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Investment Management Services
A focused European player
Investor Day2002
Marc HOFFMANNHead of Investment Management Services
Chairman of the Management Board of Dexia BIL
2
Investor Day2002
! "1. Private Banking
2. Asset Management
3. Dexia Fund Services
4. Dexia Securities
AGENDA
3
Investor Day2002
Private Banking activities
! Dexia has private banking activities in two types of markets
! Onshore markets
! AuM 2001: 9 Bn €
! 7 countries (Belgium, Spain, France, The Netherlands,
Italy, Denmark, UK)
! Offshore markets
! AuM 2001: 29 Bn €
! 5 countries (Luxembourg, Switzerland, Monaco, Jersey, Singapore)
! Growth expected by 2006 (at 2001 constant scope):
! + 10 % p.a. in AuM
! Income stability as a result of the assumed clients’ more conservative attitude in terms of investments
! The specificities of the two types of markets we operate in leads us to conduct distinct development strategies
19%
81%
Onshore Offshore
4
Investor Day2002
Onshore Private Banking strategy
Onshore markets typology
Competitive advantage for domestic players with large network
Niche players
Affluent Very HNWIHNWI
Network-based strategy Upscale strategy
5
Investor Day2002
A focused onshore Private Banking strategy
Ely Fund Managers
Dexia Bank NederlandDexia Banque Privée France
Iberagentes Popular Banca Privada
Dexia Private Banking Belgium
Affluent Very HNWIHNWI
A network-based strategy Upscale strategy
6
Investor Day2002
! New alliance with Banco Popular: Iberagentes Popular Banca Privada
! Shareholders
before the new alliance! Banco Popular: 25 %
! Dexia: 25 %
! 2 founders: 25 % each
new alliance 60 %
40 %
Market positioning of onshore entitiesSpain: Iberagentes Popular Banca Privada
Belgium Spain France Netherlands UK
Affluent Very HNWIHNWI
A network-based strategy Upscale strategy
7
Investor Day2002
Key success factors of IPBP
A clear goal
Become third Spanish Private Bank by 2004
A strong commercial coverage
Client acquisition
SEVILLA
177
248 30 285
63
232
36
BILBAO
PAMPLONA
BARCELONAZARAGOZA
VALENCIA
GANDIA
MADRID (2 DLG)
LA CORUÑA
VALLADOLID
MALAGA
MURCIAALICANTE
PALMA DEMALLORCA
TENERIFE
Current branches New branches
! Own network
! Client transfers from Banco Popular’s retail network
Target AuM (Bn €)
1,32,5
4,4
6,4
2001 2002E 2003E 2004E
CAGR: 69 %
2004 Market share: 6.6 %
8
Investor Day2002
Positive outlook for offshore banking markets
!Persisting market attractiveness despite regulatory pressures
!Growth expectations more stable than onshore markets
!Margins remain higher
!No need of an extended network, resulting in lower operating expenses
!Market concentrated in a limited number of financial centers
12 .5 %
8 .9 %6 .5 %
8 .5 %
Ons ho re Offs ho re
Growth expectationsmade in 2000
Growth expectationsmade in 2002
30%
70%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
UK dependencies15%
Luxembourg10%
Switzerland30%
US dependencies10%
HK/Singapore10%
Other (mainly Caribbean)
25%
onshore
offshore
Marché HNWI
Source: Flemings Research, UBS Warburg, Mc Kinsey, Société Générale
9
Investor Day2002
Offshore Private Banking for Dexia
! Offshore contribution remains predominant for Dexia Private Banking
! Luxembourg has developed and keeps an excellent profitability
! Increase in number of clients
! Strong resistance to worsening environment
! Very good productivity
1999 2001
# clients Average AuM (Bn€)
14 1517 18
2022 23
1995 1996 1997 1998 1999 2000 2001
67%
19%
14%
Onshore
NonLuxembourgOffshoreLuxembourg
AuM 2001
51%
26%
23%
Revenues 2001
59% 58%50% 48% 48% 49% 54% 50% 47% 45% 45% 44%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
C/I ratio
+1.4%
Non Luxembourg offshore:Switzerland, Monaco, Jersey, Singapore
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Investor Day2002
