UNICREDITO ITALIANO Alessandro Profumo - CEO
London - December 19th, 2001
“CREATION OF UCI’s SEGMENT BANKS: RATIONALE, DRIVERS AND VALUE”
2
DISCLAIMER
No representation or warranty, express or implied, is made as to, and no reliance should be placed on the completeness and accuracy of the information and/or news contained in this presentation (the “Document”) and neither UniCredito Italiano S.p.A. (“UniCredit” or “UCI”) nor any company of its Group or any of their respective directors, members, officers, employees or advisers shall have any liability whatsoever (in negligence or otherwise) for any losses claims or damages arising from the errors or omissions or from the use of this Document or its contents or otherwise arising in connection with this Document.
This Document is being supplied to you with the only purpose to inform you on Project S3 and may not be reproduced, described or further distributed, also partially, to any other person or used, in whole or in part for any purpose.
3
Strategic Rationale and Value Drivers of the Project
Structure of the Deal
Value Creation
Conclusions
Agenda
4
PROJECT S3 WILL ALLOW UCI TO MOVE FROM A FEDERAL GEOGRAPHIC TO A SEGMENT-BASED MODEL ...
… to a federation “by segment” ...
Private Bank
Corporate Bank
Retail Bank
… WITH CRITICAL MASS AND GROWTH OPPORTUNITIES
From a federation “by geography”…
Retail Corporate
5
Retail Bank
Private Bank
Corporate Bank
Foreign Banks
“New” Italian Banking Wholesale Banking New Initiatives New Europe Banking
Unbundling Italian commercial banking and creating new, focussed, business units in all key market segments
Improving accountability and market recognition of the various business lines
Opening new growth opportunities for each business, facilitating ad hoc “strategic moves” per business line (e.g. on a dimensional and a geographical scale)
... DOING A FURTHER STEP TOWARDS GROUP’s VISION TO BECOME A EUROPEAN MULTISPECIALIST FINANCIAL GROUP
6
Creating specialists “from scratch” is possible, but requires long time to reach critical mass
Transforming a big incumbent in a specialist is very difficult
THREE LARGE BUSINESS SPECIALISTS WILL CREATE SUSTAINABLE COMPETITIVE ADVANTAGE FOR THE GROUP
Improve Quality of Service
Improve Efficiency
Strengthen Effectiveness
Increase Growth Options
Higher customer satisfaction More comprehensive knowledge of the market (focused
offer of products/services) Increased market share
Management focus and external recognition Time-to-market and increased penetration in specific
geographic areas Higher brand recognition
Strong cost control (no duplications, improved HR mngt.) Improved accountability, capital allocation and risk control
Diversified growth paths (domestic and international) for each bank; potential specific partners by bank
Strategic management of Italian commercial banking as a portfolio of businesses
Create Structural Advantage
7
WHY ACT NOW ?
TODAY WE HAVE ALL THE CONDITIONS TO MAKE THIS STEP ...
INTERNAL FACTORS All main Italian Banks fully
divisionalised and working on the same IT platform
Potential to streamline “holding” structures
Critical mass in all market segments
CUSTOMERS’ NEEDS Demand of dedicated
services at good value for money
Brand and logistics becoming less important than quality of service in customers’ choice
EXTERNAL SCENARIO Incumbent competitors
busy with internal restructuring plans
Lowering of entry barriers for foreign players
New comer specialists focusing on affluent market
Investors’ analysis more and more segment-based
Accountability and higher visibility of each business line
INVESTORS’ NEEDS
Sustainability of performance and growth options
8
... AND CREATE THREE LEADERS IN THEIR RESPECTIVE MARKETS: THE FIRST ITALIAN PRIVATE BANK ...
DISTRIBUTION CHANNEL:
150 branches + direct channels
1,600 employees
750 relationship managers
Based in Turin
PRIVATE BANKING
One single national brand
Focus on consultancy and long term customer relationship built on innovative products and efficient service
Ability to grow market share in high value services and “share of wallet”
KEY DRIVERS
Consolidation of leadership in Italian high net worth individuals segment
Total Financial Assets (Direct + Indirect Deposits)
Total Revenues 500 mln
More than 100,000 private customers (with > 500,000 Euro of financial assets)
Total Loans 1 bn
44 bn
2000 KEY FIGURES (Euro)
9
... THE LEADING BANK IN CORPORATE BUSINESS ...
