EFG International AG · SIX:EFGN
EFG International — Investor Presentation (December 2016)
44 slides from EFG International's investor presentation, Dec 8, 2016
Slide 1: Analyst & Investor Update Call Presentation
Analyst & Investor Update Call Presentation Zurich, 8 December 2016 1
Slide 2: Important Legal Disclaimer
Important Legal Disclaimer This document has been prepared by EFG International AG (“EFG") solely for use by you for general information only and does not contain and is not to be taken as containing any securities advice, recommendation, offer or invitation to subscribe for or purchase or redemptio
Slide 3: Agenda
Agenda Introduction and recap of transaction Joachim H. Straehle, CEO EFG International Strategy and ambitions of the combined Group Joachim H. Straehle Integration Joachim H. Straehle / Giorgio Pradelli Synergies and restructuring costs Giorgio Pradelli, Deputy CEO & CFO EFG International
Slide 4: Current private banking landscape
Current private banking landscape Long-term opportunities Short-term challenges Global wealth forecasted to grow at 6.2% p.a. Challenging market conditions between 2014 and 2019E1 Current interest rate environment Highest growth in Emerging Markets Revenue generation under pressure Marke
Slide 5: Recap of the acquisition of BSI
Recap of the acquisition of BSI Purchase price at closing of CHF 1,060 m1,2, comprised of: CHF 575 m in cash; 86.2 m EFG shares valued at CHF 454 m1; and Price CHF 31 m EFG AT1 instruments issued to BTG Implied P/TBV multiple of 0.76x, with negative goodwill of CHF 329 m 3 vs. CHF 100 m at
Slide 6: Timeline of BSI acquisition in 2016
Timeline of BSI acquisition in 2016 Key achievements (Transaction) 22 February Announcement of BSI acquisition Raised Phase I required 29 April AGM and Board approval on the rights issue equity for transaction 11 May Completion of CHF 295 m rights issue 24 May FINMA approval of BSI acquisiti
Slide 7: Strategy and ambitions of combined Group
Strategy and ambitions of combined Group 7
Slide 8: Strengths and opportunities of the combined Group
Strengths and opportunities of the combined Group Combine existing strengths and realize opportunities through the integration in the future STRENGTHS OPPORTUNITIES Focused, “Pure-play private banking” business model Significant cost synergy potential Globally diversified presence, with strong footh
Slide 9: Ambitions of the combined bank
Ambitions of the combined bank Improve competitive position, capture significant potential for economies of scale and return to profitable growth Client-focused Offer our clients a unique private banking experience by acting solutions instead of as “Entrepreneurs” for “Entrepreneurs” standardization
Slide 10: Target clients
Target clients Key target client segment are entrepreneurs in all stages of the their life-cycle Private bank for “Swiss quality private banking with an entrepreneurial spirit”: focus on this entrepreneurs key segment in all stages of the life-cycle (Build-up, exit, heritage) Focus on core Our curre
Slide 11: Where to compete: Target Private Banking clients (1/2)
Where to compete: Target Private Banking clients (1/2) high Average age of Private Banking clients: 60+ Wealth 1st Priority Product and service First generation entrepreneurs 2nd Priority needs Inherited wealth Retired clients & entrepreneurs Young Executives Salary professionals low Age 40 50 60 70
Slide 12: Where to compete: Target Private Banking clients (2/2)
Where to compete: Target Private Banking clients (2/2) Definition Client segments Needs Competitive dynamics Liquid/investable Investment banking type of assets >USD 30 m services Global investment & universal UHNWI Family office services banks going down market Wealth >USD 100 m Global
Slide 13: Where to compete: Core regions and market potential
Where to compete: Core regions and market potential Focus on markets with continued growth potential, EFG able to leverage on its existing market presence Global presence in main financial centers and growth regions Extended reach & Economies of scale and skills Europe (incl. CEE) Upgrade client off
Slide 14: Products and Services
Products and Services Extensive range of wealth management products through a flexible open architecture platform; increase penetration of investment solutions Offer an extensive range of wealth management products and services, including Solution-driven Investment solutions (i.e. discretionary an
