The Future Royal Bank of Scotland N.V. Investor Presentation January 2010
Important Information This document has been prepared solely for use at the presentation to RBS Clients in January 2010 (the Presentation ). By attending the meeting where the Presentation is made, or by reading this document containing the Presentation slides, you agree to be bound by the following limitations. This document and the information contained herein is strictly confidential, is being provided to you solely for your information and for use at the Presentation. Accordingly, neither this document nor its contents may be reproduced or published or further distributed or passed on to any other person in whole or in part, by any medium or in any form, for any purpose. If you have received this document in error, you are instructed to dispose of it immediately. Certain sections in this document contain forward-looking statements as that term is defined in the United States Private Securities Litigation Reform Act of 1995, such as statements that include the words expect, estimate, project, anticipate, believes, should, intend, plan, probability, risk, Value-at-Risk (VaR), target, goal, objective, will, endeavour, outlook, optimistic, prospects and similar expressions or variations on such expressions. Such statements are subject to risks and uncertainties. Important factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this document include, but are not limited to: the extent and nature of future developments in the credit markets, including the sub-prime market, and their impact on the financial industry in general and the Group in particular; the effect on the Group s capital of write downs in respect of credit market exposures; general economic conditions in the UK and in other countries in which the Group has significant business activities or investments, including the United States; the monetary and interest rate policies of the Bank of England, the Board of Governors of the Federal Reserve System and other G7 central banks; inflation; deflation; unanticipated turbulence in interest rates, foreign currency exchange rates, commodity prices and equity prices; changes in UK and foreign laws, regulations and taxes; changes in competition and pricing environments; natural and other disasters; the inability to hedge certain risks economically; the adequacy of loss reserves; acquisitions or restructurings; technological changes; changes in consumer spending and saving habits; and the success of the Group in managing the risks involved in the foregoing. The forward-looking statements contained in this document speak only as of the date of this document, and the Group does not undertake to update any forwardlooking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. Slide 2
Table of Contents Update on Separation Process Introducing The Royal Bank of Scotland N.V. (RBS N.V.) Summary Financial Information for RBS N.V. Debt and Capital Securities allocated to RBS N.V. Appendices Slide 3
Update on Separation Process Introducing The Royal Bank of Scotland N.V. (RBS N.V.) Summary Financial Information for RBS N.V. Debt and Capital Securities allocated to RBS N.V. Appendices Slide 4
Update on the Separation Process New Banking and payments IT platform implemented 22 July 2009 30 September 2009 Preparation of legal demerger process Preparation of regulatory approvals Execution of legal demerger Q1 2010 Two months after demerger Execution of legal separation Separate existing key ABN AMRO platforms shared between RBS and Dutch State-owned partner Filing of documents with the Amsterdam Chamber of Commerce De-merge majority of the Dutch State-owned assets to new ABN AMRO Bank N.V.. Existing ABN AMRO Bank renamed RBS N.V. Separate new ABN AMRO Bank N.V. from joint holding company. Highlights Major technical separation completed on schedule Novation of selected traded product portfolios from existing ABN AMRO Bank N.V. to RBS plc is progressing according to plan and will complete by Q3 2010 Legal Demerger and Separation subject to all legal processes and regulatory approvals Slide 5
Update on the Separation Process (Cont d) 30 Sep 09 October 2007 until Legal Demerger filing (30 Sep 2009) Step 1 : Legal Demerger process (1) (completing Q1 2010) (3) Step 2 : Legal Separation(2) (completing two months after Legal Demerger) RBSG Santander SA Dutch State RBSG Santander SA Dutch State RBSG Dutch State 38.3% 27.9% 33.8% 38.3% 27.9% 33.8% Majority control 4 RFS Holdings B.V. RFS Holdings B.V. RFS Holdings B.V. 100% 100% ABN AMRO Holding N.V. ABN AMRO Holding N.V. Renamed to 100% 100% New Entity 100% ABN AMRO Bank N.V. 100% ABN AMRO II N.V. RBS Holdings N.V. ABN AMRO II N.V. 100% ABN AMRO Bank N.V. Renamed to RBS N.V. ABN AMRO Bank N.V. RBS N.V. ABN AMRO Bank N.V. ABN AMRO Group ABN AMRO Group RBS N.V. ABN AMRO Group continues to operate as a separately capitalised and regulated entity under the supervision of the Dutch Central Bank during the interim period. The future separate banks, RBS N.V. and ABN AMRO Bank N.V. (renamed from ABN AMRO II N.V.) will continue to comply with Dutch Central Bank minimum liquidity and solvency requirements Notes 1. The assets and liabilities that are not yet allocated to any of the Consortium shareholders, the so-called Shared Assets, are not included in this overview. This demerger process refers only to Dutch and Belgian assets and liabilities. Acquired business in other countries will be separated in accordance with mechanisms agreed as appropriate for each country. 2. The structure shown represents the position after a transitional phase, during which the Dutch State and Santander will continue to hold a stake in RFS Holdings B.V. commensurate to their holding in remaining Shared Assets and any other businesses subject to later separation 3. Subject to progression through Dutch legal procedures. 4. RFS Holdings B.V. is controlled by RBSG with an economic interest of 38.3% at acquisition, which does not reflect impact of future legal separation. Slide 6 Ultimately RFS Holdings B.V. will become a wholly-owned subsidiary of RBSG. Majority control by RBS Group over RFS Holdings B.V. should be achieved on or around legal separation.
