Reference Form 2015

Rule 12g3-2(b) Exemption # 82-35186
Reference
Form 2015
Position 12/31/2014
„Updates
Version/Date
Sections
1 – 05/29/2015
2 – 06/24/2015
12.6., 12.7., 12.8., 12.10., 12.11., 12.12., 13.2., 13.3., 13.6.,
13.11 and 13.13.
3 – 08/06/2015
12.6., 12.7., 12.8., 12.10. and 12.12.
4 – 08/13/2015
11.1., 11.2., 15.1. and 15.2.
5 – 09/04/2015
15.2. and 15.3.
6 – 10/01/2015
12.7.
7 – 10/20/2015
12.6., 12.7., 12.8., 12.10. and 12.12.
8 – 10/28/2015
12.6., 12.7., 12.8., 12.10. and 12.12.
9 – 11/19/2015
11.1., 11.2., 12.6., 12.8. and 12.12.
10 – 11/24/2015
12.6., 12.8. and 12.12.
11 – 12/07/2015
12.6., 12.7., 12.8., 12.10. and 12.12.
12 – 12/10/2015
4.1., 4.2., 4.3., 4.4., 10.1., 10.4. and 13.13.
13 – 12/10/2015
4.1., 4.2., 4.3., 4.4., 10.1., 10.4. and 13.13.
14 – 12/21/2015
12.6., 12.8., 12.12. and 18.5.
15 – 01/05/2016
12.6., 12.8. and 12.12.
16 – 01/21/2016
4.1., 4.2., 13.2., 13.3., 13.11. and 13.13.
17 – 02/03/2016
12.6., 12.7., 12.8., 12.10. and 12.12.
18 – 02/15/2016
12.6. and 12.8.
19 – 02/18/2016
12.6. and 12.8.
20 – 03/02/2016
8.1., 15.1. and 15.3.
21 – 03/07/2016
11.1., 11.2. and 15.3.
22 – 03/11/2016
12.6., 12.8. and 12.12
23 – 04/01/2016
12.6., 12.7., 12.8. and 12.12
24 – 04/12/2016
8.1., 8.2., 12.6., 12.7., 12.8., 15.1. and 15.3
25 – 04/25/2016
8.1., 8.2., 15.1., 15.2. and 15.3
26 – 05/09/2016
12.6., 12.8., 12.10. and 12.12.
27 – 05/18/2016
8.1., 8.2., 11.1.,11.2., 15.1., 15.2., 15.3. and 19.3.
28– 05/24/2016
4.1.
1
Summary
SUMMARY
DEFINITIONS ......................................................................................................................................5
1. IDENTIFICATION OF THE PERSONS RESPONSIBLE FOR THE FORM’S CONTENT ...............................8
1.1 Statement by the President and by the Investor Relations Officer .................................................8
2.
AUDITORS ....................................................................................................................................9
2.1.
2.2.
2.3.
3.
SELECTED FINANCIAL INFORMATION ......................................................................................... 10
3.1.
3.2.
3.3.
3.4.
3.5.
3.6.
3.7.
3.8.
3.9.
4.
Main market risks to which Banco do Brasil is exposed ......................................................... 51
Market risk management policy ........................................................................................... 52
Changes in the market risks or in the risk management policy .............................................. 56
Other relevant information .................................................................................................. 56
ISSUER HISTORY........................................................................................................................ 58
6.1.
6.2.
6.3.
6.4.
6.5.
6.6.
6.7.
7.
Risk factors that may influence the investment decision ....................................................... 24
Eventual expectations of variation in the exposure to risks listed in item 4.1 ......................... 24
Relevant and non-confidential lawsuits, administrative or arbitration proceedings ................. 46
Lawsuits whose adverse parties are managers, controlling shareholders or investors ............ 48
Relevant secret proceedings, not disclosed in items 4.3 and 4.4. .......................................... 48
Recurring or related lawsuits, administrative or arbitration proceedings ................................ 49
Describe other relevant contingencies not covered by prior items ......................................... 50
Rules of the foreign issuer’s home country .......................................................................... 50
MARKET RISKS ........................................................................................................................... 51
5.1.
5.2.
5.3.
5.4.
6.
Principal balance sheet and income ..................................................................................... 10
Non-accounting measurements ........................................................................................... 10
Subsequent events to the last financial statements at year-end ............................................ 11
Policy of allocation of the results of the three last fiscal years ............................................... 11
Net income appropriation (BR GAAP) ................................................................................... 12
Dividends of retained income or reserves which were constituted in previous fiscal years ...... 13
Indebtedness level (IFRS) ................................................................................................... 14
Obligations by maturity and type of guarantee (IFRS) .......................................................... 14
Other relevant information .................................................................................................. 16
RISK FACTORS ........................................................................................................................... 24
4.1.
4.2.
4.3.
4.4.
4.5
4.6
4.7.
4.8.
5.
Regarding independent auditors, indicate: .............................................................................9
Total remuneration of independent auditors in the last year ...................................................9
Other relevant information ....................................................................................................9
Establishment of the issuer ................................................................................................. 58
Duration period .................................................................................................................. 58
Brief Historic ....................................................................................................................... 58
Registration date at CVM .................................................................................................... 60
Main corporate events of Banco do Brasil and its subsidiaries or associated companies ......... 61
Filing for bankruptcy ........................................................................................................... 72
Other relevant information .................................................................................................. 72
ISSUER'S ACTIVITIES ................................................................................................................. 75
7.1.
7.2.
7.3.
7.4.
7.5.
7.6.
7.7.
7.8.
7.9.
Summary description of activities developed by Banco do Brasil and its subsidiaries .............. 75
Information of each segment .............................................................................................. 76
Description of products and services ................................................................................... 79
Customers responsible for over 10% of total net revenues ................................................... 94
Relevant effects of state regulation on Banco do Brasil's activities ........................................ 94
Countries from which Banco do Brasil obtains relevant revenues ........................................ 118
Regulation in other countries ............................................................................................ 118
Significant long-term relationships ..................................................................................... 119
Other relevant information ................................................................................................ 124
8.
ECONOMIC GROUP ................................................................................................................... 132
8.1.
8.2.
8.3.
8.4.
9.
Economic group................................................................................................................ 132
Organization chart in accordance with item 8.1: ................................................................ 135
Operations of corporate restructurings that occurred in the group ...................................... 135
Other information that the issuer considers relevant .......................................................... 135
RELEVANT ASSETS ................................................................................................................... 139
9.1.
9.2.
10.
Non-current assets that are relevant for carrying out the activities ..................................... 139
Other relevant information ................................................................................................ 149
COMMENTS FROM THE EXECUTIVE OFFICERS ...................................................................... 150
10.1. The Directors should comment on:.................................................................................... 150
10.2. The Directors must comment: ........................................................................................... 177
10.3. Main impacts in the financial statements (IFRS) ................................................................. 191
10.4. Comments from the Executive Officers .............................................................................. 192
10.5. Critical accounting practices .............................................................................................. 198
10.6. Internal controls adopted to ensure the preparation of trustworthy financial statements ........ 204
10.7. Public securities offering ................................................................................................... 204
10.8. Material items not disclosed in the financial statements of Banco do Brasil .......................... 205
10.9.
Comments on each item indicated in section 10.8 ............................................................. 205
10.10. Main elements of the Banco do Brasil 's business plan ......................................................... 208
10.11. Other factors which had a material impact on operating performance .................................. 209
11.
PROJECTIONS ...................................................................................................................... 210
11.1.
11.2.
12.
Market forecasts ............................................................................................................... 210
Projections on the developments of indicators ................................................................... 212
SHAREHOLDER’S MEETING AND MANAGEMENT .................................................................... 215
12.1. Description of the administrative structure of Banco do Brasil ............................................. 215
12.2. Rules, policies and practices related to the general meetings.............................................. 230
12.3. Dates and newspapers of publication ................................................................................ 231
12.4. Rules, policies and practices related to the Board of Directors ............................................ 232
12.5
Arbitration clause in the bylaws for the resolution of conflicts ............................................. 233
12.6. Administrators and members of the Fiscal Council of Banco do Brasil ................................. 234
12.7. Members of the statutory committees, of the audit, risk, finan. and compe. committees ........ 239
12.8. Directors and members of the Fiscal Council ......................................................................... 253
12.9. Marital relationship, stable union or kinship up to second degree between .......................... 279
12.10. Subordinate relations, service delivery or control maintained between the issuer’s officers and:
279
12.11. Agreements made by board members ............................................................................... 286
12.12. Provide other information the Company deems relevant .................................................... 287
13.
MANAGEMENT REMUNERATION ........................................................................................... 292
13.1.
13.2.
13.3.
13.4.
13.5.
13.6.
13.7.
13.8.
13.9.
13.10.
13.11.
13.12.
13.13.
13.14.
13.15.
13.16.
14.
14.1.
Management compensation policy or practice .................................................................... 292
Management compensation charged to income ................................................................. 295
Management’s Variable Compensation............................................................................... 297
Share-based management compensation plan ................................................................... 299
Quantity of shares or quotas directly or indirectly held by administrators ............................ 300
Share-based management compensation charged to income ............................................. 301
Option-based management’s compensation ....................................................................... 302
Exercised options and delivered shares.............................................................................. 302
Brief description of share-based or option-based compensation .......................................... 302
Management’s pension plans ............................................................................................ 303
Additional information on the Board of Directors. statutory board and Fiscal Council ........... 304
Benefits for management upon loss of position or retirement ............................................. 305
Each body’s total compensation percentage charged to income .......................................... 305
Other amounts charged to income of BB as management compensation ............................ 306
Management compensation charged to income of related parties ....................................... 306
Other relevant information ................................................................................................ 306
HUMAN RESOURCES ............................................................................................................ 307
Description of Human resources of Banco do Brasil ............................................................ 307
3
Summary
14.2.
14.3.
14.4.
15.
15.1.
15.2.
15.3.
15.4.
15.5.
party
15.6.
15.7.
16.
Relevant change occurring in relation to the figures disclosed in item 14.1 ......................... 307
Remuneration Policies of the employees of Banco do Brasil ................................................ 308
Relations between Banco do Brasil and trade unions. ......................................................... 312
CONTROL ............................................................................................................................ 313
Identification of the group of controlling shareholders ........................................................ 313
Shareholders or group of shareholders with the same stake of 5% or above ...................... 313
Distribution of capital, as established in the last Shareholders Meeting (SM) ....................... 313
Organization Chart of the direct and indirect controlling shareholders ................................. 314
Shareholders' agreement filed at the head office or to which the controlling shareholder is a
314
Relevant changes in the interests of the members of the holding group and directors ......... 314
Other relevant information ................................................................................................ 314
TRANSACTIONS WITH RELATED PARTIES ............................................................................ 315
16.1. Rules, policies and practices of the issuer regarding the performance of transactions with
related parties .............................................................................................................................. 315
16.2. Additional information on transactions with related parties ................................................. 315
16.3. Additional information on each transaction or series of transactions mentioned in item 16.2 320
17.
17.1.
17.2.
17.3.
17.4.
17.5.
18.
CAPITAL............................................................................................................................... 353
Information on the capital ................................................................................................. 353
Issuer capital increases ..................................................................................................... 353
Stock splits, reverse splits and stock grants ....................................................................... 353
Capital decreases of Banco do Brasil.................................................................................. 353
Other relevant information ................................................................................................ 353
SECURITIES ......................................................................................................................... 354
18.1. Rights of each class and type of shares issued ................................................................... 354
18.2. Statutory rules that limit voting right of significant shareholders ......................................... 356
18.3. Exceptions and suspensive clauses related equity and political rights .................................. 356
18.4. Trade volume as well as higher or lower quotations of securities trade at stock exchange ... 356
18.5. Other securities issued ...................................................................................................... 357
18.6. Indicate the Brazilian markets in which the security is of Banco do Brasil will be admitted for
negotiation ................................................................................................................................... 375
18.7. Regarding each class and type of securities admitted for negotiation in foreign markets
appoint: ....................................................................................................................................... 376
18.8. Public offerings carried out by the issuer or third parties .................................................... 380
18.9. Public offerings of acquisitions by the issuer relative to shares issued by third parties ......... 380
18.10. Other relevant information ................................................................................................ 380
19.
19.1.
19.2.
19.3.
19.4.
20.
20.1.
20.2.
21.
21.1.
21.2.
21.3.
21.4.
22.
22.1.
22.2.
22.3.
22.4.
SHARE BUYBACK PLANS AND TREASURY SECURITIES .......................................................... 382
Share repurchase plans..................................................................................................... 382
Changes in securities held in treasury ................................................................................ 385
Information on securities held in treasury in the close of the last fiscal year........................ 386
Other relevant information ................................................................................................ 386
SECURITIES TRADING POLICY ............................................................................................. 388
Policy for securities trading of its issuance ......................................................................... 388
Other material information ................................................................................................ 389
INFORMATION DISCLOSURE POLICY .................................................................................... 390
Internal standards, regulations or procedures adopted by Banco do Brasil .......................... 390
Disclosure policy of material act or fact ............................................................................. 390
Management responsible for the information disclosure policy ............................................ 391
Other relevant information ................................................................................................ 391
NON-RECURRING TRANSACTIONS........................................................................................ 392
Acquisition or disposal of any material asset non-operating ................................................ 392
Significant changes in the method used by the Bank to conduct business ........................... 392
Relevant contracts entered into by BB and subsidiaries non-operating ................................ 392
Other material information ................................................................................................ 392
DEFINITIONS
For purposes of this Reference Form, the terms "we" and "our" and verbs in first person plural refers to
the Banco do Brasil, except different reference in this Document. The terms below have the meanings
assigned to them, unless different reference in this Document:
ACC
Accounting practices adopted in
Brazil
ACE
AGE
AGO
ANBIMA
Audit Committee
Banco do Brasil, Banco or BB
Banco Patagonia
Banco Votorantim or BVSA
Banking Reform Law
BB DTVM
BEP
BESC
BESCRI
BIS
BIS Agreement
BIS Ratio
BM&FBOVESPA
BNDES
BNDESPAR
Board of Auditors
Board of Directors
Board of Executive Officers
Brasil or country
Brazilian Government
BRB
Bylaws
CAGR ou TACC
Cassi
CDB
CDC
CDI
CEF
Banco Central do Brasil, Central
Bank, Bacen or BCB
Cetip
CMN
CNPJ
Cofins
Contribution Margin
Controlling Shareholder
CPF
CSLL
Advance Against Exchange
Accounting practices adopted in Brazil, as established in the Stock Corporations Law, rules
and regulations issued by CVM, and technical bulletins published by the Brazilian and the
guidelines issued by the Banco Central do Brasil (Central Bank of Brazil).
Advance against Draft Presentation
Extraordinary Shareholders Meeting – ESM
Shareholders Meeting – SM
Brazilian Financial and Capital Markets Association
Audit Committee from Banco do Brasil, in compliance with Resolution CMN 3198, May 27,
2004.
Banco do Brasil S.A.
Banco Patagonia S.A.
Banco Votorantim S.A.
Law 4595 of December 31, 1964.
BB Gestão de Recursos Distribuidora de Títulos e Valores Mobiliários S.A.
Banco do Estado do Piauí S.A.
Banco do Estado de Santa Catarina S.A.
Besc S.A. Crédito Imobiliário.
Bank of International Settlements
Set of prudential banking rules issued by the Basel Committee on Banking Supervision, in
order to give greater strength to the global financial system. Some of these rules were
adopted in Brazil (in some cases with adjustments and/or adaptations) by Resolution CMN
2099, from August 17, 1994, as amended.
International concept defined by the Basel Committee that recommends the minimum
ratio of 8% of Reference Equity (RE), as treated in CMN Resolution 3,444, of Feb. 28,
2007, as amended, and the risk weighted assets according to current regulations (Equity
Required Reference), as regards the CMN Resolution 3490 of Aug. 29, 2007, as amended.
In Brazil, the minimum rate is 11%.
BM&FBOVESPA S.A. – Securities, Commodities and Futures Exchange – São Paulo Stock
Market.
National Bank for Economic and Social Development.
BNDES Participações S.A. – BNDESPAR.
Banco do Brasil’s Board of Auditors.
Banco do Brasil’s Board of Directors.
Banco do Brasil’s Board of Executive Officers.
Federative Republic of Brazil.
Federative Republic of Brazil government.
Banco de Brasília S.A.
Banco do Brasil’s Bylaws.
Compound Annual Growth Rate
Fund for Assistance of Employees from Banco do Brasil.
Certificate of deposit, representative of fixed term deposit.
Consumer Credit.
Interbank Deposit Certificate.
Caixa Econômica Federal.
Central Bank of Brazil.
Cetip S.A. – OTC Derivative and Assets.
National Monetary Council (Conselho Monetário Nacional).
Company Tax Registry
Contribution to Social Security Financing.
It is the value that represents the contribution of the product, customer or result in the
formation of the result. It aims to identify the contribution portion of each product/service
or unit to cover the fixed costs and the formation of the BB’s results.
Federal Government, through National Treasury
Individual Tax Registry
Social Contribution on Net Income.
5
Definitions
CVM
Datacenter Complex
Dólar, dólar, dólar norteamericano ou US$
Economatica
Efficiency Ratio
Employees
Executive Directorship
FCO
Febraban
Federal Constitution
Fenaban
FGC
FGCN
FGHAB
Fundação Getulio Vargas or FGV
FI-FGCN
FI-FGHAB
Finame
Fitch
Free Resources
Funcafé
Government Market
IBGE
Ibracon
IFRS
IGP-DI
IGP-M
Independent Counselor
INPC
INPI
INSS
IOF
IPCA
IRPJ
ISSQN
KPMG
Large Companies or Corporate
Clients
Management
Securities and Exchange Commission of Brazil.
Set of buildings that will keep the environment safe for hosting IT equipment, regardless
of external variables, resulting from a partnership between Banco do Brasil and CEF. It
will be built through a Public Private Partnership and have a minimum built area of 24.0
thousand m2, with 5200 m2 exclusive for IT equipment, of which 4,200 m2 will be
occupied by the Banco do Brasil and 1.0 thousand m2 occupied by CEF.
Currency of the United States of America.
Economatica Software of Support to Investors Ltda., which keeps the system
Economatica, tool for analyzing equity investments.
It evidences operational efficiency, indicating the percentage of operating revenues
consumed by administrative expenses. The lower the index the better the relationship
between revenue and expenses.
Individuals that appear on the active staff of Banco do Brasil or in the supplementary
staff, and that keep with the BB an employment contract, under current labor laws, and
registered on June 15, 2010.
Executive Directorship of Banco do Brasil.
Constitutional Financing Fund for the Midwest.
Brazilian Federation of Banks.
Constitution of the Federative Republic of Brazil.
National Federation of Banks.
Credit Guarantor Fund
Guarantee Fund for Shipbuilding, which holds shares issued by Banco do Brasil through
the Guarantee Caixa Multimarket Shipbuilding Fund.
The Housing Guarantee Fund, which holds shares issued by Banco do Brasil through the
FGHAB Multimarket Fund.
Getulio Vargas Foundation.
Fundo de Investimento Caixa Garantia Construção Naval Multimercado.
Fundo de Investimento Caixa FGHAB Multimercado.
Special Agency of Industrial Investment.
Fitch Ratings Brasil Ltda.
Resources used by financial institutions considering part of their funding on which there is
no liability specific of targeting.
Brazilian Coffee Fund.
Market that consists of all organs of direct and indirect administration, municipalities,
foundations and public companies that depend on public transfers of Federal, State,
Federal District and Municipalities.
Brazilian Institute of Geography and Statistics.
Institute of Brazilian Independent Auditors.
International Financial Reporting Standards.
Consumer Price Index – Internal Availability - released by FGV.
General Market Price Index, released by FGV.
It is a member of the Board of Directors that (i) has no link with Banco do Brasil, except
share in the social capital, (ii) is not and has not been, for the last three years, working
with the company or entity related to the controlling shareholder (exclude people from
this restriction related to public education and / or research), (iii) has not been, for the
last three years, an employee or officer of the BB's controlling shareholder or a company
controlled by the BB, (iv) is not supplying or purchaser, direct or indirect, of services or
products of the BB, to an extent that the loss of independence, (v) is not an employee or
officer of a company or entity that offers services and products to the BB, (vi) not a
spouse or second degree relative of any director of the BB, or (vii) receive any other
compensation beyond the BB's member of its Board of Directors (excluding from this
restriction cash earnings generated from any involvement in the capital). Independent
Counselors will also be considered those elected by the faculties provided for in Article
141 paragraphs 4 or 5, or Article 239 of the Corporations Law.
National Consumer Price Index.
Brazilian Industrial Property Office.
Social Security National Institute.
Tax on Financial Operations.
Extended Consumer Price Index.
Corporate Income Tax.
Tax on Services of any Nature.
KPMG Independent Auditors.
Companies, credit cooperatives and associations with annual gross revenues greater than
R$90.0 million for the industrial sector and R$150.0 million for the commercial and
services sectors.
The Board of Directors, the Executive Board, the Board of Officers and the Directors from
Managers/Officers
MAPA/MF
Mid-Sized Companies or Mid and
Large Companies
Novo Mercado Listing Rules
Novo Mercado or New Market
PAE
Pasep
PCLD
PIB
PIS
Poupex
Poupex Mortgage Credit
Previ
Pronaf
Real, real ou R$
Retail Market
Selic
Series “C” Warrants
Small Companies or SME
SFN - Sistema Financeiro
Nacional
SPC
Stock Corporations Law
Susep
TAA
Tax Responsibility Law
Tesouro Nacional
TJLP
TR
TVM
United States
VGBL
Wholesale Market
Worker‟s Assistance Fund or FAT
Banco do Brasil.
Members from the Board of Directors, the Executive Board, the Board of Officers and
Directors from Banco do Brasil.
Ministry of Agriculture, Livestock and Supply and Ministry of Finance.
It refers to companies, credit cooperatives and associations with annual gross revenues
between R$10.0 million and R$90.0 million for the industrial sector, between R$25.0
million and R$150.0 million for the commercial and services sector.
Agreement to participate on the Novo Mercado of BM&FBOVESPA, signed on May 31,
2006, between Banco do Brasil, its Management, the Shareholder Controlling and
BM&FBOVESPA.
Special listing segment of the Differentiated levels of Corporate Governance of
BM&FBOVESPA, disciplined by the Novo Mercado Rules.
Electronic Service Station
Equity Formation Program for Civil Servants.
Allowance for loan losses (ALL)
GDP
Social Integration Program.
Savings and Financing Association.
Operating agreement between Banco do Brasil and Poupex to offer mortgage credit to
customers of the BB, using Poupex resources.
Pension Plan of Banco do Brasil’s Employees.
National Program for Family-based Agricultural Empowerment.
Current Currency in Brazil.
Market made up of individual customers and Micro and Small Enterprises.
Basic interest rate, the benchmark of the Special Settlement and Custody System,
released by the Monetary Policy Committee
Warrants of ordinary shares issued and distributed for free by Banco do Brasil to its
shareholders on June 17, 1996.
It refers to companies, credit cooperatives and associations with annual gross revenues
lower than R$25.0 million.
Banking Industry (BI)
Department of Pensions.
Law 6404 of December 15, 1976.
Private Insurance Superintendency.
ATM
Complementary Law 101 of May 4, 2000.
National Treasury
Long Term Interest Rate.
Taxa Referencial.
Securities
United States of America.
Retirement Plan.
Market formed by segments of Medium and Large Companies and Corporate, composed
of companies with the legal nature of private law and gross annual revenues exceeding
R$ 10.0 million.
Special fund, under the Ministry of Labor and Employment - MTE, for the financing of the
Unemployment Insurance Program, the salary bonus and for Economic Development
Programs.
7
Seção 1 - Identification of the Persons Responsible for the Form‟s Content
1. IDENTIFICATION OF THE PERSONS RESPONSIBLE FOR THE FORM‟S CONTENT
1.1 Statement by the President and by the Investor Relations Officer
I, Alexandre Corrêa Abreu, CEO of Banco do Brasil, declare that I have reviewed this Reference Form
and that all the information contained herein complies with the provisions of CVM Instruction 480,
especially arts. 14 to 19, and also that the set of information contained therein is a true, accurate and
complete portrait of the economic and financial situation of Banco do Brasil and of the risks inherent to
its activities and of the securities issued thereby.
I, José Maurício Pereira Coelho, CFO and responsible for the Investor Relation Department of Banco
do Brasil, declare that I have reviewed this Reference Form and that all the information contained herein
complies with the provisions of Instruction CVM 480, especially arts. 14 to 19, and also that the set of
information contained therein is a true, accurate and complete portrait of the economic and financial
situation of Banco do Brasil and of the risks inherent to its activities and of the securities issued thereby.
2.
AUDITORS
2.1.
Regarding independent auditors, indicate:
Year ended at December 31,
2012
2013
2014
a. corporate name
KPMG Auditores Independentes
KPMG Auditores Independentes
KPMG Auditores Independentes
b. people in charge,
CPF (Taxpayer
register)
Mr. Giuseppe Masi
CPF: 074,811,038-01
E-mail:
[email protected]
Mr. Giuseppe Masi
CPF: 074,811,038-01
E-mail:
[email protected]
Mr. Giuseppe Masi
CPF: 074,811,038-01
E-mail:
[email protected]
Phone: (55 61) 2104-2400
Address: SBS Quadra 2, Bloco Q,
lote 3, Salas 708 a 711-Ed. João
Carlos Saad, CEP 70070-120 –
Brasília – DF
Fax: (55 61) 2104-2406
Phone: (55 61) 2104-2400
Address: SBS Quadra 2, Bloco
Q, lote 3, Salas 708 a 711-Ed.
João Carlos Saad, CEP 70070120 – Brasília – DF
Fax: (55 61) 2104-2406
Phone: (55 61) 2104-2400
Address: SBS Quadra 2, Bloco Q,
lote 3, Salas 708 a 711-Ed. João
Carlos Saad, CEP 70070-120 –
Brasília – DF
Fax: (55 61) 2104-2406
Mr. Carlos Massao Takauthi
CPF: 144.090.838-99
E-mail:
[email protected]
Mr. Carlos Massao Takauthi
CPF: 144.090.838-99
E-mail:
[email protected]
Mr. Carlos Massao Takauthi
CPF: 144.090.838-99
E-mail:
[email protected]
Phone: (55 61) 2104-2400
Address: SBS Quadra 2, Bloco Q,
lote 3, Salas 708 a 711-Ed. João
Carlos Saad, CEP 70070-120 –
Brasília – DF
Fax: (55 61) 2104-2406
Phone: (55 61) 2104-2400
Address: SBS Quadra 2, Bloco
Q, lote 3, Salas 708 a 711-Ed.
João Carlos Saad, CEP 70070120 – Brasília – DF
Fax: (55 61) 2104-2406
Phone: (55 61) 2104-2400
Address: SBS Quadra 2, Bloco Q,
lote 3, Salas 708 a 711-Ed. João
Carlos Saad, CEP 70070-120 –
Brasília – DF
Fax: (55 61) 2104-2406
c. date when
services were
contracted
March 20, 2012
Agreement 2012/96000076
March 20, 2012
Agreement 2012/96000076
March 20, 2012
Agreement 2012/96000076
d. description of
services
Rendering of technical services of
accounting audit on financial
statements of Banco do Brasil
Conglomerate, prepared in
accordance with Brazilian
accounting practices, and with
international accounting
standards (IFRS – international
Financial Reporting Standards),
and other correlated services.
None
Rendering of technical services
of accounting audit on financial
statements of Banco do Brasil
Conglomerate, prepared in
accordance with Brazilian
accounting practices, and with
international accounting
standards (IFRS – international
Financial Reporting Standards),
and other correlated services.
None
Rendering of technical services
of accounting audit on financial
statements of Banco do Brasil
Conglomerate, prepared in
accordance with Brazilian
accounting practices, and with
international accounting
standards (IFRS – international
Financial Reporting Standards),
and other correlated services.
None
e. substitution of
the auditor
2.2.
Total remuneration of independent auditors in the last year
Inform total amount of independent auditors' remuneration in previous year, discriminating
fees referring to audit services from those related to any other services provided
In 2014, were paid R$ 14,351,845.08 referring to the contract for the rendering of external audit
services.
2.3.
Other relevant information
Provide other information that the issuer deems relevant.
There is nothing to report.
9
Section 3 - Selected Financial Information
3.
SELECTED FINANCIAL INFORMATION
3.1.
Principal balance sheet and income
Based on financial statements or when the issuer is required to disclose consolidated
financial statements, based on the consolidated financial statements, prepare a table
stating:
The consolidated financial statements have been audited in accordance with Brazilian and
international auditing standards and reflect assets, liabilities, income and expenses of Banco do Brasil
Conglomerate. All intragroup transactions and unrealized results in transactions between companies
have been excluded in the consolidation. Minority interest is presented in the Consolidated Balance
Sheet in a caption separated from shareholders' equity. Net income attributable to minority
shareholders is stated separately in the consolidated statement of income and in the consolidated
statement of comprehensive income.
Policies and accounting pratices used in the preparation of the consolidated financial statements for
the year 2014 are equivalent to those applied to the consolidated financial statements for the year
2013 except for the adoption of IAS 19 (R1) - Employee Benefits, effective from July 01, 2014.
Amendments to IAS 19 (R1) aimed to consider the contribution of employees and third parties in the
accounting of defined benefit plans.
The application of IAS 19 (R1) had no material effect on the consolidated financial statements of the
Bank. The table below presents the selected financial information available in the financial statements
of Banco do Brasil, for the years 2012, 2013 and 2014:
Consolidated Financial Information
Year ended December 31
R$ million, unless otherwise specified
a. Shareholders' equity
b. Total assets
2012
2013
2014
65,206
76,382
85,440
1,014,081
1,162,168
1,278,137
c. Net revenue (Interest income ¹)
94,181
104,582
137,779
d. Gross earnings (Net interest income ²)
40,260
41,734
46,654
e. Net income
11,405
11,289
13,343
f. Number of shares, ex-treasury (millions of units).
2,845
2,809
2,797
g. Book value of the share
22.65
26.06
29.25
3.93
3.68
4.23
h. Earnings per share
1 – As a financial institution, the Bank considers Interest Income as the net income indicator.
2 – As a financial institution, the Bank considers Net Interest Income as the Gross Income indicator.
Source: Consolidated Financial Statements in IFRS.
i)
other accounting information selected by the issuer
The main accounting information is presented above.
3.2.
Non-accounting measurements
Should the issuer have disclosed its results in the last year, or wish to disclose the nonaccounting measurements, such as Ebitda (earnings before interest, tax, depreciation and
amortization) or Ebit (earnings before interest, and income tax) in this form, the issuer
must: (a) inform the value of non-accounting measurements; (b) reconcile the disclosed
values and the values of the audited financial statements; And (c) explain why it
understands that said measurement is more appropriate for the correct understanding of
its financial condition and results of its operations
None.
3.3.
Subsequent events to the last financial statements at year-end
Identify and comment on any event subsequent to the last financial statements at year-end
which may significantly alter them.
Strategic Partnership
On February 27, 2015 there was an approval and a constitution of a new company - Token S.A.
Gestão de Contas de Pagamentos (Token) - to explore the activities of post-paid transactions and
debit functionality on purchases through payments arrangements. In addition, the new business has
the purpose of develop associations with other partners to take advantage of opportunities in market
niches related to electronic means of payment, aiming to achieve synergy gains and optimizing the
structuring of new business in the segment.
The total equity of Token will be divided in proportion of 30% for BB Elo Cartões and 70% for Cielo.
The indirect equity interest of the Bank in the capital of the new company will be 50.13% once it has
an indirect interest in Cielo of 28.75%.
The Token was valued at R$11.6 billion. The estimated financial impact of the transaction on the
Bank's net income will be around R$3.2 billion.
3.4.
Policy of allocation of the results of the three last fiscal years
Describe the policy of allocation of the results of the three last fiscal years, indicating:
The allocation of the results of Banco do Brasil is carried out based on the financial statements, in
accordance with the Brazilian accounting standards (BR GAAP).
2012 / 2013 / 2014
a. regulation on profit retention
Since the creation of the Statutory Reserve for Operational Margin and for Equalization of Dividends in
December 2006, Banco do Brasil has been allocating amounts to these reserves, pursuant to its Bylaws (Article
44, item IV) and in accordance with article 194 of Law 6,404/76 (which regards the creation of statutory
reserves).
Operational Margin Reserve was created "so as to ensure an operational margin compatible with the
development of the company's operations, constituted by up to 100% (one hundred percent) of the net income
balance, up to the limit of 80% (eighty percent) of the capital stock".
Dividends Equalization Reserve seeks to "secure resources for the payments of dividends, constituted by up to
50% (fifty percent) of the net income, up to 20% (twenty percent) of capital stock."
b. regulations regarding dividend distribution
The shareholders are entitled to receive mandatory dividends each fiscal year, the percentage of profit
established in the Bylaws, according to article 202 of Law 6,404/76. The shareholders of Banco do Brasil are
ensured to receive a minimum mandatory dividend every half year equivalent to 25% of net adjusted income,
as defined in the Bylaws (art. 45)
The distribution of interim dividends is allowed in periods shorter than one semester, as per the terms of the
Bylaws, (article 45, paragraph 3), observing the competences established in the Directors Council (art. 29 I and
VII) and the Board of Directors (art. 21, II "a" and art. 45, paragraph 1). This schedule was approved at the
Shareholders General Meeting of December 28, 2006, effective as of 2007.
Complying with the law in force and as resolved by the Board of Directors, the Managing Board may authorize
the payment or credit to shareholders as own capital remuneration, as well as the imputing of its value to the
minimum mandatory dividend (art. 46 of the BB's Bylaws).
In the last three years, Banco do Brasil paid 40% (forty percent) of net income as dividends or/and interest on
own capital.
The interest on own capital payments are imputed to the value of dividends payable over Net Income for the
semester. In addition, the BB adopts the practice of distributing interim dividends, deducted from the Dividend
Equalization Reserves, to complement the distributed amount, reaching 40% of the net income for the period.
As of January 1996, the Brazilian companies have been authorized to pay interest to the shareholders and
consider the deductible payments for tax effects over corporate income tax and, as of 1997, also for effects of
social contribution over net income. The deduction is limited to what is the highest between: (i) 50.0% of the
net income for the period (after the deduction of social contribution on net income and before the deduction of
the provision for income tax) before recording of interest on own capital, regarding which payment will be
made; and (ii) 50.0% of the balance of accrued income and profit. Interest on own capital is limited to the pro
rata die variation of the Long Term Interest Rate (TJLP) over shareholders' equity accounts.
The value of dividends and/or interest on own capital payable to shareholders shall incur financial charges
which are levied based on current legislation, as of the moment the semester or fiscal year has ended, in which
they have been calculated up to the last effective day of payment, with the possibility of interest on arrears
when the payment does not take place on the date set by the law, by the General Shareholders Meeting or by
deliberation of the Board. (Bylaws of the BB, art. 45, paragraph 2).
11
Section 3 - Selected Financial Information
2012 / 2013 / 2014
c. periodicity of dividend distribution
As of the first quarter of 2007, Banco do Brasil adopted a quarterly periodicity to pay dividends/interest on
equity, in line with the resolutions of the General Shareholders' Meeting of December 28, 2006.
d. Possible restrictions for the distribution of dividends imposed by law or special regulations applicable to the
issuer, as well as contracts, legal, administrative and arbitral decisions.
According to the laws or regulations in force and applicable to programs under the international capital market
(GMTN Program, Subordinated Debt, Senior Debt and Perpetual Notes issued in 2009) there are no restrictions
as to the distribution of dividends.
The perpetual bonds issued in January and March (reopening) of 2012 and the perpetual bonds issued in
January 2013 had on September 27, 2013 its terms and changed conditions in order to adjust them to the rules
of Bacen’s Resolution No. 4,192 of March 1, 2013, which regulates the implementation of Basel III in Brazil. The
amendments entered into force on October 1, 2013, when the instruments were submitted to BB for obtaining
permission to join the Supplementary Capital (Tier I) of the Bank. The authorization was granted on October 30,
2013.
Because of the changes introduced in perpetual bonds issued in 2012 and perpetual bonds issued in 2013, if the
distributable profits for the period are not sufficient for semiannual payments of interest and / or accessories on
those securities, the payment of dividends by the Bank to shareholders will be limited to the minimum required
by applicable law determined until the semiannual interest payments and/or accessories on those titles have
been resumed in full.
For the perpetual bond issued in June/2014, the interest payment will neither be due or payable nor accumulate
if the amount exceeds the proceeds of profits or profits reserve distributable in the last calculation period. In the
event of suspension of the bond's interest payment/accumulation, the issuer will recommend to the
Shareholders' Meeting that the dividend payment is limited to the minimum required determined by applicable
law, until the semi-annual interest payments on these securities have been resumed integrally.
3.5.
Net income appropriation (BR GAAP)
The allocation of the results of Banco do Brasil is carried out based on the financial statements, in
accordance with the Brazilian accounting standards (BR GAAP).
Year ended at December 31,
R$ million, except as indicated
a. Adjusted Net Income in the Period ¹
2012
2013
2014
13,281
17,055
12,221
4,924
6,324
4,525
Interest on own capital
3,354
3,314
3,674
Dividends to shareholders
1,570
3,010
851
Minimum compulsory dividend
3,320
4,264
3,055
Priority dividend
-
-
-
Fixed dividends
-
-
-
c. Distributed Dividend vs. Adjusted Net Income
37.10%
37.10%
37.03%
d. Dividend distribution by class and type of shares ²
b. Distributed dividend
R$ 1.72
R$ 2.23
R$ 1.61
Interest on own capital
R$ 1.17
R$ 1.17
R$ 1.31
Dividends to shareholders
R$ 0.55
R$ 1.06
R$ 0.30
Priority dividend
-
-
-
Fixed dividends
-
-
-
Interest on own capital
05/22/2012
03/28/2013
03/31/2014
Dividends to shareholders
05/22/2012
05/31/2013
05/30/2014
Interest on own capital
07/23/2012
06/28/2013
06/30/2014
Dividends to shareholders
08/31/2012
08/30/2013
08/29/2014
Interest on own capital
09/20/2012
09/30/2013
09/30/2014
Dividends to shareholders
11/26/2012
11/29/2013
11/28/2014
Interest on own capital
12/28/2012
12/30/2013
12/30/2014
Dividends to shareholders
03/08/2013
02/24/2014
02/27/2015
19.80%
22.90%
15.00%
7,878
9,960
7,104
615
791
566
7,263
9,169
6,538
6,537
8,711
6,211
726
458
327
04/25/2013
04/29/2014
04/28/2015
e. Date of payment of dividends and interest on own capital
1st quarter
2nd quarter
3rd quarter
4th quarter
f. Return on average Shareholders' Equity ³
g. Retained Net Income
Legal reserve
Statutory Reserve
?
Statutory Reserve for Operational Margin
Statutory Reserve for dividend equalization
h. Date of Approval of Retention
1 - Adjusted Net Income: It is the calculated net income in accordance with the accounting practices adopted in Brazil (BR GAAP), after the
absorption of possible accumulated losses, deducting the provision for income tax, added of adjustments in credits for accumulated income,
without deducting the participation of employees in the profit sharing program and after the constitution of the Legal Reserve; formation, if
necessary, of the Reserve for Contingency and Unrealized Profit Reserves.
2 - Expressed in Brazilian reais, it is calculated by the division of dividends and interest on own capital paid in the period due to the quantity of extreasury shares in the periods.
3 - Calculated as the ratio between the company's net income in relation to the average shareholder's equity in BR GAAP.
4 - Values highlighted in the Statements of Changes in Shareholders' Equity for the years 2012, 2013 and 2014 in the line Allocations - Reserves.
Source: Statement of Changes in Shareholders' Equity, BB’s Accounting information and Note 24 - Shareholders’ equity.
3.6.
Dividends of retained income or reserves which were constituted in previous fiscal
years
Report if dividends of retained income or reserves which were constituted in previous 3
fiscal years
The allocation of the results of Banco do Brasil is carried out based on the financial statements, in
accordance with the Brazilian accounting standards (BR GAAP).
The Board of Directors meets annually to approve the determination of the payout. In a meeting
carried out on February 12, 2014 it was defined that the minimum percentage was 40% of net income
in 2014, calculated according to the accounting practices adopted in Brazil (BR GAAP), complying with
the policy of payment of dividends and/or interest on own capital every quarter, as per article 45 of
the Bylaws. The Statutory Reserve for Equalization of Dividends, which ensures the resources for the
payment of dividends, is constituted by up to 50% of net income BR GAAP, after the statutory
allocations of Adjusted Net Income (constitution of legal reserve; if applicable, formation of
Contingency Reserve and Reserve for Unrealized Profit; and payment of Minimum Mandatory
13
Section 3 - Selected Financial Information
Dividends interest on capital and interest on Hybrid Instruments of Capital and Debt), up to the limit
of 20% of the Capital Stock. In the fiscal years ended December 31, 2012, 2013 and 2014 the values
of interim dividends paid in the 1st and 3rd quarters, using the Statutory Dividend Equalization
Reserve, presented as follows:
Year ended at December 31,
R$ million
2012
2013
2014
486
467
383
Interim dividends
Source: Consolidated financial information of Banco do Brasil, Note 24 – Shareholders' equity.
3.7.
Indebtedness level (IFRS)
In a table, describe the level of indebtedness of the issuer, indicating: (a) total value of
debt, of any nature; (b) debt ratio (current liabilities plus non-current liabilities, divided by
shareholders' equity); (c) should the issuer wish to, another indebtedness ratio, indicating:
(c.i) The method used to calculate the ratio; e (c.ii) This rate is understood to be more
appropriate for the correct comprehension of the financial situation of the level of
indebtedness of the issuer
R$ million, except as indicated
12/31/2012
a. total debt, of any nature;
12/31/2013
12/31/2014
948,875
1,085,786
1,192,697
b. indebtedness level (current liabilities + non-current liabilities, divided by
shareholders' equity) ¹
14.7
14.8
14.6
c. should the issuer wish to, another indebtedness ratio
none
none
none
1 - O Shareholders' equity attributable to the majority interest was R$64,454 million, R$73,192 million and R$81,785 in Dec/12, Dec/13 and Dec/14,
respectively.
Source: Consolidated Financial Statements in IFRS.
3.8.
Obligations by maturity and type of guarantee (IFRS)
In a chart, separating debts with real guarantees, debts with fluctuating chirorographic
guarantees, appoint the amount of obligations of the issuer according to maturity date.
Total Banco do Brasil’s debt amount, understood as ―total liabilities‖ is included in item ―3.7.a‖ of this
Reference Form. However, differently from industrial, commercial and general service companies, the
level of indebtedness presented in item ―3.7.a‖ is inadequate to evaluate the compositions of the
resources used by the Banking industry. Considering that the banks basically operate as "financial
intermediaries", raise funds from savers to pass on to takers, so that most part all the liabilities of
financial institutions are constituted by this type of fund raising, classified as operational liabilities.
Thus, in the tables below it is presented: Corporate Debts in 12/31/2012, 12/31/2013 and
12/21/2014, including Borrowing and onlendings, Liabilities from issuance of securities, Subordinated
Debts, Hybrid capital, debt and securitization instruments. We also present the reconciliation table
between Corporate Debts and total liabilities.
Corporate Debts
12 / 3 1/ 2 0 12
R$ million
Uns e c ure d
Borrowing a nd onle ndings
12 / 3 1/ 2 0 13
F lo a t ing R e a l
T o tal
Uns e c ure d
12 / 3 1/ 2 0 14
F lo a t ing
R eal
Tota l
Uns e c ure d
F lo a t ing
R eal
T o tal
10 , 9 5 3
-
-
10 , 9 5 3
15 , 7 14
-
-
15 , 7 14
20,377
-
-
20,377
a. Less than 1 year
8,437
-
-
8,437
15,714
-
-
15,714
20,377
-
-
20,377
b. More than 1 year and less than 3
2,257
-
-
2,257
-
-
-
-
-
-
-
-
259
-
-
259
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
c . More than 3 years and less than 5
d. Over 5 years
Lia bilitie s from issua nc e of
se c uritie s
57,992
-
-
57,992
110 , 2 0 3
-
-
110 , 2 0 3
14 6 , 2 7 8
-
-
14 6 , 2 7 8
a. Less than 1 year
16,617
-
-
16,617
21,328
-
-
21,328
50,404
-
-
50,404
b. More than 1 year and less than 3
5,265
-
-
5,265
9,143
-
-
9,143
5,253
-
-
5,253
c . More than 3 years and less than 5
25,438
-
-
25,438
5,948
-
-
5,948
84,012
-
-
84,012
d. Over 5 years
10,672
-
-
10,672
73,784
-
-
73,784
6,608
-
-
6,608
20,578
-
-
20,578
28,840
-
-
28,840
34,064
-
-
34,064
-
-
-
-
2,180
-
-
2,180
4,111
-
-
4,111
5,327
-
-
5,327
7,750
-
-
7,750
4,570
-
-
4,570
c . More than 3 years and less than 5
3,748
-
-
3,748
11,803
-
-
11,803
12,209
-
-
12,209
d. Over 5 years
11,503
-
-
11,503
7,107
-
-
7,107
13,174
-
-
13,174
S ubordina te d de bts ¹
a. Less than 1 year
b. More than 1 year and less than 3
Ca pita l a nd de bt hybrid
instrume nts
15 , 0 6 1
-
-
15 , 0 6 1
20,874
-
-
20,874
2 0 , 9 18
-
-
2 0 , 9 18
a. Less than 1 year
-
-
-
-
-
-
-
-
369
-
-
369
b. More than 1 year and less than 3
-
-
-
-
-
-
-
-
-
-
-
-
c . More than 3 years and less than 5
-
-
-
-
-
-
-
-
-
-
-
-
20,874
-
-
20,874
20,549
-
-
20,549
d. Over 5 years
15,061
-
-
15,061
S e c uritiz a tion
838
-
-
838
475
-
-
475
968
-
-
968
88
-
-
88
58
-
-
58
79
-
-
79
480
-
-
480
163
-
-
163
-
-
-
-
-
-
-
-
254
-
-
254
224
-
-
224
270
-
-
270
-
-
-
-
665
-
-
665
a. Less than 1 year
b. More than 1 year and less than 3
c . More than 3 years and less than 5
d. Over 5 years
Tota l
10 5 , 4 2 2
-
-
10 5 , 4 2 2
17 6 , 10 6
-
-
17 6 , 10 6
222,605
-
-
222,605
a. Less than 1 year
25,142
-
-
25,142
39,280
-
-
39,280
75,340
-
-
75,340
b. More than 1 year and less than 3
13,329
-
-
13,329
17,056
-
-
17,056
9,823
-
-
9,823
c . More than 3 years and less than 5
29,445
-
-
29,445
18,005
-
-
18,005
96,445
-
-
96,445
d. Over 5 years
37,506
-
-
37,506
101,765
-
-
101,765
40,997
-
-
40,997
1 - Does not include FCO Resources.
Source: Consolidated Financial Statements in IFRS, Note 32 and 33.
Corporate debts and financial statements – Reconciliation
R$ million
12/31/2012
12/31/2013
12/31/2014
Total liabilities (A)
948,875
1,085,786
1,192,697
Corporate liabilities (B)
105,422
176,106
222,605
Borrowing and onlendings
10,953
15,714
20,377
Liabilities from issuance of securities
57,992
110,203
146,278
Subordinated debt, except FCO
20,578
28,839
34,064
Hybrid capital and debt instruments
15,061
20,874
20,918
838
476
968
843,453
909,680
970,092
449,931
461,426
437,822
15,480
26,169
30,675
2,557
3,433
2,995
204,651
223,917
293,920
Repass borrowings - Country
Labor, tax and civil provisions
60,956
6,343
84,810
7,487
89,157
7,673
Liabilities due to current taxes
5,036
5,454
2,641
Securitization
Operating liabilities (C=A-B)
Customer deposits
Amounts payable to financial institutions
Financial liabilities at fair value through profit or loss
Obligations under repurchase agreements
Liabilities due to deferred taxes
7,152
6,154
2,457
Constitutional Fund for Financing of the Midwest - FCO
Other accounts payable
16,603
5,298
18,530
7,780
20,467
10,979
Other liabilities
69,446
64,520
71,305
Source: Consolidated Financial Statements in IFRS, Note 32 and 33.
15
Section 3 - Selected Financial Information
3.9.
Other relevant information
Analysis Volume and Rate
The analysis of volume and rate allows for the verification of impacts on net interest revenue resulting
from the variation in volume of business and interest rates. The changes in volume and interest rate
were calculated based on changes in average balances in the period and the changes in the average
interest rates on assets generating income and liabilities generating expenses. The Average Rate
variation was calculated by the variation in the interest rate in the period multiplied by the average
quantity of assets generating income or by the average quantity of liabilities generating expenses in
the first period. The Net Variation is the difference between the interest income of the present period
and that of the previous period. The variation by Average Volume is the difference between the Net
Variation and that resulting from the Average Rate. The calculations do not exclude the effects of
changes in the exchange rate.
The following information is included for analysis effects and must be read jointly with the financial
statements of the BB contained in the section Management Comments. In the calculations are not the
effects of exchange rate changes excluded.
The statement seeks to establish the reason between revenues and assets corresponding to interest
generators, and between the expenses and liabilities corresponding to interest generators. For these
reasons it is possible to know the relative investment and raising rates, as well as calculating
measurements such as net interest margin (spread). Moreover, the statements are used to identify,
through the analysis of "volume vs. rates", which for the effects in the forming of the results of the
financial intermediation, originated from variations in volume are eight from one period to the other.
Earning and unearning assets
2012
R$ million, except for percentages
Average
Balance
Interest
2013
Rate
(%)
Average
Balance
Interest
2014
Rate
(%)
Average
Balance
Interest
Rate
(%)
Earning Assets ¹
Compulsory which remuneration
70,851
5,667
8.0
69,382
4,591
6.6
61,772
5,510
8.9
Loans to customers
426,383
57,289
13.4
529,876
63,781
12.0
615,502
78,611
12.8
Financial Assets (TVM)
106,470
8,163
7.7
107,420
8,423
7.8
108,312
10,787
10.0
Deposits received under security repurchase agreem.
157,458
14,157
9.0
182,845
15,992
8.7
223,358
27,885
12.5
11.6
Loans to Fin. Institutions
48,973
3,725
7.6
56,983
6,113
10.7
61,464
7,147
Other
20,514
5,180
25.2
25,191
5,681
22.6
34,475
7,839
22.7
Total
830,650
94,181
11.3
971,698
104,582
10.8 1,104,884
137,779
12.5
Unprofitable assets ¹
Tax credits
21,380
22,792
22,755
Other Assets
84,219
87,304
85,636
5,738
6,329
6,878
Total
111,337
116,426
115,269
Total Average Assets
941,987
1,088,124
1,220,152
Fixed assets
1 - Average balances of the balance sheets at the end of each period. Other interest expense were not considered.
Source: Consolidated Financial Information in IFRS.
Interest-bearing and non-interest-bearing liabilities
2012
R$ million, except for percentages
Average
Balance
Interest
2013
Rate
(%)
Average
Balance
Interest
2014
Rate
(%)
Average
Balance
Interest
Rate
(%)
Remunerated Liabilities ¹
Customer deposits
366,451
(28,236)
7.7
Obligations related to Committed Operations
191,775
(15,343)
8.0
Short-term liabilities
381,473
214,284
(26,939)
7.1
(17,517)
8.2
375,380
258,919
(31,412)
8.4
(29,722)
11.5
9,446
(215)
2.3
12,699
(366)
2.9
17,759
(364)
2.0
142,054
(9,539)
6.7
225,054
(17,593)
7.8
297,458
(28,379)
9.5
(322)
2.3
20,824
(210)
1.0
28,422
(1,120)
3.9
Other
14,256
4,078
(267)
6.5
4,363
(222)
5.1
4,709
(127)
2.7
Total
728,060
(53,921)
7.4
858,697
(62,848)
7.3
982,648
(91,124)
9.3
Long-term liabilities
Amounts payable to financial inst.
Non-Remunerated Liabilities ¹
Demand deposits
67,521
74,205
74,243
Other liabilities
81,656
84,428
82,351
Shareholders' Equity
64,749
70,794
80,911
Total
213,926
229,427
237,505
Total average liabilities
941,987
1,088,124
1,220,152
1 - Average balances of the balance sheets at the end of each period. Other interest expenses were not considered.
Source: BB’s Consolidated Financial Information in IFRS.
Change in revenue and expense due to variations in Volume and Rate
2013on/ 2012
R$ million
Average
Volume ¹
2014on/ 2013
Avareg Net Change
e Rate ²
³
Average
Volume ¹
Avarege
Rate ²
Net Change
³
Earning Assets
Compulsory which remuneration
Loans to customers
Financial Assets (TVM)
Deposits received under security repurchase agreem.
Loans to Fin. Institutions
(97)
(978)
(1,075)
(679)
1,597
918
12,457
(5,966)
6,491
10,936
3,895
14,831
75
186
261
89
2,275
2,364
2,220
(386)
1,835
5,058
6,835
11,893
1,034
859
1,529
2,388
521
513
Other
1,055
(553)
502
2,111
46
2,158
Total
15,181
(4,779)
10,401
16,608
16,588
33,196
Customer deposits
(1,061)
2,357
1,296
510
(4,983)
(4,473)
Obligations related to Committed Operations
(1,840)
(334)
(2,174)
(5,124)
(7,081)
(12,205)
Remunerated Liabilities
Short-term liabilities
(94)
(58)
(152)
(104)
107
3
(6,488)
(1,566)
(8,055)
(6,908)
(3,879)
(10,786)
Amounts payable to financial inst.
(66)
178
112
(299)
(610)
(910)
Other
(14)
60
45
(9)
104
95
(9,561)
634
(8,927)
(11,494)
(16,782)
(28,276)
Long-term liabilities
Total ⁴
1 - Variation in interest revenues (earning assets) or other interest expenses (interest bearing liabilities) which took place due to oscillation in
volumes. It is obtained from the subtraction of Net Variation (3) from the Average Rate (2).
2 - Variation in interest income (earning assets) or other interest expenses (interest bearing liabilities) which took place due to oscillation in rates. It is
obtained as of the following formula: ((Interest Current Period/ Balance Current Period) x Balance Previous Period) - (Interest Previous Period).
3 - Total Variation in interest revenues (profitable assets) or other interest expenses (remunerated liabilities) which took place due to oscillation in
volume and rate. It is obtained from subtractions of Interest of the Current Period from Interest of the Previous Period.
4 - The line 'total' in the table "Increase and Reduction of Interest (Revenue and Expense) due to the variations in Volume and Rate", in columns
"Average Rate" and "Average Volume" must not be read as the sum of values relative to items in Profitable Assets or Costly Liabilities. The sum is
impossible because the calculation of variations due to the rate and volume of each component being carried out by the effective rate, without
considering the relative weight ("weighted average") of each item in the composition of total earning assets and interest bearing liabilities.
Therefore, the consigned values in the total line are solely relative to the variations in rate and volume of total profitable assets and costly
liabilities.
Source: BB’s Consolidated Financial Information in IFRS.
Spread - Net Interest income/earning assets
2012
2013
2014
Total average balance of assets generating income
830,650
971,698
1,104,884
Total average balance of liabilities generating expenses
728,060
858,697
982,648
Income net of interest
40,260
41,734
46,654
94,181
104,582
137,779
(53,921)
87.6
(62,848)
88.4
(91,124)
88.9
Interest Income
Interest expenses
Interest Bearing Liabilities / Earning Assets - %
Interest rate on the average balance of assets generating income ¹
11.3
10.8
12.5
Interest rate on the average balance of liabilities generating expenses ²
7.4
7.3
9.3
Net Income Margin % ³
3.9
3.4
3.2
Net Interest Margin % ⁴
4.8
4.3
4.2
1 - Total interest income divided by the average balance of assets generating income.
2 - Total interest expenses divided by the average balance of liabilities generating expenses.
3 - Difference between average rate of earning assets and the average rate of liabilities generating expenses.
4 - Income net of interest divided by the average balance of assets generating income.
Source: Consolidated Financial Information in IFRS.
Ratios (%)
Banco do Brasil uses, among others, the following indicators. We highlight that they are nonaccounting measures usually adopted under BR GAAP and were measured according to IFRS balances
and cannot be compared to those used by other financial institutions:
Return on Average Net Equity (ROE): Calculated as the result between the division of the Company's
Net Income / Average Shareholders' Equity, the Return on average Shareholders' Equity indicates how
much the Company profited for each monetary unit invested. The BB's management understands that
the indicator aids in the correct comprehension of performance, as it makes the profitability rate
offered to the Company's own capital evident.
17
Section 3 - Selected Financial Information
Return on Average Assets (ROA): Calculated as the result between the division of the Company's Net
Income / Average Assets, over the return on average net equity which indicates how much the
Company profited for each monetary unit of each asset.
Earnings per share: It is an indicator which is frequently used to assess the profitability of a company.
The Result per Share can be Basic or Diluted. The Basic Earnings per Share is calculated as of the
division of the total average of shares, except treasury shares, by the profit in the period. To calculate
Earning Income per Share it is necessary to adjust the average of the quantity of shares by the
potential of bonus conversion.
Average Risk: It can be obtained as of the relationship between the constituted provision and the total
loans to clients, it indicates the level of risk existing in a loan portfolio. The index points out the
necessary provision amount to support possible losses in the loans granted.
The indexes are presented as follows:
2012
Return on Equity - %
2013
2014
17.6
15.9
16.5
1.2
1.0
1.0
Basic ¹
3.93
3.68
4.23
Diluted ²
3.93
3.68
4.23
2.8
2.7
2.9
ROA - %
Earnings per share
Average risk - % ³
123-
Average quantity of total shares without treasury stock / income for the period
Average quantity of total shares + (bonus x conversion factor) / income for the period
Allowance for doubtful accounts / Loan portfolio
Securities Portfolio
The chart below appoints the portfolio of bonds and securities listed in the groupings of financial
assets at fair value through the result, available for sale and maintained up to maturity and their
market values on the appointed dates.
R$ million
12/31/2012
12/31/2013
12/31/2014
1 - Financial assets at fair value through income or loss
16,376
18,006
10,948
Debt instruments
16,374
17,961
10,901
14,198
16,790
8,001
Securities issued by non-financial companies
633
71
272
Foreign government bonds
538
603
856
Securities issued by financial companies
165
374
1480
12
120
63
828
3
229
2
45
47
2
45
47
2 - Financial assets available for sale
83,294
90,385
93,804
Debt instruments
83,242
89,672
93,675
Brazilian federal government bonds
39,541
38,091
35,899
Securities issued by non-financial companies
30,526
39,575
42,810
Foreign government bonds
4,342
4,937
6,573
Brazilian government bonds issued abroad
3,793
3,554
3,549
Securities issued by financial companies
3,576
924
1296
-
-
0
1,464
2,591
3,548
52
713
129
52
713
129
3 - Financial assets held to maturity
4,602
643
360
Debt instruments
4,602
643
360
4,219
205
32
289
369
328
94
69
0
Brazilian federal government bonds
Brazilian government bonds issued abroad
Investments in mutual funds
Capital instruments
Trade shares
State and municipal bonds
Mutual funds
Capital instruments
Trade shares
Brazilian federal government bonds
Securities issued by financial companies
Brazilian government bonds issued abroad
Source: Consolidated Financial Statements Notes 19, 20 and 21.
Maturity of securities
The tables below indicate the maturity dates of securities in the BB's portfolio, presented by market
value, on the appointed dates.
R$ million
Maturity in years
12 / 3 1/ 2 0 12
Without
ma turity
Tota l by c a te gory
Due in up
up to 1 ye a r
Due from 1 Due from
a nd 5
5 to 10
ye a rs
ye a rs
Due
a fte r 10
ye a rs
Tota l
359
38,703
43,867
14 , 8 5 3
6,490
Sec urities at fair value through inc ome or loss
133
16,243
-
-
-
16,376
Sec urities available for sale
226
18,359
43,643
14,851
6,215
83,294
-
4,101
224
2
275
4,602
Sec urities held to maturity
10 4 , 2 7 2
Source: Consolidated Financial Statements Notes 19, 20 and 21.
R$ million
Maturity in years
12 / 3 1/ 2 0 13
Without
ma turity
Tota l by c a te gory
Due in up
up to 1 ye a r
Due from 1 Due from
a nd 5
5 to 10
ye a rs
ye a rs
Due
a fte r 10
ye a rs
Tota l
600
4 4 , 10 6
38,747
20,434
5 , 14 7
Sec urities at fair value through inc ome or loss
238
17,768
-
-
-
18,006
Sec urities available for sale
362
26,064
38,707
20,433
4,819
90,385
-
274
40
1
328
643
Sec urities held to maturity
10 9 , 0 3 4
Source: Consolidated Financial Statements Notes 19, 20 and 21.
R$ million
Maturity in years
12 / 3 1/ 2 0 14
Without
ma turity
Tota l by c a te gory
Due in up
up to 1 ye a r
Due from 1 Due from
a nd 5
5 to 10
ye a rs
ye a rs
Due
a fte r 10
ye a rs
Tota l
690
34,854
5 7 , 5 13
11, 4 3 5
620
Sec urities at fair value through inc ome or loss
317
2,735
5,827
1,526
543
10,948
Sec urities available for sale
373
32,078
51,367
9,909
77
93,804
0
41
319
0
0
360
Sec urities held to maturity
10 5 , 112
Source: Consolidated Financial Statements Notes 19, 20 and 21.
Loans to customers
The table below shows the BB's loans to customers by type, sector of economic activity and maturity
for each of the periods indicated.
Portfolio by modalities
R$ million
Loans
12/31/2012
12/31/2013
12/31/2014
450,978
550,395
616,637
Loans and bills discounted
207,821
226,747
238,689
Financing
118,121
149,275
168,766
Rural and agribusiness financing
112,092
149,841
170,128
12,854
24,323
38,733
1
1
0
89
208
321
27,327
29,163
33,087
Credit card operations
16,088
17,535
19,925
Advances on foreign exchange contracts
10,905
11,235
12,563
Guarantees honored
107
136
235
Others
227
257
363
1,028
862
861
Real estate financing
Financing of Infrastructure and development
Credit operations linked to assignments
Other receivables with loan characteristics
Lease operations
Total loans to customers
479,333
580,420
650,584
Provision for losses with loans to customers
(13,577)
(15,653)
(18,951)
(Allowance for loan losses)
(13,322)
(15,512)
(18,551)
(Provision for other losses)
(211)
(121)
(376)
(Allowance for lease losses)
(44)
(20)
(24)
465,756
564,767
631,633
Total loans to customers, net of allowance for losses
19
Section 3 - Selected Financial Information
Breakdown of the loan portfolio by sector
R$ million
Public Sector
12/31/2012
12/31/2013
12/31/2014
33,612
48,979
60,014
Government
9,188
19,009
28,941
Oil and Gas
11,272
18,455
19,480
9,902
9,848
10,231
417
Eletricity
Services
179
284
3,071
1,383
945
Private sector
445,721
531,441
590,570
Individuals
191,727
232,581
269,603
Companies
253,994
298,860
320,967
Mining and metallurgy
32,585
36,302
36,854
Agribusiness of plant origin
26,464
33,389
34,506
Services
17,750
22,858
23,121
Automotive
17,081
21,958
22,529
Transport
12,823
17,216
20,076
Fuel
17,246
19,378
19,821
9,503
13,680
18,427
13,797
16,113
17,116
7,020
8,715
15,232
Agribusiness of animal origin
12,246
12,986
14,034
Specif ic Bulding Activities
10,955
12,890
12,694
Textile and Garments
10,588
11,729
11,414
Electrical and Electronic Goods
Other Activities
Housing
Retail Trade
Eletricity
10,102
10,778
10,530
Agricultural Consumables
7,729
8,607
9,697
Pulp and Paper
8,567
9,478
9,569
Chemicals
6,973
8,286
7,987
Wholesale Trade and Industries
6,014
7,118
7,450
Timber and Furniture
6,187
6,894
6,755
Heavy Construction
4,800
5,531
5,948
Financials Institutions
3,320
3,632
5,721
Telecommunication
6,934
6,742
5,575
Other Activities
Total loans to customers
5,310
4,580
5,911
479,333
580,420
650,584
The table below appoints the listing of loans to clients by maturity date.
R$ million
12/31/2012
12/31/2013
12/31/2014
Installments falling due
01 to 30 days
39,434
41,708
46,570
31 to 60 days
25,673
28,194
29,272
61 to 90 days
20,745
24,932
23,872
91 to 180 days
52,551
60,631
64,324
181 to 360 days
79,505
95,848
99,105
255,624
321,349
378,108
Over 360 days
Other ¹
687
569
355
474,219
573,231
641,606
01 to 14 days
883
863
2,389
15 to 30 days
470
586
724
31 to 60 days
601
1,101
895
61 to 90 days
477
676
819
91 to 180 days
959
1,213
1,282
1,137
1,501
1,617
587
1,249
1,253
5,114
7,189
8,979
479,333
580,420
650,584
Subtotal
Installments overdue
181 to 360 days
Over 360 days
Subtotal
Total
1 - Operations with third party risk tied to Government Funds and Programs, mainly Pronaf, Procera, FAT, BNDES and FCO.
Source: Consolidated Financial Statements in IFRS.
Financial leasing portfolio per maturity date.
R$ million
12/31/2012
12/31/2013
12/31/2014
Maturities
Up to 1 year ¹
666
416
343
More than 1 year, up to 5 years
356
442
514
Over 5 years
Total present value
6
4
4
1,028
862
861
1 - Includes values relative to matured installments
BIS Ratio
The BIS Ratio is the most appropriate indicator to assess the potential leverage of financial institutions
and is calculated based on an international concept defined by the Basel Committee which
recommends the minimum relationship of 8% between the referential shareholders' equity and the
weighted risks according to the regulation in force (Required Referential Shareholders' Equity - PRE).
In Brazil, the minimum and demanded ratio is given by the F factor, according to CMN Resolution
4,193, of March 01, 2013. F equals: 11% from 10.01.2013 to 12.31.2015; 9.875% from 01.01.2016 to
12.31.2016; 9.25% from 01.01.20147 to 12.31.2017; 8.625% from 01.01.2018 to 12.31.2018 and 8%
from 01.01.2019 on.
Financial institutions act basically as financial intermediates rising resources from savers and passing
them on to borrowers. Therefore, the most significant part of liabilities of the Banking industry is
relative to operating liabilities inherent to the activities of the segment. Thus, indebtedness constitutes
an important component of the business on a financial institution.
Due to the specific characteristics, the Bacen demands of financial institutions have capital which is
compatible with the risk of their operations. In order for a financial institution to sustain growth with
its loan operations, for example, it is necessary to have reinforcement compatible with its capital. For
this reason, the financial authorities establish limits for leverage through minimum demands of capital
to support exposure to risks.
Regulatory Capital
For financial institutions, is important to evaluate that called "regulatory capital" demanded by the
Bacen. The implementation of the rules from Basel II in Brazil has led to modifications, especially in
how the necessary capital is measured to support the own risks of banking activities. To regulate the
21
Section 3 - Selected Financial Information
transition from Basel I to Basel II (standardized approach), Bacen published rules about capital
requirement (Pillar I), process of supervision and transparency of information (Pillars II and III).
From 10.01.2013 became effective normative set in Brazil that implemented new recommendations of
the Basel Committee on Banking Supervision, known as Basel III. The new rules adopted address the
following issues:
I - new methodology for calculating regulatory capital, which continues to be divided into Levels I and II,
the Level I consists of the Main Capital and Supplementary Capital;
II - new methodology for calculating the capital requirement for maintenance, adopting minimum
requirements Capital Base Tier I Capital and Main, and the introduction of the Additional Tier I
Capital
Referential Equity (RE)
On 10.01.2013 the National Monetary Council (CMN) approved changes in the rules for definition and
calculation of reference assets of financial institutions by CMN Resolution 4,192/2013, getting
established the regulatory scope of Basel III.
According to the Resolution, the RE, for the purpose of verifying compliance with the operational limits
of financial institutions, is still formed by the sum of Tier I and Tier II, and Tier I now composed by
the Common Equity Tier I (net of Adjustments Prudential) and Complementary Capital.
The Prudential Adjustments are deductions from Common Equity Tier I of heritage elements that can
compromise the quality of Principal Capital due to their low liquidity, difficult to review or reliance on
future profits to be realized.
These adjustments will be made gradually, after deduction of 20% per year in the period 2014-2018,
with the exception of deferred fixed assets and borrowing instruments issued by an institution
authorized by the Central Bank of Brazil or institution located outside operating equivalently to a
financial institution in Brazil that do not compose the conglomerate, which are already deducted in full
from October 2013 activity.
For the Complementary Capital and Level II, are also deducted the amounts of assets represented by
the following funding instruments issued by financial institution: actions, quotas, quota shares, hybrid
capital and debt instruments and subordinated debt, net of any related portion PR to which the
funding instrument is eligible.
Minimum Required Referential Equity (MRRE)
CMN Resolution No. 4,193, of 03/01/2013, provides for the calculation of the Minimum Required
Reference Equity (MRRE) in relation to Risk Weighted Assets (RWA), replacing the Required
Referential Equity (PRE), revoking CMN Resolution No. 3,490, of 08/29/2007.
In the calculation of assets weighted by the amount of risk, it is considered the sum of the following
items:
I – RWACPAD, concerning credit risk exposures subject to the calculation of capital requirements under
the standardized approach;
II - RWAMPAD concerning exposures to market risk subject to the calculation of capital requirements
under the standardized approach;
III - RWAOPAD on the calculation of the capital requirement for operational risk under the standardized
approach.
Complementarily, CMN Resolution 4,193/13 established the minimum core capital requirements (4.5%
of RWA) and Level I (5.5% of RWA until 12.31.2014 and 6%, from 01.01. 2015).
Performance
The table below shows the evolution and composition of Banco do Brasil Referential Shareholders'
Equity, which reached R$ 126,588 million in December 2014, an increase of 7.1% over the previous
year. In relation to 12013/2012, there was a 9.6% growth.
The RRE of Banco do Brasil reached the amount of R$86,457 million in December 2014, with an
ireduction of 3.4% compared to December 2013. The greatest variation in absolute numbers,
corresponding to exposures to credit risk subject to the calculation of capital requirements under the
standardized approach (RWACPAD), review of the reflection of the macro-prudential measures initiated
in 2010, with the publication of Circular 3,711/14 and 3,714/14 by the Central Bank of Brasil. The
effects of these legislative impacted in reducing MRRE from the 3º quarter of 2014.
The BIS ratio of the Bank do Brazil ended 12.31.2014 at 16.11%, with 11.39% of Tier I capital and
9.04% of core capital, as shown in the following table:
On December 31,
R$ million
Referential Equity (RE) ¹
2012
2013 ⁷
Change %
2013 /
2012
2014
2014 /
2013
107,925
118,234
126,588
9.6
7.1
76,769
85,501
89,538
11.4
4.7
-
67,055
71,036
-
5.9
Tier II
36,074
32,733
37,050
(9.3)
13.2
Deduction ³
(4,919)
-
-
-
-
80,035
89,499
86,457
11.8
(3.4)
727,590
813,623
785,974
11.8
(3.4)
691,605
761,431
734,716
10.1
(3.5)
1,885
15,240
11,545
708.4
(24.2)
Tier I
Common Equity Tier I ²
Required Referential Equity (RRE) ⁴
Risk Weighted Asset (RWA) ⁵
Credit Risk - RWACPAD
Market Risk - RWAMPAD
Operational Risk - RWAOPAD
34,100
36,952
39,712
8.4
7.5
Surplus / Insufficiency of RE
27,890
28,736
40,131
3.0
39.7
14.80
14.50
16.11
-
10.50
11.39
-
8.20
9.04
Índice de Basileia (IB)
Tier I Capital Ratio ⁶
Core Capital Ratio ⁶
1 - According to CMN Resolution 4,192/2013. For periods prior to 10.01.2013, the values were obtained according to the criteria of CMN Resolution.
3,444/2007
2 - Established from 10.01.2013 by CMN Resolution 4,192/2013.
3 - From the implementation of CMN Resolution No. 4,192/2013, deductions of RE were allocated at Tier I and II.
4 - Accordingo to CMN Resolution 4,193/2013, corresponds to application of factor ―F‖ to RWA, ―F‖ equals to: 11% from 10.01.2013 to 12.31.2015;
9.875% from 01.01.2016 to 12.31.2016; 9.25% from 01.01.2017 to 12.31.2017; 8.625% from 01.01.2018 to 12.31.2018 and 8% from
01.01.2019 on. For periods prior to 10.01.2013, the values refer to the Capital Requirement and were determined according to the criteria
established by CMN Resolution 3,490/2007.
5 - According to CMN Resolution No. 4.193/2013. For periods prior to 10.01.2013, the values were obtained from the Capital Requirement according
to the criteria of CMN Resolution 3,490/2007, which was converted in RWA.
6 - Established from 10.01.2013 by CMN Resolution 4,193/2013
7 - The scope of consolidation used as the basis for establishing the operating limits was amended by CMN Resolution 4,193/2013, now
considering only the financial conglomerate, of 10.01.2013 until 12.31.2014, and the Prudential conglomerate, defined in CMN Resolution
4,280/2013 from 01.01.2015.
23
Section 4 - Risk Factors
4.
RISK FACTORS
4.1.
Risk factors that may influence the investment decision
The potential purchasers of the Banco do Brasil's securities must carefully consider the specific risks
related to BB and to the securities themselves. All information registered in the offering memorandum
must be considered in light of the financial circumstances and objectives of the investment,
particularly the risk factors listed below.
Potential investors must also observe that the risks listed below are not the only ones to which the BB
is subject to. The Bank's business, the financial conditions and results of the operations can be
adversely affected by any one of these risk factors. The market price of securities may be reduced due
to any one of these risk factors, causing full or partial losses to the investor. There are other risk
factors which BB considers unlikely or which the Bank currently has no knowledge about, which can
lead to similar effects as the risks listed as follows.
The risks may take place individually or jointly. The order in which the risks are presented below is not
related to likelihood that any of the risks below shall occur.
a.
Risks related to Banco do Brasil
We are responsible for certain employee benefit payments that are not covered by PREVI.
Our provisions may not be sufficient to cover these liabilities, which could adversely affect
us.
We are responsible for benefit payments relating to employees of our company who were hired before
April 14, 1967, since these benefits are not provided for by PREVI, a closed ended complementary
pension fund. These charges have defined benefit characteristics and the system adopted for actuarial
revaluations is the capitalization method. We are also responsible for charges arising from legal
decisions that increase retirement and pension benefit amounts beyond those already provided for
under PREVI’s benefit plans for our other employees.
Our ability to continue using the Fundo de Garantia de Operações may be limited in
future.
We are a member of the Fundo de Garantia de Operações (Operational Guarantee Fund, or FGO), a
private fund set up by various banks and administered by us, which provides additional financial
guarantees for working capital and capital expenditure loans that the fund members provide to micro,
small and medium-sized businesses. If the volume of loans provided grows faster than the FGO
resources, we and the other FGO members may be required to make further contributions to the fund.
Another indicator to watch is the Honored Values Index – IVH (Índice de Valores Honrados) and the
Equity Utilization Index - IUP (Índice de Utilização do Patrimônio), which consider, among other
factors, the honored values. In case of reaching, by the shareholder, the maximum rates allowed by
the Fund for the IVH or IUP, which are, respectively, 7% and 1 (one) whole, this would be prevented
from requesting new honors, while the IVH or IUP is situate above the maximum permissible limit.
Any one of these situations can adversely affect us.
We increase the scope of financial products and services we distribute through call
centers and banking correspondents in Brazil, such as the Brazilian Post Office‟s Banco
Postal network. This may lead to operational and legal risks that could adversely affect
us.
Distributing financial products and services through third party channels such as the Brazilian Post
Office involves risks, including the following:
a) Labor claims;
b) Failures in correspondents’ systems and interactive voice response (IVR) equipment, which may
generate customer claims;
c) Mismatches in the settlement of cash under custody of banking correspondents, arising from
contingent events, operational failures or fraud;
d) Insufficient levels of customer service at the third party channel that may generate customer
claims; and
e) Class actions related to the third party services.
Any of these factors could lead to financial liabilities, which would adversely affect us.
We may be required to make extraordinary contributions to the entities that manage the
pension plans that we provide for our employees, which may adversely affect us.
We make contributions to PREVI, Economus, Prevbep and Fusesc, the entities that manage the
pension plans that we provide for our employees. These contributions are determined using criteria
which include long-term actuarial and financial estimates and assumptions and the application and
interpretation of regulatory standards in effect at the time. Estimates and assumptions involve
inherent inaccuracies. Any inaccuracies may result in the amount we record differing from amounts
we actually contribute to these entities, which may adversely affect our financial condition and results
of operations.
A failure in, or breach of, our critical processes could temporarily interrupt or disrupt our
business, increasing our costs and causing losses, which could adversely affect us.
Our business may be affected by interruptions in processes that are critical to the continuity of our
business. These interruptions may be caused by a number of factors, including events that are wholly
or partially beyond our control, such as:
- Unavailability of the systems that provide support services to our business operations;
- Unavailability of employees to run these critical processes, whether due to strikes, transportation
problems, urban violence, infectious diseases or other factors;
- Inability to access the buildings in which critical processes are carried out, whether due to
demonstrations, road blocks, problems in neighboring buildings that affect our facilities, infrastructure
problems such as fire, flood, drainage, collapse or landslides, or other factors;
- Interruptions in the provision of third party services on which our critical processes depend; or
- Cyber-attacks.
Any interruptions in our critical processes may lead to additional costs, fines and damage to our
reputation and credibility, causing losses that could adversely affect our financial condition and results
of operations.
Besides us, failures in our critical processes could also impact third parties in areas such as check
clearing (Compe), the interbank payment system or CIP, the Brazilian payment system or SPB, and
the distribution of cash to bank branches.
We may not be able to detect money laundering, terrorism financing, corruption and
other illegal or improper activities fully or on a timely basis, which could expose us to
additional liability and could have a material adverse effect on us.
We are required to comply with applicable anti money laundering, anti-terrorism, anti-corruption and
other illegal or improper activities in the jurisdictions in which we operate.
These laws and regulations require us, among other things, to adopt and enforce ―know your
customer‖ policies and procedures and to report suspicious and large transactions to the applicable
regulatory authorities. These laws and regulations have become increasingly complex and detailed,
requiring improved systems, demanding sophisticated monitoring and compliance personnel and
becoming the subject of enhanced regulatory supervision. In addition, laws such as the U.S. Foreign
Corrupt Practices Act and the U.K. Bribery Act, as well as the applicable Brazilian legislation, require
us, among other things, the maintenance of policies and procedures aimed at preventing any illegal or
improper activities related to corruption on government entities and officials in order to secure any
business advantage, and require us to maintain accurate books and a system of internal controls to
ensure the accuracy of our books and prevent illegal activities.
Our policies and procedures aimed at detecting and preventing the use of our banking network,
products and services for money laundering, terrorist financing and related activities, as well as our
policies and procedures aimed at preventing bribery and other corrupt practices may not completely
eliminate instances where our banking network may be used by our employees, representatives or
other parties to engage in money laundering and other illegal or improper activities. To the extent we
fail to fully comply with applicable laws and regulations, the relevant government agencies to which
we report have the power and authority to impose fines and other penalties on us, including the
revocation of licenses. In addition, our business and reputation could be adversely affected if our
25
Section 4 - Risk Factors
banking network, products and/or services are used for money laundering, terrorist financing or other
illegal or improper purposes and require us to maintain accurate books and records and a system of
internal controls to ensure the accuracy of our books and records and prevent illegal activities.
In addition, while we review our significant counterparties’ internal policies and procedures with
respect to such matters before engaging in business with them, we, to a large degree, rely upon
these counterparties to maintain and properly apply their own appropriate anti money laundering and
anticorruption procedures. Such measures, procedures and compliance may not be completely
effective in preventing third parties from using our (and our relevant counterparties’) services as a
conduit for money laundering (including illegal cash operations) or other corrupt practices without our
(and our relevant counterparties’) knowledge. If we are associated with, or even accused of being
associated with, or become a party to, money laundering, terrorist financing or other corrupt or illegal
practices, then our reputation could suffer and/or we could become subject to fines, sanctions and/or
legal enforcement, any one of which could have a material adverse effect on our operating results,
financial condition and prospects.
The models, management methods, policies and procedures we adopt to address market,
liquidity, credit and operational risk may not effectively shield us from exposure to
uncategorized or unforeseen risks, which could adversely affect us.
The combination of methodologies, policies, processes and methods used in the management of
market, liquidity, credit and operational risks may not completely capture our exposure to
uncategorized or unforeseen risks. The statistical models and management tools we use to estimate
our risk exposure are based on historical data, which, given the time horizon involved, might not be
accurate measurements of the capital we may require to cover unpredictable or uncategorized factors.
Likewise, our stress tests and sensitivity analyses, which are based on macroeconomic scenarios,
might not identify all possible impacts on our income.
We may also incur losses as a result of failures, inadequacies or deficiencies in our internal processes,
employees or systems. These losses may also result from external factors, or from events involving
operational risk not correctly identified by our models.
In particular, our capital allocation policy for unforeseen or unidentified risks may prove insufficient
and result in further unexpected losses. As a result, our losses could prove significantly greater than
those indicated in reports we disclose to the market, even if we maintain prudent margins for this
purpose. If this were to occur, it could adversely affect our financial condition and results of
operations.
Expenses and provisions regarding labor claims could adversely affect us.
In January 2013 we began implementing a new employee role plan (Plano de Funções). The plan
separated our employees into two categories: (i) positions that carry supervisory responsibility and (ii)
other positions, and reduced the working day for the second category from eight to six hours with a
corresponding reduction in compensation for these employees. This change has resulted in a number
of collective and individual labor law claims, filed by employees who chose to accept the second
category of positions with a six-hour working day but sought to receive compensation for an
eight-hour working day.
At the end of 2014, two disruptive protests of prescriptions obtained by labor unions in the Brazilian
Justice became overdue. As a result, there was an increase of individual and class actions against us,
which may require us to increase expenditures and provisions for labor contingencies.
There is also a contingent of individual and collective labor demands dealing on other matters, as the
procedural situation progresses, may change and therefore influence the constitution, increase or
reversal of provisions for contingent claims.
We may face risks related to mergers, acquisitions, strategic partnerships or sales of
businesses that could materially affect our business.
We have recently purchased other companies or acquired interests in them, entered into joint
ventures and strategic partnerships, and sold businesses, both in Brazil and abroad, as part of our
strategy of growing our business and creating synergies in the Brazilian and international markets.
Depending on the future strategy adopted by our management, we may acquire, merge with or sell
other businesses. We are subject to risks related to these transactions. For example, we may:
(i) overestimate the value or future profitability of the company being acquired and therefore the
expected return on our investment;
(ii) encounter problems when integrating products, customer bases, services, technology, personnel
and facilities, which may adversely affect our internal controls, procedures and policies;
(iii) fail to achieve expected operational and financial synergies which could impact our operational
results and cash flow;
(iv) be required to make payments in respect of unexpected liabilities and/or contingencies of an
acquired company or strategic partner;
(v) incur liabilities in connection with obligations of the acquired entities and actions of former
management that predate the acquisition;
(vi) enter into corporate agreements in connection with acquired companies, strategic partnerships or
joint ventures containing terms and conditions that, following the passage of time, become
inconsistent with a revised strategy, which may result in losses in the relevant business or lead us to
terminate our relationship with these entities;
(vii) fail to identify all regulatory authorizations necessary for acquisitions of other companies or for
entering into strategic partnerships or joint ventures and therefore be subject to administrative
sanctions or fines; or
(viii) underestimate the value of a business that we sell, whether directly or indirectly, particularly if
the business is not strategic or if its sale occurs in connection with a disposal of our shares.
Any of these circumstances could adversely affect us.
b.
Risks related to its direct or indirect controlling shareholder or control group
Certain of our debt obligations limit dividend payments.
The provisions of our perpetual bonds issued in January 2012 and reopened in March 2012, and our
perpetual bonds issued in January 2013, were amended in September 2013 to comply with Resolution
No. 4192/2013 of the Central Bank in application of the Basel III requirements. The amended
provisions provide that if our distributable income is insufficient to make semiannual payments of
interest and additional amounts on those bonds, any dividends payable to our shareholders will be
limited to the minimum amount required by law until such time as the interest and additional amounts
under the bonds have been satisfied in full. Similarly, our perpetual bonds issued in June 2014 provide
that interest shall not be payable and shall not accrue if the amount payable would exceed the
amounts available for shareholder distributions from our distributable income and reserves in the most
recent period; and we have undertaken that if this provision is applied, we will recommend to our
shareholders’ meeting that any dividends payable to shareholders will be limited to the minimum
amount required by law until such time as interest payments under the bonds can recommence.
The payment of the financial compensation owed to us by the National Treasury relating
to the equalization of rural lending is subject to the National Treasury‟s budget process.
The National Treasury is required to compensate us for certain rural lending activities through
―equalization‖ payments, which represent a financial subsidy to rural borrowers. The compensation
payment owed, which was determined under Law No. 8,427 of 1992, is equal to the difference
between the cost of credit charged to the rural borrower and the cost of funding, plus administrative
expenses and taxes, incurred by the official financial institutions and cooperative banks which provide
the loan. Although the equalization payment owed by the National Treasury incurs interest at the
SELIC rate from the date of its incurrence through the date of payment by the National Treasury, the
payment of the amounts owed to us depends on the National Treasury’s budget process, according to
the legislation.
As our controlling shareholder, the Brazilian Government may adopt policies that could
adversely affect our financial condition and results of operations.
Since the Brazilian Government, through the National Treasury, is our controlling shareholder, the
President of Brazil directly appoints our CEO, who, besides a member of our executive board, is also a
member of our board of directors. The Brazilian Government, acting through the Ministers of State for
Finance and for Planning, Budget and Management, also appoints the majority of the members of our
board of directors.
In turn, our board of directors appoints our board of officers, a statutory body responsible for
managing our business.
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Section 4 - Risk Factors
In connection with this government control, our bylaws provide that we may be hired to:
(i) perform certain duties and services in our role as financial agent for the National Treasury, in
addition to other functions assigned to us by law;
(ii) provide financing that furthers government interests and implements official government
programs, whether using Brazilian Government funds or other funds; and
(iii) provide guarantees in favor of the Brazilian Government.
Pursuant to our bylaws, any services that we are required to perform for the Brazilian Government are
contingent upon the satisfaction of certain conditions, including (i) the provision of funds to us by the
Brazilian Government in connection with such services, and (ii) the specification of our remuneration
in connection with and prior to the provision of such services, including with respect to equalization
payments to be made to us. Additionally, these conditions require the specification, in formal terms, of
the risks to be assumed by us, as well as the specification of our compensation for bearing such risks,
the amount of which cannot be lower than the cost of the services provided.
Despite these conditions provided by our bylaws, the Brazilian Government, as our controlling
shareholder, can exercise influence over the decisions of our directors appointed by it, to pursue
business activities that prioritize the Brazilian Government’s strategic objectives or programs, which
could conflict with our economic objectives and adversely affect us.
We are subject to public policies established by the Brazilian Government that affect
Brazil‟s economic and political condition and may require us to change our strategy and
policies, which may adversely affect our operations or prospects.
The political and economic context in which we operate affects our profitability and our strategy.
Changes to economic policy (such as the fiscal, monetary, exchange or other policies set by the
Brazilian Government) and any financial instability resulting from such factors could have an adverse
effect on the Brazilian economy and our business and financial results.
c.
Risks related to its shareholders
We may issue new shares in the future, which could decrease the market prices of our
shares and dilute the shareholder‟s participation in our company.
We may decide to raise funds through the public or private issuance of shares or securities convertible
into shares. The sale or expected sale of any such shares or securities in the future could depress the
market prices of our common shares and also dilute the shareholder’ stake.
d.
Risks related to its subsidiaries and associated companies
The profitability of our insurance and pension products is strongly linked to our models
for pricing and provisioning, which, if poorly calculated, may impact the results of these
products and adversely affect us.
We sell three principal groups of insurance products:
- pensions, which we sell through Brasilprev Seguros e Previdência S.A., or Brasilprev ;
- life, casualty and vehicle insurance products, which we sell through Grupo Segurador BB and Mapfre,
a partnership between BB Seguros Participações S.A., or BB Seguros, our 66% owned subsidiary, and
the Mapfre Group, or Mapfre; and
- reinsurance products, which we sell through IRB Brasil Re S.A., or IRB Brasil Re.
Each of these businesses involves uncertainty regarding the level of indemnity or other payments that
we will need to pay in the future. We use actuarial and statistical models in these businesses to
project premiums charged to new customers and the levels of technical provisions necessary to cover
our future payment obligations. These models take into account factors such as mortality, morbidity
and persistence in the pensions and life insurance businesses; and prior risk behavior in the casualty,
vehicle and reinsurance business. Models for the reinsurance business also take into account expected
macroeconomic conditions, especially changes in interest rates and currency exchange rates. These
models are based on assumptions and projections that are inherently uncertain and that, at times,
may involve determining value based on historical data with little statistical significance. Given the
nature of the insurance business, our payment obligations could exceed those provided for in these
models, due to factors such as retirement ages, mortality, morbidity or persistence in the pensions
and life insurance businesses; frequency of claims (quantity), severity of indemnities (amount) or
macroeconomic factors in the casualty, vehicle and reinsurance businesses.
If any of these risks were to materialize, they would result in a material adverse effect on the financial
condition of our insurance related entities, which would require them to increase their reserves and
would therefore impact their financial statements and, consequently, our results of operations.
Our insurance business related entities would remain fully liable for insurance claims if
their reinsurer coverage is insufficient or fails, which could require them to make
payments that adversely affect their financial condition and results of operations and,
consequently, ours.
In our pension plans, life, casualty and vehicle insurance businesses, reinsurance agreements do not
release our insurance subsidiaries from liability to customers if the reinsurer fails to perform its
contractual obligations. Consequently, if a reinsurer became insolvent or failed to perform its
obligations, our insurance business related entities would be required to honor the insurance contract
in full. As a result, a reinsurer’s nonperformance or insolvency would adversely affect our insurance
subsidiaries and us.
Similarly, our reinsurance business is fully liable for compliance with its reinsurance contracts even if it
carries out retrocession contracting, a transaction that transfers a reinsurer’s risk to other reinsurers
known as retrocessionaires. If a retrocessionaire became insolvent or failed to perform its obligations,
our reinsurance subsidiary would be required to honor the reinsurance contract in full, which could
adversely affect our reinsurance related entity and us.
If our actual loan losses, including Banco Votorantim, exceed credit risk provisions in our
banking activities, we will be adversely affected.
Our financial condition and results of operations depend on the ability to assess losses associated with
the risks to which we are exposed. Both our bank and Banco Votorantim, a bank in which we hold a
50% shareholding, make allowances for loan losses in banking activities according to the parameters
set forth in CMN Resolution No. 2,682 of 1999 and using estimates that involve many factors, backed
by available information including recent loss or default events, the economic scenario, the bank’s
financial situation and the internal loan risk rating. Calculating allowances for loan losses involves
significant judgment on the part of management, and those judgments may change in the future
depending on information as it becomes available.
Our models, risk management methods and procedures, internal controls and corporate
governance may not be fully effective in avoiding exposure to certain uncategorized or
unforeseen events in connection with our subsidiaries and associated companies, in Brazil
or elsewhere, as well as our foreign branches.
Our subsidiaries, associated companies and foreign branches operate in different markets and/or
undertake different activities in Brazil and elsewhere. These companies are subject to regulation by
different regulatory agencies and supervisory entities, and may be subject to local regulations, which
are often not in line with other applicable regulations.
Different types of activities and markets have different risks and complexities. Consequently, the set
of methodologies, policies, procedures and methods used in risk management, internal controls and
corporate governance may not fully capture the exposure to unidentified or developing risks
associated with each of these activities and markets where our subsidiaries, associated companies and
foreign branches operate, including risk of non-compliance with specific Brazilian or international
regulations, which may adversely affect us.
Adverse economic conditions may increase delinquency in consumer and vehicle lending
businesses.
We hold a significant market share of the Brazilian consumer and vehicle lending business and
adverse economic conditions in Brazil may limit the ability of economic agents to service their loans
and lead to increased levels of default in our loan portfolio, which would adversely affect the results of
operations of Banco Votorantim and our bank.
Our business model depends in part on our interests in subsidiaries and affiliates in Brazil
and elsewhere.
We hold direct and indirect equity interests in several financial and non-financial companies in Brazil
and abroad. Our results of operations include the results of these subsidiaries and affiliates. As a
29
Section 4 - Risk Factors
result, any results by these subsidiaries and affiliates could adversely affect us. In addition, we may
not be able to receive distributions of dividends from subsidiaries if they post negative results.
Banco Votorantim may not be able to recognize all deferred tax credits, which may
adversely affect us.
The deferred tax credits derives from tax losses on income and social contribution tax or temporary
differences, primarily related to allowances for loan losses. The accounting treatment for deferred tax
credits in Brazil is governed by CMN Resolution No. 3,059 of December 20, 2002, as amended by CMN
Resolution No. 3,355 of March 31, 2006, CMN Resolution No. 4,192 of March 1, 2013 and CMN
Resolution No. 4,441 of October 29, 2015. In accordance with these resolutions, financial institutions
and other institutions authorized to operate by the Central Bank may, we may only recognize these
deferred tax credits in our financial statements if:
(i) it has a history of taxable profits or revenues for income and social contribution tax purposes, as
evidenced by the recognition of such profits and revenues in at least three of the last five years, a
period that should include the year in question; and
(ii) it has the expectation of generating future taxable income tax and social contribution purposes, as
appropriate, in subsequent periods, based on a technical study that demonstrates the likelihood of
future obligations with taxes and contributions to enable the realization of tax credits within a
maximum of ten years.
Banco Votorantim, according to CMN Resolution No. 4,441, is required to present to the Central Bank
of Brazil during the period of tax credits’ use, studies demonstrating its use up to 10 years. The same
Resolution provides the possibility of dismissal, under Central Bank of Brazils’ judgment, of the
requirement to present the earnings or taxable income history in at least three of the last five fiscal
years.
Banco Votorantim has its scope in a diversified business portfolio, internally classified into wholesale
and retail. The wholesale encompasses operations related to corporate business, investment banking,
securities brokerage, asset management and private bank. In retail segment, it operates with a focus
on vehicle business and has significant complementary businesses such as credit cards, insurance
brokerage and payroll loans. If Banco Votorantim, depending on the nature of their business, is
unable to maintain taxable income in the future, the Central Bank may compel us to reduce or write
down the relevant deferred tax credit, and our assets and/or shareholders’ equity may be reduced as
a result. Any such write off or reduction could adversely affect our financial condition and results of
operations.
Banco Votorantim may be required to increase its provisions regarding civil and labor
claims for the following periods
Labor and civil contingencies may occur because of issues related to the banking sector, which may
cause adverse outcome to the Bank. It should be noted that the retail segment activities concentrates
part of the employees and the businesses are fragmented into several customers.
e. Risks related to its suppliers
The criteria we apply when we purchase goods and services or monitor our suppliers may
not protect us fully from adverse events or business interruption, resulted from legal,
technical and operational aspects, which could adversely affect us.
As a government-controlled company (sociedade de economia mista), we are subject to specific
legislations that govern purchases and contracting by state-owned entities, which are guided by
principles such as selection of the most advantageous proposal, isonomy, legality and publicity,
among others. As a general rule, our suppliers are selected through a bidding process, which may
limit the promptness with which we can replace them.
We use third party suppliers from various sectors for items such as office supplies, software,
equipment, furniture for premises, security services, among others, each of which present various
types of complexity. The criteria we apply when we purchase these goods and services or monitor
suppliers may not be sufficient to protect us fully from unforeseen risks relating to each type of
business or service, including legal risks. Factors such as monopolies, business concentrations or lack
of technical or operational capacity on the part of the suppliers may hinder the continuity of our
operations and adversely affect our business.
f.
Risks related to customers
It may be difficult for us to repossess and realize value from collateral with respect to
defaulted loans, which may adversely affect us.
When our customers default on collateralized loans our only recourse, after exhausting all
extra-judicial collection measures, is to enforce the collateral. Enforcing the collateral may be difficult
once depending on the judicial process that usually is subject to appeals of debtors aiming to delay
the recovery. When dealing with financially distressed debtors, the recovery of these loans may also
be subject to insolvency proceedings in which our claim may rank lower than other preferred
creditors, such as employees and tax authorities. The lawsuits are also a pressure instrument that
enable, at certain stages, the friendly renegotiation of the debtors, through agreements. In addition,
once we have obtained a court judgment, execution of the judgment in order to obtain the collateral
for sale often involves additional obstacles. In view of all the steps necessary in judicial proceedings
for debt collection and the low liquidity of specific markets, it may be difficult for us to realize value
from collateral, which may adversely affect our financial condition and results of operations.
Our ability to charge payments due from payroll loan transactions depends on applicable
regulation, licenses from and agreements with the private or public sector employers
involved, and their credit risk. It also depends on the borrower remaining employed by
the employer.
Part of our revenues derive from payroll loans, under which the interest and repayment charges are
deducted directly from employees’ or retirees’ paychecks. We have been increasing our presence in this
market over the last years. Our ability to make payroll deductions is regulated by various federal, state
and municipal laws and/or regulations, which set limits on the deductions, and depends on licenses
issued by the relevant public entities and agreements with private sector employers, and the
interpretation of those licenses and agreements. Any change in the applicable regulations or
interpretations may require adjustments to our internal procedures for deducting payments from
paychecks.
If any of these factors occur, our payroll collection system will be compromised and a new collection
system may be necessary. Any replacement system likely would not be as effective as payroll deduction
and may have higher operating costs. In this case, we may be required to drive our loans to higher risk
credit with higher interest rates, which may reduce the number of customers. If an employee’s
employment contract terminates, whether through termination by the employer, voluntary departure or
death, repayments under the loan will depend exclusively on the financial ability of the borrower or
his/her successors to repay the loan. Similarly, if a private employer suffers losses or enters financial
distress or bankruptcy, it may not be able to pay the salaries on which the payroll deductions depend.
Any of these events could increase the risk in our consumer loan portfolio and increase the need for
measures to control default through restrictions on new loans, which may adversely affect our
financial condition and results of operations.
We may incur losses in connection with counterparty exposure associated with our
derivative financial instruments, which could adversely affect us.
We face the risk that counterparties to our derivative financial instruments will be unable to honor
their contractual obligations. In particular, we are subject to counterparty risk from our exposure to
derivatives (swaps, forward and futures contracts, etc.). Default can result from deterioration in the
counterparty’s ability to pay, for example as a result of lack of liquidity, financial distress or
bankruptcy, or from various other factors such as operational failure by agents involved in the
settlement chain (such as financial intermediaries or clearinghouses), the inability to deliver assets, or
other issues that could prevent margin calls for guarantees and the financial or physical settlement of
the underlying assets. In markets with greater volatility and in which counterparties do not grant us
appropriate guarantees, failure of the counterparty’s operational strategy may accentuate our
exposure. The occurrence of any such risk could adversely affect our financial condition and results of
operations.
g.
Risks related to economy sectors in which the issuer operates:
Our profitability may be adversely affected by a worsening of Brazilian or global economic
conditions and the perception of risks and uncertainties relating to certain Brazilian
companies in the oil and gas, energy and infrastructure sectors.
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Section 4 - Risk Factors
As a financial institution operating in the Brazilian and international markets, we are subject to
adverse effects from deteriorations of the local and global economic environments. Factors such as
economic growth, market liquidity, inflation, interest rates, prices of assets and insolvency levels,
among others, have the potential to affect the profitability of our business. Due to our international
presence, changes to regulations of local and international financial systems may also affect the
profitability of our business.
In addition to global macroeconomic conditions, the perception of risks and uncertainties surrounding
Brazil may also adversely affect our business. Standard & Poor's and Fitch, two world’s major agencies
in credit rating, downgraded the credit risk rating of sovereign bonds from Brazil and from many
Brazilian companies (including Banco do Brasil), citing the sharp increase in the fiscal deficit and the
general weakening of the Brazilian economy. These downgrades in the country's credit rating and any
other possible reductions in the Brazilian rating by the credit rating agencies, may increase
uncertainties in the Brazilian and global financial markets and cause other events that, directly or
indirectly, has the potential to affect adversely our operations, profitability and financial condition.
Additionally, certain Brazilian companies active in the oil and gas, energy and infrastructure sectors
are facing investigations by the SEC, the U.S. Department of Justice (DOJ) and Brazilian authorities in
connection with corruption allegations (the ―Lava Jato‖ investigations). Given our exposure to certain
large conglomerates in the oil and gas, energy and infrastructure sectors, our credit portfolio may be
adversely affected depending on the outcome of such investigations, as the companies under
investigation may face additional downgrades from credit rating agencies, experience funding
restrictions and have a reduction in revenues, among other negative effects. Furthermore, such
difficulties may cause certain of these companies to commence judicial reorganization proceedings,
which may have greater impact on their financial condition than expected by us. If this is the case, we
may need to increase our provisions for loan losses, which may adversely affect our results of
operations.
We cannot predict how long the anti-corruption investigations may continue, or how significant the
effects of the anti-corruption investigations may be for the Brazilian economy or the companies under
investigation. If a reduction in investor confidence as a result of these investigations is material, it
may adversely affect our results of operations.
Our capability to make interest payments may be limited by liquidity constraints in Brazil.
Any international or domestic situation of liquidity constraint could lead to a flight of capital from Brazil
and/or cause the Central Bank to increase the base rate of interest drastically, could impact the
liquidity in the Brazilian market. Any such liquidity limitation could lead to a scarcity of funding and
liquid assets among Brazilian companies and financial institutions, which could harm the credit
markets and other businesses we hold. Any adverse events affecting the Brazilian economy could
directly or indirectly impair our customers’ ability to pay their debts or adversely impact us
in other ways.
Interest rate changes by the Central Bank may adversely affect us.
In mid-1999, Brazil officially adopted an inflation rate target regime. Under this system, the base
interest rate, known as Special Clearance and Custody System (Sistema Especial de Liquidação e de
Custódia, or SELIC), is the principal instrument of monetary policy used by the Central Bank to keep
inflation in line with the target rate, which is set each year by the CMN. In application of monetary
policy, the Central Bank’s Monetary Policy Committee adjusts the basic rate in response to changes in
supply and demand, which could otherwise cause inflation to vary from the target rate. Thus, changes
of the SELIC basic interest rate are frequent. The SELIC base interest rate was 11.00% p.y. as of
December 31, 2011, 7.25% p.y. as of December 31, 2012, 11.75% p.y. as of December 31, 2014 and
14.25% p.y in mid-2015.
Our businesses are subject to the changes in the base interest rate which could adversely affect our
results of operations by reducing demand for the loan products we offer, increasing our cost of funds,
reducing spreads on lending activity or increasing the risk of default by borrowers.
Our exposure to Brazilian Government debt could adversely affect us.
We invest in debt securities issued by the Brazilian Government. Although the interest rates on the
majority of these securities are fixed, their trading price varies in accordance with domestic or global
macroeconomic conditions or other events that may impact market perception of the Brazilian
Government’s capacity to pay the principal or interest on its debt as they fall due. Since a decrease in
the trading price of these securities could depress the value of our portfolio, market conditions and
the Brazilian Government’s capacity to honor its payment obligations could adversely affect us.
The increasingly competitive environment in the Brazilian banking industry may adversely
affect us.
The recent variations in Brazilian interest rates, including the historic lows reached in 2012, together
with reductions in bank spreads, pose new challenges to the financial industry as profits from financial
intermediation have fallen. Banks have responded by reallocating their asset portfolios and seeking to
generate higher fees from banking services while investing in operational efficiencies, cutting
expenses and optimizing processes to maintain competitiveness. Although interest rates have
increased since 2012 and bank spreads have widened somewhat, there can be no guarantee that they
will not decline again.
Increased access by Brazilians to the formal banking system, changes in regulations that have enabled
public sector employees to choose their bank, and other regulations that have made it easier for
customers to change banks, have all increased competition in the Brazilian banking industry.
Competition from foreign banks entering or expanding in the Brazilian market, and from companies
such as large retailers and construction companies, who have been permitted to enter the payment
card market since the Brazilian Government enacted Law 12,865/2013 in 2013, have increased these
pressures.
In addition, Brazilian bank customers are increasingly well-informed and connected and, as a result,
more demanding in terms of the banking services they seek. As a result, banks are required to
increase their investment in the quality and convenience of service, particularly in terms of
multi-channel banking platforms and new products and services.
We will be adversely affected if we fail to remain competitive in the light of these increased
competitive factors.
We are subject to the risks inherent to the Brazilian agribusiness sector, which may
adversely affect us.
We are the primary agent providing financing to the Brazilian agribusiness sector, which is subject to
inherent risks such as weather conditions, disease, insects and fluctuations in commodity prices.
These risks can drive down agricultural productivity and lead to reduced margins in the sector, which
can affect customers’ income and impair these customers’ ability to pay their debts and potentially
cause them to default, requiring us to increase our Provisions for Doubtful Debts.
We are subject to foreign exchange rate instability, including devaluation of the real,
which may adversely affect our financial condition and results of operations.
Since January 1999, the Brazilian Government has followed a floating exchange rate policy. In this
system, where exchange rates vary in accordance with currency supply and demand, the Central Bank
may intervene in the market by purchasing or selling currencies in order to avoid significant
fluctuations in the exchange rate. The Brazilian Government may also use instruments to limit
volatility and/or undesirable variations in the price of the real against the US dollar. Despite these
actions by the Central Bank and/or the Brazilian Government, significant appreciation or depreciation
of the real may occur, affecting Brazil’s economy and our business.
The depreciation of the real in relation to the US dollar may also create additional inflationary
pressures in Brazil and adversely affect our business. On the other hand, the appreciation of the real
against the US dollar may lead to a deterioration of the current transactions and balance of payments
in Brazil, due to an increase in imports. The exchange rate depreciation or appreciation of the real
may adversely affect our financial condition and operating results.
We are subject to ongoing civil claims in connection with certain “economic plans,” which
may adversely affect our results of operations.
From 1987 to 1991, the Brazilian Government adopted measures to stabilize and expand Brazil’s
economy, which included establishing economic guidelines to stimulate growth, development and
income distribution. For this purpose, the Brazilian Government of that period created stabilization
programs, also known as ―economic plans‖, namely the Bresser Plan (June 1987), the Verão or
Summer Plan (January 1989), the Collor Plan I (March 1990) and the Collor Plan II (March 1991).
Among other measures, these plans adjusted interest rates applicable to the financial system.
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Section 4 - Risk Factors
These economic plans affected the interest income generated from savings accounts at Brazilian
financial institutions, including us, and from payments deposited with the courts. These matters have
led to lawsuits brought by accountholders against Brazilian financial institutions, including us. If the
Brazilian superior courts decide in favor of accountholders, our results of operations may be adversely
affected.
At the end of 2015 it was judged RESP 1,319,232-DF (special appeal) in the proceedings of ACP
94,008,514-1 (civil action), which was maintained previous condemnation of the Union, of the Central
Bank of Brazil and of the Banco do Brasil, the payment of the differences resulting from the IPC
(Consumer Price Index) March 1990 (84.32%) and the BTN fixed for the same period (41.28%),
restated values following the overpayment, the rates applicable to judicial charges, together with
default interest. The decision can be appealed.
Certain factors outside our control, including prevailing interest and exchange rates and
the market price of our securities portfolio, may adversely affect us.
Our operating results are subject to factors that are beyond our control, including interest and
exchange rates in force and the market price of our securities portfolio.
Accordingly, our ability to secure satisfactory rates of return on our assets and shareholders’ equity
may depend on our ability to increase our revenue, reduce costs and adjust our portfolio of assets in
ways that minimize the adverse impact of fluctuations in these macroeconomic indicators.
For example, our Banco Múltiplo’s investments in securities as of December 31, 2015 consisted of the
following: (i) 88% in securities linked to an interbank certificate of deposit (Certificado de Depósito
Interbancário), or CDI, or to the average SELIC rate (Taxa Média SELIC), or TMS; (ii) 8.8% in fixed
rate securities; and (iii) 3.2% in securities linked to other indexes. Consequently, the majority of our
securities portfolio is linked to floating interest rates. Our foreign investment can adversely affect our
profitability in the event of significant changes in the exchange rate.
