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Welcome to
Itaú Unibanco
Message from the Chairman
of the Board
Message from the President
History
Profile
Panorama
Sustainability
Vision
Corporate
Governance
The Road
to Integration
Business
Commitments and Practices
Social and Cultural Investments
Appendices

In this chapter
Itaú Unibanco’s principal decision-making and monitoring structures.

  • Composition of the Board of Directors and committees
  • History of adopting best management and reporting practices
  • Procedures to minimize operational risks
  • Evolution of ethics management

LEARN MORE

> The biographies of the members of the Board of Directors

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> The biographies of the members of the Itaú Unibanco Executive Committee

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> The biographies of the members of the Itaú BBA Executive Committee

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> The Socio-environmental Credit Risk Policy

14 members

comprise the Itaú Unibanco Board of Directors, three of whom are independent

1,116 companies

were assessed by Banco Itaú in 2008 under its Socio-environmental Risk Policy criteria

R$961.8 million

was the amount financed by Unibanco under Equator Principles criteria

Shareholding Reorganization

The merger between Itaú and Unibanco involves a shareholding reorganization resulting in the migration of shareholders of Unibanco Holdings S.A. and União de Bancos Brasileiros S.A. (Unibanco), through a share exchange, to the new public company Itaú Unibanco (formerly Banco Itaú Holding Financeira S.A.) The new company’s controlling stake is split equally between Investimentos Itaú S.A. (Itaúsa) and the controllers of Unibanco Holdings, through Itaú Unibanco Participações S.A. (IUPAR).

On December 9, 2008, a little over one month after the merger announcement, Itaú Unibanco conducted its first Apimec meeting, held in São Paulo, which was attended by a record number of more than 640 people. At the event Chairman Pedro Moreira Salles and President Roberto Setubal presented the market with the profile of the new institution, its strategic priorities and the challenges ahead in integrating the operations of Itaú and Unibanco.

Governance Structures

Itaú Unibanco’s corporate governance structure follows the same guideline used during the integration of the processes and business operations of the two founding institutions: adoption of the best practices at Itaú and Unibanco. Prior to the merger in November 2008, both banks were continually improving their levels of monitoring and relationships between shareholders, the Board of Directors, executive management and committees. Transparency and the ongoing effort to create value are legacies preserved by Itaú Unibanco.

The Corporate Governance Policy is designed to reflect those company policies which protect the interests of stockholders and the market – hallmarks of the group’s management. The policy is available on Itaú Unibanco’s Investor Relations website under the Corporate Governance section (www.itauunibancori.com.br).

Shareholding Structure

Common shares of Unibanco and Unibanco Holdings were replaced by common shares of Itaú Unibanco, using the same exchange ratio negotiated between the parties for the exchange of common shares held by the controllers of Unibanco Holdings.

For preferred shares, the exchange ratio was based on the average market price of Unibanco UBBR11 Units and Banco Itaú Holding Financeira S.A. preferred shares on the São Paulo Securities, Commodities and Futures Exchange (BM&FBOVESPA) for the 45 sessions prior to the merger announcement. The UBBR11 Units and Banco Itaú Holding Financeira S.A preferred shares are both part of the IBX-50 and Ibovespa indices, and are traded on the New York Stock Exchange.

Share Exchange Ratios *

Share Type Ratio
ON UNIBANCO 1.1797 = 1
ON UNIBANCO HOLDINGS 1.1797 = 1
UNIT 1.7391 = 1
PN UNIBANCO 3.4782 = 1
PN UNIBANCO HOLDINGS 3.4782 = 1
GRDs 0.17391 = 1
Note: number of Unibanco and Unibanco Holdings shares for each share of Itaú Unibanco Holding.

Board of Directors

Itaú Unibanco’s Board of Directors is comprised of 14 members.

Elected at the Stockholders Meeting on November 28, 2008, the Board members have a one-year term and were chosen based on their knowledge of macroeconomics and executive business experience.

