annual report - caixabi · alfredo manuel antas teles josé manuel carreiras carrilho caixa –...

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STATUTORy BODIES. Bank

STATUTORy BODIES. Venture Capital

SENIOR MANAgEMENT. Bank

SUMMARy Of CONSOLIDATED OPERATIONS

RELEVANT EVENTS

OPERATINg CONTEXT

ACTIVITy

OUTLOOk fOR 2010

ACkNOwLEDgEMENTS

PROPOSAL fOR ThE APPROPRIATION Of NET INCOME

QUALIfIED EQUITy INVESTORS

CORPORATE gOVERNANCE REPORT

SOCIAL RESPONSIBILITy AND SUSTAINABILITy REPORT

fINANCIAL STATEMENTS

NOTES TO ThE CONSOLIDATED STATEMENTS

NOTES TO ThE SEPARATED STATEMENTS

REPORT AND OPINION Of AUDIT BOARD

STATUTORy AUDIT CERTIfICATE CONSOLIDATED ACCOUNTS

STATUTORy AUDIT CERTIfICATE SEPARATE ACCOUNTS

4

7

10

13

15

25

35

68

72

74

76

78

96

101

114

213

295

300

303

INDEX

INDEX

STATUTORy BODIES. BANk

5

ShareholderS’ Meeting

Chairman

Caixa geral de Depósitos, S.A., represented by

José Lourenço Soares

Secretaries

Companhia de Seguros fidelidade-Mundial, S.A., represented by

José filipe de Sousa Meira

gerbanca, SgPS, S.A., represented by

Salomão Jorge Barbosa Ribeiro

Board of directorS

Chairman

Jorge humberto Correia Tomé

Deputy Chairman

José Joaquim Berberan e Santos Ramalho

Chairman of Executive Board

Luís Lopes Laranjo

Executive Directors

António Carlos Bastos Martins

gonçalo Vaz gago da Câmara de Medeiros Botelho

Jorge Telmo Maria freire Cardoso

Non-Executive Directors

Rui Manuel do Vale Jordão gonçalves Soares

José Pedro Cabral dos Santos

José Manuel Carreiras Carrilho

STATUTORy BODIES. BANk

6

Audit BoArd

Chairman

Hernâni da Costa Loureiro

Board Members

António José Nascimento Ribeiro

João Sousa Martins

Deputy

Fernando Manuel Simões Nunes Lourenço

StAtutory AuditorS (Acting)

Deloitte & Associados, SROC, represented by

João Carlos Henriques Gomes Ferreira

Statutory Auditors (Deputising)

Carlos Luís Oliveira de Melo Loureiro

remunerAtion committee

Gerbanca, SGPS, S.A., represented by

Henrique Pereira Melo

Vitor José Lilaia da Silva

STATUTORY BODIES. BANK

STATUTORy BODIES. VENTURE CAPITAL

8

caiXa deSenVolViMento, SgPS, S.a.


Chairman

António Pereira grada ferreira

Secretary

Carla Maria gomes dos Santos

Board of directorS

Chairman

Alcides Saraiva de Aguiar

Board Members


Alfredo Manuel Antas Teles


Caixa – Banco de Investimento, S.A., represented by

José Carlos Athaíde dos Remédios furtado

Vasco Maria de Portugal e Castro de Orey

audit Board

Statutory Auditors (acting)

Deloitte & Associados, SROC, S.A., represented by

João Carlos henriques gomes ferreira

Statutory Auditors (deputising)



9

caiXa caPital, Scr, S.a.


Chairman

António Pereira grada ferreira

Secretary

Ana Cristina Pinheiro Vieira Rodrigues de Andrade

Board of directorS

Chairman

Alcides Saraiva de Aguiar

Board Members


Alfredo Manuel Antas Teles


Caixa – Banco de Investimento, S.A., represented by

José Carlos Athaíde dos Remédios furtado

Vasco Maria de Portugal e Castro de Orey

audit Board

Statutory Auditors (acting)

Deloitte & Associados, SROC, S.A., represented by


Statutory Auditors (deputising)


Remuneration Committee

Member: henrique Pereira Melo

Member: Vitor José Lilaia da Silva


SENIOR MANAgEMENT. BANk

11

finance and Structuring Division

francisco Santos

Brokerage Division

Valentim Martins

Corporate finance – Debt Division

Paulo Serpa Pinto

Corporate finance – Advisory Division

francisco Rangel

Equity Capital Market Division

Ana Santos Martins

Project and Structured finance Division

Sérgio Monteiro

Planning, Risk Control and Organisation Division

António gregório

Operations Division

Miguel freire

Accounts Division

João gonçalves

Information Systems Division

Ema Campos

Medium-sized Companies Office

Ana Rocha homem

Syndication and Sales

Leonor Canedo

Research Office

João Lourenço

Legal Affairs Office

grada ferreira


12

human and Administrative Resources Office

Manuel Cunha

Compliance Office

Ália Pereira da Silva

Internal Audit Office

fernando Oliveira


SUMMARy Of CONSOLIDATED OPERATIONS

14 SUMMARy Of CONSOLIDATED OPERATIONS

conSolidated

year

Net interest income including income from equity instruments

Commissions (net)

Income from financial operations

net operating income (*)

Structural costs (general adm. costs + depreciation)

Provisions / Impairment

Other costs and income (net)

Income before tax

Income tax

net income

cash flow

year end

Credit portfolio

Securities and derivatives portfolio

Customer deposits

net assets

Share capital

Shareholders’ equity (prior to appropriation of net income)

Solvency ratio (separate)

Solvency

Performance ratios

ROE

ROA

Structural costs adjustments (**) / net operating income

2009€ thouSand

35,297

62,534

20,136

117,967

-29,178

-34,320

2,232

56,700

-11,093

45,607

92,176

878,631

953,330

139,125

1,930,507

81,250

212,966

8.85%

17.64%

2.36%

23.38%

(*) Does not include costs and income. (**) Adjusted for inclusion of income generated from employees on loan.

24,612

60,119

4,743

89,474

-27,006

-18,771

-1,098

42,599

-12,357

30,242

62,407

865,410

921,312

119,162

1,896,964

81,250

160,196

8.67%

15.88%

1.59%

28.42%

2008€ thouSand

43.4%

4.0%

324.5%

31.8%

8.0%

82.8%

-303.2%

33.1%

-10.2%

50.8%

47.7%

1.5%

3.5%

16.8%

1.8%

0.0%

32.9%

2.1%

11.1%

48.0%

-17.7%

% groWth 2009 / 2008

SeParate

34,648

58,246

14,251

107,145

-26,372

-29,581

1,898

53,090

-11,121

41,969

83,773

891,860

878,010

146,444

1,927,765

81,250

184,468

8.85%

18.53%

2.18%

23.14%

2009€ thouSand

RELEVANT EVENTS

16

2009 was yet another challenging but successful year for Caixa – Banco de Investimento (CaixaBI). The bank’s

performance exceeded the expectations set out in its Activities and Budget Plan, in which it achieved its highest

level of net operating income and the best ever financial results. Business secured and completed is indicative of

the upwardly mobile trend of CaixaBI’s domestic and international status, with international aspects playing an

increasingly important role in terms of its activity as a whole.

Caixa geral de Depósitos (CgD) group’s investment bank, enjoys the same AA- rating on its medium and long

term liabilities, as awarded to CgD and confirmed by fitch Ratings in September 2009.

RESULTS

CaixaBI’s net operating income, in 2009, was up 31.8%, over the preceding year, to e118 million. The referred

to amount includes a 4% increase in commissions over the preceding year to e62.5 million.

2009 closed with a 50.8% increase in net income over the preceding year to e45.6 million. Cash flow was up

47.7% from 2008 to 2009.

There was a marked improvement in cost-to-income which fell to 23.4%, owing to the growth of net operating

income.

RECOgNITION

Consistency of performance, allied with business innovation and development have won the bank the international

recognition of the main analysts and awards in due recognition of its leading position in the principal league

tables.

RELEVANT EVENTS

net operating income

Net interest income

Commissions

financial Operations

Structural costs

net income

Cash flow

Cost-to-income

118.0

35.3

62.5

20.1

29.2

45.6

92.2

23.4%

2009(e million)

89.4

24.6

60.1

4.7

27.0

30.2

62.4

28.4%

2008(e million)

31.8

43.4

4.0

324.5

8.0

50.8

47.7

-17.7

2009 / 2008 (%)

17

global finance magazine awarded CaixaBI Best investment Bank in

Portugal, in 2009 status.

euromoney magazine also distinguished CaixaBI with its Best equity

house in Portugal award in 2009.

Bloomberg ranked the bank as the principal bookrunner for the issue of domestic bonds denominated in

euros in the primary debt market area for the third consecutive year.

CaixaBI consolidated its position in the M&A market, in Portugal, in the financial advisory area, having partici-

pated in 13 announced or successfully completed operations, placing it second in the Bloomberg ranking.

The bank provided advisory services to a consortium led by A. Silva & Silva group for an equity investment of

99.92% in Cintra Aparcamientos. Jornal de negócios classified this operation as the deal of the year in Portugal.

The various rankings also positioned CaixaBI among the main worldwide players in the Project finance area:

Ninth place worldwide as the MLA for PfI / PPP Project finance Loans (Dealogic)

RELEVANT EVENTS

1 Caixa – Banco de Investimento

ranK

ranKing – 2009 – BondS iSSued By doMeStic entitieS

BooKrunner

9.1

Share (%)

3,248.33

aMount (em)

19

no. oPerationS

1

2008 ranK

1

2007 ranK

Source: Bloomberg

gloBal Pfi / PPP ProJect finance loanS – 2009

State Bank of India

korea Development Bank

National Australia Bank

IDBI Bank

Santander

BBVA

Calyon

westpac Banking Corp

caixaBi / cgd

Sumitomo Mitsui Banking Corp

5,091

2,860

1,815

1,782

1,408

1,395

1,392

1,300

1,062

927

13.2

7.4

4.7

4.6

3.6

3.6

3.6

3.4

2.7

2.4

10

10

14

5

23

20

15

4

10

13

1

2

3

4

5

6

7

8

9

10

ranK Mandated lead arranger

no.oPerationS

(%)Share

aMount(uS$m)

Source: Dealogic

18

Tenth place worldwide as Bookrunner of Project finance Bonds (Dealogic)

Sixth place in EMEA as MLA for Project finance Loans (Thomson Reuters)

RELEVANT EVENTS

eMea ProJect finance loanS – Mandated arrangerS – 2009

BNP Paribas

Calyon

BBVA

Santander

Societe generale

caixaBi / cgd

Sumitomo Mitsui finl grp Inc

UniCredit group

Natixis

RBS

4,070.5

3,324.1

2,932.4

2,768.3

2,510.5

2,209.2

1,893.2

1,604.6

1,469.4

1,418.1

6.5

5.3

4.7

4.4

4.0

3.5

3.0

2.6

2.3

2.3

42

38

41

45

35

25

23

16

21

14

ranK Mandated arranger

Source: Thomson Reuters

1

2

3

4

5

6

7

8

9

10

aMount(uS$m)

(%)Share

no.oPerationS

BooKrunner of gloBal ProJect finance BondS – 2009

ranK BooKrunner

Credit Suisse

Citigroup

hSBC

RBS

Bank of America

Deutsche Bank

JP Morgan

Morgan Stanley

goldman Sachs

caixaBi / cgd

Millennium BCP

Espirito Santo financial group

BBVA

2,060

815

743

704

658

642

550

517

400

351

351

351

351

18.6

7.4

6.7

6.4

5.9

5.8

5.0

4.7

3.6

3.2

3.2

3.2

3.2

5

2

1

3

3

3

2

2

2

1

1

1

1

Source: Dealogic

1

2

3

4

5

6

7

8

9

=10

=10

=10

=10

aMount(uS$m)

(%)Share

no.oPerationS

19

Third place in the Iberian Peninsula as MLA for Project finance Loans (Dealogic)

first place in Portugal as MLA for Project finance Loans (Dealogic)

RELEVANT EVENTS

Mandated arranger – Portugal – 2009

caixaBi / cgd

Banco BPI

Espirito Santo finantial group

Banco Santander

Societe generale

Banco Bilbao Vizcaya Argentaria – BBVA

Banco Comercial Português – Millennium BCP

Banco Internacional do funchal – Banif

BNP Paribas

Caja de Ahorros y Monte de Piedad de Madrid – Caja Madrid

1,101

634

292

255

93

62

55

36

36

36

42.1

24.2

11.2

9.8

3.6

2.4

2.1

1.4

1.4

1.4

12

6

7

3

2

2

3

2

1

1

ranK

Source: Dealogic

1

2

3

4

5

6

7

8

9

10

aMount(uS$m)

(%)Share

no.oPerationS

Mandated arranger

Mandated arranger – iBerian PeninSula – 2009

Banco Santander

Banco Bilbao Vizcaya Argentaria – BBVA

caixaBi / cgd

Caja de Ahorros y Monte de Piedad de Madrid – Caja Madrid

Caja de Ahorros y Pensiones de Barcelona – La Caixa

Banco BPI

Instituto de Credito Oficial – ICO

Credit Agricole

Banco de Sabadell

Societe generale

3,043

1,710

1,388

1,254

1,252

634

526

490

460

398

20.0

11.2

9.1

8.2

8.2

4.2

3.5

3.2

3.0

2.6

52

36

14

32

29

6

10

7

15

8

ranK Mandated arranger

Source: Dealogic

1

2

3

4

5

6

7

8

9

10

aMount(uS$m)

(%)Share

no.oPerationS

20

The bank operated as co-lead for several benchmark transactions internationally classified as Deals of the year, in

this area in 2009. The following transactions, with CaixaBI as MLA / Adviser were awarded Deal of the year status:

Rodoanel – americas transport deal of the year (Project finance international)

– latin america transport deal of the year (Project finance magazine)

Braga hospital – europe health deal of the year (Project finance magazine)

Odebrecht / Norbe – americas deal of the year (Project finance international)

– latin america oil & gas deal of the year (Project finance magazine)

Port of Pecém I – latin america Power deal of the year (Project finance magazine)

DEALS

CaixaBI led the field in several emblematic business deals, particularly in the following areas:

DEBT CAPITAL MARkET

CaixaBI led 19 of the 23 primary bond market issues in which it was involved in 2009. According to Bloomberg,

this performance ranked the bank as the principal bookrunner for the issue of domestic bonds denominated in

euros for the third consecutive year.

Portuguese public debt continued to comprise one of CaixaBI’s priorities in the sovereign debt segment as a spe-

cialised treasury securities trader. Particular reference should be made to the following, in 2009:

Joint lead manager for the Portuguese Republic’s new 5 year benchmark issue (3.60% October 2014) for the

amount of €3.25 billion;

RELEVANT EVENTS

2009 ranKing – BondS iSSued By national entitieS ranK BooKrunner nuMBer

of iSSueS aMount

(em)

caixaBi

hSBC

Barclays Capital

BES Investimento

JP Morgan

Source: Bloomberg

19

12

15

10

10

1

2

3

4

5

3,248

3,125

3,100

2,795

2,129

8.6

8.3

8.2

7.4

5.7

Share(%)

21

Co-lead manager for the Portuguese Republic’s 10 year benchmark issue (4.75% June 2019) for the amount

of €4 billion.

EQUITy CAPITAL MARkET

The following table, comprising CMVM data, shows how CaixaBI once again consolidated its leading position in

the capital market, in Portugal, in 2009 in terms of the number of successfully completed transactions.

Takeover bids, in which CaixaBI was responsible for the respective organisation and structuring, were successfully

completed on Cires, Vista Alegre Atlantis and V.A. group. The largest capital market operation in Portugal, in

2009, was the €1,200 million Banco Espírito Santo public subscription with CaixaBI as co-lead manager.

RELEVANT EVENTS

Note: Excluding share capital increases in groups of which financial intermediaries are members.

adViSer ProPortional aMount (Em)

no.oPerationS

6

3

2

1

1

1

1

1

1

1

1

1

1

200

24

165

257

257

257

257

21

21

21

21

21

21

caixaBi

Millennium BCPI

BESI

JP Morgan

Credit Suisse

UBS

Calyon

BBVA

Banca IMI

Evolution Securities

Nomura International

INg Bank

keefe Bruyette & woods

22

CORPORATE fINANCE – ADVISORy

CaixaBI consolidated its position in the M&A market in Portugal, in the financial advisory area, having participated

in 13 announced or successfully completed operations, as published by Bloomberg.

CaixaBI was involved in the most relevant domestic M&As in 2009:

A 99.92% equity investment in Cintra Aparcamientos by a consortium led by A. Silva & Silva group. This

acquisition provided A. Silva & Silva group with 370 thousand parking spaces in five countries, making it

the largest Iberian player and the sector’s fourth largest European player;

galp Energia’s and Morgan Stanley Infrastructure’s joint acquisition of a part of gas Natural SDg, S.A.’s natural

gas distribution and commercialisation business in the Madrid region.

PROJECT AND STRUCTURED fINANCE

The market dynamics in this area continued to make their effects felt through 2009, exemplifying the combined

effect of CgD group’s financial strategy and CaixaBI’s execution. The international rankings positioned CaixaBI

among the leading world players in conformity with the above referred to league tables.

As already stated, the bank played a leading role in several benchmark operations, internationally considered as

Deals of the year, in this area, in 2009.

Caixa geral de Depósitos group was involved in operations for around €1,673 billion, 84% of which allocated

to Portugal, 8% to Brazil, 7% to Spain and 1% to Mozambique.

RELEVANT EVENTS

league taBle – M&a – 2009 (Portugal)

BES Investimento

caixaBi

BNP Paribas

Millennium BCP

Morgan Stanley

12,922

10,322

8,236

8,182

2,284

25

13

2

2

2

ranK adViSer aMount(uSd bn)

dealcount

Source: Bloomberg, 19-01-2009

1

2

3

4

5

23

Reference should be made to the following operations owing to their importance, dimension or characteristics:

Baixo tejo sub-concession: a greenfield road toll project in Portugal, with availability payments, led by Brisa,

with a concession period of 30 years;

iberWind: refinancing of Magnum Capital’s windfarm portfolio by project bonds (a pioneering financing model

in Portugal);

Baixo alentejo sub-concession: a greenfield road toll project in Portugal, with availability payments, led by the

Dragados / Iridium group, with a concession period of 30 years;

litoral oeste sub-concession: a greenfield road toll project in Portugal, with availability payments, led by Brisa,


Braga hospital: construction and clinical management of the new Braga hospital, led by Somague, José de

Mello group and Edifer, for a period of 30 years;

algarve litoral sub-concession: a greenfield road toll project in Portugal, with availability payments, led by the

Dragados / Iridium group, with a concession period of 30 years;

loures hospital: construction and clinical management of the new Loures hospital, led by Mota-Engil and

Espírito Santo Saúde for a period of 30 years.

fINANCE AND STRUCTURINg AREA

Trading portfolio management fuelled a high level of turnover, outperforming the iTraxx index by 5% and iBoxx

index by 2.4%.

The increase in the number of restructuring and business operations with new customers resulted in growth of

23% in total hedges.

CaixaBI continued to be the acknowledged leading liquidity provider.

BROkERAgE

The 15% increase in brokerage volumes on the bank’s internet platform – Caixadirecta Invest – was indicative of

its increasing importance in the market.

CaixaBI outperformed the rest of the market, in a year with a marked fall in trading volumes on Euronext Lisbon.

RELEVANT EVENTS

24

SyNDICATION AND SALES

The creation of a loan syndication and sales desk was a highly opportune development, in 2009, which was

a particularly favourable year for debt issues.

Its intervention was associated with the success of a significant number of primary capital market issues, with

CaixaBI as joint lead manager.

The bank also placed more than €12 billion in 445 commercial paper issues in 2009.

VENTURE CAPITAL

2009 was the first year of implementation of the venture capital area strategy approved at the end of the preced-

ing year, designed to fuel the development of this industry, consolidate its leading position in the sector and pro-

vide companies and entrepreneurs with adequate capitalisation instruments to develop their innovation, growth

and internationalisation strategies.

CgD group has allocated more than €500 million to venture capital resources in its twofold capacity as an inves-

tor in funds managed by third parties and fundamentally as a direct operator through Caixa Capital, which has

been reinforcing its operating capacity in organisational and financial terms.

The venture capital area has vehicles adjusted to different target segments. 2009 witnessed the formation of

Fundo Caixa Empreender + and Fundo Caixa Mezzanine, which together with Fundo Grupo CGD and Fundo

Energias Renováveis comprise Caixa Capital’s funds under management portfolio. At the same time and with

the aim of making up for any market shortcomings, Caixa group has been involved in the creation of several

specialised funds, to be managed by entities specialising in seed capital, corporate restructuring operations or in

sectors having a relevant activity.

Caixa Capital is responsible for investing in corporate projects led by qualified management teams, comprising

businesses with high growth and appreciation potential, providing a suitable return on equity and contributing to

responsible and sustained wealth creation and social well-being.

The investment volume in terms of total assets under direct Caixa Capital management, at the end of 2009,

totalled €296 million in 32 companies, of which special reference should be made to the fact that 85% of the

portfolio comprised investments made over the last three years. 215 investment applications were analysed in

2009, with an amount of €72 million being invested and €42 million in approvals still to proceed. Several disin-

vestments totalling €37 million at cost price were also made.

RELEVANT EVENTS

OPERATINg CONTEXT

26

INTERNATIONAL ECONOMy

OVERVIEw

first quarter 2009 will probably go down in history as one of the most volatile periods in financial markets in

conjunction with a period of sharp contraction of gDP in most countries, possibly the most significant since the

great depression of 1929.

OPERATINg CONTEXT

gdP (quarterly figures)

Source: CaixaBI Equity Research

ChINA

BRAZILUSEZJAP

15%

10%

5%

0%

-5%

-10%

1Q07 3Q07 1Q08 3Q08 1Q09 3Q09e

US JAP BRAZIL EZ ChINA

Volatility of S&P 500

Jan feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

90

80

70

60

50

40

30

20

10

0


2008 2009

27

The crisis, initially appearing to be mainly financial, turned into general crisis with a transversal effect on almost

all sectors, owing to their dependence on the financial sector, in creating significant difficulties in access to credit

plus liquidity problems. The difficulties, were, in many cases, only resolved by government intervention in countries.

In the first instance and as a means of preserving the major financial system institutions and attenuating the finan-

cial crisis’s negative effects on the real economy, regulators, monetary authorities and governments made several

appropriate decisions which gradually succeeded in restoring the confidence of the different parties, contributing

towards progressive financial markets stabilisation.

Support for the banking sector was one of the first and most important measures taken by central banks. This was

not limited to bringing down intervention rates, but also involved concerted liquidity injections, using instruments

which had, hitherto been prohibited for such interventions.

Political decisions also made an important contribution to financial sector stabilisation. The measures put into

place essentially comprised: (i) the possibility of nationalisation or a state equity intervention in distressed banks

as an offset for the injection of the necessary funds; (ii) issue of guarantees to provide financial institutions with

access to the credit market, which was not occurring; (iii) provision of lines of credit for the recapitalisation of

banking institutions.

Investment incentives programmes were also presented in economic terms with the aim of contributing to the

dynamics of growth in most countries.

OPERATINg CONTEXT

eVolution of confidence indiceS in uS and eZ


Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09

0

-5

-10

-15

-20

-25

-30

-35

-40

120

100

80

60

40

20

0

EZ (RhS)US

28

The g20 meeting held in London, in early April 2009, approved several important ideas designed to stimulate

global economic activity. These included: (i) an increase in funds to support the most distressed economies, a part

of which under the management of international organisations such as the IMf or world Bank; (ii) greater

supervision of the global banking system, extending regulation into new areas; (iii) more support for international

trade to counter protectionism.

The measures taken gradually improved the confidence levels of various economic agents, reflected in a recovery

of international equity markets and lower spreads on credit in most sectors, including the financial sector. In eco-

nomic terms, many countries posted positive growths of gDP in the second and third quarters of 2009, at least

in quarterly terms, although in annual terms, the major economies are expected to contract.

greater stabilisation in the financial sector was also visible in the capacity of several of the largest world banks to

increase their capital by significant amounts with the aim of reinforcing their capital base and / or repay the loans

obtained from public entities.

Most developed countries recorded sharper falls in gDP, with emerging economies showing greater resilience

and, in many cases, positive changes in gDP in 2009.

According to the IMf’s latest estimates (published on 1 October), the world economy is expected to have con-

tracted by 1.1% in 2009, with more developed countries contracting by 3.4% (United States: -2.7%; Eurozone:

-4.2% and Japan: -5.4%), as opposed to emerging and developing economies (particularly including China and

India), which could post growth of as high as 1.7%.

The IMf has estimated world growth of 3.1% for 2010. These figures still fall short of those achieved between

2004 and 2007 (when world gDP was up between 4.5% and 5.2% in the said period), clearly supported by the

performance of the emerging economies (up 5.1% as opposed to the 1.3% estimate for developed countries).

OPERATINg CONTEXT

gdP eStiMateS for the MaJor countrieS

eurozone

germany

france

Spain

Portugal

Italy

United kingdom

US

Japan

Brazil

World economy

0.6

1.3

0.3

0.9

0.0

-1.0

0.7

0.4

1.2

5.1

3.0

2008 (%)


-4.0

-5.0

-2.4

-3.8

-2.9

-5.0

-4.4

-2.5

- 2.7

-0.5

-1.1

2009e (%)

0.7

1.2

0.9

-0.7

0.5

0.2

0.9

2.5

2.1

3.5

3.1

2010e (%) 2007 (%)

2.8

2.5

2.3

3.6

1.9

1.6

2.6

2.1

3.8

5.7

5.2

2006 (%)

3.0

3.2

2.4

4.0

1.4

2.0

2.9

2.7

3.9

4.0

5.1

29

The maintenance of economic growth incentives will still be required, using monetary, budgetary and fiscal

mechanisms for a relatively long period of time, to consolidate an upturn in global economic activity.

Inflationary pressures are unlikely to be very significant during the first stage, to the benefit of the maintenance

of expansionary monetary policies.

Lower inflationary pressures derive from:

The fact that prices of the main raw materials are lower than their peaks of first half 2008, which in itself has

a positive effect on the monthly and month-on-month changes in (consumer and producer) prices;

Less pressure in terms of private consumption in a period of deleverage of the major economies whose unem-

ployment rates are likely to remain relatively high.

This will favour the maintenance of expansionary monetary policies in the major economic blocs.

Various risk factors still weigh on the major economies and may lead to a delay in recovery, particularly:

Expectation of continued high unemployment for a relatively long period, owing to the gap between the more

positive change in gDP and a shift towards job creation, which, if occurring, could lead to less dynamic domestic

demand in different countries;

Maintenance of credit restrictions, reflecting not only the weakness of banks’ balance sheets but also the need

to continue to reinforce capital to provide for losses still not recognised in their credit and / or investment portfo-

lios, in addition to complying with new regulatory demands;

A greater unwillingness to assume risks which have not been guaranteed by financial institutions, which have

opted to invest cash surpluses in short term investments with central banks at relatively low rates;

Amounts associated with budget stimuli have been a factor behind higher budget deficits and public debt ratios,

in several cases to worrying amounts, which could constrain such countries’ budget policies for a relatively long

period. This may lead to a reduction in the scope for the implementation of additional stimuli. It may also lead

to additional pressure to start the public accounts rebalancing process earlier or more rapidly.

CENTRAL BANkS’ INTERVENTION RATES

After the US federal Reserve had reduced its intervention rate seven times, from 4.00% to 0.25%, in 2008, to

counteract economic slowdown and financial market instability, the fED left its monetary policy unchanged over

the whole of 2009, concentrating on funds injections to the financial sector to stimulate a faster resumption of

economic activity.

OPERATINg CONTEXT

30

The Bank of England reduced its intervention rate three times, from 2% to 0.5%, to counteract the Uk economy’s

negative indicators.

The ECB reduced its reference rates by a total 150 bps between January and May, ending up with a Refi rate of

1.0%. After its meeting in early May, the European monetary authorities left their reference rates unchanged. The

ECB, however, implemented several liquidity injection operations with longer maturities, with no limit on amounts

and at fixed rates, permitting a rebalancing of money markets.

DOMESTIC ECONOMy

The Portuguese economy was significantly affected by the international economic-financial crisis, experiencing a

sharp fall in gDP between mid 2008 and first quarter 2009. The Portuguese economy’s contraction is explained by:

A sharp reduction in domestic exports, reflecting highly negative external factors, not only in the main domestic

export markets such as Spain, germany and france (in the case of goods) but also in Ireland and the Uk which

are two important source markets for domestic tourism;

A significant drop in investment, reflecting the more negative expectations of most economic agents, leading

them to postpone investment plans, but also on account of the additional difficulties in terms of access to credit

(higher spreads and financial institutions’ greater unwillingness to accept non-collateralised risks);

OPERATINg CONTEXT

eVolution of central BanKS’ interVention rateS

Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09

7%

6%

5%

4%

3%

2%

1%

0%


ECB Refi fed funds

Bank of England discount rate Bank of Japan discount rate

31

A somewhat less pronounced contraction of private consumption in an economic environment with lower

disposable household income owing to higher unemployment (9.8% at the end of the third quarter against an

end of 2008 figure of 7.6%).

The second and third quarters, however, were characterised by positive gDP growth (comparing with the last

trimester it growths 0.4% and 0.9% respectively), although, more importantly, by an almost across-the-board

improvement in confidence indices which hit all-time lows at the start of the year, as in most other European

economies.

Taking the above into account, companies were forced to deal with a negative economic environment on various

levels over the last few months:

Significantly lower demand, both domestically and externally, both in terms of tradable goods as in invisibles,

exemplified by tourism or services. Lower external demand (resulting from lower consumption and investment

in most European countries) badly affected domestic exports, mainly comprising SMEs;

Additional credit restrictions, owing to higher spreads on operations and greater aversion to risk by investors in

general and financial institutions in particular;

global increase in competition owing to fresh entrants to the international markets comprising companies in

countries whose competitiveness is based on low production costs. These particularly include Eastern European

and Asian countries (with lower labour costs);

A limited capacity to lead innovation processes in the sectors in which these companies operate, as a means of

capturing market segments of international interest.

The more positive context of several of the main economies for domestic exports (such as germany, france and

Angola), in which Spain is expected to continued to be an exception, may support gradual improvement in do-

mestic economic activity.

The IMf’s latest forecasts have revised the estimates of Portuguese gDP upwards, both for 2009 as for 2010,

indicating higher values than in the rest of the Eurozone. The IMf has accordingly forecast a 3.0% contraction

of Portuguese gDP for 2009 and 0.4% for 2010. The European Commission has estimated gDP values of -2.9%

and +0.3%, respectively in 2009 and 2010. OECD forecasts of -2.8% for 2009 and +0.8% for 2010 are slightly

more optimistic.

Not only the anti-crisis measures put into effect, in Portugal, but also the significant contraction of gDP, are also

having negative effects on the public accounts (budget deficit and public debt) in Portugal. It is estimated that

this year’s budget deficit may be more than 8% and that public debt could represent more than 77% of gDP.

OPERATINg CONTEXT

32

Investment (public and private, in infrastructures and all other matters associated with increased domestic eco-

nomic competitiveness) and an increasingly export oriented approach with higher added value are accordingly

playing a relevant role for the future growth of the domestic economy.

The inflation rate remained negative for a large part of 2009, reflecting not only adjustments to the main raw

material prices in international markets but also less pressure from private consumption.

fINANCIAL MARkETS

fOREIgN EXChANgE MARkET

The euro depreciated in value against the US dollar in first quarter 2009, although this trend was corrected in the

second half of the year. Performance against the yen was in similar vein, whereas the single currency depreciated

against sterling during the year as a whole at 2008 close.

The euro was worth an average USD 1.3945 in 2009, peaking at 1.5094 in early December and bottoming out

at 1.2543 in early March.

The gap with sterling varied between 0.8437 and 0.9603, with an average exchange rate of 0.8913.

OPERATINg CONTEXT

doMeStic econoMic indicatorS

gdP

Private consumption

Public consumption

Investment

Domestic demand

Imports

Exports

Consumer Price Index (year on year)

Unemployment

Budget deficit to gDP (%)

Public debt to gDP (%)

0.0

1.7

0.7

- 0.7

1.0

2.7

- 0.5

2.4

7.7

-2.6

66.4

2008 (%)


-2.9

-1.0

1.4

-13.3

-3.2

-14.4

-14.5

-1.0

9.5

-8.4

74.6

2009e (%)

0.5

0.6

0.6

0.4

0.6

1.0

1.7

1.3

9.4

-8.5

84.8

2010e (%) 2007 (%)

1.9

1.6

0.0

3.1

1.7

6.1

7.8

3.0

8.1

-2.6

63.5

2006 (%)

1.4

1.9

-1.4

- 0.7

0.7

5.1

8.7

2.7

7.7

-3.9

64.8

33

The euro’s minimum value against the yen was 113.28 with a maximum of 138.36 and an average of 130.38.

MONEy MARkET

The consequences of the US sub-prime crisis were felt in the real economy in the US and worldwide. Eurozone

interest rates fell during the course of the year, with the monetary authorities endeavouring to boost economic

performance by increasing financial system liquidity.

OPERATINg CONTEXT

eur / uSd, eur / gBP and eur / JPy eXchange rateS (BaSe 100)

Source: Bloomberg, CaixaBI Equity Research

Jan-09 feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

115

110

105

100

95

90

85

80

EUR / USD EUR / gBP EUR / JPy

EUR / USD

EUR / gBP

EUR / JPy

oVernight and 3, 6 and 12 MonthS euriBor rateS


Jan-09 feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

3M

ON

6M

12M

ON 3M 6M 12M

34

CAPITAL MARkET

EQUITIES

After significant falls in the major stock market indices, in 2008, 2009 was a year of significant recovery, starting

March. The resumption of economic growth was propped up by government plans in the US, Europe and other

developed economies. The PSI20 was up 33.5% in 2009, the Euro Stoxx 50 appreciated by 21.1%, the IBEX35

by 29.8%, S&P500 by 23.5% and the Dow Jones Industrial by 18.8%. Brazil was one of the first economies to

show signs of recovery, with a strong appreciation in the value of its domestic capital market with an 82.7%

appreciation of the Bovespa in 2009.

BONDS

There was an upwards inclination of the german sovereign curve in 2009, with the short zone following the

downwards trend of reference interest rates and the long side incorporating improved economic performance in

recording higher rates.

OPERATINg CONTEXT

eVolution of SeVeral indiceS


200

180

160

140

120

100

80

60

40

20

0Jan-09 feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

Bovespa

PSI20IBEX35S&P500EuroStoxx50Dow Jones Ind.

S&P500 EUROSTOXX50 DOw JONES IND.

BOVESPA PSI20 IBEX35

ACTIVITy

36

BUSINESS STRUCTURE

Caixa geral de Depósitos (CgD) group’s investment banking business has been spun off into CaixaBI, which

operates alongside CgD’s commercial structures to increase cross-selling operations. The bank develops products

and services for customers operating in its target market segments of large and medium sized companies, public

institutes and local councils, institutional investors and major domestic and regional project developers, as well as

individual private investors in the trading area.

CaixaBI has concentrated on target markets comprising Portuguese companies. In line with this strategy it has

carved out a highly competitive position in the Portugal – Spain – Brazil – Lusophone Africa perimeter, without

losing sight of other geographies of interest to its customers.

The bank’s commercial organisation, with the aim of applying the referred to strategic model, is based on a product

divisions approach for both domestic and international aspects.

CaixaBI provides highly specialised financial services focusing in the following areas:

Structured finance

Corporate Debt finance

Corporate Equity finance

Capital Market

Syndication

Corporate Risk Management Advisory

Project finance

Medium and long term domestic and international credit

Brokerage

Venture Capital / Private Equity

CaixaBI also has its own research service, as part of the European Securities Network (pan-European investment

banks) – providing it with an indispensable European outlook to operate in such strongly globalised markets.

Its research areas monitor domestic and international financial markets to assist investors’ asset portfolio manage-

ment-linked decision-making processes.

ACTIVITy

37

CONSOLIDATED PERfORMANCE

consolidated net assets were up 1.8% in 2009, to €1,930,507 thousand. This was €33,543 up over the end

2008 figure of €1,896,964 thousand.

The credit portfolio was up €13,221 thousand to €878,631 thousand over the preceding year’s €865,410

thousand.

The securities and derivatives portfolio was up 3.5% by €32,018 thousand to €953,330 thousand, i.e. up

€921,312 thousand over the preceding year’s close.

Information on the assets structure for 2008 and 2009 is set out below:

ACTIVITy

net aSSetS (thousand euros)

2008

2009

1,896,964

1,930,507

credit Portfolio (thousand euros)

2008

2009

865,410

878,631

SecuritieS and deriVatiVeS Portfolio (thousand euros)

2008

2009

921,312

953,330

OThER ASSETS CASh ASSETS

SECURITIES PORTfOLIO LENDINg

2008

48.6% 45.6%

0.9%

4.9%

49.4% 45.5%

0.1%

5%

2009

38

There was a 0.2 percentage points improvement in the bank’s separate solvency ratio in 2009 over the end of

last year’s level, i.e. 8.85% against an end 2008 figure of 8.67%.

RESULTS AND RATIOS

consolidated net income was up 50.8% over the year 2008 figure of €30,242 by €15,365 thousand to

€45,607 thousand.

return on equity (prior to the appropriation of net income for the year), improved to 17.64% at end 2009

against 15.88% at end 2008.

return on assets broke the 2% barrier, increasing from 1.59% in 2008 to 2.36% at end 2009.

net operating income was up 31.8% to €117,967 thousand in comparison to the preceding year’s close of

€89,474 thousand, with commissions accounting for 53% of the total.

ACTIVITy

SolVency ratio (%)

2008

2009

8.67

8.85

conSolidated net incoMe (thousand euros)

2008

2009

30,242

45,607

return on equity (%)

2008

2009

15.88

17.64

return on aSSetS (%)

2008

2009

1.59

2.36

39

cash flow, was, in turn, up 47.7% to €92,176 thousand at end 2009 against the end of 2008 figure of €62,407

thousand.

An analysis of net operating income beginning with net interest income shows its performance in achieving

growth of 43.4% over the preceding year. This account heading, at end 2009, totalled €35,297 thousand against

the 2008 figure of €24,612 thousand.

income from financial operations, in 2009, increased to €20,136 thousand against the year 2008 figure of

€4,743 thousand.

Net commissions continue to account for the lion’s share of net operating income, having achieved their highest

ever level of performance at €62,534 thousand in 2009 against the year 2008 figure of €60,119 thousand.

ACTIVITy

fINANCIAL OPERATIONS COMMISSIONS

NET INTEREST INCOME

27.5%

5.3%

67.2%

2008

53.0%

29.9%

17.1%

2009

caSh floW (thousand euros)

2008

2009

62,407

92,176

net intereSt incoMe (thousand euros)

2008

2009

24,612

35,297

incoMe froM financial oPerationS (thousand euros)

2008

2009

4,743

20,136

40

An amount of €34,320 thousand was paid into the provisions / impairments account heading in comparison

to the preceding year’s €18,771 thousand.

DEBT CAPITAL MARkET

The major challenges to be faced during the course of 2009 as a whole, reflecting the crisis situation in financial

markets and economic environment characterised by a deep worldwide economic recession, did not preclude

CaixaBI’s activity in its operating areas from benefiting from the highly dynamic performance of bond markets,

particularly in the primary bond market denominated in euros, which posted peak performance levels. Reference

should also be made to the cautious re-opening of the European securitisation market, in the last quarter of the

year, in which the first public placements of new issues were made after more than two years without placement

operations for end user customers.

DEBT CAPITAL MARkET

CaixaBI remained a benchmark operator in the debt capital market area, in 2009, notably in bonds and

commercial paper.

CaixaBI led 19 of the 23 primary bond market issues in which it was involved, in 2009. On the basis of this

performance, the Bloomberg league table ranks the bank as the principal bookrunner for euro bonds issued by

national entities for the third consecutive year.

ACTIVITy

coMMiSSionS (thousand euros)

2008

2009

60,119

62,534

net ProViSionS (thousand euros)

2008

2009

18,771

34,320

41

Portuguese public debt continued to comprise one of CaixaBI’s operating priorities, as a specialised treasury

securities trader, in the sovereign debt segment. Special reference should be made to the following operations,

in 2009:

Joint lead manager for the Portuguese Republic’s new 5 year bench-

mark issue (OT 3.60% October 2014) for the amount of €3.25 billion;

Co-lead manager for the Portuguese Republic’s 10 year benchmark

issue (OT 4.75% June 2019) for the amount of €4 billion;

CaixaBI led 18 private debt issues in 2009, including 8 of the total 11 Eurobond issues made during the same

period by domestic corporate issuers.

ACTIVITY

1 Caixa – Banco de Investimento

RANK

RANKiNg – 2009 – BoNds issued By domestic eNtities

BooKRuNNeR

9.1

sHARe (%)

3,248.33

AmouNt (em)

19

No. oPeRAtioNs

1

2008 RANK

1

2007 RANK

Source: Bloomberg

42

In addition to the private debt segment issues set out below, CaixaBI was the joint dealer manager in Caixa Geral

de Depósitos’s tender offer on two €220 million Upper Tier II issues.

CaixaBI organised and led 22 new commercial paper programmes, for around €5.2 billion, in 2009. Particular

reference should be made to the following for amounts of €100 million, or more:

Financial advisory services for setting up Euro Medium Term Notes programmes, as a highly flexible instrument for

the bond and particularly Eurobonds market, are another of CaixaBI’s debt capital market priorities.

CaixaBI acted as co-arranger for Caixa Geral de Depósitos’s bond programme on the public sector, in this area in

2009 and which continues to be the only one of its kind in Portugal, in addition to acting as joint arranger for

Parpública SGPS’s Euro Medium Term Notes Programme.

ACTIVITY

43

STrUCTUrED ASSET FINANCE

Particular reference should be made CaixaBI’s involvement in structured asset finance transactions completed

in 2009:

Joint arranger and joint lead manager for two securitisation operations

on edP – serviço universal credits (a regulated EDP Group electricity

commercialiser), relating to tariff adjustments for 2007 and 2008 (Ener-

gyOn No. 1 securitisation notes operation, totalling €1,258,600,000)

and in 2009 (EnergyOn No. 2 securitisation notes operation, totalling

€442,450,000);

Sole arranger for a Banco caixa geral espanha residential mortgages securitisation

operation of €400 million.

energyon operations were particularly innovative as the first asset securitisation operation

on regulated assets in Portugal. The high quality of the securitised credits, associated with

the characteristics of the structure designed for each of the operations, enabled Moody’s

Investors Service to allocate an Aaa rating on 99.60% of the amount of the securities issued

in each of the said operations.

Banco Caixa Geral Espanha’s residential mortgages securitisation for which CaixaBI was the exclusive arranger

was performed under the terms of Spain’s securitisation law and also evidenced the growing international character

of the bank’s structuring capacities in this area.

EqUITY CAPITAl MArkET

There were no IPOs or capital increases in the equity market, in Portugal, in 2009, except for a few one-off cases

of capital increases by several banks to comply with the capital ratios defined by the Bank of Portugal. The rate

of capital market activity, in Spain was also very low with no offers of relevance in terms of size, except for a few

capital increases. The Brazilian market, after a poor first half, posted a relevant series of successfully completed offers

starting August 2009.

recognition of the bank as a leading player in the variable-income securities capital market

was once again reinforced with Euromoney’s award of its Best equity House in Portugal

prize, in 2009.

ACTIVITY

44

The bank successfully completed the following capital market operations:

Financial advisory services to ZON for the disposal of an equity investment

in ZON to kento Holding limited;

Financial advisory services to Caixa Geral de Depósitos for the disposal

of an equity investment in ZON to kento Holding limited;

Financial advisory services to Cinveste for the disposal of an equity

investment in ZON to kento Holding limited;

Co-manager for the international tranche of the primary public subs-

cription on ccR (Brazil) shares;

Co-manager for the international tranche of the primary public subs-

cription on Banco santander (Brazil) shares;

Organisation and structuring of shin-etsu’s potestative acquisition

of an equity investment in Cires;

Organisation and structuring of cerutil’s takeover bid for V.A. Group;

Organisation and structuring of shin-etsu’s takeover bid for Cires;

Organisation and structuring of cerutil’s takeover bid for Vista Alegre

Atlantis and financial advisory services for Cerutil’s analysis of Vista Alegre

Atlantis’s equity structure;

Financial advisory services for the analysis of galp energia’s equity

structure and funding options;

Co-lead for the Banco espírito santo public subscription.

The largest capital market operation completed in Portugal, in 2009,

was the €1.2 billion Banco Espírito Santo public subscription with Caix-

aBI as co-lead. reference should also be made to the successful takeo-

ver bids for Cires, Vista Alegre Atlantis and V.A. Group, organised and

structured by CaixaBI.

CaixaBI also provided advisory services to Galp Energia for the analysis of its equity structure and funding options

for its investment plans. CaixaBI was the only Portuguese bank to provide such advisory services, having, as in the

case of the other two contracted banks, provided the company with a separate report.

ACTIVITY

45

Reference should also be made to the advisory services provided for ZON Multimédia’s, Cinveste’s and Caixa geral

de Depósitos’s disposal of 10% of ZON Multimédia’s equity capital to kento holding Limited. This operation made

it possible to reinforce the company’s equity base and consolidate ZON Multimédia’s strategic partnership for the

Angolan market.

Notwithstanding the highly unfavourable economic environment felt during the course of the year, CaixaBI

endeavoured to leverage its operations in Brazil, in partnership with Banco Caixa geral - Brasil, on account of the

opportunity existing on the reopening of the primary market in Brazil in third quarter 2009 pursuant to which

CaixaBI was involved as co-manager in the international tranche of the Banco Santander (Brazil) and CCR –

Companhia de Concessões Rodoviárias primary public offers, reinforcing its international presence in the capital

market area.

The Banco Santander (Brazil) offer of around 13.2 billion Brazilian reais or €5.1 billion, was the largest worldwide

IPO, in 2009. Its co-manager status in both operations enabled CaixaBI to make an active contribution to the

geographical diversification of the said placement.

The following table, comprising CMVM data, shows that CaixaBI once again consolidated its leading position in

the capital market, in Portugal, in 2009, as the leading financial institution in number of successfully completed

operations.

ACTIVITy

adViSer no.oPerationS

ProPortionalaMount (€m)

6

3

2

1

1

1

1

1

1

1

1

1

1

200

24

165

257

257

257

257

21

21

21

21

21

21

Note: Excluding share capital increases in groups of which financial intermediaries are members.

caixaBi

Millennium BCPI

BESI

JP Morgan

Credit Suisse

UBS

Calyon

BBVA

Banca IMI

Evolution Securities

Nomura International

INg Bank

keefe Bruyette & woods

46

Corporate FinanCe – advisory

the unfavourable economic and financial environment led to a significant downturn in the number of M&a

operations, in 2009, in comparison to the preceding year, both worldwide and in europe, in a continuation of the

trend in 2008. the last quarter, however, witnessed a slight market upturn, particularly visible worldwide. 2009

witnessed a 31% worldwide decrease in the total value of such transactions with a sharper market fall recorded

in european terms, at 55%.

CaixaBi consolidated its position in portugal’s M&a market, in the financial advisory area, having participated in

13 announced or successfully completed operations, as published by Bloomberg.

CaixaBi successfully completed the following projects in the said year:

Financial advisory services to a consortium led by A. Silva & Silva

Group for a 99.92% equity investment in Cintra aparcamientos;

Financial advisory services to Galp Energia in a consortium for the ac-

quisition of natural gas distribution and commercialisation assets from

Gas natural in the Madrid region;

aCtivity

MErGErS And AcquiSitionS

World market

Growth rate

european market

Growth rate

1,168

-29.5%

619

-9.4%

2002

source: Bloomberg

1,020

-12.7%

451

-27.2%

2003

1,564

53.3%

636

41.0%

2004 2001

1,656

-51.6%

683

-51.2%

2000

3,421

13.7%

1,400

9.8%

1,947

24.5%

863

35.7%

2005

2,774

42.5%

1,331

54.2%

2006

3,126

12.7%

1,573

18.2%

2007

1,744

-44.2%

899

-42.8%

2008

1,209

-30.6%

404

-55.1%

2009

(eUr bn)

M&A LEAGuE tAbLE – 2009 PortuGAL rAnK AdViSEr AMount

(uSd bn) dEAL

count

Bes investimento

caixabi

Bnp paribas

Millennium BCp

Morgan stanley

Citi

Jp Morgan

UBs

Banco santander

rothschild

12,922

10,322

8,236

8,182

2,284

2,009

1,844

1,615

1,145

1,139

25

13

2

2

2

4

5

2

1

1

source: Bloomberg, 19-01-2009

1

2

3

4

5

6

7

8

9

10

47

Financial advisory services to Zon for the disposal of an equity invest-

ment in Zon to Kento Holding Limited;

Financial advisory services to caixa Geral de depósitos for the dis-

posal of an equity investment in Zon to Kento Holding Limited;

Financial advisory services to cinveste for the disposal of an equity

investment in Zon to Kento Holding Limited;

Financial advisory services to caixa Seguros for the revision of the

joint venture agreement between Hpp and Usp;

Financial advisory services to Galp Energia for an analysis of the

company’s equity structure and funding options;

Financial advisory services to cavalum for the company’s economic

and financial assessment;

Financial advisory services to the Amorim / interfamilia ii Group for

the analysis and issue of a technical opinion on different economic and

financial valuations of the amorim Group holding company.

CaixaBi was involved in the following most relevant domestic M&as in 2009:

an equity investment of 99.92% of Cintra aparcamientos by a consortium led by a. silva & silva Group. the

investment provided a. silva & silva Group with 370 thousand parking spaces in five countries, making it the

largest iberian player and fourth largest european company in the sector. this was one of the largest transac-

tions to which CaixaBi had ever provided advisory services. the completion of this transaction is all the more

relevant owing to the fact that it was performed in a highly difficult M&a market environment, in a year in

which there number of transactions of relevant size was very small;

Galp energia’s and Morgan stanley infrastructure’s joint acquisition of a part of Gas natural sdG, s.a.’s natural

gas distribution and commercialisation business in the Madrid region. CaixaBi’s advisory services to Galp energia

contributed to the successful completion of this deal, enabling the company to expand its presence in the

spanish natural gas commercialisation market. the deal will also enable Galp energia to leverage its operational

experience as the leading distribution and commercialisation company in the portuguese natural gas market,

with more than 900 thousand customers, in exploiting growth opportunities in spain as a highly active market

with major growth potential for an iberian player of Galp energia’s dimension and ambition. this operation

gave Galp energia a portfolio of around 1.3 million customers in the iberian peninsula;

aCtivity

48

CaixaBI played an active role in providing advisory services for a part of ZON’s, Caixa geral de Depósitos’s and

Cinveste’s disposals of equity investments, comprising 10% of equity capital to kento holding Limited, enabling

ZON to consolidate the bases for a partnership in Angola in the form of a 30% ZON Multimédia and 70%

SOCIP – Sociedade de Investimentos e Participações, S.A., joint venture for the development of a satellite pay

TV service.

PROJECT AND STRUCTURED fINANCE

The bank was involved in structuring 17 project finance transactions, in 2009, as set out in the following table:

The operations entailed a total Caixa geral de Depósitos group involvement of around €1,673 billion, 84% of

which allocated to operations in Portugal, 8% to Brazil, 7% to Spain and 1% to Mozambique.

On a sector level, reference should be made to the 54% accounted for by the road and 28% by the energy sectors

in terms of total CgD group operations, as an indication of its domestic and international dynamism.

ACTIVITy

Baixo Tejo sub-concession

Baixo Alentejo sub-concession

Litoral Oeste sub-concession

Braga hospital – Infrastructure

Braga hospital – Services

Renomar (refinancing)

Algarve Litoral sub-concession

Águas Azambuja

global3 (refinancing)

Martel wind (refinancing)

Águas de gondomar

Central de Pecém

Angra hospital

Norbe VIII e IX

Rodoanel Oeste

Infinita Renovables (refinancing)

Loures hospital

total

436,100,000

401,500,000

600,150,000

141,076,000

46,052,000

512,000,000

174,360,060

7,500,000

279,000,000

998,100,000

52,900,000

706,910,552

75,700,000

926,896,552

648,275,862

202,000,000

30,000,000

6,238,521,026

aMount of deBt (B)

POR

POR

POR

POR

POR

SPA

POR

POR

SPA

POR

POR

BRA

POR

BRA

BRA

SPA

POR

country

Please Note: The Pecém Power Station, Norbe, Rodoanel and Cinac projects were priced in USD at EUR 1.45 to the dollar.

ProJect

Road

Road

Road

health

health

Energy

Road

water

Energy

Energy

water

Energy

health

Energy

Road

Energy

health

Sector

49

Reference should be made to the following operations owing to their importance, dimension or characteristics:

Baixo Tejo sub-concession: a greenfield road toll project in Portugal,

with availability payments, led by Brisa, with a concession period of 30

years;

IberWind: refinancing of Magnum Capital’s windfarm portfolio by

project bonds (a pioneering financing model in Portugal);

Baixo Alentejo sub-concession: a greenfield road toll project in Por-

tugal, with availability payments, led by the Dragados / Iridium Group,


Litoral Oeste sub-concession: a greenfield road toll project in Por-

tugal, with availability payments, led by Brisa, with a concession period

of 30 years;

Braga Hospital: construction and clinical management of the new

Braga hospital, led by Somague, José de Melo Group and Edifer, for a

period of 30 years;

Algarve Litoral sub-concession: a greenfield road toll project in Por-

tugal, with availability payments, led by the Dragados / Iridium Group,


Loures Hospital: construction and clinical management of the new

Loures hospital, led by Mota-Engil and Espírito Santo Saúde for a period

of 30 years.

ACTIVITY

Sector Distribution

54%

28%

15%

1%

2%

WATER

HEALTHROAD ENERGY

INDUSTRIAL

50

In international terms, reference should be made to geographical expansion via CaixaBi’s involvement in three

operations in Brazil, whose financial close occurred in the second half of the year:

Port of Pecém I: a “build and operate” project for two EDP and

MPX Group power stations in Brazil;

CCR: Support for a structured finance operation for the Rodoanel

Oeste road concession;

Norbe: financing support for two Odebrecht Group oil prospecting

vessels.

The bank was also involved in an operation in Mozambique at the end of the year, providing advisory and

structuring services on several operations in progress, particularly:

Tete Bridge concession – financial advisory services to the Ascendi and Soares da Costa consortium;

Catembe Bridge concession – Ponta do Ouro: financial advisory services to the Ascendi consortium.

There was an 18% increase in the number of projects with CaixaBI as the agent bank in 2009. The bank is currently

responsible for agencying more than 100 projects.