! The Swiss market is more and more attractive for a number of players
! Today, the market believes in Swiss Private Banking’s perennity
! Switzerland is the main offshore private banking center
! Switzerland concentrates strong brands and upscale know-how
! Dexia Banque Privée Suisse
! AuM 2001: 3 Bn€
! PNB 2001: 47 M€
The Swiss market
11
Investor Day2002
Conclusion: Private Banking strategy
Our acquisition strategy is today leveraged either through
! the potential of a large domestic retail network
or
! a niche specialisation in upscale private banking
A Focused European Private Banking Player
ONSHORE OFFSHORE
! Our offshore banking activities are most efficient
! Offshore private banking is and will probably remain predominant in our business mix
12
Investor Day2002
(M€) 2001 2006 CAGR 01-06
Net banking income 468 632 6%
Costs -335 -391 3%
Gross operating income 133 241 13%
Net income 75 168 18%
C/I 71.6% 61.9%
Assets under management (Bn€)
38 61 10%
Private Banking*2006 projections
! Steady growth of Gross Operating Income: 13 % CAGR
! Net banking income grow at a slower pace than AuM due to prudent assumption of clients more conservative investment attitude
! Cost control: improvement of the C/I ratio of 10 points
! Net income growth forecast of 18% p.a. over the period
* excluding Legio Lease
13
Investor Day2002
! "
1. Private Banking
2. Asset Management
3. Dexia Fund Services
4. Dexia Securities
AGENDA
14
Investor Day2002
Dexia AM: a production entity servicing all the Group’s activities
! Dexia AM services the distribution networks of all Dexia business lines
! Dexia AM is also developing autonomously:
! Institutional mandates
! Fund distribution through third-party distribution networks
Dexia Asset Management
Fund Administration
Private Banking
Retail Banking
InsuranceFSA business
Public Finance clientele
Third-party networks
Institutional clients
15
Investor Day2002
Expected growth in AuM 2002-2006
15 10
28
19
31
41
AuM 12/1996
Organicgrowth
Marketeffect
Externalgrowth
AuM 12/2001
Organicgrowth
Marketeffect
AuM 12/2006
84
143
(Bn €)
16
Investor Day2002
Product range
! Dexia AM is present in all asset classes and is in line with the geographical reach of Dexia in Europe
! Good and stable mix of asset classes
! All asset classes have positive contribution to P&L
Global Balanced25%
Bond Funds19%
Equity Funds23%
Alternative & Structured Funds
14%Money Market Funds
17%
Sustainable Funds2%
! "Captive" private & retail distribution network is a competitive advantage
! Structure of AuM
! 39 % Institutional
! 61 % Retail
17
Investor Day2002
C/I ratio
0.31 0.23
00.20.40.60.811.2
Gross operating income / AuM (%)
0.29 0.34
0 0.1 0.2 0.3 0.4
Key ratios show that Dexia AM is well positioned compared to peers
Total revenues / AuM (%)
0.42 0.44
0.25 0.35 0.45 0.55 0.65
Peers:SGAM, BNP Paribas, UBS AM, Credit Suisse AM, Vontobel, Sarasin, Unigestion, Axa AM, Julius Baër, Deutsche Bank, Dresdner Bank, Commerzbank, ING, ABN Amro, KBC, AMVESCAP, Schroders, Edinburg Fund Mngrs, Rathbones, Fideuram
Total costs / AuM (%)
0.100.13
00.10.20.30.40.50.6
Peers worst
Peers average
Peers best
Dexia AM 2002
Dexia AM 2005
18
Investor Day2002
World playersWorld players
• Operate in all three zones
• Presence in retail,institutional and pension fund markets
• Comprehensive range ofservices
• Consider asset managementas global business
UBS, Groupe AXA,Merrill Lynch
Dominant US players,present in Asia
and Europe
Dominant US players,present in Asia
and Europe
• Operate in all three zones, butlimited presence outside US
• Presence in retail, institutional and US pension fund markets
• Regional business but aiming to be globally competitive
Fidelity,State Street Global Advisors,Vanguard
Public orregional players
