definitive deduction
of the gross taxable amount, where legal action is not fully or partially successful within a reasonable period of time.

Banco di Napoli loans to be restored ex Law 588/96

This item, amounting to €580 million (€840 million as of December 31, 2001), represents the residual
principal and interest of the interventions made by former Banco di Napoli to cover the liquidation deficit of Isveimer and the losses of Società per la Gestione di
Attività S.p.A. (Sga). These interventions form part of the reorganization plan prepared, with the Bank of Italy's approval, on the basis of Law 588/96 containing urgent provisions for
the recovery, reorganization and privatization of former Banco di Napoli. Furthermore, the same law establishes to hold the former Banco di Napoli harmless from the economic and financial consequences
of the measures taken or to be taken using the mechanism provided by the Treasury Ministry Decree of September 27, 1974. Since December 31, 2002, following the merger by incorporation of
Banco di Napoli into SANPAOLO IMI, the latter has, for all legal purposes, taken over from the Banco in the recovery mechanism.

To
summarize, the procedure applicable both to Isveimer and to Sga states that the Bank of Italy will grant extraordinary advances at a special low rate of interest (1%) to cover the
losses of the subsidiaries concerned. Such advances must be invested in Government securities, so that the differential between the interest income on the securities purchased and the interest expense
on the advances received can directly reduce the "loans to be restored" and the related interest accrued, based on the "minimum interest rate offered on the principal refinancing transactions".

From
an accounting point of view, the advances received from the Bank of Italy and the Government securities purchased are shown under the memorandum accounts, while the financial flows
deriving from collection of coupons on such securities and from the payment of interest on the advances are, respectively, debited and credited directly to the "loans to be restored", thus allowing
them to be gradually reduced. This accounting treatment has been authorized by the Bank of Italy as it places emphasis on the substance of the situation rather than the form, in accordance with Decree
Law 87 of January 27, 1992.

F-84

---

On
December 27, 2002, the Bank of Italy granted Banco di Napoli four new advances to replace that expiring in December, for a total of €12,288 million, all
to expire by the end of 2003.

As
of December 31, 2002, there are no accrued expenses maturing at year end.

A
summary of the circumstances relating to the investments in Isveimer S.p.A. and in Società per la gestione di attività S.p.A. is provided below.

The liquidation of Isveimer

Isveimer S.p.A., a subsidiary of Banco di Napoli which financed industrial development in Southern Italy, was put in voluntary liquidation in 1996.

In
1997, Banco di Napoli intervened to reduce the final liquidation deficit estimated to be €917 million. The cost of this intervention and the related interest
were recovered in accordance with Law 588/96, as mentioned above, and the methods described in the aforementioned Treasury Decree of 1974.

In
fact, on the expiry of the advances granted by the Bank of Italy, the recovery process showed a balance in favor of the Central Bank of €58 million, lodged as a
non interest-bearing deposit with the same Central Bank. This deposit is shown under "other assets" offset by "other liabilities".

Società per la Gestione di Attività (Sga)

Società per la Gestione di Attività S.p.A. (Sga) was created in 1996 by transforming an existing subsidiary of Banco di Napoli for
the purpose of taking over most of the bank's doubtful loans, as an onerous title and without recourse. Although Banco di Napoli owns the entire capital of the company, it does not exercise control
having transferred the shares and the voting rights to the Treasury by way of a pledge.

The
transfer of doubtful loans to Sga began on January, 1 1997; at the same time, Banco di Napoli granted its subsidiary various interest-bearing lines of credit, essentially to finance
the cost of the factoring agreement, as well as to cover the company's running costs. At the end of 2000, Banco di Napoli reached a settlement with Sga resolving a number of differences of
interpretation and substance that had arisen between the parties; the cost of this settlement, €125 million, was deducted from the loans. As of 31 December 2002, loans to
Sga totaled €1,285 million (€2,069 million as of December 31, 2001), of which €1,252 million granted for the measures
provided by law 588/96 (a reduction of €789 million on December 31, 2001) and €33 million disbursed for the regular management of the company. The
reduction in respect of the previous year is largely connected to the financial intervention in May 2002 to cover losses for €246 million registered by the subsidiary in
the second half of 2001 and to that in October 2002 to cover the €285 million loss recorded in the first half of 2002. As with similar interventions, the amounts in
question were deducted from loans granted to the subsidiary, included among customer loans and increasing loans to be restored, recorded to other assets, in accordance with Law 588/96.

The
following tables show details of the aforementioned restoration procedure for 2002, with comparative figures for 2001.

F-85

---

Advances received and securities purchased ex Law 588/96(*)

|                                                                              |                                                                     | 12/31/02 |        | 12/31/01
|----------------------------------------------------------------------------- | ------------------------------------------------------------------- | -------- | ------ | --------
|
|Advances received from the Bank of Italy ex Law 588/96                        |                                                                     | 12,288   |        | 15,402  
|Securities lodged in guarantee for advances ex Law 588/96 (nominal value)(**) |                                                                     | 10,841   |        | 13,919  
|                                                                              | securities purchased with advances received from the Bank of Italy |          | 10,431 |         
|                                                                              | securities of Banco di Napoli                                      |          | 410    |         

---

Changes in the loans to be restored ex Law 588/96(*)

|      |  |                 |  |                                                                                          |  | 12/31/02 |   | 12/31/01 |  
|----- |  | --------------- |  | ---------------------------------------------------------------------------------------- |  | -------- | - | -------- | -
|
|a.    |  | Opening balance |  | 840                                                                                      |  | 1,376    |  
|b.    |  | Changes         |  |                                                                                          |  |          |  
|      |  | 1.              |  | Coverage of SGA's losses(**)                                                             |  | 531      |   | 507      |  
|      |  | 2.              |  | Interest income on the securities purchased with the funds advanced by the Bank of Italy |  | (953     | ) | (1,226   | )
|      |  | 3.              |  | Interest expense on advances from the Bank of Italy                                      |  | 142      |   | 169      |  
|      |  | 4.              |  | Interest accrued on the "Loans to be restored" account                                   |  | 20       |   | 46       |  
|      |  | 5.              |  | Other changes(***)                                                                       |  |         |   | (32      | )
|      |  |                 |  |                                                                                          |  |          |   |          |  
|Total |  | 580             |  | 840                                                                                      | 
|      |  |                 |  |                                                                                          |  |          |   |          |  

---

F-86

---

Financial flows maturing on the advances received from the Bank of Italy and on securities put up as guarantee ex Law 588/96(*)

12/31/02

12/31/01(€/mil)Interest accrued on advances(**)



(2
)Coupons falling due on securities purchased with advances received from the Bank of Italy

127

220Total

127

218


---

Accrued income and prepaid expenses (caption 160)

Analysis of caption 160 "Accrued income and prepaid expenses" (Table 5.2 B.I.)

12/31/02

12/31/01(€/mil)Accrued incomeincome from derivative contracts

843

744interest from loans to customers

597

627interest on securities

346

321bank interest

125

87other

152

92Prepaid expensescommission on placement of securities and mortgage loans

276

169charges on derivative contracts

33

45discounts on bond issues

236

31other

244

75Total

2,852

2,191


Other information

Distribution of subordinated assets (Table 5.4 B.I.)

12/31/02

12/31/01(€/mil)(a) Due from banks

55

40(b) Loans to customers

68

9(c) Bonds and other debt securities

189

194Total

312

243


F-87

---

Subordinated
loans to banks and to customers refer mainly to Group companies. Subordinated bonds and other debt securities refer mainly to issues by prime banking institutions.

(17)    PAYABLES

Detail of the total balance for the Group is provided below:

12/31/02

12/31/01(€/mil)Due to banks (caption 10)

24,456

27,922Due to customers (caption 20)

85,280

65,845Securities issued (caption 30)

51,561

40,839Public funds administered (caption 40)

208

100Total

161,505

134,706


Due to banks (caption 10)

Deposits taken from banks are analyzed as follows:

12/31/02

12/31/01(€/mil)Due to central banksrepurchase agreements and securities borrowed

842

1,275other deposits from the Italian Exchange Office

28

127other deposits from central banks

905

1,149Due to banksdeposits

9,603

14,105repurchase agreements and securities borrowed

2,802

4,061medium and long-term loans from international bodies

5,881

4,621current accounts

943

1,227other

3,452

1,357Total

24,456

27,922


Details of "Due to banks" (Table 6.1 B.I.)

12/31/02

12/31/01(€/mil)(a) Repurchase agreements

3,534

5,221(b) Securities borrowed

110

115


Loans
from international bodies include loans used by the Group to finance investment projects in industrial sectors and in public utility services.

F-88

---

Due to customers and securities issued (captions 20 and 30)

Funds obtained from customers, comprising deposits from customers and securities issued, are detailed below:

12/31/02

12/31/01(€/mil)Due to customerscurrent accounts

52,197

40,330repurchase agreements and securities borrowed

12,917

9,133savings deposits

18,116

13,394short-term payables relating to special management services carried out for the government

313

663other(*)

1,737

2,325Securities issuedbonds

39,447

27,695certificates of deposit

7,310

8,346bankers' drafts

648

651other securities

4,156

4,147Total

136,841

106,684


---

Details of "Due to customers" (Table 6.2 B.I.)

12/31/02

12/31/01(€/mil)(a) Repurchase agreements

12,779

9,009(b) Securities borrowed

138

124


There
have been no issues of bonds convertible into shares of the Bank or other companies, or similar securities or bonus shares.

Public funds administered (caption 40)

Public funds administered, provided by the State and other public agencies, are analyzed below:

12/31/02

12/31/01(€/mil)Funds provided by the State

151

42Funds provided by regional public agencies

19

19Other funds

38

39Total

208

100of which:funds with risk borne by the government under Law 19 of 2/6/87

59

12


Other information relating to payables

Information regarding the distribution of deposits by geographical area, type of currency and degree of liquidity is reported in note (22).

F-89

---

(18)    PROVISIONS

The Group provisions are detailed below:

12/31/02

12/31/01(€/mil)Provisions for employee termination indemnities (caption 70)

961

734Provision for risk and charges (caption 80)pensions and similar commitments (caption 80a)

343

43taxation (caption 80b)

670

901other (caption 80c)

1,768

1,527Reserve for possible loan losses (caption 90)

71

41Total

3,813

3,246


Provisions for employee termination indemnities (caption 70)

The following table shows changes in the reserve for termination indemnities during 2002.

(€/mil)Opening balanceJanuary 1, 2002

734Increasesprovisions

104employment contract acquisition

1other changes

222Decreasesadvances allowed under Law 297/82

19indemnities to employees leaving the Group

67transfers

1other changes

13Closing balanceDecember 31, 2002

961


The
increases in other changes refer mainly to the contribution of the former Cardine Group (€221 million as of December 31, 2001).

The
following table shows changes in the reserve for termination indemnities during 2001.

(€/mil)Opening balanceJanuary 1, 2001

743Increasesprovisions

73employment contract acquisition

other changes

Decreasesadvances allowed under Law 297/82

7indemnities to employees leaving the Group

64transfers

other changes(*)

11Closing balanceDecember 31, 2001

734


---

F-90

---

Provisions for risks and charges (caption 80)

Pensions and similar commitments (caption 80.a)

The following table shows changes in the reserve for pensions and similar commitments during 2002.

(€/mil)Opening balanceJanuary 1, 2002

43Increasesprovisions

24other

305Decreasesutilisations

27other

2Closing balanceDecember 31, 2002

343


As
of December 31, 2002, this reserve is made up of €41 million from the Parent Bank to cover charges in relation to the integration of the pension paid to
former IMI S.p.A. staff (€43 million as of December 31, 2001) and of €302 million from companies of the former Cardine Group
(€300 million as of December 31, 2001 shown under "Increasesother").

The
following table shows changes in the reserve for pensions and similar commitments during 2001

(€/mil)Opening balanceJanuary 1, 2001

1,128Increasesprovisions(1)

29other(2)

5Decreasesutilisations

47other(3)

1,072Closing balanceDecember 31, 2001

43


---

As
of December 31, 2001, this provision refers entirely to funds provided by the Parent Bank to cover supplementary pension liabilities for former IMI S.p.A. personnel already in
retirement. The adequacy of the technical reserves of the fund, which can be considered an "internal" pension fund, is

F-91

---

calculated
annually based on the valuations of an independent professional actuary. After the provision of €3 million charged to the year by the Parent Bank, the technical
reserves seem adequate to cover the estimated commitments.

Taxation (caption 80.b)

The following table shows changes in the reserve for taxation during 2002.

Changes in the reserve for taxation during the year 2002

Current tax
liabilities

Deferred tax
liabilities

Total(€/mil)Opening balanceJanuary 1, 2002

630

271

901Increasesprovisions for current income taxes

897

143

1,040other changes

337

44

381Decreasespayment of income taxes

1,274

136

1,410other changes

56

186

242Closing balanceDecember 31, 2002

534

136

670


The
taxation reserve is to cover current income taxes and actual and potential fiscal disputes (€534 million), including local taxes payable by foreign branches,
as well as deferred taxes (€136 million).

As
regards fiscal disputes, it should be noted that the subsidiary Fideuram Vita is in dispute with the tax authorities regarding the years from 1985 to 1987. The years 1988, 1989 and
1990 have been settled thanks to the favorable verdict pronounced by the Regional Tax Commission regarding disputed items in those years. The verdict was deposited on July 27, 2000 and the tax
authorities did not appeal against it before the legal deadline.

Regarding
the years 1985, 1986 and 1987, the company obtained a favorable judgement in the first degree, but substantially unfavorable decisions in the subsequent two degrees. However,
Fideuram Vita has appealed to the Supreme Court, as it is still confident that the case can be won. If, on the other hand, the current adverse trend is confirmed, the potential liability for the
company would be minimal, but would however become significant (albeit covered by existing reserves) if subsequent open years (from 1997 onwards) were also contested for the same reason. Based on
expert opinions, and taking into account the positive evolution of the dispute and the fact that the case involves a practice that is universally applied by the whole of the insurance industry, the
subsidiary has not made any specific provision for this risk.

Furthermore,
in December 2002, the subsidiary Sanpaolo Life Ltd received notification of a dispute issued by the Tax Police in respect of a tax audit at the Banca Sanpaolo
Invest S.p.A.

With
respect to the Sanpaolo Life products promoted by Banca Sanpaolo Invest and by other SANPAOLOIMI Group distribution channels on behalf of the insurance broker with which Life has a
distribution agreement, the Tax Police claim that Sanpaolo Life is effectively a fixed business in Italy and therefore applicable to taxation on its products.

F-92

---

On
the basis of a detailed review performed with the assistance of Group tax experts and qualified external consultants, it has been confirmed that the business model is consistent with
the liberal system of supplying services in Italy and therefore the motives for the dispute claimed by the Tax Police are founded.

For
this purpose no accruals have been made to cover the potential liability arising from the notice, as they cannot be calculated with sufficient reliability since the tax authorities
have not yet made any appraisal of the situation.

Deferred
tax assets and liabilities recorded in the consolidated financial statements relate to timing differences between the accounting and fiscal value of assets and liabilities
accrued in 2001 and in prior years for which it is deemed likely that a tax liability will be incurred in the future (in the case of deferred tax liabilities) or which will most likely be recovered
(in the case of deferred tax assets). Deferred taxation has been calculated by each Group company and also on consolidation in respect of the tax effect of specific consolidation entries. The tax
effect relating to provisional differences of each Group subsidiary has been calculated applying different tax rates according to the respective country of residence.

The
following table shows changes in the reserve for taxation during 2001.

Changes in the reserve for taxation during the year 2001

Current tax
liabilities

Deferred tax
liabilities

Total(€/mil)Opening balanceJanuary 1, 2001

996

234

1,230Increasesprovisions for income taxes

345

93

438transfer from the reserve for deferred taxation

48



48other changes(*)

10

8

18Decreasespayment of income taxes

720



720transfer to current taxes



48

48other changes

49

16

65Closing balanceDecember 31, 2001

630

271

901


---

The
taxation reserve is to cover current income taxes and actual and potential fiscal disputes (€630 million), including local taxes payable by foreign branches,
as well as deferred taxes (€271 million).

F-93

---

The
following tables about deferred tax liabilities and deferred tax assets are available for the year 2002 and 2001.

Detail of deferred tax liabilities

12/31/02

12/31/01(€/mil)Deferred tax liabilities charged to the statement of income:

112

121on the earnings of subsidiary companies

13

7other

99

114Deferred tax liabilities charged to shareholders' equity:

24

150on Parent Bank reserves:

13

139Reserve for general banking risks



110Other reservesReserves ex Law 169/83

4

4Other reservesReserves ex Legislative Decree 213/98

9

25on reserves of other subsidiaries

11

11Total

136

271


Changes in deferred tax liabilities charged to the statement of income

The following table shows changes in deferred tax liabilities charged to the statement of income during 2002.

Changes in deferred tax liabilities (Bank of Italy instructions dated 08/03/99)

(€/mil)1. Opening balanceJanuary 1, 2002

1212. Increases2.1 Deferred tax liabilities arising during the year

1432.2 Other increases

443. Decreases3.1 Deferred tax liabilities reversing during the year

263.2 Other decreases

334. Closing balanceDecember 31, 2002(*)

249


---

Compensation between deferred tax liabilities and deferred tax assets during 2002

(€/mil)Deferred tax liabilities before compensation

249Compensation with deferred tax assets

137Deferred tax liabilities, net(*)

112


---

F-94

---

The
following table shows changes in deferred tax liabilities charged to the statement of income during 2001.

Changes in deferred tax liabilities (Bank of Italy instructions dated 08/03/99)

(€/mil)1. Opening balanceJanuary 1, 2001

812. Increases2.1 Deferred tax liabilities arising during the year

932.2 Other increases

73. Decreases3.1 Deferred tax liabilities reversing during the year

443.2 Other decreases

164. Closing balanceDecember 31, 2001

121


"Deferred
tax liabilities arising during the year" relate principally to:



Changes in deferred tax liabilities charged to shareholders' equity

The following table shows changes in deferred tax liabilities charged to shareholders' equity during 2002.

Changes in deferred tax liabilities (Bank of Italy instructions dated 08/03/99)

(€/mil)1. Opening balanceJanuary 1, 2002

1502. Increases2.1 Deferred tax liabilities arising during the year

2.2 Other increases

3. Decreases3.1 Deferred tax liabilities reversing during the year

1103.2 Other decreases

164. Closing balanceDecember 31, 2002

24


F-95

---

"Deferred
taxation liabilities reversing during the year" refer to the Parent Bank in respect of:



The
following table shows changes in deferred tax liabilities charged to shareholders' equity during 2001.

Changes in deferred tax liabilities (Bank of Italy instructions dated 08/03/99)

(€/mil)1. Opening balanceJanuary 1, 2001

1532. Increases2.1 Deferred tax liabilities arising during the year

2.2 Other increases

13. Decreases3.1 Deferred tax liabilities reversing during the year

43.2 Other decreases

4. Closing balanceDecember 31, 2001

150


"Deferred
tax liabilities reversing during the year" relate to the utilization by the Parent Bank of the reserve for deferred taxation on the reserve for general banking risks to cover
loan losses incurred during the year, but which are not immediately deductible for tax purposes.

Detail of deferred tax assets

12/31/02

12/31/01(€/mil)Deferred tax assets credited to the statement of income:

1,447

1,681adjustments to loans

401

436provisions for future charges

563

472adjustments to the value of securities, equity investments and property

163

551tax losses to be carried forward

100

191other

220

31Deferred tax assets with contra-entry in shareholders' equity

250

deferred tax asset generated by the merger with Banco di Napoli

250

Total

1,697

1,681


F-96

---

Changes in deferred tax assets credited to the statement of income

The following table shows changes in deferred tax assets credited to the statement of income during 2002.

Changes in deferred tax assets (Bank of Italy instructions dated 08/03/99)

(€/mil)1. Opening balanceJanuary 1, 2002

1,6812. Increases2.1 Deferred tax assets arising during the year

5032.2 Other increases

4583. Decreases3.1 Deferred tax assets reversing during the year

1,0053.2 Other decreases

534. Closing balanceDecember 31, 2002(*)

1,584


---

Compensation between deferred tax assets and deferred tax liabilities

(€/mil)Deferred tax assets before compensation

1,584Compensation with deferred tax liabilities

137Deferred tax assets, net(*)

1,447


---

"Other
increases" essentially includes:



"Other
decreases" refer mainly to the Parent Bank in respect of the tax charge for the year 2001 and to the adjustment to tax rates and deductible provisional differences applicable to SANPAOLO IMI
(reduction in the Corporate Income Tax rate introduced in the tax legislation).

F-97

---

The
following table shows changes in deferred tax assets credited to the statement of income during 2001.

Changes in deferred tax assets (Bank of Italy instructions dated 08/03/99)

(€/mil)1. Opening balanceJanuary 1, 2001

1,2702. Increases2.1 Deferred tax assets arising during the year

8432.2 Other increases

3. Decreases3.1 Deferred tax assets reversing during the year

4143.2 Other decreases(*)

184. Closing balanceDecember 31, 2001

1,681


---

Changes in deferred tax assets credited in net shareholders' equity

During 2002 tax benefits for €250 million were booked for the first time in respect of funds concerning the deferred tax asset generated by
the merger of Banco di Napoli into SANPAOLO IMI and in relation to the quota of goodwill on Banco di Napoli, credited in 2000 to offset pre-existing negative differences at first
consolidation.

Information pursuant to Consob Communication 1011405 dated February 15, 2001

Tax benefits under Decree. 153 dated 5/17/99 (Ciampi Law)

Law Decree 153 dated May 17, 1999known as the "Ciampi Law"introduced tax instruments in respect of restructuring
operations on banks and, among others, set a reduced tax rate for bank or banking group concentration transactions of 12.50% on profits destined to a special reserve to be composed of the maximum
amount, to be broken down on a straight-line basis over five years, at 1.2% of the difference between the receivables and payables of all the banks that took part in the transaction and
the aggregate of the major bank participating in the transaction.

Through
a statement dated December 11, 2001, the European Commission declared that the tax benefits under the "Ciampi Law" were incompatible with Community principles. In
arrangement with the Italian Government who, in February 2002, filed an appeal against the European Court of Justice, ABI (the Italian Bankers Association) and the banks concerned, including
SANPAOLO IMI, petitioned the High Court of Luxembourg to cancel the decision of the European Commission. The dispute is still pending and the parties involved are waiting for the Court to decide on
whether to suspend the petition of the banks, whilst awaiting the sentence on that brought by the Italian Government, or to declare that it is incompetent and allow the banks to proceed with their
petition before the Court of Justice, thus taking up the same arguments as those upheld by the Italian Government.

SANPAOLO
IMI and the banks merged with the Cardine Group have benefited from the provisions and other minor facilities of the "Ciampi Law" in respect of the years 1998, 1999 and 2000;
these benefits have been prudently accrued to the tax reserve. The law in question was suspended with

F-98

---

effect
from year 2001, through decree law 63 of April 15, 2002 (subsequently converted into Law 112 on June 15, 2002). In the meantime, commencing from the last financial
year, current income taxes and deferred taxes have been determined without taking into account the benefits in question.

Furthermore,
through decree law 282 of December 24, 2002 (subsequently modified and converted into Law 27 on February 21, 2003), the Government implemented
the decision of the Commission whereby it enforced the recovery of the relief granted and made available to the banks: this urgent measure provided for the payment, not later than December 31,
2002, of all amounts corresponding to the tax relief enjoyed by the "Ciampi Law".

On
December 31, 2002, the Parent Bank paid €200 million, which corresponds to the lower tax liabilities already paid in by the Bank and the merged banks and
includes interest at an annual rate of 5.5%, which is substantially in line with the full amount to be reimbursed, apart from some minor adjustments. Merely for precautionary measures, reservations in
respect of the petitions brought before the Court of First Instance of the European Community were expressed to the Treasury, being the recipient.

As
far as the effect on the financial statements is concerned, considering that the recovery of the tax relief has been applied in the presence of disputes brought against the European
Commission by the Italian Government and the banks concerned and that in any case the amount paid cannot be considered definitive, such amounts have been recorded to other assets and wholly offset by
accruals to the tax reserve. The amount paid has not affected the Parent Bank's statement of income other than the interest payable in 2002 (approximately €10 million).

Provisions for risks and chargesOther provisions (caption 80.c)

The following table shows changes in caption 80.c "Provisions for risks and chargesOther provisions" during 2002.

Analysis of caption 80.c "Provisions for risks and chargesOther provisions" (table 7.3 B.I.)

|                                  |                                                                                     | Guarantees and
commitments |    | Other risks and charges |     | Other personnel
charges |     | Total
|--------------------------------- | ----------------------------------------------------------------------------------- | -------------------------- | -- | ----------------------- | --- | ----------------------- | --- | -----
|
|Opening balanceJanuary 1, 2002   |                                                                                     | 63                         |    | 1,016                   |     | 448                     |     | 1,527
|                                  |                                                                                     |                            |    |                         |     |                         |     |      
|Increases                         |                                                                                     |                            |    |                         |     |                         |     |      
|                                  | provisions                                                                         |                            | 86 |                         | 265 |                         | 54  |      
|                                  | reclassification                                                                   |                            |   |                         |    |                         | 242 | (2)  
|                                  | other                                                                              |                            | 25 | (1)                     | 138 | (1)                     | 81  | (1)  
|                                  |                                                                                     |                            |    |                         |     |                         |     |      
|Decreases                         |                                                                                     |                            |    |                         |     |                         |     |      
|                                  | revaluation of guarantees                                                          |                            | 18 |                         |    |                         |    |      
|                                  | coverage of charges deriving from legal disputes and other                         |                            |   |                         | 33  |                         |    |      
|                                  | utilized to cover long-service bonuses to employees, other indemnities and surplus |                            |   |                         |    |                         | 248 |      
|                                  | reclassification                                                                   |                            |   |                         | 242 | (2)                     |    |      
|                                  | other                                                                              |                            | 12 |                         | 83  |                         | 14  |      
|                                  |                                                                                     |                            |    |                         |     |                         |     |      
|Closing balanceDecember 31, 2002 |                                                                                     | 144                        |    | 1,061                   |     | 563                     |     | 1,768
|                                  |                                                                                     |                            |    |                         |     |                         |     |      

---

F-99

---

Provisions
for "guarantees and commitments", for €144 million, cover expected losses in respect of guarantees and, more generally, the
contingencies associated with the Group's guarantees and commitments.

Provisions
for "other risks and charges" amounting to €1,061 million, include:



Provisions
for "other personnel costs", of €563 million, include:



F-100

---



The
following table shows changes in caption 80.c "Provisions for risks and chargesOther provisions" during 2001.

Analysis of caption 80.c "Provisions for risks and chargesOther provisions" (table 7.3 B.I.)

|                                  |                                                             | Guarantees and
commitments |    | Other risks and charges |     | Other personnel
charges |     | Total
|--------------------------------- | ----------------------------------------------------------- | -------------------------- | -- | ----------------------- | --- | ----------------------- | --- | -----
|
|Opening balanceJanuary 1, 2001   |                                                             | 52                         |    | 1,118                   | (1) | 295                     | (1) | 1,465
|                                  |                                                             |                            |    |                         |     |                         |     |      
|Increases                         |                                                             |                            |    |                         |     |                         |     |      
|                                  | provisions                                                 |                            | 14 |                         | 113 |                         | 215 | (2)  
|                                  | other                                                      |                            |   |                         | 10  |                         | 23  | (3)  
|Decreases                         |                                                             |                            |    |                         |     |                         |     |      
|                                  | revaluation of guarantees                                  |                            | 2  |                         |    |                         |    |      
|                                  | coverage of charges deriving from legal disputes and other |                            |   |                         | 59  |                         | 4   |      
|                                  | used to cover long-service bonuses and other payments      |                            |   |                         |    |                         | 32  |      
|                                  | other                                                      |                            | 1  |                         | 166 |                         | 49  | (4)  
|                                  |                                                             |                            |    |                         |     |                         |     |      
|Closing balanceDecember 31, 2001 |                                                             | 63                         |    | 1,016                   |     | 448                     |     | 1,527
|                                  |                                                             |                            |    |                         |     |                         |     |      

---

Provisions
for guarantees and commitments, €63 million, cover expected losses in respect of guarantees and, more generally, the contingencies associated with the
Group's guarantees and commitments.

F-101

---

Other
provisions for risks and charges amounting to €1,016 million include:



The
provision for other personnel charges, €448 million, includes:



F-102

---



Information as per Consob Communication 1011405 of February 15, 2001.

