(24/06/2005) Fortis details growth plans: Closer to the customer, stronger in Europe

Business plans provide details of the growth strategy and differentiate the approach to product offering, customers and markets. New long-term objectives reflect creation of shareholder value: Average annual growth of net profit per share of at least 10% (excluding capital gains realised on divestments) in the period 2005-2009. Focus on enterprises and entrepreneurs in European distribution network with the opening today of three new Business Centers in Prague, Budapest and Vienna. Building up European business in consumer credit. Selective expansion in Asia and North America: Merchant Banking launches activities in China (shipping finance), San Francisco (intermodal/containers) and Calgary (Oil & Gas). Insurance: Integration and selective growth in home market, export of competences to European and Asian markets. Fortis will today present the detailed plans of its different businesses. With this it details its growth strategy for 2005-2009 announced in January and the target of average organic growth of at least 10% per annum. It also outlines the expansion of its operations in an enlarged Europe and selectively in Asia and North America. 'Closer to our customers, stronger in Europe', summarizes Fortis CEO Jean Paul Votron. 'Fortis is indeed growing, becoming more international and more efficient, and, at the same time, is matching our customers' demands more closely. This is the only way we can achieve the ambitions of our company, our employees and our shareholders.' 'If you want to grow, you must be prepared to make targeted investments,' says Fortis CEO Jean-Paul Votron. 'We're investing in our teams, hiring new people for activities such as Personal Banking (part of Retail Banking), Commercial and Private Banking, Merchant Banking and our international insurance activities. We're investing in European infrastructure, building platforms for credit cards, international payments and one IT-system for all Business Centers. We're developing and improving our distribution network, opening 35 new Business Centers in Europe in the next 4 years, rolling-out the DirectService concept in the Netherlands, and planning to grow the number of branches in Turkey from 170 to 300. We're not only investing in new products and services, we're innovating the way we work: as one organisation following our customers .' Strategic and financial objectives for 2005- 2009 In addition to the strategic objectives presented in January, Fortis is today also translating its strategy into four new financial targets. Average annual growth of net profit per share of at least 10% (excluding capital gains realised on divestments), , driven by growth of the various banking and insurance businesses. Average operating leverage of more than 250 basis points. As Fortis is investing for expansion, this target has been introduced to ensure that investments lead to stronger revenue growth relative to underlying costs. Risk Adjusted Return on Risk Adjusted Capital (RaRoRAC) of at least 15%, a performance yardstick that reflects an activity's return taking into account the economic capital it requires and the average, statistically anticipated level of credit losses over time. Stable and growing dividend. A strongly developed performance management process will closely monitor progress of these targets on the basis of a detailed set of performance indicators (KPIs or key performance indicators). The strategy explicitly states that by 2009, 30% of net profit must be contributed by activities outside the Benelux region, focusing on the enlarged Europe and selective markets in Asia and North America. Hence, Fortis will look at interesting acquisitions - in addition to 10% organic growth - in line with its strategy, the general growth targets and based on strict investment criteria. The businesses will lead growth You will find a summary of the detailed plans on www.fortis.com. Below is a short description of each business. Retail Banking, banking for private individuals is approached in different ways in the different countries of operation. In the countries where Fortis is market leader, sales efforts will be intensified and differentiated as is for instance being done with personal banking. In markets where Fortis is a smaller player, it will concentrate more on certain segments and products as a challenger. In growth markets scale will be targeted, e.g. the expansion of the network in Turkey from 170 to 300 offices. Revenue growth in Retail Banking will be generated from increased sales productivity, further expansion of personal banking, increased customer satisfaction, the development of a European platform for consumer loans (starting from the current four million credit card holders) and possible further international expansion. By 2009, at least 13% of revenue in Retail Banking will be contributed by activities outside the Benelux (now 5%). Costs will remain firmly under control, among other factors through ongoing automization of daily transactions and improvement of electronic channels such as PC-banking. Commercial and Private Banking, banking for medium-sized companies and high net-worth individuals (often entrepreneurs and