National Bank of Greece. Acquisition of a Controlling Interest in Finansbank. 3 rd April 2006

Transcription

1 Acquisition of a Controlling Interest in Finansbank 3 rd April 2006

2 Creating the leading Southeast European banking group Page 2 Transaction Highlights

3 Acquisition of Finansbank Transaction Highlights Page 3 Acquisition of a majority stake in Finansbank 100.0% of the Founder Shares and 46.0% of the Ordinary Shares from the majority owner FIBA Holding to retain a residual 9.68% shareholding (#92.2mn of shares), subject to put/call arrangements at an option price based on the bank s performance Mandatory offer for the remaining 44.3% minority shareholders (~421mn shares). If post the mandatory offer NBG remains below 50.0%, FIBA Holding is required to sell such additional shares for NBG to achieve a majority ownership position Initial purchase price of US$ 2,774mn 46.0% of the Ordinary Shares (US$ 2,323mn) 100.0% of the Founder Shares (US$ 451mn, 8.2% of the total value of Finansbank) Branding remains the same, and the international operations will rebrand within 12 months The transaction includes the subsidiaries which relate to domestic activities only. International operations (excl. Malta) will be carved out on closing and sold to FIBA Holding for USD 580mn in cash. The proceeds will remain with Finansbank post closing. NBG rights offering of up to 3.0bn to finance the transaction

4 Creating the leading Southeast European banking group Page 4 Strategic and Financial Rationale

5 Strategic and Financial Rationale Page 5 1. With a strong regional network in Greece, NBG is an advantaged SEE banking group 2. NBG has set a strategy of further SEE expansion 3. Turkey is the largest market opportunity in the region 4. Finansbank is an excellent platform for NBG to build a strong Turkish presence 5. The financial metrics of the transaction are attractive, and expected to be EPS accretive after closing 6. Measured risk profile

6 1. NBG a leader in Greek market Page 6 Profit growth with scale Largest branch network in Greece, with a core deposit base in excess of 30bn commanding a 30% market share Clear #1 in mortgages, commanding a share in excess of 1/4th of the domestic market Market share of 19% in consumer lending Liquid and strong balance sheet with a loan-to-deposit ratio of 71% In excess of 1mn credit cards on issue; launch of the 1 st multi-merchant credit card in Greece Extensive cross-selling potential, 2/3 rds of the active population within NBG s clientele Strong brand name with high loyalty and trustworthy reputation backed by 170 years of history Strong positioning in the largely underdeveloped asset management and insurance businesses: #1 in Insurance, market share of 16% in gross written premiums 1/4th of the domestic pool of FUM

7 2. Strategic focus on becoming the leading SEE Banking Group Page 7 NBG SERBIA Branches (#): Total Loans ( mn): Total Income ( mn): PBT ( mn): Branches (#): Total Loans ( mn): Total Income ( mn): PBT ( mn): Branches (#): Total Loans ( mn): Total Income ( mn): PBT ( mn): 134 1, Branches (#): Total Loans ( mn): Total Income ( mn): PBT ( mn): Branches (#): Total Loans ( mn): Total Income ( mn): PBT ( mn): 208 5, NBG ALBANIA NBG GREECE NBG CYPRUS Branches (#): Total Loans ( mn): Total Income ( mn): PBT ( mn): Branches (#): 570 Total Loans ( mn): 26,478 Total Income ( mn): 1,582 PBT ( mn): Branches (#): Total Loans ( mn): Total Income ( mn): PBT ( mn): Following the transaction, the NBG Group will comprise: A combined customer base of 10.6mn A branch network comprising units, 46% of which are outside Greece A loanbook that exceeds 7.9bn, exceeding 22% of group loans A PBT in Greece and SEE that exceeds 1.2bn, with SEE contributing 34% Source: NGB; IFRS, 2005 data

8 2. NBG has a successful M&A and restructuring track record in SEE Acquisitions in SEE Page 8 Acquisitions in recent years Our strategy: Brand image left intact Appointment of local management Centralisation of audit, risk management and treasury operations Application of a common IT platform to exploit economies of scale April 2000 Stopanska Banka A.D. (65%) July 2000 UBB (89.9%) October 2003 Romaneasca SA (81.65%) and regional synergies Focus on retail banking and SME business, capitalising on the experience gained in the domestic market (particularly in mortgage lending) United Bulgarian Bank Stopanska Banka Banca Romaneasca P&L ( mn) FY05 FY04 ±% P&L ( mn) FY05 FY04 ±% P&L ( mn) FY05 FY04 ±% Total operating income % Profit before tax % Total operating income % Profit before tax >100% Total operating income % Profit before tax % Cost:Income 42% 47% -5pp RoE 31% 27% +4pp Cost:Income 60% 69% -9pp RoE 23.5% 0.1% +23pp Cost:Income 82% 76% +6pp RoE 10% 23% -13pp