Slide 15: Client value proposition
Client value proposition We differentiate ourselves from competition through our entrepreneurial spirit the quality and seniority of our CROs the continuity of our CROs Additional differentiation factors are Familiarity with the customs, culture, regulations and market trends of the location
Slide 16: Continued focus on risk management
Continued focus on risk management Maintain strong capitalization and low risk profile Capitalization Will maintain a strong, well-capitalized and liquid balance sheet Committed to a conservative approach in taking risks in our Stick to core core/target business Continue to invest in risk and compli
Slide 17: Integration
Integration 17
Slide 18: Integration approach & future target operating model
Integration approach & future target operating model EFG International’s future target operating model combines 6 businesses with a Group- wide investment solutions platform, and strong oversight / corporate functions Key cornerstones of EFG International’s future target operating model Central Roma
Slide 19: Hybrid market coverage model
"Hybrid market" coverage model combines heritage of both banks Market model Location model CROs reporting hierarchically to CROs reporting to location head market head with a “pure” portfolio of notwithstanding their client market clients in the market focus Market heads playing also the role
Slide 20: Integration timeline
Integration timeline Legal integration of Swiss business and foreign entities planned in Q2/Q3 2017; Swiss IT migration planned for Q4 2017 Q2 2017 BSI SA (Switzerland) Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 BSI SA BSI Bahamas Swiss IT BSI Singapore BSI Luxembourg (HK Branch) (remaining migration a
Slide 21: The first major milestone for the integration of BSI
The first major milestone for the integration of BSI Integration of BSI Singapore Highlights Client review process with external expert Accelerated integration within a challenging time frame of 4 months Data analysis of client population Forensic screening of client data bases PEPs/High Risks
Slide 22: Synergies and restructuring costs
Synergies and restructuring costs 22
Slide 23: Introduction
Introduction Additional synergies have been identified and confirmed Post closing and having access to Since the announcement in February additional data, a more precise and 2016, combined AuMs have been granular analysis has been undertaken reduced from CHF 170 bn to CHF 148 bn, since 31 March
Slide 24: Key pillars of estimated costs synergies
Key pillars of estimated costs synergies 1 IT, Operations, Premises Infrastructure Migrating BSI to EFG’s platform 2 Overlap of Overlapping business in key geographies operations Combination of corporate functions 3 Optimisation Exit of non strategic businesses and / or subcritical booking
Slide 25: Increase in cost synergies of CHF 55 m to CHF 240 m
Increase in cost synergies of CHF 55 m to CHF 240 m Breakdown of targeted cost synergies Amount % of % of 2015 (in CHF m) total combined costs* Key actions Migrating to in-house platform Enhanced overall target operating model IT, OPs & 54% 41% Additional economies of scale in Global Operation
Slide 26: Fully phased cost synergies of ~CHF 240 m
Fully phased cost synergies of ~CHF 240 m Full potential to be realised in 2019 Targeted cost synergies (pre-tax) (in CHF m) Compared with December 2015, BSI AuM has Integration costs (pre-tax) CHF 250 m reduced from CHF 88 bn to CHF 67 bn as of October 2016. Additional synergies have been 451 165
Slide 27: Migration of BSI to EFG's IT platform
1 Migration of BSI to EFG’s IT platform Synergy expectations were increased by CHF 13 m IT / Operations cost evolution target1 Substantial integration synergies were expected and announced as both banks run highly centralised IT platforms centred around a core banking system and have similar CHFm
Slide 28: IT/Operations – Key path to deliverables
1 IT/Operations – Key path to deliverables Project deliverables fully on track. In addition, lessons from Singapore’s migration have significantly accelerated the learning curve and contributed to de-risk the next migrations 2016 2017 2018 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Comments Target platform de
Slide 29: Significant synergy potential from overlapping operations
