Meeting real needs with concrete solutions.

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1 Meeting real needs with concrete solutions Reports and Accounts

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3 Every day, life presents new challenges and opportunities. Every day, we each have a new story to tell that involves real needs and demands clear answers. This year s annual report captures the stories of those European students and researchers with whom our foundation has worked to help them reach their goals. It also illustrates our commitment to building a solid network of relationships in the academic world, which is essential to fostering the most talented minds. These stories were built on success, courageous innovation, respect for tradition, and our strong bonds with local communities. To support meaningful study and research, we strive to make a difference, day in and day out, for those who have chosen to collaborate with us. This means we must work together to overcome challenges and to create a new world of opportunities. Within this report are true stories - snapshots of ordinary lives that shape the mosaic of our daily work. At UniCredit & Universities, we are creating global relationships that empower young, talented students and researchers to meet the changing needs of our time Reports and Accounts

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5 Governing Bodies Board of Directors Dieter Rampl Anna Simioni Chairman Vice-Chairman Franco Bruni Willibald Cernko Antonella Massari Gianni Franco Papa Theodor Weimer Members Secretary General Giannantonio De Roni Board of Auditors Giorgio Loli Claudia Cattani Elisabetta Magistretti Michele Paolillo Valerio Villoresi Chairman Standing Members Substitute Members UniCredit & Universities Knight of Labor Ugo Foscolo Foundation Charitable Entity Italian Presidential Decree no. 255 of (Official Gazette, no. 118 of 12 May 1967) Registered Office: Via Alessandro Specchi, Rome Business Office: Via Santa Margherita, Milan Tax Code: UniCredit & Universities 2011 Reports and Accounts 3

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7 Scientific Committee Scientific Committee Franco Bruni Chairman Silvia Giannini Tullio Jappelli Levent Kockesen Christian Laux Catherine Lubochinsky Giovanna Nicodano Reinhard H. Schmidt Branko Urosevic Members Delegate Member Annalisa Aleati Scientific Director Scientific Advisors Matthias Doepke Barbara Petrongolo Michele Polo Paola Profeta Josef Zechner UniCredit & Universities 2011 Reports and Accounts 5

8 UniCredit & Universities 2011 Annual Report Chairman s letter We regard our role in supporting talented students and researchers and in promoting the study of economics as being more meaningful than ever. Although 2011 was a challenging year for the European economy and financial markets, I am pleased to report that it was one of significant growth and success for the UniCredit & Universities Foundation. The objective for 2011 was to strengthen our foundation s position as a major European supporter of the best and brightest students and researchers in the fields of economics and finance. We met our goal in all of our undertakings. Our foundation was active last year in launching new initiatives for undergraduate students and business school researchers. Importantly, the number and quality of applications to our foundation increased by a substantial number Reports and Accounts UniCredit & Universities

9 Similarly, we saw significant growth in the number of high-ranking universities and research centers interested in actively partnering in our foundation s initiatives, which expanded the geographical scope of our network. In short, our growth last year solidified our foundation s reputation as a serious and reliable force in identifying and supporting talented students and researchers. This has enabled us to launch a number of prestigious new initiatives with some of the top European and American universities. Outstanding students and researchers are benefiting from these positive developments. We are very proud of these accomplishments and we are ready to do more. Encouraged by the appreciation for our efforts, we are working harder than ever to fulfill our mandate and to meet the needs of a rapidly evolving academic environment. The current economic crisis in Europe has led to a shortage of funding for universities. As a result, we regard our role in supporting talented students and researchers and in promoting the study of economics as being more meaningful than ever. I would like to take the opportunity to thank each member of our Board of Directors and of our Board of Auditors, as well as the professors of our foundation s Scientific Committee and its advisors. Their evaluation activities, ideas, and tireless work on our foundation initiatives have been invaluable to our success. We also extend our thanks to the many professors and fellows who, from every corner of the world, help us to achieve our vision with their appreciation and superb scholarly work. Dieter Rampl Chairman UniCredit & Universities 2011 Reports and Accounts 7

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11 Contents Annual Report 11 The Foundation s Purposes 12 Highlights 13 Management Analysis 14 Activities 22 Main Goals 42 Financial Statements 47 Balance Sheet 48 Report on Operations 49 Notes on the Accounts 50 Annexes 60 Report of the Board of Auditors 65 Yearbook 69 UniCredit & Universities 2011 Reports and Accounts 9

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13 Annual Report The Foundation s Purposes 12 Highlights 13 Management Analysis 14 Activities 22 Support for Studies 22 Support for Research 27 Other Initiatives 36 Main Goals 42 UniCredit & Universities 2011 Reports and Accounts 11

14 Annual Report The Foundation s Purposes On the basis of Article 2 of the foundation s statute, the UniCredit & Universities Foundation does not pursue profit and operates with the following purposes: 1 TO PROMOTE studies and initiatives designed to deepen knowledge in the academic fields of finance, economics, law, politics and the social sciences. TO AWARD, annually, one or more scholarships. 2 3 TO ESTABLISH awards for dissertations or for special academic work in the academic fields of finance, economics, law, politics and the social sciences. TO PROPOSE and SUPPORT academic initiatives Reports and Accounts UniCredit & Universities

15 Highlights During 2011, the foundation launched 16 initiatives (12 in 2010), which yielded 42 awards (36 in 2010). Expenditures related to the launch of all 2011 initiatives amounted to 1.35 million ( 1.03 million in 2010). Investments can be broken down as follows: initiatives in support of studies: 60% initiatives in support of research: 33% other initiatives: 7% Expenses for ordinary operations amounted to a total of 1.48 million ( 1.65 million in 2010). The foundation s network of scholarship recipients included 32 students and researchers (25 in 2010). In 2011, the foundation received 812 applications. Since the start of its operations in January 2009, the foundation has received 1,600 applications. Number of initiatives Number of award recipients Investment in new initiatives ( million) 1.35 Breakdown of expenditures for new initiatives in 2011 (%) Initiatives in support of studies Initiatives in support of research Other initiatives Contributions received ( million) Number of applications received * * net of past commitments UniCredit & Universities 2011 Reports and Accounts 13

16 Annual Report Management Analysis 2011: A YEAR OF STRONG RESULTS The deep financial crisis that characterized 2011 greatly impacted the education sector through a widespread decline in funding for study and research. The number of applications to master s and PhD programs, however, have not decreased, though their direct and indirect costs have proven to be unaffordable to a broader cross-section of potential students. In this increasingly adverse environment, UniCredit & Universities has not only confirmed but also enlarged its commitment to support the best students and researchers in the academic fields of economics and finance, by significantly increasing the number of initiatives it offers and by continuing to widen the scope of its operations. In particular, the foundation has opted to extend its support to include academic scholarships for undergraduate students and research contributions to business schools, in addition to programs in economics. For undergraduate students, the foundation launched the first edition of the Study Abroad Exchange Programme in Awarding eight grants to students from those UniCredit countries that do not participate in the European Commission s Erasmus Programme, this competition enables them to spend six months studying abroad at a university in any country where UniCredit is present. In the first edition of this program, the foundation focused on Russia and Serbia for both incoming and outgoing exchanges. Naturally, the foundation intends to provide this valuable opportunity to all applicable countries within UniCredit s perimeter* including Azerbaijan, Bosnia, Croatia, Kazakhstan, Kyrgyzstan and Ukraine. The primary objective of UniCredit & Universities is to provide students from countries in which UniCredit operates with equal access to study and research opportunities. Despite the enormous complexities involved in the development of such an ambitious exchange program and the limited scope of its initial offerings, the foundation received an unexpectedly high A group photo of award winners at the awards ceremony on June 9, * see map on page Reports and Accounts UniCredit & Universities

17 At the workshop on Gender Equality in Europe. From left to right: Dieter Rampl (Chairman of the Board of Directors of the UniCredit & Universities Foundation), Michelle Rendall, Chiara Pronzato and Pamela Campa (winners of the UWIN Best Paper Award, first edition), and Professor Francesco Billari (vice-rector of Bocconi University). number of applications. To date, a tremendous effort has been made to guarantee access to this program for all eligible students. The grant was designed to cover room and board costs for six months abroad, in addition to the cost of a round-trip airline ticket. Based upon the enthusiastic response of several universities to this initiative, the foundation regards it to be a major success. These universities have not only worked to raise awareness of this program among their student bodies but have also partnered with UniCredit & Universities to resolve the many issues surrounding such a complex undertaking. In this way, they have demonstrated their commitment to promoting this exchange program over other pre-existing international programs that may be less effective. For business schools, UniCredit & Universities has developed a competition to identify and fund one-year research projects on behavioral economics and other timely topics focused mainly on corporate decision-making processes. Launched with the involvement of three of Europe s most prestigious business schools the IE Business School, INSEAD and the London Business School the foundation s goal is to extend this competition to more European and American institutions for this year s second edition. This past year has generated significant results related to sharing the expertise of the researchers funded by the foundation and the scientific contributions they have made. Before 2011, the foundation s effort to share the value of their expertise was limited to the dissemination of their research through the UniCredit & Universities Working Paper Series and through university lectures delivered by the foundation s fellows to students in the Economics and Management of Innovation and Economics of Financial and Insurance Markets programs at the University of Trieste. This year, however, the Board of Directors decided to augment the foundation s outreach to the academic community by organizing two academic workshops. The first of these workshops, which focused on Gender Equality in Europe, took place on November 18, 2011, at Bocconi University in collaboration with its Dondena and Econpubblica Centers. At the workshop, the winners of the UWIN Best Paper Award presented research projects addressing the topic Economic Consequences of Gender Equality in Europe. Both Dieter Rampl, chairman of UniCredit & Universities, and Francesco Billari, vicerector for development at Bocconi University, delivered opening addresses at this event. The following two speakers Professor Barbara Petrongolo and Professor Paola Profeta were both UniCredit & Universities 2011 Reports and Accounts 15

18 Annual Report Management Analysis (CONTINUED) scientific advisors to the foundation for the competition. Mirco Tonin, the winner of the second edition of the Foscolo Europe Fellowship, moderated the keynote research presentations delivered by the three winners. 100 Participants The foundation created a Best Paper Award competition for this event to award the top two papers among those selected for the workshop. The latter half of the workshop featured a roundtable moderated by Barbara Stefanelli, the vice editor-in-chief of Corriere della Sera. Participating were Professor Maurizio Ferrera, from the University of Milan, Elisabetta Magistretti, non-executive director of Pirelli, and Professor Francesca Zajczyk, deputy for equal opportunities at the City Council of Milan. The second workshop, which will focus on The Social Dimension of Organizations, will take place in Budapest on April 27-28, It was organized in collaboration with Central European University in Budapest and Mirco Tonin, the winner of the second edition of the Foscolo Europe Fellowship and a current researcher at the university. Additional support was provided by UniCredit Bank and the Royal Economic Society. More than one hundred researchers submitted their work for this competition. The prize will be awarded by Franco Gianni Papa, member of the foundation s Board of Directors, as part of the workshop s opening ceremonies. This workshop was made possible due to the strength of UniCredit & Universities international academic network. Since the foundation was established, it has worked to cultivate and expand this network, which is vital to its success as an institution. In 2011, UniCredit & Universities intensified its efforts to include within its network preeminent universities from across the world. 1, Reports and Accounts UniCredit & Universities

19 By virtue of this privileged window into the inner workings of diverse academic systems and its access to the latest developments in the research community, the foundation is able to continually upgrade its programs and initiatives. These networking efforts have enabled the foundation to reach out in new ways to students and researchers worldwide. This is evidenced by the significant rise in the number of applications the foundation has fielded from countries across Europe and around the world. Also in 2011, UniCredit & Universities worked to bolster its relationships with its scholars, who are the foundation s most valuable asset. Federico Rossi (winner of the Masterscholarship, first edition) between the Scientific Director and the Secretary General of the foundation at the 2012 LSE Donors and Scholars Reception. In this regard, a series of meetings were conducted in 2011, with a particular focus on the most prestigious universities and research centers in Russia (e.g., the New Economic School and the Higher School of Economics) and in Serbia (e.g., the University of Belgrade and the Center for Liberal-Democratic Studies, Belgrade). Moreover, the foundation s networking activities have been expanded to the United States, most notably among top five universities (in alphabetical order): 1. Chicago Booth 2. Harvard University 3. MIT 4. Princeton University 5. Stanford University Thanks to these networking efforts, the foundation has been able to expand its scholarships and grants portfolio. The foundation is building this network not only to engage a broad cross-section of universities and research centers in its initiatives but also to create an extraordinary opportunity for the cultural enrichment of its programs. Through these mutually beneficial relationships, the foundation stays current with the dynamics of the academic world and is particularly responsive to the needs of its students and researchers. Whenever possible, the foundation s officers have traveled to meet with its scholars at their host universities to gain a better understanding of their experiences. The Study Abroad Exchange Programme is an excellent example of the positive relationships the foundation is building with its scholars, by staying in close contact with them. Participants in this program are 23 to 24 years old and have committed to exchange programs that take them to distant countries with often unfamiliar approaches to academia and research. Despite the demanding nature of such close contact and support, the foundation finds this work to be proof positive of the high level of attention it pays to all aspects of its initiatives. The UniCredit & Universities Board of Directors has been remarkably active in all of the foundation s initiatives. Their engagement, sensibility and openness to supporting new European talents have been instrumental to the achievement of the foundation s objectives. UniCredit & Universities 2011 Reports and Accounts 17

