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MS European Banks Investing in Central & Eastern Europe Seminar

UniCredito Italiano. “THE VALUE OF NEW EUROPE”. Roberto Nicastro – Deputy CEO. MS European Banks Investing in Central & Eastern Europe Seminar. London – June 26 th 2002. MAIN POINTS.

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MS European Banks Investing in Central & Eastern Europe Seminar

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  1. UniCredito Italiano “THE VALUE OF NEW EUROPE” Roberto Nicastro – Deputy CEO MS European Banks Investing in Central & Eastern Europe Seminar London – June 26th 2002

  2. MAIN POINTS • New Europe is a significant element in UCI’s profile and strategy, carrying a significant value creation potential • Value creation in New Europe is driven by Revenues/Profitability growth and decreasing level of risk • New Europe Banking is quite homogeneous and can be managed with one Business Model • 2001 Results and Q1 2002 confirm the good performance in New Europe and support UCI’s track record and ambitious value creation targets in the region • Turkey’s acquisition represents the last element, integral part of New Europe’s strategy

  3. Agenda New Europe within UCI’s Group Market scenario in New Europe Strategy, Organisation and Key Projects in New Europe Recent performance Next steps

  4. UCI: A EUROPEAN LEADER IN DISTRIBUTION, A GLOBAL PLAYER IN ASSET MANAGEMENT WITH OUTSTANDING PROFITABILITY AND EFFICIENCY 2001 KEY FIGURES MKT CAP. Euro 28.1 bn (1) NET INCOME Euro 1,454 mln C/I RATIO 52.7% PRE-TAX ROE 32.9% ROE 18.0% BRANCH NETWORK 3,998 (1) As of 21.06.2002 including market cap for minorities that are going to be acquired in July 2002 (S3 project)

  5. OUR DIVISIONAL STRUCTURE SUPPORTS THE GROUP’S VISION TO BECOME A EUROPEAN MULTISPECIALIST FINANCIAL GROUP BEING A MULTISPECIALIST FINANCIAL GROUP .... Italian Banking Wholesale Banking New Europe Banking New Initiatives ... WHAT DOES IT MEAN ? • Generating new, focussed, fast growing business lines in a systematic way • Facilitating ad hoc “strategic moves” per business line (e.g. on a dimensional and a geographical scale) • Improving capital allocation and value based management • Improving accountability and market recognition of the various business lines

  6. Bulbank - Bulgaria Pioneer 85.2% acquired in October 2000 Total assets (Euro mln) Market share* 1,439 27% • Largest player in Poland with Euro 1,044 mln in Assets under Management • 24% market share in Poland • Total AuM of Euro 161 mln in Czech Republic Net income (Euro mln) ROE Branches 36 15% 98 UCI ALREADY ACQUIRED A LEADING PRESENCE IN NEW EUROPE Group Pekao - Poland UniBanka - Slovakia 53.2% acquired in May 1999 72.4% acquired in October 2000 Total assets (Euro mln) Market share* 20,852 17% Total assets (Euro mln) Market share* Net income (Euro mln) ROE 698 4% 3.1 9% Net income (Euro mln) ROE Branches 353.4 22.2% 817 Warsaw Branches 51 Bratislava (1) Demirbank – Romania 82.5% acquired inMay 2002 Zagreb Zagrebacka Group – Croatia Bosnia- Herzegovina 82.5%acquiredin March 2002 Bucarest Total assets (Euro mln) 74.7 Market share* 1% Net income (Euro mln) 2.5 ROE 13.9% Branches 11 Total assets (Euro mln) Deposits (Euro mln) Customer loans (Euro mln) Market share* Net profit (Euro mln) ROE Branches 6, 512 5,260 2,331 30% 63 13.5% 235 Sofia Koc Fin. Serv. - Turkey 50% to be acquired in September 2002 Total assets (Euro mln) Market share* Branches 4,963 2.8% 115 End of 2001 data (*) Total assets 2000 Market share (1) 2000 data.

