SIMPLE DEMERGER PLAN

Transcription

1 This translation of the Portuguese document was made only for the convenience of non-portuguese speaking Shareholders. For all intents and purposes, the Portuguese version shall prevail. SIMPLE DEMERGER PLAN BANCO BPI, S.A. LISTED COMPANY

2 CONTENTS I. DEFINITIONS... 3 II. ANNEXES... 4 III. INTRODUCTION... 5 IV. PRESENTATION Presentation of the BPI Group Description of the Demerged Company Description of the Proposed Operation Proposed Final Structure V. BANCO BPI S SIMPLE DEMERGER Mode Reasons Conditions and terms Participation of the companies involved in the share capital of the other Assets to be spun off from the Demerged Company Specially-compiled balance sheets of the Demerged Company and pro forma balance sheet of the New Company Effects of the demerger on the accounts of the Demerged Company Effects of the demerger on the accounts of the New Company Consideration for the shareholders of the Demerged Company Proposed amendment to the Demerged Company by-laws New Company proposed by-laws Protective measures of non-member third parties rights to share in the profits Protective measures for creditors rights Relevant date for legal and accounting purposes Special rights to safeguard the shareholders of the Demerged Company Special advantages granted to experts and members of the governing bodies Protective measures for the rights of third parties to share in the profits of the Demerged Company Assignment of the contractual position of the Demerged Company VI. OTHER IMPORTANT ASPECTS Publication and consultation of documents

3 I. DEFINITIONS The abbreviations used in the present Demerger Plan have the following meaning: BANCO BPI BCI BFA BNA BPI MOÇAMBIQUE CCC BPI GROUP NEW COMPANY COMPANY or DEMERGED COMPANY AKZ Banco BPI, S.A., public-limited company with registered head office at Rua Tenente Valadim, no. 284, in Porto, with a share capital of ,98, registered at the Porto Commercial Registry under the single registration and taxpayer reference number Banco Comercial e de Investimentos, S.A., a Mozambique-law company, with registered head office at Av. 25 de Setembro, John Orr s Building, no. 1465, Maputo, Mozambique, with a share capital of Mzn registered at the Maputo Commercial Registry under the number 8571, taxpayer reference number Banco de Fomento Angola, S.A., an Angolan-law company, with registered head office at Rua Amílcar Cabral, Luanda, Angola, with a share capital of AKZ , registered at the Luanda Commercial Registry under number 775, taxpayer reference number Abbreviation for Banco Nacional de Angola BPI Moçambique Sociedade de Investimento, S.A., a Mozambique-law company, with registered head office at Rua dos Desportistas, nº 833, Ed. JAT V 1, 1º, Maputo, Mozambique, with a share capital social of Mzn , registered at the Maputo Commercial Registry under number , taxpayer reference number Abbreviation for the Commercial Companies Code Abbreviation for the group of companies which have a controlling or group relationship with BANCO BPI, which at the present date presents the configuration appearing in Point 1 The reference to the public-limited company to be incorporated in order to incorporate the assets and liabilities to be spun off from Banco BPI for purposes of the present Demerger, under the name SGA Sociedade de Gestão de Investimentos Africanos, SGPS, S.A. or any other name to be approved by the Registo Nacional de Pessoas Colectivas. The abbreviation and alternative to Banco BPI within the ambit of the Proposed Demerger the kwanza, the official currency of Angola 3

4 II. ANNEXES The present Proposed Demerger contains the following ANNEXES: ANNEX 1 ANNEX 2 Banco BPI balance sheets relating to 30/06/2015 actual and pro forma after realisation of the demerger Initial pro forma balance sheet of the New Company ANNEX 3 List of the assets and liabilities to be spun off from Banco BPI ANNEX 4 New Company proposed by-laws 4

5 III. INTRODUCTION Banco BPI results from the incorporation in 1981 of Sociedade Portuguesa de Investimentos, S.A. a company which was subsequently transformed into a bank in In 1996, the entity that is today Banco BPI (then BPI SGPS, S.A.) acquired Banco de Fomento e Exterior, S.A. At the date of its acquisition by Banco BPI, Banco de Fomento e Exterior, S.A. had: A branch in Angola; A bank in Mozambique, with the name Banco de Fomento, S.A.R.L., which in 2006 merged with Banco Comercial e de Investimentos, S.A.R.L., giving origin to the present Banco Comercial e de Investimentos, S.A., in which bank Banco BPI has since then owned a 30% stake. Banco BPI has, therefore, with effect from 1996 been conducting banking operations in both Angola and Mozambique. In 2002, Banco BPI s branch in Angola was transformed into a local law bank, with the name Banco de Fomento S.A.R.L. (Angola). In 2008, Banco BPI sold 49.9% of BFA s share capital to Unitel, S.A., whereby its shareholding, direct and indirect, in this bank was situated at 50,1%, a situation that is still the case today. Since its incorporation, for both accounting and prudential purposes, BFA has been the object of full consolidation at Banco BPI. The aforementioned full consolidation entails, amongst other consequences, the disclosure, for purposes of the prudential ratios to be observed by Banco BPI on a consolidated basis, of the exposures held by BFA. As regards BFA s exposures in AKZ stemming from the holding of Angolan public debt or investments at BNA, there was in force however, up until the end of 2014, a regime that provided that the weighting of these exposures, for purposes of the calculation of Banco BPI s capital ratios on a consolidated basis, should comply with the same percentages as those envisaged under Angolan prudential regulations, that is: 0% weighting of the exposures attaching to public-debt securities, of the exposure to BNA; 20% weighting of the exposure attaching to non-certificated public debt. On the other hand, the prudential regime then in force, in addition, provided that the exposures whose weighting for purposes of capital ratios was 0%, were exempted from the application of the limit on large risks that Banco BPI is subject to on a consolidated basis. This regime emanated from the Bank of Portugal s regulations and presupposed the recognition of an equivalent standard as regards Angolan regulations and supervision as those relating to Portuguese regulations and supervision, which equivalence the Bank of Portugal was of the opinion that exists. It transpires that, in the wake of the creation of the Banking Union, the authority to decide whether the regulatory and supervisory systems of third countries are equivalent to EU standards has now been entrusted to the European Commission. 5

