The responsibility of leadership

Itaú Unibanco combines the values and attitudes of each institution to strengthen its commitments to respect human rights, social responsibility and ethical conduct. The merger also increases the responsibility of the largest privately-controlled bank in the Southern Hemisphere to lead the global financial sector in promoting sustainable development through its services, processes, products and relationships.

The bank employs monitoring and accounting instruments consistent with internationally recognized commitments such as the Global Compact, Equator Principles, Global Reporting Initiative (GRI) guidelines and AA1000 and
SA8000 standards.

Its business practices comply with financial sector codes of ethics and meet the practices requirements of the Dow Jones Sustainability Index (NYSE) and the São Paulo Stock Exchange Corporate Sustainability Index (Bovespa ISE), as well as other market standards.

Voluntary commitments and representation

Equator Principles

- Itaú and Unibanco have been signatories to the Equator Principles since 2004

Global Compact

- As part of the group of companies that have joined the Global Compact, Itaú and Unibanco have committed to adopt the business practices of its ten principles in the areas of human rights, labour relations, protecting the environment and combating corruption.

Carbon Disclosure Project (CDP)

- The CDP is a global initiative designed to report to investors on the greenhouse gas emission inventories of large corporations, and inform them of the risks and opportunities caused by climate change. Itaú and Unibanco are signatories to the CDP and respondents in Brazil. In 2008 Itaú became a sponsor of the CDP’s expansion in Latin America.

Greenhouse Gas Protocol (GHG Protocol)

- The GHG Protocol is the international standard for managing emissions of greenhouse gases (GHGs). Itaú and Unibanco use the GHG Protocol methodology in their inventories, and Itaú is a founding member of the initiative in Brazill.

Forum on Latin American Sustainable Finance (LASFF)

- Itaú and Unibanco take part in the activities of the Forum, which are coordinated by Fundação Getúlio Vargas and designed to promote sustainable finance in Latin America.

UNEP - Finance Initiative

- Itaú is a signatory to the UNEP-FI, a global partnership between the United Nations Program for the Environment and the financial sector. They are also part of the Latin America Task Force, which helps spread the content and practices of Sustainable Finance to other financial institutions.

Institute of Social and Ethical Accountability

- By joining this UK-based institute, Itaú Unibanco has become part of a global network of companies committed to sustainability.

Education for All

- Fundação Itaú Social is part of the governance board and is one of the organizations which maintain this group’s actions. Education for All is an alliance of various companies, organizations and institutes, including Instituto Unibanco , that share the goal of ensuring quality primary schooling for all Brazilians by the year 2022.

National Pact for the Eradication of Slave Labour

- Itaú became a signatory to the pact in 2008, and requires its value chain to comply with this initiative.

Principles for Responsible Investment (PRI)

- Unibanco Asset Management (UAM) began adopting the PRI in July 2008, becoming the first major investment fund manager in Brazil to do so. Launched in 2006, the initiative seeks to incorporate social, environmental and corporate governance aspects in investment decision-making.

Sustainability Strategy Reference Group

- Since 2007 Itaú has been part of the Sustainability Strategy Reference Group, which was formed by the Ethos Institute of Business and Social Responsibility. The companies participating in the group seek to structure a cooperative program to share knowledge and learning related to sustainable management goals and processes.

Sustainability Reference Centre

- Itaú and Unibanco are part of the Sustainability Reference Centre at Fundação Dom Cabral, which promotes studies and discussion on sustainable development. Unibanco is also a member of Fundação Dom Cabral’s Centre for Responsible Retail Development, which works to generate knowledge for retail companies and their supply chain components.

National Forum on the Prevention and Eradication of Child Labour (FNPETI)

- Fundação Itaú Social is part of FNPETI, a non-governmental approach to coordinate, mobilize and educate Brazilian society on the prevention and eradication of child labour exploitation.

Brazilian Business Council for Sustainable Development (CEBDS)

- Itaú and Unibanco are part of the Technical Chamber of Sustainable Finance (CTFIN) of CEBDS, whose mission is to help financial institutions take an active role in promoting the principles of sustainable development.

São Paulo Social Network

- Fundação Itaú Social is on the Management Committee of the São Paulo Social Network, an alliance of over 100 civil society organizations plus the private and public sector, which address social issues that affect the daily lives of the population. The first challenge is to increase its role in strengthening networks that protect children and adolescents.

Sustainable Amazon Forum

- Banco Itaú joined the Forum in 2008, becoming part of a dialogue between companies, governments and civil society organizations to create alternatives for sustainable development for the Amazon.

Itaú Unibanco's actions to meet the Millennium Development Goals

Itaú Unibanco seeks to help Brazil meet the Millennium Development Goals
(see table), a United Nations initiative ratified by 189 countries who have pledged
to reach the minimum conditions for sustainable development by 2015.

Employees

A Merger of Talents

Itaú Unibanco is in a unique position, facing tremendous opportunities for business growth thanks to the continuing success its employees have generated through their responsibility and hard work over the past years.

Huge challenges lie ahead, but with skill, dedication, respect for ethical values, superior decision-making procedures, efficiency and agility, we can grow far beyond the sum of Itaú and Unibanco’s combined work force, which is increasingly reflected in the spirit of a highly integrated and high performance team.

At the time of writing, the bank has mobilized its team by getting them fully involved with mapping out and comparing the people management policies, practices, processes and systems of the two institutions. By identifying the best practices and our combined skills, a new people management model will be built for Itaú Unibanco.

The teams have become a work force with multi-faceted potential, which is fundamental to consolidate the integration process. Together they will further strengthen our business leadership strategy, making the organization a focus for the attraction, development and retention of talent.

Itaú Unibanco Staff

Itaú Unibanco employs 108,027 people in Brazil, of which 71,354 are from Itaú and 36,673 from Unibanco, comprising a group capable of generating more value than simply the sum of its individual skills.

Careers

Attraction and retention

Itaú Unibanco values and encourages diversity, attracting professionals from different disciplines, races, opinions and cultures to contribute to the continuing development of the organization. Our teams are made up of experts in a wide variety of fields, and operate in an environment offering real prospects for professional and personal growth.

We spare no effort to retain talented individuals. During the integration process our employees will help us reorganize our many operating areas to help us better carry out our business strategy.

In 2008 the two banks conducted similar programs to attract employees and young talent.

Following are some of the best practices developed by Itaú and Unibanco during 2008 for internal and external recruiting and valuing employees.

Development actions

Career Opportunities Program (POC)

- This program focuses on choosing the right people to fill employment opportunities at Itaú. The main objectives are to strengthen our work force, offer professional growth and development, retain talented employees and let them play an active role in developing their careers. On average, 3,250 applications are received every month for 800 posted vacancies, including 273 transfers.

Training Programs

- Designed for specific business areas at Itaú, these training programs have more than 90 participants. The goals are to attract and develop high potential professionals and turn them into area specialists. The professionals we hire are young, recent graduates who receive training in Information Technology, Capital Markets, Sales and Insurance and Pensions. During the year 74 people were hired for these programs. In 2008 Unibanco trained 119 general managers, split evenly between existing staff members and newcomers from a broad range of backgrounds. Unibanco also trained 193 customer service managers, all of whom were internal promotions. Unibanco’s programs are designed to empower employees to excel in their position, and work in areas that help them expand their business vision.

Summer Job Internship Program

- Both banks have a program for students who cannot do their training during the school year. Since 2005, when the program was created by Itaú, 116 students have been hired – including 62 in 2008. Unibanco attracted students from leading schools in Brazil and abroad, and in 2008 brought on board trainees who have developed projects in the areas of risks, research and asset management.

Young Talents

- In 2008 Itaú held 18 events at Brazilian universities, attracting over 60,000 visitors. For the first time the bank also promoted eight events at American universities, in an effort to attract differentiated talents.

In 2008 Unibanco maintained its strong ties with major universities to attract talented young people. The bank held a total of 13 recruitment fairs at Brazilian universities and sponsored related events at other learning institutions and at schools in the USA.

Trainee Program

- Currently this program offers general technical and behavioural training to over 100 trainees in various business areas. In 2008, 50 people were hired through the Itaú program. Unibanco hired 88 trainees in various business and support areas. During the year the trainees participated in talks with executives and guided visits, as well as technical and behavioural training. Each trainee was also given mentors – group executives that help monitor their careers and guide them in their academic studies.

Internship Program

- Lasting up to two years, this program allows students to learn the values and practices of both companies. Itaú’s regular training program enables students to learn the culture, values and practices of the organization, while helping out with various processes and projects in the business areas. On average, 60% of the interns end up being hired. In 2008 Itaú took on 669 new interns. Unibanco’s internship program offers presence and distance training. Interns develop a project to completion and then present it to a bank examiner. In 2008 the number of interns hired increased over the year before. From 351 total interns, 169 were here hired in 2008, or 48%. In 2007 Unibanco had 355 interns, 42% of whom, or 150 candidates, were brought into the company.

Talents Acceleration Program

- This Unibanco training program is designed to map out, select and prepare managers identified as potential talent so they can take on new challenges in the group. There are currently 77 participants. In 2008 behavioural training modules were held which focused on the following leadership skills: “strategic vision”, “effective communication”, “training
and inspiring teams” and “lead yourself”.