20 Annual Report Management Analysis (CONTINUED) Over the course of 2011, the composition of the foundation s Board of Directors has undergone two significant changes. Federico Ghizzoni, following his appointment to the position of Chief Executive Officer of UniCredit, resigned from the foundation s Board of Directors. Furthermore, Marco Annunziata resigned from the board after accepting a job offer in the United States. These gaps have been filled by Gianni Franco Papa, head of UniCredit s CEE Division, and Franco Bruni, who is also the current chairman of the foundation s Scientific Committee. The foundation s selection of Mr. Papa serves to underline the importance of Central and Eastern Europe to its operations, while the selection of Mr. Bruni highlights the attentiveness of the Board of Directors to topics of scientific interest and to the close ties between the Scientific Committee and the Board of Directors. Much like the foundation s Board of Directors, the Scientific Committee continues to be vital to its operations. Without their scientific support, the foundation would not have achieved these results. The high profile of the Scientific Committee members and the constant dialogue they maintain with the Board of Directors are instrumental to the effective operation of the foundation. 9 members Scientific Committee In 2011, two new members joined the Scientific Committee. Professor Levent Kockesen, an associate professor at Koç University in Istanbul, specializes in game theory, contract theory, intermediate microeconomics, managerial economics and mathematics for economists. Professor Branko Uroševic, an associate professor of financial economics and operations research at the department of economics of the University of Belgrade, also serves as a special research advisor to the governor of the National Bank of Serbia. These important additions to the Scientific Committee will provide the foundation with key expertise in two important countries in CEE. Their support will be crucial to better disseminate information about the foundation s competitions and initiatives to Serbian and Turkish students and researchers. As in years past, in 2011 the foundation s activities were enriched by the collaboration of external experts with the Scientific Committee on specific initiatives, such as the first edition of the UWIN Best Paper Award and the Masterscholarships competitions. These high-profile academics not only evaluated applications but also helped shape the initiatives themselves. The entrance to the Ralph Landau Center for Economics and Policy Research at Stanford University, where Michela Giorcelli (winner of the Crivelli Europe Scholarship, 8th edition) is studying Reports and Accounts UniCredit & Universities

21 Camilla Bua (winner of the Study Abroad Exchange Programme, first edition) together with two students from the Engineering and Economics University of St. Petersburg. Professor Barbara Petrongolo, guest speaker at the Workshop on Gender Economics. 5 Scientific Advisors As of December 31, 2011, the foundation relies on five scientific advisors. Thanks to their contributions this past year, the foundation has strengthened its impact in a range of specialized academic and research fields. Two of these scentific advisors are professors from Italian universities, while the remaining three are professors from American, British and Austrian institutions. They are: Professor Michele Polo and Professor Paola Profeta from Bocconi University; Professor Matthias Doepke from Northwestern University; Professor Barbara Petrongolo from Queen Mary University of London and Professor Josef Zechner from Vienna University of Economics and Business (former member of the Scientific Committee). At its last meeting on December 20, 2011, the Board of Directors renewed the current Scientific Committee for another two-year term; the only departure was that of Josef Zechner. Christian Laux, an associate professor of finance at the Vienna University of Economics and Business, took his place on the committee. Main Achievements In 2011, UniCredit & Universities achieved significant quantitative and qualitative results. With 16 initiatives over the past year, the foundation has expanded the scope of its operations since its establishment in 2009, when it managed just seven initiatives. UniCredit & Universities has proved to be a dynamic institution, backing up its commitment to support the best students by more than doubling the number of its initiatives over the past two years. Forty-two students and researchers received awards from the foundation in 2011, up from 36 recipients in Applications More significantly, in 2011 the foundation received 812 applications for all of its initiatives: the Crivelli Europe and Foscolo Europe scholarships, the Study Abroad Exchange Programme, the Post-Doc Research Grant, the Best PhD Thesis Award and the Best Paper Awards. This represents a 56% increase over the 522 applications the foundation received in 2010 and speaks to its increased impact and to its initiatives. In 2011, the Board of Directors allocated 1.35 million for new initiatives, an increase of 0.32 million over the previous year. UniCredit & Universities 2011 Reports and Accounts 19

22 Annual Report Management Analysis (CONTINUED) This figure is particularly important not only because of its absolute value but also because the foundation received roughly 8% fewer contributions in 2011 than in Despite rigorously focusing on the foundation s efficiency, the ratio of administrative costs on total expenses increased to 14.1% in 2011, five points higher than in 2010 but still below the efficiency limit. As will be shown in detail in the Notes on the Accounts for the year 2011, the non-staff related increases in management costs are primarily connected to the increased cost of compensation paid to external professionals as well as to the increased regional tax levied on productive activities (IRAP). This tax increase is due to the larger number of foundation initiatives and prizes in COUNTRIES WITHIN UNICREDIT S PERIMETER Austria Azerbaijan Bosnia and Herzegovina Bulgaria Croatia Czech Republic Estonia Germany Hungary Italy Kazakhstan Kyrgyzstan Latvia Lithuania Poland Romania Russia Serbia Slovakia Slovenia Turkey Ukraine Reports and Accounts UniCredit & Universities

23 Disclosure and Engagement Tools Since the UniCredit & Universities Foundation was established in 2009, it has worked to create a paperless operational structure by organizing, managing and carrying out its activities online. This effort has maximized the efficiency and speed with which the foundation launches its initiatives and collects applications and evaluations. Moreover, the foundation s online structure has enabled it to contain costs and eliminate administrative fees for students and researchers who apply to the various initiatives. This advanced website has enabled the foundation to communicate consistently and effectively with every country it engages. Specifically, through this website the foundation: 1. launches all initiatives 2. manages the implementation phase, as students and researchers electronically submit their applications for the foundation s initiatives 3. allows the Scientific Committee members to review all applications and to submit their assessments electronically 4. regularly provides information on all initiatives and events taking place during the year 5. provides full disclosure of its operations, including the members of the Scientific Committee and corporate bodies, as well as financial statements and other detailed information A thorough website navigation analysis yielded interesting and useful information. A summary of the most compelling highlights include the following. visits in 2011 In 2011, the number of visitors to the foundation s website increased by 58%, exceeding a threshold of 50,000 visits. The number of visits has more than quadrupled as compared to The average number of daily visits increased to 139 in 2011, up from 88 in This included peaks of over 1,200 visits per day as compared to 455 in Users viewed more than 190,000 pages and spent an average of 3 minutes on the website. This is slightly less than in 2010 due to the redesign of the website s architecture in early 2011, which made it faster and easier for users to find their pages of interest. Regarding the website s emerging trends and usage patterns, the total number of users from abroad (25,900) exceeded that of Italian users (24,669) for the first time. In particular, it is worth highlighting the increased usage from countries such as Ukraine (+391%), Bulgaria (+202%), Turkey (+186%), Austria (+145%) and Germany (+122%). This demonstrates that efforts to promote the foundation and to disseminate information about its initiatives outside of Italy, especially in Central and Eastern Europe, are leading to positive results. Overall, however, in 2011 users of the foundation s website were still predominantly from Italy, followed by Germany with 2,694, Turkey with 2,380, the United Kingdom with 1,751, Austria with 1,710, and Bulgaria with 1,695 among others. Facebook:/UniCredit&Universities twitter.com/unicredit_univ 152 Countries Of particular interest is the total number of countries of users origin. This figure increased to 152 in 2011, up from 125 in Although the visitors were predominantly European (91.5%), this is added confirmation that the UniCredit & Universities Foundation is becoming increasingly well known outside of the 22 countries in which UniCredit operates. UniCredit & Universities 2011 Reports and Accounts 21

24 Annual Report Activities THE FOUNDATION S ACTIVITIES FIT INTO THREE MAJOR CATEGORIES: Support for STUDIES Support for RESEARCH Additional INITIATIVES 1. INITIATIVES TO SUPPORT STUDIES The Crivelli Europe Scholarships - 10 th edition The Crivelli Europe Scholarships are offered to students from the 22 countries in which UniCredit operates, who hold degrees in economics, banking and/or finance and who wish to pursue a doctorate abroad. This initiative is managed in keeping with the tradition of the Crivelli Europe Scholarships, created in 2002 by UniCredito. It builds on the foundation s lessons learned since its establishment to expand its initiatives to all European countries. The Crivelli Europe Scholarships reaffirm the foundation s commitment to gender diversity by ensuring that every year, at least one prize is awarded to a female applicant. In 2011, for the 10th year, the foundation awarded three Crivelli Europe Scholarships. The scholarships include a full year of 3Scholarships university fees and an annual stipend of 25,000, covering all living and travel-related costs. The scholarships are renewable for a second year, subject to performance requirements. In 2011, 270 students from 38 different countries (31 in 2010) applied. These figures should also be considered in light of the From left to right: Alessandro Vecchiato, Enrico Cantoni and Ludovica Gazzè (winners of the Crivelli Europe Scholarship, 9 th edition) Reports and Accounts UniCredit & Universities

25 MAP OF OUR SCHOLARS nd 1. Crivelli Fellowship, 2 ed. Emilio Calvano, from Harvard University to Bocconi University 2. Foscolo Europe Fellowship, 1 st ed. Emiliano Santoro, o from Copenhagen University to Catholic University 3. Foscolo Europe Fellowship, 2 nd ed. Mirco Tonin, from Southampton University (UK) to Central European University 4. Foscolo Europe Fellowship 3 rd ed. Edoardo Grillo, from Princeton University to University of Turin 5. US PhD Scholarship, 1 st ed. Kirill Borusyak from New Economic School of Moscow to Harvard 6. Crivelli Scholarship, 7 th ed. Giorgia Piacentino, London School of Economics 7. Crivelli Scholarship, 7 th ed. Roberto Robatto, Univers rsity of Chicago 8. Crivelli Scholarship, 8 th ed. Michela Giorcelli, Stanford University th 9. Crivelli Scholarship, h 8 ed. Stefano Mosso, University of Chicago 10. Foscolo Europe Scholarship, 1 st ed. Audinga Baltrunaite, Stockholm University 11. BdS Crivelli Europe Scholarship, 9 th ed. - Ludovica Gazzè, MIT 12. BdS Crivelli Europe Scholarship, 9 th ed. - Enrico Cantoni, MIT 13. BdS Crivelli Europe Scholarship, 9 th ed. - Alessandro Vecchiato, UCLA 14. BdS Masterscho olarship, 1 st ed. - Andreas Kalker - Barcelona Graduate School 15. BdS Masterscholarship, 1 st ed. - Birgit Altmann - Stockholm University 16. BdS Masterscholarship, 1 st ed. - Federico Rossi - London School of Economics 17. BdS Masterscholarship, 1 st ed. - Lorenzo Prosperi - Toulouse School of Economics exceptionally high quality of the applications. Whereas in 2010, 25 applications passed the Scientific Committee screening process, in 2011, 44 passed the process, an increase of 76%. +76% Applications In 2011, for the first time, one of the three scholarships was awarded to a Russian student, Petr Lukianchenko, a graduate of the Higher School of Economics in Moscow. The remaining two scholarships were awarded to Italian women: Barbara Biasi, from Bocconi University in Milan, and Maddalena Galardo, from LUISS University in Rome. The winners have shown a preference for the most prestigious American universities, where many of the UniCredit & Universities scholars are presently studying, including: 1. Roberto Robatto, winner of the seventh edition of the Crivelli Europe Scholarship, who is about to complete his PhD in economics at the University of Chicago 2. Michela Giorcelli, winner of the eighth edition of the Crivelli Europe Scholarship, is a second-year PhD student at Stanford University 3. Stefano Mosso, winner of the eighth edition of the Crivelli Europe Scholarship, is a third-year PhD student in economics at the University of Chicago 4. Enrico Cantoni and Ludovica Gazzè, winners of the ninth edition of the Crivelli Europe Scholarship, are both first-year PhDs at MIT 5. Alessandro Vecchiato, winner of the ninth edition of the Crivelli Europe Scholarship, is now in the first year of his PhD at UCLA The US PhD Scholarship - 1 st edition In order to meet the needs of the best students and to make the same opportunities available 1Scholarship to scholars from all of the countries in which UniCredit operates, the foundation s Board of Directors decided in 2011 to launch a new scholarship reserved for graduates from the 19 countries in Central and Eastern Europe where UniCredit is present. To be eligible, students must have been accepted by one of the five highest-ranked PhD programs in economics or finance at an American university. These are (in alphabetical order) Chicago Booth, Harvard University, MIT, Princeton University and Stanford University. Similar to the Crivelli Europe Scholarship, the US PhD Scholarship is renewable for a second year and provides an annual stipend of 25,000 and all university fees. The winner of the first edition of the US PhD Scholarship was Kirill Borusyak, a citizen of Russia, who will begin the first year of his PhD at Harvard University. UniCredit & Universities 2011 Reports and Accounts 23

