[ABN AMRO] Strengthen the Commercial Bank

7/31/2019 [ABN AMRO] Strengthen the Commercial Bank

1/27


2/27

2

Transform , St rengt hen and Build

Agenda

Description of business

Market outlook

Ambitions

Action plan

Annex


3/27

3


Commercial Banking plays a key role within

Antonveneta today(Sep 06 YTD)

Net loans (EUR bln) Operating income (EUR mln) AntonvenetaInterbanca

Total

FTEs (Number)

Strong weight ofcapital intensiveactivities

Limitedabsorption ofdirect workforce

69%

31%

36,3

23,9

Commercialand InvestmentBanking

Total

Weight =66% Weight =

37%

Weight =11%

577

77%23%

1,555

69%31%

9,586

1,017*

* Including resources from Interbanca and Antonveneta Commercial, Antonveneta Finanza and Merchant


4/274


Credit is main source of business; further growth potential in fee-based products

Sep 06 YTD, EUR mln

Operating income breakdown by P&L nature and products category

Fee-based margin (bothrisk-free and linked to

market risk) hassignificant room for

improvement

Risk freeactivities

ShortTermLending TotalP&L nature

MLTLending (1)

Trans-actionalServices

CorporateFinance

MerchantBanking

Interest Margin

Net Commissions

Other Income (2)

Operating Income

TradeFinance

Depositsand Invest-ments

357164 24 - - - -

12056 3 14 40 1 -

10014 - - -- 46

169

6

-

175 577234 27 14 40 1 46

Commercial Banking Investment and Merchant Banking

Credit risk activities Market risk activities

(3)

(4)

GlobalMarkets

-

-

40

40

(1) Includes specialised and subsidised Lending (2) Includes dividends and Capital gain

(3) Includes value margin (4) Banking book carry


5/275


SME is key client segment; potential for improvement in client share of wallet

Sep 06 YTD

25,860

12.9(54%)

346(60%)

5,111

7.4(31%)

173(30%)

58(10%)

3.6(15%)

380Large Corporates (> EUR 200 mln turnover)

Average op. income (annualised):EUR 202,000

Average loans: EUR 9.4 mln

Coverage of the Italian market: 59%

Average share of wallet: 3%

Mid Corporates (EUR 15-200 mln turnover)

Average op. income (annualised): EUR 45,000




Small Corporates (< EUR 15 mln turnover)

Average op. income (annualised): EUR 18,000




Client breakdown by segment

Large Corporate

Mid Corporate

Small Corporate

* Number of individual companies

Goodcoverage of

the Italianclient base

Potential forimprovementin client shareof wallet

Number of clients*

LendingvolumesEUR bln

Operatingincome

EUR mln

31,351 23.9 577100% =


6/276


Already covering the economically mostattractive regions; main focus on north of Italy

* Includes 58 Antonveneta Corporate Units (25 Corporate Units,33 local subsidiaries) and11 Interbanca Branches

** Companies with turnover over EUR 2.5 mln - source AIDA 2004

# Corporate Units*

Primary corporate regions (>5,000 companies**)

Secondary corporate regions (1,500-5,000 companies**)

Minor corporate regions (


7/277


Agenda


Market outlook

Ambitions

Action plan

Annex


8/278


Key characteristics of the Italian Commercialand Investment Banking market

Commercial and Investment Banking in Italy is asizeable market expected to grow in all its

components ( +7% revenues per year 05 - 08)

Commercial Banking is the major segment in the

market (EUR 25 bln, 81% of total market revenues),accounting for most of the profits (80% of theEUR 9.6 bln total market profits)

Compared to the rest of Europe, growth potential in

all non-lending products is stronger

The evolution of clients needs determines clear

market trends of sophistication on the demand side

Sizeable market

Growthpotential

Sophisticationtrend


9/279


Commercial and Investment Banking: sizeablemarket expected to grow in all its components

16%

13%31%

22%

18%Italy(EUR 30.8bln)

Spain(EUR 22.4 bln)

UK(EUR 51.6 bln)

Germany(EUR 36.6 bln)

France(26.7 EUR bln)

EU-5 Commercial and InvestmentBanking revenue mix by country,2005 (EUR bln, percent)

Italian Commercial and Investment Bankingmarket size evolution by product line(Operating income, EUR bln)