Recognition Actions

Walther Moreira Salles Award

- Recognizes the best initiatives from Unibanco employees and is divided into seven categories: Innovation, Synergy, Quality, Efficiency, Generation of Business, People Management and Sustainability, the latter of which was created in 2008. Winners in each category receive Unibanco stock and have their practices publicized throughout the company.

Partners Program

- Allows top-performing executives to purchase bank stock and receive free shares from the bank. Half of these shares may be sold in three years, and the rest in five years. There were 65 executives in the program at the end of 2008.

Attitude Value Program

- Rewards employees who generate improvements in processes for customers or measurable results for the bank. The program has already received more than 5,700 entries and awarded 813 employees, 36 of whom have received a scholarship worth R$10,000.

Star Service Program

- Designed to recognize individual and Itaú team initiatives with good service performance and to encourage the implementation of improvements that prevent the recurrence of problems. In 2008 we analyzed more than 2,839 cases in the Administrative Centre and the branch network, and rewarded 2,600 employees and 35 branches. Demonstrating the substantial motivation and involvement of the teams, 97 employees won a trip within Brazil for themselves and a companion.

Training and capacity building

In 2008 Itaú and Unibanco jointly invested about R$130 million in employee education, training and development programs.

The Itaú Business School is being developed to serve as a centre of excellence in people development, to ensure leadership in performance and business continuity. The school helps maintain the bank’s ISO 9001 certification, which was awarded in 2006. Currently, 452 presence and distance courses are offered to employees from all levels and areas of the organization.

The many challenges in 2009 include the School’s key support of the development strategy, with emphasis on special skills and future needs of Itaú Unibanco’s business operations. At Itaú, 1,543 managers and specialists also took part in Leadership Development Paths, which focuses on skills and preparation for career advancement. Participants also had access to Improvement Solutions to help broaden their knowledge on issues important to the organization.

The Knowledge Curriculum, launched in 2007 by Unibanco, identifies skills, lists the knowledge necessary to perform different roles and, based on a diagnostic analysis, prepares a series of training sessions. Currently every business area and unit has developed a curriculum.

The knowledge necessary to carry out each function is listed through interviews with directors, superintendents and managers to identify the main short and long-term challenges, and through discussion groups with representatives from several areas.

The two banks each have programs for managers to study abroad. The Unibanco Executive MBA Program allowed employees to register as prospective candidates, with final selection based on performance evaluation and time spent with the organization. The program’s second class saw 22 executives graduate in 2008. During the year the third class, comprised of 35 executives, began its studies.

Unibanco also chose staff members to enter MBA programs at some of the world’s leading universities. Itaú’s A Program fully supports staff members with high development potential to earn a Masters degree and take post-graduate training at major schools and universities overseas. Since the program began in 1983, 152 employees have completed their studies.

The G Program was created in 1999 to fully support staff members with high development potential in business or people management to earn an MBA or take other Masters training at schools in Brazil. Since the beginning of the program 72 people have received their degree.

In-company MBA training conducted by Itaú seeks to supplement and enhance the training of professionals engaged in areas or processes that require considerable knowledge, skills and techniques related to specific topics. In 2008 the bank graduated 91 people in three groups, and started two other classes, totalling 59 participants.

Average hours of training per
Itaú Unibanco employee in 2008

* in 2008 Itaú’s statutory directors
did not undertake any training

Distance learning

The Knowledge Click project had 551,000 Unibanco employees registering visits in 2008, who were seeking distance training for their career development, while 365,000 Itaú staff members signed up for 419 in programs throughout the year.

To continue providing training for those with disabilities, an e-learning program was developed in 2008 for all employees of Orbitall, in partnership with Febraban (Brazilian Banks Federation), which in 2007 had helped create a program for 17,900 Itaú staff members. These programs are designed to provide knowledge about how to manage a team with people with disabilities, to develop relationships with customers with disabilities, and provide related information on applicable Brazilian legislation.

Performance and Feedback

Itaú Unibanco uses tools that allow employees and managers to set personal goals which are in keeping with company strategy.

In 2008 Itaú continued to employ the 360° model to measure performance and potential for superintendents, managers and supervisors. It sets guidelines on targets to be achieved by employees and can be used to determine salaries. The Dialogue Development program includes all employees not covered by the Integrated Management Performance and Potential (GIPP) model. Through dialogue, managers give their employees opportunities for improvement and together they determine development actions such as training and courses. In 2008 about 17,400 employees were evaluated by GIPP, while 40,200 employees were assessed under Dialogue Development.

Itaú also has other development programs and tools, including: Assessment Center, a grading tool based on corporate skills; Coaching, which focuses on developing leaders; and Leadership Review, to evaluate bank Directors.

Unibanco’s development tools and programs are designed to help build an internal environment which can improve and reward its employees, and focus on continual growth of organizational and individual performance, based on corporate and personal needs. These tools seek to analyze the career path of the group’s leading executives, based on their potential and the performance of their employees. The main programs and development tools are: Strategic People Planning (PEP) and Mentoring.

Unibano’s evaluation system includes employees setting their own goals, performance evaluation and regular feedback.

Each quarter, employees and their immediate managers set goals to be reached during the period. At the end of the quarter a committee meets to review the performance of each employee. In 2008 approximately 36,000 employees had their performance assessed. This performance analysis is tied to bonuses and post-graduate bursaries, among other benefits. Those employees which score highest have priority in receiving bonuses.

In total, 99% of Itaú Unibanco’s employees have undergone performance assessment (companies included: Banco Itaú, Itaucor, Itaucred, Itauprev, Itaú Leasing, Orbitall, FIC, Fai, Facilita, Trishop, Itauseg, DTVM, Kinea, Itaú Adm. Consórcio, Itauseg Saúde, Itaú XL, Finaustria Assess, Fina, Total Serviços, Financeira Itaú, Itaú Holding, BIC, Banco Itaucard and the Unibanco group, except subsidiaries abroad).

Remuneration

To determine the pay of its employees, Itaú Unibanco uses various management and research tools and follows the market’s best practices. Total pay is comprised of a fixed salary, i.e. the set value based on a contract which meets all applicable legal regulations and labour union agreements, plus variable pay, or incentives related to achieving goals.

Itaú’s remuneration strategy is focused on variable pay, which allows its Performance Culture to increasingly permeate all levels of the organization. This means pay can be adapted for each segment of the bank, to support the growth strategy and remain competitive in specific markets.

Variable pay at Unibanco was tied to the performance of each employee, measured by the performance evaluation. The company had five variable pay models for different positions and areas in 2008.

Employee welfare

Benefits

Itaú Unibanco, through a substantial benefits package, supports a healthy work environment where employees enjoy ideal conditions to fully develop their professional activities. The various social benefits provided to employees and their dependents totalled R$1.4 billion in 2008.

In addition to the Itaú and Unibanco integration process, since December 2008 some benefits have been made available to employees of both companies. Itaú staff members began receiving discounts at Unibanco movie theatres, while Unibanco employees began enjoying Fundação Itauclube facilities and activities.

Some benefits are negotiated in the collective bargaining agreement, such as daycare and babysitting, funeral assistance, plus meals and food vouchers. Several other benefits were created exclusively by the organization, including: additional pension and accident illness assistance, preferential rate loans, differentiated vehicle financing, social service guidance, family medical and dental plan, supplementary private pension plans, staff loan policy, and personal life and accident insurance.

Quality of life

Following are some of the quality of life programs offered by Itaú and Unibanco in 2008.

• Health Time Program: the flagship program for educating employees about their health, through various Itaú information channels. It has five products: a booklet distributed monthly to employees, which in 2008, reached 700,000 staff members; CD – 615 copies of the audio version of the booklet were sent to the visually impaired; Intranet – the Quality of Life site had over 100,000 visits during the year and publishes four reports per month; Mural - the intranet content is summarized and sent out each month to branches and banking services outlets which received 37,000 summaries in 2008; Events – fun, interactive quarterly events are held at the São Paulo administrative centre, and annually in Belo Horizonte, Rio de Janeiro and Curitiba, with about 2,000 people taking part.
• Be OK Program and ConTactProgram: developed by Unibanco and Itaú Holding, respectively, these programs provide service to employees and their dependents to help them confront adverse personal or career situations. Be OK provides advice on retirement and procedures in case of accident or death. Through an accredited network, it offers psychological, social service, legal, nutritional, speech therapy, occupational therapy and physiotherapy assistance, as well as information on physical fitness, sporting activities, personal hygiene and financial advice. The program also supports staff members on leave. In 2008, 40,559 people were served by Unibanco’s ConTact program, which offers help from psychologists, nutritionists, physiotherapists, physical education teachers, psycho-pedagogical specialists, lawyers, occupational therapists, speech therapists and psychiatrists, who provide free advice through a toll-free number and by a network of accredited professionals. In 2008 over 38,000 calls were made and received, with psychological assistance being the most requested service. The branch network represented 66.17% of total use, against 33.83% for the administrative centre.
• Preventive examinations programs: in 2008 Unibanco’s Live Better program introduced the hiring of a medical consultant to map the health profile of employees. The intention is to help the early diagnosis of cardiovascular diseases, diabetes, breast and prostate cancer and work-related bone and muscular problems (repetitive strain injuries), among others. Itaú’s Executive Check-up program offers executives an annual check-up which is 100% subsidized by the company. This is a complete check-up offering a thorough medical evaluation plus clinical image examinations performed at leading facilities.
• Vocational Rehabilitation Program: this program is designed to decrease loss of productivity typically caused by repetitive strain injuries. Itaú’s program also seeks to reintegrate returning employees who had taken time off to recuperate from these injuries. Employees away on leave dropped from 4.1% at December 31, 2004 to 2.42% at December 31, 2008, which represents a 35% decrease in real terms and a 1.66% increase in workers on the job. Based on the number of employees at July 2007, this percentage means 780 more employees on the job, which has a clear impact on productivity. Adapting the methodology used in studies by the International Social Security Association, the criteria for a successful case was an employee not having to take Social Assistance leave due to sickness (illness or accident assistance) after 12 months of monitoring, from the time the employee joined the program. The current success rate is 80%, which is comparable to the best results obtained worldwide.