6 As explained in more detail further on, the European Commission, pursuant to Article 114(7) of Regulation (EU) no. 575/2013, of 26 July relating to the prudential requirements for credit institutions and investment companies, issued on 12 December 2014 an Implementing Decision in which it disclosed the list of third countries with regulatory and supervisory standards that are equivalent to those of the European Union, which list contains only 17 countries or territories and does not include the Republic of Angola. This fact meant that as from 1 January 2015, BFA s exposure in AKZ to the Angolan State and to BNA ceased to be the object, for purposes of calculating Banco BPI s capital ratios and large risks limit on a consolidated basis, of risk weightings equal to those envisaged in the Angolan regulations for this type of exposure to now being the object of the risk weightings envisaged in the aforesaid Regulation of the European Parliament and Council. Consequently, BFA s exposure in AKZ to the Angolan State and to BNA ceased to be the object of a weighting for Banco BPI s consolidated capital ratios purposes of 0% or 20%, depending on the situations, and is now the object of a 100% weighting. On the other hand, this situation also had as a consequence that, in light of the provisions of Article 400(1) of the Regulation (EU) no. 575/2013, of 26 June, relating to the prudential requirements for credit institutions and investment companies, BFA s exposure in AKZ to the Angolan State and to BNA ceased to be exempt from the application of the limit to large exposures contemplated in Article 395 of that regulation, to which Banco BPI is subject on a consolidated basis. In this context, and given that it considers the assumptions envisaged in the regulations applicable for the ECB to take such decision have been verified, Banco BPI requested that the ECB accept that BFA cease to be the object of full consolidation and that it be consolidated under the equity method, an alteration that would permit avoiding that BFA s exposures to Angolan public debt and to BNA be taken into account for the large risks limit to which Banco BPI is subject. In this respect, it is worth noting that BFA s consolidation using the equity method would not mean that Banco BPI s consolidated accounts and prudential ratios would cease to properly reveal all the risks associated with the shareholding in BFA. In fact, if this method had been accepted and applied, Banco BPI would have deduct in full the amount of the aforesaid shareholding (and, therefore, the whole value of the risk borne by it with its shareholding) from its own funds for purposes of the CET1 ratio (common equity Tier 1). The request referred to in the preceding paragraph has in the meantime been rejected by the ECB. In this scenario, Banco BPI ceased with effect from 1 January 2015, and with respect to BFA s exposures to Angolan public debt and to the investments at BNA, to comply the limit on large risks on a consolidated basis, in accordance with the terms that we explained in detail to the market on 16 December 2014, which situation the ECB has set a deadline for its resolution. It should be pointed out that although, with effect from 1 January 2015, if the above situation of exceeding the large risks limit were to take place, Banco BPI would immediately and effective from that date have to calculate its consolidated capital ratios (i.e. the CET1 ratio common equity Tier 1) based on the new weighting of 100% of BFA s exposure in AKZ to the Angolan State and to BNA, and that the said capital ratios continue, under this new framework, to be situated above the limits that are laid down for them in the regulations. In order to resolve the issue of overcoming the above-mentioned limit on large risks, Banco BPI has identified the alternative involving the legal separation, by demerger, to a company other than Banco BPI and whose capital is held by the latter s current shareholders, of the organisational structure 6

