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
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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. 31
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.
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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.
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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
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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.
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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
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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
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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
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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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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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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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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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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 99
Section 7 - Issuer's Activities
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 103
Section 7 - Issuer's Activities
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. 105
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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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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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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. 111
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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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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 115
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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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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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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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.
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Professional growth based on merit.
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Brand as a competitive difference.
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Proactivity in risk management.
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Commitment with soundness, profitability, efficiency and innovation.
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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;
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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.
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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.
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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.
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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.
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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$1,393 million.
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Section 10 - Comments From the Executive Officers
In civil lawsuits there are actions that seek to recover the difference between inflation and the index used to restate financial investments during the period of economic plans (Collor Plan, Bresser Plan and Summer Plan). The balances of contingent liabilities classified as possible were as follows: R$ 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.
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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.
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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) 215
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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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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 217
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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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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: 219
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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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; 221
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; 223
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)
224
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: 225
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;
227
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
231
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.
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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.
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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.
255
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
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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
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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;
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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;
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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
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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
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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
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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
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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
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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
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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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Section 12 - Shareholder‟s Meeting and Management 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;
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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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Section 12 - Shareholder‟s Meeting and Management 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:
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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;
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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
278
Banco do Brasil S.A. - Reference Form/2015 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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Section 12 - Shareholder‟s Meeting and Management 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
280
Banco do Brasil S.A. - Reference Form/2015 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
281
Section 12 - Shareholder‟s Meeting and Management 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
282
Banco do Brasil S.A. - Reference Form/2015 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
283
Section 12 - Shareholder‟s Meeting and Management 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
284
Banco do Brasil S.A. - Reference Form/2015 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
285
Section 12 - Shareholder‟s Meeting and Management 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; 286
Banco do Brasil S.A. - Reference Form/2015
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
287
Section 12 - Shareholder‟s Meeting and Management 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
288
Banco do Brasil S.A. - Reference Form/2015 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 related to state companies and corporations and is aimed at remunerating them for the level of responsibility of their functions and for the fiduciary duty inherent to them, as well as the value of each professional in the market, considering the company’s risk management policy, its profit or loss and economic environment where it is inserted.
Fees: Performance in the position. 13th Salary: Performance in the position. Direct and indirect benefits: Performance in the position. Variable remuneration: Determining the payment and establishing the amount of variable compensation granted to statutory officers is done by performance indicators in three levels: Corporate, unity and individual.
293
Section 13 - Management Remuneration The variable compensation is applied when the performance indicators are attained so that the noncompliance with a given indicator will directly affect the calculation of variable compensation. Likewise, exceeding an established target may increase amounts due.
d) as the compensation is structured in such a way as to reflect the increase in the performance indicators
The variable compensation is triggered by meeting the performance indicators so that the non-compliance with some indicator directly influence the calculation of the variable remuneration. Similarly overcoming (s) goal (s) can set (m) raise the amount due. The variable remuneration uses indicators that assess various aspects of the company's performance, among which the result, market share growth, defaults and efficiency.
The compensation policy is aligned with the Company's interests, considering medium and longterm profit or loss to be reached, and the analysis of market trends aligned with corporate strategies for the e) how the compensation policy or practice is aligned with coming periods. the short, medium and longterm interests of the issuer In addition, the indicators used in the variable compensation policy are effects of the corporate strategy, the master plan and the market plan.
f) existence of remunerated supported by subsidiaries or direct or indirect controlling shareholders
The remuneration of the Executive Board is not borne directly by the abovementioned entities. Indirectly, the profit or loss of subsidiary and associated companies influence the Bank's net income and, consequently, the compensation practice.
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.
There are no remunerations or benefits associated with a corporate event.
Audit committee
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
294
In relation to the Audit Committee, the remuneration is defined by the Board of Directors and shall fulfill the following criteria, according to the Bylaws of BB, in article 33, paragraph 6: i. the remuneration to Committee members will not be higher than the average remuneration received by the Officers; ii. in the case of public officials, their compensation for ownership interest in the Audit Committee will be subject to the provisions established in the pertinent legislation and regulation; iii. the member of the Audit Committee which is, also, member of the Board of Directors, must to make an option by the remuneration of only one of the memberships. Since July 11, 2009, the monthly compensation for permanent members has been 90% (ninety percent) of the average salary earned by BB directors.
Fees: fixed monthly remuneration practiced for the members of the Bank's audit committee. Fees: 100% The amount paid corresponds to 90% (ninety percent) of the average salary earned by the Banco do Brasil S.A.’s directors. The adjustment was due to the change in the salary of the Executive Officers or by a decision by the Board of Directors. The composition of the remuneration is attributed by decision of the Board of Directors and follows market practices for the compensation of this board. Fees: fixed remuneration without associated indicator. Not applicable. Not applicable. Not applicable. Does not exist.
Banco do Brasil S.A. - Reference Form/2015
Other Committees: At Banco do Brasil, all decisions are taken collectively. For this purpose, the Governance structure accommodates non-statutory committees composed of members of the Executive Board. Members of the Executive Board, when appointed, automatically occupy a position on the Bank's other committees without receiving any additional compensation for the other position. 13.2. Management compensation charged to income In relation to the remuneration recognized in net income for the past 3 fiscal years and that forecast for the current fiscal year of the Board of Directors, Statutory Board and Fiscal Council, prepare a table with the following contents: The tables presented in this item demonstrate the remuneration recognized in net income for the past 3 fiscal years of the Board of Directors, Statutory Board and Banco do Brasil’s Fiscal Council. The number of members of each body (letter "b" of the tables provided in this item) corresponds to the average annual number of members that effectively occupied positions on the respective bodies calculated monthly with two decimal places. Fiscal year 2012 a) Body b) Average number of members c) Compensation split into: (i) Fixed Annual Remuneration - Salary or Director Compensation (R$) - Direct and indirect benefits - Compensation for ownership interest in committees - Other¹ (ii) Variable remuneration (R$)² - Bonuses - Profit sharing - Remuneration for ownership interest in meetings - Commissions - Other (iii) Post-employment benefits (R$) (iv) Benefits motivated by the cessation of tenure, (R$) (v) remuneration based on shares (R$) d) Annual amount of remuneration (R$) e) Total remuneration (R$)
Board of Directors
Fiscal Council
Executive Board
6.25
5.00
36.00
283,919.64 n/a n/a 63,633.43
290.609.37 n/a n/a 65.386.70
20.320.854.50 1.203.484.07 n/a 7.548.425.25
n/a n/a n/a n/a n/a n/a n/a n/a 347,553.07
n/a n/a n/a n/a n/a n/a n/a n/a 355,996.07
n/a n/a n/a n/a 8,393,322.96 n/a 9.109.391.79 4.946.425.83 51,521,914.40 52,225,463.54
1 - The values for "Other" c.i item refer to the employer social security contributions to FGTS contribution levied on wages or management fees of the members of the Executive Board, BB's Board of Directors and Fiscal Council pursuant to the instructions contained in subsection I of item 13.2 of Letter No 120/2015 / CVM / SEP / GEA-1, 04/09/2015. 2 - The value of the Variable Compensation Program of Banco do Brasil’s managers for the year 2012-2013 was approved at the General Shareholders’ Meeting of 04/26/2012, and its definition, of 50% in cash and 50% in shares deferred over four years, was proposed by the Compensation Committee and approved by the Board of Directors, pursuant to CMN Resolution 3,921/2010. Out of the total paid in 2012, R$ 8,393,332.96 was paid in currency and R$ 4,946,425.83 in shares.
Fiscal year 2013 a) Body b) Average number of members c) Compensation split into: (i) Fixed Annual Remuneration - Salary or Director Compensation (R$) - Direct and indirect benefits - Compensation for ownership interest in committees - Other¹ (ii) Variable remuneration (R$)² - Bonuses - Profit sharing - Remuneration for ownership interest in meetings - Commissions
Board of Directors
Fiscal Council
Executive Board
6.11
5.00
36.08
210,685.29 n/a n/a 48,174.34
289,159.57 n/a n/a 65,060.38
21,748,203.32 1.652.382,37 n/a 7,954,483.16
n/a n/a n/a n/a
n/a n/a n/a n/a
n/a n/a n/a n/a
295
Section 13 - Management Remuneration
a) Body - Other (iii) Post-employment benefits (R$) (iv) Benefits motivated by the cessation of tenure, (R$) (v) remuneration based on shares (R$) d) Annual amount of remuneration (R$) e) Total remuneration (R$)
Board of Directors n/a n/a n/a n/a 258,859.63
Fiscal Council n/a n/a n/a n/a 354,219.95
Executive Board 12,165,639.95 n/a 2,967,695.76 n/a 46,488,404.56 47,101,484.14
1 - The values for "Other" c.i item refer to the employer social security contributions to FGTS contribution levied on wages or management fees of the members of the Executive Board, BB's Board of Directors and Fiscal Council pursuant to the instructions contained in subsection I of item 13.2 of Letter No 120/2015 / CVM / SEP / GEA-1, 04/09/2015. 2- The Variable Compensation Program for Banco do Brasil management for the fiscal year 2013-2014 had its amount approved by the annual general meeting held on 04/25/2013, and the rule that it should be paid 50% in currency and 50% in deferred shares over a four-year period was proposed by the Compensation Committee and approved by the Board of Directors, in conformity with National Monetary Council Resolution 3,921/2010. Out of the total amount of R$ 12,165,639.89 allocated to Variable Compensation in 2013, R$ 3,851,195.77 was paid in currency regarding the 2012 Program, after deducting the advance, and R$ 5,052,781.99 after the advance of the 2013 Program. Besides that, on the total there is a R$3,261,662.19 spent on social charges on variable remuneration, pursuant to item "c" of the subtitle 9.2.13 Official Letter / CVM / SEP / No. 02/2015. The share program in 2012 was deferred shares within four years starting in transfers to the beneficiaries starting in 2014. The remuneration provided to Board , the Executive Board and the CF current fiscal year should be available after the completion of Annual General Meeting of 04/29/2014.
The provided compensation for the 2014 fiscal year was approved by the AGM of 04/29/2014. Fiscal year 2014 a) Body b) Average number of members c) Compensation split into: (i) Fixed Annual Remuneration - Salary or Director Compensation (R$) - Direct and indirect benefits5 - Compensation for ownership interest in committees - Other² (ii) Variable remuneration (R$)4 - Bonuses - Profit sharing - Remuneration for ownership interest in meetings - Commissions - Other (iii) Post-employment benefits (R$) (iv) Benefits motivated by the cessation of tenure. (R$)³ (v) remuneration based on shares (R$) d) Annual amount of remuneration (R$) e) Total remuneration (R$)
Board of Directors
Fiscal Council
Executive Board¹
7.25
4.33
36.83
274,225.54 n/a n/a 74,181.68
281,857.36 n/a n/a 63,417.91
22,869,035.74 1,707,882.82 n/a 8,459,580.51
n/a n/a n/a n/a n/a n/a n/a n/a 348,407.22
n/a n/a n/a n/a n/a n/a n/a n/a 345,275.27
n/a n/a n/a n/a 15,276,659,08 n/a 429,958.45 3,371,898.76 52,115,015.36 52,808,697.85
1 - The fees of one member of the Board is payed by BB Seguridade. 2 - The values listed in the "Other". item c I( refer to the employer's social security contributions and deposits in the FGTS levied on salary or fees of the members of the Executive Board in BB. in accordance with item "c" of subtitle 9.2.13 in the Circular – Letter/CVM/SEP. No. 02/2015. 3 - The variable remuneration program for directors of Banco do Brasil for the year 2014-2015 had its value approved by the Annual General Meeting of 04/29/2014 and its definition, which is 50% into cash and 50% in shares, of which 20% transferred in cash and 80% deferred within four years, it was proposed by the Compensation Committee and approved by the Board of Directors, as CMN Resolution 3,921 / 2010. Of the total R$ 15,276,659.08 for the Variable Compensation, R$ 4,878,655.78 refer to the portion of the 2013 program into cash, after deducting the advance payment, and R$ 5,357,655.53 refer to the Program 2014. advance also integrates the total R$ 5,040,347.77 spent on social charges on variable remuneration, pursuant to item "c" of the subtitle 9.2.13 Official Letter / CVM / SEP /N.º 02/2015. Of R$ 3,371,898.76 for the stock-based compensation, R$ 1,398,218.27 refer to the first deferred portion of the program in 2012 and R$ 1,973,680.49 relate to the cash portion of the 2013 Program without the social charges incurred, which are included in c.ii item, pursuant to item "c" of the Office 9.2.13-circular subtitle / CVM / SEP / No. 02/2015. 4 - The values of Statutory Quarantine are added social charges. Of R$ 429,958.45, R$ 100,488.34 refer to the employer social security contributions and to the FGTS. 5 - Not included in direct and indirect benefits, expenditure on the employer's contribution to pension, given that, since the return of the contributions of the participants of Benefit Plan 1 of the Pension Fund of the Banco do Brasil (Previ) , resources have been used in the "Use of the Special Reserve Account sponsor". The total amounts spent are listed in item 13.10 hereof.
Fiscal year 2015 (Forecast) a) Body b) Average number of members c) Compensation split into: (i) Fixed Annual Remuneration
296
Board of Directors 8.00
Fiscal Council 5.00
Executive Board 37.00
Banco do Brasil S.A. - Reference Form/2015
a) Body - Salary or Director Compensation (R$) - Direct and indirect benefits - Compensation for ownership interest in committees - Other¹ (ii) Variable remuneration (R$)² - Bonuses - Profit sharing - Remuneration for ownership interest in meetings - Commissions - Other (iii) Post-employment benefits (R$) (iv) Benefits motivated by the cessation of tenure, (R$) (v) remuneration based on shares (R$) d) Annual amount of remuneration (R$) e) Total remuneration (R$)
Board of Directors
Fiscal Council
Executive Board
541,289.28 n/a n/a 131,928.03
338,305.80 n/a n/a 76.118.81
25,034,630.27 5,948,847.51 n/a 9.383.830.60
n/a n/a n/a n/a n/a n/a n/a n/a 673,217.31
n/a n/a n/a n/a n/a n/a n/a n/a 414,424.61
n/a n/a n/a n/a 19,386,334.13 n/a 3.542.362.14 9.339.842.83 72,635,847.48 73,723,489.40
1 - The values for 2015 for Global Remuneration Amount for the years 2015-2016, to be submitted for approval at the Annual General Meeting, scheduled for 04/28/2015. 2 - The Variable Remuneration Program of Directors of Banco do Brasil for the year 2015-2016 will be submitted for approval at the Annual General Meeting, scheduled for 09/04/2015, and its definition, which is 50% into cash and 50% in shares of which 20% are likely to be deferred cash and deferred 80% within four years, it was proposed by the Compensation Committee and approved by the Board of Directors, as CMN Resolution 3,921 / 2010. Of the total R$ 19,386,334.13 for the Variable Compensation, R$ 11,554,444.75 refer to the portion of cash payment scheduled for the year 2015 included around R$ 7,831,889.38 provided for expenditure with social charges on variable remuneration in accordance with subsection I of item 13.2 of Letter No 120/2015 / CVM / SEP / GEA-1, 04/09/2015. In addition, it is foreseen R$ 2,310,888.94 for the transfer in view of the program in 2015, R$ 2,310,888.94 for the 1st deferral program in 2014, R$ 2,310,888.94 for 2nd 2013 Program deferral and R$ 2,407,175.99 for the 3rd deferral program in 2012.
13.3. Management‟s Variable Compensation In relation to the variable remuneration of the past 3 fiscal years and that estimated for the current fiscal year of the Board of Directors. Statutory Board and of the Fiscal Council. prepare a table with the following content. Fiscal year 20121 a) Body b) Number of members (numbers of positions) c) In relation to the bonus (R$): (i) Minimum value established in the compensation plan (ii) Maximum value established in the compensation plan (iii) Value established in the compensation plan targets reached (iv) Value effectively recognized d) In relation to profit sharing (R$): (i) Minimum value established in the compensation plan (ii) Maximum value established in the compensation plan (iii) Value established in the compensation plan targets reached (iv) Value effectively recognized 1-
Board of Directors
Fiscal Council
Executive Board
6.25
5.00
36.00
None
None
None
None
None
None
None None
None None
None None
None
None
None
None
None
None
None None
None None
None None
The value of the Variable Compensation Program of Banco do Brasil’s managers for the fiscal year 2012-2013 was approved at the General Shareholders’ Meeting of 04/26/2012. and its definition. of 50% in cash and 50% in shares deferred over four years. was proposed by the Compensation Committee and approved by the Board of Directors. pursuant to CMN Resolution 3.921/2010. Out of the total of R$8,393,332.96 paid in 2012. R$ 4,946,425.83 was paid in currency and R$ 4.946.425.83 in shares.
297
Section 13 - Management Remuneration
Fiscal year 20131 a) Body b) Number of members (average - From January to December) c) In relation to the bonus (R$): (i) Minimum value established in the compensation plan (ii) Maximum value established in the compensation plan (iii) Value established in the compensation plan targets reached (iv) Value effectively recognized d) In relation to profit sharing (R$): (i) Minimum value established in the compensation plan (ii) Maximum value established in the compensation plan (iii) Value established in the compensation plan targets reached (iv) Value effectively recognized
Board of Directors
Fiscal Council
Executive Board
6.11
5.00
36.08
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None None
None None
None None
1 - The variable remuneration program for directors of Banco do Brasil for the year 2013-2014 had its value approved by the Annual General Meeting of 04/25/2013 and its definition, which is 50% into cash and 50% in deferred stock within four years, was proposed by the Compensation Committee and approved by the Board of Directors, as CMN Resolution 3,921 / 2010. Of the total of 12,165,639.89 intended for Variable Compensation, R$ 3,851,195.77 refer to the portion into cash Program 2012, after deducting the advance payment, and R$ 5,052,781.99 refer to the advance program 2013. In addition, part of the total R $ 3,261,662.19 spent on social charges on variable remuneration, pursuant to item "c" of the subtitle 9.2.13 Official Letter / CVM / SEP / N o 02/2015. The share program in 2012 was deferred shares within four years starting from the transfer to the beneficiaries starting in 2014. The remuneration provided to CA's current fiscal year, the Executive Board and the CF should be available after the completion of Annual General Meeting of 04/29/2014.
Fiscal year 20141 a) Body b) Number of members (average - From January to December) c) In relation to the bonus (R$): (i) Minimum value established in the compensation plan (ii) Maximum value established in the compensation plan (iii) Value established in the compensation plan targets reached (iv) Value effectively recognized d) In relation to profit sharing (R$): (i) Minimum value established in the compensation plan (ii) Maximum value established in the compensation plan (iii) Value established in the compensation plan targets reached (iv) Value effectively recognized
Board of Directors
Fiscal Council
Executive Board
7.25
4.33
36.83
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None None
None None
None None
1 - The variable remuneration program of Banco do Brasil administrators for the year 2014-2015 had its value approved by the Annual General Meeting of 04/29/2014 and its definition, which is 50% into cash and 50% in shares, of which 20% will be deferred cash and deferred 80% within four years, it was proposed by the Compensation Committee and approved by the Board of Directors, as CMN Resolution 3,921 / 2010. Of the total R$ 25,208,096.79 for the Variable Compensation, R$ 4,878,655.78 refer to the portion of the 2013 program into cash after being deducted the advance, and R$ 9,931,437.77 refer if its share in shares, deferred according to the criteria mentioned above. In addition, R$ 5,357,655.53 refer to advance into cash portion of the total program 2014. Integra also R$ 5,040,347.77 spent on social charges on variable remuneration in accordance with the item "c" of the subtitle 9.2.13 Official Letter / CVM / SEP / No. 02/2015.
298
Banco do Brasil S.A. - Reference Form/2015
Fiscal year 2015 (Forecast)1 a) Body
Board of Directors
b) Number of members (average - From January to December) c) In relation to the bonus (R$): (i) Minimum value established in the compensation plan (ii) Maximum value established in the compensation plan (iii) Value established in the compensation plan targets reached (iv) Value effectively recognized d) In relation to profit sharing (R$): (i) Minimum value established in the compensation plan (ii) Maximum value established in the compensation plan (iii) Value established in the compensation plan targets reached (iv) Value effectively recognized
Fiscal Council
Executive Board
8.00
5.00
37.00
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None None
None None
None None
1 - The Variable Remuneration Program of Directors of the Banco do Brasil for the year 2015-2016 will be submitted for approval at the Annual General Meeting, scheduled for 28.04.2015, and its definition, which is 50% into cash and 50% in shares, of which 20% are likely to be deferred cash and deferred 80% within four years, it was proposed by the Compensation Committee and approved by the Board of Directors, according to CMN Resolution 3,921 / 2010. Of the total R$ 19,386,334.13 for the Variable Compensation, R$ 11,554,444.75 refer to the portion of cash payment scheduled for the year 2015 included around R $ 7,831,889.38 provided for expenditure with social charges on variable remuneration in accordance with subsection I of item 13.2 of Letter No 120/2015 / CVM / SEP / GEA-1, 04/09/2015. In addition, it is foreseen R $ 2,310,888.94 for the transfer in view of the program in 2015, R$ 2,310,888.94 for the 1st deferral program in 2014, R$ 2,310,888.94 for 2nd 2013 Program deferral and R$ 2,407,175.99 for the 3rd deferral program in 2012.
13.4. Share-based management compensation plan In relation to the share-based compensation plan of the Board of Directors and of the Statutory Board. effective in the last current fiscal year and projected for the current fiscal year: a.
general terms and conditions
Holding a statutory position (President. Vice-President. or Director) during the fiscal year of 2014 and meet certain indicator targets established as a requirement for triggering the Plan. b.
main objectives of the plan
Strengthening the commitment with corporate strategies and recognizing each administrator’s effort in proportion with the meeting of proposed targets by measuring his work. The Plan’s goal is to provide compatibility between the variable compensation policy and the risk management policy in order to curb behaviors that increase the risk exposure beyond levels considered as prudent in the Bank’s short. medium and long-term strategies. c.
the way how the plan contributes for such objectives
The plan contributes directly with the objectives. since it comprises several performance indicators derived from the Corporate Strategy, the Market Plan and the Master Plan. In addition the plan establishes that part of the variable compensation will be deferred over up to 4 years. That part is transferred to the beneficiaries at the rate of ¼ per year. as long as in the previous fiscal year the Bank’s profits have not had a negative variation exceeding 20% net of extraordinary event effects. d.
how the plan is inserted in the compensation policy
The compensation part based on shares is a part of the variable compensation program which comprises payment in currency and in shares as established by National Monetary Council resolution 3.921/2010. Both forms of payment are calculated with basis on the achievement of targets for indicators that evaluate the performance of the Bank as a whole of the area under each administrator:
299
Section 13 - Management Remuneration
the immediate supervisor’s evaluation, individual and the evaluation of the collective work of the Executive Officers. e. how the plan aligns the interests of the officers to those of the issuer in short. medium and long term The alignment of the Plan is through increased search of income and its sustainability in future periods. Alignment can be can be evidenced by the use of several indicators, which consider from results negotiated, efficiency, liquidity and default to the Company's cash flow capacity. Moreover, it is established the payment of the variable remuneration on a deferred basis, subject to no adverse change in the result. f.
maximum number of shares covered
No maximum number of shares is established. As established in article 16 of the bylaws the limit is 50% of the total annual compensation or 0.005% of the profit for the period whichever is lower. g.
maximum number of options to be granted
The use of stock options is not foreseen. h.
share acquisition conditions
Shares are acquired and used in accordance with CVM authorization. i.
criteria for fixation of the acquisition or exercise price
The price considered is the average acquisition price or in the case of use of treasury shares the average price of the shares in the week preceding the payment. j.
criteria for fixation of the exercise term
The use of stock options is not foreseen. k.
settlement method
The use of stock options is not foreseen. l.
restrictions to the transfer of shares
After the shares are transferred to the administrators there are no restrictions. m. criteria and events that. when checked. will cause the suspension. change or extinction of the plan The variable compensation program is approved on an annual basis. Currently the plan’s discontinuity is not foreseen. n. effects of the removal of the officer from the issuer bodies on its rights provided for in the share-based compensation plan The administrator is entitled to earn the amounts in proportion with the days he worked in the period. No changes are made to deferred portions not yet paid due to job terminations or death. 13.5. Quantity of shares or quotas directly or indirectly held by administrators Inform the quantity of shares or quotas held directly or indirectly. in Brazil or abroad. and other securities convertible into shares or quotas issued by the issuer. its direct or indirect controlling shareholders. subsidiaries or corporations under common control. by members of the Board of Directors. Statutory Board or Fiscal Council. grouped by body. on the closing date of the last fiscal year. Balance at 12/31/2013
300
Banco do Brasil's common share
Banco do Brasil S.A. - Reference Form/2015
Board of Directors (Except the BB's president that is included in the Executive Board) Executive Board Fiscal Council
19.054 shares 103.820 shares 1.176 shares
Balance at 12/31/2013
Cielo Common Share
Board of Directors (Except the BB's President that is included in the Executive Board) Executive Board Fiscal Council
4 -
BB Seguridade (BBSE3) Common Share
Balance at 12/31/2013 Board of Directors (Except the BB's President that is included in the Executive Board) Executive Board Fiscal Council
15.016 -
The members of the Board of Directors. Statutory Board and Fiscal Council hold no other securities issued by controlling shareholders. subsidiaries or corporations under common control of the Bank. 13.6. Share-based management compensation charged to income In relation to share-based compensation recognized in net income for the past 3 fiscal years and that estimated for the current fiscal year. of the board of directors and statutory board: Stock-Based Compensation – fiscal year ended 12/31/2012 Board of Directors Executive Board Number of members¹ Granting of stock options Grant Date Number of options granted Term for the options to become exercisable Maximum term for exercise of the options Term of restriction to the transfer of shares Weighted average exercise price:² (a) Options outstanding at the beginning of the fiscal year (b) Options lost during the fiscal year (c) Options exercised during the fiscal year (d) Options expired during the fiscal year Fair value of the options on the grant date Potential dilution in case of exercise of all options granted
-
45 Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable 4 years R$ 26.78 Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable
1-Total number of beneficiaries. considering the members who worked only in part of the period under analysis. 2- Average purchase price / marking actions to the program.
Stock-Based Compensation – fiscal year ended 12/31/2013 Board of Directors Executive Board Number of members¹ Granting of stock options Grant Date Number of options granted Term for the options to become exercisable Maximum term for exercise of the options Term of restriction to the transfer of shares Weighted average exercise price:² (a) Options outstanding at the beginning of the fiscal year (b) Options lost during the fiscal year (c) Options exercised during the fiscal year (d) Options expired during the fiscal year Fair value of the options on the grant date
-
40 Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable 4 years R$ 20.35 Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable
301
Section 13 - Management Remuneration Board of Directors Executive Board Potential dilution in case of exercise of all options granted
-
Not Applicable
1-Total number of beneficiaries. considering the members who worked only in part of the period under analysis. 2- Average purchase price / marking actions to the program.
Stock-Based Compensation – fiscal year ended 12/31/2014 Board of Directors Executive Board Number of members¹ Granting of stock options¹ Grant Date Number of options granted Term for the options to become exercisable Maximum term for exercise of the options Term of restriction to the transfer of shares Weighted average exercise price:² (a) Options outstanding at the beginning of the fiscal year (b) Options lost during the fiscal year (c) Options exercised during the fiscal year (d) Options expired during the fiscal year Fair value of the options on the grant date Potential dilution in case of exercise of all options granted
-
40 Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable 4 years R$ 24.08 Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable
1-Total number of beneficiaries. considering the members who worked only in part of the period under analysis. 2- Average purchase price / marking actions to the program.