Our overall foreign exchange exposure, calculated in accordance with Central Bank Circular No. 3,641,
totaled approximately R$4.97 billion as of December 31, 2015. The principal foreign currencies to
which we are exposed are the US dollar, the Euro, the Pound Sterling the, Swiss Franc and Yen.
We are subject to all risks associated with long term credit operations, including economic activity
levels, interest rates, mismatches in funding periods or changes in Central Bank requirements. If the
interest rates applicable in the market change, our fixed rate securities would be affected, impacting
our income statement in the case of securities held as ―trading securities‖ or our shareholders’ equity
in the case of securities classified as ―available for sale.‖ None of these factors is under our control,
and any of them may adversely affect us.
Any substantial future increase in inflation in Brazil may adversely affect our financial
condition and results of operations.
In the past, Brazil has experienced high rates of inflation. Certain measures and plans adopted by the
Brazilian Government to combat inflation had in the past negative effects on the Brazilian economy.
Although the inflation target system adopted in 1999 has been largely successful in controlling
inflation, inflationary pressure could affect the Brazilian economy in future. The Central Bank currently
implements a monetary regime designed to maintain inflation in line with a target that is determined
and announced in advance. Inflation in Brazil, as measured by the National Broad Consumer Pricing
Index (IPCA), was 6.5% in 2011, 5.8% in 2012, 5.9% in 2013, 6.4% in 2014 and 10.7% in 2015.
If the Brazilian Government fails to control inflation, despite actions such as increase in interest rates
and macroprudential measures to limit the supply of credit, and the economy experiences elevated
inflation levels in the future, our financial condition and results of operations may be adversely
affected. In this case our ability to comply with certain of our obligations may be affected, since we
are party to certain inflation-adjusted agreements. Inflationary pressures could also reduce our ability
to access foreign financial markets, affect the ability of our customers to comply with their payment
obligations in a timely manner and lead to further government intervention in the economy, including
policies that could adversely affect the performance of the Brazilian economy as a whole and
consequently our financial condition and results of operations.
Brazil‟s economy remains vulnerable to external factors, which may adversely affect
Brazil‟s economic growth and our business and results of operations.
The globalization of capital markets has increased the vulnerabilities of countries to each other’s
adverse events. Brazil could be negatively affected by negative financial and economic developments
in other countries. The global financial crisis that occurred in mid-2008 led to reduced liquidity,
crashes in credit markets and economic recessions in developed countries, which in turn negatively
affected emerging markets. Financial losses and cash deficiencies, bankruptcies of financial and
non-financial institutions and a decrease in confidence of economic agents increased risk aversion and
led to more cautious lending.
In addition, fiscal problems in certain countries, especially in Europe, heightened concerns about the
fiscal sustainability of weaker economies and reduced the confidence of international investors, which
increased market volatility. These factors may affect our and other Brazilian financial institutions’
ability to obtain financing in the international markets, limiting the credit. In addition, adverse events,
such as those mentioned above, may damage the macroeconomic conditions in Brazil, impairing our
customers’ payment ability, and may also limit the realization of certain of our business strategies,
which may cause an adverse impact on our businesses and operating results.
The Brazilian Government exercises influence over the Brazilian economy, and
governmental actions may adversely affect the Brazilian markets and our business,
financial condition and results of operations.
It is generally accepted that governments must guide, correct and supplement market systems.
Economic policies, including monetary, fiscal credit and foreign exchange policies, among others, are
used as instruments to maintain Brazil’s economic system. In this context, changes in
regulations applicable to the services financial institutions provide in relation to currency controls,
taxes and other areas could adversely affect our business, financial situation and results of operations.
Uncontrolled inflation, large exchange variations, social instability and other political, economic and
diplomatic events, as well as the Brazilian Government’s response to such events, could also
negatively affect our business and strategy. In addition, uncertainty with respect to economic policy
and, principally, in regulations of the financial markets can contribute to mistrust of financial agents
and increase volatility in the Brazilian capital markets, as well as the prices of securities of Brazilian
issuers. We cannot predict whether the approach the Brazilian Government will take with respect to
economic policies will impact the Brazilian economy or produce changes in the market and adversely
affect our financial condition and results of operations. However, changes in policy or regulation at the
federal, state and municipal levels may affect or involve factors such as:
• interest rates;
• currency volatility;
• inflation;
• reserve and/or capital requirements;
• liquidity of capital and lending markets;
• macroprudential measures;
• non-performing loans;
• monetary and tax policies;
• exchange rate controls and restrictions on remittances abroad; and
• other political, social and economic developments in or affecting Brazil.
Uncertainty over the implementation of changes by the Brazilian Government creates instability in the
Brazilian economy. This instability, in turn, increases the volatility of the financial markets, which may
result in an adverse effect on our business, financial condition and results of operations.
The market for Brazilian securities is subject to a high degree of volatility due to
developments and perceptions of risks in other countries.
The market for securities issued by Brazilian companies is influenced by economic and market
conditions in Brazil, as well as, to varying degrees, market conditions in other Latin American and
emerging market countries, the United States, Europe and other markets worldwide. Although
economic conditions differ in each country, the reaction of investors to developments in one country
may cause the capital markets in other countries to fluctuate.
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Section 4 - Risk Factors
h.
Risks related to the regulation of sectors in which the issuer operates
We onlend resources from a number of Brazilian Government funds and manage Brazilian
Government investment portfolios. These activities may lead us to recognize liabilities
that are greater than those we have recorded in our financial statements, which would
adversely affect us.
We onlend resources from various funds under Brazilian Government programs that aim to stimulate
economic development and employment in Brazil by providing financing to certain business sectors.
We also onlend funding made available by the BNDES, which aims to provide long-term financing for
businesses that benefit Brazil’s development. In the majority of these cases, we recognize the loans
we make as liabilities, which are then subject to accounting reconciliation against the resources
provided by the funding providers and agencies charged with overseeing these activities. The
accounting methodology and systems relating to these funds are currently being reviewed, which
could reveal reconciliation differences in the amount of liabilities we have recorded. In addition, we
provide asset management services for various programs and investment portfolios of the Brazilian
Government that provide financing to the rural and agribusiness sector, including securitization
portfolios, Pesa, Proceder II and Funcafé. The procedures relating to these portfolio programs are also
currently being reviewed, which could reveal differences between the related accounting entries and
the amounts of the portfolios under management. Any of these reviews could adversely affect us.
We may not be able to recognize all deferred tax credits, which may adversely affect us.
The deferred tax credits derived from tax losses on income and social contribution tax or temporary
differences, primarily related to allowances for loan losses. The accounting treatment for deferred tax
credits in Brazil is governed by CMN Resolution No. 3,059 of December 20, 2002, as amended by CMN
Resolution No. 3,355 of March 31, 2006 CMN Resolution No. 4,192 of March 1, 2013 and CMN
Resolution No. 4,441 of October 29, 2015. In accordance with these resolutions, we may only
recognize these deferred tax credits in our financial statements if: (i) we have a history of taxable
profits or revenues for income and social contribution tax purposes, as evidenced by the recognition of
such profits and revenues in at least three of the previous five years (including the current year); and
(ii) we expect, based on an internal probability study, to generate future taxable profits or revenues
for income and social contribution tax purposes in subsequent periods that will allow the deferred tax
credits to be realized within the subsequent ten years.
We, according to CMN Resolution No. 4,441, are required to present to the Central Bank of Brazil
during the period of tax credits’ use, studies demonstrating its use up to 10 years. The same
Resolution provides the possibility of dismissal, under Central Bank of Brazils’ judgment, of the
requirement to present the earnings or taxable income history in at least three of the last five fiscal
years.
If we are unable to maintain taxable income in the future, the Central Bank may compel us to reduce
or write down the relevant deferred tax credit, and our assets and/or shareholders’ equity may be
reduced as a result. Any such write off or reduction could adversely affect our financial condition and
results of operations.
Any exchange controls implemented by the Brazilian Government may adversely affect
our business, financial condition and results of operations.
The purchase and sale of foreign currency in Brazil is subject to Central Bank regulation and other
specific rules. The Central Bank currently authorizes the conversion of Brazilian currency into foreign
currency in most situations, but continues to regulate certain transactions, such as investments in the
international capital markets and cross border derivative contracts by consumers or companies. In
addition, Brazilian current exchange policies follow the guidelines set forth in the Brazilian federal
legislation, including:
- mandatory use of local currency (reais) in operations in Brazil;
- requirement of registration of foreign exchange transactions with the Central Bank;
- formalization of transactions through exchange contracts; and
- maintenance of requirements applicable to foreign investments in Brazil.
Adverse events may lead the Brazilian Government to institute a more restrictive exchange control
policy in the future. Factors that could increase the likelihood of such restrictions include:
• the extent of Brazil’s foreign currency reserves;
• the availability of sufficient foreign exchange on the date a payment is due;
• the size of Brazil’s debt service burden relative to the economy as a whole; and
• any other political constraints to which Brazil may be subject.
Any such restrictions may adversely affect our financial condition, results of operations and ability to
make payments in foreign currencies to meet our obligations under foreign currency denominated
liabilities outside Brazil.
The Brazilian Government has announced that it plans to propose broad tax reforms
which, if implemented, may adversely affect us.
The Brazilian Government regularly enacts reforms to tax and other assessment regimes affecting us.
These reforms include changes to the frequency of assessments and, occasionally, temporary taxes,
the proceeds of which are earmarked for certain governmental projects. The Law 13,169 from
October 6, 2015, increased the CSLL for financial institutions from 15% to 20% during the period
between September 1, 2015 and December 31, 2018. In addition, the Federal Government proposed
the return of the CPMF, temporarily. However, that the contribution will be required, should also be
observed the legislative process in Congress and the principle of precedence. The Brazilian
Government intends to propose broad tax reforms in Brazil to improve the efficiency of the allocation
of economic resources. It is anticipated that the reforms, if adopted, would involve a major
restructuring of the Brazilian tax system, including the possible creation of a value added tax on goods
and services that would replace several taxes currently in force (including the social contribution tax,
the federal tax on industrial products and state taxes on the circulation of goods and services). The
effects of these changes, if enacted, and any other changes that could result from the enactment of
additional tax reforms cannot be quantified. They may have an adverse effect on our business.
Changes to the tax system in the past have produced uncertainty in the financial system and
increased the cost of borrowing. These changes, if enacted, may contribute to a decrease in the
performance of our loan portfolio due to a deterioration in the economic and financial condition of our
borrowers. Accordingly, these changes, if enacted, may adversely affect our financial condition and
results of operations.
The recoverable amounts of fixed assets, intangible assets and equity investments used in
our financial impairment tests may differ from the actual recoverable amount of such
assets, which could adversely affect us.
The applicable Brazilian accounting rules and IFRS require us to carry out calculations of the
recoverable amount of our assets so that they are not recorded in amounts greater than what is
actually recoverable through use or sale of the asset. In cases where this occurs, we record an
impairment loss in our income statement equal to the difference between the two amounts.
Under these rules, we must estimate the recoverable amount based on prices quoted in the market,
discounted cash flows or other techniques, which requires our management to make subjective
decisions and adopt assumptions it deems adequate. If management uses incorrect assumptions and
the recoverable value of the asset is lower than previously estimated, we would be required to
account an impairment loss, in amounts greater than the already constituted provisions, which would
adversely affect our financial condition and results of operations.
Changes in reserve requirements and compulsory deposits may adversely affect us.
Compulsory deposits are resources that financial institutions in Brazil, including us, are required to
maintain with the Central Bank in relation to demand deposits, savings deposits, time deposits and
foreign exchange transactions. Compulsory deposits have been used as an instrument of monetary
policy in the past, but they are now seen as an instrument by which the Central Bank pursues stability
in the financial system. Control over compulsory deposit levels enables the Central Bank to influence
the volume of credit that commercial banks may extend to the economy, and allows the Central Bank
to manage the money supply more efficiently by providing greater predictability with respect to
commercial banks’ liquidity requirements.
Any changes to the rules or rates of compulsory deposits that increase required levels of deposits with
the Central Bank will reduce our capacity to extend credit and make other investments, which may
adversely affect us.
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Section 4 - Risk Factors
Alterations to the requirements to apply certain savings account balances to agribusiness
loans and retail mortgages may adversely affect our profitability.
CMN regulation No. 3,549 of 2008 permitted financial institutions that are authorized to take rural
savings deposits to also take savings deposits under a specific savings and loan scheme known as the
Sistema Brasileiro de Poupança e Empréstimo, or SBPE. The same regulation required those financial
institutions to direct 90% of their savings deposits to agricultural lending and 10% to housing
mortgages. With respect to the housing mortgage requirement, as of September 30, 2015 we are
required to apply 65% of the 10% of directed savings deposits to housing mortgages. With respect to
the agricultural lending requirement, for the 2015/2016 harvest, we were required to apply 74% of
the 90% of directed savings deposits to agricultural lending.
Changes in these percentages will result in the need to increase or reduce our funding to these
sectors. The specific financial impact of any such changes will depend on both the content of the new
regulations for mandatory and additional deposits, as well as on our negotiations with the National
Treasury regarding equalization payments, which are the difference between the cost of credit
charged to the rural borrower and the cost of funding, plus administrative expenses and taxes,
incurred by the financial institution providing the loan, such as our bank. Our profitability could be
adversely affected to the extent we are required to allocate funds at lower spreads or to comply with
regulatory requirements on compulsory deposits.
In 2015, CMN resolution No. 4,410 increased the compulsory deposits of savings deposits used to
comply with housing mortgages requirements to 24.5% from the previous 20.0%, but reduced the
additional compulsory deposits to 5.5% from the previous 10.0%. The same resolution increased the
compulsory deposits of savings deposits used to comply with agricultural lending requirements to
15.5% from the previous 13.0%, and also reduced the additional compulsory deposits to 5.5% from
the previous 10.0%.
The Central Bank Circular 3,757/2015 has provided to financial institutions to comply with up to 18%
of the compulsory deposits of savings deposits within the SBPE (housing mortgages) through
financing of residential properties, new or used, under the conditions of the Financial System Housing
(Sistema Financeiro de Habitação – SFH).
Under Brazilian law, the Brazilian Government must control a majority of our shares.
We are a publicly-held company organized as a mixed-capital corporation (sociedade de economia
mista). Brazilian Law Decree No. 200 of February 25, 1967 provides that the Brazilian Government
must hold the majority of the voting shares of mixed-capital corporations such as our company. The
Brazilian Government could only hold less than a majority of our voting shares if there is a future
change to our status as a mixed-capital corporation or to Law Decree No. 200, either of which would
require a decision of the President of Brazil. As of December 31, 2015, the Brazilian Government held
57.7% of our shares, both directly and indirectly through the National Treasury and various
government-controlled funds.
Brazilian law may limit other parties‟ ability to institute bankruptcy or liquidation
proceedings against us in Brazil.
Law No. 6,024 of March 13, 1974 as amended, or the Financial Institutions Liquidation Law, in the 1st
article, empowers the Central Bank to intervene extra-judicially in the operations of financial
institutions owned by the private sector or Brazilian state governments (although not those owned by
the Brazilian Government), or to liquidate those financial institutions. Since the Brazilian Government
holds the majority of our shares, we are not subject to this Central Bank power. Furthermore,
according to Law No. 11,101 of February 9, 2005, or the New Bankruptcy Law, companies whose
share capital is held by both the Brazilian Government and private shareholders (mixed-capital
companies, or sociedades de economia mista) such as us, are not subject to bankruptcy proceedings.
As such, only the Brazilian Government, as our controlling entity, has the authority to liquidate us.
Accordingly, Brazilian law does not currently permit other parties to institute bankruptcy or liquidation
proceedings against us in Brazil. The New Bankruptcy Law, the Brazilian Corporations Law and the
Financial Institutions Liquidation Law could be amended in the future, either by legislative action or
through a provisional measure enacted by the President of Brazil. Any such amendment could change
our legal status. Any such change could adversely affect our activities and could affect our ability to
meet our payment obligations.
Local politics and macro-economic and legislative conditions in Argentina could adversely
affect our investment in Banco Patagonia.
Since Mauricio Macri, the new president of Argentina, took charge as president of this country, he has
already implemented some of the economic policy changes promised during the presidential campaign,
which aim to recover the balance in macroeconomic management and reduce distortions in the
allocation of productive factors of the country. Among other measures, taxes and licenses were
eliminated for imports for over 90% of the goods that have suffered restrictions, unification of the
foreign exchange market, restrictive monetary policy and realigning perspective in electricity tariffs. In
addition, the Government reopened negotiations with the so-called holdouts that have been stalled since
mid-2014, aiming to return to international capital markets. However, the country tried unsuccessfully to
issue sovereign bonds abroad. The Government also ordered a review of the calculation methodologies
of economic indicators, especially the GDP, and consumer inflation measures, which, since 2007, had
lost their reliability with the domestic and international financial community, including the International
Monetary Fund.
The president of the Central Bank of Argentina (BCRA), Federico Sturzenegger, announced the action
plan for 2016 that includes, among other measures, the adoption of a floating exchange rate regime,
already adopted, together with the system of inflation targeting to serve as a nominal anchor for
monetary policy going forward. In addition, the BCRA established as a central policy to promote banking
services, understood as the universal access of the population to payment services, improve the
mechanisms for savings accumulation and improvement in credit conditions in order to minimize
transaction costs, maximize financial intermediation and promoting the formalization of the economy.
Although the measures already adopted have the potential to generate more sustained growth in
economic activity, the risks to this scenario remain high. Among other factors, the recent exchange rate
depreciation, and the wage increases incompatible to growth of the country's productivity, tend to keep
inflation at relatively high levels. The correction of significant public sector deficit will mean a cut of
subsidies and other measures that should pass by raising taxes and cutting benefits granted in recent
years of the Kirchner government.
In addition, one of the great challenges of the Macri administration is to get support from the Congress,
which is mostly formed by opposition parties, to adopt some of these measures.
Thus, there is no guarantee that the current macroeconomic imbalances are fully resolved. There is also
no assurance that the Government re-adopt restrictive measures related to the external resources
output.
Due to it is an investment in Argentina, we are subject to foreign exchange exposure of the Argentine
peso/Brazilian real. We monitor the market, the trend of the currency, the cost and available liquidity of
hedge transactions, and, depending on the observed conditions, partial or full protection of the currency
risk. BB's investment hedge strategy in Banco Patagonia, during the 4th quarter of 2015 was the result
of the shareholders equity dollarization operations composition held by Banco Patagonia in Argentina
and use of derivatives in Brazil, as NDF ARS/USD Dollar and the Future Dollar. During the 4th quarter of
2015, the instruments performed very expensive and low liquidity, especially NDF ARS/USD, generating
a high cost to the hedge and rendering the strategy. The result of exchange rate changes on investment
of Banco Patagonia and their hedges negatively impacted our results on R$520 million. In 2015, the
negative impact was approximately R$100 million.
In addition, a further deterioration of the business environment and macroeconomic conditions in
Argentina have potential to reach directly the business of Banco Patagonia.
In 2015, Banco Patagonia paid dividends of 1.044 billion Argentine pesos for the 2014 results, from
which due to Banco do Brasil S.A. the amount of 554.4 million Argentine pesos (approximately R$ 192.4
million reais) corresponding to its interest in subsidiary (58.96%).
Changes in Brazilian accounting practices arising from their convergence with
international accounting practices (IFRS) may adversely affect the Bank's results.
The Accounting Pronouncements Committee (CPC) issued several accounting pronouncements that
are consistent with International Accounting Standards – IFRS, some of which were accepted by the
Central Bank of Brazil (Bacen). In addition to the CPC pronouncements accepted by Bacen, the Bank
has applied others that do not conflict with the rules issued by the National Monetary Council – (CMN)
and by Bacen. The adoption of new accounting practices that may be accepted by the Bacen could
have relevant impacts in the financial statements, with a possible negative effect on the Bank's
income, which include:
39
Section 4 - Risk Factors
CPC 04 – Intangible Assets and CPC 15 – Business Combination - a) reclassification of intangible
assets identified on the acquisitions of Banco Votorantim interest, which occurred in 2009, as well as
in the acquisition of Banco Patagonia control, in 2011, and BB Americas, in 2012, in the investment
account to the account of intangible assets in the group of Non-current Assets – Permanent; b)
derecognition of goodwill amortization expenses due to expectations of future profitability arising from
the acquisitions; and c) recognition of amortization expenses of intangible assets with definite useful
lives, identified in the acquisitions.
CPC 18 – Investment in Joint Venture – a) recording at fair value of shareholding interest received in
the ambit of partnership to form joint ventures BB Mapfre SH1 and Mapfre BB SH2, on June 30, 2011;
b) write-off of assets contributed by Banco do Brasil, including goodwill, if any, at book value; and c)
recognition of transaction income in new organizations established proportionately to shareholding
interest.
CPC 38 – Financial instruments: Recognition and Measurement - adjustment in the allowance for loan
losses, due to the adoption of the incurred loss criterion instead of the estimated loss criterion.
The Brazilian Government exercises extensive regulatory control over Brazilian banks,
including us. Any changes in laws and regulations could adversely affect our business and
results of operations.
The Brazilian Government exercises extensive regulatory control over Brazilian banks and the financial
market. This regulation is exercised principally by the Central Bank, the CVM and the CMN, which
monitor the banking sector and can impose disciplinary sanctions. These regulations relate to the
following areas, among others:
• minimum capital requirements;
• internal processes to assess capital adequacy;
• compulsory deposit and reserve requirements;
• requirements regarding investments in fixed assets;
• lending limits and other credit restrictions, including compulsory allocations;
• limits and other restrictions on fees;
• limits on the amount of interest banks can charge and the periods for capitalizing interest;
• accounting and statistical requirements;
• price and salary controls;
• tax policy and regulation; and
• other requirements or limitations resulting from the global financial crisis.
In the past the Brazilian government has enacted regulations to implement economic policy, for
example to control the availability of credit in order to reduce consumption, which affected our ability
to grant credit and restricted the growth of our credit portfolio. Increases in compulsory deposits have
reduced our profitability since returns on compulsory deposits are lower than those we could obtain
elsewhere. Future changes in regulations may similarly have an adverse effect on our results over
many periods.
This regulatory structure evolves continuously due to new or changing international agreements,
volatility in the markets and the Brazilian Government’s desire to strengthen the Brazilian Banking
Industry (Sistema Financeiro Nacional, or SFN). As a result of these factors, the Brazilian Government
may in future change laws and regulations in ways that adversely affect our liquidity, our customers’
solvency, our funding strategy, growth in our lending business, our compliance costs or other aspects
of our business.
Minimum capital adequacy requirements imposed on us following the implementation of
the Basel regulations may reduce our business leverage capability and adversely affect
us.
The implementation of Basel II rules in Brazil, especially its minimum capital adequacy requirements,
resulted in several changes in the form of measuring capital to bear risks inherent to banking
activities. New regulatory requirements may lead to a greater need for capital to support our business.
In March 2013, the Central Bank enacted a series of regulations to implement the Basel III
requirements in Brazil, the majority of which took effect on October 1, 2013.
The new rules set forth three independent capital requirements to be continuously met by financial
institutions:
I - a minimum core capital ratio of 4.5%;
II – a minimum Tier 1 Capital ratio of 5.5% (through December 31, 2014) and 6.0% (starting January
1, 2015); and
III – a minimum regulatory capital ratio of 11.0% (from October 1, 2013), declining to 8.0% (starting
January 1, 2019), to the total Reference Equity, under a timetable published by CMN Resolution 4,193
from March 2013.
In addition, these new rules require financial institutions to maintain a ―capital conservation buffer‖ for
Core Capital conservation purposes under periods of stress or for countercyclical purposes.
Due to these changes in the rules concerning capital adequacy, and depending on the performance of
the Brazilian economy as a whole, we may in future be required to provide further capital, thereby
hindering our leverage level. We may also be required to limit our credit operations, dispose of some
of our assets and/or take other measures that may adversely affect our financial condition and results
of operations. Any of these factors could adversely affect us.
Foreign investment in the share capital of Brazilian banks is limited by law.
Under a Brazilian presidential decree, foreign investment in our common shares is currently limited to
30% of our total capital stock.
Pursuant to Article 52 of Brazil’s transitory constitutional provisions, the President of Brazil may
increase the share of foreign capital in financial institutions by decree, if the President believes it to be
in the country’s best interest. Foreign investment in our capital stock is currently limited to 30%,
increased from 20% by a presidential decree in October 2013. Any increase in this limit can only be
made by presidential decree, which is out of our control. If the number of shares held by non-Brazilian
shareholders approaches the 30% limit, we will not be able to sell additional shares to foreign
investors.
This limitation may impact the liquidity and price of our shares
i.
Risks related to foreign countries where the issuer operates:
Our international operations are concentrated principally in Europe, North America, Asia,
Africa and Latin America. Any changes in economic performance or regulation in these
regions or individual countries may adversely affect us.
International expansion is one of our strategies, focusing on Brazilian communities outside of Brazil,
the internationalization of Brazilian companies and businesses, and international commerce involving
Brazil. Accordingly, we have adopted several initiatives to further this strategy, including the
acquisitions of Banco Patagonia, in Argentina, and Banco do Brasil Americas (formerly Eurobank), in
the United States, as well as the opening of a branch in Shanghai, China, in May 2014. Another
ongoing movement is the closure of BB Leasing Co. Any adverse conditions in the economies of the
foreign countries in which we operate may impact the results of our branches located in those
markets. Factors that may impact our operations outside Brazil include reductions in the volume of
foreign trade by Brazilian companies established abroad, as well as by foreign companies that have
commercial relations with Brazil, causing a decrease in our revenues and a consequent decrease in
the income of our international network. Depending on the overseas market affected, the profile of
our customers and the nature of the economic disruption, we may experience a decrease in the
number of our customers, which may negatively impact our results.
In addition, changes in regulations in any of the countries where we operate, particularly with respect
to legal, operational, image and credit risk exposition considering the allocated capital, may adversely
affect us.
j.
Risks related to environmental issues
Climate change, considering its impact on loans and financing from exposure to
environmental risk may adversely affect us.
Climate change is a systemic risk, affecting all economic sectors. This risk stems from the
intensification of the greenhouse effect, caused by the increase in the atmosphere of the pollutants
gases. Scientific evidence indicates that human activity is causing this intensification, such as the
41
Section 4 - Risk Factors
burning of fossil fuels, deforestation of native forests, among other practices. The increase in
greenhouse gas emissions (GHG) is considered as the main cause of climate change, as evidenced by
the occurrence of more severe events related to drought, storms, gales and floods. The likely
implications for society are related to the availability of arable land and water and their impacts on
health, welfare and production processes. For the Banco do Brasil, there is the risk of customers being
impacted by climate change and therefore incur in default.
k.
Risks relating to our common stock or ADS
ADSs holders may be unable to exercise preemptive rights with respect to the
common shares underlying the ADSs.
ADS holders who are United States residents may not be able to exercise the preemptive rights
relating to the common shares underlying our ADSs unless a registration statement under the
Securities Act is effective with respect to those rights or an exemption from the registration
requirements of the Securities Act is available. We are not obligated to file a registration statement
with respect to the common shares relating to these preemptive rights, and we may decide not to file
any such registration statement. If a registration statement is not filed and an exemption from
registration does not exist, the depositary bank will attempt to sell the preemptive rights, and the ADS
holder will be entitled to receive the proceeds of the sale. The preemptive rights will expire if the
depositary cannot sell them.
Actual or anticipated sales of a substantial number of our common shares in the future by
a significant shareholder could decrease the market prices of our ADSs.
Currently, the Brazilian Government owns 57.7% of our total capital, and PREVI owns 10.4%. The
sale or expected sale of a substantial number of our common shares in the future could depress the
market prices of our common shares and ADSs. If our controlling shareholder, a relevant shareholder
or a large shareholder decide to sell a substantial number of shares in the future, the market price of
the ADSs may fall meaningfully. As a result, ADS holders may not be able to sell their ADSs at or
above the price paid for them.
Judgments of Brazilian courts with respect to our common shares or ADSs will be payable
only in reais.
If proceedings are brought in Brazilian courts to enforce our obligations under our common shares or
ADSs, we will not be required to settle our obligations in any currency other than reais. Under
Brazilian exchange control limitations and according to Brazilian laws, an obligation in Brazil to pay
amounts denominated in a currency other than reais will be satisfied in reais at the exchange rate
published by the Central Bank or competent court on the date of the judgment. These amounts are
then adjusted to reflect exchange rate variations through the effective payment date. The exchange
rate in force may not fully compensate the ADS holder for any claim arising out of or related to our
obligations under our common shares or ADS.
A holder of our ADS may find it more difficult than a holder of our common shares to
exercise his or her voting rights at our stockholders‟ meetings.
ADS holders may exercise voting rights with respect to the common shares represented by our ADSs
only in accordance with the deposit agreement relating to our ADSs. There is no provision in Brazilian
law or under our bylaws that limits the exercise by ADS holders of their voting rights through the
depositary bank related to the underlying common shares. However, this places practical limitations
on the ability of ADS holders to exercise their voting rights as a result of the additional procedural
steps involved in communicating with ADS holders. For example, our common shareholders receive
notices of shareholders’ meetings in official government publications in Brazil and are able to exercise
their voting rights by either attending the meeting in person or voting by proxy. ADS holders, on the
other hand, do not receive notice directly from us. Under the deposit agreement, our company will
notify the depositary bank, which then, as soon as practicable, will mail to ADS holders the meeting
notice and the terms describing the voting instructions. In order to exercise their voting rights, ADS
holders must then instruct the depositary on how to vote. As a result of these procedural steps, the
process for exercising voting rights may take longer for our ADS holders than for holders of our
common shares. If the depositary fails to receive timely voting instructions for an ADS, that ADS may
not vote at any meeting.
ADS holders may lose their ability to remit foreign currency abroad and obtain Brazilian
tax advantages if exchange ADSs for our common shares.
The Brazilian custodian for the common shares underlying our ADSs must obtain a certificate of
registration from the Central Bank to be entitled to remit US dollars abroad for payments of dividends
and other distributions relating to our common shares, or upon the disposition of our common shares.
If you and ADS holder decide to exchange ADSs for the underlying common shares, you he will be
entitled to continue to rely on the custodian’s certificate of registration for five business days from the
date of exchange. After that period, the ADS holder may not be able to obtain and remit US dollars
abroad deriving from disposals of or distributions on the shares unless you obtaining its own
certificate of registration or register under CMN Resolution No. 4,373 of September 29, 2014, which
entitles registered foreign investors to buy and sell on Brazilian stock exchanges. If the ADS holder
does not obtain a certificate of registration or register under Resolution No. 4,373, he will generally be
subject to less favorable tax treatment on gains with respect to our shares.
Mandatory arbitration provisions in our bylaws may limit the ability of a holder of our
ADSs to hold us liable under U.S. securities laws.
Under our bylaws, any disputes among us, our shareholders and our management with respect to the
application of Novo Mercado rules, the Brazilian Corporations Law and the application of Brazilian
capital markets rules and regulations will be resolved by arbitration conducted pursuant to the
BM&FBOVESPA Arbitration Rules in the Market Arbitration Chamber. Any disputes among
shareholders, including ADR holders, and disputes between us and our shareholders, including ADR
holders, will also be submitted to arbitration. As a result, a court in the United States might require
that a claim brought by an ADR holder predicated upon U.S. securities laws be submitted to
arbitration in accordance with our bylaws. In that event, our ADSs holders would be effectively
precluded from pursuing remedies under U.S. securities law in U.S. courts.
Holders of ADSs will have rights that differ from those of shareholders of companies
organized under the laws of the United States or other countries, and may face difficulties
in protecting their interests.
Our corporate affairs are governed by our bylaws and the Brazilian Corporations Law, which differ
from the legal principles that would apply if we were incorporated in the United States or elsewhere
outside of Brazil. In addition, the rights of our shareholders and ADS holders designed to protect their
interests against actions by our board of directors are different under the Brazilian Corporations Law
as compared to the laws in other jurisdictions. Rules against insider trading and self-dealing and the
preservation of shareholder interests may also be different in Brazil as compared to the United States.
The plaintiff’s bar for enforcing shareholders’ rights in Brazil is less active as compared to the United
States. In addition, shareholders in Brazilian companies do not usually have the ability to bring a class
action.
We are a state-controlled company organized under the laws of Brazil and all of our directors and
officers reside in Brazil. Substantially all of our assets and those of our directors and officers are
located in Brazil. As a result, our ADS holders may not be able to effect service of process upon us or
our directors and officers within the United States or other jurisdictions outside Brazil or to enforce
judgments against us or our directors and officers obtained in the United States or other jurisdictions
outside Brazil. Because judgments of U.S. courts for civil liabilities based upon the U.S. federal
securities laws may only be enforced in Brazil in certain cases, ADS holders may have more difficulty
protecting their interest in proceedings against us or our directors and officers than shareholders of a
corporation incorporated in the United States would.
The relative volatility and lack of liquidity of the Brazilian securities market may
substantially limit the investor's ability to sell the underlying shares over our ADS at the
desired moment and price.
Trading securities in emerging markets, such as Brazil, usually, implies in greater risks comparing with
the north-american market or other developed markets, being these investments considering, in
general, as more speculative. The Brazilian securities market is substantially smaller, less liquid, more
concentrated and may be more volatile than the main securities markets in the United States or other
countries. Thus, the investor's ability to sell the shares underlying our ADSs at the price and desired
time can be substantially limited.
43
Section 4 - Risk Factors
Shareholders and ADR holders may not receive dividends and/or interest on our shares.
Our bylaws require us to distribute to our shareholders at least 25% of our adjusted net income in the
form of dividends or interest on shareholders’ equity twice a year. Adjusted net income, as used for
this purpose, is calculated under Brazilian accounting rules and may be substantially different from our
net income as calculated under IFRS. Under the Brazilian Corporations Law, we may also capitalize
our adjusted net income, use it to offset losses or retain it to establish reserves; and we may suspend
the mandatory distribution for a specific fiscal year if our board of directors determines and informs
shareholders that it would be incompatible with our financial condition.
4.2.
Eventual expectations of variation in the exposure to risks listed in item 4.1
As regards each of the risks mentioned above and if significant, comment on expected
reduction or increase in issuer‟s exposure to such risks.
Banco do Brasil expects that risk factors evidenced below may suffer some type of variation when
exposed to risk.
a.
Risks related to Banco do Brasil
Expenses and provisions regarding labor claims could adversely affect us.
An increase of individual and collective labor complaints claiming the mischaracterization of
supervisory responsibility function (7th and 8th hours as extras) was observed; highlight to the
collective demands by SEEB Brasilia (Banking Industry Employees Union), pleading mischaracterization
of all strategic units advisors that carry supervisory responsibility function from 2004 to 2013.
Among mitigating actions Banco do Brasil quote's:
- Involvement of all strategic units to improve BB factual defense. Some processes have been
extinguished without judgment on the merits (1st degree).
- Creation in April/2015 of a specific structure, with objective to improve Banco do Brasil factual
defense quality, in Belo Horizonte, Curitiba, Porto Alegre, Rio de Janeiro, São Paulo and the Federal
District. BB is represented by a trained and capacited employee with supervisory responsibility
function.
- Performance of Legal and extrajudicial agreements (CCV / CCP).
We may face risks related to mergers, acquisitions, strategic partnerships or sales of
businesses that could materially affect our business.
Banco do Brasil has made in recent years acquisitions, alienations, mergers and strategic partnerships.
The analysis and valuation of these businesses are carried out by senior staff from Banco do Brasil,
analysts and external law firms with extensive experience in Mergers, Acquisitions and Strategic
Partnerships. In certain cases, due diligence by outside skilled professionals are performed in order to
review the project. The objective is to validate and/or confirm the opportunities and risks of those
business. Such procedures are adopted to minimize risks to BB holding. In those cases it's also
established contractual arrangements, including guarantees, in order to mitigate risks from possible
unknown liabilities and contingencies relating to the acquired institutions and established partnerships.
BB has as business practice to hire expert advisors to evaluate, partial or total, the object of
alienation. BB also submit those demands to the Board and Strategic Units, in the process of
corporate Governance, for a technical analysis to better evaluate the impacts of such disposals /
corporate changes.
f.
Risks related to its customers
Our ability to charge payments due from payroll loan transactions depends on applicable
regulation, licenses from and agreements with the private or public sector employers
involved, and their credit risk. It also depends on the borrower remaining employed by
the employer..
The growth of credit to individuals in the current country's scenario should be aligned to the objective
of maintaining good economic indicators. Accordingly, changes in laws and regulations occur mainly
for the purpose of preventing the excessive increase of the borrower's indebtedness. Banco do Brasil
has tried to improve mechanisms for credit granting analysis to adequate it to customers' needs,
without excessively compromise their payment capacity. As regards the risk associated to changes in
payroll credit laws and regulations, Banco do Brasil has followed up this issue with regulatory agencies
so as to adopt actions to mitigate its impacts. Court interpretations in individual lawsuits are punctual
cases that generally involve the reduction of the borrower's capacity; for these cases, Banco do Brasil
makes available alternatives that permit the reorganization of conditions through dedicated credit
lines. Finally, Banco do Brasil maintains its leadership in the payroll loan segment with the strategy of
offering competitive business conditions, investment in automation, improvement of credit analysis
tools, updating of reference file basis and alternative credit lines as risk minimizers.
The risk associated with the possibility of contract rescission between employers and borrowers is also
minimized at Banco do Brasil, since for the most part, consigned credit borrowers linked to the public
sector. The possibility of contract rescission in the public sector, by its nature, is less than that found
in the private sector. The employment relationship with the public sector guarantees the borrower
greater job stability, significantly reducing portfolio risk. Additionally, Banco do Brasil has been
investing in accessory solutions, such as the credit insurance, which pays off the debtor's obligations
in the event of his death.
g.
Risks related to economy sectors in which the issuer operates
Certain factors outside our control, including prevailing interest and exchange rates and the
market price of our securities portfolio, may adversely affect us.
One of the main mechanisms that allows BB to face cyclical weather events or reduced agricultural
prices is disposed in the Rural Credit Manual, which establishes the possibility of the impact fraction
before it happens, through installments of those operation so that the farmer can support these
obligations for the following crop.
The risks of extreme climate conditions can be managed by using technology and compliance with
agricultural zoning, the use of protection mechanisms by farmers, such as the BB Agricultural
Insurance and Proagro (Program for Guaranteed Agricultural Activity). Banco do Brasil offers to its
clients both insurance mechanisms for the protection against bad weather. As regards the risk
associated with the prices of commodities, BB makes available to its clients mechanisms that minimize
these risks, such as Forward Contracts, Futures Contracts, Options Contracts and Revenue Protection
Insurance.
Since 2006/07 crop, Banco do Brasil requires the contracting of risk mitigators in agricultural cost
transactions. The strategy has been disseminated and improved at each crop, inclusive with the mass
offer of options and others mechanisms, such as insurance revenue. The use of risk mitigation
measures minimizes the farmers’ revenue losses even if there are extreme climate conditions and
provides them with a protection mechanism against fluctuations in the prices of agribusiness products.
In the family agriculture segment the operations rely on PGPAF (Programa de Garantia de Preços da
Agricultura Familiar), whose purpose is to guarantee the support price of some products produced by
family farmers and the PROAGRO Mais, insurance production.
i.
Risks related to foreign countries where the issuer operates
Banco do Brasil is present in North America, South America, Africa, Asia and Europe. Any
changes in the economies of these countries or regions may adversely affect the Bank's
results.
Adverse changes in the economy of countries or regions where BB has presence can positively or
negatively affect Banco do Brasil results, even if not representative considering the proportional
market size compared to the whole BB operation.
45
Section 4 - Risk Factors
4.3.
Relevant and non-confidential lawsuits, administrative or arbitration proceedings
Describe judicial, administrative or arbitration claims to which the issuer or its controlled
companies are parties, among labor, tax, civil and others: (i) that are not under secrecy and
(ii) that are relevant for the business of the issuer or its subsidiaries.
Judicial claims with Banco do Brasil S.A. as Plaintiff
The processes related to item 4.3 have been obtained considering both the materiality of R$ 643
million and the likelihood of success of the plaintiff of the process. Thus, the Bank has selected the
judicial claims which financial impact would be greater than the materiality.
Control: 20050015007
a. court
b. court level
c. filing date
d. parties to the process
e. amounts, goods or rights
involved
f. main facts
g. chance of loss
16th Federal Court - 199834000022783
Federal Regional Court
01/29/1998
Plaintiff: Banco do Brasil S.A
Defendant: Department of Federal Revenue of Brazil
Claim amount: R$1,000.00, as of January 29, 1998.
Updated Claim amount as of December, 31 2014: R$11,340.95.
Required amount: R$15,492,461,893.45 as of December 31, 2014.
Updated required amount: R$15,492,461,893.45 as of December 31, 2014.
Writ of mandamus based on the Unconstitutionality/illegality of the limitation of the
compensation of the IR tax losses and negative CSLL bases, in the percentage of 30%, for
each base-year. Extraordinary Appeal 591,340 suspended since May 26, 2011 (general
repercussion).
The chance of loss by Banco do Brasil is probable.
These tax liabilities are deposited periodically by the Bank. In case of loss,
legal aspect: the Brazilian IRS
h. analysis of impact in case
of loss of process
i. reserved amount
(a) under the
will take the judicial deposit of R$ 15.492.461.893,45 ((i.e. it is the conversion in income
of the full judicial deposit already performed in the records); b) under the accounting
aspect: there is no impact on BB results, since the judicial deposits were formed during a
period of time in other financial institution. Regarding the balance sheet, there will be a
reduction in the liability due the contingency reserve decrease and from the assets due to
recorded judicial deposit use.
Legal obligation in compliance with CVM Deliberation 594, from September 15, 2009, Item
10.
Control: 20090151375
a. court
b. court level
c. filing date
d. parties to the process
e. amounts, goods or rights
involved
f. main facts
g. chance of loss
h. analysis of impact in case
of loss of process
i. reserved amount
21st Federal Court - Archive 0200434000180009
Federal Regional Court
05/27/2004
Plaintiff: Banco do Brasil S.A
Defendant: INSS
Claim amount: R$1,000.00, as of May 27, 2004.
Updated Claim amount as of December, 31 2014: R$3,342.32.
Required amount: R$493,768,334.85 as of May 27, 2004.
Updated required amount: R$1,634,865,582.1 as of December 31, 2014.
Writ of Mandamus against the social security national institute aiming at releasing the
obligation of payment of employer social security national contribution on the bonuses (nonsalary funds) paid to the employees. Judgment stage of Appeal Requesting Clarification of the
Decision that judged the appeal filed by the Bank, as the sentence denied requested safety.
This tax debt was deposited in court in 2004.
The chance of loss by Banco do Brasil is possible.
Essa obrigação tributária foi depositada em juízo pelo Banco em 2004. No caso de perda do
processo: a) under the legal aspect :a Receita Federal levantará o montante do depósito
judicial (ou seja, é conversão em renda da integralidade do depósito judicial já realizado nos
autos); b) under the accounting aspect: there is no impact on BB results, since the judicial
deposits were formed during a period of time in other financial institution. Regarding the
balance sheet, there will be a reduction in the liability due the contingency reserve decrease
and from the assets due to recorded judicial deposit use.
Legal obligation in compliance with CVM Deliberation 594, from September 15, 2009, Item
10.
Control: 86472797510
a. court
b. court level
c. filing date
d. parties to the process
e. amounts, goods or rights
involved
f. main facts
g. chance of loss
h. analysis of impact in case
of loss of process
i. reserved amount
5th Civil Court – Archive 0024950650077
Court of Justice of Minas Gerais
08/09/1995
Plaintiff: Banco do Brasil S.A
Defendant: Mendes Junior Engenharia S.A. and others.
Claim amount: R$304,219,249.34, as of August 09, 1995.
Updated Claim amount as of December 31, 2014: R$1,272,237,737.74
Required amount: R$304,219,249.34, as of August 09, 1995.
Updated required amount: R$1,272,237,737.74 as of December 31, 2014.
This is an action for recovery of credit represented by an industrial credit security. Motions
filed by the debtor were judged groundless. Special Appeal (accepted and still not judged)
and Extraordinary Appeal (not accepted) were filed by the counter party. Process
Implementation ongoing since the pending judgment action has no suspensive effect.
The chance of loss by Banco do Brasil is remote.
In case of process loss: (a) under the legal aspect: BB cannot claim the credit recovery; (b)
under the accounting aspect: there is no negative impact on the Bank results and balance
sheet, since due CMN and the Central Bank of Brazil rules, the non-performing loans under
these conditions should have integral allowance for loan losses provision.
There is no amount reserved for the process. According to CVM resolution 594, of
09/15/2009, the classification remote does not demand a reserve coverage.
Control: 86638645503
a. court
b. court level
c. filing date
d. parties to the process
e. amounts, goods or rights
involved
f. main facts
g. chance of loss
h. analysis of impact in case of
loss of process
i. reserved amount
1st Civil Court of Salvador/BA - Archive 0005315-70.1995.8.05.0001
Court of Justice of the State of Bahia
02/14/1995
Plaintiff: Banco do Brasil S.A.
Defendant: Barreto de Araújo Produtos de Cacau S/A
Defendant: Barreto de Araújo Lv. Ind. E Com. S/A
Defendant: IMBASA Ind. De Mamonas da Bahia S/A
Defendant: Orlando Moscozo Barreto de Araújo
Defendant: Tadeusz Pfeiffer
Amount of the lawsuit: R$974,394,058.85 as of February 14, 1995.
Required amount: R$910,865,233.76, as of December 01, 2005.
Updated required amount: R$1,553,619,109.90 as of December 31, 2014.
It refers to a collection lawsuit for a defined amount filed by Banco do Brasil S.A. against
Barreto de Araújo Produtos de Cacau S/A and others, aiming that defendants pay the full
debt, which totaled R$974,394,058.85 at that time plus financial charges, inflation
adjustment, and interest stipulated in agreements, beginning as of the last book entry up to
effective and full payment, subject to attachment of assets pledged in guarantee and/or
others that are sufficient to cover collection. After collection was stayed, it was judged
partially valid and the Bank’s credit was a little reduced, convicting the company Barreto de
Araújo to pay attorney’s fees. Bahia State Court of Justice (TJBA), when judging appeals filed
by the parties, partially accepted both appeals, determining on debt collection the calculation
of interest on arrears limited to 1% p.a., plus interest of 12% p.a., permitted capitalization,
inflation adjustment as agreed-upon in the instrument (IGPM index), non-payment of late
payment surcharge and AMBID/SETIP, and reduced fine from 10% to 2% and, finally,
decided that attorney’s fees would be paid on a reciprocal basis. The same TJBA decides for
non-capitalization, expressly acknowledges collection excess and determines calculation of
settlement quantum, reflecting such difference in attorney’s fees, which are limited to 5% of
suit value, but once it is admitted that attorney’s fees would be paid on a reciprocal basis,
the amount of which is dependent on said settlement; at this time, it will be verified which
party owes more, obtaining, after offset, owed fees balance. The Bank filed a Special Appeal
against this decision, aiming at canceling interest rate limit of 12% p.a., as well as the pure
potestative character of the clause that establishes interest capitalization and, accordingly,
cancel reciprocal payment of attorney’s fees, turning it the defendants’ responsibility. On
December 1, 2005 the Bank joined the debit sheet in accordance with the contractual and
legal charges in civil appeal of R$910,865,233.76.
The chance of loss by Banco do Brasil is remote.
In case of process loss: (a) under the legal aspect: BB cannot claim the credit recovery; (b)
under the accounting aspect: there is no negative impact on the Bank results and balance
sheet, since due CMN and the Central Bank of Brazil rules, the non-performing loans under
these conditions should have integral allowance for loan losses provision.
There is no amount reserved for the process. According to CVM resolution 594, of
09/15/2009, the classification possible does not demand a reserve coverage.
47
Section 4 - Risk Factors
Judicial claims with Banco do Brasil S.A. as defendant
The processes related on this item have been obtained considering both the materiality of R$643
million and the likelihood of loss classified as probable or possible. For 2014, no judicial claim
classified as probable loss reached the materiality.
Control: 2011/0278819
a. court
b. court level
c. filing date
d. parties to the process
e. amounts, goods or rights
involved
f. main facts
g. chance of loss
h. analysis of impact in case
of loss of process
i. reserved amount
4.4.
1st Civil Court of Maceio/AL - Archive 00085066819998020001
Court of Justice of the State of Alagoas
11/14/2011
Plaintiff: Cooperativa Regional Produtores Açúcar Alagoas (Coopalag)
Defendant: Banco do Brasil S.A.
Claim amount: R$536,911,419.70 as of November 23, 2011.
Updated Claim amount as of December 31, 2014: R$649,076,582.26.
Required amount: R$536,911,419.70 as of November 23, 2011.
Updated required amount: R$649,076,582.26 as of December 31, 2014.
Enforcement phase of the Ordinary Claim which Coopalag pleaded a declaration of debt
inexistence to foreign creditors (where Banco do Brasil paid the overdue debt on behalf of the
guarantor, the Federal Government), as well as compensation against the Bank because of
legal transactions of no return with foreign creditors as well as declaration of inexistence of
credit assignment to the Federal Government. The Bank filed a exception of pre-execution
and rescission action. Then filed a rescission action of rescission, lying in the same at special
appeal. The Bank filed a Writ, proc. nr. 19751, within the court, where, for monocratic
decision of the Rapporteur Minister was determined outright suspension compliance with
judgment from 2013, before contesting the decision of compliance.
The chance of loss by Banco do Brasil is possible.
In case of process loss, the impact on results and balance sheet will be the payment of
compensation (amounts involved).
There is no amount reserved for the process. According to CVM resolution 594, of
09/15/2009, the classification possible does not demand a reserve coverage.
Lawsuits whose adverse parties are managers, controlling shareholders or investors
Non-confidential judicial, administrative or arbitration processes to which Banco do Brasil
or its controlled companies are party, the opposite parties of which are officers or former
officers, parent or former parent companies, or investors in Banco do Brasil or its controlled
companies
Banco do Brail and its subsidiaries are not parties to lawsuits, administrative proceedings or arbitration
proceedings whose counter parties are officers or former officers, controlling shareholders or former
controlling shareholders, or investors.
4.5
Relevant secret proceedings, not disclosed in items 4.3 and 4.4.
As regards relevant confidential proceedings to which the issuer or its subsidiaries are
parties and that have not been disclosed in items 4.3 and 4.4 above, analyze the impact in
case of loss and notify involved amounts
Banco do Brail and its controlled companies are not a party to confidential processes that are
considered to be relevant.
4.6
Recurring or related lawsuits, administrative or arbitration proceedings
Describe repetitive or connected judicial, administrative processes or arbitrations, based on
similar legal facts and causes, non-confidential, and which are material in conjunction, to
which Banco do Brasil or its subsidiaries are parties, segregating between labor, tax, civil
and other, and indicating: a) values involved; accrued value, if any; c) practices of Banco do
Brasil or of its subsidiary that had generated such contingency
a.
amounts involved¹
R$ thousands
12/31/2014
Amounts involved for Judicial Claims
Amounts involved for Civil Claims
Economic Plans
Other Civil Claims
Amounts involved for Tax Claims
Municipal notices of infringement related to ISSQN
INSS Tax Infringement Notices - Salary Bonuses²
Other Tax Claims
Amounts involved for Labor Claims
Collective Labor Claims
Other Labor Claims
27,417,905
9,828,804
4,314,132
5,514,672
13,952,546
2,130,430
196,107
11,626,009
3,636,555
675,571
2,960,984
1 - Correspond to the sum of the values of the processes with possibility of loss classified as possible and probable.
2 - Infraction notes issued by the National Institute of Social Security, aimed at the payment of contributions applicable on salary bonuses paid in the
collective agreements for the period from 1995 to 2006, in the amount of R$2,221,343,000.00 (updated required value).
b.
reserved amount, if any
R$ thousands
Reserved for Legal Claims
Provision for Civil Claims
Economic Plans
Other Civil Claims
Provisions for Tax Claims
Municipal notices of infringement related to ISSQN ¹
Other Tax Claims
Provision for labor claims
Collective Labor Claims
Other Labor Claims
12/31/2014
10,504,606
5,772,357
3,820,942
1,951,415
1,997,160
69,890
1,927,270
2,735,089
619,453
2,115,636
c.
practices of Banco do Brasil or of its controlled company that generated such
contingency
Civil Lawsuits
Among civil lawsuits, the main lawsuits are those that claim collection of inflation adjustment
difference in savings and judicial deposits related to Economic Plans’ periods (Plano Bresser, Plano
Verão and Plano Collor I and II).
Although Banco do Brasil has complied with legislation and regulation prevailing at the time,
provisions are being recognized for these processes, considering lawsuits that mention the Bank and
corresponding likelihood of losses after analysis of each claim, considering previous decisions of the
Supreme Court of Justice (STJ).
Regarding these discussions, the Federal Supreme Court - STF suspended the progress of cases that
were in the study phase until there is definitive pronouncement of that Court regarding the discussed
right.
Bresser Economic Plan
Banco do Brasil is a defendant in actions in which the plaintiff seeks for the payment of differences
related to Bresser Economic Plan. The actions demand the payment of the difference between
inflation rate used to adjust the financial investments by Banco do Brasil (stated by the Economic
49
Section 4 - Risk Factors
Plan) and the allegedly due (prior month of the plan) to adjust the financial investments in the first
month of its effectiveness.
Plano Verão (Summer Plan)
Banco do Brasil is a defendant in actions in which the plaintiff seeks for the payment of differences
related to Verão Economic Plan. The actions demand the payment of the difference between inflation
rate used to adjust the financial investments by Banco do Brasil (stated by the Economic Plan) and the
allegedly due (prior month of the plan) to adjust the financial investments in the first month of its
effectiveness.
Collor Economic Plan
Banco do Brasil is a defendant in actions in which the plaintiff seeks for the payment of differences
related to Collor Economic Plan. The actions demand the payment of the difference between inflation
rate used to adjust the financial investments by Banco do Brasil (stated by the Economic Plan) and the
allegedly due (prior month of the plan) to adjust the financial investments in the first month of its
effectiveness.
The amounts reserved for the actions related to Bresser, Verão and Collor economic plans, classified
as "Probable Loss" by the legal counselors of Banco do Brasil, are totaled in subitem 4.6.b of this
Reference Form.
The classification Other Civil Claims comprises mostly actions with request for pain and suffering,
damages and lost profits, undue payment, losing party costs, annulment/nullity of agreement,
annulment/nullity of credit security, annulment and substitution of security, collection, exclusion of
record in blacklist, nullity of debt, interests - application of art. 192 of the Federal Constitution,
commission of permanence - illegality and interests - illegality of capitalization.
Tax Lawsuits
The Bank, despite its conservative profile, is subject - in inspections conducted by the tax authorities to questions related to taxes, which can eventually give rise to assessments, such as: composition of
the calculation basis of IRPJ/CSLL (deductibility); and discussion regarding the incidence of taxes,
upon the occurrence of certain economic events. Most actions from assessments are on ISSQN, IRPJ,
CSLL, PIS/COFINS, IOF and Social Security Contributions. As guarantees for some of them, when
necessary, there are pledges in cash, public securities, real state, or judicial deposits to suspend the
application of the taxes at issue.
Labor Lawsuits
The Bank is defendant on labor lawsuits mainly filed by former employees or trade unions of the
banking industry. Allowance for probable losses represent various claimed requests, such as:
compensation, overtime, distortion of the working day, additional function and representation, and
others.
4.7.
Describe other relevant contingencies not covered by prior items
Banco do Brasil and its subsidiaries do not have other contingencies considered material, subject to
the materiality of R$643 million besides those informed in the prior items.
4.8.
Rules of the foreign issuer‟s home country
As to the rules of the foreign issuer‟s country of origin and rules of the country where the
marketable securities of the foreign issuer are held in custody, if different from the country
of origin, identify: a) restrictions imposed to the exercise of political and economic rights;
b) restrictions to the circulation and transfer of marketable securities; c) hypotheses of
cancel of registry; and d) other issues of interest to investors
Not applicable.
5.
MARKET RISKS
5.1.
Main market risks to which Banco do Brasil is exposed
Describe on a quantitative and qualitative basis the main market risks to which the issuer is
exposed, including foreign exchange and interest rate risks.
The market risks to which Banco do Brasil is subject are the following:
I.
interest rate;
II.
exchange rates;
III.
share price; and
IV.
prices of commodities.
Interest rate exposure risk (item ―I‖) includes risks of fluctuations in fixed interest rates, foreign
currency coupons, price index coupons and other interest rate coupons. Example: prefixed, dollar
coupon, IPCA coupon, TR coupon; the exchange rate exposure risk (item ―II‖) is the risk of changes in
the exchange rates practiced in the market. Example: reais x dollar, reais x euro, reais x yen; risk of
share price exposure (item ―III‖) is the risk of changes in stock prices practiced in the market.
Example: PETR4 (Petrobras-PN), VALE5 (Vale-PNA) and risk of commodities price exposure (item ―IV‖)
is the risk of changes in prices practiced in the market. Example: Fattened Cattle, Soy, Corn.
Note that the exposures to share and commodities prices are not currently relevant to the Bank.
In order to analyze market risks, the Bank segregates its positions in the Negotiation and Nonnegotiation Portfolio in conformity with CMN Resolution 3,464/07 and Bacen Circular 3,354/07, as
follows:
I.
Trading book: consisting in all the transactions in its own position undertaken as business deals
or intended as a hedge for its trading portfolio, for which there is an intention of trading prior to
their contractual expiry, subject to normal market conditions and that do not have a non-trading
clause.
II.
Banking Book: consisting in transactions with proprietary positions not classified in the Trading
Book in accordance with the policies and strategies for managing market risk.
After these considerations, Banco do Brasil exposures are presented in the table below, segregated by
the most relevant market risk factors (interest rates and foreign exchange rates), which are monitored
by Banco do Brasil’s Bord of Director.
Mismatching Map by Indexing Units and Interest rate Coupons
R$ billion
Assets
Liabilities
Net Mismatching
Risk Factor
2012
2013
2014
2012
2013
2014
Prefixed
530.7
608.5
732.1
(312.5)
(353.6)
(439.0)
218.2
254.9
293.1
CDI/TMS
201.3
254.8
262.9
(256.5)
(321.7)
(348.4)
(55.2)
(66.9)
(85.5)
TBF/TR/IRP
78.9
102.1
112.4
(207.1)
(248.4)
(265.0)
(128.2)
(146.3)
(152.6)
Price Index
12.6
14.3
13.6
(2.8)
(2.6)
(3.2)
9.8
11.7
10.4
TJLP
30.4
32.9
36.1
(30.5)
(32.9)
(36.1)
(0.1)
-
-
202.0
231.8
277.3
(204.9)
(235.9)
(282.3)
(2.9)
(4.1)
(5.0)
Dollar/Other currencies
2012
2013
2014
Among the main market risks to which the Bank is exposed, we point out the increase in the asset
and liability exposure of Prefixed indexing units, CDI/TMS and TBF/TR/IRP.
The increase in the net asset position in prefixed risk factor is mainly explained by the growth of the
loan portfolio, in credit operations contracted with this type of rates. To finance asset growth, BB
increased funding, which are referenced predominantly in CDI/TMS, explaining the growth of short
position post-fixed.
As to foreign exchange risk, the Bank adopted, in compliance with Bacen Circular Letter 3,641, of
March 4, 2013, the strategy of assuming a short position in foreign currency, through inflow of foreign
funding, due to the tax effects arising from the exchange variation on its foreign investments.
51
Section 5 - Market Risks
The Bank adopts the strategy of tax hedge in order to reduce the volatility of the result, after the tax
effects, since exchange gains on investments abroad are not subject to taxation and likewise losses do
not generate deduction in the tax basis.
5.2.
Market risk management policy
Describe market risks management policy adopted by the issuer, its objective, strategies
and instruments, indicating:
Banco do Brasil established policies and strategies for market risk management and for the
management of the derivative financial instruments, which determine the Company’s guidelines of
performance in the risk management process.
The market risk management policies and strategies of Banco do Brasil, the general principle adopted
is that the market risk management model aims to identify, assess, monitor and control exposures to
the market risk of its own positions.
In the Banco do Brasil market risk management process, own positions are segregated in a
Negotiation and Non-negotiation Portfolio for which global, specific and operating risks are established
by Strategic Risk Committees.
In addition express mechanisms are used in a regulatory system in the market risk management
process. These mechanisms detail the operating procedures necessary for the implementation of
organizational decisions concerning the Company’s business and activities and the fulfillment of legal
requirements besides those of regulatory and supervisory agencies.
a.
risks for which protection is sought
Among the risks for which the Banco do Brasil seeks protection, there is a specific policy to manage
the Bank's exposure to foreign exchange risk in order to minimize its effects on the Bank’s results.
b.
equity protection strategy (hedge):
Banco do Brasil’s market risk management policy is aimed to mapping, control and mitigation of the
risks and mismatching cases. In this context, the Risk Management Directorship is in charge of the
mapping and determination of market risks and terms of mismatching, currency and indexes identified
between the Banco do Brasil’s asset and liability positions. Based on this survey, the Risk Management
Directorate informs the Finance Directorate of the established corporate limits and calculated values.
The Finance Directorship, through Capital Structure and Assets and Liabilities Management, is in
charge of the management of mismatching cases and, for this purpose, analyzes the information
received together with the current economic situation and the use of scenarios, and suggests strategic
directions and any necessary hedges.
c.
instruments used for equity protection (hedge)
Banco do Brasil carries out transactions with derivative financial instruments to manage own positions
and comply with its customers necessities. Transactions with derivative financial instruments used for
the purpose of fully or partially offsetting risks arising from exposures to variations in market value of
financial assets and liabilities, considered as (hedge) instruments, are segregated from those not
intended for hedge, both with their own limits and objectives.
Transactions with hedge derivative financial instruments are classified according to their nature:
Market Risk - the increases or decreases in the value of the derivative financial instruments, as well as
of the hedged item, are recorded in income accounts in the statement of income for the period;
Cash Flow - the effective amount of the increases or decreases in value of the financial instruments
classified in this category is recorded, net of tax effects, in a separate Shareholders' Equity account.
Derivative financial instruments used by the Bank are compatible with defined objectives, considering
the risk and return ratio as well as the economic scenario, the main of which are:
I.
Futures contracts for interest and foreign exchange rates traded in BM&FBOVESPA;
II.
Futures contracts for foreign exchange traded in Chicago Mercantile Exchange Group - CME;
III.
Forward Currency Contracts - Non-Deliverable Forward - NDF; and
IV.
Interest rate and foreign exchange rate swap contracts.
d.
parameters used to manage those risks
Banco do Brasil uses statistical and simulation methodologies to measure the market risks of its
exposures. Among the metrics resulting from the use of these methodologies, it is worth highlighting:
I.
Value at risk (VaR);
II.
Sensitivity; and
III.
Stress.
Value at risk (VaR)
VaR is a metric used to estimate the potential maximum loss, under routine market conditions,
presented daily in monetary values, considering a particular confidence interval and time horizon.
To measure VaR, Banco do Brasil adopts a Background Simulation system and the following
parameters:
I.
99% of one-tailed confidence interval;
II.
252 retrospective scenarios of daily shock factors; and
III.
10-business day holding period.
The risk factors employed to measure VaR for market exposure risks are rated in the following
classes:
I.
interest rates;
II.
exchange rates;
III.
share price; and
IV.
prices of commodities.
Performance of the VAR metrics is assessed every month by applying a backtesting procedure. The
objective of the backtesting, run monthly, is to assess the accuracy of the market risk model (VaR).
This assessment is separated from the VaR metric development and use procedures.
The methodology used by the Bank consists of verifying whether the number of extrapolations
(quantity of times the negative returns exceeded the losses estimated by VaR) is compatible with that
predicted by the model (from the statistical viewpoint), and whether they occurred independently over
time.
Complementarily, aiming to offer a comparison between models, an evaluation is performed to
determine the magnitude of extreme values, in addition to the arrangement of the VaR models.
Sensitivity
By using sensitivity metrics, simulations are made of the effects in the exposure values arising from
changes in the market risk factor levels.
The sensitivity analysis uses as a method the application of parallel shocks on the market curves of
the most relevant risk factors. Such method is aimed simulate the effects on the Bank’s income when
faced with potential scenarios, which consider possible fluctuations in the interest rates practiced in
the market.
The application of parallel shocks on the market curves assumes that uptrends or downtrends in the
interest rates occur in an identical manner, both for short terms and for longer terms. Since market
movements do not always exhibit such behavior, this method can present minor deviations in the
simulated values.
Stress
In conclusion, BB uses the Stress metrics arising from simulations of its exposure subject to market
risks under extreme conditions, such as financial crises and economic shocks. Stress Tests are
intended to size plausible impacts or events, but unlikely to occur, in the regulatory and economic
capital requirements. Stress Tests cover exposure simulations, retrospective and based on background
53
Section 5 - Market Risks
series of shocks in market risk factors, as well as of a forward-looking nature, based on projections of
economic and financial scenarios.
The stress backtesting method estimates the percentage of variation of the market value of
exposures, through the application of shocks compatible with specific scenarios capable of
reproducing historical periods of market stress or of greater losses of the institution, considering the
following parameters:
I.
Metrics: minimum (worst loss) and maximum (greatest gain) of the historical series of daily
returns of the trading portfolio;
II.
Extension of the historical series: from 1/4/2000 to the base date;
III.
Holding period: one month (21 business days); and
IV.
Test periodicity: weekly.
The control, monitoring and daily supervision of the stress limits, for the trading portfolio of Banco do
Brasil and for its groups and books, are carried out based on the metrics of the stress backtest.
The stress backtesting method estimates the percentage of variation of the market value of exposures
subject to the risk factors underlying the capital requirement for the hedging of market risks, through
the application of shocks on the market risk factors, estimated from stress scenarios generated by the
Brand Strategy Directorship (Direm) and by the Finance Directorship (Difin), considering the following
parameters:
I.
Metrics: greatest losses and greatest gains estimated for the returns of the trading portfolio in the
period;
II.
Extension of the series: prospecting for 21 business days;
III.
Holding period: one month (21 business days); and
IV.
Test periodicity: weekly.
The prospective stress tests aim to prospectively simulate adversities based on characteristics of the
institution’s portfolio and of the macroeconomic environment, under severe and plausible conditions.
e.
Whether the issuer operates financial instruments for other purposes than equity
(hedge), and which are these objectives:
Banco do Brasil also uses derivative financial instruments in intentional position-taking strategies with
the objective of seizing market opportunities, considering the market risk limits established previously
by the Global Risk Superior Committee.
f.
organization structure for risk management control
In conformity with Resolution 3,464, issued by the National Monetary Council and published by the
Brazilian Central Bank on June 26, 2007, the management process structure of market risks intend to
identify, evaluate, monitor and control risks associated to each institution individually and to the
financial conglomerate, as well as identify and monitor risks associated to other companies that are
members of the financial-economic consolidated group.
Banco o Brasi has a structure to manage market risks, the Diris (Risk Management Directorship) that
is compatible with the characteristics of the Bank's transactions and segregated from business units
and the Internal Audit unit. Among the main responsibilities of Diris in market and liquidity risk
management is: the proposition of policies, guidelines, methodologies and limits of market risk, as
well as the identification, assessment, monitoring and control of the market risks of the Financial
Conglomerate. In the market risk management process, we segregated decision, performance and
control functions in the organization structure.
Also, in the risk management control organization structure, we emphasize the actions of the CERML
(Executive Committee for Market Risk and Liquidity) and the CSRG (Global Risk Superior Committee),
established to decentralize the Bank's decision process, guaranteeing quality and agility to decisions
with internal regulations. The CERML and the CSRG hold ordinary monthly meetings and their main
responsibilities are as follows:
Executive Committee for Market Risk and Liquidity (CERML) - It is the responsibility of the
CERML, in the ambit of Banco do Brasil, including facilities abroad and companies composing the
financial conglomerate, except those on which the Bank does not hold control, to decide on:
I.
Decide on models for market risk and liquidity management, complying with the strategies
approved by the CSRG;
II.
Define specific limits of market risk exposure.
III.
Analyze and propose to the CSRG market risk exposure global limits;
IV.
Analyze and propose to the CSRG allocation of capital to cover market risk;
V.
propose to the CSRG reserve requirement and overall liquidity risk limits;
VI.
propose to the CSRG liquidity contingency plans;
VII.
Assess the backtesting results and adopt, when necessary, corrective measures in management
models of market risk and liquidity risk.
Global Risk Superior Committee (CSRG) - It is the responsibility of the Global Risk Superior
Committee in the ambit of Banco do Brasil, including facilities abroad and companies composing the
financial conglomerate, except those in which the Bank does not hold the shareholding control, to
decide on:
I.
the strategy for market, liquidity, credit and operating risk management;
II.
risk exposure global limits;
III.
allocation of capital due to risks; and
IV.
risk factors that will comprise documents and reports to be forwarded to regulatory agencies and
other institutions.
g.
Adequacy of operating structure and internal controls to verify the effectiveness of
the policy adopted:
Banco do Brasil control activities, related to the market risk management are structured in levels, as
follows:
I.
First level: It is the primary responsibility of the Risk Management Directorship (Diris) to ensure
that its functions are conducted in accordance with applicable law and regulations and internal
policies and procedures;
II.
Second level: it is the responsibility of the Internal Control Directorship (Dicoi) to separately verify
if processes, products and services of the areas - Diris in this case - are in conformity with
applicable laws, standards and regulations;
III.
Third level: it is the responsibility of the Internal Audit (Audit) to perform reviews focusing on
risks, verify the adequacy of internal controls by evaluating its quality, sufficiency and compliance.
In this manner, the market risk management activities carried out by Diris (at 1st level), are subject to
periodic validation by Dicoi (at 2nd level), according to the requirements of Circular BC no. 3,646 and
Circular BC no. 3,674. In addition, the Internal Audit carries out the annual evaluation of the whole
process (in the 3rd level) subject to external audit and inspections of the Banco Cental do Brasil.
Validation steps
The validation is carried out, separately the Internal Controls Directorship, as per the requirements of
Circular BC no. 3,646 and 3,674, and evaluates various quantitative and qualitative aspects of the
market risk model, with special emphasis on:
I.
methodologies, assumptions, documentation and theoretical grounds;
II.
inclusion of all significant risks;
III.
scope, consistency, integrity and reliability of the entry data;
IV.
the ability to adequately consider the characteristics of new products that can impact the market
risk of the institution;
V.
the adequacy of compliance tests and stress tests;
55
Section 5 - Market Risks
VI.
adequacy of the respective controls;
VII.
adequacy of the technological infrastructure.
The validation work is also aimed at periodically assessing the market risk policy management process
of Banco do Brasil, certifying the formulation and periodic review by the Risk Management
Directorship, its formalization with the Board of Directors, and dissemination in institutional channels.
These activities make it possible to analyze the effectiveness of risk management as a corporate
control present across all the hierarchical levels of the institution.
Validation of the market risk management process is also annually submitted to Internal Audit
evaluation, which verifies mainly:
I.
effectiveness of validation process; integration of internal risk model to daily management
activities, including stress tests;
II.
the integration of the internal market risk model of the daily activity management;
III.
compliance with risk management policies, including limit structures and related policies;
IV.
integrity of tests of compliance and their effective use in verifying performance and improving the
model.
Evaluations of corporate controls related to risk management after completing all methodology stages,
which properly considered each process characteristics, allowed us to conclude that, in the last
evaluation, policies, reports, processes to make available management information, as well as
governance structure are adequate for the institution’s market risk management.
Similarly, evaluations of the effectiveness of internal controls in the Risk Management Directorship
(Diris), the Finance Directorship (Difin), and Infrastructure Capital Market Directorship (Dimec) and
Distribuidora de Títulos e Valores Mobiliários do Banco do Brasil (BBDTVM) concluded that they
mitigate the operational risks related to the management of the institution's market risk, and any
identified weaknesses were the subject of action plans, which will be followed by the Internal Controls
Directorship (Dicoi).
5.3.
Changes in the market risks or in the risk management policy
Inform if, in comparison with the previous year, there were significant changes in the main
market risks to which the issuer is exposed or in the risk management policy adopted.
Regarding last fiscal year there were no significant changes in the main market risks to which the
Bank is exposed or in the risk management policy adopted.
5.4.
Other relevant information
Banco do Brasil maintains no transactions that may be classified as exotic derivatives.
Risk Management in Banco do Brasil
Banco do Brasil considers risk management and capital management as the key factors of decision
making, providing greater stability, better capital allocations and optimizing the risk/return ratio.
Accordingly, BB invests in the continuous improvement of the process and risk management practices,
in accordance with international market references and and prudential banking rules.
Learn more on market risk management in the Investors Relations website (www.bb.com.br/ir).
Corporate Governance of Risks
The risk governance model adopted by Banco do Brasil involves a structure of Superior Committees
and Executive Committees, with the participation of several areas of the Institution, contemplating the
following aspects: (a) Segregation of duties: business x risk; (b) Specific structure for risk
appraisal/management; (c) Defined management process; (d) Decisions at several hierarchical levels;
(e) Clear rules and structure of spheres of authority; (f) Reference to best management practices.
All decisions relating to risk management are made in a collegiate manner and in accordance with the
guidelines and rules of Banco do Brasil. The risk governance of Banco do Brasil, covering the Multiple
Bank and its Wholly-Owned Subsidiaries, is centralized in the Global Risk Superior Committee (CSRG),
formed by the Steering Committee, with the main duties: establish the strategy for market, liquidity,
credit and operational risk management; to decide on minimum liquidity reserves and on liquidity
contingency plan; to approve the allocation of capital in view of the risks.
CSRG meets regularly, once per month, and extraordinarily at the coordinator’s summon following the
request of any of its members to discuss matters requiring urgent decision, observing quorum for
installation and administrative convenience.
Aiming to confer agility to the management process, there were created the Credit Risk Executive
Committee (CERC), the Executive Committee for Market Risk and Liquidity (CERML) and the Executive
Committee on Internal Control and Operational Risk Control (CERO), who decide and/or
instrumentalize the CSRG having decision-making power by delegation.
Risk Management Process
The risk management process of Banco do Brasil involves a continuous flow of information, observing
the following phases:
I.
preparation: data collection phase, data analysis and preparation of proposals;
II.
decision: proposals are assessed and deliberate in a collegiate manner, in appropriate levels and
communicated to intervening areas;
III.
execution: the intervening areas implement the decisions made; and
IV.
monitoring: evaluation of the fulfillment of resolutions and reporting to the committees/CSRG.
In addition, information on liquidity, credit and operational risk policies can be found in Section 7.9.,
Risk Management item.
57
Section 6 - Issuer History
6.
ISSUER HISTORY
6.1.
Establishment of the issuer
In relation to the establishment of the issuer, we inform that:
a. date:
10/12/1808
b. form:
Banco do Brasil, a mixed-capital company, is a multiple bank.
c. country of establishment:
Brazil.
6.2.
Duration period
Undetermined.
6.3.
Brief Historic
Established as a publicly-held and mixed-capital corporation, Banco do Brasil's controlling shareholder
is the Federal Government. Banco do Brasil was the first bank to operate in Brazil and the first
company to make a public offering of shares in the Brazilian capital market. With over 200 years of
existence, Banco do Brasil actively contributes to the development of Brazil. Its brand reflects
attributes such as solidity, trust and credibility.
After adopting the configuration of a multiple bank in 2001, Banco do Brasil started to present
increasing results. In the position of a complete bank, with sustainable vision of businesses, Banco do
Brasil adds to its competitive and profitable operation in the financial market, the function of an
economic and social development agent.
In 2006, when completed 100 years listed in the stock exchange, Banco do Brasil joined the segment,
a distinguished segment of BM&FBOVESPA for companies using the best corporate governance
practices. Listed in the Novo Mercado segment for eight years, by adopting good governance
practices, the Bank shows that its Board is committed to transparency, accountability, equity and
social-environmental responsibility, supported by the use of monitoring tools that align the behavior of
executives to the interest of shareholders and society in general.
On April 2007, the Banco do Brasil communicated the market that it was considering to incorporate
BESC. This event marked the beginning of a new expansion period for the Bank.
2008 showed the great global financial crisis, which has resulted in the lack of immediate liquidity.
The Banco do Brasil, in turn, benefited from its solidity, grew 24.6% in total deposits portfolio
(Dec/2009 compared to December/2008).
On August 2008, BB began a restructuring process in the insurance, pension and capitalization area.
In the next periods, Banco do Brasil announced several businesses and intentions related to this
restructuring, aimed at increasing the participation of this segment in the Bank's results. The details of
such transactions are presented in the Section 6.5 as follows.
On October 2008, BB was authorized by the Central Bank to carry out acquisitions of holdings in
financial institutions based in Brazil (MP 443/08, transformed into the Law 11,908 of 3/3/2009. In
2008, the BB announced the incorporation of the BESC, BESCRI and BEP, in addition the control
acquisition of Banco Nossa Caixa.
In 2009, still immerse in the uncertainties brought by the global crisis, Banco do Brasil reassumed its
leadership in the financial sector in terms of total assets, with a balance of R$709 billion. One factor
that collaborated to leadership resumption was the expansion of its credit portfolio, driven both by the
organic growth and the acquisitions of Banco Nossa Caixa, on November 2008, and 50% of Banco
Votorantim's capital stock, in September 2009.
On November 2009, SEC approved the issue Level I ADRs, by Banco do Brasil, to be traded in the
over-the-counter market. The north-american bank, The Bank of New York Mellon was nominated as
the custody agent of Level I ADRs. After obtained the approval of the Central Bank of Brazil and CVM,
Banco do Brasil started the issuance of Level I ADRs on 12/02/2009. In the first 12 months of the
Program, the landmark of 8.9 million ADR assets was achieved, a record volume for this category.
In June 2010, the Bank issued a primary and secondary public offering of BB shares for the purpose
of: (i) strengthen its capital basis; (ii) implement its organic and inorganic expansion strategy: and (iii)
increase the liquidity of shares in the secondary market. At the end of the offering, 30.4% of BB's
shares were outstanding shares (free float) exceeding the minimum limit of 25% required by the
regulation of BM&FBovespa New Market.
2010 was also marked by the implementation of BB's strategy of strengthening its operations abroad.
In this context, it is important to note that Federal Reserve (FED), granted the "Financial Holding
Company" status to Banco do Brasil that allowed BB to conduct bank activities in the USA under the
same conditions of local banks. The FINRA (Financial Industry Regulatory Authority) authorized the
operation of BB Securities LLC in underwriting, registered offerings and dealings. Still in 2010, Banco
do Brasil started the project BB 2.0 Retail Transformation Program. Created in 2009, the program has
the purpose of reformulating BB’s management and business models. The Program’s actions
implemented in 2010 are: (i) hiring of approximately 10,000 employees that were allocated in the
branches' network; (ii) integration of service network; (iii) implementation of a new business platform
and (iv) new branch ambience.
During 2011, the program focused on implementing actions intended to make the customers’ basis
profitable, among which the implementation of a new model of relationship with individuals,
improvement of services provided, training of sales force in the new business platform, and
implementation of consumption trend models for eight banking products that are priorities in retail
trade operation.
On January 2012, Banco do Brasil started operating through the Postal Bank network, installed in
6,192 post offices in that moment. This operation, allowed the Bank to expend its service network to
95% of the Brazilian municipalities, anticipating from 2015 to 2012 the strategy of extend its service
points all over the country.
On March 2012, Banco do Brasil reached the milestone of R$1 trillion in assets, closing the quarter at
R$1.15 trillion, which represented an expansion of 17.2% in relation to December 2011. Besides, the
amplified business loan portfolio that considers guarantees provided and private bonds and securities
in the portfolio, attained R$ 580 billion, growth of 24.9% in December 2011. Banco do Brasil’s market
share in the domestic loan portfolio was 20.4% in December 2012.
On April 2012, Banco do Brasil launched the BOMPRATODOS, which it is a set of measures covering
financial advisory services, reduction of interest rates of the main lines of credit for individual clients
and micro and small enterprises and improvement of the relationship with clients. Through this
program, Banco do Brasil sought to stimulate the conscious use of credit and to contribute towards
the maintenance of low delinquency, allowing the expansion of credit with quality.
On August 2012, BB realized the Primary and Secondary Public Distribution Offer of Mortgage
Investment Fund Shares - BB Progressivo II FII. 15,919,690 shares were disposed of in a Secondary
Offer with per value of R$100.00. The transfer of BB’s real state for the Fund, at market value,
produced positive effect, net of taxes, on BB’s results of R$615 million.
On September 2012, in order to meet the resources allocated in the Crop Plan Year 2012/2013, BB
obtained legal authorization for the granting the credit value of Federal Government in its favor, in the
amount of R$ 8.1 billion, in financial and contractual conditions that allowed its framework as a hybrid
capital and debt instrument, as defined by the National Monetary Council (CMN).
On April 2013, it was realized a Public Offer of 675 million of common shares issued by BB Seguridade
S.A. (subsidiary established in December 2012). The shares were listed in BM&FBOVESPA’s Novo
Mercado and started to be traded on April 29, 2013, with price set at R$17.00 per share. This
transaction generated revenues of R$11.475 billion for BB.
The establishment of BB Seguridade, as well as its listing, allowed Banco do Brasil:
(i)
consolidating under only one company all Banco do Brasil’s activities in the insurance,
capitalization, private pension plans and related activities, including any future expansions of such
activities in Brazil or overseas, organic or not;
(ii)
providing gains of scale in these transactions;
(iii)
reducing costs and expenses in the insurance area; and
(iv)
expand the range of activity of BB Corretora de Seguros e Administradora de Bens S.A., which will
begin to trade third-party products, in the segments which Banco do Brasil does not have
59
Section 6 - Issuer History
exclusivity agreements with partner companies, inside and outside the service network of the
Bank. The intention of Banco do Brasil is that BB Seguridade becomes an open-company adherent
to the best corporate governance practices.
On June 2013, Banco do Brasil, BB Seguridade Participações S.A. and Odontoprev entered into an
agreement for the establishment of Brasildental Operadora de Planos Odontológicos, for the purpose
of distributing and trading dental care plans with BB Dental brand, exclusively in all BB channels on
Brazilian territory. This agreement was ratified by CADE (Administrative Council of Economic Defense)
in August of the same year.
On August 2013, within the process of corporate restructuring of the IRB-Brasil Resseguros S.A., BB
Seguros Participações S.A. (wholly-owned subsidiary of BB Seguridade) purchased 212,421 common
shares issued by the Federal Government and now holds 20.5% of the capital of IRB-Brasil
Resseguros S.A.
On November 2013, BB signed a memorandum of understanding with Correios in order to evaluate
the feasibility of establishing strategic partnership concerning the Postal Bank. The main objective of
the partnership was to increase the currently model to established between the companies, expanding
its portfolio of products and services, aiming to bring it closer to the international models of postal
banks.
On December 2013, BB-BI sold its stake in Itapebi Geração de Energia for the Group Neoenergia. This
operation resulted in a gain in the net income of R$188.2 million.
On August 2014, the Board of Directors of BB approved the migration of its program of American
Depositary Receipt-ADR from level I to level II. Still in August, the Central Bank authorized that the
value of R$ 8.1 billion, related to mutual agreement signed instrument with the Federal Government,
in 09.26.2012, and its additive term concluded in 08.28.2014, were considered Core Capital from the
date of the celebration. The amount represented an increase of 98 basis points in the Core Capital
Ratio and of 20 basis points on the index of BIS Ratio.
On November 2014, Banco do Brasil informed that BB Elo Cartões Participação and Cielo formed new
strategic partnership, the Token, to operate in the segment of electronic means of payment, in order
to exploit the activities of management of post-pay accounts transactions and management of debit
purchasing functionality. The total capital of Token was divided in the ratio of 30% for BB Elo Cartões
and 70% to Cielo. Considering the indirect participation of BB on Cielo, through BB-BI, the total
indirect BB’s equity interest in Token is 50.05% of the capital. The new company was valued at
R$11.6 billion.
6.4.
Registration date at CVM
07/20/1977.
6.5.
Main corporate events of Banco do Brasil and its subsidiaries or associated
companies
a) event
b) key business
conditions
c) companies involved
d) effects by the
transaction on the
shareholding structure
e) shareholding
structure before and
after the transaction
Capital increase of Banco Votorantim
Banco do Brasil S.A. (BB) and Votorantim Finanças S.A. (VF), on June 27th, 2012, decided to increase
Banco Votorantim S.A. capital stock. (BV) in the amount of R$2 billion. This operation involved equal
contributions from BB and VF in the amount of R$1 billion. This operation was approved by the
Central Bank on June 29th, 2012.
Banco do Brasil S.A.
Votorantim Finanças S.A.
Banco Votorantim S.A.
There was no change in the shareholding structure of Banco do Brasil.
Banco Votorantim S.A. table
BEFORE
Common
Shares (%)
Shareholder
f) strategic rationale
ON (%)
Preferred
Shares (%)
PN (%)
Banco do Brasil S.A.
49.99
50.01
Votorantim Finanças S.A.
50.01
49.99
AFTER
Common
Shares (%)
Common
Shares (%)
ON (%)
There was no
change
-
There was no
change
PN (%)
-
As provided in the shareholders’ agreement, BB and VF maintained BV capitalization at appropriate
levels and aim to enable the Company’s continuous growth.
a) event
b) key business
conditions
Total Spin-off BB Aliança Participações, Mapfre Participações and BB Aliança REV
On November 30, 2012 it was carried on the total spin-off to BB Aliança Participações, Mapfre
Participações and BB Aliança REV, as described below:
a) total spin-off BB equity Alliance with transfer of its investments in Aliança do Brasil for Aliança do Brasil,
in reverse incorporation, transfer of its investments in life insurance company and its assets and liabilities
to BB Mapfre SH1;
b) total spin-off Mapfre Participações, with version of its investments in Vida Seguradora for life Insurance
in reverse incorporation, and its collection liquid version for BB Mapfre SH1;
c) total spin-off BB Aliança REV, with transfer of its investments in Brasilveículos to Brasilveículos in reverse
incorporation, transfer of its investments in Aliança do Brasil and its assets and liabilities to Mapfre BB SH2;
d) On March 28th, 2013 at general meetings of the Aliança do Brasil and of the Vida Seguradora, was
approved adopted their conversions on wholly-owned subsidiaries of BB Mapfre SH1. The same move on
the same date happened with Brasilveículos and Aliança do Brasil, which became wholly-owned
subsidiaries of Mapfre BB SH2. These movements were approved by Susep in the second half of 2013.
c) companies
involved
BB Mapfre SH1
Mapfre BB SH2
BB Aliança Participações
Mapfre Participações
BB Aliança REV
Vida Seguradora
Aliança do Brasil
Aliança do Brasil Seguros
Brasilveículos
d) effects by the
transaction on the
There was no change in the shareholding structure of Banco do Brasil.
shareholding
structure
e) shareholding
See item ―b‖ above
structure before and
after the transaction
f) strategic rationale Simplify the operating model of partnership between BB and Mapfre Insurance with the consequent cost
optimization
61
Section 6 - Issuer History
a) event
b) key business
conditions
Constitution of BB Seguridade and BB Cor
On December 20th, 2012, the Banco do Brasil constituted the BB Security Participations S.A. and the
company BB Cor, both with headquarters and forum in Brasilia, Distrito Federal, in the form of whollyowned subsidiaries of Banco do Brasil, with initial capital of R$15,000,000.00 and R$1,200,000.00,
respectively. Banco do Brasil now holds directly 100.00% of the capital stock of BB Cor.
c) companies
involved
Banco do Brasil
BB Seguridade
BB Cor
There was no change in the shareholding structure of Banco do Brasil.
d) effects by the
transaction on the
shareholding
structure
BB Seguridade
Shareholder
Banco do Brasil
Common Shares
(ON) (%)
Preferred
Shares (PN)
(%)
Total Capital (%)
100.00
0
100.00
BB Cor
Shareholder
Banco do Brasil
Common Shares
(ON) (%)
Preferred
Shares (PN)
(%)
Total Capital (%)
100.00
0
100.00
e) shareholding
See item ―b‖ and ―d‖ above.
structure before and
after the transaction
f) strategic rationale The Constitution of BB Seguridade aimed to: (i) consolidate under a single society, all activities of Banco
do Brasil in the segments of insurance, capitalization and pension plans and related activities, including any
future expansions of these activities, in Brazil or abroad, organic or not; (ii) provide gains of scale in these
operations; (iii) obtain reductions in costs and expenses in the insurance segment; and (iv) enhance the
performance of BB Corretora.
Formed in December 2012, the holding company BB Cor is currently a wholly-owned subsidiary of BB
Seguridade Participações S.A. and holds the control of the BB Corretora de Seguros e Administradora de
Bens S.A., through the ownership of 100% of shares representing its capital. Eventually, the BB Cor can
acquire shareholdings in other companies that operate in the market as brokers of insurance, pension
plans open, capitalization and/or health and dental plans, as well as property administration companies.
a) event
Capital increase of BB Seguridade, fully paid by Banco do Brasil, through the shares conference
of BB Seguros, BB Cor and BB Corretora.
b) key business
conditions
On December 31, 2012, it was carried on the capital increase of BB Seguridade in the amount of
R$5,631,767,124.93 with the total paid-up of participation held by Banco do Brasil on BB Seguros, BB Cor,
and BB Corretora. As a result of the capital increase, the BB Seguridade now holds 100% of the capital
directly from BB Seguros, BB Cor and BB Corretora.
c) companies
involved
Banco do Brasil
BB Seguridade
BB Seguros
BB Cor
BB Corretora
There was no change in the shareholding structure of Banco do Brasil.
d) effects by the
transaction on the
shareholding
structure
e) shareholding
structure before
and after the
transaction
Shareholding Structure Before Operation
Association
Direct
Participation of
Banco do Brasil in
ON (%)
Direct
Participation of
Banco do Brasil in
PN (%)
Direct Participation of Banco
do Brasil in Total Capital (%)
BB Seguros
100.00
0
100.00
BB Cor
100.00
0
100.00
BB Corretora
100.00
0
100.00
Shareholding Structure Before Operation
Association
f) strategic
rationale
Direct Participation of Direct Participation of Direct Participation of
BB Seguridade in ON BB Seguridade in PN
BB Seguridade in
(%)
(%)
Total Capital (%)
BB Seguros
100.00
0
100.00
BB Cor
100.00
0
100.00
BB Corretora
100.00
0
100.00
In line with the constitution of BB Seguridade and BB Cor, the capital increase of BB Seguridade enabled the
consolidation under a single society, of all activities of Banco do Brasil in the segment of insurance,
capitalization and pension plans, in so far as the contribution held through previously participation by Banco
do Brasil in capital of BB Seguros and BB Cor.
a) event
Capital increase of BB Cor, fully paid-up, through conference stock of BB Corretora.
b) key business
conditions
On December 31, 2012, it was carried out a capital increase of BB Cor amounting to
R$35,010,584.14 paid with the entire contribution interest held by BB Seguridade Participações S.A.
in BB Corretora. As a result of this contribution, the BB Corretora now holds 100% of the share
capital from BB Corretora.
c) companies involved
Banco do Brasil
BB Seguridade
BB Cor
BB Corretora
There was no change in the shareholding structure of Banco do Brasil.
d) effects by the
transaction on the
shareholding structure
e) shareholding
structure before and
after the transaction
Shareholding Structure of BB Before Operation
Shareholder
participation
with
direct Common
Shares (ON)
(%)
BB Seguridade
100.00
Preferred
Shares (PN)
(%)
Share Capital (%)
0
100.00
Shareholding Structure of BB After Operation
Shareholder
participation
f) strategic rationale
with
direct
Common
Shares (ON)
(%)
Preferred
Shares (PN)
(%)
Share Capital (%)
BB Cor
100.00
0
100.00
The transfer of the participation owned by BB Seguridade and BB Corretora to BB Cor was part of the
process of reorganization of the companies of BB’s conglomerate in preparing the company for IPO.
63
Section 6 - Issuer History
a) event
b) key business
conditions
Acquisition of Participation of IRB.
On January 18, 2013, it was published the CND Resolution 03/2013 which established, among other subjects,
that Federal Government, BB Seguros, Bradesco Auto Re - Companhia de Seguros ("Bradesco Seguros"), Itaú
Seguros S.A. ("Itaú"), Itaú Vida e Previdência S.A. (―Itaú Vida‖ and, together with Itaú, (―Itaú Seguros") and
equity investment fund Caixa Barcelona ("FIP Caixa Barcelona"), signed a shareholders’ agreement for definition
of IRB's controlling group after its destatization conferring on the Federal Government, corporate special powers
arising from the special class action (golden share).
The Central Bank has authorized, in April 1, 2013, through 2013/02011 craft, that Banco do Brasil participate,
indirectly, by up to 25% of the capital of IRB.
On April 17, 2013 it was published the decision by CADE, which approved, without restrictions, the Act of
concentration 08700.002270/2013-01, which was about the restructuring of the corporate capital of the
reinsurer.
In May 2013, the Tribunal de Contas da União ("TCU") approved four of five fiscalization stages foreseen in TCU
normative instruction 27/98, which provides for the supervision of the privatization processes TCU.
BB Seguros signed in May 24, 2013 purchase and sale agreement with Federal Government, to acquiring
20.51% of the participation of IRB, represented by 212,421 common shares. On the same date, the
stockholders agreement was signed between Federal Government, BB Seguros, Bradesco Seguros, Itaú Seguros
and FIP Caixa Barcelona, with the mediation-approval of Banco do Brasil and IRB.
On August 20, 2013, it was held an extraordinary general meeting for approval of the capital increase of IRB, a
condition precedent to payment, BB Seguros, the purchase of BB common shares. Subsequently, on August 27,
2013, BB Seguros now holds 20.51% of the capital of IRB, after the acquisition of shares.
On September 12, 2013, Susep allowed the shareholding control transfer and interference of the reinsurer's
business to the signatories of the Agreement of Shareholders.
On January 17, 2014, BNDES, in exercise of its attributions conferred by CND, published in Diário Oficial da
União the conclusion of IRB destatization process.
On December 12, 2014, TCU consigned the craft 0627/2014, in which communicates the approval of the fifth
and final stage envisaged in TCU normative instruction 27/98, which establishes for the supervision of the
destatization processes by TCU.
Shareholder Structure of IRB Before by Destatization Process
Total Capital Participation (%)
Share PN (%)
One action Golden Share in name of
Federal Government
National Treasury
50.00
100.00
Bradesco Seguros
21.24
0.00
Itaú Seguros
15.44
0.00
Porto Seguro
2.31
0.00
Caixa Seguradora
1.08
0.00
Grupo Segurador BB Mapfre (AB e Vida
Seguradora)
0.80
0.00
Minority
9.12
0.00
Association
Shareholder Structure of IRB After by Destatization Process
National Treasury
27.55
Share PN (%)
One action Golden Share in name of
Federal Government
100.00
BB Seguros
20.51
0.00
Bradesco Seguros
20.51
0.00
Itaú Seguros
15.00
0.00
FIP Caixa Barcelona
6.65
0.00
Minority
9.78
0.00
Association
Total Capital Participation (%)
On December 29, 2014, through the extraordinary general meeting of Shareholders ("AGE"), it was approved to
reform the Bylaws to change the number of shares from 1,035,663 to 1,040,000, in order to contemplate, the
amount of 4,337 shares in treasury. Thus, BB Seguros now holds a share of 20.43% in IRB.
On the same date it was held the split of the shares issued by the IRB, in the proportion of 300 Common Share
(ON) for each current Common Share (ON), without modifying the value of the capital. In addition, the total
shares of IRB is 312,000,000 and BB Seguros now holds 63,726,600 ONs of the IRB issue, without change in the
percentage participation.
IRB Shareholder Structure after AGE of December 29, 2014
National Treasury
Share PN (%)
One action Golden Share in name of
União
27.44
100.00
BB Seguros
20.43
0.00
Bradesco Seguros
20.43
0.00
Itaú Seguros
14.94
0.00
FIP Caixa Barcelona
9.85
0.00
Minority
6.50
0.00
Treasury Shares
0.42
0.00
Society
Total Capital Participation (%)
c) companies
involved
d) effects by
the transaction
on the
shareholding
structure
Banco do Brasil
IRB
Tesouro Nacional
Bradesco Seguros
Itaú Seguros
FIP Caixa Barcelona
There was no change in the shareholding structure of Banco do Brasil.
e) shareholding There was no change in the shareholding structure of Banco do Brasil.
structure
before and
after the
transaction
f) strategic
Aims to continue the process of reorganization of the BB conglomerate's insurance area, complementing the
rationale
operations of its insurers, increasing the participation of the insurance area in the net income of Banco do Brasil
and expanding partnerships in this segment, as well as the turnover, especially those related to large risks,
segment that must take advantage of the opportunities related to works for improvement of infrastructure in the
country.
a) event
b) key business
conditions
Corporate Reorganization – Insurance Segment
On February 26, 2013, it were filed in the Comissão de Valores Mobiiários ("CVM"): (a) by BB
Seguridade Participações S.A. the application for registration as a publicly-held company "A" category
in accordance with CVM instruction, 480 of December 7, 2009, as amended ("480 Statement"), in the
context of the public offer; and (b) by Banco do Brasil, request secondary public distribution of
common shares issued by BB Seguridade of ownership of Banco do Brasil, all registered, book-entry
shares with no par value, free and clear of any liens or encumbrances ("Actions"). The "Book
building" procedure of distribution of Secondary public offering common shares issued by BB
Seguridade ("Offer") ended in 25.04.2013, having the Board of Directors approved the BB price per
share offer at R$ 17.00. With the closing of the public offering of shares of BB Seguridade and with
the full exercise of further block of the offer, the gross gain from the operation will be of R$9,877
billion, which will produce an impact on the net income of the BB in second quarter of R$4.703 billion.
Before the above-mentioned public offering, the insurance area had the following
corporate configuration
Shareholder
Common
Share (ON)
ON (%)
Preferred
Share (PN)
PN
(%)
Total Share
Capital Total
(%)
Banco do
Brasil
2,000,000,000
100.00
0
0,00 2,000,000,000
100.00
Total
2,000,000,000
100.00
0
0,00 2,000,000,000
100.00
Shareholding Structure after IPO
Shareholder
Common
Share (ON)
Banco do Brasil
1,325,000,000
66.25
0
0.00 1,325,000,000
675,000,000
33.75
0
0.00
675,000,000
33.75
2,000,000,000
100.00
0
0.00 2,000,000,000
100.00
Minority
Total
c) companies involved
d) effects by the
transaction on the
shareholding structure
ON (%)
Preferred
Share (PN)
PN
(%)
Total Share
Capital Total
(%)
66.25
Banco do Brasil S.A.
BB Seguridade Participações
There was no change in the shareholding structure of Banco do Brasil.
e) shareholding
structure before and
after the transaction
See item ―b‖ above.
f) strategic rationale
Capture the real value of BB Seguridade in the market.
65
Section 6 - Issuer History
a) event
b) key business
conditions
Transfer of ownership of BB USA Holding Company, Inc. for BB S.A.
On May 2013, Banco do Brasil S.A. acquired all the shares of BB USA Holding Company, previously
owned by BB AG Vienna, a wholly-owned subsidiary of Banco do Brasil S.A. The acquisition of all the
shares of BB USA Holding Company comprised the conclusion of payment of the price to sellers and
the transfer to Banco do Brasil the actions corresponding to the total capital of BB USA Holding.
c) companies involved
Banco do Brasil S.A.
BB AG Viena
BB USA Holding Company, Inc.
d) effects by the
transaction on the
shareholding structure
There was no change in the shareholding structure of Banco do Brasil.
e) shareholding
structure before and
after the transaction
BB Stock Frame USA Holding Company, Inc.
Before – Shares (%)
Banco do Brasil S.A.
BB AG Viena
f) strategic rationale
a) event
b) key business
conditions
After – Shares (%)
-
100.00
100.00
-
The activity of BB USA Holding Co. is restricted to USA, being currently an investment outside the
operational focus of BB AG. The transfer of ownership of BB USA Holding Company for BB S.A. has as
a strategic advantage to the conglomerate, among others: (i) governance performance in the North
American market would be centered in the BB S.A., and (ii) the activities in Europe would be focused
primarily on European BB AG subsidiary and Regional Management Europe, and strategic issues,
regulatory, tax and Treasury management would be under a single governance, focused on Europe.
Definition of a partnership for the establishment of Brasildental Operadora de Planos
Odontológicos S.A. (“Brasildental”)
On June 11, 2013, Banco do Brasil S.A., BB Seguros Participações S.A. (―BB Seguros‖), BB Corretora
de Seguros e Administradora de Bens S.A. ("BB Corretora"), Odontoprev S.A. (―Odontoprev‖) and
Odontoprev Serviços Ltda. (―Odontoprev Serviços‖) signed an agreement for Association and Other
Covenants to, through Brasildental, developing and disclosing, and through BB Corretora, distributing
and trading BB Dental brand’s dental care plan, exclusively in BB channels of the national territory.
Brasildental will have an initial capital stock of R$ 5 million, distributed in 100 thousand common
shares (ON) and 100 thousand preferred shares (PN), with the following shareholding structure:
Common
(%)
Shares
Preferred Shares
(%)
BB Seguros
49.99%
100.00%
74.99%
Odontoprev
50.01%
-
25.01%
Total Capital (%)
Total
100.00%
100.00%
100.00%
On September 19, 2013, the transaction was approved by the Central Bank of Brazil (―Bacen‖) and,
on August 2, 2013, by the Administrative Council of Economic Defense (―CADE‖).
Finally, on Reference Form preparation date, Brasildental was in the process of being established.
Following the establishment of the new Company, the authorization from the National Supplementary
Health Agency (―ANS‖) must be obtained for its operation.
c) companies involved
d) effects by the
transaction on the
shareholding structure
e) shareholding
structure before and
after the transaction
f) strategic rationale
Banco do Brasil
BB Seguridade
BB Seguros
BB Corretora
Odontoprev
Odontoprev Serviços
Brasildental
There was no change in the Company’s shareholding structure. Regarding Brasildental shareholding
structure, see item ―b‖ above.
The partnership, which model forecast provides for the establishment of a dental care plan operating
company, is based on the same assumptions that guide the process of reviewing Banco do Brasil
insurance area operation model, in addition to using trading opportunities to start operation in this
area.
a) event
b) key business
conditions
Corporate Reorganization of Banco Votorantim and subsidiaries and BV Participações S.A
and subsidiaries.
In July 2013, Banco Votorantim promoted a corporate reorganization also involving its subsidiary BV
Financeira and BV Participações and its subsidiaries CP Promotora and BV Sistemas.
Banco Votorantim merged BV Participações S.A. and started to control BV Sistemas. BV Financeira
merged CP Promotora de Vendas S.A.
After
transactions,
the
Bank’s
Shareholders'
Equity
was
increased
by
R$98,920,286.15, through issuance of 1,442,096,204 new shares, being 1,179,896,894 common
shares and 262,199,310 preferred shares with no par value.
Transactions are being analyzed by the Brazilian Central Bank.
c) companies involved
Banco Votorantim S.A.
BV Financeira S.A. – Crédito Financiamento e Investimento
BV Participações S.A
CP Promotora de Vendas S.A.
BV Sistemas de Tecnologia da Informação S.A.
d) effects by the
transaction on the
shareholding structure
e) shareholding
structure before and
after the transaction
f) strategic rationale
There was no change in the shareholding structure of Banco do Brasil.
a) event
Corporate Reorganization of BB‟s interest in Companhia Brasileira de Soluções e Serviços
S.A. (CBSS)
On August 2013, interest held by BB Banco de Investimento S.A. (BB BI) in CBSS was transferred to
Elo Participações S.A (EloPar) through BB Elo Cartões Participações S.A. (wholly-owned subsidiary of
BB and holder of 49.99% of Elo Participações S.A. shares). This transfer was made effective with
partial spin-off of BB BI capital stock and transference of spun-off portion (representing shareholding
interest held in CBSS) to BB Elo Cartões S.A. which, on its turn, transferred received assets to EloPar,
which became the holder of 100% of CBSS’s capital.
b) key business
conditions
BV Participações S.A and CP Promotora de Vendas were merged and extinguished. Banco Votorantim
became the holder of 99.94% of shares of BV Sistemas de Tecnologia da Informação S.A.
Optimization of corporate structures and rationalization of activities, and of financial, administrative
and operating costs for the purpose of increasing corporate capacity and power of competition in the
market.
c) companies involved
BB Banco de Investimento S.A.
BB Elo Cartões S.A.
Alelo S.A.
Elo Participações S.A.
d) effects by the
transaction on the
shareholding structure
e) shareholding
structure before and
after the transaction
There was no change in BB’s total indirect interest in CBSS.
Shareholder structure of Companhia Brasileira de Soluções e Serviços S.A. (CBSS).
Before – Shares (%)
BB Banco de Investimentos S.A.
f) strategic rationale
49.99
After – Shares (%)
-
Elo Participações S.A.
50.01
100.00
Centralize businesses related to electronic means of payment, making better use of Elo Participações
S.A. Governance and allowing interest of BB and Bradesco Financial Conglomerates to be properly
and effectively treated.
67
Section 6 - Issuer History
a) event
b) key business
conditions
c) companies involved
d) effects by the
transaction on the
shareholding structure
e) shareholding
structure before and
after the transaction
f) strategic rationale
Partial spin-off of BB-Banco de Investimento S.A.
On August 2013, there was the partial spin-off of BB-Banco de Investimento S.A. with transference of
shareholding interest held in Alelo to BB Elo Cartões.
BB-Banco de Investimento S.A.
Alelo S.A.
BB Elo Cartões S.A.
Interest percentage of BB in BB-Banco de Investimento S.A. was not changed.
Before
After*
Common
Shares
(ON)
Common
Shares
(%)
Total
Capital
(%)
Common
Shares
(ON)
Common
Shares
(%)
Total
Capital
(%)
Banco do
Brasil S.A.
3,249,378
100
100
2,540,982
100
100
Total
3,249,378
100
100
2,540,982
100
100
*December 2013
Centralize businesses related to electronic payment methods, according to strategy outlined by BB
Conglomerate.
a) event
b) key business
conditions
Acquisition of shareholding interest in IRB-Brasil Resseguros S.A.
On August 27, 2013, BB Seguridade, through its wholly-owned subsidiary BB Seguros Participações S.A.,
paid R$547.4 million to the Federal Government and became the holder of 20.5% of IRB-Brasil
Resseguros S.A. capital stock. As a result, corporate configuration of BB’s security area changed to:
Banco do Brasil S.A.
BB Seguridade
Participações S/A
BB Seguros Participações
S.A.
Common
Preferred
Total
Common
Preferred
Shares
Shares Total Shares Capital
Shares (ON)
Shares (PN)
(%)
(%)
(%)
1,325,000,000
66.25
0
0 1,325,000,000
278,862,835
100.00
0
0
107,989,204
49.99
107,989,196
100.00
572,406
49.99
1,145,040
100.00
66.25
278,862,835 100.00
Subsidiaries/Associated
companies
1. Brasilcap
215,978,400
66.66
2. Brasilprev
3. BB Mapfre SH1
Participações S.A.
1,039,908,051
4. Mapfre BB SH2
Participações S.A.
369,162,684
49.00
384,230,549
51.00
5,400,000
100.00
0
0
5,400.00 100.00
212,421
20.51
0
0
212,421
1,200
100.00
0
0
1,200 100.00
1,000,000
100.00
0
0
1,000,000 100.00
5. BB Capitalização S.A.
(former Nossa Caixa
Capitalização)
6. IRB-Brasil Resseguros
S.A.
i.ii) BB Cor Participações
S/A
i.ii.i) BB Corretora de
Seguros e Administradora
de Bens S.A.
49.99 2,079,400,386
1,717,446 74,995
100.00 3,119,308,437
753,393,233
74.99
50.00
20.51
New configuration of IRB-Brasil Resseguros S.A. after acquisition by BB Seguros
Participações S.A. is as follows:
IRB-Brasil Resseguros S.A.
Share Capital
BB Seguros Participações S.A.
20.51
Bradesco Auto RE – Companhia de Seguros S.A.
