Bff Bank Spa · MIL:BFF
Bff Bank Spa — Merger or Acquisition (May 2020)
25 slides from Bff Bank Spa's merger presentation, May 13, 2020
Slide 1: Acquisition of DEPObank
A Bank Like No Other® Acquisition of DEPObank 13 May 2020 11
Slide 2: Key pillars of DEPObank acquisition
Key pillars of DEPObank acquisition ▪ Today, a binding agreement (the “Agreement”) was signed for the acquisition and subsequent merger of DEPObank into BFF (the “Transaction”) ▪ This Transaction confirms BFF’s strong commitment to develop its Strategic Plan and enables value creation for all stakeh
Slide 3: Creation of the leading independent specialty finance bank in Italy
Creation of the leading independent specialty finance bank in Italy, for the benefit of both companies Consistent with “BFF 2023 Plan”: “Expanding the business via M&A into new niche markets not covered by traditional banks, with low risk, high growth, high profitability, and supporting the business
Slide 4: Acquisition consistent with BFF 2023 Plan
Acquisition consistent with BFF 2023 Plan Adjacent sectors Existing business New niche markets 2016 2019 2020 Focus on next page Targets profile: Targets profile: ✓ ▪ Operating in the same businesses of BFF or in adjacent sectors ▪ Operating in niche business not covered by ▪ Attractive asset yield
Slide 5: DEPObank: A well funded and capitalized bank and a leader in niche markets
DEPObank: A well funded and capitalized bank and a leader in niche markets BFF 2023: New niche markets Achievements ▪ Operating in niche business not covered ✓ ▪ National champion in the Securities Services business ▪ Italian independent leader on payments sector by traditional banks with a signific
Slide 6: Agenda
1. A strong value creation opportunity 2. Key terms of the Transaction 3. Closing remarks Appendix: Overview of DEPObank 66
Slide 7: A strong value creation opportunity
A strong value creation opportunity 1 ▪ Increasing of products and services range, entering sectors indirectly exposed to asset management (i.e. securities services) Increased and retail payments businesses, c. 30% of the combined revenues diversification and ▪ Improved revenues mix, with stronger c
Slide 8: Increased scale with no additional credit risk
1 Increased scale with no additional credit risk Increase in scale while maintaining a portfolio of customer receivables composed mainly of short-term exposure towards the public sector, of which 37% outside of Italy + Metrics (€m, FY19)(1) Pro-forma Customer loans LTD ratio(2) 304% 4,118 100% - - (
Slide 9: Increased diversification in niche business with market leadership
1 Increased diversification in niche business with market leadership Revenues FY19 Positioning Overview of the main products and services Non-recourse ▪ Management and collection of receivables towards the PA and the NHS €156m Leader in Europe factoring ▪ Presence: On-line deposits ▪ Credit manageme
Slide 10: ~€7.5bn of liquidity invested in Italian Government bonds and ECB deposits
2 ~€7.5bn of liquidity invested in Italian Government bonds and ECB deposits available to fund BFF’s low risk and short term credit business Key considerations DEPObank liquidity (€bn) ▪ DEPObank’s liabilities mainly consist of BFF cost of funding customer deposits for €7.5bn. Such liquidity is ~€7.