Low-interest mortgage loans

Law 133/99, implemented with Ministerial Decree 110/2000 (against which an appeal was presented before the administrative court), forces banks to
review the interest rates applied to mortgages issued with charges to be borne in full or partially by the public sector, upon receipt of a request to such effect by borrowers or by the body issuing
the borrowing facilities.

As
no "threshold rate" is set for low-interest mortgages, subsection 62 of art. 145 of Law 388 dated December 23, 2000 (Budget Law 2001)
clarifies that the renegotiation rate is to be considered as "the average global rate for building mortgage loans being amortized", assigning the individuation of the transactions within which to
carry out the observations to determine the renegotiation rate to a subsequent regulation. To this end, with the Decree dated April 4, 2001, the Treasury set up the new consistent category of
low-interest loans being amortized and the Bank of Italy issued the correlated methodological notes for the observation of average rates for the sector concerned to the whole system.

The
observation activity was concluded some time ago, but the regulation has still to be completed with the issue of a Ministerial Decree to establish the renegotiation rate.
Subsection 2-sexies of article 3 of Law 265 dated November 22, 2002 (converted from Law Decree 209 dated September 24, 2002) has established
March 31, 2003 as the date by which such provision must be adopted, in application of that stated in subsection 62 of article 145 of Law 388/2000.

While
the Bank reserves the right to evaluate whether or not to continue the appeals, which were disregarded in the first degree by the Lazio Regional Administration Court, through
Ministerial Decree 110/2000, the potential charge deriving from the renegotiation has been determined on the basis of prudent criteria, at €189 million
(€162 million refer to the Parent Bank), of which €149 million refer to the period July 1, 1999 to December 31, 2001
(€127 million for the Parent Bank) and €40 million refer to the year 2002 (€35 million for the Parent Bank) and is covered
sufficiently by specific accruals to provisions for other risks and charges. In the years following 2002, the negative impacts on the statement of income will be gradually reduced because of the
expiry of current mortgage loans.

Low-interest agricultural mortgage loans

The provisions of art. 128 of Law 388/2000 (Budget Law 2001) have introduced the faculty for borrowers to renegotiate the loan installments
still to expire at current, more favorable rates fixed for low-interest transactions. Renegotiation is subject to an implementation Ministerial Decree which has still not been issued, but
which must be adopted, even in this case, by March 31, 2003, as per the aforementioned provision introduced by aforementioned subsection 2-sexies of art. 3 of
Law 265 dated November 22, 2002 (converted from Law Decree 209 dated September 24, 2002). Considering the precise reference to the "loan installments still to expire"
contained in Law 388/2000 and the consequent possibility to activate renegotiation exclusively for the future, no provisions have been made.

Fixed-rate unsubsidized mortgage loans (usury)

In compliance with the provisions of Law 24/2001, (converted from Decree Law 394/2000, containing the authentic interpretation of
Law 108/1996) and with the subsequent Constitutional Court Sentence 29 dated 02/25/2002, SANPAOLO IMI concluded adjusting all mortgages covered by these provisions to the "replacement" rate of
9.96%. An interest rate of 8% was applied instead for those borrowers who presented self-certification declaring their right to such reduction (the original capital of

F-103

---

the
loan not being more than 150 million Italian Lira, granted to first-time buyers of non-luxury homes).

The
provisions for other risks and charges still include a residual accrual of €5 million (wholly referring to the Parent Bank) to cover further requests to reduce
interest rates to 8% not yet received or not yet documented by borrowers possessing the legal requirements to benefit from such rates.

Anatocism (interest on interest)

In March 1999, the Supreme Court declared quarterly capitalization of interest payable to be illegitimate, thereby completely changing the previous law.
This decision was based on the assumption that the relevant clauses in bank contracts do not integrate "regulatory" use as believed in the past, but rather "trading", which is not suitable for
conforming to the prohibition of anatocism in compliance with art. 1283 of the Italian Civil Code.

After
the reversal by the Supreme Court, Decree Law 342/99 was enacted, confirming the legality of capitalization of interest in current account contracts if it is applied over
the same period as that for calculating interest payable and receivable: the Credit and Savings Interdepartmental Committee was assigned to determine the methods of such calculation and from
April 22, 2000, the date on which the Committee's instructions became effective, all current accounts were adjusted applying quarterly capitalization to interest receivable and payable.

Therefore,
since April 2000, capitalization of half-yearly interest is considered legitimate and the dispute on this matter refers only to those contracts signed
before that date: it should be noted that, despite the fact that the Supreme court has repeatedly confirmed the invalidity of the capitalization clauses, many judges of merit have distanced themselves
from the sentence, continuing to consider it legitimate, thus the jurisprudence is still being debated.

As
of December 31, 2002, the trend in the dispute shows a slight increase and is subject to careful monitoring: the numeric increase on the previous year is mainly because of the
integration of the former Banco di Napoli and the problems relating to disputes following the merger with SANPAOLO IMI. The risks relating to the disputes in question correspond to the prudent
accruals made to the Provisions for Other Risks and Charges which are proportionate to the total of each legal request. Where the introductory measures do not quantify the demand and until an
accounting opinion has been expressed on the issue, the risk involved is covered by an accrual of €35 million destined to hedge disputes of an undetermined amount and of an
uncertain outcome.

F-104

---



Reserve for possible loan losses (caption 90)

This caption reflects provisions made by certain subsidiaries to cover lending risksincluding risks deriving from derivatives transactions; these
risks are only potential, therefore the reserve is not set off against asset balances.

Changes
in the reserve for possible loan losses during 2002 and 2001 are analyzed below:

Changes during the year in "Reserve for possible loan losses" (table 7.2 B.I.)

(€/mil)A. Opening balanceJanuary 1, 2002

41B. IncreasesB1. provisions

27B2. other changes

43C. DecreasesC1. utilization

37C2. other changes

3D. Closing balanceDecember 31, 2002

71


Changes during the year in "Reserve for possible loan losses" (table 7.2 B.I.)

(€/mil)A. Opening balanceJanuary 1,2001

35B. IncreasesB1. provisions

11B2. other changes

C. DecreasesC1. utilization

3C2. other changes

2D. Closing balanceDecember 31, 2001

41


F-105

---

(19)    CAPITAL, EQUITY RESERVES, RESERVE FOR GENERAL BANKING RISKS AND SUBORDINATED LIABILITIES

This section comments on the following balance sheet captions:

12/31/02

12/31/01(€/mil)Shareholders' equitycapital (caption 150)

5,144

3,932additional paid-in capital (caption 160)

708

22reserves (caption 170)legal reserve

1,029

793reserve for own shares

31

304other reserves

2,610

1,739revaluation reserves (caption 180)

18

9reserve for general banking risks (100)

14

356negative goodwill arising on consolidation (caption 120)



negative goodwill arising on application of the equity method (130)

94

118Total Group capital and reserves

9,648

7,273net income (caption 200)

889

1,203Total Group shareholders' equity

10,537

8,476Own shares (asset caption 140)

31

304including: own shares held by the Parent Bank(*)



294Minority interests (caption 140)

334

698Subordinated liabilities (caption 110)

6,613

5,607


---

Group shareholders' equity

Capital and equity reserves (liability captions 150, 160, 170 and 180)

The capital, additional paid-in capital and the legal reserve coincide with the corresponding captions of the shareholders' equity of the Parent Bank.
"Other reserves" includes the Parent Bank's remaining reserves and changes at Group level in the equity of the companies included in the consolidation. In particular, the Parent Bank net equity
entries are coherent with the board resolutions made within the scope of the approval of the financial statements, at the extraordinary meeting for the increase in Legal reserve and at the ordinary
meeting for the allocation of merger goodwill generated by the merger of Cardine Banca.

As
of December 31, 2002, "Share capital" amounts to €5,144,064,800 (€3,932,435,119.2 as of December 31, 2001) and is composed of
1,448,831,982 ordinary shares (€1,404,441,114 as of December 31, 2001) and 388,334,018 preference shares both with a nominal value of €2.8 each.

In
fact, the merger of Cardine Banca with SANPAOLO IMI, stipulated on May 24, 2002 and with legal effect as of June 1, 2002, involved the exchange of 267,821,000 shares in
Cardine Banca against 480,738,695 shares in SANPAOLO IMI. The exchange was made by:



F-106

---



As
a result of the merger, Compagnia di Sanpaolo, Fondazione di Padova e Rovigo and Fondazione di Bologna availed themselves of the right, in accordance with Law 461/98 and Decree
153/99, to request conversion of the ordinary shares held by them into preference shares, for the part in excess of 15% of the total ordinary share capital held. As a consequence 388,334,018 ordinary
shares were directly converted into preference shares at par.

The
"Reserve for own shares" has been set up by certain subsidiaries to cover the SANPAOLO IMI shares in portfolio and is offset against the balance sheet asset caption 140 "Own shares
or quotas".

The
"Revaluation reserves" are lodged with certain Group companies following the revaluation of investments made in application of special laws.

Reserve for general banking risks (liability caption 100)

After utilization in the year, as described in Note (28) the "Reserve for general banking risks" reflects the €14 million reserve
accrued by certain subsidiaries.

Positive goodwill arising on consolidation (asset caption 90)

The caption expresses line-by-line and proportional goodwill remaining after off-setting against negative goodwill on first
time consolidation and amortization..

Analysis of caption 90 "Positive goodwill arising on consolidation"

12/31/02

12/31/01(€/mil)Banco di Napoli

727

764Cardine Group

13

Banka Koper

72

Financiere Fideuram

18

69Banque Privee Fideuram Wargny

3

3SANPAOLO IMI Private Equity S.p.A.

9

SANPAOLO IMI Asset Management S.g.r.



1Finconsumo Banca



1Total

842

838


Goodwill
arising on consolidation of Banco di Napoli reflects the excess price paid with respect to its adjusted shareholders' equity, for the part not compensated by the
negative goodwill arising on consolidation. Given the nature of the investment, amortization will be calculated over 10 years (see note (4)).

F-107

---

Goodwill
arising on consolidation of Banco di Napoli, net of the portion offset in 2000 on first-time consolidation against pre-existing negative goodwill, saw
the following changes during 2002 and 2001:

Changes in goodwill arising on consolidation of Banco di Napoli

(€/mil)A. Goodwill arisen as of January 1, 2002

764B. Increases:

62Public Offer for saving shares

62Other purchases

C. Amortization

91of the residual goodwill arising on consolidation at the beginning of the year

85of increases for the year

6D. Other decreases

8other(*)

8E. Goodwill arising on consolidation as of December 31, 2002

727


---

(€/mil)A. Goodwill arisen as of January 1, 2001

812B. Increases:

38residual takeover bid for ordinary shares(*)

37Other purchases

1C. Amortization

86of the residual goodwill arising on consolidation at the beginning of the year

82of increases for the year

4D. Goodwill arising on consolidation as of December 31, 2001

764


---

The
first time consolidation of the former Cardine Group shareholdings revealed positive and negative goodwill differences on line-by-line
consolidation and on net equity for, respectively, €314 million and €299 million. The positive differences have been allocated as follows:



The
goodwill arising on consolidation of Banka Koper reflects the higher price paid for the purchase of 62.10% of the company compared with the adjusted net equity of the same and is
shown net of amortization in the statement of income for 2002 (€8 million).

F-108

---

The
adjustment to the positive consolidation differences of the French group Fideuram Wargny reflects, besides the ordinary amortization attributable to 2002, a writedown of
€44 million made to take account of the downward trend in financial markets and of a more prudent evaluation of the prospects of future profit for the subsidiaries.

Negative goodwill arising on application of the equity method and on consolidation (liability captions 120 and 130)

Liability captions 120 and 130 represent the negative differences arising on line-by-line consolidation and on application of the equity
method after off-setting them against positive differences on first time consolidation.

Details
of the aforementioned off setting operations between negative and positive differences on first time consolidation are shown in the table below.

12/31/02

12/31/01(€/mil)Negative goodwill arising on first-time consolidation:line-by-lineformer IMI Group

952

952former Cardine Group

241

using the equity methodformer IMI Group

75

75former Cardine Group

58

Total

1,326

1,027Goodwill arising on first-time consolidation:line-by-lineformer Banco di Napoli Group

-854

-854former Cardine Group

-296

using the equity methodCassa di Risparmio di Firenze

-173

-173former Cardine Group

-3

Total

-1,326

-1,027


The
balance of caption 130 "Negative goodwill arising on application of the equity method", for €94 million, represents the Group's interest in the increase in
shareholder's equity of investments valued using the equity method and recorded after first time consolidation. The amount refers mainly to companies operating in the insurance sector.

Positive goodwill arising on application of the equity method (asset caption 100)

This caption expresses positive differences in consolidation applying the equity method remaining after off-setting against negative goodwill on first
time consolidation and amortization.

Analysis of caption 100 "Positive goodwill arising on application of the equity method"

12/31/02

12/31/01(€/mil)Cassa di Risparmio di Firenze

55

63Cassa dei Risparmi di Forlì

108

121Eptaventure

1

Aeffe

24

31Total

188

215


F-109

---

Goodwill
arising from a line-by-line and proportional consolidation of companies (caption 90) and relating to Cassa di Risparmio di Firenze
and Cassa dei Risparmi di Forlì is amortized over 10 years, given the strategic nature of these investments. The goodwill in the companies Aeffe and Eptaventure, purchased under private equity, is amortized over five years.

Own shares (asset caption 140)

Treasury shares held in portfolio are represented by securities of the Parent Bank held by itself and by other Group companies.

Transactions
in treasury shares carried out by the Parent Bank in 2002 involved the individual portfolios in which these shares are classified according to their finalities.

As
regards the portfolio valued at cost, being related to shares considered as fixed and used to conclude strategic transactions, in 2002 SANPAOLO IMI purchased 33,652,015 shares
(nominal value €94 million) for a total cost of €404 million. The treasury shares after these acquisitions, totaling 50,732,418
(€142 million nominal value), were exchanged with the shareholders of the former Cardine Banca (48,013,809 shares) and with the shareholders of the former Banco di Napoli
(2,718,608 shares) within the scope of the respective merger operations; as of December 31, 2002 there remains one treasury share with a nominal value of €2.8 and a book value
of €7.4. As of December 31, 2001, SANPAOLO IMI S.p.A. had 17,080,403 treasury shares in portfolio (total par value of €48 million) carried at a cost of
€294 million (€17.2 per share with respect to an average price in the second half of 2001 of €12.55).

With
reference to the portfolio valued at fair value and held for share incentive or stock option plans, in 2002 the Bank implemented a share incentive plan in favor of employees, which
assigned to those entitled and who applied, a number of treasury shares in relation to the bonus due to each employee. On the basis of applications received, in June the Bank purchased 1,926,023
shares (nominal value €5.4 million) for a cost of €19.3 million and assigned to employees 1,912,373 shares (nominal value
€5.4 million) for a cost of €18.6 million. The remaining 13,650 shares, for a book value of approximately €137,000, were sold on the
market at the beginning of July for approximately €135,000.

As
of December 31, 2002, subsidiaries held 4,940,750 SANPAOLO IMI S.p.A. shares for negotiation purposes and were therefore carried at a fair value of
€31 million. As of December 31, 2001 815,564 SANPAOLO IMI S.p.A. shares were held in the portfolio of Banca IMI for dealing purposes shown at their fair value of
€10 million.

Minority interests (liability caption 140)

As of December 31, 2002, the portion of "Minority interests" amounting to €334 million (€698 million as of
December 31, 2001) essentially relates to the quota attributable to minority shareholders in Banca Fideuram and Banca Popolare dell'Adriatico.

A
statement of changes in the consolidated shareholders' equity for the period is attached to these notes, together with a reconciliation of the Parent Bank's net income and
shareholders' equity and the corresponding consolidated amounts.

F-110

---

Subordinated liabilities (caption 110)

|Loan                                          |  | Amount in the Financial Statements as of 12/31/02 (€/mil) |  | Amount in Original currency (million) |  | Interest rate |      | Issue date |  | Maturity date |     | Amount in the financial statements as of 12/31/01
(€/mil)
|--------------------------------------------- |  | --------------------------------------------------------- |  | ------------------------------------- |  | ------------- | ---- | ---------- |  | ------------- | --- | ---------------------------------------------------------
|Preferred Securities in Euro                  |  | 1,000                                                     |  | 1,000                                 |  | 8.126         | %(a) | 11/10//00  |  |               | (b) | 1,000                                                    
|                                              |  |                                                           |  |                                       |  |               |      |            |  |               |     |                                                          
|Total innovative capital instruments (tier 1) |  | 1,000                                                     |  |                                       |  |               |      |            |  |               |     | 1,000                                                    
|                                              |  |                                                           |  |                                       |  |               |      |            |  |               |     |                                                          
|Notes in US dollars                           |  | 158                                                       |  | 165                                   |  | floating      |      | 7/12/93    |  | 7/30/03       |     | 188                                                      
|Notes in US dollars                           |  | 85                                                        |  | 89                                    |  | floating      |      | 9/24/93    |  | 9/24/03       |     | 101                                                      
|Notes in US dollars                           |  | 90                                                        |  | 94                                    |  | floating      |      | 11/30/93   |  | 11/30/05      |     | 107                                                      
|Notes in Canadian dollars                     |  | 91                                                        |  | 151                                   |  | floating      |      | 11/10/93   |  | 11/10/03      |     | 107                                                      
|Notes in Euro                                 |  | 356                                                       |  | 362                                   |  | floating      |      | 6/30/94    |  | 6/30/04       |     | 356                                                      
|Notes in Euro                                 |  |                                                          |  |                                      |  | floating      |      | 12/30/96   |  | 1/20/02       |     | 27                                                       
|Subordinated loan in Italian lire             |  | 13                                                        |  | 25,000                                |  | 5.10          | %    | 6/1/98     |  | 6/1/03        |     | 26                                                       
|Subordinated loan in Italian lire             |  | 31                                                        |  | 60,000                                |  | 5.30          | %    | 1/1/98     |  | 1/1/03        |     | 62                                                       
|Subordinated loan in Italian lire             |  | 29                                                        |  | 56,000                                |  | floating      |      | 2/1/98     |  | 2/1/03        |     | 57                                                       
|Subordinated loan in Euro                     |  | 500                                                       |  | 500                                   |  | 6.38          | %    | 4/6/00     |  | 4/6/10        |     | 500                                                      
|Subordinated loan in Euro                     |  | 350                                                       |  | 350                                   |  | floating      |      | 4/6/00     |  | 4/6/10        |     | 350                                                      
|Subordinated loan in Euro                     |  | 997                                                       |  | 1,000                                 |  | floating      |      | 9/27/00    |  | 9/27/10       |     | 1,000                                                    
|Subordinated loan in Euro                     |  | 300                                                       |  | 300                                   |  | 5.55          | %    | 7/31/01    |  | 7/31/08       |     | 300                                                      
|Subordinated loan in Euro                     |  | 191                                                       |  | 200                                   |  | 5.16          | %    | 10/2/01    |  | 10/2/08       |     | 200                                                      
|Subordinated loan in Euro                     |  | 499                                                       |  | 500                                   |  | floating      |      | 6/28/02    |  | 6/28/12       |     |                                                         
|Subordinated loan in Euro                     |  | 53                                                        |  | 54                                    |  | 4.90          | %(c) | 7/15/02    |  | 7/15/12       |     |                                                         
|Subordinated loan in Euro                     |  | 147                                                       |  | 147                                   |  | 4.32          | %(d) | 12/4/02    |  | 12/4/12       |     |                                                         
|Subordinated loan in Euro                     |  | 297                                                       |  | 300                                   |  | 5.38          | %    | 12/13/02   |  | 12/13/12      |     |                                                         
|Subordinated loan in US dollars               |  | 95                                                        |  | 100                                   |  | floating      |      | 9/15/93    |  | 9/15/03       |     | 113                                                      
|Notes in Euro                                 |  | 148                                                       |  | 150                                   |  | 5.75          | %    | 9/15/99    |  | 9/15/09       |     | 146                                                      
|Notes in Italian lire                         |  | 12                                                        |  | 25,635                                |  | floating      |      | 10/15/93   |  | 10/15/03      |     | 25                                                       
|Notes in Italian lire                         |  | 6                                                         |  | 12,650                                |  | floating      |      | 6/15/93    |  | 6/15/03       |     | 17                                                       
|Subordinated loan in Italian lire             |  | 209                                                       |  | 404,115                               |  | floating      |      | 6/30/97    |  | 8/1/04        |     |                                                         
|Subordinated loan in Euro                     |  | 199                                                       |  | 200                                   |  | floating      |      | 10/1/99    |  | 10/1/09       |     | 200                                                      
|Subordinated loan in Euro                     |  | 150                                                       |  | 150                                   |  | floating      |      | 10/12/99   |  | 10/12/09      |     | 106                                                      
|Subordinated loan in Euro                     |  | 8                                                         |  | 8                                     |  | floating      |      | 12/22/00   |  | 12/22/10      |     | 8                                                        
|Subordinated loan in Euro                     |  | 9                                                         |  | 12                                    |  | 1.00          | %    | 4/27/01    |  | 4/27/06       |     |                                                         
|Subordinated loan in Euro                     |  | 1                                                         |  | 1                                     |  | floating      |      | 9/20/01    |  | 9/20/06       |     | 1                                                        
|Total subordinated liabilities (Tier 2)       |  | 5,024                                                     |  |                                       |  |               |      |            |  |               |     | 3,997                                                    
|                                              |  |                                                           |  |                                       |  |               |      |            |  |               |     |                                                          
|Subordinated loan in Euro                     |  | 440                                                       |  | 466                                   |  | 5.55          | %    | 10/3/00    |  | 4/3/03        |     | 460                                                      
|Subordinated loan in Euro                     |  | 149                                                       |  | 150                                   |  | floating      |      | 11/6/00    |  | 5/6/03        |     | 150                                                      
|                                              |  |                                                           |  |                                       |  |               |      |            |  |               |     |                                                          
|Total subordinated liabilities (Tier 3)       |  | 589                                                       |  |                                       |  |               |      |            |  |               |     | 610                                                      
|                                              |  |                                                           |  |                                       |  |               |      |            |  |               |     |                                                          
|Total                                         |  | 6,613                                                     |  |                                       |  |               |      |            |  |               |     | 5,607                                                    
|                                              |  |                                                           |  |                                       |  |               |      |            |  |               |     |                                                          

---

F-111

---

During
the year, the Parent Bank issued new subordinated loans for €1,001 million in the form of Tier 2 subordinated loans to support the Group's
investment initiative.

It
should be noted that subordinated liabilities not included in the calculation of regulatory capital amount to €676 million (€432 million
as of December 31, 2001), excluding Tier 3 subordinated loans.

Preferred Securities, which are attributable to Tier 1 capital, satisfy the following requirements:



Contractually,
subordinated loans included in Tier 2 may not be redeemed prior to maturity, nor converted into capital or any other type of liability. In particular, such contracts lay
down that:



The
Tier 3 subordinated loans, issued to cover market risk, meet the following conditions:



Other information on subordinated liabilities

See Note 22 for information regarding the distribution of subordinated liabilities by geographical area, type of currency and degree of liquidity.

F-112

---

Shareholders' equity for supervisory purposes

In compliance with the instructions issued by the Bank of Italy in respect of transparent disclosure, the composition of regulatory capital and an analysis of the
prudent supervisory requirements are given in
the table below. The final estimates will be submitted to the Bank of Italy following approval of these financial statements:

Category/value

12/31/02

12/31/01(€/mil)A. Shareholders' equity for supervisory purposesA.1 Tier 1 capital

9,765

7,656A.2 Tier 2 capital

4,406

3,552A.3 Items to be deducted

(470
)
(1,740
)A.4 Regulatory capital

13,701

9,468B. Minimum regulatory requirementsB.1 Credit risk

9,886

7,771B.2 Market risk

767

642including:risks on dealing portfolio

756

595exchange risks

11

47B.2.1 Tier 3 subordinated loans

589

610B.3 Other minimum requirements

44

43B.4 Total minimum requirements

10,697

8,456C. Risk assets and capital adequacy-ratiosC.1 Risk-weighted assets(*)

133,713

105,700C.2 Tier 1 capital/risk weighted assets

7.3
%
7.2
%C.3 Regulatory capital/risk weighted assets(**)

10.7
%
9.5
%


---

(20)    OTHER LIABILITIES

Liability captions 50 and 60 comprise the following:

12/31/02

12/31/01(€/mil)Other liabilities (caption 50)

18,807

15,590Accrued expenses and deferred income (caption 60)

2,164

2,162Total

20,971

17,752


F-113

---

Other liabilities (caption 50)

Analysis of caption 50 "Other liabilities" (Table 9.1 B.I.)

12/31/02

12/31/01(€/mil)Valuation of interest rate and equity index derivatives

5,941

3,846Unsettled transactions

2,685

2,266Counterparty of valuations of foreign currency derivatives contracts

1,168

1,874Amounts available for third parties

1,878

1,755Tax payments accounts

587

1,019Amounts in transit with branches and subsidiaries

2,373

803Other items derivative contracts

700

700Non-liquid balances from portfolio transactions

606

374Due to tax authorities

375

274Premiums collected on options sold

385

259Amounts due to employees

237

170Deposits guaranteeing agricultural and construction loans

36

33Items relating to securities transactions

2

31Transactions by foreign branches

15

17Amounts payable due to settlement value date

12

9Other

1,807

2,160Total

18,807

15,590


Accrued expenses and deferred income (caption 60)

Analysis of caption 60 "Accrued expenses and deferred income" (Table 9.2 B.I.)

12/31/02

12/31/01(€/mil)Accrued expensesinterest on securities issued

734

693charges on derivative contracts

600

681interest on amounts due to banks

116

162payroll and other operating costs

35

124interest on amounts due to customers

104

102other

33

49Deferred incomeincome from derivative contracts

132

139interest on discounted notes

51

47other

359

165Total

2,164

2,162


F-114

---

(21)    GUARANTEES AND COMMITMENTS

Captions 10 and 20 of the consolidated balance sheet, related to guarantees issued and commitments undertaken by the Group, which involve the acceptance of
lending risk, comprise the following:

12/31/02

12/31/01(€/mil)Guarantees given (caption 10)

20,483

16,016Commitments (caption 20)

27,574

24,839Total

48,057

40,855


Guarantees
granted to third parties comprise:

Analysis of caption 10 "Guarantees given (Table 10.1 B.I.)

12/31/02

12/31/01(€/mil)(a) Commercial guarantees

13,396

9,907(b) Financial guarantees

6,999

5,984(c) Assets lodged in guarantee

88

125Total

20,483

16,016


Commitments
outstanding at year-end are as follows:

Analysis of caption 20 "Commitments" (Table 10.2 B.I.)

12/31/02

12/31/01(€/mil)(a) Commitments to grant finance (certain to be called on)

7,753

8,794(b) Commitments to grant finance (not certain to be called on)

19,821

16,045Total

27,574

24,839


The
commitments undertaken are detailed below:

12/31/02

12/31/01(€/mil)Purchase of securities not yet settled

4,175

3,631Commitments for derivatives on loans

984

844Other commitments certain to be called on

140

1,999Undrawn lines of credit granted

11,814

11,641Put options issued

1,350

682Mortgage loans and leasing contracts to be disbursed

6,422

3,631Deposits and loans to be made

1,577

1,826Membership of Interbank Deposit Guarantee Fund

142

107Other commitments not certain to be called on

970

478Total

27,574

24,839


F-115

---



Assets lodged to guarantee the Group's liabilities

(Table 10.3 B.I.)

12/31/02

12/31/01(€/mil)Portfolio securities lodged with third parties to guarantee repurchase agreements

7,318

7,781Securities lodged with the clearing-house for transactions on the derivatives market

23

30Securities lodged with central banks to guarantee advances

146

534Securities lodged with the Bank of Italy to guarantee bankers' drafts

123

143Other settled securities

545

666Total

8,155

9,154


Unused lines of credit

The unused lines of credit available to the SANPAOLO IMI Group, excluding operating limits, are as follows:

(Table 10.4 B.I.)

