FirstRand Limited - Transaction between FirstRand and Saambou

FirstRand Limited - Transaction between FirstRand and Saambou                   
FirstRand Limited                                                               
(Incorporated in the Republic of South Africa)                                  
(Registration number: 1966/010753/06)                                           
Share code: FSR                                                                 
ISIN: ZAE 000014973                                                             
First National Bank                                                             
A division of FirstRand Bank Limited                                            
Saambou Bank Limited                                                            
(under curatorship)                                                             
(Incorporated in the Republic of South Africa)                                  
Registration number: 1987/005437/06                                             
Transaction between FirstRand and Saambou                                       
1. Introduction                                                                 
The board of directors of FirstRand Limited ("FirstRand") and the curator of    
Saambou Bank Limited, under curatorship ("Saambou Bank") are proud to           
announce that agreement has been reached in terms of which FirstRand Bank       
Holdings Limited will acquire the shares in and claims against Saambou Bank     
("the transaction"). The transaction, with an estimated gross value of R12,8    
billion will, on finalisation, result in the FirstRand group effectively        
assuming the depositor liabilities and acquiring the residential mortgage       
loan book of Saambou Bank. Other assets and liabilities, including the micro-   
lending and asset-based finance books, are specifically excluded.               
2. Impact on Saambou Bank`s depositors and mortgage holders                     
As a result of the FirstRand group`s acquisition, and the resultant             
assumption of the depositor liabilities, Saambou depositors will have full      
access to the capital and interest of their deposits on the existing terms      
and conditions with effect from Thursday 23 May 2002. Mortgage bond holders     
will have access to any prepaid amounts on their mortgage bonds from the        
same date.                                                                      
3. Rationale for the transaction                                                
The co-operation of FirstRand with the curator and the public sector has        
resulted in a mutually beneficial transaction that will contribute to the       
ongoing stability of the banking sector and resolve the position of Saambou     
depositors and mortgage bond holders.                                           
The transaction provides the opportunity for the FirstRand group to increase    
its deposit - and mortgage home loans base.                                     
Together with First National Bank, the group`s market share of retail fixed     
term deposits will increase, with significant benefits expected from:           
economies of scale;                                                            
 improved productivity as a result of the utilisation of current capacity       
in First National Bank`s infrastructure; and                                    
 access to a sizeable new customer base, with significant opportunities for     
cross-selling First National Bank`s existing product range.                     
Saambou`s medium corporate deposit base will provide First National Bank        
with access to a further 2 300 medium corporate clients.                        
Together with the acquisition of the NBS homeloan book in March 2002, the       
transaction will increase the FirstRand group`s market share to                 
approximately 20%, with access to an additional 60 000 clients to whom          
existing products can be marketed.                                              
The transaction is in line with FirstRand`s cohesive growth strategy and        
will provide further opportunities to service customers through its             
integrated financial services model.                                            
4. Salient terms of the transaction                                             
FirstRand will purchase the shares in and claims against Saambou Bank from      
Saambou Holdings Limited ("Saambou Holdings") for a nominal amount of R1,00.    
FirstRand will propose a scheme of arrangement in terms of section 311 of       
the Companies Act (1973) between Saambou Bank and all its creditors,            
contingent or actual, other than depositors ("the scheme"). In terms of the     
scheme:                                                                         
 all the assets and liabilities of Saambou Bank, other than the residential     
mortgage loan book and the deposit liabilities, will then be ring fenced        
into a receivership. Such assets and liabilities include, inter alia, the       
micro-lending and asset-based finance assets, infrastructure and staff of       
Saambou Bank; and                                                               
 creditors will receive 100 cents in the Rand for their claims as at the        
date of the sanctioning of the scheme.                                          
Subsequent to the scheme the assets and liabilities of Saambou Bank will        
comprise (based on current values):                                             
 the deposit liabilities - R12,8 billion;                                       
 the mortgage loan book - R4,9 billion (which excludes securitised mortgage     
loans of R2,5 billion already owned by FirstRand); and                          
 a claim against the receivership for R7,9 billion ("the claim").               
Performance under the claim will be guaranteed by the South African Reserve     
Bank ("SARB"). The claim will bear interest at a rate approximating the         
SAFEX call rate.                                                                
Receivers will be appointed to manage the assets under receivership with a      
view to ensuring optimal realisation, either through the collection of such     
assets, or the disposal of assets to interested parties.                        
5. Conditions and interim arrangements                                          
The transaction is subject to the following remaining conditions:               
 regulatory approvals associated with and consequential to the transaction,     
and specifically including the scheme;                                          
approval by the shareholders of Saambou Holdings to the disposal of the        
shares in Saambou Bank; and                                                     
 the sanctioning of the scheme by the High Court.                               
FirstRand, the SARB and the curator have agreed to implement an interim         
arrangement to give provisional effect to the transaction, subject to the       
fulfillment of the conditions.                                                  
The curator has agreed to assist in the administration of the Saambou Bank      
access points (branches, call centres and ATMs) to ensure an efficient          
handover to First National Bank and to minimise disruption for Saambou          
depositors and mortgage bond holders.                                           
Sandton                                                                         
17 May 2002                                                                     
Merchant Bank and Sponsor to FirstRand                                          
Rand Merchant Bank                                                              
A division of FirstRand Bank Limited                                            
Corporate Finance                                                               
Curator to Saambou                                                              
John Louw                                                                       
KPMG                                                                            
Date: 17/05/2002 10:55:00 AM Produced by the SENS Department