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Reference Form 2009 | Itaúsa – Investimentos Itaú S.A.

Itaúsa – Investimentos Itaú S.A.

REFERENCE FORM

Base Date: December 31,2009 (In compliance with Attachment 24 of CVM Instruction No. 480 of December 7, 2009, or “CVM Instruction 480”)

Identification

Itaúsa – Investimentos Itaú S.A. (“the Issuer”) is a corporation enrolled with Legal Entity Taxpayer’s Registry under CNPJ/MF No. 61.532.644/0001-15, with its incorporation documents duly filed with the Board of Trade of the State of São Paulo under NIRE No. 35300022220, and registered as a listed company before the Brazilian Securities Commission (“CVM”) under No. 007617.

Head Office

The Issuer’s head office is located at Praça Alfredo Egydio de Souza Aranha, 100 - Torre Olavo Setubal, in the City of São Paulo, State of São Paulo, CEP 04344-902

Investor Relations Office

Itaúsa’s Investor Relations Area is located at Praça Alfredo Egydio de Souza Aranha, 100 - Torre Conceição – 11th floor, in the City of São Paulo, State of São Paulo. The Investor Relations Officer is Mr. Henri Penchas. The phone number of the Investor Relations Department is (0xx11) 5019 1677, the fax number is (0xx11) 5019 1678 and the e-mail is: [email protected]

Independent Auditors of the Company

BDO Auditores Independentes for the years ended December 31, 2009,December 31, 2008 and December 31, 2007.

Underwriter

Itaú Corretora de Valores S.A.

Shareholders’ Service

The Issuer’s Shareholders’ Service is provided at the branches of Itaú Unibanco S.A., of which the head office is located at Praça Alfredo Egydio de Souza Aranha, 100 - Torre Olavo Setubal, in the City of São Paulo, State of São Paulo, CEP 04344-902

Newspapers in which the Company Divulges its Information

Official Gazette of the State of São Paulo (Diário Oficial do Estado de São Paulo) and Valor Econômico

Website

http://www.itausa.com.br. The information included in the Company’s website is not an integral part of this Reference Form

Date of Last Review of this Reference Form

January 11, 2011 (Delivered on June 30, 2010 and resubmitted on July 08, 2010, due to the Extraordinary General Meeting of June 30, 2010, resubmitted on August 20, 2010, September 16, 2010 and December 21,2010)


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CONTENTS

ITEM 1. IDENTIFICATION OF THE PEOPLE RESPONSIBLE FOR THE CONTENT OF THE FORM 3

ITEM 2. AUDITORS 4

ITEM 3.SELECTED FINANCIAL INFORMATION 5

ITEM 4. RISK FACTORS 9

ITEM 5. MARKET RISK 35

ITEM 6. ISSUER’S HISTORY 42

ITEM 7. ACTIVITIES OF THE ISSUER 70

ITEM 8. ECONOMIC GROUP 119

ITEM 9. RELEVANT ASSETS 122

ITEM 10. COMMENTS OF DIRECTORS 128

ITEM 11. PROJECTIONS 178

ITEM 12. STOCKHOLDERS’ MEETINGS AND MANAGEMENT 179

ITEM 13. MANAGEMENT COMPENSATION 212

ITEM 14. HUMAN RESOURCES 225

ITEM 15. CONTROL 227

ITEM 16. TRANSACTIONS WITH RELATED PARTIES 233

ITEM 17. CAPITAL 237

ITEM 18. SECURITIES 240

ITEM 19. REPURCHASE PLANS AND TREASURY SECURITIES 247

ITEM 20. SECURITIES TRADING POLICY 250

ITEM 21. INFORMATION DISCLOSURE POLICY 252

ITEM 22. EXTRAORDINARY BUSINESS 254 INDEPENDENT AUDITOR’S REPORT ON THE REFERENCE FORM (CVM INSTRUCTION No. 480) 255


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ITEM 1 - IDENTIFICATION OF THE PEOPLE RESPONSIBLE FOR THE CONTENT OF THE FORM

S T A T E M E N T

ITAÚSA – INVESTIMENTOS ITAÚ S.A., CNPJ 61.532.644/0001-15, with head offices at Praça Alfredo

Egydio de Souza Aranha nº 100, Torre Olavo Setubal, in São Paulo (SP), herein represented by its undersigned Directors, state that: a) they revised the reference form; and b) all information contained in the form is in compliance with the provisions of CVM Instruction No. 480, particularly Articles 14 to 19, c) the information contained in the form is a true, accurate and complete portrait of the Issuer’s economic and financial situation

and of the risks inherent to its activities and of the securities issued by it.

São Paulo (SP), June 30, 2010.

ITAÚSA - INVESTIMENTOS ITAÚ S.A.

ALFREDO EGYDIO ARRUDA VILLELA FILHO HENRI PENCHAS Chief Executive Officer Investor Relations Officer


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ITEM 2 - AUDITORS

2.1 With respect to the independent auditors, please indicate: 2009 2008 2007

a. Corporate name BDO Auditores Independentes

BDO Trevisan Auditores Independentes

BDO Trevisan Auditores Independentes

b. Nome of the people in charge Orlando Octávio de Freitas Junior

Orlando Octávio de Freitas Junior

Orlando Octávio de Freitas Junior

b. Individual taxpayer's registry (CPF) number 084.911.468-78 084.911.468-78 084.911.468-78 b. Phone number 3138-5025 3138-5025 3138-5025 b. E-mail [email protected] [email protected] [email protected]

c. Date services were contracted 04.29.2009 02.22.2008 01.17.2007

d. Description of the services contracted

Service agrrement on the audit for issue of examination of balance sheet.



e. Any replacement of the auditor, including: not applicable not applicable not applicable i. Justification for the replacement not applicable not applicable not applicable ii. Any reasons presented by the auditor contrasting with the issuer´s justification for their replacement, pursuant to specific CVM regulation regarding this matter not applicable not applicable not applicable

2.2. Inform the total compensation of the independent auditors in the previous year, listing the fees related to audit services and those related to any other services rendered

The compensation of the independent auditors in the year ended December 31, 2009, amounted to R$ 190,309.00, which comprises the amounts related to audit services. 2.3. Supply other information that the Issuer may deem relevant

None.


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ITEM 3 - SELECTED FINANCIAL INFORMATION 3.1. Based on the financial statements or, when the issuer is required to disclose consolidated financial information, based on the consolidated financial statements, please prepare a table that includes:

R$ million (excepted

were indicated) 2009 2008 2007 Shareholders’ equity 19,786 16,592 15,676 Total assets 615,962 643,201 300,036 Net revenues 19,352 15,500 14,028 Gross income 16,046 12,203 11,238 Net income 3,930 2,700 3,988 Number of shares, former treasury shares (*) 4,345,833 3,881,480 3,526,409 Book value per share (R$) 4.55 4.27 4.45 Earnings per share, net (R$) 0.90 0.70 1.13

(*) in thousands 3.2. If the Issuer disclosed in the previous year or if it wishes to disclose in this form non-accounting measures such as EBITDA (income before interest, taxes, depreciation and amortization) or EBIT (income before interest and taxes), the Issuer should: a) inform the value of the non-accounting measures

Not applicable.

b) perform reconciliation between the amounts disclosed and the amounts in the audited financial statements

Not applicable. c) explain why it believes that such measurement is the most appropriate one for the correct understanding of its financial position and the results of its operations

Not applicable. 3.3. Identify and comment on any event subsequent to the most recent financial statements for the year that might significantly change them

There were no events occuring subsequent to the date of the financial statements for the year ended December 31, 2009. 3.4. Describe the policy for the appropriation of income for the past three years, indicating:

The Board of Directors presents to the Annual Shareholders’ Meeting, together with the financial statements, a proposal for the appropriation of net income for the year, and the main appropriations are: (i) 5% to Legal Reserve, that shall not exceed 20% (twenty percent) of the capital stock, (ii) distribution of dividends to shareholders (see items “b” and “c” below) and (iii) setting up the following statutory reserves:

• Reserve for Dividend Equalization: the purpose of this reserve is to guarantee funds for the payment of

dividends, including interest on capital, or advances, to maintain the flow of shareholders’ remuneration.


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It is limited to 40% of the capital stock and is made up of funds: (a) equivalent to up to 50% of the net income for the year, adjusted pursuant to article 202 of Law No. 6,404/76; (b) equivalent to up to 100% of the realized portion of Revaluation Reserves, recorded as retained earnings; (c) equivalent to up to 100% of the amount of prior years’ adjustments, recorded as retained earnings; and (d) arising from credits corresponding to dividend advances.

• Reserve for Working Capital: the purpose of this reserve is to guarantee funds for the Issuer’s operations. It is limited to 30% of the capital stock, being made up of funds equivalent to up to 20% of the net income for the year, adjusted pursuant to article 202 of Law No. 6,404/76.

• Reserve for Capital Increase in Investees: the purpose of this reserve is to guarantee the exercise of the preemptive right in the subscription of capital increases in investees. It is limited to 30% of the capital stock, being made up of funds equivalent to up to 50% of the net income for the year, adjusted pursuant to article 202 of Law No. 6,404/76. Upon the proposal of the Board of Directors, portions of these reserves are periodically capitalized so that the respective amount does not exceed the limit of 95% (ninety-five percent) of the capital stock. The balance of these reserves added to the Legal Reserve may not exceed the capital stock.

a) Rules on the retention of earnings

There have been no changes in our retention of earnings over the past three years. Pursuant to Law No. 6,404/76, as amended, the shareholders may resolve at a Shareholders’ Meeting, based on a proposal made by management, on the retention of a portion of net income for the year that had previously been approved as part of the capital budget. Additionally, mandatory minimum dividend may not be paid in any year in which the management bodies announce to the Annual Shareholders' Meeting that this would be incompatible with the Issuer’s financial position.

In the past three years, no earnings have been retained, and the dividend amount paid has been equal or higher than the mandatory minimum dividend (see item 3.5 below). b) Rules on the distribution of dividends

There have been no changes in rules on the distribution of dividends over the past three years. Shareholders are entitled to receive as mandatory dividend, each year, the minimum amount of twenty five percent (25%) of net income computed in the same year, adjusted by the addition or deduction of the amounts specified in letters “a” and “b” of item I of article 202 of Law No. 6,404/76 and in compliance with items II and III of the same legal provision.

As resolved by the Board of Directors, interest on capital can be paid, including interest on capital paid or credited to the amount of mandatory dividend, as provided for in article 9, paragraph 7 of Law No. 9,249/95.

Additionally, management may resolve on the distribution of additional dividends whenever it deems convenient for the Issuer and/or its shareholders. Such distributions do not mean that there will be any distribution of dividends additional to the mandatory minimum dividend in the future.

For further information on the percentage of dividends distributed over the past three years, see item 3.5

below. c) Frequency of the distribution of dividends

During the past three years, the mandatory dividend has been distributed quarterly or at shorter intervals throughout the year, up until the Annual Shareholders’ Meeting that approves the respective financial statements.


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The payment of mandatory dividend is made based on the shareholding position on the last day of the prior month on the first working day of the subsequent month. Interim dividends may also be declared as provided for in Article 204 of Law No. 6,404/76.

The portion of mandatory dividend that is paid in advance as interim dividends debited from the account "Reserve for Dividend Equalization” will be credited to the same reserve. d) Any restrictions on the distribution of dividends imposed by legislation or special regulation applicable to the Issuer, as well as agreements, court, administrative or arbitration decisions None. 3.5. In a table, please indicate for each of the past three years:

R$ million

2009 2008 2007 Adjusted net income for dividend purposes 2,757 6,541 3,693

Mandatory minimum dividend 689 1,635 925

Reversal / (recognition) of realizable profit reserve 220 (220) 240

Dividends / interest on capital after the realizable profit reserve is made 909 1,415 1,165

Dividends distributed 1,232 1,415 1,165

Percentage of dividends in relation to adjusted net income 44.7% 21.6% 31.5%

Dividends distributed per class and type of share 1,232 1,415 1,165 Common shares 473 543 444

Interest on capital 380 395 379

Minimum dividend 93 148 65

Preferred shares 759 872 721

Interest on capital 609 634 616

Priority dividend 27 24 22

Minimum dividend 123 214 83

Dividend payment date (a) (a) (a) Rate of return in relation to shareholders’ equity 11.8% 30.8% 22.6% Retained net income 0 0 0

Note:

(a) Quarterly installments payable on the first business day after the beginning of July each year, and supplementary installments payable in August, March and June of each year.

3.6. Inform whether, in the past three years, dividends were declared in retained earnings or reserves recognized in prior years

In 2009 the amount of R$ 220 million was reversed as Unrealized Revenue Reserves set up in the prior year and added to the amount of dividends reserved for 2009.


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In 2008 the amount of R$ 220 million was recognized in addition to the mandatory minimum dividend in relation to the portion of net income realized for 2008 pursuant to article 197 of the Brazilian Corporate Law.

In 2007 the amount of R$ 240 million was reversed as Unrealized Revenue Reserves set up in the prior year and added to the amount of dividends reserved for 2007. 3.7. In a table, please describe the Issuer’s indebtedness ratio, indicating:

R$ million 2009

Total amount of debt, of any nature 1,134

Indebtedness ratio (current liabilities plus noncurrent liabilities divided by shareholders’ equity) 4.6% Source: Individual balance sheet.

3.8. In a table, breaking down debts into secured debts, debts with floating guarantees and unsecured debts, please indicate the amount of the Issuer’s liabilities in accordance with their due dates:

R$ million

Secured debts

Debts with floating

guarantees Unsecured debts Less than one year - -

1,098 More than one year and less than three years - -

36 More than three years and less than five years - -

- More than five years - - - Source: Individual balance sheet

3.9. Supply other information that the Issuer may deem relevant

All relevant information was presented in prior items.


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ITEM 4 – RISK FACTORS 4.1. Describe risk factors that may influence an investment decision, particularly those related to:

The results of Itaúsa directly depend on the operations, activities and results of its subsidiary and

affiliated companies, particularly of the following publicly-held companies controlled by Itaúsa: Itaú Unibanco Holding S.A. (“Itaú Unibanco Holding”), Duratex S.A. (“Duratex”), Elekeiroz S.A. (“Elekeiroz”) and Itautec S.A. (“Itautec”). As Itaúsa is a holding company, the risk factors that may influence the decision to invest in its securities essentially arise from the risk factors to which its subsidiary and affiliated companies are exposed. The investors and potential investors of Itaúsa should carefully read this complete reference form. The business, the results of operations and the financial position of Itaúsa’s subsidiary and affiliated companies and, consequently, the results and financial position of Itaúsa, may be adversely affected if any of these risks materialize, and, in such event, the trading prices of Itaúsa securities may fall, and its investors may lose the totality or part of their investment.

The investors and potential investors of Itaúsa should note that the risk factors described in this item 4.1 are not the only ones faced or related to an investment in our securities. These are the risks deemed by Itaúsa as being those that might influence a decision to invest in its securities. There may be additional risks that Itaúsa considers immaterial or that currently it is not aware of, and any of these risks could have effects similar to those described below.

a. The Issuer

Itaúsa is a company whose results depend on those of its subsidiary and affiliated companies.

The results of Itaúsa directly depend on the operations, activities and results of its subsidiary and affiliated companies. The main subsidiaries of Itaúsa are Itaú Unibanco Holding, Duratex, Elekeiroz and Itautec, each a publicly-held company with risks that are specific to their business.

Itaúsa’s capability to fulfill its financial obligations and pay dividends to shareholders, including as interest on capital, depend on the distribution of profits by its subsidiary and affiliated companies. There is no guarantee that such funds will be made available to Itaúsa or that they will be sufficient to cover all financial liabilities and pay dividends to its shareholders.

Itaúsa, directly or through its subsidiary and affiliated companies, is exposed to the effects of disruptions and volatility in the global financial markets and the economies in those countries where it does business, especially Brazil.

The financial global markets have deteriorated sharply since the end of 2007. Major financial institutions,

including some of the largest global commercial banks, investment banks and insurance companies, have been experiencing significant difficulties, especially due to a lack of liquidity and depreciation of financial assets. These difficulties have constricted the ability of a number of major global financial institutions to engage in lending activity and have caused losses. In addition, defaults by, and doubts about the solvency of, certain financial institutions and the financial services industry generally have led to market-wide liquidity problems and could lead to losses or defaults by, and the bankruptcies of, other institutions.

Itaúsa, directly or through its subsidiary and affiliated companies, is exposed to the disruptions and

volatility in the global financial markets because of their effects on the financial and economic environment in the countries in which it operates, especially Brazil, such as a slowdown in the economy, an increase in the unemployment rate, a decrease in the purchasing power of consumers and a lack of credit availability. Itaú Unibanco Holding, through its subsidiary and affiliated companies, lends primarily to Brazilian borrowers and these effects could materially and adversely affect its customers and increase the number of its non-performing loans and, as a result, increase the risk associated with its lending activity. This would require its companies to


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make corresponding revisions to their models for risk management and loan loss reserve. For example, in 2009, Itaú Unibanco Holding’s subsidiary companies experienced an increase in non-performing loans overdue by more than 90 days from 3.9% at December 31, 2008 to 5.6% at December 31, 2009.

The global financial downturn has had significant consequences for Brazil and the other countries in

which Itaúsa’s subsidiary and affiliated companies operate, including an increase in stock, interest and credit market volatility, a general economic slowdown, and greater volatility in exchange rates that may, directly or indirectly, adversely affect the market price of Brazilian securities and have a material adverse effect on the business, results of operations and financial position of Itaúsa’s subsidiary and affiliated companies, and, consequently, on the results and financial position of Itaúsa. In addition, institutional failures and the disruption of the financial market in Brazil and the other countries in which Itaúsa and its subsidiary and affiliated companies operate could restrict their access to capital markets.

Continued or worsening disruption or volatility in the global financial markets could lead to further

increases in the negative effects on the financial and economic environment in Brazil and the other countries in which Itaúsa’s subsidiary and affiliated companies operate, which could have a material adverse effect on Itaúsa.

The integration of businesses acquired or merged involves certain risks that may have a material adverse effect on Itaúsa.

Itaúsa, directly or through its subsidiary and affiliated companies, has engaged in a number of mergers

and acquisitions in the past and may make new acquisitions as part of its growth strategy in the sectors in which it operates. Recently, these transactions have included the merger between Itaú and Unibanco, announced in the last quarter of 2008 and approved by the Central Bank in the first quarter of 2009, which is pending approval by the Brazilian anti-trust authorities. We believe that these transactions will contribute to the continued growth and competitiveness of the subsidiary and affiliated companies of Itaúsa in the sectors in which they operate.

Any acquisition or merger of institutions and assets, as well as the integration of such institutions,

involves certain risks, including the risk that: • integrating new networks, information systems, personnel, financial and accounting, and other

management systems, financial planning and reporting, products and customer bases into existing business may give rise to difficulties or unexpected costs and operating expenses;

• the acquiring company may incur unexpected liabilities or contingencies relating to the acquired companies, which may not be fully recovered from the counterparties in the merger or acquisition agreements;

• anti-trust and other regulatory authorities may impose restrictions or limitations on the terms of the acquisition or merger, require the disposal of certain assets or businesses or withhold their approval of the transaction; and

• Itaúsa or its subsidiary and affiliated companies may fail to achieve the expected operation and financial synergies and other benefits from mergers and acquisitions.

If Itaúsa or its subsidiary and affiliated companies fail to achieve the business growth opportunities, cost

reduction and other benefits they expect from mergers and acquisitions, or if they incur greater integration costs than they have estimated, the results of their operations and financial position may be adversely affected.

The value of the investments of Itaúsa and of its subsidiary and affiliated companies in securities

and derivatives is subject to market fluctuations due to changes in Brazilian or international economic conditions, which could produce material losses.

As at December 31, 2009, trading securities represented R$120,910 thousand, or 19.63% of the

consolidated assets of Itaúsa, and derivatives represented R$5,939 thousand, or 0.96% of those liabilities. Realized and unrealized gains and losses on these instruments have had and will continue to have a significant impact on the results of Itaúsa’s operations. These gains and losses, recorded when investments in securities


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are sold or adjusted to market value (in the case of trading securities) or when derivatives are adjusted to market value, may fluctuate considerably from period to period and are affected by domestic and international economic conditions. Additionally, the subsidiary and affiliated companies of Itaúsa have carried out derivative transactions related to sundry assets. If, for example, Itaú Unibanco Holding enters into derivatives transactions to protect against decreases in the value of the real or in interest rates and the real increases in value or interest rates increase, it may incur financial losses. These losses may materially and adversely affect the results of Itaúsa’s operations and its financial position. Gains and losses on the investment portfolio of Itaúsa’s subsidiary and affiliated companies may not continue to contribute to net income at levels consistent with that seen in recent periods or at all, and such companies may not successfully realize the appreciation or depreciation now existing in their consolidated investment portfolio or any asset included in this portfolio.

Exposure to Brazilian federal government debt could have an adverse effect on Itaúsa. Like many other Brazilian banks, Itaúsa invests in the debt securities of the Brazilian government. As at December 31, 2009, approximately 24% of Itaúsa’s total assets, representing 1% of its assets, comprised debt securities issued by the Brazilian government. As at the same date, approximately 7.2% of all assets and 36.5% of the securities portfolio of Itaú Unibanco Holding was made up of these Brazilian government debt securities. Any failure by the Brazilian government to make timely payments under the terms of these securities, or a significant decrease in their market value, would have a material adverse effect on Itaúsa.

The market, credit and operational risk management policies, procedures and methods of Itaúsa’s subsidiary and affiliated companies may not be fully effective in mitigating Itaúsa’s exposure to unidentified or unanticipated risks.

The market, credit and operational risk management policies, procedures and methods of Itaúsa’s

subsidiary and affiliated companies, especially the subsidiaries of Itaú Unibanco Holding, including their statistical modeling tools, such as value at risk (VaR), stress test and sensitivity analyses, may not be fully effective in mitigating the risk exposure of Itaúsa in all economic market environments or against all types of risk, including risks that Itaúsa or its subsidiary and affiliated companies fail to identify or anticipate. Some of our qualitative tools and measures for managing risk are based upon our use of observed historical market behavior. The subsidiary companies of Itaúsa apply statistical and other tools to these observations to quantify our risk exposure. These qualitative tools and measures may fail to predict all types of future risk exposure. This risk exposure could, for example, arise from factors not anticipated or correctly evaluated in the statistical models of Itaúsa’s subsidiary and affiliated companies. This would limit their ability to manage risks. The losses of Itaúsa’s subsidiary and affiliated companies thus could be significantly greater than the historical measures would indicate. In addition, the quantified modeling of these companies does not take all risks into account. The qualitative approach to managing those risks could prove insufficient, exposing Itaúsa to material unanticipated losses. If existing or potential customers believe that the risk management of Itaúsa or of its subsidiary and affiliated companies is inadequate, they could carry their business in another institution. This could harm the reputation as well as the revenues and profits of Itaúsa and its subsidiary and affiliated companies.

In addition, the businesses of Itaúsa and its subsidiary and affiliated companies, particularly of Itaú

Unibanco Holding, depend on the ability to process a large number of transactions securely, efficiently and accurately. Losses can result from inadequate personnel, inadequate or failed internal control processes and systems, information systems failures or breaches or from external events that interrupt normal business operations. Itaúsa also faces the risk that the structure of controls and the procedures for mitigating the operational risk of its subsidiary and affiliated companies will prove to be inadequate or will be circumvented.

If the expectations of the subsidiary and affiliated companies of Itaúsa that carry out insurance and pension plan operations are incorrect or their reserves for future policyholder benefits and claims are inadequate, the profitability of insurance and pension products or the results of operations and the financial position of such subsidiary and affiliated companies may be materially and adversely affected.

The subsidiary and affiliated companies of Itaúsa that carry out insurance and pension plan operations

set prices and establish calculations their insurance and pension products, respectively, based upon actuarial or statistical estimates. The pricing of insurance and pension products and the insurance and pension plan


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reserves carried to pay future policyholder benefits and claims are based on models that include many assumptions and projections which are inherently uncertain and involve the exercise of significant judgment, including as to the level and timing of the receipt or payment of premiums, contributions, benefits, claims, expenses, demands, interest, investment results, interest rates, retirement, mortality, morbidity and persistency. Although the pricing of insurance and pensions products and the adequacy of reserves are frequently reviewed, the subsidiary and affiliated companies of Itaúsa cannot accurately determine the amounts that they will effectively pay for, or the timing of the payment of current benefits, claims and expenses or whether the assets supporting the respective liabilities of these companies, together with future premiums and contributions, will be sufficient for the payment of benefits and claims. Thus, significant deviations in actual experience from the pricing assumptions could have a material adverse effect on the profitability of the insurance and pension plans products of Itaúsa’s subsidiary and affiliated companies.

In addition, if Itaúsa’s subsidiary and affiliated companies concluded that their reserves, together with

future premiums, are insufficient to cover future policy benefits and claims, these companies would be required to increase their reserves and to record such effects in their financial statements for the period in which the determination was made, which could have a material adverse effect on the results of operations and financial position of such subsidiary and affiliated companies and, consequently, on the results of operations and financial position of Itaúsa. Accidents related to the facilities of the subsidiary companies of Itaúsa may have a material adverse effect on the results of these subsidiaries, with effects, to a lesser extent, on the results of Itaúsa.

The subsidiaries Duratex, Elekeiroz and Itautec are exposed to risks related to their facilities. These facilities are exposed to risks such as accidents, fire and floods, which could compromise their results and the progress of production.

Duratex owns, either directly or through land lease transactions, mainly in the states of São Paulo and

Minas Gerais, a total extension of approximately 209 thousand hectares, on which it mainly conducts reforesting activities with eucalyptus. The occurrence of fire, exotic pests or hydric stress could adversely change the productivity level of forests in cultivated areas, and this could adversely affect the results of Duratex.

The plant of Itautec, located in the city of Jundiaí, in São Paulo, manufactures IT and automation

products, which account for a significant portion of Itautec’s revenue. Although fully covered by insurance policies from companies that have a good reputation in the Brazilian market, the loss or temporary halting of production would adversely affect the operating performance, margins and results of Itautec.

As Elekeiroz operates in the chemical products industry, it is exposed to the risk of leakages of inputs,

products and materials, explosions, fire and other accidents associated with its facilities. These risks may cause personal injuries, including loss of life, damage to or the destruction of real estate properties and equipment, and environmental damage. A possible accident of great proportions in one of the Elekeiroz units could cause it to temporarily halt its operations, resulting in repair costs and losses of sales revenue at amounts that might exceed the insurance coverage related to damages and loss of profit, in addition to the imposition of compensation for damages, fines and other penalties by environmental authorities.

The risks described above, if they materialize, would adversely affect the results of operations and

financial position of our subsidiary companies, with effects, to a lesser extent, on the results and financial position of Itaúsa.

The results of Itaúsa’s subsidiary and affiliated companies would be affected by the interruption

of the import of inputs or barriers to the export of their products. Elekeiroz and Itautec obtain part of their inputs in the international market and they export a portion of

their products to countries in virtually all continents. An interruption in the supply of any important input would


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affect the manufacturing of certain products, and could result in losses in the results of operations of Elekeiroz and Itautec, with effects on the results of Itaúsa.

Tariff or non-tariff barriers, as well as other policies implemented by the countries that receive exports

from Elekeiroz, should they arise, might result in the reduction of the revenues, sales and results of Itautec and Duratex. Regarding Elekeiroz, sales to European countries in particular have to be made in conformity with the requirements of the REACH regulation (Registration, Evaluation, Authorization and Restriction of Chemicals) which has been in effect since June 1, 2007, and for which the registration process may be completed by 2018. Chemicals that are not registered with the European Chemicals Agency within the established deadlines shall not be traded in the European Union. In the event that Elekeiroz is unable to obtain the registration of its chemicals on schedule, this could have material adverse effects on its business, and to a lesser extent, on the results of Itaúsa.

Additionally, a government change in a certain country may give rise to operational uncertainty for the

Itausa’s subsidiary companies that export products, including Duratex, Elekeiroz and Itautec. This situation might occur through measures taken to protect the local industry and they could result in a change in taxes, the creation of customs barriers against imported products, or the nationalization of the asset in extreme cases. b) Its parent company, direct or indirect, or control group

Our controlling shareholder has the power to direct the business of Itaúsa.

As at December 31, 2009, the main controlling shareholder of Itaúsa, the Egydio de Souza Aranha family, directly owned 60.97% of voting capital and 34.43% of total capital stock of Itaúsa. See item 8.2(a). Thus, the Egydio de Souza Aranha family has the power to exercise control over Itaúsa, including the power to elect its Board members and directors and determine the outcome of any act requiring the approval of shareholders, including transactions with related parties, corporate restructuring and the payment of dividends.

The interests of the Egydio de Souza Aranha family may be different from the interests of a holder of the securities of Itaúsa. c) Its shareholders

The relative volatility and illiquidity of the Brazilian securities market may substantially limit the capacity of investors in Itaúsa to sell the shares issued by Itaúsa at the price and time they desire.

Investing in securities traded in emerging markets, such as Brazil, often involves greater risk than investing in securities of Issuers in the United States of America or in other countries, and these investments are generally considered to be more speculative in nature. The Brazilian securities market is substantially smaller, less liquid, and more concentrated, and it can be more volatile than major markets in the United States of America or in other countries. There is also significantly greater concentration in the Brazilian securities market than in major securities markets such as the United States of America or in other countries. The ten largest companies in terms of market capitalization represented 54.7% of the aggregate market capitalization of the BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros, or BM&FBOVESPA, as at December 31, 2009. The top ten stocks in terms of trading volume accounted for 45.8%, 53.1% and 44.8% of all shares traded on BM&FBOVESPA in 2007, 2008 and 2009, respectively.

We may not pay dividends or interest on capital to the holders of our shares.

In compliance with our by-laws, we pay our shareholders 25% of our annual net income, calculated and adjusted pursuant to the Brazilian Corporate Law, as dividends or interest on capital, taking into consideration that preferred shares entitle their holders to priority in the payment of annual minimum dividend of R$0.01 per share, non-cumulative. For further information, see Item 18.1(a). Net income may be capitalized, used to offset


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losses, or retained, as set forth in the Brazilian Corporate Law, and it may not be made available for the payment of dividends or interest on capital. We will not pay dividends to our shareholders in any fiscal year, should our Board of Directors determine that the distribution of dividends would not be compatible with our financial position at that time.

Itaúsa may need to increase its capital in the future, and this could dilute the investor’s

ownership interest.

Itaúsa may need to obtain additional funds in the future to implement its growth strategy. Accordingly, Itaúsa may need to increase its capital by means of one or more subsequent offers of shares or securities convertible into shares. The offer of a significant number of Itaúsa shares, although it might not comprise the preemptive right of Itaúsa’s shareholders, pursuant to article 172 of the Brazilian Corporate Law, could adversely affect the market price of its shares and dilute the interest of our shareholders in Itaúsa’s capital. d) Its subsidiary and affiliated companies

As Itaúsa is a holding company, the risk factors that it considers as having a possible influence the decision to make an investment in its securities essentially arise from the risk factors to which its subsidiary and affiliated companies are exposed. Accordingly, the risk factors related to the subsidiary and affiliated companies of Itaúsa that Itaúsa deems to have a potential influence on the decision to invest in Itaúsa securities, are described in subitems (a) to (c) and (e) to (i) of this item 4.1. e) Its suppliers

Introduction As Itaúsa is a holding company, it is not exposed to risks related to suppliers that could influence the

decision on investment in its securities. However, Itaúsa’s subsidiary companies operate in different sectors and are exposed to risks related to their respective suppliers. Some of Itaúsa’s subsidiary companies depend on specific inputs provided by a limited number of suppliers, and this exposes them and, to a lesser extent, Itaúsa, to the risk of increases in prices or shortages of raw materials. The supply market of resins, used by Duratex in the board manufacturing process, is characterized by the involvement of a few suppliers with high level of specialization, and dependence on international commodity prices. This situation may lead to periods of financial difficulty for the supplier, putting the supply at risk. A similar situation is faced with the other inputs of Duratex: (i) paper is supplied by Brazilian companies with a high level of industrial occupancy and the input price is tied to the international pulp price; (ii) the market of non-ferrous raw materials is tied to the international commodity price fluctuations; and (iii) in ceramics, the supply is made by smaller family businesses and is affected by climate and environmental issues, as is typical of mining. Also, with respect to Duratex, its business may be adversely affected by increases in the prices of inputs or their shortage. Among the main inputs of the Wood Division are wood, resins, paper and electric energy. In the Deca Division, the main inputs are labor and metals, particularly copper alloy.

Elekeiroz operates in the chemical industry, which is characterized by the integration of the production chain with second-generation producers integrated with petrochemical complexes. The plant site located at the petrochemical complex of Camaçari is linked through pipes to the local petrochemical center (Braskem) and industrial and natural gas suppliers. Elekeiroz has contracts that guarantee the supply of raw materials (propene and orthoxylene) and utilities (vapor, gas, and treated water), however, supply disruptions due to problems in supplier units or supply interruption for any other reason, such as the non-renewal of contracts, could result in the unavailability of such inputs and consequently require Elekeiroz to cut or even halt its production, negatively impacting on the results of its operations and, consequently, the results of Itaúsa. Additionally, as is common in the production chain of the chemical industry, a single basic input is very important to the cost composition of


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Elekeiroz. The main input of Elekeiroz is propene, purchased from Braskem and used in the manufacturing of oxo-alcohols, which are sold in the market or used by Elekeiroz in the manufacture of plasticizers. In 2009, this input accounted for 23% of the total cost of products sold by Elekeiroz. Volatility in the price of this input in international markets and the R$/US$ exchange rate could result in significant fluctuations in Elekeiroz’s costs. If these input price increases cannot be transferred to sales prices, those affecting propene or other relevant inputs, among which are sulfur, orthoxylene, benzene, natural gas and electric energy, could adversely and substantially affect the results of Elekeiroz, with effects, to a lesser extent, on the results of Itaúsa.

The global market of data processing units (processors) used by Itautec in the manufacturing of its

products is dominated by two large manufacturers, and one of them holds a substantial market share. In the case of non-supply by this manufacturer, the global market will be affected, and this might oblige Itautec to reduce or even to stop its production, with material adverse effects on the its results of its operations and, to a lesser extent, on the results of Itaúsa. Additionally, in the operating system segment, a large manufacturer holds a substantial market share and trades using licenses; restrictions in the provision of such licenses to Itautec could cause competitive difficulties, should the available alternatives be considered unsatisfactory by the market as a whole. f) Its clients

Introduction

As Itaúsa is a holding company, it is not exposed to risks related to its clients that could influence the decision to invest in the securities of Itaúsa. However, Itausa’s subsidiary companies operate in several industries and are exposed to risks related to their respective clients.

Changes in the profile of the business of Itaú Unibanco Holding might have a material adverse

effect on its loan portfolio and, consequently, on the results of Itaúsa. As at December 31, 2009, the consolidated loan and financing portfolio of Itaú Unibanco Holding was

R$245,951 million compared to R$241,043 million as at December 31, 2008. Its allowance for loan losses was R$24,052 million representing 9.8% of its total loan portfolio as at December 31, 2009, compared to R$19,972 million, representing 8.3% of its total loan portfolio as at December 31, 2008.

The quality of the consolidated loan portfolio of Itaú Unibanco Holding is subject to changes in the profile

of its business resulting from organic growth or the acquisitions it makes, and it depends on domestic and, to a lesser extent, international economic conditions. Adverse changes affecting any of the sectors to which Itaú Unibanco Holding has significant lending exposure, political events within and external to Brazil and variations in economic activity could have a material negative impact on its business and the results of its operations and, consequently, on the results of Itaúsa. Furthermore, the historic loan loss experience may not be indicative of future loan losses.

In addition, Itaú Unibanco Holding’s strategy includes efforts to significantly expand its loan portfolio as

well as increase the number of its clients, particularly the individuals and small and middle-market companies that it serves. Certain financial products it offers to individuals and other clients are generally characterized by higher margins, but also higher risks of default. A future increase in the loan portfolio of Itaú Unibanco Holding, as well as a shift to higher margins and higher risk products, could result in increased default rates, which could have a material adverse effect on its financial position and the results of its operations and, consequently, on the results of Itaúsa.

Itaúsa and its subsidiary and affiliate companies could incur losses associated with counterparty

exposure. Itaúsa and its subsidiary and affiliated companies are subject to the possibility that their counterparties

will not honor their contractual obligations. These counterparties may default on their obligations due to bankruptcy, lack of liquidity, operational failure or other reasons. This risk might arise, for example, when


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Itaúsa’s subsidiary and affiliated companies enter into insurance or reinsurance agreements, loan facilities or other credit agreements under which counterparties have obligations to make payments to them, such as sale or service agreements signed by Itaúsa’s subsidiary and affiliated companies that operate in the industrial sector. This risk may also exist, for example, when Itaúsa or subsidiary and affiliated companies execute currency or other trades that fail to settle at the required time due to non-delivery by the counterparty or systems failures at clearing agents, exchanges, clearing houses or other financial intermediaries. In addition, Itaúsa and its subsidiary and affiliated companies routinely transact with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds and other institutional clients.

Some of our main subsidiary companies have a high rate of sales concentration, which exposes them to the risk of a sudden reduction in demand.

In 2009, the twenty largest clients of Duratex accounted for approximately 30% of its sales. Losing any of the large clients or the reduction of their purchase volume or financial capacity could adversely affect the business and operating and financial results of Duratex, with effects, to a lesser extent, on Itaúsa. Additionally, the commercial relationships of Duratex are not usually established in contracts, but based on the dynamics of supply and demand conditions. Accordingly, occasional clients may have greater supply difficulty at moments when the market is booming or clients may start to be supplied by competitors.

Additionally, a substantial portion of Itautec’s revenue is represented by sales made by companies

controlled by Itaú Unibanco Holding, and in 2009 this portion accounted for 21% of the consolidated gross revenue of Itautec and its subsidiaries. Any sudden reduction in demand by the controlled companies could adversely affect the business and the operating and financial results of Itautec, with effects, to a lesser extent, on the results of Itaúsa, should it be impossible to redirect the production to other clients. g) Economic sectors in which the Issuer operates

Introduction

As Itaúsa is a holding company, it does not operate directly in one sector of the economy. However, Itaúsa’s main subsidiary and affiliated companies operate in several industries, such as the financial, real estate, wood panel, bathroom fixtures and fittings, chemical and electronics industries.

The Brazilian government has exercised in the past, and continues exercising, influence on the Brazilian economy. This influence and Brazilian political and economic conditions in general could adversely affect the business, the financial position and the results of the operations of Itaúsa and its subsidiary and affiliated companies.

The Brazilian government frequently intervenes in the Brazilian economy and makes changes in policies

and regulations. The Brazilian government’s actions in the past have included, among other measures, increases in interest rates, changes in tax policies, price controls, capital controls, limits and restrictions on certain imports and, prior to the implementation of the current floating exchange regime, currency devaluations. The business, financial position, and results of operations of Itaúsa could be materially and adversely affected by changes in policies or regulations involving or affecting factors such as:

• interest rates; • compulsory deposit requirements; • capital requirements and the liquidity of capital and credit markets; • economic growth, inflation and currency fluctuations; • tax policies and rules; • restrictions on remittances abroad and other exchange controls; • increases in unemployment rates, decreases in salaries and income levels and other factors that

influence the ability of customers of Itaúsa’s subsidiary and affiliated companies to meet their obligations to them; and

• other political, social and economic developments in Brazil.


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As it is a company controlling banks in Brazil, the majority of the income, expenses, assets and liabilities

of Itaúsa are directly tied to interest rates. Therefore, the results of operations and financial position of Itaú Unibanco Holding and Itaúsa are significantly affected by inflation, interest rate fluctuations and related government monetary policies, all of which may have a material adverse effect on the growth of the Brazilian economy and on Itaú Unibanco Holding, including its loan portfolio, cost of funding and income from credit operations and, consequently, a material adverse effect on the results of Itaúsa.

In addition, changes in government could result in changes in policy that might affect Itaúsa. Uncertainty

over whether the Brazilian government will, in the future, implement changes in policies or regulations could contribute to heightened volatility in the Brazilian securities markets and in the securities of Brazilian Issuers, which in turn could have a material adverse effect on Itaúsa and on the market price of its shares.

Inflation and fluctuations in interest rates could have a material adverse effect on the business,

financial position and results of operations of Itaúsa’s subsidiary and affiliated companies and, consequently, on the financial position and results of Itaúsa.

Inflation and interest rate volatility have caused adverse effects in Brazil. Although the Brazilian government has been able to keep inflation close to target levels over the last 12 years, Itaúsa cannot guarantee investors that it will continue to be able to do so and there is no guarantee that future administrations will be able to so. In addition, Brazil has experienced high interest rates, which have fluctuated significantly. Between 2005 and 2009, the base interest rate established by the Central Bank, which is the reference interest rate payable to holders of securities issued by the Brazilian government and traded at the Special Clearing and Settlement System (Sistema Especial de Liquidação e Custódia or "SELIC) rate, varied between 8.75% per year and 19.75% per year. Market expectations regarding possible future government actions in the economy, government intervention in the foreign exchange market and the effects of the downturn in the global financial markets have caused and continue to cause interest rates to fluctuate. In addition, if Brazil experiences fluctuations in rates of inflation in the future, the costs and net margins of Itaúsa’s subsidiary and affiliated companies could be adversely affected, and government measures to combat inflation might include tightening monetary policy with high interest rates which could negatively affect the economic growth and harm the business of the subsidiary and affiliated companies of Itaúsa. Increases in the SELIC rate could adversely affect Itaúsa by reducing the demand for credit, products and services offered by its subsidiary and affiliated companies, increasing the cost of funds and the risk of customer default. Conversely, decreases in the SELIC rate could also adversely affect Itaúsa if the decreases lower the margins of its subsidiary and affiliated companies.

Exchange rate instability could have a material adverse effect on the Brazilian economy and on

the business, financial position and results of operations of Itaúsa’s subsidiary and affiliated companies and, consequently, on the financial position and results of Itaúsa.

The Brazilian currency fluctuates in relation to the U.S. dollar and other foreign currencies. The Brazilian

government has in the past implemented various economic plans and adopted a number of exchange rate regimes, including sudden devaluations, periodic mini-devaluations in which the frequency of adjustments has ranged from daily to monthly, floating exchange rate systems, and exchange rate changes coupled with exchange controls. Since 1999, Brazil has adopted a floating exchange rate system with interventions by the Central Bank in buying or selling foreign currency. From time to time, the exchange rate between the Brazilian currency and the U.S. dollar and other currencies has fluctuated significantly. For example, the real depreciated 15.7% and 34.3% against the U.S. dollar in 2001 and 2002, respectively. It appreciated virtually 100% in the following five years, from 2003 to 2007. More recently, the real depreciated again, by 24.2%, against the U.S. dollar in 2008 and it appreciated 34.2% in 2009. The quotation of the U.S. dollar in reais changed from R$2.3370 per US dollar 1.00 as of December 31, 2008 to R$1.741 per US dollar 1.00 as of December 31, 2009. The average quotation of the dollar in 2009 was R$1.99 per US dollar 1.00, as compared to the average of R$1.84 per US dollar 1.00 in 2008.


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Some of the consolidated assets and liabilities of Itaúsa are denominated in, or indexed to, foreign currencies, especially the U.S. dollar. As at December 31, 2009, 10.8% of the total consolidated liabilities and 13.1% of the total consolidated assets of Itaúsa were denominated in, or indexed to, a foreign currency.

Although as at December 31, 2009, the material consolidated foreign investments of Itaúsa were

economically hedged in order to mitigate effects arising from foreign exchange volatility, including taxes on the potential foreign exchange impact of those investments, there can be no assurance that those hedge strategies will remain in place or will offset those effects. Therefore, a depreciation of the Brazilian currency could have several adverse effects on Itaúsa at consolidated level, including (i) losses on its liabilities indexed to foreign currencies, (ii) impairments to the ability of itself and its subsidiary and affiliated companies to pay dollar-denominated or dollar-indexed liabilities by making it more costly to obtain the foreign currency required to pay those obligations, (iii) increases in the cost of inputs used by those subsidiary and affiliated companies that have a significant portion of inputs indexed to the dollar; (iv) impairment of the ability of borrowers to repay dollar-denominated or dollar-indexed liabilities to Itaúsa and its subsidiary companies and (iv) negative affects on the market price of Itaúsa’s consolidated securities portfolio. Conversely, appreciation of the Brazilian currency could cause Itaúsa and its subsidiary and affiliated companies to incur losses on assets denominated in or indexed to foreign currencies. Therefore, depending on the circumstances, either a depreciation or an appreciation of the real could have a material adverse effect on the business, the results of operations and the financial position of Itaúsa’s subsidiary and affiliated companies, and, accordingly, on the results of Itaúsa.

Developments and the perception of risk of other countries may adversely affect the Brazilian

economy and the market price of Brazilian securities. Economic and market conditions in other countries, including the United States of America, European

Union countries and emerging markets, could affect to varying degrees the market value of securities of Brazilian Issuers. Although economic conditions in these countries may differ significantly from economic conditions in Brazil, investors’ reactions to developments in these other countries may have an adverse effect on the market value of the securities of Brazilian Issuers, the availability of credit in Brazil and the amount of foreign investment in Brazil. Crises in the United States of America, the European Union and emerging markets could diminish investor interest in the securities of Brazilian Issuers, including Itaúsa. This could adversely affect the market price of securities of Itaúsa and its subsidiary and affiliated companies, and could also make it more difficult for Itaúsa and its subsidiary and affiliated companies to access the capital markets and finance their operations on acceptable terms in the future.

Companies located in countries considered to be emerging markets might prove to be particularly

susceptible to disruptions and reductions in the availability of credit or increases in financing costs, which could have a material adverse impact on Itaúsa financial position. In addition, the availability of credit to companies that operate within emerging markets is significantly influenced by levels of investor confidence in such markets as a whole and any factor that impacts on market confidence (for example, a decrease in credit ratings or state or central bank intervention in one market) could affect the price or availability of funding for companies within any of these markets.

The increasingly competitive environment and consolidations in the Brazilian banking industry

may have a material adverse effect on Itaúsa, its subsidiary and affiliated companies.

The markets for financial and banking services in Brazil are highly competitive. Itaú Unibanco Holding and its subsidiaries face significant competition from other large Brazilian and international banks, including an increase in competition from Brazilian government banks. Competition has increased as a result of recent consolidations among financial institutions in Brazil and as a result of new regulations by the National Monetary Council that facilitate the customer’s ability to switch business between banks.

Certain subsidiaries of Itaúsa also operate in highly competitive segments. The market segments in

which Duratex operates are characterized by free competition among large and middle-market companies established on a sound basis, both in the Brazilian and the international markets. The competitive environment in the panel segment is relatively less fragmented and competitors are bigger companies, whereas in the


19

bathroom fixtures and fittings segment the competitive environment is more fragmented, with the presence, in Brazil, of the largest global manufacturer of porcelain fixtures. Elekeiroz, in turn, faces the competition of other Brazilian and international producers in the segments in which it operates. The prices of most of its products are set based on the prices charged by foreign producers in international markets. Mergers and acquisitions of companies in the chemical industry have multiplied in recent years, strengthening the bargaining position of the remaining companies. Additionally, the automation and IT markets in which Itautec operates face strong competition in the Brazilian market, with the presence of a big number of Brazilian and foreign companies.

The increased competition may adversely affect Itaúsa, should it limit the ability of its subsidiary and

affiliated companies to increase customer base and to expand operations. For example, it could reduce profit margins on banking and other services and products offered by Itaúsa’s subsidiary companies, to the extent that it limits investment the opportunities of such companies. h) Regulation of the sectors in which the Issuer operates

Introduction As Itaúsa is a holding company, it does not operate directly in one sector of the economy. However, the

main subsidiary and affiliated companies of Itaúsa operate in several industries, such as the financial, real estate, wood panel, bathroom fixtures and fittings, chemical and electronics industries.

Changes in applicable laws and regulations may have an adverse effect on the business of

Itaúsa’s subsidiary and affiliated companies. Brazilian banks, including those controlled by Itaúsa, are subject to extensive and continuous regulatory

reviews by the Brazilian government, particularly by the Central Bank. Itaúsa does not have control over the applicable law and government regulations, which govern all aspects of the operations of banks controlled by Itaúsa, including regulations that impose or establish:

• minimum capital requirements; • reserve and compulsory deposit requirements; • minimum levels for federal housing and rural sector lending; • funding restrictions; • lending limits, credit restrictions and other credit constraints; • limits on investments in fixed assets; • corporate governance requirements; • limitations on the charging of commission and fees by financial institutions for services to retail clients

and the percentage of interest financial institutions can charge; • accounting and statistical requirements; and • other requirements or limitations in the context of the global financial crisis.

The regulatory structure for Brazilian financial institutions, including banks, brokers, lease companies

and insurance companies, is continuously evolving. Those parts of the businesses of Itaúsa’s subsidiary and affiliated companies that are not currently subject to government regulation might become regulated and there are several legislative proposals to that effect currently under consideration in the Brazilian congress. Disruptions and volatility in the global financial markets resulting in liquidity problems at major international financial institutions could lead the Brazilian government to change laws and regulations applicable to Brazilian financial intuitions. The amendment of existing laws and regulations or the adoption of new laws and regulations could have a material adverse effect on the business and results of operations of Itaúsa’s subsidiary and affiliated companies, including their ability to provide loans, make investments or render certain financial services.


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Tax reforms may have a material adverse impact on the results of Itaúsa. In order to support its tax policies, the Brazilian government frequently introduces reforms in tax. These

reforms include the imposition of new taxes or rate increases, changes in tax bases or rates, including rates applicable solely to the banking industry or other sectors in which Itaúsa’s subsidiary and affiliated companies operate, and the occasional introduction of temporary taxes for specific governmental purposes. For example, in October 2009, the Brazilian government imposed a 2.0% tax on the inflow of foreign investments into the Brazilian capital markets. The effects of these changes and any other changes that could result from the introduction of additional tax reforms have not been and cannot be quantified. These changes, however, may reduce the volume of operations, increase costs or limit the profitability of Itaúsa and its subsidiary and affiliated companies. Furthermore, these changes have produced uncertainty in the financial system, which could increase the cost of borrowing and contribute to an increase in the portfolio of loans in arrears or default of Itaúsa’s subsidiary and affiliated companies.

Increases in reserve and compulsory deposit requirements may have an adverse effect on the

financial position and results of Itaúsa’s subsidiary companies, and, therefore, on the results of Itaúsa. The Central Bank has periodically changed the level of reserves and compulsory deposits that financial

institutions are required to maintain with the Central Bank in Brazil. The Central Bank might increase the reserve and compulsory deposits requirements in the future or impose new obligations.

Reserve and compulsory deposit requirements reduce the liquidity of banks controlled by Itaúsa to grant

loans and make other investments. In addition, compulsory deposits generally do not yield the same return as other investments and deposits because:

• a portion of compulsory deposits do not bear interest; • a portion of compulsory deposits must be held in Brazilian federal government securities; and • a portion of compulsory deposits must be used to finance government programs, including a federal

housing program and rural sector subsidies. At December 31, 2009, the compulsory demand, time and savings deposits of Itaú Unibanco’s

subsidiaries totaled R$26,835.5 million, of which R$13,617 million were in cash. Any increase in the compulsory deposit requirements could reduce the ability of these subsidiaries to lend funds and make other investments and, as a result, have a material adverse effect on their businesses, financial positions and the results of their operations, and, in turn, produce a material adverse effect on the businesses and results of Itaúsa.

The nonrenewal of tax incentives that benefit Itautec might adversely affect its business,

financial position and results, with effects, to a lesser extent, on the results of Itaúsa. Itautec is a beneficiary of federal and state tax incentives that provide it with a decrease in and

suspension of IPI rate and cap on the amount, decrease in PIS/PASEP and COFINS rates levied on gross revenue from the retail sales of desktops for a maximum price to consumers of R$2,500.00 and notebooks for a maximum price of R$3,000.00, additional decrease in IRPJ and CSLL tax basis relating to expenditures incurred in research and development, as well as decrease in the ICMS tax payable by using the presumed credit calculated on the sales price of certain products, and deferral of ICMS in the purchase of parts, pieces, components, raw materials and packaging materials.

Should Itautec not fulfill certain obligations to which it is subject pursuant to legislation governing each

tax incentive, such as to: i) annually present certain documents to the proper authorities; ii) make annual minimum investment in research and development; iii) comply with the Basic Production Process; iv) use an electronic data processing system; v) be registered with the State Finance Department; vi) be in compliance with the accessory obligations; vi) file the declarations required by the competent authorities regarding tax regulation; vii) dispose of the products manufactured by Itautec pursuant to the legislation on tax incentives, viii) obtain environmental permits pursuant to the legislation in effect; the benefits of Itautec could be suspended or


21

cancelled and Itautec would have to pay the taxes due in full (without using tax benefits), plus charges, which might have an adverse effect on the business, financial position and results of Itautec, with effects, to a lesser extent, on the results of Itaúsa.

It is not possible to guarantee that the tax benefits that are currently given to Itautec will be renewed or

have their validity extended. In the event that the current tax benefits of Itautec are not renewed or extended, this might have an adverse effect on the results of Itautec and, to a lesser extent, of Itaúsa.

Amendments to the legislation on the protection of environment and the need of investments to

ensure compliance with the legislation in effect may result in expenditure not estimated by the subsidiary and affiliated companies of Itaúsa, which could cause a material adverse effect on the business, financial position and results of these companies, with effects, to a lesser extent, on the results of Itaúsa.

The activities of Itaúsa’s subsidiary and affiliated companies are subject to the federal, state and

municipal laws on environmental protection, including legislation that imposes restrictions on the plantation and stewardship of species such as the eucalyptus and pinus, used in the production process of Duratex. Compliance with these laws is inspected by government agencies, which could impose administrative sanction on Itaúsa and its subsidiary and affiliated companies in the event of noncompliance. Such sanctions could include, among other things, fines, revocation of permits and even the temporary or definite halting of the operations of Itaúsa’s subsidiary and affiliated companies. The environmental laws and their application are increasingly strict and, therefore, the need of future investments and expenses related to the environment may vary significantly in relation to the current ones. The growth in this expenditure could cause a reduction in strategic investments and decrease the results of Itaúsa’s subsidiary companies, with effects, to a lesser extent, on the results of Itaúsa.

In addition to the sanctions already mentioned, Itaúsa and its subsidiary and affiliated companies might

be required to repair damage that they cause to the environment as a result of their current operations, or even repair damage arising from past operations, even if they have complied with the legislation in effect at the time the event occurred, if such damage is penalized by the subsequent legislation.

i) Foreign countries in which the Issuer operates

Risk factors related to foreign countries, which could influence the decision to invest in Itaúsa’s

securities, are described in subitems (a), (f), (g) and (h) of this item 4.1. 4.2. With respect to each of the risks mentioned above, if relevant, comment on any expectations of increase or decrease in the Issuer’s exposure to such risks

There are no significant expectations of reduction or increase in the Issuer’s exposure to the risks mentioned beyond those outlined in item 4.1. 4.3. Describe the legal, administrative or arbitration proceedings to which the Issuer or its subsidiaries are a party, specifying labor, tax and civil claims, among others: (i) that are not confidential, and (ii) that are relevant for the business of the Issuer or its subsidiaries, indicating: There are no legal, administrative or arbitration proceedings to which the Issuer is a party or that are not confidential or material to its activities.

With respect to its subsidiaries, the proceedings that, due to their amount, the Issuer deems significant (base date December 31, 2009) are as follows.


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Civil Proceedings:

a. court: 7th Federal Circuit Court of the District Court of Rio de Janeiro (State of Rio de Janeiro)

b. jurisdiction: lower court

c. filing date: February 5, 2007 d. parties to the proceedings: Association of the Minority Shareholders of Publicly-Held Companies vs.

Banco Banerj S.A. (“Banerj”), Banco do Estado do Rio de Janeiro S.A. (“Berj”), the State of Rio de Janeiro and Banco Central do Brasil

e. amounts, assets or rights involved: R$4,741,452,260.00 f. main facts: The plaintiff contests the alleged dilution of minority interests due to Berj’s capital increase,

carried out as part of the measures for the privatization of Banerj. It also claims the nullity of the meeting where the capital increase was approved and urges the joint sentencing of Berj, the State of Rio de Janeiro, Banerj and the Central Bank of Brazil to pay the alleged damages caused to the minority shareholders of the former Berj. The sentence is pending.

g. chance of loss: Remote. h. analysis of impact in the event of an unfavorable decision: To indemnify the minority shareholders for

the alleged damages caused by the measures taken by the majority shareholder – State of Rio de Janeiro – in relation to the former Banerj.

i. amount of provision, if any: None.

a. court: 6th Federal Circuit Court – City of Curitiba (State of Paraná)

b. jurisdiction: Federal Supreme Court

c. filing date: October 13, 2005

d. parties to the proceedings: State of Paraná and Public Prosecution Office of the State of Paraná vs. Federal Government, Central Bank of Brazil and Itaú Unibanco S.A.

e. amounts, assets or rights involved: R$4,612,588,000.00 (Jan/2010) f. main facts: The plaintiffs require indemnity for damages allegedly incurred by the State of Paraná as a

result of the improper evaluation of tax credits in the privatization process of Banco Banestado S.A., (“Banestado”) which caused this government institution to take out a loan supposedly greater than necessary to restructure the financial institution in the pre-privatization period. The proceedings were challenged in court based on the claim that the tax credits were properly evaluated and they are awaiting decision of the Federal Supreme Court, where they are being appreciated as an original lawsuit. It should be noted that, as set forth by law, the privatization of Banestado was carried out through an invitation to bid. Additionally, at the time of the privatization, tax credits were evaluated by independent banks.

g. chance of loss: Remote. h. analysis of impact in the event of an unfavorable decision: Payment to the State of Paraná of the

amount corresponding to the tax credits. i. amount of provision, if any: None.


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a. court: 7th Federal Circuit Court of the District Court of Rio de Janeiro (State of Rio de Janeiro)

b. jurisdiction: appellate court


d. parties to the proceedings: ANBEP – National Association of Beneficiaries of Previ Banerj vs. Banco do Brasil S.A., Caixa Econômica Federal, the State of Rio de Janeiro and the Federal Government.

e. amounts, assets or rights involved: R$2,069,782,576.50 f. main facts: The plaintiff claims the nullity of the contract amendments signed on June 10, 1997, as part of

the measures for the privatization of Banco Banerj S.A., which reduced the amount deposited in the account which guarantees the payment of liabilities assumed by the State to the participants and pensioners of Previ – Banerj. In addition, it requires that the Federal Government, the State Government, Caixa Econômica Federal, Banco do Brasil S.A. and Banco Banerj S.A. be ordered to return the amount taken from that account. The lawsuit was dismissed without judging the merit of the case. The appeal is awaiting decision.

g. chance of loss: Remote.

h. analysis of impact in the event of an unfavorable decision: Payment of the intended amount.


a. court: 1st Federal Circuit Court – City of Curitiba (State of Paraná)

b. jurisdiction: Superior Court of Justice

c. filing date: December 28, 2000

d. parties to the proceedings: Federal Public Prosecution Office and Public Prosecution Office of the State of Paraná vs. Federal Government, Central Bank of Brazil and Banestado

e. amounts, assets or rights involved: R$1,589,555,000.00 (Jan/2010) f. main facts: The plaintiffs claim that the clause set forth in the agreement entered into by and between the

Federal Government and the State of Paraná, which stipulates the obligation of the State of Paraná to purchase securities of which it was creditor, aiming at restructuring the bank to enable its sale to be declared null. They also claim the nullity of the Commitment for the Purchase and Sale of Government Bonds, collateralized by Copel shares, entered into by and between the State of Paraná and Banco do Estado do Paraná. The claim is based on alleged damage to the public treasury and violation of the bidding law. The proceedings were fully dismissed in both lower and appellate courts. A special appeal filed by the plaintiffs aimed at having the sentence of the Federal Regional Court declared null due to faulty procedures in the sentencing is pending at the Superior Court of Justice.

g. chance of loss: Remote. h. analysis of impact in the event of an unfavorable decision: Loss of collateral (COPEL shares) in the

Agreement for the Purchase and Sale of Government Bonds or the respective credit, with the return of the ownership of said securities to the bank.



24

a. court: 2nd Federal Circuit Court of the District Court of Rio de Janeiro (State of Rio de Janeiro)

b. jurisdiction: Federal Regional Court of the 2nd Region c. filing date: November 21, 2000

d. parties to the proceedings: Federal Public Prosecution Office vs. Itaú Unibanco S.A., Banco Banerj S.A. (Banerj), the State of Rio de Janeiro and Caixa Econômica Federal.

e. amounts, assets or rights involved: R$942,399,095.28 (historical amount of the “B Account” set up on June 10, 1997).

f. main facts: These are public civil proceedings involving aspects of Banerj's privatization process. The so-called "B Account" was set up by means of a bank loan between Caixa Econômica Federal and the State of Rio de Janeiro with the transfer of R$942,399,095.28. The purpose of the account is to ensure the refund to the purchaser of Banerj, sentenced in lawsuits filed based on events that took place before the privatization. In these proceedings, the Federal Public Prosecution Office requires the partial annullment of the agreement that authorized the transfer of the said amount to the “B Account”, as well as the joint sentencing of the defendants to refund the amounts unduly withdrawn, through allegedly unlawful procedures adopted in settlements of labor claims filed by Banerj’s former employees. The case was dismissed, recognizing the legality of the establishment of the “B Account” and the agreements signed. An appeal filed by the plaintiff is awaiting a decision.

g. chance of loss: Remote. h. analysis of impact in the event of an unfavorable decision: To refund the amounts of labor

settlements, which were paid with funds from the “B Account”, and prevent funds from the “B Account” from being used again.



25

a. court: 2nd Federal Circuit Court of the District Court of Rio de Janeiro (State of Rio de Janeiro)

b. jurisdiction: Federal Regional Court of the 2nd Region

c. filing date: December 5, 2003 d. parties to the proceedings: Federal Public Prosecution Office, Public Prosecution Office of the State of

Rio de Janeiro and Labor Public Prosecution Office vs. Itaú Unibanco S.A.; Banerj, Gilberto Carlos Frizão, Manoel Antonio Granado and Otávio Aldo Ronco.

e. amounts, assets or rights involved: R$942,399,095.28 (historical amount of the “B Account” set up on June 10, 1997).

f. main facts: These are public civil proceedings arising from alleged administrative improbity, involving aspects of Banerj’s privatization process, related to the setting up and use of the so-called “B Account”. In these proceedings, the plaintiffs claim that there was an undue withdrawal of funds deposited in the “B Account” through allegedly unlawful procedures adopted in labor claims filed by Banerj’s former employees (the non-filing of applicable appeals), which is why they ask that any withdrawal from the “B Account” be previously submitted to the State Secretary of Finance of Rio de Janeiro for approval, as well as the joint sentencing of the defendants to refund the amounts unduly withdrawn and to the penalties set forth in Law No. 8,429/1992, due to administrative improbity on the part of the charged individuals. Case dismissed, recognizing the legality of the establishment of the “B Account” and the agreements signed. An appeal filed by the plaintiffs is awaiting a decision.

g. chance of loss: Remote. h. analysis of impact in the event of an unfavorable decision: To refund the amounts unduly withdrawn

from the “B Account”. i. amount of provision, if any: None.

Tax Claims:

a. court: 25th Civil Circuit Court of the Federal Justice of São Paulo and 15th Civil Circuit Court of the Federal Justice of São Paulo


c. filing date: January 2003 d. parties to the proceedings: Itaú Unibanco S.A., Unibanco - União de Bancos Brasileiros S.A vs. Special

Officer of the Financial and Investment Institutions of São Paulo.

e. amounts, assets or rights involved: R$1,784,083,738 (as at December, 2009) f. main facts: An injunction has been filed to suspend the levy of income tax and social contribution charged

on profits earned abroad pursuant to SRF Regulatory Instruction No. 213/02, exceeding the limits of the Law. The principal amount relates to the taxation of the proceeds from foreign exchange variation on investment abroad, which is tax-exempt by law.


h. analysis of impact in the event of an unfavorable decision: Loss of the amount involved.

i. amount of provision, if any: R$1,784,083,738 (as at December, 2009)


26

a. court: Municipal Tax Foreclosures Court of São Paulo


c. filing date: November 22, 2005

d. parties to the proceedings: City of São Paulo vs. Banco Itauleasing S.A (the current name of Cia Itauleasing de Arrendamento Mercantil).

e. amounts, assets or rights involved: R$1,163,390,097.00 (as at December, 2009) f. main facts: A claim has been filed for the collection of service tax (ISS) on lease operations carried out in

all over Brazil, in which the place where the service was provided and the calculation basis are being challenged.


h. analysis of impact in the event of an unfavorable decision: Loss of the amount involved.


a. court: Administrative Council for Tax Appeals

b. jurisdiction: 2nd administrative court


d. parties to the proceedings: Federal Revenue Service vs. Itaú Unibanco S.A.

e. amounts, assets or rights involved: R$813,554,435.98 f. main facts: The non-levy of corporate income tax (IRPJ) and social contribution (CSLL) on income arising

from the assignment of the onerous usufruct of shares, the deductibility from IRPJ and CSLL of expenses arising from an agreement for sharing administrative resources and losses in credit operations are being challenged.

g. chance of loss: Possible.

h. analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.


Labor Claims: The Issuer did not identify labor claims in progress on December 31, 2009 as being significant in terms of the matters or amounts involved. The was true regarding its controlled companies. Arbitration and Administrative Proceedings: The Issuer did not identify administrative or arbitration proceedings (except for administrative tax claims, as mentioned above) in progress on December 31, 2009 as being significant in terms of the matters or amounts involved.


27

4.4. Describe the legal, administrative or arbitration procedures that are not confidential to which the Issuer or its subsidiaries are a party and to which the opposing parties are directors or former directors, parent companies or former parent companies, or investors of the Issuer or its subsidiaries, informing: The Issuer is not a party to proceedings filed by its current or former management members or its current or former controlling shareholders. The Issuer and its subsidiaries carry out corporate transactions that are sometimes contested by minority shareholders who mainly disagree with the amount paid for their shares.

The civil lawsuits filed by investors of the Issuer are as follows:

a. court: 5th Civil Circuit Court of the Jabaquara region (São Paulo)

b. jurisdiction: lower court.

c. filing date: April 23, 2003

d. parties to the proceedings (minority shareholders): Santa Luiza Margutti de Biasi, Luiz Paulo de Biasi and Mário Sérgio de Biasi.

e. amounts, assets or rights involved: R$13,996.00.

f. main facts: This case refers to a claim filed by minority shareholders questioning the process of the merger of shares of Itaucop S.A. into Itaúsa – Investimentos Itaú S.A. and claiming indemnity against damages that were allegedly suffered as a result of the merger.


h. analysis of impact in the event of an unfavorable decision: lliquid impact.


a. court: 26th Federal Circuit Court – City of São Paulo (State of São Paulo).

b. jurisdiction: lower court.

c. filing date: February 14, 1985

d. parties to the proceedings (minority shareholder): Elizabeth da Veiga Alves.

e. amounts, assets or rights involved: Merger of Banco União Comercial into Itaú Unibanco S.A. (“Itaú Unibanco”).

f. main facts: This case refers to a class action questioning the process of merger of Banco União Comercial into Itaú Unibanco, claiming compensation on alleged damages that would have been suffered by União Federal arising from the merger process.