  7. THE NEW EUROPE DIVISION IS INCREASING ITS WEIGHT ON UCI GROUP 2001 Restated Amount invested (bn €) 2.5* • New Europe carries a significant weight on Group performance • Weight increasing as result of region’s growth, restructuring and new investments • RARORAC above Group level • A very significant EVA contribution (EPS 2001-04 CAGR > 20%, declining cost of equity) Total Assets (bn €) 34.5* Nr. of clients (mln) 6* 18.6* Revenues (% of UCI) Net Income UCI ownership (mln €) 267.4° Net Income (% of UCI) 18.0%° 17,03° ** RARORAC (%) * Including ZABA and KFS ° Including only ZABA ** UCI Group RARORAC = 10,23%.

  8. Agenda New Europe within UCI’s Group Market scenario in New Europe Strategy, Organisation and Key Projects in New Europe Recent performance Next steps

  9. WHAT DO WE CONSIDER NEW EUROPE? A REGION INCLUDING EU ACCESSION COUNTRIES PLUS CROATIA AND BOSNIA Tallinn Estonia Latvia Riga Poland Vilnius New Europe Year 2001 EU Czech Rep. Lithuania Population, mln Warsaw 180 377 Slovakia Prague GDP, bln € 627 9,006 Romania Bratislava Hungary Lubjana Budapest Per Capita GDP, € 23,885 3,472 Zagreb Bucharest 496 9,006 Bulgaria Slovenia Sarajevo Sofia 23,885 4,595 Istanbul Croatia Bosnia Turkey Source: Datastream and EIU.

  10. WHY NEW EUROPE STANDS FOR A VERY ATTRACTIVE OPPORTUNITY FOR UCI • Abundant EPS growth expected: • GDP and banking sector growth • Plenty of economies of scope/know-how transfer opportunities • Italian driven corporate business • Favourable tax environments Bank revenues and EPS • Reasonable and further declining economic & political risk • Already different from other Emerging Markets areas • Perspective entry into EU and EMU guarantees a predetermined convergence path Cost of equity

  11. 6% 100 100 80 4% 60 72 2% 40 20 24 0% 0 2000 2001 2004 EU 15 Slovenia Bulgaria NE Eurozone USA (highest) (lowest) Bank EPS  CATCHING UP PROCESS TOWARDS THE EU SUGGESTS A LONG PERIOD OF FAST AND SUSTAINABLE GROWTH Real GDP growth Gap in 2000 per capita GDP in PPP • NE growth rate (past and expected) well above EU and USA • Current gap in per capita income between EU and NECs (New Europe Countries) suggests a continued more dynamic growth Source. Per capita GDP in PPP (Purchasing Power Parity): EU Commission estimates, 2000. Real GDP growth: UCI- FBD Research Team and UBM.

  12. Bank EPS  STRUCTURAL REASONS FOR GROWTH ARE RELATED TO THE NATURE OF NECs AS TRANSITION ECONOMIES, SIGNIFICANTLY DIVERGING FROM EMERGING MARKETS EXISTING SKILLS AND INFRASTRUCTURE EU ACCESSION PROCESS • Pre-determined path of convergence and forced structural reform process • Harmonisation of legal and regulatory framework • Integration and liberalisation of markets • EU financial support for convergence • Existence of industrial assets • Developed infrastructures • Skilled labour force and availability of human capital • Historical linkages with EU countries • Foreign Direct Investments • Internal demand

  13. Bank EPS  PAST EXPERIENCES OF EU ENLARGEMENT ADDRESS TO IRELAND, SPAIN, AND PORTUGAL AS SUCCESS ROLE MODELS Ireland Average Growth 1986/01 EU Spain Portugal IE+SP+POR 4.2% EU 2.1% 1986 Spain and Portugal in EU 1973 Ireland in EU • The experience of past EU enlargement processes shows that catching up implies decades of average growth above EU standards • Spain, Portugal, and Ireland experienced for 20 years growth by 2/3% points higher, compared to the EU Source: University of Groningen database. Source: University of Groningen database.

