Banco Santander, S.a. · BME:SAN
Banco Santander — Merger or Acquisition (September 2008)
20 slides from Banco Santander's merger presentation, Sep 30, 2008
Slide 1: Abbey / Bradford & Bingley
Abbey / Bradford & Bingley 29 September 2008
Slide 2: Disclaimer
Disclaimer This document does not constitute an offer to sell, or an invitation to subscribe for or purchase, any securities or the solicitation of any approval in any jurisdiction, nor shall there be any sale, issuance or Transfer of the securities referred to in this Investor Presentation in any j
Slide 3: Description of the deal
Description of the deal Strategic rationale Financial impact Summary
Slide 4: Acquisition of B&B's retail deposit base and direct channels from UK HM Treasury
Acquisition of B&B’s retail deposit base and direct channels from UK HM Treasury HM Treasury to take Bradford & Bingley plc (B&B) into public ownership the following components of B&B will transfer to Abbey: £20 billion retail deposit base with 2.7 million customers direct channels including 197 ret
Slide 5: Strategic rationale
Description of the dealStrategic rationaleFinancial impact _____ Summary
Slide 6: Transaction strengthens Abbey's retail funding franchise
Transaction strengthens Abbey’s Retail funding franchise and 6 accelerates progress to becoming the best commercial bank in the UK 1 Combination of A&L and B&B moves Abbey’s estimated share of the Critical mass PFS market from c. 6% to c. 10% including deposit share in UK Expansion of branch network
Slide 7: Increased critical mass in core UK PFS markets
1Increased critical mass in core UK PFS markets7 Santander vertical strategy: Increasing our share of core markets Abbey average share across markets c. 6%Combined average share across markets c.10% 13.3% 3.6%10.1%10.3% 8.1%2.0%2.7% 2.2%2.0% 5.2% 9.7% 5.9%5.6% 2.9% MortgagesUPL Retail depositsBranch
Slide 8: B&B's network concentration complements Abbey's geographic spread
1 B&B’s network concentration in the North / Midlands 8 complements Abbey’s geographic spread North East 19 6 8 Scotland 59 26 12 Yorkshire 26 9 15 North West 95 19 45 East Midlands 34 44 21 N. Ireland 21 14 2 West 36 20 16 Midlands East 51 16 3 Anglia Wales 40 15 5 London 184 21 21 South South West
Slide 9: Santander has a proven track record in reducing costs
2 Santander has a proven track record in reducing costs — Abbey 9 is now reaching a competitive advantage in terms of efficiency PFS Cost to Income ratio — Historical Trends Gap vs. Sector - -15.0p.p -11.8p.p -5.6p.p -1.4p.p +2.6p.p 70.0% 60.6% 55.0% 55.0% 49.4% 49.7% 49.3% 48.8% 48.3% 46.7% 2004 20
Slide 10: Scope for revenue synergies
2 Scope for revenue synergies 10 Fee income per branch x5 Cross-sale opportunity to 2.7m customers x3 In addition, some scope for margin management of the x1 deposit base through time B&B base B&B post- Abbey synergies
Slide 11: Abbey remains focused on prudent risk management
3 Abbey remains focused on prudent risk management with a high quality asset portfolio No exposure to B&B mortgage portfolio which includes BTL and self cert mortgages — consistent with Santander risk management values No exposure to B&B’s treasury portfolio Abbey’s retail portfolio is only c. 2% un
Slide 12: B&B deposits are well established, and improve Abbey's funding ratios
4 B&B deposits are well established, and improves Abbey’s 12 funding ratios % of customers by length of relationship Improving customer deposits / loans ratios Balance % 25% 20% 55% 75% 61% 66% 63% 24% 15% Abbey Abbey / A&L Abbey / A&L / 0 — 2 yrs 3 — 10 yrs 11 yrs + B&B
Slide 13: Establishes Abbey as one of the largest retail deposit takers in the UK
4 ...and establishes Abbey as one of the largest retail 13 deposit takers in the UK PFS deposits — UK sector (£bn) Market share: 1.9% 2.0% 5.9% 7.5% 9.8% 9.9% 10.6% 20.9% (B&B / A&L adds c. 4%) Santander moves to 3 rd largest retail deposit taker 86 160 113 116 124 88 71 20 24 B&B A&L Abbey Barclays
Slide 14: Financial impact
Description of the deal Strategic rationale Financial impact Summary
Slide 15: Financial impact: the deal meets our financial criteria
15 Financial impact: the deal meets our financial criteria Net Profit Assumptions Modest liability attrition offset by Impact of negative margin, fixed-term maturities margin management in the short-term Reduced wholesale funding cost Removal of significant LIBOR premium c. 25% of costs relating to
Slide 16: Financial impact: the deal meets our financial criteria
16 Financial impact: the deal meets our financial criteria £bn Purchase price (excl. capital £0.2bn) 0.4 2009 2010 2011 Net attributable profit inc. synergies and other adjustments 40 60 80 Return on investment (based on £0.4bn above) 10% 15% 20% Accretion in Santander’s earnings per share including
Slide 17: Summary financials
7 Summary financials Investment of c.£0.4bn for B&B’s direct channels and c.£20bn of deposits (2% of the UK Market) £200m paid for Isle of Man capital Profits of £40, 60 and 80 mn in the first 3 years assuming no credit taking activities The deal is expected to be EPS enhancing: +0.3% in 2009; +0.4%
Slide 18: Summary
18 Description of the deal Strategic rationale Financial impact Summary
Slide 19: Summary
Summary 19 Transaction fits core Santander principles 1 Critical mass in Accelerates growth strategy and distribution scale in UK the UK, combination of A&L and B&B adds 4% deposit market share... 2 ...continuing to leverage core skills and efficient UK Potential for efficiency _____ operating platf
Slide 20: Relations with Investors and Analysts
Relations with Investors and Analysts Ciudad Grupo Santander Edificio Pereda, 1 a planta Avda de Cantabria, s/n 28660 Boadilla del Monte, Madrid (España) Teléfonos: 91 259 65 14 — 91 259 65 20 Fax: 91 257 02 45 e-mail: investor@gruposantander.com www.gruposantander.com Item 3
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