Workplace Health and safety

Itaú Unibanco is committed to ensuring suitable working conditions and the welfare of its employees through occupational health and safety standards.

In 2008, 56,438 Itaú Holding and Unibanco staff members were vaccinated against colds. At Unibanco, 2,010 employees were vaccinated against rubella, while Itaú supported the public rubella vaccination campaign.

During 2008 Unibanco invested approximately R$250,000 in renovating its medical in clinic Unibanco's Administrative Centre (CAU), including new furniture and stretchers.

In terms of security Unibanco made eight presentations to more than 10,000 employees during Accident Prevention Week. Topics covered included posture education, prevention of occupational accidents, defensive driving and relaxation techniques.

Occupational health and safety indicators

Workplace environment

Organizational climate

To guarantee a good working environment for its staff, Itaú Unibanco invests in Organizational Climate Management. One of the tools adopted by Itaú is the Speak Frankly survey. Conducted every two years, it lets us know how employees feel about their daily work. Last done in 2007, the survey will be conducted again in 2009.

The Itaú Way compliance survey is designed to bring feedback to evaluated employees and help create actions for their development. This annual survey lets us measure and monitor the level of compliance with the eight principles of the Itaú Way: Performance, Human Values, Feedback, Motivator, Teamwork, Continual Improvement, Customer Satisfaction and Celebrate. In 2008 the survey covered leaders of Banco Itaú and its affiliates abroad (NY Branch, NY Securities, BIE, Biel, Japan, Argentina, Uruguay and Chile).

Unibanco’s annual organizational climate survey has helped promote solid initiatives for its teams. The survey questionnaire was sent out in June 2008 to 32,857 staff members, all of whom had been with Unibanco a minimum of three months. We received 27,636 completed forms, representing an 84% response rate. According to the results, 76% of our employees said they were satisfied with Unibanco, 71% with their work area, and 72% were motivated by the bank. Of respondents, 86% would recommend Unibanco as a company to work for. The most important attributes for job satisfaction and employee motivation were understanding the bank’s mission and goals, the company’s image in the market, the benefits offered, and seeing managers act in keeping with the bank’s directives.

Since the merger between Itaú and Unibanco, the workplace environment has been monitored to keep employees motivated throughout the integration process.

Unionized Itaú Unibanco employees in 2008

Internal communication

Maintaining active and transparent communication is one of the cornerstones of Itaú Unibanco’s relationship with its employees. To establish a continuous flow of communication the bank provides a number of electronic and printed communication vehicles, including corporate portals and a wide range of periodic newsletters, as well as our phone service centres.

Over the years Itaú has continually invested in the development and expansion of corporate portals by segment and company area. One of the vehicles with the widest reach is Itaú Notícias, a monthly magazine distributed to all group employees. There are also specific supplements for business areas (branches, companies, finance, insurance and cards).

One of Unibanco’s main internal communication vehicles is TV Unibanco, Brazil’s largest in-house corporate television network, which has over 1,000 installed outlets, and features the participation of key company executives. In addition to corporate TV, Revista Unibanco magazine and the Unibanco Portal are very popular with staff. The magazine is distributed monthly to all group professionals, while the Unibanco Portal is the organization’s principal electronic channel, with about five million visits per month.

Society

Diversity

Itaú Unibanco’s Sustainability Policy demonstrates the group’s commitment to promote an inclusive working environment that values diversity and equality by attracting professionals from different backgrounds, races, views and cultures.

In 2008, in partnership with the Brazilian Federation of Banks (Febraban), both institutions developed a pilot program for professional training and inclusion for people with disabilities. Itaú recruited 108 people who will be trained as banking assistants, while Unibanco hired 79 people under the same conditions. Participants became legally registered workers, entitling them to all category benefits under the collective labour agreement.

Even before the merger, both banks shared the same belief: unique background and life experiences of team members contribute directly to the continuous development of people and organizations. In 2008 Itaú took on 858 apprentices. By year-end 31% of the apprentices who had completed the program were hired. At Unibanco 502 apprentices enrolled in the program. In partnership with Instituto Unibanco the bank also developed the People with Disabilities pilot project in Rio de Janeiro. Twenty people are taking part, and will complete their training in 2009.

Itaú participated in the Serasa Employability of the Disabled Program by sponsoring ten students from a group of 107 professionals.

Participants were evaluated at the end of the four-month course in February 2009 for possible hiring.

Itaú’s Persons with Disabilities Committee seeks to encourage the participation of different areas and the involvement of employees. The group is also responsible for proposing improvement actions related to the inclusion, integration and development of disabled employees, and primarily, providing them with access.

To enhance its diversity Itaú has also developed the Afro-Brazilian Training Program for black university students. This initiative, in partnership with the Zumbi dos Palmares Citizenship School at Campinas State University (UNICAMP) and NGOs Afrobras and Educafro, helps train professionals and develop citizenship among young black people. About 80% of the trainees who completed the program in 2008 have subsequently been hired.

In 2008 Unibanco created its Valuing and Promoting Diversity Policy, which establishes ethical principles to ensure equal opportunities and the professional development of employees, regardless of their gender, ethnicity, beliefs, opinions, age or disabilities. One focus of the policy is including the disabled in the institution’s work force. To increase accessibility for these people, access ramps have been installed in certain areas, corridors between workstations have been widened, and suitable furniture has been installed, among other measures. There was also a 99% increase in the hiring of disabled personnel in comparison to 2007. Another action to promote diversity was the extension of benefits such as medical assistance and shared property loans for same sex partners.

Composition of Itaú Unibanco corporate governance bodies

Volunteering

Another feature shared by Itaú and Unibanco is to encourage employees to engage in social causes. In 2008 both banks participated in the founding of the Brazilian Council of Business Volunteers (CBVE), a network of companies, foundations and institutes that promote volunteer work. Itaú is also dedicated to creating and strengthening a cooperative volunteer network throughout Brazil. The Itaú Volunteer program, run by Fundação Itaú Social and Banco Itaú with technical coordination from the São Paulo Volunteer Centre, organized 12 regional meetings for more than 940 branch employees.

To encourage volunteer work among its employees, Itaú operates the Itaú Volunteer Portal (www.ivoluntarios.org.br), created in partnership with the Volunteer Portal, a project of Comunitas, an NGO. The portal provides information on events, communication networks and interviews with specialists and volunteers. The site ended the year with 3,491 registered users, representing an increase of approximately 39% from 2007. To encourage the involvement of its employees in actions which defend the rights of children and adolescents, in 2008 Itaú created the Itaú Child Rally. This pilot action involved 3,243 employee volunteers who adopted 41 schools, conducted 130 activities and collected 56,014 books.

Instituto Unibanco coordinates the volunteer work of Unibanco’s employees, which encourages employees to get involved in community activities. Our professionals are engaged in various social initiatives nationwide, facilitated by an online volunteer training program through the bank’s intranet system.

One of the program’s actions is Youth Mentoring, whose goal is to help the personal and professional development of public high school students: each participant in the program receives a mentor, selected from among those bank employees who display leadership or voluntary participation in Instituto Unibanco activities. In 2008 about 140 high school students aged 15 to 24 participated in the program, along with 70 volunteer mentors. During the year the mentors seek to effect a positive change in the attitude and behaviour of the young people in their care, broadening their horizons of knowledge and increasing their chances of social and professional inclusion.

Group employees also actively participate on the Junior Achievement volunteer program team, which uses school as a means to help integrate the business world with society. The project organizes group professionals to teach business basics to public school students in 14 major cities.

Mobilization for sustainable development

Itaú Unibanco seeks to educate its managers and employees on, and increase their awareness of, issues related to sustainable development.

In 2008 Itaú presented staff with two editions of the Itaú Sustainability Dialogues event, which are designed to spread and encourage the adoption of sustainable development ideas. The theme was “Different Ways of Looking at Recycling”. The events featured the participation of Volunteer Role, an NGO, and Business Commitment to Recycling (Cempre), as well as reports from other companies on their experiences with recycling. Over 300 employees from the Itaúsa Business Centre and Technical Operational Centre took part, and the event was also broadcast for professionals in the Tatuapé Administrative Centre (CAT).

Itaú employees are also a target of the Conscientious Use of Credit campaign. This project, which was extended to staff in 2007, seeks to maintain the welfare of the team, prevent staff members from going into debt, and provide advice when debts affect their performance and quality of life. Managers are informed when employees are in arrears, allowing them to help resolve the problem.

