Investors meeting
Bucharest, November 10th 2016
Copyright © Patria Bank 2016
CONTENT
2
3 Operational model
Merger implementation status4
2 Strategy of Patria Bank post-merger
1 About the Merger
Appendix 1 - 25
1. About the MERGER
3
Copyright © Patria Bank 2016
1.1. Patria Bank – Group structure
4
Patria Bank Group comprises Patria Bank (former Nextebank) as parent of BancaComerciala Carpatica and Patria Credit IFN (non-banking financial services)
Patria Bank has started a merger process with Banca Carpatica, whereby BancaCarpatica shall absorb Patria Bank, estimated implementation date 31.dec.2016
GROUP STRUCTURE: PRE-MERGER
Emerging Europe Accession Fund UA
98.43%
Patria Bank
(Apr-2016)
100%
64.16% 100%
Banca Carpatica, listed on BSE
(Jan-2016)
Patria Credit IFN
(Oct_2015)
SAI Patria Asset
Management
100%
SAI Carpatica Asset Management
GROUP STRUCTURE: POST-MERGER
Emerging Europe Accession Fund UA
78%
Patria Bank SA*
(listed on BSE)
100% 100%
SAI Patria Asset Management
Patria Credit IFN
(Oct_2015)
* the legal merger process implies Banca Carpatica absorbing Patria Bank;
the merged bank shall remain listed on Bucharest Stock Exchange and
shall be named Patria Bank
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1.2. Patria Bank and Banca Carpatica – historical figures
Fast and solid Turnaround of Patria Bank (a small bank) over the last 2.5 years (2014-2016):
NPL ratio drastically decreased from 52% (2013) to 18% (2015)
Building new business generation capacity of 100+m Eur new loans/year, through theacquired Micro business line, new SME and Retail business lines Building newoperational model of automated operations & digital banking
Impact of “Darea in plata” law captured in 2016 cost of risk (limited impact)
Pre-merger Turnaround of BCC has just started in Q3 2016 through:
Headcount restructuring (-200 FTEs in 2016 compared to beginning of theyear; almost finalized)
Branch network optimization (-34 branches in 2016; an important partalready realized)
Revenues from workout: 4 mil. EUR, Sept.2016 YTD
PATRIA BANK BANCA CARPATICA
AuditedAudited
(restated)Audited Forecast
000 EUR 2013 2014 2015 2016
Liquid assets 537,545 392,510 426,144 387,174
Loans, net 273,404 238,640 175,483 141,022
Investments in subsidiaries 3,083 2,684 1,553 1,456
Other assets 91,952 83,887 72,252 71,445
Total Assets 905,984 717,721 675,432 601,097
Customer deposits 628,871 643,551 630,687 559,232
Equity 88,372 42,404 25,025 36,623
Net Banking Income (before cost of risk) 49,142 48,220 27,802 21,262
Cost of risk (5,635) (52,508) (10,257) (5,162)
Net Banking Income (after cost of risk) 43,507 (4,288) 17,545 16,100
OPEX (34,201) (32,473) (30,285) (25,903)
Net result 8,691 (45,687) (16,974) (10,946)
Cost/Income 79% -757% 173% 161%
Audited Audited Audited Forecast
'000 EUR 2013 2014 2015 2016
Liquid assets 113,004 153,028 129,648 84,763
Loans, net 60,834 67,329 120,064 131,312
Investments in subsidiaries 391 - 4,859 32,332
Other assets 16,757 11,151 14,034 17,952
Total Assets 190,987 231,508 268,606 266,359
Customer deposits 141,729 166,570 203,707 201,770
Equity 22,916 51,214 49,481 55,478
Net Banking Income (before cost of risk) 6,584 7,152 13,750 18,556
Cost of risk (3,986) 304 (1,369) (3,396)
Net Banking Income (after cost of risk) 2,598 7,456 12,381 15,160
OPEX (22,533) (13,678) (15,330) (17,345)
Net result (20,180) (6,426) (1,813) (2,260)
Cost/Income 867% 183% 124% 114%
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1.3. Merger valuations and share exchange
174 194
Book value Fair value
BCC (RON m)
238 262
Book value Fair value
PBK (RON m)
1.12 x book 1.10 x book
3.0566 share exchange ratio
• Independent (EY) valuations of the two banks as of May 2016 (Reference rate)
• Same valuation methods, unified approach
RON 156 m increase of BCC’s capital through the merger
• withdrawal requests from minority shareholders amount to 18.8% of capital
(market report published on Nov. 8th )
Copyright © Patria Bank 2016
1.4. Rationale for the Merger
7
To increase Scale:
Network of 85 Branches (national coverage, including a few 2nd tier towns)
Reaching a Total Assets size of ~1 bln. Eur, to 1.2% market share
Deposits remained very sticky - despite 3 years of reputational issues around the former main shareholder of BCC and its group the bank decreased with ~ 10% its deposits base. Over 87% of the deposit base is retail, very granular and with good maturity profile.
