Natwest Group Plc · LSE:NWG
Natwest — The Royal Bank of Scotland Group — Merger or Acquisition (May 2007)
57 slides from Natwest's merger presentation, May 29, 2007
Slide 1: Proposed Offer for ABN AMRO
Proposed Offer for ABN AMRO Superior Value for Shareholders Significant Benefits for Customers and Employees 29 May 2007 UK002CPP 29/05/2007 07:57 Strictly confidential 1
Slide 2: Important Information
Important Information In connection with the proposed Offer, RBS expects to file with the SEC a Registration Statement on Form F-4, which will constitute a prospectus, and the Banks expect to file with the SEC a Tender Offer Statement on Schedule TO and other relevant materials. INVESTORS ARE URGED
Slide 3: Offer Rationale
Offer Rationale ABN AMRO Challenges …Which the Banks Can Meet • Good businesses and customer • Comprehensive strategic fit with franchises in attractive markets ABN AMRO across its activities • Widely spread across many products • Extensive knowledge of ABN and geographies AMRO’s major markets • Org
Slide 4: Superior Value for Shareholders
Superior Value for Shareholders • Create stronger businesses with enhanced market presence and growth prospects • Clear cost saving opportunities • Opportunities for sustainable increases in profitable revenue growth • Projected synergies are based on achievable objectives Creates more certain trans
Slide 5: Proposed Offer Terms
Proposed Offer Terms • €30.40 in cash plus 0.844 New RBS Shares for each ABN AMRO Share(1) • Total of €38.40(2) per ABN AMRO Share, a 13.7% premium(3) to the value of Barclays’ proposed offer • Proposed Offer approximately 79% in cash • Proposed Offer values ABN AMRO at €71.1bn(4) • Capital raisings
Slide 6: LaSalle Bank
LaSalle Bank • Proposed Offer pre-conditional / conditional (depending on timing) on: – Dutch Supreme Court upholding preliminary ruling of Dutch Enterprise Chamber – ABN AMRO shareholders having declined to approve the Bank of America Agreement • €1.00 in cash will be deferred pending resolution of
Slide 7: Allocation of Businesses
Allocation of Businesses • Fortis – BU Netherlands (excluding former Dutch wholesale clients, Interbank and DMC Consumer Finance) – BU Private Clients globally – BU Asset Management globally • RBS – BU North America including LaSalle – BU Global Clients and wholesale clients in the Netherlands (incl
Slide 8: Share of Consideration and Profit
Share of Consideration and Profit Share of Profit Consideration(1) Consideration Before Tax(2) Fortis €24.0bn 33.8% €1.68bn RBS €27.2bn 38.3% €1.72bn Santander €19.9bn 27.9% €1.55bn Total €71.1bn 100.0% €4.95bn (1) Share of consideration including consideration for shared assets, as set out in Secti
Slide 9: Strong Combined Businesses
Strong Combined Businesses Fortis • Unique opportunity to strengthen Benelux core competencies: – Creates market leader with more than 10 million customers – #1 in Benelux Retail and Commercial Banking – Superior customer reach and skills in commercial banking – Capitalising, as owner of the tradema
Slide 10: Strong Combined Businesses (continued)
Strong Combined Businesses (continued) RBS • Complementary and overlapping businesses: – RBS Global Banking & Markets + ABN AMRO Global Wholesale Businesses – Citizens + LaSalle – RBS + ABN AMRO International Retail Businesses • Accelerates delivery of existing RBS objectives: – Achieve global reach
Slide 11: Strong Combined Businesses (continued)
Strong Combined Businesses (continued) Santander • Brazil: – Creates a top 3 bank by network and loans, benefiting from enhanced economies of scale – High geographical and product complementarity between both franchises (Banco Real and Santander Banespa) • Italy: – Antonveneta is a strong franchise