DISTRIBUTION CHANNEL:
250 branches + direct channels
4,000 employees
~1,300 relationship managers
Based in Verona
CORPORATE BANKING
One single national brand
Total Loans 49 bn
Total Revenues 1.3 bn
80,000 customers (companies with revenues from Euro 1.5 - 2.5 mln up to Euro 250 mln)
Total Deposits 15 bn
2000 KEY FIGURES (Euro)
Broad product offer to cover the full range of customer needs (financial, organisational, operational)
KEY DRIVERS
High quality of credit analysis tools (customer risk measurement, risk-adjusted profitability and capital absorption)
Excellence in customers management supported by advanced IT platform and systematic monitoring of customer satisfaction
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... AND THE LARGEST SINGLE RETAIL BANK IN ITALY
DISTRIBUTION CHANNEL: ~2,800 branches direct channels (self
service, telephone & home banking)
23,000 employees 2,000-2,300 relationship
managers 16,500 commercial
operators
Based in Bologna
RETAIL BANKING
Single “umbrella” brand for products and services + regional brands for distribution
Quick and efficient distribution of innovative products/services specialised by segment:
KEY DRIVERS
MASS MARKET: wide range of products, multi-channel, easy access at a low price
AFFLUENT: dedicated consultancy (asset management, saving plans)
SMALL BUSINESS: cash and credit management tools (branch & on-line channels), dedicated consultancy for family’s savings
6.5 mln customers MASS MARKET (< Euro
75,000) AFFLUENT (from Euro
75,000 to Euro 500,000) SMALL BUSINESS
(Revenues < Euro 1.5 - 2.5 mln)
Total Loans 36 bn
Total Revenues 4 bn
161 bn
2000 KEY FIGURES (Euro)
Total Financial Assets (Direct + Indirect Deposits)
11
S3 IS THE FINAL STEP OF THE STRATEGIC PATH STARTED IN 1995, THAT UCI SUCCESSFULLY MANAGED ...
ORGANISAT.
STRUCTURE
CUSTOMER APPROACH
AND OPERATING STRUCTURE
2 BANKS:
CREDITO ITALIANO AND ROLO BANCA
STEP 1 (1995-1998)
TURNAROUND
Segment-focused front line organisation
Introduction of customer segmentation: retail & corporate
Common EDP service company
&
7 FEDERATED BANKS:
FEDERAL “GEOGRAPHIC” MODEL
STEP 2
(1999-2001)
UCI
Development of finer customer segmentation in each bank: Private, Affluent, Mass Mkt, Small Business, Corporate
From specialised corners in the branches to full network divisionalisation
Single IT platform and centralised back office
3 SEGMENT BANKS:
PRIVATE, CORPORATE, RETAIL
STEP 3
(2002-...)
3 SEGMENT BANKS
Segment-specificbusiness models
Fully integrated operations and logistics
Segment banks as strategic business units
12
PROFITABILITY: PRE-TAX ROE
... AS DEMONSTRATED BY THE GROUP ABILITY TO ENHANCE PROFITABILITY AND EFFICIENCY WHILE CARRYING OUT IMPORTANT CHANGES
Lloyds
1998 1H2001(1)
Abbey National
Bank of Scotland
UCI
Lloyds
UCI
BNP Paribas
Sanpaolo IMI
RANK% RANK%
40.1
29.4
28.0
26.1
1st
2nd
3rd
4th
31.0
30.2
26.8
26.7
1st
2nd
3rd
4th
EFFICIENCY: COST/INCOME RATIO
Abbey National
1998 1H2001
Lloyds
Bank of Scotland
UCI
RANK% RANK%
41.2
49.1
51.6
54.9
1st
2nd
3rd
4thHSBC
Nordea (Merita) 55.3 5th
56.6 6th
Lloyds
Abbey National
RBoS
Barclays
43.8
44.8
48.1
48.3
1st
2nd
3rd
4thHBoS
UCI 55.5 5th
56.2 6th
(1) Annualised
Outstanding profitability and efficiency together with growth:
2nd largest player in New Europe and best performer in Poland (Bank PEKAO)
Global producer in AM (Pioneer Group)
Leader in the domestic market for corporate risk-management products (UBM and CorporateLab) and derivatives for retailers (TradingLab)
Best European Bank for total shareholders’ value creation in the five year period ’95-’00 (Source: FTSE)
RANKING CONSIDERS TOP 20 EUROPEAN BANKS PER MARKET CAP (see annex)
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SUMMING UP ...
