Presenter : Werner Schwanberg, 58, German, resident in Ireland for 21 years

1. Ireland: Financial Services in the recent crisesbackground, rescue, recovery, remaining challenges Presenter: Werner Schwanberg, 58, German, resident in Ireland for 21 years Chartered Director and CEO of WGZ BANK Ireland plc, Dublin Non-Executive Director on Irish company boards WGZ BANK Ireland plc Wholesale Bank Full Irish Banking Licence since 1995 100% subsidiary of WGZ BANK AG, Düsseldorf, Germany Total Assets: EUR 3 billion Staff: 24 Management of Treasury Portfolios, Funding of associated banks

2. WGZ BANK, Düsseldorf cooperative banking remit for more than 125 years • WGZ BANK has been the central institution to 200 local cooperative banks in Germany’s Rhineland and Westphalia regions since 1884 • In addition to its traditional functions as a central institution, it proactively complements the services of its member banks in domestic and international transactions • As a modern corporate and trading bank, WGZ BANK offers its corporate clients and its partners in the capital markets a broad range of professional products and services tailored to their specific needs

3. Ireland: Financial Services in the recent crisesbackground, rescue, recovery, remaining challenges (cont.) Background – pre crisis Irish Economy • 1980s: weak economy, over spending, over borrowing, high interest rates, intensive strike actions, high unemployment (17%), mass emigration, overvalued currency from 1979 (Exchange Rate Mechanism) until 1986 (devaluation). • Late 1980s: improvements through economic and welfare reforms, tax cuts, state and industry sponsored initiatives like the International Financial Services Centre (IFSC). • 1990-2007: boom years (Celtic Tiger), high foreign inward investment, low corporation tax rate, improved economic management, EU infrastructure funding, low unemployment (4%), high growth rates, low interest rates, property boom.

4. Ireland: Financial Services in the recent crisesbackground, rescue, recovery, remaining challenges (cont.) Background – pre crisis Financial Services in Ireland • Domestic Banks (Bank of Ireland, AIB, Irish Life and Permanent, Anglo-Irish Bank, Irish Nationwide, EBS) • Foreign owned Banks with Irish Retail Business (like Ulster Bank, RBS, Bank of Scotland, KBC, BNP) • International Financial Services without Irish retail Business (developed out of the International Financial Services Centre) • Banking - € 820 billion (total assets of foreign controlled branches and subsidiaries)* • Funds & Investment Management - € 2.2 Trillion Investment Funds assets under management* • Insurance - € 28 billion cross border life insurance premiums, €26 billion non-life insurance)* • Total of 500+ firms with c. 33,000 employees* *source IDA Ireland

5. Ireland: Financial Services in the recent crisesbackground, rescue, recovery, remaining challenges (cont.) Background - crises • US subprime crisis – no major impact on Ireland • Real Estate Crisis - Burst of Irish property bubble from late 2007, decline in house prices – major impact on Irish retail banks (developer insolvencies); construction industry comes to a halt. • Global Liquidity Crisis - Lehman Brother collapse – major impact on Irish domestic and some international banks (no liquidity). • Sovereign Crisis - Irish government bank guarantee; problems of the banks reflect on Ireland’s ability to raise finance in the markets. Combine with EU and wider global economic slow down. Governance and regulatory shortcomings in the case of some banks exacerbate financial strain on the Irish Government. Major impact on Irish domestic and some international banks. • In November 2010 a rescue deal was agreed with the EU, IMF.

6. Ireland: Financial Services in the recent crisesbackground, rescue, recovery, remaining challenges (cont.) Rescue - Combined 7 year rescue package in EURO billion: 22.5 IMF 22.5 European Financial Stability Mechanism 17.5 European Financial Stability Facility 5.0 bilateral loans UK, Sweden and Denmark 67.5 external 5.0 cash reserves Ireland 12.5 Irish National Pension Reserve Fund 17.5 internal 85.0 Total* *c. 65 of this for banks bail out, of which 35 for IBRC

7. Ireland: Financial Services in the recent crisesbackground, rescue, recovery, remaining challenges (cont.) Rescue – Supporting measures by the Irish Government • Full cooperation with the troika • Increase of personal taxes (Universal Service Charge) • Increase of stealth taxes (fuel, cigarettes alcohol) • Increase of VAT (23% - highest since 1990) • Introduction of Property Tax • Introduction of water charges • Pension contributions for public service employees • Introduction of pension levy (0.6% p.a. on pension savings) • Pay cuts for public service employees • Reductions in social benefits • Reduction of spending (infrastructure projects on hold)

8. Ireland: Financial Services in the recent crisesbackground, rescue, recovery, remaining challenges (cont.) Rescue – Banking Sector Measures • Restructuring of Banking Sector (two pillar banks remaining) • Capitalisation of Banks. The state’s main ownership: • 100% of Anglo Irish Bank/Irish Nationwide (Now IBRC) – in wind up mode • 99.8% of Allied Irish Bank – Now one of two pillar banks • 15% of Bank of Ireland – Now one of two pillar banks • Establishment National Asset Management Agency (NAMA) • Transfer of real estate related assets from banks • € 74 billion for a consideration of € 31.8 billion • Strengthening of financial services regulation (including introduction of obligatory Corporate Governance Code for Financial Institutions) • Sale of State Assets (Irish Life Insurance)

9. Ireland: Financial Services in the recent crisesbackground, rescue, recovery, remaining challenges (cont.) Recovery • Strong Foreign Direct Investment and Exports (Pharmaceutical, IT, Financial Services, Consumer and Business Services, Food) • IDA sponsored companies: Export contribution: € 122 billion* • Contributing € 19 billion to corporation tax intake* • Economic Growth above EU average • GDP Forecast 2013**: 1.8 2014: 2.7 • GNP Forecast 2013**: 1.0 2014: 1.5 • Return to the markets / positive market sentiment towards Ireland • Government return since July 2012 with T-Bills and € 5 billion 10 year bond (all oversubscribed) • 29 May 2013 Bank of Ireland issues € 500 million 3 year bond at mid swap +225bp (subscription level: € 1,000 million) * source: IDA Ireland ** source: ESRI

10. Ireland: Financial Services in the recent crisesbackground, rescue, recovery, remaining challenges (cont.) Remaining Challenges • Reduction of Sovereign debt. • High indebtedness of private households (negative equity from real estate). • Still high unemployment (although first signs of easing) still c.14%. • Revitalisation of economy. • Stimulation of businesses / provision of credit by the banks. • Reducing austerity measures in favour of future growth.