Access to US Capital Markets: Opportunities in Challenging Times

Presented by Nuno da Silva, DR Head of Latin America &Jason Paltrowitz, DR Head of Global Capital Markets

October 20, 2009Financial Markets and Treasury Services Sector

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Section I.

BNY Mellon Overview

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Highlights of BNY Mellon

$20.2 trillion assets under custody and administration

$928 billion in assetsunder management

$11 trillion in outstandingdebt serviced

Strong financial ratings: S&P AA-; Moody’s Aa2; Fitch AA-

As of December 31, 2008

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Why is BNY Mellon Hosting this Seminar?

BNY Mellon knows the Level I ADR Universe and is fully committed to

its growth and development

BNY Mellon’s Experience with Level I Programs is Unparalleled

523 Clients77%

Level I Sponsored Program Market Share

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Section II.

Demystifying ADRs

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ADRs split the liquidity of my shares

ADRs are not needed anymoreLevel I ADRs are for small, unknown companies

A Level I will make my companie more visible

There is no demand for Level I ADRs

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Myth 1:

“ADRs are no longer necessary, because investors can invest in my local shares easily”

The importance of ADRs continues to grow

In 2008, investment and trading volume of ADRs reached record levels.

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US$ 4,4 trillion

ADR Trading Volume US$ Billions

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Myth 2:

“Level I ADRs are only for small, unknown companies”

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Many of the largest companies in the world have Level I ADR programs

Nestle Largest food company in the world

Volkswagen Largest auto company in Europe

BASF Largest chemical company in the world

Gazprom Largest Oil & Gas company in the world

Usiminas Largest steel producer in Latin America

JBS Largest meet producer in the world

Wal-Mart de Mexico Largest retail company

Level I ADR programs traded in the OTC market:

Myth 3:

“A Level I ADR program will enhance the visibility of our company in the US”

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There is a key distinction bewteen “access” and “visibility”

Access and Visibility:

ADR Characteristics Investor Relations

DTC SettlementSettlement in US$Quoted in US$Real time quotationsFamiliar brokerage and clearing

Broker conferencesRoadshowsMedia relations/advertisingOTCQXInvestor events

ADR PROVIDES

IR INCREASES

ACCESS VISIBILITY+

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Myth 4:

“There is limited demand for Level I ADRs, so it’s not worth the effort”

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New Level I ADR Programs received over US$ 1 Billion

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Through 1Q09, 700 new Level I ADR programs attracted over US$ 1 billion

3,078 programs

No. of ADR Programs

More than US$ 1

billion in 1Q09

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Myth 5:

“An ADR program will split the liquidity of my shares”

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Empirical evidence shows that ADRs increase share liquidity

The average positive impact to liquidity of local shares is 48%:

Hundreds of ADR programs were analyzed between 1980-2007

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Section III.

ADR Overview

In 2008, DR program trading and investment reached record levels.

Depositary Receipt Market Highlights

• 2008’s trading value reached $4.4

trillion in U.S. and non U.S.-listed

programs as well as OTC-traded DRs,

exceeding the record set in 2007

• Issuers from 16 countries completed 41

initial public offerings (IPOs) and follow-

on offerings in 2008

Annual DR TradingU.S.-Listed

0

800

1,600

2,400

3,200

4,000

4,800

'98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08

0

20

40

60

80

100

120

Value ($bb)

Volume (bb)

• At year-end more than 2,900 DR programs from 80 countries were available to

investors, up from 2,200 a year ago

In 2008, DR program trading and investment reached record levels.