  14. In NE volume effect to offset contraction in spread, supporting NIM growth... • … with significant increases in fees generation, although lower than in Italy in 1996-01… • … and decreasing credit risk Bank EPS  POSITIVE PERSPECTIVES CONFIRMED VIA COMPARISON WITH ITALIAN SITUATION IN LAST 5 YEARS (EMU CONVERGENCE PERIOD) CAGR Loans+Deposits Total Net Revenues 6.8% 11.7% 6.5% 7.3% Italy 96-01 New Europe 01-11 Italy 96-01 New Europe 01-11 Operating Costs Provisions/Loans -8.6% 4.4% -12.5% 2.9% Italy 96-01 New Europe 01-11 Italy 96-01 New Europe 01-11 Source: UCI – Foreign Banks Division Research Team, simulated model for NECs data. 10 Year macroeconomic assumption for OEF. Data for Italy, Prometeia

  15. Bank EPS  AS A RESULT BANKING PROFITS EXPECTED TO GROW DOUBLE DIGIT IN THE NEXT DECADE Potential for Pre tax profit growth* • Double digit volumes growth, declining or stable spread, increasing fees and commissions, improving cost/income, slightly declining cost of risk • Lower growth in Poland due to declining spread, higher growth in Croatia driven by sustained GDP growth and currency switch (simul. 2001-10 CAGR for NECs) 20% 15,7% 15,4% 14,4% 15% 10,1% 10% 5% 0% Poland Slovakia Bulgaria Croatia Note: 10 Year macroeconomic assumption from Oxford Economic Forecasting Source: UCI - FBD Research Team, simulated model for NECs data * Conservative scenario. Under more aggressive growth scenario, pre-tax profit growth respctively: Poland 15%, Slovakia 21%, Bulgaria 17%, Croatia 24%

  16. Risk  RISK IN NEW EUROPE IS DECREASING AND ALREADY THE LOWEST AMONG EMERGING MARKET REGIONS S&P's Country Rating Country spread over Eurobond B 800 692 BB- BB BBB- BBB- BBB 600 400 259 200 ASIA* MERCOSUR NE 0 New Europe Latin America 1998 2001 Commitment to structural reforms guarantees low and decreasing risk, confirmed also in terms of spread over EU bonds** * Asia is defined as Indonesia, Malaysia, Thailand,Korea, Philippines ** Spread over Eurobond is based upon SUEMI: Sole24Ore UBM Emerging Market Index, for Euro-denominated high-yield benchmark (total returns traded sovereign debt instruments in Euro with fixed interest rate, 76 sovereign bonds for 22 countries and a market capitalisation of EUR 36 bln) Source: S&P’s database and UBM Research

  17. EMU entry Risk  PERSPECTIVE ENTRY INTO EU AND EMU GUARANTEES A PREDETERMINED CONVERGENCE PATH Phase 1: pre-accession Phase 2: EU membership No Euro adoption Phase 3: full EMU membership Upon fulfillment of Maastrichtcriteria (min. 2 years) – no opting out Accession negotiations Ratification (18 months) ERM II T Min T+2 Poland, Slovakia, Hungary, 3 Baltics, Czech R., Slovenia 2004 Timetable confirmed in Sevilla, June 22nd, 2002 Bulgaria, Romania and Croatia 2007 EU entry

  18. Agenda New Europe within UCI’s Group Market scenario in New Europe Strategy, Organisation and Key Projects in New Europe Recent performance Next steps

  19. AN EFFECTIVE ORGANISATION MODEL HAS BEEN ADOPTED, BASED ON A FEDERAL MODEL… STRATEGY AND ORGANIZATION MODEL OPPORTUNITY • Selective focus on Affluent and SME segments • Very similar strategies by segment in each country • Same business models and target IT systems • Economies of scale (eg. card processing, purchasing) and product (eg. Pioneer, Leasing) • Strong P&C • Homogenous region: • Countries with similar dynamics (while on different life-cycles) • Converging regulation (EU convergence)

  20. ... AND A COMMON STRATEGY BY SEGMENT Segment Situation Average ROE Strategy Large Corporate Overcrowded, thin margins Selective development fee- driven < 10% SME Specialised service model Attractive, growing > 15%* Private Highly differentiated service model Small but attractive > 40% Affluent/Small Business Specialised service model Attractive, growing > 25% • Cost focus • Cross selling (bancassurance, mortgage, credit cards) Low average revenues per customer but attractive sub-segments Mass < 10% * Segment with highest profitability differences by country