26 Annual Report Activities (CONTINUED) The Leopold Gratz Scholarship - 3 rd edition In 2011, the foundation launched the third edition of the Leopold Gratz Scholarship. This contest is aimed at top students who have either earned a degree in economics or finance at any Austrian university or are seeking to enroll in a master s or doctoral program at an Austrian university. The scholarship is directly and fully funded by Bank Austria s Leopold Gratz Foundation. 1Scholarship In 2011, the winner was Daniel Rettl, a PhD student at the Vienna Graduate School of Finance. Mr. Rettl was awarded the prize on June 22, 2011, at the Bank Austria headquarters. The ceremony was attended by Manuel Mayer, the winner of the first edition; Professor Josef Zechner, UniCredit & Universities Scientific Advisor; Alvin Kraus, Secretary General of the Leopold Gratz Foundation; and Doris Tomanek and Vera Laggner- Kausel, from Bank Austria. The winner received 25,000 for the academic year. The support of UniCredit & Universities for this initiative demonstrates its commitment to local initiatives developed within UniCredit s geographical scope. The foundation believes in the value of the traditions represented by these initiatives, which highlight the close ties that bind UniCredit s operations to its local communities. From left to right: Manuel Mayer (winner of the Leopold Gratz Scholarship, first edition); Alvin Krauss, Secretary General of the Leopold Gratz Foundation; Vera Laggner from Institutional & International Affairs at Bank Austria; Daniel Rettl (winner of the Leopold Gratz Scholarship, second edition), Doris Tomanek, Head of HR at Bank Austria; and Josef Zechner, Scientific Advisor of the UniCredit & Universities Foundation. LUISS School of Government 1 Soos Gabor (Hungary) 2 Svitlana Galko (Ukraine) 3 Oksana Kohut (Ukraine) 4 Dmytro Volodin (Ukraine) Study Abroad Exchange Programme 5 Camilla Bua (Trieste) 6 Vincenzo Cecere (Naples) 7 Bojan Jokovic (Belgrade) 8 Sandro Lucci (Rome) 9 Anna Panchenko (Rostov) 10 Davide Pescarolo (Milan) 11 Oleksandr Pitdblunyy (Trieste) 12 Ekaterina Vernezi (Rostov) Post-Doc Research Grant 13 Andrea Colciago (Milan) 14 Salvatore Piccolo (Milan) 15 Francesco Drago (Naples) 16 Tiziana Assenza (Milan) 17 Giorgio Fabbri (Naples) 18 Stefano Gagliarducci (Rome) 19 Alessio Moro (Cagliari) 20 Maria Petrova (Moscow) Reports and Accounts UniCredit & Universities

27 Masterscholarships - 2 nd edition In 2011, the foundation continued to fund an initiative launched in 2010 to provide scholarships for master s programs in economics and finance at top European universities. Open to graduates from the 22 countries in which UniCredit is present, this initiative aims to widen the activities of the foundation to encompass all levels of university studies. Previously, master s programs were not covered by the foundation. 6 Scholarships A master s degree represents an interim specialization program of one or two years that may either be a preparatory step for a research PhD or the final step in a student s academic career. The Masterscholarships grants are intended for students planning to attend the best European universities. This criterion exists because a European master s degree represents one of the three fundamental steps taken by the most talented students in economics and finance. Among the CVs of applicants, it is common to see that they have earned a bachelor s degree in their home countries, a master s in economics at a major European university, and a research PhD, often at an American university. The universities involved in the second edition of the Masterscholarships initiative are: 1. Barcelona Graduate School of Economics - University Pompeu Fabra 2. Bocconi University 3. Stockholm School of Economics 4. Toulouse School of Economics Since the first edition, Bocconi University has been added to this initiative while the London School of Economics and Political Science had to temporarily suspend their involvement. The foundation, however, is still presently funding a two-year master s program at the school for Federico Rossi and a PhD program for Giorgia Piacentino, a Crivelli winner. In its second edition, the Masterscholarships competition provides six scholarships to top students who wish to enroll in a master s program in economics or finance for the academic year at one of the above four schools. The contest is open to all students from within UniCredit s European perimeter. Federico Rossi and Birgit Altmann (two winners of the Masterscholarship, first edition) during the 2011 Awards Ceremony. The scholarship covers all university fees in addition to a monthly stipend for living costs for the full duration of the program. The foundation has established agreements for this scholarship directly with the four schools, with provisions for a two-stage candidate screening process. First, each school provides the foundation with a short list of candidates who meet the qualifications of both the school and the scholarship. Then the foundation assesses the candidates and consults with the appointed scientific advisor, Michele Polo, pro-rector at Bocconi University, before choosing the recipient. Unlike the Crivelli Europe Scholarships, the Masterscholarships ask applicants to apply at the websites of the respective universities. To receive the scholarship, the candidates must already have been accepted into the master s program. The recipients of the six scholarships will be announced by the end of April 2012 and will begin their master s programs in fall UniCredit & Universities 2011 Reports and Accounts 25

28 Annual Report Activities (CONTINUED) Several winners awaiting the beginning of the 2011 Awards Ceremony. To provide comparable opportunities to all students from UniCredit countries 247 Applications 2. students registered at a Russian or Serbian university who wish to spend six months abroad at a university in any of the other countries within UniCredit s perimeter Each winner will receive a 4,200 grant to cover living costs during the study period ( 700 a month). The initiative also provides reimbursement for a return ticket to the selected destination. Study Abroad Exchange Programme Grants - 1 st edition 8 Grants To fulfill its commitment to support the best young European talent, the UniCredit & Universities Foundation decided in 2011 to provide eight study grants to allow undergraduates to spend six months abroad at a university located within UniCredit s geographical perimeter. The goal of this program is to provide comparable opportunities to students from UniCredit countries who are not eligible for the Erasmus Programme, which is offered by the European Commission. In this first edition, the foundation focused on students from Russia and Serbia. Specifically, the competition was open to: 1. students registered at a university within UniCredit s perimeter who intend to spend six months abroad at a Russian or Serbian university This scholarship is larger than other similar initiatives so that winners may pursue their studies without receiving any additional funding. The initiative was more successful than expected. The foundation received a total of 247 applications from across Europe. The eight winners came from Italy, Russia, Serbia and Ukraine: 1. Camilla Bua, enrolled at the University of Trieste, will spend six months at the Engineering and Economics University of St. Petersburg 2. Vincenzo Cecere, enrolled at the University of Naples Federico II, will spend six months at the Moscow State University of Economics, Statistics and Informatics 3. Bojan Jokovic, enrolled at the University of Belgrade, will spend a semester at the University of Ljubljana 4. Sandro Lucci, enrolled at the University of Rome Tor Vergata, will spend six months at the Higher School of Economics in Moscow 5. Anna Panchenko, enrolled at Rostov University, will spend six months at the Polytechnic of Milan to take management engineering classes Reports and Accounts UniCredit & Universities

29 6. Sebastiano Pescarolo, enrolled at Bocconi University, will spend six months at the Plekhanov Russian Economics University in Moscow 7. Oleksandr Pitdblunyy, enrolled at the University of Trieste, will spend six months at the Engineering and Economics University of St. Petersburg 8. Ekaterina Vernezi, enrolled at Rostov University, will spend six months at the Polytechnic of Milan to take management engineering classes 2. INITIATIVES TO SUPPORT RESEARCH The Foscolo Europe Fellowship - 3 rd edition These fellowships are offered to the best young European researchers who have earned doctorates in economics at universities abroad and wish to continue their research at a European university. 1Fellowship Through the Foscolo Europe Fellowship, UniCredit & Universities provides funding for two years of post-doctoral research, renewable for a further two years. It consists of an annual stipend of 60,000 paid directly to the fellowship recipient. Since 2009, the Foscolo Europe Fellowship has been available to researchers from the European countries in which UniCredit operates. In 2011, the third edition of the fellowship was awarded to Edoardo Grillo, an Italian researcher currently at Princeton University. Thanks to UniCredit & Universities, he will be working at Turin s prestigious Collegio Carlo Alberto beginning fall The Post-Doc Research Grant - 2 nd edition In addition to the Foscolo Research Fellowship, the foundation engaged in numerous additional initiatives in 2011 to support research by young European economists. These initiatives, although relatively more modest in scale, provide grants, research support and prizes for the best PhD theses and the best papers on current topics of interest to a bank. The second edition of the Post-Doc Research Grant was launched in July 2011 to support the best research projects in economics and finance presented by young researchers working at universities located within UniCredit s perimeter. 5 Grants The winners will each receive an annual grant of 10,000 to complete their projects over a two-year period. They will present their results to UniCredit s top management. Mirco Tonin (winner of the Foscolo Europe Fellowship, second edition) during the Workshop on Gender Equality in Europe. Andrea Colciago (a winner of the Post-Doc Research Grant, first edition) during the awards ceremony. UniCredit & Universities 2011 Reports and Accounts 27

30 Annual Report Activities (CONTINUED) The five winners, selected at the end of 2011 by the Scientific Committee of UniCredit & Universities, are (in alphabetical order): 1. Tiziana Assenza, from Catholic University of Milan, for her research project, Animal Spirits and Financial Crises 2. Giorgio Fabbri, from Parthenope University of Naples, for his research project, International Borrowing Without Commitment: Volatility of Capital Inflow and Welfare 3. Stefano Gagliarducci, from the University of Rome Tor Vergata, for his research project, Political Connections and Labor Market Outcomes 4. Alessio Moro, from the University of Cagliari, for his research project, Structural Change and Slow-Motion Recoveries 5. Maria Petrova, from the New Economic School in Moscow, for her research project, Media Effects in the Weimar Republic and Nazi Germany The Best PhD Thesis Award - 2 nd edition In conjunction with the Post-Doc Research Grant, the second edition of the Best PhD Thesis Award was launched in 2011 to reward the best papers written by economists and researchers from any of the 22 European countries in which UniCredit operates. This program is designed to offer all young economists from within UniCredit s perimeter 6 Grants the same opportunity to receive private support for both study and research. For this contest, UniCredit & Universities selected the six best theses in economics, finance, political science and social science, with preference given to those written on the following subjects: 1. Financial crises, regulatory changes and profitability in Europe 2. Aging populations and their impact on banking and financial systems 3. Economic policy for the European integration of the countries of Central and Eastern Europe 4. Decision-making and behavioral economics The six best theses will each receive 5,000 and will be published in the Working Papers Series of the foundation. The competition s deadline for submissions is April 30, The UWIN Best Paper Award - 2 nd edition In 2011, the UniCredit & Universities Foundation, in cooperation with the UniCredit Women s International Network (UWIN), launched the second edition of the UWIN Best Paper Award to honor the three best papers on the subject of gender economics. The contest is open to all young economists and researchers from the 22 countries in which UniCredit operates. The three best submissions will each receive a prize of 5,000 and will be published in the Working Papers Series of the foundation. Although 2 the contest was approved and included in the foundation s 2011 activity plan, it will close in Grants April The names of the winners will be released by May 31, The selection process will be handled by the same commission of international experts appointed by the Board of Directors based on the recommendations of the foundation s Scientific Committee in The members of the commission are Matthias Doepke from Northwestern University, Paola Profeta from Bocconi University and Barbara Petrongolo from the Queen Mary University of London. Four winners of the CEE Best PhD Thesis Award. From left to right: Branislav Saxa, Zvezda Dermendzhieva, Daniel Horn and Ekaterina Rashkova. Last year s winners of the UWIN Best Paper Award were: 1. Pamela Campa, researcher at the University of Stockholm, for her paper, Gender Quotas, Female Politicians and Public Expenditures: Quasi-Experimental Evidence 2. Chiara Pronzato, researcher at the University of Turin, for her paper, An Examination of Paternal and Maternal Intergenerational Transmission of Schooling 3. Michelle Rendall, researcher at the University of Zurich, for her paper, Rise of the Service Sector and Female Market Work: Europe vs. the US Reports and Accounts UniCredit & Universities

