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Analyst & Investor Meeting Wholesale Clients SBU. 20 November, 2002. Index . 1Wilco Jiskoot, Member of the Managing Board 2Hugh Scott-Barrett, Member of the Managing Board 3Samuel Zavatti - Financial Institutions and Public Sector

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Analyst investor meeting wholesale clients sbu

Analyst & Investor Meeting Wholesale Clients SBU

20 November, 2002


Index

Index

1Wilco Jiskoot, Member of the Managing Board

2Hugh Scott-Barrett, Member of the Managing Board

3Samuel Zavatti - Financial Institutions and Public Sector

4Piero Overmars - Loan Products & Global Financial Markets

5Rob van Paridon - Global Transaction Services

6Nigel Turner - Corporate Finance

7Nigel Turner - Equities

8Ron Teerlink - Technology, Operations and Property Services


Analyst investor meeting wholesale clients sbu1

Analyst & Investor Meeting Wholesale Clients SBU

Wilco Jiskoot - Member of the Managing Board

20 November, 2002


Presentation index

Presentation Index

  • Strategic Framework and Macro Economic Context

  • Operational Performance

  • Financial Institutions and Public Sector (FIPS)

  • Global Financial Markets and Loan Products (GFM/LP)

  • Global Transaction Services (GTS)

  • Corporate Finance and Equities

  • Technology, Operations and Property Services (TOPS)

  • Outlook

  • Q&A


Presenters and other delegates

Presenters and other delegates

  • Presenters:

    • Wilco Jiskoot, Member of the Managing Board

    • Hugh Scott-Barrett, Member of the Managing Board

    • Samuel Zavatti (FIPS)

    • Piero Overmars (GFM/LP)

    • Rob van Paridon (GTS)

    • Nigel Turner (CF and Equities)

    • Ron Teerlink (TOPS)

  • Delegates: David Cole (WCS CFO) Gary Page (Portfolio Management) & Ann Cairns (GTS)


Strategic framework group strategy and wholesale clients

Strategic Framework - Group Strategy and Wholesale Clients

  • In the context of the asset gathering focus of the group, Wholesale Clients fulfils an important supportive role

  • Notwithstanding its increasingly defensive nature, Wholesale Clients is an important part of the group delta in terms of operational performance

  • Wholesale Clients is an important provider of products and intellectual capital to the other SBUs

  • The global network of Wholesale Clients provides an important strategic and competitive advantage to the Consumer and Commercial Clients SBU


Macro economic trends and context

Macro Economic Trends and Context

  • Given the current economic environment and the recent set of economic data from US and Europe, we expect 2003 to be as challenging as 2002

  • Given the state of budgetary deficits in Europe, we expect the overall liquidity for the corporate sector to reduce

  • The natural consequence is a widening of spreads and re-intermediation of banks

  • Given the client-product configuration of WCS, it is well positioned to deliver above average returns in the medium term


Hugh scott barrett member of the managing board

Analyst & Investor Meeting

Hugh Scott-Barrett - Member of the Managing Board

Wholesale Clients SBU

20 November, 2002


What are the key elements of our model

What are the key elements of our model….

  • Client focus and Client-led

  • Integrated wholesale offering

  • Significant proportion of revenues from annuity and flow products

  • Efficient capital management and allocation process

  • Focus on asset quality and independent risk management

  • Supported by a transformation in infrastructure delivered by TOPS through restructuring process


And how is it set up

…and how is it set up

5 Client groups

3 Product clusters

Financial Institutions & Public Sector

Telecoms, Media, Technology, Healthcare

Consumer

Integrated Energy

Country Coverage

Global Financial Markets(GFM)/Loan Products (LP)

Global Transaction Services (GTS)

Equities & Corporate Finance

Revenues Q3 2002


Client focus and client led

Client focus and Client-led

  • Built around a critical mass of clients, coverage and execution in Europe, but with global execution capability

  • Focus on profitable Financial Institutions and Large Cap clients

  • Focus on sectors of competitive strength

  • Enhanced ability to meet clients’ needs by providing an integrated product offering


Client performance

Client Performance

  • Overall client revenues for WCS are EUR 3.2 bln (Sept YTD), representing 80% of WCS revenues in line with the last four quarters

  • We continue to see improvement in our Priority and Key client base, making up EUR 2.1 bln, representing 63% of total client revenues