Interim Period Until Legal Separation Governance ABN AMRO Group (1) continues to be governed by its Managing Board and Supervisory Board, which have their own responsibilities in line with statutory law and principles of corporate governance in the Netherlands Regulation ABN AMRO Group continues to be regulated on a consolidated basis with capital ratios, liquidity measures and exposures of the ABN AMRO Group being reported to and regulated by its supervisor, the Dutch Central Bank Role of the Consortium members Each of the Consortium members remains a shareholder of RFS Holdings B.V., which in turn owns 100% of ABN AMRO Holding N.V.. However, the Consortium members are not actively involved in the day-to-day management of ABN AMRO Group Note 1. Including the entities ABN AMRO Holding N.V., ABN AMRO Bank N.V. to be renamed The Royal Bank of Scotland N.V. and ABN AMRO II N.V. to be renamed ABN AMRO Bank N.V. and each of their subsidiaries Slide 7
Update on Separation Process Introducing The Royal Bank of Scotland N.V. (RBS N.V.) Summary Financial Information for RBS N.V. Debt and Capital Securities allocated to RBS N.V. Appendices Slide 8
Introducing The Royal Bank of Scotland N.V. (RBS N.V.) Group Strategy RBS N.V., the renamed ABN AMRO Bank N.V., will be a significant member of the RBS Group with a targeted strong balance sheet and conservative risk profile supporting core customer businesses Core strengths in Equities, Lending and Global Transaction Services, serving corporate and financial institution clients across an international network RBS N.V. Core Entity Status Integral to the RBS Group s international operating model Key member of the RBS Group; RBS N.V. contributes 305bn (c.18%) of total assets to RBSG (as at 30 September 2009) One of the top 30 largest operating banks in Europe (1) Key part of the operating platforms in the Core Global Banking and Markets (GBM) and Global Transactional Services (GTS) divisions Supports customer businesses fundamental to the RBSG strategy Group support evidenced through recent capital actions Core Customer Businesses International Cash Management: Cash management and transaction products enhancing the working capital efficiency for global clients Trade Finance: Working capital, risk mitigation solutions and supply chain financing for major international customers Equities: Leading equities platform encompassing ECM, Corporate Broking, Cash Equities and Institutional & Retail Derivatives Local Markets: Market-leading, low-risk derivative and hedging solutions offered through an international sales network Corporate Lending: Global platform providing lending facilities to leading multi-national corporates and financial institutions Notes 1. Based on latest disclosed total asset figures. Source: Company 2009 interim or quarterly reports Slide 9
Introducing The Royal Bank of Scotland N.V. (RBS N.V.) (Cont d) RBS N.V. Standalone Credit Worthiness Stable and resilient businesses targeted to achieve stable operating performance Robust risk framework with targeted modest overall risk profile Strong liquidity position and diverse funding base RoE of 15%+ targeted as culmination of returning RBS N.V. to profitability De-risking and de-leveraging substantially achieved total assets reduced from 687bn in FY 2007 to 305bn by Q3 2009 Minimum capital ratios set by the DNB as lead regulator will be exceeded at all times Integrated Business Model Roll-out of RBS brand to RBS N.V. businesses near completion One seamless client approach (RBS plc and RBS N.V. combined) since March 2008 Integrated operating systems, manufacturing platforms and management APS and RBS N.V. Assets from RBS N.V. have been included in the Asset Protection Scheme (APS) extended by the UK Government APS provides protection on a portion of the loan portfolio which will improve the credit quality of the credit portfolio and reduce future loan impairments Slide 10
The Rationale for RBS N.V. RBS N.V. is targeted to be a well-capitalised and liquid bank with a modest risk profile and core strengths in Equities, Lending and Global Transaction Services all driven by core underlying customer franchises Delivers continuity to existing banking and lending clients of ABN AMRO Bank under the RBS brand Minimises client disruption and preserves the client franchise Reduces the need to replicate existing regulatory clearances and licences in jurisdictions where RBS did not previously operate Strong GTS client deposit base Reduces execution risk of transferring all businesses into RBS plc Slide 11
