Banca Popolare di Milano : Registration of the resolution approving the Merger - Right of withdrawal

Press release NOTICE TO THE MEMBERS AND SHAREHOLDERS OF BANCA POPOLARE DI MILANO S.C. A R.L.

(pursuant to art. 84 of Consob Regulation no. 11971/1999)

REGISTRATION OF THE RESOLUTION APPROVING THE MERGER WITH BANCO POPOLARE - SOC. COOP. IN THE MILAN COMPANIES REGISTER PROCEDURES AND TERMS FOR EXERCISING THE RIGHT OF WITHDRAWAL

On 25 October 2016 (the "Registration Date") the resolution of the Extraordinary General Meeting of Members of Banca Popolare di Milano S.c. a r.l. ("BPM" or the "Company") held on 15 October 2016 at second calling (the "Extraordinary Meeting"), approving the Merger between BPM and Banco Popolare - Società Cooperativa (the "Merger"), to be carried out through the incorporation of a new banking company in the form of a joint-stock company called "Banco BPM Società per Azioni" ("Banco BPM") was filed with the Milan Companies Register.

RIGHT OF WITHDRAWAL AND QUALIFIED SHAREHOLDERS

The Merger by incorporation of Banco BPM involves the transformation of BPM from a cooperative into a joint-stock company (the so-called "transformative merger"). For this reason, the shareholders and members of BPM who did not participate in the shareholders' resolution approving the Merger can exercise a right of withdrawal from the company pursuant to art. 2437 of the Italian Civil Code (the "Right of Withdrawal").

In particular, the right of withdrawal is reserved for the shareholders and members of BPM who did not approve the Merger Resolution (i.e. those members who were absent, dissenting or abstentions) (shareholders and members of BPM, collectively known as the "Qualified Shareholders").

The effectiveness of the Right of Withdrawal is conditional on the effectiveness of the Merger.

LIQUIDATION VALUE

The unit liquidation value of BPM's shares for which the Right of Withdrawal is being exercised has been set at Euro 0.4918 per share. This value has been calculated in accordance with art. 2437-ter, paragraph 3, of the Italian Civil Code, by referring exclusively to the straight average of the closing stock exchange prices for BPM's shares over the six months prior to 13 September 2016 (the date of publication of the notice of calling of the Extraordinary General Meeting of Members of BPM, which then approved the Merger).

WITHDRAWAL NOTIFICATION

Pursuant to art. 2437-bis of the Italian Civil Code, Qualified Shareholders can exercise their right of withdrawal, for all or part of the shares that they own, by sending a notification to the Company in a sealed envelope with the caption "Exercising the Right of Withdrawal" by registered letter or similar means

that makes it possible to record the date on which the letter is sent (the "Withdrawal Notification"), to be sent to BPM within fifteen calendar days from the Registration Date, i.e. by and no later than 9 November 2016 (the "Withdrawal Right Exercise Deadline").

The Withdrawal Notification must be addressed to "Banca Popolare di Milano S.c. a r.l." - Via San Paolo 16, 20121 Milan, Members' Secretariat, by using the appropriate form available on BPM's website (www.gruppobpm.it, in the "General Meeting of Members 14/15 October 2016" section), or by a letter containing the following information:

1. personal details (first name, last name and date of birth in case of an individual, or company name and registered office in case of a company), the tax code of the withdrawing Qualified Shareholder (the "Withdrawing Shareholder"), as well as their address (and, where possible, a telephone number and/or an e-mail address) where communications concerning the withdrawal process can be sent;

2. the number of shares for which the Right of Withdrawal is being exercised (the "Shares Subject to Withdrawal");

3. details of the intermediary where the Shares Subject to Withdrawal are deposited.

In accordance with art. 23 of the Banca d'Italia-Consob Regulation dated 22 February 2008, as subsequently amended, for the Withdrawal Notification to be admissible, the entitlement to exercise the Right of Withdrawal must be certified by a specific communication (the "Communication") issued by the intermediary belonging to the Monte Titoli S.p.A. centralised management system where the Shares Subject to Withdrawal are deposited, and sent to BPM according to the procedures laid down in the applicable laws and regulations. It will therefore be up to the Withdrawing Shareholder to ask for the Communication to be sent to BPM. The intermediary appointed by the Withdrawing Shareholder has to forward the Communication to BPM by certified email at: [e-mail].