To improve profitability:
OPEX synergies of 23% from the Merger (43m ↘ 33m annual OPEX - 2017 merged /2016 cumulated) – after a significant OPEX decrease (-14%) in BCC in 2016 vs.2015 through turnaround measures & reorganization plans
the Merged Bank will break-even in 2017 after the merger (excluding the P&L impact of the project Posta Romana distribution project)
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1.5. Better size of the Merged bank starting 2017
Audited Audited Forecast Audited Audited ForecastForecast
consolidatedPlan
'000 EUR Dec.2015 May-16 Dec.2016 Dec.2015 May-16 Dec.2016 Dec.2016 Dec.2017
Liquid assets 129,648 84,577 84,763 426,144 410,486 387,174 477,523 279,767
Loans, net 120,064 122,548 131,312 175,483 157,769 141,022 275,614 434,154
Investments in
subsidiaries4,859 36,837 32,332 1,553 1,437 1,456 4,954 4,954
Total Assets 268,606 258,506 266,359 675,432 642,600 601,097 848,335 809,983
Customer deposits 203,707 197,005 201,770 630,687 584,511 559,232 751,041 697,456
Due from Banks 956 2,209 5,333 2 1 - 10,943 12,906
Equity 49,481 52,866 55,478 25,025 38,477 36,623 61,679 77,043
Patria Bank Banca Comerciala Carpatica Merged Bank
45%
47%
49%
Dec.2015 May-16 Dec.2016
26%
25%23%
Dec.2015 May-16 Dec.2016
32%
54%
Dec.2016 Dec.2017
Loans/TA by bank
Merged bank
Copyright © Patria Bank 2016
8.3
23.7 4.7
3.3
10.3
9.9 23.3
36.9
Forecast 2016consolidated
Merged 2017
Merger impact on operational income
Net fee income, trading incomeand other op. income
Recoveries from Write off
Net interest income after cost ofrisk
Total net operational income
30 26
43 33
4
17 10
OPEX BCC2015
2016 savings OPEX BCC2016
OPEX PBK2016
OPEX 2016(PBK+BCC)
Mergersynergies
OPEX 2017Merger*
Merger related operational costs savings
EUR mEUR m
9
1.6. Better performance of the Merged bank starting 2017
Only+ 10%
* Without the ‘Posta Romana’ project
Consolidated Merged Bank
Audited Forecast Audited Forecast Forecast Plan
'000 EUR 2015 2016 2015 2016 2016 2017
Net interest income 10,909 12,225 10,776 8,926 18,658 25,975
Cost of risk, net (1,369) (3,396) (10,257) (5,162) (10,331) (2,227)
Net interest income after cost of risk 9,539 8,828 519 3,764 8,327 23,748
Net Banking Income (after cost of risk) 12,381 15,160 17,545 16,100 23,325 36,948
OPEX (15,330) (17,345) (30,285) (25,903) (35,207) (37,476)
Gross result (3,021) (2,213) (15,269) (10,946) (12,877) (2,199)
Net result (1,813) (2,260) (16,974) (10,946) (12,924) (2,199)
Cost/Income 124% 114% 173% 161% 151% 101%
ROA -0.7% -0.8% -2.5% -1.8% -1.7% -0.3%
Patria Bank BCC
Bank would breakeven in 2017 if Posta Romanaproject impact excluded
** includes PL for PBK FY 2016 and 9 months BCC (Apr to Dec '16)
**
2. Post-merger STRATEGY
10
Copyright © Patria Bank 2016
2.1. Patria Bank – Shareholding
11