Divisional Structure Indicative Legal Structure Future of RBS N.V. in RBS Group context The Royal Bank of Scotland Group plc Majority control* 100% 100% RFS Holdings* 100% RBS Holdings N.V. The Royal Bank of Scotland Plc RBS Insurance Group Ltd RBS N.V. National Westminster Bank plc Citizens Financial UK Retail Banking Wealth US Banking Insurance UK Corporate & Commercial Banking Global Transaction Services Global Banking & Markets Direct ownership Indirect ownership * RFS Holdings B.V. is controlled by RBSG with an 38.3% economic interest at acquisition of the ABN AMRO Group, which does not reflect the impact of future legal separation. RFS Holdings B.V. will become a wholly-owned subsidiary of RBSG after finalisation of the legal separation and the sale of any remaining shared assets. Slide 12
Indicative Breakdown of Divisions Across Legal Entities Brand RBS N.V. and RBS Plc Businesses RBS N.V. RBS Plc Global Transaction Services All international operations except Japan UK / Japan Global Banking & Markets All GBM Lending except UK, US, Japan and Australia Equities: Flow cash / derivatives and securitised products except North America Onshore Local Markets 1 GBM Lending UK, US, Japan and Australia Equities: Large bespoke OTC transactions and all North America business Offshore Local Markets G11 Markets 2 1. Local currency products in restricted markets for all counterparties, and G11 currency traded products for select counterparties who operate in Asia Pacific and in jurisdictions where offshore booking to RBS Plc is not allowed 2. Markets include all Trading, Sales and Structuring in our FX, Rates, Flow Credit, Derivatives, Short Term Markets and Commodities businesses in the G11 currencies. Slide 13
RBS N.V. Group Linkages and Support Capital Ongoing support to the future RBS N.V. to strengthen its capital ratios, including capital injections completed in Q109 and Q409 to support the business Capital ratios to exceed levels defined by regulators namely DNB, FSA and local regulators for subsidiaries / entities UK APS has been down-streamed to RBS N.V., providing further capital support and de-risking future earnings RBSG is willing and able to support all of its subsidiaries RBS N.V. receives the strong support of RBSG Funding management is fully integrated in governance, execution and pricing policies Funding Client liability marketing is managed through an integrated approach RBS plc and RBS N.V. as one brand Slide 14
RBS N.V. Group Linkages and Support (Cont d) Shares management, strategy and systems with other RBSG entities Operations Benefits from the established RBS brand and presence, providing significant ongoing opportunities for cross-selling Shared clients will see One face and one consistent high quality service Support through common platforms RBS N.V. GBM and GTS business strategies and targets are set by divisional not entity management Control The RBS N.V. control framework consists of three lines of defence, at the country, regional and central level, integrated in the RBSG control framework The first line of defence is business and functions. The business is responsible for setting risk appetite and manages its risks within the overall Group risk appetite The second line of defence is Risk Management. It is responsible for owning the risk management framework, which the business uses to discharge its responsibilities, and provides oversight of the first line on management of its risks The third line of defence is Audit. It is responsible for providing independent assurance on the design, adequacy and effectiveness of the Group's system of internal controls. Slide 15
Update on Separation Process Introducing The Royal Bank of Scotland N.V. (RBS N.V.) Summary Financial Information for RBS N.V. Debt and Capital Securities allocated to RBS N.V. Appendices Slide 16