The Board of Directors determines the general direction of the institution’s business, elects and removes executive directors and establishes their responsibilities, oversees the administration of line directors and convenes Stockholder Meetings. It is also the body of responsible for disclosing for management report and company financial statements, it selects and removes independent auditors, decides on the payment of interim dividends and the payment of interest on capital. The Board is also responsible for decisions on share repurchases and on the buying and/or granting of call and put options. It elects and removes members of the Advisory and International Advisory boards and for the following committees: Nominating and Compensation, Audit, Risk and Capital Management, Accounting Policies and Disclosure and Trading.

Finally, the Board of Directors approves the operating rules of the Audit Committee and monitors its activities. It also monitors the activities and authorizes the decisions of the following committees: Risk and Capital Management, Accounting Policy and Disclosure and Trading; and endorses the decisions of the Nominating and Compensation Committee.

Board of Directors

Chairman
Pedro Moreira Salles

Vice-Chairmen
Alfredo Egydio Arruda Villela Filho
Roberto Setubal
(also President and CEO)
Directors
Alcides Lopes Tápias
Alfredo Setubal
Cândido Botelho Bracher
Fernando Roberto Moreira Salles
Francisco Eduardo de Almeida Pinto
Guillermo Alejandro Cortina
Gustavo Jorge Laboissiere Loyola
Henri Penchas
Israel Vainboim
Pedro Luiz Bodin de Moraes
Ricardo Marino

Executive Committees

There are two executive committees responsible for company administration and representation: the Itaú Unibanco Executive Committee is responsible for all group operations except those of the wholesale bank, which are under the responsibility of the Itaú BBA Executive Committee. Both committees answer to the Itaú Unibanco Board of Directors.

Members of both committees are former directors of Itaú, Unibanco and Itaú BBA and were chosen for their skills at executing their strategies to lead the performance of the new bank.

Itaú Unibanco Executive Committee

Directors Areas
Roberto Setubal President
Alfredo Setubal Wealth Management and Capital Market Services
Antonio Matias Marketing
Antonio Carlos B. Oliveira Technology, Legal and Compliance
Geraldo Carbone Branches
José Castro Araújo Rudge Insurance
Marcio Schettini Cards and Financial
Marco Bonomi Vehicles and Property Loans
Marcos Lisboa Operational Risk, Efficiency and Integration Project
Ricardo Marino People and External Units
Ruy Moraes de Abreu Commercial Clients
Sérgio Werlang Risk and Finances

Itaú BBA Executive Committee

Diretor Areas
Candido Bracher President
Alberto Fernandes Sales and Products
Antonio Carlos B. Oliveira Technology, Legal, Controls and Operations
Daniel Gleizer Institutional Treasury
Jean Marc Etlin Investment Bank
Rodolfo Fischer Institutional Treasury

Audit Committee

The Audit Committee is comprised of five members, whose tasks are: supervision of internal controls processes, risk management and supervision of internal and independent audits.

The members of this committee are responsible for ensuring the quality and integrity of the company’s financial reporting, for complying with applicable laws and regulations, for the performance and independence of outside auditing firms and for the quality of internal control systems and risk management.

Audit Committee

Chairman
Gustavo Jorge Laboissiere Loyola

Members
Alcides Lopes Tápias
Eduardo Augusto de Almeida Guimarães
Guy Almeida Andrade
Tereza Cristina Grossi Togni

Other Boards, Councils and Committees

Itaú Unibanco’s other boards, councils and committees are: Fiscal Council, Advisory Board and International Advisory Board, Nominating and Compensation Committee, Risk and Capital Management Committee, Accounting Policies Committee and the Disclosure and Trading Committee. As of the date of this Report the composition of these bodies was yet to be finalized.

Related Commissions

To coordinate administrative actions the Executive Board uses the following related commissions:

Itaú Holding Senior Commission
Senior Ethics Commission
Senior Credit Commission
Senior Financial Risk Management Commission
Senior Accounting Policies Commission
Senior Tax Commission
Senior Audit Commission
Operational Risk Management.