20.51
Grupo Itaú Seguros
15.00
União*
27.55
Fundo de Investimento em Participações Caixa Barcelona
6.65
Outros
* 1(one) special class of preferred share of Federal
Government ownership issued pursuant to art. 8 of the
Social IRB Statute (―Golden Share‖)
9.78
c) companies
involved
BB Seguros Participações
Bradesco Auto RE – Companhia de Seguros S.A.
Itaú Seguros Group
Federal Government
Fundo de Investimento em Participações Caixa Barcelona
d) effects by the
transaction on the
shareholding
structure
e) shareholding
structure before
and after the
transaction
f) strategic
rationale
There was no change in the shareholding structure of Banco do Brasil.
See item ―b‖ above.
To raise the contribution by the insurance segment security area to Banco do Brasil's profit figures,
expanding its share in the partnerships in this segment as well as the volume of business.
69
Section 6 - Issuer History
a) event
b) key business
conditions
c) companies
involved
Disposal of Interest in Itapebi Geração de Energia
On December 2013, BB-Banco de Investimento S.A., wholly-owned subsidiary of Banco do Brasil, disposed
of its interest in Itapebi Geração de Energia S.A. to Neoenergia Group.
BB-Banco de Investimento S.A
Itapebi Geração de Energia S.A
Neoenergia – Termopernambuco Group
d) effects by the
transaction on the Total interest of BB-Banco de Investimento S.A. in Itapebi Geração de Energia S.A. was disposed of:
shareholding
structure
e) shareholding
Before
After*
structure before
Common
Total
Common
Total
and after the
Common
Common
Shares
Capital
Shares
Capital
transaction
Shares (ON)
(%)
(%)
Shares (ON)
(%)
(%)
BB-BI
4,750,000
19
19
-
0
0
10,500,000
42
42
10,500,000
42
42
Iberdrola Energia S.A.
5,650,000
22.6
22.6
5,650,000
22.6
22.6
Previ
4,100,000
16.4
16.4
-
0
0
-
0
0
8,850,000
35.4
35.4
25,000,000
100
100
25,000,000
100
100
Neoenergia S.A.
Termopernambuco
Total
* February 2014
f) strategic
rationale
Disposal of direct interest held by BB-Banco de Investimento S.A. in Itapebi Geração de Energia S.A. agrees
with the Conglomerate’s strategic guideline of maintaining permanent interest only in companies with
activities that are synergic to the Bank’s core business.
a) event
b) key business
conditions
c) companies
involved
Incorporation of Banco do Brasil S.A. branches in Madrid and Paris to BB AG
On 1/1/2014 the branches of Banco do Brasil S.A. in Madrid and Paris were incorporated into the BB AG,
passing to denominate BB AG Branch and France BB AG Spain Branch
Banco do Brasil S.A.
BB AG
There was no change in the shareholding structure of Banco do Brasil.
d) effects by the
transaction on the
shareholding
structure
e) shareholding
BB AG Stock Frame
structure before
Before – Share (%)
After – Share (%)
and after the
Banco do Brasil S.A.
100.00
100.00
transaction
f) strategic
The event is part of BB's internationalization strategy and aims to consolidate the Bank's activities in Europe
rationale
under license from BB AG. The integration of European units seeks to increase turnover, optimize the capital
invested in those agencies and improve operational efficiency and governance.
a) event
Strategic Partnership for Establishment of Company, Affiliate of Banco do Brasil S.A., for
sales promotion and management negotiating correspondents.
b) key business
conditions
On 10/20/2014 Banco do Brasil S.A. (BB) and Votorantim Finanças S.S. (VF) signed the partnership
agreement by creating sales promoter with the main objective to act as business correspondents
Manager of BB, given the large amount of customers not in portfolio or not account holders.
Transactions are at the stage of examination by the CADE and the Central Bank.
c) companies involved
Banco do Brasil S.A.
Banco Votorantim
d) effects by the
transaction on the
shareholding structure
There was no change in the shareholding structure of Banco do Brasil.
a) event
b) key business
conditions
Incorporation of BB Capitalização S.A. by BB Seguros Participações S.A.
On November 28, 2014, in the Assembly of Shareholders, in meetings held by the BB Seguros
Participações S.A. ("BB insurance") and BB Capitalização S.A. ("BB Capitalização"), was deliberate the
closure of the latter, through its incorporation for the former.
The shareholders ' Meeting of BB Seguros had the following objectives: (i) approve and ratify the
appointment of the chosen company for the preparation of the economic and financial appraisal
report; (ii) examine, discuss and approve the terms and conditions laid down in the Protocol and
justification signed by companies, pursuant to articles 224 and 225 of law nº 6,404/76; (iii) review
and approve the said appraisal report and the completion of the acquisition; and (iv) to approve the
version of equity ("PL") of the sheet for the property developer.
The allocation of embedded PL took place by replacing the investment held by BB Seguros on BB
Capitalização by PL of the company being acquired, not occurring, so any change in the capital stock
of BB Seguros, nor change in its shareholding structure.
Whereas the BB Seguros was the only partner on embedded on the date of incorporation, there were
no share exchange ratio of shares of shareholders not controllers of incorporated by shares of
property developer, pursuant to article 264 of law nº 6,404/76, given that BB Seguros was the holder
of all the built-in actions, being, on the date of incorporation, its only shareholder.
Within the BB Capitalização, in turn, was the subject of deliberation in assembly: (i) examine, discuss
and approve the terms of the Protocol and justification, signed between the companies involved; (ii)
approve and ratify the appointment of the chosen company for the preparation of the report of
economic and financial valuation; (iii) consider and approve the above-mentioned report; and (iv)
authorize its officers to perform additional acts necessary for incorporation.
Tax committee of both companies involved in the operation spoke about the merger proposal put
forward by the respective Councils Boards of BB Seguros and BB Capitalização companies, pursuant
to paragraph III of article 163 of law nº 6,404/76.
The corporate structure did not suffer changes, as shown in the tables below:
I) Shareholding structure of BB Capitalização before operation
Common Share
(ON) (%)
Preferred Share
(PN) (%)
Total Capital (%)
BB Seguros
100.00%
-
100.00%
Total
100.00%
-
100.00%
II) Shareholding structure of BB Seguros before operation
Common Share
(ON) (%)
Preferred Share
(PN) (%)
Total Capital (%)
BB Seguridade
100.00%
-
100.00%
Total
100.00%
-
100.00%
II) Shareholding structure of BB Seguros after operation
c) companies involved
Common Share
(ON) (%)
Preferred Share
(PN) (%)
Total Capital (%)
BB Seguridade
100.00%
-
100.00%
Total
100.00%
-
100.00%
Should clarify that, in accordance with the Portaria 6,167, of 01.23.2015, published in the No. 18, of
01.27.2015, Susep approved this incorporation and cancelled the authorization to operate the BB
Capitalização.
BB Seguros
BB Capitalização
71
Section 6 - Issuer History
a) event
d) effects by the
transaction on the
shareholding structure
e) shareholding
structure before and
after the transaction
f) strategic rationale
6.6.
Incorporation of BB Capitalização S.A. by BB Seguros Participações S.A.
There was no change in the shareholding structure of Banco do Brasil.
See item ―b‖ above.
Created by Banco Nossa Caixa ("BNC") with the objective of participation in joint venture, the BB
Capitalização remained inoperative since its creation in 2004, summarizing its activities only in the
financial implementation of its share capital. After the incorporation of BNC by Banco do Brasil S.A. in
11.30.2009, the company was maintained at BB Conglomerate, considering that the negotiations for
the revision of the business model in capitalization segment were in progress.
In the BB Capitalização 02.25.2011, hitherto controlled directly by BB, was transferred to BB Seguros,
by transference of total shares representing its capital, owned by the commercial bank. From this time
on, the company was considered as a wholly-owned subsidiary of BB Seguros.
In 03.18.2013, the Board of Directors ("CA") of BB deliberated by the closure of BB Capitalização as
well as guided all the subsidiaries involved in the process to carry out all other corporate acts required
for the closure of the company.
Following the steps necessary for the termination of the proceeding for review of the conglomerate’s
capitalization model of BB, as a result of the IPO of BB Seguridade Participações S.A. which went on
to act with independent administration in regards to BB, also would be BB Seguridade’s responsibility
prior manifestation on the matter.
Thus, in 21.03.2014, the CA of BB Security adopted the motion for closure of the BB Capitalization,
guiding the BB Safe to undertake all other corporate acts, as well as to be submitted to the competent
forums the proposals necessary for the completion of the operation.
Witch the closure of the negotiations in capitalization and the avoidance of maintaining BB
Capitalização the review process of the business model in this segment, as well as due to the lack of
prospects for the operations activities.
Filing for bankruptcy
Inform whether there was an application for bankruptcy, provided that based on a material
sum, or for judicial or out-of-court recovery by Banco do Brasil, and the current status of
such applications:
As provided in Law 11,101/2005, Banco do Brasil is not subject to judicial or extrajudicial recovery, or
to bankruptcy. Banco do Brasil has not been subject to receivership until this Reference Form's date.
6.7.
Other relevant information
Notify on business proposals and the expected impacts. In particular, address businesses
reported in relevant events or communicated to the market and that may generate
corporate events such as incorporation, merger, spin-off, share merger, disposal and
acquisition of corporate control, acquisition and disposal of important assets.
a) event
b) key business
conditions
c) companies
involved
d) strategic
rationale
a) event
b) key business
conditions
c) companies
involved
Strategic partnerships – Banco Postal
On November 2013, Banco do Brasil, in conformity with paragraph 4 of Article 157 of Law 6,404, of
December 15, 1976, and with CVM Instruction no. 358, of January 3, 2002, communicated that it signed a
non-binding Memorandum of Understanding with Empresa Brasileira de Correios e Telégrafos (ECT) for the
purpose of evaluating feasibility of a strategic partnership related to Banco Postal.
Banco do Brasil S.A.
Empresa Brasileira de Correios e Telégrafos - ECT.
Partnership may become effective through establishment of an organization engaged in holding interests and
operating as a financial institution whose objective will be to increase the model established today among the
companies, expanding their product and service portfolio in order to approximate them of international post
banks.
Stelo – Business Exploration of Subpurchase and Portfolio Digital
The Banco do Brasil S.A. (BB) and Banco Bradesco S.A. (Bradesco), through its subsidiary Companhia
Brasileira de Soluções e Serviços (CBSS), launched, in 4/16/2014, the company Stelo S.A. (Stelo), a company
of electronic payment methods that will administer, operate and explore the facilitators of payments segments
geared toward e-commerce, as well as digital portfolio business. Stelo is a company with indirect participation
in the total capital stock by BB, with 49.99%, and by Bradesco, with 50.01% through the CBSS.
Companhia Brasileira de Soluções e Serviços
Stelo S.A.
d) strategic
rationale
The creation of the Stelo is another initiative of the two banks to participate actively in the market of means
of payment, as happened previously with the launches of the merchant acquirer and payment processor
Cielo, the flag of ELO and company cards prepaid cards Allele. The main purpose is to create greater comfort
and safety for consumers and businesses, especially in the use of e-commerce payments. This new business
also reinforces the innovative and entrepreneurial character of the organizations involved.
a) event
b) key
business
conditions
Cielo – Participation in the Capital of Stelo S.A.
Cielo S.A. (Cielo) reported, in 4/16/2014, which has concluded a memorandum of understanding with the
nonbinding character Cia. Brasileira de Soluções e Serviços (CBSS), controlled by Banco Bradesco S.A.
(Bradesco) and the Banco do Brasil S.A. (BB), to participate in the share capital of Stelo S.A. (Stelo), a whollyowned subsidiary of CBSS which acts as a facilitator for online payments and digital portfolio for both the
physical world and electronic commerce.
c) companies
involved
Companhia Brasileira de Soluções e Serviços
Cielo S.A.
Stelo S.A.
For the CBSS and the Stelo, the development of new activity through corporate partnership with Cielo favors the
latter interest in employing its expertise and relationships (value chain) in strengthening the business of Stelo,
beyond what one would expect if the relationship were restricted to operating contracts drawn up between the
Stelo, like subacquired and Cielo as merchant acquirer and payment processor/acquirer.
Cielo aims to consolidate its position in electronic commerce, adding the Stelo to your facilitator portfolio
available to merchants, which also includes its own platform of Cielo e Braspag gateway. In addition, Cielo will
participate, via Stelo, digital wallets business, whose penetration should increase with the increased adoption of
smartphones and increasingly application development friendly
d) strategic
rationale
a) event
b) key
business
conditions
c) companies
involved
d) strategic
rationale
a) event
b) key
business
conditions
c) companies
involved
d) strategic
rationale
Livelo – Exploration of related Business loyalty program by Coalition
Banco do Brasil S.A. (BB) and Banco Bradesco S.A. (Bradesco) reported, in 5/14/2014, the Cia. Brasileira de
Soluções e Serviços (CBSS) started, through its wholly owned subsidiary that already exists, the Livelo S.A.
(Livelo), the negotiations to explore related business loyalty program by coalition.
The Livelo is a company with indirect participation in the total capital stock by BB, with 49.99%, and by Bradesco,
with 50.01% through the CBSS..
Companhia Brasileira de Soluções e Serviços
Livelo S.A.
The new business has among its objectives (i) Act as a loyalty program for independent coalition and open, with
fellow cruiserweights payment instrument issuers, retailers and other loyalty programs, among others; (ii) bring
together a diverse group of relevant and strategic partners, both in the generation of loyalty points as in the
possibilities of redemption of benefits; and (iii) develop own loyalty points to be offered to partners of
generation/accumulation of points and convertible into awards and benefits us rescue partners.
Cielo – Integrated solution for business automation, management software and electronic
payments platform
The Cielo S.A. (Cielo) and Linx S.A. (Linx) announced, 6/2/2014, signing nonbinding memorandum of
understanding for the creation of a joint venture that will focus on the development and marketing of a single,
integrated solution, which embarks business automation, management software and electronic payments
platform for small Brazilian retailers.
Cielo S.A.
The new offer brings to Brazil the concept of IPOS (Integrated Point of Sale) and will provide to small retailers an
integrated and flexible solution to meet the specific needs of the various segments. The partnership will benefit
by Cielo's expertise in electronic payments, in addition to the territorial coverage and distribution capacity of
merchant acquirer and payment processor, as well as the experience of three decades of Linx in custom software
solutions and management for different retail vertical, such as clothing, food, construction materials, Department
stores, pharmacies and drugstores, supermarkets, among others
73
Section 6 - Issuer History
Banco Votorantim – Sales Promoter
a) event
b) key
business
conditions
c) companies
involved
d) strategic
rationale
a) event
b) key
business
conditions
Banco do Brasil S.A. (BB) reported, in 8/12/2014, which approved the formation of a partnership with
Votorantim Finanças S.A. (VF) and Banco Votorantim S.A. (BV) for the expansion of commercial capacity and to
prospect for new business for correspondent banking, focusing on payroll loans
Banco do Brasil S.A.
Votorantim Finanças S.A.
Banco Votorantim S.A
Leveraging synergies in Banco Votorantim S.A., allowing expansion of commercial capacity and to prospect for
new business by third parties, with gains in operational efficiency and expertise.
BB Elo Cartões Participações and Cielo –
Strategic partnership in the field of electronic payment methods
Banco do Brasil S.A. (BB) reported, in 11/19/2014, which BB Cards Link Participações S.A. (BB Elo cards) and
Cielo S.A. (Cielo) celebrated the Association Agreement for formation of new strategic partnership in the field of
electronic means of payment. Under the terms of the agreement, BB Elo and Cielo will form new society
(society) who will have the right to explore the activities of postpaid payment accounts management and
management of shopping functionality via debit payment arrangements in line with standards of the regulatory
framework in the sector of electronic means of payment (Law 12,865/2013, art. 6 and 15; National Monetary
Council Resolution 4,282/2013 and circulars of the Central Bank of Brazil 3,680 the 3,683/2013).
The total share capital of the company shall be divided in the proportion of 30.00% for the BB Link cards and
70.00% for Cielo. However, taking into account the indirect participation of the BB on Cielo, via BB Investment
Bank S.A., corporate indirect participation total of BB in society will be distributed according to the following
table:
Participation BB (%)
Total Capital
c) companies
involved
d) strategic
rationale
Common Shares (ON)
Preferred Shares (PN)
Total
42.27
100.00
50.06
The new company was valued at R$11.6 billion (eleven billion six hundred million reais)
BB Elo Cartões Participações S.A.
Cielo S.A.
The new business has among its objectives (i) operational efficiency gains with reduced consumption of BB
structure to segregate the processing activities in society, allowing focus and improvement of practices in
operational activities; (ii) enhance the focus on core activities of BB's relationship with the cardholder and
management of trademarks; and (iii) take advantage of opportunities in niche market related to electronic
means of payment, seeking synergy gains with the Cielo and optimizing the structuring of new businesses in the
segment.
a) event
b) key business
conditions
c) companies
involved
BB Leasing Co. Ltd – Closure
In 2014, the Banco of Brasil approved the closure of BB Leasing co. Ltd. in January 2015, were initiated
actions that will lead to the closure of the activities of BB Leasing Company Ltd. in second semester of 2015.
Banco do Brasil S.A.
BB Leasing Co. Ltd.
d) strategic
rationale
The decision by the closure considered, among other things, the existence of substitutes to international
leasing that have contractual framework less complex and more attractive costs to the client.
7.
ISSUER'S ACTIVITIES
7.1.
Summary description of activities developed by Banco do Brasil and its subsidiaries
Banco do Brasil is the largest financial institution in Latin America in connection with assets, pursuant
to the ranking by the Economática advisory firm, based on December 31, 2014. Banco do Brasil is a
multiple bank based in Brasilia, has a material presence in every Brazilian state, and carries out
activities in important world financial centers.
It is focused on doing business driven by the creation of sustainable results and a performance
compatible with market leaderships. As an agent of public policy, the Bank supports agribusiness,
micro- and small businesses, and foreign trade, by being involved in federal government program as
well as by developing solutions intended to simplify transactions and services that assist these
economic segments.
Having over 200 years of history, its key strength is in retail banking. In general, its business may be
grouped in six segments: (i) Banking; (ii) Investments; (iii) Asset Management; (iv) Insurance,
Pension Funds, and Capitalization (premium bonds); (v) Means of Payment; and (vi) Others. The main
aspects related to each segment are detailed in items 7.2 and 7.3 of this Reference Form.
Aiming at the development of its business, Banco do Brasil also operates, through strategic
partnerships, affiliates and subsidiaries, offering a wide range of products and services in their
segments. Additional information about the Banco do Brasil subsidiaries, see item ―8.1.Economic
group - b. subsidiaries and associated companies‖. For information about the products and services
offered, divided by segment, see item ―7.3. Description of products and services‖.
Banco do Brasil ended 2014 with a portfolio of more than 61.6 million clients (38.1 million checking
accounts), which have access to a network of 19.0 thousand service, besides more than 34.6
thousand shared network points originating from partnerships (Banco 24h, CEF and BRB) and 15.5
thousand correspondents of MaisBB Network, spread around 5,559 municipalities, with the
involvement of almost 111,6 thousand employees.
Banco do Brasil has rated its customers in three key market, in order to provide creative solutions and
strengthen the bond: Individuals, Corporate, and Public Sector. Market knowledge allows the
development of value proposals adjusted to the customers’ profiles: Service model, channels, product
and service portfolio, prices and fee, an integrated communication approach, and, when applicable, a
specific trademark. Below is presented the current client segmentation of BB:
Individual
Companies
Public Sector
Mercado Emergente
Varejo
Exclusivo
Estilo
Microempresa
Pequena Empresa
Empresa
Municipal
Estadual
Federal
Judiciário
Private
Middle
Upper Middle
Corporate
Large Corporate
The Bank is present in 24 foreign countries through its own network, which contained 45 units on
12/31/2014. This network is enhanced by correspondents, which totaled 1,083 units in 135 countries.
In addition, the Bank has been increasing its capacity of marketing its products and services through a
diversity of channels. It also launched a program to encourage improved customer assistance, with
the target to provide excellence in services by means of a differentiated, qualified, and innovative
assistance structure. Hence, Banco do Brasil seeks to increase efficiency and profitability, always
committed with sustainable results, high performance, and adding value to its actions, reconciling
public and private interests, and creating growing returns to shareholders and to the country.
The table below shows Banco do Brasil in round numbers during the periods stated.
R$ million, except as otherwise indicated
2012
2013
2014
Total assets
Loans to customers without Provisions
Customer deposits
Shareholders' equity
Net income
1,014,081
465,756
449,931
65,206
11,405
1,162,168
564,767
461,425
76,382
11,289
1,278,137
631,633
437,822
85,440
13,343
75
Section 7 - Issuer's Activities
Return on average equity - %
17.6
15.9
16.5
In 2009 a partnership was established between the Votorantim Group and Banco do Brasil, which
acquired 49.99% of the voting capital and 50.00% of total share capital of Banco Votorantim. This
partnership is based on strong business logic and long-term vision, favoring the expansion of
business.
Banco Votorantim is one of Brazil's largest private banks in total assets. Established in 1988 as a
securities dealer, began to operate as a multiple bank capital closed since 1991, and currently has a
diverse portfolio of wholesale banking business, Consumer Finance and Wealth Management. Its
activities include: (i) retail operations; (ii) services for companies; (iii) management of investment
funds; (iv) securities broker; (v) leasing operations; (vi) services to private banking clients; and (vii)
international operations.
To support its operations and giving strategic capillarity, Banco Votorantim is headquartered in São
Paulo, about 35 business service centers Wholesale, subsidiary and branch in Nassau (Bahamas), and
brokerage firms in New York and London. In Dec/14 had the involvement of 4,800 employees.
BV Financial, a subsidiary responsible for consumer finance business, mainly through an extensive
network of third-party distribution, consisting of more than 19,000 resellers vehicles and
approximately 1,600 correspondent banks, and more than 80 credit shops to the consumer in the
main cities of Brazil.
7.2.
Information of each segment
For each operating segment that has been reported in the last financial statements for the
social or, where applicable, the consolidated financial statements, provide the following
information exercise.
a.
products and services marketed
The information by segment was compiled with a basis on the reports used by Management in the
appraisal of the segment's performance, decision making regarding the allocation of funds for
investment and other purposes, considering the regulatory environment and the similarities between
financial products and services.
The Bank's operations are divided into five segments: banking, investments, asset management,
insurance, pension and capitalization and payment methods. In these segments, the Bank also
participates in other economic activities such as consortium and operating support that were
aggregated in "Other". For information about the products and services offered, divided by segment,
see item ―7.3. Description of products and services‖.
The various types of accounting information used by Management in the performance appraisal and in
the decision-making process are prepared in accordance with the laws and rules and accounting rules
applicable to financial institutions in Brazil, as determined by the Central Bank.
For this reason, the Bank presents its results by segments according to this normative framework,
called managerial consolidated, being the results reported to the chief operating decision-making for
purposes of allocating resources to the segment and assessing their performance.
The accounting policies of the reportable operating segments differ from those described in the
summary of significant accounting policies under IFRS mainly due to:
I
The recognition of losses from impairment of loans to customers is based on an expected loss
model, with the use of regulatory limits defined by the Central Bank of Brazil. Loans to customers
are classified in order of increasing risk levels, ranging from AA risk (lowest risk) to H risk
(increased risk). The amount of losses on loans to customers are made monthly and may not be
less than the sum resulting from the application of minimum percentages, which vary from 0% for
AA level operations to 100% for transactions H-rated;
II
Investments in jointly controlled entities (joint ventures) are consolidated proportionally to the
Bank;
III
Revenues from fees and commissions charged for the origination of loans to customers are
recognized as income upon receipt;
IV
The amount of goodwill or negative goodwill resulting from a company's control acquisition is
measured as the difference between the value of the consideration paid and the book value per
share, which is amortized over ten years if it is based on expected future profitability and;
V
Changes in the proportion of capital held by minority shareholders, which result in gains or losses
on disposal of investments.
The measurement of managerial income by segment takes into account all income and expenses
calculated by the companies that make up each segment. There is no income or common expenses
allocated between the segments for any distribution criterion.
Intersegment transactions are conducted under terms and conditions consistent with those charged
with third parties, when applicable fees. These transactions do not involve payment risks.
The Bank does not have any customer who is responsible for over 10% of total net revenue of the
institution.
Banking Segment
The banking segment is accountable for the most significant portion of the Bank, preponderantly
obtained in Brazil, and involves a large diversity of products and services, such as deposits, loans and
services that are made available to clients by a wide variety of distribution channels, located in the
country and abroad.
The banking segment operations include business with the retail, wholesale and government markets,
carried out by the network and customer service teams, and business with micro-entrepreneurs and
the informal sector, performed through correspondents in the country.
Investment Segment
Deals are performed in this segment in the domestic capital market, with activity in the intermediation
and distribution of debts in the primary and secondary markets, besides equity interest and the
rendering of financial services.
The net interest income of the segment is obtained by means of revenues accrued in investments in
securities minus expenses with funding to third parties. The existing equity interests are concentrated
at our associated and subsidiary companies. Financial service fee income results from
economic/financial advisory services, underwriting, fixed and variable income, and the rendering of
services to associated companies.
Segment of Asset Management
Responsible for operations inherent to the purchase, sale and custody of securities, portfolio
management, institution, organization and management of investment funds and clubs. Income
mainly derived from commissions and management fees charged to investors for services rendered.
Insurance Segment
In this segment, products and services offered are related to life, property and automobile insurance,
private pension plans and premium Bonds.
Income of this segment comes mainly from fees and commission, insurance premiums issued,
contributions for private pension plans, capitalization bonds and investments in securities, less
commercialization expenses, technical provisions and expenses related to benefits and redemptions.
Segment of Payment Methods
Such segment is mainly responsible for funding, transmission, processing services and financial
settlement of operations in electronic means (debit and credit card) of witch the Revenues are
originated mainly from commissions and management fees charged to commercial and banking
Other Segments
Other segments comprise the operational support and consortium segments, which have not been
aggregated by not being individually representative. Their revenues are originated mainly from
77
Section 7 - Issuer's Activities
provision of services not covered in previous segments, such as: credit recovery, consortium
administration, development, manufacture, commercialization, rent and integration of digital electronic
systems and equipment, peripherals, programs, inputs and computing supplies, intermediation of air
tickets, lodging and organization of events.
b.
revenues from the area and its share in issuer's net revenues
Table below.
c.
profit or loss from the area and its share in issuer's net profit
Table below.
12/31/2012
R$ million
12/31/2013
%
R$ million
12/31/2014
%
R$ million
%
Total revenue (1)
Banking Segment
Investment Segment
Segment of Fund management
Insurance Segment
Segment of payment methods
Other Segments
Intersegment transactions
136,614
100.0
157,505
100.0
188,525
100.0
121,239
88.7
139,428
88.5
163,319
86.6
1,088
0.8
1,524
1.0
1,066
0.6
1,243
0.9
1,344
0.9
1,479
0.8
10,783
7.9
11,709
7.4
18,858
10.0
2,526
1.8
3,131
2.0
3,640
1.9
1,537
1.1
1,697
1.1
2,077
1.1
(1,802)
(1.3)
(1,328)
(0.8)
(1,914)
(1.0)
Total operating expenses (2)
(70,676)
100.0
(81,025)
100.0
(110,722)
100.0
Banking Segment
Investment Segment
Segment of Fund management
Insurance Segment
Segment of payment methods
Other Segments
Intersegment transactions
(70,577)
99.9
(80,994)
100.0
(110,727)
100.0
(258)
0.4
(202)
0.2
(234)
0.2
-
-
-
-
-
-
-
-
-
-
-
-
(1)
0.0
(11)
0.0
(12)
0.0
(39)
0.1
(24)
0.0
6
(0.0)
199
(0.3)
206
(0.3)
245
(0.2)
(49,339)
100.0
(53,835)
100.0
(61,391)
100.0
Banking Segment
Investment Segment
Segment of Fund management
Insurance Segment
Segment of payment methods
Other Segments
Intersegment transactions
(38,806)
78.7
(43,330)
80.5
(45,449)
74.0
(391)
0.8
(571)
1.1
(566)
0.9
(208)
0.4
(170)
0.3
(235)
0.4
(8,724)
17.7
(8,184)
15.2
(13,310)
21.7
(1,361)
2.8
(1,688)
3.1
(1,985)
3.2
(1,266)
2.6
(1,322)
2.5
(1,398)
2.3
1,417
(2.9)
1,430
(2.7)
1,552
(2.5)
Total net revenue (4)
16,599
100.0
22,645
100.0
16,412
100.0
11,856
71.4
15,104
66.7
7,143
43.5
439
2.6
751
3.3
266
1.6
1,035
6.2
1,174
5.2
1,244
7.6
2,059
12.4
3,525
15.6
5,548
33.8
1,164
7.0
1,432
6.3
1,643
10.0
232
1.4
351
1.6
685
4.2
(186)
(1.1)
308
1.4
(117)
(0.7)
12,361
100.0
16,598
100.0
12,721
100.0
9,261
74.9
11,370
68.5
6,659
52.3
355
2.9
659
4.0
211
1.7
617
5.0
967
5.8
755
5.9
1,307
10.6
2,450
14.8
3,548
27.9
769
6.2
972
5.9
1,094
8.6
159
1.3
277
1.7
521
4.1
(107)
(0.9)
(97)
(0.6)
(67)
(0.5)
Non-interest expenses (3)
Banking Segment
Investment Segment
Segment of Fund management
Insurance Segment
Segment of payment methods
Other Segments
Intersegment transactions
Total net income (5)
Banking Segment
Investment Segment
Segment of Fund management
Insurance Segment
Segment of payment methods
Other Segments
Intersegment transactions
12345-
Total Income includes Interest income and Non-interest income.
Operating Expenses includes Interest expense and Net expense with provision for losses in loans to clients.
Non-interest Expenses includes Personnel, Administrative and Other.
Net Revenues includes Total Revenues - Total Operating Expenses
The Total Net Income is composed of the following: Net income for the year. The net income for the shareholders was R$11,246 million in 2014,
R$15,758 million in 2013 and R$12,205 in 2012.
See below the reconciliation chart of the management income with consolidated income:
2012
R$ million
Total
Revenues
Operating
exp. Total
Noninterest
expenses
Total net
revenue
Total net
income
Management Adjustments(1)
2013
Consolidated
Management Adjustments(1)
2014
Consolidated
Management Adjustments(1)
Consolidated
136,614
(20,124)
116,490
157,505
(28,882)
128,623
188,525
(23,202)
165,323
(70,676)
6,684
(63,992)
(81,025)
6,648
(74,377)
(110,722)
4,813
(105,909)
(49,339)
11,850
(37,489)
(53,835)
12,448
(41,387)
(61,391)
17,582
(43,809)
16,599
(1,590)
15,009
22,645
(9,786)
12,859
16,412
(807)
15,605
12,361
(956)
11,405
16,598
(5,309)
11,289
12,721
622
13,343
1 - The main component refers to differences between the accounting methods used in the managerial reports in comparison to the accounting
methods used in the Consolidated Statement of Income, prepared in accordance with IFRS.
7.3.
Description of products and services
The table below shows the nature of Banco do Brasil's key products and services. This information is
grouped according to the areas described in item 7.2 in the Reference Form.
The Banking Segment: Individual Loans
a) nature of the
production process
Credit transactions intended for individuals may be separated in two major groups: directed and
non-directed. Among the non-directed, the main ones are: (i) Personal Overdraft Lines; (ii) BB
Payroll based loans / Renewals; (iii) BB Automatic Loans, (iv) BB Payroll based loans, and (v) BB
13th salary based loans. Directed transactions are as follows: (i) Auto Loans and Auto Leasing; and
(ii) Home Acquisition Loans; (iii) Other Assets that includes financing arrangements BB Crediário, BB
Crédito Material de Construção, BB Pagamento Parcelado de Contas e BB Crediário Internet.
b) nature of the
distribution process
BB Payroll based loans / renewals, BB Automatic Loans, and Payroll based loans are provided
through all the existing BB customer assistance channels. Formalizing them may take place through
the Self-Service Terminals, the Banco do Brasil Customer Assistance Center / CABB, through the
Bank's Internet website (bb.com.br) or mobile app, at Mais BB Network, or in the BB branch
network throughout the country.
The overdraft operations can be hired on ATM’s, at the website or at any branch.
The commercialization of Vehicle financing and Vehicle Leasing also is present in BB branch network
throughout the country. The simulation for credit operation can be done at the mobile, ATM and
the website, and at the app ―Financie seu Carro‖, available on smarthphone.
Home loan services are marketed in the retail and wholesale branches throughout the country.
Business simulations with individuals may be made in the internal communications systems and the
Internet.
The operations of BB Pagamento Parcelado de Contas, BB Construction Material Credit, BB Sundry
Payment Installment Credit and BB Internet Installment Credit are offered in all BB service channels.
Contracting in BB Installment Credit modes and BB Construction Material Credit is done in EFTPOS
(electronic funds transfer at point of sale) card machines in commercial establishments affiliated to
Cielo. The other credit facilities are contracted in self-service automated teller machines and in the
internet, all over Brazil, being BB Pagamento Parcelado de Contas available also at Banco Postal.
c) nature of the markets of activity:
i) share in each of the
Considering the sum of the loan portfolios with standing order in which the operations of BB Payroll
markets
based loans / Renewals, the balance reached R$ 23.0 billion in December 2014 which corresponds
to the market share of 22.5% in banking industry, according to information from Central Bank.
Banco do Brasil is a market leader in payroll based loans. The total portfolio balance was of R$ 64.2
billion, or a 25.5% market share on December 31, 2014.
The Banco do Brasil conglomerate (BB portfolio + 50% of Banco Votorantim) totaled R$ 32.8 billion
on December 31, 2014 (including leases). Vehicles market share, considering those classified by
BACEN as free funds, was 17.0%.
ii) market competition
conditions
Personal loans by Banco do Brasil have the following competitive advantages:
(i) An automated approach and formalizing through self-service terminals and the Internet, quickly
and safely;
(ii) Banco do Brasil brand tradition;
(iii) Capillarity of the branch network;
(iv) Differentiated conditions based on the nature of the service or customer;
(v) Competitive interest rates;
(vi) BOMPRATODOS: Installment payments of the personal overdraft line and credit card with lower
CDC interest rates; Overdraft accounts and Financing, 10 days without interest on the Overdraft
accounts;
79
Section 7 - Issuer's Activities
(vii) No fee on Auto Loans.
d) occasional seasonality
Services with seasonality:
Overdraft accounts e BB Loans 13th Salary: In particular in December, when there is a decline in the
portfolio volume owing to large repayments resulting from 13th salaries and vacation pay received
by customers, who seek to pay of this type of transactions;
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, Banco do Brasil is subject to supervision and regulation by Central
Bank (Law no. 4,595/64).
ii) dependence on a small The Bank depends very little on a small number of suppliers.
number of suppliers
iii) price volatility
Interest rates charged for loan transactions depend on macro-economic conditions such as the basic
interest rate, default rates, taxes and reserve requirements, among others.
The Banking Segment: Business loan:
Loan transactions intended for legal entities are rated in three blocks: (i) Micro- and Small Company
Credit; (ii) Commercial Credits; and (iii) Foreign Trade Credit.
The Banking Segment: Loans to SMEs
a) nature of the
production process
The customer under the Management of the Directorate of Micro and Small Enterprises are the
Businesses, Domestic, with gross annual revenues up to R$ 25 million, except for Cooperatives. The
chief services in the micro- and small business credit portfolio are: (i) Cheque Ouro Empresarial, (ii)
BB Giro Rápido; (iii) BB Giro Empresa Flex; (iv) BB Capital de Giro Mix Pasep; (v) BB Giro APL –
Arranjos Produtivos Locais; (vi) Desconto de Cheques; (vii) Desconto de Títulos; (viii) BB Giro
Cartões; (ix) Antecipação de Crédito a Lojista; (x) BB Giro Recebíveis; (xi) Proger Urbano
Empresarial; (xii) Cartão BNDES , ( xiii) BB Crédito Empresa and ( xiv) Proger Tursmo Investimento.
b) nature of the
distribution process
These transactions are intended to supply the financial needs of micro and small businesses.
Customers are offered credit facilities pre-approved through the relationship channels such as
internet banking, mobile banking and ATM, besides the branches.
c) nature of the markets of activity:
i) share in each of the
The Central Bank does not disclose statistics for this segment.
markets
ii) market competition
conditions
Personal loans for micro and small businesses have the following competitive advantages, among
others:
(i) Adoption of highly automated credit analysis methodologies, providing much quicker decisions to
credit applications;
(ii) The use of a larger number of mass and automated solutions to achieve gains in scale and
efficiency;
(iii) The intensive use of technology in sales force relationship and training strategies;
(iv) Simplification of credit procedures and improved profitability through cost efficiency;
(v) Expanded supply of services through alternative channels;
(vi) Relationship managers specialized in customer assistance;
(vii) The use by micro- and small businesses of a Financial Manager (Internet Banking ), whereby it
is possible to release loans, print bank statements, pay employees, bills, and taxes, among other
transactions. The solution is available for use by the web, tablets and mobile smartphones;
(viii) Use of self-service terminals to release working capital operations and receivables;
(ix) Use of Call Center Banco do Brasil to offer an active offer of loan.
d) occasional seasonality
No seasonality
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, Banco do Brasil is subject to supervision and regulation by Central
Bank (Law no. 4,595/64).
ii) dependence on a small The Bank does not depend on a small number of suppliers.
number of suppliers
iii) price volatility
Interest rates charged for loan transactions depend on macro-economic conditions such as interest
rates, default rates, taxes and reserve requirements, among others.
The Banking Segment: Commercial Credit
a) nature of the
production process
Loan transactions intended for middle, upper-middle, corporate and large corporate companies. The
areas are defined through a combination of the main economic variables (Manufacturing, Trade, and
Services)
and
gross
annual
revenues
(in
millions)
as
show
below:
(i) Industry: Middle - between R$ 25 and R$ 120; Upper Midle – between R$ 120 and 400;
Corporate – between R$ 400 and R$ 1,500; Large Corporate - over R$ 1,500; (ii) Trade and
Services: Middle - between R$ 25 and R$ 200; Upper Middle - between R$ 200 and R$ 600;
Corporate – between R$ 600 and R$ 2,000; Large Corporate - over R$ 2,000
The chief services in the commercial credit portfolio are: (i) BNDES Automático; (ii) BNDES Finem;
(iii) BNDES Finame; (iv) Financial Leasing; (v) Finame Leasing; (vi) FMM – Fundo da Marinha
Mercante.
b) nature of the
distribution process
Commercial credit transactions are made in Banco do Brasil branches specialized in assisting Middle,
Upper-middle, Corporate and Large Corporate Companies.
c) nature of the markets of activity:
i) share in each of the
Market share according to information from BNDES:
markets
Dec/12
Dec/13
BNDES (all lines)
Leader with 28.6%;
Leader with 25.4%
Nov/14¹
Leader with 23.3%
Market share according to information from Banco Central do Brasil:
Dec/12
Dec/13
Working capital with
31.8%
49.64%
funds raised abroad
Overdraft Accounts
6.6%
8.56%
Working Capital
23.7%
33.16%
65.94%
Vendor
28.73%
31.9%
27.85%
ii) market competition
conditions
Commercial credit has the following competitive advantages, among others:
(i) Extensive branch network;
(ii) Access to short- or long-term funds for a company's funding of production
(iii) Competitive interest rates; and
(iv) safety, solidness, and flexibility of BB.
d) occasional seasonality
There is no seasonality
Dec/14
14.46%
27.32%
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, Banco do Brasil is subject to supervision and regulation by Central
Bank (Law no. 4,595/64).
ii) dependence on a
small number of
suppliers
The Bank does not depend on a small number of suppliers.
iii) price volatility
Interest rates charged for loan transactions depend on macro-economic conditions such as interest
rates, default rates, taxes and reserve requirements, among others.
1 – Information from Nov/2014 – Last data available.
The Banking Segment: Foreign Trade Finance
a) nature of the
production process
Foreign trade finance is intended to support business and funding for companies in their import and
export transactions. The chief services in the foreign trade finance portfolio are: (i) Advances
against Export Exchange Contracts (ACC) and Advances against Exchange Bills Delivered (ACE); (ii)
Indirect ACC; (iii) BB Export Working Capital; (iv) BNDES-EXIM; (v) Working Capital); (vi) Direct
Loans; (vii) Direct or on-lending import finance; (viii) Overdraft Lines; (ix) Export Pre-Payments; (x)
Forfait Discounting; (xi) and Import Letters of Credit.
b) nature of the
distribution process
Foreign trade finance services are acquired in the Banco do Brasil internal and external networks,
which also have available trading advice by 17 Foreign Exchange Regional Support Managers
(Gecex) located in important Brazilian cities. In addition, Banco do Brasil uses the Internet to market
ACC/ACE loans.
c) nature of the markets of activity:
i) share in each of the
Exports:
markets
Banco do Brasil ended 2014 as a leader in the ACC and ACE markets, with a volume of US$ 10.3
billion in contracts in those lines. This sum is equal to 26.3% of the market for these loans during
81
Section 7 - Issuer's Activities
the period, according to Banco Central do Brasil data.
(PROEX) In the BNDES Exim pre-shipment operations, in the year 2013, the volume of
disbursements made by BB from January to December totaled US$ 1.087 billion, representing a
share of 23.6 % among the financial agents that marketed the product in this period, according to
the ranking of BNDES. In the BNDES Exim post-shipment operations, we had a notable performance
as an agent bank, totaling US$ 337.6 million in transactions, a market share of 19.2%.
Please note also the volume of disbursements in Export Pre-Payment transactions (US$ 400 million),
Export Working Capital (US$ 2.8 billion), and Direct Loans (US$ 930 million) in 2014.
Imports:
In 2014 Banco do Brasil disbursed US$ 4.6 billion to finance imports by Brazilian companies, divided
into Direct Import Loans (US$ 1.3 billion), On-lending (US$ 862 billion), Forfait Discounts (US$ 1.3
billion), and Import Letters of Credit (US$ 1.1 billion).
ii) market competition
conditions
Foreign trade finance has the following competitive advantages in Banco do Brasil, among others:
(i) An extensive customer assistance network in Brazil and in strategically located overseas offices;
(ii) expertise in consultancy and advisory services on international business (commercial and
financial) in Brazil and overseas;
(iii) the acceptance of services owing to the Bank's reputation in the international market; an
extensive network of overseas correspondent;
(iv) rates compatible with those practiced in the international market, in addition to consultancy and
advisory services provided by specialized employees during the entire process; and
(v) safety, solidness, and flexibility by Banco do Brasil.
d) occasional seasonality
There is no seasonality
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, Banco do Brasil is subject to supervision and regulation by Central
Bank (Law no. 4,595/64).
ii) dependence on a small The need for funding by means of credit lines obtained from overseas sources.
number of suppliers
iii) price volatility
Interest rates charged for loan transactions depend on macro-economic conditions such as interest
rates, default rates, taxes and reserve requirements, among others.
The Banking Segment: Agribusiness Loans
a) nature of the
production process
Banco do Brasil has solutions for all the segments and stages of the productive chain of
agribusiness. For the productive segment, the credit facilities allow the financing of short-term
needs (credit for funding and selling) and long-term needs (credit for investment allowing the
modernization of the activity). The facilities are formatted in accordance with the various audiences,
allowing the delivery of services to clients ranging from the area of family-based agriculture to large
producers, as well as companies and cooperatives.
Working Capital for Input Purchase
Maintenance credits are intended to provide financial support through a fixed credit facility in order
to undertake farming activities, whether in agriculture or cattle raising.
Maintenance transactions are covered mainly by: (i) Custeio Agropecuário; (ii) Pronaf Agricultura
Familiar; (iii) Programa Nacional de Apoio ao Médio Produtor Rural (Pronamp); (iv) Funcafé; (v)
FCO Rural.
Investment
Investment credit facilities serve to fund goods required for production and to modernize agricultural
activities.
The main products of investment operations/lines of credit are: (i) Programa Nacional de
Fortalecimento da Agricultura Familiar (Pronaf); (ii) Programa Nacional de Apoio aos Médio
Produtores Rurais (Pronamp); (iii) FCO Rural; (iv) Investimento Agropecuário; (v) BNDES Rural; (vi)
Finame Rural; (vii) Programa Agricultura de Baixo Carbono (ABC); (viii) Programa de Construção e
Ampliação de Armazéns (PCA); (ix) Inovagro.
Trading
Credit facilities for marketing are intended to financially support sales of agricultural and livestock
production.
The trading operations are covered mainly by: (i) FGPP (Financing Guarantee of Prices to Producer;
(ii) FEPM (Financing for Storage of Products; PGPM or FEE (Financing for Storage of non-PGPM
Products; (iii) Funcafé; (iv) Own Production Trading; (v) Discount of Rural Promissory Note or Rural
Trade Notes; and (vi) CPR – Rural Product Note.
Other lines
For the sectors that relate with producers, purchasing their production or supplying inputs used in
the farming activity, BB offers services and credit facilities linked to the businesses that favor
integration inside the chain, as well as providing working capital to large companies in the
agribusiness chain.
For working capital operations, the Bank has available: (i) BB Agribusiness Working Capital –
revolving credit of working capital for rural producers for investing in agriculture and cattle raising
activities (purchase of goods or inputs used in rural activities in the stages of production, selling, or
processing of agricultural and cattle products); (ii) Agro-Industrial Credit – loans for selling,
processing or industrial production of agricultural and cattle products (acquired directly from rural
producers or their cooperatives) or inputs or machinery and equipment sold to rural producers.
b) nature of the
distribution process
These lines are found in Banco do Brasil branches. In addition to branches, agribusiness services are
found in other distribution channels by farmers and other players in the Brazilian agricultural
production chain. Alternative channels for assistance by Banco do Brasil:
(i) Canal Facilitador do Crédito (CFC): a personal computer application installed in the Bank's partner
entities. This mechanism allows submitting rural loan applications from the partner entities by
exchanging files, expediting the procedures for rural credit loans. These entities may be firms
providing technical assistance, processors, cooperatives, local governments, unions, and
associations;
(ii) Business Intentions (ITF): this is a tool that serves to receive, submit, and follow up on business
proposals by BB customers. This tool allows customers to register, send and follow up on their
business proposals through the Internet. This exchange of information is automated internally to
examine and handle proposals; and
(iii) Cartão Ourocard Agronegócio: this is a card with multiple functions, combining the possibility of
credit and debit transactions, bank account functions, and access to rural credit lines. Created
especially for the individual or corporate rural producer, or for rural cooperatives, it enables the
purchase of agricultural goods or products linked to their activity, makes financial resources
available at the time when the client needs to make the payments relating to the goods purchased,
with direct settlement in the rural financing obtained or with direct debit in the checking account.
(iv) Web: objective procedural and technological innovation, with the transfer to the internet. In
February 2014, was released this technological solution in order to allow insured partners from BB
features of preparing and updating information of family farmers, opening current accounts and
receipt of credit proposals of Pronaf lines, as well tracking information of tenders, optimizing and
standardizing the process, thus enabling to increase the degree of customer satisfaction.
c) nature of the markets of activity:
i) share in each of the
The Sistema Nacional de Crédito Rural (SNCR) portfolio totaled R$257.7 million in December 2014.
markets
Banco do Brasil, reached a balance of R$ 163.6 million in the same period, the absolute leader in
this market, and is responsible for 63.5% of the SNCR.
Banco do Brasil is also a leader in various credit programs for the agribusiness segment:
(a) Programa Nacional de Fortalecimento da Agricultura Familiar (Pronaf): R$ 10.3 billion contracted
in the first six months of the 2014/15 crop. The volume provides market leadership in the segment
with 66.2%;
(b) Programa Nacional de Apoio aos Médios Produtores Rurais (Pronamp): R$ 7.8 billion contracted
in the first six months of the 2014/15 crop. The amount represents 76.9% of the total funded
through the Program;
(c) Programa de Agricultura de Baixo Carbono (ABC): R$1.6 billion contracted in the first six months
of the 2014/15 crop. The volume provides market leadership in the segment with 89.5%;
(d) Programa de Construção e Ampliação de Armazéns (PCA): R$ 1.9 billion in business internalized
in the first half of the 2014/15 crop. The amount represents 87.5% of the total funded through the
Program;
ii) market competition
conditions
Considering to the capillarity of its branch network and deep knowledge of the market, there is a
comparative advantage as compared to its competitors in the rural credit market. Known as the
agribusiness bank in Brazil, BB has another very important advantage, which is its market and
technical expertise in the agribusiness productive chain: over 260 analysts are strategically located
throughout the country in order to transfer expertise, perform market surveys (prices, costs,
climate, production, etc.), monitoring trends, identifying threats and opportunities and getting
acquainted to the vocation and the particularities of each region and culture in Brazil. Another
competitive advantage is the reputation of Banco do Brasil as a partner bank of Brazil's agribusiness.
d) occasional seasonality
The rural calendar complies with the harvest year. This period is different from the calendar year
and covers a semester in one year and another semester in the following year. It starts in July in
one year and ends in June of the following year, covering a 12-month period.
There are periods in the crop year in which the largest demand is for a specific type of financing,
such as costing, investment or trading. This seasonality is due to the fact that a greater need of
farmers due to the times of planting, harvesting, storage or other obligations.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
Rural credit operations are standardized by CMN and by the Central Bank. The Rural Credit Manual
(MCR) edited by Bacen's Departamento de Normas do Sistema Financeiro, consolidates rural credit
regulations in financing, investments, and projects.
ii) dependence on a small The Bank has no dependency in relation to few suppliers on account of the structure of funding by
number of suppliers
the actual network of BB branches.
83
Section 7 - Issuer's Activities
iii) price volatility
The main sources of funds for rural credit transactions are demand deposits, rural savings Accounts
and Agribusiness Letter of Credit. Transactions made with funding from demand deposits have
controlled rates; transaction funded by means of rural savings have their rates based on funding
costs, operating costs, risk, and rates practiced in the market. At each harvest plan, the Government
may define a volume of funds from rural savings to be allocated to farming loans under controlled
rates and the same levels as with demand deposits, by using the subsidy mechanism or equalizing
financial charges.
In addition, BB also transfers funds from BNDES, the Fundo de Amparo ao Trabalhador (FAT) and
Constitutional Funds, such as the Constitutional Fund of the Midwest Finance (FCO) and the Coffee
Economy Defense Fund (Funcafé).
The Banking Segment: Public Sector Loans
a) nature of the production
process
Credit facilities intended for the executive authority and the direct administration of local
governments, states, and the Federal District.
These are financings with a specific purpose for the respective credit lines, and should not be
used for current expenses.
Financing is contracted after verification of limits and conditions by the National Treasury
Department, established in Article 32 of the Fiscal Responsibility Law and after credit analysis
and approval by the Bank and fund allocator, if applicable.
b) nature of the distribution
Credit facilities intended for local governments, states, and the Federal District are processed
process
in Banco do Brasil's branch offices.
c) nature of the markets of activity
i) share in each of the markets There is no systematic information.
ii) market competition
Banco do Brasil competes with the following advantages:
conditions
(i) capillarity of the branch network;
(ii) the official bank for 16 states and 16 capital cities;
(iii) expertise in on-lending transactions funded by BNDES;
(iv) safety, solidness, and flexibility.
Contracts for credit operations are subject to budget availability and the specific regulation of
d) occasional seasonality
the National Monetary Council.
In an electoral year there is a period when the contracting of credit operations and the release
of funds is prohibited.
e) chief inputs and raw materials
i) subject to government
Public sector credit transactions are subject in particular to the following government
control or regulation, showing regulation:
the bodies and the applicable
(i) The Contingency Credit to the Public Sector, regulated by the National Monetary Council,
legislation
by means of Resolution No. 2,827/2001, which establishes the rules for conducting credit
operations with the organs and entities of the public sector, to be met by financial institutions
and other institutions authorized to operate by the Central Bank;
(ii) National Monetary Council Resolution No. 3,751/2009, establishes procedures for
safeguard procedures for financial institutions in connection with the adherence to limits and
conditions for credit with the states, the Federal District and the municipalities, taking into
account the provisions of article 33 of Complementary Law No. 101 of May 4, 2000;
(iii) Article 32 of Complementary Law 101/2000 (the Fiscal Liability Law) provides for
Confirmation of Limits and Conditions by the Ministry of Finance - through the National
Treasury's secretary, prior to contracting local currency transactions. The applicable
legislation, based on Complementary Law 101/2000, is defined by the Senate through its SF
Resolution no. 43/2001 and Res. SF 40/2001, as emended.
ii) dependence on a small
The Bank does not depend on a small number of suppliers.
number of suppliers
iii) price volatility
There is no price volatility
The Banking Segment: Licitações-e (equivalent to e-bids)
a) nature of the production
process
b) nature of the distribution
process
An electronic commerce system developed by Banco do Brasil in 2001 and made available for
the public sector to make purchases and to contract services electronically.
The registration of the buyers and of the suppliers is performed through the network of
branches of Banco do Brasil. The procedures involved in the purchases and contracting of
services are carried out through the Portal www.licitacoes-e.com.br.
c) nature of the markets of activity
i) share in each of the markets There is no systematic information.
ii) market competition
Banco do Brasil competes with the following advantages:
conditions
(i) The savings generated for the buyers can as high as 30% on the market value of the
goods and services acquired;
(ii) Safety: the Bank places the stamp of banking security on the service with encrypted
pages;
(iii) Capillarity of the branch network;
(iv) Technical Support 24 hours a day, 7 days a week;
(v) Top award winning system at the Brazilian Conference of Auctioneers;
(vi) Supplier base with more than 140 thousand companies registered.
(vii) First Portal of Public Purchases to conform to Law no. 12,462/11, which establishes the
Distinct Regime for Public Purchases (RDC).
d) occasional seasonality
None.
e) chief inputs and raw materials
i) subject to government
Licitações-e was developed in compliance with all the legal precepts that standardize the
control or regulation, showing method of performance of competitive bidding via the Internet:
the bodies and the applicable
(i) Law 8,666/1993 - Regulates art. 37 of the Federal Constitution and establishes rules for
legislation
competitive bidding and contracts of the Public Administration;
Law 10,520/2002 - Establishes a type of bidding process called pregão, for the purchase of
common goods and services;
(ii) Complementary Law 123/2006 - Establishes the differentiated treatment applied to micro
and small enterprises;
(iii) Decree 5,450/2005 - Regulates the reverse auction, in electronic form, for the purchase of
common goods and services;
(iv) Decree 7,581 - Differentiated Regulation Regime Hires - DRC.
ii) dependence on a small
Not applicable.
number of suppliers
BB charges the buyers and the suppliers the amount for reimbursement of the costs relating
iii) price volatility
to the delivery of the solution, as provided in Law 10,520/2002, Art. 5, item III.
The pricing is performed according to the development of new functionalities and/or of
addition of new technologies to the system.
The Banking Segment: Funding - Demand Deposits
a) nature of the
production process
Bank accounts for unrestricted transactions by customers, by means of checks, Internet, money
transfers, magnetic cards or against receipt, with no direct interference by the Bank.
b) nature of the
distribution process
Branch, Internet, ATM, CABB, and correspondent in the country.
c) nature of the markets of activity:
i) share in each of the
Total BB Conglomerate Demand Deposit raising closed 2014 with a balance of R$74.2 billion.
markets
Considering only the Multiple Bank fund raising the balance was R$61.7 billion on November 28,
2014, which is equivalent to 32.4% of market share and leadership in demand deposit raising,
according to data provided by Bacen (Brazil Central Bank) at it’s website (last available position:
Nov/2014).
ii) market competition
conditions
BB provides the advantage of its solid brand name, branch network capillarity, and a portfolio of
services within reach through a banking account.
d) occasional seasonality
Demand deposit balances tend to grow at every year-end owing to the increased liquidity in the
economy during this period.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, Banco do Brasil is subject to supervision and regulation by Central
Bank (Law no. 4,595/64).
ii) dependence on a small The Bank does not depend on a small number of suppliers.
number of suppliers
iii) price volatility
Not applicable.
The Banking Segment: Funding - Savings Accounts
a) nature of the
production process
Deposit account remunerated at TR (Reference Rate), plus monthly or quarterly interest as provided
for in Law no. 12,703, of August 7, 2012 – conversion of Provisions Act no. 567 of May 3, 2012. BB
trades two savings accounts: (i) Poupança-Ouro: product managed by BB - a portion of these funds
are directed to rural credit or to housing loans, in accordance with lending limits defined by Banco
Central do Brasil; (ii) Poupança Poupex: Product of the Management of Savings and Loan
Association POUPEX - A portion of these funds are employed in housing loans.
b) nature of the
distribution process
TAA, Internet, Gerenciador Financeiro, BB cell phone self-service, CABB, and Branches.
c) nature of the markets of activity:
i) share in each of the
BB Conglomerate savings accounts total raising in 2014 with a balance of R$148.7 billion. Raised
85
Section 7 - Issuer's Activities
markets
volume reached R$148.3 billion on November 28, 2014, which is equivalent to 22.8% of market
share and market vice-leadership, according to Sisbacen data (last position available: Nov/2014).
ii) market competition
conditions
Savings accounts have become popular in the financial market as they are easy to understand.
Another attraction is their preference by conservative investors. It is identical in all the institutions
that market this item. In BB, savings have facilitators such as: automatic redemption to cover bank
account debit balances, automatic investment of earnings in savings accounts, as well as automatic
investment bank account balances.
d) occasional seasonality
None.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, Banco do Brasil is subject to supervision and regulation by Central
Bank and CVM.
ii) dependence on a small The Bank does not depend on a small number of suppliers.
number of suppliers
iii) volatility/price
Not applicable.
The Banking Segment: Funding - Time Deposits
a) nature of the
production process
Fixed Time Deposits are registered securities that entitle customers to receive earnings over a term
specified on contracting. These securities are pre- or post-fixed income papers, with earnings having
variations according to the index selected. In Banco do Brasil, CDBs (Bank Deposit Certificates) are
marketed in bookkeeping form, i.e.: by electronic means.
b) nature of the
distribution process
Post-fixed: (i) BB CDB DI Parceria: Internet, CABB, Financial Manager, BB cell phone self-service,
branch self-service terminals; (ii) BB CDB DI: Internet, CABB, Financial Manager, BB cell phone selfservice, branch self-service terminals; (iii) BB CDB DI SWAP: Branches only;
Pre-fixed: (iv) BB CDB PRÉ: Internet, CABB, BB cell phone self-service, branch self-service terminals;
(v) BB CDB PRÉ COM SWAP. Branches only.
c) nature of the markets of activity:
i) share in each of the
BB Conglomerate Time Deposits funding closed 2014 with a balance of R$214.5 billion. Even
markets
considering only the Multiple Bank, raised volume was R$188.4 billion on November 28, 2014, which
is equivalent to 24.9% of market share and market leadership, according to Sisbacen website (last
position available: Nov/2014).
ii) market competition
conditions
Banco do Brasil trades in pre-fixed and post-fixed deposits. Post-fixed deposits have their earnings
linked to the DI (inter-bank) rate, and options by customers for daily liquidity or on expiry only. Banco
do Brasil also provides the choice of automatic redemption to cover bank account debit balances in
the BB CDB DI and CDB DI Partnership form. One of the advantages of these products is the low sum
involved, which may be transacted through the Internet, TAA, cell phone self-service, and Branch
Customer Assistance.
d) occasional
seasonality
None.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, Banco do Brasil is subject to supervision and regulation by Central Bank
(Law no. 4,595/64).
ii) dependence on a
small number of
suppliers
The Bank does not depend on a small number of suppliers.
iii) price volatility
Not applicable.
The Banking Segment: Funding – Letras de Crédito do Agronegócio (LCA)
a) nature of the
production process
The Letter of Credit for Agribusiness - LCA is a title loan word, representing a promise to pay money,
issued exclusively to financial institutions. Have profitability characterized by the absence of preestablished amount of redemption, with restatement of the title known by application of the index
(CDI) by the deadline of application. The LCA issued from 05.23.2013 are guaranteed the Credit
Guarantee Fund (FGC).
b) nature of the
distribution process
Branch, Internet, TAA, CABB, and Private Offices.
c) nature of the markets of activity:
i) share in each of the
Total funding in LCA Conglomerate BB ended 2014 with a balance of R $ 103.8 billion.
markets
ii) market competition
conditions
BB is traded on LCA with profitability characterized by the absence of pre-established amount of
redemption, with restatement of the title known by application of the index (CDI) by the deadline of
application.
d) occasional
seasonality
None.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, Banco do Brasil is subject to supervision and regulation by Central Bank
and CVM.
ii) dependence on a
small number of
suppliers
The Bank does not depend on a small number of suppliers.
iii) price volatility
The profitability of the title is linked to the Interbank Deposit Certificate (CDI), so their volatility is
linked to this index.
The Banking Segment: Funding – Letras de Crédito Imobiliário (LCI)
a) nature of the
production process
Real Estate Letter of Credit (Letra de Crédito Imobiliário – LCI) is a registered investment for a term
established upon contracting, guaranteed by the Credit Guarantee Fund, which gives the customer
the right to receive fixed or variable remuneration and has options for advance or upon maturity
redemption. At BB, LCIs are negotiated with a variable remuneration and with the possibility of an
advance redemption, and it is sold on a book registration basis, i.e., by electronic means.
b) nature of the
distribution process
Internet, TAA and Branch.
c) nature of the markets of activity:
i) share in each of the
The total funding obtained from BB Conglomerate LCIs in 2014 with a balance of R$ 14.4 billion. The
markets
product was launched in March 2013 and the captured volume by November 28, 2014 was R$ 12.4
billion, which is equivalent to a market share of 8.6% according to data from ABECIP – Associação
Brasileira de Entidades de Crédito Imobiliário e Poupança (latest available position: November 2014).
ii) market competition
conditions
The Real Estate Letter of Credit (Letra de Crédito Imobiliário, LCI) provided by BB pay a variable
income, their remuneration is linked to interbank deposit rate, and they can be redeemed in advance.
They have a daily liquidity after the 60-day grace period. One of the advantages of this product is
related to low investment values (beginning as of R$1,000.00), which may be done through Internet,
ATM and Branches.
d) occasional
seasonality
None.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, Banco do Brasil is subject to supervision and regulation by Central Bank
And CVM.
ii) dependence on a
small number of
suppliers
The Bank does not depend on a small number of suppliers.
iii) price volatility
The profitability of the title is linked to the Interbank Deposit Certificate (CDI), so their volatility is
linked to this index.
The Banking Segment: Funding - Subordinated Financial Bonds
87
Section 7 - Issuer's Activities
a) nature of the production
process
This is a credit instrument issue by financial institutions solely in book form, through its
registration in the assets clearing and settlement systems authorized by Banco Central do
Brasil.
b) characteristics of the
distribution process
The operation can take place at the initiative of investors, make contact with the Income
Trading Desk Fixed Market Difin / Gerof and request quotation, or on the initiative of the
Bank, when the Market Fixed Income Trading Desk provides the product to investors.
If there is agreement on the rates and all the features, the operation is completed.
c) characteristics of the markets in which it operates:
i) share in each of the markets In December 2014, Financial Bills amounted to R$347 billion in the market, while
subordinated Financial Bills amounted to R$77 billion. The total BB's stock in Financial Bills
was R$ 24.6 billion, of which R$22.1 billion were Subordinated Financial Bills.
ii) market competition
conditions
Financial bonds (LF) may be remunerated at interest, pre-fixed interest rate, whether or not
combined with floating rates or a price index, but cannot be issued with a foreign exchange
clause. Earnings may be paid at regular intervals of at least 180 days. The BB brand
constitutes a differential, in view of the Bank's tradition and security.
d) occasional seasonality
None
e) chief inputs and raw materials
i) subject to government
control or regulation, showing
the bodies and the applicable
legislation:
When exercising its activities, Banco do Brasil is subject to supervision and regulation by
Banco Central do Brasil (Law no. 4,595/64).
The Bank does not depend on a small number of suppliers.
possible dependence on few
suppliers
Despite not being subject to marking to market, there may be a market risk.
iii) price volatility
The Banking Segment: Fees
a) nature of the
production process
Fee Package – Comprised by a set of bank products or services classified as Priority, Distinct or
Special, in accordance with Article 7 of CMN Resolution no. 3,919/2010, according to which the
customer pays a monthly fee. The amount charged on a monthly basis is lower than the sum of
individual fees that comprise it.
b) nature of the
distribution process
Branches, BB self-service terminals, Internet and correspondent in the country.
c) nature of the markets of activity:
i) share in each of the
Not available
markets
ii) market competition
conditions
Fees provided by bank institutions are similar regarding product/services types, as market is
regulated by the CMN and BACEN, but differ in price and number of services provided. In this aspect,
packages provided by Banco do Brasil are competitive, and regulated by current legislation as they
are among the cheapest in the market.
d) occasional
seasonality
None.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
As regards the provision of Bank Services, Banco do Brasil is subject to CMN Resolution no.
3,919/2010 and Law no. 8,078/1990 – Consumer Defense Code.
ii) dependence on a
small number of
suppliers
Not applicable.
iii) price volatility
Not applicable.
The Banking Segment: Collection Services
a) nature of the
production process
A service allowing suppliers (assignors) of goods and services to receive the proceeds of their sales by
issuing bank vouchers, serving for their customers (assignees) to easily settle their liabilities by means
of any channels inter-connected to the bank network.
b) nature of the
distribution process
Available in Banco do Brasil branches;
c) nature of the markets of activity:
i) share in each of the
2012
markets
Number
of
Bills
(thousand)
Market
2,102,222
BB
929,9
Share %
17.6%
Amounts (R$ million)
Market
517,8
BB
895,2
Share %
22.12%
Source: Câmara Interbancária de Pagamentos (CIP).
ii) market competition
Not available
conditions
d) occasional
seasonality
2013
2014
2,192,206¹
605,079²
³
2,364,293¹
642,495²
³
2,458,654¹
954,126,3²
³
2,712,833¹
1,028,266²
³
None.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, Banco do Brasil is subject to supervision and regulation by Central Bank
(Law no. 4,595/64).
ii) dependence on a
small number of
suppliers
The Bank does not depend on a small number of suppliers.
iii) price volatility
Not applicable.
¹ Updated information until the month of November 2014, as BNDES ranking.
² Information to include titles settled at BB SILOC and STR.
³ For correct calculation of the percentage of information SILOC and STR is required.
The Investment Area: Securities Public Offering
a) nature of the
production process
A transaction in which the Bank as an intermediary provides potential investors with securities
issued by a varied number of issuers.
Operations in which the Bank acts as intermediary institution in the structuring and distribution of
public issue of securities, such as debentures, promissory notes, letters and financial investment
funds in credit rights.
b) nature of the
distribution process
(i) Banco do Brasil branch network and website.
(ii) Direct Contact with Institutional Investors.
c) nature of the markets of activity:
i) share in each of the
In 2014, BB occupied the first place in ANBIMA ranking of Variable Income Distribution in number of
markets
transactions. In 2014 BB-BI acted as coordinator in 81 fixed income securities issues, including
debentures, promissory notes, investment funds in receivables (FIDC), Certificate of Real Estate
Receivables (CRI) and Agribusiness Receivables Certificate (CRA) totaling volume of R$ 15.3 billion.
In terms of origination, BB occupied the 3rd place in ANBIMA ranking, with 14.4% share, while in
fixed income distribution terms BB-BI took the 5th position with 9.4% market share.
ii) market competition
conditions
Owing to the growing importance of the Brazilian Capital Market to international investors and the
earnings paid, competition grew among investment banks. The main investments banks of Europe
and America are operating in Brazil.
BB's key competitors in selling to non-institutional investors are brokerage firms associated with the
major retail banks, and those with an important number of clients.
Local Fixed Income Capital Markets reached the mark of R$ 106.6 billion offers structured as
Ranking Anbima in December/14. The main competitors in this segment, from the point of view of
origination and structuring deals are great national banks such as Bradesco BBI and Itaú BBA.
d) occasional seasonality
Issuing Companies select to market securities during favorable market conditions, which may result
in a seasonal effect in events. It is also evidenced that during August these public offerings are not
usual, in view of the vacation period in northern hemisphere countries, when those have foreign
89
Section 7 - Issuer's Activities
investors.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
The Capital Market Law. Rules and regulations disclosed by CVM. ANBIMA Codes. The Brazilian
Corporate Law.
ii) dependence on a small The Bank does not depend on a small number of suppliers.
number of suppliers
iii) price volatility
Price volatility may provide more or less favorable market for investors and issuers.
The Investment Area: Purchase and Sale of Shares
a) nature of the
production process
A transaction in which the Bank intermediates share purchases and sales of it’s clients shares at the
secondary market.
b) nature of the
distribution process
Network of branches, Share Purchase and Sale platform in the Internet (Home Broker BB).
c) nature of the markets of activity:
i) share in each of the
BB is not listed in the BM&FBovespa Home Broker Ranking as it does not have its own brokerage
markets
firm and operates through brokers with which it has agreements for system inter-connections.
ii) market competition
conditions
By reducing the number of investors Individuals observed in recent years, active brokers are seeking
diversification of products offered, including fixed income products in its portfolio. The biggest
market brokers concentrate most of the operations. Among the main competitors are also brokers
linked to major retail banks.
Competitive Advantages: (i) It is possible to purchase and sell shares through the personal bank
account, with no need to transfer funds to another account or to the brokerage firm; (ii) Capillarity
of the branch network, serving to operate in the Branch Network throughout the country; (iii)
Solidness of the BB brand name, which gives greater security to investors in connection with the
products and services provided; (iv) A broad customer base not yet registered as investors gives
Banco do Brasil ample chances for prospecting.
Competitive Disadvantages: (i) Lack of its own brokerage firm; (ii) Operations only in the spot
market.
d) occasional seasonality
The volume of business may change according to market fluctuations and investor expectations
regarding performance of variable income.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
The Capital Market Law. CVM rules and regulations. Stock market regulations. The Brazilian
Corporate Law.
ii) dependence on a small The Bank does not depend on a small number of suppliers.
number of suppliers
iii) price volatility
Not applicable.
The Investment Area: Capital Market Service Provision
a) nature of the
production process
Sale/acquisition: transfer transactions of companies or public concessions. These can be structured
as the sale / acquisition of shares or of assets / liabilities in an industrial compound.
Mergers/Acquisitions: these are transactions in which two or more companies merge and create a
new one, or in which a company is absorbed by another.
Transactions that generally include a corporate asset contribution and/or exchange of shares by the
companies involved.
Corporate restructuring: A transaction that creates a change in a company's shareholding structure.
b) nature of the
distribution process
Banco do Brasil's corporate, and large corporate branch network.
c) nature of the markets of activity:
i) share in each of the
markets
In the year 2014, BB obtained the 13th position in the ANBIMA M&A Ranking in number of
operations, participating in five operations and was placed on the 15 ANBIMA M&A Ranking Ranking by values, with a total volume of R$ 6,270 million.
ii) market competition
conditions
Banco do Brasil's credibility and countrywide activity with a broad relationship network covering a
number of sectors and company sizes, relevant share by BB in credit support to business e
Increased prospecting for potential overseas investors.
d) occasional seasonality
None
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
The Capital Market Law. CVM rules and regulations. The Brazilian Corporate Law.
ii) dependence on a small The Bank does not depend on a small number of suppliers.
number of suppliers
iii) price volatility
Not applicable.
The Investment Area: Qualified Safekeeping
a) nature of the
production process
According to the Anbima Regulating Code and Best Practices for Qualified services to the Capital
Market, the Qualified Safekeeping Service covers physical and financial settlement of assets, their
safekeeping and management and information of events related to the assets.
Safekeeping of the assets consists in controlling the assets in the name of customers, in book form,
with depositaries, trustees, clearing houses and systems, reconcilement of positions recorded and
responsibility for transactions with the assets registered.
Settlement consists in validating operating information received from customers against information
received from institutions intermediating transactions, timely remittance of information to the parties
involved with the physical and/or financial settlement, in accordance with the rules from the
different depositaries and settlement houses and systems.
To perform this service, the Bank has records in individual accounts with the clearing houses
involved in the transactions held, and uses its Bank Reserves account to control the flows of
payments and receipts in connection with the transactions held.
b) nature of the
distribution process
Requests for Qualified Safekeeping services come to Banco do Brasil through the branch network
(the Wholesale and Government areas) as well as through direct requests from major market
players (asset managers, qualified investors, corporate, customers, etc.) owing to the market
awareness of BB's Safekeeping services.
c) nature of the markets of activity:
i) share in each of the
Domestic: In the course of recent years, Banco do Brasil has maintained its position as one of the
markets
country's three largest custodians, according to the Anbima Asset Safekeeping Ranking. BB has 20%
in market share in 2014.
Foreign Market: BB has sought to improve its position in the ADR Ranking, aiming take place among
the largest custodians.
In December / 2014 BB reached the mark of R$ 798.5 million in ADR custody, increasing by 71%.
According to the Anbima Ranking for December 2014, BB is the country's forth largest custodian
with a total of R$ 627.2 billion in assets in safekeeping (an increase of R$ 19.1 billion, or 3.14%, of
assets in safekeeping in one year).
ii) market competition
conditions
Competitive Advantages: (i) The BB brand tradition and solidness; (ii) Personalized Assistance;
(iii) Customized Solutions; (iv) Alternative contingency environment; (v) Independent systems for
registration, settlement, safekeeping, processing, and bookkeeping.
d) occasional seasonality
None
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
The Capital Market Law. Under Law no. 10,303 dated October 31, 2001, regulating and supervising
financial services and investment funds came under the responsibility of CVM. The Brazilian
Corporate Law.
ii) dependence on a small The Bank does not depend on a small number of suppliers.
number of suppliers
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Section 7 - Issuer's Activities
iii) price volatility
Not applicable.
Asset Management Area; Asset Management
a) nature of the
production process
BB Gestão de Recursos – Distribuidora de Títulos e Valores Mobiliários S.A. (BB DTVM) is a specialist
company in third parties’ funds management and administration and its main distributors is Banco
do Brasil. Accordingly, the company manages assets allocated to different types of investment
funds, as defined by CVM and established in its bylaws, aiming at the best risk/return rate that is
adequate to the investor’s profile. In addition, it is responsible, as the administrator, for all services
that are directly or indirectly related to the fund operation and maintenance, providing information
to regulatory agencies and shareholders.
b) nature of the
distribution process
Self-service terminal, Internet, Gerenciador Financeiro, Branches, and CABB (after the 2nd
investment)
c) nature of the markets of activity:
i) share in each of the
In accordance with ANBIMA’s fund administration ranking, BB DTVM closed 2014 with R$554.7
markets
billion in third parties’ funds and market share of 21.7%, consolidating its position of largest
administration firm of Brazil. This result represented a growth of 12.4% in relation to prior year.
BB DTVM is also the largest administration firm of third parties’ funds of Brazil, with total volume of
R$542.1 billion and market share of 21.1%, according to ANBIMA data of December 2014.
ii) market competition
conditions
Competitive Advantages:
(i) Expertise in the creation of investment solutions for every market segment;
(ii) Excellence in Management Quality (MQ1 - the highest score in the rating), attributed since 2006
by Moody's, one of the world's key risk rating agencies;
(iii) ―International Certification ISO 9001:08 – Total Quality‖ for its Process of Credit Risk Analysis,
one of the most renowned titles of service and process quality, obtained in October 2012. The
company was audited by Fundação Carlos Alberto Vanzolini and the title has international scope;
(iv) soundness of the BB brand, , largest financial conglomerate of Brazil, according to Bacen’s data
as BB DTVM is a wholly-owned subsidiary of BB;
(v) Leadership in management in the domestic investment fund and asset management market,
pursuant to the Anbima ranking dated December 31, 2014;
(vi) Chinese Wall Concept, required by Banco Central do Brasil, with complete segregation between
third-party asset management and financial transactions of BB's own funds;
(vii) Asset management model focused on different strategies for assets concentrated in: fixed
income, variable income, and multi-markets / offshore;
(viii) Signatory of PRI - Principles of Responsible Investments
(ix) Qualified professionals acknowledged by the market, the result of a policy of continued technical
training adopted by the company.
d) occasional seasonality
The key seasonal effect in BB's investment funds refers to investments / redemptions by the public
sector. In general, in December there are large withdrawals from short-term investment funds
(intended for this public), while in January incoming funds are the rule.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, BBDTVM is subject to supervision and regulation by Banco Central do
Brasil (Law no. 4,595/64 e Res. CMN 1,120/86), in addition to CVM rules and regulations.
ii) dependence on a small BBDTVM does not depend on a small number of suppliers.
number of suppliers
iii) price volatility
Not applicable.
Segment of Insurance, Pension Plans and Capitalization (Premium Bonds)
a) nature of the
production process
Banco do Brasil works to maintain an updated portfolio of insurance, open pension plans and
capitalization bonds, valuating innovation in solutions and processes, seeking the universalization
and streamlining of access purchase types, in addition to promoting the continuous expansion of the
protection concept.
Another characteristic of the production process is the attention to the after-sale, internal controls
and compliance aspects, to maintain the competitiveness in relation to the other players of the
insurance market, and the full compliance with the provisions of regulatory agents.
The solutions sold are: (i) Personal Insurance (Life, Accident and Credit Life Insurance); (ii) Damage
Insurance (Auto, for Agribusiness, Home, Property, Credit, Financial Risks and others); (iii) Open
Supplementary Pension Plans; and (iv) Savings Bonds.
b) nature of the
These lines and services are marketed in the Branch Network, Self-Service Terminals, Internet,
distribution process
Mobile Banking and correspondents in the country.
c) nature of the markets of activity:
i) share in each of the
Based on data made available by the Susep (Private Insurance Superintendency) in 2014, BB
markets
occupied the following positions:
(i) Auto Insurance – 2nd position in the ranking of billings and insurance premiums;
(ii) Life Insurance - 1st position in the ranking of billings and insurance premiums;
(iii) Open Supplementary Pension Plans – 1st place in the turnover ranking and 3rd place in the total
provisions ranking;
(iv) Premium Saving Bonds - 1st place in the turnover and total provisions rankings.
ii) market competition
conditions
Banco do Brasil's main competitive advantages are its traditional 200-year brand, in conjunction
with a large distribution network for its lines and services.
d) occasional seasonality
It applies exclusively as refers to insurance for Agribusiness, more specifically in allusion to
agricultural insurance policies, as these have a contracting date associated with the start of the crop
season, when farmers take out bank loans and should guarantee the plantations (offered as
collateral) against climatic risks.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
SUSEP is the agency in charge of controlling and inspecting the market for insurance, private
pension plans, capitalization (premium bonds), and reinsurance.
ii) dependence on a small The Bank does not depend on a small number of suppliers.
number of suppliers
iii) price volatility
None.
The Means of Payment Area: Cards
a) nature of the
production process
The Banco do Brasil card portfolio was designed to provide the type of card, its services and
attributes, to meet the needs of different publics and sectors. In the case of Individuals, consumer
habits and purchasing power of customers are taken into consideration, among other aspects. In
the case of Legal Entities, the size of companies and their needs are taken into consideration,
among other aspects. BB has been issuing the Ourocard brand since September 2001 with multiple
functions and under the Visa and Mastercard banner. These cards put together in one single plastic
credit and debit functions, as well as bank account transactions. As of June 2009 the Ourocard
became available with the American Express banner, with a credit function. In April 2011 it issued
multiple function cards in the Elo brand. BB also has pre-paid cards for its Individuals and
Companies clients.
On December 31, 2014, Banco do Brasil's debit and credit card base totaled 81.2 million – 23.4
million in credit cards and 57.8 million in debit cards issued and pre-paid.
b) nature of the
distribution process
Credit cards for Individuals are marketed through all of the Bank's distribution channels (branches,
BB customer assistance, Internet, self-service terminals, and correspondents in the country). Credit
cards and pre-paid for companies are marketed only in the Bank's branches, owing to their special
features. On the other hand, private label cards for individuals are marketed through BB's partner
companies, customer assistance, or the Internet. Beginning as of January 2012, Ourocard cards
started to be traded also in Banco Postal.
c) nature of the markets of activity:
i) share in each of the
Going from published data by the Brazilian Association of Credit Card and Service Companies markets
ABECS, we estimate that the market share of BB in the total turnover (credit and debit) came to
24.3% in 2014.
ii) market competition
conditions
Competitive Advantages:
(i) In addition to it being publicly recognized as a safe bank, Banco do Brasil is agile and innovative
in the development of new products and services; (ii) It acts focused on life cycles and on providing
customers with quality assistance, and (iii) It offers products and services for all client segments
with one of the lowest rates and interest rates in the market.
d) occasional seasonality
During the year, the volume of card billings is seasonal according to purchases of goods and
services, such a Mothers' Day, Children's Day, Christmas, etc.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
When exercising its activities, Banco do Brasil is subject to supervision and regulation by Central
Bank (Law no. 4,595/64).
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Section 7 - Issuer's Activities
ii) dependence on a small The Bank does not depend on a small number of suppliers.
number of suppliers
iii) price volatility
None.
Services for Own Social Security Systems
a) nature of the
production process
The entire process of creating lines and services prepared for the social security area is developed
by means of a corporate tool to control and assess risks in the services.
b) nature of the
distribution process
Marketing takes place through the branch network.
c) nature of the markets of activity:
i) share in each of the
Asset management for the RPPS Regimes Próprios de Previdência Social market reached 41.1% and
markets
assets volume R$33.4 billion, position as of December 31, 2014.
ii) market competition
conditions
The market is highly competitive in marketing its services, with CEF as the key competitor and Itaú
and Bradesco as increasing forces. Moreover, it should be explained that BB has an extensive
portfolio of lines in support of its asocial security services, and may be retained when public bids are
waived or not requited (Law no. 8,666).
d) occasional seasonality
None.
e) chief inputs and raw materials:
i) subject to government control or regulation, showing the bodies and the respective legislation
Ministry of Social Security, CVM, and TCE (Accounting Court). Federal Law 9,717/98 and 10,887/04
and CMN Resolution 3,922/10, with changes from Res. CMN 4,392/14. MPS Ordinances No. 402/08,
No. 403/08 and No. 519/11.
ii) dependence on a small BBDTVM, Banco do Brasil’s wholly-owned subsidiary, operates as manager and administrator of
number of suppliers
investment funds intended to RPPS (Social Security Own Regime) segment.
iii) price volatility
7.4.
Not Applicable
Customers responsible for over 10% of total net revenues
Confirm whether there are customers responsible for over 10% of the issuer's total net
revenues, informing: (a) the total sum of revenues from customers and (b) operating areas
that reflect revenues from customers.
Banco do Brasil does not have customers responsible for over 10% of the institution's total net
revenues.
7.5.
Relevant effects of state regulation on Banco do Brasil's activities
Describe relevant effects of state regulation on the issuer's activities:
a. The need for governmental approval to exercise activities and background of relations
with the public authorities in obtaining such approvals.
The basic structure of the National Financial System - SFN was put in place under Law no. 4,595/64,
which created Conselho Monetário Nacional - CMN and granted Banco Central do Brasil the power of
issuing currency and controlling credit, among other attributions.
Key Regulatory Agencies
System is composed of the following normative and supervisory bodies:
Conselho Monetário Nacional - CMN (National Monetary Council):
CMN is the Banking Industry's supreme authority and is in charge of monetary and financial policy in
Brazil, and of the creation and overall supervision of monetary, credit, budgetary, fiscal, and public
debt policies.
Conselho Nacional de Seguros Privados (CNSP, National Council of Private Insurance)
CNSP, under the Ministry of Finance, is the agency responsible for setting the guidelines and rules of
the private insurance policy. It is composed of the Minister of Economy and Finance (President),
representatives of the Ministry of Justice, Ministry of Social Security, Susep (Private Insurance
Superintendency), Banco Central do Brasil and CVM (Brazilian Securities and Exchange Commission).
Conselho Nacional de Previdência Complementar (CNPC, National Council of Pension Plans)
The CNPC (old Supplementary Pension Management Council) was created by Law 12,154, of
12/23/2009, is a body of the basic structure of the Ministry of Social Security, and performs the role of
regulatory agency of the supplementary pension regime operated by closed supplementary pension
entities.
PREVIC
Law 12,154, of December 23, 2009, created the National Superintendency of Supplementary Social
Security - PREVIC, a special autonomous agency with administrative and financial independence and
own equity, connected to the Ministry of Social Security. The Previc supervises and oversees the
activities of closed supplementary social security entities and applies the policies of the supplementary
social security regime operated by closed supplementary social security entities. .
Banco Central do Brasil (BCB or Bacen, Central Bank)
Law 4,595/64 granted the Central Bank powers to implement the monetary and credit policies
established by the CMN, as well as to oversee public and private financial institutions and apply
sanctions provided for in the legislation, whenever needed.
CVM
The CVM is an autonomous agency connected to the Ministry of Finance (Law 6,385/76), is
headquartered in Rio de Janeiro and has jurisdiction all over Brazil, independent administrative power
and own corporate personhood and equity. This agency is responsible for applying the CMN's policies
in the securities market, with jurisdiction to regulate, develop, control and supervise this market ,
strictly in compliance with the Capital Market Law and the Brazilian Corporation Law.
Susep
The Private Insurance Superintendency (Susep) is the agency responsible for controlling and
supervising the insurance, pension plans, capitalization (premium bonds) and reinsurance markets in
Brazil. It is an autonomous agency connected to the Ministry of Economy and Finance, created by
Decree-Law No. 73, of November 21, 1966.
Main limitations and restrictions on Financial Institutions
The activities carried out by financial institutions are subject to several limitations and restrictions. In
general terms, these limitations and restrictions are related to credit granting, risk concentration,
investments, repurchase agreements (repos), loans and trading in foreign currency, investment fund
management, microcredit and payroll- deductible loans.
Restrictions to credit granting
Financial institutions cannot grant loans or advances: (i) to officers and members of their advisory
board, board of directors, fiscal council and similar boards, as well as to their respective spouses; (ii)
to second degree relatives of the individuals mentioned in item i above; iii- To individuals or legal
entities that hold interest in their capital stock above 10% (ten per cent), except in the case of specific
authorization by the Banco Central do Brasil, on a case by case basis, with regard to transactions
connected to purchase and sale agreements or commodity pledge, at limits fixed by the National
Monetary Council, on a general basis; iv - To legal entities in which they holds interest of over 10%
(ten per cent); (v) To legal entities in which they hold interest of over 10% (ten per cent), any of the
officers or administrators of the financial institution itself, as well as their spouses and respective
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Section 7 - Issuer's Activities
second degree relatives. In relation to public financial institutions, such as BB, the restriction in item iv
above is not applicable (paragraph 2 of Article 34 of Law 4,595/1964).
The restrictions regarding related party transactions are not applicable to transactions carried out
between financial institutions in the interbanking market.
In addition, currently there are restrictions imposed to financial institutions that limit credit granting to
entities in the public sector, such as subsidiaries and government agencies, that come to add to the
limits of indebtedness for these entities.
Repurchase transactions
Pursuant to the terms of CMN Resolution no. 3,339, of January 26, 2006, repurchase and resale
agreements are fixed income purchase or sale transactions with commitment to resell or repurchase
on a date agreed-upon by the parties, with admitted anticipation of resale or repurchase through
agreement between the parties.
The repos are subject to operating limits as defined in CMN Resolution No. 3,339 of 01/26/2006.
Financial institutions may only conduct repurchase committed transactions at an amount that is up to
30 times its regulatory capital (RC), being the RC defined by CMN Resolution No. 4,192 of 03/01/2013
. Within this limit, a repo involving private securities cannot exceed five times the amount of the
referential equity. Limits for repos involving securities pegged to government authorities vary
according to the type of security of the transaction and the risk perceived by the issuer.
Fixed-income transactions
Fixed-income transactions are characterized by having defined compensation rules. That is, these
transactions have fixed income (fixed interest rates) or that rely on floating rate index return (inflation
rates, interest rates, etc).
The trading of Federal Public Bonds comprise the definite purchase and sale of the Bonds issued by
the Federal Government, and are registered in the Public Sector Securities Market Clearing System Selic, according to the BACEN Circular No. 3,587, of 03/26/2012. Decree No. 3,859 of 07/04/2001
defines the characteristics of the Federal Public Bonds, and there are a large variety of public bonds,
each one with specific terms (maturities) and profitability.
Derivatives
Derivatives are financial assets with full or partial amounts arising from other financial assets or
commodities.
BB uses derivatives to manage and hedge its positions against price fluctuations, whether taken by
the Bank in its transactions with clients or hedge against structural mismatches in Banco do Brasil.
The derivatives market is regulated, mainly, by CMN Resolution 3,505, on 10/26/2007, CMN
Resolution 3,568, on 05/29/2008, Law 11,033, on 12/21/2004, SRF Instructive Norm 1,022, on
04/05/2010, and CMN Resolution 2,873, on 07/26/2001.
Loans in Foreign Currency
After registration with the Central Bank, financial institutions can contract loans in foreign currency
from funds in international markets, without previous written approval from BACEN, including
transfers of these funds in Brazil to Brazilian companies and other financial institutions. Banks carry
out these transfers through loans in domestic currency and equivalent in foreign currency. The
transfer terms should be in line with the terms of the original transaction. The interest rates levied on
the international loans should comply with the international market practices. In addition to the
original operational cost, the financial institution can only charge for a transfer commission.
The Central Bank can set limits to terms, interest rates and general conditions for loans in foreign
currency. These limits change according to the economic environment and monetary policy. Exposure
in foreign currency was set at 30% of the Referential Equity (RE), and can vary from 15% to 75% of
the RE, according to Res. CMN 3,488 of 2007.
Regulation of the International Capitals Market and Exchange Market
To operate in the foreign exchange market, financial institutions need BACEN’s authorization. Once
they are authorized to operate in the market, they are submitted to the Central Bank Circular No.
3,688, 3,689, 3,690 and 3,691, which regulate the foreign exchange market since 02/03/2014.
Regulation of Asset Management
Under Law 10,198 and Law 10,303, on 2001, the financial regulation and supervision of the mutual
funds and equity are undertaken by the CVM. Only individuals or legal entities authorized by the CVM
can act as administrators of third-party assets. Financial institutions must separate the management
of third-party assets from its other activities. These institutions must appoint an administrator to act
as the agent responsible for the management and supervision of these assets and a specialized
technical department to carry out asset management activities.
CMN, with regulation No 2,451/2007 and 2,486/1998, except in the case of very specific
circumstances, prohibited institutions that manage third-party assets and their associated companies
to invest in fixed-income funds managed by these same institutions . CVM allows investments in stock
funds. There are specific rules related to the diversification of mutual funds portfolio and the
composition aiming to reduce the exposure to certain types of risks.
The BACEN introduced, in February 2002, changes that oblige the administrators of funds to conduct
mark-to-market operations to its fixed-income securities and the results from the asset fund portfolio
should be recorded at its market value.
The CVM Instruction 409/94, together with other changes, consolidated the rules applicable to
investment funds. Certain structured investment funds are exempt from said rules, and are governed
by a different set of rules. The asset management industry is also self-governed by Anbima, which
approves supplemental rules and policies, mainly with respect to market and advertising.
Regulation of Credit to SME
To operate in the FAT credit line and Tourism under PROGER Program-Urban Investment in Micro and
Small Board is guided by standards published by the Executive Council of the Fund for Worker Codefat, collegiate body of the Ministry of Labour and Employment .
The institution PROGER Urban Investment is through Resolution and the operation of the line by the
Work Plan and Tade - Special Deposit Allocation Statement FAT, both published by Codefat. In the
Work Plan set out the credit purpose, target audience, the funded and non-eligible items, the form of
the credit qualification, the limit and the fundable ceiling, the term of the financing, finance charges,
guarantees, impairments, among other characteristics. In Tade are informed of the resources
available for allocations in the period.
The Codefat relationship with Micro and Small Enterprises Board is brokered by the Directorate of
Government.
As for the line FAT Tourism, the conditions were established by Resolution No. 683, of December 15,
2011 and extended by Resolution No. 723, of 18/12/13, until 31/12/2014. The operating conditions
were ratified by means of Work Plans and specific Tade for FAT lines Tourism - Working Capital and
FAT Tourism - Investment, formalized between the Banco do Brasil and the Ministry of Labor and
Employment/Codefat.
The funding of the lines BB and BB Giro APL Working Capital Mix Pasep is made with with funds from
the PIS-Pasep Fund resulting from the unification of the funds set up with funds from extinct Social
Integration Program - PIS and Service Asset Formation Program Public - Pasep. The use of PASEP
resource for development of these credit lines allows the granting of differentiated business
conditions, such as reduced financial charges, allowing the formation of inventory and fulfillment of
social obligations by the recipient undertakings in view of the adequacy of credit extended to their
financial needs , among others, and thus contributing to the generation of employment and income.
In particular, the health sector companies are served by BB Giro Health also operationalized with
participation of Pasep resources, allowing the expansion and improvement of health services to the
population by the anticipation of revenue arising from the provision of services to the Single System
Health - SUS.
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Section 7 - Issuer's Activities
The Bank Resolution No. 2,655, of 10/05/1999 - provides for the investment of funds of PIS-PASEP
Fund.
Regulations regarding the main credit facilities for individual clients
In relation to the characteristics affecting the Vehicle Finance Agreements between BB and its
borrowers, in general, these loans are regulated by the laws applicable to all business transactions
and by the Brazilian Civil Code, especially by articles 1,361 to 1,368-A, in the Title on Rights of
Ownership, as Banco do Brasil S.A. - Reference Form/2012 107 refers to Chattel Mortgage. In addition
to the Brazilian Civil Code, the Consumer Protection Code - Law 8,078, of 9/11/1990 and Law 10,931,
of 8/2/2004, which addresses the Bank Credit Note, also apply to vehicle finance agreements.
Specifically in relation to payroll consigned loans, BB grants credit in compliance with the specific laws
and regulations, following the example of Federal Law 10,820, regulated by Decree 4,840, both of
2003, which governs the granting of payroll consigned loans to employees under the regime of the
Consolidation of Labor Laws; of the sole paragraph of art. 45 of Law 8112, of 1990, regulated by
Decree 6,386, of 2008, which governs loans to federal public officials; and of Normative Instruction
INSS/DC 28, of 2008, which governs the granting of loans to retirees and pensioners of the National
Institute of Social Security.
As refers to property finance, according to Written Notice Deorf/Cofin I 2008/06283, of 6/13/2008,
Bacen authorized the creation of a real estate loan portfolio at BB. Specifically on Programa Minha
Casa Minha Vida (My House, My Life Program), the regulation of the granting of loans follows Law
11,977, of 7/7/2009, and subsequent changes and regulated by Decree 7,499/11 of 6/16/2011.
Regulation of Credit with to the Public Sector
Credit operations with the bodies and entities of the public sector are subject to regulations in two
main segments: The first one is the applicable to financial institutions and other institutions authorized
to operate by the Central Bank in according to applicable law to the borrower legislation.
Credit Restrictions to the Public Sector, as per Resolution of the National Monetary Council - CMN
2,827/2001, and its amendments, establishes, for financial institutions and other institutions
authorized to operate by the Central Bank, the rules for carrying out credit operations with these
customers. Operations contracted by Banco do Brasil are included in Resolution No. 2,827/2001.
National Monetary Council Resolution no. 3,751/2009 defines safeguard procedures for financial
institutions regarding proof of compliance with limits and conditions for contracting credit transactions
with states, the Federal District and municipalities.
To the public entities, the Supplementary Law No. 101/2000, denominated the Tax Responsibility Law
- LRF, in Article 32 therein, establishes the obligation of the borrower to submit credit operations
Verification of Limits and Conditions by the Ministry of Economy and Finance - this verification is
carried out by the Department of National Treasury - STN, an agency connect to this Ministry.
Credit operations from Banco do Brasil's portfolio are subject to a prior Verification of Limits and
Conditions, and are contracted after the authorization issued by the Department of National Treasury.
Regulation of public purchases and bids through Internet
Licitações-e was developed in compliance with all the legal precepts that standardize the method of
performance of competitive bidding via the Internet, based on Law 8,666/1993 - Regulates art. 37 of
the Federal Constitution and establishes rules for competitive bidding and contracts of the Public
Administration. The system was implemented with the possibility of use of the option provided in Law
10,520/2002 - Reverse Auction, as well as the options of: waiver, price quote and invitation. The
electronic reverse auction complies with the precepts of Decree 5,450/2005 which regulates the
reverse auction, in electronic form, for the purchase of common goods and services. The system also
offers the option of application of the differentiated treatment to micro and small enterprises, as
provided in Complementary Law 123/2006. Licitações-e was the first public purchase system of Brazil
that was adjusted to RDC (Public Contracting Distinct Regime), established by Law no. 12,462/2011.
Assignment of Credit to Third-Parties
CMN Resolution No. 2,836 consolidates the rules for the assignment of credits to third-parties and
authorizes financial institutions and leasing companies to assign credits from loan operations,
financing and lease agreements to individuals not registered with the National Financial System, upon
cash settlement, without the co-obligation of the assignor and without permission to repurchase the
assigned credits.
Regulations established to strengthen the Financial System
Restrictions to Risk Concentration
The Brazilian law prohibits financial institutions to concentrate their risks in a single individual or group
of related individuals. The law prohibits financial institutions to assign credits to any individual or
group of related individuals in an aggregate amount corresponding to 25% up of its referential equity.
This limit is applicable to any operation that involves credit assignment, including: (i) loans and
advances; (ii) guarantees; and (iii) subscription, purchase and trading of securities, subject to the
exceptions set forth in CMN Resolution No. 2,844/2001.
Restrictions to Investments
Financial Institutions cannot: (i) record, on a consolidated basis, permanent assets that exceed 50%
of their referential equity; (ii) acquire assets, except for assets for own offices and service stations or
(iii) acquire shareholding interests in other financial institutions abroad, without the prior approval by
Central Bank.
When a bank receives real estates as payment for a debt, this property should be sold within the span
of a year. This period can be extended for two additional one-year terms, subject to approval by the
Central Bank.
Internal Controls - Compliance
According to Res. CMN 2,554 of 09/24/1998, all financial institutions should establish policies and
internal procedures to control: (i) its activities; (ii) their financial, operating and administrative
information system; and (iii) compliance with the applicable legislation and regulations.
The boards of financial institutions are responsible for implementing a structure of effective internal
controls, effective and consistent with the nature, complexity and risk of operations performed by
them, defining responsibilities and control. The executive boards are also responsible for verifying the
compliance with internal procedures.
The internal control standards should be accessible to all employees, institutions should review and
periodically update their internal controls, so that measures are incorporated them related to new
risks or not previously addressed.
An internal audit department, should be part of the internal control system, reporting directly to the
company's board of directors.
Independent Auditors and Audit Committee
This independent audit, within the scope of its audit or review procedures and the audit committee
should notify the Central Bank on the existence or proof of errors or frauds, within three business
days after the identification of these errors or frauds, represented by: (i) the non-compliance with
legal and regulatory rules that bring risks to the continuity of the audited entity; (ii) fraud in any
amount caused by the entity's management; (iii) material frauds caused by the entity's employees or
by third-parties; or (iv) errors that significantly compromises the accounting records of the entity.
Independent auditors
All financial institutions in Brazil should have their financial statements audited by independent
auditors. These auditors can only be hired: (i) if they are registered with the CVM; certificate under
analysis of the banks by the Institute of Brazilian Independent Auditors (Ibracon) and the Brazilian
Institute of Independent Auditors; and (ii) if they meet the several requirements that assure their
independence.
At least every five consecutive years, the financial institutions should substitute their independent
auditors (accountant in charge, officer or director, manager, supervisor and any other member, with
management duties, of the team involved in the audit work), in accordance with a requirement
established by Resolution CMN 3,606, of 9/11/2008 and its amendments. Ex-accountants can only be
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hired again after having passed full three years since their previous service. In addition, financial
institutions must appoint a technically-qualified senior manager to be responsible for the compliance
of all rules on financial statements and auditing. It is not permitted to hire individuals that worked in
the auditing team in the previous 12 months.
In addition to an audit report on the financial statements, the independent auditors should prepare:
(i) an evaluation of the internal controls and risk management procedures exercised by financial
institutions, namely in relation to its electronic system of data processing, showing all the potential
failures verified; (ii) description of noncompliance of financial institutions with any applicable law that
is pertinent to its financial statements or activities.
Audit Committee (Coaud)
Under Resolution No. 3,198/04 and Circular 3,299, every financial institution (i) with referential equity
or consolidated referential equity equal or higher than R$1 billion, (ii) with third-party asset
management activities, assets equal or higher than R$1 billion or (iii) with third-party fund
management activities, assets and deposits in the overall amount equal or higher than R$5 billion,
should install an internal audit committee to indicate in its financial statements that this parameter
was achieved within a year.
The audit committee must be composed of, at least, three members, for a maximum five-year term
for institutions with shares traded on the stock exchange and without a fixed term of office for closelyheld institutions. The number of members, criteria for appointment, removal and compensation, term
of office and duties of the audit committee should be expressed in the by-laws or in the articles of
incorporation of the institution. At least one of the members of the audit committee should prove
expertise in accounting and auditing that qualify the member for his position.
As regards institutions with stock exchange traded shares, CMN Resolution no. 3,198/04 establishes a
set of basic conditions for the exercise of Coaud member, among which not have been in the last
twelve months (i) director of the institution or its affiliates.; (ii) an employee of the institution or its
affiliates; (iii) technical officer, director, manager, supervisor or any other member with management
duties, the team involved in audit work at the institution; (iv) a member of the supervisory board of
the institution or its affiliates.
Additionally, in Union-controlled institutions, such as Banco do Brasil, the members of the audit
committee: (i) cannot have permanent positions licensed by the government (in this case, BB and the
Federal Government); (ii) cannot have occupied, in the previous 12 months, a permanent position or
functions in the government (in this case, BB and the Federal Government) .
The audit committee should present a report to the board of directors or the executive board, on a
case by case basis, among other duties.
Financial Report and audit requirements
The Brazilian law requires that financial institutions prepare their financial statements according to
certain standards established by the Brazilian corporation law and other applicable regulations. Every
financial institution is obliged to have their financial statements audited on a six-month basis.
Quarterly financial information, as required by Central Bank and CVM regulations, is subject to review
by independent accountants.
CMN Regulation for the Recording and Classification of Asset Sale or Transfer
Resolution No. 3,533 , of 01/31/2008 , contains changes in the manner in which they are recorded,
classified and disclosed sales and transfers of assets on the books of banks (pursuant to CMN
Resolution No. 3,809 , of 28/10/2009. The accounting treatment becomes based on risk transfer
criteria, and, secondarily, on control transfer. Therefore, the sales or transfers of financial assets
should be classified and recorded in the accounting records according to the following categories: (i)
transactions without substantial transfer or retention of risks and benefits; (ii) transactions with
substantial retention of risks and benefits; (iii) transactions without substantial transfer or retention of
risks and benefits. The evaluation on the transfer or sale of risks and benefits of financial assets is a
responsibility of the institution and must be carried out based on the criteria consistent and subject to
verification. In line with Resolution No. 3,533, if the assignor significantly retains the risks and benefits
of the assigned assets, these credits cannot be recorded as loans off balance sheet. This provision is
equally applicable to transactions: (i) with repurchase agreements; (ii) in which the assignor
undertakes the obligation of offsetting the assignee for losses; and (iii) carried out jointly with the
acquisition of subordinated shares in Investment Funds of Credit Rights (" FIDC").
Guidelines to Capital Adequacy
Brazilian financial institution should comply with the guidelines established by the Central Bank and
the CMN similar to the Basel Accord due to the risk of capital adequacy, including the Basel Accord II,
which is under implementation. The banks provide BACEN with the information needed to exercise its
supervision activities, which include controlling the solvency or capital adequacy operations .
The main fundamental of the Basel Accord II, as implemented in Brasil, is that a bank's own capital
should cover the main risks, including credit risks, market risks and operational risks.
The implementation of the rules related to capital structure from Basel II in Brazil has led to
modifications, especially in how the necessary capital is measured to support the own risks of banking
activities. To regulate the transition from Basel I to Basel II, Bacen published rules about capital
requirement (Pillar I), process of supervision and transparency of information (Pillars II and III).
Beginning as of October 1, 2013, regulations that implemented in Brazil new CSBB recommendations,
known as Basel III, are effective in Brazil. The new adopted regulations deal with the following
matters:
I
new methodology for regulatory capital calculation;
II
The new methodology for computing the requirement of capital maintenance, by adopting
minimum requirements of Reference Equity, of Tier I and Principal Capital, and introduction of the
Additional Principal Capital.
Regulatory Capital (PR) is the amount of available capital taken into consideration when determining
operating limits of Brazilian financial institutions. In conformity with prevailing regulation, PR is
established by summing up Level I and Level II, being Level I comprised of Main Capital (less
Prudential Adjustments) and Supplementary Capital.
Prudential Adjustments are deductions made from Main Capital of equity elements that may
jeopardize the quality of Main Capital due to their low liquidity, being difficult to evaluate or
dependence on future earnings to be realized. These adjustments are conducted on a gradual basis with deduction of 20% p.a. from 2014 to 2018, except for deferred permanent assets and fund raising
instruments issued by institution authorized to operate by the Brazilian Central Bank or by institution
located abroad that has activities equivalent to that of a financial institution in Brazil, that is not part
of the conglomerate - and are fully deducted beginning as of October 2013.
For Supplementary Capital and Level II, balances of assets represented by the following fund raising
instruments issued by financial institutions are also deducted: Stock, shares, hybrid capital and debt
instruments and subordinated debt instruments, all of them deducted from respective PR portion to
which fund raising instrument is eligible.
Minimum Required Regulatory Capital (PRMR) corresponds to capital required from financial
institutions to cover risks deriving from banking activities. In accordance with prevailing regulation,
PRMR corresponds to the application of the ―F‖ factor to the amount of Assets Weighed by Risk
(RWA), being ―F‖ equal to: 11% of RWA, from October 1, 2013 to December 31, 2015; 9.875% of
RWA, from January 1, 2016 to December 31, 2016; 9.25% of RWA, from January 1, 2017 to
December 31, 2017; 8.625% of RWA, from January 1, 2018 to December 31, 2018; and 8% of RWA,
after January 1, 2019.
When determining the amount of Assets Weighed by Risk, the sum of the following portions is
considered:
I
RWACPAD, related to credit risk exposures subject to capital requirement calculation through a
standardized approach;
II
RWAMPAD, related to market risk exposures subject to capital requirement calculation through a
standardized approach;
III
RWAOPAD, related to calculation of capital required for operating risk through a standardized
approach.
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On a supplementary basis, in compliance with Basel III requirements, minimum main capital
requirements were established (4.5% of RWA) and of minimum level I capital (5.5% of RWA up to
December 31, 2014 and 6% beginning as of January 1, 2015).
The Role of the Public Sector in the Brazilian Banking System
In light of the global financial crisis, on October 6, 2008, the Brazilian President enacted provisional
measure related to the use of internal reserves of foreign currencies by the Central Bank in order to
provide financial institutions with liquidity by means of rediscount and loan transactions. Additionally,
Law 11,908 authorized: (i) BB and CEF to directly or indirectly acquire, with or without ownership,
stakes in private and public financial institutions in Brazil, including insurance companies, social
security institutions and capitalization companies (premium bonds); (ii) the institution of Caixa Banco
de Investimentos S.A., a wholly-owned subsidiary of CEF, with the purpose of carrying out investment
bank activities; and (iii) Banco Central to carry out swap transactions of currencies with other central
banks. Note that the authorization for acquisition of interest, mentioned in item (i) above, was extinct
on June 30, 2012, as provided for in paragraph 4 of Article 2 of Law no. 11,908/2009.
Resolution 4,087/12, CMN amended the by-laws of the FGC (Credit Guarantee Fund) to enable the
investment of up to 50% of its shareholders' equity in: (i) the acquisition of credit rights of financial
institutions and leasing companies; (ii) in the investment in banking deposits, with or without the
issue of certificates, lease agreement letters and exchange letters of acceptance from associated
institutions, provided that they are guaranteed by credit rights formed or to be formed arising from
the relevant transaction, or other credit rights with real or personal guarantee; and and (iii) related
transactions, under CMN Resolution 2,921/2002. The FGC can sell any asset acquired through the
transactions described in items (i), (ii) and (iii) above.