We are unbundling Italian commercial banking and creating 3 leading segment banks with critical mass, professional skills and focus in their respective business
Our track record of change management and value creation for shareholders makes us confident in achieving the strategic goals of S3
This change will give us a sustainable competitive advantage, supporting our growth through:
improved quality of service and customer satisfaction higher market share higher profitability
S3 is a key step towards our strategic goal to become a European multispecialist financial player
14
Strategic Rationale and Value Drivers of the Project
Structure of the Deal
Value Creation
Conclusions
Agenda
15
(1) The merger will imply the acquisition of the minorities of such companies; for Rolo, UCI will buy the 49% of C. Carimonte not owned and 38.8% by other Rolo’s minority shareholders
(2) From the merger excluded Banca dell’Umbria and CR Carpi(3) On-going acquisition of 5.442.000 ordinary shares (3.2% of capital) from Caritro Foundation
THE DEAL WILL BE COMPLETED IN ONE YEAR WITH TWO MILESTONES IN JUNE 2002 AND JANUARY 2003
Contribution of banking assets and liabilities to UCI Banca (Former Credit)
UCI
UCI Banca (Former Credit)– Retail banking activities– Corporate banking activities– Private banking activities
FIRST STEP: 1ST JUNE 2002
Merger of 7 companies in UCI
UCI
CRV(99.77%)(1)
CRT(100%)
CSM(100%)
Rolo(18.83%)(1)(2)
CARITRO(96.82%)(1)(3)
CRTS(79.67%)(1)
C. CARIMONTE(51%)(1)
CREDIT (100%)
Merger Perimeter
UCI
Corporate Bank*
Retail Bank*
Private Bank*
SECOND STEP: 1ST JANUARY 2003 Spin-off of Private and Corporate assets
and liabilities from UCI Banca to 2 newly created beneficiaries
UCI
UCI Banca(Retail activities)
Corporate Activities
Private Activities
Final structure
* Nicknames; names still to be defined
16
UCI already owns 40.4% of Rolo, in economic terms, 18.8% directly and 21.6% indirectly through Credit Carimonte
Double merger by incorporation of Rolo and Credit Carimonte into UCI
Share swap merger, with UCI shares to:
Credit Carimonte minority shareholders (Carimonte Holding owning 49.0%)
Rolo other minority shareholders (owning the remaining 38.8%)
Transaction expected to be approved by the respective EGMs scheduled by March-April 2002
Exchange ratio(1) UCI/Credit Carimonte, considered to be fair by UCI BoD 0.68 ex-dividend, reflecting UCI/Rolo exchange ratio(1) of 3.80
Additional market cap for ROLO minorities around Euro 5 bn (final mkt cap ~27 bn)
THE MERGER WITH ROLO IS A KEY STEP OF S3 - UCI BOARD HAS CONSIDERED TO BE FAIR AN EXCHANGE RATIO(1) OF 3.80 EX-DIVIDEND, IN LINE WITH LAST MONTHS RELATIVE MARKET VALUATION(2)
Actual Structure
42.3% 18.8%
3.7
%
Carimonte Holding
Fond. Monte di Bologna e Ravenna
Fond.CR Modena
CreditCarimonte
Rolo
UCI
40.1% 59.9%
49.0% 0.8%
51.0%
Merger Perimeter
Post merger UCI’s current shareholders will be diluted by 18%, with a weight in
the new entity of around 82%
(1) Number of UCI’s share for each Rolo/Credit Carimonte share(2) See Annex for Exchange ratio details
Other investors:RAS 3.9%F. Perugia 3.0%Free float 28.2%
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S3 PROJECT WILL IMPLY A SLIGHT DILUTION OF CURRENT UCI’S MAJOR SHAREHOLDERS
ISSUANCE OF APPROXIMATELY 1.1bn NEW ORDINARY UCI SHARES, MAINLY FOR ROLO MINORITIES ACQUISITION (98% OF TOTAL)
Other61.8%
Fondazione CSM2.8%
Allianz4.9%
Fondazione CRT
14.0%
Fondazione CRV
16.5%
UCI Current Shareholding UCI Post S3(1)
Fond. CRT11.5%
Fond. CRV13.5%
Other60.6%
Carimonte Holding6.9%
Fond. CSM2.3%
Allianz5.2%
(2)
(1) Assuming the issuance of 1.1bn new shares at service of the acquisition of the minorities related to the merger of the seven banks (the merger with Rolo and Credit Carimonte accounting for 98% of total shares to be issued)
(2) 40% owned by Fondazione Bologna and 60% owned by Fondazione Modena
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Strategic Rationale and Value Drivers of the Project