9 2. A strong presence in Turkey is valuable to NBG s SEE strategy Serbia Romania Bulgaria Page 9 GDP (US$ bn) % of total region GDP Real GDP growth Loans/GDP EU-25 Trade/GDP** % 5.4% 23.5% 18.8% GDP (US$ bn) 93.4 % of total region GDP12.5% Real GDP growth 4.0% Loans/GDP 19.7% EU-25 Trade/GDP** 34.5% GDP (US$ bn) 26.7 % of total region GDP 3.6% Real GDP growth 5.6% Loans/GDP 42.3% EU-25 Trade/GDP** 35.5% FYROM Turkey GDP (US$ bn) % of total region GDP Real GDP growth Loans/GDP EU-25 Trade/GDP** % 3.8% 25.2% 26.5% GDP (US$ bn) 367 % of total region GDP 49% Real GDP growth 5.7% Loans/GDP 23.4% EU-25 Trade/GDP** 17.1% Population (mn) % reg. Albania GDP (US$ bn) % of total region GDP Real GDP growth Loans/GDP EU-25 Trade/GDP** % 5.4% 14.6% 18.0% Greece GDP (US$ bn) % of total region GDP Real GDP growth Loans/GDP EU-25 Trade/GDP** % 3.7% 83.8% 17.4% Turkey % Romania % Greece % Bulgaria 7.5 6% Serbia 7.5 6% Albania 3.6 3% FYROM 2.0 1% TOTAL *Population is Jul 2005 estimate **EU Trade/GDP is 2004 actual Reaching an extended home market with population of ~125 mn and GDP of ~US$ 750bn Competing in a market of ~US$320bn in loans and ~US$390bn in deposits Focusing on a region with increasing ties to the EU Source: NBG

10 3. A sustained and significant reform effort in Turkey has resulted in a strongly improved macroeconomic outlook and high banking sector potential Page 10 GDP per capita Loans / GDP US$ +9.0% CAGR Percent pps 44.6 Percent // e Key policy rates Percent // e Deposits/ GDP -7.4 pps pps // e e // Source: NBG estimates

11 4. Finansbank: A major acquisition for NBG, contributing to a well diversified SEE business portfolio Page 11 in mn NBG Group (pre-acquisition) Finansbank NBG Group (post-acquisition) # Branches % 25% 20% Total Loans to Customers % 6% 15% Gross Income % 7% 25% Operating Expenses & Provisions % 7% 22% Profits Before Income Tax and Minorities % 7% 27% NBG & Other SEE Finansbank Source: NBG; FINANSBANK, IFRS, 2005 data

12 4. Finansbank: A highly dynamic private-sector bank Page 12 Domestic position: Market shares * Key strengths Assets Powerful Finansbank brand name to be maintained Strong management team, with considerable international experience Loans Deposits Isbank Akbank Garanti Yapi Finans Deniz Isbank Akbank Garanti Yapi Finans Deniz Dynamic sales culture, supported by highly incentivised staff Focus on retail banking Retail and credit cards loan growth of 79% in 2005 (vs. market 63%); strong performance in emerging mortgage market (10% market share in new loans) SME loan growth of 91% in 2005 A market leader in credit cards with a strong brand name and innovative products (market share of 7%) Isbank Akbank Garanti Yapi Finans Deniz Branches** Isbank Akbank Garanti Yapi Finans Deniz Growing and productive network 208 branches across Turkey at the end of 2005, and expected to continue to expand rapidly Effective alternative channels (ATM, POS, Call Center, Internet Banking) Centralised operations (64% of all operational transactions are performed centrally), leaving the branch network free to focus on sales RoE (%) 11.0 Losses Neg. RoE Isbank Akbank Garanti Yapi Finans Deniz Highly sophisticated IT systems, which are an integral part of the sales process. * Market Shares as of end of December 2005; Source: BRSA, individual bank websites