Slide 12: Orderly Business Reorganisation
Orderly Business Reorganisation • Day 1 – ABN AMRO structurally unchanged; becomes a subsidiary of RBS, owned jointly by the Banks – Focus on providing high quality service to customers and meeting regulatory requirements • Day 1 – 45 – Validate base-lined plan for synergies and separation – Continu
Slide 13: Orderly Business Reorganisation (continued)
Orderly Business Reorganisation (continued) BU North America ex LaSalle BU Asia BU Netherlands BU Europe ex Antonveneta ABN AMRO LaSalle Asset Private Antonveneta Banco Management Clients Real UK002CPP 29/05/2007 07:57 Slide 13 13
Slide 14: Benefits for Customers and Employees
Benefits for Customers and Employees • Benefits for Customers – Enhanced presence – Increased product strengths – Improved distribution capabilities – Minimal disruption to customer-facing activities • Benefits for Employees – Sustainable platforms for increased job creation – Fair appointment proce
Slide 15: Integration Track Record
Integration Track Record Total Cost Savings Total Cost Transaction Promised Savings Delivered Fortis Generale Bank €675m €861m (+28%) RBS NatWest £1,420m £2,030m (+43%) Santander Abbey National €300m(1) €425m (+42%) (1) Promised by end of second year after completion of the transaction UK002CPP 29/0
Slide 16: Expected Transaction Benefits: Summary
Expected Transaction Benefits: Summary Profit from Total Revenue Transaction By end Cost Savings Benefits per Benefits per Integration of 2010 per Annum Annum Annum Costs Fortis €1.15bn €0.19bn €1.34bn €1.54bn RBS €2.01bn €0.85bn €2.86bn €3.84bn Santander €0.86bn €0.18bn €1.04bn €1.00bn Shared €0.21
Slide 17: Attractive Returns
Attractive Returns Estimated 2010 Estimated 2010 EPS Accretion Return on Investment Fortis 4.3%(1) 11.2%(2) RBS 7.3%(3) 13.5%(2) Santander 5.3% 12.7%(4) (1) Adjusted for purchased intangibles amortisation (2) Return on investment defined as profit after tax excluding amortisation of intangibles plus
Slide 18: Next Steps
Next Steps • July/August 2007, consistent with Dutch offer process: – Publication of Offer documentation, prospectuses and circulars to shareholders of the Banks – Extraordinary General Meetings of shareholders of the Banks in connection with the transaction – Extraordinary General Meeting(s) of ABN
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Slide 20: Fortis-ABN AMRO: Top Player in Europe set for Growth
Fortis-ABN AMRO: Top Player in Europe set for Growth Highly Profitable and Sizeable Well-balanced Business Mix ABN AMRO % of FY 2006 Net Profit (pro forma) FY 2006 (€m) businesses Fortis Combined Insurance Retail Total Revenues - Bank 6,082 10,324 16,406 24% 23% Oper. Expenses - Bank (4,042) (6,315)
Slide 21: Clear Leader in Benelux Financial Services
Clear Leader in Benelux Financial Services The Netherlands Belgium • # 1 Retail Banking • # 1 Commercial Banking • # 1 Commercial Banking • # 1 Private Banking • # 1 Corporate Banking • # 1 Funds • # 1 Insurance • # 1 Consumer Finance (incl. cards) • # 2 Private Banking • # 2 SME Banking • # 2 SME B
Slide 22: Fortis + ABN AMRO = Grow²
Fortis + ABN AMRO = Grow² Fortis Stand-alone Growth Track Record Fortis + ABN AMRO: Growth Acceleration Total CAGR Fortis Net Profit +34% 4.4 EPS +13% post-deal (€bn) Outside Benelux growth 3.5 0.9 CAGR = +58% +12% Fortis 0.6 2.4 stand-alone 0.4 Benelux 3.4 2.9 CAGR = +30% 2.0 2004 2005 2006 2006 …
Slide 23: Building Fortis' Leading Banking Franchise in the NL