Structure of the Deal
Value Creation
Conclusions
Agenda
19
S3 IMPACT ON UCI GROUP OPERATING PROFITS: TOTAL GROSS SYNERGIES OF EURO 720 MLN IN 2004
2002E 2004E2003E
0
(152)
52
(100)
(59)
RevenuesSynergies
CostSynergies
GrossOne-offCosts
S3 TotalPre-taxI mpact
S3 TotalAfter-taxI mpact
425
720260
460
RevenuesSynergies
CostSynergies
S3 Total Pre-tax Impact
S3 Total After-tax Impact
228
204 (123)
309
182
RevenuesSynergies
CostSynergies
GrossOne-offCosts
S3 TotalPre-taxImpact
S3 TotalAfter-taxImpact
2004 SYNERGIES EXPECTED TO BE EQUAL TO:REVENUES: 4.9% OF 2000A GROUP REVENUESCOSTS: 5.5% OF 2000A GROUP COSTSTOTAL: 15.7% OF 2000A GROUP OPERATING PROFIT
(1)(1)
(1)
Note: the above figures include synergies from Rolo (1) Assuming a 41% tax rate
(Euro mln) (Euro mln) (Euro mln)
Partial offset of one-off charges from disposal of non-core assets (gross impact Euro 80 mln, 51 mln after tax)
Partial offset of one-off charges from disposal of non-core assets (gross impact Euro 70 mln, 45 mln after tax)
20
IN 2004 THE THREE BANKS(1) WILL SHOW EXCELLENT PERFORMANCE THANKS TO THEIR CAPABILITY TO GROW AND TO THE IMPACT OF SYNERGIES
(1) Considering only commercial banking activities(2) Considering only Private, Corporate and Retail P&L figures of the 7 merged banks; allocated capital related to the whole banking business(3) Considering 2004 planned figures for the 3 segment banks without synergies(4) The 3 segment banks will benefit of Euro 650 mln gross synergies; remaining Euro 70 mln (cost synergies only) are related to other Italian Banking business
Corporate2004E
Retail2004E
Private2004E
1,325696 270
48%23% 23%
1,003236287
28.0%6.3% 63.3%
2004E Post S3(4)
Baseline 2004E(3)
7 Banks 2000(2)
2,291
40%
1,526
1,908
45%
1,198
1,318
49%
766
17.9%15.1%12.2%
04E Post S3 / 7 Banks 00
% Change
+74% +20%
+99% +27%
+5.7 p.p. +2.8 p.p.
-5 p.p.
04E Post S3 / Baseline 04E
-9 p.p.
S3 will significantly boost our results compared with 2000A figures, generating additional Euro 328 mln of EVA
Net Income (Euro mln)
Cost/ Income
EVA (Euro mln)
RARORAC
Net Income (Euro mln)
Cost/ Income
EVA (Euro mln)
RARORAC
21
REVENUE SYNERGIES WILL ARISE FROM ALIGNMENT TO BEST PRACTICE AND ROLLOUT OF CURRENT PILOT PROJECTS(1) ON THE LARGER SCALE OF NATION-WIDE SEGMENT BANKS
Main drivers for revenue synergies are, for each segment:
Increased penetration and profitability of existing customers thanks to business specialisation
Acquisition of new clients/ new business opportunities due to a more effective coverage
Figures based on the projection of the results of pilot projects already implemented by Group’s banks
460
105
120
105
70
60
TOTAL
MassMarket
SmallBusiness
Affluent
Corporate
Private
(Euro mln)
Total Retail:
Euro 235 mln
REVENUE SYNERGIES STARTING FROM 2003, ON GOING IN 2004
EXPECTED GROSS REVENUE SYNERGIES IN 2004
(1) See Annex for details
22
IN PRIVATE BANKING REVENUE SYNERGIES ARISE FROM INCREASE OF SHARE OF WALLET, FOCUS ON HIGH VALUE-ADDED SERVICES AND GROWTH IN VOLUMES/CUSTOMERS
Growth EffectSpecialisation Effect
Current Clients Target 2004E
Expected revenue synergies of Euro 60 mln (representing 13.6% of 2001E segment revenues)(1)
Current Average UCI Group
Target 2004E
+9 p.p.
“Share of Wallet”
Expected revenue synergies of Euro 45 mln (representing 10.2% of 2001E segment revenues)(1)
+11%
100,000111,000
42%51%
New Customers
(1) Considering only commercial banking activities
23
IN CORPORATE BANKING REVENUE SYNERGIES ARISE FROM BETTER PRICING AND SELECTIVE GROWTH OF CUSTOMER PORTFOLIO
Growth EffectSpecialisation Effect
Expected revenue synergies of Euro 60 mln (representing 4.0% 2001E segment revenues)(1)
Expected revenue synergies of Euro 60 mln (representing 4.0% of 2001E segment revenues)(1)
Current AverageUCI Group
Target 2004E
Commissions margin
Current AverageUCI Group
Target 2004E
Net interest margin
Current Clients Target 2004E
1.40%1.62% 1.66%
1.75%
+15%+22 b.p.
