Business Combination with Intercontinental Bank Plc

Presentation to Investors and Analysts

September 2011

Disclaimer
The information presented herein is based on sources which Access Bank Plc (the Bank) regards dependable. This presentation may contain forward looking statements. These statements concern or may affect future matters, such as the Banks economic results, business plans and strategies, and are based upon the current expectations of the directors. They are subject to a number of risks and uncertainties that might cause actual results and events to differ materially from the expectations expressed in or implied by such forward looking statements. Factors that could cause or contribute to differences in current expectations include, but are not limited to, regulatory developments, competitive conditions, technological developments and general economic conditions. The Bank assumes no responsibility to update any of the forward looking statements contained in this presentation.
The information should not be interpreted as advice to customers on the purchase or sale of specific financial instruments. Access Bank Plc bears no responsibility in any instance for loss which may result from reliance on the Information. Access Bank Plc hold copyright to the Information, unless expressly indicated otherwise or this is self-evident from its nature. Written permission from Access Bank Plc is required to republish the information on Access Bank or to distribute or copy such information. This shall apply regardless of the purpose for which it is to be republished, copied or distributed. Access Bank Plcs customers may, however, retain the Information for their private use. Transactions with financial instruments by their very nature involve high risk. Historical price changes are not necessarily an indication of future price trends. Investors are encouraged to acquire general information from Access Bank Plc or other expert advisors concerning securities trading, investment issues, taxation etc in connection with securities transactions. The Information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by the Bank. Any person at any time acquiring the securities must do so only on the basis of such persons own judgment as to the merits of the suitability of the securities for its purposes and only on such information as is contained in public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained herein. The information is not tailored for any particular investor and does not constitute individual investment advice.

Business Combination with Intercontinental Bank

Access Bank Overview

Parent Company : Access Bank Plc is a full service Commercial Bank registered in Nigeria on February 8, 1989 with RC number 125384
: 9 Banking Subsidiaries (United Kingdom and 8 other African Countries) : 1751 Professional staff
United Kingdom United Kingdom

Subsidiaries

No of Employees

Accounting

Local GAAP and IFRS

Credit Rating

A- / BBB / A- (RWN) / BBB- (RWP) (GCR/Agusto/S&P(nga)/Fitch(nga))

Partnerships

Risk Management

Basel II Capital Accord

Focus Segments

Institutional (Private and Public Sector), Retail and Middle market (Value chain)

Channels

150 Business Offices 264 ATMs, 310 POS Authorised share capital of N10 billion (18 billion ordinary shares and 2 billion preference shares of 50 kobo each respectively) Paid up share capital of N8.94 billion ( 17.9 billion ordinary shares of 50 kobo each) OTC Unlisted GDR

Share Capital

Business Combination with Intercontinental Bank

Agenda A Compelling Transaction Strategic Rationale Transaction Structure and Key Terms Plans for Integration Financial Impact Stakeholder Benefits

Business Combination with Intercontinental Bank

Consolidating Position in a Market with Attractive Outlook

In 2002, we embarked on a transformation journey with a strong conviction that proactive responses to forces driving banking consolidation could enable us migrate from a fourth-division Bank to a top 3 Bank by 2012

2002

2012

Large Banks Large Banks Foreign Banks Mid-Tier Banks Merchant Banks Middle Squeeze
Mid-tier, family-controlled and stateowned banks collectively lose share to large banks, foreign banks and specialized firms with unique value propositions

Mid-Tier Banks

Family-controlled Banks
State-owned Banks

Middle Squeeze Niche Banks

Business Combination with Intercontinental Bank

The Opportunity to Transform from Mid-Tier to Scale is Compelling

Large Scale Banks

Key Implications & Considerations
Attainment of corporate vision and aspirations Leading player in clearing and settlement platforms Improved return on investments (ROE) Significantly lower cost of

Mid-Tier Player
Significantly redefine corporate direction and aspirations Potentially be shut out of settlement and clearing bank roles

Niche Player
Fundamentally redefine corporate direction and aspirations Rationalize a significant portion of the banks financial and other resources Focus exclusively on corporate and investment banking

ROE and risk rating

sustainability issues

funds and improved risk

rating Reap benefits of flight to safety

Business Combination with Intercontinental Bank

Agenda A Compelling Transaction Strategic Rationale Transaction Structure and Key Terms Plans for Integration Financial Impact Stakeholder Benefits