The bank has provided advisory services to CREDIP. It has continued to perform a series of relevant activities

upon which work began in 2008. June 2009 witnessed the successful completion of the interim finance operation

for the implementation of toll systems for shadow-toll concessionaires in the Costa de Prata and Greater Porto

areas. July also witnessed the successful completion of the structuring of the implementation of toll systems for

the Norte Litoral, S.A. shadow-toll concessionaire based on a financing structure identical to that used for the

Costa de Prata and the Greater Porto area shadow-toll concessions.

In the case of operations whose financing is structured on a corporate basis, over the course of 2009, reference

should be made to an ongoing, growing involvement in identifying mandates guaranteeing CaixaBI’s presence as

mandated lead arranger in the respective league tables.

The economic environment is reflected in the greater difficulties felt by several companies in a difficult scenario

of liquidity restrictions having a direct impact on their capacity to settle their commitments, resulting in growing

dynamics in terms of liabilities restructuring and debt refinancing operations.

ACTIVITY

51

In terms of corporate acquisitions, reference should be made to the Cintra Aparcamientos LBO by a consortium

led by Emparque, S.A. which was mainly responsible for representing the deal in the Portuguese market with

CaixaBI as co-lead, having structured and organised the necessary finance of up to €400 million. This transac-

tion was a unique opportunity for a major Portuguese company in the sector to achieve a leading position on an

Iberian level, making A. Silva & Silva group the fourth largest operator in Europe.

Pursuant to the above reference should be made to CgD group’s participation in the following transactions:

farma APS (generis group) acquisition finance of €80 million + €7 million in support of Target’s current opera-

tions for a consortium led by Magnum capital;

Back-up line of credit for the current ratings on edP – energias de Portugal, S.a. (“EDP”) and EDP finance

BV (“EDP finance”) totalling €1.6 billion;

Long term finance of USD 114 million for efacec’s construction of an electrical power transformer manufacturing

plant in georgia USA;

Acquisition finance for Cintra Aparcamientos to emparque including part refinancing of the liabilities of several

Emparque and Cintra group companies, totalling €400 million;

Long term financing of €809 million for the alfonso gallardo group;

cinac: financing the expansion of a cement manufacturing plant in Nacala.

The energy sector accounts for around 37% of total operations, around 75% of which structured in Portugal.

ACTIVITy

Magnum Capital – generis´s acquisition

EDP – Back up facility

Efacec´s electrical power transformer

manufacturing plant (georgia)

Cintra Aparcamientos´s acquisition

fundiestamo

galp Energia

Alfonso gallardo (Refinancing)

Cinac

total

87,000,000

1,600,000,000

84,475,732

400,342,692

40,000,000

10,000,000

809,118,000

13,793,103

3,044,729,527

aMount of deBt (B)

POR

POR

POR

POR

POR

POR

SPA

MOZ

country

17,400,000

100,000,000

42,237,866

94,097,667

40,000,000

10,000,000

108,618,000

13,793,103

426,146,636

cgd grouP inVeStMent (B)

January

March

March

July

December

December

December

December

agreeMent date

Industrial

Energy

Energy

Car Parks

Real estate

Energy

Steel

Industrial

Sector

52

The monitoring operations on CaixaBI’s credit portfolio and operations originated for CGD Group by its investment

bank have been decisive factors for the adequacy of processes to corporate situations and the market environment,

particularly as regards the positioning of banks.

MeDIuM SIzeD CoMpanIeS

CaixaBI, in exploiting CGD’s branch network, has set its sights on medium sized companies. It particularly focused

on the production and development of financial advisory mandates secured by it and the organisation of banking

syndicates.

a differentiating factor has been achieved by the sale of the PME Multivantagem product with highly significant

growth levels over the last few years, comprising a portfolio of around €430 million, at the end of 2009.

FInanCInG anD STruCTurInG area

TraDInG porTFolIo

2009 witnessed a significant increase in primary market issues with overall growth of 29%. particularly good

performance was achieved by the non-financial sector with the highest ever annual figure in total corporate

investment grade issues of $1,200 billion having been recorded.

aCTIVITY

53

The high demand for this category of assets was reflected in the unprecedented narrowing of spreads both in

terms of amplitude and speed. Information on the evolution of spreads, (Itraxx Europe generic) since the start of

the year is provided in the following graph. This index began the year at 177 bp, exceeded 200 bp in March and

ended the year at 80 bp.

ACTIVITy

gloBal corPorate inVeStMent grade deBt (eXcluding financialS)

Source: Thomson Reuters

PROCEEDS ($BIL) NUMBER Of ISSUES

$1.400

$1.200

$1.000

$800

$600

$400

$200

$0

3.000

2.500

2.000

1.500

1.000

500

0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

eVolution doS itraXX euroPe generic in 2009

Source: Bloomberg

01-01-09 20-02-09 11-04-09 31-05-09 20-07-09 08-09-09 28-10-09 17-12-09

225

200

175

150

125

100

75

50

25

0

54

TRADINg PORTfOLIO RESULTS

The portfolio closed 2009 with a much higher than expected level of relative and total performance. In relative

performance terms, portfolio management, based on active management with high turnover levels outperformed

the iTraxx by 5% and the iBoxx by 2.4%. In addition to income from financial operations reference should be

made to net interest income, which also exceeded all expectations, benefiting from historically high spreads and

yield curve inclination.

Information on the trading portfolio, in 2009, is given in the following table:

ACTIVITy

PerforMance of trading Portfolio VS itraXX Main VS iBoXX

10.0%

9.0%

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

-2.0%

-3.0%

01-0

1-09

16-0

1-09

31-0

1-09

15-0

2-09

02-0

3-09

17-0

3-09

01-0

4-09

16-0

4-09

01-0

5-09

16-0

5-09

31-0

5-09

15-0

6-09

30-0

6-09

15-0

7-09

30-0

7-09

14-0

8-09

29-0

8-09

13-0

9-09

28-0

9-09

13-1

0-09

28-1

0-09

12-1

1-09

27-1

1-09

12-1

2-09

27-1

2-09

iBOXX PORTfOLIO CaixaBI CREDIT PORTfOLIO

iTRAXX MAIN

PerforMance of trading Portfolio

Portfolio rotation

RoE

Margin %

Performance relative to (iTraxx)

Performance relative to (iBoxx)

14x

313%

3.09%

+4.34%

+0.81%

55

SPECIALISED TREASURy SECURITIES TRADER AND LIQUIDITy PROVIDER ACTIVITIES

Public debt market-making activities in the secondary market were constrained by the continuation of the end of

2008 scenario of no liquidity and high volatility, forcing the IgCP to change market-makers’ compliance criteria

which are now assessed on a comparison basis. The broadening of spreads to historical highs has also added to

the difficulty in managing positions.

Starting third quarter, a certain return of liquidity (albeit insufficient) in the market was noted with the consequent

narrowing of bid / ask spreads, leading to a more conservative market-making strategy.

CaixaBI achieved one of the best performances in compliance terms, com-

ing 4 out of 15 Specialised treasury securities traders. In terms of market

share, CaixaBI ended the year 12th out of 27 participants, the same position

it achieved in the global ranking announced by IgCP.

Activity as a liquidity provider for several Euronext Lisbon listed securities such as Cofina, Orey Antunes, Reditus,

Altri, Inapa, Ibersol, Martifer and Soares da Costa, progressed at a good rate. This is a business area in which

CaixaBI is a pioneer and in which its leadership remains incontestable.

Euronext recognised the superlative nature of CaixaBI’s performance in this activity, in allocating its maximum “A”

rating on all securities and categories.

CORPORATE RISk MANAgEMENT ADVISORy SERVICES

2009 was a fruitful year in terms of the contracting and structuring of interest rate, foreign exchange, commodities

and equities hedge operations.

There was an increase in business volume with new customers and operations, in addition to a higher level of

restructuring of older operations with the bank having recording growth of around 23% in total amounts hedged.

BROkERAgE

There was marked growth in the equity segment of the capital market throughout 2009, particularly from mid

March as a correction to a part of last year’s downturns. The upturn was fuelled by government plans in the US,

ACTIVITy

annual coMPliance

MCR

MSPR

96%

4

caixaBi

MCR – Monthly Compliance RatioMSPR – Monthly Spread Performance Ranking (1 to 15)

2009

56

Europe and other developed economies. The PSI20 was up 33.5% in 2009, the Euro Stoxx 50 appreciated by

21.1%, the IBEX35 by 29.8%, S&P500 by 23.5% and the Dow Jones Industrial by 18.8%. Brazil was one of the

major economies first showing signs of recovery, with the valorisation of his own capital market and the increase

of 82.7% of Bovespa in 2009.

A daily analysis of brokerage volumes shows a drastic reduction in domestic market liquidity during the year.

ANALySIS Of BROkERAgE ACTIVITIES

As already stated, value increases in the main stock market indices in 2009 (accompanied by the PSI20 which was

up 33.5%), were offset by a sharp fall in turnover on Euronext Lisbon last year in comparison to the same period

(down 42% when analysing secondary market spot share transactions – CMVM data).

CaixaBI’s brokerage operations repeated their positive performance in 2009 on Euronext Lisbon traded equities,

to the extent that the drop in brokerage volumes was less than in the rest of the market, as shown in the

following graph.

A real gain in market share by CaixaBI in terms of financial brokerage operations on securities traded on Euronext

Lisbon was once again recorded.

ACTIVITy

change in trading VoluMeS MarKet VS caixaBi (equitieS)

100%

80%

60%

40%

20%

0%

-20%

-40%

-60%

55%

11%

37%

35%58%

78%

-47%

-51%

-42%

-36%

2005 2006 2007 2008 2009 (1)

Source: CMVMPlease Note: (1) up to Novembro 2009.

CaixaBI MARkET

57

In a negative economic environment for global trading volumes in the equities market (down 42%), a positive

reference should be made to the performance of CaixaBI’s Caixadirecta Invest internet platform with a 15%

increase in brokerage volumes, up to November 2009.

PRIMARy MARkET OPERATIONS

There were no IPOs or capital increases in the equities market, in Portugal, in 2009, except for the €1.2 billion

Banco Espírito Santo (BES) capital increase with CaixaBI as co-lead.

The bank accordingly focused its attention on improving relationships with institutional investors, intensifying

marketing operations with Portuguese and foreign companies involving domestic and international investors in

collaboration with CaixaBI’s research areas and other ESN members.

CaixaBI organised and participated in various roadshows in different European countries involving officers from

Altri, BES, Brisa, Cimpor, EDP Renováveis, galp Energia, Jerónimo Martins, Martifer, Mota-Engil, Portugal Telecom,

REN, Soares da Costa, Sonae, Sonae Indústria, Sumol + Compal and ZON Multimédia.

Together with other ESN partners, CaixaBI organised and participated in three international seminars with

Portuguese companies: one in London (May) for a presentation of European Mid Caps, attended by representatives

from Cimpor, Sonae and Zon Multimédia; a European companies seminar in New york (October), attended by

ACTIVITy

change in caixaBi’S trading VoluMeS (equitieS)

Source: CMVMPlease Note: (1) up to November 2009.

CAIXADIRECTA INVEST CaixaBI

150%

130%

110%

90%

70%

50%

30%

10%

-10%

-30%

-50%

102%

55%

75% 78%

141%

-23%

-47%

-36%

15%

2005 2006 2007 2008 2009 (1)

35%

58

Sonae and REN and a seminar for companies in the Iberian renewable energies sector in Madrid (April), attended

by representatives from EDP Renováveis and Martifer.

Operations in the primary equities market particularly included CaixaBI’s participation in two operations in Brazil

(Santander Brazil IPO and the CCR – Brisa subsidiary capital increase) as co-manager, in line with CaixaBI’s

implementation of its current internationalisation process.

SyNDICATION AND SALES

2009 was a unique year in terms of the debt issues market. financial sector support measures permitted liquidity

sustainability and maintenance in markets, boosting the confidence of agents and investors alike.

with the creation of this opportunity, the vast majority of issuers entered the market with debt product issues.

This factor, allied with significant growth of sovereign issues, owning to governments’ needs to secure funding

for their respective economic and financial support plans, made 2009 an unusual year in terms of issues, both in

volume and number (Bloomberg).

Premiums on new issues which were significantly high at the start, fell during the course of the year, in line with

market recovery, notably in terms of liquidity and investor confidence.

The unusual differences in bid / offer spreads in secondary market trading at the start of the year recovered

significantly to more reasonable levels, albeit still far from pre-crisis levels.

The above is a description of the economic environment in which the bank operated and in which it participating

in a significant number of primary capital market issues of which special reference should be made to the following,

with joint lead manager status:

MetroPolitano de liSBoa e.P. – Placement of a state-backed Metro de lisboa bond issue for

€400,000,00 at a coupon rate of 5.75%, maturing on 4 february 2019.

CaixaBI, in conjunction with another three international banks, was the joint lead manager for this issue.

caiXa geral de dePÓSitoS – Placement of a cgd bond issue, for €1,250,000,000 at a coupon rate

of 5.125%, maturing on 19 february 2014.

CaixaBI, in conjunction with another four international banks, was the joint lead manager for this issue.

redeS energÉticaS nacionaiS SgPS – a tap issue on ren bonds for €300,000,000 at a coupon rate

of 6.375%, maturing on 10 december 2013.

CaixaBI, in conjunction with another three international banks, was joint lead manager for this issue.

ACTIVITy

59

rede ferroViÁria nacional, e.P.e. – Placement of a state-backed refer bond issue, for €500,000,000

at a coupon rate of 5.875% maturing on 18 february 2019.

CaixaBI, in conjunction with another three international banks, was joint lead manager for the issue.

caiXa geral de dePÓSitoS – Placement of a cgd bond issue, for €1,000,000,000 at a coupon rate

of 4.375%, maturing on 13 May 2013.

O CaixaBI, in conjunction with another four international banks, was joint lead manager for this issue.

Portugal telecoM – Placement of a Portugal telecom bond issue, for €1,000,000,000 at a coupon

rate of 6%, maturing on 30 april 2013.


rePuBlic of Portugal – Placement of a Portuguese treasury bond issue for €3,250,000,000 at a

coupon rate of 3.60%, maturing on 15 october 2014.

CaixaBI, in conjunction with another four international banks, was joint lead manager for this issue.

Santander totta – Placement of a Santander totta bond issue for €1,000,000,000 at a coupon

rate of 3.75%, maturing on 12 June 2012.

CaixaBI, in conjunction with another four international banks, was joint lead manager for this issue.

electricidade de Portugal – Placement of an electricidade de Portugal, bond issue for €1,000,000,000

at a coupon rate of 4.75%, maturing on 26 September 2016.

CaixaBI, in conjunction with another five international banks, was joint lead manager for this issue.

ParPÚBlica – Placement of a Parpública bond issue for €800,000,000 at a coupon rate of 3.50%,

maturing on 8 July 2013.

CaixaBI, in conjunction with another five international banks, was joint lead manager for this issue.

caiXa geral de dePÓSitoS – Placement of a public sector cgd covered bond for €1,000,000,000 at

a coupon rate of 3.625%, maturing on 21 July 2014.

CaixaBI once again operating as a pioneer in the Portuguese market, placed the first public sector bond issue in

Portugal, operating as joint lead manager, in conjunction with another three international banks.

rede ferroViÁria nacional, e. P. e. – Placement of a state-backed refer bond issue for €500,000,000

at a coupon rate of 4.675%, maturing on 16 october 2024.


Portugal telecoM – Placement of a Portugal telecom bond issue, for €750,000,000,000 at a coupon

rate of 5%, maturing on 04 november 2019.

CaixaBI, in conjunction with another four international banks, was joint lead manager for the issue.

ACTIVITy

60

CaixaBI was also active as co-lead lead manager / bookrunner for a €700 million, 4 year maturity issue for galp

and as the sole bookrunner in a state-backed €25 million, 3 year issue for Banco Invest. Both issues were part

syndicated in the market.

CaixaBI was also co-lead for the following issues:

TB 4.75% 14 June 2019 – €4 billion

hSBC 4.5% 30 April 2014 – €1.25 billion

BCP 5.625% 23 April 2014 – €1.0 billion

Banif 3.25% 8 May 2012 – €500 million

hSBC 3.75% 30 November 2016 – €1.25 billion

CgD performed a repos operation on two perpetual subordinated debt issues at a variable Upper Tier II rate in

September. CaixaBI operated as the dealer manager with Bank of America Merrill Lynch. The repurchase was for

two identical issues, one issued by CgD Paris and the other by CgD finance, Cayman branch.

The bank also issued a €50 million, 4 years variable rate private placement for REN – Redes Energéticas Nacionais,

SgPS, S.A..

COMMERCIAL PAPER

CaixaBI placed more than 445 commercial paper issues, in 2009, for more than €12,275 billion in which

it participated in and placed €5,126 billion in coordination and with the support of CgD’s Major Companies

structure.

VENTURE CAPITAL

BACkgROUND

In the context of 2009, as a crisis year, structural factors with a determining effect on the venture capital industry’s

limited presence in the domestic market remained in force.

The biggest constraint is on the supply side both as regards the shortage of basic high potential projects and the

most competitive companies’ reluctance to float.

ACTIVITy

61

In such a small market, venture capital operations tend to be limited to domestic operators with poorly

diversified, essentially generalist, portfolios and difficulties with projects requiring specialised knowledge in sector

or technology terms.

The finance model for the economy therefore remains almost exclusively geared to banking brokerage operations,

with companies’ capacities to reinforce their shareholders’ equity being conditioned, in most cases to the financial

capacity of the base core of shareholders and operating income.

however, the challenges associated with a structural matrix of an economy undergoing profound change, with

more restrictive debt and capital markets and unable to provide liquidity, require a venture capital industry able to

meet emerging demand associated with the need for:

Endowing an increasing number of companies with the capacity to compete in a broader range of markets;

Leveraging the appearance and development of global business projects, in knowledge and applied technology

industries.

POSITION

Caixa geral de Depósitos defined a strategic priorities framework for the venture capital area at the end of 2008.

It was designed to fuel the development of the venture capital industry, consolidate its leading position in the

sector and provide companies and entrepreneurs with adequate capitalisation instruments to develop their

innovation, growth and internationalisation strategies.

CgD group has currently allocated more than €500 million to venture capital operations, in its twofold capacity

as an investor in funds under third party management, and, fundamentally as a direct operator via Caixa Capital.

Caixa Capital is responsible for investing in business projects led by qualified management teams in business areas

with high growth and appreciation potential, providing adequate returns on equity and contributing towards the

responsible and sustained creation of wealth and social wellbeing.

Caixa Capital, which, over the course of the decade had geared its venture capital operations to a well defined

segment of operations of a reasonable size, mainly development capital, generally associated with investment

banking, changed its approach last year, adopting broader objectives with the funds required for the different

target segments.

Caixa Capital manages five investment vehicles – Caixa Desenvolvimento (SgPS), fundo grupo CgD, fundo

Energias Renováveis, fundo Caixa Empreender + and fundo Caixa Mezzanine. Of the total amount of assets under

the direct management of Caixa Capital, the volume of investment, at end 2009, totalled €296 million, in 32

companies. Around 84.5% of the portfolio (€250 million), comprises investments made over the last three years.

ACTIVITy

62

Information on the evolution of funds portfolio under the company’s management during the course of the year

is set out below:

formation of fCR Empreender – Caixa Capital, with a capital of €25 million, of which an amount of €7.5 million

has been paid up;

formation of fCR Mezzanine – Caixa Capital, with a capital of €100 million, of which an amount of €30

million has been paid up;

Capital increase of €164.7 million (from €174.6 million to €339.4 million) in fCR grupo CgD – Caixa Capital,

with €100 million of the said increase having been paid up.

Caixa Empreender + aims to remedy a shortage in the market supply of venture-seed capital and contribute

towards an equity chain which is transversal to the development cycle of recently formed businesses, mainly

concentrating on knowledge and applied technology industries.

Three specific intervention plans have been produced:

To stimulate the activities of young people with high potential and qualified business cadres for the development

of new economic realities (start-ups);

To broaden the horizons of business projects of certified merit (follow-on investments);

To provide resources for specialised investment vehicles managed by third parties or particularly suited to dealing

with entrepreneurs.

The Caixa Mezzanine solution aims to provide alternative forms of capitalisation to intermediate SME type companies.

It consists of a hybrid financial instrument, combining capital and debt characteristics and corresponding to an

intermediate threshold between these two structuring dimensions of corporate balance sheets.

Reference should also be made to the capital increase in fCR grupo CgD – Caixa Capital, under the reorganisation

process of the pre-existing fund’s portfolio subsidiaries for compliance with the new approach required under

the preceding year’s strategic reformulation, with the transfer of €60 million in Caixa Capital and Caixa

Desenvolvimento assets.

In conformity with this trajectory, changes to the governance model have been made, to provide the company

with the management and organisational conditions to enable it to expediently sustain the development of its

activity. CgD group’s venture capital area is concentrated in Caixa Capital which has been provided with a staff

complement of 18 for the purpose in question.

ACTIVITy

63

ACTIVITy

Caixa Capital analysed the investment opportunities presented for eventual inclusion in its four venture capital

funds under management during the course of the year. The portfolio comprises 215 investment projects in 2009

of which 166 were received during the year and 49 brought forward from 2008. 154 projects were either put away

or rejected with another 45 currently being examined and 16 approvals.

In the sample in question and in sectoral terms reference should be made to the importance of information tech-

nologies (19% of projects analysed), particularly including the services (18%), industrial (16%) and energy (15%)

sectors. The most representative were seed / start-up investment projects.

The following is a list of transactions:

New investments:

Vila galé – Sociedade de Empreendimentos Turísticos, S.A.

Logoplaste Investimento, SgPS, S.A.

Mwh – gestão de Recursos Naturais, S.A.

Mesquita ETVIA – Construção de Vias de Comunicação, S.A.

Critical Links, S.A.

fundo ACTec (Seed Capital COTEC)

Additional investments:

A. Silva & Silva – Imobiliário e Serviços, S.A.

Eurofrozen – Indústria e Comércio de Produtos Alimentares, S.A.

Pinewells, S.A.

Smartwatt – Eficiência Energética e Microgeração, S.A.

Disposals:

felino – fundição e Construção Mecânicas, S.A.

hélios I – Energy Investments S.L. e hélios II – hyperion Energy Investments S.L.

MARL Energia – Central fotovoltaica, S.A.

Plataforma, SgPS, S.A.

Prado karton S.A.

Torre Confecções, S.A.

MIf – Manuel Inácio & filhos, SgPS, S.A.

Part disinvestments:

Vista Alegre Atlantis, SgPS, S.A.

grupo Visabeira, SgPS, S.A.

La Seda de Barcelona, S.A.

Sumol + Compal, S.A.

fCR AICEP Capital fIEP

ACTIVITy

64

Seven operations were completed by year end which, in conjunction with additional investments comprised a

total of €72.3 million. Projects approved but which have yet to proceed entail potential investment of around

€42.4 million. Disinvestments comprised €36.7 million (at cost) and one relevant investment was transferred to

Caixa geral de Depósitos.

In respect of the development of two new business areas, the two referred to venture capital funds were formed

and the bases for their respective operationalisation defined, after the stabilising of the inherent market framework,

promotional actions and due consideration given to more than a hundred projects received in the meantime.

It should be noted that:

A network operating model has been set up for Caixa Empreender+, involving scientific and technological

institutions, public agencies (e.g. INPI), associative structures (e.g. Cotec), business angel networks (fNABA

and APBA), corporate ventures, venture capital and seed capital operators in addition to the use of an internet

based technological platform to guarantee basic interaction functionalities with developers. The whole of the

group’s offer in this segment will come under the Caixa Empreender brand umbrella;

In the case of Caixa Mezzanine a cycle of meetings with businessmen is in progress for the purpose of setting

up a reference portfolio to generate a demonstration effect, as endeavours are being geared to a corporate

stratum with high appreciation potential, with a particularly dynamic modernisation, growth and expansion

drive, with the possibility of involving business concentration processes, successions and MBOs.

MANAgEMENT CONTROL

CaixaBI has instituted a control culture which has had a positive effect on its results. Structural bodies’ contribu-

tion to the effectiveness of internal control, operating in areas making it possible to obtain and control the exist-

ing information, reliably and promptly, is described below:

Definition of commercial objectives in terms of non-quantified target markets, submitting all credit applications

to both CaixaBI and CgD credit councils;

Separation of functions, ensuring that a transaction is approved, executed, processed, recognised, continually

monitored and controlled by independent structures;

Daily control of financial information on transactions performed on the immediately preceding weekday;

Daily control of market risks with reports on the bank’s various positions at the preceding day’s close being sent

to the board of directors and other relevant organs. The market risk control system allows all positions between

support and business organs to be reconciled daily;

ACTIVITy

65 ACTIVITy

Revaluation of derivatives products position, making it possible to assess exposure, assessing potential and

global risk by counterparty or customer;

Implementation of procedures and creation of systems to monitor and control operational risk, including pre-

vention to ensure business continuity.

CaixaBI, in subordinating its structure to the above referred to mechanisms, subscribes to internal control principles:

Compliance with established management objectives;

Economic, efficient use of resources;

Adequate control of various risks and custodian services;

Reliability and integrity of financial and management information;

Compliance with legislation, regulations and internal procedures.

CaixaBI’s organic structure has a Compliance Office and an Internal Audit Office to reinforce the various control

levels. Always from a viewpoint of contributing to consistently positive financial income levels and prudent liquidity

management, capital investment and risk control, it:

Assesses the bank’s financial position and assumption of risks at each point of time;

Assesses compliance with regulatory obligations, namely in terms of capital, solvency and liquidity requirements.

CaixaBI, in collaboration with CgD, pays special attention to operational risk.

The Bank of Portugal has approved the standard methodology for CgD group, including CaixaBI as its investment

bank, continuing to make significant investments in terms of resources, for the use and adaptation of the tools

used by the group for monitoring and managing operational risk.

The bank has also been fine-tuning its Business Continuity Plan, as an indispensable tool to ensure an adequate

comfort zone to deal with any adversities.

Every three years, the bank produces a Strategic Plan to systemise its strategy and quantify objectives. In turn,

the Activities and Budget Plan, effective in terms of both quantity and quality, annually defines measures for the

assessment of risk and quantifies them with the collaboration of each structural body.

66

STRUCTURAL COSTS MANAgEMENT

Cost-to-income is the most significant indicator of balance between control of the bank’s structural costs and its

business structure. CaixaBI has consistently achieved better than benchmark values for the sector at less than 40%.

Once again, in 2009, the conjugation between structural costs control and significant growth in net operating

income, enabled the Bank to improve its productivity ratio to 23.4%.

hUMAN RESOURCES MANAgEMENT

human capital is considered to be of fundamental importance for the development of the bank’s operations.

CaixaBI processes staff retention and recruitment, to the highest ethical and technical standards. The bank is

constantly engaged in providing adequate training in its business and back office areas providing employees with

an opportunity to improve their levels of specialised training, taking financial area masters and other postgraduate

courses, higher banking management courses in addition to English and Spanish language courses and several

one-off seminars or training actions, both in Portugal and abroad.

The bank has a very young human structure, with 50% of its employees being under 39. CaixaBI’s annual intake

of young graduates is but one aspect of recognition of its social responsibility.

The bank adjusts its human resources structure to the needs defined in the Strategic Plan and market challenges,

ensuring a wholesome innovation capacity, to help achieve its objectives. The bank had 159 employees, at end

2009, 3 down over the end of 2008 figure of 162.

In terms of the bank’s consolidated activities, the following pie chart provides information on the distribution of

its 174 employees, 1 down over the end of the preceding year.

ACTIVITy

hr By age BracKetS

fROM 50 TO 60fROM 30 TO 34

UP TO 29 fROM 40 TO 49

fROM 35 TO 3929%

15%

20%

16%

2%

18%

OVER 60

67

hr By oPerating areaS

BROkERAgE (17)RESEARCh (6)

OPERATINg AREAS (42) MANAgEMENT SUPPORT (26)

VENTURE CAPITAL (15)

9%

24%

15%

39%

3%10%

PRODUCT AND COMMERCIAL AREAS (68)

ACTIVITy

OUTLOOk fOR 2010

69 OUTLOOk fOR 2010

The last IMf report confirms that the world economy is in recovery, albeit particularly sustained by the strong

performance of the emerging powers. forecasts indicate worldwide contraction of 1.1% in 2009, followed by

growth of 3.1% in 2010. Eurozone gDP however, is expected to record a marginally positive growth of 0.3%

in 2010, with Portugal’s growth having been estimated at 0.4%. The IMf has also announced that recovery is

expected to be slow as the stabilisation of the situation in the financial system will lead to the gradual elimination

of public support with its consequent impact on economic activity.

The global recessionary framework during the course of 2010, is expected to dissipate, albeit very gradually, in

a context of the progressive regularising of global financial conditions and gradual recovery in world demand,

particularly in Portugal’s export markets.

More financial market stability is likely to convey greater confidence, with the possibility of the consolidation of

growth in the main world economies in second half 2010 and throughout 2011.

Economic growth is likely to be based on several factors:

growth of public investment;

Low levels of interest rates;

A strong euro;

A reduction of the unemployment rate starting mid 2010;

Restructuring of business and financial sector, to a large extent, already achieved.

Notwithstanding the high levels of uncertainty still existing over capital market evolution in 2010, any improve-

ment thereof, in Portugal, is expected to have a positive impact on the equity capital market over the coming

year, with the bank exploiting its leading position in this business area. The bank is also interested in continuing

to perform cross border operations as part of CaixaBI’s internationalisation process both in Brazil in partnership

with Banco Caixa geral Brazil and through its branch in Spain.

This framework is not expected to witness major changes in 2010 in comparison to the level of M&A activity

in 2009, with more consistency in terms of market recovery only likely in the second half of the year. In light of

growth prospects for the economy, in 2010, and the current instability of financial markets, the coming year is

expected to continue to post a modest level of M&A activity.

CaixaBI’s turnover in the secondary equity market, in 2010, is also expected to evolve positively.

In the structured asset finance area, normally characterised by long maturation periods for opportunities, CaixaBI

continued to adopt a proactive approach and explore and obtain in-depth knowledge of several opportunities

with customers in 2009, for the purpose of obtaining fresh mandates, several of which it expects to secure in 2010.

70

The market is expected to record a period of trading activity consolidation, in 2010, although narrowing spreads,

such as in 2009, are not expected. There are, however, likely to be periods of volatility, deriving from uncertainties

over macroeconomic evolution and inflation.

we have therefore planned a mix between the contracting of new operations on account of any increases in

short / medium term rates and our customers’ respective expectations and the restructuring of operations which

have already been contracted, with the aim of eliminating complexity and volatility in customers’ debt portfolios.

To reinforce this highly profitable and counterparty risk reducing component, the bank is investing in new technological

support functionalities for the online assessment of structures placed with customers.

The bank is also furthering new contact fronts for the intermediation of risk between international derivative

structures players and its main domestic customers to increase the potential of this area’s highly attractive business

opportunities.

In line with these prospects, the bank is also fully aware of the series of risks which may have an impact on the

financial system next year:

Imbalance in the balance sheets of non-financial companies owing to excessive leverage levels, low returns and

significant financing restrictions;

higher than expected defaults in private consumption owing to higher unemployment;

growing concerns over public indebtedness and the sustainability of public finances, in addition to a reduction

in private investment;

Imbalance between the financial system and public accounts deriving from the fiscal and monetary policy

measures taken to support economic activity;

Reappearance of tensions and restrictions in the financial sector and vulnerability of recent recovery;

Instability of financial institutions which are over exposed to credit segments with a commercial profile and

finance to certain countries in central and eastern Europe which may require assistance;

Reversal of the recent recovery of financial markets if macroeconomic data fail to meet expectations.

Awareness of such risks, however, may well be a positive differentiation factor which CaixaBI believes it can exploit.

The venture capital context is likely to be more favourable to investment over the next few years, taking into

account the structural changes required for economic relaunch and a scenario in which access to alternative

sources of funding turn out to be a competitive advantage as an enabler of business projects.

OUTLOOk fOR 2010

71

In such an environment and to leverage the capture of new investment opportunities making it possible to

improve the return on disposable funds, continuity will be given to linkage with other group business areas, i.e.

between CaixaBI and CgD’s commercial structures.

we will continue to concentrate on projects involving investments in business innovation, expansion and

development, including MBOs, in which operations involving the internationalisation of domestic companies will

also be incentivised.

we shall also continue to further more comprehensive objectives in line with strategic priorities, establishing an

offer consentaneous with the dynamics of entrepreneurialism and innovation, in addition to helping medium

sized companies in the challenges they face.

Participation in financial restructuring operations or operations whose resources are used to repay debts or for

compliance with other liabilities, including fiscal affairs, will continue not to be covered by our current investments

policy, with, this, year, Caixa group having contributed towards the creation of a fund expressly geared to the

said purposes.

Commitment to companies’ and project developers’ management capacities will always be one of our fundamental

decision-making tenets.

OUTLOOk fOR 2010

ACkNOwLEDgEMENTS

73

CaixaBI consolidated its investment banking leadership in Portugal in 2009, winning international prizes and

securing several distinctions. The board of directors recognises and wishes to express its gratitude for the confidence

placed in the bank, as a sine qua non in achieving its results.

The board of directors also wishes to express its gratitude to the supervisory authorities – Bank of Portugal and

Securities Market Commission – members of the shareholders’ meeting, audit board and statutory auditor for

their institutional services to the bank.

we also wish to record our gratitude for the permanent support of our shareholders and Caixa geral de Depósitos

group companies.

Last but not least, CaixaBI’s board of directors wishes to acknowledge the commitment and performance of its

employees during the course of last year.

ACkNOwLEDgEMENTS

75

The board of directors, considering the adequacy of the levels of shareholders’ equity needed to enable CaixaBI

to perform its activities, hereby submits the following proposal to the general meeting for the appropriation of a

total amount of €41,969,026 of net income for 2009:

Lisbon, 22 January 2010

Board of Directors



Luís Lopes Laranjo








Legal reserve (10% of net income for year)

Other reserves

Dividends

e4,196,903

e12,747,123

e25,025,000

77

gerbanca, SgPS, S.A.

68,348,445 shares

89.24% of voting rights

Companhia de Seguros fidelidade-Mundial, S.A.

8,007,635 shares

10.45% of voting rights

Please note

Treasury stock held at 31 December 2008 and 31 December 2009:

4,658,000 shares

(5.73% of share capital)


79

MISSION AND OBJECTIVES

CaixaBI’s principal mission is to exploit and promote the investment banking business platform between Spain,

Brazil, Lusophone Africa and Portugal, in its different business areas, providing customers with an international

dimension in any of the above mentioned geographies with an integrated financial service.

This mission is horizontal to different product areas. It encompasses corporate debt finance, equity capital markets,

financial advisory, project finance, structured finance, brokerage, corporate advisory and risk management, ven-

ture capital and research activities. CaixaBI’s financial services are provided independently of the geography of

its customers. In an increasingly integrated world, CaixaBI accompanies its customers wherever their business is

transacted and is particularly geared to cross border operations.

CaixaBI’s strategic objectives for the 2008-2010 three year period, include:

Confirmation of its status as the domestic benchmark investment bank and prime contributor to CgD group;

fine tuning priority with the Major Companies Area and development of synergies with other CgD group

businesses;

Reinforcement of its international presence, particularly in Spain, Brazil and the US, leveraging cross border

business;

Increasing the level of penetration in the Spanish market, in product areas;

Leveraging the bank’s Iberian syndication operations and progressively expanding them into the international

sphere, addressing CgD group’s needs in terms of primary and secondary markets;

greater exploitation of cross border investment banking opportunities in Angola, Mozambique, China and India;

Development of brokerage operations, including the online platform;

Promotion of derivatives operations for customers, developing product structuring operations for CgD group;

Boosting investment banking products in collaboration with the Rede de Empresas (corporate network);

gearing its human resources capacity and commitment to achieving its remaining objectives;

Continuing to promote development capital operations, broadening its investment policy to include the initial

stages of corporate life cycles, investing in companies and projects with high growth and appreciation potential;


80

Incentivising an investment diversification policy to facilitate access to new markets and investment opportu-

nities, enabling CgD and CaixaBI to work together in the domain of current expansion / internationalisation

projects, notably in Spain and Lusophone countries.

REgULATIONS gOVERNINg CaixaBI’S OPERATIONS

CaixaBI, internally, is governed by its articles of association and a set of standards and procedures adapted to

European and domestic legislation on its activity and regulatory standards issued by supervisory authorities. The

following is the backbone of the internal standards implemented within CaixaBI.

CODES Of CONDUCT

As banking activities should be governed by strict principles of impartiality and transparency, to be complied with

by all employees, CaixaBI has introduced internal standards governing professional deontology, issuing directives

which have been compiled in a code of conduct of which all employees have been informed. The bank has also

issued an Anti-Money Laundering handbook.

internal regulations for financial Brokerage activities, defining standards and procedures to be complied

with in financial brokerage activities, prepared on the basis of the dispositions on this subject matter, namely the

Securities Code, with dispositions issued by the supervisory authorities (Bank of Portugal and Securities Market

Commission) having also been produced and issued. The regulations have also been distributed to and are binding

upon employees.

STANDARDS AND PROCEDURES SySTEM

CaixaBI has a Standards and Procedures System which has been published on its intranet and which is binding

upon all employees. It includes the most relevant aspects of the company’s operation and activities. The Standards

and Procedures Systems sets out the rules and competencies relating to production, management, support media,

disclosure and access to standards, notably organic structure, human resources policy, characteristics of products

and services and relevant procedures or information on the performance of its activity.


81

ORgANISATION AND INTERNAL PROCEDURES fOR RISk CONTROL

The executive board has provided the bank with the required means to ensure the existence of information and

analysis of its balance sheet risks and on levels of operational risk cover.

The Planning, Risk Control and Organisation Division (DPO) liaises with group Divisions, centralising control of the

respective risks, i.e. Risk Management Division (DgR) and Consultancy and Organisation Division (DCO).

CaixaBI has spun off its compliance function into an office whose functions apply to the bank’s structure as a

whole, with the following fundamental aims:

Supervision and control of a series of procedures, rules and regulations designed to promote ethical standards

and organisational discipline;

Production of a report on the bank’s internal control system for the Bank of Portugal;

Production of a supervision and control report for the CMVM;

Production of compliance reports on the bank’s diverse structural bodies for the executive board.

Pursuant to its operations, the bank’s two major assets portfolios and acquisitions of services are managed by the

following procedures:

1. SECURITIES PORTfOLIO

The management of the bank’s securities portfolio is subordinated to the bank’s authorised risk levels and the

budget approved by the board of directors. Several basic objectives have also been defined, namely:

Achieving an adequate level of net interest income for the balance sheet of an investment bank;

Establishing a securities portfolio permitting a normal degree of rotation and adequate return in terms of capital gains;

The investment portfolio’s composition shall be limited to maximum and minimum exposure levels;

Safeguarding of a minimum liquidity level required of a financial institution.

The return required from the portfolio comprises a CgD group approved ROE level obtained on the daily valuation

thereof at market prices, net of financing costs.

In calculating the allocation of shareholders’ equity to operations, the necessary requirements for hedging credit,

market and operational risks are considered in accordance with current Bank of Portugal rules.


82

Tradable instruments include bonds, shares, selected asset managers’ funds and their derivatives – futures, options

swaps and forwards traded with the treasury or forex positions in CgD’s trading room.

2. CREDIT PORTfOLIO

CaixaBI’s credit council (CCC) was created as part of the formal loop for the submission of credit applications.

It consists of executive board members and officers responsible for commercial divisions, in any capacity, involved

in extending credit.

The production of commercial proposals for submission to the credit council is the responsibility of structural

organs (business / product divisions), which should previously obtain the risk opinion of CgD’s Risk Management

Division.

Proposals are then submitted to the group’s credit councils to which, in accordance with CgD group credit policy,

CaixaBI’s competence in terms of credit approvals has been delegated.

3. ACQUISITION Of gOODS AND SERVICES

Market enquiries – three suppliers per product are normally consulted;

Selection of suppliers – based on a comparison of proposals submitted;

Expenditure – in accordance with the appropriate authorisations;

Contracts with goods suppliers / service providers – in writing or a formal contract.

List of suppliers representing more than 5% of external supplies and services:

Caixa geral de Depósitos, S.A.

finantech – Sistemas de Informação, Lda.

Reuters Europe, S.A. Portugal Branch


83

ORgANISATION

STATUTORy BODIES

CaixaBI’s statutory bodies are elected at its general meeting, comprising shareholders with voting rights.

The bank’s statutory bodies, elected by ballot at its shareholders’ meeting, are as follows:

Shareholders’ Meeting – comprising a chairman and two secretaries;

Board of directors – comprising a minimum of three and maximum of fifteen members responsible for managing

the company’s corporate affairs. The board of directors shall choose its chairman and may, at its discretion,

appoint one or more deputy chairmen from among their number. The board of directors, is statutorily entitled

to appoint an executive Board;

audit Board – comprising three acting and one deputising members;

Statutory auditors – elected in accordance with lawfully defined competencies, with a deputising statutory

auditor;

remuneration committee – comprising representatives of the majority shareholder, elected at a shareholders’

meeting.

STRUCTURAL ORgANS

CaixaBI’s organisational chart is set out below:


Board of Directors

Executive Board

Compliance Office

Internal Audit

Corporate Equity finance

Division

PrimaryEquities Market

Division

CorporateDebt finance

Division

Projectand Structured finance Division

financeand Structuring

Division

financialBrokerage Division

Planning, Risk Control and Organisation

Division

Operations Division

Accounts Division

InformationSystemsDivision

Syndicationand Sales

Medium Sized Companies

Division

ResearchOffice

Legal Affairs Office

human and Administrative

Resources

84

RESPONSIBILITIES

The board of directors delegates the authority to manage the company’s day-to-day affairs to the executive board

giving it (without prejudice to the faculty of taking upon itself any of the respective competencies) the authority

necessary to make decisions on all issues related to the bank’s performance of its activity, with the exception of

those issues which cannot be delegated under no. 4 of article 407 of the Commercial Companies Code.

The board of directors meets whenever called by its chairman and at least once every three months.

Resolutions are taken by an absolute majority of the members present or represented with the chairman, deputy

chairman or respective deputy having the casting vote.

Board of directors’ resolutions are only valid when more than half of its members are present or represented.

CAIXA – BANCO DE INVESTIMENTO, S.A. EQUITy INVESTMENTS

The bank’s corporate structure comprises adequate investments to provide for its business segmentation while

enabling it to leverage CgD group’s market intervention capacity, through its constant provision of quality, value

added services to its predominantly large and medium sized corporate customers. Information on CaixaBI’s equity

investments is set out below:

Caixa Capital (wholly owned subsidiary) – operating in the venture capital market and managing three funds;

Caixa Desenvolvimento SgPS (wholly owned subsidiary) – venture capital market operator specialising in managing

equity investments with high growth potential.


Caixa Desenvolvimento (100%)

Caixa Capital(100%)

CaixaBI Espanha(Branch)

SfE(Madeira)

Caixa – Banco de Investimento

85

USE Of NEw TEChNOLOgIES fOR INfORMATION DISCLOSURE

CaixaBI provides a considerable amount of information on its website at: www.caixabi.pt.

Our aim is to provide more and better information on the bank and relevant, up-to-date information to customers,

analysts and the general public.

In addition to the possibility of consulting information on the bank and its respective activity, the bank’s research

area provides access to historical and current information of relevance to investors.

ShARE CAPITAL AND DIVIDENDS POLICy

The bank’s share capital consists of eighty one million two hundred and fifty thousand subscribed and paid up

shares with a nominal value of one euro each.

Shares may be nominative or bearer, registered or not and are reciprocally convertible.

In share capital increases paid up in cash, shareholders will be given preference rights in subscribing for new

shares in proportion to those they already hold unless otherwise decided by the shareholders’ meeting in

conformity with lawfully imposed constraints.

The board of directors may increase the bank’s share capital on one or more occasions in the form of cash

payments until its share capital totals a maximum amount of two hundred and fifty million euros.

Under the terms of CaixaBI’s articles of association, the shareholders’ meeting shall pass a resolution on the

appropriation of annual profits, without being subject to any obligatory annual minimum limit.

The shareholders’ meeting may decide to pay shareholders an advance of profits during the course of the year

as permitted by law.

EXERCISINg Of VOTINg RIghTS AND ShAREhOLDER REPRESENTATION

Article 10 of CaixaBI’s articles of association states that all shareholders with one thousand or more shares registered

in their name in the company’s share ledgers are entitled to be present at shareholders’ meetings, with each block

of one thousand shares being entitled to one vote in accordance with no. 2 of article 14.


86

Shareholders with less than one thousand shares may form groups to make up this number and arrange to be

represented by any group member, to be indicated in a letter to the chairman of the shareholders’ meeting.

In the case of the joint ownership of shares, only one of the owners may participate in shareholders’ meetings,

and must be given a power of attorney by the others.

Shareholders may arrange to be represented at shareholders’ meetings by informing the chairman of the meeting,

by letter, prior to the meeting’s scheduled date.

Shareholders who are singular persons may arrange to be represented by other shareholders or other lawfully

entitled persons. Collective persons shall be represented by the person nominated for the purpose in question.

The chairman of the shareholders’ meeting shall call an extraordinary shareholders’ meeting whenever requested

by shareholders with the minimum number of shares required by law and who request the meeting in a letter

with a notarised signature providing precise information on the issues to be included on the agenda and justifying

the need for the meeting.

A shareholders’ meeting called at the request of shareholders shall only be held if applicants holding the minimum

number of shares required to call the meeting are present.

There are no limitations on voting rights, nor does any shareholder enjoy special rights and there is no knowledge

of any shareholders’ agreement.

MEMBERS Of ThE BOARD Of DIRECTORS AND INSPECTION BODIES

COMPOSITION

CaixaBI’s board of directors is made up as follows:

Chairman


Deputy Chairman


Chairman of Executive Board

Luís Lopes Laranjo


87

Executive Directors




Non-Executive Directors




CaixaBI’s audit board is made up as follows:

Chairman

hernâni da Costa Loureiro

Board Members


João Sousa Martins

Deputy

fernando Manuel Simões Nunes Lourenço

CaixaBI’s Statutory auditor is:

Acting

Deloitte & Associados, SROC represented by:


Deputising


The remuneration committee is made up as follows:

gerbanca, SgPS, S.A., represented by:

henrique Pereira Melo

Vitor José Lilaia da Silva

REMUNERATION

As stipulated in article 23 of CaixaBI’s articles of association, the Remuneration Committee sets the remuneration

of board members and inspection bodies.


88

OffICES hELD By MEMBERS Of ThE BOARD Of DIRECTORS AND OThER STATUTORy BODIES


corPorate officeS held Jorge humberto correia tomé





14-03-2008

14-04-2008

20-05-2009

20-03-2002

07-03-2002

22-07-2009

10-08-2007

10-01-2008

13-05-2009

30-04-2009

27-03-2009

Caixa – Banco de Investimento, S.A.

Credip – Instituição financeira de Crédito, S.A.


Trem – Aluguer de Material Circulante, ACE

Trem II – Aluguer de Material Circulante, ACE

Banco Caixa geral – Brasil, S.A.

Banco Comercial e de Investimentos, S.A.


Cimpor – Cimentos de Portugal, SgPS, S.A.

Parcaixa, SgPS, S.A.

Portugal Telecom, SgPS, S.A.

Statutory Body – Board of directors

Chairman

Chairman

Chairman

Chairman

Chairman

Deputy Chairman

Director

Director

Director

Director

Director

2008 / 2010

2007 / 2009

2009 / 2011

2000 / 2009

2001 / 2009

2009 / 2012

2007 / 2009

2008 / 2010

2009 / 2012

2008 / 2010

2009 / 2011

Caixa geral de Depósitos, S.A. 26-05-2008fomentinvest, SgPS, S.A.

Statutory Body – Supervision and Strategy Board

Member (Committee) 2006 / 2009

coMPany PoSition

corPorate officeS held José Joaquim Berberan e Santos ramalho

Caixa – Participações, SgPS, S.A.

14-03-2008

27-03-2009

20-05-2009

15-07-2008


Companhia de Seguros fidelidade – Mundial, S.A.


Império Bonança – Companhia de Seguros, S.A.


Deputy Chairman

Director

Director

Director

2008 / 2010

2009 / 2011

2009 / 2011

2008 / 2010

Caixa geral de Depósitos, S.A. 30-03-2007CgD Pensões – Sociedade gestora de fundos

de Pensões, S.A.

Statutory Body – Shareholders’ Meeting

Chairman 2007 / 2009

noMinated By terM of office

date ofnoMination

coMPany PoSition noMinated By terM of office

date ofnoMination


date ofnoMination


date ofnoMination

89 CORPORATE gOVERNANCE REPORT

Director

(Executive Board)

corPorate officeS held luís lopes laranjo

14-03-2008Caixa – Banco de Investimento, S.A.


2008 / 2010

Director

(Executive Board)

corPorate officeS held antónio carlos Bastos Martins



2008 / 2010

corPorate officeS held gonçalo Vaz gago da câmara de Medeiros Botelho

14-03-2008

12-03-2004

22-07-2009


Corporación Interamericana para el

financiamento de Infraestructura (CIfI) S.A.

Banco Caixa geral – Brasil, S.A.


Director

(Executive Board)

Director

(Non-Executive)

Director

2008 / 2010

2009 / 2012

corPorate officeS held Jorge telmo Maria freire cardoso

14-03-2008

31-01-2008


ZON – Serviço de Telecomunicações e Multimédia,

SgPS, S.A.


Director

(Executive Board)

Director

(Non-Executive)

2008 / 2010

2007 / 2009


date ofnoMination


date ofnoMination


date ofnoMination


date ofnoMination


corPorate officeS held José Pedro cabral dos Santos



Director

(Non-Executive)

2008 / 2010


date ofnoMination

corPorate officeS held rui Manuel do Vale Jordão gonçalves Soares

Caixa Capital – Sociedade de

Capital de Risco, S.A.

02-02-2006

14-03-2008

09-12-2008

16-04-2008

03-12-2008

03-12-2008

Banco Caixa geral, S.A.


Inmobiliaria Caixa geral, S.L.

La Seda de Barcelona

helios I hyperion Energy Investments, S.L.

helios II hyperion Energy Investments, S.L.


Director

(Executive Board)

Director

(Non-Executive)

Chairman

Director

Director

Director

2008 / 2009

2008 / 2010

2008 / 2009

2006 / 2010


date ofnoMination

noMinated By date of noMination

PoSition coMPany terM of office

91 Corporate GovernanCe report

Corporate offiCes Held José Manuel Carreiras Carrilho

Caixa Capital – Soc. de Capital de risco, S.a.






14-03-2008

12-03-2008

12-03-2008

14-03-2007

19-03-2009

19-03-2009

19-03-2009

19-03-2009

Caixa - Banco de Investimento, S.a.


Caixa Desenvolvimento, SGpS, S.a.

a. Silva & Silva . Imobiliária e Serviços, S.a.

pp3e – projectos e participações em

empreendimentos de energia eléctrica, S.a.

visabeira Imobiliária, SGpS, S.a.

visabeira Indústria, SGpS, S.a.

visabeira participações Financeiras, SGpS, S.a.

visabeira turismo, SGpS, S.a.

statutory Body – Board of directors

Director

(non-executive)

Director

Director

Director

Director

Director

Director

Director

Director

2008 / 2010

2008 / 2010

2008 / 2010

2007 / 2010

2007 / 2009

2009

2009

2009

2009

statutory Body – shareholders’ Meeting





02-01-2007

20-03-2009

20-03-2009

resigned on

23-04-2009

16-03-2007

31-01-2007

Grupo pestana pousadas – Investimento turístico, S.a.

prado – Cartolinas da Lousã, S.a.

prado Karton – Companhia de Cartão, S.a.

vaa – vista alegre atlantis, SGpS, S.a.

Companhia de papel do prado, S.a.

eurofrozen – Ind. e Comércio de produtos

alimentares, S.a.

statutory Body – remuneration Committee

Member

Member

Member

Member

officer

officer

2007 / 2010

2009 / 2011

2009 / 2011

2007 / 2009

2007 / 2010

resigned on

25-03-2009

Sobreovento – energias alternativas, Lda.

statutory Body – Managing partner

Managing partner

Caixa Geral de Depósitos, S.a.


Up to

21-10-2009

02-01-2007

SoDap – Soc. de Desenv. agricultura e pescas

SGpS, S.a.

Grupo pestana pousadas – Investimento turístico, S.a.

Chairman

Deputy Chairman 2007 / 2010

NoMiNated By date of NoMiNatioN

positioN CoMpaNy terM of offiCe








corPorate officeS held José lourenço Soares


31-03-2009

14-03-2008

23-05-2009

27-03-2009

07-02-2008

20-05-2009

17-06-2009

02-07-2009

27-03-2009

10-01-2008

Bandeirantes, SgPS, S.A.



Caixa Leasing e factoring – IfIC, S.A.

Caixa Seguros e Saúde, SgPS, S.A.


Parbanca, SgPS, S.A.

Partang, SgPS, S.A.

Companhia de Seguros fidelidade – Mundial, S.A.



Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Deputy Chairman

Secretary

2009 / 2011

2008 / 2010

2009 / 2011

2009 / 2011

2008 / 2010

2009 / 2011

2009 / 2011

2009 / 2011

2009 / 2011

2008 / 2010

12-11-2008BPN – Banco Português de Negócios, S.A.


Director 2008 / 2011

corPorate officeS held José filipe de Sousa Meira

Companhia de Seguros

fidelidade – Mundial, S.A.

28-03-2008

28-03-2008

27-03-2009

26-03-2007

26-03-2007

28-03-2008

28-03-2008

09-03-2007

14-03-2008

24-07-2008

Cares – Companhia de Seguros, S.A.

Cares – Rh – Companhia de Assistência

e Representação de Seguros, S.A.

Cetra – Centro Técnico de Reparação Automóvel, S.A.

EPS – gestão de Sistemas de Saúde, S.A.

fidelidade – Mundial, Sociedade de gestão e

Investimento Imobiliário, S.A.

gEP – gestão de Peritagens Automóveis, S.A.

Império Bonança – Companhia de Seguros, S.A.

Multicare – Seguros de Saúde, S.A.


Cares Multiassistance, S.A.


Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Secretary

Secretary

2008 / 2010

2008 / 2010

2009 / 2011

2007 / 2009

2007 / 2009

2008 / 2010

2008 / 2010

2007 / 2009

2008 / 2010

2008 / 2010

27-03-2009Via Directa – Companhia de Seguros, S.A.