RBS Acquired Businesses Q3 YTD 2009 Results Summary Profit & Loss Account RBS Acquired Businesses Compared to Q3 YTD 2008 the overall pre-tax operating loss for the period has improved by more 2009 2008 m YTD Q3 Q2 YTD Q3 Net interest income 1,284 501 442 1,909 508 Net fees and commissions income 767 241 255 1,081 495 Net trading income 671 525 645 (2,777) (617) Results from financial transactions (2,169) (626) (1,658) (1,855) (1,156) Share of result in equity accounted investments (62) (27) (35) 17 3 Other operating income (197) (170) (27) 46 (1) Operating income 294 444 (378) (1,579) (768) Operating expenses (3,130) (934) (1,248) (3,902) (1,368) Operating result (2,836) (490) (1,626) (5,481) (2,136) Loan impairments and other credit risk provisions (1,664) (551) (684) (600) (358) Operating profit / (loss) before taxes (4,500) (1,041) (2,310) (6,081) (2,494) Tax 864 168 475 1,407 564 Profit / (loss) from continuing operations (3,636) (873) (1,835) (4,674) (1,930) than 1.5bn. The growth in operating income was principally driven by: - Increased trading income due to lower negative credit valuation adjustments against monolines, - Lower write downs in Collateralised Debt Obligations (CDOs), - Lower credit losses on trading counterparties and - Increase in the equities business. The improved net interest margins have lead to higher net interest income (Q2 to Q3) although lower compared to YTD 2008 due to the reduced size of the balance sheet following transfers of some businesses to RBS Plc. Operating expenses declined by 772m mainly as a result of lower personnel costs due to a decrease in staff numbers and reduced remuneration levels. The loan loss impairments increased significantly reflecting the 2009 adverse economic conditions and the challenging credit environment. These results are not yet indicative of the businesses that will remain to form the basis of the future RBS N.V., post legal separation and after the disposal of the identified non-core businesses. Slide 17
RBS Acquired Businesses Q3 YTD 2009 Results Pro Forma results Summary Profit & Loss Account RBS Acquired Businesses (Pro Forma) The excluded results are predominantly the losses on monolines / CDOs and the losses on 2009 portfolios and transactions of other businesses m YTD Q3 that have been transferred to the RBS Plc. Operating income 1,405 544 Operating expenses (2,185) (590) Operating result (780) (46) Loan impairments and other credit risk provisions (321) (144) Operating profit / (loss) before taxes (1,101) (190) Tax 212 31 Profit / (loss) from continuing operations (889) (159) The pro forma figures represent the activities of the RBS Acquired businesses that will remain in RBS N.V. post demerger and exclude: - the results of activities that are classed as Non-Core - portfolios and transactions that have been transferred to RBS plc - the Shared Assets that are part of central items of the Group The pro forma results show a net loss year to date of 889m. The pro forma operating income was impacted by: - Difficult market conditions experienced during the period; - Fair value losses of 1.1bn on credit hedges - A gain on the allocation of a remaining Group ALM portfolio to the RBS Acquired businesses. Operating expenses have not declined in line with operating income due to cost reduction programmes lagging business transfers. Initiatives to reduce costs to become in line with the businesses remaining in the future RBS N.V. are currently underway. Slide 18
Balance Sheet Progress FY 2008 to Q3 2009 478 23 120 66 52 212 Total Assets ( bn) 16 99 80 39 46 56 55 100 18 92 5 12 15 FY 2008 H1 2009 Q3 2009 Cash at central banks Financial assets for trading Financial investments Loans to banks Loans to customers 36% 322 Other 305 Well on track to be a strong and stable banking franchise Significant initiatives have been undertaken to derisk and de-leverage the business and develop a sustainable model Balance sheet reduced through: - reduction in Trading Assets due to novations, netting of derivatives - reduction in Reverse Repo agreements - reduction due to roll-off of transactions to RBS plc - reduction through maturing loans and transfers to RBS plc Significant strengthening of the liquidity reserve with over 15bn of cash balances held with central banks De-risking and de-leveraging of the business has resulted in a 36% reduction of the balance sheet in the last nine months Slide 19
