Clear skies for wealth management

1. Clear skies for wealth management Foto gebouw Etienne VerwilghenManaging DirectorCEO of KBL epb

2. Our private banking businesses today (AUA: € 63 bn) KBC Group has private banking operations in 16 countries, with >€5bn in Belgium, Luxembourg, Germany, Spain and the Netherlands * Of which 5.5 low yielding assets

3. Processes, systems and culture to drive retail trade-up within KBC PB In KBL EPB local private banking brands with status/heritage in Germany, Spain, Netherlands, UK, Belgium Unique model of KBL EPB: attracts experienced Private Bankers from big banks A strong Asset Management brand and range of structured products in KBC Open architecture in KBL EPB Estate planning in KBL EPB Integrated business and personal banking offer to entrepreneurs in KBL EPB Spain (Banco Urquijo) Low cost Private Banking hub for back office and IT in KBL EPB Differentiated product and service offering in KBC PB, including greater use of open architecture including Improvement of customer recruitment skills in KBC PB Our core competencies & strategic assets The strategy leverages current strengths, but also depends on building new capabilities in key areas Current core competencies & strategic assets Critical competencies we need to develop

4. The competitive landscape – 4 different models • Type 1: Networked Retail/Universal Banks • e.g., Royal Bank Scotland, Société Générale, ABN Amro • Type 2: Global Non-Networked Banks • e.g., UBS, Credit Suisse, JP Morgan, Goldman Sachs • Type 3: Local Pure Play Private Banks • e.g., Coutts, J. Baer, Degroof • Type 4: Other advisors • Investment specialists: IFAs, asset managers, stockbrokers, pension trustees, etc. • Other personal advisors: solicitors, accountants, tax advisors, etc. There are broadly four competitive models, which will all continue to exist with no one clear winning model overall

5. Key market trends • Players will continue to innovate to in response to growing customer sophistication: • More sophisticated investment products • Enlarged scope of wealth management services • Increasingly segmented offer • Accessibility and internet delivery • However, the core client needs will remain the same • Trusted personal relationships • Status/exclusivity • Investment performance

6. Dual brand strategy for KBC PB and KBL EPB KBC PB will remain a network-led model (retail trade up) KBL EPB (Puilaetco) will be positioned as an ‘independent, boutique private bank’ Our strategic direction: 4 building blocks Build an integrated, sustainably advantaged private banking business in selected European markets through two different but complementary models (network led and local pure-play private banks), focusing on private banking clients with >€1m of investable assets Belgium W. Europe onshore Offshore CEE • We are building an integrated network of local pure play private banking brands (boutique style) • Near-term priority is to to reduce costs and improve profitability through creating synergies in a private banking hub and by attacking local HQ and overhead costs • Offshore will continue to be a low growth market • Focus on maintaining profitability (leveraging the hub) • The relative weight of this block will nevertheless continue to decrease in our global Private Banking business • We will build out a network-led model, leveraging KBC PB experience in Belgium

7. Our strategic direction: Belgium • Making the best of the KBC and KBL EPB ('Puilaetco') brands together: • Dual-brand offer in Belgium • We will not seek to systematically drive wealthier customers to KBL EPB ('Puilaetco') rather than KBC PB (or vice versa), since customer preferences for the two private banking models do not neatly align with wealth bands • Clear rules of engagement between KBC PB and KBL EPB ('Puilaetco') to minimise direct competition and to capture referral potential (primarily from KBC SME/corporate) • Sources of profitable organic growth in KBC PB and KBL EPB ('Puilaetco'): • Within KBC, retail trade-up will continue to be the major source of customers; the corporate/SME referrals will be accelerated and over time we will shift towards increased ‘new to bank’ recruitment • KBC strength in in-house investment products and innovative solutions is a source of competitive advantage • However, we will increase open architecture in KBC PB as part of an overall positioning around excellence in portfolio structuring • Because KBL EPB ('Puilaetco') is a local pure-play private banker (boutique style), KBL EPB’s primary source of growth will be through • Attracting new customers who prefer the boutique style • Hiring Private Bankers who do not want to work in big groups

8. Our strategic direction: why dual brand in Belgium? • Two brands ('KBC' and 'Puilaetco') capturing different asset flows in the market • Distinct brand positioning and distinct customer proposition • Limited cross-referral (mainly focussed on corporate customers) • ‘Rules of engagement’ to govern behaviour The headroom for growth that KBC PB and KBL EPB ('Puilaetco') can access is different Type 3b: Offshore Type 2: Global PBs Type 4: Other Type 1: Networked Retail/Universal – KBC, Dexia, Fortis, ING Type 3a: Local Pure Plays – Puilaetco, Degroof, Delen, Petercam Flows of Private Banking Assets Retail Banks Thickness of arrow indicate volume of asset flow (note: for simplicity, not all flows included)

9. Our strategic direction: W. Europe onshore • Objectives: • Create a cost advantaged network of local pure-play private banks in selected W. European markets • We will focus on customers in the €1m+ investable assets segment • Our primary focus will be on building our current businesses organically, but we will be open to selective acquisitions • Profitability improvement: • Near-term priority is to reduce costs and control cost growth while growing revenues • Achieved through standardising and centralising activities in a private banking hub and by attacking local HQ and overheads • Sources of profitable organic growth: • The local pure-play private bank model (boutique style) allows: • to attract new clients who do not want to be with big banks • to drive organic growth with higher average balances (share of wallet increases and shift in client mix) • where possible, to grow through hiring experienced Private Bankerswith clients and assets