Director 2009 / 2011


date ofnoMination


date ofnoMination


date ofnoMination


date ofnoMination


corPorate officeS held Salomão Jorge Barbosa ribeiro



07-02-2008

18-11-2009

14-04-2009

02-01-2007

07-02-2008

14-03-2008

17-07-2009

14-03-2008

29-05-2009

23-02-2006

20-05-2009

17-06-2009

07-02-2008

31-03-2009

31-03-2009

14-03-2008

07-02-2008

28-03-2008

28-03-2008

30-03-2007

31-03-2009

07-02-2008

22-01-2009

Caixa – gestão de Activos, SgPS, S.A.

Caixa – Imobiliário, S.A.

Caixanet – Telemática e Comunicações, S.A.

Caixatec – Tecnologias de Comunicação, S.A.

fundimo – Soc. gestora de fundos Inv. Imobiliário, S.A.

gestínsua – Aquis. Alien. Património Imobiliário

e Mobiliário, S.A.

Imocaixa – gestão Imobiliária, S.A.

Sanjimo – Sociedade Imobiliária, S.A.


Caixaweb, SgPS, S.A. (is being liquidated)


Parbanca, SgPS, S.A.

Sogrupo IV – gestão de Imóveis, ACE

A Promotora, Sociedade de Capital de Risco, S.A.

Banco Comercial Atlântico, SARL


Caixagest – Técnicas de gestão de fundos, S.A.

Cares – Companhia de Seguros, S.A.

Cares – Rh – Companhia de Assistência

e Representação de Seguros, S.A.

CgD Pensões – Sociedade gestora de fundos

de Pensões

garantia – Companhia de Seguros de Cabo Verde, SARL

Sogrupo – Serviços Administrativos, ACE

Sogrupo – Sistemas de Informação, ACE


Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Chairman

Deputy Chairman

Deputy Chairman

Deputy Chairman

Deputy Chairman

Deputy Chairman

Secretary

Secretary

Secretary

Secretary

Secretary

Secretary

Secretary

Secretary

Secretary

Secretary

2008 / 2010

2009 / 2011

2009 / 2011

2007 / 2009

2008 / 2010

2008 / 2011

2009 / 2011

2008 / 2011

2009 / 2011

2006 / 2009

2009 / 2011

2009 / 2011

2008 / 2010

2009 / 2011

2009 / 2011

2008 / 2010

2008 / 2010

2008 / 2010

2008 / 2010

2007 / 2009

2009 / 2011

2008 / 2010

2009 / 2011

31-03-2009

14-12-2006

Bandeirantes, SgPS, S.A.

wolfpart, SgPS, S.A.


Director

Director

2009 / 2011

2006 / 2009

23-02-2006

05-05-2008

Caixaweb, SgPS, S.A. (is being liquidated)

Culturgest – gestão de Espaços Culturais, S.A.

(is being liquidated)

Statutory Body – liquidation committee

Officer

Officer

2006 / 2009

2008 / 2009

Banco Caixa geral Totta de Angola, S.A.

Statutory Body – audit Board

Officer (Deputising) 02-07-2009 2009 / 2011


date ofnoMination


date ofnoMination






corPorate officeS held Salomão Jorge Barbosa ribeiro (cont.)

Caixa - Participações, SgPS, S.A.

Caixa Seguros, SgPS, S.A.



04-10-2006

28-06-2007

07-02-2008

07-02-2008

Imocaixa – gestão Imobiliária, S.A.

Multicare – Seguros de Saúde, S.A.



Statutory Body – remuneration committee

Member

Member

Member

Member

2009 / 2011

2007 / 2009

2008 / 2010

2008 / 2009

corPorate officeS held hernâni da costa loureiro

14-03-2008

20-05-2009



Real Vida Seguros, S.A.


Chairman

Chairman

Chairman

2008 / 2011

2009 / 2011

Lexpenta – Sociedade Imobiliária, Lda.

Statutory Body – Managing Partner

Managing Partner

10-10-2008

23-03-2007

23-12-2008

30-03-2007

10-08-2007

Banco Internacional de São Tomé e Príncipe, SARL

Esegur – Empresa de Segurança, S.A.


CgD Pensões – Sociedade gestora de fundos

de Pensões, S.A.

global – Companhia de Seguros, S.A.

global Vida – Companhia de Seguros de Vida, S.A.

Banco Comercial e de Investimentos, S.A.


Chairman

Chairman

Chairman

Deputy Chairman

Deputy Chairman

Deputy Chairman

Secretary

2008 / 2010

2007 / 2009

2008 / 2010

2007 / 2009

2007 / 2009













corPorate officeS held antónio José nascimento ribeiro

22-12-2008

02-07-2009

14-03-2008

20-05-2009

28-05-2009

Sumol + Compal, S.A.

Banco Caixa geral Totta de Angola, S.A.



VAA – Vista Alegre Atlantis, SgPS, S.A.


Chairman

Deputy Chairman

Officer

Officer

Officer

2008 / 2010

2009 / 2011

2008 / 2010

2009 / 2011

2007 / 2009

corPorate officeS held João de Sousa Martins

14-03-2008

20-05-2009




Officer

Officer

2008 / 2010

2009 / 2011





97 SOCIAL RESPONSIBILITy AND SUSTAINABILITy REPORT

Social responsibility is understood and practised in Caixa – Banco de Investimento (CaixaBI) as being transversal

to its activity as a whole. The characteristics of a socially responsible organisation, as adopted by CaixaBI, are as

follows:

An involvement based on ethical business values;

A desire to achieve continuous progress;

Understanding and acceptance of the company’s interdependence with its environmental surrounds;

Long term vision based on responsibilities to future generations;

Principle of prudence as a decision-making rule;

Regular dialogue and consultation with all parties involved, including the most sensitive issues;

A desire to inform linked with transparency;

Capacity to accept liability for its decisions and responsibility for the direct and indirect consequences of its

activity.

The sustainable development principle governs the bank’s financial performance and is reflected in its concern to

promote business guidelines to safeguard correlated social and environmental effects. Issues such as the protection

of a clean environment, good natural resources and human resources management, linked with quality of life,

form part of the notion of sustainability put into effect by CaixaBI on an interdisciplinary basis.

CaixaBI was involved in several operations, in 2009, to which reference should be made on account of their di-

mension and contribution to sustainable environment:

Iberwind: refinancing of Magnum Capital’s windfarm portfolio by project bonds (a pioneering financing model

in Portugal);

Braga hospital: construction and clinical management of the new Braga hospital, led by Somague, José de Melo

group and Edifer, for a period of 30 years;

Loures hospital: construction and clinical management of the new Loures hospital, led by Mota-Engil and

Espírito Santo Saúde for a period of 30 years;

A 10% equity share in Mwh – gestão de Recursos Naturais, S.A., a company acting as an umbrella organisation

for a series of photovoltaic projects previously owned by fomentinvest Energia, New Energy fund, fINf – fomento,

Inovação e Energia and fCR grupo CgD – Caixa Capital. This required an investment of €1.3 million, divided

up between capital and partners’ loans of which €873,109 were paid up in 2009;

98

Pinewells, S.A. – a share capital increase of €3 million in proportion to currently existing investments with fCR

Energias Renováveis making an additional investment of €600,000;

Smartwatt – Eficiência Energética e Microgeração, S.A. – Increase in partners’ loans to Smartwatt, under a

partners’ loans agreement of €50 thousand, entered into on 30 September 2008 and increasing the amount

of the investment to €100 thousand.

Reference should also be made to the following operations in progress at close 2010:

Todos-os-Santos hospital: financial advisory services to Teixeira Duarte consortium;

Vila franca hospital: potential financier, with financial close scheduled for April 2010.

ThE ThREE PS OR TRIPLE BOTTOM LINE

Agenda 21, the sustainability plan for the 21st century adopted at the Rio de Janeiro summit of 1992, established

three sustainable development areas – economic, environmental and social - also referred to as the triple bottom

line or three Ps – People, Planet, Profit.

Owing to society’s growing awareness of this issue, CaixaBI was one of the first institutions to stress the importance

of the three referred to areas for the community in which it operates: the economic axis represents wealth creation

for all through durable production and consumption; the ecological axis refers to resource conservation and

management; and the social axis reflects equity and the participation of all social groups.

CaixaBI considers that responsibility for each of the above dimensions is indissoluble from good business practice.

ECONOMIC

The economic dimension of sustainability is measured by organisations’ impacts on the economic conditions of

its interested parties and in the economic system at all levels, complying with a long term vision to embrace the

disciplines of the environment, social aspects and human resources.

This interdisciplinary nature of economic performance embraces all aspects of economic interactions which may

exist between an organisation and its interested parties, including the income traditionally recognised in financial

balance sheets. Such financial balance sheets make priority reference to indicators related with a company’s

profitability because they are geared to providing information to managers and shareholders.


99

Sustainable development indicators, however, cater for other priorities and should permit the implications of

corporate activity in terms of the well-being of its stakeholders – shareholders, customers, suppliers, employees,

government, banks and other social partners – to be perceived.

CaixaBI accordingly prepares its activity plans and endeavours to execute them in line with a sustainable development

strategy, reconciling profit ratios required by shareholders, with the need to energise the business environment

consisting of customers, therefore impacting the positive effects of its economic and financial health on the

community. The bank is, therefore, in search of new economic efficiency contexts, conscious of the fact that its

corporate mission also involves sustained value creation for its stakeholders, provided by its offer of products and

financial services of recognised quality, supported by its membership of Caixa geral de Depósitos group as the

biggest Portuguese financial group enjoying the best long term, domestic, financial system ratings - AA- from

fitch, Aa2 from Moody´s and A+ from Standard & Poor’s.

Subject to such behavioural parameters, CaixaBI has succeeded in recognising and exceeding its customers’

expectations, improving performance levels and quality, acting as a benchmark market operator owing to the

difference of its proposals which are based on ethical standards and responsibility, consolidating customers’ faith

in CaixaBI.

ENVIRONMENTAL

Although the financial sector is not an area of activity which entails the greatest environmental risks, its possible

intervention role must not be underestimated, in terms of internal operations - power consumption, water, paper,

consumables, fuel, recycling, materials re-use, waste reduction, supplier selection, are, inter alia, several of the

principal direct environmental impacts to be safeguarded.

In addition to such direct intervention, the financial sector’s role, however, is fundamental as from the time when

developers projects with an environmental impact apply for advisory services and / or finance.

In this context, CaixaBI’s activity, as an entity supplying credit to companies and investors in the financial market

has a indirect environmental impact.

The introduction of environmental criteria and assessment of environmental risks in terms of project analyses and

companies eligible for support, represent a fundamental contribution to environmental protection.

In procedures involving the securing and structuring of operations (either corporate or project finance) the bank

is concerned to assess the environmental impact of the activity of its corporate customers and reflect the analysis

of environmental effects in its corporate assessment and financing charges.

CaixaBI has made important investments in projects in the environmental area, namely wind farms, hydroelectric

power plants and other renewable energy sources, waste processing and basic sanitation, which projects have an


100

enormous environmental impact, involving complexity at all levels, including approvals and environmental moni-

toring. The bank, in conjunction with renewable energy developers, is committed to the successful achievement

of the objectives of government authorities in achieving 12% of installed electricity generation from renewable

energy sources (excluding large hydroelectric power plants) by the end of the decade.

SOCIAL

The social dimension is assessed by an analysis of an organisation’s impact on its interested parties – employees,

suppliers, consumers / customers, community, government and society in general – locally, nationally and globally.

A socially responsible company, therefore, encourages personal development through training and regularly

monitoring its employees’ health.

CaixaBI considers that it has immediate responsibility for providing its employees with a healthy working

environment – providing them with a medical plan to include their direct family members (spouses and

children) and monitoring the health of its employees in the workplace, arranging for respective annual check-ups –

and their professional career development in approving a multiplicity of training actions, ranging from attendance

at seminars to postgraduate courses and MBAs. The bank also provides its employees with a complementary

retirement plan.

In terms of the social dimension, CaixaBI publishes its Corporate governance Report, adopting a totally transpa-

rent attitude in its relations with all stakeholders. The bank has published internal regulations designed to ensure

the high ethical standards of its employees, in addition to preventative and inspection procedures. It has a

Compliance Office to verify compliance with standards and regulations in force and a code of conduct, binding

upon all employees, for fraud prevention. CaixaBI has also published an anti-money laundering handbook providing

for collaboration with the supervisory authorities.

As a CgD group member, the bank is also directly and indirectly involved in diverse sponsorships, particularly

involving the organisation of artistic events in the Culturgest auditorium and helping to promote national cultural

heritage as a basis for providing continuity to a diverse cultural heritage as a catalysing force in consolidating a

community identity.


102 fINANCIAL STATEMENTS

StateMent of conSolidated financial PoSition at 31 deceMBer 2009 and 2008 (amounts in euros)

2009

net aMount

2008

noteS

5

6

7

8

9

10

11

12

13

14

15

15

16

aMount Before iMPairMent and

aMortiSation (1)

190,010

2,082,998

24,401,981

727,408,724

225,920,811

936,919

916,569,377

22,723,790

4,429,245

657,900

19,394,538

54,982,041

1,999,698,334

iMPairMent and aMortiSation

(2)

37,938,559

9,317,030

3,979,309

17,956,869

69,191,767

net aMount

3=1-2

190,010

2,082,998

24,401,981

727,408,724

225,920,811

936,919

-

878,630,819

-

-

13,406,759

449,936

-

657,900

19,394,538

37,025,172

1,930,506,567

1,164,400

16,885,360

8,563,604

758,216,409

163,095,441

461,812

-

865,410,208

-

-

13,527,455

382,358

3,487,487

828,868

5,215,771

59,725,310

1,896,964,483

aSSetS

Cash and cash equivalents with central banks

Cash assets with other credit institutions

Loans and advances to credit institutions


financial assets recognised at fair value through profit or loss

Available for sale financial assets

Positive revaluation of hedge derivatives

Investments to be held to maturity

Loans and advances to customers

Non-current assets held for sale

Investment properties

Other tangible assets

Intangible assets

Investments in associated companies

Current tax assets

Deferred tax assets

Other assets

total assets

103

noteS

17

18

10

10

19

15

15

20

21

21

22

22

22

23

2009

1,108,928,963

139,124,974

-

300,272,162

1,703,334

-

14,129,854

18,412,651

1,112,807

-

88,248,790

1,671,933,536

81,250,000

-

-

(5,999,453)

171,472

133,207,396

45,606,639

-

4,336,978

258,573,031

1,930,506,567

2008

1,237,631,270

119,162,219

-

260,363,729

1,483,423

-

12,313,109

2,609,956

1,426,821

-

71,535,649

1,706,526,176

81,250,000

-

-

(5,999,453)

(45,791,987)

126,531,980

30,242,185

-

4,205,582

190,438,307

1,896,964,483

liaBilitieS

Credit institutions’ and central banks’ resources

Customer resources and other loans

Debt securities

financial liabilities recognised at fair value through profit or loss

Negative revaluation of hedge derivatives

Non-current liabilities held for sale

Provisions for other risks

Current tax liabilities

Deferred tax liabilities

Other subordinated liabilities

Other liabilities

total liabilities

caPital

Capital

Share premium

Other equity capital instruments

Treasury stock

fair value reserves

Other reserves and retained earnings

Income for period

Advance of dividends

Minority shareholders’ interests

total Shareholder’s equity

total liabilities and Shareholders’ equity


StateMent of conSolidated financial PoSition at 31 deceMBer 2009 and 2008 (amounts in euros) cont.


conSolidated incoMe StateMentS for the yearS ended 31 deceMBer 2009 and 2008 (amounts in euros)

noteS

24

24

25

25

26

27

28

29

12 e 13

19

30

30

14

15

15

23

2009

255,319,980

(220,022,737)

60,896

35,358,139

93,733,830

(31,200,237)

17,654,478

4,783,565

120,329,775

(17,560,939)

(10,460,994)

(1,156,215)

(1,816,745)

(23,575,302)

(8,928,234)

-

56,831,345

(26,099,296)

15,005,986

(11,093,310)

45,738,036

-

(131,397)

45,606,639

76,592,000

0,60

2008

294,052,218

(269,439,897)

156,263

24,768,584

67,228,608

(7,109,912)

(4,444,442)

9,776,887

90,219,724

(16,248,555)

(9,719,534)

(1,037,817)

(9,245,120)

(5,779,162)

(3,746,612)

(2,093,292)

42,349,632

(12,969,546)

612,948

(12,356,599)

29,993,033

-

249,152

30,242,185

76,592,000

0,39

Interest and similar income

Interest and similar costs

Income from equity instruments

net interest income including income from equity instruments

Income from services and commissions

Costs of services and commissions


Other operating income


Employee costs

Other administrative expenses

Depreciation and amortisation

Provisions net of recoveries and cancellations

Credit impairment net of reversals and recoveries

Impairment of other assets net of reversals

and recoveries

Income from associated companies

income before tax and minority shareholders’ interests

Income tax

Current

Deferret

consolidated income prior to minority shareholders’ interests

of which

Income from discontinued operations

Minority shareholders’ interests

net income for period

Shares in circulation

earnings per share


conSolidated caSh floW StateMentS for the yearS ended 31 deceMBer 2009 and 2008 (amounts in euros)

2009 2008

352,275,687

(223,645,871)

(28,550,819)

(10,125,633)

3,020,719

92,974,084

45,904,633

(17,957,652)

(15,796,981)

(40,248,578)

17,028,240

(11,070,339)

40,128,344

(128,846,630)

19,834,959

(12,814,802)

(81,698,129)

205,616

(1,208,969)

122,601

-

8,609,873

60,896

7,584,402

(23,566,769)

(23,566,769)

(15,776,751)

18,049,760

2,273,009

360,220,087

(271,460,991)

(25,234,636)

(12,664,511)

1,727,878

52,587,827

(133,979,479)

(103,831,606)

464,019

67,806,913

81,927,458

(87,612,694)

202,796,308

(158,417,787)

40,524,813

(63,053,097)

21,850,238

(13,174,628)

(3,475,953)

147,508

(700,000)

42,426,257

156,263

38,554,075

(14,140,062)

(14,140,062)

11,239,385

6,810,375

18,049,760

cash flows generated by operating activities

Interest and commissions received

Interest and commissions paid

Payments to employees and suppliers

Payment of income tax

Other income

operating income prior to changes in operating assets

(Increases) decreases in operating assets





Other assets

(Increases) decreases in operating liabilities

financial liabilities held for trading

Other credit institutions’ resources

Customer resources

Other liabilities

net cash from operating activities

cash flows generated by investing activities

Acquisition of tangible and intangible assets

Disposal of tangible and intangible assets

Investments in subsidiaries, associated companies and joint enterprises

Disinvestments in subsidiaries, associated companies and joint enterprises

Dividends received

Net cash from investing activities

cash flows generated by financing activities

Payment of dividends

net cash from financing activities

increse (decrease) net of cash and equivalents

Cash and equivalents at beginning of period

Cash and equivalents at end of period


StateMent of changeS to conSolidated ShareholderS’ equity for the yearS ended 31 deceMBer 2009 and 2008 (amounts in euros)

other reSerVeSand retained earningS

Balances at 31

december 2007

Distribution of profit

for 2007

Distribution of dividends

by the bank

Transfer to reserves

and retained earnings

Consolidated

comprehensive

income for 2008

Balances at 31

december 2008


for 2008


by the bank



Other

Consolidated

comprehensive

income for 2008

Balances at 31

december 2009

81,250,000

-

-

-

81,250,000

-

-

-

-

81,250,000

caPital

(254,878)

-

-

(45,537,109)

(45,791,987)

-

-

-

45,963,459

171,472

fair Value

reSerVeS

(5,999,453)

-

-

-

(5,999,453)

-

-

-

-

(5,999,453)

treaSuryStocK

103,630,446

859,938

22,041,596

-

126,531,980

1,433,231

5,242,185

-

-

133,207,396

61,066,036

-

24,634,049

-

85,700,085

-

(1,008,287)

-

-

84,691,798

42,564,410

859,938

(2,592,453)

-

40,831,895

1,433,231

6,250,472

-

-

48,515,598

total reSerVeS retainedearningS

220,122,445

(14,140,062)

-

(15,544,076)

190,438,307

(23,566,769)

-

(1)

91,701,495

258,573,031

total

37,041,596

(15,000,000)

(22,041,596)

30,242,185

30,242,185

(25,000,000)

(5,242,185)

-

45,606,639

45,606,639

Profitfor Period

4,454,734

-

-

(249,152)

4,205,582

-

-

(1)

131,397

4,336,978

Minority intereStS


conSolidated coMPrehenSiVe incoMe StateMentS for the yearS ended 31 deceMBer 2009 and 2008 (amounts in euros)

2009

attriButaBleto the BanK’SShareholderS

45,606,639

17,442,954

(1,460,718)

30,962,089

(1,015,058)

34,192

-

45,963,459

91,570,098

attriButaBleto Minority

intereStS

131,397

-

-

-

-

-

-

-

131,397

total

45,738,036

17,442,954

(1,460,718)

30,962,089

(1,015,058)

34,192

-

45,963,459

91,701,495

2008

30,242,185

(49,428,141)

3,821,984

(3,574,790)

(22,777)

3,666,616

-

(45,537,108)

(15,294,923)

(249,152)

-

-

-

-

-

-

-

(249,152)

29,993,033

(49,428,141)

3,821,984

(3,574,790)

(22,777)

3,666,616

-

(45,537,108)

(15,544,075)

consolidated income

Exchange rate translation differences

Revaluation reserves for available for sale financial assets

Revaluation of available for sale financial assets

fiscal impact

Transfer to income statement on disposal

fiscal impact

Transfer to income statement for recognition of impairment in period

fiscal impact

unrecognised income in income statement

consolidated comprehensive income

consolidated income




fiscal impact


fiscal impact

Transfer to income statement for recognition of impairment in period

fiscal impact


consolidated comprehensive income

attriButaBleto the BanK’SShareholderS

attriButaBleto Minority

intereStS

total


StateMent of SeParate financial PoSition at 31 deceMBer 2009 and 2008 (amounts in euros)

2009 2008

4

5

6

6

8

9

10

7

11

12

13

14

14

15

189,010

2,073,210

676,908,100

29,718,234

171,383,953

22,309,842

916,569,377

-

-

936,919

-

-

22,462,004

4,427,798

75,575,724

657,900

18,313,138

28,540,757

1,970,065,966

-

-

-

-

-

-

24,709,087

-

-

-

-

-

9,155,159

3,977,862

-

-

-

4,315,936

42,158,044

noteS aMount Before ProViSionS,

iMPairMent and aMortiSation (1)

ProViSionS, iMPairMent and aMortiSation (2)

net aMount

3=1-2

189,010

2,073,210

676,908,100

29,718,234

171,383,953

22,309,842

891,860,290

-

-

936,919

-

-

13,306,844

449,936

75,575,724

657,900

18,313,138

24,224,821

1,927,907,922

1,163,400

16,840,315

653,341,750

59,655,602

101,814,896

7,863,177

899,724,067

-

-

461,812

-

-

13,449,090

382,358

149,859,969

657,900

4,663,208

28,301,814

1,938,179,358

aSSetS



financial assets held for trading

Other financial assets recognised at fair value

through profit or loss




Investments held to maturity

Assets with repurchase agreements

hedge derivatives

Non-current assets held for sale

Investment properties


Intangible assets

Investments in subsidiaries, associated

companies and joint enterprises

Current tax assets

Deferred tax assets

Other assets

total assets


StateMent of SeParate financial PoSition at 31 deceMBer 2009 and 2008 (amounts in euros) cont.

2008 2009 noteS

7

16

17

7

18

14

14

19

20

20

21

21

21

-

300,272,162

1,108,928,963

146,444,097

-

-

1,703,334

-

26,078,265

17,886,487

467,900

-

-

99,689,446

1,701,470,654

81,250,000

-

-

(5,999,453)

(2,265,827)

111,483,524

41,969,026

-

226,437,269

1,927,907,922

-

260,363,729

1,237,631,270

130,885,462

-

-

1,483,423

-

13,857,609

2,466,548

462,949

-

-

87,644,563

1,734,795,553

81,250,000

-

-

(5,999,453)

(6,917,034)

102,539,148

32,511,144

-

203,383,805

1,938,179,358

liaBilitieS

Central banks’ resources




Debt securities

financial liabilities associated with transferred assets

hedge derivatives

Non-current liabilities held for sale

Provisions



Equity capital Instruments

Other subordinated liabilities

Other liabilities

total liabilities

ShareholderS’ equity

Capital

Share premiums

Other equity instruments

(Treasury stock)

Revaluation reserves


Net income for period

(Advance of dividends)

total Shareholders’ equity

total liabilities and Shareholders’ equity


SeParate caSh floW StateMentS for the yearS ended 31 deceMBer 2009 and 2008 (amounts in euros)

2009

254,768,509

(220,120,328)

34,648,181

60,896

89,433,399

(31,187,540)

10,030,213

3,762,122

441,970

16,828

1,836,734

109,042,803

(15,607,742)

(9,662,253)

(1,102,312)

(12,220,656)

(16,979,696)

(81,175)

(299,047)

53,089,922

(25,279,081)

14,158,184

41,969,026

-

41,969,026

76,592,000

0.55

2008

294,625,191

(269,657,984)

24,967,206

150,035

64,932,086

(7,098,704)

(6,986,614)

85,952

67,269

9,107

959,882

77,086,217

(15,310,984)

(8,602,307)

(995,033)

(1,372,919)

(6,309,684)

(57,488)

-

44,437,802

(12,644,762)

718,104

32,511,144

-

32,511,144

76,592,000

0.42

noteS

22

22

23

24

24

25

26

27

28

29

30

11 e 12

18

18

18

18

14

14



net interest income




Income from assets and liabilities recognised at fair value through profit or loss (net)

Income from available for sale financial assets (net)

Income from foreign exchange revaluations (net)

Income from the disposal of other assets



Employee costs

general administrative expenses

Depreciation and amortisation


Value adjustments associated with loans and advances to customers

and amounts receivable from other debtors (net of recoveries and cancellations)

Impairment of other assets net of reversals and recoveries

Impairment of other financial assets net of reversals and recoveries

income before taxation

Tax

Current

Deferred

net income

Of which

net income from discontinued operations


Shares in circulation

earnings per share


SeParate caSh floW StateMentS for the yearS ended 31 deceMBer 2009 and 2008 (amounts in euros)

2009 2008

347,124,024

(223,440,201)

(26,107,368)

(9,859,141)

2,511,002

90,228,316

15,926,124

(61,155,728)

(14,404,981)

(12,748,578)

7,125,144

(65,258,019)

40,128,344

(128,846,630)

15,432,173

(17,193,234)

(90,479,347)

(65,509,050)

(1,131,285)

120,469

-

74,284,245

60,896

73,334,325

(23,566,769)

(23,566,769)

(15,741,495)

18,003,715

2,262,220

358,650,731

(271,481,774)

(23,152,837)

(12,406,735)

2,056,542

53,665,927

(144,161,001)

(75,944,236)

595,519

83,346,913

79,609,028

(56,553,777)

202,796,308

(158,417,787)

50,311,301

(49,582,928)

45,106,894

42,219,044

(3,468,007)

141,120

(13,700,000)

-

150,035

(16,876,852)

(14,140,062)

(14,140,062)

11,202,130

6,801,585

18,003,715

cash flows generated by operating activities

Interest and commissions received

Interest and commissions paid

Payments to employees and suppliers

Payment of income tax

Other income

operating income prior to changes in operating assets

(Increases) decreases in operating assets





Other assets

(Increases) decreases in operating liabilities



Customer resources

Other liabilities

net cash from operating activities

cash flows generated by investing activities

Acquisitions of tangible and intangible assets

Disposals of tangible and intangible assets

Investments in subsidiaries, associated companies and joint enterprises

Disinvestments in subsidiaries, associated companies and joint enterprises

Dividends received

net cash from investing activities

cash flows generated by financing activities

Payment of dividends

net cash from financing activities

increase (decrease) net of cash and equivalents

Cash and equivalents at beginning of period

Cash and equivalents at end of period


StateMent of changeS to SeParate ShareholderS’ equity for the yearS ended 31 deceMBer 2009 and 2008 (amounts in euros)

other reSerVeSand retained earningS

caPital reVa-luation

reSerVeS

treaSuryStocK

total Profitfor

Period

Balances at 31

december 2007


for 2007




Comprehensive income

for 2008

Balances at 31

december 2008


for 2008




Comprehensive income

for 2008

Balances at 31

december 2009

noteS

81,250,000

-

-

-

81,250,000

-

-

-

81,250,000

3,620,388

-

-

(10,537,422)

(6,917,034)

-

-

4,651,207

(2,265,827)

(5,999,453)

-

-

-

(5,999,453)

-

-

-

(5,999,453)

21

8

21

8

total freereSerVe

retainedearningS

legalreSerVe

29,740,030

-

3,595,802

-

33,335,832

-

3,251,114

-

36,586,946

80,721,187

859,938

20,958,023

-

102,539,148

1,433,231

7,511,144

-

111,483,524

41,879,833

859,938

(111,459)

-

42,628,312

1,433,231

100,846

-

44,162,389

9,101,324

-

17,473,679

-

26,575,004

-

4,159,184

-

30,734,189

35,958,023

(15,000,000)

(20,958,023)

32,511,144

32,511,144

(25,000,000)

(7,511,144)

41,969,026

41,969,026

195,550,145

(14,140,062)

-

(21,973,722)

203,383,805

(23,566,769)

-

46,620,233

226,437,269


SeParate coMPrehenSiVe incoMe StateMent for the yearS ended 31 deceMBer 2009 and 2008 (amounts in euros)

2009 2008

41,969,026

-

10,889,105

(3,490,834)

(3,762,122)

1,015,058

4,651,207

46,620,233

32,511,144

-

(14,422,580)

3,799,206

85,952

-

(10,537,422)

21,973,722

Separate income




fiscal impact


fiscal impact


Separate comprehensive income

115 NOTES TO ThE CONSOLIDATED STATEMENTS

1. INTRODUCTORy NOTE

Caixa – Banco de Investimento, S.A. (“bank”) was formed by a public deed of 12 November 1987, having

absorbed all assets and liabilities of the Portuguese branch of Manufacturers hanover Trust Company, in

conformity with the terms of ministerial order no. 865-A/87 of 6 November, jointly issued by the Presidency of the

Council of Ministers and Ministry of finance.

The bank is Caixa geral de Depósitos group’s specialised investment banking business arm, which includes

activities such as fixed and variable corporate debt finance, equity, financial advisory, structured finance, project

finance, brokerage, research and venture capital. Its operations are performed by a branch office in Lisbon and

another in Porto, an offshore branch in Madeira and a branch in Spain.

The bank also has direct and indirect investments in the share capital of several companies in which it has majority

shareholdings. These companies comprise Caixa – Banco de Investimento (group).

As referred to in Note 21, the majority of the bank’s share capital is owned by Caixa geral de Depósitos group

company gerbanca, SgPS, S.A.

The consolidated financial statements at 31 December 2009 were approved by the board of directors on 22

January 2010.

The bank’s and its subsidiaries’ and associated companies’ financial statements at 31 December 2009 still require

the approval of their respective shareholders’ meetings. The board of directors considers, however, that the said

financial statements will be approved without significant alterations.

2. ACCOUNTINg POLICIES

2.1. PRESENTATION BASES

The consolidated financial statements at 31 December 2009 were prepared on the basis of the International

financial Reporting Standards (IfRS) as adopted in the European Union, in line with European Parliament and

Council Regulation (CE) 1606/2002 of 19 July and the dispositions of Decree Law 35/2005 of 17 february.

116

2.2. CONSOLIDATION PRINCIPLES

The consolidated financial statements include the accounts of the bank and the entities directly and indirectly

controlled by the group (Note 4).

In terms of associated companies, “subsidiaries” are companies over whose current management the bank has

effective control with the aim of obtaining economic benefit from their operations. Control usually takes the

form of more than 50% of share capital or voting rights. In addition, as a result of the application of the IAS 27

Standard – “Consolidated and Separate financial Statements”, the group has included special purpose entities

or vehicles within its consolidation perimeter. These include venture capital funds managed by the group which is

exposed to most of the risks and enjoys most of the benefits associated with the respective activity.

Subsidiaries’ accounts were consolidated by the global integration method. Transactions and significant balances

between the consolidated companies have been eliminated. Consolidation adjustments are also made, when

applicable, with the aim of ensuring consistency in the application of the group’s accounting principles.

Third party investment in subsidiary companies has been recognised in “minority shareholders’ interests” in

shareholders’ equity.

Consolidated income derives from the net income of the bank and its subsidiaries, in proportion to their respective

effective equity investments, after consolidation adjustments, including the elimination of dividends received and

capital gains and losses generated between companies included in the consolidation perimeter.

2.3. COMBINATIONS Of BUSINESS ACTIVITIES AND gOODwILL

Acquisitions of subsidiaries are recognised according to the purchase method. The cost of the acquisitions comprises

the aggregate fair value of the assets delivered and liabilities incurred or assumed for achieving control over the

acquired entity plus the costs directly attributable to the operation. On the acquisition date, identifiable assets,

liabilities and contingent liabilities satisfying the recognition requirements of the IfRS 3 Standard – “Combinations

of business activities” are recognised at their respective fair value.

goodwill comprises the positive difference between a subsidiary’s cost price and the effective percentage

acquired by the group in terms of the fair value of its respective assets, liabilities and contingent liabilities. goodwill

is recognised as an asset and is not amortised. Impairment tests are, however, performed at least once a year.

Up to 01 January 2004, as permitted by the accounting policies defined by the Bank of Portugal, goodwill was

fully deducted form shareholders’ equity in the year of the acquisition of the subsidiaries. As permitted by the IfRS

1 Standard, the group did not make any alterations to this entry, for which the goodwill generated on operations

occurring up to 01 January 2004 continues to be recognised in reserves.


117

2.4. INVESTMENTS IN ASSOCIATED COMPANIES

“Associated” companies are those over which the bank has a significant influence but over whose management

it does not enjoy effective control. Significant influence is considered to exist whenever the group has a direct or

indirect investment of 20% - 50% in a company’s share capital or voting rights.

Investments in associated companies are valued by the equity accounting method. According to this method,

investments are initially valued at their respective cost price and the value is subsequently adjusted on the basis

of the group’s effective percentage of changes in associated companies’ shareholders’ equity (including income).

If there are any materially relevant divergences, the shareholders’ equity used for the equity equivalence calculation

of associated companies is adjusted to reflect the use of the group’s accounting principles.

goodwill, comprising the positive difference between a subsidiary’s cost price and the effective percentage acquired

by the group in terms of the fair value of its respective assets, liabilities and contingent liabilities continues to be

recognised in the value of the investment whose total book value is subject to annual impairment tests.

Unrealised income on transactions with associated companies is eliminated in proportion to the group’s effective

percentage investment in the said entities.

2.5. TRANSLATION Of BALANCES AND TRANSACTIONS IN fOREIgN CURRENCy

The separate accounts of each group entity included in the consolidation are prepared in accordance with the

currency used in the economic context in which they operate (referred to as the “operating currency”). All group

companies, at 31 December 2009 and 2008, used the euro as their operating currency.

foreign currency transactions are recognised on the basis of the reference rates in force at the transaction date. At

each balance sheet date, monetary assets and liabilities denominated in foreign currency are translated into euros

on the basis of the foreign exchange rate in force. Non-monetary assets, recognised at fair value, are translated

on the basis of the exchange rate in force on the last valuation date. Non-monetary assets, recognised at their

historical cost, continue to be recognised at the original exchange rate.

Exchange rate differences determined upon exchange translation are recognised in income for the year, except for

differences originated by non-monetary financial instruments, such as shares, classified as available for sale and

recognised in a specific shareholders’ equity account heading until disposal.


118

2.6. fINANCIAL INSTRUMENTS

a) fINANCIAL ASSETS

financial assets are recognised at fair value at the agreement date, plus the costs directly attributable to the transaction.

financial assets are initially recognised in one of the following categories defined in the IAS 39 Standard:

i) financial assets at fair value through profit or loss

This category includes:

financial assets held for trading, which essentially include the acquisition of securities with the objective of

realising gains on the basis of short term market price fluctuations. This category also includes financial derivative

instruments, excluding financial derivative instruments complying with hedge accounting requirements; and,

financial assets recognised at fair value through profit or loss.

The use of the “fair value option” implies the irrevocable recognition, in this category, of the financial instruments

at the time of initial recognition and is restricted to situations in which the application results in the production of

more relevant financial information, i.e.

a) If the application eliminates or significantly reduces an accounting mismatch that would otherwise occur as a

result of the inconsistent measurement of assets and liabilities or recognition of gains and losses;

b) groups of financial assets, financial liabilities or both which are managed and when the performance thereof

is assessed on a fair value basis, in accordance with formally documented risk and investment management

strategies; and when information on the group is distributed internally to management bodies;

c) It is also possible to classify financial instruments containing one or more embedded derivatives in this category,

unless:

The embedded derivatives do not significantly modify the cash flows which would, otherwise, be required

under the contract;

It is evident, with little or no analysis, that the implicit derivatives should not be separated out.

The group recognises the equity instruments relating to venture capital operations in this category whenever the

instruments are associated with derivatives, notably the right or contractual obligation to dispose of the subsidiary

companies under the terms of shareholders’ agreements entered into on the date upon which the equity investments

were made and the securities classifiable in sub-paragraph b) above.


119

financial assets classified in this category are recognised at fair value whose gains and losses generated by their

subsequent valuation are recognised in the income statement in the “income from financial operations” account

heading. Interest is recognised in the appropriate “interest and similar income” account headings.

ii) Loans and accounts receivable

These are financial assets with fixed or determinable payments, not quoted on an active market and not included

in any of the other previously referred to financial asset categories. This category includes loans and advances to

the group’s customers, amounts receivable from other financial institutions and from the provision of services or

sale of assets.

These assets are initially recognised at fair value, less any commissions included in the effective rate, plus all incremental

costs directly attributable to the transaction. The assets are subsequently recognised in the balance sheet at their

amortised cost less impairment losses.

Interest is recognised on the basis of the effective rate method which enables the amortised cost to be calculated

and the interest split over the period of the operations. The effective rate is the rate that, being used to discount

the estimated future cash flows associated with the financial instrument, enables the current value to be matched

with the value of the financial instrument at the date of initial recognition.

iii) Available for sale financial assets

This category includes variable-income securities not classified as assets at fair value through profit or loss, including

stable financial investments and investments without associated options in the group’s venture capital area and

other financial instruments initially recognised herein and not classifiable in the other categories of the above

referred to IAS 39 Standard.

Available for sale financial assets are measured at fair value, with the exception of shareholders’ equity instruments

not quoted on an active market and whose fair value cannot be reliably measured, which continue to be recognised

at cost. Revaluation gains or losses are recognised directly in shareholders’ equity in the “fair value reserve”. At

the time of sale or if impairment is determined, the accumulated fair value changes are transferred to income or

costs for the year.

Interest on debt instruments classified in this category is determined on the basis of the effective tax method and

recognised in the income statement.

Dividends on equity capital instruments classified in this category are recognised as income in the income statement

when the group’s right to receive them has been established.


120

The bank, on 01 July 2008, reclassified its fixed-income securities from the financial assets held for trading

category to the available for sales financial assets category, in conformity with the change to the IAS 39 Standard

approved on 13 October 2008 (Notes 8 and 9).

Reclassification of financial assets

with the entry into force of the change to the IAS 39 Standard on 13 October 2008, the bank was in a position

to reclassify several of its financial assets classified as financial assets held for trading or available for sale to other

financial assets categories. No reclassifications to financial assets categories at fair value through profit or loss,

are, however, permitted.

fair value

As referred to above, financial assets classified in financial assets categories recognised at fair value through profit

or loss and available for sale financial assets are recognised at their fair value.

The fair value of a financial instrument comprises the amount at which an asset or financial liability can be sold

or liquidated between independent, informed parties, interested in realising the transaction under normal market

conditions.

The fair value of financial assets is, for most assets, determined by a CgD group body which is independent from

the trading function, based on the following criteria:

Closing price at the balance sheet date, for instruments traded on active markets;

The following valuation methods and techniques are, inter alia, used for debt instruments not traded on active

markets (including unlisted securities or securities with low liquidity levels):

i) Bid prices published by financial information services such as Bloomberg and Reuters, including market prices

available on recent transactions;

ii) Reference bid prices obtained from financial institutions operating as market-makers;

iii) Internal valuation models based on market data used to define a price for the financial instrument, reflecting

market interest rates and volatility, in addition to liquidity and the credit risk associated with the instrument.

Unlisted shareholders’ equity instruments held as part of venture capital operations are valued on the basis of

the following criteria:

i) Prices charged by independent entities on materially relevant transactions during the last six months;


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ii) Multiples of comparable companies in terms of operating sector, dimension and profitability;

iii) Discounted cash flows;

iv) Settlement price comprising the subsidiary company’s net worth;

v) Cost price (only for investments made in the twelve months preceding the valuation).

If there is a right or contractual obligation to alienate the subsidiaries under the terms of shareholders’ agree-

ments entered into when the investments are made, the respective accounting valuation may not exceed the

current amount of the sales price.

A discount factor reflecting the securities’ lack of liquidity and / or counterparty credit risk in the agreements

entered into is, if justified, applied to the amounts obtained from the above referred to valuation methodologies.

Other unlisted shareholders’ equity instruments whose fair value cannot be reliably measured (e.g. owing to the

lack of recent transactions) continue to be recognised at cost, less any impairment losses.

b) fINANCIAL LIABILITIES

financial liabilities are recognised at the agreement date at their respective fair value, less the costs directly

attributable to the transaction. Liabilities are classified in the following categories:

i) financial liabilities held for trading

financial liabilities held for trading comprise the negative revaluation of financial derivative instruments recognised

at their fair value.

ii) Other financial liabilities

This category includes other credit institutions’ and customers’ resources and liabilities incurred on payments of

services or purchases of assets.

These financial liabilities are valued at their amortised cost.


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c) DERIVATIVES AND hEDgE ACCOUNTINg

The bank performs derivative operations as part of its activity to provide for its customers’ requirements and

reduce its exposure to foreign exchange, interest rate and price fluctuations.

financial derivative instruments are recognised at their fair value at the date of the agreement. They are also

recognised in off-balance sheet accounts at their respective notional value.

financial derivative instruments are subsequently measured at their respective fair value. fair value is assessed:

On the basis of prices obtained in active markets (e.g. futures trading in organised markets);

On the basis of models incorporating valuation techniques accepted in the market, including discounted cash

flows and options valuation models.

Embedded derivatives

financial instruments embedded in other financial instruments are separated from the base agreement and

processed autonomously under the IAS 39 Standard, whenever:

The embedded derivative’s economic characteristics and risks are not closely related with the base agreement

defined in the IAS 39 Standard; and

The full amount of the combined financial instrument is not recognised at fair value, with fair value changes

being reflected in the income statement.

hedge derivatives

These derivatives are designed to protect the group from exposure to a specific risk attached to its operations.

Classification as hedge derivatives and use of the hedge accounting concept, as described below, are subject to

compliance with the rules of the IAS 39 Standard.

The bank, at 31 December 2009 and 2008, only used hedges on the changes in the fair value of financial

instruments recognised in the balance sheet as “fair value hedges”.

The group prepares formal documentation, for all hedge operations, at the beginning of the operation, to include

the following aspects:

Risk and strategy management objectives associated with the realisation of the hedge operation, in accordance

with the hedge policies defined by the group;


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Description of hedged risk(s);

Identification and description of hedged and hedge financial instruments;

hedge operation effectiveness appraisal method and respective periodicity.

hedge effectiveness tests are periodically performed and documented, using a comparison between the change

in fair value of the hedge instrument and hedged item (part attributable to hedged risk). with the aim of enabling

the use of hedge accounting under IAS 39, the ratio should be between a range of 80%-125%. Prospective

effectiveness tests are also performed in order to demonstrate the hedges’ expected future effectiveness.

hedge derivatives are recognised at fair value, with the results being assessed daily and recognised in income and

costs for the year. If the hedge is seen to be effective, the bank will also recognise the change in fair value of the

hedged item, attributable to the hedged risk, in income for the year. The impact of such valuations is recognised

in the “income from financial operations” account headings. for derivatives, such as interest rate swaps, with an

associated interest component, the periodisation of interest for the period in progress and liquidated flows are

recognised in “interest and similar income” and “interest and similar costs” in the income statement.

Positive and negative revaluations of hedge derivatives are recognised in specific assets and liabilities account

headings.

Valuations of hedged items are recognised in the account headings in which such assets and liabilities are recognised.

Trading derivatives

Trading derivatives are all financial derivative instruments that are not associated with effective hedge operations

in accordance with the IAS 39 Standard, including:

Derivatives taken out to hedge assets or liabilities risks recognised at fair value through profit or loss, thus rendering

hedge accounting unnecessary;

Derivatives taken out to hedge risk which do not comprise effective cover under the IAS 39 Standard;

Derivatives taken out for trading purposes.

Trading derivatives are recognised at fair value, with the results being determined daily and recognised in income

and costs for the year. The impact of such valuations is recognised in “income from financial operations” account

headings. for derivatives, such as interest rate swaps, with an associated interest component, the periodisation

of interest for the period in progress and liquidated flows are recognised in “interest and similar income” and

“interest and similar costs” in the income statement.


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d) IMPAIRMENT Of fINANCIAL ASSETS

financial assets at amortised cost

The group periodically analyses the impairment of its financial assets recognised at amortised cost, notably loans

and advances to customers, loans and advances to credit institutions and other assets.

Signs of impairment are identified on an individual basis on financial assets with a significant level of exposure and

on a collective basis as regards like-for-like assets, whose debtor balances are not separately relevant.

The following events may comprise signs of impairment:

failure to comply with contractual clauses, i.e. arrears of interest or capital;

Debtor or debt issuing entities’ significant financial difficulties;

Existence of a strong probability of a declaration of bankruptcy by the debtor or debt issuing entity;

granting of facilities to a debtor in financial difficulties which would not be granted under normal circumstances;

historical records of collections suggesting that the nominal value will never be fully recovered;

Data indicating a measurable reduction of the estimated value of the future cash flows of a group of financial

assets since original recognition, although such a reduction cannot be identified in the group’s separate financial

assets.

whenever signs of impairment on separately analysed assets are identified, the eventual impairment loss

comprises the difference between the book value at the time of analysis and current value of projected future

cash flows receivable (recoverable value), discounted on the basis of the asset’s effective original interest rate.

Assets upon which specific analyses have not been performed have been included in a collective impairment

analysis, having been classified for this purpose into homogenous groups with similar risk characteristics.

Separately analysed assets on which no objective signs of impairment have been noted were also subject to

collective impairment analyses, as referred to in the preceding sub-paragraph.

Owing to the non-existence of a relevant track record in terms of the bank, impairment losses calculated on the

collective analysis were determined on the basis of Caixa geral de Depósitos group parameters for comparable

types of credit.

The amount of impairment determined is recognised in costs for the year and separately in the balance sheet as

a deduction from the amount of the respective credit.


125

The group, whenever applicable, writes off unrecoverable credits from assets through its use of the respective

accumulated impairment with the board of directors’ approval. Eventual recoveries of credit written off from

assets are recognised as a deduction from the impairment losses balance recognised in the income statement.


As referred to in Note 2.6. a), available for sale financial assets are recognised at fair value, with fair value changes

being recognised in the “fair value reserve” in shareholders’ equity.

whenever any objective evidence of impairment exists, accumulated capital losses recognised in reserves, are

transferred to costs for the year in the form of impairment losses and recognised in the “impairment of other

assets, net of reversals and recoveries” heading.

In addition to the signs of impairment on financial assets recognised at amortised cost, IAS 39 also provides for

the following specific signs of impairment on equity instruments:

Information on significant changes having an adverse impact on the technological, market, economic or legal

environment in which the issuing entity operates, indicating that the cost of the investment may not be recovered;

A prolonged or significant decline in market value at below cost.

The bank, on each of its financial statement’s reference date performs an analysis of the existence of any impair-

ment losses on available for sale financial assets, considering, for the said purpose the nature and specific, indi-

vidual characteristics of the assets being valued. In addition to the results of the analysis, the events set out below

were considered to be objective signs of impairment on equity instruments:

Existence of potential capital losses of more than 50% of the respective cost price;

Situations in which the fair value of the equity instrument remains below its respective cost price for a period

of more than 24 months.

The existence of potential capital losses of more than 30% of the cost price, for more than 9 months, was also

considered to comprise objective signs of impairment.

Impairment losses on equity instruments cannot be reversed and any potential capital gains originated after the

recognition of impairment losses are, therefore, recognised in the “fair value reserve”. Impairment is always con-

sidered to exist if additional capital losses are assessed at a later stage and are recognised in income for the year.

Criteria identical to debt instruments are applied for the analysis of “Tier 1” securities.


126

The group also periodically performs impairment analyses on financial assets recognised at cost, notably unlisted

equity instruments whose fair value cannot be reliably measured. The recoverable value, in this case, comprises

the best estimate of future flows receivable from the asset, discounted at a rate which adequately reflects the risk

associated with holding the asset.

The amount of the impairment loss is directly recognised in income for the year. Impairment losses on such assets

cannot be reversed.

2.7. NON-CURRENT ASSETS hELD fOR SALE AND gROUPS Of ASSETS AND LIABILITIES fOR DISPOSAL

In accordance with the IfRS 5 Standard – “non-current assets held for sale and discontinued operations”,

non-current assets, or groups of assets and liabilities for disposal are classified as being held for sale whenever

their book value is expected to be recovered from their sale and not their continued use. for an asset (or group of

assets and liabilities) to be classified in this account heading the following requirements must be met:

There should be a strong probability of the sale’s occurrence;

The asset should be immediately available for sale in its current condition;

The sale is expected to take place up to a year from the asset’s classification in the account heading.

Assets recognised in this account heading are valued at their cost price or fair value whichever the lower, less the

costs incurred on the sale.

2.8. OThER TANgIBLE ASSETS

Except for assets acquired up to 1998, these are recognised at cost, less depreciation and accumulated impairment

losses. The costs of repair, maintenance and other expenses associated with their use are recognised as a cost for

the year, in the “other administrative expenses” account heading.

The bank revalued its fixed assets in 1998, under Decree Law 31/98 of 11 february. As permitted under the IfRS

1 Standard, the book value, incorporating the effect of the referred to revaluation was considered as a cost in

the transition to the IfRS, as the proceeds, at the time in question, generally comprised cost, or amortised cost, in

accordance with the IfRS, adjusted to take alterations to price indices into account.

Depreciation is calculated and recognised as a cost for the year, on a systematic basis, during the asset’s estimated

useful life, comprising the period in which it is expected to be available for use, i.e.


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Land is not depreciated.

The works being carried out by the group on its headquarters building over the period 2008-2009 are being

depreciated over a period of ten years.

Analyses of evidence of tangible assets impairment are periodically performed in accordance with the IAS 36

Standard – “Assets impairment”. whenever the net book value of the tangible assets exceeds their recoverable

value, an impairment loss is recognised in the income statement for the period. Impairment losses can be reversed

and also have an impact on income for the period if there is an increase in the asset’s recoverable value in the

following periods.

The group periodically assesses the adequacy of the estimated useful life of its tangible assets.

2.9. fINANCIAL LEASES

Leasing operations are recognised as follows:

As lessee

Leased assets are recognised at fair value in assets and liabilities, in line with the processing of the respective

instalment payments.

financial lease instalments are split up in accordance with the respective financial schedule, under which liabilities

are reduced by the corresponding payment of principal. Interest paid is recognised as a financial cost.


Property

Equipment

furniture and materials

Transport material

Computer equipment

Interior installations

Security equipment

Plant and machinery

10 - 50

4 -10

4

3 - 4

3 - 10

4 - 10

5 - 10

yearS of uSeful life

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As lessor

Leased assets are recognised in the balance sheet as loans, repaid by capital instalments set out in the financial

agreements schedule. Interest included in the instalments is recognised as financial income.

2.10. INTANgIBLE ASSETS

This account heading essentially comprises the costs, development or preparation for use of software used for

the development of the group’s operations. Intangible assets are recognised at cost, less amortisation and

accumulated impairment losses.

Depreciation is recognised as a cost, on a systematic basis, throughout the assets’ estimated useful life for a

period of between 3 - 6 years.

Expenses on software maintenance are recognised as a cost for the year in which they are incurred.

2.11. INCOME TAX

All group companies are taxed separately, with companies headquartered in Portugal paying IRC (“Tax on the

Income of Collective Bodies”). The accounts of the bank’s subsidiaries are integrated with the accounts of the

registered office for calculating global income taxable under IRC, with the income generated by subsidiaries also

paying local tax in the countries / territories in which they are domiciled. Local tax is deductible from IRC payable on

global activities under the terms of article 85 of the respective tax code and double taxation agreements entered

into with Portugal.

The bank’s Madeira Offshore Branch, however, is exempt from IRC up until 31 December 2011 under article 33

of the Statute of fiscal Benefits. for the purposes of the application of this exemption, in accordance with the

dispositions of article 34 of the Statute of fiscal Benefits, at least 85% of the profit attributable to the entity’s

global activity should derive from operations outside the institutional scope of the Madeira free Zone.

Caixa Desenvolvimento, SgPS, S.A. (Caixa Desenvolvimento) is subject to the fiscal regime on holding companies.

Under this regime, profits paid to Caixa Desenvolvimento by its subsidiaries are totally exempt from IRC, provided

that the investments are retained for at least one year.

Caixa Desenvolvimento also applied the deferred taxation regime, established in the IRC Code, on capital gains

and losses realised in 1999 and 2000 on its exchange or sale of investments or shares. Based on the regime in

force on 01 January 2002, the capital gains made in the referred to years on investments disposed of by 31 December

2004, are being taxed over a ten year period, with the group having recognised the respective deferred tax liability.


129

Under article 32 of the Statute of fiscal Benefits, the capital gains and losses made on Caixa Capital – Sociedade

de Capital de Risco, S.A. (Caixa Capital) and Caixa Desenvolvimento’s sale of equity investments, provided that

such investments are held for not less than one year, and the financial costs paid on the acquisition, are not taxable.

This regime does not apply to the capital gains made and financial costs paid when the equity investments have

been acquired (i) from entities with which special relationships exist, as defined in no. 4 of article 58 of the IRC

Code, (ii) to entities which are domiciled, headquartered or effectively managed in a territory with a more favourable

tax regime or (iii) to entities resident in Portuguese territory, subject to a special tax regime and when held for a

period of less than three years.

