Fortis Standalone. A value creation option. Pierre Nothomb - Mischaël Modrikamen. Brussels 20 April 2009

Transcription

1 Fortis Standalone A value creation option Pierre Nothomb - Mischaël Modrikamen Brussels 20 April 2009

2 Disclaimer A group of Fortis shareholders and their representatives, advised and accompanied by financial advisors and business executives the "Working Group - WG" have taken the initiative of examining the recent developments around the structure, business and activities of Fortis and its affiliates, including Fortis Holding, Fortis Bank and Fortis Insurance. The purpose of this presentation is to inform about the Working Group s analysis and view on the actions to be undertaken in the Fortis case. This presentation is descriptive and contains only a summary of the Working Group s analysis of the feasibility of a standalone scenario based on information that has not been independently verified by the Working Group. It cannot be considered as a legal or an investment advice, and cannot be considered as exhaustive. The Working Group cannot guarantee the accuracy or completeness of the facts, data and information contained in this presentation. This presentation is based on public information emanating a.o. from Fortis Holding, Fortis Bank, Fortis Insurance, BNP Paribas, analyst research and reports, press information and other public data. On the basis of this information, the Working Group has made a number of assessments and estimates, none of which purports to be accurate or complete. In particular, the Working Group did not have access to internal company data which has not been made publicly available. All the components of this presentation are therefore qualified by the fact that it needs to be corroborated by internal company data and/or audited figures where relevant. The Working Group recognizes that the Belgian State and its affiliates (including SFPI / FPIM) will play a central role with respect to Fortis in the event of a "no vote" at the extraordinary general meeting of shareholders of Fortis to be held on the April. There can be no guarantee given by the Working Group that the Belgian State and/or its affiliates will agree with the proposals contained in this presentation, nor that these proposals can be consummated according to the structure and/or under the terms and conditions proposed in this presentation. The Working Group does not guarantee that any actions will be effectively undertaken nor that any concrete result can be achieved. The Working Group does not accept any liability for the consequences of the use by any third party of the information contained in this presentation. 2

3 History Current situation Concerns A majority of Fortis stakeholders consider that Belgium had no option but to intervene in Sep - Oct 2008, in order to prevent a worsening of the financial situation of Fortis Bank. At that time, the Government also decided to sell FBB to BNP Paribas. Since then, the main sources of Fortis weaknesses have been removed: Fortis Bank Nederland has been sold to the Dutch government, removing its liquidity black hole. In addition, ABN Amro, which accelerated the perception issues surrounding Fortis as a result of its excessive acquisition price and its poor timing, was also sold off. Since then, Fortis shareholders have shown that they are increasingly reluctant to privilege this solution, because of the very poor valuation conditions, and the potential negative impact on Fortis Holding and on the Belgian economy. The Court of Appeal decision of 31 March, 2009, the negative vote on the dismantlement of Fortis during the EGM of 11 February, the postponement of the General meetings to April and the temporary stabilization of the world stock and financial markets, give us the opportunity to analyze in more detail a standalone scenario. The purpose of the present document is to allow Fortis SA/NV shareholders to choose between the BNPP option and this standalone option. 3

4 Agenda The BNPP option The standalone option Conclusion and next steps 4

5 BNPP acquires 75% of Fortis Bank with significant commitment and support from Belgium BNPP Acquires 75% of Fortis Bank Belgium (FBB) in exchange for 8.25 bn Acquires 16% of Fortis Bank Luxembourg (FBL) for 775 mio Provides 200 mio equity (11.8% of total) to Royal Park Investments (RPI) to ring-fence part of the structured credit portfolio Belgium Sells 75% of FBB to BNPP for mio BNPP 68 (value as of 17 April 2009: 4.8 bn) Fortis Holding (FHL) receive cash-settled call options on BNPP shares at a strike price of 68 Provides guarantee on interests payments of FHL to FBB on Relative Note Performance (at a cost of 80 bps) Provides 740 mio equity (43.5% of total) to RPI Provides guarantee on FBB funding to RPI ( 4.4 bn) Provides to FHL a loan of 1 bn in excess of FBB funding in RPI Provides guarantee on FBB s in portfolio of structured credits in excess of 3.5 bn losses (nominal value of 21.5 bn) Commitment to provide up to 2 bn as capital to FBB to maintain Tier 1 ratio at 9.2% BNPP acquires excellent assets at distressed prices Belgium remains heavily involved and has already lost value on its BNPP shares 5