+9 b.p.
New Customers
80,00092,000
(1) Considering only commercial banking activities
24
SPECIALISATION ON AFFLUENT CLIENTS IS EXPECTED TO GENERATE REVENUE SYNERGIES OF EURO 105 MLN IN 2004 ...
Current Clients Target 2004E
Growth EffectSpecialisation Effect
Current Average Target 2004E
+6 p.p.
Expected revenue synergies of Euro 60 mln (representing 5.3% of 2001E segment revenues)(1)
Expected revenue synergies of Euro 45 mln (representing 4.0% of 2001E segment revenues)(1)
+5%
900,000945,000
65%71%
“Share of Wallet” New Customers
(1) Considering only commercial banking activities
25
Expected revenue synergies of Euro 40 mln (representing 4.3% of 2001E segment revenues)(1)
Current Clients Target 2004E
Expected revenue synergies of Euro 30 mln (representing 3.2% of 2001E segment revenues)(1)
Group "worst"performer
Currentweighted avg.performance
Group "best"performer
Growth EffectSpecialisation Effect
Margin on Total Customer Volumes (Loans+Deposits)
+9%
New Customers
4.1%5.0%
6.2%541,000
580,000
(1) Considering only commercial banking activities
… SMALL BUSINESS IS EXPECTED TO GENERATE TOTAL REVENUE SYNERGIES OF EURO 70 MLN ...
26
Current Average UCI Group
Target 2004E Current Clients Target 2004E
Expected revenue synergies of Euro 48 mln (representing 2.6% of 2001E segment revenues)(1)
… AND THE MASS MARKET EURO 60 MLN
EFFECTIVENESS OF GEOGRAPHIC COVERAGE AND COMMERCIAL ACTIVITIES
Expected revenue synergies of Euro 12 mln (representing 0.6% of 2001E segment revenues)(1)
Specialisation Effect
+5%
Growth Effect
4,810,0005,040,000
Margin on Total Customer Volumes (Loans+Deposits)
New Customers
+10 b.p.
5.0% 5.1%
(1) Considering only commercial banking activities
27
DRIVERSEXPECTED GROSS COSTS SYNERGIES IN 2004
S3 IS ALSO EXPECTED TO POSITIVELY IMPACT THE COST BASE OF THE GROUP STARTING FROM 2002
ADMINISTRATIVE
EXPENSES
Reduction of expenses directly related to headcount
5% efficiency improvement of other indirect costs not directly related to headcount
MANAGEMENT OF PP&E Lower operating expenses, depreciation and other
costs
COMMUNICATION Lower investments for brand recognition,
merchandising, and other communication costs
IT EXPENSES More efficiency due to the unification of operating
and front office IT applications
CENTRALISED
PURCHASES
Earlier implementation of cost excellence project (E-procurement systems) reducing the purchasing price
PERSONNEL Rationalisation mainly from headquarters and
networks, commercial and production
SYNERGIES STARTING IN 2002, ON GOING IN 2004
115
35
260
25
10
40
35
TOTAL
(Euro mln)
28
THE REORGANISATION WILL REQUIRE LIMITED ONE-OFF CHARGES ESTIMATED AT AROUND EURO 275 MLN
ONE-OFF CHARGES
(Euro mln)
ONE-OFF COSTS WILL INCUR FOR APPROXIMATELY EURO 152 MLN IN 2002
AND EURO 123 MLN IN 2003
Charges partially offset by capital gains generated by sale of non-core assets (expected value of Euro 150 mln). Net one-off charges could be Euro 125 mln
27530
20
100
40
75
10
CorporateRestructuring
Redundanciesand Relocation
IT Costs Logistics andIntegration
Process
Training Marketing andAdvertising
TotalRestructuring
Charges
29
CAGR 2000A-2004E
THANKS TO S3, 2004E GROUP NET INCOME WILL GROW FROM EURO 2.2BN TO EURO 3.0BN (+38%), WITH A CAGR OF 21% COMPARED TO 17% EX-S3
2000A 9M2001ANET INCOME (Euro mln)
Corporate Centreof which
– Parent Company– Goodwill
- 399
- 371- 100
2004E
(1) Pro forma figure, calculated on New Europe Banks 2000 Net Income weighted for UCI shareholding
Cost/Income 2004E
Italian Banking Division
(Ex-S3)
14.8%
(9.4%)1,390 2,416
(1,991)1,227 40.4%
(45.3%)
Wholesale Bankingof which
– Investment Banking– Pioneer
224
14876
16.0%
17.3%14.2%
273
156117
494
295199
48.2%
37.8%59.8%
New Europe Banking 147164(1) 318 42.4%
Xelion and Clarima - 38 n.m.- 33 - 1
1,113 21.1%
(11.8%)
1,395Total
(Ex-S3)
3,000
(2,176)
43.8%
(47.7%)
- 447
- 295- 167
- 626
- 437- 220
n.m.
n.m.n.m.
n.m.
n.m.n.m.
