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Dutch Retail Banking Operations

May 29, 2001F.G.H. Deckers (CEO BU Netherlands)

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Market development and competitive position• Mature Market• Emergence new entrants and specialists puts pressure on

market shares and margins:– niche players & cherry pickers;– in consumer & commercial clients;– new service and/or tariff propositions.

• Strong increase of “remote channels” in financial markets:– opportunities for new players in the market;– changing consumer behaviour leads to different channel usage,

squeezing profitability on traditional channels.

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Moderate financial performanceAs a result of: • Accumulation of distribution channel costs • Loss-making payment services • Threat of more margin-erosion

Consequence:• Expenses grow faster than revenues

...and… Focus 2005 is not sufficient

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No Detours• Change process with the largest impact in the bank’s

history in the Netherlands.

new service concept

more efficient service

focus on profitable client relationship

new roads to modern banking

Centralization back-office

No Detours to:

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“bankshop” “advieskantoor” “Corporate (550) (80) Clients Unit”

(5)

New Service ConceptDifferentiation in services to the customer:

Streamlining:• day-to-day banking• fast & convenient• practical• clear• arrange

Elaborating:• specialised advice• attention, in depth• comprehensive• detailed, complete• orientation, consideration

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Bankshops: efficiency in day-to-day banking • Approx. 550: geographical presence maintained;• Linking pin ABN AMRO: first point of contact;• Clear, transparent range of services;• Focussed on quick service to clients;• Manned cash service in 325 bankshops, ATMs in other;• Direct clients selectively, efficiently and accurately towards

specialists;• Minimize administrative task.

Professionalisation of advisory role

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Full attention towards clients• In line with Focus 2005:

– Removal of administrative and operation tasks from sales employees and consequently streamlining them.

– Without the basis of Focus 2005, this program would not have been possible.

• Next Adapt service conceptAccelerate and deepen Focus 2005

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Consequences for the client• Full attention towards clients• Wide variety of opportunities for contact: bankshops,

advisory branches, CCU, internet, call centers• Professionalisation individual channels• One customer profile in all channels• Clients choose channel themselves• Client gets rewarded for efficient use of channels

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Financial consequences• Restructuring provision of approx. EUR 200 mln (other

costs through P&L)• Net cost savings of EUR 400 mln as of 2004, including

EUR 160 mln on account of Focus 2005 • Improvement Efficiency Ratio by 8%• Economic Profit to double in 4 years’ time

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Consequences for employees• Closer to the client: no mixture of Sales and Operations

activities• New competences profiles for new positions with more

specific requirements in terms of behaviour, knowledge and skills

• Working in professional lines of business

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Consequences employment• 6250 job losses (FTEs), including 2500 FTEs under

Focus 2005• At all levels

Realised by:• Natural attrition• Selected continuation temporary contracts• Less Temps • Mobility Units inclusive forced exit

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UnionsProgress so far:• Agreement with Labour Unions (7/5/2001)

– Upfront premium for leavers– 25% of all staff to be indicated as “key”– All ICT Staff to be indicated as “key” (Additional)– Selection for new positions on basis of competencies– Surplus staff after 2 selection rounds in Mobility Units:

– Internal Labour Pool– Retraining for new, internal positions– Retraining + exit

– Selection of 25% (indicated as “key”) and ICT from 1 June to 1 September

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Unions - continued• Voluntary qualification Departure Premium 1 September -

31 December• Premium only payable on actual departure• Costs within budgeted figures• Subject to agreement on renewal Annual Labour Contract

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Staff Council• Major reorganisations subject to advice Staff Council• Advices expected by June 14• Indications exist advice will be positive, with managable

conditions attached

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Conclusions• Major reorganisations in NL are difficult• Two pre-conditions / potential deal-breakers have been

managed within budget and within time

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Progress so far• Preparation time for project until 1 July• Branch closures to start by Autumn 2001

– Branch closures: 160 and 180 in resp. 2001 and 2002

• Implementation Schedule ready 18 June• All Interfaces between sub-projects & bottlenecks

identified by 18 June

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Financials

BU NL (in millions of euro's) 2000 2000 2001first quarter first quarter

Net Interest Revenue 2.382 569 491Net commisions 764 183 190Result from financial transactions 54 13 12Other Revenue 80 19 23Total revenue 3,280 784 716Operating expenses 2,561 589 621Operating Result 719 195 95Provision for loan losses 76 11 54Operating profit before tax 643 184 41Taxes 193 48 12Net Profit 450 136 29

31-12-01 1-5-01Fte's 28.610 28.369

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Financials• Revenues:Yield Curve

• Mortgage book: full effect early redemptions

-2%

0%

2%

4%

6%

8%

10%

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01

1-month euribor

10-year government bonds

steepness of curve

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Financials• Operating expenses rose by 5% compared to the first quarter

of 2000, in part due to:– wage increase awarded in accordance with the Collective labaour

agreement– higher profit sharing

• Provisioning levels have increased from EUR 11 to EUR 54 mln, mainly due to Foot and Mouth disease

• In comparison with 31-12-2000 Staff (fte) decreased with approx. 250 fte to 28.369

• Revamp management of the Netherlands: exit 40% of top 30

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Marketshares - client segment (Indicative)

• Corporate: 40%• SME’s: 25%• Retail/Individuals: 4,5 million accounts, approx. 17%

Marketshare

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Marketshares - products (Indicative)• Retail:

– Savings: 20%– Lending: 20%– Mortgages: 15%– Securities transactions: 25%

• Corporate:– Lending: 15%– Deposits: 30%– Electronic Banking: 30%

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Dutch Retail Banking Operations

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Cautionary Statement regarding Forward-Looking Statements

This announcement contains forward-looking statements. Forward-looking statements arestatements that are not historical facts, including statements about our beliefs and expectations.Any statement in this announcement that expresses or implies our intentions, beliefs,expectations or predictions (and the assumptions underlying them) is a forward-lookingstatement. These statements are based on plans, estimates and projections, as they are currentlyavailable to the management of ABN AMRO. Forward-looking statements therefore speak only asof the date they are made, and we take no obligation to update publicly any of them in light ofnew information or future events.

Forward-looking statements involve inherent risks and uncertainties. A number of importantfactors could therefore cause actual future results to differ materially from those expressed orimplied in any forward-looking statement. Such factors include, without limitation, the conditions inthe financial markets in Europe, the United States, Brazil and elsewhere from which we derive asubstantial portion of our trading revenues; potential defaults of borrowers or tradingcounterparties; the implementation of our restructuring including the envisaged reduction inheadcount; the reliability of our risk management policies, procedures and methods; and otherrisks referenced in our filings with the U.S. Securities and Exchange Commission. For moreinformation on these and other factors, please refer to our Annual Report on Form 20-F filed withthe U.S. Securities and Exchange Commission and to any subsequent reports furnished or filedby us with the U.S. Securities and Exchange Commission.

The forward-looking statements contained in this announcement are made as of the date hereof,and the companies assume no obligation to update any of the forward-looking statementscontained in this announcement.