April 2015 Acquisition of

Volksbank Romania SA
Transaction overview

Disclaimer
THE INFORMATION CONTAINED IN THIS DOCUMENT HAS NOT BEEN INDEPENDENTLY
VERIFIED AND NO REPRESENTATION OR WARRANTY EXPRESSED OR IMPLIED IS MADE AS
TO, AND NO RELIANCE SHOULD BE PLACED ON, THE FAIRNESS, ACCURACY,
COMPLETENESS OR CORRECTNESS OF THIS INFORMATION OR OPINIONS CONTAINED
HEREIN.
CERTAIN STATEMENTS CONTAINED IN THIS DOCUMENT MAY BE STATEMENTS OF FUTURE
EXPECTATIONS AND OTHER FORWARD-LOOKING STATEMENTS THAT ARE BASED ON
MANAGEMENTS CURRENT VIEWS AND ASSUMPTIONS AND INVOLVE KNOWN AND
UNKNOWN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS,
PERFORMANCE OR EVENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED
IN SUCH STATEMENTS.
NONE OF BANCA TRANSILVANIA OR ANY OF ITS AFFILIATES, ADVISORS OR
REPRESENTATIVES SHALL HAVE ANY LIABILITY WHATSOEVER (IN NEGLIGENCE OR
OTHERWISE) FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THIS DOCUMENT OR
ITS CONTENT OR OTHERWISE ARISING IN CONNECTION WITH THIS DOCUMENT.
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR INVITATION TO PURCHASE OR
SUBSCRIBE FOR ANY SHARES AND NEITHER IT NOR ANY PART OF IT SHALL FORM THE
BASIS OF OR BE RELIED UPON IN CONNECTION WITH ANY CONTRACT OR COMMITMENT
WHATSOEVER.
THE FINANCIAL INFORMATION PRESENTED IN THIS DOCUMENT IS NOT AUDITED, UNLESS
OTHERWISE SPECIFIED
2

PRESENTATION TOPICS
Introduction
Transaction overview
Overview of financial information

High level integration plan

Macroeconomic environment
GDP (%, Y/Y)
10%

8.5%

7.9%

The GDP rose by 2.8% Y/Y in 2014, an

evolution determined by the dynamics
of the domestic demand.

7.3%
6.3%

6%

4.2%

3.4%

2.3%

2%

2.8%

2.5%

2.8%

3.3%

0.6%

-2%

-1.1%

-6%
-6.6%

-10%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014 2015f 2016f 2017f

Inflation - at year end (%, Y/Y)

17.5%
14.2%

8.72%

4.96%
3.13%

0.83%

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

1.57%

2.80%
2.10% 2.40%

Source: International Monetary Fund, National Statistics Office, National Bank of Romania

2017f

4.75%

2016f

4.88%

7.98%

6.56% 6.30%

2015f

9.16%

2002

20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%

The private consumption increased by

4.5% Y/Y last year, while the
government consumption had a
positive contribution of 0.8 pp.

The inflexion of the fixed investment

at the end of 2014 (up by 1.4% Y/Y in
4Q) points to the start of a new cycle.
The average annual inflation
decelerated to 1.07% Y/Y in 2014.
Inflation hit new record low levels in
January and February 2015 (0.4%
Y/Y), due to the agricultural output
(2013/2014) and the decline in oil
prices.
NBR continued to relax the monetary
policy in March 2015, by cutting the
reference interest rate to 2.00% (the
central bank kept the MRRs levels at
10% for RON and 14% for FX).
4

Romanian Banking Systems banking assets

and NPLs
Total banking assets growth rates
6%

5.01%

5%

3.56%

3.50%

4%

3.31%

BT achieved 8.4% growth during

2013 and 11.2% increase during
2014.

3%
2%

0.60%
-0.92%
2009

2010

2011

2012

1%
0%

2013

2014

-1%

NPL
21.87%

22.00%

19.19%

18.24%

15.33%

14.33%

13.93%

11.85%

6.53%

17.00%
12.00%

7.89%
7.00%

BT benchmarks well at 10.87% NPL

ratio as end of 2014.
NPL ratio rose to 14.25% in
February in the Romanian Banking
sector.