  21. UCI’S NEW EUROPE ORGANISATION MODEL • BANKS: • Pekao • Zagrebacka • Bulbank • UniBanka • Demirbank • KFS • Local CEO & Mgmt Team • Expatriate COO & Selected Managers NEW EUROPE DIVISION • Planning & Development • Corporate Banking • Retail Banking • Credit Risk Process • IT/Organisation SPECIALISED FUNCTIONS Some organization reference model for N.E. Division: • Nordea (Scandinavia) • Leading global retailers* (Carrefour, Auchan, McDonald’s, Blockbuster) • Asset Mgmt/Pioneer • TradingLab/CorporateLab • Leasing • Card Processing • Bancassurance (Allianz) N.E. FACTORIES * Taking into account difference in service content of banking products and the heavier regulatory and supervision environment

  22. A CLEAR DISTINCTION IN ROLES BETWEEN BANKS AND HOLDING • BANKS: • Achieve budget • Make customers happy • Manage commercial policies • Take credit decisions • Manage Human Resources • Keep relationships with local stakeholders • Implement UCI business model • HOLDING/SPECIALISED FUNCTIONS: • Performs Strategy & Control function • Strategy • Appoints Top Management • Ensures Performance and Risk Budgeting & Controlling • Audit • Supports development of: • Products and service model • Operation & Process • IT Systems • HR policies and training • Centralized production “New Europe” Federal Model

  23. SEVERAL KEY PROJECTS HAVE BEEN LAUNCHED WITHIN NEW EUROPE BANKS TO ENSURE SUSTAINABLE PROFITABILITY GROWTH AND MARKET LEADERSHIP KEY PROJECTS UNDERGOING • Divisionalisation • Homogeneous retail strategy - service model, product range - (all banks) • Development of regional product companies to enlarge product range in revenues pool (leasing, factoring) • Affluent client acquisition model REVENUES • IT implementation • Centralized card processing COSTS • Credit excellence (all banks) • Centralized market risk management (all banks) RISK

  24. Revenues  PEKAO COMPLETED AN INNOVATIVE DIVISIONALISATION PROCESS, AIMING AT SIGNIFICANTLY INCREASING COMMERCIAL EFFECTIVENESS FOUR BUSINESS UNITS WITH DEDICATED CHANNELS AND SERVICE MODELS Affluent & Small Business Corporate Private Mass Corp.Hubs Corp.Hubs Corp.Hubs • Retain affluent clients • Gain new clients • Increase share of wallet • Leverage on existing resources • 800 fully dedicated Sales Managers • 125 dedicated Branches • Revenues growth by cross selling • Cost effectiveness/ Multichannel usage • 830 Branches and Outlets • 4,700 mass Customers Service Representatives • Dedicated financial advisors • Separate location to provide “exclusive” service • 25 corporate hubs and 5 corporate regions • Clear cost effectiveness • Improved service to clients through product specialists • Improved share of wallet/ profitability

  25. Revenues  SPECIALIZED BUSINESS MODEL LAUNCHED IN ALL NE BANKS 2 Private bankers with client portfolio in “1st floor locations” 24 Private bankers with client portfolio in “1st floor locations” Private 45 Account Managers with client portfolio in dedicated corners in branches 63 Account Managers with client portfolio in corners in branches 800 Relationship Managers* with client portfolio in VIP corners in branches Affluent • 17 Small Business Account Managers with client portfolio in dedicated corners in branches • 51 Micro Sellers with client lists in branches 800 Account Managers* with client portfolio in dedicated corners in branches SME Officers with client lists in dedicated corners in branches Small Business 4,700 Mass Customer Service Representatives in branches 133 Retail Sellers with client lists in branches 86 Retail Tellers in branches Mass Note: Salesforce figures at 04/2002 * Affluent/SB joint service in progress: 800 in total

