Presentation made at "CFO Strategies Middle East 2008" Conference, October 2008

1. Delivering Synergies
A closer look at post merger integration
Sanjay Uppal
Group Chief Financial Officer
Emirates NBD
18 October 2008
Dubai. UAE

2. Introduction
July 2007 : Communicating ‘Expected’ Value of Merger
Integration : Delivering Value
July 2008 : Communicating ‘Real’ Value of merger
Conclusion
1

3. M&As make significant contributions to relative growth
– but most acquisitions tend to destroy relative value
A strong and well executed M&A strategy can
. . . but most acquisitions fail to create value
help companies realize growth . . .
Explanatory power for differences in Improvement in share price from T – 2 years to
company growth*, R², percent T + 2 years, adjusted for returns on MSCI World
Index***, %
Innovation**
Market 23%
growth Success
38% 39%
61%
Failure
39%
Inorganic activity
* Based on the time series growth regression of 54 large companies across a broad range of sectors
** Remainder including disruptive innovation and noise in regression analysis
*** Based on analysis around 1229 large deals executed before 2005
Source: SDC, Hoovers, Company reports, Analyst reports, McKinsey analysis 2

4. Key stages of a M&A process
Pre-transaction Execution Process Post-transaction
Post
Target Transaction merger
Corporate M&A identifica Launch Capability
Execution manage- building
strategy strategy tion
Process ment
Success of the Transaction depends on success at every stage
3

5. Introduction
July 2007 : Communicating ‘Expected’ Value of Merger
Integration : Delivering Value
July 2008 : Communicating ‘Real’ Value of merger
Conclusion
4

6. Expected synergies : Articulating the merger benefits
AED m
Communicated to
shareholders & 151 346
market – July 195
2007
26
Revenue Costs Total Non-
synergies recurring
% of Expected**
E t d** 10.5%
10 5% 22.2%
22 2%
smaller Synergy Realization
base Benchmark*** 10.0% 26.0%
2008 = 33%
% of Expected** 4.1% 8.3% 2009 = 66%
combined 2010 = 100%
base Benchmark*** 5.0% 14.0%
* Figures have not been adjusted for inflation
** As a % of NBD’s base
*** Domestic transactions

7. Value creation potential – REVENUE Synergies
Revenue Synergy Breakdown
Details % Total Key Actions
Key actions
Corporate & • Expanded product offering & services
Investment 121 62% • Leverage increased balance sheet and
Bank financial strength to generate and retain
greater number of larger projects
• Focus on cross-selling among major
Retail Bank 60 31% p
product categories
g
• Increased revenue from market share /
pricing advantages & leveraging largest
distribution network in UAE
Cost of Funds 4% • Improved cost of funding due to a stronger
8 capital base
Brokerage 6 3% • Improved sales due to integrated brokerage
TOTAL 195 100%
6

8. Value creation potential – COST Synergies
Details
Revenue Synergy Breakdown % Total Key Actions
Key actions
• Branch & ATM network consolidation
Retail Bank 52 34% • Integration of card acquiring business
• Pricing advantages on advertising /
marketing spend
Head Office 40 26% • Optimized Head Office functions
• Redundancies in group functions
25% • Consolidation of IT centre
IT & Operations 38
• Reduced Capital expenditure
Corporate & • Cost-efficiency from integrated platform
10 7%
Inv. Bank
Brokerage 6 %
4% • Cost efficiency from integrated platform
Islamic Bank 3% • Leverage Emirates Islamic Bank as
5 platform for unified Islamic offering
TOTAL 151 100%
7

9. Introduction
July 2007 : Communicating ‘Expected’ Value of Merger
Integration : Delivering Value
July 2008 : Communicating ‘Real’ Value of merger
Conclusion
8

10. Integration : Guiding Principles
Guiding Principles
• Create a single company with one face to the customer
Mission that builds
th t b ild on – and goes beyond – th best of the
d b d the b t f th
merging companies
• Leverage expertise of both entities & select the best
Enable creation of people for respective positions
“Emirates NBD” in line with • Manage integration & maintain ongoing business at the
the strategic aspirations, same time
while maximizing the
hil i i i h – Executive Committee / Line executives responsible for
integration success & running day to day business
synergies in the shortest
time possible – Integration Teams aligned with organisation structure
–E l
Employees work i parallel on th i d il b i
k in ll l their daily business as wellll
as on the integration related tasks i.e., will be working on
integration part-time

