CREDEM & ABN AMRO Winning Together

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CREDEM & ABN AMROWinning Together

Presentation to ABN Amro Board of Directors Amsterdam, August 3rd 2005

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Agenda

Cross Border M&A Deals in Europe Regulatory and legal issues Credem – Top Mid-Size Italian Bank Credem Valuation Strategical Fit & Synergies Transaction Structure Final Remarks

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Cross Broader Deals

9.65bn Euro takeover of Abbey by Spain's BSCH UniCredito, Italy's largest bank, acquired HVB, 16bn Euro. We have yet to see comparable transactions that involve

Italian banks. Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA)

recently failed attempt to acquire Italian bank BNL. Antonio Fazio, Bank of Italy governor, is being threatened

with legal action by the EU because of his alleged role in blocking the two foreign approaches.

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Credem: geographical fit for ABN Amro

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Agenda


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Legal and Regulatory EnvironmentLisbon Agenda

Lisbon Agenda- Financial Services Action Plan launched by European Commission aims at a single market for financial services

Lisbon Agenda is the driver of all regulatory actions Regulators can impede a cross border acquisition of an

Italian bank by an EU bank only on the basis of: Competition Law Concerns Banking Stability Concerns

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Legal and Regulatory EnvironmentConsolidated Banking Directive

EU Directive 2000/12/EC Article 16, Paragraph 1

Prior notification of the size of intended holding (exceeding 5%)

Prior notification of intended acquisition of voting rights (20%, 33%, 50%)

Regulators may oppose within 3 months on the basis of suitability of the “person” (acquirer)

Refusal of authorization (Article 7, paragraph 2)

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Legal and Regulatory EnvironmentLeading EU Cases

Banco Santander/Abbey National (2004) The Commission held that the retail activities of the

two concentrating banks did not overlap. Abbey National is present in the UK and to a limited extent in France and Banco Santander only in Spain. Corporate banking activities are very small in both cases

Merita/Nordbanken (1997) The two merging entities were solely active in their

domestic markets. The merger was allowed as it was held that it does not create a competition impeding effect

Effect: Government authorizations in cross border banking M&A within EU have become weaker

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Legal and Regulatory EnvironmentNational Law-Italy

Civil Code: governs mergers, share deals, and asset deals in the form of going concern transfers

Legislative Decree 58 of February 24 1998 (the Consolidated Law on Financial Intermediation: Where a listed company is involved

Tax issues covered by Presidential Decree 917 of December 22 1986 (the Consolidated Law on Revenue Taxes)

Antitrust Law (Law 287 of October 10 1990) Transactions in regulated sectors - such as

telecommunications, media, gas and energy, banking, insurance and financial services - are subject to industry-specific rules and to the control of public supervision authorities

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Legal and Regulatory EnvironmentThe 1993 Banking Law

Article 57: 1. The Bank of Italy shall authorize mergers and divisions involving banks where they are not in conflict with the principle of sound and prudent management

Procedures for the entry of a planned merger can not be initiated without prior authorization

Article 19: 1. Prior authorization by the Bank of Italy is required where the acquisition exceeds 5% of the voting capital

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Legal and Regulatory EnvironmentBank of Italy-Anti Trust Role

Competition Authority (Law 287/1990) makes the Bank of Italy responsible for the antitrust function in the banking sector

Product market definition: The Bank of Italy defines as relevant products the

markets for funds (sight and time deposits) and for credit (both short and long-term)

Other relevant markets concern traditional lending and deposit taking products e.g. leasing, factoring, asset management

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Legal and Regulatory EnvironmentBank of Italy-Anti Trust Role

Geographic market definition: Provinces are the basic geographic units for fund-

raising markets and “Regions” for loan markets For the other financial product markets

geographic dimension is “national” In-depth investigations are unlikely to be

opened for operations involving firms with an aggregate share of less than 25 per cent of the relevant market

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Legal and Regulatory EnvironmentDisclosures, Reps & Warranties

The Consolidated Law on Financial Intermediation requires a prospectus to be prepared and made public in respect of IPOs, public takeovers and any other price sensitive or extraordinary corporate transactions affecting listed companies

The Civil Code lays down that a party may be liable for damages by way of pre-contractual liability in case of unjustified withdrawal

A party who knows of, or should by using reasonable diligence know of, any reason for invalidating a proposed agreement and does not disclose is liable for the damages

Courts have interpreted more narrowly. In the absence of an extensive pre-acquisition due diligence and an comprehensive contractual representations and warranties buyer can remain unprotected against seller's lack of transparency

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Agenda


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Target Engaged: Credito Emiliano