Regulation on human resources management
As provided in Art. 1 of Decree 3,735, of 1/24/2001, it is incumbent upon the Ministry of State of
Planning to approve the following pleas of federal government-owned companies: review of Staffing
and Compensation Plan, renewal of collective bargaining agreement or convention and profit sharing
or gainsharing program. The content of the legislation mentioned explicitly, so that the Bank is subject
to state regulation when it comes to revision, modification or creation of programs related to the
topics listed above either. Furthermore, prior to the approval of any measure, the ministerial
authorization is contingent upon the existence of sufficient budget allocation to cover personnel
expenses and social charges. Information on employee hiring and dismissal activities is inspected
monthly by the Federal Secretariat of Internal Control associated with the Presidency of the Republic,
through the Brazilian Office of the Comptroller General (CGU).
Corporate structure
Apart from the exceptions provided in law, financial institutions must be organized as corporations,
and are subject to the provisions set forth in the Brazilian Corporation Law and the rules issued by the
Central Bank, and to supervisions by the CVM in case these companies are constituted as publicly-held
companies. The capital stock of financial institutions can be divided in voting or nonvoting capital, and
the non-voting part cannot exceed 50% of the total capital . Given the adhesion of Banco do Brasil to
Bovespa's special listing segment, the Novo Mercado, its capital stock is divided exclusively into
common shares.
Classification of Credits and Provision for Doubtful Accounts
Resolutions 2,682 and 2,697 of the CMN, published on 12/21/1999 and 02/24/2000, respectively,
establish for the Banking Industry criteria for classifying credit operations and rules for recording a
Provision for Doubtful Accounts - PCLD.
CMN Resolution 2,682 defines that credit operations should be classified into 9 risk levels and for
these operations PCLD should be recorded at the following percentages:
Risk rating
AA
A
B
C
Minimum provision (%)
0.0%
0.5%
1.0%
3.0%
D
10.0%
E
30.0%
F
50.0%
G
70.0%
H
100.0%
The operational risk is calculated automatically based on operational data (nature, purpose,
guarantees, terms, project's risks) and on the client (risk, credit limit and total debt).
According to Resolution 2,682, the classification of operational risk should be revised: a) monthly due
to delay in payment of the principal installment or charges, taking into account the delay periods as
shown in the table below; b) every six months, for operations of a same client or economic group
whose amount is higher than 5% (five per cent) of the institution's adjusted shareholders' equity; c)
once every 12 months.
For loans overdue, the regulation establishes maximum risk classifications, as follows:
Number of days overdue(1)
15 to
30 days
31 to 60
days
61 to 90
days
91 to 120
days
121 to 150
days
151 to 180
days
More than
180 days
Minimum risk classification
B
C
D
E
F
G
H
(1) It is possible to double the period in case of loans with terms higher than 36 months.
The operation classified as risk level "H" should be transferred to the offset account (Losses), along
with the provisioned debt, six months after its classification as risk "H", as long as it is delayed more
than 180 days.
Financial institutions should properly document their policies and procedures for granting and
classifying credit operations. The documents should be at the disposal of the Central Bank and of the
independent auditors. The documents should be at the disposal of the Central Bank and of the
independent auditors. Detailed information on composition of credit operations portfolio should be
disclosed in the notes accompanying the financial statements, taking into account, at least: (i) the
distribution of operations, separated by type of client and economic activity; (ii) distribution by term of
maturity; and (iii) number of operations renegotiated, recorded against losses and operations
recovered, in the exercise.
Credit Risk Central System
The Central Bank's Credit Information System - SCR is the main instrument used by the banking
supervision to monitor credit portfolios of financial institutions. In this respect, it plays an important
role in guaranteeing the stability of the National Financial System and crisis prevention, providing
increased access to borrowers and greater transparency to society.
The main goal of the SCR if to furnish the Central Bank with precise and systematic information on
credit operations contracted by financial institutions, with the purpose of protecting the funds
deposited by the citizens. Moreover, the SCR is used by financial institutions, provided it is specifically
authorized by their clients, to evaluate the capacity of payment to clients.
Institutions inform the amount of any credit operations, before or after maturity, and the amounts
referring to guarantees or sureties offered by financial institutions to their clients, and it is mandatory
to identify the clients with total liabilities equal to or higher than R$ 1,000.00. Resolution 3,658, of
12/17/2008, altered and consolidated the regulations relating to the provision to Bacen of information
on loan operations.
Law Against Money Laundering
According to Law 9,613/1998, which sets forth provisions on "laundering" crimes or concealment of
assets, rights and values, financial institutions should: (i) identify and maintain updated the customer
information file; (ii) maintain records of operations involving domestic or foreign currency, securities ,
metals or any other assets that can be converted into money for a period of at least five years; (iii)
maintain internal controls and consolidated records that to check the clients' identity, the compatibility
between their transfer of funds, economic activity and financial capacity; (iv) monitor and Banco do
Brasil S.A. - Reference Form/2012 113 keep track of operations performed or proposals made by the
clients, with a view to detecting situations that, due to their characteristics (method of performance,
parties involved, amounts, instruments used or lack of economic or legal grounds) might indicate the
existence of signs of money-laundering or artifice to evade the established control mechanisms; and,
(v) notify the competent authorities (without the client's knowledge) of signs of money-laundering
detected.
The Central Bank regulates Law No. 9,613/1998 for financial institutions and other institutions
authorized to operate by. Bacen issued Circular 3,461/2009, consolidating the regulations for the
prevention and fighting of money-laundering in force at the time. In addition to the obligations
provided in Law 9,613/1998, Circular 3,461 prescribes specific procedures for the identification of
clients; recording of transactions; monitoring and communications to COAF; business deals with
politically exposed persons; relationship with financial institutions and correspondents abroad; training
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of employees; and appointment of officer to take charge of the implementation and fulfillment of
measures relating to money laundering prevention and fighting, including BB, branches and
subsidiaries abroad. Circular Letter no. 3,542/2012 updated and expanded the list of transactions and
situations that could characterize occurrence of crimes provided for in Law no. 9,613, liable to being
communicated to Coaf.
The Brazilian Central Bank published in March 2013 Circular Letter no. 3,654, which changes Circular
Letter 3,461/2009, with highlights:
a)
Inclusion of new public positions or functions that classify as Politically Exposed People: members
of high courts, of federal regional courts, of labor and electoral courts, of the Labor Justice High
Council and of Federal Justice Council, presidents of State, Federal District and Municipal audit
courts (Article 4 paragraph 2, items III and VI);
b)
inclusion of mandatory provision of statement to the Financial Activities Control Council (Coaf)
affirming non-occurrence of suspect transactions liable to communication (Article 15-A).
Banco do Brasil maintains in its Security Management Office an organizational structure sufficiently
specialized to comply with all obligations deriving from Brazilian regulation on Money Laundering
Prevention and Terrorism Funding.
Politically exposed persons
According to Circular No. 3,461, issued by Bacen, financial institutions should adopt differentiated
procedures for the establishment, or maintenance, of a relationship with clients considered politically
exposed persons - PEP. These procedures include the identification of the client as PEP; maintenance
of up-to-date registration information; authorization, by senior management, for the commencement
or maintenance of the business relationship; and reinforced monitoring of financial activity.
According to the regulations, the term politically exposed persons includes government agents that
occupy or have occupied, in the previous five years, in Brazil or in or on foreign countries, territories
or premises, important positions, jobs or civil service roles, as well as their representatives, family
members and other closely related persons.
FATCA (Foreign Account Tax Compliance Act)
On 04/24/2014, the Board of Directors approved the membership of the Banco do Brasil to FATCA
(Foreign Account Tax Compliance Act) or Compliance Law of the Foreign Account Tax Liabilities. This
is a US government regulations to combat tax evasion in the country by monitoring and reporting
information of the accounts of American taxpayers (US persons) having assets (deposits, investments,
etc.) and get out of income USA.
Also in this context, the governments of Brazil and the US signed on 09/23/2014, the IGA
(Intergovernmental Agreement) Model 1, agreement providing for reciprocity in the exchange of
information on taxpayers of both countries.
The main benefit achieved by adherence to the rules refers to the maintenance of BB's business
internationally.
Information Security Policy
CMN Resolution 3,380 of 06/29/2006, provides for the implementation of operational risk
management structure in financial institutions. According to the resolution, the policies associated with
the operational risk should be reviewed annually.
As defined by the Board of Directors, the actual Information Security Policy makes up the list of
associated policies to operational risk management.
The Specific Information Security Policy is reviewed annually, or whenever significant changes in the
context the demand it. The periodic review aims to maintain the grip of the instrument to regulatory
requirements and best market practices, and considers their relevance to the Operational Risk
management structure of the Banco do Brasil.
Law against Tax Evasion
Usually, information protected by banking secrecy laws can only be furnished in compliance with a
judicial order or order given by an investigation committee of the National Congress (Parliamentary
Committee of Investigation).
However, the Central Bank has authorization to demand that financial institutions furnish information
generally protected by banking secrecy without judicial authorization to exercise their duties of
supervision, as long as they have proof of a client's participation in tax evasion. These proofs can be
represented by, elements: (i) transactions by the client with an amount lower than their market value;
(ii)
Loans acquired from sources outside the financial system; (iii) operations involving "tax
havens"; (iv) expenses or investments that exceed the income tax return; (v) remittance of money
through nonresident accounts at amounts higher than the income tax return; and (vi) legal Entities
whose registration with the roll of corporate taxpayers (CNPJ) were canceled or annulled.
Moreover, in compliance with Normative Instruction No 811/2008 of the Internal Revenue Service,
financial institutions should communicate certain information relating to operations carried out in
Brazil by means of a Statement of Information on Financial Activity, such as demand and term
deposits, payments made in cash or by check, issuance of wire transfers or similar documents, and
redemptions in cash or in installments.
Regulations that Affect the Liquidity of the Financial Market
Reserve requirements and others
Reserve requirements are in an instrument available to the Central Bank to influence the amount of
money in the economy. They represent the portion of deposits taken by banks should be kept
compulsorily "sterilized" the Central Bank. The rate of reserve requirements is one of the determinants
of the money multiplier, ie the ratio of the money supply in relation to the monetary base. For
example, decreases in rate will cause banks to lend greater share of their reserves and thus increase
the total amount of currency for a given amount of monetary base.
Currently in Brazil, there are the following types of reserve requirements and obligatory reserves:
a)
Reserve requirements on demand resources;
b)
Reserve requirements on resource deposits and guaranties;
c)
Requirements on savings deposits of resources;
d)
Reserve requirements on time deposits;
e)
Additional requirements on deposits.
There are, in addition, three types of reserve requirements that are currently at rates equal to zero:
i)
Reserve requirements on the granting of guarantee, surety or other guarantees on loans /
financing between individuals or corporations non-financial (Circular No. 2,563, of 04/27/1995);
ii)
Reserve requirements on assets and liabilities (Circular No. 2,511, of 12/02/1994);
iii)
Reserve requirements on foreign exchange sold position. (Circular No. 3,548, of 07/08/2011).
In addition to the reserve requirements, there are other types of reserve requirements performed at
the Central Bank. They are:
I
deposits arising out of failure in directing for mortgage funds raised in savings deposits
operations;
II
failure in the direction of the funds raised in demand deposits to credit operations for the lowincome population and microentrepreneurs; and
III
the result of failure in direction for rural credit.
The following is a brief description of the main types of compulsory:
Demand deposits
Under the Central Bank Circular 3,632 of 02/21/2013 banks are required to collect 45% of their funds
raised under the modality "in sight." This value should remain deposited daily in the Bank Reserves
account held by financial institutions with the Central Bank.
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Section 7 - Issuer's Activities
Normative
Date
Circular 3,416
Circular 3,586
Circular 3,632
Circular 3,745
10/17/2008
03/26/2012
02/21/2013
01/23/2015
Subject
It allows for deductions from the prepayment of the regular contribution to the FGC.
Changes Circular Letter no. 3,573, which provides on deduction of amount bound to rural credit financing.
Defines and consolidates the rules of reserve requirements on demand deposits.
Provides for compliance with reserve requirements on demand resources mentioned Circular 3,632
Savings deposits
Under the Central Bank Circular No. 3,093 of 03/01/2002 as amended, financial institutions are
required to file weekly in an interest bearing account with the Central Bank, a percentage of the
average balance of savings accounts taken the week before. To reserve requirement effect there are
two saving modes: rural and estate.
At BB (and the Banco da Amazônia, Banco do Nordeste), the proceeds of the savings are allocated to
agricultural and agro-industrial credit. In this mode the current rate of reserve requirement is 13%,
but will move to 14%, 16%, 18% and 20%, from 06/29/2015, 06/27/2016, 06/26/2017 and
06/25/2018, respectively.
In addition, the Bank uses the prerogative provided in Res. CMN 3,549, that the institutions authorized
to receive rural savings deposits can capture savings deposits in the Brazilian System of Savings and
Loans (SBPE), whose resources must be used to finance residential real estate. In real estate savings
mode current compulsory rate is 20%.
The rules governing the compulsory on savings deposits are:
Normative
Circular 3,093
Circular 3,128
Circular 3,130
Resolution
3,549
Resolution
3,705
Resolution
3,817
Circular 3,595
Circular 3,596
Resolution
4,097
Resolution
4,377
Date
Subject
03/01/2002
06/24/2002
06/27/2002
Redefine and consolidate the rules for reserve requirements on savings deposits
Redefines the rules for reserve requirements on savings deposits (changes in rates)
Changes the rates incurred on savings deposits reserve requirements
03/27/2008
Sets forth the funding of savings deposit
03/26/2009
Sets forth the percentages for reserve requirements for farm savings
11/26/2009
Changes Resolution No. 3,549, on March 27, 2008, which sets forth the funding of savings deposits.
05/30/2012
05/31/2012
Clarifies savings deposits remuneration calculation formula.
Changes Circular Letter no. 3,093 that addresses mandatory deposit on savings deposit funds.
Changes percentages for requirement assignment, for sub-requirement and for the faculty of applying
rural savings funds, as well as mandatory deposit.
06/28/2012
10/30/2014
Reduces the obligatory reserves rate of rural savings from 18% to 13%.
Time deposits
Under Circular 3,569, on 12/22/2011 and its amendments, 20% of the time deposits of financial
institutions should be deposited into a Bacen account. The balance of daily closing gathering account,
limited to 40% of the gross liability, will receive compensation based on the Selic rate.
The rules that govern the reserve requirement for time deposit accounts:
Standards
Circular 3,569
Circular 3,576
Circular 3,594
Circular 3,609
Circular 3,613
Circular 3,660
Circular 3,712
Circular 3,715
Circular 3,723
Date
12/22/2011
02/10/2012
05/21/2012
09/14/2012
11/08/2012
07/01/2013
07/24/2014
08/20/2014
10/15/2014
Subject
Redefines and consolidates rules on compulsory payment on time funds.
Changes Circular Letter no. 3,569, which addresses compulsory payment on time funds.
Changes Circular Letter no. 3,569, which addresses compulsory payment on time funds.
Changes Circular Letter no. 3,569, which addresses compulsory payment on time funds.
Changes Circular Letter no. 3,569, which addresses compulsory payment on time funds.
Changes Circular Letter no. 3,569, which addresses compulsory payment on time funds.
Changes Circular Letter no. 3,569, which addresses compulsory payment on time funds.
Changes Circular Letter no. 3,569, which addresses compulsory payment on time funds.
Changes Circular Letter no. 3,569, which addresses compulsory payment on time funds.
Additional Requirement (Savings deposits and time funds)
The Bank has set additional reserve requirement on funds raised under the terms "saving" and
"forward", according to the Central Bank Circular No. 3,655 of 03/27/2013. The applied rate is 11% of
the resources the term and 10% on savings deposits. The amounts collected are deposited in an
interest bearing account by the Selic rate.
BACEN's rules that govern the reserve requirement on additional Liabilities:
Standards
Resolution 3,023
Resolution 3,843
Circular 3,514
Circular 3,528
Circular 3,576
Circular 3,609
Circular 3,655
Date
10/11/2002
03/10/2010
12/03/2010
03/23/2011
02/10/2012
09/14/2012
03/27/2013
Subject
Establishes mandatory additional deposit of 10% on savings deposits.
Changes Resolution no. 3,023, which addresses additional requirements on savings deposits
Alters the Circular 3,144 that considers the additional requirement.
Alters the Circular 3,144 that considers the additional requirement
Alters the Circular 3,144 that considers the additional requirement
Alters the Circular 3,144 that considers the additional requirement
Defines and consolidates the rules of additional reserves on deposits
Foreign exchange short position:
Bacen Circular 3,659, of 6/25/2013, 0% rate established on the basis of calculation of liability of
reserve requirements on short position Exchange. The basis of calculation is the arithmetic average of
the daily rates of short positions cleared in the days of the calculation period, less than $ 3 billion
converted to local currency at the exchange rate of the day. The calculation period is mobile and
consists of five consecutive working days, abandoning themselves, every day, the first day of the prior
period.
Microfinance Focus
Through Resolution 4,000 of 08/25/2011 the Bank determined financial institutions to use in lending
operations for the low-income population and microentrepreneurs, a value corresponding to at least
2% of the balances raised demand deposits. The funds not targeted in this way should be compulsory
deposits to the Bank, being deposited in an account without pay.
Interfinancial Deposit - DI
The Interfinancial Deposit is na instrument used to enable reserve swaps between Financial
Institutions. The issue and transfer of the Interfinancial Deposit - DI is conducted exclusively on a
registered and book-entry basis. Its recording and liquidation are made mandatorily with the CETIP
(The Private Sector Securities Market Clearing System). It is regulated by CMN Resolution 3,399, on
8/29/2006 (MNI 2-7-2), Bacen Circular 2,905on 06/30/1999, Bacen Circular 2,585, on 09/27/1995.
Exposure to Foreing Currency and Gold
Pursuant to CMN Resolution No. 3,488, the total consolidated exposure of a financial institution in
foreign currencies and gold cannot exceed 30% of its reference stockholders’ equity, according to the
CMN Resolution No. 3,488 dated August 29, 2007.
Foreign currency
CMN Resolution No. 4,033 of 11/30/2011 defines the possible modalities to invest abroad the foreign
cash and cash equivalents of Banks authorized to operate in the foreign exchange market. They are:
(i) securities issued by the Brazilian government; (ii) bonds issued by foreign governments; (iii) bonds
issued by or liable to the Financial Institution; and (iv) time deposits of the financial institution.
Rural credit
Created by Law No. 4,829, of 11/05/1965, farm loans are normatized in the Fam Loan Handbook,
published and updated by the Banco Central do Brasil. According to this manual, financial institutions
are obliged to invest in farm loan operations amounts corresponding to: (i) percentual of the Value
Subject to Payment (VSR) average related to demand deposits, calculated in the calculation period;
(ii) percentual of the Value Subject to Payment (VSR) average related to farm loan deposits,
calculated in the calculation period. These institutions must furnish Bacen, with no only monthly
reports, but also a final document that proves the fulfillment of the obligation, up to the 20th day of
the month of July for each year. After fulfilling the obligation, the institution that incurs on deficiency
of liabilities has as an alternative date the first business day of August: (iii) to pay the Bacen the
amounts of the deficiency assessed; (iv) to pay the Bacen the fine on the calculated deficiency.
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Section 7 - Issuer's Activities
In the 2014/2015 crop, value must be equal to 34% of RSV arithmetic mean relative to demand
deposits.
In the 2014/2015 crop, to rural savings deposits:
I
From 7/1/2014 to 10/31/2014: 67% (sixty-seven percent) of the arithmetic average calculated
RSV in the calculation period of 06/01/2014 to 09/30/2014;
II
From 11/01/2014 to 06/30/2015: 72% (seventy two percent) the arithmetic average of RSV
determined in the calculation period of 10/01/2014 to 05/31/2015;
Tax on Financial Transactions
Financial operations in Brazil are generally subject to income tax and to IOF (tax on foreign exchange
transactions). The income tax on income collected from financial transaction by resident Brazilians, in
general, depends on: (i) the type of investment (equity investments are generally treated more
generously than fixed income investments); and (ii) the term for investment (long-term investments
usually have a more generous treatment). Income tax on income from financial transactions: (i) is
considered a prepayment of the income tax due to legal entities; and (ii) only apply for individuals
residing in Brazil. Investments in financial and capital markets made by individuals or legal entities
residing or domiciled abroad are usually subject to the same tax rules applicable to those residing in
Brazil, except for foreign investments that currently benefit from a favorable tax regime in compliance
with the rules established by the CMN.
Tax on Foreign Exchange Transactions (IOF)
IOF (Tax on Financial Transactions), its summarized form, is predominantly not for tax purposes but
for monetary policy control. It is charged on credit, insurance, foreign exchange transactions or
transactions related to securities, pursuant to the terms of IOF Regulation (RIOF) – Decree no.
6,306/2007. The IOF rate can be changed by an executive decree, which can generate results as of
the date it is published.
Maximum IOF rate on foreign exchange transactions is 25%, but in general it is reduced to 0.38%,
with exceptions such as: (i) 6% on loan foreign exchange transactions with average minimum
maturities of up to 180 days; (ii) 6.38% on foreign exchange transactions for the acquisition of assets
or services using credit card, debit or prepaid outside Brazil; (iii) 0% for foreign exchange transactions
related to the export of assets and services; and (iv) 0% for interbank foreign exchange transactions
among SFN (national financial system) institutions authorized to operate in the foreign exchange
market and among these and foreign financial institutions.
The IOF can also be charged on the issue of securities, including operations carried out in the
Brazilian stock, futures or commodities exchange ("IOF/Securities").
The IOF rate also applies to credit operations, except for foreign credit. The IOF levied on credit
transactions is generally assessed at a daily rate of 0.0041% in operations with companies and
0.0082% in operations with individuals, up to a limit of 1.5%. Moreover, an additional IOF rate of
0.38% is currently incurred on most of the credit transactions.
Also, the IOF rate incurs on insurance transactions, at the rate of: (i) 0% for reinsurance transactions
related to export credits or international transportation of goods and for operations in which premiums
are attributed for the financing of life insurance plans with survival coverage, among others; (ii)
0.38% for premiums related to life insurance plans without survival coverage, among others; (iii)
2.38% for premiums paid in case of health insurance; and (iv) 7.38% for premiums paid in case of
other types of securities. The farm insurance, among other specific insurance operations, if free from
the IOF rate.
Regulations that affect the relationship between Banks and Clients
The relationship between financial institutions and their clients is regulated, in general, by the laws
applicable to all commercial transactions and, in particular, by the Brazilian Civil Code. However,
regulations established by the CMN and BACEN address specific issues related to banking activities
and contracts, complementing the general regulation
The Consumer Protection Code and the Bank Client Protection Code
In 1990, the Brazilian Consumer Protection Code (CBDC) was created to establish strict rules to
govern the relationship between products and services suppliers and consumers and protect the end
consumer. In June 2006, the Brazilian Supreme Court of Justice ruled that the Brazilian Consumer
Defense Code also applies to transactions between financial institutions and their clients. Financial
institutions are also subject to specific regulation of the CMN, which specifically regulates the
relationship between financial institutions and their clients. Accordingly, CMN Resolution no.
3,694/2009 established criteria related to the prevention of risks when contracting transactions and
service provisions by financial institutions, enforcing conditions to be met in the relation with
consumers of bank services and products. While CMN Resolution no. 3,919/2010 changed and
consolidated standards about the charge of tariffs for the provision of services by financial institutions.
The main changes introduced by the CBDC are: (i) financial institutions must ensure that clients are
fully aware of all contractual clauses, including responsibilities and penalties applicable to both parties,
in order to protect the counterparties against abusive practices. All doubts, questions or complaints
related to agreements or the publication of sections should be promptly dealt with, and fees,
commissions or any other types of service or operational compensation cannot increased without
reasonable justification (in any case, these charges cannot be higher than the limits set by Bacen); (ii)
financial institutions are not allowed to transfer funds from different clients' accounts, without
previous authorization; (iii) financial institutions cannot require that the transactions not related to
them should be carried out by the same institution. If the transaction depends on other transactions,
the client is free to choose another institution to carry out this transaction; (iv) financial institutions
are not allowed to disclose misleading or abusive advertising containing information on contracts and
services offered by them. Financial institutions are responsible for any damage caused or any losses
by their clients; (v) interest rates on individual and direct credits to the consumer should be reduced
proportionally, in the case of early or amortization settlement of debts; (vi) Clients have the right to
withdraw up to R$5,000.00. For larger amounts, clients have to notify the financial institution at least
24 hours in advance; and (vii) proper treatment to the elderly and physically disabled individuals.
Rules of Customer Service Center (SAC)
Law 8,078 provides for mandatory existence of the Customer Service Center (SAC).
Decree 6,523 of 31 July 2008, regulates the above mentioned law, establishing the general rules for
the Customer Service Center (SAC) by phone, service providers regulated by the Federal Government,
in order to respect the basic rights consumer in obtaining adequate and clear information about the
services that hire and remain protected against unfair or illegal practices imposed in the supply
thereof.
Pursuant to the Decree, the links to SAC will always be free, both at 0800.729.0722 as the
0800.729.0088, which includes access for people with hearing or speech impairment.
Marco Civil da Internet
Law 12,965 / 14, known as the Marco Civil da Internet, enacted in 04/23/2014 and entered into force
from 06/23/2014, establishes principles, guarantees, rights and duties for the use of the Internet in
Brazil .
Protection of users' privacy
From the entry into force of the Marco Civil da Internet the companies operating on the web should
be more transparent. The protection of personal data and the privacy of users are guarantees
established by the new law. The confidentiality of the data can only be broken by court order.
As for the content of private communications in electronic media, has the same privacy protection that
has already been made in traditional media such as letters, phone calls, etc. At BB, is in approval
process the "Authorization Form to receive e-mail", which aims to give transparency to the
relationship via e-mail and increase customer awareness of the rules of use and characteristics of
messages. The term will be available to customers in the ATM Network BB Internet (APF) and the
manager in the Business Platform.
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Section 7 - Issuer's Activities
Banking Secrecy
Financial institutions should keep under secrecy the banking transactions and services rendered to its
clients. Financial institutions should keep under secrecy the banking transactions and services
rendered to its clients. According to Supplemental Law 105 the only circumstances in which
information on clients, services and transactions with Brazilian financial institutions or credit card
companies can be revealed to third-parties are as follows: (i) information exchange between financial
institutions, for record purposes, including exchange through risk centers, under the rules of the
National Monetary Council and the Bacen; (ii) supply of information contained in the records of badcheck issuers and debtors in default, credit protection entities, under the rules of the National
Monetary Council and the; (iii) supply of information needed to identify taxpayers and the overall
amount of their respective transactions, under the conditions and terms to be set by the Ministry of
Finance, given by the financial institutions responsible for the withholding and payment of
contributions to the Brazilian Revenue Service; (iv) notice to the applicable authorities regarding the
practice of illegal criminal or administrative acts, comprising the supply of information on transactions
involving funds from any criminal act; (v) disclosure of confidential information with the express
consent of the interested parties; (vi) transactions carried out and information furnished by the Bacen
in the exercise of its duties; (vii) information to be supplied to the Judiciary and Legislative Powers,
within the limits to settle the dispute and the constitutional and legal jurisdictions; (viii) information
supplied to the Union's tax administration under the terms and limits of the amounts set by the
Executive Power; (ix) information supplied to tax agents provided that it is deemed essential by the
applicable authority under the administrative process; (x) information supplied by the Bacen and the
CVM, upon institution of administrative process and judicial authorization or in case of criminal acts or
suspicion of criminal acts. Supplementary Law No. 105/09 also allows for the BACEN or the CVM to
exchange information with foreign government authorities, as long as a specific agreement in this
respect has been entered into.
Bankruptcy
Intervention, Administrative Liquidation and Bankruptcy
The Central Bank can intervene in the transactions of a financial institution not under the control of
the Brazilian government, in case of material risk for the creditors, or in case the institution, in a
recurrent basis, breaches the applicable regulations. The Central Bank may also intervene if liquidation
can be avoided or it may perform administrative liquidation or, in some circumstances, require the
bankruptcy of any financial institution, except those controlled by the Brazilian government.
Administrative Liquidation
The administrative liquidation of any financial institution (except for public financial institutions under
the control of the Brazilian government, such as the BB) can be carried out by the Bacen (Law
6,024/74), provided that: (i) the debts of the financial institution are overdue; (ii) the financial
institution is deemed insolvent; (iii) the financial institution incurred losses that might increase
exponentially the exposure of the unsecured credits; (iv) the financial institution's management has
significantly breached the law or regulation of the Brazilian banking system; (v) when the
authorization to function is revoked and the institution does not start up normal liquidation procedures
within the following 90 days, or if it has begun them but Bacen verifies that its management is slow, it
could result in losses to the creditors; and (vi ) the liquidation process may be requested also upon
petition from the management of the institution (if the respective articles of incorporation have
empowered them to do so) or upon proposal from a mediator, bearing the proper justifications.
Administrative liquidation process may be halted: (i) At the discretion of the Bacen, if the parts
involved the cause assume management of the financial institution after providing the necessary
guarantees; (ii) inasmuch as concerns to the final accounts of the judicial liquidation, they are
processed and approved and afterward filed in the appropriate public records; (iii) when converted to
a normal liquidation; or (iv) when the financial institution in declared bankrupt.
Temporary Special Administrative Regime (Regime de Administração Especial Temporária - RAET)
In addition to the aforesaid procedures, the Central Bank may also establish the Temporary Special
Administration Regime (Regime de Administração Especial Temporária), or the RAET, which is a less
restrictive form of intervention by the Central Bank in private and non-federal public financial
institutions and which allows institutions to continue to operate normally.
RAET may be imposed by the Central Bank under the following circumstances: (i) continued practice
of operations contrary to the economic and financial policies established by federal law; (ii) the
institution fails to comply with the mandatory reserve regulations; (iii) the institution has operations
or circumstances which demand intervention; (iv) risk-taking or fraudulent; (v) the institution is faced
with a shortage of assets; and (vi) the event of any of the situations described above could result in a
declaration of intervention.
The main purpose of the RAET is to assist in maintaining solvency and financial conditions of the
institution under special management. However, the RAET does not affect the daily routine of the
commercial operations, liabilities or assets of the financial institutions, which continues to operate
normally.
There is no minimum term for a RAET, which could cease after the occurrence of any of the following
events: (i) acquisition by the Federal Government of control of the financial institution; (ii) corporate
restructuring, merger, split off or transfer of majority shareholdings of the financial institution, (iii)
decision from Bacen; or (iv) declaration of extrajudicial liquidation of the financial institution.
Reimbursement of Creditors in a Liquidation
In the event of bankruptcy or liquidation of a financial institution, certain credits such as those for
salaries up to as much as 150 minimum salaries per worker, to name a few, shall be given preference
over any other credits. .
The Credit Guarantor Fund (Fundo Garantidor de Crédito - FGC) is a system whereby deposits are
guaranteed, comprised as a not for profit civil association of a private corporate nature which assures
a maximum value of R$ 70,000.00 in deposits and credit instruments per individual against a financial
institutions (or against financial institutions of the same financial group) and a maximum value of R$
20 million in deposits for banks having deposits of as much as R$ 5 billion per bank. The Fund Credit
Insurance (Seguro de Crédito do Fundo) is financed mainly by mandatory contributions from all
Brazilian financial institutions which operate with client deposits. Payment of unsecured deposits and
deposits by clients that are not covered by the Fund credit insurance is subject to payment prior to
any and all other guaranteed credits and other credits in which specific legislation may extend special
privileges.
Furthermore, two laws affect the priority of payment to Brazilian bank creditors in the event of
insolvency, bankruptcy or the like. Law 9,069, of June 29, 1995, provides protection against pledging
of mandatory deposits held by financial institutions at the Central Bank. Such deposits cannot be
associated with suits on the part of the creditors in general of a bank for payment of debts. Law 9,450
of March 14, 1997 requires that assets of any insolvent bank financed by loans made by foreign
institutions with lines of commercial financing be used to pay these lines owed and also have
preference over the general creditors of the insolvent bank.
Cancellation of a bank license
The Banking Reform Law (Lei de Reforma Bancária), Law 4,595 of 1964, in conjunction with the
specific regulations approved by CMN Resolution 1,065 of December 5, 1985 provides that some
penalties may be imposed on financial institutions in certain situations. Among these, a financial
institution may be subject to operating license and/or to conducting foreign exchange transactions.
Cancellations are applicable under certain circumstances established by the Bacen such as for
example, in the event of repeated: (i) violations of Bacen regulations by the financial institution's
management; or (ii) negligence on the part of the financial institution to follow adequate banking
practices in relation to their foreign exchange operations.
Additionally, the Central Bank may, according to CMN Resolution 4,122, of November 28, 2002, cancel
bank authorizations to operate of a given bank, if one or more of the following situations is/are
identified at any time: (i) lack of practice on applicable standards for transactions considered as
essential; (ii) lack of operating activity; (iii) institution is not located in the address informed to
BACEN; (iv) interruption for more than 4 months, without justification, of delivery to BACEN of
statements required by prevailing law; (v) non-compliance with business plan provided for in sub-item
II of Article 6, considering the verification period addressed by Article 11. The cancellation of a
banking license can only occur after the appropriate administrative proceeding carried out by Bacen.
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Section 7 - Issuer's Activities
Sistema de Pagamentos Brasileiro (Brazilian Payment System, local acronym SPB)
In December 1999 the Brazilian government introduced new regulations for liquidation of payments in
Brazil, based on the guidelines implemented by the Bank of International Settlements BIS. Settlement
systems’ legal basis was strengthened by Law no. 10,214/2011, which, among other provisions,
acknowledges multilateral offset and makes possible effective realization of guarantees in the ambit of
these systems, even in case of civil default of the member. The Central Bank and CVM have the power
to regulate and supervise this system. The SPB started up operations in April 2002. In compliance
with these rules, new clearing houses (private) must adopt procedures for the purpose of reducing the
possibility of systemic crises and reduce the risks in the scope of offsetting and settlement systems.
The most important principles of the SPB are: (i) the existence of two main payment and settlement
systems: real-time, using the reserves deposited at the Central Bank and through the (clearing
houses); (ii) the clearing houses with a few exceptions are responsible for payment orders which
accept; and (iii) the bankruptcy laws do not affect payment orders made through credits from clearing
houses nor does the guarantee extended to assure these orders. However, the clearing houses do
have normal credits against any participant under the bankruptcy laws.
The systems made up of clearing houses are responsible for the creation of security mechanisms and
regulations to control risks and contingencies to prevent losses of the market participants and for the
correct execution of the participant's participation for the performance of their settlements and
exclusion of guarantee held under custody. The clearing houses and settlement service providers
acknowledged as important for the system must reserve a portion of their assets as an additional
guarantee of settlement of transactions.
Under these regulations, responsibility for settlement of an operation is assigned to the clearing
houses and settlement service providers responsible for it. Once a financial transaction has been
submitted for clearing and settlement, it generally becomes the obligation of the relevant clearing
house and/or settlement services provider to clear and settle it and it is no longer subject to the risk
of bankruptcy or insolvency on the part of the market participant that submitted it for clearing and
settlement.
In this line, the Banco do Brasil follows the regulations of Foreign Exchange Transaction Houses in
which the operation is referred to as "Títulos públicos federais em garantia" or Federal government
securities held in guarantee.
Bacen established that: (i) the systemically important deferred settlement systems must conduct final
settlement of the results computed therefrom directly in accounts held at the Central Bank; (ii)
Regarded as systemically important are: all systems that settle marketable securities, financial
derivatives and foreign currencies; and fund transfer systems or systems involving settlement of other
interbank transactions that have daily average financial turnover greater than 4% of the daily average
financial turnover of the Sistema de Transferência de Reservas (Reserve Transfer System) or which in
the judgment of the Central Bank may pose a risk to the flow of payments within the Brazilian
Payment System (SPB) environment; (iii) the time limit for deferring settlement of the transaction
must be by no later than: end of the day, in the event of a fund transfer system regarded systemically
important; one business day, in the event of demand transactions for securities, except stocks; and
three business days for shares traded on the stock exchanges. The settlement time limit in other
situations is established by the Central Bank; and (iv) the operating entity must maintain shareholders'
equity compatible to the risks inherent to the settlement systems in which it is engaged, complying
with the minimum limit of R$30 million or R$5 million per system depending on whether it is regarded
systemically important or not.
The financial institutions and other institutions contracted by Bacen are also necessary to create
mechanisms for identifying and preventing liquidity risks in compliance with certain established
procedures. In relation to these processes, the institutions must: (i) maintain criteria in order to
evaluate liquidity risks and mechanisms in order to manage them; (ii) analyze economic and financial
data to evaluate the impact of different market scenarios on liquidity and cash flow of the institution;
(iii) prepare reports that enable the institution to monitor liquidity risks; (iv) identify and evaluate
mechanisms to undo positions which could pose an economic and/or financial threat to the institution
and to obtain the needed funds to perform such reversals; (v) adopt systems controls and test them
periodically; (vi) readily provide the management of the institution with available information and
analyses regarding any identified liquidity risk, including any conclusions or corrective measures
adopted; and (vii) develop contingency plans to deal with liquidity crisis situations.
BACEN regulations in particular inasmuch as regards monitoring and contingencies, are:
Standards
Date
Communique 19,387
03/28/2002
08/07/2002
06/23/2009
02/26/2010
Circular 3,488
03/18/2010
Circular Letter 3,442
04/14/2010
Circular 3,100
Communique 9,867
Circular Letter 3,401
Subject
Institute the STR and approve its regulations.
Communicate the time grades and SPB messages to those associated thereto.
Disclose procedures related to STR monitoring
Communicate change and publication of domain dictionaries
Change regulatory provisions related to the nature of the fund transfer orders, form of access and
fees.
Disclose procedures to be complied with in a contingency regime at STR.
SPB - Digital Certification
Banco do Brasil acquires and uses digital certificates, issued by Certifying Authorities accredited by the
Brazilian Public Key Infrastructure - ICP-BRASIL, for the performance of financial activity, in
conformity with the determinations of Bacen, described in the Security Manual document of SPB.
Foreign Investment and Brazilian Constitution
Foreign Banks
The Brazilian Constitution forbids foreign financial institutions from establishing new branches in
Brazil, except when duly authorized by the Brazilian government. A foreign financial institution duly
authorized to operate in Brazil through a bureau or branch shall be subject to the same rules,
regulations and requirements that are applicable to any Brazilian financial institution.
Foreign Investment in Brazilian Financial Institutions
According to the Brazilian Constitution (article 52 of Transitory Brazilian Provisions) the following are
prohibited:
(i) installation in Brazil of new financial institutions domicile abroad; and (ii) an increase in the share
interest percentage of capital from financial institutions domiciled abroad. The prohibition referenced
in this article does not pertain to authorizations resulting from international agreements of reciprocity
or of interest to the Brazilian government.
Foreign investors that do not have specific authorization and are in public negotiations, however can
acquire shares having no voting rights, issued by financial institutions or even deposit receipts for
securities (depositary receipts - DR ), representing non-voting shares which are distributed abroad.
The launch of DR backed in voting stock is limited to a percentage of shareholding interest permitted
in accordance with the terms of prevailing law, according to CMN Resolution 3,760/2009.
In the case of the Banco do Brasil, the Government published based on prerogatives from the
President of the Republic: (i) in relation to ADR anchoring, Decree 6,960, as of September 16, 2009,
authorized the Banco do Brasil to release an ADR program exclusively backed in common shares,
which established anchoring be exclusive to nominal preferred shares; (ii) in relation to capital, Decree
(no number) of the same date, authorized the BB to increase foreign interest in its capital to as much
as 20% (prior limit was 12.5%); (iii) decree 7,184, authorized an increase in the Banco do Brasil
capital based on the issue of as much as 286,000,000 common shares based on a public offer and
primary stock distribution.
b.
environmental policy of Banco do Brasil
environmental policy of the issuer and costs incurred for compliance with environmental
regulations and if the case may be other environmental practices including compliance with
international environmental protection standard
The governance of environmental responsibility is practiced by the Banco do Brasil for more than a
decade and has been improved over time. The Code of Ethics, the Charter of RSA Principles and
Agenda 21 BB Sustainability Plan are examples of this evolution, and the various covenants and
voluntary public commitments to which BB is a signatory. These commitments permeate strategies,
policies, guidelines and regulatory instructions that guide the routines of the Bank.
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Section 7 - Issuer's Activities
General and Specific Policy
The general policies and specific force bring several social and environmental aspects to be considered
in the negotiation and management practices, like the credit and investment operations, and
relationships with suppliers and employees.
In 2015, the Banco do Brasil Board Directors approved a specific Policy for Environmental
Responsibility (PRSA), in compliance with CMN Resolution No. 4,327, of 04/25/2014, and the
Regulatory System of Banking Self-Regulation of FEBRABAN # 14.
This policy reinforces the Bank's commitment to social and environmental responsibility. Is
accompanied by a plan of action and extends to the financial conglomerate. Related Entities Banco do
Brasil are oriented to join the PRSA approved by BB, or to develop own policy.
Specific policy Socioambental Responsibility
1.
We base the performance on social and environmental responsibility for our strategic orientation
aligned with the laws and regulations governing the matter.
2.
We have adopted and we promote principles of action in socially and environmentally responsible
bases, considering:
a.
ethics, promotion of human rights, fundamental labor rights, environment and sustainable
development and contributing to the universalization of social rights and citizenship;
b.
the respect and appreciation of diversity and equity in relationships;
c.
the contribution to the potential of employees and other employees can be availed by the
company;
d.
the stimulus, the diffuse and the implementation of sustainable development practices;
e.
continuous improvement of our environmental performance;
f.
the development of actions for efficiency and for the prevention of pollution and carbon emissions
in products, services and processes, and the zeal for the proper disposal of waste generated.
g.
support for initiatives aimed at reducing emissions or to stabilize the concentration of greenhouse
gases in the atmosphere.
3.
We adopt governance structure of social and environmental responsibility and management of
social and environmental risks compatible with our size, the nature of business, the complexity of
products and services, and the relations established with the various stakeholders.
4.
We engage and empower senior management and our workforce, in all levels, for the
implementation of this Policy.
5.
We encourage the participation of our stakeholders in the development of this Policy.
6.
We work together with business, government and society in the definition of initiatives aimed at
reducing risks and taking advantage of opportunities related to environmental issues, including
climate change.
7.
We seek, through our negotiating performance, promote the inclusion and financial education, job
creation and income and the continuous improvement of living conditions for customers and
society.
8.
We seek alignment between private social investment and our negotiating performance,
considering environmentally sound practices.
9.
We adopt risk management framework that aims to identify, classify, evaluate, monitor, mitigate
and control the environmental risk.
10.
evaluate, update and systematically publish our challenges and actions on sustainability, and the
reporting of results achieved, according to the market recognized standards.
BB Sustainability Guidelines for Credit
BB Sustainability Guidelines for Credit aim at publicizing regional and administrative practices adopted
by the Bank on credit assignment, strengthening compliance with its assumed public commitments
and in line with social-environmental responsibility included in its general and specific policies, also
with other companies. It also follows international good practices. Guidelines are part of axis 3 –
Mitigation of Risks in Água Brasil Program, which seeks continuous improvement of socialenvironmental criteria for credit granting. Addressed economy sectors were agribusiness, electric
power, civil construction, mining, oil & gas and transportation, and strategic themes such as water,
climate changes, forests and biodiversity. Preparation of guidelines for paper and cellulose and
irrigated agriculture sectors is in progress, with expected conclusion in April 2015.
Social and Environmental Guidelines for Controversial Issues
The Social and Environmental Affairs Controversial Guidelines for the Banco do Brasil aim to explain
the BB's positioning in controversial and controversial issues and that, because of this feature, gained
notoriety in the society.
The guidelines are organized into three segments: Missed activities, restricted activities and alert list
and have compliance with international good practice and reinforce the care of public commitments by
BB.
Protocolo Verde (Green Protocol)
Statement of principles for sustainable development signed by official banks in 1995 and ratified in
2008 for the purpose of implementing policies and practices that are at all times and increasingly in
compliance with the purpose of development which does not compromise the needs of future
generations.
In accordance with the Term of Responsibility signed, BB commits to: (i) financing sustainable
development by means of credit lines and programs that promote the quality of life of the population,
the sustainable use of natural resources and environmental protection; (ii) consider the impact and
social and environmental costs in asset management (proprietary and third party) and in the analysis
of client risks and investment projects, taking the Brazilian Environmental Policy (Política Nacional do
Meio ambiente) as a base; (iii) promote sustainable consumption of natural resources and their byproducts in internal processes; (iv) inform, notify and engage interested parties in the institution's
sustainable policies and practices on a continual basis; and (v) promote conformity of procedures,
cooperation and integration of forces among signatory organizations in the implementation of these
principles.
Corporate Agenda 21 (Agenda 21 Empresarial)
Commitment agenda geared toward businesses, management practices and private social investments
of the BB in best market practices to meet the expectations of the several relationship publics and in
the company's position of social and environmental responsibility.
The update cycle for Agenda 21 began in August 2014 and promoted ten events during the second
half of the year. During the process of updating Agenda 21 for the 2015-2017 period, occurred in the
second half of 2014, a Stakeholders Panel was conducted with employees, customers, shareholders,
suppliers, civil society and specialized professionals, as well as a Sustainability Forum with executives
of the Company’s different areas. Both refer to BB’s challenge priorities in this theme. To supplement
improvement process of the Bank’s sustainability practices, around 100 executives representing all
Strategic Units of the Organization and other guests took part in the IV Workshop on Sustainable
Development, which resulted in a Calendar with 88 actions, distributed among the areas and
directories of BB.
Equator Principles
The Ecuador Principles are a set of policies and guidelines (safeguards) to be observed in the analysis
of investment projects, taking as a basis the criteria established by the International Finance
Corporation, an arm of the World Bank. The safeguards discuss environmental assessments;
protection of natural habitats; management of pests; security of dams; indigenous populations;
involuntary resettlement of populations; cultural property; child labor, forced or slave labor,
international water projects and health and safety in the workplace.
The Banco do Brasil, in February 2005, was the first official bank to comprise the Brazilian financial
institutions group abiding by the Ecuador Principles. Adjustments were promoted by the Equator
Principles Association likewise 2006 and 2013, when the Brazilian Central Bank reinforced its
commitment by renewing its adhesion. In last review, new rules were incorporated for evaluation of
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Section 7 - Issuer's Activities
projects classified in PE with scope expansion, strengthening of due diligence concept, sharing of
information among members, analysis of alternatives for projects that have high greenhouse gas
emissions, etc. New criteria will be effective beginning as of January 2014.
CEO Water Mandate - Global United Nations Compact
The proposal of Organization of the United Nations - UN, so that the signatory companies of the
Global Pact can approach the water matter and the management of this resource in its corporate
strategies and therefore positively contribute in avoiding a global shortage of water. By adhering to
the "CEO Water Mandate" in October 2010, Banco do Brasil voluntarily commits to act an essential
role in the management of water resources through six fronts: direct operations; Supply Chain;
Collective Actions Public Policies; Engagement of the Community and Transparency.
CDP
Carbon Disclosure Project (CDP) a non-profit organization representing 767 global investors and
financial resources of US$ 92 trillion and the objective order is to create a relationship between
investors, companies and governments focused on risks and business opportunities and policies
arising from the use of natural resources and impacts of climate change. The organization holds the
largest corporate database on climate change, energy, water and forests. These data generate
information that enables investors, companies and governments mitigate social and environmental
risks.
In March 2005, Banco do Brasil, Brasilprev and Previ, jointly with the main global institutional
investors, formally manifested their support to the request for the disclosure of information over the
issuance of greenhouse gases, being one of the pioneering companies in accepting to reply the
Brazilian questionnaire. Annually Banco do Brasil sends its greenhouse gas emission inventory to CDP
for public disclosure;
Brazilian Program GHG Protocol
The "GHG Protocol" is of the principal methodology to identify and calculate the emissions and
support the management of greenhouse gases, they are used by most companies in the world. Banco
do Brasil and other 16 national companies support the Brazilian initiative as founding-member,
committing to carry out the stocktaking of its emissions as of the methodology which is being adapted
to the Brazilian reality. Its use supports the adoption of policies and development of strategies based
on a consistent knowledge of greenhouse gas emission s due to its activities and the opportunities to
reduce it.
Companies for the Climate
EPC Platform is a permanent corporate effort whose purpose is to mobilize, sensitize and articulate
corporate leaders for management and reduction of greenhouse effect gases, management of climate
risks and proposal of public policies and positive incentives in the context of climate changes
contributing to the construction of a new economic model for Brazil, based on climate balance. A total
of 36 companies integrate now this initiative, coordinated by the Getulio Vargas Foundation. As a
member of the platform since its launching in 2009, BB is an active participant in the debates and
positioning with the aim to guide the adapting process of the Brazilian economy to climatic changes.
Caring for Climate - Global United Nations Pact
Adopted by BB as of September 2009, it is an additional platform of commitments to the Global Pact
launched in partnership with the United Nations Program for the Environment and the Global
Corporate Council for the Sustainable Development for participants which wish to advance in solutions
for climatic changes.
Upon adopting (Caring for Climate ) the institutions commit: To work jointly with companies, in
national and sector level, throughout its chain of value to establish norms and adopt joint initiatives
for the reduction of risks and better use of the opportunities related to the climatic changes. (ii) to
identify and understand the implications of climatic changes in the company's business and determine
a coherent strategy to minimize risks and identify opportunities; (iii) to provoke actions to engage the
government and society in the development of policies for a low carbon economy; (iv) to work jointly
with companies, in national and sector level, throughout its chain of value to establish norms and
adopt joint initiatives for the reduction of risks and better use of the opportunities related to the
climatic changes.
Água Brasil (Water Brazil) program
Banco do Brasil, largest fund provider of Brazilian agribusiness – economic segment with the highest
water consumption in production process, adopted the defense of the ―water‖ cause as a guideline for
its actions in the field of sustainability through Água Brasil Program.
Partnership entered into in 2010 by BB and the National Water Agency, WWF and Banco do Brasil
Foundation aims at implementing sustainable agricultural practices to conserve hydric resources and
to raise awareness and change attitude of partners’ internal audience, customers and the society in
relation to responsible consumption and proper treatment of urban solid waste.
The Program is structured into four operation axes:
1)
Social-Environmental Projects:
a.
Urban Axis – operates in five locations (Pirenópolis / Caxias do Sul / Rio Branco / Natal /
Belo Horizonte) and is focused on management of solid waste;
b.
Rural Axis – at the first phase of the partnership, the projects involve 14 micro basins
distributed among biomes Pantanal/ Cerrado, Mata Atlântica, Amazônia, Caatinga and Pampa and
their purpose is to join productivity and water source environmental conservation.
2)
Communication and Engagement: the axis of Communication and Engagement aims to:
propriation of water because the Banco do Brasil, strengthening the image of the Bank involved
and responsible for sustainability of the country; promoting awareness and changing attitudes of
internal public and society regarding the conservation of water resources; dissemination and
replication of models and best practices of preservation and conservation of water resources.
3)
Risk mitigation: to improve the business models geared towards sustainable regional development
and to enlarge the portfolio of financial products and services with Banco do Brasil's socioenvironmental bent.
4)
Sustainable business: intends to improve business models concerned with sustainable
development – practical improvement of agricultural production, improvement of water source
management and mitigation of or adequacy to climate changes.
Efficient Carbon Index - ICO2
BM&FBOVESPA and the National Bank for Economic and Social Development (BNDES) jointly created
the Efficient Carbon Index (ICO2), whose main purpose is to encourage companies that issue most
traded shares to assess, disclose and monitor their greenhouse gases emissions, thus preparing to
operate in a ―low carbon‖ economy. They also intend to provide the market with an index whose
performance will be the result of a portfolio limited by factors that also incorporate issues related to
climate changes.
This index, comprised of shares of companies that are members of the IBrX-50 index and that
accepted to take part in this effort by adopting transparent practices related to greenhouse effect
gases emissions (GEE), takes into consideration for weighing member companies’ shares, their GEE
emissions’ efficiency level and free float (total outstanding shares).
Ever since its launch, Banco do Brasil (BBAS3) takes part in this effort and has always been among
the five most representative institutions of this portfolio.
Soy Moratorium Workgroup (GTS)
The studies produced by GTS (workgroup) aim to reconcile environmental preservation with economic
development through the responsible and sustainable use of Brazilian natural resources, catering to
the aspirations of society. With the adhesion to the Soy Moratorium Workgroup - GTS, BB agrees not
to finance soy production in deforested areas in the Amazon biome after July 2006. Besides
representatives of the vegetable oil manufacturers and of grain exporters, GTS relies on the
participation of nongovernmental organizations, of the Ministry of the Environment (MMA) and of the
National Institute for Space Research (INPE).
Fórum Amazônia Sustentável (Sustainable Amazon Forum)
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Section 7 - Issuer's Activities
In 2008, Banco do Brasil joined Fórum Amazônia Sustentável, a group formed by various government,
corporate and non-government entities which discusses the paths leading to sustainable development
in the Amazon biome.
World Water Council
The Word Water Council is a multi-stakeholder international platform, created in 1996 at the initiative
of specialists in water, supply and sanitation, from various organizations interested in the topic, in
response to a growing concern with the issues of shortage of water resources across the global
community. The Council's regional coordination in Brazil, known as "Seção Brasil", is handled by ANA National Water Agency, which formalized the invitation for the Bank to join, considering the corporate
strategic initiative in sustainability, materialized by means of Programa Água Brasil, of which ANA is
one of the partners. BB became a member of the World Water Council in 2011.
c.
dependency on patents, brands, licenses, grants, franchises, royalties
Dependency on patents, brands, licenses, grants, franchises, royalties contracts necessary
to develop the activities
Except for the approval for functioning granted by the Brazilian Central bank and the relative brands
mentioned in item 9.1 (b) of the Reference Form, the Bank does not depend on any patents, brands,
licenses, grants, franchises, relevant royalty contracts to develop its activities, except the Brasildental
and BB Dental brands, witch, at the year of 2014, were licensed to the Brasildental company, in
exclusivity regime.
7.6.
Countries from which Banco do Brasil obtains relevant revenues
Regarding the countries of which the issuer receives relevant revenues, identify:
a.
the revenue from clients attributed to the base-country of the issuer and its share in
total net revenue
In 2014, of the total of R$165,323 million in revenues of Banco do Brasil, R$158,114 million, or
95,6%, correspond to activities in the Country.
b.
revenue from clients attributed to each foreign company and their share in total net
revenue of the issuer, and
In 2014, of the total revenues from abroad, BB Grand Cayman for 29%, BB Patagonia for 26%, BB
London of 7% and BB New York for 6%. The others are dispersed around the other countries where
Banco do Brasil is present.
c.
total revenue from foreign companies and their share in the total net revenue of the
issuer.
In 2014, of the total of R$ 165,323 million revenues of Banco do Brasil, R$ 7,209 million, or 4,4%
correspond to activities abroad.
7.7.
Regulation in other countries
Regarding the foreign countries disclosed in item 7.6, inform the extent of subjection to
regulation of this country and how said regulation affects the business of the issuer.
Each branch, subsidiary or controlled company by Banco do Brasil abroad is subject to the regulations
of the company where it is located. Moreover, prior to the acquisition of a financial institution outside
of Brazil or the installation of a unit abroad, the Bank has the support of internationally renowned
specialized consultancy firms, to carry out a detailed examination of the regulatory environment in
these countries in order to verify the capacity of compliance with the legal demands from local
supervision bodies and consequently, to be in conformity with the applicable law. As a result of these
examinations, the Brazilian Central Bank confirms if the regulation specific to the location does not
significantly impact its operations. In an affirmative case, a study considering the acquisition of
installation of new facilities is reevaluated under the aspect of convenience and opportunity.
7.8.
Significant long-term relationships
Describe relevant long-term relationships of the issuer which are not available in other
parts of this form.
Following the relationship which Banco do Brasil has with the Complementary Pension Closed Bodies is
presented to health insurance companies and with Fundação Banco do Brasil - FBB. More information
is found in the due bylaws of said institutions, as well as in their websites on the Internet.
Previ - Caixa de Previdência dos funcionários do Banco do Brasil
Objectives and Sponsors
Previ was funded on April 16, 1904, it is a closed complementary pension entity, without profit
purposes, headquartered in the city of Rio de Janeiro (RJ).
Previ aims at complying with its Bylaws, administrating and executing beneficial pension plans and
other authorized plans, so as to insure to its participants, beneficiaries and aiding the benefits in the
due regulations of each plan.
Banco do Brasil and and Previ own are the sponsors of the entity plans administered by the entity.
Both are responsible for, in addition to their legal obligations, contributing on a monthly basis on the
dates and conditions established and with the quantities which are defined in the funding of the due
Benefit Plans, pursuant to articles 65 and 66 of the Bylaws.
BB is also responsible for the systematic supervision and oversight of Previ's activities, as well as the
approval, without any functional prejudice, of the members which integrate the Board of Directors,
Executive Committee, Fiscal Council, and Previ's Consulting Council Including alternate members to be
part of due social bodies.
Participants and Benefit Plans
All individuals who are enrolled in one of the Benefit Plans of Complementary Pension Plan managed
by Previ are participants, in the terms and conditions of the Bylaws. The plans are:
Plano de Benefícios 1 (Benefit Plan 1) - The employees of the Bank which were inscribed
between 04/15/1967 and 12/23/1997 are part of this plan. On December 31, 2014 there were
116,863 participants, of whom 24,741 were active, 71,968 retired and 20,154 pension beneficiaries.
Considering the accumulated surplus, in 2007 to 2013 the contributions of the participants and
beneficiaries (retired employees and people who receive pension) and of the sponsor (Banco do
Brasil) were suspended. In 2010, under resolution CGPC No. 26/2008 the Memorandum of
Understandings was signed between BB, the elected directors of PREVI and entities representing the
participants, through which it was officially suggested that PREVI adopt measures to use the
resources from the profit in Plano 1. The main points of this document are: (i) Incorporation of Special
Benefits for Remuneration and Proportionality implemented in 2007 as permanent benefits of the Plan
and of the relative funds to Net Assets and Benefits Plan: (ii) Special Temporary Benefit; iii) Minimum
Benefit raised temporarily from 40% to 70% of the PREVI Installment; Suspension of the collection of
contribution for three consecutive years; (iv) and creation of two Pension Funds, of equal value, to
allocate the resources of the profit to the participants and beneficiaries and the sponsor, BB.
Previ Future Plan - The employees of the Bank who enrolled as of December 24, 1997 are part of
this plan. On December 31, 2014 there were 82,355 participants, of which 81,559 were active, 261
retired and 535 pension beneficiaries.
The benefits granted to the participants and their beneficiaries have their values, form of granting and
other conditions established in the due regulations of the benefit plans.
Participants employed before April 14, 1967, who were not retired and who were not in a position on
that date to request their retirement, contemplated in the contract signed on December 24, 1997
between the Bank and PREVI.C Mathematical reserves ensuring benefits corresponding to such group
are fully paid-up at Previ. The retirement benefit of this group is characterized as a defined
contribution.
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Section 7 - Issuer's Activities
Plan Financing
The financing conditions regarding the benefit plans managed by Previ, sponsored by Banco do Brasil
and by Previ itself, shall be established in the due regulations, obeying as a general rule, that the
sponsors shall support 50% (fifty percent) of the normal cost of the General Part of Benefit Plan 1
with at least 7% (seven percent) and at most 14% (fourteen percent) of the salary participation of
the participants of Plano Previ Futuro to finance this plan.
The normal contribution of the sponsors in the plans sponsored by Banco do Brasil and by Previ itself,
under no hypothesis may exceed the contributions of the participants.
Banco do Brasil will also transform special contributions for effects of paying up the value of the
mathematical reserves which ensure the benefits to the participants admitted in the job prior to
04/15/1967 and to those retired after that date, as provided for in specific document.
Equity and its Application
Previ's equity is constituted by: (i) financial resources and estate; (ii) contributions from sponsors and
participants, established in the due regulations of the benefit plans and other contributions offered by
the sponsors or participants; (iii) enrollment fee or admission fees; (iv) income produced by their
financial resources and estate, and; (v) donations, devises, assistance, subventions and other income
from any other individuals or corporations, public or private.
Previ's estate will be fully invested seeking to meet its objectives. All financial resources and estate
must be managed in compliance with the investment guidelines approved by the Board of Directors,
so as to obtain security in investments, profitability compatible with the regulations of the benefit
plans, including the monetary adjustments and regularity of liquidity flow of investments for the
payment of benefits.
Previ may invest part of its equity in real estate or other investments, destined for its participants,
observing the due regulations and pertinent law.
Cassi - Caixa de Assistência dos Funcionários do Banco do Brasil
Objectives and Sponsor
The Fund for Assistance of Employees of Banco do Brasil - Cassi, private corporation, constituted in a
General Meeting of January 27, 1944, headquartered in the City of Brasília (DF), is a non-profit
association, focused on social assistance in the self-management mode.
CASSI's objectives are to comply with the Bylaws, Internal Regulations and Regulations and contracts
of the following health care plans: (i) to grant assistance to cover expenses with the promotion,
protection, recovery and rehabilitation of health, including dental health, of the members, their
dependents and external participants; (ii) to grant assistance to cover funeral expenses of the
members or registered beneficiaries; (iii) to develop actions, including scientific and technological
research, seeking to promote health and prevent illnesses of the members, inscribed beneficiaries and
external participants; (iv) to develop and execute occupational medicine programs for employees of
Banco do Brasil and other entities or companies, upon agreement/convention; (v) to execute the
health policy defined by Banco do Brasil for its employees upon contract/convention; and (vi) to
manage other plans or programs of similar nature, as long as previously secured against possible
expenses, as well as execute other services which it is legally authorized to do.
No rendering of service may be created, majored, extended or authorized without the corresponding
source of costing and budget availability.
Banco do Brasil sponsors the Cassi Members Plan, being responsible for: (i) contributing on a monthly
basis, in national currency, with the amount which it is allotted in the Associate Plan as per the
Bylaws; (ii) to approve the absences, without no functional prejudice, of the members of the Board of
Directors and Tax Board of Cassi to be part of their work in the due boards.
Members
The members of Cassi, in the terms and conditions provided for in the Bylaws and Members Plan
Regulations: (i) the employees of Banco do Brasil in any category, inscribed in the Members' Plan; (ii)
the retired employees who receive benefits from Previ and/or BB and/or Official Pension, inscribed in
the Members' Plan; (iii) the members of the Board of Directors of BB not belonging to its roll of
employees, in the quality of temporary associates, upon the performance of its functions and upon
enrollment in the Associate Plan; and (iv) the employees of Previ itself, active and/or retired, with
possessions in Previ up to July 1978.
External participants are those who are enrolled in collective health care plans and are not sponsored
or operated by Cassi, belonging to a group of set people, as per the regulation issued by the
Supplementary Health National Agency, except in the Associates Plan.
On December 31, 2014 there were 191,403 participants, of which 103,269 were active, 69,412 retired
and 18,772 pension beneficiaries.
Equity and Financing Model
CASSI's resources are originated by: Contributions of the associates, temporary or not; dependents of
deceased associates; Revenues from external participants or from other health plans and programs
and assistance managed by CASSI; And contributions from sponsors, BB and Caixa de Previdência dos
Funcionários do Banco do Brasil, among other hypothesis provided for in article 14 of their bylaws.
The monthly contribution of the Associates Plan is calculated based on the following parameters of the
total value of benefits of retirement or general income; Or by the total value of pension benefits paid
by BB and/or Caixa de Previdência dos Funcionários do Banco do Brasil and/or Instituição Oficial de
Previdência Social, including the Christmas bonus.
The monthly contribution of the sponsor, Banco do Brasil is 4.5% (four point five percent) and will not
exceed this limit. Over the total value of retirement or pension benefits, or of the general profit, as
defined by the regulation of the Associates plan and, once a year at 4.5% (four point five percent)
over the Christmas bonus. The responsibility of the sponsor regarding Cassi is limited to the
contribution provided herein.
The monthly contribution of the members, owed exclusively for the Associates Plan is 3.0% and will
not exceed this limit. Over the total value of retirement or pension benefits, or of the general profit, as
defined by the regulation of the Associates plan and, once a year at 3.0% over the Christmas bonus.
The responsibility of the members regarding Cassi is limited to the percentages mentioned above,
added of co-participations provided for in the Bylaws and Regulation of the Associates Plan.
Cassi's equity may be added through donations, legacies, aids, subventions granted by any individual
or corporation, resulting from actions provided for in items I and II of Article 3 of its Bylaws.
The contributions owed by active members, as well as co-participations will be collected by Banco do
Brasil, upon discount in payroll to credit Cassi.
The values owed to Cassi are received through the network of dependencies of Banco do Brasil, and
in it they are invested or deposited, upon negotiation between the parties. Possible financial
insufficiencies of the Members Plan of CASSI may be covered by Banco do Brasil, exclusively as
contribution advances.
Fundação Codesc de Seguridade Social - Fusesc
With the merger of Banco do Estado de Santa Catarina S.A. (Besc) and Besc S.A. - Crédito Imobiliário
(Bescri) by Banco do Brasil on September 30, 2008, the Bank became a successor to the liabilities as
sponsor of the following Private Pension Plans managed by Fundação Codesc de Seguridade Social Fusesc:
(i)
Benefit Plan I - Variable Contribution (CV) - This plan was initially established as a Defined
Benefit plan (BD), however, due to regulatory change occurred in 2007, it started to be classified
as a Variable Contribution (CV) plan because a group of members enjoying planned retirement
changed the way they receive the continued monthly income from life income to income that is a
percentage of account balance. This plan involved, on 12/31/2014, 1,450 employees, with 1.033
retirees, 414 pensioners and 3 active employees. Employees and the sponsor contribute equally,
in average, with 9.89% of participation salary.
(ii)
Plano Multifuturo I (Multifuture Plan I), Variable Contribution (CV) - participants: employees
enrolled as of 01/12/2003 and participants who have migrated from the Benefit Plan 1. This plan
involved, on 12/31/2014, 5,824 employees, with 3,321 retirees, 94 pensioners and 2,409 active
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Section 7 - Issuer's Activities
employees. Employees and sponsor equally contribute from 2.33% to 7% of participation salary
to that plan, as determined by each participant.
In addition to Banco do Brasil there are other sponsors of the Benefit Plans managed by Fusesc,
namely: Companhia de Desenvolvimento do Estado de Santa Catarina – Codesc, BESC S.A. - Corretora
de Seguros e Administradora de Bens – Bescor, Agência de Fomento do Estado de Santa Catarina S.A.
– Badesc, a Caixa de Assistência dos Empregados dos Sistemas BESC e CODESC, do BADESC e da
FUSESC – SIM and the Foundation itself.
Economus – Instituto de Seguridade Social
Banco Nossa Caixa, merged on November 30, 2009 into Banco do Brasil, is the sponsor of Private
Pension and Medical Assistance Plans managed by Economus - Instituto de Seguridade Social, a
closed-end supplementary pension plan with its own assets and management independence. As a
natural progression, Banco do Brasil has moved onto the condition of successor of the obligations,
including the private pension plans. Following we present the pension and health plans.
Private Pension Funds
(i)
General Regulation, of Defined benefit: Instituted on 1/1/1978, it offers complementation
benefits to retirement plans due to death, illness assistance and payment due to death or
invalidity. On 08/01/2006, the plan was settled, in other words, the participants were ensured a
benefit in proportion to the time of adhesion to the plan, which will be adjusted by INPC up to the
date of demand of receipt, which is also stipulated. On 12/31/2014 11,725 participants were
enrolled, of which 5,111 were active, 6,153 retired and 461 were receiving pension. Employees
and the sponsor contribute equally, in average, with 12.11% of participation salary.
(ii)
General Complementary Regulation no. 1 of Defined Benefit (BD): formed on January 1, 1978,
offers the benefits of supplemental sickness benefit and annuity for death and disability. On
12/31/2014, 1,048 participants were enrolled, of which 2 were active, 1,042 retired and 4 were
receiving pension. The cost of the plan is the responsibility of the sponsor, participants and
assisted. The sponsor's contribution focuses on real salary to participate in equal numbers with
participants.
(iii)
General Complementary Regulation no. 2 of Defined Benefit (BD): organized on January 1,
1978, it provides benefits owing to death and disability. On 12/31/2014, 1,108 participants were
enrolled, of which 1.104 retired and 4 were receiving pension. The financing of this plan is under
the responsibility of the participants and beneficiaries.
(iv)
Prevmais, Variable Contribution: organized on August 1, 2006, it provides supplementary
income benefits supplementary disability retirement, pensions owing to death, illness assistance,
and funeral subsidies. The plan in its contribution stage is a defined contribution arrangement,
and in its receiving stage there is the likelihood of the participant opting for income in quotas or
for life. On 12/31/2014, 11,028 participants were enrolled being 9,796 active, of which 1,155
retired and 77 were receiving pension. The plan is structured as variable contribution and the
financing of risk benefits is shared between the sponsor and participants. The funding for the
income benefits is equally shared, limited to 8% of the salaries of the participants. The costing
plans are evaluated annually so as to determine the rates of contributions necessary to constitute
guarantee reserves of the fund benefits, provisions and coverage of other expenses under
responsibility of the participant and beneficial sponsors.
Medical plans
(i)
Plano Unificado de Saúde – PLUS: participation in this plan takes place by means of a 1.5%
contribution of gross salary, without limitation, covering the owner and his/her preferred
dependents, deducted from the owner's payroll and 10% as a co-participation in the price of each
medical visit and low-cost exams, made by the owner and his/her dependents (preferred and
non-preferred). On 12/31/2014, 8,127 participants were enrolled, of which 5,156 active.
(ii)
Unified Health Plan – PLUS II: Participation in this plan takes place by means of a 1.5%
contribution of gross salary, without limitation, covering the owner and his/her preferred
dependents, deducted from the owner's payroll and 10% as a co-participation in the price of each
medical visit and low-cost exams, made by the owner and his/her preferred dependents and
children of age. The plan does not provide for non-preferred dependents. On 12/31/2014, 5,815
participants were enrolled, of which 5,773 active.
(iii)
PAMC – Supplementary Medical Assistance Plan: Intended for employees in the State and
the Capital City of the state of São Paulo. Plan owners are those employees retired due to
disability in Groups "B" and "C", and their dependents, who participate in costs inasmuch as they
use it, and according to the salary range progressive table.
Regarding the benefits of retired people who formerly opted for the CLT and their pension
beneficiaries, 1.5% is charged as contribution. The plans are seeking their sustainability between
contributions and expenses incurred, with the exception of retirees and pensioners, who are subject to
a 1.5% contribution.
FBB – Fundação Banco do Brasil
Objectives
Fundação Banco do Brasil a non-profit privately owned company with administrative and financial
independence, instituted by Banco do Brasil is ruled by Bylaws and is headquartered in Distrito
Federal. The activities and functioning of the Foundation are regulated with supplementation by its
Internal Regulation.
The Foundation seeks to promote, support, incentivize and sponsor actions in the education, health,
culture, social assistance, recreation and sport, science and technology and assistance in urban-rural
communities.
Equity and revenue
The possessions of the Foundation are its equity and revenue.
Equity is formed by: funding from BB; Donations and contributions in cash or values; and fixed and
unfixed assets and rights which it may acquire or receive from individuals and corporations.
The revenues originate from resources allocated by laws which incentivate the areas in which the
Foundation acts, proceeds from any nature such as remuneration from its cash and cash equivalents,
rendering of services, funding from conventions, assistance, contributions and subventions of the
Public Powers must be invested through Banco do Brasil, maintaining their real value.
Administrative and Oversight Bodies
The Foundation's Bodies are:
(i)
Curator Council: Formed by 11 (eleven) members, of which 3 (three) are sitting and 8 (eight)
temporary. Are natural members the Presidents of Banco do Brasil and the Foundation and a
member chosen by BB’s Board Directors among the Directors elected by minority shareholders. In
addition, the Board of Directors of Banco do Brasil selects the temporary members and their due
alternates, ensuring that in the composition of the Curator Council 50% (fifty percent) of the
representation of temporary members will be people connected to public entities and 50% (fifty
percent) will be people connected to private entities.
(ii)
Executive Board: The Executive Board is composed by the President and two Executive Directors,
all employees of Banco do Brasil;
(iii)
Fiscal Council: Constituted by three members and due alternates, formed by representatives of
the internal controls department or bookkeeping department of Banco do Brasil, by a
representative of the Revenue Office and by the representative of the major minority shareholder
of Banco do Brasil, which will name their due alternate members.
The core of the Foundation will be made of employees granted by Banco do Brasil who will work in
accordance with their remunerations according to the positions they have been designated for,
without right to another remuneration from the Foundation, considering that: (i) BB will be refunded
for all costs to maintain the Foundation, including expenses and charges for the grant of employees;
and (ii) the Chairman and Executive Officers of the Foundation will be remunerated exclusively by BB.
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ASSISTANCE FUND FOR EMPLOYEES OF SYSTEMS BESC AND CODESC OF BADESC AND OF
FUSESC - YES
With the merger of Besc and Bescri on 09/30/2008, the Bank settled the obligations of sponsor of the
SIM Plan, managed by Assistance Fund For Employees Of Systems Besc And Codesc Of Badesc And Of
Fusesc - Yes For this Plan the bank has no obligations to contribute with the employers' union for the
retired employees, registering in its financial statements only the contributions which have been
passed onto active participants. On 12/31/2014 the plan had 7,289 members of which 2,629 were
active members.
In addition to Banco do Brasil there are other sponsors of the Health plans managed by SIM, namely:
Companhia de Desenvolvimento do Estado de Santa Catarina – Codesc, BESC S.A. - Corretora de
Seguros e Administradora de Bens – Bescor, Agência de Fomento do Estado de Santa Catarina S.A. –
Badesc and the Foundation itself.
BEP Caixa de Previdências Social- PREVBEP
Due to the merger of Banco do Estado do Piauí (BEP) on 11/28/2008. The Bank settled the sponsor
obligations of the Defined Benefit Plan named Plan BEP. On 12/31/2014, 189 participants were
enrolled, of which 51 were active, 106 retired and 32 were receiving pension.
Annual report
In the relationship with its various audiences, Banco do Brasil values ethics and transparency,
providing high quality information on a timely basis. Its businesses and practices follow principles that
combine socio-environmental responsibility with profitability, ensuring a performance committed to
the future of the planet.
To consolidate this relationship of transparency, the Bank maintains the strategy of rendering
accounts to society, following the guidelines of the Global Reporting Initiative (GRI). In establishing a
single standard of information submittal, the GRI methodology, used internationally in the production
of corporate reports, facilitates the comparison of its economic, social and environmental
performances over time, and also between different companies. Banco do Brasil applies the indicators
of the Financial Services Sector Supplement, declaring itself Level A+. In addition, it uses the criteria
of the Brazilian Association of Listed Companies (Abrasca), indicators highly recognized in the
preparation of annual reports.
Believing that sustainability exists in all of the company's processes, BB opts to publish a single report.
In the Annual Report of Banco do Brasil the socio-environmental issue is added to the habitual
financial statements and economic results that were previously exclusive in renderings of accounts
such as this. The Annual Report of Banco do Brasil can be accessed via the BB Portal, on the Investor
Relations page, at the following address: http://www.bb.com.br/ir.
7.9.
Other relevant information
Provide other information that the issuer considers relevant
Main strategies
The Corporate Strategy is established for a period of five years and is reviewed annually. In the 20142018 cycle, the Mission, Vision and Values that guided the Strategy were:
Mission:
"To be a competitive and profitable bank, to promote the sustainable development of Brazil and to
perform its public role efficiently".
Vision:
Being the first bank of Brazilians, businesses and the public sector, a reference abroad, the best bank
to work, recognized for its performance, lasting relationships and social and environmental
responsibility.
Values:
●
Ethics and transparency.
●
Commitment with sustainable development of communities and the country.
●
Social-environmental responsibility.
●
Consumer respect.
●
Excellence and specialization in relationship with customer.
●
Participative management, collective decision-making and team work.
●
Professional growth based on merit.
●
Brand as a competitive difference.
●
Proactivity in risk management.
●
Commitment with soundness, profitability, efficiency and innovation.
●
Respect to diversity.
●
Commitment with shareholders and society.
In 2015, Banco do Brasil revised its essence, which expresses the reason for the company, that is, his
way of thinking and acting.
The new Essence was guided by the concept "market bank with public spirit" and is materialized by
Belief, Mission, Vision and Values, as follows:
Belief
―A good world for all requires public spirit in each of us.‖
Mission
―Bank market with public spirit. To be a competitive and profitable bank, working with public spirit in
each of its shares with the whole of society.‖
Vision
―Be the most relevant Bank and reliable for customers' lives, employees, shareholders and the
development of Brazil.‖
Values
● Public Spirit
● Ethics
● Oneness
● Competence
● Innovation
● Human Potential
● Sustainability
● Efficiency
● Agility
Distribution Channels
Service Network in the Country
With national outreach and present in 3,629 Brazilian municipalities through its own service network,
BB has the largest network of branches in Brazil. On December 31, 2014, the Bank's service network
was made up of 18,956 points of service. Considering the own network, shared network and
correspondents in the country, the number of municipalities which we service reaches 5,559;
125
Section 7 - Issuer's Activities
Branch Network - 5,524
Northeast
21.5%*
North
5.9%*
Midwest 8.9%*
Southeast
44.0%*
South
19.6%*
* percentage of branches per region
Source: Bank's operating system.
The Bank's own distribution network is divided in five types of service points classified as Bacen
Resolution 4,072: Branch, Service Station (PA) and Electronic Service Station (PAE):
2012
2013
2014
Own Network
Branch
Customer Assistance Posts
PAE – Electronic Service Post:
Subtotal
5,362
1,746
12,036
19,144
5,450
1,746
11,947
19,143
5,524
1,699
11,733
18,956
MaisBB Network
Correspondent in the country
Postal Bank
17,914
11,719
6,195
16,440
10,251
6,189
15,538
9,347
6,191
Shared network
CEF - lottery
Banco 24h
ATM: BRB + CEF
Subtotal
12,443
12,344
2,347
27,134
13,022
14,014
5,010
32,046
13,250
16,779
4,612
34,641
Total
64,192
67,629
69,135
Source: Bank's operating system.
Banco do Brasil segments its business in Retail, Wholesale and Government, stratifying its client base
according to each profile and relationship needs, developing strategies and adequate distribution
networks for each niche.
The right of Retail distribution (including the style and high income branches) the main ones
responsible for client relations with Individuals and Micro and Small Companies (SME) has closed 2014
with 5,405 branches, 44% of this total located in the Southeast region. In addition, the Bank offers
service through the Banco do Brasil Service Center - CABB and service such as withdrawal, payment of
bills and other services through a network of correspondents in the country, which added 15,538
stations on December 31, 2014.
In 2014 was invested in the Wholesale Pillar, the Plan of Fixed Investment -. PFix R$3,358 million in
the expansion and adequacy of physical facilities of special units to treat the medium segment and
large enterprises These values were used in the installation of 01 new agency Corporate in Campinas
(SP), the relocation and its suitability for the new visual standard of 01 Corporate 02 business agency
and agencies, and also development of small reforms and improvements in 08 business platforms.
Banco do Brasil is one of the main financial agents of the Federal, State and Municipal Governments in
the deployment of public policies, projects and projects, which are drivers of the country's
development. At present, besides the partnerships with the Federal Government, Banco do Brasil is
the financial agent of 16 States, 16 Capitals and maintains business with most of the country's
municipalities, offering specific solutions to public administration and the only institution to reckon
with 32 branches exclusively focused in the Public Sector as a customer.
External Network
On December 31, 2014, the Bank's network abroad had 44 active units located in 24 countries, of
which 12 were branches, 4 sub-branches, 10 representative offices, 8 subsidiary’s, 3 subsidiary's
branches,5 branch offices of subsidiary branch 2 shared-service units and 2 business unit. In South
America, Bank's presence is expanded by the Banco Patagonia network (Banco Universal Controlado),
in Argentina, which adds 199 service points and in USA by Banco do Brasil Americas, with 3 branches
in Florida. In addition to this structure, BB has agreements with other financial institutions abroad to
serve its customers. On December 31, 2014, the Bank had 1,083 correspondent in 135 countries.
Alternative Channels
Banco do Brasil’s self-service network represents a strategic differential, offering an extensive range of
services to clients, besides supporting the cost control strategy of the institution. As of December 31,
2014, this network had 44,182 automatic teller machines (ATM), compared to 44,152 and 44,393 in
December 2013 and December 2012, respectively.
The ATM's are responsible for the processing of an expressive portion of the total banking operations
performed by the Bank. In December 31, 2014, 96.6% of the cash withdrawals, 73.1% of the
checkbooks delivered, 76.1% of the deposits and 67.9% of the receipts of bills and contractual
payments passed through the ATM network. Besides the cashiers at the branches and the ATMs, BB
offers other options for access to banking services, such as: The Internet, Financial Manager (and
Internet banking tool for businesses), POS equipment (credit and debit card machines at the
commercial establishments), telephone, fax, and mobile banking (WAP). On December 31, 2014 the
automated channels responded for 95.4% of the total transactions.
Risk Management
In the Section 5 of this Reference Form, we present the information in main market risks which Banco
do Brasil is exposed and the market risk management policy. The liquidity, credit and operating risk
are covered as follow:
Liquidity Risk
Policy
Liquidity Risk Policy, annually reviewed and approved by the Board of Directors intends to guide
Banco do Brasil’s behavior. Subsidiaries, Associates and Investees may define their orientation based
on guidelines provided to the Bank, considering specific needs and legal and regulatory aspects to
which they are subject.
This policy, which complies with provisions of national and international regulation, contemplates
aspects related to: risk management structure; management scope and objectives; and management
tools.
Liquidity risk management
Banco do Brasil maintains levels of liquidity that are adequate for commitments assumed in Brazil and
abroad, resulting from its broad and diversified depositor base and the quality of its assets, the
capillarity of its network of branches and of access to the international capital market. Stringent
control over liquidity risk is in accordance with the Market and Liquidity Risk Policy established,
fulfilling the requirements of national banking supervision and of the other countries where the Bank
operates.
Liquidity risk instruments adopted in the Conglomerate are: (i) liquidity projections; (ii) stress test; (iii)
liquidity risk limits; (iv) liquidity contingency plan.
Liquidity risk management tools are periodically monitored and reported to the Strategic Committees
of the institution.
Short, Medium and Long-term Liquidity Forecasts permit the evaluation of the effect of mismatching
between funding and investments, with the objective of identifying situations that could compromise
the institution's liquidity, taking into consideration the budget planning of the institution, as well as
market conditions.
127
Section 7 - Issuer's Activities
Stress Tests are performed periodically, when the Short-term Liquidity Projections are evaluated in
alternative and stress scenarios, aiming to verify the institution's liquidity recovery capacity under
adverse conditions and to identify corrective measures, if necessary. Regarding, liquidity risk limits,
the Liquidity Reserve is utilized in short term operational liquidity management of the domestic and
international areas, being the minimum level of assets of high liquidity to be maintained by the Bank,
compatible with the exposure to risk resulting from the characteristic of its operations and from the
market conditions. The Liquidity Reserve is utilized as a parameter for the identification of a liquidity
stress situation and to deploy the Liquidity Contingency Plan, being monitored on a daily basis.
On its turn, Liquidity Cushion is the risk limit used as parameter for prudential liquidity level in the
Bank’s liquidity risk management process vis-à-vis Observed Liquidity, which permits to evaluate
conditions under stress without characterizing liquidity contingency states or providing the opportunity
to immediately or compulsorily trigger Liquidity Contingency Measures.
Still regarding liquidity risk limits Banco do Brasil utilizes, in the planning and execution of its annual
budget, the indicator of Availability of Free Funds (DRL), which aims to guarantee a balance between
funding and application of resources from the commercial portfolio and to ensure the financing of
liquidity with structural resources.
Credit Risk
Policy
The Credit Specific Policy guides the behavior with respect to credit and applies to all businesses that
involve credit risk in the Banco do Brasil. It is expected that the company’s Subsidiaries, Affiliates and
Participações define their paths from those guidelines, considering the specific needs and legal and
regulatory aspects which are imposed.
Approved by the Board of Directors and reviewed annually, this policy includes the assumption and
management of credit risk, collection and credit recovery and applies to all businesses that involve
credit risk, including those made at the risk of third parties, except, in this case, the adoption of a rule
due to different specific analysis or guidance resource allocator.
The statements regarding risk-taking behaviors approach adopted by the Bank in negotiations and
contracting of loans or other products with credit risk, applicable to all businesses. To the credit of rich
management, the statements exhibit the conduct assumed by the Bank in the identification,
evaluation, monitoring and mitigation of credit risk, with a focus on driving aggregate risk
management. The statements regarding the collection management establish the position of the Bank
in the recovery procedures in nonperforming operations from their maturity on infraction situations of
any contractual or legal obligation and peculiar situations to international operations, arbitration or
legislation the country where the Bank's premises are located.
Credit Risk Management
In compliance with CMN Resolution No. 3,721/09, the Board (CA) approved the credit risk
management structure of the Banco do Brasil, composed by the Global Higher Committee (CSRG),
Executive Committee for Credit Risk (CRC), Credit Management (DICRE), Directorate of Operational
Assets Restructuring (say) and Risk Management Directorate (Diris).
Considering that the Diris is the area of the Bank responsible for global risk management and has no
connection with management of third party resources or conducting subject to credit risk operations,
the CA stated the Director of Risk Management as responsible for managing the credit risk of the
Banco do Brasil before the Central Bank.
This credit risk management framework is compatible with the nature of operations, the complexity of
products and services and with the size of exposure to credit risk incurred by BB.
The management of credit risk is carried out from the guidelines set out in Specific Credit Policy,
approved by the CA, transformed into strategies by CSRG and CRC. In addition to the Credit Specific
Policy, other internal documents, like the Normative Ruling (IN), assist the Bank in risk management,
through the regulation of the processes that underlie the management of credit risk and the spread of
practices approved by the High Bank management within the institution.
In addition, the Declaration of Appetite and Tolerance Risk, also approved by the Bank's Board of
Directors, contains, among other definitions, commitment limits on maximum percentage of the
Reference Assets, distributed by type of customer (individual or company) economic groups, foreign
country and financial institutions. These limits are regularly monitored in specific committees of senior
management of BB.
Evaluation and validation of processes and that risk management framework of procedures are
performed by two internal areas, which ensures proper segregation of duties and independence of the
work. The Board of Internal Controls (Dicoi) is responsible for the validation of models for risk
assessment of the financial conglomerate and the internal control system of the Bank, and the
Internal Audit (Audit) periodically assesses the management processes to ensure they are in
accordance with the strategic guidelines, the credit policy and the internal rules. In addition, the
Independent Audit examines processes and procedures, helping to ensure they are in compliance with
regulatory requirements and internal settings.
Operating Risk
Policy
The Operational Risk Policy, approved and reviewed annually by the Board, provides guidance to the
areas of the Bank, intended to ensure the effectiveness of operational risk management model, it is
expected that the company’s Subsidiaries and Affiliates define their paths from these guidelines,
considering the specific needs and legal and regulatory aspects which are imposed.
In adherence to that recommended in Basel II and CMN Resolution 3,380 requirements, the policy
permeates the management-related activities of operational risk, in order to identify, assess, monitor,
control and mitigate the risks inherent in the Financial Conglomerate, and identify and monitor the
risks associated with other group companies in the economic-financial consolidated.
BB also has a Specific Policy Legal Risk, associated with operational risk management policies, which
establishes the method of the Bank in preventive pillars, advisory, litigation and management activities
of the legal risk.
Management Strategies and Processes
In 2014 the Operational Risk Unit was created (URO) in order to continue the development of
operational risk management at BB and provide the necessary conditions for reducing losses,
dissemination of culture and improvement of means of identification, assessment, mitigation, control
and monitoring of operational risks, providing more effective management.
In operational risk identification and assessment phase the Bank operates in advising business
managers, in vetting launches processes, products and services, in the capture and storage of
operational losses, monitoring the external and internal environment - in order to identify potential
threats against the Bank, among other activities.
In mitigation phase are created, together with management, mechanisms to modify the risk, seeking
to reduce operating losses by risk source removal, change the probability of occurrence or change of
the risk event of the consequences.
To better control exposures to operational risk are defined risk panels, limits and indicators, which are
assigned managers, responsible for providing timely actions to reduce risk.
In the monitoring stage are monitored and reported the remaining steps of operational risk
management and the implementation of improvement actions proposed to reduce exposures. The
monthly monitoring of operating losses also allows that current induction instruments are always in
revaluation process.
The Bank also operates in the analysis of security incidents with continuous monitoring, searching
inhibit invested and retrieve values. Actions to mitigate operating losses with electronic fraud and
measures are developed to curb criminal activities related to external theft.
Exposure Limits Operating Loss
To ensure effectiveness of operational risk management, the Bank uses of exposure to operational
loss limits, which aim to establish acceptable levels of operational losses that are monitored monthly
by the Global Risk Higher Committee and Executive Committee Internal Control and Risk operational.
129
Section 7 - Issuer's Activities
In this sense, BB established the Global Limit and Specific Limits Operating Losses, where you can
assign the operating losses to managers of products, services and processes of the Bank, responsible
for the adoption of mitigation actions.
In line with these limits, procedures were developed for inclusion of the observed values of operating
losses in managerial income products, allowing better identify the impact generated by the losses.
Overview of the banking industry
Evolution of the Brazilian Banking Industry
In 2014, the main challenge of the financial industry has to adapt to a more modest economic growth
environment.
Faced with this scenario, banks prioritized growth in lower-risk credit lines, such as real estate and
payroll. In addition, in order to keep track of default, are also improving the risk measurement
models.
Another aspect to highlight is that financial institutions continue improving operational efficiencies,
covering both cost containment and the expansion of revenue, especially in relation to services. Thus,
gain strength investments in technology to enable the provision of convenience through digital
channels and at the same time generate business from channels and service models that reduce
costs. Similarly, strategies to increase revenue from security products and cards gain additional
importance, which is intensifying competition in these businesses.
Composition of the Brazilian Banking Industry
Brazilian Financial System
The National Financial System is composed by regulating and inspecting bodies such as the National
Monetary Council, the Central Bank of Brazil, the Securities Commission, the Superintendence of
Private Insurance and the Department of Private Pension Plans, which are subordinated to different
entities and institutions.
According to data made available by the Central Bank of Brazil website, in 2014, there were 1,943
financial institutions regulated and inspected by the Central Bank, including:
(i)
22 commercial banks – private or public financial institution. The main purpose is the adequate
and timely provision of the funds required to finance, in the short and medium term, the
commerce, industry, service providing companies, individuals and third parties in general. The
acceptance of freely disposable demand deposits is a typical activity of commercial banks;
(ii)
14 Investment Banks – Private financial institution specialized in transactions of temporary
shareholding interest, of financing production with supply of fixed and working capital, and
management of third parties’ funds.
(iii)
130 Multiple Banks – Private or public financial institution that carries out asset, liability and
accessory transactions for several financial institutions through the following portfolios:
commercial, investment and/or development, real estate credit, lease, credit, financing and
investment. These transactions are subject to the same legal and regulatory standards applicable
to single institutions that correspond to their portfolios.
(iv)
Among other institutions, there are 1,163 Credit Cooperatives, 186 Consortium Administration
Entities, 108 Securities Distribution Entities, and 92 Securities Brokerage Entities.
Brazilian Macroeconomic Scenario
The financial condition and results of Bank operations are directly influenced by the economic
environment prevailing in Brazil, being especially affected by variables such as GDP, inflation, interest
rates, exchange rate and fiscal policy. In addition, the demand for banking products and services is
affected by developments in other economic fundamentals, particularly those related to the labor
market and socio demographic.
In 2014, the international economy showed different rates of growth, although globally the growth
rates have remained low. In the US, the strengthening of the labor market allowed the gradual
withdrawal of monetary stimulus that were in force since the international financial crisis of 2008, a
move that contributed to the appreciation of the dollar against major currencies. In Europe, despite
the improvement in some economies, the difficulties in establishing a sustainable recovery and dispel
the deflationary risk remained. In Asia, the smooth deceleration perspective of Chinese activity
imposed more moderate path for the price of key commodities.
In this environment, the Brazilian economy recorded modest growth in 2014. Net exports suffered
from the less intense momentum of external demand ahead of the difficulties observed in the
international arena. The more moderate growth in household consumption, characterized by slower
pace of creation of formal jobs and the credit slowdown, and the withdrawal of investments amid
falling confidence indicators were other elements that led to the weaker performance of activity .
Despite the economic slowdown, the resilience of price indices on the expansionary fiscal policy, the
inertial pressure from the indexing of important items of the consumer basket and the exchange rate
depreciation led the central bank to raise interest rates in order to avoid the disruption of ceiling of
the inflation target. In turn, facing a less favorable environment, but supported by a sound financial
system, the volume of loans in the economy evolved in a manner consistent with the activity,
maintaining a moderate growth trend in nominal terms.
The following table shows selected macroeconomic data for the indicated period.
Year ended December 31
2012
Actual GDP – growth in %
Inflation (IGP-M)(1) in %
Inflation (IPCA)(2) in %
Selic rate(3) in %
Change in Exchange Rate (R$/US$) by %(4)
Exchange rate at the end of the period (R$/US$)
Average exchange rate over the period (R$/US$)
2013
1.76
7.81
5.84
7.25
8.51
2.04
1.96
2014
2.74
5.53
5.91
10.0
14.71
2.34
2.17
0.14
3.67
6.41
11.75
13.68
2.66
2.36
(1) Inflation measured by the IGP-M, the General Market Price Index of the Getulio Vargas Foundation.
(2) IPCA: Extended Consumer Price Index of the Brazilian Institute of Geography and Statistics
(3) Selic target.
(4) Positive amounts indicate devaluation of Real against the Dollar. Negative amounts indicate the opposite.
Source: FGV, IBGE and Bacen.
131
Section 8 - Economic Group
8.
ECONOMIC GROUP
8.1.
Economic group
Please describe the economic group in which the issuer is located:
a.
Direct and indirect parent companies
The Capital Share of Banco do Brasil S.A. is R$ 67,000,000,000.00 (sixty seven billion of Reais),
divided into 2,865,417,020 (two billion, eight hundred sixty-five million, four hundred and seventeen
thousand and twenty) book-entry common shares without par value.
The Federal Government is the Bank's largest shareholder, with 54.3903977% of the shares. Since
this is a mixed (public and private capital) corporation, the majority of the voting shares must belong
to the government, as established by Decree-Law 200 of February 25, 1967. As of December 31,
2013, 2014 and May 12, 2016, Banco do Brasil's shares are held as follows: The holdings of the
controlling shareholder are maintained by the National Treasury and funds that are directly or
indirectly controlled by the Federal Government.
List of Banco do Brasil's Shareholders
BB shareholders
Federal Government
National Treasure
Invest. and Stabilization Fund
Investiment Guarantee Fund
Naval Constr. Guarantee Fund
BB FGO Invest. Shares Fund
b.
31/12/2013
31/12/2014
12/31/2015
%
%
%
58.3049126
50.7251512
3.8615671
0.261742
3.4251652
0.0312872
57.8975162
50.7251512
3.8615671
0.261742
3.0490559
-
57.701194
50.725151
3.665246
0.261742
3.049055
-
05/12/2016
%
54.390397
50.725151
3.665246
-
Subsidiaries and associated companies:
In turn, Banco do Brasil is a shareholder of several companies that operate in different segments of
the financial market or in activities related to its stated purpose, especially in activities such as asset
management, insurance, investment banking, leasing operations, credit cards and consortiums for
goods and services.
The following tables present the ownership interests held by Banco do Brasil as of December 31,
2013, 2014 and Mach 31, 2015, with a description of the main field of activity of each company.
Interest in the Capital of Subsidiaries and Affiliates of the BB Banco Múltiplo - Consolidated
12 / 3 1/ 2 0 13
12 / 3 1/ 2 0 14
0 3 / 3 1/ 2 0 15
c.
d.
c.
d.
c.
d.
Ac tivity
ba nk ' s
O wne rs hip
Int e re s t in
G ro up
C o m pa nie s
( %)
gro up
c o m pa nie s
o wne rs hip
int e re s t in t he
B a nk
ba nk ' s
O wne rs hip
Int e re s t in
G ro up
C o m pa nie s
( %)
gro up
c o m pa nie s
o wne rs hip
int e re s t in t he
B a nk
ba nk ' s
O wne rs hip
Int e re s t in
G ro up
C o m pa nie s
( %)
gro up
c o m pa nie s
o wne rs hip
int e re s t in t he
B a nk
Banc o do Brasil AG
Banking
100.00
-
100.00
-
100.00
-
BB Leasing Company
Leasing
100.00
-
100.00
-
100.00
-
BB Leasing S.A. - Arrendamento Merc antil
Leasing
100.00
-
100.00
-
100.00
-
BB Sec urities Asia Pte. Ltd.
Brokerage
100.00
-
100.00
-
100.00
-
Banc o do Brasil Sec urities LLC
Brokerage
100.00
-
100.00
-
100.00
-
BB Sec urities Ltd.
Brokerage
100.00
-
100.00
-
100.00
-
BB USA Holding Company, Inc .
Holding
100.00
-
100.00
-
100.00
-
Brasilian Americ an Merc hant Bank
Banking
100.00
-
100.00
-
100.00
-
Banc o do Brasil Americ as
Banking
100.00
-
100.00
-
100.00
-
Asset Management
99.62
-
99.62
-
99.62
-
Banking
58.96
-
58.96
-
58.96
-
Investment Bank
100.00
-
100.00
-
100.00
-
Asset Management
100.00
-
100.00
-
100.00
-
BB Seguridade Partic ipaç ões
Holding
66.25
-
66.25
-
66.25
-
BB Cor Partic ipaç ões S.A.
Holding
66.25
-
66.25
-
66.25
-
Brokerage
66.25
-
66.25
-
66.25
-
Holding
66.25
-
66.25
-
66.25
-
Capitalization
66.25
-
-
-
-
-
Servic e Rendering
100.00
-
100.00
-
100.00
-
Holding
100.00
-
100.00
-
100.00
-
Ativos S.A. Sec uritizadora de Créditos
Financ eiros
Credit Ac quisition
100.00
-
100.00
-
100.00
-
Ativos S.A. Gestão de Cobranç a e Rec uperaç ão
de Crédito
Credit Ac quisition
100.00
-
100.00
-
100.00
-
Consortiums
100.00
-
100.00
-
100.00
-
Tourism
100.00
-
100.00
-
100.00
-
Servic e Rendering
100.00
-
-
-
-
-
IT
99.97
-
99.97
-
99.97
-
S e gme nt/ Compa ny
Ba nking S e gme nt
Besc Distribuidora de Títulos e Valores
Mobiliários
Banc o Patagonia S.A.
Inve stme nt S e gme nt
BB Banc o de Investimentos S.A.
S e gme nt of Fund ma na ge me nt
BB Gestão de Rec ursos Distribuidora de Títulos
e Valores Mobiliários S.A.
Insura nc e , P riva te P la n a nd
Ca pita liz a tion S e c tor
BB Corretora de Seguros e Administradora de
Bens S.A.
BB Seguros Partic ipaç ões
BB Capitalizaç ão S.A. (antiga Nossa Caixa
Capitalizaç ão)
S e gme nt of pa yme nt me thods
BB Administradora de Cartões de Crédito S.A.
BB Elo Cartões Partic ipaç ões S.A.
O the r S e gme nts
BB Administradora de Consórc ios
BB Tur Viagens e Turismo Ltda.
BB Money Transfers, Inc .
BB Tec nologia e Serviç os S.A.
133
Section 8 - Economic Group
Investments in Affiliates and Joint Ventures
12 / 3 1/ 2 0 13
12 / 3 1/ 2 0 14
3 1/ 0 3 / 2 0 15
c.
d.
c.
d.
c.
d.
Ac tivity
ba nk ' s
O wne rs hip
Int e re s t in
G ro up
C o m pa nie s
( %)
gro up
c o m pa nie s
o wne rs hip
int e re s t in t he
B a nk
ba nk ' s
O wne rs hip
Int e re s t in
G ro up
C o m pa nie s
( %)
gro up
c o m pa nie s
o wne rs hip
int e re s t in t he
B a nk
ba nk ' s
O wne rs hip
Int e re s t in
G ro up
C o m pa nie s
( %)
gro up
c o m pa nie s
o wne rs hip
int e re s t in t he
B a nk
Banc o Votorantim S.A.
Banking
50.00
-
50.00
-
50.00
-
BV Financ eira S.A. Crédito Financ iamento e
Investimento
Banking
50.00
-
50.00
-
50.00
-
BV Leasing - Arrendamento Merc antil S.A.
Leasing
50.00
-
50.00
-
50.00
-
Votorantim Bank Limited
Banking
49.99
-
49.99
-
49.99
-
Votorantim Corretora de Seguros S.A.
Brokerage
50.00
-
50.00
-
50.00
-
Votorantim Corretora de Títulos e Valores
Mobiliários LTDA
Brokerage
49.99
-
49.99
-
49.99
-
Banc o Votorantim Sec urities Inc .
Brokerage
50.00
-
50.00
-
50.00
-
Votorantim Sec urities (UK) Limited
Brokerage
50.00
-
50.00
-
50.00
-
BVIA - BV Investimentos Alternativos e Gestão
de Rec ursos S.A.
Investment
50.00
-
50.00
-
50.00
-
BVIP - BV Investimentos e Partic ipaç ões S.A.
Investment
50.00
-
50.00
-
50.00
-
BV Empreendimentos e Partic ipaç ões S.A.
(BVEP)
Investment
50.00
-
50.00
-
50.00
-
Industry
17.46
-
17.46
-
17.56
-
Credit Ac quisition
12.12
-
12.12
-
12.12
-
Energy
11.99
-
11.99
-
11.99
-
Asset Management
49.99
-
49.99
-
49.99
-
S e gme nt/ Compa ny
Ba nking S e gme nt
Inve stme nt S e gme nt
Kepler Weber S.A.
Companhia Brasileira de Sec uritizaç ão Cibrasec
Neonergia S.A.
S e gme nt of Fund ma na ge me nt
Votorantim Asset Management Distribuidora de
Títulos e Valores Mobiliários LTDA.
Insura nc e , P riva te P la n a nd
Ca pita liz a tion S e c tor
BB Mapfre SH1 Partic ipaç ões S.A.
Holding
49.68
-
49.68
-
49.68
-
Servic e Rendering
-
-
49.68
-
49.68
-
Insuranc e Company
49.68
-
49.68
-
49.68
-
Pension
49.68
-
49.68
-
49.68
-
Insuranc e Company
49.68
-
-
-
-
-
Insuranc e/Pension
49.68
-
49.68
-
49.68
-
Capitalization
44.16
-
44.16
-
44.16
-
Holding
33.13
-
33.13
-
33.13
-
Alianç a do Brasil Seguros
Insuranc e Company
33.13
-
33.13
-
33.13
-
Brasilveíc ulos Companhia de Seguros S.A.
Insuranc e Company
33.13
-
33.13
-
33.13
-
Mapfre Seguros Gerais S.A.
Insuranc e Company
33.13
-
33.13
-
33.13
-
Mapfre Affinity Seguradora S.A.
Insuranc e Company
33.13
-
33.13
-
-
-
Servic e Rendering
33.13
-
33.13
-
33.13
-
Votorantim Corretora de Seguros
Insuranc e Company
50.00
-
50.00
-
50.00
-
Seguradora Brasileira de Crédito à Exportaç ão SBCE
Insuranc e Company
12.09
-
12.09
-
12.09
-
Reinsuranc e
13.53
-
13.53
-
13.53
-
Servic e Rendering
50.13
-
50.13
-
50.13
-
Holding
49.99
-
49.99
-
49.99
-
Companhia Brasileira de Soluç ões e Serviç os
CBSS - Alelo
Servic e Rendering
49.99
-
49.99
-
49.99
-
Elo Serviç os S.A.
Servic e Rendering
33.33
-
33.33
-
33.33
-
Cielo S.A.
Servic e Rendering
28.68
-
28.75
-
28.75
-
Tec nologia Banc ária S.A. - Tec ban
Servic e Rendering
13.53
-
13.53
-
13.53
-
Servic e Rendering
11.11
-
11.11
-
11.11
-
Mining
21.64
-
21.64
-
21.64
-
Sanitation
15.44
-
15.44
-
15.44
-
Brasildental S.A.
Companhia de Seguros Alianç a do Brasil
Mapfre Vida S.A.
Vida Seguradora S.A.
Brasilprev Seguros e Previdênc ia S.A.
Brasilc ap Capitalizaç ão S.A.
Mapfre BB SH2 Partic ipaç ões S.A.
BB Mapfre Assistênc ia
IRB - Brasil Resseguros S.A.
S e gme nt of pa yme nt me thods
Cateno Gestão de Contas de Pagamento S.A. Token¹
Elo Partic ipaç ões S.A.
O the r S e gme nts
Estruturadora Brasileira de Projetos - EBP
Cadam S.A.
Cia. Hidromineral Piratuba
1 - On February 27, 2015 was approved and established a new company - Cateno Gestão de Contas de Pagamentos (Token). The total equity of
Token is divided in proportion of 30% for BB Elo Cartões and 70% for Cielo. The indirect equity interest of the Bank in the capital of new company
is 50.05%, once it has indirect interest in Cielo of 28.75%.
c.
issuing entity's ownership interest in Group companies
Banco do Brasil's ownership interest in Group companies is listed in item 8.1."b" above.
d. group companies' ownership interest in the issuing entity
The analysis of shareholders of Banco do Brasil is described in item 8.1."a" above. Group companies
have no ownership interest in Banco do Brasil.
e.
companies under joint ownership:
Since Banco do Brasil is a company controlled by the National Treasury, all other companies controlled
directly or indirectly by the Federal Government are under a common control with Banco do Brasil,
and that includes all public companies, mixed-economy companies controlled by the Federal
Government operating in diverse sectors of the economy (electric power, oil and financial), such as:
Centrais Elétricas Brasileiras S.A - Eletrobrás, Companhia Hidro Elétrica do São Francisco - CHESF,
Petróleo Brasileiro S.A - Petrobrás, and Caixa Econômica Federal – Caixa.
8.2.
Organization chart in accordance with item 8.1:
If desired by the issuer, insert an organization chart of the economic group in which the
issuer operates, provided that compatible with information presented in item 8.1.
See the organization chart in subsequent page. (position: 05/12/2016).
8.3.
Operations of corporate restructurings that occurred in the group
Please describe the restructuring operations, such as mergers, business combinations, splitoffs, mergers of shares, ownership interest divestiture and acquisition, major asset
acquisitions and sales occurred in the group.
Please see items 6.5 and 6.7. of this Reference Form.
8.4.
Other information that the issuer considers relevant
No further relevant information to add.
135
Seção 8 - Economic Group
BANCO DO BRASIL CONGLOMERATE
SHAREHOLDING CONFIGURATION
MULTIPLE BANK
NATIONAL TREASURE
TREASURY SHARES
50.73%
FISCAL INVEST. STABILIZATION FUND
3.67%
42.79%
FREE FLOAT
2.81%
CONTROLLED*
BB SEGURIDADE
PARTICIPAÇÕES S.A.
BB ADMINISTRADORA
DE CARTÕES DE
CRÉDITO S.A.
BB 66,25% VS
66,25% TOTAL
BB COR
PARTICIPAÇÕES S.A.
100% VS
100%TOTAL
BB CORRETORA DE
SEGUROS E
ADMINISTRADORA
DE BENS S.A.
100% VS
100% TOTAL
100% VS
100% VS
100% TOTAL
BB ELO CARTÕES
PARTICIPAÇÕES S.A.
BB SEGUROS
PARTICIPAÇÕES S.A.
100% VS
100%TOTAL
BB ADMINISTRADORA
CONSÓRCIOS S.A.
DE
100% VS
100% TOTAL
BESC DIST. TÍTULOS
E VAL. MOB. S.A.
BESCVAL
BB 99,95% VS
99,97%TOTAL
BB BI 0,0006% VS
0,0003% TOTAL
BB LEASING S.A.
ARRENDAMENTO
MERCANTIL
99,62% VS
99,62%TOTAL
ATIVOS S.A. SEC.
