Banco Santander, S.a. · BME:SAN
Banco Santander — Banco Santander Central Hispano — Merger or Acquisition (July 2004)
28 slides from Banco Santander's merger presentation, Jul 26, 2004
Slide 1: Grupo Santander: A Unique Multi-local Retail Bank
GRUPO SANTANDER A Unique Multi-local Retail Bank July 26, 2004 Disclaimer This announcement contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. Forward looking statements may be identified by words such as "expects", "anticipates", "inte
Slide 2: Table of Contents
Table of Contents The Transaction Positioning of the New Group The “Abbey Opportunity” Value Creation and Financial Impact Next Steps
Slide 3: Table of Contents
Table of Contents The Transaction Positioning of the New Group The “Abbey Opportunity” Value Creation and Financial Impact Next Steps
Slide 4: Transaction Rationale
Transaction Rationale Santander core expertise is to manage retail banking franchises Proven in Portugal, LatAm and in Pan-European consumer finance... .... and by our first half results Abbey is a unique retail banking opportunity Preeminent franchise (18mn customers), in an attractive market... ..
Slide 5: Transaction Rationale: Positioning of the New Group
Transaction Rationale Positioning of The New Group Highly focused on retail banking: ~85% of total business Well diversified: 42% Eurozone, 47% UK and 11% Rest of the World(1) Good risk-growth trade off: 92% loans in AA or better rated countries Eur 50bn+ market cap global bank: #10 globally Abbey C
Slide 6: Summary Transaction Terms
Summary Transaction Terms Key Terms 1 share of Santander for each share of Abbey Special Abbey dividend: 25p plus 6p for dividend differential = 31p Price Price: £5.78(1)+ 6p for dividend differential = £5.84 Premium to Market: 17.3%(1)(2) Aggregate Consideration: £8.5bn/Eur 12.8bn(1)(2) Key Dates R
Slide 7: Table of Contents
Table of Contents The Transaction Positioning of the New Group The “Abbey Opportunity” Value Creation and Financial Impact Next Steps 8
Slide 8: Attractive Multi-local Retail Footprint
Attractive Multi-local Retail “Footprint” GDP US$952bn(1) Grupo Santander Serfin Market share 14%(2) Branches 1,018 GDP US$1,678bn(1) Abbey Market share 11%(2) Branches 741 GDP US$2,170bn(1) CC Bank Market share 16%(2) Branches 54 GDP US$191bn(1) Grupo Totta/Banco Santander Portugal/BSN Market share
Slide 9: Highly Focused on Retail
Highly Focused on Retail Total Revenues Per Business Unit '03 (%) (1) Santander + Abbey. Abbey Retail Banking includes only PFS Total Revenues (2) HSBC: Retail Banking includes Commercial Banking Business (3) BoA: On a pro forma basis including FleetBoston. Retail Banking includes FleetBoston’s Nati
Slide 10: Balanced Portfolio of Businesses
Balanced Portfolio of Businesses Combined Net Income Breakdown (%)(1) Combined Loans to Customers Breakdown (%)(2) Row UK 3 21 Spain 32 Puerto Spain Rico 39 1 Venez. 2 UK 47 Mexico Portugal 8 5 Other EU 5 Brazil Portugal Puerto Chile 15 Chile 6 Brazil Germany Rico Mexico 3 5 1 3 1 3 High diversifica
Slide 11: Exposed to Higher Rated Countries
Exposed to Higher Rated Countries Combined Net Income Breakdown (%)(1) Combined Loans to Customers Breakdown (%)(2) 3 2 5 B- A- BB B- 0.5 18 BB AA 0.3 2 AAA 15 3 1 15 5 8 25 A- 11 8 AAA 8 AA AA+ 52 14 61 11 32 AA+ 49 39 Pre Transaction Breakdown 74% of net income and 92% of loans to customers in AA
Slide 12: A Group with a Global Dimension
A Group with a Global Dimension Key Figures Global Dimension(3)(Market Cap. Eur bn) Citigroup 188.0 1 Santander Santander'03 + Abbey(1) BoA 141.0 2 Assets (Eur bn) 351.8 617.9 HSBC 132.7 3 Loans to Customers (Eur bn) 172.5 335.6 JPMorgan Chase 106.6 4 Deposits (Eur bn) 132.7 244.7 Wells Fargo 78.5 5
Slide 13: Table of Contents
Table of Contents The Transaction Positioning of the New Group The “Abbey Opportunity” Value Creation and Financial Impact Next Steps 14
Slide 14: Entry into the Attractive UK Banking Market
Entry into the Attractive UK Banking Market Robust market, with solid growth Profitability of Listed Banks by Geography(1)prospects Switzerland Stable UK economy, forecast to maintain momentum Ireland UK Continued c. 3% GDP growth Spain Business-led recovery France Low unemployment Nordic Low inflat
Slide 15: Sizeable Retail Platform with Significant Untapped Potential
