Exhibit 99.1

Report of Independent Registered Public Accounting Firm

To the shareholders

Unibanco- União de Bancos Brasileiros S.A.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of cash flows and of value added and the related unconsolidated statement of changes in stockholders’ equity present fairly, in all material respects, the financial position of Unibanco- União de Bancos Brasileiros S.A. and its subsidiaries at December 31, 2008 and 2007, and the results of their operations and their changes in financial position for the years then ended in conformity with accounting practices adopted in Brazil.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and approved Brazilian auditing standards.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

Accounting practices adopted in Brazil vary in certain significant respects from accounting principles generally accepted in the United States of America.  Information relating to the nature and effect of such differences is presented in Note 27 to the consolidated financial statements.

PricewaterhouseCoopers

Auditores Independentes

São Paulo, Brazil

June 29, 2010

1

 
 

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

BALANCE SHEETS AT DECEMBER 31,

Amounts expressed in thousands of Reais

	UNIBANCO						UNIBANCO CONSOLIDATED
ASSETS	2008			2007			2008			2007
CURRENT ASSETS		107,147,397			93,647,416			132,173,933			109,986,335
CASH AND DUE FROM BANKS		1,885,372			2,511,237			3,869,074			4,430,425
SHORT-TERM INTERBANK INVESTMENTS (Note 5)		42,665,633			41,192,331			40,155,772			36,437,215
Securities purchased under resale agreements		31,444,750			31,067,884			31,447,187			31,067,884
Interbank deposits		11,205,943			10,078,720			8,693,645			5,323,604
Foreign currency investments		14,940			45,727			14,940			45,727
MARKETABLE SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (Note 6)		19,660,279			11,137,543			29,356,421			15,732,768
Own portfolio		8,461,500			6,411,792			18,048,796			11,053,430
Subject to repurchase commitments		201,907			1,490,834			201,907			1,493,898
Pledged with Brazilian Central Bank		3,482,118			1,585,294			3,485,637			1,585,294
Pledged under guarantees rendered		1,306,696			482,512			1,375,705			459,402
Derivative financial instruments (Note 6(h))		6,208,058			1,167,111			6,244,376			1,140,744
INTERBANK ACCOUNTS		1,940,828			6,616,964			2,206,390			6,797,072
Payments and receipts pending settlement		63,636			57,807			65,042			59,482
Compulsory deposits:
- Brazilian Central Bank		1,841,327			6,518,743			2,094,744			6,683,141
- National Housing System - SFH		1,738			1,524			1,738			1,524
Correspondent banks		34,127			38,890			44,866			52,925
INTERDEPARTMENTAL ACCOUNTS		34,545			31,609			41,011			34,390
Third-party funds in transit		182			241			183			241
Internal transfers of funds		34,363			31,368			40,828			34,149
LENDING OPERATIONS		26,390,537			22,956,330			31,629,331			29,640,839
Lending operations: (Note 7(a))
- Public sector		426,251			181,211			426,251			181,211
- Private sector		28,365,551			23,690,584			35,570,840			31,592,419
Allowance for losses on lending (Note 7(f))		(2,401,265	)		(915,465	)		(4,367,760	)		(2,132,791	)
LEASING OPERATIONS		321,741			409,415			3,876,672			2,509,670
Leasing operations: (Note 7(a))
- Private sector		327,437			412,135			3,986,422			2,587,992
Allowance for losses on leasing (Note 7(f))		(5,696	)		(2,720	)		(109,750	)		(78,322	)
OTHER CREDITS		14,003,315			8,393,845			20,696,056			13,602,835
Foreign exchange portfolio (Note 8(a))		8,228,958			4,022,023			8,228,958			4,022,023
Income receivable		2,046,170			1,152,087			552,045			426,008
Negotiation and intermediation of securities		643,104			578,738			728,101			822,150
Deferred tax (Note 21(a))		867,939			776,588			1,538,503			1,350,816
Receivables from credit card operations		-			-			5,369,252			3,472,335
Insurance premium		-			-			1,500,749			1,246,914
Prepaid taxes		549,759			316,718			1,108,625			1,241,513
Sundry (Note 9)		1,700,249			1,588,295			1,881,893			1,135,246
Allowance for losses on other credits (Note 7(f))		(32,864	)		(40,604	)		(212,070	)		(114,170	)
OTHER ASSETS		245,147			398,142			343,206			801,121
Other assets		124,530			147,420			244,143			261,590
Allowance for losses on other assets		(42,732	)		(31,508	)		(126,064	)		(68,121	)
Prepaid expenses (Note 10)		163,349			282,230			225,127			607,652

 

2

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

BALANCE SHEETS AT DECEMBER 31,

Amounts expressed in thousands of Reais

	UNIBANCO						UNIBANCO CONSOLIDATED
ASSETS	2008			2007			2008			2007
LONG-TERM ASSETS		56,585,852			48,602,195			46,889,653			37,287,013
INTERBANK INVESTMENTS (Note 5)		687,595			1,318,179			651,859			1,235,037
Interbank deposits		687,595			1,318,179			651,859			1,235,037
MARKETABLE SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (Note 6)		31,262,460			27,942,090			11,747,334			10,240,894
Own portfolio		10,471,541			6,898,591			7,010,289			4,285,470
Subject to repurchase commitments		17,292,412			16,663,403			2,029,329			2,271,510
Pledged with Brazilian Central Bank		715,688			1,558,771			715,688			1,558,771
Pledged under guarantees rendered		1,506,665			1,888,109			691,809			1,029,392
Derivative financial instruments (Note 6(h))		1,276,154			933,216			1,300,219			1,095,751
INTERBANK ACCOUNTS		59,431			56,060			59,431			56,060
Compulsory deposits:
- National Housing System – SFH		59,431			56,060			59,431			56,060
LENDING OPERATIONS		19,164,253			15,350,904			19,603,192			15,933,960
Lending operations: (Note 7(a))
- Public sector		414,533			631,328			414,533			631,328
- Private sector		19,905,319			15,210,824			20,397,256			15,842,773
Allowance for losses on lending (Note 7(f))		(1,155,599	)		(491,248	)		(1,208,597	)		(540,141	)
LEASING OPERATIONS		280,748			541,837			5,489,108			3,814,552
Leasing operations: (Note 7(a))
- Private sector		285,718			545,436			5,646,529			3,935,958
Allowance for losses on leasing (Note 7(f))		(4,970	)		(3,599	)		(157,421	)		(121,406	)
OTHER CREDITS		4,938,863			2,769,398			8,214,071			5,185,196
Receivables on guarantees honored		667			33,590			667			33,590
Foreign exchange portfolio (Note 8(a))		39,805			494,013			39,805			494,013
Income receivable		36,426			27,105			125,224			82,841
Deferred tax (Note 21(a))		3,566,312			1,081,546			5,370,313			2,073,321
Prepaid taxes		46,490			20,428			220,744			157,512
Sundry (Note 9)		1,251,338			1,115,577			2,461,520			2,350,764
Allowance for losses on other credits (Note 7(f))		(2,175	)		(2,861	)		(4,202	)		(6,845	)
OTHER ASSETS		192,502			623,727			1,124,658			821,314
Prepaid expenses (Note 10)		192,502			623,727			1,124,658			821,314
PERMANENT ASSETS		21,478,847			15,252,863			4,117,464			2,323,599
INVESTMENTS		20,121,102			14,326,751			1,907,088			734,533
Investments in associated companies (Note 12(a))		20,097,540			14,302,907			1,239,624			576,198
-Local		15,744,827			11,231,812			56,119			318,629
-Foreign		3,226,137			2,997,164			-			-
Goodwill on acquisitions of subsidiary companies (Note 12(b))		1,126,576			73,931			1,183,505			257,569
Other investments		53,866			52,443			730,520			216,658
Allowance for losses		(30,304	)		(28,599	)		(63,056	)		(58,323	)
FIXED ASSETS (Note 13)		489,953			382,030			992,830			843,078
Land and buildings in use		203,078			183,313			616,095			608,297
Other fixed assets		1,326,211			1,004,096			2,070,058			1,591,577
Accumulated depreciation		(1,039,336	)		(805,379	)		(1,693,323	)		(1,356,796	)
INTANGIBLES (Note 13)		315,353			-			593,487			-
Intangible assets		428,666			-			706,856			-
Accumulated amortization		(113,313	)		-			(113,369	)		-
DEFERRED CHARGES (Note 13)		552,439			544,082			624,059			745,988
Organization and expansion costs		956,742			1,072,765			1,162,965			1,479,096
Accumulated amortization		(404,303	)		(528,683	)		(538,906	)		(733,108	)
TOTAL		185,212,096			157,502,474			183,181,050			149,596,947