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Depositary Receipt Market History

0

500

1,000

1,500

2,000

2,500

1930 '35 '40 '45 '50 '55 '60 '65 '70 '75 '80 '85 '90 '95 '00 2007 2008

Tota

l N

um

ber

of

DR

Pro

gra

ms

Source: BNY Mellon; December 31, 2008

2003 to 2007 - Markets Rebound and Grow

Falling U.S. dollar, low interest rates drive DR prices

International equity markets outperform and U.S. investors follow – rise of BRICs

Depositary banks increasingly act as consultants

2001 to 2002 –Markets Consolidate

Technology bubble implosion

Corporate Governance reemphasis (Enron, WorldCom)

Greater demands placed on a depositary banks

1990 to 2000 – Explosive Growth in the DR Market

Structural changes, decimalization and tighter spreads

DRs used in privatizations, capital raisings and M&A

Depositary role largely administrative and operational

1930 to 1989 –DR Market largely unsponsored and investor driven

Depositary role totally administrative

and operational

2008 – Unprecedented Volatility

Regulatory change

Unsponsored growth – more DR supply

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All DR Programs From Latin America

206

46

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All DR Programs Global

241

276

273

1331

All DR Programs From Brazil

102

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BNY Mellon Depositary Receipt

•63% of Global DR Programs

•74% of Latin American DR Programs

•78% of Brazil DR Programs

Leader in All Relevant Markets

BNY Mellon J.P. Morgan Citibank Deutsche Bank

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Section IV.

Introduction to Level I ADR Programs

mericanA

Global

What Are Depositary Receipts?

• Can be used to list on stock exchanges around the world

• Can be used to raise capital (IPOs or follow-on offerings)

• Can be adapted to meet specific marketing needs

DRs

Negotiable securities issued by a depositary bank that represent a

non-U.S. company's publicly traded equity.

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Creating Depositary Receipts from Local Market

Instructs Brazilian Broker to Purchase

Ordinary Shares

Broker Purchases Ordinary Shares on Bovespa and Delivers Ordinary Shares to Local Custodian

DTCC Delivers DRs to Broker’s Custodian or Euroclear / Clearstream credits participants account

Local Custodian Takes Delivery and Confirms to Depositary

Depositary Creates DRs and Delivers to Depositary Trust & Clearing Corporation or Euroclear / Clearstream

T+3 Settlement

Brazilian BrokerU.S. Broker

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Depositary Receipt Benefits

Issuer Benefits

Access deep international capital markets

Increase share valuation and liquidity

Diversify and broaden shareholder base

Prepare for future acquisitions

Express international commitment

Heighten profile for products and services

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Depositary Receipt Benefits

Investor Benefits

Access over 2,000 DRs from 76 countries

Obtain quotes in U.S. dollars

Receive dividends in U.S. dollars

Clear and settle in globally recognized systems

Overcome foreign investment restrictions

Access improved information in English

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DRs Provide Access to Deep Capital Markets

- Brazilian Institutions

- Brazilian Retail

- US and European Institutions with presence in Brazil

144A/RegS

- Qualified U.S. Institutional Buyers (QIBs – with over $100 MM in assets) and European investors with clearing and settlement structures in Brazil

Level II & III DR

(SEC Registered & Listed)

- US and European Institutional Investors that prefer SEC-registered securities and familiar trading and settlement structures

- US Retail Investors

Bovespa

Level I DR (OTC)

- Sophisticated US Retail Investors

- US and European

Institutions that don’t have clearing and settlement structures in Brazil but seek Brazilian equity opportunities

- Mutual/Pension Funds that are required to hold U.S. DTC securities

- Mutual/Pension Funds that are required to hold U.S. securities

DRs will increase access to institutional and retail investors

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Introduction - Level I DR Program

Level I DRs:

Level I DR programs offer an easy method for reaching U.S. investors.

Level I DRs trade in the “Over the Counter” (OTC) market with prices published in Pink Sheets and on some exchanges outside the U.S.

A sponsored Level I program allows non-U.S. issuers to realize the benefits of issuing a U.S. publicly traded security without changing their reporting processes.

In order to establish a Level I program, the Company does NOT have to:

• Comply with the Sarbanes-Oxley Act.

• Reconcile to U.S. GAAP

• Change its current financial and disclosure reporting procedures. (U.S. SEC disclosures)

• Issue any new shares for the DR program

Size of the Market:

The sponsored Level I DR market is the fastest-growing segment of the DR business. Of the approximately 2,100 DR programs available more than 700 of these are Level I facilities.