Sizeable Retail Platform with Significant Untapped Potential 18mn customers #6 by assets: £177bn Sizeable #2 by mortgages: 11% share Retail #5 by deposits: 9% share Platform #6 by current accounts: 6% share #3 in insurance protection products: 15% share Large distribution network, including 741 bran
Slide 16: Table of Contents
Table of Contents Q The Transaction Q Positioning of the New Group Q The “Abbey Opportunity” Q Value Creation and Financial Impact Q Next Steps 17
Slide 17: First Objectives
First Objectives 1. Further simplify product range 2. Reinforce branch network distribution 3. Reinforce strong sales culture 4. Optimise efficiency levels, particularly via IT 5. Finalise disposal of non-core assets 18
Slide 18: Initial Year Plan Impact on Earnings Before Tax
Initial 3 Year Plan Impact on Earnings Before Tax (Eur mn) Main Actions Total Synergies: Eur 560mn Cost: Eur 450mn ¦ Improved cross sell/ tapping of Revenue: Eur 110mn growth areas: consumer finance, insurance to mortgage customers ¦ Productivity gains in branch network and back office ¦ Cost synerg
Slide 19: Sources of Revenue Synergies
Sources of Revenue Synergies Upgrade effectiveness of branch network Mortgages sold through branches at only 35% of total... Leverage ...well below market average Branch Network Goal is to increase bank sales to 50%+ of origination U Better book of mortgages with lower origination costs U Greater ab
Slide 20: Sources of Efficiency Gains and Cost Synergies
Sources of Efficiency Gains and Cost Synergies Apply Santander DPC(1)Management to reduce DPCs Extend Santander “purchasing power” in hardware, IT software and communications Eliminate costs of overlapping systems development programs Accelerate Abbey existing site reduction and off-shoring Operatio
Slide 21: Revenue Synergies Potential from Benchmarking
Revenue Synergies Potential from Benchmarking £ mn Mortgages per Branch 5.75 159.3 Revenue per 4.36 4.55 118.5 Branch 85.0 (Banking & Savings Eur mn) Abbey A&L HBoS Abbey A&L HBoS £ mn Deposits per Branch 119.3 81.6 63.0 Revenue Expansion 486.0 Abbey A&L HBoS Eur mn £ mn Personal Lending per Branch
Slide 22: Efficiency Gains Potential from Benchmarking
Efficiency Gains Potential from Benchmarking Retail Banking: Cost to Income Reduction Eur mn(1) 52.7% 157.8 47.8% 220.1 45.9% Abbey(2) A&L HBoS (Banking & Savings) (Retail Banking) (Retail Banking) (1) Data as of December ’03. Exchange rate: Eur/£:1.50545 (2) PFS cost to income for ’03 amounts to 56
Slide 23: New Group Combined Capital Position
New Group Combined Capital Position 30th June ’04(1) Adjustment Special Santander Eur bn Santander Abbey to Abbey Dividend + Abbey RWA 217.1 86.6 - - 303.7 Core Capital 13.8 6.5 (2.1) (0.5) 17.7 Core Capital (%) 6.4 7.5 - - 5.8 Tier 1 Capital 17.6 9.5 (2.1) (0.5) 24.5 Tier 1 Capital (%) 8.1 10.9 - -
Slide 24: Summary of Financial Impact and Value Creation
Summary of Financial Impact and Value Creation ¦Annual synergies of Eur 560mn incremental earnings before tax by ’07 U Eur 110mn in revenues U Eur 450mn in costs ¦Share buy back of up to 4% of Santander existing share capital... ¦...and continued focus on disposal of Abbey investment portfolio ¦Expe
Slide 25: Table of Contents
Table of Contents Q The Transaction Q Positioning of the New Group Q The "Abbey Opportunity" Q Value Creation and Financial Impact Q Next Steps 26
Slide 26: Estimated Timetable
Estimated Timetable ’04 Announcement of Transaction 26 July Santander and Abbey interim results September Scheme documents posted to Abbey shareholders Late September Santander shareholder EGM October Abbey shareholder EGM Late October Final UK court hearing to approve Scheme of Arrangement By Year
Slide 27: Roadshow Schedule
Roadshow Schedule Team One Team Two Edinburgh Boston Amsterdam West Coast New York London Frankfurt Paris Munich Zurich Milan Madrid Lisbon Announcement: Announcement: Mon 26 July Mon 26 July = London (UK) - p.m. Tue 27 July = London (UK) Tue 27 July = Frankfurt (Germany) Wed 28 July = London (UK) W
Slide 28: Investor Relations
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 20 – 34 91 259 65 15 – 34 91 259 65 17 – 34 91 259 65 18 Fax: 34 91 257 02 45 e-mail: investor@gruposantander.com www.gruposantander.com SIGNATURE Pu
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