strategic partnership -...
TRANSCRIPT
1
Strategic Partnership
2
This presentation contains references and statements, planned synergies,
including estimates, projections of results and future strategy for Banco do Brasil,
it’s Associated and Affiliated Companies and Subsidiaries. Although these
references and statements reflect the management’s belief, they also involve
imprecision and high difficult risks to be foreseen, consequently, they may
conduct to a different result than the one anticipated here. These expectations
are highly dependent on market conditions, on Brazil’s economic and banking
system performances, as well as on international market one. Banco do Brasil is
not responsible for bringing up to date any estimate in this presentation.
Disclaimer
3
Section 1
Transaction Description
4
Transaction Highlights
Structure� Acquisition of a stake at Banco Votorantim, owned by Votorantim Finanças S.A., and partial capital
increase equivalent to 50% of the total capital and 49.99% of the voting capital
Precedent Conditions
� Brazilian Central Bank approval
Payment� Closing date (after Brazilian Central Bank approval): R$ 3.75 billion
� Six months after closing date: R$ 450 million
Price of theTransaction
� Acquisition value of a 50% stake after the transaction: R$ 4.2 billion, paid through:
⇒ R$ 3.0 billion paid to Votorantim Finanças S.A.
⇒ R$ 1.2 billion paid in Banco Votorantim S.A., through capital increase
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Partnership Structuring
Other businessBrokerage HouseVAMBV Financeira e
BV Leasing
VotorantimFinanças
Banco do Brasil
Stake saleR$ 3.0 billion
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Shares issuance
R$ 1.2 billion22
Historical dividend
distributionR$ 0.75 billion
00
Newly issued PN
sharesR$
50 – 50 total capital partnershipPrivate sector retains voting capital majority
50 – 50 total capital partnershipPrivate sector retains voting capital majority
ON: VF with 33,356,791,208 and BB with 33,356,791,198 sharesPN: VF with 7,412,620,267 and BB with 7,412,620,277 shares
49.99% (ON)
50.01% (PN)
50% Total
R$
50% Total
50.01% (ON)
49.99% (PN)
Shares ON
R$
6
Dividend Distribution to VF
Partnership Structuring
Shareholders’Equity Book
Value of Banco
Votorantim(R$ bn)
Stake in BV Stake in BV (%)(%)
100.0%
0.0%
55.0%
45.0%
50.0%
50.0%
45% stake acquisition on Banco Votorantim
for R$ 3.0 billion
Capital increase of R$ 1.2 billion, reaching a 50% stake in
Banco Votorantim’ total capital
11
22
33333333
3.003.003.003.00
55% 50%
45%
(0.75) 1.20
50%
Initial status Dividenddistribution of BV
to VF
Post Dividenddistribution
Post stakeacquisition(secondary)
Capital increasefrom BB at BV
Final status aftercapital increase
6.425.67 5.67
6.87
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Corporate Structure
VotorantimFinanças S.A.
VotorantimAsset
Management DTVM Ltda.
BV Empreendimentose Participações Ltda.
VotorantimCTVM Ltda.
BV Sistemas Ltda.
VotorantimBank Limited
BV Leasing ArrendamentoMercantil S.A.
Banco do Brasil S.A.
100% 100% 100% 100% 100%
100%
BV Trading S.A.
AgênciaBanco
VotorantimNassau
Banco Votorantim
Securities Inc.
100% 100%
BV Corretorade Seguros
100%
CP Promotorade Vendas
Ltda.
BV Financeira S.A.