Under the terms of no. 4 of article 32 of the Statute of fiscal Benefits, Caixa Capital is also entitled to deduct from

its IRC taxable income and up to the amount thereof, as a fiscal benefit, an amount equal to the sum of its IRC

tax bills for the five years preceding the year of the respective benefit, provided that the amount of the deduction

is invested in companies with growth and appreciation potential. Amounts not deducted under the previously

referred to terms may be deducted at a later stage, subject to the same terms, from its tax bill for the following

five years. Under article 86 of the IRC Code the payment of tax may not be less than 60% of the amount payable

if Caixa capital had not enjoyed the above referred to tax benefit.

Income from venture capital funds are exempt from IRC under article 23 of the Statute of fiscal Benefits.

The total amount of tax on profit recognised in the income statement encompasses current and deferred tax.

Current tax is calculated on the basis of taxable profit for the year, which is different from accounting income

owing to adjustments to taxable profit resulting from costs or income which are not relevant for fiscal purposes

or only considered in other periods.

Deferred tax comprises the impact of temporary deductible or taxable differences between the balance sheet

value of assets and liabilities and their fiscal basis, used to assess taxable profit on tax recoverable or payable in

future periods.

Deferred tax liabilities are normally recognised for all temporary taxable differences, whereas deferred tax assets

are only recognised up to the amount by which the existence of future taxable profit, permitting the use of the

corresponding deductible tax differences or fiscal losses, is probable. Deferred taxes are not, however, recorded

in the following situations:

Temporary differences resulting from goodwill;

Temporary differences originating from the initial recognition of assets and liabilities in transactions which do

not affect accounting income or taxable profit;

Temporary differences resulting from non-distributed profit by subsidiaries and associated companies, to the

extent that the group is able to control their reversal and which is not likely to occur in the foreseeable future.


130

The principal situations originating temporary differences in group terms comprise provisions and impairment not

accepted for fiscal purposes, revaluations of equity investments registered as available for sale financial assets,

deferred commissions, statutory revaluations of tangible assets, capital gains on the disposal of investments (see

above) and fiscal benefits granted to venture capital activities.

Deferred taxes are calculated on the basis of the tax rates expected to be in force on the date of reversal of the

temporary differences, comprising the approved or substantially approved rates, at the date of the balance sheet.

Tax on income (current or deferred) is recognised in income for the year, except for cases in which the originating

transactions have been recognised in other shareholders’ equity account headings (e.g. revaluations of available

for sale financial assets). The corresponding tax, in such cases, is also recognised as a charge to shareholder’s

equity and does not affect income for the year.

2.12. PROVISIONS AND CONTINgENT LIABILITIES

A provision is set up when there is a current (legal or constructive) obligation, resulting from past events, involving

the probable future expenditure of resources and when this may be reliably determined. The amount of the provision

comprises the best estimate of the amount to be paid to liquidate the liability at the date of the balance sheet.

when not probable, the future expenditure of resources is considered to be a contingent liability. Contingent

liabilities require no more than a disclosure procedure, unless the possibility of their payment is remote.

This account heading reflects the provisions required for liabilities incurred on guarantees and other off-balance

sheet liabilities and is determined on the basis of a risk assessment on the operations and respective customers. It

also includes provisions for fiscal, legal and other contingencies in addition to the depreciation of financial assets.

2.13. EMPLOyEE BENEfITS

The bank does not have any retirement pensions liabilities to its employees, who are covered by the national social

security regime, owing to the fact that it is not a signatory to the Collective wage Bargaining Agreement for the

Banking Sector.

The bank, however, at its own discretion, in 1987, set up the “fundo de Pensões Caixa-Banco de Investimento”

(fund) with the objective of providing its employees with additional old age, disability and survivors’ retirement

pensions, pursuant to the terms of the contract. The fund is managed by CgD Pensões – Sociedade gestora de

fundos de Pensões, S.A.


131

The bank pays a percentage of 3.5% of each employee’s annual wages into the fund. Pension costs, in 2009 and

2008 were €393,986 and €405,169 respectively (Note 28).

The bank does not have any liabilities other than the above referred to contributions owing to the fact that this

is a defined contribution plan.

The other group companies do not have pensions liabilities.

Short term benefits, including productivity bonuses paid to employees, are recognised in “employee costs” for

the respective period, on an accrual basis.

2.14. COMMISSIONS

As referred to in Note 2.6, commissions received on credit operations and other financial instruments, i.e.

commissions charged for originating operations, are included in amortised costs and recognised as costs or

income over the period of the operation.

Commissions for services performed are usually recognised as income for the period of performance of the service

or as a lump sum if resulting from single acts.

The estimate of the commissions the bank expects to pay to other credit institutions for the syndicating of credit

operations in which it is involved as lead and in which CgD group’s initial exposure is higher than the defined

objective, is recognised as accrued costs as a charge to the “costs of services and commissions” account heading

for the year in which the bank recognises the income relating to the corresponding commission.

2.15. SECURITIES AND OThER ITEMS hELD UNDER CUSTODy

Securities and other items held under custody, notably customers’ securities, are recognised in off-balance sheet

account headings at their nominal value.

2.16. CASh AND EQUIVALENTS

for the purposes of the preparation of cash flow statements, the group considers “cash and equivalents” to be

the total amount of the “cash and cash equivalents with central banks” and “cash equivalents with other credit

institutions” account headings.


132

2.17. CRITICAL ACCOUNTINg ESTIMATES AND MOST RELEVANT JUDgEMENTAL ASPECTS IN ThE APPLICATION Of ACCOUNTINg POLICIES

The group’s principal accounting policies are described in Note 2. for the application of the said policies, the

bank’s and group’s board of directors must produce estimates. The estimates with the greatest effect on the con-

solidated financial statements include those set out below.

Determination of impairment losses on loans and receivable

Impairment losses on loans and receivables are determined in accordance with the methodology defined in Note

2.6. d). Accordingly, the determination of impairment on separately analysed assets derives from the bank’s specific

valuation based on its specific knowledge of its customers’ status and the guarantees associated with the operations

in question.

Determination of impairment on collectively analysed assets was based on Caixa geral de Depósitos group

parameters for comparable types of credit.

The bank considers that impairment determined on the basis of this methodology permits the prudent recognition

of the risk associated with its credit portfolio, taking into account the rules defined in the IAS 39 Standard.

Valuation of financial instruments not traded in active markets

In accordance with the IAS 39 Standard, the group values all financial instruments at fair value, except for those

recognised at amortised cost. The valuation models and techniques described in Note 2.6. a) are used to value

financial instruments not traded on liquid markets, including equity instruments allocated to venture capital

operations. The valuations obtained comprise the best estimate of the fair value of the referred to instruments,

at the date of the balance sheet. The determining of fair value on equity instruments allocated to venture capital

operations, may, however, be subjective.

As referred to in Note 2.6.a), to guarantee an adequate separation between functions, the valuation of most such

financial instruments, except for equity instruments allocated to venture capital operations, is determined by a

body that is independent from the trading function.

A summary of the sources used by the group to determine the fair value on financial instruments is provided in

Note 32 – Disclosures on financial instruments, in the “fair value” section.


133

Determination of impermaint losses on available for sale financial assets

As described in Note 2.6. d), capital losses deriving from the valuation of such assets are recognised as a charge

to the fair value reserve. whenever objective evidence of impairment exists, the accumulated capital losses

recognised in the fair value reserve should be transferred to costs for the year.

for equity instruments, including those allocated to venture capital, determination of the existence of impairment

losses may be subjective. The group determines whether or not impairment exists on such assets through a specific

analysis at each balance sheet date, taking into consideration the definitions provided in the IAS 39 Standard (see

Note 2.6. d)). As a general criterion, impairment is always determined when it is considered, that, owing to the

size of the capital loss determined, the full recovery of the amount invested by the group is highly improbable.

In the case of debt instruments classified in this category, including “Tier I” classified as equity instruments, the

capital losses are transferred from the fair value reserve to income, whenever there is any indication of the possible

future occurrence of failure to comply with contractually agreed cash flows, notably on account of financial

difficulties, defaults on other financial liabilities, or a significant deterioration in the issuing entity’s rating.

Determination of tax on profit

Tax on profits (current and deferred) is assessed by group companies on the basis of the rules defined by the current

fiscal framework. In several cases, however, fiscal legislation may not be sufficiently clear and objective and may

give rise to different interpretations. The amounts recognised in such cases represent the best understanding of

the responsible bank bodies and subsidiaries on the correctness of the operations although this may be queried

by the fiscal authorities.

2.18. ADOPTINg Of NEw STANDARDS (IAS / IfRS) OR REVISION Of ALREADy ISSUED STANDARDS

The following standards, interpretations, amendments and revisions endorsed by the European Union and

mandatory for economic years beginning on or after 1 January 2009, were adopted for the first time, in the year

ended 31 December 2009:


IfRS 1/IAS 27 – Amendments (Cost of

an investment in a subsidiary, jointly

controlled entity or an associate)

These amendments deal with the measurement of the cost of investments

in subsidiaries, jointly controlled entities and associates in the first time

adoption of IfRS and recognition of dividend income from subsidiaries, in

the parent company’s separate financial statements.

effectiVe on or after

Standard / interPretation

1-Jan-09

134

The effect of the adoption of the above referred to new standards, interpretations, amendments and revisions on

the group’s financial statements at 31 December 2009, was not significant except for the following situations:

“IfRS 8 – Operating Segments”. This standard came into force on 1 January 2009 for all entities having issued

securities (bonds or shares) admitted to listing in public markets or which have applied for such securities to be

listed in public markets. Notwithstanding the fact that it was not part of the defined scope, the group opted to

make its disclosures in accordance with the standard’s requirements. IfRS 8 requires the group to report quanti-

tative and qualitative information on the reported segments which comprise operating segments or aggregates

thereof. Operating segments comprise components of an activity on which the group has autonomous financial

information and which is analysed by the group’s decision-making bodies when deciding what resources to

allocate and performance measurement.


IAS 39 – Amendments Eligible hedged

items

IfRS 2 – Amendments (acquisitions

and cancellations)

IAS 23 – Borrowing costs (revised)

IAS 32/IAS 1 – Amendments (puttable

financial instruments and obligations

arising on a liquidation)

IAS 1 – Presentation of financial

standards (revised)

IfRIC 13 – Customer loyalty programmes

IfRS 8 – Operating segments

IfRS 7 – Amendments (disclosures on

fair value measurements and liquidity

risk)

Improvements to international financial

reporting standards – 2007

These are clarifications related with the following hedge accounting

aspects: (i) identification of inflation as a hedged risk and (ii) options

hedges.

Consists of the clarification of the definition of vesting conditions,

introduction of the concept of non-vesting conditions and clarification of

the processing of cancellations.

This revision establishes the obligation to capitalise the costs of loans

related with qualifying assets with the option of recognising them in the

income statement for the period in which they were incurred being

consequently, eliminated.

These amendments change the classification criteria of a financial

instrument between an equity capital instrument and a financial liability,

enabling several financial instruments which may be repurchased to be

classified as shareholders’ equity instruments.

The year 2007 revision of IAS 1 introduced changes of terminology,

including new designations for elements of financial statements, and

changes to the format and content of such elements.

This interpretation requires bonuses given to customers as part of a sales

transaction to be recorded as a separate component part of the transaction.

IfRS 8 consists of a standard dealing exclusively with disclosures in

replacement of the former IAS 14 standard. The IfRS implied a redefinition

of the entity’s reportable segments and the information to be reported

therein.

These amendments to IfRS 7 expand the required disclosures on the fair

value of financial instruments and liquidity risk.

This process involved the revision of 32 accounting standards.



1-Jul-09

1-Jan-09

1-Jan-09

1-Jan-09

1-Jan-09

1-Jul-08

1-Jan-09

1-Jan-09

Various (usually

1-Jan-09)

135

“IAS 1 (Revised) – Presentation of financial statements”. This standard is mandatory starting 01 January 2009

and makes a series of changes on the terminology of financial statements. The following are, inter alia, the

principal effects of this revision of IAS 1:

All gains and losses (including gains and losses recognised directly in shareholders’ equity) should, in the

future, be presented:

- In a single “statement of comprehensive income”; or

- In two statements (an income statement and statement of comprehensive income). The group adopted this

possibility in its financial statements at 31 December 2009.

The presentation of “other comprehensive income” (e.g. gains or losses on the revaluation of available for

sale financial assets) as separate items on the statement of changes to shareholders’ equity is no longer

permitted.

At the date of the board of directors’ approval of these financial statements, the relevant standards and interpre-

tations available for advance application were as follows:


IfRS 3 – Business combinations and

IAS 27 – Consolidated and separate

financial statements (2008 revision)

Revisions of IfRS 1 – first time

adoption of international financial

reporting standards

IfRIC 12 – Service concession

agreements

IfRIC 15 – Agreements for the

construction of real-estate

IfRIC 16 – hedges of a net investment

in a foreign operation

This revision must be applied for the years beginning on or after 1 July

2009 and makes several changes to the level of registration of business

combinations notably regarding: (a) the measurement of non-controlling

interests (previously referred to as minority shareholders’ interests ); (b)

the recognition and subsequent measurement of contingent payments;

(c) the processing of direct costs related with the combination; and (the

registration of transactions involving the purchase of interests in already

controlled entities and transactions for the sale of interests which do not

result in loss of control.

This standard was revised for the purpose of grouping the various

changes occurring since the first release.

This interpretation must be applied for the years beginning on or after 1

January 2010 and introduces rules for the recognition and measurement

by the private operator involved in the provision of infrastructures and

operations in public-to-private type concessions.

This interpretation deals with the form of assessment of whether a

real-estate construction agreement falls within the sphere of IAS 11 –

Construction contracts or IAS 18 – Revenue and how the corresponding

revenue should be recognised.

This interpretation provides guidelines on the hedge accounting of net

investments in foreign operations.



1-Jul-09

1-Jan-10

1-Jan-10

1-Jan-10

1-Jul-09

136

The standards, although having been endorsed by the European Union, were not adopted by the group for the

year ended 31 December 2009, owing to the fact that their application was still not mandatory. No significant

impacts on the financial statements deriving from their adoption have been estimated.

3. OPERATINg SEgMENTS

The board of directors receives and analyses the group’s financial information every month, split up into business

segments representing its areas of activity by type of origination, designed, as a whole, to ensure a dynamic

investment banking business platform i.e.

corporate finance – including debt and equity financial advisory and project finance activities;

trading and sales – including trading and asset management operations and treasury liabilities;

Brokerage – brokerage operations;

commercial banking – including domestic and international transversal business origination;

Venture capital – CgD group’s venture capital operations continued to be performed by Caixa Capital – So-

ciedade de Capital de Risco, S.A. (which, in addition to concentrating all operating activity also manages four

venture capital funds) and Caixa Desenvolvimento, SgPS, S.A. (principally geared to strategic operations with

the highest potential appreciation);

other – other activities not classifiable in any of the former categories.

IfRIC 9 and IAS 39 – Amendments

(reassessment of embedded derivatives)

IfRIC 17 – Distributions of non-cash

assets to owners

IfRIC 18 – Transfers of assets from

customers

These amendments clarify the circumstances in which subsequent

reassessments of the obligation to separate derivatives assets are

permitted.

This interpretation issues guidelines on the correct accounting of the

distribution of non-cash assets to owners as dividends.

This interpretation issues guidelines on operators’ accounting of “cus-

tomers’” tangible fixed assets.



years ending on

beginning after

30-Jun-09

1-Jul-09

Transfers made

on or after

1-Jul-09


137

The following tables summarises the information on the group’s operating segments at 31 December 2009

and 2008:


2009

total coMMercial BanKing

BroKerage Venture caPital

tradingand SaleS

corPoratefinance

other




net interest income including

income from equity instruments







Impairment of credit net of reversals

and recoveries


and recoveries

others costs and income

consolidated net income

financial assets recognised at fair value





Other credit institutions’ and central

banks’ resources


financial liabilities recognised at fair value



56,008

(34,130)

-

21,879

6,350,089

(1,460,732)

(159,115)

197,443

4,927,685

4,949,564

(661,767)

804

(4,534)

(665,497)

4,284,067

-

-

-

2,555,317

1,546,794

30,733,622

-

-

13,304,685

(4,116,119)

-

9,188,566

11,625,561

(629,505)

(84,654)

2,441,052

13,352,454

22,541,020

(355,242)

(22,935,751)

(22,632)

(23,313,625)

(772,605)

26,266,952

26,665,185

-

326,964,860

229,960,645

102,483,927

-

-

792,732

(2,129)

-

790,603

4,317,737

(12,698)

3,420,284

663,952

8,389,275

9,179,878

4,452,441

-

(8,548,011)

(4,095,570)

5,084,308

20,782,390

54,536,858

-

-

45,592,524

-

-

-

255,319,980

(220,022,737)

60,896

35,358,139

93,733,830

(31,200,237)

17,654,478

4,783,565

84,971,636

120,329,775

(1,816,745)

(23,575,302)

(8,928,234)

(34,320,281)

86,009,494

(40,402,855)

45,606,639

727,408,724

225,920,811

936,919

878,630,819

1,108,928,963

139,124,974

300,272,162

1,703,334

210,166,524

(202,811,302)

60,896

7,416,118

5,180,859

(265,507)

13,997,304

159,159

19,071,815

26,487,933

(889,158)

-

(70)

(889,228)

25,598,705

680,359,382

138,673,828

936,919

-

495,780,188

-

300,272,162

1,703,334

30,894,884

(12,959,451)

-

17,935,433

66,223,109

(28,831,795)

480,659

1,325,721

39,197,694

57,133,127

(4,271,616)

(624,207)

(318,862)

(5,214,685)

51,918,442

-

-

-

538,629,008

326,044,888

5,907,425

-

-

105,146

(99,606)

-

5,540

36,475

-

-

(3,762)

32,713

38,253

(91,403)

(16,148)

(34,124)

(141,675)

(103,421)

-

6,044,940

-

10,481,634

10,003,924

-

-

-

i.

ii.

iii.

total

138

Interest and similar costs were split up over the various business lines on the basis of the average value of the

respective asset allocations to the said operating segments.

2008




net interest income including








Impairment of credit net of reversals

and recoveries


and recoveries








Other credit institutions’ and central

banks’ resources


financial liabilities recognised at fair

value through profit or loss


217,134

(158,403)

-

58,731

9,219,472

(1,813,041)

(387,641)

228,996

7,247,786

7,306,516

(587,753)

56,370

-

(531,383)

6,775,133

1,165,112

-

-

2,792,796

2,741,574

22,488,975

-

-

28,342,223

(19,027,087)

-

9,315,136

12,989,707

(813,889)

(158,597)

(59,527)

11,957,694

21,272,829

(988,242)

(5,770,449)

(57,487)

(6,816,178)

14,456,651

43,272,591

22,658,988

-

397,327,054

320,891,192

90,867,129

-

-

1,816,415

(5,904)

6,228

1,816,739

2,337,059

(11,208)

2,388,830

9,326,127

14,040,808

15,857,547

(6,674,441)

-

(3,689,125)

(10,363,566)

5,493,981

45,219,057

61,280,545

-

-

73,770,420

-

-

-

294,052,218

(269,439,897)

156,263

24,768,584

67,228,608

(7,109,912)

(4,444,442)

9,776,887

65,451,141

90,219,724

(9,245,120)

(5,779,162)

(3,746,612)

(18,770,894)

71,448,830

(41,206,644)

30,242,185

758,216,409

163,095,441

461,812

865,410,208

1,237,631,270

119,162,219

260,363,729

1,483,423

232,202,805

(232,706,024)

150,035

(353,185)

2,633,632

(588,064)

(6,535,776)

71,586

(4,418,622)

(4,771,807)

(190,692)

189,776

-

(916)

(4,772,723)

668,559,649

77,093,788

461,812

-

516,501,157

-

260,363,729

1,483,423

31,203,626

(17,285,960)

-

13,917,665

40,025,227

(3,883,710)

248,742

231,364

36,621,623

50,539,288

(659,969)

(248,299)

-

(908,268)

49,631,020

-

-

-

456,083,129

315,920,845

5,806,115

-

-

270,016

(256,518)

-

13,498

23,512

-

-

(21,659)

1,853

15,351

(144,022)

(6,560)

-

(150,582)

(135,231)

-

2,062,120

-

9,207,229

7,806,082

-

-

-

i.

ii.

iii.

total


BroKerage Venture caPital

tradingand SaleS

corPoratefinance

other


139

Income distribution by principal balance sheet headings and countries in which the bank performs its activities in

2009 and 2008 is set out below:

2009




net interest income including income

from equity instruments







Impairment of credit net of reversals and recoveries

Impairment of other assets net of reversals and recoveries











Portugal

230,963,479

(197,258,295)

60,896

33,766,080

93,278,479

(31,188,209)

17,654,474

4,347,229

84,091,973

117,858,053

(2,676,408)

(23,575,302)

(8,928,234)

(35,179,944)

82,678,109

727,408,724

225,920,811

936,919

867,849,591

1,098,151,808

139,124,974

300,272,162

1,703,334

total

255,319,980

(220,022,737)

60,896

35,358,139

93,733,830

(31,200,237)

17,654,478

4,783,565

84,971,636

120,329,775

(1,816,745)

(23,575,302)

(8,928,234)

(34,320,281)

86,009,494

(40,402,855)

45,606,639

727,408,724

225,920,811

936,919

878,630,819

1,108,928,963

139,124,974

300,272,162

1,703,334

SPain

24,356,501

(22,764,442)

-

1,592,059

455,351

(12,028)

4

436,336

879,663

2,471,722

859,663

-

-

859,663

3,331,385

-

-

-

10,781,228

10,777,155

-

-

-

i.

ii.

iii.

total


140

The information set out in the preceding tables comprises the balance sheet and financial statements of all group

entities headquartered in Portugal (“Portugal” column) and the Madrid branch (“Spain” column). Each of the

group entities performs its activity mainly with customers or resident counterparties domiciled in the same countries

in which they are headquartered.

2008




net interest income including income

from equity instruments







Impairment of credit net of reversals and recoveries

Impairment of other financial assets net of reversalsand recoveries











Portugal

284,576,529

(261,326,064)

156,263

23,406,728

65,716,895

(7,092,680)

(4,444,443)

9,798,543

63,978,315

87,385,043

(9,126,774)

(5,779,162)

(3,746,612)

(18,652,548)

68,732,495

758,216,409

163,095,441

461,812

768,695,448

1,140,358,157

119,162,219

260,363,729

1,483,423

total

294,052,218

(269,439,897)

156,263

24,768,584

67,228,608

(7,109,912)

(4,444,442)

9,776,887

65,451,141

90,219,724

(9,245,120)

(5,779,162)

(3,746,612)

(18,770,894)

71,448,830

(41,206,644)

30,242,185

758,216,409

163,095,441

461,812

865,410,208

1,237,631,270

119,162,219

260,363,729

1,483,423

SPain

9,475,689

(8,113,833)

-

1,361,856

1,511,713

(17,232)

1

(21,656)

1,472,826

2,834,682

(118,346)

-

-

(118,346)

2,716,336

-

-

-

96,714,760

97,273,113

-

-

-

i.

ii.

iii.

total


141

4. gROUP COMPANIES AND TRANSACTIONS IN PERIOD

The following is a summary of the financial data extracted from the provisory separate accounts of the entities

included in the consolidation perimeter in the last financial year, using the global integration method:

Caixa Desenvolvimento, SgPS, S.A. formed in 1998, has its registered office in Portugal. Its corporate object is

to manage equity investments in other companies, as an indirect form of performing economic activities. Caixa

Desenvolvimento, SgPS, S.A.’s shareholders’ equity at 31 December 2009 and 2008, included supplementary

contributions of €13,000,000 and €87,284,245 respectively, from the bank.

Caixa Capital - Sociedade de Capital de Risco, S.A. (Caixa Capital) has its registered office in Lisbon and was

formed on 31 December 1990 under Decree Law 17/86 of 05 february. The company’s corporate object is to support

and promote investment and technological innovation by making temporary equity investments in projects or

companies. It is also authorised to provide assistance to the financial, technical, administrative and commercial

management of its subsidiary companies. It managed four venture capital funds at 31 December 2009.

Fundo de Capital de Risco para Investidores Qualificados Energias Renováveis – Caixa Capital (FCR Energias

Renováveis) was formed in January 2006, with a subscribed capital of €50,000,000 comprising 2,000 investment

units. The fund’s objective is to invest its assets in equity investments in companies with high growth and

appreciation potential, operating in the field of generating electricity from renewable energy sources. The bank

subscribed for 1,820 investment units for a nominal amount of €45,500,000 of which amount €18,900,000 was

outstanding at 31 December 2009 and 2008. An amount of €13,700,000 was paid up in 2008.

caixa – Banco de investimento, S.a.

Caixa Desenvolvimento, SgPS, S.A.

Caixa Capital – Sociedade de

Capital de Risco, S.A.

fundo de Capital de Risco

Energias Renováveis – Caixa Capital

entity date

31-12-2009

31-12-2009

31-12-2009

31-12-2009

Percentageequity

inVeStMent

100.00

100.00

100.00

91.00

lisbon

Lisbon

Lisbon

Lisbon

regiStered office

aSSetS

1,927,907,922

28,978,986

35,595,287

53,263,737

Profit /loSS

41,969,026

(1,721,821)

3,346,254

4,544,061


226,437,269

25,934,725

28,092,240

52,992,932


142

5. CASh AND CASh EQUIVALENTS wITh CENTRAL BANkS

This account heading comprises the following:

The “sight deposits with Bank of Portugal” account heading includes the deposits providing for the demands of

the “Minimum Reserve Requirements of the System of European Central Banks” (SEBC). Interest is paid on these

deposits which comprise 2% of the deposits and debt securities with a maturity of up to two years, excluding the

deposits and public debt securities subject to SEBC minimum reserve requirements.

6. CASh ASSETS wITh OThER CREDIT INSTITUTIONS


Cash

Sight deposits with central banks

2009

2,897

187,113

190,010

2008

3,555

1,160,845

1,164,400

Cheques pending collection

In Portugal

Sight deposits

In Portugal

Abroad

2009

-

968,450

1,114,548

2,082,998

2,082,998

2008

50,000

15,754,407

1,080,953

16,835,360

16,885,360


143

7. LOANS AND ADVANCES TO CREDIT INSTITUTIONS


The “term deposits – Portugal” account heading at 31 December 2009 and 2008 comprised deposits with CgD

group financial institutions.

8. fINANCIAL ASSETS RECOgISED AT fAIR VALUE ThROUgh PROfIT AND LOSS

These headings comprise the following:


Term deposits

In Portugal

Short term loans

In Portugal

Interest receivable

2009 2008

8,484,638

-

78,966

8,563,604

9,281,619

15,000,000

120,362

24,401,981

2008

debt instruments

Public issuers

Bonds

Other issuers

Bonds and other securities

Issued by resident entities

Issued by non-resident entities

equity instruments



derivatives with positive

fair value (note 10)

2009

held for trading

41,292,177

136,167,769

127,516,724

304,976,671

42,968,768

-

42,968,768

328,962,661

676,908,100

total

41,292,179

163,393,406

130,009,320

334,694,905

63,751,158

-

63,751,158

328,962,661

727,408,724

recogniSed at fair Value through

Profit or loSS

2

27,225,637

2,492,596

29,718,234

20,782,390

-

20,782,390

-

50,500,624

89,311,803

168,206,920

66,208,742

323,727,465

37,291,022

1,420,113

38,711,135

293,605,227

656,043,827

100,378,128

212,452,639

70,552,300

383,383,067

79,808,002

1,420,113

81,228,115

293,605,227

758,216,409

11,066,325

44,245,719

4,343,558

59,655,602

42,516,980

-

42,516,980

-

102,172,582

held for trading

total recogniSed at fair Value through

Profit or loSS

144

The “debt instruments issued by other public entities – held for trading” account heading at 31 December 2009 and

2008, included €92,658,873 and €158,631,452 in bonds convertible into EDP shares issued by Parpública – SgPS,

S.A. respectively.

Information on the “financial assets recognised at fair value through profit or loss – equity instruments” account

heading is set out below:

The group recognises equity instruments for venture capital in this category, whenever there are associated

embedded derivatives (i.e. the right or contractual obligation to dispose of the subsidiary companies under

shareholders’ agreements entered into when the equity investments were made).

The 6.9% equity investment in Sumol + Compal, S.A. was received as part of the disposal process of Compal –

Companhia Produtos de Conservas Alimentares, S.A. equity investment described in Note 14. The book value of

the shares at 31 December 2009 comprised the current value of the sales option held by the group. The value of

the shares determined on the basis of Euronext Lisbon prices totalled €10,183,513 on the said date.

The group acquired 337,926 Mwh – gestão de Recursos Naturais, S.A. shares, in December 2009, though fCR

Energias Renováveis, comprising 10% of the equity at nominal unit value of €1. The group had paid up 251,305

shares by 31 December 2009, with the others still outstanding. Partners’ loans of €621,804 were also made

(Note 16).

In April 2009, as part of a restructuring operation of the investment portfolios of CgD group venture capital

area subsidiaries, Caixa Capital disposed of its investment in Visabeira, SgPS, S.A. and Convento de Belmonte –

Investimentos Turísticos, S.A. to fCR grupo CgD. The transactions were realised on the basis of the fair value of

the assets recognised in the financial statements at 31 December 2008, with a consequent nil net effect on the

group’s income for 2009.

In April 2009, the group exercised its sales option on the Manuel Inácio & filhos, S.A. shares as provided for

by the shareholders’ agreement. The amount receivable, calculated using the methodology provided for in the

agreement was €11,629,371, was transferred to the “other assets” account heading (Note 16). As a result of


Equity instruments – Venture capital

Sumol + Compal, S.A. (Note 14)

Mwh – gestão Recursos Naturais, S.A.

Visabeira, SgPS, S.A.


Manuel Inácio & filhos, SgPS, S.A.

Convento de Belmonte – Investimentos Turísticos, S.A.

Other

2009 2008

20,503,541

-

17,277,058

2,448,647

1,875,000

400,264

12,470

42,516,980

20,444,464

337,926

-

-

-

-

-

20,782,390

145

this operation, the company (i) transferred the potential capital loss of €1,875,000 which had been recognised

in the investment to impairment on debtors and other investments (Note 30) and (ii) recognised capital gains of

€7,878,971 over the cost price in the “income from assets and liabilities at fair value through profit or loss”

account heading (Note 26), which was fully offset by the same amount of impairment recognised in the account

to be received (Note 16).

In May 2009, Caixa Capital disposed of the full amount of its investment in Plataforma, SgPS, S.A., comprising

around 9.7% of the company’s share capital for the amount of €3,176,726. Annual gains comprised €364,040.

The amount of the sale was recognised in a debtors account (Note 16) with around €500,000 having been paid

in 2009.

At 31 December 2008, the “financial assets at fair value through profit or loss – equity instruments” account

included investments made under the scope of the process for the dissolution and liquidation of fundo de Capital

de Risco PME (fCR PME) at a total cost price of €1,119,944 (Note 20) and which were disposed of in 2009.

Under the terms of the agreements, the differences between the referred to cost price and the amounts to be

received should be paid or reimbursed by fCR PME members. The said investments were worth €104,381 at 31

December 2008 (Note 20).

The bank transferred a collection of securities recognised as financial assets held for trading, in 2008, to the available

for sale financial assets portfolio (Note 9).

The bank, at 31 December 2009 and 2008, held debt securities (pledged) with a nominal value of €49,366,000

and €44,150,000 respectively (Note 19).


146

9. AVAILABLE fOR SALE fINANCIAL ASSETS



2008

debt instruments

Issued by other entities

Residents

Non residents

equity instruments

Shares

gross amount


fair value

historical cost


fair value

historical cost

Impairment (Note 30)

Investment units

gross amount


gross amount

2009

89,355,228

57,229,838

146,585,066

12,531,338

153,127

40,107,235

-

52,791,700

(5,438,408)

47,353,292

21,761,702

10,220,751

79,335,745

225,920,811

71,644,521

18,567,806

90,212,327

34,689,853

153,127

48,229,155

3,063,720

86,135,855

(13,357,047)

72,778,808

104,306

-

72,883,114

163,095,441

147

Information on the value of share and investment units at 31 December 2009 and 2008, is set out below:


Venture capital investments

fundo de Capital de Risco grupo CgD

SICAR NovEnergia II

EDP Renováveis, S.A.

fomentinvest, SgPS, S.A.

Martifer, SgPS, S.A.

Pinewells, S.A.

La Seda Barcelona




Eurofrozen – Indústria e Companhia

de Produtos Alimentares, S.A.

MARL Energia – Central fotovoltaica, Lda

Other less than 100.000 euros

Other investments

SEIf – South Europe Infrastructure Equity finance

Corporación Interamericana para

el financiamiento de Infraestructura

MTS Portugal, SgMR, S.A.

2009

-

-

-

-

(3,700,808)

-

-

-

-

-

-

-

-

(3,700,808)

-

(1,737,600)

-

(1,737,600)

(5,438,408)

iMPairMent

21,761,702

17,712,326

14,612,268

5,138,081

2,595,508

1,096,941

100

-

-

-

-

-

-

62,916,926

4,052,818

1,992,123

153,127

6,198,068

69,114,994

BooK Value (*)

411,955

5,804,744

(2,669,815)

1,561,158

-

196,941

(1,695)

-

-

-

-

-

-

5,303,287

364,097

172,109

-

536,206

5,839,493

21,349,747

11,907,582

17,282,083

3,576,923

6,296,316

900,000

1,795

-

-

-

-

-

-

61,314,447

3,688,721

3,557,614

153,127

7,399,462

68,713,909

coStPrice

6.46

17.10

0.25

15.38

0.78

20.00

0.76

-

-

-

-

-

-

8.33

9.26

4.67

%inVeStMent

2008

n. d.

17.10

0.25

15.38

0.78

20.00

7.23

23.90

5.00

5.00

32.00

31.67

-

8.33

9.26

4.67

104,306

16,354,554

11,026,422

4,752,000

2,629,700

300,000

15,403,770

14,000,000

791,818

791,818

773,116

516,656

159,984

67,604,145

3,063,722

2,062,119

153,127

5,278,968

72,883,113

fair Value

reSerVe

%inVeStMent

BooK Value

(*) Net of impairment

148

Information on movements in this account, for 2009 and 2008, was as follows:




SICAR NovEnergia II




Pinewells, S.A.

La Seda Barcelona







Parque Eólico da gardunha, Lda.


Other investments





ENACOL – Empresa Nacional de

Combustíveis, S.A.

(7,325)

2,123,269

(6,514,874)

1,175,077

144,197

-

(33,492,433)

-

-

-

(763,909)

-

(1,423,643)

(28,136)

(38,787,777)

-

-

-

-

-

(38,787,777)

change in fair Value

reSerVe

iMPairMent (note 30)

-

-

-

-

(3,666,616)

-

-

-

-

-

-

-

-

-

(3,666,616)

-

-

-

-

-

(3,666,616)

-

-

17,541,296

1,826,923

1,241,027

300,000

11,294,191

-

791,818

791,818

34,956

516,656

(1,357)

991

34,338,319

1,262,501

794,028

-

(3,718,940)

(1,662,411)

32,675,908

PurchaSeS/ SaleS

111,631

14,231,285

-

1,750,000

4,911,092

-

37,602,012

14,000,000

-

-

1,502,069

-

1,425,000

187,130

75,720,220

1,801,221

1,154,712

153,127

3,718,940

6,827,999

82,548,220

Balance at 31-12-2007

eXchangedifferenceS

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

113,379

-

-

113,379

113,379

104,306

16,354,554

11,026,422

4,752,000

2,629,700

300,000

15,403,770

14,000,000

791,818

791,818

773,116

516,656

-

159,986

67,604,147

3,063,722

2,062,119

153,127

-

5,278,968

72,883,115


Continues on the next page

149

The “Other equity instruments” account heading comprises non-voting preference shares issued by Caixa geral

finance Limited, giving a right to a quarterly preferential dividend, at the company’s discretion, equivalent to

annual interest at the Euribor rate plus a spread. Caixa geral finance may redeem the preferential shares starting

from the tenth year after their issue (June 2014 and September 2015) with a 1% increase in spread if failing to

do so.

The potential capitals losses on shares classified in the “debt instruments” and “other equity capital” account

headings, at 31 December 2009 and 2008, totalled €7,250,328 and €11,697,535 respectively.

The investment in Corporación Interamericana para el financiamento de Infraestructura was made in 2001 for

4,000,000 US dollars. In August 2008, the bank acquired 1,000,000 shares for the total amount of 1,170,000

US dollars. Exposure to foreign exchange risk is hedged by funding in US dollars. Under the terms of the hedge

accounting investment, the change in fair value resulting from the foreign exchange component, in 2009 and

2008, was recognised in the income statement.




SICAR NovEnergia II




Pinewells, S.A.

La Seda Barcelona







Parque Eólico da gardunha, Lda.


Other investments





ENACOL – Empresa Nacional de Combustíveis, S.A.

407,408

1,357,772

3,845,059

386,081

-

196,941

36,574,981

-

-

-

763,910

-

-

95,780

43,627,932

364,096

-

-

-

364,096

43,992,028

-

-

-

-

(34,192)

-

-

-

-

-

-

-

-

-

(34,192)

-

-

-

-

-

(34,192)

21,249,988

-

(259,213)

-

-

600,000

(51,978,652)

(14,000,000)

(791,818)

(791,818)

(1,537,026)

(516,656)

-

(255,766)

(48,280,961)

625,000

-

-

-

625,000

(47,655,961)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(69,996)

-

-

(69,996)

(69,996)

104,306

16,354,554

11,026,422

4,752,000

2,629,700

300,000

15,403,770

14,000,000

791,818

791,818

773,116

516,656

-

159,986

67,604,147

3,063,722

2,062,119

153,127

-

5,278,968

72,883,115

21,761,702

17,712,326

14,612,268

5,138,081

2,595,508

1,096,941

100

-

-

-

-

-

-

-

62,916,926

4,052,818

1,992,123

153,127

-

6,198,068

69,114,994


reSerVe

iMPairMent (note 30)

PurchaSeS/ SaleS


eXchangedifferenceS


150

The following were the principal movements in equity instruments recognised in “available for sale financial assets”

in 2009 and 2008:

la Seda Barcelona

Caixa Capital disposed of 4,737,715 La Seda Barcelona shares in September 2008, on the stock market. Caixa

Desenvolvimento also acquired an identical number of shares on the stock market, in the same month. The value

of the share purchase totalled €3,363,778, with Caixa Capital making capital losses of €5,139,385 on the

operation (Note 26). Caixa Desenvolvimento also increased the size of its investment in La Seda Barcelona to

7.23% through its acquisition of 23,443,575 shares for €16,433,575.

Caixa Desenvolvimento disposed of its investment in La Seda Barcelona to Caixa geral de Depósitos, S.A. in January

2009 for the amount of €45,304,211. The operation generated capital losses of €6,674,441 (Note 26), fully

provisioned at 31 December 2008 (Note 19).

The investment in La Seda Barcelona, S.A. was admitted to trading in the Madrid stock market at 31 December

2009 and 2008. however trading of La Seda shares had been suspended, since June 2009, owing to the fact that

negotiations for the approval of a corporate restructuring plan were in progress.

edP renováveis, S.a.

The bank and fCR Energias Renováveis acquired 1,263,962 and 600,000 EDP Renováveis, S.A. shares in June 2008

respectively, under the IPO on Euronext Lisbon at a unit price of €8 per share, for the amount of €14,911,696.

340,000 shares for the amount of €2,629,600 were also acquired on the stock market by the by the end of 2008.

A further 340,000 shares for the amount of €2,629,600 were acquired in the stock exchange by the end of 2008.

The bank realised purchases / sales of EDP Renováveis, S.A. shares, in 2009. There was no change in the number

of shares held in comparison to 31 December 2008. These operations generated net losses of €136,571 (Note 26).

fomentinvest, SgPS, S.a.

Caixa Capital invested in an increase in the share capital of fomentinvest, SgPS, S.A. in December 2008 having

subscribed for 1,826,923 shares with a nominal value of €1 each, with its percentage investment remaining

unchanged.

Martifer, SgPS, S.a.

fCR Energias Renováveis acquired 349,020 shares for the amount of €1,241,027, in 2008.

Pinewells, S.a.

fCR Energias Renováveis acquired 60,000 Pinewells, S.A. shares for the amount of €300,000 in August 2008.


151

The fund participated in the increase in share capital of Pinewells, S.A. in July 2009, having increased the size of its

investment by €600,000 , of which €200,000 in cash and €400,000 through an incorporation of partners’ loans.

This operation gave the fund €180,000 shares, with no change to the size of its investment in the company.

a. Silva & Silva – imobiliário e Serviços, S.a.

Caixa Desenvolvimento and Caixa Capital sold their equity investments in A. Silva & Silva Imobiliário e Serviços,

S.A. in April 2009 to fCR grupo CgD – Caixa Capital at a book value of €14,000,000.

helios i / ii hyperion energy investments, Sl

153 hyperion Energy Investments, SL shares comprising 5% of the company’s share capital, for the amount of

€1,583,636 were acquired in April 2008.

The fund reinforced its equity investment in helios I hyperion Energy Investments, S.L. and helios II hyperion

Energy Investments, S.L. in first half 2009 comprising an investment of €55,000 in each. The fund disposed of its

investments for the total amount of €1,872,052, in December 2009, making capital gains of €178,416 (Note 26).

eurofrozen – indústria e comércio de Produtos alimentares, S.a. (eurofrozen)

Caixa Desenvolvimento and Caixa Capital acquired 1,563 and 156 Eurofrozen shares in August 2008, at a unit

price of €20,335. The operation totalled €34,956.

As part of a restructuring of the investments held by Caixa geral de Depósitos group’s venture capital operations,

the group disposed of its investment in Eurofrozen to fundo de Capital de Risco grupo CgD – Caixa Capital (fCR

CgD) at its book value at 31 December 2008 making capital losses of €763,909 (Note 26). Accessory capital

payments of €220,000, were also alienated.

Marl energia – central fotovoltaica, lda. (Marl energia)

Caixa Capital acquired 23,750 shares comprising 47.5% of the share capital of MARL Energia, for the amount of

€775,000, in January 2009. On the same date, it disposed of 7,917 shares, at their purchase price of €258,344

to fomentInvest, SgPS, S.A.. Caixa Capital’s equity investment, following the said operation, comprised 31.67%

of MARL Energia’s share capital at 31 December 2008.

As part of the above referred to restructuring operation of Caixa geral de Depósitos group’s venture capital port-

folio operations, the group disposed of its investment in MARL Energia to fCR grupo CgD in April 2009, at its

book value at 31 December 2008. This operation did not generate any income for the bank.

fundo de capital de risco grupo cgd – caixa capital

The company participated in the share capital increase of fundo de Capital de Risco grupo CgD – Caixa Capital,


152

in April 2009, having subscribed for 418 investment units at a unit price of €50,837, totalling €21,249,987. The

company had paid up €16,000,000 by 31 December 2009 with the outstanding amount to be realised by 31

December 2010 (Note 20).

Sobreovento – energias alternativas, lda

fCR Energias Renováveis made an investment of 19.9% in the share capital of Sobreovento – Energias Alternativas.

Lda. (Sobreovento), for €995, in 2008. The company was formed as a vehicle for the acquisition of PEA – Parques

Eólicos de Arganil, Lda., formed in April 2005, for the construction and operation of three wind farms in Arganil

and Pampilhosa da Serra.

following this operation, the fund made partners’ loans of €3,980,000 to Sobreovento of which €1,990,000 had

been repaid by 31 December 2008.

In March 2009, an agreement for the sale of a stake in Ventosga – Produção de Energia, SgPS, S.A., under which the

fund disposed of the whole of its investment in Sobreovento – Energias Alternativas, Lda. for €2,010,000, making

capital gains of €2,009,005 (Note 26). This operation also included the repayment of partners’ loans of €1,990,000.

Vista alegre atlantis, SgPS, S.a.

Cerutil, S.A. launched a takeover bid for Vista Alegre Atlantis, SgPS, S.A., (“Vista Alegre”), in 2009 offering

€0.092 per non-listed share and 0.072 per share resulting from the merger. Under the terms of this operation,

Caixa Desenvolvimento disposed of 7,106,960 Vista Alegre shares, for the amount of €523,037 recognising

capital gains for the same amount (Note 26), as impairment on the full amount of the investment had been

recognised.

South europe infraestructure equity finance

The bank was involved in the South Europe Infrastructure Equity finance (SEIEf) capital increases in 2009 and

2008, investing an amount of €625,000 and €1,262,501 respectively. The bank has undertaken to provide up to

€10,000,000 in capital funding at the fund’s request, whenever a new operation is realised.

reclassification of securities

The bank reclassified its financial assets held for trading category securities to the available for sales financial as-

sets category on 01 July 2008, in conformity with the change to the IAS 39 Standard approved on 13 October

2008. Owing to the turbulence in the financial markets in 2008, the fact that the bank does not expect to dispose

of these securities over the short term explains the reason for the transfer between categories.


153

Information on the impact of the reclassification of these securities, in income and fair value reserves account

headings is set out below:

The fiscal effect is not reflected in the amounts.

fair value

Accrued interest

Book value

fair value reserve

Capital gains / losses recognised in income statement for year

impact on income for the period without reclassification

31-12-2009 aMount

31-12-2008 aMount

12,922,417

92,090

13,014,507

(2,161,051)

1,598,457

(1,114,943)

37,359,987

781,314

38,141,301

(1,046,108)

(2,170,534)

(1,046,108)


154

10. fINANCIAL DERIVATIVE INSTRUMENTS

These operations were valued in conformity with the criteria set out in Note 2.6.c), at 31 December 2009 and

2008. Information on the respective notional and balance sheet value, at the said dates, is set out below:

2009

financial derivative

instruments

OTC

Swaps

Interest rates

Equity swaps

Commodity forwards

Currency forwards

Caps & floors

Options

On interest rates

On currencies

On commodities

Stock market

futures

Interest rate

Equity swaps

notional aMount BooK Value

9,158,572,400

59,892,105

9,583,784

-

2,624,518,740

600,000,500

39,666,496

4,138,276

12,496,372,301

114,685,187

1,750,000

12,612,807,488

16,661,158

-

-

-

-

-

-

-

16,661,158

-

-

16,661,158

9,141,911,242

59,892,105

9,583,784

-

2,624,518,740

600,000,500

39,666,496

4,138,276

12,479,711,143

114,685,187

1,750,000

12,596,146,330

total hedgederiVatiVeS

trading deriVatiVeS

259,588,520

17,207,758

-

-

39,193,592

11,378,513

1,083,613

510,664

328,962,661

-

-

328,962,661

(248,158,494)

-

-

-

(39,132,727)

(11,386,664)

(1,083,613)

(510,664)

(300,272,162)

-

-

(300,272,162)

(766,415)

-

-

-

-

-

-

-

(766,415)

-

-

(766,415)

10,663,611

17,207,758

-

-

60,866

(8,151)

-

-

27,924,084

-

-

27,924,084

aSSetSheld for trading (note 8)

liaBilitieS held for trading

hedgederiVatiVeS

total


155

The balance on the “Swaps – market value” account heading at 31 December 2009, comprised an equity swap to

hedge the risk on changes in the value of shares recognised in the trading portfolio. This agreement also provides

for collateral comprising a deposit to be maintained with the bank by the counterparty and recognised in the

“creditors and other resources – price adjustments” (Note 20) account heading.

The “options on associated companies” account heading at 31 December 2008, refers to the revaluation of a

sales option on the equity investment in Pestana Pousadas Investimentos Turísticos, S.A. group (Note 14).

The book value of the assets classified as hedged items, at 31 December 2009 and 2008, totalled €13,409,321

and €14,195,957 respectively, including €1,578,920 and €1,558,370 (Note 11), respectively, in respect of value

adjustments.

The book value of liabilities classified as hedged items also totalled €6,051,308 and €5,723,912 respectively

at 31 December 2009 and 2008, including €271,060 and €160,731 (Note 18), respectively, relating to value

adjustments.

financial derivative

instruments

OTC

Swaps

Interest rate

Equity swaps

Currency forwards

Caps & floors

Options

Market prices

Associated companies

Stock market

futures

Interest rate

6,916,987,525

59,892,105

40,000,000

3,548,185,044

64,255,227

-

10,629,319,901

66,237,091

10,695,556,992

17,456,798

-

-

-

-

-

17,456,798

-

17,456,798

6,899,530,727

59,892,105

40,000,000

3,548,185,044

64,255,227

-

10,611,863,103

66,237,091

10,678,100,194

232,563,060

24,584,001

142,451

23,029,569

10,584,070

2,702,076

293,605,227

-

293,605,227

(226,620,869)

-

(134,531)

(23,024,259)

(10,584,070)

-

(260,363,729)

-

(260,363,729)

(1,021,611)

-

-

-

-

-

(1,021,611)

-

(1,021,611)

4,920,580

24,584,001

7,920

5,310

-

2,702,076

32,219,887

-

32,219,887

2008



trading deriVatiVeS



hedgederiVatiVeS

total


156

Information on the distribution of financial derivative instruments operations, at 31 December 2009 and 2008 by

periods to maturity (notional amounts) is set out below:

2009

financial derivatives

OTC

Swaps

Interest rate

Trading

hedge

Equity swaps

Trading

Commodity forwards

Trading

Caps & floors

Trading

Options

On interest rates

On currencies

On commodities

Stock market

futures

Interest rate

Trading

Equity swaps

150,000,000

-

150,000,000

-

150,000,000

-

60,000,000

-

6,598,460

4,138,276

220,736,736

114,685,187

1,750,000

337,171,923

96,468,870

-

96,468,870

59,892,105

156,360,975

-

-

-

7,825,952

-

164,186,927

-

-

164,186,927

320,162,472

-

320,162,472

-

320,162,472

9,538,784

52,506,000

-

22,003,975

-

404,256,231

-

-

404,256,231

4,607,350,293

5,000,000

4,612,350,293

-

4,612,350,293

-

1,426,883,762

-

3,238,109

-

6,042,472,164

-

-

6,042,472,164

3,967,929,607

11,661,158

3,979,590,765

-

3,979,590,765

-

1,085,128,978

600,000,500

-

-

5,664,720,243

-

-

5,664,720,243

9,141,911,242

16,661,158

9,158,572,400

59,892,105

9,218,464,505

9,538,784

2,624,518,740

600,000,500

39,666,496

4,138,276

12,496,372,301

114,685,187

1,750,000

12,612,807,488

<= 3 MonthS > 3 <= 6 MonthS

6 MonthS <= 1 year

>1 <= 5 yearS

> 5 yearS total


157


OTC

Swaps

Interest rate

Trading

hedge

Equity swaps

Trading

Currency forwards

Trading

Caps & floors

Trading

Commodity options

Trading

Stock market

futures

Interest rate

Trading

1,320,733,276

-

1,320,733,276

-

1,320,733,276

40,000,000

-

7,615,431

1,368,348,707

66,237,091

1,434,585,798

66,667

-

66,667

-

66,667

-

-

13,802,976

13,869,643

-

13,869,643

169,305,439

-

169,305,439

-

169,305,439

-

673,200,000

38,553,138

881,058,577

-

881,058,577

2,413,489,223

-

2,413,489,223

59,892,105

2,473,381,328

-

2,526,805,024

4,283,682

5,004,470,034

-

5,004,470,034

2,995,936,122

17,456,798

3,013,392,920

-

3,013,392,920

-

348,180,020

-

3,361,572,940

-

3,361,572,940

6,899,530,727

17,456,798

6,916,987,525

59,892,105

6,976,879,630

40,000,000

3,548,185,044

64,255,227

10,629,319,901

66,237,091

10,695,556,992

2008


6 MonthS <= 1 year

>1 <= 5 yearS

> 5 yearS total


158

Information on the distribution of financial derivative instruments operations, by counterparty type, at 31 December

2009 and 2008, is set out below:

2008

Contracts on interest rates

Interest rate swaps

financial institutions

Customers

Equity swaps

Customers

Commodity forwards


Customers

forward rate agreement


Customers

Caps & floors


Customers

Interest rate options


Central government

Customers

Currency options


Customers

Commodity options


Customers

Options - associated companies

Customers

futures

Stock market

4,724,322,177

4,434,250,223

9,158,572,400

59,892,105

59,892,105

4,791,892

4,791,892

9,583,784

-

-

-

1,312,259,370

1,312,259,370

2,624,518,740

300,000,000

300,000,000

500

600,000,500

19,833,248

19,833,248

39,666,496

2,069,138

2,069,138

4,138,276

-

116,435,187

12,612,807,488

(187,527,935)

198,191,546

10,663,611

17,207,758

17,207,758

-

-

-

-

-

-

(25,350,892)

25,411,758

60,866

(11,386,664)

11,378,513

-

(8,151)

896,768

(896,768)

-

(134,631)

134,631

-

-

-

27,924,084

notional Value

BooKValue

3,715,905,214

3,201,082,311

6,916,987,525

59,892,105

59,892,105

-

-

-

20,000,000

20,000,000

40,000,000

1,774,092,522

1,774,092,522

3,548,185,044

-

-

-

-

-

-

-

32,127,618

32,127,609

64,255,227

-

66,237,091

10,695,556,992

(172,619,822)

177,540,402

4,920,580

24,584,001

24,584,001

-

-

-

(134,531)

142,450

7,919

(18,519,784)

18,525,094

5,310

-

-

-

-

-

-

-

(1,840,126)

1,840,126

-

2,702,076

-

32,219,886

2009

notional Value

BooKValue


159

11. LOANS AND ADVANCES TO CUSTOMERS


Information on impairment movements for 2009 and 2008, is set out in Note 30.

This account was broken down as follows, by periods to maturity at 31 December 2009 and 2008:

2008

Domestic credit

Loans

Current account

Current account overdrafts

Other credit

Securitised domestic credit

Commercial paper

foreign loans

Loans

Current account

Other credit

Value adjustments relating to hedged assets (Note 10)

Interest receivable

Deferred income

Commissions associated with amortised cost

Interest

Overdue credit and interest


2009

413,786,428

26,298,920

5,678,613

10,470,240

45,800,000

408,927,704

3,244,880

105,990

1,578,920

915,891,695

2,932,062

(4,071,982)

(9,378)

914,742,397

1,826,980

916,569,377

(37,938,559)

878,630,819

385,317,967

26,509,400

5,943,793

9,284,346

45,500,000

398,860,789

2,990,775

-

1,558,370

875,965,440

6,803,378

(4,286,005)

(129,055)

878,353,758

1,469,590

879,823,348

(14,413,141)

865,410,208

2008

Up to three months

Three months to one year

One to five years

More than five years


2009

65,801,569

2,551

229,669,110

585,184,042

35,234,423

915,891,695

45,858,370

4,007,085

155,445,867

635,198,139

35,455,979

875,965,440


160

Impairment, recognised at 31 December 2009 and 2008, was determined as follows:

The total nominal value of credit suffering from impairment at 31 December 2009 and 2008 was €56,677,002

and €37,953,533 respectively, including the amounts recognised in overdue credit.

