Agenda

1 Companies Involved

2 Rationale of the Acquisition

3 The Acquisition Battle

4 Analysis of the Offers

5 After the Deal

6 Conclusion

1
 ABN Amro Company History

1964
§  Netherlands Trading Society
merged with Twentsche Bank
to form Algemene Bank
Nederland (ABN)
1964
§  Amsterdamsche Bank merged
with Rotterdamsche Bank to
form Amsterdam Rotterdam
Bank (AMRO)

1991

§  ABN and AMRO merged to form ABN Amro, headquartered in

Amsterdam, Netherlands

2
 ABN Amro Company Profile

General Introduction Divisional breakdown of income 2006

§  The 8th largest bank in Europe
and 12th worldwide
§  Total operating income
€22.66bn
§  Market capitalization North
€45.9bn America
19% Netherlands
§  Total assets of €1.025bn Asset 22%
Mgmt LatAm
§  The bank has more than 22%
4%
4.500 branches in 53
countries Group
§  Employed more than Europe Functions/
105,000 people LatAm 10% Services
22% 1%

Business Structure
§  Consumer banking Asia
6%
§  Commercial banking Private Private
Equity Clients
§  Private banking 6% 6%
3
 Barclays plc

General Introduction Divisional breakdown of income 2006

§  The 7th largest bank
worldwide by total assets Wealth Mgmt
($2.42 trillion) 3%
§  The 22nd largest company
worldwide by market
capitalisation (£21.8 billion) UK banking
Investment 39%
banking
Business Structure 33%
§  Corporate and Investment
Banking
§  Wealth and Investment
Management
§  Retail and Business Banking Creditcards
Retail & 6%
commercial
banking
19%

4
 RFS Consortium

§  Formed in early April 2007 in order to acquire ABN Amro

§  Made its initial approach to ABN Amro on 25th April
§  More than 300,000 employees and 110 million customers around
the world

Acquisition structure

38.3% 22.8% 27.9%

5
 RBS Group

General Introduction Divisional breakdown of income 2006

§  The world’s 16th largest bank
(assets: $1.83 trillion), 30 million
customers RBS
§  A global leader in securitization, insurance
6%
structured and leveraged finance
and financing and risk
management products Citizens
20%
Corporate
markets
Business Structure 41%
§  Corporate markets- debt, banking,
investment and risk management Ulster
services bank
§  Retail market- retail services for 4%
personal and small business
customers
§  Ulster bank- banking and financial
services in Ireland Retail
markets
§  Citizens- banking services in US. 29%
§  RBS insurance- motor, home and
commercial insurance
6
 Fortis

General Introduction Divisional breakdown of income 2006

§  20th largest business in the
world by revenue and the 3rd
largest European private bank
§  A banking, insurance and Retail
investment management banking
company with home base in the Insurances 24%
31%
Benelux countries
§  Broke up after having difficulty
financing its part of acquisition
of ABN Amro
§  Retained its insurance
operations (renamed Ageas)
and sold ownership of the Fortis
Merchant
brand to BNP Paribas
& private
banking
Business Structure 45%
§  Retail banking
§  Merchant & private banking
§  Insurances
7
 Santander

General Introduction Divisional breakdown of income 2006

§  World’s 18th largest bank
(assets: $1.61 trillion) and the
2nd largest bank in the Eurozone Asset
by market value ($80.92 billion) mgmt,
insurance
§  Main activities: 7%
Global
§  Europe: covers all retail
wholesale
banking, asset management banking
and insurance 14%
§  UK: focuses on retail
banking and insurances
§  Latin America: includes
financial activities
conducted via the Bank’s Retail
subsidiaries banking
79%
Business Structure
§  Retail banking
§  Wholesale banking
§  Asset management and
insurances 8
 Overview Key Figures 2006

Net Net
Market
banking profit Profitability ROE
HQ cap
income (€bn) (%) (%)
(€bn)
(€bn)

Edinburgh
RBS
United 41.1 9.6 97.2 22.1 14.28
Kingdom

RFS Brussels
Conso Belgium;
rtium Fortis 15.8 4.4 43.1 19.4 18.41
Utrecht,
Netherlands