WCS Revenues

(Sept YTD EUR 4,026mln)

Revenues by Client

(Sept YTD EUR 3,233mln)

Priority & Key Revenues by Client

(Sept YTD EUR 2,051mln)


Integrated wholesale offering

Integrated wholesale offering

  • Integrated delivery of corporate and investment banking products and services

  • The integrated GFM/LP offering brings together our strengths in debt products and structuring and simplifies the client interface

  • GTS positioned for growth through integrated delivery of a suite of highly complementary working capital products

  • Refined business models for CF and Equities focusing on positions of strength

  • WCS is a key provider of products and intellectual capital to the other SBUs


Product performance

Product Performance

  • Most important revenue contributors are GFM and GTS

  • Priority and Key clients contributing over 50% of total product revenue

Revenues by Product

(Sept YTD EUR 4,026mln)

Priority & Key Revenues by Product

(Sept YTD EUR 2,051mln)


Efficient capital management and allocation process

Efficient capital management and allocation process

  • Managing for Value as the guiding principle

  • Aggressive reduction of RWA of EUR 20 bln primarily by reduction in Loan portfolio and on track to achieve our target of EUR 30 bln by the end of 2004

  • More discipline at origination to manage capital efficiently

  • Increase emphasis on portfolio optimisation and distribution


Focus on asset quality and independent risk management

Focus on asset quality and independent risk management

  • Ensure the overall stability and quality of the loan portfolio (investment grade)

  • Limiting single sector/country exposure by high degree of diversification

  • Independent risk management

  • Actively manage concentration risk

  • Weighted average portfolio remains investment grade (UCR 1,2,3 = 80%)

  • Rigorous stress testing through the cycles incorporating the VAR methodology in the business decisions


Improving infrastructure through restructuring process

Improving infrastructure through restructuring process

  • In late 2000 TOPS defined an operating model based on removing duplication and inefficiency through regionalising and globalising service provision

  • A number of high profile cost reduction programmes have been implemented over the last 24 months enabling us to significantly lower our cost base and headcount

  • TOPS restructuring programme will achieve its target of EUR 408 mln P&L savings by the end of 2002


Resulting in sustainable income stream with embedded delta

Resulting in sustainable income stream with embedded delta...

  • On the revenue level through:

    • an integrated delivery of products to our client franchise and a repositioning of Corporate Finance and Equities

    • additional revenues from GFM/Loan Products through widening of credit spreads

  • Through achieved cost savings and ongoing cost control in the future

  • Through potentially a lower level of provisions in case of an improvement of the economic outlook


Appendices

Appendices


Revenue by client

Revenue by Client

June YTD: EUR 2,118mln

Sept YTD: EUR 3,233mln


Revenues by product

Revenues by Product

Q1: EUR 1,384mln

Q2: EUR 1,355mln

Q3: EUR 1,287mln


Rwa reductions by product

RWA Reductions by Product

Dec-01: EUR 95.2 bln

Mar-02: EUR 90.4 bln

Jun-02: EUR 83.8 bln

Sep-02,: EUR 82.1 bln


Asset quality of wholesale client sectors by ucrs limits as per sept 2002

Asset Quality of wholesale client sectors (by UCRs, limits as per Sept 2002)

UCR

UCR

UCR

1,2,3

1, 2, 3

1, 2, 3

80%

78%

79%

UCR

UCR

UCR

>=4

>=4

>=4

22%

20%

21%

UCR

UCR

1, 2, 3

1, 2, 3

86%

81%

UCR

UCR

>=4

>=4

19%

14%

Wholesale corporate portfolio

Country Coverage

Integrated Energy

(36% of WCS corp. portfolio)

(27% of WCS corp. portfolio)

TMTH

Consumer

100%

(23% of WCS corp. portfolio)

(14% of WCS corp. portfolio)

18%

19%

20%

80%

60%

82%

81%

80%

40%

20%

0%

Sept. 01

Dec. 01

Sep. 02

UCR 1, 2, 3

UCR >=4


Wholesale corporate exposure is gradually coming down across sectors

Wholesale corporate exposure is gradually coming down across sectors

Sector breakdown of wholesale portfolio - Total limits

25.7% Reduction

27.5% Reduction

26.8% Reduction

26.1% Reduction

17.7% Reduction

TMTH

Integrated Energy

Country Coverage

Consumer

WCS Corporate

Jun.01

Sept.01

Dec.01

Mar.02

Jun.02

Sept.02


Analyst investor meeting wholesale clients sbu

Financial Institutions and Public Sector Samuel Zavatti, SEVP - Global Head of FIPS Client Coverage BU

20 November, 2002


Discussion outline

Discussion Outline

  • What is the role of FIPS within WCS?

