Against the backdrop of an improving economic environment in Germany and a sustained increase in the earnings power of the company, the main focus of the Supervisory Board’s work in 2006 was the integration of Bayerische Hypo- und Vereinsbank Aktiengesellschaft (HVB) into the UniCredit Group. This applied both to internal structures, which were adapted to UniCredit’s divisional organisational structure, and to the positioning of HVB within the corporate group, focusing on the German market as well as investment banking. The steps planned towards integration were able to be implemented as scheduled, taking into account the framework provided by German law. UniCredit’s announcement on January 23, 2007 that it was starting a squeeze-out procedure at both HVB and Bank Austria Creditanstalt is another systematic step in the integration process towards becoming the first truly European banking group.
- Focus of discussion during the plenary sessions of the Supervisory Board
- Corporate governance
- Main focus of committee work
- Audit and approval of the 2006 financial statements
- Further explanations pursuant to Section 171 (2) 2 of the German Stock Corporation Act (Section 289 (4), Section 314 (4) of the German Commercial Code)
- Personnel changes
Focus of discussion during the plenary sessions of the Supervisory Board
The Supervisory Board met at eight plenary sessions last year, one of which was an extraordinary meeting. In addition, thirty-seven resolutions were adopted by written circular. Thirty-three of these concerned approval for lending transactions with companies in compliance with Section 136 of the Italian Banking Act (TUB). This banking supervisory regulation which, in essence, is similar to Section 15 of the German Banking Act (“Loans to managers and members of governing bodies”) primarily aims at preventing abuse of special privileges granted to corporate officers. The start of 2006 was initially dominated by the events of late 2005. At an extraordinary meeting convened at the request of two of its members, the Supervisory Board received a report on the reasons why Dr Michael Kemmer had made use of the change of control clause in his employment contract and resigned from the Management Board on December 22, 2005. By means of a resolution adopted by written circular, the Remuneration & Nomination Committee of the Supervisory Board was authorised to retain an external legal expert to prepare a report examining the legal consequences of applying the change of control clause. Furthermore, the Supervisory Board resolved in a written procedure not to appeal against the judgement of Munich Regional Court passed on December 22, 2005 which had allowed legal action to be brought by shareholders challenging the approval of the actions of the Supervisory Board for the 2004 financial year. Instead, it decided to re-submit a motion to approve the actions of the Supervisory Board in the 2004 financial year together with a revised Supervisory Board report to the Annual General Meeting of Shareholders for approval on May 23, 2006. As already explained in detail in last year’s Report of the Supervisory Board, the court had found fault with the report for the 2004 financial year because it does not contain any information on the final judgment passed in favour of the plaintiffs in the legal action challenging the block voting of Supervisory Board members at the Annual General Meeting on May 14, 2003 through the Bank’s abandonment of appeal in July 2004.
Against the backdrop of the integration of HVB into the UniCredit Group, the Supervisory Board received reports on the company’s strategy and business development at four meetings during the year based on documents presented by the Management Board. The 2006 annual plan, the 3-year plan based on the new divisional structure of the operating business and, towards the end of the year, a preliminary report on the plan drawn up for 2007 were the subject of extensive deliberations at these meetings. Moreover, the Supervisory Board paid special attention to the implementation of each of the steps serving to integrate HVB into the UniCredit Group in 2006. First of all, the most important integration programmes were presented to the Supervisory Board in February. This notably concerned the organisational adjustments needed to match UniCredit’s divisional structure with the aim of enhancing corporate management, thus forming the foundation for sustainable earnings growth for all companies in the corporate group. At its meeting in July, the Supervisory Board gained an overview of the status of the divisionalisation, which was completed shortly afterwards, from the short reports provided by the members of the Management Board responsible.