6 With the following consequences for the various stakeholders (i) Fortis Holding shareholders Strategically weak Strategic asset of the group divested at distressed price at the worst moment FHL has a sub-scale insurance franchise, does not have resources to materially develop the franchise Break-up of the bancassurance model developed between FIB/FII and the banking activities Financially weak Continues to bear liabilities related to FBB (Cashes, etc.) Continue to support a very significant part of the risks (equity in RPI, loan to RPI, etc.) without any compensation or rewards or participation in the upside Remaining value depending on insurance distribution through BNPP, only secured through 2020 (whereas 70% of insurance business done through banking distribution channels) Do not benefit from a potential recovery of value of FBB. Highly unlikely that call mechanism on BNPP 68 could provide meaningful value Fortis Holding continues to bear significant downside risk with very little upside opportunity Fortis Holding is weak strategically on the insurance side 6

7 With the following consequences for the various stakeholders (ii) Belgium Substantial loss on BNPP shares given share price evolution since signature (as of 17 April: bn) Value of consideration not immediately accessible because of 2 years lock-up period French government preferred equity injection of 5.1 bn in BNPP will negatively weigh on BNPP profitability High likelihood that Belgium will be further diluted in the capital of BNPP given BNPP s relatively weak capital position, and in any event to refinance French government s preferred equity injection. Significant amount of guarantees and commitments given to FBB / FHL / BNPP Only very indirect participation in the upside of FBB s activities. Exposure to international banking group based in France with significant investment banking activities BNPP s commitment to support Belgian economy: one among many priorities for an international group covering more than 85 countries No end of litigation procedures initiated by dissatisfied Fortis SA/NV shareholders 7

8 With the following consequences for the various stakeholders (iii) Personnel and clients According to BNPP, restructuring costs amount to 750 mio to generate yearly synergies of 500 mio, amounts conservatively estimated, likely to be substantially exceeded (e.g. BNL) Fortis model to be integrated within BNPP model. As a result, Belgium to become 2 nd level regional bank in BNPP model and Fortis s 1 st level decision centers to be progressively disintegrated into BNPP s business and geographic business lines and decision centers. Major decision and competence centers to be moved or diluted into BNPP s governance framework Weak commitments on personnel evolution, social levers to be used and level of support to the Belgian economy A very good deal for BNPP A bad deal for Belgium and for Fortis SA/NV Belgium loses a large institutional decision center with related social impact Belgium is not adequately compensated for the level of risks it retains Wealth lost by Belgian Fortis shareholders is lost to the Belgian economy 8

9 Agenda The BNPP option The standalone option Conclusion and next steps 9

10 The standalone option The standalone option is structured around the replacement of BNPP by Fortis SA/NV as Belgium s counterpart It permits the creation of: A strategically coherent group A financially strong group Delivering strong profitability and growth potential A successful group for all stakeholders: Belgium Employees Customers Shareholders 10

11 Fortis standalone: a strategically coherent group generating today 1 bn banking profits and 11.6 bn of insurance premiums Banking activities (2008 revenues Billion ) Retail Belgium Merchant Commercial Other Total Insurance activities (2008 premiums Billion ) Life Belgium International 6.3 Non-Life 5.3 Total A strong Bancassurance franchise with international presence in emerging and growth markets, focused on traditional banking activities Centered on the Belgian and Luxembourg economies, their clients, their growth and their international expansion Independent and strongly backed and partially owned by Belgium and Luxembourg Enjoying a strong deposit base, substantial assets under management and a very sound and low risk portfolio of credits International presence Others* (8400) Having built strong franchises and substantial market shares in Core banking (Retail, Commercial and Private) as well as Insurance in Life and Non-Life Luxembourg (2500) 22% 48% Belgium (18000) Generating solid financial performance ( 7-8 bn revenues, 1 bn banking profits, 11.6 bn of insurance premiums) with a Core tier above 10% Poland (3100) 15% Turkey (5500) Employing motivated and talented professionals * UK, US, Asia, RoW Source: Fortis Banque communiqué de presse; WG analysis 11

