Banco Santander, S.a. · BME:SAN
Banco Santander — Merger or Acquisition (December 2012)
32 slides from Banco Santander's merger presentation, Dec 17, 2012
Slide 1: Banesto to merge with Santander
Banesto to merge with Santander December 2012
Slide 2: Important information
Important information Banco Santander, S.A. (“Santander”) cautions that this presentation contains forward looking statements. These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business developm
Slide 3: Summary of the transaction
Summary of the transaction Rationale of the transaction: Why are we doing this now? The Spanish financial system: outlook
Slide 4: Summary of the transaction
Summary of the transaction Santander offers to acquire Banesto’s minority shareholders at an exchange ratio of 0.633x Santander shares for each share of Banesto (EUR 3.73 per share*), paid with treasury stock (approx. 45 million Santander shares) This exchange offer values Banesto at approx. EUR 2.6
Slide 5: An attractive deal for Banesto shareholders
An attractive deal for Banesto shareholders Banesto shareholders receive +25 % premium over Dec 14th closing price and a +42 % premium over the 6 month average Banesto shareholders participate in a international diversified bank with 55% of its profit coming from emerging markets; with a strong bala
Slide 6: Service improvements for Santander and Banesto's customers
.and service improvements for Santander and Banesto´s customers Santander’s and Banesto’s customers will have access to a broader distribution network (4,000 branches) Banesto’s customers will have access to a broader range of products, as well as to Santander’s international network that can suppor
Slide 7: Expected timetable
EXPECTED TIMETABLE Dec 17, 2012 Santander’s Board approves the transaction Jan 9, 2013 Santander’s Board approves merger project Jan 10, 2013 Merger project communicated to the market / CNMV Santander’s General Shareholders’ Meeting. Mar 22, 2013 April 26, 2013 Regulatory and administrative approval
Slide 8: Rationale of the transaction
Summary of the transaction Rationale of the transaction: Why are we doing this now? The Spanish financial system: outlook Final remarks
Slide 9: Rationale of the merger
Rationale of the merger A The profitability of the banking sector in Spain is under pressure B Why now? C Cost synergies D Revenue improvement: new structure in Spain E Financial impacts
Slide 10: Profitability of the banking sector in Spain is under pressure
A The profitability of the banking sector in Spain is under pressure… The Spanish financial system has lost What does the sector profitability over the past 5 years need to do? Lower spreads 1. Recover lost SPREADS and FEE income… …leads to a deteriorating efficiency despite cost 2. improvement …NOR
Slide 11: Santander is working to recover profit levels in Spain
Santander is working to recover profit levels in Spain lost in the last few years… Credit front book at good margins… new ecover lost SPREADS deposit origination margins still need to and FEE income improve; improved fee generation throug enhanced quality of service We are accelerating the provision
Slide 12: Why now?
B Why now? 1. A “single brand” strategy is most suitable for a low growth market Focus on combining EFFICIENCY GAINS with selective market share gains = best achieved with a SINGLE BRAND 2. Higher economies of scale 3. Flight to quality to the top are necessary in a more brands is accelerating conce
Slide 13: A single brand = stronger position
A single brand = stronger position Ranking: number of Ranking: deposits (EUR bn) branches
Slide 14: A balanced nationwide network
A balanced nationwide networ Combined branch market share by region 12% 29% 11% 13% 9% 8% 11% 10% 9% 17% 12% 9% 12% 10% 9% 11% 16%
Slide 15: One of the strongest brands in the international financial system
… with one of the strongest brands in the international financial system Top Banking Brands 2012 1 2 The 4th 3 international Zara and Santander, the only two 4 financial Spanish brands in the global “Top 100” brand… Interbrand 2012 5 … and the 1st in 6 the Eurozone 7 8 9 10 Brand Finance Global 500
Slide 16: Cost synergies: brand consolidation and structural efficiency improvement
C Cost synergies: Brand consolidation and structural efficiency improvement Integration of central structures Branch optimisation: There is already some degree of integration between Santander and We expect to close approx. 700 Banesto (e.g., IT platform, factories) branches, without impact on our H
Slide 17: Cost synergies: EUR 420m within three years
