0 candido bracher executive vice-president august 25 th 2003

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Candido BracherExecutive Vice-President

August 25th 2003

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Banco BBA Creditanstalt

Itaú Corporate Bank

Negociations to Create Banco

Itaú BBA • Basic Concepts• Structuring the Bank

Summary of Structure and Market Position

Challenges and Opportunities

Financial Highlights

Table of ContentsTable of Contents

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Banco BBA CreditanstaltBanco BBA Creditanstalt

- Founded in 1988:

Internationally respected foreign shareholder

Bank executives with wide experience in Brazilian markets

Net worth of US$20 million

50/50 share in total capital

Brazilian shareholders with 66% of voting capital

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Philosophy:

Wholesale Bank

Focus on a limited number of corporate clients

Objetive: quality relationships

Highly qualified professionals

Deep knowledge of corporate clients

Frank dialogue and consistent approach

Day-to-day products lead to structured transactions

Flat organization

Responsive and flexible attitude

Treasury and the International Area are the basis for growth


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Banco BBA CreditanstaltBanco BBA CreditanstaltGrowth in Net WorthGrowth in Net Worth (U$ Mil (U$ Millionslions))

18 29 27 28 48 76

274325

413 429

538 508 514 552482

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

CAGR = 26.5%

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2%

43%

35%

22%

36%

45%

54%

25%

35%

22% 21%

33%

21%16%

23%

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Return on EquityReturn on Equity – ROE (%) – ROE (%)

AverageAverage = = 24.5%24.5%

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Publicly listed foreign shareholder

Full Disclosure

Starting 1994, Executives become shareholders in Bank –

Creation of BBA HE (Holding company owned by Executives)

Corporate Governance:

Declining Global appetite for Brazil risk (consequences for HVB)

Reason for exiting the country

Excellent Relations with Foreign Shareholder:

Availability of resources

Same philosophy as BBA

Continuation of growth

Search for a Replacement for HVB:


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Excellent results with corporate clients

Capital base, reputation, cash mnagement products

Highly qualified professionals and management

Strong and active trading desks

Wholesale bank part of the Itaú Conglomerate

Demand for greater focus exclusively on corporate clients

CorporateBank

Itaú Corporate BankItaú Corporate Bank

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Confidentiality of information

Careful planning

Same cultural values

18 Months of steady progress:

NegociaNegociations to Create the Banktions to Create the Bank

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Focus on quality of relationship Client’s interests before all else :

Maximization of profitability over the medium and long term

Equity stake for principal executives

Suitable results-based compensation

Flat and informal organization

Excellent work environment (external, not internal competition

– teamwork)

Open space floors (new installations)

Highly motivated staff:

Itaú BBA – Itaú BBA – Basic ConceptsBasic Concepts

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Banco Itaú Holding Financeira S.A.

Banco Itaú S.A.

100.0%

Banco Itaú BBA S.A.

95.75%

BBA HE Participações S.A.

4.25%

BBA Executives

Shared ControlShared Control

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Shared control: 50% HE / 50% Itaú Holding

Shareholders agreement provides for autonomous operation

Operationally independent:

Independent risk control areas

Risk and control consolidated into a 2nd level within Itaú Holding

Itaú Holding nominates Vice-president Financial Controls

Operations within pre-set limits

Risk Control (Credit, Market and Operating):

Close integration between Itaú BBA and Itaú Holding executives

Itaú participates in decisions on credit limits over a given amount

Itaú BBA executives to sit on Itaú Holding Commissions

Joint Decision-taking:

Itaú BBA – Itaú BBA – Structuring the BankStructuring the Bank

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Complete autonomy and focus on a functionality that combines:

Responsive decision-taking

Flexible service

Processing capability

Broad choice of products and services

Design of the bank’s functional structure and specific areas:

Selecting Target Market:

Definition of client universe (1000 largest economic groups)

Itaucorp 920 clients, BBA 630 clients (350 overlap)

Definition of staff

Structuring of the areas


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Asset Management

Private Banking

Fináustria – Automobile finance

Brokerage

Areas transferred to Itaú :


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Operates independently but consolidates its risks into Itaú Holding

Rapid responses and structured products for clients

Treasury Maintained:

The Complete Bank

Handles correspondent banking for the whole Itaú Group

International Area:

Itaú BBA as distribution channel for the products of Itaú Holding to corporate clients,

independent of the operating model:

Banco Itaú Europa

Banco Itaú Buen Ayre

Broker Dealer – New York

Asset Management

Pension Funds and Insurance

Retail services for client employees

Maximization of synergies with the Itaú Group:


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5

2

553

22

6

-

25

1

3

300

-

4

12

50

3

2

620

34*

11

-

43

Vice-Presidents

Management levelsto Client

# of Employees

Executive Share-holders

Regional Directors

Commercial Superintendents

Officers

(73% of the total)

CorporateBank


(*) 12 executiv(*) 12 executives invited to become shareholderses invited to become shareholders

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CHAIRMAN

Fernão Bracher

VICE- CHAIRMEN

Antonio Carlos Barbosa de Oliveira

Back Office, Financial Controls, Risk and Systems

Candido Bracher

Commercial, Capital Markets and HR Policy

Eduardo Vassimon

International, Products, Client dealing and Treasury

Executive Committee


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Name / Reputation

Solid Capital Base

Ability to Attract and Retain the Best Talents

Being independent enables differentiated HR policies to generate

motivation

Streamlined and informal structure makes for versatility and

responsiveness

Broad range of products

Focus on creating value for shareholders

Summary of Structure and Market Summary of Structure and Market PositionPosition

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Moody’s – AAA (local)

Fitch – AA (local)

S&P – brAA (local)

Close integration and harmony make Itaú BBA an integral part of the Itaú Group

Summary of Structure and Market PositionSummary of Structure and Market Position

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Challenge overcome

Minimal loss of staff

Readily accepted by clients

Principal Challenge: Integration

Lacks the inertia of retail results

Builds its results anew each quarter

Ability to adapt to circumstances

Competitive in all market segments

Wholesale Bank

Challenges and OpportunitiesChallenges and Opportunities

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Improvement in credit quality

Lower losses and provisions

Higher volumes

Increase in Capital Markets operations

Compensating Factors

Falling spreads

Lower volatility reduces Treasury gains

Falling interest rates

Adverse Factors


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Maintain the high return on equity

Responsibilities

To fully exploit the potential for cross-selling

To multiply volumes and processing capacity

To apply creativity to undifferentiated products

Capital Market and M&A

Well positioned to grow with the market

Well developed structure for origination and distribution of

securities

Opportunities


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The operations of Itaucorp were incorporated on a preliminary basis in order to demonstrate approximately what Banco Itaú-BBA will be after all the migrations between segments have terminated. There are still adjustments to be made.Forecasts based on this exercise should therefore bear in mind the already mentioned risks and uncertainties as well as those that are beyond the control of the companies comprising the Itaú conglomerate (political and economic change, volatility in interest and exchange rates, technological change, inflation, financial disintermediation, competitive pressures on products and prices and changes in tax law).

R$ MillionPro-Forma Balance SheetPro-Forma Balance Sheet

LIABILITIESBanco Itaú-BBA

Pro FormaDeposits

Open market liabilities

Loan liabilities

Pass-through loan liabilities

Other liabilities

Deferred income

Capital

Balance Sheet at June 30 2003 ASSETS Banco Itaú-BBA

Pro Forma

Cash, Interbank placements and securities

Loans

Bad Debt Provision

Other Assets

Fixed Assets

TOTAL ASSETS

9,290

17,637

(574)

1,428

95

27,876

15,565

2,368

2,848

1,204

2,248

13

3,630 TOTAL LIABILITIES 27,876

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The operations of Itaucorp were incorporated on a preliminary basis in order to demonstrate approximately what Banco Itaú-BB A will be after all the migrations between segments have terminated. There are still adjustments to be made.Forecasts based on this exercise should therefore bear in mind the already mentioned risks and uncertainties as well as those that are beyond the control of the companies comprising the Itaú conglomerate (political and economic change, volatility in interest and exchange rates, technological change, inflation, financial disintermediation, competitive pressure on products and prices and changes in tax law).

R$ Million

INCOME STATEMENT 1st Half of 2003Banco Itaú-BBA

Pro Forma

1,252

(174)

1,078

120

(276)

922

(415)

507

3,630

29.9%

Financial margin

Bad debt provision

Gross income from Financial Intermediation

Fee income

Administrative Expenses

Income before tax and participations

Income Tax and Social Contribution

Net Income

Net Worth

ROE (%)

Pro-Forma Income StatementPro-Forma Income Statement

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Highlights – Environmental Highlights – Environmental ManagementManagement

Environmental Policy

Drawn up and approved by the Board of the Bank since 2001

Officially approved by the IFC

Control of environmental risk in projects

Environmental preservation

Access to special credit lines (BNDES and others)

Large potential market (US$ 600 billion)

Improved risk-return ratio

26August 25th 2003

Candido BracherExecutive Vice-President

0 candido bracher executive vice-president august 25 th 2003

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