Medium sized Italian bank 14th banking group as market cap 12th bank as asset under

management ($40 bln) 453 branches throughout Italy $ 2.5 bln market cap

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Credem: Financials Snapshot

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Credem Ownership Structure

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Credem: Structure & Business

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Agenda


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CredemCurrent Valuation

Share price 8.81Number of shares outstanding 275,488,892Equity value 2,427,057,139

Credem Valuation as of 7/29/05 (in euros)

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Credem CompetitorsKey Ratios

P/E P/Book xRevenueCitigroup 10.8 2.1 2.8BAC 11.1 1.8 3.3Deutsche 14.4 1.4 1.7JPM 23.8 1.2 2.8Antonveneta 13.8 1.7 3.4BPVN 12.1 1.5 2.4BPMilano 13.3 0.9 2.3BPU 13.3 1.2 2.4Average 14.1 1.5 2.6

Am

eric

an

/E

uro

pe

an

B

an

ks

Ita

lian

B

an

ksCompetitors Key Ratios

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0 2 4 6 8 10 12

$/Shr

U.S/Europe BanksP/E

P/Book xRev

Italian BanksP/E

P/Book xRev

Credem Valuation

Credem ValuationComparison with American and Italian Banks

8.81

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Credem ValuationShortfalls of Multiples Valuation

Multiples Valuation is a comparison to other pure play banks

Credem is a combination of traditional commercial banking, Asset Management, and Investment Banking

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Credem ValuationShortfalls of Multiples Valuation (con’t)

Credem’s revenue outlook is more attractive vs. Italian banking sector average

Net interest income should grow due to superior lending growth and resilient spreads

Non-interest income should be driven by AM (volumes and margins) and rapid growth of Investment Banking Division as well as higher traditional banking fees which are due to be raised

Source: Cheuvreux

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Credem ValuationSum of Parts

Weights Value Eur/shr P/E05 P/E06 E05 E06

0.44 Traditional Banking 1085 3.94 13.3 13.3 68 82

0.42 Asset Management 1036 3.77 12.1 12.1 72 86

0.14 Investment Banking 345 1.26 17.7 17.7 16 20

Total Value 2466 8.97 13.5 13.4 155.03 184

Source: Divisional weights, P/E estimates from Cheuvreux analysts

SoP Valuation

5.00 6.00 7.00 8.00 9.00 10.00

Eur/Share

Current Share Price

Sum of Parts Share Price

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Agenda

Cross Border M&A Deals in Europe Regulatory and legal issues Credem – Top Mid-Size Italian Bank Credem Valuation – Why Credem Strategical Fit & Synergies Transaction Structure Final Remarks

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A Perfect Deal at the Right Time European banking industry is HOT although Italian

economy is a turnaround play (recession since 4Q04) Italian banking system is growing at an higher pace

Consumer credit is growing double digit Highest savings rate among Western European

countries Banking industry is highly fragmented

On Jan 13th Mr. Maramotti who owns a controlling stake in Credem Holding passed away

The family could sell its stake in the banking business focusing only on fashion

Maramotti’s heirs are currently working in the Fashion business

Italian Central Bank is weakened by EU and Italian Courts judgments

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Why Credem? – ABN Amro’s View

ABN Amro’s perspective Will to expand in Italian Banking system Enough capital base (capital increase in April 05)

Big players are costly from: An economic standpoint (performance figures as

industry) A political standpoint (both left and right parties won’t

accept a foreigner) Smaller and “Popolari” Banks present law issues still

unresolved A small bank acquisition won’t allow ABN Amro to

enter the industry with a sufficient scale

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Bank of Italy: The Real Obstacle

Italian Central Bank should/could: Authorize any merger in the banking industry Authorize any increase over the 5% ownership

threshold Valuate banks on the basis of capital

adequacy, risks, holdings, internal control systems

Valuate any antitrust issue concerning banking companies

More on 1993’s banking law

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Recent Deals and Bank of Italy

BBVA’s bid on BNL Announced on in March 2005 2nd largest Spanish bank willing to acquire 7th

Italian bank in which it has held a controlling stake for years

Deal failed upon the higher offer of Unipol Bank of Italy has placed an high acceptance

threshold Bank of Italy is rumored to have helped Unipol

and its allies on their bid

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Recent Deals and Bank of Italy

ABN Amro’s bid on Antonveneta Announced in March 2005 Fairly priced 100% cash offer (sweetened later

on) Tender bid failed (only 2.88% NTV’s

shareholders tendered their shares) Bank of Italy encouraged and approved a worst

offer from Banca Popolare Italiana Court & Parliament are watching and

scrutinizing the deal closely

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Interloper analysis

Credem could be targeted by Unicredito Italiano HSBC Banca Montepaschi Italian local entrepreneurs Barclay’s, Lehman Brothers & others

interested in the Asset Mgmt business

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Interloper Analysis - Unicredito