  26. Costs  IT DEVELOPMENT STRATEGY • Definition of common business models within New Europe Banks and along the lines of the Italian Business Model • Different hardware solutions between Pekao (mainframe) and smaller banks (AS 400) in the context of a common platform • Development of homogeneous target systems (architecture, facility management, application portfolio), with tailored approach per: • Language • Regulations • legacies • Reliance on standardized/already tested IT solutions and applications (minimise proprietary development) Priorities • New IT system in Pekao (end 2003) & Bulbank (end 2002) • Convergence in IT developments

  27. Risk  CREDIT EXCELLENCE: REDESIGN CREDIT PROCESS ALONG RESULTS OF DIAGNOSTIC HIGHLIGHTING IMPROVEMENT OPPORTUNITIES IN SEVERAL AREAS TARGET: REDUCE COST OF RISK KEY ACTIONS • Electronic underwriting tool • Of corporate clients introducing new rules for valuation and structural procedures LOGIC • Credit rating system corporate,small business and retail • Of Corporate, Small Business and Retail clients introducing risk measurement procedures Introduce the “best practices” in the credit area, closing the gap between New Europe and Italian Banks • Credit management system • Identification of Retail and Small Business clients abnormalities and setting of a pre-defined pattern • Work Out system • Active management on collection of NPL of Corporate and Small Business • HR/Skills • Training and upgrade of credit officers teams

  28. Agenda New Europe within UCI’s Group Market scenario in New Europe Strategy, Organisation and Key Projects in New Europe Recent performance Next steps

  29. A CONSISTENT TRACK RECORD OF PERFORMANCE IMPROVEMENT LEADING TO OUTSTANDING RESULTS, ZAGREBACKA ACQUISITION FURTHER STRENGHTENS NE DIVISION (Euro mln) Total Revenues Cost/Income ratio +11% 1,784 -7.8pp 69.0% 1,541 56.7% 51.4% 1,391 48.9% Operating Income 786 +31% • 1999 2000* 2001* 2001 • (incl. Zaba) 866 +5.5#pp 787 • 1999 2000* 2001* 2001 • (incl. Zaba) 602 ROE* +1.5pp 244 21.1% 19.4% 19.5% Operating Costs • 2000* 2001* 2001 • (incl. Zaba) -4.6% 917 789 753 542 Pekao 2001 perimeter Incl. ZaBa • 1999 2000* 2001* 2001 • (incl. Zaba) • 2001 2001 • (incl. Zaba) *At Unchanged FX as at the end of 2001 # For 2000 Bulbank Net Profit net of Euro 79 mln (pre tax) extraordinary income from UBB disposal Perimeter for 1999: Group Pekao only Perimeter for 2000 and 2001 : Group Pekao, Bulbank, Unibanka and Splitska (sold in Apr. 02)

  30. A MORE BALANCED PORTFOLIO AS A RESULT OF ZAGREBACKA ACQUISITION NEW EUROPE BANKING TOT. REVENUES – UCI’s PORTION (restated): EURO 1.1 bn KFS 6.6% (Euro 75.6 mln) ZAGREBACKA 22.2% (Euro 253.5 mln) BULBANK 5.5% (Euro 63.4 mln) UNIBANKA 2.1% (Euro 24.3 mln) GROUP PEKAO63.4% (Euro 727.4 mln) Zagrebacka Group Group Pekao Bulbank Total Division UniBanka +19(3) +81 (2-3) +53 +80 (2) n.s. Net Income – % y/y growth (1) 13.3 ROE, % 22.2 14.7 9.0 19.4 -1.0 ROE – p.p. Ch. on 2000 0.7 (2-3) +2.6 +6.6 (2) n.s. 63.3 C/I Ratio, % 51.4 48.7 45.9 68.2 -6.4 -7.9 -5.2 -13.7 C/I Ratio – p.p. Ch. on 2000 -1.2 17.0 24.2 35.6 1.8 8.6 RARORAC, % (1) At Unchanged FX (2) For 2000 Bulbank Net Profit net of € 79 mln (pre tax) extraordinary income from UBB disposal (3) Excluding extraordinary items for Pliva shares disposal and revaluation of replacement bonds and based on Italian accounting standards