 

3

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

BALANCE SHEETS AT DECEMBER 31,

Amounts expressed in thousands of Reais

	UNIBANCO				UNIBANCO CONSOLIDATED
LIABILITIES	2008		2007		2008		2007
CURRENT LIABILITIES		94,278,838		84,026,697		102,291,323		90,652,620
DEPOSITS (Note 14(b))		31,811,612		38,213,709		29,502,878		32,497,896
Demand deposits		3,831,763		10,268,332		4,020,660		10,148,091
Savings deposits		6,674,713		10,060,219		7,399,975		10,505,892
Interbank deposits		4,909,083		7,354,135		1,660,592		1,149,031
Time deposits		16,322,979		10,400,433		16,348,577		10,564,292
Other deposits		73,074		130,590		73,074		130,590
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS (Note 14(c))		33,563,702		24,910,812		23,823,346		18,920,895
Own portfolio		7,326,483		9,759,209		7,172,202		9,641,616
Third parties portfolio		26,237,219		15,151,603		16,651,144		9,279,279
RESOURCES FROM SECURITIES ISSUED (Note 14)		5,975,823		2,957,125		5,956,308		2,997,851
Real estate notes, mortgage notes, credits and similar (Note 14(d))		4,467,398		1,469,335		4,467,398		1,524,472
Debentures (Note 14(e))		56,611		409,836		60,082		409,836
Securities abroad (Note 14(f))		1,451,814		1,077,954		1,428,828		1,063,543
INTERBANK ACCOUNTS		140,408		166,057		138,753		136,563
Receipts and payments pending settlement		50,101		48,701		60,798		54,447
Correspondent banks		90,307		117,356		77,955		82,116
INTERDEPARTMENTAL ACCOUNTS		696,778		626,354		697,161		627,606
Third-party funds in transit		696,747		626,342		696,747		626,414
Internal transfers of funds		31		12		414		1,192
BORROWINGS (Note 14(g))		4,828,840		5,957,582		5,022,023		6,199,789
Borrowings in Brazil - governmental agencies		42		91		42		91
Borrowings in Brazil - other institutions		-		-		67,066		110,285
Foreign borrowings		4,828,798		5,957,491		4,954,915		6,089,413
ONLENDING IN BRAZIL - GOVERNMENTAL AGENCIES (Note 14(h))		3,077,409		2,559,622		3,334,299		2,817,441
BNDES  (National Economic Development Bank)		1,389,230		1,400,027		1,389,230		1,400,027
FINAME (National Industrial Financing Authority)		1,580,894		1,114,930		1,837,784		1,372,749
Other		107,285		44,665		107,285		44,665
FOREIGN ONLENDINGS (Note 14(h))		1,761		2,286		1,761		2,286
Foreign onlendings		1,761		2,286		1,761		2,286
DERIVATIVE FINANCIAL INSTRUMENTS (Note 6(h))		5,216,366		3,136,180		5,216,366		3,115,439
Derivative financial instruments		5,216,366		3,136,180		5,216,366		3,115,439
OTHER LIABILITIES		8,966,139		5,496,970		28,598,428		23,336,854
Collection of taxes and social contributions		54,707		54,085		108,550		104,513
Foreign exchange portfolio (Note 8(a))		6,412,824		2,519,480		6,412,824		2,519,480
Social and statutory		472,499		990,946		539,068		1,598,654
Taxes and social security		176,541		129,025		1,184,808		1,192,713
Negotiation and intermediation of securities		330,441		322,678		483,419		715,093
Accounts payable for purchase of assets		60,372		-		113,501		-
Technical provisions for insurance, retirement and capitalization plans (Note 16(a))		-		-		11,971,476		10,414,381
Subordinated debt (Note 14(i))		369,929		14,931		369,875		14,906
Payable to merchants - credit card		-		-		4,947,029		4,346,399
Sundry (Note 16(b))		1,088,826		1,465,825		2,467,878		2,430,715

 

4

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

BALANCE SHEETS AT DECEMBER 31,

Amounts expressed in thousands of Reais

	UNIBANCO						UNIBANCO CONSOLIDATED
LIABILITIES	2008			2007			2008			2007
LONG-TERM LIABILITIES		80,575,072			61,610,492			69,286,213			45,116,483
DEPOSITS (Note 14(b))		42,056,465			28,861,195			27,170,659			13,144,648
Interbank deposits		14,818,329			13,619,392			129,845			-
Time deposits		27,238,136			15,241,803			27,040,814			13,144,648
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS (Note 14(c))		10,855,515			8,383,240			10,522,497			8,159,279
Own portfolio		10,855,515			8,383,240			10,522,497			8,159,279
RESOURCES FROM SECURITIES ISSUED (Note 14)		2,252,188			6,050,889			2,577,596			2,654,281
Real estate notes, mortgage notes, credits and similar (Note 14(d))		841,118			208			841,118			208
Debentures (Note 14(e))		1,079,027			2,485,139			1,436,983			2,335,923
Securities abroad (Note 14(f))		332,043			3,565,542			299,495			318,150
BORROWINGS (Note 14(g))		2,785,474			1,523,223			2,791,223			1,519,059
Borrowings in Brazil - governmental agencies		110			237			110			237
Borrowings in Brazil - other institutions		-			-			7,871			-
Foreign borrowings		2,785,364			1,522,986			2,783,242			1,518,822
ONLENDING IN BRAZIL - GOVERNMENTAL AGENCIES (Note 14(h))		7,041,651			5,372,786			7,351,509			5,792,699
BNDES  (National Economic Development Bank)		3,306,863			2,674,095			3,306,863			2,674,095
FINAME (National Industrial Financing Authority)		3,519,661			2,477,170			3,829,519			2,897,083
Other		215,127			221,521			215,127			221,521
FOREIGN ONLENDINGS (Note 14(h))		3,491			5,297			3,491			5,297
Foreign onlendings		3,491			5,297			3,491			5,297
DERIVATIVE FINANCIAL INSTRUMENTS (Note 6(h))		1,803,003			805,025			1,812,040			805,552
Derivative financial instruments		1,803,003			805,025			1,812,040			805,552
OTHER LIABILITIES		13,777,285			10,608,837			17,057,198			13,035,668
Foreign exchange portfolio (Note 8(a))		38,465			496,258			38,465			496,258
Allowance for tax contingencies (Note 15)		2,205,253			1,784,630			3,508,719			2,763,805
Taxes and social security		31,909			39,255			634,149			318,726
Negotiation and intermediation of securities		44,325			111,084			189,563			111,084
Accounts payable for purchase of assets		113,394			-			113,394			-
Technical provisions for insurance, retirement and
capitalization plans (Note 16(a))		-			-			651,732			641,112
Subordinated debt (Note 14(i))		7,834,875			5,749,737			7,821,570			5,742,046
Sundry (Note 16(b))		3,509,064			2,427,873			4,099,606			2,962,637
DEFERRED INCOME		40,984			27,981			84,766			56,888
Deferred income		40,984			27,981			84,766			56,888
MINORITY INTEREST (Note 12)		-			-			1,201,546			1,933,652
STOCKHOLDERS' EQUITY (Note 18)		10,317,202			11,837,304			10,317,202			11,837,304
Capital:		11,000,000			8,000,000			11,000,000			8,000,000
- Local residents		11,000,000			5,605,827			11,000,000			5,605,827
- Foreign residents		-			2,394,173			-			2,394,173
Capital reserves		88,087			160,910			88,087			160,910
Revaluation reserve of subsidiaries		2,493			4,884			2,493			4,884
Revenue reserves		-			3,873,989			-			3,873,989
Carrying value adjustment		(365,958	)		(65,786	)		(365,958	)		(65,786	)
Retained losses		(407,420	)		-			(407,420	)		-
Treasury stock		-			(136,693	)		-			(136,693	)
STOCKHOLDERS' EQUITY PLUS MINORITY INTEREST		-			-			11,518,748			13,770,956
TOTAL		185,212,096			157,502,474			183,181,050			149,596,947

The accompanying notes are an integral part of these financial statements.