12 Fortis enjoys market-conform loan-to-deposit ratio and measures should be taken to reduce customer funding gap in the future Company HSBC Crédit Agricole Deutsche Postbank Deutsche Bank KBC Commerzbank BNP Paribas Banesto Fortis Bank BBVA Société Générale Barclays RBS Lloyds Banking Group Dexia Natixis Loan-to-deposit ratio (%) Measures to be taken to reduce customer funding gap and ensure that liquidity situation remains stable: 1. Downsize activities creating the gap Merchant banking: ~ 50 bn gap Commercial and Retail International: ~ 5-10 bn gap 2. Possibly, Belgian State guarantee for funding (as Dexia and others) 3. Operational initiatives to regain market share in deposits Source: KB&W 16 April 2009; WG estimate 12

13 Standalone option would lead to a situation that keeps Fortis in a stronger solvency situation than peers including BNPP (%) Tier 1 ratios of selected European players, eoy 2008 Benelux player Fortis Bank Belgium Estimated 2009 Core Tier 1 ratios of selected European players Rabobank Fortis Bank Belgium Commerzbank RBS KBC ING Bank Santander HSBC Lloyds BBVA Societe Generale BNP Paribas Bancaja Intesa Sanpaolo Unicredit Core tier 1 Leverage 2009e Tier 1 ratio ratio ratio "New standard" 10,0% 7,5% 22,2 Fortis Bank post SPV 11,8% 10,8% 22,9 Fortis Bank 10,7% 9,7% 23,9 HSBC 9,8% 8,5% 21,7 Cr é dit Suisse 14,7% 9,5% 26,3 KBC 11,0% 5,7% 23,3 Intesa San Paolo 7,2% 6,4% 23,8 BBVA 8,4% 6,6% 21,7 Santander 9,1% 7,6% 23,8 Unicredit 7,3% 6,4% 27,8 Royal Bank of Scotland 12,0% 3,4% 40,0 Barclays 8,4% 5,5% 55,6 Credit Agricole 8,9% 6,7% 52,6 Deutsche Bank 9,9% 7,3% 58,8 BNP Paribas 9,5% 6,5% 45,5 Soci é t é G é n é rale 9,1% 7,5% 35,7 UBS 12,3% 9,7% 76,9 Sector average 9,6% 7,1% 31,3 Fortis Bank, and even more Fortis Bank post ring-fencing of structured credit products, is the best capitalised bank of all the major listed European banks, and this on virtually all the solvency metrics Source: Fortis Bank Belgium Press Release; WG analysis 13

14 The execution of the standalone option, in order to keep strong solvency ratio, manage the liquidity gap and improve profitability will require: Operationally To re-engage a strengthened management team and Fortis employees around the new project To build further the industrial project as a standalone franchise To reduce further the liquidity gap To refocus the bank on its core deposit and lending activities in Retail and Commercial banking To re-build earning's potential and recapture market share in core businesses To aim at a 65 cost income ratio through efficiency actions and through socially responsible adjustments to the headcount, mainly through natural attrition Structurally To revisit the Group structure and shareholdership structure with Belgium To revisit the shareholdership structure and scope of the RPI with Belgium To establish a new strong and efficient governance structure 14

15 Refocus on core and low risk activities will improve Fortis profitability overtime and support the achievement of a 65% cost income ratio Performance overview 2011 Banking activities Without refocus With refocus Difference Revenues (Billion ) Costs (Billion ) Net profit (Billion ) C/I ratio (%) Liquidity gap (Billion ) FTE ~0 ~ to -12% -6 to -20% +45 to +60% -3 to -10% to -20% Fortis Bank can reach bn net profits in 2011 by refocusing on its core activities (traditional Banking activities and key geographies) and implementing efficiency improvement initiatives Total assets (Billion ) ~750 ~500-33% Insurance is expected to add a ~ 150 mio additional net profit Source: WG analysis 15

16 Refocus could be achieved through selective divestment from Merchant banking as well as non-core businesses (Billion ) Revenues 2011 Expenses 2011 Without refocus With refocus Difference Without refocus With refocus Difference Retail to 0% to -5% Merchant to -22% to 35% Private Banking and AM to -22% to 35% Total to -12% to -20% Focus on traditional Banking (Retail and Commercial) in Belgium and Luxembourg Selective reduction of activities (mostly outside BeLux) in Merchant Banking (Public Banking and Markets) and non-core businesses Adjustment of overall cost base to new business perimeter and implementation of specific efficiency improvement initiatives Source: WG analysis 16