Unicredito Italiano Now busy with HVB’s deal but… Credem would have a strategic fit

Maramotti in UC’s Board Market share in Centre/North Italy Pioneer and EuroSGR integration (1st

Italian Asset Manager) UC is willing to acquire well managed

companies

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Interloper Analysis: HSBC & MPS

HSBC Not successful tentative to launch an

Asset Management business in Italy Long term relationships with Credem

(listed after Euromobiliare acquisition) Banca Montepaschi

Strategically stalled 5th banking Italian banking group “environmentally” fitting with Credem

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Interloper analysis: Italian entrepreneurs and other foreign banks

Local Entrepreneurs Italian Central regions have a specific, more laid

back, way to live Italian industry is fragmented and local bank

relationships are a competitive advantage Emilia is rich and unite enough to engender an

“industrial” bidder (with the favor of next Italian government)

Barclay’s & Lehman Both willing to expand its AM business in Europe

(Deutsche Bank and GLG deals) Financially sound Low expertise in the Italian commercial banking:

should sell the branches (deal becomes complex)

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Agenda


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Transaction Rationale

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Strong Fit with ABN Amro Strategy

Increase ABN Amro’s Consumer, Retail, Small Business, Mid-Market and Mortgage Business footprint in

Europe

Profitable franchise with high quality customer base complementing Asset & Wealth Management

Strategy

Value creating opportunity strengthening & leveraging ABN Amro commercial banking

expertise inside and outside Italy

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ABN Amro's strategic agenda: accelerate growth and build scale in mid-market segments

Italian economy is mainly characterized by small/medium businesses - whose main source of financing is bank loans allowing for cross sell of consumer banking products, as well as Asset & Wealth Management.

Product Innovation

Distribution

Consumer Clients Commercial Clients

Provider of Scale

TopPrivateClients

Mass Retail Small Business

Owners ofCompanies

MassAffluent

Mid-MarketCompanies

“Sweet Spot”

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Italian mid-market has significant untapped potential

5.6

1,444

119

19.3

4,892

296

65.2

17,131

1,032

50.7

12,966

1,069

87.237.611.14.58.215.57.54.2

23,8386,5242,4151,2532,1184,0821,390947

389263140201282465655

Source: Countries Central Banks, brokers research report, and Datamonitor report

(1)Size of the consumer loans market in 2003 and mortgage market in 2002 respectively

High savings rate

Pension reform

Increased penetration rate in retail segment

Increased demand for more sophisticated products and longer debt maturities in SME segment

6%5%

4%3%

2%

13%

10%

8%7%

2%

Italy Spain UK France Germany

Consumer Loans CAGR 04 - 07 Mortgages CAGR 04 - 07

CAGR of Consumer loans and mortgages

Mortgages

Key growth drivers

Consumer Loans

Size(1) (EUR bln)

Pen./PerCapita % of

GDP

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Detailed comparison for Credem vs other mid-size Italian Banks: Non-performing loans (NPL) ratio

Asset quality is outstanding Sound risk management and prudent lending approach Credem has territorial presence in some of the

wealthiest regions in Italy

Italian Asset QualityAntonveneta BPU

BP Milano

CR Firenze Credem

NPL coverage ratio, 2003 48.6% 37.0% 39.6% 39.6% 59.1%

Total net problem loans as a % of market cap, 2003 44% 78% 10% 21% 4%

Total net problem loans as a % of book value, 2003 75% 40% 18% 33% 7%

NPL ratio (net) to total loans, 2004A 3.1% 1.9% 0.7% 1.2% 0.3%

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Revenue/Profit Breakdown for Credem

Italian Banks - Top Line Breakdown (2004A data)

EUR millions Antonveneta BPU BP Milano CR Firenze Credem

Interest Income 1,364 1,517 662 680 324

Commission Income 564 789 521 286 367

Total Income 2,235 2,506 1,444 1,112 832

Interest Income 61.0% 60.5% 45.8% 61.2% 38.9%

Commission Income 25.2% 31.5% 36.1% 25.7% 45.2%

Well Balanced Businesses Mix Credem one of the least exposed banks in

Italian market to interest income as a result of AM/WM strategy

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Comparison of ROE for Credem vs other Italian medium-size banks

Annualized, based on 1H04 data BPL

CR Firenze Credem

Tier 1 ratio 6.3% 5.2% 7.2%

ROE 11.0% 16.4% 16.5%

Efficiency (cost/income) ratio 58% 67% 72%

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Antonveneta vs. Credem: geographical fit in case ABN Amro will be able to close Antonveneta deal