The Communication has to certify that:

1. the Withdrawing Shareholder has owned the Shares Subject to Withdrawal continuously before the date of the Extraordinary Meeting of Members that approved the Merger up to and including the date on which the Communication was issued. With respect to the eligibility criteria, to qualify to exercise the Right of Withdrawal a Shareholder who bought shares on the stock exchange has to have paid for them in time to receive them before the start of the Extraordinary Meeting of Members of 15 October 2016; and

2. the Shares Subject to Withdrawal have to be free of pledges or other encumbrances in favour of third parties. Otherwise, for the Withdrawal Notification to be deemed admissible, the Withdrawing Shareholder must also send to BPM, following the same procedures and attached to the Withdrawal Notification, a specific statement by the secured party, or other beneficiary of the encumbrance, stating their irrevocable and unconditioned consent to the release of the Shares Subject to Withdrawal from pledge and/or encumbrances and to their liquidation in accordance with the Withdrawing Shareholder's instructions.

These communications, statements and certifications must also be made by Withdrawing Shareholders who hold BPM shares that have not been deposited with the centralised management system, with the formalities required under applicable laws and regulations. In this case, they must deliver the share certificates beforehand to an authorised intermediary for their centralisation in Monte Titoli S.p.A. and request the issuance of the above-mentioned Communication to exercise the Right of Withdrawal.

Withdrawing Shareholders are responsible for ensuring that the information provided in the Withdrawal Notification is correct and for sending it in by and no later than the Withdrawal Right Exercise Deadline. Any Withdrawal Notifications sent after this deadline and/or lacking the necessary information and/or not promptly accompanied by the Communication will not be accepted.

LOCK-UP OF SHARES SUBJECT TO WITHDRAWAL

In compliance with art. 2437-bis, para. 2, of the Italian Civil Code, the Shares Subject to Withdrawal will become unavailable up to the end of the liquidation procedure; hence, the shares mentioned above may not be transferred by shareholders up to the end of the liquidation procedure, making it temporarily impossible to sell their investment. In accordance with the applicable rules, issuance of the Communication by the intermediary will trigger the lock-up of the Shares Subject to Withdrawal .

LIQUIDATION PROCEDURE

In the event that one or more Qualified Shareholders exercise their Right of Withdrawal, the liquidation procedure will be carried out in compliance with art. 2437-quater of the Italian Civil Code which, in relation to the possible purchase of the Shares Subject to Withdrawal by Banco BPM, pursuant to art. 2437-quarter, paragraph 5, of the Italian Civil Code, is subject to the limits and restrictions as per Law no. 33 of 24 March 2015, as explained below.

If the procedure as per art. 2437-quater of the Italian Civil Code is still underway at the effective date of the Merger, the Shares Subject to Withdrawal will be exchanged for newly issued ordinary shares of the company resulting from the Merger, Banco BPM (based on the exchange ratio established for the Merger, namely 1 Banco BPM ordinary share for every 6.386 BPM shares - the "Exchange Ratio"). It is understood that these newly issued Banco BPM shares shall also be subject to the lock-up restriction described in the previous paragraph ("Lock-up of Shares under Withdrawal") and that the withdrawing Qualified Shareholders shall be entitled to receive the same overall liquidation value indicated in the paragraph above on the "Liquidation Value".

As mentioned previously, the effectiveness of the withdrawal will be subject to the effectiveness of the Merger. This means that if the Merger is not completed, the Shares Subject to Withdrawal (or the Banco BPM shares assigned in exchange for them) will be released from the lock-up restriction described in the previous paragraph ("Lock-up of Shares under Withdrawal") and returned to the Withdrawing Shareholder free of any restriction; the liquidation procedure of such shares will therefore be interrupted.

1. The Pre-emptive Offer

   The Shares Subject to Withdrawal will first be pre-emptively offered to the shareholders of BPM who did not exercise their Right of Withdrawal, in proportion to the number of BPM shares that they hold (the "Pre-emptive Offer"). As provided by law, shareholders will be granted a term of not less than thirty days from the date on which the Pre-emptive Offer is deposited with the Milan Companies Register to exercise their pre-emptive rights. Moreover, those BPM shareholders who exercise their pre- emptive rights as part of the Pre-emptive Offer, provided they apply for it at the same time, will also be granted a pre-emptive right to buy the Shares Subject to Withdrawal that have not been taken up; in the event that the number of shares for which the pre-emption right is exercised is higher than the number of shares that have not been taken up at the end of the Pre-emptive Offer period, the shares will be distributed among all the applicants in proportion to the number of shares that they hold.

   The terms and procedures to participate in the Pre-emptive Offer, together with any additional information thereon, will be communicated by BPM in the Pre-emptive Offer notice to be deposited with the Milan Companies Register pursuant to art. 2437-quater, para. 2, of the Italian Civil Code. The notice will be published in the ways and terms required by current law.