  • What is our strategy?

  • How are we positioned competitively?

  • How are we doing?

  • What new growth initiatives are we working on?

  • What is the outlook given current market conditions?


Role of fips client bu in wcs

Role of FIPS Client BU in WCS

“Delivering the Client”

  • Strong Relationships with Senior Decision Makers

  • Understanding of Clients’ Businesses and Issues

  • Overall Client Strategy + Coordination Across Product Groups

  • Solutions focus via partnership with products

  • Determine optimal use of capital

Financial Institutions & PS

Client BU

Corporate

Finance &

Equities,

ECM

Loan Products

and Global

Financial

Markets

Working

Capital

Other

SBU

Products

“Delivering the Product”

  • Product Excellence, Innovation

  • Ability to Structure / Tailor Products

  • Competitive Pricing

  • Outstanding Execution

  • Alignment of efforts to highest potential relationships

WCS

Product

BUs


Fips strategy today

FIPS Strategy -- Today

Sector

Specialized

Coverage

Bankers

  • Highly experienced sector heads managing large and/or high growth markets

  • Coverage bankers with industry knowledge and senior client contacts

  • Knowledge of entire applicable product range

  • Balance of flow and big ticket business

Active

Relationship Mgnt

and Cross Selling

  • Apply balance sheet to highest potential relationships

  • Seniority of bankers suitable to having “tough” conversations

  • Strong partnerships with relevant product groups to deliver complete solutions rather than one-off pitches

Stringently

Enforced RAROC

Hurdles

  • All deals must meet FIPS hurdles (RAROC > 25%)

  • Promised “Fee-based” trades are actively monitored to ensure delivery

  • Active program to exit under-performing facilities/relationships

Superior Growth

and

Economic Returns

  • Continued investment from WCS

  • Goal is a top five competitive position in target sectors

  • Repeat business from CEO/CFO/CIO on “Share of Mind” products


Fips strategy prioritised coverage of clients

FIPS Strategy -- Prioritised Coverage of Clients

Focus our resources on highest potential clients

Priority

  • Principally major global relationships

  • Managing Director or Director level coverage

  • Likely need for all WCS and Group products/services

  • Greatest willingness to apply ABN AMRO balance sheet

Key

  • Principally major regional relationships

  • Director level coverage or “senior” VPs

  • Need for most/all of WCS and Group products/services

  • Selective use of ABN AMRO balance sheet

Core

  • Principally major indigenous relationships

  • Vice President level coverage

  • Emphasis on LP/GFM and GTS Capital products

  • Low willingness to extend balance sheet

Client Development Group (CDG)

  • Smaller relationships with potential to become P/K/C clients

  • VP coverage

  • Working Capital product emphasis

  • Typically working to minimize/reduce exposure


Focus on increased cross selling

Focus on Increased Cross Selling

Achieving increased client penetration selling all WCS and Group products

Increased Cross Selling Into FIPS Clients

FIPS Revenues By Product (Sept YTD)

Relative

# of Products

Sold/Client

+33%

in

2002

+22%

in

2002

+20%

in

2002

Priority

Key

Core


Fips focus on six sectors

FIPS -- Focus On Six Sectors

Our target clients are best served by a strong client coverage approach

Characteristics of FIPS Clients

  • Very large wallets

  • Wide range of banking needs, routinely purchased

  • Many layers of decision makers, from CEO to Department Managers

  • Requires senior bankers to cover all products and all decision points

  • Global account teams to handle multi-regional client buying centers


Fips competitive position

FIPS Competitive Position

We benchmark ourselves against 4 major competitors (Citibank, JP Morgan, Deutsche Bank and HSBC)

  • We can compete aggressively with these competitors in each of the following areas:

    • We have a strong global footprint

    • We have senior access into important FIPS clients

    • We provide a seamless service to clients across a wide spectrum of competitive products

    • We have an AA rating


Fips portfolio quality september 2002

FIPS - Portfolio Quality (September 2002)

Careful selection of counterparties and geographies


Growth initiatives

Growth Initiatives

  • Insurance Group -- will focus on demand for capital raising (debt and equity) by European and US insurers as they seek to rebuild their balance sheets and maintain ratings, and structured investment products as all insurers globally look to improve yields and minimise loss expense.