28

The civil lawsuits filed by investors of the Issuer’s subsidiaries are as follows:

a. court: 2nd Federal Court of the District Court of Mato Grosso

j. jurisdiction: lower court

k. filing date: March 26, 2007

l. parties to the proceedings (minority shareholder): Cassiano Antonio Fonseca

m. amounts, assets or rights involved: 20,000 shares issued by Banestado n. main facts: This case refers to an indemnity claim filed by a minority shareholder due to resolutions

adopted in the privatization process of Banestado, including the bank’s going private process. o. chance of loss: Remote.

p. analysis of impact in the event of an unfavorable decision: lliquid impact.

q. amount of provision, if any: None


29

a. court: (i) 15th Civil Circuit Court of the Central Courts of the Judicial District of São Paulo; (ii) 3rd Civil Circuit Court of the Central Courts of the Judicial District of São Paulo (SP); (iii) 8th Civil Circuit Court of the Central Courts of the Judicial District of São Paulo (SP); (iv) 7th Civil Circuit Court of the Central Courts of the Judicial District of São Paulo (SP); (v) 39th Civil Circuit Court of the Central Courts of the Judicial District of São Paulo (SP); (vi) 15th Civil Circuit Court of the Central Courts of the Judicial District of São Paulo (SP); (vii) 4th Civil Circuit Court of the Central Courts of the Judicial District of São Paulo (SP); (viii) 15th Civil Circuit Court of the Central Courts of the Judicial District of São Paulo (SP); (ix) 15th Civil Circuit Court of the Courts of the Judicial District of São Paulo (SP); (x) 4th Civil Circuit Court of the Central Courts of the Judicial District of São Paulo (SP); (xi) 15th Civil Circuit Court of the Courts of the Judicial District of São Paulo (SP); (xii) 15th Civil Circuit Court of the Courts of the Judicial District of São Paulo (SP).

b. jurisdiction: (i) lower court; (ii) lower court; (iii) appellate court; (iv) Superior Court of Justice; (v) lower court; (vi) appellate court; (vii) appellate court; (viii) appellate court; (ix) Superior Court of Justice; (x) appellate court; (xi) appellate court; (xii) lower court.

c. filing date: (i) May 10, 2002; (ii) July 10, 2001; (iii) November 27, 2000; (iv) October 5, 2000; (v) February 17, 2000; (vi) May 10, 2002; (vii) April 15, 2002; (viii) March 25, 2002; (ix) December 20, 2000; (x) May 15, 2002; (xi) March 1, 2001; (xii) May 10, 2002.

d. parties to the proceedings (minority shareholders): Sumatra Comércio e Indústria, Importações e Exportações Ltda., João Antonio Lian, Estate of Yerchanik Kissajikian, Antranik Kissajikian, André Kissajikian, Suely Kissajikian, Vanda Kissajikian Mordjikian, Companhia Iniciadora Predial e Comercial Empreendimentos Brasil S.A., Renato Cifali, Arlete Sanchez Morales Cifali, Hélio Caretoni, Luiz Carlos Ferreira, Sylvio Propheta de Oliveira, Clube de Investimentos FHS and Panamá Empreendimentos e Participações.

e. amounts, assets or rights involved: Capital increase of Banco Bandeirantes S.A. (“Bandeirantes”), subscribed by Caixa Geral de Depósitos.

f. main facts: There are claims filed by the said shareholders, in the same lawsuit or in different ones, either jointly or severally, based on alleged losses arising from presumed unjustified dilution resulting from the capital increase of Bandeirantes subscribed by Caixa Geral de Depósitos. It should be noted that the said increases were made at times when Bandeirantes was going through severe financial difficulties, and in all the said increases the shareholders’ preemptive right was assured.

g. chance of loss: Remote or possible, depending on the case.

h. analysis of impact in the event of an unfavorable decision: Iliquid impact.

i. amount of provision, if any: None


30

a. court: 3rd Circuit Court of the Federal Justice of Minas Gerais

b. jurisdiction: Superior Court of Justice

c. filing date: August 17, 1982

d. parties to the proceedings (minority shareholders): Ítalo Aurélio Gaetani plus 71 Co-Plaintiffs

e. amounts, assets or rights involved: Merger of Banco Mineiro into Unibanco - União de Bancos Brasileiros S.A. (“Unibanco”).

f. main facts: This case refers to an indemnity claim filed by minority shareholders due to the alleged loss incurred as a result of the process of merging Banco Mineiro into Unibanco.

g. chance of loss: Possible


i. amount of provision, if any: R$980,000.00

4.5. With respect to the confidential relevant proceedings in which the Issuer or its subsidiaries are a party and which have not been reported in items 4.3 and 4.4 above, analyze the impact in the event of an unfavorable decision and inform the amounts involved Neither the Issuer nor its subsidiaries are party to confidential proceedings that are considered significant. 4.6. Describe the repetitive or related legal, administrative or arbitration proceedings based on similar legal facts or causes that are not confidential and that are collectively relevant to which the Issuer or its subsidiaries are a party, specifying labor, tax and civil claims, among others, and indicating: The Issuer does not have repetitive or related legal, administrative or arbitration proceedings that are collectively relevant. Below is a description of the proceedings of this nature affecting the Issuer's financial subsidiary companies. Civil Proceedings in relation to Economic Plans: Between 1986 and 1994, the Federal Government implemented a number of monetary stabilization plans, better known as Cruzado, Bresser, Verão, Collor I, Collor II and Real, with the purpose of controlling the high and chronic inflation that jeopardized Brazil’s stability for years. In order to implement these plans, several laws were enacted by successive governments, in the full exercise of the powers conferred upon them by the Federal Constitution to regulate the monetary and financial system. These laws, however, started to be questioned by the holders of savings accounts at that time. They claimed alleged differences in monetary correction arising from changes established by the plans in the savings accounts indexes.


31

Individual Proceedings Itaúsa’s financial subsidiaries are parties to mass and repeated individual proceedings related to the economic plans. Such claims are provided for based on statistics criteria when the bank is served with notice, and the provision is made taking into consideration the amounts paid upon the termination of the said claims. Such criteria may be adjusted in accordance with the balances included in the statements of that time or according to the amount of the escrow deposit demanded.

Public Civil Proceedings Itaúsa’s financial subsidiaries are also party to public civil proceedings regarding the same issue, filed by the Public Prosecution Office and by consumer protection associations. After the final and unappealable judgment on these lawsuits, the provision is recognized for each new individual claim, as it arises, and the same criteria as are used for the accrual for individual proceedings are adopted. Controversial Case Law There is controversy regarding the case law of the Federal Supreme Court arising from the fact that a different treatment from that given to savings accounts has been given to a similar economic events. In the case of investments in Bank Deposit Certificates (CDB) and corrections applied to agreements in general, the case law of the Federal Supreme Court has already been established as favorable to the constitutionality of the laws that governed the economic plans. Due to this controversy, the Allegation of Noncompliance with Fundamental Precept No. 165 (ADPF165), filed by Confereração Nacional do Descumprimento de Preceito Fundamental (“Consif”), in which the Central Bank of Brazil acts as an advisor (amicus curiae), is pending in the Federal Supreme Court, evidencing with technical excellence contested by the argument that savers have not incurred losses and with the constitutionality of the economic plans ebign defended. Mainly for this reason, Itaúsa’s financial subsidiaries believe in the legality of ADPF 165. They uphold that it was made in compliance with the legal rules that established the economic plans, strictly following the determinations of the National Monetary Council and the Central Bank of Brazil.

Civil Claims from Different Origins In addition to the claims related to the economic plans, there are other civil proceedings against ITAÚSA’s financial subsidiaries arising from different indemnity claims for loss and suffering and property damage, and claims resulting from the ordinary course of its business related to, for example, protests of bills, bounced checks and the inclusion of information in the credit protection registry. The total amount of the provision for civil claims of ITAÚSA’s biggest financial subsidiary, Itaú Unibanco Holding S.A., at December 31, 2009 was R$2,409,698 thousand.

The amounts involved in civil claims include the total provision mentioned above plus the contingencies classified into possible amounting to R$384,529 thousand, totaling R$2,794,227 thousand. Tax Claims: In the tax sphere, the conglomerate has countless repetitive claims in which the levy of the Service Tax (ISS) is challenged. The amounts involved and provisioned for tax claims relating to repetitive claims regarding the ISS at December 31, 2009 amounted to R$256 million. In addition to the amounts provisioned, we also disclosed an amount of R$560 million in the Notes to our financial statements at December 31, 2009. Therefore, the provision plus the amounts disclosed in the Notes on this matter totaled R$816 million.


32

ISS leasing – place of service provision/calculation basis The companies that carry out lease operations in the Itaú Unibanco Conglomerate pay ISS to the municipality where the service provider and its employees are located and where its lease operations are performed, with credit approval, management of the agreement and leased assets, and where the employees of the contracting company are located, all pursuant to Supplementary Law LC No. 116/03. The same legislation sets forth that the tax calculation basis is the price of the service. On the other hand the ISS calculation basis, detailed in the wording of the municipal legislation, is based on the amount of the consideration for the leases. Several Itaú Unibanco Conglomerate companies have been assessed and become parties to execution proceedings due to the non-payment of ISS on lease operations in 300 municipalities where the where the property leased is chosen by the lessee. The calculation basis used in the entry is usually higher than the consideration for the lease. The place where the service is provided and the calculation basis are challenged in these claims. The issue will be judged by the Superior Court of Justice in the new proceedings for the judgment of repetitive appeals. Considering that the tax is due and paid where the company’s service provider is located, which is mixed up in this case with the place of the facilities that provide the service, the conglomerate believes that the municipal claim is groundless and should not proceed. ISS Financial Activity The financial institutions of the Itaú Unibanco Conglomerate pay ISS on income resulting from the effective provision of services, such as checking account opening fees and credit card management fees. On the other hand, they are assessed and become parties to tax foreclosures when collecting the payment of the municipal tax on other income that is typical of financial activity, such as income from financial operations. The conglomerate believes that the assessed income is not characterized as service provision income nor is it included in the list of taxed services attached to LC No. 116/03, and therefore the collection of ISS is illegal. 4.7. Describe other relevant contingencies that are not included in the previous items

We refer to Note 13 of our financial statements as at December 31, 2009, already published, which shows that there are in our consolidated financial statements, balances provisioned for tax contingencies and legal liabilities totaling R$8,562,207 (R$1,560,339 for tax contingencies and R$7,001,868 for legal obligations), for civil contingencies amounting to R$2,423,031 thousand, for labor contingencies amounting to R$3,216,569 thousand and for other contingencies amounting to R$257,671 thousand.


33

The main legal theses provided are the following: Main Theses Provided - Legal Liabilities and Tax Contingencies

R$

thousand Tax Issue Amount

PIS/COFINS

Income vs. Gross Revenue: the levy of the taxes on income from the sale of goods and services only, or the levy of PIS Repique (5% of income tax payable) to the detriment of total revenue recorded is disputed, alleging the unconstitutionality of paragraph 1, Article 3, of Law No. 9,718/98.

4,427,995

IRPJ/CSLL Taxation of Income Earned Abroad: the exemption of positive equity results from earnings from investments abroad is being claimed.

454,048

CSLL

Isonomy: the payment of tax at the rate of 9%, instead of 15%, in the case of financial and insurance companies, is being claimed, alleging the unconstitutionality of Article 41 of Law No. 11,727/08

444,197

PIS

Anteriority over 90 days and Non-retroactivity: the rejection of Constitutional Amendments No. 10/96 and No. 17/97 is being claimed in view of the anteriority and non-retroactivity principles, with regard to payments pursuant to Supplementary Law No. 07/70.

330,928

INSS

Independent Workers and Management Members: the non-levy on payments made to independent workers and management members in the period of the Supplementary Law No. 84/96 is being claimed, alleging its unconstitutionality.

255,323

In addition to the balances provided for, the Note 13 of our audited financial statements

shows the balances of contingencies evaluated as possible loss at R$387,144, and tax contingencies evaluated as possible loss in the total amount of R$3,658,234, which is explained by the main theses described below. Main Theses of Possible Loss – Tax Contingencies R$ thousand

Tax Issue Amount

ISS

Banking Activities: the fact that operational income cannot be mixed up with service income and that the income in question is not mentioned in Supplementary Law No. 116/03 or in Decree Law No. 406/68 is in question.

418,413

IRPJ/CSLL

Losses on the Receipt of Credits and Discounts Granted in Credit Renegotiation: their deductibility, considering they are operating expenses, necessary and inherent to financial activity, is being defended.

428,479

IRPJ/CSLL/PIS/COFINS Usufruct of Quotas and Shares: the accounting and tax treatment of the amounts received as a result of the setting up of the usufruct is being questioned.

341,237

IRPJ/CSLL/PIS/COFINS Rejection of the Offset Request: the liquidity and certainty of the offset credit are being analyzed. 300,130


34

IRPJ/CSLL Taxation on Revenue Abroad: the criteria used to assess the calculation basis and to establish the taxable income are being questioned.

264,443

IRPJ/CSLL Goodwill: the deductibility of goodwill on acquisition of merged companies is being claimed. 198,586

IRPJ/CSLL Expenses Incurred on the Acquisition of Customers’ Portfolios: their deduction as necessary operating loss is being defended.

171,409

IRPJ Allowance for Loan Losses: the use of the rate of 1.5% for the quantification of the expense, in view of the non-retroactivity of IN SRF No. 80/93, is being claimed.

164,441

ISS Lease Operations:. the place of the service provision and the calculation basis are being questioned.

142,292

INSS Non-compensatory Amounts: the non-levy of this tax on these amounts is being defended. 134,709

IRRF

Differences in the Completion of Declaration of Federal Contributions and Taxes (“DCTF”): sundry collections arising from differences in the completion of DCTF and other accessory obligations are being contested.

83,698

IRPJ Disallowance of Losses: the invalidity of the disallowance of losses that were ex-officio allocated in the calculation of several tax entries by the SAPLI system is alleged.

78,964

IRPJ/CSLL Limit of 30%: the offset of loss without the limit of 30% of income in the case of the merger or winding up of companies is being questioned.

66,685

ITR Legal Reserve: farms with overlapping deeds were received as payment in kind for debts, and there is no evidence of the setting up of the legal reserve.

63,998

There are no other relevant contingencies in the case of the Issuer and its subsidiaries. 4.8. With respect to the rules of the foreign Issuer’s country and to the rules of the country in which the foreign Issuer’s securities are in custody, if different from the original country, please identify: a) Restrictions imposed on the exercise of political and economic rights

Not applicable. b) Restrictions on outstanding securities and their transfer

Not applicable. c) Cases for the cancellation of registration

Not applicable. d) Other issues of interest to investors

Not applicable.


35

ITEM 5 - MARKET RISKS 5.1. Describe, on a quantitative and qualitative basis, the main market risks to which the Issuer is exposed including with respect to foreign exchange risks and interest rates Itaúsa’s market risks are concentrated in the Financial Services Area of the Group through the subsidiary Itaú Unibanco Holding. In the financial industry, Itaú Unibanco Holding manages market risk considering two types of exposure:

• Trading portfolio (trading book): consists of all transactions involving financial instruments and commodities, including derivatives, which are held with the intention of trading or to hedge other elements of the trading book and are not subject to limitations on their marketability. Transactions held in the trading book are those intended for resale. The trading book is managed by the flow book trading desk and the proprietary trading desk; and

• Non-trading portfolio (banking book or “structural gap”): consists of all transactions not classified in the trading book; structural transactions and their hedges, as well as transactions made to manage the non-trading portfolio.

As result of the Association during 2009 we have unified the risk models and control and existing procedures.

We monitor our trading book through the use of VaR models, VaR Stress scenarios, maximum loss limits, or Stop Loss, and maximum loss alerts (which produces an alert when the Stop Loss may be reached under stress scenarios). We manage our banking book through the use of VaR models, VaR Stress scenarios and profit and loss simulations under stress scenarios.

VaR is a statistical measure that estimates the maximum potential economic loss under normal market conditions based on probability and time horizon. As presented in the following tables, VaR corresponds to the maximum potential economic loss in one day with a confidence level of 99%. VaR Stress is a scenario analysis that evaluates the assets and liabilities of a portfolio assuming extreme market conditions, based on historical and projected scenarios. In certain cases, VaR Stress is further analyzed based on and pessimistic scenario combination.

Stop Loss is the maximum loss amount, measured based on the materiality standards for financial statements that one trader, a group of traders or a trading desk can reach in one day. Maximum loss alerts are triggered by actual losses considered together with the maximum potential loss under stress scenarios. Profit and loss simulations are made based on stress scenarios that assume extreme market conditions that vary through optimistic, pessimistic and very pessimistic. The stress scenarios for VaR Stress and profit and loss simulations are defined by the institutional treasury superior committee, which projects interest rates, inflation, spreads, exchange rates, Gross Domestic Product (“GDP”) and other inputs and determines the optimistic, pessimistic and very pessimistic scenarios.

The Industrial Area of the Group is subject to market risks associated with its industrial and commercial activity, always in line with its business. They are not relevant when compared to the total risk of the Group as presented in the table below.

The sensitivity analyses, shown below, do not predict the dynamics of the operation of the Risk and

Treasury Areas, because once loss related to positions is found, risk-mitigating measures are quickly taken, minimizing the possibility of significant losses. In addition, the presented results do not necessarily translate into accounting results, because the study's sole purpose is to disclose exposure to risks and the respective protective actions, taking into account the fair value of financial instruments, irrespective of the accounting practices adopted by the institutions.


36

The considerable impact of the fixed-income factor is related to the market risks of the fixed-rate financing of the banking portfolio, which are not recognized as marked to market and, therefore, are not necessarily fully covered by hedging.

R$ thousand

Exposure December 30, 2009 (*)

Risk factors Risk of variation in: Scenarios I II III

Fixed rate Fixed rate in reals (3,969)

(1,619,699)

(3,112,367)

Foreign exchange coupons Rates of foreign exchange coupons

1,566

(11,886)

(46,792)

Foreign currency Exchange variations (158)

(3,953)

(7,906)

Price indices Rates of price indices coupons (10)

(2,210)

(1,245)

Long-term interest rate Rate of TJLP coupons (2)

(27,843)

(55,688)

Reference rate Rate of TR coupons 4,367

(107,335)

(117,106)

Variable income Share price 15,233

(222,205)

(444,410)

Total without correlation – Financial Services Area

(1,995,131)

(3,785,513)

Total with correlation – Financial Services Area

(1,298,995)

(2,464,682)

Total without correlation – Industrial Area(**)

(11,786)

(23,293)(*) Amounts net of tax effects. (**) Includes exposures in foreign currency, interest rates and prices.

Scenario I: For the exposure of the Financial Services Area, addition of 1 base point to the fixed-rate

curve, currency coupon, inflation and interest rate indices, and 1 percentage point in currency and share prices, which is based on market information (BM&F BOVESPA, Anbima, etc). For the exposure of the Industrial Area, market rates and quotations are used, with immaterial effect.

Scenario II: Shocks at approximately 25% in the portfolio of December 30, 2009, considering the largest resulting losses per risk factor.

Scenario III: Shocks at approximately 50% in the portfolio of December 30, 2009, considering the largest

resulting losses per risk factor. 5.2. Describe the market risk management policy adopted by the Issuer, its objectives, strategies and instruments, indicating:

Based on a culture, process and risk structure involved in the identification of opportunities along with the management of adverse effects, the Group decisions are supported by analysis tools that enable sophisticated and profitable transactions to be safely conducted. In the Financial Services Area, Itaú Unibanco manages risks supported by the best solutions rendered by the Risk and Capital Management Committee which, based on corporate governance practices recommended by international organizations and by the Basel II Accord, establishes exposure limits and monitors the implementation of policies and methodologies on risk management.


37

In addition, in the Financial Services Area, the Superior Institutional Treasury Committee of Itaú Unibanco Holding S.A. monitors risk management and control actions to make sure that they conform to market risk limits.

The Industrial Area of the Group uses derivative financial instruments for managing market risks related to interest rates and exchange variation for hedging purposes. a) Risks that are intended to be hedged

Not applicable to the Issuer. b) Equity hedging strategy

Not applicable to the Issuer.

c) Instruments used for equity hedging purposes


d) Parameters used for managing these risks


e) If the Issuer carries out transactions involving financial instruments for different equity hedging purposes and what these purposes are


f) Organizational structure for risk management control

Itaúsa shares the organizational risk management structure, as necessary, with its main subsidiary, Itaú Unibanco Holding, as described below: Risk Management Process

Risk management at Itaú Unibanco Holding S.A. is the process in which:

• The existing and potential risks of a transaction are identified;

• The risk limits are established, in conformity with all business strategies of the bank;

• Policies, procedures and methodologies consistent with the previously established risk limits are approved;

• The risk portfolio of the bank is managed based on the best risk/return ratios;

• The allocation of capital is consistent with the risks incurred.

Risk management is considered by Itaú Unibanco Holding S.A. as a key instrument for optimizing the use of capital and selecting the best business opportunities, aiming at achieving the best risk/return ratio for its shareholders.


38

The risk management process permeates the institution as a whole, and top management, by means of committees, defines the major objectives that are passed on as goals and limits to the business units that manage risks. The control units, in turn, provide feedback to the top management, reporting the results of the consolidated monitoring of risks.

In November 2002, changes were introduced in the risk control and monitoring process, leading to the decentralization of the control over positions and risks assumed by the business units of the conglomerate and the centralized monitoring and follow-up of exposure by the holding company.

The organizational structure of risk management of Itaú Unibanco Holding S.A. is in compliance with the recommendations of the Basel Committee.

In September 2007, a Superior Risk Committee was organized, which is currently named the Risk Policies Superior Committee (CSRisc), which establishes the general risk policy of Itaú Unibanco Holding S.A., and monitors its performance through four major committees: the Superior Institutional Treasury Committee and the Superior Treasury and Liquidity Committee, which assess and establish strategies for the market and liquidity risks; the Credit Superior Committee, which manages credit risks; and the Superior Audit and Operational Risk Management Committee (CSAGRO), which is responsible for the operational risks and internal controls.

The risk-monitoring activities, according to the policies established by the commission, are centralized in the Credit, Operational and Insurance Risk Control Offices and Market and Liquidity Risk Control Offices of Itaú Unibanco Holding S.A.

Based on corporate governance practices recommended by international organizations and by the Basel II Accord, the Risk and Capital Management Committee was created in April 2008 to be the highest hierarchical body of risk and capital management at Itaú Unibanco Holding S.A. The Risk and Capital Management Committee is responsible for reviewing, approving and monitoring the implementation of policies and methodologies on risk management and capital allocation, which includes the establishment of limits for: (i) exposure to the several risks and (ii) capital allocation, assuring full adherence to regulatory requirements. Capital and Risk Management Committee

In order to comply with Conselho Monetário Nacional (“CMN”) resolutions and strengthen the internal control structure, the creation of the Capital and Risk Management Committee was approved in 2008. This committee is composed of members annually elected by the Board of Directors from among the members of this


39

Board, of the Executive Board of the company and controlled companies, and professionals with proven knowledge in the capital and risk management area.

The meetings are held on a quarterly basis and it is incumbent upon the committee:

• To define the holding company’s global risk appetite (types and levels of acceptable risks);

• To evaluate and approve the holding company’s policies, procedures and limits for capital and risk management;

• To review the risk exposure, performance and adequacy of capital in relation of the risk appetite. CSRisc

The meetings of CSRisc are held on a bi-monthly basis. It is incumbent upon this committee:

• To establish general risk policies that define the operating methods and competences for specific decision-making bodies, and the managers of each type of risk;

• To approve the procedures required for effective compliance with the established policies and processes;

• To analyze high value-added decisions, approved in different committees, and their impact on economic capital and compliance with the established risk policy;

• To establish limits per type of risk;

• To ensure the holding company’s risk management is consistent over time;

• To discuss the most significant risk factors and plans to mitigate them;

• To coordinate the implementation of risk management instruments. Institutional Treasury Superior Committee

The meetings of this Committee are held on a monthly basis. Its main responsibilities are to discuss and decide on the following, within the competence granted to it by CSRisc:

• The position limits for market risk and the limits for maximum loss (VaR) of each position (including under stress conditions for each type of risk) subordinated to those defined by CSRisc, and additional or supplementary controls and limits, as necessary;

• The operational guidelines and decision-making powers granted to the Institutional Treasury Management Committee (CGTI);

• The retention periods of the main types of risk, considering the size of positions and market liquidity;

• The positions under the management of this committee;

• The risk control models and procedures, including the supplementary ones stipulated by CSRisc;

• Issues and limits related to the treasury operational risk;

• Stop Loss policies;

• Incentive policies.


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CGTI The meetings of this committee are held on a weekly basis and its responsibilities are to discuss and

decide on the following, withing the competence granted to it by CSRisc and CGTI, on the market risk limits, risk models and procedures and retention of position in the main types of risk.

g) Adequacy of operating structure and internal controls to verify the effectiveness of the policy adopted

Itaúsa shares the organizational structure, as necessary, with its main subsidiary, Itaú Unibanco Holding, as described below:

The Market Risk Management Policy effective from February 26, 2010, published on the Investor

Relations website, defines the market risk scope and management structure. The policy covers all financial instruments included in the portfolios of companies owned by the Issuer and the processes and controls significant for the achievement of the business objectives and the implementation of risk management independent from the business area, structured as follows:

Decentralized control – exercised by the Market Risk Control Units, located in the main legal entities of the conglomerate, through the regular activities of risk control, meeting the requirements of the local business units, local regulatory bodies and the Issuer.

Centralized monitoring – exercised by the Liquidity Risk Control Office, through the follow-up, assessment and timely consolidation of the information on market risk received from the Market Risk Control Units, aiming at providing feedback for follow-up by the Superior Committees and to meet the requirements of the regulatory body.

The adherence of the Market Risk Control Units and management to the policies and strategies defined by the Superior Committees of the institution are periodically checked by the Internal Controls Offices, subordinated to the Operational Risk and Efficiency Area (AROE)

The Internal Controls Offices are responsible for the periodic quality evaluation of internal controls and adherence of the processes to the guidelines of top management.

The internal controls methodology is based on the following phases:

1) Mapping of processes, assuring that they: • Enable understanding of the process; • Include details of critical controls and activities; • Are up-to-date.

2) Development of the Risk and Control Matrix, addressing: • The major risks of each phase; • Controls adequate to mitigate risks, including monitoring in compliance with the defined rules and

policies.

3) Analysis and carrying out of tests, considering whether: • The established tests are adequate to evaluate the effectiveness of controls; • The documentation of the test procedure is clear and sufficiently detailed to enable the tests to be

conducted again; • The result of the tests effectively show the adequacy/inadequacy of control.


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4) Reporting on control deficiencies to the managers of the various areas for the development of action plans.

5) Monitoring of the implementation of action plans for the correction of the identified control deficiencies.

5.3. Inform whether, with respect to 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

There were no significant changes regarding the principles of the market risk management policy. The leading company of Itaúsa’s financial segment, Itaú Unibanco Holding S.A., maintained its policy of

operating within low risk limits in relation to its capital. The amounts at risk at the consolidated level were, as in the individual units, affected both by the reduction in the volatility of the main internal and external risk factors over 2009, and by the conservative management of portfolios. 5.4. Supply other information that the Issuer may deem relevant

Itaúsa is structured around the Financial and Industrial Areas, and its main subsidiaries are Itaú Unibanco, Itautec, Elekeiroz and Duratex. The significant market risks of the Group’s Financial Services Area are managed through Itaú Unibanco Holding S.A., based on a governance structure already in place.

The risk analysis process quantifies risk exposure and risk appetite based on the significant market risk factors of the Group.

The companies in the industrial area present immaterial market risks as compared to the Financial Services Area - Itaú Unibanco Holding (please refer to the table in item 5.1).Transactions in the Industrial Area that could possibly present market risk are carried out in order to meet the needs inherent to the business of the area. These transactions present immaterial market risks to the conglomerate.


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ITEM 6 - HISTORY OF THE ISSUER 6.1. With respect to the Issuer’s incorporation, please inform: a) Date

The Incorporation Shareholders' Meeting was held on May 6, 1966. b) Type of business organization

Corporation

c) Country of incorporation

Brazil 6.2. Inform term of duration, if any

Undetermined. 6.3. Brief history of the Issuer

As a holding, Itaúsa is focused on the creation of value for its shareholders and maintains as its central approach its participation in the administration and the monitoring of the management of its subsidiaries. Thus, these companies are capable of achieving high levels of productivity, better benefitting their collaborators and developing technology to continuously improve the products and services they offer to the market.

This model also ensures that the principles that govern the holding are fully followed by the conglomerate companies. Human capital recognition, business ethics and the creation of value for shareholders are unquestionable values that guide the work of the 117,000 employees of Itaúsa and its subsidiaries.

The main companies controlled by Itaúsa stand out in the several business sectors in which they operate: Itaú Unibanco Holding S.A., in the financial segment and Duratex S.A., Itautec S.A. and Elekeiroz S.A., leaders in their respective industrial segments.

The history of the Group began with the first investment bank to be founded in Brazil. It was called Banco Federal Itaú de Investimentos S.A. and was created on May 6, 1965, shortly after the Brazilian Central Bank gave permission for this kind of activity.

Among its founders, we highlight: Jorge Dias de Oliva, Eudoro Villela, Aloysio Ramalho Fóz, Olavo Egydio Setubal, Haroldo de Siqueira, Rubens Martins Villela and José Carlos Moraes Abreu, current Chairman of the Board of Directors of Itaúsa.

In November 1970, it changed its official name to Banco Itaú de Investimento S.A. and in May 1973 to Banco Itaú Português de Investimento S.A. It expanded its operations into the specific area of investment banking. At the same time it accumulated a large equity portfolio and became a substantial shareholder in a number of Itaú’s financing institutions. As these institutions grew, it became a complex task for Banco Itaú Português de Investimento S.A. to maintain its bipolar approach to its operations, both as the holding company of the group and as an investment bank.

As a result, it reformulated its objectives and ceased its investment banking activities in order to become the leading company within the Instituições Financeiras Itaú, a holding company that at that time grouped more than 50 companies. Approval was given at the General Meeting held on December 9, 1974 for the name to be changed to Investimentos Itaú S.A. The business objective was to provide support to the private Brazilian companies in which it had a capital share.

At a General Meeting held on April 30, 1991, the official name was changed to Itaúsa - Investimentos Itaú S.A., thereby incorporating the "Itaúsa" tag which the market valued.


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In 2009, two major positive events reflected significantly on the holding's operations. The first one was the Itaú and Unibanco merger, which was completed in November of that year and established Itaú Unibanco, the largest financial group in the Southern Hemisphere in terms of assets.

The second event took place in August 2009, when Duratex and Satipel completed their merger, creating the biggest manufacturer of wood panels in the Southern Hemisphere, the eighth largest company in this business in the world and the first in the Brazilian market. Duratex, the resulting company, includes the operations of Deca, the brand leader in the bathroom fixtures and fittings and holder of second position in bathroom porcelain in the domestic market, being among the ten biggest producers in this sector in the world.

In 2009, for the sixth time, Itaúsa was selected for the Dow Jones Sustainability World Index and for the third consecutive year it was appointed as leader in sustainability in the financial services sector. The seven Brazilian companies selected in the 2009/2010 review included two other group companies, Itaú Unibanco Holding S.A. and Redecard. Brief history of the institutions that are part of Itaúsa S.A.

Industrial Area:

Duratex:

Duratex was founded in 1951 by businessmen Eudoro Villela, Nivaldo Coimbra de Ulhoa Cintra and Alfredo Egydio de Souza Aranha. Its first industrial plant started making wooden fiberboards three years later using Swedish technology. In 1972, it merged with Deca, a company founded in 1947, and transformed it into the division responsible for the production of bathroom fixtures and fittings of the Deca and Hydra brands.

The control over Duratex S.A. is shared by the groups Itaúsa and Ligna (directly and indirectly), with respective interests of 39.9%, and 17.8% in the company's capital stock. The Ligna Group has significant operations in the input retail and distribution market for civil construction through Leroy Merlin, and joinery, through Leo Madeiras, also operating in the construction and rental of real estate ventures, through Espaço Negócios.

Duratex is currently the largest manufacturer of wood panels in the Southern Hemisphere and leader in the Brazilian market, producing fiberboards, MDP, MDF/HDF/SDF, engineered wood floors under the Durafloor brand and semi-finished parts under the Multiform brand. It has also achieved leadership in bathroom fixtures and fittings through the Deca and Hydra brands, and is well renowned for its bathroom porcelain marketed under the Deca brand.

Elekeiroz:

Elekeiroz’s beginnings go back to the end of the 19th century with the foundation of a small pharmaceutical laboratory called Queiroz Moura & Cia. In 1912, the company became known as L. Queiroz after one of its founders. The transformation of this undertaking into a leading Brazilian chemicals company has been a continuous process of change.

Elekeiroz was a pioneer in the production of a number of chemical products in Brazil, such as phthalic anhydrides, carbon bi-sulfate, octanol and butanol from sugar cane, trimetilolpropano and 2-thylhexoic acid, amongst others.

In 2002, it assumed shareholder control of the former Ciquine Cia. Petroquímica, located in the petrochemical hub at Camaçari, State of Bahia. This operation brought greater competitiveness to the current chemical situation and anticipated the current rapid and irreversible force of globalization.

Elekeiroz carried out the reformulation of its governance, strengthening the Board of Directors, which will be reinforced by a group of independent members.


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Itautec:

Itautec, which is part of the group´s Industrial Area, was founded in 1979 as a result of Banco Itaú’s need to develop technology specifically for its branches. Thanks to this initiative, Itaú has been able to establish its self-service network with equipment and software developed and manufactured by Itautec since the 1980s.

Nowadays, Itautec S.A. is a Brazilian company specialized in IT that provides product development solutions, automation and services. It has the tenth largest installed base of self-service machines in the world and second largest in Latin America, according to Retail Banking Research (Atos). In addition, Itautec has its own network offering IT technical assistance, which is the largest in Brazil.

Itautec is an active participant in both the corporate and household markets in the following segments (i) automation: retail and banking automation products sold in Brazil and abroad as well as outsourcing, technical assistance, infrastructure and installation services; (ii) IT: microcomputers, notebooks and servers, marketed under the Itautec brand name; (iii) distribution: the company acts as a Value-Added Distributor (VAD) of global brand names such as IBM, Apple, Avaya, and Novelle NetApp.

In February 2010, Itautec announced the restructuring of its governance systems, with the strengthening of its Board of Directors and the hiring of a new CEO, who will also sit on the Board.

Financial Services Area:

Itaú Unibanco Holding S.A.:

Two people have been of crucial importance in the development of Itaú and Unibanco: the entrepreneurs Olavo Setubal and Walther Moreira Salles. They achieved success by remaining abreast of the economic, political and social history of Brazil.

The history of the two banks is intertwined. On September 27, 1924, the banking department of Casa Moreira Salles started to operate, later on becoming Banco Moreira Salles. The institution, which would play the leading role in a continuous process of mergers and acquisitions, adopted the name of Unibanco in 1975.

Alfredo Egydio de Souza Aranha founded Banco Central de Crédito with the opening of the first branch on January 2, 1945. The close relationship he had with industrialists and merchants stimulated the bank’s first cycle of expansion. The Itaú brand was created in 1973. Even before, however, the name was already being used within other corporate names, such as Itaú América.

Itaú Unibanco operates in more than 1,100 Brazilian cities and towns throughout the entire country. Overseas it has branches and offices in 12 countries in the Americas, Europe and Asia, and plans to increase its presence in these markets in the coming years, after consolidating our operations in Brazil and Latin America. Based in São Paulo, the Bank had approximately 102,000 employees and a network of about 4,900 branches and banking services outlets at the end of 2009, plus over 30,000 ATMs installed in Brazil’s five regions. 6.4. Date of registration with CVM or indication that the registration is being requested

July 20,1977


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6.5. Describe the main corporate events, such as takeovers, mergers, spin-offs, acquisition of shares, disposals and acquisitions of shareholding control, acquisitions and disposals of important assets which the Issuer or any of its subsidiaries or affiliated companies have carried out, indicating: 2009 Event Sale of the shares of Allianz Seguros

Main conditions of the transaction

On December 29, 2009, Itaú Unibanco Holding S.A., through its subsidiary Cia. Itaú de Capitalização, and Allianz South America Holding B.V., a subsidiary of Allianz Europe B.V., entered into an agreement governing the acquisition by Allianz South America Holding B.V. of the 14.025% interest indirectly held by Cia. Itaú de Capitalização in the capital of Allianz Seguros S.A. The amount of this transaction was R$109 million. This transaction was completed on January 14, 2010, approved by the Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica – CADE) in March 2010, and communicated to the Superintendency of Private Insurance (SUSEP). Following this transaction, Itaú Unibanco Holding S.A. and its subsidiaries no longer hold interests in Allianz Seguros S.A.

Companies involved Itaú Unibanco Holding S.A., Cia. Itaú de Capitalização, Três “B” Empreendimentos e Participações Ltda., Allianz South America Holding B.V., Allianz Europe B.V, Allianz Seguros S.A. and Allianz do Brasil Participações Ltda.

Effects arising from the transaction on the corporate structure, particularly on the ownership interest of the Issuer’s parent company, shareholders with more than 5% of the capital, and management members

No change in the Issuer’s corporate structure.

Corporate structure before and after the transaction

On December 29, 2009, Itaú Unibanco Holding S.A., through its subsidiary Cia. Itaú de Capitalização, indirectly held 14.025% ownership interest in the capital of Allianz Seguros S.A. Afterwards, Itaú Unibanco Holding S.A. and its subsidiaries no longer held ownership interests in Allianz Seguros S.A.


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Event Sale of all shares of Unibanco Saúde Seguradora


On December 16, 2009, Itaú Seguros S.A. and Itaú Unibanco S.A. entered into an agreement for the sale of shares with a subsidiary of Tempo Participações S.A., one of the main companies in the country that provide special care services, dental plans and health services management, aiming to transfer the total capital of Unibanco Saúde Seguradora S.A. to Tempo Participações S.A. On April 29, 2010, thesubsidiary of Tempo Participações S.A. paid to Itaú Seguros S.A. and to Itaú Unibanco S.A. the amount of R$55 million for the transfer of all shares of Unibanco Saúde Seguradora S.A. Depending on the performance of Unibanco Saúde Seguradora S.A. in the 12-month period after the closing date of the transaction, Itaú Seguros S.A. and Itaú Unibanco S.A. may be entitled to an additional payment of up to R$45 million. The transfer of control over Unibanco Saúde Seguradora S.A. was approved in April 2010 by the National Agency of Supplemental Health (Agência Nacional de Saúde Suplementar) and in December 2009 by CADE.

Companies involved Itaú Seguros S.A., Itaú Unibanco S.A., Unibanco Saúde Seguradora S.A., Tempo Participações S.A. and Atori 22 Participações Ltda.




Before this transaction, Itaú Unibanco Holding S.A. held indirectly the total capital of Unibanco Saúde Seguradora S.A. After this transaction, 100% of the capital of Unibanco Saúde Seguradora S.A. is held by a subsidiary of Tempo Participações S.A.


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Event Renewal of the partnership with Magazine Luiza


In September 2001, Unibanco – União de Bancos Brasileiros S.A. entered into a partnership with Magazine Luiza S.A. to incorporate a financial institution named Luizacred S.A. Crédito, Financiamento e Investimento. The scope of this financial institution is to offer consumer credit financial services and products exclusively to customers of Magazine Luiza S.A. Magazine Luiza S.A. directly and indirectly has 50% interest in the capital of Luizacred S.A. Crédito, Financiamento e Investimento, and Itaú Unibanco Holding S.A. directly and indirectly has the other 50% interest. On November 27, 2009, the exclusive right of distribution of consumer credit financial products and services through Luizacred S.A. Crédito, Financiamento e Investimento in all distribution channels of Magazine Luiza S.A. was extended to December 31, 2029, for which Itaú Unibanco Holding S.A. paid the amount of R$250 million. Luizacred S.A. Crédito, Financiamento e Investimento is consolidated in the conglomerate’s financial statements in proportion to the interest directly and indirectly held.

Companies involved Unibanco – União de Bancos Brasileiros S.A., Itaú Unibanco Holding S.A., Magazine Luiza S.A. and Luizacred S.A. Crédito, Financiamento e Investimento.




Not applicable.


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Event Purchase of all shares issued by Itaú XL Seguros Corporativos S.A.


On November 12, 2009, Itaú Seguros S.A. and XL Swiss Holdings Ltd., a company controlled by XL Capital Ltd., entered into an agreement pursuant to which Itaú Seguros S.A. purchased the total shares issued by Itaú XL Seguros Corporativos S.A. held by XL Swiss Holdings Ltd., becoming the holder of 100% interest in Itaú XL Seguros Corporativos S.A. A separate agreement was signed in accordance with which Itaú Seguros S.A. shall provide insurance coverage to XL Capital’s clients in Brazil and XL Capital’s Global Programs clients with operations in Brazil.

Companies involved Itaú Seguros S.A., XL Swiss Holdings Ltd., XL Capital Ltd. and Itaú XL Seguros Corporativos S.A.




Before this purchase, the control over Itaú XL Seguros Corporativos S.A. was shared, that is, 50% was held by Itaú Seguros S.A. and the other 50% was held by XL Swiss Holdings Ltd. After this purchase, Itaú Seguros S.A. became the holder of 100% of interest in the capital of Itaú XL Seguros Corporativos S.A.


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Event Merger of Duratex S.A. and Satipel Industrial S.A. and subsequent partial spin-off of Satipel Florestal Ltda. and transfer of part of its net assets to Duraflora S.A.


a) On June 22, 2009, Itaúsa – Investimentos Itaú S.A., Itaucorp S.A (“the controlling shareholders of Duratex S.A.”) and Companhia Ligna de Investimentos, Alex Laserna Seibel and Andrea Seibel C. Ferreira (“controlling shareholders of Satipel”) entered into a Merger Agreement and a Shareholders’ Agreement, aiming at the unification of all the activities of Satipel Industrial S.A. and Duratex S.A. The implementation of the merger comprised a corporate restructuring approved by the companies’ shareholders on August 31, 2009, in which Duratex S.A. was merged into Satipel Industrial S.A. Accordingly, the shareholders of Duratex S.A. received shares in Satipel Industrial S.A. replacing their shares in Duratex S.A., in the proportion of 3.05360401 common shares issued by Satipel Industrial S.A. per common share issued by Duratex, held by the controlling shareholders, and 2.54467001 common shares issued by the Company per common and preferred share issued by Duratex S.A. held by the other shareholders. On the same date, Satipel Industrial S.A. had its name changed to Duratex S.A. (“Nova Duratex”).

b) In this context, in order to optimize and maximize results and to reduce operating and administrative costs, the forest activities developed by Satipel Florestal Ltda. and by Duraflora S.A., controlled by Nova Duratex S.A., were unified in Duraflora S.A. (as holding the larger number of forest assets). On October 31, 2009, theforest assets of Satipel Florestal Ltda. were spun off and assigned to Duraflora S.A.

Companies involved a) The companies involved in the merger were Itaúsa – Investimentos Itaú S.A.,

Itaucorp S.A., Companhia Ligna de Investimentos, Satipel Industrial S.A. (or Nova Duratex) and Duratex S.A. b) The companies involved in the spin-off were Satipel Florestal Ltda. and Duraflora

S.A. Effects arising from the transaction on the corporate structure, particularly on the ownership interest of the Issuer’s parent company, shareholders with more than 5% of the capital, and management members

a) After the merger, the ownership interest of the controlling shareholders changed

from 71.3% to 56.6%. There was no increase in the interest of shareholders with more than 5% of the capital, and the interest of the management members of Nova Duratex is 3.68%.

b) In the spin-off, there was no change in the Issuer’s corporate structure.


a) Merger: Before the transaction a) the capital of Nova Duratex was held as follows: 71.3% by its then-controlling shareholders and 28.7% by other shareholders; and b) the capital of Duratex S.A. was held as follows: 48% by its then-controlling shareholders and 52% by other shareholders. After the transaction the capital of Nova Duratex is held as follows: 39,6% by the controlling shareholders of Duratex S.A., 17% by the controlling shareholders of Nova Duratex and 43,4% by other shareholders.

b) In the spin-off, there was no change in the Issuer’s corporate structure.


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Event Partnership with Companhia Brasileira de Distribuição, which operates under

the Pão de Açúcar brand


On August 28, 2009, Companhia Brasileira de Distribuição (CBD), which operates under the Pão de Açúcar brand, and Itaú Unibanco S.A. concluded their negotiations concerning FIC – Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento (“FIC”), in which both directly or indirectly hold 50% interest, having agreed the following: (i) change the partnership agreement of FIC, in order to release the Itaú Unibanco S.A.’s exclusivity obligation, for which Itaú Unibanco S.A. paid R$550 million to the Pão de Açúcar Group, and (ii) extend the exclusivity term granted by CBD to FIC until August 2029, for which Itaú Unibanco Holding S.A. paid R$50 million. The partnership provides for the sale of financial, insurance and private pension services and products (excluding extended warranty services) in stores of all types that at the time when the agreement was reached were directly or indirectly operated or owned by CBD, including supermarkets, convenience stores, electronic appliance stores, retail and wholesale stores, gas stations, drugstores, and e-commerce. The new stores purchased by CBD may be included in the partnership according to the criteria established in the agreements entered into between the parties. FIC is fully consolidated in our financial statements.

Companies involved Companhia Brasileira de Distribuição, Itaú Unibanco S.A., FIC - Financeira Itaú and CBD S.A. Crédito, Financiamento e Investimento.




Not applicable.


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Event Alliance with Porto Seguro S.A.


On August 23, 2009, Itaú Unibanco Holding S.A. and Porto Seguro S.A. entered into an alliance aimed at the unification of their residential and automobile insurance operations, which lead to the negotiation of an Operational Agreement for the exclusive offering and distribution of residential and automobile insurance products to the customers of the Itaú Unibanco S.A. in Brazil and Uruguay. In order to implement the alliance, on November 30, 2009, the shareholders of Porto Seguro S.A. and Itaú Unibanco Holding S.A. approved the merger of ISAR Holding Ltda. into Porto Seguros S.A. (“the Merger”). Until the Merger, ISAR Holding Ltda. was the parent company of Itaú Seguros de Auto e Residência S.A., the company that received the assets and liabilities of Itaú Seguros S.A. related to the residential and automobile insurance operations. On that same date, the companies of the Itaú Unibanco Conglomerate became shareholders of Porto Seguro Itaú Unibanco Participações S.A., to which they contributed the total shares issued by Porto Seguros S.A. received in view of the Merger. Accordingly, the Itaú Unibanco Conglomerate held an interest of approximately 43% in the capital of Porto Seguro Itaú Unibanco Participações S.A., and indirectly held 30% in the capital of Porto Seguro S.A. This alliance is pending approval by the Brazilian Anti-trust System (SBDC).

Companies involved Porto Seguro S.A. and its subsidiaries, Itaú Unibanco S.A., Itaú Unibanco Holding S.A., ISAR Holding Ltda., Itaú Seguros de Auto e Residência S.A., Itaú Seguros S.A. and Porto Seguro Itaú Unibanco Participações S.A.




Before this alliance, 100% of the capital of ISAR Holding Ltda. and of its subsidiary, Itaú Seguros de Auto e Residência S.A., was indirectly held by Itaú Unibanco Holding S.A. After the merger of ISAR Holding Ltda. into Porto Seguro S.A., 100% of the capital of Itaú Seguros de Auto Residência S.A. was held by Porto Seguro S.A. With the completion of the restructuring mentioned above, the Itaú Unibanco Conglomerate held an interest of approximately 43% in the capital of Porto Seguro Itaú Unibanco Participações S.A., and indirectly held 30% interest in the capital of Porto Seguros S.A.


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Event Transactions involving the shares of Redecard S.A.


Banco Itaucard S.A. and Unibanco Participações Societárias S.A. sold in July 2007, through a secondary offering, approximately 107.6 million common shares, corresponding to 16.4% of the total capital of Redecard S.A., a company that captures and transmits information for the credit and debit card transactions of Mastercard and Diners Club in Brazil. Each share was sold at R$27.00, generating income of R$1.6 billion after taxes. In March 2009, the conglomerate purchased approximately 24 million shares in Redecard S.A. from Banco Citibank S.A. for the total price of R$590 million, giving rise to goodwill amounting to R$557 million, which was totally amortized in the consolidated financial statements as at December 31, 2009. In view of this transaction, Itaú Unibanco Holding S.A. became the holder of over 50% interest in the total and voting capital of Redecard S.A.; since the first quarter of 2009, the results of Redecard S.A. have been fully consolidated in theconglomerate’s consolidated financial statements.

Companies involved Banco Itaucard S.A., Unibanco Participações Societárias S.A., Redecard S.A., Banco Citibank S.A. and Itaú Unibanco Holding S.A.




Before the primary and secondary offerings, Itaú Unibanco Holding S.A., through its subsidiaries, held approximately 63.8% interest in the capital of Redecard S.A. In 2009, after the purchase of shares owned by Banco Citibank S.A. (as described above), Itaú Unibanco Holding S.A., through its subsidiaries, held over 50% interest in the total and voting capital of Redecard S.A.


53

Event Partnership agreement with Vivo S.A.


On March 31, 2009, Banco Itaucard S.A., Vivo S.A. and Telemig Celular S.A., a subsidiary of Vivo S.A. (Vivo S.A. and Telemig Celular S.A., collectively, “Vivo”), the leader in the Brazilian mobile telecommunication services market, entered into a partnership agreement pursuant to which the conglomerate was granted the right to distribute and sell co-branded credit cards and other financial and certain insurance products to Vivo’s clients in Brazil for a ten-year period.

Companies involved Banco Itaucard S.A., Vivo S.A. and Telemig Celular S.A.




Not applicable.


54

2008 Event Remaining interest in Banco Itaú BBA S.A.


On December 29, 2008, Itaú Unibanco S.A. purchased the remaining interest of 4.25% in Banco Itaú BBA S.A. that was held by certain executives and employees of Banco Itaú BBA S.A. At present, Itaú Unibanco Holding S.A. holds approximately 100% interest in the capital of Banco Itaú BBA S.A.

Companies involved Itaú Unibanco Holding S.A., Itaú Unibanco S.A. and Banco Itaú BBA S.A.




Before this transaction, Itaú Unibanco Holding S.A. held approximately 95.75% interest in the total capital of Banco Itaú BBA S.A. After this transaction, Itaú Unibanco Holding S.A. holds approximately 100% interest in the total capital of Banco Itaú BBA S.A.


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Event Partnership with Marisa S.A.


On December 4, 2008, Itaú Unibanco, Marisa S.A. and Credi-21 Participações S.A., or Credi-21 (Marisa S.A. and Credi-21, collectively, “Marisa”) entered into a partnership agreement pursuant to which Itaú Unibanco S.A. and its subsidiaries were granted an exclusive right to offer and sell financial products and services, namely co-branded credit cards, personal loans and other types of consumer credit financial products, through Marisa’s sales network (physical and online stores) for ten years. Marisa is the largest Brazilian department store chain specializing in women’s clothing. Its business and operational strategies are targeted at medium-and low-income women of ages ranging from 20 to 35 years. With the partnership, both parties have combined the strengths of their business operations, which comprise valuable brands, clientele, market share and extensive penetration in their respective segments. The deal was structured as a profit-sharing agreement, under which each party is entitled to 50% of the results of the partnership operations. The partnership represented an investment of approximately R$120 million by Itaú Unibanco, R$65 million of which was paid in exchange for the exclusivity right and for the access to Marisa’s customer base for the period of the agreement, and an additional payment of up to R$55 million, which is linked to certain contractual sales targets set over a five-year period.

Companies involved Itaú Unibanco S.A., Marisa S.A. and Credi-21 Participações S.A.




Not applicable.


56

Event Operation with the American International Group, Inc. - AIG


On November 26, 2008, Unibanco – União de Bancos Brasileiros S.A. entered into an agreement with AIG, pursuant to which the parties exchanged shares that both groups held in Brazilian insurance companies, as follows: (i) Unibanco – União de Bancos Brasileiros S.A. acquired, for US$820 million, the shares held by AIG in Unibanco Seguros S.A.; and (ii) AIG acquired, for US$15 million, the shares held by Unibanco – União de Bancos Brasileiros S.A. in AIG Brasil Companhia de Seguros. Upon the completion of this transaction, Unibanco – União de Bancos Brasileiros S.A., held 100% interest in the capital of Unibanco Seguros S.A., Unibanco AIG Vida e Previdência S.A. (currently named “Itaú Vida e Previdência S.A.”) and Unibanco AIG Saúde Seguradora S.A. (currently named “Unibanco Saúde Seguradora S.A.), which were companies controlled by Unibanco Seguros S.A.

Companies involved Unibanco – União de Bancos Brasileiros S.A., American International Group, Inc., Unibanco Seguros S.A. and AIG Brasil Companhia de Seguros.




Before this transaction, Unibanco – União de Bancos Brasileiros S.A. and AIG held 50.001% and 49.999% interest, respectively, in the capital of Unibanco Seguros S.A., and Unibanco – União de Bancos Brasileiros S.A. and AIG held 49.999% and 50.001% interest, respectively, in the capital of AIG Brasil Companhia de Seguros. Upon the completion of this transaction, Unibanco – União de Bancos Brasileiros S.A. indirectly held 100% interest in the capital of Unibanco Seguros S.A., Unibanco AIG Vida e Previdência S.A. (currently named “Itaú Vida e Previdência S.A.”) and Unibanco AIG Saúde Seguradora S.A. (currently named “Unibanco Saúde Seguradora S.A.), which were companies controlled by Unibanco Seguros S.A. AIG, in its turn, held 100% interest in the capital of AIG Brasil Companhia de Seguros.


57

Event Itaú and Unibanco AssociationMain conditions of the transaction

On November 3, 2008, Itaúsa – Investimentos Itaú S.A. and the controlling shareholders of Unibanco Holdings S.A. entered into an agreement to combine the operations of the financial groups Itaú and Unibanco. The precondition for the completion of this merger was that Itaú Unibanco S.A. should acquire all the shares in Itaúsa Export S.A. and Itaúsa Europa Investimentos SGPS Lda. directly held by Itaúsa, the then controlling shareholder of Itaú Unibanco Holding S.A., in Itaú Unibanco S.A., in Itaúsa Export S.A. and in Itaúsa Europa Investimentos SGPS Lda. On December 12, 2008, Itaú Unibanco S.A. entered into an agreement with Itaúsa – Investimentos Itaú S.A. for the acquisition of 77.8% interest in the total capital and 80% interest in the voting capital of Itaúsa Export S.A., and of 12.1% total and voting capital of Itaúsa Europa Investimentos SGPS Lda., a subsidiary of Itaúsa Export S.A., for the amount of approximately R$1.2 billion. As a result of the acquisition and subsequent corporate events, Itaú Unibanco S.A. held 100% interest in the capital of Itaúsa Europa Investimentos SGPS Lda. and of Itaúsa Export S.A. Itaúsa Export S.A. is a privately-held holding company with headquarters in Brazil, which holds control over Itaúsa Europa S.A. Itaúsa Europa Investimentos SGPS Lda. is a privately-held holding company with headquarters in Portugal. The operations of Itaúsa Export S.A. and Itaúsa Europa Investimentos SGPS Lda., carried out by their indirect subsidiaries, include corporate banking and international cash management and private banking services. In order to complete the merger, the Itaú and Unibanco financial groups carried out a corporate restructuring under which Unibanco Holdings S.A and its subsidiary Unibanco – União de Bancos Brasileiros S.A. became wholly-owned subsidiaries of Itaú Unibanco through a series of transactions. (i) the merger of all the shares in E. Johnston Representação e Participações S.A. into Itaú Unibanco S.A.; (ii) the merger into Itaú Unibanco S.A. of all the shares in Unibanco Holdings which were not directly held by Itaú Unibanco S.A.; (iii) the merger into Itaú Unibanco S.A. of all the shares in Unibanco – União de Bancos Brasileiros S.A. which were not indirectly held by Itaú Unibanco S.A.; and (iv) the merger of all the shares in Itaú Unibanco S.A. into Itaú Unibanco Holding S.A. The shareholders of Itaú Unibanco Holding S.A., Itaú Unibanco S.A., E. Johnston Representação e Participações S.A., Unibanco Holdings S.A. and Unibanco – União de Bancos Brasileiros S.A. approved the transactions at Extraordinary Shareholders’ Meetings held on November 28, 2008. The transactions were approved by the Central Bank in February 2009. The shares of Itaú Unibanco Holding S.A., including those exchanged for shares originally issued by Unibanco – União de Bancos Brasileiros S.A. and Unibanco Holdings S.A., started to be traded under the same symbol on March 31, 2009. In May 2009, the symbols were standardized to “ITUB” on all the stock exchanges where Itaú Unibanco Holding S.A. is listed. At the Extraordinary Shareholders’ Meeting held on November 28, 2008, the conglomerate’s shareholders approved the change of the corporate name Banco Itaú Holding Financeira S.A. to Itaú Unibanco Banco Múltiplo S.A. At the Extraordinary Shareholders’ Meeting held on April 24, 2009, the change of the corporate name Itaú Unibanco Banco Múltiplo S.A. to Itaú Unibanco Holding S.A was approved. This change


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was approved by the Central Bank of Brazil on August 12, 2009. At the Extraordinary Shareholders’ Meeting held on April 30, 2009, the conglomerate’s shareholders approved the change of the corporate name Banco Itaú S.A. to Itaú Unibanco S.A. This change was approved by the Central Bank of Brazil on December 30, 2009.

Companies involved Itaúsa – Investimentos Itaú S.A., Unibanco Holdings S.A., Itaú Unibanco Holding S.A., Itaú Unibanco S.A., Unibanco – União de Bancos Brasileiros S.A., IUPAR – Itaú Unibanco Participações S.A., E. Johnston Representação e Participações S.A., Itaúsa Export S.A. and Itaúsa Europa Investimentos SGPS Lda.


With this merger, the capital of Itaú Unibanco Holding S.A. is held as follows, excluding the treasury shares: (i) 50.5% in free float, (ii) 5.4% held by Bank of America Corporation, (iii) 18.3% directly held by Itaúsa – Investimentos Itaú S.A., and (iv) 25.8% held by IUPAR - Itaú Unibanco Participações S.A., a holding company controlled by Itaúsa – Investimentos Itaú S.A. (holder of 66.5% interest in the capital of IUPAR - Itaú Unibanco Participações S.A.) and by Companhia E. Johnston de Participações (holder of 33.5% interest in the capital of IUPAR - Itaú Unibanco Participações S.A.), which is controlled by the former shareholders of Unibanco – União de Bancos Brasileiros S.A. (the members of the Moreira Salles family).


Before the merger, the capital of Itaú Unibanco Holding S.A. was held as follows, excluding the treasury shares: (i) 47 % in free float, (ii) 7.5% held by Bank of America Corporation, and (iii) 45.5% held by Itaúsa – Investimentos Itaú S.A. Before the merger, the capital of Unibanco – União de Bancos Brasileiros S.A. was held as follows: (i) 41.7% in free float, and (ii) 58.3% held by Unibanco Holdings S.A. Before the merger, the capital of Unibanco Holdings S.A. was held as follows:: (i) 67.1% in free float, and (ii) 32.9% held by the Moreira Salles group. With this merger, the capital of Itaú Unibanco Holding S.A. is held as follows, excluding the treasury shares: (i) 50.5% in free float, (ii) 5.4% held by Bank of America Corporation, (iii) 18.3% directly held by Itaúsa – Investimentos Itaú S.A., and (iv) 25.8% held by IUPAR - Itaú Unibanco Participações S.A., a holding company controlled by Itaúsa – Investimentos Itaú S.A. (holder of 66.5% interest in the capital of IUPAR - Itaú Unibanco Participações S.A.) and by Companhia E. Johnston de Participações (holder of 33.5% interest in the capital of IUPAR Itaú Unibanco Participações S.A.), which is controlled by the former shareholders of Unibanco – União de Bancos Brasileiros S.A. (the members of the Moreira Salles family, or the Moreira Salles Family). As the total shares in Unibanco Holdings S.A. and in Unibanco – União de Bancos Brasileiros S.A. are directly and indirectly held by Itaú Unibanco Holding S.A., their subsidiaries consequently hold the total shares indirectly held by Itaú Unibanco Holding S.A.


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Event Partnership with Coelho da Fonseca


In April 2008, Itaú Unibanco Holding S.A. and Itaú Unibanco S.A. signed a partnership agreement with Coelho da Fonseca Empreendimentos Ltda., a real estate broker that provides real estate consulting and brokerage services, for the acquisition of the exclusive right to offer, distribute and market real estate financial products and services to the clients of Coelho da Fonseca for a ten-year period. In view of this partnership, Coelho da Fonseca Empreendimentos Ltda. is entitled to commission based on the financial products and services that its clients purchase from the conglomerate.

Companies involved Itaú Unibanco Holding S.A., Itaú Unibanco S.A. and Coelho da Fonseca Empreendimentos Ltda.




Not applicable.


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Event Agreement with Dafra da Amazônia Indústria e Comércio de Motocicletas Ltda.


In March 2008, Itaú Unibanco S.A. signed an agreement with Dafra da Amazônia Indústria e Comércio de Motocicletas Ltda., a motorcycle assembly company owned by the Itavema group, for the acquisition of the exclusive right to: (i) offer, distribute and market financial products and services to the clients of Dafra, (ii) offer working capital loans to Dafra dealers for the financing of motorcycles purchases, and (iii) be recommended by Dafra to the dealers in relation to certain financial, insurance and private pension products and services of Itaú Unibanco S.A. The investment of Itaú Unibanco Holding totaled R$20 million and it relates to the acquisition of the said exclusive right for a ten-year period, which can be extendable. The amount of R$20 million, paid to Dafra, was recorded as an intangible asset, which will be amortized over the term of the agreement. We allocated this intangible asset to the banking services segment of Itaú Unibanco S.A. The partnership was structured through a profit-sharing agreement, pursuant to which Itaú Unibanco S.A. is entitled to 60% and Dafra is entitled to 40% interest in the earnings from the sale of financial products and services.

Companies involved Itaú Unibanco S.A. and Dafra da Amazônia Indústria e Comércio de Motocicletas Ltda.




Not applicable.


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2007 Event Agreement with Lopes


On December 28, 2007, Itaú Unibanco Holding S.A., LPS Brasil – Consultoria de Imóveis S.A., a company that provides real estate consulting and sales services, and SATI – Assessoria Imobiliária Ltda., a subsidiary of Lopes, entered into an agreement, pursuant to which Itaú Unibanco Holding S.A. and its subsidiaries obtained the exclusive right for a 20–year period to offer and sell to Lopes clients certain financial products and services, such as loans for real estate and related durable goods and improvements. With this agreement and the intent of promotingfinancial products and services to Lopes clients, Itaú Unibanco S.A. and SATI –Assessoria Imobiliária Ltda. incorporated Olímpia Promoção e Serviços S.A., of which each party owns 50% interest in the capital. The deal was structured as a profit-sharing agreement, under which each party is entitled to 50% of the results of the partnership operations.

Companies involved Itaú Unibanco Holding S.A., Itaú Unibanco S.A., LPS Brasil – Consultoria de Imóveis S.A., SATI – Assessoria Imobiliária Ltda. And Olímpia Promoção e Serviços S.A.




Itaú Unibanco and SATI – Assessoria Imobiliária Ltda. incorporated and each of them owns 50% interest in the capital of Olímpia Promoção e Serviços S.A.


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Event Sale of BM&F shares


In November 2007, in connection with the initial public offering of Bolsa de Mercadorias e Futuros – BM&F S.A. (after the merger with Bovespa Holdings S.A., “BM&FBOVESPA”), Itaubank Distribuidora de Títulos e Valores Mobiliários S.A., Itaú Unibanco S.A. and Banco Itaú BBA S.A. sold 10.4 million shares issued by Bolsa de Mercadorias e Futuros – BM&F S.A., and Unicard Banco Múltiplo S.A. sold 4.5 million shares issued by Bolsa de Mercadorias e Futuros – BM&F S.A. In addition, prior to the initial public offering of Bolsa de Mercadorias e Futuros - BM&F S.A., Itaubank Distribuidora de Títulos e Valores Mobiliários S.A., Itaú Corretora de Valores S.A., Itaú Unibanco S.A. and Banco Itaú BBA S.A. sold 3.4 million shares issued by Bolsa de Mercadorias e Futuros – BM&F S.A. to GL Latin America Investments LLC, and Unicard Banco Múltiplo S.A. sold 1.5 million shares issued by Bolsa de Mercadorias e Futuros – BM&F S.A. to GL Atlantic Private Equity Group. At that time, these transactions generated a net income of R$150 million for Itaú Unibanco Holding S.A. and R$62million for Unibanco Holdings S.A.

Companies involved Bolsa de Mercadorias e Futuros – BM&F S.A. (after the merger with Bovespa Holdings S.A., “BM&FBOVESPA”), Itaubank Distribuidora de Títulos e Valores Mobiliários S.A., Itaú Unibanco S.A., Itaú Unibanco Holding S.A., Banco Itaú BBA S.A., Unicard Banco Múltiplo S.A., Itaú Corretora de Valores S.A., GL Latin America Investments LLC and GL Atlantic Private Equity Group.




After the sale, Itaú Unibanco Holding S.A. holds less than 5% interest in the capital of BM&FBOVESPA.


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Event Sale of Bovespa shares


In October 2007, Bovespa Holding S.A. (after the merger with BM&F, “BM&FBOVESPA”), completed its initial public offering. With this initial public offering, the conglomerate, through Itaú Unibanco and Banco Itaú BBA S.A., as well as Unicard Banco Múltiplo S.A., sold 11.4 million and 23.3 million shares, respectively, of Bovespa Holding S.A. These transactions generated a net income of R$164 million for Itaú Unibanco Holding S.A. and R$320 million for Unibanco Holdings S.A.

Companies involved Bovespa Holding S.A., Itaú Unibanco S.A., Banco Itaú BBA S.A. and Unicard Banco Múltiplo S.A.




After the sale, Itaú Unibanco Holding S.A. holds less than 5% interest in the capital of BM&FBOVESPA.


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Event Partnership with Aenik


On September 3, 2007, Itaú Unibanco Holding S.A. entered into an agreement with Aenik Participações Ltda. to incorporate and develop Kinea Investimentos S.A. Itaú Unibanco Holding S.A. indirectly holds 80% of the capital of Kinea Investimentos S.A. and Aenik Participações Ltda. holds the remaining interest of 20%. Kinea Investimentos S.A. manages alternative investments in hedge funds, real estate equity funds and private equity funds, and is targeted at heavy investments of corporate and individual clients. The conglomerate has fully consolidated the results of Kinea in its consolidated financial statements.