17 There is flexibility to manage workforce size based on progressive and soft measures Large part of Fortis workforce is outside BeLux In Belgium and Luxembourg, natural levers could be pulled to progressively reduce workforce Belgium Natural attrition ~1500/over three years** Turkey Temporary contracts ~300 at Fortis Poland Other levers such as pre-pension ~1000 Luxembourg Internal mobility N/A (enabler) Others* Total ~2800 * UK, US, Asia, RoW ** Corresponds to ~3% natural attrition rate which is commonly observed Source: WG analysis 17

18 The standalone structure (i) Concept Fortis SA/NV (FHL) replaces BNPP as Belgium's counterparty Structure 1 Upstream Belgium contributes 50% + 1 to 100% of FBB to FHL 2 Downstream FHL contributes 100% of FIB and FII to FBB Belgium Market Market 0-49% X% Y% Fortis Holding Belgium Fortis Holding 50% % FBB RPI FIB FII X% Y% FBB FIB FII RPI 18

19 The standalone structure (ii) Whatever the structure (upstream or downstream): FHL would receive options exercisable after 4 and 7 years on Belgium s remaining shares in FBB (upstream structure) or FBB / FIB / FII (downstream structure) based on a valuation of FBB of 9.4 bn + monetary interest A mechanism should be provided in both structures capping the potential upside of Belgium as with the BNPP shares 19

20 The standalone structure (upstream scenario) would lead to a ~30% Belgium / ~70% FHL share repartition Exchange ratio considerations In the following table, we calculate the value of one share of Fortis SA/NV (FHL) after contribution by Belgium of 50% +1 in FBB to FHL based on the following assumptions: The value of the contribution of Belgium s FBB shares to FHL will be based on the transaction value agreed in October 2008 between FHL and Belgium: 9.4 bn FHL s value is some 10.5 bn. This value is based on the following assumptions: Embedded Value FIB: 5.7 bn Embedded Value FII: 1.1 bn MCS: 1.7 bn Net cash position as of bn In the base case, the value of one share of FHL post contribution by Belgium amounts to 4.2 Source: WG analysis 20

21 In a standalone scenario, FBB should be able, by 2011, to generate yearly net results of ~ 1.6 to 1.8 bn, while generating significant excess capital For total assets, we assume total assets of 550 bn for 2008, and then deduct the SPV ( 20 bn) and the targeted deleveraging of the group (~ 60 bn). The impact in terms of RWA* reduction is somewhat less, with RWA falling from 203 bn in 2008 to 168 bn in We assume no synergies and no dividend payments. * Risk Weighted Assets Source: WG analysis 21

22 Prospective valuation of FHL as of 2011 Compared to a share price of 1.63 as of 18 April, we believe that under normal conditions, a share of Fortis in a standalone scenario could be worth between 6-8 by 2011, before taking into account additional positive elements such as CASHES and others This valuation does not include: The positive effect resulting from the neutralization of the negative effect resulting from the RPN (CASHES) mechanism which has come into effect as a result of the dismantlement of the group The potential upside resulting from the significant discount observed on the CASHES Any resources that would be available as a result of the sale of the Dutch operations including, inter alia, the sale of ABN-Amro Asset Management to the Dutch State Source: WG analysis 22

23 The standalone structure: Treatment of structured credit portfolio The concept: FHL is substituted to BNPP with respect to RPI Foreseen in BNPP deal RPI ( 11.4 bn) Standalone RPI ( 11.4 bn) 43% 12% 45% 43% 57% Belgium BNPP Fortis Holding Belgium Fortis Holding Split in the structured credit portfolio, and contribution of the structured credit portfolio OUT to Royal Park Investment (RPI), a SPV Maintain the RPI structure as it is. Contribution of the OUT portfolio to RPI, for an amount of 11.4 bn Substitution of BNPP in the RPI equity by FHL (consideration: 200 mio) Maintain the guarantee system as previously organised with Belgium FBB will substitute BNPP in the funding of RPI, for the full exposure negotiated with BNPP: 485 mio The structure of RPI will be the following: In order to finance RPI, the parties would contribute equity as follows: 960 mio for Fortis Holding (56.50% of the equity) 740 mio for Belgium (43.5% of the equity) As a consequence, RPI will be consolidated in the FHL accounts The financing of RPI will be divided in two tranches: A senior debt for 4.85 bn financed by FBB A super senior debt for 4.85 bn financed by FBB Belgium will guarantee the senior debt for an amount of bn Source: WG analysis 23

