2
This presentation contains references and statements, planned synergies,
including estimates, projections of results and future strategy for Banco do Brasil,
it’s Associated and Affiliated Companies and Subsidiaries. Although these
references and statements reflect the management’s belief, they also involve
imprecision and high difficult risks to be foreseen, consequently, they may
conduct to a different result than the one anticipated here. These expectations
are highly dependent on market conditions, on Brazil’s economic and banking
system performances, as well as on international market one. Banco do Brasil is
not responsible for bringing up to date any estimate in this presentation.
Section 1
4
Transaction Highlights
Structure
Acquisition of a stake at Banco Votorantim, owned by Votorantim Finanças S.A., and partial capital
increase equivalent to 50% of the total capital and 49.99% of the voting capital
Precedent
Conditions
Brazilian Central Bank approval
Payment
Closing date (after Brazilian Central Bank approval): R$ 3.75 billion
Six months after closing date: R$ 450 million
Price of the
Transaction
Acquisition value of a 50% stake after the transaction: R$ 4.2 billion, paid through:
⇒
R$ 3.0 billion paid to Votorantim Finanças S.A.
Partnership Structuring
Other business
Brokerage House
VAM
BV Financeira e
BV Leasing
Votorantim
Finanças
Banco
do Brasil
Stake sale
R$ 3.0 billion
1
1
Shares
issuance
R$ 1.2 billion
2
2
Historical
dividend
distribution
R$ 0.75 billion
0
0
Newly
issued PN
shares
R$
50 – 50 total capital partnership
Private sector retains voting capital majority
50 – 50 total capital partnership
Private sector retains voting capital majority
49.99% (ON)
50.01% (PN)
50% Total
R$
50% Total
50.01% (ON)
49.99% (PN)
Shares ON
R$
6
Dividend
Distribution to VF
Partnership Structuring
Shareholders’
Equity Book
Value of
Banco
Votorantim
(R$ bn)
Stake in BV
Stake in BV
(%)
(%)
100.0%
0.0%
55.0%
45.0%
50.0%
50.0%
45% stake acquisition
on Banco Votorantim
for R$ 3.0 billion
Capital increase of R$ 1.2 billion,
reaching a 50% stake in
Banco Votorantim’ total capital
1
1
2
2
3333
3333
3.00
3.00
3.00
3.00
55%
50%
45%
(0.75)
1.20
50%
Initial status
Dividend
distribution of BV
to VF
Post Dividend
distribution
Post stake
acquisition
(secondary)
Capital increase
from BB at BV
Final status after
capital increase
6.42
5.67
5.67
Corporate Structure
Votorantim
Finanças S.A.
Votorantim
Asset
Management
DTVM Ltda.
BV Empreendimentos
e Participações Ltda.
Votorantim
CTVM Ltda.
BV
Sistemas Ltda.
Votorantim
Bank Limited
BV Leasing
Arrendamento
Mercantil S.A.
Banco do Brasil S.A.
100%
100%
100%
100%
100%
100%
BV Trading S.A.
Agência
Banco
Votorantim
Nassau
Banco
Votorantim
Securities Inc.
100%
100%
BV Corretora
de Seguros
100%
CP Promotora
de Vendas
Ltda.
BV
Financeira S.A.