Companies involved Itaú Unibanco Holding S.A., Itaú Unibanco Itaubank Asset Management Ltda., Aenik Participações Ltda. and Kinea Investimentos S.A.




After the incorporation of Kinea Investimentos S.A., Itaú Unibanco Holding S.A. indirectly holds 80% interest in its capital.


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Event Sale of the ownership interest held in Serasa


In June 2007, Itaú Unibanco Holding S.A, through its subsidiaries (including those of the former Unibanco conglomerate), sold a portion of the ownership interest it held in Serasa S.A. to Experian Brasil Aquisições Ltda., a Brazilian subsidiary of Experian Solutions, Inc., the world’s leading credit analysis company. Approximately 1.3 million shares were sold, corresponding to 35.45% of total shares issued by Serasa S.A., for R$925.78 per share. On the same date, Itaú Unibanco Holding S.A., through its subsidiaries, with another financial institution incorporated a holding company, BIU Participações S.A., the capital of which was contributed in the form ofSerasa S.A. shares that were directly and indirectly held by Itaú Unibanco Holding S.A. and by the other financial institution. On October 11, 2007, BIU Participações S.A. sold approximately 11,000 shares issued by Serasa S.A. to Experian Brasil Aquisições Ltda. Such transactions (including the sale carried out in June 2007) totaled approximately R$1.2 billion. In view of the shareholders’ agreement entered into as a result of these transactions, the conglomerate is entitled to appoint two members to the Board of Directors of Serasa S.A.

Companies involved Itaú Unibanco Holding S.A., Serasa S.A., Experian Brasil Aquisições Ltda., Experian Solutions, Inc., BIU Participações S.A. and other financial institutions that are shareholders of Serasa S.A.




Before these transactions, Itaú Unibanco Holding S.A., through its subsidiaries (including those of the former Unibanco conglomerate), held 51.79% interest in the capital of Serasa S.A. After the sales, Itaú Unibanco Holding S.A. held interest in the capital of Serasa, and at December 31, 2009, its aggregate indirect interest was 16.13% in the capital of Serasa S.A. through BIU Participações S.A.


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Event Acquisition of private banking operations of ABN AMRO conducted in Miami and Montevideo


On June 8, 2007, Itaú Unibanco Holding S.A., through its subsidiaries, acquired theinternational private banking assets of Latin American clients of ABN AMRO Bank N.V. in Miami, Montevideo, Switzerland and Luxembourg. This acquisition comprised managed assets of approximately US$3.0 billion, located in the United States of America (Miami), Switzerland, Luxembourg and Uruguay (Montevideo). At the beginning of the second quarter of 2007, the assets recorded in Miami were accounted for by Banco Itaú Europa Internacional S.A., and the assets recorded in Uruguay were accounted for by Banco Itaú Uruguay S.A. This transaction consolidated the position of Itaú Unibanco Holding S.A. and Banco Itaú Europa S.A. as one of the leaders in private banking in the Latin American market.

Companies involved Itaú Unibanco Holding S.A., ABN AMRO Bank N.V., Banco Itaú Europa S.A., Banco Itaú Uruguay S.A. and Banco Itaú Europa Internacional S.A.




Not applicable.


67

Event Acquisition of BankBoston International and BankBoston Trust Company Limited


On May 31, 2007, Banco Itaú Europa S.A. and its subsidiary Banco Itaú Europa Luxemburgo S.A. completed the acquisition of BankBoston International (currently named Banco Itaú Europa Internacional S.A.), with headquarters in Miami, and of BankBoston Trust Company Limited (currently named BIE Bank & Trust Ltd.), with headquarters in Nassau. Such companies operate private banking services targeted at individual clients that are non-residents in the United States of America. The transactions made for the acquisition of such companies included at that time managed assets that amounted to approximately US$3.2 billion and about 5,500 private banking clients in Latin America.

Companies involved Banco Itaú Europa S.A. Banco Itaú Europa Luxemburgo S.A., Bank of America Corporation, BankBoston International and BankBoston Trust Company Limited.




Before the transaction, Banco Itaú Europa S.A did not hold any interest in the capital of BankBoston International nor in the capital of BankBoston Trust Company Limited. After the completion of the transaction, Banco Itaú Europa S.A wholly owns the capital of BankBoston International and of BankBoston Trust Company Limited.


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Event Acquisition of the operations of BankBoston in Chile and Uruguay


On February 26, 2007, Itaú Unibanco Holding S.A. completed the acquisition of the operations of Bank of America Corporation in Chile under the BankBoston brand. Such operations were acquired through the issuance of approximately 17.4 million common shares by Itaú Unibanco Holding S.A. (which at that time represented approximately 1.42% of total shares issued by Itaú Unibanco Holding S.A., including treasury shares). On March 23, 2007, Itaú Unibanco Holding S.A. completed the acquisition of the operations of Bank of America Corporation in Uruguay under the BankBoston brand, as well as those of OCA in Uruguay. Such operations were acquired through the issuance of 3.1 million common shares by Itaú Unibanco Holding S.A. (which at that time represented approximately 0.26% of total shares issued by Itaú Unibanco Holding S.A., including treasury shares). Prior to these transactions, Itaú Unibanco Holding S.A. had acquired the operations of Bank of America Corporation in Brazil under the BankBoston brand, and had entered into an agreement with Bank of America Corporation pursuant to which it agreed to acquire the operations in Chile and Uruguay under the BankBoston brand, as well as the OCA operations in Uruguay. The shares issued by Itaú Unibanco Holding received by Bank of America Corporation in view of the transactions carried out in Chile and Uruguay were included in the shareholders’ agreement of Itaú Unibanco Holding S.A. entered into between Itaúsa and Bank of America Corporation, which became effective after the completion of the acquisition of BankBoston Brazil on September 1, 2006.

Companies involved Itaú Unibanco Holding S.A., Itaúsa – Investimentos Itaú S.A., Bank of America Corporation, BKB Chile Holdings, Bank Boston Uruguay S.A., OCA S.A., OCA Casa Financeira S.A., ACO Ltda. and Boston Directo S.A.




In view of the sale to Itaú Unibanco Holding S.A. of its operations in Brazil, Chile and Uruguay, Bank of America Corporation held in October 2008 approximately 51.3 million common shares and 171.3 million preferred shares issued by Itaú Unibanco Holding S.A., equivalent to 7.4% of total shares issued by Itaú Unibanco Holding S.A. at that date.

6.6. Indicate whether there was a petition for bankruptcy, provided that it was based on a significant amount, or for judicial or extra-judicial recovery of the Issuer, and the current status of such petitions None.


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6.7. Supply other information that the Issuer may deem relevant In May 2010, Hipercard Banco Múltiplo S.A., a company controlled by Itaú Unibanco Holding S.A., entered into a partnership with Redecard S.A., to capture transactions with the Hipercard brand from the second quarter of 2010. Through this partnership, Hipercard Banco Múltiplo S.A. will have access to the established infrastructure and network of Redecard in Brazil, which will provide more efficiency and speed in the registration of establishments by Hipercard, according to its current operational model, as well as an increase in its market share and revenue. For Redecard S.A., the partnership will imply an increase of its presence in the northeast and south regions, where the new brand will have a significant share, and it will also assist in the consolidation of the multibrand platform, with a total of 17 brands in its portfolio, and increase its revenue, since Hipercard is the top Brazilian credit card brand, with over 13 million cards issued.

On June 1, 2010, Bank of America Corporation, then a shareholder of Itaú Unibanco Holding S.A., made an offering for the disposal of all 188,424,758 preferred shares issued by Itaú Unibanco Holding S.A. it held as American Depositary Shares - ADS (each one representing one preferred share issued by Itaú Unibanco Holding S.A.) equivalent to approximately 8.4% of the total outstanding preferred shares issued by Itaú Unibanco Holding S.A. and 4.16% of the total outstanding capital stock. Such a disposal was carried out through a secondary offering of ADS restricted to qualifying investors. This offering was not registered with the CVM or SEC. Additionally, on June 11, 2010, Itaúsa – Investimentos Itaú S.A. purchased the 56,476,299 common shares issued by Itaú Unibanco Holding S.A. owned by Bank of America Corporation, corresponding to approximately 2.5% of the outstanding common shares issued by Itaú Unibanco Holding S.A. and 1.2% of its outstanding capital stock As a result, Bank of America Corporation is no longer entitled to appoint a member to the Board of Directors of Itaú Unibanco Holding S.A. nor jointly to sell its shares issued by Itaú Unibanco Holding S.A. in the case of control transfer (tag-along). With the acquisition of these common shares, the direct and indirect interest held by Itaúsa - Investimentos Itaú S.A. in the capital stock of Itaú Unibanco Holding S.A. increased to 35.43% from 36.68%.


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ITEM 7 - ACTIVITIES OF THE ISSUER 7.1. Briefly describe the activities carried out by the Issuer and its subsidiaries

The Issuer is a holding company. Its main subsidiaries are Itaú Unibanco Holding S.A., Duratex S.A., Itautec S.A. and Elekeiroz S.A., which operate in different areas such as finance, wood panels, bathroom fixtures and fittings, chemicals and electronics, covering the consumer goods and IT industries. 7.2. With respect to each of the operating segments that have been disclosed in the most recent financial statements for the year or, when applicable, in the consolidated financial statements, please indicate the following information: a) Products and services sold

Because it is a holding company, the revenue of the Issuer basically arise from its subsidiaries and are accounted for using the equity method. We present below a description of the main products sold by our main subsidiaries: Industrial Area: Duratex:

This company’s operating performance over the past year has showed significant improvement as the result of the merger of Duratex S.A. into Satipel Industrial S.A., whose corporate name was subsequently changed to Duratex S.A. (see item 6.5). Accordingly, the financial statements of Duratex were merged into those of Satipel, the second largest manufacturer of wood panels in the Brazilian market, as from July 2009. As a result, not only did the Wood Division show significant operational improvement, but also a new business segment was launched, internally called Deca Division. This division is responsible for the manufacturing of finishing products aimed at the civil construction industry, notably, bathroom fixtures and fittings. Elekeiroz:

This company manufactures intermediate chemicals and there are no divisional structures or activities managed on an individual basis, or separately determined financial results. In the management of its activities, the Company operationally separates its products into two groups, based on the characteristics of the markets in which it operates:

1. Organic Products – which include oxo-alcohols, phthalic and maleic anhydrides, plasticizers,

unsaturated polyester resins, phormaldehyde, urea-formaldehyde concentrate, and fumaric acid; 2. Inorganic Products – which include sulfuric acid and some resale activities.


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The Company’s main financial information is divided into these two segments in the consolidated financial statements, and is as follows:

a. Organic products 2007 2008 2009 b. Net revenue R$ thousands 778,551 740,696 536,275 % in total gross income of the company 89% 84% 94% c. Gross income R$ thousands 132,030 86,083 44,609 % in total revenue of the company 81% 63% 104%

a. Inorganic products 2007 2008 2009 b. Net revenue R$ thousands 92,070 136,963 34,935 % in total gross income of the company 11% 16% 6% c. Gross income R$ thousands 30,889 50,401 -1,739 % in total revenue of the company 19% 37% -4%

a. Total of the Company 2007 2008 2009 b. Net revenue R$ thousands 870,621 877,659 571,21 % in total gross income of the company 100% 100% 100% c. Gross income R$ thousands 162,919 136,484 42,870 % in total revenue of the company 100% 100% 100%

Itautec:

Although the disclosure of financial information for this segment is still being prepared, pursuant to CPC No. 22, approved by CVM Resolution No. 582/09, we have already made certain disclosures in the Company’s Management Report, as described below:

Operating segments

Automation IT SERVICES Distribution

Products and services sold

Banking automation (self-service machines (ATMs) and bank teller terminals; retail automation (point-of-sale terminals, fiscal printers, self-service machines and software;

Desktops, Notebooks, Netbooks and Servers

Services de outsourcing, technical assistance, infrastructure and facilities

VAD of global brand names


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Financial Services Ares: Itaú Unibanco: Business

This company provides a broad range of banking services to a diversified client base of individuals and

corporations. These services are provided on an integrated basis through the following segments:

• Commercial Banking, • Itaú BBA, • Consumer Credit.

The Commercial Banking segment provides insurance, pension and capitalization products, credit cards,

asset management, credit products and customized products and solutions specifically developed to meet clients’ needs. Marketing strategies are adapted to the profile of each client and implemented through the most appropriate distribution channels. The goal is to increase the number of products used by our clients, thus diversifying the sources of income. The segment is an important source of funding for the conglomerate’s operations and provides significant financial income and banking service fees. The Commercial Banking segment covers:

• Retail banking; • Public sector enterprises; • Personnalité; • Private banking; • Very small companies; • Small companies; • Medium-sized companies; • Credit cards; • Real estate financing; • Asset management; • Corporate social responsibility funds; • Securities services for third parties; • Brokerage; and • Insurance, private pension plans and capitalization.

Itaú BBA is responsible for corporate segment services and investment banking activities. The

management model of Itaú BBA is based on the development of close relationships with clients, so as to meet their needs and offer customized solutions. The corporate segment services comprise the provision of banking services to large companies, whereas the investment banking activities comprise the offering of funds to such companies through fixed and variable income instruments, among other things.

The Consumer Credit segment offers financial products and services to non-account holders, such as

vehicle financing, credit card services and loans to low-income consumers.

In addition, Itaú Unibanco has a wide range of operations abroad, and has strengthened its international presence based on the strategic location of units in the Americas, Europe and Asia. Accordingly, significant synergies have been generated in the financing of foreign trade,the placement of Eurobonds, the offering of sophisticated financial transactions and private banking operations.


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Commercial Banking

The following is an overview of products and services provided to account holders:

The main products available to account holders are:

• Credit: personal loans, overdraft accounts, payroll advance loans, vehicle financing, credit cards, real estate financing, rural loans, working capital, factoring and export services;

• Investments: pension plans, mutual funds, time deposits, demand deposit accounts, savings accounts, capitalization plans; and

• Services: insurance (life, residence, credit/debit card, vehicle, and loan protection, among other products), foreign exchange, brokerage and other services.

Retail banking

The core business of the segment is retail banking focused on individuals with monthly income of below

R$ 7,000. The purpose is to fulfill the needs of over 13.7 million clients, by offering high-quality banking products and services, by means of 4,465 branches and service centers, as at December 31, 2009, under the “Itaú” and “Unibanco” brands. The retail bank units are present in all Brazilian states and in cities that together accounted for more than 80.0% of Brazil’s individual domestic consumption as at December 31, 2009.

In the second half of 2009, a pilot project was started, converting Unibanco branches into Itaú branches.

Approximately 50 branches were converted in that year. As at December 31, 2009, there were 950 Unibanco branches left. In 2010, the conversion process will be intensified and to convert approximately 160 branches per month starting in June 2010. Retail clients are classified in accordance with their income and profile, as follows:

• Itaú retail clients, who earn less than R$ 4,000 per month; • Itaú Uniclass clients, who earn more than R$ 4,000 and less than R$ 7,000 per month. These clients

are served by specialized account managers and they have access to certain customized products. We created this segment after the Association and we expect Itaú Uniclass to be present in a number of our retail branches all over Brazil in the future and to increase the number of clients served.

For the year ended December 31, 2009, credit products represented 67.0% of Itaú Unibanco’s

consolidated income from retail banking, while investments represented 24.0% and services and other fee-based products accounted for 9.0%. Public sector

Activities focused on the public sector are structured for all areas of that sector, including federal, state

and municipal levels of government (in the executive, legislative and judicial branches). To serve public-sector clients, separate platforms are used from the retail banking branches, with teams of specially trained managers who offer customized solutions in terms of tax collection, foreign exchange services, the management of public bodies’ assets, the payment of suppliers, the payroll of civil and military servants and retirement plans. Based on these platforms, Itaú Unibanco has a significant amount of business with public sector clients, particularly in those Brazilian states where we have acquired previously state-owned financial institutions. As at December 31, 2009, it provided services to 1.4 million civil and military servants.


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Personnalité

Itaú Personnalité is the division that provides specialized services to meet the demands of high-income clients. Itaú Personnalité’s strategy consists of offering (i) the advisory services of managers who are trained to understand the specific needs of these clients; and (ii) a large portfolio of exclusive products and services, which are made available through a dedicated network located in the main Brazilian cities. Personnalité clients also have access to Itaú and Unibanco branches and ATMs throughout the country.

In September 2009, Personnalité reviewed its strategy and raised its target-client limits to individuals

who earn more than R$ 7,000 per month (as compared to R$ 5,000 before) or with investments of over R$ 80,000 (in contrast to R$ 50,000 before). This strategy is in line with the creation of the Uniclass division mentioned in the retail banking activity.

With a dedicated network of 165 branches, Itaú Personnalité’s client base had reached approximately

520,000 individuals as at December 31, 2009. Private banking

Itaú Private Bank is the leading Brazilian bank in the global private banking industry, providing financial

advisory services to approximately 20,000 Latin American clients as at December 31, 2009. The 620 employees of this division are focused on offering financial consulting services to clients with at least US$ 200,000 in investment assets. The division also provides its clients with a full range of traditional banking products and services.

Financial advisory services are provided by teams of experienced relationship managers located in

Brazil, Miami, Argentina, Uruguay, Chile and Paraguay, with the support of investment experts, who recommend the most appropriate solutions for each risk profile. The private banking client base is composed of clients from Brazil, Argentina, Venezuela, Chile, Uruguay, Ecuador, Paraguay, Mexico, and other Latin American countries.

The private banking segment meets clients’ needs for offshore wealth management solutions in three

major jurisdictions through independent institutions: in the United States of America through BIEI and Itaú Europa Securities Inc. (“IES”); in Luxembourg, through BIEL; and in the Caribbean, through BIE Bahamas and Unicorp Bank & Trust in the Cayman Islands (“UBT Cayman”).

Each portfolio is managed in accordance with the guidelines previously agreed upon with each client.

Itaú Private Bank also uses its managed portfolios to invest in mutual funds managed by other financial institutions that have more flexibility to make investment decisions. Income from private banking clients arises mainly from managed assets.

As at December 31, 2009, private banking activity for Latin American clients comprised managed assets

equivalent to R$ 97,548 million, including R$ 13,945 million in BIEL, R$ 6,810 million in BIEI and IES and R$ 2,129 million in BIE Bahamas and UBT Cayman.

The Private Banker International magazine granted Itaú Private Bank the “Outstanding Private Bank”

award in 2009, which, in our opinion, shows recognition of our consistently good performance in the markets in which we operate. The 2010 Annual Private Banking and Wealth Management Survey, coordinated by Euromoney magazine, concluded that Itaú Private Bank offered “the best private banking services in general” in Brazil for the second consecutive year. In the most recent ranking published in the February 2010 edition of Euromoney magazine, Itaú Private Bank was named as offering “the best private banking services in general” in Chile and it is among the five providers of the “best private banking services in general” in Latin America.


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Very small companies

At the end of 2005, Itaú Unibanco set up 150 platforms in the city of São Paulo to provide specialized services to companies with annual revenue of below R$ 500,000. In 2006, it expanded its services to over 80 locations throughout the interior of the State of São Paulo and, subsequently, organized 94 additional platforms in the State of Rio de Janeiro. In 2007, these services were extended the States of Minas Gerais and Paraná. In 2008 and 2009, this expansion continued and other platforms for very small companies were set up.

The managers of these platforms offer customized solutions and provide detailed advice on all products

and services to very small companies. The strategy is to capture the significant potential of these clients by meeting the needs of the companies and their owners, particularly regarding the management of cash flows and credit facilities. The amount made available to credit facilities for very small companies increased by 92.9% in 2009.

Since the announcement of the Association in 2009, efforts have been made to consolidate platforms

and customer services. As at December 31, 2009, Itaú Unibanco had over 430 platforms for very small companies located throughout Brazil, and approximately 1,700 managers working for over 537,000 very small company clients. In 2010, Itaú Unibanco expects to continue to consolidate banking operations for very small businesses and to increase the number of managers working in this sector. Small companies

Since 2001, the relationship with small companies has been structured in specialized platforms. As at

December 31, 2009, in constituted 277 platforms located nationwide in Brazil and nearly 1,500 managers who worked for over 260,000 companies with annual revenue of between R$ 500,000 and R$ 6 million. In 2010, Itaú Unibanco expects to continue to consolidate banking operations for small companies and to expand the geographical coverage of its platforms.

All the managers are certified by the Brazilian Financial and Capital Markets Association (“ANBIMA”),

and over the course of each year they receive training so as to be qualified to offer the best solutions for each client’s profile. Our clients rely on our ability to offer products, terms and rates compatible with their needs.

Medium-sized companies

The Association has strengthened Itaú Unibanco’s position in the medium-sized company segment. The

best products and services of each bank were selected to be offered to clients, who are served by dedicated managers focused on meeting their needs.

As at December 31, 2009, relationships existed with approximately 104,000 medium-sized companies

that represented a wide range of Brazilian companies located in over 75 cities in Brazil. These clients are generally companies with annual revenue of from R$ 6 million to R$ 150 million.

A full range of financial products and services is offered to medium-sized companies, including current

accounts, investment options, insurance, private pension plans and credit products. Credit products include investment capital loans, working capital loans, inventory financing, trade financing, foreign exchange services, equipment leasing services, letters of credit and guarantees. Itaú Unibanco also carries out financial transactions on behalf of these companies, such as interbank transactions, open market transactions and futures, swaps, hedging and arbitrage transactions. It also offers these clients collection services and electronic payment services. It is able to provide these services for virtually any kind of payment, including Internet banking. It also offers collection and payment services (in connection with payroll, taxes and supplier payments) to these companies.


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As at December 31, 2009, Itaú Unibanco had over 1,300 managers specialized in the medium-sized company segment, a number it intends to increase in 2010. These managers worked in the 213 specialized platforms located at the main branches. An increase in points of service is scheduled for 2010. Credit cards

Itaú Unibanco was the leader in the Brazilian credit card market, both in terms of number of cardholders

and of transaction volume as at December 31, 2009. Our credit card brands Itaucard, Unicard and Hipercard offered a wide range of products to 23.4 million clients as at December 31, 2009, including account holders and non-account holder clients. In the year ended December 31, 2009, the amount of client transactions made using credit cards was R$ 84,938 million, a 17.8% increase as compared to the previous year. The results of transactions carried out by non-account holders are reported in the Consumer Credit segment.

The main challenges in the credit card area are to continually increase the cardholder base and improve

portfolio profitability. To do so, Itaú Unibanco focuses on the development of new products, enhancement of partnerships, cross-selling of products and sales made through a variety of distribution channels.

Real estate financing

As at December 31, 2009, the balance of our real estate financing portfolio was R$ 8,510 million. In view

of its expectation of growth in the Brazilian real estate financing market over the coming years, Itaú Unibanco is investing in the operational platform to reduce costs and improve the quality of the services provided to clients. It is also developing distribution channels for real estate financing by focusing on the branch network and establishing partnerships with real estate brokers. The Brazilian regulations require that financial institutions allocate at least 65% of their savings accounts balances to real estate financing, and 80% of this total must be used to finance properties with a value lower than R$ 500,000, at annual interest rates of below 12.0%.

Itaú Unibanco uses different distribution channels to reach customers, including Itaú Personnalité

branches and real estate brokers. It has partnerships with two of the largest real estate brokers in Brazil: Lopes and Coelho da Fonseca. These partnerships involve real estate financing originating exclusively with Itaú Unibanco, which is available at a large number of locations throughout Brazil. Asset management

According to ANBIMA, as at December 31, 2009, Itaú Unibanco was the largest mutual fund manager

among private banks in Brazil in terms of assets under management. On that date, it had total net assets under management of R$ 297,987 million on behalf of approximately 1.5 million clients. It also provides portfolio management services for pension funds, large companies, private banking customers and foreign investors. According to ANBIMA, as at December 31, 2009, it was the largest manager of private banking clients’ assets and the largest private manager of pension funds’ assets in Brazil in terms of assets managed. As at December 31, 2009, it had R$ 176,363 million in managed assets for pension funds, large companies and private banking clients.

Fees are based on the average net asset value of funds under management, which is calculated on a

daily basis. In general, average fees are approximately 2.7% per year for the funds of individuals and 0.2% to 0.5% per year for the funds of companies. Fees for portfolio management services are privately negotiated and vary according to the size and investment parameters of the funds managed.

As at December 31, 2009, Itaú Unibanco offered and managed about 1,478 mutual funds, which were

mostly fixed income and money market funds. For individual clients, it offered 157 funds to retail clients and approximately 300 funds to Itaú Personnalité clients. Private banking clients may invest in over 600 funds, including those offered by other institutions. Itaú BBA’s capital markets area also provides tailor-made mutual funds to institutional, corporate and private banking clients.


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In June 2009, the Asset Management Area maintained its M1 (bra) rating (the highest rating granted to an asset manager) with Fitch, one of the largest international rating agencies operating in Brazil. It has been in the top-rating category since July 2003. Securities services for third parties

Itaú Unibanco provides securities services for third parties in the Brazilian capital markets, where it acts

as a custodian, transfer agent and registered holder. In December 2009, it was named the largest provider of securities services for third parties in Brazil by ANBIMA.

As at December 31, 2009, Itaú Unibanco held R$ 685,360 million in assets related to securities services

for third parties, representing 28.5% of the Brazilian market in terms of assets held in custody. Its extensive line of products relates to both domestic and international custody. Services include acting as a transfer agent, providing services related to debentures and promissory notes, custody and control services for mutual funds, pension funds and portfolios, trustee services and non-resident investor services, and acting as a custodian for depositary receipt programs.

In 2009, Itaú Unibanco worked as custodian and settlement agent for 438 companies and as the

registered holder in 145 operations. As at December 31, 2009, its specialized staff reached 659 employees for the management of portfolios for mutual funds, institutional investors and private portfolios. Brokerage

Itaú Corretora has been providing brokerage services since 1965, with operations at BM&FBOVESPA.

BM&FBOVESPA was organized in 2008, with the integration of BM&F with the São Paulo Stock Exchange (BOVESPA). It also provides brokerage services to international clients through broker-dealer operations in New York, the London branch, and through broker-dealers in Hong Kong and Dubai.

For the year ended December 31, 2009, Itaú Corretora was ranked third on BM&FBOVESPA in terms of

share trading volume and third among brokers controlled by large commercial banks in Brazil, in terms of commodities and futures trading volume. Corporate social responsibility

The Itaú Social Excellence Fund (FIES), launched in 2004, is a socially responsible investment fund,

investing in the shares of companies that show superior corporate social responsibility practices and aimed at obtaining long-term returns higher than those offered by the main Brazilian financial market indices. In addition to analyzing the risks and returns of companies, fund managers take into account three fundamental criteria: corporate social activities, environmental protection practices and good corporate governance practices. Every year, the fund donates part of its accumulated asset management fees to social projects in the following fields: environmental education, employment education and childhood education.

As at December 31, 2009, FIES recorded net assets of R$ 365 million, and it donated more than R$ 3.3

million in that year, which corresponds to 50% of the management fees taken from July 1, 2008 to June 30, 2009. The 19 projects chosen to receive this donation were divided into two investment categories, with 16 non-governmental organizations receiving R$ 100,000 each, and three non-governmental organizations receiving R$ 150,000 each. Consulting expenses reached almost R$ 1.3 million. The projects were selected by the fund advisory council, which is composed of market leaders and experts in corporate social responsibility. Insurance, pension plan and capitalization Insurance

As at December 31, 2009, according to SUSEP, Itaú Unibanco was one of the largest insurance groups

in Brazil in terms of direct premiums, (the assessment of which included nine months of Itaú Unibanco’s results related to residence and vehicle insurance that were obtained before the alliance with Porto Seguro, described


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below), excluding health insurance and Free Benefit Generating Plan – Life (“VGBL”), a private retirement plan that provides annuity benefits but that, for regulatory purposes, is considered as a life insurance product. For the year ended December 31, 2009, direct premiums totaled approximately R$ 6,715 million.

The main lines of insurance in which Itaú Unibanco operates are life insurance, property and casualty

insurance and vehicle insurance, which accounted for 31.4%, 27.5% and 27.3% of direct premiums, respectively, for the year ended December 31, 2009. Policies are sold through our banking operations, independent local brokers, multinational brokers and other channels. Itaú Unibanco reinsures a portion of the risks it underwrites, particularly large marine properties and casualty risks that exceed the retention limits we have established within the regulatory limits. Risks that exceed the retention limit are assigned to licensed Brazilian reinsurers in compliance with Supplementary Law No. 126 enacted on January 15, 2007 and the SUSEP regulations enacted on December 17, 2007.

The strategy to increase the level of penetration in the Brazilian insurance market depends on the

markets in which Itaú Unibanco operates. In high-risk markets, it intends to increase market share through independent local brokers and multinational brokerage firms. For individuals and the small and medium-sized company markets, it will focus on operations within the banking client base (bancassurance operations), aiming to increase penetration in these markets. It is working to improve bancassurance operations in property and casualty insurance for small and medium-sized companies. Itaú Unibanco has made progress in the development of specific products for different segments, which allows a more efficient use of each distribution channel (branches, telemarketing, Internet, ATMs and bank teller terminals).

In August 2009, Itaú Unibanco and Porto Seguro entered into an alliance, unifying the residence and

vehicle insurance operations. The operational agreement sets forth the offering and distribution, on an exclusive basis, of residence and vehicle insurance products to clients of the Itaú Unibanco network in Brazil and Uruguay, through Itaú Seguros de Auto e Residência. In August 2009, Porto Seguro Itaú Unibanco Participações (“PSIUPAR”), a – subsidiary of ISAR, - had 3.4 million vehicles insured and 1.2 million residences insured. As from the fourth quarter of 2009, this company started to be proportionally consolidated into the Itaú Unibanco financial statements due to its ownership interest of 30%.

In November 2009, Itaú Seguros and XL Swiss, a company controlled by XL Capital, entered into an

agreement for the acquisition, by Itaú Seguros, of XL Swiss’ ownership interest in Itaú XL, so that this company would become a Itaú Unibanco wholly-owned subsidiary. In view of XL Capital’s intention to continue to operate in Brazil and Itaú Unibanco’s relationship with this company, a separate agreement was signed, pursuant to which Itaú Seguros will provide insurance to the clients of XL Capital in Brazil and to clients of XL Capital Global Program with operations in Brazil. These policies will be reinsured by an XL Capital reinsurance company incorporated in Brazil in the same way that they were reinsured before the end of the joint venture. These transactions are still subject to the approval of SUSEP.

In December 2009, Allianz South America Holding B.V. entered into an agreement with Itaú Unibanco for the purchase of the 14.0% ownership interest that Itaú Unibanco held in Allianz Seguros S.A. for R$ 109 million. This transaction, which was completed in January 2010, was submitted to CADE for approval and reported to SUSEP, and did not have a significant impact on net income for 2009. Private pension plans

As at December 31, 2009, the balances of private pension plans (including VGBL) totaled R$43,435

million, an increase of 25.0% as compared to December 31, 2008. As at December 31, 2009, Itaú Unibanco was the second largest private pension plan manager in Brazil in terms of total liabilities, according to SUSEP. As at December 31, 2009, the Bank had R$ 43,636 million in assets related to its private pension liabilities (including VGBL). Its activities are concentrated on the management of open private pension plans, which showed a strong growth in 2009.


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Capitalization Capitalization products are funding products in which the client deposits a fixed sum with the bank,

which will be returned at the end of an agreed period, with accrued interest. In return, the client automatically takes part in periodic lotteries that gives them the opportunity to win significant prize money.

As at December 31, 2009, Itaú Unibanco had 9.7 million capitalization plans issued, with assets of R$

2,300 million. In 2009, Itaú Unibanco sold R$ 1,786 million of capitalization products and distributed over R$ 41.1 million in prizes to 6,085 clients through lotteries. Itaú BBA

Itaú BBA is responsible for corporate and investment banking activities. Itaú BBA offers a complete

portfolio of products and services through a team of highly qualified professionals. Currently, Itaú BBA serves approximately 2,400 companies and conglomerates. Itaú BBA’s activities range from the typical operations of a commercial bank to capital market operations and advisory services in mergers and acquisitions. These activities are fully integrated, which enables Itaú BBA to adapt its performance to its clients’ needs.

As at December 31, 2009, the Itaú BBA corporate loan portfolio was worth R$ 90,830 million. In 2009,

this portfolio was mainly affected by the appreciation of the real and the worsening of the economic scenario, mainly in the first nine months of the year. In investment banking activities, the Fixed Income Department was responsible for the issuance of debentures and promissory notes that totaled R$ 17,849 million and securitization operations that amounted to R$ 1,378 million in Brazil in 2009. According to ANBIMA, Itaú BBA was the leader in the distribution of fixed income in 2009, with a 24.2% market share, thus maintaining the bank’s historic leadership in the domestic fixed income market. In the issuance of debt instruments in international markets, Itaú BBA acted as joint book runner in the issuance of securities in the amount of US$ 4,950 million in 2009, earning the second place in Bloomberg’s ranking of Issuers located in Brazil in terms of number of transactions.

With respect to share issuances, Itaú BBA coordinated public offerings that totaled R$ 14,229 million in

2009, and was ranked third in ANBIMA’s origination ranking in Brazil, with 13.7% market share. Itaú BBA’s investment banking division started to manage wholesale brokerage activity in 2009 and is implementing several initiatives to increase its presence in the markets in which it operates.

In addition, Itaú BBA provided consultancy services on merger and acquisition transactions with a total

volume of R$ 19,964 million in 2009, ranking second in Brazil in terms of number of merger and acquisition operations, according to Thomson.

Itaú BBA onlends BNDES (National Bank of Economic and Social Development) credit lines to finance

large projects, with the aim of strengthening domestic infrastructure and increasing the production capacity of several industrial segments. In consolidated terms, total onlending granted by BNDES represented more than R$ 4,889 million, and this was granted for a number of projects in 2009. As an integral part of its risk management and sustainability policies, the onlending of funds to large projects is done in compliance with Itaú Unibanco’s social and environmental risk policy. Itaú Unibanco is the current leader in the ranking of Latin American banks that adopt the best corporate governance practices, as announced by the consultancy firm Management & Excellence and Latin Finance magazine. All credit classified as project finance, pursuant to Basel II, is granted in compliance with the Equator Principles, which Itaú BBA adopted in 2004. Itaú BBA was the first financial institution from an emerging market to adopt these principles.

The Equator Principles were launched in 2003 and became the benchmark in the financial market for

addressing environmental and social risks in project financing. By February 2010, 67 financial institutions had adopted the Equator Principles, and therefore, they had voluntarily committed themselves to incorporating these principles into projects amounting to US$ 10 million or more. The Equator Principles were revised in 2006 and were extended to advisory services offered in the structuring of projects. Itaú Unibanco plays a leading role in


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the Equator Principles Steering Committee and working groups, having taken the position of Chair of the Steering Committee from September 2008 to March 2010.

Itaú BBA mainly focuses on the following products and services in the international area: (i) spot

exchange, which exceeded US$ 88,677 million in volume in 2009; and (ii) the structuring of long-term, bilateral, and syndicated financing. In addition, in 2009 Itaú BBA continued to offer a large number of credit facilities for foreign trade, having a total of approximately US$ 6,797 million in credit facilities drawn from corresponding banks, as at December 31, 2009.

In 2009, Itaú BBA received the award for Investment Bank of the Year in Latin America, from The

Banker magazine, and Best Local Investment Bank, from Latin Finance. Banco Itaú Europa

Banco Itaú Europa is a bank headquartered in Portugal, controlled by Itaú Unibanco. Banco Itaú Europa

focuses mainly on two lines of business:

• Corporate banking: the provision of international corporate banking services, international capital markets operations, foreign trade financing and other financial services to support investments and other economic relations between Latin America and Europe through its operations in Lisbon, Madrid, Frankfurt, Paris and London; and

• Private banking: the delivery of offshore and international private banking products and services to our Latin American client base through its subsidiaries (BIEL in Luxembourg, and BIEI in Miami).

As at December 31, 2009, Banco Itaú Europa had €5,055 million in assets, €2,013 million in loan and

lease operations, €1,609 million in deposits and €876 million in shareholders’ equity (including minority interests).

Banco Itaú Europa’s Corporate Banking Area offers several products, such as credit, derivatives and

advisory services for European companies with subsidiaries in Latin America.

The Private Banking Area provides financial and asset management services to Latin American clients with a minimum of US$ 200,000 in investments, putting at their disposal a diversified and specialized range of investment funds, and assistance in dealing with the management of securities and other financial instruments, trusts and investment companies on behalf of clients. Currently, the Private Banking Area has clients in Argentina, Brazil, Chile, Mexico, Uruguay, Venezuela and other countries. In December 2009, the assets managed by the private banking area amounted to €6,924 million.

All Itaú Unibanco’s transactions with Banco Itaú Europa and its subsidiaries are carried out on an arm’s-

length basis. Banco Itaú Europa’s long-term debt is rated Baa1 and BBB+ by Moody’s and Fitch, respectively. Other international operations

The other international operations managed by Itaú BBA have the following objectives:

To support our customers in international financial transactions and services.

Itaú Unibanco offers its clients a variety of financial products such as trade financing, loans from

multilateral credit agencies, offshore loans, international cash management services, foreign exchange, letters of credit, guarantees required in international bidding processes, derivatives for hedging or proprietary trading purposes, structured transactions, and international capital market offerings.

The international units include: Itaú BBA, Nassau branch (focused on corporate banking); Itaú Unibanco,

New York branch, Itaú Unibanco, Nassau branch and Itaú Unibanco, Cayman Islands branch (focused on middle-market companies); Banco Itaú Argentina, Banco Itaú Chile and Banco Itaú Uruguay (focused on retail


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customers, international corporate banking and middle-market companies); and Itaú Unibanco, Tokyo branch (focused on Brazilian retail clients living in Japan).

The Japanese Financial Services Agency granted Itaú Unibanco a banking charter on September 7,

2004, and the Tokyo branch’s start-up took place in October of that year. On December 23, 2006, it acquired the client portfolio and respective deposits of the branch of Banco do Estado de São Paulo (“BANESPA”) in Japan. The main purpose of this branch is to offer a service and product portfolio that meets the banking needs of Brazilian citizens living in Japan.

To manage proprietary portfolios and raise funds through the issuance of securities in the international market.

Fund-raising through the issuance of securities, certificates of deposit, commercial papers and trade

notes can be carried out by Itaú Unibanco’s branches located in the Cayman Islands, in Nassau, in the Bahamas, and in New York, by Itaú Bank Ltd., (“Itaú Bank”), a banking subsidiary incorporated in the Cayman Islands, or Banco Itaú BBA’s Nassau branch. Itaú Unibanco’s Cayman Islands branch has issued subordinated debt bonds that are treated as Capital Tier 2.

Itaú BBA’s own portfolios are held mainly by Itaú Bank and Itaú Unibanco Cayman Islands branch.

These offices also strengthen its ability to manage international liquidity. Itaú BBA’s own positions abroad are registered with Itaú BBA, Nassau branch.

Through its international operations, Itaú Unibanco grants and monitors trade-related lines of credit from

foreign banks and maintains relationships with correspondent banks (banks that hold credit facilities with Itaú Unibanco), monetary centers and regional banks throughout the world, and oversees other activities related to foreign exchange.

To participate in international capital markets as a dealer.

The group has international fixed and variable income desks in Brazil (Itaú BBA), New York (Itaú USA Securities Inc.), Lisbon and London (Banco Itaú Europa and Itaú UK Securities Ltd.), Argentina (Banco Itaú Argentina), and Hong Kong (Itaú Asia Securities Ltd.).

Our international fixed and variable income teams trade and offer securities in emerging markets, in line

with our strategy of becoming a non-stop one-shop dealer for transactions in capital markets.

Through Itaú Unibanco, providing services to clients in Asia, especially through the representation office of Itaú BBA in Shanghai.

Foreign trade financing

As at December 31, 2009, our foreign trade investment portfolio reached US$ 8,601 million, US$ 7,501 million of which were related to exports (pre- and post-export financing). In general, our financing of the exports of major corporate clients is granted with no guarantees, with the exception of certain operations that require guarantees, mainly those whose original structure originates in syndicated financial institutions. The balance of our import-financing portfolio was US$ 1,099 million as at December 31, 2009.

In 2009, the total volume of foreign exchange transactions related to exports was US$ 17,138 million,

and the import volume was US$ 14,556 million. Consumer credit Vehicle financing


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As at December 31, 2009, our portfolio of vehicle financing, leasing and consortium activities consisted of approximately 3.7 million contracts. The vehicle loan and lease portfolio for individuals grew 9.1% as compared to 2008, totaling R$ 52,240 million in 2009, which is equivalent to a market share in Brazil of approximately 33.5% as at December 31, 2009. Our strong performance and the Association have positively affected the market leadership.

The vehicle-financing segment in Brazil is dominated by banks and finance companies that are affiliated

with vehicle manufacturers. According to the Brazilian Association of Leasing Companies (“ABEL”), as at December 31, 2009, Itaú Unibanco was the largest leasing company in Brazil in terms of the present value of its operations.

Itaú Unibanco leases and finances vehicles through 13,270 dealers. Sales are made through computer

terminals installed in the dealers’ premises and connected to its computer network. Every vehicle financing application is reviewed based on credit scoring and dealer scoring systems. The dealer scoring system analyzes the credit quality and amount of business provided by each vehicle dealer. On average, credit is approved within 11 minutes, depending on the client’s credit history. In 2009, the majority of our credit approvals were made instantaneously, since our scoring models enable the pre-approval of our existing clients, providing a very efficient tool and strong performance in credit approval. Currently, all applications are processed through the Internet, providing more security and speeding up the process for dealers, clients and the institution.

The Truck Financing Division corresponded to approximately 5.7% of vehicle financing and lease

operations in 2009. Itaú Unibanco also has a division in charge of financing motorcycles. The financial volume of transactions relating to motorcycles increased 19.1% in the year to December 2009, as compared to December 2008. Redecard

Redecard is a multibrand credit card provider in Brazil, also responsible for the capturing, transmission,

processing and settlement of credit, debit and benefit card transactions. Itaú Unibanco holds 50% plus one share of Redecard’s capital stock.

Joint ventures

Itaú Unibanco Holding has joint venture and partnership agreements with over 300 retailers in Brazil,

serving more than 17.2 million clients as at December 31, 2009. The consumer credit joint venture portfolios totaled R$ 7,941 million as at December 31, 2009.

Itaú Unibanco has developed a strong presence in the consumer finance segment through strategic

alliances with major retailers in Brazil, such as Magazine Luiza, Marisa, Pão de Açúcar (“CBD”), Ponto Frio (Globex Utilidades S.A.) Lojas Americanas S.A. and Ipiranga (Ultrapar Participações S.A.). Since 2001, when the first partnerships were established, these alliances have supported consumer financing through several products, such as co-branded credit cards, private label cards, personal loans and insurance. International operations Banco Itaú Argentina

Argentina is the third largest economy in Latin America, Brazil’s main trading partner and one of the

countries with the highest GDP per capita on the continent and, in the opinion of Banco Itaú Argentina, provides potential for greater penetration of its banking services. Banco Itaú Argentina’s core business is retail banking, with approximately 250,000 clients in the middle and upper-income client segment as at December 31, 2009. As compared to 2008, this represents a 6.0% increase in the number of clients. As at December 31, 2009, Banco Itaú Argentina posted assets of R$ 2,119 million, loan and lease operations of R$ 1,137 million, deposits in the amount of R$ 1,576 million and shareholders’ equity of R$ 172 million. On the same date, Banco Itaú Argentina


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had one of the largest branch networks in Argentina, consisting of 81 units (73 in the Greater Buenos Aires metropolitan area), 164 ATMs, and 23 service centers. Itaú Chile Operations

Banco Itaú Chile’s official start-up took place on February 26, 2007, when BAC transferred the

operations of BankBoston Chile and BankBoston, N.A. - Uruguay Branch to its entity. This acquisition increased Itaú Unibanco’s presence in Latin America and expanded the scope of its operations. Additionally, Itaú Chile Inversiones Servicios y Administración S.A. provides services related to collection, securitization and insurance.

As at December 31, 2009, the consolidated operations in Chile posted R$ 10,738 million in assets, R$

8,300 million in loan and lease operations, R$ 7,029 million in deposits and R$ 1,301 million in shareholders’ equity. According to the Chilean banking and financial institutions regulatory agency (Superintendencia de Bancos e Instituciones Financieras, or “SBIF”) on that same date, Banco Itaú Chile was ranked eighth in the Chilean loan and lease market, if loan and lease portfolios are considered, with a 3.2% market share; it was ranked sixth in terms of number of demand deposit accounts in the private sector, with approximately 89,094 accounts.

Banco Itaú Chile offers several products such as factoring, leasing, corporate finance, mutual funds,

insurance brokerage and trading, through different entities and business lines.

The retail segment is focused on the upper-income population that, as at December 31, 2009, accounted for 59.6% of Banco Itaú Chile’s total revenue. As at December 31, 2009, Banco Itaú Chile had 48 ATMs and 70 branches, 66% of which were located in Santiago.

Banco Itaú Chile’s commercial banking segment offers a wide range of products and excellent customer

service, creating a competitive advantage based on the quality of services, products and processes for specific clients (companies with annual revenue of between R$ 3.6 million and R$ 180 million).

Banco Itaú Chile’s global corporate banking segment offers local and international corporate finance

capabilities, such as syndications, private placements and securitizations. It also provides trade financing and global treasury services, as part of its marketing strategy. Treasury products, such as those relating to foreign exchange and derivatives, are essential to this strategy.

Itaú Uruguay Operations

Banco Itaú Uruguay is one of the largest financial institutions in Uruguay. Local operations also include

the main credit card manager, OCA S.A. (“OCA”), and the pension fund management company Unión Capital AFAP S.A. (“Unión Capital”). Banco Itaú Uruguay’s strategy is to serve a broad range of clients with customized banking solutions. As at December 31, 2009, Banco Itaú Uruguay had R$ 3,067 million in assets, ranking second in terms of asset volume among private banks in Uruguay, according to the Uruguayan Central Bank (“BCU”); on the same date, Itaú Uruguay had R$ 1,267 million in loan and lease operations, R$ 2,341 million in deposits and R$ 279 million of shareholders’ equity.

The Retail Banking Area is focused on individuals and small companies, with approximately 130,000

clients as at December 31, 2009. The branch network is concentrated in the metropolitan area of Montevideo with 15 units. In addition, Banco Itaú Uruguay has branches in Punta del Este, Tucuarembó and Salto. Banco Itaú Uruguay has a leading position in the debit card segment of private banking in Uruguay. Retail products and services are mainly focused on the middle- and upper-income segments, and include current and savings accounts, payroll, self-service areas and ATMs in all branches, and phone and Internet banking.

The Wholesale Banking Division is focused on multinational companies, financial institutions, large and

medium-sized companies and the public sector. It provides credit, cash management, treasury, trade and investment services. Additionally, the Private Banking Unit provides a dedicated regional service (for resident and non-resident clients), offering a full portfolio of products on the local and international financial market.


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OCA is the main credit card Issuer in Uruguay. OCA performs the three main credit card operations: customer attraction, card issuance and transaction processing. Credit cards and consumer loans are the main products offered by OCA through a network of 20 branches, as at December 31, 2009.

Unión Capital is a pension fund management company that has been operating in Uruguay since 1996,

when the current Uruguayan pension system was created. As at December 31, 2009, it had 194,739 clients. Interbanco S.A., Paraguay

Interbanco S.A. (“Interbanco”) was incorporated in Paraguay in 1978 and became one of the largest

banks in the financial market of that country. It was acquired by Unibanco in 1995. It has been posting significant growth since 1999, enhancing the variety and quality of its services all

over the country. As at December 31, 2009, Interbanco had 19 branches, approximately 220,000 clients and 166 ATMs.

Its main sources of income are retail banking products, primarily credit cards. Interbanco has launched

innovative products and services under the brand “24IN,” such as international debit card Cirrus Maestro and the Internet banking service Interhome Banking; it also offers banking information to clients through mobile phones with the Click Banking service. As at December 31, 2009, Interbanco had R$ 1,924 million in assets, R$ 975 million in loan and lease operations, R$ 1,572 million in deposits and R$ 247 million in shareholders’ equity. Interbanco operates in: corporate banking (small and medium-sized companies, agribusiness, large companies, institutional clients) and consumer banking (individuals and payroll). In corporate banking, Interbanco has a well-established presence in the agribusiness segment, which has been presenting attractive levels of profitability and credit performance in Paraguay since 2002. In retail banking, the main marketing channel is payroll and the offer of pre-approved products to all clients who receive their salaries through Interbanco. b) Revenues arising from the segment and their share in the Issuer’s net revenues

Because the Issuer is a holding company, the revenue of each subsidiary is accounted for by the Issuer using the equity method: Industrial Area: R$ 166,121 thousand Financial Services Area: R$3,787,928 thousand

Revenue arising from the segments and its share in the net revenue of Itaúsa’s main subsidiaries is as follows: Industrial Area: Duratex:

Net revenue in thousands of R$:

2007 % 2008 % 2009 %

Deca Division 566,038 34% 698,654 29% 757,243 38%

Wood Division 1,104,513 66% 1,749,315 71% 1,255,616 62%

Total 1,670,551 100% 2,447,969 100% 2,012,859 100%


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Elekeiroz:

The Company does not calculate income separately for each of its operating segments in because they all use the same structure of indirect costs, and administrative and selling expenses. The gross margin results from the sales revenue, less taxes, cost of products sold and variable selling expenses, such as freight and commission (see item 7.2 c below). Itautec:

a. Operating segments Automation IT Services Distribution

Thousands of R$ 2009 2008 2007 2009 2008 2007 2009 2008 2007 2009 2008 2007

b. Gross sales and services revenue 338,986 260,239 309,604 733,256 755,809 601,154 417,823 404,044 360,189 597,564 566,935 431,334

b. Share in consolidated gross sales and services revenue 16.3% 13.2% 18.2% 35.1% 38.0% 35.3% 20.0% 20.3% 31.2% 28.6% 28.5% 25.3%

Financial Services Area: Itaú Unibanco:

The table below shows data on revenue from interest, banking services and commission for each of the three business areas for the years ended December 31, 2009, 2008 and 2007.

R$ million

2009 2008 2007 Commercial bank 32,466 22,626 19,886

Income from financial operations before loan losses (1) 24,249 14,919 12,000 Banking service fees 8,217 7,706 7,886

Itaú BBA 5,567 3,619 2,259 Income from financial operations before loan losses (1) 4,075 2,840 1,589 Banking service fees 1,492 779 670

Consumer Credit 16,324 9,488 6,586 Income from financial operations before loan losses (1) 10,767 6,769 4,905 Banking service fees 5,557 2,719 1,681

Corporate + Treasury (2) 7,017 (1,161) 2,414Income from financial operations before loan losses (1) 7,056 (1,161) 2,477 Banking service fees (39) - (63)

Total 61,374 34,572 31,146 Income from financial operations before loan losses 46,147 23,367 20,971 Banking service fees 15,227 11,204 10,174

(1) For comparison purposes, the financial margin of the commercial bank market and of Itaú BBA was reclassified to Corporate + Treasury in 2008 and 2007.

(2) Includes Treasury results, capital in excess, subordinated debt in excess, the financial margin of balance of net deferred taxes and the tax effect of hedge and sovereign bonds.

Note: Results for 2009 refer to the consolidation of Unibanco's operations during the year as compared to 2008, in which only the last quarter includes Unibanco's amounts.

Itaú Unibanco carries out business activities mainly in Brazil and does not break down revenue by Brazilian geographic market. Revenue arising from interest income from loan and lease operations, banking service fees and commissions, insurance premiums, private pension plans and capitalization plans are divided between revenue earned in Brazil and that earned abroad. The information in the table below covers revenue for each of the years ended December 31, 2009, 2008 and 2007, after eliminations on consolidation.


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R$ million

2009 2008 2007

Income from financial operations before loan losses 46,147 23,367 20,971 Brazil 44,220 21,335 20,034 Abroad 1,927 2,032 937

Banking service fees 15,227 11,204 10,174 Brazil 14,586 10,557 9,783 Abroad 640 647 391

Income from insurance, pension plan and capitalization operations 2,432 1,307 1,219

Brazil 2,412 1,305 1,219 Abroad 20 3 -

(1) Results for 2009 refer to consolidation of Unibanco’s operations during the year as compared to 2008, in which only the last quarter comprises

Unibanco’s amounts.

The table below shows income earned abroad by business area for the years ended December 31,

2009, 2008 and 2007: R$ million

2009 2008 2007

Itaú Unibanco – commercial bank 2,062 1,491 1,156Argentina 184 231 193 Chile 443 467 660 Uruguay 73 180 143 Other companies abroad (2) 1,361 613 160

Itaú BBA 411 1,073 96Other companies abroad (2) 411 1,073 96

Itaú Unibanco –credit card 114 118 77 Argentina 21 25 11 Chile 14 - - Uruguay 79 92 65

(1) Results for 2009 refer to consolidation of Unibanco’s operations during the year as compared to 2008, in which only the last quarter comprises Unibanco’s amounts. (2) Includes Banco Itaú Europa Int, Itaú Unibanco S.A. – Cayman, New York, Tokyo and Nassau Branches, Banco Itaú-BBA S.A. – Nassau Branch, Banco Itaú-BBA S.A. – Uruguay Branch, Itaú Unibanco Holding S.A. – Grand Cayman Branch, Unibanco Grand Cayman Branch; BIEL Holdings AG, IPI - Itaúsa Portugal Investimentos, SGPS Lda. (51%), Itaú Europa Luxembourg Advisory Holding Company S.A., Itaúsa Europa - Investimentos, SGPS, Lda., Itaú Europa, SGPS, Lda., Itaúsa Portugal - SGPS, S.A., Banco Itaú Europa, S.A., BIE - Bank & Trust, Ltd., Banco Itaú Europa Luxembourg S.A., Banco Itaú Europa Fund Management Company, S.A., BIEL Fund Management Company S.A., BIE Cayman, Ltd., Banco Itaú Europa International, Bie Bank & Trust Bahamas Ltd., Itaú Europa Securities Inc., Unibanco - União de Bancos Brasileiros (Luxembourg) S.A., Itaú Madeira Investimentos, SGPS, Ltda, BIE Directors, Ltd, BIE Nominees, Lda, Brazcomp 1 Limited, Fin Trade, Kennedy Director International Services S.A., Federal Director International Services, S.A., Bay State Corporation Limited, Cape Ann Corporation Limited; BFB Overseas N.V., BFB Overseas Cayman, Ltd., Itau Bank Ltd., ITB Holding Ltd., Jasper International Investiment LLC, Unibanco Cayman Bank Ltd., Unicorp Bank & Trust Ltd., Unibanco Securities, Inc, UBB Holding Company, Inc., Uni-Investments Inter. Corp., Unipart Partic. Internac. Ltd, Rosefield Finance Ltd.; Interbanco S.A; Afinco Americas Madeira, SGPS, Soc. Unipessoal Ltda., Itaú Asset Management S.A., Sociedad Gerente de Fondos Comunes de Inversión, Zux Cayman Company Ltd., Zux SGPS, Lda,, Agate SARL, Topaz Holding Ltd., Itaú USA Inc, Itaú International Investment LLC, ITrust Servicios Financieros S.A.,, Albarus S.A., Banco Del Paraná S.A., Amethyst Holding Ltd., Garnet Corporation, Itaú Securities Holding (new name of Zircon Corporation), Spinel Corporation, Tanzanite Corporation, Itaú Sociedad de Bolsa S.A., Peroba Ltd., Mundostar S.A., Karen International Ltd., Nevada Woods S.A., Itaú Asia Securities Ltd., Líbero Trading International Ltd., IPI - Itaúsa Portugal Investimentos, SGPS Lda. (49%), Itaú USA Securities, Inc., Itaú Middle East Securities Limited, Unipart B2B Investments, S.L., Tarjetas Unisoluciones S. A. de Capital Variable, Proserv - Promociones Y Servicios S.A. de C. V. and Itau UK Securities Ltd.

c) Income or loss arising from the segment and its share in the Issuer’s net income or loss

Because the Issuer is a holding company, the revenues of each subsidiary are accounted for by the Issuer using the equity method: Industrial Area: R$ 166,121 Financial Services Area: R$ 3,787,928

In the following we present the income or loss arising from the segments of Itaúsa’s main subsidiaries:


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Industrial Area: Duratex:

Operating income by division and consolidated income in thousands of R$.

2007 % 2008 % 2009 %

Deca Division - - - - 100,598 58%

Wood Division 83,757 100% 125,164 100% 71,679 42%

Total 83,757 100% 125,164 100% 172,277 100%

Consolidated net income 46,693 - 75,095 - 97,935 -

Elekeiroz:

The main financial information of the company, divided into two segments in accordance with the consolidated financial statements, is presented below:

Organic products 2007 2008 2009

Net sales – R$ thousand 778,551 740,696 536,275

% In the company’s total revenue 89% 84% 94%

Gross margin – R$ thousand 132,030 86,083 44,609

% In the company’s total gross margin 81% 63% 104%

Inorganic products 2007 2008 2009

Net sales - R$ thousand 92,070 136,963 34,935


Gross margin - R$ thousand 30,889 50,401 (1,739)

% In the Company’s total gross margin 19% 37% -4%

Total company 2007 2008 2009

Net sales - R$ thousand 870,621 877,659 571,210


Gross margin - R$ thousand 162,919 136,484 42,870

% In the company’s total gross margin 100% 100% 100% Itautec:

See item “b” above.


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Financial Services Area: Itaú Unibanco: R$ million

2009 ITAÚ UNIBANCO

COMMERCIAL BANK ITAÚ BBA CONSUMER

CREDIT CORPORATE + TREASURY

ITAÚ UNIBANCO

Managerial Financial Margin 24,250 4,075 10,767 3,687 42,778 Financial Margin with Customers 22,316 4,075 10,767 - 37,157 Financial Margin with the Market - - - 5,621 5,621

Corporation Financial Margin 1,934 - - (1,934) -

Income from Loan Losses (8,856) (1,150) (5,786) 1,626

(14,165) Allowance for Loan Losses (10,410) (1,174) (6,442) 1,626

(16,399)

Recovery of Credits Written Off as Losses 1,554 24 656 - 2,234 Gross Income from Financial Operations 15,394 2,925 4,981 5,314 28,613 Other Operating Income/(Expenses) (7,985) (385) (1,658) (752)

(10,782)

Banking service fees 8,219 1,491 5,557 (40) 15,227 Income from Insurance, Pension Plans and Capitalization 2,238 1 82 111 2,432

Non-interest Expenses (17,088) (1,474) (6,456) (784)

(25,805)

Tax Expenses for ISS, PIS and Cofins (1,954) (287) (1,014) (214)

(3,467) Equity in Earnings of Affiliates 0 1 - 183 183 Other Operating Income 601 (117) 173 (8) 649

Operating Income 7,409 2,540 3,323 4,562 17,831 Non-operating Income 117 (12) (51) 14 68 Income Before Tax and Profit Sharing 7,526 2,529 3,272 4,576 17,900Income Tax and Social Contribution (2,067) (527) (921) (1,335)

(4,850)

Profit Sharing (1,079) (289) (146)

(182)

(1,695)

Minority Interest in Subsidiaries (0) - - (864)

(864)Recurring Net Income 4,379 1,713 2,205 2,194 10,491

2008

ITAÚ UNIBANCO COMMERCIAL

BANK ITAÚ BBA CONSUMER CREDIT

CORPORATE + TREASURY

ITAÚ UNIBANCO

Managerial Financial Margin 15,362 3,112 6,770 2,441 27,689 Financial Margin with Customers 15,362 3,112 6,770 857 25,258

Financial Margin with the Market 0 0 - 1,585 2,431

Income from Loan Losses (4,338) (493) (3,100) - (7,930) Allowance for Loan Losses (5,141) (540) (3,588) - (9,269)

Recovery of Credits Written Off as Losses 803 48 488 - 1,339

Gross Income from Financial Operations 11,024 2,620 3,670 2,441 19,759 Other Operating Income/(Expenses) (4,613) (565) (1,233) (202) (6,618)

Banking service fees 8,276 778 2,719 - 11,783

Income from Insurance, Pension Plans and Capitalization 1,492 0 77 - 1,570

Non-interest Expenses (13,668) (1,089) (3,657) (76) (18,490) Tax Expenses for ISS, PIS and Cofins (1,386) (225) (599) (322) (2,532) Equity in Earnings of Affiliates (0) 13 1 171 184

Other Operating Income 673 (41) 227 25 868

Operating Income 6,411 2,055 2,436 2,239 13,141 Non-operating Income 15 (5) (13) 2 (1)

Income Before Tax and Profit Sharing 6,426 2,050 2,424 2,241 13,140Income Tax and Social Contribution (1,912) (617) (726) (97) (3,352)

Profit Sharing (635) (211) (109) (0) (957)


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Minority Interest in Subsidiaries 0 - - (461) (461)

Recurring Net Income 3,879 1,221 1,589 1,682 8,371

R$ million

2007

ITAÚ UNIBANCO

COMMERCIAL BANK ITAÚ BBA CONSUMER

CREDIT CORPORATE + TREASURY

ITAÚ UNIBANCO

Managerial Financial Margin 11,998 1,590 4,905 1,862 20,356Financial Margin with Customers 11,998 1,590 4,905 676 19,169

Financial Margin with the Market 0 0 - 1,187 1,187

Income from Loan Losses (3,191) 46 (1,963) - (5,108) Allowance for Loan Losses (3,962) 39 (2,253) - (6,176)

Recovery of Credits Written Off as Losses 770 7 291 - 1,068

Gross Income from Financial Operations 8,807 1,636 2,942 1,862 15,248Other Operating Income/(Expenses) (2,513) (339) (955) 28 (3,779)

Banking service fees 7,900 670 1,681 (63) 10,173

Income from Insurance, Pension Plans and Capitalization 1,148 0 71 - 1,219

Non-interest Expenses (10,664) (845) (2,344) (165) (13,994)

Tax Expenses for ISS, PIS and Cofins (1,245) (160) (421) (145) (1,971)

Equity in Earnings of Affiliates - 5 - 266 272

Other Operating Income 348 (9) 58 134 521

Operating Income 6,295 1,297 1,987 1,890 11,469Non-operating Income (12) 5 0 8 0

Income Before Tax and Profit Sharing 6,284 1,301 1,987 1,897 11,469Income Tax and Social Contribution (1,871) (272) (667) (558) (3,368)

Profit Sharing (581) (123) (33) (7) (744)

Minority Interest in Subsidiaries - - - (178) (178)

Recurring Net Income 3,832 906 1,287 1,154 7,179

7.3. With respect to the products and services that correspond to the operating segments disclosed in item 7.2, describe: a) Characteristics of the production process

Because it is a holding company, the Issuer does not have revenue from the sale of products, and its revenue basically arises from equity in earnings.

The characteristics of the production processes, of our main subsidiary companies are described below: Industrial Area: Duratex:

Reconstituted wood panels (MDF, MDP, hardboard, low-pressure laminates, high-resilience laminated floors (Durafloor) and furniture components) are produced as part of the company’s industrial process.

The hardboard panels are produced through the so-called wet process from wood fibers obtained by the defibration of chips of eucalyptus wood. In this process, developed in 1931 by Arne Asplund from Sweden, wood chips are softened with saturated steam and then broken into fibers by two discs with specially-designed grooves that pull the fibers apart. A company called Defibrator AB was created at that time to sell this process,


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which is today a trademark of Metso. The fibers so obtained are diluted in water, forming the pulpwood which, in the following stage of the process, in a forming machine, is transformed into a mat of fibers and then forwarded for pressing in a multistep thermo-mechanical process that operates in batches, resulting in boards that are from 2.5 mm to 6.0 mm thick. Subsequently, the hardboards are forwarded to heat treatment chambers and then to humidifying chambers or machines. Panels are then sanded, cut into many sizes and checked, thus being ready for shipping to the consumer market. The process of producing hardboards arrived in Brazil in 1954 in a plant established by Duratex in the city of Jundiaí, State of São Paulo.

The Medium Density Particleboard (MDP) panels are produced through the so-called dry process from wood particles (pine or eucalyptus) to which urea-formaldehyde resin is added, and through a continuous thermo-mechanical press process a finished panel that is from 6.0 mm to 30.0 mm thick is obtained. The MDP production process was developed in the 1950s in Germany, where the product is called particleboard or woodparticle board. At that time and for several decades, the production of these boards used a batch production system with mono-floor or multiopening presses which, at the end of the 1980s, were replaced by continuous processes of high performance and large production volumes that provide standard quality products with superior mechanical properties and at lower cost. As an improvement on the traditional particleboard, the MDP was then created in Brazil. In the continuous production process, which is the one adopted by Duratex, wood logs are cut into chips that go through grinders, generating wood particles that are subsequently dried in rotary drum dryers and subject to a classification process that uses shaking screens, resulting in particles being created and sorted for the MDP panel inner and outer layers. A new set of grinders reprocesses some of the particles to adjust the granulometry to be used in the panel’s outer layers so as to ensure that the final product has the desired quality. Subsequently, the particles are glued with urea-formaldehyde resin or special resins, depending on the type of product to be manufactured, and then forwarded to forming machines to obtain a particle mat that is forwarded to the continuous press where pressure and temperature act to form the MDP panel. After the press, these panels go through a cooling system to be acclimatized and then their surfaces are sanded for thickness adjustment; after being classified and checked, they are forwarded to the warehouse of finished products from which they are shipped to customers.

The Medium and High Density Fiberboard (MDF and HDF) panels are made of wood fibers (pine or eucalyptus) that receive an addition or dose of urea-formaldehyde resin. Through a continuous thermo-mechanical press process, panels that are from 2.5 mm to 30.0 mm thick are obtained. This process was developed in the 1970s and is a result of the combination of the hardboard and particleboard production processes, that is, it takes advantage of some of the characteristics of the production of hardboards and applies them to thicker panels, which were already being used in the manufacture of chipwood. The German company Siempelkamp (Krefeld) is one of the main worldwide manufacturers of equipment for MDF production lines and supplies their equipment to the Duratex plants for this product. MDF and HDF production is based on wood logs that are cut into chips, which are subsequently defibrated and to the fibers of which is added urea-formaldehyde resin or special resins, depending on the type of panel that will be produced. Subsequently, the glued fibers go through a drying process in a tubular dryer and forwarded to a forming machine that will form a fiber mat, which is then forwarded to the continuous press where pressure and temperature act to produce the MDF or HDF panel. The MDF weight is usually between 650 and 800 Kg/cubic meter, whereas the HDF weight is between 800 and 920 Kg/cubic meter. After being pressed, the MDF or HDF panels are cooled, acclimatized, sanded for thickness adjustment and classified and checked. They are subsequently forwarded to the warehouse of finished products to be shipped to customers.