Another step in the re-orientation of the individual corporate units of the UniCredit Group was taken when the Supervisory Board approved the new “Bank of the Regions” agreement notably with Bank Austria Creditanstalt (BA-CA). The Business Combination Agreement signed by HVB and UniCredit on July 12, 2005 had already defined the basis of this new agreement, under which BA-CA becomes the UniCredit sub-holding responsible for Austria and central and eastern Europe. During its July meeting, the Supervisory Board then dealt with a first important change in the Bank’s holdings. The Business Combination Agreement already contained an announcement stating that a decision regarding whether HVB’s asset management companies should be held directly by Pioneer Global Asset Management S.p.A., a UniCredit subsidiary, in future would be taken as a structural measure. An appraisal identified that the planned pooling of the asset management activities would yield high synergy potential for the corporate group and that an attractive sale price could be obtained by HVB. At the same July meeting, the Supervisory Board approved the sale of the three Activest companies in Germany, Luxembourg and Switzerland to Pioneer on the basis of the appraisal prepared by an independent auditor.
Another major step in the integration of HVB and BA-CA into the UniCredit Group came when the Supervisory Board approved the transfer of BA-CA to UniCredit and the restructuring of HVB’s shareholdings in central and eastern Europe (transfer of HVB Bank Ukraine to UniCredit, transfer of the shares in International Moscow Bank, transfer of HVB Bank Latvia to BA-CA and transfer of HVB’s branches in Vilnius and Tallinn to HVB Bank Latvia). At the Supervisory Board meeting on September 11, 2006, the Management Board explained the major points of the six underlying purchase and transfer contracts which were then submitted to the Extraordinary Shareholders’ Meeting held on October 25, 2006 for approval. The Supervisory Board had access to the contracts and all the Management Board reports regarding the transactions together with the expert appraisals. During the meeting, the Management Board explained the background to the transactions to the Supervisory Board: their purpose is to simplify the corporate structure of the UniCredit Group, provide for clearly defined responsibilities and align the individual Group units with their respective core markets. For HVB, this means focusing as part of intragroup specialisation on business in Germany and investment banking, for which it is to become the competence centre within the UniCredit Group. In addition, Munich will remain responsible for corporate banking throughout the Group. Also at this meeting, the external auditors commissioned by the Management Board explained the appraisals of each of the transactions to the Supervisory Board and described the appraisal methods applied in detail. In this connection, the Supervisory Board was able to satisfy itself that the appraisals were conducted in compliance with principles recognised in theory, in practice and in court rulings. Moreover, the Supervisory Board had a fairness opinion prepared by an investment bank, which confirmed that the valuations are fair. At the meeting, the Chief Legal Officer of HVB informed the Supervisory Board about the legal admissibility of the transactions with regard to possible disadvantages under corporate law and the Management Board reported on an investment bank’s assessment of the strategic investment opportunities in the next few years. After all the lines of argumentation had been extensively considered in the course of the discussion, a lawyer from a prestigious legal firm additionally called in to act as legal advisor informed the Supervisory Board that, on the basis of the information provided, the transactions could be approved from a legal perspective. As already announced at this Supervisory Board meeting, the Board of Directors of UniCredit confirmed in a resolution on September 12, 2006 that HVB might use the gains realised on the sale of the shareholdings to continue to develop domestic operations through organic growth or acquisitions, and that the intention was to turn HVB into a competence centre for investment banking within the UniCredit Group. In this last regard, HVB is to host investment banking activities for the next seven years at least. It was also decided that resolutions to divide HVB into separate legal entities during the (five-year) term of the Business Combination Agreement signed by UniCredit and HVB on June 12, 2005 would require a majority of fourth fifths of the members of the HVB Supervisory Board. Based in part on these resolutions and the arguments outlined above, the HVB Supervisory Board approved the transactions on the evening of September 12, 2006 by written circular.
In the course of the integration into the UniCredit Group, the Management Board also presented the Group Managerial Golden Rules and the Integrity Charter to the Supervisory Board. Compliance with the former is required on a Group-wide basis under the supervisory provisions of Banca d’Italia, whilst the latter defines the standards of conduct expected of all employees. Moreover, the Supervisory Board solicited a report on the restructuring of the Markets & Investment Banking division towards the end of the year. This enabled the Supervisory Board to gain an overview of the business model and each phase of implementation.