18.0%
n.m.
Minorities from S3 - n.m.- 400 n.m.
30
2,176
394
108
425
400
3,000
2004E Stand Alone
Minorities Acquired
Net ExpectedSynergies
2004E After S3
Merger with Rolo and Credit Carimonte S3 Ex-Merger
UCI GROUP 2000A - 2004E: NET INCOME GROWTH AFTER PROJECT S3
S3 WILL SIGNIFICANTLY BOOST UCI GROUP EXPECTED NET INCOME GROWTH
(1) Excluding the extraordinary provisions for 1998 and 1999 related to the effects of Ciampi Law; re-stated net income Euro 1,508 mln
1,395
2000A
Net Income (Euro mln)
(1)
502
323
2,176
31
UCI GROUP 2000A - 2004E EPS GROWTH AND ACCRETION ANALYSIS
EPS (Euro)
EVA (Euro mln)
EPS CAGR ‘00-04
RARORAC
2000A 2004E Baseline
2004E Post S3
723 1,204 1,836
0.28 0.43
- +11.8% +15.2%
11.7% 11.5% 14.6%
0.49
’04E Post S3/ ’00A
’04E Post S3/ ’04E Baseline
% Change
2002 AFFECTED BY ONE-OFF CHARGES WITH LIMITED REVENUE SYNERGIES,HIGHER GROWTH IMPACT EXPECTED IN 2003 AND 2004
+76% +13%
+154% +52%
+290 bp +310 bp
+340 bp
Marginal RARORAC 15.0% 14.0% 16.7% +170 bp +270 bp
32
Strategic Rationale and Value Drivers of the Project
Structure of the Deal
Value Creation
Conclusions
Agenda
33
UCI FIRST COMMITMENT IS TO CONTINUE TO DELIVER VALUE TO ITS CLIENTS AND SHAREHOLDERS
After the completion of project S3, UCI will have a cutting edge organisational structure and will be the first European bank with 3 large segment specialists
S3 will help UCI to further improve customer satisfaction and shareholders value
UCI has shown its ability to deliver planned goals: full integration of Italian banks expansion in fast-growing areas (Asset
Management and New Europe) development of high value-added business (UBM
and TradingLab)
34
Annexes
35
THE TRANSACTION WILL STRENGTHEN UCI AS ONE OF THE LEADING EUROPEAN BANKS
Data as of 11th December, 2001Note: in green “Euro area” banks(1) Assuming the issuance of 1.1bn new shares at service of the acquisition of the minorities related to the merger of the seven banks (the merger with Rolo and Credit
Carimonte accounting for 98% of total shares to be issued)
Top European Banks by Market Cap (Euro bn)
POTENTIAL ADDITIONAL EFFECT ON MARKET CAP FROM VALORISATION OF SYNERGIES AND RE-RATING
15
12776 71
65
58 55
47
2217
2227
18
47 46 46 44
2827
1816
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Ranking “Euro Area” 1º 2º 3º 4º 5º 6º 7º 8º 9º 10º
ADDITIONALMARKET CAP FORMINORITIESOF AROUND EURO 5 bn(1)
36
UCI GROUP COMPARED TO ITS EUROPEAN PEERS
1H 2001A1998A
Group Cost/Income GroupROE
Pre-taxAbbey National 41.2% Lloyds 40.1%Lloyds 49.1% Abbey National 29.4%Bank of Scotland 51.6% Bank of Scotland 28.0%HSBC 54.9% UniCredit 26.1%Nordea (Merita) 55.3% Natwest 24.8%UniCredit 56.6% Barclays 23.3%Sanpaolo IMI 56.9% Deutsche Bank 22.5%BBV 61.5% Banca Intesa 22.2%Barclays 66.3% HSBC 22.1%Banca Intesa 68.1% HVB 20.2%BNP 68.1% ABN Amro 18.8%Natwest 68.6% Nordea (Merita) 18.7%ABN Amro 69.4% BBV 16.6%Santander 69.5% Santander 16.5%HVB 71.1% Sanpaolo IMI 16.0%Credit Suisse 72.4% BNP 14.2%Société Générale 73.5% Société Générale 13.7%Deutsche Bank 78.1% Credit Suisse 13.5%Dresdner 79.4% UBS 12.2%UBS 81.8% Dresdner 12.0%
Average 64.7% Average 20.5%
Group Cost/Income GroupROE
Pre-taxLloyds 43.8% Lloyds 31.0%Abbey National 44.8% UniCredit 30.2%RBoS 48.1% BNP Paribas 26.8%HBoS 48.3% Sanpaolo IMI 26.7%UniCredit 55.5% Abbey National 25.6%Barclays 56.2% Barclays 23.9%BBVA 58.2% ABN Amro 23.7%HSBC 59.0% Société Générale 22.9%SCH 60.0% IntesaBci 22.2%BNP Paribas 61.4% Nordea 22.1%Nordea 63.1% HBoS 21.0%IntesaBci 65.0% HSBC 20.4%Sanpaolo IMI 65.1% BBVA 20.0%Société Générale 72.0% SCH 17.0%HVB 72.3% Credit Suisse 16.5%ABN Amro 72.8% RBoS 16.4%Deutsche Bank 73.3% Deutsche Bank 14.4%Dresdner 78.8% Dresdner 8.4%Credit Suisse 80.3% HVB 8.4%UBS 81.2% UBS 7.6%