2 Significant synergy potential from overlapping operations Selected booking centres Efficiency gains and economies of scale effects in overlapping functions such as: Global EFG - Central Filing - Legal BSI - Risk - Finance - Audit - HR Miami Europe UK - Management Lux Switzerland Hong Kong Base
Slide 30: Optimisation of perimeter
3 Optimisation of perimeter Exit of non-core businesses Key principles Examples for planned measures Exit of non strategic businesses Partial sale of BSI Bahamas client portfolios signed in December 2016 Subcritical booking centers BSI Panama closed by Q3 2017 UK IFA sale process ongoing 3
Slide 31: Estimated revenue attrition
Estimated revenue attrition Revised revenue attrition estimates post AuM outflows in 2016 Estimated AuM attrition (cumulative) (in CHF bn) At time of announcement of the transaction, potential AuM attrition was estimated to be around 5 -10% of the combined Revised estimate1 ~12.9 ~12.9 Original co
Slide 32: Breakdown of estimated transaction and integration costs
Breakdown of estimated transaction and integration costs Estimated integration costs equivalent to 1.2x synergies 36% 18% 6% 12% 6% 22% 100% 47 297 47 55 250 10 15 45 30 15 45 5 15 10 250 90 30 Incl. migration related 10 costs, BSI retention plan Regulatory & Integration, Costs borne by Costs borne
Slide 33: Net synergies
Net synergies Estimated post-tax net synergies of CHF 141 m Estimated post-tax synergies (in CHF m)1 Estimated post tax synergies (based on 17.5% Revised estimate tax rate), expected to be ~CHF 141 m Original communication2 ~141 Revenue synergies are targeted from the enhanced geographic and CRO
Slide 34: Potential for substantial RWA optimisation at BSI
Potential for substantial RWA optimisation at BSI BSI’s RWAs have reduced by 15% YTD BSI’s RWA evolution (in CHF bn) RWA / Assets across peers 1, 2 10.1 43% 43% 2.0 8.1 1.4 1.3 6.9 30% 1.3 29% 1.5 23% 23% 1.3 6.7 5.4 4.1 BSI Peer 2 Peer 3 Peer 4 EFG 2014 Peer 1 2015 At closing1 Market & Credit Opera
Slide 35: Solid combined capital and liquidity position
Solid combined capital and liquidity position Swiss GAAP CET1 ratio at 16.8% and Total Capital ratio at 19.4% Following FINMA approval, regulatory capital ratios of the combined group will be monitored and reported under Swiss GAAP Swiss GAAP capital ratios Breakdown of RWAs (Swiss GAAP) (in %) (i
Slide 36: Conclusion
Conclusion 36
Slide 37: Acquisition of BSI – a compelling transaction
Acquisition of BSI – a compelling transaction Positioning EFG to benefit from long term opportunities in the sector EFG becomes one of the largest private banks in Switzerland with approx. CHF 148 bn AuM1, CHF 43.7 bn in total assets1, 700 CROs1,2 Scale Global presence with 40 locations worldwid
Slide 38: Conclusion
Conclusion Top-tier Swiss private bank Differentiation through entrepreneurial spirit, seniority and continuity of CROs Strong capitalization and low risk profile Additional synergies identified Implementation of integration plan well on track 38
Slide 39: Medium term operational targets
Medium term operational targets Medium term targets for the enlarged business, which will apply after completion of BSI’s integration: Continually grow revenue-generating AuM with a Net new assets targeted annualized growth rate of 3% to 6%1 Cost-income ratio Target a cost-to-income ratio below
Slide 40: Q&A
Q&A 40
Slide 41: Appendix
Appendix EFG@ International
Slide 42: A strong, solid Swiss private bank
A strong, solid Swiss private bank New leading player in Switzerland (in CHF bn) Incl. loans Excl. loans 2,194 725 364 1 177 166 2 3 4 4 148 143 142 121 120 1151 68 46 Source: Company information, latest available data 1 Wealth Management AuM for Pictet; Private Clients AuM for Lombard Odier 2 Inclu
Slide 43: Purchase price at CHF 1,060 m, 0.76x P/TBV
Purchase price at CHF 1,060 m, 0.76x P/TBV Negative goodwill at CHF 329 m5 (in CHFm) Purchase price at closing of 1,389 BSI estimated TBV at closing CHF 1,060 m1,2 Implied P/TBV multiple of 0.76x 52.6 m EFG shares issued to BTG as 1,060 Negative goodwill generated from the consideration tran
Slide 44: Contacts
Contacts Investors Media Investor Relations Marketing & Communications Jens Brueckner Daniela Haesler Head of Investor Relations Head of Marketing & Communications Telephone: +41 44 226 1799 Telephone: +41 44 226 1804 E-mail: jens.brueckner@efginternational.com E-mail: daniela.haesler@efginternation
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