 

5

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31,

Amounts expressed in thousands of Reais, otherwise indicated

	UNIBANCO						UNIBANCO CONSOLIDATED
	2008			2007			2008			2007
REVENUE FROM FINANCIAL INTERMEDIATION		22,062,518			13,597,051			26,268,922			17,252,001
Lending operations		10,406,629			6,064,743			14,974,894			10,163,073
Leasing operations		111,131			27,569			1,298,982			599,459
Marketable securities		10,154,591			6,990,740			7,797,771			4,848,252
Financial results from insurance, pension plans and annuity products		-			-			1,028,332			1,228,883
Derivative financial instruments		(85,996	)		68,100			(316,746	)		(57,967	)
Foreign exchange transactions (Note 8(b))		967,370			20,332			974,188			41,436
Compulsory deposits		508,793			425,567			511,501			428,865
EXPENSES ON FINANCIAL INTERMEDIATION		(19,203,968	)		(9,293,596	)		(18,696,127	)		(8,898,290	)
Deposits and securities sold		(16,100,026	)		(7,745,388	)		(12,977,485	)		(5,126,596	)
Price-level restatement and interest on technical provision for insurance, pension plans and annuity products		-			-			(753,662	)		(891,823	)
Borrowings and onlendings		(2,082,889	)		(642,304	)		(2,189,719	)		(725,180	)
Provision for credit losses (Note 7(f))		(1,021,053	)		(905,904	)		(2,775,261	)		(2,154,691	)
GROSS PROFIT FROM FINANCIAL INTERMEDIATION		2,858,550			4,303,455			7,572,795			8,353,711
OTHER OPERATING INCOME (EXPENSES)		(1,004,431	)		(1,220,605	)		(4,454,879	)		(4,257,059	)
Total of services fees (Note 19)		1,923,591			2,081,508			3,772,001			3,639,738
.Banking fees		1,784,878			1,905,240			3,538,764			3,380,777
.Services fees		138,713			176,268			233,237			258,961
Insurance, annuity products and retirement plans premiums		-			-			6,332,487			5,592,430
Changes in technical provision for insurance, annuity products and retirement plans		-			-			(2,911,412	)		(2,693,204	)
Insurance claims		-			-			(1,419,142	)		(1,250,094	)
Private retirement plans benefit expenses		-			-			(18,863	)		(846	)
Selling, other insurance and private retirement plans expenses		-			-			(1,096,954	)		(902,983	)
Credit card selling expenses		-			-			(349,411	)		(263,307	)
Salaries, benefits, training and social security		(2,080,764	)		(1,789,482	)		(2,600,626	)		(2,281,607	)
Other administrative expenses		(1,837,108	)		(1,757,524	)		(3,643,871	)		(3,438,485	)
Financial transaction and other taxes		(155,447	)		(592,214	)		(1,073,041	)		(1,207,909	)
Equity in the results of associated companies (Note 12(a))		2,183,234			1,724,223			12,680			101,952
Other operating income (Note 20(a))		203,349			35,138			439,375			100,535
Other operating expenses (Note 20(b))		(1,241,286	)		(922,254	)		(1,898,102	)		(1,653,279	)
OPERATING INCOME		1,854,119			3,082,850			3,117,916			4,096,652
NON-OPERATING INCOME (EXPENSES)		(17,023	)		(20,719	)		15,057			(10,170	)
INCOME BEFORE TAXES AND PROFIT SHARING		1,837,096			3,062,131			3,132,973			4,086,482
INCOME TAX AND SOCIAL CONTRIBUTION (Note 21(b))		1,392,317			899			543,868			(753,999	)
Provision for income tax		44,158			(118,488	)		(1,088,614	)		(774,806	)
Provision for social contribution		(5,510	)		(15,767	)		(315,485	)		(253,636	)
Deferred tax asset change		1,353,669			135,154			1,947,967			274,443
PROFIT SHARING		(553,948	)		(463,475	)		(661,098	)		(560,220	)
Management		(60,666	)		(37,558	)		(60,666	)		(37,880	)
Employees		(493,282	)		(425,917	)		(600,432	)		(522,340	)
INCOME BEFORE NON-RECURRING EVENTS AND MINORITY INTEREST		2,675,465			2,599,555			3,015,743			2,772,263
INCOME (EXPENSE) FROM NON-RECURRING EVENTS (NOTE 26)		(2,641,905	)		848,270			(2,641,905	)		848,270
MINORITY INTEREST		-			-			(340,278	)		(172,708	)
NET INCOME (LOSS) FOR THE YEAR		33,560			3,447,825			33,560			3,447,825
Number of outstanding shares (Note 18(a))		2,734,416,904			2,794,206,460
Net income (loss) shares: R$		0.01			1.23
Back value per share: R$		3.77			4.24

The accompanying notes are an integral part of these financial statements.

 

6

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Amounts expressed in thousands of Reais, otherwise indicated

																							Retained
								Revaluation			Revenue reserves						Carrying						earnings
			Capital		Capital			reserve of						Statutory			value			Treasury			(Accumulated
	Capital		increase		reserve			subsidiaries			Legal			reserves			adjustments			stock			deficit)			Total
At January 1, 2007		8,000,000		-		160,292			5,381			570,534			1,345,497			(117,649	)		(43,198	)		-			9,920,857
Prior year adjustments (Note 18(f))		-		-		-			-			-			-			-			-			(48,958	)		(48,958	)
Transfer of reserves		-		-		-			-			-			(48,958	)		-			-			48,958			-
Purchase of treasury stock (Note 18(e))		-		-		-			-			-			-			-			(110,616	)		-			(110,616	)
Sale of treasury stock (Note 18(e))		-		-		-			-			-			(78,813	)		-			50,046			-			(28,767	)
Revaluation reserve of subsidiary and affiliated companies		-		-		-			(497	)		-			-			-			-			-			(497	)
Restatement of exchange membership certificates		-		-		618			-			-			-			-			-			-			618
Carrying value adjustments		-		-		-			-			-			-			51,863			-			-			51,863
Conversion of UBB stock for Unibanco Holdings stock (Note 18(e))		-		-		-			-			-			-			-			(32,925	)		-			(32,925	)
Net income for the year		-		-		-			-			-			-			-			-			3,447,825			3,447,825
Constitution of reserves		-		-		-			-			172,391			1,913,338			-			-			(2,085,729	)		-
Interest on own capital proposed (Note 18(b))		-		-		-			-			-			-			-			-			(1,362,096	)		(1,362,096	)
At December 31, 2007		8,000,000		-		160,910			4,884			742,925			3,131,064			(65,786	)		(136,693	)		-			11,837,304
Capital increase (Note 18(a))		-		3,000,000		-			-			-			(3,000,000	)		-			-			-			-
Restatement of exchange membership certificates		-		-		468			-			-			-			-			-			-			468
Purchase of treasury stock (Note 18(e))		-		-		-			-			-			-			-			(242,123	)		-			(242,123	)
Sale of treasury stock (Note 18(e))		-		-		-			-			-			1,291			-			74,243			-			75,534
Revaluation reserve of subsidiary companies		-		-		-			(2,391	)		-			-			-			-			-			(2,391	)
Cancellation of treasury stock (Note 18(e))		-		-		-			-			-			(535,299	)		-			535,299			-			-
Conversion of UBB stock for Unibanco Holdings stock (Note 18(e))		-		-		-			-			-			-			-			(230,726	)		-			(230,726	)
Carrying value adjustments		-		-		-			-			-			-			(300,172	)		-			-			(300,172	)
Law 11.638/07 (Note 25(e))		-		-		88,087			-			-			-			-			-			(81,341	)		6,746
Net income for the year		-		-		-			-			-			-			-			-			2,675,465			2,675,465
Interest on own capital proposed (Note 18(b))		-		-		-			-			-			-			-			-			(860,998	)		(860,998	)
At December 31, 2008 before non-recurring events		8,000,000		3,000,000		249,465			2,493			742,925			(402,944	)		(365,958	)		-			1,733,126			12,959,107
Loss from non-recurring events (Note 26)		-		-		-			-			-			-			-			-			(2,641,905	)		(2,641,905	)
Reversal of reserves		-		-		(161,378	)		-			(742,925	)		402,944			-			-			501,359			-
At December 31, 2008		8,000,000		3,000,000		88,087			2,493			-			-			(365,958	)		-			(407,420	)		10,317,202
Dividends and interest on own capital per shares of capital (Note 18(b))
	2008		2007
On common shares:    R$		0.2961		0.4653
On preferred shares:    R$		0.3259		0.5119

The accompanying notes are an integral part of these financial statements.

