Dexia Holding SA · EURONEXT:DEXB
Dexia Holding SA — Investor Day (September 2006)
50 slides from Dexia Holding SA's investor day presentation, Sep 26, 2006
Slide 1: Creating Strategic Value: Moving Forward into the Next 10 Years
Creating Strategic Value Moving Forward into the Next 10 Years Public & Project Finance and Credit Enhancement Treasury & Financial Markets Bruno Deletré - Member of the Executive Committee, Head of PPFCE Robert P. Cochran - CEO Financial Security Assurance Paris, September 26th 2006 Alain Delouis -
Slide 2: Disclaimer
Disclaimer This presentation outlines the main findings and conclusions of the strategic review conducted during the first half of 2006. It includes forward-looking statements and assumptions related to the possible evolutions of business environment in the next decade and beyond. By their very natu
Slide 3: Public & Project Finance and Credit Enhancement
Creating Strategic Value Moving Forward into the Next 10 Years Public & Project Finance and Credit Enhancement Paris, September 26th 2006
Slide 4: Public Finance: Strong and Steady Growth in Earnings
Public Finance: Strong and Steady Growth in Earnings Net Net Income Income (1) (1) EUR M .0% + 14 Belgium + France .5 % 1,008 R + 12 Other (mainly Europe) CAG 902 884 790 724 634 21% 564 America (Dexia) 8% 46% 25% 2001 2002 2003 2004 2004 2005 H1 2006 America (FSA) Dexia GAAP EU GAAP (2) Total LT Ba
Slide 5: Agenda
Agenda Dexia's key strengths for a promising and large market 3 main drivers to fulfill our ambition Client centric approach Geographical expansion Client diversification Taking advantage of PPP / Infrastructure development opportunities Building on synergies: A unique positioning in the market FSA’
Slide 6: M6 Transaction in Hungary
M6 Transaction in Hungary Unique Unique combination combination of of know-how know-how within within Dexia Dexia to to efficiently efficiently meet meet clients’ clients’ expectations expectations Refinancing of 58 kilometers of new highway south of Budapest Bond underwriting Project finance & exte
Slide 7: A Large Market with Good Long-Term Visibility and Geographic Diversity
A Large Market with Good Long-Term Visibility and Geographic Diversity Local Local debt debt market market 2005 2005 -- 2015 2015 -- 2025 2025 (USD (USD Bn) Bn) Increasing population and GDP Ageing population/ New demand Decentralization Increasing infrastructure needs Total market 2005 = USD 5,000
Slide 8: Competitive Edges of Dexia's Successful Business Model
Competitive Edges of Dexia’s Successful Business Model Commercial franchise AA Rating Long term financing Basel II Low Probability of Default Low Loss Given Default 8
Slide 9: Ambition: Anchor and Develop Worldwide Leadership
Ambition: Anchor and Develop Worldwide Leadership Innovation Geographic expansion Product diversification Broadening client’s base A client centric approach 9
Slide 10: Innovation: Different Markets but Similar Clients' Needs
Innovation: Different Markets but Similar Clients’ Needs Example: Example: leverage leverage financial financial engineering engineering solutions solutions worldwide worldwide EUR Bn 20 Austria 18 Scandinavia 16 Portugal 14 Spain 12 UK 10 Italy 8 6 Germany 4 Belgium 2 France 0 1995 1996 1997 1998 1
Slide 11: Winning Positioning in the Market
Winning Positioning in the Market Several Several types types of of competitors competitors address address different different customer customer segments segments ► Domestic banks Large clients Investment banks, Depfa Dexia worldwide Dexia France & Belgium presence Public Institutions presence Midd
Slide 12: Geographical Expansion: Strong Development since Early 90's
Geographical Expansion: Strong Development since Early 90’s 1990: US 1992: UK / Austria 1995: Germany 1996: Portugal / Scandinavia 1997: Italy 1998: Ireland / Spain 2000: FSA / Slovakia 2001: Netherlands / Israel 2004: Australia / Poland 2005: Mexico / Canada / Romania / Bulgaria / Czech Republic 20
Slide 13: Geographic Expansion: A Process Underway
Geographic Expansion: A Process Underway Central and Eastern Europe Partnership with Austrian Bank (KA) Outstanding Outstanding (June (June 30, 30, 2006): 2006): Hub & Spokes model EUR EUR 4.6 4.6 Bn Bn Strong production Canada Greenfield operations Outstanding Outstanding (June (June 30, 30, 2006):
