Merger of the property and public sector financing activities of

to form the new Eurohypo AG

Conference call for international analysts 6 November 2001 1 Introduction

2 Strategic positioning

Transaction objects, organisational structure, corporate 3 governance, integration

4 Synergies

5 Financial Data

6 The new Eurohypo – expertise, size, and clear focus on profitability 1 Introduction “The merger at a glance”

1

n , Deutsche , and are bundling their property- financing businesses, and are terminating their own activities in this area n The new institution is being created through a merger into Deutsche Hyp, and will be named Eurohypo n Including free float, the relative valuation of the mortgage is Deutsche Hyp 30%, Eurohypo 35%, and Rheinhyp 35% n The core capital ratio according to BIS (Bank for International Settlements) is 6%. In order to achieve this ratio, Commerzbank, and Dresdner Bank will contribute additional equity n The target return on equity will clearly exceed the current cost of capital of around 9% n Cost synergies will amount to around EUR120m p.a. beginning 2004

4 2001iF106 Goals of the new Eurohypo

1

n Leading provider of commercial-property financing in and Europe with mixed-bank status

n Expansion of presence in North America

n Increase in commission income through real estate and syndicated loan business

n Leading market position in servicing and refinancing of standardised home loans in Germany

n Public sector financing characterised by conservative risk policy and focus on higher margin foreign business

n Benchmark issuer in the Pfandbrief market and leading issuer of MBS

5 2001iF106 Transaction background

1

Market environment Mortgage bank environment

n Increasing competitive pressure in n Selective growth in foreign markets German property financing raises the n More intensive use of instruments need to consolidate for easing strain on balance sheet n Weak margin in German public n Restructuring of the real estate sector business activities of the three groups: n Real estate investment banking and mortgage banks as centre of foreign markets offer growth and competence of commercial-property margin potential financing

n Formation of partnerships between institutions of different banking groups to – significantly improve market position – realise synergy potential n Concentration of property financing expertise in one optimised unit

6 2001iF106 2 Strategic positioning Business model

2

Professional real estate customers/Commercial-property financing

n Quality edge through bundling of expertise n Broader range of financing through use of mixed-bank status n Stronger European focus and expansion in North America

Standardised home loans Public sector financing

n Market leader in servicing and n Expansion of higher-margin foreign refinancing business n Sales handled by agents and through n Conservative risk policy agency agreements with parent n Realisation of adequate financing companies and third parties volumes

n Concentration on higher-margin business and expansion of commission income business n Best possible risk diversification and realisation of economies of scale

8 2001iF106 Market leader in commercial-property financing

2

Sales performance in 2000 The new Eurohypo – share of (in EUR bn) foreign business in sales performance

18.4

4.2 41% 57% 68%

14.2 59% 8.2 43% 4.6 32% 2.0

(1) Eurohypo Hypo DePfa AHBR 1998 1999 2000 Vereinsbank International National

(1) Combined figure for Eurohypo, Rheinhyp, Deutsche Hyp, (real-estate centres); syndicated business shown separately Sources: Annual reports, VdH, Deutsche Bank, Deutsche Hyp, Rheinhyp, Capital Data Loanware

n The new Eurohypo is the leading German bank for commercial-property financing n Growth potential in the higher-margin foreign business – the new Eurohypo already has an excellent track record

9 2001iF106 Commercial-property financing – Operations in Germany 2

Currently: 25 branches in 10 locations In the future: 10 branches in 10 locations

Hamburg

Berlin Berlin

Dortmund Dortmund Düsseldorf Düsseldorf Leipzig Leipzig Cologne Cologne Frankfurt Mannheim Mannheim

Stuttgart Munich Munich

Deutsche Hyp Eurohypo Rheinhyp (8 branches) (8 branches) (9 branches)

n Combination of improved distribution and optimised cost basis n Branches to be merged by end of 2002

10 2001iF106 Commercial property financing – Foreign operations 2

Stockholm

London Warsaw Chicago New York

Paris Los Angeles

Zurich Vienna Budapest Madrid Milan Lisbon Barcelona

n Presence in the most important business centres in Europe and the USA

n Significant improvement in sales reach outside Germany

n All locations are maintained, while the number of branches will be reduced from 33 to 17