11. Integration : Key Stages
Phase 2: Launch
Phase 1: Design Phase 3: Handover to
Integration Organization
Integration Plan Line Management
& Initiatives
Joint Steering Comm Emirates NBD CEO Emirates NBD CEO
CEO CEO Emirates NBD ExCo Emirates NBD ExCo
ExCo ExCo Integration Office/
Task Forces
Line
Integration
M&A team Handover 1 Handover 2 management
organization /
i ti
of integrated
initiatives
organization
06/03 02/07 05-06/09 16/10 End of 2007 2009
Milestones
Merger Financial EGM Legal Target business Integration
announced closing closing model defined completed

12. Establish an Integration organization & a dedicated team
CEO
Integration Offi
I t ti Office Follow up on integration more
• Support & coordinate Integration closely to speed up progress
Teams and selected cross ExCo (Steering Committee)
functional projects Acts as Integration Steering
• Consolidate input & develops CEO + Executive Committee
Committee and approve all
Integration Roadmap major decisions
j
A
Integration Office
Cross-functional projects
Project Baseline/ Communi- Top priority projects with cross
Manage- Synergies
a age Sy e g es cat o
cation Governance & organization bus ess u ct o a e e a ce
business functional relevance
ment
B
Strategic HR Branding
Move & relocation planning Day-1 management and MIS
BU/SU Integration Teams
Collaboration of the two
C banks to develop individual
integration initiatives as input
g p
Retail Banking HR for Integration Roadmap by
Business / Support unit
Wholesale Banking IT/Ops
Treasury Finance
Wealth M
W lth Management
t Admin
Ad i
International Risk management
Islamic Banking Audit

13. Each Integration Team has key deliverables
• Integration Team organization
Organizational
set-up • Detailed workplan definition for Integration Team
Input to • Compare & assess both banks’ business models
Integration
g
Roadmap • Develop Emirates NBD value proposition, strategy &
go-to-market model
• Develop target organization structure & resources
• List of initiatives to combine models & achieve
synergies target (including quick wins)
•T
Transition plan
iti l

14. Organization Structure : Seizing Day ONE
September 2007 December 2007
Day-1 Organization Final Organization
Address key organizational
questions during integration
Put in place initial top- Move to final
level organization organization structure
structure directly after once key strategic
legal closing to ensure questions have been
fast and effective properly addressed to
decision making ensure realization of
synergies & business
go t
growth

15. Communicating with all stakeholders
. . . and articulated issues & our approach for
d ti l t d i hf
Developed a Stakeholder Map . . . each stakeholder group
Internal External Others Stake- Their Our Message Channels
holders issues objective
j
Staff Shareholders General Public Shareholders Value Increase Safe / Press /
Enhanced Website
Transaction Customers Service/ Competitive Larger bank, Press /
Boards Customers
Advisors
Ad i Pricing distribution.. Website
UAE
regulators Accountants
Staff Job Security/ Attract and Better Intranet
Career Retain best opportunities webcasts,
Foreign Outlook talent in diversified newsletters
regulators Legal Advisors organisation
Analysts Regulators Transparency/ Compliance/
Other Advisors Meeting
Blueprint Best Practice
Media
Ratings
g
agencies
Suppliers
14

16. Communicating with staff started early
15

17. Integration : Keeping Track
October 2007 November 2007
Activity 39 40 41 42 43 44 45 46 47
Board Board meetings
ExCo Updates
CEO
ExCo Integration
decisions
Integration Update meetings with
p g
Office Integration Teams/
Cross-functional teams
Functional
Project Updates
Teams
Integration
I t ti Updates
Teams

18. Introduction
July 2007 : Communicating ‘Expected’ Value of Merger
Integration : Delivering Value
July 2008 : Communicating ‘Real’ Value of merger
Conclusion
17