Slide 14: Strong Potential of Broadening Clients Scope
Strong Potential of Broadening Clients Scope Public Utilities (Fr, Bel, Ger) Social Not for Housing profit Potential growth (Fr, Bel, UK) (Fr, Bel) from new clients, Local in line with Dexia’s Authorities underwriting criteria (Low PD, Low LGD / Basel II) Education Healthcare (It, US) (Fr, Bel, It,
Slide 15: A Movement Already Well Engaged in France & Belgium
A Movement Already Well Engaged in France & Belgium Long-term Long-termcommitments commitments in in France France && Belgium Belgium(EUR (EURBn) Bn) CAGR 2001-2005 22 +11.2% 19 14 15 17 +1.8% 58 59 59 61 62 2001 2002 2003 2004 2005 Local Authorities Other Local Players 15
Slide 16: A Clear Strategic Focus and Timing
A Clear Strategic Focus and Timing Historic markets: Belgium, France • Keep market share • Develop innovation and financial engineering • Diversify products on core clients • Continue to broaden scope of clients Growth markets: Rest of EU, US • Gain market share / grow volume rapidly • Develop innov
Slide 17: Taking Advantage of PPP / Infrastructure Development Opportunities
Taking Advantage of PPP / Infrastructure Development Opportunities Dexia active in PPP Dexia targeting development in PPP Mature market UK Developing markets Italy Germany France Portugal Spain Netherl. Australia Canada Japan Ireland Starting markets Denmark Austria Central Europe Belgium Luxemb. US
Slide 18: Project Finance: Business Focuses Deliberately on Specific Sectors
Project Finance: Business Focuses Deliberately on Specific Sectors within Current Risk Profile North Developing Europe Australia America economies Transport Accommodation PFI Infrastructure Environment & water Telecom Thermal power Energy Renewable / Wind-farms Oil & Gas M ining Refining & petrochem
Slide 19: Remarkable Transactions Around the World in PPP / Project Finance
Remarkable Transactions Around the World in PPP / Project Finance GBP 212 M GBP 2,370 M EUR 11 M CAD 1,015 M Stobhill & Victoria ABP Acquisition financing Strazny Vrch Wind farm Golden Ears Bridge PFI Hospitals EUR 431 M M 6 Duna Autopalya EUR 250 M USD 190 M Antwerp Law Courts EUR 65 M Invenergy Wi
Slide 20: FSA in Infrastructure Finance: A Developing Business
FSA in Infrastructure Finance: A Developing Business GBP 515 M GBP 635 M London Underground Barts and Royal Hospitals EUR 431 M GBP 635 M M 6 Highway West-Link Highway USD 1,400 M EUR 325 M EUR 460 M Chicago Skyway Feria Valencia A-28 Highway Convention Ctr EUR 250 M Acquedotta EUR 600 M Pugliese-Wa
Slide 21: Structured Products/Derivatives: a Strong Reactivity & Innovation for Local Authorities
Structured Products/Derivatives: a Strong Reactivity & Innovation for Local Authorities Number Number of of structured structured financial financial solutions solutions offered offered to to the the clients clients 167 136 97 54 45 48 43 39 29 20 12 3 1995 1996 1997 1998 1999 2000 2001 2002 2003 20
Slide 22: Bond Origination & Structuring: Developing a New Franchise
Bond Origination & Structuring: Developing a New Franchise Mandates on various transactions Commercial franchise Origination / Structuring / Distribution Examples Examples of of transactions transactions 22
Slide 23: Building on a Unique Positioning in the Market to Foster New Developments
Building on a Unique Positioning in the Market to Foster New Developments Dexia provides Public Sector Clients with financing solutions through which they can benefit from market opportunities Financial Financial Markets Markets Public Public Sector Sector Clients Clients Investors Investors Making
Slide 24: Corporate Banking: A Complementary Business to Dexia's Retail Franchise
Corporate Banking: A Complementary Business to Dexia’s Retail Franchise Strong expertise in Corporate Banking and Corporate Finance in Belgium and Luxembourg, notably for clients linked to the Utilities / Project franchise Initial Public Offering Senior Secured Facilities Bond Issue Acquisition for
Slide 25: FSA Key Strengths and Philosophy Perfectly Fits and Complements Dexia's Public Finance Franchise