Total: 1,000

branches

Focus area: 697

branches

1091.8%

10.1%

2969.0%

983.1%

200.9%

10.2%

353.3%

893.6%

271.8%

61.0%

21.4%

20.8%

285.5%

938.4%

391.5%

11.0%

667.1%

755.5%

121.3%

Antonveneta Credem

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ABN AMRO has successfully integrated and grown mid-market franchises in Brazil and North America

Announcement date

Announced synergies

Revenue synergies

Cost synergies

Transaction size

Realization of synergies

Revenue synergies

Cost synergies

Michigan National Corporation (NA)

22 November 2000

USD 100 mln pa; from 3rd year onwards

USD 2.75 bln (100% stake)

Not communicated (internal targets)

Total amount of synergies exceeding forecasts by 30%, with over-delivery in years 1 (+50%) and 2 (+16%)

USD 100 mln pa; 25% target cost base

• Incremental sales in fee-based products• Additional benefits from leveraging

LaSalle’s commercial banking coverage model, product suite, credit portfolio and risk management to MNC client base

MNC integrated ahead of schedule

Sudameris (Brazil)

16 April 2003

BRL 300 mln pa; as of 2005

BRL 2.19 bln (95% stake) or ~ EUR 600 mln

BRL 300 mln pa; 30% target cost base

Not communicated (internal targets)

Sudameris integrated ahead of schedule

• Incremental contribution from enhanced portfolio management (credits/investments)

• Additional benefits from cross-selling and applying best practice client coverage management across the client bases

Synergies ahead of 2004 target, and clearly on course to realize the announced 2005 target of BRL 300mn

Completion date 02 April 2001 27 October 2003

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Synergies – ABN Amro + Credem

Cost saving synergies fully realized in 2005-9

536 25%

429 20%

322 15%

NPV of cost savings for year 2005Millions EUR

IT related costs30%

Procurement20%

General administrative

5%

New servicing model10%

Funding5%

Transaction banking

10%

Wholesale20%

Efficiency benefits from leveraging economies of

scale (incl. general admin.) and IT related costs Wholesale product suite, risk and credit portfolio

management Transaction Banking Implementation of new servicing model =>

enhancement of the multi-channel approach Total estimated restructuring charge: EUR 100M Lower financing costs as a result of ABN Amro Credit Rating

7.00%Risk premium rate

3.29%Risk free rate

1.7ABN Amro Beta

15.90%ABN Amro WAAC for Credem

based on Equity financing

Basic Assumptions for Eurozone:

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Synergies

Target Earnings (FYE 2005) EUR 1 blnAfter Tax Synergy EUR 430 mlnInterest Expense (6% for debt) EUR 180 mlnIncremental Net Income EUR 1.25 bln Pick-Up/Dilution Analysis Pre-Acquisition EPS Post Acquisition EPS

EUR 3.3 bln = EUR 1.99 EUR 3.3 bln + EUR 1.25 bln = EUR 2.741,662,420,000 1,662,420,000

P/E 10.5 (not changed – to be conservative)Implied share price EUR 28.77Current stock price EUR 20.62

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Conservative estimates: revenue upside not included in EPS calculations

Leverage ABN Amro’s: Servicing model from affluent / private banking

clients Wholesale product capabilities International presence Expertise in asset management and

derivatives Global consumer finance capabilities

Offer of standard banking services in Italy to ABN Amro’s international clients through Credem network

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Agenda


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Credem Offer: summary terms

Voluntary tender offer Tender for all 275.5 mln shares currently outstanding

not already owned by ABN AMRO Offer subject to conditions precedent such as

regulatory approvals, no frustrating actions and no material adverse change to Credem’s business

Total maximum consideration EUR 2.87 bln for 100% of total shares, EUR 10.4 per Credem share

19.34% premium to last price(8.81/share); 23.93% premium to average official price over last 6 months(8.5/share)

Offer structure

Credem price

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Transaction Structure

Credem is owned by CredemHolding (73%) and by the market (27%)

ABN Amro’s could only bid the holding company with a friendly offer

The acquisition of a majority stake in a company indirectly controlling a public company bind the buyer to launch a tender offer to market’s stake

Tender offer price is the average between weighted average price of the last 12 months and highest price paid for the controlling stake

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Structure of Acquisition

The acquisition can be set up as reverse triangular Target stock will be de-listed after the transaction Cash deal will make the offer attractive to Credem and

within the financial capability of ABN AMRO.

CredemABN holding

ABN AMRO

100%

Merge into

100%

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Concluding Remarks

EU pressing on Italy – regulatory barriers will fall

Credem’s buyout is interesting on a strategic perspective Short term: entrance in a high growth country Long term: if ABN wins Antonveneta can create the

4th banking group in Italy

CREDEM & ABN AMRO Winning Together

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