Barclays Abn Amro Deal Presentation

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Information about Barclays Abn Amro Deal Presentation
Finance

Published on December 29, 2008

Author: sumit_thawrani

Source: slideshare.net

The ABN AMRO Deal ANIRBAN RAY SUMIT THAWRANI A MONETRIX PRESENTATION

What sparked it off? ABN AMRO was seen as a takeover target for years because of its underperforming share price, but rival banks were deterred by its mix of businesses, which was unattractive to any single bidder. Rijkman Groenink, ABN AMRO CEO has been under pressure to raise ABN AMRO's share price, and investors criticized a string of failed acquisition attempts and the bank's lack of focus. The pressure intensified when The Children's Investment Fund , known for buying minority stakes in companies and then forcing the management to change its strategy, asked ABN AMRO to either to put itself up for sale or split itself up. The bank's shares jumped to a record following the announcement.

March 20 April 13 April 23 April 25 July 23 July 30 July 16 May 7 May 29 May 5 Barclays and ABN outline the plan for a potential merger. Royal Bank of Scotland (RBS) Spain's Santander and Belgian-Dutch group Fortis approach ABN AMRO. Barclays agrees to buy ABN in a recommended all-share deal, ABN will sell LaSalle to Bank of America for $21 billion. RBS, Santander and Fortis propose a cash-and-share offer for ABN worth about $98 billion RBS consortium offer worth $24.5 billion for LaSalle, conditional on buying the rest of ABN. ABN rejects the RBS consortium offer for LaSalle The RBS-led consortium bid for ABN valued at 38.40 euros per share, worth a total $95.7 billion The RBS-led consortium improves its bid for ABN, raising the cash component to 93 percent from 79 percent before. Barclays raises its offer for ABN AMRO, to 67.5 billion euros , include a cash element. (35 euros per share) ABN AMRO withdraws its recommendation of a takeover by Barclays. ABN AMRO Deal : IMPORTANT TIMELINES August 29 Barclays Bid falls to €59bn in value, with speculation regarding credit crisis at Sachsen Landesbank

The Key Players One of the world’s largest banks with total assets of EUR 632.8 billion Presence in more than 3,000 locations in over 60 countries ABN AMRO is the result of the merger in 1991 of Algemene Bank Nederland (ABN) and the Amsterdamsche-Rotterdamsche Bank (AMRO). ABN AMRO is organized into three autonomous strategic business units responsible for managing wholesale clients consumer and commercial clients private clients and asset management The English bank began operations in the 17th century in London, but has since then become a strong entity in 60 countries. Barclays has grown into an international bank with 800 global branches Barclaycard is the leader in the issue of credit cards in Europe Barclays Global Investors were one of the very first asset management companies in the world Barclays Capital is an investment bank well-known for the services it offers Barclays plc is the 4th largest financial services provider in the world by Tier 1 capital ($32.5 billion)

One of the world’s largest banks with total assets of EUR 632.8 billion

Presence in more than 3,000 locations in over 60 countries

ABN AMRO is the result of the merger in 1991 of Algemene Bank Nederland (ABN) and the Amsterdamsche-Rotterdamsche Bank (AMRO).

ABN AMRO is organized into three autonomous strategic business units

responsible for managing wholesale clients

consumer and commercial clients

private clients and asset management

The English bank began operations in the 17th century in London, but has since then become a strong entity in 60 countries.