Unibanco has created Sustainability Leaders, a group comprising 35 employees from different areas which seeks to publicize sustainability by organizing and implementing projects in their respective sectors. Leaders were divided into 12 working groups and a study group, coordinated by the Sustainability area. Each working group developed an action plan that ranged from the design of strategies and formulation of policies to small changes in daily activities.

The groups’ tasks included placing socio-environmental criteria in analyses conducted by the credit and risks areas, spreading financial education and conscientious consumption to bank customers, and inserting initiatives raised by the sustainability indicators that contribute to transparent communication with investors. To develop action plans to meet these goals, the leaders participated in meetings and training sessions, including Sustainable Finance Training, which was sponsored by Unibanco and conducted by Fundação Getúlio Vargas and Fábrica Ética.

Recognition in 2008

• The 10 Dream Companies of University Students, presented to Banco Itaú by Companhia de Talentos, a consulting company which specializes in programs for trainees and interns in Brazil and Latin America.
• One of the Best Companies to Work For, awarded to Banco Itaú and its subsidiaries Taií and Itaucred Veículos by Época magazine and the Great Place to Work Institute.
• Best Companies to Work For, presented to Taií, Itaucred Veículos and Banco Itaú, by Você SA and Exame magazines and by Fundação Instituto de Administração (FIA).
• Best Companies to Work For, awarded to Banco Itaú by Valor Carreira magazine and consulting firm Hewitt Associates.
• 2008 Oswaldo Checchia Human Being award, Business category - People Management, presented to Itaú by ABRH Nacional.
• Best in People Management, for Education and Training at Taií, awarded by Melhor Gestão de Pessoas magazine.
• Unibanco was presented with the 2008/2009 E-Learning Brasil Award, for its use of technological resources for the continuous learning of its employees.

Clientes

Relationship of trust

With a massive domestic presence, Itaú Unibanco combines approximately 30.5 million Unibanco clients and 27 million Itaú clients among the bank’s wide range of businesses. Itaú Unibanco customers in 1,100 cities and towns in Brazil will have at their disposal a highly interconnected network of 4,600 branches and banking services outlets plus 30,000 ATMs. Internet services will also be expanded to offer over 300 operations through this channel. Additionally, the increased customer base will bring greater efficiency to our processes.

This greater number of customers will lead to the use of more refined mathematical models to assess client needs, allowing us to offer the products and services best suited to their profile.

Respect for consumers

At Itaú Unibanco a long-term partnership with customers is based on relationships of trust, transparency and respect. Both institutions have always been based on providing quality service and continually improving the relationship with their clients.

Satisfaction indicates a measure of the awareness of the institution to the needs of its customers, which is essential for a bank’s long-term success. With respect to sustainability, customer satisfaction also provides an understanding of how an organization develops links with one of its strategic relationship groups.

The new bank will always share the best practices and services each organization is known for, so that it continues to offer the best products and most efficient services to its customers.

In 2008 Itaú and Unibanco moved their programs forward. Itaú, which had already evaluated monthly customer satisfaction at each bank branch, has now begun studies to determine customer satisfaction at every call centre. The Ombudsman Tracking project, for example, is designed to monitor customer satisfaction with how well their problems are resolved by our Ombudsman service, Bacen (Brazil’s Central Bank) and Procon (Brazil’s Consumer Protection Agency). Satisfaction with the help provided by the Ombudsman jumped from 5.33 to 7.48. The Mystery Shopping Program allows better control by managers and greater uniformity in the performance of the service centres, and these initiatives will be extended in 2009.

Unibanco implemented its Troubleshooting in the 30 Horas Central and Consumer Client Internet Banking project. After analyzing customer impressions about the bank’s efficiency in solving problems through these channels, a multidisciplinary team mapped out and identified the issues that most influence customer satisfaction. The key measurement indicator was the research item “Satisfaction Tracking - Ease at solving problems”. Unibanco has now adopted a series of measures to increase customer satisfaction, such as the Councils of General Managers and Guardians of Quality, who are trained by branch managers throughout the country. The Councils are intended to identify tangible suggestions and criticisms as an ongoing means to provide better service. Some of the actions suggested by the Councils have been implemented, such as the creation of a corporate credit card.

Another tool employed is the General Satisfaction Index, which reveals the approval rating for bank products and services. This index is derived from the main items of a satisfaction survey conducted with 12,000 bank customers, and is monitored by the bank’s senior administration and all executives and managers. It represents one of the quality indicators that directly affect the evaluation of results of the bank’s main areas, and management’s individual evaluation.

Itaú created a Competitiveness area, which is responsible for monitoring customer satisfaction levels to better understand the factors behind reasons for satisfaction and dissatisfaction, thereby mobilizing the various areas of the institution to seek out improvements. This new methodology, already deployed in key business areas of the bank, provides regular satisfaction studies every six months for middle market companies, for example, and every month for consumer and high-income clients.

The voice of the customer inside the bank

Ombudsman

The Ombudsman is an avenue of recourse for Itaú and Unibanco customers, and is focused solely on solving problems. Itaú pioneered the creation of a Corporate Ombudsman service long before it became required by Brazil’s National Monetary Council. It was introduced through the “Itaú Wants to Hear Your Opinion” campaign, which reinforced the bank’s commitment to listen to its customers and learn from them.

In 2008 thousands of customers were served by Ombudsman personnel in all companies of the two institutions. Both Ombudsman departments gained a broader scope and were included in the corporate governance model of the organizations. In addition to handling customers, they also serve as a catalyst for corrective actions, improvements and spreading a culture of respect for consumer rights. A concern for continuing growth led Itaú and Unibanco to differentiated actions in 2008.

To increase everyone’s commitment to quality and reduce the time to resolve problems, Itaú prioritized operational efficiency projects involving every area of the institution. The Ombudsman area was also restructured, and now features service by business segment to improve the relationship between the specialist ombudsman in each Itaú area, allowing the Corporate Ombudsman to resolve an average of 75% of the cases brought before it each year. An innovative initiative was the establishment of the Client Agent, a professional who helps make the customer’s position more evident in each business area.

The Unibanco Ombudsman made innovative efforts to prevent complaints and customer dissatisfaction. Its participation as an effective member of the bank’s risk analysis and management process sought to show the customer’s view and the need to improve products or processes, even before their introduction.

Of the customers who used the Ombudsman at Unibanco or Itaú, 99% did not resort to outside consumer protection agencies such as Procon or the Central Bank, demonstrating our effectiveness at finding the best solution for the client and the institution.

In 2008 the Unibanco Ombudsman handled approximately 52,000 calls from Unibanco group customers, and acted directly in 21% of eligible instances where customers complained they were not satisfied with the solution offered by the Customer Service Centre (SAC). The principal motives for the complaints included bank fees, cancellation of a purchase, discrepancy with product rules and not receiving documents.

Ombudsman complaints ranking

Valuable opinion

The participation of customers is fundamental in building the new bank. Some months after the merger an Ibope market study was conducted to hear and understand the views of Itaú and Unibanco account holders.

The survey covered expectations, value added, trouble spots and aspects such as customer service and products and services. The results will help
us develop suitable management and service models.

Customer Council and Forum

Both organizations have channels which proactively strengthen the dialogue with their customers: the Unibanco Customer Council and the Itaú Customer Forum.

Unibanco was the first Brazilian financial institution to establish a Customer Council. Created in March 2005, it meets quarterly with “Uniclass” and “Exclusivo” customers to hear suggestions and comments on how to improve the institution’s quality of service. The Council is composed of clients selected from the customer service centre user base who have made proactive suggestions
or criticisms. Members sit on the Council for one year.

Some customer suggestions have already been adopted by the institution, such as extending the time period that bills may be paid by phone through 30 Horas, changes in Internet Banking to include search and security information features, and quick access by account segment. ATMs also now print out information about bank notes when withdrawals are made.

In September 2005 Itaú created its “Discussion Forum with Clients”, which included customers who had submitted complaints to the Ombudsman. In November 2008 the model was altered to a set group of customers in each market invited to take part in four meetings during the year. In these meetings customers can explain their views directly to the executives responsible for those segments, and the bank commits to respond to all questions submitted by the customers. The experience undertaken in the two corporate client segments will be expanded in 2009 to other business areas.

Many of these satisfaction indicators are used to help determine the remuneration paid to commercial and central administration teams throughout the bank’s operating areas.

Itaú and Unibanco use every tool at their disposal to listen to and learn from their clients. Itaú uses all its service and relationship channels such as ATMs, Internet Banking and call centre to listen to the opinions of its customers. Itaú and Unibanco also make use of specialized research institutes such as Ibope, IPSOS, TNS Interscience and GFK Indicator to freely collect information on customer satisfaction. Through these initiatives both banks listen to over 1.3 million consumer clients and more than 100,000 commercial clients each year.

The survey results can lead to changes in products and services. As well, the positive points identified can be used in communications with customers. An example of this was the campaign for the conscientious use of credit and its related cost-benefit.

Procon

Itaú and Unibanco have always placed great importance on their relations with consumer protection agencies, and provide a toll-free number to serve agencies around Brazil, allowing them to come up with rapid solutions. In 2008 an agreement was reached with the Procon Consumer Protection agency in Belo Horizonte which allows Itaú to be one of the first companies in the country to use the electronic CIPs system, which is an electronic preliminary investigation document.