17.4

7.5

2.1

3.8

30.8

2005

21.0

9.0

2.5

4.8

37.3

2008E

Lending

Transactional Services

and Cash Management

Corporate Finance +Merchant Banking

Global Markets

CommercialBanking

InvestmentBanking 8%

6%

6%

6%

7%

CAGR(E) 05-08

100% = EUR 168.1 bln


10/2710


Italy has a strong growth potential in allnon-lending products

2005, Volume/GDP in percentage points Underdeveloped vs. rest of Europe

Product Italy Europe * percentage **

Trade Finance 6 7 -11%

-9%415 458Cash management ***

-91%462 5,135Capital Markets ***

6 7Advisory **** -2%

125 141Securitisation -11%

Commercial Lending 28 18 +55%

Leasing 7 6 +18%

Factoring 15 13 +15%* UK, Germany, France, Italy and Spain ** Italy/Europe -1*** 2004 estimates **** Includes M&A, IPO, SPO


11/2711


Agenda


Market outlook

Ambitions

Action plan

Annex


12/2712


Commercial Banking* Operatingincome

CAGR (E)2005-2008

Uplift (EURmln) (E)2005-2008

95

26

759

785

2005

1,010

1,105

2008 E

69

251

320

FTEs 980 1,060

12.1%

Global Ma

We have ambitious growth objectives...

Commercial & Local Products strategic plan, 2005-2008, EUR mlnrkets

* Including Transaction Banking, Trade Finance, Investment & Merchant Banking, Global Markets


13/2713


Cross- selling

Pricing

Clientpenetration

coming from seven key business drivers

Increase in Lendingvolumes

Improve pricing for Short-Term Lending on under-priced clients

Increase market share inTrade/Export Finance

Cross-selling of ShortTerm Lending andtransactional services

Increase of CorporateDerivatives penetration

Increase penetration of M&A

Increase Global MarketsInstitutional Sales activity

35 bps average increase of spread on EUR 6.5 bln Short-TermLending (risk return correction)

Increase market share in Trade/Export Finance from 2% to 3% by2008

Cross selling of Short-Term Lending and transactional services to30% of current Interbanca client base

Increase penetration of Corporate Derivatives on customer base to20%

Increase penetration of M&A activities

Develop institutional sales activity (e.g. equity brokerage)

Description

2 % points increase in the average Lending share of wallet on

Antonveneta top-rated Clients


14/27


15/27

15


Our strategic roadmap is based on threepriorities for 2007

2007 objectives

Launch a series of commercial/sales campaigns , according to2007 budget and commercial plan

Finalise the design and implement a new coverage model

Reorganise the Antonveneta product development centres ,leveraging ABN AMRO expertise

Introduce a dedicated coverage model differentiated for each

segment Large Corporate: dual-layer coverage unit at Head Office level

Mid Corporate: dedicated relationship managers supported byproduct specialists

Small Corporate: local relationship managers supported by

dedicated CRM/Marketing tools

Launch a complete plan to turn-around skills and motivation of front-office staff

Develop a new relationship managers workstation and the

related training programme

PrioritiesRe-launch the sales campaigns toreach 2007 revenue goals

Align and integrate our servicemodels to a new delivery model:

Define and implement a newdelivery model for CommercialBanking

Empower product developmentcentres

Invest in skills, motivation and toolsof front-line staff

1

2

3


16/27

16


Four commercial campaigns, based on theanalysis of our client base

Campaign/initiative Description Target clients

Under-priced clientsLoans re-pricing, centrally, one-by-one, locally authorised byrelationship managers

Clients with relevant bank exposurewith variable interest rates

Clients with relevant trades withforeign countries

Clients operating in sectors withhigh level of commoditiespurchasing/sales

Increase commission margin byselling standardised derivatives totarget clients

Clients with low risk level

Clients with low penetration

Increase penetration (bankloans/system loans) of under-penetrated customers with good riskprofile; simultaneously cross-sellinginterest rate derivatives on MLTdeals

ABN AMRO International clients

and Interbanca clients withoutaccounts in Antonveneta

Sale of services to ABN AMRO

International clients and Interbancaclients

Exemplified in the following

1A

Objective

Re-launch thecommercialperformance of the

Corporate Networktaking advantageof opportunitieswith specific clients

Set up the salesplanning engine

Derivatives sales onexisting clients

Loan penetrationincrease (withderivatives)

Target ABN AMROand Interbancaclients

Loans re-pricing

Client base analysis example: significant


17/27

17


2

2

2

2

2

2

43

3,907

360

0

0

Client base analysis example: significantcross-sell opportunities exist for derivativesand Corporate Finance

2005 Cross-sell opportunities

3,254

252

19

6,858

7,201

405

11

51

11,579

11,615

9,410

2,155

86

4,034

4,005

153

4,034 90

90

90

89

87

Number of clients

Transactional Services

Deposits and Investments

Trade Finance

Derivatives

Having.