12/31/02

12/31/01(€/mil)a) Central banks

44

54b) Other banks

250

215Total

294

269


F-116

---

Forward transactions

Forward transactions as of December 31, 2002 and 2001, excluding dealing transactions on behalf of third parties, are detailed below:

(Table 10.5 B.I.

|12/31/02                |                                 | Hedging
transactions       |                            | Dealing
transactions(*) |        | Other
transactions |         | Total  
|----------------------- | ------------------------------- | -------------------------- | -------------------------- | ----------------------- | ------ | ------------------ | ------- | -------
|
|1. Purchase/sale of     |                                 |                            |                            |                         |        |                    |         |        
|                        | 1.1 securities                  |                            |                            |                         |        |                    |         |        
|                        |                                 | purchases                 |                            |                        |        | 4,175              |         |       
|                        |                                 | sales                     |                            |                        |        | 2,311              |         |       
|                        | 1.2 currency                    |                            |                            |                         |        |                    |         |        
|                        |                                 | currency against currency |                            | 1,701                   |        | 1,556              |         |       
|                        |                                 | purchases against Euro    |                            | 8,340                   |        | 4,505              |         |       
|                        |                                 | sales against Euro        |                            | 6,165                   |        | 3,024              |         |       
|2. Deposits and loans   |                                 |                            |                            |                         |        |                    |         |        
|                        | to be disbursed                |                            |                           |                         |       |                    | 1,865   |        
|                        | to be received                 |                            |                           |                         |       |                    | 3,290   |        
|3. Derivative contracts |                                 |                            |                            |                         |        |                    |         |        
|                        | 3.1 with exchange of capital    |                            |                            |                         |        |                    |         |        
|                        |                                 | (a) securities             |                            |                         |        |                    |         |        
|                        |                                 |                            | purchases                 |                         |       |                    | 3,611   |        
|                        |                                 |                            | sales                     |                         |       |                    | 6,865   |        
|                        |                                 | (b) currency               |                            |                         |        |                    |         |        
|                        |                                 |                            | currency against currency |                         | 228    |                    | 227     |        
|                        |                                 |                            | purchases against Euro    |                         | 2,427  |                    | 1,749   |        
|                        |                                 |                            | sales against Euro        |                         | 701    |                    | 1,856   |        
|                        |                                 | (c) other instruments      |                            |                         |        |                    |         |        
|                        |                                 |                            | purchases                 |                         |       |                    |        |        
|                        |                                 |                            | sales                     |                         |       |                    |        |        
|                        | 3.2 without exchange of capital |                            |                            |                         |        |                    |         |        
|                        |                                 | (a) currency               |                            |                         |        |                    |         |        
|                        |                                 |                            | currency against currency |                         | 17     |                    | 47      |        
|                        |                                 |                            | purchases against Euro    |                         | 23     |                    | 11      |        
|                        |                                 |                            | sales against Euro        |                         |       |                    |        |        
|                        |                                 | (b) other instruments(**)  |                            |                         |        |                    |         |        
|                        |                                 |                            | purchases                 |                         | 42,292 |                    | 117,393 |        
|                        |                                 |                            | sales                     |                         | 19,578 |                    | 126,708 |        
|                        |                                 |                            |                            |                         |        |                    |         |        
|Total                   |                                 | 81,472                     |                            | 274,038                 |        | 10,375             |         | 365,885
|                        |                                 |                            |                            |                         |        |                    |         |        

---

Dealings
in derivative contracts principally include transactions entered into within the scope of investment banking activities and to cover dealing portfolios. The results from the
valuation of

F-117

---

derivative
contracts are revealed in the statement of income and described in the note concerning profits and losses on financial transactions of Note (26).

"Hedging"
derivatives refer mainly to transactions to cover interest and/or exchange rate risks on funding and/or lending activities. These mainly reflect the activities of the Parent
Bank and its subsidiaries operating in the loans sector.

"Other
transactions" principally refer to some types of derivative contracts included under structured financial instruments.

Derivative
contracts included under structured financial instruments amount to €6,042 million (€4,479 million as of December 31,
2001), at nominal value.

At
year end the potential net loss on the aggregate value of derivative hedging contracts entered into by Group companies and included in the columns "hedging" and "other transactions"
was calculated at €566 million (€553 million as of December 31, 2001). In compliance with accounting policies, this amount was not recorded in the
financial statements since the purpose of the derivative contracts in question is to hedge interest, market and exchange rate risks with regard to funding activities (particularly collection
transactions made through issuing bonds with a structured yield) and/or lending and investment activities. The above-mentioned contracts are, in fact, recorded on a consistent basis with those adopted
for hedging transactions, by recording accruals in relation to the differential of the interest and/or exchange rate maturing at the date of the financial statements.

F-118

---

(Table 10.5 B.I.)

|12/31/01                |                                 | Hedging
transactions       |                            | Dealing
transactions(*) |        | Other
transactions |         | Total  
|----------------------- | ------------------------------- | -------------------------- | -------------------------- | ----------------------- | ------ | ------------------ | ------- | -------
|
|1. Purchase/sale of     |                                 |                            |                            |                         |        |                    |         |        
|                        | 1.1 securities                  |                            |                            |                         |        |                    |         |        
|                        |                                 | purchases                 |                            |                        |        | 3,631              |         |       
|                        |                                 | sales                     |                            |                        |        | 1,958              |         |       
|                        | 1.2 currency                    |                            |                            |                         |        |                    |         |        
|                        |                                 | currency against currency |                            | 1,550                   |        | 825                |         |       
|                        |                                 | purchases against Euro    |                            | 11,699                  |        | 4,717              |         |       
|                        |                                 | sales against Euro        |                            | 5,842                   |        | 5,173              |         |       
|2. Deposits and loans   |                                 |                            |                            |                         |        |                    |         |        
|                        | to be disbursed                |                            |                           |                         |       |                    | 1,826   |        
|                        | to be received                 |                            |                           |                         |       |                    | 3,711   |        
|3. Derivative contracts |                                 |                            |                            |                         |        |                    |         |        
|                        | 3.1 with exchange of capital    |                            |                            |                         |        |                    |         |        
|                        |                                 | (a) securities             |                            |                         |        |                    |         |        
|                        |                                 |                            | purchases                 |                         |       |                    | 2,253   |        
|                        |                                 |                            | sales                     |                         | 421    |                    | 2,809   |        
|                        |                                 | (b) currency               |                            |                         |        |                    |         |        
|                        |                                 |                            | currency against currency |                         | 290    |                    | 144     |        
|                        |                                 |                            | purchases against Euro    |                         | 2,896  |                    | 1,205   |        
|                        |                                 |                            | sales against Euro        |                         | 1,019  |                    | 912     |        
|                        |                                 | (c) other instruments      |                            |                         |        |                    |         |        
|                        |                                 |                            | purchases                 |                         |       |                    |        |        
|                        |                                 |                            | sales                     |                         |       |                    |        |        
|                        | 3.2 without exchange of capital |                            |                            |                         |        |                    |         |        
|                        |                                 | (a) currency               |                            |                         |        |                    |         |        
|                        |                                 |                            | currency against currency |                         | 30     |                    |        |        
|                        |                                 |                            | purchases against Euro    |                         | 11     |                    |        |        
|                        |                                 |                            | sales against Euro        |                         |       |                    |        |        
|                        |                                 | (b) other instruments(**)  |                            |                         |        |                    |         |        
|                        |                                 |                            | purchases                 |                         | 37,762 |                    | 156,437 |        
|                        |                                 |                            | sales                     |                         | 17,356 |                    | 153,120 |        
|                        |                                 |                            |                            |                         |        |                    |         |        
|Total                   |                                 | 78,876                     |                            | 333,184                 |        | 10,016             |         | 422,076
|                        |                                 |                            |                            |                         |        |                    |         |        

---

Financial information relating to derivative contracts and forward currency purchase/sale transactions

This section offers supplementary information on operations in derivative contracts according to the standards established by the Basel Committee on Bank
Supervision and the International Organization of Securities Commissions (IOSCO).

F-119

---

The
table below shows the notional nominal capital, by type, of forward purchase/sale of currency and derivative contracts on interest rates, exchange rates and stockmarket index for
year 2002.

Notional amounts

|12/31/02                    |                             | Interest
rate related |         | Exchange
rate related |        | Stockmarket
index related |        | Other |   | Total  
|--------------------------- | --------------------------- | --------------------- | ------- | --------------------- | ------ | ------------------------- | ------ | ----- | - | -------
|
|OTC trading contracts       |                             |                       |         |                       |        |                           |        |       |   |        
|                            | Forward(a)                 |                       | 2,026   |                       | 4,005  |                           |       |       |  |        
|                            | Swap(b)                    |                       | 192,570 |                       | 674    |                           |       |       |  |        
|                            | Options purchased          |                       | 15,943  |                       | 1,399  |                           | 3,654  |       |  |        
|                            | Options sold               |                       | 15,876  |                       | 1,491  |                           | 6,936  |       |  |        
|                            | Other derivative contracts |                       | 2,040   |                       | 325    |                           | 71     |       |  |        
|Exchange traded contracts   |                             |                       |         |                       |        |                           |        |       |   |        
|                            | Futures purchased          |                       | 336     |                       |       |                           | 57     |       |  |        
|                            | Futures sold               |                       | 1,983   |                       |       |                           | 122    |       |  |        
|                            | Options purchased          |                       | 385     |                       |       |                           | 633    |       |  |        
|                            | Options sold               |                       | 1,064   |                       |       |                           | 549    |       |  |        
|                            | Other derivative contracts |                       |        |                       |       |                           |       |       |  |        
|Total trading contracts     |                             | 232,223               |         | 7,894                 |        | 12,022                    |        |      |   | 252,139
|Total non trading contracts |                             | 54,880                |         | 18,693                |        | 8,389                     |        |      |   | 81,962 
|                            |                             |                       |         |                       |        |                           |        |       |   |        
|Total contracts(c)          |                             | 287,103               |         | 26,587                |        | 20,411                    |        |      |   | 334,101
|                            | including OTC contracts    |                       | 283,336 |                       | 26,587 |                           | 19,050 |       |  |        

---

F-120

---

The
table below shows the notional nominal capital, by type, of purchase/sale of currency and derivative contracts on interest rates, exchange rates and stockmarket index for year 2001.

Notional amounts

|12/31/01                    |                             | Interest
rate related |         | Exchange
rate related |        | Stockmarket
index related |        | Other |   | Total  
|--------------------------- | --------------------------- | --------------------- | ------- | --------------------- | ------ | ------------------------- | ------ | ----- | - | -------
|
|OTC trading contracts       |                             |                       |         |                       |        |                           |        |       |   |        
|                            | Forward(a)                 |                       | 10,996  |                       | 7,134  |                           |       |       |  |        
|                            | Swap(b)                    |                       | 175,256 |                       | 987    |                           |       |       |  |        
|                            | Options purchased          |                       | 12,174  |                       | 653    |                           | 7,030  |       |  |        
|                            | Options sold               |                       | 12,146  |                       | 556    |                           | 6,219  |       |  |        
|                            | Other derivative contracts |                       |        |                       | 66     |                           | 993    |       |  |        
|Exchange traded contracts   |                             |                       |         |                       |        |                           |        |       |   |        
|                            | Futures purchased          |                       | 1,257   |                       |       |                           | 24     |       |  |        
|                            | Futures sold               |                       | 11,065  |                       |       |                           | 12     |       |  |        
|                            | Options purchased          |                       | 3,550   |                       |       |                           | 531    |       |  |        
|                            | Options sold               |                       | 7,540   |                       |       |                           | 53,171 |       |  |        
|                            | Other derivative contracts |                       |        |                       |       |                           |       |       |  |        
|Total trading contracts     |                             | 233,984               |         | 9,396                 |        | 67,980                    |        |      |   | 311,360
|Total non trading contracts |                             | 50,563                |         | 23,105                |        | 7,357                     |        |      |   | 81,025 
|                            |                             |                       |         |                       |        |                           |        |       |   |        
|Total contracts(c)          |                             | 284,547               |         | 32,501                |        | 75,337                    |        |      |   | 392,385
|                            | including OTC contracts    |                       | 261,119 |                       | 32,501 |                           | 21,600 |       |  |        

---

The
following tables show the residual duration of the above OTC transaction for year 2002 and 2001.

Residual maturity of notional amounts underlying OTC derivative contracts

12/31/02

Up to 12
months

Between 1
and 5 years

Beyond 5
years

Total(€/mil)Interest rate related

104,142

113,354

65,840

283,336Exchange rate related

22,711

3,651

225

26,587Equity index related

1,689

15,549

1,812

19,050Other contracts










F-121

---

Residual maturity of notional amounts underlying OTC derivative contracts

12/31/01

Up to 12
months

Between 1
and 5 years

Beyond 5
years

Total(€/mil)Interest rate related

131,944

80,980

48,195

261,119Exchange rate related

28,655

3,393

453

32,501Equity index related

5,809

11,869

3,922

21,600Other contracts










The
following tables report the credit risk equivalent related to OTC contracts broken down into their various components: positive fair value and add on for year 2002 and 2001.

Notional amounts, fair values and similar add on

|12/31/02                                   |                         | Interest
rate related |        | Exchange
rate related |      | Equity
index related |      | Other |   | Total  
|------------------------------------------ | ----------------------- | --------------------- | ------ | --------------------- | ---- | -------------------- | ---- | ----- | - | -------
|
|Notional amounts                           |                         | 283,336               |        | 26,587                |      | 19,050               |      |      |   | 328,973
|                                           |                         |                       |        |                       |      |                      |      |       |   |        
|A. Fair value of OTC trading contracts     |                         |                       |        |                       |      |                      |      |       |   |        
|                                           | A.1 positive fair value |                       | 5,415  |                       | 219  |                      | 329  |       |  |        
|                                           | A.2 negative fair value |                       | -5,400 |                       | -139 |                      | -243 |       |  |        
|B. Add on                                  |                         | 1,196                 |        | 82                    |      | 282                  |      |      |   | 1,560  
|C. Fair value of OTC non-trading contracts |                         |                       |        |                       |      |                      |      |       |   |        
|                                           | C.1 positive fair value |                       | 889    |                       | 348  |                      | 508  |       |  |        
|                                           | C.2 negative fair value |                       | -1,150 |                       | -588 |                      | -175 |       |  |        
|D. Add on                                  |                         | 186                   |        | 323                   |      | 305                  |      |      |   | 814    
|                                           |                         |                       |        |                       |      |                      |      |       |   |        
|Credit risk equivalent (A.1+ B+C.1+D)      |                         | 7,686                 |        | 972                   |      | 1,424                |      |      |   | 10,082 
|                                           |                         |                       |        |                       |      |                      |      |       |   |        

Notional amounts, fair values and similar add on

|12/31/01                                   |                         | Interest
rate related |        | Exchange
rate related |      | Equity
index related |      | Other |   | Total  
|------------------------------------------ | ----------------------- | --------------------- | ------ | --------------------- | ---- | -------------------- | ---- | ----- | - | -------
|
|Notional amounts                           |                         | 261,119               |        | 32,501                |      | 21,600               |      |      |   | 315,220
|                                           |                         |                       |        |                       |      |                      |      |       |   |        
|A. Fair value of OTC trading contracts     |                         |                       |        |                       |      |                      |      |       |   |        
|                                           | A.1 positive fair value |                       | 3,523  |                       | 171  |                      | 329  |       |  |        
|                                           | A.2 negative fair value |                       | -3,211 |                       | -117 |                      | -102 |       |  |        
|B. Add on                                  |                         | 828                   |        | 116                   |      | 614                  |      |      |   | 1,558  
|C. Fair value of OTC non-trading contracts |                         |                       |        |                       |      |                      |      |       |   |        
|                                           | C.1 positive fair value |                       | 640    |                       | 638  |                      | 377  |       |  |        
|                                           | C.2 negative fair value |                       | -1,071 |                       | -458 |                      | -283 |       |  |        
|D. Add on                                  |                         | 184                   |        | 358                   |      | 267                  |      |      |   | 809    
|                                           |                         |                       |        |                       |      |                      |      |       |   |        
|Credit risk equivalent (A.1+ B+C.1+D)      |                         | 5,175                 |        | 1,283                 |      | 1,587                |      |      |   | 8,045  
|                                           |                         |                       |        |                       |      |                      |      |       |   |        

F-122

---

Fair
values of hedging and dealing transactions arranged with third parties have been calculated using the criteria established by the Bank of Italy to determine the solvency ratio. The
fair values identified in the table above derive from the application of the aforementioned criteria which provide for inclusion in the calculation of the fair value of accrued income and expenses
currently maturing as well as the result deriving from the current rate revaluation of the principal amount of cross-currency interest rate swaps to be exchanged at maturity.

Lastly,
the following tables show the breakdown of credit risk equivalent on OTC contracts by type of counterparty for year 2002 and 2001.

Credit quality of OTC derivative contracts, by counterparty

12/31/02

Positive
fair value

Add on

Credit risk
equivalent(a)
(current value)(€/mil)Governments and central banks





Banks

6,036

1,969

8,005Other operators

1,672

405

2,077Total

7,708

2,374

10,082


---

Credit quality of OTC derivative contracts, by counterparty

12/31/01

Positive
fair value

Add on

Credit risk
equivalent(a)
(current value)(€/mil)Governments and central banks

10



10Banks

4,802

2,046

6,848Other operators

866

321

1,187Total

5,678

2,367

8,045


---

The
aforementioned transactions are not normally covered by either lien or personal guarantees thus, the exercise of a put option on equity securities, purchased during the year, is
guaranteed by top ranking banks (€329 million). There have been no losses on loans for derivatives during the year, and there are no outstanding derivative contracts waived, but
not settled.

The
inherent risks of derivative contracts entered into by Group companies, including those "hedging contracts" whose current value is not shown in the financial statements, are subject
to monitoring within the context of the system of risk management and control set up by the Group.

A
description of the organizational model and the results of monitoring the evolution of risks for 2002 is reported in the appropriate section of the Report on Group Operations ("Risk
management and control").

F-123

---

Derivative contracts on loans

Transactions in derivatives on loans carried out by the Group as of December 31,2002 and as of December 31, 2001 are analyzed below:

(table 10.6.B.I)

12/31/02

Negotiation

Other
transaction

Total(€/mil)Categories of operations1. Hedging purchases1.1 With exchange of capitalcredit default swap

90

375

4651.2 Without exchange of capitalcredit default swap



173

1732. Hedging sales2.1 With exchange of capitalcredit default swap

146

654

800credit linked note



135

1352.2 Without exchange of capitalcredit default swap



49

49Total

236

1,386

1,622


(table 10.6.B.I)

12/31/01

Negotiation

Other transaction

Total(€/mil)Categories of operations1. Hedging purchases1.1 With exchange of capitalcredit default swap

55

368

4232. Hedging sales2.1 With exchange of capitalcredit default swap

47

797

8442.2 Without exchange of capitalcredit default swap





Total

102

1,165

1,267


Other information relating to guarantees

The classification of guarantees given by category of counterparty is provided in Note (22), while forward transactions related to dealing on behalf of
third parties are described in Note (23).

F-124

---

(22)    CONCENTRATION AND DISTRIBUTION OF ASSETS AND LIABILITIES

Significant exposures

The table below shows the positions defined as "significant exposures" by the Bank of Italy in compliance with EC guidelines. For this purpose, the positions are
considered significant if the overall exposure to a single client (or group of companies) on a consolidated basis is equal to or greater than 10% of the Group's regulatory capital. Exposure is
calculated using a system of weighting positions
exposed to lending risk, which takes into account the nature of the counterparty and the guarantees received.

(Table 11.1 B.I.)

12/31/02

12/31/01(a) Amount (€/mil)

11,448

9,236(b) Number

6

4


Distribution of loans to customers, by category of borrower

Loans to customers are distributed by main category of borrower as follows:

(Table 11.2 B.I.)

12/31/02

12/31/01(€/mil)(a) Governments

7,237

5,342(b) Other public entities

6,244

7,193(c) Non-financial businesses

68,214

51,737(d) Financial institutions

13,985

13,669(e) Family businesses

5,466

3,240(f) Other operators

25,555

15,875Total

126,701

97,056


Distribution of loans to resident non-financial and family businesses

The distribution of loans to non-financial and family businesses resident in Italy is detailed below, by sector to which the borrower belongs:

(Table 11.3 B.I.)

12/31/02

12/31/01(€/mil)(a) Other services for sale

10,535

6,583(b) Commerce, salvage and repairs

9,553

6,099(c) Construction and public works

6,558

3,832(d) Energy products

5,642

4,768(e) Transport

3,102

2,682(f) Other sectors

29,280

20,062Total

64,670

44,026


F-125

---



Distribution of guarantees given, by category of counterparty

Guarantees given by the Group are classified by category of counterparty as follows:

(Table 11.4 B.I.)

12/31/02

12/31/01(€/mil)(a) Governments

1

23(b) Other public entities

84

27(c) Banks

812

975(d) Non-financial businesses

17,217

13,090(e) Financial institutions

1,307

1,421(f) Family businesses

163

114(g) Other operators

899

366Total

20,483

16,016


Geographical distribution of assets and liabilities

The geographical distribution of the Group's assets and liabilities is detailed below, by reference to the countries of residence of the counterparties concerned:

(Table 11.5 B.I.)

|                              |                        | 12/31/02 |         | 12/31/01
|----------------------------- | ---------------------- | -------- | ------- | --------
|
|
|1. Assets                     |                        |          |         |         
|                              | 1.1 due from banks     |          | 5,129   |         
|                              | 1.2 loans to customers |          | 111,808 |         
|                              | 1.3 securities         |          | 14,368  |         
|                              |                        |          |         |         
|Total                         |                        | 131,305  |         | 29,103  
|                              |                        |          |         |         
|2. Liabilities                |                        |          |         |         
|                              | 2.1 due to banks       |          | 5,989   |         
|                              | 2.2 due to customers   |          | 72,667  |         
|                              | 2.3 securities issued  |          | 36,872  |         
|                              | 2.4 other accounts     |          | 4,937   |         
|                              |                        |          |         |         
|Total                         |                        | 120,465  |         | 29,634  
|                              |                        |          |         |         
|3. Guarantees and commitments |                        | 31,109   |         | 8,195   
|                              |                        |          |         |         

F-126

---

Maturities of assets and liabilities

The residual maturities of assets and liabilities for year 2002 are detailed in the following table:

(Table 11.6 B.I.)

|                  |                                             | Specified duration       |        |         |         |        
|----------------- | ------------------------------------------- | ------------------------ | ------ | ------- | ------- | -------
|
|
|
|1. Assets         |                                             |                          |        |         |         |        
|                  | 1.1 Treasury bonds eligible for refinancing |                          | 3      |         | 310     |        
|                  | 1.2 due from banks                          |                          | 5,000  |         | 14,214  |        
|                  | 1.3 loans to customers                      |                          | 23,104 |         | 19,476  |        
|                  | 1.4 bonds and other debt securities         |                          | 153    |         | 1,015   |        
|                  | 1.5 off-balance sheet transactions          |                          | 27,523 |         | 93,430  |        
|                  |                                             |                          |        |         |         |        
|Total assets      |                                             | 55,783                   |        | 128,445 |         | 104,255
|                  |                                             |                          |        |         |         |        
|2. Liabilities    |                                             |                          |        |         |         |        
|                  | 2.1 due to banks                            |                          | 3,036  |         | 10,021  |        
|                  | 2.2 due to customers                        |                          | 61,357 |         | 19,231  |        
|                  | 2.3 securities issued:                      |                          |        |         |         |        
|                  |                                             | bonds                   |        | 481     |         | 1,319  
|                  |                                             | certificates of deposit |        | 1,702   |         | 2,470  
|                  |                                             | other securities        |        | 665     |         | 4,023  
|                  | 2.4 subordinated liabilities                |                          |       |         | 60      |        
|                  | 2.5 off-balance sheet transactions          |                          | 18,523 |         | 102,068 |        
|                  |                                             |                          |        |         |         |        
|Total liabilities |                                             | 85,764                   |        | 139,192 |         | 97,002 
|                  |                                             |                          |        |         |         |        

F-127

---

The
residual maturities of assets and liabilities for year 2001 are detailed in the following table:

(Table 11.6 B.I.)

|                  |                                             | Specified duration       |        |         |         |       
|----------------- | ------------------------------------------- | ------------------------ | ------ | ------- | ------- | ------
|
|
|
|1. Assets         |                                             |                          |        |         |         |       
|                  | 1.1 Treasury bonds eligible for refinancing |                          | 41     |         | 969     |       
|                  | 1.2 due from banks                          |                          | 3,994  |         | 12,770  |       
|                  | 1.3 loans to customers                      |                          | 15,262 |         | 17,984  |       
|                  | 1.4 bonds and other debt securities         |                          | 30     |         | 775     |       
|                  | 1.5 off-balance sheet transactions          |                          | 28,585 |         | 118,295 |       
|                  |                                             |                          |        |         |         |       
|Total assets      |                                             | 47,912                   |        | 150,793 |         | 97,311
|                  |                                             |                          |        |         |         |       
|2. Liabilities    |                                             |                          |        |         |         |       
|                  | 2.1 due to banks                            |                          | 3,237  |         | 14,798  |       
|                  | 2.2 due to customers                        |                          | 48,400 |         | 14,485  |       
|                  | 2.3 securities issued:                      |                          |        |         |         |       
|                  |                                             | bonds                   |        | 463     |         | 902   
|                  |                                             | certificates of deposit |        | 402     |         | 5,660 
|                  |                                             | other securities        |        | 661     |         | 4,008 
|                  | 2.4 subordinated liabilities                |                          |       |         | 87      |       
|                  | 2.5 off-balance sheet transactions          |                          | 30,093 |         | 115,783 |       
|                  |                                             |                          |        |         |         |       
|Total liabilities |                                             | 83,256                   |        | 155,723 |         | 90,261
|                  |                                             |                          |        |         |         |       

F-128

---

Assets and liabilities denominated in foreign currencies

Assets and liabilities denominated in currencies other than those of the Euro-zone as of December 31, 2002 and as of December 31, 2001
are broken down as follows:

(Table 11.7 B.I.)

|                  |                       | 12/31/02 |       | 12/31/01
|----------------- | --------------------- | -------- | ----- | --------
|
|(a) Assets        |                       |          |       |         
|                  | 1. due from banks     |          | 3,936 |         
|                  | 2. loans to customers |          | 8,833 |         
|                  | 3. securities         |          | 2,931 |         
|                  | 4. equity investments |          | 90    |         
|                  | 5. other accounts     |          | 203   |         
|                  |                       |          |       |         
|Total assets      |                       | 15,993   |       | 16,965  
|                  |                       |          |       |         
|(b) Liabilities   |                       |          |       |         
|                  | 1. due to banks       |          | 7,658 |         
|                  | 2. due to customers   |          | 6,543 |         
|                  | 3. securities issued  |          | 6,551 |         
|                  | 4. other accounts     |          | 519   |         
|                  |                       |          |       |         
|Total liabilities |                       | 21,271   |       | 28,050  
|                  |                       |          |       |         

The
"liquidity", "rates" and "exchange" risks inherent in the distribution by expiry, type of rate and currency of Group assets, liabilities and forward transactions (of which the two
tables above supply a simplified representation with reference to the precise situation at the end of the year), are subject to
monitoring within the context of the complete system of risk management and control set up by the Group.

A
description of the organizational model and the results of monitoring the evolution of risks for 2002 is reported in the appropriate section of the Report on Group Operations ("Risk
management and control").

