Relaunch of the Belgian finance place after the Brexit 24-04-2017 1 - PowerPoint PPT Presentation

Relaunch of the Belgian finance place after the Brexit 24-04-2017 1 BRU-3510-90017-11 (Belgian Finance Club)_Presentation_vf.pptx 1

Relaunch of the Belgianfinance place after the Brexit AGENDA Presentation of the strategic study • by Grégoire Tondreau , managing partner of Roland Berger Belgium Presentation of the conclusions • by Prof. Dr. Bruno Colmant , chairman of the BFC Panel discussion lead by Marc Lambrechts , journalist at L'Echo with: • - Luc Bertrand, chairman of Ackermans & van Haaren - Fabian Vandenreydt , Global Head of Securities Markets, Innotribe & the SWIFT Institute - Prof. Dr. Bruno Colmant , Executive Board Member de la Banque Degroof Petercam . BRU-3510-90017-11 (Belgian Finance Club)_Presentation_vf.pptx 2

The Belgian Finance Place Evaluation of competitiveness and recommendation Brussels, April 24, 2017

BRU-3510-90017-11 (Belgian Finance Club)_Presentation_vf.pptx 4

BRU-3510-90017-11 (Belgian Finance Club)_Presentation_vf.pptx 5

The Belgian Finance Place (BFP) is characterized by limited risk taking, resulting in lower economic development Characteristics of the Belgian Finance Place (BFP) [2015] Demographics & Economy Number of inhabitants (m) 11.2 Fiscal Capital Gross Domestic Product (EUR bn) 410 Policy allocation Dynamic Banking activity of the Number of established MFIs 112 Lower BFP Retail economic People employed in MFIs (FTE) 55,000 banking develop- Total size 1) of MFIs in Belgium (EUR bn) dominance 1,091 ment Limited risk of which BE MFIs (EUR bn) 591 taking Allocation of capital Bank deposits (EUR bn) 330 (80% of GDP) Asset Managers AuM (EUR bn) 160 (39% of GDP) What would be the benefits of shift of Flow to PE / VC (EUR bn) < 0.5 (0.1% of GDP) capital to riskier assets/investments ? 1) Size of MFIs in Belgium, represented by their balance sheets Source: Statbel, Febelfin, Beama, ECB, NBB, ONS Business Register, Roland Berger BRU-3510-90017-11 (Belgian Finance Club)_Presentation_vf.pptx 6

Following Brexit, banks are leaving the UK - They are however looking outside Belgium Observations Selected articles " Goldman Sachs considers 'Dozens of UK banks and 'UBS Said to Mull Moving Frankfurt move over Brexit" financial firms 'looking at moving London Investment Bankers to to Ireland '' Madrid" Bloomberg 09/11/2016 The Guardian 25/12/2016 Bloomberg 19/01/2017 "Lloyd’s of London picks Brussels for ' HSBC could base more staff in European base" Paris in case of ‘Brexit" Financial Times 30/03/2017 The Financial Times 26/06/2016 'Brexit: Banks consider ‘moving London staff to Luxembourg to get access to EU" The independent 19/10/2016 BRU-3510-90017-11 (Belgian Finance Club)_Presentation_vf.pptx 7

Lacking institutional attractiveness, Brussels is not a EU destination of choice for major (UK) banks & insurers in a Brexit triggered move Key selection criteria for (UK) banks Move confirmed Banks & Underwriters considering to move EU Target Frankfurt Citigroup, Goldman Sachs , UBS Institutional attractiveness Established Dublin Hiscox, Beazley, Fintechs NL SP LU FR IL DE financial center Paris HSBC Established Luxembourg Credit Suisse, Columbia Threadneedle, M&G Investments NL SP LU FR IL DE subsidiaries Madrid Goldman Sachs, UBS Amsterdam Multiple FinTechs Fiscal FR NL DE SP LU IL policies Brussels Lloyds of London Wage levels & Labour conditions SP FR NL DE IL LU Ranking among EU peers structure Dublin London Labour A'dam FR DE NL SP IL LU Frankfurt Frankfurt flexibility London Luxembourg Brussels Amsterdam Luxembourg Paris Paris Workforce availability Skilled/talented SP IL LU NL FR DE Munich workforce Dublin Liechtenstein Copenhagen International Madrid FR SP DE NL LU IL Brussels character Madrid Source: Reuters, Bloomberg, Roland Berger BRU-3510-90017-11 (Belgian Finance Club)_Presentation_vf.pptx 8