Management and Reporting Practices

Itaú Unibanco inherits from its founding institutions the tradition of being aligned with the market’s best practices in corporate governance and reporting. Throughout their history Itaú and Unibanco established corporate policies, management structures and transparency procedures designed to ensure impartiality in decision making and rapid responses to changing market conditions. The market recognizes these efforts in different ways: both institutions were part of the São Paulo Securities, Commodities and Futures Exchange (BM&FBOVESPA) Corporate Sustainability Index in 2008, while Itaú is the only Latin American bank to have been on the Dow Jones Sustainability Indexes since this metric was introduced in 1999.

Itaú Unibanco’s professional management structures feature independent members of the Board of Directors and other councils and committees. Its shareholdings are widely held, thanks to its issuing of shares that trade on the São Paulo, Buenos Aires and New York stock exchanges, which underlines the institution’s democratic nature.

Transparent reporting to the market is based on compliance with the BM&FBOVESPA’s Level 1 corporate governance standards and the Sarbanes-Oxley Act, which require the adoption of a number of internal control and risk management procedures. Our disclosure policy includes the publication of quarterly results and timely releases, as well as holding conferences, road-shows and periodic public meetings with analysts.

Itaú Unibanco employs internal procedures to ensure ethical conduct by its employees and partners, including policies for internal controls, investor relations, information security and prevention of money laundering, among others. Staff members regularly participate in training sessions focusing on these procedures and the ethical principles to be followed in their daily activities. In 2008, for example, about 40,000 Itaú Unibanco employees received training in anti-corruption procedures and policies.

During the year Itaú released its Corporate Anti-Corruption and Bribery Policy, which covers 100% of the group’s business units. In 2009 compliance monitoring practices for the Policy will be put in place. At Unibanco, six units (bank, securities brokerage, cards companies, insurance, pensions and capitalization) underwent corruption risk assessments through monitoring by Money Laundering Prevention Compliance.

In 2008 Itaú Unibanco did not register a single case of corruption involving employees or partners. All reports are subject to in-depth investigation and, where there is compelling evidence and material proof or witness statements, employees are dismissed with just cause and commercial partner relations with the bank are terminated.

The Operating Rules Policy for the Trading of Treasury Shares establishes the parameters which Itaú Unibanco must observe when trading its own shares either on the cash or options market, for maintaining them in treasury, or for cancellation or disposal. The Policy’s rules are designed to assure all stakeholders and the market of the company’s commitment to the highest standards of corporate governance, transparency and integrity when conducting these transactions.

History of Governance Practices

Itaú

1964

  • Creation of first Board of Directors

1986

  • Related Commissions

1988

  • International Advisory Committee

1995

  • Stock Options Plans

1996

  • Public meeting with Apimec associates and road-shows

1999

  • Inclusion in the Dow Jones Sustainability Indexes (until present)

2000

  • Corporate Code of Ethics
  • Investor Relations Website
  • Fiscal Council

2001

  • Bovespa Level 1 Corporate Governance
  • Independent Board Members

2002

  • Disclosure and Trading Committee
  • Level II ADRs
  • Tag Along Rights

2003

  • Itaú Shares in Focus newsletter, quarterly information for shareholders and investors

2004

  • Audit Committee
  • Adoption of Equator Principles
  • Operating Rules for Treasury

2005

  • Nominating and Compensation Committee
  • Executive Socio-environmental Responsibility Committee and Commission
  • Bovespa BM&FBOVESPA Corporate Sustainability Index

2006

  • Certification of Sarbanes-Oxley Act – Section 404

2007

  • Adoption of Abrasca Manual for Material Information Control and Disclosure

2008

  • Executive Sustainability Commission
  • Development and introduction of Corporate Governance Policy
  • Inclusion in the Dow Jones Sustainability Indexes for the 9th consecutive time, and in the Bovespa Corporate Sustainability Index for the 4th consecutive time