Securitization transactions

Group securitization transactions

As of December 31, 2002, the SANPAOLO IMI Group carried out the following securitization transactions:



F-129

---





---

F-130

---



Securities in portfolio representing third party securitization transactions

As of December 31, 2002, the Group holds investment and dealing securities from third party securitizations, as shown in the following table:

12/31/02

|Type of underlying activities   |                                                   | Credit quality       |                                 | "Senior"
securities |      | "Mezzanine"
securities |      | "Junior"
securities |     | Total
|------------------------------- | ------------------------------------------------- | -------------------- | ------------------------------- | ------------------- | ---- | ---------------------- | ---- | ------------------- | --- | -----
|
|Investment securities portfolio |                                                   |                      |                                 |                     |      |                        |      |                     |     |      
|                                | Building mortgage loans                           |                      | Performing                      |                     | 2    |                        |     |                     |    |      
|                                | Credit cards                                      |                      | Performing                      |                     | 47   |                        |     |                     |    |      
|                                | Leasing                                           |                      | Performing                      |                     | 29   |                        |     |                     |    |      
|                                | Securities portfolio                              |                      | Performing                      |                     |     |                        |     |                     | 6   |      
|                                | SACE loans to foreign public sector debtors       |                      | Performing                      |                     | 6    |                        |     |                     |    |      
|                                | Health care receivable                            |                      | Performing                      |                     | 3    |                        |     |                     |    |      
|                                | Other loans                                       |                      | Performing                      |                     | 57   |                        | 5    |                     |    |      
|                                |                                                   | Non-performing loans |                                 | 3                   |      |                        |      |                     |     | 3    
|                                |                                                   |                      |                                 |                     |      |                        |      |                     |     |      
|                                |                                                   |                      |                                 | 147                 |      | 5                      |      | 6                   |     | 158  
|                                |                                                   |                      |                                 |                     |      |                        |      |                     |     |      
|Dealing securities portfolio    |                                                   |                      |                                 |                     |      |                        |      |                     |     |      
|                                | Building mortgage loans                           |                      | Performing
Non-performing loans |                     | 6
1  |                        | 4
1  |                     | 1
 |      
|                                | Commercial/industrial/agricultural mortgage loans |                      | Performing
Non-performing loans |                     | 1
2  |                        | 
4  |                     | 
 |      
|                                | Leasing                                           |                      | Performing                      |                     | 6    |                        |     |                     |    |      
|                                | Health care receivable                            |                      | Performing                      |                     | 6    |                        |     |                     |    |      
|                                | Public real estate                                |                      | Performing                      |                     | 126  |                        |     |                     |    |      
|                                | Social security contributions                     |                      | Performing
Problem loans        |                     | 25
6 |                        |     |                     |    |      
|                                | Other loans                                       |                      | Performing
Non-performing loans |                     | 29
2 |                        | 23
 |                     | 
 |      
|                                |                                                   |                      |                                 |                     |      |                        |      |                     |     |      
|                                |                                                   |                      |                                 | 210                 |      | 32                     |      | 1                   |     | 243  
|                                |                                                   |                      |                                 |                     |      |                        |      |                     |     |      
|                                |                                                   |                      |                                 | 357                 |      | 37                     |      | 7                   |     | 401  
|                                |                                                   |                      |                                 |                     |      |                        |      |                     |     |      

The
investment securities portfolio is shown net of adjustments in value totaling €30 million, of which €21 were booked during the year.

F-131

---

As
of December 31, 2001, the Group holds investment and dealing securities from third party securitizations, as shown in the following table:

12/31/01

|Type of underlying activities   |                                                   | Credit quality |                                 | "Senior"
securities |       | "Mezzanine"
securities |      | "Junior"
securities |     | Total
|------------------------------- | ------------------------------------------------- | -------------- | ------------------------------- | ------------------- | ----- | ---------------------- | ---- | ------------------- | --- | -----
|
|Investment securities portfolio |                                                   |                |                                 |                     |       |                        |      |                     |     |      
|                                | Building mortgage loans                           |                | Performing                      |                     | 47    |                        |     |                     |    |      
|                                | Credit cards                                      |                | Performing                      |                     | 144   |                        | 23   |                     |    |      
|                                | Leasing                                           |                | Performing                      |                     | 36    |                        |     |                     |    |      
|                                | Securities portfolio                              |                | Performing                      |                     | 23    |                        |     |                     |    |      
|                                | SACE loans to foreign public sector debtors       |                | Performing                      |                     | 14    |                        |     |                     |    |      
|                                | Health care receivable                            |                | Performing                      |                     | 11    |                        |     |                     |    |      
|                                | Other loans                                       |                | Performing                      |                     | 132   |                        | 14   |                     |    |      
|                                |                                                   |                |                                 |                     |       |                        |      |                     |     |      
|                                |                                                   |                |                                 | 407                 |       | 37                     |      |                    |     | 444  
|                                |                                                   |                |                                 |                     |       |                        |      |                     |     |      
|Dealing securities portfolio    |                                                   |                |                                 |                     |       |                        |      |                     |     |      
|                                | Building mortgage loans(1)                        |                | Performing
Non-performing loans |                     | 48
3  |                        | 4
  |                     | 1
 |      
|                                | Commercial/industrial/agricultural mortgage loans |                | Performing
Non-performing loans |                     | 7
7   |                        | 3
3  |                     | 
 |      
|                                | Leasing                                           |                | Performing                      |                     | 6     |                        |     |                     |    |      
|                                | Health care receivable(2)                         |                | Performing                      |                     | 24    |                        |     |                     | 6   |      
|                                | Public real estate                                |                |                                |                     | 309   |                        |     |                     |    |      
|                                | Social security contributions                     |                | Problem loans                   |                     | 33    |                        |     |                     |    |      
|                                | Other loans                                       |                | Performing
Non-performing loans |                     | 115
5 |                        | 23
 |                     | 
 |      
|                                |                                                   |                |                                 |                     |       |                        |      |                     |     |      
|                                |                                                   |                |                                 | 557                 |       | 33                     |      | 7                   |     | 597  
|                                |                                                   |                |                                 |                     |       |                        |      |                     |     |      
|                                |                                                   |                |                                 | 964                 |       | 70                     |      | 7                   |     | 1,041
|                                |                                                   |                |                                 |                     |       |                        |      |                     |     |      

---

The
investment securities portfolio is shown net of adjustments for a total of €9.5 million, of which €8.9 carried out during the period.

F-132

---

(23)    ADMINISTRATION AND DEALING ON BEHALF OF THIRD PARTIES

Dealing in securities

Purchases and sales made during the year on behalf of third parties were as follows:

(Table 12.1 B.I.)

12/31/02

12/31/01(€/mil)(a) Purchases1. settled

118,222

113,7632. not settled

124

473Total purchases

118,346

114,236(b) Sales1. settled

109,844

112,5942. not settled

122

542Total sales

109,966

113,136


Purchase
and sale transactions performed on behalf of third parties include, respectively, €334 million and €372 million for dealing in
derivative contracts.

Portfolio management

The total fair value of portfolios managed on behalf of customers is detailed below:

(Table 12.2 B.I.)

12/31/02

12/31/01(€/mil)Portfolio management(1)

34,283

34,942


---

Custody and administration of securities

The nominal value of securities held in custody and for administration, including those received as guarantees, is detailed bellow:

(Table 12.3 B.I.)

12/31/02

12/31/01(€/mil)(a) Third-party securities held on deposit

257,594

240,440(b) Third-party securities deposited with third parties

175,659

156,178(c) Portfolio securities deposited with third parties(a)

21,703

21,304


---

F-133

---

Collection of receivables on behalf of third parties: debit and credit adjustments

The notes portfolio has been reclassified on the basis of the related settlement date, by recording the following adjustments:

(Table 12.4 B.I.)

12/31/02

12/31/01(€/mil)a) Debit adjustments1. current accounts

681

5882. central portfolio

3,658

313. cash

1,395

4. other accounts

1,448

37b) Credit adjustments1. current accounts

616

402. transferors of notes and documents

6,556

6063. other accounts

296

15


Other transactions

Research and Development

Applied Research Reserve

SANPAOLO IMI manages transactions arising from applications received by December 31, 1999 out of the Applied Research Reserve. As of December 31,
2002, there are resolutions to be stipulated for €217.4 million, disbursements to be made for €827.2 million and loans for
€708.7 million.

Reserve for Research Grants

SANPAOLO IMI continues to operate, in its capacity as authorized bank, for the evaluation and control of industrial research projects and researcher training
schemes using the Reserve for Research Grants managed by the Ministry of Education, Universities and Research (MIUR). During 2002, 559 applications were received for research investment for
€1,001million and MIUR deliberated on financing of €457.5 million.

Reserve for Technological Innovation

As of November 2001, SANPAOLO IMI activated a co-operation with the Ministry for Productive Activities (MAP) for the management of development
projects out of the Reserve for Technological Innovation. During 2002, 452 applications were received for development investment for €1,354.0 million and MAP deliberated on
financing of €122.0 million.

During
the year activities connected to the three reserves generated a total of €17.9 million commission from the Public Administration.

Guarantee Fund for small and medium-sized enterprises in Southern Italy (Law 341/95)

With the Convention stipulated between the Italian Treasury and the Bank on December 21, 1995, as approved and activated by Decree of the Director-General
of the Treasury dated January 5, 1996, SANPAOLO IMI, in its capacity as Managing Body, has been granted the concession to this Fund established under Law 341/95.

F-134

---

The
purpose of Law 341/95 is to promote rationalization of the financial situation of small and medium-sized enterprises in Southern Italy, as defined by EU parameters. This involves
measures of various types, from interest-relief grants on financing designed to convert short-term bank borrowing into medium and long-term loans, to the granting of
supplementary guarantees on investment loans, for the purchase of equity investments and for the debt consolidation described above.

As
of December 31, 2002, there are 3,150 applications for €1,184 million, broken down as follows:



As
of December 31, 2001, 3,900 applications are outstanding for €1,590 million broken down as follows:



Management
activities carried out on behalf of the Treasury generated a total of €0.5 million commission (€0.9 million in 2001).

Notes accepted after collection and taxation

The Group has received instructions to collect third-party receivables as part of its portfolio transactions. The nominal value of such receivables is
€31,170 million (€8,926 million as of December 31, 2001).

Furthermore,
through the subsidiaries ESABAN, Ge.ri.co., Sanpaolo Riscossioni Genova and Sanpaolo Riscossioni Prato, the Group manages the collection of taxes for
€22,289 million (€20,077 million as of December 31, 2001).

Third-party portion of syndicated loans

The portion of syndicated loans arranged by the Parent Bank for third parties without a representation mandate totaled €671 million at year
end (€795 million in 2001).

Portfolio management services rendered by third parties

The amount of portfolio management services rendered by third parties and offered to customers through Group companies as of December 31, 2002 amounted to
€12,444 million (€4,150 million as of December 31, 2001) broken down as follows: €5,883 million of mutual funds
(€587 million as of December 31, 2001), €2,147 million of portfolio management funds, (€648 million as of
December 31, 2001), €387 million of stock portfolio management schemes (€352 million as of December 31, 2001) and
€4,027 million in insurance policies (€2,563 million as of December 31, 2001).

(24)    INTEREST

Interest income and expense and similar revenues and charges, detailed below, are reported in captions 10 and 20 of the consolidated statement of income:

|                                                  |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|------------------------------------------------- |  | -------- |  | -------- |  | --------
|
|Interest income and similar revenues (caption 10) |  | 8,693    |  | 8,016    |  | 7,622   
|Interest expense and similar charges (caption 20) |  | 4,955    |  | 5,326    |  | 5,123   

F-135

---



Interest income and similar revenues (caption 10)

Analysis of caption 10 "interest income and similar revenues" (Table 1.1 B.I.)

|                                                 |                              | 12/31/02 |    | 12/31/01 |    | 12/31/00
|------------------------------------------------ | ---------------------------- | -------- | -- | -------- | -- | --------
|
|(a) On amounts due from banks                    |                              | 691      |    | 900      |    | 991     
|                                                 | including:                   |          |    |          |    |         
|                                                 | deposits with central banks |          | 60 |          | 63 |         
|(b) On loans to customers                        |                              | 6,936    |    | 5,999    |    | 5,501   
|                                                 | including:                   |          |    |          |    |         
|                                                 | loans using public funds    |          |   |          |   |         
|(c) On debt securities                           |                              | 995      |    | 1,026    |    | 1,006   
|(d) Other interest income                        |                              | 71       |    | 91       |    | 87      
|(e) Net differential on hedging transactions (*) |                              |         |    |         |    | 37      
|                                                 |                              |          |    |          |    |         
|Total                                            |                              | 8,693    |    | 8,016    |    | 7,622   
|                                                 |                              |          |    |          |    |         

---

Detail of caption 10 "interest income and similar revenues" (Table 1.3 B.I.)

|                                             |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|-------------------------------------------- |  | -------- |  | -------- |  | --------
|
|a) On assets denominated in foreign currency |  | 309      |  | 506      |  | 552     
|                                             |  |          |  |          |  |         

"Interest
income and similar revenue" on assets denominated in foreign currency relates to transactions denominated in currencies not included in the Euro-zone.

Interest expense and similar charges (caption 20)

Analysis of caption 20 "interest expense and similar charges" (Table 1.2 B.I.)

|                                                  |                          | 12/31/02 |     | 12/31/01 |     | 12/31/00
|------------------------------------------------- | ------------------------ | -------- | --- | -------- | --- | --------
|
|(a) On amounts due to banks                       |                          | 1,029    |     | 1,428    |     | 1,522   
|(b) On amounts due to customers                   |                          | 1,445    |     | 1,600    |     | 1,401   
|(c) On securities issued (*)                      |                          | 1,945    |     | 1,961    |     | 2,038   
|                                                  | including:               |          |     |          |     |         
|                                                  | certificates of deposit |          | 221 |          | 336 |         
|(d) On public funds administered                  |                          |         |     |         |     |        
|(e) On subordinated liabilities                   |                          | 320      |     | 241      |     | 162     
|(f) Net differential on hedging transactions (**) |                          | 216      |     | 96       |     |        
|                                                  |                          |          |     |          |     |         
|Total                                             |                          | 4,955    |     | 5,326    |     | 5,123   
|                                                  |                          |          |     |          |     |         

---

F-136

---

Detail of caption 20 "interest expense and similar charge" (Table 1.4 B.I.)

|                                                  |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|------------------------------------------------- |  | -------- |  | -------- |  | --------
|
|a) On liabilities denominated in foreign currency |  | 403      |  | 921      |  | 762     
|                                                  |  |          |  |          |  |         

"Interest
expense and similar charges" on liabilities denominated in foreign currency relates to transactions denominated in currencies not included in the
Euro-zone.

(25)    COMMISSION

Commission income and expense, as detailed below, are reported in captions 40 and 50 of the consolidated statement of income:

|                                |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|------------------------------- |  | -------- |  | -------- |  | --------
|
|Commission income (caption 40)  |  | 3,467    |  | 3,312    |  | 3,452   
|Commission expense (caption 50) |  | 671      |  | 714      |  | 817     

The
following tables have been prepared on the basis of the new reporting format required by the Bank of Italy in its letter no. 14815 dated November 21,
2001. In the interests of comparability, the 2000 figures have also been reclassified on the basis of this new format.

Commission income (caption 40)

Analysis of caption 40 "Commission income" (Table 2.1 B.I.)

|                                              |                                             | 12/31/02                  |               | 12/31/01 |     | 12/31/00
|--------------------------------------------- | ------------------------------------------- | ------------------------- | ------------- | -------- | --- | --------
|
|(a) Guarantees given                          |                                             | 77                        |               | 68       |     | 49      
|(b) Derivative contracts on loans             |                                             | 10                        |               | 3        |     | 1       
|(c) Management, dealing and advisory services |                                             |                           |               |          |     |         
|                                              | 1. dealing in securities                    |                           | 129           |          | 131 |         
|                                              | 2. dealing in currency                      |                           | 35            |          | 35  |         
|                                              | 3. portfolio management:                    |                           |               |          |     |         
|                                              |                                             | 3.1 individual            |               | 229      |     | 196     
|                                              |                                             | 3.2 collective            |               | 1,129    |     | 1,476   
|                                              | 4. custody and administration of securities |                           | 66            |          | 60  |         
|                                              | 5. custodian bank                           |                           | 121           |          | 138 |         
|                                              | 6. placement of securities                  |                           | 13            |          | 59  |         
|                                              | 7. acceptance of instructions               |                           | 83            |          | 84  |         
|                                              | 8. advisory services                        |                           | 23            |          | 38  |         
|                                              | 9. third party service distribution:        |                           |               |          |     |         
|                                              |                                             | 9.1 portfolio management: |               |          |     |         
|                                              |                                             |                           | a) individual |          | 23  |         
|                                              |                                             |                           | b) collective |          | 110 |         
|                                              |                                             | 9.2 insurance products    |               | 159      |     | 137     
|                                              |                                             | 9.3 other products        |               | 7        |     | 4       
|(d) Collection and payment services           |                                             | 325                       |               | 239      |     | 219     
|(e) Servicing for securitisation transactions |                                             | 2                         |               | 1        |     | 1       
|(f) Tax collection services                   |                                             | 122                       |               | 83       |     | 52      
|(g) Other services                            |                                             | 804                       |               | 536      |     | 439     
|                                              |                                             |                           |               |          |     |         
|Total                                         |                                             | 3,467                     |               | 3,312    |     | 3,452   
|                                              |                                             |                           |               |          |     |         

F-137

---

Subcaption
(g) "Other services" comprises, in particular:

|                                        |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|--------------------------------------- |  | -------- |  | -------- |  | --------
|
|Loans granted                           |  | 243      |  | 175      |  | 145     
|Deposits and current account overdrafts |  | 297      |  | 215      |  | 178     
|Current accounts                        |  | 141      |  | 82       |  | 66      
|Loan-arrangement activities             |  | 6        |  | 7        |  | 6       
|Other services                          |  | 117      |  | 57       |  | 44      
|                                        |  |          |  |          |  |         
|Total                                   |  | 804      |  | 536      |  | 439     
|                                        |  |          |  |          |  |         

Commission
income by distribution channels is organized as follows:

Detail of caption 40 "commission income": "Products and services distribution channels" (Table 2.2 B.I.)

|                       |                                | 12/31/02 |     | 12/31/01 |       | 12/31/00
|---------------------- | ------------------------------ | -------- | --- | -------- | ----- | --------
|
|(a) With own branches: |                                |          |     |          |       |         
|                       | 1. portfolio management        |          | 933 |          | 1,028 |         
|                       | 2. placement of securities     |          | 1   |          | 43    |         
|                       | 3. other products and services |          | 192 |          | 77    |         
|(b) Outside supply     |                                |          |     |          |       |         
|                       | 1. portfolio management        |          | 425 |          | 644   |         
|                       | 2. placement of securities     |          | 12  |          | 16    |         
|                       | 3. other products and services |          | 107 |          | 88    |         

Commission expense (caption 50)

Analysis of caption 50 "Commission expense"(Table 2.3 B.I.)

|                                    |                                                                    | 12/31/02                  |     | 12/31/01 |     | 12/31/00
|----------------------------------- | ------------------------------------------------------------------ | ------------------------- | --- | -------- | --- | --------
|
|(a) Guarantees received             |                                                                    | 14                        |     | 7        |     | 5       
|(b) Derivative contracts on loans   |                                                                    | 1                         |     |         |     |        
|(c) Management and dealing services |                                                                    |                           |     |          |     |         
|                                    | 1. dealing in securities                                           |                           | 36  |          | 34  |         
|                                    | 2. dealing in currency                                             |                           | 2   |          | 2   |         
|                                    | 3. portfolio management:                                           |                           |     |          |     |         
|                                    |                                                                    | 3.1 own portfolio         |     |         |     |        
|                                    |                                                                    | 3.2 third party portfolio |     | 71       |     | 102     
|                                    | 4. custody and administration of securities                        |                           | 24  |          | 28  |         
|                                    | 5. placement of securities                                         |                           | 2   |          | 12  |         
|                                    | 6. door-to-door sales of securities, financial products & services |                           | 319 |          | 430 |         
|(d) Collection and payment services |                                                                    | 98                        |     | 65       |     | 60      
|(e) Other services                  |                                                                    | 104                       |     | 34       |     | 50      
|                                    |                                                                    |                           |     |          |     |         
|Total                               |                                                                    | 671                       |     | 714      |     | 817     
|                                    |                                                                    |                           |     |          |     |         

F-138

---

Subcaption
(e) "Other services" comprises, in particular:

|                                         |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|---------------------------------------- |  | -------- |  | -------- |  | --------
|
|Loan-arrangement activities              |  | 65       |  | 12       |  | 2       
|Loans obtained                           |  | 3        |  | 2        |  | 7       
|Intermediation in financing transactions |  | 10       |  | 3        |  | 8       
|Other services                           |  | 26       |  | 17       |  | 33      
|                                         |  |          |  |          |  |         
|Total                                    |  | 104      |  | 34       |  | 50      
|                                         |  |          |  |          |  |         

(26)    PROFITS (LOSSES) ON FINANCIAL TRANSACTIONS

Profits and losses on financial transactions, detailed below, are reported in caption 60 of the consolidated statement of income:

|                                                        |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|------------------------------------------------------- |  | -------- |  | -------- |  | --------
|
|Profits (losses) on financial transactions (caption 60) |  | -98      |  | 105      |  | 165     

Profits (losses) on financial transactions (caption 60)

Profits and losses for years 2002, 2001 and 2000 in respect of the "official schedules" are analyzed as follows:

Analysis of caption 60 "Profits (losses) on financial transactions (Table 3.1 B.I.)

|12/31/02                    |                             | Security
transactions |      | Currency
transactions |  | Other
transactions |   | Total  |  
|--------------------------- | --------------------------- | --------------------- | ---- | --------------------- |  | ------------------ | - | ------ | -
|
|A1. Revaluations            |                             | 414                   |      |                      |  | 1,796              |   | 2,210  |  
|A2. Writedowns              |                             | (243                  | )    |                      |  | (2,695             | ) | (2,938 | )
|B. Other profits and losses |                             | (382                  | )    | 69                    |  | 943                |   | 630    |  
|                            |                             |                       |      |                       |  |                    |   |        |  
|Total                       |                             | (211                  | )    | 69                    |  | 44                 |   | (98    | )
|                            |                             |                       |      |                       |  |                    |   |        |  
|                            | including:                  |                       |      |                       |  |                    |   |        |  
|                            | 1. on government securities |                       | 74   |                       |  |                    |   |        |  
|                            | 2. on other debt securities |                       | 70   |                       |  |                    |   |        |  
|                            | 3. on equities              |                       | (544 | )                     |  |                    |   |        |  
|                            | 4. on security derivatives  |                       | 189  |                       |  |                    |   |        |  
|                            |                             |                       |      |                       |  |                    |   |        |  

|12/31/01                    |                             | Security
transactions |      | Currency
transactions |  | Other
transactions |   | Total  |  
|--------------------------- | --------------------------- | --------------------- | ---- | --------------------- |  | ------------------ | - | ------ | -
|
|A1. Revaluations            |                             | 238                   |      |                      |  | 1,490              |   | 1,728  |  
|A2. Writedowns              |                             | (138                  | )    |                      |  | (3,081             | ) | (3,219 | )
|B. Other profits and losses |                             | (387                  | )    | 40                    |  | 1,943              |   | 1,596  |  
|                            |                             |                       |      |                       |  |                    |   |        |  
|Total                       |                             | (287                  | )    | 40                    |  | 352                |   | 105    |  
|                            |                             |                       |      |                       |  |                    |   |        |  
|                            | including:                  |                       |      |                       |  |                    |   |        |  
|                            | 1. on government securities |                       | 78   |                       |  |                    |   |        |  
|                            | 2. on other debt securities |                       | 45   |                       |  |                    |   |        |  
|                            | 3. on equities              |                       | (153 | )                     |  |                    |   |        |  
|                            | 4. on security derivatives  |                       | (257 | )                     |  |                    |   |        |  
|                            |                             |                       |      |                       |  |                    |   |        |  

F-139

---

(Table 3.1 B.I.)

|12/31/00                    |                             | Security
transactions |     | Currency
transactions |  | Other
transactions |   | Total  |  
|--------------------------- | --------------------------- | --------------------- | --- | --------------------- |  | ------------------ | - | ------ | -
|
|A1. Revaluations            |                             | 476                   |     |                      |  | 6,515              |   | 6,991  |  
|A2. Writedowns              |                             | (426                  | )   |                      |  | (8,384             | ) | (8,810 | )
|B. Other profits and losses |                             | 100                   |     | 57                    |  | 1,827              |   | 1,984  |  
|                            |                             |                       |     |                       |  |                    |   |        |  
|Total                       |                             | 150                   |     | 57                    |  | (42                | ) | 165    |  
|                            |                             |                       |     |                       |  |                    |   |        |  
|                            | including:                  |                       |     |                       |  |                    |   |        |  
|                            | 1. on government securities |                       | 13  |                       |  |                    |   |        |  
|                            | 2. on other debt securities |                       | 30  |                       |  |                    |   |        |  
|                            | 3. on equities              |                       | 114 |                       |  |                    |   |        |  
|                            | 4. on security derivatives  |                       | (7  | )                     |  |                    |   |        |  

This
mainly reflects one component of the brokerage activity normally carried out by the Group, the results of which are also reflected in the captions relating to interest and
dividends. The main result is outlined in the "net interest and other banking income" of the Wealth Management and Financial Marketsbusiness
sectorBanca IMI in the Report on Operations.

The
reconciliation with the "Profits and losses from financial transactions and dividends on shares" caption of the reclassified statement of income, reported in the Report on
Operations, is detailed below:

Reconciliation of caption 60 "Profits (losses) on financial transactions" with the reclassified statement of income

(€/mil)Profits (losses) on financial transactions (caption 60)

-98Reclassification from interest income and expense of the negative margin of Investment Banking(1)

-35Reclassification to "Provisions and net adjustments to loans and financial fixed assets" of the losses on securities arising from loan recovery transactions

9Reclassification from the dividends on dealing shares caption

410Caption of the reclassified statement of income "Profits and losses from financial transactions and dividends on shares"

286


---

F-140

---

(27)    ADMINISTRATIVE COSTS

Administrative costs, detailed below, are reported in caption 80 of the consolidated statement of income:

12/31/02

12/31/01

12/31/00(€/mil)Payroll costs (caption 80.a)

2,856

2,221

1,929Other administrative costs (caption 80.b)

1,792

1,379

1,147Total

4,648

3,600

3,076


Payroll costs (caption 80.a)

The following table sets out the detail of the payroll costs.

12/31/02

12/31/01

12/31/00(€/mil)Wages and salary

2,061

1,600

1,380Social security charges

618

471

425Termination indemnities

140

109

97Pension and similar commitments

37

41

27Total

2,856

2,221

1,929


The
following table sets out the average number of employees by category

Average number of employees by category (table 4.1 B.I.)

12/31/02

12/31/01

12/31/00(a) Executives

857

673

439(b) Supervisors

6,114

11,638

5,046(c) Other employees

39,132

23,172

24,339Total

46,103

35,483

29,824of which: of companies consolidated under the proportional method

698

182

154


The
division between Executives and Supervisors as of December 31, 2002 and 2001 reflects the changes provided for by the collective national employment contract; so the
equivalent figures as of December 31, 2000 are not directly comparable.

The
average number of employees in 2000 includes half of the Banco di Napoli Group employees as of December 31, 2000 as laid down by law.