Business Combination with Intercontinental Bank

Strategic Rationale for the Merger

1
The combination creates one of Nigerias top 3 banking Groups by several indices

Merger creates an industry leader with multiple product strengths, leadership in focus areas of the financial services sector, high growth potential and unrivalled brand appeal Meaningful opportunities to unleash Access Banks competencies and resources in Treasury, Trade Finance, Cash Management and Corporate Finance on an expanded Customer base Significant growth in retail banking segment with the combined entity having a customer base of over 5 million customers Lower cost of acquisition due to CBN intervention - significant de-risking of Intercontinentals balance sheet and significant opportunities to build up regulatory capital internally Increased balance sheet size will provide combined entity with an enhanced capacity to provide credit to a larger combined wholesale and retail client base. Merger delivers operational synergies in employee and branch productivity, leading to resource optimization

Business Combination with Intercontinental Bank

Rationale Evident in Much Enhanced Market Position

Combined Entity (June 2011) Metric Market Share Market Share Ranking

Total Loans

6.7%

#5

5.4%

1.3%

Total Deposits

3.3%

5.3%

8.7%

#4

Branches

2.5%

6.9%

9.4%

#3

Customer Count

3.0%

17.0%

20%

#3

Access
Source: Company Reports Note: Financial data as of June 2011.
9

Intercontinental

Business Combination with Intercontinental Bank

Agenda A Compelling Transaction Strategic Rationale Transaction Structure and Key Terms Plans for Integration Financial Impact Stakeholder Benefits

10

Business Combination with Intercontinental Bank

Transaction Overview
Reorganization of share capital via a scheme of arrangement under Section 539 of CAMA and Section 118 of ISA

Transaction Description

Placement of 75% of reconstituted capital with Access Bank through PSI Limited and placement of 15% of capital with Asset Management Corporation of Nigeria (AMCON) Intercontinental Bank to be absorbed into Access by way of a scheme of merger within 12 months

Access Bank via PSI Limited to inject N50bn into Intercontinental Bank as investment amount AMCON to recapitalize Intercontinental Bank to a zero NAV Existing shareholders to retain 10% shareholding (post-money) Existing shareholders shall retail 1 share for every 7 shares previously held Intercontinental Bank will be delisted from the Nigeria Stock Exchange (NSE)

Key Terms

Intercontinental Bank will operate as a high-performing subsidiary of Access Bank up to the date of merger Intercontinental Bank shareholders who wish to exit are able to sell their shares to Access Bank at N2.75 per share Where an employee does not wish to continue in employment of Access Bank, they are entitled to fully funded gratuity benefits Key Transaction and Integration risks have been addressed in the Transaction Implementation Agreement (TIA) e.g. Liquidity risk, loss run rate, Deferred Tax Assets (DTA), cancellation of preference shares, Change of Control etc

11

Business Combination with Intercontinental Bank

Key Transaction Timelines

Status
16 December 2009 15 February 2010 12 October 2010 28 March 2011 6 July 2011
Submission of Expression of Interest (EOI)

Due Diligence commences (Phases 1 -3)

Access Bank selected as preferred bidder for Intercontinental Bank Signing of a Memorandum of Understanding

Signing of a Transaction Implementation Agreement (TIA)

CBN approval of TIA SEC / FHC clearance of Scheme document

7 July 2011
25 August 2011 26 September 2011 26 September 2011 26 September 2011 29 September 2011 29 September 2011 29 September 2011 29 September 2011 29 September 2011 3 October 2011
12

Court-ordered meeting of Intercontinental Bank

Annual General Meeting of Intercontinental Bank Extra-ordinary General Meeting of Access Bank

Obtain Court Sanction of Scheme

Apply to NSE for delisting of shares Settlement of Financial Accommodation by AMCON Access transfers Investment Amount into Intercontinentals account with CBN Allotment of Investor Shares Access reconstitutes Board and Management of Intercontinental
Business Combination with Intercontinental Bank

Agenda A Compelling Transaction Strategic Rationale Transaction Structure and Key Terms Plans for Integration Financial Impact Stakeholder Benefits

13

Business Combination with Intercontinental Bank

Governance and Management of Intercontinental Bank

Access Banks rigorous Group Governance

framework will guide and facilitate the

governance and management of Intercontinental Bank Intercontinental Board and Management will be accountable to Access Bank Plc on a day to day basis Upon recapitalization, Intercontinental Board will be reconstituted to include Access Bank executives as Non-Executive Directors and Executive Directors. Representation will also include 2 independent directors A detailed 2-year business plan (2011-2012) for Intercontinental Bank has been approved by Access Bank Board of Directors.