2.00%
2008

2009

2010

Source: National Bank of Romania

2011

2012

2013

H1 2014

Q3 2014

2014

-3.00%

Romanian Banking System loans and

deposits
RON non-government loans (RON bn)
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0

81,654
83,669 79,712
77,352

84,723 85,354

FX non-government loans (RON bn)

92,124

160,000
131,947

140,000
100,000

49,486

60,000

40,000

43,797
32,762

20,000
0
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2005

RON non-government deposits (RON bn)

2006

2007

2008

2009

2010

2011

2012

2013

2014

FX non-government deposits (RON bn)

180,000

90,000
155,504

160,000

142,046

140,000
120,000
100,000

87,617

98,552

102,688

113,364

80,000

71,841 73,605

70,000

124,111 125,454

52,628

50,000
40,000

60,000

30,000

45,183
35,898

77,094

65,055 63,950 62,737

60,000

80,000
40,000

118,868

80,468

80,000

27,911

133,111

120,171
114,411

120,000

67,713

141,378 141,151

41,407
31,156
25,884

20,000
10,000

20,000

0
2005

2006

2007

2008

Source: National Bank of Romania

2009

2010

2011

2012

2013

2014

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Banca Transilvanias growth path

BT: market share evolution
9.78%

10%

8.9%

9%

8.1%

8%

7.3%

7%

6%

5.5%

6.3%

5.4%

4.7%

5%

3.9%

4%

BT clients and units evolution

2.9%

3%
2%

5.9%

CLIENTS

600

1.8% 2.0%

1%

535

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

540

2,500,000

400

2,000,000
1,500,000

215

200
100

1,000,000
500,000

31

2000

Source: National Bank of Romania

3,000,000

500

300

0%

UNITS

2005

2010

2014

PRESENTATION TOPICS
Introduction
Transaction overview
Overview of financial information

High level integration plan

Transaction overview
Transaction rationale
Banca Transilvania intends to consolidate its position within the Romanian banking market,
benefiting from economies of scale, while preserving strong profitability, organic growth
and prudential ratios.

The main points of focus for the acquisition are:

Banca Transilvania will achieve a better management of its strong liquidity position.
Banca Transilvania has a long-term strategy that synergies with Volksbanks significant retail loans
portfolio.
The cross-sell ratio of banking products and services will increase for the combined entity.

Next steps
The integration planning.

Legal merger subject to GSM approval.

GSM General Shareholders Meeting

Transaction overview
Transaction scope and milestones

The transaction documentation was signed on 10 December 2014. The closing date of the
transaction is 7 April 2015.
Banca Transilvania Financial Group acquired 100% of Volksbank Romania S.A. shares (Banca
Transilvania has full control after closing date).

The balance of parent funding outstanding in Volksbank at closing date is assigned to Banca
Transilvania at nominal value as part of the transaction.
Pricing overview

The transaction price is EUR 81 million (eq. RON 360 million), out of which an amount of
EUR 58 million is placed in an escrow account to cover certain future risks that may arise
within 1 year, as identified in the SPA.
The consideration was fully paid by Banca Transilvania at closing date from own liquidity
resources.

10

PRESENTATION TOPICS
Introduction
Transaction overview
Overview of financial information

High level integration plan

11

2014 Highlights
Total assets CCY structure

Key Indicators
(RON million)
Total assets
Equity
Total loans and accruals
PAR 90 (%)
Cost / Income (%)
Cost of risk (%)
NIM (%)
Capital adequacy ratio (%)
Loans / deposits (%)
Quick liquidity (%)

Banca Volksbank
Transilvania* Romania**
35,620
12,361
3,702
713
20,020
8,656
10.87%
9.16%
41.41%
78.1%
3.32%
0.99%
3.37%
2.07%
17.32%
19.00%
66.63%
184.33%
55.30%
33.80%

* Audited results approved by the Board of Directors on 26 March 2015

** Based on 2014 audit report

12

2014 - Balance Sheet

Banca
Transilvania*
4,226
2,379
10,905
17,517
435
158
35,620

Vollksbank
Romania**
2,483
418
1,537
7,677
158
88
12,361

3,702

713

395

723

30,045

4,696

1,082

4,069

Other liabilities

396

2,160

Total liabilities

35,620

12,361

RON million
Cash and cash equivalents
Placements with banks
T bills and securities
Loans to customers, net
Fixed assets and participations
Other assets
Total assets
Shareholders' equity**
Subordinated loan
Due to customers
Due to banks and FIs