Sector distribution of loans and advances to customers (nominal value), excluding overdue credit, at 31 December

2009 and 2008, was as follows:

2008

Specific analysis

Collective analysis

2009

24,709,087

13,229,472

37,938,559

7,779,275

6,633,866

14,413,141

2008

Mining industries

Manufacturing industries

Electricity, water and gas generation and distribution

food, beverages and tobacco industries

Basic metallurgical and metal industries

Textiles industry

Chemicals and synthetic or artificial fibres manufacture

Manufacture of transport material

Paper pulp, card and publishing and printing thereof

Manufacture of electrical and optical equipment

Other manufacturing industries

Manufacture of articles of rubber and plastic

Property, rentals and corporate services

Property

Other

Transport, warehousing and communications

Construction

wholesale / retail

health and social security

financial activities

hotels and restaurants

Other activities and collective, social and personal activities

Loans and advances to individual customers

2009

actiVity

-

136,503,901

15,014,835

8,512,486

9,607,544

6,070,629

4,411,704

789,468

890,489

1,588,217

787,294

55,379,659

183,826,975

275,685,222

100,821,357

27,478,122

22,585,671

6,000,000

5,007,454

42,623,662

12,307,007

915,891,696

aMount %

-

14.9

1.6

0.9

1.0

0.7

0.5

0.1

0.1

0.2

0.1

6.0

20.1

30.1

11.0

3.0

2.5

0.7

0.5

4.7

1.3

100

-

135,531,667

13,787,608

8,074,030

9,607,544

6,572,147

7,106,967

2,430,675

967,699

1,873,401

1,300,840

50,499,110

187,185,502

246,323,916

97,754,212

27,682,827

23,358,369

-

5,511,589

39,184,337

11,213,000

875,965,440

aMount %

-

15.5

1.6

0.9

1.1

0.8

0.8

0.3

0.1

0.2

0.1

5.8

21.4

28.1

11.2

3.2

2.7

-

0.6

4.5

1.3

100


161

12. OThER TANgIBLE ASSETS

Information on movements in the “other tangible assets” account headings for the years 2009 and 2008 is set

out below:

2009

Property

for own use

Other property

Equipment

Computer equipment


furniture and material

Plant and machinery

Transport material

Other equipment

Security equipment

Tangible assets

in progress

Leased assets

Transport material

Balance at 31-12-08

460,636

-

77,513

-

242,512

26,912

55,658

-

-

-

-

863,230

acquiSitionS

(3,176,903)

(77,843)

(1,461,582)

(1,745,074)

(1,049,345)

(450,487)

(96,755)

(565)

(240,087)

-

(496,151)

(8,794,792)

13,093,384

77,843

1,698,023

1,822,356

1,316,217

546,159

143,375

1,367

240,087

2,646,002

737,434

22,322,247

accuMulated dePreciation

groSS aMount

2,646,002

-

-

-

-

-

5,000

-

-

(2,646,002)

(5,000)

-

tranSferS(net)

(479,428)

-

(162,109)

(18,403)

(93,167)

(27,084)

(35,565)

-

-

-

(93,800)

(909,557)

dePreciation for year

-

-

-

(2,133)

(98)

-

-

-

-

-

(72,138)

(74,368)

Write-offS (net)

12,543,691

-

151,845

56,746

416,119

95,499

71,712

802

-

-

70,345

13,406,759

net aMount

at 31-12-09


162

Tangible assets in progress, at 31 December 2008, comprised expenses incurred on building works on Caixa –

Banco de Investimento’s headquarters which were completed in 2009.

13. INTANgIBLE ASSETS

Information on movements in the “intangible assets” account headings for the years 2009 and 2008 is set out below:


-

-

288,137

-

254,846

71,655

53,268

-

-

2,646,002

-

3,313,908

(168,764)

-

(272,264)

(34,420)

(93,044)

(32,100)

(16,651)

-

-

-

(196,650)

(813,893)

-

-

-

-

-

-

(9,150)

-

-

-

(129,264)

(138,414)

9,916,481

-

236,441

77,282

266,872

95,672

46,620

802

-

2,646,002

241,283

13,527,455

(3,008,139)

(77,843)

(1,198,926)

(1,712,878)

(956,962)

(419,092)

(157,434)

(4,457)

(240,087)

-

(660,565)

(8,436,383)

13,093,384

77,843

1,419,494

1,824,580

1,062,032

475,209

176,587

5,259

240,087

-

1,227,762

19,602,237

2008

Balance at 31-12-07

acquiSitionS accuMulated dePreciation

groSS aMount


Write-offS (net)

net aMount

at 31-12-09

Property

for own use

Other property

Equipment

Computer equipment



Plant and machinery

Transport material

Other equipment

Security equipment

Tangible assets in progress

Leased assets

Transport material

2009

Automatic data

processing systems

Intangible assets

in progress

Balance at 31-12-08

87,546

258,193

345,739

(3,732,651)

-

(3,732,651)

4,046,928

68,081

4,115,009

36,578

(36,578)

-

191,744

258,193

449,936

(246,658)

-

(246,658)

-

(31,503)

(31,503)


groSS aMount

tranSferS net aMount at

31-12-09


adJuStMentS

163

fixed assets in progress, at 31 December 2009 and 2008, comprised expenses incurred on the acquisition of

software not yet in use at the said dates.

14. INVESTMENTS IN ASSOCIATED COMPANIES

The “investments in associated companies” account heading, at 31 December 2008, comprised a 25% equity

investment in grupo Pestana Pousadas Investimentos Turísticos, SA. (Pestana Pousadas group).

Caixa – Banco de Investimento group had a sales option (see Note 10) on the investment in Pestana Pousadas

group under a shareholders’ agreement. The option may be taken up from May 2009 at the highest of the

following prices:

Cost price;

Valuation price determined by an independent entity. If the implicit valuation is higher than a pre-defined rate

of return, the surplus will be split up between Caixa – Banco de Investimento group and Pestana group in

accordance with a predefined percentage.

The investment was disposed of to fCR grupo CgD, in April 2009, for the amount of €5,907,796 originating

capital gains of €2,420,310 (Note 27). The accessory capital payments and partners’ loans made by the group for

€3,287,500 and €712,500, respectively were also alienated.

Sumol + compal, S.a.

Caixa Desenvolvimento had an equity investment of 49% in Compal – Companhia Produtos de Conservas Ali-

mentares, S.A. (Compal), at 31 December 2007 at a cost price of €61,250,000 including supplementary contri-

butions of €56,350,000.


2008

Automatic data

processing systems

Intangible assets

in progress

162,045

-

162,045

(3,513,260)

-

(3,513,260)

3,724,553

232,944

3,957,497


groSS aMount

164,863

(164,863)

-

314,277

68,081

382,358

(223,924)

-

(223,924)

Balance at 31-12-07

acquiSitionS tranSferS dePreciation for year

net aMount at

31-12-08

164

The group made contact with Sumolis, in 2007, with a view to the disposal of the Compal equity investment, with

a promissory sales agreement having been entered into with this subsidiary in first quarter 2008.

2008 witnessed the following developments with this operation:

The Competition Authority issued a declaration of non-opposition to Compal’s sale on 14 August 2008, pursuant

to which Caixa Desenvolvimento disposed of 29.9% of Compal’s share capital for €42,426,257, including

accessory capital payments of €34,385,000;

A general meeting of shareholders approved the merger project between Compal and Sumol+Compal, gestão

de Marcas, S.A. in December 2008 which was formalised on 23 December 2008 with effect from 31 December

2008. In accordance with the agreement Caixa Desenvolvimento disposed of 5.0225% of the company’s share

capital for €7,334,427 including accessory capital payments of €5,775,875;

After the merger, Sumol+Compal, S.A. issued 20,619,055 new shares, fully subscribed and paid up by Caixa

Desenvolvimento and fundo de Capital de Risco grupo CgD – Caixa Capital comprising the surrender of Compal

shares. The shares received were valued at €20,503,541.

As a result of these operations, the group recognised capital gains of €9,031,539 and €6,505,556, in 2008,

registered in the “other operating income - income generated by associated companies ” (Note 27) and “income

from other financial assets recognised at fair value through profit or loss” (Note 26) account headings.

Caixa Desenvolvimento’s equity investment in Sumol+Compal at 31 December 2009 and 2008, comprised

6.921% of its share capital, recognised in the “financial assets at fair value through profit or loss” account heading

(Note 8). Caixa Desenvolvimento has a sales option on the shares which can be exercised forty three months after

the merger occurring in the meantime, reflected in the investment’s book value.

Information on the book value of these investments in 2009 and 2008 and respective impact in the consolidated

financial statements is set out below:


Balance at 31 december 2007

Disposal of equity investment in Compal

Income generated by associated companies

Supplementary contributions


Disposal of equity investment in grupo Pestana



coMPal

56,493,231

(54,727,129)

(1,766,102)

-

-

-

-

-

total

59,607,908

(54,727,129)

(2,093,292)

700,000

3,487,487

(5,907,797)

2,420,310

-

gruPo PeStana

3,114,677

-

(327,190)

700,000

3,487,487

(5,907,797)

2,420,310

-

165

15. INCOME TAX

Tax assets and liabilities balances, at 31 December 2009 and 2008, were:

The “income tax to be recovered” account heading, at 31 December 2009 and 2008, included €657,900 in

respect of a claim made by the bank on its IRC for 2000.

The following table provides details and information on deferred tax movements in 2009 and 2008:


2008

Current tax assets

Income tax to be recovered


Income tax payable

Deferred tax assets


2009

657,900

(18,412,651)

(17,754,751)

19,394,538

(1,112,807)

18,281,731

828,868

(2,609,956)

(1,781,088)

5,215,771

(1,426,821)

3,788,950

Impairment and provisions disallowed for fiscal purposes

Commissions

Revaluation of financial derivatives

Revaluation of fixed assets disallowed for fiscal purposes

Valuation of available for sale financial assets

Impairment of available for sale financial assets

Valuation of other assets recognised at fair value through

profit or loss

Value adjustments on hedged assets

Deferral of capital gains tax on the disposal of financial

investments (Note 2.11)

fiscal benefits – Venture capital (Note 2.11)

2009

1,284,398

1,214,157

300,371

(184,365)

958,055

475,826

(21,726)

(246,499)

(543,827)

552,562

3,788,950

-

-

-

-

(512,205)

-

-

-

-

-

(512,205)

Balance at 31-12-08

change in incoMe

change in Share-holderS’ equity

Balance at 31-12-09

7,728,302

6,857,122

(150,186)

5,942

-

(246,412)

10,863

123,249

148,268

528,838

15,005,986

9,012,700

8,071,279

150,185

(178,423)

445,850

229,414

(10,863)

(123,250)

(395,559)

1,081,400

18,282,731

166

The “other” column, in 2008 , reflects deferred tax movements recognised as a charge to the current tax account

heading.

The group does not recognise deferred tax assets whenever the existence of future taxable income allowing their

respective use is not probable. Deferred tax assets of €787,431 and €1,606,441 respectively, were not recog-

nised by Caixa Capital at 31 December 2009 and 2008, respectively.


Impairment and provisions disallowed for fiscal purposes

Commissions

Revaluation of financial derivatives





profit or loss


Carry back of losses

Deferral of capital gains tax on the disposal of financial

investments (Note 2.11)

fiscal benefits – Venture capital (Note 2.11)

1,275,824

342,079

450,557

(190,306)

260,693

486,184

(32,589)

(369,749)

275,526

(692,096)

707,280

2,513,401

-

-

-

-

1,003,845

-

-

-

-

-

-

1,003,845

8,574

872,078

(150,186)

5,941

24,403

-

10,863

123,250

(275,526)

148,269

(154,718)

612,948

1,284,398

1,214,157

300,371

(184,365)

958,055

475,826

(21,726)

(246,499)

-

(543,827)

552,562

3,788,950

-

-

-

-

(330,886)

(10,358)

-

-

-

-

-

(341,244)

2008

Balance at 31-12-07

change in incoMe

change in ShareholderS’

equity

Balance at 31-12-08

other

167

Information on tax on profit recognised in the income statement and the tax burden, measured by the ratio

between the appropriation for tax on profit and net profit for the year before tax is set out below:

Current tax reflected in reserves for the amount of €1,962,571 and €2,795,631, at 31 December 2009 and

2008, respectively, refers to the tax associated with the revaluation of debt securities classified as available for sale

financial assets in the year, for the purposes of determining tax income for the year. The deferred tax recognised in

the same account heading refers to the revaluation during the year of equity investments also classified as available

for sale financial assets, whose fiscal effects will only be produced at the time of disposal.


2008

having an impact on net income for year

Current tax

year

Adjustments relating to previous years

Deferred tax

Recognition and reversal of temporary differences

Total tax in income statement

Income before tax and minority shareholders’ interests

Tax burden

having an impact on reserves

Current tax

Deferred tax

Total tax in reserves

total tax in shareholders’ equity

2009

26,103,823

(4,527)

26,099,296

15 005,986

11,093,310

56,831,345

19.52%

1,963,571

512,205

2,475,776

13,569,086

12,914,013

55,533

12,969,546

(612,948)

12,356,599

42,349,632

29.18%

(2,795,361)

(1,003,845)

(3,799,207)

8,557,393

168

Information on the reconciliation between the nominal and effective tax rate in 2009 and 2008 is set out below:

In conformity with current legislation, tax returns are subject to review and correction by the tax authorities for

a period of four years. The bank’s tax returns for 2006 to 2009 are therefore still subject to review and the

possibility of correction.

The board of directors considers that any correction is unlikely to have a significant impact on the financial statements,

at 31 December 2009.


income before tax and minority shareholders’ interests

Determination of tax at nominal rate

fiscal losses per corporate grouping

Impact of tax regime on activities performed

by Madeira Offshore Branch (Note 2.11)

fiscal benefits

Income generated by associated companies - tax regime for Caixa

Capital and Caixa Desenvolvimento discontinued operations

financial instruments with embedded derivatives


fiscal regime for fCR Energias Renováveis

fiscal gains

Provisions disallowed for fiscal purposes

Separate source-based taxation

Interest disallowed for fiscal purposes

Other

2009

26.50

(0.59)

(7.03)

(1.75)

(0.50)

-

(1.13)

(0.68)

0.02

3.96

0.16

0.04

0.51

19.52

rate (%) taX

56,831,345

15,060,307

(333,453)

(3,994,219)

(996,872)

(283,000)

-

(641,382)

(386,891)

11,656

2,249,357

93,033

22,491

292,284

11,093,310

2008

26.50

(1.10)

(0.42)

(0.18)

(5.41)

(0.45)

1.31

1.73

(0.02)

5.69

0.22

1.10

0.21

29.18

rate (%) taX

42,349,632

11,222,652

(464,849)

(177,739)

(78,067)

(2,292,248)

(190,945)

554,722

733,614

(7,748)

2,409,660

92,041

467,920

87,586

12,356,599

169

16. OThER ASSETS


The amounts of €7,127,212 and €10,544,834 at 31 December 2009 and 2008, respectively, refer to amounts

receivable from Caixa Desenvolvimento’s June 2002 disposal of its investment in Barraqueiro, SgPS, S.A. Based

on the initial agreement, the part of the sales price not settled would be paid in four equal successive instalments,

falling due on the last working day of the months of December 2003 to December 2006. An addendum was

appended to the initial agreement of 7 february 2006, in which Caixa Desenvolvimento received 50% of the


2008

Debtors and other loans and advances

Proceeds from sale of the equity investment in Inácio & filhos, S.A. (Note 8)

Proceeds from sale of the equity investment in Barraqueiro

Capital

Interest receivable

Partners’ loans

Partners’ loans acquired as part of the liquidation of fCR PME (Note 20)

Other

Other investments

Accessory capital payments acquired as part of the liquidation of fCR PME (Note 20)

Other accessory capital payments

Debtors – futures trading

Other debtor balances acquired as part of the liquidation of fCR PME (Note 20)

Miscellaneous

other assets

Income receivable

Other interest receivable

Other income receivable

Deferred expenses

Insurance

Leasing instalments

Other deferred expenses

Prepayments and accrued income

Securities operations pending settlement

Other lending operations pending settlement



2009

11,629,371

7,127,212

83,194

-

621,804

-

-

2,412,435

2,357,806

6,951,256

31,183,078

48,846

-

823,014

823,014

9,916

3,812

996,273

1,010,001

15,559,066

385,195

15,944,261

5,972,841

54,982,041

(17,956,869)

37,025,172

-

10,544,834

328,099

125,000

18,414,889

187,500

411,665

1,752,804

1,588,519

4,986,931

38,340,241

48,846

234,119

33,510

267,629

8,892

46,912

1,161,787

1,217,591

21,213,953

283,249

21,497,202

5,190,311

66,561,819

(6,836,509)

59,725,310

170

outstanding principal and a new payments schedule was agreed, comprising four payments falling due on the last

working day of June over the period 2007 - 2010. Interest, at the market rate, is payable on the overdue amounts

and paid on the date of liquidation of each instalment. Caixa Desenvolvimento has a pledge on the shares to

guarantee payment of the outstanding amounts.

Information on the “partners’ loans” account heading at 31 December 2009 and 2008, is set out below:

Interest at market rates is payable on partners’ loans at 31 December 2009 and 2008, with the following periods

to maturity to reimbursement:

The “miscellaneous debtors” account heading at 31 December 2009 and 2008 includes €4,181, 933 and €3,631,516

in amounts receivable from customers for the invoicing of services provided by the bank.

The “other deferred expenses” account heading, at 31 December 2009 and 2008 includes €709,891 and €932,188

respectively, in respect of the investment in Agrupamento Complementar de Empresas TREM II – Aluguer de

Material Circulante, ACE.

The “securities operations pending settlement” account heading, at 31 December 2009 and 2008, comprises the

value of the operations for the sale of securities for the year and settled in the few first days of the following year.

At 31 December 2009 and 2008, the “overdue credit and interest” account heading included overdue loans of

€3,551,441, originated in Caixa Valores and deriving from securities trading operations in 1992 by a group of

customers. Impairment for the same amount has been allocated to this credit.


2008

Mwh – gestão de Recursos Naturais, S.A. (Nota 8)

A. Silva & Silva – Imobiliário e Serviços, S.A. (Nota 9)

Sobreovento – Energias Alternativas, Lda.

grupo Pestana – Pousadas Investimentos Turísticos, S.A. (Nota 14)

MARL Energia – Central fotovoltaica, Lda.

Other

2009

621,804

-

-

-

-

-

621,804

-

15,529,055

1,990,000

712,500

183,334

125,000

18,539,889

2008


One to five years


Unspecified

2009

621,804

-

-

-

621,804

-

13,756,172

4,658,717

125,000

18,539,889

171

Caixa Valores took legal action against the group of customers in September 1994, accusing them of responsibility

for realising the referred to operations and claiming an amount of €6,003,180 plus interest accruing since June

1993. As the action is still in progress, the bank has not recognised any asset related with this situation.

Information on “impairment” at 31 December 2009 and 2008, is set out below:

17. OThER CREDIT INSTITUTIONS’ RESOURCES



2008

Other investments and partners’ loans:

Other

Debtors

Proceeds from sale of the equity investment in Inácio & filhos, S.A. (Note 8)

Caixa Valores


Overdue invoices

Customers bad or doubtful debts

Other

2009

-

9,754,371

3,551,441

1,311,963

465,448

299,047

2,574,599

17,956,869

274,495

-

3,551,441

1,227,898

384,273

-

1,398,402

6,836,509

2008

Credit institutions’ resources In Portugal

Very short term deposits

Term deposits

Sight deposits

Credit institutions’ resources abroad

Term deposits

Sight deposits

Interest payable

2009

475,945,796

597,145,000

157,106

34,585,000

1,292

1,107,834,194

1,094,769

1,108,928,963

1,109,158,795

89,100,000

170,665

38,250,000

1,364

1,236,680,824

950,446

1,237,631,270

172

Information on the periods to maturity of other credit institutions’ resources is set out below:

18. CUSTOMER RESOURCES AND OThER LOANS


The following information is provided on deposits at 31 December 2009 and 2008 in accordance with their

respective period to maturity:


2008

Sight deposits and overdrafts

Up to three months

Three months to three years

2009

158,398

1,006,275,796

101,400,000

1,107,834,194

172,029

1,147,408,795

89,100,000

1,236,680,824

2008

Deposits

Sight

Term

Value adjustments relating to hedged liabilities (Note 10)

Interest payable on deposits

2009

53,673,824

83,499,915

137,173,739

271,060

137,444,799

1,680,175

139,124,974

41,366,078

76,083,032

117,449,110

160,731

117,609,841

1,552,378

119,162,219

2008

Up to three months


One to five years


2009

93,642,124

32,103,400

5,000,000

6,428,215

137,173,739

100,845,648

4,300,000

-

12,464,193

117,609,841

173

19. PROVISIONS AND CONTINgENT LIABILITIES

PROVISIONS

Information on “provisions for other risks” movements in 2009 and 2008 is set out below:

Provisions for guarantees provided and commitments assumed are calculated on the basis of the estimated losses

associated with operations in progress, in accordance with a separate analysis and Caixa geral de Depósitos

group parameters.

Provisions for other risks comprise the group’s best estimate of eventual amounts to be expended on settling

legal, fiscal and other contingencies. They also reflect the effect of any depreciation on financial assets.

The “provision for other risks and liabilities – other risks ” account heading at 31 December 2008, included

€6,674,441 for the depreciation of the equity investment in La Seda Barcelona, S.A. The provision was cancelled

after the sale in 2009 (Note 9).


for other risks and liabilities

guarantees and commitments

Other risks

2009

377,293

11,935,816

12,313,109

-

(18,166,214)

(18,166,214)

Balance at 31-12-08

increaSeS cancellationS and recoVerieS

Balance at 31-12-09

143,294

19,839,666

19,982,959

520,587

13,609,267

14,129,854

537,003

2,530,986

3,067,989

(159,710)

(5,000,000)

(5,159,710)

-

14,404,830

14,404,830

377,293

11,935,816

12,313,109

2008

Balance at 31-12-07


Balance at 31-12-08

for other risks and liabilities

guarantees and commitments

Other risks

174

CONTINgENT LIABILITIES AND COMMITMENTS

Contingent liabilities associated with banking activity are recognised in off-balance sheet account headings as

follows:

The “assets-backed guarantee” account heading, at 31 December 2009 and 2008 comprises the nominal value

of debt securities pledged, by the bank (Note 8), in respect of the following situations:

The object of the Deposit guarantee fund is to guarantee customers’ deposits in conformity with the limits fixed

in the general Credit Institutions Regime. This takes the form of regular annual contributions. A part of the said

contributions takes the form of an irrevocable commitment to realise the respective contributions when requested

by the fund. These amounts are not recognised in costs. The total value of commitments assumed since 1996

totals €162,182.


2008

Contingent liabilities

guarantees and sureties

Asset-backed guarantees (Note 8)

Commitments

Revocable lines of credit

Securities subscriptions

Other irrevocable commitments

Potential liability to Investors’ Indemnity System

Term liabilities to Deposit guarantee fund

Other

Liabilities for the provision of services

Deposit and custody of securities

Amounts under bank management

2009

68,226,250

49,366,000

117,592,250

96,773,915

29,741,054

-

2,052,436

162,182

83,135

128,812,722

7,314,299,425

342,246,565

78,850,623

44,150,000

123,000,623

142,973,041

31,041,679

299,524

2,052,436

162,182

83,135

176,611,997

4,825,780,957

195,582,587

2008

“SPgT” (Major Transactions Processing System)

Caixa geral de Depósitos, S.A. – Euronext

Investors’ Indemnity System (SII)

Deposit guarantee fund

2009

44,666,000

2,500,000

1,950,000

250,000

49,366,000

40,600,000

2,000,000

1,550,000

-

44,150,000

175

The balance on the “amounts under bank management” account heading, at 31 December 2009 and 2008 comprises

the value of the following venture capital funds managed by Caixa Capital, excluding outstanding capital:


fCR grupo CgD – Caixa Capital

fCR Energias Renováveis – Caixa Capital

fCR Mezzanine

fCR Empreender +

incoMe

2008 2009

271,071,134

34,092,931

29,726,811

7,355,689

342,246,565

Value offund

5,341,566

4,544,061

(273,189)

(144,311)

netfund

166,033,717

29,548,870

-

-

195,582,587

Value ofincoMe

netfund

(16,229,428)

(4,651,314)

-

-

176

20. OThER LIABILITIES



2008

Creditors and other resources

Price adjustments – Equity swap (Note 10)

Outstanding capital payments (Note 9)

Central and local government

Value added tax

Deduction of tax at source

Social security contributions

futures and options

Deferred interest and dividends

Miscellaneous creditors

IRC payable

Creditors – securities operations

Suppliers of leased assets

Other suppliers

Cost price of assets acquired in fCR PME liquidation

Other

Costs payable

Interest payable

Other costs payable

Additional remuneration

holiday and holiday subsidies

Pension fund

Potential capital gains on subsidiaries acquired

as part of the liquidation of fCR PME (Note 8)

Other

Deferred income

Agencying commissions

Commissions on provision of guarantees and other contingent liabilities

Other accrual and deferred income accounts


Lending operations pending settlement

Commissions payable – syndicating of loan operations

Other

2009

8,817,254

5,336,609

257,857

2,100,939

237,863

240,300

183,397

884,172

748,108

96,245

681,213

896,199

1,747,876

22,228,032

12

3,304,924

1,693,960

384,975

-

1,791,518

7,175,389

996,222

11,655

1,007,877

20,323,034

37,235,743

278,715

57,837,492

88,248,790

13,236,577

-

2,440,083

5,138,035

261,567

-

162,454

884,172

754,445

336,529

1,303,669

1,696,284

180,431

26,394,246

178

2,709,829

1,652,434

377,946

104,381

1,077,671

5,922,439

913,128

58,612

971,740

27,524,679

10,684,598

37,947

38,247,224

71,535,649

177

The balance on the “Miscellaneous creditors – IRC payable” account heading at 31 December 2008, comprises

a reimbursement in 2008, by the Directorate general for Tax Affairs in the judicial proceedings related with the

payment of IRC for 1997. The amount will be settled after a decision has been made on the amount to be paid

by the bank on its 1996 IRC return.

The balance of the “creditors – securities operations” account heading at 31 December 2009 and 2008, refers to

the current accounts of brokerage operations customers.

The “securities operations pending settlement” account heading at 31 December 2009 and 2008, comprises the

value of securities purchase operations at the end of the year and settled in the first few days of the following year.

The “commissions payable – syndicating of loan operations” account heading at 31 December 2009 and 2008,

comprises amounts charged to customers for the structuring of syndicated loan operations in which CgD group

supplies all or a significant part of the loan with the latter objective of placing it with other credit institutions.

As described in Note 2.14, the Banco recognises the part of the commissions received in proportion to the total

amount of credit the group intends to syndicate in this account heading.

Information is provided below on the value of the assets acquired from the winding up and liquidation of fCR

PME at 31 December 2009 and 2008:

The acquisition of assets will be settled as the corresponding assets are received. Under the terms of the

agreements, the difference between the amounts generated on the disposal of the subsidiary companies and

debtor balances realised by the group should be paid or reimbursed by the fund’s investors. At 31 December

2008, the potential capital gains on the assets acquired totalled €104,381 (Note 8).


2008

Assets at fair value through profit or loss (Note 8)


Ng – Negócios e gestão, S.A.

Other

Other assets (Note 16)

Debtors

Amounts received and not yet transferred

Partners’ loans

Other investments

Impairment

2009

-

-

-

-

2,357,806

227,017

-

-

2,584,823

(1,688,624)

896,199

1,119,943

-

1

1,119,944

1,588,519

-

125,000

187,500

1,901,019

(1,331,943)

1,689,020

178

21. SUBSCRIBED CAPITAL AND TREASURy STOCk

Subscribed capital comprises 81,250,000 shares with a nominal value of one euro each.

Information on the bank’s equity structure, at 31 December 2009 and 2008, is set out below:

The bank owned 4,658,000 of its own shares at a cost price of €5,999,453, at 31 December 2009 and 2008.




fidelidade-Mundial, S.A.

Treasury stock

Other

2009

68,348,445

8,007,635

4,658,000

235,920

81,250,000

no.ShareS

%

84.1

9.9

5.7

0.3

100

2008

68,348,445

8,000,640

4,658,000

242,915

81,250,000

no.ShareS

%

84.1

9.9

5.7

0.3

100

179

22. RESERVES, RETAINED EARNINgS AND PROfIT fOR yEAR

The composition of the reserves and retained earnings account headings at 31 December 2009 and 2008, was

as follows:

LEgAL RESERVE

In conformity with Decree Law 298/92 of 31 December, altered by Decree Law 201/2002 of 26 September, the

bank is required to set up a legal reserve fund until equal to its share capital or sum of free reserves and retained

earnings, if higher, annually transferring an amount of not less than 10% of net profits to the reserve.

This reserve may only be used to cover accrued losses or share capital increases. The value of the legal reserve

registered by the bank at 31 December 2009 and 2008 totalled €38,001,636 and €34,750,521 respectively.

LEgAL REVALUATION RESERVE

The bank revalued its fixed assets in 1998, under Decree Law 31/98 of 11 february. The increase of €4,338,403,

in the net value of the fixed assets was recognised in the “revaluation reserves” account heading in the separate

accounts.

Revaluation reserves may only be used to cover accrued losses or share capital increases.


2008


Legal reserve

free reserve

Legal revaluation reserve

Retained earnings

fair value reserves

Potential gains

fiscal effect

Current tax

Deferred tax

Profit for year

2009

38,001,636

42,351,759

4,338,403

48,515,598

133,207,396

(1,410,835)

1,137,457

445,850

171,472

45,606,639

178,985,507

34,750,521

46,611,160

4,338,403

40,831,896

126,531,980

(49,850,070)

3,100,028

958,055

(45,791,987)

30,242,185

110,982,178

180

fAIR VALUE RESERVES

The fair value reserve recognises potential capital gains and losses on available for sale financial assets, net of the

corresponding fiscal effect.

DIVIDENDS

A resolution was passed at the general shareholders’ meeting of 20 february 2009, to distribute dividends of

€25,000,000 for 2008 of which an amount of €1,433,231 was allocated to treasury stock.

PROfIT fOR yEAR

Information on the bank’s consolidated net income for 2009 and 2008 is set out below:

According to the accounting policies applicable to the sector, Caixa Capital and FCR Energias Renováveis recognise

the valuation of all of their investments in the income statement. These valuations are recognised in the fair value

reserve in the case of “available for sale financial assets” in the group’s consolidated accounts.


2008

Bank’s separate net income (statutory accounts)

Subsidiaries’ contributions

Caixa Capital

Caixa Desenvolvimento


Income generated by associated companies (Note 14)

Correction of gains on associated companies

Income from operations between group companies

Impact of conversion of separate accounts to IfRS

Valuation of Caixa Capital subsidiaries

Valuation of fCR Energias Renováveis subsidiaries

Caixa Capital

Impairment on lending

Other


2009

41,969,026

3,346,254

(1,721,821)

4,135,096

5,759,529

2,420,310

(303,785)

-

(958,474)

(2,806,525)

(473,441)

-

45,606,639

32,511,144

(2,738,518)

1,392,858

(4,232,696)

(5,578,356)

(2,093,292)

5,602,397

(354,367)

(1,070,509)

1,713,491

(490,420)

2,097

30,242,185

181

23. MINORITy ShAREhOLDERS’ INTERESTS

This account heading fully comprised the minority interests of 9% in fCR Energias Renováveis investment units

at 31 December 2009 and 2008. The proportion of losses determined by FCR Energias Renováveis attributable to

minority shareholders in 2009 and 2008 totalled €131,397 and €249,152, respectively.

24. INTEREST AND INCOME AND INTEREST AND SIMILAR ChARgES



2008


Interest on loans and advances to credit institutions in Portugal

Interest on domestic credit

Interest on foreign loans

Interest on financial assets heldfor trading

Securities

Derivatives – swaps

Interest rate guarantee contracts

Interest on other financial assets at fair value

Securities

Interest on available for sale financial assets

Interest on hedge derivatives

Interest on debtors and other investments

Debtors

Partners’ loans

Interest on cash assets

Other interest

Commissions received associated with amortised cost

2009

636,845

16,346,471

12,326,706

9,362,748

209,232,515

10,792

1,279,486

3,979,593

532,339

406,160

375,940

63,783

6,537

254,559,916

760,064

255,319,980

956,177

31,615,619

27,146,182

11,659,791

213,079,856

-

2,533,382

3,291,539

865,702

671,640

1,101,605

158,055

74,049

293,153,597

898,621

294,052,218


182

25. INCOME AND COSTS ON SERVICES AND COMMISSIONS


The “income from services and commissions – other ” account heading for 2009 and 2008, essentially includes

financial advisory commissions. The “costs of services and commissions – for banking services provided by third

parties” account heading included €27,789,474 and €3,073,251, respectively, relating to commissions to be

passed on to other credit institutions in future syndications in accordance with the policy described in Note 2.14.


2008

Interest and similar charges

Interest on deposits


Other resident entities

Other non-resident entities

Interest on credit institutions’ resources in Portugal

Interest on credit institutions’ resources abroad

Interest on financial liabilities held for trading

Swaps


Other interest and similar costs

2009

472,479

1,142,295

4

1,614,778

11,769,615

321,373

205,385,690

876,095

55,186

218,407,959

220,022,737

479,207

4,905,115

382,623

5,766,945

51,863,289

366,443

210,376,171

1,012,014

55,035

263,672,952

269,439,897

2008


for services provided

Organisation of operations

Venture fund capital management (Caixa Capital)


Other

guarantees provided

Commissions for operations realised by third parties

Commissions for commitments to third parties

Other



for banking services provided by third parties

for operations on financial instruments

Other

2009

14,534,285

4,330,446

897,183

20,362,838

488,672

5,896,553

125,265

47,098,588

93,733,830

1,641,596

29,471,585

76,447

10,609

31,200,237

14,257,390

2,337,067

621,527

15,792,954

508,868

8,219,050

155,251

25,336,501

67,228,608

2,084,480

4,642,003

372,326

11,103

7,109,912

183

26. INCOME fROM fINANCIAL OPERATIONS


The “income from other financial assets at fair value through profit or loss” account heading, in 2009, included

€7,878,971 for the disposal of the equity investment in Manuel Inácio & filhos, SgPS, S.A. (Note 8), with impairment

for the same amount having been recognised in receivables (Note16).

The “income from other assets recognised at fair value through profit or loss” account heading, in 2008, included

€6,505,556 for the equity investment in Compal (Note 14).


2008

foreign exchange income

Revaluation of foreign exchange position

Income from assets and liabilities held for trading

Debt instruments

Equity instruments

Derivatives

Interest rate swaps

Equity swaps

futures

Options


Currency forwards

Commodity forwards

Other

Income from other financial assets recognised at fair value through profit or loss

Debt instruments

Equity instruments

Income from available for sale financial assets

Debt instruments

Equity instruments

Income from hedge operations

Interest rate swaps

Income from other financial operations

Value adjustments relating to hedged assets and liabilities

Other

2009

442,006

9,076,399

13,053,942

2,753,380

(8,717,473)

(6,369,828)

(8,151)

183,467

18

15,663

5,251

9,992,668

70,617

8,243,918

8,314,535

3,898,693

(4,960,242)

(1,061,549)

56,708

(89,779)

111

(89,890)

17,654,478

67,269

1,798,064

(24,007,039)

2,723,410

24,236,038

(11,888,424)

716,848

293,851

7,919

-

-

(6,119,333)

(208,344)

5,329,026

5,120,682

25,322

(3,600,112)

(3,574,790)

(225,243)

286,850

123

286,973

(4,444,442)

184

Information on income from equity instruments classified as available for sale financial assets in 2009 and 2007

as is set out below (Note 9):


2008


Sobreovento – Energias Alternativas, Lda.

Vista Alegre Atlantis

helios I hyperion Energy Investments S.L.

helios II hyperion Energy Investments S.L.

Prado Cartolinas da Lousã, S.A.

Parque Eólico da Penha da gardunha, Lda.

Enacol – Empresa Nacional de Combustíveis de Cabo Verde, S.A.R.L.

Losses on available for sale financial assets

La Seda Barcelona

Eurofrozen – Ind. Com. Prod. Alim., S.A.

EDP Renováveis

Prado karton, S.A.

Companhia Papel do Prado, S.A.

2009

2,009,005

523,037

89,208

89,208

30,204

-

-

2,740,662

(6,674,441)

(763,909)

(136,571)

(98,862)

(27,121)

(7,700,904)

(4,960,242)

-

-

-

-

-

1,478,643

60,630

1,539,273

(5,139,385)

-

-

-

-

(5,139,385)

(3,600,112)

185

27. OThER OPERATINg INCOME



2008


Income generated by associated companies (Note 14)

Staff on loan – CgD group

Reimbursement of expenses

Provision of miscellaneous services

Recovery of interest and expenses on overdue credit

gains on non-financial assets


Other

Other operating costs

Tax

Indirect taxes

Stamp duty

Charges

Tax on road transport

Other

Direct taxes

Other taxes

TREM II

Donations and subscriptions

Contributions to Deposit guarantee fund

Losses on tangible assets

Other

Other operating income (net)

2009

2,420,310

1,412,012

917,541

477,690

44,323

17,500

282,931

5,572,307

63,051

82,932

1,133

6

220,359

367,481

223,298

33,343

40,698

770

123,152

421,262

788,743

4,783,565

9,031,539

1,178,567

360,448

474,081

-

13,093

219,884

11,277,612

337,101

82,650

1,892

-

625,635

1,047,278

311,288

33,066

29,648

3,999

75,446

453,447

1,500,725

9,776,887

186

28. EMPLOyEE COSTS


The average number of staff employed by the bank and its subsidiaries’ in 2009 and 2008, excluding the board

of directors and inspection bodies was 174 and 175, respectively and distributed as follows:


2008

Remuneration paid to board of directors and inspection bodies

Remuneration paid to employees

Mandatory social costs

Costs of remuneration

Pension costs (Note 2.13)

Other mandatory social costs

Other employee costs

2009

1,887,623

12,404,647

14,292,270

2,185,929

393,986

91,408

2,671,323

597,346

17,560,939

934,177

12,265,115

13,199,292

2,146,026

405,169

91,232

2,642,427

406,836

16,248,555

2008

Senior management

Technical and line management

Administrative and auxiliary staff

2009

75

77

22

174

71

76

28

175

187

29. OThER ADMINISTRATIVE EXPENSES


The minimum payments to be made by the bank in 2010 for operating lease contracts in force at 31 December

2009 totalled €100,473.


2008

Specialised services

Rents and leases

Maintenance and repair

Travel and expenses

Advertising and publications

Communications

water, electricity and fuel

Office consumables

Employee training

Insurance

Publications

Other external services

Other third party supplies

2009

6,062,264

1,011,510

1,056,210

671,008

574,071

476,723

127,965

98,306

75,775

45,017

59,942

126,887

75,316

10,460,994

5,163,027

1,324,550

1,140,740

554,854

498,479

482,017

108,209

107,413

42,790

61,439

48,614

143,039

44,363

9,719,534

188

30. IMPAIRMENT

Information on impairment movements in 2009 and 2008 is set out below:

The “other” column, in 2008, included €1,875,000 relating to the equity investment in Manuel Inácio & filhos,

SgPS, S.A. (Note 8).


Loans and advances

to customers (Note 11)

Debtors and other

investments (Note 16)

Available for sale assets (Note 9)

2009

14,413,141

6,836,509

13,357,047

34,606,696

(8,373,173)

(264,571)

-

(8,637,744)

31,948,475

9,158,613

34,192

41,141,280

(49,884)

-

(61,053)

(110,937)

Balance at 31-12-08

cancellationS and recoVerieS

increaSeS

-

(317,863)

(7,891,778)

(8,209,641)

uSe

-

2,544,181

-

2,544,181

other eXchange differenceS

Balance at 31.12.09

37,938,559

17,956,869

5,438,408

61,333,835

2008

8,553,716

6,639,755

9,592,196

24,785,666

(3,437,043)

(123,336)

-

(3,560,379)

9,216,205

203,332

3,666,616

13,086,153

-

(4,064)

-

(4,064)

-

120,822

-

120,822

80,263

-

98,235

178,498

14,413,141

6,836,509

13,357,047

34,606,696

Balance at 31-12-07

cancellationS and recoVerieS

increaSeS uSe other eXchange differenceS

Balance at 31.12.08

Loans and advances


Debtors and other

investments (Note 16)

Available for sale assets (Note 9)

189

31. RELATED ENTITIES

All companies controlled by CgD group, associated companies and the bank’s management bodies are considered

to be entities related with the bank.

BALANCES wITh gROUP COMPANIES

The principal balances with Caixa geral de Depósitos group companies not included in the consolidation perimeter

at 31 December 2009 and 2008 were as follows:


assets

Loans to credit institutions payable on demand







of which securities

of which trading derivatives

Locarent



Caixa geral finance Limited

CgD finance Limited




Other assets



BCI Moçambique, S.A.



CREDIP – Instituição financeira de Crédito, S.A.


fCR Empreender Mais

fCR Mezzanine – Caixa Capital

2008

15,513,418

288,361

8,563,603

37,344,881

-

37,344,881

-

34,940,798

9,132,668

4,310,232

104,306

-

622,645

164,275

105,388

13,179

133,419

36,000

1,572

-

-

2009

791,230

574,871

9,354,006

66,653,291

21,238,330

45,414,961

4,108,996

16,520,488

10,220,751

4,345,678

21,761,701

1,690,279

1,393,698

6,296,759

18,668

13,827

27,735

-

1,613

56,819

153,135


190 NOTES TO ThE CONSOLIDATED STATEMENTS

liabilities

financial liabilities held for trading – derivatives


CgD – Subsidiária Offshore Macau, S.A.

Locarent

hedge derivatives with negative fair value




Caixa Leasing e factoring – Instituição financeira de Crédito, S.A.


Customer resources




Locarent

fundo Energias Renováveis

fCR Empreender Mais


Other liabilities




Parcaixa SgPS, S.A.

2008

222,502,608

2,254,342

-

1,483,423

1,198,814,237

122,271

396,048

21,320,066

147,012

-

-

-

-

1,243,103

280,619

-

-

2009

252,755,943

-

-

1,703,334

1,073,451,181

122,271

753,782

2,044,198

258,280

19,111,237

1

6,000,506

29,884,945

6,424,486

80,214

5,251,453

240,300

191

TRANSACTIONS wITh gROUP COMPANIES

The principal balances in Caixa geral de Depósitos, S.A.’s income statement for group companies not included in

the consolidation perimeter, at 2009 and 2008, are set out below:


net interest income


of which financial assets held for trading

of which other financial assets recognised at fair value through profit or loss

of which available for sale financial assets

of which hedge derivatives



CgD finance Limited







Locarent

fCR Empreender Mais




commissions (net)


fCR Empreender Mais







income generated by financial operations


of which financial assets held for trading

of which other financial assets recognised at fair value through profit or loss

of which available for sale financial assets

of which hedge derivatives



CgD finance Limited

Locarent

2008

(34,790,657)

15,145,115

10,021

968,686

(120,013)

(175,206)

390,135

343,895

944,256

(20,944)

(2,401)

(21,836)

-

-

-

-

-

-

2,352,828

-

-

7,190

150,000

44,456

305,000

-

(224,370,008)

(223,142,562)

49,627

(7,578)

(569,495)

(1,312,524)

595,384

-

-

2009

(60,780,051)

(50,173,296)

-

1,252,298

(406,014)

(41,784)

20,047

165,052

312,613

(3,686)

(1,498)

(6,775)

128,272

(34,438)

4,056,261

(40,529)

(106,591)

60,896

3,791,908

170,891

366,798

423,237

85,000

11,836

75,000

30,824

(23,047,489)

(25,213,547)

-

2,266,236

(100,178)

263,796

242,049

46,500

(679,209)


192

The bank also had a guarantee of €5,988,000 provided to Banco Caixa geral at 31 December 2009 and 2008.

Transactions with related entities are generally made on the basis of market values on the respective dates.

As referred to in Note 9, negotiations between Caixa Desenvolvimento and Caixa geral de Depósitos, S.A., for

the disposal of the equity investment in La Seda Barcelona were in progress at 31 December 2008. The disposal

was formalised in an agreement dated 22 January 2009.

BANk’S MANAgEMENT BODIES

The costs incurred on the remuneration of the bank’s board of directors, in 2009, totalled €1,831,732 of which

amount €17,673 in respect of contributions to the Caixa – Banco de Investimento pension fund, as described in

Note 2.13 (€884,305 and €18,607 respectively in 2008).

Bonuses of €357,500 and €162,500 were paid to the board of directors, in 2009 and 2008, respectively.

One of the board members has a mortgage lending agreement with the bank for the amount of €196,382 at 31

December 2009 (€199,351 in 2008). This is a standard loan for bank employees which was taken out prior to

the appointment as a board member. The bank has no additional liability or granted any long term benefit to the

board of directors, other than those referred to above.

As stipulated in article 23 of CaixaBI’s articles of association, the remuneration committee defines the remuneration

of the board of directors and inspection bodies. In terms of the board of directors remuneration is only paid to

the executive board.


other operating income







Culturgest – gestão de Espaços Culturais, S.A.

other operating expenses



Locarent

Banco Caixa geral Brasil

2008

779,354

175,987

236,575

48,691

22,865

18,000

-

(1,255,474)

(37,882)

-

-

2009

853,462

184,293

400,804

-

38,336

18,000

(20,000)

(848,165)

(69,325)

(414,670)

(344,747)

193

Information on the amounts paid to the members of boards of directors, in 2009, is set out below:

32. fINANCIAL INSTRUMENTS

MANAgEMENT POLICIES ON fINANCIAL RISkS PERTAININg TO ThE gROUP’S ACTIVITy

CgD group adopted a centralised risk management model, in 2001. This encompasses the assessment and

control of all of the group’s credit, market and liquidity risks, based on the principle of the separation of functions

between commercial and risk areas. Risk management and control are centralised by CgD’s Risk Management

Division. The bank also has risk management regulations defining the limits and operating procedures on the

management of various risks.

The following disclosures on the principal types of risks pertaining to the bank’s activity are required under IfRS 7.

fOREIgN EXChANgE RISk

foreign exchange risk is controlled and assessed on a daily individual basis for Caixa – Banco de Investimento,

S.A.’s operations VaR amounts and limits are calculated on total open and currency positions.


Executive board

Luís Lopes Laranjo




Alcides Aguiar

Antas Teles

José Carrilho

José furtado

Audit board



João Sousa Martins

Body and officer

277,388

241,388

261,388

261,388

234,542

214,060

189,265

181,145

1,860,564

25,788

23,688

23,688

73,164

194

financial instruments were broken down into the following currencies at 31 December 2009 and 2008:


assets






Securities

financial derivatives (notional)

Available for sale financial assets (book value)


hedge derivatives (notional)


Other assets

Provisions and impairment

liabilities




through profit and loss


financial derivatives (book value)


Other liabilities

net exposure

2009

-

37,901

-

10,161,394

555,740,466

21,082,478

9,667,761

-

24,747,336

5,461,043

(1,419,707)

625,478,672

(44,773,441)

(782,903)

(555,740,466)

(16,852,644)

-

(7,405,598)

(625,555,052)

(76,380)

uSd

190,010

1,986,263

24,401,981

388,284,669

8,646,062,880

238,506,042

209,669,072

16,661,158

872,625,703

49,448,501

(54,475,721)

10,393,360,558

(1,038,482,344)

(138,338,822)

(8,646,062,880)

(231,305,850)

(16,661,158)

(80,635,337)

(10,151,486,391)

euro

-

27,561

-

-

-

-

6,583,978

-

19,196,338

71,874

-

25,879,751

(25,673,178)

(2,256)

-

-

-

(207,232)

(25,882,666)

(2,915)

Sterling

190,010

2,082,998

24,401,981

398,446,063

9,201,803,346

259,588,520

225,920,811

16,661,158

916,569,377

54,982,041

(55,895,428)

11,044,750,877

(1,108,928,963)

(139,124,974)

(9,201,803,346)

(248,158,494)

(16,661,158)

(88,248,790)

(10,802,925,725)

(49,015)

total other

-

31,273

-

-

-

-

-

-

-

623

-

31,896

-

(993)

-

-

-

(623)

(1,616)

30,280

currency

195

The amounts relating to derivatives in the above tables, comprise the notional amount of interest rate and equity

swaps.

LIQUIDITy RISk

Liquidity risk comprises the bank’s risk of difficulties in securing funds to meet its commitments. An example of

liquidity risk may be the bank’s incapacity to dispose of a financial asset quickly at close to its fair value.

The analysis of the bank’s liquidity risk is part of the consolidated liquidity analysis of CgD group’s Asset-Liability

Committee. The bank has an irrevocable line of credit from CgD, for liquidity requirements of up to one year.

CgD group policy, on the other hand, does not advise direct access to the capital market for securing medium

and long term funding, which is the consolidated liability of CgD group with CgD having a global management

commitment and eventual coverage of the liquidity gaps of its various subsidiaries as a whole.


2008

assets






Securities


Available for sale financial assets (book value)




Other assets


liabilities




through profit and loss


financial derivatives (book value)


Other liabilities

net exposure

-

155,131

-

-

233,586,826

63,804,430

2,062,120

-

25,262,840

369,103

(1,469,591)

323,770,859

(27,161,679)

(651,493)

(233,586,826)

(61,811,328)

-

(874,703)

(324,086,029)

(315,170)

1,164,400

16,709,507

8,563,604

464,611,181

6,725,836,006

168,758,630

161,033,321

17,456,798

836,615,256

66,137,119

(19,780,059)

8,447,105,763

(1,192,620,570)

(118,508,762)

(6,725,836,006)

(164,809,541)

(17,456,798)

(70,657,319)

(8,289,888,996)

-

7,381

-

-

-

-

-

-

17,945,252

54,840

-

18,007,473

(17,849,021)

(1,077)

-

-

-

(2,869)

(17,852,967)

154,506

1,164,400

16,885,360

8,563,604

464,611,181

6,959,422,832

232,563,060

163,095,441

17,456,798

879,823,348

66,561,819

(21,249,650)

8,788,898,193

(1,237,631,270)

(119,162,219)

(6,959,422,832)

(226,620,869)

(17,456,798)

(71,535,648)

(8,631,829,636)

(148,210)

-

13,341

-

-

-

-

-

-

-

757

-

14,098

-

(887)

-

-

-

(757)

(1,644)

12,454

uSd euro Sterling total other

currency

196

Under IfRS 7 requirements, the full amount of non-discounted contractual cash flows for the various bands,

based on the following premises, is set out below:

Customers’ sight deposits are recognised in the “customer resources and other loans” account heading in

“payable on demand”;

Sight overdrafts are recognised in the “loans and advances to customers” account headings in “payable on

demand”;

The “other” column comprises amounts already received or paid which are being deferred;

The amount for financial derivative instruments set out in this table comprises their book value;

Overdue credit to customers and shares have been classified for unspecified periods; and

future cash flows on variable yield operations such as on operations indexed to Euribor, have been estimated

at the reference value at 31 December 2009 and 2008.


2009

contractual PeriodS to Maturity

assets







Available for sale financial assets (gross)


Securities


Loans and advances to customers (gross)


Other assets

liabilities






Other liabilities

liquidity gap

-

-

24,491,930

14,271,341

964,680

3,003,986

58,033,632

88,661,022

-

-

189,426,590

1,007,307,016

39,989,272

54,477,402

-

23,030,152

1,124,803,843

(935,377,253)

190,010

2,082,998

-

-

-

-

-

5,678,935

-

36,915,532

44,867,475

158,398

28,291,200

-

-

21,192,349

49,641,947

(4,774,472)

-

-

-

558,523

10,336,169

22,384,958

20,648,714

107,715,161

-

7,913,156

169,556,680

76,355,869

57,649,734

3,423,275

-

37,681,803

175,110,681

(5,554,001)

-

-

-

362,062

65,176,773

179,619,371

38,247,648

207,641,616

936,919

-

491,984,388

-

6,986,712

36,944,454

-

-

43,931,166

448,053,222

-

-

-

7,886,993

47,464,311

85,349,489

42,234,608

208,145,680

-

-

391,081,080

26,815,549

-

42,023,590

-

5,336,609

74,175,747

316,905,332

-

-

-

8,799,923

50,991,395

64,071,817

169,798,059

413,996,512

-

-

707,657,706

-

11,360,367

163,403,441

1,703,334

-

176,467,142

531,190,564

-

-

-

20,782,390

79,335,744

42,968,768

-

1,826,980

-

9,224,298

154,138,180

-

-

-

-

-

-

154,138,180

-

-

-

-

-

-

-

(4,081,361)

-

1,010,001

(3,071,360)

-

-

-

-

1,007,877

1,007,877

(4,079,238)

uP to3 MonthS

PayaBle on deMand

3 MonthS-1 year

3-5 yearS

1-3 yearS

More than 5 yearS

undeterMined other total

190,010

2,082,998

24,491,930

52,661,230

254,269,072

397,398,388

328,962,661

1,029,584,544

936,919

55,062,987

2,145,640,739

1,110,636,832

144,277,285

300,272,162

1,703,334

88,248,790

1,645,138,404

500,502,335

197

As already referred, the bank benefits from an irrevocable line of credit from CgD, permitting the adequate

management of liquidity gaps of up to one year.


2008

assets







Available for sale financial assets (gross)


Securities


Loans and advances to customers (gross)


Other assets

liabilities






Other liabilities

liquidity gap

-

-

8,563,604

28,164,568

1,201,796

616,951

13,100,036

72,371,214

-

-

124,018,887

1,147,590,195

59,850,228

13,961,954

-

25,945,971

1,247,348,347

(1,123,329,460)

1,164,400

16,885,360

-

-

-

-

-

5,944,782

-

29,909,472

53,904,113

172,029

16,429,682

-

-

28,778,245

45,379,956

8,524,158

-

-

-

3,770,652

13,153,036

15,232,599

12,394,303

107,581,001

-

5,240,064

157,371,654

-

29,447,575

9,675,665

-

15,839,692

54,962,932

102,408,722

-

-

-

6,548,098

50,777,792

64,322,953

20,931,554

230,849,654

-

13,164,740

386,594,790

-

-

20,556,855

-

-

20,556,855

366,037,935

-

-

-

18,499,149

9,004,786

75,485,580

41,992,292

185,157,129

-

13,120,603

343,259,539

98,766,413

-

17,379,117

-

-

116,145,530

227,114,009

-

-

-

9,771,369

93,412,219

239,457,239

205,186,325

595,060,990

461,812

5,027,789

1,148,377,744

-

19,799,159

198,790,138

1,483,423

-

220,072,720

928,305,024

-

-

-

42,516,980

72,883,114

38,711,134

-

1,469,591

-

5,594,476

161,175,295

-

-

-

-

-

-

161,175,295

-

-

-

-

-

-

-

(4,415,060)

-

1,217,591

(3,197,469)

-

-

-

-

971,740

971,740

(4,169,210)

1,164,400

16,885,360

8,563,604

109,270,816

240,432,743

433,826,456

293,605,227

1,194,019,300

461,812

73,274,835

2,371,504,553

1,246,528,637

125,526,643

260,363,729

1,483,423

71,535,648

1,705,438,081

666,066,472


uP to3 MonthS

PayaBle on deMand

3 MonthS-1 year

3-5 yearS

1-3 yearS

More than 5 yearS


198

INTEREST RATE RISk

Interest rate risk comprises the fair value or cash flow risk associated with a determined financial instrument,

if altered on the basis of an alteration of market interest rates.