Capital Position FY 2008 to Q3 2009 Risk Weighted Assets ( bn) 80.4 36% 53.2 51.6 FY 2008 H1 2009 Q3 2009 Cash at central banks RBS N.V. is a highly integrated subsidiary of the RBS Group as reflected by its name association and enjoys the full support of RBSG. S&P has recognised this position by giving an indicative long term rating of A+ RBS N.V. will become a majority owned subsidiary of RBSG post legal separation and RBSG will provide additional capital to maintain capital adequacy, if needed. In this context, a 3bn capital injection was made by RBSG via RFS Holdings BV in support of the RBS acquired business in Q1 2009 Capital ratios for the RBS N.V. will comply with the minimum tier 1 and total capital ratios set by the Dutch Central Bank, currently 9% and 12.5% respectively. These may be reset on transition to Basel II post legal separation RWAs have decreased in line with the transfer of businesses and activity to RBS plc; the decrease in RWAs has strengthened RBS N.V. s capital position. On accession to the UK Asset Protection Scheme (APS) by RBSG in December 2009, cover was extended to a pool of assets in RBS N.V.. This has helped to improve the capital position and de-risk future earnings. De-risking and de-leveraging of the business has resulted in a 36% reduction in RWAs and strengthened the capital position of RBS NV in the last nine months Slide 20
Funding and Liquidity Balance Sheet as at September 2009 ( Bn) Cash and balances with central banks Financial assets held for trading (net*) 227.3bn 14.5 14.2 227.3bn 5.1 7.5 Allocated Equity Subordinated liabilities Financial investments 54.9 70.7 Issued debt securities Loans and receivables to banks and customers and other assets 143.7 144.0 Due to banks and customers and other liabilities Assets Liabilities The RBS NV balance sheet is well structured Highlights RBS NV remains highly liquid with significant cash balances at the central bank and a substantial liquidity portfolio of unencumbered central bank eligible securities The funding and liquidity position of RBS NV remains strong RBS NV will continue to comply with the Dutch Central Bank minimum liquidity requirements (* Financial trading assets of 91.9bn net of financial trading liabilities of 77.7bn) Slide 21
Maturity profile of issued debt and capital securities (Q3 09, bn) Maturity Profile Capital & Term Debt Instruments 9.0 Term debt and capital securities are well distributed among different maturity bands, resulting in limited refinancing requirements 2.2 Legacy capital instruments provide a substantial core of term funding in addition to senior debt 2.5 2.5 2.2 0.8 1.4 4.2 0.1 4.1 1.5 1.5 4.1 2.7 To comply with EC State Aid requirements on burden sharing RBS NV may not be permitted to exercise any call rights on capital instruments, except where legally obliged to do so 0-6 Mths 6-12 Mths 1-3 Yrs 3-5 Yrs > 5Yrs Senior LT2 T1 Slide 22
Update on Separation Process Introducing The Royal Bank of Scotland N.V. (RBS N.V.) Summary Financial Information for RBS N.V. Debt and Capital Securities allocated to RBS N.V. Appendices Slide 23
Debt and Capital Securities Economically Allocated to RBS Liabilities Allocated to RBS Acquired Businesses On 30 September 2009 ABN AMRO Bank N.V. filed documentation with the Amsterdam Chamber of Commerce for a legal demerger in The Netherlands and in Belgium. The demerger proposals outline the legal process for the transfer of the majority of the Dutch State acquired businesses into a separate legal entity, ABN AMRO II N.V., which will remain wholly owned by ABN AMRO Holding N.V. until it is legally transferred out of the ABN AMRO Group. The demerger proposals (excluding the description of assets and liabilities) and pro forma financial information as of 31 December 2008 and 30 June 2009 providing indicative insight on the impact of the legal transfers and demergers on ABN AMRO Bank N.V. are available on the ABN AMRO's website (www.abnamro.com). The complete demerger filing, including a description of assets and liabilities to be transferred, is available for consultation at the Amsterdam Chamber of Commerce. The assets and liabilities referred to in the legal demerger documentation include debt and capital instruments allocated to the Dutch State acquired businesses and, therefore, to the extent legally possible, such debt and capital instruments shall be legally transferred to ABN AMRO II N.V. upon the legal demerger becoming effective. Insofar as, and to the extent that, the legal ownership of such debt and capital instruments cannot be transferred to ABN AMRO II N.V. pursuant to the legal demerger (e.g. due to governing law or contractual constraints), then the economic ownership of such debt and capital instruments will, to the greatest extent possible, transfer to ABN AMRO II N.V. pursuant to the legal demerger. Further steps will be taken to transfer the legal ownership in due course. Any debt and capital instrument not included in the assets and liabilities referred to in the legal demerger documentation