7 corresponding to the exercise in an autonomous and independent manner of the Demerged Company of the business of managing the shareholdings in African credit institutions. The implementation of this alternative entails, however, a long formal process, with the result that for this to be utilised within the period arising from the deadline set by the ECB for overcoming the large risks limit, this process must be initiated right away. That is, the start of the process relating to this alternative (the demerger process) cannot wait for the eventual possibility of finding another solution. Accordingly, Banco BPI s Board of Directors is of the opinion that the demerger process should be initiated without prejudice to - if in the meantime the surmounting of the limit on large risks by some other means is resolved - this process being suspended or cancelled. The organisational structure to be spun off is legally composed of an economic unit (branch of activity) that comprises the stakes held by Banco BPI in African credit institutions and the organised grouping of human and balance sheet asset resources that are currently deployed in the exercise of this activity at the Demerged Company and which, as such, are needed for the conduct in an autonomous and independent manner of the management of those shareholdings, all under the terms more fully described further on. It should be noted that the management of those shareholdings present specific aspects that distinguish themselves from the management of the other shareholdings owned by Banco BPI. Namely: On the one hand, the management of those shareholdings is separate from the management of those shareholdings which Banco BPI has in companies that are ancillary or complementary to the Bank s core business: many of those interests are 100% shareholdings and, above all, all are shareholdings in companies whose business and products complement Banco BPI s products range or, in some other form, contribute, complement or are instrumental in its operations; in many of these cases, the investee companies share common services with Banco BPI and thus do not have the autonomy that characterises holdings such as those owned in BFA or in BCI and, above all, are shareholdings that are managed taking into consideration the aforesaid relationship of the complementarity of their business with that of the Bank s operations; On the other, the management of aforesaid shareholdings is distinct from the management of the other type of interests and that Banco BPI holds and which are not shareholdings in financial institutions and hence do not require the monitoring and specialised know-how that are required in the last-mentioned category. Banco BPI intends to achieve the aforesaid spinoff by way of a legal demerger operation, under the simple demerger mode envisaged in Article 118(1)( a) of the CCC, by way of the transfer to a New Company to be formed, of the aforesaid economic unit (branch of activity) corresponding to the exercise of the activity of managing the shareholdings in African credit institutions. Within the framework of the proposed simple demerger, it is Banco BPI s intention to maintain the shares representing the respective share capital listed on the Euronext Lisbon, a regulated market managed by Euronext Lisbon Sociedade Gestora de Mercados Regulamentados, S.A., and that in parallel an application be made for admission to trading on this market of the shares representing the share capital of the New Company to be incorporated in this context. It is Banco BPI s understanding that the present operation, because it involves the spin-off of a unit 7

8 corresponding to a branch of activity (the management of shareholdings in African credit institutions, an activity that Banco BPI will cease to carry on, given that the demerger extends to all the equity interests held by it in African credit institutions and the abovementioned group of human and material resources), meets the requirements for benefiting from the tax neutrality regime contemplated in articles 73 to 78 of the Corporate Income Tax Code. With a view to realising this operation, Banco BPI S Board of Directors has prepared the present Demerger Plan, which contains the necessary details for a comprehensive understanding of the projected operation and which was submitted to this body at the meeting held on September 30 th At that meeting, the Executive Committee of Banco BPI s Board of Directors were also given the necessary powers to carry out the present demerger, namely, the drafting of the documentation that will be needed for verifying the conditions contemplated in the present demerger plan and for the dissemination of this operation to the market, in particular, the preparation of the prospectus or equivalent document pursuant to the provisions of the Portuguese Securities Code. At the meeting held on the present date, the Board of Directors approved several adjustments to the Demerger Plan, as well as the final and consolidated version thereof. By the Board of Directors of Banco BPI, S.A. 23 December

9 IV. PRESENTATION 1. Presentation of the BPI Group The BPI Group headed by Banco BPI is a financial group, centred on the business of corporate and retail banking and on the provision of investment banking and asset management services. The two principal markets of operations are Portugal one a developed and competitive market where Banco BPI occupies a strong competitive position- and Angola, an emerging economy that has posted robust and sustained growth over the past few years where Banco BPI, via its shareholding in BFA, ranks as a leading player in the banking market. Domestic operations correspond to commercial banking business in Portugal, to the provision abroad of banking services to non- residents namely to communities of Portuguese emigrants and the services rendered at the Madrid branch,and to the investment banking, private equity, asset management and insurance activities. The commercial banking business is conducted by Banco BPI, one of the five main financial institutions operating in Portugal in terms of turnover which serves some 1.8 million customers and which has 8% market share in loans and 9% in resources. BPI Group can also count upon Banco Português de Investimento, S.A., this Group s original matrix, which is engaged in the business of Investment Banking, Equities and Corporate Finance within the geographical confines of the Iberian Peninsula: The Equities business, which encompasses research, national and international sale of equities and stock market trading, is essentially conducted in the Iberian Peninsula through its structure in Portugal and a branch in Madrid. The Corporate Finance business is carried on in the Iberian Peninsula. The BPI Group s Asset Management unit trust funds, life-capitalisation insurance and pension funds is undertaken by specialised subsidiaries, 100% held, with products being placed with Customers via Banco BPI s distribution channels. Banco BPI also offers a broad range of life and general risk insurance, by way of an insurance distribution agreement with Allianz Portugal, which is 35% held by the BPI Group under a strategic partnership with the Allianz Group. International operations encompass in essence the operations conducted by BFA in Angola, 50,1% held by the BPI Group in partnership with Unitel, holder of the remaining 49,9% of the capital, as well as the appropriation of the results of the 30% shareholding in BCI in Mozambique. BFA is a retail bank with an ample deposits base and a low rate of transformation of deposits into loans. It has an array of structured and differentiated products and services for individuals and companies, complemented in this case by the availability of project finance and corporate finance. 9