Unibanco

1965

  • Establishment of the first Board of Directors

1968

  • São Paulo Stock Exchange listing

1987

  • Financial Statements are USGAAP-compliant
  • Shares listed on the New York Stock Exchange

1988

  • Stock Options Plan

1991

  • Corporate Ethics Code

1997

  • Level III ADRs

1999

  • Public meeting with Apimec associates

2000

  • Investor Relations Website

2001

  • Bovespa Level 1 Corporate Governance
  • Creation of Stock Options Plan

2002

  • Disclosure Policy Committee

2003

  • Independent Directors

2005

  • Trading Policy Committee

2007

  • Adoption of Abrasca Disclosure of Material Information Control Manual
  • Creation of Sustainability Committee
  • Certification of Sarbanes-Oxley Act – Section 404

2008

  • Unibanco Asset Management (UAM) signs the Principles for Responsible Investment (PRI), a set of social, environmental and corporate governance criteria for investment decision-making.

2008

  • Itaú Unibanco
    Establishment of Itaú Unibanco Sustainability Policy, based on the combined policies of both institutions

Crises Management

Major transactions and incidents in branches are examples of situations which expose the bank’s image and therefore require specific action plans. Itaú Unibanco has rapid response procedures in place for emergency situations, as well as preventive measures such as complying with new regulations. Examples of both these situations were demonstrated in 2008 by Itaú and Unibanco.

In September 2008 when news emerged about the financial difficulties faced by American International Group (AIG) – an insurance provider to banks involved in funding the U.S. housing market – Unibanco stepped forward and stated its position on the matter through the press. The objective was to clarify that the performance of its partnership with AIG in Brazil would not be affected by the events in the USA.

In terms of preventive measures the Itaú Crises Committee took part in implementing the new Customer Service Channel (SAC), helping it adapt to new rules. The Crises Management team continued to monitor preventive action strategies and the alignment of the work group responsible for the adaptation of Itaú’s SAC with a view to minimize impacts to the bank’s image and reputation by identifying vulnerabilities and being prepared for unfavourable scenarios. Projects carried out included a contingency plan for opening customer request files and a review of customer complaint treatment processes, focusing on reducing response times.

Throughout 2008 a number of other committees were set up at Banco Itaú, such as the Crisis Committee that went into action after an incident on July 21 in a branch in the city of Campinas. The Committee oversaw the provision of complete medical and psychological assistance to the victims involved, showing clients our ability to quickly and competently handle situations of this nature.

The business continuity plan is part of the crises management model, and was implemented in all Itaú areas in 2008. The plan organizes the processes and procedures necessary to ensure the continued operation of critical services, even in crisis situations, and preserves the integrity of people, goods, information, systems and ultimately the reputation of the institution. In addition to a specific contingency plan for branches, Itaú also has workplace contingency plans for staff members responsible for critical activities such as trading and customer service centres, plus the key aspects of treasury, back office, operations, support and development.

From a technological point of view, Itaú has an alternative (secondary) processing site, located about 100 kilometres from its central processing facility. For disaster recovery purposes the data needed to re-establish all critical services are replicated in real time. The required technology resources (computers, network and disks) are available at the alternative site, and their ability to function as designed is regularly tested.

Risk Management

Risk management is an essential tool in optimizing the use of capital and selecting the best business opportunities to provide shareholders with the best risk-return. Itaú Unibanco’s risk management process uses analysis tools that allow us to safely undertake sophisticated and profitable operations.

With the merger between Itaú and Unibanco, the new bank’s risk area combines the best solutions adopted by both institutions. The Risk and Capital Management Committee is the most senior body within this structure and employs corporate governance practices recommended by leading international organizations and by Basel II. It is responsible for establishing exposure limits for different risk categories and tracking the implementation of management policies and methodologies.

Two executive boards – Operational Risk, Efficiency and Project Integration, and Risk and Finance – are responsible for unifying risk management practices under a single business vision, and report to senior management on the results of this monitoring.

