Creating an enhanced wealth management platform

Transcription

1 Creating an enhanced wealth management platform David Morgan David Clarke Philip Chronican Peter Martin Chief Executive Officer Group Executive, Business & Consumer Banking Chief Financial Officer Chief Executive Officer, Rothschild Australia Asset Management 23 April 2002

2 Agenda David Morgan Strategic fit David Clarke Deal summary Business model Peter Martin Combined strengths Integration Phil Chronican Financial impact 1.

3 Wealth management strategy fit Builds on successful organic growth Expands distribution size and capability Strengthens the product platform, while accessing and integrating best of breed products Achieves a balance between growth and profitable returns 2.

4 Agenda David Morgan Strategic fit David Clarke Deal summary Business model Peter Martin Combined strengths Integration Phil Chronican Financial impact 3.

5 Deal Summary $323m purchase price for Rothschild Australia Asset Management and operations Establishing a new, separately branded and managed wealth management business Strong strategic fit Positions Westpac to leverage wealth management growth opportunities Transaction to be completed 31 May

6 Wealth Management Strategy Customers Distribution Bundling Platform Manufacture Investment Mgt Increase customer share of wallet Access customers outside Westpac Aggressively grow planner numbers Access independent planner force Enhance sales & service platform Master trust Enhance bundling/ wrap capability Development & execution excellence Enhance product range Structured investments Scale Solid performance International alliances Fund ratings 5.

7 Capabilities strengthened Customers Distribution Bundling Platform Manufacture Investment Mgt Increase customer share of wallet Access customers outside Westpac Aggressively grow planner numbers Access independent planner force Enhance sales & service platform Master trust Enhance bundling/ wrap capability Development & execution excellence Enhance product range Structured investments Scale Solid performance International alliances Fund ratings = Rothschild value added 6.

8 Business model New wealth management organisation Combining strengths of Westpac Investment Management and Rothschild Capturing scale Development of a new and unique brand Preserving culture 7.

9 Agenda David Morgan Strategic fit David Clarke Deal summary Business model Peter Martin Combined strengths Integration Phil Chronican Financial impact 8.

10 Rothschild overview $10.6bn funds under management (FUM) 37% institutional 35% master trust & wholesale wraps 28% retail Market share 1.5% total FUM 174 employees Access to 1,000 premier financial planners and broader IFA network beyond 9.

11 A strong combination Westpac Financial Services New Entity 10.

12 Market position retail FUM $bn Retail Funds Under Management Westpac/ Rothschild $17.2bn CBA /CFS NAB /MLC AMP ANZ /ING WBC BT MBL Rothschild Source: ASSIRT December quarter

13 Market position total FUM $bn Total Funds Under Management Westpac/ Rothschild $33.7bn CFS/ CBA AMP NAB /MLC ANZ /ING DBL/ Zurich MBL State Street WBC Rothschild Source: ASSIRT December quarter

14 What does Westpac bring? Strong balance sheet Strong risk management skills Network of 765 planners Complementary investment management process Priority access to 7 million Australian customers 13.

15 What does Rothschild bring? Highly regarded investment capability Strong researcher & consultant ratings Superior service model and culture Best of breed international partners Independent distribution Access to 1,000 Premier advisers 14.

16 Leveraging our Service capability Core to our strategy Understanding customer needs Careful segmentation Aligning the organisation but execution is critical 15.

17 Integration priorities Maintain researcher & consultant ratings and recommendations Brand and independence Organisational culture Retention of key people Optimise product offerings Maintain existing international alliances 16.

18 A strong combination Westpac Financial Services Access to broad customer base Comprehensive distribution Enhanced service capability Extensive product range Multi-style investment capability Platform for accelerated growth 17.

19 Agenda David Morgan Strategic fit David Clarke Deal summary Business model Peter Martin Combined strengths Integration Phil Chronican Financial impact 18.

20 Acquisition criteria Aligned with group strategy Not unduly diverting Strict financial criteria 19.

21 Financial impact - Summary Price $323m - net asset value $16m Cash EPS positive from 2003 Small balance sheet impact Paid for with less than 4 months of internally generated capital Acquired under life company 20.

22 Financial impact - valuation Comprehensive DCF analysis Key assumptions Conservative 12% discount rate Growth in FUM just above system (~12%) Continued squeezing of industry margins Over $15m per annum ongoing cost savings Integration costs expensed in 2002 Revenue enhancements not factored into valuation Price represents 80% of estimated full value, including synergies 21.

23 Synergies Consolidation of systems and investment resources Premises Global overhead charges Savings equal 20% p.a. of combined expense base 1 by Pro-forma total expense base ~ $80m 22.

24 Financial impact profit after tax Pro forma impact on 2003 Cash Earnings Normalised NPAT 1 Less opportunity cost of funding $20.1m ($14.3m) Earnings accretion $ 5.8m Cash earnings per share 0.4 cents 1. Normalised for synergies, net changes to employee costs and overhead charges. 23.

25 Financial impact multiples PE 1 (x) % FUM WBC/Rothschild 2 24 x 3.0% Principal/BT 27 x 5.5% NAB/MLC 22 x 15.2% ANZ/ING 20 x 11.2% Average US transactions 3 24 x 4.0% Average UK transactions 3 31 x 2.5% 1. JP Morgan analysis, based on historical or current year PEs. 2. PE based on normalised 2002 profit after tax. Based on normalised 2003 forecast, PE 16 x 3. Based on asset management transactions since 1 Jan

26 Westpac Financial Services Creating an enhanced wealth management platform 25.

27