CRÉD. FINANCEIROS
BB SECURITIES
ASIA PTE LTD
DE
BB BI 49% VS
74,50% TOTAL
BAMB 51% VS
25,50% TOTAL
BB SECURITIES
LTD
100% VS
100% TOTAL
BB DTVM S.A.
BB TUR VIAGENS
E TURISMO LTDA
DE CRÉDITO
100% VS
100% TOTAL
BANCO DO BRASIL
SECURITIES LLC
100% VS
100% TOTAL
100% VS
100% TOTAL
BB USA HOLDING
COMPANY INC
100% VS
100% TOTAL
100% VS
100% TOTAL
BAMB
ATIVOS S.A. GESTÃO DE
COBRANÇA E REC.
100% VS
100% TOTAL
BB LEASING CO.
LTD
100% VS
100% TOTAL
100% TOTAL
100% VS
100% TOTAL
BB TECNOLOGIA
E SERVIÇOS
BRAZILIAN AMERICAN
MERCHANT BANK
BAMB
BB BANCO DE
INVESTIMENTO
BANCO
BANCO PATAGONIA
URUGUAI S.A.I.F.E
GPAT COMPAÑIA
FINANCIERA S.A.
11,11% VS
11,11% Total
100% VS
100% Total
99% VS
99% TOTAL
100% VS
100% TOTAL
BB ASSET
MANAGEMENT
IRELAND
EUROHOLDING
100% VS
100% TOTAL
100% VS
100% TOTAL
58,96% VS
58,96% TOTAL
INTERBANKING S.A.
BANCO DO BRASIL
AMERICAS
BRASIL AG
100% VS
100% TOTAL
BANCO
PATAGONIA S.A.
100% VS
100% TOTAL
DO
99% VS
99% TOTAL
BB 1% VS
1% TOTAL
PATAGONIA
INVERSORA S.A.
99,99% VS
99,99% TOTAL
PATAGONIA
VALORES S.A.
99,99% VS
99,99% TOTAL
AFFILIATED AND SIMPLE PARTICIPATION – MULTIPLE BANK*
BANCO
VOTORANTIM S.A.
49,99% VS
50% TOTAL
BV FINANCEIRA S.A.
CRÉDITO FINANC. E
INVEST.
100% VS
100% TOTAL
BV LEASING
ARRENDAMENTO
MERCANTIL S.A.
VOTORANTIM
MANAGEMENT
100% VS
100% TOTAL
99,99% VS
99,99% TOTAL
CADAM
BB
* REPRESENTED
ASSET
DTVM
VOTORANTIM
BANK LIMITED
LTDA
56,19% PN
21,64% TOTAL
VOTORANTIM
CORR. SEGUROS S.A.
VOTORANTIM
CORRETORA TVM
LTDA
100% VS
100% TOTAL
100% VS
99,99% TOTAL
99,99% VS
99,99% TOTAL
BANCO VOTORANTIM
SECURITIES INC
100% VS
100% TOTAL
CIA. HIDROMINERAL
PIRATUBA
BB
100% VS
100% TOTAL
BVIA – BV INVEST.
ALTERN. E GESTÃO
DE RECURSOS S.A.
100% VS
100% Total
PROMOTIVA
100% VS
100% Total
BVIA – FUNDO DE
INVESTIMENTO EM
PARTICIPAÇÃO
100% VS
100% Total
BVEP – BV
EMPREENDIMENTOS E
PARTICIPAÇÕES S.A.
14,26% VS
14,26% TOTAL
ONLY BY COMPANIES IN WHICH BANCO DO BRASIL HOLDS, DIRECTLY OR INDIRECTLY, AT LEAST
VOTORANTIM
SECURITIES (UK)
LTD
100% VS
100% Total
10%
OF THE VOTING OR TOTAL CAPITAL.
AS OF: 05.12.2016
BANCO DO BRASIL CONGLOMERATE
SHAREHOLDING CONFIGURATION
AFFILIATED AND SIMPLE PARTICIPATION – INSURANCE*
BB MAPFRE SH1
PARTICIPAÇÕES S.A.
BB SEGUROS PART.
49,99% VS
74,99% TOTAL
CIA DE SEG. ALIANÇA
DO BRASIL
MAPFRE VIDA S.A.
100% VS
100% TOTAL
MAPFRE SEGUROS
GERAIS S.A.
100% VS
100%TOTAL
100% VS
100% TOTAL
MAPFRE BB SH2
PARTICIPAÇÕES S.A.
BRASILCAP
CAPITALIZAÇÃO S.A.
BB SEGUROS PART.
49,00% VS
50,00% TOTAL
BB SEGUROS PART.
49,99% VS
66,66% TOTAL
ALIANÇA DO BRASIL
SEGUROS
BRASILVEÍCULOS
COMPANHIA DE
SEGUROS
100%VS
100%TOTAL
BB SEGUROS PART.
49,99% VS
75% TOTAL
IRB BRASIL
RESSEGUROS S.A.
BB SEGUROS PART.
50% VS
75% TOTAL
SEGURADORA BRAS.
CRÉD. EXP. S.A SBCE
BB SEGUROS PART.
20,43% VS
20,43% TOTAL
100%VS
100%TOTAL
BRASILDENTAL OP. DE
PLANOS ODONT . S.A.
BRASILPREV SEG. E
PREV. S.A.
BB BI 12,09% VS
12,09% TOTAL
BB MAPFRE
ASSISTÊNCIA S.A.
100% VS
100% TOTAL
AFFILIATED AND SIMPLE PARTICIPATION– PAYMENT METHODS*
ELO PARTICIPAÇÕES
S.A.
CIELO S.A.
BB ELO CARTÕES PART.
49,99% VS
49,99% TOTAL
ELO HOLDING
FINANCEIRA S.A.
ELO SERVIÇOS S.A.
100% VS
100%TOTAL
IBI PROMOTORA DE
VENDAS LTDA
STELO S.A.
.
PARTICIPAÇÕES
LTDA
CBSS 70% VS
70%TOTAL
AL. PAG. E PART. LTDA
30% VS
30% TOTAL
100% VS
100%TOTAL
* REPRESENTED
99,99% VS
99,99%TOTAL
99,99% VS
99,99%TOTAL
BANCO
CIELO CAYMAN
ISLANDS
CIA BRASILEIRA
GESTÃO SERVIÇOS
PAGGO SOLUÇÕES E
MEIOS DE
PAGAMENTOS S.A.
99,99% VS
99,99%TOTAL
99,90% VS
99,90%TOTAL
100% VS
100%TOTAL
100% VS
100%TOTAL
99,90% VS
99,90%TOTAL
MULTIDISPLAY COM. E
SERV. TECN. S.A.
SERVINET SERVIÇOS
LTDA
50,10% VS
50,10% TOTAL
99,99% VS
99,99% TOTAL
M4 PRODUTOS E
SERVIÇOS S.A.
100% VS
100% TOTAL
50% VS
50% TOTAL
40,95% VS
40,95% TOTAL
PREVSAÚDE COM.
PROD. E SERV.
FARMÁCIA LTDA
99,99% VS
99,99% TOTAL
GUILHER COM. IMP.,
EXP. E DIST. MED.
E TEC. SAÚDE LTDA
99,99% VS
99,99% TOTAL
BANCO CBSS
99,99% VS
99,99% TOTAL
ONLY BY COMPANIES IN WHICH
BRASPAG
TECNOLOGIA EM
LTDA
PAGAMENTO
MERCHANT
E-SOLUTIONS
PARTICIPAÇÕES
LTDA
TBFORTE TRANSP.
VALORES BRASIL
FORTE LTDA
ALIANÇA
PAGAMENTOS E
LTDA
PARTICIPAÇÕES
CIELO USA INC.
FARLY
BB BI 8,01% VS
8,01% TOTAL
BB
4,51% VS
4,51% TOTAL
99,99% VS
99,99% TOTAL
BB ELO CARTÕES PART.
22,22% VS
30% TOTAL
CIELO
77,78% VS
70% TOTAL
KARTRA
TECNOLOGIA
BANCÁRIA S.A.
TBNET COM.,
LOCAÇÃO E ADM.
LTDA
100% VS
100%TOTAL
CATENO GEST. DE
CONTAS DE PAG. S.A.
LIVELO S.A.
99,99% VS
99,99%TOTAL
99,99% VS
99,99%TOTAL
ALPHA SERVIÇOS DE
AUTOATENDIMENTO
S.A.
COMPANHIA
BRASILEIRA DE SOL.
E SERV. - CBSS
99,99% VS
66,66% TOTAL
100% VS
100%TOTAL
MOVERA SERV. E
PROMOÇÃO DO
EMPREEND. LTDA
BB BI 28,65% VS
28,65% TOTAL
DO
1009% VS
100%TOTAL
BRASIL
HOLDS, DIRECTLY OR INDIRECTLY, AT LEAST
10% OF
THE VOTING OR TOTAL CAPITAL.
AS
OF:
05.12.2016
137
Seção 8 - Economic Group
BANCO DO BRASIL CONGLOMERATE
SHAREHOLDING CONFIGURATION
AFFILIATED AND SIMPLE PARTICIPATION – BB BANCO DE INVESTIMENTO*
CIA BRAS. SECURIT.
CIBRASEC
KEPLER W EBER
BB BI 9,09% VS
9,09% TOTAL
BB
3,03% VS
3,03 % TOTAL
BB BI 17,46% VS
17,46% TOTAL
ESTRUTURADORA
BRAS. DE PROJ. S.A.
CIBRASEC ADM. DE
RECURSOS LTDA
BB BI 11,11% VS
11,11% TOTAL
B, VOTORANTIM 11,11% VS
8,28% TOTAL
CIBRASEC SERVIÇOS
FINANCEIROS LTDA
NEOENERGIA
99,99% VS
99,99% TOTAL
99,99% VS
99,99% TOTAL
BB BI 11,99% VS
11,99% TOTAL
TERMO PERNAMBUCO
S.A.
POTIGUAR SUL
TRANSMISSÃO DE
ENERGIA S.A.
NEOENERGIA
SERVIÇOS LTDA
11,99% TOTAL
11,99% TOTAL
11,99% TOTAL
GOIÁS SUL GERAÇÃO
DE ENERGIA S.A.
11,99% TOTAL
GERAÇÃO CÉU AZUL
S.A
NEOENERGIA
INVESTIMENTOS S.A.
BAHIA PCHIII
BAHIA PCHI
11,99% TOTAL
11,99% TOTAL
11,55% TOTAL
COMP. ENERGÉTICA
DO RIO GRANDE DO
NORTE S.A.
10,53% TOTAL
11,99% TOTAL
COELBA
11,99% TOTAL
AFLUENTE
TRANSMISSÃO
10,97% TOTAL
BAHIA PCHII
11,99% TOTAL
AFLUENTE GERAÇÃO
BELO MONTE
PARTICIPAÇÕES S.A.
10,53% TOTAL
11,99% TOTAL
GERAÇÃO CIII S.A.
COMP. ENERGÉTICA
DE PERNAMBUCO
S.A.
CAPUAVA ENERGY
LTDA
10,75% TOTAL
11,99% TOTAL
11,99% TOTAL
SE NARANDIBA S.A.
PCH ALTO DO RIO
GRANDE S.A.
NEOENERGIA OP.
MANUTENÇÃO S.A.
NC ENERGIA S.A.
11,99% TOTAL
11,99% TOTAL
11,99% TOTAL
11,99% TOTAL
BAGUARI I
COMPANHIA
HIDRELÉTRICA TELES
PIRES
11,99% TOTAL
11,88% TOTAL
ECONOMUS INSTITUTO
DE SEGURIDADE
SOCIAL
FUNDAÇÃO CODESC
DE SEGURIDADE
SOCIAL - FUSESC
MANAGED, SPONSORED AND FOUDATIONS – MULTIPLE BANK
BB PREVIDÊNCIA –
FUNDO DE PENSÃO
BANCO DO BRASIL
* REPRESENTAED
CAIXA DE
PREVIDÊNCIA DOS
FUNCIONÁRIOS DO
BANCO DO BRASIL PREVI
ONLY BY COMPANIES IN WHICH BANCO DO
BEP CAIXA DE
PREVIDÊNCIA SOCIAL
- PREVBEP
CAIXA DE
ASSISTÊNCIA DOS
FUNCIONÁRIOS DO
BANCO DO BRASIL CASSI
CAIXA DE ASSISTÊNCIA
EMPREGADOS DOS
SISTEMAS BESC E
CODESC, DO BADESC
DOS
E DA
FUNDAÇÃO
BANCO DO BRASIL
BESC CLUBE COMPROMISSO
SOCIAL COM OS
CATARINENSES
FUSESC - SIM
BRASIL
HOLDS, DIRECTLY OR INDIRECTLY, AT LEAST
10%
OF VOTING OR TOTAL CAPITAL.
AS OF: 05.12.2016
9.
RELEVANT ASSETS
9.1.
Non-current assets that are relevant for carrying out the activities
Please describe the non-current assets that are essential for carrying out the issuing
entity's activities:
a. fixed assets, including rented out or leased out ones, identifying their location.
Own and third parties’ properties that comprise property, plant and equipment of Consolidated Banco
do Brasil totaled R$4,320 million as of December 31, 2014 as per IFRS Financial Statements.
Properties that are relevant to the development of BB's activities are distributed per state as follows:
12/31/2014
Buildings
Location (State)
Land
Own
Third party
Own
Third party
AC
5
124
-
-
AL
29
151
2
-
AM
31
208
1
-
AP
5
99
-
-
BA
136
783
8
-
CE
61
407
-
2
DF
17
526
2
1
ES
29
244
-
1
GO
65
423
2
-
MA
45
415
2
-
MG
212
1148
3
1
MS
42
250
-
-
MT
31
230
-
1
PA
61
331
2
-
PB
50
184
-
-
PE
77
363
4
-
PI
40
178
-
-
PR
176
848
4
-
RJ
83
812
1
1
RN
34
204
2
-
RO
11
195
-
-
RR
6
102
-
-
RS
160
816
2
-
SC
143
634
1
1
SE
19
124
1
-
SP
523
2430
11
4
TO
21
200
3
-
Total Real Estate Properties
2112
12429
51
12
Book value (R$ million)
2300
1687
4.9
-
The real estate properties owned by the Bank and third parties are protected by insurance in effect
through September 30, 2015, for the purpose of ensuring indemnities for material losses and
damages caused accidentally as a result of covered risks (fire, lightning and explosion). The net
premium of current policies is R$ 5.3 million to cover an amount in risk of R$ 10.5 billion.
The relevant assets that make up the property of the Banco do Brasil Data Processing System are
listed below:
139
Section 9 - Relevant Assets
Data processing system
Property (Own/Leased)
Type of asset
Own
Processing Mainframe
Own
Storage Mainframe
Own
Processing High-End
Own
Storage High-End
Own
Distributed Processing
Location (State)
Net book value
12/31/2014 (R$ million)
DF
517.10
RJ
34.45
DF
231.57
RJ
2.28
DF
182.50
RJ
7.38
DF
90.26
RJ
8.40
SP
5.69
DF
38.43
RJ
7.38
SP
5.70
b. patents, trademarks, permits, concessions, franchises and technology transfers,
informing:
I. Trademarks.
Banco do Brasil has 437 trademarks either deposited, registered or in the process of registration
before the Brazilian Industrial Property Office (INPI):
i.
duration: In Brazil a trademark property is only obtained by registering it with the Brazilian
Industrial Property Office (INPI), and holders are entitled to the exclusive use of the trademark in
Brazil for 10 years, counting from the registration grant, with a possibility of obtaining extensions
of successive equal periods. During the registration process, the depositor has only an expectation
of the right to use the deposited trademarks for identification of its products and services.
ii.
location targeted at: Brazil, for trademarks registered in Brazil. In addition, BB is the holder of
trademarks deposited and registered abroad, including the aforementioned main trademark,
which is registered in the US, European Community, Asia and Latin America.
iii.
events that may lead to the loss of rights to such assets: In the administrative realm,
trademark registration applications under analysis by the INPI may be rejected. Even for already
granted trademark registrations, it cannot be ruled out that third parties, or the INPI itself, will not
file claims for annulment, end of validity or other. In the judicial realm, although a company holds
a registration of several trademarks, third parties have the right to contest the company regarding
possible violations of their intellectual property rights and possibly have favorable court decisions.
Trademark registration maintenance requires a periodic payment of INPI fees. Paying the fees is
mandatory to maintain the registration and the resulting owner's rights.
iv.
possible consequences of the loss of said rights to issuer: A loss of the trademarks
registered by BB would result in the end of the exclusive right to use them in Brazil. The result of
that for BB would be great difficulty to prevent third parties from using identical or similar brands,
even to identify competing products or services. Also, if BB cannot provide evidence of being the
legitimate owner of the trademarks that it uses, there would be a possibility of being the target of
penal and civil lawsuits for undue use of the trademark and violation of third parties' rights,
leading to image damage and financial losses.
II. Internet domains
Banco do Brasil has several domain names registered. Among them, the most relevant are: Erro! A
referência de hiperlink não é válida.
Domain
Expiry date
www.bb.com.br
03/04/2018
www.bancodobrasil.com.br
02/09/2023
www.bancobrasil.com.br
03/14/2023
i.
Duration: variable in accordance with the company's interest;
ii.
Location targeted at: Brazil. In addition, Banco do Brasil also has domains abroad, namely in
Europe, the US, Asia, Arab Emirates, Cayman Islands and other South American countries;
iii.
Events that may lead to the loss of rights to such assets: non-renewal within the coverage
period by the managing area;
iv.
Possible consequences of the loss of said rights to issuer: loss of space in the Internet to
the competitors, financial losses and image damage in the market and among customers.
c. companies in which the issuer has ownership interest
Listed below are the 12 direct ownership interest that comprise the Banco do Brasil Conglomerate.
These investments were selected based on investment materiality (represent an amount equal to or
higher than R$711 million as of December 31, 2012, R$763 million as of December 31, 2013 and
R$643 million in 2014) or on conformity with the Bank’s business. The total of Banco do Brasil's
ownership interest in subsidiaries and affiliated companies is found in section 8 of this Reference
Form. The amounts were determined according to IFRS.
i) corporate name
BB - Banco de Investimento S.A.
ii) head office
Street Senador Dantas, 105, 36th floor - Centro, Rio de
Janeiro – RJ.
iii) operation developed
Investment Bank
iv) Banco do Brasil's ownership interest
Direct ownership interest of 100%.
v) Subsidiary or Affiliated Company
Subsidiary.
vi) registration with CVM
It is registered as an investment bank, share control service
provider, book share service provider, securities custody
services, and a Central-Bank authorized financial institution.
vii) book value of ownership interest
(R$ million)
12/31/2012
12/31/2013
12/31/2014
2,676
2,767
2,825
viii) market value of ownership interest based on
share quotation at the end of the corporate year, The company has no shares traded in organized securities
markets.
when said shares are traded in organized
securities markets (R$ million)
ix) appreciation or depreciation of said ownership
12/31/2012
12/31/2013
12/31/2014
interest over the past 3 corporate years and in
47.4%
3.4%
2.1%
the current year based on book value
x) appreciation or depreciation of said ownership
interest over the past 3 corporate years based
The company has no shares traded in organized securities
on market value, in conformity with share
markets.
quotation at the end of each corporate year,
when said shares are traded in organized
markets (R$ million)
12/31/2012
12/31/2013
12/31/2014
xi) amount of dividends received over the past 3
corporate years (R$ million)
240
364
1,156
A subsidiary established for the purpose of adding
investment bank services to the main activity of the BB
Conglomerate.
xii) Reasons for the ownership interest
BB - Banco de Investimento S.A. holds shareholding interest
acquisition and maintenance
in subsidiaries and associates, evaluated by the equity
method, among which, Neoenergia S.A., Ativos S.A., Cia
Brasileira de Meios de Pagamento – Cielo.
141
Section 9 - Relevant Assets
i) corporate name
BB Gestão de Recursos – Distribuidora de Títulos e
Val. Mobiliários S.A.
ii) head office
Praça XV Novembro, n 20, rooms 201, 202, 301 e 302,
Centro, Rio de Janeiro/RJ.
iii) operation developed
Administration and management of third parties' funds.
iv) Banco do Brasil's ownership interest
Direct ownership interest of 100%.
v) Subsidiary or Affiliated Company
Subsidiary.
vi) registration with CVM
A registered securities dealer and a share control service
provider, book share service provider, portfolio management
service provider, representative of non-resident investors,
Individual Programmed Retirement Fund management
company, securities custody service provider, and a CentralBank authorized financial institution.
vii) book value of ownership interest
(R$ million)
12/31/2012
12/31/2013
12/31/2014
132
132
132
viii) market value of ownership interest based on
share quotation at the end of the corporate year, The company has no shares traded in organized securities
markets.
when said shares are traded in organized
securities markets (R$ million)
ix) appreciation or depreciation of said ownership
12/31/2012
12/31/2013
12/31/2014
interest over the past 3 corporate years and in
4.8%
0.0%
0.0%
the current year based on book value
x) appreciation or depreciation of said ownership
interest over the past 3 corporate years based
The company has no shares traded in organized securities
on market value, in conformity with share
markets.
quotation at the end of each corporate year,
when said shares are traded in organized
markets (R$ million)
12/31/2012
12/31/2013
12/31/2014
xi) amount of dividends received over the past 3
corporate years (R$ million)
623
648
771
xii) Reasons for the ownership interest
acquisition and maintenance
A subsidiary established for the purpose of complementing
the main activity of the Banco do Brasil Conglomerate.
i) corporate name
BB Leasing S.A. - Arrendamento Mercantil
ii) head office
SBS, Court 01, lot 31, block G, 24th floor, Building Sede III Brasília /DF.
iii) operation developed
Leasing of real estate properties and other assets
iv) Banco do Brasil's ownership interest
Direct ownership interest of 100%.
v) Subsidiary or Affiliated Company
Subsidiary.
vi) registration with CVM
Not registered with the CVM
vii) book value of ownership interest
(R$ million)
12/31/2012
12/31/2013
12/31/2014
3,551
3,716
3,893
viii) market value of ownership interest based on
share quotation at the end of the corporate year, The company has no shares traded in organized securities
markets.
when said shares are traded in organized
securities markets (R$ million)
ix) appreciation or depreciation of said ownership
12/31/2012
12/31/2013
12/31/2014
interest over the past 3 corporate years and in
2.8%
4.6%
4.8%
the current year based on book value
x) appreciation or depreciation of said ownership
interest over the past 3 corporate years based
The company has no shares traded in organized securities
on market value, in conformity with share
markets.
quotation at the end of each corporate year,
when said shares are traded in organized
markets (R$ million)
12/31/2012
12/31/2013
12/31/2014
xi) amount of dividends received over the past 3
corporate years (R$ million)
xii) Reasons for the ownership interest
acquisition and maintenance
35
23
67
A subsidiary established for the purpose of complementing
the main activity of the Banco do Brasil Conglomerate.
i) corporate name
iii) operation developed
BB Administradora de Consórcios S.A.
SBS - Court 02 - Block E - 5th floor - Building Prime Business
Convenience Center, Brasília/DF.
Management of purchasing pool groups.
iv) Banco do Brasil's ownership interest
Direct ownership interest of 100%.
v) Subsidiary or Affiliated Company
Subsidiary.
vi) registration with CVM
Not registered with the CVM
ii) head office
vii) book value of ownership interest
(R$ million)
12/31/2012
12/31/2013
12/31/2014
99
155
164
viii) market value of ownership interest based on
share quotation at the end of the corporate year, The company has no shares traded in organized securities
markets.
when said shares are traded in organized
securities markets (R$ million)
ix) appreciation or depreciation of said ownership
12/31/2012
12/31/2013
12/31/2014
interest over the past 3 corporate years and in
98.0%
56.6%
5.9%
the current year based on book value
x) appreciation or depreciation of said ownership
interest over the past 3 corporate years based
The company has no shares traded in organized securities
on market value, in conformity with share
markets.
quotation at the end of each corporate year,
when said shares are traded in organized
markets (R$ million)
12/31/2012
12/31/2013
12/31/2014
xi) amount of dividends received over the past 3
corporate years (R$ million)
89
55
153
xii) Reasons for the ownership interest
acquisition and maintenance
A subsidiary established for the purpose of complementing
the main activity of the Banco do Brasil Conglomerate.
i) corporate name
Banco Votorantim S.A.
iii) operation developed
Av. das Nações Unidas, 14.171, Tower A, 18th floor, Vila
Gertrudes, São Paulo/SP.
Multiple Bank
iv) Banco do Brasil's ownership interest
Direct ownership interest of 50.00%.
v) Subsidiary or Affiliated Company
Joint Venture.
ii) head office
vi) registration with CVM
vii) book value of ownership interest
(R$ million)
Registered as a multiple bank with an investment portfolio,
and a Central-Bank authorized financial institution, a
portfolio management management service provider, and a
representative of non-resident investors.
12/31/2012
12/31/2013
12/31/2014
4,938
4,464
4,667
viii) market value of ownership interest based on
share quotation at the end of the corporate year, The company has no shares traded in organized securities
markets.
when said shares are traded in organized
securities markets (R$ million)
ix) appreciation or depreciation of said ownership
12/31/2012
12/31/2013
12/31/2014
interest over the past 3 corporate years and in
-0.4%
-9.6%
4.5%
the current year based on book value
x) appreciation or depreciation of said ownership
interest over the past 3 corporate years based
The company has no shares traded in organized securities
on market value, in conformity with share
markets.
quotation at the end of each corporate year,
when said shares are traded in organized
markets (R$ million)
12/31/2012
12/31/2013
12/31/2014
xi) amount of dividends received over the past 3
corporate years (R$ million)
xii) Reasons for the ownership interest
acquisition and maintenance
-
-
-
This is a strategic ownership interest for the BB
Conglomerate.
143
Section 9 - Relevant Assets
i) corporate name
Brasilian American Merchant Bank – BAMB
ii) head office
28 North Churc Street, 2nd floor, P.O. Box 1360 - KY1 –
1108, Grand Cayman, Cayman Islands.
iii) operation developed
Asset, liability and accessory banking transactions.
iv) Banco do Brasil's ownership interest
Direct ownership of 100%.
v) Subsidiary or Affiliated Company
Subsidiary.
vi) registration with CVM
Not registered with the CVM
vii) book value of ownership interest
(R$ million)
12/31/2012
12/31/2013
12/31/2014
916
1,023
1,222
viii) market value of ownership interest based on
share quotation at the end of the corporate year, The company has no shares traded in organized securities
markets.
when said shares are traded in organized
securities markets (R$ million)
ix) appreciation or depreciation of said ownership
12/31/2012
12/31/2013
12/31/2014
interest over the past 3 corporate years and in
12.3%
11.7%
19.4%
the current year based on book value
x) appreciation or depreciation of said ownership
interest over the past 3 corporate years based
The company has no shares traded in organized securities
on market value, in conformity with share
markets.
quotation at the end of each corporate year,
when said shares are traded in organized
markets (R$ million)
12/31/2012
12/31/2013
12/31/2014
xi) amount of dividends received over the past 3
corporate years (R$ million)
xii) Reasons for the ownership interest
acquisition and maintenance
-
-
This is a strategic ownership interest for the BB
Conglomerate.
-
i) corporate name
Banco do Brasil Aktiengesellschaft (BB-Viena)
ii) head office
Praterstrasse 31/4th floor – 1020, Vienna - Austria
iii) operation developed
Commercial Bank
iv) Banco do Brasil's ownership interest
Direct ownership interest of 100%.
v) Subsidiary or Affiliated Company
Subsidiary.
vi) registration with CVM
Not registered with the CVM
vii) book value of ownership interest
(R$ million)
12/31/2012
12/31/2013
12/31/2014
261
332
725
viii) market value of ownership interest based on
share quotation at the end of the corporate year, The company has no shares traded in organized securities
markets.
when said shares are traded in organized
securities markets (R$ million)
ix) appreciation or depreciation of said ownership
interest over the past 3 corporate years and in
the current year based on book value
x) appreciation or depreciation of said ownership
interest over the past 3 corporate years based
on market value, in conformity with share
quotation at the end of each corporate year,
when said shares are traded in organized
markets (R$ million)
xi) amount of dividends received over the past 3
corporate years (R$ million)
xii) Reasons for the ownership interest
acquisition and maintenance
12/31/2012
12/31/2013
12/31/2014
22.5%
27.2%
118.4%
The company has no shares traded in organized securities
markets.
12/31/2012
12/31/2013
12/31/2014
-
-
-
The general guidelines of the governance model and the
outline of the macrostructure approved by the Bank aim to
bring efficiency to the structure of BB in Europe and BB AG;
create conditions for increased origination business;
potentiate products, services and channels; rationalize
support activities and maintain the appropriate level of risk
management and control over the processes in Block Europe
in the context of the goals of internationalization Banco do
Brasil S.A.; In 2009 was begun the process of implementing
the new model of BB's work in Europe, which provides
integration to the "BB AG" of BB agencies in Portugal
(completed), Spain, France, Italy and Germany.
145
Section 9 - Relevant Assets
i) corporate name
iii) operation developed
Banco Patagonia S.A.
Av. Mayo, 701 - 24th floor. C1084AAC – Buenos Aires –
Argentina.
Multiple Bank
iv) Banco do Brasil's ownership interest
Direct ownership interest of 58.96%.
v) Subsidiary or Affiliated Company
Subsidiary.
vi) registration with CVM
Has foreign company registration.
ii) head office
vii) book value of ownership interest
(R$ million)
12/31/2012
825
974
1,229
viii) market value of ownership interest based on
share quotation at the end of the corporate year,
when said shares are traded in organized
12/31/2012
12/31/2013
12/31/2014
619
853
1,802
ix) appreciation or depreciation of said ownership
interest over the past 3 corporate years and in
the current year based on book value
12/31/2012
12/31/2013
12/31/2014
29.3%
18.1%
26.2%
12/31/2012
12/31/2013
12/31/2014
46
234
-
12/31/2012
12/31/2013
12/31/2014
-
-
65
x) appreciation or depreciation of said ownership
interest over the past 3 corporate years based
on market value, in conformity with share
quotation at the end of each corporate year,
when said shares are traded in organized
markets (R$ million)
xi) amount of dividends received over the past 3
corporate years (R$ million)
xii) Reasons for the ownership interest
acquisition and maintenance
12/31/2013
12/31/2014
Strategic ownership interest for the BB Conglomerate to
expand the activities in South America. The purpose of
acquiring control on this bank is: (A) increase partnerships
with Brazilian and Argentine companies; (B) diversify the
portfolio of Banco Patagonia goods and services in order to
enhance its customer assistance; (C) expand Banco
Patagonia's credit portfolio, in particular through
transactions with Brazilian companies that operate in
Argentina and local companies in the wholesale activity; and
(D) be present in the corporate sector's value chain in
Argentina, by assisting micro and small businesses, their
employees (payroll services), suppliers, etc.
i) corporate name
iv) Banco do Brasil's ownership interest
BB Tecnologia e Serviços S.A.
Street dos Bandeirantes, 7966, Jacarepaguá, Rio de
Janeiro/RJ.
To develop, produce, manufacture, trade, rent, license for
right of use, integrate, assemble, import, export and
distribute, including through representation of other
companies, IT products, automation and assets security and
to provide several services.
Direct ownership interest of 99.9472%.
v) Subsidiary or Affiliated Company
Subsidiary.
vi) registration with CVM
Not registered with the CVM
ii) head office
iii) operation developed
vii) book value of ownership interest
(R$ million)
12/31/2012
12/31/2013
12/31/2014
142
162
208
viii) market value of ownership interest based on
share quotation at the end of the corporate year, The company has no shares traded in organized securities
markets.
when said shares are traded in organized
securities markets (R$ million)
ix) appreciation or depreciation of said ownership
interest over the past 3 corporate years and in
the current year based on book value
12/31/2012
12/31/2013
12/31/2014
14.5%
14.1%
28.2%
x) appreciation or depreciation of said ownership
interest over the past 3 corporate years based
on market value, in conformity with share
The company has no shares traded in organized securities
quotation at the end of each corporate year,
markets.
when said shares are traded in organized
markets (R$ million)
xi) amount of dividends received over the past 3
corporate years (R$ million)
xii) Reasons for the ownership interest
acquisition and maintenance
12/31/2012
12/31/2013
12/31/2014
-
-
-
That is a strategic ownership interest due to the provision of
IT services to the Banco do Brasil Conglomerate.
147
Section 9 - Relevant Assets
i) corporate name
BB Seguridade Participações S.A.
ii) head office
SBS Court 1, Block A, Lot 31, Building Sede I, 15th floor,
room 4 Brasília/DF.
iii) operation developed
Ownership interest in corporate of insurance, premium
bonds (called capitalization) and open supplementary
pension entity, companies that operate private plans health
care and other companies that have holdings in other
companies asset management companies, brokerage and
viable business involving insurance companies of the
elementary fields, the life and premium bonds, pension plans
and health insurance companies which operate plans private
health care.
iv) Banco do Brasil's ownership interest
Direct 66.25% ownership interest.
v) Subsidiary or Affiliated Company
Subsidiary.
vi) registration with CVM
CVM Code 23,159
vii) book value of ownership interest
(R$ million)
12/31/2012
12/31/2013
12/31/2014
4,468
3,181
3,662
viii) market value of ownership interest based on
share quotation at the end of the corporate year,
when said shares are traded in organized
12/31/2012
12/31/2013
12/31/2014
-
32,463
41,486
ix) appreciation or depreciation of said ownership
interest over the past 3 corporate years and in
the current year based on book value
12/31/2012
12/31/2013
12/31/2014
0.0%
-28.8%
15.1%
x) appreciation or depreciation of said ownership
interest over the past 3 corporate years based
on market value, in conformity with share
quotation at the end of each corporate year,
when said shares are traded in organized
markets (R$ million)
xi) amount of dividends received over the past 3
corporate years (R$ million)
xii) Reasons for the ownership interest
acquisition and maintenance
The company does not hold any shares traded in organized
securities markets in 2010, 2011 and 2012.
12/31/2012
12/31/2013
12/31/2014
-
550
806
Subsidiary incorporated with the aim of supplementing the
main activity Conglomerate Banco do Brasil.
i) corporate name
BB Elo Cartões Participações S.A.
ii) head office
SBS, Court 01, lot 31, block A, 8th floor, Building Sede I Brasília/DF.
iii) operation developed
Ownership in other companies.
iv) Banco do Brasil's ownership interest
Direct ownership interest of 100%.
v) Subsidiary or Affiliated Company
Subsidiary.
vi) registration with CVM
Not registered with the CVM.
vii) book value of ownership interest
(R$ million)
12/31/2012
12/31/2013
12/31/2014
15
464
587
viii) market value of ownership interest based on
share quotation at the end of the corporate year, The company has no shares traded in organized securities
markets.
when said shares are traded in organized
securities markets (R$ million)
ix) appreciation or depreciation of said ownership
12/31/2012
12/31/2013
12/31/2014
interest over the past 3 corporate years and in
-21.1%
2993.3%
26.5%
the current year based on book value
x) appreciation or depreciation of said ownership
interest over the past 3 corporate years based
The company has no shares traded in organized securities
on market value, in conformity with share
markets.
quotation at the end of each corporate year,
when said shares are traded in organized
markets (R$ million)
12/31/2012
12/31/2013
12/31/2014
xi) amount of dividends received over the past 3
corporate years (R$ million)
xii) Reasons for the ownership interest
acquisition and maintenance
9.2.
-
-
14
This is a closed corporation used as a means of participation
in other companies, notably electronic means of payment.
Currently has a direct share in the company Elo
Participações SA and indirectly in Elo Services SA and
Companhia Brasileira de Soluções e Serviços (Alelo).
Other relevant information
Provide other information that the issuer considers relevant
The private-equity investment funds (FIPs) are intended for purchasing shares or convertible
securities as a way for the fund to participate in the management of investees, by appointing board
members. In turn, emerging-company investment funds (FMIEEs) have the same goal as FIPs, but
operate solely with emerging companies (annual net revenues under R$ 150,000,000.00).
Consolidated information on FIP's/FMIEE's - position in 2014
FIP/FMIEE
Fund's Committed Capital
(R$ million)
BB-BI's ownership interest
(%)
AG Angra Infra Estrutura
739.76
8.11
Logística Brasil – FIP
462.00
12.99
1,040.00
5.81
FIP Brasil Energia
InfraBrasil FIP
824.00
7.28
FIP COLISEU
1,330.00
15.04
FIP Redentor
1,400.00
28.57
Rio Bravo Nordeste II FMIEE
131.80
15.17
Jardim Botânico VC I - FMIEE
100.00
20.00
Fundotec II FMIEE
77.40
15.50
Brasil Agronegócio FIP
840.00
19.05
Brasil Sustentabilidade FIP
421.00
9.50
Fundo Brasil de Governança Corporativa - FIP
600.00
13.75
Fundo Brasil de Internacionalização de Empresas - FIP
360.00
24.44
FIP Brasil Óleo e Gás – Fdo de Investimento em Partic.
500.00
25.00
Brasil Portos e Ativos Logísticos – FIP
900.00
18.81
Fundo Brasil de Internacionalização de Empresas II - FIP
700.00
21.43
149
Section 10 - Comments From the Executive Officers
10.
COMMENTS FROM THE EXECUTIVE OFFICERS
We, the members of the Executive Board of Banco do Brasil, pursuant to CVM Instruction 480/09,
commented in this section 10 of the Reference Form the main aspects related to the Bank,
retrospectively to 2012, 2013 and 2014. We declare that the information is true, complete and
consistent.
Initially, in item 10.1, we present our position about the financial conditions of the Bank, its capital
structure, sources of loan and its indebtedness level. We further present the variations between the
years 2014/2013 and 2013/2012 of each item of the Balance Sheet. The commented performance is
based on the financial statements using the IFRS - International Financial Reporting Standards, issued
by the International Accounting Standards Board (IASB) and the predecessor bodies.
In item 10.2 we comment on the formation of the income of Banco do Brasil based on the vertical
and horizontal analysis of Income Statement. We evidence: (i) Interest income; (ii) Interest expenses;
(iii) Net expenses with provision for losses with loans to customers; (iv) Non-interest income; and (v)
Non-interest expenses.
In compliance with item 10.3, we demonstrated the business conditions and the strategic rationale of
the following events: (i) Corporate Reorganizations in the area of Insurance, Open Pension Plan,
Capitalization and Reinsurance; (ii) Corporate Reorganization - Overseas subsidiaries and controlled
companies; and (iii) Corporate Reorganization in the Card Area.
Then, in item 10.4 we talk about material changes to the accounting practices adopted by the Bank
and its effects on the Financial Statements. Besides, we discuss in item 10.4 the opinions of the
Auditors on the Financial Statements related to the fiscal years ended on December 31, 2012, 2013
and 2014.
In relation to critical accounting policies, item 10.5, we emphasize: (i) provision for losses with loans
to customers; (ii) provisions for labor, fiscal and civil claims; (iii) revenue recognition, (iv) deferred tax
assets; (v) long-lived assets; (vi) useful life of non-current assets; (vii) pension plans; (viii) conversion
adjustments on foreign currency; (ix) environmental recovery costs; and (x) criteria for asset
impairment tests.
Referring to item 10.6, we commented on the internal controls intended to assure the correctness of
the Financial Statements, which are based on the best market and corporate governance practices,
besides the compliance with the legislation in force and the guidance from regulatory bodies.
In item 10.7, we reported that in the last three years (2012, 2013 and 2014) there was no primary
and secondary public offering.
As an answer to items 10.8 and 10.9, we list the items that were not disclosed in Financial
Statements, such as: (i) provisions and contingent liabilities; (ii) derivative financial instruments
agreements; (iii) guarantees provided; (iv) unreleased letters of credit; (v) import and export credits;
and (vi) operating leasing. We make comments on addressing possible impacts on Financial Statement
items, in addition to their natures and values.
Finally, in item 10.10, addressing the business plan, we discuss Banco do Brasil fixed investment
plan, including among other actions: (i) expansion and adequacy of the service network and physical
facilities; (ii) modernization of the set of automated teller machines; (iii) maintenance and
preservation of physical facilities; (iv) expansion of the processing and storage capacity in IT; (v)
delivery of technological solutions; and (vi) modernization of the security solutions.
We believe that all the factors that significantly influenced the Bank's operating performance were
commented on in items 10.1 to 10.10 and, accordingly, no additional comments were included in item
10.11.
10.1. The Directors should comment on:
a.
general financial and equity conditions
Banco do Brasil ended the year 2014 with total assets of R$ 1.28 trillion, an increase of 10.0%
compared to that observed at the end of 2013. The assets evolution, in the 2014/2013 comparision,
mainly reflected the strong growth of securities purchased under agreements Operations and Loans to
Customers.
In 2013, total assets increased 14.6%, ending the year at R$ 1.16 trillion, due, mainly to growth in
Loans to Costumers.
The loans to customers totaled R$650,584 million on December 31, 2014, an increase of R$70,164
million (12.1%) from December 31, 2013. This change mainly arises from the following increases: (i)
R$20,287 million in rural and agribusiness financing operations; (ii) R$19,491 million in financing
operations; (iii) R$14,410 million in mortgage loans; (iv) R$11,942 million in loans and bills
discounted; (v) R$2,390 million in credit card transactions; and (vi) R$1,328 million in forward
exchange contracts.
On December 31, 2013, the loans to customers totaled R$580,420 million, an increase of R$101,087
million (21.1%) in relation to the recorded on December 31, 2012. This change mainly arises from the
following increases: (i) R$37,749 million in rural and agribusiness financing operations; (ii) R$31,154
million in financing operations; (iii) R$18,927 million in loans and bills discounted; (iv) R$11,469
million in transactions income mortgage loans; and (v) R$1,448 million in credit card transactions. The
provision for losses and loans to customers totaled R$19.0 billion on December 31, 2014, an increase
of R$3,298 million (21.1%) from December 31, 2013, mainly by the increased volume of loans to
customer. In 2012, provisions reached R$ 16.2 billion.
The analysis of significant changes in each item of the financial statements under IFRS is presented in
the "10.1.h". The analysis of the results is presented in section 10.2.
In 2014, net income was R$13,343 million, corresponding to a return on average equity of 16.5% in
the period, against 15.9% in 2013. The return in 2012 was 17.6%.
2012
Return on Equity - %
2013
2014
17,6
15,9
16,5
1,2
1,0
1,0
Basic1
3,93
3,68
4,23
Diluted 2
3,93
3,68
4,23
2,8
2,7
2,9
ROA - %
Earnings per share
Average risk - % 3
123-
Average quantity of total shares without treasury stock / income for the period
Average quantity of total shares + (bonus x conversion factor) / income for the period
Allowance for doubtful accounts / Loan portfolio
Earnings per share increased from R$3.68 in 2013 to R$4.23 in 2014, while in 2012 it reached R$3.93.
The movement observed is consistent with the income variation for the period: drop in 2013 and
increase in 2014.
Net income from fees and commissions totaled R$19,778 million in 2014, a result that is 9.4% higher
than that verified in prior year. In the comparison 2013/2012, such revenues increased 10.6%.
The coverage ratio of administrative and personnel expenses (Net income from fees and
commissions/administrative expenses + Personnel Expenses) was 67.4% in 2014, against 62.4% in
2013. More information on results of Bank operations is in item "10.2".
The debt ratio ended 2014 at 14.6% against 14.8% in 2013. It is the lowest rate of the last 3 years
and demonstrates the stability in the company's liability management.
R$ million, except as indicated
a. total debt, of any nature;
b. indebtedness level (current liabilities + non-current liabilities, divided by
shareholders' equity) ¹
Dec/12
948,875
Dec/13
1,085,786
Dec/14
1,192,697
14.7
14.8
14.6
Source: Consolidated Financial statements in IFRS.
1 - O Shareholders' equity attributable to the majority interest was R$ 63,685 million, R$64,454 million and R$ 73,192 million in Dec/11, Dec/12 and
Dec/13, respectively.
Basel index ended 2014 16.11%, up from 14.50% of 2013 and higher than the 11% required by CMN,
as shown in item "10.1.b".
On July 24, 2014, the Central Bank issued Circular No. 3,711 and on August in 20, 2014, it issued
Circular No. 3,714. These led to the revision of macro-prudential measures initiated in 2010. These
regulations have affected the reduction in PRMR with respect to credit risk exposures subject to the
calculation of capital requirements under the standardized approach (RWACPAD), as of the third
quarter of 2014.
151
Section 10 - Comments From the Executive Officers
b.
capital structure and possibility of redemption of shares and quotas
BB’s total debt, comprising the ―sum of current and non-current liabilities‖ totaled R$948.9 billion,
R$1,085.8 billion and R$1,192.2 billion on 12/31/2012, 12/31/2013 and 12/31/2014, respectively. The
level of indebtedness was measured by the "current and non-current liabilities divided by
shareholders' equity" which was 14.7, 14.8 and 14.6, in the same order (figures in IFRS, pursuant to
item ―3.7‖ of the Reference Form).
R$ million, except for percentages
12/31/2012
%
1,085,786
%
93.5
12/31/2014
1,192,697
%
Liabilities
948,875
Shareholders' equity
65,206
6.4
76,382
6.5
85,440
6.7
1,014,081
100
1,162,168
100
1,278,137
100
Total liabilities and shareholders'
equity
93.6
12/31/2013
93.3
At the end of 2014, Banco do Brasil presented a Referential Shareholders' Equity of R$126,588 million,
an increase of 7.1% from 2013. This increase is explained chiefly: by the earnings obtained in 2014;
by the reclassification of Hybrid Capital and Debt Instruments – IHCD as Core Capital, by subordinated
borrowings - perpetual bonds abroad and subordinated letters of credit; and by funds obtained from
the FCO.
In December, 31st
R$ million, except for percentages
Change %
2012
2013
2014
109,286
118,234
126,588
8.2
7.1
Tier I ¹
77,100
85,501
89,538
10.9
4.7
Core Capital (CC)
65,535
67,055
71,036
2.3
Tier II
36,025
32,733
37,050
(9.1)
Referential equity (RE)
Deduction from the RE
Minimum Required Referential Equity (MRRE) ²
Risk-Weighted Assets (RWA)
Credit Risk - RWACPAD
Market Risk - RWAMPAD
Operational Risk - RWAOPAD
Surplus/(insufficiency) of RE
BIS Ratio (RE/RWA) %
Tier I Capital Ratio (Tier I/RWA) - %
(3,839)
13/12
14/13
--
--
79,435
89,499
86,457
12.7
(3.4)
722,141
813,623
785,973
11.8
(3.4)
688,457
761,431
734,716
10.6
(3.5)
1,885
15,240
11,545
708.5
(24.2)
31,799
36,952
39,712
29,850
28,736
40,131
15.13
14.53
16.11
10.68
10.51
11.39
9.08
8.24
9.04
Core Capital Ratio (CC/RWA) - %
--
5.9
13.2
16.2
(3.7)
--
7.5
39.7
1 - The Instruments authorized by Bacen to compose the Referential Equity according to CMN Resolution No. 3,444/2007 and do not fulfill the
requirements established by CMN Resolution No. 4,192/2013 are reduced by 10% per year from 2013 to 2022. This reduction is applied on the
values that composed the RE on December 31, 2012.
2 - Under CMN Resolution 4,193/2013, it corresponds to the Factor ―F‖ applied to the amount of RWA, where "F" equals: 11%, from October 1, 2013
to December 31, 2015; 9.875% from January 1, 2016 to December 31, 2016; 9.25%, from January 1, 2017 to December 31, 2017; 8.625% from
January 1, 2018 to December 31, 2018 and 8%, from January 1, 2019.
Redemption hypotheses
There are no hypotheses of redemption of shares issued by the Banco do Brasil besides those
established by law.
Formula for calculating the redemption amount
Not applicable.
c.
payment ability in relation to the financial commitments assumed
Banco do Brasil maintains liquidity levels to meet its commitments in Brazil and abroad, as a result of
its broad and diversified funding base, the quality of its assets, the capillarity of its network overseas
and its ability to access the international capital market.
Stringent control over liquidity risk is aligned with the Liquidity Risk Policy established by the Board of
Directors, meeting the requirements of national banking supervision and the other countries where
the BB operates.
In the last three years, the liquidity assets grew mainly influenced by investments in repurchase
operations. The same movement is perceived in relation to obligations under repurchase agreement.
However, the liquidity balance decrease of 13.2% in the 2013/2014 comparision and 6.3% in the
2012/2013 comparision.
The fall of 13.2% in the liquidity balance for the last two years can be explained mainly by two
factors: restrictive financial market liquidity and wider application in the loan portfolio, influenced by
rising interest rates. However, the payment capacity remains ensured as the total commitments is
24% lower than the total assets.
Financial Information on BB Consolidated
In December, 31st
Change %
R$ million, except for percentages
2012
2013
2014
Liquidity Assets (A)
348,020
369,916
428,634
6.3
15.9
12,053
11,386
13,337
(5.5)
17.1
(11.2)
Cash and bank deposits
Loans to financial institutions
13/12
14/13
48,846
65,120
57,808
33.3
Money market repurchase agreements
182,300
183,391
263,325
0.6
43.6
Financial assets
104,821
110,019
94,164
5.0
(14.4)
220,131
250,086
324,595
13.6
29.8
15,480
26,169
30,675
69.1
17.2
204,651
223,917
293,920
9.4
31.3
127,889
119,830
104,039
(6.3)
(13.2)
Liquidity Liabilities (B)
Deposits of financial institutions
Obligations under repurchase agreements
Liquidity Balance (A - B)
d.
funding sources for working capital and investments in non-current assets utilized
Banco do Brasil uses several funding sources to finance loan operations in the country. The most
relevant in local currency are: time deposits, savings deposits, Agribusiness Letters of Credit (LCA),
Mortgage Bonds (LCI) and demand deposits. In addition, in order to take advantage of opportunities
arising from its position in government securities, Banco do Brasil can raise funds on the interbank
market, pledging these assets as collateral.
The significant volume of demand deposits and savings, and borrowings by means of LCA/LCI, in
relation to total borrowing reduces the weighted average cost of funding, and given their dispersion,
allows stability in BB's cash flow.
In De c e mbe r, 3 1st
R$ million, exc ept for perc entages
2 0 12
2 0 13
Cha nge %
2 0 14
13 / 12
14 / 13
Funds not from the Fe de ra l G ove rnme nt
Tota l de posits (A)
4 6 5 , 4 11
487,594
468,497
4.8
(3 . 9 )
Demand deposits
74,719
75,762
74,224
1.4
(2 . 0 )
Savings deposits
117,744
140,728
148,699
19.5
5.7
15,480
26,169
30,675
69.1
17 . 2
Deposits of financ ial institutions
Time deposits
257,468
244,935
214,899
(4.9)
(12 . 3 )
(7 9 , 5 0 9 )
(9 0 , 6 8 2 )
(6 3 , 2 2 4 )
14 . 1
(3 0 . 3 )
12 3 , 4 5 1
220,467
2 9 1, 5 3 9
78.6
32.2
32,898
81,278
116,481
147.1
43.3
Obligations related to repurc hase agreements
9,554
34,061
48,256
256.5
4 1. 7
Letters of Credit and Debentures ¹
3,608
2,295
2,547
(36.4)
11. 0
Subordinated Debt
37,181
47,369
54,531
27.4
15 . 1
Foreign Borrowing
40,210
55,464
69,724
37.9
25.7
509,352
6 17 , 3 7 8
6 9 6 , 8 12
6.2
12 . 9
61,043
84,835
89,157
39.0
5.1
Compulsory de posits (B)
O the r Funds (C)
Agribusiness Let. of Credit + Mortgage Bonds
Tota l funds not from the gove rnme nt (D= A+ B+ C)
Funds from the Fe de ra l G ove rnme nt
Funds from onlendings
Financ ial and Development Funds
5,089
7,661
10,840
50.6
4 1. 5
Domestic Hybrid Debt Capital Instruments ²
8,215
8,325
69
1.3
(9 9 . 2 )
74,347
10 0 , 8 2 1
10 0 , 0 6 6
35.6
(0 . 7 )
583,698
7 18 , 19 9
796,878
23.0
11. 0
Tota l funds from the Fe de ra l G ove rnme nt (E)
Tota l funds (D+ E)
1 - Refers to debentures issued by Ativos S.A. expired in March 2014.
2 - On August 28, 2014, pursuant to Law 12,793/2013 was entered into an amendment to the contract in order to make the IHCD issued in
September 2012, in the amount of R$8.1 billion, eligible as core capital. On September 22, 2014, the Central Bank considered this instrument as
eligible to the core capital, according to the CMN Resolution No. 4,192/2013. Thus, for purposes of disclosure of financial statements, the one
mentioned instrument was reclassified to Shareholders' equity, remaining in this line only the balance of interest payable existing before the
instrument reclassification.
153
Section 10 - Comments From the Executive Officers
The table below presents loan operations by type of financial product as of the dates stated:
In December, 31st
R$ million, except for percentages
2012
2013
Change %
2014
13/12
14/13
Loans and bills discounted
207,821
226,747
238,689
9.1
5.3
Financing
118,122
149,276
168,766
26.4
13.1
Rural and agroindustrial financing
112,092
149,841
170,128
33.7
13.5
12,854
24,323
38,733
89.2
59.2
89
208
321
132.2
54.7
27,327
29,163
33,087
6.7
13.5
1,028
862
861
(16.1)
(0.1)
479,334
580,420
650,584
21.1
12.1
(13,577)
(15,653)
(18,951)
15.3
21.1
465,756
564,767
631,633
21.3
11.8
Real estate financing
Credit operations linked to assignments
Other receivables with loan characteristics
Lease operations
Total Loans to customers
(Provision for losses with loans to customers)
Total
Funding Sources and Application of Funds
The following indicators show the relationship between the funding sources and application of funds
at Banco do Brasil, evidencing that the loan portfolio is backed both by deposits, and by other forms
of funding, such as BNDES onlending, resources of Financial and Development Funds and overseas
funding.
In De c e mbe r, 3 1st
Cha nge %
R$ million, exc ept for perc entages
2 0 12
2 0 13
2 0 14
Tota l funding (A)
583,698
13 / 12
14 / 13
7 18 , 19 9
796,878
23.0
11. 0
1) Total deposits
465,411
487,594
468,497
4.8
(3.9)
2) Agribusiness Letters of Credit+Mortgage Bonds
32,898
81,278
116,481
147.1
43.3
9,554
34,061
48,256
256.5
41.7
61,043
84,835
89,157
39.0
5.1
3) Obligations related to repurc hase agreements
4) Domestic onlendings
5) Financ ial and Development Funds
5,089
7,661
10,840
50.6
41.5
6) Letters of Credit + Debentures¹
3,608
2,295
2,547
(36.4)
11.0
7) Subordinated Debt
37,181
47,369
54,531
27.4
15.1
8,215
8,325
69
1.3
(99.2)
40,210
55,464
69,724
37.9
25.7
14.1
(30.3)
8) IHCD In Brazil²
9) Foreign borrowing ³
10) Compulsory deposits
(79,509)
(90,682)
(63,224)
465,756
564,767
6 3 1, 6 3 3
Loans to c ustomers
479,333
580,420
650,584
21.1
Provision for losses with loans to c ustomers
(13,577)
(15,653)
(18,951)
15.3
117 , 9 4 1
15 3 , 4 3 3
16 5 , 2 4 5
Net Loan Portfolio / Total Deposits
100.1
115.8
134.8
Net Loan Portfolio / Total Funding
79.8
78.6
79.3
Available Funds / Total Funding
20.2
21.4
20.7
Ne t loa n portfolio (B)
Ca sh a nd c a sh e quiva le nts (A- B)
2 1. 3
30.1
11. 8
12.1
21.1
7.7
Indic a tors (% )
1 - Refers to debentures issued by Ativos S.A. expired in March 2014.
2 - On August 28, 2014, pursuant to Law 12,793/2013 was entered into an amendment to the contract in order to make the IHCD issued in
September 2012, in the amount of R$8.1 billion, eligible as core capital. On September 22, 2014, the Central Bank considered this instrument as
eligible to the core capital, according to the CMN Resolution No. 4,192/2013. Thus, for purposes of disclosure of financial statements, the one
mentioned instrument was reclassified to Shareholders' equity, remaining in this line only the balance of interest payable existing before the
instrument reclassification.
3 - Includes Foreign Borrowing, Foreign Securities Obligations and erpetual Bonuses.
The ―Net Loan Portfolio / Total Funding ratio‖ ended 2014 at 79.3%, as opposed to 78.6% in 2013
and 79.8% in 2012. The change in the index is explained by the combined effect of BBs loan portfolio
expansion, increase in total funding, in particular the growth of LCA + LCI (147.1% in 2013/2012
comparison and 43.3% in 2014/2013 comparison), notably by the increased demand for these
products, as well as Foreign Borrowing (25.7% in 2014/2013 comparison) and also the increase of
Financial and Development Funds (41.5% in 2014/2013 comparison). Please note that there is still a
comfortable margin for growth by the loan portfolio with no need for other sources of financing.
e.
funding sources for working capital and investments in non-current assets to be
used to cover liquidity deficits
Banco do Brasil does not have a liquidity shortage. Items 10.1.c and 10.1.d present analysis of the
payment capacity and of liquidity, respectively.
Banco do Brasil has management tools that allow early identification of scenarios indicating possible
liquidity shortfalls.
Thus, if necessary, the BB may use mechanisms for increasing the volume of resources such as
increased rates to raising term deposits, short-term money market and bond issues in local and
international markets to rebalance availability, thus ensuring the continuity of their business.
f.
indebtedness levels and characteristics of such debts
Indebtedness levels and characteristics of such debts, also describing: (i) relevant loan and
financing agreements; (ii) other long-term relationships with financial institutions; (iii)
degree of subordination among debts; and (iv) any restrictions imposed on the issuer,
especially in relation to indebtedness limits and the contracting of new debts, to the
distribution of dividends, to the divestiture of assets, to the issuance of new securities and
to the sale of controlling interest.
Banco do Brasil issues securities in the international and domestic capital market, using both nonsubordinated and subordinated debt and hybrid capital and debt instruments. The objective is to
obtain funds for free use and to reinforce the Bank's Referential Equity with those resources qualifying
as Capital. These issues have institutional investors, financial institutions and private banking clients
as a target audience.
Among these securities, it issues secured and insecured subordinated debt. If it issues a secured debt,
the guarantees granted in the new bond should be extended to those existing ("Negative Pledge"
clause).
For those without collateral, there is no contractual restriction on the issuer.
The remaining subordinated debt, such as Subordinate Certificates of Deposit (CDB), Subordinated
debt abroad, Subordinated Financial Bills (LFS) and FCO resources that comprise the Tier II capital,
their payment is subordinated to other liabilities of the Bank except those considered Tier I Capital.
The Hybrid Capital Instruments (IHCD) issued abroad, in the form of perpetual bonds are classified as
Tier I capital and its payment is subordinated to other liabilities, with the exception of the elements
considered as core capital. Of total perpetual bonds, the amount of R$18,503 million composes the
Reference Equity - RE on December 31, 2014 (R$18,446 million on December 31, 2013).
Athough without any restriction on the distribution of dividends, the Hybrid Capital Instruments issued
abroad stipulate that in case of non-payment of coupons, the Chief Financial Officer shall recommend
to the Banco do Brasil to pay dividends as the minimum required by current legislation.
On August 28, 2014, the Hybrid Capital Instrument in the amount of R$ 8.1 billion, which, until then
was classified as additional Tier I capital was authorized by the Central Bank to compose the
Reference Equity as core capital. This instrument is subordinated to other liabilities in the event of
institutions’s dissolution.
Furthermore, for purposes of composition of its Referential Equity, Banco do Brasil classifies the
resources from the Constitutional Financing Fund of the Midwest - FCO (Vote CMN n.° 067/2001 and
Bacen - Diret Official Letter n.° 1,602/2001) as Capital in keeping with the low enforceability and long
term of stay of these funds at the Bank. Amounts of R$20,467 million, R$18,530 million and R$16,603
million, calculated as of December 31, 2014, December 31, 2013 and December 31, 2012,
respectively, comprised Level II Referential Equity of Banco do Brasil.
The following table summarizes the subordination level of securities issued by the Banco do Brasil:
155
Section 10 - Comments From the Executive Officers
Type of Capital
Securities Issued
Subordination Level
Core Capital
Hybrid Capital Instrument
All Liabilities
Additional Tier I Capital
Perpetual Bonds Abroad - IHCD
All Liabilities, except core capital
Tier I
Tier II
Subordinate Certificates of Deposit
Tier II Capital
Subordinated debt abroad
All Liabilities, except core and additional
Tier I capital
Subordinated Financial Bills
FCO Resources
Additional information on the securities issued by the Banco do Brasil can be found in item ―18.5.
Other securities issued‖.
Financial Information of BB Consolidated in IFRS
Subordinated debts¹ (R$ million)
Funding
Date
Matur.
Currency Amount
Remun. p.a.
2012
2013
Chg.%
13/12
2014
Chg.%
14/13
Banco do Brasil
Domestic Subordinated CDB
4,711
5,137
4,111
9.0
(20)
Sep/14
R$
900 113.80% from CDI
1,345
1,469
-
9.2
(100)
Mar/09
Mar/15
R$
1,335 115.00% from CDI
2,001
2,187
2,461
9.3
12.5
Nov/09
Nov/15
R$
1,000 105.00% from CDI
1,365
1,481
1,650
8.5
11.4
6,673
7,645
7,862
14.6
2.8
Mar/09
Subordinated debt Abroad
Sep/04
Sep/14
US$
300
8.50%
619
711
-
14.9
(100)
Oct/10
Jan/21
US$
660
5.38%
1,382
1,584
1,788
14.6
12.9
May/11
Jan/22
US$
1,500
5.88%
3,106
3,563
4,046
14.7
13.6
Jun/12
Jan/23
US$
750
5.88%
1,566
1,787
2,028
14.1
13.5
9,197
16,058
22,102
74.6
37.6
Subordinated Letters of Credit
Mar/10
Mar/16
R$
1,000 108.50% from CDI
1,331
1,448
1,620
8.8
11.9
Mar/11
Mar/17
R$
1,007 111.00% from CDI
1,211
1,320
1,479
9
12.0
Apr/11
Apr/17
R$
335 111.00% from CDI
401
437
490
8.9
12.1
May/11
May/17
R$
14 111.00% from CDI
16
18
20
12.5
11.1
Sep/11
Oct/17
R$
700 111.00% from CDI
788
859
963
9
12.1
May/12
May/18
R$
513 111.50% from CDI
538
586
657
8.9
12.1
May/12
May/19
R$
215 112.00% from CDI
226
246
276
8.8
12.2
May/12
Jun/20
R$
115 112.50% from CDI
121
132
148
9
12.1
May/12
Jun/20
R$
36
IPCA + 5.45%
38
42
47
10.5
11.9
Jun/12
Jun/18
R$
12
111.50% from CDI
13
14
15
7.7
7.1
Jun/12
Jun/18
R$
100
IPCA + 5.40%
106
118
132
11.3
11.9
Jun/12
Jun/18
R$
500
IPCA + 5.53%
529
591
663
11.7
12.2
Jun/12
Jun/18
R$
7
IPCA + 5.30%
8
8
9
-
12.5
Jun/12
May/18
R$
185
CDI + 1.11%
194
211
238
8.7
12.8
Jun/12
Jun/18
R$
315
IPCA + 5.56%
334
372
418
11.3
12.4
Jun/12
Apr/18
R$
308
CDI + 1.10%
323
353
395
9.3
11.9
Jun/12
Jun/18
R$
20
IPCA + 5.50%
21
24
26
14.3
8.3
Jun/12
Apr/18
R$
53 111.50% from CDI
55
60
67
9.1
11.7
Jun/12
Jan/18
R$
Jun/12
Jan/18
R$
Jun/12
Feb/18
R$
874
Jun/12
Jan/18
R$
Jul/12
Jun/18
Jul/12
0,3
-
-
0
-
0
52
57
63
9.6
10.5
IPCA + 5.40%
921
1,027
1,154
11.5
12.4
691
CDI + 1.06%
720
786
881
9.2
12.1
R$
17
IPCA + 5.33%
18
20
23
11.1
15.0
Apr/18
R$
27
IPCA + 5.24%
28
31
35
10.7
12.9
Jul/12
Jun/18
R$
41 111.50% from CDI
42
46
52
9.5
13.0
Jul/12
Feb/18
R$
100 111.50% from CDI
104
113
127
8.6
10.4
Jul/12
Jul/18
R$
22 111.50% from CDI
23
25
28
8.7
12.0
Jul/12
Apr/18
R$
10 111.50% from CDI
11
12
13
9.1
8.3
Sep/12
Jul/18
R$
1,000
1,025
1,133
1,251
10.5
12.4
Jan/13
Jan/19
R$
4,681 111.00% from CDI
-
5,681
5,695
-
0.2
IPCA + 5.32%
50 111.50% from CDI
Pré 10.51%
Funding
Date
Matur.
Currency Amount
Remun. p.a.
2012
2013
2014
Chg.%
13/12
Chg.%
14/13
Feb/13
Feb/19
R$
266
111.00% from CDI
-
288
0
-
(100)
Mar/14
Mar/21
R$
1,000
114.00% from CDI
-
-
1.095
-
-
Apr/14
Apr/21
R$
265
115.00% from CDI
-
-
288
-
-
May/14
May/21
R$
72
113.00% from CDI
-
-
78
-
-
May/14
May/22
R$
400
IPCA+8.08%
-
-
431
-
-
May/14
May/20
R$
52
112.00% from CDI
-
-
56
-
-
May/14
Apr/20
R$
3
114.00% from CDI
-
-
3
-
-
May/14
May/20
R$
78
114.00% from CDI
-
-
85
-
-
May/14
May/21
R$
64
114.00% from CDI
-
-
69
-
-
May/14
May/21
R$
703
115.00% from CDI
-
-
759
-
-
Jun/14
Jun/20
R$
30
112.00% from CDI
-
-
32
-
-
Jun/14
Jun/21
R$
50
114.00% from CDI
-
-
53
-
-
Jun/14
Jun/21
R$
120
115.00% from CDI
-
-
129
-
-
Aug/14
Aug/21
R$
12
113.00% from CDI
-
-
13
-
-
Aug/14
Aug/20
R$
16
112.00% from CDI
-
-
16
-
-
Aug/14
Aug/20
R$
262
114.00% from CDI
-
-
274
-
-
Aug/14
Aug/21
R$
15
115.00% from CDI
-
-
15
-
-
Sep/14
Sep/21
R$
30
113.00% from CDI
-
-
31
-
-
Sep/14
Sep/20
R$
100
114.00% from CDI
-
-
103
-
-
Sep/14
Sep/21
R$
1,500
115.00% from CDI
-
-
1,548
-
-
Oct/14
Oct/21
R$
38
115.00% from CDI
-
-
39
-
-
Subordinated debt issued by Bank, held by
subsidiary abroad
Total subordinated debt
(3)
0
(11)
-
-
20,578
28,840
34,064
40.1
18.1
1 - Does not include funds from the FCO (Constitutional Fund for Developing the Midwest).
Source: Note 33.
Liabilities from securities issues (R$ million)
Funding
Date
Matur.
Currency Amount
Remun. p.a.
Banco do Brasil
Global Medium - Term Notes Program
Jul/09
Jul/14
US$
Jan/10
Jan/15
US$
Jan/10
Jan/20
US$
Jan/11
Jan/16
EUR
Sep/12
Sep/15
JPY
Jul/13 e
Mar/14
Jul/18
Dec/13
Jun/19
100
950
500
750
24,700
Libor 6m+2.55%
4.50%
6.00%
4.50%
1.80%
EUR
700 e
300
3.75%
CHF
275
2.50%
“Senior Notes”
Nov/11
Jan/17
US$
Oct/12
Oct/22
US$
500
1,925
US$
50
Structured Notes
Certificates of Deposits
Certificates of structured operations
Mortgage bonds - LCI
Agribusiness Letters of Credit - LCA
Letters of Credit,
3.88%
3.88%
0.90% to 3.55%
2012
2013
2014
Chg.%
13/12
Chg.%
14/13
5,916
9,771
11,031
65.1
12.9
207
1,979
1,044
2,099
587
238
2,268
1,197
2,515
553
0
2,573
1,359
3,285
551
15.0
14.6
14.7
19.8
(5.8)
(100)
13.4
13.5
30.6
(0.4)
2,280
2,519
-
10.5
-
720
745
-
3.5
4,952
5,682
6,452
14.8
13.6
1,033
3,919
1,185
4,497
1,346
5,106
13.6
13.5
(52.5)
(10.0)
317.6
31.4
11.4
689
303
144
14.8
14.7
(0.6)
9,681
32,898
3,570
10,325
3,390
77,888
2,287
9,292
2
14,156
102,325
2,547
6.7
136.7
(35.9)
157
Section 10 - Comments From the Executive Officers
Funding
Date
Matur.
Currency Amount
Remun. p.a.
Total liabilities with securities issued by Banco do Brasil
Banco Patagonia
Chg.%
13/12
Chg.%
14/13
145,949
395
90.0
62.9
33.1
(38.5)
476
968
(43.3)
103.4
59
163
254
79
224
(76.9)
(27.2)
(51.5)
2012
2013
2014
57,706
394
109,646
642
838
88
256
224
270
Special Purpose Entities Abroad (Securitization)
Securitization of future flow of payment orders from abroad1
'Structured Notes2
Dec/03
Dec/13
US$
Mar/08
Mar/14
US$
Sep/08
Sep/15
US$
Apr/08
Jun/18
US$
Dec/14
Apr/21
US$
250
250
200
150
250
6.55%
Libor 3m+0.55%
Libor 3m+1.20%
5.25%
Libor 6m+2.5%
Amout eliminated in the consolidated
Total
-
-
665
(108)
(86)
58,830 110,678
(5.9)
(66)
147,246
(20.4)
88.1
(11.8)
(23.3)
33.0
1 - The Special Purpose Entities (SPE) - "Dollar Diversified Payment Rights Finance Company" was organized under the laws of the Cayman Islands
for the following purposes: (i) the issuance and sale of securities in the international market; (ii) use of resources obtained by issuing securities to
pay for the purchase from the BB of the rights to payment orders issued by banking correspondentes located in the U.S. and by the agency of BB
New York in U.S. dollars, for any agency for Brazil ("Rights on Consignment"); and (iii) making payments of principal and interest on securities and
other payments defined in the contracts of issuance of these securities. The liabilities arising from the issued securities are paid by the SPE using
the funds accumulated in its account. The SPE declare that have no relevant asset or liability other than the rights and duties originating from the
contracts for issue of securities, has no subsidiaries and no employees. Its subscribed capital is U$1,000 divided into 1,000 common shares of
U$1.00 each. All 1,000 common shares were issued for BNP Paribas Private Bank & Trust Cayman Limited, acting as trustee of an entity of the
Cayman Islands. Thus, BNP Paribas Private Bank & Trust Cayman Limited is the sole shareholder of EPE. The Bank owns the "Remittance Rights"
and sole beneficiary of the funds raised by EPE, and is responsible for sending funds for periodic payment of principal and interest on the
securities.
2 – The Special Purpose Entities (SPE) - ―Loans Finance Company Limited‖ (Loans) was organized under the laws of the Cayman Islands for the
following purposes: (i) Obtaining financial resources by issuing of securities in the international market; (ii) hiring repurchase agreements with the
Bank, through its branch in the Cayman Islands, for use of the funds raised; and (iii) hiring of protection against credit risk of the Bank, through a
credit derivative called basis swap, which is actionable only in case of default of any obligation of the Bank in repurchase agreements operations.
The conditions of currencies, amounts, terms, rates and financial flows of repurchase operations are identical to those of the issues of securities.
Therefore, all the obligations and expenses of the issued securities are covered fully by the SPE with the rights and revenues from repurchase
agreements, so that the Loans not generate positive or negative results. The SPE has no other assets and liabilities other than those arising from
repurchase agreements and emissions of securities. The paid-up capital of the Loans is U$250 divided into 250 common shares of U$1.00 each.
All 250 common shares were issued to Maples Corporate Services company and then transferred to the MaplesFS Limited, which is a limited
liability company incorporated in the Cayman Islands. The MaplesFS Limited is an independent provider of specialized trust services and sole
shareholder of SPE. The Bank, through its branch in the Cayman Islands, is the only counterpart of SPE in repurchases operations.
Funding in perpetual securities - Capital and debt hybrid instruments – R$ million
Funding
Issued value
Remun. p.a.
US$
1,500
8.50%
US$
R$
US$
US$
1,750
8,100¹
2,000
2,500
9.25%
5.50%
6.25%
9.00%
Date of funding
Oct/09
Jan and Mar/2012
Sep/12
Jan/2013
Jun/2014
Total
Perpetual bonds issued by the Bank, held by subisidiary abroad
Total
2012
2013
2014
Chg.%
13/12
Chg.%
14/13
3,104
3,558
4,038
14.6
13.5
3,743
8,215
-
4,277
8,325
4,720
-
4,836
68
5,356
6,628
14.3
1.3
-
13.1
(99.2)
13.5
-
15,062
20,880
20,926
38.6
0.2
(1)
(6)
(8)
500
33.3
15,061
20,874
29,918
38.6
0.2
1 - The bonds of R$8.1 billion, issued in September 2012, resulting from a Loan Agreement with the Federal Government, up to August 27, 2014,
were authorized by Bacen to be included in the referential equity of Tier I capital (Additional Tier I Capital), and were subject to the established by
article 28 of the CMN Resolution No. 4,192/2013, hence were recognized in this grouping. On August 28, 2014, under the law 12,793/2013, an
amendment was signed to the agreement with the objective of making this instrument qualifying to common equity Tier 1 capital. On September
22, 2014, Bacen considered the instrument qualifying to common equity Tier 1 capital, in accordance with Resolution CMN No. 4,192/2013.
Thereby, for disclosure of financial statements, the instrument was reclassified to Shareholder’s Equity, and the balance of interest payable
remained in this grouping.
Borrowing and onlendings
Borrowing and onlendings are sources of funding from other financial institutions and national
government agencies, predominantly long-term, to boosting domestic production. The funds come
from the National Treasury, the BNDES (National Bank for Economic and Social Development), CEF
(Caixa Economica Federal), among other sources.
Thus, the Bank works as financial agent of government programs of incentives to certain sectors of
the economy. In agriculture, through of transfers, notably: (i) Pronaf (National Programme for
Strengthening Family Agriculture); (ii) Cacau (Recovery Program of Cocoa Farming); iii) Recoop
(Agricultural Production Cooperatives Revitalization Program); (iv) Funcafé (Fund for the Coffee
Economy); and (v) Rural Savings. In industry, through onlending arising mainly from the BNDES
programs and Finame (Special Agency of Industrial Investment).
R$ million
2012
Borrowings
Onlendings
Total
g.
2013
2014
Chg.% 13/12
Chg.% 14/13
10,866
61,043
15,690
84,835
20,377
89,157
44.4
38.9
29.9
5.1
71,909
100,525
109,534
39.8
9.0
limits on the use of the financing obtained
Banco do Brasil not have limits on the use of financing, but is subject to the standards determined by
the Monetary Authorities, in accordance with the Basel principles.
h.
significant changes in each item of the financial statements
Below we present the evolution analyses of the Consolidated Balance Sheet and Consolidated
Statement of Income for the years ended December 31, 2012, December 31, 2013 and December 31,
2014, prepared in accordance with the International Financing Reporting Standards (IFRS) and
disclosed on the Bank's Investor Relations site. (http://www.bb.com.br/ir).
The information presented in the explanatory notes disclosed together with the mentioned financial
statements is important to justify the changes in balance sheet and income statement accounts. For
this reason, they will also be used as a reference source in these analyses.
Balance Sheet – Assets
The information on the "Asset" group is shown below. In relation to the Standardized Financial
Statements (SFS), differences were identified in the items "Cash and Cash Equivalents" and "Loans
and Receivables", categories that group together a large number of items not used for disclosure
purposes under IFRS. The changes led to reclassifications of balances, as shown in the table below:
12/31/2012
R$ million, except
for percentages
Stand.
Finan.
Statetm.
Balance
sheet
disclosed
12/31/2013
Difference
Stand.
Finan.
Statetm.
Balance
sheet
disclosed
12/31/2014
Difference
Stand.
Finan.
Statetm.
Balance
sheet
disclosed
Difference
Cash and cash equivalents
Cash and bank
12,053
deposits
Loans to Fin.
24,455
Institutions
Money market
repurchase
20,499
agreements
Loans and receivables
Loans to Fin.
Institutions
Money market
repurchase
agreements
Loans to
customers
12,053
-
11,386
11,386
-
13,337
13,337
-
-
24,455
37,240
-
37,240
35,593
-
35,593
-
20,499
20,216
-
20,216
13,149
-
13,149
24,391
48,846
(24,455)
27,880
65,120
(37,240)
22,216
57,809
(35,593)
161,801
182,300
(20,499)
163,175
183,391
(20,216)
250,176
263,325
(13,149)
465,756
465,756
-
564,767
564,767
-
631,633
631,633
-
The "Assets" group in the Balance Sheet disclosed by the Bank, on which these analyses are based, is
shown below:
159
Section 10 - Comments From the Executive Officers
Chg. 14 / 13
R$ million, exc ept for perc entages
12 / 3 1/ 2 0 12
%
12 / 3 1/ 2 0 13
%
12 / 3 1/ 2 0 14
%
Abs.
%
Asse ts
Cash and bank deposits
12,053
1.2
11,386
1.0
13,337
1.0
1,951
17.1
Compulsory deposits in c entral banks
79,509
7.8
90,682
7.8
63,224
4.9
(27,458)
(30.3)
Loans to financ ial institutions
48,846
4.8
65,120
5.6
57,809
4.5
(7,311)
(11.2)
182,300
18.0
183,391
15.8
263,325
20.7
79,934
43.6
16,925
1.7
18,991
1.6
12,441
1.0
(6,550)
(34.5)
16,376
1.6
18,006
1.5
10,948
0.9
(7,058)
(39.2)
549
0.1
985
0.1
1,493
0.1
508
51.6
83,294
8.2
90,385
7.8
93,804
7.3
3,419
3.8
4,602
0.4
643
0.1
360
-
(283)
(44.0)
465,756
45.9
564,767
48.6
631,633
49.4
66,866
11.8
65
-
44
-
24
-
(20)
(45.5)
12.0
Money market repurc hase agreements
Financ ial assets at fair value through profit or loss
Debt and equity instruments
Derivatives
Financ ial assets available for sale
Financ ial assets held to maturity
Loans to c ustomers, net of provision
Non- c urrent assets available for sale
Investments in assoc iates
13,881
1.4
14,213
1.2
15,922
1.2
1,709
Fixed assets
6,083
0.6
6,575
0.5
7,180
0.6
605
9.2
Intangible assets
11,869
1.2
10,347
0.9
9,932
0.8
(415)
(4.0)
Goodwill on Investments
622
0.1
626
0.1
630
0.1
4
0.6
Others
11,247
1.1
9,721
0.8
9,302
0.7
(419)
(4.3)
Tax assets
32,672
3.2
33,639
2.9
32,533
2.5
(1,106)
(3.3)
9,041
0.9
11,684
1.0
8,977
0.7
(2,707)
(23.2)
Deferred
23,631
2.3
21,955
1.9
23,556
1.8
1,601
7.3
Other assets
56,226
5.6
71,985
6.2
76,613
6.1
4,628
6.4
1, 0 14 , 0 8 1
10 0
1, 16 2 , 16 8
10 0
1, 2 7 8 , 13 7
115 , 9 6 9
10 . 0
Current
Tota l
10 0
Cash and bank deposits
The cash and bank deposits totaled R$13,337 million as of December 31, 2014, an increase of
R$1,951 million (17.1%) from December 31, 2013. This change resulted from the increase of R$996
million (11.0%) in cash and increase of R$955 million (40.9%) in bank deposits.
On December 31, 2013, the cash and bank deposits totaled R$11,386 million, a decrease of R$667
million (5.5%) from December 31, 2012. This change resulted from the decrease of R$1,111 million
(32.3%) under bank deposits and increase of R$444 million (5.2%) in cash.
Compulsory deposits in central banks
The compulsory deposits with central banks totaled R$63,224 million as of December 31, 2014, a
decrease of R$27,458 million (30.3%) from December 31, 2013. This change derives from the
decrease of R$25,271 million in deposits with remuneration, mainly due to the decrease of reserve
requirement rate on savings deposits which decrease from 18% in December/13 to 13% in
December/14, and R$2,187 million in deposits without remuneration.
On December 31, 2013, compulsory deposits with central banks totaled R$90,682 million, an increase
of R$11,173 million (14.1%) from December 31, 2012. This change derives from the decrease of
R$10,050 million in deposits with remuneration, resulted from the significant growth of savings
deposits in 2013, and of R$1,123 million in deposits without remuneration.
Loans to financial institutions
The loans to financial institutions totaled R$57,809 million on December 31, 2014, a decrease of
R$7,311 million (11.2%) from December 31, 2013. This change is mainly due to: a) decrease of: (i)
R$4,315 million loan portfolio Acquired portfolio acquired with the assignor's co-obligation, following
the trend of this market; (ii) R$2,636 million in investments in interest-bearing account of foreign
branches; (iii) R$2,055 million in time deposits of foreign branches; (iv) R$1,969 million in interbank
deposits by the Multiple Bank; (v) R$990 million in overnight investments; and (vi) R$951 millions in
foreign branches’ investments in central banks or similar banks abroad; and b) increase of: (i)
R$5,162 million from the Brazilian real depreciation vis-à-vis the US dollar (13.39%); e R$405 million
in investiments certificates of deposit abroad.
On December 31, 2013, the loans to financial institutions totaled R$65,120 million, an increase of
R$16,274 million (33.3%) in relation to the recorded on December 31, 2012. This change is mainly
due to: a) the increase of R$13,884 million in investments abroad, especially the following increases:
(i) R$8,533 million in overnight investments, (ii) R$3,435 million from the Brazilian real depreciation
vis-à-vis the US dollar, and (iii) R$2,444 millions in investments in central banks or similar banks
abroad; b) the increase of R$2,802 million in loan portfolios acquired with the assignor's co-obligation;
c) the decrease of R$471 million in interbank deposits by the Multiple Bank.
In accordance with IFRS, the financial assets assigned, whose risks and ownership benefits have not
been fully transferred, should continue to be accounted for in the assigning entity, which will
recognize a financial liability for the consideration received, causing the recording of a financial asset
by the acquiree.
Money market Repurchase agreements
The money market repurchase agreements totaled R$263,325 million on December 31, 2014, an
increase of R$79,934 million (43.6%) from December 31, 2013. This change is mainly due to the
growth in demand from institutional investors. The growing demand from institutional investors since
January 2011 led to an increase of R$120 billion in money market repurchase agreements operations
with government securities. The growth of short position in money market repurchase agreements
operations induces growth on the asset side due to the purchase of securities on the market or
entities such as the Central Bank.
On December 31, 2013, the money market repurchase agreements totaled R$183,391 million, an
increase of R$1,092 million (0.6%) from December 31, 2012. This change is mainly due to the
R$1,375 million increase in financed positions and decrease of R$283 million in own operations.
Financial assets at fair value through profit or loss
The financial assets at fair value through profit or loss totaled R$12,441 million on December 31,
2014, a decrease of R$6,550 million (34.5%) from December 31 2013. This change arises from: a)
the decrease of R$7,058 million in debt and equity instruments, specially: (i) decrease of R$8,789
million in Brazilian federal government bonds, (ii) increase of R$1,106 million in in securities issued by
financial companies; (iii) increase of R$253 million in foreign government bonds, (iv) increase of
R$226 million in investments in mutual funds, and (iv) increase of R$201 million in securities issued by
non-financial companies; and b) increase of R$508 million in derivative financial instruments, in
particular the increase of R$318 million in forward operations and of R$154 million in swap
transactions.
On December 31, 2013, the financial assets at fair value through profit or loss totaled R$18,991
million, an increase of R$2,066 million (12.2%) in relation to December 31 2012. This change arises
from: a) the increase of R$1,630 million in debt and equity instruments, specially: (i) increase of
R$2,592 million in Brazilian federal government bonds, (ii) increase of R$209 million in in securities
issued by financial companies; (iii) increase of R$108 million in Brazilian federal government bonds
issued abroad, (iv) decrease of R$825 million in investments in mutual funds, and (iv) decrease of
R$562 million in securities issued by non-financial companies; and b) increase of R$436 million in
derivative financial instruments, in particular the increase of R$346 million in swap transactions and of
R$114 million in forward operations.
Financial assets available for sale
The financial assets available for sale totaled R$93,804 million on December 31, 2014, an increase of
R$3,419 million (3.8%) from December 31, 2013. This change arises from: (i) increase of R$3,234
million in securities issued by non-financial institutions; (ii) increase of R$1,636 million in foreign
government bonds; (iii) increase of R$957 million in investments in mutual funds; (iv) increase of
R$372 million in securities issued by financial companies; (v) decrease of R$2,192 million in Brazilian
federal government bonds; and (vi) decrease of R$584 million in trade shares.
On December 31, 2013, the financial assets available for sale totaled R$90,385 million, an increase of
R$7,091 million (8.5%) from December 31, 2012. This change arises from: (ii) increase of R$9,049
million in securities issued by non-financial institutions; (ii) increase ofR$1,126 million in investments
in mutual funds; (iii) increase of R$661 million in trade shrares, (iv) increase of R$595 million in
foreign government bonds, (v) decrease of R$2,651 million in securities issued by financial companies;
161
Section 10 - Comments From the Executive Officers
(vi) decrease of R$1,450 million in Brazilian federal government bonds; and (vii) decrease of R$239
million in Brazilian federal government bonds issued abroad.
Financial assets held to maturity
The financial assets held to maturity totaled R$360 million as of December 31, 2014, a decrease of
R$283 million (44.0%) compared to December 31, 2013. The change mainly arises from the reduction
of R$173 million in federal government bonds, decrease of R$69 million in Brazilian federal
government bonds issued abroad and increase of R$41 million in securities issued by financial
institutions.
On December 31, 2013, the financial assets held to maturity totaled R$643 million, a decrease of
R$3,959 million (86.0%) compared to December 31, 2012. The change mainly arises from the
reduction of R$4,014 million in federal government bonds and increase of R$80 million in securities
issued by financial institutions.
Loans to customers
The loans to customers totaled R$650,584 million on December 31, 2014, an increase of R$70,164
million (12.1%) from December 31, 2013. This change mainly arises from the following increases: (i)
R$20,287 million in rural and agribusiness financing operations; (ii) R$19,491 million in financing
operations; (iii) R$14,410 million in mortgage loans; (iv) R$11,942 million in loans and bills
discounted; (v) R$2,390 million in credit card transactions; and (vi) R$1,328 million in forward
exchange contracts.
On December 31, 2013, the loans to customers totaled R$580,420 million, an increase of R$101,087
million (21.1%) in relation to the recorded on December 31, 2012. This change mainly arises from the
following increases: (i) R$37,749 million in rural and agribusiness financing operations; (ii) R$31,154
million in financing operations; (iii) R$18,927 million in loans and bills discounted; (iv) R$11,469
million in transactions income mortgage loans; and (v) R$1,448 million in credit card transactions.
Provision for losses with loans
The provision for losses with loans to customers totaled R$18,951 million on December 31, 2014, an
increase of R$3,298 million (21.1%) from December 31, 2013, mainly by the increased volume of
loans to customer.
On December 31, 2013, the provision for losses with loans to customers totaled R$15,653 million, an
increase of R$2,076 million (15.3%) from December 31, 2012.
Investments in associated companies
Investments in associated companies and joint ventures totaled R$15,922 million as of December 31,
2014, an increase of R$1,709 million (12.0%) from December 31, 2013. This change mainly arises
from the following increases:
(i) R$381 million in Brasilprev Seguros e Previdência, mainly: increase of R$739 million of equity
income and decrease of R$359 million of dividend payments;
(ii) R$340 million in BB Mapfre SH1 Participações S.A. mainly: increase of R$974 million of equity
income and decrease of R$632 million of dividend payments;
(iii) R$332 million in Cielo, mainly: increase of R$881 million of equity income and decrease of R$551
million of dividend payments;
(iv) R$203 million in Banco Votorantim, mainly: increase of R$259 million of equity income and
decrease of R$60 million of dividend payments;
(v) R$141 million in Elo Participações, mainly: increase of R$185 million of equity income and
decrease of R$44 million of dividend payments;
(vi) R$135 million in Mapfre BB SH2 Participações S.A., mainly: increase of R$133 million of equity
income;
(vii) R$85 million in Basilcap Capitalização S.A., mainly: increase of R$216 million of equity income
and decrease of R$132 million of dividend payments.
On December 31, 2013, investments in associates companies totaled R$14,213 million, an increase of
R$332 million (2.4%) from December 31, 2012. This change is a result of: a) increase of R$569
million due to the acquisition of equity interest at IRB – Brasil Resseguros S.A. as of August 27, 2013,
and b) decrease of R$76 million due to divestiture of ownership interest in Itapebi Geração de Energia
S.A.
Assets Property, plant and equipment
The Bank's fixed assets totaled R$7,180 million on December 31, 2014, an increase of R$605 million
(9.2%) compared to December 31, 2013. This increase mainly arises from investments in
Improvements to third-party property buildings (R$269 million), in furniture and equipment (R$192
million), in Data processing equipment (R$107 million), and buildings (R$50 million).
On December 31, 2013, the Bank's fixed assets totaled R$6,575 million, an increase of R$492 million
(8.1%) compared to December 31, 2012. This increase mainly arises from investments in
Improvements to third-party property buildings (R$381 million), and buildings (R$124 million).
Goodwill on Investments
The goodwill on investments totaled R$630 million on December 31, 2014, an increase of R$4 million
(0.6%) from December 31, 2013.
The goodwill on investments totaled R$626 million on December 31, 2013, reflecting growth of R$4
million (0.6%) in relation to December 31, 2012.
Other intangible assets
The other intangible assets, basically represented by intangible assets with a defined useful life,
totaled R$9,302 million on December 31, 2014, a decrease of R$419 million (4.3%) from December
31, 2013. This decrease was mainly due to: (i) decrease of R$2,482 million in intangible assets
relating to contracts; (ii) decrease of R$389 million in intangible assets relating to customer portfolio;
(iii) increase fo R$2,106 million in rights for payroll management; and (iv) increase of R$370 million
due to the acquisition of software development.
On December 31, 2013, the other intangible assets, basically represented by intangible assets with a
defined useful life, totaled R$9,721 million, a decrease of R$1,526 million (13.6%) from December 31,
2012. This increase was mainly due to: (i) decrease of R$838 million in rights for payroll
management; (ii) decrease of R$440 million in intangible assets relating to contracts; (iii) decrease of
R$411 million in intangible assets relating to customer portfolio; and (iv) increase of R$203 million due
to the acquisition of software development.
Current and deferred tax assets
The current tax assets totaled R$8,977 million on December 31, 2014, a decrease of R$2,707 million
(23.2%) compared to December 31, 2013. The deferred tax assets totaled R$23,556 million on
December 31, 2014, an increase of R$1,601 million (7.3%) compared to December 31, 2013.
On December 31, 2013, the current tax assets totaled R$11,684 million, an increase of R$2,643
million (29.2%) compared to December 31, 2012. The deferred tax assets totaled R$21,955 million on
December 31, 2013, an increase of R$1,676 million (7.1%) compared to December 31, 2012.
Others Assets
The amounts recorded in Other assets totaled R$76,613 million on December 31, 2014, an increase of
R$4,628 million (6.4%) from December 31, 2013. This increase mainly arises from: (i) an increase of
R$5,394 million in securities and credits receivable from the National Treasury; (ii) an increase of
R$4,990 million regarding judicial deposits made for tax purposes and civil and labor issues; (iii) an
increase of R$2,681 million in domestic sundry debtors; (iv) an increase of R$1,430 million in other
securities and credits receivable; (v) a decrease of R$308 million in Previ Surplus - Pension Funds;
(vi) a decrease of R$9,311 million regarding post-employment benefit plans – Previ – Plan I; (vii) a
decrease of R$593 million in other assets; (viii) a decrease of R$265 million in prepaid taxes.
On December 31, 2013, the amounts recorded in Other assets totaled R$71,985 million, an increase
of R$15,759 million (28.0%) in relation to December 31, 2012. This increase mainly arises from: (i) an
increase of R$4,793 million regarding judicial deposits made for tax purposes and civil and labor
163
Section 10 - Comments From the Executive Officers
issues; (ii) an increase of R$3,713 million regarding post-employment benefit plans – Previ – Plan I;
(iii) an increase of R$3,453 million in securities and credits receivable from the National Treasury; (iv)
an increase of R$2,284 million in other securities and credits receivable; (v) an increase of R$1,086
million in the royalty acquisition rights and government credits; (vi) an increase of R$670 million in
securities clearing accounts; (vii) an increase of R$531 million in other assets; (viii) an increase of
R$317 million in income receivable, primarily in Multiple Bank relating to remuneration for services
rendered to the National Treasury; and (ix) a decrease of R$1,232 million in Previ Surplus - Pension
Funds.
Balance Sheet – Liabilities
The "Liabilities" and "Shareholders' equity" groups in the Balance Sheet disclosed by Banco do Brasil,
on which these analyses are based, are presented below:
Chg. 14 / 13
R$ million, exc ept for perc entages
12 / 3 1/ 2 0 12
%
12 / 3 1/ 2 0 13
%
12 / 3 1/ 2 0 14
%
Abs.
%
(23,603)
Lia bilitie s
Customer deposits
Amounts payable to financ ial institutions
Financ ial liabilities at fair value through
profit or loss
Debt instruments
Derivatives
Obligations under repurc hase
agreements
449,931
44.4
461,425
39.7
437,822
34.3
15,480
1.5
26,169
2.3
30,675
2.4
2,557
0.3
3,433
0.3
2,995
0.2
388
-
342
-
345
-
2,169
0.2
3,091
0.3
2,650
0.2
4,506
(438)
3
(441)
(5.1)
17.2
(12.8)
0.9
(14.3)
204,651
20.2
223,917
19.3
293,920
23.0
70,003
31.3
Short- term liabilities
10,208
1.0
15,190
1.3
20,328
1.6
5,138
33.8
Long- term liabilities
18.7
178,071
17.6
272,036
23.4
322,880
25.3
50,844
Labor, tax and c ivil provisions
6,343
0.6
7,487
0.6
7,673
0.6
186
Tax liabilities
12,188
1.2
11,608
1.0
5,099
0.4
Current
5,036
0.5
5,454
0.5
2,642
Deferred
7,152
0.7
6,154
0.5
2,457
69,446
6.8
64,521
5.6
948,875
93.6
1, 0 8 5 , 7 8 6
48,400
4.8
54,000
-
-
Other liabilities
Tota l
2.5
(6,509)
(56.1)
0.2
(2,812)
(51.6)
0.2
(3,697)
(60.1)
71,305
5.5
6,784
10.5
93.5
1, 19 2 , 6 9 7
93.3
10 6 , 9 11
9.8
4.6
54,000
4.2
-
-
S ha re holde rs' e quity
Capital
Instruments Qualifying to Common
Equity Tier 1 Capital
Treasury Stoc k
Capital reserves
(461)
-
-
-
(1,325)
(0.1)
8,100
0.6
(1,622)
(0.1)
(297)
22.4
-
-
5,598
0.5
5,603
0.5
5
0.1
Profit reserves
16,132
1.6
19,972
1.7
26,626
2.1
6,654
33.3
Other ac c umulated c omprehensive
inc ome
(3,086)
(0.3)
(3,202)
(0.3)
(9,758)
(0.8)
(6,556)
3,469
0.3
(1,851)
(0.2)
(1,164)
(0.1)
64,454
6.4
Unalloc ated retained earnings
Tota l sha re holde rs' e quity
a ttributa ble to ma jority inte re st
Interest of the non- c ontrolling
stoc kholders
S ha re holde rs' e quity
Tota l lia bilitie s a nd sha re holde rs'
e quity
752
0.1
687
204.7
(37.1)
7 3 , 19 2
6.2
8 1, 7 8 5
6.4
8,593
11. 7
3,190
0.3
3,655
0.3
465
14.6
65,206
6.4
76,382
6.5
85,440
6.7
9,058
11. 9
1, 0 14 , 0 8 1
10 0
1, 16 2 , 16 8
10 0
1, 2 7 8 , 13 7
10 0
115 , 9 6 9
10 . 0
Customer deposits
The total deposits from clients totaled R$437,822 million as of December 31, 2014, a decrease of
R$23,603 million (5.1%) from December 31, 2013. This change is a result of: (i) decrease of
R$30,036 million in time deposits; and (ii) decrease of R$1,538 million in demand deposits. The
decreases were offset by an increase of R$7,971 million in savings deposits, R$7,526 million of
individuals, and R$456 million of legal entities.
On December 31, 2013, the total deposits from clients totaled R$461,425 million, an increase of
R$11,494 million (2.6%) from December 31, 2012. This change is a result of: (i) increase of R$22,984
million in savings deposits, R$22,253 million of individuals, and R$731 million of legal entities; and (ii)
increase of R$1,043 million in demand deposits. The increases were offset by a decrease of R$12,533
million in time deposits.
Amount payable to financial institutions
Amounts payable to financial institutions amounted to R$30,675 million as of December 31, 2014, an
increase of R$4,506 million (17.2%) in relation to December 31, 2013. This increase mainly arose
from the increase in deposits of financial institutions (R$4,392 million).
On December 31, 2013, amounts payable to financial institutions amounted to R$26,169 million, an
increase of R$10,689 million (69.1%) in relation to December 31, 2012. This increase mainly arose
from the increase in deposits of financial institutions (R$10.571 million).
Financial liabilities at fair value through profit or loss
The financial liabilities at fair value through profit or loss totaled R$2,995 million on December 31,
2014, a decrease of R$438 million (12.8%) in relation to December 31 2013. This variation arises
from the decrease of R$441 million in derivative financial instruments.
On December 31, 2013, the financial liabilities at fair value through profit or loss totaled R$3,433
million, an increase of R$876 million (34.3%) in relation to December 31 2012. This variation arises
from the increase of R$921 million in derivative financial instruments, partially offset by a decrease of
R$45 million in other financial liabilities at fair value through profit or loss.
Obligations under repurchase agreements
Obligations related to repurchase agreements totaled R$293,920 million as of December 31, 2014, an
increase of R$70,003 million (31,3%) in comparison to December 31, 2013. This increase mainly
arose from the increase of R$77,167 million in the third-party portfolio, offset by the R$7,164 million
decrease in own portfolio.
On December 31, 2013, obligations related to repurchase agreements totaled R$223,917 million, an
increase of R$19,266 million (9.4%) in comparison to December 31, 2012. This increase mainly arose
from the increase of R$16,718 million in own portfolio.
Short-term liabilities
Short-term liabilities totaled R$20,328 million as of December 31, 2014, an increase of R$5,138 million
(33.8%) in relation to December 31, 2013. This change mainly arises from the increase of R$5,080
million in borrowings.
On December 31, 2013, short-term liabilities totaled R$15,190 million, a decrease of R$4,982 million
(48.8%) in relation to December 31, 2012. This change mainly arises from the increase of R$5,018
million in borrowings.
Long-term liabilities
Long-term liabilities totaled R$322,880 million as of December 31, 2014, an increase of R$50,844
million (18.7%) in relation to December 31, 2013. This change mainly arises from the increases:
I.
R$36,567 million in issuance of securities, with an emphasis on: R$24,438 million in agribusiness
letters of credit; R$1,260 million in securities (Global Medium-Term Notes program); R$10,766
million in mortgage bonds; R$769 million in securities (Senior Notes). The increases were offset
by R$1,034 million in certificates of deposit;
II.
R$7,162 million in subordinated debts, in particular: subordinated financial bond issues (R$6,044
million); FCO funds (R$1,938 million); subordinated debt abroad (R$217 million); and decrease in
CDBs issued in Brazil (R$1,026 million);
III.
R$4,323 million in the transfer of obligations, especially the increases of: (i) obligations for
transfers of CEF, referring to the resources of the Minha Casa Minha Vida program (R$8,140
million); (ii) Finame (R$4,870 million) and (iii) the BNDES (R$565 mihões). The increases were
offset by decreases cited in: (i) the return of funds transferred by the Bacen for use in rural credit
as CMN Resolution No. 3,745/09 (R$9,039 million); and (ii) obligations related to rural credit
(R$189 million);
165
Section 10 - Comments From the Executive Officers
IV.
R$3,179 million in development funds, especially: FNDE -Northeast Development Fund (R$1,534
million); Fundo da Marinha Mercante - (RS$1,462 million); and the FDCO - Midwest Development
Fund (R$255 million).
On December 31, 2013, long-term liabilities totaled R$272,036 million, an increase of R$93,965 million
(52.8%) in relation to December 31, 2012. This change mainly arises from the increases:
I.
R$51,849 million in issuance of securities, with an emphasis on: R$44,989 million in agribusiness
letters of credit; R$3,856 million in securities (Global Medium-Term Notes program); R$3,390
million in mortgage bonds; R$731 million in securities (Senior Notes); and R$644 million in
certificates of deposit;
II.
R$23,854 million in onlendings, in particular liabilities with funds of other official institutions
(R$9,250 million); Finame (R$9,039 million); and BNDES funds (R$2,401 million);
III.
R$10,189 million in subordinated debts, in particular: subordinated financial bond issues (R$6,861
million); FCO funds (R$1,927 million); subordinated debt abroad (R$972 million); and CDBs issued
in Brazil (R$426 million);
IV.
R$5,813 million in perpetual bond issues, specifically the perpetual bond issue in Overseas
Branches (R$5,708 million).
Labor, tax and civil provisions
The provisions for labor, tax and civil contingencies totaled R$7,673 million as of December 31, 2014,
an increase of R$186 million (2.5%) in relation to December 31, 2013. This change is a result of the
following increases: (i) R$989 million in the amount of the provision for civil claims, partially offset by
decrease of R$787 million in the amount of the provision for labor claims and R$15 million in the
amount of the provision for tax claims.
On December 31, 2013, the provisions for labor, tax and civil contingencies totaled R$7,487 million,
an increase of R$1,144 million (18.0%) in relation to December 31, 2012. This change is a result of
the following increases: (i) R$605 million in the amount of the provision for civil claims; (ii) R$481
million in the amount of the provision for labor claims; and (iii) R$58 million in the amount of the
provision for tax claims.
Current and deferred tax liabilities
Current tax liabilities totaled R$2,642 million as of December 31, 2014, showing a decrease of
R$2,812 million (51.6%) in relation to December 31, 2013. The deferred tax assets totaled R$2,457
million on December 31, 2014, a decrease of R$3,697 million (60.1%) compared to December 31,
2013. This change is a result of the reversal of actuarial gains of 2014 (R$3,657 million).
On December 31, 2013, current tax liabilities totaled R$5,454 million, showing an increase of R$418
million (8.3%) in relation to December 31, 2012. The deferred tax assets totaled R$6,154 million on
December 31, 2013, a decrease of R$998 million (14.0%) compared to December 31, 2012. This
change is a result of the following decreases: (i) recognition of actuarial gains (R$1,101 million); (ii)
adjustment of the leasing portfolio (R$160 million). The decreases were partially offset by the (iii)
increase in positive mark-to market of financial assets (R$285 million).
Other liabilities
The amounts recorded in other liabilities totaled R$71,305 million on December 31, 2014, an increase
of R$6,784 million (10.5%) in relation to December 31, 2013. This change mainly arises from the
following increases: (i) R$2,906 million in liabilities with sundry creditors in the country; (ii) R$1,011
million in dividends, bonuses and bonuses payable; (iii) R$525 million in receipts from third parties;
(iv) R$514 million arising from advances on foreign exchange contracts; (v) R$980 million arising from
liabilities with credit card brands; (vi) R$392 million in tax liabilities; (vii) R$439 million in premium
paid for loyalty/performance; (viii) R$204 million in deposits subject to guarantees; (ix) R$186 million
in sundry creditors – foreign; (x) R$151 million in net foreign exchange portfolio; and (xi) R$110
million in charges and labor obligations. These increases are partially offset by decreases of: (i) R$504
million in liabilities for securities dealings; (ii) R$365 million arising from post-employment benefit
plans.
On December 31, 2013, the amounts recorded in other liabilities totaled R$64,521 million, a decrease
of R$4,925 million (7.1%) in relation to December 31, 2012. This change mainly arises from the
following decreases: (i) R$4,980 million arising from advances on foreign exchange contracts; (ii)
R$1,985 million arising from post-employment benefit plans, mainly in the Plan of Members - Cassi
(R$1,384 million) and General Plan Regulation - Economus (R$409 million); (iii) R$595 million in tax
liabilities; (iv) R$429 million in receipts from third parties, (v) R$360 million in dividends, bonuses and
bonuses payable; and (vi) R$330 million in liabilities for official agreements and payment services.
These decreases are partially offset by increases of: (i) R$2,082 million in liabilities with sundry
creditors in the country; (ii) R$770 million arising from liabilities with credit card brands; (iii) R$650
million in a provision for sundry payables; (iv) R$228 million in sundry creditors - foreign.
Shareholders' equity
Banco do Brasil's shareholders' equity totaled R$85,440 million on December 31, 2014, an increase of
R$9,058 million (11.9%), from December 31, 2013.
On December 31, 2013, Banco do Brasil's shareholders' equity totaled R$76,382 million, an increase of
R$11,176 million (17.1%), in relation to December 31, 2012.
Capital
Banco do Brasil's equity capital totaled R$54,000 million on December 31, 2014, unchanged from
December 31, 2013.
On December 31, 2013, Banco do Brasil's equity capital totaled R$54,000 million, an increase of
R$5,600 million (11.6%), from December 31, 2012. This change arises from the capital increase with
the use of the statutory reserve.
Eligible instrument to Principal Capital
Brazil's Central Bank authorized the capital and debit hybrid instrument, in the amount of R$8,100
million, to be eligible to the core capital of the Bank. Accounting for disclosure purposes, the
instrument is reclassified to Shareholders' equity.
Treasury shares
Treasury shares totaled R$1,622 million on December 31, 2014, due to the acquisition of 12,179,248
shares, according to Stock Repurchase Program, approved on June 6, 2014 by the Board of Directors.
On Decenber 31, 2013, treasury shares totaled R$1,325 million, due to the acquisition of 36,277,300
shares, according to Stock Repurchase Program, approved on June 13, 2013 by the Board of
Directors.
Profit reserves
Profit reserves totaled R$26,626 million on December 31, 2014, an increase of R$6,654 million
(33.3%) compared to December 31, 2013. This change arose from: (i) creation of a statutory reserve
for operating margin (R$6,211 million) and for dividend equalization (R$327 million); (ii) use of the
statutory reserve for payment of dividends (R$383 million); and (iii) creation of a legal reserve (R$566
million).
On December 31, 2013, profit reserves totaled R$19,972 million, a decrease of R$3,840 million
(23.8%) compared to December 31, 2012. This change arose from: (i) creation of a statutory reserve
for operating margin (R$8,711 million) and for dividend equalization (R$459 million); (ii) use of the
statutory reserve for a capital increase (R$5,600 million) and payment of dividends (R$468 million);
and (iii) creation of a legal reserve (R$791 million).
Other accumulated comprehensive income
Other accumulated comprehensive income totaled R$9,578 million on December 31, 2014, an increase
of R$6,556 million (204.7%) compared to December 31, 2013.
On December 31, 2013, other accumulated comprehensive income totaled R$3,202 million, a decrease
of R$116 million (3.6%) compared to December 31, 2012.
167
Section 10 - Comments From the Executive Officers
Unallocated retained earnings
Unallocated retained earnings totaled R$1,164 million on December 31, 2014, an increase of R$687
million (37.1%) compared to December 31, 2013.
On December 31, 2013, unallocated retained earnings totaled a negative balance of R$1,851 million, a
decrease of R$5,320 million (153.4%) compared to December 31, 2012.
Net income determined according to accounting practices adopted in Brazil is totally distributed in the
form of dividends, interest on own capital, and the formation of profit reserves. Hence the balance
presented in this account, in these financial statements prepared in accordance with IFRS, represents
the effect of the differences between accounting practices adopted in Brazil and the International
Accounting Standards.