With this structure the risk management area supports all of the bank’s operations, measuring the default risk of each loan, required guarantees, the spread to be charged and the cost of capital for allocation of resources to comply with Basel II. This allows us to price each transaction individually, which provides a fair cost to customers and greater security for shareholders.

Main Categories

Credit Risk

Credit risk is the risk of loss due to a debtor’s non-payment of a loan or other line of credit, including the principal and/or interest. It is usually the main risk faced by banks and is associated with the probability of default. It arises from every activity in which success depends on borrowers to meet their obligations.

At Itaú Unibanco credit risk management means: identifying existing and potential risks in a transaction; establishing and monitoring credit risk at levels deemed acceptable by senior management; setting a rigid structure of committees and approval standards; approving policies, procedures and methodologies consistent with the limits of previously established risk; and properly allocating sufficient capital to safeguard against potential loan losses.

Market and Liquidity Risk

Market risk is the risk that the value of assets and liabilities will decrease due to changes in stock prices, interest rates, foreign exchange rates or commodity prices.

Itaú Unibanco’s strategy to manage this risk balances the bank’s business objectives with its risk appetite, based on prevailing political, economic and market conditions, the bank’s market risk portfolio, and its expertise at operating in specific markets. These procedures are subject to periodic review to maintain their alignment with best market practices and compliance with the bank’s continual improvement process.

Liquidity risk is the risk that an institution’s reserves may be temporarily insufficient to meet its timely obligations due to cash flow constraints. This can occur when payments received are less than or later than expected.

Despite the international financial crisis Itaú Unibanco maintained comfortable levels of liquidity in Brazil and abroad at the end of 2008. Its solvency (Basel) ratio was approximately 16.1%, well above the 11% minimum required by the Central Bank of Brazil. This was possible due to its solid, diversified funding bases on the interbank market and from customers, and the resizing of its securities portfolio, undertaken in 2008.

Market Risk Indicators

The Value at Risk table below consolidates Itaú Unibanco’s total VaR, covering the portfolios of Unibanco, Itaú BBA, Banco Itaú Europa, Banco Itaú Argentina, Banco Itaú Chile, Banco Itaú Uruguay and Itaú’s structural portfolio (loans and pre-fixed debt/equity instruments). Itaú and Itaú BBA portfolios are combined, broken down by risk factor.

On a consolidated basis Itaú Unibanco maintained its policy of operating within relatively low limits. The consolidated average and maximum risk values were affected by the volatility of the main internal and external risk factors, which varied greatly over the second half of 2008, reaching their peak in late November and early December, returning, however, to lower levels by year-end, shown in the VaR values at December 31, 2008.

The diversification of risks of the business units is significant, allowing the group to maintain a very low total exposure to market risk, compared with its capital.

Itaú Unibanco Consolidated VaR (in R$ millions)

Itaú Unibanco Itaú
  VaR by Risk Factor 31/Dec/08 31/Dec/08 30/Dec/07
  Pre-fixed Interest 159.3 159.3 97.1
TR Interest 13.8 13.8 7.6
Inflation rates 4.6 4.6 10.0
Exchange Coupon 16.6 16.6 14.3
Exchange Rate Variation - US$ 17.2 17.2 6.7
Private Issues and Sovereign Abroad 22.2 22.2 12.1
Equities 15.5 15.5 16.4
External Rates 7.8 7.8 4.1
Commodities 0.0 0.0 0.4
Forex – Other Currencies 1.0 1.0 1.0
Others 8.6 8.6 0.9
Unibanco 161.6 - -
Banco Itaú Europa 5.9 5.9 1.5
Banco Itaú Argentina 5.1 5.1 1.6
Banco Itaú Chile 1,1 1,1 1,2
Banco Itaú Uruguai 2.8 2.8 -
Effect of Diversification (97.9) (98.1) (56.6)
VaR Global Total 345.3 183.7 118.2
VaR Maximum 814.6 673.4 312.3
VaR Average 263.0 165.5 117.3
VaR Minimum 126.6 65.1 48.8

(*) Excludes Proprietary Portfolio Desk. Includes effects of tax adjustments.