F-141

---

Other administrative costs (caption 80.b)

|                                              |                                                                             | 12/31/02 |     | 12/31/01 |     | 12/31/00
|--------------------------------------------- | --------------------------------------------------------------------------- | -------- | --- | -------- | --- | --------
|
|IT costs                                      |                                                                             | 404      |     | 340      |     | 228     
|                                              | Software maintenance and upgrades                                           |          | 110 |          | 118 |         
|                                              | Maintenance of operating assets                                             |          | 67  |          | 66  |         
|                                              | Data transmission charges                                                   |          | 62  |          | 52  |         
|                                              | External data processing                                                    |          | 93  |          | 54  |         
|                                              | Database access charges                                                     |          | 53  |          | 34  |         
|                                              | Equipment leasing charges                                                   |          | 19  |          | 16  |         
|Property management expenses                  |                                                                             | 294      |     | 237      |     | 205     
|                                              | Rented property:                                                            |          | 187 |          | 152 |         
|                                              | rental of premises                                                         |          | 172 |          | 142 |         
|                                              | maintenance of leasehold premises                                          |          | 15  |          | 10  |         
|                                              | Property owned:                                                             |          | 34  |          | 23  |         
|                                              | maintenance of properties owned by the Bank                                |          | 34  |          | 23  |         
|                                              | Security services                                                           |          | 39  |          | 34  |         
|                                              | Cleaning of premises                                                        |          | 34  |          | 28  |         
|General expenses                              |                                                                             | 279      |     | 202      |     | 186     
|                                              | Postage and telegraph charges                                               |          | 62  |          | 51  |         
|                                              | Office supplies                                                             |          | 37  |          | 28  |         
|                                              | Transport and counting of valuables                                         |          | 31  |          | 14  |         
|                                              | Courier and transport services                                              |          | 18  |          | 10  |         
|                                              | Payroll costs for personnel on secondment                                   |          | 5   |          | 1   |         
|                                              | Other expenses                                                              |          | 126 |          | 98  |         
|Professional and insurance fees               |                                                                             | 287      |     | 203      |     | 171     
|                                              | Consultancy services                                                        |          | 185 |          | 128 |         
|                                              | Legal and judiciary expenses                                                |          | 43  |          | 40  |         
|                                              | Investigation/commercial information costs                                  |          | 19  |          | 17  |         
|                                              | Insurance premiumsbanks and customers                                      |          | 40  |          | 18  |         
|Utilities                                     |                                                                             | 93       |     | 69       |     | 69      
|                                              | Energy                                                                      |          | 49  |          | 35  |         
|                                              | Telephone                                                                   |          | 44  |          | 34  |         
|Promotion, advertising and marketing expenses |                                                                             | 96       |     | 65       |     | 47      
|                                              | Advertising and entertainment                                               |          | 82  |          | 58  |         
|                                              | Contributions and membership fees to trade unions and business associations |          | 14  |          | 7   |         
|Indirect payroll costs                        |                                                                             | 75       |     | 64       |     | 52      
|                                              | Indirect personnel expenses                                                 |          | 75  |          | 64  |         
|Total                                         |                                                                             | 1,528    |     | 1,180    |     | 958     
|Indirect duties and taxes                     |                                                                             |          |     |          |     |         
|                                              | stamp duties                                                               |          | 190 |          | 145 |         
|                                              | substitute tax (Pres. Decree 601/73)                                       |          | 26  |          | 15  |         
|                                              | local property taxes                                                       |          | 14  |          | 10  |         
|                                              | tax on stock exchange contracts                                            |          | 8   |          | 7   |         
|                                              | non-recoverable VAT on purchases                                           |          | 4   |          | 4   |         
|                                              | other                                                                      |          | 22  |          | 18  |         
|                                              |                                                                             |          |     |          |     |         
|Total                                         |                                                                             | 264      |     | 199      |     | 189     
|                                              |                                                                             |          |     |          |     |         
|Total other administrative costs              |                                                                             | 1,792    |     | 1,379    |     | 1,147   
|                                              |                                                                             |          |     |          |     |         

F-142

---

(28)    ADJUSTMENTS, WRITEBACKS AND PROVISIONS

Adjustments and provisions, reported in captions 90, 100, 120, 140 and 150 of the consolidated statement of income, and writebacks, reported in captions 130 and
160, are detailed below:

|                                                                                               |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|---------------------------------------------------------------------------------------------- |  | -------- |  | -------- |  | --------
|
|Adjustments to intangible and tangible fixed assets (caption 90)                               |  | 753      |  | 543      |  | 389     
|Provisions for risks and charges (caption 100)                                                 |  | 261      |  | 136      |  | 323     
|Adjustments to loans and provisions for guarantees and commitments (caption 120)               |  | 889      |  | 636      |  | 647     
|Writebacks of adjustments to loans and provisions for guarantees and commitments (caption 130) |  | 320      |  | 278      |  | 417     
|Provisions to reserves for possible loan losses (caption 140)                                  |  | 27       |  | 11       |  | 8       
|Adjustments to financial fixed assets (caption 150)                                            |  | 569      |  | 235      |  | 36      
|Writebacks of adjustments to financial fixed assets (caption 160)                              |  | 8        |  | 2        |  | 15      

Adjustments to intangible and tangible fixed assets (caption 90)

|                                       |                                                                       | 12/31/02 |     | 12/31/01 |     | 12/31/00
|-------------------------------------- | --------------------------------------------------------------------- | -------- | --- | -------- | --- | --------
|
|Adjustments to intangible fixed assets |                                                                       |          |     |          |     |         
|                                       | amortization of start-up and capital increase expenses               |          | 1   |          | 2   |         
|                                       | amortization of goodwill                                             |          | 2   |          | 1   |         
|                                       | amortization of merger differences                                   |          | 27  |          | 27  |         
|                                       | amortization of software costs                                       |          | 198 |          | 125 |         
|                                       | long-term writedowns of software cost                                |          | 4   |          | 8   |         
|                                       | amortization of other deferred charges                               |          | 32  |          | 45  |         
|                                       | long-term writedowns of other deferred charges                       |          | 12  |          |    |         
|                                       | amortization of goodwill arising on consolidation                    |          | 154 |          | 96  |         
|                                       | amortization of goodwill arising on application of the equity method |          | 29  |          | 25  |         
|Adjustments to tangible fixed assets   |                                                                       |          |     |          |     |         
|                                       | depreciation of property                                             |          | 92  |          | 66  |         
|                                       | depreciation of furniture and installations                          |          | 202 |          | 148 |         
|                                       |                                                                       |          |     |          |     |         
|Total                                  |                                                                       | 753      |     | 543      |     | 389     
|                                       |                                                                       |          |     |          |     |         

Individual
assets have been written down with reference to their remaining useful lives using, in most cases, the maximum fiscally-allowed rates, including the provision of accelerated
depreciation.

The
permanent nature of the writedowns in other long-term charges refers to adjustments made by the subsidiary IMIWEB Bank, following the operating scenario after the
disposal of the subsidiary.

Amortization
of goodwill from consolidation includes, for the French group Fideuram Wargny, besides the ordinary amortization for the year 2002, a writedown of
€44 million, made to take account of the downward trend in financial markets and of a more prudent evaluation of prospects of future profit for the subsidiaries.

F-143

---



Provisions for risks and charges (caption 100)

Provisions for risks and charges, for €261 million, made during the year ended December 31, 2002 reflect the consolidation of the
corresponding provisions of the Parent Bank for €149 million and €18 million for provisions made by during the year by "Network Banks" held by Cardine
Finanziaria. The remainder refers to provisions of €68 million made by subsidiaries operating in the placement and management of financial products against the risks involved in
such activities and €26 million accrued by other subsidiaries.

The
provisions made by the Parent Bank are allocated as follows:



The
provisions made by the "Network Banks" are allocated as follows:



The
provisions made by the other subsidiaries operating in financial services for families are made up of prudent provisions against risks connected with the distribution and management
of financial products.

Provisions
for risks and charges, €136 million, made during the year ended December 31, 2001 reflect the consolidation of the corresponding provision of the
Parent Bank (€30 million) and provisions made by subsidiary Banco di Napoli (€34 million). The remainder refers essentially to provisions made by the
subsidiaries operating in the placement and management of financial products against the risks involved in such activities.

The
provision made by the Parent Bank is allocated as follows:



The
provision made by Banco di Napoli is allocated as follows:



F-144

---



The
provisions made by other subsidiaries relate to prudent provisions made by subsidiaries operating in the area of financial services for households for risks involved in the marketing
financial products.

Provisions
for risks and charges, €323 million, made during the year ended December 31, 2000 reflect the consolidation of the corresponding provision of the
Parent Bank (€201 million) and provisions made by subsidiary Banco di Napoli (€74 million). The remainder refers essentially to provisions made by the
subsidiaries operating in the placement and management of financial products against the risks involved in such activities.

The
provision made by the Parent Bank is allocated as follows:



The
provision made by Banco di Napoli in the second half of the year is split as follows:



The
provisions made by other subsidiaries relate to prudent provisions made by subsidiaries operating in the area of financial services for households for risks involved in the marketing
financial products.

Adjustments to loans and provisions for guarantees and commitments (caption 120)

The
following table sets out the analysis of caption 120 "Adjustments to loans and provisions for guarantees and commitments".

F-145

---

Analysis of caption 120 "Adjustments to loans and provisions for guarantees and commitments" (table 5.1 B.I.)

|                                              |                                       | 12/31/02 |     | 12/31/01 |     | 12/31/00
|--------------------------------------------- | ------------------------------------- | -------- | --- | -------- | --- | --------
|
|(a) Adjustments to loans                      |                                       | 803      |     | 622      |     | 634     
|                                              | of which:                             |          |     |          |     |         
|                                              | general adjustments for country risk |          | 7   |          | 13  |         
|                                              | other general adjustments            |          | 189 |          | 184 |         
|(b) Provisions for guarantees and commitments |                                       | 86       |     | 14       |     | 13      
|                                              | of which:                             |          |     |          |     |         
|                                              | general provisions for country risk  |          |    |          |    |         
|                                              | other general provisions             |          | 67  |          | 3   |         
|                                              |                                       |          |     |          |     |         
|Total                                         |                                       | 889      |     | 636      |     | 647     
|                                              |                                       |          |     |          |     |         

In
addition to the above adjustments, default interest of €142 million during 2001and 2000 has been reversed from interest income.

Writebacks of adjustments to loans and provisions for guarantees and commitments (caption 130)

|                                                                 |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|---------------------------------------------------------------- |  | -------- |  | -------- |  | --------
|
|Revaluation of loans previously written down                     |  | 95       |  | 132      |  | 107     
|Revaluation of loans previously written off                      |  | 1        |  | 2        |  | 1       
|Revaluation of provisions for guarantees and commitments         |  | 18       |  | 2        |  | 2       
|Collection of loan principal previously written down             |  | 116      |  | 72       |  | 200     
|Collection of loan principal and interest previously written off |  | 39       |  | 35       |  | 46      
|Collection of default interest previously written down           |  | 51       |  | 35       |  | 61      
|                                                                 |  |          |  |          |  |         
|Total                                                            |  | 320      |  | 278      |  | 417     
|                                                                 |  |          |  |          |  |         

Provisions to reserves for possible loan losses (caption 140)

Provisions to reserves for possible loan losses represent accruals made by certain subsidiary companies without requiring adjustments for risks which are only
potential.

Adjustments to financial fixed assets (caption 150)

|                                           |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|------------------------------------------ |  | -------- |  | -------- |  | --------
|
|Adjustments to equity investments          |  | 542      |  | 224      |  | 20      
|Adjustments to other investment securities |  | 27       |  | 11       |  | 16      
|                                           |  |          |  |          |  |         
|Total                                      |  | 569      |  | 235      |  | 36      
|                                           |  |          |  |          |  |         

Adjustments
to investment securities in 2001 mainly refer to the writedown of an investment security of Banco di Napoli in relation with the reorganization of the New York branch.

F-146

---

Adjustments
to investment securities in 2000 refer to the writedown made by the Parent Bank of debt securities issued by "Countries at risk", to take account of market trends, in
compliance with art. 18 of Decree 87/92.

Adjustments
to equity investments relate to the writedown of holdings in the following non-consolidated companies:

|                                             |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|-------------------------------------------- |  | -------- |  | -------- |  | --------
|
|Santander Central Hispano                    |  | 399      |  | 80       |  |        
|Fiat S.p.A.                                  |  | 82       |  | 72       |  |        
|Hutchinson 3G Italia S.p.A.                  |  | 16       |  | 19       |  |        
|Olivetti S.p.A.                              |  | 10       |  | 19       |  |        
|Idra Partecipazioni S.p.A.                   |  | 6        |  |         |  |        
|Enel S.p.A.                                  |  | 4        |  | 4        |  |        
|AEM Torino S.p.A.                            |  | 4        |  | 3        |  |        
|Convergenza S.C.A.                           |  | 4        |  | 1        |  |        
|Euromedia Venture Belgique S.A.              |  | 2        |  | 3        |  |        
|Engineering Ingegneria Informatica S.p.A.    |  | 3        |  | 1        |  |        
|Praxis Calcolo S.p.A.                        |  | 2        |  |         |  |        
|Kiwi II VenturaServiços de Consultoria S.A. |  | 2        |  | 1        |  |        
|Banca Popolare di Lodi S.c.r.l.              |  | 1        |  | 6        |  | 3       
|Metzler International A.G.                   |  | 1        |  |         |  |        
|AC.E.GA.S S.p.A.                             |  | 1        |  | 2        |  |        
|ACEA S.p.A.                                  |  | 1        |  | 1        |  |        
|Blixer S.p.A.                                |  |         |  | 4        |  | 4       
|Cartiere Fedrigoni S.p.A.                    |  |         |  | 2        |  |        
|Davide Campari S.p.A.                        |  |         |  | 2        |  |        
|Banca Mediocredito S.p.A.                    |  |         |  | 1        |  |        
|Elsacom N.V.                                 |  |         |  |         |  | 8       
|Filos S.p.A.                                 |  |         |  |         |  | 2       
|Giraglia Immobiliare S.p.A.                  |  |         |  | 1        |  |        
|Other adjustments                            |  | 4        |  | 2        |  | 3       
|                                             |  |          |  |          |  |         
|Total                                        |  | 542      |  | 224      |  | 20      
|                                             |  |          |  |          |  |         

In
the context of the purchase agreement for shares in West Bank S.A., the former Cardine Banca granted some shareholders a put option on their shares, for a unit price not lower than
that set for the acquisition of the majority shareholding in West Bank by Cardine Banca. With respect to this put option, SANPAOLO IMI booked a commitment for approximately
€5 million.

Considering
that the investment in West Bank S.A. was written down to reflect the reduction in equity value from the effect of the losses for the year and that the put options are valued
at cost and eventually written down to reflect any permanent losses in value, the December 31, 2002 financial statements were adjusted by €5 million to reflect the
proportionate value of the put options in respect of the write down of the investment.

Writebacks
of fixed financial assets in 2002 (€8 million) refer to writebacks of equity investments for €3 million and writebacks of
investment securities for €5 million.

F-147

---

Writebacks
of fixed financial assets in 2001 (€2 million) refer to equity investments for €1 million and to dealing securities for
€1 million.

Writebacks
of fixed financial assets in 2000 (€15 million) mainly refer to writebacks to the investment in Montedison S.p.A. (€14 million)
by NHSNuova Holding Sanpaolo IMI S.p.A.

Changes in the reserve for general banking risks (caption 230)

As already indicated in Note 19, the Reserve for General Banking Risks has been fully used by the Parent Bank, amounting to
€358 million (including the allocation of the merger goodwill from the incorporation of Cardine Banca). Residual use at consolidated level (€6 million)
reflects the movements of the subsidiaries.

This
use has been made to cover the negative impact on net income of the devaluations of the listed investment portfolio, also taking account of the need to optimize the Group's tax
position.

(29)    OTHER CONSOLIDATED STATEMENT OF INCOME CAPTIONS

|                                          |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|----------------------------------------- |  | -------- |  | -------- |  | --------
|
|Dividends and other revenues (caption 30) |  | 565      |  | 397      |  | 231     
|Other operating income (caption 70)       |  | 422      |  | 280      |  | 250     
|Other operating expenses (caption 110)    |  | 50       |  | 36       |  | 31      
|Extraordinary income (caption 190)        |  | 575      |  | 660      |  | 451     
|Extraordinary expense (caption 200)       |  | 248      |  | 269      |  | 55      
|Income taxes for the year (caption 240)   |  | 450      |  | 318      |  | 785     

Consolidated
statement of income captions 70, 110, 190, 200, and 240, not discussed above, comprise:

Other operating income (caption 70)

Analysis of caption 70 "Other operating income" (Table 6.1 B.I.)

|                                                    |                   | 12/31/02 |     | 12/31/01 |     | 12/31/00
|--------------------------------------------------- | ----------------- | -------- | --- | -------- | --- | --------
|
|Expenses recovered                                  |                   |          |     |          |     |         
|                                                    | stamp duties     |          | 180 |          | 112 |         
|                                                    | other taxes      |          | 32  |          | 44  |         
|                                                    | legal costs      |          | 25  |          | 7   |         
|                                                    | other recoveries |          | 78  |          | 43  |         
|Income from merchant banking activities             |                   | 13       |     | 14       |     | 11      
|Income from IT companies                            |                   | 3        |     | 14       |     | 10      
|Reimbursement of services rendered to third parties |                   | 11       |     | 7        |     | 7       
|Rent and other income from property                 |                   | 17       |     | 4        |     | 4       
|Other income from leasing activities                |                   | 5        |     | 3        |     | 2       
|Other income                                        |                   | 58       |     | 32       |     | 41      
|                                                    |                   |          |     |          |     |         
|Total                                               |                   | 422      |     | 280      |     | 250     
|                                                    |                   |          |     |          |     |         

F-148

---

Other operating expenses (caption 110)

Analysis of caption 110 "Other operating expenses" (Table 6.2 B.I.)

|                                        |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|--------------------------------------- |  | -------- |  | -------- |  | --------
|
|Leasing charges                         |  | 1        |  | 3        |  | 3       
|Other charges on leasing transactions   |  | 24       |  | 16       |  | 17      
|IT companies expenses                   |  | 1        |  | 8        |  | 6       
|Losses from merchant banking activities |  | 1        |  | 3        |  |        
|Other expenses                          |  | 23       |  | 6        |  | 5       
|                                        |  |          |  |          |  |         
|Total                                   |  | 50       |  | 36       |  | 31      
|                                        |  |          |  |          |  |         

Extraordinary income (caption 190)

Analysis of caption 190 "Extraordinary income" (Table 6.3 B.I.)

|                                                        |                                                                   | 12/31/02 |     | 12/31/01 |     | 12/31/00
|------------------------------------------------------- | ----------------------------------------------------------------- | -------- | --- | -------- | --- | --------
|
|Out-of-period income                                    |                                                                   |          |     |          |     |         
|                                                        | use of reserves in excess                                        |          | 106 |          | 16  |         
|                                                        | disposal of derivative contracts connected with shareholdings(1) |          | 96  |          |    |         
|                                                        | other out-of-period income                                       |          | 107 |          | 59  |         
|Reimbursement of prior years direct taxes               |                                                                   | 21       |     |         |     |        
|Amounts not payable                                     |                                                                   | 6        |     | 28       |     | 5       
|Out-of-court settlements                                |                                                                   | 10       |     | 66       |     |        
|Price revision on property and investment transactions  |                                                                   | 10       |     | 7        |     |        
|Reimbursement of damages for natural disasters          |                                                                   | 5        |     |         |     |        
|Incorporation of former Banco di Napoli saving deposits |                                                                   | 22       |     |         |     |        
|Closure of branches                                     |                                                                   | 12       |     |         |     |        
|Gains on:                                               |                                                                   |          |     |          |     |         
|                                                        | equity investments(2)                                            |          | 133 |          | 280 |         
|                                                        | investment in line-by-line consolidated companies                |          | 16  |          | 152 |         
|                                                        | investment securities                                            |          | 5   |          | 12  |         
|                                                        | own shares in portfolio                                          |          |    |          | 30  |         
|                                                        | tangible and intangible fixed assets                             |          | 26  |          | 10  |         
|                                                        |                                                                   |          |     |          |     |         
|Total                                                   |                                                                   | 575      |     | 660      |     | 451     
|                                                        |                                                                   |          |     |          |     |         

---

F-149

---

Extraordinary expense (caption 200)

Analysis of caption 200 "Extraordinary expense"

|                                                              |                               | 12/31/02 |    | 12/31/01 |   | 12/31/00
|------------------------------------------------------------- | ----------------------------- | -------- | -- | -------- | - | --------
|
|Provisions for supplementary pensions made by Banco di Napoli |                               |         |    | 114      |   |        
|Amounts not collectible                                       |                               | 7        |    | 18       |   | 5       
|Transactions for legal disputes                               |                               | 15       |    | 6        |   |        
|Restructuring                                                 |                               | 25       |    | 10       |   |        
|Registration tax on the IMISIR sentence                      |                               |         |    | 17       |   |        
|Severance bonus incentive for voluntary redundancy            |                               | 31       |    | 31       |   | 7       
|Losses on:                                                    |                               |          |    |          |   |         
|                                                              | investment securities        |          | 3  |          |  |         
|                                                              | equity investments(a)        |          | 96 |          | 6 |         
|                                                              | other financial fixed assets |          | 4  |          | 9 |         
|                                                              | tangible fixed assets        |          | 1  |          |  |         
|Other out-of-period expenses                                  |                               | 66       |    | 58       |   | 35      
|                                                              |                               |          |    |          |   |         
|Total                                                         |                               | 248      |    | 269      |   | 55      
|                                                              |                               |          |    |          |   |         

---

Restructuring
costs include provisions made for the restructuring of the tax collection sector (€13 million) and for the charges expensed to the statement of
income for the announced disposal of IMIWEB Bank (€9 million).

Income taxes for the year (caption 240)

Analysis of caption 240 "Income taxes for the year" (B.I instruction dated 08/03/99)

|                                      |  | 12/31/02 |   | 12/31/01 |   | 12/31/00 |  
|------------------------------------- |  | -------- | - | -------- | - | -------- | -
|
|1. Current income taxes               |  | 932      |   | 691      |   | 883      |  
|2. Change in deferred tax assets      |  | 368      |   | (409     | ) | (88      | )
|3. Change in deferred tax liabilities |  | (850     | ) | 36       |   | (10      | )
|4. Income taxes for the year          |  | 450      |   | 318      |   | 785      |  

The
consolidated tax rate for 2002 (calculated on the ratio between gross income and income taxes from the reclassified statement of income, therefore without considering the change in
the Reserve for general banking risks and minority interest) was 44.2%, with an increase on that recorded in 2001 (19.6%) and in 2000 (35.9%). It is reminded that the tax rate for the year 2001 was
particularly moderate for the following reasons:



Net
of these components, the consolidated tax rate at year end would have been in the region of 38% (standard tax rate). The lower rate when compared to the sum of Corporate Income Tax
and the

F-150

---

Regional
Tax on Businesses (41%), was determined on the lower taxable income generated abroad, which exceeded the negative influence of the non-deductibility of personnel costs to Italian
companies in respect of the Regional Tax on Businesses.

The
negative trend in respect of 2001 standard rates is mainly determined by the following events:



(30)    OTHER INFORMATION REGARDING THE CONSOLIDATED STATEMENT OF INCOME

Geographical distribution of revenues

The geographical distribution of revenues, based on the location of the Group's companies and their branches for years 2002, 2001 and 2000, is as follows:

(Table 7.1 B.I.)

|                                           |  | 12/31/02 |   | 12/31/01
|------------------------------------------ |  | -------- | - | --------
|
|
|Interest income and similar revenues       |  | 7,779    |   | 557     
|Dividends and other revenues               |  | 539      |   | 9       
|Commission income                          |  | 2,671    |   | 764     
|Profits (losses) on financial transactions |  | (142     | ) | 42      
|Other operating income                     |  | 398      |   | 18      
|                                           |  |          |   |         
|Total revenues                             |  | 11,245   |   | 1,390   
|                                           |  |          |   |         

(Table 7.1 B.I.)

|                                           |  | 12/31/00(*)
|------------------------------------------ |  | -----------
|
|
|Interest income and similar revenues       |  | 5,840      
|Dividends and other revenues               |  | 216        
|Commission income                          |  | 2,349      
|Profits (losses) on financial transactions |  | 138        
|Other operating income                     |  | 349        
|                                           |  |            
|Total revenues                             |  | 8,892      
|                                           |  |            

---

F-151

---

(31)    OTHER INFORMATION

DIRECTORS AND STATUTORY AUDITORS

Remuneration

The remuneration of Directors, including the variable component, and Statutory Auditors for the performance of their duties on behalf of the Parent Bank and
subsidiary companies is as follows:

(Table 1.1 B.I.)

|                   |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|------------------ |  | -------- |  | -------- |  | --------
|
|Directors(*)       |  | 8        |  | 5        |  | 5       
|Statutory Auditors |  | 1        |  | 1        |  | 1       

---

The
figures in the table include the remuneration toward the Directors and Statutory Auditors of Cardine Banca S.p.A. for the period before its merger by incorporation with SANPAOLO IMI
S.p.A. (1/1/02-5/31/02).

A
detailed analysis of Stock option plans and emoluments paid to Directors, Statutory Auditors and General Managers are reported in the next pages.

Compensation paid to Directors, Statutory Auditors and General Managers
(pursuant to Article 78 of Consob Resolution 11971 of May 14, 1999, amended by CONSOB resolution 13616 of June 12, 2002)

Directors, Statutory Auditors and General Managers in office

|                      |  |                                              |  |                 |  |      |  | Compensation | 
|--------------------- |  | -------------------------------------------- |  | --------------- |  | ---- |  | ------------ | 
|
|
|
|
|Directors             |  |                                              |  |                 |  |      |  |              | 
|MASERA Rainer Stefano |  | Chairman of the Board of Directors(3)        |  | 1.1.02-12.31.02 |  | 2003 |  | 656          | 
|ROSSI Orazio          |  | Deputy Chairman of the Board of Directors(3) |  | 3.5.02-12.31.02 |  | 2003 |  | 86           | 
|SALZA Enrico          |  | Deputy Chairman of the Board of Directors(3) |  | 1.1.02-12.31.02 |  | 2003 |  | 112          | 
|BUSSOLOTTO Pio        |  | Managing Director(3)                         |  | 3.5.02-12.31.02 |  | 2003 |  | 507          | 
|IOZZO Alfonso         |  | Managing Director(3)                         |  | 1.1.02-12.31.02 |  | 2003 |  | 656          | 
|                      |  |                                              |  |                 |  |      |  |              | 

F-152

---

|MARANZANA Luigi                        |  | Managing Director(3)           |  | 1.1.02-12.31.02  |  | 2003    |  | 656 |     |   |  | 413 |     |     | (d)
|-------------------------------------- |  | ------------------------------ |  | ---------------- |  | ------- |  | --- | --- | - |  | --- | --- | --- | ---
|BOUILLOT Isabelle                      |  | Director                       |  | 3.5.02-12.31.02  |  | 2003    |  | 47  |     |   |  |    |     | 26  |    
|CARMI Alberto                          |  | Director                       |  | 1.1.02-12.31.02  |  | 2003    |  | 62  |     |   |  | 93  |     |    |    
|FONTANA Giuseppe                       |  | Director                       |  | 1.1.02-12.31.02  |  | 2003    |  | 82  |     |   |  | 116 |     | 62  |    
|GALATERI DI GENOLA E SUNIGLIA Gabriele |  | Director(3)                    |  | 1.1.02-12.31.02  |  | 2003    |  | 71  |     |   |  | 116 |     | 26  |    
|GARDNER Richard                        |  | Director                       |  | 1.1.02-12.31.02  |  | 2003    |  | 60  |     |   |  | 47  |     |    |    
|MANULI Mario                           |  | Director                       |  | 1.1.02-12.31.02  |  | 2003    |  | 65  |     |   |  | 70  |     |    |    
|MARRONE Virgilio                       |  | Director(3)                    |  | 1.1.02-12.31.02  |  | 2003    |  |     | (e) |   |  |     | (e) |    |    
|MATUTES Abel                           |  | Director                       |  | 1.1.02-12.31.02  |  | 2003    |  | 59  |     |   |  | 47  |     |    |    
|MIHALICH Iti                           |  | Director(3)                    |  | 1.1.02-12.31.02  |  | 2003    |  | 92  |     |   |  | 116 |     | 27  |    
|OTTOLENGHI Emilio                      |  | Director                       |  | 1.1.02-12.31.02  |  | 2003    |  | 63  |     |   |  | 109 |     | 98  |    
|SACCHI MORSIANI Gian Guido             |  | Director                       |  | 3.5.02-12.31.02  |  | 2003    |  | 53  |     |   |  |    |     | 304 |    
|VERMEIREN Remi François                |  | Director                       |  | 1.1.02-12.31.02  |  | 2003    |  | 56  |     |   |  | 8   |     |    |    
|ARCUTI Luigi                           |  | Honorary Chairman(4)           |  |                  |  |         |  |    |     |   |  | 47  |     |    |    
|ALBANI CASTELBARCO VISCONTI Carlo      |  | Director(4)                    |  |                  |  | 4.30.01 |  |    |     |  |  | 39  |     |    |    
|BOTIN Emilio                           |  | Director(4)                    |  |                  |  | 4.30.01 |  |    |     |  |  | 8   |     |    |    
|INCIARTE Juan Rodriguez                |  | Director(4)                    |  |                  |  | 4.30.01 |  |    |     |  |  | 47  |     |    |    
|MASINI Mario                           |  | Director(4)                    |  |                  |  | 4.30.01 |  |    |     |  |  | 47  |     |    |    
|SCLAVI Antonio                         |  | Director(4)                    |  |                  |  | 4.30.01 |  |    |     |  |  | 31  |     |    |    
|VERCELLI Alessandro                    |  | Director(4)                    |  |                  |  | 4.30.01 |  |    |     |  |  | 23  |     |    |    
|Statutory Auditors                     |  |                                |  |                  |  |         |  |     |     |   |  |     |     |     |    
|PAOLILLO Mario                         |  | Chairman of Statutory Auditors |  | 1.1.02-12.31.02  |  | 2004    |  | 105 |     |  |  |    |     | 240 |    
|BENEDETTI Aureliano                    |  | Statutory Auditor              |  | 1.1.02-12.31.02  |  | 2004    |  | 69  |     |  |  |    |     | 116 |    
|DALLOCCHIO Maurizio                    |  | Statutory Auditor              |  | 1.1.02-12.31.02  |  | 2004    |  | 71  |     |  |  |    |     | 21  |    
|MAZZI Paolo                            |  | Statutory Auditor              |  | 4.30.02-12.31.02 |  | 2004    |  | 50  |     |  |  |    |     |    |    
|VITALI Enrico                          |  | Statutory Auditor              |  | 4.30.02-12.31.02 |  | 2004    |  | 46  |     |  |  |    |     |    |    
|MIGLIETTA Angelo                       |  | Statutory Auditor              |  | 1.1.02-4.30.02   |  |         |  | 23  |     |  |  |    |     | 98  |    
|                                       |  |                                |  |                  |  |         |  |     |     |   |  |     |     |     |    

F-153

---

|RAGAZZONI Ruggero |  | Statutory Auditor |  | 1.1.02-4.30.02 |  |  |  | 23 |  |  |  |  |  | 78 | 
|----------------- |  | ----------------- |  | -------------- |  |  |  | -- |  | - |  | - |  | -- | 

---



F-154

---

Compensation paid to Directors, Statutory Auditors and General ManagersLeaving Banco di Napoli

Directors, Statutory Auditors and General Managers in office

|                       |  |                                    |  |                  |  |          |  | Compensation
|---------------------- |  | ---------------------------------- |  | ---------------- |  | -------- |  | ------------
|
|
|
|
|Directors              |  |                                    |  |                  |  |          |  |             
|PEPE Federico          |  | Chairman of the Board of Directors |  | 1.1.02-12.31.02  |  | 12.31.02 |  | 576         
|SERAFINO Vittorio      |  | Managing Director                  |  | 1.1.02-12.31.02  |  | 12.31.02 |  |             
|                       |  | Director                           |  | 1.1.02-12.31.02  |  | 12.31.02 |  |             
|GUARINO Giuseppe       |  | Director                           |  | 1.1.02-12.31.02  |  | 12.31.02 |  | 38          
|IOZZO Alfonso          |  | Director                           |  | 1.1.02-12.31.02  |  | 12.31.02 |  |             
|MARANZANA Luigi        |  | Director                           |  | 1.1.02-3.12.02   |  | 3.12.02  |  |             
|MONTAGNESE Maurizio    |  | Director                           |  | 3.12.02-12.31.02 |  | 12.31.02 |  |             
|PICCA Bruno            |  | Director                           |  | 1.1.02-12.31.02  |  | 12.31.02 |  |             
|ZODDA Augusto          |  | Director                           |  | 1.1.02-12.31.02  |  | 12.31.02 |  | 38          
|Statutory Auditors     |  |                                    |  |                  |  |          |  |             
|ORIOLI Giancarlo       |  | Chairman of Statutory Auditors     |  | 1.1.02-12.31.02  |  | 12.31.02 |  | 59          
|SCIBETTA Sergio        |  | Statutory Auditor                  |  | 1.1.02-12.31.02  |  | 12.31.02 |  | 39          
|VILLARI Carlo          |  | Statutory Auditor                  |  | 1.1.02-12.31.02  |  | 12.31.02 |  | 36          
|CODACCI PISANELLI Vito |  | Supplementary Auditor              |  | 1.1.02-12.31.02  |  | 12.31.02 |  | 1           
|GRIMALDI Gian Paolo    |  | Supplementary Auditor              |  | 1.1.02-12.31.02  |  | 12.31.02 |  | 1           

---

F-155

---

Stock option plans

The Shareholders' Meeting held on July 31, 1998 authorized the Board of Directors to make stock incentive (stock option) plans in favor of Group
executives, resorting to increases in capital against payment up to a maximum amount subsequently established as €40 million, corresponding to 14,285,714 shares.