100% 100%
49.99% (ON)
50.01% (PN)
50% Total 50% Total
50.01% (ON)
49.99% (PN)
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Future Corporate Governance of Banco VotorantimBoard with 2 year mandate and Chairman rotation ann ually
Chairman of the Board Antonio Francisco de Lima Neto
Vice-Chairman of the Board José Ermírio de Moraes Neto
Equal Number of Seats on the Board of Directors• 3 members indicated by Votorantim Finanças
• 3 members indicated by Banco do Brasil
CEOWilson Masao Kuzuhara
Existent Management Team• Current Management Philosophy remains
Current business model and management team of Banco Votorantim will remain
Current business model and management team of Banco Votorantim will remain
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Section 2
Strategical Alignment
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Banco do Brasil’s InitiativesScenario
Source: Brazilian Central Bank (Banco Central do Brasil)
1 Includes only multiple and commercial banks authorized to operate by the Central Bank
2 Pro-forma for the merger of Itaú/Unibanco, Santander/Real, BB/BESC, BB/BEP and BB/Nossa Caixa
3 Loan operations CAGR considering the annualized data from January through September 2008
� International Financial Crisis: lack of liquidity, change of requirement regulation, and acceleration of consolidation process of the Brazilian Banking Sector
� Credit Evolution in Brazil - R$ billion
209.3
1995
379.5
2002
CAGR
8.9%
379.5
1,046.6
2002 Sep-08
Financialpartnership +
economicgrowth
CAGR
24.8% 3
� Consolidation of the Brazilian Banking Industry
Number of Banks 1,2 % of total deposits owned bythe 5 largest banks 2
Strategic Growth
� Merger/acquisition of state-owned banks
� Purchase of loan portfolios
� Assessment of potential acquisitions of stakes in financial institutions
� Expansion to international markets
� Footprint in mortgage and vehicle financing
� Alternative product distribution through complimentary channels
� Strength positioning in capital markets
59%
75%
1995 Jun-08
240
153
1995 Dec-08 Sep-08
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Clients and Distribution
Diversified Portfolio :
corporate market, capital markets, treasury, international businesses, asset management, consumer finance and brokerage
Alternative Distribution:BV Financeira: 61 branches, 82 credit stores
Outsourcing Network: 29 thousand of partners
Performance – Sep/08
7th largest bank in Brazil in Total Assets
R$ 81.9 billion
Assets Under ManagementR$ 18.8 billion
Net Income LTMR$ 1.15 billion
Efficiency Ratio(average 05-07)
25%
LoanPortfolio
R$ 38.2 billion
4th position1
Vehicle Financing
12.0%
Banco VotorantimMain Figures
17 Branches
8 in SP, 8 in other states: GO (1), MG (1), PR (1), RJ (2) , RS (2) and SC (1), abroad (Nassau)
3 Million clients attended by BV Financeira
6.800 Employees
1 September/2008 ranking, considering Itaú and Unibanco merger