 

7

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. E

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. E EMPRESAS CONTROLADAS

STATEMENTS OF VALUE ADDED FOR THE YEARS ENDED DECEMBER 31,

Amounts expressed in thousands of Reais

	Unibanco										Unibanco Consolidated
	2008					2007					2008					2007
Gross profit from financial intermediation(1)		3,955,043		156.5	%		3,920,140		79.7	%		8,669,288		176.2	%		7,970,396		101.3	%
Services rendered		1,923,591		76.1	%		2,081,508		42.3	%		3,772,001		76.7	%		3,639,738		46.3	%
Other income and other expenses		(3,350,739	)	-132.6	%		(92,866	)	-1.9	%		(7,520,339	)	-152.8	%		(3,741,889	)	-47.6	%
Total value added		2,527,895		100.0	%		5,908,782		120.1	%		4,920,950		100.0	%		7,868,245		100.0	%
Human resources		2,140,908		84.7	%		1,850,646		37.6	%		2,709,973		55.1	%		2,494,122		31.7	%
Salaries		1,714,134		67.8	%		1,538,156		31.3	%		2,147,817		43.6	%		1,954,025		24.8	%
Charges		113,380		4.5	%		35,516		0.7	%		166,617		3.4	%		192,225		2.4	%
Benefits		313,394		12.4	%		276,974		5.6	%		395,539		8.0	%		347,872		4.4	%
Government		353,427		14.0	%		610,311		12.4	%		2,177,417		44.2	%		1,926,298		24.5	%
Financial transaction and other taxes		287,952		11.4	%		544,130		11.1	%		1,205,546		24.5	%		1,159,825		14.7	%
Income tax and social contribution		(428,329	)	-16.9	%		(336,130	)	-6.8	%		420,120		8.5	%		418,768		5.3	%
INSS on salaries		493,804		19.5	%		402,311		8.2	%		551,751		11.2	%		347,705		4.4	%
Dividends and interest on own capital		860,998		34.1	%		1,362,096		27.7	%		860,998		17.5	%		1,362,096		17.3	%
Profit reinvestment		(827,438	)	-32.7	%		2,085,729		42.4	%		(827,438	)	-16.8	%		2,085,729		26.5	%
Total		2,527,895		100.0	%		5,908,782		120.1	%		4,920,950		100.0	%		7,868,245		100.0	%

(1) Considers the tax effects of  hedges of foreign investments.

The accompanying notes are an integral part of these financial statements.

 

8

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

1. Operations

The operations of Unibanco - União de Bancos Brasileiros S.A. and its direct and indirect subsidiaries and  jointly controlled  companies in Brazil and abroad include, in addition to the financial activities of the Unibanco Conglomerate, other activities carried out by subsidiaries with specific objectives principally related to insurance, credit card operations, annuity product plans and private retirement plans.

Agreement between Unibanco and Itaú

On November 3, 2008, Itaúsa - Investimentos Itaú S.A. (ITAÚSA) and Unibanco Holdings S.A. (Unibanco Holdings) entered into an agreement aiming at unifying the financial operations of Banco Itaú S.A. (ITAÚ) and Unibanco – União de Bancos Brasileiros S.A. (Unibanco) (“the Agreement”). This transaction received BACEN’s approval on February 18, 2009.

The Agreement comprised a corporate reorganization, which resulted in the migration of the current stockholders of Unibanco Holdings and Unibanco to a listed company – currently named Itaú Unibanco Holding S.A. (Itaú Unibanco) control over which is shared between Itaúsa and the Unibanco Holdings controlling stockholders through IUPAR – Itaú Unibanco Participações S.A., a non-financial holding company set up in this reorganization.

At the Extraordinary Stockholders’ Meeting held on November 28, 2008, all shares of E.Johnston Representação e Participações S.A. (E.Johnston), Unibanco Holdings and Unibanco were contributed to Banco Itaú S.A. in a transaction named under Brazilian law as “incorporação de ações” (merger of shares).

The common shares of UNIBANCO and Unibanco Holdings held by non-controlling stockholders will be replaced by common shares of Itaú Unibanco, following the same exchange ratio that was negotiated by the parties for the replacement of common shares of Unibanco Holdings’ controlling stockholders. For preferred shares, the exchange ratio was established based on the average market quotation, at BM&F Bovespa, for the last 45 trading sessions prior to November 3, 2008, of Units (stock certificates, representing one preferred share of Unibanco and one preferred share of Unibanco Holdings) and preferred shares of Itaú Holding.

2.  Presentation of Financial statements

The financial statements of Unibanco - União de Bancos Brasileiros S.A. and its foreign branch (Unibanco) are presented together with the consolidated financial statements of Unibanco and its direct and indirect subsidiaries, and its jointly controlled companies (Unibanco Consolidated), as shown in Note 12, and  have been prepared in accordance with accounting principles established by the Brazilian Corporate Law, including the amendments introduced by Law No. 11,638, of December 28, 2007 (Note 25 (e)) and by Provisional Measure No. 449, of December 3, 2008, taken into consideration for the first time in 2008, in conformity, when applicable, with instructions issued by the Central Bank of Brazil (BACEN), the National Monetary Council (CMN), the Superintendency of Private Insurance (SUSEP) and the Brazilian Securities Commission (CVM).

9

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

The consolidated financial statements has been prepared in accordance with consolidation principles determined by the Brazilian Securities Commission and the Brazilian Central Bank. Intercompany investments, balances, income and expenses, as well as unrealized intercompany gains and losses, were eliminated upon consolidation. The investments held by consolidated companies in Exclusive Investment Funds have been consolidated and Investments in these fund portfolios are classified by type of transaction and type of security. The assets, liabilities, revenues and expenses of jointly controlled companies have been included in the consolidated financial statements on a proportional basis. The financial statements of December 31, 2008 include the statements of cash flows and value added.

The financial statements of the leasing subsidiary were reclassified by means of off-book adjustments, in order to reflect its financial position and results of operations in the consolidation, in accordance with the financial method of accounting for leasing transactions.

In preparing our financial statements, estimates and assumptions were used to account for certain assets, liabilities, revenues and expenses in accordance with accounting practices adopted in Brazil. Estimates and assumptions were used to account for the allowance for credit losses, the provision for litigation, the fair value of financial instruments, in the methods of determining reserves of insurance and private retirement plan businesses and to determine the remaining useful lives of certain assets. Actual results in future periods could differ from those estimates and assumptions and judgments adopted.

In the statement of income for the year ended December 31, 2007, for the purpose of better comparability, according to Susep Circular no. 356/07 and Circular Letter Susep/Decon/GAB nº 003/08, the amount of R$858,828 has been reclassified from “Private Retirement Plans Benefit Expenses” and “Insurance Premium and Redemption” to “Changes in Technical Provision for Insurance, Annuity Products and Retirement Plans”.

Accounting practices adopted in Brazil in the preparation of these financial statements differs from generally accepted accounting practices in the United States of America (“US GAAP”). These financial statements include in Note 27 information not required by accounting practices adopted in Brazil with respect to significant differences in determining stockholders equity and net income between accounting practices adopted in Brazil (“Brazilian GAAP”) and generally accepted accounting principles in the United States of America (“US GAAP”).

3.  Summary of Significant Accounting Policies

The accounting policies adopted by Unibanco and its subsidiary companies are in accordance with the requirements of Brazilian Corporate Law and the regulations of the National Monetary Council, the Brazilian Central Bank, the Brazilian Securities Commission and the Superintendency of Private Insurance.