  31. POSITIVE PERFORMANCE IN Q1 2002 DESPITE ECONOMIC SLOWDOWN Euro mln Pekao - Poland Bulbank - Bulgaria 1Q02 1Q01 %Ch May02 May01 %Ch Revenues Net Op. Profit Net Profit C/I (%) Revenues Net Op. Profit Net Profit C/I (%) 31 18 15.5 41.5 32 17.8 12.2 44.8 +20 +31 +31 -3.7 330 173 81 47.5 -3.6 +1.5 +27 -3.3 275 132 62 51.2 Zagrebacka Group - Croatia Unibanka - Slovakia May02 May01 %Ch 1Q02 1Q01 %Ch 8.7 2.9 (1) 1.8 65.9 85 24 41 62.6 Revenues Net Op. Profit Net Profit C/I (%) +14 - 14 +90 -9.1 Revenues Net Op. Profit Pre-tax Profit C/I (%) 9.3 3.7 2.7 60.4 +18 +22 +51 -5.5 75 28 22 71.7 • * 2001-2000 figures – excluding extraordinary items for Pliva shares disposal and revaluation of replacement bonds • Restated

  32. IN A CONTEXT OF PROBLEMATIC ASSET QUALITY AND ECONOMIC SLOWDOWN, STRONG FOCUS ON CONSERVATIVE LENDING ACTIVITY AND AGGRESSIVE RECOVERY ACTIONS Net NPLs and Doubtful Loans as % of Total Net Loans Coverage ratios 76.5 8.7 56.1 9.2 78.6 78.6 9.0 56.8 54.6 2.9 2.8 2.5 2001 2001 1Q02 1Q02 restated restated Net Doubtful Loans/ Total Net Loans Net NPLs/ Total Net Loans On Gross Doubtful Loans On Gross NPLs • Selective and conservative lending policies Incl. Zaba % ch. on Dec.’01 Dec. 2001* 1Q’02 (Euro mln) • Improvement of coverage ratios • Implementation of new lending rules and procedures, active monitoring Net Doubtful Loans 876 847 -3.3 Net NPLs 240 255 +6.2 • Effective recovery actions • Ratio better than the system * Restated, excluding Zaba

  33. UCI NEW EUROPE BANKING ALREADY COMPARABLE TO SIGNIFICANT PLAYERS BOTH FOR SIZE AND PROFITABILITY (4TH ITALIAN BANKING GROUP!) UCI’s portion of Net Income 2001 TotalRevenues2001 UCI’sStake Net Income2001 1,368 Pekao Group 183.3 53.2% 353 Bulbank 74 30.9 85.2% 36 63 Zagrebacka Group 51.1 307 82.5% 2.2 Unibanka 34 72.4% 3 267 456 Total (Euro mln) 1,784 (Euro mln) TotalRevenues2001 Net Income 2001 Total size compared to: Alpha bank Banca di Roma 1,402 103 Banco Popular Español 2,016 BNL 342 Monte Paschi Banco Espirito Santo 1.227 399 Source: Bankscope & Balance sheet

  34. AMBITIOUS TARGET GROWTH LEADING TO A 20% SUSTAINABLE EPS GROWTH 2004* ROI (Return on UCI’s Investments) 18-20% 20% EPS CAGR Cost/Income ratio ~46% Max weight of capital investments on UCI’s total group capital 25% * Pekao Group, Bulbank, UniBanka, Zagrebacka

  35. Agenda New Europe within UCI’s Group Market scenario in New Europe Strategy, Organisation and Key Projects in New Europe Recent performance Next steps

  36. AS A RESULT OF CORPORATE RESTRUCTURING CURRENTLY BEING IMPLEMENTED, KFS WILL EMERGE AS ONE OF THE LEADING AND FINANCIALLY STRONGEST GROUPS IN TURKEY KFS IS THE RESULT OF A 50/50% PARTNERSHIP BETWEEN UCI AND KOC GROUP KFS KOC YATIRIM (brokerage) KOC NV (dutch subsidiary) KOC ASSET MGMT. KOC LEASE KOC FACTORING KOC Azerbaijan KOCBANK • KOCBANK: the sixth largest private sector bank in Turkey in terms of total assets (US $ 3.8 bn) with an approx. 5% market share (total deposits US$ 2.6 bn, total net loans US$ 1.2 bn) • KOC YATIRIM manages the second largest portfolio of mutual funds with a 17% market share in Turkey • KOCLEASE: a leading institution in the Turkish leasing market • KOC FACTORING: Turkey’s largest factoring company in terms of business volume and asset size