shall not transfer to ABN AMRO II N.V. and shall be retained by ABN AMRO Bank N.V. (to be renamed The Royal Bank of Scotland N.V.) unless stated and / or agreed otherwise by the parties. Lower Tier 2 Coupon Type of instrument ISIN EUR1,500m Floating Bermudan callable subordinated lower tier 2 notes 2015 (callable June 2010) XS0221082125 EUR800m 6.25 % Subordinated notes 2010 NL0000118024 EUR250m 4.70 % CMS linked subordinated notes 2019 NL0000122505 EUR170m Floating Sinkable subordinated notes 2041 XS0123050956 EUR100m 5.125 % Flip flop Bermudan callable subordinated notes 2017(callable December 2012) XS0159771327 EUR26m 7.42 % Subordinated notes 2016 XS0067935253 EUR15m Floating CMS linked floating rate subordinated lower tier 2 notes 2020 XS0214553348 EUR13m Zero coupon subordinated notes 2029 (callable June 2009) XS0098392755 EUR7m 7.38 % Subordinated notes 2016 XS0067976364 EUR5m Floating Bermudan callable subordinated lower tier 2 notes 2015 (callable October 2010) XS0233906808 GBP42m Floating Amortising MTN subordinated lower tier 2 notes 2010 XS0072183204 GBP25m Floating Amortising MTN subordinated lower tier 2 notes 2011 XS0073571761 AUD575m 6.50 % Bermudan callable subordinated lower tier 2 notes 2018 (callable May 2013) AU0000ABOHG2 AUD175m Floating Bermudan callable subordinated lower tier 2 notes 2018 (callable May 2013) AU0000ABOHH0 USD1,500m Floating Bermudan callable subordinated notes 2015 (callable March 2010) XS0213858243 USD500m 4.65 % Subordinated notes 2018 USN02627AR30 USD165m 6.14 % Subordinated notes 2019 XS0088804504 USD150m 7.13 % Subordinated notes 2093 US00077TAB08 USD72m 5.98 % Subordinated notes 2019 XS0093450608 PKR800m Floating Subordinated 2012 MYR200m Floating Subordinated notes 2017 EG5294632 TRY60m Floating Callable subordinated notes 2017 (callable 2012) Tier 1 Coupon Type of instrument ISIN USD1,285m 5.90 % Trust Preferred V US74928K2087 USD200m 6.25 % Trust Preferred VI US74928M2044 USD1,800m 6.08 % Trust Preferred VII US74928P2074 The above statement has been prepared by ABN AMRO Bank N.V. for information purposes only, solely in connection with the separation process of the Dutch State acquired businesses of ABN AMRO Holding N.V., which includes assets and liabilities of ABN AMRO Bank N.V. and is not an offer to buy, sell, exchange or transfer or a recommendation for or solicitation of an offer to buy, sell, exchange or transfer any security or instrument and is not intended to form the basis of any investment decision. The above statement does not (nor shall it be deemed to) constitute a prospectus, offering circular or memorandum, nor is it and is not intended to provide the sole basis for any evaluation of the securities or the issuer. The information contained in the above statement is not for publication, or distribution to, persons in the United States and, for the avoidance of doubt, the above statement does not constitute an offer of securities for sale in the United States For further information on the economic allocation of ABN AMRO capital please refer: http://www.group.abnamro.com/financials/allocation.cfm?disclaimer=off Slide 24
Update on Separation Process Introducing The Royal Bank of Scotland N.V. (RBS N.V.) Summary Financial Information for RBS N.V. Debt and Capital Securities allocated to RBS N.V. Appendices Slide 25
Update on the Separation Process 30 Sep 09 Q1 2010 October 2007 until Legal Demerger filing (30 September 2009) Step 1 : Legal Demerger process (due to complete Q1 2010) (3) Step 2 : Legal Separation process (due two months after legal demerger) Certain businesses have been transferred to consortium members or third party acquirers The RBS, Dutch State and Santander acquired businesses have been ring-fenced within ABN AMRO Bank N.V. Financial separation, commercial separation and technical separation are nearly completed Capitalisation measures have been taken, and further actions planned, by RBS and the Dutch State to support the separation ABN AMRO Group (1) has chosen a two-step approach for the transfer of the Dutch State acquired businesses to the direct, or indirect, control of the Dutch State: - Step 1: Legal Demerger - Step 2: Legal Separation The legal demerger means the legal transfer of (the majority of the) Dutch State acquired businesses from ABN AMRO Bank N.V. to a new legal entity, ABN AMRO II N.V., where the new entity will initially be a fully owned subsidiary of ABN AMRO Holding N.V. The legal