Cost synergies: EUR 420m (pretax) within three years Total % of Total Synergies (before taxes) Pre-tax 2012 costs savings(SPAIN)Year 1 Year 2 Year 3 IT 30Premises / real estate 69 420 Ops 32 326 Advertising / brand 8 Other expenses 27 206 Depreciation 16Total G&A 183 11%Total combined headcount to b
Slide 18: Revenue enhancement
D Revenue enhancement: Re-allocate resources to the most 18 attractive / higher ROE segments: Corporates / SMEs / affluent, through specialised networks Currently: Target: 4,664 branches Approx 4,000 branches A single brand New business structure Leverage on Banesto’s 2,914 branches traditional stre
Slide 19: Financial impacts
E Financial impacts Total synergies (revenue + cost) expected to reach EUR 520m (pre-tax) Impact on capital: approx. neutral
Slide 20: The Spanish financial system: outlook
Summary of the transaction Rationale of the transaction: Why are we doing this now? The Spanish financial system: outlook Final remarks
Slide 21: Features of the Spanish financial system in 2015+
Features of the Spanish financial system in 2015+ I A more concentrated market IIon track to deliver a ROTE normalisation III but with clear winners and losers
Slide 22: A more concentrated market
I A more concentrated market… Deposit market share (3Q12) Top 5 banks will control ca. 65% of the Ca. market (in line with 16% in 2015 other European economies) = improved pricing rationality and economies of scale
Slide 23: On track to a ROTE normalisation in the sector
II … on track to a ROTE normalisation in the sector 1. The sector will move towards a IMPROVE SPREADS more normalised ROTE over the next 3-4 years 2. ROTE: Spanish financial sector ORMALISATION OF PROVISIONS 3. IMPROVE EFFICIENCY
Slide 24: Improve spreads: customer spread improvement already under way
1. MPROVE SPREADS: Customer spread improvement is already under way B SPREADS EXPECTED TO CONTINUE TO IMPROVE OVER THE NEXT 18 MONTHS: Lending spreads: favorable back book / front book dynamics to continue +40-50 bp Deposit spreads to over 2-3 improve following years deleveraging / creation of SAREB
Slide 25: Provisions: peak in 2012/2013; normalisation expected
2. PROVISIONS: Peak in 2012 / 2013; normalisation expected over the next 3 years Evolution cost of risk (Provisions / loans)% (*) Normalisation of provisions will start in 2013 … moving towards a normalised level through the cycle The financial system expects to fully comply with the provisioning le
Slide 26: Improve efficiency: reduction in number of branches
3. MPROVE EFFICIENCY: Reduction in the number of branches in the system via plain closures or mergers / integrations Evolution of branches (banks+saving banks) Trend for the Pre-crisis Current period next 3-4 years 2004-2008 2009-2012 2013e-2016e # branches opened/closed +5,462 -7,065 -9,000 Total b
Slide 27: Clear winners and losers
27 III … but with clear winners and losers… Deposit evolution by groups The BIG 3 have increased their market share mainly through capturing deposits from the WEAKER Santander Spain COMPETITORS has shown the best individual performance in the system
Slide 28: Santander is a clear winner in the new environment
Santander is a CLEAR WINNER in the new environment, leading to the NORMALISATION OF THE CONTRIBUTION OF OUR SPANISH BUSINESS prove margins and n profitable market Improve Normalise are with enhanced efficiency rovisions service quality 2012: Cost of risk 2012: Loans: EUR 210bn (MS 11%) 150bp ex RDs
Slide 29: Santander will be a clear winner in the new environment
Santander will be a CLEAR WINNER in the new environment, leading to the NORMALISATION OF THE CONTRIBUTION OF OUR SPANISH BUSINESS The new structure is designed to take full advantage of the Our target is to deliver a growth 12-15% ROTE opportunities, in our Spanish mainly through business within thr
Slide 30: Final remarks
Summary of the transaction Rationale of the transaction: Why are we doing this now? The Spanish financial system: outlook Final remarks
Slide 31: Final remarks
Final remarks An attractive transaction for Santander shareholders: Low execution risk Significant integration synergies (+EUR 520m) EPS accretive: +3% in Year 3 The single brand and the new structure will allow Santander to best capture the market share gain opportunities in the Spanish market, whi
Slide 32: Signature
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Banco Santander, S.A. Date: December 17, 2012 By: /s/ José Antonio Álvarez Name: José Antonio Álvarez Ti
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