Barclays has grown into an international bank with 800 global branches

Barclaycard is the leader in the issue of credit cards in Europe

Barclays Global Investors were one of the very first asset management companies in the world

Barclays Capital is an investment bank well-known for the services it offers

Barclays plc is the 4th largest financial services provider in the world by Tier 1 capital ($32.5 billion)

World's fifth largest bank founded in 1727 RBS's activities cover account management, savings, loans and credit cards and insurance. Leading corporate and institutional bank with global product strengths Global leader in securitization, structured and leveraged finance, FX and financing and risk management products Established in 1990 and has strong footprint in Europe with over 2,500 branches A banking, insurance, and investment management company, and is the 20th largest business in the world by revenue Top 20 worldwide in assets under management from high net worth individuals with a total AUM of USD 500 billion Total revenue around USD 96 billion More than 10 million retail banking clients The bank's market capitalization was EUR 88,436 million at the end of 2006, making Santander the world's 12th largest financial group by market value. Europe covers all retail banking, asset management, and insurance United Kingdom focuses on retail banking and insurance The Latin America includes financial activities conducted via the Bank's subsidiaries The Consortium : Key Players

World's fifth largest bank founded in 1727

RBS's activities cover account management, savings, loans and credit cards and insurance.

Leading corporate and institutional bank with global product strengths

Global leader in securitization, structured and leveraged finance,

FX and financing and risk management products

Established in 1990 and has strong footprint in Europe with over 2,500 branches

A banking, insurance, and investment management company, and is the 20th largest business in the world by revenue

Top 20 worldwide in assets under management from high net worth individuals with a total AUM of USD 500 billion

Total revenue around USD 96 billion

More than 10 million retail banking clients

The bank's market capitalization was EUR 88,436 million at the

end of 2006, making Santander

the world's 12th largest financial

group by market value.

Europe covers all retail banking, asset management, and insurance

United Kingdom focuses on

retail banking and insurance

The Latin America includes financial activities conducted via

the Bank's subsidiaries

LaSalle Bank Subsidiary of Netherlands-based ABN AMRO Bank headquartered in Chicago More than $106.6 billion in assets Centerpiece of ABN AMRO’s US operations since its acquisition nearly 30 years ago Sale of LaSalle Bank to Bank of America The Deal was valued at USD 21 billions LaSalle represents a unique and important strategic opportunity for Bank of America in augmenting its unparalleled business platform in the US The sale of LaSalle is expected to complete late 2007 and is subject to regulatory approvals and other customary closing conditions. The management of the combined group is expected to distribute EUR 12 bn to the shareholders of the combined group in a tax efficient form, primarily through buy-backs after completion of the offer

Subsidiary of Netherlands-based ABN AMRO Bank headquartered in Chicago

More than $106.6 billion in assets

Centerpiece of ABN AMRO’s US operations since its acquisition nearly 30 years ago

Sale of LaSalle Bank to Bank of America

The Deal was valued at USD 21 billions

LaSalle represents a unique and important strategic opportunity for Bank of America in augmenting its unparalleled business platform in the US

The sale of LaSalle is expected to complete late 2007 and is subject to regulatory approvals and other customary closing conditions.

The management of the combined group is expected to distribute EUR 12 bn to the shareholders of the combined group in a tax efficient form, primarily through buy-backs after completion of the offer

The Bid from Barclays

Components of the Transaction 3.225 new Barclays shares for each ABN AMRO share, with an equivalent value of €36.25 per ABN AMRO share Ownership of the combined entity will be 52% to Barclays shareholders and 48% to ABN AMRO’s shareholders Regulatory & Tax Clearances Sale of LaSalle Bank Completion of employee consultations UK Incorporation, HQ in Amsterdam and UK FSA lead regulator LSE primary listing, Euronext Amsterdam & Tokyo Stock Exchange secondary listings with NYSE listing for new Barclays ADSs € 3.5bn (£2.37bn) of pre-tax synergies 5% cash earnings per share accretion Return on investment of 13% by 2010 Key Terms Conditions Structure & Listing Financial Returns

3.225 new Barclays shares for each ABN AMRO share, with an equivalent value of €36.25 per ABN AMRO share

Ownership of the combined entity will be 52% to Barclays shareholders and 48% to ABN AMRO’s shareholders

Regulatory & Tax Clearances

Sale of LaSalle Bank

Completion of employee consultations

UK Incorporation, HQ in Amsterdam and UK FSA lead regulator

LSE primary listing, Euronext Amsterdam & Tokyo Stock Exchange secondary listings with NYSE listing for new Barclays ADSs