Santander
Santand
Spain 22.6 7.1 90.4 23.2 21.39
er

Barclays London UK 28.9 7.7 79.73 26.6 24.7

9
 Agenda

1 Companies Involved

2 Rationale of the Acquisition

3 The Acquisition Battle

4 Analysis of the Offers

5 After the Deal

6 Conclusion

10
 Rationale of the Acquisition
Significant Presence Worldwide
ABN AMRO was a bank with a
significant presence in the European
banking market. It is an attractive
target for acquisition.
§ Total operating income €22.658bn
§ Ranked as the eighth largest bank
in Europe
Recently underperforming History
§  2005 unable to reach the target
of a top-five ROE among its peers.
§  2000-2005 share price
stagnated
§  Operating expenses increased
at a greater rate than operating
revenue, and the efficiency ratio
deteriorated further to 69.9%
§  The problems in its cost structure
limited its geographical scale
benefits
§  Beginning of hard relationship
between management and
shareholders
11
Recently underperforming History

12
 Buyer´s consideration

Faster Growth Economies of scale

§  Exposure to broader geographical §  Opportunity to move up the list
footprint under American counterparts from
§  The platform of ABN allowed a global perspective
the RBS consortium banks to
achieve faster growth in
Europe, Asia and Latin Name of the
Market Net
Cap Income ROE%
America Bank Rank
($m) ($m)
CitiGroup 1 1,493,987 29,433 38.3
§  Complementary and HSBC 2 1,501,970 20,966 29.6
integration of resources BAC 3 1,297,795 25,155 36.4
§  RBS Global Banking & Markets JP Morgan 4 1,198,842 12,215 17.3
+ ABN Global Wholesale RBS 7 1,337,512 13,664 31.2
Businesses Santander 10 954,473 9,033 26.9
Barclays 14 1,591,524 9,091 29.7
§  RBS + ABN International
ABN 15 1,039,052 6,705 24.1
Retail Businesses

13
 Agenda

1 Companies Involved

2 Rationale of the Acquisition

3 The Acquisition Battle

4 Analysis of the Offers

5 After the Deal

6 Conclusion

14
 The Acquisition Battle

21 February 2007
19 March 2007
16 April 2007
23 April 2007

U.K. hedge fund Barclays offered to Royal Bank of Barclays offered an

The Children´s acquire ABN Scotland all-share deal
Investment Fund Amro proposed a deal
As part of the
(TCI) called on in which RBS,
ABN Amro´s agreement ABN
ABN Amro to spin- Fortis and Banco
market Amro would sell its
off its units, Santander would
capitalization LaSalle division to
merge or break jointly bid for ABN
reaches €57bn Bank of America
itself as the Amro
Corp.
current stock price
did not reflect the
true value of
underlying
assets

15
 The Acquisition Battle

29 May 2007
16 July 2007
23 July 2007

RFS Consortium RFS Consortium Barclays raised

offers €38,40 increased cash its offer for ABN
per ABN Amro component to Amro to €67.5bn
share, valuing 93%, but price
ABN Amro at offered remained
€72bn including the same, this
LaSalle time however,
excluding LaSalle

16
 The Acquisition Battle

Barclays
RFS Consortium
5 October 2007
9 October 2007

Barclays has RFS Consortium Barclays FRS Consortium

revised its offer to offered a 93% withdraws offer declared to
a 37% cash cash component from ABN Amro acquire ABN
component Amro with its bid
In total it was
of €72bn,
9,8% higher
excluding LaSalle
than Barclays’
offer

17
 Agenda

1 Companies Involved

2 Rationale of the Acquisition

3 The Acquisition Battle

4 Analysis of the Offers

5 After the Deal

6 Conclusion

18
 Analysis of the offers

RBS Fortis Santander

Barclays
Consortium

23rd of April 23rd of July 29th of May 16th of July

Date
2007 2007 2007 2007

Type of bid Friendly takeover Hostile takeover

Value of the
65.7 billion € 67.5 billion € 71.1 billion € 71.1 billion €
deal

Value per ABN

35.44 € 35.75 € 38.40 € 38.40 €
Amro share

Cash
NONE 13.15 € 30.40 € 35.60 €
component
3.225 new 2.13 new
0.844 new RBS 0.296 new RBS
Share Barclays shares Barclays shares
shares per ABN shares per ABN
component per ABN Amro per ABN Amro
Amro share Amro share
share share
Cash 37% of the 79% of the 93% of the
0% of the offer
proportion offer offer offer