During 2006 the Supervisory Board also solicited reports on the further reduction of the Real Estate Restructuring segment (RER) set up at the end of 2004. Workout portfolios of the real estate finance business with a volume of €15.4 billion were pooled in this segment. The portfolio, which includes the Aphrodite loan portfolio that was the subject of resolutions adopted by the Annual General Meeting of May 23, 2006, was reduced by more than €10.4 billion by means of sales and our own workout activities. Another topic of discussion was setting up a new portfolio of non-strategic receivables amounting to €20.5 billion which is to be reduced with priority due to the lack of cross-selling opportunities. Furthermore, the Management Board informed the Supervisory Board about the sale of a portfolio of non-strategic real estate holdings, which is consistent with the Bank’s strategy of disposing of business areas that are not part of its core competence.
The Supervisory Board received an extensive risk report from the Chief Risk Officer (CRO) and solicited another report towards the end of the year on the risk strategy, risk situation and risk development, taking special account of individual sectors. Based on the reports and documents presented, the Supervisory Board was able to gain an extensive overview of the development of credit risk, market risk, operational risk and risk provisioning.
A further topic of discussion was succession planning and personnel development. Finally, the Supervisory Board considered changes and measures in the field of shareholdings - particularly the outsourcing of payment processing – and, at several meetings, also the various actions brought by shareholders of the Bank for rescission, annulment and the provision of information in connection with the Annual General Meeting of Shareholders of May 23 and the Extraordinary General Meeting held on October 25, 2006.
In individual cases, the Supervisory Board requested supplementary written and oral information, which the Management Board provided in each instance. Given the volume of information and the frequency of its meetings, however, the Supervisory Board saw no reason to inspect the Company’s books or written matter in addition to the documents already made available. The Supervisory Board approved transactions requiring its approval in 37 cases, 33 of which related to transactions requiring approval under Section 136 of the Italian Banking Act.
Corporate Governance
The Supervisory Board again addressed corporate governance topics in depth in 2006. The internal regulations were amended after the tasks of the former Strategy and Business Development Committee and the Risk Committee were transferred to the plenary session and the Audit Committee at the end of 2005. In addition, the internal regulations were adapted to cater for some new provisions under the German Corporate Governance Code. To carry out the annual efficiency review, the Chairman of the Supervisory Board sent a questionnaire to Supervisory Board members, the results of which were extensively discussed at the following Supervisory Board meeting. One outcome of the survey was that the Supervisory Board had a sufficient number of independent members within the meaning of section 5.4.2 of the German Corporate Governance Code according to its own evaluation. The Supervisory Board also considered any possible conflicts of interest. Thus, when voting on the Supervisory Board’s approval of the internal sale of three Activest companies to Pioneer Global Asset Management S.p.A., two members of the Supervisory Board did not take part on account of their positions with Pioneer and UniCredit. The issue of any possible conflicts of interests was likewise discussed by the Supervisory Board with regard to the voting on the sale and transfer of HVB operations in Austria, central Europe and eastern Europe to UniCredit together with its subsidiaries. Irrespective of the fact that all the transactions were conducted at market conditions, potential conflicts of interest were avoided by appropriate voting abstentions.
Compliant with the German Corporate Governance Code, the Supervisory Board discussed and examined the structure of the remuneration system for the Management Board. Changes to the annual bonus were made when adjusting HVB AG’s structure to the remuneration system of UniCredit. Please see the Compensation Report for further details on this issue.
Furthermore, the Supervisory Board adopted the Statement of Compliance in accordance with Section 161 of the German Stock Corporation Act at the end of the year, whereby four of the Code’s recommendations were not followed and another only applied in part in 2006. Further details on this issue are contained in the joint Corporate Governance Report of the Management Board and the Supervisory Board (see the section of this Annual Report headed “Corporate Governance and Compensation Report”).