11 2001iF106 Growing commission income through established real estate investment banking 2

Development of commission income Business model (in EUR m)(1)

89.0

Real estate 69.3 investment banking 57.3 52.3 Origination/ Structured Advisory Funding 38.0 finance

n Senior Debt n Securitisa- n On-balance n Mezzanine tion n MBS/CMBS n Equity n Asset Sales n Private placements 1998 1999 2000 1H 2000 1H 2001

(1) Sum of Deutsche Hyp, Eurohypo, and Rheinhyp Source: Annual and interim reports, Commerzbank, Deutsche Bank, Dresdner Bank

n Focus on structured finance and securitisation n Strong starting position through established activities in London and the USA n Dynamic growth of commission income maintained

12 2001iF106 Syndicated loans

2

Syndicated real estate loans in Europe – Major transactions rankings in 2000 (US$ m) 1 Eurohypo (1) 3,979 Canary Wharf Whitehall MP 2 Royal 1,962 MILLENNIUM PARTNERS

3 1,842 EUR 1,600m EUR 431.6m US$ 400m 4 Société Générale 1,272 Eurohypo Eurohypo Dresdner Bank Real Estate 5 Crédit Lyonnais 1,014 Arranger Arranger Arranger

March 2001 January 2001 February 2001 (UK) (F) (USA)

(1) Combined syndicated volume of Deutsche Hyp, Eurohypo, and Rheinhyp Source: Capital Data Loanware, Rheinhyp, Deutsche Hyp

The new Eurohypo is market leader in Europe for syndicated real estate loans and also holds a strong position in North America

13 2001iF106 Standardised home loans – Distribution channels

2

Sales through agents Agency agreements

n Continuation of Rheinhyp model n Existing co-operation models with the parent banks to continue n No end-consumer business n Further agency agreements with third n Current key figures(1) parties are planned – approx. 2,400 independent sales agents – approx. 140 full-time staff – 20 offices – EUR 794,1m of new business volume(2)

(1) as of 30.06.2001 (2) 1st half year 2001

Reduction of acquisition costs per customer combined with significant new business volume

14 2001iF106 Standardised home loans – Servicing

2

Business model Structure

n “Factory-style“ processing and n Rheinhyp's subsidiary prompter AG administration of private home loans responsible for servicing business from third-party providers n Open platform – third-party providers can convert their fixed costs into n Own portfolios will be processed in variable costs through outsourcing two, instead of previous five, in-house service centres

n Currently over 425,000 loans in the combined portfolio

n Number of locations reduced to what is economically necessary

n Cost leadership through economies of scale

n Creation of additional, less volatile sources of commission income

15 2001iF106 Broadly diversified property loan portfolio(1)

2

Split by property type Regional split

Office Former West Other building Germany 11% 22% 54% Berlin GB/Ireland 11% Spain/ 35% Portugal Residential 19% Foreign – other countries 26% Trade buildings 16% 14% France Other 12% Residential Former East 13% Scandinavia Austria/ – owner Germany 10% Switzerland occupied 18% 27% 11% Total: EUR 90.0bn International portfolio: EUR 14.6bn (1) Deutsche Hyp, Eurohypo, and Rheinhyp combined, as of June 30, 2001 Source: Annual reports, Deutsche Hyp, Eurohypo, Rheinhyp n Active portfolio management n Broad diversification by property type and region n Rising share of foreign business n Further diversification possible through North American operations

16 2001iF106 Public sector financing

2

Total financing volume per 31.12.2000 The new Eurohypo – (in EUR Mrd.) Share of foreign business (2000) 138.3

112.4

65% 69.8 84%

42.9

35% 16%

Eurohypo(1) DePfa AHBR HVB Total New business Real Estate(2) International National (1) Deutsche Hyp, Eurohypo, and Rheinhyp combined, incl. Source: Annual reports, Deutsche Hyp, Rheinhyp foreign subsidiaries (Europäische Hypothekenbank S.A., Rheinhyp Europe plc) (2) Sum of Bayerische Handelsbank, NürnbergHyp, Südboden, and PBI (Pfandbrief Bank International, Luxembourg) Source: VdH, DePfa 2000 annual report, PBI 2000 annual report

n Strong position in public sector financing n Continuation of conservative risk policy n Further growth in higher-margin foreign business