On
the strength of this power of attorney, the Board of Directors:



In
compliance with CONSOB resolution no. 11971 of May 14, 1999, it is hereby noted that the Directors and Chairman of the Bank enjoyed the benefits of the following stock
option plans:



The
Shareholders' Meeting, held on April 30, 2002, conferred a new power of attorney to the Board of Directors to make stock incentive plans in favor of Group executives,
resorting to increases in capital against payment up to a maximum amount of €51,440,648 million, corresponding to 18,371,660 shares.

On
the strength of this power of attorney the Board of Directors, on December 17, 2002, presented a new stock option plan, structured thus:



F-156

---



Furthermore,
the Board of Directors, on May 14, 2002, presented a stock option plan for the Chairman and the Managing Directors, for the 2001-2003
three-year period, on the basis of the power of attorney approved by the Ordinary meeting of April 30, 2002 to use own shares at the service of the same plan.

The
plan thus presented, has the following characteristics:



To
implement this stock option plan, a proposal will be made to the Shareholders' meeting called to approve the 2002 financial statements, to authorize the purchase of own shares, as
specified in the next point on the agenda.

F-157

---

The
following table shows the stock options assigned to the Directors and General Managers on the basis of Attachment 3CSchedule 2, of Consob resolution
no. 13616 dated June 12, 2002.

|                      |  |                   |  | Options at the
beginning of the year |  | Options assigned
during the year |  |                          |  |         |  |         |  |                       
|--------------------- |  | ----------------- |  | ------------------------------------ |  | -------------------------------- |  | ------------------------ |  | ------- |  | ------- |  | ----------------------
|
|
|Plan 1999/2001        |  |                   |  |                                      |  |                                  |  | by 3/31/04               |  |         |  |         |  |                       
|Rainer Stefano MASERA |  | Managing Director |  | 123,334                              |  | 12.396                           |  |                          |  |         |  |         |  |                       
|Luigi MARANZANA       |  | Managing Director |  | 370,000                              |  | 12.396                           |  |                          |  |         |  |         |  |                       
|Plan 2000             |  |                   |  |                                      |  |                                  |  | from March 03 to 3/31/05 |  |         |  |         |  |                       
|Rainer Stefano MASERA |  | Managing Director |  | 188,285                              |  | 16.4557                          |  |                          |  |         |  |         |  |                       
|Luigi MARANZANA       |  | Managing Director |  | 188,285                              |  | 16.4557                          |  |                          |  |         |  |         |  |                       
|Plan 2001/2003        |  |                   |  |                                      |  |                                  |  |                          |  |         |  |         |  | from May 04 to 3/31/06
|Rainer Stefano MASERA |  | Chairman          |  |                                      |  |                                  |  |                          |  | 450,000 |  | 12.6244 |  |                       
|Pio BUSSOLOTTO        |  | Managing Director |  |                                      |  |                                  |  |                          |  | 300,000 |  | 12.6244 |  |                       
|Alfonso IOZZO         |  | Managing Director |  |                                      |  |                                  |  |                          |  | 450,000 |  | 12.6244 |  |                       
|Luigi MARANZANA       |  | Managing Director |  |                                      |  |                                  |  |                          |  | 450,000 |  | 12.6244 |  |                       

---

F-158

---

In
2002 the Board of Directors approved the first stock granting operation of SANPAOLO IMI shares to all Parent Bank personnel in service on June 27, 2002. The initiative,
application for which was voluntary, was connected with the 2001 company production premium issued in May 2002.

The
assignment of free shares, stock granting, (unavailable for three years) involved 14,427 employees, 72.5% of those entitled. On the basis of the initiative regulations, personnel
received 1,912,373 shares with a reference cost per unit of €10.0196 (calculated according to the current tax standards) for a commitment of €19.2 million.

Lastly,
the Board of Directors on March 4, 2003 approved the repetition of the stock granting operation to Parent Bank personnel, with voluntary application, for a cost graduated
in relation to the individual level of remuneration, providing for a connection with the 2002 company production premium which will be issued in 2003.

Development of stock option plans in 2002

|    |  |                                                         |  | Number of shares |  | Average
exercize
price |  | Market
price |    
|--- |  | ------------------------------------------------------- |  | ---------------- |  | ---------------------- |  | ------------ | ---
|
|(1) |  | Rights existing as of January 1, 2002                   |  | 11,654,104       |  | 13.66497               |  | 12.041       | (a)
|(2) |  | New rights assigned in 2002 to Executives               |  | 5,455,000        |  | 7.1264                 |  | 6.703        | (b)
|(3) |  | New rights assigned to President and Managing Directors |  | 1,650,000        |  | 12.6244                |  | 11.742       | (c)
|(4) |  | Rights exercised in 2002                                |  |                 |  |                       |  |             |    
|(5) |  | Rights lapsed in 2002(d)                                |  | -245,000         |  | 14.3989                |  |             |    
|(6) |  | Rights existing as of December 31, 2002                 |  | 18,514,104       |  | 10.9061                |  | 6.200        | (e)
|(7) |  | Of which: exercisable on December 31, 2002(f)           |  |                 |  |                       |  |             |    

---

Development of stock option plans in 2001

|    |  |                                               |  | Number of shares |  | Average
exercize
price |  | Market
price |    
|--- |  | --------------------------------------------- |  | ---------------- |  | ---------------------- |  | ------------ | ---
|
|(1) |  | Rights existing as of January 1, 2001         |  | 8,227,020        |  | 14.06305               |  | 17.269       | (a)
|(2) |  | New rights assigned in 2001                   |  | 4,030,000        |  | 12.7229                |  | 11.860       | (b)
|(3) |  | Rights exercised in 2001                      |  | -422,916         |  | 12.396                 |  | 15.675       | (c)
|(4) |  | Rights lapsed in 2001(d)                      |  | -180,000         |  |                       |  |             |    
|(5) |  | Rights existing as of December 31, 2001       |  | 11,654,104       |  | 13.66497               |  | 12.041       | (e)
|(6) |  | Of which: exercisable on December 31, 2001(f) |  |                 |  |                       |  |             |    

---

F-159

---

Details of rights by exercise price and residual maturity

|         |  | Rights assigned as of 12/31/02 |  | Incl.:
exercisable as
of 12/31/02
|-------- |  | ------------------------------ |  | ---------------------------------
|
|
|
|12.396   |  | 4,305,834                      |  |                                 
|16.45573 |  |                               |  | 3,208,270                        
|12.7229  |  |                               |  |                                 
|12.6244  |  |                               |  |                                 
|7.1264   |  |                               |  |                                 
|         |  |                                |  |                                  
|Total    |  | 4,305,834                      |  | 3,208,270                        
|         |  |                                |  |                                  

---

Details of rights by exercise price and residual maturity

|         |  | Rights assigned as of 12/31/01 |  | Incl.:
exercisable as
of 12/31/01
|-------- |  | ------------------------------ |  | ---------------------------------
|
|
|
|12.396   |  | 4,305,834                      |  |                                 
|16.45573 |  |                               |  | 3,318,270                        
|12.7229  |  |                               |  |                                 
|         |  |                                |  |                                  
|Total    |  | 4,305,834                      |  | 3,318,270                        
|         |  |                                |  |                                  

F-160

---



In
accordance with the recommendations of the Code of Conduct for Listed Companies promoted by Borsa Italiana S.p.A., a list is provided below of the offices held by Directors or
Statutory Auditors of the Board of Directors of SANPAOLO IMI in other companies listed on regulated markets (even abroad), in financial institutions, banks, insurance companies or other significantly
large companies.

|DIRECTOR                                   |  | OFFICE                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | COMPANY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dr. Rainer MASERA                          |  | Chairman
Member of the Board of Directors                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Sanpaolo Imi International S.A.
BEI - European Investment Bank                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|M.me Isabelle BOUILLOT                     |  | President du Directoire
President of the Supervisory Board
President
President of the Supervisory Board
Member of the Supervisory Board
President
Member of the Supervisory Board
Administrator
Member of the Supervisory Board
Member of the Board
Member of the Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Board
Member of the Supervisory Board
Administrator
President of the Board |  | CDC Finance - CDC Ixis S.A.
CDC Ixis Financial Guaranty Holding S.A.
CDC Ixis Financial Guaranty North America Inc.
CDC Ixis Capital Markets S.A.
CDC Ixis Securities S.A.
CDC Ixis North America
CDC Ixis Asset Management S.A.
CDC Ixis AM US Corporation
CDC Ixis Private Capital Management S.A.
CDC Ixis Private Equity S.A.
CDC Ixis Immo S.A.
CDC Ixis Italia Holding S.A.
Accor S.A.
Caisse Nationale des Caisses d'Epargne
Compagnie de Saint Gobain
CNP Assurances
Compagnie Financiére Eulia S.A.
Sociéte de Gestion de CDC Euro Obligations
|Rag. Pio BUSSOLOTTO                        |  | Managing Director
Managing Director
Director                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Cardine Finanziaria S.p.A.
Cassa di Risparmio di Padova e Rovigo S.p.A.
Sanpaolo Imi International S.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Cav. Lav. Alberto CARMI                    |  | /                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | /                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Dr. Giuseppe FONTANA                       |  | Director                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Banca Popolare di Sondrio                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Dr. Gabriele GALATERI di GENOLA e SUNIGLIA |  | Director
Director
Director
Managing Partner
Director
Director
Director
Director
Director
Director                                                                                                                                                                                                                                                                                                                                                                |  | Accor S.A.
Birra Peroni Industriale S.p.A.
Cassa di Risparmio di Savigliano S.p.A.
Giovanni Agnelli e C. S.a.p.a.z.
Fiat S.p.A.
IFI S.p.A.
Sanpaolo Imi Investments So.par.fi.
Sifalberghi S.r.l.
Toro Assicurazioni S.p.A.
Worms & Cie                                                                                                                                                                                                                                                                                                                
|Mr. Richard GARDNER                        |  | /                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | /                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Dr. Alfonso IOZZO                          |  | Director
Director
Director (Supervisory Board)                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Sanpaolo Imi International S.A.
NHS Mezzogiorno SGR S.p.A.
CDC Finance - CDC Ixis S.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Cav. Lav. Mario MANULI                     |  | Managing Director
Deputy Chairman and Managing Director
Director
Director                                                                                                                                                                                                                                                                                                                                                                                        |  | Manuli Rubber Industries S.p.A.
Manuli Packaging S.p.A.
Terme di Saturnia S.r.l.
Web Equity S.p.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Rag. Luigi MARANZANA                       |  | Chairman
Director
Director
Director                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Sanpaolo Imi Wealth Management S.p.A.
Banca Imi S.p.A.
Sanpaolo Imi International S.A.
Sanpaolo Imi Internazionale S.p.A.                                                                                                                                                                                                                                                                                                                                                                                                                              
|Dr. Virgilio MARRONE                       |  | Director                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Fiat S.p.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Dr. Abel MATUTES                           |  | /                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | /                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

F-161

---

|Dr. Iti MIHALICH                      |  | Director
Director
Deputy Chairman
Director
Managing Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Chairman
Director
Director
Director |  | Aci Global S.p.A.
Agemut Sociedad de Agencia de Seguros de Mutral
Ala Service S.p.A.
Banca Reale S.p.A.
Italiana Assicurazioni S.p.A.
La Piemontese Assicurazioni S.p.A.
La Piemontese Vita S.p.A.
Reale Asistencia - Compania de Seguros S.A.
Reale Autos y Seguros Generales S.A.
Reale Immobili
Reale Sum - Agrupacion de Interes Economico
Reale Vida S.A.
Rem Assicurazioni S.p.A.
Inmobiliaria Grupo Asegurador Reale S.A.
Rem Vie S.A.
Sara Assicurazioni S.p.A.
Sara Vita S.p.A.
Reale Mutua di Assicurazioni
|------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Dr. Emilio OTTOLENGHI                 |  | Director
Director
Managing Director
Director (Supervisory Board)
Chairman                                                                                                         |  | Sanpaolo Imi International S.A.
Autostrade S.p.A.
La Petrolifera Italo Rumena S.p.A.
Solving International
VIS S.p.A.                                                                                                                                                                                                                                                                                                                                                                                                
|Comm. Orazio ROSSI                    |  | Chairman
Chairman
Chairman
Member of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors                                                     |  | Cardine Finanziaria S.p.A.
Cassa di Risparmio di Padova e Rovigo S.p.A.
Sanpaolo Imi Internazionale S.p.A.
Cassa di Risparmio di Udine e Pordenone S.p.A.
Sanpaolo Imi International S.A.
Eptaconsors S.p.A.                                                                                                                                                                                                                                                                                                         
|Prof. Avv. Gian Guido SACCHI MORSIANI |  | Chairman
Deputy Chairman
Deputy Chairman
Deputy Chairman
Deputy Chairman substitute
Director                                                                                      |  | Cassa di Risparmio in Bologna S.p.A.
Eptaconsors S.p.A.
Cardine Finanziaria S.p.A.
GE.RI.CO. S.p.A.
Finemiro Banca S.p.A.
Cassa di Risparmio di Venezia S.p.A.                                                                                                                                                                                                                                                                                                                                                       
|Ing. Enrico SALZA                     |  | Managing Director
Director
Director                                                                                                                                               |  | Tecnoholding S.p.A.
Sanpaolo Imi International S.p.A.
Thera It Global Company                                                                                                                                                                                                                                                                                                                                                                                                                                        
|M. Remi François VERMEIREN            |  | Chairman
President of the Executive Committee                                                                                                                                     |  | KBC Bank
KBC Bank and Insurance Holding Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Loans and guarantees given

(Table 1.2 B.I.)

|                   |  | 12/31/02 |  | 12/31/01 |  | 12/31/00
|------------------ |  | -------- |  | -------- |  | --------
|
|Directors          |  | 39       |  | 44       |  | 6       
|Statutory Auditors |  |         |  |         |  | 1       

The
amounts indicated above include loans granted to and guarantees given by the Group to the Directors and Statutory Auditors of the Parent Bank, for
€0.1 million (€0.1 million as of December 31, 2001), and to companies and banks identified pursuant to article 136 of the Consolidated
Banking Act, for €38.7 million (€44.4 million as of December 31, 2001), including the drawdown against credit lines granted to the latter.

F-162

---



Attachments

F-163

---

Statement of changes in consolidated shareholders' equity

Shareholders' equity as per financial statements

|                                                                                                      |                              | Capital |       | Reserves
and retained
earnings |     | Reserve for
general
banking
risks |    | Goodwill
arising on
consolidation
and on
application of
the equity
method |   | Net
income |      | Shareholders'
equity as per
financial
statements |       | Own shares in
the Parent
Bank's
portfolio |      | Shareholders'
equity as per
reclassified |      
|----------------------------------------------------------------------------------------------------- | ---------------------------- | ------- | ----- | ------------------------------ | --- | --------------------------------- | -- | ------------------------------------------------------------------------- | - | ---------- | ---- | ------------------------------------------------ | ----- | ----------------------------------------- | ---- | ---------------------------------------- | -----
|
|Shareholders' equity as of December 31, 2001                                                          |                              | 3,932   |       | 2,867                          |     | 356                               |    | 118                                                                       |   | 1,203      |      | 8,476                                            |       | (294                                      | )    | 8,182                                    |      
|                                                                                                      |                              |         |       |                                |     |                                   |    |                                                                           |   |            |      |                                                  |       |                                           |      |                                          |      
|Allocation of 2001 net income                                                                         |                              |         |       |                                |     |                                   |    |                                                                           |   |            |      |                                                  |       |                                           |      |                                          |      
|                                                                                                      | to reserves                 |         |      |                                | 430 |                                   |   |                                                                           |  |            | (430 | )                                                |      |                                           |     |                                          |     
|                                                                                                      | to shareholders             |         |      |                                |    |                                   |   |                                                                           |  |            | (773 | )                                                | (773  | )                                         |     |                                          | (773 
|Changes in the Parent Bank's own shares                                                               |                              |         |       |                                |     |                                   |    |                                                                           |   |            |      |                                                  |       |                                           |      |                                          |      
|                                                                                                      | increases                   |         |       |                                |    |                                   |   |                                                                           |  |            |     |                                                  |      |                                           | (403 | )                                        | (403 
|                                                                                                      | use for merger with Cardine |         |       |                                |    |                                   |   |                                                                           |  |            |     |                                                  |      |                                           | 678  |                                          | 678  
|                                                                                                      | other decreases             |         |       |                                |    |                                   |   |                                                                           |  |            |     |                                                  |      |                                           | 19   |                                          | 19   
|Reclassification between reserves                                                                     |                              |        |       | 24                             |     |                                  |    | (24                                                                       | ) |           |      |                                                 |       |                                          |      |                                         |      
|Merger with Cardine Banca                                                                             |                              |         |       |                                |     |                                   |    |                                                                           |   |            |      |                                                  |       |                                           |      |                                          |      
|                                                                                                      | increase of capital         |         | 1,212 |                                |    |                                   |   |                                                                           |  |            |     |                                                  | 1,212 |                                           |     |                                          | 1,212
|                                                                                                      | change in reserves          |         |      |                                | 829 |                                   | 22 |                                                                           |  |            |     |                                                  | 851   |                                           |     |                                          | 851  
|Portion of tax benefits from the Banco Napoli merger                                                  |                              |        |       | 250                            |     |                                  |    |                                                                          |   |           |      | 250                                              |       |                                          |      | 250                                      |      
|Change in Reserve for general banking risks                                                           |                              |        |       |                               |     | (364                              | )  |                                                                          |   |           |      | (364                                             | )     |                                          |      | (364                                     | )    
|Differences arising on the translation of foreign currency financial statements and other adjustments |                              |         |       | (4                             | )   |                                  |    |                                                                          |   |           |      | (4                                               | )     |                                          |      | (4                                       | )    
|Net income                                                                                            |                              |        |       |                               |     |                                  |    |                                                                          |   | 889        |      | 889                                              |       |                                          |      | 889                                      |      
|                                                                                                      |                              |         |       |                                |     |                                   |    |                                                                           |   |            |      |                                                  |       |                                           |      |                                          |      
|Shareholders' equity as of December 31, 2002                                                          |                              | 5,144   |       | 4,396                          |     | 14                                |    | 94                                                                        |   | 889        |      | 10,537                                           |       |                                          |      | 10,537                                   |      
|                                                                                                      |                              |         |       |                                |     |                                   |    |                                                                           |   |            |      |                                                  |       |                                           |      |                                          |      

F-164

---

Reconciliation between the Parent Bank's financial statements and the consolidated financial statements for 2002

|                                                          |                                                                                            | Net income |        | Capital and
reserves |        | Shareholders'
equity |        | Reserve for
possible loan
losses |      | Total  |       
|--------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ---------- | ------ | -------------------- | ------ | -------------------- | ------ | -------------------------------- | ---- | ------ | ------
|
|Financial Statements of the Parent Bank                   |                                                                                            | 764        |        | 9,192                |        | 9,956                |        |                                 |      | 9,956  |       
|                                                          |                                                                                            |            |        |                      |        |                      |        |                                  |      |        |       
|Balance of subsidiary companies consolidated line-by-line |                                                                                            | 730        |        | 12,035               |        | 12,765               |        | 194                              |      | 12,959 |       
|Consolidation adjustments:                                |                                                                                            |            |        |                      |        |                      |        |                                  |      |        |       
|                                                          | book value of line-by-line consolidated investments                                       |            |       |                      | (9,139 | )                    | (9,139 | )                                |     |        | (9,139
|                                                          | dividends of consolidated companies                                                       |            | (1,149 | )                    | 298    |                      | (851   | )                                |     |        | (851  
|                                                          | amortization of goodwill arising on consolidation and on application of the equity method |            | (183   | )                    | (298   | )                    | (481   | )                                |     |        | (481  
|                                                          | elimination of goodwill arising on consolidation and on application of the equity method  |            |       |                      | (1,326 | )                    | (1,326 | )                                |     |        | (1,326
|                                                          | elimination of gains on sale of investments                                               |            | 23     |                      | (1,427 | )                    | (1,404 | )                                |     |        | (1,404
|                                                          | valuation of investments at net equity                                                    |            | 137    |                      | 94     |                      | 231    |                                  |     |        | 231   
|                                                          | writedowns of equity investments                                                          |            | 353    |                      |       |                      | 353    |                                  |     |        | 353   
|                                                          | minority interests                                                                        |            | (43    | )                    | (291   | )                    | (334   | )                                |     |        | (334  
|                                                          | elimination of reserve for possible loan losses                                           |            | 59     |                      | 64     |                      | 123    |                                  | (123 | )      |      
|                                                          | adjustment to Group accounting policies                                                   |            | 53     |                      | (53    | )                    |       |                                  |      |        |      
|                                                          | elimination of amortization of Banco di Napoli merger deficit                             |            | 155    |                      |       |                      | 155    |                                  |     |        | 155   
|                                                          | portion of tax benefits from the Banco di Napoli merger                                   |            |       |                      | 250    |                      | 250    |                                  |     |        | 250   
|                                                          | elimination of prior year writedowns in investments made for fiscal purposes              |            |       |                      | 229    |                      | 229    |                                  |     |        | 229   
|                                                          | other                                                                                     |            | (10    | )                    | 20     |                      | 10     |                                  |     |        | 10    
|                                                          |                                                                                            |            |        |                      |        |                      |        |                                  |      |        |       
|Consolidated Financial Statements                         |                                                                                            | 889        |        | 9,648                |        | 10,537               |        | 71                               |      | 10,608 |       
|                                                          |                                                                                            |            |        |                      |        |                      |        |                                  |      |        |       

F-165

---

List of equity investments as of December 31, 2002, higher than 10% in unlisted companies represented by shares with voting rights and in limited liability companies
(Consob resolution 11715 of November 24, 1998)(1)

|Name                                   |  | Held by                              |  | %     
|-------------------------------------- |  | ------------------------------------ |  | ------
|Abruzzo Capital S.p.A.                 |  | Banca Popolare dell'Adriatico        |  | 16.90 
|Agricola del Varano S.r.l.             |  | Banca Agricola di Cerea              |  | 26.58 
|Agricola Favorita S.r.l.               |  | Banca Agricola di Cerea              |  | 99.32 
|Alilaguna S.r.l.                       |  | Cassa di Risparmio Venezia           |  | 80.00 
|Banque Galliere S.A. (in liq.)         |  | Cassa di Risparmio Bologna           |  | 17.50 
|Beato Edoardo Materiali Ferrosi S.r.l. |  | Cassa di Risparmio Padova e Rovigo   |  | 50.00 
|Biessefin S.p.A. (in liq.)             |  | Sanpaolo IMI                         |  | 36.10 
|Calitri Denim Industries S.p.A.        |  | Isveimer (in liq.)                   |  | 14.29 
|Calzaturificio Novella                 |  | Cassa di Risparmio Venezia           |  | 45.00 
|Calzaturificio Zampieri                |  | Cassa di Risparmio Venezia           |  | 25.00 
|Celeasing S.r.l.                       |  | Sanpaolo IMI                         |  | 100.00
|Cen. Ser. Centro Servizi S.p.A.        |  | Cassa di Risparmio Padova e Rovigo   |  | 11.60 
|Centro S.r.l.                          |  | Cassa di Risparmio Padova e Rovigo   |  | 100.00
|Chateau Bolides S. a r.l.              |  | Immobiliare 21                       |  | 49.00 
|Cifrali 8 (in liq.)                    |  | Banque Sanpaolo                      |  | 18.30 
|Cifrali 9                              |  | Banque Sanpaolo                      |  | 14.09 
|Cive S.p.A.                            |  | Sanpaolo IMI                         |  | 68.97 
|Crif S.p.A.                            |  | Invesp                               |  | 5.05  
|                                       |  | Sanpaolo IMI                         |  | 5.05  
|                                       |  |                                      |  |       
|                                       |  |                                      |  | 10.10 
|                                       |  |                                      |  |       
|Dulevo S.p.A. (bankrupt)               |  | Sanpaolo IMI                         |  | 16.30 
|Efrem S.r.l.                           |  | Servizi                              |  | 20.00 
|Elvetia Edile S.r.l.                   |  | Sanpaolo IMI                         |  | 100.00
|Emporium S.r.l.                        |  | Cassa di Risparmio Padova e Rovigo   |  | 51.27 
|Esped Spedizioni S.r.l.                |  | Banca Agricola di Cerea              |  | 29.80 
|Evoluzione 94 S.p.A.                   |  | Sanpaolo IMI                         |  | 5.99  
|                                       |  | Cassa di Risparmio Bologna           |  | 2.55  
|                                       |  | Cassa di Risparmio Gorizia           |  | 1.67  
|                                       |  | Cassa di Risparmio Udine e Pordenone |  | 0.30  
|                                       |  |                                      |  |       
|                                       |  |                                      |  | 10.51 
|                                       |  |                                      |  |       
|Fata Group S.r.l.                      |  | IMI Investimenti                     |  | 13.17 
|Fides S.p.A. (bankrupt)                |  | Isveimer (in liq.)                   |  | 20.00 
|Fin. Tess. S.p.A.                      |  | Cassa di Risparmio Padova e Rovigo   |  | 98.00 
|                                       |  |                                      |  |       