(a) Determination of net income

Net income is determined on the accrual basis and considers:

· income, expenses and monetary or exchange rate variations, at official rates or indexes, pro rata temporis, on current and long-term assets and liabilities;

· the effects of the provisions to adjust the assets to market or realizable values;

· the adjustments to the technical reserves for insurance, annuity products and retirement plans;

· the insurance premiums, as well as their respective acquisition costs, are recognized in earnings when the policy is issued and adjusted for the changes in the technical provision for unearned premium and the deferred acquisition costs over the related contract period;

· the commissions related to policy issuance are deferred and appropriated to earnings on a straight-line basis over a period of 12 months;

· the effects of the adjustment of investments in subsidiary and associated companies to reflect the equity method of accounting;

10

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

· the provision for federal income tax at the rate of 15% on taxable income, plus a specific surcharge of 10% on taxable income over established fiscal limits;

· the provision for social contribution calculated at the rate of 15% (9% until April of 2008, according to Law nº 11,727 of June 2008) on the adjusted income before income tax; and

· tax credits calculated on temporary differences between book value and tax bases, and on tax loss carry-forwards.

(b) Cash and cash equivalents

For purposes of the Statement of Cash Flows, this item includes, when applicable, cash and current accounts in banks, interbank deposits, securities purchased under agreements to resell and marketable securities (CDB)  that have original maturities of 90 days or less.

(c) Current and long-term assets

These assets are stated at cost plus, when applicable, the related income and monetary and exchange rate variations, and less the related unearned income and/or allowances for losses, except for marketable securities, the derivative financial instruments and financial assets subject to hedge, which are presented as stated in item (d).

The allowance for losses on credit is set up in an amount considered sufficient to cover probable future losses. Management's analysis to establish the allowance required takes into account the economic environment, accumulated experience, specific and general portfolio risks, as well as the regulations of the Brazilian Central Bank.

(d) Marketable securities and derivative financial instruments

Marketable securities

Marketable securities are classified into three categories accounted for as follows:

· Trading securities – acquired for trading purposes. They are stated at cost plus accrued interest and adjusted to their fair values. Unrealized gains and losses are recognized currently in earnings.

· Securities available for sale – acquired as part of the strategy of managing market risks. They are negotiated as a result of changes in the interest rates, in payment conditions or other factors. They are stated at cost plus accrued interest and adjusted to their fair value, with the related income recognized in the period and unrealized gains and losses recorded as a separate component of stockholders’ equity, net of applicable taxes, in “Carrying value adjustments”. The realized gains and losses and permanent losses are recognized in the income statement against the account in the stockholders’ equity.

· Securities held to maturity – marketable securities for which there is an intention and financial ability to hold them to maturity. They are carried at cost plus accrued interest recognized currently in earnings.

Derivative financial instruments (assets and liabilities)

The derivative financial instruments are classified based on Management’s intent for hedging or non-hedging purposes.

· Derivative financial instruments designed to hedge or to modify characteristics of financial assets or liabilities and (i) which are highly correlated to changes in fair value in relation to the fair value of the item being hedged, both at inception date and over the life of the contract; and (ii) are effective at reducing the risk associated with the exposure being hedged, are classified as hedges as follows:

11

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

- Fair value hedge. The financial assets and liabilities and the corresponding derivative financial instruments are accounted for at fair value and any resulting gains or losses are recognized currently in earnings; and

- Cash flow hedge. The effective hedge portion of financial assets and liabilities and the respective derivative financial instruments are accounted for at fair value and any unrealized gains and losses are recorded as a separate component of stockholders’ equity, net of applicable taxes, as “Carrying value adjustments”. The non-effective hedge portion is recognized currently in earnings.

· Transactions involving derivative financial instruments to meet customer needs or for the bank’s own purposes that do not meet hedge accounting requirements established by the Brazilian Central Bank, primarily derivatives used to manage overall exposure, are accounted for at fair value with unrealized gains and losses recognized currently in earnings.

(e)  Prepaid expenses

Composed of financial resources related to benefits or services that will be provided in the future.

(f) Permanent assets

Investments, fixed assets and deferred charges are originally stated at cost.

Investments in subsidiary and associated companies through common shares and which represent significant influence are accounted for using the equity method of accounting in the proportion of the ownership interest in the stockholders’ equity of the associated companies, as shown in Note 12. The effects in subsidiary and associated companies related to the valuation of marketable securities and derivatives, as mentioned above in item (d), are recognized by the controlling company so as to maintain the original accounting made by the subsidiary and associated companies.

Other investments consist, principally, of investments carried at cost, adjusted by an allowance for losses, when applicable.

Goodwill relating to the acquisition of subsidiaries is being amortized over periods not exceeding five years, see Note 12 (b). Upon the merger of the subsidiary company with the discontinuation or expiration of the acquired brand, the respective goodwill is amortized in full.

Fixed assets – Correspond to rights over tangible assets intended for maintenance of the company's operations or which are exercised for such purpose, including assets arising from transactions that transfer to the company their benefits, risks and control. These assets are stated at cost of acquisition or construction, less accumulated depreciation, restated up to December 31, 1995, and adjusted to market value until  December 31, 2007, when applicable, or insurance, pension plan and capitalization operations, based on appraisal reports.

Depreciation is calculated using the straight-line method, based on monetarily restated cost, at the following annual rates:

Buildings in use - 4%;

Leasehold improvements - 10%;

Installations, furniture, equipment and security, transportation and communication systems – 10% to   25%; and

Data processing, and transportation systems – 40% and 50% (2007 - 20%).

Intangible assets – Correspond to acquired rights over non-physical assets intended for maintenance of the company or which are exercised for such purpose, according to CMN Resolution N°3,642, of November 26, 2008. Composed of rights acquired to credit payrolls and partnership agreements, amortized over the agreement terms, and software and customer portfolios, amortized over terms varying from five to ten years.

12

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

Deferred charges, composed substantially of leasehold improvements and software acquisition and development, are amortized over the term of the respective lease contracts or up to five years as from the beginning of their use.

(g) Reduction in the recoverable amount of assets

A loss is recognized when there is clear evidence that assets are stated at a non-recoverable amount. As from 2008, this procedure started to be adopted annually in the fourth quarter.

(h) Current and long-term liabilities

These amounts are presented at cost and include, when applicable, accrued interest and monetary and exchange rate variations, except for derivative financial instruments and liabilities subject to hedge, which are presented as described above in item (d).

Liabilities are presented according to their maturity in current or long-term liabilities. Time deposits are presented according to their contractual maturity date despite market practice to offer immediate liquidity for these instruments.

(i) Contingent assets and liabilities and legal liabilities.

The recognition, measurement and disclosure of contingent assets and liabilities are made according to the criteria defined in Deliberation CVM nº 489 of 2005.

Contingent assets – Contingent assets are not recorded, except upon evidence guaranteeing their realization.

Contingent liabilities – Contingent liabilities are recorded, based on the opinion of legal counsel and management, whenever a loss is considered as probable for judicial and administrative claims, which would cause a probable outflow of resources for the settlement of liabilities and when the amounts involved can be reasonably estimated.

Legal liabilities – Taxes and social security – result from obligations arising under legislation, regardless of the probable outcome of litigation in progress, and are recorded at their full amount.

(j) Technical provisions for insurance, complementary pension plans and annuity products

The technical provisions are recorded in accordance with the rules of Resolution CNSP no. 162/06 and 139/05. In accordance with Resolution CNSP no. 135/05, an actuarial valuation is also performed on an annual basis and reported to the Superintendency of Private Insurance (SUSEP) with the respective actuarial report.

The provision for unearned premiums (PPNG) is recorded to cover claims to be incurred through the deferral of premium income over the related contract period, according to the regulation of the Superintendency of Private Insurance – (SUSEP). When the actuarial calculation determines a shortfall, the provision for insufficient premiums (PIP) is increased.

The provision for payment of unsettled claims (PSL) is recorded to cover claims reported until the date of the calculation base, considering commitments assumed by the insurance company.

13

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

The provision for claims incurred but not yet reported (IBNR) is recorded based on the risk of incidents incurred but not yet reported until the reporting date and the amount is determined through actuarial calculation.