Public orregional players
• Strong presence inlocal market
• Expertise in certainareas of asset management
• Seeking to develop geographically
• Manage business as national group
Nippon Life, KBC
Dominant European players present in
Asia or / and the USA
Dominant European players present in
Asia or / and the USA
• Operates in other zones, butlimited presence outside Europe
• Strong presence in retail markets and many institutional mandates in different Europe countries
• Regional business with a global reach reinforcing position in Europe
Dexia Asset Management,CS Asset ManagementFortis Investment Management
Dexia Asset Management in its universe
19
Investor Day2002
(M€) 2001 2006 CAGR 01-06
Net banking income 246 394 10%
Costs -132 -154 3%
Operating income 114 240 16%
Net income 84 172 15%
C/I 53.7% 39.1%
Assets under management (Bn€)
84 143 11%
Asset Management2006 projections
! Steady growth of AuM: 11% CAGR
! Group networks
! Autonomous growth
! Costs under control resulting in an improvement of the C/I ratio of 14 points
! Net income growth forecast of 15 % p.a. over the period
20
Investor Day2002
! "
1. Private Banking
2. Asset Management
3. Dexia Fund Services
4. Dexia Securities
AGENDA
21
Investor Day2002
Market Fundamentals
! Macro economic factors
! Growing aging population in developed countries needing to prepare for retirement
! Private pension plans growth
! Industry trends
! Consolidation trend in the industry, reflected by change in strategy for various players, resulting in strategic opportunities
! Growing cross-border distribution of financial products
! Growing outsourcing trend for asset managers
! Implications for Dexia Fund Services
! Strong potential for organic growth both in Luxembourg and at international level
! Strategic opportunities for Dexia to come out as a winner of the global industry change
22
Investor Day2002
Dexia Fund ServicesA strong growth in total net assets
both in Luxembourg and at international level
126,000
170,000
196,000207,000
TN
A (B
n€)
1999 2000 2001 03/2002
15,301
25,137
35,838
62,366
TN
A (B
n€)
1999 2000 2001 03/2002
Luxembourg Other entities
CAGR + 25%CAGR + 87%
23
Investor Day2002
A leading market position
! Market leader in Luxembourg for third-party administration
! Expected market growth in Luxembourg: 18 % p.a. in terms of new money
Market share (%)
Market position
Market share(%)
Market position
Number of funds Total assets
Administration 14.9 2 19.7 1
Transfer Agent 30.6 1 47.3 1
Our objective: remain leader in Luxembourg
Source: Fitzrovia 12/2001
Custody 13.9 1 12.8 3
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Investor Day2002
A strong international growth
A steady and profitable internationalisation
11%
2%2%
0%
8%
17%60%
10%
2% 1%
9%
17%61%
10%
1%
4%3%
82%
Custody Funds Administration
Transfer Agent
Luxembourg Dublin France Belgium Singapore Switzerland Spain
Geographical asset split as of 31/3/2002
18 %
13 %
Transfer Agent
39 %40 %31/03/2002
19 %23 %31/12/2000
AdministrationCustodyNon Luxembourg activity (% of total assets)
25
Investor Day2002
International strategy: go where the market growth is
! DFS Dublin
! Established in 1997 (greenfield) to follow the move of money market funds from Luxembourg to Dublin
! Today one of the major service provider in Dublin
! Retained by the largest fund groups with European retail distribution strategy
! Was profitable at the end of the second year of activity
! DFS Switzerland
! Start in January 2002 (greenfield)
! Will be break-even at the end of year 1
! Comprehensive service offering: custody, accounting, transfer agent, universal ordering
! Objective: 5 % to 7 % market share acquisition by 2004
! DFS Italy
! Established in 2001 (greenfield) following the request of a large Italian fund group
