Investment Seminars - Where next for Credit Union Investments? April/May 2014 Nationwide seminars with speakers Adrian Missen, BCP Asset Management and John McCormack, Head of Investments at le chéile Group.

1. Where next for
Credit Union Investments?

2. Where next for Credit Union Investments?
Gareth Fahey
Senior Investment Consultant
April 2014
2

3. • Established in 1969
• One of Ireland’s largest Independently owned Product Producers
− Over €1.5bn in assets under management
− €780m raised since start 2012
− Over 120 Credit Union Clients in last 3 years - €220m
− Working alongside key CU advisors - le chéile
• Key Investment Objectives:
− Provide compelling range of investment, income & deposit solutions
− Consistent focus on capital protection
− Conservative investment bias
− Diversified Portfolio approach
Key Information on BCP
3

4. Forging Key Partnerships
Investment
Advisors
Research
Tools
Custodians
Asset
Managers
4

5. 2014 Industry Awards for BCP
5

6. General Market Update
6

7. Ireland Inc.
7
• Irish unemployment now at its lowest since 2008 and below the
average for Europe
• Q1 tax-take up strongly on same period last year
• Personal and government debt, reliance on exports, austerity…….

8. Eurozone
• Recovery has impressed but significant headwinds continue
– Low inflation hurts growth and increases debt burden
– Jobless rate still near its peak of 12%
• Fall in Bond yields helps peripheral countries and their ability to borrow
• Irish yields at their lowest since Euro started 15 years ago
• Market does not fear a Euro break-up anymore but how will ECB react?
8

9. Outlook for Interest Rates
• Significant decrease in rates since 2008 to protect the global
economy
• Rate increases are dependent on solid economic growth outlook –
Not evident anywhere yet
• Banks are awash with cash and have no motivation to significantly
increase deposit rates
• Inflation continues to erode the real value of money on deposit
• Lack of options available for traditional low risk investors
• Short and medium term outlook is for continued low rate
environment
9

10. European 3yr & 5yr Interest Rates
10

11. Trends in Credit Union Market
• Capital security top priority
• Fixed Income top priority
• Low deposit rates encouraging greater product innovation
• Move towards active investment solutions (funds/indices)
• Customised Bonds – BCP can create tailored bonds at €2m+
11

12. BCP Q2 Product Range
12

13. BCP Fixed Income Plan 6
13

14. BCP Fixed Income Plan 6
• Joint Product between Investec Bank and BCP
• Open to Credit Unions Only
• Medium Term Note with 2 options:
– 3yr Plan paying 2.2% pa gross AER
– 5yr Plan paying 3.2% pa gross AER
• Credit risk exposure to Investec Bank plc plus Royal Bank of
Scotland
• RBS is an A rated bank that’s +80% owned by UK Government
• Security of Plan ranks equally with deposits
• Classified as Category 3 in CU Guidance Notes
14

15. BCP Fixed Income Plan 6
15

16. BCP Fixed Income Plan 6
Credit Exposure Royal Bank of Scotland Investec Bank plc
Rank Senior Unsecured Debt Senior Unsecured Debt
Market Cap £35.4bn £4.5bn
Credit Rating A- BBB-
Country UK UK
16
Term: 3 years 5 years
Close Date: 13th
June 2014 13th
June 2014
Start Date: 20th
June 2014 20th
June 2014
End Date: 20th
June 2017 20th
June 2019
Yield (p.a.): 2.20% 3.20%

17. Deposit Options
• Investec Deposit
– 5 Year Deposit
– 1.75% AER Fixed*
• Bank of Ireland
– 5 Year Deposit
– 1.67% AER Fixed
• Interest rates are indicative until traded
17

18. Credit Union Split Deposit
Absolute Return Bond
18

19. Bond Summary
• Bond tracks the performance of the Carmignac ‘Patrimoine’ Fund
• Fund invests in Equities, Bonds and Currencies
• Fund has €27bn in assets and a 24 year track record
• Fund has returned over 636% (CAR 8.7%) since its launch in 1989
• Capital Security provided by Investec Bank plc (Irish Branch)
• Classified as Category 2 in CU Guidance Notes
Key Features:
– 20% invested in a 3yr high yield deposit account paying 3.75% AER
– 80% invested in a 5 year 9 month Absolute Return Bond
– 80% participation in the fund performance
– 100% Capital Security from Investec
19

20. Past Performance since 1989
20
WARNING: Past performance is not a reliable guide to future performance

21. BCP Absolute Return Equity Bond
21

22. Bond Summary
• A capital secure Bond that aims to provide absolute equity returns with
low volatility
• 3 year 6 month term
• 100% Capital Security
• Underling Fund managed by specialist manager Marshall Wace
• Capital security provided by Bank of Ireland
• No maximum limit to returns earned
22

23. Performance vs MSCI World
23
Source: Bloomberg. Performance is shown from November 23rd 2007 to March 28th 2014.
Warning: Past performance is not a reliable guide to future performance.