Apart from absences on a few occasions as a result of sickness or other appointments, all members of the Supervisory Board took part in the plenary sessions as a general rule. No member of the Supervisory Board attended fewer than half of the Supervisory Board meetings in 2006.
Main focus of committee work
The Supervisory Board has set up three committees that support the work of the Supervisory Board. A description is given of tasks performed by committees in the Corporate Governance report. The composition of the committees is shown in the “Supervisory Board” list elsewhere in this Annual Report.
Remuneration & Nomination Committee
The Remuneration & Nomination Committee met three times in 2006. In addition, a resolution was adopted by telephone vote and two resolutions adopted by written circular. At its meetings, it discussed executive appointments. A topic of discussion was also remuneration levels for the Management Board, in which connection details were defined for the remuneration and targets for 2006. The Remuneration & Nomination Committee repeatedly solicited reports on the status of negotiations with Ms Novakovic, Dr Jentzsch and Dr Kemmer, who applied the change of control clause in their employment contracts at the end of 2005 in the course of the takeover by UniCredit. Based on legal opinions prepared by two external legal advisors, the Remuneration & Nomination Committee finally approved the agreements with the three former Management Board members after intensive deliberations. Moreover, the Remuneration & Nomination Committee granted its approval to Management Board members who wished to accept seats on supervisory boards of other companies and considered loans requiring approval by circular.
Audit Committee
The Audit Committee had four meetings in 2006. Dr Lothar Meyer, Chairman of the Management Board of ERGO Versicherungsgruppe AG, chairs this committee. In particular, the Audit Committee examined the preliminary audit of the annual financial statements and consolidated financial statements, and the report on relationships with related parties, and discussed the interim reports.
To prepare for the election of the independent auditors by the Annual General Meeting of Shareholders, the committee assessed the independence of the proposed auditors. For this purpose, it received a detailed statement from the auditors on facts which might limit their independence. Following this, the Audit Committee reached the conclusion that the facts presented were not detrimental to the auditors’ independence. After the election, the committee had the auditors explain their plan and appointed them to perform the audit, specifying the areas to be subject to special scrutiny and setting the fee. In addition, the committee defined the type and scope of non-auditing tasks to be performed by the auditors. In the course of the year, it again solicited reports on the status of the fees paid and fees expected.
Another topic of discussion in the Audit Committee were the reports of the Audit department on the internal auditing results from the first half and the third quarter of 2006. Furthermore, the auditor’s report on the annual audit of the securities account business was discussed in detail and did not lead to any objections requiring disclosure. After the tasks of the former Risk Committee were transferred to the Audit Committee at the beginning of 2006, the committee had the Chief Risk Officer (CRO) submit an extensive portfolio report at each meeting and had the development of credit risk, market risk and operating risk explained on the basis of the documents.
Compliant with the Minimum Requirements for the Credit Business of Credit Institutions (MaK), the MaRisk report was submitted to the committee at each meeting. The committee also had the credit risk strategy explained to it in great detail. Moreover, the committee was able to satisfy itself from a report that the liquidity and funding situation was satisfactory. Based on the reports and the documents submitted in this connection, the committee is of the opinion that risks are identified extensively at an early stage and are adequately managed.
Negotiating Committee
The Negotiating Committee required by law did not have to convene in the past year.
The chairmen of the respective committees reported to the Supervisory Board meetings on the topics discussed at the committee meetings, and on the results of these discussions and any votes held. The Management Board also informed the members of the Supervisory Board in writing about unusual events between meetings. The Chairman of the Supervisory Board met regularly with the Spokesman of the Management Board for consultations on major developments, and was informed continually on decisions by the Management Board and ongoing events.
Audit and approval of the 2006 financial statements
The annual financial statements and management report of Bayerische Hypo- und Vereinsbank Aktiengesellschaft, as well as the consolidated financial statements and management’s discussion and analysis for the 2006 financial year prepared in accordance with International Financial Reporting Standards (IFRS), including the account records, were audited by KPMG. The independent auditors issued an unqualified opinion in both cases.
