Bancolombia (CIB) Status Update summary

Rationale and structure of the corporate evolution

• A new holding company, Grupo Cibest, will be created to serve as the parent for all business lines, aiming to optimize business, strengthen capital allocation, and enhance value distribution, including enabling share repurchase programs not currently allowed for banks in Colombia.

• The transformation will not change operations, sources of income, profit generation, debt structure, or asset divestment, and clients, personnel, and suppliers will see no material changes.

• Shareholders will receive one Grupo Cibest share per Bancolombia share, with listings planned on the Colombian and New York Stock Exchanges.

• The new structure addresses financial inefficiencies and regulatory complexities by separating the regulated banking entity from other businesses.

• The reorganization involves asset transfers and mergers, with all assets remaining under Grupo Cibest.

Financial and regulatory impacts

• The structure is designed to be cost-neutral and tax-neutral, with no change to the location of publicly traded debt.

• The separation of goodwill and Central American operations from the Colombian bank will improve capital allocation efficiency and reduce FX sensitivity in solvency ratios.

• Pro forma Tier 1 ratio would be 10.3%, providing a 433 basis point cushion above regulatory minimums; total solvency would be 12.5%.

• Year-end Core Equity Tier 1 target for the Colombian operation remains at 11%.

• The holding company will have a double leverage ratio near 105% and a tangible common equity ratio around 92%.

Value distribution and capital flexibility

• The new structure enables share buybacks, with a proposed $300 million program subject to shareholder approval.

• Enhanced flexibility for raising capital and issuing debt through various entities, though no immediate plans to issue new debt.

• Dividend policy will continue to be based on leverage and capital targets, with potential for increased distributions due to capital efficiency.

• Double leverage for the holding company could increase to 115-120% while maintaining credit ratings.