100%
100%
49.99% (ON)
50.01% (PN)
50% Total
50% Total
50.01% (ON)
49.99% (PN)
8
Future Corporate Governance of Banco Votorantim
Board with 2 year mandate and Chairman rotation annually
Chairman of the Board
Antonio Francisco de Lima Neto
Vice-Chairman of the Board
José Ermírio de Moraes Neto
Equal Number of Seats on the Board of Directors
•
3 members indicated by Votorantim Finanças
•
3 members indicated by Banco do Brasil
CEO
Wilson Masao Kuzuhara
Existent Management Team
•
Current Management Philosophy remains
Current business model and management team of Banco Votorantim will
remain
Current business model and management team of Banco Votorantim will
remain
Section 2
10
Banco do Brasil’s Initiatives
Scenario
Source: Brazilian Central Bank (Banco Central do Brasil)
1 Includes only multiple and commercial banks authorized to operate by the Central Bank
2
Pro-forma for the merger of Itaú/Unibanco, Santander/Real, BB/BESC, BB/BEP and BB/Nossa Caixa
3
Loan operations CAGR considering the annualized data from January through September 2008
International Financial Crisis: lack of liquidity,
change of requirement regulation, and acceleration
of consolidation process of the Brazilian Banking
Sector
Credit Evolution in Brazil - R$ billion
209.3
1995
379.5
2002
CAGR
8.9%
379.5
1,046.6
2002
Sep-08
Financial
partnership +
economic
growth
CAGR
24.8%
3Consolidation of the Brazilian Banking Industry
Number of Banks
1,2% of total deposits owned by
the 5 largest banks
2Strategic Growth
Merger/acquisition of state-owned banks
Purchase of loan portfolios
Assessment of potential acquisitions of stakes
in financial institutions
Expansion to international markets
Footprint in mortgage and vehicle financing
Alternative product distribution through
complimentary channels
Strength positioning in capital markets
59%
75%
1995
Jun-08
240
153
1995
Dec-08
Sep-08
Clients and Distribution
Diversified Portfolio:
corporate market, capital markets,
treasury, international businesses, asset
management, consumer finance and
brokerage
Alternative Distribution:
BV Financeira: 61 branches, 82 credit
stores
Outsourcing Network: 29 thousand of
partners
Performance – Sep/08
7
th
largest bank in
Brazil in Total Assets
R$ 81.9 billion
Assets Under
Management
R$ 18.8 billion
Net Income LTM
R$ 1.15 billion
Efficiency Ratio
(average 05-07)
25%
Loan
Portfolio
R$ 38.2 billion
4
th
position
1
Vehicle
Financing
12.0%
Banco Votorantim
Main Figures
17
Branches
8 in SP, 8 in other states: GO (1),
MG (1), PR (1), RJ (2) , RS (2) and
SC (1), abroad (Nassau)
3
Million clients attended by
BV Financeira
12
Banco Votorantim Assets Evolution
Brazilian largest financial institutions (ranked by total assets – R$bn)
Source: Austin Asis
1
Data from sep/08: considering the merger of Itaú-Unibanco and the acquisition of Nossa Caixa by BB (pro-forma)
1994
1994
1. BANCO DO BRASIL 2 CAIXA 3. BANESPA 4. BRADESCO 5. BAMERINDUS) 6. NACIONAL 7. UNIBANCO 8. REAL 9. SAFRA 10. ECONOMICO 11. NOSSA CAIXA 12. BANRISUL 13. BNB 14. LLOYDS TSB BANK 15. SANTANDER NOROESTE 16. APLICAP (LIQ EXT) 17. ITAU HOLDING FIN 18. SANTANDER (BOZANO) 19. MULTIPLIC 20. BANERJ EX JUD) 21. CITIBANK, N.A. 22. BBM 23. BANORTE 24. SANTANDER BANESPA 25. ABN - AMRO BANK 26. BANKBOSTON, N.A. 27. IBM 28. ITAMARATI 29. UBS PACTUAL 30. BMB34.VOTORANTIM 0.8 bn
1. BANCO DO BRASIL 2. CAIXA 3. BRADESCO 4. ITAÚ 5. UNIBANCO 6. BANESPA 7. REAL 8. SAFRA 9. HSBC BANK BRASIL 10. NOSSA CAIXA 11. SANTANDER BANESPA 12. SANTANDER BRASIL 13. ABN - AMRO BANK 14. SANTANDER NOROESTE 15. SANTANDER (BOZANO) 16. BNB17.VOTORANTIM 4.8 bn