€ 3.5bn (£2.37bn) of pre-tax synergies

5% cash earnings per share accretion

Return on investment of 13% by 2010

Deals related to the Merger China Development Bank (CDB) -Barclays CDB has paid 2.2 billion euros for 201.39 million Barclays shares at a price of 7.2 Pounds/Share The purchases give CDB a 3.1 percent stake in Barclays' existing share capital Temasek -Barclays Temasek has paid 1.4 billion euros for 135.42 million Barclays shares at a price of 7.2 Pounds/Share The purchases give Temasek a 2.1 percent stake in Barclays' existing share capital The funds are additional capital for Barclays' ongoing bid for Amsterdam-based ABN AMRO. Under the deal, if Barclays outbids its competitor Royal Bank of Scotland (RBS) and wins ABN AMRO, CDB will make a further investment in Barclays of up to 6.34 billion euros.

China Development Bank (CDB) -Barclays

CDB has paid 2.2 billion euros for 201.39 million Barclays shares at a price of 7.2 Pounds/Share

The purchases give CDB a 3.1 percent stake in Barclays' existing share capital

Temasek -Barclays

Temasek has paid 1.4 billion euros for 135.42 million Barclays shares at a price of 7.2 Pounds/Share

The purchases give Temasek a 2.1 percent stake in Barclays' existing share capital

The funds are additional capital for Barclays' ongoing bid for Amsterdam-based ABN AMRO. Under the deal, if Barclays outbids its competitor Royal Bank of Scotland (RBS) and wins ABN AMRO, CDB will make a further investment in Barclays of up to 6.34 billion euros.

Financial Highlights of the Deal 33% premium on the share price of ABN AMRO ordinary shares as on 16 th March 2007. Total Synergies = €3.5bn by 2010 - Cost = €2.8bn - Net Revenue = €0.7bn - Implementation Costs = €3.6bn Target Equity Tier I ratio of 5.75% 13% by the year 2010 5% accretive in 2010 for Barclays shareholders Significantly accretive to ABN AMRO shareholders in 2008 Premium Synergies Capital Barclays ROI Cash EPS Accretion

33% premium on the share price of ABN AMRO ordinary shares as on 16 th March 2007.

Total Synergies = €3.5bn by 2010

- Cost = €2.8bn

- Net Revenue = €0.7bn

- Implementation Costs = €3.6bn

Target Equity Tier I ratio of 5.75%

13% by the year 2010

5% accretive in 2010 for Barclays shareholders

Significantly accretive to ABN AMRO shareholders in 2008

Global Retail and Commercial Banking • Offer leading products to rapidly growing attractive client segment • Expand distribution through enlarged network • Barclays is a leading international card issuer • Enlarged customer base and network offer substantial growth opportunities • Improved cost and revenue per card performance is expected to result • ABN AMRO infrastructure is market-leading • Barclays offers substantial network extension and strong client relationships • Significant opportunity to grow Barclays share in UK Business Banking trade finance market • Exploit the ability to expand global merchant acquiring network • Cross-sell wealth management products to SME owners and managers

• Offer leading products to rapidly growing attractive client segment

• Expand distribution through enlarged network

• Barclays is a leading international card issuer

• Enlarged customer base and network offer substantial growth opportunities

• Improved cost and revenue per card performance is expected to result

• ABN AMRO infrastructure is market-leading

• Barclays offers substantial network extension and strong client relationships

• Significant opportunity to grow Barclays share in UK Business Banking trade finance market

• Exploit the ability to expand global merchant acquiring network

• Cross-sell wealth management products to SME owners and managers

Investment Banking The markets are large and highly fragmented, providing significant opportunity for growth and Combination will add incremental growth

Investment Management

Total synergies of €3.5bn (£2.37bn) by 2010: €2.8bn cost-related and €0.7bn in net revenue synergies Expected Total Synergies by Year (€m) Expected Total Synergies by Business (€m)