The top six complaints registered about Itaú were related to credit cards, finance, debt renegotiation and collection, motor vehicle finance and loans and financing.

The top four complaints registered about Unibanco were for debt renegotiation, the cancellation of products and services, non-recognized use of credit cards and difficulties in closing a current account.

Procon Complaints

* Total complaints submitted to Procon São Paulo

** Total complaints handled

*** Unibanco vehicle occurrences appear under “Bank” due to CNPJ registration consolidation used by Procon São Paulo

Bacen

In 2008 Itaú and Unibanco used the Central Bank of Brazil complaints index as a key indicator for quality of services.

Banco Itaú did not appear in ten editions of the Bacen complaints ranking, while Unibanco was absent from four editions.

Among their competitors Itaú and Unibanco have the two best indices of baseless complaints.

Itaú Sustainability Dialogues

Disseminating the experiences of various companies and providing a forum for discussions on best national and international sustainability practices are the goals behind Itaú Sustainability Dialogues. In 2008 four editions were held for outside groups – which also sought to involve Itaú commercial clients – to discuss the carbon credit market, business sustainability and energy efficiency.

The meetings were attended by about 700 people, including representatives from Klabin, Usina Santa Elisa, Vonpar, Braskem, CPFL, Elektro, Neonergeia, the Brazilian Foundation for Sustainable Development, the Brazilian Association of Companies for Energy Conservation and Unicamp. Through these meetings Itaú stimulates dialogue and spreads the concepts of socio-environmental responsibility to commercial clients, middle market companies, opinion formers, executives and the media.

Extreme Makeover

In 2008 Itaú held the third edition of the Extreme Makeover Program, in partnership with Itautec, Microsoft and Small Companies, Big Business magazine. The project has been transforming very small and small enterprises through changes in the areas of technology and financial management.

The first step was to diagnose problems, a task delegated to the project’s consultants. When visiting companies they listed the main difficulties encountered and came up with solutions. The third edition of the program also included socio-environmental consulting offered by Itaú. The bank sought to show that it is possible to adopt socio-environmental practices in companies of every size and area, and that simple actions can result in cost savings and competitive differentials, in addition to better use of natural resources. Issues covered included recycling, reducing the use of paper and energy efficiency.

Conscientious Use of Money

Itaú Unibanco has a commitment to its customers and society to educate and guide them on the responsible use of financial services. Itaú’s Conscientious Use of Money Program publicizes the best ways to use money, set up structured household budgets, borrow money and plan investments, while Unibanco’s Credit Card Guidance shows how to use cards sensibly. As companies focused on sustainability and social responsibility, Itaú and Unibanco have the duty to provide this service and share their knowledge of the financial sector with society.

To increase the scope of the Conscientious Use of Credit and Current Account program in 2008, Itaú put out four new booklets which were distributed to clients in the branches and made available for download on the bank’s website. Bank employees are another target group of this action (see Employees for more details).

The Family Budget booklet addresses how to organize household finances, while Time to invest provides explanations on safe, conscientious investments. The Getting out of the red booklet offers tips on how to tackle, from a financial perspective, unexpected situations such as loss of employment. Finally, Talking about money with your children looks at ways to convey the concept of conscientious money use to future generations. Booklets previously released on the conscientious use of credit are being reissued in versions for individuals and companies.

Throughout 2008 Unibanco increased its investments in financial education for its customers. Microinvest trained 569 microentrepreneurs in basic accounting, business management and the conscientious use of credit.

More access to financial services

Itaú Unibanco believes that tomorrow was made for everyone, without exception. That’s why it has strengthened its commitment to citizenship and social responsibility by adapting its branches, ATMs and telephone and internet service to comprehensively serve disabled customers.

The bank provides disabled people with access to its facilities. Over 3,000 branches – 98% of Itaú and 78% of Unibanco – have access ramps, tactile flooring, bathrooms and ATMs specially adapted for this group.

Recognition in 2008

• For the second consecutive year Fininvest won the annual survey of “Companies that most respect the consumer in Brazil” – in the Finance/Personal Credit category, conducted by international consultants TNS Interscience in partnership with Consumidor Moderno magazine.
• Itaú was the winner of the annual survey “Companies that most respect the consumer in Brazil” in the retail bank category. The survey, conducted for the 6th consecutive year, is an initiative of Consumidor Moderno magazine and TNS Interscience.
• Itaú won the Consumidor Moderno Award for Excellence in Customer Services.
• Unicard received the Probare seal of ethics for its telemarketing sales operations.
• Unibanco Asset Management won the Overall Top 10 from Agência
  Estado Projeções.
• Unibanco was awarded by E-finance 2008.
• Unibanco Insurance & Pensions received the 2008 Coverage Performance award, in the Best Performance in the Specified Risk Portfolio category.
• The Gazeta Investe Award 2008 was presented by Gazeta Mercantil to Unibanco Asset Management for having the best fixed-income fund.
• Itaú received the 2008 Intangibles Brazil Award and the 2008 Top Intangibles Brazil, in the banks sector, from Consumidor Moderno magazine and DOM Strategy Partners.
• Itaú won Best Investment Funds Manager from Exame Guide to Personal Investments.
• Itaú won the Quality in Banks Award from Banco Hoje magazine.

Acionistas

Flexibility and transparency

Itaú has approximately 75,000 stockholders and investors, while Unibanco has 156,827 stockholders. The Investor Relations area was the first to be integrated after the merger announcement, and maintains constant communication with stockholders, investors and opinion-formers about the activities and results of the group. As with the other areas of the new bank, Investor Relations has also adopted the best practices of Itaú and Unibanco.

The basic guideline of this relationship is to be transparent at all times. Communications are conducted through events, meetings, publications, the internet and various other means. The commitment is to give the market clear, accurate, accessible and comprehensive information with respect to group strategies, operations and results.

On December 9, 2008 the first Apimec (Capital Markets Investment Professionals and Analysts) meeting after the merger, held in São Paulo, was attended by a record number of 640 participants, many of whom were journalists, including 15 who came from Argentina, Chile, Paraguay and Uruguay.

The meeting was broadcast on-line, with simultaneous English and Spanish translation. During 2008 Itaú and Unibanco independently held 16 and 5 Apimec meetings, respectively.

All actions undertaken by the area are in keeping with Investor Relations policy, and are reported to the Disclosure and Trading Committee. The role of this committee is to organize and add value to the connection with the bank’s relationship groups, based on structured strategic planning that guides actions such as implementation measures, monitoring, evaluation and feedback.

An important communication channel maintained by this area is the Investor Relations website, which features financial statements, managerial discussions and analyses, press releases, material facts, dividend payments history, presentations, teleconferences and other information, all provided in three languages. The portal also offers users the possibility to choose page content and create pages with content specific to their interest.

Communication channels

• Itaú and Unibanco Investor Relations websites
• Public meetings
• Meetings with groups of investors in Brazil and abroad
• Conference Calls
• Stocks in Focus Newsletter
• Annual Report
• Chats (individual investors)
• E-mail alert
• Contact Us
• Telephone service

Relationship groups

• Stockholder
• Individual and institutional investors
• Market analysts
• Regulatory bodies
• National and international
  capital markets entities
• Financial press
• Academics who study the financial
  and capital markets

Recognition in 2008

• For the 8th consecutive time the Unibanco Investor Relations website (www.ri.unibanco.com.br) was named one of the Top 5 Investor Relations Websites in Latin America. This is Brazil’s most important on-line investor relations award, given for providing clear, flexible and effective information channels, and is organized by MZ Consult, KPMG, Linklaters and JPMorgan.
• For the second consecutive year Unibanco was chosen by Capital Aberto magazine as one of the Best Companies for Stockholders, and was the only bank among the winning companies and the only company selected in both 2007 and 2008. The magazine evaluated 86 companies listed on the
  São Paulo Stock Exchange whose market value exceeded R$15 billion.

Fornecedores

Value chain

Itaú Unibanco had a base of 47,000 active suppliers at the end of 2008. Most of these partners are Brazilian companies that, to provide products and services to the bank, must demonstrate their alignment with our corporate values, the adoption of good employment practices, respect for human rights and the environment, and meet quality and delivery time criteria. In 2008 the commercial transactions between Itaú Unibanco and its suppliers were worth R$9 billion.

The main guidelines common to the selection and hiring of suppliers by the two institutions are equal access to different companies and a strict monitoring and alignment with the ethical conduct required by Itaú Unibanco. Itaú’s supplier website, for example, was launched in 2006 and is improving every year. It allows better, more structured communication with suppliers, as it discloses our Purchasing and Hiring Policy and strengthens the interaction with existing partners. The use of this tool also allows registered suppliers to participate in competitive bidding, offering equal opportunities to companies regardless of their size or location in Brazil. In the case of new suppliers, the qualifications are assessed and approved within 30 days. The registration process meets the Itaú Holding Corporate Code of Ethics and is in keeping with the values and principles of the Organization. The contract specifies restrictions and penalties regarding the use of child labour, forced labour and discrimination of any kind. The implementation of the site was based on the requirements of AA1000, an international standard of ethics and social reporting for corporate transparency and accountability.