The Variable Remuneration Program of the Executives of the Bank for the year 2015-2016 will be submitted to the Annual General Meeting, scheduled for 04/28/2015, and its definition, which is 50% into cash and 50% stock , of which 20% are likely to be deferred in cash and 80% deferred within four years, was proposed by the Compensation Committee and approved by the Board of Directors, as CMN Resolution 3,921/ 2010. Of the total R$ 19,386,334.16 for the variable remuneration, R$7,831,889.38 planned for expenditure on social charges on variable remuneration in accordance with subsection I of item 13.2 of Letter No 120/2015 / CVM / SEP / GEA-1, 04/09/2015. In addition, it is foreseen R$ 2,310,888.94 for the transfer in view of the program in 2015, R$ 2,310,888.94 for the 1st deferral program in 2014, R$ 2,310,888.94 for 2 2013 program deferral and R$ 2,407,175.99 for the 3rd deferral program in 2012. 13.7. Option-based management‟s compensation In relation to the outstanding options of the board of directors and statutory board at the end of the last fiscal year: Banco do Brasil does not have a share-based compensation plan. 13.8. Exercised options and delivered shares In relation to options exercised and shares delivered relating to the share-based compensation of the board of directors and statutory board. in the past 3 fiscal years This type of remuneration does not exist at Banco do Brasil. 13.9. Brief description of share-based or option-based compensation Brief description of the information required to understand the data disclosed in items from 13.6 to 13.8. such as the explanation of the pricing method of the value of shares and options: Currently the shares are acquired by Banco do Brasil directly in the stock exchange at market price. After determining all the program indicators and further definition of the individual amount of each officer. the taxes due will be withheld and the total net value will be used by the Bank for purchase of shares in the market. This purchase operation occurs in conformity with CVM regulations. At the end of the purchase operation. the average price of the acquired shares is calculated. The average price is considered for the payment of compensation to all the beneficiaries. 302
Banco do Brasil S.A. - Reference Form/2015
use treasury shares. In this mode the actions are marked as belonging to the variable compensation program and after the deferral period, if in view of all defined requirements and rules, the shares are transferred to the beneficiaries. In this mode is considered the average share price in the previous week marking. 13.10. Management‟s pension plans Pension plans in force granted to the members of the board of directors and to the statutory officers. provide the following information in tabular form Board of Directors¹
Executive Board²³
Number of members
2
33
Pension Plan Name
Plano de Benefícios nº 1 e Plano Previ Futuro
Number of managers who are eligible to retire
1
15
As General Regulations of Plano de Benefícios nº 1, Article 44 and General Regulations of the Plano Previ Futuro, Article 43 transcribed below: Conditions for early retirement
The Early Retirement Supplement will be due to the participant from the date of your application, provided that it meets the following conditions: I - count on at least fifty (50) years of age; II - has fulfilled the lack of 180 (one hundred eighty) monthly contributions to the Benefit Plan; III - there is termination of employment with the sponsoring company in the same benefit of the application of the act referred to in this article.
Updated cumulative value of accumulated contributions until the end of last fiscal year, less the portion relating to contributions made directly by the Members Total amount of contributions made during the last fiscal year, less the portion of contributions made directly by the Members
R$ 1,466,183.20
R$ 42,542,469.85
R$ 71,426.47
R$ 1,271,113.43
As General Regulations of Plano de Benefícios nº 1, it will be a condition for the option for early redemption: a. conditional upon proven disruption of employment or by request of cancelling from the participant;
Possibility of early redemption and conditions
b. The redemption will be in sight. For participant application payment may be made for a period of twelve (12) consecutive months from the date of your choice; c. At the death of the person concerned before you have been made the payment of their individual booking savings, the corresponding amount will be paid to his legal heirs, in a lump sum. d. The cancelation of the Plan is ensured, and the rescue of the existing balance in their individual savings reserve, which is the account used in Previ to record the personal contributions made by the participant.
1 – Includes BB’s CEO; 2 – One member is already retired by Previ; 3 – One of the members is not associated to Previ; 4 – Do not includes fees from the plans.
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Section 13 - Management Remuneration
13.11. Additional information on the Board of Directors. statutory board and Fiscal Council Indicate in tabular form. for the past 3 fiscal years. in relation to the board of directors. the statutory board and the fiscal council: Fiscal year 2012 a) Body b) Number of members (average 12 months) c) Amount of the highest individual remuneration (R$) – year¹ d) Amount of the lowest individual remuneration (R$) – year² e) Mean amount of individual remuneration per annum (R$)³
Board of Directors
Fiscal Council
Executive Board
6.25
5.00
36.00
69,451.53
69,451.53
1,505,281.82
69,451.53
69,451.53
1,185,093.58
55,608.49
71,199.21
1,431,164.29
1 – Corresponds to the total annual remuneration paid to the Chairman of the Banco do Brasil in 2012, , he held the post for 12 months, then included the direct and indirect benefits and social charges levied on their compensation installments, as the items "c" and "j "caption 9.2.13 Official Letter / CVM / SEP / No 02/2015. 2 – Corresponds to the total annual remuneration paid to an Executive Director of Banco do Brasil in 2012 then included the direct and indirect benefits and social charges levied on their compensation installments, as the items "c" and "j" caption 9.2. 13 Letter-circular / CVM / SEP / No 02/2015. The amount of the lowest annual individual compensation was calculated based on the total remuneration received by a director who held the position for 12 months. 3 – The average value calculated to the Board of Directors is based on the ratio of R$347,553.07 per 6.25, to the Fiscal Council the ratio of R$355,996.07 per 5 and for the Executive Board is based on the ratio of R$ 51.521.914,40 per 36.00.
Fiscal year 2013 a) Body b) Number of members (average 12 months) c) Amount of the highest individual remuneration (R$) – year¹ d) Amount of the lowest individual remuneration (R$) – year² e) Mean amount of individual remuneration per annum (R$)³
Board of Directors
Fiscal Council
Executive Board
6.11
5.00
36.08
72,253.76
72,253.76
1,531,686.31
72,253.76
72,253.76
1,379,631.75
42,366.55
70.843,99
1,288,481.28
1 – Corresponds to the total annual remuneration paid to the Chairman of the Banco do Brasil in 2013, he held the post for 12 months, then included the direct and indirect benefits and social charges levied on their compensation installments, as the items "c" and "j "caption 9.2.13 Official Letter / CVM / SEP / No 02/2015. 2 – Corresponds to the total annual remuneration paid to an Executive Director of Banco do Brasil in 2013 then included the direct and indirect benefits and social charges levied on their compensation installments, as the items "c" and "j" caption 9.2. 13 Letter-circular / CVM / SEP / No 02/2015. The amount of the lowest annual individual compensation was calculated based on the total remuneration received by a director who held the position for 12 months. 3 – The average value calculated to the Board of Directors is based on the ratio of R$258,859.63 per 6.11, to the Fiscal Council the ratio of R$354,219.95 per 5 and for the Executive Board is based on the ratio of R$ 46,488,404.56 per 36.08.
Fiscal year 2014 a) Body b) Number of members (average 12 months) c) Amount of the highest individual remuneration (R$) – year¹ d) Amount of the lowest individual remuneration (R$) – year² e) Mean amount of individual remuneration per annum (R$)³
Board of Directors
Fiscal Council
Executive Board
7.25
4.33
36.83
78,166.92
78,166.92
1,824,529.64
78,166.92
78,166.92
1,409,402.62
48,056.17
79,740.25
1,415,015.35
1 – Corresponds to the total annual remuneration paid to the Chairman of Banco do Brasil in 2014, he held the post for 12 months, then included the direct and indirect benefits and social charges levied on their compensation installments, as the items "c" and "j "caption 9.2.13 Official Letter / CVM / SEP / No 02/2015. 2 – Corresponds to the total annual remuneration paid to an Executive Director of Banco do Brasil in 2014, then included the direct and indirect benefits and social charges levied on their compensation installments, as the items "c" and "j" caption 9.2. 13 Letter-circular / CVM / SEP / No 02/2015. The amount of the lowest annual individual compensation was calculated based on the total remuneration received by a director who held the position for 12 months. 3 – The average value calculated to the Board of Directors is based on the ratio of R$348,407.22 per 7.25, to the Fiscal Council the ratio of R$345,275.27 per 4.33 and for the Executive Board is based on the ratio of R$ 52,115,015.36 per 36.83.
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Banco do Brasil S.A. - Reference Form/2015
13.12. Benefits for management upon loss of position or retirement Describe contractual arrangements. insurance policies or other instruments that structure mechanisms of remuneration or compensation for the directors in case of removal from office or retirement. indicating the financial consequences for the issuer. Banco do Brasil bylaws establish. in paragraph 6 of article 24. that: After the end of the term of office. the former members of the Executive Board are impeded to do the following for four months from the end of the term. if a longer period is not set out in rule provisions: I.
perform activities or provide any service to corporations or entities that compete with the Banco do Brasil’s group companies;
II. take position as manager or director or establish professional relationship with individuals or legal entities with whom he/she maintained direct and significant official relationship over the six months prior to the end of the term. if a longer period is not set out by rule provisions; and III. directly or indirectly sponsor the individual or legal entities affairs before any Federal Agency or entity with which he/she maintained direct and significant official relationship over the six months prior to the end of the term. if a longer period is not set out by rule provisions. § 7 During the period of impediment. the former members of the Executive Board are entitled to compensatory remuneration equivalent to that of the post that they occupied in this body. in compliance with the provisions of § 8 of this article. § 8 The former members of the Board of Officers not originating from the Bank’s staff. which in compliance with § 6 of this article opt to resume prior to the end of the period of impediment. the performance of the role or job permanent or superior. which. prior to their installation they occupied in public or private administration. In that respect Law 12.813 of May 16. 2013. which regulates conflicts of interest in exercising a position or holding a job in the realm of the Federal Executive Power where the positions of president. Vice-President and director of mixed-economy companies established that the first six months after destitution would be a conflicting period when former directors will receive compensatory payments established in paragraph 7 of article 24 of Banco do Brasil bylaws. 13.13. Each body‟s total compensation percentage charged to income In relation to the last 3 fiscal years. indicate the percentage of the total remuneration of each body recognized in the net income of the issuer referring to members of the board of directors. the statutory board or the fiscal council who are parties related to the direct or indirect controlling shareholders. as defined by the accounting rules that address this subject: Fiscal year 2012¹ Board of Directors Total remuneration of the body (R$) Total remuneration of the members appointed by the controlling shareholder (R$) Percentage of remuneration of the appointees in relation to the total amount paid
Executive Board
Fiscal Council
347,553.07
355,996.07
51,521,914.40
166,825.47
213,597.64
1,505,281.82
48.00%
60.00%
2.92%
1 - The total remuneration of the body and the remuneration of members appointed by the controller were added in social security contributions, according to item "c" and "l" caption 9.2.13 of the Circular Letter / CVM / SEP / No 02 / 2015
Fiscal year 2013¹ Board of Directors Total remuneration of the body (R$) Total remuneration of the members appointed by the controlling shareholder (R$) Percentage of remuneration of the appointees in relation to the total amount paid
Fiscal Council
Executive Board
258,859.63
354,219.95
46,488,404.56
211,832.76
212,531.97
1,531,686.31
81.83%
60.00%
3.29%
1 - The total remuneration of the body and the remuneration of members appointed by the controller were added in social security contributions, according to item "c" and "l" caption 9.2.13 of the Circular Letter / CVM / SEP / No 02 / 2015
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Section 13 - Management Remuneration
Fiscal year 2014¹ Board of Directors Total remuneration of the body (R$) Total remuneration of the members appointed by the controlling shareholder (R$) Percentage of remuneration of the appointees in relation to the total amount paid
Fiscal Council
Executive Board
348,207.22
345,275.27
52,115,015.36
174,353.50
209,211.01
1,824,529.04
50.04%
60.59%
3,50%
1 - The total remuneration of the body and the remuneration of members appointed by the controller were added in social security contributions, according to item "c" and "l" caption 9.2.13 of the Circular Letter / CVM / SEP / No 02 / 2015
13.14. Other amounts charged to income of BB as management compensation In relation to the last 3 fiscal years. indicate the amounts recognized in the net income of the issuer as remuneration of members of the board of directors. the statutory board or the fiscal council. grouped by body. for any reason other than the position that they occupy. such as commissions and consulting or advisory services rendered. As to the Board of Directors, Fiscal Council, Board of Executive Officers. the items regarding compensation policy had been fully disclosed in items from 13.1 to 13.13. 13.15. Management compensation charged to income of related parties In relation to the last 3 fiscal years. indicate the amounts recognized in the net income of direct or indirect controlling shareholders. of corporations under common control and of subsidiaries of the issuer. as remuneration for members of the board of directors. the statutory board or the fiscal council of the issuer. grouped by body. specifying for which reason such amounts were assigned to such individuals Members of the Board of Directors and of the Fiscal Council appointed by the controlling shareholder of Banco do Brasil are public officials and paid by the Federal Government according to the positions held at that level. Banco do Brasil only bears the monthly remuneration of the members for their ownership interest on the respective boards. Board members are paid monthly. regardless of the quantity of meetings. No member of the Executive Committee of Banco do Brasil has their remuneration paid by the controlling shareholder of Banco do Brasil or by subsidiaries. In addition. officers who are appointed by the Bank to participate in the councils of other corporations have their monthly compensation limited to 25% of the monthly fees paid by Banco do Brasil. with a limit to 2 councils. The table below shows the amounts paid as fees received by the members of each body. which were borne by companies controlled by Banco do Brasil. Amounts in R$ Board of Directors Executive Board Fiscal Council
2012 0.00 72.128.68 66.178.05
13.16. Other relevant information Provide other information that the issuer deems relevant: All the information deemed relevant was disclosed in the above items.
306
2013 0.00 137.540.45 0.00
2014 0.00 140.618.79 0.00
Banco do Brasil S.A. - Reference Form/2015
14.
HUMAN RESOURCES
14.1. Description of Human resources of Banco do Brasil a.
number of employees
Number of employees
2012
Per groups General Management Regional Departments Branches By Geographic Location North Northeast South Southeast Center-west Abroad Total employees
b.
2013
2014
9,690 25,379 79,113
8,787 26,696 76,733
9,162 26,166 76,300
5,184 19,595 19,644 51,594 18,094 71 114,182
5,054 18,903 19,676 50,534 17,984 65 112,216
5,106 18,809 19,459 50,234 17,973 47 111,628
2012
2013
number of outsourced workers
Number of employees¹ Per groups Surveillance/Cleaning Other activities By Geographic Location² Belo Horizonte Brasília³ Curitiba Recife Rio de Janeiro São Paulo Total employees
2014
28,626 11,758
29,044 12,714
27,125 13,215
5,074 7,620 7,115 6,876 3,612 10,087 40,384
7,137 5,805 10,926 4,081 3,701 10,272 41,922
8,565 15,487 1,954 3,633 10,701 40,340
1 - Information on quantities of outsourced workers, as indicated, is referential, given that the contracts executed by the Bank are aimed at service rendering. The standard guideline of the invitations to bid is that the bidders shall formalize the bid, focusing on filling job openings. Thus, the information available on the number of outsourced workers aims just to provide management data, as is the case of socio-environmental responsibility evaluations. Moreover, as they are limited to service agreements executed continuously, they do not include data on workers allocated in sporadic engagements, covering only workers associated with biblioteconomy, fire brigade, pantry, elevator operation, vehicle parking control, typing, gardening, cleaning, maintenance and operation of equipment and facilities (resident team), document handling, driving of vehicles, operation of cargo and materials, preparation of meals, reception and surveillance services; 2 - The data relating to geographic location concerns the six Logistics Service Centers - CSL mentioned here, administrators of the contracts, not reflecting the physical location of the outsourced worker; 3 - The contracts managed by CSL Brasília have been transferred to Cenop Curitiba.
c.
turnover rate 2012
Turnover rate 1
2013 3.70%
2014 5.10%
3.36%
1 - Turnover Rate = nº dismissals/headcount
d.
exposure of the issuer to labor liabilities and contingencies
The Bank and its subsidiaries do not have labor contingencies considered material, subject to the materiality of R$ 643 million. 14.2. Relevant change occurring in relation to the figures disclosed in item 14.1 Comment on any relevant change occurring with regard to the figures disclosed in item 14.1 above There were no material changes with respect to the figures for 2012, except for the number of trainees that declined due to the suspension of hirings as of October 2012.
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Section 14 - Human Resources
In 2013, some factors were determinants in raising the number of terminations of employees of Banco do Brasil SA and the consequent reduction of workers. We highlight below the most relevant ones: 1-
Release of the Retirement Program (PDA), between June and August, 2013, with the adherence of 20.79% from the elegible employees, which provided an increase on the number of retirements.
2-
Restructuring from the Business and Operations Support Directorship (Dinop), Legal Directorship (Dijur), Credit Directorship (Dicre) and the Restructuring of Operational Assets Directorship (Dirao).
In 2014, the increase on the number of outsourced workers (Belo Horizonte and Curitiba regions) was due the services migration from Recife and Brasilia, respectively. (line b of item 14.1). In 2014 it was not observed significant changes in BB’s work force, considering the reduction of 0.53%. 14.3. Remuneration Policies of the employees of Banco do Brasil Describe the policies for remuneration of the employees of Banco do Brasil, informing: Admission of Bank staff members occurs through approval in a public examination test, and external recruitment is performed through public notice. This process is carried out by an external entity according to the current legislation. To the administrative career, the only entry level position at Banco do Brasil is Clerk. As a result of Regulatory Standard no. 04 of the Ministry of Labor and Employment, Sesmt (Serviços Especializados em Engenharia de Segurança e Medicina do Trabalho, or Specialized Occupational Safety and Medicine Engineering Services) Career was created in 2011. In the aforesaid career, the filling of functional positions (Occupational Safety Engineer, Occupational Safety Technician, Occupational Health Physician, Occupational Health Nurse and Occupational Health Nursing Assistant) occurs through specific external selection, to perform activities inherent to Occupational Safety and Medicine Engineering. a.
variable remuneration and salary policy
The career (a) Administrative and (b) Specialized services in safety engineering and occupational medicine – Sesmt Banco do Brasil have two forms of progression. Progression within the Bank are detailed below: I.
Seniority: promotion occurs automatically, by time of service in each with a standard salary, discounted any delays and obeyed the temporal interstices stabilished for each career. The increase between each pay level is 3%. In both careers promotion by seniority occurs once every three years, except the first promotion, 90 days on administractive career and 730 days in career SESMT;
II.
Merit: besides promotion based on seniority, described in the foregoing item, employees from the administrative and Sesmt careers can also have promotion based on merit. The ascension between the 25 merit levels occurs through cash, indulged or trust in effective character or replacement when a score is accumulated merit, 1,095 points are needed for migrating between tiers.
Besides clerk and Sesmt career positions, the employees can also hold extra remunerated positions, with a workday of 6 hours, or positions of trust, with a workday of 8 hours, considered positions of special trust as a result of the activities’ nature, which involve the ability to influence the management of the Organization, besides exclusive access to confidential information. When designated to a special trust or extra remunerated position, in addition to the personal compensation described below, employees receive a functional supplement with bonus and a supplement of position of special trust, respectively. The supplements mentioned vary according to the hierarchical position in the organization’s structure. We highlight the fact that the mentioned position guarantees minimum remuneration equivalent to those staff performing the same function.
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Standard remuneration Personal Budgets: Standard Remuneration: composes the employee‟s basic remuneration. Basic monthly salary value, defined according to the level of the seniority. Merit Compensation: composes the employee‟s basic remuneration. This extra pay corresponds to the merit level indicated in item ―a‖, subparagraph II. Amount per individual: budget established for payment of the difference resulting from categorization in Standard Remuneration, of Administrative and Technical and Scientific careers. Supplemented Standard Remuneration: budget established as a result of the restructuring, on February 25, 1982, of the career of ancillary services (to be discontinued). Supplement for Seniority: Budget established from 9/1/1999, incorporated to the remuneration of a personal nature of employees hired before 8/31/1996, due to the termination of the Annual Supplementary Bonus. Reference Value: meaning the minimum pay, extra remunerated positions and positions of trust. Pay – Position of Trust and Remunerated Position: Supplement: additional portion paid to employees holding a Remunerated Position or Position of Trust. Additional per position: Corresponds to the potential difference between the Reference Value (RV) and the sum of personal allowances, allowances tied to positions and weekly bonus. It is of a temporary and variable nature. Adjustment Job Plan: Maintains the remuneration, on a temporary basis, while the employee remains in the position/payment code in which they are invested upon the implementation of the Job Plan. Variable remuneration Profit-sharing Program: The Profit-sharing program (PLR) promotes the distribution to employees of part of the Bank’s net income, in the form of Law 10,101 of 12.19.2000. The current model of distribution consists on a basic part named Fenaban Module, and a special part, named BB Module, detailed below: 1. FENABAN Module The FENABAN module corresponds to 45% of the standardized salary, plus a fixed amount defined in the collective agreement of work. The standardized salary considers the value of the different positions occupied on an effective basis during the six-month period. 2. BB Module The BB module is composed of two installments, namely: I.
Fixed Installment: That corresponds to 4% of the net income published in the semi-annual balance sheet, apportioned linearly among the employees. For purposes of determining this installment, the number of employees corresponds to the sum of days worked by each employee, divided by the number of days in the six-month period;
II.
Variable Installment: equivalent to the multiplication of a quantity of salaries by the standardized salary, whereas the FENABAN module and the fixed installment of the BB module are subtracted from this total. The receipt of this installment is dependent on performance in the Employment Agreement - ATB - of the semester of distribution.
Performance Bonus Program (PDG) The Performance Bonus Program (PDG) aims to improve the practices of variable compensation of employees, recognizing and rewarding, every six months, up to 7% of Middle Managers and up to 30% of Business Managers, General Managers and Regional Superintendents with the best
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Section 14 - Human Resources
performances and good management style, so the performance reflects on the employee’s compensation. The managers qualification and ranking, in its group/subgroup, is done based in indicators that measure the achievement of corporate goals, services quality, compliance and management style. b.
benefits
Concerned about the employee’s quality of life, Banco do Brasil provides a series of benefits, which are listed below: Items Benefits
Description Ticket provided in the form of an electronic card used for the reimbursement of acquisition costs of food in restaurants and snack bars.
1
Food Allowance/Meal Allowance
2
Night Shift Assistance
Reimbursement of expenses with transport back home for employees whose work shift ends between midnight and six a.m., and for those accredited by the Clearinghouse that take part in clearing sessions during a nighttime period.
3
Daycare Assistance
Budget for expenses incurred with the enrollment of each child, including adoptive children, in nurseries and pre-school institutions of free choice, including, under the same conditions and in the same amount, expenses incurred with the payment of a maid/nanny. The amount is defined in a Collective Agreement ACT.
4
Allowance for Disabled Children
Reimbursement of expenses similar to the Daycare Assistance for employees that have children with a confirmed disability, who require permanent care, with no age limit.
5
Bank Teller - Personal Advantage RSI
Payment of the bank teller bonus, for a period of 18 months starting when the employee, on leave due to RSI (Repetitive Strain Injury and Work-Related Osteomuscular Diseases), returns to work at the Bank.
6
Basic Food Basket
Ticket provided in the form of an electronic card used for reimbursement of acquisition costs of food in grocery stores or supermarkets.
7
Paid Leave
Annual acquisition of five paid leaves per year.
8
Assault Compensation
Compensation in favor of the employee and their legal dependents, in the event of permanent disability or death as a result of abduction and/or intentional assault against the Bank.
9
Leave to Accompany Sick Family Member (LAPEF)
Concession of leave of absence to employees, not exceeding 90 days, to accompany sick family members in temporary and specific situations.
10
Long Paid Leave
Annual acquisition of 18 days for every effective year at the Bank. Only for employees that joined the Bank prior to 1998.
11
Program for Assistance to Holdup and Abduction Victims (PAVAS)
Provision of medical and psychotherapeutic care, legal and security assistance to employees after a holdup, also facilitating the reorganization of work routine of the premises, in order to minimize the negative impact of the incident. As regards the protection of the physical and emotional integrity of the employees and their dependents, the Bank covers travel expenses (tickets, accommodation and food).
12
Social Welfare Program - Advances Purchase of eyeglasses and lenses
Concession of advance to cover expenses with the purchase of glasses or contact lenses, recommended by a physician. The advance is paid back within 25 to 48 months without interest.
13
Social Welfare Program - Advances Natural Catastrophe or House Fire
Coverage of expenses with purchase or renovation of essential property damaged by a natural catastrophe such as a flood, windstorm, earthquake or house fire. The advance is paid back within 25 to 48 months without interest.
14
Social Welfare Program - Advances Financial Imbalance
Advance for overcoming of financial crisis, resulting from unpredictable and unavoidable causes and acts of God The advance is paid back within 25 to 48 months without interest.
15
Social Welfare Program - Advances Funeral of Financial Dependent
Coverage of the funeral expenses of a financial dependent, which exceed the amounts covered by Cassi. The advance is paid back within 25 to 48 months without interest.
16
Social Welfare Program - Advances Disallowances of Cassi
Advances for payment of Cassi disallowances in free choice, upon the characterization of insufficiency/nonexistence of accredited/associated medical/hospital and laboratory resources in the location where the treatment is being provided. The advance is paid back within 25 to 48 months without interest.
17
Social Welfare Program - Advances Dental Treatment
Concession of advance for coverages of expenses with dental treatment, to be paid back within 25 to 48 months, without interest.
18
Social Welfare Program - Advances Psychotherapeutic Treatment
Upon joining the Bank, the employees and their financial dependents are entitled to 200 individual sessions of psychotherapy. When the quantity of sessions has been reached, the Bank allows their extension, by release of the advance. The repayment of the advance is made in 25 months, interest free.
19
Social Welfare Program - Benefit Purchase of Medications Abroad
Reimbursement of part of the expenses incurred with the purchase of medications abroad.
20
Social Welfare Program - Benefit Assistance for Handicapped
Coverage of expenses with day care, semi-boarding school, private school and supplementary therapies with financial dependents or pensioners (registered at
310
Banco do Brasil S.A. - Reference Form/2015 Items Benefits Individuals
Description the Bank) individuals with physical, mental and/or neurosensorial handicap of a permanent nature, which limits or generates their inability to go about their daily lives and/or work.
Social Welfare Program - Benefit Medical and Hospital Care Social Welfare Program - Benefit Medical Care and Social Welfare
Coverage of medical and hospital expenses with serious illnesses, where there are no resources in the Members' Plan, which is intended for the employees. Provision of social welfare, with psychosocial and socio-educational services, for problem situations.
23
Social Welfare Program - Benefit Travel for Health Treatment Abroad
24
Social Welfare Program - Benefit Travel for Health Treatment in the Country
Reimbursement of travel expenses for medical treatment abroad (tickets, accommodation and meals) for the patient and companion, when there are no adequate or sufficient resources in Brazil. Reimbursement of travel expenses for health treatment in Brazil (tickets, accommodation and meals) for the patient and companion, when there are no adequate and/or sufficient resources at the place of origin of the employee (location where assigned to work.)