10 BFA serves 1.4 million Customers, via a distribution network with a strong presence in the capital city Luanda and a broad coverage of the entire country, comprising 163 branches, 9 investment centres and 16 corporate centres. On the other side, in Mozambique, the BPI Group is present via BCI, a retail bank predominantly focused on the taking of resources and the granting of loans, activities in which the bank has market shares of 28% and 30%, respectively. BCI serves thousand Customers via a network of 171 branches and corporate centres. Still as concerns Mozambique, the BPI Group also owns BPI Moçambique, which resulted from the transformation realised in 2013 of BPI Dealer Sociedade Financeira de Corretagem (Moçambique), S.A., into an investment company with the object of having an entity capable to conducting investment banking business in that country, especially geared to canvassing for and executing financial consultancy assignments and mandates for the structuring, organisation and mounting of financing for investment projects. The BPI Group s current configuration includes the following main units: 2. Description of the Demerged Company Banco BPI, as the Demerged Company, is the only company involved in the proposed demerger operation: Name. Banco BPI, S.A. Head office Rua Tenente Valadim, nº 284, Porto Share capital ,98, fully subscribed and paid-up, represented by shares; Company no.. Registered at the Oporto Commercial Registry on 23 October 1981, 10

11 under the single registration and taxpayer reference number Description of the Proposed Operation The proposed operation consists of the demerger of Banco BPI, in the form of the simple demerger envisaged in Article 118(1)(a) of the CCC, of the part of the respective net assets which constitute an economic unit (that is, a group of assets capable, from an organisational viewpoint, of functioning autonomously, through the respective transfer to a New Company to be incorporated. More specifically, the present demerger operation involves the spin-off from Banco BPI corresponding to the exercise of the activity of managing shareholdings in African credit institutions, to the New Company. On the date the proposed demerger takes effect, the admission to trading is expected to occur on the Euronext Lisbon, a regulated market managed by Euronext Lisbon Sociedade Gestora de Mercados Regulamentados, S.A., of the shares representing the share capital of the New Company. In this manner, completion of the proposed simple demerger operation will materialise, in summary, the transfer to the New Company, by means of the execution of a simple demerger in terms of article 118 and following of the CCC, of the economic unit corresponding to the exercise of the activity of managing shareholdings in African credit institutions, which comprises the shareholdings and moreover the group of assets referred to in detail in Point 9 of the present Proposed Plan. These comprise the assets and human resources that are currently deployed in the exercise of this activity at the Demerged Company and which, as such, are necessary so that, immediately after the demerger comes into force, the New Company can function autonomously. 4. Proposed Final Structure Following the completion of the proposed simple demerger, BPI Group shall have the configuration which is presented in the following organisation chart: 11

12 The New Company s configuration is presented in the following organisational structure: V. BANCO BPI S SIMPLE DEMERGER 5. Mode The current operation entails a simple demerger which corresponds to the demerger form envisaged in Article 118(1)(a) of the CCC. Indeed and as expressly provided for in such legislation, the operation is designed to spin-off from Banco BPI a part of its respective assets which in the terminology used in article 124(1)(b) of the CCC constitutes an economic unit (branch of activity), that is, a group of assets capable from an organisational standpoint of functioning autonomously. These assets to be spun off comprise the group of assets detailed in the Point 9 of the present Demerger Plan. 6. Reasons The reasons underlying the projected demerger are of a regulatory nature. As already referred to, Banco BPI results from the incorporation in 1981 of Sociedade Portuguesa de Investimentos, S.A, a company which was subsequently transformed into a bank in In 1996, the entity that is today Banco BPI (then BPI SGPS, S.A.) acquired Banco de Fomento e Exterior, S.A. At the date of its acquisition by Banco BPI, Banco de Fomento e Exterior, S.A. had: A branch in Angola; A bank in Mozambique, with the name Banco de Fomento, S.A.R.L., which in 2006 merged with Banco Comercial e de Investimentos, S.A.R.L., giving origin to the present Banco Comercial e de Investimentos, S.A., in which bank Banco BPI has since then owned a 30% stake. 12

13 In light of that acquisition, Banco BPI has with effect from 1996 been conducting banking operations in both Angola and Mozambique. In 2002, the branch in Angola was transformed into a local law bank - the present Banco de Fomento Angola S.A. (then known as Banco de Fomento S.A.R.L. (Angola)). In 2008, Banco BPI sold 49.9% of BFA s share capital to Unitel, S.A., retaining the ownership (direct and indirect) of the remaining 50.1%, a situation that is still the case today. Since its incorporation, for both accounting and prudential purposes, BFA has been the object of full consolidation at Banco BPI. The aforementioned full consolidation entails, amongst other consequences, the importance, for purposes of the prudential ratios to be observed by Banco BPI on a consolidated basis, of the exposures held by BFA. As regards BFA s exposures in AKZ stemming from the holding of Angolan public debt or investments at BNA, there was in force meanwhile up until the end of 2014, a regime which provided that the weighting of these exposures, for purposes of the calculation of Banco BPI s capital ratios on a consolidated basis, should comply with the same percentages as those contemplated under Angolan prudential regulations, that is: 0% weighting of the exposures attaching to public-debt securities, and of the exposure to BNA; 20% weighting of the exposure attaching to non-certificated public debt. On the other hand, the prudential regime then in force, in addition provided that the exposures whose weighting for purposes of capital ratios was 0%, were exempted from the application of the limit on large risks to which Banco BPI is subject on a consolidated basis. This regime emanated from the Bank of Portugal s regulations and presupposed the recognition of the equivalent standard attributable to Angolan regulations and supervision as those relating to Portuguese regulations and supervision, which equivalence in the Bank of Portugal s opinion exists. It transpires that, in the wake of the creation of the Banking Union, the authority to decide whether the regulatory and supervisory systems of third countries are equivalent to EU standards has now been entrusted to the European Commission. In this context, pursuant to the provisions, namely of Article 114(7) of Regulation (EU) no. 575/2013, of 26 June 2013 of the European Parliament and Council relating to the prudential requirements for credit institutions and investment companies, the European Commission issued on 12 December 2014 an Implementing Decision in which it disclosed the list of third countries with regulatory and supervisory standards that are equivalent to those of the European Union, which list contains only 17 countries or territories and does not include the Republic of Angola. In view of the foregoing, this fact meant that as from 1 January 2015, BFA s exposure in AKZ (i) to the Angolan State (translated into Angolan public-debt securities held by Banco de Fomento Angola and in loans advanced to the Angolan State by Banco de Fomento Angola) and (ii) to Banco Nacional de Angola (translated into minimum cash reserves, other deposits and repos also of Banco de Fomento Angola) ceased to be the object, for purposes of calculating Banco BPI s capital ratios, of risk weightings equal to those contemplated in Angolan regulations for this type of exposure, to now being the object of the risk weightings envisaged in the aforesaid Regulations of the European Parliament and Council. 13