  37. THE INVESTMENT IN KFS REPRESENTS AN IDEAL ENTRY OPPORTUNITY FOR UCI IN THE TURKISH MARKET, A CORE ELEMENT OF NE STRATEGY WHO IS KFS WHY TURKEY • Turkish economy: is currently exhibiting a strong recovery • Turkish banking sector: is among the most attractive in NE in terms of: • size • development potential • growth prospects • Leading provider of financial services • US$ 4.4 bn of assets, US$ 636 mln of AUM (as of Dec 01) • Pro-forma BV: min. US$ 330 mln(1) • Capital Adequacy Ratio of approx. 12% STRATEGIC GUIDELINES DEAL CONDITIONS • Main objective of the strategic partnership: • consolidate and grow KFS’ position in Turkey • realize a sizable value generation opportunity • 2004 target ROAE: appr. 20% • Evaluation of 50% stake: US$ 240 mln • Agreement on an earn-out formula(2) • Closing of the transaction: Sep. 2002 (1) Estimate based on conservative provisioning and consequent recapitalisation to take place prior to closing (2) Additional payment by UCI based on the achievement of a minimum normalised return on investment of 20% consistently for the next three years

  38. MAIN POINTS • New Europe is a significant element in UCI’s profile and strategy, carrying a significant value creation potential • Value creation in New Europe is driven by Revenues/Profitability growth and decreasing level of risk • New Europe Banking is quite homogeneous and can be managed with one Business Model • 2001 Results and Q1 2002 confirm the good performance in New Europe and support UCI’s track record and ambitious value creation targets in the region • Turkey’s acquisition represents the last element, integral part of New Europe’s strategy

  39. Annexes

  40. NEW EUROPE BANKING: 2001 RESULTS BREAKDOWN BY BANK New perimeter: excluding Splitska and including Zagrebacka Mln € ZAGRE-BACKA Group (82.5%) Group PEKAO (53,2%) POL’NO BANKA (72,4%) SPLITSKA BANKA (62,6%) BULBANK (85,2%) TOTAL (1) TOTAL UCI stake 207 Interest margin (incl. div.) 823 21 1 102 47 942 51 Net non interest income 545 13 101 681 18 599 23 Total revenues 1 368 34 307 1 784 65 1 541 74 754 Operating costs (incl. dep.) 666 23 195 917 31 34 34 Net operating income 702 11 113 866 787 40 12 187 174 5 13 185 Net loan loss provisions 6* 18 353 3 63 456 Net income 410 36 183.3 2.2 267.4 Net income (UCI’s portion) 10,9 227,3 51.1 30.9 23,8% 9.0% 21,1% ROE 14.7% 22.2% 13.3% 19.4% Cost/income (excl. goodwill dep.) 48,9% 48.7% 45.9% 68.2% 63.3% 51.4% 48,0% (1)Balance due to roundings and elisions (*)Writeback

  41. NEW EUROPE BANKING: 1Q02 RESULTS BREAKDOWN BY BANK Group PEKAO (53,2%) BULBANK (85,2%) UNI BANKA (72,4%) TOTAL (1) (Euro mln) (UCI stake) Interest margin (incl. div.) 224 10 7 245 Net non interest income 106 5 3 114 Total revenues 330 15 9 359 Operating costs (incl. dep.) 157 7 6 169 - Staff costs 82 3 2 87 - Other costs 59 3 3 64 Net operating income 173 8 4 190 48 47 0 2 Net loan loss provisions 6 81 2 93 Net income 43 5 1 54 Net income (UCI’s portion) ROE 18,6% 11,1% 11,4% 18,4% Cost/income (excl. goodwill dep.) 47,5% 45,1% 60,7% 47,1% 36% 28% 21% 34% Tax Rate (1) Including Euro 4.2 mln due to Splitska Banka consolidation at net equity; balance due to roundings