In fulfilment of their professional obligations under Section 317 (4) of the German Commercial Code, the independent auditors also examined the monitoring systems used by the Bank to detect risk at an early stage. The independent auditors came to the conclusion that the monitoring systems installed are suitable for the management, identification and monitoring of the risks incurred by HVB Group, and confirm that the management report for HVB AG and management’s discussion and analysis for the Group present a true and fair view of the risks of future business development. The Chairman of the Audit Committee attended the final discussion of the Management Board with the independent auditors.
The financial statements listed above were forwarded to the Supervisory Board, together with Management Board’s proposal for the appropriation of profits and the auditors’ report. The Audit Committee examined these documents in great detail during the preliminary audit. The lead auditor reported on the findings of the audit and provided detailed answers to the questions of the members of the Supervisory Board at the preparatory meeting of the Audit Committee as well as at the subsequent meeting of the Supervisory Board devoted to the annual financial statements. In addition, the Management Board explained the financial statements in detail at these meetings. The Supervisory Board concurred with the results of the audit. It determined that, on the basis of its own examination of HVB AG’s financial statements and management report together with the consolidated financial statements, management’s discussion and analysis and proposal for the appropriation of profits, no objections were to be raised. At its meeting on March 20, 2007, the Supervisory Board therefore approved the annual financial statements prepared by the Management Board. At the same meeting, the Supervisory Board also approved the consolidated financial statements prepared by the Management Board. The Supervisory Board approves the proposal put forward by the Management Board concerning the appropriation of the profits.
UniCredito Italiano S.p.A. has held a majority interest in the share
capital of HVB AG since November 17, 2005. Consequently, the
Management Board has produced a report on relationships of
Bayerische Hypo- und Vereinsbank AG with related companies for
the 2006 financial year in accordance with Section 312 of the
German Stock Corporation Act. The report contains the following
concluding statement by the Management Board:
“We declare that, based on the circumstances known to us at the
time in which the legal transactions mentioned in this report were
entered into or the measures mentioned in this report were taken or
omitted, Bayerische Hypo- und Vereinsbank AG received appropriate
consideration for each legal transaction and that the Bank was
not put at a disadvantage by these measures having been taken or
omitted.”
KPMG audited this report and issued the following opinion:
“On the basis of our statutory audit and assessment, we confirm that
- the actual information contained in the report is correct,
- the company’s performance was not unreasonably high for the legal transactions mentioned in the report or disadvantages have been compensated,
- no circumstances speak in favour of a significantly different assessment to the one given by the Management Board concerning the measures mentioned in the report.”
The report of the Management Board on relationships with related parties and the related audit report by KPMG were also forwarded to the Supervisory Board. In the course of the preliminary audit, the Audit Committee and then the Supervisory Board considered these documents in depth at the meeting devoted to the annual financial statements. KPMG took part in the deliberations of the Supervisory Board and the preparatory meeting of the Audit Committee, and gave a report on the principal findings of their audit. The Supervisory Board concurred with the results of the audit by KPMG. Based on the final outcome of its own examination of the report on relationships of Bayerische Hypo- und Vereinsbank AG with related parties in the 2006 financial year prepared by the Management Board compliant with Section 312 of the German Stock Corporation Act, which did not identify any deficiencies, no objections are to be made about the final declaration of the Management Board in this report.
Further explanations pursuant to Section 171 (2) 2 of the German Stock Corporation Act (Section 289 (4), Section 314 (4) of the German Commercial Code)
The share capital of HVB consists of 736,145,540 shares of common bearer stock and 14,553,600 shares of registered preferred stock without voting rights. The shares of preferred stock, which constitute a holding of 1.9% of the share capital, result from the merger with Bayerische Staatsbank in 1971 and are held solely by UniCredit. The shares of preferred stock are not listed and can only be transferred with the approval of the Company. Shares of preferred stock have no voting rights and receive a retroactively payable advance share in profits and a dividend equivalent to the amount due for common shares.