When choosing suppliers Itaú takes into account more than technical skills: it also monitors compliance with labour and environmental laws. All suppliers classed as critical come under special scrutiny. These include companies offering security, call centre, construction, cleaning and building maintenance services that offer the potential for operational and image risks and labour problems. The evaluation is not dependent on the value of the contract. A visit is made by the hiring manager, who attests to the company’s technical ability to comply with bank standards. Every procedure is formalized in internal circulars.

The process of evaluating suppliers is ISO 9001 certified for quality. Through close and daily contact the bank can identify any changes in supplier compliance. Underlining its commitment to the cause of human rights, Itaú has signed the National Pact for the Eradication of Slave Labour, a voluntary agreement sponsored by the Ethos Institute for Social Responsibility.

A commitment to respect human rights and the environment is also a requirement for suppliers of the Unibanco group. All existing contracts of over R$1 million per year have clauses prohibiting slave or child labour and stipulate appropriate conditions for worker health and safety. No Unibanco supplier employs slave labour.

The other criteria for selecting suppliers are quality of products and services, technical training, local support, flexibility, financial health, position in the market, geographical area of performance and costs. The institution also carries out technical on-site visits to attest to the company’s ability to supply the product or service, based on quality and infrastructure. These visits are important because operations that require the intensive use of unskilled labour can run the risk of using child or forced labour.

Despite taking all appropriate measures to convey clear guidelines to its suppliers, Unibanco was surprised in 2008 by a report that one of its suppliers was using child labour. After investigating, the company in question was warned and then dropped from the bank’s list of suppliers. As a result of this report, Unibanco held a series of workshops designed to reinforce with its suppliers their responsibility and commitment to sustainable development and to not use child or slave labour, to ensure this type of occurrence is not repeated.

The value of diversity

• In 2008 Unibanco became associated with NGO Integrare, reaffirming its commitment to valuing diversity in business and society. Integrare identifies, classifies and provides its associates with a base of potential suppliers whose ownership is made up of minorities – including blacks, descendants of indigenous peoples, and/or the disabled.
• Integrare enables these providers to be able to compete as an equal (in terms of price and quality) with larger suppliers.
• As an associate, Itaú Unibanco now has at its disposal a database of providers owned by minority groups.
• This initiative brings benefits to all parties involved to promote diversity, strengthen the image of the partners and provide real opportunities for groups which have traditionally been disadvantaged and discriminated against.

Training in human rights watch

• The surveillance and security teams working at Itaú Unibanco branches and administrative centres come from outsourced service providers. All workers participate in training sponsored by their employers - which includes areas such as human relations and human rights - to prepare them for their relationship with the public.
• Among the topics covered in training and refresher events are appropriate treatment and priority given to people with disabilities, basics of private safety, applicable laws, the public safety system, criminology, prevention and fighting of fires, first aid, self defence, security of the facilities and monitoring.
• To supplement the training events the bank provides its security teams with brochures and the “Eyes on Safety and Good Service” video. These materials, developed by Itaú in keeping with its security policy, guide professionals on correct treatment of customers and users of banking services without losing the focus on safety, and cover issues such as education, courtesy, respect, discrimination and treatment of people with disabilities.

Imprensa e relações públicas

Staying close to the news

For Itaú Unibanco the media is a strategic target group, and our relationship actions are designed to contribute to the conscientious use of information.

At Itaú in 2008 approximately 800 opinion formers attended meetings, chat sessions, workshops, press conferences and conference calls arranged by Itaú Holding. Three hundred press releases and notes were sent out to the media, while the Media Relations website – a channel to research information and receive requests, received 174,253 visits. All this work is monitored each day by outside partners who collect daily clippings and audit our image.

Among the main achievements in 2008 was the launch of the Itaú Sustainable Finance Award for journalists and academics. This award seeks to encourage the writing of academic papers and journalism pieces on Sustainable Finance, covering issues such as the integration of social and environmental aspects into financial activities. The first edition of the award, with support from consulting firm SustainAbility and the Ethos Institute for Social Responsibility, received 79 entries from around the country.

During 2008 the Media Relations office handled about 1,800 requests for information from journalists, and sent out 50 press releases related to the institution’s activities. The results of these actions are monitored each day by outside partners who collect and send daily clippings to hundreds of employees, and carry out an image audit which is expressed through MEQI (Media Exposure Quality Index).

Transparency underlined the bank’s actions in 2008. One of the most striking cases was the crisis at the American Company AIG, a former partner of Unibanco’s insurance arm. Through press releases and conference calls designed to answer the many questions from journalists, we were able to keep an open dialogue with the public and reassure customers about the strength of the Brazilian company, the continuation of its normal activities and its ability to serve customers. After the most pressing moment of the crisis, Unibanco announced it had made an offer to purchase part of AIG, and as soon as this transaction was completed the news was widely distributed to ensure unrestricted access to information.

Another example of transparency playing a key role occurred at the end of October, with the advance release of our third quarter results. During those moments of crisis we lifted the quiet period so our senior executives could provide the information being demanded from our many stakeholders, particularly the media.

Other highlights of Itaú’s activities in 2008

• Launching the Corporate Crisis Management Program, in partnership with our Business Continuity area. This involved more than one hundred key staff members situated in strategic areas at Itaú, whose objectives are to monitor and prevent reputational, image and business risk situations to the bank.
• Disclosure of all stages of the Portuguese Language Olympics – Writing the Future, a unique partnership between the Ministry of Education and Fundação Itaú Social, with an increased presence in the disclosure for each regional event, as well as the semi-final and final stage in Brasília (DF), involving journalists from media outlets nationwide.
• Disclosure of nine special studies of the credit card market, and monthly indicators with data on the growth of this industry.
• Implementation of five workshops with opinion formers and two chat sessions about credit cards and products for corporate clients.
• Conducting the first two international editions of Sustainability on the Agenda: one involving sustainable finance with the participation of SustainAbility, and the other involving sustainability reports with the participation of the Global Reporting Initiative. About 90 people attended the events. Sustainability on the Agenda is a cycle of quarterly meetings with discussions on sustainability-related issues.
• Apimec – For the third consecutive year Itaú has brought journalists from Argentina, Chile and Uruguay to attend the Apimec (Capital Markets Investment Professionals and Analysts) meeting, as well as presentations by bank executives. In 2008 Itaú also took the step of bringing three journalists from Paraguay.
• Newsletter – Since 2007 Itaú has been sending out the Itaú Socio-environmental electronic newsletter to approximately 5,000 people each month, including employees, customers, journalists, students and others who sign up through the bank’s sustainability website at www.itau.com.br/socioambiental. The newsletter includes outside interviews, analyses and views on the subject, plus information on the the organization’s sustainability actions.
• Providing information on the Itaúbrasil project, which emphasizes Itaú’s cultural activities, involving a relationship action with invitations to opinion formers to participate in shows and exhibitions. To present the project and its programming to journalists covering culture, the economy and marketing, our Media Relations office held a launch event in June 2008. During the programming the press received notes, releases, photos and other media materials.

The Community

Stimulating Local Development

Itaú Unibanco encourages its teams to get involved in social actions. The branch network and the many bank foundations and institutions – which cover every region of Brazil – are the front line in our contact with the communities where we operate. Employees are trained to go beyond the traditional role of banks and identify the needs of these locations and assess how we can help out. This process is fundamental for the bank to meet its commitment to the sustainable development of society.

In 2008 Itaú and Unibanco united to mobilize their employees, customers and society to support rain and flood victims in the State of Santa Catarina. To strengthen efforts to provide immediate care to those in need, Itaú opened a bank account to receive cash donations, in conjunction with the State Office of Civil Defence. With this action the two institutions collected over R$4.3 million, while Unibanco’s Volunteer Program collected food, clothes, books and toys.

At that same time, the number of participants in Itaú Solidarity, a program which seeks donations and allocates taxes paid by bank employees to projects for protecting the rights of children and adolescents, grew 63%, reaching almost 7,000 professionals. Monies collected by the program rose 49% over the previous year, from R$431,000 to R$641,000. Under Brazil’s tax incentive laws, everyone who declares income tax under the full model can allocate up to 6% of the tax payable to these projects through the Funds for Children and Adolescents. These funds are administered by Councils for Child and Adolescent Rights, which organize and control actions to assist Brazil’s young people.

In 2008 companies in the Itaú group passed on a total of R$3.5 million to the Funds for Children and Adolescents, including three at the state and municipal level, which benefited 70 projects. Tax incentive laws allow companies to allocate 1% of their income tax payable to these funds.

The Itaú Solidarity Program is partnered with 28 Municipal Councils for Child and Adolescent Rights (CMDCAs), covering all five Brazilian regions. In each partner city the Itaú Solidarity Committee has a group of 8 to 12 volunteer staff members who are trained to monitor the projects identified by the CMDCAs through their diagnostic and local action plan. In its annual campaign Itaú Solidarity offers all staff members the chance to allocate funds to these projects. In 2008 the Itaú Solidarity Committee had 250 members, who contributed to 29 projects nationwide.

The bank institutionalized the Itaú Solidarity Network in an effort to link up key players in support of ensuring the rights of children and adolescents. The Network’s first action in 2008 was to hold five Itaú Solidarity Committee training sessions in the centres of São Paulo, Fortaleza, Curitiba, Belo Horizonte and Brasília, with more than 200 volunteer employees taking part, as well as the Committee members and representatives of the Municipal Councils for Child and Adolescent Rights.