  42. OPERATING INCOME UP 23% Y/Y AND NET INCOME GROWTH AT +19% Y/Y (+23% AND +18% AT END 1Q02 FX RESPECTIVELY) • Customer volumes growth constrained by slight delay in macroeconomic pick-up and by tight pricing policy: • Selective Customer Loans growth: +1.5% yoy(2)(+9.6% y/y retail and corporate average volumes) • Customer Deposits: +2.7% yoy(2)(+4% y/y retail and corporate average volumes) (Euro mln) +17.2% Net Interest Income +10.1% Total Revenues At end of March FX +18.4% +10.8% 245 At end of period FX(1) 207 359 324 +23.4% Operating Income +23.4% 1Q01 1Q02 Non Net Interest Income 190 154 1Q01 1Q02 • Negative impact of conservative customer lending activity on commissions (-4.7% y/y) • Positive contribution of other income (+18.2% y/y) due to fees on current account packages 117 114 Cost/Income -2.6% 52.5% -2.6% 1Q01 1Q02 1Q01 1Q02 47.1% -5.4 pp • EFFICIENT COST CONTROL • Staff costs down 1.1% at unchanged FX (-1.158 headcount reduction vs 1Q01) • Tight procurement, centralised purchasing, outsourcing • Real estate restructuring • INCREASED PRODUCTIVITY • Total Revenues per employee up 16% at unchanged FX from Euro 57 th. in 1Q01 to 66 th. in 1Q02 -5.7 pp 1Q01 1Q02 (1) Exchange ratio of 31 mar 02 for 1Q02, exchange ratio of 31 mar 01 for 1Q01 (2) End of period Perimeter: Group Pekao, Bulbank and Unibanka fully consolidated, Splitska at net equity with P&L impact of Euro 2.4 mln in 1Q01 and Euro 4.2 mln in 1Q02 in NE dividend figure

  43. INCREASED CONTRIBUTION OF NEW EUROPE DIVISION 2000 REVENUE COMPOSITION BY BUSINESS AREA (1) (Total: Euro 9.3 bn) 2001 REVENUE COMPOSITION BY BUSINESS AREA (1) (Total: Euro 10.5 bn) 0.2% 0.2% 16.6%* 15.7%* 13.7% 14.7% 4.8% 5.8% 2.7% 4.6% 78.6% 74.6% 2000 NET INCOME COMPOSITION BY BUSINESS AREA (2) (Total: Euro 1.87 bn) 2001 NET INCOME COMPOSITION BY BUSINESS AREA (2) (Total: Euro 2.17 bn) 14.1%* 12.1%* 10.5% 9.0% 8.4% 10.0% 6.0% 2.7% 76.6% 76.9% Italian Banking New Europe Investment Banking Asset Management New Initiatives (1) Net of Corporate Centre negative contribution * pro-forma including Zagrebacka Group (2) Net of Corporate Centre and New initiatives negative contribution

  44. KFS, TOGETHER WITH UCI’S EXPERIENCE AND SKILLS, AIMS AT EXPLOITING SIGNIFICANT VALUE CREATION OPPORTUNITIES UCI EXPERIENCE OPPORTUNITIES FOR KOC • UCI’s “New Europe” model that allows: • the independence ofthe banks management • in a context of UCI’s strong control and support is an attractive proposition for the Koç Group • The Koç Group will have access to UCI’s: • proven expertise in banking and financial services • franchise in Western and “New Europe” • UCI’s proven track-record of successfully managing banks in “New Europe” and make each one of them a leading player in their respective markets will prove critical for the achievement of the partnership’s targets 2004 ROAE TARGET 20% • Improved credit rating will enable KFS to achieve a low cost funding base • KFS international profile will be enhanced by UCI’s international standing and network • KFS growth will be supported by UCI’s strong balance sheet and profit oriented approach • Extract cost, revenues and funding synergies by sharing Group best practices

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