24 BNPP is replaced by FHL in RPI - - Belgium s exposure does not change Overall, we consider that RPI will generate a positive carry, as was confirmed by Fortis Holding last week. Exposure for FHL will be increased by 200 mio (equity) and for FBB by 485 mio (debt fully guaranteed by Belgium). BNPP will be totally excluded from the financing of RPI. The partial guarantee from Belgium of the structured credit portfolio remaining on FBB balance sheet is unchanged (nominal value of 21.5 bn). The guarantee of a second loss tranche up to 1.5 bn beyond a first loss of 3.5 bn provided to BNPP will be adapted to FHL, together with the mechanism of intervention in case the tier 1 ratio of FBB would fall below 9.2% for up to 2 bn. According to the agreement with Belgium, FHL will receive a credit facility from Belgium, backed by a pledge provided by FHL to the Belgian State on 35% of the FIB shares, or all other reserves for an amount of 1.5 bn. As a consequence, the exposure of Belgium will be unchanged. 24

25 The assets of RPI will be the following Agreed Price (in bn) US RMBS 4,8 Agreed Price (as % of par) Prime 0,9 86% Subprime 0,3 58% Midprime 0,8 58% Alt-A/Jumbo 1 62% Alt-A/30yr fixed 0,5 77% NegAM 1,1 57% Heloc 0,2 57% ABS CDO Origination 1,2 Super Senior High Grade 1 25% Super Senior Mezzanine 0,1 10% Warehouses 0,1 10% US multi-sector CDO 0,6 66% US Student Loans (private) 0,6 79% CRE-CDOs 0,4 92% ABS CDOs & Other 0,9 US 0,2 56% ROW 0,7 84% High Yield CBO's 0,1 95% European RMBS 2,5 Spanish 1,6 86% UK Non-comforting 0,9 91% CLO's 0,1 86% Other 0,2 90% Total 11,4 59% Source: Fortis 25

26 The bull / bear view on the overall structured credit portfolio Our stress test scenario, based on market price and best practices, implies potential additional marks of 2.1 bn, valuing the RPI portfolio at 48% of par value So far, the structured credit portfolio (IN + OUT) has experienced a marginal level of default. The cash flow out of this portfolio (interest + reimbursement) amounts to mio per month. We assume that the reimbursement can be broadly split 1/3 for the OUT portfolio and 2/3 for the IN portfolio. Due to the fact that the OUT portfolio has a lower level of quality than the IN portfolio (part of it is non investment grade), the contribution of the OUT portfolio to RPI has a strong positive impact on the solvability ratio of FBB. The structured credit assets transferred to RPI are already depreciated by more than 40%. Other options can be envisaged to ring-fence the structured credit portfolio: Defeasance solution (UBS type): FBB could materially de-risk its balance sheet through a transaction with BNB. FBB would raise new capital through mandatory convertible notes. BNB and FBB would reach an agreement to transfer part of its structured assets from the FBB balance sheet to a separately funded entity. With this transaction, FBB would cap future potential losses from these assets, secure their long-term funding, reduce its risk-weighted assets, and materially reduce risk, decreasing its balance sheet size. Illiquid assets back-up facility (ING type): Transfer of risk between FBB to Belgian State on a part of the structured portfolio, with a discount on the par value. Belgium receives a part of the cash flows from the portfolio. FBB will pay a guarantee fee to the state and will receive a funding fee and a management fee. The European commission temporarily authorized the back up facility. It accepted the cash flow swap arrangement and risk transfer between ING and the Netherlands state. 26

27 Role of Belgium and Governance Principles Role of Belgium It is not the mission of public authorities to support over the long term commercial banks and financial institutions. The proposed structure provides a clear exit for Belgium (in terms of capital and commitments taken vis-à-vis FBB) in the 4 to 7 coming years. It is also important for the market, rating agencies and other stakeholders to have clear implicit support from Belgium for FBB until the worst stage of the crisis is over. This is reflected (as it was in the BNPP scenario) in the structure. Clear governance principles should be put in place at the level of Fortis Holding and Fortis Bank for the period of detention by Belgium. Governance Principles Fortis Holding As shareholder owning ~30% of the shares of Fortis Holding following contribution of 50% + 1 of FBB, Belgium should have the right to appoint up to one-third of the directors of Fortis Holding. The board should be limited in size and all board appointees should have the necessary qualification, expertise and experience to fulfil their duties Board committees will be organized for audit, nomination and remuneration matters. Fortis Bank A shareholders agreement should be concluded between Fortis Holding and Belgium dealing with customary matters such as standstill rights, pre-emption issues and other governance matters. The board of directors of Fortis Bank should reflect, during the first 4 years, the 50%+1 / 50%-1 ownership by, respectively, Fortis Holding and Belgium. The composition of the board would be adjusted afterwards to reflect exercise of the call options. The board should be limited in size and all board appointees should have the necessary qualification, expertise and experience to fulfil their duties Board committees will be organized for audit, nomination, remuneration and risk matters. 27