14

Business Combination with Intercontinental Bank

We have Designed a Robust Integration Planning Process

The post-acquisition integration program of both banks will be executed in two broad phases. Access and Intercontinental, assisted by Accenture have been involved in integration planning process for the last 6 months: Phase I: 34 Months Phase II: 12 Months

Project Definition and Planning

Integration Execution 9 Months Subsidiary Phase 3 Months

Merger Phase
Program Management

KEY Completed

Acquisition via Placing of Shares and injection of investment amount

Scheme of Merger

Single Entity Day 1

Access Bank Board

Access Bank Executive Committee

Integration effort formalized early on signing of MOU Boards and management of both banks fully involved Strong Project Management Office advised by Accenture Integration teams structured around key value delivery areas that have been identified as biggest synergy opportunities 38-man Integration team
Business Combination with Intercontinental Bank

Program Management Office

Integration Team Leads/Program Management Office Staff

Credit Risk Consolidation

Customer Management

Employee Management

Head Office Consolidation

Branch Rationalisation

Treasury Consolidation

IT Integration

Fin Mgt.& Regulatory Reporting

Ops. Process Alignment & Consolidation

Communications Culture & Change

15

Integration Objectives and Guiding Principles

Guiding Principles Objective

Achievement of a lean organization to ensure the efficient and effective utilization of resources Right Sizing of Branch & other resources Adoption of Centralized Procurement / Sourcing Centralization of Core functions and Adoption of Shared Services to ensure consistency in service delivery standards and customer experience across various touch points in a cost - efficient manner Optimize Customer and Products Experience to ensure customer satisfaction and retention

1 Achieve significant cost reduction through branch

2
3

rationalization, IT & Operations consolidation and deduplication of enterprise functions and other efficiency initiatives Enhance corporate performance through implementation of key initiatives identified in the Commercial Strategy

3 Minimize operating risks by identifying and managing

key risks and developing appropriate mitigation actions

4 Retain the customer base: Less than 10% customer

attrition, by defining a clear retention plan focusing on highly valued, at risk customer segments

Adoption of Single IT Application Infrastructure / Architecture to ensure synergy, improved quality service delivery and seamless integration
Entrench Effective Risk Management Ensure Appropriate Communications and Effective Branding &

5 Retain key talent: More than 90% retention of top

talent to address skills gaps

6 Improve employee engagement and development

through a robust and comprehensive assimilation and learning development program

7 8

7 Improve Service Quality and customer experience

through adoption of a single technology and operations platform, process alignment, consolidation and centralization programs; and Access Banks Project 5* program

16

Business Combination with Intercontinental Bank

Agenda A Compelling Transaction Strategic Rationale Transaction Structure and Key Terms Plans for Integration Financial Impact Stakeholder Benefits

17

Business Combination with Intercontinental Bank

Fundamental Changes to Intercontinentals Capital Structure

Current Authorized Ordinary Share Capital Current Issued and Fully Paid-up Ordinary Share Capital Unissued Shares N12.25 billion 24.5 billion ordinary shares of 50 Kobo each (A) N9.453 billion 18.906 billion ordinary shares of 50Kobo each (B) 5.594 billion Ordinary Shares of 50 Kobo each (AB)

Cancellation of 5,056,000,000 Shares purchased directly or indirectly with the funds of Intercontinental Bank
Pro-rata reduction and cancellation of 11,850,000,000 ordinary shares of 50 Kobo each in the share capital of Intercontinental Bank

2 3

Authorized capital of the Bank shall be increased by 12.4 billion ordinary shares of 50 Kobo each, to the target share capital of N10.0 billion comprising 20.0 billion ordinary shares of 50 Kobo each Following the reorganization of capital, Intercontinental Bank will place the subscription shares with AMCON and PSI Limited PSI Limited will be issued 15.0 billion ordinary shares of 50 Kobo each corresponding to N7.5 billion in the share capital of Intercontinental Bank for the injection of the investment amount Merger by absorption of Intercontinental Bank into Access Bank
Post-Scheme Holding (Bn shares) % New Holding

6 7

Retention of N1,000,000,000 (comprising 2,000,000,000 ordinary shares of 50 Kobo each) in the Share Capital account attributable to Existing Shareholders Reduction of share premium account from N146,712,000,000 to zero (0) to offset the negative retained earnings
Existing Holding (Bn shares)

