ABN AMRO launches cash offer for Banca Antonveneta

ABN AMRO launches cash offer for Banca Antonveneta Fully aligned with mid-market strategy Amsterdam, 30 March 2005 Antonveneta: unique opportunity ...
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ABN AMRO launches cash offer for Banca Antonveneta Fully aligned with mid-market strategy

Amsterdam, 30 March 2005

Antonveneta: unique opportunity to grow profitably ABN AMRO’s mid-market footprint Š

Š

Acquisition delivers growth –

Northern Italy: one of the wealthiest areas in Europe with low penetration rate for banking products



Antonveneta: profitable franchise with untapped growth potential



ABN AMRO: increase European mid-market footprint

Acquisition creates value –

Cost synergies estimate of EUR 160 mln by 2007



EPS accretive after twelve months of ownership

Š

Equity funding via an up to 135 mln share issue and the abolishment of the neutralisation of the final FY 2004 scrip dividend

Š

Commitment to return proceeds of the equity funding in a cost effective way if the acquisition does not materialise

Š

All cash offer supported by simultaneous equity raising puts ABN AMRO in best position to secure the acquisition 2

ABN AMRO determined to accelerate the successful development of Antonveneta Š

ABN AMRO has played a key role in the successful development of Antonveneta –

Shareholder since 1995; member of shareholders’ agreement since 2002



4 Board representatives from ABN AMRO

Š

Current ownership: 12.7% (18.7% on a fully diluted basis)

Š

Antonveneta’s restructuring on track, evidenced by strong 2004 results

Š

Filing of OPA documentation this morning to ensure stability

Š

ABN AMRO brings extensive skills to Antonveneta –

Superior credit skills



Cost management and efficiency platform



Extensive product suite

3

OPA: summary terms Offer structure

OPA price

Minimum acceptance level

Milestones

Š

Voluntary tender offer

Š

Tender for all 251.7 mln shares currently outstanding not already owned by ABN AMRO

Š

Offer subject to conditions precedent such as regulatory approvals, no frustrating actions and no material adverse change to Antonveneta’s business

Š

Tender for all 251.7 mln shares currently outstanding not already owned by ABN AMRO

Š

EUR 25 per Antonveneta share in cash

Š

Total maximum consideration EUR 6.3 bln for 87.3% of total shares

Š

6.9% premium to last price; 30% premium to average official price over last 6 months

Š

ABN AMRO’s stake post OPA at least 50% + 1 share

Š

April 29: end of 30 days review period by Bank of Italy

Š

June: expected date for OPA acceptance period

4

Funding with combination of debt and equity Š

Funding to ensure core tier 1 ratio of at least 6% and tier 1 ratio of at least 8% by end 2006

Š

Equity funding of approx. EUR 3 bln via an issue of up to 135 mln shares and the abolishment of the neutralisation of the final FY 2004 scrip dividend

Š

Further core tier 1 may be secured by progressively abolishing the neutralisation of scrip dividend for interim 2005 and possibly final 2005 dividend if acceptance levels > 75%

Š

Scrip dividend neutralised from 2006 onwards

Š

Final debt / equity mix to be determined upon closing of the tender offer

Š

No impact on credit ratings expected

Š

Commitment to return EUR 3 bln proceeds of equity funding in a cost effective way and to resume the neutralisation policy of any scrip dividend from 2005 onwards if the acquisition does not materialise

All numbers in presentation refer to a fully diluted basis, assuming 100% acceptance level

5

Update on recent developments Š

Net profit for Q1 2005 to be approximately in line with Q1 2004 (under IFRS) –

Š

Š

Excluding gain on Bank Austria (EUR 115 mln) and Leaseplan (EUR 46 mln) in Q1 2004

Operating result Q1 2005 to be lower than same period last year (under IFRS) –

Most (S)BU’s doing well, especially the Netherlands, Bouwfonds and Brazil



WCS operating result significantly lower year on year, net profit around breakeven primarily driven by lower contribution of loan portfolio and to a lesser extent disappointing proprietary trading results



Expectation that WCS first quarter results not indicative of subsequent quarters



Additional steps being taken to address geographical spread of WCS and its support for C&CC franchises in key markets, particularly in the US

No further major acquisitions in near future 6

Delivery of ABN AMRO’s existing commitments remains priority Š

Execute mid-market strategy –

Alignment of WCS product capabilities



Integration of WCS and BU NA commercial banking expertise

Š

GSS programme well on track – EUR 600 mln to be achieved by 2007

Š

Ongoing development of franchise –

BU NL revenue growth underpinned by improved client service



BU Brazil strong revenue growth after successful integration of Sudameris



Expansion of BU NA commercial franchise, develop retail activities and turnaround mortgage banking