18. ITAU HOLDING FIN 19. BICBANCO 20. BANKBOSTON, N.A. 21. BARCLAYS 22. JP MORGAN (CHASE) 23. ALFA 24. BBM 25. LLOYDS TSB BANK 26. BESC 27. RURAL 28. UBS PACTUAL 29. BMB 30. ICATU 1. BANCO DO BRASIL 2. BRADESCO 3. CAIXA
4. ITAU HOLDING FIN 5. UNIBANCO
6. SANTANDER BRASIL 7. ABN - AMRO BANK 8. BANESPA 9. NOSSA CAIXA 10. CITIBANK 11. SAFRA 12. HSBC BANK BRASIL
13. VOTORANTIM 19bn
14. BANRISUL 15. BNB 16. SANTANDER (BOZANO) 17. JP MORGAN (CHASE) 18. BANKBOSTON, N.A. 19. LLOYDS TSB BANK 20. SANTOS (LIQ) 21. BNP PARIBAS 22. RURAL 23. ALFA 24. BASA 25. UBS PACTUAL 26. BMB 27. WESTLB 28. FIBRA 29. ABC BRASIL 30. VOLKSWAGEN 1. BANCO DO BRASIL 2. BRADESCO 3. ITAU HOLDING FIN 4. SANTANDER + ABN 5. CAIXA 6. UNIBANCO 7. HSBC BANK BRASIL8.VOTORANTIM 64bn
9. SAFRA 10. NOSSA CAIXA 11. CITIBANK 12. UBS PACTUAL 13. BANRISUL 14. BBM 15. BNP PARIBAS 16. DEUTSCHE BANK 17. BNB 18. FIBRA 19. BICBANCO 20. JP MORGAN 21. BMB 22. BANESTES 23. PANAMERICANO 24. VOLKSWAGEN 25. BMG 26. DAYCOVAL 27. ING 28. BASA 29. GMAC 30. BANCO IBI 1. ITAÚ + UNIBANCO 2. BANCO DO BRASIL + NC 3. BRADESCO 4. SANTANDER + ABN 5. CAIXA 6. HSBC BANK BRASIL7.VOTORANTIM 82 bn
8. SAFRA 9. CITIBANK 10. BANRISUL 11. BNP PARIBAS 12. UBS PACTUAL 13. FIBRA 14. BNB 15. ALFA 16. BBM 17. DEUTSCHE BANK 18. JP MORGAN 19. BICBANCO 20. VOLKSWAGEN 21. BANESTES 22. PANAMERICANO 23. SICREDI 24. BMB 25. DAYCOVAL 26. BMG 27. GMAC 28. BASA 29. ABC BRASIL 30. BESC1998
1998
2002
2002
2007
2007
Today
Today
1
1
+
The transaction complements
Banco do Brasil’s growth strategy
R$ billion
Banco do Brasil
1
Banco Votorantim
BB + Votorantim (50%)
Growth
Total Assets
512.4
81.9
553.3
8%
Loan Portfolio
213.7
38.2
232.8
9%
Individuals
51.5
21.7
62.6
21%
Corporations
88.1
16.5
96.4
9%
Total Deposits
264.0
23.4
275.7
4%
Net Income (nine months)
6.5
0.8
6.8
6%
14
Section 3
Strategic reasons behind the partnership
Grow faster under an intense consolidation
process of the Brazilian Banking Sector
Leverage asset generation of low cost, stable
and secure funding sources
Consolidate and grow in the vehicle financing
market
Develop and explore off-branch distribution
channels
Strength positioning in capital markets, including
retail segment
High quality asset generation
Diversified product portfolio for the corporate
market
Expertise and size in vehicle financing, with
more than 3 million serviced clients
BV Financeira: 4
th
largest in vehicle financing
Distribution through sales representatives with
more than 29 thousand points of sale
Votorantim Corretora (Top 18 at BM&F and Top
35 at Bovespa), with strong potential of leverage
on BB client base
16
Instituição
Crédito PF
(R$ bi)
% Crédito
Total
Veículos
1(R$ bi)
% Crédito
PF
51.5
24.1%
5.6
10.9%
21.7
56.8%
16.8
77.6%
73.2
29.1%
22.4
30.6%
95.2
39.9%
47.1
50.9%
63.7
39.7%
31.2
49.0%
57.3
43.9%
23.7
41.4%
Strategic reasons behind the partnership
Consumer Finance Portfolio Breakdown of Major
Banks
Source: Quarterly company information, Central Bank
Banco do Brasil is the only retail bank that does not have a consumer finance arm
Rationale of BV Financeira to Banco do Brasil
Consumer
Finance Arm
Controller
Retail Funding
Funding Generation + Assets
The strategic partnership will foster BB’s vehicle financing growth off-branches, what today represents
R$ 1.9 billion, 34% of vehicle loan portfolio
1
Considers CDC Auto and Leasing