25
Social Welfare Program - Benefit Donation/Reception of Organs and Transplants
Reimbursement of expenses incurred by the employee with travel for donation/reception of organs for transplant.
26
Social Welfare Program - Benefit Special Nursing
Coverage of amounts disallowed by Cassi in hospital and home nursing services for patients requiring permanent and intensive nursing care, and not requiring admission to the ICU.
27
Social Welfare Program - Benefit Death while Working
Coverage of funeral expenses and transfer of the body in case of the death of an employee assigned duties outside the Metropolitan Region of their work premises, including during transit.
28
Social Welfare Program - Benefit Transfer in Mobile ICU or Air Taxi
Coverage of expenses with transfer in mobile ICU or air taxi for health treatment, in medical situations of real severity and/or emergencies, characterized by the need for medical supervision during travel.
29
Social Welfare Program - Benefit Treatment with Growth Hormone
Coverage as reimbursement of amounts disallowed by Cassi for expenses resulting from growth hormone treatment for patients with pituitary dwarfism.
30
Social Welfare Program - Control of Smoking
Employees enrolled in the Program shall have full coverage of travel expenses to the nearest place, when there is no network of affiliated providers at the site where the employee works. They will also be reimbursed in 50% of the price of prescribed medications, if applicable.
31
Social Welfare Program - Dental Reports
The Bank bears the expense with dental reports, when necessary.
32
Transportation Stipend
Partial funding of transportation expenses of employees, in travel from their homes to the workplace and vice versa. Does not apply to travel in selective or special modes of transport.
33
Personal Advantage (VCP)
Continuity of payment of a personal nature for a certain period of the assignment performed by the employee when there is downsizing on the premises.
34
Personal Advantage nature (VCP) Work Accident
Payment, of a personal nature, of the commission, for a period of 120 days starting when the employee, on leave of absence due to a Work Accident, resumes their activities at the Bank.
35
Adoption Leave
Leave of absence for the adoption of children aged up to 96 (ninety-six) months is paid. Male adopters may take five days off. A female employee that adopts or obtains custody of a child for adoption purpose is also entitled to maternity pay.
36
Maternity Leave
At the time of the birth, adoption or legal custody for adoption purposes, the female employee is entitled to the maternity pay benefit and to maternity leave.
37
Maternity Pay
The salary paid to the female employee while they are on maternity leave or adoption leave is equal to their full remuneration due in the month of leave of absence or to the arithmetic mean of the last six months (whichever is better).
38
Health Care
Banco do Brasil contributes as a sponsor to a health plan for the employees, including those from merged financial institutions.
39
Supplementary Pension Plans
Banco do Brasil contributes as a sponsor to a to a supplementary pension plan for the employees, including those from merged financial institutions.
40
BB DENTAL
Banco do Brasil, in partnership with the company Odontoprev, provides dental care to active employees and their dependents.
41
Extension of Maternity Leave
Option to extend the period of absence due to childbirth for 60 days. Hence maternity leave may last for up to 180 days.
42
Advantages of Removal
These are intended for the partial funding of expenses inherent to the process of uninstallation, installation, transport and others, for employees that move due to commissioning, in the interest of the job.
43
Unibb Family website
Website for training, development and supplementary distance learning to dependents of employees.
44
Culture Voucher
The program aims to provide to the employees means for the exercise of cultural rights and access to sources of culture.
45
Extension of maternity leave Premature birth and baby in ICU
Absence authorized after the end of maternity leave in the amount of days that the premature newborn remained in the ICU, limited to 60 days.
21 22
311
Section 14 - Human Resources Items Benefits 46
c.
Educational Assistance to Dependent
Description Benefit granted to the dependent of deceased employee or diagnosed with permanent disability, as a result of assault against the Bank, assisting when appropriate, all academic cycles of educational training (kindergarten, elementary 1and 2, high school and college).
share-based compensation plans of non-director employees
Describe the characteristics of the share-based compensation plans of non-director employees, identifying: (i) groups of beneficiaries; (ii) exercise conditions; (iii) exercise price, (iv) exercise periods (v) amount of shares in the plan. This type of remuneration does not exist at Banco do Brasil. 14.4. Relations between Banco do Brasil and trade unions. Describe the relations between the issuer and trade unions In its bicentennial history, Banco do Brasil has built a paradigmatic model of respect for freedom of association and the right to collective bargaining, today one of the pillars of the Title that refers to fundamental rights and guarantees of the Constitution of the Republic. Moving beyond the lines advocated by the legal framework, in mutual agreement with the union entities, it puts into practice a permanent model of collective bargaining with periodic meetings to address issues of the capital/worker ratio (occupational health and working conditions, supplementary pension, remuneration and outsourcing, among others). In its organizational architecture, it maintains executives with responsibility geared toward the relationship with unions and representative of its employees and collaborators. As one of the pioneers in Brazil, the company recognizes the figure of the Base Union Representative, main cell of the Workplace Organization (OLT) concept, a contemporary form of organization, seen as a facilitator of negotiations and of the resolution of workplace conflicts, regulated in its Collective Agreement, where this representative receives the same specific legal guarantees as the union leader pursuant to Article 543 of the CLT (Consolidation of Labor Laws). With innovative, vanguard positions, following the example of the signing of the International Framework Agreement, signed on 2011 and extended in 2013, with the Union Network International for the Americas (regional representation of the UNI Global Union, which assembles more than 900 unions and approximately 20 million workers from the services sector in 140 countries from all the continents), Banco do Brasil became the first financial institution from the Americas and the second in the world, to formalize through a protocol of intent, its policy of repudiation of slave labor and of the illegal use of child labor, of respect for collective bargaining agreements, of appreciation of socioenvironmental responsibility and sustainable regional development measures, and especially, of respect for the legislation of each country in which it is developing economic activities. The Bank thus reaffirms the positions of the Global Compact contributing to the sustainability of democracy, to the consolidation of fundamental rights and guarantees and the stability of capital/labor relations.
312
Banco do Brasil S.A. - Reference Form/2015
15.
CONTROL
15.1. Identification of the group of controlling shareholders Banco do Brasil is controlled by the Federal Government through the entities described in the table below: a) Name b) Nationality c) CNPJ/CPF d) Quantity of common shares
Secretaria do Tesouro Nacional
Fundo Fiscal de Inv. e Estabilização
Caixa FI Garantia Construção Naval
Brazilian
Brazilian
Brazilian
00.394.460/0001-41 10.539.257/0001-70 10.732.594/0001-89 1,453,487,115
105,024,600
0
e) Percentage held in relation to the class or type 1
50.7251512
3.665247
0
f) Percentage held in relation to the total capital
50.7251512
3.665247
0
No
No
No
g) Participation in shareholders' agreement h) if the shareholder is a legal entity, a list containing the information referred to in sub-items "a" and "d" about their direct and indirect controlling i) Date of last change in ownership percentage
Not Applicable 08/30/12
Federal Government Federal Government 07/20/15
05/09/16
1 - Banco do Brasil only issues common shares, thus the percentage held in relation to the respective class or kind is the same described in letter "f", that is, the percentage held in relation to the total capital.
15.2. Shareholders or group of shareholders with the same stake of 5% or above List containing information about the shareholders, or group of shareholders acting together or representing the same interest, with holdings of 5% or more in the same class or type of share and that are not listed in item 15.1. Caixa de Previdência dos Funcionários do Banco do Brasil - Previ
a) Name b) Nationality
Brazilian
c) CNPJ/CPF
33.754.482/0001-24
d) Quantity of common shares
285,815,314
e) Percentage held in relation to the total capital
9.974649
f) Participation in shareholders' agreement
no
g) Date of last change in ownership percentage
05/05/2016
There are no other shareholders or group of shareholders acting together or that represent the same interest, with a stake of 5% or more in the capital stock of Banco do Brasil, other than those listed in item 15.1. 15.3. Distribution of capital, as established in the last Shareholders Meeting (SM) Description Class
Based on the balance of May 12, 2016 ON
Number of individual shareholders
333,963
Number of corporate shareholders
13,102
Number of institutional investors ¹
864
Number of shares outstanding ²
1,225,996,313
1 - We consider pension funds and private pension entities, trust funds, social security foundations, funds and investment clubs, insurance and capitalization companies and investment firms to be institutional investors. 2 - To achieve the number of shares outstanding, we subtracted, from the total shares of Banco do Brasil, as well as the total shares belonging to the Federal Government in addition to the treasury stock and shares of the directors of the issuer, considering the members of the Board of Directors and officers of BB and BESC fractions to the auction.
313
Section 15 - Control
15.4. Organization Chart of the direct and indirect controlling shareholders Organization Chart of the direct and indirect controlling shareholders as well as the shareholders with interest of 5% or above Not available. 15.5. Shareholders' agreement filed at the head office or to which the controlling shareholder is a party With respect to any shareholders' agreement filed at the head office of the issuer or to which the controlling shareholder is a party, governing the exercise of the voting right or the transfer of shares issued by the issuer, inform: a. parties; b. date of execution; c. validity period; d. description of the clauses relating to the exercise of voting rights or the power of control; e. description of the clauses relating to the appointment of directors; f. description of the clauses relating to the transfer of shares and to preference in their purchase; g. description of the clauses restricting or binding the voting rights of members of the board of directors. There is no shareholders' agreement. 15.6. Relevant changes in the interests of the members of the holding group and directors Relevant changes in the interests of the members of the holding group and directors of the issuer. There were no relevant changes in the holdings of the members of the control group, shareholders and BB’s directors between January, 2012 and January, 2015, except for the National Treasury (Ministry of Finance), as follows: Base data
Relevant Changes ¹
Change
06/29/2012
143,270,851
123,572,902
Quantity of common shares ¹ ² 1,607,300,682
08/31/2012
143,270,851
(153,813,567)
1,453,487,115
12/31/2013
143,270,851
1,453,487,115
12/31/2014
143,270,851
1,453,487,115
1 - Criteria of relevance considered: the addition or reduction of 5% or more of the total kind or class of shares of Banco do Brasil S.A. 2 - The information refers to the final balance of shares held at the date.
15.7. Other relevant information Share base and shareholders by number of shares, in December, 2014: Share base and shareholders Quantity by number of shareholders of shares
Quantity of shares
% Shareholders
110,816
580,390
32.7445291
12 to 50 shares
89,758
2,253,267
26.5221939
51 to 100 shares
35,853
2,609,702
10.5940442
101 to 1000 shares
78,905
27,535,332
23.315289
Over 1,000 shares
23,094
2,832,438,329
6.8239438
338,426
2,865,417,020
100
1 to 11 shares
Total
Other information deemed relevant was presented in the previous items.
314
Banco do Brasil S.A. - Reference Form/2015
16.
TRANSACTIONS WITH RELATED PARTIES
16.1. Rules, policies and practices of the issuer regarding the performance of transactions with related parties Describe the rules, policies and practices of the issuer regarding the performance of transactions with related parties, as defined by the accounting rules that address this subject: IAS 24 requires the disclosure of outstanding transactions and balances with related parties or other entities of a group in the financial statements of an entity. The essence of this accounting standard is to evidence at what level the financial position and the result of the entity may have been affected by the existence of transactions and business with related parties. According to the variable remuneration policy of the Banco do Brasil, established in accordance with CMN Resolution 3,921/2010, the variable remuneration of the Board of Officers is paid in common shares (Note 36.l). Banco do Brasil does not offer post-employment benefits to its key management personnel except those that are part of the staff of the Bank, participating in the Pension Plan for Employees of the Banco do Brasil - Previ. The Bank does not grant loans to its officers, members of its board of directors, audit committee and fiscal council because this practice is prohibited at all the financial institutions regulated by the Central Bank of Brazil (Bacen). Account balances referring to transactions between consolidated companies of the Bank are eliminated in the consolidated financial statements. Regarding the transactions with the National Treasury and controlled entities, full or shared mode, by this body, the Bank opted for partial exemption in accordance with IAS 24. In this case, are disclosed only the most significant transactions. The Bank carries out banking transactions with related parties, such as current account deposits (unpaid), remunerated deposits, money market funding, loans (except for the key management personnel) and acquiring loan portfolios. There are also contracts for services and guarantees. Such transactions are conducted under terms and rates compatible with those practiced with third parties when applicable. These transactions do not involve payment risks. The funds invested in government securities and those for the funds and programs from the Official Institutions are listed in Notes 19 and 33, respectively. The Bank established the Fundação Banco do Brasil (FBB) which aims to promote, support, encourage and support actions in the fields of education, culture, health, social welfare, recreation and sports, science and technology and assistance to urban-rural communities. In 2014, the Bank made contributions to the FBB in the amount of R$51,838 thousand (R$115,539 thousand in 2013). 16.2. Additional information on transactions with related parties In accordance with accounting rules on related parties, the information requested in paragraphs 16.2 and 16.3 are submitted from disclosures in the financial statements of the Bank and tables that detail the relevant contracts with the controlling shareholder, associated company, subsidiaries, jointlyowned subsidiary and entities assisted. The tables relating to items 16.2 and 16.3 are presented after the statements frames of transactions with related parties. Tables showing related-party transactions The following tables have been extracted from the audited Consolidated Financial Statements of Banco do Brasil under IFRS, for the years ended 12/31/2012, 12/31/2013 and 12/31/2014 and show the balances of related party transactions:
315
Section 16 - Transactions With Related Parties
12/31/2012 R$ million
Controlling Shareholder¹
Subsidiaries²
Associated Key Management Companies⁴ Personnel⁵
Joint Venture³
Other Related Parties⁶
Total
ASSETS Loans to Financial Institutions
-
33,618
-
-
-
-
Financial Assets Available for Sale
-
44
170
-
-
-
214
Loans to Customers
-
37
7
-
-
16,792
16,836
Other Assets⁷ Total
33,618
5,616
334
1,039
-
-
-
6,989
5,616
34,033
1,216
-
-
16,792
57,657
836
3,793
1,177
2
4
14,119
19,931
-
5,309
-
-
-
2,067
7,376
634
25,320
-
-
-
60,318
86,272
LIABILITIES Customer Deposits Obligations Related to Committed Operations Long-Term Liabilities Other Liabilities⁸ Total
8,665
988
8
-
-
15
9,676
10,135
35,410
1,185
2
4
76,519
123,255
Statement of Income Income from Interest and Services Funding Expenses Total Net
82
2,417
101
1
-
317
2,918
(69)
(2,113)
(131)
(5)
(1)
(3,112)
(5,431)
13
304
(30)
(4)
(1)
(2,795)
(2,513)
-
908
6,800
-
-
-
7,708
Guarantees and Other Coobligation⁹
123456-
National Treasury and agencies of the direct administration of the Federal Government. Includes related companies on Explanatory Note of IFRS Financial Statement. Includes related companies on Explanatory Note of IFRS Financial Statement. Includes related companies on Explanatory Note of IFRS Financial Statement. Board of Directors, Executive Board, Audit Committee and Fiscal Council. Includes the most significant transactions with public enterprises and joint stock companies controlled by the Federal Government, such as: Petrobras, CEF, BNDES, Eletrobras, the Fundo de Amparo ao Trabalhador - FAT, Fundo de Aval para Geração de Emprego e Renda - Funproger, Fundo de Defesa da Economia Cafeeira - Funcafé. Besides these, entities linked to employees and sponsored entities: Cassi, Previ and others. 7 - The transactions with the controlling shareholder refer to notes and credits receivable from the National Treasury. 8 - Includes Hybrid Instrument Agreement and Debt Capital - perpetual bonds with the Federal Government, on 08/28/2014 reclassified to Shareholders' Equity (Note of the Consolidated Financial Statements in IFRS). 9 - Includes interbank lending agreement to release with Banco Votorantim.
12/31/2013 R$ million
Controlling Shareholder¹
Subsidiaries²
Associated Key Management Companies⁴ Personnel⁵
Joint Venture³
Other Related Parties⁶
Total
ASSETS Loans to Financial Institutions
-
42,182
11,772
-
-
7
53,961
Financial Assets Available for Sale
-
21,421
167
-
-
-
21,588
Loans to Customers
-
6
431
95
-
22,273
22,805
9,097
103
202
1
-
-
9,403
9,097
63,712
12,572
96
-
22,280
107,757
568
4,957
519
1
5
17,145
23,195
-
5,895
1,359
-
-
110
7,364
473
31,890
-
-
-
84,335
116,698
Other Assets⁷ Total LIABILITIES Customer Deposits Obligations Related to Committed Operations Long-Term Liabilities Other Liabilities⁸ Total
8,556
22,265
146
13
-
-
30,980
9,597
65,007
2,024
14
5
101,590
178,237
4,029
4,652
1,334
5
-
413
10,433
(82)
(4,791)
(65)
(6)
-
(4,707)
(9,651)
3,947
(139)
1,269
(1)
-
(4,294)
782
-
1,345
6,800
-
-
-
8,145
Statement of Income Income from Interest and Services Funding Expenses Total Net Guarantees and Other Coobligation⁹
123456-
National Treasury and agencies of the direct administration of the Federal Government. Includes related companies on Explanatory Note 5 of 2014 IFRS Financial Statement. Includes related companies on Explanatory Note 25 of 2014 IFRS Financial Statement. Includes related companies on Explanatory Note 25 of 2014 IFRS Financial Statement. Board of Directors, Executive Board, Audit Committee and Fiscal Council. Includes the most significant transactions with public enterprises and joint stock companies controlled by the Federal Government, such as: Petrobras, CEF, BNDES, Eletrobras, the Fundo de Amparo ao Trabalhador - FAT, Fundo de Aval para Geração de Emprego e Renda - Funproger, Fundo de Defesa da Economia Cafeeira - Funcafé. Besides these, entities linked to employees and sponsored entities: Cassi, Previ and others. 7 - the transactions with the controlling shareholder refer to notes and credits receivable from the National Treasury. 8 - Includes Hybrid Instrument Agreement and Debt Capital - perpetual bonds with the Federal Government, on 08/28/2014 reclassified to Shareholders' Equity (Note 36.c to the Consolidated Financial Statements in IFRS 2014). 9 - Includes interbank lending agreement to release with Banco Votorantim.
316
Banco do Brasil S.A. - Reference Form/2015
12/31/2014 R$ million
Controlling Shareholder¹
Subsidiaries²
Associated Key Management Companies⁴ Personnel⁵
Joint Venture³
Other Related Parties⁶
Total
ASSETS Loans to Financial Institutions
-
64,763
15,260
-
-
-
80,023
Financial Assets Available for Sale
-
45,379
129
-
-
-
45,508
Loans to Customers
-
136
715
86
-
25,481
26,419
14,730
98
2,284
-
-
-
17,111
14,730
110,376
18,388
86
-
25,481
169,061
435
10,094
4,127
-
3
18,230
32,889
-
6,783
3,736
-
-
2,842
13,361
285
48,350
-
-
-
88,871
137,506
Other Assets⁷ Total LIABILITIES Customer Deposits Obligations Related to Committed Operations Long-Term Liabilities Other Liabilities⁸ Total
310
46,160
8
19
-
185
46,681
1,030
111,387
7,871
19
3
110,128
230,437
5,469
7,390
2,447
1
-
2,072
17,380
(39)
(6,824)
(258)
(30)
-
(4,842)
(11,992)
5,430
567
2,190
(29)
-
(2,770)
5,388
-
3,058
6,800
-
-
-
9,858
Statement of Income Income from Interest and Services Funding Expenses Total Net Guarantees and Other Coobligation⁹
123456-
National Treasury and agencies of the direct administration of the Federal Government. Includes related companies on Explanatory Note 5 of 2014 IFRS Financial Statement. Includes related companies on Explanatory Note 25 of 2014 IFRS Financial Statement. Includes related companies on Explanatory Note 25 of 2014 IFRS Financial Statement. Board of Directors, Executive Board, Audit Committee and Fiscal Council. Includes the most significant transactions with public enterprises and joint stock companies controlled by the Federal Government, such as: Petrobras, CEF, BNDES, Eletrobras, the Fundo de Amparo ao Trabalhador - FAT, Fundo de Aval para Geração de Emprego e Renda - Funproger, Fundo de Defesa da Economia Cafeeira - Funcafé. Besides these, entities linked to employees and sponsored entities: Cassi, Previ and others. 7 - the transactions with the controlling shareholder refer to notes and credits receivable from the National Treasury. 8 - Includes Hybrid Instrument Agreement and Debt Capital - perpetual bonds with the Federal Government, on 08/28/2014 reclassified to Shareholders' Equity (Note 36.c to the Consolidated Financial Statements in IFRS 2014). 9 - Includes interbank lending agreement to release with Banco Votorantim.
The balances of transactions with related parties presented in the tables above, by segment of activity, on 12/31/2012, 12/31/2013 and 12/31/2014, result in the following statement: 12/31/2012 R$ million
Banking
Asset Management
Investment
Insurance and Related
Payment Methods
Other
ASSETS Loans to Financial Institutions Financial Assets Available for Sale Loans to Customers Other Assets Total
30,787
2,831
-
-
-
192
6
-
16
-
-
44
-
-
-
-
16,792
1,041
5
11
198
-
5,734
32,064
2,842
11
214
-
22,526
10,713
935
-
4
1,138
7,141
5,089
13
700
1,321
47
206
67,133
-
-
-
-
19,139
LIABILITIES Customer Deposits Obligations Related to Committed Operations Long-Term Liabilities Other Liabilities Total
8,350
-
-
-
2
1,324
91,285
948
700
1,325
1,187
27,810
Statement of Income Income from Interest and Services Funding Expenses Net Income (Loss)
929
1,285
45
262
73
324
(2,797)
(1,052)
(75)
(9)
(2)
(1,496)
(1,868)
233
(30)
254
71
(1,173)
317
Section 16 - Transactions With Related Parties
12/31/2013 R$ million
Banking
Asset Management
Investment
Insurance and Related
Payment Methods
Other
ASSETS Loans to Financial Institutions
51,697
2,264
-
-
-
Financial Assets Available for Sale
21,574
3
-
11
-
-
6
-
-
-
526
22,273
Loans to Customers Other Assets Total
-
186
5
9
50
2
9,151
73,463
2,272
9
61
528
31,424
15,641
114
-
99
291
7,050
3,724
14
487
1,780
1,028
331
83,594
-
-
-
-
33,104
LIABILITIES Customer Deposits Obligations Related to Committed Operations Long-Term Liabilities Other Liabilities Total
30,187
1
-
-
16
776
133,146
129
487
1,879
1,335
41,261
Statement of Income Income from Interest and Services Funding Expenses Net Income (Loss)
5,493
230
46
327
82
4,255
(7,569)
(7)
(58)
(123)
(4)
(1,890)
(2,076)
223
(12)
204
78
2,365
12/31/2014 R$ million
Banking
Asset Management
Investment
Insurance and Related
Payment Methods
Other
ASSETS Loans to Financial Institutions
77,763
2,260
-
-
-
Financial Assets Available for Sale
45,470
1
-
37
-
-
670
-
-
-
348
25,401
Loans to Customers Other Assets Total
-
21
5
11
35
2,251
14,788
123,923
2,267
11
72
2,599
40,189
10,463
220
1
6
3,859
18,341
7,007
16
785
2,094
225
3,234
103,296
-
-
-
-
34,210
LIABILITIES Customer Deposits Obligations Related to Committed Operations Long-Term Liabilities Other Liabilities
45,668
2
0
-
25
987
166,434
237
786
2,100
4,109
56,771
Income from Interest and Services
11,245
279
71
336
45
5,404
Funding Expenses
(9,344)
(5)
(58)
(184)
(68)
(2,333)
1,901
274
13
152
(23)
3,071
Total Statement of Income
Net Income (Loss)
The next chart shows the balances of significant transactions with third parties (an amount equal to or higher than R$711 million as of 12/31/2012, R$763 million in 12/31/2013 and R$643 million in 12/31/2014). 2014
Subsidiaries and Associated 2012 2013 2014
Controlling Shareholder R$ million ASSETS Loans to Financial Institutions Financial Assets Available for Sale Loans to Customers Other Assets LIABILITIES Customer Deposits Repurchase Agreement Operations Long-Term Liabilities Other Liabilities
2012
2013
Joint Control 2012
Other Related Parties
2013
2014
2012
2013
2014
5,616
9,097
14,730
33,618 -
42,182 21,421 -
64,763 45,310 -
1,038
11,772 -
14,729 2,270
16,141 -
22,273 -
25,481 -
836 8,214
8,556
-
3,795 5,309 25,320 987
4,900 4,280 31,890 21,719
10,010 5,569 48,350 45,628
1,177 -
1,359 -
3,610 3,535 -
14,119 2,067 60,318 -
17,145 84,335 -
18,007 2,842 88,871 -
The following chart presents the balances of the other transactions with related parties, which individually or by entity are lower than relevance criteria, presenting separately the average value by line of the balance sheet, as well as the highest individual balance:
318
Banco do Brasil S.A. - Reference Form/2015 2012 R$ million
Other
ASSETS Loans to Financial Institutions Financial Assets Available for Sale Loans to Customers Other Assets LIABILITIES Customer Deposits Repurchase Agreement Operations Long-Term Liabilities Other Liabilities
Average Amount
2013 Highest Individual Balance
Other
2014
Average Amount
Highest Individual Balance
Other
Average Amount
Highest Individual Balance
214 695 335
43 116 56
154 646 137
7 167 531 306
4 42 89 10
7 142 257 141
531 198 938 111
265 20 59 4
530 91 211 46
4 634 475
4 634 8
4 634 15
1,150 1,725 473 705
31 107 473 41
560 565 473 475
1,261 1,415 285 1,053
13 101 285 31
404 601 285 303
To calculate the average value of the other transactions with related parties, it is not considered the material operations presented in individual tables. The distribution according to the relationship with Banco do Brasil resulted in the following table: Number of Entities Related Party Controlling Shareholder¹
2012
2013
2014
1
1
1
Subsidiaries and Associated Companies
26
26
25
Companies Under Joint Control
28
24
24
Key Management Personnel²
1
1
1
Other Related Parties³
1
1
1
57
53
52
Total
1 - National Treasury and agencies of the direct administration of the Federal Government. 2 - Comprises the Board of Directors, Executive Board, Audit Committee and Fiscal Council. 3 - Include private and public companies controlled by the Federal Government, entities linked to employees (Caixa de Previdência dos Funcionários do Banco do Brasil – Previ, Fundação Codesc de Seguridade Social – Fusesc, Caixa de Assistência dos Funcionários do Banco do Brasil – Cassi) and Fundação Banco do Brasil - FBB.
In order to reduce the dilution of the average value of the other transactions, the set of Other Related Parties was consolidated in a single entity, since they are mostly composed of several companies linked to the Federal Government and represent the exposure of Banco do Brasil to the transactions with the public sector.
319
Section 16 - Transactions With Related Parties
The following tables show the detailing required by items 16.2 and 16.3 Inform the related party transactions which, according to the accounting standards, should be disclosed in the individual or consolidated financial statements of the issuer and which have been contracted in the last 3 fiscal years or which are in force in the current fiscal year: a.
name of the related parties:
b.
relationship of the parties with the issuer:
c.
transaction date:
d.
purpose of the agreement:
e.
sum involved in the business
f.
current balance
g. sum corresponding to the interest of such a related party in the business, if it is possible to measure h.
related guarantees and insurance:
i.
duration:
j.
conditions of rescission or termination:
k.
when this relationship is a loan or other type of debt, also inform: i.
nature and reasons for the operation
ii.
interest rate charged
16.3. Additional information on each transaction or series of transactions mentioned in item 16.2 In regard to each one of the transactions or set of transactions mentioned in item 16.2 above occurred in the last fiscal year: a.