2. The Offer on the Market

   Any residual Shares Subject to Withdrawal that have not been sold at the end of the Pre-emptive Offer can be offered on the Italian MTA market (Mercato Telematico Azionario) organised and run by Borsa Italiana S.p.A. (the "Offer on the Market"), in compliance with art. 2437-quarter, paragraph 4, of the Italian Civil Code and other applicable legal and regulatory provisions. All the required information

   regarding this phase of the liquidation procedure will be communicated in due course in the ways and terms required by current law.

3. Further steps in the liquidation procedure - Limitations on reimbursement of the Shares Subject to Withdrawal

The reimbursement of any Shares Subject to Withdrawal not taken up on completion of the Pre- emptive Offer and of the Offer on the Market will be borne by the company resulting from the Merger, Banco BPM, pursuant to art. 2437-quater, para. 5, of the Italian Civil Code, and the rules on the reimbursement of shares subject to withdrawal envisaged for cooperative banks, as already explained in detail in Paragraph 11.2 of the Explanatory Report of BPM's Management Board on the Merger, prepared under arts. 2501-quinquies of the Italian Civil Code and 70, para. 2, of Consob Regulation 11971/1999 (published on BPM's website www.gruppobpm.it in the "General Meeting of Members of 14/15 October 2016" section - the "Explanatory Report").

It is recalled that Decree Law no. 3 of 24 January 2015, converted into Law no. 33 of 24 March 2015, has amended certain provisions of Legislative Decree 385 (the Consolidated Banking Act or "CBA") on cooperative banks: inter alia, a new paragraph 2-ter was added to art. 28, under which: "At "banche popolari" and "banche di credito cooperativo", the right of reimbursement in the event of withdrawal, also as a result of transformation, death or exclusion of the shareholder, is limited in accordance with the provisions of the Bank of Italy, even if this involves a derogation from statutory provisions, when this is necessary to allow the shares to be included in the bank's core capital for regulatory purposes. For the same purposes, the Bank of Italy can limit the right of reimbursement of any other equity instruments that have been issued".

The regulatory framework established by the new version of art. 28, para. 2-ter, of the CBA was completed with the introduction of Chapter 4 of the Third Part of the Bank of Italy's Circular no. 285 of 17 December 2013, in particular regarding Section III, which provides that "the articles of association of a "banca popolare" or "banca di credito cooperativo" gives the strategic supervisory body, on the proposal of the management body, having heard the control body, the power to limit or defer, in whole or in part and without any time limit, the redemption of the shares and any other capital instruments of the shareholder who is leaving because of withdrawal (also in the event of a transformation), exclusion or death, as provided for under the applicable supervisory regulations. This right is granted, pursuant to article 28, paragraph 2-ter, of the CBA, even in derogation from the applicable provisions of the Italian Civil Code and other statutory provisions".

In compliance with the above regulations, BPM has amended its articles of association by introducing a new last paragraph in art. 39, according to which "[…] after consulting the Supervisory Board, the Management Board can limit and/or postpone, in whole or in part and without any time limit, the redemption of shares and any other capital instruments attributable to the Bank's Common Equity Tier 1 (both in the case of withdrawal, also as a result of a transformation, and in cases of exclusion or death of the shareholder), even as an exception to the provisions of the Civil Code and other laws. […]". Banco Popolare has added a similar provision in its by-laws (see art. 15, paragraph 2, of the by-laws of Banco Popolare).

The reimbursement of BPM's shares (in the same way as Banco Popolare's shares), for which the Right of Withdrawal has been exercised, that remain once the Pre-emptive Right has be exercised and after their possible placement under the Offer on the Market, will be subject to the regulatory and statutory provisions mentioned above and, if not derogated, the specific Civil Code provisions on this matter. The decision regarding reimbursement of the remaining shares will be taken: (i) only after the Merger takes effect; and (ii) once the number of shares for which withdrawal has been exercised and the result of the Pre-emptive Offer and Offer on the Market have been published in order to know the residual amount that would have to be taken up by Banco BPM pursuant to art. 2437-quater, paragraph 5, of the Italian Civil Code.

As spelt out in greater detail in Paragraph 11.2 of the Explanatory Report (and in the Explanatory Report prepared by Banco Popolare) to which reference should be made for more information, neither BPM or Banco Popolare are in a condition to provide definitive guidelines on any limitation that could be applied by Banco BPM on the reimbursement of such residual shares, as the banks themselves do