1 2 3

Existing Shareholders
AMCON Project Star Investment Ltd
18

18.906bn
---

2.0bn
3.0bn 15.0bn

10.0
15.0 75.0 100.0

Total

Business 18.906bn Combination with Intercontinental Bank 20.0bn

Intercontinental Banks Balance Sheet is Dramatically Transformed

AMCON and Access Bank capital injection has dramatic impact on balance sheet
Impact of AMCON process and Access recap on Intercontinental Balance Sheet
31 December 2009 Net Loans Gross Loans Non-Performing Loans AMCON Bonds Deferred Tax Asset Total Assets Customer Deposits CBN Loan Total Equity
(1)

Comments Acquisition of a Good Bank facilitated by the Asset Management Company of Nigeria (AMCON) Over NGN 480bn of NPLs transferred to AMCON during 2010 and 2011

31 December 2010 119,211 310,834 200,428 108,264 153,611 708,588 677,527 100,000 (325,892) 708,588

31 December 2011E 68,804 104,257 61,141 343,284 1,705 765,411 610,075 0 34,210 765,411

158,100 715,398 561,563 0 163,652 632,850 527,289 100,000 (380,116) 632,850

Further injection of c.N550bn by AMCON to recapitalise Intercontinental Bank to a position of zero (0) NAV
Subsequent injection of c.N50bn by Access Bank into Intercontinental Bank to achieve an adequate level of regulatory CAR at Intercontinental Bank Repayment of CBN loan with AMCON Bonds Selected ratios in 2011E: CAR: 15.0% Loans/Deposits: 11% Liquidity Ratio: 83% NPL Ratio: 59%

Total Liabilities and Equity

Source: Company disclosures (1) Including Minority Interest.

19 Business Combination with Intercontinental Bank

Pro Forma Financial Position

Group Financial Highlights for Access Bank plus Intercontinental Bank (June 2011) (N m) Profit and Loss
Net Interest Income Fees and Commissions Other Operating Income Total Operating Income Total Operating Expenses Provisions/Write-backs 27,172 9,791 3,193 40,157 (24,679) (5,115) (11,566) 8,523 18,507 15,464 (33,020) 19,236 15,606 18,314 21,701 55,621 (57,699) 14,121

Access Bank

Intercontinental Bank

Aggregate

Profit Before Taxes

Profit After Taxes

10,396
8,079

1,680
1,346

12,076
9,425

Balance Sheet
Total Assets Gross Loans Net Customer Loans Customer Deposits 984,434 549,171 512,419 639,112 708,781 180,577 95,427 620,036 1,693,215 729,748 607,846 1,259,148

20

Business Combination with Intercontinental Bank

Intercontinental Bank Forecast Financials & Synergies

Forecast P&L and Balance Sheet
(NGNbn) Profit & Loss Net Interest Income Non Interest Income Operating expenses (Provisions)/writebacks Profit/(Loss) Before Tax and Extraord. Extraordinary items Profit/(Loss) before Tax Profit/(Loss) after Tax Balance Sheet Net Loans AMCON Bonds Treasury bills and other eligible bills Due from other banks Total Assets Customer Deposits Interbank Deposit Total Liabilities Total Equity (1) 68.8 343.3 121.1 64.7 765.4 610.1 73.5 731.2 34.2 80.2 380.6 260.7 92.6 990.3 817.7 80.1 948.0 42.3 86.5 418.0 420.3 144.9 1,229.6 1,078.3 0.0 1,158.3 71.4
Post-Synergies Profit/(Loss) after Tax Earnings per Share RoE (228.9) n.m. n.m. 24.1 1.20 63% 32.4 1.62 57%

Likely Impact of Synergies under Access Management

2013F
(NGNbn) Synergies Revenue Cost Financial Total Synergies (pre-tax) Total Synergies (post-tax) 2.0 3.9 0.0 5.9 5.0 2.5 11.3 5.0 18.8 16.0 2.8 8.1 5.0 15.9 13.5 2011F 2012F 2013F

2011F

2012F

(16.7) 12.2 (58.0) 22.1 (40.5) (193.3) (233.8) (0.1) (233.9)

55.5 15.5 (52.4) (7.0) 11.6 0.0 11.6 (3.5) 8.1

72.2 19.9 (50.7) (14.4) 27.0 0.0 27.0 (8.1) 18.9

Pre-Synergies Profit/(Loss) after Tax Earnings per Share RoE (233.9) n.m. n.m. 8.1 0.40 21% 18.9 0.95 33%

Source: Company disclosures (1) 21 Including Minority Interest.