Identify the steps taken to deal with conflicts of interest:
b. Demonstrate the commutative nature of the agreed conditions or the appropriate compensatory payment:
320
Banco do Brasil S.A. - Reference Form/2015
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S.A. and the Federal Government (controlling shareholder): 16.2 Name of the related party:
Federal Government.
Relationship of the party with the issuer: Controlling Shareholder. FAT - Fundo de Amparo ao Trabalhador - (Worker Assistance Fund): Under the terms of Resolution 439 of June 2, 2005, which refers to the allocation of resources from FAT, in special interest bearing deposits, MTE/CODEFAT executes, through the Executive Secretariat of the Board of Directors of FAT CODEFAT, instruments of formalization of the investment of resources from FAT, in the special interest bearing deposit category, at an official federal government financial institution, whereas such instrument is designated RECORD OF ALLOCATION OF SPECIAL DEPOSITS OF FAT - TADE. BB executed various TADEs with the Executive Secretariat of CODEFAT, each with its specific purpose, whose resources, mainly originating from contributions to the Social Integration Program - PIS and to the Equity Formation Program for Civil Servants - PASEP are made available through a number of specific facilities. Thus they consist of financing operations of specific facilities in line with the promotion and financing schedule established by CODEFAT and MTE.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it Not Applicable. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
There is the possibility of immediate redemption of FAT resources allocated in Special Deposits at the official financial institutions, according to art. 9 of Law 8,019/90. The financial resources of FAT may be invested in Treasury bonds.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Funding for loans.
ii) Interest rate charged:
Resource Invested: TJLP. Resource Available: TMS
Contract Number -
Transaction date 07/14/1993
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
5,952,980
5,208,691
4,478,914
Undetermined.
16.3 According to Law 8,352/91, the financial resources of FAT may be invested in special interest-bearing deposits available for movement at the Official Federal Government Financial Institutions. Banco do Brasil operates in compliance with Identify the steps taken to deal with the standards set by the Federal Government in Laws/Resolutions/Contracts, in conflicts of interest: the capacity of financial agent, subject to the same conditions applied to the other operators. The criteria for investment of resources (beneficiaries, rate, term, limits of amounts) are established by Law/Resolution/Contract. The remuneration of Demonstrate the commutative nature of the financial agents is defined in a regulation, but the Bank assesses the the agreed conditions or the appropriate viability of each line and approves its effective operation through the same compensatory payment: decision-making process applied to other business, which weights the RSPLE (Return on Required Shareholders' Equity) or Cost/Income Ratio as appropriate.
321
Section 16 - Transactions With Related Parties
16.2 Name of the related party:
Federal Government.
Relationship of the party with the issuer: Controlling Shareholder. FCO - Fundo Constitucional do Centro-Oeste (Constitutional fund for financing of the middle-west): Banco do Brasil is the administrator of FCO, as provided in Art. 159-c of Federal Constitution and Law 7,827/89, aiming at assigning funds to credit transactions, together with investments of rural producers, individuals or private legal entities that are engaged in agribusiness, mineral, industrial, trading, service, agro-industrial and tourism activities of the Midwest Region
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it Not Applicable. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Funding for loans.
ii) Interest rate charged:
Resource Invested: depends charges of credit operation, set by CMN, as proposed by the Ministry of National Integration and can be differentiated or favored due to the credit purpose, size of the beneficiary, the activity sector and the project location. CMN Resolution 4,297/2013, as amended by Resolution CMN 4,304/2014 and 4,324/2014, set the charges on Constitutional Funds from 01/01/2014 to 12/31/2014. Resource Available: Extra market Rate.
Contract Number -
Transaction date 09/27/1989
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
16,602,973
18,529,802
20,467,310
Undetermined.
16.3 According to Law 7,827/89, the administration of the Constitutional Funds of the North, Northeast and Midwest will be separate and independent and, observing the duties provided by law, exercised by the following bodies: I - Board of Directors of the Superintendencies for the Development of Amazonia and of the Northeast and by the Board of Directors of the Constitutional Fund of the Midwest; Identify the steps taken to deal with II - Ministry of National Integration, and conflicts of interest: III - Federal financial institution of a regional nature and BB. The duties of the administrator financial institutions are established by law. The Ministry of National Integration establishes the guidelines to be observed by the Administrator Banks in the investment of resources. Also acting as main financial agent of the FCO, Banco do Brasil is subject to the limits of the legislation and of the resolutions of the Board of Directors and of the Ministry. The criteria for investment of resources (beneficiaries, rate, term, limits of amount) are established by Law/Resolution. The remuneration of the Demonstrate the commutative nature of administrators and financial agents is defined in a regulation, but the Bank the agreed conditions or the appropriate assesses the viability of its operations in the two roles by means of the same compensatory payment: decision-making process applied to the other business, which weights the RSPLE (Return on Required Shareholders' Equity) or Cost/Income Ratio, as appropriate.
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Banco do Brasil S.A. - Reference Form/2015
16.2 Name of the related party:
Federal Government.
Relationship of the party with the issuer: Controlling Shareholder. Pasep - Programa de Formação do Patrimônio do Servidor Público, as established by CMN Resolution 2,655/99.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it It isn't possible to be measured. is possible to measure: Related guarantees and insurance:
Not Required.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation: ii) Interest rate charged: Contract Number -
Transaction date 10/05/1999
Funding for loans. Resource Invested: TR + 6% p.a. Resource Available: Extra market Rate. Sum involved in Balance at (R$ thousand) the transaction 2012 2013 2014 (R$ thousand) Variable. 1,969,825 2,063,491 2,260,015
Duration (months) Undetermined.
16.3 CMN Resolution 2,655/99, which refers to the investment of resources of Identify the steps taken to deal with Pasep, defines Banco do Brasil and Caixa Econômica as financial agents of the conflicts of interest: Fund. Resolution CMN 2,655/99 defines the remuneration of the financial agents and the calculation method. The remuneration of the financial agents is defined in Demonstrate the commutative nature of a regulation, but the Bank assesses the viability of each line and approves its the agreed conditions or the appropriate effective operation through the same decision-making process applied to other compensatory payment: business, which weights the RSPLE (Return on Required Shareholders' Equity) or Cost/Income Ratio as appropriate.
323
Section 16 - Transactions With Related Parties
16.2 Name of the related party:
Federal Government.
Relationship of the party with the issuer: Controlling Shareholder. Intermediation of the programs for promotion and financing of the FMM Merchant Marine Fund, as established in the main provision of Art. 26 of Law 10,893/04 and in Resolution 3/2004 of the Management Board of the Merchant Marine Fund - CDFMM, which approved the qualification of Banco do Brasil S.A. as Financial Agent of the FMM.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it Not Applicable. is possible to measure: Related guarantees and insurance:
Not Required.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Funding for loans.
ii) Interest rate charged:
Resource Invested: FMM Line: 0.1% p.a. (financing of national item) or 0.5% p.a. (financing of foreign item), plus TJLP or US dollar exchange variation rate. PROFROTA Line: 7% to 12% p.a., with del credere of 5% to 6% p.a. discounted, according to borrowers’ size. Available resource: TMS - Average Selic Rate.
Contract Number
Transaction date
Sum involved in the transaction (R$ thousand)
001/2011 - MTIR
11/21/2011
Variable.
Balance at (R$ thousand) 2012
2013
2014
2,250,825 4,324,152 5,786,781
Duration (months)
60
Obs
It may be extended by the option of the participants.
16.3 Law 10,893/04 establishes that the FMM shall have BNDES and official federal Identify the steps taken to deal with government banks as financial agent. The criteria for investment of resources conflicts of interest: are established by Law/Resolution/Decree/Contract. BB operates in compliance with the rules defined by the Federal Government, acting as financial agent. The criteria for investment of resources (beneficiaries, rate, term, limits of amounts) are established by Law/Resolution/Decree/Contract. The Demonstrate the commutative nature of remuneration of the financial agents is defined in a regulation, but the Bank the agreed conditions or the appropriate assesses the viability of each line and approves its effective operation through compensatory payment: the same decision-making process applied to other business, which weights the RSPLE (Return on Required Shareholders' Equity) or Cost/Income Ratio as appropriate.
324
Banco do Brasil S.A. - Reference Form/2015
16.2 Name of the related party:
Federal Government.
Relationship of the party with the issuer: Controlling Shareholder.
Purpose of the agreement:
Funcafé - Fundo de Defesa da Economia Cafeeira 010/2007 : Hiring of BB to operate with loans using resources from Funcafé, referred to by CMN Resolutions 3,451/07, 3,494/07, 3,601/08, 3,699/09, as well as specific provisions of Chapter 9 - Fundo de Defesa da Economia Cafeeira - Funcafé, of the Rural Credit Manual - MCR. The contracts are prevailing for financing of:
CMN 024/1994
Coffee Retention.
010/2007 010/2008
016/2008
010C/2009
010G/2009
010/2010, 010/2009 010/2011
Costs, harvest, storage and financing for purchase of coffee - FAC, whose trading period extends from July/2007 to June/2008. Costs, harvest, storage and financing for purchase of coffee - FAC, whose trading period extends from July 2008 to June 2009, and interministerial ordinance MAPA/MR 435/08. Recovery of coffee crops affected by hailstorms occurred or that may occur and financing of the acquisition of rural product notes (CPR) addressed by CMN Resolutions 3,640/08, 3,643/08 and MAPA/MF Inter-ministerial Administrative Rule 1,180/08. Coffee harvest whose trading period extends from July 2009 to June 2010, addressed by MAPA/MF Inter-ministerial Administrative Rule no. 271/09. Recovery of coffee crops affected by hailstorms occurred or that may occur and financing of the acquisition of Rural Product Notes (CPR) addressed by CMN Resolutions ns 3,640/08, 3,643/08 and 3,720/09. Costs, harvest, storage and financing for purchase of coffee - FAC, whose trading period extends from July 2010 to June 2010, and interministerial ordinance MAPA/MR 453/09. Funding and Financing for Coffee Acquisition (FAC), addressed by CMN Resolution 3,995, of July 28, 2011.
010-2/2011
Financing of Working Capital for Soluble Coffee Industries.
010-3/2011
Financing for the composition of rural producers' debts arising from financing to coffee production addressed by CMN Resolution 3,995, of July 28, 2011.
010/2012
010/2013
010/2014
Funding, Storage, Financing for Coffee Acquisition (FAC), Financing of Working Capital for Soluble Coffee and Roasting Industries, recovery of damaged coffee plantations and Composition of Debt. Costing, warehousing, coffee purchase financing, working capital for coffee roasting and soluble coffee industrial plants, working capital for production cooperatives, damaged coffee plantation recovery, and future markets transaction and option agreements. Costing, Stockpiling, Coffee Acquisition Financing - FAC, Working Capital for Industry and Soluble Coffee Roasting, working capital for Cooperative Production and Option Contracts and Futures Markets Operations.
Sum corresponding to the interest of such a related party in the business, if it Not Applicable. is possible to measure: Related guarantees and insurance:
Not Required.
Conditions for rescission or termination:
Expiry of the obligations executed.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Funding for loans.
ii) Interest rate charged:
Resource Invested: 5.5% p.a to 7.5% p.a, according to the contract for use of resources signed by the map. Resource Available: variation of the Average Selic Rate - TMS.
325
Section 16 - Transactions With Related Parties
Contract Number
Transaction date
Sum involved in the transaction (R$ thousand)
Balance at (R$ thousand) 2012
2013
Duration (months)
2014
CMN 024/1994
03/03/1994
8,727
1,266
010/2007
05/08/2007
1,100,000
5,495
-
1,268 -
1,285
010/2008
05/27/2008
610,000
44,589
-
-
016/2008
12/19/2008
190,000
8,964
010/2009
06/29/2009
350,000
753
360
010C/2009
05/27/2009
135,000
13,308
7,651
010G/2009
06/08/2009
110,000
10,981
1,841
-
60
010/2010
08/02/2010
750,000
9
9
-
60
010/2011
11/28/2011
140,000
33,156
-
-
60
010-2/2011
11/11/2011
90,000
35,781
-
010-3/2011
12/07/2011
30,000
32
26
010/2012
06/25/2012
722,100
498,577
010/2013
09/05/2013
1,000,001
-
010/2014
09/09/2014
740,000
-
4,743
60 60 60
1,157 -
60 60
3,567
-
60
60 18
60
164,054
55,264
60
694,372
219,404
60
583,166
60
-
16.3 The financial agents of Funcafé are defined by the National Monetary Council through a rule, as is the case with CMN Resolution 3,856/10, which defines as financial agents the financial institutions from the National Rural Credit System SNCR. The regulations published by the CMN support the Agreements for the Identify the steps taken to deal with Investment and Administration of Financial Resources, made by and between conflicts of interest: Banco do Brasil and the Federal Government (represented by the Ministry of Agriculture, Livestock and Food Supply), as well as between the Federal Government and the other financial agents. The remunerations received by the financial agents of Funcafé are also defined by the National Monetary Council through a rule, as is the case with CMN Resolution 3,856/10, Art. 1, item I. The regulations published by the CMN support the clauses on remuneration of financial agents provided in the Demonstrate the commutative nature of Agreements for the Investment and Administration of Financial Resources the agreed conditions or the appropriate made by and between BB and the Federal Government (represented by the compensatory payment: Ministry of Agriculture, Livestock and Food Supply), whose formalization by the Bank is contingent upon the same decision-making process applied to other business, which balances the RSPLE (Return on Required Shareholders' Equity) or Cost/Income Ratio, as appropriate.
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Banco do Brasil S.A. - Reference Form/2015
16.2 Name of the related party:
Federal Government (Caixa Econômica Federal).
Relationship of the party with the issuer: Controlling Shareholder. FGTS (Government Severance Indemnity Fund for Employees – operate in the capacity of Financial Agent for granting of financing, with FGTS under the Program to Support the Production of Housing, Letter of Credit Association and Individual Letter of Credit.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it Not Applicable. is possible to measure: Related guarantees and insurance:
Financial Treasury Bills (LFT).
Conditions for rescission or termination:
Expiry of obligations contracted in the contract between the Operator Agent of the FGTS and Banco do Brasil acting as Financing Agent.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Funding for loans.
ii) Interest rate charged:
5.00% p.a. to 8.16% p.a.
Contract Number
Transaction date
Sum involved in the transaction (R$ thousand)
-
09/23/2009
Variable.
Balance at (R$ thousand) 2012
895,482
2013
2014
4,219,810 12,295,224
Duration (months)
Obs
12
Renewable for an equal period.
16.3 Identify the steps taken to deal with Caixa Econômica Federal acting as operator agent of the FGTS enabled Banco conflicts of interest: do Brasil according to the current FGTS legislation to act as financial agent. The criteria for application of funds (rate, term, grace period, indemnity value Demonstrate the commutative nature of limits) are established by Law / Resolution / Order / Contract and published the agreed conditions or the appropriate periodically in the Manual on Promotion by the Operator Agent. The compensatory payment: remuneration of the financial agent is defined in an agreement.
327
Section 16 - Transactions With Related Parties
16.2 Name of the related party:
Federal Government.
Relationship of the party with the issuer: Controlling Shareholder. Fundo de Aval para a Geração de Emprego e Renda (Funproger): is a special accounting fund established on November 23, 1999 by Law 9,872/99, of November 23, 1999, and regulated by Codefat Resolution 409/04, of October 28, 2004, and is managed by Banco do Brasil under the supervision of the Executive Council of the Worker Assistance Fund - Codefat, attached to the Ministry of Labor and Employment (MTE). The purpose of FUNPROGER is provide guarantees to entrepreneurs who do not have the necessary guarantees of their own to contract PROGER Urbano and PNMPO financing, through payment of a fee.
Purpose of the agreement:
2010 - 1,352,994 (R$ thousand) Sum corresponding to the interest of 2011 - 966,740 (R$ thousand) such a related party in the business, if it 2012 - 318,169 (R$ thousand) is possible to measure: 2013 - 181,247 (R$ thousand) 2014 - 25,173 (R$ thousand) Related guarantees and insurance:
Collateral or personal guarantee of the members and of third parties. The limit of the guarantee assumed by the Fund varies between 1% and 80% of the operation. BB assumes at a minimum, the guarantee of 20% of the contracted operation.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Guarantee of investment operations with or without associated working capital, contracted under the Program for Generation of Jobs and Income - Urban Area.
ii) Interest rate charged:
Not Applicable.
2010
11/23/1999
Sum involved in the transaction (R$ thousand) 1,781,284
2011
11/23/1999
1,630,958
198,610
201,236
233,940
Undetermined.
2012
11/23/1999
2,192,866
198,610
201,236
233,940
Undetermined.
2013
11/23/1999
2,217,817
198,610
201,236
233,940
Undetermined.
2014
11/23/1999
2,604,851
198,610
201,236
233,940
Undetermined.
Contract Number
Transaction date
Balance at (R$ thousand) 2012
2013
2014
Duration (months) ¹
198,610
201,236
233,940
Undetermined.
16.3 Banco do Brasil operates in compliance with the rules defined by the Federal Government in Laws, Resolutions of the MTE/Codefat and Side Letter, acting as manager and financial agent of Funproger, as detailed below: I - as Manager, appointed by means of Art. 1 of Law 9,872/99, performs the administration, accounting and annual rendering of accounts, pursuant to Regulatory Instructions defined by the Tribunal de Contas da União (TCU), audited by Internal and External Audit. They are paid a management fee to manage Funproger; Identify the steps taken to deal with II – as Agent, they formalized a Side Letter with the MTE, as provided in letter conflicts of interest: "h" of sub-item 9.1 of the regulation of Funproger, annexed to Codefat Resolution 409/04, and complies with the rules stipulated for all Official Federal Government Financial Agents for contracts, requests to honor commitments and recovery of amounts honored. Contracted operations are made available to the Fund Supervisor, MTE/CGFAT (General Coordination of Resources of FAT) for inspection, by sampling, in all the federal units of the country. The Fund is obliged to honor the outstanding balance of defaulting operations, recalculated by normal interest rates up to the limit of the assumed guarantee Demonstrate the commutative nature of in operation (1% to 80%) and to the limit of 7% of default of the guaranteed the agreed conditions or the appropriate portfolio and historical the Financial Agent to the Fund. Pursuant to Art. 5 of compensatory payment: Law 9,872/99, the Bank, the management of the Fund is entitled to receive a management fee / remuneration, whose calculation is defined as the Resolution Codefat 741 of 12/10/2014. 1 - Undetermined, whereas the agreement may be terminated by either one of the parties due to breach of any of the obligations and conditions therein agreed, as well as of the current legislation, in which case the parties shall be liable for the obligations assumed previously. Termination may also occur by means of a unilateral act, against prior communication from the disinterested party, at least 90 days in advance, preserving responsibility for obligations assumed previously.
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Banco do Brasil S.A. - Reference Form/2015
16.2 Name of the related party:
Federal Government.
Relationship of the party with the issuer: Controlling Shareholder.
Fundo de Terras e da Reforma Agrária: Banco do Brasil entered into with the Union, represented by the Ministry of Agrarian Development, a contract whose object is to establish conditions for the provision of contracting services of credit provided for in SRA Resolution no. 04, of August 23, 2005, for operation of Subprojetos de Aquisição de Terras (SAT) that permit acquisition of land by PROGRAM beneficiaries, and of Subprojetos de Investimentos Básicos (SIB), intended to finance basic and production investments for beneficiaries of the PROGRAM, including contracting referring to other Programs of the FUND.
Purpose of the agreement:
PROGRAM - 2012 (R$ thousand) - 2013 (R$ thousand) - 2014 (R$ thousand) Banco da Terra - 1,058,319 - 1,078,149 - 1,053,811 Sum corresponding to the interest of CAF-Consolidação da Agricultura Familiar - 1,654,925 - 1,705,095 - 1,704,428 such a related party in the business, if it CPR/NPT-Combate à Pobreza Rural/Nossa Primeira Terra - 92,240 - 116,285 is possible to measure: 138,657 SAT-Subsistema de Aquisição de Terras - 1,713 - 1,616 - 1,538 TOTAL - 2,807,197 - 2,901,145 - 2,898,434 Related guarantees and insurance:
As provided in the contract 3, 1st Addendum, the risks of financing operations are assumed by the Fund.
Conditions for rescission or termination:
According to the rules of Law 8,666/93.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Funding for loans.
ii) Interest rate charged:
Resource Available: Average Selic Rate - TMS.
Contract Number
Sum involved in Transaction the transaction date (R$ thousand)
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
Obs
Banco da Terra
01/27/2012
Variable.
4,735
12,939
14,232
12
It may be extended up to 60 months.
CAF-Consolidação da Agricultura Familiar
01/27/2012
Variable.
25,841
25,241
17,050
12
It may be extended up to 60 months.
CPR/NPT-Combate à Pobreza Rural/Nossa Primeira Terra
01/27/2012
Variable.
11,296
14,883
11,312
12
It may be extended up to 60 months.
SAT – Subsistema de Aquisição de Terras
01/27/2012
Variable.
87
78
78
12
It may be extended up to 60 months.
16.3 The financial management of the Land and Agrarian Reform Fund is Identify the steps taken to deal with undertaken by the official banks, as defined by Art. 4, § 1 of Complementary conflicts of interest: Law 93/1998. The remunerations received by the financial agents of the Fund are defined by Demonstrate the commutative nature of the CMN through the publication of Resolutions by Bacen. The regulations the agreed conditions or the appropriate published by the CMN support the clauses on remuneration of financial agents compensatory payment: provided in the contracts made by and between BB and the Federal Government.
329
Section 16 - Transactions With Related Parties
16.2 Name of the related party:
Federal Government.
Relationship of the party with the issuer: Controlling Shareholder. Programa de Crédito Especial Rural (Procer): Pledging of revenues in counterguarantee, relating to the financing agreement through the opening of a facility credit executed, on November 23, 2009, between Banco do Brasil and BNDES (The Brazilian Development Bank), as intervening consenting party guarantor, the Federal Government (Agreement 508/PGNF/CAF - "Financing Agreement"), in the amount of R$5 billion.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it R$5 bilion is possible to measure: The federal government shall assume, as guarantor, the commitment of guaranteeing Banco do Brasil, under the terms of the personal security agreement, made by and between the Federal Government, BNDES and, as Related guarantees and insurance: intervening consenting party Banco do Brasil, on November 23, 2009 (Agreement 509/PGNF/CAF - "Unsecured Guarantees Agreement") under the financial obligations under the Funding Agreement. Conditions for rescission or termination:
Expiry of the obligations executed.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Pledging of revenues as counter guarantee.
ii) Interest rate charged:
Not Applicable.
Contract Number 508/PGNF/CAF
Transaction date 11/23/2009
Sum involved in the transaction (R$ thousand) 5,000,000
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
5,952,980
5,208,691
4,478,914
Undetermined.
16.3 As regards the Procer agreement, it is a case of pledging of revenues as counter guarantee. The Union is committed to ensuring the Banco do Brasil, in Identify the steps taken to deal with terms of the personal security, given their obligations under the Financing conflicts of interest: Agreement signed between the Banco do Brasil and the BNDES, whose resources were allocated to Procer. The contract for personal security, enabling the allocation of resources of Demonstrate the commutative nature of interest to the Union for the implementation of credit transactions under the the agreed conditions or the appropriate Procer through the Funding Agreement, which formalized the Bank determines compensatory payment: whether the same decision process applied to other businesses, which balances the RSPLE or Cost/Income Ratio, as appropriate.
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Banco do Brasil S.A. - Reference Form/2015
16.2 Name of the related party:
Federal Government.
Relationship of the party with the issuer: Controlling Shareholder. Fundo de Desenvolvimento do Nordeste (FDNE) - BB signed contracts for operation of FDNE resources whose objects are the definition of the activities, competences, rights and obligations of SUDENE and BB in applying FDNE resources, based on provisional Measure 2,156-5 of 24 August 2001 by Law 12,712/2012, and provisions of FDNE the Regulation approved by Decree 7,838/2012, including in Resolution 4,171/2012 of the CMN and changes.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it Not Applicable. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Funding for loans. Resource Invested: 1,5% p.a. or 4% p.a., as the project / operation. Resource Available: TMS, applicable after 5 business days of receipt of the appeal.
ii) Interest rate charged:
01/2013
05/24/2013
Sum involved in the transaction (R$ thousand) 2,649,561
02/2013
05/24/2013
2,649,561
-
387,000
1,534,405
Undetermined.
16/2013
05/24/2013
2,649,561
-
387,000
1,534,405
Undetermined.
20/2013
06/27/2013
2,649,561
-
387,000
1,534,405
Undetermined.
21/2013
09/26/2013
2,649,561
-
387,000
1,534,405
Undetermined.
22/2013
12/10/2013
2,649,561
-
387,000
1,534,405
Undetermined.
01/2014
06/10/2014
2,649,561
-
387,000
1,534,405
Undetermined.
Contract Number
Transaction date
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
-
387,000
1,534,405
Undetermined.
16.3 Provisional Measure 2,156-5, amended by Law 12,712 of August 30, 2012, establishes that the FDNE will have as operating agents the official federal financial institutions, preferably the Banco do Nordeste do Brasil S.A. The Identify the steps taken to deal with criteria for investing the funds are established by conflicts of interest: Law/Decree/Resolution/Agreement. BB operates in compliance with the standards set by the Federal Government in the capacity of financial agent, subject to the same conditions applied to the other operators. The criteria for investment of resources (beneficiaries, rate, term, limits of amounts) are established by Law/Decree/Resolution/Contract. The remuneration of the financial agents is defined in a regulation, but the Bank Demonstrate the commutative nature of assesses the viability of lines of credit and approves its effective operation the agreed conditions or the appropriate through the same decision-making process applied to other business, which compensatory payment: weights the RSPLE (Return on Required Shareholders' Equity) or Cost/Income Ratio as appropriate.
331
Section 16 - Transactions With Related Parties
16.2 Name of the related party:
Federal Government.
Relationship of the party with the issuer: Controlling Shareholder. Civil Aviation Office of the Presidency of the Republic (SAC/PR): Under the terms of Article 63-A of Law 12,462/2011, and Decree 8,024/2013, that agreement’s purposes are the financial management and administration of funds of the National Civil Aviation Fund to be used in airport modernization, expansion, refurbishment and construction in accordance with investment plans established by the Federal Government.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it R$238,791,690.00. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
There is the possibility of termination of the contract as the assumptions contained in Articles 77 and 78 and in accordance with Articles 79 and 80, all of Law 8,666/1993.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Resources of Fundo Nacional de Aviação Civil for the modernization, construction, expansion or airfields reforms.
ii) Interest rate charged:
Resource Invested: Extra market Rate.