31 Best Paper Award The Social Dimension of Organizations 2 Grants In 2011, the foundation expanded its program to support academic research with a new award focused on labor economics. The competition is open to all young economists and researchers from the 22 countries in which UniCredit operates. The Best Paper Award The Social Dimension of Organizations was linked to the workshop on the same topic, held in collaboration with Central European University, where Mirco Tonin, winner of the second edition of the Foscolo Europe Fellowship, is conducting his research. The three winners of the UWIN Best Paper Award, first edition. From left to right: Michelle Rendall, Chiara Pronzato and Pamela Campa. The three winners received their awards from the Chairman of the UniCredit & Universities Foundation during a workshop organized by Bocconi University on the topic of Gender Equality in Europe, at which they presented their projects. The foundation s fellow, Mirco Tonin, a researcher at Central European University in Budapest, was the moderator. The winning papers have been published in the foundation s Working Papers Series. The winners are: 1. Alessandro Bucciol, Assistant Professor of Econometrics in the economics department of the University of Verona, for his paper, Pay Dispersion and Work Performance. He co-authored the paper with Marco Piovesan, a researcher at Harvard Business School. 2. Christiane Bradler, a researcher at the Centre for European Economic Research in Mannheim, Germany, for her paper, Employee Recognition and Performance - A Field Experiment. She co-authored her paper with Susanne Neckermann, a researcher at the Centre for European Economic Research in Mannheim, Robert Dur, a professor at Erasmus University of Rotterdam, and Arjan Non a researcher at Maastricht University. The winners of the UniCredit Best Paper Award, second edition. From right: Grzegorz Halaj, Alexander Schätz, Jan Maruhn and Max Mair. From left, the students awarded a special mention by the Scientific Committee: Piotr Kazmierkiewicz, Daniele Ruspantini, Alessandra Sordi and Tekçe Bülent. UniCredit & Universities 2011 Reports and Accounts 29

32 Annual Report Activities (CONTINUED) Business School Research Project Funding - 1 st edition In 2011, to extend the scope of its support for research, the foundation reached out to business schools. UniCredit & Universities has launched a competition for research being conducted at business schools on economic and financial topics, particularly on the topic of decision-making and behavioral economics. In its first edition, the competition included three of Europe s most prestigious business schools, IE Business School, INSEAD and the London Business School. The competition was 1 open to researchers from the 22 countries in Grant which UniCredit operates who work at one of these three institutions. INSEAD s Fontainebleau campus. Each honoree will be awarded 5,000 during a ceremony to be held on April 27, 2012 in Budapest, at the opening of the workshop on The Social Dimension of Organizations. The prize will be awarded by Gianni Franco Papa, member of the foundation s Board of Directors. The research project chosen to receive the award this year comes from INSEAD and is entitled Behavioral Biases in the Short-Selling Market. The research will be conducted by: 1. Oleg Chuprinin, PhD in Finance 2. Bastian von Beschwitz, PhD in Finance 3. Massimo Massa, Professor of Finance UniCredit & Universities will provide 40,000 for the development of this research. The success of this initiative exceeded expectations. The foundation received more than one hundred submissions for the competition. Levent Kockesen, a member of the Scientific Committee of the UniCredit & Universities Foundation and the scientific advisor for this initiative, emphasized the very high average quality of the submissions. The UniCredit Best Paper Award - 3 rd edition Unlike the other initiatives described thus far, the UniCredit Best Paper Award now in its third edition is only offered to researchers employed by UniCredit, at any bank or legal entity of the Group. 2 Grants The UniCredit Best Paper Award recognizes the two best papers in the fields of economics, finance, law or social sciences with prizes of 5,000 each. Criteria for selection include the interest of the paper s contents to the Group. The large number of submissions (26 in 2011) was drawn from across UniCredit s perimeter. The two winners this year will be announced by the end of May Reports and Accounts UniCredit & Universities

33 RESEARCH: The Foundation s Fellows and Research Projects Underway The foundation is presently supporting a significant number of researchers who are actively conducting valuable research at prominent institutions of higher learning. 12 Researchers The 12 fellows now receiving funding include the four winners of the Crivelli and Foscolo Fellowship competitions and the eight winners of the first and second editions of the Post-Doc Research Grant. These young researchers are building promising academic careers by carrying out high-profile research on cutting-edge topics with potentially important implications for the economic system as a whole and the banking system in particular. The following is a brief profile of the foundation s fellows and the topics they are exploring. FELLOWS OF THE UNICREDIT & UNIVERSITIES FOUNDATION COMPETITION FELLOW ACADEMIC INSTITUTION CRIVELLI FELLOWSHIP Emilio Calvano Bocconi University FOSCOLO EUROPE FELLOWSHIP Emiliano Santoro Mirco Tonin Edoardo Grillo Catholic University Central European University Collegio Carlo Alberto POST-DOC RESEARCH GRANT Andrea Colciago Francesco Drago Salvatore Piccolo Tiziana Assenza Giorgio Fabbri Stefano Gagliarducci Alessio Moro Maria Petrova Bicocca University Parthenope University of Naples Catholic University Catholic University Parthenope University of Naples University of Rome Tor Vergata University of Cagliari New Economic School UniCredit & Universities 2011 Reports and Accounts 31

34 Annual Report Activities (CONTINUED) EMILIO CALVANO Winner of the Second Edition of the Crivelli Fellowship Emilio Calvano, a young researcher in the field of economics, graduated with a degree in political economics from Bocconi University with full marks and distinction in The relationship between new, online information channels and the profitability of old, off-line business models He holds a PhD from the University of Toulouse in France. In 2007, he moved to the United States, where he conducted research and taught at Harvard University as Professor Susan Athey s research assistant. He also taught in Sweden as Professor Mike Burkart s research assistant at the Stockholm School of Economics. Calvano is an applied theoretical economist whose research mainly focuses on the theory of industrial organization. His research interests also include the economics of organization, regulatory policy and competition, and market design. His current research principally focuses on online advertising markets and, in particular, on the relationship between the newer, online information channels and the profitability of older, off-line business models. The intent is to identify the determinants of reduced total revenues in the information industry, which occurred in tandem with the shift in consumption towards electronic formats. EMILIANO SANTORO Winner of the First Edition of the Foscolo Europe Fellowship Emiliano Santoro holds a PhD in economics from Cambridge University. Since September 2008, he has been an assistant professor of economics at the University of Copenhagen and has also engaged in research as a visiting researcher at Pompeu Fabra University in Barcelona. Since the fall of 2010, thanks to the Foscolo Europe Fellowship, Santoro has returned to Italy to conduct his research at the Catholic University in Milan. He specializes in monetary economics and macroeconomics. Within these fields, he is currently developing a research project that focuses on dynamic stochastic general equilibrium (DSGE) models for the theoretical and empirical analysis of the interconnections between the banking sector and the macroeconomy. Additionally, he intends to develop a general equilibrium framework for the assessment of the asymmetric effects of monetary policy on output and inflation. Dynamic models of general economic equilibrium for theoretical and empirical analysis of links between the banking sector and the macroeconomy MIRCO TONIN Winner of the Second Edition of the Foscolo Europe Fellowship Mirco Tonin graduated from Bocconi University in Milan and completed a PhD in economics at the Institute for International Economic Studies of Stockholm University. He is a lecturer in economics at the University of Southampton in the United Kingdom. Analysis of relationships between social behavior and employment His work has thus far focused on the labor market. He has published several papers in international journals on topics relating to labor economics, often incorporating experimental and behavioral analyses. Thanks to the Foscolo Europe Fellowship, Tonin decided to continue his research at another prestigious institution, Central European University in Budapest, where he began in fall At CEU, Tonin will be able to pursue his project on relationships between social behavior and employment. He will take an in-depth look at problems linked to discrimination and will collaborate with international experts on these subjects Reports and Accounts UniCredit & Universities

35 EDOARDO GRILLO Winner of the Third Edition of the Foscolo Europe Fellowship Edoardo Grillo is a researcher who is close to completing his PhD in economics at Princeton University, begun in He graduated in economics from Bocconi University with full marks and distinction in Thanks to the research fellowship he received from the foundation, Grillo will return to Italy next fall to conduct his research at the prestigious Collegio Carlo Alberto in Turin. His research focuses on microeconomics and game theory, but he is actively exploring topics in behavioral economics, political economy and mechanism design. In Turin, Grillo will continue his research on information transmission, with an emphasis on two different perspectives. He will examine the interaction between reference dependence and information transmission, while also investigating the role played by ideological and cultural proximity in forming and diffusing opinions on the consequences of policy interventions. Using rigorous game theory analytical tools and possible insights from other disciplines to analyze contractual environments, political settings and communication games How labor market dynamics are affected by the creation and destruction of enterprises ANDREA COLCIAGO Winner of the First Edition of the Post-Doc Research Grant Andrea Colciago is an assistant professor in the department of political economics at the University of Milano Bicocca, where in 2007 he received his PhD in economics. After completing his studies, Colciago worked as an economist in the research department of the Bank of Italy and as a visiting researcher at the central banks of Finland and Hungary. His research interests primarily focus on macroeconomics and dynamic stochastic general equilibrium (DSGE) models. His post-doctoral research will be dedicated to this academic area. Colciago has been developing a DSGE model to simulate the market entry of endogenous firms in order to study the interaction between goods market structure and labor markets. This enables him to address recent empirical evidence concerning the dynamic relationship between the number of producers and changes in employment. Moreover, he uses the model to evaluate the effects of fiscal and monetary policy interventions on both unemployment and business creation. FRANCESCO DRAGO Winner of the First Edition of the Post-Doc Research Grant Since graduating with a doctorate in economics from the University of Siena in 2006, Drago has been a lecturer at Parthenope University of Naples. He has been a visiting researcher abroad, both in Europe at University College London and the University of Munich and in the United States at Columbia University, the University of California, Berkeley, and the Santa Fe Institute. His research interests primarily focus on applied microeconomics and behavioral economics, economics and crime and social interactions. The research grant awarded by UniCredit & Universities enables Drago to pursue in greater depth his studies on interrelationships between belief formation, crime and economic shocks. During this period, he is spending time at Harvard University to collaborate with experts in this field. Interrelationships between belief formation, crime and economic shocks UniCredit & Universities 2011 Reports and Accounts 33