  • Investment Management Group -- FIPS is completing a dedicated coverage team for what is expected to be a major growth area in Europe over the medium term

  • Financial Sponsors -- sponsor activity is recovering dramatically and we aim to build a 5% share of the European market by 2005

  • Central Banks -- specialist team will sharpen the focus of FIPS bankers on this under developed client segment


Looking forward

Looking Forward

Ability to sustain performance in continued adverse conditions

  • FIPS has already re-oriented selling efforts around its clients’ current down-cycle problems, creating a healthy pipeline of structured deals (e.g., sub-debt for banks, insurance recaps)

  • A majority of FIPS revenues derives from flow business, providing insulation against marketplace volatility

  • Investments in growth businesses made in 2002 (e.g., Insurance, Investment Management, Central Banks) will begin to yield incremental revenues

  • FIPS ensures integration across WCS product groups and is at the centre of a number of cross BU and cross SBU initiatives concerning Asset Management, ABN AMRO Mellon and the plans for LP/GFM and GTS


Appendix

Appendix


League tables

League Tables

Top Bookrunners of all institutional euro denominated bonds for financial institutions YTD @ 14/11//02 - ABN AMRO 4th

Top Bookrunners of all institutional euro denominated bonds for sovereigns YTD @ 14/11/02 - ABN AMRO 6th


League tables cont d

League Tables (cont’d)

M&A - FI, European Target Cross-border, Acquirer of any Nationality, H1 2002 - ABN AMRO 8th

Top Custody Banks by Worldwide Custody Assets Sept 2002 - ABN AMRO Mellon 6th


Loan products global financial markets

Loan Products & Global Financial Markets

Piero Overmars, SEVP - Global Head of Loan Products and Global Financial Markets BUs

20 November, 2002


Solid performance in two currently separate product bus

Solid performance in two currently separate Product BUs...

Loan Products (LP)

Global Financial Markets (GFM)

Nine Months YTD

Nine Months YTD

% change

% change

2002

2001

2002

2001

Revs (€m)

Prov (€m)

  • RWAs (€b)

  • Staff

Revs (€m)

Prov (€m)

  • RWAs (€b)

  • Staff

1,464

11

22

1,908

743

564

47

1,234

1,749

4

21

1,934

(16)

175

2

(1)

753

193

61

1,393

(1)

292

(23)

(11)


With a comprehensive suite of products solutions and advice

…with a comprehensive suite of products, solutions and advice

Loan Products

Global Financial Markets

  • Corporate Lending

  • Structured Trade Finance

  • Project Finance

  • Commodity Finance

  • FX, FX Options

  • Rates (MM, Govt Bonds, Derivatives)

  • Investment Grade Corporate DCM

  • Emerging Market DCM

  • Leveraged Finance

  • Asset Securitisation

  • Credit Derivatives


We are a leading european player in our chosen markets

We are a leading European player in our chosen markets...

Global Asset Securitisation

Global Project Fin Arrangers

Global Syndicated Credit

Euro denominated DCM

Eurozone DCM

Global FX

Consistently Rated in the Top 10

Key Market Positions

2002

2001

LP and GFM rank in sample of recent League Tables

#6

#1

#9

#5

#7

#8

#6

#6

#10

#6

#10

#13

% of

League Tables

Sample size: 105 League Tables

Source: IFR, Project Finance Magazine, Euromoney, Loanware, Swapsmonitor.com


And these markets have attractive medium term outlooks

…and these markets have attractive medium-term outlooks

Market Revenue

Growth 3-5 Year Outlook

Core Product Markets

Credit Derivatives

> 25%

Structured Financing

5 - 15%

Rates Derivatives

DCM (All Bonds)

Foreign Exchange

> 5%

Corporate Lending

Source: MSDW/Oliver Wyman/ABN AMRO internal sources


Integrating lp and gfm creates a stable platform for profitable growth

Integrating LP and GFM creates a stable platform for profitable growth

The strategic priorities of the integrated Business Unit are

  • Enhancing our offer

    • Better meet the needs of our most important clients by providing integrated capital raising, capital management and risk advisory capabilities