OTC Depositary Receipts Enhance Valuation and Liquidity

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Value Added - Level I

0.02.04.06.08.0

10.0

-20 0 20 40 60 80 100 120 140 160 180 200 220 240 260

Event Trading Days

Val

ue R

eact

ion

(%)

Value Added - Level I

• After year one, OTC DRs raised ordinary

share liquidity by 23% on average

• OTC DRs increased ordinary share price

by an average of 10%

• BNY Mellon, both by its dominance

and scope of services, holds a

comparative advantage in driving both

issuer and investor value and increasing

the liquidity of local shares

The research resulted in a few conclusions relating to “Sponsored” OTC DRs:

Oxford Metrica, an Oxford University-based independent strategic advisor, conducted research on the DR marketplace which provided “empirical insight on the extent of the value and additional liquidity generated by DRs, and the key drivers of this process.”

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Level I DR Program

Wal-Mart de Mexico Mexico

Grupo Modelo Mexico

JBS Brazil

Cyrela Brazil Realty Brazil

Usiminas Brazil

MMX Brazil

Inv. Aguas Metropolitanas (IAM) Chile

Sivensa Venezuela

Cementos Lima Peru

Banco Hipotecario Argentina

ISA Colombia

Graña y Montero - GyM Peru

Sare Holding Mexico

Hipermarc Chile

International Level I Issuers Latin American Level I Issuers Country

Heineken Volkswagen

BNP Paribas Lukoil

SAB Miller Mitsubishi Corp.

Deutsche Lufthansa Nestle

Foster's Nintendo

Gazprom Societe Generale

adidas BASF

Rolls Royce Roche

L’Oreal BAE Systems

Air China Olympus

Zurich Financial Serv Air France-KLM

Clarins El Al Israel Airlines Ltd.

Sega-Sammy Antofagasta

Sharp

Many of the world’s largest and most respected companies currently have sponsored Level I ADR programs trading in the U.S. OTC market.

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Establishment – Level I DR Program

Benefits:

Simple to establish and maintain No cost to the Issuer Minimal reporting No additional disclosure Access to broad and diversified shareholder base – European and U.S. institutions as well as U.S. retail Cost efficiencies for investors Creates shareholder value

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Establishment – Level I DR Program

Establishing a Level I DR Program is Easy:

A Level I DR program is easy to establish and does not require extensive management time or commitment. To establish a sponsored Level I DR program, three principal documents are required:

12g3-2(b) Information Exemption - Is the principal provision used by Foreign Private Issuers to claim exemption from U.S. registration and reporting requirements.

Deposit Agreement - A standard service contract between the Company, BNY Mellon and DR holders which details the responsibilities of each party.

Form F-6 - This is a simple registration statement of DRs which includes the signatures of a majority of the Company's board of directors.

The Level I establishment process takes approximately 6 weeks, and can be achieved at no cost to the issuer.

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Establishment Timetable – Level I DR Program

Level I ADR Establishment Timetable

Week Party Responsible

Item 1 2 3 Appoint depositary bank and U.S. lawyers

Issuer

Confirm automatic 12g3-2(b) exemption compliance

Issuer & Lawyers

Prepare DR certificates, obtain CUSIP number, request DTC eligibility

Depositary, Issuer & Lawyers

Prepare / submit Deposit Agreement and form F-6 to SEC

Depositary, Issuer & Lawyers

NASD and DTC are notified of effectiveness

Depositary

DR trading commences Brokers, Investors Broker notifications are sent and posted on Internet

Depositary

Distribute announcements to financial community and media

Depositary* Above timetable refers to US portion of documentation. CVM approval generally takes 30 days

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Section V.

Market Demand for Level I ADRs

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Opportunity to Diversify Shareholder Base & Improve Liquidity

Expanded universe of potential “target” investors

Additional investment by larger institutions

Smaller, long-term institutional investors

Managed Account Managers

Retail Investors

Improve Liquidity

More investors potentially entering and exiting your stock/DR

Arbitrage traders – provide base of increased liquidity

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U.S. Investor Tiers

Tier Equity AUM DR Opportunity

$11.0 trillion invested by 77 U.S. firms.$2.2 trillion international of which $358 billion is in DRs (16% DRs).

$3.6 trillion managed by 163 U.S. firms.$628 billion international of which $173 billion is in DRs (28% DRs).