FSA Key Strengths and Philosophy Perfectly Fits and Complements Dexia’s Public Finance Franchise Strong strategic fit Dexia and FSA together are the world leader in Public Finance FSA provides Dexia with access to Financial Guaranty space Shared conservative credit culture Investment grade underwrit
Slide 26: FSA Is a Very Strong AAA Company
FSA Is a Very Strong AAA Company Moody’s Moody’s Total Total Capital Capital Ratio Ratio (2) (2) Standard Standard && Poor’s Poor’s Margin Margin of of Safety Safety (1)(1) (Higher (Higher is is Better) Better) 160 % of 160-170% (x) 2,00 “ Depression Hard Capital Losses” + Soft Capital 150-160% cove
Slide 27: While US Markets Have Dominated, FSA Has Dramatic Growth Potential in Non-US Markets
While US Markets Have Dominated, FSA Has Dramatic Growth Potential in Non-US Markets Total Total Net Net Par Par Outstanding: Outstanding: USD USD 362 362 Bn Bn International USD 46 Bn US ABS USD 94 Bn 13% 26% 61% US Municipal USD 222 Bn As of 30 June 2006 27
Slide 28: FSA is a Leader on Each of Its Markets
FSA is a Leader on Each of Its Markets US US Municipal Market (1) Municipal Market (1) US US ABS Market (2) ABS Market (2) International Market (2) International Market (2) XLCA FGIC FGIC FGIC 10% AM BAC 15% 20% 12% 27% Other (3) 7% FSA FSA FSA AM BAC AM BAC 22% 19% 30% 24% 46% MBIA MBIA MBIA 31% 22
Slide 29: US Municipal Market Provides Large and Reliable Opportunity for FSA
US Municipal Market Provides Large and Reliable Opportunity for FSA US US Municipal Municipal Bond Bond Insurance Insurance Penetration Penetration Rate Rate for for Financial Financial Guarantors Guarantors (USD (USDBn) Bn) 408 384 359 360 288 201 180 228 178 191 194 131 Insured 79 90 50% 2000 2001
Slide 30: US Asset-Backed Market: Rapid Growth but Strong Discipline Required
US Asset-Backed Market: Rapid Growth but Strong Discipline Required US US ABS ABS Insured Insured Penetration Penetration Rate Rate for for Financial Financial Guarantors Guarantors (Public (Public and and 144A 144AABS ABSMMarket arket--Par Par Insured) Insured) (1)(1) (USD (USDBn) Bn) 814 637 467 4
Slide 31: International Public Infrastructure Markets Offer High Growth Prospects for FSA
International Public Infrastructure Markets Offer High Growth Prospects for FSA Direct Direct Par Par Originated Originated (USD (USDBn) Bn) 14.9 13.9 11.7 8.1 6.0 4.1 7.2 4.4 FSA 2.2 2.9 3.0 2.5 1.5 2000 2001 2002 2003 2004 2005 H1 2006 Source: Association of Financia l Guaranty Insurers and FSA. F
Slide 32: International Markets: Following the Evolution of Securitization and Infrastructure Finance
International Markets: Following the Evolution of Securitization and Infrastructure Finance London Paris San Francisco Dallas New York Madrid Tokyo Berm uda Mexico City Singapore Sydney 32
Slide 33: Adjusted Book Value Growth Shows Strategic Fit with Dexia
Adjusted Book Value Growth Shows Strategic Fit with Dexia Since the Merger with Dexia, FSA’s ABV Has Grown at an Annualized Rate of 16.1%, BV at 15.9% (1) USD per Share 120 ABV Pre-merger Post-merger 110 100 90 BV 80 USD 76 acqui sition price 70 60 50 40 30 20 12/94 12/95 12/96 12/97 12/98 12/99 12/
Slide 34: 2009 Financial Targets in Public & Project Finance and Credit Enhancement
2009 Financial Targets in Public & Project Finance and Credit Enhancement Underlying net income CAGR 05-09 around 10% Maintain Return On Economic Equity in excess of 20% Increase revenues at a faster rate than costs 34
Slide 35: 5-Year Ambition
5-Year Ambition Effective presence in all developed economies / Global leadership affirmed Contribution of business outside France and Belgium to represent 2/3 of total business line’s earnings (vs. 54% today) 35
Slide 36: Treasury & Financial Markets
Creating Strategic Value Moving Forward into the Next 10 Years Treasury & Financial Markets Paris, September 26th 2006
Slide 37: Mission Statement
Mission Statement Provide high quality «financial market products» to customers of commercial business lines (Public Finance, Retail, Private Banking) Manage Dexia Group / entities balance sheets (liquidity, interest rate, …) Develop own business (with a focus on Capital Markets Intermediation) 37