F-166

---

|Finlombarda Leasing S.p.A. (in liq.)                         |  | Sanpaolo IMI                         |  | 14.00 
|------------------------------------------------------------ |  | ------------------------------------ |  | ------
|Finplozner S.p.A.                                            |  | Cassa di Risparmio Udine e Pordenone |  | 25.00 
|Fly United Spedizioni Internazionali S.r.l.                  |  | Banca Agricola di Cerea              |  | 20.22 
|Fonti di Gaverina                                            |  | Sanpaolo IMI                         |  | 66.62 
|Four C S.r.l.                                                |  | Cassa di Risparmio Venezia           |  | 100.00
|Fratelli Comunello S.p.A.                                    |  | Cassa di Risparmio Padova e Rovigo   |  | 50.00 
|Gerard H Polderman S.r.l.                                    |  | Banca Agricola di Cerea              |  | 100.00
|Giraglia Immobiliare S.p.A.                                  |  | Sanpaolo IMI                         |  | 17.15 
|Guiness Peat Aviation ATR Ltd                                |  | Sanpaolo IMI Bank Ireland            |  | 12.50 
|I Guardi                                                     |  | Cassa di Risparmio Venezia           |  | 56.00 
|IAM Piaggio S.p.A.                                           |  | Sanpaolo IMI                         |  | 9.68  
|                                                             |  | Banca Fideuram                       |  | 3.74  
|                                                             |  |                                      |  |       
|                                                             |  |                                      |  | 13.42 
|                                                             |  |                                      |  |       
|Idra Partecipazioni S.p.A.                                   |  | Ldv Holding                          |  | 11.56 
|Immobiliare dell'Isola Cattaneo S.p.A.                       |  | Sanpaolo IMI                         |  | 48.57 
|Immobiliare Femar S.p.A.                                     |  | Banca Agricola di Cerea              |  | 38.57 
|Immobiliare Meduna S.r.l.                                    |  | Cassa di Risparmio Venezia           |  | 40.00 
|Immobiliare Peonia Rosa S.r.l.                               |  | Sanpaolo IMI                         |  | 47.00 
|Immobiliare San Giuliano S.r.l.                              |  | Cassa di Risparmio Venezia           |  | 50.00 
|Immobiliare Santa Caterina S.r.l.                            |  | Sanpaolo IMI                         |  | 100.00
|Impianti S.r.l. (in liq.)                                    |  | Sanpaolo IMI                         |  | 14.16 
|Integrated Shipping Company S.p.A.                           |  | Sanpaolo IMI                         |  | 100.00
|Istituto per l'Enciclopedia della Banca e della Borsa S.p.A. |  | Sanpaolo IMI                         |  | 12.12 
|                                                             |  | Banca Fideuram                       |  | 0.34  
|                                                             |  |                                      |  |       
|                                                             |  |                                      |  | 12.46 
|                                                             |  |                                      |  |       
|Isveimer S.p.A. (in liq.)                                    |  | Sanpaolo IMI                         |  | 65.22 
|                                                             |  | Banca Popolare dell'Adriatico        |  | 0.17  
|                                                             |  |                                      |  |       
|                                                             |  |                                      |  | 65.39 
|                                                             |  |                                      |  |       
|Italpower S.p.A. (in liq.)                                   |  | IMI Investimenti                     |  | 15.00 
|Ittica Ugento S.p.A.                                         |  | Sanpaolo IMI                         |  | 26.96 
|Kall Kwik Italia S.p.A. (in liq.)                            |  | Sanpaolo Leasint                     |  | 15.00 
|Kish Receivables Co.                                         |  | Tobuk                                |  | 20.83 
|Kyle Receivables Co.                                         |  | Tushingham                           |  | 11.11 
|La Compagnia Finanziaria S.p.A.                              |  | Sanpaolo IMI                         |  | 12.09 
|La Promessa S.r.l.                                           |  | Cassa di Risparmio Padova e Rovigo   |  | 100.00
|                                                             |  |                                      |  |       

F-167

---

|Lillo S.p.A.                                     |  | Sanpaolo IMI                         |  | 50.00 
|------------------------------------------------ |  | ------------------------------------ |  | ------
|LimaLto S.p.A.                                  |  | Cassa di Risparmio Gorizia           |  | 95.50 
|Lingotto S.p.A.                                  |  | CSP Investimenti                     |  | 15.65 
|Loseri S.p.A.                                    |  | Sanpaolo IMI                         |  | 18.40 
|Loop S.p.A.                                      |  | Sanpaolo Leasint                     |  | 19.79 
|Marche Capital S.p.A.                            |  | Banca Popolare dell'Adriatico        |  | 11.99 
|Metalgalante S.r.l.                              |  | Cassa di Risparmio Venezia           |  | 40.00 
|Mirano Costruzioni                               |  | Cassa di Risparmio Venezia           |  | 100.00
|Pantecna S.p.A. (bankrupt)                       |  | Sanpaolo IMI                         |  | 15.50 
|Pharmacom S.r.l.                                 |  | Farbanca S.p.A.                      |  | 17.00 
|Pila 2000 S.p.A.                                 |  | Cassa di Risparmio Padova e Rovigo   |  | 37.19 
|Pragma S.r.l.                                    |  | Sanpaolo IMI                         |  | 100.00
|Print S.r.l.                                     |  | Banca Popolare dell'Adriatico        |  | 100.00
|Raco S.p.A.                                      |  | Ldv Holding                          |  | 12.30 
|S.A. Imm. De Construction de Monteclin (in liq.) |  | Banque Sanpaolo                      |  | 11.30 
|S.T.C. Servizio Trasporti Combinati S.p.A.       |  | Sanpaolo IMI                         |  | 100.00
|Sago S.p.A.(2)                                   |  | Sanpaolo IMI                         |  | 26.67 
|Sazic S. a r.l.                                  |  | Societé Fonciere d'Investissement    |  | 99.00 
|                                                 |  | Societé Immobiliere d'Investissement |  | 1.00  
|                                                 |  |                                      |  |       
|                                                 |  |                                      |  | 100.00
|                                                 |  |                                      |  |       
|SCI Balcons Sainte Marie                         |  | Banque Sanpaolo                      |  | 17.95 
|SCI Boissy Griselle 7                            |  | Societé Fonciere d'Investissement    |  | 99.00 
|                                                 |  | Societé Immobiliere d'Investissement |  | 1.00  
|                                                 |  |                                      |  |       
|                                                 |  |                                      |  | 100.00
|                                                 |  |                                      |  |       
|SCI Boissy RER 5                                 |  | Societé Fonciere d'Investissement    |  | 90.00 
|SCI Boissy RER 8                                 |  | Societé Fonciere d'Investissement    |  | 99.00 
|                                                 |  | Societé Immobiliere d'Investissement |  | 1.00  
|                                                 |  |                                      |  |       
|                                                 |  |                                      |  | 100.00
|                                                 |  |                                      |  |       
|SCI Boissy Saint Leger 94                        |  | Societé Fonciere d'Investissement    |  | 99.00 
|                                                 |  | Societé Immobiliere d'Investissement |  | 1.00  
|                                                 |  |                                      |  |       
|                                                 |  |                                      |  | 100.00
|                                                 |  |                                      |  |       
|SCI La Source de Saint Hilarie (in liq.)         |  | Societé Immobiliere d'Investissement |  | 98.00 
|SCI Le Chevalier                                 |  | Societé Immobiliere d'Investissement |  | 99.00 
|                                                 |  | Societé Fonciere d'Investissement    |  | 1.00  
|                                                 |  |                                      |  |       
|                                                 |  |                                      |  |       

F-168

---

|                                                            |  |                                    |  | 100.00
|----------------------------------------------------------- |  | ---------------------------------- |  | ------
|                                                            |  |                                    |  |       
|SCI Le Clos de Noyer (in liq.)                              |  | Banque Sanpaolo                    |  | 15.00 
|Serit S.p.A.Servizi Riscoss. Imposte e Tesoreria (in liq.) |  | Sanpaolo IMI                       |  | 18.64 
|Servizi Interbancari S.p.A.                                 |  | Sanpaolo IMI                       |  | 11.16 
|Soa Nordest S.p.A.                                          |  | Cassa di Risparmio Padova e Rovigo |  | 15.00 
|Società Capua Group Imbottigliamento Bevande Gassate S.p.A. |  | Sanpaolo IMI                       |  | 100.00
|Società Manifattura del Piave S.r.l.                        |  | Cassa di Risparmio Padova e Rovigo |  | 38.52 
|Società per la Gestione di Attività S.p.A.S.g.a.           |  | Sanpaolo IMI                       |  | 100.00
|Sofimer S.p.A.                                              |  | Isveimer (in liq.)                 |  | 20.00 
|Sosib Industriale e Commerciale S.r.l.                      |  | Sanpaolo IMI                       |  | 60.00 
|SSBSocietà per i Servizi Bancari S.p.A.                    |  | Sanpaolo IMI                       |  | 15.54 
|                                                            |  | Banca Fideuram                     |  | 0.02  
|                                                            |  |                                    |  |       
|                                                            |  |                                    |  | 15.56 
|                                                            |  |                                    |  |       
|Società Trasporto Telematico S.p.A.                         |  | Cardine Finanziaria                |  | 15.73 
|Societè Fonciere Joseph Vallot S.A.                         |  | Societé Fonciere d'Investissement  |  | 100.00
|Sogepi et Cie Le Fournas S.n.c. (in liq.)                   |  | Banque Sanpaolo                    |  | 12.50 
|Sviluppo Finanza Mobiliare S.p.A.                           |  | Sanpaolo IMI                       |  | 10.87 
|Tecnoalimenti S.c.p.A.(2)                                   |  | Sanpaolo IMI                       |  | 20.00 
|Tecnobiomedica S.p.A.(2)                                    |  | Sanpaolo IMI                       |  | 26.22 
|Tecnocittà S.r.l.                                           |  | Sanpaolo IMI                       |  | 12.00 
|Tecnofarmaci S.p.A.(2)                                      |  | Sanpaolo IMI                       |  | 20.50 
|Tecnogen                                                    |  | Sanpaolo IMI                       |  | 29.96 
|Tecnotessile S.r.l.(2)                                      |  | Sanpaolo IMI                       |  | 40.00 
|Torsyl S.A. (in liq.)                                       |  | Sanpaolo IMI International         |  | 15.79 
|Zwalen & Mayr S.A.                                          |  | Sanpaolo IMI International         |  | 12.96 

---

F-169

---

(32) SIGNIFICANT DIFFERENCES BETWEEN ITALIAN AND U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

As described in Note 1, the Consolidated Financial Statements of the SANPAOLO IMI Group are presented in accordance with generally accepted accounting
principles prescribed by Italian law as supplemented by the accounting principles established or adopted by the Italian Accounting Profession (collectively "Italian GAAP") that vary in certain
significant respects from generally accepted accounting principles in the United States of America ("U.S. GAAP").



SIGNIFICANT DIFFERENCES IN VALUATION AND INCOME RECOGNITION PRINCIPLES UNDER ITALIAN AND U.S. GAAP

Note 32.1

NET INCOME AND SHAREHOLDERS' EQUITY RECONCILIATION BETWEEN ITALIAN AND U.S. GAAP

Note 32.2

SIGNIFICANT PRESENTATION DIFFERENCES BETWEEN ITALIAN AND U.S. GAAP

Note 32.3

CONSOLIDATED FINANCIAL STATEMENTS

Note 32.4

ADDITIONAL INFORMATION REQUIRED BY U.S. GAAP

Note 32.5


(32.1) SIGNIFICANT DIFFERENCES IN VALUATION AND INCOME RECOGNITION PRINCIPLES UNDER ITALIAN AND U.S. GAAP

The following is a summary of the main differences in valuation and income recognition principles between Italian GAAP and U.S. GAAP, which are relevant to the
Group's Consolidated Financial Statements. The impact on net income and shareholders' equity of each of these differences is reconciled within Note 32.2 below.

Certain
amounts reported in the US GAAP reconciliation related to the 2001 year have been revised as follows:



F-170

---



Furthermore,
certain minor reclassifications have been made within the numbers reported in the U.S. GAAP reconciliation for the previous year.

|ITALIAN GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | U.S. GAAP                                                                                                                                                                                                                                                                                        
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) Business Combinations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Italian GAAP does not provide any guidance in determining the appropriate accounting treatment for a business combination involving the exchange of stock.                                                                                                                                                                                                                                                                                                                                                                                               |  | Until June 30, 2001 both the purchase method and the pooling of interests method were acceptable methods of accounting for a business combination, according to certain criteria. For all business combinations initiated
after this date, the pooling of interest method is no longer permitted.
|Reversal of results prior to acquisition date                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Certain significant mergers within the Group have been accounted using the "pooling of interest" method under U.S. GAAP, except for consolidating the merged entity at the beginning of the year in which the business combination is
consummated.                                                                                                                                                                                                                                                                                                       |  | All the business combinations accounted for using the pooling of interest method under Italian GAAP would have been accounted for using the purchase method under US GAAP and therefore consolidated from the date of acquisition.                                                               
|Allocation to Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Where the purchase method of accounting for a business combination has been applied, goodwill is capitalized and amortized over its useful life that should not exceed 20 years. Business combinations undertaken by the Group that have been accounted
for as a pooling result in a reserve within shareholders' equity (referred to as "negative goodwill" within the Italian GAAP financial statements), which is used to offset positive amounts of goodwill arising from subsequent business combinations,
accounted for using the purchase method. |  | Until January 1, 2002 goodwill was capitalized and amortized over its estimated useful life. From that date, goodwill is no longer amortized but reviewed at least annually for impairment at a reporting unit level instead, in accordance with FAS
142.                                        
|Purchase Price Allocation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Using the pooling of interest method requires the assets and liabilities of the merged entity to remain at cost.                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Using the purchase method under U.S. GAAP results in the allocation of the purchase price to the assets and liabilities of the acquired company. These fair value adjustments are amortized over their individual useful economic lives.                                                         

F-171

---

|ITALIAN GAAP                                                                                                                                                                                                                                                           |  | U.S. GAAP                                                                                                                                                                                                                                                                                                               
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|(b) Investments in Debt, Equity Securities and Own Bonds                                                                                                                                                                                                              
|Debt and equity securities held for investment or trading purposes are accounted for as follows:                                                                                                                                                                       |  | Debt and marketable equity securities are classified according to management's intent within one of the following categories:                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                      |  | Investment debt securities are stated at amortized cost less any write-down for permanent diminution in value; the original value of the investment is reinstated if the reason for write-downs cease to apply.                                                                                                         
|                                                                                                                                                                                                                                                                      |  | Marketable debt securities and equity securities held for trading purposes and all other securities held without a particular identifiable purpose are classified as trading securities. These securities are recorded at market value, with the related
unrealized gains and losses recognized in the income statement.
|                                                                                                                                                                                                                                                                       |  |                                                                                                                                                                                                                                                                                                                         
|Debt and equity securities held for sale in the Group's insurance portfolio are recorded at cost, or at the lower of cost or market value, with any related losses recognized in the income statement.                                                                 |  | Investments in debt and marketable equity securities held within the Group's insurance portfolios would be classified and recorded based on management's intent described above.                                                                                                                                        
|Permanent investments in companies where the Group owns less than 20% of the voting shares are stated at cost, less any write-down for permanent diminution in value. The original value of the investment is reinstated if the reason for write-downs
cease to apply. |  | Non-marketable equity investments of 20% or less are accounted for under the cost method, reduced through write-downs to reflect "other than temporary" impairments in value. Reversals of impairments are not permitted.                                                                                               
|Holding of own bonds are classified and accounted for similar to third party debt securities.                                                                                                                                                                          |  | Purchases of own bonds are treated as a reduction of the debt outstanding. Any difference between the cost of repurchase and the carrying value of the liability is taken to the income statement. Any gain or loss on resale is treated as a premium or
discount and amortized over the remaining term of the bond.    

F-172

---

|ITALIAN GAAP                                                                                                                                                                     |  | U.S. GAAP                                               
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------
|(c) Revaluation of Premises                                                                                                                                                     
|Premises are recorded in the financial statements at original cost, adjusted in some circumstances for the application of specific monetary revaluation required by Italian law. |  | Revaluations of fixed assets are not permitted.         
|Depreciation is charged on properties based on the revalued amount.                                                                                                              |  | Depreciation is charged on all properties based on cost.

|ITALIAN GAAP                                                                                                                                                                                                                                                                                                                                                        |  | U.S. GAAP                                                                                                   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------
|(d) Treasury Shares                                                                                                                                                                                                                                                                                                                                                
|Treasury shares purchased by the Parent are recognized on the balance sheet as assets and carried at acquisition cost, while those purchased by subsidiaries are also recognized on the balance sheet as assets, but carried at fair value with unrealised
gains and losses taken in the income statement. Gains and losses on sales are recorded through earnings. |  | Treasury shares are classified as treasury stock and shown as a deduction from shareholders' equity at cost.

|ITALIAN GAAP                                                               |  | U.S. GAAP                                               
|-------------------------------------------------------------------------- |  | --------------------------------------------------------
|(e) Advertising and Start-Up Costs                                        
|Advertising and start-up costs are deferred and amortised over five years. |  | Advertising and start-up costs are expensed as incurred.

|ITALIAN GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(f) Derivatives and Hedging Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The accounting treatment for derivatives is dependent upon whether the derivative is entered into and qualifies as a hedge of an asset, liability or firm commitment. Derivatives not qualifying as hedges are recorded at fair value with changes in fair
value recognized in the income statement. Derivatives qualifying as a hedge are generally not reflected in the financial statements until the corresponding impact of the hedged transaction is recognized in the income statement. Embedded derivatives
are separated from the underlying host contract, but are held at cost. |  | US GAAP only permits hedge accounting to be applied if certain criteria are met.
The Group has chosen not to adopt hedge accounting for all derivatives held for non-trading purposes due to the operational cost of meeting the documentation and effectiveness requirements of FAS133.
These are considered effective as economic hedges and continue to qualify for hedge accounting under Italian GAAP.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | All derivative instruments (including certain derivative instruments embedded in other contracts) are recorded in the balance sheet as either an asset or liability measured at fair value with changes in fair value recognized in the income
statement.                                                                                                                                                  

F-173

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|ITALIAN GAAP                                                                                                                                            |  | U.S. GAAP                                                                                                                                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(g) Modification of Debts                                                                                                                              
|Italian GAAP requires a similar treatment as U.S. GAAP of modified debt in only limited circumstances, such as if the original loan was non-performing. |  | Under U.S. GAAP, a modification of debt such as a performing loan should be treated as an extiguishment of debt, if certain criteria are met. A gain or loss is recognized in the income statement at the time the original instrument is
extinguished.

|ITALIAN GAAP                                                                                                                                                                                                                                              |  | U.S. GAAP                                                                                                                                      
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|(h) Pension Plans                                                                                                                                                                                                                                        
|Defined benefit pension plans have been granted to certain employees by separate legal entities. The Group is contingently liable in the future if the assets of the plans are insufficient to fund the future benefit payments to the plan
participants. |  | The liabilities and assets of the defined benefit pension plan are measured based on an "attribution period" as defined in SFAS 87.            
|The liability and assets are estimated on a total service basis. As such, the Group has accrued amounts reflecting its contingent liability to the plan.                                                                                                  |  | The company has adopted an accounting policy to reflect the minimum required recognition of experience (gains)/losses as defined under SFAS 87.
|                                                                                                                                                                                                                                                          |  | An adjustment has therefore been recorded to reflect the differences described.                                                                

|ITALIAN GAAP                                                                                                                                                                                                                                                                                                                                                                                                    |  | U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(h) Stock Option Plans                                                                                                                                                                                                                                                                                                                                                                                         
|There is no specific accounting principle or established method for accounting for stock option plans under Italian GAAP. Stock option plans are not recorded within the financial statements; only a narrative disclosure is provided within the
management report. The Group records stock-based compensation such as awards of stock options as an issuance of stock when an employee exercises the options. |  | The Group has elected to apply APB No. 25 and related interpretations in accounting for stock option plans. The difference between the quoted market price of the stocks granted or awarded on the measurement day less the amount, if any, the employee
is required to contribute is expensed as compensation cost during the vesting period. The measurement date is the first date at which both (1) the number of shares the employee is entitled to receive and (2) the option or the purchase price, if any,
are known.
|If the indexed part of the stock based compensation award is hedged by a linked derivative or other hedging instrument, fair value changes in both the hedged item and the hedging instrument are deferred until the maturity date of the
plan.                                                                                                                                                                 |  | The derivative is recognized on the balance sheet as an asset or liability at fair value. Changes in fair value of the derivative are reported through earnings. The estimated compensation cost of the award is recognized as a liability and
subsequently adjusted for changes in the estimated cost through the income statement.                                                                                                                                                                                         

|ITALIAN GAAP                                                                                                                                                                                                                                                                                                                                                                                                                  |  | U.S. GAAP                                                                                                                                                                                                                                                                                                                 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) Employee Termination Costs                                                                                                                                                                                                                                                                                                                                                                                               
|A restructuring liability is accrued for the estimated cost of early retirement when a decision has been made and approved at the appropriate governance level to reduce personnel through the offering of early retirement compensation. The estimated
liability is based on projections of the eligible employees that will accept the early retirement offer and the respective cost to be incurred upon their retirement. |  | Permissible accruals of employee termination cost relating to business combinations or restructuring are limited to the estimated cost of involuntary terminations. No accrual is permitted for voluntary terminations until the employee is eligible for
the termination benefits and has accepted the termination offer.

F-174

---

|ITALIAN GAAP                                                                                                                                      |  | U.S. GAAP                                                                                                                                                                                                                                                                                                                                                             
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(j) Deferred Taxes                                                                                                                               
|Deferred taxes are not calculated on reserves generated by either domestic and foreign group companies if those reserves will not be distributed. |  | Deferred taxes are calculated on reserves generated by domestic group companies irrespective of whether they will be distributed.                                                                                                                                                                                                                                     
|Deferred tax assets are only recorded when they are "reasonably certain" of occurring.                                                            |  | Deferred tax assets are recorded with respect to all temporary differences. A valuation allowance is recorded against a deferred tax asset when it is "more likely than not" that some portions of the deferred tax asset will not be realized. This
results in a larger net deferred tax assets balance being recorded under U.S. GAAP when compared to Italian GAAP.

|ITALIAN GAAP                                                                                                                                                                                                                                                                 |  | U.S. GAAP                                                                                                    
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------
|(k) Allowance for General Bank Risks                                                                                                                                                                                                                                        
|This provision covers the general business risks of the Group and, as such, forms part of the shareholders' equity in compliance with international supervisory standards and Bank of Italy instructions. The provision is accrued through a charge to the
income statement. |  | Provisions for potential losses such as an allowance for general banking risks are not allowed under US GAAP.

|ITALIAN GAAP                                                                                                                                                                                                                |  | U.S. GAAP                                                                                                                                                                                                                                                                                                                                                 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(l) Consolidation of Insurance Subsidiaries                                                                                                                                                                                
|Insurance subsidiaries are included in the consolidated financial statements using the equity method even when the Group directly or indirectly, on a non-temporary basis, holds more than 50% of the voting share capital. |  | Consolidation is required when control is exercised over the entities. The Parent exerts control over the insurance entities through ownership of the majority of the voting share capital and shall therefore apply full consolidation to such
businesses. Summarised financial information regarding these companies is reported in the Note 32.5 below.

|ITALIAN GAAP                                                                                                                                                                                                                                                                                                                                                                                       |  | U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                        
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(m) Deferred Acquisition Costs and Actuarial Reserves                                                                                                                                                                                                                                                                                                                                             
|Acquisition costs for new insurance life contracts are expensed as incurred by the Group's life insurance companies.
Actuarial reserves are calculated for each individual contract on a prospective basis. Linked contracts are held at market value. Additional reserves are recorded and calculated for interest rate risk, expenses, excess annuities and mortality for
index-linked policies. |  | Acquisition costs that vary with and are primarly related to the production of new and renewal contracts are deferred. For conventional life insurance products, acquisition costs are amortized over premiums and for investment-type policies, they are
amortized over expected gross profits, if positive.
The additional reserves for interest rate risk and expenses reserves are not allowed under US GAAP.
|                                                                                                                                                                                                                                                                                                                                                                                                   |  | Amounts assessed that represent compensation to the insurance enterprise for services to be provided in future periods are not earned in the period assessed. Such amounts are reported as URL (unearned revenue liability) and are recognized in income
over the period benefited using the same assumptions and factors used to amortize acquisition costs (DAC).                                              
|                                                                                                                                                                                                                                                                                                                                                                                                   |  | These adjustments are reported in the reconciliation within the item "insurance companies".                                                                                                                                                                                                                                                                                                                      

F-175

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|ITALIAN GAAP                                                                                            |  | U.S. GAAP                                                                                              
|------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------
|(n) Proportional Consolidation                                                                         
|Companies that are under joint control may be consolidated using the proportional consolidation method. |  | Companies that are under joint control should be accounted for using the equity method.                
|                                                                                                        |  | Summarized financial information regarding these companies is not provided as they are not significant.

|ITALIAN GAAP                                                                                                                                                                                                     |  | U.S. GAAP                                                                                                                             
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------
|(o) Earnings Per Share                                                                                                                                                                                          
|Disclosure of earning per share is recommended but not required. Sanpaolo IMI discloses such information using U.S. GAAP guidance for determining the basic and diluted number of share used in the calculation. |  | Disclosure is required of a basic and diluted earnings per share measured, calculated in accordance with SFAS128 "Earnings Per Share".

F-176

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(32.2) NET INCOME AND SHAREHOLDERS' EQUITY RECONCILIATION BETWEEN ITALIAN AND U.S. GAAP

The following is a summary of the most significant adjustments to consolidated net income and to consolidated shareholders' equity which would be required if U.S.
GAAP had been applied to the accompanying Consolidated Financial Statements.