We assessed the competitiveness of the Belgian Finance Place along four dimensions, and identified issues and recommendations 1 2 3 4 Banking Capital FinTech & Regulatory & & Insurance markets Infrastructure Government > Limited international footprint > Stock market financing is not > Historically strong in > Government present in all > Abundant capital common infrastructure dimensions, but has limited > Low risk taking > Limited mobilization of > Leading banks collaborate impact Diagnose domestic capital into PE intensively with start-ups > Unwanted distortion in choice > Small share of wealth > No real FinTech champions of asset classes managed by domestic AM > Gold plating of EU standards > Limited experience in cross- > Lack of IPO-culture > Domestic market size > Regulatory/ fiscal insecurity border expansion > Fiscal disincentive to mobilize > Regulator is conservative > Unbalanced tax framework Key Issues > Gold plating disadvantage capital into equity > Lack of Governmental > No focused strategy > Limited ability to attract talent > Less supportive regulatory guidance & support climate for asset managers > Infrastructure lead not leveraged Structural issues: LMS (= Labour cost, Mobility, Stability of fiscal framework) > Create competitive > Find common interest > Create ecosystem for SME's > Build strategic vision & advantage in digitized towards stock market & startups to share ecosystem banking models financing innovation & talent > Rebalance fiscal treatment of dations Recommen- > Make shift to fee-based > Direct more money to PE and > Partner with universities financial assets business work on defragmentation > Aim for LT stability of fiscal > Build-up local AM framework > Infrastructure plan Source: Roland Berger BRU-3510-90017-11 (Belgian Finance Club)_Presentation_vf.pptx 9

1 Although no immediate opportunities from Brexit, the BE retail market shows above average profitability and lower leverage ratios Key characteristics of the Belgian banking & Insurance market High Strong 50% Average RoE ['10-'15] of assets controlled international profitability by foreign entities 7.8% presence on BE market 4.1% EU 14 50% 37% 7% 6% 4% Profitability Strong 4th 23% driven by deleveraging Fee share in income '15 21% interest 18% income 26% highest 16% 22% 15% 15% average net interest EU 14 margin (1,7%) 2010 2011 2012 2013 2014 2015 Leverage ratio '10-'15 1),3) Source: ECB data, HLEG report 2015, Roland Berger BRU-3510-90017-11 (Belgian Finance Club)_Presentation_vf.pptx 10

2 BE capital markets are characterized by low stock market financing, small domestic PE's and importance of foreign asset managers Characteristics of the Belgian capital markets A. Trading platforms B. Private Equity C. Asset management # average money AuM by country of fund / Total wealth owned 1,250 % of GDP, 450 invested per PE by citizens in 2013 2015 (m EUR ) 400 UK 0.22% 69% UK 67 350 0.66% France 30% 300 0.21% France 43 Netherlands 250 26% 0.38% 200 Germany 452 16% 0.21% Netherlands 20 150 0.49% Belgium 14% 219 100 148 0.07% Austria 92 Germany 8% 50 44 0.21% 0 Other UK France Germany Nether- Belgium 0.04% Belgium 19 lands 0.34% Currency and deposits 13% Money 0.01% 31% raised as 0.68% 0.57% 0.20% 1.42% 0.12% Austria 9 Equity 0.32% % GDP 18% Number of IPO’s 13’-15’ per country of listing PE money raised by country 6% 13% Debt securities Average money raised after 1st day of trading PE money invested in country 19% Investment funds in Million Euro ’13-’15 Insurance Source: Roland Berger, Invest Europe, EFAMA, ECB, Credit Suisse, NBB BRU-3510-90017-11 (Belgian Finance Club)_Presentation_vf.pptx 11

3 Belgium should leverage its historical leadership position in Financial Markets Infrastructure to foster local FinTech ecosystem Belgian FinTech market per segment Investing Crypto- FinTech & Asset Data currencies & FMI Management Blockchain segment Payments Insurance Management Crowdfunding Growth Potential Belgian High Medium Low Low Medium Low Low presence Belgian players ISSUES > Few established FMI's vs growing pool of start-ups > Growth potential limited by lack of a dedicated ecosystem and adequate guidance Source: Global FinTech Hubs Federation, De Tijd, company websites, Roland Berger Research BRU-3510-90017-11 (Belgian Finance Club)_Presentation_vf.pptx 12