The mathematical provisions related to the free benefits generation plans (VGBL and PGBL) comprise the amounts of the liabilities assumed under the form of survival insurance and are established based on the financial method determined in the contract by a legally qualified actuary. The mathematical provisions represent the present value of future benefits estimated based on actuarial methods and assumptions.

The mathematical provision for benefits to be granted represents the commitments assumed with participants, while no identification event has occurred, and the Mathematical Provision for Benefits granted corresponds to the value of commitments relating to events already occurred. Both provisions are calculated according to a methodology approved in the Actuarial Note of the plan or product.

The financial expenses credited to participants in the technical provision are recorded as “Interest and monetary correction on technical provision for insurance, pension plans and annuity products”.

4. Cash and Cash Equivalents

	Unibanco				Unibanco Consolidated
	2008		2007		2008		2007
Cash and due from banks		1,885,372		2,511,237		3,869,074		4,430,425
Interbank deposits		6,119,455		2,697,696		4,380,296		25,347,640
Securities repurchase under resale agreements		26,720,282		572,104		26,720,282		1,479,532
Marketable securities		1,221,992		-		1,276,725		65,155
Total		35,947,101		5,781,037		36,246,377		31,322,752

5. Short-Term Interbank Investments

	Unibanco
	2008																		2007
	0-30 days			31-180 days			181-360 days			Over 360 days			Total			%			Total		%
Securities purchased under resale agreements		27,184,944			1,828,511			2,431,295			-			31,444,750			72.5	%		31,067,884		73.1	%
Own position		482,211			1,798,518			2,242,392			-			4,523,121			10.4	%		15,969,789		37.6	%
- Financial treasury bills		92,838			-			-			-			92,838			0.2	%		2,881,265		6.8	%
- Treasury bills		389,130			1,720,978			2,224,548			-			4,334,656			10.0	%		10,657,971		25.1	%
- Treasury notes		243			61,592			-			-			61,835			0.1	%		2,387,817		5.6	%
- Other		-			15,948			17,844			-			33,792			0.1	%		42,736		0.1	%
Financed Position		26,702,733			29,993			188,903			-			26,921,629			62.1	%		15,098,095		35.5	%
- Financial treasury bills		6,079,355			-			-			-			6,079,355			14.0	%		12,119,480		28.5	%
- Treasury bills		7,958,652			29,972			188,903			-			8,177,527			18.9	%		2,968,589		7.0	%
- Treasury notes		11,980,337			-			-			-			11,980,337			27.6	%		10,026		0.0	%
- Other		684,389			21			-			-			684,410			1.6	%		-		0.0	%
Interbank deposits		5,794,583			3,830,206			1,581,154			687,595			11,893,538			27.4	%		11,396,899		26.8	%
Foreign currency investments		14,940			-			-			-			14,940			0.0	%		45,727		0.1	%
Total - 2008		32,994,467			5,658,717			4,012,449			687,595			43,353,228			100.0	%		42,510,510		100.0	%
% per maturity term		76.0	%		13.2	%		9.2	%		1.6	%		0.0	%
Total - 2007		29,401,905			7,289,699			4,500,727			1,318,179			42,510,510
% per maturity term		69.2	%		17.1	%		10.6	%		3.1	%

14

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco Consolidated
	2008																		2007
	0-30 days			31-180 days			181-360 days			Over 360 days			Total		%				Total		%
Securities purchased under resale agreements		27,184,944			1,829,686			2,432,557			-			31,447,187		77.1	%	-		31,067,884		82.5	%
Own position		482,211			1,799,714			2,243,654			-			4,525,579		11.1	%	-		15,969,789		42.4	%
- Financial treasury bills		92,838			-			-			-			92,838		0.2	%	-		2,881,265		7.6	%
- Treasury bills		389,130			1,720,978			2,224,548			-			4,334,656		10.6	%	-		10,657,971		28.3	%
- Treasury notes		243			61,592			-			-			61,835		0.2	%	-		2,387,817		6.4	%
- Other		-			17,144			19,106			-			36,250		0.1	%	-		42,736		0.1	%
Financed Position		26,702,733			29,972			188,903			-			26,921,608		66.0	%	-		15,098,095		40.1	%
- Financial treasury bills		6,079,355			-			-			-			6,079,355		14.9	%	-		12,119,480		32.2	%
- Treasury bills		7,958,652			29,972			188,903			-			8,177,527		20.0	%	-		2,968,589		7.9	%
- Treasury notes		11,980,337			-			-			-			11,980,337		29.4	%	-		10,026		0.0	%
- Other		684,389			-			-			-			684,389		1.7	%	-		-		0.0	%
Interbank deposits		3,980,098			3,286,871			1,426,676			651,859			9,345,504		22.9	%	-		6,558,641		17.4	%
Foreign currency investments		14,940			-			-			-			14,940		0.0	%	-		45,727		0.1	%
Total - 2008		31,179,982			5,116,557			3,859,233			651,859			40,807,631		100.0	%	-		37,672,252		100.0	%
% per maturity term		76.4	%		12.5	%		9.5	%		1.6	%
Total - 2007		28,174,843			6,553,971			1,708,401			1,235,037			37,672,252
% per maturity term		74.8	%		17.4	%		4.5	%		3.3	%

6. Marketable Securities and Derivative Financial Instruments

(a) The balances can be summarized as follows:

	Unibanco
	2008
			Restricted
									Derivative
	Own		Repurchase				Pledging of		financial
	portfolio		agreements		Central Bank		guarantees		instruments		Total
GOVERNMENT SECURITIES - DOMESTIC		6,635,020		2,230,385		4,197,806		553,271		-		13,616,482
Treasury bills		4,522,375		220,434		1,128,570		186,819		-		6,058,198
Financial treasury bills		78,039		14,941		-		274,275		-		367,255
Treasury notes		1,050,310		-		3,069,236		-		-		4,119,546
Brazilian sovereign bonds		982,104		1,995,010		-		92,177		-		3,069,291
Other		2,192		-		-		-		-		2,192
GOVERNMENT SECURITIES - ABROAD		298		-		-		743,579		-		743,877
Korea		-		-		-		743,579		-		743,579
Ecuador		286		-		-		-		-		286
Venezuela		12		-		-		-		-		12
BANK DEBT SECURITIES		11,462,538		15,263,934		-		1,348,205		-		28,074,677
Certificates of deposit		1,245,955		-		-		-		-		1,245,955
Certificates of receivable		1,138,299		-		-		-		-		1,138,299
Debentures		8,311,407		15,263,083		-		1,348,205		-		24,922,695
Eurobonds and others		406,617		851		-		-		-		407,468
Other		360,260		-		-		-		-		360,260
PGBL/VGBL FUND QUOTAS		34,284		-		-		168,306		-		202,590
MARKETABLE EQUITY SECURITIES		800,901		-		-		-		-		800,901
SUBTOTAL - SECURITIES		18,933,041		17,494,319		4,197,806		2,813,361		-		43,438,527
Trading		1,938,727		32,614		2,804,434		330,011		-		5,105,786
Available for sale		16,757,155		16,530,047		1,393,372		2,391,173		-		37,071,747
Held to maturity		237,159		931,658		-		92,177		-		1,260,994
DERIVATIVE FINANCIAL INSTRUMENTS		-		-		-		-		7,484,212		7,484,212
TOTAL OF MARKETABLE EQUITY SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (ASSETS)		18,933,041		17,494,319		4,197,806		2,813,361		7,484,212		50,922,739
TOTAL OF MARKETABLE EQUITY SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (ASSETS) - 12/31/2007		13,310,383		18,154,237		3,144,065		2,370,621		2,100,327		39,079,633

