CLS GroupMeeting

Joseph De Feo

CEO, CLS Group

President & CEO, CLS Bank International

3 October 2003

Istanbul

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CLS Bank: a unique achievement

First global banking settlement system

Unprecedented co-operation across the industry

Creating a global industry standard

67 shareholders, 27 vendors, eleven central banks

Major business & technical achievement

Extends finality of domestic RTGS settlement globally

Growing number of providers of third party services

Level playing field – target of one price for all

3

AustraliaAustralia - Australia & New Zealand Banking Group * Commonwealth Bank of Australia * - Australia & New Zealand Banking Group * Commonwealth Bank of Australia * National Australia Bank * Westpac Banking Corporation *National Australia Bank * Westpac Banking Corporation * BelgiumBelgium-- Fortis Bank * KBC Fortis Bank * KBC Bank * Bank * CanadaCanada - - Bank of Montreal * The Bank of Nova Scotia * CIBC * Royal Bank of Bank of Montreal * The Bank of Nova Scotia * CIBC * Royal Bank of Canada * The Toronto-Dominion Bank *Canada * The Toronto-Dominion Bank * DenmarkDenmark - Danske Bank * Nordea - Danske Bank * Nordea * * FranceFrance - BNP - BNP Paribas * Caisse Nationale De Credit Agricole * Credit Lyonnais * Société Générale Paribas * Caisse Nationale De Credit Agricole * Credit Lyonnais * Société Générale * * GermanyGermany - Bayerische Landesbank * Commerzbank * Deutsche Bank * DZ Bank * - Bayerische Landesbank * Commerzbank * Deutsche Bank * DZ Bank * Dresdner Bank * Hypo Vereinsbank * Westdeutsche Landesbank *Dresdner Bank * Hypo Vereinsbank * Westdeutsche Landesbank * ItalyItaly – Banca Intesa * – Banca Intesa * UniCredito *UniCredito * JapanJapan - The Bank of Tokyo-Mitsubishi, Ltd * - The Bank of Tokyo-Mitsubishi, Ltd * Mizuho Corporate BankMizuho Corporate Bank * * Norinchukin Bank * Sumitomo Mitsui Banking Corporation * The Sumitomo Trust & Norinchukin Bank * Sumitomo Mitsui Banking Corporation * The Sumitomo Trust & Banking Co., Ltd. * UFJ Bank *Banking Co., Ltd. * UFJ Bank * LuxembourgLuxembourg – Dexia Banque Internationale a Luxembourg – Dexia Banque Internationale a Luxembourg ** NetherlandsNetherlands - ABN AMRO Bank * ING Bank * Rabobank Nederland *- ABN AMRO Bank * ING Bank * Rabobank Nederland * NorwayNorway - Den - Den norske Bank *norske Bank *SingaporeSingapore - - Development Bank Of Singapore * Oversea-Chinese Banking Development Bank Of Singapore * Oversea-Chinese Banking Corporation * United Overseas Bank * Corporation * United Overseas Bank * SpainSpain - BBVA * Banco Popular Espanol * Banco - BBVA * Banco Popular Espanol * Banco Santander Central Hispano*Santander Central Hispano* SwedenSweden - Skandinaviska Enskilda Banken * Svenska - Skandinaviska Enskilda Banken * Svenska Handelsbanken *Handelsbanken * SwitzerlandSwitzerland - - Credit Suisse * UBS * Zurcher Kantonalbank * Credit Suisse * UBS * Zurcher Kantonalbank * United United KingdomKingdom - Barclays Bank * HSBC Holdings * Royal Bank of Scotland * Standard Chartered - Barclays Bank * HSBC Holdings * Royal Bank of Scotland * Standard Chartered Bank *Bank * United StatesUnited States - American International Group * Bank of America * The Bank of - American International Group * Bank of America * The Bank of New York * Bank One * Bear Stearns Securities * Citibank * The Goldman Sachs Group * New York * Bank One * Bear Stearns Securities * Citibank * The Goldman Sachs Group * JPMorgan Chase * Lehman Brothers * Mellon Bank * Merrill Lynch * Morgan Stanley & Co. * JPMorgan Chase * Lehman Brothers * Mellon Bank * Merrill Lynch * Morgan Stanley & Co. * Northern Trust Corporation * State Street Bank and Trust Co.Northern Trust Corporation * State Street Bank and Trust Co.