Slide 38: A Worldwide Network
A Worldwide Network Dublin Brussels London Paris Stockholm Berlin Vienne Seattle Rome New York Tokyo Singapore Tel-Av iv Madrid Luxembourg 415 415 Front Front Office Office employees employees 38
Slide 39: A Very Efficient Organization
A Very Efficient Organization Revenue Revenue per per producer producer (1) (1) Cost Cost per per producer producer (1)(1) x 1,000 EUR x 1,000 EUR 1,331 1,344 1,150 520 1,094 976 506 487 465 466 2003 2004 2003 2004 2005 2003 2004 2003 2004 2005 Peers (2) Dexia Peers (2) Dexia (1) Capital Market acti
Slide 40: TFM Contribution to Dexia Revenues
TFM Contribution to DEXIA Revenues Significant and growing revenue contribution… EUR M 600 487 500 449 400 306 290 300 222 218 200 100 0 2004 (1) 2005 (1) H1 2006 (1) 2004 (1) 2005 (1) H1 2006 (1) TFM own revenues Contribution to revenues (1) Excludin g Turkey of the commercial business lines …With
Slide 41: Key Competitive Edges of Dexia on Financial Markets
Key Competitive Edges of Dexia on Financial Markets Strong know-how on specific classes of assets (Public Finance, ABS, covered bonds, financial institutions, …) Large origination capacities (in terms of volume and sophistication of products) Technology and innovation Size of the Balance-Sheet High
Slide 42: Balance Sheet Management
Balance Sheet Management Increased Dexia Long-term Funding Needs in 2009 Will be achieved through: Development of our AAA vehicles Diversification strategy to use all possible funding sources (private placement, structured issues, retail, public issues,…) AA AA rating rating isis key key 42
Slide 43: TFM+: Implementing New Business Developments
TFM+: Implementing New Business Developments for Boosting Direct and Indirect Revenue Growth Strengthening origination in broad public sector Enhancing structuring/trading capacities for supporting origination and sales force Calibrating sales force in line with origination capacities Developing pro
Slide 44: Strengthening Origination in Broad Public Sector
Strengthening Origination in Broad Public Sector Provide structured solutions for public authorities and related parties by using internal structuring competence to elaborate tailor made products Example: Example: For For the the Madrid Madrid transaction, transaction, Dexia Dexia was was joint join
Slide 45: Enhancing Structuring and Trading Capacities for Supporting Origination and Sales Force
Enhancing Structuring and Trading Capacities for Supporting Origination and Sales Force Enhance warehousing capabilities to support TFM and commercial business lines development in structured interest rate and credit products Examples: Examples: Creation Creation of of innovative innovative products
Slide 46: Calibrating Sales Force in line with Origination Capacities
Calibrating Sales Force in line with Origination Capacities and Developing Profitable Institutional Customer Base Strengthening existing coverage & capturing new markets by leveraging Dexia’s specific expertise The distribution is focused on high value products as well as strategic axes Example: Exa
Slide 47: Distribution Capacity: Broad Base of Institutional Investors
Distribution Capacity: Broad Base of Institutional Investors Breakdown Breakdown by by category category of of investors investors Breakdown Breakdown by by geography geography Others UK 5% Insurance 10% Asset managers 15% 25% companies Italy 28% Benelux 14% Pension funds 15% Spain 4% 20% 10% Irelan
Slide 48: To Implement TFM+, Dexia Invests in Human Resources, IT and Capital
To Implement TFM+, Dexia Invests in Human Resources, IT and Capital TFM will reinforce its skills (number of Front Office employees) 465 415 50 new hires Front Office - Current 2006 Front Office - Target 2008 Convergence to one single IT System 48
Slide 49: TFM Financial Objectives
TFM Financial Objectives Increase revenue base, while maintaining Current high ROEE Stable Cost/Income ratio TFM Net income CAGR 05-09 above 5% Increased revenues for PPFCE and PFS from cooperation with TFM from EUR 315 M in 2005 to EUR 534 M in 2009 (CAGR 14% ) 49
Slide 50: Creating Strategic Value
Creating Strategic Value Moving Forward into the Next 10 Years Paris, September 26th 2006