Average 63.0% Average 20.3%
Source: 1998 Annual Reports and 2001 Interim ReportsNote: the sample is formed by top 20 European banking groups by market capNote: Pre-tax ROE calculated as (net income+minority interests+taxes)/(equity=share capital+reserves+net income+paid-in capital+Fund for general Banking Risks+neg.
consolidation and book value diff.+minority interests)Note: Cost/Income ratio calculated as operating costs (including D&A)/revenues (net interest margin+net commissions+trading+other net operating revenues)
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Date Key Milestones and Events
14th-21th December 2001 Presentation of Project S3 to BoDs of involvedcompanies
February 2002 BoDs approval of annual report projects of all UCI Groupcompanies
March 2002 Approval of consolidated report of UCI Approval of merger project from BoDs of involved companies
April 2002 EGMs of all the companies involved in merger
J une 2002 Merger effective Contribution of banking assets and liabilities (retail, corporate
and private) from UniCredit to UCI Banca
September 2002 Identification in UCI Banca of all assets and liabilities that willbe spun-off
November 2002 EGM of UCI Banca for approval of spin-off and creation of twobeneficiary companies (Corporate Bank and Private Bank)
1st J anuary 2003 Spin-off effective, launch of the three new segmentbanks
S3 WILL BE EXECUTED TIMELY IN ORDER TO START IMPLEMENTING THE NEW STRATEGY OF THE GROUP AS SOON AS POSSIBLE
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THE AGREED UCI/ROLO EXCHANGE RATIO(1) IS IN LINE WITH THE MARKET PRICE OF THE TWO COMPANIES
12/12/00 22/02/01 06/05/01 18/07/01 29/09/01 11/12/01
EXCHANGE RATIO CONSIDERED TO BE FAIR BY UCI’s BoD: 3.80
Average 12 Months 3.63
Average 6 Months 3.69
Average 3 Months 3.79
Average 1 Month 3.85
Exchange Ratio Evolution
(1) Number of UCI’s share for each Rolo share; calculated as ordinary sharee prices of Rolo/ordinary share price of UCI
Exchange ratio pre-rumours
(started on 6/10/2001):
Average 1 Month: 3.72
Average 3 Months: 3.64Average 6 Months: 3.59Average 12 Months: 3.56
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PILOT PROJECTS
UCI HAS ALREADY STARTED PILOT PROJECTS TARGETING SPECIFIC SEGMENTS
Private
Affluent
Small Business
Total Retail
Corporate
Wealth Management
Small Business
Corporate Project
Mass Market
Family Banking
GOAL: FURTHER IMPROVEMENT OF SERVICE MODELS
TargetSegments
All Banks
CI, CRV, CRT, ROLO
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18% volumes increase (after 20% discount on the volumes arising from the improved share of wallet)
Net volumes valued at 25% discount on 2004 target margins
Expected revenue synergies of Euro 60 mln (representing 13.6% of 2001E segment revenues)(1)
TOTAL REVENUE BENEFIT FROM PRIVATE CLIENTS ESTIMATED AT AROUND EURO 105 MLN IN 2004
13% volume increase due to new customers (after 20% discount on target customers growth)
Net volumes valued at 25% discount on 2004 target margins
Expected revenue synergies of Euro 45 mln (representing 10.2% of 2001E segment revenues)(1)
Growth EffectSpecialisation Effect
Current Clients Target 2004ECurrent Average UCI Group
Target 2004E
+9 p.p.