19
 Analysis of Barclays’ offer
Arguments in favor of Barclays’ offer
§  Friendly offer
§  Barclays would ultimately keep the
entire ABN Amro organization
intact
à  Barclays’ strategy : create a
new global bank which would
become one of the world’s
biggest financial institutions
§  Headquarters would remain in the
Netherlands
§  Growth opportunities in the
attractive Asian market in
accordance with ABN Amro’s
strategy
Arguments against Barclays’ offer
§  Lower offer (lessened by a fall in
Barclays’ share price): lower price
per share
§  Less cash generous: cash
component of 37% vs. 93% from
the Consortium
§  Higher level of dilution for existing
shareholders
§  Aggressive synergy plans
§  High levels of EPS dilution post-
transaction - accretion relies on
the execution of synergies
20
 Analysis of Consortiums´ offer
Arguments in favor of Barclays’ offer
§  Higher offer: higher price per
share
§  Cash rich offer: cash component
of 93% vs. 37% for Barclays
à looks more appealing,
generous ABN Amro
shareholders
§  Lower level of dilution for existing
shareholders (only concerns RBS)
§  Total expected synergies are
higher if the business is broken up
between the 3 members of the
consortium than if the merger with
Barclays takes place
Arguments against Barclays’ offer
§  The consortium would split
ABN Amro (each bank would take
control of the parts of ABN they
were best placed to deal with) à
not aligned with ABN Amro’s
strategy
§  Need to raise huge amounts of
capital to fund the cash part of the
offer (93%)
§  Aggressive synergy plans
§  Did the consortium overpay for the
acquisition?
§  Potential for conflict between
shareholders (Dutch, British,
Spanish etc.)
21
Synergy Analysis

22
 The decision
Financing the Offer

Barclays had to withdraw from the bidding war:

à was unable to match the consortium’s offer
à missed the deadline for securing majority shareholders’ support

Fortis made a 13.4

RBS raised 5 billion € rights issue
billion € (2nd largest rights
through five issue to date in
issues of tier Europe).
1 instruments
in several RBS Fortis
formats,
38.3% 33.8% Santander raised
currencies and
€7 billion through
markets
a combination of
(largest ever
convertibles and
tier 1 Santander other financing
package). 27.9% sources.
Successful
despite difficult
market
conditions.
23
 Agenda

1 Companies Involved

2 Rationale of the Acquisition

3 The Acquisition Battle

4 Analysis of the Offers

5 After the Deal

6 Conclusion

24
 Break up of ABN Amro´s businesses

§  ABN AMRO businesses split between the members of the

Consortium according to their strategic preferences and
core capabilities

§  Shared Assets : Private equity portfolio, stakes in Capitalia

and Saudi Hollandi, and Prime Bank / Head Office and central
functions

§  BU Netherlands §  BU North §  BU Latin

§  BU Private America America
Clients §  BU Asia §  Antonveneta
§  BU Asset §  BU Europe §  Interbank and
Management DMC
§  Consumer
Finance
25
Share prices after the deal

26
 Impact of the Deal

RBS FORTIS SANTANDER

§  Write down §  Loss of confidence §  Only one to

register profits
à  Solvency threatened à  Huge withdrawals after the deal

à  UK rescue plan à  Governments of à  Selling Antonveneta

(holding first 58% then Netherlands, Belgium and to Banca Monte dei
95% in RBS) Luxembourg rescued Paschi di Siena for
from bankruptcy €9bn

à  Later sold to BNP

Paribas

27
 Agenda

1 Companies Involved

2 Rationale of the Acquisition

3 The Acquisition Battle

4 Analysis of the Offers

5 After the Deal

6 Conclusion

28
 Conclusion

§  The consortium overpayed: 17.6 times tangibles book value for RBS
and 14.2 times for Fortis

§  The consortium picked a wrong time: Credit structure dislocation with
the subprime crisis

§  Lack of due diligence

§  Collective enthusiasm à « trophy deal »

è Acquiring ABN-AMRO was a “bad mistake”

29
Thank you for your attention

30