Another important community support program is Itaú Child, which acts to mobilize the defence of child and adolescent rights through Itaú and Itaú Personnalité branches and Taií outlets. The program promotes strategies for employees, customers and partners to participate in supporting the community. As in the previous year, in 2008 each branch was asked to adopt a public school in their area. This action is designed to improve the quality of public schooling by offering brochures with tips on how parents can assist in the learning process of their children, and encouraging customers and the community to donate books to school libraries. To supplement the actions undertaken at the branches, Fundação Itaú Social, in partnership with publishers, donated kits of children’s books that were delivered to the adopted schools to increase their library collections. In partnership with Itaú’s logistics and transportation service providers, staff volunteers prepared the kits sent to the schools along with the Active Library guide, a publication provided by Instituto Gerdau, which explains the best ways to use libraries.

Through the Present! community program, the bank supports projects related to public schooling such as the training of educators, digital inclusion, training young people from lower income suburban areas and complementary school activities like sports, music and remedial classes. The program is designed to help branch network employees adopt a structured process to handle, assess and refer requests to support social projects that are sent to the branches by companies or groups which represent local communities. As a basic qualification, projects must be aligned with the values, principles and guidelines of Fundação Itaú Social (read more about employee participation in social actions under Volunteering, in the Employees section of this Report).

The Environment

Eco-efficiency and mobilization

Itaú Unibanco is aware of the environmental impacts of its activities. Financial institutions generate impacts that are primarily linked to the consumption of natural resources such as water and electricity, as well as daily supplies. The generation of greenhouse gases in the transport of people, goods and money is also a material impact of the institution. Accordingly, before Itaú and Unibanco merged into a single institution they already had similar practices to mitigate the direct environmental impacts of their operations.

Since 2007 Itaú has relied on its Eco-efficiency Working Group to help the organization identify actions which can produce more efficient uses of natural resources. This working group meets every two weeks and comprises representatives from various areas of the bank, who analyze market practices and suggestions submitted by employees. Among the activities undertaken by the Group in 2008 was the implementation of staff-directed selective waste collection, and mobilizing building management to set up bike racks.

In 2008 Unibanco created a specific area to oversee managing the environmental impacts of its activities. The Eco-efficiency Unit was created to centralize all information on the subject in a single area, and establish an integrated strategy for the entire institution. The Eco-efficiency Unit’s roles are to implement and monitor the results of actions and programs for the efficient use of resources such as water, energy and materials in general, as well as programs to reduce the institution’s Greenhouse Gas (GHG) emissions.

The two banks also undertook initiatives to reduce the environmental impacts of their products and services. Itaú implemented the Green IT program (see table on page 133) and reduced the number of documents it sent to customers by substituting this paper with the use of electronic services. Unibanco developed the Greenpeace card, made from a type of chlorine-free plastic which, when thrown away causes less harm to the environment and people’s health. Unibanco also encourages sending statements by e-mail, which helps reduce the amount of paper sent to customers.

Together, Itaú and Unibanco invested R$18.9 million on environmental protection actions.

Polluting emissions

Most of the direct emissions of GHGs from Itaú Unibanco occur through the transport of people and materials, the leakage of coolant gas in air conditioners and when its own generators need to be operated to produce electricity. Indirect emissions come from the subcontracted armoured car fleet which transports money between the institution’s various branches and ATMs throughout Brazil.

To monitor its GHG emissions, Itaú and Unibanco conducted inventories based on the GHG Protocol methodology (see table on page 128). The two banks also have several initiatives to reduce these emissions. Following are the main measures adopted in 2008:

• Itaú and Unibanco undertook actions to optimize the logistics of cash transport, with a consequent reduction in indirect CO2 emissions by the armoured cars. Work is also being done on better inventory control and on avoiding unnecessary trips to deliver material.
• Itaú is prioritizing the use of videoconferencing and distance learning courses, which reduces the need for staff travel.
• In its administrative buildings Itaú adopts Ibama (Brazil’s Environmental Protection Agency) regulations for the collection and storage of contaminated coolant gases.
• Unibanco’s ride program minimizes emissions of greenhouse gases. Access to this program is available to all Itaú Unibanco staff members through the bank’s web portal, where interested employees can register their route and offer rides.
• Unibanco promotes the use of chartered buses to transport its employees to work. These expenses are reimbursed to the employees. The bank also encourages and promotes the use of public transit, which increases the efficiency of emissions of greenhouse gases per employee/kilometre. About one thousand people have already joined the program.
• The treatment of domestic sewage at Unibanco’s sewage treatment station, located at its head office facilities, reduces emissions of greenhouse gases (particularly methane). In 2008 the initiative enabled the bank to reduce its emissions by 128.8 metric tons of CO2 through improved
  waste treatment.

Greenhouse Gas Emissions 2008 – Itaú Unibanco

Emission of substances harmful to the ozone layer in 2008 – Unibanco*

The types of air conditioner gas used in administrative buildings are listed in the table above:

R-22 (chlorodifluoromethane), 141-b (1,1 - dichloro-1 - fluoroethanol), R 134-a (1,1,1,2 - tetrafluoroethanol). HFCs are colorless and almost odourless and have zero ozone depleting potential (ODP = 0), while the gas used in air conditioners at the branches is R-22 (chlorodifluoromethane).

* Coolant gases used in air-conditioning in administrative buildings.

** ODP is defined as the relative amount of degradation to the ozone layer caused by a chemical compound, per unit mass of CFC-11 emitted. (Source: The Ozone Layer - DETR, UK. 1998).

Emission of NOx and SOx in 2008

Inventory

In 2008 Unibanco conducted its first greenhouse gas emissions inventory. Unibanco has participated in the Carbon Disclosure Project (CDP) since 2006, answering the questionnaire about the impact of its operations on climate change. To this end, we employed the Greenhouse Gas Protocol methodology – the most commonly used international standard to assess, quantify and manage greenhouse gas emissions.

Itaú has been part of the CDP since 2005, helping this independent global initiative to meet its goal of informing investors and customers about the risks and opportunities caused by climate change. In addition to being a signatory and respondent, as a publicly held company Itaú also sponsors the Carbon Disclosure Project’s Latin America Report. Events were held in Chile, Mexico and Argentina to present the Carbon Disclosure Project to businesses in those countries and invite them to participate in the Report.

Materials used and waste disposal

The consumption of materials by Itaú Unibanco is primarily paper for checks and administrative use, as well as furniture and plastic for credit cards and debit cards (see table at bottom of page).

Each month Unibanco recycles about 39% of all recyclable waste (paper, metal and plastic) from its facilities. In 2008 the processes were expanded to include the biggest waste generation centres. Crushed documents, plastics, glass and aluminium are now properly disposed of, with less impact to the environment.

In 2008, 14% of the paper used was recycled. In the same year a recycling program was implemented for banners, which are donated to Arrastão, an NGO, to be turned into bags and holders. Monies earned from the processing of waste materials are sent to the Instituto Unibanco to be applied to selective waste collection and recycling projects.

In 2008 Itaú implemented selective waste collection at its administrative buildings in São Paulo. Before the creation of the program, recyclable waste had been collected underground to be separated and sold. With the new program the separation is done by employees at the moment of disposal.

Throughout 2008, 1,935 metric tons of waste was collected, which generated $190,000 from the sale of materials. This revenue was then distributed to NGO partners of Fundação Itaú Social.

Itaú also began collecting organic waste in 2008, generated in the kitchens and restaurants at its three administrative centers in São Paulo. Each month it collects 12 tonnes to be processed into three tonnes of fertilizer. The bank also collects 600 litres of oil which it donates to NGOs that use the material to manufacture soap.

Itaú was also active in 2008 with the removal of boxes of inactive files from its branches, which had been handled by third-party suppliers. A total of 574 tonnes of white paper and 30 tonnes of cardboard were sent for recycling. The sale of this waste generated R$91,000 for Fundação Itaú Social.

Waste disposal in 2008 Itaú Unibanco

Cheques received, after processing, are sent to kaper, a company which recycles confidential documents and cheques.

Energy

The energy consumed by Itaú Unibanco is used for transportation (gasoline), the operation of generators (diesel), and the operation of its administrative centres and points of sale (electricity). Itaú and Unibanco both monitor their energy consumption and implement initiatives to reduce the use of electricity and fuels.

In 2008 a new procedure for collecting energy use data from the branches allowed the institution to take initiatives for reducing energy consumption. Unibanco branches throughout Brazil sent in their electricity bills during the year for consumption analysis. The 230 branches that used the most electricity (about 75% of the network) are now being monitored.

The bank also began using more efficient, less energy consuming equipment. It exchanged air-conditioners at 54 branches and substituted 4,441 conventional work stations (monitors and CPUs) with more modern units that consume less energy.

In 2008 Itaú sought to reduce its electricity consumption through more efficient products and solutions. The monthly monitoring of electricity bills is reviewed by the Commission of Rationalization of Processes and Costs (CRPC). The bank also addresses the subject through a group of representatives from the organization’s engineering departments. To spread good practices on lowering consumption, a manual was created to help branch managers with savings procedures.