The low-pressure laminates are wood panels coated with low-pressure melamine laminates: the panels with melamine coating, which are usually called low-pressure laminates, are produced from wood panels (MDF, HDF, MDP and hardboard) that are laminated under pressure and temperature with wood or paper sheets impregnated with melamine resin. This process was developed in the 1960s and consists of feeding wood panels into the production line with batch mono-floor presses. The equipment for producing low-pressure laminates comes from Germany and is made by Siempelkamp or Wemhöner. The panels receive the application, usually on each side, of a sheet of decorative paper with a plain color or wood design or patterns, impregnated with melamine resin, and are subsequently forwarded to the press in which pressure and temperature act so that the impregnated paper film is thermofused into the panel’s surface, resulting in products coated with varied patterns and textures. Among its physical characteristics, the melamine laminate shows excellent resilience to damage and stains, being ideal for applications in the furniture industry (the manufacturing


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of wardrobes, cabinets, kitchen cabinets, desks, racks, counters, shelves, etc.) and civil construction, as screens and wall coatings. Duratex’s melamine panels also make use of Microban® antibacterial protection.

The high-resilience laminated floors (Durafloor) are produced by Duratex from HDF panels, the main side of which receives the application of a sheet of printed paper with a wood design or patterns that is impregnated with melamine resin, on which another protection film impregnated with melamine resin is also applied, containing aluminum trioxide, which provides the final product with resilience to abrasion. This protection paper is called overlay. On the inner side of the panel, a protection film is applied, also consisting of paper impregnated with melamine resin. In the next processing stage, this set is forwarded to the press where pressure and temperature act so that the papers are thermofused into the HDF base, thus generating laminated panels with varied patters and textures which, after being cooled and acclimatized, will be cut into final sizes of high-resilient laminated flooring and processed in milling lines for making tongue and groove joints, ensuring excellent product performance as to fixing and stability. The high-resilience laminated floorboard of Duratex uses the advanced click system for laying with rulers, which does not require the use of glue, thus making the application easier and allowing the removal and relaying of the floorboards in another place, if necessary. This technology is applied pursuant to an agreement with Unilin - Flooring Industries of Belgium, which has the patent for this invention.

Duratex has plants for producing resins and a modern impregnation complex to produce impregnated papers used in the processing melamine laminates.

The components are lines of finished or semi-finished products to be used in the furniture industry. These are composed of wood panels (MDF, MDP, HDF, hardboard) that are cut into standard sizes and sold to small furniture makers or to the DIY (do-it-yourself) consumer segment under the Multiform brand. The panels’ length can be 60 cm, 90 cm or 120 cm and they are 30 cm wide and 15.0 mm thick.

The production process of hardboard panels is operating at full installed capacity; the occupancy level in the fourth quarter of 2009 reached 99%. MDP and MDF panel production showed an occupancy level of approximately 82%, taking into consideration the capacity available in view of the ramp up process of the Agudos (MDF) and Taquri (MDP) lines.

For the purposes of property and individual safety, the industrial plants have safety systems, such as: Minimax, Grecon, Kidde, in addition to operational procedures and training programs.

The routines established in the maker’s handbooks, safety instructions, maintenance and cleaning programs are continually updated and intensified, having the strictest model as a benchmark. Training and predictive and preventive maintenance guarantee the sustainability of operations, following the scheduled programs.

Through Management Systems, 5S and Kaizen programs, among others, processes are periodically audited for continuous improvement, customer service and increased profitability.

The eucalyptus production process, from the planting to the final forest formation stage, when the trees are ready to be cut down for the manufacturing of reconstituted wood panels, takes from six to seven years.

The forest is planted with seedlings grown in the company's own nursery that are planted in a previously tilled and fertilized soil. The soil tilling process is called minimum cultivation and is characterized by the use of the minimum soil tilling required without intense overturn. The first year of the production process, called implementation, is characterized by the employment of a number of techniques basically aimed at providing nutrients through the application of fertilizers, the pulling out of weeds and the combat against leaf-cutting ants. From the second year until the cutting down, there is a period of maintenance, in which at first weeds are pulled out, some nutrients are provided and then care is given to the protection of the forest by combating leaf-cutting ants, monitoring phytosanitary conditions and preventing fire.

At six or seven years of age, the forest is harvested and then it is replaced by a new forest (new planting), or the buds that are produced from cut stumps are managed to produce a new harvest over the following six or seven years. In this case, the first year of such a planting is characterized again by techniques that provide nutrients through the application of fertilizers, the pulling out of weeds and the combat against leaf-cutting ants. At the end of this year, an operation is carried out for selecting the best buds and then a maintenance period begins, providing forest protection.


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The products that are usually called bathroom fittings: are made of many raw materials and components, the specifications of which vary according to the properties required in the application, such as resilience to corrosion, imperviousness, surface finishing, etc.

As a result the production process of bathroom fittings is composed of many operations that may be grouped in the process stages of (i) component making, (ii) mechanical processing, (iii) finishing and (iv) assembly.

(i) Component Making: Set of processes through which parts are manufactured from basic raw materials. This group includes casting, bar processing, stamping and plastic injection processes.

Casting consists of producing components from bronze (an alloy composed of 83% copper, 8% zinc, 6% lead and 3% tin) and brass (an alloy composed of 65% copper and 35% zinc), raw materials that are cast and poured into molds that reproduce the part shapes. For manufacturing bronze parts, sand molds are used, whereas for the brass ones, metal molds are used. Bronze is used in parts without finishing, which are usually embedded in walls during construction (for example, gate valve, pressure and sphere bodies, flush valve bodies). Tin is used in parts that will receive a surface finishing (chromium plating, painting, etc).

In the processing of tin bars, the components are manufactured through machining in automatic machines, or forging, a process in which the bars are cut and heated so that the parts are shaped by pressure, making it possible to obtain a form that is closer to the part’s final shape (for example, mechanism rods in machining and crosses and castles in forging).

In stamping, the components are manufactured by pressing brass plates in dies that reproduce the part shapes (for example, washbasin and kitchen mixer and tap covers, flush valve covers).

In plastic injection, the components are manufactured by automatic machines from many types of thermoplastic resins (acetal, polypropylene, nylon, etc.), which are melted and injected in molds that reproduce the part shapes. For example, components of flush valve mechanisms.

(ii) Mechanical Processing: Cast or forged parts (water pipe, tap and valve bodies) are forwarded to machining in lathes, machining centers or transfer machines where their final shape is obtained regarding holes, threads, fits, sections, etc, with the appropriate precision level so that the final products can be assembled and work as expected.

The mechanical processing category also includes pipe and weld forming processes.

In pipe forming, items are bent, giving parts their functional shape (for example, high water pipes in washbasin and kitchen mixers).

In welding, two or more parts are joined by melting the materials which, after solidifying, are bonded together forming subsets (for example, kitchen mixer and pipe washbasin bodies).

(iii) Finishing: The purpose of the finishing processes is to give to the product’s exposed components, processed in the previous stages, their finishing, color and texture design characteristics. The components that are required to have these characteristics go through refining (sanding) and polishing processes, providing parts with a smooth and bright finish. Subsequently, the parts go through chemical electrodeposition (electroplating) or painting (electrostatic deposition) processes that provide them with final finishing and color characteristics (for example, cast covers, water pipes and taps, shower bodies, bathroom fittings).

(iv) Assembly: The purpose of the assembly and test processes is to make, from the assembly of components and imperviousness tests and performance tests, the final products with the specified functional, design and reliability characteristics. After the tests, the products are packaged and forwarded to the Shipping Department so that they can be transported to customers (for example, valves, taps, flush valves, showers, mixers, bathroom fittings, etc.).

The products that are usually called bathroom fixtures are made of a ceramics body that bears mechanical stress and chemical attack, and an smooth and bright glazed outer layer. The production of bathroom fixtures involves the processes of (i) preparation of raw materials, (ii) forming the product, (iii) drying and enameling, (iv) burning and (v) final check, assembly, packaging and warehousing.

(i) Preparation of Raw Materials: The materials that compose the ceramics are natural minerals, divided into two groups: The argillaceous minerals (clay, kaolin, phyllite), which are refined by dispersion in water


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and screening for removal of contaminants, and the non-argillaceous minerals (quartz, feldspar or granite), which are refined by grinding until a very fine material is obtained (with particles smaller than 74 micrometers in diameter). The minerals are then mixed in water suspension. This mixture is called “clay slip”. The materials that compose the glazing are natural minerals (quartz, feldspar, kaolin, limestone) and industrial minerals (barium carbonate, zinc oxide, zircon silicate). All materials are ground in water suspension until a very fine material is obtained (with particles smaller than 50 micrometers in diameter). This mixture is called “enamel”.

(ii) Forming the Ceramics: The clay slip is poured into porous molds. As the molds absorb the clay slip water, its solid portion is deposited into the mold surface. The clay slip stays in the mold until the deposited wall reaches the thickness required for the product. The clay slip that is not deposited is then drained and the mold is stripped off the product. This forming process is called “casting”. The moisture content of the newly-cast product is approximately 20%. Still moist, the product goes through manual finishing for the removal of edges and other imperfections. The forming can be made with plaster molds at ambient pressure (“low-pressure casting”) or with porous acrylic resin die molds (“high-pressure casting”).

(iii) Drying and Enameling: After casting and finishing, the product goes through a cycle in a drying oven to reduce moisture content to less than 1%. In this condition, the product receives a fine (approximately 1 millimeter) enamel coat applied with an airbrush.

The application is either manual or automated.

(iv) Burning: Enameled and dried products suffer heat treatment in continuous tunnel kiln.

In cycles of 12 to 16 hours, the product is heated at 1,220ºC and then cooled again, at pre-established and controlled rates.

The heat treatment produces a reaction in the materials that compose the ceramics to form a non-porous mechanically and chemically resilient structure. The materials that compose the glaze are melted into a smooth, bright, uniform and colored coat on the ceramics’ surface.

(v) Final Check, Assembly, Packaging and Warehousing: The “burnt” products are subject to visual, measurement and gauge checks to verify size, and to hydraulic and pneumatic tests to verify performance and detect leakages.

Small superficial defects can be repaired by a “re-burning” process. In this process, the defect is removed, enamel is applied to the damaged area, and the product goes through a new heat treatment cycle to melt and level the repair.

The inlet, discharge and flush valves are assembled in the flush tanks. Some of the products are packaged in cardboard boxes and others receive a paper tape for protection.

The occupancy level of the fitting production units was over 90%.

For property security and team safety, all the industrial fitting plants have legal security systems, in addition to operating procedures and training programs (Internal Commission for Accident fire brigades, etc).

Through management systems, certificates (ISO9000) and programs such as 5S, Kaizen and TPM, among others, production processes are continuously developed for continuous improvement, the maximization of operating assets, high customer service and increased profitability.

Elekeiroz:

The alcohols produced by Elekeiroz arise from the hydrogenerization of aldehydes obtained from the reaction of hydroformylation (propane + synthesis gas) in two plants. The process is basically composed of the following stages: (i) production of hydrogen and synthesis gas from natural gas; (ii) production of aldehydes, from oxo reaction and aldol condensation; and (iii) production of alcohols from the hydrogeneration of aldehydes and purification.

The phthalic anhydride is obtained by the catalyct oxidation of naphthalene and/or ortoxylene. The reaction is produced in a fixed-bed reactor at temperatures of approximately 370°C. The gross product in the form of gas is obtained, which is then condensed and purified through vacuum distillation. Fumaric acid is a byproduct of the production process of phthalic anhydride.


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The maleic anhydride is produced through the catalyct oxidation of benzene through the atmospheric oxygen. The reaction is produced in a fixed-bed reactor at temperatures of approximately 360°C. Part of the gross product obtained is condensed while the other part is absorbed in water which, after being dehydrated together with the first part, is purified through vacuum distillation.

The process for obtaining the phthalic plasticizers is based on catalytic esterification in the liquid phase between an acid or anhydride (usually phthalic anhydride) and alcohol (for example, octanol, isodecanol, isobutanol, butanol etc.) and subsequent purification.

The polyester resins are obtained by the condensation of di-carboxylic acids and glycols. The reaction is produced in batches, in reactors heated to 215°C and with controls over acidity and molecular weight. At the end of the reaction, the product is cooled and diluted in styrene.

Formaldehyde and urea-formaldehyde concentrate are obtained through the catalytic oxidation of wood alcohol (methanol) in fixed bed and gaseous phases. The formaldehyde gas is absorbed in water producing formaldehyde solutions with concentrations of 37% to 50%. The formaldehyde gas may also be absorbed in urea water solution producing a urea-formaldehyde concentrate with solid content (formaldehyde + urea) of 71%.

Itautec:

The production of IT and automation equipment is carried out in the industrial unit in Jundiaí, State of São Paulo. This unit is fully covered by the insurance policies of companies that have a strong reputation in the Brazilian market, and it includes facilities, machinery and equipment, and product inventory.

The maintenance of equipment is devised in the Plan for Preventive Maintenance, and is carried out according to the recommendation of each maker. In order to reduce the exposure to risks associated with halts in production, it adopts a Contingency Plan involving the use of electric generators and the transfer of production among pieces of equipment in case of maintenance or repair.

IT – Manufacturing of microcomputers (desktops, notebooks, netbooks) and servers

In 2009, a total of 442,000 pieces of equipment were produced in the industrial unit in Jundiaí, including desktops, notebooks, netbooks and servers, and the annual installed production capacity for this equipment is approximately 960,000 units.

The production of IT equipment starts after the receipt and inspection of materials, when they are checked and labeled. The inputs are forwarded to the raw materials storeroom, where they are separated and kept in boxes and pallets. Itautec uses the KANBAN system storing technique, which consists of maintaining a continuous flow of products that are being manufactured, and the great innovation of which is the concept of streamlining inventory, where materials and components to be included in the product arrive immediately before they are used.

The stages of the KANBAN process are as follows:

1. Printing and checking orders and cards;

2. Creating labels for BTOs and cards;

3. Recording the specific product configuration in the test server.

4. Preparing cases (if necessary).

5. Separating materials into beehives: memories, processors, Winchester, power sources, video card, drivers (CD-ROMs, floppy discs, among others).

The manufacturing process starts with the separation and checking of the beehived material, according to the configuration sheet, which outlines the characteristics of each product, which is then forwarded to the production line. After being assembled, the product undergoes through performance tests, where all components of the process items are checked: memory capacity, Winchester size, CPU card configuration, operation of the


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CPU card and processor clock, drivers, power source, peripherals cards (video and network), mouse, leads, buzzer, memory cards (notebook and netbook) and other components.

After the component tests, the product undergoes simulation of operation for a fixed time, when it also executes a software load. In the stage of final clearance, the product undergoes a performance test, when all items of the assembly process are checked and the Winchester software and operating system are identified and peripherals are tested: fax/modem (Internet), DVD, USB, wireless system, client test (sampling approximately 2% of production).

After products are cleared from the production line, they are forwarded to the packaging area, where they are stored in boxes with their respective kits, which may include: mouse, keyboard, documentation, power cable and other accessory items, according to the equipment model.

After the packaging process, the product is forwarded to the shipping department, which has a bar code reader for checking the documentation and including it in the system.

AUTOMATION – Manufacturing of banking automation equipment, such as ATMs and bank teller terminals; business automation, with point-of-sales terminals invoice printers and self-service terminals

In 2009, a total of 7,700 ATMs were produced in the industrial unit in Jundiaí, and the annual installed capacity for this equipment is approximately 28,000 units. In the business automation segment, the annual production of invoice printers reached approximately 3,500 units. The installed capacity is approximately 36,000 units/year.

After the receipt and inspection of materials, when they are checked and labeled, the inputs are forwarded to the raw materials storeroom, where they are separated and kept in boxes and pallets. According to the KANBAN system, materials are separated and identified according to dispenser module and made available for production.

The manufacturing process starts with the separation and checking of materials, which are then forwarded to the production line. After the assembly process, which includes the assembly and testing of subsets through the finished product, the products are forwarded to the performance tests, when they are tested and for the checking of components, such as: card reader, printers, scanner, keyboards (optical and mechanical), banknote dispenser and depositor modules, sensor module (door, smoke, vibration), coin dispenser, banknote recognition device, check transporter, no-break, etc. The equipment is subsequently forwarded to the run-in test, when the test software is transferred from the server to the machine for the cyclical testing of peripherals, such as: scanner, printer, depositor module, banknote dispenser, reader activator, microcomputer, video, card dispenser, among others.

After being approved in tests, the product is forwarded for final clearance, when the following modules are tested and checked for the purpose of carrying out a final checking before packaging: card reader, printers, scanner, keyboards (optical and mechanical), banknote dispenser, modules (banknote dispenser, depositor, sensor modules (door, smoke and vibration), coin dispenser, banknote recognition device, check transporter, no-break, and recording of customer’s application (if requested by the customer). As soon as it is approved, the equipment is forwarded to packaging, where it is cleaned, the accessory kit is prepared according to the equipment model, the internal chucks are placed, inhibiting the movement of peripherals during transportation, the product is wrapped in plastic film, the packaging box is folded and the product is put into the box. After this process, the product is forwarded to the shipping department, where the material is checked a with bar code reader, including its documentation, for inclusion in the system.

Assembly of motherboards for notebooks, desktops, banking and business automation

After the receipt and inspection of materials, when they are checked and labeled, the inputs are forwarded to the raw materials storeroom, where they are separated and kept in boxes and pallets. The Production Order is opened according to the schedule prepared by the Production Planning and Control. Subsequently, the materials are separated by the storeroom personnel.

The materials are then forwarded to the plant where the production process will begin:


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1- In the preparation area (when applicable) the PTH (Pin Through Hole)-type component terminals are formatted and components (PALs, Eproms, flash memories) are recorded before they are assembled in boards.

2- In the Automatic Insertion/SMT area (when applicable) the components are fed into machines for component positioning, the welding paste and respective stencils are put in the screen printer, and the specific assembly program for the board model to be produced is started. The assembly process begins and then the first card test (in circuit test) is performed immediately after the board leaves the remelting furnace (in this furnace, the welding paste is melted between the component terminals and the printed circuit board pads).

3- After this stage, the boards are forwarded for Manual Insertion where the PTH components (some of which may have been pre-formatted before preparation) are assembled. After the insertion of these components, the boards go through wave welding machines (where the PTH components are welded into the printed circuit board). After the welding, the Complementation Department makes visual checks and occasional welding repairs are carried out, circuit shocks are fixed, and dissipaters and other components that show sensitivity to heat and could not be previously inserted are then inserted.

4- Then the boards are forwarded to an electronic test (performance test) where a simulation that is as close as possible to the real product use is run. The boards rejected at this stage are sent to the Board Repair Lab where they are diagnosed and fixed.

5- The approved boards are stored in anti-static bags and subsequently put in appropriate boxes to be sent to the raw materials storeroom. b) Characteristics of the distribution process

As it is a holding company, the Issuer does not market/distribute products or services.

The characteristics of the distribution process of our main subsidiary companies are described below. Industrial Area: Duratex:

In the Wood Division, the panels are mainly distributed to the furniture industry (80% of volume), which uses the materials for processing and manufacturing furniture, and 20% of the volume is distributed to retailers of wood panels (wood resellers), the main customers of which are small furniture companies and carpenters.

The distribution profile of high- resilience laminated floorboards is diversified and includes retail (business centers), specialized stores, home construction centers, construction companies and hotels, meeting the demand of the many segment channels and consumer profiles.

There are approximately 5,000 active customers in this business division.

In the export of hardboards, we supply the European and the United States of America markets with our own inventories in warehouses.

In the main United States of America and European ports that are strategically positioned to meet the demands of customers in these markets, with the required logistic streamlining and cost competitiveness.

The distribution profile in European markets is targeted at the of doors for civil construction industry.

In the United States of America, 75% of the volume is targeted at the doors for civil construction industry, 10% at the furniture industry, and 15% at panel retail.

Deca distributes its bathroom fixture and fitting products throughout the Brazilian territory through retail segments such as home centers and construction materials stores, supplying all states of Brazil. It also supplies the wholesale channels in many states, which distribute products to small retailers located in cities in the interior of Brazil.


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Deca supplies a market known as “boutique”, which is specialized in the sale of high added-value products to consumers that are more demanding in terms of service and product quality.

It also supplies the main construction companies in Brazil through direct sales, in addition to the hydraulic segment of civil construction, which supplies these companies through specialized fitting and installation services.

Sales are performed by its own sales team in addition to outsourced sales representatives in a network of 14 sales branches all over Brazil. Our own sales force is composed of approximately 400 people, 65% of whom are from our own sales force, including point-of-sales promoters, and 35% are outsourced.

The company’s own sales force provides services to the main customers of Deca, those that are the most significant in terms of sales volume, and representatives provide services to small retailers.

In both divisions, the share of the 20 largest customers is approximately 30% of sales, which reflects a dilution in the customer base. Elekeiroz:

Most of the organic product sales are carried out directly with customers through a specialized team, in addition to distributors that purchase the products from Elekeiroz and resell them to small-sized customers.

Product distribution to customers is directly handled by the plant.

• Phthalic and maleic anhydrides are sold stored in white solid flakes/briquettes, or molten (liquid) form in

thermally insulated tank trucks.

Alcohols, plasticizers, formaldehydes and urea-formaldehyde concentrate are liquids and sold in bulk, and are delivered by tank trucks; polyester resins are delivered in bulk and also sold in drums. Itautec:

Domestic market

The products are sold by its own sales team, inbound call center and representatives who are trained by the company itself, ensuring a quality service throughout the Brazilian territory. These types of distribution provide speed and differentiated service to every customer. Itautec provides to the corporate market a complete line of IT and automation products and services.

The distribution of products and parts by Itautec is carried out by outsourced transportation companies.

In the automation segment, particularly the transportation of ATMs and self-service terminals, in view of the product characteristics (weight, sizes and fragility), Itautec hires specialized transportation companies that have platform trucks and specialized equipment and labor for their transportation. Itautec currently has contracts with six transportation companies from this segment.

In the distribution of IT products (desktops, notebooks, netbooks and servers), Itautec hires fractional load transportation companies to deliver the products all over Brazil, to end consumers and government bodies and retailers. The transportation used in this distribution is done by road, and in exceptional cases, air transportation is used.

In the Service Area, that is, the supply of the branches or technicians of Itautec with spare parts, approximately 80% of transportation is carried out by road, and the remaining part, by air. As this distribution is very varied, many transportation companies are used, but most of them provide regional services.

Foreign market

With subsidiaries in Argentina, Spain, the United States of America, Mexico and Portugal, Itautec sells its own banking and business automation equipment, and provides technical services, particularly in the subsidiary located in Spain. The subsidiary in the US also carries out procurement operations of electronic components and peripherals used in the production of Itautec equipment.


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Tallard operates as a Added VAD of global brand products. It has offices in Brazil, Argentina, Chile, Ecuador, USA, Mexico, Venezuela and Colombia, where it started its operations in 2008. Its main differentiating factor is the delivery of complete solutions, which include channel support and development, pre-sales support, product management and marketing development, among other activities that add value and reliability to customers’ activities.


Itaú Unibanco:

Marketing and distribution channels

Itaú Unibanco offers integrated services and products to clients by means of many marketing tools and distribution channels. Its distribution network is made up mainly of branches, ATMs and customer site branches, or (“CSB”), which are banking service centers established on the premises of corporate clients.

The table below shows information related to our network of branches and ATMs at December 31, 2009 in both Brazil and abroad:

Branches CSBs ATMsItaú Unibanco 3,550 915 32,352Itaú Personnalité 165 3 352Itaú BBA 9 - -

Total in Brazil 3,724 918 32,704Itaú Unibanco abroad (Outside Latin America) 4 - -Argentina 81 23 164Chile 70 - 48Uruguay 38 1 32Paraguay 19 6 166

Total 3,936 948 33,114 The table below shows information regarding the geographical locations of the distribution network

throughout Brazil at December 31, 2009:

Region Branches CSBs ATMsSouth 633 125 4,611Southeast 2,499 653 23,631Midwest 282 62 1,824Northeast 242 45 2,014North 68 33 624

Total in Brazil 3,724 918 32,704

Branches

At December 31, 2009, the Itaú Unibanco network was composed of 3,724 full service branches throughout Brazil. It had branches in municipalities that represented 83.9% of Brazilian GDP at December 31, 2009, 81.4% of which are located in the states of São Paulo, Rio de Janeiro and Minas Gerais, in the southeastern region, Paraná, in the southern region, and Goiás, in the midwestern region, which, together, represent over 62.7% of Brazilian GDP (in accordance with the data published by the Central Bank of Brazil on the breakdown of Brazilian GDP by state in 2006). The network of branches operates as a distribution network for all products and services offered to our clients, such as credit cards, insurance and private pension plans.


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CSBs

At December 31, 2009, Itaú Unibanco operated 918 CSBs throughout Brazil, as shown in the table above. The services offered at these centers may be the same as those offered at the full-service branches, or more limited, in accordance with the size of the corporate client and its needs. The CSBs are a low-cost alternative to full-service branches. Additionally, they give Itaú Unibanco the opportunity to reach new retail clients while providing services to corporate clients and their employees.

ATMs

At December 31, 2009, Itaú Unibanco operated 32,704 ATMs for the use of its clients throughout Brazil.

Through the network of ATMs, a monthly average of approximately 125 million transactions was carried out during the year then ended. Clients can perform practically all transactions related to their accounts by means of the ATMs, which are alternatives that do not require the direct participation of employees in the transactions and provide points of service at a cost that is significant lower than that of branches. Clients may carry out transactions using ATMs that operate under the brands Itaú and Unibanco. Itaú Unibanco also has agreements with other network companies, such as the Cirrus and Maestro brands, which allow clients to access simplified services through the networks of these companies. Other distribution channels

Itaú Unibanco also provides clients with the possibility of obtaining information on the status of their

accounts, investment funds and credit through many electronic channels, which allows it to carry out retail transactions at a lower cost. These channels are:

• Call centers, with a monthly volume of approximately 43.3 million transactions. This distribution

channel accounted for 3.0% of the total products sold by the commercial bank in 2009; • Internet banking system, with a monthly volume of approximately 167.7 million transactions. This

distribution channel accounted for 5.0% of the total products sold by the commercial bank in 2009;

• Points of sale/Redeshop, a network that allows clients to use a debit card to purchase goods at the point of sale of the merchant, with approximately 45.6 million transactions a month;

• Many other channels, such as e-mail, links for mobile telephones and wireless applications, drive-through installations and courier services.

c) Characteristics of the markets in which it operates, in particular: I - Share in each of the markets

As it is a holding company, this item is not applicable to the Issuer.

The characteristics of the markets and market share of each of our subsidiary companies are described below. Industrial Area: Duratex:

The Wood Division has a product mix that is very diversified. In addition to a complete line of base panels, it offers many pattern options. Its production capacity represents approximately 40% of the Brazilian production capacity, according to an internal estimate. 67% of the division’s revenue is earned from sales to industry, 30% from sales to the wood retail sector and 3% from sales to civil construction operators.


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The Deca products are present in all segments (low-, medium- and high income), although it has outstanding performance in the medium/high income segment. Its capacity accounts for approximately 40% of the bathroom fittings market and one third of the fixtures market in Brazil, according to internal estimates. The retail of construction materials accounts for more than 70% of sales.

The estimates of the market share in which it operates are based on market studies conducted internally because most of the competitors are closely-held companies and their information is not available. Elekeiroz:

• The oxo-alcohols - octanol, normal-butanol and isobutanol - are used in the production of plasticizers for PVC, direct or intermediate solvents for the paint industry, additives for lubricants and many chemical intermediates.

• The 2 ethylhexanoic acid is used, among other applications, in the production of paint driers,

additives for lubricants of cooling systems and stabilizers for PVC. • The phthalic anhydride is used in the production of plasticizers for PVC, and it is also very

important in the production of alkyd resins, which are raw materials of the paint and varnish industry and also extensively used in the production of polyester resins.

• The maleic anhydride is used in the production of polyester and alkyd resins, which are used in the production of finishing paint, among other applications. It is also used in the production of maleic resins, which are used in the production of super-fast air-drying paint. There are other applications for maleic anhydride, such as in the production of fumaric acid, as binders in paper manufacturing, succinic acid, malic acid, surfactants, insecticides and herbicides.

• The fumaric acid is used in the manufacturing of polyester resins, alkyd resins, phenolic resins, plasticizers, elastomers, adhesives, insecticides, and fungicides.

• The purpose of plasticizers is to make polymers more flexible, particularly PVC, which is originally hard. Among its applications, the main ones are in footwear, plastic hoses and frames, paints, varnishes, vinyl floors, adhesives, car and furniture upholstery, electric wire and cable sheaths, food packaging, canvas tarpaulins for trucks, pool coverings, banners and toys

• Unsaturated polyester resins are thermohardening polymers that, together with fiberglass and/or mineral charges create a composite a building element the mechanical strength of which is comparable to steel. It has a wide range of applications in different markets, and the main ones are the following:

- Civil Construction: production of water tanks, pools, roof tiles, bathtubs, toilet seats, sinks, etc. - Transportation: manufacturing of internal and external parts (bodies) of buses, trucks, tractors,

agricultural machines and special automobiles. - Nautical: production of boats and speedboats. - Technical Parts: these are sold to a market that is very varied. Phormaldehyde is a raw material for the manufacturing of many other products, such as urea, melamine

and phenolic resins, adhesives, fertilizers, trimethylolpropane, pentaerythrol, 1.4 butanoediol, neopentyl glycol, and is also used as an auxiliary in the textile, leather, rubber and cement industry, and as a bactericidal agent, germicide and disinfectant.

The company is working to keep its leadership in the market, in which it competes with Brazilian manufacturers and also foreign manufacturers. The following table shows the development of the company’s market share in this segment:

Organic 2007 2008 2009 Market share 27% 26% 25%

Itautec: Itautec specializes in developing products and solutions in automation, IT, services and distribution.


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The Company has the tenth largest installed base of ATMs in the world and the second in Latin America, according to the Global ATM Market and Forecasts to 2013 report of Retail Banking Research of August 2008 and the largest network of technical support in Brazil.

It also ranked 24th according to the FinTech 100 ranking, which lists the major global technology suppliers of the financial industry, and was the best Brazilian company in two consecutive years. In June 2010, Itautec won the World Finance Technology Awards 2010. This is the first time the award has been given to a Brazilian company. Thus, Itautec was chosen the best vendor of technology for the Latin American financial sector.

Itautec was the best evaluated company in the Banking and Business Automation category of the Brand Info Survey published in the April 2010 edition of the Info Exame Magazine. It also has a long-standing commercial relationship with the main private and government financial institutions in Brazil, a market in which three international players and two Brazilian companies, including Itautec, operate.

The business automation segment, which includes equipment for retail chains, such as supermarkets, drugstores and business in general, is supplied by a high number of Brazilian and foreign companies, in which Itautec is the market leader in many of segments.

Itautec’s Service Area distinguishes itself by the technical training of its professionals, as well as its intricate technical support network, which is the largest network in Brazil. The company has 34 service centers, ten support labs and over 2,000 technicians – Itautec’ employees who receive the same type of training as other members of the company’s staff and have greater knowledge of the company’s products – who are able to meet the needs of customers in 2,700 Brazilian cities.

In addition to the network, it has an inventory of parts in each of its units and in the cities where it has qualified technicians (“residents”), thus ensuring that they are quickly replaced, keeping the halt to its customer’s equipment or system to a minimum, and operating effectively in terms of logistics.

Another important differential is the permanent exchange of knowledge with the product development area, which allows for integration and adjustments between software, hardware and services, according to the needs of each customer’s business. Concurrently, the company offers courses on new technologies, products and services. Itautec provides many types of technical support, including on-site, 24/7 support.

Infrastructure services include consulting and project design, the implementation of IT departments and the installation of electric and logical networks. The Itautec Training Center is focused on the training, specialization and qualification of professionals that work with IT.

The IT area operates in the production and sale of desktops, notebooks, netbooks and servers of the Itautec brand. The company’s sales are mainly made in the Brazilian market, with a share of approximately 4% at the end of 2009, according to data from IT Data Consultancy. It sells a complete line of equipment, and its main targets are the corporate and government sectors.

The Brazilian IT market is composed of a high number of Brazilian companies, small makers that operate locally and global multinational companies, mainly those with head offices in the US and Asia. In 2009, makers that observed all stages of the PPB established by the Ministry of Science and Technology (MCT) and Ministry of Development, Industry and Trade (MDIC), was responsible for approximately 70% of total equipment sold in Brazil. According to IT Data Consultancy, Itautec’s share in this market corresponds to approximately 5%.

At the federal and state levels, there are tax incentives that provide for a decrease in and suspension of IPI rate, decrease in PIS/PASEP and COFINS rates levied on gross revenue from retail sales of desktops for a maximum price to consumers of R$2,500.00 and notebooks for a maximum price of R$3,000.00, additional decreases are available in IRPJ and CSLL tax bases relating to expenditure incurred in research and development, as well as a decrease in the ICMS tax payable by using the presumed credit calculated on the sales price of certain products, and deferral of ICMS in the purchase of parts, pieces, components, raw materials and packaging materials.

II - State of competition in the markets



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The state of competition in each of the markets of its main subsidiary companies is described below.

Industrial Area:

Duratex:

The market in which neither division operates has barriers to market entry and, therefore, the competition is based on the supply and demand dynamics.

The competition in the panels segment is less fragmented and is made up of larger sized companies. Based on the product’s characteristics, although there are larger competitors abroad, the freight and distribution costs make imports unviable, so there is basically one local competitor.

The competition for the Deca Division is more fragmented, with small-sized competitors and some foreign competitors, mainly for bathroom fittings.

Elekeiroz:

Elekeiroz is the only producer of oxo-alcohols, 2-ethylhexanic acid and maleic anhydride in Brazil, and the competition is only from imported products. As to other products, the competition is from local producers and foreign companies, as detailed below. Considering normal competition conditions, the company is competitive in all of its product lines.

• Oxo-alcohols - (octanol, normal-butanol and isobutanol): Elekeiroz is the only producer in Brazil, and its competitors are foreign companies from many countries, mainly from the US and South Africa, but also from Europe and Asia.

Because of the strong presence of Normal-butanol imported from the United States of Amarica, at artificially low prices, the company has lost some market share in the Brazilian market. Under normal competition conditions, the company is competitive.

• 2-ethylhexanoic Acid – the company is also the only producer in Brazil, and its competitors are producers from Germany, the US and Sweden.

• Anhydrides – in the phthalic anhydride and fumaric acid markets, Elekeiroz has a local competitor, in addition to competitors from Mercosur (Argentina), South America (Chile, Colombia and Venezuela), and Asia (mainly fumaric acid from China).

As to the local competitor, it is fair to say that the competition is balanced, which is not the case with the product from Chile, which receives incentives and subsidies for entering Brazil in the State of Santa Catarina, clearly causing losses to Brazilian producers. There are also speculative and sporadic imports from the US and China.

In the maleic anhydride market, on the other hand, the company is the only Brazilian producer, competing with companies from Argentina, North America and China.

• Plasticizers – in this line, there are two Brazilian competitors for some specific plasticizers and/or equivalent products, and competition from foreign companies (mainly DOP) from Chile, Mexico, Korea, India and Taiwan. In the non-phthalic plasticizers line, there is competition from abroad and some from Brazil. In the plasticizer line (either phthalates or non-phthalates), the company is more competitive than Brazilian producers that use local raw materials, because it has a scale of production that is considerably higher. It is also equally competitive in relation to competitors that use some imported raw materials and imported plasticizers under normal competition conditions, that is, without prices artificially low or subsidized, as is the case of the product from Chile, which receives incentives and subsidies for entering the State of Santa Catarina, causing losses to Brazilian producers.

• For the formaldehyde and urea-formaldehyde concentrate products, there are competitors with different profiles, four of which belong to multinational groups and two of which to Brazilian groups. In both cases (multinational and Brazilian companies) the plants are verticalized, and the captive consumption of a large part of production for the manufacturing of urea-formaldehyde and phenolic resins and operation in these markets is quite common. The competitors are at different competitiveness levels, largely depending on the start-up of new plants, the captive consumption of each of them, repositioning on the markets where they operate, and exports, which also greatly affects the market, particularly in relation to unsaturated polyester resins.


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Itautec:

(see item I above)


Itaú Unibanco:

General considerations

Recent years have been characterized by the increase in competition and consolidation of the Brazilian financial service sector. On December 31, 2009, there were in Brazil 137 multiple-service banks, 18 commercial banks and a large number of savings and credit, brokerage, and lease institutions and other financial institutions.

Itaú Unibanco, Banco Bradesco, Banco Santander and HSBC are the leaders in the private banking sector. On September 20, 2009, these banks represented 41.0% of the total assets of the Brazilian banking sector. Itaú Unibanco also faced competition from government banks. On September 30, 2009, Banco do Brasil, the National Bank for Economic and BNDES and Caixa Econômica Federal (CEF) ranked first, fourth and fifth, respectively, in the Brazilian banking sector, accounting for 38.6% of the total assets of the banking system.

The table below shows the total assets of the 14 largest banks in Brazil in order of share in the total assets of the Brazilian banking sector.

December 31, 2009 (*) R$ billion %

Banco do Brasil (**) 692.0 20.0 Itaú Unibanco Holding 585.6 17.0 Bradesco 444.4 12.9 BNDES 386.6 11.2 CEF 341.8 9.9 Banco Santander 334.1 9.7 HSBC 100.1 3.9 Banco Votorantim 86.9 2.5 Safra 71.1 2.1 Citibank 40.8 1.2 Banrisul 29.3 0.8 Credit Suisse 21.9 0.6 BNP Paribas 21.3 0.6 UBS Pactual 20.7 0.6 Others 275.4 8.0

Total 3,452.0 100.0 (*) Based on banking services, except for insurance and pension funds. (**) It Includes the consolidation of 50% of Banco Votorantim, based on the interest of 50% held by Banco do Brasil in Banco Votorantim. Source: Central Bank of Brazil, The 50 largest banks and the consolidated financial system (December 2009)

With the merger of Itaú and Unibanco and the creation of Itaú Unibanco, new business opportunities

arose in the domestic market, in which economies of scale have started to be essential for competitiveness. Itaú Unibanco has a leading position in many areas of the Brazilian financial market. It achieved a market share of 16.5% based on total loans in December 2009 and ranked second in the Brazilian banking market. Without taking the government banks into consideration, it is the market leader with respect to total loan operations, with


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a 27.2% share in this market. It ranked second in the market in terms of total funding, with a market share of 17.03% at December 31, 2009.

Itaú Unibanco also has qualified employees and has increased its presence in the Southern Cone

(Argentina, Chile, Paraguay and Uruguay), to strengthen operations in Latin America in order to assume a leading position in this market. The long-term strategy is to gradually obtain a global position, but the priority is the consolidation of Itaú Unibanco’s presence in the Brazilian and South American markets.

The Brazilian credit card market is very competitive and has grown at the rate of 21.7% a year over the past three years, in accordance with the Brazilian Association of Credit Card and Service Companies (ABECS). Itaú Unibanco’s main competitors are Bradesco, Banco do Brasil and Banco Santander. Credit card companies are increasingly adopting alliance and co-branding strategies and adapting their pricing policies (interest rates, cardholder fees, and merchant fees) for the purpose of strengthening their position in the market.

The Brazilian insurance market is also highly competitive. Itaú Unibanco’s main competitors in this industry are the insurance companies Sul América, Bradesco Seguros and other related companies, and BB Seguros and other related companies. On December 31, 2009, this sector was made up of around 113 insurance companies of different sizes. Itaú Unibanco believes that its alliance with Porto Seguro will result in economies of scale and efficiency. Taking into consideration its 30% interest in Porto Seguro, Itaú Unibanco was in the leading position in terms of insurance premiums in November 2009, with a share of 14.8% of billings in the Brazilian market.

Itaú Unibanco’s main competitors in private pension plan and capitalization products are controlled by large commercial banks, such as Bradesco, Banco do Brasil, Banco Santander and CEF, which, as Itaú Unibanco does, use their networks of branches to access the retail market.

Itaú BBA is a major market competitor in the market targeting large corporations. In volume of loan operations, Itaú BBA competes with Banco do Brasil (including Banco Votorantim) and, to a lesser extent, with Bradesco and Banco Santander; in cash management, a market in which Itaú BBA has a leading position and renowned efficiency, it competes with Banco do Brasil, Santander and Bradesco; and in derivative transactions, particularly structured derivatives, its main competitors are international banks, such as Citibank, Credit Suisse, HSBC, JP Morgan, Morgan Stanley and Santander. Itaú BBA received the award for Best Cash Manager in Brazil from Euromoney magazine in 2009.

The main competitors in the consumer credit industry are HSBC and Bradesco, in addition to Banco Panamericano, Citifinancial (Citibank brand), GE Money (Banco GE Capital brand) and Banco Ibi. The main factors that make institutions competitive in this segment are: distribution, strong brands, customer relationship management, and strategic alliances with large retailers.

Itaú Unibanco has formed alliances with CBD, Lojas Americanas, Magazine Luiza, Ponto Frio, Hipercard (Wal-Mart Brazil), and Ipiranga (Ultrapar), among others.

The main bank in the Brazilian real estate market is CEF, which is owned by the government. This institution provides real estate financing and is a leader in this market, particularly due to its aggressive pricing strategy. This position was strengthened by the “Minha Casa, Minha Vida” (“My House, My Life”) federal program, which is responsible for the construction and financing of one million homes for the low-income population and, of which, CEF is the main operator. There are also two major competitors in the private sector: Banco Santander and Bradesco.

d) Seasonality


The seasonality in each of the markets of its main subsidiary companies is described below.

Industrial Area:

Duratex:

In general, the market is stable, except in the first two months of the year, when the number of working days is lower in view of the many holidays, and activity is slower.


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Elekeiroz:

Sales are, to a certain extent, affected by seasonality, although this effect is secondary to that of global economic conditions.

Historically, a higher volume of sales to the Brazilian market is reached in the second half of the year because the whole production chain is prepared for the year-end sales. As Elekeiroz products are raw materials for other manufacturers, it experiences this increase about three to five months in advance.

In recent years, the average sales volume over the first and second halves of the year was 46% and 54%, respectively, and the third and fourth quarters posted the highest sales volumes.

The main segments that are affected by seasonality, which is reflected in the total sales volume in the Brazilian market, are paint, footwear, automobiles, PVC composites, films, PVC canvas and spreads, hoses, toys, etc.

Itautec:

The automation market is not greatly affected by seasonality. It is dependent upon calls for bids from private or government companies, which take place throughout the year.

The IT market is also dependent upon calls for bids from private or government companies. The retail segment experiences more seasonal effect in the last quarter of the year, as the major retail chains build up their stock for year-end holidays, when IT products are one of the most wanted items.

The products that account for the largest share in the revenue of the Distribution Area, particularly servers and storage, experience sales seasonality in the last month of each quarter, and the volume is higher in the last quarter of the year. The retail products sold by this area, on the other hand, experience more seasonality in the last quarter of the year, when retailers build up their stocks for the year-end sales. Financial Services Area:

Itaú Unibanco:

In general, Itaú Unibanco’s retail and credit card operations are seasonal, growing during the Christmas season and dropping at the beginning of the following year. Service revenue is also seasonal, growing at the beginning of the year, when taxes and contributions are usually paid. Finally, a seasonal drop in personal expenses takes place in the first quarter of the year due to the summer holidays.

e) Main inputs and raw materials, informing:


The main inputs and raw materials used in each of the markets of its main subsidiary companies are described below.

Industrial Area:

Duratex:

In the production of wood panels, the main inputs are producer-grown or purchased reforested wood, urea-formaldehyde resins, electric energy, papers for impregnation and printing, decorative papers, melamine resins and paraffin emulsion.

The main inputs used in forests are fertilizers, ant-killer baits (ant control) and herbicides (weed control).


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In the production of bathroom fittings, the main inputs are bronze and brass bars, engineering plastic, galvanic material and packaging.

In the production of bathroom fixtures, the main inputs are clay, kaolin, feldspar, gypsum, dyes and natural gas.

Elekeiroz:

The main raw materials of the organic product segment are propene, orthoxylene, benzene, styrene monomer, methanol and urea.

Propene, a raw material for the production of oxo-alcohols, as well as orthoxylene, for phthalic anhydride, are supplied by the raw materials center (now Braskem) in the Camaçari complex, State of Bahia, where they are delivered directly through pipes, without being handled by intermediaries, to the production facilities.

In the Várzea Paulista unit, State of São Paulo, the benzene (for the production of maleic anhydride) and orthoxylene (for phthalic anhydride) are received in bulk delivered by trucks. The transportation and handling of these raw materials fully complies with the proper legislation, and is carried out using specific trucks and trained and certified drivers.

The main raw materials of the polyester resin and formaldehyde segment are styrene monomer, methanol and urea. The urea and styrene monomer are purchased in the Brazilian market, while the methanol is imported and received at the Paranaguá Port in the State of Paraná.

Itautec:

In the manufacturing of its IT and automation products, the main inputs are the following: processors, cases, lockers, printed circuit boards, monitors, hard disk drivers, memory modules, and notebook and netbook kits.

I - Description of the relations established with suppliers, including whether they are subject to governmental control or regulation, indicating the bodies and the respective applicable legislation


The relations established with suppliers by its main subsidiary companies are described below.

Industrial Area:

Duratex:

The main input categories used in the manufacturing processes of Duratex are as follows: resins, decorative papers, fertilizers, electric energy, non-ferrous metals, ceramic minerals, natural gas and fuel oil.

In view of the diversity and specific nature of products and industrial processes of the Wood and Deca Divisions, the Company has relationships with suppliers from the electric energy, petrochemical, pulp and paper, metal and trading industries, among other manufacturing industries.

The strategy for supply of urea-formaldehyde resins, the Company’s most important input category, is currently being restructured. Historically, the Company always purchased them from petrochemical suppliers that transformed urea and methanol into urea-formaldehyde resins. An exclusive long-term supply agreement for the Uberaba plant isin place with the Peixoto de Castro Group, or PCG, the main supplier of the Agudos and Botucatu plants. In Taquari, resin is also purchased based on a long-term agreement with the multinational Hexion. In the following months, with the start-up of DRI, Duratex’s resin plant located in Agudos, it will produce some of the resin currently purchased from PCG, thus reducing dependence, diluting risk and obtaining know-how for the manufacturing of this important input. Duratex, which currently purchases methanol and urea


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directly from suppliers and transforms them into resin through services provided at the PCG plant in Araucária, will do this directly at DRI.

Of all industries, gas and electric energy is the most strictly regulated. The Duratex plants are in the free market for electric energy and, therefore, are bound by the regulations of the Brazilian Electricity Regulatory Agency and the Chamber of Electrical Energy Commercialization. The Company adopts the strategy of purchasing electric energy in the long term based on many agreements with generators and traders of regular and subsidized energy. The agreements are managed in such a way as to record separately the electric energy purchased in the company’s 12 points of delivery and consumption.

The company also has agreements for the supply of water, gas and fuel oil with the concessionaires that serve the regions where the plants are located, and natural gas is an important input in the manufacturing of bathroom fixtures.

The non-ferrous metals (copper, bronze and brass) used in the manufacturing of bathroom fittings are obtained from companies that transform non-ferrous metals, such as Brazilian Termomecânica, Eluma and Cecil, and the Chilean Cembrass, into bar or tube shapes. The company has a cast house where it can process copper scrap, purchased with proven origin in the Brazilian market, as well as copper or brass slabs obtained from transforming companies.

The ceramic minerals used in the production of bathroom fixtures are obtained from many Brazilian suppliers of kaolin, clay, feldspar, crushed stone, etc. These mining companies are often visited and inspected by the Duratex team. All of them have the required environmental permits and mining rights for their operations.

In the forestry area, there is a business partnership relationship with suppliers of pesticides. The legislation in effect, Law No. 7,802 of 1989 and Decree No. 4,074 of 2002, the Pesticide Law, is complied with through the issuance of agricultural instructions by the supplier, and enforced by official state agriculture and environment inspection agencies.

In Rio Grande do Sul, the MDP panel plant will be supplied with wood from third parties at 85% of its demand for the following six years; they are wood producers or wood and wood residue traders under contract and are not subject to government control. The production of eucalyptus in the region complies with the specific legislation of the State of Rio Grande do Sul, and the inspection authorities are the State Environmental Department and the State Foundation for Environmental Protection From 2016, dependence on the wood market will be reduced to 40% of demand.

Elekeiroz:

Raw materials are purchased according to a schedule and by sending the volumes and delivery dates to suppliers. There are supply agreements and arrangements for the main raw materials; the others, which are not provided for in these instruments, delivered according to schedules negotiated with their suppliers. There are no restrictions or impediments arising from government regulation that affect any of the raw materials that are used. The main raw material price calculation is established in the agreements and/or purchase orders, and is benchmarked against the international market, thus providing an early idea of price variations.

Itautec:

The company develops long-term relationships with its suppliers, which may increase competitiveness and business synergy, in addition to developing joint work in order to improve the entire production chain. For the purpose of fostering economic development and creating jobs in the areas in which it operates, the company privileges Brazilian suppliers whenever it is possible.

Products are selected based on the strictest criteria, in order to ensure that the profiles are compatible with the values and needs of Itautec, and the selection involves the Commercial, Engineering and Materials Areas. They analyze suppliers according to factors from input quality and financial position to compliance with tax, social and environmental requirements. Itautec undertakes to handle agreements and business conditions with confidentiality, in addition to guiding its relationships based on values such as ethics and integrity.


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In 2009, in order to further strengthen its relationship with its suppliers, Itautec organized the “First Itautec Meeting with Suppliers”, sharing its vision on sustainability and, consequently, assisting these business partners in the adoption of principles for responsible management.

II - Any dependence on few suppliers


Any dependence on few suppliers by its main subsidiary companies is described below.

Industrial Area:

Duratex:

Given the range of the Company’s inputs, it has a portfolio of suppliers of finished and transformed products. Among the many segments in which suppliers operate, some are capital intensive and labor intensive, with higher or lower barriers to market entry and strong or weak competition. The industries in which there is weak competition or high specialty are mainly the petrochemical, copper slabs, decorative papers and some ceramic materials industries.

In general, there is no dependence on suppliers.

Elekeiroz:

Some raw materials are purchased from a single supplier because of the nature of the activity, as is the case of the Camaçari unit, State of Bahia, which is installed in a petrochemical complex and interconnected with the supply center (Braskem) through pipes. The purchase of these raw materials from third parties or on the international market, even if it were possible, would not be convenient.

However, for the production of formaldehyde and urea-formaldehyde concentrate, the company has many supply options.

Itautec:

The international market of data processing units is dominated by two large suppliers, one of which has a substantial market share. Should this company fail to supply, the entire international market would be affected. Itautec purchases projects and manufactures a substantial volume of boards for its own consumption in its industrial unit in Jundiaí, State of São Paulo. In the event of any restriction on the supply of processors, it would be necessary to purchase projects for printed circuit boards that are appropriate to the data processing unit of the second supplier, which are already available in the market.

In the segment of operating systems, there is a large supplier that has a substantial market share in the sale of licenses. Currently, the products sold by Itautec can be configured with a license from this maker or with free software, that is, Librix, the Linux product distributed in Brazil developed by Itautec, which meets all quality, maintenance, continuous improvement and technical support requirements. In recent years, the use of free software has posted a considerable growth, reducing the dependence on “paid-for software” in the international market.

III - Any volatility in their prices


Any volatility in the prices of suppliers of its main subsidiary companies is described below.


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Industrial Area:

Duratex:

The prices of some inputs used by Duratex are highly volatile. These are urea, methanol, copper and paper. As they are commodities, these inputs follow the international price trends that vary according to supply and demand at the time.

Elelekeiroz: The prices are based on the international market and are subject to fluctuations.

Itautec:

A considerable proportion of the components used in production is imported because there are no similar products manufactured in the Brazilian market. Accordingly, a significant depreciation of the real in relation to the US dollar would push up the cost of raw materials, which would increase the cost of the products sold, maximizing the chances of a price increase by makers as a way to protect their operating margins required for the sustainability of their businesses.

7.4. Identify whether there are clients that are responsible for more than 10% of the Issuer’s net revenues, informing:

a) Total amount of revenue arising from the client

As a holding company, the Issuer’s revenue basically arise from equity in earnings.

The amount of revenue arising from the customers of our main subsidiary companies is described below.

Industrial Area:

Duratex:

No customer accounts for more than 10% of the company’s revenue.

Elekeiroz:


Itautec:

The gross revenue of the Itaú Unibanco Group for 2009 in relation to the sale of products and services under normal market conditions reached R$438,879, representing 21.0% of the Itautec Group’s consolidated revenue.


Itaú Unibanco:

There are no clients that account for more than 10% of the Issuer’s revenue.

b) Operating segments affected by the revenues arising from the client

The operating segments affected by the revenue arising from the clients of Itaú Unibanco’s main subsidiary companies are described below.


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Industrial Area:

Duratex:


Elekeiroz:


Itautec:

Itautec supplies products from all operating segments, such as banking automation, software, IT and services to Itaú Unibanco Holding S.A., the largest financial conglomerate in Brazil.


Itaú Unibanco:

There are no clients who account for more than 10% of the Issuer’s revenue.

The table below shows the concentration of loan, lease, other credit operations and the securities transactions of companies and financial institutions: R$ million

Loan, lease and other credit operations and securities of companies and financial

institutions (*)

December 31, 2009

December 31, 2008

December 31, 2007

Risk % of Total Risk % of

Total Risk % of Total

Largest debtor 3,351,437 1.1 7,950,623 2.5 1,404,737 1.0

20 largest debtors 34,875,013 11.3 44,192,721 14.0 14,879,896 10.3

50 largest debtors 55,367,738 18.0 69,383,770 22.0 24,403,844 16.9

100 largest debtors 73,494,272 23.9 90,844,640 28.8 33,102,327 22.9

7.5. Describe the relevant effects of the state regulation on the Issuer’s activities, specifically commenting on: a) Need for governmental permits for the performance of activities and history of the relationship with public authorities for obtaining such permits

The Issuer was incorporated in the Shareholders’ Meeting on May 5, 1966 under the name of Banco Federal Itaú de Investimentos S.A., and registered with the São Paulo Board of Trade under number 321.921 on June 23, 1966; its shares were admitted for trading on BM&FBOVESPA in June 1966.

The Issuer is not subject to any government authorization for the performance of its activities, but in its economic group there are controlled companies which are publicly held. Information on government authorizations related to such companies is provided below.


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Industrial Area:

Duratex:

Duratex S.A.’s activities are subject to government environmental authorizations (operations licenses), which are required for any industrial operation, and no specific authorization is required for its products and/or manufacturing processes. The reforestation activity in the State of São Paulo does not require a preliminary license; only the activities carried out in the States of Minas Gerais and Rio Grande do Sul require this license. According to our past experience in obtaining authorization from government bodies, effective legal procedures have been followed at all times, posing no risk to Duratex. Itautec:

The main acts of Itautec S.A. - Itautec Group that are subject to state government regulation on IT goods and automation are:

1. For the construction of an industrial site, environmental licenses are required and the floor plans of

construction works must be approved, and an occupancy permit must be obtained from the municipal government after the construction is completed.

2. Additionally, the state regulation on IT goods and automation industry, which must be complied with

for the company and its products to be entitled to the benefits from the IT Law and the so-called “MP do Bem” (a Provisional Measure that establishes tax incentives related to certain IT products), stipulates as follows:

a) The entitlement to the IPI (excise tax) rate reduction, established in the IT Law, depends on the

recognition of the company’s compliance with the PPB, by means of a Joint Ministerial Ordinance signed by the Ministries of Science and Technology (MCT), the MDIC, and the Ministry of Finance. This authorization is required for new products, and the approval process takes around six months, however, the MCT is implementing an electronic system that will significantly reduce the period for approval. With respect to a product whose PPB has already been approved, the inclusion of a new model is more simple, but it also depends on government approval, in this case, that of the MCT.

b) The IPI rate reduction benefit is granted on investments in research and development. These

investments must be confirmed and approved by the MCT through a detailed report submitted on an annual basis.

c) Law No. 11,774/08, which amended the so-called “Lei do Bem” (No. 11,196/05), provided the companies that benefited by the IT Law with the possibility to offset up to 160% of their expenditure on research and development for the purposes of determining taxable income and the CSLL tax base. To this end, the companies must annually send a report on the research and development activities for the analysis and approval of the MCT.

3. At the State of São Paulo level, the deferral of ICMS in the acquisition of inputs within the state or

imported by a São Paulo state manufacturer requires the production to comply with the PPB and the registration of the company with the São Paulo State Finance Department. Elekeiroz:

Elekeiroz S.A. depends on the issuance of licenses by government bodies to carry out its activities and, in its experience, it has not have any problems with obtaining and renewing such licenses.

The licenses issued by government bodies which are necessary for the performance of the Company’s

activities are the following: 1) License and Inspection Certificate from the Civil Police.


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Expiry date: In effect for the current year throughout the Brazilian territory. For 2010, the company has

taken the appropriate measures to renew it. 2) Certificate of Registration and Business License from the Federal Police. Expiry date: November 27, 2010 for the Camaçari unit; March 30, 2010 for the Várzea Paulista unit. The

certifcate for the Várzea Paulista unit is under renewal. The certificates are valid throughout the Brazilian territory.

3) Certificate from the Ministry of Defense. Expiry date: April 19, 2010, valid throughout the Brazilian territory. The certificate is already under

renewal. The certificate has an attachment that specifies the controlled products, as well as the quantities that may be used in each activity.

The abovementioned licenses and certificates are issued by the respective inspection bodies for the

purposes of authorizing specific activities with controlled products. Should the company not comply with the legal rules that regulate the activities that involve controlled

products, it could lose its respective license or certificate, thus making its activities unviable. 4) License from the São Paulo State Environmental Agency (CETESB – SP) (pollutant activities). Expiry date: February 20, 2010 (in phase of renewal), valid throughout the State of São Paulo. 5) Environmental License from CRA, State of Bahia Expiry date: valid for indefinite period (awaiting opinion from the environmental body) 6) Operation License for the Camaçari Petrochemical Complex, State of Bahia Expiry date: eight years from February 16, 2010


Itaú Unibanco :

In order to conduct its activities, Itaú Unibanco Holding S.A. depends on prior permission from the Central Bank, and is subject to all rules applicable to financial institutions.

Incorporated on September 9, 1943 under the name Banco da Metrópole de São Paulo S.A., registered

with the São Paulo Trade Board under the number 20.683 on April 22, 1944, the Issuer obtained a permit to operate as a financial institution on July 24, 1944. The group started to operate in the financial area on September 27, 1924, when the banking department of Casa Moreira Salles started to operate; later, it became Banco Moreira Salles and, in 1975, it adopted the name Unibanco. In the Itaú group, these activities go back as far as 1944, when the members of the Egydio de Souza Aranha family founded Banco Federal de Crédito S.A. in São Paulo.

b) Issuer’s environmental policy and costs incurred in complying with environmental regulation and, if

applicable, with other environmental practices, including the adherence to international environmental protections standards

Based on the sustainable practices of each company, Itaúsa has worked on the integration of the

"Sustainable Value Generation" business model.


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With progress in this integration, the development of the Group regarding issues such as consumption of water and energy, and emissions is possible to assess. Additionally, the Group's investments in and expenses on environmental protection have been quantified, and the review was done by an external consulting company contracted to carry out the inventory of greenhouse gas (GHG), waste and effluent disposal and management, as well as forest preservation, among other things.

The following are the investments in environmental protection, made by Itaúsa’s main subsidiaries in the

past three years:

Investiment in environmental protection (R$ thousands) 2009 2008 2007(1) Duratex S.A. (2) 10,586 12,327 13,617 Elekeiroz S.A. (3) 8,740 11,503 10,063 Itaú Unbanco Holding S.A. (4) 962 18,898 4,072

Itautec S.A. (5) 3,303 525 2,481

(1) Investments in and expenses on environmental protection for 2007 do not include Unibanco. (2) At Duratex S.A., investments were made in the treatment of effluents, collection of waste, forest preservation and other things. (3) At Elekeiroz, the amount shown refers to the disposal of waste, expenditure on environmental materials, the expenses of monitoring emissions, and the treatment of effluents.

(4) Investments in and expenses on environmental protection at Itaú Unibanco Holding S.A. in 2009 were concentrated on gas washing, consulting services for the inventory of GHG emissions the collection of recycling and waste disposal and management.

(5) Internal and external investments. NOTE: source: sustainability report

Itaúsa is a holding company, and therefore its main subsidiaries adopt specific policies for environmental

protection, according to the operational area.

Industrial Area:

Duratex:

The company adopts a strict policy on compliance with environmental, industrial and forest legislation, including that regarding the procurement of international certification of the origin of forest inputs and procedures applied in its reforestation activities.

All the environmental commitments of the company are formalized in an environmental policy, of which all the company’s collaborators are aware. As part of Duratex’s Environmental Management System, in effect in every industrial site (two of them, the Botucatu site and the Nursery of Lençóis Paulista have been ISO 14001 certified since 1997), there are strict operational controls and environmental targets for emissions,the generation of waste, the reduction of the consumption of electric energy, etc.

Duratex operations are located in the States of São Paulo, Rio Grande do Sul, Minas Gerais and Pernambuco, and therefore they are subject to strict federal, state and municipal laws, as well as to regulations and authorizations regarding environmental protection and population health. The company also complies with the regulation of the Ministry of Environment, at the federal level, and the regulatory instructions of bodies such as the Brazilian Association of Technical Standards (ABNT). As at March, 2010, about 500 laws, decrees, technical and regulatory instructions, resolutions, ordinances, technical standards, environmental regulatory standards, resolutions of environmental bodies etc. were applicable to and governed Duratex’s activities.


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Industrial activities are licensed by the state at two different levels, i.e., one for installation, remodeling or expansion of operations and another for the full operation of the activities proposed at the time of the application for installation. Such licenses are renewed every five years on average.

Concurrently, the company complies with the resolutions of the Brazilian master file of potentially polluting activities in force at the federal level, coordinated by the Brazilian Institute of the Environment and Renewable Natural Resources (Ibama). Likewise, it complies with laws and standards enacted by the States, wherever they have a nexus with the company's operations. Costs incurred and investments made in the management of Duratex’s environmental processes total approximately R$12 million/year.

It should be emphasized that the management of any type of waste, in compliance with NBR 10.004, is one of the most complex processes, involving a long chain of suppliers for the proper allocation of the waste.

The responsible operation of Duratex regarding the environment has already been recognized by public opinion and a number of bodies dedicated to nature protection. It was the first Latin American plant to achieve the Green Seal for its forests in 1995, a certification issued by the Scientific Certification Systems. It is also pioneer in achieving the Green Seal of the Forest Stewardship Council for sustainable management of forests, in 1996; this certification was renewed in 2007 and 2008.

Another noteworthy aspect is the contribution to third sector entities, universities, governments, companies and individuals by means of lectures, seminars and information made available in the corporate website, and support for research projects. Additionally, Duratex keeps a relationship channel with an audience interested in environmental issues via email.

Elekeiroz:

Elekeiroz operates in the chemicals segment. While performing its activities, the company is in search for environmental, social and economic sustainability, through technological innovation, assuring quality, productivity and competitiveness in the markets where it operates.

The Company’s environmental policy establishes the following commitments:

• Comply with the applicable environmental legislation, regulatory standards and other requirements set up by the organization regarding environmental issues.

• Prevent environmental damage from arising from its activities, through the use of environmentally adequate technologies to manage projects and develop new products.

• Establish permanent communication channels on environmental issues with stakeholders.

• Create standards and record actions related to environmental protection, on an auditable and transparent basis.

• Minimize the consumption of water and energy.

• Promote training and awareness for internal and external collaborators, so that their work shows responsibility towards environmental conservation.

• Establish, review and monitor annually the environmental objectives and targets specific to its activity.

Among the costs for compliance with the environmental regulation, noteworthy is the maintenance of an area specifically for managing environment issues in Várzea Paulista and Camaçari, in addition to other disbursements related to the disposal of waste, management of effluents, provision of services, etc. , which, in 2009, accounted for a disbursement of R$8.1 million.

Elekeiroz is a signatory of the Responsible Care Program, a worldwide program of the chemical industry, managed in Brazil by the Brazilian Chemical Industry Association, which is also engaged in environmental protection.


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Itautec: Itautec’s operations are located in the state of São Paulo, therefore, under the guidelines of the São

Paulo State Basic Sanitation, Technology and Environment Protection Company (CETESB), the São Paulo state environmental agency. The company also complies with the regulations of the Ministry of the Environment, at the federal level, regulatory standards of bodies such as ABNT, and municipal rules, decrees and laws. In February, 2010, 415 laws, decrees, technical and regulatory instructions, resolutions, ordinances, technical standards, environmental regulatory standards, resolutions of environmental bodies etc. were applicable to and governed Itautec’s activities.

Industrial activities are licensed by the state at two different levels, i.e., one for installation, remodeling or expansion of operations and another for the full operation of the activities proposed at the time of the application for installation.

All licenses are renewed every five years on average.

Concurrently, the company complies with the resolutions of the Brazilian master file of potentially polluting activities at the federal level, coordinated by Ibama. Likewise, it complies with laws and standards enacted by the states, wherever they have a nexus with the company's operations.

Costs incurred and investments made to manage Itautec’s environmental processes total approximately R$1 million/year.

It should be emphasized that the management of any type of waste, in compliance with NBR 10.004, is one of the most complex processes, since it involves a long chain of suppliers for the proper disposal of the waste.

As part of Itautec’s Environmental Management System, which has been ISO 14001 certified since 1997, there are goals defined for the reduction of wastes sent to industrial landfill. In 2009, 84% of all generated waste was sent for recycling, returning to the production processes of other industries, and only 16% was sent to accredited landfill.

All the environmental commitments of the company are formalized in an environmental policy approved by the CEO, of which all the company’s collaborators are aware.

Itautec is the first Brazilian company to have, within its production plant, an area for the environmental management of all electric and electronic waste, and it was a pioneer in managing this type of material. This experience has been shared with companies and government bodies that are in search for information on how to manage and dispose waste in the form of high technology equipment on an environmentally sound basis. In addition, the company makes available to the clients of the brand a recycling service for equipment at the end of its useful life.

Itautec was also the first Brazilian company to manufacture equipment in conformity with the RoHS European directive, which limits the use of certain chemical substances in electric and electronic products, such as lead, mercury, cadmium, and hexavalent chromium, among others.

Another noteworthy aspect is the contribution to third sector entities, universities, governments, companies and individuals by means of lectures, seminars and information made available on the corporate site on the Internet.


Itaú Unibanco:

Environmental issues affect operations and relationships with clients. Itaú Unibanco follows internationals standards, such as the Global Compact, and has its own policies to guide its activities.


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Operations

As regards operations (administrative buildings and branch network management), the bank follows the state and federal regulations on environmental issues. In 2009, the bank did not pay any fines nor were any monetary sanctions imposed in relation to non-compliance with environmental laws and regulations.

The bank seeks to have the best practices for the implementation of eco-efficiency throughout the conglomerate.

Itaú Unibanco’s Sustainability Policy provides the following guidelines on environmental aspects:

• Support market mechanisms and internal policies that promote respect for the environment, quality of life and the maintenance of biodiversity;

• Develop and improve mechanisms and internal policies on the management of the indirect environmental impacts of financial operations;

• Mitigate the direct environmental impacts of operations.