CLS Shareholders

4

CLS has changed market practice

1 day funding

Normal - 2 day risk

Historical information

Possible same day settlement

Normal - 2 day contract

CLS eliminates Settlement risk (temporal risk)

Real-time information

Intraday - Timed payments

Extends domestic settlement finality

globally

5

CLS Bank is unique

Bankers’ Bank for FX Settlement

Corporate structure and governance model

Legal governance and regulation

Real-time links to Central Banks

6

CLS now

Settling over 80,000 sides a day, around $1

trillion value

Over 80 Third party customers

of Member banks

54 banks settling live transactions in 11 currencies

27 Registered Vendors using

CLS brand

14 million sides settled in

1 year with a gross value of

$160 trillion

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Moving 20 Day Average of Volume

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,0007-O

ct

17-O

ct

29-O

ct

8-N

ov

20-N

ov

2-D

ec

12-D

ec

24-D

ec

7-J

an

17-J

an

29-J

an

10-F

eb

20-F

eb

4-M

ar

14-M

ar

26-M

ar

7-A

pr

17-A

pr

29-A

pr

9-M

ay

21-M

ay

2-J

un

12-J

un

24-J

un

4-J

ul

16-J

ul

28-J

ul

7-A

ug

19-A

ug

29-A

ug

10-S

ep

Average of 20 days prior to

Sid

es S

ett

led

Average including Split Sides Average pre Split

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CLS Bank values & Net Funding

Average Daily Value

0

200

400

600

800

1000

1200

USD

billi

ons

0

24

68

10

1214

1618

20

Perc

enta

ge N

et F

undi

ng

Requ

irem

ent

Value Net Funding %

9

CLS Market Potential (Sides per day)

Intra-Shareholder Transactions

100

Financial Institutions as 3rd Party

260

Other Currencies 290

Matching Field for Custody350

500

Other 3rd Party

- Future potential

- 2004 plans

- Very early days

- Good progress

Planned CLS Market Share after 5 Years

20%

50%

50%

90%

10

CLS Benefits

Major Reduction in Intra-Day Credit

Usage

Multilateral NettingBenefit > 90%

Real Time Information on Settlement and Funds Flows

Improved Funds Flow and

Availability

Consistent Legal Framework

OperationalResilience & Reduction of

Operational Risk

Business Opportunities –

Increased trading, Nostro Services &

Third Party Services

STP

Settlement Risk Elimination

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Additional benefits for Members

In / Out swaps

Information delivery / control

Enhanced credit profile

Participation in setting future direction:Strategy, Rules, Prioritisation of product

development & market development

plus

Industry leadership & transformation

Involvement in CLS Group Governance

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Opportunities for new Settlement Members Industry transformation

– Settlement finality

– Leadership role in local & global market

– Board & working group participation

– Access to I/O Swap to further improve currency cash management

– Access to Member experience and knowledge base

– Settlement Member web site

Risk & Operational Benefits– Risk reduction

– Improved cash management

– Increased trading revenues

– Improved operational efficiency and cost reduction

– Real time information

13

Revenue Opportunities

Increased Trading

Nostro Services for other CLS participating banks

Potential third party service revenues

Improved cash management

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Cost reduction

Reduced payment expense (MT202)

– Payment processing

– SWIFT costs

– Reconciliation costs

Potential elimination of confirmations

– Nine Members have eliminated confirmations

100% settlement success

– Reduced error correction expense

STP benefits

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CLS Benefits – what our members say

Post-Settlement Reporting

Pre-Settlement Information

Eliminates Settlement Risk

Reduces error ratesReduces error rates

Reduction or elimination of Reduction or elimination of credit (settlement) limitscredit (settlement) limits

Source: TowerGroupSource: TowerGroup

Increased tradingIncreased trading

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New products and services – short term

1.14 Application and infrastructure conversion - achieved1.15 Currency expansion, NKR, DKR, SEK and SGD – now live1.16 Matching field for Custody & CLS capacity up-grade

2003 Up-grades

2003/04 plan to add five and four new shareholders respectively.

HK and New Zealand dollar, Korean won

Further Currencies

New Shareholders

SSI Database

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Future New Product Plans

Global Liquidity Management

Currency / Member Expansion

Currency/Member Expansion New "member" category for Central Banks Capabilities for non-CLS currencies

STP for FX e-platforms links Enhanced STP efficiencies SSIs database/directory 

Additional Settlement Sessions In/In Swaps High value liquidity payments

Information Services Identify products and services consequent to the significant data, historical and real time, available to CLS

Global Liquidity Management

Category

Category Product Proposals

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CLS tomorrow

New currencies

New products and services

New shareholders

Custody enhancement

Leverage the infrastructure

“To make CLS Bank the premier To make CLS Bank the premier means by which financial institutions means by which financial institutions

settle foreign exchange settle foreign exchange”

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