company owners), will accelerate the expansion of its European network of Business Centres between 2005 and 2009. Commercial banking aims to have fully covered the 25 European countries by 2009. To achieve this, it plans to open an average of seven new business centers every year, three of which will be located in new countries. Following the opening this year of centres in Hamburg, Zurich and Florence, new centers are being opened today in Prague, Budapest and Vienna, bringing the current presence to 14 European countries. Private Banking will base its expansion on this network. Customer teams will be reinforced and expanded. Specialised financial services such as Leasing, Trust Services, Factoring, Export finance will support this network (with Leasing and Factoring aiming for a place among the top five in Europe). Cost efficiency is being pursued further with joint offices for commercial and Private Banking, streamlining of sales processes, further expansion of a single IT platform in all Business Centers and centralization of back-offices, such as those for leasing and factoring. Merchant Banking, is active in a large number of countries and has a diversified customer base consisting of large companies and institutional investors. Merchant Banking combines (1) market leadership in the Benelux (and a smaller position in Ile de France) with (2) a strong position on a European or world scale in specific product or customer niches with growth perspectives (e.g. Shipping finance, Commodities, project finance, structured credits), which account for approximately 45% of revenue. Merchant Banking will increase its revenue through (1) accelerated cross-selling to major customers, the majority of which are investment-grade, by means of an integrated approach; (2) further expansion of a number of specific product niches and customer sectors, based on selective product development (e.g. expanding corporate finance in shipping, derivatives trading in commodities); and (3) further expansion in the US and Asia by following the major and specific customer sectors. Merchant Banking will also keep costs under control by further integration of support processes, full implementation of the planned IT architecture (e.g. integration of all front and back office tools worldwide), and further consolidation of clearing and fund administration activities. Insurance Belgium is continuing the tie-up of Fortis AG and FB Insurance, which will be joined into one legal entity in 2006 to become the largest insurer in Belgium. The difference in market approach between the broker and the banking channel will be continued, while non-channel specific activities will be amalgamated. This approach will enable stable costs in real terms. Revenue growth will be generated both through the banking and the broker channel. Customer and distributor satisfaction - which are already high - will be improved even further where possible. Further expansion of the distribution cooperation with Bank van De Post to cover insurance products will also contribute to growth. Cost savings will be achieved by tuning and combining IT investments and by amalgamating support functions. A joint IT platform will, for instance, allow for an annual saving of 11% on the combined IT budget. Insurance Netherlands, Fortis's insurance operations in the Netherlands will round off the integration of three companies under the Fortis ASR brandname. The integration processes are on target and operations will be carried out under the new name from 1 October 2005. Additional revenue growth for Insurance Netherlands will be generated by a number of specific factors, such as the emphasis on disability insurance (an EUR 1 billion market opportunity), offering specific bank products through the intermediary, doubling sales through the banking channel and growth in collective pension contracts. The level of costs will stay flat from 2006 onwards, owing to the integration effort. Insurance International comprises Fortis's insurance activities in the United Kingdom, France, Luxemburg, Spain, Portugal, China, Malaysia and Thailand. In the past, a specific approach was used for each country. In countries where bancassurance is showing strong growth, Fortis has made successful joint ventures with local banking partners (e.g. in Spain, Portugal and Malaysia). In addition, Fortis has established joint ventures in Thailand and China, which not only aim at the banking channel, but also at other channels, such as agents. In the United Kingdom our insurance activities are among the best in terms of operating performance and non-life insurance is distributed through an extensive broker network. In France Life products are sold through intermediaries and an own agent network. In Luxemburg, mainly life insurance products are sold though brokers and bank alliances. Revenue from Insurance International will have to grow in existing and possibly in new markets. The focus for the current activities will be on expansion (e.g. electronic channels, member or affinity groups) and /or reinforcement (e.g. by training sales teams) of distribution channels. In addition to this, new products will be developed specifically for the country in question and customer demand. As far as entering new markets is concerned the focus will be on life insurance and pensions, as much as possible supported by forward distribution integration. Fortis organisation groomed for growth 'The businesses will be given room to grow', says Jean-Paul Votron. 