The following is a summary of the type of exposure to interest rate risk at 31 December 2009 and 2008:


assets




Securities


Other financial assets recognised at fair value trough profit or loss

hedge derivatives


Loans for advances to customers

Other assets

liabilities

financial liabilities held for trading financial derivatives




hedge derivatives

Other liabilities

net exposure

2009

-

-

42,968,768

-

20,782,390

-

79,335,744

(2,254,381)

47,771,635

188,604,155

-

-

-

-

88,248,790

88,248,790

100,355,365

-

-

271,242,852

4,578,911,046

2

5,000,000

25,079,535

13,409,321

-

4,893,642,756

4,632,057,991

158,398

41,609,077

11,661,158

-

4,685,486,624

208,156,132

2,082,998

24,401,981

33,733,819

4,622,892,300

29,718,232

11,661,158

121,505,532

905,414,437

7,210,406

5,758,620,865

4,569,745,355

1,108,770,565

97,515,897

5,000,000

-

5,781,031,817

(22,410,953)

not SuBJect to intereSt rate riSK

fiXed rate

VariaBle rate

total

2,082,998

24,401,981

347,945,439

9,201,803,346

50,500,624

16,661,158

225,920,811

916,569,377

54,982,041

10,840,867,776

9,201,803,346

1,108,928,963

139,124,974

16,661,158

88,248,790

10,554,767,232

286,100,544

199

The “financial assets held for trading – shares” account heading at 31 December 2009 and 2008, included

€92,659,872 and €158,631,452 for a portfolio bond whose interest included a fixed-rate component indexed

to the stock market performance of a Portuguese share.


2008

-

-

38,711,134

-

42,516,979

-

72,883,114

(2,945,470)

37,035,278

188,201,035

-

-

-

-

71,535,648

71,535,648

116,665,387

-

-

278,078,862

3,461,034,304

2

5,000,000

44,936,887

14,195,958

688,824

3,803,934,837

3,504,152,659

172,029

30,033,298

12,456,798

-

3,546,814,784

257,120,053

16,885,360

8,563,604

45,648,604

3,498,388,528

59,655,601

12,456,798

45,275,440

868,572,860

28,837,717

4,584,284,512

3,455,270,173

1,237,459,241

89,128,921

5,000,000

-

4,786,858,335

(202,573,823)

16,885,360

8,563,604

362,438,600

6,959,422,832

102,172,582

17,456,798

163,095,441

879,823,348

66,561,819

8,576,420,384

6,959,422,832

1,237,631,270

119,162,219

17,456,798

71,535,648

8,405,208,767

171,211,617


fiXed rate

VariaBle rate

total

assets




Securities


Other financial assets recognised at fair value trough profit or loss

hedge derivatives


Loans for advances to customers

Other assets

liabilities

financial liabilities held for trading financial derivatives




hedge derivatives

Other liabilities

net exposure

200

Exposure to interest rate risk, at 31 December 2009 and 2008 can be broken down into the following maturity

periods:


2009

assets




Securities


Other financial assets recognised

at fair value through profit or loss

hedge derivatives



Other assets

liabilities





hedge derivatives

Other liabilities

net exposure

2,082,998

-

-

-

-

-

-

5,678,935

36,915,532

44,677,465

-

158,398

28,291,200

-

21,192,349

49,641,947

(4,964,482)

-

24,401,981

33,733,819

1,619,739,356

24,517,045

-

100,666,907

524,366,368

-

2,327,425,476

1,623,768,912

1,007,105,156

39,982,013

-

23,030,513

2,693,886,594

(366,461,118)

-

-

10,550,519

3,035,025,328

5,201,187

11,661,158

25,037,216

375,529,748

7,832,210

3,470,837,366

3,049,797,865

75,693,131

57,533,884

5,000,000

37,681,442

3,225,706,323

245,131,044

-

-

45,472,805

1,675,037,041

-

-

5,110,407

-

-

1,725,620,253

1,660,005,795

25,972,278

-

-

5,336,609

1,691,314,681

34,305,572

-

-

162,975,356

800,899,250

2

5,000,000

15,632,287

-

-

984,506,895

799,629,023

-

6,051,307

-

-

805,680,330

178,826,565

-

-

52,244,172

2,071,102,371

-

-

138,250

13,248,708

-

2,136,733,501

2,068,601,751

-

7,266,570

11,661,158

-

2,087,529,479

49,204,022

-

-

42,968,768

-

20,782,390

-

79,335,744

1,826,980

9,224,298

154,138,180

-

-

-

-

-

-

154,138,180

-

-

-

-

-

-

-

(4,081,361)

1,010,001

(3,071,360)

-

-

-

-

1,007,877

1,007,877

(4,079,238)

2,082,998

24,401,981

347, 945,439

9,201,803,346

50,500,624

16,661,158

225,920,811

916,569,377

54,982,041

10,840,867,776

9,201,803,346

1,108,928,963

139,124,974

16,661,158

88,248,790

10,554,767,232

286,100,544

rate refiXing / contractual PeriodS to Maturity

2008

16,885,360

-

-

-

-

-

-

5,944,782

29,909,572

52,739,714

-

172,029

16,429,682

-

28,778,245

45,379,956

7,359,758

-

8,563,604

45,648,603

2,068,721,728

53,580,103

-

41,226,794

537,802,421

-

2,755,543,253

2,078,987,699

1,147,552,016

59,764,988

-

19,688,181

3,305,992,884

(550,449,631)

-

-

256,749

2,026,682,709

6,075,497

12,456,798

4,048,645

324,825,657

3,745,720

2,378,091,775

1,964,609,636

-

29,364,669

5,000,000

20,271,816

2,019,246,121

358,845,654

-

-

13,512,195

691,570,585

-

-

-

-

10,333,711

715,416,491

748,484,160

89,907,225

-

-

1,825,666

840,217,051

(124,800,560)

-

-

41,443,116

664,042,118

2

-

44,505,976

-

11,032,524

761,023,736

662,607,766

-

-

-

-

662,607,766

98,415,970

-

-

222,866,801

1,508,405,692

-

5,000,000

430,911

14,195,958

4,728,225

1,755,627,587

1,504,733,571

-

13,602,880

12,456,798

-

1,530,793,249

224,834,338

-

-

38,711,136

-

42,516,980

-

72,883,115

1,469,590

5,594,476

161,175,297

-

-

-

-

-

-

161,175,297

-

-

-

-

-

-

-

(4,415,060)

1,217,591

(3,197,469)

-

-

-

-

971,740

971,740

(4,169,209)

16,885,360

8,563,604

362,438,600

6,959,422,832

102,172,582

17,456,798

163,095,441

879,823,348

66,561,819

8,576,420,384

6,959,422,832

1,237,631,270

119,162,219

17,456,798

71,535,648

8,405,208,767

171,211,617

uP to3 MonthS

PayaBle on deMand

3 MonthS-1 year

3-5 yearS

1-3 yearS

More than 5 yearS



uP to3 MonthS

PayaBle on deMand

3 MonthS-1 year

3-5 yearS

1-3 yearS

More than 5 yearS


assets




Securities




hedge derivatives



Other assets

liabilities





hedge derivatives

Other liabilities

net exposure

201

The contents of the above referred to table were based on the following premises:

The book value of fixed-rate instruments was classified in accordance with their respective period to maturity;

The book value of variable-rate instruments (e.g. indexed to Euribor), was classified in accordance with the

respective maturity until the next refixing of the rate;

The book value of instruments not subject to interest rate risk (e.g. shares) was included in the “undetermined”

column;

The book value included in the “other” column comprises amounts which have already been received or paid

which are being deferred;

Information is provided on notional purchase amounts (as assets) and sales (as liabilities) on interest rate swaps;

Overdue loans to customers are not considered to be subject to interest rate risk; and

Customers’ sight deposits, when no interest is paid, are considered as fixed-rate and classified as “payable on

demand”.

CREDIT RISk

Credit risk comprises financial losses on the defaults of counterparties who have entered into agreements on

financial instruments.


202

Maximum exposure to credit risk

The following is a summary of the maximum exposure to credit risk, by financial instrument, at 31 December

2009 and 2008:

Credit quality of financial assets

The bank does not have an internal rating system. The principal procedures in force in terms of the approval and

monitoring of credit operations designed to ensure an adequate risk level for the bank’s strategy, are set out

below:

The bank has a credit council, comprising members of the executive board and managers of the commercial

divisions with any form of involvement in granting credit. The bank’s credit council meets once a week with a

minimum of two directors and managers of the commercial divisions involved in the credit granting process;


organs (business / product divisions), which require the risk opinion of CgD’s Risk Management Division, in

advance. The proposals approved by the bank’s credit council are recorded in minutes and are signed by all

present, for later submission to and the final resolution of CgD’s credit councils.


Assets

Cash and cash equivalents

with other credit institutions


financial assets recognised




hedge derivatives

Other assets (excluding deferred costs)

Off-balance sheet

guarantees provided

2009

2,082,998

24,401,981

663,657,566

146,585,066

916,569,377

936,919

53,972,040

1,808,205,948

68,226,250

1,876,432,198

tyPe of financial inStruMent

2008

BooK Value(groSS)

ProViSionS/ iMPairMent

BooK Value(net)

-

-

-

-

37,938,559

-

17,956,869

55,895,428

520,587

56,416,015

2,082,998

24,401,981

663,657,566

146,585,066

878,630,819

936,919

36,015,171

1,752,310,521

67,705,663

1,820,016,183

16,885,360

8,563,604

676,988,294

90,212,327

879,823,348

461,812

65,344,230

1,738,278,975

78,850,623

1,817,129,598

-

-

-

-

14,413,141

-

6,836,509

21,249,650

374,727

21,624,377

16,885,360

8,563,604

676,988,294

90,212,327

865,410,208

461,812

58,507,721

1,717,029,326

78,475,896

1,795,505,222

BooK Value(groSS)


BooK Value(net)

203

A part of credit operations with customers is, inter alia, guaranteed by the following types of collateral:

A pledge on securities;

Bank guarantees;

State-backed;

Mortgage loans for employees; and

Personal guarantees.


204

Credit quality of debt securities and financial derivative instruments

The following table provides information on the book value of debt securities in a portfolio net of impairment

(excluding matured securities) according to the Standard & Poor’s or equivalent rating, by type of guarantor or

issuing entity and by the guarantor‘s or issuing entity’s geography, at 31 December 2009 and 2008:



AAA

AA- to AA+

A- to A+

Less than A-

Unrated

Issued by

Corporate entities

governments and other local authorities




AA- to AA+

Unrated

Issued by

Corporate entities




(net of impairment)

AAA

AA- to AA+

A- to A+

Less than A-

Unrated

Issued by

Corporate entities



2009

2,007,201

162,912,027

12,540,719

-

-

177,459,946

101,931,274

41,292,177

34,236,496

177,459,946

2

27,225,637

27,225,639

27,225,635

2

1

27,225,639

5,110,407

19,004,608

19,782,471

-

47,639,048

91,536,534

51,841,207

3,477,049

36,218,278

91,536,534

-

18,117,069

45,731,817

27,547,205

-

91,396,090

18,164,573

-

73,231,517

91,396,090

-

-

-

-

-

-

-

1,863,218

7,552,155

22,290,610

8,603,070

-

40,279,054

1,496,412

-

38,782,642

40,279,054

-

2,909,557

3,427,469

-

-

6,337,026

-

-

6,337,026

6,337,026

-

-

-

-

-

-

-

-

-

10,423,801

-

-

10,423,801

-

-

10,423,801

10,423,801

-

5,989,174

15,743,178

8,051,256

-

29,783,608

4,754,734

3,972,919

21,055,955

29,783,608

-

2,492,596

2,492,596

-

-

2,492,596

2,492,596

-

4,345,678

-

-

-

4,345,678

-

-

4,345,678

4,345,678

Portugal reSt ofeuroPean union

north aMerica

other total

2,007,201

189,927,826

77,443,183

35,598,461

-

304,976,671

124,850,581

45,265,096

134,860,994

304,976,671

2

29,718,232

29,718,234

27,225,635

2

2,492,597

29,718,234

6,973,625

30,872,441

52,496,882

8,603,070

47,639,048

146,585,067

53,337,619

3,477,049

89,770,399

146,585,067

205

The bank, at 31 December 2009 also recognised in “debtors – other” an amount of €1,079,632 relating to interest

on financial derivative instruments whose payment has been overdue for less than 3 months. The book value

recognised in financial assets held for trading relating to the said operations totalled €5,056,555.


2008


AAA

AA- to AA+

A- to A+

Less than A-

Issued by

Corporate entities





AAA

AA- to AA+

A- to A+

Less than A-

Issued by

Corporate entities




(net of impairment)

AAA

AA- to AA+

A- to A+

Less than A-

Issued by:

Corporate entities


-

247,943,255

8,731,419

844,049

257,518,723

-

89,311,803

168,206,920

257,518,723

-

973,128

6,075,497

37,197,096

44,245,721

43,272,591

973,128

1

44,245,721

-

39,251,030

16,671,354

22,658,988

78,581,373

39,330,343

39,251,030

78,581,373

-

32,212,113

4,091,002

2,570,939

38,874,054

2,312,342

-

36,561,712

38,874,054

11,066,323

-

-

1,978,699

13,045,022

-

11,066,323

1,978,699

13,045,022

-

-

2,498,286

-

2,498,286

-

2,498,286

2,498,286

-

2,023,615

2,388,174

-

4,411,789

-

-

4,411,789

4,411,789

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

2,321,730

11,295,915

9,305,254

-

22,922,899

1,554,905

-

21,367,994

22,922,899

-

-

-

2,364,860

2,364,860

-

-

2,364,860

2,364,860

-

-

9,132,668

-

9,132,668

-

9,132,668

9,132,668

2,321,730

293,474,898

24,515,849

3,414,988

323,727,465

3,867,247

89,311,803

230,548,414

323,727,465

11,066,323

973,128

6,075,497

41,540,654

59,655,602

43,272,591

12,039,451

4,343,560

59,655,602

-

39,251,030

28,302,308

22,658,988

90,212,327

39,330,343

50,881,984

90,212,327


north aMerica

other total

206

Credit quality of loans and advances to credit institutions

The counterparties with which the bank had contracted “loans and advances to credit institutions ”at 31 December

2009, comprised CgD group bodies (€9,401,981), with an external rating of AA- and another financial institution

headquartered in Portugal (€15,000,000), which latter operation was guaranteed by the Portuguese state.

Credit quality of loans and advances to customers

Information on non-performing credit operations and / or separate impairment at 31 December 2009 and 2008,

is set out in the following table:


Corporate loans

Collective analysis

Outstanding

Overdue

Impairment

Mortgage lending

Outstanding

Overdue

Impairment

Consumer credit

Outstanding

Overdue

Impairment

Total outstanding credit

Total overdue credit

Total impairment

total credit

2009

848,638,463

-

(13,133,757)

835,504,706

10,128,029

-

(91,659)

10,128,029

448,201

-

(4,056)

448,201

859,214,693

-

(13,229,472)

845,985,221

2008

credit WithcollectiVe

aSSeSSMent of iMPairMent

credit WithSeParate


total

54,850,022

1,826,980

(24,709,087)

31,967,915

-

-

-

-

-

-

-

-

54,850,022

1,826,980

(24,709,087)

31,967,915

903,488,485

1,826,980

(37,842,844)

867,472,621

10,128,029

-

(91,659)

10,128,029

448,201

-

(4,056)

448,201

914,064,715

1,826,980

(37,938,559)

877,953,136

830,229,835

-

(6,554,579)

823,675,256

8,701,976

-

(74,576)

8,701,976

549,686

-

(4,711)

549,686

839,481,497

-

(6,633,866)

832,847,631

36,483,942

1,469,590

(7,779,275)

30,174,257

-

-

-

-

-

-

-

-

36,483,942

1,469,590

(7,779,275)

30,174,257

866,713,777

1,469,590

(14,333,854)

853,849,513

8,701,976

-

(74,576)

8,701,976

549,686

-

(4,711)

549,686

875,965,439

1,469,590

(14,413,141)

863,021,888

credit WithcollectiVe


credit WithSeParate


total

207

The following classifications were used for the preparation of the above tables:

“Performing loans” – loans without any overdue payments or with balances overdue up to 30 days;

“Non-performing loans” – loans balances overdue between 30-90 days;

“Loans in default” – loans with balances overdue more than 90 days. In the case of corporate loans, if a customer

has at least one operation with payments overdue for more than 90 days, the full amount of the customer’s

exposure to the group is reclassified to this category.

The book value of loans and advances to customers which would have had unpaid instalments at 31 December

2009, if such loans and advances had not been renegotiated totalled €22,091,449 and €36,483,942 respec-

tively. The bank had recorded impairment of €17,155,261 and €6,309,684 respectively on such loans at 31

December 2009 and 2008.

MARkET RISk

Market risk comprises the risk of a change in the fair value or the cash flows of financial instruments deriving from

changes in market prices, including foreign exchange, interest rate and price risks.

The bank’s market risk is assessed on the basis of the following methodologies:

Value-at-Risk” (VaR) on the trading portfolio. This portfolio includes the following elements: securities and

financial derivative instruments portfolio;

A sensitivity analysis on the bank’s other assets and liabilities recognised in the bank’s separate financial

statements. This sensitivity analysis is calculated on the bases of the premises defined in Bank of Portugal

Instruction 19/2005.

The group does not have qualitative information for the sensitivity analysis on the remaining assets and liabilities

of its subsidiaries.

TRADINg PORTfOLIO

VaR comprises an estimate of the maximum potential loss on a specific assets portfolio, over a determined period

with a given confidence level, assuming normal market operation.


208

The calculation methodology used is that of historical simulation i.e. future events are fully explained by past

events, based on the following premises:

Asset held for: 10 days;

Confidence level: 99%;

Price sampling period: 720 calendar days;

Decay factor = 1, i.e. all observations carry the same weight.

for options, the theoretical price is calculated by the use of adequate models and the use of implicit volatility. No

calculation for correlations is made, owing to the methodology applied; i.e. the correlations are empirical.

The following is a breakdown of VaR at 31 December 2009 and 2008 (thousand euros):

The diversification effect is calculated implicitly. Total VaR refers to the combined effect of interest rate, price,

foreign exchange and volatility risks.

Bpvs (basis point values), changes in the market value of interest rate positions owing to the parallel movement

of 1 basis point on the yield curves are calculated for the trading portfolio. Other sensitivity indices commonly

applicable to options portfolios are also calculated.

Stress testing assessments are realised monthly.

Theoretical backtesting (comparison of the VaR measure with technical results) is performed daily and real

backtesting (comparison of the VaR measure with the real result) monthly. The number of exceptions obtained

i.e. the number of times theoretical or real losses exceed VaR, enable the method’s accuracy to be assessed and

any necessary adjustments made.


2008

Market VaR

Interest rate

foreign exchange

Market price

Diversification effect

2009

374

87

50

(105)

406

221

17

34

(40)

232

209

NON-TRADINg PORTfOLIO

The sensitivity analysis on the non-trading portfolio was carried out to determine the potential impact on the

bank’s net interest income in 2010 (excluding the other companies within the consolidation perimeter), considering

a fall of 50 basis points (bps) in reference interest rates and assuming a parallel movement of the interest rate

curve. The bank’s separate financial assets and liabilities in its financial statements were considered for this purpose,

excluding:

financial derivative instruments; and

Commercial paper.

The principal premises related with the pricing of operations were:

Variable-rate operations: market rate plus respective contractual spread;

New fixed-rate operations: market rate plus respective spread equivalent to the difference between the average

rate on live transactions at 31 December 2009 and respective market rate;

New variable-rate operations: market rate plus average contractual spread on live transactions at 31 December

2009.

Based on the above referred to premises, the potential positive impact of a 50 basis points fall in reference interest

rates on net interest income for 2010 totals €639,092 (€2,359,820 at 31 December 2008). In the event of a 50

basis points increase in reference interest rates, the potential negative impact on the net interest income forecast

for 2010 totals €1,348,133 (€2,388,738 at 31 December 2008).

fAIR VALUE

The group maintains a significant part of its assets, notably its securities and derivatives portfolio, at fair value

through profit or loss, at 31 December 2009. .

Reference should be made to the following aspects as regards the principal financial assets and liabilities

recognised at cost:

Interest is paid on almost all loans and advances and resources with other credit institutions at indexed rates

and short refixing;

As shown above, in the section on interest rate risk, the payment of interest on almost all customer deposits is

indexed to Euribor, with short refixing periods. A long term operation at fixed interest rates has been covered by


210

a hedge derivative for which reason the change in the fair value attributable to the interest rate risk has already

been recognised in the deposit’s book value (see Note 18).

In light of the above, the bank considers that the book value of its financial assets, net of provisions and its financial

liabilities comprises a reliable approximation of their respective fair value.

The form of determining the fair value of financial instruments at 31 December 2009 and 2008 is summarised

below:


2009

total tyPe of financial inStruMent

financial inStruMentSrecogniSed at fair Value

Assets





hedge derivatives

Liabilities


hedge derivatives

-

-

153,127

-

153,127

-

-

-

231,782,327

2

95,187,997

-

326,970,326

-

-

-

445,125,773

958,684

35,236,453

936,919

482,257,829

(300,272,162)

(1,703,334)

(301,975,496)

-

49,541,938

95,343,234

-

144,885,172

-

-

-

MarKet data

(leVel 2)

other (leVel 3)

676,908,100

50,500,624

225,920,811

936,919

954,266,454

(300,272,162)

(1,703,334)

(301,975,496)

aSSetS Valued at

coSt

ValuationtechniqueS BaSed on:

PriceS on an actiVe MarKet

(leVel 1)

211


Prices on active markets correspond to equity instruments listed on a stock market and high liquidity bonds

(Level 1);

Prices of financial derivative instruments are calculated using valuation techniques based on market data

(Level 2)”;

Portfolio shares valued by indicative bids supplied by contributors external to the group were recognised in

“Valuation techniques - market data (Level 2)”;

Shares valued by internal CgD group models are presented in “Valuation techniques – Other (Level 3)”; this

column includes:

At 31 December 2008, €158,631,452 in bonds convertible into EDP shares issued by Parpública SgPS, S.A.,

which were being valued in accordance with an internal model defined by the bank. In 2009, the bank

opted to value the security on the basis of indicative bids supplied by external counterparties;

At 31 December 2009 and 2008, €1,992,123 and €2,062,120 , respectively, relating to a financial investment

valued by an internal model for updating projected cash flows;


-

-

19,617,141

-

19,617,141

-

-

-

177,008,218

11,066,325

29,490,806

-

217,565,349

-

-

-

320,404,157

7,892,361

63,073,781

461,812

391,832,111

(260,363,729)

(1,483,423)

(261,847,152)

158,631,452

83,213,897

50,913,713

-

292,759,061

-

-

-

656,043,827

102,172,582

163,095,441

461,812

921,773,662

(260,363,729)

(1,483,423)

(261,847,152)

2008


financial inStruMentSrecogniSed at fair Value

MarKet data

(leVel 2)

other (leVel 3)

aSSetS Valued at

coSt



(leVel 1)

Assets





hedge derivatives

Liabilities


hedge derivatives

212

At 31 December 2009 and 2008, €76,401,609 and €67,404,550, respectively, relating to fixed or variable-rate

bonds issued by Portuguese financial and non-financial companies, in respect of which there are no active

market nor indicative prices supplied by external counterparties. The bank values these securities using a pro-

jected cash flow updating model at market interest rates plus a spread the bank considers adequate to the

issuing entity’s credit risk as a discount rate.

Assets valued at cost are stable financial investments held by the bank for which no active market exists;

The following values refer to subsidiary companies held under venture capital operations:

Cost price: in the case of acquisitions made in the twelve months preceding the valuation date;

Prices in an active market: for stock market listed companies; and

Other: for other subsidiaries.

The following table provides information on the movements occurring in 2009 on securities valued by “Valuation

techniques – Others” (Level 3):

33. CAPITAL MANAgEMENT

In capital management terms, the bank’s separate accounts are supervised by the Bank of Portugal and its

consolidated accounts by CgD group.

The solvency ratio on the bank’s separate financial statements, at 31 December 2009 and 2008, was 8.85% and

8.67%, respectively.


aMountS recogniSed in incoMe

StateMent for year

Assets

financial assets held

for trading

Other financial assets

recognised at fair value


Available for sale

financial assets


158,631,452

83,213,897

50,913,713

292,759,061

(158,631,452)

-

300,000

(158,331,452)

-

(520,495)

-

(520,495)

-

761,045

-

761,045

foreign eXchange difference


fair Value reSerVeS

effectiVe Potential acquiSitionS/ diSPoSalS

change of Valuation

Method

-

(33,151,464)

36,260,398

3,108,934

-

-

7,178,075

7,178,075

-

-

(69,997)

(69,997)

-

49,541,938

95,343,234

144,885,172

214

1. INTRODUCTORy NOTE

Caixa – Banco de Investimento, S.A. (“bank”) was formed by a public deed of 12 November 1987, having

absorbed all assets and liabilities of the Portuguese branch of Manufacturers hanover Trust Company, in

conformity with the terms of ministerial order no. 865-A/87 of 6 November, jointly issued by the Presidency of the

Council of Ministers and Ministry of finance.

The bank is Caixa geral de Depósitos group’s specialised investment banking business arm, which includes activities

such as fixed and Variable Corporate Debt finance, Equity, financial Advisory, Structured finance, Project finance,

Brokerage and Research. Its operations are performed by a branch office in Lisbon and another in OPorto, an

offshore branch in Madeira and a branch in Spain.

As referred to in Note 20, the majority of the bank’s share capital is owned by Caixa geral de Depósitos group

company gerbanca, SgPS, S.A.

The financial statements at 31 December 2009 were approved by the Board of Directors on 22 January 2010.

The bank’s financial statements, at 31 December 2009, still require the approval of its Shareholders’ meeting.

The Board of Directors considers, however, that the said financial statements will be approved without significant

alterations.

2. ACCOUNTINg POLICIES

The separate financial statements of the bank’s registered office have been combined with those of its branches

and represent the bank’s global activities. All balances and trading between the bank’s headquarters and branch

offices in this process have been eliminated.

2.1. PRESENTATION BASES

The bank’s financial statements have been prepared on the going concern principle, based on books and accounting

records, kept in conformity with the accounting principles set out in the Adjusted Accounting Standards under

the terms of Bank of Portugal Official Notice 1/2005 of 21 february and Instructions 9/2005 and 23/2004, in

accordance with the competence afforded by no. 3 of Article 115 of the general Credit and financial Institutions

Regime, approved by Decree Law 298/92 of 31 December.

The Adjusted Accounting Standards generally correspond to the International financial Reporting Standards

(IfRS), as adopted by the European Union under European Parliament and Council Regulation (CE) 1606/2002 of


215

19 July, transposed into national legislation by Decree Law 35/2005 of 17 february and Bank of Portugal Official

Notice 1/2005 of 21 february. Under the terms of Official Notice 1/2005, however, the following exceptions have

an impact on the bank’s financial statements:

i) Valuation criteria on loans and advances to customers and amounts receivable from other debtors (credit

and accounts receivable) – credits are recognised at their nominal value and may not be reclassified in other

categories and, as such, recognised at fair value;

ii) Provisioning of credit and accounts receivable – minimum provisioning levels are defined in accordance with

the dispositions of Bank of Portugal Official Notice 3/95, with the alterations made by Bank of Portugal

Official Notices 8/03 of 30 June and 3/2005 of 21 february (Note 2.3. a)). The regime also includes liabilities

comprising acceptances, guarantees and other similar instruments;

iii) Tangible assets must be maintained at cost and cannot, therefore, be recognised at fair value, as permitted

by the IAS 16 Standard – Tangible fixed Assets. The recognition of legally authorised revaluations is permitted,

as an exception, in which case the resulting capital gains are recognised in “revaluation reserves”.

2.2. TRANSLATION Of BALANCES AND TRANSACTIONS IN fOREIgN CURRENCy

The bank’s accounts have been prepared in accordance with the currency used in the economic context in which

it operates (referred to as “operating currency”), i.e. the euro.

foreign currency transactions are recognised on the basis of the reference rates in force at the transaction date. At

each balance sheet date, monetary assets and liabilities denominated in foreign currency are translated into euros

on the basis of the foreign exchange rate in force. Non-monetary assets, recognised at fair value, are translated

on the basis of the exchange rate in force on the last valuation date. Non-monetary assets, recognised at their

historical cost, continue to be recognised at the original exchange rate.

Exchange rate differences determined upon exchange translation are recognised in income for the year, except for

differences originated by non-monetary financial instruments, such as shares, classified as available for sale and

recognised in a specific shareholders’ equity account heading until disposal.


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2.3. fINANCIAL INSTRUMENTS

a) LOANS AND ADVANCES TO CUSTOMERS AND AMOUNTS RECEIVABLE fROM OThER DEBTORS

As described in Note 2.1, these assets are recognised in accordance with the dispositions of Bank of Portugal

Official Notice 1/2005. They are, accordingly, recognised at their nominal value, with their respective income, i.e.

interest and commissions, being recognised over the course of the period of the operations in accordance with

the “pro rata temporis” method, when comprising operations producing residual flows for a period of more than

a month. whenever applicable, commissions and external costs imputable to contracted operations underlying

the assets classified in this category are also periodised during the period of application of the credits.

The provisioning regime is defined in Bank of Portugal Official Notice 3/95 and includes the following:

Provision for overdue credit and interest

This provision is used to cover the risks on lending involving overdue payments of principal or interest. The provi-

sion percentages for overdue credits and interest are increased in proportion to the period having elapsed since

their respective maturity and whether or not they are collateralised.

Provision for doubtful loans

This provision caters for the risks of outstanding principal on loans to customers with unpaid principal or interest

or customers with other unpaid liabilities.

Official Notice no. 3/95 provides the following classifications for doubtful loans:

Outstanding payments on a single credit operation in which at least one of the following conditions applies to

the respective unpaid principal and interest:

i) when exceeding 25% of the unpaid principal, plus accrued interest;

ii) when in default for more than:

Six months in the case of operations with a maturity of less than five years;

Twelve months in the case of operations with a maturity of five or more and less than ten years;

Twenty four months in the case of operations with a maturity of ten years or more.


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These doubtful loans are provisioned in accordance with the provisioning percentage for overdue credit.

Outstanding credit on a single customer, if the overdue credit and interest on all of the operations in respect of

the said customer, plus the outstanding credit described in the preceding sub-paragraph, exceed 25% of the

total credit, plus overdue interest. These doubtful debts are provisioned on the basis of 50% of the average

percentage of provisions for overdue credit.

Provisions for bad and doubtful debts at 31 December 2009, were higher than the minimum amounts defined

by the Bank of Portugal.

Provision for general credit risks

This provision is recognised in liabilities and covers the risk of non payment of loans and other risks, such as the

provision of guarantees and securities, deriving from the bank’s activity. The amount of the provision is calculated

on the application of the following general percentages on the full amount of the value of unmatured credit,

including guarantees and acceptances:

1.5% on consumer credit and unspecified loans and advances to customers;

0.5% on mortgage lending on property or property leasing operations, in both cases when the property is for

the borrower’s residence;

1% for other credit.

Provisions for bad and doubtful debts at 31 December 2009, were higher than the minimum amounts defined

by the Bank of Portugal.

Provisions increases ceased to be accepted as a tax deductible cost from 01 January 2003. The effect on income

is recognised in the “provisions net of recoveries and cancellations” account heading in the income statement.

b) OThER fINANCIAL ASSETS

The other financial assets are recognised at fair value at the agreement date, plus the costs directly attributable

to the transaction. These assets are initially recognised in one of the following categories defined in the IAS 39

Standard:


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i) financial assets at fair value through profit or loss

This category includes:

financial assets held for trading, which essentially include the acquisition of securities with the objective

of realising gains on the basis of short term market price fluctuations. This category also includes financial

derivative instruments, excluding financial derivative instruments complying with hedge accounting require-

ments; and,

financial assets recognised at fair value through profit or loss (“fair value option”).

The use of the “fair value option” implies the irrevocable recognition, in this category, of the financial instruments

at the time of initial recognition and is restricted to situations in which the application results in the production of

more relevant financial information, i.e.

a) If the application eliminates or significantly reduces an accounting mismatch that would otherwise occur as a

result of the inconsistent measurement of assets and liabilities or recognition of gains and losses;

b) groups of financial assets, financial liabilities or both which are managed and when the performance thereof

is assessed on a fair value basis, in accordance with formally documented risk and investment management

strategies; and when information on the group is distributed internally to management bodies.

c) It is also possible to classify financial instruments containing one or more embedded derivatives in this category,

unless:

The embedded derivatives do not significantly modify the cash flows which would, otherwise, be required

under the contract;

It is evident, with little or no analysis, that the implicit derivatives should not be separated out.

financial assets classified in this category are recognised at fair value whose gains and losses generated by their

subsequent valuation are recognised in the income statement in the “income from assets and liabilities measured

at fair value through profit or loss” account headings. Interest is recognised in the appropriate “interest and

similar income” account headings.

ii) Loans and accounts receivable

These are financial assets with fixed or determinable payments, not quoted on an active market and not included

in any of the other financial asset categories. Owing to the restriction imposed under Official Notice 1/2005, this

category only includes amounts receivable from other financial institutions.


219

These assets are initially recognised at fair value, less any commissions included in the effective rate, plus all incre-

mental costs directly attributable to the transaction. The assets are subsequently recognised in the balance sheet

at their amortised cost less impairment losses.

Interest recognition

Interest is recognised on the basis of the effective rate method which enables the amortised cost to be calculated

and the interest split over the period of the operations. The effective rate is the rate that, being used to discount

the estimated future cash flows associated with the financial instrument, enables the current value to be matched

with the value of the financial instrument at the date of initial recognition.

iii) Available for sale financial assets

This category includes variable-income securities not classified as assets recognised at fair value through profit

or loss, including stable financial investments and other financial instruments initially recognised herein and not

classifiable in the other categories of the above referred to IAS 39 Standard.

Available for sale financial assets are measured at fair value, with the exception of shareholders’ equity instruments

not quoted on an active market and whose fair value cannot be reliably measured, which continue to be recognised

at cost. Revaluation gains or losses are recognised directly in shareholders’ equity in the “fair value reserve”. At

the time of sale or if impairment is determined, the accumulated fair value changes are transferred to income or

costs for the year.

Dividends on equity capital instruments classified in this category are recognised as income in the income statement

when the bank’s right to receive them has been established.

The bank, on 01 July 2008, reclassified its fixed-income securities from the financial assets held for trading category

to the available for sales financial assets category, in conformity with the amendment to the IAS 39 Standard

approved on 13 October 2008 (Note 8).

Reclassification of financial assets

with the entry into force of the amendment to the IAS 39 Standard on 13 October 2008, the bank is in a posi-

tion to reclassify several of its financial assets classified as financial assets held for trading or available for sale to

other financial assets categories. No reclassifications to financial assets categories at fair value through profit or

loss, are, however, permitted.


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fair value

As referred to above, financial assets classified in financial assets categories recognised at fair value through profit

or loss and available for sale financial assets are recognised at their fair value.

The fair value of a financial instrument comprises the amount at which an asset or financial liability can be sold

or liquidated between independent, informed parties, interested in realising the transaction under normal market

conditions.

The fair value of financial assets is, for most assets, determined by a CgD group body which is independent from

the trading function, based on the following criteria:

Closing price at the balance sheet date, for instruments traded on active markets;

The following valuation methods and techniques are, inter alia, used for debt instruments not traded on active

markets (including unlisted securities or securities with low liquidity levels):

i) Bid prices published by financial information services such as Bloomberg and Reuters, including market prices

available on recent transactions;

ii) Reference bid prices obtained from financial institutions operating as market-makers;

iii) Internal valuation models based on market data used to define a price for the financial instrument, reflecting

market interest rates and volatility, in addition to liquidity and the credit risk associated with the instrument.

c) fINANCIAL LIABILITIES

financial liabilities are recognised at the agreement date at their respective fair value, less the costs directly

attributable to the transaction. Liabilities are classified in the following categories:

i) financial liabilities held for trading

financial liabilities held for trading comprise the negative revaluation of financial derivative instruments recog-

nised at their fair value.


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ii) Other financial liabilities

This category includes other credit institutions’ and customers’ resources and liabilities incurred on payments of

services.

These financial liabilities are valued at their amortised cost.

d) DERIVATIVES AND hEDgE ACCOUNTINg

The bank performs derivative operations as part of its activity to provide for its customers’ requirements and

reduce its exposure to foreign exchange, interest rate and price fluctuations.

financial derivative instruments are recognised at their fair value at the date of the agreement. They are also

recognised in off-balance sheet accounts at their respective notional value.

financial derivative instruments are subsequently measured at their respective fair value. fair value is assessed:

On the basis of prices obtained in active markets (e.g. futures trading in organised markets);

On the basis of models incorporating valuation techniques accepted in the market, including discounted cash

flows and options valuation models.

Embedded derivatives

financial instruments embedded in other financial instruments are separated from the base agreement and proc-

essed autonomously under the IAS 39 Standard, whenever:

The embedded derivative’s economic characteristics and risks are not closely related with the base agreement

defined in the IAS 39 Standard; and

The full amount of the combined financial instrument is not recognised at fair value, with fair value changes

being reflected in the income statement.

hedge derivatives

These derivatives are designed to protect the group from exposure to a specific risk attached to its operations.

Classification as hedge derivatives and use of the hedge accounting concept, as described below, are subject to

compliance with the rules of the IAS 39 Standard.


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The bank, at 31 December 2009 and 2008, only used hedges on the changes in the fair value of financial instru-

ments recognised in the balance sheet as “fair value hedges”.

The bank prepares formal documentation, for all hedge operations, at the beginning of the operation, to include

the following aspects:

Risk and strategy management objectives associated with the realisation of the hedge operation, in accordance

with the hedge policies defined by the bank;

Description of hedged risk(s);

Identification and description of hedged and hedge financial instruments;

hedge operation effectiveness appraisal method and respective periodicity.

hedge effectiveness tests are periodically performed and documented, using a comparison between the change

in fair value of the hedge instrument and hedged item (part attributable to hedged risk). with the aim of enabling

the use of hedge accounting under IAS 39, the ratio should be between a range of 80%-125%. Prospective

effectiveness tests are also performed in order to demonstrate the hedges’ expected future effectiveness.

hedge derivatives are recognised at fair value, with the results being assessed daily and recognised in income and

costs for the year. If the hedge is seen to be effective, the bank will also recognise the change in fair value of the

hedged item, attributable to the hedged risk, in income for the year. The impact of these valuations is recognised

in the “income from assets and liabilities measured at fair value through profit or loss” account headings. for

derivatives, such as interest rate swaps, with an associated interest component, the periodisation of interest for

the period in progress and liquidated flows are recognised in “interest and similar income” and “interest and

similar costs” in the income statement.

Positive and negative revaluations of hedge derivatives are recognised in specific assets and liabilities account

headings.

Valuations of hedged items are recognised in the account headings in which such assets and liabilities are recognised.

Trading derivatives

Trading derivatives are all financial derivative instruments that are not associated with effective hedge operations

in accordance with the IAS 39 Standard, including:

Derivatives taken out to hedge assets or liabilities risks recognised at fair value through profit or loss, thus

rendering hedge accounting unnecessary;


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Derivatives taken out to hedge risk which do not comprise effective cover under the IAS 39 Standard;

Derivatives taken out for trading purposes.

Trading derivatives are recognised at fair value, with the results being determined daily and recognised in income

and costs for the year. The impact of these valuations is recognised in the “income from assets and liabilities

measured at fair value through profit or loss” account headings. for derivatives, such as interest rate swaps, with

an associated interest component, the periodisation of interest for the period in progress and liquidated flows are

recognised in “interest and similar income” and “interest and similar costs” in the income statement.

Positive and negative revaluations are recognised in the financial assets recognised at fair value through profit or

loss” and “financial liabilities at fair value through profit or loss” account headings, respectively.

e) IMPAIRMENT Of fINANCIAL ASSETS

financial assets at amortised cost

The group periodically analyses the impairment of its financial assets recognised at amortised cost, notably loans

and advances to credit institutions.

Signs of impairment are identified on an individual basis.

The following events may comprise signs of impairment:

failure to comply with contractual clauses, i.e. arrears of interest or capital;

Debtor or debt issuing entities’ significant financial difficulties;

Existence of a strong probability of a declaration of bankruptcy by the debtor or debt issuing entity;

granting of facilities to a debtor in financial difficulties which would not be granted under normal circumstances;

historical records of collections suggesting that the nominal value will never be fully recovered;

Data indicating a measurable reduction of the estimated value of the future cash flows of a group of financial

assets since original recognition, although such a reduction cannot be identified in the group’s separate financial

assets.

whenever signs of impairment on separately analysed assets are identified, the eventual impairment loss com-

prises the difference between the book value at the time of analysis and current value of projected future cash

flows receivable (recoverable value), discounted on the basis of the asset’s effective original interest rate.


224


As referred to in Note 2.3. a), available for sale financial assets are recognised at fair value, with fair value changes

being recognised in the “fair value reserve” in shareholders’ equity.

whenever any objective evidence of impairment exists, accumulated capital losses recognised in reserves, are

transferred to costs for the year in the form of impairment losses and recognised in the “impairment of other

assets, net of reversals and recoveries” heading.

In addition to the signs of impairment on financial assets recognised at amortised cost, IAS 39 also provides for

the following specific signs of impairment on equity instruments:

Information on significant changes having an adverse impact on the technological, market, economic or legal

environment in which the issuing entity operates, indicating that the cost of the investment may not be recovered;

A prolonged or significant decline in market value at below cost.

The bank, on each of its financial statement’s reference date performs an analysis of the existence of any impair-

ment losses on available for sale financial assets, considering, for the said purpose the nature and specific, indi-

vidual characteristics of the assets being valued. In addition to the results of the analysis, the events set out below

were considered to be objective signs of impairment on equity instruments:

Existence of potential capital losses of more than 50% of the respective cost price;

Situations in which the fair value of the equity instrument remains below its respective cost price for a period

of more than 24 months.

The existence of potential capital losses of more than 30% of the cost price, for more than 9 months, was also

considered to comprise objective signs of impairment.

Impairment losses on equity instruments cannot be reversed and any potential capital gains originated after the

recognition of impairment losses are, therefore, recognised in the “fair value reserve”. Impairment is always

considered to exist if additional capital losses are assessed at a later stage and are recognised in income for the

year.

Criteria identical to debt instruments are applied for the analysis of “Tier 1” securities.

The group also periodically performs impairment analyses on financial assets recognised at cost, notably unlisted

equity instruments whose fair value cannot be reliably measured. The recoverable value, in this case, comprises

the best estimate of future flows receivable from the asset, discounted at a rate which adequately reflects the risk

associated with holding the asset.


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The amount of the impairment loss is directly recognised in income for the year. Impairment losses on such assets

cannot be reversed.

2.4. OThER TANgIBLE ASSETS

Except for assets acquired up to 1998, these are recognised at cost, less depreciation and accumulated impairment

losses. The costs of repair, maintenance and other expenses associated with their use are recognised as a cost for

the year, in the “other administrative expenses” account heading.

The bank revalued its fixed assets in 1998, under Decree Law 31/98 of 11 february. As permitted under the IfRS

1 Standard, the book value, incorporating the effect of the referred to revaluation was considered as a cost in

the transition to the IfRS, as the proceeds, at the time in question, generally comprised cost, or amortised cost, in

accordance with the IfRS, adjusted to take alterations to price indices into account.

Depreciation is calculated and recognised as a cost for the year, on a systematic basis, during the asset’s estimated

useful life, comprising the period in which it is expected to be available for use, i.e.

Land is not depreciated.

The works being carried out by the bank on its headquarters building over the period 2008-2009 are being

depreciated over a period of ten years.

Analyses of evidence of tangible assets impairment are periodically performed in accordance with the IAS 36

Standard – “Assets impairment”. whenever the net book value of the tangible assets exceeds their recoverable

value, an impairment loss is recognised in the income statement for the period. Impairment losses can be reversed

and also have an impact on income for the period if there is an increase in the asset’s recoverable value in the

following periods.

The bank periodically assesses the adequacy of the estimated useful life of its tangible assets.


Property

Equipment

furniture and materials

Transport material

Computer equipment


Security equipment

Plant and machinery

10 - 50

4 -10

4

3 - 4

3 - 10

4 - 10

5 - 10

yearS of uSeful life

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2.5. fINANCIAL LEASES

Leasing operations are recognised as follows:

As lessee

Leased assets are recognised at fair value in assets and liabilities, in line with the processing of the respective

instalment payments.

financial lease instalments are split up in accordance with the respective financial schedule, under which liabilities

are reduced by the corresponding payment of principal. Interest paid is recognised as a financial cost.

As lessor

Leased assets are recognised in the balance sheet as loans, repaid by capital instalments set out in the financial

agreements schedule. Interest included in the instalments is recognised as financial income.

2.6. INTANgIBLE ASSETS

This account heading essentially comprises the costs, development or preparation for use of software used for

the development of the bank’s operations. Intangible assets are recognised at cost, less amortisation and accu-

mulated impairment losses.

Depreciation is recognised as a cost, on a systematic basis, throughout the assets’ estimated useful life for a period

of between 3 - 6 years.

Expenses on software maintenance are recognised as a cost for the year in which they are incurred.

2.7. INVESTMENTS IN SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINTLy CONTROLLED ENTITIES

This account heading includes investments in entities over whose current management the bank has effective

control with the aim of obtaining economic benefit from their operations referred to as subsidiaries. Control usually

takes the form of more than 50% of share capital or voting rights.


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These assets are recognised at cost and periodic impairment analyses are realised.

Dividends are recognised as income for the year in which they are distributed by subsidiaries.

2.8. INCOME TAX

The bank pays tax under the regime set out in the Portuguese Tax Code on the Income of Collective Persons (IRC).

The Madeira Offshore Branch, however, is exempt from IRC up until 31 December 2011, under article 33 of the

Statute of fiscal Benefits. for the purposes of the application of this exemption, in accordance with the dispositions

of article 33 A of the Statute of fiscal Benefits, at least 85% of the profit attributable to the entity’s global activity

should derive from the performance of activities outside the institutional scope of the Madeira free Zone.

The total amount of tax on profit recognised in the income statement encompasses current and deferred tax.

Current tax is calculated on the basis of taxable profit for the year, which is different from accounting income

owing to adjustments to taxable profit resulting from costs or income which are not relevant for fiscal purposes

or only considered in other periods.

Deferred tax comprises the impact of temporary deductible or taxable differences between the balance sheet

value of assets and liabilities and their fiscal basis, used to determine taxable profit recoverable or payable in

future periods.

Deferred tax liabilities are normally recognised for all temporary taxable differences, whereas deferred tax assets

are only recognised up to the amount by which the existence of future taxable profit, permitting the use of the

corresponding deductible tax differences or fiscal losses, is probable. Deferred taxes are not, however, recorded

in the following situations:

Temporary differences resulting from goodwill;

Temporary differences originating from the initial recognition of assets and liabilities in transactions which do

not affect accounting income or taxable profit;

Temporary differences resulting from non-distributed profit by subsidiaries and associated companies, to the

extent that the group is able to control their reversal and which is not likely to occur in the foreseeable future.

The principal situations originating temporary differences on a bank level, comprise provisions and revaluations

not accepted for fiscal purposes, deferred commissions and depreciation not accepted on legal revaluations of

tangible assets.


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Deferred taxes are calculated on the basis of the tax rates expected to be in force on the date of reversal of the

temporary differences, comprising the approved or substantially approved rates, at the date of the balance sheet.

Tax on income (current or deferred) is recognised in income for the year, except for cases in which the originating

transactions have been recognised in other shareholders’ equity account headings (e.g. revaluations of available

for sale financial assets). In such cases the corresponding tax is also recognised as a charge to shareholders’ equity

and does not affect income for the year.

2.9. PROVISIONS AND CONTINgENT LIABILITIES

A provision is set up when there is a current (legal or constructive) obligation, resulting from past events,

involving the probable future expenditure of resources and when this may be reliably determined. The amount

of the provision comprises the best estimate of the amount to be paid to liquidate the liability at the date of the

balance sheet.

when not probable, the future expenditure of resources is considered to be a contingent liability. Contingent

liabilities require no more than a disclosure procedure, unless the possibility of their payment is remote.

Provisions for other risks are for fiscal, legal and other contingencies in addition to the depreciation of financial

assets.

2.10. EMPLOyEE BENEfITS

The bank does not have any retirement pensions liabilities to its employees, who are covered by the national social

security regime, owing to the fact that it is not a signatory to the Collective wage Bargaining Agreement for the

Banking Sector.

The bank, however, at its own discretion, in 1987, set up the “fundo de Pensões Caixa – Banco de Investimento”

(fund) with the objective of providing its employees with additional old age, disability and survivors’ retirement

pensions, pursuant to the terms of the contract. The fund is managed by CgD Pensões – Sociedade gestora de

fundos de Pensões, S.A.

The bank pays a percentage of 3.5% of each employee’s annual wages into the fund. Pension costs, in 2009 and

2008 were €393,986 and €405,169 respectively (Note 29).

The bank does not have any liabilities other than the above referred to contributions owing to the fact that this

is a defined contribution plan.


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Short term benefits, including productivity bonuses paid to employees, are recognised in “employee costs” for

the respective period, on an accrual basis.

2.11. COMMISSIONS

As referred to in Note 2.3, commissions received on credit operations and other financial instruments, i.e.

commissions charged for originating operations, are recognised as income over the period of the operation.

Commissions for services performed are usually recognised as income for the period of performance of the service

or as a lump sum if resulting from single acts.

The estimate of the commissions the bank expects to pay to other credit institutions for the syndicating of credit

operations in which it is involved as lead and in which CgD group’s initial exposure is higher than the defined

objective, is recognised as accrued costs as a charge to the “costs of services and commissions” account heading

for the year in which the bank recognises the income relating to the corresponding commission.

2.12. SECURITIES AND OThER ITEMS hELD UNDER CUSTODy

Securities and other items held under custody, notably customers’ securities, are recognised in off-balance sheet

account headings at their nominal value.

2.13. CASh AND EQUIVALENTS

for the purposes of the preparation of cash flow statements, the bank considers “cash and equivalents” to be

the total amount of the “cash and cash equivalents with central banks” and “cash equivalents with other credit

institutions” account headings.

2.14. CRITICAL ACCOUNTINg ESTIMATES AND MOST RELEVANT JUDgEMENTAL ASPECTS IN ThE APPLICATION Of ACCOUNTINg POLICIES

In the application of the above referred to accounting policies, the bank’s board of directors must produce estimates.

The estimates with the greatest impact in the bank’s separate financial statements include those set out below.


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Determination of impairment losses on loans and receivables

As regards provisions for loans and advances to customers, accounts receivable and guarantees and acceptances

given, the bank complies with the minimum limits defined by the Bank of Portugal (Note 2.3). however, whenever

considered necessary, such provisions are complemented to reflect the bank’s estimate of the risk of non-recover-

ability associated with customers. The assessment is produced on a separate basis by the bank, using its specific

knowledge of its customers’ status and the guarantees associated with the operations in question.

Determination of impairment losses on available for sale financial assets

As described in Note 2.3. d), capital losses deriving from the valuation of such assets are recognised as a charge to

the fair value reserve. whenever objective evidence of impairment exists, the accumulated capital losses recognised

in the fair value reserve should be transferred to costs for the year.

for equity instruments, determination of the existence of impairment losses may be subjective. The group determines

whether or not impairment exists on such assets through a specific analysis at each balance sheet date, taking into

consideration the definitions provided in the IAS 39 Standard (see Note 2.3. e)). As a general criterion, impairment is

always determined when it is considered, that, owing to the size of the capital loss determined, the full recovery

of the amount invested by the group is highly improbable.

In the case of debt instruments classified in this category, including “Tier I” classified as equity instruments, the

capital losses are transferred from the fair value reserve to income, whenever there is any indication of the

possible future occurrence of failure to comply with contractually agreed cash flows, notably on account of

financial difficulties, defaults on other financial liabilities, or a significant deterioration in the issuing entity’s rating.

Valuation of financial instruments not traded in active markets

In accordance with the IAS 39 Standard, the bank values all financial instruments at fair value, except for those

recognised at amortised cost. The valuation models and techniques described in Note 2.3 are used for the valuation

of financial instruments not traded on liquid markets. The valuations obtained comprise the best estimate of the

fair value of the referred to instruments, at the date of the balance sheet. As referred to in Note 2.3. to guarantee

an adequate separation between functions, the valuation of most such financial instruments is determined by a

body that is independent from the trading function.

A summary of the sources used by the bank to determine the fair value on financial instruments is provided in

Note 33 – Disclosures on financial instruments, in the “fair value” section.


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Determination of tax on profit

Tax on profits (current and deferred) is assessed by the bank on the basis of the rules defined by the current fiscal

framework. In several cases, however, fiscal legislation may not be sufficiently clear and objective and may give

rise to different interpretations. The amounts recognised in such cases represent the best understanding of the

responsible bank bodies and subsidiaries on the correctness of the operations although this may be queried by

the fiscal authorities.

2.15. ADOPTINg Of NEw STANDARDS (IAS / IfRS) OR REVISION Of ALREADy ISSUED STANDARDS

Except for subject matters regulated by the Bank of Portugal, such as those referred to in Note 2.1, the bank, in

2009, used the standards and interpretations issued by the International Accounting Standards Board (IASB) and

the International financial Reporting Interpretations Committee (IfRIC) which are relevant to its operations and

effective for the periods starting 1 January 2009, provided that they have been approved by the European Union.