Among the many measures already in place are the switching of 40 W light bulbs to 32 W in the branches, and the use of electronic reactors, which generates a 20% saving. The bank’s Retrofit Program replaced the air conditioning system in the Cambuci administrative centre (CTO) for better performing centrifuges, and Itaú also implemented the use of surveillance systems for automatic control and lighting in the Ceic and CTO centres.

Main achievements – 2008:

• Replacement of the air conditioning system in the Rudge Ramos building, and improving the insulation of the air conditioning system ducts for better equipment efficiency in the CAT centre. Automated temperature controls were also installed in the CAT centre.
• Replacement of the elevators in the CAT centre with more efficient models, resulting in a 40% reduction in the electricity they consume, and modernization of the elevators in the Ceic centre (Alfredo Egydio, Conceição and Itauseg towers, and the kitchen), the CTO centre (dispatch and kitchen), and at the Jardim Paulista, Pinheiros and Santana facilities. Industrial equipment used for food production was also substituted by more energy efficient models, some of which are gas powered.
• Replacement of hall lighting in the Egydio Alfredo, Conceição and Itauseg towers in the Ceic centre, resulting in 20% less energy consumption than the previous system.

Green IT

In 2008 Itaú invested R$2.3 billion in technology to support 3.37 billion transactions in its various self-service channels. But this technology also has an impact, so since 2004 Itaú has been investing in environmental programs and initiatives that include research, projects and benchmarking with several companies to identify and develop sustainable practices in this area.

One of the major impacts of banking technology is the consumption of electricity, so most of the practices developed by the program are related to energy efficiency. Actions undertaken include substituting the central cooling system of the Technical Operations Centere (CTO), which since 2004 has been using ecologically correct gas for cooling, resulting in 40% less energy use. Additionally, areas that were previously lit 24 hours a day now only trigger the lights when a person is present.

The exchange of certain machines for larger and more efficient units is another strategy of the Green IT program. In 2008 alone 450 servers were exchanged, while tube monitors are gradually being replaced by more economical LCD technology.

In addition to electricity, Green IT initiatives also focus on the disposal of materials such as batteries used in uninterrupted power supply devices in branches, banking service outlets, Taií locations and ATMs, which are now discarded at the end of their useful life in accordance with environmental policies. The goal for 2009 is to extend this policy to the disposal and recycling of machinery.

Direct Energy Consumption in 2008, by source (in GJ)

A sustainable energy source

The Bandeirantes Thermoelectric Plant (Uteb), situated in the Bandeirantes Sanitary Landfill in São Paulo Brazil, was the first biogas-powered plant in the country and the largest in the world at the time of its construction in 2003. The plant, which is managed by Unibanco, generates electricity from the burning of methane gas from organic waste, which is extracted from the landfill.

The plant’s electricity generating capacity is 20 MW, enough to supply a city of 400,000 inhabitants. Unibanco uses part of that electricity at five administrative buildings in São Paulo and one in Rio Janeiro, an initiative that has reduced its electricity expenses.

Since the merger with Itaú, a study is underway on expanding electricity production in 2009 to also supply Itaú’s administrative buildings. The benefits are not just financial. The use of methane helps reduce the amount of greenhouse gases in the atmosphere, which are linked to global warming.

In 2008 over 590 tonnes of CO2 in carbon credits were issued. Over 470 tonnes of CO2 have already been certified while approximately 120 tonnes of carbon dioxide are undergoing certification.

Through an agreement between Unibanco, the City of São Paulo and Biogás, half the carbon credits will be held by the City of São Paulo, under the auspices of the Secretariat of Green Areas and the Environment for subsequent investment in the Municipal Environment Fund. The other half is shared between Unibanco and Biogás, with the bank being entitled to receive 7.5% of the carbon credits generated by Uteb.

By 2015 the project will reduce the equivalent of 7.3 million tonnes of CO2, making it eligible to obtain carbon credits through the Clean Development Mechanism under the Kyoto Protocol.

The running of the Bandeirantes plant has improved the quality of life of some 120,000 residents in the neighbouring Perus district of São Paulo, by eliminating sources of contamination, odour problems caused by waste deposited in the landfill, and insect-born disease transmission. The project also includes a recreation area for the community surrounding the plant. These improvements also have also led to increased property values in the area.

Water

Itaú Unibanco uses water to meet the requirements of its points of sale and administrative centres. Most of the water used comes from public utilities, though it also uses some water from artesian wells (see table at bottom of page). In 2008 water re-use was 2.1%, equivalent to 51,236 m3.

Unibanco Holding also uses water to meet its administrative needs. This water comes through the concession-holder distribution network, with the exception of the Unibanco Administrative Centre and the call centre, which use artesian well water.

At Unibanco’s Administrative Centre (CAU), a water treatment station also eliminates the waste generated and re-uses this water for gardens, cleaning of common areas and in toilets. This action resulted in saving 23,388 m3 of water in 2007, while the amount of water re-used in 2008 rose to 32,986 m3.

Since 2004 Itaú has increased the number of actions designed to reduce water consumption in its buildings and branches. Water use increased from 14.57 m3 per employee in 2007 to 26.4 m3 in 2008, due in part to modified criteria for measuring consumption, and the opening of 235 new branches in 2008.

The measures taken over the years by Itaú to reduce consumption include the collection and treatment of water from the washrooms in the Eudora Villela tower (Ceic centre).

After being collected the water is treated and used in toilets. Since 2006 this measure has saved 50,000 litres of water a day.

The actions also include investments in more economical technologies and infrastructure systems for water re-use and using rainwater.

The new branches are receiving more efficient toilets which use less water. These branches have also installed air-cooled air conditioning, which is more efficient than the previous water-cooled system. Changes were also made in the washrooms in the Ceic centre (Alfredo Egydio, Conceição and Itauseg towers), as well as in the Pinheiros, Santana and Vila Mariana buildings in São Paulo, which now have sinks and flushing that require 50% less water per use.

A pilot project to capture and use rainwater was begun in nine new branches. After being collected, the water is treated and re-used in toilets, gardens and for cleaning outside areas. The design of the project was based on rainfall amounts in different regions of the country. The collection of rainwater was also implemented at the CAT centre in São Paulo, which now collects water from the roof
for re-use in toilets.

Water consumption in 2008 – Itaú Unibanco (in m³)*

* Flushing of water is solely from domestic utilities and collected rainwater.

Mobilization

Each year Itaú holds its Spring Planting project, which is designed to strengthen the relationship between branches, clients and the community, and to raise ecological awareness. In the 21st edition of the program, held in 2008, 10,500 seedlings were distributed, which will be planted in environmental conservation areas. The program involved staff members from our administrative centres in
São Paulo, Rio de Janeiro, Curitiba, Belo Horizonte, Salvador and Goiânia.

The seeds planted in the State of São Paulo were sent to a nursery located in the city of Nazaré Paulista. The nursery is run by Arvorar, a consultancy associated with the Ipê Ecological Research Institute, which specializes in promoting the integration of forest restoration with social involvement and biodiversity conservation. The growing site is monitored and when the seeds become seedlings they will be planted in environmental preserves connected with Arvorar. In Nazaré Paulista seedlings were also provided for a special reforestation area, an action conducted by 1,500 public and private school children, chosen by branch managers in São Paulo.

Inserted in the city

Itaú Unibanco seeks to promote environmental development in the cities where it operates. In 2008 Unibanco helped conserve eight bridges located along the Marginal Pinheiros highway in São Paulo. This sponsorship included painting and cleaning the bridges, as well as landscaping the access ways.

Through the Passarela Verde (Green Overpass) project, in partnership with the City of São Paulo, Unibanco benefited everyone who crosses the bridge over Avenida Eusébio Matoso and those who use the squares nearby. The overpass underwent the following improvements:

• The floor was coated with rubber recycled from used tires.
• Part of the roof was designed with bamboo to absorb 30% more carbon than other vegetation of the same size.
• Use of moulded wood, produced from recycled packaging.
• Native tree species were planted in the nearby squares, which attract birds and help preserve soil moisture.
• Use of high efficiency solar energy lamps.
• Two elevators which provide access for the disabled.

In 2008 Banco Itaú, Itaú BBA, Itaú Cultural and Itaú Social joined forces with Instituto Abril, Editora Abril and the City of São Paulo on the Praça Victor Civita – Open Sustainability Museum project. More than just a meeting place, the facility seeks to become a benchmark on environmental issues by offering a variety of activities offered to the public. The property had previously been contaminated by domestic and hospital waste, but was fully adapted for the construction of the facility.

Itaú also supported the community in 2008 by investing R$428,810 in the maintenance of Lina and Paulo Raia Park in São Paulo. The bank also allocated R$200,000, raised through ticket sales from the Bossa Nova exposition at Oca, to the revitalization of some of the greenhouses at the Manequinho Lopes nursery, located in São Paulo’s Ibirapuera Park. This project is a partnership between Itaú and the São Paulo State Secretariat of Green Spaces and the Environment.

Recognition in 2008

• Unibanco was the winner of the 4th Brazilian Environmental Award – Clean Development Mechanism
  – presented by the American Chamber of Commerce of Rio de Janeiro, for the bank’s reporting of its financial, social and environmental results from the Bandeirantes Thermoelectric Plant.
• Itaú was honoured with the Época Climate Change Award, sponsored by Época magazine and Editora Globo.