14 In other words, BFA s exposure in AKZ to the Angolan State and to BNA ceased to be the object of a weighting for Banco BPI s consolidated capital ratio purposes of 0% or 20%, depending on the situations, and is now the object of a 100% weighting. As explained in the announcement to the market on December 16 th 2014, BFA s exposure to the Angolan State and to BNA in AKZ and in USD as at September 30 th 2014 was as follows: As can be seen from the table, for purposes of Banco BPI s consolidated capital ratios, the total of Risk Weighted Assets (RWA) attributable to BFA s exposure to the Angolan State and to BNA was 799 million euro and 437 million euro, respectively. With the application, after January 1 st 2015 of the new weightings, the RWA attributable to the Angolan State increased to million euro and the RWA attributable to BNA rose to million euro in the case of BNA, which corresponds to a total increase in RWA of 3.7 billion euro relative to the previous regulations. On the other hand, this fact also had as a consequence, in view of the provisions of article 400(1) of the aforesaid Regulations, that BFA s exposure in AKZ to the Angolan State and to BNA (in this case with the exception of the minimum cash reserves) ceases to be exempt from the application of the limit on large risks to which Banco BPI is subject on a consolidated basis, just as envisaged in article 395 of that enactment. The end of the aforesaid exemption implied that BFA s exposure to the Angolan State now exceeds, as from 1 January 2015, the limit on Banco BPI s large risks 1 on a consolidated basis by million euro and in the case of BNA by 184 million euro. In view of the foregoing, and given that it considers that the assumptions envisaged in the regulations applicable for the ECB to take such a decision have been verified, Banco BPI requested that the ECB accept that - for prudential purposes - BFA cease to be the object of full consolidation and that it be consolidated under the equity method, an alteration that would permit avoiding that BFA s exposures to Angolan public debt and to BNA be taken into account for the large risks limit to which Banco BPI is subject. It is worth noting in this respect that BFA s consolidation using the equity method would not mean that Banco BPI s consolidated accounts and prudential ratios would cease to properly reveal all the risks associated with the shareholding in BFA. In fact, if this method had been accepted and applied, Banco BPI would have to deduct in full the amount of the aforesaid shareholding (and, therefore, the whole value 1 On September 2014, Banco BPI s limit to large risks stood at 637 million euros. 14

15 of the risk borne by it with its shareholding) from its own funds for purposes of the CET1 ratio (common equity Tier 1). The request referred to in the preceding paragraph has in the meantime been turned down by the European Central Bank, with the result that Banco BPI ceased with effect from 1 January 2015, and with respect to BFA s exposures to Angolan public debt and to the investments at BNA, to comply the limit on large risks on a consolidated basis, in accordance with the terms that were explained in detail to the market on 16 December 2014 In addition, the European Central Bank has set a deadline for Banco BPI to adopt the measures required for compliance with the aforementioned large risks limit. It should be pointed out that although, with effect from 1 January 2015, were the above situation of exceeding the large risks limit to materialise, Banco BPI would immediately, effective from that date, have to calculate its consolidated capital ratios (i.e. the CET1 ratio common equity Tier 1) based on the new weighting of 100% of BFA s exposure in AKZ to the Angolan State and to BNA and that the said capital ratios continued, under this new framework, to be above the limits that are laid down for them in the regulations. In order to resolve the issue of overcoming the above-mentioned limit on large risks, Banco BPI has identified the alternative involving the legal separation, by demerger, to a company other than Banco BPI and whose capital is held by the latter s current shareholders, of the organisational structure corresponding to the exercise in an autonomous and independent manner of the Demerged Company of the business of managing the shareholdings in African credit institutions. As mentioned previously, the management of those shareholdings present specific aspects that distinguish themselves from the management of the other shareholdings owned by Banco BPI. Namely: On the one hand, the management of those shareholdings is divorced from the management of those shareholdings which Banco BPI has in companies that are ancillary or complementary to the Bank s core business: many of those interests are 100% shareholdings and, above all, all are shareholdings in companies whose business and products complement Banco BPI s product range or, in some other form, contribute, complement or are instrumental in its operations; in many of these cases, the investee companies share common services with Banco BPI and thus do not have the autonomy which characterises holdings such as those owned by BFA or in BCI and, above all, are shareholdings that are managed taking into consideration the aforesaid relationship of the complementarity of their business with that of the Bank s operations; On the other, the management of aforesaid shareholdings is distinct from the management of the other type of interests and that Banco BPI holds and which are not shareholdings in financial institutions and hence do not require the monitoring and specialised know-how that are required in the last-mentioned category. The implementation of this alternative entails, however, a long formal process, with the result that for this to be utilised within the period arising from the deadline set by the ECB to put an end to the overstepping of the large risks limit, this process must be initiated right away. That is, the instigation of the process relating to this alternative (the demerger process) cannot wait for the eventual possibility of finding another solution. Accordingly, Banco BPI s Board of Directors is of the opinion that the demerger process should be initiated without prejudice to this process being suspended or cancelled, if in the meantime a solution for surmounting of the limit on large risks by some other means is found. 15