* Audited results approved by the Board of Directors on 26 March 2015

** Based on 2014 audit report; the equity of VB includes 2014 losses

13

2014 - Income Statement

RON million
Net interest income
Net commissions income
Other operating income
Operating income
Operating expenses
Profit before provisions
Provisions
Gross profit / (loss)
Net profit / (loss)

* Audited results approved by the Board of Directors on 26 March 2015

** Based on 2014 audit report
*** the equity of RON 713 million, includes the 2014 net loss of VB

Banca
Transilvania*
1,138
408
454
2,000
828
1,172
667
505
434

Volksbank
Romania**
267
27
39
333
232
102
2,006
(1,904)
(1,899)***

14

Overview of financial information on

closing date
Selected captions
(RON million)

Subordinated loans
Parent funding
Equity further to VB capital increases
in Q1 2015
Additional provisions as required by
BT, to be booked following closing
Final Equity position

Volksbank Romania
at closing*

Volksbank Romania
eoy 2014**

2,857

723
4,069

2,795

713

890
1,905

During Q1 2015, Volksbank Romanias equity position has significantly increased following the
implementation of the conditions negotiated between parties before closing date:
Conversion of all subordinated loans amounting to EUR 161 million;
Partial conversion of parent funding amounting to CHF 341.5 million.

VB parent funding of eq. RON 2,857 is assigned to BT

* Based on December 2014 audited amounts adjusted for SPA conditions

** Based on 2014 audited report

15

Post merger highlightspreliminary estimations

RON million

Estimated
post-merger

BT individual*

Loans to customers, net

26,954

20,415

Due to customers

31,939

31,378

1,730
504
147
1,028

1,484
456
139
898

Net interest income

Net commissions income
Other operating income
Operating expenses

*BT individual as presented as a stand alone, organic growth bugdet

16

PRESENTATION TOPICS

Introduction
Transaction overview
Overview of financial information

High level integration plan

17

Integration strategy was developed to ensure

business continuity and synergy achievement
Retail
Corporate &
SME

Enhanced customer experience

Single portfolio of products in the merged bank
Strong relationships with the clients

Common product and service offering

Network

Unified branch network focused on customer experience

Risk &
Internal
control

Risk, compliance and anti-fraud policies aligned to BT standards

IT

HR

Finance /
controlling

Market risk addressed by BT being the main counterpart for VB treasury

No disruptions in customer service and operations

Unified core banking platform and support applications
Strong and unified team in the merged bank
Talents retained, employee satisfaction kept at a high level
No disruptions in reporting
Unified procedures and policies
18

A portfolio of over 20 projects have been

already defined to implement the strategy
Projects Portfolio

Main projects

IT migration

Legal process for the merger

Accounting

Retail loans strategy

Communication

Finance & Controlling

CHF loans

Data warehouse

Internal Audit

Retail non-loan products strategy

Operations integration

ATM & POS Integration

Corporate & SME portfolio strategy

Risk strategy

Procurement synergies

HR Integration

Rebranding

Real-estate portfolio management

Joint network strategy

Treasury

Collection and workout

Q1 2015

Pre-closing
activities

Program structure
development

Program planning

Q2 2015

Development of
tactics within
respective
project areas

Q3 2015

Q4 2015

Tactics implementation

Merger preparation, further to specific GSM

and other authorities approvals

Target
merger
date1

1. Targeted date could be Q1 2016, but it is subject to approvals from the General Shareholders Meeting

19

Integration program is managed by a strong

team with VB engagement

Program Management

Omer Tetik

George Calinescu

Luminita Runcan

Tiberiu Moisa

Mihaela Nadasan

Leontin Toderici

Gabriela Nistor

Andrei Dudoiu

Communication Team

Program Office

Project Managers

Dedicated BT teams

Dedicated VB teams

20

Five core values defined for the integration customers and employees in the center

Fairness

Transparency

Customer
and Employee
Focus

360 Communication

Collaboration

21

Banca Transilvania S.A.

8, G. Baritiu Street
Cluj-Napoca, 400027
Romania
Telephone
Fax

+ 40 264 407 150

+ 40 264 407 179

Investor.Relations@btrl.ro
22