+
Macroeconomic Environment
Banco do Brasil is the only retail bank that does not have a brokerage house
The combination of brokerage services with the large individuals and institutional
Consistent growth of the average daily
trading volume negotiated at Bovespa in the
last years
Increasing number of individuals in the stock
exchange
Increasing participation of foreign investors
searching for higher return
Brokerage House
Potential value creation through
Banco do Brasil client base
Potential value creation through
Banco do Brasil client base
1111
Votorantim CTVM counting with efficient operational
structure to leverage its business through
Banco do Brasil strong franchise
Votorantim CTVM counting with efficient operational
structure to leverage its business through
Banco do Brasil strong franchise
2222
Benefits for Banco do Brasil
18
4%
12%
1
2
Banco do Brasil and Banco Votorantim Combination
Source: Central Bank; Austin Asis; banks financial statements; press
Note: Considering the merger of Itaú + Unibanco (pro-forma), sep/08 data for vehicle financing, jun/08 data for payroll deductible loans and dec/07 data for Corporate/Large loans
Vehicle Financing
Payroll Loans
Corporate and Large
Corporate Credit
4
4
th
th
place in ranking
place in ranking
place in ranking
place in ranking
(16%)
(16%)
(16%)
(16%)
1
1
st
st
place in ranking
place in ranking
place in ranking
place in ranking
(22%)
(22%)
(22%)
(22%)
2
2
nd
nd
place in ranking
place in ranking
place in ranking
place in ranking
(21%)
(21%)
(21%)
(21%)
Market Share (%)
Market Share (%)
Market Share (%)
14%
7%
1
2
19%
3%
1
2
Section 4
20
BB-BV Partnership Fit into
Nossa Caixa acquisition
Credit and Funding Fit
Diversified Individuals Product Portfolio
Huge Client Base
(Individuals and Corporate)
Low Cost Funding
National Presence
Diversified Individuals Product Portfolio
Huge Client Base
(Individuals and Corporate)
Low Cost Funding
National Presence
Low Cost Funding
Low Leverage
Resources Availability
State of SP Payroll
Low Cost Funding
Low Leverage
Resources Availability
State of SP Payroll
High Quality Asset Generation
Diversified Corporate Product Portfolio
Outsourced Distribution
Brokerage House
High Quality Asset Generation
Diversified Corporate Product Portfolio
Outsourced Distribution
Brokerage House
Operational and strategic fit between both companies
will also benefit Nossa Caixa recent acquisition
Individuals Loans / Low cost deposits (x)
♦
56% of Banco do Brasil deposits and 89% of Nossa Caixa deposits are considered low cost funding
Fit between operations will foster profitability
Consumer Credit
1
/ Individual Loans
1
2
3
0.33x
0.33x
0.33x
0.33x
0.28x
0.28x
0.28x
0.28x
150.5x
150.5x
150.5x
150.5x
1
2
3
0.89x
0.89x
0.89x
0.89x
0.66x
0.66x
0.66x
0.66x
0.48x
0.48x
0.48x
0.48x
22
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Nov-06
May-07
Nov-07
May-08
Nov-08
Evolution of vehicle financing in the last 12 months
Final Balance (R$ bn)
Although there was a small spike in delinquency rates, recent evolution of vehicle financing
demonstrates spread increases and average maturity reductions
Spread (p.p.)
Average Maturity (days)
Delinquency (%)
1 1 1
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Nov-06 May-07
Nov-07 May-08
Nov-08
Market
11 Estimated data for Spt/08, Oct/08 and Nov/08 1 Estimated data for Spt/08, Oct/08 and Nov/08
1 Estimated data for Spt/08, Oct/08 and Nov/08 1 Estimated data for Spt/08, Oct/08 and Nov/08
