Mr' Peter Tichansky, President and Chief Executive Officer

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(No Transcript)
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Welcome Mr. Peter Tichansky, President and Chief
Executive Officer The Business Council for
International Understanding
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Opening Remarks Mr. Andrew Langhoff, Managing
Director, The Wall Street Journal
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Opening Remarks Mr. Nicolino Spina, CEO, Valor
Economico
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PANEL 1
Brazil And The Global Crisis - How The Country Is
Overcoming The Current Turmoil
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PANEL 1
Brazil And The Global Crisis How The Country Is
Overcoming The Current Turmoil

• Moderator
• Mr. David Luhnow, Latin America Bureau Chief, The
  Wall Street Journal
• Mr. Henrique de Campos Meirelles, Governor, The
  Central Bank of Brazil
• His Excellency Guido Mantega, Minister, Ministry
  of Finance
• Mr. William Rhodes, Chairman, Citibank Senior
  Vice Chairman, Citi
• Mr. Roberto Setubal, Chief Executive Officer,
  Banco Itaú

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Brazil
How the Country is Overcoming the Current Turmoil
Henrique de Campos Meirelles Banco Central do
Brasil New York - March 2009
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Brazil at the Outset of the Crisis

• Fast, domestic demand-led growth
• Low leveraged, fully provisioned banking system
• Banking reserve requirements at BCB R 260
  billion (approximately US 160 billion)
• International reserves US 205 billion
• BCB's long position in FX futures market US 22
  billion.

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Domestic Demand and Supply
9.3
change, year-over-year
9.0
6.8
7.5
6.0

4.5
3.0
1.5
0.0
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
04
04
05
05
06
06
07
07
08
08
Domestic demand
GDP
Source IBGE
10
Brazilian Banking System Risk-Based Capital
Adequacy
20
18.5
18.0
17.8
17.4
18
17.3
16.7
16

14
12
regulatory minimum (11)
10
8
2004
2005
2006
2007
Sep 2008
2008
Source BCB
11
BraziliBanking System an Past Due Loans and
Provisions
7
6.4
6.4
6.2
6.0
6
5.7
5.2
4.8
5
4.6
4.5

4.2
4.1
4.0
4
3
2
2004
2005
2006
2007
Sep 2008
2008
past due loans (90days)/total loans
loan loss reserves/total loans
Source BCB
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Channels of Transmission of Global Financial
Crisis to Brazil
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Total Credit
(estimated, beginning of September/2008)
External (US 97 billion)
Domestic with external funding (US 47 billion)
Domestic (US 620 billion)
Source BCB
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Domestic Banking Credit with Foreign Funding
48
46.8
45
43.7
41.7
US billion
42
39.8
39
38.0
36
Jan 08
Mar 08
May 08
Jul 08
Sep 08
Nov 08
Jan 09
Source BCB
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Initiatives to Inject Liquidity in Foreign
Currency Market

• Sales of USD in spot market
• Sales of USD in repurchase agreement auctions
• Reduction of reserve requirements for banks
  acquiring USD with repurchase agreement
• Sales of USD swap contracts
• Export financing
• Authorization for BCB to engage in currency swap
  transactions with other central banks (US 30
  billion swap line with Federal Reserve)
• Loans to rollover external debt of Brazilian
  companies.

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Initiatives to Inject Liquidityin Foreign
Currency Market
Sales Payments
NET Export financing repos 20.3
8.0 12.3 Spot 14.5 TOTAL
26.8
(through March 12th in US billion)
Currency swaps (net) 32.4
Source BCB
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Liquidity in Foreign Currency Advances on
Export Contracts (ACC)
daily averages
rollover rates
210
100
95
194
90
85
161
170
154
146
77
76
80
75
US million

130
114
70
90
60
50
50
Oct 08
Nov 08
Dec 08
Jan 09
Feb 09
Oct 08
Nov 08
Dec 08
Jan 09
Feb 09
Source BCB
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Loans to Rollover External Debt of Brazilian
Companies
US
Libor 1.5 p.y.
359 days
US
US
company A
Debt
Contract A
Subsidiary Abroad
US
US
company B
Debt
Contract B
US
US
company C
Debt
Brazilian Bank
Contract C
collateral
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Loans to Rollover External Debt of Brazilian
Companies
US
Libor 1.5 p.y.
359 days
Subsidiary Abroad
Debt
Option 1
US
US
ID-US
Brazilian Bank
US
Debt
Option 2
Interbank Deposit US collateral
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Initiatives to Inject Liquidity in Domestic
Credit Market

• Reduction in reserve requirements R 99.8
  billion
• Incentives for banks (including public banks) and
  the deposit insurance fund (FGC) to acquire
  portfolios of small and medium size banks
  (approximately R 35 billion)
• Increase of funding to BNDES (Development Bank)
  and rural credit.