16 Hence, in the interest of its shareholders, Banco BPI s Board of Directors intends to promote the consideration of the present demerger proposal. Nonetheless, and as set out more fully in the following Point of the present Proposal, the implementation of the projected demerger shall not take place where, at the date it comes into effect, there has been a change to the current background in which it is being proposed. 7. Conditions and terms The present demerger operation is subject to the conditions and terms laid down in points 7.1 to 7.2, and may not yet be realised for any of the reasons referred to in Conditions The projected demerger shall become effective subject to the following conditions (facts without whose verification the registration of the demerger shall not be made and, therefore, the demerger shall not come into effect): a) Confirmation on the part of the ECB that the realisation of the proposed demerger will permit compliance with this entity s ruling referred to in Point 6 of the present proposed demerger relating to compliance with the limit on large risks; b) According to Article 35 of the General Regime for Credit Institutions and Financial Companies, approved by Decree-Law no. 298/92 of 31 December, the demerger of credit institutions is subject to prior authorisation of the Bank of Portugal. Within this framework, and bearing in mind that the Demerged Company is classified as a credit institution by the General Regime for Credit Institution and Financial Companies, the present demerger operation shall be subject to the condition of the prior granting of authorisation by the Bank of Portugal for its fulfilment. c) On the other hand, and taking into account the nature of the economic unit to be spun off from Banco BPI, which includes a qualified majority shareholding in an Angolan banking financial institution, BFA, the present demerger operation is subject to the prior authorisation (non opposition) from BNA, considering the provisions of Articles 24 and 25 of Law (Angolan) no. 12/2015 of 17 June, which approves the Financial Institutions Base Law. d) In light of the provisions of Article 65 of the Law (Mozambican) no. 15/99 of 1 November, which regulates the establishment and exercise of the activity of credit institutions and financial companies, the materialisation of the proposed demerger is dependent upon the prior authorisation from the Bank of Mozambique, taking into account the equity interest held by Banco BPI in BCI, a Mozambican banking financial institution; e) The admission to trading on the Euronext Lisbon, a regulated market managed by Euronext Lisbon Sociedade Gestora de Mercados Regulamentados, S.A. of the shares representing the share capital of the New Company, is approved or such approval is assured upon the present demerger taking effect, by the competent entities for this purpose (CMVM and Euronext Lisbon); 16

17 f) Obtaining confirmation from the Tax and Customs Authority (Autoridade Tributária e Aduaneira) that the tax neutrality regime contemplated in articles 73 to 78 of the Corporate Income Tax Code shall apply to the present demerger; On another aspect (i.e. contractual), completion of this operation is dependent upon: g) Obtaining the prior agreement of Unitel, S.A., pursuant to the Shareholder Agreement entered into between this company and Banco BPI, as the sole shareholders of BFA; h) Obtaining the prior agreement of Unitel, S.A. for the assignment in favour of the New Company, of Banco BPI s contractual position arising out of the Shareholder Agreement mentioned in the preceding sub-paragraph; i) Confirmation, by Caixa Geral de Depósitos Group (Caixa Geral de Depósitos, S.A. and Parbanca, SGPS, S.A.), that the transfer of the shareholding in BCI held by Banco BPI for purposes of the present demerger does not constitute a transfer subject to pre-emption pursuant to the Shareholder Agreement entered into in July 2006 between these two entities, or, should the Caixa Geral de Depósitos Group regard this as so constituting, it does not exercise this preemption right or the right of joint sale also envisaged in that Shareholder Agreement; j) Obtaining the prior agreement of Caixa Geral de Depósitos Group for the assignment, in favour of the New Company of Banco BPI s contractual position arising from the Shareholder Agreement mentioned in the preceding sub-paragraph; k) Obtaining the prior agreement of the Parties (Caixa Geral de Depósitos, S.A., Parbanca, SGPS, S.A., Insitec Investimentos, S.A., Insitec Holding, S.A., SCI Sociedade de Controlo e Gestão de Participações Sociais, SARL, 2KL Gestão de Participações, S.A. and Celso Ismael Correia), for the assignment in favour of the New Company of Banco BPI s contractual position arising from the Preference Agreement entered into on 22 November Banco BPI s Board of Directors reserves the right to renounce the verification of the condition previously referred to in sub-paragraph k), without prejudice to safeguarding against any major impact for Banco BPI that may stem from such renunciation Suspensive term As referred to in Point 18.1, the present demerger operation shall take legal effect on the first business day of the month following that in which the respective definitive registration at the commercial registry takes place or, alternatively, at an earlier date as may be approved by the Board of Directors. 7.3 Other causes for the non-materialisation of the demerger Finally, it should be mentioned that, according to applicable law, up until the respective approval by Banco BPI s General Meeting, the present demerger operation may not materialise at the initiative of the Bank s Board of Directors through the mere withdrawal of the proposal presented (even where all the conditions previously described are met). In the event that the present demerger has already been approved by Banco BPI s General Meeting, but not yet come into force, even if the demerger has already been presented at the Comercial Registry, the respective non-materialisation by virtue of a cause other than any of the aforementioned conditions not being met, depends on a new resolution of Banco BPI s shareholders in its favour. 17