Operational Risk

Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. Itaú Unibanco’s strategy to minimize operational risk includes a set of principles, procedures and instruments which ensure the suitable ongoing management of risk with respect to the nature and complexity of its products, services, activities, processes and systems.

Itaú Unibanco employs a financial assessment management model for each business line, which uses statistical modeling to quantify the operational risks incurred. This allows the bank to provision reserves for expected losses and to allocate capital for unexpected losses. This proprietary mechanism enables greater refinement of the pricing process for our products and services, and allows the bank to meet the criteria of the New Basel Capital Accord within the timeframe set by the regulator.

Underwriting Risk

This is the risk associated with the probability of error in the price of retail products and/or in the calculation of technical reserves for insurance products, based on the value of the premiums. Similar to Basel II, the International Association of Insurance Supervisors (IAIS) guides insurance companies on employing risk management systems which supplement their minimum capital and solvency margin systems.

Itaú and Unibanco have been using models to manage their insurance activity since 2006. Itaú began allocating sufficient capital even prior to legislation introduced by Brazil’s Superintendence of Private Insurance (Susep), which benefits companies that use internal risk management models. The new bank’s internal models go beyond the segments addressed by the national regulator, and comprise virtually the entire range of insurance related products.

Socio-environmental Risk

Equator Principles

Unibanco and Itaú Holding became signatories to the Equator Principles in 2004, and Unibanco was the first financial institution from an emerging economy to adopt the Principles. Participating institutions commit to finance projects which are developed in a socio-environmentally responsible manner, based on the internationally recognized criteria of the International Finance Corporation’s (IFC) Performance Standards. The Equator Principles are also applied when the bank simply acts as an adviser in structuring projects. The guidelines cover the analysis and socio-environmental monitoring of large projects (equal to or greater than US$10 million in value), and which bring benefits to the bank, its customers and society as a whole.

In September 2008, Itaú, the first Brazilian bank to apply socio-environmental criteria to its project assessments, was appointed to take on the leadership position for the Equator Principles worldwide, acting as Chair of the Steering Committee for a one year term. This was the first time that a financial services institution from an emerging economy had been asked to lead this group.

Combining the responsibilities of this new role with its ongoing commitment to increase socio-environmental awareness, add value to discussions and help push the financial sector in this direction, Itaú led a partnership between the IFC and Brazilian bank signatories to the Equator Principles to organize the Regional Latin American Meeting to celebrate the fifth anniversary of the Equator Principles. Held in Rio de Janeiro in December 2008, the event attracted key players from the global socio-environmental scene, who discussed the future and challenges of the Principles.

The training of professionals is critical to properly apply the Equator Principles to granting credit. In 2008 the Itaú Unibanco team responsible for socio-environmental analysis and monitoring of project finance was fully trained by the (IFC) International Finance Corporation and the United Nations Environment Program Finance Initiative (UNEP-FI) to apply the performance standards.

In 2008 the bank spread awareness of the subject by helping oversee the translation of the Equator Principles into Portuguese, which is now available on the Principles website, and into Spanish, which will be completed in 2009.

Projects assessed by Unibanco using
Equator Principles criteria (in 2008)*


Category Projects Total investment**
(in R$ millions)
Unibanco’s share
(in R$ millions)
A 1 3,600 131.10
B 16 4,221.16 746.26
C 1 132.77 79.70
Total 18 7,953.93 957.06
* Low risk (C) medium risk (B) and high risk (A) ** Approximate values
Sector Projects Total investment
(in R$ millions)
Unibanco’s share
(in R$ millions)
Sugar and Ethanol 8 1,440.59 236.66
Electricity 9 6,425.34 695.19
Services 1 88 25.22
Total 18 7,953.93 957.06