17 2001iF106 Establishing as a benchmark issuer

2

Pfandbriefe – Volume outstanding Pfandbriefe – New issue volume (in EUR bn)(1) in 2000 (in EUR bn) 183.1

27.4

21.5 9.5 74.4 5.6 59.8 59.5 12.9 48.3 10.5 5.2 7.0 17.9 15.8 0.7 7.7 9.8 7.0

Eurohypo(2) AHBR DePfa HVB Real Hypotheken- Eurohypo AHBR HVB Real Hypotheken- DePfa Estate(3) bank Estate(3) bank in Essen in Essen Public sector Pfandbriefe Mortgage Pfandbriefe

(1) as of 31.12.2001 (3) Bayerische Handelsbank, NürnbergHyp, Südboden (2) Deutsche Hyp, Eurohypo, and Rheinhyp combined Source: Annual reports, HVB, Deutsche Hyp

Source: Annual reports Economies of scale

n Realisation of funding advantages through status as a benchmark issuer n Development of agency status

18 2001iF106 Reduction of capital burden through (synthetic) securitisation 2

MBS transaction volume of German Selected transactions banks (EUR bn)(1) Issuer Name Volume(3) Date

Rheinhyp Europa I EUR 1.336m Mar. 2000 6,3 Eurohypo 2000-1 EUR 500m Jun. 2000

2,3 Rheinhyp Europa II EUR 1.520m Apr. 2001

0,7 0,3 1.8 1.8 Eurohypo 2001-1 GBP 1.083m Aug. 2001

1998 1999 2000 2001 ytd Eurohypo(2) Total (1) as of 30.09.2001 (3) Volume including credit default swaps (2) Eurohypo and Rheinhyp combined, without credit default swaps Source : Eurohypo, Rheinhyp Source: Deutsche Bank, Global Markets Research

n Eurohypo and Rheinhyp have had a strong impact on the German MBS market

n In the future innovative structures will be used to reduce capital burden

19 2001iF106 Transaction objects, organisational structure, 3 corporate governance, integration Transaction objects

3

Commerzbank Dresdner Bank Deutsche Bank

Merger of Rheinhyp Deutsche Hyp Eurohypo mortgage-bank subsidiaries Total assets: EUR 78,3m Total assets : EUR 93,7m Total assets : EUR 71,4m Equity(1): EUR 1,0m Equity(1): EUR 1,4m Equity(1): EUR 1,4m Employees: 867 Employees: 845(2) Employees: 788

Change of name to

Eurohypo

Planned Commercial property business Deutsche Bank's share of transfer of of branches in Germany and Real estate investment property centres and REIB current parent real estate banking in USA banking of Dresdner Bank in structured finance team in company USA Europe activities

(1) Sum of subscribed capital, reserves, and funds for general banking risks (2) After reduction of workforce by 440 employees to be reflected in the P&L of fiscal year 2001 Source: Interim Reports 2001

n Merger into Deutsche Hyp to preserve mixed-bank status

21 2001iF106 Shareholder structure

3

Relative valuation of mortgage banks (including free float)(1)

Eurohypo Rheinhyp (2) 35% 35%

Deutsche Hyp 30%

(1) As of today (2) Including property financing units in Berlin and Hamburg and Commerzbank's new property financing business in Germany

n Prior to the merger, Commerzbank and Dresdner Bank will contribute additional equity of EUR500m and EUR280m, respectively n In the next few years, an increase of the company’s free float is planned. This will enable the new Eurohypo to raise equity via the capital market n To cover potential risks in the existing portfolio, parent banks are providing guarantees limited in terms of duration and scope

22 2001iF106 Organisational structure

3

2 representatives 2 representatives 2 representatives 6 employee Supervisory Board Commerzbank Deutsche Bank Dresdner Bank representatives Chairman of supervisory board: Dr. v. Harbou

Board of Managing Dr. v. Köller Knobloch Schuh Dr. Danne Plesser Rasche Directors(1) CEO Deputy CEO Deputy CEO