The eco-efficiency plan for the conglomerate takes into consideration the following items: • Use of materials; • GHG emissions (including an inventory audited in 2009); • Consumption of electrical energy; • Consumption of water; • Waste management (with a selective garbage collection program).

In the Itaú Unibanco Sustainability Annual Report it is possible to see data on consumption and practices regarding all of these items.

The following are among the outstanding environmental practices of the bank:

TI Verde (Green IT)

The energy efficiency actions aim at ensuring the proper use of space and reducing energy consumption. In 2009, the updating of hardware and mainframes, the consolidation and virtualization of servers, the acquisition of precision cooling machines, the virtualization of desktops and the replacement of CRT with LCD monitors saved about 1,900 MWh, which is equivalent to R$ 590,000.

The use of voice mail, smartphones, printing management tools and videoconference rooms – with average use of 160 times a month – avoided many trips, the consumption of resources and, consequently, GHG emissions. At the end of 2009, three telepresence rooms were implemented. They simulate a real meeting environment and, in 2010, another room will become operational, thus avoiding many trips.

The proper disposal of obsolete electronic equipment is an initiative that helps with the reuse of materials, which, after being refurbished, can be used as raw materials for other ends, without the overexploitation of natural resources, in addition to reducing the risks to health (some heavy metals used in such equipment can cause irreversible damages to the brain if they contaminate the soil or water tables), which could arise with the unsafe disposal of such materials. In 2009, the Bank sustainably disposed of of electronic garbage totaling around 118 tonnes as a result of the replacement of obsolete IT equipment. Of this, 98% was reused after being refurbished and the remaining 2% was treated in accordance with the guidelines of environmental bodies and the legislation in effect.

Bandeirantes Thermoelectric Power Plant (“UTEB”)

This power plant is managed by the bank and produces electricity from the biochemical gas generated and collected from the Bandeirantes sanitary landfill site, located at Km 26 of the Bandeirantes highway, in the


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district of Perus, São Paulo.It generated 107,703 thousand carbon credits in 2009, corresponding to 378,964 thousand tonnes of carbon that have not been discharged.

UTEB brings environmental benefits because it prevents the release of methane, one of the greenhouse gases, into the air. For this reason, it is authorized to issue carbon credits, which are sold to industrial companies in countries that have emission reduction targets agreed upon under the Kyoto Protocol.

Itaú Unibanco uses the renewable energy produced by UTEB to supply six administrative buildings. In 2009, total energy consumed at these units was 49,000 MWh. For 2010, the target is to supply another administrative center with the energy generated by UTEB and to consume 60,000 MWh.

Clients

Environmental issues are also taken into consideration in the relationship with clients. In 2009, the bank joined the Green Protocol, which is a commitment to only grant financing to companies or projects that are committed to sustainability.

Itaú Unibanco is making efforts to improve its social and environmental risk management, making assessments of its loan operations. The Bank is also the world leader of the Equator Principles. Appointed to the chair of its Steering Committee on September 23, 2008, it became the first financial institution to take this position, and remained in office until March 15, 2010.

Taking on this challenge allowed Itaú Unibanco to consolidate and share its experience in social and environmental risk management policies. In October 2009, for example, the Bank led, together with the International Finance Corporation (“IFC”), the financial arm of the World Bank for private investments, and with other banks that are part of the Steering Committee of the Equator Principles, led discussions at the meeting held as part of the IFC Performance Standards Review and Consultation process that took place in London.

The financial institutions that decide (voluntarily) to join the Equator Principles undertake to follow social and environmental criteria established by them for the concession of credit to projects of which the worth is equal to or higher than US$ 10 million (project finance operations, as defined in the Basel II Accord), in addition to the criteria established by the IFC Performance Standards and the Environmental, Health and Safety Guidelines defined by the World Bank and which are known worldwide.

The Equator Principles address, among other issues, the following: • The protection of human rights and community health, safety and security • The protection of the cultural property and heritage • Land acquisition and involuntary resettlement • Impacts on indigenous peoples, and their unique cultural systems and values • Pollution prevention and waste minimization, pollution controls, and solid and chemical waste

management • The sustainable management of natural resources and biodiversity • Labor and employment conditions

In addition to the commitments assumed with its adherence to the Equator Principles, Itaú Unibanco created, in 2007, the Social and Environmental Risk Policy on loans to corporate clients. The initiative represents the bank’s commitment to integrate social and environmental criteria into the credit decision-making process. In the application of the policy, the institution seeks to assess the social and environmental risk of financing projects and clients’ activities, the latter by means of an analysis of their social and environmental risk management abilities.

c) Dependence on relevant patents, trademarks, licenses, concessions, franchises, and royalty contracts for developing activities

The Issuer is the holder of the “ITAÚSA” brand, used in the performance of its activities. In its view the chance of losing this brand is very remote and there is no dependence on it for developing its activities.


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7.6. With respect to the countries in which the Issuer obtains substantial revenues, please identify :

a) Revenues arising from clients from the country where the Issuer is headquartered and their share in the Issuer’s total net revenues

Not applicable.

b) Revenues arising from clients from each foreign country and their share in the Issuer’s total net revenues

Not applicable.

c) Total revenues arising from foreign countries and their share in the Issuer’s total net revenues

Not applicable.

7.7. With respect to the foreign countries disclosed in item 7.6, please inform the extent to which the Issuer is subject to regulation in these countries and how this regulation affects the Issuer’s business

Not applicable.

7.8. Describe relevant long-term relationships of the Issuer that are not mentioned anywhere else in this form

None.

7.9. Supply other information that the Issuer may deem relevant

None.


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ITEM 8 - ECONOMIC GROUP 8.1. Describe the economic group in which the Issuer is inserted, indicating: a) Direct and indirect controlling shareholders Direct Controlling Companies Companhia ESA (by itself and in its capacity as usufructuary of the voting rights of the common shares held by the Egydio de Souza Aranha family, according to the Shareholders’ Agreement.) Indirect Controllers Egydio de Souza Aranha Family

Alfredo Egydio Arruda Villela Filho Alfredo Egydio Setubal Ana Lúcia de Mattos Barretto Villela Beatriz de Mattos Setubal Bruno Rizzo Setubal Camila Rizzo Setubal Carolina Marinho Lutz Setubal Espólio de Olavo Egydio Setubal Fernando Setubal Souza e Silva Gabriel de Mattos Setubal Guilherme Setubal Souza e Silva José Luiz Egydio Setubal Julia Guidon Setubal Luiza Rizzo Setubal Maria Alice Setubal Maria de Lourdes Egydio Villela Mariana Lucas Setubal Marina Nugent Setubal Olavo Egydio Setubal Júnior Paula Lucas Setubal Paulo Egydio Setubal Paulo Setubal Neto Ricardo Egydio Setubal Ricardo Villela Marino Roberto Egydio Setubal Rodolfo Villela Marino Tide Setubal Souza e Silva Nogueira

b) Subsidiary and affiliated companies c) Issuer’s ownership interests in group companies d) Group companies’ ownership interests in the Issuer e) Companies under common control


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The table below refers to subitems “b” to “e” above:

Date: 31/12/2009

Date: 30/06/2010

Denominação Social Equity share in voting capital

(%)

Equity share in capital (%)

Relationship tothe Itaúsa

No País Duratex S.A. 35,3 35,3 Subsidiary

Elekeiroz S.A. 98,2 96,5 Subsidiary Itaú Unibanco Holding S.A. 38,7 19,5 Subsidiary Itaúsa Empreendimentos S.A. 100,0 100,0 Subsidiary Itautec S.A. 94,0 94,0 Subsidiary Itautec.com Serviços S.A. 0,1 0,1 Subsidiary IUPAR - Itaú Unibanco Participações S.A. 50,0 66,5 Subsidiary No Exterior

ITH Zux Cayman Company Limited 100,0 100,0 Subsidiary

Denominação Social Equity share in

voting capital (%)

Equity share in capital (%)

Relationship tothe Itaúsa

No País Duratex Comercial e Exportadora S.A. - 0,1 SubsidiaryDuratex S.A. 24,7 24,7 Subsidiary

Elekeiroz S.A. 3,9 3,8 Subsidiary Elekpart Participações e Administração S.A. 12,0 12,0 Subsidiary Intrag Part Administração e Participações Ltda. 0,1 0,1 Subsidiary Itaú Gestão de Ativos S.A. - 0,1 Subsidiary Itaú Unibanco Holding S.A. 36,2 18,3 Subsidiary Itaucorp S.A. 99,9 99,9 Subsidiary Itaúsa Empreendimentos S.A. 0,3 0,3 Subsidiary Itautec S.A. 89,0 89,0 Subsidiary Itautec.com Serviços S.A. 0,1 0,1 Subsidiary IUPAR - Itaú Unibanco Participações S.A. 50,0 66,5 Subsidiary Paraná Companhia de Seguros 0,1 0,1 Subsidiary Rouxinol Administração e Participações Ltda. 79,5 79,5 Subsidiary Seg Part S.A. 81,8 81,8 Subsidiary No Exterior

ITH Zux Cayman Company Limited 100,0 100,0 Subsidiary


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8.2. Should the Issuer wish, please insert a flowchart of the economic group in which the Issuer is included, provided that it is compatible with the information presented in item 8.1

C: Book-entry common share P: Book-entry preferred share ( * ) in relation to this interest, the Shareholders’ Agreement included provisions on the usufruct by Companhia ESA of the voting rights in connection with the 976,272,159 common shares issued by Itaúsa – Investimentos Itaú S.A. (58.08% in the voting capital). Base Date: December 31, 2010 8.3. Describe corporate restructuring transactions, such as takeovers, mergers, spin-offs, acquisitions of shares, disposals and acquisitions of shareholding control, and acquisitions and disposals of important assets that the group has carried out

Item 6.5 of this Reference Form contains the information related to the main corporate events. 8.4. Supply other information that the Issuer may deem relevant None.

DURATEXITH ZUX

CAYMAN ELEKEIROZ ITAÚSA EMPREEND.

ITAUTEC Itaú UnibancoHolding IUPAR

100% 96,49% 100,00% 35,32% 19,48%94,01%66,53%

25,69%

Fundação Itaú Social Others

Itaúsa

14,96% C71,51% P

49,79% Total

Family Egydio de Souza

Aranha

Fund. Petrobrás Seg . Social

Petros Caixa de Prev. dos

Func. do Banco do Brasil - PREVI

11,2777% 0,14% P 4,42% Total

12,70% C0,41% P

5,13% Total5,08% P

3,13% Total

BlackRock, INC

5,16% P 3,16 % Total

Companhia ESA

100,00% C 100,00% Total

58,08% C ( * ) 17,93% P33,36% Total

2,99% C 1,15% Total


122

ITEM 9 - RELEVANT ASSETS 9.1. Describe the noncurrent assets that are relevant for the development of the Issuer’s activities, indicating in particular: a) Property, plant and equipment, including those under rental or lease agreement, identifying their location

Itaúsa owns part of the towers of Itaú Unibanco Centro Empresarial located at Praça Alfredo Egydio de Souza Aranha, 100 – São Paulo – SP, and which are rented to Banco Itaú Unibanco S.A. and its subsidiaries. b) Patents, trademarks, licenses, grants, franchises and technology transfer agreements, informing: (I) and (II) Duration and Territory Affected Brands

In Brazil, the property of a brand is acquired by means of registration validly issued by the INPI (National Institute of Industrial Propriety) and the exclusive use of it in Brazilian territory is assured to the holder. The registration of the brand is valid for ten years from the date it is granted by the INPI and may be extended for equal and successive periods.

The grant and due dates of the registrations and registration application deposits of the brands held by the Issuer in Brazil, as well as other information on said brands, are mentioned in Table I below.

Table I – Brands held by the Issuer.

Brand Form of presentation 1 Process # Class

Registration deposit/grant

date Registration

due date

ITAÚSA Word 828571473 36 July 14, 2006

ITAÚSA Word 828571481 35 April 07, 2009 April 07, 2019

(III) Events that may cause the loss of the rights to such assets

The events that may cause the loss of the rights to such assets are provided for by law. At the administrative level, brand registration applications may be rejected by the INPI in the situations provided for by Law No. 9,279/96, including as a result of opposition filed to the INPI by a third party that has a right of precedence over the brand or is the owner of the registration application or of a conflicting brand.

The registration of the brand terminates upon: (i) the end of its effective term without the due extension; (ii) a waiver by the brand’s owner, which may be total or partial with respect to the products or services marked by the brand; and (iii) its lapse, which may be total or partial.

1 The brands may have different forms of presentation. A word brand is one composed of one or more words in the broad sense of the Roman alphabet, including neologisms and combinations of letters and/or Roman and/or Arabic numbers. A combination brand is one composed of word and figure elements or, of stylized word elements. A figure brand is one composed only of figure elements, such as symbols, drawings, illustrations, images, etc. A three-dimensional brand is one composed of a plastic shape representing a product or packaging.


123

Any person lawfully interested may present a lapse request to the INPI if, five years after the date the brand registration is granted by the INPI, any of the following situations occur: (i) the brand has not yet been used in Brazil; (ii) the use of the brand has been interrupted for more than five consecutive years; or (iii) the brand has been used with modification that implies a change in its original distinct nature, which is contained in its respective registration certificate.

The registration of a brand may be declared void by the INPI by means of annulment administrative proceedings filed by the INPI itself or upon the request of a lawfully interested third party if the grant of such registration has not been done in compliance with the provisions in law. The annulment of the registration may be total or partial. The condition for the partial annulment is the fact that the subsisting part of the brand or of the description of the products or services, that is, the part that is not declared void, is considered as qualifying for registration.

In addition to the administrative proceedings mentioned above, the INPI or interested third party may file a lawsuit with the Judiciary Branch for the annulment of the brand’s registration five years after the date the registration is granted by the INPI. (IV) Possible consequences of the loss of such rights to the Issuer

In the case that the Issuer and/or its subsidiaries lose the rights over the brand named above, and if they can not stop third parties from using the same or similar brands, (the possibility of which is considered very remote) particularly in the same market segment, they would have to carry out their activities using other brands. Also, there would be the possibility of the Issuer and/or its subsidiaries having to defend themselves in lawsuits in the event of the violation of third parties’ rights. c) The companies in which the Issuer has an ownership interest and inform about these companies i. corporate name ii. head office iii. activities developed iv. Issuer’s ownership interest v. whether the company is a subsidiary or affiliated vi. whether it is registered with the CVM vii. book value of the ownership interest viii. market value of the ownership interest pursuant to the price of shares at the end of the year when such shares were traded on organized securities markets ix. appreciation or depreciation of such ownership interest for the past three years in accordance with book value x. appreciation or depreciation of such ownership interest for the past three years in accordance with market value pursuant to the price of the shares at the end of each year when such shares were traded in organized securities markets xi. amount of dividends received over the past three years xii. reasons for the acquisition and maintenance of such ownership interest


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We present below subitems I, II, III, IV, V, VI, VII and XI:

9.1.C.I, II and III 9.1.C.IV 9.1.C.V 9.1.C.VI 9.1.C.VII 9.1.C.XI

Corporate name

Issuer’s ownership interest

Subsidiary or affiliated company

Registry with the CVM

Book value of the ownership

interest

Amount of dividends/interest on capital received over the past three years

Interest in voting capital

(%)

Interest in capital (%) 2009 2008 2007

In the country

21,888

1,489

1,409

1,094

Itaú Unibanco Holding S.A.

36.2

18.3 Subsidiary Yes

11,489

1,401

1,310

1,030 Head office: Praça Alfredo Egydio de Souza Aranha, 100 - Torre Olavo Setubal - Brazil - São Paulo (SP) Activities developed: Multiple bank, with commercial portfolio

IUPAR - Itaú Unibanco Participações S.A.

50.0

66.5 Subsidiary No

8,535

51

-

- Head office: Praça Alfredo Egydio de Souza Aranha, 100 - Torre Olavo Setubal - Brazil - São Paulo (SP) Activities developed: Holding

Itaucorp S.A.

99.9

99.9 Subsidiary No

848

-

51

1 Head office: Praça Alfredo Egydio de Souza Aranha, 100 - Torre Conceição – 12th floor - Brazil - São Paulo (SP) Activities developed: Holding

Duratex S.A.

24.7

24.7 Subsidiary Yes

581

26

32

44 Head office: Avenida Paulista, 1938 – 5th floor - Brazil - São Paulo (SP) Activities developed: Manufacturing of laminated wood, plywood boards, hardboards and chipboards, and bathroom fixtures and fittings.

Itautec S.A.

89.0

89.0 Subsidiary Yes

363

11

15

18 Head office: Av. Paulista, 2028 – 15th floor (part) - Brazil - São Paulo (SP) Activities developed: Manufacturing of IT equipment.

Elekpart Participações e Administração S.A.

12.0

12.0 Subsidiary No

51

-

-

- Head office: Praça Alfredo Egydio de Souza Aranha, 100 - Torre Conceição – 7th floor - Brazil - São Paulo (SP) Activities developed: Wholesale of other chemical and petrochemical products.

Elekeiroz S.A.

3.9

3.8 Subsidiary Yes

14

-

1

1 Head office: Rua Dr. Edgardo de Azevedo Soares, 392 - Brazil - Várzea Paulista (SP) Activities developed: Manufacturing of intermediate products for plasticizers, resins and fibers.

Seg Part S.A.

81.8

81.8 Subsidiary No

7

-

-

- Head office: Praça Alfredo Egydio de Souza Aranha, 100 - Torre Itauseg - Brazil - São Paulo (SP) Activities developed: Holding.

Itaúsa Empreendimentos S.A.

0.3

0.3 Subsidiary No

-

-

-

- Head office: Avenida Paulista, 1938 – 17th floor - Brazil - São Paulo (SP) Activities developed: Development of real estate ventures.

Paraná Companhia de Seguros

0.1

0.1 Subsidiary No

-

-

-

- Head office: Avenida Eusébio Matoso, 891 – 20th floor - Brasil - São Paulo (SP) Activities developed: Insurance.

Itautec.com Serviços S.A.

0.1

0.1 Subsidiary No

-

-

-

- Head office: Rua João Boemer, 254 (part) - Brazil - São Paulo (SP) Activities developed: Wholesale of IT equipment.

Rouxinol Administração e Participações Ltda.

79.5

79.5 Subsidiary No

-

-

-

- Head office: Praça Alfredo Egydio de Souza Aranha, 100 - Torre Conceição – 7th floor - Brazil - São Paulo (SP) Activities developed: Holding. Itaú Gestão de Ativos S.A. Subsidiary No


125

- 0.1 - - - - Head office: Alameda Pedro Calil, 43 - Brazil - Poá (SP) Activities developed: Fund management on a contract or commission basis.

Intrag Part Administração e Participações Ltda.

0.1

0.1 Subsidiary No

-

-

-

- Head office: Praça Alfredo Egydio de Souza Aranha, 100 - Torre Conceição – 7th floor - Brazil - São Paulo (SP) Activities developed: Holding.

Duratex Comercial e Exportadora S.A.

-

0.1 Subsidiary No

-

-

-

- Head office: Av. Paulista, 1938 – 8th floor - Brazil - São Paulo (SP) Activities developed: Manufacturing of laminated wood, plywood boards, hardboards and chipboards.

Abroad

29

-

-

-

ITH Zux Cayman Company Limited

100.0

100.0 Subsidiary No

29

-

-

- Head office: P.O. Box 1034 KY1-1102 Harbour Place, 4th Floor, 103 - South Church Street - Grand Cayman - Cayman Islands Activities developed: Non-financial company

GRAND TOTAL

21,917

1,489

1,409

1,094

We present below subitems VIII and X:

Market value of the ownership interest (R$ million) Appreciation / Depreciation

December 30,

2007 December 30,

2008 December 30,

2009 2006 X 2007

2007 X 2008

2008 X 2009

Itaú Unibanco Holding S.A. 48,822 38,005 62,118 7.6% -22.16% 63.45% Duratex S.A. 2,327 770 2,615 -6.35% -66.92% 239.70% Itautec S.A. 639 329 548 -5.97% -48.54% 66.67% Elekeiroz S.A. 714 456 437 -5.27% -36.18% -4.00% Banco BPI S.A. 797 - - -14,87% - -

Other net assets 1,165 825 1,208 28.68% -29.18% 46.40% Note: amounts involve direct and indirect interest

We present below subitem IX:

Book value of the ownership interest (R$ million) Appreciation / Depreciation

December 30, 2006

December 30, 2007

December 30, 2008

December 30, 2009

2006 X 2007

2007 X 2008

2008 X 2009

Itaú Unibanco Holding S.A. 12,032 14,193 18,387 20,024 17.96% 29.55% 8.90% Itaucorp S.A 645 768 799 848 19.07% 4.04% 6.13% Duratex S.A. 410 448 514 581 9.27% 14.73% 13.04% Itautec S.A. 242 305 336 363 26.03% 10.16% 8.04% Elekpart Participações e Adm . S.A. 133 161 51 51 21.05% -68.32% 0.00% ITH Zux Cayman Company Ltd. 36 29 43 29 -19.44% 48.28% -32.56% Elekeiroz S.A. 9 12 14 14 33.33% 16.67% 0.00% Itaúsa Export S.A. 570 669 - - 17.37% - - Itaúsa Europa - Investimentos, SGPS, Lda. 108 129 - - 19.44% - -

Other interests 5 6 7 236 20.00% 16.67% 3271.43%Note: amounts involve direct and indirect interest.


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XII - Reasons for the acquisition and maintenance of such ownership interest

Itaúsa was incorporated to centralize the financial and strategic decisions of a group of companies, providing them with better expansion conditions. By operating in the financial and industrial areas, Itaúsa also maintains significant social institutions.

The main companies controlled by Itaúsa are: (i) Itaú Unibanco Holding S.A. and its subsidiaries in the

financial market: Itaú Unibanco and Itaú BBA; (ii) Duratex S.A., Itautec S.A. and Elekeiroz S.A., leaders in their respective industrial sectors.

Itaú Unibanco Holding S.A. is the biggest financial institution in Brazil and one of the largest in the

world. Itaú Unibanco has outstanding performance in Brazil and abroad, through a segmented business strategy, being engaged in activities in several economic areas and performing a leading role in many segments of its sector. This is possible due to the permanent search for sustainable results and trend detection.

With shareholders’ equity of around R$51 billion and accumulated net income of R$10.5 billion as at

December 2009, a significant capital basis is assured to Itaú Unibanco Holding, which is used to:

• Strengthen its support of Brazilian companies in their domestic and international operations; • Expand its operations in Brazil; • Support the growth of the loan operations of clients; • Compete in the international market; • Achieve important economies of scale in all segments; and • Exploit significant synergies between businesses.

Companies in the industrial area: Itautec was organized in 1979, due to Banco Itaú’s need to develop technology specifically for its

branches. Thanks to this initiative, Itaú was able to implement its self-service automation network, with hardware and software developed and manufactured by Itautec from the 1980’s.

Currently, Itautec provides a complete line of products for corporate and domestic markets:

microcomputers, servers, data storage, banking and commercial automation, self-service and technical assistance, infrastructure services, installations and outsourcing (the management of IT services). Its over five thousand employees are distributed among the plant in city of Jundiaí, in the state of São Paulo, administrative offices in the capital city of São Paulo, 34 units and seven supporting laboratories in the Brazilian territory, in additional to subsidiaries in a number of countries. Itautec’s share is 6% of the formal market of personal computers and notebooks in Brazil and is the Brazilian IT company with the largest presence abroad.

Duratex was incorporated in 1951, due to the initiative of the entrepreneurs Eudoro Villela, Nivaldo

Coimbra de Ulhoa Cintra and Alfredo Egydio de Souza Aranha. Its first industrial site started manufacturing fiberboards three years later, with Swedish technology. In 1972, the company acquired Deca, a plant organized in 1947, and transformed it into its division responsible for manufacturing metal and porcelain bathroom fittings and accessories with the Deca and Hydra brands.

With the approval of the merger between Duratex and Satipel, in Shareholders’ Meetings held in those

companies, the largest wood panel company in the Southern Hemisphere was created, being also the eighth in the world and the undisputed leader in the local market. Duratex, resulting from this transaction, is a Brazilian publicly-held company, with shares traded at BM&FBOVESPA and listed in the segment known as Novo Mercado.

Elekeiroz’s origin dates back to the end of the 19th century, with the foundation of a small

pharmaceutical laboratory named Queiroz Moura & Cia. In 1912, the company's name was changed to L. Queiroz, referring to the name of one of its founders. The change of this undertaking into a chemical plant relevant in the Brazilian scenario has been a continuous and consistent process. Elekeiroz was the pioneer in


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the production of several chemical products in Brazil, such as phthalic-anhydride, carbon disulfide, octanol and butanol from sugar cane alcohol and 2-ethylhexanoic acid, among others. In 2002, the company took over the shareholding control of the former Ciquine Cia. Petroquímica, located near the petrochemical complex of Camaçari, in the state of Bahia. This transaction assured more competitiveness to the current chemical conglomerate, anticipating the fast, irreversible and ongoing globalization movement.

9.2. Supply other information that the Issuer may deem relevant None.


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ITEM 10 - COMMENTS OF DIRECTORS 10.1. Directors should comment on: a. Financial and equity positions in general

Itaúsa, as a holding company, has as its main objective supporting the companies in which it holds an

equity interest, through studies, analyses and suggestions on the operating policy and projects for the expansion of these companies, obtaining resources to meet the related additional needs of risk capital through subscription or the acquisition of securities issued, to strengthen their position in capital markets and for related activities or to hold interest in these companies, except for needs restricted to financial institutions.

This model also guarantees that the principles that guide the holding are fully adhered by the Group

companies. Valuing human capital, ethics in business and the creation of value for shareholders are the values that drive the work of over 117,000 employess of Itaúsa and its subsidiary companies.

As a holding company, Itaúsa concentrates its interest in the capital of controlling companies in the

financial and industrial sectors, ranking second among the private Brazilian groups in terms of revenue volume. The main companies controlled by Itaúsa have stood out for many years in the several industries in which they operate, in the financial and manufacturing segments.

The way Itaúsa develops and manages each of its businesses is increasingly reflected in its impressive

results. At December 31, 2009, shareholders’ equity reached (in thousands) R$24,506,353 (R$22,340,470 at December 31, 2008 and R$17,238,241 at December 31, 2007), and assets totaled R$25,640,238 (R$23,688,941 at December 31, 2008 and R$18,359,170 at December 31, 2007).

We present below comments on the general equity positions of our main subsidiary companies: Duratex,

Elekeiroz, Itautec and Itaú Unibanco Holding. INDUSTRIAL AREA: DURATEX: The balances presented below for 2007 and 2008 refer to Satipel only, and those for 2009 are the

balances after the merger of Satipel Industrial and Duratex. The Company’s consolidated indebtedness increased in 2007, 2008 and 2009 as follows: R$304.6

million, R$420.3 million and R$1,408.9 million, respectively. The indebtedness increase between 2007 and 2008 is justified by the increase in investments in the construction of new plants aimed at expanding capacity. Between 2008 and 2009, the indebtedness increased mainly due to the merger of Duratex and Satipel, which consolidated the indebtedness of the two companies.

Regardless of the indebtedness level, managers believe that the financial position has improved and is

now more balanced since it is supported by improvements in equity: R$472.6 million, R$521.1 million and R$2,371.9 million for the respective periods, with the increase from 2008 to 2009 arising from the merger of Duratex and Satipel, which corresponds to a gross debt/equity ratio of 64.4%, 80.6% and 59.4%.

In 2009, debts in the amount of R$414.1 million were amortized and new debts in the amount of

R$417.5 million were contracted. The company had R$300.9 million in cash at the end of the period. Managers understand that the company arising from the merger of Duratex and Satipel, which is the absolute leader in their operating segments in the domestic market and among the ten largest global players, has a financial leverage capacity higher than the current levels of leverage ratio. At the end of 2009, net indebtedness, i.e. total debt less cash available, was R$1,107.9 million, equivalent to 1.46 x EBITDA, (earnings before interest, tax


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and depreciation), of the fourth annualized quarter (x4), which is considered low. In management’s opinion, in a limit situation, this indicator could be raised to 2.5x or 3x, without prejudice to the company’s solvency condition. Similarly, the leverage level measured by the net debt and shareholders’ equity ratio, equivalent to 0.46x at the end of 2009, is low.

Regardless of the financial leverage potential, the Company’s operating segments (wood panels and

finishing construction materials) experience strong demand, which may provide liquidity sufficient to withstand short-term and medium-term requirements and to implement the company’s long-term business plan.

ELEKEIROZ: Management considers that the Company’s current financial and equity positions are extremely healthy

for its field of activity. As a typical intensive capital manufacturing company, the Company operates according to conservative investment, credit and indebtedness policies so as to guarantee the full compliance of its obligations with regulation as well as the continuity of the Company as a going concern on a sustainable basis.

ITAUTEC: The Management of Itautec S.A. – Itautec Group understands that the Company’s financial and equity

positions are sufficient for business development in all the areas in which it operates with the necessary conditions to implement the Resource Application Plan that outlines for the investments for the coming years.

FINANCIAL SERVICES AREA: ITAÚ UNIBANCO:

2009

The Brazilian economy showed strong recovery, mainly in the industrial segment, from January. From then, industrial production grew for ten consecutive months, posting an accumulated increase of 19.1% until November as compared to the month of December 2008. However, despite the sequence of monthly increases, production in industry still accumulated a decrease of 9.3% between January and November 2009, as compared with the same period in 2008.

Strong growth is expected for the Brazilian economy in 2010, consolidating the scenario of recovery already noted in employment and investment data as from the third quarter of 2009.

The quick recovery of the domestic bank credit was essential for this recovery. In December, credit

reached 45% of GDP, after a historic series lower than this level. Reported below are the highlights of Itaú Unibanco’s performance in 2009; readers are reminded that

the results for 2009 reflect the consolidation of Unibanco operations throughout the year, whereas in 2008, the consolidation of Unibanco operations only affected results for the fourth quarter of that year.

Consolidated net income reached R$ 10,067 million, with a 21.4% return on average equity. Excluding

the non-recurring effects on income for the year, corresponding to an expense of R$ 424 million, the recurring net income amounted to R$ 10,491 million, with a return of 22.3%.

Consolidated shareholders’ equity totaled R$ 50,683 million at December 31, 2009, an increase of

16.1% in relation to the previous year.


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The total balance of assets amounted to R$ 608,273 million at the end of the year, a drop of 4.5% in relation to the previous year. The average recurring return on assets stood at 1.7% in 2009. The Basel ratio reached 16.7% at the end of the year.

Free, raised and managed assets increased 5.9% in relation to December 2008, totaling R$ 855,112 million. The growth of 22.7% in savings deposits was noteworthy, reaching R$ 48,221 million at the end of the period. Itaú Unibanco ended 2009 with a balance of R$ 333,869 million in managed assets.

Despite all the challenges faced in 2009, Itaú Unibanco maintained a high level of financial performance,

based mainly on the high level of segmentation and specialization of its operations in the market. The offering of differentiated financial products and services, specifically developed for many different types of clients and sold in exclusive platforms and channels, is an essential characteristic of its operations.

Itaú Unibanco’s credit portfolio, including endorsements and sureties, totaled R$ 278,382 million, an

increase of 2.4% from the previous year. Considering retail loans and financing operations only, it recorded growth of 14.0% in the portfolio balance, totaling R$ 177,491 million. On the other hand, it recorded a drop of 13.6% in loan operations carried out with large companies and of 12.6% in the portfolios in Argentina, Chile, Uruguay and Paraguay, a result of the appreciation of the Brazilin real in relation to foreign currencies and the recovery of capital markets, which once again came to represent an important area for the investment projects of large conglomerates.

Changes in the retail credit portfolio were characterized by the increase of R$ 10,352 million, or 20.4%, in operations carried out with very small, small and middle market companies, R$ 5,458 million, or 23.1% in credit card balance, R$ 4,351, or 9.1%, in vehicle financing operations and R$ 2,266 million, or 36.3%, in the real estate loan portfolio. Therefore, despite the reduction in the level of economic activity, Itaú Unibanco increased its credit granting and maintained its leadership position in many operating segments.

The prices of preferred shares in Itaú Unibanco appreciated 61.5% over 2009. The market value of Itaú

Unibanco at stock exchanges, calculated taking into consideration the average price of the outstanding preferred shares on the last trading day of the period, totaled R$ 175.1 billion at the end of December. According to Bloomberg, at December 31, 2009 Itaú Unibanco ranked ninth in the world bank rank, based on its market value. 2008

2008 was marked by the merger of the financial institutions Itaú and Unibanco which, on November 3, 2008, signed an agreement for the merger. This was the formal beginning of the construction of the largest private financial conglomerate in the Southern Hemisphere, with a market value that placed it among the 20 largest financial institutions in the world.

In 2008, the global financial market went through a unique period of significant changes with several

types of impact manifesting themselves in Brazil. The first effects were felt in August 2008 with the beginning of a strong process of devaluation of the real in relation to the US dollar and a continuous spell of adjustments at stock exchanges that started in the first half of the year. The situation became more serious in September with the retraction of the world’s credit market. The shortage of external credit lines led the Brazilian companies that operate abroad to seek credit in the local market. The credit offer maintained by large Brazilian banks reflected the effects of this new demand, the healthy preservation of liquidity and the expected increase in default rates. The combination of different factors, particularly external ones, caused a reduction in the level of expansion of the Brazilian economy.

The integration of the operations of Itaú and Unibanco took place in a favorable environment, created by

the international crisis itself, which offered opportunities to the organization and allowed it to become even stronger and more competitive. The merger is in line with the global consolidation movement among financial institutions, which reflects the permanent search for more solid operations, preparation for competition and the desire to ensure the offer of credit and the soundness of the system.


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Reported below are the highlights of Itaú Unibanco’s performance in 2008; readers are reminded that the net income for the period reflected the consolidation of Unibanco results for the fourth quarter of that year, whereas balance sheet accounts were fully consolidated at December 31, 2008.

Consolidated net income for the year totaled R$ 7,803 million, with a return of 23.8% on average equity.

Excluding the non-recurring effects on income for the year, corresponding to an expense of R$ 567 million, the recurring net income amounted to R$ 8,371 million, with a return of 25.5%.

Stockholders’ equity reached R$ 43,664 million at the end of 2008, an increase of 50.7% as compared to

December 2007. The consolidated assets of the new bank totaled R$ 637,202 million at December 31, 2008. The Basel

ratio stood at 16.1% at the end of December 2008. Free, raised and managed assets increased 74.3% in relation to December 2007, totaling R$ 807,652

million. The growth of 469.8% in time deposits was noteworthy, reaching R$ 135,901 million at the end of the year. Itaú Unibanco ended 2008 with a balance of R$ 258,252 million in managed assets.

Itaú Unibanco’s credit portfolio, including endorsements and sureties, totaled R$ 271,983 million at

December 31, 2008, representing an increase of 113.1% in relation to December 31, 2007. The merger with Unibanco had an important role in this increase, in particular the operations involving the extension of credit to companies, which grew 166.8% in relation to the prior year. The balance of the large companies segment grew 178.3% and that of the very small, small and middle-market company segment grew 147.2% in the period. Operations with credit cards grew 116.4% in relation to the prior year. The vehicle portfolio kept a significant rate of growth, of 61.6% in relation to 2007. The real estate loan portfolio added to the rural loan portfolio grew 87.8%, mainly because of the expansion of the former. Loan operations carried out by foreign branches (Argentina, Chile, Uruguay and Paraguay) increased 43.9%, mainly stimulated by foreign exchange variation and consolidation of Interbanco operations in Paraguay. Not taking into consideration the merger with Unibanco, the total balance of the loan and financing portfolio totaled R$ 180,562 million at December 31, 2008, representing an increase of 41.5% in relation to the prior year. 2007

The international financial markets showed strong volatility in the second half of 2007, affecting the economic activity in the United States. This crisis, which arose in the US high-risk mortgage market, triggered a fall in real estate prices. As a result, the US economy started to show signs of a slowdown from the last quarter of 2007 (the annual GDP growth went from 4.9% in the third quarter to 0.6% in the fourth quarter). Another indicator of this slowdown was the unemployment rate, which rose from 4.5% in the first half to 5% in December. Because of the losses caused by the real estate market, the US credit market shrank, which contributed to an increase in the slowdown of the US economy.

Despite the external turbulences in the second half of the year, 2007 was characterized by a great surge

in economic activity in Brazil, which resulted in an increase of 5.3% in Brazilian GDP. This growth was based on the expansion of investments and an increase in domestic consumption, supported by a decrease in interest rate.

The strong internal growth, together with the continuous appreciation of the real, increased the level of imports. However, the maintenance of commodities prices at a high level and the boost in global trade contributed to increase exports, maintaining a significant balance of trade for the country. The result was also influenced by the substantial inflow of investments. In order to avoid a more rapid appreciation of the currency, BACEN (Central Bank) increased its purchase of dollars, achieving a balance of reserves of US$ 180 billion.

The highlights of our performance for 2007 are described below.


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Consolidated net income for the year amounted to R$ 8,474 million, a return of 32.1% on average shareholders’ equity. Excluding the non-recurring effects for the year amounting to R$ 1,295 million, recurring net income was R$7,179 million, with a return of 27.2%.

Stockholders’ equity reached R$ 28,969 million at the end of 2007, growth of 22.9% as compared to

December 2006. The Basel ratio stood at 17.9% at the end of December 2007. Consolidated assets reached R$294,876 million, an increase of 40.6% in relation to December 2006. Free, raised and managed owned assets increased 29.7% in relation to December 2006, totaling R$

463,331 million. The growth of 22.2% in savings deposits is worth noting, reaching R$ 27,990 million at the end of the year. Itaú Unibanco ended 2007 with R$211,464 million in managed assets.

The loan portfolio, including endorsements and sureties, grew 36.2% in relation to the same period of

2006, reaching R$ 127,589 million. Some specific actions of the Bank, particularly in the vehicle segment, in addition to the significant growth in the demand for credit by individuals, caused a significant increase in the portfolio over 2007. Itaú Unibanco’s portfolio of non-mandatory loans to individuals grew 34.8% in the year, reaching R$ 54,416 million, and the segment of very small, small and middle-market companies grew 34.0% in relation to December 2006, totaling R$ 21,769 million.

b) Capital structure and possibility of redemption of shares or quotas, indicating:

There is no case for redemption of shares issued by the Company besides those which are legally provided for and, as the case may be, upon authorization from the Board of Directors. (*)

At December 31, 2009, capital stock comprised 4,347,214,678 book-entry shares with no par value

(3,885,885,269 in 2008 and 3,528,909,481 in 2007), of which 1,670,037,112 were common (1,491,119,451 in 2008 and 1,344,649,428 in 2007) and 2,677,177,566 were preferred without voting rights (2,394,765,818 in 2008 and 2,184,260,053 in 2007), but with the following advantages:

• Priority in the receipt of the annual minimum dividend of R$0.01 per share, non-cumulative,

guaranteeing a dividend equal to that of common shares; (*) • Tag-along rights, in the event of tender offer, at a price equal to 80% of the amount paid per share

with voting rights in the controlling stake. (*)

(*) There was no change in these issues over the period between 2007 and 2009.


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Changes in shares from 2007 to 2009 were as follows:

NUMBER

Common Preferred Total

Shares of capital stock at 12/31/2006

1,210,037,200

1,979,865,795

3,189,902,995

Cancellation of shares – A/ESM of 04/27/2007 -

(14,271,000)

(14,271,000)

Share bonus – A/ESM of 04/27/2007

121,003,720

196,559,480

317,563,200

Subscription of shares (approved at the ESM of 06/29/2007)

13,608,508

22,105,778

35,714,286


1.344.649.428

2,184,260,053

3,528,909,481


(24,695,600)

(24,695,600)


134,464,943

215,956,445

350,421,388


12,005,080

19,244,920

31,250,000


1,491,119,451

2,394,765,818

3,885,885,269


(4,404,840)

(4,404,840)


149,111,945

239,036,097

388,148,042


29,805,716

47,780,491

77,586,207


1,670,037,112

2,677,177,566

4,347,214,678

c) Payment capability in relation to the financial commitments assumed

Short-term minimum liquidity limits are determined according to guidelines set by the management members. These limits aim at ensuring adequate liquidity, as well as forecasted minimum needs. Management of liquidity makes it possible for us to simultaneously meet operating requirements and obligations, protect capital and take advantage of market and business opportunities when they arise.


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R$ thousands

2009 2008 2007 Short-term payment capacity Current liquidity: CA = 2,071,951

= 1.89 1,910,856 = 1.43 1,408,440

= 1.27 CL 1,097,651 1,338,220 1,106,997 Long-term payment capacity General liquidity: CA + LTR = 2,104,266

= 1.86 1,950,686 = 1.45 1,433,172

= 1.28 CL + LTL 1,133,885 1,348,471 1,120.929 Notes: 1) Data obtained from the Financial Statements 2) As Itaúsa does not have inventories, the amount of the Quick Ratio is equal to the General Liquidy Ratio. 3) CA: Current Assets 4) CL: Current Liabilities 5) LTR: Long-term Receivables 6) LTL: Long-term Liabilities

As noted in the chart above, the current ratio increased to 1.89 in 2009 from 1.27 in 2007, as well as the

general liquidity ratio, which reached 1.86 in 2009 from 1.28 in 2007. This slight improvement shows that the company is still comfortable with the commitments assumed as well as with the short (basically dividends/interest on capital) and long terms (basically tax contingencies).

d) Sources of financing used for working capital and investments in noncurrent assets Itaúsa did not use sources of financing for working capital or investments in noncurrent assets.

e) Sources of financing for working capital and investments in noncurrent assets that it intends to use to cover liquidity deficiencies

Itaúsa does not intend to use sources of financing for working capital and investments in noncurrent

assets to cover liquidity deficiencies.

f) Indebtedness ratios and the characteristics of the debts, also describing: Not applicable.

g) Limits for the use of the financing already contracted Not applicable.


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h) Significant changes in each item of the financial statements

Balance Sheet (In thousands of reals)

December 31, 2009

December 31, 2008

December 31, 2007

2009 X 2008 (%)

2008 X 2007 (%)

ASSETS

CURRENT ASSETS

2,071,951

1,910,856

1,408,440 8% 36%

LONG-TERM RECEIVABLES

32,315

39,830

24,732 -19% 61%

INVESTMENTS

21,930,357

20,154,828

16,723,773 9% 21%

FIXED ASSETS

7,332

7,485

7,905 -2% -5%

INTANGIBLE ASSETS

1,598,283

1,575,942

194,320 1% 711%

TOTAL ASSETS

25,640,238

23,688,941

18,359,170 8% 29% LIABILITIES

CURRENT LIABILITIES

1,097,651

1,338,220

1,106,997 -18% 21%

LONG-TERM LIABILITIES

36,234

10,251

13,932 253% -26%

STOCKHOLDERS’ EQUITY

24,506,353

22,340,470

17,238,241 10% 30% TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

25.640.238

23,688,941

18,359,170 8% 29%

Statement of Income (In thousands of reals)

January 01 to

December 31, 2009

January 01 to December 31,

2008

January 01 to December 31,

2007 2009 X 2008

(%) 2008 X 2007

(%)

OPERATING REVENUE 3,116,748 6,973,317 3,978,369 -55% 75% OPERATING EXPENSES (172,582) (155,237) (70,122) 11% 121% INCOME TAX AND SOCIAL CONTRIBUTION (35,492) 74,520 (14,247) -148% -623% PROFIT SHARING (6,635) (6,827) (6,423) -3% 6% NET INCOME 2,902,039 6,885,773 3,887.577 -58% 77%

Because it is a holding, the movements of Itaúsa are basically produced by investments, dividends/interest on capital payable/receivable, and financial investments. The composition of the main accounts/movements is as follows.

• Current assets – mostly composed of dividends/interest on capital receivable, and financial

investments. The growth is basically promoted by financial investments. • Investments – basically composed of direct/indirect interest in Itaú Unibanco Holding S.A.,

Duratex S.A., Elekeiroz S.A. and Itautec S.A., its movement is basically produced by the equity in earnings of these subsidiaries.

• Intangible assets – basically composed of goodwill on purchase of investments. The considerable growth in 2008 refers to the goodwill from the merger of Itaú Holding with Unibanco.


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• Current liabilities – basically composed of dividends/interest on capital payable. • Operating revenues – mostly composed of equity in earnings and income from financial

investments.

The significant events that occurred in 2008 and 2009 which are reflected in the income/equity of Itaúsa are as follows: In November 2008, the controlling shareholders of Itaúsa and Unibanco Holdings communicated to the market the signature of a merger agreement aimed at joining the financial operations of the banks Itaú and Unibanco. This is how Itaú Unibanco Holding S.A. was created. This merger produced a significant impact on Itaúsa figures, as noted in the headings Operating Revenues, Investments and Intangible Assets.

In June 2009, the merger of the companies Duratex and Satipel created the largest manufacturer of wood panels in the Southern Hemisphere. The company resulting from this transaction is a publicly-held company with Brazilian capital with shares traded on the BM&FBOVESPA and listed in the Novo Mercado. This merger exerted an impact of minor significance on Itaúsa.

Both mergers have involved efforts in the sense of obtaining gains from the synergy between the

companies. In Itaú Unibanco, the migration of Unibanco branches to the Itaú platform will bring benefits in both operational and client service aspects. Duratex, in its turn, established 14 committees to analyze systems from forest planting to manufacturing processes, in addition to market supply, individual skills, and infrastructure. The objective, in both cases, is to adopt the best practices and create value for shareholders.

10.2. Directors should comment on:

a. Results of operations, in particular:

ITAÚSA: I - Description of any important components of revenues

As the Issuer is a holding company, the main component of its revenue is equity in earnings arising from

investments in subsidiary companies.

II - Factors that materially affected operating income and expenses

In view of comments included in the previous item, we recommend that readers consult the reference forms of subsidiary companies. Presented below is the equity in earnings of subsidiaries for the past three years:


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Equity in earnings of subsidiaries: In thousands of R$

Companies December 31, 2009

December 31, 2008

December 31, 2007

Itaú Unibanco Holding S.A. 2,013,917 7,294,164 3,440,674 IUPAR - Itaú Unibanco Partic. S.A. (1) 730,209 (795,084) 0 Itaucorp S.A. 49,278 90,504 124,366 Duratex S.A. 84,782 92,843 83,655 Itautec S.A. 36,020 41,986 87,171 Elekpart Partic. e Administração S.A. 380 30,637 27,912 ITH Zux Cayman Company Ltd. (13,901) 13,885 (6,072)Elekeiroz S.A. 135 3,072 2,998 Other Affiliates (2) 123 101,683 (747)GRAND TOTAL 2,900,943 6,873,690 3,759,957

(1) On November 3, 2008, ITAÚSA and UNIBANCO HOLDINGS signed a merger agreement aimed at joining the financial operations of ITAÚ and UNIBANCO. This merger involved a corporate restructuring, which resulted in the migration of the current shareholders of UNIBANCO HOLDINGS and UNIBANCO to a publicly–held company – ITAÚ UNIBANCO, which control is shared between ITAÚSA and the controlling shareholders of UNIBANCO HOLDINGS, through IUPAR a non-financial holding created within this restructuring. (2) In 2008 and 2007, the amounts were made up of investments: Itaúsa Export S.A. and Itaúsa Europa – Investimentos, SGPS Ltda., sold to Itaú Unibanco on November 28, 2008. In 2008 and 2007, these included foreign exchange variation. We present below the comments on the results of the operations of the Issuer’s main subsidiaries:

INDUSTRIAL AREA: DURATEX: At the end of June 2009, revenue mainly came from sales of MDP and MDF wood panels. After the

merger with Duratex, described in item 6.5, the revenue for the second half of 2009 comprised that from operations of that company, including wooden fiber boards besides finishing products sold under the Deca brand. The merger explains the large revenue variation between 2007 and 2009.

Wood Division: The performance indicators of the wood panel industry depend on the economic activity

levels, unemployment rates, per capita income, salary income and interest policy for final consumers. The Brazilian market for wood panels is growing at average annual rates of 20% p.a. (MDF) and 5.1%

p.a. (MDP), a performance higher than the average GDP growth rates in the last ten years. This is due to a successful strategy for the launching/pre-marketing of superior products with multiple uses and applications, and greater cost competitiveness, when compared to the existing similar products.

The Brazilian wood panel industry holds an 80% share in the furniture industry (direct sales and retail)

with partnerships with furniture retail stores in Brazil (Casas Bahia, Lojas Cem, Magazine Luiza, Marabras, among others) to distribute finished products. The whole chain is interrelated with the civil construction market as the increase in the per capita consumption of wood panels depends on the fact that every new property corresponds to furniture renewals or new purchases. The activity of this whole chain depends on the Brazilian macroeconomic variables and global economic stability.

Duratex also operates in the segment of high-resilience laminated floorboards, a product developed for

the retail segment (specialized stores and dealers) in order to meet the strategy of adding value to the business, which requires great marketing, promotion and advertising efforts to strengthen the product positioning and add value to the Durafloor brand.


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Exports are significantly decreasing due to the global financial crisis, which caused loss of credibility in

the liquidity of the main markets in which Duratex operates (Europe and the United States), and currently represent approximately 5% of the shipping volume.

Duratex’s operating segments operate in markets characterized by the free competition among sound

and solid large and medium companies, in the Brazilian and international markets these are usually large players. Seasonality is low and low points occur in the final and early periods of the year because of the number of holidays and the commitment of the family income with year-end expenses.

Prices are managed gradually and through the periods following a trend of margin adjustments to cover

cost increases or demand for greater value-added products in line with the strategy of creating value for shareholders.

Duratex has the leading production capacity regarding wood panels in Brazil and its revenue is directly

dependent on shipping volumes and changes in prices and the mix of products. The Wood Division finished the last quarter with a 9.1% increase in shipping volume in relation to the

previous quarter. This situation was possible due to the improvement in the activity level in the second half of the year, which practically offset the weak performance of the first half caused by the slowdown of the furniture industry.

Exports are not very representative, with wooden fiber boards accounting for almost 80% of total exports

and in 2009 for approximately 5% of net income for the area. The year 2009 was marked by the merger of Duratex and Satipel, announced in June and completed in

August, which created the biggest manufacturer of wood panels in the Southern Hemisphere. With this merger, the new company, which is the leader in its operating segments, managed to reinforce its competitive advantages based on, among other factors, management quality, economies of scale, geographic diversity, complementary products and a highly integrated production model. Another highlight is related to the completion of the construction and the start-up, and ramp-up phases of three new plants for the production of wood panels, two for MDF and one for MDP.

Deca Division: The civil construction industry depends on several factors that determine its growth rate

and the most important are the GDP growth rate, workers’ income, unemployment rate, interest policy for consumers, real estate financing, housing deficit and the availability of credit to consumers. The GDP of the civil construction industry grew between 2006 and 2008 at a rate of 5.9% p.a., and in 2009 it showed a reduction of 6.3% according to data from the Brazilian Institute of Geography and Statistics – IBGE. Deca, in its turn, presented a 10.2% growth rate in shipping volume in the period between 2006 and 2008. In 2009, the growth rate was 12% as compared to the previous year. This means that Deca exceeded the performance achieved by the industry, including a market share expansion through the acquisition of plants of Ideal Standard in Brazil, and of Cerâmica Monte Carlo in the State of Pernambuco.

The Brazilian construction industry is composed of new housing construction and the remodeling of

existing units. The share of new construction in total construction varies based on the availability of credit and financing, interest rates and employment. Accordingly, in recent years, with the economic stability and growing employment rate, income and availability of financing, the new construction industry is growing more than the remodeling industry, which currently represents around 40% and 50% of the industry.

Renewals are served by the network of retailers throughout the country, represented by construction

home centers, and new construction is also served by retailers, but there is an increase in direct sales by producers of bathroom fixtures and fittings to construction companies.

Deca operates throughout Brazil meeting the demand for our products, from the more affordable to

those sold in the most specialized retail stores, where consumers look for different designs, sophistication and quality. For new constructions, Deca’s policy is to deal only with large construction companies, preserving its


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relationship with the distribution chain and, at the same time, enabling large construction works to be served with a customized approach. Sales to construction companies represent around 15% of its direct sales.

The export levels in this industry are relatively low as compared to the domestic market, basically due to

technical and installation differences between countries. In addition to the technical aspect, with the appreciation of the real in relation to the U.S. dollar in recent years, export prices suffered an important loss of competitiveness. Deca, which exports to more than 30 countries, decided to continue serving the markets already developed and not to search for new customers in this time of lower price competitiveness. Exports represent approximately 5% of sales volume.

The segments where Deca operates are subject to free competition in Brazil; bathroom fixtures are

produced by large, medium and small companies. The largest bathroom fixtures manufacturer in the world has operations in Brazil. In the metal segment, Deca competes with more than 200 companies in the country, generally small companies, regionally distributed, in addition to large and medium companies.

The market is highly competitive, which makes it difficult for foreign companies to share the domestic

market. The import level is low. Seasonality is low, as in the Wood Division. Deca manages its prices based on the main inputs for the manufacturing processes, such as copper,

energy, gas and labor. Deca has a strong market share in the segment of greater value-added products, and has been managing to recover its margins since the second half of the last year with the recovery of the activity level and the greater demand for its products.

Deca leads the domestic market in the production and sales of bathroom fixtures and fittings, particularly

in the luxury segment, aligned with its value-adding strategy, and is the benchmark in the market. With respect to bathroom fixtures, it is second in production volumes and the leader in the segments of higher value-added products, which provides it with a larger shipping mix and, consequently, more profitability.

2009 was difficult, especially the first half, due to the recession process and reduction of the price level,

which was required to increase, or even maintain, production and sales. In the second half of the year, volumes and prices began to recover, which allowed an increase in the consolidated year in relation to the previous year of 6% for bathroom fixtures and fittings and 46% for bathroom porcelain, as mentioned before.

I - Description of any important components of revenues Regardless the merger, the volume of shipped products and the sales mix, in addition to a price basis,

are important components of revenue. II - Factors that materially affected operating income and expenses In spite of the credit crisis initiated at the end of 2008, the Brazilian economy has been highly resistant

based on a healthy and not directly contaminated financial industry and on the macroeconomic conditions of the country. In addition, the government reacted on a timely basis adopting incentive measures, through the reduction of interest rates, and tax breaks, through the reduction of IPI tax rate for strategic industries, such as the automotive, white goods and civil construction industries and, at the end of the year, for wood panels and furniture. The civil construction industry benefited by measures that allowed the capitalization of construction companies, the reduction of bureaucracy in the system of access to credit by lower-income consumers, and the increase in the price limit for properties that can be financed through the severance pay fund FGTS ( the Brazilian pay fund for time of work). This set of incentives was successful, with ABECIP (the Brazilian Association of Real Estate Credit and Savings Entities)showing a record volume of contracted operations (686 thousand) corresponding to a financed amount of R$49,6 billion.


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Credit recovery with the extension of financing terms, in addition to income expansion and favorable interest rates (8.75% p.a. at the end of the period) contributed to the strengthening of the domestic market demand.

Accordingly, industries served by Duratex, represented by civil construction and furniture manufacturers,

benefited and recovered, especially from the second half of the year on. As soon as the country had demonstrated its economic recovery, Brazil attracted foreign capital again, which contributed to maintaining the appreciation of the real in relation to the U.S. dollar (R$1.7412 per U.S. dollar at the end of the year). However, the first half of 2009 was characterized by the reduction of sales volume as a result of the crisis initiated in the end of 2008. In addition to the shipping volumes falling, the consequences of this situation were the reduction of the industrial occupation level, inefficient dilution of fixed costs, and the need to reduce the price base, as a consumer incentive tool.

In the second half of the year, in spite of the improvement in the markets where the company operates

due to credit recovery in the furniture retail industry and recovery in the civil construction industry, the results were impaired by a series of extraordinary cash and non-cash events arising from the merger of Duratex and Satipel.

ELEKEIROZ: To better understand the analysis of the company’s results, it is important to have a clear idea of what it

produces and of its dynamics in the market where it operates. Elekeiroz is a manufacturer of chemical intermediary products for industrial use, which are acquired and used by other chemical and transformation companies, until the final product reaches the consumer. The petrochemical chain begins with oil, which originates naphtha (in refineries) that is turned into raw materials (in the petrochemical hubs – considered a first generation industry). This raw material is used in the production of chemical intermediaries (in the second generation industries, such as Elekeiroz) for other chemical or transformation industries, which prepare the products to be purchased by the final consumer. Using raw materials such as propane, orthoxylene, naphthalene, benzene, among others, Elekeiroz produces the so0called octyl alcohols (octanol, butanol, isobutanol, 2-ethylhexagonic acid), phthalic anhydride and maleic, several types of plasticizers and polyester resins. From methanol, a raw material produced from natural gas, the company produces formaldehyde and urea-formol resin, and from sulphur it produces sulphuric acid. The latter is classified as an “inorganic” product, whereas the other products are “organic” because their molecular structure contains carbon.

I - Description of any important components of revenues Elekeiroz produces and sells organic and inorganic chemical intermediaries. In 2009, the organic

products accounted for 51% of total sales volume and the inorganic products accounted for 49%, the same proportion as in the previous year. The domestic market is the main destination of the company’s sales, absorbing 90% of total shipment (92% in 2008).

The prices of organic products are determined by the company based on prices in the foreign markets,

particularly North American and European markets. Therefore, the company’s revenue is strongly linked to global market. The prices of raw materials in the domestic market are determined based on the naphtha price in foreign markets and, accordingly, the direct margins (selling price less raw materials costs) of the organic products are also linked to those in the foreign market.

Considering that the inorganic segment comprises non-tradeables, products consumed and produced

mainly locally, its price policy is less dependent on the foreign market and more linked not only to the performance and demand of the consuming segments, such as agriculture and many other chemical industries, but also to several local producers, which produce, among other things, sulfuric acid as a sub-product of other production lines. On the other hand, considering that the main raw material used for this product in Elekeiroz is sulphur imported due to the insufficient domestic production, significant price changes in the foreign market are directly reflected in the contribution margin of the final product.


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II - Factors that materially affected operating income and expenses The global financial and credit crisis, initiated in September 2008 and with intense effects in mid-2009, in

conjunction with the regular cycle of the global petrochemical industry, caused two immediate effects, which strongly impacted on the revenue of the company:

• A sudden drop in the international prices of chemical inputs and products, which was reflected in the Brazilian market;

• A reduction in the global demand for these products, increasing the excess in production that was already high due to the downturn cycle in the industry subsequent to the start-up of many new investments, which intensified the competition of imported products in the markets served by the Company and contributed to reduce physical sales and their amounts.

In addition to these two, a third factor affected even more the absolute amount of revenue and margins

of the Company, namely the exchange rate. In fact, in 2009, the strong rise of the real in relation to the U.S. dollar contributed to the relatively large drop in the prices (in reals) of petrochemicals in the Brazilian market because, besides being based on the low international prices, they were also negatively impacted by the appreciation of the real.

As a consequence of the combined effect, the total shipment of 422.6 thousand tons was 6.4% lower

than that in 2008, whereas the gross revenue of R$712.8 million and net revenue of R$571.2 million decreased 35% as compared to the previous year.

In the case of a general decrease in prices, the companies in general may be affected by the

devaluation of existing inventory, whether raw materials or finished products. Operating continuously, 24 hours a day, in most of its industrial plants and receiving inputs from the petrochemical hub in the Petrochemical Pole in Camaçari, State of Bahia, the company generally does not build up inventory of raw material or final products, that are potentially subject to significant changes in value, due to price fluctuations in the foreign market, that may materially affect the results during the Company’s fiscal year.

The exception is the imported sulphur used in the production of sulphuric acid, the acquisition of which is

made by a pool of buyers so as to fully load the ship, thus reducing acquisition and freight costs. The acquisition cycle of this input, from ordering it to receiving it at the industrial plant, can take four months, which assumes the acquisition of batches large enough to support the scheduled production for a definite term. Accordingly, because of the strong sulphur devaluation of approximately 90% in the foreign market, especially in the first months of 2009, the company made an adjustment in the related inventory value at the end of the first quarter since this trend was not expected to reverse.

As the physical volumes produced where not very large, Elekeiroz conservatively adjusted the inventory

value for other two products – sulphuric acid, as a direct consequence of the devaluation of its raw material, and iso-butanol, in fact a sub-product of the other alcohol production (2-ethyl hexanol and normal-butanol) and the inventory of which increased with the general demand reduction. The adjustments totaled R$ 43.4 million directly recorded in the statement of income. Other products were not significantly adjusted.

As a result of these facts, including the extraordinary adjustment of inventory, at the end of the year the

Company reported operating losses before equity in earnings in the amount of R$21.5 million, as compared to income in the amount of R$105.5 million in the previous year.

ITAUTEC: I - Description of any important components of revenues Itautec operates in the IT segment, providing microcomputers, automation, including technical

assistance, infrastructure services, installations and outsourcing, and distributing global brand products. The area in which it operates includes Brazil, where are concentrated the largest portion of its revenue arising from


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sales of products for banking and business automation, technical services, IT equipment and the distribution of global brand products through its subsidiary Tallard Technologies S.A.

Itautec operates abroad through subsidiaries in American and European countries selling Itautec

products, providing services and distributing global brand products. Revenue in foreign currency is subject to foreign exchange variation at the time of the translation into Brazilian currency, pursuant to the standards set out in the Technical Pronouncement CPC02 of the Accounting Pronouncements Committee, approved by CVM Resolution No. 534/08.

Although the disclosure of segment information is still being prepared, pursuant to CPC No. 22,

approved by CVM Resolution No. 582/09, certain disclosures have already been made in the Company’s management report, as described below:

Gross sales and services revenue by operating segment in the past three years was as follows:

Operating Segment Share of Gross Consolidated Revenue 2007 2008 2009 Automation 18.2% 13.2% 16.3% IT 35.3% 38.0% 35.1% Services 21.2% 20.3% 20.0% Distribution 25.3% 28.5% 28.6% Total 100.0% 100.0% 100.0%

II - factors that materially affected operating income and expenses In 2009, the main factors that materially affected the company’s operating income and expenses related

to the amounts shipped and foreign exchange variation. The world economy showed different scenarios in 2009. In the first quarter, the effects of the crisis in

the global financial system initiated at the end of 2008 were still being felt, with aversion for risk, general credit restriction and high unemployment rates, especially in Europe and the United States. In April, the largest economies and the main emerging countries showed signs of economic recovery, with the gradual expansion of the industrial activity indicators, a scenario that improved during the second half of the year. In Brazil, government measures for credit recovery, such as the reduction of the interest rate and tax exemption for some production industries, contributed to reduce the decline in the domestic economic activity. This scenario contributed to the continuity of investments of the financial institutions in technology, which was positively reflected in Itautec’s automation area.

The U.S. dollar exchange rate fluctuated significantly during the year, ending the year with a 25.5%

depreciation, which impacted on costs and sales prices of inputs and products, particularly in the IT segment, allowing the Companhia to adjust the margins affected by the significant appreciation of the U.S. dollar as from September 2008.

The year 2008 was marked by two very different scenarios, with the first half of the year characterized

by the continuity of the economic expansion cycle and the second semester showing the full reversal triggered by the development of the crisis in the global financial system, which caused a strong aversion for risk resulting in general credit restriction. In Brazil, there was a strong devaluation of the real in relation to the U.S. dollar, which contributed to the cost increase of imported inputs, impacting on the company’s margins and its operating income and expenses.

In 2007, the Brazilian economy maintained the growth rate, with a 6.0% p.a. expansion of the industrial

industry. The information systems industry followed this evolution favored by consumer credit expansion, a drop


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in average equipment prices arising from the 17.1% appreciation of the real in relation to the U.S. dollar, which contributed to increase company’s share in the formal market. In this scenario, the number of microcomputers marketed by Itautec increased 5.3%, but, with the drop in average equipment prices, the IT Area’s gross revenue decreased 12.1%, directly affecting the Company’s operating income and expenses .


I - Description of any important components of revenue II - Factors that materially affected operating income and expenses


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2009 X 2008 R$ million 2009 2008 Nominal

Variation Variation (%)

Income from financial operations before loan losses

46,147 23,367 22,779 97.5%

Result of loan losses (14,165) (12,946) (1,220) 9.4% Expense for allowance for loan losses (16,399) (14,280) (2,119) 14.8% Income from recovery of credits written off as loss 2,234 1,334 900 67.4% Gross income from financial operations 31,981 10,422 21,560 206.9% Other operating income/expenses (12,365) (11,123) (1,241) 11.2% Banking services fees 12,455 8,649 3,806 44.0% Income from bank charges 2,772 2,555 217 8.5% Result from insurance, pension plan and capitalization operations

2,432 1,307 1,124 86.0%

Personnel expenses (9,832) (7,632) (2,200) 28.8% Other administrative expenses (11,593) (7,921) (3,672) 46.4% Tax expenses (4,238) (2,336) (1,902) 81.4% Equity in earnings of affiliated/subsidiary companies 178 194 (16) -8.0% Other operating income 941 1,509 (568) -37.6% Other operating expenses (5,480) (7,448) 1,969 -26.4% Operating income 19,617 (701) 20,318 -2896.5% Non-operating income 430 206 225 109.2% Income (loss) before taxes on income and profit sharing

20,047 (496) 20,543 -4144.3%

Income tax and social contribution (7,421) 9,420 (16,842) -178.8% Profit sharing - statutory (1,695) (855) (840) 98.3% Employees (1,491) (748) (743) 99.4% Management members - statutory (205) (107) (98) 91.0% Minority interest in subsidiaries (864) (266) (598) 224.3% Net income (loss) 10,067 7,803 2,263 29.0%


In 2009, the income from financial operations before loan losses reached R$ 46,147 million, which corresponds to an increase of 97.5% in relation to 2008. This change was mainly caused by the following factors: (i) a significant increase in the average balance of loan and financing operations – in part associated with the consolidation of Unibanco operations – together with a change in the mix of clients and products. (ii) an extremely satisfactory treasury performance, as a result of the impact of the drop in interest rates and foreign exchange coupons in fixed income and foreign exchange positions in the local market. (iii) the impact of the strategy on the foreign exchange risk of the capital invested abroad, which aimed to neutralize the foreign exchange risk, by using derivative financial instruments, taking into consideration the tax effects. According to the Brazilian tax legislation, the gains and losses on foreign exchange change in investments in subsidiaries abroad are not taxable – in the case of gains, – and not deductible in the case of losses, being a permanent difference. Meanwhile, gains and losses on financial instruments used for hedging investments abroad are taxable or deductible. Itaú Unibanco’s hedge strategy totally counteracts these effects, since we it sets up a hedge at a volume higher than the hedged asset, so that the result of the total foreign exchange exposure, net of tax effects, is practically nil. Accordingly, in 2009, with the appreciation of the real in relation to other foreign currencies, Itaú Unibanco secured a gain from financial instruments while, on the other hand, in 2008 it noted a devaluation of the real in relation to foreign currencies, which gave rise to losses on financial instruments.