Corporate Finance

2904,034

11,6167,266

3,52513%

1 product

27%

2 products

44%

3 products

15%

4 products~0%

5 products~0%

6 products

26,533*

Total

Lending

* Clients with detailed product data available, a total number of 30,500 clients as of 31/12/2005

1B

25,817

23,194

13,930

6,162

379

18


18/27

18


that can be captured through a structuredand targeted sales campaign

Antonveneta derivatives sales campaign results, EUR thds

427

207136

680

837

492

650

Week13

Jan-JunAverage

JulyAverage

AugustAverage

Weeks1-4

Weeks5-8

Weeks9-12

668

283

Operating income from derivatives per week

~2.5X

Average aftercampaignlaunch

Averagebeforecampaignlaunch

Campaign launch

04/09/06

NON IFRS FIGURES

1C

First 13 weeks ofcampaign generatedEUR 8.7 mlnoperating incomefrom derivatives salescompared toEUR 3.7 mln with theprevious trend(+EUR 5.0 mln)

Maintaining actualweekly sales averageuntil year-end wouldyield total operatingincome during

campaign ofEUR ~11 mln insteadof EUR ~4.5 mln withprevious trend(+EUR 6.5 mln) in 16weeks


19/27

19


Introduce a new coverage modeldifferentiated for each client segment

( ) Turnover, EUR mln

Loans(EUR bln) Key elements

Dedicated channelDedicated coverage model based on specialised

Relationship Managers and involvement of high-profileClient Directors two level coverageAccount planning for each client with contribution fromproduct and sector specialists50-60 clients per Coverage Team

Large(>200)

Mid(15-200)

Small(2.5-15)

Dedicated Relationship Managers supported by JuniorRMs and administrative resourcesRMs based in Corporate Units and supported byproduct/sector specialistsIT tools (RM workstation) and centralised sales support70-80 clients per Coverage Team

3.6

7.4

12.9

Dedicated Relationship Managers supported by JuniorRM administrative resources

RMs based in Corporate Units and supported by CRMtoolsSimplified credit processTailored product range140-160 clients per portfolio

AntonvenetaClients*

380

5,111

25,860

31,351 23.9

Unified coveragemodel forAntonveneta andInterbanca

Coverage modeldifferentiated forthree maincustomer segmentsservice model

Physical footprintbased on 58Corporate Units**

Global clientsmanaged directly

by ABN AMRO

2A

MarketClients*

~800

~15,000

~70,000

~85,800

* Number of individual companies with turnover above specified threshold, except for large clients where number is referred to Groups of Companies ** Rationalisation of current footprint of 69 Units


20/27

20


Reorganise the Antonveneta productfactories, leveraging ABN AMRO expertise

4 dedicated product

development centresfocused on key value-added services

Product developmentcentres totally integratedin the client segment,providing one face tothe market

Strong link toABN AMRO globalfactories to leverage/ adopt in Italy globalexpertise

Enhanced productdelivery model based oncentral product unitsand product specialistson the field

Antonveneta Commercial product development centres

Central Units

DerivativesProductSpecialists

Payments &TransactionsProductSpecialists

Trade Finance

ProductSpecialists

GlobalMarkets

TransactionBanking &Trade Finance

SpecializedLending

Merchant &InvestmentBanking

Product Specia- lists

ABN AMRO

2B

Coverage Mid/Small Clients Coverage Large Clients

Mid/SmallClients

Large Clients


21/27

21


An integrated program to develop skills andmotivation of front-line staff

Creation of new

profiles and roles

Trainingand

development

Assessmentof existingresourcesand consequencemanagement

Motivation andincentives

Currently developing a newRelationship Manager workstation tointegrate all the IT tools used tomanage and develop the client

3

Key initiativesPlanned deploymentof ~100 high calibreRelationshipManagers in 2007-2008

Launched anassessment of front

line managerial staff toidentify competence/ skills, strengths andgaps

Key initiativesActivated a continuous learningapproach based on:

Periodical road-shows wheremarketing and sales managersmeet front-line people

Continuous training sessionson commercial products

Coaching activities

New incentive scheme articulatedin:

Incentives based oncommercial campaigns results

Incentives based on overallyear performance


22/27

22


Conclusions

Good starting point in terms of market potential and Antonvenetasposition

Ambitious revenue target of EUR 1,105 mln in 2008 (+EUR 320 mlnversus 2005, 12.1% CAGR)

