Banco Santander, S.a. · BME:SAN
Banco Santander — Banco Santander Central Hispano — Merger or Acquisition (June 2006)
19 slides from Banco Santander's merger presentation, Jun 8, 2006
Slide 1: Sale of Insurance Operations in UK & Distribution agreement with Resolution
Sale of Insurance Operations in UK & Distribution agreement with Resolution June 7 2006 Item 3
Slide 2: Important information
Important information Santander cautions that this presentation contains forward looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. These forward looking statements are found in various places throughout this presentation and include, without limitation
Slide 3: Terms of the agreements
Terms of the agreements Index Strategic Rationale Financial impacts Conclusion
Slide 4: Terms of the Agreement
Terms of the Agreement What is being sold? All the UK insurance business. This includes principally Scottish Mutual, Scottish Provident, Abbey National Life, Scottish Provident International and Scottish Mutual International, etc. This represents £24.2 bn of insurance assets under management What bu
Slide 5: Terms of the Agreement
Terms of the Agreement Retail Distribution agreement with Resolution 10 year distribution agreement: Resolution becomes exclusive provider through Abbey network of: Life protection products Life saving and pension products Intermediary distribution agreement with Resolution Abbey keeps exclusive rig
Slide 6: Strategic Rationale
Strategic Rationale Index Terms of the agreements Financial impacts Conclusion
Slide 7: Strategic Rationale
1 2 3 4 Strategic Rationale De-risk the balance sheet- We give up short term profits for economic capital and lower risk Selling a substandard business to focus on our core-activities Expanding in core banking businesses in the UK with the excess economic capital generated Strategic partnership, whi
Slide 8: The deal will have a positive impact on the Group BIS Capital Ratio (14bp)
The deal will have a positive impact on the Group BIS Capital Ratio (14bp) … and it will improve our core Tier 1 ratio by 7bp 1 De-risk the balance sheet However, it would have a much larger impact on the economic capital absorption of our business… Although BIS I / current regulatory framework acce
Slide 9: UK insurance is sub-standard in terms of profitability and expected growth
2 Note: data for Grupo Santander based on market consensus UK insurance is sub-standard in terms of profitability and expected growth… when compared with our business portfolio
Slide 10: The management team will be fully focussed on transforming Abbey into the best retail bank in the UK
2 The management team will be fully focussed on transforming Abbey into the best retail bank in the UK Focus on our core-businesses… This deal allows us to concentrate on our core businesses It frees up management time and resources (including capital) to be re-invested in our main activities
Slide 11: This deal will transfer the manufacturing component of the business to Resolution
3 This deal will transfer the “ manufacturing ” component of the business to Resolution… . …while focusing on distribution …in addition, Abbey gain access to Resolution’s policyholder base (5 million), having the opportunity to cross-sell banking products Strategic partnership, while focusing on dis
Slide 12: Strategic partnership, while focusing on distribution
3 Strategic partnership, while focusing on distribution (*) General Insurance provided by Aviva
Slide 13: The financials of the deal are even more attractive when taking into account strategic value
4 The financials of the deal are even more attractive when taking into account the strategic value of our partnership with Resolution Attractive multiple compared with similar transactions Resolution is paying 97% of Embedded Value (based on 05 figures)-which is a very favourable multiple when compa
Slide 14: Selected Transactions in the last years
4 Selected Transactions in the last 3 years Attractive multiple compared with similar transactions
Slide 15: Financial impacts
Financial impacts Index Terms of the agreements Strategic Rationale Conclusion
Slide 16: The positive regulatory impact on the group and Abbey understates the real impact on economic capital
The positive regulatory impact on the group and Abbey understates the real impact on economic capital Three measures on economic capital released: Some rating agencies deduct the full 100% Our internal model implies improved economic capital by EUR 1.9bn Rule of thumb (50% of BV) implies releasing E
Slide 17: BIS II simulation
BIS II simulation Under BIS II, Abbey RWA are expected to fall from £ 64 bn to £ 34 bn This leaves Abbey well positioned to grow. As an example: + £ 40 bn in new RWA to grow (+ £ 120 bn mortgages, or £ 40-50 bn in SME / consumer loans, etc) Life under BIS II: Abbey gets the mortgage capital saving a
Slide 18: Estimated after-tax impact of the sale
Estimated after-tax impact of the sale …however, we maintain the same profit targets we provided in our 3 year plan There is an initial net profit negative impact in Abbey… P&L impact (after tax £ mn)
Slide 19: Investor Relations contact
• Investor Relations • Ciudad Grupo Santander • Edificio Pereda, 1st floor • Avda de Cantabria, s/n • 28660 Boadilla del Monte, Madrid (Spain) • Tel.: 34 91 259 65 14 -34 91 259 65 20 • Fax: 34 91 257 02 45 • e-mail: investor@gruposantander.com • www.gruposantander.com SIGNATURE Pursuant to the requ
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