13 4. Finansbank: An impressive financial track record Page 13 Finansbank Group excl. International Operations (IFRS, pro forma) Highly profitable financial institution with RoE reaching 27% in 2005 Cost-to-income ratio below 45% in 2005, as a result of strong top line growth (+44% in 2005) Customer Loans (YTLmn) (1) +46.7% CAGR: 50.2% Customer Deposits (YTLmn) (1) CAGR: 15.7% +24.4% Financial Ratios (IFRS excl. inter. exp.) RoE (after tax) 21.1% 26.6% NIM (average assets) 7.7% 7.3% C:I Ratio 51.0% 44.6% NII / Total Income 68.7% 61.7% Commissions / Total Income 26.8% 27.2% PBT (YTLmn) (1) CAGR: 30.7% +97% 502 Personnel Expenses / Total Operating Expenses 39.7% 45.1% Provisions to Average Loans to Customers 0.74% 1.98% NPL ratio (%) 1.9% 2.5% Coverage (%) 100.0% 100.0% Loans-to-Deposits 115.8% 137.0% Loans-to-Assets 62.9% 62.8% (1) BRSA Unconsolidated financial accounts Equity-to-Assets 13.4% 13.0%

14 4. Finansbank: High growth focused on the retail and SME sectors Page 14 Bank-only Performing Loans Bank-only Customer Deposits YTLmn, BRSA Corporate & Commercial Loans SME Loans Mortgages Consumer Loans Credit Cards +47% CAGR % YTLmn BRSA YTL Deposits FCY Deposits +24% CAGR % % % % % 124% 94% %

15 5. Financially attractive pricing metrics Page 15 Finansbank valuation metrics expected to be EPS accretive from closing Acquisition P/E 2005A * of 17.7x v. NBG of 18.0x High ROEs supports high P/BV - the highest 2005 ROE of any Turkish mid/large cap bank High long-term earnings growth potential given the under-development of the sector Turkish banks valuation metrics 2005 Metrics P / E P / BV RoE (%) Garanti Bank 14.8x 2.7x 20.1 Akbank 14.1x 3.2x 24.8 Denizbank 16.4x 3.4x 22.8 Recent acquisition valuation metrics 2005 Metrics Consideration P / E P / BV RoE (%) BCR (Erste Bank) 4.4bn 29.7x 5.8x 19.5 Aval (Raiffeisen Intl) 1.0bn nm 4.3x nm Ukrsotsbank (Intesa) 1.1bn 43.1x 5.2x 12.1 * - pro-forma consolidated, IFRS financial statements

16 5. Significant medium-term synergy potential Page 16 NBG Finansbank Strong group credit rating offering access to cheaper funding. Loan-todeposit ratio of NBG is 71% and for Finansbank it is 134%, permitting lower funding costs on Finansbank s US$ 2.7bn wholesale funding Strong position in mortgage and consumer lending, with 25% and 19% market shares, respectively Centralisation of risk management, audit, and treasury operations Strong presence in neighbouring markets Strong in credit cards and project finance Strong sales culture and skills Performance-based pay Effective mobile sales forces Developed alternative channels: call center, internet banking Cost synergies in SEE: Back office operations Credit card business IT investments

17 6. Continuity, while integrating the Bank into strengthened Group process frameworks Page 17 Continuity in Management Mr. Ozyegin: to continue as Chairman of Finansbank, maintain a ~10% stake in the company, and operate with performance-based incentives through put / call option pricing based on Finansbank s profitability Senior Executives: Retention and performance-based contracts Alignment with Group Risk Management, Internal Audit, Control, Compliance and Corporate Governance Processes Finansbank to join NBG Basel-II system Policy setting defined at a Group level Approval defined at a local level, above which decisions made by the Group Finansbank to join Sarbanes-Oxley based corporate governance framework

18 Creating the leading Southeast European banking group Page 18 Financing Plan and Timetable

19 A fully underwritten 3.0bn rights issue secures the completion of the transaction and maintains core Tier I above 8.0% threshold Page 19 Assuming 90% take up and 3.0bn rights issue 90% of the entity acquired 16.6% % Dec 05* Dec 05** Tier II Capital Supplementary Tier I Capital Core Tier I *After the anticipated sale of Atlantic Bank & the disposal of NBG Canada **Combined entity, pro forma

20 Timetable Indicative Timetable Page 20 3 April Announcement of acquisition Subscription period CLOSING 28 March End of May Early June End of June Early July Mid July July Oct. Submission of binding offer 3rd EGM approves capital increase Competition Authority Approval End of subscription period BRSA Approval Application to CMB for the mandatory call Mandatory call for minorities & Completion

21 Creating the leading Southeast European banking group Page 21 Concluding Remarks

22 Key messages Acquisition of Finansbank Page With a strong regional network, NBG is an advantaged SEE banking group 2. Finansbank accelerates NBG s strategy of further SEE expansion 3. Turkey is the largest market opportunity in the region 4. Finansbank is an excellent platform for NBG to build a strong Turkish presence 5. The financial metrics of the transaction are attractive, and expected to be EPS accretive from closing 6. Measured risk profile

