First National Bank division of First Rand Bank

First National Bank - division of First. Rand Bank Limited. An Authorised Financial Services Provider Commercial Banking Failure is not an option… Riaan Coetzer 26 October 2006

Agenda The Small Business Challenge Banks can Help Appropriate solutions for Small Business Failure is not an option… “If economic growth is our first joint project…. . then bringing the second economy into the mainstream of economic life must be our second” (Minister Trevor Manuel, 25 October 2005) Page 7 December 2004 | 26 Oct 2006 | First National Bank | A Division of First. Rand Bank Limited | An Authorised Financial Service Provider

The Small Business Challenge • • • 2/3 of actively trading businesses will close within the first 3 years (not all due to business failure) Lack of “entrepreneurial culture” in South Africa - Stripping out the businesses that trade for individual survival, as opposed to those that are driven to build and grow businesses – SA has a very poor record by international standards - Red tape - Legal and social framework still making failure a burden, rather than encouraging people to try even if they fail - Entrepreneurship still not the key aspiration of most people Difficult challenge to close the gap and ensure a higher survival rate: - Skill (and education) levels of entrepreneur – to run businesses - Inability to sell and access markets - Difficulty to access finance Page 7 December 2004 | 26 Oct 2006 | First National Bank | A Division of First. Rand Bank Limited | An Authorised Financial Service Provider

The Small Business Challenge And there’s more…. . • Globalisation and open trade regimes require our businesses to be increasingly competitive • Global trends are seeing a shift away from large conglomerates (down-sizing) being the key drivers of employment towards a reliance on small businesses – “Those countries that are best able to nurture and grow small business will be in the best position to drive growth and achieve high levels of employment” This requires alignment and strong linkages between established, large business (including the banks), government and emerging entrepreneurs Page 7 December 2004 | 26 Oct 2006 | First National Bank | A Division of First. Rand Bank Limited | An Authorised Financial Service Provider

Advice and Value Wanted by Small Business Relative Value of Value Added Advice / Support Areas (n=1259) Cash Flow Management Financial / Accounting Management Investment Planning Cash Management Solutions Economic Information Structured Finance / Debt Structuring Risk Management Company Credit Assessments VAT, Tax, Estate Planning Advice Industry Specific Info. Legal Advisory Services Marketing BEE Strategy / Structuring Advice BEE Partnering Support Export / Import Products / Services Advice Average Value Rating Source: Business Tracker Research November 2004; Q 10. 1

Banks Can Play a Key Role in Helping to Meet the Challenge New Approach: Helping businesses succeed From To • • • • Revenue-generating products Focus on faultless admin Understanding banking Advice help on product Bank as risk averse Monolithic approach Unequal relationship Client-specific / segment solutions for a specific situation Giving clients time and value-add Understanding customers Advice and business mentorship (grow and manage) Facilitator of business growth, while managing risk Hub for relevant complimentary networks Mutual benefit This must be balanced by some realities • Maintain a sound risk profile • Need to deliver shareholder value • Understanding of the economics and costs of a bank (including the costs of capital requirements, legislative compliance and infrastructure) Page 7 December 2004 | 26 Oct 2006 | First National Bank | A Division of First. Rand Bank Limited | An Authorised Financial Service Provider

New Business Solutions… Page 7 December 2004 | 26 Oct 2006 | First National Bank | A Division of First. Rand Bank Limited | An Authorised Financial Service Provider

Solutions to make sure our clients succeed… Current Customer Focus Areas: Ø Leveraged finance for smaller businesses: Underfunded businesses, acquisitions, buy-ins, buy-outs that require finance Ø BEE ownership: acquisitions, buy-ins, buy-outs Ø Franchising Team Ø Tourism desk Ø Smaller businesses than traditional focus areas – Micro Enterprises Ø Residential development property finance & affordable housing Better Serving our Customers and Adding Value: Ø SAB Taverners Solution Ø In-contact (up to date sms alerts) to better manage your business and security Ø e. Bucks for Business - loyalty scheme, rewards and discounts Ø Biznetwork - providing a comprehensive integrated platform for learning, networking, discounts and marketing small business Ø Guarantee funds - Umsobomvu Youth Fund (Progress Fund), Khula Enterprise Finance (DTI), Enablis Entrepreneur Fund (Canadian based) Ø FNB Taxi Association/Owners/Drivers Solution Page 7 December 2004 | 26 Oct 2006 | First National Bank | A Division of First. Rand Bank Limited | An Authorised Financial Service Provider

Failure is not an option… Page 7 December 2004 | 26 Oct 2006 | First National Bank | A Division of First. Rand Bank Limited | An Authorised Financial Service Provider

Thank You Page 7 December 2004 | 26 Oct 2006 | First National Bank | A Division of First. Rand Bank Limited | An Authorised Financial Service Provider