Cost Synergies: 5 Major Areas have been identified 5.0% 1610 Headcount Rationalization 1.6% 520 IT Platform / Software Consolidation 0.9% 290 IT Infrastructure (Networks/Hardware) 8.7% € 2800m Total 0.5% 160 Property 0.7% 220 Project Integration / Discretionary Spend % of combined 2006 cost base € m Initiative

Global Retail & Commercial Banking Operational Efficiencies – includes move to ABN off shoring model, improved purchasing & property management (around €450million in savings) and reduction in consulting and advisory fee Global Product Solutions – Integrate cash management, trade finance & payments into ABN AMRO’s Global transaction banking and all Card operations under Barclaycard IT – Integration of Global Technology Platforms, reduction in application development & maintenance costs and rationalize network & data centers. Net Revenue benefits – 1) Leverage ABN AMRO's platform in cash management & trade finance, by putting the Barclay volumes through it 2) By leveraging in the Barclaycard platform & scale economies, increase ABN AMRO’s revenue/card Synergy Split

Global Retail & Commercial Banking

Operational Efficiencies – includes move to ABN off shoring model, improved purchasing & property management (around €450million in savings) and reduction in consulting and advisory fee

Global Product Solutions – Integrate cash management, trade finance & payments into ABN AMRO’s Global transaction banking and all Card operations under Barclaycard

IT – Integration of Global Technology Platforms, reduction in application development & maintenance costs and rationalize network & data centers.

Net Revenue benefits –

1) Leverage ABN AMRO's platform in cash management & trade finance, by putting the Barclay volumes through it

2) By leveraging in the Barclaycard platform & scale economies, increase ABN AMRO’s revenue/card

Investment Banking Cost Synergies – Migrate ABN AMRO wholesale activities onto Barclays Capital platforms Streamline overlap in front offices in the US, UK, Europe & Asia while combining back and middle offices. Net Revenue Synergies – Leverage BarCap / Global market products through the expanded retail network Strengthen & broaden product capabilities across combined client base Synergy Split

Investment Banking

Cost Synergies –

Migrate ABN AMRO wholesale activities onto Barclays Capital platforms

Streamline overlap in front offices in the US, UK, Europe & Asia while combining back and middle offices.

Net Revenue Synergies –

Leverage BarCap / Global market products through the expanded retail network

Strengthen & broaden product capabilities across combined client base

Investment Management Achieve higher productivity through greater distribution strength Cost Synergies – In Asset management, Liquidity Fund management to be transferred to Barclays & also remove other functional overlap Eliminate overlap in private client product manufacturing Eliminate duplication of branches in Europe & Asia and optimize IT platforms Net Revenue Synergies – Enhanced product offering & distribution scale will drive higher penetration Increased retail network distribution of BGI products, like Exchange Traded Funds; also structured lending & structured products Synergy Split

Investment Management

Achieve higher productivity through greater distribution strength

Cost Synergies –

In Asset management, Liquidity Fund management to be transferred to Barclays & also remove other functional overlap

Eliminate overlap in private client product manufacturing

Eliminate duplication of branches in Europe & Asia and optimize IT platforms

Net Revenue Synergies –

Enhanced product offering & distribution scale will drive higher penetration

Increased retail network distribution of BGI products, like Exchange Traded Funds; also structured lending & structured products

Corporate Centre Single group headquarters located in Amsterdam Barclays & ABN AMRO have similar approaches, with both focused on governance & control Synergies driven by FTE reduction, IT savings and lower project related costs Functional activities decentralized to business divisions: legal, treasury, risk, finance, HR, with governance retained at the group center Overlap of major initiatives such as BASELII etc Synergy Split

Corporate Centre

Single group headquarters located in Amsterdam

Barclays & ABN AMRO have similar approaches, with both focused on governance & control

Synergies driven by FTE reduction, IT savings and lower project related costs

Functional activities decentralized to business divisions: legal, treasury, risk, finance, HR, with governance retained at the group center