'The organisation has been tuned to maximum support and pursuit of growth dynamics: the support functions will be managed centrally, including risk management, legal and compliance and progress of expansion plans is systematically pursued on the basis of growth targets and key indicators.' All Fortis support functions (information services, facility management & purchasing, operations, legal & compliance, human resources and risk management including lending) have been joined into one entity headed by Chief Operating Officer Herman Verwilst. By organising these functions better, support to the businesses will be more efficient and pro-active, and cost increases in this area can be reduced to a maximum of 2%. These initiatives will allow for an EUR 100 million cost saving in 2006, which by 2009 should have grown to an annual amount of EUR 200-250 million. Examples of cost savings are the creation of a single cross-border back office for securities handling, one infrastructure for settlement of international payments and one IT platform for all Business Centers worldwide. In addition, smartsourcing will be applied preparing an optimal location for support services in the different countries where Fortis operates. Human Resources plays a key role in supporting the above strategy. Businesses like Merchant Banking and Commercial and Private Banking are planning to take on new staff, but jobs will be discontinued at the same time, owing to elimination of duplicate tasks in support functions. HR will monitor performance more closely and will continue to develop tools for performance management. 'These initiatives all contribute to Fortis operating as one company,' adds Jean-Paul Votron. 'In addition to providing excellent services, a strong, recognized brand is the best guarantee for carrying out our core business. To achieve this, we will take the first concrete steps in our re-branding operations - BGL, Disbank and Fortis ASR - in the autumn of this year. From 2006, a new house style will be gradually introduced in the different businesses as cost efficiently as possible.' Implementation started 'Needless to say we did not sit still while preparing to present our plans', says Jean-Paul Votron. 'The announced takeover of Disbank in Turkey ensures Fortis's presence in a large growth market. This year, we have already opened six new business centers including four in new countries. A large number of the plans presented today are already being put into action with the intention of producing the first results as early as this year.' The announced takeover of Disbank in particular is already being crystallised together with the very strong local management. While waiting for the closing of the takeover, preparations were started in the various areas of operation to enable Disbank in Turkey to grow into an essential component of Fortis's strategy in the enlarged Europe. In practical terms, this means that Disbank will be marketed under the Fortis name from November 2005. Jean-Paul Votron's closing comments: 'A lot is expected from our employees, but they are also given the opportunity to be part of the exciting growth process of a European financial services company. These plans define our growth strategy with the challenge of continuing to anticipate and react to our customers' needs, our competitors' moves and the opportunities presented by the market.' Today, Friday 24 June Fortis is organising a press briefing in London at 9:30 GMT (10:30 CET) in which the Fortis top management will provide details on Fortis's plans. You can join the press briefing on www.fortis.com or by calling +44 (0) 207 784 1017 (Listen Only - United Kingdom) +31 (0) 20 713 2789 (Listen Only - The Netherlands) +32 (0) 2 400 6864 (Listen Only - Belgium) This afternoon Fortis is organising an analyst meeting at which the Fortis top management will provide details on Fortis's plans. You can join the meeting on www.fortis.com or by calling. +44 (0) 207 784 1004 (Listen Only - United Kingdom) +1 718 354 1152 (Listen Only - United States) +32 (0) 2 400 6875 (Listen Only - Belgium) Fortis is an integrated financial services provider active in the fields of banking and insurance. With a market capitalization of EUR 28.7 billion (31/05/2005) and around 51,000 employees, Fortis ranks in the top 20 of European financial institutions. In its home market, the Benelux countries, Fortis occupies a leading position which it aims to develop and bolster. Fortis is drawing on the expertise it has acquired in its home market to realize its European ambitions via growth platforms. Fortis also operates successfully worldwide in selected activities. In specific countries in Europe and Asia it effectively exploits its know-how and experience in bancassurance. Fortis is listed on the exchanges of Amsterdam, Brussels and Luxembourg and has a sponsored ADR programme in the United States. More information is available on www.fortis.com

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