19. Synergy identification & tracking process
Due diligence Identification/ Planning Execution Phase:
April – August 2007 Oct - Dec 2007 Jan 2008 onwards
Phase
1 2 3 4
Planning phase:
Commitment Realisation & Finalise
Identification &
to the
t th market
k t Tracking
T ki Documentation
D t ti
Commitment
1. Agree mechanism to 1. Provide evidence & documents
calculate & evidence 2. Revenue synergies – track
2. Freeze baselines actual achievements
ocumentation Flow
3. State assumptions & pre- Synergy Synergy
identification Realisation & 3. State annual recurring
requisites amounts and P&L impact for
4. Define milestones & recording recording
each year
Board Memo Tracking Sheets
g
Do
will form part of
documentation
provided to
auditors
Summary Business Unit wise tracking template

20. H1 2008 : Actual synergies achieved
AED Millions
Total Synergies
y g
400 372
300 246
200 61%
200
124
100
0
2008 2009 2010
Target Actual (H1'08)
Note 1: Base used when computing synergy targets were 2006 financials

21. Exceeded 2008 full year targets on synergies
250
Revenue Synergies 195
AED Millions 200
150 129
100 87 34%
65
50
0
2008 2009 2010
Total Synergies
400 372 151
150 Cost Synergies
300 246
91 82% 100
200 61% 100
200
124 + 50
100 50
0 0
2008 2009 2010 2008 2009 2010
Target Actual (H1'08)
30
One-off Synergies 26
22
20 17
144%
9
10
0
Note 1: Base used when computing synergy targets were 2006 financials 2008 2009 2010

22. Synergies achieved : Key drivers
AED millions
Annualised synergies Total, % Key drivers of synergies achieved in H1’2008
• Largest distribution network of 115 branches & 486 ATMs
• Focus on cross selling – e.g. mortgages >AED100m loans
Revenue 87 41 • Enhanced market share/pricing advantages – e.g. FDs
• Embedded Customer efficiency framework – e.g. Tafawouq has
tripled branch sales in Umm Suqeim & DCC
• Single Head-office in place
Costs 91 48
• Created efficiencies through unified business models
• Combined marketing & advertisement activities
• Projects & initiatives discontinued due to merger, namely Islamic
One offs 22 11 banking set up previously planned in NBD
Total 200 100
21

23. Key performance indicators : Cost-Income ratio
Cost Income ratio for H1-2008 is 37.4% (vs. 38.8% in H2-2007)
Before synergies H1-2008 cost-income ratio is 38.6%
Synergies contribute to 1.2% drop in cost-income ratio
Jaws of 4% achieved in H1-2008 vs. H2-2007 (before synergies 1%)
40%
Cost: Income ratio
39% 38.8%
%
38.6%
Synergy
38% Impact
= 1.2%
1 2%
37.4%
37%
H2-2007 H1-2008 (before
( H1-2008
synergies)
Note: Above financials exclude one-off integration costs

24. Integration Update : Q3 2008
Integration on track
Key integration achievements in Q3-2008 include:
Inauguration of Emirates NBD’s Large Corporate Unit (LCU)
Treasury team now working as a single integrated FX trading entity
Operations staff co-location in our new IT & Operations Processing Center in Al Barsha
ATMs integrated to form the largest network in the UAE of over 500 ATMs & CDMs
Mobile & Online Banking integrated; enhanced functionalities & 13 payment partners
Completed the largest culture roll-out program in the Banking and Finance sector in the
region – ‘My Bank, Our Values’; 5,000 employees attended 107 workshops
Single Treasury
system in place Rebranding across all
Combined trading New Core Banking branches – One bank
coverage to both bank’s system roll-out in across all channels
customers EBI
12/08 01/09 Q1/09 Q2/09
Integrated credit cards
I t t d dit d Legal merger
L l Core-Banking R ll
C B ki Roll-out to
tt
platform at Network Emirates Bank and NBD NBD: New system online
International legally merge into one for combined entity
entity Integration of all support
units

25. Introduction
July 2007 : Communicating ‘Expected’ Value of Merger
Integration : Delivering Value
July 2008 : Communicating ‘Real’ Value of merger
Conclusion
24

26. Integration : Key success factors
Identify & communicate merger benefits early in the process
Develop a robust Integration Roadmap
Dedicated team in place before transaction closes
Measure & review constantly what you plan to achieve
Sense of urgency is critical
Communicate
Focus on people
Maintain business momentum
End is not concluding the transaction – it is delivering the value
25