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Initiatives to Inject Liquidity in Domestic
Credit Market

• Results
• Normalization of liquidity conditions of the
  banking system, including small and medium size
  banks.
• After sharp fall in October, credit recovered
  gradually (although possibly more concentrated).

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Domestic Credit
Growth Jan 09/Sep 08
13.9
14
12
10
8

6
3.5
4
2.7
2
0
foreign banks
public banks
domestic private banks
Source BCB
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Domestic Credit Companies
Growth Dec/Sep 08
16.0
16
12
8.9
8

4.1
4
0
above R 10 million
below R 10 million
total
Source Sistema de Informações de Crédito/BCB
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Inflation and Targets
12-month trailing basis
18
market consensus
15
12
2008 5.90
2009 4.52
9

6
3
0
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
03
04
05
06
07
08
09
10
Source IBGE and BCB
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Real Interest Rate
360-day rate deflated by expected inflation
18
16
14
12

10
8
6
5.3
4
Jan 03
Jan 04
Jan 05
Jan 06
Jan 07
Jan 08
Mar 09
Source BMF Bovespa and BCB
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PANEL 1
Brazil And The Global Crisis How The Country Is
Overcoming The Current Turmoil

• Moderator
• Mr. David Luhnow, Latin America Bureau Chief, The
  Wall Street Journal
• Mr. Henrique de Campos Meirelles, Governor, The
  Central Bank of Brazil
• His Excellency Guido Mantega, Minister, Ministry
  of Finance
• Mr. William Rhodes, Chairman, Citibank Senior
  Vice Chairman, Citi
• Mr. Roberto Setubal, Chief Executive Officer,
  Banco Itaú

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Itaú Unibanco Banco Múltiplo S.A.
Brazil Global Partner in a New Economy Roberto
Egydio Setubal CEO March 16, 2009
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GDP Growth
Source IBGE
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Credit and GDP Growth
Source IBGE and BCB
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Currency Volatility
Sources ECB, Central Bank of Brazil. Volatility
is the standard deviation of the daily log-price
change in 90-day windows, annualized
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Return on Average Asset() - Brazilian Banks
Return on Average Asset
() Considers the median of Santander Banespa
Itaú Unibanco Bradesco Banco do Brasil and
Nossa Caixa. Source Economatica
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Assets/Stockholders Equity and BIS Ratio
Median
Total Assets / Stockholders Equity
BIS Ratio
Global Banks Citibank, JP Morgan, Bank of
America, HSBC, Santander, UBS, Credit Suisse and
BBVA Emerging Market Banks Standard Bank (South
Africa), ICICI (India), AkBank (Turkey) and ICBC
(China) Brazil Banks Itaú Unibanco, Bradesco,
Banco do Brasil and Santander ABN
Sources Bloomberg / Financial Statements
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Asset Quality
Median
Provisions / Loans
Provisions / Financial Margin
Global Banks Citibank, JP Morgan, Bank of
America, HSBC, Santander, UBS, Credit Suisse and
BBVA Emerging Market Banks Standard Bank (South
Africa), ICICI (India), AkBank (Turkey) and ICBC
(China) Brazil Banks Itaú Unibanco, Bradesco,
Banco do Brasil and Santander ABN
Sources Bloomberg / Financial Statements
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Return on Equity
Median
ROE
Global Banks Citibank, JP Morgan, Bank of
America, HSBC, Santander, UBS, Credit Suisse and
BBVA Emerging Market Banks Standard Bank (South
Africa), ICICI (India), AkBank (Turkey) and ICBC
(China) Brazil Banks Itaú Unibanco, Bradesco,
Banco do Brasil and Santander ABN
Sources Bloomberg / Financial Statements
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Itaú Unibanco Banco Múltiplo S.A.
Brazil Global Partner in a New Economy Roberto
Egydio Setubal CEO March 16, 2009
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PANEL 1
Brazil And The Global Crisis How The Country Is
Overcoming The Current Turmoil

• Moderator
• Mr. David Luhnow, Latin America Bureau Chief, The
  Wall Street Journal
• Mr. Henrique de Campos Meirelles, Governor, The
  Central Bank of Brazil
• His Excellency Guido Mantega, Minister, Ministry
  of Finance
• Mr. William Rhodes, Chairman, Citibank Senior
  Vice Chairman, Citi
• Mr. Roberto Setubal, Chief Executive Officer,
  Banco Itaú

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Foyer