“Share of Wallet”
+11%
100,000111,000
42%51%
New Customers
(1) Considering only commercial banking activities
IN PRIVATE BANKING REVENUE SYNERGIES ARISE FROM INCREASE OF SHARE OF WALLET, FOCUS ON HIGH VALUE-ADDED SERVICES AND GROWTH IN VOLUMES/CUSTOMERS
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Corporate further segmentation in Tier 1 clients and high growth potential clients Other clients
Average pricing resulting from the assumption that existing gaps vs. Group best performer are filled at 25%
Expected revenue synergies of Euro 60 mln (representing 4.0% 2001E segment revenues)(1)
Loss of volumes (6% of current volumes) due to overlap of clients within 7 banks
Target margins assume that existing gaps vs. Group best performer are filled at 25%
Better pricing on interests (+9 b.p. on average) and commissions (+22 b.p. on average) applied to net volumes
Expected revenue synergies of Euro 60 mln (representing 4.0% of 2001E segment revenues)(1)
TOTAL REVENUES BENEFIT FROM CORPORATE CLIENTS ESTIMATED AT AROUND EURO 120 MLN IN 2004
Growth EffectSpecialisation Effect
Current AverageUCI Group
Target 2004E
Commissions margin
Current AverageUCI Group
Target 2004E
Net interest margin
Current Clients Target 2004E
1.40%1.62% 1.66%
1.75%
+15%+22 b.p.
+9 b.p.New Customers
80,00092,000
(1) Considering only commercial banking activities
IN CORPORATE BANKING REVENUE SYNERGIES ARISE FROM BETTER PRICING AND SELECTIVE GROWTH OF CUSTOMER PORTFOLIO
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TOTAL REVENUES BENEFIT FROM AFFLUENT CLIENTS ESTIMATED AT AROUND EURO 105 MLN IN 2004
7% volumes increase (after 20% discount on the volumes arising from the improved share of wallet)
Net volumes valued at 25% discount on 2004 weighted average margin (obtained assuming that gaps vs. best performer are filled at 30%)
Expected revenue synergies of Euro 60 mln (representing 5.3% of 2001E segment revenues)(1)
5% volume increase due to new customers (after 20% discount on target customers growth)
Net volumes valued at 25% discount on 2004 weighted average margin (obtained assuming that gaps vs. best performer are filled at 30%)
Expected revenue synergies of Euro 45 mln (representing 4.0% of 2001E segment revenues)(1)
Current Clients Target 2004E
Growth EffectSpecialisation Effect
Current Average Target 2004E
+6 p.p.+5%
900,000945,000
65% 71%
“Share of Wallet” New Customers
(1) Considering only commercial banking activities
SPECIALISATION ON AFFLUENT CLIENTS IS EXPECTED TO GENERATE REVENUE SYNERGIES OF EURO 105 MLN IN 2004 ...
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7% volumes (funding+assets) increase due to new customers, after 40% discount to take into account the overlap with Imprendo
Net volumes valued at current spreads with 30% discount Expected revenue synergies of Euro 40 mln
(representing 4.3% of 2001E segment revenues)(1)
Targeted weighted average spread of 5.7%
Margin gaps vs. best performer are filled at 20%
Expected revenue synergies of Euro 30 mln (representing 3.2% of 2001E segment revenues)(1)
TOTAL REVENUES BENEFIT FROM SMALL BUSINESS CLIENTS ESTIMATED AT AROUND EURO 70 MLN IN 2004
Current Clients Target 2004EGroup "worst"performer
Currentweighted avg.performance
Group "best"performer
Growth EffectSpecialisation Effect
Margin on Total Customer Volumes (Loans + Deposits) +9%
New Customers
4.1%5.0%
6.2%541,000
580,000
(1) Considering only commercial banking activities
… SMALL BUSINESS IS EXPECTED TO GENERATE TOTAL REVENUE SYNERGIES OF EURO 70 MLN ...
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Current Average UCI Group
Target 2004E Current Clients Target 2004E
Expected revenue synergies of Euro 48 mln (representing 2.6% of 2001E segment revenues)(1)
… AND THE MASS MARKET EURO 60 MLN
EFFECTIVENESS OF GEOGRAPHIC COVERAGE AND COMMERCIAL ACTIVITIES
Expected revenue synergies of Euro 12 mln (representing 0.6% of 2001E segment revenues)(1)
Specialisation Effect
+5%
Growth Effect
4,810,0005,040,000
Margin on Total Customer Volumes (Loans + Deposits)
New Customers
+10 b.p.
5.0% 5.1%
(1) Considering only commercial banking activities