1. PROSPECTS FOR BANKING IN ASEAN Arvind Mathur Head, Capital Markets Asian Development Bank DBS 10am

2. ENTRY/ EXIT/ GROWTH CRITERIA  Macroeconomic Conditions (+ve correlation with performance)  Bank Quality – Ability to exploit opportunities  Success in high Margin Businesses to Maximise Economic Value Added (EVA) 1

3. MACRO SITUATION  Distressed   GDP growth rates   Export Prospects    Sovereign Credit Quality   Currency Stability   Bear Push from Japanese Recession Prospects  2

4. GDP GROWTH (%) 20002001(f) SINGAPORE 9.9 5.0 THAILAND 4.2 3.5 PHILIPPINES 3.9 3.1 INDONESIA 4.8 4.2 MALAYSIA 8.5 4.9 3

5. DISTINCTIVE FEATURES OF DBS  Reputation  Solidity  Know How - Credit Analysis Skills/ Technology  People & Talent  Good Corporate Governance  Regional Presence 4

6. THESIS: CIRCUMSPECTION NOT ABANDONMENT  Fundamental Strengths Remain  Low Cost Mfg Base   Infrastructure   Policies   Business Transplants from Japan/US/Europe  5

7. IMPLICATIONS OF ADDED RISK  Proper Pricing of Risk  High Risk-Adjusted Return Hurdle  Avoid Price Competition to Protect Margins 6

8. PROSPECTS FOR BANKING PRODUCTS  Corporate Exposures   Project Finance   Retail/ Consumer Banking    Distressed Assets   FX Trading/ Treasury (Controls)   Capital Markets   Build or Acquire? 7

9. DISTRESSED ASSET PRODUCTS  Debt-Equity Swaps (Form of Private Equity)  Purchase & Sale of Retail Distressed Debt Pools  Purchase & Work-Out: Maximize Recoveries  Purchase & Hold to Maturity 8

10. ADVANTAGES OF DISTRESSED DEBT  Bargain Price  Benefit from Improving Credit Quality as Macro Conditions Improve  Capitalize on ASEAN Presence 9

11. SUCCESSFUL MODELS  GE Capital – Thai Distressed Debt  Goldman Sachs  Japan Real Estate  Korean Distressed Debt Pool  Lonestar  U.S.  Korean Distressed Debt Pool  Citicorp  Latin America Debt/Equity SWAP 10

12. THAI DISTRESSED DEBT: JACK WELCH GE CAPITAL QUOTE  “This guy, this nut, wants us to invest $1billion in autos. I’m going to blow him out of the water tomorrow. This guy’s got no chance Norbom came in and made a convincing case. If you asked me five minutes before the meeting, I’d say “What are you nuts? And yet he made a great case, and you love him for doing it.”  Source: GE Digs Info Asia, Fortune, October 2, 2000 11

13. GOLDMAN SACHS: TERMS OF KOREAN DISTRESSED DEBT PURCHASE Seller:KAMCO Buyer:Goldman Sachs Price:5 cents on the $ i.e. 5% of par value Contingent Profit Sharing: Seller receives 50% - 60% of profits 12

14. POTENTIAL APPROACH  Develop Core Competency in Distressed Debt  Partner with Seasoned Players  Distressed Asset Funds  G.E. Capital / Lonestar etc  Specialist Teams – Debt Restructuring Specialists/ Turnaround Artists 13

15. POTENTIAL APPROACH  Lending Officers can be Trained  Focus on Thailand, Malaysia initially  Asset Pools  Info source: www.debtmarketplace.com 14

16. CONCLUSION  Citibank & Standard Chartered never abandoned countries  Tailor strategy to exploit changing conditions  Though macro conditions are poor, DBS could exploit special opportunities 15