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Expenses for allowance for loan losses

Expenses for allowance for loan losses grew 14.8% in relation to 2008, totaling R$ 16,399 million. Over 2009, the impact of two events together resulted in an increase in these expenses. First Itaú Unibanco changed its mix of clients and increased the balance of funds allocated to retail loan and financing operations, which required a higher volume of allowance. Second, the international financial crisis increased the risk of clients and caused the expenses of allowances related to loan granting operations to grow.

Itaú Unibanco’s default ratio in terms of loans overdue for more than 90 days reached 5.6% in 2009,

whereas it stood at 3.9% in 2008. In particular there was an increase in defaults over the first half of 2009, but from that period the default in individual operations became stable at 8.1%, falling to 7.6% in the last quarter of the year. On the other hand, the corporate client operations reached peak default in the third quarter of the year, standing at 4.1% and returning to 4.0% in the fourth quarter of 2009.

The recovery of credit previously written off as losses grew 67.4% as compared to the prior year, as a

result of policies on collection adopted, which aimed to reintegrate clients that are current and non-current account holders into the use of of credit.

Income from banking service fees and bank charges

In 2009, income from banking service fees reached R$ 12,455 million, which is equivalent to an addition of 44.0% in relation to the previous year. Income from bank charges totaled R$ 2,772 million, which corresponds to an increase of 8.5% as compared to the previous year.

2009 was marked not only by the consequences of the international financial crisis but also by changes in regulatory frameworks, affecting income from banking service fees. This was because of a prohibition on collecting fees for renewing registration, which affected income from current account services. Despite the recovery of economic activity after the crisis, many companies continued to adopt conservative positions in relation to new investments and funding in the market. Such conservatism caused income from the placement of securities in capital markets and economic and financial advisory services to show a reduction, mainly in the first half of 2009. However, in the second half Itaú Unibanco noted growing recovery in these activities. In 2009, it also noted an increase in income from credit cards, as compared to 2009 and 2008, as a consequence of the popularization of the use of cards in business transactions and the expansion of the card-holder base. Also noted was an addition in income from asset management, which contributed R$ 2,201 million to income from banking service fees, considering that the balance of managed assets posted growth of 29.3% in relation to 2008, totaling R$ 333,869 million. In relation to income from bank charges, the reduction in income from credit/registration operations because of changes in practices relating to priority service fees, under the terms of the policy adopted by the Central Bank, was offset by the increase in income from service packages, in view of the increase in the volume of transactions. Results from insurance, pension plan and capitalization operations

In 2009, the result of insurance, pension plan and capitalization operations totaled R$ 2,432 million, an increase of 86.0% in relation to 2008. The result of insurance operations totaled R$ 1,451 million in 2009, an increase of 133.3% in relation to 2008. Basically, this change resulted from the consolidation of Unibanco operations, and the consequent increase in the volume of transactions. The result of life insurance and pension plan operations reached R$ 469 million in 2009, an increase of 53.8% as compared to 2008, also related to the merger with Unibanco. The results of capitalization operations totaled R$ 512 million in 2009, which is equivalent to growth of 34.4% in relation to 2008.


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Personnel and other administrative expenses

Personnel expenses totaled R$ 9,832 million in 2009, growth of 28.8% in relation to 2008. This growth was basically the result of the consolidation of Unibanco operations throughout 2009, which affected only one quarter of 2008. In addition, personnel expenses grew because of Collective Bargaining Agreements (“CCT”) which govern the adjustment of salaries in September of each year.

Likewise, the other administrative expenses reached R$ 11,593 million, which corresponds to an

increase of 46.4% in relation to 2008. In addition to the impact of consolidation over different periods of Unibanco operations, other administrative expenses were affected by the increase in expenses for the depreciation of data processing systems, furniture and equipment in general, and an increase in expenses for credit card sales in view of the expansion and restructuring of operations.

The total number of employees of Itaú Unibanco reached 101,640, which represents a reduction of 6.6%

in relation to 2008, a result of the streamlining of activities in the integration of Itaú and Unibanco, and the transfer of employees from Itaú Unibanco to Porto Seguro, related to the process of allying these companies.

Tax expenses

Itaú Unibanco’s tax expenses reached R$ 4,238 million, an increase of 81.4% in relation to 2008. The consolidation of Unibanco operations was the main factor that caused this change. In addition, the rise in taxable income, arising from changes in the mix of loans in the portfolio and a higher level of operating activity, caused tax expenses to grow. Other operating income/expenses

The reduction of 37.6% in other operating income is basically associated with the fact that in 2009 certain events did not repeat, such as the reversal of R$ 720 million of provision of CPMF (an extinguished Brazilian tax) on lease operations, the reversal of R$127 million of the provision for depreciation exceeding IT equipment and assets, and the reversal of R$ 64 million of provision related to the lawsuit referring to the payment of PIS (see the notes to the financial statements for 2008). On the other had, in 2009 the impact was felt of the reversal of R$292 million, for the program for cash or installment payment of federal taxes under Law No. 11,941/09.

In relation to other operating expenses, a reduction of 26.4% occurred between an expense of R$ 5,480

million in 2009 and an expense of R$ 7,448 million in 2008. In 2009, Itaú Unibanco did not note the repetition, in the same magnitude, of some events that occurred in 2008, such as (i) the setting up of R$ 1,331 million of provision for expenses related to the integration of Itau and Unibanco, (ii) the provision of R$ 531 million for health insurance, with the intent of covering possible future deficits, (iii) the amortization of R$ 1,543 million of goodwill on investments, essentially related to the merger of Itaú and Unibanco, and (iv) higher provision for tax and social security contingencies, as further discussed in the analysis of the results of operations for 2008 in relation to 2007. On the other hand, in 2009, the increase noted in credit card operations contributed to the growth of selling expenses, such as commission and prizes. Itaú Unibanco also increased provision for civil contingencies in the normal course of business. Income tax and social contribution on net income

Itaú Unibanco’s expense for income tax and social contribution on net income reached R$ 7,421 million in 2009, as compared to a deferred tax asset of R$ 9,420 million in 2008. The main factors that contributed to this change in income tax and social contribution on net income were the following: (i) in 2008, it had exclusions of R$ 6,131 million from its tax base, arising from the merger between Itaú and Unibanco, which did not repeat in 2009, and (ii) the effect of the foreign exchange change on investments abroad resulted in expenses of R$ 2,034 million in 2009 in comparison to a tax benefit of R$ 1,281 million in 2008. This change was partially offset by a greater tax benefit arising from the payment of interest on capital, reaching R$ 1,478 million in 2009, with an increase of R$ 778 million in relation to 2008.


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The expense for social contribution on net income payable in the short term was still unaffected by the rate increase from 9% to 15%, in view of the recognition of a deferred tax asset at an amount sufficient to cancel out this effect, taking into consideration that the management of the bank believes that it will receive a favorable decision in the unconstitutionality lawsuit filed by the CONSIF. 2008 X 2007

R$ million

2008 2007 Nominal amount

Change %

INCOME FROM FINANCIAL OPERATIONS BEFORE LOAN LOSSES 23,367 20,971 2,396 11.40% RESULT OF LOAN LOSSES -12,946 -5,495 -7,451 135.60% EXPENSE FOR ALLOWANCE FOR LOAN LOSSES -14,280 -6,563 -7,716 117.60% INCOME FROM RECOVERY OF CREDITS WRITTEN OFF AS LOSS 1,334 1,068 266 24.90% GROSS INCOME FROM FINANCIAL OPERATIONS 10,422 15,476 -5,055 -32.70% OTHER OPERATING INCOME/EXPENSES -11,123 -4,431 -6,692 151.00% BANKING SERVICES FEES 8,649 7,775 874 11.20% INCOME FROM BANK CHARGES 2,555 2,399 156 6.50% RESULT FROM INSURANCE, PENSION PLAN AND CAPITALIZATION OPERATIONS 1,307 1,219 88 7.20% PERSONNEL EXPENSES -7,632 -5,523 -2,109 38.20% OTHER ADMINISTRATIVE EXPENSES -7,921 -6,403 -1,517 23.70% TAX EXPENSES -2,336 -2,533 197 -7.80% EQUITY IN EARNINGS OF AFFILIATED/SUBSIDIARY COMPANIES 194 220 -26 -11.90% OTHER OPERATING INCOME 1,509 521 987 189.40% OTHER OPERATING EXPENSES -7,448 -2,107 -5,342 253.60% OPERATING INCOME -701 11,045 -11,747 -106.40% NON-OPERATING INCOME 206 2,873 -2,668 -92.80% INCOME (LOSS) BEFORE TAXES ON INCOME AND PROFIT SHARING -496 13,919 -14,414 -103.60% INCOME TAX AND SOCIAL CONTRIBUTION 9,420 -4,756 14,177 -298.10% PROFIT SHARING - STATUTORY -855 -744 -111 15.00% EMPLOYEES -748 -616 -132 21.40% MANAGEMENT MEMBERS - STATUTORY -107 -128 21 -16.10% MINORITY INTEREST IN SUBSIDIARIES -266 55 -321 -585.10%

NET INCOME 7,803 8,474 -670 -7.90%


Over 2008, Itaú Unibanco generated income from financial operations before loan losses of R$ 23,367 million, which corresponds to an increase of 11.4% in relation to the previous year. This increase mainly resulted from the broadening of the loans and financing portfolio, both for individuals and companies, with the accompanying change in the mix of products and clients, favoring operations that are capable of providing a higher risk-return ratio. In the year Itaú Unibanco had a fine treasury performance, because it seized market opportunities in an environment of higher volatility. Finally, the consolidation of Unibanco operations in the last quarter of 2008 also contributed to an increase in income from financial operations before loan losses.


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Expenses for allowance for loan losses

The expenses for allowance for loan losses reached R$ 14,280 million in 2008, growth of 117.6% in relation to the prior year.

In 2008, considering the economic outlook of crisis and its associated uncertainties, the criteria for

recognizing additional allowance for loan operations were reviewed, resulting in the inclusion of a portion related to the risks envisaged with the more pessimistic outlook for subsequent periods. From this analysis, Itaú Unibanco increased the total additional allowance, reaching R$ 7,791 million at December 31, 2008, whereas in 2007 this balance totaled R$ 2,150 million.

As well as this, the expenses for allowance for loan losses were affected by the consolidation of Unibanco operations in the fourth quarter of 2008, the steady growth in the loan portfolio, the impact of the international financial crisis on the risk ratings of large companies, and the risks involved in the very small, small and middle-market company portfolios and the individual clients portfolio.

Itaú Unibanco’s default ratio, for transactions overdue over 90 days, stood at 3.9% in December 2008

whereas it stood at 4.2% on the same date in the previous year. Models for credit risk management are continuously being developed, helping Itaú Unibanco to meet the strategic goals established by top management. The analysis of the behavior of different client clusters enabled it to develop a more intense relationship with those that had a low risk profile, thus permitting it to combine the strong increase in the portfolio volume with control over default ratios.

The income from the recovery of credit previously written off as loss totaled R$ 1,339 million in 2008,

equivalent to an increase of 25.3% in relation to 2007, as a result of the consolidation of Unibanco operations and collection efforts taken over the year.

Income from banking service fees and bank charges

The income from banking service fees reached R$ 8,649 million in 2008, an increase of 11.2% in relation to 2007. The main factors in the increase were: (i) expansion in the credit card customer base, and (ii) growth in the client base comprising current account holders. In addition, the consolidation of the Unibanco operations in the fourth quarter of 2008 contributed to the growth in income noted between the periods. The income from credit card operations posted an increase of 28.5% in relation to 2007, such an increase being the result of the intense focus of Itaú Unibanco on this product, in addition to the increased use of cards as a means of payment in sales transactions. Meanwhile, the growth in the client base of current account holders raised income from current account services, in view of the use of the Maxiconta package and receipt services.

The income from bank charges totaled R$ 2,555 million in 2008, an increase of 6.5% in relation to 2007.

This increase was mainly the result of the consolidation of the Unibanco operations. The introduction by the Central Bank of Brazil of changes in the collection of basic service charges, from May 2008, in addition to the adoption of a client loyalty policy in view of tougher competition, were the main factors that determined the reduction in income from bank charges between 2008 and 2007, excluding from consideration the contribution of Unibanco. Results of insurance, pension plan and capitalization operations

In 2008, the results of pension plan and capitalization operations totaled R$ 1,307 million, an increase of

7.2% as compared to 2007. This increase was basically caused by a rise in the volume of transactions between the periods. The results of insurance operations totaled R$ 622 million in 2008, an increase of 12.5% as compared to 2007. The results of life and pension plan operations reached R$ 305 million in 2008, equivalent to a reduction of 23.0% in relation to 2007, due to adjustments arising from the merger with Unibanco. The results of capitalization operations totaled R$ 381 million in 2008, an increase of 41.1% as compared to the previous year.


149

Personnel and other administrative expenses

Personnel expenses totaled R$ 7,632 million in 2008, growth of 38.2% in relation to the previous year. This change was in part related to the consolidation of Unibanco operations in the fourth quarter of 2008. In addition, personnel expenses grew in view of the maintenance of actions for promoting the organic growth of operations, of which the widening of the service network stands out. Thus the total number of bank branches increased by 134, (not taking into consideration the contribution of Unibanco), which corresponds to an increase of 4.8% in relation to 2007.

Other administrative expenses totaled R$ 7,921 million, which corresponds to an increase of 23.7% in

relation to 2007. The consolidation of Unibanco operations in the fourth quarter of 2008 was the main factor that determined this change. Tax expenses

In 2008, tax expenses reached R$ 2,336 million, a decrease of 7.8% in relation to the previous year. This decrease in tax expenses was mainly caused by the end of the payment of CPMF, which entered into effect on January 1, 2008. Other operating income/expenses

Other operating income reached R$ 1,509 million in 2008, growth of 189.4% in relation to 2007. In 2008 occurred the reversal of R$ 720 million of provision for CPMF on lease operations. Itaú Unibanco also suffered the impact of the reversal of R$ 127 million of provision for exceeding depreciation of IT equipment and assets, and R$ 64 million arising from a lawsuit for the restoration of undue payments of PIS Gross Operating Income (“ROB”) exceeding PIS Repique (PIS calculated on income tax payable), for the periods July 1988 to May 1989. In November 2002, a final and unappealable decision was awarded recognizing the right to credit and in September 2008 the expert computation for settlement of the decision was completed.

Other operating expenses totaled R$ 7,448 million in 2008, which corresponds to an increase of 253.6%

in relation to expenses of R$ 2,107 million in 2007. Over 2008, Itaú Unibanco recognized R$ 1,331 million in provision for expenses related to the Itau Unibanco integration, provision of R$ 531 million for health insurance, with the intent of covering possible future deficits, amortization of R$ 1,543 million of goodwill on investments, essentially related to the merger of Itaú with Unibanco, and a higher amount of provision for tax and social security contingencies, of which R$ 290 million related to CPMF on transactions carried out with clients, R$ 402 million related to the deductibility of goodwill, R$ 158 million related to CPMF on the transfer of securities, R$ 18 million was associated with ISS on bank operations, and R$ 199 million was payable to social security (National Institute of Social Security, the INSS) on profit sharing in excess of the collective bargaining agreement amount.

Income tax and social contribution on net income

In 2008, Itaú Unibanco recorded a deferred tax asset of R$ 9,420 million as compared to an expense of R$ 4,756 million in 2007. The main factors that contributed to this change in income tax and social contribution on net income were as follows: (i) in 2008, Itaú Unibanco recorded exclusions from its tax base of R$ 6,131 million resulting from the merger between Itaú and Unibanco, (ii) the impact of gains and losses on foreign exchange variation, associated with new investments abroad, resulted in a tax benefit that totaled R$ 1,421 million in 2008, a change of R$ 1,961 million as compared to 2007, and (iii) it had a greater tax benefit on payment of interest on capital, totaling R$ 655 million, in 2008, growth of R$ 573 million in relation to 2007.

The expense for social contribution on net income payable in the short term does not take into

consideration the effect of the rate increase from 9% to 15%, in view of the recognition of a deferred tax asset at an amount sufficient to cancel out such an effect, taking into consideration that the management of the bank believes that it will receive a favorable decision in the unconstitutionality lawsuit filed by CONSIF.


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b) Changes in revenues arising from changes in prices, foreign exchange rates, inflation, changes in volumes and introduction of new products and services

ITAÚSA: Itaúsa, as a holding, does not present any changes in revenue arising from changes in prices, foreign

exchange rates, inflation, changes in volumes or the introduction of new products and services; however, the effects of these changes affect its main subsidiaries’ income and expenses, namely that of Duratex S.A., Elekeiroz S.A., Itautec S.A. and Itaú Unibanco Holding S.A.

The effect of these changes regarding the Issuer’s main subsidiaries are described below: INDUSTRIAL AREA: DURATEX: The Company’s performance from 2007 to June 2009 was mainly based on sales of MDP panels. Since

July 2009, the results arising from Duratex’s operations in MDF, fiberboards and bathroom fixtures and fittings, have been included. At the end of 2008, a new MDF line entered into operation with an annual production capacity of 350,000 m3. In the following year, a new MDF line with an annual production capacity of 800,000 m3 and a MDP line with an annual production capacity of 700,000 m3 were inaugurated. As a result of the merger of Duratex and Satipel in August 2010, Deca’s operations became part of this new structure.

The evolution of the shipping lines, revenue and net revenue per unit by operating segment is as follows:

ELEKEIROZ: In 2009, gross revenue was R$712.8 million and net revenue was R$571.2 million, a decrease of 35%

as compared to the previous year. The most significant portion of this drop was due to international prices, particularly that of naphtha,

which, in Brazil, is the main input for the whole chain of petrochemical companies with a strong influence on the prices of the products of this industry. The main suppliers of Eleikeroz, which is a manufacturer of second generation chemical intermediary products, are the petrochemical complexes, companies that process the petrochemical naphtha, the average price of which in the international market in 2009 was 35% lower than in 2008 (US$524 compared to US$807).

This impressive drop in prices was reflected in all products of the petrochemical chain, and these prices

remained down due to the excess of production in global markets, which were strongly affected by the financial crisis and the usual cycle of slowdown in the industry.

The Brazilian chemical industry making products used by manufacturing companies, the comparison

basis of 2008 for which is low as a result of scheduled maintenance stoppages of the main petrochemical complexes producing raw materials in that year, showed an increase of only 3.5% in physical volume at the end

2007 2008 2009 Volume shipped (in 1,000 parts/year) - - 10,787Deca Division Net revenue (in thousands of R$) - - 418,197 Net revenue per unit (in R$/part) - - 38.77 Volume shipped (in cubic

meters/year) 693,044 767,314 1,470,854

Wood Division Net revenue (in thousands of R$) 418,980 520,173 1,019,599 Net revenue per unit (in R$/cubic

meters) 604.55 677.91 693.20


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of 2009, but the average prices were 19.6% lower and the margins were reduced, thus decreasing the profitability of the companies in the industry in general.

The strong appreciation of the real in relation to the U.S. dollar also contributed to the relatively strong

drop in prices in reals of petrochemicals in the Brazilian market because, in addition to being based on low international prices, they were also negatively impacted by the appreciation of the real.

The drop in global demand also increased the competitiveness of imported products in the local markets

served by the company, resulting in strong pressure in the first months of 2009. As from the second quarter of 2009, the Brazilian economy in particular, as a result of public policies of

transitory tax exemption and stimuli used to increase credit, was able to add new consumers to the market and preserve the purchasing power of existing consumers, thus maintaining the domestic market in a relatively strong prosition. In fact, the total physical shipping of 422,600 metric tons of Eleikeroz products in 2009 was only 6.4% lower than in the previous year, thus showing recovery and a tendency to reach the volumes shipped in the pre-crisis period because, although the shipping dropped 32.1% in the first quarter, it was 41.2% higher in the 4th quarter than in the respective periods of 2008.

No new products or services were introduced during the year. ITAUTEC: The company’s revenue is directly affected by changes in sales volume and foreign exchange variation

(as a significant portion of the components used in the production of automation and IT equipment are imported), changes in the volumes sold and the launch of new products.

The company’s gross revenue from sales and services in 2009 amounted to R$2,087.6 million, 5.1%

higher than in 2008. This result was mainly due to the larger volume of banking automation equipment sold as a result of the bidding processes won in the first half of 2009. In that year, 7,700 ATMs were shipped, 90.9% higher than in 2008. A factor that caused the company’s revenue to change was the strong variation of the real-US dollar exchange rate in the year. The real appreciated 25.5% in relation to the US dollar in 2009, which was reflected in the costs of inputs and sales prices of products, mainly in the IT segment, which started to drop in September in particular in the retail of notebooks.

In 2008, the scenario was favorable until the beginning of September, when the crisis in the international

financial system became aggravated, the Company showed impressive growth in the IT segment, mainly sustained by sales of notebooks, which totaled 213,200 units sold, an increase of 183.7% in relation to the previous year, resulting in an increase in gross revenue of about 25.7%. In the automation segment, the number of ATMs sold dropped. Sales in the domestic market totaled 3,600 equipment units, a volume 21.7% lower than in the previous year, resulting in a drop in gross revenue of around 21.9%.

In 2007, gross revenue from sales and services totaled R$1,702.3 million, showing growth of 3.5% in

relation to 2006, a result that was positively influenced by the increase of 19.3% in the number of ATMs sold, which provided R$265.5 million in revenues for the Automation Area.

The drop in the average price of IT equipment, although contributing to the increase of 5.3% in the

volume of equipment shipped, contributed negatively to the revenue of the area, which dropped from 12.1% in relation to the previous year.


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FINACIAL AREA: ITAÚ UNIBANCO: (The comments below refer to the items 10.1.b e 10.1.c) There was no significant variation in income attributable to changes in the prices of our main inputs and

products, exchange rates and inflation in the reporting periods (2009, 2008 and 2007). It should be noted that we adopt a strategy towards management of the foreign exchange risk from the

capital invested abroad with the objective of not allowing impacts on income arising from exchange variation. In order to meet such objective, the foreign exchange risk is outweighed by the use of derivative financial instruments. Our hedging strategy also takes into consideration all tax effects exerted: those related to the non taxation or deductibility of the foreign exchange variation in the respective moments of appreciation or devaluation of the Real in relation to foreign currencies, and those arising from the derivative financial instruments used.

Market risk is the possibility of incurring losses arising from fluctuation in the market values of positions

held by a financial institution, as well as from its financial margin, including the risks of transactions subject to variation in foreign exchange and interest rates, and share and commodity prices.

The structural gap, composed of commercial transactions and respective financial instruments, has been historically steady and with minor fluctuations because it mainly comprises the assets and liabilities of retail and derivative transactions used as hedge against the market risk arising from these operations.

In 2009, the Value at Risk (VaR) of the structural gap for the end of the period and the maximum VaR decreased significantly due to the increased market stability over the period and our conservative management of this portfolio composition.

Our flow book trading desk trades in the domestic and foreign markets, specifically to hedge the exposure of our portfolio’s market risk. The VaR of these operations is sensitive to market conditions and the expectations of portfolio managers, and may result in significant day-to-day changes. However, the liquidity of the markets for these trading instruments and our active management of the flow book trading desk portfolio allow the reversal of positions within a short period, which reduces market exposure in cases of economic instability.

In 2009, the main positions that contributed to our flow book trading desk risk exposure were related to fixed rate, Libor and equity (variable income transactions).

The proprietary trading desk takes directional trading positions in order to optimize our risk adjusted return on capital. In 2009, our treasury continued to play its role as a pricing source for commercial operations and taking advantage of arbitrage opportunities. The effective control over and management of market risk brought comfort to the institution for efficiently managing the changes in scenarios, as well as bringing about continuous improvement in terms of diversification and sophistication on the operations performed.

The last quarter of 2009 was marked by the improvement in global financial markets and the Brazilian

economy. The values of risk assumed by the proprietary trading desk did not change significantly in 2009 compared to 2008.

We maintained the policy of operating within low risks in relation to capital. The amounts at risk of our business units were affected by the reduction in the volatility levels of the main internal and external risk factor throughout the period, as well as by the conservative management of the portfolio.

The management of the diversity of risks of business units has been efficient and significant, enabling such units to maintain a total exposure to market risk that is reduced as compared to capital.


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In addition, we adopted a strategy on management of foreign exchange risk of capital invested abroad which objective is not allowing impacts on the result arising from foreign exchange variation. For this purpose the foreign exchange risk is neutralized by the use of derivative financial instruments.

Our hedging strategy considers all tax effects: non taxation when the Real appreciates or deductibility

when the Real devaluates, or arising from the derivative financial instruments used. In period when the parity variation between the Real and foreign currencies is considerable, there is a

significant impact on several financial income and expenses. The financial margin (arising from the trading of financial assets through proprietary positions

(segments), the gap management of currencies, interest rates and other risk factors, the opportunities for arbitrage in the foreign and domestic market, and the marking to market of financial assets and named Financial Margin with the Market) totaled R$ 5,621 million in 2009, R$ 1,585 million in 2008 and R$ 1,187 million in 2007, with the addition of 254.6% in relation to 2008 and 33.5% in relation to 2007. Also in relation to 2007, we did not make any analysis of sensitivity, established later in 2008.

In addition to the variation of R$ 4,036 million as a result of the comparison between 2009 to 2008,

treasury delivered a fine performance, as a result of the impact of foreign exchange coupon on fixed-income and foreign exchange positions in the domestic market. Another important factor which contributed to this variation was the impact arising from our strategy on management of foreign exchange risk of the capital invested abroad, which aims at neutralizing the foreign exchange risk, by using derivative financial instruments, also taking into consideration the tax effects.

In 2008, we noted an addition of R$ 398 million in relation to the previous year, basically due to the fine

performance of treasury, in view of the market opportunities which were taken up in an environment of higher volatility. Finally, the consolidation of Unibanco operations in the last quarter of 2008 also contributed to increase the Financial Margin with the Market.

According to the criteria for classification of transactions set forth in BACEN Resolution No. 3,464/07 and

Circular No. 3,354/07, and the New Capital Accord - Basel II, the financial instruments of Itaú Unibanco Holding S.A., including all transactions with derivatives, are separated into trading and banking portfolios.

The sensitivity analyses, shown below, do not predict the dynamics of the operation of the risk and

treasury areas, because once loss related to positions is found, risk mitigating measures are quickly taken, minimizing the possibility of significant losses. In addition, we point out that the presented results do not necessarily translate into accounting results, because the study's sole purpose is to disclose the exposure to risks and the respective protective actions, taking into account the fair value of financial instruments, irrespective of the accounting practices adopted by the institutions.

The trading portfolio consists of all transactions, including those involving derivatives, held with the

intention of being traded or to provide hedging for the other financial instruments of this strategy. These are transactions for resale, obtaining benefits from price movements, actual or expected, or from arbitrage. This portfolio has strict limits set by the risk areas and is controlled daily.


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Trading and banking portfolios Exposure 12/31/2009 (*) 12/31/2008 (*)

Risk factors Risk of variation in: Scenarios Scenarios

I II III I II III

Fixed rate Fixed rate in real (1)

(447)

(877) -

(275)

(528)

Foreign exchange coupons Rates of foreign exchange coupons -

(1)

(1) -

(30)

(59)

Foreign currencies Exchange variation (1)

(29)

(57)

(2)

(81)

(162)

Price indices Rates of price indices coupons -

(6)

(11) -

(35)

(62)

Long-term interest rate Rate of TJLP coupons - - - -

(12)

(25)

Reference rate Rate of TR coupons 2

(73)

(99) -

(11)

(20)

Variable rate Share price 7

(108)

(217)

(5)

(113)

(225)

Total without correlation (663)

(1,262)

(556)

(1,082)

Total with correlation (432)

(822)

(370)

(717)

The banking portfolio comprises transactions that do not fit into the trading portfolio concept and are

typically banking transactions of the institution’s business lines and their respective hedges, which may or not be carried out with derivative financial instruments. Accordingly, the derivatives of this portfolio are not used for speculation purposes, not generating significant economic risks to the institution.

The considerable impact on the fixed-income factor is related to the market risks of fixed-rate financing

of the banking portfolio, which are not recognized as marked to market and, therefore, are not necessarily fully subject to hedge.


155

Trading and banking

portfolios Exposure 12/31/2009 (*) 12/31/2008 (*)

Risk factors Risk of variation in: Scenarios Scenarios

I II III I II III

Fixed rate Fixed rate in real (4)

(1,620)

(3,112) (5) (1,309) (2,511)

Foreign exchange coupons Rates of foreign exchange coupons 2

(12)

(47) - (38) (88)

Foreign currencies Exchange variation -

(4)

(8) (7) (137) (273)

Price indices Rates of price indices coupons -

(2)

(1) (4) (327) (564)

Long-term interest rate Rate of TJLP coupons -

(28)

(56) - (12) (25)

Reference rate Rate of TR coupons 4

(107)

(117) - (91) (105)

Variable rate Share price 15

(222)

(444) (5) (113) (225)

Total without correlation (1,995)

(3,786) (2,026) (3,791)

Total with correlation (1,229)

(2,465) (1,407) (2,655)

Scenario I: Addition of 1 base point to the fixed-rate curve, currency coupon, inflation and interest rate

indices, and 1 percentage point to currency and share prices, the level of which is based on market information (BM&FBOVESPA, ANBIMA, etc).

Scenario II: Shocks at approximately 25% in the portfolio at the end of the period, considering the largest loss results expected per risk factor.

Scenario III: Shocks at approximately 50% in the portfolio at the end of the period, considering the largest loss results expected per risk factor.

On December 31, 2009, the sensitivity analysis, with the correlation of effects between risk factors

included in the trading portfolio and net of tax effects, showed a sensitivity of marking to market of R$ 432 million and R$ 822 million for scenarios with variations from of 25% to 50%, respectively (for December 31, 2008, the sensitivity of marking to market of trading portfolios for Scenario II was R$ 370 million and R$717 million for Scenario III).

In the consolidated portfolio (trading + banking), sensitivity is R$ 1,299 million and R$ 2,465 million for scenarios with variations of 25% to 50%, respectively (for December 31, 2008, the sensitivity of marking to market of the consolidated portfolio (trading + banking) of Scenario II was R$ 1,407 million and R$ 2,655 million for Scenario III).

The balance sheet per currency shows the asset and liability balances indexed to the local currency and

those indexed to foreign currencies. At December 31, 2009, the net foreign exchange position, including investments abroad, was a liability totaling US$ 8,041 million. We point out that the policy of gap management that we adopt is carried out taking into consideration the tax effects on this position. As the result from foreign exchange variation in investment abroad is not taxed, we set up a hedge (a liability position in foreign exchange derivatives) at a higher volume than that of the hedged asset, so that the total result from foreign exchange variation, net of tax effects, is practically cancelled, as is consistent with the strategy of low risk exposure that we adopt.


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Dec 31, 09

Assets Consolidated Itaú Unibanco

Business in Brazil

Business Abroad Itaú Unibanco Total Local

Currency Foreign

Currency Cash and Cash Equivalents 10,594 6,177 4,880 1,298 4,885 Short Term Interbank Deposits 139,195 132,631 130,548 2,083 15,156 Securities 120,189 108,174 106,998 1,176 23,348 Credit Operations and Leases 221,899 197,655 188,950 8,705 25,493 Loans 245,951 220,992 212,287 8,705 26,207 (Allowance for Loan Losses) (24,052) (23,337) (23,337) 0 (715) Other Assest 106,101 93,565 82,991 10,574 27,354 Foreign Exchange Portfolio 27,239 17,307 7,140 10,167 24,712 Other 78,861 76,258 75,851 407 2,642 Other Assests 18,927 17,566 17,486 79 1,361 Permanent Assets 10,295 26,599 8,878 17,722 1,417 Investments 2,187 18,991 1,269 17,722 918 Fixed Assets 4,360 4,134 4,134 0 226 Deferred 3,748 3,475 3,475 0 273 Total Assets 608,273 564,801 523,244 41,557 97,653 Derivatives - Purchased Positions 24,871 Futures 7,646 Options 4,592 Swap 7,934 Other 4,700

Total Assets After Adjustments (a) 66,428


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Dec 31, 09

Liabilities and Equity Consolidated

Itaú Unibanco

Business in Brazil

Business

Abroad Itaú Unibanco Total Local

Currency Foreign

Currency Deposits 190,772 161,673 161,498 175 31,923 Demand Deposits 24,837 16,952 16,778 175 8,642 Savings Deposits 48,222 46,369 46,369 0 1,852 Interbank Deposits 2,046 1,332 1,332 0 1,330 Time Deposits 114,671 96,023 96,023 0 20,099 Other Deposits 997 997 997 0 0 Funds Received under Securities Repurchase Agreements 131,935 130,359 130,359 0 1,576 Recursos de Aceites e Emissão de Títulos 17,320 22,519 12,467 10,052 5,915 Borrowings and ONLendings 34,692 31,675 22,665 9,010 10,725 Interbank and Interbranch Accounts 3,077 3,017 1,705 1,312 61 Derivatives and Financial Instruments 5,476 4,374 4,362 12 1,095 Other Liabilities 118,180 105,080 92,398 12,682 28,607 Foreign Exchange Portfolio 27,682 17,761 7,174 10,588 24,700 Other 90,498 87,319 85,224 2,095 3,907 Technical Provisions of Insurance, pension plans and Capitalization Capitalization 52,404 52,398 52,398 0 6 Deferred Income 194 171 171 0 23 Minority Interest in Subsidiaries 3,540 2,852 2,852 0 0 Shareholder´s Equity of Parent Company 50,683 50,683 50,683 0 17,722 Capital Stock 40,617 40,617 40,617 0 16,557 Net Income 10,067 10,067 10,067 0 1,165 Total Liabilities and Equity 608,273 564,801 531,558 33,243 97,653 Derivatives - Sold Positions 47,187 Furures 27,045 Options 5,788 Swap 10,918 Other 3,436 Total Liabilities and Equity After Adjustments (b) 80,430 Foreign Exchange Position Itaú Unibanco (c=a-b) (14,002) Foreign Exchange Position Itaú Unibanco (c) in US$ (8,041)

c) Impact of inflation, changes in the prices of main inputs and products, foreign exchange rate and interest rates on the operating and financial income and expenses

ITAÚSA: Considering that Itaúsa is a holding, its operating and financial income and expenses are not impacted

upon by inflation, changes in the prices of inputs and products, foreign exchange rates or interest; however, these changes affect the income and expenses of its main subsidiaries: Duratex S.A., Elekeiroz S.A., Itautec S.A. and Itaú Unibanco Holding S.A.

The impact of these changes regarding its main subsidiaries are described below:

INDUSTRIAL AREA:

DURATEX: In 2008, the costs of two important production inputs, electricity and resin, were affected by high

inflation. This was caused by increased demand. In 2009, however, there was deflation in relation to the cost of these inputs due to the decrease in economic activities as a result of the crisis initiated at the end of 2008.


158

ELEKEIROZ: In 2009, inflation measured by the IPCA, the extended consumer price index of the IBGE, was relatively

low, at 4.31%, with an indirect impact on the results of the Company smaller than the that of changes in the prices of inputs, products sold and foreign exchange rate, as commented on in the previous items. However, even low inflation affects the Company’s performance considering that it raises all its operating expenses in reals (not linked to the U.S. dollar), such as salaries of employees and payment of service providers, because they are indexed to past inflation plus real gains above inflation.

The company’s low indebtedness ratio together with a low inflation rate and a high foreign exchange rate

cause the impact of the debt in reals to be insignificant. The charges of the existing debts, measured in reals in December 2009, were between 8.5% p.a. and 10.95% p.a. (TJLP(Long-Term Interest Rate) + 4.95% p.a.), whereas the charges on the portion of debts denominated in US dollars were between 7.65% p.a. and 8.625% p.a. plus foreign exchange variation. These debts are long-term debts with the BNDES system and Banco do Nordeste do Brasil.

ITAUTEC: The real - U.S. dollar exchange rate fluctuated strongly during the year, causing the real to appreciate

25.5% by the end of the year, and impacting costs and sales prices of inputs and products, particularly in the IT segment, which allowed the company to adjust the margins affected by the significant depreciation of the real as from September 2008.

In Brazil, 2008 was characterized by the strong depreciation of the real in relation to the U.S. dollar,

which contributed to the increase in the costs of imported inputs, impacting on the Company’s margins and its operating income and expenses.

In 2007, the IT industry benefited from the consumer credit increase, a drop in the average prices of

equipment arising from the 17.1% appreciation of the real in relation to the U.S. dollar, which contributed to the increase of its share in the formal market.

In the past three years, a significant portion of the financing contracted by the company has come from

BNDES and been aimed at the contract that contemplated the modernization and transfer of production lines to the city of Jundiaí, the increase of the installed capacity, the internationalization of the company, and working capital associated with the increase in investments in product development.

These funds are adjusted as follows:

• TJLP plus interest varying from 1.1% p.a. to 3.1% p.a. ; • Fixed rate of 5.6% p.a.; • Currency basket + variable interest.

In the period of 2007, 2008 and 2009, the variation of the TJLP was around 6.25% p.a., a factor that did not significantly impact on the Company’s financial results.


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10.3. Directors should comment on the material effects that may have been caused or that are expected to be caused on the issuer’s financial statements and its results:

a) Introduction or disposal of operating segment

Itaúsa did not introduce or dispose of any operating segment in 2009, 2008 or 2007.

b) Incorporation, acquisition or disposal of ownership interest In 2009 MERGER BETWEEN DURATEX S.A. AND SATIPEL INDUSTRIAL S.A.

On June 22, 2009, Itaúsa - Investimentos Itaú S.A. and Companhia Ligna de Investimentos, parent

companies of Duratex and Satipel, respectively, entered into a merger agreement aimed at joining their operations.

The merger comprised a corporate restructuring in which Duratex was merged into Satipel by means of

the replacement of shares in Duratex by shares in Satipel, whose name was changed to Duratex S.A. The percentage of interest in Duratex decreased from 48.0% to 39.6%.

In 2008 MERGER BETWEEN ITAÚ AND UNIBANCO

On November 3, 2008, the controlling shareholders of Itaúsa and Unibanco Holdings entered into a merger agreement aimed at joining the financial operations of Itaú and Unibanco. The percentage of direct and indirect interest in Itaú Unibanco went from 45.34% at September 30, 2008 to 35.54% at December 31, 2008, basically due to the merger of Unibanco shares.


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c) Unusual events or operations

In order to enable an adequate analysis of the financial statements for 2007, 2008 and 2009, we present below the Net Income excluding the main unusual (nonrecurring) significant events and transactions, net of tax effects:

Net Recurring Profits (*) Effect of the purchase of shares for the treasury controlled by ITAU HOLDING, which during the period acquired shares of its own issue in the amount of R$ 1.290 million with an impact R$ 396 million on operating expenses for equivalent Net Worth of ITAUSA (without showing up in the cash outflow of the holding company), increasing the percentage share in this subsidiary from 44.76% on December 31, 2007, to 45.35% on June 30, 2008.

From 01/01/2009 to 12/31/2009

From 01/01/2009 to 12/31/2008

From 01/01/2009 to 12/31/2007

Net Income 2,902,039 6,885,773 3,887,577

Exclusion of Non-recurring Effects 18,026 ( 3,294,550 ) (562,82)

Premium on Acquisitions - - - Shares of Itaú Unibanco Holding - - - Shares of BPI - - - Shares of Delle - - - Shares of Union Capital - - - Shares of Ceramica Monte Carlo - Duratex - - - Purchase of Shares For the Treasury – Duratex 68 6,223 12,468 Purchase of Shares For the Treasury – ITAU UNIBANCO HOLDING (*) 4,436 474,68 74,450 Purchase of Shares For the Treasury – Other Companies - 2,486 - Provisions for Contingencies – Economic Plans 67,881 80,079 92,316 Provisions for Contingencies – Doubtful Credits - 1,104,582 117,852 Sale of Investments (81,03) (101,17) (829,35) Serasa (218,775) Redecard (470,172) Mastercard (24,580) Visa (75,207) (43,060) Capital Gains –Allianz (5,824) Banco Angola (Investments held by BPI) (14,298) Bovespa Stock Market (19,228) (140,407) Association of Itaú Unibanco x CBD 128,901 Loss of Inventory 27,598 Tax Recovery Program – Law 11.941/09 (104,376) The Activation of the Jundiaí and Taquari Facilities 7,187 Association of Duratex And Satipei (Note 2) (32,638) Harmonization of Criteria 23,615 Equivalence of Net Worth by Changes in Share Position (56,253) Sale and Market Adjustment of Shares Banco Comercial 33,659 Confirmed Results from the Sale of the Former Headquarters of Banco Itaú (33,682) Guaranteed Accounts and Commitments to Acquired Investments 36,578 Recovery of Taxes and Other Nonrecurring Attacks – Duratex S.A/Itautec (7,724) Sale of Real Estate Tatuapé – Itautec S.A. (20,448) Taxes on the Realization of Reserves For the Re-evaluation of Tatuapé Property 2,902 Sale of 50% of the Shares of Camargo Correa Desenvolvimento Imobiliario (15,904) Effects of Law 11.638 59,560 Provisions for Association Expenses 315,760 Effects from Association ITAU UNIBANCO ( 5,686,092 ) Harmonization of Criteria ITAU UNIBANCO 502,487 Other Nonrecurring Events (79,084)

Curring Net Income 2,920,065 3,591,223 3,324,755

ITAÚSA During 2007, 2008 and 2009 we observed the following nonrecurring events, net of tax affects on the net profits of Itaúsa:


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As noted in the chart above, the most significant unusual events and transactions were as follows:

2007 – In 2007, Itaú Unibanco Holding carried out the following disposal:

• 22.33% of the interest it held in the capital of Serasa S.A., comprising 832,176 shares to Experian Brasil Aquisições Ltda., remaining with an indirect interest of 10.29%, which is no longer consolidated from the disposal date. Itaú Unibanco continues to take part in the management of Serasa, with a 10.29% interest in the company's total capital and the right to appoint one member for the Board of Directors. This transaction gave rise to an income of R$218,775 thousand in Itaúsa;

• 53.8 million common shares of Redecard S.A. (8.73% in total capital), continuing to take part in the control over the company, giving rise to a nonrecurring income of R$470,172 thousand;

• 11.4 million shares of BM&F Bovespa, giving rise to an income of R$140,407 thousand (R$19,228 thousand in 2008).

2008 - On November 3, 2008, the controlling shareholders of Itaúsa and Unibanco Holdings communicated to the market the signature of a merger agreement aimed at joining the financial operations of the banks Itaú and Unibanco. It resulted in Itaú Unibanco, created by the merger of these institutions. The effects arising from the Itaú Unibanco merger are basically composed of the following:

Equity in earnings: (*) R$5,686,092 thousand.

Additional allowance for loan losses: (R$1,104,582) thousand

Equalization of accounting criteria: (R$502,487) thousand.

Provision for integration expenditures: (R$315,760) thousand. (*) Effect net of the gain on the increase in capital of Banco Itaú S.A. through the merger of Unibanco shares and loss in the

interest in the capital of Itaú Holding (current Itaú Unibanco S.A.).

There is also the effect of the purchase for treasury by the subsidiary Itaú Unibanco, which repurchased its shares amounting to R$1,290 million, with an effect of R$396 million on non-operating expenses from equity in Itaúsa (without representing a cash outflow in the parent company), raising the interest in this subsidiary to 45.35% at June 30, 2008 from 44.76% at December 31, 2007.

2009 – Itaú Unibanco Holding produced the following effects of unusual events:

• Disposal of the investment in Visa Net with an effect of R$75,207 thousand in Itaúsa.

• Effects of the Merger of Itaú Unibanco with CDB – Companhia Brasileira de Distribuição – (R$128,901) thousand.

In the industrial area, even though it produced a minor impact on Itaúsa, the most significant unusual event resulted from the merger between Duratex and Satipel, which gave rise to the creation of a global company, with economy of scale in markets that is increasingly competitive and prepared to continue its successful path to sustainable growth.


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10.4. Directors should comment on:

a) Significant changes in accounting practices

There were no changes in the accounting practices other than those established by Laws No. 11,638/07 and 11,941/09. According to this new legislation, the rules issued by CVM shall be prepared in conformity with international accounting standards. In 2009, 29 Technical Pronouncements and 12 Technical Interpretations were issued by the Accounting Pronouncements Committee, approved by CVM Resolutions, to be applied from 2010 and 2009 for comparison purposes.

b) Significant effects of the changes in accounting practices

Among the effects arising from the above-mentioned laws and regulations, which affected our income from 2008, we highlight the segregation of goodwill under the heading Intangible Assets and the prohibition of its amortization.

c) Qualifications and emphases presented in the auditor’s report

There were no qualifications and emphases presented by the auditor for 2009, 2008 or 2007. 10.5. The directors should indicate and comment on the critical accounting policies adopted by the issuer, in particular, accounting estimates made by management on uncertain and relevant issues for describing the financial position and results of operations that require subjective or complex judgment, such as: provisions, contingencies, revenue recognition, tax credits, long-lived assets, useful life of noncurrent assets, pension plans, foreign currency translation adjustments, environmental recovery costs, criteria for asset and financial instrument impairment tests

ITAÚSA: Itaúsa, being a holding, does not have critical accounting policies that require subjective or complex

judgment. However, the following comments apply to its main subsidiaries: INDUSTRIAL AREA: DURATEX: The financial statements of the company included in this form were prepared according to the

accounting practices adopted in Brazil, based on the provisions of the Brazilian Corporate Law and the rules of the Brazilian Securities Commission, or the CVM.

In the preparation of financial statements, accounting estimates were used when necessary as

determined by management, in view of objective factors, for the selection of the useful lives of fixed assets, provision required for contingent liabilities and allowance for loan losses, and other similar decisions.

The summary of the main accounting practices of the company is as follows: Allowance for loan losses: The allowance for loan losses was recorded based on the credit risk

analysis, at an amount considered sufficient to cover loan losses. The allowance was recorded under the heading Selling Expenses.


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Fixed assets: These assets are stated at cost of acquisition, building or construction (including interests and other financial charges), plus the voluntary re-appraisal and monetary restatement done before 1995. Depreciation is calculated using the straight-line method. As provided for in Technical Interpretation ICPC10 of the Accounting Pronouncements Committee, approved by CVM Resolution No. 619/09, the Company completed the first periodical appraisal for the purpose of reviewing and adjusting the estimated economic useful life for the calculation of depreciation. In view of this appraisal, the Company took into consideration the operational planning for the following years, internal experience aspects, such as level of maintenance and use of items, and external comparison aspects such as available technologies, the recommendations and guidebooks of makers and the useful lives of assets. The depletion of forest reserves is based on the volume of wood cut over the period.

Reduction in the recoverable value of assets: Fixed and other assets, including goodwill and

intangible assets, are annually reviewed in order to find clear evidence of non-recoverable losses, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When this is the case, the recoverable amount is calculated in order to check if there is a loss. If there is a loss, it is recognized in the amount by which the asset’s carrying amount exceeds its recoverable amount, which is the higher of an asset’s net selling price and value in use. For the purposes of assessment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

Provisions: Provisions are recognized when the Company has a present legal or informal obligation as

a result of past events, it is likely that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

Land lease costs (land lease): Leases where the lessor retains a significant portion of the risks and

rewards of ownership are classified as operating leases. Payments made under operating leases are recorded in the investment and charged to the income statement on a straight-line basis over the period of the lease.

Consolidation: Consolidated accounts were prepared according to the rules issued by the CVM and

comprise the financial statements of the Company and of its controlled companies, in which the former holds direct and indirect shareholding control. The intercompany investments were eliminated in proportion to the interest in capital held, as well as the balances of assets, liabilities, revenue and expenses and unrealized profits.

. ELEKEIROZ: The main accounting policies adopted by the company are described below: Revenue recognition: Revenue from operations is recognized on an accrual basis. Revenue from sales

of products is recognized when the risks and benefits inherent in the product are transferred to the purchaser. Revenue is not recognized when there is a significant uncertainty as to its realization. From January 1, 2008, the provision for income tax is recognized net of the portion related to tax incentives.

Accounting estimates: The preparation of individual and consolidated financial statements is done in

accordance with the accounting practices adopted in Brazil, which require the management to use judgment in the determination and recognition of accounting estimates. Significant assets and liabilities subject to these estimates and assumptions include the residual value of fixed assets, allowance for loan losses, inventory, deferred income tax and social contribution, and provisions for tax, labor and civil contingencies. The settlement of transactions involving these estimates may result in amounts different from those estimated because of inaccuracies inherent in the estimation process. The company and its controlled companies review the estimates and assumptions at least quarterly.


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Current and non-current assets: • Cash and cash equivalents – include the balances in bank accounts and financial investments

with maturities up to 90 days from the investment date, recognized at cost, plus income earned through the balance sheet date, which does not exceed the market value. Financial investments are stated at amortized cost, plus the agreed interests, recognized proportionally until the closing date of financial statements, equivalent to their market value.

• Financial instruments – non-derivative financial instruments include financial investments,

investments in debt and equity securities, accounts receivable and other receivables, cash and cash equivalents, loans and financing, as well as accounts payable and other debts. Non-derivative financial instruments are initially recognized at fair value plus directly related transaction costs for all instruments not recognized at fair value through profit or loss. After initial recognition, non-derivative financial instruments are measured according to their respective classification:

• Held-to-maturity investments – if the company has the positive intention and ability to hold to

maturity its debt securities, these are classified as held-to-maturity. Held-to-maturity investments are measured at amortized cost using the effective interest method, net of occasional reductions in the recoverable amount.

• Available-for-sale investments – the company’s investments in equity securities and certain

assets related to debt securities are classified as available-for-sale. After the initial recognition, these are stated at fair value and the fluctuations, except reductions in recoverable value, and the differences in foreign currency of these instruments are directly recognized in shareholders’ equity, net of tax effects. When an investment is no longer recognized, the accumulated gain or loss in shareholders’ equity is transferred to income.

• Financial instruments at fair value through profit or loss – an instrument is classified at fair value

through profit or loss if it is held for trading, that is, designated as such when initially recognized. Financial instruments are designated at fair value through profit or loss if the Company manages these investments and makes decisions about purchasing and selling based on fair value according to a strategy on investment and risk management. After initial recognition, transaction costs are recognized in income when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and its fluctuation is recognized in income.

• Other – other non-derivative financial instruments are measured at amortized cost using the

effective interest method, net of occasional reductions in the recoverable amount. • Trade accounts receivable – these refer to amounts receivable from clients and are reduced,

upon provision, to their probable realizable values. The allowance for loan losses is recognized at an amount considered sufficient by management to cover occasional losses on the realization of receivables.

• Inventory – this is stated at average cost of purchase or production, not exceeding market value.

When applicable, provision for obsolete inventory is recognized and the recorded value of inventory that exceeds its realizable value is adjusted.

• Investments – investments in subsidiary and affiliated companies are accounted for under the

equity method, with a contra-entry of these amounts recognized in operating income, except exchange variations in investments abroad, which are recognized in a specific account in Shareholders’ Equity, being recognized in income when the investment is written off or sold. Other investments are recognized at cost of acquisition, monetarily restated through December 31, 1995, and adjusted to market value, when applicable.

• Fixed assets and depreciation – fixed assets are recognized at cost of acquisition or

construction, monetarily restated through December 31, 1995, including interest incurred during construction. Depreciation is calculated using the straight-line method at rates compatible with the useful lives of assets. For


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equipment and installations that are directly used in the production process, it is calculated using the units-of-production method, taking into consideration the economic useful lives of the assets.

• Intangible assets – these are the goodwill arising from the acquisition of companies that are

merged. Goodwill amortization has been interrupted from January 2009 and the balance is subject to testing for impairment.

• Reduction to the recoverable value of assets – the company annually reviews if there is clear

that the carrying amount may not be recoverable. The recoverable amount of an asset is the higher of: (i) fair value less costs to sell, and (ii) value in use. The value in use is equivalent to the discounted cash flow (before taxes) derived from the continuous use of the asset until the end of its useful life. Regardless of evidence about the non-recovery of its carrying amount, the goodwill arising from business combination is tested for impairment at least once a year. When the residual value of the asset exceeds its recoverable value, the company recognizes a reduction in the accounting balance of the asset (impairment). The test for impairment is made by each business unit, which is the lowest cash-generating unit for identifying cash flows. At December 31, 2009 and 2008, no losses were found to be recognized.

• Other current and non-current assets – these are stated at realizable value, including, when

applicable, accrued interest, monetary and exchange variations, gains or, in the case of prepaid expenses, at cost.

Current and non-current liabilities: these are recognized in the balance sheet when the Company has

a legal obligation or as a result of past events, taking into consideration that it is likely that an outflow of resources will be required to settle the obligation. Some liabilities involve uncertainties as to term and value, being estimated as to the extent they are incurred and recognized through provision. Provision is recognized based on the best estimates of the risk involved.

The determination of the estimated obligation related to tax, civil and labor lawsuits involves professional

judgment of specialists in the theme of the case, which is done by in-house or outsourced legal advisors and also by the management members, who usually adopt a more conservative position. The company is subject to several claims, being a party to tax, civil and labor lawsuits on many subjects, arising from the normal course of its business. The company recognizes a provision for losses regarding lawsuits classified as probable and that may be estimated with sufficient certainty. The balances are adjusted in order to reflect changes in the circumstances of the lawsuits in progress. Actual results may differ from those estimated.

Liabilities are restated, when applicable, at the exchange rates and financial charges, according to the

provisions of agreements in effect, in order to reflect the amounts incurred through the balance sheet date. The non-current items are adjusted to present value when applicable.

Taxes: Sales revenues incurs the following taxes and contributions at the following base rates: Rates ICMS (State of São Paulo) 18% ICMS (State of Bahia) 17% ICMS (other States) 7% or 12% IPI 0 or 5% PIS 1.65% COFINS 7.6% These charges are stated as deductions from sales in the income statements. The credits arising from

the non-cumulative PIS/COFINS are stated by reducing the cost of products sold in the income statements. Income tax is calculated at 15% on taxable income, plus 10% of the resulting amount, and is offset

against existing tax loss carry-forwards. Social contribution on net income is calculated at 9% on adjusted profit, also taking into consideration the offset of negative amounts carried forward. The company is a beneficiary of the partial reduction of income tax on the operating income of its production unit in Camaçari, state of Bahia,


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which rests at 75% of the previous amount until December 31, 2015. Deferred income tax and social contribution are recorded in Non-current Assets and Liabilities.

Escrow deposits, provision for deferred income tax and social contribution, and provision for

contingencies: As a result of the adoption of CVM Resolution No. 489/05, escrow deposits are reclassified to liabilities as charges to “Provision for Deferred Income Tax and Social Contribution” and “Provision for Contingencies”. Loans and financing are restated at monetary or exchange variation, as applicable, plus interest incurred through the balance sheet date.

ITAUTEC: In the preparation of the financial statements, certain assumptions are adopted for the recognition of

estimates to record certain assets, liabilities and other transactions, among which are the following: Financial instruments: The company classifies its financial assets into the following categories:

measured at their fair value through results, loans and receivables held to maturity, and available for sale. The classification depends on the purpose for which the financial assets are purchased. Management classifies its financial assets upon acquisition.

Financial assets measured at their fair value through results: Financial assets measured at their fair

value through results are those held for active and frequent trading. Derivatives are also classified as held-for-trading and, therefore, they fit into this category, unless they are designated as hedge instruments. This type of asset is classified as current. Gains or losses on the variations in the fair value of financial assets measured at their fair value through results are presented in the statement of income as Financial Income in the period in which they occur, unless the instrument has been contracted in connection with another operation. In this case, variations are recognized in the line of the result affected by the said transaction.

Loans and receivables: Loans granted and receivables which are non-derivative financial assets with

fixed or determinable payments, and not quoted in an active market, are included in this category. They are included as current assets, except those with maturity over 12 months after the balance sheet date (these are classified as non-current assets). The company’s loans and receivables, and other accounts receivable, comprise trade accounts receivable, other accounts receivable, and cash and cash equivalents, except for short-term investments. Loans and receivables are accounted for at their amortized cost under the effective interest rate method and receivables are computed at their present value when they are relevant.

Assets held to maturity: These are basically financial assets that cannot be classified as loans and

receivables because they are quoted in an active market. In this case, these financial assets are purchased with the intent and financial capacity to be held in portfolio to maturity. They are assessed at their acquisition cost, plus income earned as a contra-entry to the result for the year, under the effective interest rate method.

Financial assets available for sale: Financial assets available for sale are securities (non-derivative)

which are either designated in this category or are not classified in any other category. They are included in non-current assets, unless management intends to sell the investment within 12 months of the balance sheet date. Financial assets available for sale are accounted for at their fair value. Interest on securities available for sale, computed under the effective interest rate method, is recognized in the statement of income as financial income. The portion corresponding to variation in fair value is charged to shareholders’ equity, in the account equity evaluation adjustments, and it is charged to results upon their settlement in the case of loss considered permanent (impairment).

Fair value: For financial assets without an active market or public quotation, the company establishes

the fair value through evaluation methods. These methods include the use of recent transactions contracted with third parties, reference to other instruments that are essentially similar, discounted cash flow analysis and option


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pricing models that use, to the maximum extent possible, information generated by the market and that count, to the minimum extent possible, on information generated by the entity's management itself.

The company evaluates, on the balance sheet date, if there is objective evidence that a financial asset

or a group of financial assets is recorded at an amount higher than its impairment value. Should there be such evidence for financial assets available for sale, cumulative loss – measured as the difference between the acquisition cost and current fair value, less any loss for impairment of this financial asset previously recognized in results - is deducted from shareholders’ equity and recognized in the statement of income.

Derivative instruments and hedging activities: Initially, derivatives are recognized at their fair value

on the date when a derivative agreement is entered into, and they are subsequently revaluated at their fair value, and the fair value variations are charged to results, except when the derivative is designated as a hedge instrument for investments in foreign controlled companies.

Clients: Trade accounts receivable are recorded at the face value of the securities that represent these

credits, which does not significantly differ from the present value of securities. The allowance for loan losses is set up in an amount considered sufficient to cover possible losses in the realization of the client’s account, which involves individual client analysis, as applicable.

Amounts receivable from future installments of leased assets are recognized at present value, deducted from the portions of services to be provided, based on the average rates used for this business, pursuant to the guidelines of CPC No. 06, approved by CVM Resolution No. 554.

Inventory: Inventory is stated at average production or purchase cost lower than replacement costs

or realization amounts, as applicable, less reserve for obsolescence. Imports in transit are stated at the accumulated cost of each import.

Other assets: Other assets are stated at their realization cost, including, when applicable, income,

foreign exchange variations and monetary variations earned. Permanent investments: Investments in controlled companies are recorded and assessed under the

equity method, recognized in results for the year as operating income (or expense) and other investments at their acquisition cost. Pursuant to CVM Resolution No. 534 of January 29, 2008, which approved CPC No. 02, exchange rate variations on investments held abroad, with a functional currency different from the controlling company's functional currency, are recognized directly in Shareholders' Equity in an specific account called “Translation Accumulated Adjustments”, together with the exchange variations of instruments designated as hedges.

The financial statements of companies located abroad are translated into reals under the following

procedures: a) Assets and liabilities, translated using the foreign exchange rate at the end of the year; b) Initial shareholders' equity, translated adopting the exchange rate as at December 31, 2007; c) Income and expenses, translated at the average exchange rate of each month. Investment in TCI Trading (an affiliate in which the Company does not have influence on management)

is assessed under the equity method, and it was not considered in the consolidation process, and therefore it remains in the Investment in Affiliates caption (Note 2.1 (c)).

Property, plant and equipment: Property, plant and equipment is recorded at acquisition,

formation/build up or construction cost. Depreciation is calculated under the equity method, at the rates described in Note 10 to the financial statements for 2009.

Intangible assets: Intangible assets comprise expenses incurred in project development, when it is

probable that the projects will succeed, considering their commercial and technological feasibility, and only when


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cost may be measured on a reliable basis. Other research and development expenses are recognized as expenses as incurred. Capitalized development costs are amortized from the beginning of the commercial production of the product, under the straight line method, over the period estimated for the expected benefit.

Current and Noncurrent Liabilities: Provision: Provision is recognized when the Company has a current liability, either legal or not

formalized, as a result of past events, and it is probable that an outflow will be required to settle the liability and a reliable estimated of the amount can be made.

Loans: Loans are initially recognized at their fair value, upon receipt of funds, net of the transaction

costs. Subsequently, borrowings are recorded at their amortized cost, i.e. plus charges and interest proportional to the period incurred (on a pro rata basis).

Income tax and social contribution: Income tax and social contribution are calculated pursuant to the

legislation in effect, at the rates of 25% and 9% respectively. Itautec records deferred income tax and social contribution calculated on short-term temporary differences between the tax calculation bases of assets and liabilities and book values in the financial statements, as well as on income tax and social contribution loss carry-forwards, when realization is considered probable.

The Company and its controlled companies opted for the Transition Tax System (RTT), pursuant to

Provisional Measure No. 449/08. Income tax and social contribution on net income included in the financial statements were calculated based on these rules.


General

Itaú Unibanco’s main accounting practices are described in Note 4 to its financial statements at December 31, 2009, December 31, 2008 and December 31, 2007. The preparation of financial statements involves certain estimates and assumptions arising from experience and several other factors that are considered to be reasonable and relevant. Although Itaú Unibanco continuously reviews these estimates and assumptions in the ordinary course of business, the presentation of statements of financial position and the results of operations often require that judgments be made on issues that are inherently uncertain. The topics below describe the areas that require the most judgment or that involve a high level of complexity in the application of accounting polices that currently affect Itaú Unibanco’s financial position and the results of its operations.

Use of estimates and assumptions

The preparation of the financial statements requires that estimates and assumptions be made that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses arising during the reporting periods. Estimates and assumptions are used, for example, to calculate the allowance for loan losses, to determine the useful lives of certain assets, to determine whether a certain asset or group of assets posts a loss in its recoverable value, to determine the expectation of realization of deferred tax assets, to determine the market value of certain financial instruments, to classify and calculate contingent liabilities and to determine the amount of technical provision for insurance, pension plans and capitalization. The accounting estimates made in these contexts require the preparation of estimates for issues that are highly uncertain. In each case, if other estimates had been processed or if changes in such estimates have occured from one period to the other, there may be a material impact on Itaú Unibanco’s financial position and the results of its operations. Accordingly, actual results may differ from estimates.


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Provision for allowance for loan losses

The allowance for loan losses represents the estimated amount of probable losses in Itaú Unibanco’s portfolio of loan and lease operations at the end of each reporting period. The allowance is calculated considering the rating of loan losses in nine different risk levels (from AA to H). The rating in each risk level is a judgment that considers economic and political conditions, trends in credit quality, past experience, specific risks of the portfolio and certain global risks, as well as CMN and BACEN regulations. CMN regulations establish minimum allowance levels for loan operations and other loan extensions, in each risk rating, which range from 0% (for loan operations which are not overdue) to 100% (for loan operations which are over 180 days overdue). Should estimates differ from the amounts effectively received, additional provision might be required.

Market value of financial instruments

Itaú Unibanco records some financial instruments at their market value. The financial instruments recorded at market value in the balance sheet are basically composed of securities classified as trading securities, available-for-sale securities and other trading instruments, including derivative financial instruments. Held-to-maturity securities are recorded at the acquisition cost amortized in the balance sheet and their corresponding market value is disclosed in the accompanying note.

Market value is defined as the amount at which a position can be sold or settled in an arm's length transaction. Itaú Unibanco estimates these amounts using market quotations, when available. If these are not available, it uses a variety of sources such as quotations from brokers, pricing models, the quoted prices of similar financial instruments or discounted cash flows. Determining the market value when a market quotation is not available involves judgment. Likewise, judgment should be used to estimate prices when there is no external parameter available. Other factors that may affect the estimates are the use of inaccurate estimates in models and unexpected correlation. Although we believe that our pricing methods are adequate and consistent with the other market players, the use of different methodologies and estimates to determine the market value of certain instruments may result in different market values at the closing date, which may affect the reported revenue or loss for a certain asset or liability financial instrument.

Judgment is also required to determine if the reduction in market value below the amortized cost of

available-for-sale securities or held-to-maturity securities is permanent, which would require the recognition of provision, with its effects recognized in results for the period. Itaú Unibanco uses certain factors to determine if a loss is permanent, such as the observed period of loss, the loss amount and the expected potential realization of the financial instrument.

Contingent liabilities

Itaú Unibanco is a party in a series of civil, labor, tax and social security lawsuits, inherent in the normal course of its operations. It records provision for these contingencies based mainly on the following parameters: (i) for lawsuits examined individually, the opinion of internal and external legal advisors and the probability that financial resources will be required to settle these obligations, when the settlement amounts can be estimated with sufficient certainty, and (ii) for lawsuits examined collectively, according to the statistical references per group of lawsuit, type of legal body (Small Claims Court or Regular Court) and claimant.

Itaú Unibanco classifies the risk that such contingencies arising from lawsuits may become effective

losses as probable, possible or remote. It recognizes provision for these contingencies when classifying the losses related to these liabilities as probable. Although it does not recognize provision for contingencies the risk of which it considers as possible or remote, it discloses the amounts of contingencies the risk of is considered possible.

Itaú Unibanco measures contingency amounts using models and criteria it believes can accurately

estimate these amounts, despite the high level of uncertainty in the nature of the terms and amounts of these contingencies.


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Although Itaú Unibanco believes that contingencies are adequately reflected in its financial statements, their outcome may result in payment obligations in amounts higher than the total provisioned for all contingencies, considering the inherent difficulties involved in estimating the exact amounts for these lawsuits.

10.6. With respect to the internal controls adopted to ensure the preparation of reliable financial statements, directors should comment on: a) Efficiency level of such controls, indicating any imperfections and measures adopted to correct them

The management of Itaúsa is responsible for establishing and maintaining internal controls related to the

company’s financial statements. The internal control related to the financial statements is a process developed to provide reasonable

assurance regarding the reliability of accounting information and the preparation of the financial statements disclosed in accordance with the generally accepted accounting principles. The internal controls related to the financial statements include policies and procedures that: (i) are related to the maintenance of records that, in reasonable detail, reflect accurately and properly the transactions and write-offs of the company's assets; (ii) provide reasonable assurance that the transactions are recorded as necessary to enable the preparation of the financial statements in accordance with the generally accepted accounting principles in Brazil, and that the company's receipts and payments are made in accordance with the authorizations of the company's management and directors; and (iii) provide reasonable assurance regarding the timely prevention or detection of unauthorized acquisition, use or allocation of the company’s assets which could have a significant effect on the financial statements.

Due to their inherent limits, the internal controls related to the financial statements may not avoid or

detect errors. Therefore, even systems considered to be effective may only provide reasonable assurance regarding the preparation and presentation of the financial statements. Likewise, projections of any evaluation of their effectiveness for future periods are subject to the risk that the controls may become inadequate due to changes in conditions, or that deterioration may occur in the level of conformity with practices or procedures.

The internal controls related to the financial statements are carried out in accordance with the criteria

defined by the Integrated Framework of COSO – the Committee of the Sponsoring Organization of the Treadway Commission on Internal Control.

b) Deficiencies of and recommendations for the internal controls that are present in the independent auditor’s report

In the independent auditor’s report, we did not note any deficiencies or recommendations on internal

controls that pose the risk of the failure of or material effect on the financial statements at December 31, 2009, December 31, 2008 and December 31,2007. However, in case these occur, the management members of Itaú Unibanco will perform the monitoring of its notes and action plans.