Contract Number 11/2013
Transaction date 06/20/2013
Sum involved in the transaction (R$ thousand) 238,791
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
-
2,301
51,632
72
16.3 Banco do Brasil concluded with the Union contract consisting obligations of both parties. In this sense, the instrument includes clause that specifies the the Identify the steps taken to deal with Federal Courts, Judicial Section of the Distrito Federal, noting the previous conflicts of interest: attempt to administrative solution with the participation of the Advocacia-Geral da União, to address possible conflicts. The remuneration of the Banco do Brasil, which arises from the provision of Demonstrate the commutative nature of management and financial management services, is specified in the contract, the agreed conditions or the appropriate where it follows the provisions of Ministerial Decree 360/2013 of the Ministério compensatory payment: da Fazenda e da Secretaria de Aviação Civil da Presidência da República, pursuant to paragraph 5 of Art. 63-A of Law 12,462/2011.
332
Banco do Brasil S.A. - Reference Form/2015
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S.A. and controlling shareholder BNDES (The Brazilian Development Bank): 16.2 Name of the related party:
BNDES - The Brazilian Development Bank.
Relationship of the party with the issuer: Shareholder linked to the controller. BB's work as Financial Agent in BNDES operations with transfer of funds from that institution, in accordance with the Credit Facility Agreement (CAC) 14.2.0380.1.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it 100% of the amount involved in the business. is possible to measure: Those required by the standards of BNDES, credit standards adopted by BB, in Related guarantees and insurance: accordance with the characteristics of each facility, risk of the operation and of the beneficiary. Liquidation of the entire balance of the liability of operations with BNDES, or if Conditions for rescission or termination: BB fails to meet the performance standards set by the bank and the monetary authorities. When such relationship is a loan or any other kind of debt, also inform: Transfer of funds from BNDES, in financing transactions where the BB acts as i) Nature / reasons for the operation: financial agent of that Bank. ii) Interest rate charged: Contract Number 14.2.0380.1
Average rate of the portfolio: 0.99% p.a. Transaction date 09/11/2014
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012
2013
2014
Duration (months)¹
70,211,920
75,647,290
51,632
44.48
16.3 BNDES, resource allocator, establishes normative ones to all financial institutions authorized to deal with that institution, whether public or private. Identify the steps taken to deal with Thus, there is no flexibility for changing conditions which could pose a conflict conflicts of interest: of interest with the Bank. Moreover, the position of accounting operations in the BB is reconciled monthly with balances provided by BNDES and the analytical records containing the characteristics of each operation. The contractual terms of the items "h" and "j" and the interest rate the item "kii" above are in the market practice adopted between unrelated companies. Demonstrate the commutative nature of Additionally, the dates specified by BNDES, the BB makes the payment of its the agreed conditions or the appropriate obligations to the institution concerned, monthly, whose position is informed compensatory payment: and given reconciled with the Bank records, with no privilege of one party to another. 1 - Average term of the portfolio.
333
Section 16 - Transactions With Related Parties
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S.A. and sponsored entities Caixa de Previdência dos Funcionários do Banco do Brasil (Previ) and Caixa de Assistência dos Funcionários do Banco do Brasil (Cassi). 16.2 Name of the related party:
Previ - Caixa de Previdência dos Funcionários do Banco do Brasil.
Relationship of the party with the issuer: Sponsored Entity. Manage and conduct social security benefit plans and others, in order to ensure to its members and beneficiaries the benefits provided for in respective regulations of each plan to which they are linked.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it Actuarial Assets in 2014 (R$ thousand): 6,130,485 is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Fund management in favor of the Bank's employees.
ii) Interest rate charged:
Not Applicable.
Contract Number -
Transaction date 04/16/1904
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
1,521,578
1,137,810
581,636
Undetermined.
16.3 Management of benefit plan is conducted in compliance with investment Identify the steps taken to deal with guidelines approved by Previ's Board of Directors, to obtain application security conflicts of interest: and avoid interest conflicts. Demonstrate the commutative nature of Payments will be made in accordance with contract provisions without privilege the agreed conditions or the appropriate of one party over the other, confirming the commutative character of the compensatory payment: transaction.
16.2 Name of the related party:
Cassi - Caixa de Assistência dos Funcionários do Banco do Brasil.
Relationship of the party with the issuer: Sponsored Entity. Purpose of the agreement:
Manage the health care services to Banco do Brasil employees.
Sum corresponding to the interest of such a related party in the business, if it Actuarial liabilities in 2014 (R$ thousand): 5,830,331 is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Fund management in favor of Banco do Brasil employees.
ii) Interest rate charged:
Not Applicable.
Contract Number -
Transaction date 01/27/1944
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
817,542
895,454
896,175
Undetermined.
16.3 Management of benefit plan is conducted in compliance with investment Identify the steps taken to deal with guidelines approved by Cassi's Board of Directors, to obtain application security conflicts of interest: and avoid interest conflicts. Demonstrate the commutative nature of Payments will be made in accordance with contract provisions without no the agreed conditions or the appropriate privilege of one party over the other, confirming the commutative character of compensatory payment: the transaction.
334
Banco do Brasil S.A. - Reference Form/2015
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S.A. and subsidiary BB Tecnologia e Serviços (Cobra Tecnologia S.A.): 16.2 Name of the related party:
BB Tecnologia e Serviços (Cobra Tecnologia S.A.)
Relationship of the party with the issuer: Subsidiary. Provision of operational availability services and technological upgrading of automated teller machines (ATM) of the contractor's premises, throughout the national territory, according to the conditions for carrying out the required tasks. On May 21, 2013 it was signed an additive number 01 changing the total contracted amount of R$1,096,165,851.00 to R$1,142,731,643.00.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it 100% of the amount involved in the business. is possible to measure: Related guarantees and insurance:
There is no guarantees.
Conditions for rescission or termination:
According to the rules of Law 8,666/1993.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable.
Contract Number 2011/96000264
Transaction date 08/26/2011
Sum involved in the transaction (R$ 1,142,731
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
764,346
555,985
303,303
60
16.3 Identify the steps taken to deal with Agreement signed according to the Law 8,666/1993, whose rules are to avoid conflicts of interest: conflicts of interest. Demonstrate the commutative nature of The contractual terms of guarantees and insurance related, of rescission and the agreed conditions or the appropriate extinction conditions, as well as the amount of business, are in the market compensatory payment: practices adopted for the same type of contract between unrelated companies.
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S.A. and BB Corretora, BB MAPFRE Participações, insurance company controlled by BB Mapfre SH1 and Mapfre BB SH2.:
335
Section 16 - Transactions With Related Parties
16.2 Name of the related party:
BB Corretora e Seguradora controlated by BB Mapfre SH1.
Relationship of the party with the issuer: Direct, controlled and associated controller, respectively. Regulate the rights and obligations of the parties with respect to the development, dissemination, distribution and marketing of insurance products in the segments / lines of people and elemental as defined in applicable current or future legislation, and the distribution of insurance products of insurance companies will be made exclusive banking channels in the Banco do Brasil, through BB Corretora, nationwide. In both cases, the receipt and transfer to insurers of their insurance premiums will be paid by Banco do Brazil. The parties have authorized the use by any of the signatories of the brands of other parties to this agreement. The remuneration of BB Corretora and the Banco do Brasil was set at variable percentages on net premiums. In 2014 through this agreement, Cia de Seguros Aliança do Brasil moved R$1,220,159,020.41 with BB Corretora and R$47,095,499.49 with Banco do Brazil. In Exercise / 2013 through this agreement, Alliance Insurance Company of Brazil moved R$884,865,826.73 with BB Corretora and R$40,492,000.35 with Banco do Brazil. In 2012, through this agreement, Cia de Seguros Aliança do Brasil moved R$630,778,591.41 with BB Corretora and R$72,228,566.34 with Banco do Brasil.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it is possible to measure: Related guarantees and insurance:
There is no guarantees.
Conditions for rescission or termination:
The operating agreement may be terminated in advance: (a) in relation to Vida Seguradora and Aliança do Brasil, if the shareholders’ agreement related to SH1, signed between Mapfre Brasil and BB Seguros on June 30, 2011 is terminated or rescinded; (b) in relation to Brasilveículos and AB Seguros, if the shareholders’ agreement related to SH2, signed between Mapfre Brasil and BB Seguros on June 30, 2011 is terminated or rescinded. This agreement may be terminated at the discretion of the other parties regardless of any arbitration decision, if any of the parties incurs in intervention, extrajudicial winding up, voiding of authorization for operation by the competent body, bankruptcy, request for court recovery or a similar proceeding or the start of a proceeding for extrajudicial recovery or also if the party has an intervention, bankruptcy or winding up requested and that situation is not remedied within 30 days from the date when that party is informed of the event.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable.
Contract Number
Transaction date
Sum involved in the transaction (R$ thousand)
2012
2013
2014
Duration (months)
Obs
-
06/30/2011
-
703,007
925,358
1,267,255
240
It may be extended up to 60 months.
Balance at (R$ thousand)
16.3 The BB Seguridade's bylaws establishes rules for managing conflicts of interest within the Board of Directors. Article 15, paragraph 4, of the bylaws prohibits members of the Board of Directors to intervene in any act or corporate Identify the steps taken to deal with operation where they have an interest that conflicts with that of BB conflicts of interest: Seguridade, and in related decisions made by the other directors and in that case the director whose interest conflicts with that of the Company must notify his impediment, recording in the minutes the nature and extent of his interest. The transactions made by BB Seguridade with related parties are commercial Demonstrate the commutative nature of operations that follow regular standards and do not generate any the agreed conditions or the appropriate extraordinary benefit or loss for either party. compensatory payment:
336
Banco do Brasil S.A. - Reference Form/2015
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S.A. and subsidiary BB Leasing S.A.: 16.2 Name of the related party:
BB Leasing S.A. - Arrendamento Mercantil.
Relationship of the party with the issuer: Subsidiary. Purpose of the agreement:
Deposits received under security repurchase agreements
Sum corresponding to the interest of such a related party in the business, if it 100% of invested balance. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable.
Contract Number -
Transaction date Variable.
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
2,985,263
3,164,940
3,350,501
Variable.
16.3 Operation signed in strict compliance with the provisions of CMN Resolution Identify the steps taken to deal with 3,399/2006 and Bacen Circular 3,587, without any flexibility that may represent conflicts of interest: conflicts of interest. The Repo Transaction is a sale operation with repurchase agreements for settlement in pre-established date, provided that such date is limited to the Demonstrate the commutative nature of business day preceding the expiration date of the title or of the security the agreed conditions or the appropriate compromise of the object. It is strictly carried out in accordance to the rules compensatory payment: established by the CMN and the Central Bank, with no privilege of one party to another and confirming the commutative nature of the transaction.
337
Section 16 - Transactions With Related Parties
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S.A. and subsidiary BB Gestão de Recursos DTVM S.A.: 16.2 Name of the related party:
BB Gestão de Recursos DTVM S.A.
Relationship of the party with the issuer: Subsidiary. Purpose of the agreement:
Deposits received under security repurchase agreements.
Sum corresponding to the interest of such a related party in the business, if it 100% of invested balance. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
99% of variation of the Average Selic Rate - TMS.
Contract Number -
Transaction date Variable.
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
699,186
487,187
785,078
Variable.
16.3 Operation signed in strict compliance with the requirements established by Identify the steps taken to deal with CMN Resolution 3,399/06 and Bacen Circular 3,587, with no flexibility that conflicts of interest: might represent a conflict of interest. Repo is the sales transaction with repurchase agreements for settlement in pre-established date, provided that such date is limited to before the date of Demonstrate the commutative nature of maturity of the bond or security object of the undertaking business day. Both the agreed conditions or the appropriate are carried out strictly in accordance with the rules established by the CMN compensatory payment: and the Central Bank, without any privilege of one party to another and confirming the commutative character of the transaction.
338
Banco do Brasil S.A. - Reference Form/2015
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S.A. and the subsidiary Banco do Brasil Akentiengesellschaft (BB AG): 16.2 Name of the related party:
Banco do Brasil Akentiengesellschaft (BB AG)
Relationship of the party with the issuer: Subsidiary. Purpose of the agreement:
Interbank deposits.
Sum corresponding to the interest of such a related party in the business, if it 100% of invested balance. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable.
Transaction date
Sum involved in the transaction (R$ thousand)
-
Variable.
Variable.
25,342,575 31,890,574 47,933,725
Variable.
Assets
-
Variable.
Variable.
27,255,037 35,170,183 52,899,700
Variable.
Liabilities
Contract Number
Balance at (R$ thousand) 2012¹
2013²
2014³
Duration (months)
Obs
16.3 Operation signed in strict compliance with the provisions of CMN Resolution Identify the steps taken to deal with 3,399/2006, without any flexibility that may represent a conflict of interest. conflicts of interest: Interbank deposit is the financial instrument or security that allows the Demonstrate the commutative nature of exchange of reserves between financial institutions. They are conducted in the agreed conditions or the appropriate strict conformity with the rules established by CMN and Bacen, without compensatory payment: privilege of one party over the other, confirming the commutative character of the transaction. 1 - Exchange Rate 1.00 € = R$2.6944 in 12/31/2012. 2 - Exchange Rate 1.00 € = R$3.2252 in 12/31/2013. 3 - Exchange Rate 1.00 € = R$3.2258 in 12/31/2014. Note: the values shown in item 16.2 in relation to "Assets" and "Liabilities" contain consolidated information and updated by BB AG since 2012, including the branches of the subsidiary. Compared to information provided in the Form of Reference, exercise in 2013, and has been including the "Assets" for the years 2012, 2013 and 2014 have been updated the information to the "Liabilities" field, considering the branches of BB AG.
339
Section 16 - Transactions With Related Parties
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S.A. and subsidiary Brazilian American Merchant Bank - BAMB: 16.2 Name of the related party:
Brasilian American Merchant Bank – BAMB.
Relationship of the party with the issuer: Subsidiary. Purpose of the agreement:
Application in interbank deposits.
Sum corresponding to the interest of such a related party in the business, if it 100% of invested balance. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable.
Contract Number -
Transaction date Variable.
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012¹
2013²
2014³
Duration (months)
3,287,947
4,382,682
8,495,208
Variable.
16.3 Identify the steps taken to deal with Operation signed in strict compliance with the provisions of CMN Resolution conflicts of interest: 3,399/2006, without any flexibility that may represent a conflict of interest. Interbank deposit is the financial instrument or security that allows the Demonstrate the commutative nature of exchange of reserves between financial institutions. They are conducted in the agreed conditions or the appropriate strict conformity with the rules established by CMN and Bacen, without compensatory payment: privilege of one party over the other, confirming the commutative character of the transaction.
16.2 Name of the related party:
Brasilian American Merchant Bank – BAMB.
Relationship of the party with the issuer: Subsidiary. Purpose of the agreement:
Interbank deposits.
Sum corresponding to the interest of such a related party in the business, if it 100% of invested balance. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable.
Contract Number -
Transaction date Variable.
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012¹
2013²
2014³
Duration (months)
2,465,538
4,152,187
8,200,154
Variable.
16.3 Identify the steps taken to deal with Operation signed in strict compliance with the provisions of CMN Resolution conflicts of interest: 3,399/2006, without any flexibility that may represent a conflict of interest. Interbank deposit is the financial instrument or security that allows the Demonstrate the commutative nature of exchange of reserves between financial institutions. They are conducted in the agreed conditions or the appropriate strict conformity with the rules established by CMN and Bacen, without compensatory payment: privilege of one party over the other, confirming the commutative character of the transaction. 1 - Ptax R$2.0429 in 12/31/2012. 2 - Ptax R$2.3420 in 12/31/2013. 3 - Ptax R$2.6556 in 12/31/2014.
340
Banco do Brasil S.A. - Reference Form/2015
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S.A. and special purpose entity (SPE) Dollar Diversified Payment Rights Finance Company: 16.2 Name of the related party:
Dollar Diversified Payment Rights Finance Company.
Relationship of the party with the issuer: Special Purpose Entity (SPE). Purpose of the agreement:
Negotiation and intermediation of securities.
Sum corresponding to the interest of such a related party in the business, if it 100% of invested balance. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable.
Contract Number -
Transaction date Variable.
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012¹
2013²
2014³
Duration (months)
838,740
476,142
303,313
Variable.
16.3 Identify the steps taken to deal with conflicts of interest: Demonstrate the commutative nature of the agreed conditions or the appropriate compensatory payment:
The contracts are carried out based on market remuneration, without conflict of interest. Securities purchase and sale transactions are conducted strictly in conformity with the rules established by the National Monetary Council (CMN) and Bacen.
1 - Ptax R$2.0429 in 12/31/2012. 2 - Ptax R$2.3420 in 12/31/2013. 3 - Ptax R$2.6556 in 12/31/2014.
341
Section 16 - Transactions With Related Parties
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S.A. and Joint Venture Banco Votorantim S.A.: 16.2 Name of the related party:
Banco Votorantim S.A.
Relationship of the party with the issuer: Joint Venture. Agreement on Assignment of Credit Receivables with co-obligation, with coobligation, made by and between Banco do Brasil and Banco Votorantim, the assignment of receivables financing and loans to employees, servants, retirees or pensioners of certain public institutions.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it 100% of the amount involved in the business. is possible to measure: The institution is obligated to pay the transferor to the transferee institution Related guarantees and insurance: the value of each overdue and not paid at maturity. Conditions for rescission or termination:
According to current legislation in Brazil.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable. Transaction date
Sum involved in the transaction (R$ thousand)
200800000018 – Rem. 3
10/17/2008
190,345
3,872
1,269
262
96
200800000018 – Rem. 11 : 19
10/20/2008
509,717
5,511
518
40
96
200800000018 – Rem. 20 : 21
12/22/2008
182,148
4,077
598
119
83
200800000018 – Rem. 22
12/29/2008
108,601
4,510
25
-
71
200900000013 – Rem. 4 : 6
11/18/2009
550,704
62,762
21,904
1,247
83
200900000013 – Rem. 7 , 8
12/22/2009
269,183
41,467
15,777
281
83
Contract Number
Balance at (R$ thousand) 2012
2013
Duration (months)
2014
16.3 The BB operations decision-making process is performed in accordance with current legislation and segregated by function, i.e. the establishment of credit limits, pricing and negotiation are performed by different specialized areas, Identify the steps taken to deal with and in accordance with the policies and internal standards. The assignments of conflicts of interest: credit receivables are performed at normal prices market conditions, equivalent to those that would be adopted when contracted with unrelated parties. The transactions carried out by Banco do Brasil with related parties are business transactions and follow common standards for banking, not causing Demonstrate the commutative nature of any extraordinary benefit or harm to either party. The assignments of credit the agreed conditions or the appropriate receivables are agreed on terms that meet the interests of the parties, the compensatory payment: ability of the Banco do Brasil to obtain retail funding and of Banco Votorantim to carry out loan operations.
342
Banco do Brasil S.A. - Reference Form/2015
16.2 Name of the related party:
Banco Votorantim S.A.
Relationship of the party with the issuer: Joint Venture. Agreement on Assignment of Credit Receivables with co-obligation, held between Banco Nossa Caixa (succeeded by the Banco do Brasil) and Banco Votorantim to assignment of receivables from loans, financing and direct loans to retirees and pensioners of Social Security.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it 100% of the amount involved in the business. is possible to measure: The institution is obligated to pay the transferor to the transferee institution Related guarantees and insurance: the value of each overdue and not paid at maturity. Conditions for rescission or termination:
According to current legislation in Brazil.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable.
201000000019 – Rem. 20090001
05/28/2009
Sum involved in the transaction (R$ thousand) 662,878
2,505
12,122
-
60
201000000019 – Rem. 20090002
06/16/2009
285,282
23,073
9,546
-
61
201000000019 – Rem. 20090004
10/27/2009
304,024
11,533
14,427
-
58
Contract Number
Transaction date
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
16.3 The BB operations decision-making process is performed in accordance with current legislation and segregated by function, i.e. the establishment of credit limits, pricing and negotiation are performed by different specialized areas, Identify the steps taken to deal with and in accordance with the policies and internal standards. The assignments of conflicts of interest: credit receivables are performed at normal prices market conditions, equivalent to those that would be adopted when contracted with unrelated parties. The transactions carried out by Banco do Brasil with related parties are business transactions and follow common standards for banking, not causing Demonstrate the commutative nature of any extraordinary benefit or harm to either party. The assignments of credit the agreed conditions or the appropriate receivables are agreed on terms that meet the interests of the parties, the compensatory payment: ability of the Banco do Brasil to obtain retail funding and of Banco Votorantim to carry out loan operations.
343
Section 16 - Transactions With Related Parties
16.2 Name of the related party:
Banco Votorantim S.A.
Relationship of the party with the issuer: Joint Venture. Agreement on Assignment of Credit Receivables with co-obligation, held between Banco Nossa Caixa (succeeded by the Banco do Brasil) and Banco Votorantim, for assignment of receivables from loans and financing to employees, servants, retirees and/or pensioners of certain public institutions.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it 100% of the amount involved in the business. is possible to measure: The institution is obligated to pay the transferor to the transferee institution Related guarantees and insurance: the value of each overdue and not paid at maturity. Conditions for rescission or termination:
According to current legislation in Brazil.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable.
Contract Number 201000000019 – Rem. 20090003
Transaction date
Sum involved in the transaction (R$ thousand)
2012
2013
2014
Duration (months)
06/19/2009
65,667
3,799
452
-
59
Balance at (R$ thousand)
16.3 The BB operations decision-making process is performed in accordance with current legislation and segregated by function, i.e. the establishment of credit limits, pricing and negotiation are performed by different specialized areas, Identify the steps taken to deal with and in accordance with the policies and internal standards. The assignments of conflicts of interest: credit receivables are performed at normal prices market conditions, equivalent to those that would be adopted when contracted with unrelated parties. The transactions carried out by Banco do Brasil with related parties are business transactions and follow common standards for banking, not causing Demonstrate the commutative nature of any extraordinary benefit or harm to either party. The assignments of credit the agreed conditions or the appropriate receivables are agreed on terms that meet the interests of the parties, the compensatory payment: ability of the Banco do Brasil to obtain retail funding and of Banco Votorantim to carry out loan operations.
344
Banco do Brasil S.A. - Reference Form/2015
16.2 Name of the related party:
Banco Votorantim S.A.
Relationship of the party with the issuer: Joint Venture. Credit Rights Assignment Agreement, with co-obligation, conducted between Banco do Brazil and Banco Votorantim, for assignment of receivables from loans and financing to employees, servants, retirees and/or pensioners of certain public institutions.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it 100% of the amount involved in the business. is possible to measure: The institution is obligated to pay the transferor to the transferee institution Related guarantees and insurance: 20% of first losses on the portfolio transferred. Conditions for rescission or termination:
According to current legislation in Brazil.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable. Transaction date
Sum involved in the transaction (R$ thousand)
200900000013 – Rem. 24 : 46
06/21/2010
872,891
170,817
73,776
9,535
71
200900000013 – Rem. 64 : 66
06/24/2010
63,641
13,584
5,387
17
76
200900000013 – Rem. 67 : 69
06/25/2010
121,335
29,633
12,477
221
68
200900000013 – Rem. 78 : 86
06/28/2010
171,120
45,978
21,440
4,143
71
200900000013 – Rem. 77 : 81
06/29/2010
71,938
18,690
8,555
1,310
57
200900000013 – Rem. 70 : 76
06/30/2010
295,019
60,469
27,953
6,955
72
200900000013 – Rem. 90 : 93
07/21/2010
223,607
40,790
18,247
3,568
71
200900000013 – Rem. 87 : 89
22/07/2010
167,051
34,990
14,642
771
62
200900000013 – Rem. 94 : 99
08/25/2010
39,721
6,026
2,352
283
64
200900000013 – Rem. 100 : 105
08/30/2010
541,137
124,898
59,073
17,711
71
200900000013 – Rem. 125 : 128
24/09/2010
101,837
27,164
11,502
3,082
76
200900000013 – Rem. 129 : 136
09/27/2010
461,613
119,065
58,554
21,671
84
200900000013 – Rem. 144 : 146
10/27/2010
219,329
74,835
37,292
13,639
83
200900000013 – Rem. 151 : 152
11/23/2010
182,626
70,725
36,514
14,756
83
200900000013 – Rem. 153 : 154
11/30/2010
196,326
31,564
13,973
5,370
84
200900000013 – Rem. 158 : 163
12/21/2010
75,074
19,700
7,337
1,125
71
200900000013 – Rem. 167 : 171
12/22/2010
171,503
66,964
35,204
14,630
84
200900000013 – Rem. 172 : 181
12/29/2010
235,740
62,849
29,716
11,630
84
200900000013 – Rem. 182 : 184
01/27/2011
298,471
113,332
57,716
24,302
84
200900000013 – Rem. 186 : 189
02/24/2011
390,414
146,797
72,241
32,056
84
200900000013 – Rem. 190 , 199
03/24/2011
74,128
25,082
12,349
4,394
78
200900000013 – Rem. 200 : 203
03/29/2011
228,670
99,992
48,692
21,614
84
200900000013 – Rem. 204 : 206
04/20/2011
226,637
104,985
52,372
23,634
84
200900000013 - Rem. 207 : 209
05/12/2011
313,953
162,636
85,528
40,866
84
200900000013 – Rem. 240 : 242
06/15/2011
250,144
141,531
76,432
37,715
84
200900000013 – Rem. 243 : 246
06/21/2011
82,958
200900000013 – Rem. 248 : 251
07/25/2011
417,182
200900000013 – Rem. 272
09/01/2011
200900000013 – Rem. 275 200900000013 – Rem. 276
Contract Number
Balance at (R$ thousand) 2012
2013
Duration (months)
2014
31,113
14,083
5,027
78
236,271
126,848
64,401
84
64,770
33,182
17,465
8,235
82
09/15/2011
112,432
69,758
36,907
18,673
83
09/16/2011
44,514
27,321
14,219
7,187
83
200900000013 – Rem. 277
09/19/2011
103,235
62,737
32,689
16,415
83
200900000013 – Rem. 278
09/20/2011
112,565
68,526
35,825
18,230
83
200900000013 – Rem. 279
09/21/2011
230,732
144,478
72,779
36,771
84
200900000013 – Rem. 280
09/29/2011
65,196
41,822
19,965
9,418
84
200900000013 – Rem. 284
10/27/2011
125,810
86,183
45,517
23,441
84
200900000013 – Rem. 285
10/28/2011
117,123
74,689
33,893
16,339
84
200900000013 – Rem. 287
10/31/2011
133,920
83,162
43,296
21,671
83
345
Section 16 - Transactions With Related Parties
201200000004 – Rem. 35
03/22/2013
285,093
-
183,394
73,246
57
201200000004 – Rem. 36 , 38
03/25/2013
314,476
-
179,771
75,273
43
201200000004 – Rem. 39
03/26/2013
249,104
-
133,219
58,746
45
201200000004 – Rem. 37 : 46
03/28/2013
1,648,429
-
935,775
403,679
50
201200000004 – Rem. 52 , 55
07/02/2013
218,473
-
163,729
69,677
49
201200000004 – Rem. 53 , 54
07/03/2013
222,100
-
168,396
69,275
54
201200000004 – Rem. 57 , 61
07/04/2013
202,368
-
153,079
57,851
42
201200000004 – Rem. 62 , 63
07/11/2013
245,842
-
195,554
82,147
45
201200000004 – Rem. 70 , 71
09/23/2013
373,776
-
337,437
132,339
56
201200000004 – Rem. 74 , 75
09/24/2013
110,487
-
95,804
40,003
56
201200000004 – Rem. 80 : 82
09/27/2013
159,516
-
147,862
58,696
57
201200000004 – Rem. 90 : 92
12/10/2013
13,124
-
12,638
4,965
36
201200000004 – Rem. 95
12/12/2013
226,949
-
226,787
93,782
57
201200000004 – Rem. 93 , 94
12/13/2013
35,981
-
35,587
14,022
56
201200000004 – Rem. 96
12/27/2013
127,654
-
127,821
56,719
57
201200000004 – Rem. 105 : 107
03/21/2014
292,838
-
-
155,792
57
201200000004 – Rem. 112 , 113
05/23/2014
224,567
-
-
138,883
57
201200000004 – Rem. 108 : 111
05/26/2014
77,579
-
-
46,956
36
201200000004 – Rem. 119
07/16/2014
171,117
-
-
111,058
58
201200000004 – Rem. 117 , 120
07/17/2014
110,124
-
-
64,625
53
201200000004 – Rem. 114 : 118
07/18/2014
186,468
-
-
120,359
39
16.3 The BB operations decision-making process is performed in accordance with current legislation and segregated by function, i.e. the establishment of credit limits, pricing and negotiation are performed by different specialized areas, Identify the steps taken to deal with and in accordance with the policies and internal standards. The assignments of conflicts of interest: credit receivables are performed at normal prices market conditions, equivalent to those that would be adopted when contracted with unrelated parties. The transactions carried out by Banco do Brasil with related parties are business transactions and follow common standards for banking, not causing Demonstrate the commutative nature of any extraordinary benefit or harm to either party. The assignments of credit the agreed conditions or the appropriate receivables are agreed on terms that meet the interests of the parties, the compensatory payment: ability of the Banco do Brasil to obtain retail funding and of Banco Votorantim to carry out loan operations.
