Sale of Michigan National Corporation to ABN AMRO

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Sale of Michigan National Corporationto ABN
AMRO
23nd November, 2000
www.national.com.au
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Contents

• Deal Summary
• Transaction Highlights
• Transaction Arithmetic and Details
• NAB Post Transaction
• Use Of Proceeds
• Strategic Outcomes
• Deconsolidated PL, Balance Sheet and Key Ratios
• Summary

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Sale of MNC to ABN AMRO

• Attractive deal
• Excellent return on investment
• Significantly enhances strategic options
  flexibility
• Supports focus on leveraging UK assets
• Consistent with core strategy to Manage the
  Groups businesses to maximise shareholder value
• Positions the Group for growth

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Transaction Highlights

• 1995 Acquisition Price1 A1.86bn US1.39bn
• Profit on Sale (after tax)2 A2.1bn
• IRR 2 39
• Financial Impacts
• GAAP EPS ? 2.33
• Tier One ? 190 bps
• Tangible Common Ratio ? 105 bps
• Significant capital management and re-investment
  options

1 Represents price paid for the equity of
Michigan National Corporation 2 Estimated after
expenses and tax 3 EPS impact assumes net
proceeds are re-invested at the current short
term Govt bill rate and no buy-back
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Transaction Arithmetic Details

• Sale price A5.3bn US2.75bn1 in cash
• Repayment of A327m in
• subordinated debt
• Entitled to US85m dividend in respect to year
  2000 profit profits up to closing
• P/E2 15.5 x
• Price to NTA3 3.2 x
• Expected settlement date 31st March, 2001
• Conditions / Approvals Normal regulatory
  approvals

1Exchange rate assumption of 0.52 2Earnings
based on 00A pre goodwill and one-time
adjustment to statistical provision 3Sept 30 NTA
less US85m dividend
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National Australia Group Post Transaction
A b
Mortgage Servicing Portfolio 30 - -
325 - 355
Australia UK / Ireland New Zealand United
States Asia Total
Customers 5.6m 4.5m 0.9m 1.0m
12.0m
Assets 191.0 75.1 25.5 23.6 12.5 327.7
Custody 177 108 - - - 285
FUM 55.2 1.7 1.9 - 0.3 59.1
As at 30th September, 2000
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Use of Proceeds

• Organic Growth and Development
• Accelerate expansion of wealth management
  platform in UK
• Distribution enhancements in UK
• Accelerate deployment of Customer Relationship
  Management in UK
• Accelerate e-National program
• Strategic Initiatives
• Strong Balance sheet positions the Group to
  participate in consolidation of core markets
• Capital management
• Commitment to active management
• Creates capital management options upon closing

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Strategic Outcomes
Strategy
Sale
Use of Proceeds

• Grow Private, Premium Business capabilities in
  UK

?

• Accelerate growth of Wealth Management business
  in UK

?

• Managing portfolio
• Increasing focus
• Generating value

?
?

• Capital Management
• Accelerate e-National

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• Increases non -interest income

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Profit Loss
AFTER Pro Forma1 NAB (ex MNC) 30/9/00 5,976
6,217 12,193 6,547
5,646 573 5,073 1,622 3,451 149 3,302 200 3,102
BEFORE Actual NAB 30/9/00 6,371 6,523
12,894 7,032 5,862 588 5,274 1,700 3,574 1
97 3,377 200 3,177
Net Interest Income Non Interest Income Total
Revenue Non Interest Expense Underlying
Profit BDD Pre Tax Profit Tax Net Profit After
Tax Pre Goodwill Goodwill Amortisation Net Profit
After Tax Distributions Minorities Earnings to
Ord. post Goodwill
A m
1Pro-forma numbers assume net proceeds are
re-invested at the current short term Govt bill
rate
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Balance Sheet
BEFORE Actual NAB 30/9/00 198,201
(2,709) 195,492 2,617 145,568
343,677 185,097 137,173
322,270 21,407
AFTER Pro Forma1 NAB (ex MNC) 30/9/00 182,379
(2,384) 179,995 1,876 145,847
327,718 169,128 135,209
304,337 23,381
A m
Gross Loans Provisions Loans Goodwill Other Asse
ts Deposits Other Liabilities Shareholders Funds
1Pro-forma numbers reflect cash proceeds held on
balance sheet
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Key Financial Ratios
Pre Sale 2.11 18.1 1.11 2.88 50.6 54.5
Pro-forma Post Sale 2.071 15.91 1.15 2.86 51.
0 53.7
GAAP EPS Return on SHF Return on Assets Net
Interest Margin Non Interest Income/Total
Income Cost/Income Ratio
1EPS and Return on SHF impacts assume net
proceeds are re-invested at the current short
term Govt bill rate and no buy-back
As at 30th September, 2000
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Key Financial Ratios (contd)
Pre Sale 0.62 183 6.6 9.3 4.1
Pro-forma Post Sale 0.63 174 8.5 11.4 5.1
NPLs/RWAs NPLs Coverage Ratio Tier 1 Ratio Total
Capital Ratio Tangible Common Ratio
As at 30th September, 2000
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Summary

• Good cash price providing excellent return on
  investment
• Maintain our commitment to growing HomeSide
• Sharpens geographic focus of the Group
• Strengthens balance sheet
• Funds Global Wealth Management growth
• Funds network enhancements in UK
• Funds acceleration of e-National program
• Creates capital management options
• Realises value for shareholders

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Disclaimer
The preceding material is a presentation of
general background information about the
Nationals activities current at the date of the
presentation. It is information given in a
summary form and does not purport to be complete.
It is not intended to be relied upon as advice to
investors or potential investors and does not
take into account the investment objectives,
financial situation or needs of any particular
investor. These should be considered, with or
without professional advice when deciding if an
investment is appropriate.
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