Merged Patria Bank shall have as majority shareholder, owning 78%, Emerging Europe Accession FundUA (“EEAF”), private equity fund owned whose main investors are IFI’s (EBRD, EIF, DEG, BSTDB)
EEAF is advised by Axxess Capital Partners, one of the most experienced Private Equity team inRomania, with extensive expertise in Financial Services, having previously managed 2 other banks, 4leasing companies, 5 other non-banking financial institutions
Performance in Financial Services: 56% IRR & 5.6 x Money
Value creation through:
• Fast-growth strategies• Innovative business models• Empowered managerial team• Entrepreneurial approach
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Significant growth opportunities are available in the Romanian market to increase financialintermediation & consolidate the local banking players
Penetration of Financial Sector is lowest in EU (59% banking assets /GDP)
50% of the population does not have a relationship with a bank, while 45% of the population lives in the rural area
over 80% of the banking assets are owned by foreign banks
Bank growth strategy based on 3 pillars
Classic Banking model – national distribution through 85-100 Bank Branches
3rd Party Distribution model – distribution through commercial partnerships with nation-wide distribution networks,such as the network of Postal Offices
Acquisitions opportunities – distressed bank acquisitions or portfolios - are expected to appear in the market
Business model focused on alternative distribution channels, automated operations & digitalbanking leads to a profitable mid sized bank (ROE of 12.8% in 2019)
2.2. Patria Bank’s Strategy
KEY POINTS
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2.3. The 3 strategic pillars for growth
Organic growth
Classic branch model (85)
3rd party distribution model
Strong growth of loan portfolio, CAGR 2016-2019
Retail, 49%
SME, 17%
Micro, 20%
3rd Party
Classic
2016 2017 2018 2019
Loans portfolio, gross (EUR m)661
350
423540
Micro
SME
Retail
2016 2017 2018 2019
Loans portfolio, gross (EUR m)
741
350
513
625
• Distressed banks• Lines of business• Performing portfolios
Acquisition opportunities
Corporate, APL and workout portfolio (BCC)
Copyright © Patria Bank 2016page 14
x2.3 times increase in productive assets (net loans), including through the 90m portfolio acquisition
+30% increase in Total Assets
x2,3 times increase in Own funds, considering a capital increase planned for Q3 of 2017
Increase by 2.9% of RoA (from -1.7% in 2016 to +1.2% in 2019)
Reduction of Cost Income ratio to 75% ( from 151% in 2016)
(above comparison between 2019 objectives for the merged bank are made against the 2016 consolidated balance sheet of the parent-PBK as suitable comparatives)
(the projections presented in the table to the left include the hypothesisand projections related to the strategic project of banking servicesintermediation through Posta Romana, for the period 2017-2019).