Building Fortis’ Leading Banking Franchise in the NL Financial Data Combined Entity Strategy – Going forward ABN AMRO • Commercial Banking FY 2006 (€m) businesses* Fortis** Combined – Leverage the strengths of the International Business Centre Network for the Dutch client base Total Revenues 3,948 1
Slide 24: Creation of a Leading European Asset Manager
Creation of a Leading European Asset Manager Highly Profitable & Sizeable Leading Provider of AM Solutions ABN AMRO • True multi-product investment and structuring solutions FY 2006 (€m) businesses Fortis Combined • Autonomous investment centers for a broad range of asset Total Revenues 745 347 1,09
Slide 25: Creation of a Top 3 European Private Bank
Creation of a Top 3 European Private Bank Highly Profitable & Sizeable One Integrated International Private Bank ABN AMRO • Service provider of choice for HNW and UHNW clients FY 2006 (€m) businesses Fortis Combined • Dedicated, broad and differentiated service offering Total Revenues 1,389 703 2,09
Slide 26: Total Expected Pre-Tax Synergies of €1.3bn
Total Expected Pre-Tax Synergies of €1.3bn Amount (€m) Total (%) Rationale • Optimize branch network Retail Banking 307 56 363 27% • Harmonize IT & Front-office application Netherlands • Combine & integrate common functions • Streamline, leverage business centre network Comm. Banking 124 19 143 11%
Slide 27: Transaction financials
Transaction financials • Consideration for ABN AMRO Businesses €24.0bn • 9.8 times estimated 2007 earnings + full post-tax benefits(1) • Financing: 60% rights issue, 20% non-equity Tier 1, 20% sale of assets, capital relief and debt • Core Tier 1 ratio of at least 5.7% and Tier 1 ratio of at least 6
Slide 28: A Socially Responsible Integration Plan
A Socially Responsible Integration Plan FTE Synergies 6,443 A Socially Responsible Integration Plan ROW FTE 2,182 81,781 ROW 616 100% 75,338 FTE 92.2% NL NL 5,827 22,713 ROW: 56,886 ROW 46,070 46,686 ROW 81,781 75,338 44,504 NL NL 35,095 29, 268 NL 12,382 Fortis ABN AMRO Combined 2007 2008 2009 2010
Slide 29: A Strong Commitment to Dutch Stakeholders
A Strong Commitment to Dutch Stakeholders Customers Employees Community • A Dutch bank with a unique • Benelux leader, able to attract • Deeply rooted in Dutch presence in the Benelux and and nurture talent community since 18th century the third largest network in the Netherlands • One of the larges
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Slide 31: Acquisition of ABN AMRO Businesses
Acquisition of ABN AMRO Businesses Create Stronger Businesses Strengthen Platform for Growth Outside UK • Complementary and overlapping Group Operating Profit 2006 businesses RBS – RBS Global Banking & Markets + ABN Asia-Pacific 1% AMRO Global Wholesale Businesses Europe 15% – Citizens + LaSalle US
Slide 32: RBS Global Banking & Markets + ABN AMRO Global Wholesale Businesses
RBS Global Banking & Markets + ABN AMRO Global Wholesale Businesses ABN AMRO Global Wholesale Businesses RBS Global Banking & Markets Large corporate and institutional bank with a Leading corporate and institutional bank global footprint with global product strengths Broad Customer Franchise Deep Cu
Slide 33: RBS Global Banking & Markets + ABN AMRO Global Wholesale Businesses
RBS Global Banking & Markets + ABN AMRO Global Wholesale Businesses Complementary Product Strengths Large Customer Franchise Ranking RBS ABN RBS+ABN Relationships with Large Corporates and AMRO AMRO Financial Institutions RBS Strengths Ranking GBM ABN GBM+ Global All Bonds + Loans 6 17 3 AMRO ABN AM
Slide 34: RBS Global Banking & Markets + ABN AMRO Global Wholesale Businesses