Growth of BU PC, BU NGM and BU AM

7

ABN AMRO will target an average ROE of 20% over the period 2005 - 2008

Š

Objective of Total Return to Shareholders in top quartile unchanged

Š

Target of 20% average ROE over the period 2005-2008 –

2004 ROE under IFRS is 24 %

8

Transaction rationale

Antonveneta: strong fit with ABN AMRO’s strategy +

Increase ABN AMRO’s mid-market footprint

Profitable franchise with high quality customer base

Value creating opportunity

10

ABN AMRO’s strategic agenda: accelerate growth and build scale in mid-market segments Product innovation

Top Private Clients ‘SWEET SPOT’

PC / Mass Affluent

Mass Retail

MNCs

MidMarket/FIs Small Business

Feeder channel

Provider of scale Consumer

Commercial

11

+

Increase ABN AMRO’s mid-market footprint

Profitable franchise with high quality customer base

Value creating opportunity

12

Antonveneta: sizeable, high quality mid-market customer base Over 1.5 mln clients at year-end 2004; strong proportion of Affluent and Mid-Corporate customers Consumer: 1.33mn clients

Commercial: 0.18mn clients

Breakdown by deposit and loan volume:

Breakdown by deposit and loan volume:

35.0% 45.0%

65.0%

49.0%

6.0% Mass Market

Affluent

Private Banking

Small Business

Mid-Corporate & Corporate (1)

Legend: Private Banking (net worth > EUR 2.5 mln), Affluent (net worth within EUR 0.1-2.5 mln), Mass (net worth < EUR 0.1 mln), Corporate (revenues > EUR 75 mln), Mid-corporate (revenues of EUR 2.5-75 mln), Small Business (small business with revenues < EUR 2.5 mln). (1) Comprising 3,000 Interbanca (Antonveneta’s Investment Banking arm) accounts Source: Company data

13

Strengthening ABN AMRO’s mid-market footprint Breakdown of total 2004 revenues(1) before transaction Bwfds NGM 7% 6%

CC PC 5% 6%

BR 20%

AM 3% C&CC 56%

WCS 30%

NL 32%

Breakdown of total 2004 revenues (1) after transaction NGM Bwfds 5% 6% BR 16%

NA 35%

CC AM PC 5% 3% 5%

BAPV 18%

NA 29%

NL 26%

C&CC 60% WCS 27%

Legend: PC: Private Clients; AM: Asset Management; WCS: Wholesale Clients; C&CC: Consumer & Commercial Clients; BAPV: Banca Antonveneta. (1) Excluding gains from sale and results of Bank of Asia and Leaseplan, excluding results of ABN AMRO’s stake in Banca Antonveneta Source: ABN AMRO company data, Antonveneta press release

14

Italian mid-market has significant untapped potential CAGR of Consumer loans and mortgages 13% 10% 8% 6%

5%

7%

‹

High savings rate

‹

Pension reform

‹

Increased penetration rate in retail segment

‹

Increased demand for more sophisticated products and longer debt maturities in SME segment

4% 3%

Italy

Key growth drivers

Spain

UK

Consumer Loans CAGR 04 - 07

2% 2%

France

Germany

Mortgages CAGR 04 - 07

Mortgages MORTGAGES

Consumer loans CONSUMER LOANS Size(1) (EUR bn) Penetration (per capita) (EUR) Percentage of GDP

55

56

246

128

119

20

140

263

1,032

296

1,069

389

947

1,390

4,082

2,118

1,444

1,253

2,415

6,524

17,128

4,892

12,966

23,838

4.2%

7.5%

15.5%

8.2%

5.6%

4.5%

11.1%

37.6%

65.2%

19.3%

50.7%

87.2%

Source: Countries Central Banks, brokers research report, and Datamonitor report 1. Size of the consumer loans market in 2003 and mortgage market in 2002 respectively

15

+

Increase ABN AMRO’s mid-market footprint

Profitable franchise with high quality customer base

Value creating opportunity

16

Antonveneta: strong presence in one of the wealthiest areas of Europe Š Š Š Š

9th bank in Italy by total deposits

1 0.1% 1 1.0%

10th bank by number of branches

39 1.5% 12 1.3%

Solid market share for future growth Unified and trusted brand with strong recognition, especially in Antonveneta’s focus areas Area North Center South Total