36 Annual Report Activities (CONTINUED) SALVATORE PICCOLO Winner of the First Edition of the Post-Doc Research Grant Salvatore Piccolo earned his master s degree at the Toulouse School of Economics and, in 2006, his doctorate from Northwestern University. Since 2007, he has been a lecturer in the economics department of the University of Naples Federico II and, since 2011, an associate professor of economics at Catholic University in Milan. How banks relationships with customers are affected by compensation systems of top bank managers and information exchange agreements between banks within a context of moral hazards His research relates to industrial organization and contract theory, with a particular emphasis on regulatory regimes, banking systems and corporate finance. Piccolo s research focuses on these core interests, with support from the foundation. His topic is extremely current, as he is analyzing how banks relationships with their customers are affected by compensation systems for top bank managers and information exchange agreements between banks, with a special focus on exclusive loans and multi-bank systems, within the context of the challenges associated with moral hazards. TIZIANA ASSENZA Winner of the Second Edition of the Post-Doc Research Grant Tiziana Assenza is an assistant professor at the Catholic University in Milan, where she earned a PhD in economics in She has been a post-doctoral researcher at the Center for Non-Linear Dynamics in Economics and Finance (CeNDEF) at the University of Amsterdam. During and following her PhD, she has taught in both undergraduate and graduate programs at Catholic University, and until 2009 at the Polytechnic of Milan. Her research interests focus on the role of heterogeneity in macroeconomic models. Recently, Assenza has also been interested in experimental macroeconomics. She was awarded the Post-Doc Research Grant for her project, Animal Sprits and Financial Crises. The main objective of her research project consists in evaluating the importance of animal spirits, particularly confidence in the origin and propagation of financial crises. To this end, her research will also analyze experimental data from controlled experiments, which will be conducted in the laboratory with human subjects. The importance of animal spirits in the origin and propagation of financial crises To develop new theoretical models on the topic of international borrowing without commitment: volatility of capital inflow and welfare GIORGIO FABBRI Winner of the Second Edition of the Post-Doc Research Grant Giorgio Fabbri has been a researcher at the Parthenope University of Naples since He received his PhD in mathematics in 2006 from Sapienza University in Rome. He has conducted research, both during and after his doctoral studies, as a research fellow at LUISS Guido Carli in Rome and as a research associate at the University of New South Wales in Sydney, Australia. He is currently an external fellow at the Institut de Recherches Economiques et Sociales of the Catholic University of Louvain-la-Neuve, Belgium. With the proposed research project, International Borrowing Without Commitment: Volatility of Capital Inflow and Welfare, he intends to develop new theoretical models on the subject. Part of the award will be used by Fabbri to finance short research visits to several European universities. In particular, he will visit the University of Aix-Marseille to work with international experts in this field, including Professors Boucekkine and Pintus Reports and Accounts UniCredit & Universities

37 STEFANO GAGLIARDUCCI Winner of the Second Edition of the Post-Doc Research Grant Stefano Gagliarducci has been an assistant professor of economics at the University of Rome Tor Vergata since In 1999, he earned his bachelor s degree at Sapienza University in Rome. After obtaining an MSc at Collegio Carlo Alberto in Turin, he earned a PhD in economics in 2006 at the European University Institute in Fiesole. In 2006, he was a visiting lecturer at Boston University. From 2007 to 2009, he was a post-doctoral research fellow at CEMFI (Madrid). And in 2011 he was a visiting scholar at the London School of Economics. He is also a research fellow at the Institute for the Study of Labor (IZA) in Bonn. His main research interests are political economics, labor economics and applied microeconometrics. The purpose of his research project, Political Connections and Labor Market Outcomes, is to study the careers of politicians relatives and to assess how the connections between politics and the labor market vary through the course of the electoral cycle. ALESSIO MORO Winner of the Second Edition of the Post-Doc Research Grant Alessio Moro is a researcher at the University of Cagliari. He holds an MSc in economics from University College London and a PhD in economics from Universidad Carlos III in Madrid. He has carried out research at the Bank of Spain and at Bocconi University in Milan. To study the careers of politicians relatives and to assess how the connections between politics and the labor market vary through the course of the electoral cycle To investigate the effects of structural changes in manufacturing and services on recovery patterns in GDP following a recession The research project that Moro will undertake with the support of this grant is entitled Structural Change and Slow-Motion Recoveries. Its object is to investigate the effects of structural changes in manufacturing and services on recovery patterns in GDP following a recession. His ultimate goal is to develop a quantitative theory to explain the speed and mechanisms that characterize a post-recession economic recovery. The project will be carried out in collaboration with Vasco Carvalho, a researcher at CREi and University Pompeu Fabra in Barcelona. MARIA PETROVA Winner of the Second Edition of the Post-Doc Research Grant Maria Petrova is a researcher from Russia who is currently working at the New Economic School in Moscow, where she earned a master s degree in economics. In 2008, she completed her PhD in political economy and government at Harvard University. She will use part of her grant to continue her research at Princeton University. The objective of her project is to deepen our understanding of the influence of mass media on people s behavior by estimating the causal effects of German public radio on voting and expressions of anti- Semitism in Germany from 1930 to Her ultimate goal is to compare the magnitude of this effect with the results found in comparable studies on the effects of mass media on a range of more recent outcomes in the United States, Russia, Croatia and other countries. To deepen the influence of mass media on people s behavior by estimating the effect of German public radio on expressions of anti- Semitism in Germany in the 1930s UniCredit & Universities 2011 Reports and Accounts 35

38 Annual Report Activities (CONTINUED) 3. ADDITIONAL INITIATIVES Workshops In 2011, the foundation continued an ambitious program, launched in 2010, to collaborate with major universities on a series of scientific seminars and workshops. The aim is to generate value by sharing the expertise of the foundation s scholars. 1. Workshop on Gender Economics On November 18, 2011, the foundation sponsored a workshop at Bocconi University on the topic of Gender Equality in Europe, in collaboration with the Dondena and Econpubblica Centers based at the university. At the workshop, the papers of the three UWIN Best Paper Award winners were presented. The initiative s scientific advisors, Paola Profeta and Barbara Petrongolo, introduced the three winners (Chiara Pronzato, Pamela Campa and Michelle Rendall), while Mirco Tonin, the winner of the second edition of the Foscolo Europe Fellowship, served as the moderator. For the second part of the workshop, a roundtable was held, moderated by Barbara Stefanelli, vice editor-in-chief of the Corriere della Sera. The participants included Professor Maurizio Ferrera from the University of Milan, Elisabetta Magistretti, non-executive director of Pirelli, and Professor Francesca Zajczyk, deputy for equal opportunities at the City Council of Milan. 2. Workshop on the Social Dimension of Organizations The second workshop, on the topic of The Social Dimension of Organizations, will be held in Budapest on April 27-28, It was organized in collaboration with Central European University in Budapest, and received additional support from UniCredit Bank and the Royal Economic Society. Mirco Tonin, now a researcher at Central European University, was instrumental in the planning for this event. In tandem with the workshop, the foundation launched a Best Paper Award competition to honor the two best papers presented for this occasion. Both degree programs are open to Italian and non-italian students, with an emphasis on students from Central and Eastern Europe. The collaboration includes a financial contribution by the foundation to the university to run the two programs. It also entails the active participation of UniCredit & Universities scholars in seminars that make up part of the programs. With this initiative, the foundation underscores its commitment to making high-quality instruction available to students from every country in which UniCredit operates. The foundation support initiatives that will make cross-border academic choices real and accessible by bridging the divide between old and new Europe. 2. Funding of a Master s Degree at the LUISS School of Government In 2011, UniCredit & Universities confirmed its collaboration with the LUISS School of Government in Rome to offer four scholarships for students in the university s master s program in international and public affairs for the academic year. The goal of this program is to train future leaders for legal, administrative and governmental institutions, for non-governmental organizations and related research foundations, at both a national and international level. As in 2010, the competition was open to all graduates from the 22 countries where UniCredit is present. Courses began in September 2011 and will end in June They are held in Rome at the LUISS School of Government and are taught in English. The winners of the four scholarships come from Hungary and Ukraine: - Soos Gabor - Hungary - Svitlana Galko - Ukraine - Oksana Kohut - Ukraine - Dmytro Volodin - Ukraine Through this initiative, the foundation supports young people who represent the future of their communities. Collaboration with Universities 1. Funding of Two Bachelor s Degrees in Economics at the University of Trieste In 2011, UniCredit & Universities confirmed its collaboration with the faculty of economics at the University of Trieste, co-funding two three-year degree programs, taught entirely in English. The programs are entitled The Economics and Management of Innovation and The Economics of Financial and Insurance Markets Reports and Accounts UniCredit & Universities

39 THE WORKING PAPER SERIES The Working Paper Series was launched in 2010 to compile the findings of all the researchers who have received the foundation s support. This series promotes the broad circulation of their work, both within and beyond the bank, with a view to encouraging comment and discussion. The research may focus on subjects relating to the foundation s fields of interest, namely economics, finance, law, and political and social science. The articles are published on the foundation s website after being reviewed and selected by the Scientific Committee based on technical criteria and the level of contributions made to the scientific debate. The working papers currently available online were selected in the first and second editions of the UniCredit Best Paper Award contest. Additionally, a contribution from Manuel Mayer, winner of the first edition of the Leopold Gratz Scholarship, has been included. The series also includes the winners of the first edition of both the Best PhD Thesis Award and the UWIN Best Paper Award. These contributions will soon be joined by the works selected for the third edition of the UniCredit Best Paper Award and the second editions of the Best PhD Thesis and Best Paper Awards. As of December 31, 2011, the following works were published on the Working Paper Series section of the website: Working Paper Series No Gender Quotas, Female Politicians and Public Expenditures: Quasi-Experimental Evidence - Pamela Campa No An Examination of Paternal and Maternal Intergenerational Transmission of Schooling - Chiara Pronzato No Rise of the Service Sector and Female Market Work: Europe vs. the US - Michelle Rendall No Essays on Dynamic Macroeconomics - Ceyhun Elgin No Political Learning and the Number of Parties: Why Age Matters - Ekaterina Rashkova No Carbon Market Implications for New EU Member States: Empirical Analysis for Hungary - Dora Fazekas No Essays on Exporting Behavior of Firms and on Inflation Persistence - Branislav Saxa No Essays on International Migration - Zvezda Dermendzhieva No Essays on Educational Institutions and Inequality of Opportunity - Daniel Horn No Investment and Debt Maturity: An Empirical Analysis from Turkey - Bülent Tekçe No The Reputational Risk Impact of Internal Frauds on Bank Customers: A Case Study on UniCredit Group - Daniele Ruspantini and Alessandra Sordi No The Influence of CSR on the Company s Market Value: A Random Effect or the Source of Outperformance? e? A Case Study of American Companies from the Global 100 List - Piotr Kazmierkiewicz No Real Estate Equities: Real Estate or Equities? - Alexander Schätz No On Primal-Dual Algorithm for Callable Bermudan Options - Jan Maruhn and Max Mair Working Paper Series No Systemic Valuation of Banks: Interbank Equilibrium and Contagion - Grzegorz Halaj No Forward Bias Trading in Emerging Markets - Manuel Mayer No. 9 - Combining VAR Forecast Densities Using Fast Fourier Transform - Jakub Rysanek No. 8 - Modeling of Extremes: Application on Electricity Day-Ahead Spot Prices Time Series - Igor Paholok No. 7 - From Minority Game to Black and Scholes Pricing - Matteo Ortisi No. 6 - Evidence on the Liquidity Effect in Euro Area Government Bond Markets: A Bayesian VAR Analysis - Stephan Maier No. 5 - Measuring Prepayment Risk: An Application to UniCredit Family Financing - Matteo Consalvi and Giovanni Scotto di Freca No. 4 - A Practitioner Approach to Forecasting Cross-Section and Aggregated Outcomes - Andrea Brasili No. 3 - The Italian Financial Development and the Regional Impact on Growth - Elena D Alfonso No. 2 - Corporate Growth: The Role of Financial Structure - Silvia Giannangeli No. 1 - Pricing Distressed CDOs with Base Correlation and Stochastic Recovery - Martin Krekel UniCredit & Universities 2011 Reports and Accounts 37

40 Annual Report Activities (CONTINUED) The Awards Ceremony The 2011 Awards Ceremony, like those of years past, represented an important event for the UniCredit & Universities Foundation. It allows the Chairman and Board of Directors to meet this year s competition winners while providing a unique opportunity to bring all of the foundation s stakeholders together. The awards ceremony is the very best time to assess the strengths and weaknesses of the foundation s past activities and to unveil its plans for the future. After presenting them with their certificates, Mr. Rampl called attention to the two previous winners of the Crivelli Scholarship, Marcello Miccoli, winner of the third edition, and Marco Di Maggio, winner of the sixth edition, who is currently in the final year of his PhD at MIT. The ceremony was held on June 9, 2011, in Milan, in UniCredit s Aula Magna auditorium. Alessandro Plateroti, vice manager of Sole 24 ore, was the moderator. Attendees included UniCredit Chairman Dieter Rampl and Salvatore Rossi, central director for economic research and international relations at the Bank of Italy, who delivered speech on Higher Education for Higher Growth: The Power of Cross-Border Knowledge. Salvatore Rossi, central director for economic research and international relations of Bank of Italy, speaks on Higher Education for Higher Growth: The Power of Cross-Border Knowledge. Both Mr. Miccoli and Mr. Di Maggio passed a figurative baton to the three new winners and encouraged them to face new challenges with confidence. In keeping with tradition, Mr. Di Maggio presented an MIT sweater to Mr. Rampl on behalf of all the past recipients of the scholarship as a symbol of gratitude. Then, the winners of the first edition of the Masterscholarships Birgit Altmann, Federico Rossi, Andreas Kalker and Lorenzo Prosperi received their certificates, followed by the winners of the scholarships for the two master s programs at the LUISS School of Government: Ekaterina Burdina (Russia), Eleonora Mura (Italy), Dorina Damsa (Romania), Petra Tisocki (Hungary), and Sahizer Samuk (Turkey). Chairman Dieter Rampl opens the 2011 Awards Ceremony. Afterwards, the awards ceremony officially began by honoring Ludovica Gazzè, Enrico Cantoni and Alessandro Vecchiato, winners of the 10 th edition of the Crivelli Europe Scholarship Reports and Accounts UniCredit & Universities

