Commercial strategy in Slovakia RETAIL BANKING Banca viitorului într-o Europa largita Strategii pentru inovatie si crestere Commercial strategy in Slovakia Marc Lauwers Bucuresti, 29 iunie 1

Agenda Dexia Dexia Banka Slovensko (Turbo) Retail Strategy Conclusions Questions

Agenda Dexia Dexia Banka Slovensko (Turbo) Retail Strategy: key elements Conclusions Questions

Dexia at a glance Total Assets (31.12.04) €389.0bn Total Shareholders’ Equity €10.5bn Tier 1 Ratio Net Profit €1.8bn ROE Based on 2004 consolidated financial statements (under Belgium GAAP) CAGR Earnings Per Share 11.5 % 19.8% 10.7% AA+ Rating €20.6bn Market Capitalization (01.04.05) 20.6 13.8 9.7 23.8 36.0 HVB Erste Bank KBC Deutsche Bank # 14 Comparison on european level

Dexia at a glance # employees 24,019 Presence in # countries also in Romania 22 As at 31.12.04 Business portfolio Net income for 2004 (excl. central Assets) Public/Project Finance & Credit Enhance- ment 53% Treasury & Financial Markets 11% Investment Mngt & Insurance Services 14% Personal Financial Services 22%

Agenda Dexia Dexia Banka Slovensko (Turbo) Retail Strategy Conclusions Questions

Dexia Banka Slovensko General Profile Governance Staff Financials Strong focus Retail : not actively developed municipalities utilities / project finance Branch network retail Market share : 3,25%(end 2004) rank 7 Governance Individuals 2 % Slovak municipalities 19 % Dexia KB 79 % Staff Employ. Branch. 687 50 Financials Net profit Total assets ROE 2002 7.8 628 31.7 2003 8.4 642 20.3 2004 6,8 980 20,0 mio EUR %

actively develop retail market Dexia Banka Slovensko Turbo Retail Project Front-to-back (F2B) = more time on commercial activities Retail Reflection redefine business, marketing & distribution strategy Objectif 2006 Financial control First impressions 5 % market share Retail strategy Credit Risk Mgt F.O. / B.O. ALM Segmentation competencies organization ABC margin missing instruments administration what ? corporates in BL2 actively develop retail market

Agenda Slovakia Dexia Banka Slovensko (Turbo) Retail Strategy Conclusions Questions

(Turbo) Retail Strategy 4 Lines Client orientation Internal organisation Strategy Shareholder value proposition Financials

(Turbo) Retail Strategy Line 1 Client orientation Key observations Customer value proposition Customer segmentation Distribution Price structuring Product offering Brand reputation Retail Strategy Slovakia 11

(Turbo) Retail Strategy Line 2 Internal organization Operational efficiency & IT Key observations Lack of commercial time 261 / 426 branch employees = active sellers 13 % of total time : commercial activities 47 FTE’s : payment orders 33 FTE’s : cash transactions Causes of high administrative workload centralization / decentralization internal checks & paper load level of automation

(Turbo) Retail Strategy Line 2 Internal organization Operational efficiency & IT Goal Time for sales activities attract new customers Portfolio x 2 impact on activities in servicing How Front to Back Project improve operational efficiency more time on commercial activities

(Turbo) Retail Strategy Line 2 Internal organization Operational efficiency & IT Time in branches commercial time : % 13 % 24 % 31 % 100 time freed by quick wins 11 % 80 87 80 time freed by medium term solut. 7 % 76 74 72 69 60 40 Current Immediat. centra- lization Controls & paper loads Automat. in MIDAS Delayed centra- lization Front office applicat.

(Turbo) Retail Strategy Line 2 Internal organization Employee value proposition Key observations Recruitment requirements : available Previous reorganization : best sales moved to 1st BL Goal Freed up time for new customers & sales but commercial staff needs capacities tools

(Turbo) Retail Strategy Line 2 Internal organization Employee value proposition How Branch managers & deputies : assessed on - commercial - coaching skills Recruitment requirements Training programs adapted & improved Benchmark salaries New commissioning system rewarding sales efforts Current salary distribution Individual 13 % Team 11 % Fixed 76 %

(Turbo) Retail Strategy Risk Competitive risk Retail : competitive investing from foreign banks Shortage of available assets in Sl. Market margins Risk : miss the business volume target Sales capacity of branches : difficult to achieve Risk : not to be capable of transforming the opportunity Execution risk Executing projects : parallel & successfully How to mitigate these risks Dedicated support on group level in all areas touched upon

Front Office Managers Assessment & deputy branch Qualitative assessment indicated potential problem in our ambitious goals Being entrepreneurial / initiative: Ability to motivate & support Customer-orientedness Dexia average Clear communication skills Goal orientation A (16 %) Ability to start & Stress resistance keep contacts C* (11 %) B (27 %) Creativity / Innovativeness Loyalty C (46 %) Analytical Organizational skills skills

Agenda Dexia Dexia Banka Slovensko (Turbo) Retail Strategy Conclusions Questions

Conclusions after 1 year Competition proved to be very fierce with pressure on margins Systems to monitor branches largely in place Training on new IT new products, procedures & organization proved to be main bottleneck

Conclusions after 1 year However : commercial results are rocketing eg credits production individuals SME/Corp. 31.05.04 31.05.05 693 6011 163 412 Brand Awareness (BA) Spontaneous BA DBS Supported BA DBS August 2004 May 2005 14% 34,6% 46% 72,4%

Conclusions after 1 year Overall conclusion : don’t waste time !

Agenda Dexia Dexia Banka Slovensko (Turbo) Retail Strategy Conclusions Questions

Commercial strategy in Slovakia RETAIL BANKING Banca viitorului într-o Europa largita Strategii pentru inovatie si crestere Commercial strategy in Slovakia Marc Lauwers Bucuresti, 29 iunie 24