Significant growth opportunities on current client base, and

opportunities for new client development as well as doing businesswith international clients from ABN AMRO

1

2

3


23/27

23


Agenda


Market outlook

Ambitions

Action plan

Annex


24/27

24


19.0%

10.6

5.0

3.7

2.3

1.3

0.2

0

3.0

22.8%

13.0

8.5

6.1

4.1

2.6

1.0

0.1

6.3

73.2%

37.1

22.1

14.3

9.3

5.8

3.1

0.3

13.6

Share of Wallet linked to client size; in eachsegment opportunities to increase penetration

Clientsdeciles Large corporate Medium corporate Small corporate

1

Total

6.5

5.0

3.3

0.9

0.2

10.0

41.3%

20.5

7.3

N.S. N.S. N.S. N.S.

N.S. N.S. N.S. N.S.

3

4

2

5

6

7

8

9

10

Average

* Antonveneta and Interbanca exposure over system exposure

Penetration increase targetShare Of Wallet* distribution by deciles

d f d d l


25/27

25


An opportunity to increase spreads for under-priced clients arisesfrom the analysis of current pricing, which is highly volatile eveninside homogeneous client clusters

Clientdeciles

740

153

431

520

608

668

837

989

1,113

1,129

285

ST Lending SpreadBasis Point

MT/LT Lending SpreadBasis Point

404

286

231

198

184

169

156

142

124

93

120

1

2

3

4

5

6

7

8

9

10

Expected LossSpread lower than expected loss

Client cluster characteristics:

Antonvenetaclients

Client type: SmallCorporate

Geographical

area: Central Italy

Risk Class: 8

Number of clientsconsidered:

421 ShortTerm Lending

111 M/L TermLending

Commercial Banking accounts for most of the


26/27

26


2005, EUR bln, percent

Operating income

Commercial Banking accounts for most of theoperating income and profit of Italian CorporateBanking

18%12%

9% 7%

81%73%

168.1

EU-5

30.8

Italy

Corporate Finance +Merchant Banking **

Global Markets ***

Commercial Banking ****

100% =

* Pre tax, pre cost of capital, post cost

of risk (provision charge for bad and doubtful debits), excluding proprietary trading

** Includes Corporate Finance (ECM,DCM, M&A), Equity Investments

*** Includes Specialised Lending, Fixed Income, Equity, Money market,Forex, Commodities

**** Includes Commercial Lending,Leasing, Factoring, Cash

management & payments, Custody,Deposits, Trade Finance

Profit *

18%14%

7% 6%

80%75%

60.2

EU-5

9.6

Italy

100% =


27/27

27


Cautionary Statement regarding Forward-Looking Statements

This announcement contains forward-looking statements. Forward-looking statements arestatements that are not historical facts, including statements about our beliefs and expectations.Any statement in this document that expresses or implies our intentions, beliefs, expectations,forecasts, estimates or predictions (and the assumptions underlying them) is a forward-lookingstatement. These statements are based on plans, estimates and projections, as they are currentlyavailable to the management of ABN AMRO Holding N.V.. Forward-looking statements thereforespeak only as of the date they are made, and we take no obligation to update publicly any ofthem in light of new information or future events.

Forward-looking statements involve inherent risks and uncertainties. A number of important

factors could therefore cause actual future results to differ materially from those expressed orimplied in any forward-looking statement. Such factors include, without limitation, the conditions inthe financial markets in Europe, the United States, Brazil and elsewhere from which we derive asubstantial portion of our trading revenues; potential defaults of borrowers or tradingcounterparties; the implementation of our restructuring including the envisaged reduction inheadcount; the reliability of our risk management policies, procedures and methods; changesresulting from the acquisition of Banca Antonveneta, including the risks associated with itsbusiness, as well as the difficulties of integrating its systems, operations functions and cultureswith ours; and other risks referenced in our filings with the U.S. Securities and ExchangeCommission. For more information on these and other factors, please refer to our Annual Reporton Form 20-F filed with the U.S. Securities and Exchange Commission and to any subsequentreports furnished or filed by us with the U.S. Securities and Exchange Commission.

The forward-looking statements contained in this announcement are made as of the date hereof,and we assume no obligation to update any of the forward-looking statements contained in this

document.

[ABN AMRO] Strengthen the Commercial Bank

Documents

Transcript of [ABN AMRO] Strengthen the Commercial Bank