RBS Global Banking & Markets + ABN AMRO Global Wholesale Businesses 2006 Profit & Loss Account Business Plan €m IFRS GBM Global • Apply RBS’s management model to ABN Wholesale AMRO’s customer franchise – GBM income per customer 1.7x ABN AMRO Total income 10,014 5,861 – GBM income per front office em
Slide 35: Citizens + LaSalle
Citizens + LaSalle LaSalle Bank Citizens • Commercial and retail bank, • Retail and commercial bank, headquartered in Chicago headquartered in Providence • Focus on commercial banking • Focus on retail banking – #8 commercial lender nationally – #10 deposits nationally – Leading cash management prop
Slide 36: Citizens + LaSalle
Citizens + LaSalle Complementary Businesses Top 10 Across Range of Products Loans $bn Citizens LaSalle Citizens Ranking Citizens LaSalle Citizens at Dec 06 +LaSalle +LaSalle Retail 75.6 71% 17.2 27% 92.8 54% Distribution Commercial 29.3 28% 46.9 72% 76.2 45% Branches 8 25 7 Other 1.1 1% 0.7 1% 1.8 1
Slide 37: Citizens + LaSalle
Citizens + LaSalle 2006 Profit & Loss Account Business Plan $m US GAAP Citizens LaSalle • Leverage LaSalle commercial banking proposition in Citizens footprint Total income 5,974 4,041 • Leverage Citizens retail banking products Expenses 3,074 2,665 and sales and service management processes in LaSa
Slide 38: RBS + ABN AMRO International Retail Businesses
RBS + ABN AMRO International Retail Businesses Asia, Middle East and Europe 2006 Profit & Loss Account ABN AMRO €m IFRS RBS ABN Retail Branches AMRO China (11) Indonesia (10) UAE (17) Taiwan (8) Malaysia (4) Kazakhstan (10) Total income 553 607 Hong Kong (4) India (27) Romania (20) Expenses 336 365
Slide 39: Total Transaction Benefits €2,944m
Total Transaction Benefits €2,944m Amount (€m) Total (€m) Rationale Cost Savings ■ De-duplication of IT systems and support ■ De-duplication of functional support Global ■ Efficiency savings in procurement and property Wholesale 1,300 742 2,042 ■ Elimination of front office overlaps Businesses Reven
Slide 40: Transaction Financials
Transaction Financials • Consideration for ABN AMRO Businesses €27.2bn (£18.5bn) • 7.8 times consensus 2007 earnings + post-tax benefits in 2010 • Financing 54% equity, 46% preference shares and cash • Core Tier 1 ratio of 4.6% and Tier 1 ratio of 7.2% after anticipated completion (expected end 2007
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Slide 42: Acquisition of ABN AMRO Businesses
Acquisition of ABN AMRO Businesses 1. Create Stronger Businesses ABN AMRO Businesses • Two attractive markets, which we know 2006 (€m) ABN ATV Total well: Brazil and Italy LatAm Italy SAN Combined(1) • In which we can generate value – Improve efficiency Total income 3,738 2,182 22,615 28,789 – Creat
Slide 43: Brazil: the Deal Would Enhance our Growth Opportunities
Brazil: the Deal Would Enhance our Growth Opportunities • A step-up in terms of scale: #2 bank by total deposits, #3 bank by branch network and loans • Excellent fit with our existing businesses – Geographical fit: strong positions in regions in which Banespa has been traditionally underrepresented
Slide 44: Creation of a Leading Brazilian Bank…
Creation of a Leading Brazilian Bank… Branches & PABs 2006 Loans Market Share 2006 20% 5,205 1,236 4,064 3,972 14% 13% 1,056 3,383 1,822 11% 780 2,026 1,946 3,969 7% 7% 6% 3,008 967 855 1,392 1,.256 2,603 4% 458 316 2,150 898 360 1,059 1,091 934 940 1% 538 BB B radesco A B N+SA N ITA U SA N A B N Re
Slide 45: … with an Excellent Geographical, Product and Client Fit
… with an Excellent Geographical, Product and Client Fit Excellent Geographical Fit of Excellent Product Fit and Enhanced Both Distribution Networks Client Base % of Market Market Combined SAN Banespa: stronger in the affluent National Share Share Market segments + corporate banking GDP SAN ABN Shar