Interests of the non-controlling stockholders
Interests of the non-controlling stockholders totaled R$3,655 million as of December 31, 2014, an
increase of R$465 million (14.6%) from December 31, 2013.
On December 31, 2013, interests of the non-controlling stockholders totaled R$3,190 million, an
increase of R$2,438 million (324.2%) in relation to December 31, 2012, due to the disposal of 33.75%
of BB Seguridade’s shares.
Statement of Income for the Year
Banco do Brasil recorded net income of R$13,343 million in 2014, an increase of 18.2% in relation to
the R$11,289 million recorded in 2013.
In 2013, the Bank's net income decreased by 1.0% (R$116 million) from the previous year.
The components of the Consolidated Statement of Income of Banco do Brasil are as follows, which
was used as basis for this analysis, are as follows:
Chg. 13 / 12
R$ million, exc ept for perc entages
2 0 12
Interest inc ome
Interest expense
Ne t inte re st inc ome
Net expenses with provision for losses with loans to
c ustomers
Expense with provision for losses on loans to financ ial
institutions
2 0 14
94,181
104,582
137,778
10,401
11.0
33,196
31.7
(53,921)
(62,848)
(91,124)
(8,927)
16.6
(28,276)
45.0
1, 4 7 4
3.7
4,920
11. 8
(1,452)
14.4
(3,275)
28.4
(6)
66.7
19
40,260
4 1, 7 3 4
(10,062)
(11,514)
(9)
(15)
Abs.
Chg. 14 / 13
2 0 13
46,654
(14,789)
4
%
Abs.
%
(126.7)
Ne t inte re st inc ome a fte r the a llowa nc e for
c re dit losse s
3 0 , 18 9
30,205
3 1, 8 6 9
16
0.1
1, 6 6 4
5.5
Non- inte re st inc ome
22,309
24,041
27,544
1, 7 3 2
7.8
3,503
14 . 6
16,340
18,074
19,778
1,734
10.6
1,704
9.4
157
137.7
(234)
(48.2)
Net revenues from fees and c ommissions
Net gains (losses) on financ ial assets/liabilities stated
at fair value through profit or loss
(188)
114
271
302
(160.6)
Net gains/(losses) on financ ial assets available for
sale
359
485
251
126
35.1
Net gains/(losses) in assoc iated c ompanies and joint
ventures
590
2,296
3,548
1,706
289.2
Other operating inc ome
Non- inte re st e xpe nse s
5,208
3,072
3,696
(2,136)
(41.0)
1,252
54.5
624
20.3
(3 7 , 4 8 9 )
(4 1, 3 8 7 )
(4 3 , 8 0 9 )
(3 , 8 9 8 )
10 . 4
(2 , 4 2 2 )
5.9
(16,477)
(18,819)
(18,863)
(2,342)
14.2
(44)
0.2
Administrative expenses
(9,601)
(10,159)
(10,476)
(558)
5.8
(317)
3.1
Contributions, taxes and other taxes
(3,743)
(4,033)
(4,101)
(290)
7.7
(68)
1.7
Amortization of intangible assets
(2,866)
(2,820)
(3,008)
46
(1.6)
(188)
6.7
Provisions
(2,025)
(2,552)
(2,076)
(527)
(950)
(880)
(1,030)
70
Personnel expenses
Deprec iation
Other operating expenses
(1,827)
(2,124)
15 , 0 0 9
Ta xe s
(3 , 6 0 4 )
(1, 5 7 0 )
(2 , 2 6 1)
Current
(5,441)
(6,531)
(3,557)
1,837
4,961
1,296
Deferred
12 , 8 5 9
(4,255)
Inc ome be fore ta xe s
15 , 6 0 4
(297)
26.0
(7.4)
16.3
(2 , 15 0 )
(14 . 3 )
2,034
(5 6 . 4 )
476
(18.7)
(150)
17.0
(2,131)
100.3
2,745
(6 9 1)
(1,090)
20.0
2,974
(45.5)
3,124
170.1
(3,665)
(73.9)
11, 4 0 5
11, 2 8 9
13 , 3 4 3
(116 )
(1. 0 )
2054
Attributable to c ontrolling shareholders
11,246
10,438
11,853
(808)
(7.2)
1,415
Attributable to non- c ontrolling interests
159
851
1,490
692
Ne t inc ome for the pe riod
2 1. 3
44.0
435.2
639
18 . 2
13.6
75.1
Net interest income
Interest income increased 31.7% (R$33,196 million), from R$104,582 million in 2013 to R$137,778
million in the year 2014. Interest expenses increased 45.0% (R$28,276 million), from R$62,848
million in 2013 to R$91,124 million in the year 2014. Thus, the increase in net interest income was
11.8% (R$4,920 million in 2014).
In 2013, Interest income increased 11.0% (R$10,401 million), from R$94,181 million in 2012. Interest
expenses increased 16.6% (R$8,927 million), from R$53,921 million in 2012. The increase in net
interest income was 3.7% (R$1,474 million in 2013).
Interest income
The following changes contributed to the increase in interest income for 2014:
(a) loans to customers, (b) money market repurchase agreements, (c) financial assets, (d) other
interest income, (e) loans to financial institutions, and (f) compulsory deposits in central banks.
In 2013, the following changes contributed to the increase in interest income:
(a) loans to customers, (b) loans to financial institutions, (c) money market repurchase agreements,
(d) financial assets, and (e) other interest income, partially offset by negative changes in (f)
compulsory deposits in central banks.
Income from changes in exchange rates is also considered in this caption.
a) Income from loans to customers
In 2014, revenues from loans to customers increased 23.3% (R$14,830 million), from R$63,781
million in 2013 to R$78,611 million, in line with the growth of 11.8% of the loans to customer portfolio
(R$66,866 million), as the following increases:
169
Section 10 - Comments From the Executive Officers
I.
15.6% (R$6,459 million) in income from loans and bills discounted, in particular:
(i) an increase R$5,761 million in income from the purchase of goods and services from Multiple
Bank operations due to rising average balances, mainly in the BB Capital de Giro (R$1,833
million), BG Giro Empresa Flex (R$1,063 million), Cartão de Crédito (Credit Card, R$928 million),
Cheque Especial (R$661 million), Desconto de Títulos (R$367 million), Conta Garantida (R$232
million), and CDC (R$201 million); (ii) acréscimo de R$1.056 milhões from branches abroad;
II.
30.2%
(R$3,551
million)
in
income
from
financing,
in
particular:
(i) an increase of R$2,390 million in the Multiple Bank due to rising average balances, mainly
from the purchase of goods and services (R$1,942 million), income from operations with BNDES
funds (R$234 million) and income from operations with Marinha Mercante funds (R$214 million);
(ii) an increase of R$1,186 million in the Multiple Bank due to an increase of average balances and
rates mainly in BB Capital de Giro a Exportação (R$1.007 milhões), Cartão de Crédito (R$179
milhões); (iii) decrease of R$418 milhões in income of CDC do Banco Múltiplo mainly due to
decrease of average balances;
III.
57.2% (R$1,589 million) in income from agroindustrial financing due mainly to increased average
balances and CDI rates (13.82% in 2014 compared to 8.07% in 2013);
IV.
86.9% (R$1,311 million) in income from mortgage financing, due basically to increased average
balances of BB Crédito Imobiliário;
V.
19.5% (R$979 million) in income from rural financing due mainly to increased average balances
and TR (0.75% in 2014 compared to 0.19% in 2013);
VI.
45.2% (R$549 million) in income from operations acquired mainly due mainly to increased
average balances;
In 2013, revenues from loans to customers increased 11.3% (R$6,492 million), from R$57,289 million
in 2012 to R$63,781 million, in line with the growth of 21.1% of the loans to customer portfolio
(R$101,087 million), as follows the following increases:
I.
31.7%
(R$2,834
million)
in
income
from
financing,
in
particular:
(i) a R$1,334 million in income from the purchase of goods and services from Multiple Bank
operations due to higher depreciation of the Real against the U.S. dollar (14.64% in 2013 against
8.95% in the same period of 2012) and increase of average balances; (ii) a R$846 million
increase in the Multiple Bank due to rising average balances, mainly in the BB Capital de Giro a
Exportação (R$493 million), Credit Card (R$242 million) and Crédito Direto ao Consumidor – CDC
(R$111 million); (iii) a R$351 million increase in income from operations with BNDES funds from
Multiple Bank due to higher depreciation of the Real against the U.S. dollar - ―D-1‖ (14.64% in
2013 against 8.94% in the same period of 2012) and increase of average balances;
II.
3.6% (R$1,422 million) in income from loans and bills discounted, in particular: (i) a R$1,551
million increase in the Multiple Bank due to rising average balances, mainly in the BB Giro (R$780
million), BB Giro Empresa Flex (R$521 million) and BNDES (R$250 million); (ii) a R$515 million
increase in foreign branches mainly in income from Working Capital; (iii) a R$790 million decrease
in Multiple Bank due to rising a decrease in rates, mainly in the CDC (R$396 million) and Overdraft
(R$394 million);
III.
335.9% (R$936 million) in income from operations acquired primarily due mainly to increased
average balances;
IV.
68.6% (R$613 million) in income from real estate financing, due basically to increased average
balances of BB Crédito Imobiliário;
V.
10.4% (R$474 million) in income from rural financing due mainly to increased average balances;
VI.
11.5% (R$287 million) in income from rural and agroindustrial financing due mainly to increased
average balances.
b) Income from money market repurchase agreements
In 2014, there was an increase of 74.4% (R$11,893 million) income from money market repurchase
agreements, from R$15,992 million in 2013 to R$27,885 million due to increased rates in the period,
mainly CDI, and average balances.
In 2013, there was an increase of 13.0% (R$1,835 million) income from money market repurchase
agreements, from R$14,157 million in 2012 to R$15,992 million due to increased in the average
balances.
c) Income from financial assets
The income from financial assets totaled R$10,787 million in 2014, an increase of 28.1% (R$2,364
million) from 2013. This change is mainly due to the increase in revenues from financial assets
available for sale (R$3,385 million), partially offset by the decrease in income from financial assets at
fair value through profit or loss (R$717 million) and income from financial assets held to maturity
(R$304 million).
The income from financial assets totaled R$8,423 million in 2013, increase of 3.2% (R$261 million) in
relation to 2012. This change is mainly due to the increase in revenues from financial assets available
for sale (R$714 million), partially offset by the decrease in income from financial assets held to
maturity (R$279 million), and income from financial assets at fair value through profit or loss (R$174
million).
d) Other interest income
In 2014, there was an increase of 38.0% (R$2,158 million) in other interest income, from R$5,681
million in 2013 to R$7,839 million. This change arises from: an increase of R$1,420 million in income
from rate equalization income – agricultural harvests due to the increase in volume of Equalizable
lines R$638 million in income from restatements of guarantee deposits and R$100 million in other
income.
In 2013, there was an increase of 9.7% (R$501 million) in other interest income, from R$5,180 million
in 2012 to R$5,681 million. This change arises from the addition of: R$181 million in income from
restatements of guarantee deposits, R$180 million in income from rate equalization income –
agricultural harvests and R$140 million in other income.
e) Loans to financial institutions
In 2014, there was an increase of 16.9% (R$1,034 million) in revenues from loans to financial
institutions, from R$6,113 million in 2013 to R$7,147 million, with R$957 million in interbank deposits
mainly due to the increase of the CDI rate.
In 2013, there was an increase of 64.1% (R$2,388 million) in revenues from loans to financial
institutions, from R$3,725 million in 2012 to R$6,113 million, with R$2,391 million in interbank
deposits mainly due to the increase of average balances.
f) Revenues from compulsory deposits in central banks
Revenues from compulsory deposits with the Brazilian Central Bank totaled R$5,510 million in 2014,
an increase of 20.0% (R$919 million), compared to R$4,591 million recorded in 2013. This variation is
mainly due to the TMS rate increased (10.90% in 2014 against 8.22% in 2013).
Revenues from compulsory deposits with the Brazilian Central Bank totaled R$4,591 million in 2013,
which represents a decrease of 19.0% (R$1,076 million), compared to R$5,667 million recorded in
2012. This change is mainly due to the TMS rate reduction (8.22% in 2013 against 8.49% in 2012)
and average balances.
Interest expenses
The following changes contributed to the decrease in interest expenses for 2014: (a) repurchase
agreements, (b) long-term liabilities, (c) customer deposits, (d) interbank deposits and (e) other
interest expenses, offset by the decrease in short-term liabilities.
The following changes contributed to the decrease in interest expenses for 2013: (a) long-term
liabilities, (b) other interest expenses, (c) repurchase agreements, and (d) short-term liabilities, offset
by the decrease in (e) customer deposits and (f) interbank deposits.
In this item are also considered expenses arising from changes in exchange rates.
a) Expenses from repurchase agreements
In 2014 there was an increase of 69.7% (R$12,205 million) in expenses with repurchase agreements,
from R$17,517 million in the 2013 fiscal year to R$29,722 million, mainly due to the increased average
balances, increase of the CDI and TMS rates, with the following increase: 69.5% (R$10,390 million) in
third-party portfolio expenses and 70.9% (R$1,814 million) in own portfolio expenses.
In 2013 there was an increase of 14.2% (R$2,174 million) in expenses with repurchase agreements,
from R$15,343 million in the 2012 fiscal year to R$17,517 million, mainly due to the increased average
171
Section 10 - Comments From the Executive Officers
balances, with the following increase: 13.4% (R$1,768 million) in third-party portfolio expenses and
18.9% (R$406 million) in own portfolio expenses.
b) Expenses with long-term liabilities
Expenses with long-term liabilities increased 61.3% (R$10,786 million) in 2014, from R$17,593 million
in the 2013 fiscal year to R$28,379 million. This increase is mainly due to the following increases: (i)
R$5,105 million in expenses with agribusiness letters of credit; (ii) R$2,687 million in expenses with
onlendings; (iii) R$898 million in expenses from subordinated debts; (iv) R$603 million in mortgage
bonds; (v) R$562 million in expenses from liabilities from issuance of securities; (vi) R$468 million in
expenses with export financing; and (vii) R$249 million in capital and debt hybrid instruments.
In 2013, expenses with long-term liabilities increased 84.4% (R$8,054 million), from R$9,539 million
in the 2012 fiscal year. This increase is mainly due to the following increases: (i) R$2,642 million in
expenses with agribusiness letters of credit; (ii) R$1,995 million in expenses from liabilities from
issuance of securities; (iii) R$1,512 million in onlendings; (iv) R$780 million in subordinated debts; (v)
R$327 million in capital and debt hybrid instruments; and (vi) R$270 million in expenses with export
financing.
c) Customer deposit expenses
In 2014, there was an increase of 16.6% (R$4,473 million) in customer deposit expenses, from
R$26,939 million in 2013 to R$31,412 million. This increase is mainly due to: an increase of 29.3%
(R$2,250 million) in interest expense on saving deposits and an increase of 11.5% (R$2,176 million)
in term deposits.
In 2013, there was a decrease of 4.6% (R$1,297 million) in customer deposit expenses, from
R$28,236 million in 2012 to R$26,939 million. It is worth mentioning the decline of 10.1% (R$2,136
million) in interest expense on term deposits and the increase of 11.8% (R$808 million) in savings
deposits.
d) Expenses with interbank deposits
In 2014, there was an increase of 433.3% (R$910 million) in expenses with interbank deposits, from
R$210 million in 2013 to R$1,120 million, mainly due to the increased of CDI rate and average
balances.
In 2013, there was a decrease of 34.8% (R$112 million) in expenses with interbank deposits, from
R$322 million in 2012 to R$210 million, due to the reduction of CDI rate (8.07% in 2013 against
8.39% in 2012) and average balances.
e) Other interest expenses
In 2014, there was a decrease of 42.8% (R$95 million) in other interest expenses, from R$222 million
in 2013 to R$127 million.
In 2013, there was a decrease of 16.9% (R$45 million) in other interest expenses, from R$267 million
in 2012 to R$222 million.
f) Expenses with short-term liabilities
In 2014, there was a decrease of 0.5% (R$2 million) in expenses with short-term liabilities, from
R$366 million in 2013 to R$364 million.
In 2013, there was an increase of 70.2% (R$151 million) in expenses with short-term liabilities, from
R$215 million in 2012 to R$366 million. This change is basically due to the increase of R$140 million in
import financing expenses.
Net expenses with provision for losses with loans to customers
Net expenses with the provision for losses with loans to customers totaled R$14,789 million in 2014,
an increase of 28.4% (R$3,275 million) from 2013. This change resulted from the increase in the
provision for loan transactions totaling R$3,149 million (27.8%), in particular: R$4,582 million in loans
and bills discounted, R$240 million in financing, R$210 million in mortgage loans, mainly due to higher
average balances of the loan portfolio, offset by the decrease of R$2,206 million in rural financing
mainly due to the decrease in the portfolio risk.
Net expenses with the provision for losses with loans to customers totaled R$11,514 million in 2013,
an increase of 14.4% (R$1,452 million) from 2012. This change resulted from the increase in the
provision for loan transactions totaling R$1,566 million (16.0%), in particular: R$735 million in rural
financing, R$491 million in loans and bills discounted, R$214 million in mortgage loans and R$108
million in financing, mainly due to increased average balances of the loan portfolio.
Net interest income after the allowance for credit losses
Net interest income after the provision for customer loans losses was R$31,869 million in 2014, an
increase of 5.5% (R$1,664 million) from 2013, owing to the events explained in the preceding items.
In 2013, net interest income after the provision for customer loans losses was R$30,205 million, an
increase of 0.1% (R$16 million) from 2012.
Non-interest income
The non-interest income totaled R$27,544 million in 2014, an increase of R$3,503 million (14.6%)
from R$24,041 million recorded in 2013.
The non-interest income totaled R$24,041 million in 2013, an increase of R$1,732 million (7.8%) in
relation to R$22,309 million recorded in 2012.
These changes had the contribution of:
Net revenues from fees and commissions
In 2014, there were an increase of R$1,704 million (9.4%) from R$18,074 million in 2013 to R$19,778
million. This change mainly arises from the following increases:
(i)
R$717 million in income related to credit/charge cards;
(ii)
R$600 million in income from management of third-party funds;
(iii)
267 million in income from commissions on sales of insurance products, pension plans and
capitalization;
In 2013, there were an increase of R$1,734 million (10.6%) from R$16,340 million in 2012 to
R$18,074 million. This change mainly arises from the following increases:
(i)
R$760 million in income from commissions on sales of insurance products, pension plans and
capitalization;
(ii)
R$416 million in income from management of third-party funds;
(iii)
R$378 million in income related to credit /charge cards; and
(iv)
R$283 million in income from credit transactions and guarantees provided.
The increases mentioned were partially offset by a decrease of R$382 million in income related to
checking accounts.
Net gains/(losses) in associated companies
Income from interests in associated companies for the 2014 fiscal year was R$3,548 million, an
increase of R$1,252 million as compared to the 2013 fiscal year (R$2,296 million). This change is
mainly due to the gains in the following investiments:
(i)
R$437 million from the investment in Banco Votorantim, from R$178 million loss to a profit of
R$259 million, mainly due to improve the quality of the loan portfolio and the consequent
reduction of losses as well as the reduction of administrative and personnel expenses;
(ii)
R$292 million in Brasilprev Seguros e Previdência S.A., mainly by an increase of 34.7% revenues
compared to 2013 occasioned by the increase in VGBL plan sales.
(iii)
R$223 million in BB Mapfre SH1 Participações SA, mainly due to increased of revenue in the rural
credit insurance.
Income from interests in associated companies for the 2013 fiscal year was R$2,296 million, an
increase of R$1,706 million as compared to the 2012 fiscal year (R$590 million). This change is mainly
due to the gains in the following investiments:
(i)
R$963 million from the reduction in the loss from investment in Banco Votorantim, loss of R$178
million in 2013 from R$1,083 million in 2012, mainly due to improve the quality of the loan
173
Section 10 - Comments From the Executive Officers
portfolio and the consequent reduction of losses as well as the reduction of administrative and
personnel expenses;
(ii)
R$280 million in BB Mapfre SH1 Participações SA, gain of R$750 million in 2013 against R$470
million in 2012, mainly due to increased of revenue in the life and rural credit insurance.
(iii)
R$166 million in BB Mapfre SH2 Participações SA, gain of R$125 million in 2013 against a loss of
R$41 million in 2012, mainly due to higher insurance revenue in the automotive segment;
(iv)
R$117 million in Brasilprev Seguros e Previdência S.A., gain of R$447 million in 2013 against
R$330 million in 2012, mainly by an increase of 27.1% revenues compared to 2012; and
(v)
R$122 million in Cielo S.A., gain of R$774 million in 2013 against R$652 million in 2012, mainly by
an increase of 25.0% net income with credit/debit cards.
Other operating revenues
In the 2014 fiscal year, other operating revenues increased R$624 million (20.3%), from R$3,072
million in the 2013 to R$3,696 million. This change is due chiefly to the following increases:
(i)
R$750 million in gains in employee benefit plans;
(ii)
R$311 million in income related to card transactions;
(iii)
R$138 million in receivables income;
(iv)
R$120 million in receivables income relating to Banco Postal;
(v)
R$96 million in the recovery of charges and expenses;
(vi)
R$83 million in income from operations of Microcrédito Produtivo Orientado-MPO;
These decreases were partially offset by decreases of:
(i)
R$446 million due to higher losses on foreign currency transactions;
(ii)
R$185 million in gains in the sale of permanent investments;
(iii)
R$139 million in gains in the conversion of foreign investments; and
(iv)
R$98 million arising from the reversal of provisions for sundry payments;
In the 2013 fiscal year, other operating revenues dropped by R$2,136 million (41.0%), from R$5,208
million in the 2012 fiscal year to R$3,072 million. This change is due chiefly to the following
decreases:
(i)
R$1,103 million due to the disposal of quotas in Fundo de Investimento Imobiliário - Progressivo
II in 2012;
(ii)
R$764 million due to higher losses on foreign currency transactions;
(iii)
R$757 million in gains in employee benefit plans in surplus situation, due to the rising cost of
interest on the obligations of the Previ Plano 1 (R$855 million) and the current service cost (R$26
million), offset by an increase of plan assets of interest income (R$124 million);
(iv)
R$197 million in the recovery of charges and expenses; and
(v)
R$133 million in update rights to receive with benefit plans arinsing from surplus allocation
agreements Plano 1 Previ.
These decreases were partially offset by increases of:
(i)
R$372 millions in gains in the conversion of foreign investments;
(ii)
R$164 million arising from the reversal of provisions for sundry payments;
(iii)
R$123 million in gains in the sale of permanent investments;
(iv)
R$105 million in income related to card transactions; and
(v)
R$83 million in receivables income.
Non-interest expenses
Non-interest expenses increased R$2,422 million (5.9%), from R$41,387 million in 2013 to R$43,809
million in 2014. Main items that caused increase in non-interest expenses were other operating
expenses, administrative expenses, amortization of intangible assets and depreciation. These
increases were partially offset by decreases of provisions.
Non-interest expenses increased R$3,898 million (10.4%), from R$37,489 million in 2012 to R$41,387
million in 2013. Main items that caused increase in non-interest expenses were personnel expenses,
administrative expenses, provisions, contributions, rates and other taxes, and other operating
expenses.
Administrative expenses
Administrative expenses increased R$317 million (3.1%), from R$10,159 million for the 2013 fiscal
year to R$10,476 million in 2014. The items that increased the most are:
(i)
surveillance and security services (R$163 million);
(ii)
rental and operating leases (R$155 million);
(iii)
data processing (R$149 million); and
(iv)
communications (R$86 million).
These increases were partially offset by decreases of:
(i)
R$133 million in the financial system services expenses related to the disposal of share from
Seguridade that occurred in 2013;
(ii)
R$63 million in third-party services, mainly relating to Banco Postal compensation;
(iii)
R$63 million in philanthropic contributions.
In 2013, administrative expenses increased R$558 million (5.8%), from R$9,601 million for the 2012
fiscal year to R$10,159 million. The items that increased the most are:
(i)
rental and operating leases (R$245 million);
(ii)
third-party services (R$146 million);
(iii)
specialized technical services (R$87 million); and
(iv)
philanthropic contributions (R$79 million).
Amortization of Intangible Assets
In 2014, the item amortization of intangible assets increased R$188 million (6.7%), from R$2,820
million in the 2013 to R$3,008 million. This change is mainly due to the increase in amortization
expenses related to Banco Postal (R$181 million).
In 2013, the item amortization of intangible assets decreased by R$46 million (1.6%), from R$2,866
million in 2012 to R$2,820 million.
Provisions
In 2014, provision expenses decreased by R$476 million (18.7%), from R$2,552 million in 2013 to
R$2,076 million. This change mainly due to the following decreases:
(i)
90.0% (R$1,179 million) in provisions for labor claims, offset by other operating expenses item,
mainly due to improvements implemented in 2014 in the transitional adjustments of the financial
statements to IFRS; and
(ii)
91.2% (R$59 million) in provisions for tax demands.
This decrease was partially offset by an increase of 63.1% (R$762 million) in expenses with provisions
for civil claims.
In 2013, provision expenses increased R$527 million (26.0%), from R$2,025 million in 2012 to
R$2,552 million. This change was chiefly due to the following increases:
(i)
R$639 million in provisions for labor claims; and
(ii)
R$68 million in provisions for tax claims.
This increase was partially offset by a decrease of R$180 million (13.0%) in expenses with provisions
for civil claims.
175
Section 10 - Comments From the Executive Officers
Other operating expenses
In 2014, other operating expenses increased R$2,131 million (100.3%), from R$2,124 million in 2013
to R$4,255 million. This change mainly arises from the following increases:
(i)
R$772 million in other expenses, offset by provisions item, mainly due to improvements
implemented in 2014 in the transitional adjustments of the financial statements to IFRS
(ii)
R$662 million in expenses for transaction remuneration of the Banco Postal, which started to be
realized this year;
(iii)
R$360 million in expenses with restatement of guarantee deposits; and
(iv)
R$160 million in provisions for losses on other assets.
In 2013, other operating expenses increased R$297 million (16.3%), from R$1,827 million in 2012 to
R$2,124 million. This change mainly arises from the following increases:
(i)
R$194 million in provisions for losses on other assets;
(ii)
R$108 million in other expenses; and
(iii)
R$45 million in expenses with restatement of actuarial liabilities.
These increases were partially offset by the R$96 million decrease in expenses with restatement of
guarantee deposits.
Income before taxes
The Bank’s income before income tax totaled R$15,604 million for the 2014 fiscal year, an increase of
R$2,745 million (21.3%) as compared to R$12,859 million in 2013.
In 2013, the Bank's income before taxes decreased by R$2,150 million (14.3%), from R$15,009
million in 2012 to R$12,859 million.
Tax expenses
Expenses with taxes amounted to R$2,261 million in fiscal year 2014, representing an increase of
R$691 million (44.0%) in relation toe R$1,570 million in 2013. Current taxes in this period decreased
by R$2,974 million (45.5%), from R$6,531 million in 2013 to R$3,557 million. This decrease was
offset by the reduction of R$3,665 million from the positive outcome of deferred taxes, which changed
from R$4,961 million in 2013 to R$1,296 million in 2014.
In 2013, expenses with taxes decresed R$2,034 million (56.4%) from R$3,604 million posted in 2012.
Current taxes over this period increased R$1,090 million (20.0%), from R$5,441 million in the 2012
fiscal year to R$6,531 million in 2013, offset by increase of the R$3,124 million gain in deferred taxes,
which changed from R$1,837 million in 2012 to R$4,961 million in 2013.
Net income for the year
The net income increased R$2,054 million (18.2%) in 2014, from R$11,289 million in 2013 to
R$13,343 million in 2014. Out of this amount, R$11,853 million are attributable to the Bank's
controlling shareholders (R$10,438 million in 2013) and R$1,490 million to minority shareholders
(R$851 million in 2013).
Basic and diluted earnings per share increased 14.9% in the year 2014, totaled R$4.23 per share,
compared to R$3.68 in 2013.
In 2013, net income decreased R$116 million (1.0%), from R$11,405 million in 2012 to R$11,289
million in 2013. Out of this amount, R$10,438 million are attributable to the Bank's controlling
shareholders (R$11,246 million in 2012) and R$851 million to minority shareholders (R$159 million in
2012).
Basic and diluted earnings per share dropped 6.4% in the year 2013, totaled R$3.68 per share,
compared to R$3.93 in 2012.
10.2. The Directors must comment:
a.
income from issuer's operations:
(i) details on any important revenue items and (ii) factors that materially impacted
operating income
b.
changes in revenues from price variations, foreign exchange rates, inflation,
changes in volume and introduction of new products and services
c.
impact of inflation, of price changes of the main inputs and products, of foreign
exchange rate and interest rate in the issuer's operating and financial income
Banco do Brasil recorded Net Income of R$13,343 million in 2014, according to the International
Financial Reporting Standards (IFRS). This result was 18.2% higher than in 2013. The following table
presents the main items of the Bank's income, and return on average equity.
R$ million, exc ept for perc entages
Interest inc ome
Interest expenses
2 0 12
94,181
2 0 13
104,582
(53,921)
(62,848)
40,260
Ne t inte re st inc ome
Net expenses with provision for losses with loans to financ ial institutions
4 1, 7 3 4
2 0 14
137,779
Chg. %
13 / 12
11.0
(91,124)
Chg. %
14 / 13
31.7
16.6
45.0
46,654
3.7
11. 8
4
66.7
--
14.4
28.4
(9)
(15)
Net expenses with provision for losses with loans to c ustomers
(10,062)
(11,514)
Inte re st inc ome , ne t of provision for losse s on c ustome r loa ns
3 0 , 18 9
30,205
3 1, 8 6 9
0.1
5.5
Non- inte re st inc ome
22,309
24,041
27,544
7.8
14 . 6
Non- inte re st e xpe nse s
(14,789)
(3 7 , 4 8 9 )
(4 1, 3 8 7 )
(4 3 , 8 0 9 )
10 . 4
5.9
Inc ome be fore ta xe s
15 , 0 0 9
12 , 8 5 9
15 , 6 0 5
(14 . 3 )
2 1. 4
Taxes
(3,603)
11, 4 0 5
(1,570)
11, 2 8 9
(2,261)
13 , 3 4 3
(56.4)
44.0
(1. 0 )
18 . 2
11,246
10,438
11,853
(7.2)
13.6
159
851
1,490
Ne t inc ome for the ye a r
Net inc ome attributable to the majority interest
Net inc ome attributable to interests by non- c ontrolling shareholders
Re turn on Ave ra ge S ha re holde rs' Equity
17 . 6 %
15 . 9 %
433.7
75.2
16 . 5 %
Below we present the result of Banco do Brasil's main operations according to: (i) Interest income; (ii)
Interest expenses; (iii) Net expenses with provision for losses with loans to customers; (iv) Noninterest income; (v) Non-interest expenses.
Interest income
Interest Income amounted to R$137,779 million in 2014, an increase of 31.7% over 2013, driven by
growth in revenues from loans to customers, representing 57.1% of total interest income, and
revenues from money market repurchase agreements, which account for 20.2% of interest income, as
shown in the following table.
In 2013, growth of Interest income was also led by the expansion of gains from loans to customers,
which represented 61.0% of total.
R$ million, except for percentages
2012
Interest income
%
2013
%
2014
%
Chg. %
13 / 12
Chg. %
14 / 13
94,181
100
104,582
100
137,779
100
11.0
31.7
Loans to customers¹
57,289
60.8
63,781
61.0
78,611
57.1
11.3
23.3
Money market repurchase agreements
14,157
15.0
15,992
15.3
27,885
20.2
13.0
74.4
Loans to financial institutions²
5,383
5.7
6,097
5.8
9,482
6.9
13.3
55.5
Financial assets available for sale
3,725
4.0
6,113
5.8
7,147
5.2
64.1
16.9
Compulsory deposits in central banks
5,667
6.0
4,591
4.4
5,510
4.0
(19.0)
Financial assets at fair value through profit or loss²
2,190
2.3
2,015
1.9
1,298
0.9
(8.0)
(35.6)
Financial assets held to maturity
Other interest income
590
5,180
0.6
5.5
311
5,681
0.3
5.4
7
7,839
0.0
5.7
(47.3)
9.7
(97.7)
38.0
20.0
1 – Includes interest income recognized on loan operations with total impairment of R$6,302 million in 2014 (R$4,691 million in 2013).
2 - Includes dividend income totaling R$85 million in 2014 (R$33 million in 2013 and R$88 million in 2012).
177
Section 10 - Comments From the Executive Officers
Loans to customers
Interest income with loan to customers amounted to R$78,611 million in 2014, 23.3% more than in
2013. The performance of this income was boosted by an increase in the balance of loan to
customers, totaled R$650,584 million at the end of 2014 (+12.1% compared to the total observed in
2013). There was also a positive effect related to the portfolio movement. Moreover, the exchange
variation of 13.4% in the 2014/2013 comparison also impacts income from loans to customers.
In 2013, income from loans to customers increased 11.3%, from R$57,289 million to R$63,781
million, driven by a growth of 21.1% of the loans to customers portfolio.
In the following table, the portfolio of loans to customers is presented, segmented by type,
highlighting the growth of (i) rural/agribusiness financing; (ii) mortgage financing, a type in which
Banco do Brasil started operating in 2008 and has grown significantly since then; and (iii) financing,
especially in loans to businesses.
R$ million, exc ept for perc entages
12 / 3 1/ 2 0 12
Loa n ope ra tions
Loans and bills disc ounted¹
Financ ing²
Rural and agroindustrial financ ing
Real estate financ ing
Others
450,978
%
12 / 3 1/ 2 0 13
%
12 / 3 1/ 2 0 14
94.8
Chg. %
14 / 13
%
94.1
550,395
6 16 , 6 3 7
94.8
207,821
43.4
226,747
39.1
238,689
36.7
5.3
118,121
24.6
149,275
25.7
168,766
25.9
13.1
112,092
23.4
149,841
25.8
170,128
26.1
13.5
12,854
2.7
24,323
4.2
38,733
6.0
59.2
90
0.0
208
0.0
0.0
54.0
27,327
5.7
2 9 , 16 3
5.0
33,087
5.1
13 . 5
Credit c ard operations
16,087
3.4
17,535
3.0
19,925
3.1
13.6
Advanc es on foreign exc hange c ontrac ts
10,905
2.3
11,235
1.9
12,563
1.9
11.8
107
0.0
136
0.0
235
0.0
72.8
O the r re c e iva ble s with loa n c ha ra c te ristic s
Guarantees honored
Others
Le a se ope ra tions
Tota l loa ns to c ustome rs
321
12 . 0
227
0.0
257
0.0
363
0.1
1, 0 2 8
0.2
862
0.1
861
0.1
(0 . 2 )
41.7
479,333
10 0
580,420
10 0
650,584
10 0
12 . 1
1 - The balance of ―Loans and bills discounted‖ includes operations to businesses, mainly comprised of working capital operations and discount of
trade receivables, and operations to individuals, mainly comprised of personal loans (direct consumer finance and overdraft accounts) and
operations with credit cards paid in installments.
2 - The balance of ―Financing‖ includes operations to business, comprised mainly of import and export financing transactions and other medium-term
financing to small, medium and large enterprises with funds from onlendings. The balance of the ―Financing‖ caption also includes transactions to
individuals, mainly comprised of vehicle financing.
Scheduling of loans to customers by maturity brackets
The scheduling of loans to customers by maturity is presented in the following table. In terms of
falling due installments, over 50% of the portfolio matures in more than 360 days.
R$ million, exc ept for
perc entages
Insta llme nts fa lling due
12 / 3 1/ 2 0 12
4 7 4 , 2 19
%
98.9
8.2
12 / 3 1/ 2 0 13
%
12 / 3 1/ 2 0 14
%
Chg. %
13 / 12
Chg. %
14 / 13
573,231
98.8
6 4 1, 6 0 6
98.6
20.9
11. 9
11.7
01 to 30 days
39,434
41,708
7.2
46,570
7.2
5.8
31 to 60 days
25,673
5.4
28,194
4.9
29,272
4.5
9.8
61 to 90 days
20,744
4.3
24,932
4.3
23,872
3.7
20.2
3.8
(4.3)
91 to 180 days
52,551
11.0
60,631
10.4
64,324
9.9
15.4
6.1
181 to 360 days
79,505
16.6
95,848
16.5
99,105
15.2
20.6
3.4
361 to 1080 days
132,039
27.5
143,828
24.8
164,318
25.3
8.9
14.2
1081 to 1800 days
59,929
12.5
73,157
12.6
96,975
14.9
22.1
32.6
Over 1800 days
63,656
13.3
104,364
18.0
116,814
18.0
687
0.1
569
0.1
355
0.1
Other¹
Insta llme nts ove rdue
11.9
(37.6)
5 , 115
1. 1
7 , 18 9
8,979
1. 4
01 to 14 days
883
0.2
863
0.1
2,389
0.4
15 to 30 days
470
0.1
587
0.1
724
0.1
24.8
23.4
31 to 60 days
601
0.1
1,101
0.2
895
0.1
83.1
(18.7)
61 to 90 days
477
0.1
676
0.1
819
0.1
41.7
21.3
91 to 180 days
959
0.2
1,213
0.2
1,282
0.2
26.5
5.7
181 to 360 days
1,138
0.2
1,501
0.3
1,617
0.2
31.9
7.8
Over 360 days
587
0.1
1,249
0.2
1,253
0.2
112.9
0.3
580,420
10 0
650,584
10 0
2 1. 1
12 . 1
Tota l
479,333
10 0
1. 2
63.9
(17.2)
40.6
(2.3)
24.9
176.9
1 - Operations with third-party risks subject to Government Funds and Programs, mainly Pronaf, Procera, FAT, BNDES and FCO. They include the
amount of overdue installments in the total amount of R$25,999,000, which comply with rules defined in each program for reimbursement with
the managers and do not imply a credit risk for the Bank.
Renegotiated Credits
The table below shows the breakdown of our renegotiated loan portfolio. The renegotiation of loans
can be driven by (i) renewal, i.e. transactions contracted for partial or full settlement of the previous
maturing operation resulting in a change in payment maturities or the originally agreed payment
terms, including the possibility of new disbursements; and (ii) renegotiation due to late payment, i.e.
renegotiation of debts due to late payment.
The line’s total, which includes renegotiated credits enable future or past-due debt, rose to R$43,068
million in 2014, an amount 26.2% higher (R$8,930 million) than the previous year. Of this total,
10.7% refers to renegotiated loans during the period because of late payment by customers. The
installment of 89.3% corresponds to renewed credit, i.e. credit renegotiated regarding operations not
yet matured.
In 2013, the line’s total, which includes renegotiated credits enable future or past-due debt, totaled
R$34,138 million, an amount 5.8% higher (R$1,861 million) than the previous year. Of this total,
7.4% refers to renegotiated loans during the period because of late payment by customers. The
installment of 92.6% corresponds to renewed credit, i.e. credit renegotiated regarding operations not
yet matured.
179
Section 10 - Comments From the Executive Officers
R$ million, exc ept for perc entages
Re n e g o tia te d lo a n p o rtfo lio d u rin g th e p e rio d ¹
Re n e g o tia te d b y De la y²
Individuals
Companies
Re n o va te d ³
Individuals
12 / 3 1/ 2 0 12
12 / 3 1/ 2 0 13
12 / 3 1/ 2 0 14
Ch g . %
13 / 12
Ch g . %
14 / 13
26.2
32,277
3 4 , 13 8
43,068
5.8
2,380
2,538
4 , 6 17
6.6
8 1. 9
(4.4)
106.9
1,894
1,811
3,746
486
727
871
49.5
19.8
29,897
3 1, 6 0 0
38,451
5.7
2 1. 7
29,897
31,600
38,451
5.7
21.7
5,224
6,261
7,094
19 . 9
13 . 3
2,380
2,538
4,617
6.6
81.9
(7)
(70)
(747)
924.4
962.0
Cre d its re n e g o tia te d b y d e la y - c h a n g e s
In itia l b a la n c e
Contrac ts²
Interest rec eived and appopriated
Write- Of f
(1,336)
(1,635)
(1,791)
22.3
9.5
6,261
7,094
9 , 17 3
13 . 3
29.3
NPL Loan portfolio renegotiated by delay + 90 days
989
1,383
1,424
39.9
3.0
(%) NPL + 90 days / Loan portfolio renegotiated by delay
15.8
19.5
15.5
F in a l b a la n c e ⁴
1 - Represents the balance renegotiated during the period of loan operations, falling due or overdue, using the Internet, self-service terminal or
branch network.
2 - Renegotiated loans during the period for renegotiated credits because of late payment by customers.
3 - Credit renegotiated regarding operations not yet matured for extension, renewal, granting new operation for partial or full settlement of the
previous operation, or any other type of agreement involving changes in maturity or in the payment terms originally agreed.
4 - Includes the amount of R$158 million in Multiple Bank (R$194 million on December 31, 2013) related to renegotiated rural credits. The amount of
R$5,231 million (R$5,394 million on December 31, 2013) of the extended rural credits of the rural portfolio based on specific legislation.
Money market Repurchase agreements
Interest income invested in repurchase agreements were R$27,885 million in 2014, 74.4% more than
in 2013. The performance of this income was boosted by an increase in the balance of investments in
repurchase agreements, totaled R$263,325 million at the end of 2014 (+43.6% compared to the total
observed in 2013). There was also a positive effect related to the effective TMS increase of 32.6% in
relation to 2013. In addition, the exchange rate of 13.4% in 2014/2013 comparison also impacts the
line of investments in repurchase agreements.
Interest income invested in repurchase agreements were R$15,992 million in 2013, 13.0% more than
in 2012, accounting for 15.3% of total Interest Income. The balance of investments in repurchase
agreements totaled R$183,391 million at the end of 2013 (+ 0.6% compared to the total observed in
2012).
It is worth mentioning that the Bank invests in securities with resale agreements and raises funds
selling securities with repurchase agreements, comprised mainly of federal securities. Resale and
repurchase agreements are considered as financial transactions with guarantee, and are recorded at
acquisition or sale value, plus interest incurred.
Therefore, securities sold under repurchase agreements are not written-off because the Bank holds
almost all of property risks and benefits. The amount of cash received, including recognized interest,
is recognized as a liability for repurchase and resale agreements, reflecting the economic substance of
the transaction as a Bank debt.
Securities acquired with resale agreements are not recognized. The amount paid, including recognized
interest, is recorded as an asset from repurchase and resale agreements, reflecting the economic
nature of the transaction as a loan granted by the Bank.
Interest expenses
Interest expenses totaled R$91,124 million in 2014, representing a 45.0% change in relation to the
previous year. This increase is explained mainly by: (i) increase in funding operations, especially the
104.7% increase in expenses with long-term liabilities; (ii) increase in the CDI rate (+ 34.1%
compared to 2013) and (iii) exchange variation of 13.4% in the 2014/2013 comparison.
Interest expenses totaled R$62,848 million in 2013, representing a 16.6% change in relation to the
previous year. This increase was basically due to the increase in the funding operation. Special
emphasis is placed on the increase of 84.4% in long-term liabilities, partially offset by the 4.6%
decrease in expenditure with customer deposits.
R$ million, exc ept for perc entages
2 0 12
Inte re st e xpe nse s
%
2 0 13
%
2 0 14
%
Chg. %
13 / 12
Chg. %
14 / 13
16 . 6
45.0
(5 3 , 9 2 1)
10 0
(6 2 , 8 4 8 )
10 0
(9 1, 12 4 )
10 0
Customer deposits
(28,236)
52.4
(26,939)
42.9
(31,412)
34.5
(4.6)
16.6
Obligations related to repurc hase agreements
(15,343)
28.5
(17,517)
27.9
(29,722)
32.6
14.2
69.7
(9,539)
17.7
(17,593)
28.0
(28,379)
31.1
84.4
(322)
0.6
(210)
0.3
(1,120)
1.2
(34.8)
Short- term liabilities
(215)
0.4
(366)
0.6
(364)
0.4
70.7
Other interest expenses
(267)
0.5
(222)
0.4
(127)
0.1
(16.9)
Long- term liabilities
Amounts payable to financ ial institutions
61.3
432.7
(0.8)
(42.7)
Below is detailed information on BB's main funding operations.
Customer deposits
Customer deposit expenses amounted to R$31,412 million in 2014, 16.6% higher than in 2013.
BB's total customer deposits amounted to R$437,822 million on December 31, 2014, down 5.1% over
December 2013. One reason for the observed reduction in total deposits was the decrease in time
deposits, which dropped 13.5% over the previous year as a result of funding diversification strategy of
the Bank, focusing on products such as LCA (Letters of Agribusiness Credit) and LCI (Real Estate
Credit Bills), comprising the balance of ―long-term liabilities‖. On the other hand, the balance of
savings deposits in Brazil increased by 5.7% in the same comparison. Even with the decrease, time
deposits in the country represent nearly 43.7% of the total of deposits of the Bank.
Customer deposit expenses amounted to R$26,939 million in 2013, 4.6% higher than in 2012.
BB's total customer deposits amounted to R$461,425 million on December 31, 2013, up 2.6% over
December 2012. Driven by the growth in savings deposits of 19.5% compared to the previous year.
On the other hand, the balance of time deposits in Brazil decreased by 5.4% in the same comparison.
Even with the decrease, time deposits in the country represent nearly 48% of the total of deposits of
the Bank.
R$ million, except for
percentages
Brazil
12/31/2012
%
12/31/2013
%
12/31/2014
%
Chg. %
13 / 12
Chg. %
14 / 13
421,522
93.7
431,460
93.5
405,709
92.7
2.4
(6.0)
70,155
15.6
69,690
15.1
65,882
15.0
(0.7)
(5.5)
69,179
15.4
68,595
14.9
65,477
15.0
(0.8)
976
0.2
1,095
0.2
405
0.1
Time deposits
233,622
51.9
221,042
47.9
191,128
Savings deposits
117,744
26.2
140,728
30.5
148,699
Abroad
28,409
6.3
29,965
6.5
4,564
1.0
6,072
4,564
1.0
6,072
23,845
449,931
5.3
100
23,893
461,425
Demand deposits
Without remuneration
With remuneration¹
Demand deposits
Without remuneration
Time deposits
Total deposits
(4.5)
12.2
(63.0)
43.7
(5.4)
(13.5)
34.0
19.5
5.7
32,113
7.3
5.5
7.2
1.3
8,342
1.9
33.0
37.4
1.3
8,342
1.9
33.0
37.4
5.2
100
23,771
437,822
5.4
100
0.2
2.6
(0.5)
(5.1)
1 - Refer to Special Accounts, whose purpose is to record the movement of foreign currency accounts opened in the country on behalf of embassies,
foreign diplomatic offices, international organizations, and public administration entities receiving credits or loans of international financial
organizations or foreign government agencies.
Demand deposits
Demand deposits received in the country totaled R$65,882 million on December 31, 2014, decreasing
5.5% in relation to the value observed at the end of 2013. These deposits accounted for 15.0% of
total deposits of the Bank in 2014 and are in their majority, credit balances of checking account
holders, which do not earn interest.
On December 31, 2014, the Bank had approximately 38.1 million demand deposit accounts, of which
approximately 93.6% were individual accounts.
Demand deposits received in the country totaled R$69,690 million on December 31, 2013, decreasing
0.7% in relation to the value observed at the end of 2012. These deposits accounted for 15.1% of
total deposits of the Bank in 2013 and are in their majority, credit balances of checking account
holders.
At the end of 2013, the Bank had approximately 39.8 million demand deposit accounts, of which
approximately 93.8% were individual accounts.
181
Section 10 - Comments From the Executive Officers
Bacen establishes the use of demand deposit accounts and other fund sources. The rule in effect
mandates that BB deposits 45.0% of its average daily balance of demand deposits in cash at Bacen,
and without bearing interests. In addition, a portion of 34.0% of demand deposits should be granted
as as borrowings at reduced interest rates for agribusiness and 2.0% of these funds shall be granted
as borrowings, also at reduced rates, to low-income customers.
Savings deposits
On December 31, 2014, savings deposits amounted to R$148,699 million, growing 5.7% compared to
December 31, 2013, corresponding to 34.0% of all the Bank's deposits.
On December 31, 2014, the Bank had approximately 39.4 million demand savings accounts.
On December 31, 2013, savings deposits amounted to R$140,728 million, growing 19.5% compared
to December 31, 2012, corresponding to 30.5% of all the Bank's deposits.
On December 31, 2013, the Bank had approximately 38.5 million demand savings accounts, against
36.0 million on December 31, 2012.
Bank funding through savings accounts act as funding for housing finance and agribusiness. The Bank
requires that such deposits have a minimum term to earn interests: 30 days in the case of individuals,
and 90 days regarding for-profit corporations. Interests on individual customer's savings accounts do
not levy taxes, whereas interests on legal entities' savings accounts pay 22.5% income tax.
Obligations under repurchase agreements
Total repurchase agreement expenses came to R$29,722 million in 2014, up 69.7% in relation to
2013, accounting for 32.6% of interest expenses. Such behavior was influenced by the increase in the
balance of these obligations that totaled R$293,920 million at the end of 2014, representing an
increase of 31.3% compared to 2013. The increase of TMS in relation to 2013 also impacted the
growth of expenses with obligations under repurchase agreements.
Total repurchase agreement expenses came to R$17,517 million in 2013, up 14.2% in relation to
2012, accounting for 27.9% of interest expenses. The balance of these obligations was R$223,917
million at the end of 2013, representing an increase of 9.4% compared to 2012.
Long-term liabilities
Total expenses with long-term liabilities amounted to R$28,379 million in 2014, with an increase of
61.3% in relation to the prior year. The balance of long-term liabilities amounted to R$322,880 million
in 2014, an increase of 18.7% in relation to 2013. This movement was mainly influenced by the
increase of liabilities with issuance of securities, in particular Agribusiness Credit Note, which totaled
R$102,325 million in 2013 (+ 31.4% or + R$24,438 million). Subordinated debts also contributed to
the increase in long-term liabilities.
Total expenses with long-term liabilities amounted to R$17,593 million in 2013, with an increase of
84.4% in relation to the prior year. The balance of long-term liabilities amounted to R$272,036 million
in 2013, an increase of 52.8% in relation to 2012. This movement was mainly influenced by the
increase of liabilities with issuance of securities, in particular Agribusiness Credit Note, which totaled
R$77,888 million in 2013 (+136.8% or +R$44,989 million). Transfer operations and subordinated
debts also contributed to the increase in long-term liabilities.
R$ million, exc ept for
perc entages
12 / 3 1/ 2 0 12
%
12 / 3 1/ 2 0 13
%
12 / 3 1/ 2 0 14
Chg. %
13 / 12
%
Chg. %
14 / 13
Onlending
61,043
34.3
84,835
31.2
89,157
27.6
39.0
5.1
Subordinated debts
37,181
20.9
47,369
17.4
54,531
16.9
27.4
15.1
Liabilities with issuanc e of sec urities
58,829
33.0
110,678
40.7
147,246
45.6
88.1
33.0
Financ ial and development funds
5,089
2.9
7,661
2.8
10,840
3.4
50.6
41.5
Perpetual bonuses
15,061
8.5
20,874
7.7
20,918
6.5
38.6
0.2
38
0.0
8
0.0
0
-
(80.0)
-
830
0.5
611
0.2
188
0.1
(26.4)
(69.3)
17 8 , 0 7 1
10 0
10 0
322,880
52.8
18 . 7
Debentures¹
Others
Long- te rm lia bilitie s
1 - Refer to debentures of Ativos S.A. that matured in March 2014.
272,036
10 0
Short-term liabilities
Total expenses with short term obligations was R$364 million in 2014 (-0.8% over the previous year).
Funding through short-term obligations amounted to R$20,328 million on December 31, 2014, an
increase of 33.8% over 2013, as showed in the table below. Loans are the most representative items
in this group (99.4% of total obligations).
Expenses with short term obligations totaled R$366 million in 2013 (+70.7% over the previous year).
Funding through short-term obligations amounted to R$15,190 million on December 31, 2013, an
increase of 48.8% over 2012, as showed in the table below. Loans are the most representative items
in this group (99.6% of total obligations).
R$ million, exc ept for
perc entages
Foreign borrowings
12 / 3 1/ 2 0 12
12 / 3 1/ 2 0 13
%
12 / 3 1/ 2 0 14
Chg. %
13 / 12
%
10,117
99.1
15,135
99.6
20,215
99.4
6
0.1
1
0.0
6
0.0
Export financ ing
Import financ ing
S hort- te rm lia bilitie s¹
%
85
0.8
55
0.4
107
0.5
10 , 2 0 8
10 0
15 , 19 0
10 0
20,328
10 0
Chg. %
14 / 13
49.6
33.6
(89.5)
(35.5)
48.8
882.7
95.2
33.8
1 - On December 31, 2014, the weighted average interest rate applicable to short-term liabilities abroad was 1.56% p.a. (1.74% p.a. as of December
31, 2013).
Net expenses with provision for losses with loans to customers
Net expenses with provision for losses with loans to customers totaled R$14,789 million in 2014,
amount 28.4% higher than that verified in 2013, as shown in the following table. This growth was
influenced by (i) by the increase in the provision for loan transactions totaling R$3,149 million
(27,8%), in particular: R$4,582 million in loans and bills discounted, R$240 million in financing, and
R$210 million in mortgage loans, primarily due to higher average balances of the loan portfolio, offset
by a decrease of R$2,206 million in rural financing, primarily due to the decrease in the portfolio risk,
and (ii) due to the growth of loans to customers of R$70,164 million (12.1%) compared to 2013.
Net expenses with provision for losses with loans to customers totaled R$11,514 million in 2013,
amount 14.4% higher than that verified in 2012, as shown in the following table. In the same
comparison, the total balance of loans to customers increased by R$101,087 million (+21.1%).
The provision for losses with loans to customers in the collective analysis, comprising most of the
expenses for the provision for losses with loans to customers, is calculated based on estimates that
consider the evolution of the loan portfolio, historical losses, current economic scenarios, the balance
of recovered and renegotiated defaulted operations, and assumptions and judgments of the Bank’s
Management.
The provisions for impairment of loans recorded for the period were considered by Management to be
sufficient to cover losses incurred with these loans.
R$ million, exc ept for perc entages
Chg. %
13 / 12
Chg. %
14 / 13
17,072
7.7
26.4
(2,282)
(19.5)
14.6
14,789
14.4
28.4
12 / 3 1/ 2 0 12
12 / 3 1/ 2 0 13
12 / 3 1/ 2 0 14
Setting up of a reserve
12,534
13,505
Rec overy of loans written off as loss
(2,472)
(1,991)
Net expenses with provision for losses with loans to c ustomers
10,062
11,514
The provision for losses with loans to customers amounted to R$18,951 million in 2014, a 21.1%
higher amount than the recorded in 2013.
The provision for losses with loans to customers amounted to R$15,653 million in 2013, a 15.3%
higher amount than the recorded in 2012, as shown in the following table.
R$ million, exc ept for perc entages
O pe ning ba la nc e
12 / 3 1/ 2 0 12
12 / 3 1/ 2 0 13
Chg. %
13 / 12
12 / 3 1/ 2 0 14
Chg. %
14 / 13
10 , 5 7 9
13 , 5 7 7
15 , 6 5 3
28.3
15 . 3
Setting up of a reserve
12,534
13,505
17,072
7.7
26.4
Written- off balanc es
(9,596)
(11,424)
(13,750)
19.0
20.4
Other movements
48
-
-
Exc hange variation on allowanc es - foreign
12
(5)
(24)
Closing ba la nc e
13 , 5 7 7
15 , 6 5 3
18 , 9 5 1
-
-
(138.6)
403.9
15 . 3
2 1. 1
183
Section 10 - Comments From the Executive Officers
Non-interest income
In 2014, non-interest income amounted to R$27,544 million, representing a 14.6% growth over 2013.
Net income from fees and commissions corresponds to 71.8% of total non-financial revenues and
increased by 9.4% in the same comparison.
In 2013, non-interest income amounted to R$24,041 million, representing a 7.8% growth over 2012.
Net income from fees and commissions corresponds to 75.2% of total non-financial revenues and
increased by 10.6% in the same comparison.
R$ million, exc ept for perc entages
2 0 12
Non- inte re st inc ome
%
2 0 13
22,309
10 0
16,340
73.2
Net revenues from fees and c ommissions
Net gains (losses) on financ ial assets/liabilities
stated at fair value through profit or loss
Net gains/(losses) on financ ial assets available for
sale
Net gains/(losses) in assoc iated c ompanies and
joint ventures
Other operating inc ome
Chg. %
13 / 12
Chg. %
14 / 13
%
2 0 14
%
24,041
10 0
27,544
10 0
7.8
14 . 6
18,074
75.2
19,778
71.8
10.6
9.4
(188)
(0.8)
114
0.5
271
1.0
(160.8)
359
1.6
485
2.0
251
0.9
35.1
590
2.6
2,296
9.5
3,548
12.9
289.3
5,207
23.3
3,072
12.8
3,696
13.4
(41.0)
137.5
(48.3)
54.5
20.3
Fee Income
In 2014, BB's total fee and commission revenues amounted to R$22,026 million, for growth of 8.5% in
relation to 2013, and the most significant items were service rendering to customers and third-party
asset management.
BB's fee and commission expenses totaled R$2,248 million in 2014, a slight increase of 1% over the
previous year, including Banking Industry expenses, denial of withdraws, credit card loyalty programs,
settlement services, among others.
Net revenues from fees and commissions totaled R$19,778 million in 2014, up by 9.4% compared to
the prior year.
In 2013, BB's total fee and commission revenues amounted to R$20,300 million, growth of 9.7% in
relation to 2012.
Banco do Brasil has focusing its efforts to diversify businesses, with a strong presence in the
Insurance, Cards, Asset Management and Capital Market segments, favoring the growth of income
from fees and commissions.
R$ million, exc ept for perc entages
Fe e inc ome
2 0 12
%
2 0 13
%
2 0 14
18 , 5 0 3
113 . 2
20,300
112 . 3
22,026
%
Chg. %
13 / 12
Chg. %
14 / 13
8.5
111. 4
9.7
11, 9 7 5
73.3
12 , 6 0 2
69.7
13 , 5 0 3
68.3
5.2
7.1
Ac c ount fees
4,546
27.8
4,163
23.0
3,997
20.2
(8.4)
(4.0)
Inc ome from c ards
2,695
16.5
3,073
17.0
3,790
19.2
14.0
23.3
Collec tion
1,376
8.4
1,522
8.4
1,695
8.6
10.7
11.3
Collec tions
1,324
8.1
1,411
7.8
1,488
7.5
6.6
5.4
Interbank and transfer of funds
973
6.0
1,051
5.8
1,143
5.8
8.1
Loans and registration file
732
4.5
1,003
5.5
955
4.8
36.9
Foreign exc hange
257
1.6
293
1.6
323
1.6
14.1
10.3
73
0.4
86
0.5
112
0.6
18.1
30.2
14 . 5
S e rvic e inc ome to c lie nts
Brokerage and c ustody
8.7
(4.7)
Asse t Ma na ge me nt
3,731
22.8
4 , 14 7
22.9
4,747
24.0
11. 1
Commissions
2,406
14 . 7
3 , 16 6
17 . 5
3,433
17 . 4
3 1. 6
8.4
9.9
29.7
33.0
Marketing of Insuranc e
1,133
6.9
1,470
8.1
1,955
Tec hnic al and fin. c ooperation agreements
492
3.0
754
4.2
378
1.9
53.1
(49.9)
Trading with c apitalization investment plans
326
2.0
598
3.3
705
3.6
83.6
17.9
Marketing of pension produc ts
455
2.8
344
1.9
395
2.0
(24.3)
14.9
0.7
9.4
(0 . 6 )
(16 . 9 )
G ua ra nte e s provide d
O the r se rvic e s
Fe e Expe nse s
Servic es Inc ome
Comission expenses
Other servic es
Ne t re ve nue s from fe e
13 0
260
0.8
1. 0
(6 . 8 )
(2 , 2 2 7 )
(12 . 3 )
(2 , 2 4 8 )
(11. 4 )
3.0
(2,130)
(13.0)
(2,177)
(12.0)
(2,196)
(11.1)
2.2
(5)
(0.0)
(22)
(0.1)
(11)
(0.1)
311.5
(50.2)
4.3
48.1
(0.2)
10 0
(27)
18 , 0 7 4
1. 3
14 2
(13 . 2 )
(26)
242
0.8
(2 , 16 2 )
16 , 3 4 0
1. 6
14 2
(0.2)
10 0
201
(41)
19 , 7 7 8
(0.2)
10 0
10 . 6
1. 0
0.9
9.4
Other operating revenues
Other operating revenues amounted to R$3,696 million in 2014, up by 20.3% over 2013 figures
(+R$624 million). The table below lists the main items that explain the performance of these
revenues. The following increases should be highlighted: (i) R$750 million in gains in employee
benefit plans; (ii) R$311 million in income related to card transactions; (iii) R$138 million in income
from securities and credits receivable; (iv) R$120 million in income from securities and credits
receivable relating to the Postal Bank.
Our gains with employee benefit plans refer to revenues from defined benefit plans presenting
surplus, calculated from net interest income on plan assets, interest paid on plan liabilities and the
cost of the service. This item represents our interest of 50% in the gains or losses of the Plan I of
Previ.
The aforementioned increases were partially offset by the following decreases: (i) R$446 million due
to higher losses on foreign currency transactions; (ii) R$185 million in gains in the sale of permanent
investments; (iii) R$139 million ins gains in the conversion of foreign investments; and (iv) R$98
million arising from the reversal of provisions for sundry payments.
2 0 12
%
2 0 13
%
2 0 14
%
Chg.
%
13 / 12
5,207
10 0
3,072
10 0
3,696
10 0
(4 1. 0 )
20.3
Gains from benefit plans – Plan 1 – Previ¹
1,355
26.0
598
19.5
1,348
36.5
(55.9)
125.3
Inc ome from benefit plans - Surplus agreements
1,091
21.0
969
31.5
907
24.5
(11.2)
(6.4)
Rec overy of c harges and expenses
870
16.7
672
21.9
768
20.8
(22.8)
14.3
Credit c ard transac tions
344
6.6
450
14.6
761
20.6
30.6
69.1
Foreign Currenc y gains in the c onversion of invest.
461
8.8
832
27.1
694
18.8
80.7
(16.7)
R$ million, exc ept for perc entages
O the r ope ra ting inc ome
Ac c ounts rec eivable
Chg.
%
14 / 13
391
7.5
475
15.4
612
16.6
21.3
29.1
1,250
24.0
84
2.7
160
4.3
(93.3)
90.0
Reversal of provisions for sundry payments
32
0.6
196
6.4
98
2.7
511.7
(49.8)
Gains from c orporate investments²
93
1.8
87
2.8
74
2.0
Gains /(losses) in the sale of permanent investments³
65
1.2
188
6.1
2
0.1
189.9
Gains/(losses) on the sale of assets
Net gains (losses) in foreign exc hange operations
Others
(1,834)
(35.2)
1,089
20.9
(2,597)
1,119
(6.0)
(15.4)
(98.8)
(84.5)
(3,044)
(82.3)
41.7
17.2
36.4
1,316
35.6
2.7
17.6
1 - Refers to the recognition in income of certain cost components of defined benefit plans (Note 45).
2 - Payment of monetary correction of dividends and interest on own capital.
3 - In 2013, includes the amount of the gain on divestiture of ownership interest in Itapebi Geração de Energia S.A.
Other operating revenues amounted to R$3,072 million in 2013, down 41.0% over 2012 figures (R$2.136 million). The table below lists the main items that explain the performance of these revenues.
The following decreases should be highlighted: (i) R$1,103 million due to the disposal of quotas in
Fundo de Investimento Imobiliário - Progressivo II in 2012; (ii) R$764 million due to higher losses on
foreign currency transactions; and (iii) R$757 million in gains in employee benefit plans.
These decreases were partially offset by increases of: (i) R$372 million in gains in the conversion of
foreign investments; (ii) R$164 million arising from the reversal of provisions for sundry payments;
(iii) R$123 million in gains in the sale of permanent investments; (iv) R$105 million in income related
to card transactions; and (v) R$83 million in income from securities and credits receivable.
Non-interest expenses
Non-interest expenses were R$43,809 million in 2014, with an increase of 5.9% compared to 2013.
This performance was a result of the strong commitment of Management in the control of expenses
and focus on operational efficiency. Personnel and administrative expenses corresponded to 43.1%
and 23.9%, respectively, as shown in the following table.
Non-interest expenses were R$41,387 million in 2013, with an increase of 10.4% compared to 2012.
185
Section 10 - Comments From the Executive Officers
R$ million, exc ept for perc entages
Non- inte re st e xpe nse s
2 0 12
%
2 0 13
%
2 0 14
%
Chg. %
14 / 13
(3 7 , 4 8 9 )
10 0
(4 1, 3 8 7 )
10 0
(4 3 , 8 0 9 )
10 . 4
5.9
(16,477)
44.0
(18,819)
45.5
(18,863)
43.1
14.2
0.2
Administrative expenses
(9,601)
25.6
(10,159)
24.5
(10,476)
23.9
5.8
3.1
Contributions, taxes and other taxes
(3,743)
10.0
(4,033)
9.7
(4,101)
9.4
7.7
1.7
Amortization of intangible assets
(2,866)
7.6
(2,820)
6.8
(3,008)
6.9
(1.6)
6.7
Provisions
(2,025)
5.4
(2,552)
6.2
(2,076)
4.7
(950)
2.5
(880)
2.1
(1,030)
2.4
(7.4)
(1,827)
4.9
(2,124)
5.1
(4,255)
9.7
16.3
Personnel expenses
Deprec iation
Other operating expenses
10 0
Chg. %
13 / 12
26.0
(18.7)
17.0
100.3
Personnel expenses
Personnel expenses amounted to R$18,863 million in 2014, a 0.2% variation over 2013. The table
below details these expenses. Salaries and social charges are the most significant item of this account,
representing 56.3% and 20.5% of the total, respectively. The behavior of personnel expenses in
2014 was influenced by the decrease in expenses with profit sharing (-27.8%, or R$566 million), and
for the stability in expenses with salaries, social charges and benefits, a result of a large number of
retirements compared to the number of new hires, and reflecting the improved efficiency and
productivity.
Personnel expenses rose by R$2,342 million (14.2%) in 2013, from R$16,477 million in the 2012 fiscal
year to R$18,819 million. This change was chiefly due to the following increases: (i) R$878 million
(9.1%) in expenses with salaries; (ii) R$656 million (42.5%) in employee benefit plans; and (iii)
R$288 million (8.8%) in expenses with social charges. The increase in personnel expenses in mainly
the result of salary increases pursuant to collective bargaining agreement.
R$ million, exc ept for perc entages
Tota l pe rsonne l e xpe nse s
2 0 12
%
2 0 13
%
%
Chg. %
13 / 12
Chg. %
14 / 13
14 . 2
0.2
(16 , 4 7 7 )
10 0
(18 , 8 19 )
(18 , 8 6 3 )
10 0
Salaries
(9,679)
58.7
(10,557)
56.1
(10,618)
56.3
9.1
0.6
Soc ial c harges
(3,265)
19.8
(3,553)
18.9
(3,870)
20.5
8.8
8.9
Benefits
(1,544)
9.4
(2,200)
11.7
(2,357)
12.5
42.5
7.1
Profit sharing
(1,582)
9.6
(2,033)
10.8
(1,467)
7.8
28.5
(27.8)
Complementary pension plans
10 0
2 0 14
(334)
2.0
(395)
2.1
(448)
2.4
18.1
13.4
Training
(42)
0.3
(47)
0.2
(60)
0.3
11.6
29.5
Direc tors’ and offic ers’ honoraries
(31)
0.2
(33)
0.2
(42)
0.2
7.0
27.0
The number of collaborators decreased in the 2014/2013 and 2013/2012 comparison. On
December/12 to December/14 there was a decrease of 2,554 employees.
De c / 12
Number of Collaborators
Collaborators
Trainees
De c / 13
De c / 14
121,811
117,774
116,931
114,182
112,216
111,628
7,629
5,558
5,303
Administrative expenses
In 2014, administrative expenses amounted to R$10,476 million, an increase of 3.1% over 2013,
slowing down in relation to the 5.8% growth in the 2013/2012 comparison. The most expressive
component of administrative expenses is outsourced services, accounting for 15.9% of the total in
2014, recording a reduction of 3.6% in the 2014/2013 comparison, mainly due to the remuneration of
the Postal Bank. The items that increased the most in the period were: (i) surveillance and security
service; (ii) rental and operating leases; (iii) data processing and; (iv) communication. The operational
efficiency measures adopted by the Bank offset growth in expenses with outsourced services and
rentals and operating leases, whose contractual adjustments followed the rate of inflation.
Administrative expenses increased by 5.8% in the 2013/2012 comparative. There was an increase in
expenses with rental and operating leases (+33,3%), outsourced services (+9.2%), and specialized
technical services (+37.6%).
R$ million, exc ept for perc entages
2 0 12
%
Tota l a dministra tive e xpe nse s
2 0 13
%
2 0 14
Chg. %
13 / 12
%
Chg. %
14 / 13
(9 , 6 0 1)
10 0
(10 , 15 9 )
10 0
(10 , 4 7 6 )
10 0
5.8
Outsourc ed servic es
(1,586)
16.5
(1,731)
17.0
(1,668)
15.9
9.2
(3.6)
Expenses with c ommunic ations
(1,315)
13.7
(1,382)
13.6
(1,468)
14.0
5.1
6.2
Transportation
(1,163)
12.1
(1,144)
11.3
(1,224)
11.7
(1.6)
Rental and operating leases
(735)
7.7
(979)
9.6
(1,134)
10.8
33.3
15.8
Sec urity servic es
(837)
8.7
(842)
8.3
(1,005)
9.6
0.6
19.3
Data proc essing
(725)
7.6
(760)
7.5
(910)
8.7
4.9
19.6
Maintenanc e and preservation
(560)
5.8
(598)
5.9
(660)
6.3
6.8
10.5
Advertising and public ity
(369)
3.8
(390)
3.8
(418)
4.0
5.8
7.3
Water, energy and gas
(381)
4.0
(348)
3.4
(373)
3.6
(8.7)
Spec ialized tec hnic al servic es
(230)
2.4
(317)
3.1
(354)
3.4
Advertising and public relations
(237)
2.5
(235)
2.3
(262)
2.5
(1.1)
(60)
0.6
(139)
1.4
(77)
0.7
131.1
(44.9)
Traveling
(149)
1.6
(135)
1.3
(160)
1.5
(9.5)
18.4
Offic e supplies and alike
(137)
1.4
(133)
1.3
(130)
1.2
(2.7)
(2.1)
(1,117)
11.6
(1,026)
10.1
(632)
6.0
(8.1)
(38.4)
Philanthropic c ontributions
Others
37.6
3.1
6.9
7.2
11.8
11.9
As presented in item 7.9 of this Reference Form, the Bank has a wide national reach and is present in
99.8 Brazilian cities through its own service network, which is the largest in Brazil. On December 31,
2014, the Bank's service network was made up of 18,956 points of service. The following table
presents the growth of the BB service network in the last years.
De c / 12
Own Network
Branch
Customer Assistance Posts
PAE – Electronic Service Post
MaisBB Network
Correspondent banks
Postal Bank
Shared network
CEF - lottery
Banco 24h
ATM: BRB + CEF
Total
19,144
5,362
De c / 13
19,143
5,450
De c / 14
18,956
5,524
Abs. V a r.
on De c / 12
(188)
162
Abs. V a r.
on De c / 13
(187)
74
1,746
1,746
1,699
(47)
(47)
12,036
11,947
11,733
(303)
(214)
17,914
11,719
16,440
10,251
15,538
9,347
(2,376)
(2,372)
(902)
(904)
6,195
6,189
6,191
(4)
2
27,134
12,443
32,046
13,022
34,641
13,250
7,507
807
2,595
228
12,344
14,014
16,779
4,435
2,765
2,347
5,010
4,612
2,265
(398)
64,192
67,629
69,135
4,943
1,506
On December 31, 2014, the Bank's network abroad had 45 active units located in 24 countries, of
which 12 were branches, 4 sub-branches, 10 representation offices, 1 business units, 8 subsidiaries, 8
subsidiaries and associated subsidiaries, 2 shared services units, and 2 controlled universal banks. In
South America, Bank's presence is expanded by the Banco Patagonia network, in Argentina, which
adds 195 service points and in USA by Banco do Brasil Américas, with 4 branches in Florida. In
addition to this structure, BB has agreements with other financial institutions abroad to serve its
customers. On December 31, 2014, the Bank had 1,083 correspondent banks in 135 countries.
Contributions, rates and other taxes
Contributions, rates and other taxes totaled R$4,101 million in 2014, representing an increase of R$68
million (1.7%) over the previous year.
In 2013, this line amounted to R$4,033 million, an increase of R$290 million (7.7%) over the previous
year.
Goodwill and Other Intangible Assets
Amortization expenses of intangible assets in 2014 amounted to R$630 million, an increase of 0.7%
over 2013, as shown in the following table.
187
Section 10 - Comments From the Executive Officers
R$ million
12/31/2012
12/31/2013
12/31/2014
Banco do Brasil - Estado de São Paulo - Ágio Banco Nossa Caixa
592
592
592
BB Américas
Total
30
621
34
626
39
630
Banking Segment
Goodwill impairment on acquisition of investments is determined based on value in use, calculated by
the method of discounted cash flows, which is based on the projected cash flow for the investee
company (cash generating unit) and in determining the discount rate of this cash flow.
According to a sensitivity analysis carried out, there is no indication that changes in premises may
cause the carrying value of the units to exceed its respective recoverable value.
There was no goodwill impairment in 2014 and 2013.
The table below sets forth the changes in goodwill.
R$ million
2012
Gross goodwill in the beginning of the year
Accumulated impairment loss at the beginning of the year
Opening balance
Goodwill recognized for the year
2013
592
2014
621
626
-
-
-
592
621
626
--
--
26
Write-offs
--
--
--
Gross value of goodwill at the end of the year
617
621
626
Exchange variation
4.06
4.36
4.57
Impairment loss at the end of the year
Goodwill at the end of the year
-
-
-
621
626
630
Additional information on goodwill - other intangible assets can be found in note 27 under IFRS.
Intangible assets with defined useful life are presented below.
R$ million
S oftwa re
Rights due to
pa yroll
ma na ge me nt
Re la te d to
c ustome rs
portfolio
Re la ting to
c ontra c ts¹
O the r²
Tota l
Ac quisition c ost
Ba la nc e a t 12 / 3 1/ 2 0 12
1, 6 9 4
Generated in- house
Ac quisitions
3,205
3,734
--
--
--
--
77
1,044
--
--
--
1,273
(1,540)
--
228
Write- offs
Exc hange variation
9,266
77
(20)
(46)
(0)
(1,562)
(3)
(2)
(51)
--
Ba la nc e a t 12 / 3 1/ 2 0 13
1, 9 7 9
8,770
3 , 15 9
3,728
Ba la nc e a t 12 / 3 1/ 2 0 13
1, 9 7 9
8,770
3 , 15 9
3,728
--
--
--
195
Ac quisitions
317
3,981
(29)
(2,283)
Write- offs
Exc hange variation
0
18 , 0 9 0
(2)
--
Generated in- house
19 2
19 0
17 , 8 2 6
19 0
17 , 8 2 6
--
--
195
0
4,298
(5,138)
(0)
(2,826)
(0)
(27)
(1)
(1)
--
--
2,462
10 , 4 6 8
3 , 13 3
900
18 9
17 , 15 2
(9 18 )
(3 , 8 9 2 )
(1, 2 14 )
(6 4 7 )
(12 4 )
(6 , 7 9 3 )
(100)
(1,882)
(365)
(434)
(40)
(2,820)
18
1,540
0
Ba la nc e a t 12 / 3 1/ 2 0 13
(9 9 9 )
(4 , 2 3 4 )
(1, 5 7 9 )
(1, 0 8 0 )
(16 3 )
(8 , 0 5 6 )
Ba la nc e a t 12 / 3 1/ 2 0 13
(9 9 9 )
(4 , 2 3 4 )
(1, 5 7 9 )
(1, 0 8 0 )
(16 3 )
(8 , 0 5 6 )
(134)
(1,875)
(363)
(615)
(21)
(3,008)
22
2,283
0
961
0
3,266
(1, 112 )
(3 , 8 2 6 )
(1, 9 4 2 )
(7 3 4 )
(18 4 )
(7 , 7 9 8 )
Ba la nc e a t 12 / 3 1/ 2 0 14
(29)
Ac c umula te d a mortiz a tion
Ba la nc e a t 12 / 3 1/ 2 0 12
Amortization
Write- offs
Amortization
Write- offs
Ba la nc e a t 12 / 3 1/ 2 0 14
--
--
1,558
Impa irme nt loss
Ba la nc e a t 12 / 3 1/ 2 0 12
Reversals³
--
(5 0 )
--
--
0
--
--
--
--
(5 0 )
--
0
Ba la nc e a t 12 / 3 1/ 2 0 13
--
(5 0 )
--
--
--
(5 0 )
Ba la nc e a t 12 / 3 1/ 2 0 13
--
(5 0 )
--
--
--
(5 0 )
Loss
Ba la nc e a t 12 / 3 1/ 2 0 14
(2)
--
(2 )
--
(5 0 )
--
--
--
--
(2)
--
(5 2 )
Book va lue
Balanc e at 12/31/2013
979
4,487
1,581
2,647
27
9,721
Balanc e at 12/31/2014
1,348
6,593
1,190
166
4
9,302
1 - In 2013, included the right of use of the Banco Postal network for correspondent banking services in the amount of R$2,823,857,000, acquired in
the 2nd half of 2011.
2 - Includes mainly trademarks acquired in business combinations.
3 - There was a reversal of impairment loss for the year 2013 mainly due to the termination of payrolls agreements of city councils.
Estimated expenses with amortization of intangible assets for the coming years are presented in the
following table.
R$ million
Amounts to be amortized
2 0 15
2,401
2 0 16
2,156
2 0 17
1,633
2 0 18
1,420
2 0 19
796
Afte r 2 0 19
896
Tota l
9,302
Provisions
Expenses with provisions totaled R$2,076 million in 2014, a 18.7% decrease over the previous year (R$476 million). The variation was mainly due to decreases in (i) provisions for labor claims (-R$1,179
million or -90.0%), offset in the item Other operating expenses – Other, resulting from improvements
implemented in 2014 in the transitional adjustments of the financial statements to international
accounting standards; and (ii) 91.2% (or R$59 million) in provisions for tax claims. This decrease was
partially offset by an increase of 63.1% (R$762 million) in expenses with provisions for civil claims.
189
Section 10 - Comments From the Executive Officers
In 2013, there was an increase of 26.1% (+R$527 million) in expenses with provisions that went from
R$2,025 million in 2012 to R$2,552 in 2013. The increase resulted mainly from higher provisions for
labor and tax claims of R$639 million and R$68 million, respectively. On the other hand, there was a
decrease of R$180 million in expenses with provisions for civil claims.
Other operating expenses
Other operating expenses totaled R$4,255 million in 2014, corresponding to a 9.7% share in the
group "non-interest expenses". The table below lists the main items of these expenses, which grew
100.3% over 2013 (+R$2,131 million). The following increases were recorded: (i) R$772 million in
other expenses, offset in the item Provisions, resulting from improvements implemented in 2014 in
the transitional adjustments of the financial statements to international accounting standards; (ii)
R$662 million in expenses for remuneration of Postal Bank transactions, which started to be realized
in this year; (iii) R$360 million in expenses with restatement of guarantee deposits; and (iv) R$160
million in provisions for losses on other assets.
Other operating expenses totaled R$2,124 million in 2013, growth of 16.3% (+R$297 million) over
2012. The following increases were recorded: (i) R$194 million in provisions for losses on other
assets; (ii) R$108 million for other expenses; (iii) R$45 million in expenses with restatement of
actuarial liabilities; and (iv) R$37 million in expenses related to the tax recovery program – Refis. On
the other hand, expenses with restatement of guarantee deposits decreased R$96 million in the same
period.
R$ million, exc ept for perc entages
O the r ope ra ting e xpe nse s
Restatement of ac tuarial obligations
Compensation for transac tions of Banc o Postal
Restatement of guarantee deposits
2 0 12
%
2 0 13
%
2 0 14
Chg. % Chg. %
13 / 12
14 / 13
%
(1, 8 2 7 )
10 0 . 0
(2 , 12 4 )
10 0 . 0
(4 , 2 5 5 )
10 0 . 0
(881)
48.2
(926)
43.6
(1,015)
23.9
16 . 3
--
-
--
-
(662)
16
-
-
(275)
15.0
(179)
8.4
(539)
12.7
(35.0)
201.4
175.5
5.1
10 0 . 3
9.6
103
(5.6)
(91)
4.3
(252)
5.9
(189.0)
Business relationship bonus
(166)
9.1
(156)
7.3
(208)
4.9
(5.9)
33.5
Servic e failures and operating losses
(188)
10.3
(204)
9.6
(184)
4.3
8.6
(9.9)
Life insuranc e premium - c onsumer c redit
(Provision)/reversal for losses on other assets
(149)
8.2
(129)
6.1
(159)
3.7
(13.3)
22.6
Update values to release
(32)
1.7
(58)
2.7
(101)
2.4
82.2
75.5
Garantee servic es
Liabilities regarding transac tions related to
assignments
Monetary restatement of resourc es to be
returned to the National Treasury
(69)
3.8
(75)
3.5
(86)
2.0
8.6
15.0
(72)
4.0
(75)
3.5
(77)
1.8
3.8
3.2
-
-
-
-
-
-
-
-
Capital gains/(losses)
(22)
1.2
(18)
0.9
(33)
0.8
(18.4)
80.5
Fees for the use of Sisbac en
(24)
1.3
(23)
1.1
(27)
0.6
(2.2)
15.4
Proagro expenses
(16)
0.9
(19)
0.9
(25)
0.6
18.6
32.3
(1)
0.1
(11)
0.5
(22)
0.5
703.4
91.5
(12)
0.7
(41)
1.9
(9)
0.2
233.8
(76.9)
Adjustment to rec overable value of fixed assets
(0)
0.0
(3)
0.2
(6)
0.1
-
87.6
Fisc al Rec overy Program – Refis¹
--
-
(37)
2
(0)
0
-
-
(Formation)/reversal for devaluation of assets
and goods
Others
(6)
0.3
3
(0.2)
3
(0.1)
-
6.3
(16)
0.9
(81)
3.8
(854)
20.1
407.6
951.8
Liabilities for operations linked to assignments
Update of interest on own c apital/dividends
1 - Refers to joining the program for installment and cash payment of tax debts – Refis (Note 34).
Income before taxes
The Bank's income before taxes totaled R$15,605 million in 2014, a growth of 21.4% compared to the
previous year.
In 2013, the Bank's income before taxes totaled R$12,859 million, a reduction of 14.3% compared to
2012.
Tax expenses
Tax expenses totaled R$2,261 million in 2014, a 44.0% increase over the previous year (or +R$691
million). Current taxes in this period increased by R$2,974 million (45.5%), reaching R$3,557 million
in 2014. The decrease in current taxes was offset by the drop in the positive result of deferred taxes,
which ranged from R$4,961 million in 2012 to R$1,296 million in 2013.
Tax expenses totaled R$1,570 million in 2013, a 56.4% decrease over the previous year (or -R$2,034
million). Current taxes in this period increased by R$1,090 million (20.0%), reaching R$6,531 million
in 2013. The growth of current taxes was offset by the positive result of R$3,124 million of deferred
taxes, which ranged from R$1,837 million in 2012 to R$4,961 million in 2013.
10.3. Main impacts in the financial statements (IFRS)
Executive officers should comment the material effects that the following events have
caused or are expected to cause on the issuer's financial statements and results:
a.
acquisition or disposal of an operating segment
Not applicable.
b.
constitution, acquisition or disposal of equity interest
Corporate Reorganizations in the area of Insurance, Open Pension Plan, Capitalization and
Reinsurance
BB Capitalização S.A.
Brasildental Operadora de
Planos Odontológicos S.A.
Strategic rationale
On 11.28.2014, BB Seguros managers approved the merger of BB Capitalização into its equity
pursuant to the terms of the Protocol and Justification for the Merger. Merged net assets were
evaluated at book value as of the base date of the transaction, 11.28.2014, in the amount of R$5,573
million. Considering that the base date of the accounting appraisal report coincides with the date of
the corporate events that have approved the transaction, there were no changes in equity after the
merger.
As a natural outcome, BB Seguros became the universal successor of all the rights and obligations of
BB Capitalização, fully assuming its net assets.
Considering that BB Seguros is the sole shareholder of the merged company at the merger date,
there was no exchange of shares of non-controlling shareholders of the merged company by shares
of the merging company. Therefore, there was no change in the equity capital of BB Seguros.
On June 11, 2013, Banco do Brasil, BB Seguros Participações S.A. (BB Seguros), BB Corretora de
Seguros e Administradora de Bens S.A. ("BB Corretora"), Odontoprev S.A. (Odontoprev) and
Odontoprev Serviços Ltda. (Odontoprev Serviços) entered into an Agreement for Association and
Other Covenants for the purpose of, through a new corporation, Brasildental, developing and
disclosing, and through BB Corretora, distributing and trading BB Dental brand’s dental care private
plans, exclusively in BB channels of the national territory.
Brasildental was incorporated on March 3, 2014, and its total capital stock amounts to R$5 million,
distributed in 100,000 common shares (ON) and 100,000 preferred shares (PN), with the following
ownership structure:
a) BB Seguros holds 49.99% of the common shares and 100% of the preferred shares, representing
74.99% of the total share capital;
b) Odontoprev holds 50.01% of the common shares, representing 25.01% of the total share capital.
Of the total share capital, R$1 million were paid-up in the company's incorporation date and the
remaining R$4,999 million were paid on April 15, 2014. BB Seguros and Odontoprev were responsible
for the contribution of the initial capital of Brasildental in the respective proportion of their interests.
The joint venture was approved by Conselho Nacional de Defesa Econômica (CADE) on August 2,
2013 and on September 19, 2013, the Central Bank of Brazil (Bacen) authorized the indirect interest
of Banco do Brasil S.A. in the capital of Brasildental.
The registration of the company on the Regional Council of Dentistry (CRO) was issued on May 12,
2014. The National Supplementary Healthcare Agency (ANS) authorized the operations of Brasildental
on July 7, 2014, and approved the products to be marketed by Brasildental in the Brazilian dental
care plans on August 5, 2014.
The Agreement shall be valid for 20 years, and may be extended for equal periods.
The incorporation of BB Capitalização S.A. is justified since there is no need of maintaining BB
Capitalização in the business model review process in the capitalization segment, and due to the lack
of prospects for the company carrying out operational activities.
The goal of Brasildental is to operate and offer its products in the brazilian dental plan market.
Corporate Reorganization - Overseas subsidiaries and controlled companies
BB Money Transfers
Key business conditions
The dissolution of BB Money Transfers, located in the state of New York, occurred on December 8,
2014.
The capital of BB Money Transfers was transferred to the Bank through BB USA Holding Company
191
Section 10 - Comments From the Executive Officers
Inc. (its controlling shareholder, with 100% of the shares). However, part of this capital was retained
in BB USA Holding Company, aiming to pay expenses arising from operating activities for closing of
the subsidiary and expenses of the holding company itself.
The Bank will paid-up such share capital in the same place of investment, through BB Grand Cayman,
without any inflow of funds in Brazil.
Strategic rationale
The Board of Directors decided for the closure of the company and repatriation of its capital to its
parent company, based on a study of economic feasibility of the business.
China
Key business conditions
On May 30, 2014, the Bank opened its first branch in China. The Bank had a representative office in
Shanghai, which was transformed in a branch.
Strategic rationale
The goal of opening the first branch in China is to expand trade with the country, seeking to increase
Chinese investments in Brazil and also supporting the Brazilian multinationals in the Chinese market.
Europe Block
Key business conditions
As of January 1, 2014, Bank do Brasil branches in Madrid and Paris were linked to BB AG Vienna,
wholly owned subsidiary of Banco do Brasil in Austria. The measure is part of the process of
consolidation of activities in Europe under license from BB AG Vienna.
Strategic rationale
The integration of European units seeks to increase the business volume by optimizing the capital
invested in such agencies, improving governance and increasing operational efficiency.
Corporate Reorganization in the Card Area
Livelo
Key business conditions
On May 14, 2014, Banco do Brasil and Banco Bradesco announced to the market that Companhia
Brasileira de Soluções e Serviços (Alelo) started, through its already existing wholly owned subsidiary,
Livelo S.A., discussions to explore businesses related with the loyalty program by means of a
coalition.
Livelo is a company with indirect interest of the Bank, with 49.99% of its share capital, and Bradesco,
with 50.01% of the share capital through Alelo.
The company is currently in the set up process to start its activities and has already obtained
permission from supervisory and regulatory bodies.
Strategic rationale
The main objective of Livelo is:
a) act as a loyalty program by means of an independent and open coalition having as partners:
issuers of payment instruments, retailers and other loyalty programs, among others;
b) bring together a diverse group of relevant and strategic partners to enable the generation of
loyalty points and the redemption of benefits;
c) develop their own loyalty points to be offered to partners in the generation/accumulation of points
convertible in prizes and benefits in the respective partners.
Stelo
Key business conditions
Banco do Brasil and Bradesco, through its subsidiary Companhia Brasileira de Soluções e Serviços
(Alelo), launched Stelo S.A. on April 16, 2014, an electronic payment media company that will
manage, operate and exploit the segments of payment enablers toward e-commerce and digital
business portfolio.
In order to implement this project, Cielo and Alelo entered into a Memorandum of Understanding on
April 15, 2014 regarding Cielo's interest in the capital of Stelo, currently wholly owned subsidiary of
Alelo.
The company is currently in the set up process to start its activities and has already obtained
permission from supervisory and regulatory bodies.
Strategic rationale
The main purpose is to create greater comfort and safety for consumers and companies, especially in
the use e-commerce payments.
c.
unusual events or operations
Not applicable.
10.4. Comments from the Executive Officers
a.
significant changes in accounting practices
Since January 1, 2009, when we first adopted IFRS, the IASB has issued new accounting procedures
and improvements to IFRS that may impact our financial position and results of operations. The
improvements to IFRS, issued by IASB, comprise amendments to the recognition, measurement and
evidence rules related to several IFRS practices.
A summary of certain IASB amendments, interpretations and standards affecting the presentation of
our financial results, and made effective since 2012, 2013 or 2014, as well as interpretations and
pronouncements recently issued, effective as of January 1, 2015, are presented below:
Effective in 2012
Amendment to IAS 12 – Deferred Taxes – Recovery of Underlying Assets - The IASB
introduced an exception to the principles of measuring deferred tax assets and liabilities, which now
must reflect the tax effects of how an entity expects to recover the book value of an asset. This
exception is also applicable to investment properties acquired through a business combination
recorded in accordance with IFRS 3, provided that the acquirer later measures these assets according
to the fair value method in compliance with IAS 40. In these circumstances, measurement of
deferred tax assets and liabilities shall reflect the assumption that the book value of the underlying
asset will be recovered entirely through its sale. Amendment to IAS 12 became effective for periods
beginning as of January 1, 2012. The application of this amendment did not significantly affect our
financial statements.
Amendments to IAS 1 – Presentation of Financial Statements - On June 16, 2011, the IASB
published changes to IAS 1 focusing on the presentation and classification of items included in the
―Statement of Comprehensive Income.‖ The changes primarily require the separate presentation of
items linked to other comprehensive income that may be reclassified to income in the future from
items that will never be reclassified to income or loss. The existing option of presenting the
statements of income for the period and other comprehensive income in two separate statements was
not changed. These amendments became effective for periods beginning as of July 1, 2012 with early
application of the amendments permitted. Application of these amendments did not significantly
affect the Bank’s financial statements.
Effective in 2013
Amendment to IAS 27 – Separate Financial Statements - The IASB introduced an amendment
to IAS 27, requiring separate financial statements to maintain the same accounting and disclosure
requirements prior to the implementation of the amendment. The remaining standards in IAS 27,
which relate to consolidated financial statements were replaced by the standards set forth in IFRS 10.
The amendment to IAS 27 became effective for annual periods commencing as of January 1, 2013.
The application of the amendment did not significantly affect the Bank’s financial statements.
IFRS 10 – Consolidated Financial Statements - IFRS 10 replaced the consolidation guidelines
previously set forth in IAS 27—Consolidated and Separate Financial Statements and SIC 12—
Consolidation—Special Purpose Entities. IFRS 10 introduced a single consolidation model to be
applied in the assessment of control over investees. According to IFRS 10, ―control‖ over an investee
exists when the investor satisfies all of the following criteria: (i) power over the investee, (ii) exposure
or rights on variable returns from its involvement with the investee, and (iii) the capacity to use its
power over the investee to affect its returns. IFRS 10 became effective for annual periods beginning
as of January 1, 2013. The Bank’s management has reviewed our control assessments in accordance
with IFRS 10 and concluded that the classification of its investees (as subsidiaries or not) was not
affected for the comparative period or periods covered by the financial statements for the years ended
December 31, 2013, 2012 and 2011.
IFRS 11 – Joint Ventures - IFRS 11 replaces IAS 31—Interests in joint ventures, and SIC 13—
Jointly Controlled Entities—Non-Monetary Contributions by Venturers. Pursuant to IFRS 11, the equity
method must be used to account for interests in jointly-controlled entities, and the proportional
consolidation of jointly-owned subsidiaries is prohibited. The core principle of IFRS 11 is that the
parties to a joint venture arrangement are responsible for determining the classification of the joint
arrangement in question, which determination is based on the assessment of each party’s rights and
obligations, accounting for their respective rights and obligations in accordance with the joint
arrangement classification. There are two types of joint arrangement: (i) joint operations (where the
respective rights and obligations to the joint arrangement’s assets and liabilities are specified
according to the agreement governing such relationship), in which the parties recognize their assets,
liabilities and corresponding revenues and expenses proportionally to their interest in the
arrangement; and (ii) joint ventures (where each party has rights to the net assets of the joint
193
Section 10 - Comments From the Executive Officers
venture entity), in which the parties recognize their investments using the equity method. IFRS 11
became effective for annual periods beginning as of January 1, 2013.
The Bank has applied IFRS 11 retroactively, allowing for certain simplifications contained in its
transitional provisions. In this registration statement, the Bank has recognized its investments in joint
ventures according to the equity method beginning as of the earliest period presented herein. The
initial investments were measured as the aggregate of the carrying amounts of the assets and
liabilities that we had previously proportionately consolidated, including any goodwill arising from
acquisition, in effect from January 1, 2012.
The effects of the application of IFRS 11 on our consolidated balance sheets and on our consolidated
statements of income as at January 1, 2012 and December 31, 2012 and for the periods ending
December 31, 2012 and 2011 are presented later on item 10.4.b of this Reference Form.
IFRS 12 – Disclosure of Involvement with Other Entities - IFRS 12 contains extensive
disclosure requirements for entities that have interests in subsidiaries, joint ventures, associates
and/or non-consolidated entities. The objective of IFRS 12 is to require sufficient disclosure that will
enable users of financial statements to evaluate: (i) the nature and risks associated with the
participation of one entity in other entities; (ii) the exposure to risks arising from an entity’s
involvement with unconsolidated structured entities and the involvement of minority shareholders in
the activities of consolidated entities; (iii) expanded disclosures on subsidiaries, joint agreements and
associates; and (iv) the effects of these interests in the entity’s financial position, financial
performance and cash flows. IFRS 12 became effective for annual periods beginning as of January 1,
2013. The adoption of IFRS 12 did not materially affect the Bank’s consolidated financial statements.
IFRS 13 – Measurement at Fair Value - IFRS 13 revises the definition of fair value and provides
guidelines on how fair value should be measured, together with a set of disclosure requirements.
However, IFRS 13 does not alter the requirements regarding items that should be measured or
disclosed at fair value. IFRS 13 became mandatory for periods beginning on or after January 1, 2013;
however, early adoption of IFRS prior to the stipulated implementation date was also allowed. The
adoption of IFRS 13 by us on January 1, 2013 did not materially affect the Bank’s consolidated
financial statements
IAS 19 (R) – Employee Benefits - The revised IAS 19 introduces improvements in the presentation
of defined benefit plans, but does not significantly alter their measurement. The main changes to IAS
19 are: (i) the elimination of the corridor method (actuarial gains and losses are now entirely
recognized as actuarial assets or liabilities); (ii) interest cost (net interest) is calculated on the net
liability (asset) for defined benefit plans; (iii) remeasurements (including actuarial gains and losses)
must be recognized in other comprehensive income; and (iv) increased disclosure in the financial
statements, in order to clarify the risks associated with defined benefit plans.
IAS 19 (R) was applied retroactively in accordance with the transitional provisions of the standard.
The effects of the application of IAS 19 (R) on the Bank’s consolidated balance sheets and on the
Bank’s consolidated statements of income as of January 1, 2012 and December 31, 2012 and for the
periods ended December 31, 2012 and 2011 are presented on item 10.4.b.
Amendments to IAS 28 – Investments in Associates and Joint Ventures - The IASB published
changes to IAS 28, which provided for the accounting of investments in associates and established
requirements for the application of the equity method to record investments in associates and joint
ventures. Amendments to IAS 28 became effective for annual periods beginning as of January 1,
2013.
Effective in 2014
Amendment to IAS 32 – Financial Instruments: Presentation - This amendment clarifies the
presentation of tax effects on payouts made to holders of equity instruments, which must be
accounted for in accordance with IAS 12 – Income Taxes.
Amendment to IAS 36 – Asset Impairment - The IASB amended the disclosure requirements
regarding the measurement of the recoverable value of assets in connection with the issuance of IFRS
13.
Amendment to IAS 39 – Financial Instruments: Recognition and Measurement - This
amendment allows an exception to the obligation to discontinue hedge accounting for derivative
financial instruments, when there is compliance with the statutory requirements.
These amendments to IAS 32, 36 and 39 became effective for annual periods beginning as of January
1, 2014. The Bank believes that these amendments do not significantly affect its consolidated
financial statements.
IFRIC 21 – Taxes - IFRIC 21 addresses the accounting for government-imposed taxes, other than
income tax. The interpretation clarifies that the taxable event giving rise to a liability to pay taxes is
the activity described in the relevant legislation that determines the tax payment. The IAS 37
interpretation became effective for annual periods beginning as of January 1, 2014. The Bank
believes that this interpretation does not have a significant impact on its consolidated financial
statements.
Amendments to IAS 19 (R1) – Employee Benefits - The IASB issued revised IAS 19, which
requires that contribution of employees and third-parties be reflected in the accounting for defined
benefit plans. Amendments to IAS 19 became effective for annual periods beginning on or after July
1, 2014, with early application permitted. The adoption of IAS 19 (R1) did not materially affect the
Bank’s consolidated financial statements.
Effective after 2014
IFRS 15 – Revenue from Contracts with Customers - In May 2014, the IASB published a new
standard that specifies how and when an IFRS reporter will recognize revenue from contracts and
requires these entities to provide users of financial statements with more informative, significant
disclosures. IFRS 15 is effective for annual periods beginning on or after January 1, 2017, and early
adoption is permitted.
IFRS 9 – Financial Instruments: Recognition and Measurement - IFRS 9 is the first standard
issued as part of a larger project to replace IAS 39, as many users of financial statements and
stakeholders found the requirements included in IAS 39 difficult to understand, apply and interpret.
To answer the requests to improve financial instrument accounting, the IAS 39 replacement project
was divided into three main stages: (i) classification and measurement of financial assets; (ii)
impairment; and (iii) hedge accounting.
IFRS 9 simplifies the model of measurement of financial assets and sets forth two main categories of
measurement: (i) amortized cost, and (ii) fair value. Classification depends on the business model of
the entity and the contractual characteristics of a financial asset’s cash flows. With respect to the
requirements of measurement and classification of financial liabilities, the most significant change
relates to the accounting of changes in the fair value of a financial liability measured at fair value
through profit or loss. Changes to fair values of these liabilities attributable to changes in credit risks
are now recognized in other comprehensive income in shareholders’ equity, unless the recognition of
the effect of these changes results in an income accounting mismatch or increase an accounting
mismatch.
In November 2013, the IASB introduced new requirements for hedge accounting in IFRS 9. The
purpose of these new requirements is to to align hedge accounting more closely with the entities’ risk
management.
In July 2014, the IASB finalized the project to replace IAS 39.
IFRS 9 is effective for annual periods beginning on or after January 1, 2018. The Bank has begun the
process of evaluating the impact of adopting this standard.
Amendments to IAS 16 – Property, Plant and Equipment - In May 2014, the IASB issued an
amendment to IAS 16 which clarifies that depreciation of an item of property, plant and equipment
based on revenue is not appropriate. This amendment is effective for periods beginning on or after
January 1, 2016, and early adoption is permitted.
Amendments to IAS 38 – Intangible Assets - In May 2014, the IASB issued an amendment to
IAS 38 which clarifies that amortization of an intangible asset based on revenue generated by using
the asset is inappropriate except in the following circumstances: (i) the intangible asset is expressed
as a measure of revenue; or (ii) the IFRS reporter can demonstrate that revenue and the use of the
economic benefits of the intangible asset are highly correlated. This amendment is effective for
periods beginning on or after January 1, 2016, and early adoption is permitted. The Bank has begun
the process of evaluating the impact of adopting this standard.
Amendment to IFRS 11 – Joint Ventures - This amendment to IFRS 11 provides guidance on
accounting for the acquisition of an interest in a joint operation that constitutes a business, in
195
Section 10 - Comments From the Executive Officers
accordance with the principles of business combination accounting established in IFRS 3. This
amendment to IFRS 11 is effective for annual periods beginning on January 1, 2016, and early
adoption is permitted. The Bank decided not to adopt all the changes effective after 2014 in advance.
The Bank is evaluating possible impacts from the adoption of these standards and amendments, and
will complete our assessments prior to the effective date of each standard.
b.
significant effects of changes in accounting practices
In the year 2014, the application of amendments and interpretations had no significant effects on the
consolidated financial statements of the Bank.
In 2013, the application of IAS 19(R) and IFRS 11 had material effects on the Consolidated Balance
Sheet and Consolidated Statement of Income of the Bank on December 31, 2012, presented below.
Effects of the application of IAS 19(R) and IFRS 11 on the Bank‟s Consolidated Balance
Sheet
R$ million
Previous
Disclosure
12/31/2012
Adjustments IAS
Adjustments
19(R)
IFRS 11
Adjusted
Balances
Assets
Financial assets
510,920
--
(83,391)
427,529
Loans to customers
Investments
in associated companies
and joint ventures
498,071
164
---
(32,314)
13,717
465,756
13,880
(2,839)
23,630
Assets due to deferred taxes
Other assets
Total
23,207
3,263
103,646
(4,441)
(15,920)
83,284
1,136,007
(1,179)
(120,748)
1,014,081
--
(50,497)
860,897
-10
(55,843)
252
7,152
(14,538)
Liabilities
Financial liabilities
Liabilities due to insurance contracts
Liabilitie due deferred taxes
Other liabilities
Shareholders' equity
Other comprehensive income
Total
911,394
55,843
6,890
91,982
3,382
69,898
1,485
(4,571)
(4,571)
(122)
--
1,136,007
(1,179)
(120,748)
80,825
65,206
(3,086)
1,014,081
Effects of the application of IAS 19(R) and IFRS 11 on the Bank‟s Consolidated Statement
of Income
Fiscal Year/2012
R$ million
Interest income
Previous
Disclosure
107,931
Interest expense
(59,356)
Net interest income
48,576
Net expenses with provision for losses with loans to customers
(12,846)
Net expenses with provision for losses with loans to financial
institutions
Previous
disclosure
(13,751)
Adjusted
Balances
94,181
5,435
(8,316)
2,784
(9)
(53,921)
40,260
(10,062)
--
(9)
Net interest income after the allowance for credit losses
35,721
(5,532)
30,189
Non-interest income
30,642
(8,334)
22,309
18,107
(1,766)
16,340
Net revenues from fees and commissions
Net gains (losses) on financial assets/liabilities stated at fair value
through profit or loss
Gains/(losses) on assets available for sale
Net gains/(losses) in associated companies and joint ventures
Income from insurance and private pension operations
Other operating income
Non-interest expenses
(734)
546
449
(90)
46
544
(188)
359
590
2,526
(2,526)
--
10,249
(5,041)
5,207
(51,093)
13,604
(37,489)
Personnel expenses
(17,783)
1,306
(16,477)
Administrative expenses
(10,613)
1,012
(9,601)
Amortization of intangible assets
(3,261)
395
(2,866)
Depreciation
(1,092)
142
(950)
Other expenses
(18,343)
10,748
(7,595)
Income before taxes
15,270
Taxes
(3,832)
228
(3,603)
Current
(6,860)
1,419
(5,440)
3,028
(1,191)
1,837
11,438
(33)
11,405
Deferred
Net income for the period
Attributable to controlling shareholders
11,246
Attributable to non-controlling interests
192
c.
(261)
-(33)
15,009
11,246
159
qualification and emphasis in the independent accountants' report
In 2012, the independent auditors' report was issued without any qualification or emphasis.
In 2013 the independent auditors' report was issued with a informational Emphasis of matter
paragraph, as follows:
―Restatement of corresponding amounts
As mentioned in Note 2(d) as a result of changes in accounting policies adopted in 2013, the
corresponding consolidated amounts for the consolidated balance sheets as of December 31, 2012
and January 1, 2012, and consolidated statements of income, comprehensive income, changes in
shareholders’ equity and cash flows for the year ended December 2012, presented for comparative
purposes, were adjusted and are being restated as required by IAS 8 - Accounting Policies , Change in
Accounting Estimates and Errors and IAS 1 - Presentation of Financial Statements. Our conclusion is
not qualified in respect of this matter.‖
Although the matter was presented properly in the financial statements of 2013, this highlight was
included according to the auditor's judgment, the matter has such importance, that an emphasis is
fundamental for the users suitable understanding of the financial statements.
With this emphasis, the auditor clarifies that the other periods balance restatement of financial
statements do not modify its previously issued opinion.
In 2014, the independent auditors' report was issued without any qualification or emphasis.
197
Section 10 - Comments From the Executive Officers
10.5. Critical accounting practices
Indicate and comment on the critical accounting practices adopted, specially stressing the
Management's accounting estimates on uncertain and material issues for the description of
the financial and income position, that require subjective or complex judgments, such as:
(a) provisions; (b) contingencies; (c) revenue recognition; (d) tax credits; (e) long-lived
assets; (f) useful life of non-current assets; (g) pension plans; h) conversion adjustments
on foreign currency; i) environmental recovery costs; and (j) criteria for asset impairment
tests.
The preparation of the financial statements in compliance with the International Financial Reporting
Standards requires that the Management uses judgments to establish and record accounting
estimates, whenever necessary. Significant assets and liabilities subject to these estimates and
assumptions include provisions for losses on loans to customers, provision for labor, tax and civil
claims, revenue recognition, deferred tax assets, long-term assets, property, plant and equipment and
intangible assets' useful lives and residual values, valuation of financial instruments, assets and
liabilities related to post-employment benefits and other provisions. The final amounts for transactions
involving these estimates are only known upon their settlement.
a.
provision for losses with loans to customers
In the evaluation of the impairment of loans to customers, the Bank verifies whether there is any
objective evidence of losses in relation to these financial assets, with the objective of classifying them
in operations with recoverability problems (impairment) and without recoverability problems (nonimpairment).
The operations group with recoverability issues is evaluated in a segmented manner depending on the
significance of operations, generating two distinct groups: (i) individually significant operations with
impairment, for individualized handling; and (ii) individually non-significant operations with
impairment, for collective handling.
For the segmentation of loans to customers with evidence of losses in individually significant and
individually non-significant, management adopts as a parameter the corporate levels of authority for
concession of the most significant loans. In this manner, the bank adopts as a cutoff point, for
determination of the significance of operations, the maximum value of trading authority level for the
performance of operations with legal entities, considering as such the amount of indebtedness of the
client from which their new operations would require approval at a strategic decision-making level of
the Bank.