Corporate Corporate Risk Private Corporate Capital Divisions clients (Europe, clients management/ clients/ clients market/ excl. Germany (UK, USA) Credit, Market Servicing (Germany) Treasury and UK) Legal services and operational IT/ Internal and Public sector Internal auditing risks Organisation external financing Corporate Human reporting communications resources

(1) designated Board members

n Realisation of business model while structuring business lines and assigning departments

n Systematic separation of sales responsibility and risk management

23 2001iF106 High-quality risk management

3

Independent risk management right up to board level

Active management Efficient processes Active portfolio Strong equity basis of market risk and instruments management

n Value at risk and n Internal rating n Diversification for n Active manage- sensitivity-based system credit optimising risks ment of equity risk management standing and and returns resources: n Conservative limits transaction) n All-inclusive – 6% core capital set for market risk n Lean, know-how- portfolio – 10%overall capital oriented lending management (according to BIS process – selective new rules) n Systematic business n Allocation of early warning – permanent equity through recognition of risk portfolio analysis risk-adjusted – modern control pricing n Constant analysis instruments of individual risks

24 2001iF106 Integration timetable

3

November 2001 Jan. 2002 April/May 2002 2nd half 2002 Mid-2003 Milestones Signing of heads of Due diligence AGM approval Entry into Entry into agreement completed from commercial implementation phase subsidiaries register

n Pre- n Realisation of measures Implementation paration of mea- n Monitoring of sures implementation

n Completion n Verification of of business & synergies and Conception organisation integration targets model n Implementation plan

n Con- n Con- n Completion of n Legal tribution tribution Transaction due diligence implementation REF(1) REIB(2)

2001 2002 2003 (1) Deutsche Bank’s real estate centres (2) Deutsche Bank’s Structured Finance team in London, Commerzbank’s Real Estate Investment Banking in New York, Dresdner Bank’s Real Estate Banking in the US

25 2001iF106 Integration structure

3

Steering committee 6 future members of Supervisory Board

Integration committee Future Eurohypo Board of Managing Directors

Integration office

Project groups according to business and function

Efficient and swift implementation of merger by 2003 based on a tight integration structure

26 2001iF106 4 Synergies Optimised cost base through realisation of synergy potential 4

30 Others 30 50

Others 10 IT 50

IT 40

140

Personnel 90 Personnel 70

Cost synergies Gross earnings Dissynergies Net synergies Restructuring costs synergies non-recurring in p.a. starting in 2004 2002 and 2003 n Net synergies of around €140m p.a. starting in 2004

n Annual cost synergies of around €120m correspond to 28% of the combined cost base(1)

n After two years, non-recurring restructuring costs of EUR170m will be covered by synergies

(1) Cost basis after Deutsche Hyp’s reduction of work force by 440 employees to be reflected in the P&L of fiscal year 2001

28 2001iF106 Cost synergies

4

Personnel IT systems

n Reduction of workforce by approx. 800 n All three merger partners use an SAP- employees forms a significant part of based system expected synergy potential n Agreement already reached on a n Staff reduction will be done under common system. As a result: economic and socially-acceptable – accelerated migration (completion considerations and in close co- mid-2003) at low cost, and operation with the staff council – realisation of high synergy effects n Through its focus on expertise and through reduction of redundancies international expansion, the new Eurohypo will be an attractive employer for qualified personnel

29 2001iF106 5 Financial Data Financial figures as of June 30, 2001

5 Deutsche Hyp Eurohypo Rheinhyp

Equity(1) (EURm) 1,354.0 1,446.3 999.9

Total assets (EURm) 93.7 71.4 78.3

Net interest income (EURm) 190.6 185.6 172.2

Net commission income (EURm) 2.2 13.4 -10.9

Operating expenses (EURm) 102.6(2) 60.4 59.6

Operating result after (EURm) 36.2 123.2 75.7 risk provisioning

(1) Sum total of subscribed capital, reserves, and funds for general banking risks (2) Including EUR 34.5m of restructuring costs

31 2001iF106 The new Eurohypo – expertise, size, and 6 clear focus on profitability The new Eurohypo – expertise, size, and clear focus on profitability 6

The new Eurohypo – the European property financing institution

Rising commission income

Higher margin Market leader in potential commercial-property financing

Leader in know-how Benchmark issuer and quality

Optimised cost base Improved risk position

33 2001iF106