Corporate treasurers and repo Treasury Peer London, October 2013

2 The three key principles ► Capital preservation – Avoid direct banking exposure ► Maximisation of liquidity options ► … at a reasonable yield Risk management of treasury investments Yield Credit Liquidity Yield CreditLiquidity From return on capital to return of capital

3 Moving from unsecured to secured investment The repo option So why Repo ? The repo market is the natural meeting place for ► cash lenders with term liabilities looking to secure their investment (‘ double name’ indemnity ) ► cash borrowers looking to extend the term of their funding Maximise Capital preservation and liquidity with a reasonable return

4 For internal use 4 Collateral providerCash provider Moving from unsecured to secured investment Repo an alternative short term investment Securities € 200m Cash Opening leg Collateral providerCash provider Securities € 200m Cash Closing leg

5 Collateral providerCash provider Securities Cash Opening leg Closing leg Transfer of securities against cash in a secured way Valuation of securities on daily basis to make sure always equal to 200m cash Margin calls and releases according to valuation Allocation of securities based on cash provider requirements Moving from unsecured to secured investment Triparty Repo - outsourcing collateral management € 200m Term of Repo Euroclear Automatic processes

6 Moving from unsecured to secured investment The repo option – what value does it bring ? Post crisis 3-month liability invested in a 1-week asset Libor –the unsecured curve opportunity gain Spread between unsecured & secured curve You can invest longer term in a secured way!!

7 Moving from unsecured to secured investment 6 steps to trading Triparty Repo 1.Sign a bilateral Repo agreement, such as a GMRA, with your partner bank 2.Become a Euroclear participant (we’ll guide you through the admission process) 3.Sign the triparty services agreement (Collateral Management Form) 4.Open a collateral account (Account Opening form, Belgian exemption forms) 5.Define your collateral profile (Excel form); profile of eligible collateral securities according to your risk management requirements 6.Choose your communication channel You are now ready to trade!