41 The ceremony then shifted its focus to the winners of the first edition of the Best PhD Thesis Award: Zvezda Dermendzhieva (Bulgaria), Daniel Horn (Hungary), Branislav Saxa (Slovakia), and Ekaterina Rashkova (Bulgaria). The final set of awards went to the winners of the second edition of the UniCredit Best Paper Award, the only contest reserved for UniCredit employees. These included Grzegorz Halaj (Poland), co-authors Jan Maruhn and Max Mair (Germany), Alexander Schätz (Germany), and Piotr Kazmierkiewicz (Poland). Tekçe Bülent (Turkey) and Daniele Ruspantini and Alessandra Sordi (Italy) were singled out by the Scientific Committee as worthy of special mention. The UniCredit Best Paper Award signals the foundation s determination to seek out the brightest European minds not only outside the Group, but also within UniCredit. In 2011, this initiative became increasingly international. Colleagues from Turkey submitted the most applications, followed by Italy, Romania, Poland, Germany, Russia and Bulgaria. In the chairman s closing remarks, he expressed his best wishes to the nearly two hundred people in attendance. Marco Di Maggio presents an MIT sweater to Chairman Dieter Rampl. The ceremony continued with the awarding of the fellowships. Winners of the first edition of the Post-Doc Research Grant included Andrea Colciago from Bicocca University, Francesco Drago from Parthenope University of Naples, and Salvatore Piccolo from the University of Naples Federico II. Mirco Tonin, from the University of Southampton, won the second edition of the Foscolo Europe Fellowship. Thanks to UniCredit & Universities, Mr. Tonin is doing his research at Central European University. His decision underscores the true intent of the Foscolo Europe Fellowship, which was created to bring the best minds back to the countries in which UniCredit is active, regardless of their country of origin. This initiative contributes to the concept of a Europe without boundaries. The object is to define Europe, not as an entity divided by language and borders, but as a unified intellectual community, conducive to the best academic talents. Before handing out more certificates, Mr. Rampl welcomed Emilio Calvano and Emiliano Santoro, respective winners of the second Crivelli Fellowship and the first Foscolo Europe Fellowship. Eleonora Mura, winner of the LUISS School of Government master s program scholarship, at the awards ceremony. UniCredit & Universities 2011 Reports and Accounts 39

42 Annual Report Activities (CONTINUED) THE FOUNDATION S NETWORK An important part of the foundation s activities in 2011 focused on developing a strong and extensive international network. This network is fundamental to reaching the most talented students and researchers worldwide, and to collaborating with academic institutions in implementing successful new initiatives. The foundation s network consists of two main components: 1. the university network - our relationships with research departments, academic programs and institutions of higher learning with which we collaborate 2. the scholars network - our relationships with students and researchers who have received support from the foundation and maintain close ties with it The university network was expanded this year. The programs with which the foundation collaborates are primarily those which the applicants indicate as their preferred places for study. THE UNIVERSITY NETWORK Reports and Accounts UniCredit & Universities

43 Thus, the foundation collaborates with the universities that are currently attracting the most talented students, as well as with those that best complement the objectives and projects it seeks to support. The university network is complemented by a network of scholars, which is as large as the number of the foundation s award recipients. It includes scholars from major European and American universities. The foundation maintains close ties with its award winners. It provides them with support in addressing any logistical challenges they may encounter during their academic undertakings, and it involves them in seminars and other activities organized by UniCredit or the universities within the foundation s network. In 2011, this network has been further extended to undergraduates, as a result of the new Study-Abroad Exchange Programme initiative. MASTERSCHOLARSHIPS 1 Barcelona Graduate School of Economics - University Pompeu Fabra 2 London School of Economics and Political Science 3 Stockholm School of Economics 4 Toulouse School of Economics 5 Bocconi University SCIENTIFIC COMMITTEE 6 Université Panthéon - Assas (Paris 2) 7 Goethe University Frankfurt 8 Vienna University 9 University of Turin 10 University of Bologna 11 University of Naples Federico II 12 Koç University 13 Belgrade University 5 Bocconi University UNIVERSITY INITIATIVES 14 LUISS School of Government 15 University of Trieste FELLOWSHIPS 16 Catholic University 17 Central European University 18 Collegio Carlo Alberto 5 Bocconi University OTHER RELATIONSHIPS 19 Corvinus University of Budapest 20 Warsaw School of Economics 21 GSM St. Petersburg State University 22 Lomonosov Moscow State University 23 Higher School of Economics 24 University of Rostov 25 Center for Liberal Democratic Studies BUSINESS SCHOOL RESEARCH PROJECT 26 INSEAD 27 IE Business School 28 London Business School POST-DOC RESEARCH GRANT 11 University of Naples Federico II 29 Parthenope University of Naples 30 Bicocca University 31 University of Rome Tor Vergata 32 University of Cagliari 33 New Economic School US PHD SCHOLARSHIP 34 Chicago Booth 35 Harvard University 36 MIT 37 Princeton University 38 Stanford University UniCredit & Universities 2011 Reports and Accounts 41

44 Annual Report Main Goals The economic crisis currently confronted by Europe will likely impact the foundation s activities in As a result, and in addition to a likely shortage of funding, the foundation s primary objective is to maintain a strong core program, consisting of several high-profile initiatives. This program will not only include current initiatives but also propose new ones that support Europe s top talent. The UniCredit & Universities Foundation will maintain its European profile while prioritizing innovation. This means the foundation will focus on improving existing initiatives while accounting for swift change in the academic world. In 2012, the foundation will seek to create strong, lasting synergies with partners who are similarly interested in supporting students and researchers in the fields of economics and finance. In this effort, UniCredit & Universities will draw on its experience and expertise to increase the quality and quantity of its offerings. UniCredit & Universities aims to provide concrete support to local initiatives that reflect the specific interests of different territories and regions. One such example is its collaboration with the Leopold Gratz Foundation in Vienna on the Leopold Gratz Scholarship for the past three years. In 2012, UniCredit & Universities will work to create an alumni association to connect all of its award recipients. This community will be updated on achievements related to the foundation and will be solicited for feedback on proposals, new goals and strategies for achieving the foundation s aims. In a sense, this international community already exists; however, the foundation aims to strenghten and leverage it to benefit tomorrow s students and researchers. Through this alumni association, students and researchers from all over the world can empower one another based on their personal experiences at their own universities and research centers. Moreover, based on the feedback collected, this alumni association may evolve into an effective think tank. This development would lend additional credence to the foundation s is standing and its relationship to the international academic world Reports and Accounts UniCredit & Universities

45

46

47 To Mr. Chairman and Members of the Board, I ask you to approve the 2011 Accounts presented herein that show an operating surplus of 216,025, which will be appropriated to increase the operating reserve. Giannantonio De Roni Secretary General UniCredit & Universities 2011 Reports and Accounts 45

48

49 Financial Statements Balance Sheet 48 Report on Operations 49 Notes on the Accounts 50 Accounting Principles and Valuation Criteria 51 Note on the Balance Sheet and the Report on Operations 53 Annexes 60 A) Breakdown of Securities Portfolio, included in the Assets under Management as of December 31, B) Breakdown of Securities of Directly Puchased Securities Portfolio, as of December 31, C) Reclassification of 2010 initiatives 62 UniCredit & Universities 2011 Reports and Accounts 47

50 Financial Statements Balance Sheet (Amounts in ) Assets DEC. 31, 2011 DEC. 31, 2010 C) Floating assets 3,570,664 2,705,364 II - Receivables ) Due from others III - Short-term financial assets not 2,837, ,032 classified as fixed assets 2) Other securities 2,837, ,032 IV - Liquid assets 733,100 1,714,693 1) Bank deposits 728,641 1,693,556 2) Cash held by asset 4,259 20,937 management companies 3) Cash and cash equivalents on hand E) Accruals and deferrals 14,220-1) Accrued liabilities 14,220 - Liabilities DEC. 31, 2011 DEC. 31, 2010 A) Net equity 1,055, ,779 I - Operating reserve 539, ,322 1) Surplus/Deficit for period 216, ,327 of operation 2) Available reserve 323, ,995 II - Endowment fund 516, ,457 D) Payables, with itemized details for 2,529,069 1,865,585 amounts due after the subsequent period 2) Payables for contributions to be 2,427,173 1,791,098 disbursed 2.1) Support for studies 1,319, ,242 due within the following period 620, ,183 due after the following period 698, , ) Support for research 1,008, ,906 due within the following period 412, ,148 due after the following period 595, , ) Other initiatives 100,000 58,950 due within the following period 100,000 58,950 due after the following period - - 6) Accounts payable 91,682 71,407 7) Taxes payable 9,235 3,080 8) Payables to social security and 340 welfare agencies - 12) Other payables E) Accruals and deferrals 11-1) Accrued liabilities 11 - TOTAL ASSETS 3,584,884 2,705,364 TOTAL LIABILITIES 3,584,884 2,705, Reports and Accounts UniCredit & Universities

51 Report on Operations (Amounts in ) Expenses ) Expenses from ordinary operations 1,477,745 1,652, ) Support for studies 815, , ) Support for research 464, , ) Other activities 100, , ) Compensation and expenses for the Scientific Committee members 69,987 68, ) Communications expenses 28,183 16,705 4) Financial expenses and losses - 4, ) From other assets - 4,371 6) General administrative costs 242, , ) Employees 111,608 93, ) Other operating expenses 131,027 68,449 Revenues ) Revenues from ordinary operations 1,745,500 1,900, ) Contributions received 1,745,500 1,900,000 4) Financial income and gains 45,359 10, ) From bank deposits 21,621 7, ) From other assets 23,738 3,441 7) Other Income 145,546 27,281 Amounts recovered from scholarships 120,046 27,281 and initiatives concluded or not implemented Amounts recovered for reorganization of grants 25,500 - TOTAL EXPENSES 1,720,380 1,817,898 OPERATING SURPLUS 216, ,327 TOTAL 1,936,405 1,938,225 TOTAL REVENUES 1,936,405 1,938,225 OPERATING DEFICIT - - TOTAL 1,936,405 1,938,225 UniCredit & Universities 2011 Reports and Accounts 49

52 Financial Statements Notes on the Accounts Introduction The UniCredit & Universities Knight of Labor Ugo Foscolo Foundation was constituted in Rome on July 13, 1966, as Fondazione Cavaliere del Lavoro Ugo Foscolo, già Presidente del Banco di Roma, with a restricted equity of 50,000,000 ITL (currently 516,456.90), thanks to the subsequent extraordinary contributions made at the end of 1991 by what was formerly Banco di Roma. The Foundation s current name came into effect on November 16, 2009, the date on which it received approval of its new articles of association from the Prefecture of Rome. It is categorized as a private, non-profit Foundation and has been recognized under Italian Presidential Decree no. 255 of March 28, 1967 (Official Gazette no. 118 of May 12, 1967). The Foundation aims to: promote studies and initiatives that increase awareness of economic, financial, legal, political and social matters annually award one or more scholarships institute prizes for degree theses or specific studies in financial, economic, legal, political and social matters propose and support initiatives in the academic world The Foundation consists of: the Board of Directors, the Chairperson, the Secretary General and the Statutory Board of Auditors. Contents and Form of the Financial Statements The financial statements were drawn up in accordance with the recommendations issued by the Non-Profit Enterprises Commission of the National Board of Chartered and Expert Accountants. The accounting principles and valuation criteria are applied consistently over time. If they are not underlined, they have not been modified. The financial statements consist of the Balance Sheet, the Report on Operations and the Notes on the Accounts, and are accompanied by the Chairman s Report. The 2011 financial year ended with an operating surplus of 216,025. This surplus represented income for the year not yet committed to scholarships and initiatives as of December 31, 2011, and will be appropriated to increase the operating fund. The accounts are audited by the Board of Auditors. Since the Foundation does not conduct commercial business, its income is not subject to VAT or income tax; however, it is subject to IRAP (regional business tax). Please note that data for 2010 related to Payables for contributions to be disbursed and Expenses from ordinary operations have been reclassified; the criteria used to identify the type of grants and initiatives have changed. See Annex C for the reclassifications of the relevant data Reports and Accounts UniCredit & Universities