! Large market potential
! Outsourcing solutions not yet in the trend but clearly identified by asset managers
! DFS Hong Kong
! Butterfield operations acquired in June 2002 to consolidate our presence in Asia, where we serve a global demand
26
Investor Day2002
•Large volumes with low margin•Need to grow in “pure conservation” to face huge IT investments
•Low quality •Add side services to increase margins
Our strategic positioningThere are currently 3 “Business Models”
Industry giants
•Volumes limited to domestic market•Low margins•Unstable strategy•Globaly low returns
•“Securities processing” is a component of the business system, not the basis
•Higher margins •High quality of service•Integrated services•High returns
Followers
Specialists
Volumes
Chase
SSB
Dexia
Pictet
Bony
CAI BNP P
SG
CDC
Added value
PFPC
Industry target positioning
27
Investor Day2002
2 strategic options for Dexia Fund Services
! Pursuit of a strong organic growth
! Seize alliance opportunity to foster growth
Volumes
Chase
SSB
Dexia
Pictet
Bony
CAI BNP P
SG
CDC
Added value
Industry target positioningPFPC
28
Investor Day2002
(M€) 2001 2006 CAGR 01-06
Net banking income 182 347 14%
Costs -103 -163 10%
Operating income 79 184 18%
Net income 53 131 20%
C/I 57% 47%
Assets in custody (Bn€)
99.7 172.9 12%
# of NAV's in administration
220,000 406,000 13%
# of transactions in T.A. (M)
4.6 8.4 14%
Dexia Fund Services2006 projections
! Steady growth of net banking income: 14% CAGR
! Volumes grow faster than market
! Margins grow with new value added services
! Costs under control resulting in an improvement of the C/I ratio of 10 points
! Net income growth forecast of 20 % p.a. over the period
29
Investor Day2002
! "
1. Private Banking
2. Asset Management
3. Dexia Fund Services
4. Dexia Securities
AGENDA
30
Investor Day2002
Dexia Securities is a multi-local specialist servicing both Dexia and external clients
Dexia Crediop
DexiaSecurities Espana
Dexia BIL
Dexia Securities
Belgium
DexiaSecurities
France
Dexia Bank Nederland
Internal
Group Asset Management companies
Research and Sales & Trading Services
External
Institutional investors
-Insurers
-Pension funds
-Mutual funds
Professional counterparties
Corporate clients
Research, Sales & Trading and Corporate Finance Services
“Support business”
31
Investor Day2002
Growth expected over the next 5 years
! We expect market capitalization to grow at an annual rate of 8.5 % over the period
! Annual market turnover equal to 1, a fairly conservative assumption
! Dexia Securities will focus on niches:
! strong expertise in local stocks (small & large) as well as a selected number of pan-European small & mid caps stocks, such as properties
! expanding activities on listed derivatives which exhibited strong resilience in the past months compared to cash markets
! such niches are prone to cross-selling activities in corporate finance areas, where Dexia maintains strong relationships
Market
Niche player
32
Investor Day2002
(M€) 2001 2006 CAGR 01-06
Net banking income 136 182 6%
Costs -96 -109 3%
Operating income 40 73 13%
Net income 32 46 8%
C/I 70.6% 59.9%
Dexia Securities2006 projections
! Expected revenue growth: 6 % p.a.
! Costs under control resulting in
!13 % growth in Operating Income
!10.7 points improvement of C/I ratio
33
Investor Day2002
Outlook 2001 –2006 Income statement of the business line*
-1- 51 %-40Cost of risks
767+ 14 %402Operating income
58 %51 %ROEE
931+ 11 %542Allocated equity
53 %63 %Cost / Income ratio
529+ 14 %272Net income
-858+ 2 %-765Costs
00Insurance
1,139+ 7 %803Net commissions & other income
487+ 4 %404Net interest income & related
1,626+ 6 %1,207Revenues
2006CAGR2001(M€)
* Excluding exceptional items
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