18 8. Participation of the companies involved in the share capital of the other Owing to the very nature of this operation a simple demerger there are no equity holdings between the companies involved given that Banco BPI, as the Demerged Company, is the only entity involved in this demerger process. 9. Assets to be spun off from the Demerged Company For purposes of the projected simple demerger of Banco BPI, that portion of Banco BPI s assets corresponding to the unit whose business it is to manage the shareholdings in African credit institutions, including all the other resources (namely the assets and human resources that are currently deployed in this activity of the Demerged Company and which, consequently, are necessary so that immediately after the demerger comes into effect, the New Company can function autonomously (namely the legal positions in employment contracts). It is worth noting that the management of those shareholdings presents specific aspects that distinguish this activity from the management of the other shareholdings owned by Banco BPI. Namely: On the one hand, the management of those shareholdings is divorced from the management of those shareholdings which Banco BPI has in companies that are ancillary or complementary to the Bank s core business: many of those interests are 100% shareholdings and, above all, all are shareholdings in companies whose business and products complement Banco BPI s product range or, in some other form, contribute, complement or are instrumental in its operations; in many of these cases, the investee companies share common services with Banco BPI and thus do not have the autonomy that characterises holdings such as those owned in BFA or in BCI and, above all, are shareholdings that are managed taking into consideration the aforesaid relationship of the complementarity of their business with that of the Bank s operations; On the other, the management of aforesaid shareholdings is separate from the management of the other type of interests and that Banco BPI holds and which are not shareholdings in financial institutions and hence do not require the monitoring and specialised know-how that are required in the last-mentioned category. It is also worth mentioning that under the present demerger, there will be no transfer of any liabilities to the New Company, without prejudice to the liabilities arising from the employment contracts entered into with Banco BPI s employees, whose legal position is to be transferred within the framework of the present demerger by virtue of the fact that they are currently, within the framework of the Demerged Company, deployed in the business unit to be spun off. Hence, by means of this operation, the group of assets (economic unit/branch of activity) to be detached from Banco BPI is comprise of: a) Shareholdings (which are also detailed in ANNEX 3) held by Banco BPI in the following entities: (i) Banco de Fomento Angola, S.A. shareholding comprising 654,086 shares corresponding to 50,1% of the share capital and inherent voting rights in BFA, an Angolan-law company, with registered head office at Rua Amílcar Cabral, Luanda, Republic of Angola, registered at the 18

19 Luanda Commercial Registry under no. 775, Corporate Entity no , with a share capital of AKZ , fully subscribed and paid up, represented by ordinary shares with a nominal value of kwanzas each; (ii) Banco Comercial e de Investimentos, S.A. shareholding comprising 204,263,972 shares corresponding to 30% of the share capital and inherent voting rights in BCI, a Mozambique law company, with registered head office at Av. 25 de Setembro, John Orr s Building, nº 1465, Maputo, Mozambique, registered at the Maputo Commercial Registry under the number 8571, Corporate Entity no ,with a share capital of Mzn 6,808,799,060, fully subscribed and paid up, represented by 680,879,906 shares with a nominal value of 10 Mzn each; (iii) BPI Moçambique Sociedade de Investimento, S.A. shareholding comprising 1,084,265 shares corresponding to 100% of the share capital and inherent voting rights in BPI Moçambique, a Mozambican-law company, with registered head office at Rua dos Desportistas, nº 833, Ed. JAT V 1, 1º, Maputo, Mozambique, registered at the Maputo Commercial Registry under no , Corporate Entity no , with a share capital of Mzn , fully subscribed and paid up, represented by 1,084,265 shares with a nominal value of 100 Mzn each; With respect to the shareholdings in BFA and BPI Moçambique to be spun off under the present demerger upon the terms described in (i) and (iii) above, it should be mentioned that at the present date these are spread amongst various BPI Group companies which are directly and indirectly fully controlled by Banco BPI, in the following terms: BFA: # Shares % Held Banco BPI ,0865 BPI Madeira SGPS, Unipessoal, S.A. 44 0,0034 BPI Vida e Pensões Companhia de Seguros, S.A. 88 0,0067 Banco BPI Cayman, Ltd. 44 0, ,1 BPI Moçambique: # Shares % Held Banco BPI ,4045 Banco Português de Investimento, S.A ,5863 BPI Vida e Pensões Companhia de Seguros, S.A , Nevertheless, Banco BPI is projected to acquire from each one of the abovementioned companies the shares held by them in both BFA and BPI Moçambique, acquisitions these which will be realised, once the applicable authorisations have been obtained, prior to the date the proposed demerger comes into effect. It is worth clarifying that the conclusion of these intra-group transfers does not constitute a condition for the present demerger to take effect, with the result that if any or some of them is not concluded by the time referred to the preceding paragraph, or, in the worst case scenario, nothing is concluded (e.g. due to lack of any authorisation that they may be subject to), this fact does not prevent the 19