The following items are verified on general lines to allow management to determine whether a loss
event could materialize, on an individual basis: (i) the economic, financial and legal situation of the
counterparty; (ii) retention of risks by the Bank, in relation to the operations of the counterparty; (iii)
the counterparty's past business relationship with the Bank; and (iv) the situation of the credit-related
guarantees. This scope allows the Bank to estimate, on each reporting date, the need for potential
impairment of the financial assets considered individually. This information is also used to determine
the classification of operations in high, medium or low risk.
The identification of a loss event for a counterparty in a specific operation means that all the other
operations with that counterparty are also classified as having evidence of loss.
If the Bank determines that the loss events do not affect the recoverable value of the loans to
individually evaluated clients, the financial assets are included in a group of assets with similar credit
risk characteristics and the bank evaluates them collectively for impairment purposes. Loans to
customers that are individually evaluated by impairment and for which impairment loss is recognized,
are not included in a collective evaluation of impairment.
The collective evaluation of impairment losses, applied to operations classified as in individually
nonsignificant impairment, is based on the application of the Historical Loss Rates -HLRs observed in
the Bank's portfolio. The HLRs are determined by observing losses incurred by the Bank, by monthly
harvests, as from the thirteenth month prior to the yearly closing date, in the case of ongoing
operations with period of up to thirty-six months (called "short-term" for the purpose of impairment
testing), or from the nineteenth previous month, in the case of ongoing operations with period of
more than thirty-six months (called "long-term" for the purpose of impairment testing).
The short-term monthly HLR is calculated by means of the monitoring, for up to twelve months, of the
migrations of operations to losses in relation the opening book balance of operations selected in the
month immediately prior to the twelve months of monitoring. The long-term monthly HLR is calculated
in a similar manner to the short-term HLR, extending the loss monitoring period to up to eighteen
months.
For the purpose of collective evaluation of impairment, the calculation of the monthly HLRs is
performed in a segmented manner by groupings of similar products/types, internal classification of
risk of operations and types of clients, grouped according to the risk analysis methodology and credit
limit.
If the evidence of impairment loss in a relationship with an individual counterparty or on a collective
basis materializes, the amount of loss is recognized in Net expenses with provision for losses with
loans to customers, in counter entry to an account of provision for reduction of the respective financial
asset. The amounts recorded as provisions representing the estimate of the Bank's management of
losses incurred in the portfolio. The level of provision is determined based on estimates that consider
the occurrence of loss event, the current economic scenarios, other assumptions and judgments of
Management.
If the amount of a previously recognized impairment loss decreases, and this situation can be related
objectively to an event occurring after its recognition, it is reversed by reducing the respective
provision account, and such a reversal is recognized in net income of the period.
Loans to customers are written off against their respective provision account when they are
considered uncollectible or not recoverable. The Bank usually writes-off loans when no payment is
received after 360 days of the maturity date or in up to 540 days for loans with maturities over 36
months. If a future write-off is subsequently recovered, the amount is credited in Net expenses with
provision for losses with loans to customers.
The provisions for impairment of loans, recorded on December 31, 2014, 2013 and 2012, were
considered by Management to be sufficient to cover losses incurred with these loans.
b.
provision for labor, fiscal and civil claims
The recognition and disclosure of contingent assets and liabilities and legal obligations are made in
accordance with the criteria defined in IAS 37 – Provisions, Contingent Liabilities and Contingent
Assets.
Contingent assets are only recognized in the financial statements upon the existence of evidence
guaranteeing their realization usually represented by the final judgment of the lawsuit and by the
confirmation of the capacity for its recovery by receipt or offsetting by another receivable.
Provisions are recognized in the financial statements when, based on the nature of proceedings, on
the opinion of legal advisors and Management, and in the complexity and experience with similar
transactions, the risk of loss of legal or administrative proceedings is considered probable, with a
probable outflow of financial resource for the settlement of obligation and when the amounts involved
are measurable with sufficient assurance, and judicial figures when reporting monthly and revised as
follows:
- Aggregated - Cases that are similar and recurring in nature and whose values are not considered
relevant, according to the provisions are based on statistical data. It covers civil, tax or labor claims
(except labor claims filed by labor unions and all claims classified as strategic) with probable value of
conviction estimated by the legal advisors in up to R$1 million.
- Individual – Proceedings considered unusual or whose value is considered relevant by our legal
counsel. It is considered the amount claimed; probability of an unfavorable decision; evidence
presented; evaluation of legal precedents; other facts raised during the process; judicial decisions
made during the course of the case; and the classification and the risk of loss of legal actions.
Individually measured contingent liabilities considered as possible losses are not recognized in the
balance sheet and only need to be disclosed in the notes to the financial statements, while those
classified as remote do not require provisioning or disclosure.
Legal obligations (tax and social security) originate from tax obligations established in the legislation,
and, regardless of the probability of success of lawsuits in progress, the amounts are recognized in full
in the financial statements as liabilities.
199
Section 10 - Comments From the Executive Officers
c.
revenue recognition
Income is recognized at the accrual basis and are recorded in the financial statements of the periods
to which they refer. Interest, fee and commission income are recognized when its value, associated
costs and stage of completion of the transaction may be reliably measured, and is probable that the
economic benefits associated to the transaction will be realized. This concept is applied to the main
revenues generated by the Bank's activities, namely:
Net interest income - Interest income and expenses from assets and liabilities that yield and pay
interest are recognized in income (loss) for the period at the accrual basis using the effective interest
rate.
Income from fees and commissions – The recognition of income from fees and commissions is
determined in accordance with the purpose of the fees and the existence of financial instruments
associated to them. If there is an associated financial instrument, fee income is considered in interest
calculation, except in cases where the financial instrument is recorded at fair value through profit or
loss. However, fee income received for services that are provided on a specific period are recognized
during that period. Fee income received to complete a specific significant service or event are
recognized when the service has been completed or the event occurred.
In conformity with IAS 18 – Revenues, the Bank recognizes interest income when it is probable that
economic benefits related to the transaction will be received.
d.
deferred tax assets
Deferred tax assets are calculated on temporary differences and tax losses carryforward, and
recognized in the accounting books whenever the Bank expects to generate taxable profit in
subsequent years in amounts sufficient to set-off such values. The expected realization of the Bank's
tax credit is based on the projection of future income and on technical studies, in line with the
prevailing tax legislation.
The estimates considered by the Bank for the recognition and valuation of deferred taxes are
reviewed based on the current expectations and projections of future events and trends. The main
assumptions identified by the Bank that may affect these estimates are related to factors such as (i)
changes in the amounts deposited, default and customer base; (ii) changes in government regulations
on tax matters; (iii) changes in the interest rates; (iv) changes in inflation rates; (v) lawsuits or legal
disputes with an adverse impact on the Bank; (vi) credit and market risks, as well as other risks
arising from loan and investment activities; (vii) changes in the market values of Brazilian securities,
mainly Brazilian government securities; and (viii) changes in internal and external economic
conditions.
e.
long-lived assets
Investment in associated companies and joint ventures - investments in associated companies
and joint ventures are evaluated according to the accrual basis of accounting based on their
shareholders' equity. The financial statements of branches and subsidiaries abroad are translated
according to the IAS 21 and the effects of changes in foreign exchange rates are recognized in income
(loss) for the period or in other comprehensive income, in shareholders’ equity. Other permanent
investments are evaluated at fair value, pursuant to IAS 39 - Financial Instruments - Recognition and
Measurement.
Property and equipment in use – Property and equipment are stated at cost less depreciation,
calculated using the straight-line method.
Intangible assets - an asset complies with the criteria for identification of an intangible asset when
it can be split from the entity and sold, transferred or licensed, leased or exchanged individually or in
a contract, related asset or liability, regardless of the entity's intention to use it or provide contractual
or legal rights, regardless if such rights are transferable or can be split from the entity or from other
rights and obligations.
Intangible assets have a defined useful life and refer to disbursements for acquisition of the right to
provide bank services (payroll acquisitions), and are amortized over contracted periods, and
acquisition/development of software, amortized on the straight-line basis at the rate of 10% to 20%
per year starting from the date of availability for use, and adjusted by reducing them to their
recoverable amounts (impairment), when applicable.
f.
useful life of non-current assets
The estimated useful life term of the fixed assets is defined based on the percentages below:
Assets Property, plant and equipment
Buildings ¹
Furniture and equipment
Improvements to third-party property
Data processing equipment
Vehicles
Annual rate %
2.0 to 10.0
10.0
10.0 to 20.0
20.0
20.0
Others
10.0 to 20.0
1 - For depreciation of owned buildings, the Bank considers the useful life of the various components of a building, in conformity with paragraph 43 of
IAS 16.
The estimated useful life term of the intangible assets is defined based on the percentages below:
Intangible assets
Annual rate %
Software
10.0 to 20.0
Rights due to payroll management
10.0 to 20.0
Related to customers, acquired in business combinations
10.0 to 50.0
Related to contracts, acquired in business combinations
10.0 to 35.0
Other ¹
20.0
1 - Includes mainly trademarks acquired in business combinations.
g.
pension plans
Benefits for employees, related to short-term benefits for existing employees are recognized on the
accrual basis as the services are provided. Post-employment benefits, comprising supplementary
retirement benefits and medical assistance for which the Bank is responsible, were accounted at
December 31, 2014, 2013 and 2012 in accordance with criteria established by IAS 19 – Employee
benefits.
In defined-contribution plans, the actuarial risk and the investment risk are borne by the participants.
Consequently, no actuarial calculation is required when measuring the obligation or expense. Thus,
the expense is recognized in income (loss) for the period in which the related services are rendered by
employees in return for contributions for the same period.
In defined benefit plans, the actuarial risk and the investment risk the actuarial risk and the
investment risk fall either partially or fully on the sponsoring entity. Thus, actuarial assumptions are
required for the measurement of plan liabilities and expenses, and there is the possibility of actuarial
gains and losses. As a result, the Bank records a liability when the present value of actuarial liabilities
is greater than the fair value of plan assets, or an asset when the fair value of assets is greater than
the present value of plan liabilities. In the latter instance, the asset should be recorded only when
there is evidence that it can effectively reduce the contributions from the Bank or refundable in future.
The Bank, as permitted by IAS 19, recognizes actuarial gains/losses in the same period in which the
actuarial calculation was performed, as follows: (i) the costs of current services and net interest on
the net amount of defined benefit liabilities (assets) are recognized in the statement of income; and
(ii) the net value remeasurements of defined benefit liabilities (assets) are recognized in other
comprehensive income, in shareholders’ equity.
The contributions payable by the Bank to medical plans, in some cases, remain after the retirement of
the employee. Thus, Bank's obligations are evaluated at the present actuarial value of the
contributions to be paid over the expected period when plan participants and beneficiaries will be
linked to the plan. Said obligations are evaluated and recognized under the same criteria used for
defined benefit plans.
The actuarial asset recognized in the Consolidated Balance Sheet refers to the actuarial gains and its
implementation must occur by the end of the plan. There may be partial realizations of this asset,
contingent upon the fulfillment of the requirements of the Law.
h.
conversion adjustments on foreign currency
Functional and presentation currency - The consolidated financial statements are presented in
Brazilian Reais, which is the Bank's functional and presentation currency. The functional currency,
201
Section 10 - Comments From the Executive Officers
which is the currency of the main economic environment in which an entity operates, is the Real for
most of the entities comprising the Group.
Transactions and balances - Transactions in foreign currency are initially recorded at the exchange
rate of the functional currency at the date of the transaction.
The Bank's assets and liabilities denominated in foreign currency, most of which are monetary, are
translated at the exchange rate of the functional currency at the reporting date. All the exchange
differences are recognized in the consolidated statement of income for the period in which they arise.
Translation to the presentation currency – The financial statements of overseas entities (none of
which has the currency of a hyperinflationary economy) are translated into the presentation currency
according to the following criteria: (i) assets and liabilities are translated using the exchange rate in
force at the reporting date and (ii) income and expenses are translated at the average exchange rate
for the period.
Foreign exchange differences from the translation of the financial statements of overseas entities,
whose functional currency is the Real, are recognized in the consolidated statement of income. For
those entities whose functional currency is not the Real, the accumulated foreign exchange
differences are recognized directly in shareholders' equity, until the disposal of the subsidiary abroad
or loss of control. At that time, the accumulated foreign exchange differences are reclassified from
other comprehensive income to profit or loss for the period. The sum of foreign exchange differences
attributable to non-controlling shareholders is allocated and recognized as part of interests of noncontrolling shareholders in the consolidated balance sheet.
i.
environmental recovery costs
Not applicable.
j.
criteria for asset impairment tests
At the end of each reporting period, the Bank assesses, based on internal and external sources of
information, whether there is any indication that a non-financial asset may be impaired. If there is
indication of impairment, the Bank estimates the recoverable amount of the asset. The recoverable
amount of the asset is its fair value, less the costs to sell it and its value in use, whichever is the
higher.
Regardless of the existence of any indication of impairment, the Bank annually tests for impairment
intangible assets with indefinite useful life, including goodwill acquired in a business combination, or
an intangible asset not yet available for use. This test can be performed at any time during an annual
period, provided it is performed at the same time every year.
As for investments in associated companies and joint ventures, the Bank applies the requirements of
IAS 39 to determine whether it is necessary to recognize any additional impairment loss of the total
net investment.
As the goodwill comprising the book value of investments in associated companies and joint ventures
is not separately recognized, it is not tested separately with respect to its recoverable amount,
pursuant to the requirements of IAS 36. Instead, the aggregate book value of the investment is tested
for impairment as a single asset by comparing its carrying amount with its recoverable amount,
whenever application of IAS 39 indicates that the investment has recovery issues. The impairment loss
recognized in those circumstances is not allocated to any asset, including goodwill, that forms part of
the carrying value of the investment in the associate company or joint venture.
In case the recoverable value of the asset is lower than its book value, the book value of the asset is
reduced to its recoverable value through a reducing account for impairment losses, whose contraentry is recognized in income for the period in which is occurs, under Other expenses.
The Bank also evaluates, at the end of each reporting period, if there is any indication that an
impairment loss recognized in prior periods for an asset, except for goodwill due to expected future
earnings, may not exist anymore or may have decreased. If there is indication of impairment, the
Bank estimates the recoverable amount of this asset. Reversal of impairment losses of an asset will be
recognized in income for the period, rectifying Other expenses balance.
The main non-financial assets are subject to have their recoverable amounts tested are presented
below.
Property, plant and equipment
Land and buildings – upon determination of land and building recoverable value, technical evaluations
in conformity with ABNT (Brazilian Association of Technical Standards) are conducted, which
establishes general concepts, methods and procedures of compulsory use in urban property
evaluation technical services.
Data processing equipment – in the determination of recoverable value of relevant items that
comprise data processing equipment, market values of components whose market value is available
are considered and, for other items, the value that may be recovered for use in Bank operations is
considered, and its calculation considers cash flow projections of benefits from using each asset
during its useful life, adjusted to present value based on the CDI rate.
Other property, plant and equipment items – although being subject to loss indication analysis, other
items of property, plant and equipment in use have low individual values and, considering cost
effectiveness, the Bank does not evaluate the recoverable value of these items on an individual basis.
However, the Bank conducts annual inventory counts with the purpose of writing-off accounting
records of lost or deteriorated assets.
Investments in associated companies and joint ventures
The methodology for calculating the recoverable amount of investments in associated companies and
joint ventures, including goodwill incorporated to the balance of these investments is to measure the
expected result of investment using the discounted cash flow. To measure this result, assumptions are
based on (i) projections of operations, results and companies' investment plans; (ii) macroeconomic
scenarios developed by the Bank; and (iii) internal methodology to determine the cost of capital based
on the Capital Asset Pricing Model - CAPM model.
Goodwill on investments acquired in business combination
The methodology for calculating the recoverable amount of goodwill acquired in a business
combination is to measure the expected result of the investment using the discounted cash flow. To
measure this result, assumptions are based on (i) projections of operations, results and companies'
investment plans; (ii) macroeconomic scenarios developed by the Bank; and (iii) internal methodology
to determine the cost of capital based on the Capital Asset Pricing Model - CAPM model.
For goodwill generated by the acquisition of Banco Nossa Caixa, which was merged into Banco do
Brasil in November 2009, methodology consists in comparing the goodwill amount paid with present
value of Bank's results projected for the São Paulo State, less net assets with defined useful lives.
Projections are based on verified results and evolve based on earnings growth assumptions for Banco
do Brasil, and are discounted based on the Bank's capital cost.
Other intangible assets
Rights due to payroll management - Model to evaluate the recoverable value of rights due to
payroll acquisition uses the performance of contracts, which are calculated based on client relationship
contribution margins that are related to each contract, so as to verify if projects that justified the
asset acquisition correspond to the verified performance. For contracts that do not reach expected
performance, a provision for impairment is recognized.
Software – Software that is substantially developed internally to meet the Bank's necessities receive
constant investment for modernization and adequacy to new technologies and business needs. As
there are no similar software in the market, and the cost to implement measurements that permit the
calculation of its value in use is high, recoverability test for software consist in evaluating its utility to
the company so as to, whenever the software is not used anymore, its value is written-off from
accounting records.
Acquired through business combination – intangible assets acquired through business
combination, mainly represented by trademarks and rights related to clients and contracts, are
evaluated at the end of each reporting period to verify if there are indications of impairment losses. If
there is any indication for these assets, the Bank estimates its recoverable value. Methodology to
calculate the recoverable value consist in determining the present value of cash flows estimated for
these intangible assets, discounted at a rate that reflects current market evaluations and specific risks
of each asset.
203
Section 10 - Comments From the Executive Officers
Other assets
Non-operating assets – regardless of the existence of loss indications, Non-operating assets have
their recoverable value evaluated on a half annual basis, through the formalization of their market
values in appraisal reports, prepared according to ABNT standards.
10.6. Internal controls adopted to ensure the preparation of trustworthy financial
statements
a.
efficiency level of such controls, indicating eventual imperfections and actions to
correct them:
Banco do Brasil's Management is responsible for establishing, keeping and improving the internal
controls related to the Bank's consolidated financial statements. These controls follow policies and
procedures established to ensure that financial statements reflect, assets and liabilities transactions,
guarantees provided, positions held and held in custody by the Bank and consolidation of other
Conglomerate companies.
Moreover, Banco do Brasil has a governance structure aimed at the management of risks and the
ongoing monitoring of its internal controls. This structure is made up of the Board of Directors, the
Audit Committee, the Management Board, and Strategic Committees.
The evaluation of the effectiveness of internal controls uses as basis documents and guidelines widely
recognized in the Brazilian and international markets such as COSO - Committee of Sponsoring
Organization of the Treadeway Commission - Framework for the Evaluation of Internal Control
Systems and CobiT - Control Objectives for Information and related Technology.
The identified risks are mitigated by preventive and corrective actions and the periodic review and
updating of internal controls. The shortcomings are monitored by the Strategic Committees of the
Bank.
The system of internal controls of BB has evolved with consolidation of roles and responsibilities of
managers of business processes and integrated operations in the areas of risks and controls.
However, the internal controls related to the financial statements may not avoid or detect errors
timely, even with regards to established systems considered effective.
Management evaluated the efficiency of internal controls related to the consolidated financial
statements for the year ended December 31, 2014 and concluded, with reasonable level of assurance,
that Banco do Brasil's internal controls are adequate to the Bank's size, business complexity and risks.
b.
deficiencies and recommendations
independent auditor's report:
on
internal
controls
addressed
on
the
In line with the Bacen Circular 3,467 of 09.14.2009, independent auditing has been reporting on
accounting procedures, internal controls and compliance with legal and regulatory provisions.
Deficiencies and recommendations in the report are not enough significant to generate important or
material effects on the financial statements.
However, deficiencies and recommendations, as well as plans of action and corrective measures are
prioritized in the Directorships and Strategic Units. The Committees that make up the administrative
structure (Global Risk Superior Committee, Executive Committee for Prevention of Financial Crimes
and Exchange Illicit Acts and Information Security, Executive Committee of Internal Controls and
Operational Risk, and others that are described in section 12.1) monitor operational risk and internal
controls of the institution. The results of monitoring and implementation of action plans are
periodically reported to the Executive Board, the Audit Committee and the Board of Directors.
10.7. Public securities offering
If the issuer had a public offering of securities, (a) how it invested the funds raised in the
offering; (b) whether there were material deviations from the actual use of the funds and
the intended use disclosed in the prospects of the offering; and (c) reasons that led to
them.
In the last three years (2012, 2013 and 2014) there was no public offerings of distribution of
securities, in the form of shares, by Banco do Brasil.
10.8. Material items not disclosed in the financial statements of Banco do Brasil
a.
the assets and liabilities directly or indirectly held by Banco do Brasil which do not
appear in its Balance Sheet (off-balance sheet items):
i.
operating leases, assets and liabilities
The Bank, as lessee, has several operating lease agreements, mainly represented by lease contracts
of its dependencies (branches and administrative buildings), in Brazil and abroad.
ii.
receivables portfolios written off for which the entity takes on risks and
responsibilities, representing potential liabilities
Not applicable. IFRS prevent the write-off of portfolios in this scenario. Loan operations subject to
assignment and their associated liabilities are presented in Note 43 - Transfer of Financial Assets of
the financial statements under IFRS.
iii.
contracts for future purchase and sale of products or services
There is no such situation at the Bank.
iv.
contracts for unfinished constructions
Said amounts are recorded as Fixed Assets in the financial statements according to the IFRS, in line
with the financial statements in BRGAAP, from Cosif's constructions in progress.
v.
contracts for the future receipt of financing
There is no such situation at the Bank.
b.
other items not disclosed in the financial statements
Not applicable. Banco do Brasil does not have off-balance sheet assets and liabilities other than those
indicated in the notes to the financial statements, according to the best corporate governance
practices. Banco do Brasil’s off-balance sheet assets and liabilities are properly indicated in the
financial statements for fiscal year 2014. Notes that address these items are: (i) Note 26 – Assets
Property, plant and equipment; (ii) Note 34 – Provisions and contingent liabilities; (iii) Note 39 Derivative Financial Instruments; and (iv) Note 40 - Financial Guarantees and Other Commitments.
10.9.
Comments on each item indicated in section 10.8
a.
inasmuch as such items change or may change the revenues, expenses, operating
income or other items of the financial statements.
Provisions
The lawsuits, tax and civil risks classified "possible" are exempted from any provisions based on IAS
37 - Provisions, Contingent Liabilities and Contingent Assets.
Labor lawsuits represent various claimed requests, such as: compensation, overtime, distortion of the
working day, Additional Function and Representation, and others.
Tax lawsuits are claims related to ISSQN, collection and other tax obligations deriving from the
Federal Revenue Service and the Social Security National Institute. The main contingencies originate
from:
I.
Tax deficiency notices issued by the Social Security National Institute (INSS) targeting the
collection of contributions levied on salary bonus from 1995-2006 collective bargaining
agreements, in the amount of R$2,462 million, transportation voucher and use of own vehicles by
Banco do Brasil employees in the amount of R$220 million and employee profit sharing for the
period from April 2001 to October 2003 in the amount of R$68 million.
II.
Notices of tax assessment drawn by the Treasuries of the Municipalities, aiming at the collection
of ISSQN, which amounts R$1,393 million.
205
Section 10 - Comments From the Executive Officers
In civil lawsuits there are actions that seek to recover the difference between inflation and the index
used to restate financial investments during the period of economic plans (Collor Plan, Bresser Plan
and Summer Plan).
The balances of contingent liabilities classified as possible were as follows:
R$ million
12/31/2012
Labor claims
12/31/2013
12/31/2014
55
123
167
Tax claims
4,679
8,440
10,841
Civil claims
3,420
4,062
3,685
8,154
12,625
14,693
Total
Source: Financial statements in accordance with IFRS, Note 34 – Provisions, Contingent Assets and Liabilities and Legal, Tax and Social Security
Obligations.
Derivative Financial Instruments Agreements
R$ million
12/31/2012
12/31/2013
12/31/2014
Notional value - Asset position
Futures contracts
12,298
3,598
3,868
4,956
7,180
10,156
--
215
36
10,602
31,734
7,488
5,984
3,383
2,442
Futures contracts
7,825
11,281
9,453
Forward operations agreements
5,033
5,180
5,334
Option market
3,011
4,964
3,396
Swap contracts
9,499
9,091
11,032
Other derivative agreements
3,353
7,046
3,067
Forward operations agreements
Option market
Swap contracts
Other derivative agreements
Notional value - Liability position
Source: Financial statements, Note 39 – Derivative financial instruments
The reference value is the nominal (notional) value of derivative financial instrument agreements that
are recorded in off balance sheet accounts for control purposes.
Guarantees provided
Banco do Brasil grants guarantees to individuals and legal entities, including other financial institutions
which were given a permit to operate by the (Bacen), by collecting financial charges and counterguarantees from the beneficiaries in the local or foreign-currency denominated transactions carried
out in Brazil or abroad. In Brazil, the Bank mainly grants guarantees, sureties and bonds. As far as
international guarantees are concerned, the types adopted by Banco do Brasil are as follows: Bid
Bond, Performance Bond, Refundment Bond, International Guarantee, International Surety, Standby
Bond.
Guarantees granted to third parties amounted to R$8,739 million on December 31, 2014 (R$11,687
million on December 31, 2013, and R$9,382 million on December 31, 2012), for which, according to
IAS 37 – Provisions, Contingent Assets and Contingent Liabilities, a provision of R$194 million in 2013
(R$146 million in the end of 2013 and R$144 million in the end of 2012) is deemed to be sufficient
and recorded under "Other liabilities".
Credits contracted to release
Among the commitments taken on by Banco do Brasil, there are unused credit facilities and lease
transactions totaling R$150,309 million on December 31, 2014 (R$149,934 on December 31, 2013 and
R$141,516 million on December 31, 2012). Such operations, upon financial realization, are recorded
in the Balance Sheet according to the credit line available.
Credits to release are contracted for a given period of time to offer a loan to a client that has fulfilled
predetermined contractual conditions, including the limits assigned to overdraft account and credit
card operations. Standby letters of credit and sureties and guarantees are conditional commitments,
generally to guarantee the performance of a client before a third party in loan contracts.
In credit linked financial instruments, the contractual sum of the financial instrument represents the
maximum potential of credit risk in case the counterpart fails to fulfill the terms of the contract. The
majority of these commitments matures without being withdrawn. As a result, the total sum is not
representative of the effective future exposure to credit risks or liquidity requirements originating from
these commitments. To decrease the credit risk, the Bank requires the contracted party to deliver, as
collateral, cash resources, securities or other assets to pledge the credit facility, similar to the pledge
required for loans to customers.
Credits to exports confirmed and open credits to imports
As a result of foreign trade transactions, there are confirmed import and export letters of credit
amounting to R$3,325 million on December 31, 2014 (R$2,716 million on December 31, 2013 and
R$2,348 million in 2012). These operations will make up Banco do Brasil's credit portfolio, when
import or export contracts are executed.
Operating leases
Operating lease agreements entered into by the Bank, as lessee, have estimated future payments
distributed over time as shown below.
R$ million
2015 .
Amounts payable
1,238
2016 .
2017 .
2018 .
883
728
566
2019 . After 2019
338
893
Total
4,646
Expenses with rental and operating leases in 2014 were R$«D_A_at»,000 (R$«D_A_ant»,000 in
2013). Banco do Brasil does not hold sublease contracts.
Credit assignment with substantial risk and benefit retention
The Conglomerate transfers the right to receive future cash flows from financial assets classified as
loans and receivables, to the assignee, upon receipt of an amount in cash, calculated on the date of
transfer. However, the Conglomerate continues to recognize on its balance sheet, financial asset in
highlighted items, because the risks and benefits of bonds were substantially retained, that is, the
Conglomerate is fully responsible for any bad debt situation occurred in the receivables transferred.
The consideration received in cash is recognized as a financial asset and a financial liability is
recognized as amounts payable to financial institutions. Since the Bank sells the contractual rights of
loan cash flows, it does not have the possibility of using the assets transferred during the term of the
agreement.
Assets transferred and still recognized in the balance sheet and associated financial
liabilities
R$ million
12/31/2014
Book value
Fair value
12/31/2013
Book value
Fair value
Credit operations assigned with recourse¹
Transferred financial assets
321
314
208
206
Financial liabilities associated
Net position
321
321
208
208
(0)
(7)
(0)
(1)
1 - The transferred financial assets and the financial liabilities related to loan operations assigned with co-obligation are recognized in the consolidated
balance sheet in the captions ―Loans to customers‖ and ―Amounts payable to financial institutions‖, respectively.
b.
nature and purpose of the transaction
The nature and purpose of the operations are described in section 10.9.a above.
c.
nature and amount of the obligations taken on by and the rights generated in favor
of Banco do Brasil as a result of the transaction .
The nature and amounts are described in section 10.9.a. above.
207
Section 10 - Comments From the Executive Officers
10.10. Main elements of the Banco do Brasil 's business plan
The officers must name and comment on the main elements of the issuer's business plan,
specifically addressing the following topics:
a.
investments, including:
i.
quantitative and qualitative description of ongoing and forecast investments
In 2014, Banco do Brasil invested R$1.9 billion in the Fixed Investment Plan (PFix) for the expansion
of its branch network and bank service points, modernization of the IT facility, business solutions
supported by IT and in the improvement of ATMs. These investments are targeted at creating physical
and technological infrastructure conditions to support the growth of Banco do Brasil's business and
they made possible several movements, among which:
I.
Expansion and adaptation of the service network, in order to better positioning the Bank with the
installation of 32 new style branches, 47 retail branches and adaptation of 113 dependencies to
the new ambiance, and modernization and upgrade of outdoor signage of 776 branches in the
country;
II.
Expansion and adequacy of physical facilities of units specialized in the service for the segment of
medium segment and large companies with the installation of 01 Corporate branch and relocation
of 02 Enterprise branches, and adaptation works in 08 business platforms.
III.
Modernization of 99 Self-Service Areas and replacement of 4,254 ATMs, providing increased
productivity and security for customer service;
IV.
Execution of 10,401 works for maintenance and conservation of physical installations, among
which 5,890 are considered minor, providing proper conditions for the operation of service chain
and internal agencies' facilities;
V.
Increasing the processing and storage capacity in IT area, covering management and automation
of the Mainframe environment; small, medium and large telephone system, connectivity capacity
expansion, videoconferencing systems and expansion of the disk subsystem modeling software,
and equipment and software for office solutions.
VI.
Acquisition of processing and connectivity solutions for Datacenters; communication and
connectivity expansion to the network; integration of applications with the new Mainframe
environment (z-Linux); and integrated management software for IT processes, credit risk and
billing platform.
VII.
Modernizing 550 Telecommunications Rooms (On-Line Rooms) and retail Branches, in order to
improve the standards of infrastructure, increase availability of data, voice and safety facilities,
and to prepare racks for new equipment;
VIII. Modernization and expansion of physical security solutions for business environments, safe
custody, administrative and IT, reducing their exposure to risk of criminal activities.
For 2015, Banco do Brasil has approximately R$2.97 billion to intensify the investments in projects of
modernization and business growth support.
ii.
investment funding sources
Own funds.
iii.
material ongoing and forecast divestitures
Not applicable.
b.
provided that already disclosed, report the acquisition of plants, equipment, patents
or other assets which shall significantly impact the production capacity of the issuer
In 2014, new hardware (disks and mainframe) and software were acquired to develop solutions in a
large-scale environment, which expanded data processing and storage capacity by 20% and data
storage by 8.5%.
c.
new products and services
New products and services, informing: (i) description of the research under development
already disclosed; (ii) total amounts spent by the issuer on research to develop new
products or services; (iii) projects under development already disclosed; and (iv) total
amounts spent by the issuer to develop new products or services.
There were no specific market research to develop new products and services.
10.11. Other factors which had a material impact on operating performance
Comment on other factors which had a material impact on operating performance and
which were identified or commented on in the other items of this section.
All the factors which significantly influenced the Bank's operating performance were addressed in the
items of this section.
209
Section 12 - Shareholder‟s Meeting and Management
11.
PROJECTIONS
The words "believes", "is able to", "will be able to", "shall", "aims to", "estimates", "continues",
"anticipates", "intends", "expects", "potential" and other similar words contained in this section are
intended to identify estimates and outlooks for the future. Projections and outlooks for the future
include information pertaining to results and projections, strategy, financing plans, competitive
position, sector environment, potential growth opportunities, the effects of future regulations and the
effects of competition. Such projections and outlooks for the future refer only to the date on which
they are expressed.
Given the risks and uncertainties described here, the projections may not materialized and therefore
do not consist of a guarantee of future performance. Moreover, the future results and performance of
Banco do Brasil may differ substantially from those anticipated in its estimates on account, including
but not limited to, of the risk factors mentioned in this Reference Form (RF), many of which are
beyond the Bank's ability to control or predict. Additionally, such estimates are based on assumptions
that may not materialize. Given these uncertainties and limitations, investors shall not make their
investment decisions based exclusively on the estimates and outlooks for the future contained in this
RF.
11.1. Market forecasts
a.
projection subject
Indicators that provide market analysts with input for their projection models for the future results of
Banco do Brasil. The following indicators are disclosed at present:
Indicato r
A djusted ROE¹
Net Interest Inco me
To tal depo sits²
Co mmercial Funding²
Do mestic Classified Lo an P o rtfo lio ³
Measurement method
P ercentage o bserved in the perio d by the divisio n o f A djusted Net Inco me by the A verage
Shareho lders' Equity fo r the perio d.
Co rrespo nds to Gro ss inco me fro m financial intermediatio n witho ut allo wance fo r do ubtful
acco unts and adjusted fo r reallo catio ns (Statement with Reallo catio ns).
A ccumulated variatio n o bserved in twelve mo nths. Includes the lines o f "Demand Depo sits",
"Savings Depo sits", "Interbank Depo sits" and "Term Depo sits" o f the B alance Sheet.
A ccumulated variatio n o bserved in twelve mo nths. Includes the fo llo wing balance sheet items:
lines o f "Demand Depo sits", "Savings Depo sits", "Interbank Depo sits” , "Term Depo sits” ,
"A gribusiness Letters o f Credit - LCA ", "M o rtgage B o nds - LCI" and "Repurchase agreement with
P rivate Securities".
A ccumulated variatio n o bserved in twelve mo nths.⁴
Individuals
A ccumulated variatio n o bserved in twelve mo nths.⁴
B usinesses
A ccumulated variatio n o bserved in twelve mo nths.⁴
A gribusiness
A ccumulated variatio n o bserved in twelve mo nths.⁴
Do mestic Lo an P o rtfo lio - bro ad definitio n³
A ccumulated variatio n o bserved in twelve mo nths.⁴
Individuals
A ccumulated variatio n o bserved in twelve mo nths.⁴
B usinesses
A ccumulated variatio n o bserved in twelve mo nths.⁴
A gribusiness
A ccumulated variatio n o bserved in twelve mo nths.⁴
A llo wance fo r Lo an and Lease Lo sses (A LLL) P ercentage o bserved in the perio d, calculated with a basis o n the divisio n o f expenses with
allo wance fo r lo an lo sses (A llo wance) by the average lo an po rtfo lio o f the perio d (accumulated in
12 mo nths).
Fee Inco me
Gro wth percentage expected in the year. The fee inco me co ncept co mprises, in this case, the sum
o f the "Service Revenues" and "B anking Fee Inco me" lines.
A dministrative Expenses
Gro wth percentage expected in the year. The estimated A dministrative Expenses include
P erso nnel Expenses and Other A dministrative Expenses adjusted fo r reallo catio ns (Statement
with Reallo catio ns).
Tax Rate⁵
P ercentage expected in the perio d, calculated by dividing expenses with inco me tax and so cial
co ntributio n by net inco me by Inco me befo re Taxes less Statuto ry P ro fit Sharing in A djusted net
inco me (Statement with Reallo catio ns).
1 - As of 2Q12, the nomenclature ―Recurring Profit‖ was changed to ―Adjusted Net Income‖. For 2013 and 2014, shareholders’ equity started to be
adjusted, free from the effects of restatement of actuarial assets and liabilities arising from CVM 695 and minority interest.
2 - As from 2013, the indicator Total Deposits was replaced by the indicator Commercial Funding.
3 - As from 2013, the indicator ―Domestic Classified Loan Portfolio‖ was replaced by the indicator ―Domestic Loan Portfolio in the Broad Definition‖. The
broad definition includes Securities and Guarantees.
4 - Comparison between the balances at the end of December of the year in which the projections are valid, with that observed at the end of
December of the prior year.
5 - As from 2013, the indicator Tax rate was discontinued.
210
Banco do Brasil S.A. - Reference Form/2015
b.
projected period and validity period of the projections
At Banco do Brasil, the projections indicate amounts expected for the current year. The disclosure of
profit/loss of each year (last quarter of each year) includes the indicators expected for the following
year. The validity period of the projections is the current year.
The projections refer to statement of income accounts - Adjusted ROE, Net Interest Income, Fee
Income and Administrative Expenses are based on non-accounting measurements (Statement with
Reallocations).
Every quarter the monitoring of indicators is published in the management report entitled
Performance Analysis, available at www.bb.com.br/ir. Alterations are made in the projected indicators
when necessary, with explanations about the reason for deviations and/or differences in relation to
the expected amounts. Moreover, since the publication of ICVM 480/09, the disclosure of such
monitoring also occurs in an appropriate field of the quarterly financial information form - ITR and in
the form of standardized financial statements - DFP.
c.
assumptions of the projections
Assumptions influenced by management for the year 2015:
I.
Increase in profitability of the client portfolio as a way to leverage revenues;
II
It disregards new acquisitions and/or partnerships that might be entered into to exploit specific
segments;
II.
Maintenance of the current business model, disregarding the disposal of companies or businesses
of Bank;
IV.
Adjustments in contracts to suppliers and collective bargaining agreement aligned with the
market;
V.
Growth of the loan portfolio observing economic conditions.
Assumptions that are not under Management control for the year 2015:
I.
The world economy growth at a moderate pace;
II.
Normalization of monetary conditions in the USA;
III.
Maintenance of the current domestic macroeconomic policy structure: floating exchange rate,
inflation targets and fiscal discipline;
IV.
Maintaining the average unemployment rate;
V.
Economic downturn (GDP).
d.
values of the indicators subject of the forecast
We present in the following table the original forecast:
Forecast
Indicator
Adjusted ROE¹
Forecast 2016
2015
2014
2013
11% - 14%
14% - 17%
12% - 15%
14% - 17%
15% - 19%
Commercial funding²
-
5% - 9%
14% - 18%
Net Interest Income
7% - 11%
9% - 13%
3% - 7%
7% - 10%
Domestic loan portfolio – broad definition³
3% - 6%
7% - 11%
14% - 18%
16% - 20%
Individual client portfolio
5% - 8%
6% - 10%
12% - 16%
18% - 22%
Business loan
1% - 4%
7% - 11%
14% - 18%
16% - 20%
Agribusiness Loan
6% - 9%
10% - 14%
18% - 22%
13% - 17%
3.7% - 4.1%
2.7% - 3.1%
2.7% - 3.1%
3% - 3.4%
Fee Income⁴
7% - 11%
7% - 10%
9% - 12%
10% - 14%
Administrative expenses
5% - 8%
5% - 8%
5% - 8%
7% - 10%
Allowance for loan losses
1 - As of 2Q12, the nomenclature ―Recurring Profit‖ was changed to ―Adjusted Net Income‖. For 2013 and 2014, adjusted ROE uses shareholders’
equity adjusted, free from the effects of restatement of actuarial assets and liabilities arising from CVM Resolution 695 and minority interest.
2 - The commercial funding indicator, composed by resources obtained from client funding, that used to be part of the 2015 Guidance, was excluded
from the 2016 Guidance considering that the impact on Banco do Brasil is included in the Net Interest Income indicator;
211
Section 12 - Shareholder‟s Meeting and Management
3 - As from 2013, the indicator Domestic Classified Loan Portfolio was replaced by the indicator Domestic Loan Portfolio in the Broad Definition. The
broad definition includes Securities and Guarantees.
4 - Range revised due to the establishment of partnership with Cielo SA, according to Material Fact of 02.27.2015.
11.2. Projections on the developments of indicators
a.
alterations or substitutions of projections
The 2016 forecast will be made considering the new consolidation standard, due to the release of
CMN Resolution 4,403, dated March 26, 2015, that dismissed the preparation and submission to the
Brazilian Central Bank of the Economic-Financial Consolidated Financial Statements (“Conef”) and
also revoked CMN Resolution 2,743, dated June 28, 2000, which determined the proportional
consolidation of the directly or indirectly controlled companies.
The commercial funding indicator, composed by resources obtained from client funding, that used to
be part of the 2015 Guidance, was excluded from the 2016 Guidance considering that the impact on
Banco do Brasil is included in the Net Interest Income indicator.
As from 2015, the amount of R$8.1 billion related to the debt instruments eligible as core capital will
be considered in adjusted shareholders’ equity, for purposes of calculating the Adjusted ROE.
b.
projections relating to periods already elapsed - Projected x Realized
With regard to projections for periods already elapsed, the CVM regulations determine the need to
publish comparisons between the projected data and those realized, clearly indicating the reasons for
deviations in the projections.
In the following tables we present the projection results e changes made in the indicators
ranges:
Forecasts and observed results for the year 2015
Indicator
Adjusted ROE¹
Net Interest Income
Commercial funding²
Domestic loan portfolio – broad concept³
Individual client portfolio
Business loan
Agribusiness Loan
Allowance for loan losses⁴
Fee Income
Administrative expenses
1Q15
Initial
Observed Revision
Forecast
14% - 17%
14.5%
Maintained
9% - 13%
17.6%
Maintained
5% - 9%
6.0%
Maintained
7% - 11%
9.5%
Maintained
6% - 10%
7.1%
Maintained
7% - 11%
11.0%
Maintained
10% - 14%
9.0%
Maintained
2.7% - 3.1%
3.1%
Maintained
7% - 10%
9.9%
3% 6%
5% - 8%
6.4%
Maintained
1H15
Observed Revision
14.2%
14.2%
3.8%
6.4%
7.8%
5.4%
7.1%
3.1%
9.1%
7.2%
Maintained
11% - 15%
Maintained
Maintained
Maintained
Maintained
Maintained
3.1% - 3.5%
Maintained
Maintained
9M15
Observed
13.7%
13.6%
6.4%
7.1%
8.1%
5.9%
8.5%
3.3%
9.5%
6.9%
Revision
13% - 16%
Maintained
Maintained
Maintained
Maintained
5% - 9%
Maintained
Maintained
7% - 10%
Maintained
2015
Observed
13.0%
13.3%
5.9%
5.9%
7.5%
5.0%
6.1%
3.6%
9.2%
6.9%
1 - Adjusted ROE for 2015 uses adjusted shareholders’ equity, free from the effects of: (i) the restatement of assets and actuarial, liabilities arising from the
Deliberation CVM/695; and (ii) minority interests in controlled companies.
2 - Includes total deposits, Agribusiness Letters of Credit - LCA, Mortgage Bonds - LCI and Repurchase Agreement Operations with Private Securities.
3 - Includes Private Securities and Guarantees.
4 - ALLL expenses from the last 12 months / average classified loan portfolio for the same period.
By the end of the fiscal year, the reasons for deviations between the forecast and the actual
observed results were:
I.
Companies Loan Portfolio: outcome of a lower demand;
II.
Agribusiness Loan Portfolio: result impacted by a lower disbursement for the crop trading and
investment credit lines;
III.
ALLL Expenses: results impacted by economic conditions and the lower portfolio growth.
212
Banco do Brasil S.A. - Reference Form/2015
Forecasts and observed results for the year 2014
Indicator
Adjusted ROE¹
Net Interest Income
Commercial funding²
Domestic loan portfolio – broad concept³
Individual client portfolio
Business loan
Agribusiness Loan
Allowance for loan losses⁴
Fee Income
Administrative expenses
1Q14
Initial
Observed Revision
Forecast
12% - 15%
14.0%
Maintained
3% - 7%
8.0%
Maintained
14% - 18%
17.7%
Maintained
14% - 18%
18.3%
Maintained
12% - 16%
8.6%
Maintained
14% - 18%
16.9%
Maintained
18% - 22%
35.7%
Maintained
2.7% - 3.1%
2.8%
Maintained
9% - 12%
6.6%
Maintained
5% - 8%
9.7%
Maintained
1H14
Observed Revision
15.3%
7.2%
14.2%
13.8%
7.2%
13.2%
23.7%
2.8%
5.3%
8.3%
9M14
Observed
14% - 17%
5% - 9%
Maintained
Maintained
Maintained
Maintained
Maintained
Maintained
6% - 9%
Maintained
15.2%
7.3%
10.0%
13.1%
6.9%
12.8%
21.8%
2.8%
6.7%
8.5%
Revision
Maintained
Maintained
12% - 16%
12% - 16%
8% - 12%
12% - 16%
16% - 20%
Maintained
Maintained
Maintained
2014
Observed
15.1%
8.8%
4.5%
10.0%
6.8%
9.9%
13.9%
2.9%
7.6%
7.1%
1 - For 2013 and 2014, adjusted ROE uses shareholders’ equity adjusted, free from the effects of restatement of actuarial assets and liabilities arising
from CVM Resolution 695 and minority interest.
2 - Includes Total Deposits, Agribusiness Letters of Credit – LCA, Mortgage Bonds – LCI and Repurchase Agreements Operations with Private
Securities
3 - Domestic Loan Portfolio in the Broad Definition. The broad definition includes Securities and Guarantees.
4 - ALLL expenses of the last twelve months/average classified loan portfolio of the same period.
By the end of the fiscal year, the reasons for deviations between the forecast and the actual
observed results were:
I.
Commercial Funding: performance arising from the portfolio management strategy;
II.
Domestic Loan Portfolio - Broad Definition: result impacted by lower demand;
III.
Individuals Loan Portfolio: reflecting the lower volume of loan portfolio Acquired and Auto Loans,
partially offset by mortgage loans in the period;
IV.
Companies Loan Portfolio: lower growth of Private Securities and SME;
V.
Agribusiness Loan Portfolio: lower volume contracted in the agro-industrial item.
Forecasts and observed results for the year 2013
1Q13
Indicator
Adjusted ROE¹
Net Interest Income
Commercial funding²
Domestic loan portfolio – broad concept³
Individual client portfolio
Business loan
Agribusiness Loan
Allowance for loan losses⁴
Fee Income
Administrative expenses
Initial
Forecast
14% - 17%
7% - 10%
15% - 19%
16% - 20%
18% - 22%
16% - 20%
13% - 17%
3% - 3.4%
10% - 14%
7% - 10%
Observed Revision
17.4%
1.7%
11.4%
25.7%
18.7%
32.7%
19.5%
3.0%
6.7%
6.6%
Maintained
Maintained
Maintained
Maintained
Maintained
Maintained
Maintained
Maintained
Maintained
Maintained
1H13
Observed Revision
16.3%
1.2%
10.0%
25.8%
15.9%
28.8%
32.8%
2.9%
9.7%
6.0%
Maintained
4% - 7%
Maintained
17% - 21%
16% - 20%
18% - 22%
22% - 26%
2.7% - 3.1%
Maintained
5% - 8%
9M13
Observed
15.8%
2.3%
11.7%
23.1%
14.1%
24.7%
32.2%
2.8%
9.9%
5.3%
Revision
Maintained
2% - 5%
12% - 16%
Maintained
14% - 18%
Maintained
24% - 28%
2.7% - 3%
Maintained
Maintained
2013
Observed
15.0%
1.5%
17.7%
19.9%
10.6%
19.5%
34.1%
2.8%
10.6%
7.2%
1 - For 2013 and 2014, adjusted ROE uses shareholders’ equity adjusted, free from the effects of restatement of actuarial assets and liabilities arising
from CVM Resolution 695 and minority interest.
2 - Includes Total Deposits, Agribusiness Letters of Credit – LCA, Mortgage Bonds – LCI and Repurchase Agreements Operations with Private
Securities
3 - Domestic Loan Portfolio in the Broad Definition. The broad definition includes Securities and Guarantees.
4 - ALLL expenses of the last twelve months/average classified loan portfolio of the same period.
By the end of the fiscal year, the reasons for deviations between the forecast and the actual
observed results were:
I.
Net Interest Income: performance impacted mainly by the growth of the loan portfolio in lines of
lower risk and by the increased funding cost due the increase in TMS (effective Average Selic
Rate);
II.
Commercial Funding: performance arising from management of funding mix;
III.
Individuals Loan Portfolio: lower demand from customers, especially in consumer finance loan;
IV.
Agribusiness Loan Portfolio: high demand, notably in Investment and Agroindustry, for resources
to harvest 2013/2014.
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c.
projections relative to ongoing periods:
The following table shows the earlier forecast for 2016, the results realized until March,
2016 and revised forecast for 2016.
1Q16
Initial
Indicator
Observed Revision
Forecast
Adjusted ROE¹
11% - 14%
5.6%
9% - 12%
Net Interest Income
7% - 11%
13.7%
Maintained
Domestic loan portfolio – broad definition²
3% - 6%
4.0%
Maintained
Individual client portfolio
5% - 8%
8.7%
Maintained
Business loan
1% - 4%
-0.9%
Maintained
Agribusiness Loan
6% - 9%
9.8%
Maintained
Allowance for loan losses³
3.7% - 4.1%
3.9%
4% - 4.4%
Fee Income
7% - 11%
2.5%
Maintained
Administrative expenses
5% - 8%
2.5%
Maintained
1 - Adjusted ROE for 2016 includes estimates of adjusted shareholders’ equity, free from the effects of: (i) the restatement of assets and actuarial,
liabilities arising from the Deliberation CVM 695; and (ii) minority interests in subsidiaries.
2 - Includes classified loan portfolio in Brazil, private securities and guarantees.
3 - Accumulated 12 months ALLL expenses/12 months average classified loan portfolio.
Reasons for deviations in the projections in the 1Q16:
a)
Adjusted ROE: the adjusted net income was influenced by the provision for a specific case. The
structural result reflects the commercial performance as expected;
b)
Net Interest Income: reflects the higher profitability of the loan portfolio;
c)
Individuals Loan Portfolio: influenced by the growth of mortgage portfolio and direct consumer
credit portfolio;
d)
Companies Loan Portfolio: result affected by lower demand;
e)
Agribusiness Loan Portfolio: performance achieved by greater demand on agroindustrial and
working capital for input purchase operations;
f)
Fee Income: reflects the higher cards revenues in two months of 1Q15, prior to the establishment
of the partnership between BB and Cielo (Cateno);
g)
Administrative Expenses: influenced by Incentive Retirement Program (PAI) and the reduction in
travels and cash transportation;
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12.
SHAREHOLDER‟S MEETING AND MANAGEMENT
12.1. Description of the administrative structure of Banco do Brasil
Description of the administrative structure of Banco do Brasil, as set forth in its Bylaws and
internal rules:
The management bodies of Banco do Brasil are composed by Brazilian people with recognized
knowledge, including about the best corporate governance practices, experience, moral competency,
impeccable reputation and technical capacity compatible with the position:
I.
the Board of Directors; and
II.
the Executive Board, composed of the Board of Directors and Executive Officers, all of them
resident in Brazil, pursuant to art. 24 of the Bylaws.
a.
duties
Board of Directors
The Board of Directors has, according to the law and the Bylaws of Banco do Brasil, strategic
assignments of directive, elective and supervisor nature, not covering operating or executive
functions, and it is composed by eight members, elected for a two-year term in the General Meeting.
Of the eight positions in the Board of Directors, at least two will be assumed by Independent
Directors, indicated by the minority shareholders, , in accordance with the minimum percentage of
20% defined in the Listing Rules of the Novo Mercado of BM&FBOVESPA, if a higher number is not
assigned to them by the multiple vote process.
The Federal Government should indicate up to six members of the Board of Directors. Among them, a
representative will be chosen by direct ballot of his/her pairs, among the Company’s active employees,
in a ballot organized and regulated by the Bank, together with unions that represent them, in
accordance with the provisions of Law 12,353, of 12.28.2010. To exercise this function, the counselor
that is the representative of employees is subject to all criteria, requirements, and prohibitions
provided for in the Law and in these Bylaws. Moreover, this representative shall not take part in the
discussions and deliberations in which there is a characterized conflict of interest, such as trade union
relations, employee pay, benefits and advantages, as well as supplementary pension and care/aid
matters, among other subjects. The other representatives of the Federal Government are nominated
by the Minister of Finance, who nominates three representatives, one of whom shall be chosen to act
as Chairman and the Vice-Chairman of the Board, besides a representative nominated by the Minister
of Planning, Budget and Management and the CEO of Banco do Brasil.
The Board of Directors decides by majority of votes, except for the followings issues, which require
favorable vote of at least five Directors.
I.
approval of the policies, corporate strategy, investment plan, master plan and global budget of
Banco do Brasil;
II.
definition of the assignments of the Internal Audit Unit and regulation of its operation, and is also
responsible for appointing and dismissing the General Auditor;
III.
choose and dismiss the independent auditors, and
IV.
of the internal rules and decision about the creation, extinguishment and operation of committees
within the Board of Directors.
The approval of other issues depends on the favorable vote of the majority directors attending the
meeting, prevailing in case of parity, the vote of the Chairman of the Board, or his/her alternate in the
exercise of the functions.
According to article 21 of the Bylaws of Banco do Brasil, the Board of Directors is responsible for the
following assignments: (I) to approve the policies, corporate strategy, the investment plan, the master
plan and general budget of the Bank; (II) to decide on: (a) distribution of interim dividends including
to the retained earnings account or profit reserves existing in the last annual or semi-annual balance
sheet; (b) payment of interest on own capital; (c) acquisition of own shares, on a non-permanent
basis; (d) interest held by the Bank in companies, in Brazil or abroad; (III) to define the assignments
of the Internal Audit, regulate its operation, as well as appoint and dismiss the internal auditor; (IV)
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Section 12 - Shareholder‟s Meeting and Management
to choose
and dismiss the independent auditors, whose names may be subject to veto, duly
grounded, by the Director elected under § 2 of art. 19 of the Bylaws, if any; (V) to define the
number and elect the members of the Executive Board, observing art. 24 of the Bylaws and art. 21
of Law 4,595, of December 31, 1964; (VI) to approve its internal rules and decide on the creation,
extinguishment and operation of committees within the Board of Directors; (VII) to approve the
internal regulations of the Executive Board and of the committees formed within the actual scope of
the Board; (VIII)to decide on the participation of employees in the profits or results of the Bank; (IX)
submit to General Meeting a list containing the nomination of three specialized companies for the
purpose foreseen in the sole paragraph of Article 10; (X)to establish profitability goal that would
ensure the adequate interest on own capital; (XI) elect and remove from office the members of the
committees formed within the scope of the actual Board; and (XII) formally appraise, at the end of
each year, the performance of the Executive Board of the committees formed within the scope of the
actual Board; (XIII) make a formal pronouncement when public offerings are being held for the
purchase of shares issued by the Bank. Pursuant to art. 5 of the Internal Rules of the Board of
Directors, besides the assignments defined in the Law and in the Bylaws, the Board should:
I.
choose the temporary members and respective alternates of the Board of Trustees of Fundação
Banco do Brasil;
II.
approve, at the Board of Trustees' proposal, the change of the Bylaws of Fundação Banco do
Brasil, and
III.
determine the engagement of specialists and experts to better instruct the matters submitted to
their deliberation.
The current composition of the Board of Directors is shown in item 12.6 of this Reference Form.
Audit Committee
The Audit Committee of Banco do Brasil, according to art. 33 of the Bylaws, with the assignments and
duties provided for in the legislation, will be composed of four effective members and one alternate,
which will have annual mandate, renewable for up to five years, under the terms of the applicable
standards.
The Audit Committee shall be responsible for advising the Board of Directors in connection with its
exercise of audit and inspection functions, and of opining on: (I) the quality of the financial
statements; (II) the effectiveness of the internal control system; and (III) the effectiveness of the
internal and independent audits.
The Audit Committee members shall be elected by the Board of Directors, in compliance with the Bylaws and the following criteria: (I) a regular member will be chosen among those appointed by the
members of the Board of Directors elected by the minority shareholders; (II) three members will be
chosen among those appointed by the members of the Board of Directors representing the Federal
Government; (III) at least one of the members of the Audit Committee shall have proven knowledge
in the areas of accounting and auditing.
A member of the Audit Committee that fails to appear, with or without justification, at three (3)
consecutive ordinary meetings or at four (4) alternate meetings in the period of twelve months will be
removed from office, except in cases of force majeure or acts of God, and at any time, by decision of
the Board of Directors.
Audit Committee shall have the following duties, in addition to other provided for by its own
legislation: (I) advise the Board of Directors as concerns the performance of its auditing and
supervisory roles; (II) supervise the activities and evaluate the work of the independent audit firm;
(III) perform its duties and responsibilities at the companies controlled by Banco do Brasil that have
adopted the single Audit Committee regime.
The operation of the Audit Committee will be regulated through its internal rules, observing that: (I) it
will meet at least on a quarterly basis, with the Board of Directors, with the Board of Officers, with the
independent auditors and with the Internal Audit Department, jointly or separately, at its sole
discretion; (II) the Audit Committee may invite the following individuals to take part in its meetings,
without the right to vote: (a) members of the Fiscal Council; (b) the incumbent and other
representatives of the Internal Audit department; and (c) any members of the Board of Executive
Officers or employees of the Bank.
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Banco do Brasil S.A. - Reference Form/2015
In conformity with sole paragraph of art. 2 of its Internal Regulations, the Audit Committee will also
exercise its duties and responsibilities along to the societies controlled by Banco do Brasil which adopt
the single Audit Committee model.
Moreover, the Audit Committee has the following attributions, in addition to those provided in
pertinent legislation: (I) to establish the operating rules for its activities and to submit them for
approval by the Board of Directors; (II) to review the semiannual financial statements prior to
publication, including the notes to the financial statements, management report and the independent
auditors’ report; (III) evaluate the effectiveness of the internal control; (IV) to evaluate the
effectiveness of the independent and internal audits, including the checking compliance with legal and
normative provisions, in addition to internal regulations and codes; (V) to recommend to the Board of
Directors, the entity to be contracted for the rendering of independent auditing services, as well as
the replacement of the provider of these services, if it considers this necessary; (VI) to evaluate the
Annual Plan of Activities of Internal Audit (PAINT), the Annual Report of Activities of Internal Audit
(Raint), the Working Agreement, budget and proposals for fixing the attributions and regulations the
functioning of internal audit; (VII) to evaluate proposals for the creation and review of policies related
to management risk and capital; (VIII) to recommend to correction or improvement of policies,
practices and procedures identified in the scope of its attributions; (IX) to evaluate compliance, by the
Board of Executive Officers, with recommendations made by audit committee an the independent or
internal auditors; (X) review reports to the Board of Directors that deal with risk management
processes and capital and internal control systems; (X) to evaluate reports to the Board of Directors
that deal with risk management processes and capital and internal control systems; (XI) to evaluate
proposals for revision of appetite statement and risk tolerance; (XII) to establish and disclose
procedures for the receiving and handling of information concerning non-compliance with the legal
and normative provisions applicable to Banco do Brasil, besides internal regulations and codes,
including a forecast of specific procedures for protection of the provider and of the confidentiality of
the information; (XIII) to notify the Board of Executive Officers and Bacen, within a maximum of three
business days as of identification, of the existence or evidence of error or fraud represented by: (a)
non-compliance with legal and regulatory rules, which jeopardize the continuity of the institution; (b)
fraud of any amount committed by the Board of Executive Officers of the Institution. Senior
management and the Financial Conglomerate Units shall inform the Audit Committee within 24 hours
of detecting any events referred to in indentation XIII.
The members of the Audit Committee will have total independence in the performance of their duties,
and shall treat information received from Banco do Brasil and from the Independent Auditors as
confidential.
The composition of the Audit Committee is shown in item 12.7 of this Reference Form.
Compensation Committee
The Compensation Committee, according to art. 34 of the Bylaws, works permanently and is
composed of four effective members, which will have annual mandate, renewable for up to 10 years.
The Compensation Committee members shall be elected and removed by the Board of Directors, in
compliance with the applicable laws, and the By-laws of Banco do Brasil. The Committee shall be
composed of the following members: (I) one (1) member will be chosen from among the members of
the Board of Directors indicated by the minority shareholders; (II) two (2) members chosen among
the members of the Board of Directors nominated by the federal government, namely the President of
Banco do Brasil and one (1) member chosen among the other representatives nominated by the
federal government, and; (III) one (1) independent member, not from the Board of Directors or from
the Executive Board.
The Compensation Committee aims of advising the Board of Directors in the establishment of the
director remuneration policy of Banco do Brasil, having as its responsibilities, in addition to those
established in the Bank’s Bylaws: (I) to prepare the director remuneration policy of Banco do Brasil,
proposing to the Board of Directors the various forms of fixed and variable pay, besides benefit and
special recruitment and dismissal programs; (II) to supervise the implementation and effective
operation of the Bank's director remuneration policy; (III) to review annually the Bank's director
remuneration policy, recommending to the Board of Directors its correction or improvement; (IV) to
propose to the Board of Directors the total amount of the Directors' remuneration to be submitted to
the General Meeting, in the form of art. 152 of Law 6,404, of 1976; (V) to evaluate internal and
external future scenarios, and their possible impact on the director remuneration policy; (VI) to
analyze the Bank's director remuneration policy in relation to market practices, with a view to
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Section 12 - Shareholder‟s Meeting and Management
identifying significant discrepancies in relation to similar companies, proposing the necessary
adjustments; (VII) to ensure that the director remuneration policy is permanently compatible with the
risk management policy, with the goals and current and expected financial situation of the institution
and with the legal provisions; (VIII) to propose to the Board of Directors the formation of an
Compensation Committee in the associated companies of BB, if it considers this applicable, fulfilling
the requirements provided in the legislation, and; (XI) to perform other duties determined by the
Board of Directors and by the Central Bank of Brazil.
The Compensation Committee shall meet: (I) ordinarily, at least semiannually to evaluate and propose
to the Board of Directors the fixed and variable pay of the directors of the Bank and of its subsidiaries
that adopt the single committee regime; (II) ordinarily, in the first three months of the year to
evaluate and propose the annual total amount of pay to be set for the members of the management
bodies, to be submitted to the General Meetings of the Bank and of the companies that have adopted
the single Compensation Committee system, and; (III) extraordinarily, convened by the coordinator,
when considered necessary by any of its members or upon request from the Management of the
Bank.
Fiscal Council
Refers to the body that supervises the actions of the management and operates on a permanent
basis. It is composed of five members and respective alternates, elected at a General Meeting, with
mandate of one year, and the minority shareholders are entitled to choose two of the members. The
Fiscal Council will meet, ordinarily, once a month, and extraordinarily whenever deemed necessary by
any of its members or by the Management of Banco do Brasil, and will also participate in meetings of
the Board of Directors deciding on issues that require their opinion (arts. 38, § 1, and 39 of the
Bylaws and art. 6 of the Internal Rules of the Fiscal Council).
Pursuant to Law 6,404/76, art. 163, the Fiscal Council should: (I) to supervise, by any of its members,
the actions of management and ensure the compliance with their legal and statutory duties; (II) to
express an opinion on the annual management report, including in its opinion the supplementary
information considered necessary or useful to the decision of the General Meeting; (III) to express an
opinion on the proposals of the management bodies, to be submitted to the General Meeting, in
regard to the change of the capital stock, issuance of debentures or subscription warrants, investment
plans or capital budgets, distribution of dividends, transformation, merger, amalgamation or spin-off;
(IV) to denounce, by any of its members, to the management bodies and, if they fail to take the
necessary measures to protect the company's interests, to the General Meeting, the errors, frauds or
crimes discovered by them, and suggest useful actions to the company; (V) to call the ordinary
General Meeting, if the management bodies postpone this call for more than 1 (one) month, and the
extraordinary General Meeting whenever there are serious or urgent reasons, including in the agenda
of the meetings the issues considered necessary; (VI) to analyze, at least on a quarterly basis, the
trial balance and other financial statements regularly prepared by the company; (VII) to examine the
financial statements for the fiscal year and express an opinion on them; (VIII) to exercise these
assignments, during the settlement, considering the special provisions that regulate it.
In addition to the provisions of said Law and of the Bylaws of Banco do Brasil, the Internal Rules of
the Fiscal Council, in its art. 3, state that the Fiscal Council is also responsible for the following
assignments: (I) to consider the proposal of the Annual Internal Audit Activities (PAINT) and monitor
its implementation; (II) to request to the Internal Audit the disclosure of the reports produced on the
facts of the Bank's management, and check specific facts; (III) to decide on the Internal Rules of the
Council; and (IV) to supervise, by any of its members, the acts of management and check if they are
in compliance with their legal and statutory duties.
The current composition of the Fiscal Council is shown in item 12.6 of this Reference Form.
Executive Board
The Executive Board, the body responsible for the Bank management, should have from 10 to 37
members (one President, 9 Vice-Presidents that comprise the Executive Board of Directors and up to
27 Executive Officers), with mandate of three years, reelection permitted. The President of Banco do
Brasil is appointed and may be dismissed by the President of Brazil. The Vice-Presidents and Executive
Officers are elected by the Board of Directors upon indication by the CEO of Banco do Brasil. The
position of Officer is restricted to active employees.
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Banco do Brasil S.A. - Reference Form/2015
The assignments of the Executive Board are stated in art. 28 of the Bylaws of Banco do Brasil,
whereby the Executive Board is responsible for complying with the Bylaws, the decisions of the
General Shareholders' Meeting and of the Board of Directors and for ensuring that they are complied
with, and for exercising the assignments defined by the Board of Directors, always observing the
principles of good banking technique and the corporate governance procedures.
The individual assignments of the members of the Executive Board are shown in item 12.1.d of this
Reference Form.
The composition of the Executive Board of Banco do Brasil is shown in item 12.6 of this Reference
Form.
Management Board
The Management Board is composed of the President and Vice-Presidents, composing the Executive
Board together with the other Executive Officers of Banco do Brasil.
Pursuant to art. 29 of the Bylaws, the Management Board is responsible for the following: (I) to
submit to the Board of Directors, through the Bank’s CEO, or by the Coordinator designated thereby,
proposals for its decision, especially about the matters listed in subsections I, II, VII, VIII and IX of
art. 21 of these Bylaws; (II) to enforce execution of the policies, the corporate strategy, the
investment plan, the master plan and the general budget of the Bank; (III) to approve and enforce
execution of the market plan and the work agreement; (IV) to approve and ensure the execution of
the allocation of funds to operating activities and for investments; (V) to authorize the disposal of
items of the permanent assets, the recording of actual burden, the granting of collaterals for thirdparty liabilities, the waiver of rights, the transaction and the business rebate, with option of granting
these powers with express limitation; (VI) to decide on the career plans, salaries, advantages and
benefits, and approve the Personnel Rules of the Bank, observing the legislation in force; (VII) to
distribute and apply profits, as approved at the General Shareholders' Meeting or by the Board of
Directors, observing the legislation in force; (VIII) to decide on the creation, installation and
suppression of branches or agencies, offices, premises and other points of service in Brazil and
abroad, with option of granting these powers with express limitation; (IX) to decide on the internal
organization of the Bank, the administrative structure of the directorates and the creation,
discontinuation and functioning of committees in the sphere of the Executive Board and of
administrative units; (X) to fix the levels of authority of the Executive Board and of its members and
the duties and levels of authority of the committees and of the administrative units, of the regional
bodies, of the distribution networks and of the other bodies of the internal structure, besides those of
the Bank employees, allowing the granting of these powers with express limitation; (XI) to authorize,
provided that the security and proper compensation in each case has been formerly verified, the
granting of loans to social assistance entities and to communication companies, as well as the
financing of public service work, with option of granting these powers with express limitation; (XII) to
decide on the granting of contributions for social purposes to foundations created by the Bank,
limited, every year, to 5% (five per cent) of the operating result; (XIII) to approve the criteria for
selection and appointment of directors to compose the boards of companies and institutions in which
the Bank, its subsidiaries, controlled or affiliated companies participate or have the right to indicate a
representative; and (XIV) to decide on situations not included in the assignments of another
management body and on extraordinary cases.
The grants of authority provided for in items V, VIII, X and XI above, when destined to produce
effects before third parties, will be formalized through an instrument of mandate signed by the
President and one Vice-President or by two Vice-Presidents.
Management Board's decisions bind the entire Executive Board.
Strategic Committees
Decisions are taken collectively at all levels of the Bank. With the purpose of involving the executives
in the definition of strategies and approval of proposals for BB's different businesses, the Management
uses committees, subcommittees and commissions at a strategic level, in the Executive Board sphere,
which ensure the agility and security for the decision making. The main strategic committees are:
Global Risk Superior Committee (CSRG)
The purpose of the Global Risk Superior Committee, or CSRG (Comitê Superior de Risco Global) is:
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Section 12 - Shareholder‟s Meeting and Management
I.
II.
III.
with regard to Risk Management:
a.
to establish the strategy for risk management;
b.
to define global limits of the risk exposure;
c.
to decide on minimum liquidity reserves and on liquidity contingency plans;
d.
to approve the risk factors that will compose the documents and reports to be forwarded to
regulatory bodies and other institutions;
e.
to approve the methodologies, criteria and parameters for calculation provisions for
contingent claims.
in regard to Internal Controls:
a.
to decide on methodologies of identification and classification of weaknesses in the internal
control system of the Bank;
b.
to decide on manager accountability methodologies in relation to the generation of
information to be disclosed to the market;
c.
to approve the classification of weaknesses identified in the internal controls that might
affect the integrity of the financial statements;
d.
to define and monitor the implementation of measures for the correction of the weaknesses
identified in the internal control system of the Bank.
in regard to Capital Management:
a.
to approve the allocation of capital as a function of risks;
b.
to establish the capital management strategy;
c.
to decide on the measures in the capital contingency plan;
The composition of the Committee is shown in item 12.7 of this Reference Form.
Superior Committee of Management of Assets and Liabilities and Liquidity
The purpose of the Superior Committee of Management of Assets and Liabilities and Liquidity:
I.
to establish the strategy for management of assets and liabilities and liquidity;
II.
to define guidelines for operation of the treasury, observing the global limits defined by the CSRG;
III.
to define guidelines for management of the liquidity of the Conglomerate;
IV.
to monitor the recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Committee on Credit Limits
The purpose of the Credit Limit Committee is to decide on:
I.
the establishment of client risk;
II.
credit limit;
III.
technical feasibility of investment projects.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Committee of Operations
The purpose of the Committee of Operations is as follows
I.
to decide on operations with credit risk, observing the established competencies and competency
level;
II.
to express opinion on operations of its competency, in amount higher than the competency levels
established for the Committee;
III.
to monitor the recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
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Banco do Brasil S.A. - Reference Form/2015
Operating and Administrative Committee
The purpose of the Operating and Administrative Committee is as follows:
Full composition:
I.
II.
to decide, subject to the established competency levels, on the following:
a)
To decide on acquisition, rent, commercial leasing, commodatum, donation, conservation,
maintenance and disposal of assets and services;
b)
to decide on other administrative and operating issues;
c)
to decide on the payment related to losses associated to the operating risk.
in relation to the Plan of Fixed Investments Plan – ―Pfix‖:
a)
to issue statements on the Plan prior to be submitted to the Management Board and Board
of Directors, as well as to monitor its implementation;
b) to select and authorize expenditures for implementation of Projects of Fixed Investments,
according to the competency levels established;
c) to formally close projects.
III.
to monitor the recommendations and guidelines deliberated by the Committee.
Alternative Composition – Labor litigations:
I.
to decide on expenditures intended to solve labor litigations;
II.
to monitor the recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Committee of Business
The purpose of the Executive Committee of Business is as follows:
Full composition:
I.
to approve:
a)
the business plans that guide the operation of the Bank;
b)
market and institutional communication plans;
c)
the creation and the discontinuation of products, services and their respective types, as
well as the alteration of their main features;
d)
guidelines to promote the integrated management of client service channels;
e)
the development and implementation of new client service channels and solutions;
f)
to create and close branches, observing the guidelines approved by the Management
Board;
g)
to develop measures to promote improvements in the customer satisfaction level;
h)
to approve criteria and regulation for the performance of mobilization, award and incentive
actions involving own or third-party resources, as well as the respective division of these
resources;
i)
II.
III.
formalization of agreements with retail partners.
to analyze and propose to the Management Board:
a)
the strategic plan of Bank’s channels;
b)
formation of FIP and FMIEE funds.
to monitor the following:
a)
results and accountability relating to mobilization, award and incentive;
b)
the Bank’s business performance;
c)
performance of the Work Agreement of the Strategic Units;
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Section 12 - Shareholder‟s Meeting and Management
d)
recommendations and guidelines deliberated by the Committee.
Alternative Composition – Business Relationship Allowance – ―VRN‖:
I.
to decide on the use of the business relationship allowance.
II.
to monitor the recommendations and guidelines deliberated by the Committee.
Alternative Composition – Work/Synergy Agreement:
I.
to approve:
a)
the Work/Synergy Agreement;
b)
changes to indicators’ weight modules and blocks;
c)
inclusion and exclusion of indicators;
d)
changes in targets and weights of indicators;
e)
to monitor the performance of the Work/Synergy Agreement.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Committee of Prevention of Financial and Exchange Illicit Acts and Information
Security
The purpose of the Executive Committee of Prevention of Financial and Exchange Illicit Acts and
Information Security is as follows:
I.
to decide on measures for prevention and combat:
a)
of financial and exchange Illicit Acts (money laundering);
b)
corruption;
c)
terrorist financing.
II.
to define guidelines related to prevention of frauds and management of the information security;
III.
to evaluate the result of implemented measures for improving security of traditional and electronic
channels and of products and services;
IV.
to monitor the following:
a)
to implement measures related to preventing and combating money laundering, corruption
and terrorist financing;
b)
to implement measures related to the prevention of fraud and information security
management;
c)
recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Committee of Information Technology
The purpose of the Executive Committee on Information Technology (IT) is as follows:
I.
to approve:
a)
the methodology of priority to be given to corporate IT projects;
b)
alterations in the model of relationship of the strategic units with the Technology Board Ditec.
II.
to deliberate on proposals forwarded by the Information Technology Committee – CTI;
III.
Set:
222
a)
to define the distribution of the service delivery capacity of Ditec among the portfolios
projects of the Information Technology Committee – CTI;
of
b)
to define the domains and the composition of the Information Technology Committee CTI;
Banco do Brasil S.A. - Reference Form/2015
c)
the criteria and parameters of performance of the Information Technology Committee –
CTI.
IV.
to promote alignment of IT with the strategic guidelines;
V.
to monitor the following:
a)
performance of the consolidated portfolio of IT projects;
b)
IT investments;
c)
recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Disciplinary Committee
The purpose of the Executive Disciplinary Committee is as follows:
I.
to decide on disciplinary action, according to its competencies and competency levels, and may
apply the following outcomes:
a)
closed case;
b)
covered case;
c)
pecuniary liability;
d)
knowledge letter;
e)
sanctions of warning, suspension, dismissal and termination;
f)
to authorize definitive recording resulting from administrative inquiry according to its
competency levels.
II.
to analyze and judge requests to review disciplinary sanctions applied by the Committee itself;
III.
to issue opinion to the Management Board about:
IV.
a)
disciplinary inquiries, according to its competencies and competency levels;
b)
review requests of suspension and removal sanctions applied by the own Management
Board.
to monitor the recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Committee for Ethics
The purpose of the Executive Committee for Ethics is:
I.
II.
To decide on:
a)
ethical conflicts and dilemmas of institutional nature;
b)
adoption of measures for guidance and sanctions, according established competence level;
c)
forwarding of processes for analysis from the disciplinary standpoint, observing the criteria
defined in the ethical process.
to conduct the procedure for ethical misconduct involving:
a)
employees of the first and second management levels at Strategic Units and the first
management level of Tactical Units and Business Support and Management Units, except
for the first and second management levels of Internal Audit (Audit), which will have
treatment for cases of this kind, as well as the technical segments of Audit (Audit Manager,
Audit Coordinator and Auditor), whose proceedings shall be conducted and judged by the
Audit Administration Committee;
b)
state representatives elected by employees.
III.
to issue statements on the adequacy of institutional documents relating to corporate ethics;
IV.
to make recommendations related to institutional ethical conduct to be forwarded to the
Organizational Units, informing the Management Board;
V.
to submit the following to the Management Board;
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Section 12 - Shareholder‟s Meeting and Management
a)
issues related to ethical deviations that could have material impact on the image of the
Bank;
b)
proposals for improvement of corporate processes involving corporate ethical principles, for
deliberation;
VI.
to promote the dissemination of the ethical principles adopted by the Bank;
VII.
to monitor the recommendations and guidelines deliberated by the Committee;
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Disclosure Committee
The purpose of the Executive Disclosure Committee is:
I.
II.
to approve:
a)
the set of estimates (guidance) used in the communications with the investor
market revising them according to the dynamics of business;
b)
disclosure of extraordinary components identified in the consolidation of
results;
c)
measures for improvement of the investor market's perception of the Bank, with emphasis
on the reduction of discounts on the pricing of BB's shares of stock in the market.
quarterly
to assess:
a)
annually the Reference Form, including the specific sections previously presented to the
CVM, submitting them to the approval by the Management Board;
b)
documents prepared by the Strategic Units (UE) to be disclosed to the market;
c)
the effectiveness of the actions of disclosure of information to the investor market.
III.
to promote the harmonization of the actions of the various areas involved in the market disclosure
process;
IV.
to monitor the following:
a)
the process of providing information to the investor market and the fulfillment of the Policy
on the Disclosure of Material Acts or Facts of Banco do Brasil, in order to assure the quality,
transparency, consistency and timeliness of the information provided;
b)
recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Governance Committee of Related Entities
The purpose of the Executive Governance Committee of Related Entities is:
I.
II.
to approve the following, with regard to Related Entities:
a)
mechanisms, tools and standards for governance;
b)
criteria to evaluate performance and results;
c)
criteria for the training and performance evaluation of Bank representatives.
to issue opinions on:
a)
proposals, whether binding or not, related to acts that may offer impact the Bank’s equity
interest in Related Entities (corporate acts), particularly, but not limited to, the following:
i. changes on Capital that could modify the shareholders structure;
ii. IPO and delisting;
iii. issuance of debentures convertible on stocks, or its sale, when in treasury;
iv. processes of transformation, merger, demerger and dissolution;
v. interest on Capital of companies or groups.
b)
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shareholder’s and association agreement on Related Entities scope;
Banco do Brasil S.A. - Reference Form/2015
c)
III.
IV.
proposes of criteria for selection and indication of Bank’s representatives.
to promote:
a)
alignment of governance practices and policies of Related entities with those
established for the Bank itself;
b)
discussion and sharing of best governance practices among the areas of the Bank and
Related Entities;
to monitor the following:
a)
economic, financial and operational performance of Related Entities;
b)
implementation of procurement processes and strategic partnerships approved by the
Bank;
c)
results of the Bank’s performance evaluations;
d)
recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Market and Liquidity Risk Executive Committee
The purpose of Market and Liquidity Risk Executive Committee is:
I.
to approve:
a)
models, methods, criteria and parameters for market risk management, of
actuarial;
liquidity and
b)
specific limits of exposure to market risks and actuarial risks;
c)
contingency plans referring to market risk management, liquidity risk management and
actuarial risk management;
II.
to evaluate the results of internal validations and specify, where needed, corrective measures for
models of risk management models for market, liquidity and actuarial risks;
III.
to analyze and propose the following to the CSRG:
IV.
a)
the overall limits of exposure to market risks and actuarial risks;
b)
the minimum reserve and overall limits of liquidity risk;
c)
liquidity contingency plans;
b)
the strategy for managing market risk, liquidity risk and actuarial risk;
to monitor the recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Committee on Credit Risk – CERC
The purpose of the Executive Committee on Credit Risk is:
I.
to approve:
a)
the deployment of actions that enable proper management of the loan portfolio;
b)
actions and instruments to mitigate loan portfolio risk;
c)
contingency plans for credit risk management and environmental risk management;
d)
specific limits for exposure to credit risks and environmental risks;
e)
models, methodologies, criteria and parameters applied to the following:
i. credit risk management and environmental risk management.
ii. the debt collection and recovery process; models, methods, criteria and parameters for
managing market risk, liquidity risk and actuarial risk.
II.
to evaluate the results of internal validations and define, where needed, corrective measures for
models of credit risk management and environmental risk management;
III.
to analyze and propose the following to the CSRG:
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Section 12 - Shareholder‟s Meeting and Management
IV.
a)
strategy for credit risk management and environmental risk management;
b)
limits of overall exposure to credit risks and environmental risks.
to monitor the following:
a)
measures implemented to mitigate risk in managing the loan portfolio;
b)
evolution of Allowance for Loans and Lease Losses (ALLL), submitting them to the attention
of the CSRG;
c)
recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Committee on Internal Controls and Operational Risk Controls – CERO
The purpose of the Executive Committee on Internal Controls and Credit Risk Controls is:
Full composition:
I.
Regarding Internal Controls:
a) to analyze and propose the following to the CSRG:
i. methodologies for identification and classification of weakness in the internal control
system;
ii. methodologies for accountability of managers regarding the generation of information
disclosed to the market;
iii. classification of weaknesses identified in internal controls that may affect the
integrity of the financial statements;
b) to monitor the following:
i. Implementation of measures to correct deficiencies identified in the
control system;
Bank’s internal
ii. the result of the compliance checks, defining improvement measures;
II.
Regarding risk to Operations, Strategy and Reputation:
a) to approve:
i. models, methodologies, criteria and parameters for managing operational risks,
strategy risk and reputation risk;
ii. establishment of key risk indicators and tolerance, alert and
respective indicators;
critical ranges for the
iii. operational risk transfer instruments;
iv. specific limits of exposure to risks of operations, strategy and reputation;
v. contingency plans referring to operational risk management, strategy risk management
and reputation;
b) to define mitigating actions for losses and key risk indicators falling within critical ranges;
c) to evaluate the results of internal validations and define, where needed, corrective measures
for models of operational, strategy and reputation risk management;
d) to analyze and propose the following to the CSRG:
i. the risk factors that will comprise the documents and reports to be submitted to
external regulatory agencies;
ii. strategy for operational, strategy and reputation risk management;
iii. overall limits of exposure to operational, strategy and reputation risks;
e) to monitor the measures implemented for:
i. mitigation of operating losses;
ii. operational risk management associated with outsourced services relevant for the
proper functioning of the Bank;
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Banco do Brasil S.A. - Reference Form/2015
f) to monitor the following:
i. evolution of the provisions arising from contingent claims, submitting them to the
attention of the CSRG;
ii. the measures adopted in the application of methodologies, criteria and parameters for
calculating provisions for contingent claims.
g) to monitor the recommendations and guidelines deliberated by the Committee.
Alternative Composition - Contingent Claims:
I.
to approve the need to establish, strengthen and reverse provisions for contingent claims;
II.
to analyze, and propose to the CSRG, methodologies, criteria and parameters for calculating
provisions for contingent claims;
III.
to monitor individual reviews and the reclassification of provisionable claims, considering strategic
actions or actions involving material amounts.
IV.
to monitor the recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Committee on Capital Management - CEGC
The purpose of the Executive Committee on Capital Management is to:
I. to approve the models, methodologies, criteria and parameters for capital management;
II. to define the scenarios to be used in the capital management process;
III. to analyze and propose the following to the CSRG:
a) capital management strategy;
b) allocation of capital as a function of risk;
c) adoption of the measures contained in the capital contingency plan;
IV. to evaluate the results of capital stress tests;
V. to monitor the following:
a) capital contingency plan and measures;
b) Internal capital adequacy assessment process–ICAAP
c) recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
Executive Committee on People Management - CEGP
The purpose of the Executive Committee on People Management is:
I.
to approve:
a) to define guidelines relating to personnel management subsystems;
b) to develop career advancement programs, subject to the criteria established by the
Management Board;
II.
to define criteria and parameters for:
a) hiring employees;
b) absences and leaves;
c) appointment;
d) termination;
e) temporary reassignment;
f) temporary staffing of positions of trust;
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Section 12 - Shareholder‟s Meeting and Management
g) compensation, as loss, of debts arising from advances and salaries left by terminated
employees;
h) business trips;
III.
to promote alignment of the people management model with the Bank’s strategic guidelines;
IV.
to monitor the following:
a. implement people management policies and practices and, where needed, propose actions for
improvement;
b. recommendations and guidelines deliberated by the Committee.
The composition of the Committee is shown in item 12.7 of this Reference Form.
BB Japan Supervisory Committee
The BB Japan Supervisory Committee is joint body linked to the administration of Banco do Brasil,
which operates in accordance with the general business guidelines of Banco do Brasil established by
the Board of Directors, and with the requirements set forth in Japanese law. The purpose of this
committee is to oversee the operations of Banco do Brasil in Japan, regarding compliance with the
requirements of local regulatory authorities, the needs of customers, employees, vendors and the
community, maintenance of corporate values, and compliance with the policies, limits, competency
levels, practices of risk management and other duties defined by Banco do Brasil.
The composition of the Committee is shown in item 12.7 of this Reference Form.
b.
date of installation:
Audit committee
Remuneration Committee
Created on 07/01/2004
Created on 01/10/2012
Global Risk Superior Committee
Superior Committee of Management of Assets and Liabilities and Liquidity
Executive Commmitte on Credit Limit
Executive Committee of Operations
Operating and Administrative Committee
Executive Committee of Business
Executive Committee of Prevention of Financial and Exchange Illicit Acts and
Information Security
Executive Committee of Information Technology
Executive Disciplinary Committee
BB Japan Supervisory Committee
Executive Committee for Ethics
Executive Disclosure Committee
Executive Governance Committee of Related Entities
Market and Liquidity Risk Executive Committee
Executive Committee on Credit Risk - CERC
Executive Committee on Internal Controls and Operational Risk Controls - CERO
Executive Committee On Capital Management - CEGC
Executive Committee on People Management - CEGP
Created on 08/21/2001
Created on 11/03/2009
Created on 08/21/2001
Created on 08/21/2001
Created on 08/21/2001
Created on 08/21/2001
c.
Created on 08/21/2001
Created on 11/20/2006
Created on 06/28/2005
Created on 06/17/2008
Created on 05/11/2010
Created on 01/11/2011
Created on 05/02/2012
Created on 12/15/2014
Created on 12/15/2014
Created on 12/15/2014
Created on 12/15/2014
Created on 12/15/2014
mechanisms of performance evaluation of each body or committee:
Article 23 of the Bylaws of the Banco do Brasil states that the Board of Directors will perform an
annual formal appraisal of its performance. It is also the Board of Directors responsibility, as defined
in item 29 of Article XII of Bylaws, to formally appraise the performance of the Executive Board and of
the committees within the sphere of the actual Board. The Board of Directors also assesses the
operations of the Executive Secretariat - Secex, responsible area for administrative support to such
collegial body. The appraisal process is carried out according to procedures previously defined by the
actual Board of Directors, whereas the People Management Board - Dipes is responsible for the
methodological support to this process. It is incumbent upon the Chairman of the Board to conduct
the appraisal process.
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Banco do Brasil S.A. - Reference Form/2015
The evaluations are made on an annual basis by the Board of Directors in specific instrument,
composed of four blocks of evaluation items, completed by the members of the Board of Directors,
where:
I.
each Director evaluates the performance of the Board of Directors;
II.
each Director evaluates the performance of the Executive Board;
III.
each Director evaluates the performance of the Audit Committee;
IV.
each Director evaluates the performance of the Remuneration Committee;
V.
each Director evaluates his/her own performance in the Board.
VI.
each Director evaluates the performance of the Executive Secretary;
The items that compose the instrument cover different aspects of the corporate governance,
representing expectations in regard to the performance of the Board, of the COAUD and of the
Executive Board.
There is no evaluation of the Fiscal Council.
d.
Individual assignments and powers of the members of the Executive Board:
The Executive Board, responsible for business administration, is comprised of the President (CEO), the
Vice-Presidents and the officers.
The assignments are as follows:
I–
II –
of the President (CEO):
a)
to preside the General Shareholders' Meeting, call and preside the meetings of the
Management Board and of the Executive Board and supervise their performance;
b)
to propose to the Board of Directors the number of members of the Executive Board,
indicating for election the names of the Vice-Chairmen and Executive Officers;
c)
to propose to the Board of Directors the assignments of the Vice-Chairmen and Executive
Officers, as well as any possible change;
d)
to supervise and coordinate the work and activity of the Vice-Presidents, of the Officers and
heads of units that are under his direct supervision;
e)
to appoint, remove, assign, promote, commission, punish and dismiss employees, with the
ability to grant these powers with express limitation, and
f)
to appoint, among the Vice-Presidents, a coordinator with the purpose of convening and
presiding over the meetings of the Management Board and of the Executive Board in his
absence or impediment.
of each Vice-President:
a.
to administer, supervise and coordinate the areas that are assigned thereto and the
performance of the Officers and Units that are under his direct supervision, and
b)
to coordinate the meetings of the Management Board and of the Executive Board, when
requested by the Chairman.
III – of each Officer:
a.
to manage, supervise and coordinate the activities of the Executive Board and units under
their responsibility;
b.
to advise on works of the Management Board, in the sphere of the respective attributions;
and
c.
to execute other tasks that are assigned thereto by the member of the Management Board
to whom he is related to.
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Section 12 - Shareholder‟s Meeting and Management
e.
mechanisms of evaluation of performance of management
Mechanisms of evaluation of performance of the members of the Board of Directors,
Committees and of the Executive Board:
Evaluations made by the members of the Board of Directors are focused on the general performance
of each body evaluated. In addition to the evaluation conducted by each of the Board of Directors
members in relation to Board of Directors itself and other bodies, as described in item 12.1.c., the
Bank established evaluation criteria to comply with provisions of CMN Resolution 3,921/2010, which
established that financial institutions and other institutions authorized to operate by BACEN (Central
Bank of Brazil) should implement and maintain a management fees policy compatible with the
institution’s risk management policy.
The Bank established a specific instrument to evaluate professional competences, in a cycle of halfannual evaluations, based on expected behavior of the Company’s officers. It is the Remuneration
Committee’s responsibility to establish weights to be applied to both criteria that comprise the
evaluation’s individual level: a) competences; and b) management style.
Evaluation is performed in two ways: self-evaluation, conducted by the officer him/herself; b)
evaluation by the next hierarchic level, so that Board of Directors’ members evaluate the CEO, who,
on his/her turn, evaluate Vice-Presidents and Officers related to him/her and, finally, Vice-Presidents
evaluate Officers related to their operation area.
12.2. Rules, policies and practices related to the general meetings
Describe the rules, policies and practices related to the general meetings, indicating:
a.
term for call:
Since the Bank is a publicly-traded company, the term for call follows art. 124, §1, item II of Law
6,404/76, considering that the advance period for the first call will be of 15 (fifteen) days and for the
second call will be of 8 (eight) days. Since 2005, save rare exceptions, Banco do Brasil has, on
average, made the call with 30 days in advance.
b.
competencies:
Pursuant to art. 10 of the Bylaws of Banco do Brasil, it is the exclusive responsibility of the General
Meeting to decide on:
I–
sale of all or any shares of the capital stock of the Bank or its subsidiary companies; going-public
process; increase of capital stock through subscription of new shares; waiver of rights of
subscription of shares or debentures convertible into shares of subsidiaries; sale of debentures
convertible into shares of the Bank issued by subsidiaries; or, also, issuance of any other
securities or marketable securities in Brazil or abroad;
II.
spin-off, merger or takeover;
III.
swap of shares or other securities; and
V.
differentiated practices of corporate governance and execution of contract for this purpose with
stock exchange.
c.
address (physical or electronic) where the documents of the meeting will be
available
Address (physical or electronic) where the documents related to the meeting will be
available for analysis by the shareholders:
I.
Physical: Executive Secretariat of Banco do Brasil: Setor de Autarquias Norte, Quadra 5, Lote B,
13º andar, Asa Norte – Brasília (DF);
II.
Electronic: www.bb.com.br/ir
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Banco do Brasil S.A. - Reference Form/2015
d.
identification and management of conflicts of interest
Banco do Brasil does not adopt a specific mechanism to identify conflicts of interest at general
meetings and applies in these cases the rules of the Brazilian legislation.
In this regard, the Brazilian Corporate Law establishes that the shareholder cannot vote in the
decisions of the General Meeting relating to the report of appraisal of assets for the formation of the
capital stock and to the approval of its accounts as administrator, nor in any other meeting that could
benefit them on a particular manner, or in which they have conflict of interest with the company.
The decision made in result of the vote of shareholder with conflict of interest with the Company can
be annulled; the shareholder will be responsible for the damages caused and will have to transfer to
the company the advantages obtained. The conflicts of interest are identified under the Brazilian
Corporate Law and managed by the Chairman of the Board of Directors.
e.
request for proxies by management for the exercise of the voting right:
Not applicable, since BB does not make public requests for proxy under CVM Regulatory Instruction
481/2009.
f.
formalities required for acceptance of proxy instruments granted by shareholders
Formalities required for acceptance of proxy instruments granted by shareholders,
indicating if the issuer accepts proxies granted by shareholders through electronic mean
Under the Brazilian Corporate Law, the shareholder may be represented at the General Meeting by an
attorney in fact appointed less than one year who must be a shareholder, administrator of Banco do
Brasil or lawyer; in a publicly-traded company, such as the Bank, the attorney-in-fact may also be a
financial institution, where the administrator of investment funds should represent these investors.
To attend the General Meeting, the shareholder represented by attorney-in-fact should deposit,
preferably up to 24 hours prior to the meeting, with the Executive Secretariat of the Bank, located in
the head office of the Bank, the instrument of mandate.
To be accepted in the Meeting, according to article 126 of Law 6,404/76, the shareholder, or his/her
legal representative, should present a valid document of identification, and in the case of holders of
book-entry shares or shares held in custody, they should also present a document issued by the
depositary financial institution.
The Company does not accept proxies granted by shareholders through electronic mean.
g.
maintenance of forums and pages on the Internet in order to receive and share
shareholders' comments on the agenda of the meetings:
None.
h.
live transmission of the video and/or audio of the meetings:
None.
i.
mechanisms to allow the inclusion, in the agenda, of shareholders‟ proposals:
Under article 9, paragraph 2 of the Bylaws of the Bank, the extraordinary general meetings of the
Bank will only address the issues that have been object declared in the calls. It is not permitted the
inclusion of general issues in the agenda of the meeting.
12.3. Dates and newspapers of publication
Information related to the annual general meetings of 2013, 2012 and 2011, that approve the
financial statements for the fiscal years ended 12/31/2013, 12/31/2012 and 12/31/2011 is as follows:
Balance Sheet of 2014
a. shareholders informing about the
disclosure of the financial statements
Publishing dates
Newspapers of publishing of the notice to
--
Publishing dismissed under article 133, paragraph 5, of
Law 6,404/76 (Brazilian Corporate Law), in view of the
publishing of the financial statements in advance equal
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Section 12 - Shareholder‟s Meeting and Management
to or higher than 01 month from the date of the
Annual General Meeting.
b. from the call for the Annual
General Meeting which analyzed the
financial statements
03/27/2015, 03/30/2015,
03/31/2015 and
04/01/2015
- Diário Oficial da União
- Valor Econômico (DF)
c. from the minutes of the Annual
General Meeting which analyzed the
financial statements
--
- Diário Oficial da União
- Valor Econômico (DF)
02/25/2015
- Diário Oficial da União
- Valor Econômico (DF)
d. of the financial statements
Balance Sheet of 2013
Publishing dates
Newspapers of publishing of the notice to
a. shareholders informing about the
disclosure of the financial statements
-
Publishing dismissed under article 133, paragraph 5, of
Law 6,404/76 (Brazilian Corporate Law), in view of the
publishing of the financial statements in advance equal
to or higher than 01 month from the date of the
Annual General Meeting.
b. from the call for the Annual
General Meeting which analyzed the
financial statements
03/28/2014, 03/31/2014
and 04/01/2014
- Diário Oficial da União
c. from the minutes of the Annual
General Meeting which analyzed the
financial statements
-
- Diário Oficial da União
- Valor Econômico (DF)
- Valor Econômico (DF)
- Diário Oficial da União
d. of the financial statements
Balance Sheet of 2012
02/25/2014
- Valor Econômico (DF)
Publishing dates
Newspapers of publishing of the notice to
a. shareholders informing about the
disclosure of the financial statements
-
Publishing dismissed under article 133, paragraph 5, of
Law 6,404/76 (Brazilian Corporate Law), in view of the
publishing of the financial statements in advance equal
to or higher than 01 month from the date of the
Annual General Meeting.
b. from the call for the Annual
General Meeting which analyzed the
financial statements
03/25/2013, 03/26/2013
and 03/27/2013
c. from the minutes of the Annual
General Meeting which analyzed the
financial statements
06/03/2013
d. of the financial statements
02/28/2013
- Diário Oficial da União
- Jornal de Brasília (DF)
- Diário Oficial da União
- Jornal de Brasília (DF)
- Diário Oficial da União
- Jornal de Brasília (DF)
12.4. Rules, policies and practices related to the Board of Directors
Description or rules, policies and practices related to the Board of Directors
a.
frequency of meetings:
Pursuant to article 22 of the Bylaws, the Board of Directors of Banco do Brasil will meet with the
presence of at least the majority of its members: (I) ordinarily, at least once a month; and (II –
extraordinarily, whenever it is convened by its Chairman, or at the request of at least two board
members.
232
Banco do Brasil S.A. - Reference Form/2015
b.
If there are, restriction to the exercise of the voting right of members of the board
Provisions of the shareholders' agreement establishing restriction or link to the exercise of
the voting right of members of the board:
There is no agreement of the shareholders of Banco do Brasil.
c.
rules for identification and management of conflicts of interests:
The Bank identifies and manages the conflicts of interest within the Board of Directors, based on its
internal manuals so that each operating area should observe the compliance with the Bylaws of the
Bank.
Pursuant to art. 14 of the Bylaws of Banco do Brasil, the members of the management bodies cannot
intervene in the study, deferral, control or settlement of any operation in which: I – companies in
which they hold controlling interest or ownership interest above ten percent (10%) of the capital are
directly or indirectly interested; The impediment addressed in item I also applies in the case of
company where they hold, or have held in period immediately prior to their taking office in the Bank,
management position.
12.5
Arbitration clause in the bylaws for the resolution of conflicts
If there is, arbitration clause inserted in the Bylaws for the resolution of conflicts among
shareholders and between these and Banco do Brasil through arbitration
Describe the commitment clause contained in the Bylaws to solve conflicts between shareholders and
between the shareholders and the issuer through arbitrage
The commitment clause is provided for in art. 52 of the Bylaws of Banco do Brasil, as follows:
Art. 52. The Bank, its shareholders, senior managers and Fiscal Council members agree to resolve
through arbitration any and all disputes or controversies that may arise among them, especially those
related to or arising from the application, validity, effectiveness, construction, violation and related
effects of the provisions of the Corporate Law, the Bank’s bylaws, the rules issued by the National
Monetary Council, the Central Bank of Brazil and the Securities and Exchange Commission, as well as
other rules applicable to the capital market’s overall operation, those provided for by the Novo
Mercado Listing Rules of BM&FBOVESPA, the Arbitration Rules of the Arbitration Chamber, the
contract for participation, and the Novo Mercado Sanction Rules.
§1
The provisions included in the head of this article are not applicable to the disputes or
controversies related to the own activities of the Bank, as an institution that takes part of the National
Financial System, and those activities provided for in art. 19 of Law 4595, as of December 31, 1964,
and other laws that assign it roles of financial agent, administrator or manager of public funds.
§2
Also exclude from the caput, the disputes or controversies involving unavailable rights.