(1)

Branches 622 153 225 1,000

109 1.8%

66 7.1%

296 9.0% 98 3.1% 20 0.9%

Total: 1,000 branches (1) Focus area: 697 branches

35 3.3% 1 0.2% 89 3.6%

6 1.0% 2 75 1.4% 5.5% 27 1.8% 2 0.8%

% 62% 15% 23% 100%

28 5.5%

93 8.4%

Source: Antonveneta analyst presentation FY 2004 results 1. Domestic branches as of December 2004, taking into account the sale of CIS-Credito Italiano Sanmarinese (3 branches in Republic of San Marino) on 24th February 2005

17

Antonveneta: scope to grow revenue through greater cross selling Source: company data and analyst research

Peer comparison: AuM(1) per client (EUR)

1. As of June 2004

25,000

2. As of December 2004; residential mortgages only

20,000

3. Based on peers shown in the graph

10,000

4. Based on breakdown per sector of domestic loan portfolio as of June 2003

+ 83%

15,000

5,000 0 San Paolo IMI Banca Intesa

Unicredito

BPVN

BNL

Capitalia

BMPS

(3)

Average

Banca Antonveneta

5. Excludes New Europe 6. ABN AMRO estimate based on risk-weighted assets for residential mortgages as of June 2003

Peer comparison: average mortgage balance(2) per client (EUR) (1) 6,000

+ 28%

4,500 3,000 1,500 0

Banca Intesa(4) Unicredito(5)

1. Total mortgage outstandings / total number of bank clients

BPVN

San Paolo IMI

BMPS(6)

BNL

Capitalia

Average(3)

Banca Antonveneta

18

Antonveneta: business plan well under way allowing focus on growth Guidelines Re-focusing commercial strategy (Retail + Corporate)

Action planned / undertaken

Status

Š Focus on customer segmentation: – specialisation of branch network (retail / 30-40 corporate branches) – specialised account managers ⇒ Development of high value added products

Ongoing Ongoing

Š Launch of network re-organisation program – staff reductions – administrative cost savings

Done Done

Improving asset quality

Š Balance sheet restructuring in 2003 Š Conservative provisioning Š Improve risk management policies

Done Done Ongoing

Strengthening of capital base

Š EUR 0.5 bln capital increase at the end of 2003 Š Reduction of RWA on large exposures (EUR 2 bln) Š EUR 0.5 bln innovative Tier I capital in H2 2005

Improving operating efficiency

Antonveneta

[check]

Done Done Planned

19

Conservative provisioning and NPL’s coverage will enhance profitability Š

NPL’s coverage (1)

High coverage ratio now among

(3)

San Paolo IMI Banca Intesa

66.8%

Banca Antonveneta (2)

performing loans 57.7%

BNL

56.5%

MPS(3)

(3)

BP Lodi

Prudent provisioning for

60.2%

Capitalia

(3)

Š

60.8%

Unicredito

BPU

market best practice

74.3%

49.8% 47.2%

Š

Restructuring actions taken in 2003 coupled with strict credit policy and procedures leading to lower cost of risk

42.5%

(3)

BPVN

Average

38.6% 55.4%

1. As of 2004 2. As stated in company reports and analyst presentation 3. As of September 2004

Source: Banca Antonveneta company reports and analyst presentations

20

Antonveneta is well on track to achieve business plan targets Antonveneta key financial data Š Significant improvement of

(1)

(1)

2002

2003

2004 BP

2004

2006 BP

Revenues

2.3

2.1

---

2.2

2.6 - 2.7

Operating Result

1.2

1.0

---

1.1

1.45 - 1.5

56.4%

61.7%

< 60%

57.6%

50.6%

0.4

1.2

< 0.4

0.4

0.2

NPL Coverage Ratio

50.7%

61.8%

---

60.8%

60%

Net income / Loss (EUR mln)

216.2

(842.6)

> 220

282.7

600

RWA

46.0

43.0

---

39.9

~54

Tier I

5.2%

4.9%

> 5%

5.8%

7.0%

(EUR bln, except for ratios)

profitability in 2004 Š 2004 actual results exceed

Cost-Income Ratio Net Provisions

(2)

(3)

business plan targets 1. Antonveneta Business Plan estimates 2. As stated by the company 3. Adjustments to loans net of write-backs on loans; 2004 provisioning negatively impacted by material oneoff specific provisions of total EUR 140 mln Source: company reports