53 Accounting Principles and Valuation Criteria Income and expenses are reported on an accrual basis with the exception of contributions received, which are recorded on a cash basis. Accrual of the costs of ordinary activities is determined on the basis of the expenses incurred by the spending decisions made by the Board of Directors. Assets Floating assets Receivables are posted at their face value, which coincides with their estimated realizable value. The Short-term financial assets - Other securities item includes securities in which the foundation s funds are invested for asset management purposes until used by the foundation. These securities are all priced and assigned values according to two criteria: - securities in assets under management are estimated according to the market value, understood as the price reported on the last working day of the period, and include quota accruals; - securities in assets under custody are subject to acquisition value, and quota accruals are categorized under Accrued income and prepaid expenses. Liquid assets are reported at face value. Accrued income and prepaid expenses Accrued income and prepaid expenses are calculated in accordance with both the accruals concept and the general principle of correlation between costs and income for the period. Liabilities Net equity The Operating Reserve consists of operating results for the current and previous periods. The Endowment Fund is recognized at face value and represents the value of contributions made at the time the foundation was founded or at the time of subsequent deposits. Payables, with itemized details of amounts due after the following period Payables are reported at their face value. Payables for contributions to be disbursed represent the foundation s commitment for disbursements not yet made to fund approved scholarships and initiatives. They are divided according to the type of scholarship or initiative supported. Accounts payable include amounts owed with respect to invoices or bills received as well as the amount of any invoices or bills to be received for services rendered but not invoiced by year-end. Taxes payable include the advance withholding tax on the income of self-employed workers, taxes withheld from scholarship students and the IRAP amount due. Payables to social security and welfare agencies include the value of accrued - not liquidated - welfare contributions related to the foundation s collaborative relationships. Other payables represent all remaining payables, which, by their nature, are not included in the previous items, including the substitute tax on asset management earnings that has accrued and is owed to the asset management company, which acts as withholding agent. In addition, earmarking a substitute of the ritenuta mantello calculated by the bank when purchasing securities. Besides revenues related to securities in assets under custody such as interest and the difference between the purchasing/reimbursement price per the financial year. Revenues are indicated as net of expenses and taxes. Other Income includes all remaining revenue that cannot be included in the previous categories. This includes surpluses recovered from scholarships and initiatives completed or not implemented. Accrued liabilities and deferred income Accrued liabilities and deferred income are calculated in accordance with the accruals concept and the general principle of correlation between costs and income in the period. UniCredit & Universities 2011 Reports and Accounts 51

54 Financial Statements I Notes on the Accounts Notes on the Accounts (Continued) Expenses Expenses from ordinary operations include all contributions and expenses for scholarships and initiatives approved during the period by the Board of Directors. Financial expenses and losses represent losses deriving from investments in asset management accounts. Administrative costs reflect the costs incurred by the foundation during the reference period to conduct its operations. Revenues Revenues from ordinary operations represent the donations received during the period. Financial income and gains represent bank interest and income from investments in asset management accounts and repurchase agreements entered into and settled during the period. In addition to the incomes related to securities in assets under custody, such as interests and differences between purchasing price/refund related to this year. Incomes are intended after-tax and expenses. The item Other Income brings together the remaining revenues, which by nature cannot be included in the previous categories, and includes surpluses recovered on scholarships and initiatives completed or not implemented Reports and Accounts UniCredit & Universities

55 Notes on the Balance Sheet and the report on Operations Assets DEC. 31, 2011 DEC. 31, 2010 C) Floating assets 3,570,664 2,705,364 II - Receivables ) Due from others Receivables due from others represent the substitute tax credit relating to the negative results of asset management obtained during the second half of the year, in addition to items currently being prepared. (in ) DEC. 31, 2011 DEC. 31, 2010 III - Short-term financial assets not classified as fixed assets 2,837, ,032 2) Other securities 2,837, ,032 The increase in Other securities, which in 2010 represented only the value of assets under management, is the result of management s decision to purchase securities in the short term. As a result, Other securities now include the value of both types of securities. The assets under management ( 1,020,525) include Italian and European securities estimated at market value on the last business day of December 2011, with an accrued interest of 8,828. A breakdown of the securities portfolio as of December 31, 2011 is provided in Annex A. The securities purchased directly ( 1,816,538) include short term Italian securities (Bot and Btp as of December 31, 2012) and are evaluated at purchasing price. A breakdown of the securities portfolio is provided in Annex B. DEC. 31, 2011 DEC. 31, 2010 IV - Liquid assets 733,100 1,714,693 1) Bank deposits 728,641 1,693,556 2) Cash held at asset management companies 4,259 20,937 3) Cash and cash equivalents on hand Bank deposits represent the total of current account balances held at UniCredit S.p.A. These amounts consist of non-binding positions. Cash held at asset management companies is the cash generated from the asset management relationship indicated under Other securities. Cash and cash equivalents on hand is the balance of petty cash used for current expenses. DEC. 31, 2011 DEC. 31, 2010 D) Accruals and deferrals 14,220-1) Accrued income 14,220 - Accrued income represents - relative to securities in assets under custody - accrued and unused income, as well as the difference between purchasing price and the value of the end of UniCredit & Universities 2011 Reports and Accounts 53

56 Financial Statements I Notes on the Accounts Notes on the Accounts (Continued) Liabilities (in ) DEC. 31, 2011 DEC. 31, 2010 A) Net equity 1,055, ,779 I - Operating reserve This amounts to 539,347, which consists of the 216,025 operating surplus for the year and 323,322 in available reserves. II - Endowment fund This was funded at the time of constitution and increased through subsequent payments made by what was previously the Banco di Roma, thereby reaching the current balance of 516,457. Changes in Net Equity are indicated in the table below. Changes in net equity in 2011 MANAGEMENT FUND ENDOWMENT FUND TOTAL SHAREHOLDER EQUITY Start of year 323, , ,779 Operating result for the period 216, ,025 Balance as of Dec. 31, , ,457 1,055,804 DEC. 31, 2011 DEC. 31, 2010 D) Payables, with itemized details of amounts due after the subsequent period 2,529,069 1,865,585 Payables for contributions to be disbursed totaled 2,427,173 and represent the Foundation s commitment to scholarships, research grants and initiatives, which have been approved, with disbursements to occur in future periods. The following table provides a breakdown of expenses by type and by disbursement period Reports and Accounts UniCredit & Universities

57 Payables Due (in ) WITHIN THE FOLLOWING PERIOD AS OF DEC. 31, 2011 BEYOND THE FOLLOWING PERIOD TOTALS Support for studies 620, ,121 1,319,034 Crivelli Scholarships 390, , , th edition 76, , ,000 9 th edition 195, , ,347 8 th edition 119, ,257 Foscolo Europe Scholarships 12,500-12,500 1 st edition 12,500-12,500 US PhD Scholarship 25, , ,000 1 st edition 25, , ,000 Masterscholarships 157, , ,930 2 nd edition 96, , ,537 1 st edition 60,429 23,964 84,393 Study Abroad Exchange Programme Grants 35,000-35,000 1 st edition 35,000-35,000 Support for research 412, ,394 1,008,139 Crivelli Fellowship 60,216 45, ,906 2 nd edition 60,216 45, ,906 Foscolo Europe Fellowship 135, , ,352 3 rd edition 15, , ,000 2 nd edition 60, , ,784 1 st edition 60, , ,568 Business School Research Project Funding 40,000-40,000 1 st edition 40,000-40,000 Post-Doc Research Grant 110,000 50, ,000 2 nd edition 50,000 50, ,000 1 st edition 60,000-60,000 Best PhD Thesis Award 30,000-30,000 2 nd edition 30,000-30,000 UniCredit Best Paper Award 15,000-15,000 3 rd edition 15,000-15,000 Best Paper Award 21,881-21,881 Best Paper Award on The Social Dimension of Organization 10,000-10,000 UWIN Best Paper Award, 2nd edition 10,000-10,000 UWIN Best Paper Award, 1st edition 1,881-1,881 Other initiatives 100, ,000 LUISS School of Government Master's Programs 65,000-65,000 LUISS SoG Master's Programs, 2011/ ,000-65,000 Bachelor's degree courses, University of Trieste 25,000-25,000 4 th edition 25,000-25,000 Contributions to other initiatives 5,000-5,000 Contribution to the Central European University Budapest Workshop ,000-5,000 Academic initiatives 5,000-5,000 Serbian translation of classical economics text 5,000-5,000 UniCredit & Universities 2011 Reports and Accounts 55

58 Financial Statements I Notes on the Accounts Notes on the Accounts (Continued) Accounts payable totaled 91,682 and includes amounts owed on invoices received and amounts due to UniCredit S.p.A., in relation to the cost of personnel seconded by the foundation. Taxes payable totaled 9,235 and include the advance withholding taxes and deductions related to scholarship students, which were paid to tax authorities in January 2012, and the IRAP balance due for Payables to social security and welfare agencies amounted to 340 and represent costs incurred in January 2012 related to the foundation s collaborations with other entities. Other liabilities amounted to 639 and entail the so called ritenuta mantello sostitutiva, which was calculated by the bank when purchasing securities in assets under custody. DEC. 31, 2011 DEC. 31, D) Accruals and deferrals 11 - DEC. 31, 2011 DEC. 31, ) Accrued liabilities 11 - Accrued liabilities amount to 11 and represent the accrued costs for the year. They will be withheld next year in connection with deposit securities Reports and Accounts UniCredit & Universities

59 Expenses ) Expenses for ordinary operations 1,477,745 1,652,047 These can be broken down as follows: 1.1) Support for Studies 815, , ) Support for Research 464, , ) Other activities 100, , ) Compensation and expenses for the Scientific Committee members 69,987 68, ) Communication Costs 28,183 16,705 The decreased amounts when compared to 2010 were due to a smaller number of expenses for Support for research and Other activities. Costs were higher for Support for studies and Communication costs, while the fees and expenses for the Scientific Committee members remained stable. The Support for studies item amounts to 815,075 and includes the expenses (scholarships and university fees) incurred for several university initiatives. This year s initiatives, which are described in the Balance Sheet Report, are summarized below: 3 Crivelli Scholarships 10 th edition; 7 Masterscholarships 2 nd edition; 1 US PhD Scholarship 1 st edition; 8 Study Abroad Exchange Programme Grants 1st edition. Support for Studies 815,075 Crivelli Scholarships - 10 th edition 390,000 Masterscholarships - 2 nd edition 252,537 Masterscholarship - integration to 1 st edition 7,538 US PhD Scholarship - 1 st edition 130,000 Study Abroad Exchange Programme Grants - 1 st edition 35,000 In 2011, UniCredit & Universities Foundation promoted several initiatives to support research among young European economists, by launching a number of competitions to award grants and to award the best papers and PhD thesis. The above initiatives are grouped under the Support for Research item, and total 464,500 for A brief description of the initiatives and a detailed list of costs are as follows: 1 Foscolo Europe Fellowship, 3 rd edition. A two-year fellowship, renewable for an additional two years, which includes insurance. 5 Post-Doc Research Grants, 2 nd edition. A grant to develop a two-year research project. 1 Business School Research Project Funding. Financial support to develop a one-year research project at a business school. 6 Best PhD Thesis Awards, 2 nd edition. Awards for outstanding PhD theses. 2 UniCredit Best Paper Awards, 3 rd edition. Awards for the finest papers prepared by UniCredit employees. 2 UWIN Best Paper Awards, 2 nd edition. Awards for top papers on Gender Economics. 2 Best Paper Awards on the Social Dimension of Organizations. Awards for top papers on Labor Economics. Support for Research 464,500 Foscolo Europe Scholarship - 3 rd edition 242,000 Post-Doc Research Grant - 2 nd edition 100,000 Business School Research Project Funding 40,000 Best PhD Thesis Award - 2 nd edition 30,000 UniCredit Best Paper Award - 3 rd edition 15,000 UniCredit Best Paper Award - integration 2 nd edition 5,000 UWIN Best Paper Award - integration 1st edition 12,500 UWIN Best Paper Award - 2 nd edition 10,000 Best Paper Award on The Social Dimension of Organizations 10,000 Additional initiatives were launched in the 2011 financial year in collaboration with top European universities, at a total cost of 100,000. A detailed list of expenses appears below, while full descriptions of the initiatives are included in the Balance Sheet Report. Other Initiatives 100,000 LUISS School of Government Master s Programs 2011/ ,000 Bachelor s degree courses, University of Trieste - 4 th edition 25,000 Contribution to CEU Budapest Workshop , academic initiative - Serbian translation of a classic book on Economics 5,000 UniCredit & Universities 2011 Reports and Accounts 57

