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Roberto Dumas Damas

7th Annual Bank Conference on Development Economics (ABCDE)

Amsterdam, May 23-24, 2005

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Itaú Group – A Global Brazilian Financial InstitutionItaú Group – A Global Brazilian Financial InstitutionThe Itaú Group has an important presence in key financial centers, strong recognition in Brazil and a broad range of products

Best Brazilian Bank 2004, 2003, 2002, 2000, 1999

Best Brazilian Bank 2004, 2003, 2002,1999

Best Brazilian Bank 2004, 2003, 2002, 2001,

2000, 1999, 1998

1st

• 14 million checking accounts• 3,070 branches• 21,150 ATMs• 45,316 employees• Most valuable trademark in Brazil (Interbrand, 2004)• #1 brand in Latin America for financial institutions

(Brand Channel, 2004)• Authorized by The Board of Governors of the Federal Reserve System to act

as “Financial Holding Company” in the US (since 2001)Leasing - Autos

Brokerage Services

Pension Plans

Consumer Finance

Credit Cards

Insurance

Retail Bank Corporate & IB

Banco Itaú

Banco Itaú BBA

Banco Itaú Buen Ayre

Itaú Securities

Itaú Europa

Itaú Europa London Branch

Japan Representative

Itaú BBA Shanghai Branch

Hong kong Representative

Itaú – La Caixa Partnership

Itaú Bank (Cayman)

IFE - Bemge - Uruguay S.A.

Banco del Parana Paraguay

BIE Luxembourg

Member of the Dow Jones Sustainability Group Index2005, 2004, 2003, 2002, 2001

Nova York

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ITAÚ BBA – A Brazilian PowerhouseITAÚ BBA – A Brazilian PowerhouseA leading Brazilian corporate and investment bank …

… with the broadest range of products and financial services in Brazil

• Loan book: US$ 20 billion• Total assets: US$ 49 billion• Market capitalization: US$ 18 billion

• Loan book: US$ 9 billion• Total assets: US$ 13 billion• Book equity: US$ 1 billion

• Loan book: € 503 million• Total assets: € 2.435 million• Book equity: € 320 million

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Environmental Management System – Itaú BBA: CronologyEnvironmental Management System – Itaú BBA: Cronology

Sep/2000: Banco BBA Creditanstalt implemented its own EMS;

Aug/2004: Banco Itaú and Banco Itaú BBA endorsed The Equator Principles;

Sep/ 2004: For the fifth consecutive time, Itaú Holding was chosen to participate in the Dow Jones Sustainability Index – DJSI. This index is formed by companies recognized by their corporate sustainability, capability of creating value in the long term for its shareholders and also for managing efficiently economic, social and environmental risks and opportunities;

Oct/2004: 50 employees from Banco Itaú and Itaú BBA, from several department attended a workshop about the Equator Principles.

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ENVIRONMENTAL POLICY: WHY?ENVIRONMENTAL POLICY: WHY?

To identify, evaluate, control, transfer and monitor environmental risks;

SHAREHOLDERSSHAREHOLDERS

● Lower Credit Risks;

● Lower Devalued Collateral;

● Stronger portfolio.

CAPITAL MARKETSCAPITAL MARKETS

● Greater confidence / Reputation / Boycott;

● Access to Better terms, loan rates;

● Access to multilateral agencies;

COMPLIANCE ISSUESCOMPLIANCE ISSUES

● Compliance with regulatory requirements;

● Stronger portfolio.

Increase in Share Value

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Credit Risks / Hidden Environmental liabilitiesCredit Risks / Hidden Environmental liabilities

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ENVIRONMENTAL POLICY: WHY?ENVIRONMENTAL POLICY: WHY?

“Environment is not just about Turtles”

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ENVIRONMENTAL POLICY: EMSENVIRONMENTAL POLICY: EMS

Fund FlowsFund FlowsFund FlowsFund Flows Rating Rating ImprovementImprovement

Rating Rating ImprovementImprovement

Clients / ProductsClients / ProductsClients / ProductsClients / Products

Financial Financial InstitutionsInstitutions

Financial Financial InstitutionsInstitutions

Multilateral Multilateral AgenciesAgencies

Multilateral Multilateral AgenciesAgencies

International International Financial SystemFinancial System

International International Financial SystemFinancial System

Credit Risk Evaluating Credit Risk Evaluating ImprovementImprovement

Credit Risk Evaluating Credit Risk Evaluating ImprovementImprovement

ENVIRONMENTAL POLICY

ENVIRONMENTAL POLICY

==

VALUE CREATION

VALUE CREATION

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RISK MANAGEMENTRISK MANAGEMENT

AcceptableInvestments

Unacceptable

Investments

Risk

Return over

the Investment

Investment withenvironmental

risk management

Investment withoutenvironmental

risk management

“TRANSFORMS RISKS INTO OPPORTUNITIES”

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RESPONSABILITIESRESPONSABILITIES

RESPONSABILITIES

• MANAGING DIRECTOR

•ENVIRONMENTAL MANAGER

•ENVIRONMENTAL COORDINATOR

•ENVIRONMENTAL ANALYST

•RELATIONSHIP MANAGER

•LEGAL

•ENVIRONMENTAL CONSULTANT

•CREDIT COMMITTE

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Production or activities involving harmful or exploitative forms of child labor;

Production or trade in any products or activity deemed illegal under host country laws or regulations or international conventions and agreements;

Production or trade in weapons and munitions; Trade in wildlife or wildlife products; Production or trade in radioactive materials; Production or trade in or use of unbonded asbestos fibers; Commercial logging operations / purchase of logging equipment

for use in primary tropical moist forest; Production or trade in pharmaceuticals subject to phase outs or

bans; Production or trade of pesticides/herbicides subject to

International phase out or bans; Production or trade in ozone depletion substances subject to

phase out.

Banco Itaú BBA Banco Itaú BBA does not financedoes not finance

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EQUATOR PRINCIPLESEQUATOR PRINCIPLES

Banks will adopt a common framework and categorization process of a project in accordance with internal guidelines based upon the environmental and social screening criteria of the IFC;

All projects must be covenanted with environmental and social covenants based on the IFC Sector Specific Pollution Abatement Guidelines;

As necessary (Type A Project), lenders will have to appoint an

independent environmental expert to provide additional

monitoring and reporting services;

These principles apply to projects with a total capital cost of

US$ 50 million or more.

The main goal is to establish a common framework for financial institution in determining, assessing and managing environmental & social risk in project financing

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EQUATOR PRINCIPLES: BENEFITSEQUATOR PRINCIPLES: BENEFITS

The adherence is inevitable in near future by the banks

More efficiency and performance of the projects. Better risk management;

More availability of information for the decision making process and projects approval;

Time saving and money (“Do it right the first time”);

Seek of sustainable economic and environmental development standards;

NGOs: Consensus maker;

Image.

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EP: Dealing With Client ResistanceEP: Dealing With Client Resistance

1. Other banks don´t require this.

2. We don´t have the money.

3. We don´t have a problem.

4. We don´t have the time.

5. The regulations are not enforced.

6. You are a bank. Why are you telling me how to run my business?

7. It is going to open up Pandora´s box, and expose us to a whole load of problems.

Special thanks go to Mr. Leo Johnson from Sustainable finance (UK)Special thanks go to Mr. Leo Johnson from Sustainable finance (UK)

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Roberto Dumas Damas, M.Sc., CFA(55-11) 3708-8183

7th Annual Bank Conference on Development Economics (ABCDE)

Amsterdam, May 23-24, 2005