Irish Life & Permanent Acquisition of TSB Bank
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Transcript of Irish Life & Permanent Acquisition of TSB Bank
Irish Life & Irish Life & PermanentPermanent
Acquisition ofAcquisition ofTSB BankTSB Bank
December 2000
www.irishlifepermanent.ie
Acquisition of TSB BankAcquisition of TSB Bank
Brand New Bank
Permanent TSB
Our Vision
No. 1 Personal Financial Services Provider in Ireland
Acquisition creates a Powerful Competitive Force
StrategyStrategy
“Ireland First” Personal Financial Services Sector Customer Focus Multi-channel access Best in class Bancassurer
High quality retail bank a key element
Acquisition CriteriaAcquisition Criteria
Build retail market position
Complete full retail product range
Shared vision
Complementary
Adds to Shareholder Value
Transaction HighlightsTransaction Highlights
Financial Consideration of €430m
– 1.9 times NAV– P.E. of 13*
EPS enhancing Revenue and Cost Synergies
*2000 estimated net operating profit
Transaction HighlightsTransaction 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
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
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
Permanent TSBPermanent TSB
Brand New Bank!
Permanent TSBPermanent TSB- Product Range- 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
Permanent TSBPermanent TSBBranch DistributionBranch 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)
Permanent TSBPermanent TSBnon-Branch Distributionnon-Branch Distribution
Brokers
600 supportingMortgageBrokers &
Intermediaries
Agencies
90 agencies&
franchises
Salesforce
320 strongIrish LifeSalesforce
In-StoreOutlets
13 In-Storeoutlets,
rising to 18
Telephone
24 HourTelephoneBanking
Internet
OnlineMortgages &
PersonalBanking
Permanent TSBPermanent TSB- Customers- 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
A Powerful Competitive A Powerful Competitive ForceForce
Mortgages 25%+ Savings 12% Current Accounts 10% New Car Finance 20% Life & Pensions 20%+ Total Assets >€30bn
Management & Management & OrganisationOrganisation
Harry Lorton & TSB Trustee (non-exec) to join main Board
Group CEODavid Went
Bank CEOHarry Lorton
Dep. CEO & COODiarmuid Bradley
Director of IntegrationBilly Kane
Integration ProcessIntegration 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 andIrish Permanent merger
Bank Financials*Bank Financials*
TSB IP 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
Financial BenefitsFinancial 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
Transaction StructureTransaction 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
Impact on CapitalImpact on Capital
€m
TSB Risk Assets 1,400
Support Capital (10%) 140
Goodwill 203
Total Capital Required 343
Capital FundingCapital Funding€m
Capital Required 343
Share Buy-back 150
493
Financed from:
Tier 2 Issue 288
Excess Capital 140
ESOP Share Issue 65
493
Completion ProcessCompletion Process
Binding contract with Trustees, subject to:
Minister for Finance approval
Enabling legislation to allow sale
Regulatory clearances
Target completion end Q1 2001
SummarySummary
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
Brand New BankBrand New Bank
Best in Class Bancassurer