  • Changing origination behaviour

    • Optimise the portfolio through increased securitisation and hedging

    • Capitalise on the market environment to more selectively deploy capital to Priority and Key clients and others with sophisticated structuring/advisory needs

  • Leveraging our distribution capabilities

    • Build upon our deep penetration in Europe and Asia

    • Systematically narrow our focus to the Top 250 investors

  • Improving our efficiency

    • Aggressively centralise infrastructure while hub and spoking the front office


Enhancing our offer

Enhancing our offer

We will better meet the needs of our most important clients by

  • Providing an integrated offer including capital raising, capital management and risk advisory

  • Deepening our offer by extending our established platforms and capabilities into higher margin value-added structured financing and exotics, e.g.

    • Asset Securitisation - Maintain Top 2 position in Europe while expanding $ABS and CMBS

    • Credit and Rates Derivatives - Leverage our established platforms and gain share of market growth

    • Debt and Risk Advisory - Consolidate our intellectual capital into a single advisory group

    • Foreign Exchange - Deepen penetration with our top quality Foreign Exchange product suite thus supporting the development of the WCS working capital business


Changing origination behaviour

Changing origination behaviour

  • A more selective deployment of capital

    • Better targeting of top 300 clients and others with high potential

    • Continued focus on identifying high quality credits on favourable terms

  • Increasing our penetration of existing clients

    • Focus on derivatives cross-sell off back of primary loans and bonds

    • Increased emphasis on higher margin share of mind solutions (e.g., value-added structured financing, advisory solutions)

  • Optimising the portfolio

    • Better pricing, hedging and securitisation

We aim to capitalise on the market environment and use the credit product strategically through


Leveraging our distribution capabilities

Leveraging our distribution capabilities

  • On the demand side, we will build upon our deep penetration in Europe and Asia

  • Systematically increase our focus to the Top 250 investors

  • Establish deeper relationships with larger institutions, as investors continue to rationalise their preferred investment banking suppliers

  • Underwrite and price to sell, but choose to hold strategic risks

Institutional Investors Share of Global New Securities Issues

Strategic Focus

All Others

Top 250

Investors

Source: IFR


Improving our efficiency

Improving our efficiency

  • Centralised infrastructure to capture all possible economies of scale

    • Eliminate duplication and multiple flavours of vanilla IT

  • Hub & spoke front office model

    • Critical mass of intellectual capital built and deployed outward from hubs rather than creating sole practitioners in regions

  • In sum, we recognise that we must have a different and smarter operating model than our larger peers

We will refine our operating configuration to reduce costs, increase control and encourage creativity


Our ambition for the business

Our ambition for the Business

  • A singular focus on profitable growth and value creation through a differentiated offer to our chosen clients

  • Solidify our position as a profitable Top 5 player in our chosen markets

  • Improve our portfolio return through more selective capital allocation, pricing and distribution

  • Further establish ourselves as the European advisor and provider of choice for clients seeking a strategic relationship for financing and risk management requirements


Appendix1

Appendix


A european leader

A European Leader

Global Asset Securitisation

Global Project Fin Arrangers

Global Syndicated Credit

2002

2001

2002

2001

2002

2001

JPMChase11

Citi22

BofA33

Deutsche44

Bank One55

Barclays66

Mizuho77

BNPP813

ABN AMRO910

ABN AMRO 16

Barclays29

RBS33

Citi41

WestLB52

SG67

Mizuho710

Abbey Natl818

Euro denominated DCM

Eurozone DCM

Global FX

2002

2001

2002

2001

2002

2001

Deutsche 11

JPMChase24

Citi32

Barclays46

MSDW 53

UBS68

ABN AMRO710

CSFB 87

Deutsche11

Citi22

MSDW35

JPMChase43

ABN AMRO56

DKW68

Barclays711

BNPP87

Citi11

UBS 27

Deutsche32

Goldman43

JPMChase54

CSFB66

MSDW710

ABN AMRO813

Deutsche13

Citi21

JPMChase310

Barclays48

MSDW52

ABN AMRO66

Merrill78

CSFB85

Source: IFR

Source: Project Fin Review

Source: IFR

Source: IFR

Source: IFR

Source: Euromoney FX Poll


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