Source: Austin Asis, Brazilian Central Bank and banks financial statements
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Banco Votorantim Assets EvolutionBrazilian largest financial institutions (ranked by total assets – R$bn)
Source: Austin Asis
1 Data from sep/08: considering the merger of Itaú-Unibanco and the acquisition of Nossa Caixa by BB (pro-forma)
19941994
1. BANCO DO BRASIL2 CAIXA3. BANESPA4. BRADESCO5. BAMERINDUS)6. NACIONAL7. UNIBANCO8. REAL9. SAFRA10. ECONOMICO11. NOSSA CAIXA12. BANRISUL13. BNB14. LLOYDS TSB BANK15. SANTANDER NOROESTE16. APLICAP (LIQ EXT)17. ITAU HOLDING FIN18. SANTANDER (BOZANO)19. MULTIPLIC20. BANERJ EX JUD)21. CITIBANK, N.A.22. BBM23. BANORTE24. SANTANDER BANESPA25. ABN - AMRO BANK26. BANKBOSTON, N.A.27. IBM28. ITAMARATI29. UBS PACTUAL30. BMB
34.VOTORANTIM 0.8 bn
1. BANCO DO BRASIL2. CAIXA3. BRADESCO4. ITAÚ5. UNIBANCO6. BANESPA7. REAL8. SAFRA9. HSBC BANK BRASIL10. NOSSA CAIXA11. SANTANDER BANESPA12. SANTANDER BRASIL13. ABN - AMRO BANK14. SANTANDER NOROESTE15. SANTANDER (BOZANO)16. BNB
17.VOTORANTIM 4.8 bn18. ITAU HOLDING FIN19. BICBANCO20. BANKBOSTON, N.A.21. BARCLAYS22. JP MORGAN (CHASE)23. ALFA24. BBM25. LLOYDS TSB BANK26. BESC27. RURAL28. UBS PACTUAL29. BMB30. ICATU
1. BANCO DO BRASIL2. BRADESCO3. CAIXA4. ITAU HOLDING FIN5. UNIBANCO6. SANTANDER BRASIL7. ABN - AMRO BANK8. BANESPA9. NOSSA CAIXA10. CITIBANK11. SAFRA12. HSBC BANK BRASIL
13. VOTORANTIM 19bn14. BANRISUL15. BNB16. SANTANDER (BOZANO)17. JP MORGAN (CHASE)18. BANKBOSTON, N.A.19. LLOYDS TSB BANK20. SANTOS (LIQ)21. BNP PARIBAS22. RURAL23. ALFA24. BASA25. UBS PACTUAL26. BMB27. WESTLB28. FIBRA29. ABC BRASIL30. VOLKSWAGEN
1. BANCO DO BRASIL2. BRADESCO3. ITAU HOLDING FIN4. SANTANDER + ABN5. CAIXA6. UNIBANCO7. HSBC BANK BRASIL
8.VOTORANTIM 64bn9. SAFRA10. NOSSA CAIXA11. CITIBANK12. UBS PACTUAL13. BANRISUL14. BBM15. BNP PARIBAS 16. DEUTSCHE BANK17. BNB18. FIBRA19. BICBANCO20. JP MORGAN21. BMB22. BANESTES23. PANAMERICANO24. VOLKSWAGEN25. BMG26. DAYCOVAL27. ING28. BASA29. GMAC30. BANCO IBI
1. ITAÚ + UNIBANCO2. BANCO DO BRASIL + NC3. BRADESCO4. SANTANDER + ABN5. CAIXA6. HSBC BANK BRASIL
7.VOTORANTIM 82 bn8. SAFRA9. CITIBANK10. BANRISUL11. BNP PARIBAS12. UBS PACTUAL13. FIBRA14. BNB15. ALFA16. BBM17. DEUTSCHE BANK18. JP MORGAN19. BICBANCO20. VOLKSWAGEN21. BANESTES22. PANAMERICANO23. SICREDI24. BMB25. DAYCOVAL26. BMG27. GMAC28. BASA29. ABC BRASIL30. BESC
19981998 20022002 20072007 Today 1Today 1
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+
The transaction complementsBanco do Brasil’s growth strategy
R$ billion Banco do Brasil 1 Banco Votorantim BB + Votorantim (50%) Growth
Total Assets 512.4 81.9 553.3 8%
Loan Portfolio 213.7 38.2 232.8 9%
Individuals 51.5 21.7 62.6 21%
Corporations 88.1 16.5 96.4 9%
Total Deposits 264.0 23.4 275.7 4%
Net Income (nine months) 6.5 0.8 6.8 6%
BIS Ratio 2 13.5% 13.6% 12.5% 100 bps
Figures relative to September 30th, 2008.