20 demerger coming into effect, although there will be an adjustment to be made depending on the assets to be spun off, which will no longer include the shareholdings which are the object of such transfers. Finally, it must be noted that the shareholdings described in (1), (ii) and (iii) above will be transferred without the right to receive the dividends and other income which may be distributed by BFA, BCI and BPI Moçambique, respectively, with reference to the 2015 financial year, although their distribution may occur after the demerger comes into force. b) Other assets and legal positions the abovementioned group of assets comprises other assets and obligations in the net overall amount of 5 million, corresponding to a sight deposit and the assets and liabilities associated with the legal positions under employment contracts entered into with employees, including the fixed assets allocated thereto, which warrants their assignment to the New Company so that it, immediately after the demerger takes effect, can initiate the activity and can do so in an autonomous manner. The projected transfer is recorded in the accounting records in Banco BPI s proforma balance sheet (on the consolidated and individual basis) and in the New Company s proforma balance sheets (on the consolidated and individual basis), which are referred to in the following point and which are included as an annex to the present Proposal. 10. Specially-compiled balance sheets of the Demerged Company and pro forma balance sheet of the New Company The specially-compiled proforma balance sheets actual and pro forma of Banco BPI as at 30 June 2015 constitute ANNEX 1 to the present Proposed Demerger. On the other hand, the initial proforma balance sheet of the New Company as at 30 June 2015 constitutes Annex 2 to the present Proposed Demerger. 11. Effects of the demerger on the accounts of the Demerged Company The present demerger operation has as a consequence the transfer of a group of assets and Banco BPI s shareholder equity captions. The situation has from the outset an effect on Banco BPI s accounts, which translates into a decrease in the respective shareholders equity by an amount equivalent to the balance arrived at based on the value at which the assets are stated in the accounts on the date the proposed demerger operations come into effect. Based on the balance sheet at 30 June 2015 which constitutes Annex 1, the overall amount of the decrease in Banco BPI s shareholders equity is 46 Million in the individual balance sheet and 457 Million in the consolidated balance sheet. This decrease in Banco BPI s shareholders equity in both the individual and consolidated balance sheets will not have an impact on Banco BPI s share capital, nor on the number of shares issued by it. 20

21 According to the international accounting standards adopted by the European Union (Regulation (EC) no /2002 of the European Parliament and Council) and Bank of Portugal Notice no. 1/2005, and provided for in IFRIC 17, the decrease in Banco BPI s shareholders equity shall be recorded under the caption reserves and net profit for the year : a gain shall be recognised in the income statement corresponding to the difference between the fair value of the assets which will be transferred in the demerger operation and the respective book value; the fair value of the assets transferred under the demerger operation shall be recorded under the caption of other reserves. The fair value shall be determined based on the share price of the New Company shares or of the Demerged Company or based on a valuation figure; consequently, the total impact of the demerger operation on Banco BPI s shareholders equity resulting from these two captions net profit and other reserves shall correspond to the book value of the assets to be spun off ( 46 million in the individual balance sheet and 457 million in the consolidated balance sheet), based on the proforma balance sheet at 30 June 2015, irrespective of the fair value that is calculated in accordance with the terms of the preceding paragraph; Without prejudice to the foregoing, it should be noted that the figures shown above relating to Banco BPI s balance sheets (individual and consolidated) could be adjusted as a consequence of alterations to Banco BPI s current accounting policies, namely, should there be a change to its policy relating to the valuation of the equity investments. Banco BPI s proforma balance sheet after the demerger operation shall be the same as that reproduced in the aforementioned Annex 1. It is important to underline that the conditions imposed in article 123, paragraph 1, subparagraphs (a) and (b) of the CSC are assured, given that the value of the assets and liabilities of the Demerged Company after the realisation of the demerger project will not be less than the sum of the respective share capital and of its legal reserve and that, on the other hand, Banco BPI s share capital is fully paid up. The table hereunder presents Banco BPI s capital ratios with reference to 06/30/2015, on a consolidated and individual basis, and pro forma after the demerger: a) Phasing In: Consolidated Individual Current After demerger Current After demerger Common Equity Tier 1 ratio 10,5% 10,4% 9,3% 9,1% Tier 1 10,7% 10,7% 9,3% 9,1% Total ratio 10,7% 10,7% 9,3% 9,1% a) Fully Implemented: Consolidated Individual Current After demerger Current After demerger Common Equity Tier 1 ratio 9,0% 8,9% 8,2% 8,1% Tier 1 9,3% 9,0% 8,2% 8,1% Total ratio 9,5% 9,1% 8,2% 8,1% 21