Projects assessed by Itaú BBA using Equator
Principles criteria (in 2008)*

Category** Projects Total investment***
(in R$ millions)
Itaú BBA’s share
(in R$ millions)
A - - -
B 8 3,341 710
C 3 210 114
Total 11 3,551 825
* Approximate values ** In 2008 Banco Itaú BBA analyzed 12 projects one of which was turned down *** Project Finance and Corporate Finance only (investments in excess of US$50 million)
Sector Total investment*
(in R$ millions)
Itaú BBA’s share
(in R$ millions)
Sugar and Ethanol 2,651 247
Electricity 558 400
Services 342 177
Total 3,551 825
* Approximate values

The Equator Principles
Examples of issues assessed

  • Protection of human rights and community health, safety and security
  • Protection of cultural property and heritage
  • Land acquisition and involuntary resettlement
  • Impacts on indigenous peoples, and their unique cultures, systems and values
  • Pollution prevention and waste minimization, pollution controls and solid and chemical waste management

Categories are based on the following International Finance Corporation (IFC) socio-environmental criteria:

Category A Projects expected to have significant adverse social and/or environmental impacts that are diverse, irreversible or unprecedented.
Category B Projects expected to have limited social and/or environmental impacts that can be readily addressed through mitigation measures.
Category C Projects expected to have minimal or no adverse impacts, including certain financial intermediary projects.

Socio-Environmental Credit Risk Policy

Itaú Unibanco applies sustainability principles to its products and services, and incorporates socio-environmental criteria into its credit analysis processes to help mitigate the risks of the operation, encourage customers to adopt responsible practices and contribute to sustainable development. The bank seeks to go beyond the identification of socio-environmental risks and compliance with legal requirements. We want to build a relationship with our customers that conveys our inclusiveness, and as a multiplier and developer of best socio-environmental practices.

In keeping with its Socio-environmental Risk Policy, since December 2007 Itaú has adopted socio-environmental criteria in its analyses of loans of over R$5 million for its commercial banking clients in Brazil. For Banco Itaú Chile S.A., Banco Itaú Uruguay S.A., Banco Itaú Buen Ayre S.A. and Banco Itaú Europa S.A., analysis tools will be developed in 2009 and 2010, based on the unique nature of each institution. Like the other policies developed separately by Itaú and Unibanco, the new bank’s Socio-environmental Risk Policy for Corporate Credit will be combined in 2009 to cover all Itaú and Unibanco corporate credit operations.

Itaú’s socio-environmental analysis team comprises industry specialists, and is kept abreast of key issues. This year the bank plans a greater number of socio-environmental training events for areas related to credit and commercial clients.

Socio-Environmental Risk Analysis – Examples of issues assessed:

  • The harmful and/or exploitative use of child labour
  • Companies on the list of employers that have kept workers in conditions similar to slavery (Decree 540 of 15.10.2004, Ministry of Labour and Employment)
  • Sector Guidelines
  • Public Information
  • Socio-environmental questionnaire answered by the company

As shown below, Itaú Unibanco employs an innovative classification for the socioenvironmental analysis of companies to be financed, based on their socioenvironmental management capability.

Itaú Unibanco uses the Equator Principles and its own policies, documents and socio-environmental information, as well as on-site inspection and requests for public information. It also carries out audits for situations requiring the Risks Policy and the Equator Principles.

Socio-environmental analysis categories

A- High potential for significant socio-environmental impact
Low capability to manage socio-environmental risks
High
B- Medium potential for significant socio-environmental impact
Low capability to manage socio-environmental risks
A+ High potential for significant socio-environmental impact
Company has socio-environmental risk management capability
Medium
B+ Medium potential for significant socio-environmental impact
Company has socio-environmental risk management capability
Low
C Low potential for significant socio-environmental impact

Companies evaluated by Banco Itaú using the
Itaú Holding Financeira Socio-Environmental Risk Policy (in 2008)

