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CLS Group Meeting

CLS Group Meeting. Joseph De Feo CEO, CLS Group President & CEO, CLS Bank International 3 October 2003 Istanbul. CLS Bank: a unique achievement. Creating a global industry standard. First global banking settlement system. Unprecedented co-operation across the industry.

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CLS Group Meeting

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  1. CLS GroupMeeting Joseph De Feo CEO, CLS Group President & CEO, CLS Bank International 3 October 2003 Istanbul

  2. CLS Bank: a unique achievement Creating a global industry standard First global banking settlement system Unprecedented co-operation across the industry 67 shareholders, 27 vendors, eleven central banks Growing number of providers of third party services Major business & technical achievement Extends finality of domestic RTGS settlement globally Level playing field – target of one price for all

  3. CLS Shareholders Australia - Australia & New Zealand Banking Group * Commonwealth Bank of Australia * National Australia Bank * Westpac Banking Corporation *Belgium- Fortis Bank * KBC Bank * Canada - Bank of Montreal * The Bank of Nova Scotia * CIBC * Royal Bank of Canada * The Toronto-Dominion Bank *Denmark- Danske Bank * Nordea * France- BNP Paribas * Caisse Nationale De Credit Agricole * Credit Lyonnais * Société Générale * Germany- Bayerische Landesbank * Commerzbank * Deutsche Bank * DZ Bank * Dresdner Bank * Hypo Vereinsbank * Westdeutsche Landesbank *Italy– Banca Intesa * UniCredito *Japan- The Bank of Tokyo-Mitsubishi, Ltd * Mizuho Corporate Bank* Norinchukin Bank * Sumitomo Mitsui Banking Corporation * The Sumitomo Trust & Banking Co., Ltd. * UFJ Bank *Luxembourg– Dexia Banque Internationale a Luxembourg *Netherlands- ABN AMRO Bank * ING Bank * Rabobank Nederland *Norway- Den norske Bank *Singapore - Development Bank Of Singapore * Oversea-Chinese Banking Corporation * United Overseas Bank * Spain- BBVA * Banco Popular Espanol * Banco Santander Central Hispano*Sweden- Skandinaviska Enskilda Banken * Svenska Handelsbanken *Switzerland - Credit Suisse * UBS * Zurcher Kantonalbank *United Kingdom- Barclays Bank * HSBC Holdings * Royal Bank of Scotland * Standard Chartered Bank *United States- American International Group * Bank of America * The Bank of New York * Bank One * Bear Stearns Securities * Citibank * The Goldman Sachs Group * JPMorgan Chase * Lehman Brothers * Mellon Bank * Merrill Lynch * Morgan Stanley & Co. * Northern Trust Corporation * State Street Bank and Trust Co.

  4. CLS has changed market practice Possible same day settlement Normal - 2 day contract CLS eliminates Settlement risk (temporal risk) Normal - 2 day risk Historical information Real-time information 1 day funding Intraday - Timed payments Extends domestic settlement finality globally

  5. CLS Bank is unique Corporate structure and governance model Bankers’ Bank for FX Settlement Real-time links to Central Banks Legal governance and regulation

  6. 54 banks settling live transactions in 11 currencies 27 Registered Vendors using CLS brand 14 million sides settled in 1 year with a gross value of $160 trillion Settling over 80,000 sides a day, around $1 trillion value Over 80 Third party customers of Member banks CLS now

  7. Moving 20 Day Average of Volume

  8. CLS Bank values & Net Funding

  9. 500 20% Other 3rd Party 350 Matching Field for Custody 50% 290 Other Currencies 260 Financial Institutions as 3rd Party 50% 100 Intra-Shareholder Transactions 90% Planned CLS Market Share after 5 Years CLS Market Potential (Sides per day) - Future potential - 2004 plans - Very early days - Good progress

  10. Major Reduction in Intra-Day Credit Usage Multilateral Netting Benefit > 90% Settlement Risk Elimination Business Opportunities – Increased trading, Nostro Services & Third Party Services Real Time Information on Settlement and Funds Flows Operational Resilience & Reduction of Operational Risk Improved Funds Flow and Availability Consistent Legal Framework STP CLS Benefits

  11. Additional benefits for Members Industry leadership & transformation Participation in setting future direction: Strategy, Rules, Prioritisation of product development & market development Enhanced credit profile Involvement in CLS Group Governance plus Information delivery / control In / Out swaps

  12. Opportunities for new Settlement Members • Industry transformation • Settlement finality • Leadership role in local & global market • Board & working group participation • Access to I/O Swap to further improve currency cash management • Access to Member experience and knowledge base • Settlement Member web site • Risk & Operational Benefits • Risk reduction • Improved cash management • Increased trading revenues • Improved operational efficiency and cost reduction • Real time information

  13. Revenue Opportunities • Increased Trading • Nostro Services for other CLS participating banks • Potential third party service revenues • Improved cash management

  14. Cost reduction • Reduced payment expense (MT202) • Payment processing • SWIFT costs • Reconciliation costs • Potential elimination of confirmations • Nine Members have eliminated confirmations • 100% settlement success • Reduced error correction expense • STP benefits

  15. CLS Benefits – what our members say Eliminates Settlement Risk Increased trading Reduces error rates Post-Settlement Reporting Pre-Settlement Information Reduction or elimination of credit (settlement) limits Source: TowerGroup

  16. New products and services – short term 2003 Up-grades 1.14 Application and infrastructure conversion - achieved 1.15 Currency expansion, NKR, DKR, SEK and SGD – now live 1.16 Matching field for Custody & CLS capacity up-grade Further Currencies HK and New Zealand dollar, Korean won New Shareholders 2003/04 plan to add five and four new shareholders respectively. SSI Database

  17. Category Currency / Member Expansion • Currency/Member Expansion • New "member" category for Central Banks • Capabilities for non-CLS currencies STP for FX • e-platforms links • Enhanced STP efficiencies • SSIs database/directory Category Product Proposals • Additional Settlement Sessions • In/In Swaps • High value liquidity payments Information Services • Identify products and services consequent to the significant data, historical and real time, available to CLS Global Liquidity Management Global Liquidity Management Future New Product Plans

  18. CLS tomorrow New products and services New currencies New shareholders “To make CLS Bank the premier means by which financial institutions settle foreign exchange” Custody enhancement Leverage the infrastructure

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