24. Credit Union Matrix
Fixed Income
Plan 6
Credit Union
Absolute
Return Bond
Absolute
Return
Equity Bond
Investec
Deposit Plan
Bank of
Ireland
Deposit Plan
Capital
Security
Income N/A
Compliance
Analysis
Meets CU
Guidelines
24

25. Compliance Disclosure
25
Please refer to the Brochure and Key Features for full details. With regard to
the BCP Capital Secure Bonds investors may not encash prior to the maturity
dates. AER is Annual Equivalent Rate, CAR is Compound Annual Return.
Capital Security is provided by the relevant Bank. In the event of that Bank
failing to meet its obligations you could lose some or all of your money.
BCP SPLIT DEPOSIT ABSOLUTE RETURN BOND 9; WARNING: If you invest in this
product you will not have any access to 20% of your money for 3 years and 80% of
your money for 5 years 9 months.
BCP ABSOLUTE RETURN EQUITY BOND; WARNING: If you invest in this product
you will not have any access to your money for 3 years 6 months. WARNING: The
value of your investment may go down as well as up.
BCP FIXED INCOME PLAN 6; WARNING: If you invest in this product you will not
have any access to your money for 3 or 5 years.
WARNING: Past performance is not a reliable guide to future
performance.

26. Compliance Disclosure
26
Please refer to the Brochure and Key Features for full details. With regard to
the BCP Capital Secure Bonds investors may not encash prior to the maturity
dates. AER is Annual Equivalent Rate, CAR is Compound Annual Return.
Capital Security is provided by the relevant Bank. In the event of that Bank
failing to meet its obligations you could lose some or all of your money.
BCP SPLIT DEPOSIT ABSOLUTE RETURN BOND 9; WARNING: If you invest in this
product you will not have any access to 20% of your money for 3 years and 80% of
your money for 5 years 9 months.
BCP ABSOLUTE RETURN EQUITY BOND; WARNING: If you invest in this product
you will not have any access to your money for 3 years 6 months. WARNING: The
value of your investment may go down as well as up.
BCP FIXED INCOME PLAN 6; WARNING: If you invest in this product you will not
have any access to your money for 3 or 5 years.
WARNING: Past performance is not a reliable guide to future
performance.
John McCormack
Head of Investments

27.  Capital Protection with high quality, investment grade institutions
 Diversification across different institutions, maturities & investment asset classes
 Allowing credit unions to build portfolios & manage risk appropriately
 Offer the potential for better returns than short term cash deposits
 Completion of fact-find, statement of suitability, full transparency of fees
le chéile Investment Philosophy

28. Broad Selection of Counterparties

29. IIii
Previous Product Examples
High Yield Credit
Linked Note
 5% coupon p.a.
 Linked to iTraxx cross
over index
Credit Union
Income Plans
 3 year - 2.5% p.a.
 5 year - 3.5% p.a.
Irish Govt. Bond
Linked Note
 3 year – 4% p.a.
 5 year – 6% p.a.
Eurozone Inflation
linked Bond
 1.5% coupon p.a.
 Participate in annual
inflation figure

30. Current Deposit Based Options
• RaboDirect On-demand Deposit Account
 Instant access, paying 1% p.a.; Max €5m
• RaboDirect 30 day notice account
 Interest rate 1.10% p.a.; Max €1m
• RaboDirect 90 day notice account
 Interest rate 1.25% p.a.; Max €1m
• Bank of Ireland 5 Year Fixed Term Deposit
 Interest rate 1.67% p.a.
• Investec Bank plc 5 Year Fixed Term Deposit
 Interest rate 1.75% p.a.

31. Current Structured Product Options
Societe Generale
Fixed Return note
 4% coupon p.a.
 Linked to iTraxx
main index
BBVA EuroStocks
Bonus Note
 4 yr 11 mth term
 8% min return
 16% max return
Merrill Lynch Multi
Asset Strategy
Fund
Investec Income
Plan VI
 3 Year - 2.2% p.a.
 5 Year - 3.2% p.a.

32. Disclaimers & Important Information
This presentation is intended for regulated credit unions only.
All of the terms provided are indicative and subject to change.
The full terms will be provided in brochures in due course.
If you invest in these products, you may lose some or all of the money you invest.
Past Performance is not a reliable guide to Future Performance.
The value of your investment may go down as well as up.
le chéile Financial Services Limited trading as le chéile Group is regulated by the Central Bank of Ireland.
Registered in Dublin, Ireland under company no. 030391.

33. Q&A
Thank you