28 Agenda The BNPP option The standalone option Conclusion and next steps 28

29 Conclusion Since October 2008, the Fortis shareholders have shown their reluctance to approve a transaction that they considered to be totally unbalanced. This presentation shows that a serious alternative solution can be proposed to the Fortis shareholders, entailing significantly more value for them, and improving at the same time the situation of the Bank employees and the Belgian citizens. To be able to implement this solution, the shareholders have to vote against the BNP Paribas transaction at the coming general meeting of 28 and 29 April. In order to reject this transaction, the shareholders need a strong support from every person that can use his/her credibility, experience, and position to show that this alternative can be implemented with success. The help and support of each and everyone will be crucial to persuade the Belgian government that this option is viable and does not carry more risk than the BNP Paribas proposed transaction. Above these considerations, it is important to stress that this alternative scenario is backed by a strong industrial project for Fortis Bank. This project, implemented by a motivated and skilled team, from the existing management, reinforced by external managers, will allow Fortis to stay as a vertebral spine of the Belgian economy, role that it fulfils since long before the creation of the Country. This project shows that the sale to other countries of Belgian industrial and financial jewels is not a fatality. Without further risks, the level of ambition and vision for our people and our country is clearly better than the solutions which have so far been articulated. Therefore, it deserves your attention and your full support. 29

30 Back-up 30

31 Side by side analysis of BNPP vs. standalone (i) Overall Fortis shareholders Minimizes uncertainties and maximizes potential for BNPP, through a deal that is financially difficult to justify and that harms all existing stakeholders (FH shareholders, Belgium, Belgian clients, personnel, etc.) No upside from any value creation in FBB Strong risk of downside from lower performance in Insurance (not a priority for BNPP given stake) Support part of risk in RPI (45 % in RPI) No strategic coherence of New Fortis Go for a solid value creation story centred on the Belgian economy, Belgian clients and the Belgian personnel without taking any additional engagement Participate in the upside resulting from the industrial plan Maximize upside from insurance (all stakeholders have a stake) Similar risk (53 % in RPI) Belgium Value of stake in BNPP: 5.4* bn Provides financial guarantees to French institution: 43.5 % of RPI 1 bn loan to FHL Capital injection commitment: 2 bn (if needed) Risk of further dilution in the shareholding of BNPP (difficult to justify further participation to capital increases) Supporting the Belgian economy will never be a top priority for a French bank (20 % of loans and 30 % of deposits at stake) Stronger upside from larger stake in Fortis Participates in the upside resulting from the industrial plan; allows Fortis shareholders to do the same Provides guarantees to Belgian institution No risk of unwanted dilution given stake size Supporting the Belgian economy will always remain a clear priority * Based on 40.5 BNPP share price (15/04/2009) 31

32 Side by side analysis of BNPP vs. standalone (ii) BNPP Become 1 st deposit base in the Eurozone (more than 540 bn and a L/D ratio of 120 %) Improves solvability ratios for BNPP Additional financial guarantee from Belgian State ( 2 bn commitment for Tier 1 if needed; 43.5 % participation in RPI) Paying through shares valued at 68 while today they are at 40 Further weakening of Fortis Insurance would provide potential acquisition opportunities in the future Personnel Customers According to BNPP: synergies of at least 500 mio No communication on full impact Belgian activities will never be the core All international activities will need to merge Major important decision and competence centers move to in Paris and/or diluted in BNPP s governance model State guarantee for deposits < 100,000 In case choices need to be made on allocation of resources, Belgium will not be top priority (20-30 % of Belgian lending volume at stake) Belgian activities are the core of the model (critical for liquidity and strategy) International activities: yes but only if attractive and sound (liquidity/solvability, have critical size) 3 clear engagements now No social plan All decision centers in Belgium Efforts clearly manageable with natural levers in BeLux; can be more voluntaristic in other regions (Asia, US, UK,...) State guarantee for deposits <100,000 In case choices need to be made on allocation of resources; priorities will always be on Belgium * Based on 40.5 BNPP share price (15/04/2009) 32