10.7. Should the issuer have made a public offering of securities, the directors should comment on: a) How the funds arising from the offering were used

Not applicable.

b) If there were relevant differences between the effective investment of funds and investment proposals disclosed in the prospectus of said offering

Not applicable.


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c) If there were differences, the reasons for such differences

Not applicable. 10.8. Directors should describe the relevant items that are non-evidenced in the issuer’s financial statements, describing: a) Assets and liabilities directly or indirectly held by the issuer that are not presented in its balance sheet (off-balance sheet items), such as: I - Operating leases, assets and liabilities II - Written off portfolios of receivables for which the entity has risks and responsibilities, indicating the related liabilities III - Agreements for the future purchase and sale of products or services IV - Agreements for constructions in progress V - Agreements for future receipt of financing

All relevant items are duly and properly evidenced in Itaúsa’s financial statements and their notes, as well as in the financial statements and notes of its main subsidiary companies.

b) Other items that are not presented in the financial statements

Not applicable. 10.9. With respect to each of the items that are not presented in the financial statements indicated in item 10.8, directors should comment on: a) How these items change or may change revenues, expenses, operating income and expenses, financial expenses or other items of the issuer’s financial statements

Not applicable. b) Nature and purpose of the operation

Not applicable. c) Nature and amount of the liabilities assumed and rights generated in favor of the issuer as a result of the operation

Not applicable. 10.10. Directors should indicate and comment on the main elements of the issuer’s business plan, describing, in particular, the following topics: a) Investments, including: I - Quantitative and qualitative description of the investments in progress and expected investments II - Sources of investment financing III - Relevant divestitures in progress and expected divestitures

Itaúsa is always considering options to expand its operations in the financial and industrial market. Should new opportunities arise, even at attractive prices, they will be carefully analyzed considering the risks involved, especially in view of the deterioration of financial markets and perspectives of the country involved.


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b) Provided that it has already been disclosed, indicate the acquisition of plants, equipment, patents or other assets that are expected to have a material impact on the issuer’s production capacity

ITAÚSA: The Issuer, as a holding, did not make any acquisition of plants, equipment, patents or other assets that

could influence its production capacity and it does not take part directly in the business plans of its controlled companies.

The following are the comments of the management members of our main controlled companies on the

topic of plants, equipment, patents or other assets that could materially influence the issuer’s production capacity.

INDUSTRIAL AREA: DURATEX: In 2009, the assembly of three new wood panel manufacturing lines, two for MDF and one for MDP

were completed, and they added approximately 1.9 million m3 to the existing annual production capacity of 2.0 million at that time. These plants are in the ramp-up process, and they should contribute to increasing the company’s operating level.

Investments of approximately R$100 million over 2010 should contribute to the increase of

approximately 20% in Deca's capacity, and this will contribute to increase this division’s operating level. ELEKEIROZ: Elekeiroz does not have plans for the acquisition of plants, equipment, patents or other assets that could

materially influence its production capacity. ITAUTEC: The start-up of the new industrial unit located in the city of Jundiaí in the State of São Paolo took place

in September 2007. Investment in the construction of the new plant totaled R$ 30.8 million, and they comprised the increase in production capacity and adjustments to and the start-up of safe manufacturing. Currently, the company’s installed capacity is about 1 million pieces of IT equipment (desktops, notebooks, netbooks and servers), 24 thousand ATMs and three thousand safes/year.

Equipment purchased over the year was designated for technological updates and replacement, and did

not materially influence the Company's production capacity. Acknowledged as the biggest Brazilian company in the IT industry operating abroad, Itautec stands out

due its intellectual property. The company invests in the development of high quality products, which enable continuous improvement in the management of its clients' business. Focused on this, it currently files patent applications and industrial designs with the Brazilian Institute of Industrial Property (INPI). In 2009, a safety device for banking ATMs and another related to the improvement of the production process were developed.

FINANCIAL SERVICES AREA: ITAÚ UNIBANCO: Not applicable.


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We are always considering options to expand our operations in the financial market. Should new opportunities arise, even at attractive prices, they will be carefully analyzed considering the risks involved, especially in view of the recent deterioration of financial markets and the perspective of the country involved.

c) New products and services, indicating:

I - Description of the research in progress that has already been disclosed II - Total amounts spent by the issuer in research for the development of new products and services III - Projects in progress that have already been disclosed IV - Total amounts spent by the issuer in the development of new products and services

ITAÚSA: The Issuer, as a holding, does not operate with products and services. Regarding our its main controlled

companies, the facts outlined below should be noted. that: INDUSTRIAL AREA: DURATEX: The Deca and Wood Divisions annually formulate the product development plan, defining the removal

from the market of products of which the life cycle has come to an end, and concurrently they define the new products to be launched to complement their portfolio, in view of the market needs. Surveys are frequently conducted in the domestic and international markets, with the aim of updating portfolios. From the IT point of view, attendance at symposiums, congresses and specific technical events is frequent, and there is also extensive networking with companies operating in the divisions’ industries, with the purpose of following up and transferring new technologies.

In the Services Area, there is a specific structure in place to meet end clients and consumers, for

recommending to them and instructing them on the uses and applications of the company’s products. I – Description of ongoing surveys already disclosed

• International price survey • Wood panel – balance of trade survey • Product trends market survey • Consumer profile survey • Brand value perception survey • Flora and fauna monitoring analysis • Environmental education activities survey • Assessment of biologic control over eucalyptus exotic pests • Evaluation of climate zoning, damage and inoculation of diseases in controlled conditions in the

main genetic materials planted by Duratex • Forest management thematic program assessment • EUCFLUX project – Flux Tower – Study of balances of carbon, water and nutrients in population

level in a eucalyptus forest, under the flux tower methodology. Collaborative project with ten other companies, with the tower installed on Duratex property

• Pedological soil surveys at Duratex properties • Tests of herbicide resources and weed control methods, aimed at optimizing their control with a

mechanized system • Home center shopping survey • Commercial management model survey for civil construction • Civil construction market information system survey • Hydraulic installer public study survey • Filter survey


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• Brand study survey • Discontinued product survey • Competitive product design survey • Spare parts and competitors’ pricing survey

II - Total amounts spent by the issuer in research for the development of new products and services For the past three years, approximately R$ 2 million/year were invested in market studies, surveying and

monitoring. III - Projects in progress that have already been disclosed At the Deca Division, products focused on the luxury, middle and competitive segments were launched

in the past three years. Products are developed in accordance with the needs of each client group and market demand: these have included saver products, flush systems, sinks, toilets, seats, urinals, tanks, and filters, among others.

• 2007: 13 lines of bathroom fittings and 12 lines of bathroom fixtures were launched • 2008: 30 lines of bathroom fittings and 13 lines of bathroom fixtures were launched • 2009: 17 lines of bathroom fittings and 18 lines of bathroom fixtures were launched At the Wood Division, the launching of new patterns followed market trends • 2007: 16 patterns of laminate flooring/accessories and 56 patterns of wood panels or new products

were launched • 2008: 55 patterns of wood panels, eight patterns of laminate flooring and 9 Duratex Moulding

models, or 72 new products, were launched • 2009: nine patterns of laminate floor/accessories/moulding and 66 patterns of wood panels, or 75

new products, were launched

At the Wood Division, the wood portfolio covers about 7,500 items designed to meet highly diversified market segmentation strategies, following the global trends in innovation, design and applied technology.

Within the market segmentation strategy, extensions of lines in the MDP and MDF business units were

develop to enable different social classes, with diversified income characteristics, to have access to products, which resulted in an important share of the B, C and D economic classes in the group of the newest consumers of furniture wood products.

At Deca Division, the product portfolio is composed of approximately 1,800 items, of which 1,100 are

bathroom fittings and 700 bathroom fixtures. This portfolio has been developed over time to serve all market segments in which Deca operates,

including the luxury, middle and competitive segments. Deca launches new products every year, following global trends in design, incorporating new

technologies which enable us to increasingly improve the already acknowledged of products and adding features that provide more comfort to consumers, considering that comfort should always be linked with technology applied for the rational use of water.

Thus, Deca has launched, with increasingly frequency, products incorporating technological resources to

save water, such as double flush toilet valves, tanks coupled to toilets with the double flush (dual flux) system, with three or six liters per flush, flow restrictors and aerators, and mechanic and electronic timers that interrupt water flow after a certain time of use.


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IV - Total amounts spent by the issuer in the development of new products and services On average R$ 15 million/year. ELEKEIROZ: The company has a development center at the Várzea Paulista site, in São Paulo, whose technicians

are engaged in designing Elekeiroz products with the characteristics required to the meet the clients' specific needs. For example, for unsaturated polyester resins, 271 new formulae have been developed in the last three years, 54 of which related to new products and the remaining 217 correspond to changes in the existing formulae. In the plasticizer area, new formulae are also being developed and tested for specific uses in certain market segments.

Funds used for this purpose amounted to R$ 0.7 million during the year, not considering investments in

development and process-specific changes required for manufacturing certain batches of products with new characteristics.

I - Description of ongoing surveys already disclosed There are no ongoing survey projects that have already been disclosed. II - Total amounts spent by the issuer in research for the development of new products and services The amount is consolidated in item iv below. III - Projects in progress that have already been disclosed There are no projects in progress which have already been disclosed. IV - Total amounts spent by the issuer in the development of new products and services The amount spent on research and development was R$ 0.7 million in 2009. ITAUTEC: I - Description of ongoing surveys already disclosed Not applicable. II - Total amounts spent by the issuer in research for the development of new products and services Not applicable. III - Projects in progress that have already been disclosed List of the main projects in progress in the Automation and IT Areas disclosed by the Company:


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Bank automation:

1. ATMs: ATM Adattis Full Function have all the functions of electronic teller machines, which include: deposits, withdrawals, payments for accounts with barcodes, processing of and bolts and checks using image capture, among other things.

2. AUTOMANAGER: software for proactive monitoring of a network of self-service terminals, PDVs, servers, applications, peripherals, and processes in real time, anywhere, via the Internet.

3. ATM software: development of machine language: Drivers (Device Drivers) APIs Linux for ATMs.

4. IHC – Internet Host Connector – a solution that allows access to corporate applications from environments and more modern devices, applications and mainframes or hosts (IBM System i5, AS/400) as well as other remaining systems that are easy to navigate.

5. Security Way Plus – multi-deposits by image: a complete solution for the digitalization of images of checks and recognition of document information, that offers greater speed in the process of check compensation and service to clients.

6. MDI Image – Multideposit by Image: Complete solution aimed at digitizing images of checks and recognition of information contained in documents, which speeds up the check compensation process and client service.

Commercial automation:

1. SIAC- Itautec Commercial Sales Automation: software that consists of sales automation for the store front office, an integrated system for all sales areas that generates performance information in real time.

2. Sales Automation Hardware: point-of-sale terminals for operators and also for purchase by the client, self-service terminals for consultation and payments, printers, terminals for price checking, terminals for consultation.

3. SCOPE: A system that manages the entire process of TEF (Electronic Funds Transfer) through transactions between the point-of-sale and the authorized credit card network.

4. WEBWAY: Terminal for self-service that can be used for the payment of accounts, issue of receipts, sale of tickets, printing, changes in registration, client orientation, among other things.

IT:

1. LIBRIX: National distribution of Linux developed by Itautec, based on the Linux Gentoo

distribution system 2. Small Computers: Desktops - InfoWay, InfoWay 3D, InfoWay Professional lines 3. Notebooks: netbook and notebook lines 4. Servers: Monoprocessors and multiprocessors (towers and racks)

IV - Total amounts spent by the issuer in the development of new products and services

In 2009, R$ 60.7 million were invested in the development of banking automation and IT products

(desktops, notebooks, netbooks and servers), and the main projects disclosed to the market are submitted in item 10.10 CIII.


I - Description of the research in progress that has already been disclosed II - Total amounts spent by the Issuer in research for the development of new products and services


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III - Projects in progress that have already been disclosed IV - Total amounts spent by the Issuer in the development of new products and services

Not applicable. 10.11. Comment on other factors that have significantly affected operating performance and that were not identified or commented on in the other items of this section

All the factors that have significantly affected operating performance were commented on in the other

items of this section.


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ITEM 11 - PROJECTIONS 11.1. Projections should identify: a) Subject matter of the projection

Not applicable. b) Period projected and period for which the projection is valid

Not applicable. c) Assumptions of the projection, indicating which ones may be influenced by the issuer’s management and which are beyond its control

Not applicable. d) Amounts of the indicators that are the subject matter of the projection

Not applicable. 11.2. Should the issuer have disclosed, for the past three years, projections for the evolution of its indicators: a) Inform which are being replaced by new projections included in the form and which are being repeated in the form

Not applicable. b) Regarding the projections related to periods that have already elapsed, compare the data projected with the effective performance of the indicators, clearly presenting the reason for any differences in projections

Not applicable. c) Regarding the projections related to current periods, inform whether the projections are still valid on the date the form is delivered and, when applicable, explain why they were abandoned or replaced

Not applicable.


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ITEM 12 - SHAREHOLDERS’ MEETINGS AND MANAGEMENT 12.1. Describe the issuer’s administrative structure, as established in its Bylaws and internal rules, identifying: a) Functions of each body and committee a.1 Board of Directors

The Board of Directors, which is a decision-making body, is mandatory in a publicly-held company. It is incumbent upon the Board of Directors:

I) to establish the general guidelines of the Issuer;

II) to elect and remove from office the Issuer’s directors and establish their duties, pursuant to the bylaws;

III) to supervise the management of the directors, examine at any time the Issuer’s books and documents, request information on contracts already entered into or to be entered into, and any other acts;

IV) to call Shareholders’ Meetings at least 15 days in advance, the number of days being counted from the publication of the first call;

V) to opine on the management report and the Executive Board’s accounts;

VI) to appoint and remove independent auditors;

VII) to resolve the establishment of committees to handle specific issues within the scope of the Board of Directors;

VIII) to resolve the distribution of interim dividends, pursuant to the Issuer’s bylaws and subject to approval at the Shareholders’ Meeting;

IX) to resolve the payment of interest on capital;

X) to resolve on the conversion of common shares into preferred shares, pursuant to the Issuer’s bylaws.

The Board of Directors shall be composed of shareholders, elected by the Shareholders' Meeting, and it

shall have one Chairman and from one to three Vice-Chairmen chosen by the members from among their peers.

The Board of Directors shall have a minimum of five and a maximum of twenty effective members. Within these limits, it is incumbent upon the Shareholders’ Meeting, which elects the Board of Directors, to initially establish the number of members which will comprise this body for each mandate. At the same Shareholders’ Meeting, two alternative members shall be elected, who, at the discretion of the Board of Directors, may be convened replace an absent effective member.

The mandate of the members of the Board of Directors is one year as from the date of election by the Shareholders’ Meeting, extendable until they are replaced in office. a.2 Executive Board

The management and representation of the company shall be incumbent upon the Executive Board, elected by the Board of Directors within two business days of the date of the Shareholders' Meeting which elects the Board of Directors.


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The Executive Board shall also have the power to settle or waive rights, independently of the

authorization of the Board of Directors, to encumber and sell corporate property, including permanent assets, provide guarantees for third party liabilities and decide as to the issue of promissory notes and bonds overseas such as commercial paper, Euro notes, Eurobonds, notes, bonds and others as well as the issue of commercial papers for placement in the Brazilian market pursuant to the terms of CVM Instructions Nos. 134/90 and 155/91 and subsequent legislation.

The Executive Board shall comprise from three to 15 members, encompassing the positions of Chief Executive Officer, General Manager, Managing Vice-Presidents and Executive Directors, as established by the Board of Directors which appoints these positions.

The members of the Executive Board shall hold their mandates for one year, being eligible for reelection, remaining in their positions until they are replaced in office.

a.3 Disclosure and Trading Committee

The Disclosure and Trading Committee originated from the unification, in 2006, of the Disclosure Committee and the Trading Committee, and its main duty is to manage policies on disclosure and trading.

It is incumbent upon the Disclosure and Trading Committee: (i) to advise the Investor Relations Officer; (ii) to continuously assess the present disclosure and trading situation and propose applicable changes; (iii) to resolve on construction doubts of reading comprehention; (iv) to establish the actions required for disclosure and dissemination of information, including to the Issuer’s employees; (v) to analyze in advance the content of press releases, road shows, teleconferences and public presentations that contain significant information on the Issuer; (vi) to regulate adherence to legal disclosure requirements; (vii) to investigate and decide on cases of disclosure requirement violation; (viii) to analyze questioning by official regulatory bodies and self-regulatory bodies and prepare responses; and (ix) to propose a solution for cases not covered by law and unforeseen exceptions.

In addition to the Investor Relations Officer, the Disclosure and Trading Committee shall be made up of two to ten persons appointed annually by the members Board of Directors, from among the members of that Board and the Executive Boards of the Issuer and its subsidiaries, and it shall meet whenever called by the Investor Relations Officer. a.4 Investment Policies Committee

It is incumbent upon the Investment Policies Committee to revise and approve investment policies, aiming at the economic and financial balance and prudent and effective management of the company's assets. a.5 Accounting Policies Committee

It is incumbent upon the Accounting Policies Committee to revise and approve accounting policies and procedures; it shall be composed of people elected annually by the Board of Directors from among the members of the Board of Directors, the company's and subsidiaries’ Executive Boards and professionals with proven knowledge of investment, capital markets, accounting and audit. a.6 Fiscal Council

The Issuer has a Fiscal Council which operates on a non-permanent basis, composed of three to five effective members and an equal number of alternative members. The election, establishment and operation of the Fiscal Council shall meet the provisions of articles 161 and 165 of Law No. 6,404/76.


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The Fiscal Council may or may not be established annually by the Shareholder's Meeting and it is incumbent upon the Fiscal Council to inspect the management members’ acts, examine the financial statements and express an opinion on the management’s annual report.

Established uninterruptedly since 1997, The Issuer’s Fiscal Council comprises three professionals independent of the controlling group, and one of them is elected by the holders of preferred shares. b) Date of the establishment of the fiscal council, if not permanent, and of the creation of committees - Fiscal Council: April 30, 2009 (the Fiscal Council has been established annually, without interruption, since May 09, 1995); - Disclosure and Trading Committee: April 29, 2005; - Investment Policies Committee: June 27, 2008; - Accounting Policies Committee: June 27, 2008. c) Mechanisms for assessing the performance of each body or committee

The Issuer’s bodies and committees are assessed based on their performance. Additionally, management members are individually assessed for compensation purposes, pursuant to item “e” below. d) With respect to the members of the executive board, their individual duties and powers

The Chief Executive Officer is responsible for chairing the Shareholders’ Meetings and calling and chairing the meetings of the Executive Board, and coordinating its actions.

The General Manager is responsible for structuring and guiding all the company’s services and establishing internal and operational rules, in accordance with the guidelines set by the Board of Directors.

Managing Vice-Presidents and Executive Directors collaborate with the Chief Executive Officer and General Manager in the management of business and in conducting corporate services.

The composition of the Executive Board is as follows.

Chief Executive Officer and General Manager

Alfredo Egydio Arruda Villela Filho

Managing Vice-Presidents

Henri Penchas

Jairo Cupertino

Roberto Egydio Setubal e) Mechanisms for evaluating the performance of the members of the board of directors, committees and executive board

See item “c” above and section 13 below.

It should be noted that directors are also subject to thorough and broad assessment, in which the following performance indicators are considered: financial, judicial, client satisfaction, people management and cross goals with other areas of the Issuer.


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12.2. Describe the rules, policies and practices related to shareholders’ meetings, indicating: a) Call notice terms

According to Article 124, item II of the Brazilian Corporate Law, the term for the first call is 15 days before the date of the meeting and it is eight days for the second call. b) Duties

The duties of the Shareholders’ Meeting are established in the Brazilian Corporate Law. c) Addresses (street or electronic) where the documents related to the shareholders’ meeting will be available to shareholders for analysis

The documents to be analyzed at shareholders’ meetings are available at the Issuer’s headquarters, located at Praça Alfredo de Souza Aranha No. 100, Torre Olavo Setubal, São Paulo, as well as on its investor relations website (www.itausa.com.br).

Shareholders may also request a copy of such documents through the following e-mail: [email protected]; or consult such documents on the websites of the Brazilian Securities and Exchange Commission (www.cvm.gov.br) and BM&FBOVESPA (www.bovespa.com.br).

d) Identification and management of conflicts of interest

According to paragraphs 1, 2 and 4 of Article 115 of the Brazilian Corporate Law, shareholders cannot vote in meetings that are intended to reach a decision on an appraisal report on assets that contributed to the capital, approve their accounts as management members or any other resolution that could benefit them, under penalty of (i) the resolution being cancelled; (ii) taking responsibility for damages inflicted; and (iii) being required to transfer to the company the advantages obtained. e) Request of proxies by management for the exercise of voting rights

There have been no requests for the use of proxies by management for the exercise of voting rights in the last three years.

f) Formalities necessary for accepting proxy instruments granted by shareholders, indicating whether the issuer accepts proxies granted by shareholders by electronic means

The shareholders can be represented at Shareholders’ Meetings by a proxy, under the provisions of Article 126 of the Brazilian Corporate Law.

In order to facilitate the work of the meeting, the Issuer suggests that the shareholders represented by proxy send, at least 48 hours before the meeting, a copy of the following documents:

a) Companies – certified copy of the bylaws of the company the member represents, evidence of the

election of management members and corresponding notarized proxy.

b) Individuals – the corresponding proxy with a notarized signature.


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These documents may be also sent by mail or courier to: Centro Empresarial Itaú Unibanco,

Superintendency of Corporate Affairs, Praça Alfredo Egydio de Souza Aranha, 100 - Parque Jabaquara, City of São Paulo, State of São Paulo, Brasil, CEP 04344-902 or by fax (011) 5019-8103, or the e-mail [email protected].

At the Shareholders’ Meeting, the shareholder or proxy is required to show an identification document. The Issuer still does not have a system for accepting proxy by electronic means.

g) Maintenance of forums and pages in the World Wide Web designed for receiving and sharing comments of shareholders on the meetings’ agendas

The Issuer does not maintain forums or pages on the World Wide Web designed for receiving and sharing the comments of shareholders on the meetings’ agendas.

h) Live broadcast of the meetings via video or audio

The Issuer does not have a system for live broadcasting of video and/or audio of Shareholders’ Meetings.

i) Mechanisms designed to allow for the inclusion of proposals made by shareholders in the agenda

Shareholders can contact the Issuer through the investor relations website (www.itausa.com.br).

12.3. In a table, please inform the dates and newspapers of the publication of:


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12.4. Describe the rules, policies and practices related to the board of directors, indicating:

a) Frequency of meetings

The Board of Directors will meet whenever necessary. In 2009, the Board of Directors met eight times. b) If applicable, the provisions in the shareholders’ agreement that place restrictions or conditions on the exercise of the voting rights of directors

Shareholders agreement of Itaúsa (“Itaúsa Shareholder’s Agreement”): there are no provisions for this purpose.

Shareholders agreement of “ESA” (“ESA Shareholder’s Agreement”): certain matters relating to key

strategic points of Itaúsa must first be defined by the controlling shareholders' meeting of Itaúsa (family Villela and Setubal). The Shareholders' Agreement ESA provides that the members of the Board of Directors of Itaúsa indicated by its controlling shareholders should vote with respect to these strategic points in a uniform manner and in accordance with the resolution passed at the meeting of the controlling shareholders of Itaúsa.

Shareholders agreement of OES Participações S.A. and of Itaúsa (“OES/Itaúsa Shareholder’s

Agreement”): there are no provisions for this purpose. c) Rules for identifying and managing conflicts of interest

The members of the board of directors may not participate in deliberations on matters where their interests are conflicting with the Issuer. The Issuer, however, is a holding company that has several subsidiaries that are publicly-held companies, with independent management. The rules applicable to these subsidiary companies may be consulted in their respective reference forms. 12.5. If applicable, please describe the commitment clause contained in the Bylaws for settling conflicts between shareholders and between shareholders and the issuer by means of arbitration

Not applicable. 12.6 – With respect to each member of the issuer’s board of directors and fiscal council members, please find below the following information: MANAGEMENT AND FISCAL COUNCIL MEMBERS

Name José Carlos Moraes Abreu

Age 87

Profession LawyerIndividual Taxpayer’s Registry (CPF) or passport no. 005.689.298-53

Elective office held Chairman of the Board of Directors

Date of election 04/30/2009

Date of investiture 04/30/2009

Term of office Annual

Other offices or functions held in the Issuer None Elected by the controlling shareholder YES


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Name Alfredo Egydio Setubal

Age 51

Profession AdministratorIndividual Taxpayer’s Registry (CPF) or passport no. 014.414.218-07

Elective office held Vice-Chairman of the Board of Directors Date of election 04/30/2009



Other offices or functions held in the Issuer Member of the Disclosure and Trading Committee Member of the Investment Policies Committee

Elected by the controlling shareholder YES

Name Carlos da Camara Pestana

Age 78






Name Maria de Lourdes Egydio Villela

Age 66

Profession PsychologistIndividual Taxpayer’s Registry (CPF) or passport no. 007.446.978-91






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Name Alfredo Egydio Arruda Villela Filho

Age 40

Profession EngineerIndividual Taxpayer’s Registry (CPF) or passport no. 066.530.838-88

Elective office held Member of the Board of Directors




Other offices or functions held in the Issuer CEO Chairman of the Disclosure and Trading Committee Member of the Investment Policies Committee Member of the Accounting Policies Committee


Name Paulo Setubal Neto

Age 61

Profession Industrial EngineerIndividual Taxpayer’s Registry (CPF) or passport no. 638.097.888-72

Elective office held Member of the Board of Directors





Name Ricardo Egydio Setubal

Age 48


Elective office held Alternative Member of the Board of Directors Date of election 04/30/2009



Other offices or functions held in the Issuer Member of the Disclosure and Trading Committee Coordinator of the Investment Policies Committee



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Name Rodolfo Villela Marino

Age 34

Profession AdministratorIndividual Taxpayer’s Registry (CPF) or passport no. 271.943.018-81

Elective office held Alternative Member of the Board of Directors Date of election 04/30/2009



Other offices or functions held in the Issuer Member of the Disclosure and Trading Committee Coordinator of the Investment Policies Committee


Name Henri Penchas

Age 64

Profession Engineer Individual Taxpayer’s Registry (CPF) or passport no. 061.738.378-20

Elective office held Managing Vice-President




Other offices or functions held in the Issuer Investor Relations Officer Member of the Disclosure and Trading Committee Member of the Investment Policies Committee Member of the Accounting Policies Committee

Elected by the parent company Not applicable

Name Jairo Cupertino

Age 84






Other offices or functions held in the Issuer None



188

Name Roberto Egydio Setubal

Age 55






Other offices or functions held in the Issuer President of the Accounting Policies Committee


Name José Marcos Konder Comparato

Age 77


Elective office held Member of the Fiscal Council





Name Paulo Ricardo Moraes Amaral

Age 68








189

Name Luiz Alberto de Castro Falleiros

Age 53

Profession Administrator Individual Taxpayer’s Registry (CPF) or passport no. 024.351.768-80






Elected by the parent company No

Name José Roberto Brant de Carvalho

Age 82

Profession Retired BankerIndividual Taxpayer’s Registry (CPF) or passport no. 038.679.008-68

Elective office held Alternative Member of the Fiscal Council Date of election 04/30/2009




Name João Costa

Age 59

Profession EconomistIndividual Taxpayer’s Registry (CPF) or passport no. 476.511.728-68

Elective office held Alternative Member of the Fiscal Council Date of election 04/30/2009





190

Name Sérgio Álvares da Fonseca Pinho

Age 55

Profession Economist Individual Taxpayer’s Registry (CPF) or passport no. 332.414.227-04

Elective office held Alternative Member of the Fiscal Council





Elected by the parent company No

12.7. Supply the information mentioned in item 12.6 with respect to the members of the statutory committees, as well as of the audit, risk, financial and compensation committees, even if these committees or structures are not statutory DISCLOSURE AND TRADING COMMITTEE


Age 40


Elective office held President of the Disclosure and Trading Committee




Other offices or functions held in the Issuer Member of the Board of Directors Chief Executive Officer Member of the Investment Policies Committee Member of the Accounting Policies Committee



Age 51


Elective office held Member of the Disclosure and Trading Committee




Other offices or functions held in the Issuer Vice-chairman of the Board of Directors Member of the Investment Policies Committee



191

Name Henri Penchas

Age 64






Other offices or functions held in the Issuer Managing Vice-President Investor Relations Officer Member of the Investment Policies Committee Member of the Accounting Policies Committee



Age 48

Profession Lawyer Individual Taxpayer’s Registry (CPF) or passport no. 033.033.518-99





Other offices or functions held in the Issuer Alternative Member of the Board of Directors Coordinator of the Investment Policies Committee



Age 34






Other offices or functions held in the Issuer Alternative Member of the Board of Directors Coordinator of the Investment Policies Committee



192

INVESTMENT POLICIES COMMITTEE


Age 40


Elective office held President of the Investments Policies Committee




Other offices or functions held in the Issuer President of the Disclosure and Trading Committee Member of the Board of Directors Chief Executive Officer Member of the Accounting Policies Committee



Age 51


Elective office held Member of the Investment Policies Committee




Other offices or functions held in the Issuer Vice-chairman of the Board of Directors Member of the Disclosure and Trading Committee


Name Fernando Marques Oliveira

Age 34









193

Name Henri Penchas

Age 64






Other offices or functions held in the Issuer Investor Relations Officer Managing Vice-President Member of the Disclosure and Trading Committee Member of the Accounting Policies Committee



Age 48

Profession Lawyer Individual Taxpayer’s Registry (CPF) or passport no. 033.033.518-99

Elective office held Coordinator of the Investment Policies Committee




Other offices or functions held in the Issuer Member of the Disclosure and Trading Committee Alternative Member of the Board of Directors


Name Ricardo Villela Marino

Age 36









194


Age 35


Elective office held Coordinator of the Investment Policies Committee




Other offices or functions held in the Issuer Member of the Disclosure and Trading Committee Alternative Member of the Board of Directors


ACCOUNTING POLICIES COMMITTEE

Name Roberto Egydio Setubal

Age 55


Elective office held President of the Accounting Policies Committee




Other offices or functions held in the Issuer Managing Vice-President



Age 40


Elective office held Member of the Accounting Policies Committee




Other offices or functions held in the Issuer President of the Investments Policies Committee President of the Disclosure and Trading Committee Member of the Board of Directors Chief Executive Officer



195

Name Henri Penchas

Age 64


Elective office held Member of the Accounting Policies Committee




Other offices or functions held in the Issuer Managing Vice-President Investor Relations Officer Member of the Disclosure and Trading Committee Member of the Investment Policies Committee


12.8 With respect to the members of the Board of Directors and the Fiscal Council, please find below: a) Curriculum vitae, containing the following information: I - Main professional experience for the last five years, indicating:

• Company name • Position and functions inherent to the position • Main activity of the company in which these functions were performed, mentioning the companies or

organizations that are part of the economic group of (i) the issuer, or (ii) of direct or indirect stockholders with an interest equal to or higher than 5% in a same class or type of the issuer’s securities Name: JOSÉ CARLOS MORAES ABREU Professional Experience Itaúsa - Investimentos Itaú S.A. Chairman of the Board of Directors since September 2008 Member of the Board of Directors from May 1966 to September 2008. General Manager from April 1983 to April 2004, Managing Vice-President from 1966 to 1976 and from 1979 to 1983, Chief Executive Officer from 1976 to 1979, Managing Director in 1966. Main activity of the company: Holding Itaú Unibanco Holding S.A. President of Honor from September 2008 to November 2008, Vice-Chairman of the Board of Directors from March 2003 to November 2008, Member of the International Consulting Council from March 2003 to April 2009, Member of the Appointments and Compensation Committee from May 2005 to April 2009. Main activity of the company: Holding Itaú Unibanco S.A. Vice-Chairman of the Board of Directors from 1986 to March 2003, Chairman of the Board of Directors in 1985, Member of the Board of Directors from 1964 to 1984 and General Manager from 1976 to 1985. Main activity of the company: Multiple-service bank, with commercial portfolio. Member of the National Monetary Council from 1975 to 1984. Education: Law degree from Universidade de São Paulo, 1944. II - Indication of all management positions he holds or has held in publicly held companies

Itaúsa – Investimentos Itaú S.A., Itaú Unibanco Holding S.A. and Itaú Unibanco S.A. in the positions


196

specified above. b) Description of any of the following events that may have taken place over the last five years:

I - Any criminal conviction - NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended

or disqualified him for the performance of any professional or commercial activity – NO Name: ALFREDO EGYDIO SETUBAL Professional Experience Itaúsa - Investimentos Itaú S.A. Vice-Chairman of the Board of Directors since September 2008 Member of the Disclosure and Trading Committee and Investment Policies Committee since August 2008 Main activity of the company: Holding Itaú Unibanco Holding S.A. Member of the Board of Directors since April 2007 Managing Vice-President and Investor Relations Officer since March 2003 Member of the Appointments and Corporate Governance Committee since June 2009 Chairman of the Disclosure and Trading Committee since April 2005 Member of the Accounting Policies Committee from May 2008 to April 2009 Main activity of the company: Holding Itaú Unibanco S.A. Managing Vice-President since March 1996 Investor Relations Officer from 1995 to 2003 Chief Executive Officer from 1993 to 1996 Managing Director from 1988 to 1993 Main activity of the company: Multiple-service bank, with commercial portfolio. National Association of Investment Banks - ANBID Vice-President from 1994 to August 2003 President from August 2003 to August 2008 Association of Broker-Dealers – ADEVAL Member of the Advisory Board since 1993 Brazilian Association of Listed Capital Companies – ABRASCA Member of the Management Board since 1999 Brazilian Institute of Investors Relations - IBRI Member of the Board of Directors since 1999 São Paulo Museum of Modern Art – MAM (since 1992). Financial Officer since 1992 Education: Bachelor’s degree, 1980 and postgraduate degree in business administration from Fundação Getulio Vargas, with specialization course at INSEAD (France). II - Indication of all management positions he holds or has held in publicly held companies

Itaúsa – Investimentos Itaú S.A., Itaú Unibanco Holding S.A. and Itaú Unibanco S.A. in the positions specified above.


197

b) Description of any of the following events that may have taken place over the last five years:

I - Any criminal conviction - NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO

III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: CARLOS DA CAMARA PESTANA Professional Experience Itaúsa - Investimentos Itaú S.A. Vice-Chairman of the Board of Directors since December 2008 Main activity of the company: Holding Itaú Unibanco Holding S.A. Chairman of the Board of Directors from September to November 2008; Member of the International Advisory board from March 2003 to April 2009; Member of the Board of Directors from March 2003 to September 2008; President of the Audit Committee from April 2004 to September 2008; President of the Appointments and Compensation Committee from September 2008 to April 2009 and Member of the Appointments and Compensation Committee from May 2005 to September 2008. Main activity of the company: Holding Itaú Unibanco S.A. Member of the Board of Directors from October 1986 to March 2003; Managing Vice-President from November 1986 to June 1990 and Chief Executive Officer from July 1990 to March 1994. Main activity of the company: Multiple-service bank, with commercial portfolio. Education: Law degree from Faculdade de Direito da Universidade Clássica de Lisboa, 1955. II - Indication of all management positions he holds or has held in publicly held companies


b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction – NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied – NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: MARIA DE LOURDES EGYDIO VILLELA Professional Experience Itaúsa - Investimentos Itaú S.A. Vice-Chairman of the Board of Directors since April 2001 Main activity of the company: Holding Itaú Unibanco Holding S.A. Member of the Board of Directors from March 2003 to April 2008, Member of the International Advisory board from March 2003 to April 2009. Main activity of the company: Holding


198

Itaú Unibanco S.A. Member of the Board of Directors from March 1993 to March 2003 Main activity of the company: Multiple bank, with commercial portfolio. Main activity of the company: Holding São Paulo Museum of Modern Art (MAM) President since December 1994 Itaú Cultural Institute President since May 2001 Despertar Communitarian Association Founder and President since April 1994 Faça Parte – Brasil Voluntário Institute Founder and President since October 2000 São Paulo Voluntary Work Center Founder and President since May 1997 Education: Psychology degree from Pontifícia Universidade Católica, 1971 II - Indication of all management positions he holds or has held in publicly held companies


b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction – NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: ALFREDO EGYDIO ARRUDA VILLELA FILHO Professional Experience Itaúsa - Investimentos Itaú S.A. Member of the Board of Directors since August 1995; CEO and Chief Executive Officer since September 2008; President of the Disclosure and Trading Committee since April 2005; President of the Investment Policies Committee and Member of the Accounting Policies Committee since August 2008. Main activity of the company: Holding Itaú Unibanco Holding S.A. Vice-Chairman of the Board of Directors since March 2003; Member of the Appointments and Compensation Committee since May 2005; Member of the Appointments and Corporate Governance Committee since June 2009, Member of the Accounting Policies Committee from May 2008 to April 2009. Main activity of the company: Holding Itaú Unibanco S.A. Vice-Chairman of the Board of Directors from 2001 to March 2003 Main activity of the company: Multiple-service bank, with commercial portfolio. Itautec S.A. – Grupo Itautec


199

Vice-Chairman of the Board of Directors since January 2010, Chairman of the Board of Directors from April 2009 to January 2010; Vice-Chairman of the Board of Directors from April 1997 to April 2009. Main activity of the company: Manufacturing of IT equipment. Elekeiroz S.A. Vice-Chairman of the Board of Directors from November 2009 to April 2010; Chairman of the Board of Directors from April 2009 to November 2009; Vice-Chairman of the Board of Directors from April 2004 to April 2009. Main activity of the company: Manufacturing of intermediate products for plasticizers, resins and fibers. Duratex S.A. Vice-Chairman of the Board of Directors since August 2009 Main activity of the company: Manufacturing, sale, import and export of wood byproducts, bathroom fittings, and ceramic and plastic materials. Education: Mechanical Engineering degree from Escola de Engenharia Mauá of the Instituto Mauá de Tecnologia in 1992 and postgraduate degree in Business Administration from Fundação Getúlio Vargas. II - Indication of all management positions he holds or has held in publicly held companies

Itaúsa - Investimentos Itaú S.A., Itaú Unibanco Holding S.A., Itaú Unibanco S.A., Itautec S.A., Elekeiroz S.A. and Duratex S.A. in the positions specified above.

b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction – NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO


200

Name: PAULO SETUBAL NETO Professional Experience Itaúsa - Investimentos Itaú S.A. Member of the Board of Directors since 1999; Chief Executive Officer from 1987 to 1991 and Managing Vice-President from 1991 to 1999. Main activity of the company: Holding Duratex S.A. Member of the Board of Directors since April 2001; Chief Executive Officer from April 2001 to April 2009. Main activity of the company: Manufacturing, sale, import and export of wood byproducts, bathroom fittings, and ceramic and plastic materials. Itautec S.A. Member of the Board of Directors since 1997; Chief Executive Officer from 1997 to April 2009. Main activity of the company: Manufacturing of IT equipment. Elekeiroz S.A. Member of the Board of Directors since 1986; Chief Executive Officer from March 1993 to April 2009. Main activity of the company: Manufacturing of intermediate products for plasticizers, resins and fibers. Itaúsa Industrial Foundation Chief Executive Officer and Chairman of the Board of Trustees since September 2008; Vice-Chairman of the Board of Trustees from 1980 to August 2008. Main activity of the company: Activities for the protection of social rights. Education: Industrial Electric Engineer – electronics option from Faculdade de Engenharia Industrial (1967/1971), of the Pontifícia Universidade Católica de São Paulo – Bachelor’s Degree in Industrial Engineering. Regional Engineering Board (CREA) – 33638/D issued on February 14, 1974. Master’s Degree in Finance from Faculdade Getúlio Vargas, 1974 II - Indication of all management positions he holds or has held in publicly held companies

Itaúsa - Investimentos Itaú S.A., Duratex S.A. and Elekeiroz S.A. in the positions specified above. b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction – NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: RICARDO EGYDIO SETUBAL Professional Experience Itaúsa - Investimentos Itaú S.A. Alternative Member of the Board of Directors since April 2009, Member of the Investment Policies Committee since August 2008 Main activity of the company: Holding Itautec S.A. – Grupo Itautec Chairman of the Board of Directors since February 2010; Alternative Member of the Board of Directors from April 2009 to January 2010; Member of the Board of Directors from April 1999 to April 2008. Executive Managing Vice-President from April 1999 to January 2010. Main activity of the company: Manufacturing of IT equipment.


201

Elekeiroz S.A. Alternative Member of the Board of Directors since April 2009. Executive Managing Vice-President of the Environmental, Social and Cultural Sustainability Committee from October 2007 to April 2009. Main activity of the company: Manufacturing of intermediate products for plasticizers, resins and fibers. Duratex S.A. Vice-Chairman of the Board of Directors since August 2009 Main activity of the company: Manufacturing, sale, import and export of wood byproducts, bathroom fittings, and ceramic and plastic materials. Education: Law degree from Universidade de São Paulo (USP), in 1988, and holds a Business Administration degree from Fundação Getúlio Vargas, 1984, and a specialization degree (PMD 69) from Harvard University, 1995. II - Indication of all management positions he holds or has held in publicly held companies

Itaúsa - Investimentos Itaú S.A., Itautec S.A., Elekeiroz S.A. e Duratex S.A. in the positions specified above.

b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction – NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: RODOLFO VILLELA MARINO Itaúsa - Investimentos Itaú S.A. Alternative Member of the Board of Directors since April 2009 Member of the Investment Policies Committee since August 2008; Member of the Disclosure and Trading Committee since May 2009. Main activity of the company: Holding Itautec S.A. Member of the Board of Directors since April 2008 Main activity of the company: Manufacturing of IT equipment. Elekeiroz S.A. Member of the Board of Directors since April 2008 Main activity of the company: Manufacturing of intermediate products for plasticizers, resins and fibers. Duratex S.A. Member of the Board of Directors since April 2008 Main activity of the company: Manufacturing, sale, import and export of wood byproducts, bathroom fittings, and ceramic and plastic materials. He worked as advisor for the World Bank, General Coordinator of Studies and Evaluation for Continued Education, Literacy and Diversity Department of the Ministry of Education, Project Manager for the Social Program Evaluation Department of the Ministry of Social Welfare.


202

Education: Business Administration degree from Fundação Getúlio Vargas, currently attending PhD classes on Public Administration and Government at the same school. Master’s Degree in Development Studies and Economics and Philosophy from the London School of Economics and Political Science (LSE). II - Indication of all management positions he holds or has held in publicly held companies

Itaúsa - Investimentos Itaú S.A., Itautec S.A., Elekeiroz S.A. e Duratex S.A. in the positions specified above.

b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction – NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: HENRI PENCHAS Professional Experience Itaúsa - Investimentos Itaú S.A. Managing Vice-President since April 2009 Investor Relations Officer since 2009 and from 1995 to April 2008 Chief Executive Officer from December 1984 to April 2008 Member of the Disclosure and Trading Committee since April 2005 Member of the Investment Polices and Accounting Polices Committees since August 2008 Main activity of the company: Holding. Itaú Unibanco Holding S.A. Member of the Board of Directors since March 2003 Member of Strategy Committee, and Appointments and Corporate Governance Committee since June 2009 Member of the International Advisory Board from March 2003 to April 2009 Member of the Disclosure and Trading Committee from May 2005 to April 2009 Senior Vice-President from March 2003 to May 2008 Member of the Capital and Risk Management Committee and Accounting Policies Committee from May 2008 to April 2009 Main activity of the company: Holding. Itaú Unibanco S.A. Senior Vice-President responsible for the Economic Control Area from April 1997 to April 2008 Member of the Board of Directors from April 1997 to March 2003 Executive Managing Vice-President from April 1993 to March 1997 Chief Executive Officer from 1988 to 1993 Main activity of the company: Multiple-service bank, with commercial portfolio. Banco Itaú BBA S.A. Member of the Board of Directors since April 2009 Vice-Chairman of the Board of Directors from February 2003 to April 2009 Main activity of the company: Multiple-service bank, with investment portfolio Duratex S.A.: Chief Executive Officer since August 2009 General Manager from April 2009 to July 2009.


203

Main activity of the company: Manufacturing, sale, import and export of wood byproducts, bathroom fittings, and ceramic and plastic materials. Education: Mechanical engineering degree from Universidade Mackenzie in 1968 and postgraduate degree in finance from Fundação Getulio Vargas. II - Indication of all management positions they hold or have held in publicly held companies

Itaúsa - Investimentos Itaú S.A., Itaú Unibanco Holding S.A., Itaú Unibanco S.A. and Duratex S.A. in the positions specified above.

c) Description of any of the following events that may have taken place over the last five years:

I - Any criminal conviction - NO II - Any conviction in an administrative proceedings of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: JAIRO CUPERTINO Professional Experience Itaúsa – Investimentos Itaú S.A. Executive Managing Vice-President since August 1986 Director and Member of the Board of Directors from 1974 to 1975; Managing Director between 1975 and 1977; Member of the Board of Directors between 1974 and 1990; Director between 1978 and 1986. Main activity of the company: Holding. Itaú Unibanco S.A. Managing Director between 1974 and 1980, Executive Managing Vice-President between 1980 and 1990; Member of the Board of Directors between 1974 and 2001; Member of the International Advisory Board between 1988 and1998. Main activity of the company: Multiple-service bank, with commercial portfolio. Itautec S.A. Member of the Board of Directors from October 1985 to February 2010 and Chief Executive Officer from June 1985 to July 1997. Main activity of the company: Manufacturing of IT equipment. Duratex S.A. Member of the Board of Directors from 1980 to August 2009. Main activity of the company: Manufacturing, sale, import and export of wood byproducts, bathroom fittings, and ceramic and plastic materials. Education: Engineering degree from Escola Politécnica da Universidade de São Paulo.


204

II - Indication of all management positions they hold or have held in publicly held companies

Itaúsa - Investimentos Itaú S.A., Itaú Unibanco S.A., Itautec S.A. and Duratex S.A. in the positions specified above.

b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction - NO II - Any conviction in an administrative proceedings of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: ROBERTO EGYDIO SETUBAL Professional Experience Itaúsa – Investimentos Itaú S.A. Executive Managing Vice-President since May 1994 President of the Accounting Policies Committee since August 2008 Main activity of the company: Holding. Itaú Unibanco Holding S.A. Vice-Chairman of the Board of Directors; Chief Executive Officer since March 2003; Member of the Capital and Risk Management Committee since May 2008; Member of the Strategy and Personnel Committees since June 2009; Chairman of the International Advisory Board from March 2003 to April 2009; Member of the Appointments and Compensation Committee from May 2005 to April 2009. Main activity of the company: Holding. Itaú Unibanco S.A. Chief Executive Officer and General Manager since April 1994 General Manager from August 1990 to March 1994 Member of the Board of Directors from April 1995 to March 2003 Main activity of the company: Multiple-service bank, with commercial portfolio. Banco Itaú BBA S.A.: Chairman of the Board of Directors since February 2003 Main activity of the company: Multiple-service bank, with portfolio investment. Itauseg Participações S.A. Chairman of the Board of Directors since July 2005 Chief Executive Officer from March 2005 to July 2008 Main activity of the company: Holding Brazilian Federation of Banks (Fenaban) and Brazilian Federation of Bank Associations (Febraban) President from April 1997 to March 2001 Institute of International Finance Vice-President since September 2003 International Monetary Conference Board Member The Federal Reserve Bank of New York Member of the International Advisory Committee New York Stock Exchange - NYSE


205

Member of the International Advisory Committee since April 2005 Education: Bachelor’s degree in production engineering from Escola Politécnica of Universidade de São Paulo and a Master’s degree in science engineering from Stanford University, 1979. II - Indication of all management positions they hold or have held in publicly held companies

Itaúsa - Investimentos Itaú S.A., Itaú Unibanco Holding S.A., Itaú Unibanco S.A. and Itauseg Participações S.A. in the positions specified above.

b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction - NO II - Any conviction in an administrative proceedings of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: JOSÉ MARCOS KONDER COMPARATO Professional Experience Itaúsa - Investimentos Itaú S.A. Effective Member of the Fiscal Council since May 1995; Managing Director from August 1986 to April 1987 and Chief Executive Officer from April 1987 to March 1995. Main activity of the company: Holding Itaú Unibanco Holding S.A. Alternative Member of the Fiscal Council since March 2003. Main activity of the company: Holding Itaú Unibanco S.A. Managing Director from May 1980 to August 1986 Banco Itaú de Investimento S.A.: Officer from September 1974 to April 1980; Itaú S.A. Crédito Imobiliário: Chief Executive Officer from December 1977 to August 1986; Unifina S.A. Imobiliária e Participações: Chief Executive Officer from September 1981 to April 1987; Itaú S.A. Empreendimentos Imobiliários: Chief Executive Officer from September 1979 to April 1995; Main activity of the company: Multiple-service bank, with commercial portfolio. BR Foods Member of the Board of Directors from April 1996 to March 2009 Education: Civil Engineering degree from Escola Politécnica of Universidade de São Paulo, 1955 II - Indication of all management positions he holds or has held in publicly held companies


b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction – NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO


206

Name: PAULO RICARDO MORAES AMARAL Professional Experience Itaúsa - Investimentos Itaú S.A. Effective Member of the Fiscal Council since April 2006; Alternative Member of the Fiscal Council from 1995 to 2006. Main activity of the company: Holding Duratex S.A. Effective Member of the Fiscal Council; Chief Executive Officer from 1977 to 1992; Chief Financial Officer from 1977 to 1980. Main activity of the company: Manufacturing, sale, import and export of wood byproducts, bathroom fittings, and ceramic and plastic materials. Education: Mechanical Engineering: Faculdade de Engenharia Industrial - FEI, São Paulo. 1961/1965; Postgraduate in Business Administration: Fundação Getúlio Vargas, São Paulo. 1969/1970; Stanford Executive Program: Stanford Graduate School of Business, California, USA. 1974 – Specialization in business administration for Senior Executives; Financial Administration for Executives: Fundação Getúlio Vargas, São Paulo. 1976 – one semester; Foreign Trade: Fundação Getúlio Vargas, São Paulo. 1976 – one semester. II - Indication of all management positions he holds or has held in publicly held companies

Itaúsa - Investimentos Itaú S.A. and Duratex S.A. in the positions specified above. b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction – NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Nome: LUIZ ALBERTO DE CASTRO FALLEIROS Professional Experience Itaúsa – Investimentos Itaú S.A. Effective Member of the Fiscal Council since April 2010. Main activity of the company: Holding FASCE – Assessoria e Consultoria Empresarial S/S Ltda. Consultant since April 2000 Main activity of the company: Provider of advisory services to companies and investors. Financeira Alfa S.A. Credito Financiamento e Investimento Member of the Board of Directors since April 2008 Main activity of the company: Loan, financing and investment company Rohr S.A. Member of the Fiscal Council since April 2008 Universidade Tiradentes Member of the Board of Directors since January 2009.


207

Melpaper S.A. Member of the Fiscal Council from April 2005 to April 2009. Main activity of the company: Activities in the paper, pulp and wood pulp industry, and purchase and sale of real estate for industrial purposes. Alpargatas S.A. Alternative Fiscal Member from April 2006 to April 2009. Main activity of the company: Industrialization, manufacturing, sale and export of footwear, including that used as industrial safety equipment (EPI). Tele Norte Celular Participações S.A. Alternative Member of the Advisory Board from April 2008 to April 2009. Banco Alfa de Investimento S.A. Member of the Fiscal Council from April 2005 to April 2008. Main activity of the company: Multiple-service bank, with investment portfolio Financeira Alfa S.A. Crédito, Financiamento e Investimento Member of the Fiscal Council from April 2005 to April 2008. Main activity of the company: Loan, financing and investment company Education: MBA in Finance – FACAMP, postgraduate in Economics from PUC-SP (1981 to 1982). Economics graduate from Universidade Estadual de Campinas (1975-1978). II - Indication of all management positions he holds or has held in publicly held companies Itaúsa – Investimentos Itaú S.A e Melpaper S.A. in the positions specified above. b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction – NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: JOSÉ ROBERTO BRANT DE CARVALHO Professional Experience Itaúsa - Investimentos Itaú S.A. Alternative Member of the Fiscal Council since April 2006. Main activity of the company: Holding Itaú Unibanco Holding S.A. Alternative Member of the Fiscal Council from March 2003 to April 2005. Main activity of the company: Holding Itaú Unibanco S.A. Chief Executive Officer from October 1986 to March 1991; Main activity of the company: Multiple bank, with commercial portfolio. II - Indication of all management positions he holds or has held in publicly held companies



208

b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction – NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: JOÃO COSTA Professional Experience Itaúsa - Investimentos Itaú S.A. Alternative Member of the Fiscal Council since April 2009. Main activity of the company: Holding Itaú Unibanco Holding S.A. Alternative Member of the Fiscal Council since May 2009. Main activity of the company: Holding Itaú Unibanco S.A. Managing Director from April 1997 to April 2008. Main activity of the company: Multiple bank, with commercial portfolio. Brazilian Federation of Bank Associations (Febraban) Effective member of the Fiscal Council from April 1997 to August 2008 Brazilian Federation of Banks (Fenaban) Effective member of the Fiscal Council from April 1997 to August 2008 Brazilian Institute of Bank Science (IBCB) Effective member of the Fiscal Council from April 1997 to August 2008 Bank Union of the State of São Paulo Effective member of the Fiscal Council from April 1997 to August 2008 Education: Economics degree from Faculdade de Economia São Luiz – São Paulo, extension in Business Administration from FEA/USP. Management Program for Executives – University of Pittsburgh. II - Indication of all management positions he holds or has held in publicly held companies


b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction – NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO Name: SÉRGIO ALVARES DA FONSECA PINHO


209

Professional Experience Itaúsa – Investimentos Itaú S.A. Alternative Member of the Fiscal Council since April 2009 Main activity of the company: Holding. Banco do Brasil S.A. Deputy Operating Manager Education: Economics degree from Universidade Federal do Rio de Janeiro in 1980, Executive MBA from COPPEAD/UFRJ in 1997. II - Indication of all management positions they hold or have held in publicly held companies

Itaúsa – Investimentos Itaú S.A. in the position specified above. b) Description of any of the following events that may have taken place over the last five years: I - Any criminal conviction - NO II - Any conviction in an administrative proceeding of the CVM and the punishments applied - NO III - Any conviction ruled final and unappealable at the legal or administrative levels that have suspended or disqualified him for the performance of any professional or commercial activity – NO 12.9. Inform the existence of a marital relationship, stable union or kinship extended to relatives once removed between: a) issuer’s management members

• Alfredo Egydio Setubal (Vice-Chairman of Board of Directors), Paulo Setubal Neto (Member of Board of Directors), Ricardo Egydio Setubal (Alternative Member of Board of Directors) and Roberto Egydio Setubal (Managing Vice-President) are brothers.

• Maria de Lourdes Egydio Villela (Vice-Chairman of the Board of Directors) is the aunt of Alfredo Egydio Arruda Villela Filho (Member of Board of Directors and CEO) and mother of Rodolfo Villela Marino (Alternative Member of Board of Directors).

b) (i) issuer’s management members and (ii) management members of the issuer’s direct or indirect subsidiaries

• Olavo Egydio Setubal Júnior (Vice-Chairman of the Board of Directors of the indirect subsidiary Itauseg Participações S.A.) is the brother of Alfredo Egydio Setubal (Vice-Chairman of the Board of Directors of the issuer), Paulo Setubal Neto (Member of the Board of Directors of the issuer), Ricardo Egydio Setubal (Alternative Member of the Board of Directors of the issuer) and Roberto Egydio Setubal (Managing Vice-President of the issuer).

• Ricardo Villela Marino (Member of the Board of Directors of the controlled company Itaú Unibanco Holding S.A. and Chief Executive Officer of the indirect subsidiary Itaú Unibanco S.A.) is the son of Maria de Lourdes Egydio Villela (Vice-Chairman of the Board of Directors of the issuer) and brother of Rodolfo Villela Marino (Alternative Member of the Board of Directors of the issuer).

c) (i) management members of the issuer and its direct or indirect subsidiaries and (ii) issuer’s direct or indirect parent companies

The group of controlling shareholders of the Issuer is composed of the families:

• VILLELA: Maria de Lourdes Egydio Villela (Vice-Chairman of the Board of Directors), her sons Rodolfo Villela Marino (Alternative Member of the Board of Directors) and Ricardo Villela Marino


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(Member of the Board of Directors of the subsidiary Itaú Unibanco Holding S.A. and Chief Executive Officer of the indirect subsidiary Itaú Unibanco S.A.) and her nephews Alfredo Egydio Arruda Villela Filho (Member of the Board of Directors and CEO) and Ana Lúcia de Mattos Barretto Villela;

• SETUBAL: the siblings Alfredo Egydio Setubal (Vice-Chairman of the Board of Directors), José Luiz

Egydio Setubal, Maria Alice Setubal, Olavo Egydio Setubal Júnior (Vice-Chairman of the Board of Directors of the indirect subsidiary Itauseg Participações S.A.), Paulo Setubal Neto (Member of the Board of Directors), Ricardo Egydio Setubal (Alternative Member of the Board of Directors) and Roberto Egydio Setubal (Managing Vice-President).

d) (i) issuer’s management members and (ii) management members of the issuer’s direct or indirect parent companies

• The Executive Board of the parent company Companhia ESA is composed of the brothers Egydio Setubal (Managing Vice-President) and Ricardo Egydio Setubal (Alternative Member of the Board of Directors), as well as of Rodolfo Villela Marino (Alternative Member of the Board of Directors) and Alfredo Egydio Arruda Villela Filho (Member of the Board of Directors and CEO).

12.10 Inform on the subordination, services provision or control relationships maintained for the past three years between the issuer’s management members and: a) Issuer’s direct or indirect subsidiary:

Except for the executives José Carlos Moraes Abreu, Maria de Lourdes Egydio Villela, Carlos da Camara Pestana and Jairo Cupertino, all the others have management positions in subsidiary companies. b) Issuer’s direct or indirect controlling group

The management members Alfredo Egydio Arruda Villela Filho, Alfredo Egydio Setubal, Maria de Lourdes Egydio Villela, Paulo Setubal Neto, Ricardo Egydio Setubal, Roberto Egydio Setubal and Rodolfo Villela Marino are in the controlling group of Itaúsa. c) If relevant, supplier, client, debtor or creditor of the issuer, its subsidiaries or parent companies or subsidiaries of any of these people

Itaúsa is a guarantor in financing contracted by the subsidiary companies Itautec S.A. (with FINEP and BNDES), Duratex S.A. (with BNDES) and Elekeiroz S.A. (with BNDES). Itaúsa is also a guarantor of Elekeiroz in an industrial credit note (cédula de crédito industrial) with BNB.


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12.11. Describe the provision in any agreements, including insurance policies, that provide for the payment or reimbursement of expenses supported by management members arising from indemnity for damages caused to third parties or the issuer, from penalties imposed by state agents, or from agreements that aim at ending administrative or legal proceedings due to the performance of their functions

In compliance with its policy, the issuer has civil liability insurance for directors and officers (D&O), which covers the management members of the issuer for expenses in the case that the personal assets of management members are affected as a result of lawsuits, administrative proceedings or arbitration procedures, including but not limited to those of a civil, labor, tax, consumer or pension nature, in view of their personal, joint or subsidiary liability, or because of of neglect committed by a corporate entity, related to the activities of the Issuer, as well as those resulting from any written claim or civil lawsuit, administrative proceeding, regulatory or arbitration procedure, that attributes the violation of laws or federal, state and/or municipal rules, or foreign rules that govern securities.

The D&O insurance premiums paid in 2010 amounted R$ 1,754 thousand, including Financial Operations Tax (IOF) and issuance policy costs.

12.12 Supply other information that the issuer may deem relevant

All relevant information was presented in prior items.


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ITEM 13. MANAGEMENT COMPENSATION 13.1 Describe the policy or practice for the compensation of the board of directors, statutory and non-statutory executive board, fiscal council, statutory committees and audit, risk, financial and compensation committees, addressing the following aspects:

The data provided below refers only to the Issuer. Itaúsa holds control over several companies, which have compensation policies adjusted to the profile of each business, and the details of such polices can be found in the reference forms of the respective companies.

The main publicly-held companies controlled by Itaúsa are: Itaú Unibanco Holding, Elekeiroz, Duratex and Itautec a. Objectives of the compensation policy or practice:

The objectives of the compensation policy adopted by the Issuer are, in general, the same as those of the compensation policies of the publicly-held companies controlled by it, namely: to attract, reward, retain and stimulate the management members in the conduct of its business, in consideration of the achievement of sustainable results for the companies, in line with the shareholders' interests.

At the time the Issuer's compensation policy was established, values aligned with those adopted by the market and with the Company’s strategy, as well as the appropriate risk management over the time, were taken into consideration.

The general compensation parameters of the Issuer's management members are set up in its Bylaws, whereas the aggregate amounts for annual compensation of the Board of Directors and Executive Board are resolved at the annual Shareholders’ Meeting, which also stipulates the monthly fixed fees of the members of the Fiscal Council.

The apportionment of compensation, as well as profit sharing, among the members of the Board of Directors and Executive Board, is carried out by the Board of Directors, subject to the limits set by the Bylaws and at the annual shareholders’ meeting of the Issuer. The compensation so defined, in addition to ensuring transparency for the shareholders and the market, aims at rewarding the contribution given by each management member and the management as a whole for the Issuer’s results.

Regarding the benefit policy, noteworthy are the benefits focused on health (the health and dental care plan) and the private pension plan.

Finally, it should be emphasized that the information below address only the compensation policy adopted by the management members of the statutory and non-statutory bodies of the Issuer: the Board of Directors, the statutory Executive Board (the Issuer does not have non-statutory directors, the Fiscal Council and tge committees (Disclosure and Trading, Investment Policies and Accounting Policies). The Issuer, considered individually, has no employees. b. Compensation composition, indicating: i. Description of the compensation elements and the objectives of each one of them:


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Board of Directors and Executive Board

The annual compensation of the members of the Executive Board is composed of (i) monthly fixed fees; (ii) short-term variable compensation (profit sharing); and (iii) benefit plan.

The monthly fixed compensation and the benefit plan aim at rewarding the management member in relation to the level of importance, experience and responsibility of the position held ,whereas the short-term variable compensation, which is paid semi-annually, aims at compensating the Issuer’s management members in accordance with their contribution to

the achievement and surpassing of the goals previously set by the Issuer.

The members of the Board of Directors of the Issuer who were elected as alternatives at the annual Shareholders' Meeting of April 30, 2009, are eligible for the benefit policy. The monthly fixed compensation and profit sharing are linked to the discharge of the duties associated with each position, and so alternative members are compensated only when they deputize for the effective member. Fiscal Council

The total compensation of the members of the Fiscal Council is established at the annual shareholders' meeting, subject to the approval of the Board of Directors. Pursuant to the legislation, such compensation cannot be lower, for each acting member, than 10% of the fixed compensation assigned to each director (i.e., not including benefits, representation allowances and profit sharing assigned to directors). Thus, the members of the Fiscal Council receive only a monthly fixed compensation and they are not eligible for the benefit policy. Investment Policies Committee

The members of the Investment Policies Committee who do not hold positions nor act in the Issuer’s statutory bodies (Board of Directors, Executive Board and Fiscal Council) receive monthly fixed compensation, because they are eligible for the benefit policy due to their participation in the committee. Such compensation is aimed at acknowledging the availability, dedication and contribution of the members of the Investment Policies Committee to the work developed in the scope of the committee.

The members of the Investment Policies Committee who hold positions and act in other statutory bodies of the Issuer are not compensated for the duties they carry out in the Investment Policies Committee. These management members are compensated based on the compensation and benefit policy adopted by the statutory bodies of which they are members. Other Committees

The members of the other existing committees (Disclosure and Trading Committee and Accounting Policies Committee) who serve on the Board of Directors, Executive Board or Fiscal Council of the Issuer are compensated based on the compensation and benefit policy adopted by the statutory bodies in which they act. ii. The proportion of each element in total compensation

For the Board of Directors of the Issuer, the fixed monthly compensation, the short-term

variable compensation (profit sharing), the compensation for serving on committees and benefits in 2009 corresponded to 52%, 43%, 2% and 3%, respectively, of total compensation.


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For the Board of Officer of the Issuer, the fixed monthly compensation, the short-term variable compensation (profit sharing), and benefits in 2009 corresponded to 27%, 68% and 5%, respectively, of total compensation.

For the Fiscal Council, the monthly fixed compensation in 2009 corresponded to 100% of total compensation.

For the Investment Policies Committee, the monthly fixed compensation and benefits in 2009 corresponded to 91% and 9%, respectively, of total compensation. iii. Calculation and adjustment methodology for each of the compensation elements Monthly fixed fees: these are agreed upon with the management members and periodically adjusted in line with the market and the Company's strategy. Variable compensation: short-term (semi-annual) profit sharing, which represents a significant portion of total compensation and takes into consideration the results of the Issuer’s operations, and the performance of the management member. Benefit plans: the practice regarding benefit plans is compatible with the market practices, taking into consideration the fact that the main benefits are health care and private pension plans. iv. Reasons that justify the composition of compensation

The practice adopted by the Issuer aims at aligning risk management in the short

and medium terms, in addition to providing benefits to management members in the same proportion that the Issuer and its shareholders are benefited by their performance. c. Main performance indicators that are taken into consideration in determining each compensation element

The variable compensation (profit sharing and Issuer’s results) and the monthly fixed fees received by

management members are defined considering the availability, focus and dedication of individual executives in the conduct of their assignment in each organ of the Issuer.

Additionally, at variable compensation is considered the result of the Issuer. The benefit plan, are not affected by performance indicators.

d. How the compensation is structured to reflect the evolution of performance indicators

As mentioned above, a significant portion of the total compensation of management members is provided through variable compensation, and is affected by the performance indicators. Therefore, the better the indicators, the higher the compensation and the reverse. e. How the compensation policy or practice is aligned with the Company’s short-, medium- and long-term interests

As mentioned in item “c” above, the variable compensation corresponds to a significant portion of the total compensation paid to management members, taking into consideration


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that the objective of such a practice is to align the risk management in the short, medium and long terms, and in addition to provide benefits to management members in the same proportion that the Issuer and its shareholders are benefited by their performance. Taking into consideration that the compensation of management members is affected by the results of the Issuer, including the risks that it assumes, we believe that the compensation policy causes the management members’ interests to be aligned with those of the Company. f. Existence of compensation supported by direct or indirect subsidiaries, controlled companies or parent companies

The compensation of the management and Fiscal Council members of the Issuer is not provided by direct or indirect subsidiaries, controlled companies or parent companies. However, some management members of the Issuer take part in the management bodies of the controlled companies. For this reason, such management members also receive compensation from those companies because of the duties they perform there. g. Existence of any compensation or benefit tied to the occurrence of a certain corporate event, such as the disposal of the Company’s shareholding control

Currently, there is no compensation or benefit tied to the occurrence of any particular corporate event, such as the disposal of the issuer’s stockholding control, and nor is there any such compensation provided for in the Issuer’s compensation policy.

