Current Report no. 29 (2017)

14 december 2017

Inside information - signing of the transaction agreement related to the acquisition of certain businesses _through a carve out_ of Deutsche Bank Polska S.A.

Bank Zachodni WBK S.A. _"the Bank"_ hereby informs that on 14th December 2017 it signed an agreement with Deutsche Bank AG _the "Transaction Agreement"_ pursuant to which it agreed to acquire an organized part of business of Deutsche Bank Polska S.A. _"DBPL"_ consisting of DBPL's retail banking, private banking, business banking _SME_ as well as 100% of shares in DB Securities S.A. _the "Acquired Business"_ _the "Transaction"_. The Bank's parent company Banco Santander S.A. is also a party to the Transaction.

On the same day, the Bank entered into a pre-demerger agreement with DBPL and Deutsche Bank AG which sets forth the framework for cooperation between the Bank and DBPL with the aim to execute the Transaction.

On 14th December 2017, the Management Board of the Bank decided to commence all necessary actions to execute the Transaction resulting from the Transaction Agreement.

After the Transaction, the Bank will reinforce its position as the third largest financial institution in Poland.

Pursuant to the Transaction Agreement, the branch network along with the external sales channels - vendors and agents of DBPL will also be integrated with Bank's current network. The asset management contracts will also be transferred along with the Acquired Business, which will allow the transfer of the open investment funds architecture. The corporate and investment banking business and retail FX mortgages of DBPL are not the subject of the Transaction and will remain in DBPL _the "Retained Business"_.

Acquisition of the Acquired Businesses will be made by a demerger _podział przez wydzielenie_ within the meaning of art. 529 § 1 item 4 of the Commercial Companies Code dated 15th September 2000 _the "Demerger"_.

Before the Demerger, the Bank will purchase from Deutsche Bank AG around 10% shares in DBPL, representing the same number of votes at the DBPL shareholders meeting _the "Purchased Shares"_.

After the acquisition of the Purchased Shares, DBPL and the Bank will file motions to the relevant registry courts to register the Demerger. The Parties agreed that the Demerger will be effected on the following principal terms:
_a_ DBPL will be the demerged company _spółka dzielona_ and the Bank will be the acquiring company _spółka przejmująca_;
_b_ in exchange for the Acquired Business being transferred to the Bank as a result of the Demerger, Deutsche Bank AG shall receive a number of shares in the share capital of the Bank _the "Demerger Shares"_ as at the Demerger Effective Date _as defined below_, calculated based on the agreed formula which will be the basis for the determination of the share exchange ratio in the Demerger Plan;
_c_ the share capital of DBPL will be decreased by the amount equal to at least the total nominal value of the Purchased Shares _the "Demerger Share Capital Decrease"_ on the date of the registration of such decrease by the relevant registry court _the "Demerger Share Capital Decrease Effective Date"_;
_d_ the Bank will increase its share capital by issuing the Demerger Shares as part of the Demerger to Deutsche Bank AG _the "Demerger Share Capital Increase"_; and the date on which the registry court enters the Demerger Share Capital Increase in the register shall be the "Demerger Effective Date";
_e_ as a result of the Demerger Share Capital Decrease all the Purchased Shares owned by the Bank will cease to exist on the Demerger Share Capital Decrease Effective Date and Deutsche Bank AG will become the sole shareholder in DBPL;
_f_ on the Demerger Effective Date, the Acquired Business will be transferred to the Bank;
_g_ the Retained Business will not be transferred to the Bank as part of the Demerger and will remain in DBPL; and
_h_ the assets and liabilities of DBPL shall be allocated between the Acquired Business and the Retained Business based on the terms of separation specified in the Transaction Agreement and the Demerger Plan which details are to finalized between DBPL and the Bank.

The initial estimated purchase price for the Acquired Business, including the shares of DB Securities S.A., amounts to PLN 1,289,799,000 and has been determined on the basis of the capital requirement for the value of the risk weighted assets of the Acquired Business _excluding DB Securities S.A. shares_ established based on financial projections as at a date close to signing the Transaction Agreement, at an agreed capital adequacy ratio. The portion of the initial estimated purchase price related to the value of DB Securities S.A. shares has been determined on the basis of its net asset value. Consideration for the Transaction will be paid both in cash by means of the acquisition of the Purchased Shares _equivalent to a 20% of the initial estimated price for the Acquired Business_ and in newly issued shares of the Bank _representing circa 2,7% of the Bank's share capital on a fully diluted basis_ by means of the described Demerger _equivalent to 80% of the initial estimated price for the Acquired Business_. From Agreement Date the initial estimated price for the Acquired Business _excluding DB Securities S.A. shares_ shall be adjusted based on the changes in the risk weighted assets and any changes of the volumes of loans, deposits, and assets under management of the Acquired Business _excluding DB Securities S.A. shares_ from the Transaction Agreement Date until the Demerger Effective Date above an agreed level. The portion of the initial purchase related to DB Securities S.A. shares will be adjusted based on the changes to the net asset value of DB Securities until the Demerger Effective Date. The final settlement of the purchase price will be made in cash. Following the referred Demerger, Banco Santander S.A. would hold circa 67,6% of the Bank's share capital.

Moreover, the Bank informs that completion of the Transaction is subject to regulatory approvals, including consents from the Polish Financial Supervision Authority and President of the Office of Competition and Consumer Protection as well as the necessary approvals from the General Shareholders' Meetings of the Bank and DBPL, signing of the Demerger Plan and fulfilment of some operational conditions. Completion of the Transaction is expected in 4Q 2018

Legal basis:
article 17 _1_ of Regulation _EU_ No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse _MAR_.