346
Banco do Brasil S.A. - Reference Form/2015
16.2 Name of the related party: Banco Votorantim S.A. Relationship of the party with the Joint Venture. issuer: Credit Receivables Assignment, with co-obligation, made between BB and Banco Votorantim, to auto loans credit receivables assignment.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, 100% of the amount involved in the business. if it is possible to measure: Related guarantees and insurance:
The institution is obligated to pay the transferor to the transferee institution 20% of first losses on the portfolio transferred.
Conditions for rescission or According to current legislation in Brazil. termination: When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation: Not Applicable. ii) Interest rate charged: Contract Number
Not Applicable. Transaction date
Sum involved in the transaction (R$ thousand)
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
201000000009 – Rem. 3
05/28/2010
738,325
164,174
51,383
2,887
66
201000000009 – Rem. 5 , 6
06/24/2010
1,198,594
352,383
131,998
15,698
72
201000000009 – Rem. 7
06/29/2010
37,054
10,219
3,951
705
71
201000000009 – Rem. 8
07/28/2010
329,484
104,185
41,708
7,373
71
201000000009 – Rem. 11
08/25/2010
362,280
114,804
47,252
10,505
72
201000000009 – Rem. 12
09/20/2010
258,795
77,289
30,767
6,131
71
201000000009 – Rem. 13
09/28/2010
497,424
170,725
73,690
17,899
72
201000000009 – Rem. 17
10/15/2010
194,910
72,003
32,735
9,046
72
201000000009 – Rem. 21
10/28/2010
253,660
94,764
41,627
11,153
72
201000000009 – Rem. 22 : 25
11/09/2010
703,343
285,601
133,305
34,623
72
201000000009 – Rem. 26
11/18/2010
160,125
66,504
32,293
10,063
72
201000000009 – Rem. 27
11/29/2010
130,036
52,821
25,457
7,825
72
201000000009 – Rem. 28
12/17/2010
171,787
71,640
34,790
11,020
72
201000000009 – Rem. 29
12/22/2010
153,855
69,144
34,768
11,683
72
201000000009 – Rem. 31
01/20/2011
353,896
163,215
81,859
28,078
72
201000000009 – Rem. 32
02/14/2011
366,517
164,798
77,418
25,902
72
201000000009 – Rem. 33 , 34
02/28/2011
135,373
55,782
24,854
7,407
55
201000000009 – Rem. 35 , 36
03/15/2011
104,450
44,703
19,984
5,678
69
201000000009 – Rem. 37
03/30/2011
395,905
175,817
78,979
23,791
70
201000000009 – Rem. 40
04/18/2011
366,384
175,940
82,340
27,539
60
201000000009 – Rem. 41
04/19/2011
85,480
41,825
20,037
5,436
69
201000000009 – Rem. 42
04/28/2011
418,612
206,326
99,507
30,723
69
201000000009 – Rem. 43
05/06/2011
277,539
135,872
63,669
22,595
60
201000000009 – Rem. 44
05/20/2011
266,585
137,627
66,592
24,754
60
201000000009 – Rem. 45
06/06/2011
130,754
66,278
31,980
11,621
60
201000000009 – Rem. 46 , 47
06/07/2011
57,215
26,595
10,691
2,614
59
201000000009 – Rem. 48
06/09/2011
125,017
73,011
38,519
14,631
67
201000000009 – Rem. 49
06/10/2011
333,626
179,815
87,462
32,317
60
201000000009 – Rem. 51
06/29/2011
78,834
33,733
14,127
3,716
66
201000000009 – Rem. 53
07/26/2011
578,851
330,307
166,767
66,369
60
201000000009 – Rem. 59
09/13/2011
232,154
139,255
70,872
28,125
60
201000000009 – Rem. 60
09/27/2011
267,177
164,119
84,792
32,686
63
201000000009 – Rem. 62
09/29/2011
455,587
285,196
147,905
61,820
60
201000000009 – Rem. 61
09/30/2011
57,371
27,746
11,754
3,376
59
201000000009 – Rem. 63
10/28/2011
353,793
231,698
123,367
52,400
60
201000000009 – Rem. 70
12/15/2011
442,991
305,537
166,551
73,860
60
347
Section 16 - Transactions With Related Parties
201000000009 – Rem. 67
12/16/2011
113,886
66,556
29,836
7,421
54
201000000009 – Rem. 75
12/19/2011
305,964
198,898
100,788
39,936
60
201000000009 – Rem. 71
12/23/2011
393,060
279,094
152,472
58,583
60
201000000009 – Rem. 72
12/26/2011
288,434
200,521
106,915
37,685
59
201000000009 – Rem. 76
12/27/2011
371,803
260,265
136,715
54,762
61
201000000009 – Rem. 80
12/28/2011
1,103,821
695,447
342,645
122,478
60
201200000006 – Rem. 16
12/26/2012
768,364
769,179
490,790
231,833
58
201200000006 – Rem. 17
12/27/2012
692,910
693,481
443,087
207,979
58
201200000006 – Rem. 18
12/28/2012
796,690
797,207
507,770
233,316
59
201200000006 – Rem. 35 , 36
03/22/2013
1,217,842
-
870,784
422,952
59
201200000006 – Rem. 37 : 39
03/27/2013
1,925,603
-
1,399,711
705,475
58
201200000006 – Rem. 40
03/28/2013
449,226
-
328,843
166,954
59
201200000006 – Rem. 56 , 58
06/12/2013
1,055,358
-
845,447
446,215
59
201200000006 – Rem. 57
06/13/2013
604,061
-
485,683
260,460
59
201200000006 – Rem. 86
12/17/2013
479,646
-
475,893
294,100
60
201200000006 – Rem. 83 , 85
12/18/2013
933,383
-
927,243
568,984
59
201200000006 – Rem. 81 , 82
12/19/2013
707,597
-
703,765
434,378
59
201200000006 – Rem. 87 : 89
12/20/2013
662,398
-
660,223
398,950
59
201200000006 – Rem. 90
12/23/2013
247,239
-
246,907
152,883
59
201200000006 – Rem. 92
12/26/2013
461,579
-
459,611
306,585
60
201200000006 – Rem. 94 , 95
02/27/2014
1,555,568
-
-
1,094,590
60
201200000006 – Rem. 96 : 98
03/24/2014
759,243
-
-
554,709
59
201200000006 – Rem. 99 , 100
05/21/2014
968,038
-
-
759,495
59
201200000006 – Rem. 101 , 103
09/24/2014
2,105,155
-
-
1,892,795
59
201200000006 – Rem. 102 , 104
05/25/2014
1,699,323
-
-
1,532,943
63
200800000025 - Rem. 24
12/22/2008
682,155
2,505
-
60
200900000011 – Rem. 3
06/26/2009
588,959
23,073
1,558
-
59
200900000011 – Rem. 4
06/29/2009
282,120
11,533
770
-
59
200900000011 – Rem. 5
09/29/2009
288,317
21,308
3,634
-
59
200900000011 – Rem. 7
09/30/2009
142,506
12,176
2,110
-
200900000011 – Rem. 10
11/24/2009
357,680
46,874
11,471
57
71
200900000011 – Rem. 11
11/27/2009
210,657
17,588
3,051
7
71
200900000011 – Rem. 13
12/17/2009
350,620
44,213
11,968
261
71
20100000009 – Rem. 81
12/29/2011
331,727
215,754
106,339
38,087
60
201200000006 – Rem. 107 , 108
12/17/2014
1,431,770
-
-
1,415,049
59
201200000006 – Rem. 106
12/18/2014
786,657
-
-
778,590
59
-
59
16.3 The BB operations decision-making process is performed in accordance with current legislation and segregated by function, i,e, the establishment of credit limits, pricing and negotiation are performed by Identify the steps taken to deal with different specialized areas, and in accordance with the policies and conflicts of interest: internal standards, The assignments of credit receivables are performed at normal prices market conditions, equivalent to those that would be adopted when contracted with unrelated parties.
Demonstrate the commutative nature of the agreed conditions or the appropriate compensatory payment:
348
The transactions carried out by Banco do Brasil with related parties are business transactions and follow common standards for banking, not causing any extraordinary benefit or harm to either party, The assignments of credit receivables are agreed on terms that meet the interests of the parties, the ability of the Banco do Brasil to obtain retail funding and of Banco Votorantim to carry out loan operations.
Banco do Brasil S.A. - Reference Form/2015
16.2 Name of the related party:
Banco Votorantim S.A.
Relationship of the party with the issuer: Joint Venture. Credit Receivables Assignment, without co-obligation, made between BB and Banco Votorantim, to auto loans credit receivables assignment.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it 100% of the amount involved in the business. is possible to measure: The originator institution is not obliged to pay the assignee institution losses on Related guarantees and insurance: the portfolio assigned. Conditions for rescission or termination:
According to current legislation in Brazil.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable. Transaction date
Sum involved in the transaction (R$ thousand)
2012
2013
2014
Duration (months)
201200000012 – Rem. 1
06/28/2012
17,638
-
8,304
3,660
58
201200000012 – Rem. 6
09/28/2012
97,944
-
53,396
25,675
59
Contract Number
Balance at (R$ thousand)
16.3 The BB operations decision-making process is performed in accordance with current legislation and segregated by function, i,e, the establishment of credit limits, pricing and negotiation are performed by different specialized areas, Identify the steps taken to deal with and in accordance with the policies and internal standards, The assignments of conflicts of interest: credit receivables are performed at normal prices market conditions, equivalent to those that would be adopted when contracted with unrelated parties. The transactions carried out by Banco do Brasil with related parties are business transactions and follow common standards for banking, not causing Demonstrate the commutative nature of any extraordinary benefit or harm to either party, The assignments of credit the agreed conditions or the appropriate receivables are agreed on terms that meet the interests of the parties, the compensatory payment: ability of the Banco do Brasil to obtain retail funding and of Banco Votorantim to carry out loan operations.
349
Section 16 - Transactions With Related Parties
16.2 Name of the related party:
Banco Votorantim S.A.
Relationship of the party with the issuer: Joint Venture. Interbank lending agreement with Banco Votorantim. In the case of Banco Votorantim be interested in the effective use of line, weekly disbursements are limited to 25% of the total line.
Purpose of the agreement:
Sum corresponding to the interest of such a related party in the business, if it 100% of the amount involved in the business. is possible to measure: Related guarantees and insurance:
There is no guarantees.
Conditions for rescission or termination:
According to current legislation in Brazil, it is automatically renewed for periods of 1 year in case the parties do not decide against the renewal. Obligation maturities will be accelerated in the following hypotheses: (i) financial default and other non-compliances with the contract; (ii) violation of contract commitments; (iii) false or inaccurate statements and guarantees in the contract; (iv) insolvency of Banco Votorantim; (v) judicial collection of notes or obligations higher than 5% of Banco Votorantim's shareholders' equity; and (vi) the contract is declared illegal.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation: ii) Interest rate charged: Contract Number -
Loan for corporate general purposes and Working Capital.
Prevailing interest in the market, not exceeding the maximum rate renegotiated on a quarterly basis between the parties. Sum involved in Balance at (R$ thousand) Transaction Duration the transaction date (months) 2012 2013 2014 (R$ thousand) 09/28/2014 6,800,000 12
16.3 The BB operations decision-making process is performed in accordance with current legislation and segregated by function, i,e, the establishment of credit limits, pricing and negotiation are performed by different specialized areas, Identify the steps taken to deal with and in accordance with the policies and internal standards, The Contract for to conflicts of interest: Revolving Interbank Credit Facility adopts market rates equivalent to those that would be used in contracts with unrelated parties.
The transactions carried out by Banco do Brasil with related parties are Demonstrate the commutative nature of business transactions and follow common standards for banking, not causing the agreed conditions or the appropriate any extraordinary benefit or harm to either party, Considering established compensatory payment: extinction and rescission conditions, one party there isn't privileges over the other, confirming the commutative character of the transaction,
350
Banco do Brasil S.A. - Reference Form/2015
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do rasil S.A. and subsidiary BB Banco de Investimento S.A.: 16.2 Name of the related party:
BB-Banco de Investimento S.A.
Relationship of the party with the issuer: Subsidiary. Purpose of the agreement:
Application in interbank deposits.
Sum corresponding to the interest of such a related party in the business, if it 100% of invested balance. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable.
Contract Number -
Transaction date Variable.
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
2,812,824
2,245,111
2,231,534
Variable.
16.3 Operation signed in strict compliance with the established by Resolution CMN Identify the steps taken to deal with 3,399/2006, with no flexibility that may represent a conflict of interest with the conflicts of interest: Banco do Brasill. The Interbank Deposit is a financial instrument or security designed to enable Demonstrate the commutative nature of the exchange of reserves among financial institutions. They are performed the agreed conditions or the appropriate strictly in accordance with the rules established by the Conselho Monetário compensatory payment: Nacional (CMN) and Bacen, with no privilege of one party to another and confirming the commutative nature of the operation.
351
Section 16 - Transactions With Related Parties
The following charts shows the details required by items 16.2 and 16.3 of relevant contracts (amounts higher than R$711 million in 2012, R$763 million in 2013 and R$643 million in 2014) signed between Banco do Brasil S,A, and associated company Neoenergia S,A,: 16.2 Name of the related party:
Neoenergia S.A.
Relationship of the party with the issuer: Associated company. Purpose of the agreement:
Long-term Investment Fund
Sum corresponding to the interest of such a related party in the business, if it 100% of invested balance. is possible to measure: Related guarantees and insurance:
Not Applicable.
Conditions for rescission or termination:
Not Applicable.
When such relationship is a loan or any other kind of debt, also inform: i) Nature / reasons for the operation:
Not Applicable.
ii) Interest rate charged:
Not Applicable.
Contract Number -
Transaction date 09/29/2003
Sum involved in the transaction (R$ thousand) Variable.
Balance at (R$ thousand) 2012
2013
2014
Duration (months)
2,338,258
2,550,904
853,314
Undetermined.
16.3 Transaction conducted in compliance with current legislation in Brazil, without Identify the steps taken to deal with conflict of interest with Banco do Brasil. conflicts of interest: Fund transactions are conducted strictly in conformity with the rules Demonstrate the commutative nature of established by CMN, Bacen and CVM, and in accordance with fund regulations the agreed conditions or the appropriate available at CVM, without privilege of one party over the other and confirming compensatory payment: the commutative category of the transaction.
352
Banco do Brasil S.A. - Reference Form/2015
17.
CAPITAL
17.1. Information on the capital Prepare a table containing the following information on capital: Banco do Brasil takes part in BM&FBovespa New Market, holding only common shares without par value. On the date this Reference Form was presented, breakdown of Banco do Brasil capital was as follows, pending approval by the Bacen: After the Extraordinary Shareholders' Meeting held on 04/28/2015 Amount (R$)
Numbers of Shares
a. Issued capital
60,000,000,000.00
2,865,417,020
b. Subscribed capital
60,000,000,000.00
2,865,417,020
c. Paid-in capital
60,000,000,000.00
2,865,417,020
d. Capital payment deadline
Capital fully paid-in
e. Authorized capital
120,000,000,000.00
- Authorization date
04/28/2015
f. Securities convertible into shares
Not applicable.
g. Conversion terms
Not applicable.
17.2. Issuer capital increases In relation to the issuer's capital increases: a. Resolution date
12/18/2012
12/19/2013
ESM
ESM
ESM
No issuance of shares
No issuance of shares
No issuance of shares
15,277,431,321.02
5,600,000,000.00
6,000,000,000.00
No issuance of shares
No issuance of shares
No issuance of shares
b. Body that decided the increase c. Issue date d. Total increase (R$) e. Amount of issued securities separated by class and species f. Issue price (R$)
04/28/2015
No issuance of shares
No issuance of shares
No issuance of shares
Capitalization of reserves
Capitalization of reserves
Capitalization of reserves
h. Criterion used to determine the issuance price
No issuance of shares
No issuance of shares
No issuance of shares
i. Indication of whether the subscription was private or public
No issuance of shares
No issuance of shares
No issuance of shares
46.12%
11.57%
11.11%
g. Payment method
j. Percentage increase over previous capital amount
17.3. Stock splits, reverse splits and stock grants Regarding stock splits, reverse splits and stock grants, inform in a table (last 3 years): a. date of the decision; b. number of shares before the approval, separated by class and type, and c. number of shares after the approval, separated by class and type. None. 17.4. Capital decreases of Banco do Brasil Regarding capital decreases of the issuer, indicate: There was no resolution on capital decrease in the last 3 fiscal years. 17.5. Other relevant information Provide other information that the issuer considers relevant None.
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Section 18 - Securities
18.
SECURITIES
18.1. Rights of each class and type of shares issued Describe each class or type of share issued: a. right to dividends Banco do Brasil only trades common shares, which entitle holders to rights and benefits, and restrictions resulting from Brazilian Corporate Law, do Novo Mercado listing rules and Bylaws. Shareholders are entitled to fully receive any applicable benefit, dividends and other earnings of any nature which are reported by the Bank. Banco do Brasil's Bylaws ensures shareholders of half-yearly receiving minimum and mandatory dividend equivalent to twenty-five per cent (25%) of adjusted net income, pursuant to the Law. Dividends corresponding to each half-year will be stated by the Management Board, approved by the Board of Directors. Distribution of intermediary dividends in less than a half-year period is permitted in the Bylaws. Pursuant to legislation in effect and resolution of Board of Directors, Management Board may authorize payment or credit of interest on shareholders' equity to the shareholders, as well as allocation of its value to mandatory minimum dividend. The Management Board will be responsible for establishing value and date of payment or credit of each installment of interests. b. voting right Each common share entitles its holder to one vote at the General Meeting's resolutions, except when adopting multiple vote for the Board of Directors' election. c. convertible into other class or type of share, indicating: i. conditions: Not applicable. ii. effects on capital stock: Not applicable. d. rights to capital reimbursement Right to Withdrawal: Any shareholder of Banco do Brasil dissident of certain resolutions take at general meeting may withdraw from BB, upon reimbursement of their shares' value, based on book value. Pursuant to Brazilian Corporate Law, right to withdraw may be exercised, among others, under the following circumstances: (i) spin-off of Banco do Brasil (in specific situations, as described in the following paragraph); (ii) decrease in mandatory minimum dividend of BB; (iii) amendment to Banco do Brasil's corporate purpose; (i) merger or incorporation of BB (in specific situations, as described in the following paragraph); (v) Banco do Brasil's interest in a group of companies (as provided for in Brazilian Corporate Law, in specific situations, as described in the following paragraph); (vi) merger of shares involving BB pursuant to Article 252 of Brazilian Corporate Law, so as to turn BB into a whollyowned subsidiary of other Brazilian company or turn other Brazilian company into a wholly subsidiary of BB; and (vii) acquisition of other company's control for a price exceeding certain limits set forth in law (Article 256 of Brazilian Corporate Law). Brazilian Corporate Law sets forth the spin-off of Banco do Brasil will only entitle to withdrawal in cases the spin-off causes the following : (i) change in Banco do Brasil's corporate purpose, except when spun off equity is allocated to company whose purpose is equivalent to Banco do Brasil's purpose; (ii) decrease in mandatory minimum dividend to be distributed to the Bank shareholders; or (iii) Banco do Brasil's interest in a group of companies (as set forth in the Brazilian Corporate Law). If occurs: (i) merger or incorporation of Banco do Brasil into other company; Or (ii) Banco do Brasil's interest in a group of companies (as defined in Brazilian Corporate Law), BB shareholders will not be entitled to withdraw in case their shares have the following: (a) liquidity, that is, figures in BM&FBOVESPA general index or index of any stock exchange, as defined by CVM; And (b) dispersion
354
Banco do Brasil S.A. - Reference Form/2015
in market, so as the controlling shareholders of the Bank, parent company or other companies under its control may hold less than half the total shares of BB. Right to withdrawal must be exercised within thirty (30) days, as from the publication of the minutes of general meeting which may have approved the act originating the recess. Additionally, shareholders at general meeting are entitled to reconsider any resolution that may give rise to the right to withdrawal, after call by administrative bodies of Banco do Brasil within ten (10) day subsequent to the end of exercise term, if they understand that payment of share reimbursement price to dissident shareholders would risk the financial stability of the Bank. In case of exercising the right to withdrawal, shareholders of Banco do Brasil will be entitled to receive book value of their shares, based on the last balance sheet approved by general meeting of BB. If, however, resolution giving rise to the right of withdrawal has occurred more than sixty (60) days after date of last balance sheet approved, shareholder may request, jointly with reimbursement, presentation of special balance sheet on the date meeting said term, in order to assess book value of shares. In this case, BB must immediately pay eighty per cent (80%) of reimbursement value, calculated based on last balance sheet approved by shareholders of the Bank, and balance within one hundred and twenty (120) days as from date of resolution of general meeting. Redemption: Pursuant to Brazilian Corporate Law, shares of Banco do Brasil may be redeemed upon determination of their shareholders at special shareholders' meeting, representing at least fifty percent (50%) of BB shares. Redemption must be made by drawing lots, and may be paid with the Company's income, profit reserve or capital reserve. e. right to participate in public offering by control sale Novo Mercado Listing Rules of BM&FBOVESPA and Banco do Brasil's Bylaws set forth that selling Banco do Brasil's share control, either by a single operation, or by successive operations, must be contracted under the suspensive or resolutive condition that the acquiring party undertakes to conduct a public offering of acquisition to other shareholders of the Bank, observing conditions and terms in effect in legislation and in Novo Mercado listing rules, so as to ensure they have equal treatment to that given to seller controlling shareholder, and statement containing price and other conditions to the sale operation of Banco do Brasil's control must be delivered to BM&FBOVESPA. This offer will be also required when there is assignment for consideration of rights to share subscription of other securities or rights related to amounts convertible into shares, resulting in sale of Banco do Brasil's control and in case of sale of control holding the controlling power of the Bank. In this sense, seller controlling shareholder will be obliged to declare to BM&FBOVESPA the assigned value to BB in the sale, in addition to attaching documents to evidence said value. Pursuant to Novo Mercado Ruling and Bylaws, that one who already holds shares, and also acquires the control of Banco do Brasil, in view of a private purchase and sale agreement entered into with controlling shareholder, involving any number of shares, must conduct a public offering, in the model above referred, and reimburse shareholders from who they have purchased shares traded at stock exchange six (6) months before the date of control sale, to which must pay the difference between price paid to seller controlling shareholder and amount paid for BB shares at stock exchange in this period, duly updated. Banco do Brasil will not record: (i) any transfer of shares to acquiring party of control, or those who may hold the control, while these do not execute the Controlling Shareholders' Statement of Agreement, as define in the Novo Mercado (New Market) Ruling and in its Bylaws; or (ii) any agreement of shareholders having on the exercise the control power when its signatory have not signed Controlling Shareholder's Statement of Agreement. Equally, seller controlling shareholder will not transfer ownership of its shares while acquiring party does not execute Controlling Shareholder's Statement of Agreement. f. restrictions to trade Not applicable.
355
Section 18 - Securities
g. conditions to change rights ensured to such securities Not applicable. h. other relevant characteristics Not applicable. i. foreign issuers Foreign issuers must identify differences between characteristics described in items "a" to "i" and those normally attributed to securities issued by national issuers, differentiating which are inherent to securities described and which are imposed by rules of the country where the issuer comes from or country where its securities are in custody Not applicable. 18.2. Statutory rules that limit voting right of significant shareholders Describe, if applicable, the statutory rules that limit voting right of significant shareholders or that oblige them to conduct a public offering As set forth in art. 55 of the Bylaws, if the Bank goes private with consequent cancellation of publiclyheld company registration, a minimum price shall be offered for the shares, corresponding to the economic value determined by a specialized company chosen by the General Meeting, as established in Law no. 6,404, of 12/15/1976, and as provided for in the Sole Paragraph of Article 10. 18.3. Exceptions and suspensive clauses related equity and political rights Describe exceptions and suspensive clauses related to equity or policy rights set forth in the bylaws There is no exception or suspensive clause related to equity or policy rights set forth in the Bank's Bylaws. 18.4. Trade volume as well as higher or lower quotations of securities trade at stock exchange Inform trade volume as well as higher or lower quotations of securities trade at stock exchange or organized and OTC market, in each one of quarters of last 3 years BBAS3 (R$)
Minimum
Maximum
First quarter/2012
17.84
23.23
11,083,980,391
Second quarter/2012
14.76
20.71
9,332,698,914
Third quarter/2012
14.44
22.00
9,748,645,041
Fourth quarter/2012
16.72
21.42
8,295,677,786
First quarter/2013
19.47
23.27
10,400,796,306
Second quarter/2013
17.32
24.20
12,555,005,720
Third quarter/2013
17.23
24.10
10,477,204,619
Fourth quarter/2013
21.39
26.98
10,765,046,917
First quarter/2014
17.45
22.44
9,215,879,920
Second quarter/2014
20.53
25.51
9,977,046,419
Third quarter/2014
22.95
36.47
16,464,908,808
Fourth quarter/2014
20.80
33.08
16,543,399,060
Source: Economática – Inquiry with earnings adjustments for proceeds for all historical series.