Estimated Assessments 1,116
Conditional Approvals 19
Rejections 10
Visits to Clients 6


Corporate financings by Itaú BBA using the
Itaú Holding Financeira Socio-environmental Risk Policy (in 2008)

Sector Projects Total
investment
(in R$ millions)
Itaú BBA’s
share
(in R$ millions)
Category
Sugar and Ethanol 1 300,000.00 30,000.00 B+
Power 6 1,988,500.00 234,817.00 B+
Extraction Industry 1 94,168.00 59,635.45 B+
Manufacturing 2 246,338.00 65,631.00 B+
Services 2 200,779.00 47,000.00 B+
Total 12 2,829,785.00 437,083.45 B+

 

Ethics Management

The management of ethics is strategic for Itaú Unibanco and leads to the systematic adherence of its corporate values by employees, a factor that directly influences the image of the organization and the security of its operations. In recent years Itaú and Unibanco have invested in establishing policies and codes of conduct, disseminating recommendations to all areas of each bank, and developing monitoring mechanisms for such practices.

At Unibanco the Code of Professional Conduct and Ethics was established to guide relationships and activities involving employees, customers, investors, suppliers and competitors. It ensures that the interests of the institution and its employees are aligned with the interests of current and potential customers. Human rights are also protected under this document. In 2008 a working group comprised of representatives from various bank areas was formed to review the code. Their revised version is now more objective and presents new guidelines.

At Itaú the Corporate Ethics Policy was drafted in accordance with the group’s corporate values, vision and external commitments, as well as the requirements of the AA1000 and SA8000 standards and the sustainability indices of the New York and São Paulo stock exchanges. The policy was designed to embed the guidelines from internal (corporate and sector) and external (trade and professional associations) codes of ethics into the corporate culture. The Senior Ethics Commission, comprised of executives from the organization, uses two programs to monitor compliance with this policy.

The Ethical Commitments Management Program gives managers and other employees the tools and information to resolve ethical dilemmas and conflicts of interest, while the Continuing Education in Ethics Program spreads the bank’s principles, values and standards of conduct to staff members.

In 2008 Itaú conducted its second external assessment of the Corporate Ethics Policy, which involved interviews with representatives of the Board of Directors and the Executive Board, as well as working with focus groups, cross-matching components of the Itaú ethics system with American and European benchmarks, and aligning corporate policies with ethics ratings requirements plus national and international principles. The results of this assessment will be used by Itaú Unibanco to review its corporate ethics performance.

All Itaú and Unibanco employees receive a copy of the code, which is also available on the company intranet and website, while specific bodies monitor its implementation in the organization.


 
 
 
 
Objectives Projects / Processes Frequency
Board of Directors
  • Approve changes in the Corporate Ethics Code
Annually
Senior Ethics Commission
  • Submit proposals for improving the Corporate Ethics Code to the Board of Directors.
  • Establish and administrate the Corporate Ethics Policy and Corporate Policy to Combat Corruption and Bribery (Policies).
  • Monitor the ethical climate and assess the compliance of the business and operations of the holding company and its subsidiaries with the guidelines of the Policies.
  • Examine variances in the conduct of group companies.
  • Rule on interpretations of the Corporate Ethics Code, ethical dilemmas, conflicts of interest and other guidelines in the Policies.
Half-yearly
Ethics Committees of related companies in Brazil and abroad
  • Rule on interpretations of the Corporate Ethics Code, ethical dilemmas, conflicts of interest and other guidelines in the Policies.
  • Monitor the ethical climate and assess compliance of the company’s business and operations with the guidelines of the Policies.
  • Examine variances in conduct within the companies.
  • Submit annual report to the Senior Ethics Commission.
Quarterly
Sector Ethics Committees (one per executive area of Banco Itaú S.A.)
  • Monitor the ethical climate and assess compliance of the company’s business areas and their operations with the guidelines of the Policies.
  • Examine variances in the conduct of the business area.
  • Submit annual report to the company’s Ethics Committee.
Quarterly