15

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco Consolidated
	2008
			Restricted
									Derivative
	Own		Repurchase				Pledging of		financial
	portfolio		agreements		Central Bank		guarantees		instruments		Total
GOVERNMENT SECURITIES - DOMESTIC		10,318,311		2,230,384		4,201,325		726,239		-		17,476,259
Treasury bills		4,598,440		220,433		1,128,571		189,298		-		6,136,742
Financial treasury bills		358,166		14,941		3,518		436,493		-		813,118
Treasury notes		4,290,288		-		3,069,236		8,271		-		7,367,795
Brazilian sovereign bonds		1,038,620		1,995,010		-		92,177		-		3,125,807
Other		32,797		-		-		-		-		32,797
GOVERNMENT SECURITIES - ABROAD		546,907		-		-		743,579		-		1,290,486
Colombia		247		-		-		-		-		247
Korea		-		-		-		743,579		-		743,579
Ecuador		286		-		-		-		-		286
Mexico		148,176		-		-		-		-		148,176
Paraguay		397,702		-		-		-		-		397,702
Turkey		484		-		-		-		-		484
Venezuela		12		-		-		-		-		12
BANK DEBT SECURITIES		5,457,683		852		-		483,050		-		5,941,585
Certificates of deposit		2,060,609		-		-		2,034		-		2,062,643
Certificates of receivable		1,156,815		-		-		-		-		1,156,815
Debentures		1,597,050		-		-		481,016		-		2,078,066
Eurobonds and others		174,964		852		-		-		-		175,816
Other		468,245		-		-		-		-		468,245
PGBL/VGBL FUND QUOTAS		7,827,893		-		-		114,646		-		7,942,539
MARKETABLE EQUITY SECURITIES		908,291		-		-		-		-		908,291
SUBTOTAL - SECURITIES		25,059,085		2,231,236		4,201,325		2,067,514		-		33,559,160
Trading		11,227,152		32,614		2,807,953		301,727		-		14,369,446
Available for sale		11,809,403		1,266,964		1,393,372		1,673,610		-		16,143,349
Held to maturity		2,022,530		931,658		-		92,177		-		3,046,365
DERIVATIVE FINANCIAL INSTRUMENTS		-		-		-		-		7,544,595		7,544,595
TOTAL OF MARKETABLE EQUITY SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (ASSETS)		25,059,085		2,231,236		4,201,325		2,067,514		7,544,595		41,103,755
TOTAL OF MARKETABLE EQUITY SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (ASSETS) - 12/31/2007		15,338,900		3,765,408		3,144,065		1,488,794		2,236,495		25,973,662

16

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(b) By maturity

	Unibanco
	2008																																	2007
				Adjustment to
				market value
							Stockholders			Market						0-30			31-90			91-180			181-360			361-720			Over-720			Market
	Cost			Results			equity			value			%			days			days			days			days			days			days			value
GOVERNMENT SECURITIES - DOMESTIC		13,617,004			51,041			(51,563	)		13,616,482			26.6	%		8,489,210			65,874			632,532			454,003			947,936			3,026,927			10,061,595
Treasury bills		6,047,217			10,781			200			6,058,198			11.9	%		5,095,926			-			630,756			94,346			237,170			-			4,687,539
Financial treasury bills		367,648			(244	)		(149	)		367,255			0.7	%		9,851			51,676			-			116,092			91,772			97,864			494,929
Treasury notes		4,087,899			40,504			(8,857	)		4,119,546			8.0	%		3,345,739			-			-			88,819			423,416			261,572			2,343,032
Brazilian sovereign bonds		3,111,751			-			(42,460	)		3,069,291			6.0	%		37,694			13,970			1,776			154,515			195,396			2,665,940			2,499,515
Other		2,489			-			(297	)		2,192			0.0	%		-			228			-			231			182			1,551			36,580
GOVERNMENT SECURITIES - ABROAD		726,779			-			17,098			743,877			1.5	%		12			10			-			743,585			12			258			2,867,506
Austria		-			-			-			-			0.0	%		-			-			-			-			-			-			827,752
Korea		726,481			-			17,098			743,579			1.5	%		-			-			-			743,579			-			-			2,039,512
Ecuador		286			-			-			286			0.0	%		-			10			-			6			12			258			233
Venezuela		12			-			-			12			0.0	%		12			-			-			-			-			-			9
BANK DEBT SECURITIES		28,170,575			18			(95,916	)		28,074,677			55.0	%		1,410,620			127,579			292,464			232,841			670,967			25,340,206			23,088,605
Certificates  of deposit		1,245,955			-			-			1,245,955			2.4	%		1,245,955			-			-			-			-			-			-
Certificates  of receivable		1,209,441			(247	)		(70,895	)		1,138,299			2.2	%		76,540			10,766			12,859			39,305			175,763			823,066			132,446
Debentures		24,936,465			265			(14,035	)		24,922,695			48.9	%		81,941			55,522			142,174			71,304			487,825			24,083,929			22,044,709
Eurobonds and others		417,772			-			(10,304	)		407,468			0.8	%		6,119			8,723			209			13,435			183			378,799			713,146
Other		360,942			-			(682	)		360,260			0.7	%		65			52,568			137,222			108,797			7,196			54,412			198,304
PGBL/VGBL FUND QUOTAS		202,650			-			(60	)		202,590			0.4	%		202,590			-			-			-			-			-			168,892
MARKETABLE EQUITY SECURITIES		915,028			60,570			(174,697	)		800,901			1.5	%		800,901			-			-			-			-			-			792,708
SUBTOTAL - SECURITIES		43,632,036			111,629			(305,138	)		43,438,527			85.0	%		10,903,333			193,463			924,996			1,430,429			1,618,915			28,367,391			36,979,306
Trading		4,994,157			111,629			-			5,105,786			10.0	%		5,008,745			-			97,041			-			-			-			6,233,613
Available for sale		37,376,885			-			(305,138	)		37,071,747			73.0	%		5,894,366			193,453			826,179			1,275,904			1,423,507			27,458,338			29,604,560
Held to maturity		1,260,994			-			-			1,260,994			2.0	%		222			10			1,776			154,525			195,408			909,053			1,141,133
DERIVATIVE FINANCIAL INSTRUMENTS		6,139,427			1,344,785			-			7,484,212			15.0	%		1,610,193			1,564,119			1,470,315			1,563,431			839,387			436,767			2,100,327
TOTAL OF MARKETABLE EQUITY SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (ASSETS)		49,771,463			1,456,414			(305,138	)		50,922,739			100.0	%		12,513,526			1,757,582			2,395,311			2,993,860			2,458,302			28,804,158			39,079,633
DERIVATIVE FINANCIAL INSTRUMENTS (LIABILITIES)		(3,365,813	)		(3,653,556	)		-			(7,019,369	)					(1,604,212	)		(1,315,450	)		(1,209,503	)		(1,087,201	)		(802,843	)		(1,000,160	)		(3,941,205	)