Overlap of major initiatives such as BASELII etc

The Bid from The Consortium

Key Highlights of the Consortium Bid

Italy ABN AMRO Antonveneta is a strong franchise in an attractive market Potential improvement in commercial performance e.g. mortgage lending, consumer finance, mutual funds Brazil Benefiting from economies of scale, creates a top 3 bank by network and loans High geographical and product complimentarity between both franchises (Banco Real and Santander Banespa) Strengthen Benelux Core Competencies Market Leader with more then 10 Million customers #1 in Benelux Retail & Commercial banking Superior Customer reach & skills Expansion of Asset management growth platform Top tier asset manager with €300bn AUM Larger geographic footprint Enhanced offering to 3 rd party distributors 3 rd Largest European Private bank Strengthen RBS’s platform for growth outside UK Complementary & overlapping business Citizens + LaSalle RBS + ABN AMRO Retail Business RBS Global Banking Markets + ABN AMRO Global Wholesale Business Accelerates delivery of RBS objectives Strong position with US mid-corporates Global reach in corporate & institutional banking Expand presence in Asia Pacific Consortium – Strong Combined Business

Italy

ABN AMRO Antonveneta is a strong franchise in an attractive market

Potential improvement in commercial performance e.g. mortgage lending, consumer finance, mutual funds

Brazil

Benefiting from economies of scale, creates a top 3 bank by network and loans

High geographical and product complimentarity between both franchises (Banco Real and Santander Banespa)

Strengthen Benelux Core Competencies

Market Leader with more then 10 Million customers

#1 in Benelux Retail & Commercial banking

Superior Customer reach & skills

Expansion of Asset management growth platform

Top tier asset manager with €300bn AUM

Larger geographic footprint

Enhanced offering to 3 rd party distributors

3 rd Largest European Private bank

Strengthen RBS’s platform for growth outside UK

Complementary & overlapping business

Citizens + LaSalle

RBS + ABN AMRO Retail Business

RBS Global Banking Markets + ABN AMRO Global Wholesale Business

Accelerates delivery of RBS objectives

Strong position with US mid-corporates

Global reach in corporate & institutional banking

Expand presence in Asia Pacific

Transaction Benefits to the Consortium Cost Savings = €4228m Revenue Benefits = €1215m Driving Force for the BID

Clear Integration Plan -€810m Improve Standalone Efficiency - €305m IT Migration - €105m Integration of Operations - €40m Head office Integration - €70m Full Merger / Network Optimization - €135m Cost Synergies -> €700m Revenue Synergies -> €110m The Consortium – Synergy Benefits Total transaction benefits -€2944m Global Wholesale Business - €2042m Citizens + LaSalle - €820m Integration of Operations - €40m No Transaction benefits in International Retail Cost Synergies -> €2091m Revenue Synergies -> €853m Expected Pre-Tax Synergies -€1337m Retail Banking - €363m Commercial banking - €143m Private banking - €203m Asset Management - €160m IT & operations - €225m Overheads - €243m Cost Synergies -> €1150m Revenue Synergies -> €187m

Clear Integration Plan -€810m

Improve Standalone Efficiency - €305m

IT Migration - €105m

Integration of Operations - €40m

Head office Integration - €70m

Full Merger / Network Optimization - €135m

Cost Synergies -> €700m

Revenue Synergies -> €110m

Total transaction benefits -€2944m

Global Wholesale Business - €2042m

Citizens + LaSalle - €820m

Integration of Operations - €40m

No Transaction benefits in International Retail

Cost Synergies -> €2091m

Revenue Synergies -> €853m

Expected Pre-Tax Synergies -€1337m

Retail Banking - €363m

Commercial banking - €143m

Private banking - €203m

Asset Management - €160m

IT & operations - €225m

Overheads - €243m

Cost Synergies -> €1150m

Revenue Synergies -> €187m

THANK YOU!

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