60 Financial Statements I Notes on the Accounts Notes on the Accounts (Continued) The Fees and expenses for Scientific Committee members item in the amount of 69,987 includes charges incurred by members of the Scientific Committee when assessing candidates to award scholarships and prizes, and when determining grant renewals for current scholarship recipients. Communications costs in the amount of 28,183 cover the cost of digital PR and social networking services related to online communications for scholarship and prize contests. They also cover costs incurred related to advertising and award ceremonies for scholarships awarded in ) Financial expenses and losses - 4, ) From other assets - 4,371 The From other assets item represents the net loss generated by asset management for the 2010 financial year. For the current financial year, it is not significant, as asset management produced a positive result ) General administrative costs 242, ,480 Below are expenses incurred through activities that support the foundation s objectives ) Payroll (seconded staff) 111,608 93, ) Other operating expenses 131,027 68,449 Payroll (seconded staff) The foundation does not have its own employees and uses staff seconded from UniCredit at a cost of 111,608. A comparison with last year is for informational purposes only, as 2011 shows an increase due to the inclusion of a seconded staff member at the foundation who began and ended the assignment within the year. Other operating expenses ( 131,027) consist of the following: Fees paid to professionals and for professional services 68,329 21,649 Exhibitions and events - 4,894 Taxes and withholding: 24,304 10,745 IRAP (regional business tax) 17,964 10,570 Revenue stamps and miscellaneous indirect taxes 6, Other: 38,394 31,161 Entertainment expenses Stationery supplies, printed matter and miscellaneous office supplies 6, Travel expenses Rent paid 28,052 27,759 Miscellaneous (subscriptions, publications, association dues, etc.) 1,967 1,741 Total 131,027 68,449 When compared to the previous financial year, the sizeable increase in expenses is due to: The higher cost of compensating professionals and paying for professional services, which are the result of new administrative management, the translation and publication of the Foundation Annual Report and the international registration of the Foundation trademark. The higher IRAP taxable base due to the higher number of grants and fellowships awarded. Stationery costs, printed materials and office supplies in connection with the publication of this report. It is important to note the lack of expenses the Foundation incurred for events Reports and Accounts UniCredit & Universities

61 Revenues ) Revenues from ordinary operations 1,745,500 1,900,000 Total contributions received in the amount of 1,745,500 consist of donations from UniCredit S.p.A. ( 1,333,000) and FinecoBank S.p.A. ( 400,000), in addition to the 12,500 contribution from UniCredit S.p.A. for the first edition of the UWIN Best Paper Award. For this award, funds had already been earmarked by the foundation in the 2010 financial year ) Financial income and gains 45,359 10, ) From bank deposits 21,621 7, ) From other assets 23,738 3,441 The From bank deposits item, totaling 21,621, consists entirely of net interest accrued during the year on the current account. An increase from the previous year is due to improved agreed-upon conditions and greater average liquidity in the current account, which contains funds awaiting allocation by the foundation. Revenues are indicated as net of expenses. The From other assets item, totaling 23,738, represents revenues derived from asset management with a special risk profile - a management strategy with a short-medium residual term bond component. Moreover, revenues are also derived from securities in assets under custody, including interest and differences between the purchasing and reimbursement prices. The Endowment Fund and a portion of the liquid funds awaiting allocation are invested in these instruments. Revenues are indicated as net of commissions, taxes and expenses. In comparison to last year, when asset management generated losses, there is a net increase, due to changing market conditions and strategic investment decisions ) Other income 145,546 27,281 Recoveries from scholarships and initiatives concluded or not implemented 120,046 27,281 Recoveries on the restructuring of grants 25,500 - The Other income item totaling 145,546 represents, for the year, the recovery of surpluses on scholarships and initiatives completed. In the case of scholarships, the recovery includes university fees. It also represents the results of scholarship restructuring, which led to a decrease in awards, in connection with earmarked insurance costs for award recipients. This expense was initially overestimated. Recoveries are detailed below. Recoveries of scholarships and initiatives concluded 120,046 Foscolo Europe Scholarship - 1 st edition 60,000 Crivelli Scholarship - 7 th edition 56,962 UniCredit Best Paper Award - 2 nd edition 3,084 Recoveries on the restructuring of grants 25,500 Foscolo Europe Fellowship - 1 st edition 10,000 Foscolo Europe Fellowship - 2 nd edition 8,000 Crivelli Fellowship - 2 nd edition 7,500 Other Information As of December 31, 2011, the foundation did not have any employees; however, it used the services of two individuals seconded from UniCredit. The foundation does not hold, nor did it acquire or sell during the year, any shares of UniCredit or its companies. In 2011, the members of the Board of Directors received no compensation. Milan, March 19, 2012 Secretary General Giannantonio De Roni UniCredit & Universities 2011 Reports and Accounts 59

62 Financial Statements Annexes A) Breakdown of Securities Portfolio, included in the Assets under Management as of December 31, 2011 TYPE OF SECURITIES BALANCE FACE VALUE MARKET VALUE COUNTERVALUE ACCRUED INTEREST CLOSING BALANCE BOT 30/03/ ,000 99, ,796-40,796 BOT zero coupon 31/01/ ,000 99, ,976-58,976 BOT zero coupon 16/01/ ,000 99, ,998-58,998 BOT zero coupon 15/02/ ,000 99, ,896-82,896 BTP 01 Aug 1/8/ % 22,000 94, , ,042 BTP 3.5% 14 20,000 96, , ,341 BTP 4.25% 15/4/ , , , ,118 CCT July ,000 96, , ,230 CCT EU float 15/12/ ,000 84, , ,535 CCT 01 Mar 2012 TV 63,000 99, , ,460 CCT Nov 2012 TV 99,000 99, , ,211 CTZ 29/02/ ,000 99, ,589-98,589 CTZ 30/04/ ,000 99, ,656-44,656 Austria 3.4% 20/10/ , , , ,810 Austria 4.0% 15/9/2016 8, ,5400 8, ,857 Bei 2.5% 15/04/ , , , ,520 Bei 3.125% 15/04/ , , , ,690 BTAN 2.5% 01/ , , , ,673 BTAN 3.0% 12/07/ , , , ,886 Bundes 2.75% 08/04/ , , , ,419 Bundesobl /04/ , , , ,903 Bundes Deut 3.5% 4/1/ , , , ,970 Bundesobl % 10/10/ , , , ,867 Netherland 4.0% 15/07/ , , , ,127 OAT 3.25% 25/04/ , , , ,885 OAT 4.0% 25/10/2013 9, ,6120 9, ,571 OAT 5.0% 25/04/ , , ,167 2,595 79,762 Spain 2.75% 30/04/ ,000 99, , ,778 Spanish Gov 3.0% 30/04/ ,000 97, , ,959 Total 1,016,000 1,011,697 8,828 1,020, Reports and Accounts UniCredit & Universities

63 B) Breakdown of Securities of Directly Puchased Securities Portfolio, as of December 31, 2011 INITIAL BALANCE ACQUISITIONS SALES CLOSING BALANCE TYPE OF SECURITY QUANTITY VALUE ( ) QUANTITY VALUE ( ) QUANTITY VALUE ( ) QUANTITY VALUE ( ) BOT 27 Dec 11 FL , , , , BOT 30 Mar 12 S , , , ,845 BOT 15 Jul 12 A , , , ,497 BTP 15 Oct % , , , ,196 Total - - 2,350,000 2,314, , ,975 1,850,000 1,816,538 UniCredit & Universities 2011 Reports and Accounts 61

64 Financial Statements Annexes (Continued) C) Reclassification of 2010 initiatives LIABILITIES/PAYABLES FOR CONTRIBUTIONS TO BE DISBURSED BALANCE 2010 ( ) LIABILITIES/PAYABLES FOR CONTRIBUTIONS TO BE DISBURSED RECLASSIFIED BALANCE 2010 ( ) 2.1) Crivelli Scholarships 671, ) Support for Studies - - reclassified as "Support for Studies" -671,742 + reclassification from "Crivelli Scholarships" Total after reclassifications - + reclassification from "Foscolo Europe Scholarships" ) Crivelli Fellowship 173,622 + reclassification from "Masterscholarships" reclassified as "Support for Research" -173,622 Total after reclassifications Total after reclassifications - 2.2) Support for Research - 2.3) Foscolo Europe Scholarships 97,500 + reclassification from "Crivelli Fellowship" reclassified as "Support for Studies" -97,500 + reclassification from "Foscolo Europe Fellowship" Total after reclassifications - + reclassification from "Awards" ) Foscolo Europe Fellowship 486,784 + reclassification from "Support for initiatives implemented at universities" reclassified as "Support for Research" -486,784 Total after reclassification Total after reclassifications - 2.3) Other initiatives - 2.5) Awards 147,500 + reclassification from "Support for initiatives implemented at universities" reclassified as "Support for Research" -147,500 Total after reclassifications Total after reclassifications - 2.6) Support for university initiatives 78,950 - reclassified as "Support for Research" -20,000 - reclassified as "Other initiatives" -58,950 Total after reclassifications - 2.9) Masterscholarships 135,000 - reclassified as "Support for Studies" -135,000 Total after reclassifications - Total adjustments to Financial Statement due to reclassifications -1,791,098 Total adjustments to Financial Statement due to reclassifications Total adjustments to Financial Statement due to reclassifications Reports and Accounts UniCredit & Universities

65 Management report EXPENSES/EXPENSES FOR REGULAR OPERATIONS BALANCE 2010 ( ) EXPENSES/EXPENSES FOR REGULAR OPERATIONS RECLASSIFIED BALANCE 2010 ( ) 1.1) Crivelli Scholarships 640, ) Support for Studies - - reclassified as "Support for Studies" -640,000 + reclassification from "Crivelli Scholarships" 640,000 Total after reclassifications - + reclassification from "Masterscholarships" 135, ) Crivelli Fellowship 234,000 Total after reclassification 775,000 - reclassified as "Support for Research" -234, ) Support for Research - Total after reclassifications - + reclassification from "Crivelli Fellowship" 234, ) Foscolo Europe Scholarships - + reclassification from "Foscolo Europe Fellowship" 250,000 Total after reclassifications - + reclassification from "Awards" 154, ) Foscolo Europe Fellowship 250,000 + reclassification from "Support for initiatives implemented at universities" 20,000 - reclassified as "Support for Research" -250,000 Total after reclassification 658,984 Total after reclassifications - 1.3) Other initiatives - 1.5) Awards 154,984 - reclassified from "Support for initiatives implemented at universities" 132,600 - reclassified as "Support for Research" -154,984 Total after reclassification 132,600 Total after reclassifications - 1.4) Compensation and expenses for Scientific Committee members - 1.6) Support for university initiatives 152,600 - reclassified from "Compensation and expenses for 68,758 Members of the Scientific Committee" - reclassified as "Support for Research" -20,000 Total after reclassification 68,758 - reclassified as "Other initiatives" -132, ) Communication costs - Total after reclassifications - + reclassification from "Communication costs" 16, ) Communication costs 16,705 Total after reclassification 16,705 - reclassified as "Communication costs" -16,705 Total after reclassifications - 1.8) Compensation and expenses for Scientific Committee members 68,758 - reclassified as "Compensation and expenses for Members of the Scientific Committee" -68,758 Total after reclassifications - 1.9) Masterscholarships 135,000 - reclassified as "Support for Studies" -135,000 Total after reclassifications - Total adjustments to Financial Statement due to reclassifications -1,652,047 Total adjustments to Financial Statement due to reclassifications 1,652,047 UniCredit & Universities 2011 Reports and Accounts 63

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