21

+

Increase ABN AMRO’s mid-market footprint

Profitable franchise with high quality customer base

Value creating opportunity

22

ABN AMRO has successfully integrated and grown mid-market franchises in Brazil and North America Michigan National Corporation (NA)

Sudameris (Brazil)

Announcement date

22 November 2000

16 April 2003

Completion date

02 April 2001

27 October 2003

Transaction size

USD 2.75 bln (100% stake)

BRL 2.19 bln (95% stake) or ~ EUR 600 mln

Announced synergies

USD 100 mln pa; from 3rd year onwards

BRL 300 mln pa; as of 2005

Cost synergies

USD 100 mln pa; 25% target cost base

BRL 300 mln pa; 30% target cost base

Revenue synergies

Not communicated (internal targets)

Not communicated (internal targets)

MNC integrated ahead of schedule

Sudameris integrated ahead of schedule

Cost synergies

Total amount of synergies exceeding forecasts by 30%, with over-delivery in years 1 (+50%) and 2 (+16%)

Synergies ahead of 2004 target, and clearly on course to realise the announced 2005 target of BRL 300mn

Revenue synergies

• Incremental sales in fee-based products • Additional benefits from leveraging LaSalle’s commercial banking coverage model, product suite, credit portfolio and risk management to MNC client base

• Incremental contribution from enhanced portfolio management (credits/investments) • Additional benefits from cross-selling and applying best practice client coverage management across the client bases

Realisation of synergies

23

Value creation supported by estimated cost synergies of EUR 160 mln by 2007 Cost Synergies „ Estimated annual gross cost synergies: EUR 160 mln

IT related costs 30%

Procurement 20%

„ Efficiency benefits from leveraging economies of scale (incl. general admin.), GSS (incl. procurement) and IT related costs „ Wholesale product suite, risk and credit portfolio management „ Transaction Banking „ Implementation of new servicing model ⇒ enhancement of the multi-channel approach „ Funding synergies from ABN AMRO’ s superior credit rating

Funding 5% New servicing model Transaction 10% banking 10%

General administrative 5%

Wholesale 20%

Source: ABN AMRO estimate

Restructuring Charges „ Total estimated restructuring charge: EUR 200 mln 24

EPS neutral in 2006 and accretive after 12 months of ownership based on cost synergies „

EPS calculation assumptions: –

100% cash transaction with 100% acceptance (fully diluted basis)



Funding mix based on ABN AMRO’s target core tier 1 ratio of 6% and tier 1 ratio of 8% at year end 2006 (IFRS basis)



Target pay-out ratio: 45% - 50% ⇒ scrip dividend of 50% in 2005 (no buy-back) based on 100% acceptance



EUR 160 mln gross cost and funding synergies fully realised by 2007



ABN AMRO and Antonveneta net income estimates: IBES consensus

Note: assuming equity issuance by ABN AMRO at closing share price on 29 March 2005

25

Conservative estimates: revenue upside not included in EPS calculations Revenues Synergies

( 1

„ Preliminary estimate of EUR 100 mln (4.5% of target revenues) „ Leverage ABN AMRO’s: − Servicing model from affluent / private banking clients − Wholesale product capabilities − International presence − Expertise in asset management and derivatives − Global consumer finance capabilities

Business Plan Antonveneta „ >10% upside of Banca Antonveneta’s Business Plan vs. IBES net profit consensus (EUR 600 mln vs. EUR 536 mln)

„ Offer of standard banking services in Italy to ABN AMRO’s international clients through Antonveneta network (1) Revenue synergies of 6.4% of target revenues announced in Santander / Abbey takeover; average of 5% of sample of selected European cross-border transactions since 2000

Source: Banca Antonveneta analyst presentation, 12 September 2003

26

Concluding remarks

Concluding remarks Š

Acquisition is unique opportunity to grow profitably mid-market footprint

Š

Acquisition is EPS accretive after 12 months of ownership

Š

Acquisition creates value

Š

Equity funding of approx. EUR 3 bln via a up to 135 mln share issue and the cancellation of the neutralisation of the final FY 2004 scrip dividend

Š

Commitment to return proceeds of equity funding in a cost effective way and to resume the neutralisation policy of any scrip dividend from 2005 onwards should the acquisition not materialise

Š

All cash offer supported by simultaneous equity raising puts ABN AMRO in best position to secure the acquisition

28

ABN AMRO launches cash offer for Banca Antonveneta Q&A

Amsterdam, 30 March 2005

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