2.4. Strategic objectives for 3 years post-merger
Consolidated
EUR m Forecast Plan Plan Plan
2016 2017 2018 2019
Loans, net 276 434 540 646
Total Assets 848 810 911 1,096
Own funds 40 60 77 92
ROE -21.0% -3.4% 10.0% 13.3%
ROA -1.7% -0.3% 0.9% 1.2%
Cost/Income 151% 101% 79% 75%
Merged Bank
3. Operational model
15
Copyright © Patria Bank 2016 16
Digital Office + Client Enrollment
Main initiatives
IB / MB
Phone Banking
Completely renewed Products
Contact center
Mobile Salesforce Platform
Developments
Completely new Internet Banking and Mobile Banking platforms
Phone banking – new solution imbedded in the Contact Center platform
Digital Office (embedding biometric signature and OCR):
o Assisted Banking Platform for Clients Enrollment & transactions / in
branches and 3rd party outlets (postal offices)
o Online customer enrollment
Contact center -> expected to be fully deployed early 2017
Direct Salesforce Platform – expected to be launched in 2017
M-Pos transaction capabilities for mobile sales force and 3rd party outlets
Up-to-date and competitive Lending products offering (Retail, IMM and Micro)
Good retention of deposit customers
3.1. Initiatives for operational improvement
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Data center infrastructure
Main initiatives
Rebranding & new Branch Concept
SIEM
Branch network optimization
Developments
New branch concept covers external signage and interior
functional design
95% of data center infrastructure has been upgraded during 2016,
including improvements on security layers and infrastructure
A new platform for security incidents management in progress of
implementation
Optimization of branches network in terms of distribution and
customers servicing
3.2. Upgrades / investments
4. Merger Status
18
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Merger implementation status BCC – PBK
FINALIZED BCC – PBK Merger project has been delivered to Trade Registry in August 2016
October 5th, 2016 – BCC EGSM approved the merger
Withdrawing rights exercising period for BCC shareholders: October 5th – November 7th
Results of the withdrawing rights exercising: 3 shareholders (individuals) exercised their rights,these shareholders holding 414.699.946 BCC shares (18.83% of the bank’s equity)
November 8th 2016 – PBK EGSM approved the merger
WORK IN PROGRESS Work in progress to finalize the delivery of necessary documentation to NBR, for pre-approval of
the merger
NEXT STEPS NBR pre-approval of the merger
Delivery of merger documentation to Trade Registry, Court
Merger implementation – December 31, 2016
Delivery to FSA of the offering circular for capital increase of the bank, as result of the merger process
Legal registration of the merger – February 2017
4.1
5. Appendix
21
Copyright © Patria Bank 2016 22
Appendix 15
Key economic and banking indicators*
* Source: national sources, Eurostat, RBI/Raiffeisen RESEARCH
Bank assets (EUR bn,
2015)
Assets-to-GDP (2000)
Assets-to-GDP(2015)
CE 788 78% 97%
SEE 223 37% 79%
hereof, Romania 92 29% 59%
Romania growth rates continue tobe the highest in Europe
Financial intermediation still lagsbehind the region average
Foreign ownership in Romanianbanking sector is among thehighest in the region (>80%);opposite trend in the CE and SEEcountries
Consolidation actions in bankingsector will continue (a certain sizeand market share is essential for asustainable profitability)
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5 Appendix 2. Proforma BS and P&L for 2016-2019
Consolidated
Forecast Plan Plan Plan
''000 EUR 2016* 2017 2018 2019
Liquid assets 477,523 279,767 276,700 361,427
Loans, net 275,614 434,154 539,561 645,575
Other Assets 95,199 96,062 95,073 88,710
Total Assets 848,335 809,983 911,335 1,095,713
Customer deposits 751,041 697,456 789,908 959,845
Total Liabilities 786,656 732,940 826,180 998,463
Equity 61,679 77,043 85,155 97,249
Net Banking Income (before cost of risk) 33,656 39,175 57,473 72,446
Cost of risk (10,331) (2,227) (9,250) (16,035)
Net Banking Income (after cost of risk) 23,325 36,948 48,223 56,411
OPEX (35,207) (37,476) (38,193) (42,586)
Net result, (12,924) (2,199) 8,111 12,095
of which due to Posta Romana project 0 (3,155) (397) 2,652
of which Merged Bank (12,924) 956 8,508 9,443
* includes PL for PBK FY 2016 and 9 months BCC (Apr to Dec '16)
Merged Bank
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Disclaimer
The contents of this Presentation will not be interpreted or considered as a financial or fiscal opinion and any potentialinvestor may wish to use competent assistance from their legal and business advisers or from any other domain, for arelevant consultancy. This Presentation does not represent and cannot be used as a selling bidding offer, an invitation toacquire shares or request to purchase shares from the Issuer, coming from any person in any jurisdiction whereas such anoffer, invitation or request is illegal. The Presentation for investors cannot be used for, or in connection with an invitationto purchase shares from the Issuer. The Presentation offers the Management’s estimations and projections as regards theIssuer’s activity taking into consideration the financial market and banking evolution. The Management’s valuations shouldnot constitute the basis to substantiate an investment decision.