356
Volume (quantity)
Banco do Brasil S.A. - Reference Form/2015
18.5. Other securities issued Describe securities issued other than shares: a) Identification of the security b) Number c) Amount d) Issue date e) Restriction to trade f) Convertibility into shares or right to subscribe to or purchase shares of the issuer, informing i) Conditions ii) Effects on capital stock g) Possibility of redemption i) Assumptions ii) Calculation formula h) When the securities are debts i) Maturity and early maturity terms ii) interest iii) Guarantees (description of the asset in case of collateral) iv) unsecured or subordinate credit? (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to ● dividend distribution ● the sale of certain assets ● the contracting of new debts ● issue of new securities vi) Fiduciary Agent and main terms i) Terms for changing the rights j) Other relevant characteristics
357
Section 18 - Securities
a) Identification of the security:
Perpetual Warrant 2009
b) Number:
1
c) Amount¹:
R$ 5,903,550.00
d) Issue date:
10/20/2009
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None
g) Possibility of redemption:
i) Assumptions
ii) Calculation formula
a) There is no possibility of early redemption to be exercised by the investor. b) The Bank has the option of redeeming all the securities or any part thereof on 10/20/2020 and on each coupon payment date as of this date, subject to prior approval from the Central Bank or other Brazilian governmental authority. c) In the event of tax or regulatory events, the Bank may redeem all securities (but not part of them) early on any coupon payment date before 10/20/2020. In this case, the trustee must receive a formal early notification containing consulting legal opinion of a Brazilian consulting firm attesting the legal conditions for the exercise of the option. a) In the event of redemption arising from a tax event, the price will be 100% of the principal plus accrued and unpaid interest (―base price of redemption‖). b) In the event of redemption arising from a regulatory event, the price will be determined by an independent investment bank, being the higher of the ―redemption base price" and the resulting price of the sum of: i) the present value of principal and ii) the present value of the accrued semiannual interests, according to the formula in the indenture of securities.
h) When the securities are debts: Perpetual (without maturity) and there is no hypothesis for early maturity. i) Maturity and early maturity terms Purchase option in October, 2020 and on each coupon payment date thereafter. ii) interest
8.50% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Non-cumulative junior subordinate. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
Some conditions.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
Deutsche Bank Trust Company Americas.
i) Terms for changing the rights:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders).
j) Other relevant characteristics:
Any payment of non-principal will not be due and accumulate if the issuer does not distribute dividends to common share holders in relation to period corresponding to period of interests of securities.
1 - Raised amount equivalent to US$1,500,000,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
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Banco do Brasil S.A. - Reference Form/2015
a) Identification of the security:
Tier 2 Subordinated Debt
b) Number:
1
c) Amount¹:
R$ 2,597,562.00
d) Issue date:
10/05/2010
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption: i) Assumptions
ii) Calculation formula
The issuer will not have right to redeem securities before the respective maturity date, except when tax treatment is changed. The issuer can not redeem the securities without the authorization of the Central Bank. 100% of the principal amount plus accrued and unpaid interest and all other amounts due.
h) When the securities are debts:
i) Maturity and early maturity terms
01/15/2021 Failure to pay capital. Failure to pay interest for a period of 15 working days. In cases of bankruptcy or insolvency of the issuer.
ii) interest
5.375% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Tier 2 subordinated debt, according to Bacen Resolution 3,444. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
Some conditions.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
Deutsche Bank Trust Company Americas.
i) Terms for changing the rights:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders).
j) Other relevant characteristics:
Relevant characteristics of Subordinated Debt are described above.
1 - Raised amount equivalent to US$660,000,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
359
Section 18 - Securities
a) Identification of the security:
GMTN - Series 13
b) Number:
1
c) Amount:
R$ 350,000,000.00
d) Issue date:
07/13/2007
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
The issuer will not have right to redeem securities before the respective maturity date, except when tax treatment is changed. The issuer can not redeem the securities without the authorization of the Central Bank.
ii) Calculation formula
100% of the principal amount plus accrued and unpaid interest and all other amounts due.
h) When the securities are debts:
i) Maturity and early maturity terms
07/18/2017 Failure to pay capital. Failure to pay interest for a period of 15 working days. In cases of bankruptcy or insolvency of the issuer.
ii) interest
9.75% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Unsecured credit. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
The Law Debenture Trust Corporation.
i) Terms for changing the rights:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders).
j) Other relevant characteristics:
Relevant characteristics of Subordinated Debt are described above.
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Banco do Brasil S.A. - Reference Form/2015
a) Identification of the security:
GMTN - Series 16
b) Number:
1
c) Amount¹:
R$ 1,967,850,000.00
d) Issue date:
01/22/2010
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
The issuer will not have right to redeem total securities before the respective maturity date, except when tax treatment is changed. The issuer can not redeem the securities without the authorization of the Central Bank.
ii) Calculation formula
100% of the principal amount plus accrued and unpaid interest and all other amounts due.
h) When the securities are debts:
i) Maturity and early maturity terms
01/22/2020 Failure to pay capital. Failure to pay interest for a period of 15 working days. In cases of bankruptcy or insolvency of the issuer.
ii) interest
6.00% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Unsecured credit. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
The Law Debenture Trust Corporation.
i) Terms for changing the rights:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders).
j) Other relevant characteristics:
Relevant characteristics of Subordinated Debt are described above.
1 - Raised amount equivalent to US$500,000,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
361
Section 18 - Securities
a) Identification of the security:
GMTN - Series 17
b) Number:
1
c) Amount¹:
R$ 3,225,375,000.00
d) Issue date:
01/20/2011
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
The issuer will have right to redeem total securities before the respective maturity date, except when tax treatment is changed. The issuer can not redeem the securities without the authorization of the Central Bank. The issuer may redeem in whole the higher of: (1) 100% of the principal and (2) the sum of the present values of the remaining installments of principal and future discounted interest based on 365 or 366 days/year at Bund Rate plus a premium of 35bps, plus interest accrued on the principal up to the date of exercise of the option.
ii) Calculation formula
100% of the principal amount plus accrued and unpaid interest and all other amounts due.
h) When the securities are debts:
i) Maturity and early maturity terms
01/20/2016 Failure to pay capital. Failure to pay interest for a period of 15 working days. In cases of bankruptcy or insolvency of the issuer.
ii) interest
4.50% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Unsecured credit. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
The Law Debenture Trust Corporation.
i) Terms for changing the rights:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders).
j) Other relevant characteristics:
There is a "Negative Pledge" which provides that in the event that the issuer conducts new issues that have some type of guarantee, including these same guarantees shall be automatically valid for this issue.
1 - Raised amount equivalent to 750 000 000 €, converted on 12/16/2015 with the rate of R$ 4,3005. (Source: Ptax Bacen).
362
Banco do Brasil S.A. - Reference Form/2015
a) Identification of the security:
Securitization MT 100 - EPE - Series 2008 - 2
b) Number:
1
c) Amount¹:
R$ 590,355,000.00
d) Issue date:
04/29/2008
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption: i) Assumptions ii) Calculation formula
The issuer will have right to redeem total or partial securities before the respective maturity date at any time. 100% of the principal amount plus accrued and unpaid interest and all other amounts due.
h) When the securities are debts:
i) Maturity and early maturity terms
06/15/2018 Failure to pay capital. Failure to pay interest for a period of 15 working days. In cases of bankruptcy or insolvency of the issuer or SPE.
ii) interest
5.25% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Unsecured credit. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
The Bank of New York Trust Company (Cayman) Limited.
i) Terms for changing the rights:
j) Other relevant characteristics:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders). The IT provider is an important part of the securitization transaction, and its replacement requires approval of all stakeholders.
1 - Raised amount equivalent to US$150,000,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
363
Section 18 - Securities
a) Identification of the security:
Senior Debit - Certificate of Deposit - CD
b) Number:
1
c) Amount¹:
R$ 19,988,682,596.33 Total Certificates of Deposit (CDs) to be issued by Banco do Brasil, position on 09/30/2015 (various currencies).
d) Issue date:
Diverse.
e) Restriction to trade:
(a) The bonds are issued in programs established by Banco do Brasil through its Grand Cayman, London, New York and Tokyo; (b) how programs are not recorded on any stock exchange nor the SEC, sale restrictions apply, according to the various jurisdictions.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption: i) Assumptions ii) Calculation formula
Instruments may be redeemed in advance by agreement between the parties. 100% of the principal amount plus accrued and unpaid interest and all other amounts due.
h) When the securities are debts: Diverse. In case of bankruptcy or insolvency of the issuer, non-compliance with i) Maturity and early maturity terms obligations under the program documentation, change of control, cross default and similar events. ii) interest
Diverse (fixed or floating rates).
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Unsecured credit. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
The Bank of New York Mellon, London Branch and Deutsche Bank Ag, London Branch.
i) Terms for changing the rights:
Not Applicable.
j) Other relevant characteristics:
Not Applicable.
1 - Raised amount equivalent to US$5,078,812,561.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
364
Banco do Brasil S.A. - Reference Form/2015
a) Identification of the security:
Tier 2 Subordinated Debt
b) Number:
1
c) Amount¹:
R$ 5,903,550,000.00
d) Issue date:
05/26/2011
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
The issuer will not have right to redeem securities before the respective maturity date, except when tax treatment is changed. The issuer can not redeem the securities without the authorization of the Central Bank.
ii) Calculation formula
100% of the principal amount plus accrued and unpaid interest and all other amounts due in the Deed.
h) When the securities are debts: 01/26/2022 Failure to pay capital. i) Maturity and early maturity terms Failure to pay interest for a period of 15 working days. In cases of bankruptcy or insolvency of the issuer. ii) interest
5.8750% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Tier 2 subordinated debt, according to Bacen Resolution 3,444. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
Some conditions.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
Deutsche Bank Trust Company Americas.
i) Terms for changing the rights:
j) Other relevant characteristics:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders). Relevant characteristics of Tier 2 Subordinated Debt are above described.
1 - Raised amount equivalent to US$1,500,000,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
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Section 18 - Securities
a) Identification of the security:
Senior Debt
b) Number:
1
c) Amount¹:
R$ 1,967,850,000.00
d) Issue date:
11/23/2011
e) Restriction to trade:
The securities are offered and sold in the United States primary and secondary markets, without the requirement of registration at SEC (issue under the exception provided in Section 3(a)(2) of the Securities Act), allowing access by any investor resident in that country.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
The issuer will not have right to redeem securities before the respective maturity date, except when tax treatment is changed. The issuer can not redeem the securities without the authorization of the Central Bank.
ii) Calculation formula
100% of the principal amount plus accrued and unpaid interest and all other amounts due.
h) When the securities are debts:
i) Maturity and early maturity terms
01/23/2017 Failure to pay capital. Failure to pay interest for a period of 15 working days. In cases of bankruptcy or insolvency of the issuer.
ii) interest
3.875% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Senior. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
Deutsche Bank Trust Company Americas.
i) Terms for changing the rights:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders).
j) Other relevant characteristics:
Relevant characteristics of Senior Debt are described above.
1 - Raised amount equivalent to US$500,000,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
366
Banco do Brasil S.A. - Reference Form/2015
a) Identification of the security:
Perpetual Warrant 2012
b) Number:
1
c) Amount¹:
R$ 3,491,662,518.90
d) Issue date:
01/20/2012
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
a) There is no possibility of early redemption to be exercised by the investor in accordance with CMN Resolution 3,444, of 02/28/2007. b) The Bank has the option of redeeming all the securities (but not of part thereof) on 04/15/2023 and on each coupon payment date as of this date, subject to prior approval from the Central Bank or other Brazilian governmental authority. c) In the event of tax or regulatory events, the Bank may redeem all securities (but not part of them) early on any coupon payment date before 04/15/2023. In this case, the trustee must receive a formal early notification containing consulting legal opinion of a Brazilian consulting firm attesting the legal conditions for the exercise of the option.
ii) Calculation formula
a) In the event of redemption arising from a tax event, the price will be 100% of the principal plus accrued and unpaid interest (―base price of redemption‖). b) In the event of redemption arising from a regulatory event, the price will be determined by an independent investment bank, being the higher of the ―redemption base price" and the resulting price of the sum of: i) the present value of principal and ii) the present value of the accrued semiannual interests, according to the formula in the indenture of securities.
h) When the securities are debts: Perpetual (without maturity) and there is no hypothesis for early i) Maturity and early maturity terms maturity. Purchase option on 04/15/2023. ii) interest
9.25% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Non-cumulative junior subordinate. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
Deutsche Bank Trust Company Americas.
i) Terms for changing the rights:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders).
j) Other relevant characteristics:
Any payment of non-principal will not be due and accumulate if the issuer does not distribute dividends to common share holders in relation to period corresponding to period of interests of securities.
1 - Raised amount equivalent to US$887,177,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
367
Section 18 - Securities
a) Identification of the security:
Perpetual Warrant 2012 (Reopening)
b) Number:
1
c) Amount¹:
R$ 2,951,775,000.00
d) Issue date:
03/05/2012
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
a) There is no possibility of early redemption to be exercised by the investor in accordance with CMN Resolution 3,444, of 02/28/2007. b) The Bank has the option of redeeming all the securities (but not of part thereof) on 04/15/2023 and on each coupon payment date as of this date, subject to prior approval from the Central Bank or other Brazilian governmental authority. c) In the event of tax or regulatory events, the Bank may redeem all securities (but not part of them) early on any coupon payment date before 04/15/2023. In this case, the trustee must receive a formal early notification containing consulting legal opinion of a Brazilian consulting firm attesting the legal conditions for the exercise of the option.
ii) Calculation formula
a) In the event of redemption arising from a tax event, the price will be 100% of the principal plus accrued and unpaid interest (―base price of redemption‖). b) In the event of redemption arising from a regulatory event, the price will be determined by an independent investment bank, being the higher of the ―redemption base price" and the resulting price of the sum of: i) the present value of principal and ii) the present value of the accrued semiannual interests, according to the formula in the indenture of securities.
h) When the securities are debts: Perpetual (without maturity) and there is no hypothesis for early i) Maturity and early maturity terms maturity. Purchase option in April 2023. ii) interest
9.25% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Non-cumulative junior subordinate. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
Bank of New York Mellon
i) Terms for changing the rights:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders).
j) Other relevant characteristics:
Any payment of non-principal will not be due and accumulate if the issuer does not distribute dividends to common share holders in relation to period corresponding to period of interests of securities.
1 - Raised amount equivalent to US$750,000,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
368
Banco do Brasil S.A. - Reference Form/2015
a) Identification of the security:
Tier 2 Subordinated Debt
b) Number:
1
c) Amount¹:
R$ 2,951,775,000.00
d) Issue date:
06/19/2012
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
The issuer will not have right to redeem total securities before the respective maturity date, except when tax treatment is changed. The issuer can not redeem the securities without the authorization of the Central Bank.
ii) Calculation formula
100% of the principal amount plus accrued and unpaid interest and all other amounts due in the Deed.
h) When the securities are debts: i) Maturity and early maturity terms
01/19/2023 In cases of bankruptcy or insolvency of the issuer or similar events.
ii) interest
5.8750% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Tier 2 subordinated debt, according to Bacen Resolution 3,444. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
Some conditions.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
Deutsche Bank Trust Company Americas
i) Terms for changing the rights:
j) Other relevant characteristics:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders). Relevant characteristics of Tier 2 Subordinated Debt are above described.
1 - Raised amount equivalent to US$750,000,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
369
Section 18 - Securities
a) Identification of the security:
Senior Debt
b) Number:
1
c) Amount¹:
R$ 7,182,652,500.00
d) Issue date:
10/10/2012
e) Restriction to trade:
The securities are offered and sold in the United States primary and secondary markets, without the requirement of registration at SEC (issue under the exception provided for in Section 3(a)(2) of the Securities Act), allowing access by any investor resident in that country.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
The issuer will not have right to redeem securities before the respective maturity date, except when tax treatment is changed. The issuer can not redeem the securities without the authorization of the Brazilian Central Bank.
ii) Calculation formula
100% of the principal amount plus accrued and unpaid interest and all other amounts due.
h) When the securities are debts: 10/10/2022 Failure to make a capital payment, failure to make the payment of i) Maturity and early maturity terms interest for a period of 15 days, in cases of a bankruptcy or insolvency proceeding of the issuer, non-performance of obligations of the Note or of the Indenture, change of control, cross default, similar events. ii) interest
3.875% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Senior. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
Deutsche Bank Trust Company Americas.
i) Terms for changing the rights:
Supplemental Indenture with the consent of the security holders and Supplemental Indenture without the consent of the security holders (in a manner considered satisfactory for the Trustee and without affecting rights of the holders).
j) Other relevant characteristics:
Relevant characteristics of Senior Debt are described above.
1 - Raised amount equivalent to US$1,825,000,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
370
Banco do Brasil S.A. - Reference Form/2015
a) Identification of the security:
Perpetual Warrant 2013
b) Number:
1
c) Amount¹:
R$ 7,871,400,000.00
d) Issue date:
01/31/2013
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
a) There is no possibility of early redemption to be exercised by the investor. b) The Bank has the option of redeeming all the securities (but not of part thereof) on 04/15/2024 and on each coupon payment date as of this date, subject to prior approval from the Central Bank or other Brazilian governmental authority. c) In the event of tax or regulatory events, the Bank may redeem all securities (but not part of them) early on any coupon payment date before 04/15/2024. In this case, the trustee must receive a formal early notification containing consulting legal opinion of a Brazilian consulting firm attesting the legal conditions for the exercise of the option.
ii) Calculation formula
a) In the event of redemption arising from a tax event, the price will be 100% of the principal plus accrued and unpaid interest (―base price of redemption‖). b) In the event of redemption arising from a regulatory event, the price will be determined by an independent investment bank, being the higher of the ―redemption base price" and the resulting price of the sum of: i) the present value of principal and ii) the present value of the accrued semiannual interests, according to the formula in the indenture of securities.
h) When the securities are debts: i) Maturity and early maturity terms
Perpetual (with no maturity). Early maturity of the principal can only occur in the event of liquidation, dissolution or other similar incidents involving the Bank.
ii) interest
6.25% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? The obligation is junior subordinate. (in the absence of guarantees) The interest is not cumulative in the event of non-payment. v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
If there is no payment of interest and non-principal, the Bank undertakes to recommend the non-payment of dividends to its shareholders, at the limit of the applicable legislation, until the regularization of payments.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
Bank of New York Mellon
i) Terms for changing the rights:
The Bank may make ―qualified changes‖ in the securities, without the consent of the investors, at any time and when necessary, strictly to the extent required to comply with a new regulation of the Brazilian Central Bank, satisfying requirements to maintain the qualification of the debt as Level 1 or Level 2 Capital, due to the implementation of Basel III. The Bank may also make other changes (―unqualified changes‖), providing they do not cause any material loss to the security holders, as formally certified by the Bank to the trustee. The ―qualified changes‖ consist of : a) changes for absorption of losses (within the strict limits necessary for the adequacy of the debt as Level 1 or Level 2 Capital); and b) changes of payment of interest and of non-principal (establishing that the Bank undertakes to recommend the non-payment of dividends to its shareholders until the payment of the interest and non-principal of the securities relative to a period). The occurrence of the qualified changes (a) and (b) will imply the elimination, under the terms and conditions of the securities, of the Bank’s obligation to pay interest and non-principal if it pays dividends to its shareholders.
j) Other relevant characteristics:
Any payment of non-principal will not be due and accumulate if the issuer does not distribute dividends to common share holders in relation to period corresponding to period of interests of securities.
1 - Raised amount equivalent to US$2,000,000,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
371
Section 18 - Securities
a) Identification of the security:
GMTN – Series 19
b) Number:
1
c) Amount¹:
R$ 3,010,350,000.00
d) Issue date:
07/25/2013
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
In the event of tax or regulatory events, the Bank may redeem all securities before the maturity date. In the event of redemption arising from a tax event, the price will be the higher between two options: (1) 100% of the principal amount or (2) the sum of the present value of the remaining principal and unpaid interest, discounted, on a 365 or 366 days/year basis by the so called ―Bund Rate‖, plus a 65bps premium and the accumulated over the principal until the date of the exercise of the option.
ii) Calculation formula
100% of the principal amount plus accrued and unpaid interest and all other amounts due.
h) When the securities are debts: 07/25/2018 Failure to make a capital payment. i) Maturity and early maturity terms Failure to make interest payments for a 15 business days period. Insolvency or bankruptcy of the issuer. ii) interest
3.75% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Unsecured. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
The Law Debenture Trust Corporation.
i) Terms for changing the rights:
None.
j) Other relevant characteristics:
Negative Pledge establishing that guarantees associated to further emissions by the Bank must be associated to the presente bond as well.
1 - Raised amount equivalent to 700 000 000 €, converted on 12/16/2015 with the rate of R$ 4.3005. (Source: Ptax Bacen).
372
Banco do Brasil S.A. - Reference Form/2015
a) Identification of the security:
GMTN – Series 19 (Reopening)
b) Number:
1
c) Amount¹:
R$ 1,290,150,000.00
d) Issue date:
03/26/2014
e) Restriction to trade:
The bonds may only be acquired by qualified institutional investors.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
In the event of tax or regulatory events, the Bank may redeem all securities before the maturity date. In the event of redemption arising from a tax event, the price will be the higher between two options: (1) 100% of the principal amount or (2) the sum of the present value of the remaining principal and unpaid interest, discounted, on a 365 or 366 days/year basis by the so called ―Bund Rate‖, plus a 65bps premium and the accumulated over the principal until the date of the exercise of the option.
ii) Calculation formula
100% of the principal amount plus accrued and unpaid interest and all other amounts due.
h) When the securities are debts:
i) Maturity and early maturity terms
07/25/2018 Failure to make a capital payment. Failure to make interest payments for a 15 business days period. Insolvency or bankruptcy of the issuer.
ii) interest
3.75% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Unsecured. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
The Law Debenture Trust Corporation.
i) Terms for changing the rights:
None.
j) Other relevant characteristics:
Negative Pledge establishing that guarantees associated to further emissions by the Bank must be associated to the presente bond as well.
1 - Raised amount equivalent to 300 000 000 €, converted on 12/16/2015 with the rate of R$ 4.3005. (Source: Ptax Bacen).
373
Section 18 - Securities
a) Identification of the security:
GMTN – Series 20
b) Number:
1
c) Amount¹:
R$ 1,096,782,500.00
d) Issue date:
12/20/2013
e) Restriction to trade:
The document (Pricing Supplement) contains restrictions on the sale of the bonds in the United States and to American people, in the UK, European Economic Community, in Brazil and in the Cayman Islands.
f) Convertibility: i) Conditions
None. It refers to non-convertible bonds.
ii) Effects on capital stock
None.
g) Possibility of redemption: i) Assumptions
None.
ii) Calculation formula
Not Applicable.
h) When the securities are debts: 06/20/2019 In the event of tax or regulatory events, the Bank may redeem all securities before the maturity date. Failure to make a capital or interest payment, breach of other i) Maturity and early maturity terms obligations, cross default, legal claims, enforcement of securities, insolvency, moratorium, dissolution, change in the business or operating structure, loss of control of the Bank by the Brazilian government, similar events. ii) interest
2.50% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? Unsecured. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
None.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
The Law Debenture Trust Corporation.
i) Terms for changing the rights:
The trustee, the issuer and the designated subsidiaries may agree to modifications of the contract without the consent of the holders of the securities, provided that, in the opinion of the trustee: a) whether formal, technical, minor or made t o correct a manifest and proven mistake; or b) are considered not materially prejudicial to the bondholders. Changes must be communicated to the holders of the securities as soon as possible.
j) Other relevant characteristics:
There is a "negative pledge" establishing that while any bond is pending, the Issuer and its affiliates may not use any of its assets to secure external indebtedness (except for sums not exceeding US$50 million, aggregates) without prior or while granting the same guarantee to the present series bonds.
1 - Raised amount equivalent to CHF275,000,000, converted on 12/16/2015 with the rate of R$ 3.9883. (Source: Ptax Bacen).
374
Banco do Brasil S.A. - Reference Form/2015
a) Identification of the security:
IECE - Perpetual 2014
b) Number:
1
c) Amount¹:
R$ 8,658,540,000.00
d) Issue date:
06/18/2014
e) Restriction to trade:
The securities may only be purchased by Qualified Investors.
f) Convertibility: i) Conditions
Nonconvertible.
ii) Effects on capital stock
None.
g) Possibility of redemption:
i) Assumptions
a) There is no chance of early redemption to be exercised by the Investor; b) The Bank holds all the securities of the redemption option (but not part of them) on 06/18/2024 and each coupon date as of this date, subject to the prior approval of the Central Bank or other domestic authorities; c) After a period of 05 years from the date of issue, the occurrence of tax or regulatory events, the Bank may redeem the bonds.
ii) Calculation formula
The rescue as a result of tax or regulatory event, the price will be the "base price of redemption" (principal plus accrued and unpaid interest).
h) When the securities are debts: i) Maturity and early maturity terms
Perpetual (unpaid). Can only occur early maturity in the event of liquidation events, dissolution or similar involving the Bank.
ii) interest
9% p.a.
iii) Guarantees (description of the No guarantee. asset in case of collateral) iv) unsecured or subordinate credit? The obligation is junior subordinated. (in the absence of guarantees) v) Restrictions imposed on Banco do Brasil in relation to: • dividend distribution
If there is interruption in interest payments and / or principal, the Bank undertakes to recommend the non-payment of dividends to its shareholders within the limits of applicable law, until there is a settlement payments.
• the sale of certain assets
None.
• the contracting of new debts
None.
• issue of new securities
None.
vi) Fiduciary Agent and main terms:
Bank of New York Mellon
i) Terms for changing the rights:
None.
j) Other relevant characteristics:
The Bank may amend the terms and conditions of the securities without the investor's consent, within one year from the date of issue, where necessary, only to meet new regulations of the Central Bank of Brazil, fulfilling requirements to maintain the qualification of debt as Tier 1 capital, according to Resolution 4,192 and subsequent regulations.
1 - Raised amount equivalent to US$2,200,000,000.00, converted on 12/16/2015 with the rate of R$ 3.9357. (Source: Ptax Bacen).
18.6. Indicate the Brazilian markets in which the security is of Banco do Brasil will be admitted for negotiation The Bank's shares are traded at the BM&FBovespa.
375
Section 18 - Securities
18.7. Regarding each class and type of securities admitted for negotiation in foreign markets appoint: Describe the public offerings made by the issuer or by third parties, including controlling shareholders, affiliates and subsidiaries, concerning the issuer's securities. a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. proportion of deposit certificates abroad in relation with each class and species of shares: j. custodian institution:
United States of America Secondary SEC November 10, 2009 Over-the-counter December 2, 2009. Quantity of negotiations shares - BBAS3: 1,998,040,400 Quantity of negotiations shares - BBDO: 22,269,737 All negotiated stocks: 2,020,310,137 (%): 1.1146 (%): 1.1023 1:1 (one ADR for each common share)Depository bank: The Bank of New York Mellon Banco do Brasil S.A.