10. Improvement of efficiency: Global Custody Services Subsidiaries use the hub for all International and Local custody services Transaction/ Settlement Services Subsidiaries use the hub for all International cash payments Financial Market Intermediation Services Subsidiaries process all International and Local transactions through the hub (for all major asset classes i.e., Money, Bonds, Equities, Funds, Structured Products) IT Platform Full harmonisation of major IT tools Enhancing the development through distinctive offer: Front-Office Support: product sourcing and development capability Increased use of emerging ‘Centres of Excellence’ for particular product and service areas e.g.: Majority of product design and 3rd party product sourcing done via the hub Back-office: large majority of local back office costs removed Dealing rooms: minimal local market activities will remain (troubleshooting only) IT: only local IT support will remain Reduction in other overheads The private banking hub Our endgame vision of the hub Organisational impact

11. KBL EPB franchises in Western Europe • United Kingdom • Brand name: Brown Shipley • AUA as at 31.12.04 : € 3.1 bn • Drivers for growth : • Bigger share of wallet • Conversion of “Funds under influence" of the administrated Pension Fund into Managed Assets • Selective acquisition if we are confident to recapture premium to be paid

12. KBL EPB franchises in Western Europe • Holland • Brand name: Theodoor Gilissen Bankiers • AUA as at 31.12.04 : € 3.3 bn • Drivers for growth : • Private Banking sensu stricto + External Asset managers • Acquisition of Stroeve Bank in April 2005 (AUM € 3.0 bn) • Closing planned early July 2005 • Integration with Theodoor Gilissen will be effective by October 2005 • Hiring of (experienced) Private Bankers (re turmoil situation with the big banks) • No other major acquisition foreseen

13. KBL EPB franchises in Western Europe • Germany • Brand name: Merck Finck • AUA as at 31.12.04 : € 5.0 bn • Drivers for growth : • Bigger share of wallet through estate planning • Hiring of experienced Private Bankers : 30 Private Bankers have been hired and will join in the next months because they are attracted by KBL EPB model • Acquisition unlikely except possibly for small IFAs • Working group on possible synergies with KBC Corporate Banking (servicing entrepreneurs)

14. KBL EPB franchises in Western Europe • Spain • Brand name: Banco Urquijo • AUA as at 31.12.04 : € 5.0 bn (+ € 5.5 bn low yielding assets) • Drivers for growth : • Pure organic growth • Specific actions on low yielding assets • Working group on possible development of Corporate Activity with KBC Corporate Banking(servicing entrepreneur)

15. KBL EPB franchises in Western Europe • France • Brand name: KBL France • AUA as at 31.12.04 : € 0.8 bn • Drivers for growth : • Acquisition of Aurel Leven Gestion (IFA) in February 2005 (AUM € 0.5 bn) being currently integrated in KBL France • Acquisition of small IFAs (more than 400 existing IFAs in France as of today) who are currently being forced by the regulatory authority to join bigger financial institutions or to disappear • Hiring experienced Private Bankers France needs to reach critical mass: periodic reassessment on France and global reassessment in 3 years

16. KBL EPB franchises in Western Europe • Italy • Brand name: Banca KBL Fumagalli Soldan • AUA as at 31.12.04 : € 0.4 bn • We are currently reassessing the model

17. Our strategic direction : offshore • Drive hard on cost reduction (leveraging the hub) and revenue margins to maintain profitability as the offshore market declines • Where possible, steer repatriated assets to KBL EPB onshore businesses or to KBC • In the near-term, we will not aggressively pursue new sources of offshore wealth (e.g., Middle East, Asia), except where existing KBC operations provide a clear access point (e.g., CEE) • Selected small acquisitions of IFAs with short pay back period  The weight of offshore in our global private banking business will continue to decrease

18. Our strategic direction : CEE • Small as of today (total AUM : € 1.6 bn) but an attractive long-term opportunity for KBC Group • Expected market growth is above W.Europe markets • 1st phase : Network-led model (as per KBC PB Belgium):The primary source of organic growth will be via retail trade-up • A reasonable expansion is foreseen by 2008 (yearly increase of 15%) but on the longer term, the increase could be much more significant

19. KBC Group PB financial projections1 In total, KBC Group projects ~10% Net Income growth per year till 2008 Net Income Growth CAGR 10% This assumes normal market conditions 1. Excluding any future acquisitions

20. KBC Group PB financial projections • These projections take into account that : • The offshore private banking, which have an above average profitability, will slowly declined and so will do its relative contribution to the net income • The development of the onshore private banking and its higher efficiency through the hub implementation will assure a global CAGR on net income of 10 %

21. Summary : big choices The choices we are making : • The Private Banking market will continue to be attractive despite increased focus from competitors • We believe in our 2 models for Private Banking : • EPB model : network of local pure-play private banking brand (boutique style) which allows : • to keep the “plus” of local proximity and human size service • to leverage and optimise the local brands through 'the hub' (increase the efficiency and the development of a distinctive offer) • KBC PB model in Belgium : retail trade-up in a network-driven model • We believe CEE has got an important growth potential for Private Banking in the medium and long term and that the Belgian retail trade-up model is the adequate model to catch this opportunity

22. Summary : our strategic actions by priority Increase profitability and drive organic growth in current businesses 1 Selectively acquire to reinforce current positions of strength onshore (e.g. Netherlands, Germany, UK, Spain) 2 Build critical mass in France (and Italy? ) 3 Acquire offshore in Switzerland and Lux to maintain scale 4 Opportunistic acquisitions will imply an investmentin the range of € 150-250 mln a year