In 2005, UniCredit submitted a tender offer which was accepted by a large majority of the shareholders. As a result of this offer, UniCredit has held 93.9% of the share capital of HVB since November 17, 2005. On January 23, 2007, UniCredit announced that it now held 95% of the share capital of HVB and intended to initiate a squeeze-out procedure. Assuming that this announcement is also implemented, UniCredit will hold 100% of the share capital of HVB in the foreseeable future.
HVB does not have any shares with special privileges granting control rights. Insofar as HVB employees hold shares in HVB, there are no special rules governing the exercise of their control rights. All holders of shares with voting rights can exercise their voting rights in person or through a proxy, or authorise a designated proxy of the Company to carry out their instructions.
Under Section 84 of the German Stock Corporation Act, the Supervisory Board appoints Management Board members for a maximum of five years. The Supervisory Board is entitled to revoke the appointment to the Management Board for good cause. Under Article 7 of HVB’s Articles of Association, the Management Board of the Bank must consist of at least two members. In line with HVB’s organisational structure in divisions, there are currently nine members of the Management Board. The terms of office of seven members of the Management Board expire on December 31, 2008 and of the two other members of the Management on February 22 and March 31, 2009, respectively. None of the Management Board contracts contain a change-of-control clause.
According to Section 179 of the German Stock Corporation Act, any amendment of the Articles of Association requires a resolution to be passed by the Annual General Meeting of Shareholders. Under Section 181 (3) of the German Stock Corporation Act, an amendment to the Articles of Association does not take effect until entered in the Commercial Register. The amendment to Article 4 of the Articles of Association resolved by the Annual General Meeting on May 23, 2006 has been challenged and hence not yet entered in the Commercial Register. The Annual General Meeting can transfer the authority to make amendments to the Articles of Association which only concern the wording, but not the content, to the Supervisory Board. Under Article 21 (3) of HVB’s Articles of Association, this authority was granted to the Supervisory Board. The Supervisory Board generally makes use of this right for capital increases from the authorised capital, for example, which lead to an amendment of Article 5 of the Articles of Association (share capital).
The authorised capital increase of €990 million still existing in full at the time the present Report of the Supervisory Board was approved on March 20, 2007 was resolved by the Annual General Meeting in 2004 and may be used up to April 29, 2009. The authorised capital increase was entered in the Commercial Register on December 18, 2006. In particular, it allows for a capital increase against non-cash contributions with the exclusion of shareholder subscription rights. At the same time, conditional capital of €375 million is available to grant common shares of HVB to holders of debt securities or participating certificates with an option or conversion right and/or conversion obligation. The authorisation granted to the Management Board by the Annual General Meeting in 2003 to issue appropriate debt securities or participating certificates up to May 14, 2008 has not been used either. In accordance with Section 71 (1) No. 7 of the German Stock Corporation Act, the company was authorised to buy or sell treasury stock for the purpose of securities trading by the resolution of the Annual General Meeting of May 23, 2006. The Company made use of this authorisation on more than one occasion in 2006. The information in this regard is provided in the notes to the 2006 annual financial statements and the notes to the consolidated financial statements. This authorisation will become null and void when the squeeze-out is entered in the Commercial Register. There is currently no authorisation compliant with Section 71 (1) No. 8 of the German Stock Corporation Act to purchase treasury stock for other purposes, such as to withdraw it.
There are no significant agreements at HVB that are subject to the condition of a change of control following a tender offer.
No compensation agreements have been reached with members of the Management Board or employees in the event of a tender offer.
