1. 1 Roberto Dumas Damas 7th Annual Bank Conference on Development Economics (ABCDE) Amsterdam, May 23-24, 2005

2. 2 Itaú Group – A Global Brazilian Financial Institution The Itaú Group has an important presence in key financial centers, strong recognition in Brazil and a broad range of products Best Brazilian Bank 2004, 2003, 2002, 2000, 1999 Best Brazilian Bank 2004, 2003, 2002,1999 Best Brazilian Bank 2004, 2003, 2002, 2001, 2000, 1999, 1998 1st 14 million checking accounts 3,070 branches 21,150 ATMs 45,316 employees Most valuable trademark in Brazil (Interbrand, 2004) #1 brand in Latin America for financial institutions (Brand Channel, 2004) Authorized by The Board of Governors of the Federal Reserve System to act as “Financial Holding Company” in the US (since 2001) Leasing - Autos Brokerage Services Pension Plans Consumer Finance Credit Cards Insurance Retail BankCorporate & IB Member of the Dow Jones Sustainability Group Index 2005, 2004, 2003, 2002, 2001 Nova York

3. 3 ITAÚ BBA – A Brazilian Powerhouse A leading Brazilian corporate and investment bank … … with the broadest range of products and financial services in Brazil Loan book: US$ 20 billion Total assets: US$ 49 billion Market capitalization: US$ 18 billion Loan book: US$ 9 billion Total assets: US$ 13 billion Book equity: US$ 1 billion Loan book: € 503 million Total assets: € 2.435 million Book equity: € 320 million

4. 4 Environmental Management System – Itaú BBA: Cronology Sep/2000: Banco BBA Creditanstalt implemented its own EMS; Aug/2004: Banco Itaú and Banco Itaú BBA endorsed The Equator Principles; Sep/ 2004: For the fifth consecutive time, Itaú Holding was chosen to participate in the Dow Jones Sustainability Index – DJSI. This index is formed by companies recognized by their corporate sustainability, capability of creating value in the long term for its shareholders and also for managing efficiently economic, social and environmental risks and opportunities; Oct/2004: 50 employees from Banco Itaú and Itaú BBA, from several department attended a workshop about the Equator Principles.

5. 5 ENVIRONMENTAL POLICY: WHY? To identify, evaluate, control, transfer and monitor environmental risks; SHAREHOLDERS SHAREHOLDERS ●Lower Credit Risks; ●Lower Devalued Collateral; ●Stronger portfolio. CAPITAL MARKETS CAPITAL MARKETS ●Greater confidence / Reputation / Boycott; ●Access to Better terms, loan rates; ●Access to multilateral agencies; COMPLIANCE ISSUES COMPLIANCE ISSUES ●Compliance with regulatory requirements; ●Stronger portfolio. Increase in Share Value

6. 6 Credit Risks / Hidden Environmental liabilities

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12. 12 ENVIRONMENTAL POLICY: WHY? “Environment is not just about Turtles”

13. 13 ENVIRONMENTAL POLICY: EMS Fund Flows Rating Improvement Clients / Products Financial Institutions Multilateral Agencies International Financial System Credit Risk Evaluating Improvement ENVIRONMENTAL POLICY ENVIRONMENTAL POLICY = VALUE CREATION VALUE CREATION

14. 14 RISK MANAGEMENT Acceptable Investments Unacceptable Investments Risk Returnover theInvestment Investment with environmental risk management Investment without environmental riskmanagement “TRANSFORMS RISKS INTO OPPORTUNITIES”

15. 15 RESPONSABILITIES RESPONSABILITIES MANAGING DIRECTOR ENVIRONMENTAL MANAGER ENVIRONMENTAL COORDINATOR ENVIRONMENTAL ANALYST RELATIONSHIP MANAGER LEGAL ENVIRONMENTAL CONSULTANT CREDIT COMMITTE

16. 16 PROCEDURES

17. 17 PROCEDURES

18. 18 HRP => High Risk Project (Equivalent to Category A of IFC);  Projects that involve significant risks to local environment. A complete environmental analysis is necessary, based in external consulting and in legal opinions. MRP => Medium Risk Projects (Equivalent to category B of IFC);  Projects that present a significant possibility of affecting adversely the local environment;  Appropriate analysis of the potential information related to the local environment, less wide than for HRP; CLASSIFICATION

19. 19 LRP => Low Risk Projects (equivalent to IFC’s category C); Projects that are not expected to have relevant impact over local environment; Don’t request a specific environmental analysis. CLASSIFICATION

20. 20  Production or activities involving harmful or exploitative forms of child labor;  Production or trade in any products or activity deemed illegal under host country laws or regulations or international conventions and agreements;  Production or trade in weapons and munitions;  Trade in wildlife or wildlife products;  Production or trade in radioactive materials;  Production or trade in or use of unbonded asbestos fibers;  Commercial logging operations / purchase of logging equipment for use in primary tropical moist forest;  Production or trade in pharmaceuticals subject to phase outs or bans;  Production or trade of pesticides/herbicides subject to International phase out or bans;  Production or trade in ozone depletion substances subject to phase out. Banco Itaú BBA does not finance

21. 21 EQUATOR PRINCIPLES Banks will adopt a common framework and categorization process of a project in accordance with internal guidelines based upon the environmental and social screening criteria of the IFC; All projects must be covenanted with environmental and social covenants based on the IFC Sector Specific Pollution Abatement Guidelines; As necessary (Type A Project), lenders will have to appoint an independent environmental expert to provide additional monitoring and reporting services; These principles apply to projects with a total capital cost of US$ 50 million or more. The main goal is to establish a common framework for financial institution in determining, assessing and managing environmental & social risk in project financing

22. 22 EQUATOR PRINCIPLES: BENEFITS The adherence is inevitable in near future by the banks More efficiency and performance of the projects. Better risk management; More availability of information for the decision making process and projects approval; Time saving and money (“Do it right the first time”); Seek of sustainable economic and environmental development standards; NGOs: Consensus maker; Image.

23. 23 EP: Dealing With Client Resistance 1. 1.Other banks don´t require this. 2.We don´t have the money. 3.We don´t have a problem. 4.We don´t have the time. 5.The regulations are not enforced. 6.You are a bank. Why are you telling me how to run my business? 7.It is going to open up Pandora´s box, and expose us to a whole load of problems. Special thanks go to Mr. Leo Johnson from Sustainable finance (UK)

24. 24 Roberto Dumas Damas, M.Sc., CFA (55-11) 3708-8183 7th Annual Bank Conference on Development Economics (ABCDE) Amsterdam, May 23-24, 2005