1 Considers BB + Nossa Caixa + BESC + Bescri.
2 BIS Ratio estimated for dec/08 considering change in the impacts of tax credits and the acquisition of Nossa Caixa.
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Section 3
Transaction Rationale
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Strategic reasons behind the partnership
� Grow faster under an intense consolidation process of the Brazilian Banking Sector
� Leverage asset generation of low cost, stable and secure funding sources
� Consolidate and grow in the vehicle financing market
� Develop and explore off-branch distribution channels
� Strength positioning in capital markets, including retail segment
� High quality asset generation
� Diversified product portfolio for the corporate market
� Expertise and size in vehicle financing, with more than 3 million serviced clients
� BV Financeira: 4th largest in vehicle financing
� Distribution through sales representatives with more than 29 thousand points of sale
� Votorantim Corretora (Top 18 at BM&F and Top 35 at Bovespa), with strong potential of leverage on BB client base
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InstituiçãoCrédito PF
(R$ bi)% Crédito
TotalVeículos 1
(R$ bi)% Crédito
PF
51.5 24.1% 5.6 10.9%
21.7 56.8% 16.8 77.6%
73.2 29.1% 22.4 30.6%
95.2 39.9% 47.1 50.9%
63.7 39.7% 31.2 49.0%
57.3 43.9% 23.7 41.4%
Strategic reasons behind the partnership
Consumer Finance Portfolio Breakdown of Major Banks
Source: Quarterly company information, Central Bank
Banco do Brasil is the only retail bank that does no t have a consumer finance arm
Rationale of BV Financeira to Banco do Brasil
Consumer Finance Arm
Controller Retail Funding
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Funding Generation + Assets
The strategic partnership will foster BB’s vehicle f inancing growth off-branches, what today represents R$ 1.9 billion, 34% of vehicle loan portfolio
1 Considers CDC Auto and Leasing
+
+
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Macroeconomic Environment
Banco do Brasil is the only retail bank that does no t have a brokerage house
The combination of brokerage services with the larg e individuals and institutional
investors base of Banco do Brasil will create severa l opportunities for the partnership
� Consistent growth of the average daily trading volume negotiated at Bovespa in the last years
� Increasing number of individuals in the stock exchange
� Increasing participation of foreign investors searching for higher return
Brokerage House
Potential value creation through Banco do Brasil client base
Potential value creation through Banco do Brasil client base
1111
Votorantim CTVM counting with efficient operational structure to leverage its business through
Banco do Brasil strong franchise
Votorantim CTVM counting with efficient operational structure to leverage its business through
Banco do Brasil strong franchise2222
Benefits for Banco do Brasil
Strategic reasons behind the partnership
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4%
12%
1 2
Banco do Brasil and Banco Votorantim Combination
Source: Central Bank; Austin Asis; banks financial statements; press
Note: Considering the merger of Itaú + Unibanco (pro-forma), sep/08 data for vehicle financing, jun/08 data for payroll deductible loans and dec/07 data for Corporate/Large loans
Vehicle Financing Payroll LoansCorporate and Large
Corporate Credit
44ththplace in rankingplace in rankingplace in rankingplace in ranking
(16%)(16%)(16%)(16%)11stst place in rankingplace in rankingplace in rankingplace in ranking
(22%)(22%)(22%)(22%)22ndnd place in rankingplace in rankingplace in rankingplace in ranking
(21%)(21%)(21%)(21%)
Market Share (%) Market Share (%) Market Share (%)
14%
7%
1 2
19%
3%
1 2
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Section 4
Benefits of the Transaction
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BB-BV Partnership Fit into Nossa Caixa acquisition
Credit and Funding Fit
Diversified Individuals Product Portfolio
Huge Client Base (Individuals and Corporate)
Low Cost Funding
National Presence
Diversified Individuals Product Portfolio
Huge Client Base (Individuals and Corporate)
Low Cost Funding
National Presence
Low Cost Funding
Low Leverage
Resources Availability
State of SP Payroll
Low Cost Funding
Low Leverage
Resources Availability
State of SP Payroll
High Quality Asset Generation
Diversified Corporate Product Portfolio
Outsourced Distribution
Brokerage House
High Quality Asset Generation
Diversified Corporate Product Portfolio
Outsourced Distribution
Brokerage House
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Operational and strategic fit between both companies will also benefit Nossa Caixa recent acquisition
Individuals Loans / Low cost deposits (x)
♦ 56% of Banco do Brasil deposits and 89% of Nossa Caixa deposits are considered low cost funding
♦ Low cost funding: Demand deposits, savings deposits and judicial deposits
Fit between operations will foster profitability
Note: Figures relative to September 30th, 2008.