Personnel changes
The following people were appointed to the Management Board with effect from January 1, 2006 following the business combination with UniCredit: Jan-Christian Dreesen, Rolf Friedhofen, Heinz Laber, Ronald Seilheimer, Matthias Sohler, Andrea Umberto Varese and Andreas Wölfer. Dr Wolfgang Sprissler, who already served on the Board as Chief Financial Officer, was elected to succeed Dieter Rampl, who retired from the Management Board with effect from December 31, 2005, as Spokesman of the Management Board after consulting the Remuneration & Nomination Committee of the Supervisory Board. In addition, Dr Stefan Schmittmann was elected deputy member of the Management Board with effect from January 1, 2006. Jan-Christian Dreesen amicably resigned from office for personal reasons on February 9, 2006. Willibald Cernko was elected to the Management Board as his successor with effect from February 23, 2006. On August 31, Johann Berger resigned from the Management Board at HVB and from the Management Committee of UniCredit after he considered that his task of combining the commercial real estate finance and corporate banking operations in one division based on his proposal had been completed. Johann Berger had been a member of the Management Board since April 1, 2005, gaining much credit particularly for reducing the workout portfolios of the real estate financing operations pooled in the Real Estate Restructuring segment. The Supervisory Board would like to thank Johann Berger for his successful work on the Management Board. Johann Berger’s duties on the Management Board were assumed by Dr Schmittmann, who was appointed a regular Management Board member with effect from September 12, 2006.
At the Annual General Meeting of May 23, 2006, Alessandro Profumo, Chief Executive Officer of UniCredit, Carlo Salvatori, former Chairman of the Board of Directors of UniCredit, Aldo Bulgarelli, lawyer, Ranieri de Marchis, Chief Financial Officer of UniCredit, Paolo Fiorentino, Head of Global Banking Services of UniCredit, Dario Frigerio, Head of Private Banking and Asset Management of UniCredit, Roberto Nicastro, Head of Retail of UniCredit, and Vittorio Ogliengo, Head of Corporates of UniCredit, were re-elected to the Supervisory Board for their remaining term of office, being until the end of the Annual General Meeting of Shareholders in 2008. The gentlemen named had been previously appointed to the Supervisory Board in the course of the business combination with UniCredit under an order issued by Munich Registry Court on November 29, 2005. Alessandro Profumo was re-elected Chairman of the Supervisory Board at the Supervisory Board meeting held on May 23, 2006 following the Annual General Meeting of Shareholders.
Herbert Munker and Anton Hofer resigned from the Supervisory Board with effect from March 8 and December 31, 2006, respectively. Beate Dura-Kempf and Günter Guderley, who had been elected deputy members of Herbert Munker and Anton Hofer by the Bank’s employees according to the provisions of the German Co-Determination Act, were elected to the Supervisory Board in their places. With effect from August 21, 2006, Carlo Salvatori announced his resignation from the Supervisory Board. Based on an order issued by Munich Registry Court on August 22, 2006, Sergio Ermotti, Head of Markets & Investment Banking of UniCredit, was appointed to the Supervisory Board in his place. The Supervisory Board would also like to use this opportunity to thank the members who have left the Supervisory Board for their successful service on this body. Their great personal commitment and extensive professional experience was a decisive gain for work on the Supervisory Board.
Rolf Heffner passed away on November 14, 2006. He had been a member of the Management Board of Bayerische Hypotheken- und Wechsel-Bank from 1975 to 1984 and then a member of the Bank’s Advisory Board until 1993. Johann Rüth passed away on December 28, 2006. He was appointed to the Management Board of Bayerische Staatsbank in 1961 and, after the merger with Bayerische Vereinsbank, was a member of the merged bank’s Management Board until 1979. He then served as a member of the Bank’s Advisory Board until 1990. Karl Wüst passed away on January 31, 2007. He had been a member of the Management Board of Bayerische Hypotheken- und Wechsel-Bank from 1973 to 1976 and remained closely connected with the Bank as a member of its Advisory Board until 1988. With tireless commitment, great skill and sound judgement, the deceased gentlemen made an exemplary contribution to the Bank’s development. The Supervisory Board will hold the memory of the deceased gentlemen in the highest esteem.
The Supervisory Board would like to thank the Management Board, the employees and employee representatives for all their hard work in the past year, which was essentially marked by the integration of HVB into the UniCredit Group and a sustained increase in the earnings power of the Company. The Supervisory Board wishes the Management Board and the employees every success for the future.
Munich, March 20, 2007
The Supervisory Board
Alessandro Profumo
Chairman