F-177

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Net income

|   |  |                                                                                                                                       |  | Year ended December 31, |  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | -
|
|
|   |  | Net income after minority interest as reported under Italian GAAP                                                                     |  | 889                     |  
|a) |  | Business Combinations:                                                                                                                |  |                         |  
|   |  | Allocation to Goodwill: impairment                                                                                                    |  | (982                    | )
|   |  | Allocation to Goodwill: (amortization)/reverse of amortization                                                                        |  | 198                     |  
|   |  | Purchase Price Allocation                                                                                                             |  | (549                    | )
|   |  | Reversal of results prior to acquisition                                                                                              |  | (155                    | )
|b) |  | Investments in Debt and Equity Securities and Own Bonds                                                                               |  | (90                     | )
|c) |  | Revaluation of Premises                                                                                                               |  | 8                       |  
|d) |  | Treasury Shares                                                                                                                       |  | 21                      |  
|e) |  | Advertising and Start-Up Costs                                                                                                        |  | 4                       |  
|f) |  | Derivatives and Hedging Activities                                                                                                    |  | 75                      |  
|f) |  | Implementation of FAS 133 (net of tax effect)                                                                                         |  |                        |  
|g) |  | Modification of Debts                                                                                                                 |  | (87                     | )
|h) |  | Pension Plans                                                                                                                         |  | 12                      |  
|h) |  | Derivatives on Stock Based Compensation Plans                                                                                         |  |                        |  
|h) |  | Stock Based Compensation Plans                                                                                                        |  | (24                     | )
|h) |  | Stock Option Plans                                                                                                                    |  |                        |  
|i) |  | Employee Termination Costs                                                                                                            |  | (74                     | )
|j) |  | Deferred Tax on Equity reserves                                                                                                       |  | (19                     | )
|j) |  | Deferred Tax on US GAAP adjustments                                                                                                   |  | 94                      |  
|k) |  | Allowance for General Banking Risks                                                                                                   |  | (364                    | )
|l) |  | Insurance Subsidiaries:                                                                                                               |  |                         |  
|   |  | Deferred Acquisition Costs and Actuarial Reserves (m)                                                                                 |  | (123                    | )
|   |  | Investment in Debt and Equity Securities (b)                                                                                          |  | 36                      |  
|   |  | Revaluation of Premises (c)                                                                                                           |  | 9                       |  
|   |  | Derivatives and Hedging Activities (f)                                                                                                |  | (2                      | )
|   |  | Deferred Tax on US GAAP adjustments (j)                                                                                               |  | 22                      |  
|   |  | Deferred Tax on equity reserves (j)                                                                                                   |  | (19                     | )
|   |  |                                                                                                                                       |  |                         |  
|   |  | Net income/loss after minority interest in accordance with U.S. GAAP                                                                  |  | (1,120                  | )
|   |  |                                                                                                                                       |  |                         |  
|o) |  | Basic Earnings/Loss Per Share (in Euro)                                                                                               |  | (0.683                  | )
|o) |  | Diluted Earnings/Loss Per Share (in Euro)                                                                                             |  | (0.683                  | )
|   |  | Comprehensive income                                                                                                                  |  |                         |  
|   |  | Net income/loss after minority interest in accordance with U.S. GAAP                                                                  |  | (1,120                  | )
|   |  | Gross change in unrealized gain/loss on AFS securities                                                                                |  | (149                    | )
|   |  | Less: reclassification adjustments (for realized gains/losses on sales of AFS securities previously included in comprehensive income) |  | 364                     |  
|   |  |                                                                                                                                       |  |                         |  
|   |  | Net change in unrealized gain/loss on AFS securities                                                                                  |  | 215                     |  
|   |  | Change in foreign currency translation adjustments                                                                                    |  |                        |  
|   |  | Amortization of cash flow hedge reclassified as earnings/costs (FAS 133)                                                              |  | 5                       |  
|   |  | Cumulative effect of change in accounting principle, net of related tax effect                                                        |  |                        |  
|   |  | Tax effect                                                                                                                            |  | (33                     | )
|   |  |                                                                                                                                       |  |                         |  
|   |  | Other comprehensive income                                                                                                            |  | 187                     |  
|   |  |                                                                                                                                       |  |                         |  
|   |  | Comprehensive income                                                                                                                  |  | (933                    | )
|   |  |                                                                                                                                       |  |                         |  
|   |  | Tax effect of other comprehensive income components                                                                                   |  |                         |  
|   |  | Tax effect of gross gain/loss on AFS securities                                                                                       |  | (27                     | )
|   |  | Tax effect of reclassification adjustments                                                                                            |  | (5                      | )
|   |  |                                                                                                                                       |  |                         |  
|   |  | Tax effect of net change in unrealized gain/loss on AFS securities                                                                    |  | (32                     | )
|   |  | Tax effect of amortization of cash flow hedge reclassified as earnings/costs                                                          |  | (1                      | )
|   |  |                                                                                                                                       |  |                         |  
|   |  |                                                                                                                                       |  | (33                     | )
|   |  |                                                                                                                                       |  |                         |  

F-178

---

Shareholders'equity

|   |  |                                                         |  | Year ended December 31, |  
|-- |  | ------------------------------------------------------- |  | ----------------------- | -
|
|
|   |  | Shareholders' equity in accordance with Italian GAAP    |  | 10,537                  |  
|a) |  | Business Combinations:                                  |  |                         |  
|   |  | Allocation to Goodwill                                  |  | 4,136                   |  
|   |  | Purchase Price Allocation                               |  | 2,339                   |  
|b) |  | Investments in Debt and Equity Securities and Own Bonds |  | 76                      |  
|c) |  | Revaluation of Premises                                 |  | (492                    | )
|d) |  | Treasury Shares                                         |  | (31                     | )
|e) |  | Advertising and Start-Up Costs                          |  |                        |  
|f) |  | Derivatives and Hedging Activities                      |  | (20                     | )
|f) |  | Implementation of FAS 133 (net of tax effect)           |  |                        |  
|g) |  | Modification of Debts                                   |  | (87                     | )
|h) |  | Pension Plans                                           |  | 124                     |  
|h) |  | Derivatives on Stock Based Compensation Plans           |  |                        |  
|h) |  | Stock Based Compensation Plans                          |  |                        |  
|i) |  | Employee Termination Costs                              |  | 121                     |  
|j) |  | Deferred Tax on Equity Reserves                         |  | (564                    | )
|j) |  | Deferred Tax on US GAAP adjustments                     |  | (1,206                  | )
|l) |  | Insurance Subsidiaries:                                 |  |                         |  
|   |  | Deferred Acquisition Costs and Actuarial Reserves (m)   |  | (15                     | )
|   |  | Investment in Debt and Equity Securities (b)            |  | 138                     |  
|   |  | Revaluation of Premises (c)                             |  | 4                       |  
|   |  | Derivatives and Hedging Activities (f)                  |  | (9                      | )
|   |  | Implementation of FAS 133 (net of tax effect) (f)       |  |                        |  
|   |  | Deferred Tax on US GAAP adjustment (j)                  |  | (57                     | )
|   |  | Deferred Tax on equity reserves (j)                     |  | (60                     | )
|   |  |                                                         |  |                         |  
|   |  | Shareholders' equity in accordance with U.S. GAAP       |  | 14,934                  |  
|   |  |                                                         |  |                         |  

F-179

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(32.3) SIGNIFICANT PRESENTATION DIFFERENCES BETWEEN ITALIAN AND U.S. GAAP

In addition to the differences in valuation and income recognition principles disclosed in Note No. 32.1 and 32.2, other differences exist between Italian
and U.S. GAAP relating to the presentation of financial statements. These differences do not result in differences between Italian and U.S. GAAP reported net income and Shareholders' equity, but only
in the presentation of the consolidated financial statements.

The
following is a summary of the significant classification differences between U.S. GAAP formatsas set forth in Regulation S-X of the Securities and
Exchange Commission of the United States of Americaand the formats required by the Italian Law (Decree 87 of January 27,1992). Furthermore, in Note 32.4 are reported the
balance sheet and the income statement in accordance with the format required by US GAAP. However, these statements are prepared on the basis of the financial information included in the Italian
financial statements prepared in accordance with Italian GAAP; hence before the US GAAP adjustments indicated in the table reported in Note 32.2

Balance Sheet

F-180

---

Statements of Income

F-181

---

F-182

---

(32.4) CONSOLIDATED FINANCIAL STATEMENTS

The following consolidated balance sheet and statement of income show the impact of applying U.S. GAAP presentation requirements to amounts determined under
Italian GAAP. Excluding the adjustment for own shares in the balance sheet, the following tables do not reflect the US GAAP adjustments indicated in table in Note 32.2.

Consolidated Balance Sheets

|                                                                                                              |  | At December 31,
|------------------------------------------------------------------------------------------------------------- |  | ---------------
|
|
|ASSETS                                                                                                        |  |                
|Cash and due from banks                                                                                       |  | 1,406          
|Interest-bearing deposits in other banks                                                                      |  | 7,503          
|Federal funds sold and securities purchased under resale agreements or similar arrangements                   |  | 14,262         
|Trading account assets                                                                                        |  | 19,595         
|Investment securities                                                                                         |  | 2,897          
|Loans, net of allowance for loan losses of € 4,707 million and € 3,312 million in 2002 and 2001, respectively |  | 126,865        
|Premises and equipment                                                                                        |  | 2,229          
|Investments in affiliated companies                                                                           |  | 4,252          
|Other assets                                                                                                  |  | 24,594         
|                                                                                                              |  |                
|TOTAL ASSETS                                                                                                  |  | 203,603        
|                                                                                                              |  |                
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                          |  |                
|Deposits                                                                                                      |  | 79,057         
|Short-term borrowings                                                                                         |  | 5,878          
|Securities sold under repurchase agreements                                                                   |  | 16,562         
|Other liabilities                                                                                             |  | 24,713         
|Long-term debt                                                                                                |  | 66,621         
|                                                                                                              |  |                
|Total Liabilities                                                                                             |  | 192,831        
|Commitments and Contingencies (Note 20)                                                                       |  |                
|Minority Interest in Consolidated Subsidiaries                                                                |  | 334            
|Capital stock (consisting of 1,837,166,000 issued and outstanding
Share, par value Euro 2,8 per Share)        |  | 5,144          
|Other shareholders' equity                                                                                    |  | 5,294          
|                                                                                                              |  |                
|Total Shareholders' Equity                                                                                    |  | 10,438         
|                                                                                                              |  |                
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                                    |  | 203,603        
|                                                                                                              |  |                

F-183

---

Consolidated Statement of Income

|                                                                                                  |  | Year ended December 31, |  
|------------------------------------------------------------------------------------------------- |  | ----------------------- | -
|
|
|Interest Income:                                                                                  |  |                         |  
|Interest earnings deposits and loans to credit institutions                                       |  | 713                     |  
|Loans and leases to non-credit institutions                                                       |  | 6,985                   |  
|Interest on investment securities                                                                 |  | 188                     |  
|Trading account interest                                                                          |  | 807                     |  
|                                                                                                  |  |                         |  
|Total Interest Income                                                                             |  | 8,693                   |  
|Interest Expense:                                                                                 |  |                         |  
|Borrowings from credit institutions                                                               |  | (1,064                  | )
|Borrowings from non-credit institutions                                                           |  | (1,471                  | )
|Securities and commercial paper                                                                   |  | (2,204                  | )
|                                                                                                  |  |                         |  
|Total Interest Expense                                                                            |  | (4,739                  | )
|Net effect of off-balance sheet instruments                                                       |  | (216                    | )
|                                                                                                  |  |                         |  
|Net Interest Income                                                                               |  | 3,738                   |  
|Net write-offs and provision for loan losses                                                      |  | (528                    | )
|                                                                                                  |  |                         |  
|Net Interest Income after provision for loan losses                                               |  | 3,210                   |  
|Non Interest Income:                                                                              |  |                         |  
|Dividends                                                                                         |  | 155                     |  
|Commission and fees from fiduciary activities                                                     |  | 1,309                   |  
|Commissions, broker's fees and markups on securities underwriting and other securities activities |  | 402                     |  
|Fees for other customer services                                                                  |  | 1,926                   |  
|Profit or loss on transactions in securities in dealer trading account                            |  | 312                     |  
|Equity in (loss) earnings of unconsolidated subsidiaries and associated companies                 |  | 137                     |  
|Income (loss) in affiliated, other companies and investments securities, net                      |  | (493                    | )
|Other income                                                                                      |  | 623                     |  
|                                                                                                  |  |                         |  
|Total Non Interest Income                                                                         |  | 4,371                   |  
|Non Interest Expense:                                                                             |  |                         |  
|Salaries and employee benefits                                                                    |  | (2,856                  | )
|Net occupancy expenses of leased premises                                                         |  | (204                    | )
|Goodwill amortization                                                                             |  | (213                    | )
|Net premises and equipment expenses                                                               |  | (355                    | )
|Amortization of intangibles                                                                       |  | (230                    | )
|Change in reserve for general banking risks                                                       |  | 364                     |  
|Other expenses                                                                                    |  | (2,705                  | )
|                                                                                                  |  |                         |  
|Total Non Interest Expense                                                                        |  | (6,199                  | )
|Income Before Income Tax Expense                                                                  |  | 1,382                   |  
|Income Tax Expense                                                                                |  | (450                    | )
|                                                                                                  |  |                         |  
|Net Income                                                                                        |  | 932                     |  
|Minority interest in income of consolidated subsidiaries                                          |  | (43                     | )
|                                                                                                  |  |                         |  
|Net Income after Minority Interest                                                                |  | 889                     |  
|                                                                                                  |  |                         |  
|Basic earnings per share (in Euro)                                                                |  | 0.4840                  |  
|Diluted earnings per share (in Euro)                                                              |  | 0.4840                  |  

F-184

---

(32.5) ADDITIONAL DISCLOSURES REQUIRED BY U.S. GAAP

The following consolidated statement of cash flows is presented in accordance with SFAS 95 "Statement of Cash Flows". The amounts included within the statement
are determined under Italian GAAP.

|                                                                                  |  | 2002     |   | 2001     |   | 2000     |  
|--------------------------------------------------------------------------------- |  | -------- | - | -------- | - | -------- | -
|
|Cash Flows from Operating Activities                                              |  |          |   |          |   |          |  
|Net income after minority interest                                                |  | 889      |   | 1,203    |   | 1,292    |  
|Adjustment to reconcile net income to cash provided by operating activities:      |  |          |   |          |   |          |  
|Amortization and depreciation                                                     |  | 753      |   | 543      |   | 326      |  
|Net realized loss (gain) on sale of securities                                    |  | 728      |   | 375      |   | (107     | )
|Net realized loss (gain) on sale of tangible fixed assets                         |  | (147     | ) | (10      | ) | (7       | )
|Net realized (gain) on sale of investments in affiliated and other companies      |  | 91       |   | (437     | ) | (268     | )
|Net unrealized loss (gain) on valuation of securities                             |  | 10       |   | (77      | ) | 128      |  
|Net unrealized loss (gain) on valuation of fixed assets                           |  | 16       |   | 8        |   | (15      | )
|Net unrealized loss on valuation of investments in affiliated and other companies |  | 539      |   | 223      |   | 7        |  
|Net loss (gain) from investments carried at equity                                |  | (137     | ) | (79      | ) | (87      | )
|(Increase) decrease in other assets                                               |  | 59       |   | 1,236    |   | 3,033    |  
|(Decrease) increase in other liabilities                                          |  | 198      |   | (4,137   | ) | (2,520   | )
|Net cash provided by operating activities                                         |  | 2,999    |   | (1,152   | ) | 1,782    |  
|Cash Flows from Investing Activities                                              |  |          |   |          |   |          |  
|Cash and Cash Equivalents, beginning of year from Cardine Group                   |  | 354      |   |         |   |         |  
|Purchase of tangible fixed assets                                                 |  | (460     | ) | (377     | ) | (341     | )
|Proceeds from sale of tangible fixed assets                                       |  | 208      |   | 24       |   | 30       |  
|Purchase of investments in affiliated companies                                   |  | (159     | ) | (108     | ) | (97      | )
|Proceeds from sale of investments in affiliated conmpanies                        |  | 11       |   |         |   |         |  
|Purchase of investments in other companies                                        |  | (331     | ) | (1,703   | ) | (1,745   | )
|Proceeds from sale of investments in other companies                              |  | 820      |   | 493      |   | 846      |  
|Consideration paid for the acquisition of Banco di Napoli                         |  |         |   |         |   | (2,048   | )
|Purchase of securities                                                            |  | (459,775 | ) | (481,117 | ) | (291,793 | )
|Proceeds from sale and redemption of securities                                   |  | 464,993  |   | 484,232  |   | 292,968  |  
|Decrease (increase) in interest-bearing deposits                                  |  | 18,206   |   | (1,213   | ) | (190     | )
|Decrease (Increase) in federal funds sold and reverse repo's                      |  | (3,458   | ) | (2,599   | ) | (29      | )
|Net decrease (increase) in loans, net                                             |  | (12,102  | ) | 3,010    |   | (1,352   | )
|                                                                                  |  |          |   |          |   |          |  
|Net cash provided by investing activities                                         |  | 8,307    |   | 642      |   | (3,751   | )
|Cash Flows from Financing Activities                                              |  |          |   |          |   |          |  
|(Decrease) increase in deposits, net                                              |  | (16,831  | ) | 397      |   | (4,732   | )
|(Decrease) increase in short-term borrowing, net                                  |  | (433     | ) | 932      |   | 2,584    |  
|(Decrease) increase in repurchase agreements, net                                 |  | (302     | ) | 1,358    |   | 915      |  
|Increase (decrease) in long-term debt                                             |  | 8,569    |   | (1,273   | ) | 4,363    |  
|Dividends paid                                                                    |  | (773     | ) | (787     | ) | (724     | )
|Other changes of shareholders' equity                                             |  | (489     | ) | 10       |   | (465     | )
|Increase (decrease) of minority interest                                          |  | (459     | ) | (17      | ) | 43       |  
|                                                                                  |  |          |   |          |   |          |  
|Net cash (used in) provided by financial activities                               |  | (10,718  | ) | 620      |   | 1,984    |  
|Net (decrease) increase in cash and cash equivalents                              |  | 588      |   | 110      |   | 15       |  
|Cash and Cash Equivalents, beginning of year                                      |  | 818      |   | 708      |   | 693      |  
|                                                                                  |  |          |   |          |   |          |  
|Cash and Cash Equivalents, end of year                                            |  | 1,406    |   | 818      |   | 708      |  
|                                                                                  |  |          |   |          |   |          |  

F-185

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The financial information reported below provides summarized financial information for those companies accounted for using the equity method under
Italian GAAP and which would have been fully consolidated under U.S. GAAP. This information is provided on the basis of Italian GAAP.

|                                      |  | As at December 31, 2002
|------------------------------------- |  | -----------------------
|
|
|San Paolo Vita SpA and San Paolo Life |  | 105                    
|Fideuram vita SpA                     |  | 275                    
|Fideuram Assicurazioni SpA            |  | 3                      
|                                      |  |                        
|total                                 |  | 383                    

|                                      |  | As at December 31, 2002
|------------------------------------- |  | -----------------------
|
|
|San Paolo Vita SpA and San Paolo Life |  | 7,038                  
|Fideuram vita SpA                     |  | 4,076                  
|Fideuram Assicurazioni SpA            |  | 23                     
|                                      |  |                        
|total                                 |  | 11,137                 

|                                      |  | For the year ended December 31, 2002
|------------------------------------- |  | ------------------------------------
|
|
|San Paolo Vita SpA and San Paolo Life |  | 99                                  
|Fideuram vita SpA                     |  | 67                                  
|Fideuram Assicurazioni SpA            |  | 3                                   
|                                      |  |                                     
|total                                 |  | 169                                 

F-186

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|                                      |  | As at December 31, 2001
|------------------------------------- |  | -----------------------
|
|
|San Paolo Vita SpA and San Paolo Life |  | 21                     
|Fideuram vita SpA                     |  | 407                    
|Fideuram Assicurazioni SpA            |  | 4                      
|                                      |  |                        
|total                                 |  | 432                    

|                                      |  | As at December 31, 2001
|------------------------------------- |  | -----------------------
|
|
|San Paolo Vita SpA and San Paolo Life |  | 4,363                  
|Fideuram vita SpA                     |  | 4,391                  
|Fideuram Assicurazioni SpA            |  | 25                     
|                                      |  |                        
|total                                 |  | 8,779                  

|                                      |  | For the year ended December 31, 2001
|------------------------------------- |  | ------------------------------------
|
|
|San Paolo Vita SpA and San Paolo Life |  | 81                                  
|Fideuram vita SpA                     |  | (5                                  
|Fideuram Assicurazioni SpA            |  | 3                                   
|                                      |  |                                     
|total                                 |  | 79                                  

|                                      |  | For the year ended December 31, 2000
|------------------------------------- |  | ------------------------------------
|
|
|San Paolo Vita SpA and San Paolo Life |  | 36                                  
|Fideuram vita SpA                     |  | 52                                  
|Fideuram Assicurazioni SpA            |  | 4                                   
|                                      |  |                                     
|total                                 |  | 92                                  

F-187

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In the table below is reported the balance sheet and income statement related to Banka Koper, which under Italian Gaap is accounting for by using the "proportional method", whereas under
U.S. GAAP it should have been fully consolidated.

|ASSETS                                              |  | €/mil |  
|--------------------------------------------------- |  | ----- | -
|Assets                                              |  |       |  
|Cash and due from banks                             |  | 26    |  
|Interest-bearing deposits in other banks            |  | 118   |  
|Trading account assets                              |  | 410   |  
|Loans, net of allowance loan losses                 |  | 592   |  
|Premises and equipment                              |  | 32    |  
|Investments in affiliated companies                 |  | 17    |  
|Other assets                                        |  | 25    |  
|                                                    |  |       |  
|TOTAL ASSETS                                        |  | 1,220 |  
|                                                    |  |       |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                |  |       |  
|Liabilities and stockholders' equity                |  |       |  
|Deposits                                            |  | 360   |  
|Securities sold under repurchase agreements         |  | 5     |  
|Other liabilities                                   |  | 47    |  
|Long-term debt                                      |  | 667   |  
|                                                    |  |       |  
|TOTAL LIABILITIES                                   |  | 1,079 |  
|                                                    |  |       |  
|Capital stock & Other stockholders' equity          |  | 141   |  
|                                                    |  |       |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          |  | 1,220 |  
|                                                    |  |       |  
|INCOME STATEMENT                                    |  |       |  
|Total Interest Income                               |  | 90    |  
|                                                    |  |       |  
|Total Interest Expense                              |  | (48   | )
|                                                    |  |       |  
|Net Interest Income                                 |  | 42    |  
|                                                    |  |       |  
|Net write-offs and provision for loan losses        |  | (8    | )
|Net Interest Income after provision for loan losses |  | 34    |  
|                                                    |  |       |  
|Total Non Interest Income                           |  | 58    |  
|                                                    |  |       |  
|Total Non Interest Expense                          |  | (60   | )
|                                                    |  |       |  
|Income Before Income Tax Expense                    |  | 32    |  
|                                                    |  |       |  
|Income Tax Expense                                  |  | (7    | )
|                                                    |  |       |  
|Net Income                                          |  | 25    |  
|                                                    |  |       |  

Developments under Italian GAAP

The European Commission issued a Regulation in 2002 requiring all listed companies to adopt International Financial Reporting Standards in their consolidated
financial statements commencing January 1, 2005. The Group is considering the implications of such a requirement and would expect first to prepare consolidated financial statements in
accordance with International Accounting Standards and International Financial Reporting Standards issued by the International Accounting Standards Board for the year ended December 31, 2005.

F-188

---

Developments under U.S. GAAP

SFAS 143: "Accounting for Asset Retirement Obligations"

SFAS 143 "Accounting for Asset Retirement Obligations" was issued in June 2001 and is effective for fiscal years beginning after June 15,
2002, although early adoption is encouraged. SFAS 143 requires that the fair value of an asset retirement obligation be recognized in the balance sheet in the period in which it is incurred and
then charged to the profit and loss account over the useful economic life of the asset.

Adoption
is not expected to have a material impact upon net income and shareholders' equity as determined under U.S. GAAP if it was currently in force.

SFAS 146: "Accounting for costs associated with exit or disposals"

SFAS 146 "Accounting for Cost Associated with Exit or Disposal Activities" was issued in June 2002 and is effective for exit or disposal activities
that are initiated after December 31, 2002. SFAS 146 requires that the fair value of a liability for a cost associated with an exit or disposal activity be recognized when the liability
is incurred and nullifies EITF 94-3 which requires the recognition of a liability at the date of an entity's commitment to an exit plan.

Adoption
is not expected to have a material impact upon net income and shareholders' equity as determined under U.S. GAAP if it was currently in force.

SFAS 148: "Accounting for Stock-Based CompensationTransition and Disclosurean amendment of FASB Statement No. 123"

SFAS 148 "Accounting for Stock-Based CompensationTransition and Disclosurean amendment of FASB Statement No. 123" was
issued in December 2002. It amends SFAS 123 to provide alternate methods of transition for entities voluntarily adopting a fair value based method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of SFAS 123. The Statement amends SFAS 123 "Accounting for Stock-Based Compensation" to provide alternative methods of transition
for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS 148 also amends the disclosure requirements of SFAS 123. SFAS 148
is effective for fiscal years ending after December 15, 2002.

SANPAOLO
IMI does not currently intend to change to the fair value based method of accounting for stock-based employee compensation and therefore the transition methods are not
applicable.

EITF Issue 02-03: "Issues Involved In Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management
Activities"

The Emerging Issues Task Force released EITF 02-3 "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts
Involved in Energy Trading and Risk Management Activities" in November 2002. In EITF 02-3 the FASB staff clarified that, in the absence of (a) quoted market prices in an
active market, (b) observable prices of other current market transactions or (c) other observable data supporting a valuation technique, the transaction price represents the best
information available with which to estimate fair value at the inception of the arrangement for all derivatives.

With
respect to these criteria, the impact on the reported results for 2002 was not material. SANPAOLO IMI is currently assessing the potential impact of EITF02-03 upon net
income and shareholders' equity as determined under U.S. GAAP.

F-189

---

FIN 45: "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Othersan Interpretation of FASB
Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34"

FIN 45 "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Othersan Interpretation
of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34" was issued in November 2002. It addresses disclosure requirements for guarantors in respect of
guarantees issued (including guarantees embedded in other contracts) and requires recognition of a liability to be recognized for all obligations assumed under guarantees issued. The measurement
requirements are effective for guarantees issued from January 1, 2003.

SANPAOLO
IMI is currently assessing the potential impact of FIN45 upon net income and shareholders' equity as determined under U.S. GAAP.

FIN 46: "Consolidation of Variable Interest Entitiesan interpretation of ARB No. 51"

FIN 46 "Consolidation of Variable Interest Entitiesan interpretation of ARB No. 51" was issued in January 2003. This addresses the
criteria to be applied when determining whether certain special purpose entities (variable interest entities) should be consolidated and requires disclosures to be made if the involvement with an
unconsolidated variable interest entity is significant. Many variable interest entities have commonly been referred to as special purpose entities or off-balance sheet structures, but the
guidance applies to a larger population of entities. The Statement requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from
the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. Until now, one company generally has included another entity in its consolidated
financial statements only if it controlled the entity through voting interests. We will be subject to the consolidation requirements of FIN 46 for all variable interest entities created after
January 31, 2003, within our financial statements for the year ended December 31, 2003, while all other variable interest entities, if any, that existed before February 1, 2003,
will be considered within the first fiscal year beginning after June 15, 2003, which means within our financial statements for the year ended December 31, 2004.

SANPAOLO
IMI is currently assessing the potential impact of FIN 46 upon net income and shareholders' equity as determined under U.S. GAAP.

SFAS 149: "Amendment of Statement 133 on Derivative Instruments and Hedging Activities"

SFAS 149 "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" was issued in April 2003. The Statement amends and clarifies
financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities
under SFAS 133 "Accounting for Derivative Instruments and Hedging Activities". This Statement is effective prospectively for contracts entered into or modified after June 30, 2003 and
prospectively for hedging relationships designated after June 30, 2003.

SANPAOLO
IMI is currently assessing the potential impact of SFAS 149 upon net income and shareholders' equity as determined under U.S. GAAP.

SFAS 150: "Accounting For Certain Financial Instruments with Characteristics of both Liabilities and Equity"

SFAS 150 "Accounting For Certain Financial Instruments with Characteristics of both Liabilities and Equity" was issued in May 2003. The Statement
improves the accounting for certain financial

F-190

---

instruments
that, under previous guidance, issuers could account for as equity and requires that these instruments be classified as liabilities in statements of financial position. This Statement is
effective prospectively for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after
June 15, 2003. This statement shall be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the
Statement and still existing at the beginning of the year of adoption.

SANPAOLO
IMI is currently assessing the potential impact of SFAS 150 upon net income and shareholders' equity as determined under U.S. GAAP.

F-191

---

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

|                    |  | SANPAOLO IMI S.p.A.
|------------------- |  | -------------------
|                    |  |                    
|                    |  |                    
|                    |  | By:                
|                    |  |                    
|Date: June 26, 2003 |  |                    

---

CERTIFICATION

I, Pio Bussolotto, certify that:

1.     I
have reviewed this annual report on Form 20-F of Sanpaolo IMI S.p.A.;

2.     Based
on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based
on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.     The
registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.     The
registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

|                                                  |  | 
|------------------------------------------------- |  | 
|Date: June 26, 2003                               |  | 
|                                                  |  | 
|                                                  |  | 
|/s/PIO BUSSOLOTTOPio Bussolotto Managing
Director |  | 

---

CERTIFICATION

I, Alfonso Iozzo, certify that:

1.     I
have reviewed this annual report on Form 20-F of Sanpaolo IMI S.p.A.;

2.     Based
on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based
on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.     The
registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.     The
registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

|                                                |  | 
|----------------------------------------------- |  | 
|Date: June 26, 2003                             |  | 
|                                                |  | 
|                                                |  | 
|/s/ALFONSO IOZZOAlfonso Iozzo Managing
Director |  | 

---

CERTIFICATION

I, Luigi Maranzana, certify that:

1.     I
have reviewed this annual report on Form 20-F of Sanpaolo IMI S.p.A.;

2.     Based
on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based
on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.     The
registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.     The
registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

Date:
June 26, 2003

|/s/LUIGI MARANZANALuigi Maranzana Managing
Director |  | 
|--------------------------------------------------- |  | 

---

CERTIFICATION

I, Carlo Giuseppe Angelini, certify that:

1.     I
have reviewed this annual report on Form 20-F of Sanpaolo IMI S.p.A.;

2.     Based
on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based
on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.     The
registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.     The
registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

Date:
June 26, 2003

|/s/CARLO GIUSEPPE ANGELINICarlo Giuseppe Angelini Head of Accounting Department |  | 
|------------------------------------------------------------------------------- |  | 

---

EXHIBIT INDEX

|Exhibit No. |  | Description                                
|----------- |  | -------------------------------------------
|1.1         |  | Articles and By-laws of Sanpaolo IMI S.p.A.
|11.1        |  | Corporate Governance Report                
|99.1        |  | Section 906 Certifications                 

---

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