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September 2011
Agenda
1 2 3 Deal Highlights Overview Transaction Dynamics Deal Rationale Timeline Financial Review and Forecasts
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5 6 7
Summary
Deal Highlights
AMCON will inject Financial Accommodation Amount (FAA) of N64.45 billion to bring the Net Asset Value (NAV) of ETB to zero as a precondition for the acquisition. In exchange AMCON will receive 785,193,222 units of ETB shares subsequent to ETBs capital re-organization
Existing ETB shareholders will re-capitalize the institution up to N8.5 billion from zero Sterling Bank will issue 3,140,772,888 in exchange for the assumption of all assets and liabilities of ETB with impact as follows on its ownership: AMCON: 1,570,386,444 units (10%) of total Sterling shares in issue ETB legacy shareholders: 1,570,386,444 units (10%) of total Sterling shares in issue
Key Facts
Recapitalization funding to be provided by legacy ETB shareholders
N8,500,000,000
3,140,772,888
N2.71
Valuation
Market Value 10 Oct, 2011 Sterling Bank Valuation Premium/ Discount Per share 1.43 June 30 Pre deal Book value 2.29
Legacy shareholders of Sterling Bank will retain existing holding, which total 80% of the enlarged Sterling Bank
Total Sterling Bank shares in issue will increase by 25% to 15,703,864,432 ordinary shares of 50 kobo each.
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90%
18%
Agenda
1 2 3 Deal Facts Overview Transaction Dynamics Deal Rationale Timeline Financial Review and Forecasts Summary
4
5 6
Agenda
1 2 3 Deal Facts Overview Transaction Dynamics Deal Rationale Timeline Financial Review and Forecasts Summary
4
5 6 7
Transaction Dynamics
Pre-acquisition
Execution of Transaction Implementation Agreement (TIA) Capital re-organization of ETB
14% Sterling
AMCON Intervention14%
ETB Recapitalization
15.3%
0%
15.3% 0%
15.0% 15.3%
15.0%
97%
Steady state capital adequacy ratio of the resultant Combined Entity, Sterling Bank
Agenda
1 2 3 Deal Facts Overview Transaction Dynamics Deal Rationale Timeline Financial Review and Forecasts Summary
4
5 6
10
711
UBA
611
First
570
Ecobank + Oceanic
491
Access + Intercontinental
Union FCMB + Finbank Zenith Skye Unity Diamond Mainstreet Keystone Sterling + ETB GTBank Fidelity StanbicIBTC
249 223 215 206 201 189 186 184 181 154
Wema
Enterprise Sterling ETB StanChart Citibank
120
#19
96 93 26 13
11 First Zenith
FY 2010, %
12.7% 11.5%11.1%
UBA
10.2% Access+Intercontinent al 8.7% Ecobank+Oceanic 6.6% GTBank 5.6% Union
4.7%
FCMB+Finbank
Skye Diamond Keystone Sterling+ETB Fidelity Mainstreet Unity Citibank Sterling Enterprise StanbicIBTC StanChart ETB Wema
#17
12 13.9% First 11.5% Zenith 9.8% UBA Access+Intercontinenta l 9.2% 8.7% Ecobank+Oceanic 7.0% GTB 6.1% Union FCMB+Finbank Skye Diamond Bank Fidelity Keystone Sterling+ETB 4.4% 4.3% 3.6% #13
FY 2010, %
StanbicIBTC
Unity Sterling Mainstreet Citibank Standard Chart Enterprise Wema ETB
#16
2.9% 2.7% 2.5% 2.3% 1.8% 1.7% 1.6% 1.6% 1.4% 1.3% 1.2% 0.8%
Employees
Greater and promising career opportunities within a fast growing and more diversified organization Improved training and career development capacity Greater ability to attract and retain valuable human capital and senior talent
Shareholders
Tap cost and revenue benefits from economies of scale and operational synergies to achieve optimization
Instant leap into Tier 2 banks category with greater stock market liquidity and lower risk perception Increased financial strength and capital position to support future growth Value creation through revenue and cost synergies, Leadership by established management team and knowledge sharing of best practices across both institutions
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Agenda
1 2 3 Deal Facts Overview Transaction Dynamics Deal Rationale Timeline Financial Review and Forecasts Summary
4
5 6
14
Date
Sep 26, 2011
Sep 28, 2011 Sep 28, 2011 Sep 29, 2011 Sep 29, 2011
Oct 3, 2011
Oct 5, 2011 Oct 5, 2011 Oct 7, 2011 Oct 7, 2011
Agenda
1 2 3 Deal Facts Overview Transaction Dynamics Deal Rationale Timeline Financial Review and Forecasts Summary
4
5 6
16
Sterling Bank
ETB
Consolidated
Notes
The Consolidated Capital & Reserves position of N44.72bn includes: N64.45 Financial Accommodation Amount (FAA) to bring ETBs net asset value (NAV) to zero Further injection of N8.5bn by legacy shareholders of ETB.
LIABILITIES
Customers' deposits Borrowings Other Liabilities TOTAL LIABILITIES
EQUITY
Tier II Capital Share Capital Reserves Capital & Reserves Contingencies Balance sheet size
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81,933 506,665
2011E
2012E
2013E
47,214
74,422
90,928
2011E
2012E
2013E
47,214
74,423
90,927
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2011E
45,703 30,849 (14,029) 16,820
2012E
89,682 60,146 (22,978) 37,168
2013E
115,209 75,860 (26,129) 49,731
Fee and commission income Fee and commission expenses Net fee and commission income
Income from investments Other income Operating income
8,501 8,501
1,674 4,680 31,674
18,784 18,784
1,065 9,687 66,704
25,134 25,134
1,254 12,961 89,080
Operating expenses Loan loss expenses Diminution in value of other risk assets PROFIT/(LOSS) ON ORDINARY ACTIVITIES
PROFIT/(LOSS) BEFORE TAXATION Taxation
5,881
15,260
20,632
Agenda
1 2 3 Deal Facts Overview Transaction Dynamics Deal Rationale Timeline Financial Review and Forecasts Summary
4
5 6 7
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Summary
The acquisition of ETB by Sterling Bank is supported by a compelling business case
Increased critical mass in the retail banking space Business model scalability at an appealing price Strong corporate banking proposition
Fully scaled business model with institutionalized processes beyond the stewardship of current owners and managers
Systemically important operator materially impacting all our sectors of business participation
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Contact
Investor Relations
20 Marina, Lagos, Nigeria Tel: +234 1 4613152 Email: investor.relations@sterlingbankng.com Website: www.sterlingbankng.com
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