demerger will happen by way of a Dutch law governed statutory split-off (juridische afsplitsing) and constitutes a transfer by universal title (overgang onder algemene titel) of such assets, liabilities and businesses (2) The legal demerger proposal has been filed with the Amsterdam Chamber of Commerce on 30 September 2009 Following a Declaration of Non-Objection ( DNO ) by the Dutch Central Bank, the legal demerger can be executed by notarial deed Post execution of the legal demerger and transfer of subsidiaries, ABN AMRO Bank N.V. (to be renamed The Royal Bank of Scotland N.V. ( RBS N.V. )) and ABN AMRO II N.V. (to be renamed ABN AMRO Bank N.V. ) will operate under separate banking licenses which are expected to be obtained from the Dutch Central Bank in due course RBS N.V. and ABN AMRO II N.V. (to be renamed ABN AMRO Bank N.V. ) also expect to obtain separate credit ratings, effective once the legal demerger has been executed The legal separation entails the transfer of the shares of ABN AMRO II N.V. (to be renamed ABN AMRO Bank N.V. ) from ABN AMRO Holding N.V. to a new State holding company, wholly-owned (directly or indirectly) by the Dutch State ABN AMRO Holding N.V. will rename to RBS Holdings N.V. Notes 1. Including the entities ABN AMRO Holding N.V., ABN AMRO Bank N.V. to be renamed The Royal Bank of Scotland N.V. and ABN AMRO II N.V. to be renamed ABN AMRO Bank N.V. and each of their subsidiaries 2. In addition, certain subsidiaries and certain assets and liabilities that will not transfer via legal demerger will separately be transferred on or around the execution of the legal demerger using other transfer mechanisms such as a share transfer, novation and contract transfer 3. Subject to progression through Dutch legal process. This demerger overview refers only to Dutch and Belgian assets and liabilities. Acquired business in other countries will be separated in accordance with mechanisms agreed as appropriate for each country. Slide 26
Intended Management Structure of RBS N.V.* Independent but fully aligned with RBSG governance practice and business strategy Benefits from the strength and experience of the RBSG management team but will also have a degree of independence within the RBSG operating structure Two-tier board management structure: Supervisory Board Managing Board Supervises the management of RBS N.V. Board meetings held at least six times per annum Supervisory Board of RBS N.V. will supervise the Managing Board and will consist of three members. Two members shall be executives of RBSG The Audit Committee is the only sub-committee of the Supervisory Board Reports to Supervisory Board Principal decision-making forum for RBS N.V. Sets policy framework, operating structure and yearly plan (including objectives and budgets) Five members led by the RBS N.V. Chairman: Chief Administration Officer Chief Financial Officer Chief Risk Officer Head of GBM Head of GTS The two key sub-committees, i.e. the Risk & Control Committee and Asset & Liability Management Committee will provide an additional layer of financial oversight on RBS N.V. RBS N.V. Supervisory Board RBS N.V. Managing Board Chairman Chief Administration Officer Chief Financial Officer Chief Risk Officer Head of GBM Head of GTS * Subject to DNB approval Slide 27
RBS Group remains a strong financial counterparty RBS has a well diversified business A strong UK and International franchise. Leading business in UK Retail banking, Commercial and Corporate Banking Strong underlying businesses including GTS, GBM and RBS Insurance RBS has stable, profitable and market-leading customer franchises with an international reach and presence UK Government owns 70% of RBS s ordinary voting shares and is supportive of the Group s strategy 40% of all payments going through the UK economy touch one part of the RBS group and 26% of the UK deposit base is placed with a part of the RBS group RBS Group and Subsidiary Credit Ratings Standard & Poor s Moody s Fitch RBS Group (Group Level) A A1 AA- RBS Plc (Bank Level) A+ Aa3 AA- NatWest A+ Aa3 AA- Citizens Financial Group 1 A- A2 A+ Ulster Bank Ltd 2 A A2 A+ Ulster Bank Ireland Ltd 2 A A2 A+ ABN Amro Bank N.V. A+ Aa3 AA- RBS N.V. 3 A+ 1. Standard & Poor s and Moody s ratings for Citizens on negative watch 2. Moody s ratings for Ulster Bank and Ulster Bank Ireland on negative outlook 3. Standard & Poor s has issued a provisional rating for RBS NV prior to legal demerger Source: RBS Group Slide 28