$2.2 trillion managed by 727 U.S. firms. $378 billion international of which $98 billion is in DRs (26% DRs).

$628 billion managed by 3,126 U.S. firms. $76 billion international of which $26 billion is in DRs (34% DRs).4 < $1b

2 $10b - $50b

3 $1b - $10b

Access to the Full DR Investment Market

1 > $50b

Larger institutions tend to invest in both the home market and DRs. Many smaller institutions use DRs to diversify internationally.

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Largest DR Holders and Level 1 Investments

Institution Name ADR Value ($mm) OTC Value ($mm) Share (%)1 Capital World Investors (U.S.) 15,938.5 2,252.7 14.12 Fisher Asset Management, LLC 7,959.6 2,202.4 27.73 Tradewinds Global Investors, LLC 8,293.3 2,033.3 24.54 Thornburg Investment Management, Inc. 4,632.9 1,347.7 29.15 Barrow Hanley Mewhinney & Strauss, Inc. 2,345.7 1,212.2 51.76 Barclays Global Investors N.A. 13,576.8 1,005.7 7.47 Wellington Management Company, LLP 13,670.6 804.4 5.98 Van Kampen Asset Management 4,093.4 697.1 17.09 The Vanguard Group, Inc. 2,005.0 676.3 33.7

10 BlackRock Investment Management (U.K.), LTD 4,868.1 576.7 11.811 Fidelity Management & Research Company 20,109.2 560.2 2.812 Delaware Investments 4,080.0 544.1 13.313 Aberdeen Asset Management, LTD (U.K.) 2,829.8 511.0 18.114 Brandes Investment Partners, LLC 10,081.4 487.2 4.815 Templeton Asset Management, LTD 2,413.2 444.7 18.416 AllianceBernstein, L.P. (U.S.) 10,909.5 441.7 4.017 Dodge & Cox 17,327.2 429.6 2.518 Schroder Investment Management (UK), LTD 1,985.2 318.7 16.119 Lazard Asset Management, LLC (U.S.) 5,622.2 251.7 4.520 Capital Research Global Investors (U.S.) 12,158.2 248.7 2.0

Of the top 50 institutions holding DRs, almost $18.5 billion is invested in Level I companies.

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Access to Additional Investor Segments

Retail (individual investors):

At the end of 2008, U.S. retail investors held $5.5 trillion in equities, either directly or through mutual funds.

Of this, $2.7 trillion were foreign equities.

Managed Accounts:

At the end of 1Q09, managed accounts assets under management was $675.5 billion

Some of the largest managed accounts institutions include:

Legg Mason ($32.7 billion AUM) Blackrock, Inc. ($29.4 billion AUM) Allianz Global Investors ($24 billion AUM) Lord Abbett & Co. ($13.1 billion AUM) Brandes Investment Partners ($12.4 billion AUM)

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Investor Demand for International Level I Programs

Director of Managed Accounts ($2.2 billion AUM):

“Yes, we would like to see more OTC DR programs. Anything that expands the universe of DRs is a good thing.”

Portfolio Manager ($26.6 billion AUM):

“We would like to see more OTC DRs. We manage private accounts, which in some cases are ADR-only, and in that case it would be beneficial to have them.”

Trader ($7.4 billion AUM):

“We would like to see OTC or listed DRs because it would benefit accounts that cannot hold ordinary shares. Also, it would help our non-QIB accounts with increased investment choices.”

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Sell-side

Sell-side will not initiate coverage because of a Level I program.

However, the sell-side can look positively upon the establishment of a Level I because of the liquidity upside:

When an issuer recently started trading OTC, UBS published a report stating that the move to an OTC DR program is a “positive for the stock as it should improve the liquidity of the shares.”

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BNY Mellon Support

25 global capital market experts (largest team in the industry)

Located in major business centers of New York, London and Hong Kong

Specialists help you navigate the capital markets efficiently and effectively

Increase exposure and liquidity of Issuer DR Programs Provide global best practice Investor Relations advisory services Leverage sell-side and buy-side intelligence and contacts Produce Investor Relations/Thought Leadership studies