The following standards, interpretations, amendments and revisions endorsed by the European Union and

mandatory for economic years beginning on or after 1 January 2009, were adopted for the first time, in the year

ended 31 December 2009:


IfRS 1/IAS 27 – Amendments (Cost of

an investment in a subsidiary, jointly

controlled entity or an associate)

IAS 39 – Amendments Eligible hedged

items

IfRS 2 – Amendments (acquisitions

and cancellations)

IAS 23 – Borrowing costs (revised)

IAS 32/IAS 1 – Amendments (puttable

financial instruments and obligations

arising on a liquidation)

These amendments deal with the measurement of the cost of invest-

ments in subsidiaries, jointly controlled entities and associates in the first

time adoption of IfRS and recognition of dividend income from subsidiar-

ies, in the parent company’s separate financial statements.

These are clarifications related with the following hedge accounting

aspects: (i) identification of inflation as a hedged risk and (ii) options

hedges.

Consists of the clarification of the definition of vesting conditions, intro-

duction of the concept of non-vesting conditions and clarification of the

processing of cancellations.

This revision establishes the obligation to capitalise the costs of loans

related with qualifying assets with the option of recognising them in the

income statement for the period in which they were incurred being con-

sequently, eliminated.

These amendments change the classification criteria of a financial in-

strument between an equity capital instrument and a financial liability,

enabling several financial instruments which may be repurchased to be

classified as shareholders’ equity instruments.

1-Jan-09

1-Jul-09

1-Jan-09

1-Jan-09

1-Jan-09



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The effect of the adoption of the above referred to new standards, interpretations, amendments and revisions

on the bank’s financial statements at 31 December 2009, was not significant except for the following situations:

“IfRS 8 – Operating Segments”. This standard came into force on 1 January 2009 for all entities having issued

securities (bonds or shares) admitted to listing in public markets or which have applied for such securities to be

listed in public markets. Notwithstanding the fact that it was not part of the defined scope, the bank opted to

make its disclosures in accordance with the standard’s requirements. IfRS 8 requires the bank to report quanti-

tative and qualitative information on the reported segments which comprise operating segments or aggregates

thereof. Operating segments comprise components of an activity on which the bank has autonomous financial

information and which is analysed by the bank’s decision-making bodies when deciding what resources to

allocate and performance measurement.

IAS 1 (Revised) – Presentation of financial statements”. This standard is mandatory starting 01 January 2009 and

makes a series of changes on the terminology of financial statements. The following are, inter alia, the principal

effects of this revision of IAS 1:

All gains and losses (including gains and losses recognised directly in shareholders’ equity) should, in the

future, be presented:

- In a single “statement of comprehensive income”; or

- In two statements (an income statement and statement of comprehensive income). The bank adopted this

possibility in its financial statements at 31 December 2009.


IAS 1 – Presentation of financial

standards (revised)

IfRIC 13 – Customer loyalty pro-

grammes

IfRS 8 – Operating segments

IfRS 7 – Amendments (disclosures on

fair value measurements and liquidity

risk)

Improvements to international financial

reporting standards – 2007

The year 2007 revision of IAS 1 introduced changes of terminology,

including new designations for elements of financial statements, and

changes to the format and content of such elements.

This interpretation requires bonuses given to customers as part of a sales

transaction to be recorded as a separate component part of the transaction.

IfRS 8 consists of a standard dealing exclusively with disclosures in

replacement of the former IAS 14 standard. The IfRS implied a redefinition

of the entity’s reportable segments and the information to be reported

therein.

These amendments to IfRS 7 expand the required disclosures on the fair

value of financial instruments and liquidity risk.

This process involved the revision of 32 accounting standards.

1-Jan-09

1-Jul-08

1-Jan-09

1-Jan-09

Various (usually

1-Jan-09)



233

The presentation of “other comprehensive income” (e.g. gains or losses on the revaluation of available for

sale financial assets) as separate items on the statement of changes to shareholders’ equity is no longer

permitted.

At the date of the board of directors’ approval of these financial statements, the relevant standards and interpre-

tations available for advance application were as follows:

The standards, although having been endorsed by the European Union, were not adopted by the bank for the

year ended 31 December 2009, owing to the fact that their application was still not mandatory. No significant

impacts on the financial statements deriving from their adoption have been estimated.


IfRS 3 – Business combinations and

IAS 27 – Consolidated and separate

financial statements (2008 revision)

Revisions of IfRS 1 – first time adoption

of international financial reporting

standards

IfRIC 12 – Service concession agree-

ments

IfRIC 15 – Agreements for the

construction of real-estate

IfRIC 16 – hedges of a net investment

in a foreign operation

IfRIC 9 and IAS 39 – Amendments

(reassessment of embedded deriva-

tives)

IfRIC 17 – Distributions of non-cash

assets to owners

IfRIC 18 – Transfers of assets from

customers

This revision must be applied for the years beginning on or after 1 July

2009 and makes several changes to the level of registration of business

combinations notably regarding: (a) the measurement of non-controlling

interests (previously referred to as minority shareholders’ interests ); (b)

the recognition and subsequent measurement of contingent payments;

(c) the processing of direct costs related with the combination; and (d) the

registration of transactions involving the purchase of interests in already

controlled entities and transactions for the sale of interests which do not

result in loss of control.

This standard was revised for the purpose of grouping the various changes

occurring since the first release.

This interpretation must be applied for the years beginning on or after 1

January 2010 and introduces rules for the recognition and measurement

by the private operator involved in the provision of infrastructures and

operations in public-to-private type concessions.

This interpretation deals with the form of assessment of whether a

real-estate construction agreement falls within the sphere of IAS 11 –

Construction contracts or IAS 18 – Revenue and how the corresponding

revenue should be recognised.

This interpretation provides guidelines on the hedge accounting of net

investments in foreign operations.

These amendments clarify the circumstances in which subsequent

reassessments of the obligation to separate embedded derivatives are

permitted.

This interpretation issues guidelines on the correct accounting of the

distribution of non-cash assets to owners as dividends.

This interpretation issues guidelines on operators’ accounting of

“customers’” tangible fixed assets.

1-Jul-09

1-Jan-10

1-Jan-10

1-Jan-10

1-Jul-09

years ending on

beginning after

30-Jun-09

01-Jul-09

Transfers made

on or after

01-Jul-09



234 NOTES TO ThE SEPARATED STATEMENTS

3. OPERATINg SEgMENTS

The board of directors receives and analyses the bank’s financial information every month, split up into business

segments representing its areas of activity by type of origination, designed, as a whole, to ensure a dynamic

investment banking business platform i.e.

corporate finance – including Debt and Equity fnancial advisory and Project finance activities;

trading and Sales including trading and asset management operations and treasury liabilities;

Brokerage – brokerage operations;

commercial Banking – including domestic and international transversal business origination;

other – other activities not classifiable in any of the former categories.

235

The following tables summarises the information on the bank’s operating segments at 31 December 2009 and

2008:




net interest income









Value adjustments associated with loans and

advances to customers and amounts receivable

from other debtors (net of replacements and

cancellations)

Impairment of other financial assets net

of reversals and recoveries

Impairment of other assets net of reversals and

recoveries




Other financial assets recognised at fair



hedge derivatives





hedge derivatives

i.

ii.

iii.

total

2009

254,768,509

(220,120,328)

34,648,181

60,896

89,433,399

(31,187,540)

14,234,305

16,828

1,836,734

74,394,622

109,042,803

(12,220,656)

(16,979,696)

(81,175)

(299,047)

(29,580,574)

79,462,229

(37,493,203)

41,969,026

676,908,100

29,718,234

171,383,953

936,919

891,860,290

300,272,162

1,108,928,963

146,444,097

1,703,334

13,545,946

(4,142,794)

9,403,152

-

11,642,610

(629,505)

(84,654)

-

44,868

10,973,319

20,376,471

(5,817,499)

(16,979,696)

-

(22,632)

(22,819,827)

(2,443,356)

-

26,266,952

26,665,185

-

335,286,820

-

243,242,219

109,803,050

-

56,008

(34,267)

21,742

-

6,350,089

(1,460,732)

(159,115)

-

220,951

4,951,193

4,972,935

(659,770)

-

-

(4,534)

(664,304)

4,308,631

-

-

-

-

2,578,653

-

1,615,679

30,733,622

-

210,166,524

(202,855,237)

7,311,287

60,896

5,181,116

(265,508)

13,997,415

-

171,429

19,145,348

26,456,635

(889,455)

-

-

(70)

(889,525)

25,567,110

676,908,100

3,451,282

138,673,828

936,919

-

300,272,162

523,587,768

-

1,703,334

30,894,884

(12,988,424)

17,906,460

-

66,223,109

(28,831,795)

480,659

-

1,403,214

39,275,187

57,181,647

(4,761,223)

-

(81,175)

(237,687)

(5,080,085)

52,101,562

-

-

-

-

543,417,469

-

340,483,297

5,907,425

-

105,146

(99,606)

5,540

-

36,475

-

-

16,828

(3,728)

49,575

55,115

(92,709)

-

-

(34,124)

(126,833)

(71,717)

-

-

6,044,940

-

10,577,348

-

-

-

-


BroKerage trading and SaleS

corPorate finance

other


Interest and similar costs were split up over the various business lines on the basis of the average value of the

respective asset allocations to the said segments.



net interest income









Value adjustments associated with loans and

advances to customers and amounts receivable

from other debtors (net of replacements and

cancellations)

Impairment of other financial assets net of revers-

als and recoveries







hedge derivatives





hedge derivatives

i.

ii.

iii.

total

2008

294,625,191

(269,657,984)

24,967,206

150,035

64,932,086

(7,098,704)

(6,833,393)

9,107

959,882

52,119,013

77,086,217

(1,372,919)

(6,309,684)

(57,488)

(7,740,091)

69,346,126

(36,834,982)

32,511,144

653,341,750

59,655,602

101,814,896

461,812

899,724,067

260,363,729

1,237,631,270

130,885,462

1,483,423

30,731,610

(19,099,054)

11,632,556

-

13,029,853

(813,889)

(158,596)

-

79,785

12,137,153

23,769,708

36,489

(6,309,684)

(57,488)

(6,330,683)

17,439,025

-

43,272,591

22,658,988

-

427,372,952

-

356,089,929

102,590,372

-

217,134

(158,403)

58,731

-

9,219,472

(1,813,041)

(387,641)

-

300,741

7,319,531

7,378,261

(519,784)

-

-

(519,784)

6,858,477

1,165,112

-

-

-

2,816,937

-

2,874,426

22,488,975

-

232,202,804

(232,800,654)

(597,851)

150,035

2,634,023

(588,064)

(6,535,898)

-

111,793

(4,228,111)

(4,825,962)

(38,449)

-

-

(38,449)

(4,864,411)

652,176,638

16,383,011

77,093,789

461,812

-

260,363,729

539,735,522

-

1,483,423

31,203,626

(17,343,355)

13,860,270

-

40,025,227

(3,883,710)

248,742

-

487,389

36,877,648

50,737,918

(707,152)

-

-

(707,152)

50,030,766

-

-

-

-

460,247,382

-

332,227,756

5,806,115

-

270,017

(256,517)

13,500

-

23,512

-

-

9,107

(19,828)

12,791

26,292

(144,022)

-

-

(144,022)

(117,731)

-

-

2,062,119

-

9,286,795

-

6,703,637

-

-


BroKerage trading and SaleS

corPorate finance

other

237

Information on income distribution and the principal balance sheet headings by geographical markets in 2009

and 2008, is set out below:


2009



net interest income








Provisions net of replacements and cancellations

Value adjustments associated with loans and advances

to customers and amounts receivable from other

debtors (net of replacements and cancellations)

Impairment of other financial assets net of reversals

and recoveries


and recoveries




Other financial assets recognised at fair



hedge derivatives





hedge derivatives

i.

ii.

iii.

total

Portugal total SPain

230,412,008

(197,355,886)

33,056,122

60,896

88,978,048

(31,175,512)

14,234,305

16,828

1,400,394

73,514,959

106,571,081

(13,080,319)

(16,979,696)

(81,175)

(299,047)

(30,440,237)

76,130,844

676,908,100

29,718,234

171,383,953

936,919

881,079,063

300,272,162

1,098,151,808

146,444,097

1,703,334

254,768,509

(220,120,328)

34,648,181

60,896

89,433,399

(31,187,540)

14,234,305

16,828

1,836,734

74,394,622

109,042,803

(12,220,656)

(16,979,696)

(81,175)

(299,047)

(29,580,574)

79,462,229

(37,493,203)

41,969,026

676,908,100

29,718,234

171,383,953

936,919

891,860,290

300,272,162

1,108,928,963

146,444,097

1,703,334

24,356,501

(22,764,442)

1,592,059

-

455,351

(12,028)

-

-

436,340

879,663

2,471,722

859,663

-

-

-

859,663

3,331,385

-

-

-

-

10,781,227

-

10,777,155

-

-

238

The information set out in the preceding tables comprises the balance sheet and financial statements of the

bank’s headquarters and subsidiaries domiciled in Portugal (“Portugal” column) and the Madrid branch (“Spain”

column). Each of these entities performs its activity mainly with customers or resident counterparties domiciled in

the same countries in which they are headquartered.


2008

Portugal total SPain

i.

ii.

iii.

total

285,149,501

(261,544,151)

23,605,350

150,035

63,420,373

(7,081,472)

(6,833,393)

10,937

979,705

50,646,185

74,251,535

(1,254,573)

(6,309,684)

(57,488)

(7,621,745)

66,629,790

653,341,750

59,655,602

101,814,896

461,812

803,009,306

260,363,729

1,140,358,157

130,885,462

1,483,423

294,625,191

(269,657,984)

24,967,206

150,035

64,932,086

(7,098,704)

(6,833,393)

9,107

959,882

52,119,013

77,086,217

(1,372,919)

(6,309,684)

(57,488)

(7,740,091)

69,346,126

(36,834,982)

32,511,144

653,341,750

59,655,602

101,814,896

461,812

899,724,067

260,363,729

1,237,631,270

130,885,462

1,483,423

9,475,690

(8,113,833)

1,361,857

-

1,511,713

(17,232)

-

(1,830)

(19,823)

1,472,828

2,834,685

(118,346)

-

-

(118,346)

2,716,339

-

-

-

-

96,714,761

-

97,273,113

-

-



net interest income








Provisions net of replacements and cancellations

Value adjustments associated with loans and advances

to customers and amounts receivable from other

debtors (net of replacements and cancellations)

Impairment of other financial assets net of reversals

and recoveries







hedge derivatives





hedge derivatives

239

4. CASh AND CASh EQUIVALENTS wITh CENTRAL BANkS


The sight deposits with central banks account heading includes deposits with the Bank of Portugal providing for

the demands of the “Minimum Reserve Requirements of the System of European Central Banks” (SEBC). Interest

is paid on these deposits which comprise 2% of the deposits and debt securities with a maturity of up to two

years, excluding the deposits and public debt securities subject to SEBC minimum reserve requirements.

5. CASh ASSETS wITh CREDIT INSTITUTIONS PAyABLE ON DEMAND



Cash

Sight deposits with central banks

2009

1,897

187,113

189,010

2008

2,555

1,160,845

1,163,400

Cheques payable

In Portugal

Sight deposits

In Portugal

Abroad

2009

-

958,732

1,114,478

2,073,210

2,073,210

2008

50,000

15,709,432

1,080,883

16,790,315

16,840,315


6. fINANCIAL ASSETS hELD fOR TRADINg AND OThER fINANCIAL ASSETS RECOgNISED AT fAIR VALUE ThROUgh PROfIT OR LOSS


The “debt instruments – issued by other entities” account heading at 31 December 2009 and 2008, included

€92,658,873 and €158,631,452 in bonds convertible into EDP shares issued by Parpública – SgPS, S.A. respectively.

The bank transferred a collection of securities recognised as financial assets held for trading, in 2008, to the available

for sale financial assets portfolio (Note 8).

The bank, at 31 December 2009 and 2008, held debt securities (pledged) with a nominal value of €49,366,000

and €44,150,000 respectively (Note 31).

debt instruments

Public issuers

Bonds

Other issuers

Bonds and other securities



equity instruments



derivatives with positive

fair value (note 7)

41,292,177

136,167,769

127,516,724

304,976,671

42,968,768

-

42,968,768

328,962,661

676,908,100

41,292,179

163,393,406

130,009,320

334,694,905

42,968,768

-

42,968,768

328,962,661

706,626,334

2

27,225,637

2,492,596

29,718,234

-

-

-

-

29,718,234

89,311,803

168,206,920

66,208,742

323,727,465

37,291,022

1,420,112

38,711,134

290,903,151

653,341,750

100,378,128

212,452,639

70,552,300

383,383,067

37,291,022

1,420,112

38,711,134

290,903,151

712,997,352

11,066,325

44,245,719

4,343,558

59,655,602

-

-

-

-

59,655,602

2008 2009

held for trading


Profit or loSS

held for trading


Profit or loSS

241

7. fINANCIAL DERIVATIVE INSTRUMENTS

These operations were valued in conformity with the criteria set out in Note 2.3. d), at 31 December 2009 and

2008. Information on the notional and book value thereof, as at 31 December 2009 and 2008, is set out below:



OTC

Swaps

Interest rate

Equity swaps

Currency forwards

Caps & floors

Options

On interest rates

On currencies

On commodities

Stock market

futures

Interest rate

Equity swaps

9,158,572,400

59,892,105

9,583,784

2,624,518,740

600,000,500

39,666,496

4,138,276

12,496,372,301

114,685,187

1,750,000

12,612,807,488

16,661,158

-

-

-

-

-

-

16,661,158

-

-

16,661,158

9,141,911,242

59,892,105

9,583,784

2,624,518,740

600,000,500

39,666,496

4,138,276

12,479,711,143

114,685,187

1,750,000

12,596,146,330

259,588,520

17,207,758

-

39,193,592

11,378,513

1,083,613

510,664

328,962,661

-

-

328,962,661

(248,158,494)

-

-

(39,132,727)

(11,386,664)

(1,083,613)

(510,664)

(300,272,162)

-

-

(300,272,162)

(766,415)

-

-

-

-

-

-

(766,415)

-

-

(766,415)

10,663,611

17,207,758

-

60,866

(8,151)

-

-

27,924,084

-

-

27,924,084

2009



trading deriVatiVeS



hedgederiVatiVeS

total

242

The balance on the “equity swaps” account heading at 31 December 2009, comprised an equity swap to hedge

the risk on changes in the value of shares recognised in the trading portfolio. This agreement also provides for

collateral comprising a deposit to be maintained with the bank by the counterparty and recognised in the “creditors

and other resources – price adjustments” (Note 19) account heading.

The book value of the assets classified as hedged items, at 31 December 2009 and 2008, totalled €13,409,321

and €14,195,957 respectively, including €1,578,920 and €1,558,370 (Note 10), respectively, in respect of value

adjustments.

The book value of the liabilities classified as hedged items, at 31 December 2009 and 2008, also totalled

€6,051,308 and €5,723,912 respectively, including €271,060 and €160,731 (Note 17), respectively, in respect

of value adjustments.



OTC

Swaps

Interest rate

Equity swaps

Currency forwards

Caps & floors

Options on commodities

Stock market

futures

Interest rate

6,916,987,525

59,892,105

40,000,000

3,548,185,044

64,255,227

10,629,319,901

66,237,091

10,695,556,992

17,456,798

-

-

-

-

17,456,798

-

17,456,798

6,899,530,727

59,892,105

40,000,000

3,548,185,044

64,255,227

10,611,863,103

66,237,091

10,678,100,194

232,563,060

24,584,001

142,451

23,029,569

10,584,070

290,903,151

-

290,903,151

(226,620,869)

-

(134,531)

(23,024,259)

(10,584,070)

(260,363,729)

-

(260,363,729)

(1,021,611)

-

-

-

-

(1,021,611)

-

(1,021,611)

4,920,580

24,584,001

7,920

5,310

-

29,517,811

-

29,517,811

2008



trading deriVatiVeS



hedgederiVatiVeS

total


Information on the distribution of financial derivative instruments operations, at 31 December 2009 and 2008 by

periods to maturity (notional amounts) is set out below:


OTC

Swaps

Interest rate

Trading

hedge

Equity swaps

Trading

Commodity forwards

Trading

Caps & floors

Trading

Options

On interest rates

On currencies

On commodities

Stock market

futures

Interest rate

Trading

hedge

150,000,000

-

150,000,000

-

150,000,000

-

60,000,000

-

6,598,460

4,138,276

220,736,736

114,685,187

1,750,000

337,171,923

96,468,870

-

96,468,870

59,892,105

156,360,975

-

-

-

7,825,952

-

164,186,927

-

-

164,186,927

320,162,472

-

320,162,472

-

320,162,472

9,583,784

52,506,000

-

22,003,975

-

404,256,231

-

-

404,256,231

4,607,350,293

5,000,000

4,612,350,293

-

4,612,350,293

-

1,426,883,762

-

3,238,109

-

6,042,472,164

-

-

6,042,472,164

3,967,929,607

11,661,158

3,979,590,765

-

3,979,590,765

-

1,085,128,978

600,000,500

-

-

5,664,720,243

-

-

5,664,720,243

9,141,911,242

16,661,158

9,158,572,400

59,892,105

9,218,464,505

9,538,784

2,624,518,740

600,000,500

39,666,496

4,138,276

12,496,372,301

114,685,187

1,750,000

12,612,807,488

2009


> 6 MonthS <= 1 year

>1 <= 5 yearS

> 5 yearS total


1,320,733,276

-

1,320,733,276

-

1,320,733,276

40,000,000

-

7,615,431

1,368,348,707

66,237,091

1,434,585,798

66,667

-

66,667

-

66,667

-

-

13,802,976

13,869,643

-

13,869,643

169,305,439

-

169,305,439

-

169,305,439

-

673,200,000

38,553,138

881,058,577

-

881,058,577

2,413,489,223

-

2,413,489,223

59,892,105

2,473,381,328

-

2,526,805,024

4,283,682

5,004,470,034

-

5,004,470,034

2,995,936,122

17,456,798

3,013,392,920

-

3,013,392,920

-

348,180,020

-

3,361,572,940

-

3,361,572,940

6,899,530,727

17,456,798

6,916,987,525

59,892,105

6,976,879,630

40,000,000

3,548,185,044

64,255,227

10,629,319,901

66,237,091

10,695,556,992

2008


> 6 MonthS <= 1 year

>1 <= 5 yearS

> 5 yearS total


OTC

Swaps

Interest rate

Trading

hedge

Equity swaps

Trading

Corrency forwards

Trading

Caps & floors

Trading


Trading

Stock market

futures

Interest rate

Trading


Information on the distribution of financial derivative instruments operations, by counterparty type, at 31 December

2009 and 2008, is set out below:

4,724,322,177

4,434,250,223

9,158,572,400

-

59,892,105

59,892,105

4,791,892

4,791,892

9,583,784

-

-

-

1,312,259,370

1,312,259,370

2,624,518,740

300,000,000

300,000,000

500

600,000,500

19,833,248

19,833,248

39,666,496

2,069,138

2,069,138

4,138,276

116,345,187

12,612,807,488

(187,527,935)

198,191,546

10,663,611

-

17,207,758

17,207,758

-

-

-

-

-

-

(25,350,892)

25,411,758

60,866

(11,386,664)

11,378,513

-

(8,151)

896,768

(896,768)

-

(134,631)

134,631

-

-

27,924,084

3,715,905,214

3,201,082,311

6,916,987,525

-

59,892,105

59,892,105

-

-

-

20,000,000

20,000,000

40,000,000

1,774,092,522

1,774,092,522

3,548,185,044

-

-

-

-

-

-

-

32,127,618

32,127,609

64,255,227

66,237,091

10,695,556,992

(172,619,822)

177,540,402

4,920,580

-

24,584,001

24,584,001

-

-

-

(134,531)

142,450

7,919

(18,519,784)

18,525,094

5,310

-

-

-

-

-

-

-

(1,840,126)

1,840,126

-

-

29,517,810

2008

notional Value

BooKValue

2009

notional Value

BooKValue

Contracts on interest rates

Interest rate swaps


Customers

Equity swaps


Customers

Commodity forwards


Customers

forward rate agreement


Customers

Caps & floors


Customers

Options on interest rates


Central government

Customers

Options on currencies


Customers



Customers

futures

Stock market


8. AVAILABLE fOR SALE fINANCIAL ASSETS


Information on the “equity instruments – shares” account heading at 31 December 2009 and 2008, is set out

below:

2008

debt instruments



equity instruments

Shares

gross amount


historical cost


historical cost

fair value


gross amount

2009

89,355,228

57,229,838

146,585,066

153,127

-

14,425,009

14,578,136

10,220,751

24,798,887

171,383,953

71,644,521

18,567,806

90,212,327

153,127

3,063,721

8,385,721

11,602,569

-

11,602,569

101,814,896


SEIf – South Europe Infrastructure

Equity finance




2009

8,380,068

4,052,818

1,992,123

153,127

14,578,136

(1,472,415)

364,097

172,109

-

(936,209)

9,852,483

3,668,721

1,820,014

153,127

15,514,345

0.14

8.33

9.26

4.67

BooK Value

fair Value

reSerVe

coStPrice (*)

% equity inVeStMent

2008

0.14

n. d.

9.26

4.67

6,323,602

3,063,721

2,062,119

153,127

11,602,569

(*) net of impairment

% equity inVeStMent

BooK Value

naMe


Information on movements in this account, for 2009 and 2008, was as follows:

The “other equity instruments” account heading comprises non-voting preference shares issued by Caixa geral

finance Limited, giving a right to a quarterly preferential dividend, at the company’s discretion, equivalent to annual

interest at the Euribor rate plus a spread. Caixa geral finance may redeem the preferential shares starting from

the tenth year after their issue (June 2014 and September 2015) with a 1% increase in spread if failing to do so.

The potential capitals losses on shares classified in the “debt instruments” and “other equity instruments”

account headings, at 31 December 2009 and 2008, totalled €7,250,328 and €11,697,535 respectively.

The bank was involved in the South Europe Infrastructure Equity finance (SEIEf) capital increases in 2009 and

2008, investing amounts of €625,000 and €1,262,500 respectively. The bank has undertaken to provide up to

€10,000,000 in equity funding at the fund’s request, whenever a new operation is realised.

The bank acquired 1,263,962 EDP Renováveis, S.A. shares under the IPO on Euronext Lisbon in June 2008 at a

unit price of €8.






2009

(259,213)

625,000

-

-

365,787

2,315,679

364,097

-

-

2,679,776

6,323,602

3,063,721

2,062,119

153,127

11,602,569

8,380,068

4,052,818

1,992,123

153,127

14,578,136

PurchaSeS/ SaleS


reSerVe



eXchange differenceS

-

-

(69,996)

-

(69,996)

naMe






ENACOL – Empresa Nacional de Combustíveis, S.A.

2008

10,111,696

1,262,500

794,028

-

(3,718,940)

8,449,284

(3,788,094)

-

-

-

-

(3,788,094)

-

1,801,221

1,154,712

153,127

3,718,940

6,828,000

6,323,602

3,063,721

2,062,119

153,157

-

11,602,569

-

-

113,379

-

-

113,379

PurchaSeS/ SaleS


reSerVe




naMe

248

The investment in Corporación Interamericana para el financiamento de Infraestructura was made in 2001 for

4,000,000 US dollars. In August 2008, the bank acquired 1,000,000 shares for the total amount of 1,170,000

US dollars. Exposure to foreign exchange risk is hedged by funding in US dollars. Under the terms of the hedge

accounting investment, the change in fair value resulting from the foreign exchange component, in 2009 and

2008, was recognised in the income statement.

The bank reclassified its financial assets held for trading category securities to the available for sales financial

assets category on 01 July 2008, in conformity with the amendment to the IAS 39 Standard approved on 13

October 2008. Owing to the turbulence in the financial markets in 2008, the fact that the bank does not expect

to dispose of these securities over the short term explains the reason for the transfer between categories.

Information on the impact of the reclassification of these securities, in income and fair value reserves account

headings, excluding their fiscal effect, is set out below:

The fiscal effect is not reflected in the amounts.

9. LOANS AND ADVANCES TO CREDIT INSTITUTIONS



fair value

Accrued interest

Book value

fair value reserve

Capital gains / losses in income for period

impact on income if not reclassified

31-12-2009 Value

31-12-2008 Value

12,922,417

92,090

13,014,507

(2,161,051)

1,598,457

(1,114,943)

37,359,987

781,314

38,141,301

(1,046,108)

(2,170,534)

(1,046,108)

Term deposits

In Portugal

Interest receivable

2009 2008

7,784,638

78,539

7,863,177

22,189,619

120,223

22,309,842

249

“Loans and advances to credit institutions”, at 31 December 2009 and 2008, matured in the first quarter of the

following year and were denominated in euros at an average annual interest rate of 2.54% and 3.65% respectively.

10. LOANS AND ADVANCES TO CUSTOMERS


The bank also set up a provision for general credit risks totalling €14,690,998 and €8,596,234 at 31 December

2009 and 2008, respectively (Note 18).


2008

Non-securitised domestic credit

Loans

Current account


Other credit

Securitised domestic credit

Commercial paper

foreign loans

Loans

Current account

Other credit

Value adjustments relating

to hedged assets (Note 7)

Interest receivable

Deferred income

Commissions associated with amortised cost

Interest


Provisions for doubtful credit (Note 18)

Provisions for overdue credit (Note 18)

2009

413,786,428

26,298,920

5,678,613

10,470,240

45,800,000

408,927,704

3,244,880

105,990

1,578,920

915,891,695

2,932,062

(4,071,981)

(9,379)

914,742,397

1,826,980

916,569,377

(23,128,219)

(1,580,868)

(24,709,087)

891,860,290

385,317,967

54,009,400

5,943,793

9,284,345

45,500,000

398,860,789

2,990,775

-

1,558,370

903,465,439

6,983,371

(4,286,005)

(129,055)

906,033,750

1,469,591

907,503,341

(6,309,684)

(1,469,591)

(7,779,275)

899,724,067

250

This account was broken down as follows, by periods to maturity at 31 December 2009 and 2008:

Sector distribution of loans and advances to customers, excluding overdue credit, at 31 December 2009 and

2008, was as follows:


2008

Up to three months


One to five years



2009

65,801,569

2,551

229,669,110

585,184,042

35,234,423

915,891,695

45,858,370

4,007,085

155,445,867

635,198,139

62,955,978

903,465,439

Mining industries


Electricity, water and gas generation and distribution

food, beverages and tobacco industries

Basic metallurgical and metal industries

Textiles industry

Chemicals and synthetic or artificial fibres manufacture

Manufacture of transport material

Paper pulp, card and publishing and printing thereof

Manufacture of electrical and optical equipment


Manufacture of articles of rubber and plastic

Property, rentals and corporate services

Property

Other

Transport, warehousing and communications

Construction

wholesale / retail

health and social security

financial activities

hotels and restaurants

Other activities and collective, social and personal activities

Loans and advances to individual customers

-

136,503,901

15,014,835

8,512,486

9,607,544

6,070,629

4,411,704

789,468

890,489

1,588,217

787,294

55,379,659

183,826,975

275,685,222

100,821,357

27,478,122

22,585,671

6,000,000

5,007,454

42,623,661

12,307,007

915,891,695

-

135,531,667

13,787,608

8,074,030

9,607,544

6,572,147

7,106,967

2,430,675

967,699

1,873,401

1,300,840

50,499,110

205,685,502

246,323,916

97,754,212

27,682,827

23,358,369

9,000,000

5,511,589

39,184,336

11,213,001

903,465,440

-

14.9

1.6

0.9

1.0

0.7

0.5

0.1

0.1

0.2

0.1

6.0

20.1

30.1

11.0

3.0

2.5

0.7

0.5

4.7

1.3

100

-

15.0

1.5

0.9

1.1

0.7

0.8

0.3

0.1

0.2

0.1

5.6

22.8

27.3

10.8

3.1

2.6

1.0

0.6

4.3

1.2

100

2008 2009

oPerating Sector aMount % aMount %


11. OThER TANgIBLE ASSETS

Information on movements in the “other tangible assets” account headings for the years 2009 and 2008 is set

out below:

460,636

-

164,828

55,658

77,512

-

-

26,912

-

-

785,545

(3,176,903)

(77,843)

(1,031,041)

(96,755)

(1,432,641)

(1,734,973)

(240,087)

(445,231)

(427,778)

-

(8,663,252)

13,093,382

77,843

1,295,871

143,374

1,655,518

1,810,124

240,087

540,902

609,239

2,646,002

22,112,342

2,646,002

-

-

5,000

-

-

-

-

(5,000)

(2,646,002)

-

(479,428)

-

(79,497)

(35,565)

(156,062)

(18,403)

-

(27,084)

(59,615)

-

(855,654)

-

-

-

-

-

-

-

-

(72,136)

-

(72,136)

12,543,689

-

350,161

71,712

144,327

56,748

-

95,499

44,710

-

13,306,844

2009

Balance at 31-12-08


groSS aMount

tranSferS(net)


Write-offS (net)

net aMount

at 31-12-09

Property

for own use

Other property

Equipment


Transport material

Computer equipment


Security equipment

Plant and machinery

Leased assets

Transport material


252

Tangible assets in progress, at 31 December 2008, comprised expenses incurred on building works on Caixa –

Banco de Investimento’s headquarters which were completed in 2009.

12. INTANgIBLE ASSETS

Information on movements in the “intangible assets” account headings for the years 2009 and 2008 is set out

below:


-

-

252,777

53,268

282,261

-

-

71,655

-

2,646,002

3,305,963

(3,008,139)

(77,843)

(938,331)

(157,435)

(1,167,336)

(1,701,619)

(240,087)

(413,236)

(600,779)

-

(8,304,805)

13,093,382

77,843

1,043,094

176,587

1,373,258

1,810,122

240,087

469,248

1,067,567

-

19,351,188

(168,764)

-

(92,710)

(16,651)

(265,306)

(33,354)

-

(31,995)

(162,463)

-

(771,243)

-

-

-

(9,150)

-

-

-

-

(122,864)

-

(132,014)

9,916,479

-

264,830

46,619

222,877

75,149

-

95,672

181,461

2,646,002

13,449,090

2008

Balance at 31-12-07


groSS aMount


Write-offS (net)

net aMount

at 31-12-08

Property

for own use

Other property

Equipment


Transport material

Computer equipment


Security equipment

Plant and machinery

Leased assets

Transport material


87,546

258,193

345,739

(3,731,204)

-

(3,731,204)

4,045,481

68,081

4,113,562

36,578

(36,578)

-

191,744

258,192

449,936

(246,658)

-

(246,658)

-

(31,503)

(31,503)

2009

Balance at 31-12-08


groSS aMount

tranSferS net aMount at

31-12-09


other

Automatic data

processing systems

Intangible assets

in progress

253

fixed assets in progress, at 31 December 2009 and 2008, comprised expenses incurred on the acquisition of

software not yet in use at the said dates.

13. INVESTMENTS IN SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINTLy CONTROLLED ENTITIES

Information on the balance of this account heading at 31 December 2009 and 2008, is set out below:

Caixa Desenvolvimento, SgPS, S.A.’s investments at 31 December 2009 and 2008, included supplementary

contributions of €13,000,000 and €87,284,245 respectively, from the bank. Supplementary contributions of

€74,284,245 were reimbursed in 2009.


162,044

-

162,044

(3,507,414)

-

(3,507,414)

3,718,574

232,944

3,951,518

164,863

(164,863)

-

314,277

68,081

382,358

(223,790)

-

(223,790)

2008


groSS aMount

Balance at 31-12-07

acquiSitionS tranSferS dePreciation for year

net aMount at

31-12-08

Automatic data

processing systems

Intangible assets

in progress

2008

Caixa Desenvolvimento, SgPS, S.A

fundo de Capital de Risco

Energias Renováveis – Caixa Capital

Caixa Capital – Sociedade de Capital de Risco, S.A.

2009

15,500,000

45,500,000

14,575,724

75,575,724

89,784,245

45,500,000

14,575,724

149,859,969

254

The following is a summary of the financial data extracted from the separate accounts of the subsidiaries, for the

last financial year:

Caixa Desenvolvimento, SgPS, S.A. (Caixa Desenvolvimento) formed in 1998, has its registered office in Portugal.

Its corporate object is to manage equity investments in other companies, as an indirect form of performing

economic activities.

Caixa Capital – Sociedade de Capital de Risco, S.A. (Caixa Capital) has its registered office in Lisbon and was

formed on 31 December 1990 under Decree Law 17/86 of 05 february. The company’s corporate object is

to support and promote investment and technological innovation by making temporary equity investments in

projects or companies. It is also authorised to provide assistance to the financial, technical, administrative and

commercial management of its subsidiary companies. It managed four venture capital funds at 31 December

2009.

Fundo de Capital de Risco para Investidores Qualificados Energias Renováveis – Caixa Capital (FCR Energias

Renováveis) was formed in January 2006, with a subscribed capital of €50,000,000 comprising 2,000 invest-

ment units. The fund’s objective is to invest its assets in equity investments in companies with high growth and

appreciation potential, operating in the field of generating electricity from renewable energy sources. The bank

subscribed for 1,820 investment units for a nominal amount of €45,500,000 of which amount €18,900,000

(Note 19) was outstanding at 31 December 2009 and 2008. An amount of €13,700,000 was paid up in 2008.

Caixa Desenvolvimento had an equity investment of 49% in Compal – Companhia Produtos de Conservas

Alimentares, S.A. (Compal), at 31 December 2007 at a cost price of €61,250,000 including supplementary

contributions of €56,350,000. The group made contact with Sumolis, in 2007, with a view to the disposal of

the Compal equity investment, with a promissory sales agreement having been entered into with this subsidiary

in first quarter 2008.

2008 witnessed the following developments with this operation:

The Competition Authority issued a declaration of non-opposition to Compal’s sale in August 2008, pursuant

to which Caixa Desenvolvimento disposed of 29.9% of Compal’s share capital;


Caixa Desenvolvimento, SgPS, S.A.


Caixa Capital, S.A.

Percentage equity inVeStMent

entity

31-12-2009

31-12-2009

31-12-2009

date

Lisbon

Lisbon

Lisbon

regiStered office

28,978,986

53,263,737

35,595,287

aSSetS

(1,721,821)

4,544,061

3,346,254

Profit/ loSS

25,934,725

52,992,932

28,092,240


100.00

91.00

100.00

direct effectiVe

100.00

91.00

100.00

255

A general meeting of shareholders approved the merger project between Compal and Sumol + Compal, gestão

de Marcas, S.A. in December 2008 which was formalised on 23 December 2008 with effect from 31 December

2008. In accordance with the agreement Caixa Desenvolvimento disposed of 5.0225% of Compal’s share capital;

After the merger, Sumol+Compal, S.A. issued 20,619,055 new shares, fully subscribed and paid up by Caixa

Desenvolvimento and fundo de Capital de Risco grupo CgD – Caixa Capital comprising the surrender of

Compal shares.

These operations gave Caixa Desenvolvimento a 6.921% equity investment in Sumol+Compal at 31 December

2009 and 2008.

14. IINCOME TAX

Tax assets and liabilities balances, at 31 December 2009 and 2008, were:

The “income tax to be recovered” account heading, at 31 December 2009 and 2008 was in respect of a claim

made by the bank on its IRC for 2000.


2008

Current tax assets

Income tax to be recovered


Income tax payable

Deferred tax assets

Temporary differences


2009

657,900

(17,886,487)

(17,228,587)

18,313,138

(467,900)

17,845,238

657,900

(2,466,548)

(1,808,648)

4,663,208

(462,949)

4,200,259

256

The following table provides details and information on deferred tax movements in 2009 and 2008:

The “other” column at 31 December 2008 refers to the reclassifications between deferred and current tax.



Commissions

Revaluation of hedge derivatives




profit or loss



2009

1,703,443

1,214,156

300,372

959,055

475,826

(21,727)

(184,366)

(246,499)

4,200,259

Balance at 31-12-08

-

-

-

(513,205)

-

-

-

-

(513,205)

change inShareholderS’

equity

change inincoMe

7,557,607

6,857,121

(150,186)

-

(246,412)

10,864

5,941

123,249

14,158,184

Balance at 31-12-09

9,261,050

8,071,277

150,186

445,850

229,414

(10,863)

(178,425)

(123,250)

17,845,238

2008

1,872,687

342,078

450,558

259,695

486,184

(32,590)

(190,306)

(369,749)

2,818,556

-

-

-

1,003,845

-

-

-

-

1,003,845

(143,841)

872,078

(150,186)

-

-

10,863

5,940

123,250

718,104

1,703,443

1,214,156

300,372

959,055

475,826

(21,727)

(184,366)

(246,499)

4,200,259

(25,403)

-

-

(304,485)

(10,358)

-

-

-

(340,246)

change inother


Commissions

Revaluation of hedge derivatives




profit or loss



change inincoMe

change inShareholderS’

equity

Balance at 31-12-08

Balance at 31-12-07

257

Information on tax on profit recognised in the income statement and the tax burden, measured by the ratio

between the appropriation for tax on profit and net profit for the year before tax is set out below:

Current tax reflected in reserves for the amount of €1,962,570 and the current tax credit of €2,795,631, in

December 2009 and 2008, refer to the tax associated with the revaluation of debt securities classified as available

for sale financial assets in the year, for the purposes of determining tax income for the said year. The deferred

tax recognised in the same account heading refers to the revaluation during the year of equity investments also

classified as available for sale financial assets, whose fiscal effects will only be produced at the time of disposal.

In conformity with current legislation, tax returns are subject to review and correction by the tax authorities for

a period of four years. The bank’s tax returns for 2006 to 2009 are therefore still subject to review and the

possibility of correction.

The board of directors considers that any correction is unlikely to have a significant impact on the financial

statements, at 31 December 2009.


2008

having an impact on net income for year

Current tax

year


Deferred tax

Recognition and reversal of temporary differences


Income before tax


having an impact on reserves

Current tax

Deferred tax

Total tax in reserves

total tax in shareholders’ equity

2009

25,283,608

(4,527)

25,279,081

(14,158,184)

11,120,896

53,089,922

20.95%

1,962,570

513,205

2,475,776

13,596,672

12,589,229

55,533

12,644,762

(718,104)

11,926,658

44,437,802

26.84%

(2,795,361)

(1,003,845)

(3,799,206)

8,127,452

258

Information on the reconciliation between the nominal and effective tax rate in 2009 and 2008 is set out below:


income before tax

Determination of tax at nominal rate

Impact of tax regime on activities performed by Madeira

Offshore Branch (Note 2.8)


Losses per Economic Interest grouping

Separate source-based taxation


Other disallowed costs

fiscal gains

fiscal benefits

Other

2009

26.50

(7.52)

3.21

(0.63)

0.15

0.00

0.02

0.02

(1.33)

0.53

20.95

53,089,922

14,068,829

(3,994,219)

1,705,981

(333,453)

81,681

0

8,587

11,656

(707,819)

279,652

11,120,896

2008

26.50

(0.40)

1.44

(1.05)

0.19

0.12

0.04

(0.02)

(0.00)

0.02

26.84

44,437,802

11,776,018

(177,739)

640,933

(464,849)

82,769

55,533

16,605

(7,748)

(1,860)

6,996

11,926,658

rate (%) taX rate (%) taX

259

15. OThER ASSETS

This account heading comprised the following, at 31 December 2009 and 2008:

The “miscellaneous debtors” account heading at 31 December 2009 and 2008 essential comprises amounts

receivable from customers for the invoicing of services provided by the bank.

The “other deferred expenses” account heading, at 31 December 2009 and 2008 includes €709,891 and €932,188

respectively, in respect of the amounts invested in Agrupamento Complementar de Empresas TREM II – Aluguer

de Material Circulante, ACE (TREM II).

The “securities operations pending settlement” account heading, at 31 December 2009 and 2008, comprises

the value of the operations for the sale of securities at the end of the year and settled in the first few days of the

following year.

At 31 December 2009 and 2008, the “overdue credit and interest” account heading included overdue loans of

€3,551,441, originated in Caixa Valores and deriving from securities trading operations in 1992 by a group of

customers. The loan has been fully provisioned.


2008

Debtors and other loans and advances

futures and options

Miscellaneous

other assets

income receivable

Deferred expenses

Insurance

Leasing instalments

Other deferred expenses

Prepayments and accrued income


Other lending operations pending settlement


Impairment of other assets (Note 18)

2009

2,412,435

4,297,695

6,710,130

48,846

827,169

1,146

3,812

993,133

998,091

15,559,066

380,566

15,939,632

4,016,889

28,540,757

(4,315,936)

24,224,821

1,752,804

3,810,753

5,563,557

48,848

37,223

1,034

46,912

1,112,017

1,159,963

21,213,953

278,272

21,492,225

3,935,714

32,237,528

(3,935,714)

28,301,814

260

Caixa Valores took legal action against the group of customers in September 1994, accusing them of responsibility

for realising the referred to operations and claiming an amount of €6,003,180 plus interest accruing since June

1993. As the action is still in progress, the bank has not recognised any asset related with this situation.

16. OThER CREDIT INSTITUTIONS’ RESOURCES


Information on the periods to maturity of other credit institutions’ resources is set out below:

Interest at an average annual rate of 0.61% and 2.49% was paid on other credit institutions’ resources, excluding

sight deposits, at 31 December 2009 and 2008, respectively.


2008

Payable on demand

Sight deposits

Credit institutions In Portugal

Credit institutions abroad

Term

Interbank money market resources

Term deposits

Very short term deposits

Other resources – sight deposit overdrafts


Term deposits

Interest payable

Credit institutions’ resources in Portugal


2009

133,620

1,292

-

597,145,000

475,945,796

23,486

34,585,000

1,107,834,194

1,082,057

12,712

1,108,928,963

170,665

1,364

-

89,100,000

1,109,158,795

-

38,250,000

1,236,680,824

905,821

44,625

1,237,631,270

2008

Sight deposits and overdrafts

Up to three months

Three months to three years

2009

158,398

1,006,275,796

101,400,000

1,107,834,194

172,029

1,147,408,795

89,100,000

1,236,680,824


17. CUSTOMER RESOURCES AND OThER LOANS


Customers’ resources and other loans, at 31 December 2009 and 2008, had the following structure in accordance

with their respective periods to maturity:

2008

Deposits

Sight

Term

Value adjustments relating

to hedged liabilities (Note 7)

Interest payable on deposits

2009

53,676,147

90,815,715

144,491,862

271,060

144,762,922

1,681,175

146,444,097

41,431,488

87,738,532

129,170,020

160,731

129,330,751

1,554,711

130,885,462

2008

Payable on demand

Up to three months


One to five years


2009

53,676,147

44,542,100

34,845,400

5,000,000

6,428,215

144,491,862

41,431,488

71,135,070

4,300,000

-

12,303,462

129,170,020

262

18. PROVISIONS AND IMPAIRMENT

Information on movements in the bank’s provisions and impairment accounts for the years 2009 and 2008 is set

out below:

The bank ‘s provisions for bad debts and for general credit risks at 31 December 2009 and 2008 were higher

than the limits defined by the Bank of Portugal, to provide for the risk associated with a series of operations for

loans and advances to customers.


Provisions for loans and advances


Bad and doubtful debts

Overdue credit

Provisions for general credit risks

(Note 10)

Provisions for other risks and liabilities


2009

6,309,684

1,469,591

7,779,275

8,596,235

5,261,374

13,857,609

3,935,714

25,572,599

-

(49,884)

(49,884)

-

-

-

-

(49,884)

23,128,219

161,161

23,289,380

8,158,253

17,617,666

25,775,919

550,893

49,616,192

(6,309,684)

-

(6,309,684)

(2,063,490)

(11,491,773)

(13,555,263)

(170,671)

(20,035,618)

-

-

-

-

-

-

-

-

Balance at 31-12-08



uSe Balance at 31-12-09

23,128,219

1,580,868

24,709,087

14,690,998

11,387,267

26,078,265

4,315,936

55,103,289

2008

-

1 389,328

1,389,328

9,953,705

2,530,985

12,484,690

3,878,226

17,752,245

-

80,263

80,263

-

-

-

-

80,263

6,309,684

-

6,309,684

2,079,573

7,730,389

9,809,962

57,488

16,177,134

-

-

-

(3,437,043)

(5,000,000)

(8,437,043)

-

(8,437,043)

-

-

-

-

-

-

-

-

6,309,684

1,469,591

7,779,275

8,596,235

5,261,374

13,857,609

3,935,714

25,572,599

Balance at 31-12-07



uSe Balance at 31-12-08

Provisions for loans and advances


Bad and doubtful debts

Overdue credit


(Note 10)

Provisions for other risks and liabilities



The “provisions for risks and other liabilities” provisions at 31 December 2009 included provisions for fiscal

contingencies and eventual losses on or depreciation of financial assets.

19. OThER LIABILITIES


2008

Creditors and other resources

Price adjustments – Equity swap (Note 7)


Deduction of tax at source

Value added tax

Social security contributions

Deferred interest and dividends

Creditors – securities operations

Miscellaneous creditors

FCR Energias Renováveis – outstanding capital (Note 13)

IRC payable

Suppliers of leased assets

Other

futures and options

Costs payable

Additional remuneration

holiday and holiday subsidies

Pension fund

Other

Deferred income

Commissions on credit operations (Note 2.3. a))

Agencying commissions

Provision of guarantees

Other accrual and deferred income accounts


Lending operations pending settlement

Commissions payable – syndicating of loan operations

Other

2009

8,817,254

2,088,017

208,393

219,669

183,397

748,108

18,900,000

884,172

60,212

1,977,197

240,300

34,326,719

2,925,924

1,575,500

384,975

1,630,958

6,517,357

996,222

11,656

1,007,878

20,323,034

37,235,743

278,715

57,837,492

99,689,446

13,236,577

5,128,077

2,411,386

247,786

162,454

754,445

18,900,000

884,172

265,508

1,317,139

-

43,307,544

2,559,829

1,554,900

377,946

625,380

5,118,055

913,128

58,612

971,740

27,524,679

10,684,598

37,947

38,247,224

87,644,563

264

The balance of the “creditors - securities operations” account heading at 31 December 2009 and 2008, refers to

the current accounts of brokerage operations customers.

The balance on the “Miscellaneous creditors – IRC payable” account heading at 31 December 2009 and 2008,

comprises a reimbursement in 2008, by the Directorate general for Tax Affairs in the judicial proceedings related

with the payment of IRC for 1997. The amount will be settled after a decision has been made on the amount to

be paid by the bank on its 1996 IRC return.

The “securities operations pending settlement” account heading at 31 December 2009 and 2008, comprises the

value of securities purchase operations at the end of the year and settled in the first few days of the following year.

The “commissions payable - syndicating of loan operations” account heading at 31 December 2009 and 2008,

comprises amounts charged to customers for the structuring of syndicated loan operations in which CgD group

supplies all or a significant part of the loan with the latter objective of placing it with other credit institutions. As

described in Note 2.11, the bank recognises a part of the commission received in proportion to the total amount

of credit the group intends to syndicate.

20. SUBSCRIBED CAPITAL AND TREASURy STOCk

Subscribed capital comprises 81,250,000 shares with a nominal value of one euro each.

Information on the bank’s equity structure, at 31 December 2009 and 2008, is set out below:

The bank owned 4,658,000 of its own shares at a cost price of €5,999,453, at 31 December 2009 and 2008.




fidelidade-Mundial, S.A.

Treasury stock

Other

2009

68,348,445

8,007,635

4,658,000

235,920

81,250,000

no. ShareS

%

84.1

9.9

5.7

0.3

100.0

2008

68,348,445

8,000,640

4,658,000

242,915

81,250,000

no. ShareS

%

84.1

9.9

5.7

0.3

100.0

265

21. RESERVES, RETAINED EARNINgS AND PROfIT fOR yEAR

The composition of the reserves and retained earnings account headings at 31 December 2009 and 2008, was

as follows:

REVALUATION RESERVES

fixed assets revaluation reserves

The bank revalued its fixed assets in 1998, under Decree Law 31/98 of 11 february. The increase of €4,338,403,

in the net value of the fixed assets was recognised in the “revaluation reserves” account heading.

Revaluation reserves may only be used to cover accrued losses or share capital increases.

fair value reserves

The fair value reserve recognises potential capital gains and losses on available for sale financial assets, net of the

corresponding fiscal effect.


2008

Revaluation reserves

fixed assets revaluation reserve

fair value reserves

Potential gains

fiscal effect


Legal Reserve

free reserve

Retained earnings

Profit for year

2009

4,338,403

(8,186,537)

1,582,307

(2,265,827)

36,586,946

30,734,188

44,162,390

111,483,524

41,969,026

151,186,722

4,338,403

(15,313,520)

4,058,083

(6,917,034)

33,335,832

26,575,004

42,628,312

102,539,148

32,511,144

128,133,258


LEgAL RESERVE

In conformity with Decree Law 298/92 of 31 December, altered by Decree Law 201/2002 of 26 September, the

bank is required to set up a legal reserve fund until equal to its share capital or sum of free reserves and retained

earnings, if higher, annually transferring an amount of not less than 10% of net profits to the reserve. This reserve

may only be used to cover accrued losses or share capital increases.

DIVIDENDS

A resolution was passed at the general shareholders’ meeting of 20 february 2009, to distribute dividends of

€25,000,000 for 2008 of which an amount of €1,433,232 was allocated to treasury stock.

267

22. INTEREST AND INCOME AND INTEREST AND SIMILAR ChARgES


23. INCOME fROM EQUITy INSTRUMENTS

The balance on this account heading for the years 2009 and 2008, comprises dividends relating to available for

sale financial assets received in the respective year.


2008


Interest on cash assets

Interest on loans and advances to credit institutions

Interest on loans and advances to customers

Domestic credit

foreign loans

Interest on assets held for trading

Securities

Interest rate swaps


Interest on other assets recognised at fair value through profit or loss

nterest on available for sale financial assets


Interest on debtors and other investments

Commissions on credit operations


Interest on credit institutions’ resources

Interest on customer deposits

Interest on financial liabilities held for trading

Interest rate swaps


Other interest and similar costs

Interest on creditors and other resources

Other

2009

63,750

626,085

16,587,732

12,326,706

9,362,748

209,232,515

10,792

1,279,486

3,979,593

532,339

6,698

254,008,444

760,065

254,768,509

12,089,693

1,714,498

205,385,690

876,096

3,589

50,762

220,120,328

220,120,328

158,055

918,748

34,005,006

27,146,181

11,659,790

213,079,856

-

2,533,382

3,291,540

865,702

68,310

293,726,570

898,620

294,625,191

52,228,305

5,990,938

210,376,171

1,012,014

20,330

30,226

269,657,984

269,657,984


24. INCOME AND COSTS ON SERVICES AND COMMISSIONS


The “other commission received” account heading for 2009 and 2008, essentially includes financial advisory

commissions.