Slide 46: Clear Integration Plan Leading to €810m of Synergies
Clear Integration Plan Leading to €810m of Synergies with Low Execution Risk… Track Record in Brazil Five Sources of Value and a Clear Integration Timeframe Banco Geral do Improve standalone efficiency: €305m 1997 Comercio 1. For example, the level of non personnel expenses to customer volumes is ve
Slide 47: Antonveneta: an Attractive Platform with Significant Growth Potential
Antonveneta: an Attractive Platform with Significant Growth Potential • Very attractive market – Attractive returns – Underdeveloped in some areas (mortgages, consumer lending) – Potential to improve operational efficiency • A market we know well (partnership with SPIMI, consumer finance, private ba
Slide 48: An Attractive Franchise in One of the Wealthiest Regions of Italy
An Attractive Franchise in One of the Wealthiest Regions of Italy (Number of 0 1,000 2,000 3,000 4,000 5,000 6,000 branches) Intesa SanPaolo UCI-Capitalia Pro forma Strong regional positions… Banco Popolare UBI Banca BPER-BPM Pro forma MPS ATV BNL North Center-South …and an excellent platform from w
Slide 49: Opportunity for Efficiency and Commercial Performance Improvement
Opportunity for Efficiency and Commercial Performance Improvement • Best practices / cost discipline: Antonveneta general costs well above SAN standards Cost Synergies • Migrate Antonveneta to SAN proprietary IT system (Partenon) • Synergies with Group / global units (e.g., software development) Imp
Slide 50: Total Pre-Tax Synergies of €1,030m
Total Pre-Tax Synergies of €1,030m Amount (€m) % of Total Rationale • In-market synergies 700 110 • Integration of back office structures, migration to Brazil 810 79% common IT platform • Optimisation of distribution networks • Synergies: 32% of 06 proforma costs, 3% of revenues • Apply Santander re
Slide 51: The deal meets our financial criteria
The deal meets our financial criteria: EPS accretion + ROI > cost of capital by year 3 Value Cost Revenue Expected (€m) Allocation Synergies Synergies 2010 ROI Total 19,855 Of which Stake in Shared Assets 1,005(1) n/a Total Acquired Businesses 18,850 855 175 >12.5%(2) LatAm 12,000 700 110 >13.5% Ant
Slide 52: Transaction Financials
Transaction Financials • Consideration for ABN AMRO Businesses €18.8bn (excluding the value of shared businesses) • < 16 times consensus 2007 earnings for ABN AMRO Businesses(1) • < 10 times consensus 2007 earnings + full post-tax benefits(2) • Financing: 51% balance sheet optimisation (including as
Slide 53: Proposed Offer for ABN AMRO
Proposed Offer for ABN AMRO Superior Value for Shareholders Significant Benefits for Customers and Employees 29 May 2007 UK002CPP 29/05/2007 07:57 Strictly confidential 53
Slide 54: Appendices
Appendices UK002CPP 29/05/2007 07:57 Slide 54 54
Slide 55: Expected Transaction Benefits: Cost Savings
Expected Transaction Benefits: Cost Savings Shared Cost Savings €m Fortis RBS Santander Assets Total Global Retail and 845 - 855 - 1,700 Commercial Banking Of which Benelux 845(1) - 5 - 850 Of which Brazil - - 700 - 700 Of which Italy - - 150 - 150 Global Banking and 1,300 - - 1,300 Markets Private
Slide 56: Expected Transaction Benefits: Revenue Benefits
Expected Transaction Benefits: Revenue Benefits Shared Net Revenue Fortis RBS Santander Assets Total Benefits €m Global Retail and 129 - 175 - 304 Commercial Banking Of which Benelux 129(1) - 5 - 134 Of which Brazil - - 110 - 110 Of which Italy - - 60 - 60 Global Banking and - 742 - - 742 Markets Pr
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