21 Business Combination with Intercontinental Bank

Funding
Illustrative Pro Forma Capital Position Funding the Capital Injection

Current Position

26%

The transaction will be funded with Access Bank internal financial resources Access Bank is one Nigerias best capitalized banks with a CAR of 26% as of HY2011
(42%)
AMCON Recap of ICB

Access Bank also have a very robust liquidity position, with a net free cash position of N111.6bn as at June 2011

26%

0%
Access Bank injection into ICB

22% 15%

19%

Access

Intercontinental

Group

Source: Company disclosures

Access Bank plc 22 Business Combination with Intercontinental Bank

Access Plus: Impact of Combination on Business Segments

Retail Banking

Rank #1 or #2 in retail banking in Nigeria by market share and profitability Significantly enhanced revenue-generation potential driven by a combination of increased customer base, enhanced distribution capacity and access to a large pool of stable retail deposits Increased capabilities in retail product development and management Retail economies of scale driving lower operating expenses

Commercial Banking

Rank #1 or #2 in commercial banking in Nigeria by revenues, deposits & LAD Increased geographic presence enables increased penetration of existing customers and acquisition of new customers thereby enhancing revenue potential Economies of scale and best practice sharing driving operating expenses lower

Institutional Banking

Rank #4 in Corporate/Institutional Banking by revenue, deposit, and loans & advances Build capabilities to play and harness opportunities in key sectors of the economy Deploy corporate e-payment solutions to better serve customers needs and enhance revenue

Financial Markets

Rank #1 Project & Structured Finance Bank in Nigeria Rank #1 Treasury & Financial Markets Bank in Nigeria Enhanced revenue potential by deploying financial markets offerings to larger pool of customers Increase transaction volumes by transferring Access efficiency, expertise and execution capabilities Opportunities to reduce cost of funds by deploying Access risk governance practices
Business Combination with Intercontinental Bank

23

Plans for Intercontinental Subsidiaries

Intercontinental Bank has operating subsidiaries in Nigeria, Ghana and UK: Banking Subsidiaries
Intercontinental Bank Ghana Limited Intercontinental Bank United Kingdom

Action
Intercontinental Bank Ghana will be merged with Access Bank Ghana to create the fourth largest lender in the Ghanaian market Intercontinental Bank United Kingdom will be sold to suitable investors in line with FSA requirements

Non- Banking Subsidiaries

Intercontinental Finance and Investments Limited Intercontinental Securities Limited Intercontinental Homes Savings and Loans Limited Intercontinental Registrars Limited Intercontinental Capital Markets Limited Intercontinental Wapic Insurance Plc. Intercontinental Properties Limited Intercontinental Trustees Limited

Action
Non-banking subsidiaries present a significant opportunity for building capital internally given that a number of the investments have been written down They also present the opportunity of reviewing the universal banking license in the context of a large scale business franchise which Access Bank now becomes by virtue of this business combination

Intercontinental Bureau de Change Limited

Flexmore Technologies Limited

24

Business Combination with Intercontinental Bank

Agenda A Compelling Transaction Strategic Rationale Transaction Structure and Key Terms Plans for Integration Financial Impact Stakeholder Benefits

25

Business Combination with Intercontinental Bank

Benefits to Stakeholders
The merger safeguards a significant degree of capacity in the Nigerian banking sector that would otherwise have been lost The transaction is of systemic importance. Careful consolidation of the banking sector is essential to the future stability and growth of the Nigerian economy

Nigerian Banking Sector / Economy

To sustain a robust ROE, Access Bank needs to achieve scale. This transaction facilitates that goal Supports Accesss growth ambitions enabling the Bank to accelerate the realization of its objectives Enlarged distribution network for Access Bank Low cost of acquisition. Enhanced Industry position and risk rating

Access Bank Stakeholders

Transaction will enable shareholders to salvage value despite a negative NAV position Facilitate the survival of the Bank and save it from possible liquidation;

Intercontinental Bank Stakeholders

Intercontinental Bank will remain part of one of Nigerias leading banking institutions; Position the Bank for realization of operational synergies through the future merger with Access Bank;

26

Business Combination with Intercontinental Bank