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
Perpetual Bonds 2009 Grand Ducky of Luxembourg Secondary - counter
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
Subordinated Debt 2 Grand Ducky of Luxembourg Secondary-counter
376
The Luxembourg Stock Exchange. October 20, 2009 Euro MTF October 20, 2009 None None None Deutsche Bank Trust Company Americas
The Luxembourg Stock Exchange. October 05, 2010 Euro MTF October 05, 2010 None None None Deutsche Bank Trust Company Americas
Banco do Brasil S.A. - Reference Form/2015
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
GMTN – Series 13 Grand Ducky of Luxembourg Secondary - Counter
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
GMTN – Series 16 Grand Ducky of Luxembourg Secondary - Counter
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
GMTN – Series 17 Grand Ducky of Luxembourg Secondary - Counter
The Luxembourg Stock Exchange. July 13, 2007 Euro MTF July 13, 2007 None None None The Law Debenture Trust Corporation PLC
The Luxembourg Stock Exchange. January 02, 2010 Euro MTF January 02, 2010 None None None The Law Debenture Trust Corporation PLC
The Luxembourg Stock Exchange. January 20, 2011 Euro MTF January 20, 2011 None None None The Law Debenture Trust Corporation PLC
377
Section 18 - Securities
Identification of securitie: a. country:
Subordinated Debt Tier 2 Grand Ducky of Luxembourg
b. market:
Secondary - Counter
c. administrative entity of the market in which the securities will be negotiated:
The Luxembourg Stock Exchange.
d. date of admission for negotiation:
May 26, 2011
e. if there is any, indicate segment of negotiation:
Euro MTF
f. date of beginning of listing in the negotiation segment:
May 26, 2011
g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume::
None None
i. if any, depositary bank:
None
j. custodian institution:
Deutsche Bank Trust Company Americas
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
Senior Debt Grand Ducky of Luxembourg Secondary - Counter
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
Perpetual Bonds 2012 Grand Ducky of Luxembourg Secondary - Counter
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
Subordinated Debt Tier 2 Grand Ducky of Luxembourg Secondary - Counter
378
The Luxembourg Stock Exchange. November 23, 2011 Euro MTF November 23, 2011 None None None Deutsche Bank Trust Company Americas
The Luxembourg Stock Exchange. January 20, 2012 Euro MTF January 20, 2012 None None None Deutsche Bank Trust Company Americas
The Luxembourg Stock Exchange. June 19, 2012 Euro MTF June 19, 2012 None None None Deutsche Bank Trust Company Americas
Banco do Brasil S.A. - Reference Form/2015
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
GMTN – Series 18 Grand Ducky of Luxembourg Secondary - Counter
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
Senior Debt Grand Ducky of Luxembourg Secondary - Counter
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
Perpetual Bonds 2013 Grand Ducky of Luxembourg Secondary - Counter
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
GMTN-Series 19 Grand Ducky of Luxembourg Secondary - Counter
The Luxembourg Stock Exchange. September 24, 2012 Euro MTF September 24, 2012 None None None The Law Debenture Trust Corporation PLC
The Luxembourg Stock Exchange. October 10, 2012 Euro MTF October 10, 2012 None None None Deutsche Bank Trust Company Americas
The Luxembourg Stock Exchange. January 31, 2013 Euro MTF January 31, 2013 None None None Deutsche Bank Trust Company Americas
The Luxembourg Stock Exchange. July 25, 2013 Euro MTF July 25, 2013 None None The Law Debenture Trust Corporation PLC The Law Debenture Trust Corporation PLC
379
Section 18 - Securities
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
GMTN-Series 20 Grand Ducky of Luxembourg Secondary - Counter
Identification of securitie: a. country: b. market: c. administrative entity of the market in which the securities will be negotiated: d. date of admission for negotiation: e. if there is any, indicate segment of negotiation: f. date of beginning of listing in the negotiation segment: g. percentage of volume of negotiations abroad regarding the total volume of negotiations (3 years): h. percentage of negotiations abroad in comparison with total negotiated a volume:: i. if any, depositary bank: j. custodian institution:
IECE – Bônus Perpétuo 2014 Grand Ducky of Luxembourg Secondary - Counter
The Luxembourg Stock Exchange. December 20, 2013 Euro MTF December 20, 2013 None None None The Law Debenture Trust Corporation PLC
The Luxembourg Stock Exchange. June, 18, 2014 Euro MTF June, 18, 2014 None None None Deutsche Bank Trust Company Americas
18.8. Public offerings carried out by the issuer or third parties Describe the public offerings carried out by the issuer or third parties, including controllers or associated parties and subsidiaries, relative to securities of the issuer. There was no public offering in fiscal years 2012, 2013 and 2014. 18.9. Public offerings of acquisitions by the issuer relative to shares issued by third parties Describe public offerings of acquisitions by the issuer relative to shares issued by third parties There were no public offerings of acquisitions by the issuer relative to shares issued by third parties in fiscal years 2012, 2013 and 2014. 18.10. Other relevant information Provide other information that the issuer considers relevant. The following table shows information on prices and trading volume of Bank’s ADR. There is no other information considered relevant.
380
Banco do Brasil S.A. - Reference Form/2015
BDORY (US$) First quarter/2012
Minimum 12.40
Maximum 17.14
Volume (quantity) 9,877,184
Second quarter/2012
9.04
14.45
7,349,315
Third quarter/2012
9.04
13.49
8,212,264
Fourth quarter/2012
10.04
12.70
8,751,689
First quarter/2013
11.78
14.10
17,017,142
Second quarter/2013
9.04
14.60
6,479,914
Third quarter/2013
8.88
12.02
8,325,209
Fourth quarter/2013
10.00
13.59
10,835,313
First quarter/2014
7.93
10.28
10,186,955
Second quarter/2014
9.97
11.99
6,441,500
Third quarter/2014
10.33
17.04
14,591,900
Fourth quarter/2014
7.72
14.25
8,473,156
1 - Quantity traded receipts. Source: OTC Pink Markets
381
Section 19 - Share Buyback Plans and Treasury Securities
19.
SHARE BUYBACK PLANS AND TREASURY SECURITIES
19.1. Share repurchase plans Regarding the issuer share buyback plans, provide the following information: a.
dates of resolutions that approved buyback plans
- First Program: 07.13.2012: Approval by the Board of Directors. - Second Program: 06.13.2013: Approval by the Board of Directors. - Third Program: 06.06.2014: Approval by the Board of Directors. b.
for each plan, please indicate:
i.
amount of planned shares, separated by class and type
- First Program: Up to 50 million common shares. - Second Program: Up to 50 million common shares. - Third Program: Up to 50 million common shares. ii.
percentage in relation to total outstanding shares, separated by class and type
- First Program: the expected amount represents 6.0832% of the total of common shares outstanding in the market (share base of May/2012). - Second Program: the expected amount represents 6.0888% of the total of common shares outstanding in the market (share base of May/2013). - Third Program: the expected amount represents 6.4253% of the total of common shares outstanding in the market (share base of May/2014). iii.
repurchase period
- First Program: the repurchase transaction was approved for a period of up to 180 days, as of July 13, 2012. - Second Program: the repurchase transaction was approved for a period of up to 365 days, as of June 13, 2013. - Third Program: the repurchase transaction was approved for a period of up to 365 days, as of June 06, 2014. iv.
reserves and profit available for repurchase
- First Program; observed balance in statutory reserve (operating margin) in the amount of R$ 16,765,834 thousand in the financial statements for the year ended December 31, 2011. - Second Program: observed balance in statutory reserve (operating margin) in the amount of R$ 8,025,178 thousand in the financial statements for the year ended December 31, 2012. - Third Program: balance observed in statutory reserve (operating margin) in the amount of R$ 11,135,916 thousand in the financial statements for the year ended December 31, 2013. v.
other important features
- the repurchase plan was approved in order to acquire shares in treasury for subsequent sale or cancellation, without capital reduction, and aims to create value for shareholders. First Program: a) Votorantim CTVM Ltda, located in Avenida das Nações Unidas, 14.171 - 14° Andar – Torre A - São Paulo/SP CEP: 04794-000; b) Concórdia S.A. CVMCC, located in Rua Líbero Badaró, 425 - 23º Andar – São Paulo/SP CEP: 01009905; 382
Banco do Brasil S.A. - Reference Form/2015
c) Liquidez DTVM Ltda, located in Avenida Almirante Barroso, 52 – 23º Andar – Sala 2301 – Centro Rio de Janeiro/RJ CEP: 20031-000; d) Ágora CTVM S.A. – 39, located in Praia de Botafogo, 300 – 6º Andar – Rio de Janeiro/RJ CEP: 22250-040. Second Program: a) Votorantim CTVM Ltda, localizada na Avenida das Nações Unidas, 14.171 - 14° Andar - São Paulo/SP CEP: 04794-000; b) UBS Brasil CCTVM S.A., localizada na R. Leopoldo Couto de Magalhães Jr. nº 758, 10º andar – São Paulo SP, CEP 04.542-000; c) Gradual CCTVM S.A., localizada na Av. Juscelino Kubitschek nº 50, 5º 6º e 7º andares – São Paulo SP, CEP 04.543-000. Third Program: a) Votorantim CTVM Ltda, localizada na Avenida das Nações Unidas, 14.171 - 14° Andar – Torre A São Paulo/SP CEP: 04794-000; b) Citigroup Global Markets Brasil, CCTVM S/A, localizada na Avenida Paulista nº 1111, 14º Andar – São Paulo – SP, CEP 01.311-920; c) ICAP do Brasil CTVM LTDA, localizada na Avenida das Américas nº 3500 - Sala 201 – Rio de Janeiro – RJ, CEP 22.640-102. vi.
amount of acquired shares, separated by class and type
First Program: Month of acquisition July/2012 August/2012 September/2012 October/2012 Total
Numbers of common shares 3,020,000 1,980,000 2,245,000 12,955,000 20,200,000
Second Program: Month of acquisition June/2013 July/2013 August/2013 September/2013 October/2013 November/2013 December/2013 January/2014 February/2014 March/2014 April/2014 May/2014 Total
Numbers of common shares 5,993,000 7,353,100 2,613,900 7,338,100 3,500,700 1,185,900 8,292,600 4,441,700 458,200 221,200 1,228,800 499,500 43,126,700
383
Section 19 - Share Buyback Plans and Treasury Securities
Third Program (to 04/30/2015) Month of acquisition
Numbers of common shares
Jun/2014 July/2014 August/2014 September/2014 October/2014 November/2014 December/2014 January/2015 February/2015 March/2015 April/2015
3,115,500 1,706,400 640,000 560,000 -
Total
vii.
6,021,900
weighted average acquisition price segregated by class and type
First Program: Month of acquisition
Numbers of common shares
July/2012 August/2012 September/2012 October/2012 Total
Weighted average acquisition price (R$)
Total acquisitions (R$)
3,020,000 1,980,000 2,245,000 12,955,000
57,522,564.00 45,555,951.00 59,092,156.00 299,076,264.00
19.05 23.01 26.32 23.09
20,200,000
461,246,935.00
22.83
Second Program: Month of acquisition
Numbers of common shares
June/2013 July/2013 August/2013 September/2013 October/2013 November/2013 December/2013 January/2014 February/2014 March/2014 April/2014 May/2014 Total
Total acquisitions (R$)
5,993,000 7,353,100 2,613,900 7,338,100 3,500,700 1,185,900 8,292,600 4,441,700 458,200 221,200 1,228,800 499,500 43,126,700
Weighted average acquisition price (R$)
134,443,126.00 158,914,664.00 61,040,828.00 176,200,561.00 93,316,670.00 28,802,245.00 203,418,386.00 104,276,043.00 9,060,516.00 4,166,555.00 28,679,651.00 11,184,698.00 1,014,503,943.00
22.60 21.61 23.35 24.01 26.66 24.29 24.53 23.48 19.77 18.84 23.34 22.39 23.52
Third Program
Month of acquisition
Numbers of common shares
Total acquisitions (R$)
Weighted average acquisition price (R$)
jun/14
3,115,500
79,532,130.00
25.53
jul/14
1,706,400
46,134,488.00
27.04
640,000
17,102,065.00
26.72
ago/14 set/14 out/14 nov/14 dez/14 jan/15 Total
384
560,000
12,712,301.00
22.70
6,021,900
155,480,984.00
25.82
Banco do Brasil S.A. - Reference Form/2015
viii.
percentage of shares acquired in relation to the total approved First
Second
Third (up 04/30/2015)
Total acquired shares
20,200,000
43,126,700
6,021,900
Total approved shares
50,000,000
50,000,000
50,000,000
40.40%
86.25%
Percentage
12.04%
19.2. Changes in securities held in treasury Regarding changes in securities held in treasury, indicate in a table, segregated by type, class and species, the number, total amount and weighted average acquisition price: Year 12/31/2012 Type of share: Common (ON) Changes a. Opening balance b.1. Acquisition (Payment of bonus / 2011 Executive Board) b.2. Acquisition (Repurchase program) c. Disposal (Payment of bonus / 2011 Executive Board) d. Cancellation e. Closing balance
Quantity (in units)
Total value (in R$)
Weighted average price of acquisition (in R$)
32
951.24
29.73
130,146
3,593,496.70
27.61
20,200,000
461,246,935.00
22.83
130,131
3,593,082.57
27.61
20,200,047
461,248,300.37
22.83
Quantity (in units)
Total value (in R$)
Weighted average price of acquisition (in R$)
20,200,047
461,248,300.37
22.83
212,301
5,684,870.02
26.78
36,277,300
857,136,480.00
23.63
12,680
339,510.64
26.78
56,702,328
1,324,409,161.03
23.36
Year 12/31/2013 Type of share: Common (ON) Changes a. Opening balance b.1. Acquisition (Payment of bonus / 2012 Executive Board) b.2. Acquisition (Repurchase program) b.3. Disposal (Payment of bonus / 2012 Administrators - BBDTVM) c. Disposal d. Cancellation e. Closing balance
385
Section 19 - Share Buyback Plans and Treasury Securities
Year 12/31/2014 Type of share: Common (ON) Changes a. Opening balance b. Acquisition (Repurchase program)) c.1.Disposal Payment bonus BB Management 2013 c.2. Disposal Payment bonus BB Management 2013 c.3. Disposal Payment bonus BB Management 2013 c.4. Disposal Payment bonus BB Management 2013 c.5.Disposal Payment bonus Adm. BB DTVM 2012 c.6.Disposal Payment bonus Adm. BB DTVM 2013 c.7.Disposal Payment bonus Adm. BB DTVM 2013 d. Cancellation e. Closing balance
Quantity (in units)
Total value (in R$)
Weighted average price of acquisition (in R$)
56,702,328 12,311,300
1,324,409,161.03 300,136,146.00
22,83 24,38
(53,108)
(1,422,232.24)
26,78
(70,786)
(1,440,495.10)
20.35
(26)
(618.54)
23.79
(44)
(1,338.92)
30.43
(3,170)
(84,892.60)
26.78
(4,306)
(102,913.40)
23.90
(612)
(14,265.72)
23.31
68,881,576
1,621,478,551
23.54
19.3. Information on securities held in treasury in the close of the last fiscal year Regarding the change in equity held in treasury in the end of the last fiscal year, indicate in a table, segregating by type, class, species, the number, average price, acquisition date and percentage: Year 12/31/2014 Type of share ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON ON
Year 12/31/2015
386
a) Quantity (in units)
b) Weighted average price of acquisition (in R$)
897,300 652,300 458,200 221,200 227,600 93,100 408,000 500,100 499,500 400,000 800,000 860,000 1,055,500 100,800 761,600 20,000 824,000 640,000
22.01 21.20 19.77 18.84 23.13 24.09 23.35 23.28 22.39 26.61 26.16 25.50 25.50 25.31 25.17 29.00 29.27 26.72
c) Date of acquisition
01/23/14 01/24/14 02/25/14 03/17/14 04/03/14 04/08/14 04/09/14 04/10/14 05/23/14 06/17/14 06/18/14 06/20/14 06/23/14 06/26/14 06/30/14 07/23/14 07/25/14 11/05/14
d) % in relation to outstanding securities of the same type
0.079% 0.057% 0.040% 0.019% 0.020% 0.008% 0.036% 0.044% 0.044% 0.035% 0.070% 0.076% 0.093% 0.009% 0.067% 0.002% 0.072% 0.056%
Banco do Brasil S.A. - Reference Form/2015
Type of share ON ON ON ON ON ON
a) Quantity (in units)
b) Weighted average price of acquisition (in R$)
400,000 160,000 300,000 1,000,000 1,123,700 1,200,000
22.66 22.80 21.06 19.28 18.29 18.12
c) Date of acquisition
d) % in relation to outstanding securities of the same type
01/02/15 01/09/15 07/22/15 08/17/15 08/20/15 08/24/15
0.035% 0.014% 0.026% 0.088% 0.099% 0.105%
Current Fiscal Year until 05/12/2016 Type of share ON
a) Quantity (in units)
b) Weighted average price of acquisition (in R$)
8,075,350
20.25
c) Date of acquisition
d) % in relation to outstanding securities of the same type
05/10/16
0.667%
19.4. Other relevant information As of December 31, 2014, Banco do Brasil had 68,881,576 treasury shares, as follows: I.
29 shares under litigation referring to the position of withdrawing shareholders in BESC merger process;
II.
01 share under litigation from calculation residues of BESC merger;
III.
02 shares referring to calculation residues of Nossa Caixa and BESCLEASING mergers;
IV.
15 shares referring to the residual payment of bonus/2011 to the Executive Board;
V.
68,410,254 shares purchased under the both three Stock Repurchase Program;
VI.
159,193 shares referring the payment of bonus/2012 BB Executive Board;
VII
282,944 shares referring the payment of bonus/2013 BB Executive Board;
VIII 9,510 shares referring the payment of bonus/2012 BB DTVM Administrators; IX
19,628 shares referring the payment of bonus/2013 BB DTVM Administrators.
In order to determine the percentage in relation to outstanding securities of the same type (item 19.3d), we used the shareholder base of December/2014 - quantity of 840,019,565 shares outstanding.
387
Section 20 - Securities Trading Policy
20.
SECURITIES TRADING POLICY
20.1. Policy for securities trading of its issuance Indicate if the issuer has adopted a policy for securities trading by the direct and indirect controlling shareholders, officers, and members of the Board of Directors, the Fiscal Council and any technical or advisory body created under our Bylaws, stating: Banco do Brasil, in conformity with CVM regulations, opts to maintain a regulatory system that regulates the trading of securities of its own issuance and of its affiliate, controlled, subsidiary companies and sponsored entities trading its shares on exchange, as well as the disclosure of Material Act or Fact Trading Policy for Securities Issued by Banco do Brasil ("Securities Trading Policy"). a.
approval date
The Securities Trading Policy was approved by the Board of Directors on June 10, 2002 and comprises the self-regulation System of the Bank, the person in charge of which is the Vice-President of Financial Management and Investors Relations. b.
related persons
The Securities Trading Policy applies to the controlling shareholder, Management (Board of Directors and Board of Executive Officers), members of the Fiscal Council and the Audit Committee, and to all people that: i)
hold management commissioned positions, in Brazil and abroad;
ii)
hold other positions in the Bank that, according to the definition of the Management Committees of the Directorships, Administrative Units, Internal Audit, Service Network and Regional Bodies, have access even during temporary work to privileged information related to material act or fact;
iii)
are assigned to administrative functions in affiliate and related entities such as Cassi, Previ and Fundação Banco do Brasil; and
iv)
have a commercial, professional or trust relationship with the Bank and have knowledge on accounting, strategic or any other information on the Bank's business that may give rise to material act or fact.
c.
main characteristics
Any person subject to the Securities Trading Policy should: i)
communicate to the Bank, immediately after entering the position or after temporary work begins, the amount, characteristics and way of acquisition of securities issued by Banco do Brasil and its subsidiaries, controlled and affiliate companies held by them, including exclusive investment funds shares, such as shares of Clube de Investimento dos Funcionários do Banco do Brasil;
ii)
communicate to the Bank all negotiations made within ten days after the end of the month in which positions they hold are altered, indicating the position balance at the end of the period;
iii)
indicate securities held by the spouse, if not separated legally or in fact, or by a partner and any dependent included in its annual income tax report, as well as negotiations made by these people, according to the previous item; and
iv)
present their formal adhesion to the standards that discipline the negotiation of securities issued by Banco do Brasil.
It is prohibited to the controlling shareholder, management and all people who have privileged access to information on material act or fact due to the position or job they hold, to use this undisclosed information to obtain advantages for him/herself or third parties through negotiation with securities issued by the Bank or with exclusive fund shares referring to the Company's values. This prohibition also applies to all people who have commercial, professional or trust relations with the Bank, such as independent auditors, security analysts and contracted advisors, who are aware of information referring to material act or fact. In addition, this prohibition prevails if the controlling shareholder is in the process of acquiring or selling shares issued by Banco do Brasil and its subsidiaries, controlled and
388
Banco do Brasil S.A. - Reference Form/2015
affiliate companies, or if there is the intention of promoting the merger or total or partial spin-off, corporate transformation or reorganization of those companies. Communications on negotiations with securities issued by Banco do Brasil regarding members of the Board of Directors, Board of Auditors and Board of Executive Officersare forwarded to CVM and BM&FBOVESPA immediately after they take hold of the position and until the tenth day of each month. d.
prevision of negotiation prohibition periods
Prevision of negotiation prohibition periods and description of procedures adopted to supervise negotiations in those periods Any person subject to self-regulation is prohibited from negotiating securities issued by Banco do Brasil and its subsidiary, controlled and affiliate companies in the period of at least 15 days prior to the disclosure of quarterly and annual information of the respective entities (Quarterly Information [ITR] and Quarterly Financial Information [IFT] and Standardized Financial Statements [DFP]). Regarding managers who leave the job before the public disclosure of any business or relevant event started during its management, are prohibited from negotiating securities issued by Banco do Brasil for a period of six months after leaving the company's management or until the disclosure of said material act or fact to the market, whichever occurs first. This prohibition applies also to any person subject to self-regulation who leaves the Bank before the disclosure to the market of a material act or fact about which they were aware by virtue of the job, function or position they held in the Company. The prohibitions described above do not apply to negotiations of securities issued by Banco do Brasil for the acquisition of treasury shares, through private negotiation, deriving from the exercise of the purchase option according to the stock option plan approved in the Annual Shareholders' Meeting. Non-compliance with the established standards is a serious infraction and subjects the infractor to the penalties provided for in Law 6,385/76, CVM Instruction 358/2002 and instructions of Banco do Brasil included in the professional code of ethics, and the employee is liable to disciplinary sanctions applicable through administrative inquiry. 20.2. Other material information Provide other information that the issuer deems material All material information was provided in the item above.
389
Section 21 - Information Disclosure Policy
21.
INFORMATION DISCLOSURE POLICY
21.1. Internal standards, regulations or procedures adopted by Banco do Brasil Describe internal standards, regulations or procedures adopted by the issuer to ensure that the Information to be publicly disclosed is gathered, processed and reported on an accurate and timely basis Banco do Brasil is committed to providing the market with objective, reliable, timely corporate information disclosed uniformly in line with legal requirements, to allow the best investment decision. This commitment is maintained at any time, including crisis periods, so that the agents of the society, especially the investor community, have democratic and fast access to this information. To achieve this, and in conformity with CVM Instruction 358, BB maintains a self-regulation system and the Market Information Disclosure Policy that addresses the disclosure of Material Actions or Facts, expected future earnings - guidance, as well as the silent period that precedes its results disclosure. Thus, Information Disclosure Policy disciplines, in the context of Banco do Brasil, its subsidiaries, controlled, affiliate and sponsored entities, Previ, CASSI and Fundação Banco do Brasil, the disclosure of information to the market based on the needs of external users to make economic decisions, in compliance with the requirements of regulatory and supervisory agencies, in accordance with the highest Corporate Governance standards. Banco do Brasil has internal standards that address the adequacy, preparation and consolidation of information that may be provided to the market. Access to information before its disclosure is restricted to people in charge of its preparation. 21.2. Disclosure policy of material act or fact Describe the adopted disclosure policy for relevant act or fact, indicating the channel or channels of communication used to disseminate information about them and the procedures relating to the secrecy of relevant about undisclosed information Banco do Brasil’s management and any person who, due to their position in the Company have access to information of material act or fact, keep the confidentiality of this information until its disclosure to the market, and shall ensure that subordinates and other people they trust also do it, being jointly liable with them in case of non-compliance. The transgression of the rules set forth in this Market Disclosure Policy, section Disclosure of Material Act or Fact configures serious infraction and subject the violator to the penalties established in Law 6,385/76, CVM Instruction 358/2002 and in BB’s internal instructions. The disclosure of material act or fact is made to CVM (Securities and Exchange Commission) and the Stock Exchange, in that order and, only after confirmation of receipt of the statement by that Commission, the same content is released simultaneously to the press and to analysts and investors and made available on the Investor Relations website, in Portuguese and English. On an exceptional basis, material acts or facts may not be disclosed if the controlling shareholder or the Bank's management understands that its disclosure poses a risk to the legitimate interest of the Company. Whenever the Bank's management decided for the confidentiality of a piece of information or a material act or fact, and this escapes from its control, the Vice-President of Financial Management and Investors Relations should immediately disclose that information through a material fact notice. In accordance with the Material Act or Fact Disclosure Policy of Banco do Brasil, any resolution of the controlling shareholder, Annual Shareholders' Meeting, Board of Directors, Executive Board or any other action or fact occurred in the Bank's business that may considerably influence the following, is considered as "material‖: (i) the quotation of securities of their own issuance or referred to them; (ii) the decision of investors on buying, selling or maintaining those securities; and (iii) the decision of investors about exercising any rights inherent to the condition of holder of securities issued by the Bank or referred to them.
390
Banco do Brasil S.A. - Reference Form/2015
21.3. Management responsible for the information disclosure policy Inform the directors and officers responsible for implementing, maintaining, assessing and overseeing the information disclosure policy In Banco do Brasil, the Investors Relations Unit reviews as necessary the Information Disclosure Policy and submits changes to the Board of Directors, and the Vice-President of Financial Management and Investors Relations, who is the person responsible for the disclosure of information referring to material acts of facts and other information to the investment market. However, other directors and officers are jointly liable in case of noncompliance with standards that regulate the disclosure of information to the market. As informed in section 20 of this Reference Form, Banco do Brasil has a self-regulation system where the Investors Relations Unit (URI), subordinated to the Vice-President of Financial Management and Investors Relations, is responsible for the management of this system. Noncompliance with standards established in this Information Disclosure Policy comprises a serious infraction and subjects the infractor to the penalties provided for in Law 6,385/76, CVM Instruction 358/02 and Banco do Brasil instructions, and the determination of responsibility is in charge of the Institution's Internal Audit. 21.4. Other relevant information Provide other information that the issuer considers relevant The Information Disclosure Policy as well as other governance policies and documents of the Bank are available to the market in CVM website (www.cvm.gov.br) and portal www.bb.com.br/ri (Investors Relations). All employees of the Bank have access to the policies provided for in Regulatory Instructions (IN), and employees and service providers with access to material information, regardless of their job, should comply with the Bank's self-regulation standards.
391
Seção 22 - Non-recurring Transactions
22.
NON-RECURRING TRANSACTIONS
22.1. Acquisition or disposal of any material asset non-operating Indicate the acquisition or disposal of any material asset not classified as a regular transaction in the business of the Issuer: There were no acquisition or sale of any material asset that does not qualify as a regular transaction in Banco do Brasil business in the last 3 fiscal years. 22.2. Significant changes in the method used by the Bank to conduct business Indicate significant changes in the way the issuer conducts its business: There were no significant changes in the way Banco do Brasil conducts its business in the last 3 fiscal years. 22.3. Relevant contracts entered into by BB and subsidiaries non-operating Identify the important contracts entered into by the issuer and its subsidiaries not directly related to its operating activities: There were no significant contracts entered into by Banco do Brasil and its controlled companies not directly related to its operating activities in the last 3 fiscal years. See sections 6 and 16 of this Reference Form. 22.4. Other material information Not applicable.
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