13.2 With respect to the compensation of the board of directors, statutory executive board, and fiscal council recognized in the income or loss for the last year and to that determined for the current year, please prepare a table containing:

In 2009, at the annual shareholders’ meeting the aggregate compensation to be paid to the members of the Board of Directors and Executive Board was approved in the amount of R$15,000,000.00 (fifteen million reais). Regarding the Fiscal Council, the monthly individual compensation of R$12,000.00 (twelve thousand reais) was approved to the effective members and R$5,000.00 (five thousand reais) to alternate members. Of these amounts, the following were actually paid for 2009:

In addition to the compensation established at the shareholders’ meeting, the following profit sharing of

the Issuer was allocated to the members of the Board and Directors and Executive Board:


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2009

R$, except if otherwise indicated

a body Board of Directors

Statutory Executive Board

Fiscal Council

Total

b number of members 7,25 4,00 5,83 17,08

c compensation segregated into:

i annual fixed compensation, segregated into: 6.279.207 2.332.336 635.000 9.246.543

. salary or management fees 5.778.644 1.961.114 635.000 8.374.758

. direct and indirect benefits 260.563 371.222 0 631.785

. compensation for participating in committees 240.000 N/A N/A 240.000

. other N/A N/A N/A N/A

ii variable compensation, segregated into: 4.805.808 4.828.836 0 9.634.644

. bonuses N/A N/A N/A N/A

. profit sharing 4.805.808 3.328.836 N/A 8.134.644

. compensation for participating in meetings N/A N/A N/A N/A

. commissions N/A N/A N/A N/A

. Other (special fees) N/A 1.500.000 N/A 1.500.000

iii post-employment benefits: N/A N/A N/A N/A

iv benefits arising from the termination of mandate N/A N/A N/A N/A

v stock-based compensation N/A N/A N/A N/A

d amount, per body, of the compensation of the board of directors, statutory executive board and fiscal council 11.085.015 7.161.172 635.000

e amount of compensation of the board of directors, statutory executive board and fiscal council 18.881.187

Note: 1. There is one member that comprises the Board of Directors of the Issuer who is also member of the Executive Board. As the compensation policy of both bodies are similar and there is no segmentation of the compensation for each body, the amounts related to the compensation of said member is included only in the table referring to the compensation of the Board of Directors of the Issuer. This note is also applicable to items 13.3, 13.10 and 13.13. 2. The number of members of each body corresponds to the annual average number of members of each body computed on a monthly basis, according to the guideline set out in the Circular Letter/CVM/SEP/No. 03/2010. This note is also applicable to item 13.3.

For 2010, the proposal at the Shareholder’s Meeting is for the approval of the aggregate amount of R$ 15 million to the members of the Board of Directors and of the Executive Board. The Board of Directors shall distribute these amounts among the members of such bodies, according to the compensation policy of the Issuer, estimating that the amount shall be paid in the proportions described in the table below. It should be noted that the proposed aggregate amounts do not include possible charges to be supported by the Issuer arising from the compensation to be paid. In relation to the members of the Fiscal Council, at the shareholders’ meeting the individual monthly compensation of R$12,000.00 (twelve thousand reais) was approved to effective members and R$5,000.00 (five thousand reais) to alternate members.


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R$, except if otherwise

indicated


Statutory Executive

Board Fiscal

Council Total

b number of members (people) 8,00 4,00 6,00 18,00 c compensation segregated into: i annual fixed compensation, segregated into: 8.360.000 3.820.000 663.000 12.843.000 . salary or management fees 7.390.000 2.880.000 663.000 10.933.000 . direct and indirect benefits 370.000 940.000 N/A 1.310.000 . compensation for participating in committees 600.000 0 N/A 600.000 . other N/A N/A N/A N/A ii variable compensation, segregated into: 0 2.820.000 0 2.820.000 . bonuses N/A N/A N/A N/A . profit sharing See below See below N/A See below . compensation for participating in meetings N/A N/A N/A N/A . commissions N/A N/A N/A N/A . Other (special fees) N/A 2.820.000 N/A 2.820.000 iii post-employment benefits: N/A N/A N/A N/A iv benefits arising from the termination of mandate N/A N/A N/A N/A v stock-based compensation N/A N/A N/A N/A

d amount, per body, of the compensation of the board of directors, statutory executive board and fiscal council 8.360.000 6.640.000 663.000

e amount of compensation of the board of directors, statutory executive board and fiscal council 15.663.000

In addition to the compensation established at the shareholders’ meeting, the members of the Board and Directors and Executive Board shall receive profit sharing of the Company, which, under the provisions of paragraph 1, Article 152 of Law No. 6,404/76, is limited to the annual compensation of management members or 10% of the Company’s profits, whichever is lower.


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13.3 With respect to the variable compensation of the board of directors, statutory executive board, and fiscal council for the last year and to that determined for the current year, please prepare a table containing:

2009

R$, except if otherwise indicated


Statutory Executive Board

Fiscal Council

Total

b number of members 7.25 4.00 5.83 17.08 c with respect to bonuses

i minumum amount provided for in the compensation plan N/A N/A N/A N/A

ii maximum amount provided for in the

compensation plan N/A N/A N/A N/A

iii amount provided for in the the compensation plan should the targets established be achieved N/A N/A N/A N/A

iv amount effectively recognized in

income or loss for the last year N/A N/A N/A N/A d with respect to profit sharing:

i minumum amount provided for in the

compensation plan 4,685,808 1,828,835 N/A 6,514,643

ii maximum amount provided for in the

compensation plan 5,133,216 4,828,836 N/A 9,962,052

iii amount provided for in the the compensation plan should the targets established be achieved 5,013,216 1,828,835 N/A 6,842,051

iv amount effectively recognized in

income or loss for the last year 4,805,808 4,828,836 zero 9,634,644 The “variable compensation” expression corresponds to the special fees, together with profit sharing, that compose the variable compensation paid by the Issuer. The total variable compensation recognized in 2009, in the amount of R$9,634,644, is composed of R$8,134,644 of profit sharing and R$1,500,000 of “special fees” detailed in item 13.2.The criteria for payment of special fees informed in item 13.2 are the same adopted for payment of variable compensation, as detailed in item 13.1. Regarding profit sharing for 2010, see clarification in item 13.2. 13.4. With respect to the plan on stock-based compensation for the board of directors and statutory executive board in effect in the last year and determined for the current year, please describe: a) General terms and conditions

The Issuer does not have a stock option plan. b) Main objectives of the plan

Not applicable.


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c) How the plan contributes to these objectives

Not applicable.

d) How the plan becomes part of the issuer’s compensation policy

Not applicable.

e) How the plan is aligned with short-, medium- and long-term interests of management members and the issuer

Not applicable.

f) Maximum number of shares

Not applicable.

g) Maximum number of options to be granted

Not applicable. h) Conditions for the purchase of shares

Not applicable. i) Criteria for setting purchase or strike price

Not applicable. j) Criteria for defining the exercise period

Not applicable. .

k) Type of option settlement

Not applicable. l) Restriction on the transfer of shares

Not applicable. m) Criteria and events that, when verified, will cause the suspension, change or termination of the plan

Not applicable. n) Effects of the management member’s leave from the issuer’s bodies on their rights provided for in the plan on stock-based compensation

Not applicable.


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13.5. Inform the number of shares or quotas directly or indirectly held in Brazil and abroad and other securities convertible into shares or quotas issued by the issuer, its direct or indirect parent companies, subsidiaries or companies under common control, by members of the board of directors, the statutory executive board, or fiscal council, grouped per body at the end of the previous year

Board of Directors Board of Officers Fiscal Councill

Companies Stocks Stocks Stocks

Common Preferred Total Common Preferred Total Common Preferred Total

Issuer Itaúsa ‐ Investimentos S.A. 511,094,208 249,006,750 760,100,958 48,274,034 13,933,145 62,207,179 4,297,111 558,106 4,855,217

Controlling Company Companhia ESA 511,094,088 ‐ 511,094,088 47,410,195 ‐ 47,410,195 ‐ ‐ ‐

Controlled Itaú Unibanco Holding S.A. 1,162,448 5,282,841 6,445,289 8,709,964 5,035,466 13,745,430 127,187 812,307 939,494

Itautec S.A. 19,741 ‐ 19,741 170 ‐ 170 ‐ ‐ ‐

Elekeiroz S.A. 378 410 788 1,090 1,230 2,320 ‐ ‐ ‐

Duratex S.A. 14,672,044 ‐ 14,672,044 177,594 ‐ 177,594 3,053 ‐ 3,053

13.6 With respect to the stock-based compensation to the board of directors and statutory executive board recognized in the income or loss for the previous year and to that determined for the current year, prepare a table containing:

Not applicable. 13.7 With respect to the outstanding options of the board of directors and statutory executive board at the end of the previous year, please prepare a table containing:

Not applicable. 13.8 With respect to the options exercised and shares delivered relating to the stock-based compensation to the board of directors and statutory executive board for the last year, prepare a table containing:

Not applicable. 13.9. Brief description of the information necessary for understanding the data disclosed in items 13.6 to 13.8, such as an explanation of the pricing model for share and option value, indicating, at least:

Not applicable.


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13.9. Brief description of the information necessary for understanding the data disclosed in items 13.6 to 13.8, such as an explanation of the pricing model for share and option value, indicating, at least: a) Pricing model

The Issuer does not have an option distribution program.

b) Data and assumptions used in the pricing model, including the weighed average price of shares, exercise price, volatility expected, term of the option, dividends expected and risk-free interest rate The Issuer does not have an option distribution program. c) Method used and assumptions made to absorb the expected early exercise effects


d) Method to determine expected volatility


e) If any other characteristic of the options was included in its fair value measurement The Issuer does not have an option distribution program.


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13.10 With respect to the pension plans in effect granted to the members of the board of directors and statutory executive board, please supply the following information in a table format:

a body Board of Directors Statutory Executive Board b number of members 4 3 1 3 c plan's name PAC PGBL PAC PGBL d number of management

members that have the conditions necessary for retirement

2 zero 1 zero

e conditions for early retirement 55 years of age

Relationship termination with

the issuer.55 years of age Relationship termination with

the issuer.f

restated amount of contributions accumulated in the pension plan by the end of the last year, less the portion related to contributions made directly by management members

As it refers to defined benefit plan, it does not have an individual balance per participant.

R$240,665.33

As it refers to defined benefit plan, it does not have an individual balance per participant.

R$1,628,078.41

g total accumulated amount of the contributions made in the previous year, less the portion related to contributions made directly by management members

R$6,560.35 R$112,115.52 R$2,877.68 R$278,834.40

h whether there is the possibility of early redemption and what the conditions are

No No No No

Notes:

1. At present, the Supplementary Retirement Plan (“PAC”) does not require additional contribution, because the private pension entity of the Issuer, Fundação Itaubanco, set up last year the total benefit reserve that will be granted to its beneficiaries. 2. The number of members of each body (item “b”) corresponds to the number of management members who are active participants of pension plans. There is one member who takes part in the Issuer’s Board of Directors and one member who take part in the Executive Board who participate in more than one retirement plan.

13.11 In a table, please indicate, for the last year, with respect the board of directors, statutory executive board, and fiscal council:

On March 2, 2010, the Brazilian Institute of Financial Executives – IBEF Rio de Janeiro filed, on behalf of the executives affiliated thereto, an ordinary proceeding requesting an injunction, in which the legality of this item is being challenged. The reason for this is that said disclosure caused great discomfort to the executives, who understand that the requested disclosure would violate their individual rights and guarantees.

Recently, the Issuer became aware that the 8th Specialized Panel of the Federal Regional Court (TRF) of the 2nd region granted the interlocutory appeal filed by CVM against the decision that granted the injunction. A motion for clarification of decision was filed, and judgment of said appeal is still pending. In fact, the main aspect


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of the discussion submitted to the Judiciary branch – the possibility of identification of management members and their respective compensations – was not addressed by the TRF court decision.

As the judgment of the motion for clarification is pending, experts in Brazilian Civil Procedure understand that said appeal has a suspensive effect.

The Issuer respects its executives’ legal right of access to the Judicial branch, mainly regarding such a sensitive matter for them. The submission of the information requested in item 13.11 of the Reference Form would represent the immediate extinction of the interest.

In view of the concept that the appeal filed by IBEF has a suspensive effect and that the provision of the information requested in item 13.11. would represent a curtailment of the executives’ right of access to justice, the Issuer will wait until the aforementioned disclosure is enforceable. 13.12 Describe contractual arrangements, insurance policies or other instruments that structure mechanisms for compensating or indemnifying management members in the event of removal from position or retirement, indicating the financial consequences to the issuer

The Issuer does not have any contractual arrangements, insurance policies or other instruments that structure mechanisms for compensating or indemnifying management members in the event of their removal from position or retirement.

13.13 With respect to the last year, indicate the percentage of total compensation of each body recognized in the issuer’s income or loss related to members of the board of directors, statutory executive board or fiscal council that are parties related to the direct or indirect parent companies, as determined by the accounting rules that address this matter 2009

Body Board of Directors Statutory Executive

Board Fiscal Council

Related parties 55% 23% 0% 13.14 With respect to the last year, please indicate the amounts recognized in the issuer’s income or loss as compensation to the members of the board of directors, statutory executive board or fiscal council, grouped by body, for any reason other than the position they hold, such as commissions and consulting or advisory services provided

None. 13.15 With respect to the last year, please indicate the amounts recognized in income or loss of the issuer’s direct or indirect parent companies, companies under common control and controlled companies as compensation to the members of the issuer’s board of directors, statutory executive board or fiscal council, grouped by body, specifying the reason such amounts were paid to these people.

None. However, some management members of the Issuer take part in the management bodies of the companies controlled by it. For this reason, such management members also receive compensation from such companies because of the duties they perform there.


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13.16. Supply other information that the issuer may deem relevant

The Issuer controls, either directly or indirectly, other publicly-held companies, which have compensation policies adjusted to the profile of each business, and they may or may not have their own stock-based compensation plans. Information on such plans and policies can be found in their respective reference forms disclosed by each of the relevant companies.


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ITEM 14 – HUMAN RESOURCES 14.1. Describe the issuer’s human resources, supplying the following information: a) Number of employees (total, by groups based on the activity performed and by geographic location)

Itaúsa does not have any employees. b) Number of outsourced employees (total, by groups based on the activity performed and by geographic location) Itaúsa does not have any outsourced employees. c) Turnover rate

Not applicable. d) Issuer’s exposure to labor liabilities and contingencies

Not applicable. 14.2. Comment on any relevant change occurred with respect to the figures disclosed in item 14.1 above

None. 14.3. Describe the issuer’s employee compensation policies, informing: a) Wage and variable compensation policy

Not applicable. b) Benefit policy

Not applicable. c) Characteristics of share-based payment to non-management employees, identifying: I - Groups of beneficiaries

Not applicable (see item 13.4). II - Exercise conditions

Not applicable. III - Exercise prices

Not applicable. IV - Exercise terms


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Not applicable. V - Number of shares committed by the plan

Not applicable. 14.4. Describe the relations between the issuer and unions

Not applicable.


227

ITEM 15 - CONTROL 15.1. Identify the controlling shareholders or group of shareholders, indicating with respect to each of them: a) Name b) Nationality c) CPF/CNPJ d) Number of shares held, per class and type e) Percentage held with respect to the related class or type f) Percentage held with respect to total capital g) If they participate in the shareholders’ agreement

Itaúsa - Investimentos Itaú S.A.

Common shares % Preferred

shares % Total % Participates

in the shareholders’

agreement Companhia ESA

Nationality: Brazilian CNPJ 52.117.397/0001-08 Interest: 1,026,572,249 61.08 8,627 - 1,026,580,876 23.47 YES - direct 50,300,090 2.99 8,627 - 50,308,717 1.15 - usufruct established in a Shareholders’ Agreement by the Egydio de Souza Aranha family

976,272,159 58.08 - - 976,272,159 22.32

h) If the shareholder is a legal entity, a list containing the information mentioned in subitems “a” and “d” on its direct and indirect parent companies, even if they are natural persons, provided that this information is treated as confidential because of the legal business or by the legislation of the country where the shareholder or parent company was incorporated

Companhia ESA Common shares

% Total %

Maria de Lourdes Egydio Villela

129,959,824

13.31 129,959,824

13.31

Nationality: Brazilian CPF 007.446.978-91 Alfredo Egydio Arruda Villela Filho

199,025,438

20,39 199,025,438

20,39 Nationality: Brazilian CPF 066.530.838-88 Ana Lúcia de Mattos Barreto Villela

199.025.438

20.39

199.025.438

20.39

Nationality: Brazilian CPF 066.530.828-06 Ricardo Villela Marino

35,325,069 3.62 35,325,069 3.62 Nationality: Brazilian CPF 252.398.288-90 Rodolfo Villela Marino

35,325,070 3.62 35,325,070 3.62 Nationality: Brazilian CPF 271.943.018-81


228

Paulo Setubal Neto

63,539,815 6.51 63,539,815 6.51 Nationality: Brazilian CPF 638.097.888-72 Carolina Marinho Lutz Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 077.540.228-18 Julia Guidon Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 336.694.358-08 Paulo Egydio Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 336.694.318-10 Maria Alice Setubal

34,535,793 3.54 34,535,793 3.54 Nationality: Brazilian CPF 570.405.408-00 Fernando Setubal Souza e Silva

1,126 - 1,126 - Nationality: Brazilian CPF 311.798.878-59 Guilherme Setubal Souza e Silva

1,126 - 1,126 - Nationality: Brazilian CPF 269.253.728-92 Tide Setubal Souza e Silva Nogueira

1,126 - 1,126 - Nationality: Brazilian CPF 296.682.978-81 Olavo Egydio Setubal Júnior

56,241,555 5.76 56,241,555 5.76 Nationality: Brazilian CPF 006.447.048-29 Bruno Rizzo Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 299.133.368-56 Camila Rizzo Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 350.572.098-41 Luiza Rizzo Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 323.461.948-40 Roberto Egydio Setubal

56,023,195 5.74 56,023,195 5.74 Nationality: Brazilian CPF 007.738.228-52 Mariana Lucas Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 227.809.998-10 Paula Lucas Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 295.243.528-69 José Luiz Egydio Setubal

55,742,364 5.71 55,742,364 5.71 Nationality: Brazilian CPF 011.785.508-18


229

Beatriz de Mattos Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 316.394.318-70 Gabriel de Mattos Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 348.338.808-73 Alfredo Egydio Setubal

55,767,083 5.71 55,767,083 5.71 Nationality: Brazilian CPF 014.414.218-07 Alfredo Egydio Nugent Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 407.919.708-09 Marina Nugent Setubal

1,126 - 1,126 - Nationality: Brazilian CPF 384.422.518-80 Ricardo Egydio Setubal

55,744,619

5.71 55,744,619 5.71

Nationality: Brazilian CPF 033.033.518-99

C: book-entry common share P: book-entry preferred share i) Date of the latest change December 31, 2010

15.2. In a table, please present a list containing the information below on shareholders or groups of shareholders that act together or that represent the same interest, with an ownership interest equal to or higher than 5% in the same class or type of shares and that are not listed in item 15.1:

Name Nationality CPF / CNPJ

Number of common shares

% of common shares

Number of preferred

shares

% of preferred

shares

% of total Company’s capital

stock

Participates in the

shareholders’

agreement

Date of the last change

Fundação Itaú Social Brazilian 59.573.030/0001-30 189,502,007 11.27% 3,828,053 0.14% 4.42% No

December 31, 2010

Fundação Petrobrás de Seguridade Social - PETROS Brazilian 34.053.942/0001-50 213,383,113 12.70% 10,964,186 0.41% 5.13% No

December 31, 2010

Caixa de Prev. dos Func. do Banco do Brasil - PREVI Brazilian 33.754.482/0001-24 0 0.00% 136,785,421 5.08% 3.13% No

December 31, 2010

BlackRock, Inc. American - 0 0.00% 138,085,520 5.13% 3.16% No August

13, 2010


230

15.3. In a table, please describe the distribution of capital, as determined in the last annual shareholders meeting:

Composition based on the Annual Shareholders’

Meeting held on: Description of capital distribution April 30, 2009 April 30, 2010 Number of individual shareholders 30,127 28,823 Number of corporate shareholders 2,310 2,314 Number of institutional investors - - Number of outstanding common shares 640,499,089 651,023,538

Number of outstanding preferred shares 2,158,476,346 2,194,042,805 15.4. Should the issuer wish, please insert a flowchart of the issuer’s shareholders, identifying all direct and indirect parent companies, as well as the shareholders who have an interest equal to or higher than 5% in a class or type of shares, provided that it is compatible with the information presented in items 15.1 and 15.2

C: Common shares P: Non-voting shares (*) on this interest, an usufruct in favor of Companhia ESA was established in a Shareholder’s Agreement, and it comprises the voting right on 976,272,159 shares issued by Itaúsa – Investimentos Itaú S.A. (58.08% of voting capital). Base Date: December 31, 2010 15.5. With respect to any shareholders’ agreement filed at the issuer’s head office or to which the parent company is a party that regulates the exercise of the voting right or the transfer of shares issued by the issuer, please indicate: a) Parties

Itaúsa Shareholders’ Agreement: Made between individuals that are part of the Villela and Setubal families, in addition to ESA. Itaúsa Shareholders’ Agreement only provides for the transfer of shares issued by Itaúsa by its controlling shareholders.

ESA Shareholders’ Agreement: Made between individuals that are part of the Villela and Setubal families. ESA Shareholders’ Agreement provides for (i) the transfer of shares issued by Itaúsa held by its controlling shareholders; and (ii) the exercise of the voting right by Itaúsa’s shareholders at its Shareholders’ Meeting and by those appointed by such controlling shareholders to Itaúsa’s Board of Directors and Executive Board.

Fundação Itaú Social Others

Itaúsa

14,96% C71,51% P

49,79% Total

Family Egydio de Souza

Aranha

Fund. Petrobrás Seg . Social

Petros Caixa de Prev. dos

Func. do Banco do Brasil - PREVI

11,27%

C 0,14% P

4,42% Total

12,70% C0,41% P

5,13% Total5,08% P

3,13% Total

BlackRock, INC

5,16% P 3,16 % Total

Companhia ESA

100,00% C 100,00% Total

58,08% C ( * ) 17,93% P33,36% Total

2,99% C 1,15% Total


231

OES/Itaúsa Shareholders’ Agreement: Made between individuals that are part of the Setubal family.

OES/Itaúsa Shareholders’ Agreement only provides for the transfer of shares issued by Itaúsa held by the members of the Setubal family. b) Date of execution

Itaúsa Shareholders’ Agreement: June 24, 2009.

ESA Shareholders’ Agreement: June 24, 2009.

OES/Itaúsa Shareholders’ Agreement: August 5, 2005. c) Term of effectiveness

Itaúsa Shareholders’ Agreement: effective for a period of ten years from its signature (June 24, 2009), automatically renewable for successive periods of ten years, except in cases where any controlling shareholder expresses any wish contrary to the renewal two years before the termination of any term of effectiveness.

ESA Shareholders’ Agreement: effective for as long as the Itaúsa Shareholders’ Agreement is effective.

OES/Itaúsa Shareholders’ Agreement: effective for a period of 30 years from its signature (August 5, 2005) or for the term of effectiveness of the Itaúsa Shareholders’ Agreement, whichever is longer. d) Description of the clauses related to the exercise of the voting right and control power

Itaúsa Shareholders’ Agreement: there is no provision in this respect.

ESA Shareholders’ Agreement: certain matters related to Itaúsa’s main strategic points must be determined in advance at the meeting of Itaúsa’s controlling shareholders (the Villela and Setubal families). With respect to these strategic points, the ESA Shareholders’ Agreement provides that (i) the members of Itaúsa’s Board of Directors appointed by its controlling shareholders, (ii) the members of Itaúsa’s Executive Board appointed by its controlling shareholders, and (iii) Itaúsa’s controlling shareholders, at the Annual Meeting of Itaúsa itself, should vote uniformly and in accordance with the resolution made in the meeting of Itaúsa’s controlling shareholders.

OES/Itaúsa Shareholders’ Agreement: there is no provision in this respect. e) Description of the clauses related to the appointment of management members

Itaúsa Shareholders’ Agreement: each of the members of the Villela and Setubal families are entitled to appoint two members to Itaúsa’s Board of Directors. The other members of Itaúsa’s Board of Directors will be appointed by consensus of its controlling shareholders.

ESA Sharholders’ Agreement: each of the members of the Villela and Setubal families are entitled to

appoint two members to Itaúsa’s Board of Directors. The other members of Itaúsa’s Board of Directors will be appointed by consensus of its controlling shareholders.

OES/Itaúsa Shareholders’ Agreement: there is no provision in this respect. f) Description of the clauses related to the transfer of shares and the preemptive right to purchase them

Itaúsa Shareholders’ Agreement: (i) see items “b”, “c”, “d” and “f” of the ESA Shareholders’ Agreement; (ii) the sale of the shares issued by Itaúsa by its controlling shareholders cannot reduce the position of the Villela or Setubal families to less to 30% of the total controlling stake of Itaúsa; and (c) none of Itaúsa’s controlling shareholders can buy common shares from third parties that are strange to the controlling shareholders without


232

offering them to ESA beforehand, which will have the preemptive right to acquire them, and the preemptive right to acquire half of the shares offered by the third party who is strange to the controlling stake.

ESA stockholders’ agreement: (i) Itaúsa’s controlling shareholders (the Villela and Setubal families) cannot trade shares issued by ESA or their respective subscription rights (or, indirectly, shares issued by Itaúsa) in cases other than those provided for in the ESA Shareholders’ Agreement; (ii) the acquisition of common shares issued by Itaúsa (or the subscription rights of such common shares) cannot cause the Villela or the Setubal families to directly or indirectly hold more than 70% of the total common shares issued by Itaúsa that compose its controlling stake; (iii) Itaúsa’s controlling shareholders may sell a lot of shares issued by Itaúsa that, in transactions accumulated in a period of two years, does not exceed 1% of Itaúsa’s controlling stake (“Small Lot”). Until the limit of the Small Lot is reached, the controlling shareholders that have not sold their shares in the past two years can make new sales. Once the limit of the Small Lot is reached, only “Large Lots” (lots of shares that exceed 1% of Itaúsa’s total controlling stake up to the limit of 10% of said controlling stake) can be sold; (iv) Itaúsa’s controlling shareholders “Large Lots” every two years. Every controlling shareholder of Itaúsa can only offer a Large Lot two years after the date of the prior sales offer made by any controlling shareholder of Itaúsa, even if the limit of a Large Lot was not reached in the prior sale. In both the Small Lot sale and in the Large Lot sale, the offering shareholder must make an offer to the other shareholders of the same family, to ESA and to the shareholders of the other family who, in this order, will have the preemptive right to acquire the shares; (v) the sale of shares issued by Itaúsa between the shareholders of the same family is not subject to any limitation; and (f) a controlling shareholder of Itaúsa who wishes to sell his/her right to subscribe shares issued by Itaúsa should offer them to the members of his/her family, to the members of the other family, to ESA and at Stock Exchanges, in this order.

OES/Itaúsa Shareholders’ Agreement: (i) a member of the Setubal family can only sell his/her common shares issued by Itaúsa related to the OES/Itaúsa Shareholders’ Agreement after offering them to the other shareholders of the Setubal family; and (ii) the preferred shares issued by Itaúsa related to the OES/Itaúsa Shareholders’ Agreement will be kept by the members of the Setubal family, who can only use them for the payment for common shares issued by Itaúsa acquired from other members of the Setubal family. g) Description of the clauses that restrict or condition the voting rights of the members of the board of directors

Itaúsa Shareholders’ Agreement: there is no provision in this respect.

ESA Shareholders’ Agreement: certain matters related to Itaúsa’s main strategic points must be determined in advance at the meeting of Itaúsa’s controlling shareholders (the Villela and Setubal families). With respect to these strategic points, ESA Shareholders’ Agreement provides that the members of Itaúsa’s Board of Directors appointed by its controlling shareholders should vote uniformly and in accordance with the resolution made at the meeting of Itaúsa’s controlling shareholders.

OES/Itaúsa Shareholders’ Agreement: there is no provision in this respect. 15.6. Indicate relevant changes in the ownership interests of the issuer’s control group and management

Not applicable. 15.7. Supply other information that the issuer may deem relevant None.


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ITEM 16 - TRANSACTIONS WITH RELATED PARTIES 16.1. Describe the issuer’s rules, policies and practices regarding the carrying out of transactions with related parties, as determined by the accounting rules that address this matter

The transactions carried out between Itaúsa and its subsidiaries are governed by the compliance with legal and ethical rules.

The transactions with related parties are carried out at amounts, on terms and at average rates that are

usual in the market, in effect on the respective dates, and on an arm’s length basis. These transactions are subject to criteria of strict compliance with legal provisions, to prevent favorable

treatment for group or controlling companies. For this reason, such transactions are always exhaustively analyzed by top management.

Specifically regarding loan operations, our subsidiary in the financial area is prohibited by law from granting loans or advances to (i) controlling companies of the institution, individuals and companies related thereto, (ii) directors, members of the Board of Directors and Fiscal Council of the institution, individuals and companies related thereto; (iii) entities controlled by the financial institution or in which it holds, either directly or indirectly, more than 10.0% of the financial institution's capital stock. 16.2. Inform, with respect to transactions with related parties that, according to the accounting rules, should be disclosed in the issuer’s individual or consolidated financial statements and that have been entered into in the past three years or that are in effect in the current year: a) Name of the related parties

• Itaú Unibanco S.A.

• Duratex S.A.

• Itautec S.A.

• Elekeiroz S.A. b) Relationship of the parties with the issuer

• Banco Itaú Unibanco S.A. – Subsidiary of Itaú Unibanco Holding S.A.

• Duratex S.A. - Subsidiary

• Itautec S.A. - Subsidiary

• Elekeiroz S.A. - Subsidiary c) Date of transaction

• April 01, 1998 – Agreement for Apportionment of Common Costs due to the use of the common structure of Banco Itaú Unibanco S.A.

• November 12, 2008 – Sale of Ownership Interest Abroad to Banco Itaú Unibanco S.A.

• Guarantees and Endorsements


234

o Duratex – six agreements with the following dates: November 07, 2001, September 29, 2003, April 11, 2005, December 27, 2007, January 08, 2008 and July 10, 2008.

o Itautec – eight agreements with the following dates: one dated December 10, 2004, six dated

August 17, 2007 and one dated November 04, 2009.

o Elekeiroz – three agreements with the following dates: October 20, 2004, December 28, 2004 and December 06, 2007.

d) Subject matter of the agreement

• Agreement for Apportionment of Common Costs due to the use of a common structure. (1)

• Sale of Ownership Interest Abroad.

• Guarantees and Endorsements (2)

(1) This is not a contract, but an agreement for apportionment. (2) Itaúsa only provides guarantees to its industrial subsidiaries, and no financial transactions are carried between them.

e) Amount involved in the transaction

• April 01, 1998 – There is no specific amount; the Apportionment of Common Costs is carried out and paid monthly in accordance with involved costs with Itaúsa.

• November 12, 2008 – Sale of Ownership Interest Abroad.

o Transaction amount: R$587 million.

• Guarantees and Endorsements.


Maximum amounts to be guaranteed: R$626 million

o Itautec – three agreements with the following dates: December 10, 2004, August 17, 2007 and November 04, 2009.

Maximum amounts to be guaranteed: R$277million o Elekeiroz – three agreements with the following dates: October 20, 2004, December 28, 2004

and December 06, 2007 Maximum amounts to be guaranteed: R$235 million

f) Existing balance

• April 01, 1998 – Agreement for Apportionment of Common Costs due to the use of the common structure.

o Expense of R$ 4 million in 2009, R$ 5 million in 2008 and R$ 7 million in 2007.No remaining payables.


o Amount receivable at December 31, 2009: R$73 million.



235


Guarantees at December 31, 2009: R$365 million

o Itautec – three agreements with the following dates: December 10, 2004, August 17, 2007 and November 04, 2009.

Guarantees at December 31, 2009: R$152 million o Elekeiroz – three agreements with the following dates: October 20, 2004, December 28, 2004

and December 06, 2007 Guarantees at December 31, 2009: R$21 million

g) Amount corresponding to the interest of the related party in the transaction, if it can be calculated

Not applicable. h) Related guarantees and insurance

Not applicable. i) Due date

• April 01, 1998 – Agreement for Apportionment of Common Costs due to the use of a common structure. o Undetermined.


o November 3, 2010.


o Duratex – six agreements with the following dates: November 07, 2001, September 29, 2003, April 11, 2005, December 27, 2007, January 08, 2008 and July 10, 2008, with maturities on January 15, 2010, April 15, 2010, April 15, 2005, January 15, 2017, January 15, 2018 and July 15, 2011, respectively.

o Itautec – three agreements with the following dates: December 10, 2004, August 17, 2007 and

November 04, 2009, with maturities on June 15, 2012, August 15, 2016 and March 15,.2018, respectively.

o Elekeiroz – three agreements with the following dates: October 20, 2004, December 28, 2004

and December 06, 2007, with maturities on January 15, 2010, December 28, 2010 and July 15, 2014, respectively.

j) Termination or extinction conditions

• Agreement for Apportionment of Common Costs due to the use of a common structure. o By convenience of one of the parties upon the serving of 30 days’ prior notice.

• Sale of Ownership Interest Abroad.

o None.

• Guarantees and Endorsements. o The settlement of the agreements terminates the guarantees.


236

k) When the relationship is a loan or other type of debt, please also inform: I - Nature and reasons for the transaction II - Interest rate charged

None.

16.3. With respect to each of the transactions or group of transactions mentioned in item 16.2 above that took place in the previous year: (a) identify the measures taken to address conflicts of interest; and (b) show the strictly commutative nature of the agreed upon conditions or the proper compensatory payment

The transactions presented in item 16.2, based date December 31, 2009, between Itaúsa and related parties were carried out at amounts, terms and average rates that are usual in the market, on an arm’s length basis, and do not give rise to any benefit or loss to the parties. The main transactions are:

• Apportionment of Common Costs - calculation is made on a monthly basis and any subsequent

adjustment is settled after being restated, at rates usual in the market. • Amounts Receivable from Related Parties – price adjustment related to the purchase of investment

which variation is reflected in accordance with the variation of the market value of the disposed investment.

• Guarantees and Endorsements – in the guarantees provided by Itaúsa, there is not any type of financial compensation for the controlling company.

In addition, Itaúsa, as a Tier 1 company in corporate governance and pursuant to the rules of

BM&FBOVESPA on differentiated practices of Corporate Governance and Novo Mercado, shall disclose information on any and all agreements entered into with its subsidiaries and affiliates, its management members and its controlling shareholder and also on those entered into between subsidiaries and affiliates of management members and of the controlling shareholder, as well as with other companies in the groups of which any of these persons actually or legally participate in the same group, whenever the amount of a single agreement or successive agreements, whether their objective is the same or not, at any period of one year, is equal to or higher than R$200,000.00 or is equal to or above 1% of the shareholders’ equity of Itaúsa, whichever is higher.


237

ITEM 17 - CAPITAL

17.1. Prepare a table containing the following information on capital:

Issued capital Subscribed

capital Paid-up capital

Term for the payment of capital that has not

yet been paid up Authorized

capital

Securities convertible into

shares Conversion conditions

In Reais (R$) 13,266,405,254.19 13,266,405,254.19 13,266,405,254.19 - - - - In Shares 4,374,281,589 4,374,281,589 4,374,281,589 - - - - Common shares 1,680,795,973 1,680,795,973 1,680,795,973 - - - - Preferred shares 2,693,485,616 2,693,485,616 2,693,485,616 - - - -

17.2. With respect to the issuer’s capital increases, please indicate: a) Date of resolution b) Body that resolved the increase c) Date of issue d) Total amount of increase e) Number of securities issued, specifying class and type f) Issue price g) Payment form: I - Cash II - If assets, please describe III - If rights, please describe h) Criteria used to determine the issue price (Article 170, paragraph 1, of Law No. 6,404 of 1976) i) Indication of whether the subscription was private or public j) Percentage that the increase represents in relation to the capital immediately prior to the increase

Date of resolutionBody that

resolved on the increase

Date of issue

Total amount of increase

C 121,003,720

C 13,608,508

C 134,464,943

C 12,005,080

C 149,111,945

C 29,805,716

C ‐

C 10,758,861

P 196,559,480

P 22,105,778

P 215,956,445

P 19,244,920

P 239,036,097

P 47,780,491

P 448,949

P 17,241,139

Issue price

Payment form

Criterion

Private or public subscription

% in relation to last capital

Adjusted weighted average price of

shares at BM&FBOVESPA from

11/30/2009 to

Private

2.05

Junr 30, 2010

Shareholders’ Meeting

April 30, 2010

266,000,000.00

9.50000

Cash


April 27, 2007 June 29, 2007 April 29, 2008 June 27, 2008 April 30, 2009 June 29, 2009 April 30, 2010


April 29, 2008 April 29, 2008 April 30, 2009 April 30, 2009

Shareholders’ MeetingShareholders’

MeetingShareholders’ Meeting



April 30, 2010

2,000,000,000.00 300,000,000.00 2,250,000,000.00 250,000,000.00 2,550,000,000.00 450,000,000.00 405,254.19

April 27, 2007 April 27, 2007

Number of securities issued

6.29796 8.40000 6.42084 8.0000 6.56966Capitalization of reserve and share

bonusCash

Capitalization of reserve and share

bonusCash

Capitalization of reserve and share

bonusCash

‐o‐

Adjusted weighted average price of shares at BM&FBOVESPA from 12/04/2007 to

04/01/2008

‐o‐

Adjusted weighted average price of shares at BM&FBOVESPA from 12/09/2008 to

04/07/2009

‐

0.90267

Merger of companies

5.80000

(*)‐o‐

Adjusted weighted average price of

shares at BM&FBOVESPA from

12/07/2006 to

0.00325.50

‐o‐ Private ‐o‐ Private ‐o‐ Private

(*) the share exchange ratio was determined based on (i) the shareholders' equity of the shares of the merged companies, calculated at 12/31/2009 and (ii) the average market price at BMF&BOVESPA for the last 120 trading sessions of the preferred shares of Itaúsa, calculeted from November 30, 2009 to March 29, 2010.

38.46 4.17 30.00 2.56 3.58


238

Cancellation of shares in treasury

- Shareholders’ Meeting of April 27, 2007, resolved to cancel 14,271,000 company's preferred

shares in treasury , without reduction of capital, which is represented by 3,175,631,995 shares, being 1,210,037,200 common shares and 1,965,594,795 preferred shares without par value, after the mentioned cancelation.







17.3. With respect to splits, reverse splits and bonuses, please inform in a table format: Splits: Number of shares before the approval Number of shares after the approval

Date of resolution C P C P

- - - - -

Reverse splits: Number of shares before the approval Number of shares after the approval


- - - - -

Bonuses: Number of shares before the approval Number of shares after the approval


April 27, 2007 1,210,037,200 1,965,594,795 1,331,040,920 2,162,154,275 April 29, 2008 1,344,649,428 2,159,564,453 1,479,114,371 2,375,520,898 April 30, 2009 1,491,119,451 2,390,360,978 1,640,231,396 2,629,397.075

C: Book-entry common share P: Book-entry preferred share


239

17.4. With respect to the issuer’s capital reductions, please indicate: a) Date of resolution

Not applicable. b) Date of reduction

Not applicable. c) Total amount of reduction

Not applicable. d) Number of shares cancelled by the reduction, specifying class and type

Not applicable. e) Amount reimbursed per share

Not applicable. f) Form of reimbursement: I - Cash II - If assets, please describe III - If rights, please describe

Not applicable. g) Percentage that the reduction represents in relation to the capital immediately prior to the increase

Not applicable. h) Reason for the reduction

Not applicable. 17.5. Supply other information that the issuer may deem relevant

None.


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ITEM 18 - SECURITIES 18.1. Describe the rights of each class and type of share issued:

The Issuer’s bylaws set forth two types of shares: common and preferred, both book-entry, with no par value and of a single class. a) Right to dividends

Shareholders are entitled to receive as mandatory dividend, in each year, the minimum amount of 25% of net income computed in the same year, adjusted by the addition or deduction of the amounts specified in letters “a” and “b” of item I of article 202 of the Brazilian Corporate Law and in compliance with items II and III of the same legal provision.

The preferred shares will be entitled to the payment of an annual minimum dividend of R$0.01 per share. The amount of the mandatory dividend remaining after the payment of the minimum priority dividend payable to the preferred shares will be first applied on the payment of the dividend to the common shares equal to the priority dividend of the preferred shares. Both types of shares participate equally, after all shareholders have received the minimum dividends. b) Voting right

Preferred shares do not confer voting rights on their holders. Each common share corresponds to one vote on a resolution taken at the Shareholders’ Meeting.

c) Convertibility into another class or type of share, indicating: I - Conditions II - Effects on capital

The Board of Directors may authorize the conversion of common shares into preferred shares (reconversion prohibited), based on a fixed ratio or at a public auction at a stock exchange, and in both cases it may determine the periods and quantities. The conversion ratio cannot be higher than one preferred share for one common share presented, considering the legal limit. If the common shares to be converted result in a final number of preferred shares that exceeds the limit of two thirds of preferred shares, the Issuer will carry out an apportionment among the holders of common shares interested in the conversion in proportion to the number of common shares presented for conversion, with a conversion that results in share fractions being prohibited. After each conversion period, the Board of Directors will specify the new number of shares by type, and the amendments to the bylaws will be made at the first annual meeting. d) Rights in the reimbursement of capital

In the case of the liquidation of the Issuer, the shareholders shall receive payments related to reimbursement of capital, in proportion to their interests in capital, after the payment of all of the Issuer’s obligations.

Pursuant to articles 45 and 137 of the Brazilian Corporate Law, the shareholders that dissent from the resolutions approved in Shareholders’ Meetings may leave the Issuer, upon reimbursement of the value of their shares, in which case the reimbursement shall be based on the book value of the shares.


241

e) Right to participate in public offering from disposal of control

In the event of the disposal of control, the common and preferred shares shall be included in the public offering of shares, so that they entitle their holders a price equal to 80% of the value paid per share in the controlling stake. f) Restrictions on trading

None. g) Conditions for changing the rights assured by such securities

There are no requirements in the bylaws additional to those existing in the law that change the rights assured by the securities issued by the Issuer. h) Other relevant characteristics

None. i) Foreign issuers should identify the differences between the characteristics described in items “a” and “i” and those usually attributed to similar securities issued by local issuers, identifying which are inherent to the described security and which are imposed by rules of the issuer’s original country or of the country where its securities are in custody

Not applicable. 18.2. Describe, if applicable, the statutory rules that limit the voting rights of significant shareholders or that force them to carry out a public offering

None. 18.3. Describe exceptions and suspension clauses related to equity or political rights provided for in the by-laws

None.


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18.4. In a table format, please inform the trading volume, as well as the highest and lowest prices of securities traded at stock exchanges or organized over-the-counter markets in each of the quarters of the past three years The tables below present the prices, for the indicated periods, adjusted by events such as reverse split and bonuses in subsequent periods:

ITSA4 – Preferred share

Quarter ended Minimum Maximum Trading volume (R$ thousand) March 2007 7.62 9.15 3,002,279 June 2007 8.20 10.34 3,284,870 September 2007 8.02 10.91 4,925,303 December 2007 9.09 11.44 5,682,188 March 2008 7.46 9.76 5,110,080 June 2008 8.33 10.76 5,401,277 September 2008 7.40 9.53 3,911,720 December 2008 4.36 8.75 4,331,501 March 2009 5.75 8.05 3,552,636 June 2009 7.10 9.30 4,444,001 September 2009 8.26 10.75 5,119,542 December 2009 9.85 12.20 5,778,505

ITSA3 - Common share

Quarter ended Minimum Maximum Trading volume (R$ thousand) March 2007 8.66 11.54 47,714 June 2007 10.21 17.16 7,566 September 2007 11.03 16.33 9,368 December 2007 12.46 15.92 9,061 March 2008 10.80 14.70 8,852 June 2008 14.10 16.69 7,978 September 2008 11.82 15.79 15,670 December 2008 8.03 13.18 5,982 March 2009 8.40 10.42 45,336 June 2009 8.95 11.99 5,691 September 2009 9.63 11.56 19,260 December 2009 10.95 13.78 19,116


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18.5. Describe securities issued other than shares, indicating: a) Identification of the security

Unsecured and non-convertible debentures. b) Number

10,000 debentures. c) Amount

Total issue price of R$1 billion. Unit par value of R$100 thousand at the issue date. d) Issue date

June 1, 2010. e) Restrictions on trading

Only those provided by the applicable legislation, particularly in CVM Instruction No. 476/2009. f) Convertibility into shares or concession of right to subscribe or purchase the issuer’s shares, indicating: I – Conditions Not applicable. II - Effects on capital

Not applicable.

g) Possibility of redemption, indicating: I - Cases for redemption Itaúsa may, at its sole discretion, starting in the 18th month from the issue date, redeem the outstanding debentures in advance. II - Formula for the calculation of the redemption value

Payment of unit par value plus remuneration described in item h) (II) below, calculated pro rata temporis from the issue date or the immediately prior remuneration payment date, as the case may be, plus a share premium calculated pursuant to the following formula:

P= d/D *0.50%

where:

P= share premium payable as a percentage of the redemption value;

d= number of days between the early redemption date and the maturity date; D= number of days between the beginning of the term for early redemption date and the maturity date.

h) When the securities are debt related, please indicate, when applicable:


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I - Maturity, including early maturity conditions

The term of the debentures is three years from the issue date, to be paid and amortized in three annual and consecutive installments, as follows:

Amortization Date of amortization Part of the par value to be amortized (%)

1st amortization June 01, 2011 30%

2nd amortization June 01, 2012 35%

3rd amortization June 01, 2013 35%

Total - x- 100% Early maturity As presented in detail in the debenture issue deed, debentures mature early on the occurrence of any of the following events: (i) non-payment of any monetary liability by Itaúsa; (ii) (a) bankruptcy adjudication of Itaúsa, Itaú Unibanco Holding S.A., Itaú Unibanco S.A. and/or Banco Itaú BBA S.A. (together, the “Relevant Subsidiaries"); (b) voluntary bankruptcy by Itaúsa and/or any of the Relevant Subsidiaries;(c) petition for bankruptcy filed against Itaúsa and/or any of the Relevant Subsidiaries by third parties and not defeated in the legal term;(d) petition for judicial or extra-judicial recovery of Itaúsa and/or any of the Relevant Subsidiaries; or (e) intervention, liquidation, winding-up or, dissolution of Itaúsa and/or any of the Relevant Subsidiaries; (iii) protest of bills against Itaúsa in the local or international market in an amount equal to or higher than R$100 million; (iv) change in the control, direct or indirect, of Itaúsa, except if the ratings agency maintains the rating assigned to the offering; (v) approval of merger, acquisition of spin-off of Itaúsa, except if the ratings agency maintains the rating assigned to the offering; (vi) early maturity of any financial liabilities of Itaúsa and/or any of the Relevant Subsidiaries in the local or international market in an amount equal or higher than R$100 million; (vii) capital reduction of Itaúsa, except if the transaction is previously approved by the majority of the holders of outstanding debentures; (viii) non-compliance with any judicial order against Itaúsa relating to an amount equal to or higher than R$100 million; (ix) change in the business purpose of Itaúsa that may materially and adversely affect it; (x) non-compliance, by Itaúsa, with any non-monetary liability related to the debentures; (xi) transformation of Itaúsa into a limited liability company; (xii) assignment, offer of assignment or any other type of transfer or offer of transfer to third parties, by Itaúsa, of the liabilities assumed in the debenture issue deed, except if the transaction (a) is previously approved by at least 2/3 (two thirds) of the holders of outstanding debentures; or (b) arises from a merger, acquisition or spin-off transaction that is not an event of default; (xiii) dividend distribution, payment of interest on capital or any other payment to its shareholders, in the event Itaúsa is in default with any of its liabilities set out in the debenture issue deed; (xiv) annulment, nullity or unenforceability as regards the issuance of the debentures; (xv) loss by Itaúsa of the direct or indirect control of one or more of the Relevant Subsidiaries; and (xvi) non-observance by Itaúsa of the financial index to be calculated on an annual basis based on the data of the first quarter of each fiscal year as determined by the debenture issue deed. II – Interest Interest equivalent to 106.50% of the accumulated variation of the daily average rates of– Interbank Deposits (DI) of one day, extra-group, daily calculated and disclosed by CETIP, based on 252 business days, following the compound interest system, pro rata temporis, per business day, will incur from the issuance date or the date of the previous interest payment to the date of the following interest payment. III - Guarantee and, if secured, a description of the asset that is the subject matter of the guarantee Not applicable. IV - In the absence of a guarantee, whether the credit is unsecured or subordinated


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Unsecured. V - Possible restrictions imposed on the issuer with respect to: • Distribution of dividends • Disposal of certain assets • Contracting of new debts • Issue of new securities Only those provided by the applicable legislation, particularly in CVM Instruction No. 476/2009. VI - Fiduciary agent, indicating the main terms of the agreement

The fiduciary agent is Oliveira Trust Distribuidora de Títulos e Valores Mobiliários S.A. The fiduciary

agent will receive remuneration to be paid by Itaúsa in quarterly installments of R$7,000, adjusted based on the accumulated variation of the IGP-M(inflation rate) plus the respective taxes. i) Conditions for changing the rights assured by such securities

Only those provided by the applicable legislation. j) Other relevant characteristics

Not applicable. 18.6. Indicate the Brazilian markets in which the issuer’s securities are admitted for trading

The shares of Itaúsa were listed for trading on BM&FBOVESPA on June 30, 1066.

Reiterating our historical commitments to transparency, to corporate governance and to the strengthening of capital markets, Itaúsa is among the first companies that spontaneously adhered to the Differentiated Corporate Governance Index of BM&FBOVESPA – Level I on June 26, 2001. 18.7. With respect to each class and type of security admitted for trading in foreign markets, please indicate: a) Country

Not applicable. b) Market

Not applicable. c) Managing entity of the market in which the securities are admitted for trading

Not applicable. d) Date of admission for trading

Not applicable.


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e) If applicable, indicate the trading segment

Not applicable. f) Date the securities were first listed in the trading segment

Not applicable. g) Percentage of trading volume abroad in relation to total trading volume of each class and type in the previous year

Not applicable. h) If applicable, proportion of deposit certificates abroad in relation to each class and type of shares

Not applicable. i) If applicable, depository bank

Not applicable. j) If applicable, custodian institution

Not applicable. 18.8. Describe the public offerings for distribution carried out by the issuer or third parties, including parent companies and affiliated and subsidiary companies, related to the issuer’s securities

Pursuant to the description in item 18.5 above, Itaúsa held on June 1, 2010 its first public issuance of unsecured debentures not convertible into shares in the amount of R$1billion, following the system provided in CVM Instruction No. 476/2009 (public distribution with limited placement efforts, exclusively for qualified investors). The funds obtained from this issuance were fully used to purchase common shares issued by Itaú Unibanco Holding S.A. 18.9. Describe the public offerings for acquisition carried out by the issuer related to shares issued by third parties

Not applicable. 18.10. Supply other information that the issuer may deem relevant

None.


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ITEM 19 - REPURCHASE PLANS AND TREASURY SECURITIES 19.1. With respect to the share repurchase plan, supply the following information: a) Dates of the resolutions that approved the repurchase plans

Meetings of the Board of Directors held on November 06, 2006, November 12, 2007, November 10, 2008 and November 09, 2009. b) With respect to each plan, please indicate: I - Number of shares provided for, specifying class and type

Date of resolution Book-entry Common Book-entry Preferred November 06, 2006 47,000,000 163,000,000 November 12, 2007 52,000,000 180,000,000 November 10, 2008 58,000,000 192,000,000 November 09, 2009 65,000,000 219,000,000

II - Percentage in relation to total outstanding shares, specifying class and type

Date of resolution Book-entry Common % Book-entry Preferred % November 06, 2006 9.92 9.96 November 12, 2007 9.90 9.98 November 10, 2008 9.97 9.77 November 09, 2009 9.98 9.97

III - Repurchase period

Date of resolution Period November 06, 2006 November 06, 2006 to November 05, 2007 November 12, 2007 November 12, 2007 to November 09, 2008 November 10, 2008 November 10, 2008 to November 09, 2009 November 09, 2009 November 10, 2009 to November 10, 2010

IV - Reserves and profits available for the repurchase

November 06, 2006 - Revenue Reserves/Reserve for Working Capital November 12, 2007 - Revenue Reserves/Reserve for Working Capital November 10, 2008 - Revenue Reserves/Reserve for Working Capital November 09, 2009 - Revenue Reserves/Reserve for Working Capital

V - Other relevant characteristics None.


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VI - Number of shares acquired, specifying class and type

Date of resolution Book-entry Common Book-entry Preferred November 06, 2006 - 14,271,000 November 12, 2007 - 28,700,000 November 10, 2008 - - November 09, 2009 - 1,382,038

VII - Weighed average purchase price, specifying class and type

Date of resolution Book-entry Common Book-entry Preferred November 06, 2006 - 10.54 November 12, 2007 - 10.75 November 10, 2008 - 0.00 November 09, 2009 - 11.03

VIII - Percentage of shares purchase in relation to total approved

Date of resolution Book-entry Common % Book-entry Preferred % November 06, 2006 - 8,76 November 12, 2007 - 15,94 November 10, 2008 - - November 09, 2009 - 0,63

19.2. With respect to the changes in the securities held in treasury, in a table, specifying kind, class and type, please indicate the number, total amount and weighed average purchase price for the following: 2009:

Kind (class and type) Opening

balance (in R$) Weighed average

purchase price (in R$) Purchases Cancellations

Closing balance (in

R$) Common shares - - - - -

Preferred shares 45,503,679.47 11.03 1,382,038 4,404,840 15,243,879.14

2008:




Closing balance (in


Preferred shares 30,501,938.92 10.55 26,600,440 24,695,600 45,503,679.47


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2007:




Closing balance (in


Preferred shares 124,944,673.05 11,67 4,797,000 14,271,000 30,501,938.92

19.3. With respect to the securities held in treasury at the end of the immediately previous year, please indicate, in a table, specifying kind, class and type:

Kind (class and type) Number Weighed average

purchase price (in R$) Purchase

date % in relation to outstanding securities of the

same class and type Common shares - - - -

Preferred shares 1,382,038 11.03 November

26, 2009 0.051649612%

19.4. Supply other information that the issuer may deem relevant

None.


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ITEM 20 - SECURITIES TRADING POLICY 20.1 Indicate whether the issuer adopted a trading policy for the securities issued by it by direct or indirect controlling shareholders, executive officers, directors or members of the fiscal council or of any body created by a statutory provision, that performs technical or advisory functions, informing:

The Issuer is bound by rules set out by CVM Instruction No. 358 of January 3, 2002, as amended, regarding the trading of its securities. In addition, although it has never been mandatory, since 2002 it has decided to adopt a policy in this sense, which has resulted in rules that are even stricter than those required by the governing body itself. a) Date of approval

The Issuer’s current securities trading policy was approved in 2002, taking into consideration that its provisions are constantly reviewed to ensure that they are in line with the best corporate governance practices. The latest change was made on March 1, 2010. b) Insiders

Insiders are: (i) direct or indirect controlling shareholders, members of the Board of Directors, Fiscal Council and any body created by a statutory provision, that performs technical or advisory functions with technical and consulting functions; (ii) members of the statutory bodies of subsidiary or affiliated companies; (iii) management members that resign from the Issuer’s management or the management of companies in which the Issuer is the only controlling shareholder, over the term of six months counted from the resignation date; (iv) anybody who, in view of their job, duty or position in the Issuer or in its controlled, subsidiary or affiliated companies, is aware of material information; (v) those who have a business, professional or trust relationship with the Issuer such as independent auditors, securities analysts, consultants and institutions that are part of the distribution system; and (vi) the spouse or partner and any other dependant included in the annual income tax return of persons impeded from trading indicated in items "i", "ii" and "iii". In addition, the persons that are equivalent to persons impeded from trading are: (x) the managers of the portfolio and investment funds, companies or other institutions or entities in which the persons impeded from trading are the only quotaholders or shareholders, or in which they may influence the trading decisions; (y) any company that is directly or indirectly controlled by persons impeded from trading; and (z) any person who has had access to information on a material act or fact through any of the persons impeded from trading. c) Main characteristics

Our trading policy is managed by a Disclosure and Trading Committee, the scope of which covers a range of internal actions aimed at improving information flows and upholding the ethical conduct of the management members and collaborators who are subscribers to these policies, in order to: (i) assure the transparency, quality and safekeeping of the information provided to shareholders, investors, the press, government authorities and other capital market entities; (ii) observe and apply the criteria established by the policies, so that management members, shareholders, and third parties who have a professional or trust relationship with the Issuer follow the ethical and legal standards of the Issuer or values to which it subscribes; (iii) evaluate the guidelines and procedures of the Issuer’s trading policy and those to be followed in the disclosure of a material act or fact, and the maintenance of the confidentiality of such information, established by the disclosure policy, as well as to analyze in advance the content of press releases; (iv) monitor and regulate the adherence of management members and other collaborators of the conglomerate to its policies, and (v) examine cases of the breach of the Issuer’s policies. d) Provision for black-out periods and description of the procedures adopted to inspect trading in such periods

Insiders, in addition to the restrictions set out in the CVM No. 358/02 Instruction, cannot:


251

1) Trade securities issued by any company of the Issuer or referenced to them, from the acknowledgement date to the disclosure date of a material act or fact to the market (except if within the dividend reinvestment program).

2) Trade the securities mentioned in item 1 above during black-out periods, which can be determined by the Investor Relations Officer regardless of any justification or existence of a material act or fact not yet disclosed.

3) Sell securities of the Issuer or referenced to them before a period of 180 days from their purchase is elapsed (except if within the stock option plan, stock-based compensation program, dividend reinvestment program, exercise of preemptive right to subscription related to shares previously purchased or private negotiation between insiders).

4) Trade securities issued by the Issuer through intermediaries other than Itaú Corretora de Valores S.A.

The control over such transactions so that they do breach the disclosure and trading policies of the Issuer shall be carried out by Itaú Corretora de Valores S.A. 20.2. Supply other information that the issuer may deem relevant

In November 2004, the Issuer and Itaú Unibanco Holding S.A., following a detailed national and international survey of best corporate governance practice, became the first Brazilian companies to voluntarily adopt operating rules for the trading of treasury shares. These rules were introduced to govern the trading of its own shares undertaken by the Issuer on BM&FBOVESPA – Bolsa de Valores, Mercadorias e Futuros (Securities, Commodities and Futures Exchange).

In the view of the Issuer’s management, the adoption of these rules has brought innumerable benefits,

among which are the reduction of operational, financial and strategic risk, the creation of an in-house culture for these operations in the capital markets, the reduction in the possibility of market concentration or improper pricing, and the bolstering of the strategy for the repurchase of securities focused on the preservation of liquidity and value for shareholders. All this has led to greater transparency in this type of operation.

Additionally, as good governance practice, the Issuer reports monthly the movement of shares in the repurchase program. At present, it has a stock repurchase program in progress – on November 09, 2009, the Board of Directors authorized the purchase of up to 65,000,000 common shares and 219,000,000 preferred shares, without reduction of capital stock value, for holding in treasury, cancellation or replacement in the market.


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ITEM 21 - INFORMATION DISCLOSURE POLICY 21.1. Describe internal standards, regulations or procedures adopted by the issuer to ensure that the information to be publicly disclosed is gathered, processed and reported accurately and on a timely basis

As mentioned in items 12.1(a.3) and 20.1, the Issuer has a Disclosure and Trading Committee, which manages disclosure and trading policies.

One of the responsibilities of this committee is to ensure that the information to be publicly disclosed is gathered, processed and reported accurately and on a timely basis. For this purpose, its duty is to regulate the adherence of insiders to the disclosure policy, which has effective mechanisms for the collection of information, as well as severe sanctions for use in cases of noncompliance (see item 21.2 for more information on the disclosure policy).

Additionally, the Investor Relations Officer, Henri Penchas, is the Executive Managing Vice-President of the Issuer, and this enables him to have full access to the key decisions of the company. Some of his duties are: (i) disclose and report to the markets and competent authorities any material act or fact occurring in or related to the Issuer’s business; (ii) ensure the wide and immediate dissemination of the material act or fact; (iii) disclose the material act or fact simultaneously in all markets in which the securities of the issuer are admitted for trading; (iv) provide additional clarification on the disclosure of a material act or fact to the competent authorities, upon their request; and (v) inquire of people who have access to material acts or facts in the event contemplated in subitem “iv” or if there is an atypical oscillation in the quotation, price or quantity of securities traded and issued by the Issuer or referenced to them, with the purpose of checking if they are aware of information that should be disclosed to the market.

In accordance with the disclosure policy, a document disclosing the material act or fact shall be prepared by the Disclosure and Trading Committee, which may request the participation of the offices involved in the transaction or business that gave rise to the material act or fact. The Disclosure and Trading Committee may also, subject to the timeliness and convenience criteria, (i) approve the disclosure of preliminary information not yet audited, related to the quarterly, semiannual or annual results of the Issuer or (ii) approve the advanced disclosure of the quarterly, semiannual or annual results of the Issuer, duly audited.

The area in charge of corporate matters shall disclose, under the supervision of the Investor Relations

Officer, the material act or fact, on a priority and simultaneous basis: (i) to CVM, on its website, to BM&FBOVESPA and, as the case may be, to other stock exchanges and entities of the organized over-the-counter markets; and (ii) to the market in general, by publications in newspapers of wide circulation, regularly used by the Issuer, and in the Official Gazette of the State.

After this disclosure, the person appointed by the Investor Relations Officer may disclose to the market

the material act or fact by e-mail, and make it available on the Investor Relations website. 21.2. Describe the policy for the disclosure of a material act or fact adopted by the issuer, indicating the procedures related to maintenance of confidentiality of the undisclosed material information

Insiders should maintain secrecy on the information related to the material act or fact until it is disclosed to the market.

For the purposes of the Issuer’s disclosure policy, insiders are: (i) its direct or indirect controlling stockholders, directors, members of the Board of Directors, of the Fiscal Council or of any body created by a statutory provision, that performs technical or advisory functions; (ii) the same persons of its controlling company, subsidiaries under the effective management of the Issuer, and affiliated companies, who are aware of information related to the material act or fact; (iii) employees of the Issuer, or of its controlling company, subsidiaries under effective management of the Issuer, and affiliated companies, that, in view of their job, duty or position, are aware of information related to the material fact or act; and (iv) any other person who, under any


253

circumstance, may be aware of the material information, such as consultants, independent auditors, rating agency analysts and advisors.

In the event that an insider resigns from the Issuer, or no longer takes part in the business or project to

which the relevant information is related, she/he will continue to meet the duty of secrecy until this information is disclosed to the proper authorities and to the market.

Any insider who discloses by mistake a material act or fact to any person who is not an insider before it

is disclosed to the market, shall immediately inform the Investor Relations Officer of this undue disclosure, so that the Investor Relations Officer can take the appropriate measures.

The Issuer has mechanisms and policies to assure control over information, such as restriction on the

use of external e-mails (which means that every piece of information must go through the internal e-mails of our employees, which are constantly monitored by a specific team), to the use of mobile phones in sensitive areas (such as capital markets) and of pen drives, compact discs and other information storage devices.

The Issuer has also implemented awareness actions, aimed at making its policies even more effective (for example, lectures on the need to keep secure documents that contain confidential information in secure places, as well recommendations on the disposal of these documents).

In addition, Itaúsa has a team that periodically inspects the workplace of its employees to identify possible deficiencies. It also classifies the information conveyed in and out of the bank in accordance with the confidentiality level. The Issuer and Itaú Unibanco Holding S.A. were the first companies to adhere to the ABRASCA Guidebook on Control and Disclosure of Material Information.

The Issuer will not comment on rumors about it existing in the market, except if they significantly affect the quotation of its securities. 21.3. Indicate the management members responsible for implementing, maintaining, evaluating and inspecting the information disclosure policy

Alfredo Egydio Arruda Villela Filho – Member of the Board of Directors since August 1995 and member

of the Disclosure and Trading Committee since April 2005 (he is currently the chairman of this committee). Member of the Accounting Policies Committee since August 2008 and Chief Executive Officer and General Manager since September 2008.

Alfredo Egydio Setubal – Member of the Board of Directors since September 2008, member of the

Investment Policies Committee since August 2008, and member of the Disclosure and Trading Committee since May 2009.

Henri Penchas – Member of the Disclosure and Trading Committee since April 2005 and member of the Investment Policies and Accounting Policies committees since August 2008.

Ricardo Egydio Setubal – Alternative Member of the Board of Directors since April 2009.

Rodolfo Villela Marino Setubal – Alternative Member of the Board of Directors since April 2009. 21.4. Supply other information that the issuer may deem relevant

All relevant information was addressed in the items above.


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ITEM 22 - EXTRAORDINARY BUSINESS 22.1. Indicate the acquisition or disposal of any relevant asset that is not classified as a regular transaction in the issuer’s business

None. 22.2. Indicate significant changes in the conduction of the issuer’s business

None. 22.3. Identify the relevant agreements entered into by the issuer and its subsidiaries that are not directly related to its operating activities

None. 22.4. Supply other information that the issuer may deem relevant

None.

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(A free translation of the original in Portuguese) Report of Independent Auditors on Reference Form (CVM Instruction 480) To the Board of Directors Itaúsa - Investimentos Itaú S.A.

1 In connection with the audits of the financial statements of Itaúsa - Investimentos Itaú S.A. and subsidiaries as of December 31, 2009, 2008 and 2007, on which we issued unqualified audit reports dated March 1, 2010, March 2, 2009 and February 18, 2008, respectively, we performed a review of the accounting information included in the Reference Form of Itaúsa - Investimentos Itaú S.A.

2 Our review was performed in accordance with specific standards established by the Federal Accounting Council, with respect to the accounting information included in the Reference Form of Itaúsa - Investimentos Itaú S.A., and mainly comprised: (a) inquiry of, and discussion with, management responsible for the accounting, financial and operational areas of the Bank with regard to the main criteria adopted for the preparation of the Reference Form; and (b) reading the significant accounting information included in the Reference Form to assess its consistency with the audited financial statements. The accounting information included in the Reference Form is presented by the Board of Directors for the purpose of complying with Brazilian Securities Commission (CVM) Instruction 480; however, it should not be considered part of the financial statements.

3 Based on our review, we are not aware of any material modifications that should be made to the accounting information included in the Reference Form referred to above in order that it be presented, in all material respects, in a manner consistent with the financial statements at December 31, 2009, 2008 and 2007 taken as a whole. São Paulo, June 30, 2010 PricewaterhouseCoopers Maria José De Mula Cury Auditores Independentes Contadora CRC 1SP192785/O-4 CRC 2SP000160/O-5

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