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Irish Life & Permanent Acquisition of TSB Bank

Irish Life & Permanent Acquisition of TSB Bank. www.irishlifepermanent.ie. December 2000. Acquisition of TSB Bank. Brand New Bank Permanent TSB. Our Vision No. 1 Personal Financial Services Provider in Ireland. Acquisition creates a Powerful Competitive Force. Strategy. “Ireland First”

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Irish Life & Permanent Acquisition of TSB Bank

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  1. Irish Life & PermanentAcquisition ofTSB Bank www.irishlifepermanent.ie December 2000

  2. Acquisition of TSB Bank Brand New Bank Permanent TSB Our Vision No. 1 Personal Financial Services Provider in Ireland Acquisition creates a Powerful Competitive Force

  3. Strategy • “Ireland First” • Personal Financial Services Sector • Customer Focus • Multi-channel access • Best in class Bancassurer High quality retail bank a key element

  4. Build retail market position • Complete full retail product range • Shared vision • Complementary • Adds to Shareholder Value Acquisition Criteria

  5. Transaction Highlights Financial • Consideration of €430m • 1.9 times NAV • P.E. of 13* • EPS enhancing • Revenue and Cost Synergies *2000 estimated net operating profit

  6. Transaction Highlights Business • Combined customer base of 1million • Leader in Mortgages - 25%+ Life & Pensions - 20% + • Leading positions in Savings, New Car Finance, Current Accounts • Unrivalled Distribution Mix

  7. Full Clearing Bank • Strong positions in Savings & Personal Banking • 300,000 customers • 1,300 employees • 82 bank branches • 13 in-store TUSA outlets (JV with leading retailer) • 120 own ATMs and reciprocity with over 1,500

  8. Market leader in mortgage lending • Strong positions in Savings, Bancassurance & Car Finance • Capital Markets expertise • 450,000 customers • 1,500 employees • 70 branches and c.90 agencies/franchises • Excellent credit ratings - S&P: A+, Moodys: A1

  9. Permanent TSB Brand New Bank!

  10. Permanent TSB- Product Range • Combined product range for combined customer base • Best of both: • Mortgages • Life, Pensions & Investments • Current Accounts • Car Finance • Savings • Money Transmission • Credit Cards

  11. Permanent TSBBranch Distribution • Key to success • Combined network of c. 110 • Overlap of 40/45 branches • Evaluate branches for best fit • Re-engineering programmes in place • “Vision 21” (IP) • “Branch Reformat” (TSB)

  12. Brokers Agencies Salesforce In-Store Outlets Telephone Internet 600 supporting Mortgage Brokers & Intermediaries 90 agencies & franchises 320 strong Irish Life Salesforce 13 In-Store outlets, rising to 18 24 Hour Telephone Banking Online Mortgages & Personal Banking Permanent TSBnon-Branch Distribution

  13. Permanent TSB- Customers • Improved Market Offering • Wider product range • More competitive product offerings • More access points • Improved service levels • New Services Customer base of 1 million within enlarged Group

  14. A Powerful Competitive Force • Mortgages 25%+ • Savings 12% • Current Accounts 10% • New Car Finance 20% • Life & Pensions 20%+ • Total Assets >€30bn

  15. Group CEO David Went Director of Integration Billy Kane Dep. CEO & COO Diarmuid Bradley Management & Organisation • Harry Lorton & TSB Trustee (non-exec) to join main Board Bank CEO Harry Lorton

  16. Integration Process • Joint Steering Committee chaired by David Went • Director with responsibility for Integration: Billy Kane • Fair, objective and transparent process • “Best of Both” principle will operate • Growth opportunities for merged organisation Build on success of Irish Life and Irish Permanent merger

  17. Bank Financials* TSBIP • Total Assets €2.6bn €9.9bn • Loans & Advances €1.7bn €7.6bn • Mortgage Loans €1.3bn €7.0bn • Customer Accounts €2.3bn €4.7bn • Pre-tax profit €39.0m €80.8m • Net assets on transfer €227m *1999 other than net assets

  18. Financial Benefits • Earnings Enhancing • pre-goodwill • pre-synergies • Cost Savings • Branch closures • Integration of group functions • Combined cost base €188m • Revenue Synergies • Sale of life products • Sale of banking products

  19. Transaction Structure • Transfer of TSB Bank undertaking into IL&P • Consideration of €430m: • 85.1% in cash • 14.9% in IL&P shares • 14.9% in shares allocated to ESOP • Average closing price over last 10 days

  20. €m TSB Risk Assets 1,400 Support Capital (10%) 140 Goodwill 203 Total Capital Required 343 Impact on Capital

  21. €m Capital Required 343 Share Buy-back 150 493 Financed from: Tier 2 Issue 288 Excess Capital 140 ESOP Share Issue 65 493 Capital Funding

  22. Completion Process Binding contract with Trustees, subject to: • Minister for Finance approval • Enabling legislation to allow sale • Regulatory clearances Target completion end Q1 2001

  23. Summary • Permanent TSB - a powerful personal retail bank • More customers • More products • Better access • IL&P - an important strategic step • Best in Class Bancassurer • Powerful competitive force • Increased financial strength • Growing shareholder value

  24. Brand New Bank Best in Class Bancassurer

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