1 Do not considers payroll deductible loans
Consumer Credit 1 / Individual Loans
1 2 3
0.33x0.33x0.33x0.33x 0.28x0.28x0.28x0.28x
150.5x150.5x150.5x150.5x
1 2 3
0.89x0.89x0.89x0.89x
0.66x0.66x0.66x0.66x
0.48x0.48x0.48x0.48x
22
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Nov-06 May-07 Nov-07 May-08 Nov-08
Evolution of vehicle financing in the last 12 month s
Final Balance (R$ bn)
Although there was a small spike in delinquency rat es, recent evolution of vehicle financing demonstrates spread increases and average maturity reductions
Spread (p.p.)
Average Maturity (days) Delinquency (%)
1 1
1
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%Nov-06 May-07 Nov-07 May-08 Nov-08
Market
1
1 Estimated data for Spt/08, Oct/08 and Nov/08 1 Estimated data for Spt/08, Oct/08 and Nov/08
1 Estimated data for Spt/08, Oct/08 and Nov/081 Estimated data for Spt/08, Oct/08 and Nov/08
16.5
18.6
16.4 16.418.4
18.718.4
22.2
18.8
16.317.2
18.8
14
17
20
23
Dec-08Jan-07
Feb-08Mar-0
8Apr/0
8May/08
Jun-08Jul-08
Aug/08Sep/08
Oct/08Nov-08
112 114 117
120 123
126 129
133 135 138 138 137
Dec-08Jan-07
Feb-08Mar-0
8Apr/0
8May/08
Jun-08Jul-08
Aug/08Sep/08
Oct/08Nov-08
590
594
592
595
583
573
586587
591592
593594
565
570
575
580
585
590
595
600
Dec-08Jan-07
Feb-08Mar-0
8Apr/0
8Mai/08
Jun-08Jul-08
Agug08Sep/08
Oct/08Nov-08
1 Estimated data for Spt/08, Oct/08 and Nov/08
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Banco do Brasil and Banco Votorantim have conditions to make the transaction accretive
1 Last twelve months net income ended on September 30, 2008
2 Opportunity cost based on current Selic interest rate (13.75%) over the transaction value (R$ 3,600 million) and excluding taxes. Considering cash payment. Value of R$3,600 million = R$3,000 million (stake acquisition) + 50% x R$1,200 million (capital increase)
3 Considering Banco do Brasil stake only
In R$ millionsexcept otherwisementioned
Immediate value creation of 1.2% in Earnings per Share, without considering potential synergies
Net Income LTM08 1
Opportunity Costof Cash in theTransaction
2(495)
# Shares (million)
Earnings per Share (R$)
Banco doBrasil
7,075
2,565
2.76
3
Banco Votorantim
578
Banco doBrasil + Banco
Votorantim
7,158
2,565
2.79
LTM
3Q
2008
24
A stronger and more competitive Banco do Brasil
+
� Improve capacity of assets origination in the compe titive consumer finance industry;
� Access to well developed alternative distribution c hannels - auto dealers, partners and BV Financeira stores;
� Successful sales promotion model with nationwide pr esence in the vehicle financing industry;
� Strength positioning of BB in capital markets;
� Higher diversification in the corporate product por tfolio
25
Section 5
Indicative Timetable
26
Next steps – indicative timetable
Material Fact informing the
acquisition of a stake at Banco
Votorantim
D
Signing of theSales andPurchase
Agreement and Underwriting Agreement
D+15
Filling ofregulatory
documentationwith Central Bank
D1
Transactionapproval by theCentral Bank
Apr-09
Transaction closingand financialsettlement
Assuming shortest possible timeframe
27
Transaction advisors
Due Diligence
Legal Advisor
Financial Advisor
Fairness Opinion
Due Diligence
Financial Advisor
FRANFRANFRANFRANÇÇÇÇA E NUNES PEREIRAA E NUNES PEREIRAA E NUNES PEREIRAA E NUNES PEREIRAADVOGADOSADVOGADOSADVOGADOSADVOGADOS
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Investor Relations
SBS Qd.01 – Ed.Sede III, 5º andarCEP - 70.073-901
Brasília – DF Phone: (61) 3310.3990
Fax: (61) 3310-3735
For further details, please access www.bb.com.br/ri