The “costs of services and commissions – for banking services provided by third parties ” account heading for the

years 2009 and 2008 included €27,789,474 and €3,073,251, respectively, relating to commissions to be passed

on to other credit institutions in future syndications in accordance with the policy described in Note 2.11.

2008


Provision of guarantees

Commissions for commitments to third parties

Provision of services

Organisation of operations

Agencying


Management of securities

Collections on securities

Other services

Commissions for operations realised for third parties

Other commissions received


for banking services provided by third parties


for operations on financial instruments

2009

488,672

125,265

14,534,285

2,329,110

897,183

765,222

30,113

17,268,260

5,896,701

47,098,588

89,433,399

29,471,553

1,639,540

76,447

31,187,540

508,867

155,251

14,257,390

1,754,975

621,527

427,013

84,434

13,540,984

8,245,142

25,336,503

64,932,086

4,641,969

2,084,409

372,326

7,098,704


25. INCOME fROM ASSETS AND LIABILITIES RECOgNISED AT fAIR VALUE ThROUgh PROfIT OR LOSS


26. INCOME fROM AVAILABLE fOR SALE fINANCIAL ASSETS


2008

Income from assets and liabilities held for trading

Equity instruments

Debt instruments

Derivatives

Equity swaps

futures

Interest rate swaps


Options

fRAs

Commodity forwards

Other

Income from assets and liabilities recognised at fair value through profit or loss

Debt instruments

Income from hedge operations

Value adjustments relating to hedged assets and liabilities

2009

13,053,942

9,076,399

(8,717,473)

(6,369,828)

2,753,380

183,467

(8,151)

18

15,663

5,250

9,992,667

70,617

56,708

(89,779)

10,030,213

(24,007,040)

1,798,064

24,236,038

(11,888,424)

2,723,410

293,852

(3,697)

7,918

-

-

(6,839,879)

(208,344)

(225,243)

286,852

(6,986,614)

2008


Debt instruments

Equity instruments

Losses on available for sale financial assets

Equity instruments

Debt instruments

2009

3,913,984

-

3,913,984

(136,572)

(15,290)

(151,862)

3,762,122

263,746

60,630

324,376

-

(238,424)

(238,424)

85,952


27. INCOME fROM EXChANgE REVALUATIONS


28. OThER OPERATINg INCOME


2008

Revaluation of spot foreign exchange position

Revaluation of forward foreign exchange position

2009

441,970

-

441,970

62,784

4,485

67,269

2008


Other operating gains and income

Staff on loan – CgD group

Reimbursement of expenses

Other

Other gains on financial operations


Other operating costs and expenses

TREM II

Subscriptions and donations

Contributions to Deposit guarantee fund

Other

Other losses on financial operations

Other taxes

Indirect taxes

Direct taxes


2009

1,487,348

838,479

265,849

2,591,676

480

2,592,156

223,298

25,411

40,698

122,684

591

122,381

220,359

755,422

1,836,734

1,620,408

360,304

194,221

2,174,933

752

2,175,685

311,288

27,266

29,648

73,437

634

147,897

625,635

1,215,804

959,882


29. EMPLOyEE COSTS


The average number of staff employed by the bank and its subsidiaries’ in 2009 and 2008, excluding the board

of directors and inspection bodies was 159 and 162, respectively and distributed as follows:

30. gENERAL ADMINISTRATIVE EXPENSES

2008

Remuneration paid to board of directors and inspection bodies

Remuneration paid to employees

Mandatory social costs

Costs of remuneration

Pension fund (Note 2.10)

Other mandatory social costs

Other employee costs

2009

1,041,934

11,498,485

2,037,987

393,986

86,446

548,904

15,607,742

933,878

11,509,734

2,012,595

405,169

86,672

362,936

15,310,984

2008

Senior management

Technical

Administrative

2009

69

70

20

159

66

70

26

162

2008

Specialised services

Rents and leases

Maintenance and repair

Travel and expenses

Advertising and publications

Communications

Office consumables

water, electricity and fuel

Insurance

Publications

Employee training

Other third party supplies

Other external services

2009

5,437,994

943,192

1,045,561

632,474

558,542

466,629

92,433

120,272

41,039

56,911

69,811

71,439

125,956

9,662,253

4,155,828

1,277,149

1,135,982

530,740

497,919

471,723

104,495

102,008

55,663

45,702

40,421

42,458

142,219

8,602,307


The minimum payments to be made by the bank in 2010 for operating lease contracts in force at 31 December

2009 totalled €100,473.

31. CONTINgENT LIABILITIES AND COMMITMENTS

Contingent liabilities associated with banking activity are recognised in off-balance sheet account headings as

follows:

The “assets-backed guarantee” account heading, at 31 December 2009 and 2008 comprises the nominal value

of debt securities pledged, by the bank (Note 6), in respect of the following situations:

The object of the Deposit guarantee fund is to guarantee customers’ deposits in conformity with the limits defined

by the general Credit Institutions Regime. This takes the form of regular annual contributions. A part of the said

contributions takes the form of an irrevocable commitment to realise the respective contributions when requested

by the fund. These amounts are not recognised in costs. The total value of commitments assumed since 1996

totals €162,182.

2008

Contingent liabilities

guarantees and sureties

Asset-backed guarantees (Note 6)

Commitments

Revocable lines of credit

Securities subscriptions

Other irrevocable commitments

Potential liability to Investors’ Indemnity System

Term liabilities to Deposit guarantee fund

Liabilities for the provision of services


2009

70,083,663

49,366,000

119,449,663

96,773,915

29,741,054

-

2,052,436

162,182

128,729,586

7,314,299,425

78,850,623

44,150,000

123,000,623

142,973,041

31,041,679

299,526

2,052,436

162,182

176,528,864

4,825,780,957

2008

“SPgT” (Major Transactions Processing System)

Caixa geral de Depósitos, S.A. – Euronext

Investors’ Indemnity System (SII)

Deposit guarantee fund

2009

44,666,000

2,500,000

1,950,000

250,000

49,366,000

40,600,000

2,000,000

1,550,000

-

44,150,000

273

32. RELATED ENTITIES

All companies controlled by CgD group, associated companies and the bank’s management bodies are considered

to be entities related with the bank.

The bank’s financial statements, at 31 December 2009 and 2008, include the following balances and transactions

with related entities, excluding management bodies:

Transactions with related entities are generally made on the basis of market values on the respective dates.

MANAgEMENT BODIES

The costs incurred on the remuneration of the bank’s board of directors, in 2009, totalled €986,043 of which

amount €17,673 in respect of contributions to the Caixa – Banco de Investimento pension fund, as described in

Note 2.10 (€884,305 and €18,607 respectively in 2008.


assets


Loans and advances to credit institutions payable on demand


Other financial assets recognised at fair value through profit or loss


Other assets

liabilities




hedge derivatives

Other liabilities

income and costs

Net interest Income



Income from services and commissions (net)

Operating income

general administrative expenses

-

-

-

-

-

43,703

-

-

(7,319,123)

-

-

141,542

-

-

17,306

154,369

-

2009

othercgd grouPcoMPanieS

SuBSidiarieS

2008

1,690,279

7,261,867

70,762,287

-

31,086,917

6,356,870

(252,755,943)

(1,074,327,234)

(57,299,167)

(1,703,334)

(6,071,547)

(56,655,579)

(23,412,765)

60,896

638,544

1,395,802

(1,480,566)

27,679,993

-

-

-

-

-

-

-

(11,723,243)

-

-

2,165,395

-

-

40,536

518,106

-

-

7,863,177

37,344,881

-

40,154,983

411,905

(224,756,947)

(1,199,332,556)

(21,467,078)

(1,483,423)

(340,886)

(34,310,355)

(224,982,531)

-

506,700

1,205,062

740,890

othercgd grouPcoMPanieS

SuBSidiarieS

274

Bonuses of €195,500 and €162,500 were paid to the board of directors, in 2009 and 2008, respectively.

One of the board members has a mortgage lending agreement with the bank for the amount of €196,382 at 31

December 2009 (€199,351 in 2008). This is a standard loan for bank employees which was taken out prior to

the appointment as a board member. The bank has no additional liability or granted any long term benefit to the

board of directors, other than those referred to above.

As stipulated in article 23 of CaixaBI’s articles of association, the remuneration committee defines the remuneration

of the board of directors and inspection bodies. In terms of the board of directors remuneration is only paid to

the executive board.

Information on the amounts paid to the members of boards of directors and inspection bodies, in 2009, is set

out below:

33. DISCLOSURES RELATINg TO fINANCIAL INSTRUMENTS

MANAgEMENT POLICIES ON fINANCIAL RISkS PERTAININg TO ThE BANk’ ACTIVITy

Risk management and control are centralised by CgD’s Risk Management Division. The bank also has risk

management regulations defining the limits and operating procedures on the management of various risks.

Information on the disclosures required under IfRS 7 – financial Instruments: Disclosures on the principal types of

risks pertaining to the bank’s activity is set out below.


Executive Board

Luís Lopes Laranjo




Audit Board



João Sousa Martins

Body and officer

277,388

241,388

261,388

261,388

1,041,552

25,788

23,688

23,688

73,164

aMount (E)

275

fOREIgN EXChANgE RISk

financial instruments were broken down into the following currencies at 31 December 2009 and 2008:


assets




Shares

Derivatives (notional value)

Derivatives (book value)

Other financial assets recognised at fair value through

profit or loss



hedge derivatives (notional value)


Other assets


liabilities







Other liabilities

net exposure

2009

-

37,901

10,161,394

555,740,466

21,082,478

-

9,667,761

-

-

24,747,336

5,461,043

(1,419,707)

625,478,672

(555,740,466)

(16,852,644)

(44,773,441)

(782,903)

-

(7,405,598)

(625,555,052)

(76,380)

-

27,561

-

-

-

-

6,583,978

-

-

19,196,338

71,874

-

25,879,751

-

-

(25,673,178)

(2,256)

-

(207,232)

(25,882,666)

(2,915)

189,010

1,976,475

337,784,045

8,646,062,880

238,506,042

29,718,234

155,132,214

22,309,842

16,661,158

872,625,703

23,007,217

(27,605,316)

10,316,367,504

(8,646,062,880)

(231,305,850)

(1,038,482,344)

(145,657,945)

(16,661,158)

(92,075,993)

(10,170,246,170)

189,010

2,073,210

347,945,439

9,201,803,346

259,588,520

29,718,234

171,383,953

22,309,842

16,661,158

916,569,377

28,540,757

(29,025,023)

10,967,757,823

(9,201,803,346)

(248,158,494)

(1,108,928,963)

(146,444,097)

(16,661,158)

(99,689,446)

(10,821,685,504)

(49,015)

uSd Sterling euroS total other

-

31,273

-

-

-

-

-

-

-

-

623

-

31,896

-

-

-

(993)

-

(623)

(1,616)

30,280

currency


-

155,131

-

233,586,826

63,804,430

-

2,062,120

-

-

25,262,840

369,103

(1,469,591)

323,770,859

(233,586,826)

(61,811,328)

(27,161,679)

(651,493)

-

(874,703)

(324,086,029)

(315,170)

1,163,400

16,664,462

362,438,599

6,725,836,006

168,758,630

59,655,602

99,752,776

7,863,177

17,456,798

864,295,249

31,812,828

(10,245,398)

8,345,452,129

(6,725,836,006)

(164,809,541)

(1,192,620,570)

(130,232,005)

(17,456,798)

(86,766,234)

(8,317,721,154)

-

7,381

-

-

-

-

-

-

-

17,945,252

54,840

-

18,007,473

-

-

(17,849,021)

(1,077)

-

(2,869)

(17,852,967)

154,506

1,163,400

16,840,315

362,438,599

6,959,422,832

232,563,060

59,655,602

101,814,896

7,863,177

17,456,798

907,503,341

32,237,528

(11,714,989)

8,687,244,559

(6,959,422,832)

(226,620,869)

(1,237,631,270)

(130,885,462)

(17,456,798)

(87,644,563)

(8,659,661,794)

(148,210)

-

13,341

-

-

-

-

-

-

-

-

757

-

14,098

-

-

-

(887)

-

(757)

(1,644)

12,454

2008

uSd Sterling euroS total other

currency

assets




Shares



Other financial assets recognised at fair value through

profit or loss





Other assets


liabilities







Other liabilities

net exposure

The amounts relating to derivatives in the above tables, comprise interest rate swaps.

LIQUIDITy RISk

Liquidity risk comprises the bank’s risk of difficulties in securing funds to meet its commitments. An example of

liquidity risk may be the bank’s incapacity to dispose of a financial asset quickly at close to its fair value.

The analysis of the bank’s liquidity risk is part of the consolidated liquidity analysis of CgD group’s Asset-Liability

Committee. The bank has an irrevocable line of credit from CgD, for liquidity requirements of up to one year.

CgD group policy, on the other hand, does not advise direct access to the capital market for securing medium

and long term funding, which is the consolidated liability of CgD group with CgD having a global management

commitment and eventual coverage of the liquidity gaps of its various subsidiaries as a whole.

277

Under IfRS 7 requirements, the full amount of non-discounted contractual cash flows for the various bands,

based on the following premises, is set out below:

Customers’ sight deposits are recognised in the “customer resources and other loans” account heading in

“payable on demand”;

Sight overdrafts are recognised in the “loans and advances to customers” account headings in “payable on

demand”;

The “other” column comprises amounts already received or paid which are being deferred;

The amount for financial derivative instruments set out in this table comprises their book value;

Shares and customers overdue credit have been classified for unspecified periods;

for operations whose income is not fixed such as on operations indexed to Euribor, the future cash flows have

been estimated at the reference value at 31 December 2009 and 2008.


2009


assets




Shares

financial derivative instruments






hedge derivatives

Other assets

liabilities





hedge derivatives

Other liabilities

liquidity gap

-

-

3,003,986

58,033,632

14,271,341

964,680

22,399,405

88,661,022

-

-

187,334,065

-

54,477,402

1,007,307,016

44,563,690

-

21,840,009

1,128,188,117

(940,854,053)

189,010

2,073,210

-

-

-

-

-

5,678,935

-

23,525,778

31,466,932

-

-

158,398

28,293,523

-

21,192,349

49,644,271

(18,177,338)

-

-

22,384,958

20,648,714

558,523

10,336,169

-

107,715,161

-

-

161,643,524

-

3,423,275

76,355,869

60,398,654

-

36,749,210

176,927,008

(15,283,483)

-

-

179,619,371

38,247,648

362,062

65,176,773

-

207,641,616

936,919

-

491,984,388

-

36,944,454

-

6,986,712

-

-

43,931,166

448,053,222

-

-

85,349,489

42,234,608

7,886,993

47,464,311

-

208,145,680

-

-

391,081,080

-

42,023,590

26,815,549

-

-

18,900,000

87,739,139

303,341,941

-

-

64,071,817

169,798,059

8,799,923

50,991,395

-

413,996,512

-

-

707,657,706

-

163,403,441

-

11,360,367

1,703,334

-

176,467,142

531,190,564

-

-

42,968,768

-

-

24,798,886

-

1,826,980

-

4,016,889

73,611,523

-

-

-

-

-

-

-

73,611,523

-

-

-

-

-

-

-

(4,081,361)

-

998,091

(3,083,271)

-

-

-

-

-

1,007,877

1,007,877

(4,091,148)

uP to3 MonthS

PayaBle on deMand

3 MonthS- 1 year

3 - 5 yearS

1 - 3 yearS

More than 5 yearS

iundeterMined other total

189,010

2,073,210

397,398,388

328,962,661

31,878,840

199,732,214

22,399,405

1,029,584,544

936,919

28,540,757

2,041,695,948

-

300,272,162

1,110,636,832

151,602,946

1,703,334

99,689,446

1,663,904,720

377,791,228


-

-

616,951

13,100,754

28,164,568

1,201,796

7,927,594

72,371,214

-

-

123,382,876

13,961,954

1,147,590,195

71,528,237

-

25,051,572

1,258,131,959

(1,134,749,082)

1,163,400

16,840,315

-

-

-

-

-

5,944,782

-

27,141,861

51,090,357

-

172,029

16,495,827

-

28,707,224

45,375,080

5,715,277

-

-

15,232,599

9,692,226

3,770,652

13,153,036

-

136,403,603

-

-

178,252,116

9,675,665

-

29,447,575

-

32,914,027

72,037,267

106,214,849

-

-

64,322,953

20,931,554

6,548,098

50,777,792

-

230,849,654

-

-

373,430,050

20,556,855

-

-

-

-

20,556,855

352,873,194

-

-

75,485,580

41,992,292

18,499,149

9,004,786

-

185,157,129

-

-

330,138,936

17,379,117

98,766,413

-

-

-

116,145,530

213,993,406

-

-

239,457,239

205,186,325

9,771,369

93,412,219

-

595,060,990

461,812

-

1,143,349,955

198,790,138

-

19,799,159

1,483,423

-

220,072,720

923,277,235

-

-

38,711,134

-

-

11,602,569

-

1,469,591

-

3,935,714

55,719,008

-

-

-

-

-

-

55,719,008

-

-

-

-

-

-

-

(4,415,060)

-

1,159,953

(3,255,107)

-

-

-

-

971,740

971,740

(4,226,848)

1,163,400

16,840,315

433,826,456

290,903,151

66,753,836

179,152,198

7,927,594

1,222,841,902

461,812

32,237,528

2,252,108,191

260,363,729

1,246,528,637

137,270,799

1,483,423

87,644,563

1,733,291,151

518,817,039

2008


uP to3 MonthS

PayaBle on deMand

3 MonthS- 1 year

3 - 5 yearS

1 - 3 yearS

More than 5 yearS


assets




Shares







hedge derivatives

Other assets

liabilities





hedge derivatives

Other liabilities

liquidity gap


INTEREST RATE RISk

Interest rate risk comprises the fair value or cash flow risk associated with a determined financial instrument, if

altered on the basis of an alteration of market interest rates.

The following is a summary of the type of exposure to interest rate risk at 31 December 2009 and 2008:

assets



Shares



hedge derivatives




Other assets

liabilities





hedge derivatives

Other liabilities

net exposure

2009

-

42,968,768

-

-

-

24,798,886

-

(2,254,381)

28,540,757

94,054,030

-

-

-

-

99,689,446

99,689,446

(5,635,416)

-

271,242,852

4,578,911,046

2

5,000,000

25,079,535

-

13,409,321

-

4,893,642,756

4,632,057,991

158,398

41,611,400

11,661,158

-

4,685,488,948

208,153,808

2,073,210

33,733,819

4,622,892,300

29,718,232

11,661,158

121,505,532

22,309,842

905,414,437

-

5,749,308,531

4,569,745,355

1,108,770,565

104,832,697

5,000,000

-

5,788,348,617

(39,040,086)


fiXed rate

VariaBle rate

total

2,073,210

347,945,439

9,201,803,346

29,718,234

16,661,158

171,383,953

22,309,842

916,569,377

28,540,757

10,737,005,317

9,201,803,346

1,108,928,963

146,444,097

16,661,158

99,689,446

10,573,527,010

163,478,307

280

The “financial assets held for trading – shares” account heading at 31 December 2009 and 2008, included

€92,659,873 and €158,631,452 for a portfolio bond whose interest included a fixed-rate component indexed

to the stock market performance of a Portuguese share.


-

38.711.134

-

-

-

11.602.569

-

(2.945.470)

32.237.528

79.605.762

-

-

-

-

87.644.563

87.644.563

(8.038.801)

-

278.078.862

3.461.034.304

2

5.000.000

44.936.887

-

14.195.958

-

3.803.246.013

3.504.152.659

172.029

30.098.708

12.456.798

-

3.546.880.194

256.365.819

16.840.315

45.648.603

3.498.388.528

59.655.601

12.456.798

45.275.439

7.863.177

896.252.853

-

4.582.381.314

3.455.270.173

1.237.459.241

100.786.754

5.000.000

-

4.798.516.168

(216.134.854)

16.840.315

362.438.599

6.959.422.832

59.655.602

17.456.798

101.814.896

7.863.177

907.503.341

32.237.528

8.465.233.089

6.959.422.832

1.237.631.270

130.885.462

17.456.798

87.644.563

8.433.040.925

32.192.164

assets



Shares



hedge derivatives




Other assets

liabilities





hedge derivatives

Other liabilities

net exposure

2008


fiXed rate

VariaBle rate

total


Exposure to interest rate risk, at 31 December 2009 and 2008 can be broken down into the following maturity

periods:

2009

assets

Cash assets with other credit

institutions


Shares




hedge derivatives




Other assets

liabilities





hedge derivatives

Other liabilities

net exposure

2,073,210

-

-

-

-

-

-

5,678,935

23,525,778

31,277,922

-

158,398

28,293,523

-

21,192,349

49,644,271

(18,366,349)

-

33,733,819

1,619,739,356

24,517,045

-

100,666,907

22,309,842

524,366,368

-

2,325,333,337

1,623,768,912

1,007,105,156

44,556,079

-

21,840,009

2,697,270,155

(371,936,819)

-

10,550,519

3,035,025,328

5,201,187

11,661,158

25,037,216

-

375,529,748

-

3,463,005,156

3,049,797,865

75,693,131

60,276,618

5,000,000

36,749,210

3,227,516,824

235,488,332

-

45,472,805

1,675,037,041

-

-

5,110,407

-

-

-

1,725,620,253

1,660,005,795

25,972,278

-

-

18,900,000

1,704,878,073

20,742,180

-

162,975,356

800,899,250

2

5,000,000

15,632,287

-

-

-

984,506,895

799,629,023

-

6,051,307

-

-

805,680,330

178,826,565

-

52,244,172

2,071,102,371

-

-

138,250

-

13,248,708

-

2,136,733,501

2,068,601,751

-

7,266,570

11,661,158

-

2,087,529,479

49,204,022

-

42,968,768

-

-

-

24,798,886

-

1,826,980

4,016,889

73,611,523

-

-

-

-

-

-

73,611,523

-

-

-

-

-

-

-

(4,081,361)

998,091

(3,083,271)

-

-

-

-

1,007,877

1,007,877

(4,091,148)

2,073,210

347, 945,439

9,201,803,346

29,718,234

16,661,158

171,383,953

22,309,842

916,569,377

28,540,757

10,737,005,317

9,201,803,346

1,108,928,963

146,444,097

16,661,158

99,689,446

10,573,527,010

163,478,307


2008

16,840,315

-

-

-

-

-

-

5,944,782

27,141,861

49,926,958

-

172,029

16,495,827

-

28,707,224

45,375,080

4,551,877

-

45,648,603

2,068,721,728

53,580,103

-

41,226,794

7,863,177

537,802,421

-

2,754,842,827

2,078,987,699

1,147,552,016

71,422,084

-

18,793,783

3,316,755,581

(561,912,754)

-

256,749

2,026,682,709

6,075,497

12,456,798

4,048,645

-

352,505,650

-

2,402,026,048

1,964,609,636

-

29,364,669

5,000,000

20,271,816

2,019,246,121

382,779,927

-

13,512,195

691,570,585

-

-

-

-

-

-

705,082,780

748,484,160

89,907,225

-

-

18,900,000

857,291,385

(152,208,605)

-

41,443,116

664,042,118

2

-

44,505,976

-

-

-

749,991,213

662,607,766

-

-

-

-

662,607,766

87,383,447

-

222,866,801

1,508,405,692

-

5,000,000

430,911

-

14,195,958

-

1,750,899,362

1,504,733,572

-

13,602,881

12,456,798

-

1,530,793,251

220,106,111

-

38,711,134

-

-

-

11,602,569

-

1,469,591

3,935,714

55,719,008

-

-

-

-

-

-

55,719,008

-

-

-

-

-

-

-

(4,415,060)

1,159,953

(3,255,107)

-

-

-

-

971,740

971,740

(4,226,848)

16,840,315

362,438,599

6,959,422,832

59,655,602

17,456,798

101,814,896

7,863,177

907,503,341

32,237,528

8,465,233,088

6,959,422,832

1,237,631,270

130,885,462

17,456,798

87,644,563

8,433,040,925

32,192,163

assets

Cash assets with other credit

institutions


Shares




hedge derivatives




Other assets

liabilities





hedge derivatives

Other liabilities

net exposure

uP to3 MonthS

PayaBle on deMand

3 MonthS- 1 year

3 - 5 yearS

1 - 3 yearS

More than 5 yearS



uP to3 MonthS

PayaBle on deMand

3 MonthS- 1 year

3 - 5 yearS

1 - 3 yearS

More than 5 yearS




The book value of fixed-rate instruments was classified in accordance with their respective period to maturity;

The book value of variable-rate instruments (e.g. indexed to Euribor), was classified in accordance with the

respective maturity until the next refixing of the rate;

The book value of instruments not subject to interest rate risk (e.g. shares) was included in the “undetermined”

column;

The book value included in the “other” column comprises amounts which have already been received or paid

which are being deferred;

Information is provided on notional purchase amounts (as assets) and sales (as liabilities) on interest rate swaps;

Overdue loans to customers and amounts already received or paid were not considered subject to interest rate

risk; and,

Customers’ sight deposits, when no interest is paid, are considered as fixed-rate and classified as “payable on

demand”.

CREDIT RISk

Credit risk comprises financial losses on the defaults of counterparties who have entered into agreements on

financial instruments.

283

MAXIMUM EXPOSURE TO CREDIT RISk

The following is a summary of the maximum exposure to credit risk, by financial instrument, at 31 December

2009 and 2008:

CREDIT QUALITy Of fINANCIAL ASSETS

The bank does not have an internal rating system. The principal procedures in force in terms of the approval and

monitoring of credit operations designed to ensure an adequate risk level for the bank’s strategy, are set out

below:

The bank has a credit council, comprising members of the executive board and managers of the commercial

divisions with any form of involvement in granting credit. The bank’s credit council meets once a week with a

minimum of two directors and managers of the commercial divisions involved in the credit granting process;


organs (business / product divisions), which require the risk opinion of CgD’s Risk Management Division, in

advance. The proposals approved by the bank’s credit council are recorded in minutes and are signed by all

present, for later submission to and the final resolution of CgD’s credit councils.


Assets

Cash and cash equivalents

in other credit institutions





Loans and advances to credit

institutions


hedge derivatives

Other assets (excluding deferred

costs)

Off-balance sheet

guarantees provided

2009

2,073,210

633,939,332

29,718,234

146,585,066

22,309,842

916,569,377

936,919

27,542,666

1,779,674,647

70,083,663

1,849,758,310

tyPe of financial inStruMent

2008

BooKValue

(groSS)


BooKValue

(net)

-

-

-

-

-

24,709,087

-

4,315,936

29,025,023

-

29,025,023

2,073,210

633,939,332

29,718,234

146,585,066

22,309,842

891,860,290

936,919

23,226,730

1,750,649,624

70,083,663

1,820,733,287

16,840,315

614,630,616

59,655,602

90,212,327

7,863,177

907,503,341

461,812

31,077,565

1,728,244,755

78,850,623

1,807,095,378

-

-

-

-

-

7,779,275

-

3,935,714

11,714,989

-

11,714,989

16,840,315

614,630,616

59,655,602

90,212,327

7,863,177

899,724,067

461,812

27,141,851

1,716,529,767

78,850,623

1,795,380,390

BooKValue

(groSS)


BooKValue

(net)


A part of credit operations with customers is, inter alia, guaranteed by the following types of collateral:

A pledge on securities;

Bank guarantees;

State-backed;

Mortgage loans for employees; and

Personal guarantees.

285

CREDIT QUALITy Of DEBT SECURITIES AND fINANCIAL DERIVATIVE INSTRUMENTS

The following table provides information on the book value of debt securities in a portfolio net of impairment

(excluding matured securities) according to the Standard & Poor’s or equivalent rating, by type of guarantor or

issuing entity and by the guarantor‘s or issuing entity’s geography, at 31 December 2009 and 2008:



AAA

AA- to AA+

A- to A+

Less than A-

Unrated

Issued by

Corporate entities




through profit or loss (fair value option)

AA- to AA+

Unrated

Issued by

Corporate entities




(net of impairment)

AAA

AA- to AA+

A- to A+

Less than A-

Unrated

Issued by

Corporate entities



2009

2,007,201

162,912,027

12,540,719

-

-

177,459,946

101,931,274

41,292,177

34,236,496

177,459,946

2

27,225,637

27,225,639

27,225,635

2

1

27,225,639

5,110,407

19,004,608

19,782,471

-

47,639,048

91,536,534

51,841,207

3,477,049

36,218,278

91,536,534

Portugal

-

18,117,069

45,731,817

27,547,205

-

91,396,090

18,164,573

-

73,231,517

91,396,090

-

-

-

-

-

-

-

1,863,218

7,522,155

22,290,610

8,603,070

-

40,279,054

1,496,412

-

38,782,642

40,279,054

reSt ofeuroPean union

-

2,909,557

3,427,469

-

-

6,337,026

-

-

6,337,026

6,337,026

-

-

-

-

-

-

-

-

-

10,423,801

-

-

10,423,801

-

-

10,423,801

10,423,801

north aMerica

-

5,989,174

15,743,178

8,051,256

-

29,783,608

4,754,734

3,972,919

21,055,955

29,783,608

-

2,492,596

2,492,596

-

-

2,492,596

2,492,596

-

4,345,678

-

-

-

4,345,678

-

-

4,345,678

4,345,678

other total

2,007,201

189,927,826

77,443,183

35,598,461

-

304,976,671

124,850,581

45,265,096

134,860,994

304,976,671

2

29,718,232

29,718,234

27,225,635

2

2,492,597

29,718,234

6,973,625

30,872,441

52,496,882

8,603,070

47,639,048

146,585,067

53,337,619

3,477,049

89,770,399

146,585,067

286

The bank, at 31 December 2009 also recognised in “debtors – other” an amount of €1,079,632 relating to interest

on financial derivative instruments whose payment has been overdue for less than 3 months. The book value

recognised in financial assets held for trading relating to the said operations totalled €5,056,555.



AAA

AA- to AA+

A- to A+

Less than A-

Issued by

Corporate entities




through profit or loss (fair value option)

AAA

AA- to AA+

A- to A+

Less than A-

Issued by

Corporate entities



Available for sale financial assets (net of

impairment)

AA- to AA+

A- to A+

Unrated

Issued by

Corporate entities


-

247,943,255

8,731,419

844,049

257,518,723

-

89,311,803

168,206,920

257,518,723

-

973,128

6,075,497

37,197,096

44,245,721

43,272,591

973,128

1

44,245,721

39,251,030

16,671,354

22,658,988

78,581,373

39,330,343

39,251,030

78,581,373

-

32,212,113

4,091,002

2,570,939

38,874,054

2,312,342

-

36,561,712

38,874,054

11,066,323

-

-

1,978,699

13,045,022

-

11,066,323

1,978,699

13,045,022

-

2,498,286

-

2,498,286

-

2,498,286

2,498,286

-

2,023,615

2,388,174

-

4,411,789

-

-

4,411,789

4,411,789

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

2,321,730

11,295,915

9,305,254

-

22,922,899

1,554,905

-

21,367,994

22,922,899

-

-

-

2,364,860

2,364,860

-

-

2,364,860

2,364,860

-

9,132,668

-

9,132,668

-

9,132,668

9,132,668

2,321,730

293,474,898

24,515,849

3,414,988

323,727,465

3,867,247

89,311,803

230,548,414

323,727,465

11,066,323

973,128

6,075,497

41,540,654

59,655,602

43,272,591

12,039,451

4,343,560

59,655,602

39,251,030

28,302,308

22,658,988

90,212,327

39,330,343

50,881,984

90,212,327

2008


north aMerica

other total

287

CREDIT QUALITy Of LOANS AND ADVANCES TO CREDIT INSTITUTIONS

The counterparties with which the bank had contracted “loans and advances to credit institutions” at 31 December

2009, comprised CgD group bodies (€7,189,619), with an external rating of AA- and another financial institution

headquartered in Portugal (€15,000,000), which latter operation was guaranteed by the Portuguese state.

CREDIT QUALITy Of LOANS AND ADVANCES TO CUSTOMERS

Information on overdue credit operations at 31 December 2009 and 2008, is set out in the following table.

The following classifications were used for the preparation of the above tables:

“Performing loans” – loans without any overdue payments or with balances overdue up to 30 days;

“Non-performing loans ” – loans balances overdue between 30-90 days;

“Loans in default” – loans with balances overdue more than 90 days. In the case of corporate loans, if a customer

has at least one operation with payments overdue for more than 90 days, the full amount of the customer’s

exposure to the group is reclassified to this category.


Corporate loans

Outstanding

Overdue

Mortgage lending

Outstanding

Consumer credit

Outstanding

Total outstanding credit

Total overdue credit

Provisions for bad and

doubtful debts

Provisions for overdue credit

net amount

2009 2008

894,193,107

-

894,193,107

8,722,647

549,685

903,465,439

-

(6,309,684)

-

897,155,755

873,379,436

-

873,379,436

10,128,029

448,201

883,955,666

-

(11,901,345)

-

872,054,321

23,833,131

84,951

23,918,082

-

-

23,833,131

84,951

(7,175,425)

-

16,742,657

905,315,465

1,826,980

907,142,445

10,128,029

448,201

915,891,695

1,826,980

(23,128,219)

(1,580,868)

893,009,588

PerforMing credit

non-PerforMing credit

total credit

credit in default

8,102,898

1,742,029

9,844,927

-

-

8,102,898

1,742,029

(4,051,449)

(1,580,868)

4,212,610

-

1,469,591

1,469,591

-

-

-

1,469,591

-

(1,469,591)

-

894,193,107

1,469,591

895,662,698

8,722,647

549,685

903,465,439

1,469,591

(6,309,684)

(1,469,591)

897,155,755

PerforMing credit

credit in default

total credit


The book value of loans and advances to customers which would have had unpaid instalments at 31 December

2009 and 2008, if such loans and advances had not been renegotiated totalled €22,091,449 and €36,483,942

respectively. The bank had recorded bad debt provisions of €9,979,837 and €6,309,684 respectively on such

loans at 31 December 2009 and 2008.

Market risk

Market risk comprises the risk of a change in the fair value or the cash flows of financial instruments deriving from

changes in market prices, including foreign exchange, interest rate and price risks.

The bank’s market risk is assessed on the basis of the following methodologies:

Value-at-Risk” (VaR) on the trading portfolio, including the securities and financial derivatives portfolios;

A sensitivity analysis on the bank’s remaining assets and liabilities. This sensitivity analysis is calculated on the

bases of the premises defined in Bank of Portugal Instruction 19/2005.

Trading portfolio

VaR comprises an estimate of the maximum potential loss on a specific assets portfolio, over a determined period

with a given confidence level, assuming normal market operation.

The calculation methodology used is that of historical simulation i.e. future events are fully explained by past

events, based on the following premises:

Asset held for: 10 days;

Confidence level: 99%;

Price sampling period: 720 calendar days;

Decay factor = 1, i.e. all observations carry the same weight;

for options, the theoretical price is calculated by the use of adequate models and the use of implicit volatility. No

calculation for correlations is made, owing to the methodology applied; i.e. the correlations are empirical.

289

The following is a breakdown of VaR at 31 December 2009 and 2008 (thousand euros):

The diversification effect is calculated implicitly. Total VaR refers to the combined effect of interest rate, price,

foreign exchange and volatility risks.

Bpvs (basis point values), changes in the market value of interest rate positions owing to the parallel movement

of 1 basis point on the yield curves are calculated for the trading portfolio and treasury positions. Other sensitivity

indices commonly applicable to options portfolios are also calculated.

Stress testing assessments are realised monthly.

Theoretical backtesting (comparison of the VaR measure with technical results) is performed daily and real

backtesting (comparison of the VaR measure with the real result) monthly. The number of exceptions obtained

i.e. the number of times theoretical or real losses exceed VaR, enable the method’s accuracy to be assessed and

any necessary adjustments made.

Non-trading portfolio

The sensitivity analysis on the non-trading portfolio was carried out to determine the potential impact on the

bank’s net interest income in 2010, considering a fall of 50 basis points (bps) in reference interest rates and

assuming a parallel movement of the interest rate curve. The bank’s financial assets and liabilities were considered

for this purpose, excluding:

financial derivative instruments; and

Commercial paper.


2008

Market VaR

Interest rate

foreign exchange

Market price

Diversification effect

2009

374

87

50

(105)

406

221

17

34

(40)

232


The principal premises related with the pricing of operations were:

Variable-rate operations: market rate plus respective contractual spread;

New fixed-rate operations: market rate plus respective spread equivalent to the difference between the average

rate on live transactions at 31 December 2009 and respective market rate;

New variable-rate operations: market rate plus average contractual spread on live transactions at 31 December

2009.

Based on the above referred to premises, the potential positive impact of a 50 basis points fall in reference interest

rates on net interest income for 2010 totals €639,092 (€2,359,820 at 31 December 2008). In the event of a 50

basis points increase in reference interest rates, the potential negative impact on the net interest income forecast

for 2010 totals €1,348,133 (€2,388,738 at 31 December 2008).

fair value

The bank maintains a significant part of its assets, notably its securities and derivatives portfolio, at fair value

through profit or loss.

Reference should be made to the following aspects as regards the principal financial assets and liabilities

recognised at cost:

Interest is paid on almost all loans and advances and resources with other credit institutions at indexed rates

and short refixing periods;

As shown above, in the section on interest rate risk, the payment of interest on almost all customer deposits is

indexed to Euribor, with short refixing periods. A long term operation at fixed interest rates has been covered by

a hedge derivative for which reason the change in the fair value attributable to the interest rate risk has already

been recognised in the deposit’s book value (see Note 17).

In light of the above, the bank considers that the book value of its financial assets, net of provisions and its financial

liabilities comprises a reliable approximation of their respective fair value.

291

The form of determining the fair value of financial instruments at 31 December 2009 and 2008, is summarised

below:


-

-

153,127

-

153,127

-

-

-

231,782,327

2

86,360,190

-

318,142,519

-

-

-

445,125,773

958,684

35,236,453

936,919

482,257,829

(300,272,162)

(1,703,334)

(301,975,496)

-

28,759,548

49,634,184

-

78,393,732

-

-

-

676,908,100

29,718,234

171,383,953

936,919

878,947,206

(300,272,162)

(1,703,334)

(301,975,496)

2009


financial inStruMentSat fair Value

MarKet data

(leVel 2)

other (leVel 3)

aSSetS at coSt



(leVel 1)

Assets





hedge derivatives

Liabilities


hedge derivatives

-

-

3,216,848

-

3,216,848

-

-

-

177,008,218

11,066,326

6,754,513

-

194,829,057

-

-

-

317,702,080

7,892,361

63,073,781

461,812

389,130,035

(260,363,729)

(1,483,423)

(261,847,152)

158,631,452

40,696,915

28,769,753

-

228,098,120

-

-

-

653,341,750

59,655,602

101,814,896

461,812

815,274,060

(260,363,729)

(1,483,423)

(261,847,152)

2008


financial inStruMentSat fair Value

MarKet data

(leVel 2)

other (leVel 3)

aSSetS at coSt



(leVel 1)

Assets





hedge derivatives

Liabilities


hedge derivatives



Prices on active markets correspond to equity instruments listed on a stock market and high liquidity bonds

(Level 1);

Prices of financial derivative instruments are calculated using valuation techniques based on market data (Level 2);

Portfolio shares valued by indicative bids supplied by contributors external to the group were also recognised in

“Valuation techniques - market data (Level 2)”;

Shares valued by internal CgD group models are presented in “Valuation techniques – Other (Level 3)”; This

column includes: This column includes:

At 31 December 2008, €158,631,452 in bonds convertible into EDP shares issued by Parpública SgPS, S.A.,

which were being valued in accordance with an internal model defined by the bank. In 2009, the bank opted

to value the security on the basis of indicative bids supplied by external counterparties;

At 31 December 2009 and 2008, €1,992,123 and €2,062,120 , respectively, relating to a financial investment

valued by an internal model for updating projected cash flows;

At 31 December 2009 and 2008, €76,401,609 and €67,404,550, respectively, relating to fixed or variable-rate

bonds issued by Portuguese financial and non-financial companies, in respect of which there are no active

market nor indicative prices supplied by external counterparties. The bank values these securities using a

projected cash flow updating model at market interest rates plus a spread the bank considers adequate to

the issuing entity’s credit risk as a discount rate.

Assets valued at cost are stable financial investments held by the bank for which no active market exists.

293

The following is a summary, in 2009, of the movements occurring in portfolio securities valued at 31 December

2009 and 2008 by “valuation techniques – other” in addition to the potential and realised capital gains recognised

in the fair value reserve and in income from financial operations:

34. CAPITAL MANAgEMENT

The bank in performing its investment banking operations exercises strict control over the ratio between its assets

management needs and available capital. This management action on the bank’s capital has been designed to

cater for any default in terms of capital requirements, exceeding reporting obligations and making it possible to

simulate the impacts of hypothetical management decisions on the diverse prudential ratios.

Capital management is designed to optimise the above referred to ratio, with a prudential margin providing for

the resolutions to be passed in terms of the bank’s asset management.

The bank’s administration received periodic internal reports permitting not only the monitoring of the resolutions

taken in assets management terms but also the spaces between real positions and their minimum respective

capital requirements.

The procedures used to calculate the bank’s ratios and prudential limits are based on the dispositions issued by

the Bank of Portugal, as is the case for issues pertaining to the banking system’s supervisory functions. These

regulations represent the legal and regulatory framework on various prudential matters.


158,631,452

40,696,915

28,769,753

228,098,120

(158,631,452)

4,940,535

-

(153,690,917)

-

(213,282)

-

(213,282)

-

(364,621)

(98,645)

(463,266)

-

(16,300,000)

16,203,200

(96,800)

-

-

4,829,872

4,829,872

-

-

(69,997)

(69,997)

-

28,759,548

49,634,184

78,393,732

financial assets held

for trading

Other financial assets

recognised at fair value


Available for sale

financial assets

aMountS recogniSed in incoMe

StateMent for year


eXchange difference


fair Value reSerVeS

effectiVe Potential acquiSitionS/ alienationS

change of Valuation

Method

294

The solvency ratio, at 31 December 2009 and 2008 was determined as follows:


Paid up capital

(-) Treasury stock

Legal, statutory and other reserves

Retained earnings

Other deductions

Basis own funds

fixed assets revaluation reserves


Revaluation differences on available for sale assets – positive fair value

complementary own funds

eligible own funds (base and complementary)

Credit risk and counterparty credit risk

(-) 8% provisions for general credit risks - part non-eligible for own funds

Position risks - debt instruments

Position risks - equity securities

Commodities risk

Operational risk - standard indicator method

Operational risk - basic indicator method

own funds requirements

Solvency ratio

31-12-2009

81,250,000

(5,999,453)

67,321,134

44,162,390

(6,815,974)

179,918,096

4,338,403

8,889,558

241,293

13,469,254

193,387,350

122,031,977

(464,115)

36,107,812

5,402,612

287,514

11,434,059

-

174,799,858

8.85%

81,250,000

(5,999,453)

59,910,835

42,628,313

(4,098,796)

173,690,899

4,338,403

-

77,449

4,415,852

178,106,751

122,252,526

(687,699)

26,362,005

4,645,336

963,828

-

10,805,814

164,341,811

8.67%

31-12-2008

296 REPORT AND OPINION Of AUDIT BOARD

In compliance with the dispositions of sub-paragraph g) of no. 1 of article 420, articles 452 and 508-D of the

Commercial Companies Code, Caixa - Banco de Investimento, S.A.’s audit board hereby submits its inspection

report for the year ended 31 December 2009, in addition to its opinion on the separate and consolidated

management report and accounts for the same year and proposal for the appropriation of net income, submitted

by the board of directors.

The audit board, during the year in question, accompanied the performance of the bank’s activity, with the

periodicity and to the extent considered necessary, having systematically analysed the information received for

the said purpose, including the information set out in the monthly financial reports, not only in respect of the

bank but also the other companies included in the consolidation.

It also considered the criteria used to set up and reinforce reserves and determine impairment on the bank’s

assets and, as regards the former, its respective liabilities.

The audit board kept in close touch with the executive board for the purpose of obtaining information on the

evolution of the company’s situation and attended board of directors’ meetings in which the financial and activity

reports for each quarter were considered.

The audit board attended thirteen formal meetings during the course of the year and, in addition to making

other contacts, met with the representative of the statutory auditor for a joint analysis of the issues pertaining

to the sphere of both bodies.

To complement its compilation of documentary information, the audit board made systematic contact with

departmental representatives - particularly the Audit and Compliance Offices and the Information Systems

Division – to analyse the periodic reports on the development of internal audit operations.

The audit board also met with representatives of the Risk Management Division and Caixa geral de Depósitos’

Compliance function Support Office, to compile information on the articulation of the corresponding functions

on a CgD group level, particularly as regards Caixa - Banco de Investimento’s activity.

The audit board issued its opinion on the bank’s internal control system, on 22 May 2009, in compliance with

the dispositions of sub-paragraph a) of no. 5 of article 25 of the Bank of Portugal’s official notice 5/2008 of 25

June, in accordance with the schedule established for the purpose in question within Caixa geral de Depósitos

group.

A contract for the provision of services in support of the Internal Audit Office’s functions, entered into between

the bank and Deloitte, which the audit board had already examined last year, remained in force, in 2009.

The position expressed at the said time that, in light of the nature and dimension of the contracted services and

the manner of performance thereof, according to the information obtained to the effect that this relationship

297

does not appear to interfere with the statutory auditor’s independence in performing its respective functions,

was restated.

The audit board considers that particular mention should be made of the following facts which demonstrate the

bank’s good performance, in 2009, evidencing the consistency of its performance associated with its business

innovation and development capacity:

global finance’s “Best Investment Bank in Portugal” award;

Euromoney’s recognition as the “Best Equity Bank in Portugal”;

Bloomberg’s classification as the “Principal Bookrunner” for bond issues denominated in euros, for domestic

issuers;

Its position as an important world player in the project finance area;

growth of 31.8% in net operating income over the preceding year;

Significantly improved efficiency, with a 28.4% to 23.4% improvement in cost-to-income over 2008;

good net income level of €45.6 million.

Reference should be made to the following indicators which characterise the bank’s consolidated accounts for

the year:

The bank’s consolidated net assets were up €33.5 million over the preceding year to €1 930 million.

Contributory factors were the €62.8 million growth in available for sale financial assets and €15.8 million in

loans and advances to credit institutions, €14.2 million in deferred tax assets and €13.2 million in loans and

advances to customers, in addition to the decreases of €30.86 million financial assets at fair value through

profit or loss, €22.7 million in other assets and €14.8 million in cash assets with other credit institutions.

On the liabilities side, special reference should be made to the €39.9 million increase in financial liabilities

recognised at fair value through profit or loss, €20 million in customer resources and other loans, €16.7

million in other liabilities and €15.8 million in current tax liabilities in addition to the €128.7 million decrease

in other credit institutions’ resources.

Consolidated shareholders’ equity was up 35.8% by €68.1 million over the preceding year owing to the

positive change of €46 million in fair value reserves and €15.4 million in net income for the period.


298

Net operating income was up €28.5 million over 2008 to €118 million. Contributory factors were net interest

income with an additional €10.7 million, income from financial operations of €22 million and net commissions

with an additional €2.4 million.

The already referred to consolidated net income of €45.6 million was up €15.4 million over 2008. Cash flow

was also up €29.8 million over the preceding year to €92.2 million.

The following indicators on the separate accounts translate the bank’s activity for the year:

Net assets were down €10.3 million over 31 December 2008 to €1 927.9 million. Special reference should

be made to the decreases of €74.3 million in investments in subsidiaries, associated companies and joint

enterprises, €29.9 million in financial assets recognised at fair value through profit or loss and €16.8 million

in cash assets with other credit institutions. This was offset by a €69.6 million growth in available for sale

financial assets, €23.6 million in financial assets held for trading and €14.4 million in loans and advances

to credit institutions;

On the liabilities side, reference should also be made to the €33.3 million decrease over the preceding year

as a result of the €128.7 million decrease in other credit institutions’ resources, partly offset by the €39.9

million increase in financial liabilities held for trading, €15.5 million in customer resources and other loans,

€12.2 million in provisions, €15.4 million in current tax liabilities and €12 million in other liabilities;

Shareholders’ equity was up €23 million over the preceding year to €226.4 million. This growth derived

from the positive combination effect of changes of €9 million in other reserves and retained earnings, €4.6

million in revaluation reserves and €9.4 million in net income for the period;

The solvency ratio, calculated in accordance with Bank of Portugal rules was 8.85% in comparison to the

preceding year’s 8.67%;

Net operating income was up 40.8% by €31.1 million to €107.2 million over 2008, particularly owing to

the good performance comprising the €21 million increase in income from financial operations and €9.7

million increase in net interest income;

There was a 29.2% increase of €9.5 million in net income for the period to €42 million.

The audit board examined the separate and consolidated reports for 2009 submitted by the board of directors

and inspected the process involving the preparation and disclosure of the financial information.

It also met with the representative of the statutory auditor for the joint consideration of the said documents

and appraisal of the conclusions of the separate and consolidated accounts revision work, with which, having

examined the contents of the statutory audit certificate and their compliance with legal requirements, it is in

agreement.


299

In conformity with the above, the audit board considers that the shareholders’ meeting:

Should approve the separate and consolidated management report and accounts for 2009 as submitted by

the board of directors;

Should approve the proposal for the appropriation of net income set out in the same report;

Should undertake a general appraisal of the company’s management and inspection and draw the conclusions

referred to in article 455 of the Commercial Companies Code.

The audit board wishes to thank the board of directors and executive committee, statutory auditor and the bank’s

various departments for their assistance in the performance of its functions.

Lisbon, 3 february 2010

audit Board


Chairman


Board Member

João de Sousa Martins

Board Member


301 STATUTORy AUDIT CERTIfICATE CONSOLIDATED ACCOUNTS

(Amounts in euros)

INTRODUCTION

1. we have examined the attached consolidated financial statements of Caixa – Banco de Investimento, S.A.

(bank) and its subsidiaries, comprising the statement of its consolidated financial position at 31 December

2009, comprising a total of €1,930,506,567 and shareholders’ equity of €258,573,031, including net income

of €45,606,639, the consolidated statements of comprehensive income, changes to shareholders’ equity and

cash flows for the year then ended and corresponding notes.

RESPONSIBILITIES

2. The bank’s board of directors is responsible for preparing consolidated financial statements with a view

to presenting a true and appropriate description of the financial position of the companies included in the

consolidation, the comprehensive income generated by their operations, changes to consolidated

shareholders’ equity and consolidated cash flows, in addition to using adequate accounting policies and

criteria and maintaining appropriate internal control systems. It is our responsibility to express a professional,

independent opinion thereon, based on our examination of the said financial statements.

SCOPE

3. Our examination was performed in conformity with the technical standards and revision / audit directives of the

Order of Statutory Auditors* which require that the examination be planned and performed with the objective

of obtaining an acceptable degree of assurance as to whether the consolidated financial statements contain

any materially relevant distortions. The examination included verification of specimens of the supporting documents

upon which the amounts and information disclosed in the financial statements have been based and an

assessment of estimates based on judgements and criteria defined by the board of directors and used for the

preparation thereof. The examination also included verification of the consolidation operations and application

of the equity accounting method and whether the financial statements of the consolidated companies have

been appropriately examined; an appraisal of the adequacy of the accounting policies used, their uniform

application and disclosure, based on the circumstances, verification of the applicability of the going-concern

principle and whether the global presentation of the consolidated financial statements is adequate. Our

examination also included verification of concordance between the consolidated financial information contained

in the board of directors’ report and the consolidated financial statements. we consider that our examination

has provided us with an acceptable basis upon which to base our opinion.

* Ordem dos Revisores Oficiais de Contas

302

OPINION

4. In our opinion, the consolidated financial statements, referred to in paragraph 1 above, provide a true and

appropriate description, in all materially relevant aspects, of the consolidated financial position of Caixa – Banco

de Investimento, S.A. and its subsidiaries at 31 December 2009, the consolidated income generated by their

operations and consolidated cash flows for the year then ended in conformity with the International financial

Reporting Standards, as adopted by the European Union.


Deloitte & Associados, SROC S.A.

Represented by João Carlos henriques gomes ferreira


304 STATUTORy AUDIT CERTIfICATE SEPARATE ACCOUNTS

(Amounts in euros)

INTRODUCTION

1. we have examined the attached financial statements of Caixa - Banco de Investimento, S.A. (bank) comprising

the statement of its separate financial position at 31 December 2009, with total assets of €1,927,907,922

and shareholders’ equity of €226,437,269 including net income of €41,969,026, separate statements of

comprehensive income, income, changes to shareholders’ equity and cash flows for the year then ended and

corresponding notes.

RESPONSIBILITIES

2. The bank’s board of directors is responsible for preparing financial statements with a view to presenting a true

and appropriate description of the bank’s financial position, the comprehensive income generated by its operations,

changes to shareholders’ equity and cash flows, in addition to using adequate accounting policies and criteria

and maintaining an appropriate internal control system. It is our responsibility to express a professional,

independent opinion thereon, based on our examination of the said financial statements.

SCOPE

3. Our examination was performed in conformity with the technical standards and revision / audit directives of the

Order of Statutory Auditors* which require that the examination be planned and performed with the objective

of obtaining an acceptable degree of assurance as to whether the financial statements contain any materially

relevant distortions. The examination included verification of specimens of the supporting documents upon

which the amounts and information disclosed in the financial statements have been based and an assessment

of estimates, based on judgements and criteria defined by the board of directors and used for the preparation

thereof. The examination also included verification of whether the accounting policies used are adequate and

their disclosure, based on the circumstances, verification of the applicability of the going-concern principle

and whether the global presentation of the financial statements is adequate. Our examination also included

verification of concordance between the financial information contained in the board of directors’ report and

the financial statements. we consider that our examination has provided us with an acceptable basis upon

which to base our opinion.

* Ordem dos Revisores Oficiais de Contas

305

OPINION

4. In our opinion, the separate financial statements, referred to in paragraph 1 above, provide a true and

appropriate description, in all materially relevant aspects, for the objectives specified in paragraph 5 below, of

Caixa – Banco de Investimento, S.A.’s financial position at 31 December 2009, the comprehensive income

generated by its operations, changes to shareholders’ equity and cash flows for the year then ended, in

conformity with the “Adjusted Accounting Standards” issued by the Bank of Portugal (Note 2).

EMPhASIS Of MATTERS

5. The financial statements referred to in paragraph 1 above, refer to the bank’s separate activity and have been

prepared for approval and publication under current legislation and the requirements of the Bank of Portugal.

In conformity with the accounting policies applicable to the bank’s separate activity, its majority shareholdings

are recognised at cost. The bank will be submitting separate consolidated accounts to include the effect of the

integral consolidation of its total assets, liabilities, costs and income.


Deloitte & Associados, SROC S.A.

Represented by João Carlos henriques gomes ferreira


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