BFF Bank (BFF) investor relations material

Regulatory developments, intervention, and governance

• Bank of Italy appointed two temporary commissioners to support the board and management in remediating operational and accounting issues, especially in factoring and internal controls.

• The remediation process was initiated prior to the regulator's intervention and addresses historical shortcomings, mainly pre-2023.

• The board and statutory auditors retain full powers and decision-making authority, with commissioners acting in a supportive, temporary capacity.

Identified issues and financial impacts

• Issues in factoring, lending, and credit exposure classification may lead to up to €0.8bn in additional past due exposure and up to €0.5bn from stricter past due day counting; these are not necessarily cumulative.

• Past due exposures relate to public sector receivables with negligible loss given default; CET1 regulatory requirements are expected to be met even at maximum impact.

• Incorrect cash allocation in Italian factoring business from 2019 to June 2023 led to €15.1m negative impact on 2025 opening equity.

• Sample analysis of €102m in ancillary credit rights collections (2015–2025) suggests €3.4m pre-tax negative impact from potential errors.

• Exposure to Italian public sector from negative court rulings is about €400m before €70m provisions, subject to updates.

Capital, risk assessment, and management

• Risk weight for past due exposures is 150%, and the bank’s average risk weight is already high.

• Multiple capital management options are available, including loan book management and securitization, with no current intention to pursue a capital raise.

• Even at maximum impact, total capital ratio may be within a few basis points of the requirement, pending further assessment.