Slide 11: Capital neutral confirming BFF's disciplined approach in M&A
3 Capital neutral confirming BFF’s disciplined approach in M&A No impact on BFF’s Total Capital ratio: both the shares to be issue in the context of the merger and the badwill generated by the Transaction are expected to cover the capital absorption @ 15% TC ratio target. Positive impact on Tier 1 r
Slide 12: Significant value creation, with €25-35m run-rate synergies
4 Significant value creation, with €25-35m run-rate synergies… Pre-tax annual run rate synergies (€m) Key initiatives Funding synergies ▪ Deployment of DEPObank’s liquidity (c. €7.5bn at YE19) to fund BFF’s Euro business Funding Equal to 20-30bps over DEPObank − Current BFF funding lines assumed to
Slide 13: …and immediately accretive for shareholders
4 …and immediately accretive for shareholders Issuing 14,043,704 new BFF shares for a current value of €63m (1), representing an P/TBV of 0.5x for a business with marginal credit risk, low capital absorption and strong synergy potential Earnings multiple (€m)(1,2) Comments ▪ The Agreement envisages
Slide 14: Agenda
1. A strong value creation opportunity 2. Key terms of the Transaction 3. Closing remarks Appendix: Overview of DEPObank 14 14
Slide 15: Summary of the key terms of the Transaction
Summary of the key terms of the Transaction ▪ On 13th May 2020 BFF, Equinova and DEPObank signed a binding Agreement envisaging the following key steps: I. Equinova to acquire the outstanding shares held by the minority shareholders before closing. If not previously acquired, the minority shareholde
Slide 16: Risk Sharing Mechanism in relation to DEPObank's Portfolio HTC
BFF’s returns further enhanced by a Risk Sharing Mechanism in relation to DEPObank’s Portfolio HTC at closing 1. The purchase (completed today) by BFF of a portion of the Portfolio HTC at the current market value equal to €742m, with a yield (as of today) of 1.6% and a residual duration of 5 years,
Slide 17: BFF shareholding structure and governance
BFF shareholding structure and governance BFF shareholding structure Shareholding 4.3% Management ▪ In the context of the Merger Equinova will receive 14,043,704 Pre Transaction BFF shares, becoming the 2nd largest shareholder of BFF with an 21.8% 73.9% expected stake equal to 7.6% of BFF’s share ca
Slide 18: Indicative timeline of the Transaction
Indicative timeline of the Transaction 13th May 2020 Signed the Agreement for the acquisition of DEPObank By June 2020 Approval of the Merger plan by BFF’s Board of Directors September 2020 Supervisory authorities’ authorisations October 2020 Approval of the Merger by BFF’s extraordinary shareholder
Slide 19: Agenda
1. A strong value creation opportunity 2. Key terms of the Transaction 3. Closing remarks Appendix: Overview of DEPObank 19 19
Slide 20: Another step towards BFF 2023
Another step towards “BFF 2023” Increase scale and diversification both in terms of products & services offered and revenue mix, 1 while maintaining a negligible credit risk profile Ample and stable low-cost liquidity flows generated by DEPObank’s core activities will support 2 BFF’s business growth
Slide 21: Appendix: Overview of DEPObank
1. A strong value creation opportunity 2. Key terms of the Transaction 3. Closing remarks Appendix: Overview of DEPObank 21 21
Slide 22: DEPObank: Specialized player in Securities Services and Payments businesses
DEPObank: Specialized player in Securities Services and Payments businesses Diversified revenue mix among Securities Services, Payments and Treasury (1) Total Gross operating Customer Revenues (€m) margin (€m) FTEs (#) deposits (€bn) 139 42 363 7.5 ` Treasury function manages the liquidity generated
Slide 23: National champion in the Securities Services business
1 National champion in the Securities Services business with focus on high growth customer segments Comments Revenues(1) (€m) Key data ▪ DEPObank is the sole Italian national champion Transfer agent in the Securities Services market 44.3 ▪ Investor recordkeeping/shareholder servicing #2.3m ▪ Compreh
Slide 24: Italian independent leader in the fast growing banking payments sector
2 Italian independent leader in the fast growing banking payments sector Comments Revenues(1) (€m) % on total transaction ▪ DEPObank is the Italian independent leader on Checks & receivables 8% domestic transactions with a significant focus 46.3 on intermediation services ▪ Checks issuing: project s
Slide 25: DEPObank main financials
DEPObank main financials Balance sheet composition FY19 (€bn) Key data Income statement (€m) 2019(1) 9.1 9.1 Other assets 0.4 0.5 Shareholders’ Equity Net interest income 45.4 Intangible assets 0.1 0.4 Other liabilities Net fees & commission 90.2 Loans to banks c.€0.8m REPOs Interbank 1.5 0.8 Due to