23 NBG: The leading SEE Group Page 23 Focusing on SEE, a region with critical mass and high growth potential: Population of 115mn, GDP of US$ 530bn, and loan business of US$ 320bn Positive macroeconomic outlook driven by economic reforms and strengthening ties to the EU Large opportunities in banking given current low levels of penetration NBG ALBANIA NBG SERBIA Extending and strengthening our reach in the region: Branch network of 500 units (44% of Group) Loans of 7.9bn (22% of Group) PBT of over 400mn (31% of Group) 5.1mn customers (44% of Group) NBG CYPRUS

24 Page 24 Appendix

25 Finansbank: Business Profile As of March 2006* Page 25 Retail Banking Credit Cards SME Banking Corporate & Commercial Banking 179 branches (27 Retail, 129 Retail/ SME branches, 23 Joint) ~35 FTE direct sales team ~20 FTE telesales team ~1.0 million clients ~10% share in new production of mortgages High quality loan portfolio with <1% NPL ratio All 208 branches of the Bank and 8 CardFinans branches ~300 FTE direct sales team ~30 FTE telesales team >2 million cards Strong CardFinans brand Loyalty Program Para Puan 156 branches (4 SME, 129 Retail/SME, 23 Joint) ~ clients Focus on 5 core sectors (Trade, Manufacturing, Construction, Tourism, Agriculture) with customized product offerings SME magazine and portal (KobiFinans), sectoral exhibitions, roadshows, sponsorships 48 branches (6 Corporate, 19 Commercial and 23 Joint) ~ clients >500 Structured & Project Finance projects in 2005 *Total number of branches as at end 2005

26 Finansbank: Financial performance Page 26 Finansbank Group excl. International Operations (IFRS, pro forma) P&L - IFRS (YTLmm) '05/'04 NII % Fee & Commission Income % Trading profit % Balance Sheet - IFRS (YTLmn) '05/'04 Cash and balances with Central Bank % Deposits with other Banks % Net Loans to Customers % Other Income % Total Banking Income % Trading Securities & other MM placements % Investment Securities % Personnel Expenses % Admin. Expenses % Other Assets % Total Assets % Depreciation Charges % Other admin. Expenses % Total Operating Expenses % Deposits from other Banks % Customer Deposits % Funds Borrowed % FX Differences Provisions % Loss on monetary position % Income from associates Debt Securities % Subordinated Debt Securities % Other Liabilities % Total Liabilities % PBT % Taxes % Minorities % PAT % Equity Attributable to Parent Shareholders % Minority Interest % Total Equity %

27 Finansbank: Customer base sustainability 2005 business review Page 27 Greek and Turkish Relations may cause political skepticism, but do not influence banking behavior Foreign entry of investment has negligible role in determining their behavior Extremely limited level of knowledge about foreign investment in the banking sector. Second lowest level of knowledge (74%) for Finansbank. For majority of customers, key focus is quality of service; once trustworthiness is established, acquiring further knowledge about the company structure is not too relevant. Banking customers in Turkey are loyal to their bank 80% of banking customers have never changed bank. The remaining 20% who have, gave low service quality and other bank s more attractive offers as main reasons for doing so. Finansbank customers are the most favorable towards foreign investment Finansbank customers fall into the medium scale bank customer group, which is the most positive in its evaluation of countries strong in banking sector. Finansbank customers are the most positively inclined towards foreign investment. The majority of Finansbank customers showed a positive disposition to an acquisition. Speculated banking behavior analysis shows that 15% of Finansbank customers have intentions to increase their investments, and only 2% have withdrawal intentions.

28 Page 28 Disclaimer This press release contains certain forward-looking statements. Such statements can be generally identified by the use of terms such as "believes", "expects", "may", "will" "should", "would"," could", "plans", "anticipates" and comparable terms and the negatives of such terms. By their nature, forward-looking statements involve risk and uncertainty and the factors described in the context of forward- looking statements in this press release could cause actual results and developments to differ materially from those expressed in or implied by such forward- looking statements. NBG and Finansbank have based these forward looking statements on their current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about the transaction or any potential benefits arising from the transaction, including among other things, securing necessary regulatory approvals, changing business or market conditions,the prospects for growth of Finansbank anticipated by the management of Finansbank and NBG and any potential synergies resulting from the integration of the activities of NBG and Finansbank. NBG and Finansbank undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward looking statements contained in this press release may not occur. Any statement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. This presentation is being communicated in the United Kingdom only to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) (all such persons being referred to as relevant persons). This presentation is only directed at relevant persons and any investment or investment activity to which this presentation relates is only available to relevant persons or will be engaged in only with relevant persons. Solicitations resulting from this presentation will only be responded to if the person concerned is a relevant person. Other persons should not rely on or act upon this presentation or any of its contents.