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Harry Lorton, CEO

Harry Lorton, CEO. Creation of 3rd Banking Force. Complementarity of TSB & Irish Permanent Distribution reach & product breadth Exclusively Ireland & retail focus Opportunity to offer alternative to BOI/AIB duopoly. A Powerful Competitive Force. Mortgages 23%+ Savings 12%

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Harry Lorton, CEO

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  1. Harry Lorton, CEO

  2. Creation of 3rd Banking Force • Complementarity of TSB & Irish Permanent • Distribution reach & product breadth • Exclusively Ireland & retail focus • Opportunity to offer alternative to BOI/AIB duopoly

  3. A Powerful Competitive Force • Mortgages 23%+ • Savings 12% • Current Accounts 10% • New Car Finance 20% • Life & Pensions 20%+ Customer Base of over 1 million

  4. Life Salesforce 5% Branches 43% Agents 7% Brokers 45% Multi-Channel Mortgage Distribution

  5. Creating a New Bank - Challenges • Integration of I.T. platform • Pace & extent of HR change agenda • Compatibility of cultures • Customer retention & service Business as usual

  6. Implementation Plan - Timeline To Launch Steady State End Game PTSB • Centralisation of broker business • Rebranding • Branch Amalgamations • Organisation changes • Infrastructure to support integration project PTSB • Self-service banking • Single view of customer Degree of Change PTSB • Centralisation of mortgage processing • Piloting self-service banking • Back book conversion to Unibanks • Single product set • New Business conversion to Unibanks system IP TSB 2003 and beyond June 2002 2001 Dec 2002

  7. IT Integration - Timeline

  8. Programme Management (Incl. Benefits Tracking & Communications) Integration Programme - Governance Integration Steering Group Integration Executive Branding Premises Transition IT Infrastructure IT Applications HR Transition Products Sales & Distribution Customer Services Risk Head Office Functions

  9. I.T. Agenda • Single base platform - “Unibanks” • real time • customer centric • single customer view • “Layered” applications architecture • independent of platform • add applications / functionality • CRM strategy • single customer databases • work to be done on ‘cleansing’ data • incrementally add cross-channel CRM capability

  10. H.R. Transition • Population of new management structures • Comprehensive training programme • products • systems • Reduction of over 500 staff • Harmonisation of T&Cs • Buoyancy of business offsetting “change fatigue”

  11. Bancassurance - Structures CEO Life CEO Bank Head of Bancassurance Regional Managers Branch Managers Bancassurance Consultants Branch Staff

  12. Bancassurance - Implementation • Building branch consultant salesforce • currently 65 • target 80 • Training of 800 branch staff • competency testing • licensing • co-ordinators

  13. Bancassurance - Implementation • Integrated technology support • Siebel - consultants now - branch staff to follow • open diary system for consultants • ePoS to follow • database (IL/ptsb) for marketing campaigns

  14. Bancassurance Performance • Excellent 2001 outcome • sales up 95% in combined / network • despite major disruption & uncertainty • 2002 SSIA campaign - life product • 36% of bank sales (versus 15-20% for market) • Target to double (2001) volumes by 2004

  15. Mortgage Lending - Market • Strong fundamentals • Rebound from slowdown in H2 2001 • Increased competition between domestic players • Margins stabilised • No deterioration in credit quality

  16. Mortgage Lending • Key product segment • profitable • low risk • cross-selling opportunity • Multi-channel distribution • branches - leverage off Irish Permanent brand • intermediaries - centralised/dedicated channel • Targets • business as usual during integration • all branches up to I.P. level of productivity

  17. Other Lending • Consumer Finance • new car sales biggest component • registrations down • adding to distribution • Business / commercial • targeting smaller end of SME sector • selective on commercial lending • increasing capability

  18. Resources / Deposits • Building on strong TSB franchise • Benefit of inertia in low interest rate environment • Targeting increased share of customer accounts • Packaged offering to attract account transfers

  19. Cost Agenda • Deliver merger synergies of €27m by 2003 • Target further cost reductions in 2004 • additional €10m in savings • keep costs at 2002 level • Continue to drive down costs towards target 50% ratio

  20. Merger Cost Savings 2002 2003 2004 €m €m €m Staff 9 18 23 Overheads 5 9 9 Depreciation on capital (4) (5) (5) 10 22 27

  21. Banking Cost Ratios • Actual Estimated Target • 2001 2002 2004 • % % % • Cost*/Income • Reported 65 65 55 • Incl. bancassurance VNB 60 58 49 • Costs*/assets 1.3 1.2 1.0 * operating costs

  22. Banking Margins • Residential mortgages - competitive • Retail deposits - will benefit from increase in rates • Consumer finance - steady • Treasury - lower contribution going forward

  23. Summary • Tremendous progress on merger of two banks • On target to deliver synergies • Challenging cost agenda • Opportunities in banking and bancassurance A LOT DONE, MORE TO DO

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