233
Section 12 - Shareholder‟s Meeting and Management
12.6. Administrators and members of the Fiscal Council of Banco do Brasil
In regard to each one of the administrators and members of the Fiscal Council of Banco do Brasil:
Board of Directors
a) Name
f) Election g) Installation
h) Term in i) Other positions at
office
BB
Member of the
2015/2017
Compensation
Committee
b) Age
c) Occupation
d) CPF
e) Position
j) Indication
Manoel Carlos de
Castro Pires
38
Economist
079.012.567-61
Chairman
04/28/2015
04/28/2015
Fabrício da Soller
42
Lawyer
912.223.979-00
Vice Chairman
04/28/2016
04/29/2016
2015/2017
None
Controlling
shareholder
Alexandre Corrêa
Abreu
51
Bank employee
837.946.627-68
Director
04/28/2015
04/28/2015
2015/2017
Chairman
Controlling
shareholder
Beny Parnes
57
Economist
729.641.627-00
Director
04/28/2015
04/28/2015
2015/2017
Member of the
Compensation
Committee
Minority interests
Francisco Gaetani
57
Economist
297.500.916-04
Director
01/25/2016
01/25/2016
2015/2017
None
Controlling
shareholder
Controlling
shareholder
Juliana Publio Donato
de Oliveira
35
Psychologist
031.071.529-60
Director
04/28/2015
04/28/2015
2015/2017
None
Representative
elected by the
employees and
appointed by the
Controlling
Shareholder
Luiz Serafim Spinola
Santos
69
Civil Enginner
093.068.627-68
Director
04/28/2015
04/28/2015
2015/2017
Member of the Audit
Committee
Minority interests
Miguel Ragone de
Mattos
41
Lawyer
669.984.091-68
Director
04/28/2016
04/29/2016
2015/2017
None
Controlling
shareholder
234
Banco do Brasil S.A. - Reference Form/2015
Fiscal Council
f) Election g) Installation
h) Term in i) Other positions
office
at BB
Incumbent Board
Member
04/28/2016
04/28/2016
2016/2017
None
Controlling
shareholder
510.806.132-34
Incumbent Board
Member
04/28/2016
04/28/2016
2016/2017
None
Controlling
shareholder
Accountant
005.167.759-87
Incumbent Board
Member
04/28/2016
04/28/2016
2016/2017
None
Minority interests
51
Civil Servant
398.826.591-87
Incumbent Board
Member
04/28/2016
04/28/2016
2016/2017
None
Controlling
shareholder
Mauricio Graccho de
Severiano Cardoso
67
Economist
315.096.737-68
Incumbent Board
Member
04/28/2016
04/28/2016
2016/2017
None
Minority interests
Alexandre Gimenez
Neves
55
Accountant
707.072.007-68
Alternate Board
Member
04/28/2016
04/28/2016
2016/2017
None
Minority interests
Danielle Ayres
Delduque
41
Civil Servant
670.041.801-15
Alternate Board
Member
04/28/2016
04/28/2016
2016/2017
None
Controlling
shareholder
Edélcio de Oliveira
49
Civil Servant
546.874.466.04
Alternate Board
Member
04/28/2016
04/28/2016
2016/2017
None
Controlling
shareholder
Iêda Aparecida de
Moura Cagni
42
Civil Servant
820.132.251-72
Alternate Board
Member
04/28/2016
04/28/2016
2016/2017
None
Controlling
shareholder
Paulo Roberto
Franceschi
65
Accountant
171.891.289-72
Alternate Board
Member
04/28/2016
04/28/2016
2016/2017
None
Minority interests
a) Name
b) Age
c) Occupation
d) CPF
e) Position
Aldo César Martins
Braido
51
Civil Servant
064.456.448-21
Felipe Palmeira
Bardella
37
Civil Servant
Giorgio Bampi
69
Marcos Machado
Guimarães
j) Indication
235
Section 12 - Shareholder‟s Meeting and Management
Executive Board
a) Name
b) Age
c) Occupation
d) CPF
e) Position
Alexandre Corrêa
Abreu
51
Bank employee
837.946.627-68
President (CEO)
Antonio Mauricio
Maurano
54
Bank employee
038.022.878-51
Geraldo Afonso
Dezena da Silva
60
Bank employee
775.575.068-04
João da Silva Maia
63
Economist
066.629.781-91
José Mauricio Pereira
Coelho
50
Bank employee
Vice-President of Finance
853.535.907-91 Management and Investor
Relations (CFO)
Julio Cezar Alves de
Oliveira
60
Bank employee
450.306.857-15
Osmar Fernandes Dias
64
Agricultural
Engineer
Paulo Roberto Lopes
Ricci
48
Bank employee
079.020.578-51
Vice-President of Retail
Distribution and Human
Resources Officer
Raul Francisco Moreira
45
Bank employee
554.374.430-72
Walter Malieni Junior
47
Bank employee
117.718.468-01
f) Election g) Installation
h) Term in
office
i) Other
j) Indication
positions at BB
02/06/2015
Vice-President of Wholesale
02/12/2014
Business Officer
02/14/2014
2013/2016
None
President of
the Bank
09/16/2013
09/16/2013
2013/2016
None
President of
the Bank
Vice-President of Services,
Infrastructure and
03/28/2016
Operations
04/04/2016
2013/2016
None
President of
the Bank
02/10/2015
02/10/2015
2013/2016
None
President of
the Bank
11/16/2015
11/17/2015
2013/2016
None
President of
the Bank
Vice-President of
171.988.289-49 Agribusiness and Micro and 09/16/2013
Small Businesses Officer
09/16/2013
2013/2016
None
President of
the Bank
09/16/2013
09/16/2013
2013/2016
None
President of
the Bank
Vice-President of Retail
Business Officer
02/10/2015
02/10/2015
2013/2016
None
President of
the Bank
Vice-President of Risk
Management Officer
09/16/2013
09/16/2013
2013/2016
None
President of
the Bank
Vice-President of
Technology Officer
Vice-President of
Government Officer
Undetermined Board of Directors
President of
the Republic
02/06/2015
236
Banco do Brasil S.A. - Reference Form/2015
f) Election g) Installation
h) Term in
office
Institutional Security
Officer
06/15/2015
07/10/2015
2013/2016
None
President of
the Bank
239.664.400-91
Legal Officer
09/16/2013
09/16/2013
2013/2016
None
President of
the Bank
Bank employee
001.415.907-42
São Paulo Distribution
Officer
09/16/2013
09/16/2013
2013/2016
None
President of
the Bank
50
Bank employee
317.207.141-34
Employees Relations and
Sponsored Entities Officer
10/08/2015
10/08/2015
2013/2016
None
President of
the Bank
Carlos Renato Bonetti
46
Bank employee
092.198.248-84
Risk Management Officer
01/25/2016
01/26/2016
2013/2016
None
President of
the Bank
Edmar José Casalatina
56
Bank employee
017.122.018-83
Loans and Financing
Operations Officer
09/16/2013
09/16/2013
2013/2016
None
President of
the Bank
Edson Rogério da
Costa
46
Bank employee
510.309.260-34
Credit Officer
06/15/2015
07/10/2015
2013/2016
None
President of
the Bank
Eduardo César Pasa
46
Bank employee
541.035.920-87
Accounting Officer
04/06/2015
04/06/2015
2013/2016
None
President of
the Bank
Gustavo de Faria
Barros
53
Bank employee
395.969.234-04
Controllership Officer
04/06/2015
04/06/2015
2013/2016
None
President of
the Bank
Hamilton Rodrigues da
Silva
52
Bank employee
440.772.039-53
Real Estate Credit Officer
06/06/2014
06/09/2014
2013/2016
None
President of
the Bank
Ilton Luís Schwaab
48
Bank employee
532.599.980-04
Micro and Small Business
Officer
05/25/2015
05/25/2015
2013/2016
None
President of
the Bank
João Pinto Rabelo
Júnior
47
Bank employee
364.347.521-72
Government Officer
10/19/2015
12/01/2015
2013/2016
None
President of
the Bank
José Caetano de
Andrade Minchillo
50
Bank employee
574.907.166-91 People Management Officer 03/28/2016
04/11/2016
2013/2016
None
President of
the Bank
José Carlos Reis da
Silva
53
Bank employee
350.077.450-49
09/16/2013
2013/2016
None
President of
the Bank
a) Name
b) Age
c) Occupation
d) CPF
e) Position
Adriano Meira Ricci
46
Bank employee
334.550.741-20
Antonio Pedro da Silva
Machado
60
Bank employee
Carlos Alberto Araujo
Netto
48
Carlos Célio de
Andrade Santos
Agribusiness Officer
09/16/2013
i) Other
j) Indication
positions at BB
237
Section 12 - Shareholder‟s Meeting and Management
f) Election g) Installation
h) Term in
office
Finance Officer
02/18/2015
02/20/2015
2013/2016
None
President of
the Bank
085.987.588-17
Brand Strategy Officer
04/06/2015
04/06/2015
2013/2016
None
President of
the Bank
Bank employee
350.319.726-53
Technology Officer
09/16/2013
09/16/2013
2013/2016
None
President of
the Bank
47
Bank employee
062.859.038-59
Corporate Bank Officer
06/15/2015
07/10/2015
2013/2016
None
President of
the Bank
Marco Antonio Ascoli
Mastroeni
46
Bank employee
062.198.128-16
Digital Business Officer
04/06/2015
04/06/2015
2013/2016
None
President of
the Bank
Nilson Martiniano
Moreira
48
Bank employee
583.491.386-53
Corporate Supllies and
Property
04/06/2015
04/06/2015
2013/2016
None
President of
the Bank
Otaviano Amantea de
Souza Campos
54
Bank employee
023.702.668-64
Restructuring Operational
Assets Officer
01/25/2016
02/01/2016
2013/2016
None
President of
the Bank
Rogério Magno Panca
46
Bank employee
085.035.618-08
Payment Methods Officer
02/18/2015
02/23/2015
2013/2016
None
President of
the Bank
Sandro Kohler
Marcondes
52
Bank employee
485.322.749-00
Capital Market and
Infrastructure Officer
09/16/2013
09/16/2013
2013/2016
None
President of
the Bank
Simão Luiz kovalski
44
Bank employee
517.714.970-68
Individual Client Account
Officer
02/18/2015
02/23/2015
2013/2016
None
President of
the Bank
Tarcísio Hübner
55
Bank employee
453.600.309-68
Distribution Officer
03/12/2015
03/12/2015
2013/2016
None
President of
the Bank
Wilsa Figueiredo
53
Bank employee
457.398.546-87 Wholesale Solutions Officer 06/15/2015
06/18/2015
2013/2016
None
President of
the Bank
Luiz Cláudio Ligabue
57
Bank employee
145.381.051-04
10/22/2015
2013/2016
None
President of
the Bank
a) Name
b) Age
c) Occupation
d) CPF
e) Position
Leonardo Silva de
Loyola Reis
46
Bank employee
981.761.707-63
Luís Aniceto Silva
Cavicchioli
46
Bank employee
Luiz Henrique
Guimarães de Freitas
56
Márcio Luiz Moral
Internal Controls Officer
07/28/2015
i) Other
j) Indication
positions at BB
238
Banco do Brasil S.A. - Reference Form/2015
12.7. Members of the statutory committees, of the audit, risk, finan. and compe. committees
Provide the information of item 12.6 as regards the members of the statutory committees, as well as the audit, risk, financial and
compensation committees, even though such committees or structures are not statutory:
Statutory Committees
Audit committee
b) Age
c) Occupation
d) CPF
e) Position
f) Election g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Egidio Otmar Ames
58
Administrator
257.146.780-87
Coordinator
09/25/2015
09/25/2015
2015/2016
Member of the
Compensation
Committee
Representatives of the
Federal Government in
the Board of Directors
Antônio Carlos Correia
62
Engineer
339.336.937-72
Incumbent member 09/25/2015
09/25/2015
2015/2016
None
Representatives of the
Federal Government in
the Board of Directors
Elvio Lima Gaspar
54
Engineer
626.107.917-04
Incumbent member 09/25/2015
09/25/2015
2015/2016
None
Representatives of the
Federal Government in
the Board of Directors
Luiz Serafim Spinola
Santos
69
Engineer
093.068.627-68
Incumbent member 09/25/2015
09/25/2015
2015/2016
a) Name
Representatives of the
Member of the
Federal Government in
Board of Directors
the Board of Directors
239
Section 12 - Shareholder‟s Meeting and Management
Compensation Committee
a) Name
b) Age
c)
Occupation
d) CPF
e) Position
f) Election g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Coordinator
09/25/2015
09/25/2015
2015/2016
BB Vice Chairman
Board of Directors
Paulo Roberto Lopes
Ricci
48
Egidio Otmar Ames
58
Administrator
257.146.780-87
Member
09/25/2015
09/25/2015
2015/2016
Member of the
Audit Committee
Board of Directors
Francisco Gaetani
57
Economist
297.500.916-04
Member
03/28/2016
03/28/2016
2015/2016
Member of the
Board of Directors
Board of Directors
Beny Parnes
57
Economist
729.641.627-00
Member
09/25/2015
09/25/2015
2015/2016
Member of the
Board of Directors
Board of Directors
Bank employee 079.020.578-51
240
Banco do Brasil S.A. - Reference Form/2015
Non-Statutory Committees
Global Risk Superior Committee
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
Alexandre Corrêa
Abreu
51
Bank employee
837.946.627-68
President (CEO)
02/06/2015
02/06/2015
Undetermined
Antonio Mauricio
Maurano
54
Bank employee
038.022.878-51
Vice-President of
Wholesale Business
Officer
02/12/2014
02/14/2014
2013/2016
None
Function inherent
to the office
José Mauricio Pereira
Coelho
50
Bank employee
Vice-President of Finance
853.535.907-91 Management and Investor
Relations (CFO)
02/10/2015
02/10/2015
2013/2016
None
Function inherent
to the office
Paulo Roberto Lopes
Ricci
48
Bank employee
079.020.578-51
Vice-President of Retail
Distribution and Human
Resources Officer
09/16/2013
09/16/2013
2013/2016
Member of the
Compensation
Committee
Function inherent
to the office
Raul Francisco
Moreira
45
Bank employee
554.374.430-72
Vice-President of Retail
Business Officer
02/10/2015
02/10/2015
2013/2016
None
Function inherent
to the office
Walter Malieni Junior
47
Bank employee
117.718.468-01
Vice-President of Risk
Management Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
a) Name
i) Other
positions at BB
j) Indication
Member of the
Function inherent
Board of Directors
to the office
Management of Assets and Liabilities and Liquidity Superior Committee
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Antonio Mauricio
Maurano
54
Bank employee
038.022.878-51
Vice-President of
Wholesale Business
Officer
02/12/2014
02/14/2014
2013/2016
None
Function inherent
to the office
José Mauricio Pereira
Coelho
50
Bank employee
Vice-President of Finance
853.535.907-91 Management and Investor
Relations (CFO)
02/10/2015
02/10/2015
2013/2016
None
Function inherent
to the office
Walter Malieni Junior
47
Bank employee
117.718.468-01
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
a) Name
Vice-President of Risk
Management Officer
241
Section 12 - Shareholder‟s Meeting and Management
Market and Liquidity Risk Executive Committee
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
092.198.248-84 Risk Management Officer
01/25/2016
01/26/2016
2013/2016
None
Function inherent
to the office
Bank employee
395.969.234-04
Controllership Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
46
Bank employee
981.761.707-63
Finance Officer
02/18/2015
02/20/2015
2013/2016
None
Function inherent
to the office
Márcio Luiz Moral
47
Bank employee
062.859.038-59
Corporate Bank Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Wilsa Figueiredo
53
Bank employee
457.398.546-87
Wholesale Solutions
Officer
06/15/2015
06/18/2015
2013/2016
None
Function inherent
to the office
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Carlos Renato
Bonetti
46
Bank employee
092.198.248-84 Risk Management Officer
01/25/2016
01/26/2016
2013/2016
None
Function inherent
to the office
Edson Rogério da
Costa
46
Bank employee
510.309.260-34
Credit Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Gustavo de Faria
Barros
53
Bank employee
395.969.234-04
Controllership Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Otaviano Amantea
de Souza Campos
54
Bank employee
023.702.668-64
Restructuring Operational
Assets Officer
01/25/2016
02/01/2016
2013/2016
None
Function inherent
to the office
a) Name
b) Age
c) Occupation
Carlos Renato
Bonetti
46
Bank employee
Gustavo de Faria
Barros
53
Leonardo Silva de
Loyola Reis
d) CPF
e) Position
Credit Risk Executive Committe
a) Name
242
Banco do Brasil S.A. - Reference Form/2015
Internal Control and Operational Risk Executive Committe
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Adriano Meira Ricci
46
Bank employee
334.550.741-20
Institutional Security
Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Antonio Pedro da
Silva Machado
60
Bank employee
239.664.400-91
Legal Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Carlos Renato
Bonetti
46
Bank employee
092.198.248-84 Risk Management Officer
01/25/2016
01/26/2016
2013/2016
None
Function inherent
to the office
Eduardo César Pasa
46
Bank employee
541.035.920-87
Accounting Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
José Caetano de
Andrade Minchillo
50
Bank employee
574.907.166-91
People Management
Officer
03/28/2016
04/11/2016
2013/2016
None
Function inherent
to the office
Luiz Cláudio Ligabue
57
Bank employee
145.381.051-04
Internal Controls Officer
07/28/2015
10/22/2015
2013/2016
None
Function inherent
to the office
Nilson Martiniano
Moreira
48
Bank employee
583.491.386-53
Corporate Supllies and
Property
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
a) Name
243
Section 12 - Shareholder‟s Meeting and Management
Capital Management Executive Committe
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
092.198.248-84 Risk Management Officer
01/25/2016
01/26/2016
2013/2016
None
Function inherent
to the office
Bank employee
541.035.920-87
Accounting Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
53
Bank employee
395.969.234-04
Controllership Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Leonardo Silva de
Loyola Reis
46
Bank employee
981.761.707-63
Finance Officer
02/18/2015
02/20/2015
2013/2016
None
Function inherent
to the office
Luís Aniceto Silva
Cavicchioli
46
Bank employee
085.987.588-17
Brand Strategy Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
02/10/2015
02/10/2015
2013/2016
None
Function inherent
to the office
a) Name
b) Age
c) Occupation
Carlos Renato
Bonetti
46
Bank employee
Eduardo César Pasa
46
Gustavo de Faria
Barros
d) CPF
e) Position
Earnings Release Executive Committe
a) Name
b) Age
c) Occupation
José Mauricio Pereira
Coelho
50
Bank employee
Vice-President of Finance
853.535.907-91 Management and Investor
Relations (CFO)
Walter Malieni Junior
47
Bank employee
117.718.468-01
Vice-President of Risk
Management Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Edson Rogério da
Costa
46
Bank employee
510.309.260-34
Credit Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Eduardo César Pasa
46
Bank employee
541.035.920-87
Accounting Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Gustavo de Faria
Barros
53
Bank employee
395.969.234-04
Controllership Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Leonardo Silva de
Loyola Reis
46
Bank employee
981.761.707-63
Finance Officer
02/18/2015
02/20/2015
2013/2016
None
Function inherent
to the office
Management of Assets and Liabilities and Liquidity Executive Committee
244
Banco do Brasil S.A. - Reference Form/2015
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Carlos Renato
Bonetti
46
Bank employee
092.198.248-84
Risk Management Officer
01/25/2016
01/26/2016
2013/2016
None
Function inherent
to the office
Gustavo de Faria
Barros
53
Bank employee
395.969.234-04
Controllership Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Leonardo Silva de
Loyola Reis
46
Bank employee
981.761.707-63
Finance Officer
02/18/2015
02/20/2015
2013/2016
None
Function inherent
to the office
Márcio Luiz Moral
47
Bank employee
062.859.038-59
Corporate Bank Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Sandro Kohler
Marcondes
52
Bank employee
485.322.749-00
Capital Market and
Infrastructure Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Wilsa Figueiredo
53
Bank employee
457.398.546-87
Wholesale Solutions
Officer
06/15/2015
06/18/2015
2013/2016
None
Function inherent
to the office
a) Name
245
Section 12 - Shareholder‟s Meeting and Management
Businesses Executive Committe
a) Name
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Carlos Alberto Araujo
Netto
48
Bank employee
001.415.907-42
São Paulo Distribution
Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Edmar José
Casalatina
56
Bank employee
017.122.018-83
Loans and Financing
Operations Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Gustavo de Faria
Barros
53
Bank employee
395.969.234-04
Controllership Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Hamilton Rodrigues
da Silva
52
Bank employee
440.772.039-53 Real Estate Credit Officer
06/06/2014
06/09/2014
2013/2016
None
Function inherent
to the office
Ilton Luís Schwaab
48
Bank employee
532.599.980-04
Micro and Small Business
Officer
05/25/2015
05/25/2015
2013/2016
None
Function inherent
to the office
João Pinto Rabelo
Júnior
47
Bank employee
364.347.521-72
Government Officer
10/19/2015
12/01/2015
2013/2016
None
Function inherent
to the office
José Carlos Reis da
Silva
53
Bank employee
350.077.450-49
Agribusiness Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Luís Aniceto Silva
Cavicchioli
46
Bank employee
085.987.588-17
Brand Strategy Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Luiz Henrique
Guimarães de Freitas
56
Bank employee
350.319.726-53
Technology Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Márcio Luiz Moral
47
Bank employee
062.859.038-59
Corporate Bank Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Marco Antonio Ascoli
Mastroeni
46
Bank employee
062.198.128-16
Digital Business Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Rogério Magno Panca
46
Bank employee
085.035.618-08 Payment Methods Officer
02/18/2015
02/23/2015
2013/2016
None
Function inherent
to the office
Sandro Kohler
Marcondes
52
Bank employee
485.322.749-00
Capital Market and
Infrastructure Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Simão Luiz kovalski
44
Bank employee
517.714.970-68
Individual Client Account
Officer
02/18/2015
02/23/2015
2013/2016
None
Function inherent
to the office
Tarcísio Hübner
55
Bank employee
453.600.309-68
Distribution Officer
03/12/2015
03/12/2015
2013/2016
None
Function inherent
to the office
Wilsa Figueiredo
53
Bank employee
457.398.546-87
Wholesale Solutions
Officer
06/15/2015
06/18/2015
2013/2016
None
Function inherent
to the office
246
Banco do Brasil S.A. - Reference Form/2015
Governance of Related Companies Executive Committe
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Antonio Pedro da
Silva Machado
60
Bank employee
239.664.400-91
Legal Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Eduardo César Pasa
46
Bank employee
541.035.920-87
Accounting Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Gustavo de Faria
Barros
53
Bank employee
395.969.234-04
Controllership Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Leonardo Silva de
Loyola Reis
46
Bank employee
981.761.707-63
Finance Officer
02/18/2015
02/20/2015
2013/2016
None
Function inherent
to the office
Luís Aniceto Silva
Cavicchioli
46
Bank employee
085.987.588-17
Brand Strategy Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
a) Name
Human Resources Executive Committe
a) Name
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Carlos Alberto Araujo
Netto
48
Bank employee
001.415.907-42
São Paulo Distribution
Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Carlos Célio de
Andrade Santos
50
Bank employee
317.207.141-34
Employees Relations and
Sponsored Entities Officer
10/08/2015
10/08/2015
2013/2016
None
Function inherent
to the office
José Caetano de
Andrade Minchillo
50
Bank employee
574.907.166-91
People Management
Officer
03/28/2016
04/11/2016
2013/2016
None
Function inherent
to the office
Luís Aniceto Silva
Cavicchioli
46
Bank employee
085.987.588-17
Brand Strategy Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Márcio Luiz Moral
47
Bank employee
062.859.038-59
Corporate Bank Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Tarcísio Hübner
55
Bank employee
453.600.309-68
Distribution Officer
03/12/2015
03/12/2015
2013/2016
None
Function inherent
to the office
247
Section 12 - Shareholder‟s Meeting and Management
Ethics Executive Committe
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Carlos Célio de
Andrade Santos
50
Bank employee
317.207.141-34
Employees Relations and
Sponsored Entities Officer
10/08/2015
10/08/2015
2013/2016
None
Function inherent
to the office
José Caetano de
Andrade Minchillo
50
Bank employee
574.907.166-91
People Management
Officer
03/28/2016
04/11/2016
2013/2016
None
Function inherent
to the office
Luiz Cláudio Ligabue
57
Bank employee
145.381.051-04
Internal Controls Officer
07/28/2015
10/22/2015
2013/2016
None
Function inherent
to the office
a) Name
Disciplinary Executive Committe
a) Name
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Carlos Alberto Araujo
Netto
48
Bank employee
001.415.907-42
Distribution Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Carlos Célio de
Andrade Santos
50
Bank employee
317.207.141-34
Employees Relations and
Sponsored Entities Officer
10/08/2015
10/08/2015
2013/2016
None
Function inherent
to the office
José Caetano de
Andrade Minchillo
50
Bank employee
574.907.166-91
People Management
Officer
03/28/2016
04/11/2016
2013/2016
None
Function inherent
to the office
Luiz Cláudio Ligabue
57
Bank employee
145.381.051-04
Internal Controls Officer
07/28/2015
10/22/2015
2013/2016
None
Function inherent
to the office
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Credit Limit Executive Committe
a) Name
b) Age
Edson Rogério da
Costa
46
Bank employee 510.309.260-34
Credit Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Gustavo de Faria
Barros
53
Bank employee 395.969.234-04
Controllership Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
248
Banco do Brasil S.A. - Reference Form/2015
Operations Executive Committe
a) Name
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Edson Rogério da
Costa
46
Bank employee 510.309.260-34
Credit Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
José Carlos Reis da
Silva
53
Bank employee 350.077.450-49
Agribusiness Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Leonardo Silva de
Loyola Reis
46
Bank employee 981.761.707-63
Finance Officer
02/18/2015
02/20/2015
2013/2016
None
Function inherent
to the office
Márcio Luiz Moral
47
Bank employee 062.859.038-59
Corporate Bank Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Operational Administrative Executive Committe
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Gustavo de Faria
Barros
53
Bank employee
395.969.234-04
Controllership Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Luiz Henrique
Guimarães de Freitas
56
Bank employee
350.319.726-53
Technology Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Nilson Martiniano
Moreira
48
Bank employee
583.491.386-53
Corporate Supllies and
Property
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
a) Name
BB Japan Supervising Committee
249
Section 12 - Shareholder‟s Meeting and Management
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Luiz Cláudio Ligabue
57
Bank employee
145.381.051-04
Internal Controls Officer
07/28/2015
10/22/2015
2013/2016
None
Function inherent
to the office
Luiz Henrique
Guimarães de Freitas
56
Bank employee
350.319.726-53
Technology Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Márcio Luiz Moral
47
Bank employee
062.859.038-59
Corporate Bank Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Simão Luiz kovalski
44
Bank employee
517.714.970-68
Individual Client Account
Officer
02/18/2015
02/23/2015
2013/2016
None
Function inherent
to the office
a) Name
IT Executive Committe
250
Banco do Brasil S.A. - Reference Form/2015
b) Age
c) Occupation
d) CPF
e) Position
f) Election
g) Installation
h) Term in
office
i) Other
positions at BB
j) Indication
Gustavo de Faria
Barros
53
Bank employee
395.969.234-04
Controllership Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Ilton Luís Schwaab
48
Bank employee
532.599.980-04
Micro and Small Business
Officer
05/25/2015
05/25/2015
2013/2016
None
Function inherent
to the office
João Pinto Rabelo
Júnior
47
Bank employee
364.347.521-72
Government Officer
10/19/2015
12/01/2015
2013/2016
None
Function inherent
to the office
Luís Aniceto Silva
Cavicchioli
46
Bank employee
085.987.588-17
Brand Strategy Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Luiz Henrique
Guimarães de Freitas
56
Bank employee
350.319.726-53
Technology Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Márcio Luiz Moral
47
Bank employee
062.859.038-59
Corporate Bank Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Marco Antonio Ascoli
Mastroeni
46
Bank employee
062.198.128-16
Digital Business Officer
04/06/2015
04/06/2015
2013/2016
None
Function inherent
to the office
Sandro Kohler
Marcondes
52
Bank employee
485.322.749-00
Capital Market and
Infrastructure Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Simão Luiz kovalski
44
Bank employee
517.714.970-68
Individual Client Account
Officer
02/18/2015
02/23/2015
2013/2016
None
Function inherent
to the office
a) Name
251
Section 12 - Shareholder‟s Meeting and Management
Illegal Financial and Exchange Activities Prevention and Information Security Executive Committe
Adriano Meira Ricci
46
Bank employee
334.550.741-20
Institutional Security
Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Carlos Alberto Araujo
Netto
48
Bank employee
001.415.907-42
São Paulo Distribution
Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Edson Rogério da
Costa
46
Bank employee
510.309.260-34
Credit Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Luiz Henrique
Guimarães de Freitas
56
Bank employee
350.319.726-53
Technology Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Márcio Luiz Moral
47
Bank employee
062.859.038-59
Corporate Bank Officer
06/15/2015
07/10/2015
2013/2016
None
Function inherent
to the office
Sandro Kohler
Marcondes
52
Bank employee
485.322.749-00
Capital Market and
Infrastructure Officer
09/16/2013
09/16/2013
2013/2016
None
Function inherent
to the office
Simão Luiz kovalski
44
Bank employee
517.714.970-68
Individual Client Account
Officer
02/18/2015
02/23/2015
2013/2016
None
Function inherent
to the office
Tarcísio Hübner
55
Bank employee
453.600.309-68
Distribution Officer
03/12/2015
03/12/2015
2013/2016
None
Function inherent
to the office
252
Banco do Brasil S.A. - Reference Form/2015
12.8. Directors and members of the Fiscal Council
In relation to each of the directors, supervisory board members and members of the
statutory audit committee, provide:
Board of Directors
Chairman of the Board – Manoel Carlos de Castro Pires
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Ministry of Finance; Position/Function: Secretary of Economic Policy
Period: Since Dec/2016; Does it belong to Grupo Banco do Brasil? No;
Main activity of the company: Ministry of Finance is administrative structure of the Federative Republic of Brazil basically
responsible for the economic policy’s formulation and implementation.
Company: Ministry of Planning, Budget and Management; Position/Function: Head of economic advice;
Period: Since Jan/2015; Does it belong to Grupo Banco do Brasil? No;
Main activity of the company: planning the government administration, plan costs, analyze the feasibility of projects, manage
budgets, free up funds to states and government projects.
Company: Ministry of Finance; Position/Function: Fiscal Policy Coordinator
Period: From 2008 to 2010; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Ministry of Finance is administrative structure of the Federative Republic of Brazil basically
responsible for the economic policy’s formulation and implementation.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: None;
- any conviction in an administrative process of CVM and the penalties applied: None;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: None.
Vice Chairman of the Board – Fabrício da Soller
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Office of the Attorney General of the National Treasury; Position/Function: Attorney
Period: since 1998; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: legal consulting body of the Department of the Treasury and represents the Union for fiscal
purposes.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Company: Banco do Nordeste do Brasil S/A; Position/Function: Incumbent Representative/Board of Directors
From 2013 to 2015
Company: Banco da Amazônia S/A; Position/Function: Incumbent Representative/Board of Directors
From 2009 to 2013
Company: BESC S/A; Position/Function: Incumbent Representative/Board of Directors
From 2007 to 2008
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Board Member – Alexandre Corrêa Abreu
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: President (CEO)
Period: since Fev/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Vice-President of Retail Business Officer
Period: since Dec/2011 to Fev/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio.
Company: Banco do Brasil S.A; Position/Function: Vice-President of Retail, Distribution and Operations Officer
253
Section 12 - Shareholder‟s Meeting and Management
Period: from Apr/2009 to Dec/2011; Does it belong to Banco do Brasil Conglomerate? Yes
Company: BB - Banco Popular do Brasil; Position/Function: Chief Executive Officer
Period: from Apr/2009 to May/2010; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Commercial bank created to encourage bank inclusion.
Company: BB Seguridade S.A.; Position/Function: Board of Directors Chairman;
Period: Since Jul/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Holding from insurance segment;
Company: BB Seguridade S.A.; Position/Function: Board of Directors Vice Chairman;
Period: From Mar/2013 to Jul/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: BB Seguridade S.A.; Position/Function: Chief Executive Officer;
Period: From Dec/2012 to Mar/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Holding from insurance segment;
Company: Banco do Brasil S.A; Position/Function: Insurance, Pension Funds, and Capitalization Officer
Period: from Aug/2008 to Apr/2009; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: Caixa de Previdência dos Funcionários do Banco do Brasil – Previ; Position/Function: Incumbent Board Member of
Directors;
Period: since 6/1/2010; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Pension fund, management, and execution of pension funds benefit plans
Company: BB Aliança Participações S.A. Executive Vice-President
Period: from Sep/2009 to Nov/2011; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Holding company in the insurance field.
Company: BB Seguros Participações S.A.; Position/Function: Executive Vice-President
Period: from Sep/2009 to Jan/2012; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: segments of insurance of people, elementary fields, and vehicles
Company: BB Seguros Participações S.A.; Position/Function: Chief Executive Officer
Period: Since Jan/2012 to abr/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: Banco Nossa Caixa S.A.; Position/Function: Member of the Board of Directors;
Period: from Jan/2009 to Nov/2009. Term in office extinguished due to the integration with Banco do Brasil; Does it belong to
Banco do Brasil Conglomerate? Yes;
Main activity of the company: Retail bank and financial agent of programs and funds of the State of São Paulo
Company: Mapfre Nossa Caixa Vida e Previdência S.A.; Position/Function: Member of the Board of Directors (incumbent);
Period: from Mar/2009 to Jul/2009; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Insurance and pension funds
Company: BB DTVM - BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A.; Position/Function: member of the
Board of Directors (incumbent);
Period: from Apr/2009 until Feb/2012; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Securities Distribution
Company: FEBRABAN - Federação Brasileira de Bancos; Position/Function: Members of the Board of Executive Officers.
Period: since Aug/2009; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Congregates banking financial institutions, operating throughout the national territory, and
associations that represent financial institutions and the like, at national or regional level.
Company: Brasilprev Seguros e Previdência S.A.; Position/Function: Member of the Board of Directors (incumbent);
Period: from Sep/2008 to May/2009; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: people insurance operations and pension funds benefits plan
Company: Companhia de Seguros Aliança do Brasil; Position/Function: Member of the Board of Directors (incumbent);
Period: from Sep/2008 to May/2009; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Insurer, comprising personal and asset insurances
Company: Brasilsaúde Companhia de Seguros; Position/Function: Member of the Board of Directors (incumbent);
Period: from Sep/2008 to May/2009 and Deputy from Jul/2009 to Jul/2010; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Health insurance
254
Banco do Brasil S.A. - Reference Form/2015
Company: Brasilveículos Cia de Seguros S.A.; Position/Function: Member of the Board of Directors (incumbent);
Period: from Sep/2008 to May/2009; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Vehicle Insurer
Company: Brasilcap Capitalização S.A.; Position/Function: member of the Board of Directors (incumbent);
Period: from Oct/2008 to Jun/2009 and Deputy from Dec/2009 to Feb/2012; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: capitalization market
Company: Fundo Garantidor de Crédito - FGC; Position/Function: Board Member of Directors;
Period: since Apr/2011; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: protection of the holders of credits, against financial institutions and savings and loans associations
Company: Câmara Interbancária de Pagamentos - CIP; Position/Function: Chairman
Period: Since March 2011; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Clearance and settlement of securities
Company: Banco Patagonia S.A.; Position/Function: Vice-President (Permanent Director);
Period: from Apr/2011 to Apr/2012; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Commercial Bank
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Information available on the previous item. Theses companies are publicly-held: Banco do Brasil S.A., BB Seguridade S.A., Banco
Nossa Caixa S.A. and Banco Patagonia S.A.
Period before 5 years:
Company: Banco do Brasil S.A.; Position/Function: Director – Cards Directorship;
Period: from Aug/2007 to Aug/2008.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Board Member – Beny Parnes
a.i Resumé, containing the main professional experiences during the last 5 years
Company: SPX Capital S.A.; Position/Function: Chief Economist;
Period since 2013; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Fund management activities by contract or commission.
Company: Banco BBM.; Position/Function: Executive Manager and of Executive Member Board
Period from to 2004 to 2012; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Financial Institution.
Company: Central Bank.; Position/Function: International Director
Period from to 2002 to 2003; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: conduct of monetary, foreign exchange, credit and financial relations abroad; the regulation and
supervision of the National Financial System (SFN); and the administration of the payment system and currency.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held companies in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: None;
- any conviction in an administrative process of CVM and the penalties applied: None;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: None.
Board Member - Francisco Gaetani
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Ministry of Planning, Budget and Management; Position/Function Executive Secretary;
Period since 2016; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: planning the government administration, plan costs, analyze the feasibility of projects, manage
budgets, free up funds to states and government projects.
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Section 12 - Shareholder‟s Meeting and Management
Company: Ministry of Planning, Budget and Management; Position/Function Executive Secretary;
Period From 2008 to 2010; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: planning the government administration, plan costs, analyze the feasibility of projects, manage
budgets, free up funds to states and government projects.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
no
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: None;
- any conviction in an administrative process of CVM and the penalties applied: None;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: None.
Board Member – Luiz Serafim Spinola Santos
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Cremer S.A.; Position/Function: Vice-Chairman;
Period: since 2006; Does it belong to Banco do Brasil Conglomerate? No;
Main Activity of the company: Textile, Surgical, Cosmetics, Perfumery and Hygiene Products.
Company: João Fortes Engenharia S.A.; Position/Function: Board of Directrs Member;
Period: since 2007; Does it belong to Banco do Brasil Conglomerate? No;
Main Activity of the company: Construction.
Company: Aegea Saneamento e Participações S.A.; Position/Function: Board of Directrs Member;
Period: since 2014; Does it belong to Banco do Brasil Conglomerate? No;
Main Activity of the company: Sanitation.
Company: Metalúrgica Gerdau S.A.; Position/Function: Board of Directrs Member;
Period: from 2012 to 2014; Does it belong to Banco do Brasil Conglomerate? No;
Main Activity of the company: Metallurgy.
Company: Líder Taxi Aéreo S.A; Position/Function: Board of Directrs Member
Period: from 2011 to 2013; Does it belong to Banco do Brasil Conglomerate? No
Main Activity of the company: Aircraft Rental;
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Company: Cremer S.A.;
Position/Function: Vice-Chairman;
Period: since 2006;
Company: João Fortes engenharia S.A;
Position/Function: Board of Directors Member;
Period: since 2007;
Company: Aegea Saneamento e Participações S.A.; Position/Function: Board of Directors Member;
Period: since 2014;
Company: Metalúrgica Gerdau S.A.;
Position/Function: Board of Directors Member;
Period: from 2012 to 2014;
Company: Líder Taxi Aéreo S.A.
Position/Function: Board of Directors Member;
Period: from 2011 to 2013;
Company: Investec – Investimentos Brasileiros S.A.;
Position/Function: Chairman.
Period: from 1985 to 2001;
Company: Labo Eletrônica S.A.;
Position/Function: Board of Directors Member;
Period: from 1985 to 1993.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: None;
- any conviction in an administrative process of CVM and the penalties applied: None;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: None.
256
Banco do Brasil S.A. - Reference Form/2015
Board Member – Miguel Ragone de Mattos
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Ministry of Finance; Position/Function: Head of the Finance minister’s office
Period: since Dec/2015; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Ministry of Finance is administrative structure of the Federative Republic of Brazil basically
responsible for the economic policy’s formulation and implementation.
Company: Ministry of Planning, Budget and Management; Position/Function: Head of the Minister’s office
Period: from 01/10/2015 to 12/24/2015; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: planning the government administration, plan costs, analyze the feasibility of projects, manage
budgets, free up funds to states and government projects.
Company: Civil Office of the Cabinet of the President of the Republic; Position/Function: Adjunct deputy;
Period: from 06/05/2011 to 01/10/2015; Does it belong to Banco do Brasil Conglomerate? No;
Atividade principal da empresa: Directly and imediatly assist the President of the Republic in In carrying out its activities;
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held companies in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: none.
Executive Board
Chairman – Alexandre Corrêa Abreu
See Board of Directors
Vice-President of Retail Business Officer – Raul Francisco Moreira
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Vice-President of Retail Business Officer
Period: since Feb/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio.
Company: Banco do Brasil S.A; Position/Function: Cards Officer
Period: from Feb/2012 to Feb/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Alelo S.A.; Position/Function: Governance Officer;
Period: from Jun/2011 to Feb/2012; Does it belong to Banco do Brasil Conglomerate? Yes
Main activity of the company: Benefit Card Administrator– Food and Meal
Company: Banco do Brasil S.A; Position/Function: Executive Manager of the Strategic Unit;
Period: from Aug/2010 to Jun/2011; Does it belong to Banco do Brasil Conglomerate? Yes
Company: Banco do Brasil S.A; Position/Function: Executive Manager of the Strategic Unit;
Period: from Oct/2007 to Aug/2010; Does it belong to Banco do Brasil Conglomerate? Yes
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Vice-President of Wholesale Businesses Officer - Antonio Mauricio Maurano
a.i Resumé, containing the main professional experiences during the last 5 years
257
Section 12 - Shareholder‟s Meeting and Management
Company: Banco do Brasil S.A Position/Function: Vice-President of Wholesale Businesses Officer
Period: since 02/14/2014; Does it belong to Grupo Banco do Brasil? Yes
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Commercial Officer;
Period: since 2/1/2010; Does it belong to Grupo Banco do Brasil? Yes;
Company: Banco do Brasil S.A; Position/Function: Superintendent of Retail and Government;
Period: fom 12/8/2009 to 1/31/2012; Does it belong to Grupo Banco do Brasil? Yes
Company: Banco do Brasil S.A; Position/Function: Commercial Superintendent
Period: from 05/14/2009 to 7/12/2012; Does it belong to Grupo Banco do Brasil? Yes
Company: Banco do Brasil S.A; Position/Function: Executive Manager
Period: from 10/01/2007 to 5/13/2012; Does it belong to Grupo Banco do Brasil? Yes
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: none;
ii. any conviction in an administrative process of CVM and the penalties applied: none;
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: none
Vice-President of Government Officer - Julio Cezar Alves de Oliveira
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A.; Position/Function: Vice-President of Government Officer
Period: since Nov/2014; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company:Multiple Bank, with commercial portfolio.
Company: Brasil Dental; Position/Function: Chairman;
Period: March/2014 to Nov/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Odontological plans.
Company: Grupo Segurador Banco do Brasil e Mapfre; Position/Function: Offcer;
Period: Oct/2011 to March/2014; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Insurance.
Company: Brasil Veículos Companhia de Seguros; Position/Function: Chairman;
Period: May/2007 a Oct/2011; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Vehicle Insurance.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Company: Brasil Veículos Companhia de Seguros; Position/Function: Commercial Officer;
Period: Jan/2006 a May/2007.
Company: Banco Popular do Brasil; Position/Function: Officer;
Period: Oct/2003 a Jan/2006.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Vice-President of Technology Officer - Geraldo Afonso Dezena da Silva
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Vice-President of Technology Officer
Period: since Jun/2010; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Companhia de Seguros Aliança do Brasil; Position/Function: Administrative and Financial and Technology Officer
Period: from 06/23/2009 to 06/27/2010; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Insurer, comprising personal and asset insurances
258
Banco do Brasil S.A. - Reference Form/2015
Company: Banco do Brasil S.A; Position/Function: Retail Officer
Period: from 05/08/2009 to 06/30/2009; Does it belong to Banco do Brasil Conglomerate? Yes
Company: Banco do Brasil S.A; Position/Function: Distribution Officer
Period: from 07/28/2007 to 05/07/2009; Does it belong to Banco do Brasil Conglomerate? Yes
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Vice-President of Finance Management and Investor Relations (CFO) – José Maurício Pereira Coelho
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Vice-President of Finance Management and Investor Relations (CFO) ;
Period: Since Feb/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Financial Officer
Period: from Feb/2012 to Feb/2015; Does it belong to Banco do Brasil Conglomerate? Yes
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Capital Market and Investments Officer
Period: from Sep/2009 to Jan/2012; Does it belong to Banco do Brasil Conglomerate? Yes
Company: Banco do Brasil S.A; Position/Function: Insurance, Pension Funds and Capitalization Executive Manager
Period: from Sep/2007 to Aug/2009; Does it belong to Banco do Brasil Conglomerate? Yes
Company: Cielo S.A; Position/Function: Member of Board of Directors
Period: since 03/24/2010; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Service rendering
Company: BB AG; Position/Function: Supervision Council Member;
Period: since Jun/2011; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Banking businesses in Europe;
Company: COELBA; Position/Function: Board of Directors Member;
Period: since 2012; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Energy distribution;
Company: CELPE; Position/Function: Board of Directors Member;
Period: since 2012; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Energy distribution;
Company: COSERN; Position/Function: Board of Directors Member;
Period: since 2012; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Energy distribution;
Company: ITAPEBI; Position/Function: Board of Directors Member;
Period: since 2012; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Energy Sector.
Company: TERMOPE; Position/Function: Board of Directors Member;
Period: since 2012; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Energy Sector.
Company: AFLUENTE G; Position/Function: Board of Directors Member;
Period: since 2012; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Energy Sector.
Company: AFLUENTE T; Position/Function: Board of Directors Member;
259
Section 12 - Shareholder‟s Meeting and Management
Period: since 2012; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company Energy Sector.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Banco do Brasil S.A., Cielo S.A., COELBA, CELPE , COSERN , ITAPEBI, TERMOPE, AFLUENTE G and AFLUENTE T..
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Vice-President of Agribusiness and Micro and Small Businesses Officer: Osmar Fernandes Dias
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Vice-President of Agribusiness and Micro and Small Businesses Officer
Period: Since Apr/2011; Does it belong to Banco do Brasil Group? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Federal Senate; Position/Function: Senator of the Republic.
Period: 1995/2003 and 2003/2010; Does it belong to Grupo Banco do Brasil? No
Main activity of the company: Federal Legislative Activity.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Vice-President of Retail, Distribution , Operations and People Management Officer: Paulo Roberto Lopes Ricci
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Vice-President of Retail, Distribution, Operations and People Management Officer
Period: Since Apr/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Vice-President of Retail, Distribution, Operations Officer
Period: from Aug/2012 to Apr/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Government Officer
Period: Dec/2010 to Aug/2012; Does it belong to Banco do Brasil Conglomerate? Yes
Company: Banco do Brasil S.A.; Position/Function: Superintendent of Retail Business of São Paulo - Capital
Period: From Dec/2009 to Nov/2010; Does it belong to Banco do Brasil Conglomerate? Yes
Company: Banco Nossa Caixa S.A; Position/Function: Network and Distribution Officer
Period: From Apr/2009 to Dec/2009; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Retail bank and financial agent of programs and funds of the State of São Paulo, merged by BB.
Company: Banco do Brasil S.A; Position/Function: Superintendent of Retail Business and Government of Santa Catarina
Period: Sep-2007/Apr-2009; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: BB Cor Participações S.A; Position/Function: Chief Executive Officer;
Period: since Apr/2013; Does it belong to the Banco do Brasil Conglomerate? Yes;
Main activity of the company: Holding from insurance segment.
Company: BB DTVM - BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A; Position/Function: Board of
Directors Chairman;
Period: since Aug/2012; Does it belong to the Banco do Brasil Conglomerate? Yes;
Main activity of the company: Securities Distribution.
Company: BB Previdência - Fundo de Pensão do Banco do Brasil; Position/Function: Deliberative Council President;
Period: since Aug/2011; Does it belong to the Banco do Brasil Conglomerate? Yes;
260
Banco do Brasil S.A. - Reference Form/2015
Main activity of the company: Closed Pension Plans.
Company: BB Seguros Participações S.A; Position/Function: Chief Executive Officer;
Period: from Aug/2012 to Apr/2013; Does it belong to the Banco do Brasil Conglomerate? Yes;
Main activity of the company: personal insurance, casualty and vehicle segment.
Company: Ativos S.A; Position/Function: Board of Directors Member;
Period: from Apr/2011 to Oct/2012; Does it belong to the Banco do Brasil Conglomerate? Yes;
Main activity of the company: receivables securitization.
Company: BB Aliança Participações S.A; Position/Function: Member of the Fiscal Council;
Period: from Nov/2010 to Apr/2011; Does it belong to the Banco do Brasil Conglomerate? Yes;
Main activity of the company: Holding from insurance segment.
Company: Brasilprev Seguros e Previdência S.A; Position/Function: Board of Directors Substitute Member;
Period: since Dec/2013; Does it belong to the Banco do Brasil Conglomerate? Yes;
Main activity of the company: Pension Plans and personal insurance.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Information available in previous item. These companies are publicly-held: Banco do Brasil S.A. and Banco Nossa Caixa S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: none;
ii. any conviction in an administrative process of CVM and the penalties applied: none;
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none
Vice-President of Services, Infrastructure and Operations – João da Silva Maia
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Vice-President of Services, Infrastructure and Operations
Period: since 04/2016; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Brazilian Senate; Position/Function: Analyst;
Period: from 2010 to 2015; Does it belong to Banco do Brasil Conglomerate? No
Main activity of the company: Federal Legislative;
Company: House of Representatives; Position/Function: Federal congressman;
Period: from 2010 to 2014; Does it belong to Banco do Brasil Conglomerate? No
Main activity of the company: Federal Legislative;
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Company: Banco do Brasil ; Position: Board of Directors Chairman
Period: 1990 to 1992; Does it belong to Banco do Brasil Conglomerate? Yes
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: none;
ii. any conviction in an administrative process of CVM and the penalties applied: none;
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: none
Vice-President of Internal Controls and Risk Management Officer – Walter Malieni Júnior
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Vice-President of Internal Controls and Risk Management Officer
Period: since Dec/2012; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: São Paulo Distribution Officer
Period: from Feb/2012 to Dec/2012; Does it belong to Banco do Brasil Conglomerate? Yes
Company: Banco do Brasil S.A; Position/Function: Credit Officer
Period: from May/2009 to Jan/2012; Does it belong to Banco do Brasil Conglomerate? Yes
Company: Banco do Brasil S.A; Position/Function: Corporate Superintendent SP
Period: from Aug/2006 to May/2009; Does it belong to Banco do Brasil Conglomerate? Yes
261
Section 12 - Shareholder‟s Meeting and Management
Company: Neoenergia S.A.; Position/Function: Member of the Inspection Board;
Period: since Dec/2009; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Distribution, generation, transmission, and trade of energy.
Company: Kepler Weber S.A.; Position/Function: Board of Directors Member;
Period: since/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company:Crop Storage Solutions.
Company: BB DTVM; Position/Function: Board of Directors Member;
Period: since/2012; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Investment Funds
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Information available in previous item. These companies are publicly-held: Banco do Brasil S.A., Neoenergia S.A. and Kepler Weber
S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: none;
ii. any conviction in an administrative process of CVM and the penalties applied: none;
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: none
Institutional Security Officer – Adriano Meira Ricci
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Institutional Security Officer;
Period: since 07/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Credit Officer;
Period: from 06/2014 to 06/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Operating Assets Restructuring Officer;
Period: from 1/30/2010 to 06/08/2014; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: BB Tecnologia e Serviços (Cobra Tecnologia S.A.); Position/Function: President
Period: 8/26/2010 to 1/29/2012; Does it belong to Grupo Banco do Brasil? Yes Subsidiary.
Main activity of the company: IT
Company: Banco do Brasil S.A; Position/Function: Government Office Executive Manager
Period: 6/18/2007 to 8/25/2010; Does it belong to Grupo Banco do Brasil? Yes
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies besides Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none
Legal Officer - Antonio Pedro da Silva Machado
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Legal Officer
Period: since 02/28/2011; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Legal Executive Manager;
Period: 12/05/2005 to 02/27/2011; Does it belong to Grupo Banco do Brasil? Yes
Company: BB Tecnologia e Serviços (Cobra Tecnologia S.A.); Position/Function: Board of Directors Member;
Period: since Mar/2013; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: IT
262
Banco do Brasil S.A. - Reference Form/2015
Company: BB Seguridade S.A.; Position/Function: Fiscal Council Member;
Period: since Mar/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Holding from Insurance segment.
Company: Federação Brasileira de Bancos (FEBRABAN); Position/Function: Director for Legal Issues.
Period: since Jul/2013; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Represents the banking sector in Brazil.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none
São Paulo Distribution Officer – Carlos Alberto Araujo Netto
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: São Paulo Distribution Officer
Period: since 04/11/2016; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: People Management Officer
Period: since 2/1/2010 to 04/10/2016; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Executive Manager
Period: 12/01/2009 to 01/31/2012; Does it belong to Grupo Banco do Brasil? Yes
Company: Banco do Brasil S.A.; Position/Function: General Manager of the Support Unit;
Period: from 01/10/2006 to 11/30/2009; Does it belong to Grupo Banco do Brasil? Yes.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none
Employees and Sponsored Entities Relations Officer – Carlos Célio de Andrade santos
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Employees Relations and Sponsored Entities Officer
Period: since 10/08/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Economus – Instituto de Seguridade Social ; Position/Function: Superitendent Director
Period: from 03/03/2015 to 10/07/2015; Does it belong to Grupo Banco do Brasil? yes;
Main activity of the company: Supplementary Pension
Company : ABRAPP – Associação Brasileira Entidades Fechadas Previdência Complementar; Position/Function: Council
Period: since mar/2015; Does it belong to Grupo Banco do Brasil? No.
Main activity of the company: Legal entity of private law, integrates ABRAPP / ICSS system - certification from the Institute of
Social Security Professionals / SINDAPP - National Association of Closed Entities of Complementary Social Security, is
constituted and organized in the form of association no-profit and non-profit
Company: Banco do Brasil S.A; Position/Function: Executive Manager of the Strategic Unit;
Period: 03/04/2015 to 03/02/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the c/ompany: Multiple Bank, with commercial portfolio
Company: Previ; Position/Function: Substitute Tax Adviser;
Period: since Jun/2014; Does it belong to Grupo Banco do Brasil? No;
Main activity of the c/ompany: Closed pension fund, non-profit organization with headquarters in the city of Rio de Janeiro (RJ)
Company: Economus – Instituto de Seguridade Social; Position/Function: Deliberative Council
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Section 12 - Shareholder‟s Meeting and Management
Period: Oct/2013 to Mar/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the c/ompany: Supplementary Pension
Company: Cassi; Position/Function: Deliberative Council
Period: since Dec/2013; Does it belong to Grupo Banco do Brasil? No;
Company: Unidas; Position/Function: Deliberative Council
Period: Mar/2013 to Dec/2013; Does it belong to Grupo Banco do Brasil? No;
Company: Economus – Instituto de Seguridade Social ; Position/Function: Director
Period: from 07/10/2012 to 03/03/2015; Does it belong to Grupo Banco do Brasil? yes;
Main activity of the company: Supplementary Pension
Company: GEAP – Fundação de Seguridade Social; Position/Function: Executive Director
Period: from 04/12/2011 to 07/08/2012; Does it belong to Grupo Banco do Brasil? no;
Main activity of the company: Supplementary Pension
Company: Economus – Instituto de Seguridade Social ; Position/Function: Superitendent Director
Period: from 08/03/2010 to 10/04/2011; Does it belong to Grupo Banco do Brasil? yes;
Main activity of the company: Supplementary Pension
Company: BESC CLUB – Compromisso Social com os Catarinenses; Position/Function: CEO
Period: from april/2008 to june/2011; Does it belong to Grupo Banco do Brasil? yes;
Main activity of the company: private association
Company: Cassi; Position/Function: Deliberative Council
Period: since april/2011 to june/2011/2013; Does it belong to Grupo Banco do Brasil? No;
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Information available on previous item. These companies are publicly-held:
Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Risk Management Officer - Carlos Renato Bonetti
a.i Curriculum, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A.; Position: Risk Management Officer;
Period: since 01/26/2016; Does it belong to Banco do Brasil Conglomerate? Yes
Main activity of the company: Multiple bank with comercial portfolio;
Company: Banco do Brasil S.A.; Position: Executive Manager of the Strategic Unit;
Period: frome 05/02/2013 to 01/25/2016; Does it belong to Banco do Brasil Conglomerate? Yes
Main activity of the company: Multiple bank with comercial portfolio;
Company: Banco do Brasil S.A.; Position: Executive Manager;
Períod: frome 10/13/2006 to 05/01/2013; Belongs to the Group Banco do Brasil? Yes
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Loans and Financing Officer – Edmar José Casalatina
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Loans and Financing Operations Officer;
Period: since Mar/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
264
Banco do Brasil S.A. - Reference Form/2015
Company: Banco do Brasil S.A; Position/Function: Executive Manager in the Partners’ Channels Unit;
Period: from Feb/2009 to Mar/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: Banco do Brasil S.A; Position/Function: General Manager of the Channel Management Unit;
Period: from Jun/2011 to Jan/2012; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: Banco do Brasil S.A; Position/Function: General Manager of the Private Bank Unit;
Period: from Jul/2009 to Jun/2011; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: Banco do Brasil S.A; Position/Function: General Manager of Campinas Estilo Branch;
Period: from Jun/2007 to Jul/2009; Does it belong to Banco do Brasil Conglomerate? Yes;
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Credit Officer – Edson Rogério da Costa
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Cerdit Officer;
Period: since jul/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Corporate Bank Officer;
Period: since Feb/201; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A.; Position/Function:General Manager;
Period: from Feb/2012 to Feb/2014; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: Banco do Brasil S.A.; Position/Function: Corporate Superintendent SP
Period: from Jun/2011 to Feb/2012; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: Banco do Brasil S.A.; Position/Function: Empresarial Superintendent Centro Norte RJ;
Period: from Jul/2009 to Jun/2011; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: BBTUR Viagens e Turismo Ltda.; Position/Function: Member of Consulting Council;
Period: from Apr/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Provide solutions for tourism.
Company: CIELO S.A.; Position/Function: Member of the Corporate Governance Committee;
Period: from Dec/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Provide credit and debit cards transations.
Company: ELO Participações S.A.; Position/Function: Board Member of Directors;
Period: from Jul/2012; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Holding.
a.ii Indication of all management positions filled in open companies (incluiding a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Individual Clients Officer – Simão Luiz Kovalski
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Individuals Clients Officer;
Period: Since feb/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
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Section 12 - Shareholder‟s Meeting and Management
Company: Banco do Brasil S.A; Position/Function: Executive Manager at Individuals Costumer Directorship;
Period: Since May/2013 to Feb/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Executive Manager at Channels Management Unit;
Period: from Jul/2011 to Feb/2012; Does it belong to Banco do Brasil Conglomerate? Yes
Main activity of the company: Multiple Bank, with commercial portfolio
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Information available on the previous item. These companies are publicly-held: Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Real State Credit Officer – Hamilton Rodrigues da Silva
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Real State Credit Officer
Period: since 06/09/2014; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: General Manager
Period: from 02/05/2013 to 06/08/2014; Does it belong to Grupo Banco do Brasil? Yes;
a.ii Indication of all management positions filled in open companies (incluiding a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none
Micro and Small Business Officer – Ilton Luís Schwaab
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Micro and Small Business Officer
Period: since May/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: BB gestão de Recursos DTVM S.A.; Position/Function: Executive Officer.
Period: from Nov/2012 to May/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Portfolio Management; Fund Management
Company: Banco do Brasil S.A; Position/Function: Executive Manager.
Period: from Jan/2008 to Oct/2012 ; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Government Officer – João Pinto Rabelo Júnior
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Department of Treasury; Position/Function: Deputy Secretary of Agricultural Policy
Period: since jan/2012 ; Does it belong to Grupo Banco do Brasil? no;
Main activity of the company: Formulation and implementation of economic policy
266
Banco do Brasil S.A. - Reference Form/2015
Company: Banco do Brasil S.A; Position/Function: Executive Manager;
Period: since Apr/2011 to Jan/2012; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: General Manager of Business Unit Abroad;
Period: since Jan/2011 to Apr/2011; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: General Abroad;
Period: since Jan/2007 to Jan/2011; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: no
- any conviction in an administrative process of CVM and the penalties applied: no
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: no
People Management Officer – José Caetano de Andrade Minchillo
a.i Currículo, contendo as principais experiências profissionais durante os últimos 5 anos
Company: Banco do Brasil S.A.; Position/Function: People Management Officer;
Period: desde 04/11/2016; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio.
Company: Caixa de Assistência dos Funcionários do Banco do Brasil (Cassi); Position/Function: Advisory Board Alternate Member;
Period: 06/01/2012 to 11/23/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: a self-management health company, with the purpose of refunding the health expenses of the
employees of Banco do Brasil.
Company: Caixa de Assistência dos Funcionários do Banco do Brasil (Cassi); Position/Function: Advisory Board Member;
Period: since 11/24/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: a self-management health company, with the purpose of refunding the health expenses of the
employees of Banco do Brasil.
Company: Economus – Instituto de Seguridade Social; Position/Function: Deliberative Board Member
Period: 03/11/2010 to 05/29/2014; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Supplementary Pension
Company: Economus – Instituto de Seguridade Social; Position/Function: Deliberative Board Member Chairman
Period: 04/02/2013 to 05/29/2014; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Supplementary Pension
Company: Fundação Banco do Brasil S.A.; Position/Function: Chief Executive Officer;
Period: 10/28/2013 to 04/10/2016; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Foundation.
Company: Banco do Brasil S.A.; Position/Function: Executive Manager;
Period: since 05/26/2009 to 10/27/2013; Does it belong to Grupo Banco do Brasil? Yes.
Company: Banco do Brasil S.A.; Position/Function: Regional Superintendent;
Period: since 06/11/2007 to 05/25/2009; Does it belong to Grupo Banco do Brasil? Yes.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: no
ii. any conviction in an administrative process of CVM and the penalties applied: no
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: no
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Section 12 - Shareholder‟s Meeting and Management
Agribusiness Officer – José Carlos Reis da Silva
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Agribusiness Officer
Period: since 04/11/2016; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Distribution Officer
Period: since 8/21/2012 to 04/10/2016; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Superintendency of Retail and Government - RS;
Period: from 07/14/2010 to 08/20/2012; Does it belong to Grupo Banco do Brasil? Yes
Company: Banco do Brasil S.A; Position/Function: Superintendency of Retail and Government - SC;
Period: from 05/05/2009 to 07/13/2010; Does it belong to Grupo Banco do Brasil? Yes
Company: Banco do Brasil S.A; Position/Function: Project Manager – Projeto Operação BESC;
Period: from 06/23/2008 to 05/04/2009; Does it belong to Grupo Banco do Brasil? Yes;
Main Activities: Merger of BESC to BB’s structure
Company: Banco do Brasil S.A; Position/Function: Regional Superintendent - Gerev Florianópolis;
Period: from 06/18/2007 to 06/22/2008; Does it belong to Grupo Banco do Brasil? Yes
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: no
ii. any conviction in an administrative process of CVM and the penalties applied: no
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: no
Financial Officer – Leonardo Silva de Loyola Reis
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Financial Officer
Period: since Feb/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: General Manager at Investor Relations Unit;
Period: since Sep/2013 to Feb/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Executive Manager at Capital Markets and Infrastructure Directorship;
Period: since Jun/2008 to May/2011; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: BB Securities LTD - Londres - Reino Unido; Position/Function: Assistant Executive Manager;
Period: since 8/21/2012; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Division Manager Capital Markets and Infrastructure Directorship;
Period: since 8/21/2012; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: no
ii. any conviction in an administrative process of CVM and the penalties applied: no
268
Banco do Brasil S.A. - Reference Form/2015
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: no
Brand Strategy Officer – Luís Aniceto Silva Cavicchioli
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A.; Position/Function: Brand Strategy Officer
Period: since Apr/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A.; Position/Function: Strategy and Organization Officer;
Period: from Sep/2013 to Apr/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: BB Tecnologia e Serviços (Cobra Tecnologia S.A.); Position/Function: Board of Directors member;
Period: since Oct/2013; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Develop, manufacture, market, rent, import and export equipment and digital electronic systems and
associated products, as well as provide technical assistance services, processes, and related logistical support.
Company: BB Tecnologia e Serviços (Cobra Tecnologia S.A.); Position/Function: President;
Period: from Fev/2012 to Sep/2013; Does it belong to Grupo Banco do Brasil? Yes;
Company: Banco do Brasil S.A.; Position/Function: Level I Project Manager;
Period: from Jul/2010 to Jan/2012; Does it belong to Grupo Banco do Brasil? Yes;
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: none;
ii. any conviction in an administrative process of CVM and the penalties applied: none;
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: none
Corporate Supplies and PropertyOfficer – Luiz Cláudio Ligabue
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function Executive Secretary ;
Period: since Apr/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: BB Cor Participações; Position/Function: Incumbent Member of the Inspection Board
Period: 12/31/2012 to 04/27/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Holding company in the insurance field.
Company: Cobra Tecnologia S.A. – BB Tecnologia e Serviços (BBTS).; Position/Function: Incumbent Member of the Inspection
Board
Period: since apr/2010 to apr/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Technology
Company: BB Mafre SH2 Participações S.A.; Position/Function: Board of Directors Alternate Member
Period: since 04/30/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Insurer, comprising personal and asset insurances
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: none;
ii. any conviction in an administrative process of CVM and the penalties applied: none;
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: none
Technology Officer - Luiz Henrique Guimarães de Freitas
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Technology Officer
Period: since Jul/2010; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
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Section 12 - Shareholder‟s Meeting and Management
Company: Banco do Brasil S.A; Position/Function: General Manager;
Period: from Jul/2009 to Jul/2010; Does it belong to Banco do Brasil Conglomerate? Yes
Company: Banco do Brasil S.A; Position/Function: Executive Manager
Period: from Jun/2003 to Jul/2009; Does it belong to Banco do Brasil Conglomerate? Yes
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
See previous item. This company is publicly-held: Banco do Brasil S.A.
Other positions in publicly-held companies:
Company: Pronor Petroquímica S.A.; Position/Function: Board of Auditors Member;
Period: from Apr/2010 to May/2011; Does it belong to Banco do Brasil Conglomerate? No
Main activity of the company: Manufacturing, processing, trading, importing and exporting of chemicals and petrochemicals.
Company: Cobra Tecnologia S.A. (BB Tecnologia e Serviços - BBTS); Position/Function: Board of Directors Alternate Member;
Period: desde 12/10/2010; Does it belong to Banco do Brasil Conglomerate? Yes
Main activity of the company: Develop, manufacture, market, rent, import and export equipment and digital electronic systems and
associated products, as well as provide technical assistance services, processes, and related logistical support.
Company: BB Previdência.; Position/Function: Deliberative Council Effective Member;
Period: desde 01/05/2012; Does it belong to Banco do Brasil Conglomerate? Yes
Main activity of the company: Pension Plans and personal insurance.
Company: Fundação Banco do Brasil S.A.; Position/Function: Curator Council Alternate;
Period: desde 05/16/2011; Does it belong to Banco do Brasil Conglomerate? Yes
Main activity of the company: promote, support, incentivize and sponsor actions in the education, health, culture, social assistance,
recreation and sport, science and technology and assistance in urban-rural communities.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Corporate Bank Officer – Márcio Luiz Moral
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Corporate Bank Officer
Period: from Since Jul/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Executive Manager of Corporate Bank Directory
Period: from May/2014 to Jul/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: BB Banco de Investimento S.A; Position/Function: Fiscal Council
Period: Since April/2014; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Investment Bank
Company: Banco do Brasil S.A; Position/Function: Executive Manager of International and Wholesale Directory
Period: from May/2012 to May/2014; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: BB AG Viena Surcusal Lisboa/Portugal; Position/Function: Assistant Manager
Period: Oct/2009 to May/2012; Does it belong to Banco do Brasil Conglomerate? Yes
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Company: BB Banco de Investimento S.A; Position/Function: Fiscal Council
Period: Since April/2014; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Investment Bank
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: none;
ii. any conviction in an administrative process of CVM and the penalties applied: none;
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: none
270
Banco do Brasil S.A. - Reference Form/2015
Digital Business Officer - Marco Antonio Ascoli Mastroeni
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Digital Business Officer
Period: since Apr/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Controllership Officer
Period: from Jun/2014 to Apr/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Individual Costumers Officer
Period: since Sep/2013 to Jun/2014; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Strategy and Organization Officer
Period: from May/2009 to Sep/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: Banco do Brasil S.A; Position/Function: Executive Manager of the Organizational Architecture in the Strategy and
Organization Directorship
Period: Jan/2008 to May/2009; Does it belong to Banco do Brasil Conglomerate? Yes
Company: Banco do Brasil S.A; Position/Function: Executive Manager of Budget and Analysis in the Controllership Directorship
Period: from Dec/2003 to Jan/2008; Does it belong to Banco do Brasil Conglomerate? Yes
Company: BB Tecnologia e Serviços (Cobra Tecnologia S.A.); Position/Function: Alternate Board Member
Period: from Dec/2004 to Dec/2009; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: To manufacture and trade equipment and digital electronic systems, peripherals, programs and
related products, raw materials and supplies and provision of similar services.
Company: BB Tecnologia e Serviços (Cobra Tecnologia S.A.); Position/Function: Effective Member
Period: Dec/2009 to Dec/2013; Does it belong to Banco do Brasil Conglomerate? Yes
Company: BESC Distribuidora de Títulos e Valos Mobiliários S.A.; Position/Function: Director:
Period: from Oct/2008 to Oct/2009; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Distributor of Securities
Company: Bescredi - BESC Financeira S.A. Credit, Loan, and Investments Director:
Period: from Oct/2008 to March/2010; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Credit, Financing and Investment.
Company: BESC Arrendamento Mercantil S.A. Director:
Period: from Oct/2008 to March/2010; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Leases.
Company: Caixa de Assistência dos Funcionários do Banco do Brasil (CASSI); Position/Function: Member of the Board of Directors
Period: Jun/2010 to Jul/2014; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: a self-management health company, with the purpose of refunding the health expenses of the
employees of Banco do Brasil.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Banco do Brasil S.A. and BESC Arrendamento Mercantil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Corporate Supplies and Property Officer - Nilson Martiniano Moreira
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Corporate Supplies and Property Officer
Period: since Apr/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
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Company: Banco do Brasil S.A; Position/Function: Business and Operation Support Officer
Period: from Feb/2014 to Apr/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Internal Control Officer
Period: from Jul/2010 to Feb/2014; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: Banco do Brasil S.A; Position/Function: Loans and Financing Operations Officer;
Period: From May/2009 to Jul/2010; Does it belong to Banco do Brasil Conglomerate? Yes
Company: Banco do Brasil S.A; Position/Function: Controllership Officer
Period: from Jun/2006 to May/2009; Does it belong to Banco do Brasil Conglomerate? Yes
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Restructuring of Operational Assets Officer - Otaviano Amantéa de Souza Campos
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Restructuring of Operational Assets Officer;
Period: since 02/01/2016; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: General Manager at Restructuring of Operational Assets ;
Period: from 04/06/2016 to 01/31/2016; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Superintendent of Retail Business - MG;
Period: from 12/01/2010 to 08/26/2012; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Superintendent of Retail Business - DF;
Period: from 12/01/2010 to 08/26/2012; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A. and Elo Participações S.A..
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Payment Methods Officer – Rogério Magno Panca
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Payment Methods Officer
Period: since Feb/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: General Manager at Governance of Related Companies Unit;
Period: from Feb/2014 to Feb/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: Elo Participações S.A.; Position/Function: Board of Directors Effective Member;
Period: from Feb/2014 to Feb/2015; Does it belong to Banco do Brasil Conglomerate? Yes;
Company: Banco do Brasil S.A; Position/Function: Large Corporate Clients Superintendent – São Paulo;
Period: from Feb/2011 to Feb/2014; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Executive Manager at Commercial Directorship;
272
Banco do Brasil S.A. - Reference Form/2015
Period: from Feb/2008 to Feb/2011; Does it belong to Banco do Brasil Conglomerate? Yes;
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A. and Elo Participações S.A..
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Whosale Solutions Officer - Wilsa Figueiredo
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Wholease Solutions Officer;
Period: Since Jun/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: General Manager
Period: from Mar/2015 to Jun/2015; Does it belong to Grupo Banco do Brasil? Yes;
Company: BB Seguridade S.A; Position/Function: Executive Manager
Period: from 01/11/2010 to 03/08/2015; Does it belong to Grupo Banco do Brasil? Yes;
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Information available in the previous item.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Capital Market and Infrastructure Officer - Sandro Kohler Marcondes
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Capital Markets and Investments Officer
Period: Since Sep/2013; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Controllership Officer
Period: From Feb/2012 to Sep/2013; Does it belong to Grupo Banco do Brasil? Yes;
Company: Banco do Brasil S.A; Position/Function: Commercial Officer
Period: from Jun/2009 to Jan/2012; Does it belong to Grupo Banco do Brasil? Yes
Company: Banco do Brasil S.A; Position/Function: International Officer;
Period: From Jan/2007 to Jun/2009; The following belongs to Banco do Brasil Group? Yes
Company: BB Leasing S.A. - Arrendamento Mercantil; Position/Function: Managing Officer;
Period: From Jul/2005 to Jan/2008; Does it belong to Grupo Banco do Brasil? Yes
Main activity of the company: Leases.
Company: Vale S.A.; Position/Function: Board Member of Directors
Period: from Apr/2007 to Apr/2010; Does it belong to Grupo Banco do Brasil? No;
Main activity of the company: Research, production and trade of iron ore and pellets, nickel, copper concentrate, coal, bauxite,
alumina, aluminum, potassium, kaolin, manganese, alloy iron, cobalt, metals of platinum group and precious metals.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Information available in the previous item. Vale S.A. and Banco do Brasil S.A are publicly-held companies.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
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Distribution Officer – Tarcísio Hübner
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Distribution Officer
Period: Since 04/11/2016; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: São Paulo Distribution Officer
Period: from Mar/2015 to 04/10/2016; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Superintendent of Retail and Government - RS;
Period: from Sep/2012 to Mar/2015; Does it belong to Banco do Brasil Group? Yes
Company: Banco do Brasil S.A; Position/Function: Superintendent of Retail and Government - RJ;
Period: from Nov/2009 to Sep/2012; Does it belong to Banco do Brasil Group? Yes
Company: Banco do Brasil S.A; Position/Function: Superintendent of Retail and Government - MT;
Period: from May/2008 to Nov/2009; Does it belong to Banco do Brasil Group? Yes
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No publicly-held company in addition to Banco do Brasil S.A.
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: none;
ii. any conviction in an administrative process of CVM and the penalties applied: none;
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: none
Accounting Officer – Eduardo César Pasa
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Account Director
Period: Since Apr/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: General Manager of Account Unit (Account General)
Period: from Mar/2009 at Apr/2015; Does it belong to Grupo Banco do Brasil? Yes;
Company: BB Seguridade S.A; Position/Function: Accounter
Period: from Dez/2012 at Mar/2015; Does it belong to Grupo Banco do Brasil? Yes;
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Information available in the previous item.
b. Description of any of the following events that may have occurred during the last 5 years:
i. any criminal conviction: none;
ii. any conviction in an administrative process of CVM and the penalties applied: none;
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: none
Controllership Officer – Gustavo de Faria Barros
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Comptroller Director;
Period: Since Apr/2015; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Multiple Bank, with commercial portfolio
Company: BBTS; Position/Function: CFO and Internal Services;
Period: from Nov/2012 at Apr/2015; Does it belong to Grupo Banco do Brasil? Yes;
Company: Banco do Brasil S.A; Position/Function: Executive Manager of the Comptroller;
Period: from Jan/2008 at Nov/2012; Does it belong to Grupo Banco do Brasil? Yes;
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Information available in the previous item.
b. Description of any of the following events that may have occurred during the last 5 years:
274
Banco do Brasil S.A. - Reference Form/2015
i. any criminal conviction: none;
ii. any conviction in an administrative process of CVM and the penalties applied: none;
iii. any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to
perform any professional or commercial activity whatsoever: none
Fiscal Council
Incumbent Member – Felipe Palmeira Bardella
a.i Resumé, containing the main professional experiences during the last 5 years
Company: National Treasury Department; Position/Function: Finance and Control Analyst;
Period: since Dec/2005; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Central body of the Federal Financial Administration System and the Federal Accounting System.
Company: BB Administradora de Consórcios S.A; Position/Function: Fiscal Council Member;
Period: from April/013 to Oct/2013; Does it belong to Banco do Brasil Conglomerate? Yes;
Main activity of the company: Management of corsotium groups.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies in addition to that available in th previous item.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Alternate Member - Edélcio de Oliveira
a.i Resumé, containing the main professional experiences during the last 5 years
Company: National Treasury Department; Position: General-coordinator of the General-Coordination of Relations and Financial
Analysis of the States and Municipalities
Function: To technically assist and subsidize the Secretary of National Treasury about issues related to the policies and guidelines
for the perfecting of the financial relationship of the Union with the States, the Federal District and the Municipalities.
Period: since 2004; Does it belong to Grupo Banco do Brasil? No;
Main activity of the company: Central body of the Federal Financial Administration System and the Federal Accounting System.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Incumbent Member - Marcos Machado Guimarães
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Department of Treasury - Secretariat of International Matters; Position: International Economic Dialogue General Coordinator
Function: Coordinate matters related to the work of international labor organs for the standardization of financial regulation and supervision, as well as o
financial inclusion and education, especially the Financial Stability Council (FSB) and G-20; Coordinate dialogue on financial and macro-economic matte
and deepen specific cooperation mechanisms - either of SAIN or of the Finance Ministry - between the Ministry and its counterparties in countries tha
have strategic importance to Brazil, with the re-establishment of regular meetings and contacts; coordinate activities and PCN (Ponto de Contat
Nacional do Brasil) department of OECD Guidelines for Multinational Companies, especially to promote responsible corporate conduct standards and t
resolve disputes deriving from non-compliance with Guidelines; aid the coordination of Ministry of Finance participation in matters related to the Glob
Forum for Tax Information Transparency and Exchange, for the purpose of fighting tax havens and harmful tax practices. General Coordination als
carries out studies and technical advisory on matters referring to the international economic situation and international economic policy, particula
focused on countries comprising G-20.
Period: Since Dec/2007; Does it belong to Banco do Brasil Conglomerate? No
Main activity of the company: to take part in economic and financial discussions and negotiations with other countries and at forums, econom
organizations and international financial institutions
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies.
b. Description of any of the following events that may have occurred during the last 5 years:
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Section 12 - Shareholder‟s Meeting and Management
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform any professional o
commercial activity whatsoever: none.
Alternate Member - Danielle Ayres Delduque
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Department of the Treasury - Secretariat of National Treasury; Position/Function: Finance and Control Analyst
Period: since June 1998; Does it belong to Grupo Banco do Brasil? No;
Main activity of the company: consulting and advice in the scope of the Department of the Treasury and related entities
Company: Department of the Treasury - Secretariat of International Matters; Position/Function: Coordinator of International Economic Dialogue
Period: since December/2007; Does it belong to Grupo Banco do Brasil? No
Main activity of the company: consulting and advice in the scope of the Department of the Treasury and related entities
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform any professional o
commercial activity whatsoever: none.
Incumbent Member – Aldo César Martins Braido
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Department of the Treasury; Position/Function: National Treasury Attorney;
Period: Since Jul/2000; Does it belong to Banco do Brasil Conglomerate? No;
Main activity of the company: Representing the prosecution, as well as direct, guide, supervise and monitor the activities of the Unit.
Company: Universidade Paulista; Position/Function: Professor of Financial Law, Tax Law, Constitutional and Administrative Law;
Period: Since May/2002; Does it belong to the Banco do Brasil Conglomerate? No;
Main activity of the company: Educational Services.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform any professional or
commercial activity whatsoever: none.
Incumbent Member – Iêda Aparecida de Moura Cagni
a.i Resumé, containing the main professional experiences during the last 5 years
Company: National Treasury Attorney's Office Position/Function : Attorney of the National Treasury
Period: Since March/2009; Does it belong to Banco do Brasil Conglomerate? No
Main Activities: Represent the Prosecution, as well as directing, guiding, supervising and inspecting the unit’s activies.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: No;
- any conviction in an administrative process of Brazilian Securities Commission (CVM) and the penalties applied: No;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform any professional
commercial activity whatsoever: No;
Incumbent Member: Maurício Graccho de Severiano Cardoso
a.i Resumé, containing the main professional experiences during the last 5 years
Company: BNYMellon Serviços Financeiros DTVM S.A.
Main activity of the companie: Investment Fund Management.
Position: Operational Director
Function: Investment Fund Management.
Period: From 2000 until 2011;
276
Banco do Brasil S.A. - Reference Form/2015
Does it belong to Banco do Brasil Conglomerate? No
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
None
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: No;
- any conviction in an administrative process of Brazilian Securities Commission (CVM) and the penalties applied: No;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform any professio
commercial activity whatsoever: No.
Incumbent Member: Giorgi Bampi
a.i Resumé, containing the main professional experiences during the last 5 years:
Company: PROBRAM – Consultoria Empresarial LTDA; Position/Function: Partner;
Period: Since Mar/2010; Does it belong to the Banco do Brasil Conglomerate? No;
Main activity of the company: Fiscal Consulting and Finance/Administrative control
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
None
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: No;
- any conviction in an administrative process of Brazilian Securities Commission (CVM) and the penalties applied: No;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform any professio
commercial activity whatsoever: No.
Alternate Member: Paulo Roberto Franceschi
a.i Resumé, containing the main professional experiences during the last 5 years:
Company: Audicontrole Auditoria e Controle
Main activity of the companie: Independent auditing and consulting in accounting and tax areas Company
Position: Partner
Function: Partner
Period: Since 1995
Does it belong to Banco do Brasil Conglomerate? No
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: No;
- any conviction in an administrative process of Brazilian Securities Commission (CVM) and the penalties applied: No;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform any professio
commercial activity whatsoever: No;
Alternate Member: Alexandre Gimenez Neves
a.i Resumé, containing the main professional experiences during the last 5 years:
Company: Othon Group; Position/Function: Chief Financial Officer
Period: Since Mar/2010; Does it belong to the Banco do Brasil Conglomerate? No;
Main activity of the company: Hotel Business, Agroindustry and Real Estate developments
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
Company: Grupo Othon; Position/Function: Corporative Finance
Period: desde 2010; Does it belong to the Banco do Brasil Conglomerate? No
Company: Estácio Participações S.A.; Position/Function: Controller
Period: 2006 - 2010; Does it belong to the Banco do Brasil Conglomerate? No
Company: Icatu Hartford Group; Position/Function: Regional Director
Period: 2000 - 2003; Does it belong to the Banco do Brasil Conglomerate? No
Company: Icatu Hartford Group; Position/Function: Controlling Director
Period: 1996 - 1999; Does it belong to the Banco do Brasil Conglomerate? No
Company: Banco Icatu S.A.; Position/Function: Internal Audit Management
Period: 1994 - 1996; Does it belong to the Banco do Brasil Conglomerate? No
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Section 12 - Shareholder‟s Meeting and Management
Company: Grupo Souza Cruz; Position/Function: External Audit Management
Period: 1992 - 1994; Does it belong to the Banco do Brasil Conglomerate? No
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: No;
- any conviction in an administrative process of Brazilian Securities Commission (CVM) and the penalties applied: No;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform any professio
commercial activity whatsoever: No;
Audit committee
Member – Egidio Otmar Ames
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Member of the Audit Committee;
Period: Since Sep/2012; Main activity of the company: Multiple Bank, with commercial portfolio
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Brasil S.A; Position/Function: Member of Compensation Committee;
Period: Since Sep/2012; Does it belong to Grupo Banco do Brasil? Yes
Company: Banco do Brasil S.A; Position/Function: General Auditor
Period: 2007/2011; Does it belong to Grupo Banco do Brasil? Yes
Company: Companhia de Seguros Aliança do Brasil; Position/Function: Coordinator of the Audit Committee;
Period: since October/2008; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Insurer, comprising personal and asset insurances
Company: Mapfre Seguros Gerais S.A. Coordinator of the Audit Committee;
Period: since December/2007; Does it belong to Grupo Banco do Brasil? No;
Main activity of the company: Insurance Company
Company: Caixa de Previdência dos Funcionários do BB - Previ); Position/Function: Incumbent Member of the Inspection Board
Period: 2005/2008; Does it belong to Grupo Banco do Brasil? No
Main activity of the company: Pension fund, management, and execution of pension funds benefit plans
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Member – Antônio Carlos Correia
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco do Brasil S.A; Position/Function: Member of the Audit Committee;
Period: Since set/2012; Does it belong to Grupo Banco do Brasil? Yes
Main activity of the company: Multiple Bank, with commercial portfolio
Company: Banco do Nordeste do Brasil S.A.; Position/Function: member of the Audit committee;
Period: 2009/2012; Does it belong to Grupo Banco do Brasil? No;
Main activity of the company: Commercial Bank
Company: Banco Votorantim S.A.; Position/Function: Member of the Audit committee;
Period: 2009/2012; Does it belong to Grupo Banco do Brasil? Yes;
Main activity of the company: Financial Institution
Company: Brasilveículos; Position/Function: Member of the Inspection Board;
Period: 2010/2011; Does it belong to Grupo Banco do Brasil? YES
Main activity of the company: Insurance Company
Company: Brasilsaúde; Position/Function: Member of the Audit committee;
Period: 2009/2010; Does it belong to Grupo Banco do Brasil? YES
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Main activity of the company: Insurance Company
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
Member – Elvio Lima Gaspar
a.i Resumé, containing the main professional experiences during the last 5 years
Company: Banco Nacional de Desenvolvimento Econômico e Social - BNDES; Position/Function: Social credit Director;
Period: From Apr/2006 to Feb/2012; Does it belong to Grupo Banco do Brasil? No
Main activity of the company: Long-term financing for investments in all segments of the economy, a policy that includes the social,
regional and environmental dimensions.
a.ii Indication of all management positions filled in open companies (including a period before 5 years):
No jobs were filled in publicly-held companies.
b. Description of any of the following events that may have occurred during the last 5 years:
- any criminal conviction: none;
- any conviction in an administrative process of CVM and the penalties applied: none;
- any conviction which became final, at judicial or administrative level, that may have suspended or disqualified him/her to perform
any professional or commercial activity whatsoever: none.
12.9. Marital relationship, stable union or kinship up to second degree between
Existence of a marital relationship, stable union or kinship up to second degree between:
a.
officers of Banco do Brasil
None.
b.
(i) officers of BB and (ii) officers of BB directly or indirectly controlled companies
None.
c.
(i) officers of BB or of its directly or indirectly controlled companies and (ii) BB
directly or indirectly controlled companies
None.
d.
(i) officers of BB and (ii) officers of direct and indirect parent companies of BB
None.
12.10. Subordinate relations, service delivery or control maintained between the issuer‟s
officers and:
Subordination, service provision or control relationships kept, in the last 03 fiscal years,
between the issuer's officers and:
a.
company directly or indirectly controlled by Banco do Brasil
Executive Board
CEO - Alexandre Corrêa Abreu
CPF: 837.946.627-68
Related Person: BB Seguros Participações S.A.
CNPJ: 11.159.426/0001-09
Position/Function: Executive Vice-President
Type of relationship between the Administrator and the related person: Control
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Type of related person: Indirect subsidiary
Year: 12/31/2012
Related Person: BB Seguros Participações S.A.
CNPJ: 11.159.426/0001-09
Position/Function: Chief Executive Officer
Type of relationship between the Administrator and the related person: Control
Type of related person: Indirect subsidiary
Year: 12/31/2012
Related Person: BB DTVM - BB Gestão de Recursos - Distribuidora de Títulos e Valores Mobiliários S.A.
CNPJ: 30.822.936/0001-69
Position/Function: Member of the Board of Directors
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2012
Related Person: BB Seguridade Participações S.A.
CNPJ: 17.344.597/0001-94
Position/Function: Chairman
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2013
Related Person: Banco Patagonia S.A.
CNPJ: 08.884.213/0001-35
Position/Function: Vice-President
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2012
Vice-President of Finance Management and Investor Relations (CFO) – José Maurício Pereira Coelho
CPF: 853.535.907-91
Related Person: BB Banco de Investimento S.A.
CNPJ: 24.933.830/0001-30
Position/Function: Vice-President
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: since 2015
Related Person: BB Cartões
CNPJ: 31.591.399/0001-56
Position/Function: Vice-President
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: since 2015
Related Person: BB Elo Cartões Participações
CNPJ: 05.105.802/0001-80
Position/Function: Vice-President
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: since 2015
Related Person: BB Leasing
CNPJ: 31.546.476/0001-56
Position/Function: Vice-President
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: since 2015
Related Person: BB AG (Vienna, Austria)
CNPJ: 00.000.000/1890-22
Position/Function: Member of the Advisory Council
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Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2013 and 12/31/2012
Vice-President of Retail Service, Distribution and People Management Officer – Paulo Roberto Lopes Ricci
CPF: 079.020.578-51
Related Person: BB Gestão de Recursos – Distribuidora de Títulos e Valores Mobiliários
CNPJ: 30.822.936/0001-69
Position/Function: Chairman
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2013, 12/31/2012
Related Person: BB Cor Participações S.A.
CNPJ: 17.345.055/0001-36
Position/Function: Chief Executive Officer
Type of relationship between the Administrator and the related person: Control
Type of related person: Indirect subsidiary
Year: 12/31/2013
Related Person: BB Seguros Participações S.A.
CNPJ: 11.159.426/0001-09
Position/Function: Chief Executive Officer
Type of relationship between the Administrator and the related person: Control
Type of related person: Indirect subsidiary
Year: 12/31/2013, 12/31/2012
Related Person: Ativos S.A.
CNPJ: 05.437.257/0001-29
Position/Function: Member of the Board of Directors
Type of relationship between the Administrator and the related person: Control
Type of related person: Indirect subsidiary
Year: 12/31/2012
Vice-President of Retail Officer - Raul Francisco Moreira
CPF: 554.374.430-72
Related Person: BB Cartões
CNPJ: 31.591.399/0001-56
Position/Function: CEO
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: since 2015
Related Person: BB Elo Cartões Participações
CNPJ: 05.105.802/0001-80
Position/Function: CEO
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: since 2015
Vice-President of Risk Management Officer – Walter Malieni Junior
CPF: 117.718.468-01
Related Person: BB Gestão de Recursos – Distribuidora de Títulos e Valores Mobiliários
CNPJ: 30.822.936/0001-69
Position/Function: Member of the Board of Directors
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2013, 12/31/2012
Credit Officer – Adriano Meira Ricci
CPF: 334.550.741-20
Related Person: BB Tecnologia e Serviços (Cobra Tecnologia S.A.)
CNPJ: 42.318.949/0001-84
Position/Function: President
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
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Year: 12/31/2012
Legal Officer – Antonio Pedro da Silva Machado
CPF: 239.664.400-91
Related Person: BB Tecnologia e Serviços (Cobra Tecnologia S.A.)
CNPJ: 42.318.949/0001-84
Position/Function: Member of the Board of Directors
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2013
Related Person: BB Seguridade Participações S.A.
CNPJ: 17.344.597/0001-94
Position/Function: Member of the Board of Auditors
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2013
Assets Restructuring Officer - Carlos Roberto Cafareli
CPF: 204.183.619-91
Related Person: Ativos S.A.
CNPJ: 05.437.257/0001-29
Position/Function: Chairman
Type of relationship between the Administrator and the related person: Control
Type of related person: Indirect subsidiary
Year: 12/31/2014
Credit Officer – Edson Rogério da Costa
CPF: 510.309.260-34
Related Person: BBTUR Viagens e Turismo Ltda.
CNPJ: 28.152.684/0017-23
Position/Function: Member of the Advisory Council
Type of relationship between the Administrator and the related person: Control
Type of related person: Indirect subsidiary
Year: 12/31/2013
Accounting Officer – Eduardo Cesar Pasa
CPF: 541.035.920-87
Related Person: BB Tecnologia e Serviços (BBTS)
CNPJ: 42.318.949/0001-84
Position/Function: Member of the Fiscal Concil
Type of relationship between the Administrator and the related person: Direct controlled
Year: 12/31/2014, 12/31/2013, 12/31/2012
Controllership Officer – Gustavo de Faria Barros
CPF: 395.969.234-04
Related Person: BB Tecnologia e Serviços (BBTS)
CNPJ: 42.318.949/0001-84
Position/Function: Finance and Internal Services Officer
Type of relationship between the Administrator and the related person: Direct controlled
Year: 12/31/2014, 12/31/2013, 12/31/2012
Micro and Small Business Officer – Ilton Luís Schwaab
CPF: 532.599.980-04
Related Person: BB Gestão de Recursos DTVM S/A
CNPJ: 30.822.936/0001-69
Position/Function: Executive Officer
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct Controlled
Year: 05/24/2015; 12/31/2014; 12/31/2013 e 12/31/2012
Related Person: BB Gestão de Recursos DTVM S/A
CNPJ: 30.822.936/0001-69
Position/Function: Executive Officer
Type of relationship between the Administrator and the related person: Control
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Type of related Person: Direct Controlled
Year: 05/24/2015; 12/31/2014; 12/31/2013
Goverment Officer – João Pinto Rabelo Júnior
CPF: 364.347.521-72
Related Person: BB Cor Participações
CNPJ: 17.345.055/0001-36
Position/Function: Member of the Fiscal Concil
Type of relationship between the Administrator and the related person: Indirect controlled
Year: 12/31/2013, 12/31/2014 and 2015
Brand Strategy Officer – Luís Aniceto Silva Cavicchioli
CPF: 085.987.588-17
Related Person: BB Tecnologia e Serviços (Cobra Tecnologia S.A.)
CNPJ: 42.318.949/0001-84
Position/Function: President
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2013, 12/31/2012
Related Person: BB Tecnologia e Serviços (Cobra Tecnologia S.A.)
CNPJ: 42.318.949/0001-84
Position/Function: Member of the Board of Officers
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 31/12/2013
Brand Strategy Officer – Luiz Cláudio Ligabue
CPF: 145.381.051-04
Related Person: BB COR Participações S.A.
CNPJ: 17.345.055/0001-36
Position/Function: Incumbent Member of the Inspection Board
Type of relationship between the Administrator and the related person: Control
Type of related person: Indirect subsidiary
Year:12/31/2014, 12/31/2013, 12/31/2012
Related Person: Cobra Tecnologia S.A. – BB Tecnologia e Serviços (BBTS)
CNPJ: 42.318.949/0001-84
Position/Function: Incumbent Member of the Inspection Board
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2012; 12/31/2013 and 12/31/2014
Technology Officer – Luiz Henrique Guimarães de Freitas
CPF: 350.319.726-53
Related Person: BB Tecnologia e Serviços (Cobra Tecnologia S.A.)
CNPJ: 42.318.949/0001-84
Position/Function: Alternate Member of the Board of Officers
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2013 and 12/31/2012
Corporate Bank Officer – Márcio Luiz Moral
CPF: 062.198.128-16
Related Person: BB Banco de Investimentos S.A
CNPJ: 24.933.830/0001-30
Position/Function: Fiscal Conciul
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Related Person: BB AG (Viena, Austria) – Surcusal Lisboa/Portugal
CNPJ:
Position/Function: Assistant Manager
Type of relationship between the Administrator and the related person: Control
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Type of related person: Direct subsidiary
Year: 12/31/2012
Related Person: BB Viena – BB Money Transfers Inc. – BB MT (Subsidiária Integral da BB Usa HoldCo)
CNPJ:
Position/Function: President of the Board
Type of relationship between the Administrator and the related person: Control
Type of related person: Indirect subsidiary
Year: 12/31/2012 – Annually Renewable
Related Person: BB Leasing Company Limited
CNPJ:
Position/Function: President of the Board
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2012 – Undetermined
Related Person: BB Bamb – Brasilian American Merchant Bank
CNPJ:
Position/Function: Board of Officer and Member of Risk, Capital and Assets/Liabilities Member
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2012 – Undetermined
Digital Businesses Officer - Marco Antonio Ascoli Mastroeni
CPF: 062.198.128-16
Related Person: BB Tecnologia e Serviços (Cobra Tecnologia S.A.)
CNPJ: 42.318.949/0001-84
Position/Function: Incumbent Counselor
Type of relationship between the Administrator and the related person: Control
Type of related person: Direct subsidiary
Year: 12/31/2013 and 12/31/2012
Digital Businesses Officer - Nilson Martiniano Moreira
CPF: 583.491.386-53
Related Person: BB Tecnologia e Serviços
CNPJ: 42.318.949/0001-84
Position/Function: Membro Titular do Conselho de Administração
Type of relationship between the Administrator and the related person: Control
Type of related person: Indirect subsidiary
Year: 12/31/2014
Related Person: Banco Patagonia S.A. (Buenos Aires, Argentina)
CNPJ: 08.884.213/0001-35
Position/Function: Diretor Suplente
Type of relationship between the Administrator and the related person: Control
Type of related person: Indirect subsidiary
Year: 12/31/2014
b.
direct or indirect parent company of Banco do Brasil
Board of Directors
Chairman – Manoel Carlos de Castro Pires
CPF: 079.012.567-61
Related Person: Ministry of Finance
CNPJ: 00.394.460/0001-41
Position/Function: Executive Secretary.
Type of relationship between the Administrator and the related person: Subordination
Type of related person: Direct Controller
Year: since 2015
Vice Chairman - Fabrício da Soller
CPF: 912.223.979-00
Related Person: Office of the Attorney General of the National Treasury
CNPJ: 00.394.460/0001-41
Position/Function: Attorney
Type of relationship between the Administrator and the related person: Subordination
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Type of related person: Direct Controller
Year: 12/31/2013, 12/31/2014 and 12/31/2015
Board Member – Miguel Ragone de Mattos
CPF: 669.984.091-68
Related Person: Ministry of Finance
CNPJ: 00.394.460/0001-41
Position/Function: Head of the Finance minister’s office
Type of relationship between the Administrator and the related person: Subordination
Type of related person: Direct Controller
Year: since 2015
Related Person: Civil Office of the Cabinet of the President of the Republic
CNPJ: 00.394.411/0001-09
Position/Function: Adjunct deputy
Type of relationship between the Administrator and the related person: Subordination
Type of related person: Direct Controller
Year: 12/31/2014 and 12/31/2015
Board Member – Francisco Gaetani
CPF: 297.500.916-04
Related Person: Ministry of Finance
CNPJ: 00.489.828/0001-55
Position/Function: Executive Secretary
Type of relationship between the Administrator and the related person: Subordination
Type of related person: Direct Controller
Year: since 2015
Fiscal Council
Incumbent Member – Felipe Palmeira Bardella
CPF: 494.424.306-53
Related Person: National Treasury Department
CNPJ: 00.394.460/0001-41
Position/Function: Finance and Control Analyst
Type of relationship between the Administrator and the related person: Subordination
Type of related person: Direct Controller
Year: 12/31/2013, 12/31/2014 and 12/31/2015
Incumbent Member – Aldo César Martins Braido
CPF: 064.456.448-21
Related Person: Department of Treasury
CNPJ: 00.394.460/0001-41
Position/Function: National Treasury Attorney
Type of relationship between the Administrator and the related person: Subordination
Type of related person: Direct Controller
Year: 12/31/2013, 12/31/2014 and 12/31/2015
Incumbent Member- Marcos Machado Guimarães
CPF: 398.826.591-87
Related Person: Department of the Treasury
CNPJ: 00.394.460/0001-41
Position/Function: General Coordinator of International Economics Dialogue
Type of relationship between the Administrator and the related person: Subordination
Type of related person: Direct Controller
Year: 12/31/2013, 12/31/2014 and 12/31/2015
Alternate Member - Edélcio de Oliveira
CPF: 546.874.466-04
Related Person: National Treasury Department
CNPJ: 00.394.460/0001-41
Position/Function: General-coordinator of the General-Coordination of Relations and Financial Analysis of the States and
Municipalities
Type of relationship between the Administrator and the related person: Subordination
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Type of related person: Direct Controller
Year: 12/31/2013, 12/31/2014 and 12/31/2015
Alternate Member - Danielle Ayres Delduque
CPF: 670.041.801-15
Related Person: Department of the Treasury
CNPJ: 00.394.460/0001-41
Position/Function: Coordinator of International Economic Dialogue
Type of relationship between the Administrator and the related person: Subordination
Type of related person: Direct Controller
Year: 12/31/2013, 12/31/2014 and 12/31/2015
Alternate Member – Iêda Aparecida de Moura Cagni
CPF: 820.132.251-72
Related Person: National Treasury Attorney's Office
CNPJ: 00.394.460/0001-41
Position/Function: Attorney of the National Treasury
Type of relationship between the Administrator and the related person: Subordination
Type of related person: Direct Controller
Year: 12/31/2013, 12/31/2014 and 12/31/2015
c.
supplier, client, debtor or creditor of the issuer, of its controlled, parent companies
If relevant, the supplier, client, debtor or creditor of the issuer, of its controlled or parent
companies or controlled companies of any of these persons
None.
12.11. Agreements made by board members
Description of the provisions of any agreements, including insurance policies, which
establish the payment or the reimbursement of expenses borne by the directors, resulting
from the redress of damage caused to third parties or to the issuer, from penalties imposed
by state agents, or from agreements aimed at closing administrative or judicial
proceedings, by virtue of the performance of their duties:
Banco do Brasil has a Civil Liability Insurance for Board Members, Directors and Officers - D&O with
maximum coverage amount of R$304 million. The agreement was executed with Itaú Seguros S.A. on
March 16, 2015 and is effective up to March 16, 2016.
Coverages:
Coverage for affiliates nonprofit;
Coverage for Spouse, Heirs, Legal Representatives and Estate;
Automatic inclusion of new subsidiaries with assets of up to: R$ 2,500,000,000.00;
Claims against the insured related to improper labor practices;
Advertising expenses;
Defense costs related to extra-judicial procedures;
Emergency costs;
Moral Damages (beyond labor issues);
Complaints by Government, Suppliers, Competitors, Regulators, Lenders and Investors;
Complaints Insured (D & O) against the Insured (D & O);
Claims made by the company Borrower against the insured (current and future D & Os);
Claims against the insured in tax levels;
Defense costs (including appeal deposits) when applying fines and other penalties at the
administrative level;
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Defective or vitiated by providing services (provided you have the piercing the corporate veil);
Responsibility of insured persons arising from Body Damage occurring in the course of the Borrower's
activities;
Environmental damage:
-
Defense Costs for Individuals;
-
Derivatives Shares (claims filed by shareholders);
-
Compensation / Other Losses.
Coverage for retirees insured;
Goods Lock coverage of Managers - Asset Freezing;
Coverage for Attachment Online;
Coverage for Banco Nossa Caixa, retroactive limited to 16/03/09;
Coverage for BB Security;
Public Offering of Shares coverage CVM / SER / SEC / 2010/008;
Extradition expenses;
12.12. Provide other information the Company deems relevant
Formation of the members of the Executive Board of Banco do Brasil S.A.
1. Alexandre Corrêa Abreu
Education:
Business Administration
Specialization:
MBA Marketing; MBA General Education for High Executive Officers
2. Antonio Mauricio Maurano
Education:
Law
Specialization:
MBA General Education for High Executive Officers
Foreign Trade and International Business
3. Geraldo Afonso Dezena da Silva
Education:
Law; Mathematics; Science
Specialization:
MBA General Education for High Executive Officers - USP
MBA in Agribusiness - ESALQ/USP
4. José Mauricio Pereira Coelho
Education:
Accounting Sciences (Faculdade Unigranrio - RJ)
Specialization:
Finance and Capital Markets (FGV/RJ)
MBA Finance and Capital Markets (FGV/RJ)
5. Julio Cezar Alves de Oliveira
Education:
Law
Specialization:
Finance and Accounting
Business management
6. Osmar Fernandes Dias
Education:
Agricultural Engineer - Fundação Faculdade de Agronomia Luiz Meneguel, Bandeirantes (PR)
7. Paulo Roberto Lopes Ricci
Education:
Business Administration - AIEC – Associação Internacional de Educação Continuada
Specialization:
MBA General Education for High Executive Officers - FIA/USP (SP)
8. Raul Francisco Moreira
Education:
Information Technology
9. Walter Malieni Junior
Education:
Economic Sciences – Mackenzie - 1992
Specialization:
MBA in Capital Market and Finance – IBMEC – 1995
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Post-graduation in General Education for Executives – USP (University of São Paulo) – 1996
Continued Education in Business Strategic Management – FGV – 1999
MBA in Business Administration – Mackenzie – 2003
Continued education in mergers and acquisitions – FGV - 2008
10. Adriano Meira Ricci
Education:
Economic Sciences
Specialization:
MBA Marketing (PUC-RJ)
MBA in Advanced Business Management (UFMT)
Analysis of Projects (IBMEC)
11. Antonio Pedro da Silva Machado
Education:
Law
Specialization:
Economic and Corporate Law
Civil Procedural Law
Legal-Political Institutions Law
12. Carlos Alberto Araújo Netto
Education:
History
Master's Degree:
History and Social Communication
Doctorate:
Social Psychology
Specialization:
Marketing
13. Carlos Célio de Andrade Santos
Education:
Physical Education
Specialization:
BB MBA General Basic Training for Top Executives
BB MBA Corporate Finance
BB MBA Business Management
14. Carlos Renato Bonetti
Education:
Data Processing Technology
Specialization:
MBA in Advanced Business Management
BB MBA Risk
15. Edmar José Casalatina
Education:
Business Administration – Universidade Metodista de Piracicaba – Unimep
Specialization:
BB MBA General Education for High Executive Officers – FIA/USP
16. Edson Rogério da Costa
Education:
Accounting Sciences – Centro Universitário de Brasília – UniCEUB – 1995
Specialization:
BB MBA Advanced Finance – FIPECAFI/USP - 1997
MBA Strategic Leadership – INEPAD/USININOS – São Leopoldo (RS) - 2013
17. Eduardo César Pasa
Education:
Specialization:
Master’s Degree:
Accounting
Accounting
Organizational Accounting
Controlling and Accounting
18. Gustavo de Farias Barros
Education:
Specialization:
Business
BB MBA Controller
19. Hamilton Rodrigues da Silva
Education:
Business Administration
Specialization:
Business Administration
Executiv MBA in Business Management
BB MBA General Education for High Executive Officers
20. Ilton Luís Schwaab
Education:
Accounting – 12/1996
Specialization:
Information Systems – 04/1999
MBA – Agribusiness – 11/2003
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MBA – Financial Business – 06/2005
21. João da Silva Maia
Education:
Civil Engineering – Universidade de Brasilia (UnB) – 1974/1976
Economics – Universidade Federal do Rio de Janeiro (UFRJ) - 1982
Specialization:
Information Systems – 04/1999
Master Degree in Industrial Economy and Technology –UFRJ – 1984
22. João Pinto Rabelo Júnior
Education:
Business Administration
Specialization:
Public Administration
BB MBA Marketing
BB MBA Public Administration
23. José Caetano de Andrade Minchillo
Education:
Law – 12/1999
Specialization:
BB MBA General Education for High Executive Officers – 05/2001;
BB MBA Advanced Business Management – 02/2010.
24. José Carlos Reis da Silva
Education:
Foreign Trade Management Technology
Specialization:
BB MBA General Education for High Executive Officers (USP)
25. Leonardo Silva de Loyola Reis
Education:
Business Administration
Specialization:
MBA Executive Financial
26. Luís Aniceto Silva Cavicchioli
Education:
Business Administration – Centro Universitário de Brasília – UniCEUB
27. Luiz Cláudio Ligabue
Education:
Accounting (UFRJ)
Specialization:
BB MBA General Basic Training for Executives
BB MBA Audit, Specialization Course – FIPECA
28. Luiz Henrique Guimarães de Freitas
Education:
Mathematics – Centro Universitário Claretiano – Batatais (SP)
Specialization:
System development - UCB/Brasília (DF)
BB MBA General Accounting - FIPECAFI/USP
29. Márcio Luiz Moral
Education:
BA in Systems Analysis - UNIMEP - Universidade Metodista de Piracicaba - São Paulo
Specialization:
Systems Analysis - PUC - Pontifícia Universidade Católica de Campinas - São Paulo
BB MBA Marketing - FDC - Fundação Dom Cabral - Belo Horizonte - Minas Gerais
MBA Advanced Management - IE Business School Madrid - Madrid – Espanha
30. Marco Antonio Ascoli Mastroeni
Education:
Economy
Specialization:
MBA Controller - Universidade de São Paulo - FIPECAF/FEA/USP
Accounting and Financial Administration - Fundação Getúlio Vargas - Escola de Administração de Empresas
de São Paulo
31. Nilson Martiniano Moreira
Education:
Economic Sciences – Universidade Católica de Minas Gerais - 1992
Specialization:
MBA General Education for High Executive Officers – Fundação Dom Cabral - 1998
MBA Executive in Finance - IBMEC
32. Otaviano Amantéa de Souza Campos
Education:
Law
Specialization:
Business and technology management
Executiv MBA in Business Management
BB MBA General Education for High Executive Officers
289
Section 12 - Shareholder‟s Meeting and Management
BB MBA Marketing
33. Rogério Magno Panca
Education:
Economic Sciences
Specialization:
Business
BB MBA International Business
34. Sandro Kohler Marcondes
Education:
Business Administration - Universidade do Centro Oeste - Guarapuava (PR)
Specialization:
Bank Management to Superior Results - Texas University - Austin (TX) - USA
Advanced Banking Management - Escola de Administração de Empresas de São Paulo - Fundação Getúlio
Vargas
Master's Degree:
Business Administration - Escola de Administração de Empresas de São Paulo - Fundação Getúlio Vargas
35. Simão Luiz Kovalski
Education:
Business Administration
Specialization:
Markenting
Master's Degree:
Administration - Policy and Institutional Management
36. Tarcísio Hübner
Education:
Business Administration
Specialization:
Executiv MBA in Business Management
Markenting
BB MBA General Education for High Executive Officers
MBA in Agribusiness
37. Wilsa Figueiredo
Education:
Chemical Engineering
Degree in Mathematics
Specialization:
Corporate Finance
Business Management
MBA Strategic Leadership
MBA Marketing
Disclosure of the Positions Occupied by the Directors at Other Companies
1. Alexandre Corrêa Abreu
Board of Directors Alternate Member of BB Mapfre SH1 Participações S.A. - Mapfre;
Board of Directors Member of Caixa de Previdência dos Funcionários do Banco do Brasil – Previ;
2. Luiz Serafim Spinola Santos
Board of Directors Vice Chairman of Cremer S.A.
Board of Directors Member of João fortes Engenharia S.A.
Board of Directors Member of Aegea Saneamento e Participações S.A.
3. Francisco Gaetani
Board of Directors Alternate Member of Banco Nacional do Desenvolvimento – BNDES
3. Fabrício da Soller
Board of Directors Member of Banco do Nordeste do Brasil S.A.
Board of Directors Memberof Banco da Amazônia S.A.
Board of Directors Member of BESC S.A.
4. Miguel Ragone de Mattos
Board of Directors Member of CODEVASF
Fiscal Council Member of EBC
Fiscal Council Member of BB Leasing
290
Banco do Brasil S.A. - Reference Form/2015
GENERAL SHAREHOLDERS MEETING DURING THE LAST THREE YEARS
DATE
2ND Call
QUORUM
2015
04/28/2015
NO
2,183,022,298
2014
04/29/2014
NO
2,172,373,753
2013
04/25/2013
NO
2,081,255,560
291
Section 13 - Management Remuneration
13.
MANAGEMENT REMUNERATION
13.1. Management compensation policy or practice
Describe the policy or practice for compensation of the board of directors, statutory and
non-statutory board, fiscal council, statutory committees and of the auditing, risk, financial
and remuneration committees:
As foreseen in article 16 of Banco do Brasil’s bylaws, the compensation of the members of its
management bodies is annually established by the Annual General Meeting, observing the legal rules.
The Global Compensation Amount establishes the compensation of the members of the Board of
Directors and the Board of Executive Officers. The values are defined based on market research,
internal balance, responsibility, Company and individual performance, and other factors. The total
remuneration includes fixed remuneration, variable remuneration and benefits.
Banco do Brasil has no non-statutory board. The remuneration characteristics of each BB Board are
described below.
Board of Directors
a) aims of the policy or practice for remuneration
b) composition of remuneration, indicating:
(i) description of the remuneration components and the
objectives of each one of them
(ii) the proportion of each element in the total
remuneration
(iii) calculation and adjustment methodology of each one
of the remuneration components
(iv) reasons that justify the composition of the
remuneration
c) key performance indicators that are considered when
determining each element of the compensation
d) as the compensation is structured in such a way as to
reflect the increase in the performance indicators
e) how the compensation policy or practice is aligned with
the short, medium and longterm interests of the issuer
f) existence of remunerated supported by subsidiaries or
direct or indirect controlling shareholders
g) existence of any remuneration or benefit linked to the
occurrence of a particular corporate event, such as the
disposal of the issuer's controlling interest
For the members of the Board of Directors, the amount practiced
corresponds to 10 percent (10%) of the weighted average of the
amounts paid to members of the Executive Board, where the objective
is to compensate them for services rendered.
Fees: fixed monthly remuneration practiced for the members of the
Bank's Board of Directors.
Fees: 100%
The amount practiced corresponds to 10 percent (10%) of the
weighted average of the amounts paid to the members of the
Executive Board and approved annually by the Ordinary General
Meeting.
Established by the General Meeting according to the article 152 of Law
6,404/76 and article 1 of Law No. 9,292/96.
Not applicable: fixed remuneration without associated indicator.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Fiscal Council
a) aims of the policy or practice for remuneration
b) composition of remuneration, indicating:
(i) description of the remuneration components and the
objectives of each one of them
(ii) the proportion of each element in the total
remuneration
(iii) calculation and adjustment methodology of each one
of the remuneration components
(iv) reasons that justify the composition of the
remuneration
c) key performance indicators that are considered when
determining each element of the compensation
292
For the members of the Fiscal Council, the amount practiced
corresponds to 10 percent (10%) of the weighted average of the
amounts paid to members of the Executive Board, where the objective
is to compensate them for services rendered.
Fees: fixed monthly remuneration practiced for the members of the
Bank's fiscal council.
Fees: 100%
The amount practiced corresponds to 10 percent (10%) of the
weighted average of the amounts paid to the members of the
Executive Board and approved annually by the Ordinary General
Meeting.
Established by the General Meeting according to the article 162
paragraph 3 of Law 6,404/76 and article 1 of Law 9,292/97
Not applicable: fixed remuneration without associated indicator.
Banco do Brasil S.A. - Reference Form/2015
d) as the compensation is structured in such a way as to
reflect the increase in the performance indicators
e) how the compensation policy or practice is aligned with
the short, medium and longterm interests of the issuer
f) existence of remunerated supported by subsidiaries or
direct or indirect controlling shareholders.
g) existence of any remuneration or benefit linked to the
occurrence of a particular corporate event, such as the
disposal of the issuer's controlling interest.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Executive Board
a) aims of the policy or practice for remuneration
Compensate the members of the Executive Board, taking into account
their responsibilities, time devoted to their duties, their competence
and professional reputation and the value of their services on the
market, in order to maximize the Company's profit or loss in a
sustainable manner over time.
b) composition of remuneration, indicating:
Fees, 13th Salary, Variable Remuneration and Benefits
(i) description of the remuneration components and the
objectives of each one of them
Fees: fixed monthly remuneration paid to the directors of the Bank. Is
the reward for services rendered to the Company.
13th Salary: compensation equivalent to one monthly fee.
Executive Officers’ Variable Compensation Program: a variable
compensation program whose purpose is to recognize the directors’
effort toward obtaining the achieved profit or loss, with basis on the
calculated performance of indicators linked to the corporate strategy.
The form of payment is in accordance with the proposals set forth by
National Monetary Council Resolution 3,921, of November 25, 2010,
among which we highlight the payment in company shares.
Direct and indirect benefits: part of the remuneration aimed at the
quality of life of the Directors and Officers, including housing,
healthcare, pension and life insurance.
(ii) which is the proportion of each element in the total
remuneration (based on the values of the fiscal year
2013)
(iii) calculation and adjustment methodology of each one
of the remuneration components
(iv) reasons that justify the composition of the
remuneration
c) key performance indicators that are considered when
determining each element of the compensation
Fees: 44%
13th Salary: 4%
Variable Remuneration of the Executive Board: 40%
Direct and indirect benefits: 13%
Fees: As established by the annual general meeting, and taking into
account the analysis of the banking market’s best compensation
practices in addition to the period’s inflation. (April/14 to March/15)
13th Salary: Established by the annual general meeting and equivalent
to 1 monthly fee(s).
The Executive Officers’ variable compensation is established by the
annual general meeting and is limited to 50% of the annual
compensation of the Executive Officers and to five thousandths of the
profit whichever is lower, according to BB bylaws, article 16, sole
paragraph. Any adjustment in monthly fees automatically adjust other
compensation components (thirteenth salary and variable
compensation), since the definition of the latter depends on the values
established for the former.
The compensation granted to the members of the Board of Executive
Officers is in conformity with the legal provisions relate