17

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco Consolidated
	2008																																	2007
				Adjustment to
				market value
							Stockholders			Market						0-30			31-90			91-180			181-360			361-720			Over-720			Market
	Cost			Results			equity			value			%			days			days			days			days			days			days			value
GOVERNMENT SECURITIES - DOMESTIC		17,559,981			57,348			(141,070	)		17,476,259			42.5	%		8,779,304			115,030			778,287			508,931			1,110,252			6,184,455			14,201,097
Certificate of receivable		-			-			-			-			0.0	%		-			-			-			-			-			-			93,498
Treasury bills		6,126,467			11,329			(1,054	)		6,136,742			14.9	%		5,161,410			-			630,755			98,485			237,167			8,925			5,206,335
Financial treasury bills		813,541			(285	)		(138	)		813,118			2.0	%		92,721			100,832			93,504			165,226			219,523			141,312			1,037,203
Treasury notes		7,418,305			46,612			(97,122	)		7,367,795			17.9	%		3,482,190			-			1,286			90,212			427,380			3,366,727			5,179,754
Brazilian sovereign bonds		3,168,575			(308	)		(42,460	)		3,125,807			7.6	%		42,983			13,970			52,742			154,776			195,396			2,665,940			2,647,726
Other		33,093			-			(296	)		32,797			0.1	%		-			228			-			232			30,786			1,551			36,581
GOVERNMENT SECURITIES - ABROAD		1,265,602			7,786			17,098			1,290,486			3.2	%		253,812			78,485			67,257			890,662			12			258			3,243,507
Argentina		1			(1	)		-			-			0.0	%		-			-			-			-			-			-			7,741
Austria		-			-			-			-			0.0	%		-			-			-			-			-			-			827,751
Colombia		291			(44	)		-			247			0.0	%		247			-			-			-			-			-			-
Korea		726,481			-			17,098			743,579			1.8	%		-			-			-			743,579			-			-			2,039,512
Ecuador		286			-			-			286			0.0	%		-			10			-			6			12			258			233
United States		-			-			-			-			0.0	%		-			-			-			-			-			-			850
Mexico		140,341			7,835			-			148,176			0.4	%		142,067			6,109			-			-			-			-			-
Paraguay		397,703			(1	)		-			397,702			1.0	%		111,486			72,366			66,773			147,077			-			-			367,411
Turkey		487			(3	)		-			484			0.0	%		-			-			484			-			-			-			-
Venezuela		12			-			-			12			0.0	%		12			-			-			-			-			-			9
BANK DEBT SECURITIES		6,183,006			(1,066	)		(240,355	)		5,941,585			14.4	%		2,083,875			123,929			423,631			308,012			722,850			2,279,288			4,295,219
Certificates of deposit		2,062,644			(1	)		-			2,062,643			5.0	%		1,784,960			-			129,838			56,764			342			90,739			1,042,282
Certificates of receivable		1,227,957			(247	)		(70,895	)		1,156,815			2.8	%		79,062			10,766			12,859			39,305			175,763			839,060			137,628
Debentures		2,091,796			258			(13,988	)		2,078,066			5.1	%		82,585			55,522			143,170			73,771			538,705			1,184,313			2,275,254
Eurobonds and others		331,682			(1,076	)		(154,790	)		175,816			0.4	%		32,631			1,660			542			29,375			844			110,764			629,468
Other		468,927			-			(682	)		468,245			1.1	%		104,637			55,981			137,222			108,797			7,196			54,412			210,587
PGBL/VGBL FUND QUOTAS		7,942,430			-			109			7,942,539			19.3	%		7,792,539			-			-			-			-			150,000			646,560
MARKETABLE EQUITY SECURITIES		1,130,689			52,372			(274,770	)		908,291			2.2	%		908,291			-			-			-			-			-			1,350,784
SUBTOTAL - SECURITIES		34,081,708			116,440			(638,988	)		33,559,160			81.6	%		19,817,821			317,444			1,269,175			1,707,605			1,833,114			8,614,001			23,737,167
Trading		14,253,006			116,440			-			14,369,446			35.0	%		13,664,009			80,998			362,023			216,347			42,530			3,539			10,630,358
Available for sale		16,782,337			-			(638,988	)		16,143,349			39.3	%		6,153,590			236,436			905,065			1,336,733			1,591,213			5,920,312			10,696,812
Held  to maturity		3,046,365			-			-			3,046,365			7.4	%		222			10			2,087			154,525			199,371			2,690,150			2,409,997
DERIVATIVE FINANCIAL INSTRUMENTS		6,223,384			1,321,211			-			7,544,595			18.4	%		1,617,115			1,592,551			1,471,066			1,563,644			845,590			454,629			2,236,495
TOTAL OF MARKETABLE EQUITY SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (ASSETS)		40,305,092			1,437,651			(638,988	)		41,103,755			100	%		21,434,936			1,909,995			2,740,241			3,271,249			2,678,704			9,068,630			25,973,662
DERIVATIVE FINANCIAL INSTRUMENTS
(LIABILITIES)		(3,278,357	)		(3,750,049	)		-			(7,028,406	)					(1,604,192	)		(1,315,450	)		(1,210,645	)		(1,086,079	)		(802,843	)		(1,009,197	)		(3,920,991	)

18

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(c) Trading securities

	Unibanco
	2008																												2007
			Adjustment to			Market					0-30			31-90			91-180			181-360			361-720			Over-720			Market
	Cost		market value			value		%			days			days			days			days			days			days			value
GOVERNMENT SECURITIES - DOMESTIC		4,659,425		51,041			4,710,466		92.2	%		4,613,425			-			97,041			-			-			-			3,908,084
Treasury bills		1,344,133		10,781			1,354,914		26.5	%		1,257,873			-			97,041			-			-			-			2,184,860
Financial treasury bills		10,095		(244	)		9,851		0.2	%		9,851			-			-			-			-			-			107,079
Treasury notes		3,305,197		40,504			3,345,701		65.5	%		3,345,701			-			-			-			-			-			1,616,145
GOVERNMENT SECURITIES - ABROAD		-		-			-		0.0	%		-			-			-			-			-			-			1,382,873
Austria		-		-			-		0.0	%		-			-			-			-			-			-			181,422
Korea		-		-			-		0.0	%		-			-			-			-			-			-			1,201,451
BANK DEBT SECURITIES		65,667		18			65,685		1.3	%		65,685			-			-			-			-			-			143,802
Eurobonds and others		-		-			-		0.0	%		-			-			-			-			-			-			59,903
Certificates of receivable		5,598		(247	)		5,351		0.1	%		5,351			-			-			-			-			-			-
Debentures		60,069		265			60,334		1.2	%		60,334			-			-			-			-			-			83,899
PGBL/VGBL FUND QUOTAS		192,639		-			192,639		3.8	%		192,639			-			-			-			-			-			158,652
MARKETABLE EQUITY SECURITIES		76,426		60,570			136,996		2.7	%		136,996			-			-			-			-			-			640,202
Total		4,994,157		111,629			5,105,786		100	%		5,008,745			-			97,041			-			-			-			6,233,613
% per maturity term												98.1	%		0.0	%		1.9	%		0.0	%		0.0	%		0.0	%
Total - 2007		6,251,300		(17,687	)		6,233,613		100	%		1,203,533			58,810			167,669			1,851,565			876,769			2,075,267
% per maturity term												19.3	%		0.9	%		2.7	%		29.7	%		14.1	%		33.3	%

19

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco Consolidated
	2008																												2007
			Adjustment to			Market					0-30			31-90			91-180			181-360			361-720			Over-720			Market
	Cost		market value			value		%			days			days			days			days			days			days			value
GOVERNMENT SECURITIES - DOMESTIC		5,044,780		57,348			5,102,128		35.4	%		4,878,532			2,523			164,928			10,076			42,530			3,539			5,797,767
Certificate of receivable		-		-			-		0.0	%		-			-			-			-			-			-			93,498
Treasury bills		1,413,208		11,329			1,424,537		9.9	%		1,323,357			-			97,041			4,139			-			-			2,636,840
Financial treasury bills		106,236		(285	)		105,951		0.7	%		67,734			2,523			15,946			4,283			11,926			3,539			371,884
Treasury notes		3,437,908		46,612			3,484,520		24.2	%		3,482,152			-			975			1,393			-			-			2,571,519
Brazilian sovereign bonds		56,824		(308	)		56,516		0.4	%		5,289			-			50,966			261			-			-			124,026
Other		30,604		-			30,604		0.2	%		-			-			-			-			30,604			-			-
GOVERNMENT SECURITIES - ABROAD		538,823		7,786			546,609		3.9	%		253,800			78,475			67,257			147,077			-			-			1,758,024
Argentina		1		(1	)		-		0.0	%		-			-			-			-			-			-			7,741
Austria		-		-			-		0.0	%		-			-			-			-			-			-			181,421
Colombia		291		(44	)		247		0.0	%		247			-			-			-			-			-			-
Korea		-		-			-		0.0	%		-			-			-			-			-			-			1,201,451
Mexico		140,341		7,835			148,176		1.0	%		142,067			6,109			-			-			-			-			-
Paraguay		397,703		(1	)		397,702		2.9	%		111,486			72,366			66,773			147,077			-			-			367,411
Turkey		487		(3	)		484		0.0	%		-			-			484			-			-			-			-
BANK DEBT SECURITIES		809,543		(1,066	)		808,477		5.6	%		619,445			-			129,838			59,194			-			-			1,325,063
Certificates of deposit		707,606		(1	)		707,605		4.9	%		521,003			-			129,838			56,764			-			-			848,510
Certificates of receivable		8,120		(247	)		7,873		0.1	%		7,873			-			-			-			-			-			5,077
Eurobonds and others		30,721		(1,076	)		29,645		0.2	%		29,591			-			-			54			-			-			159,198
Debentures		63,096		258			63,354		0.4	%		60,978			-			-			2,376			-			-			312,278
PGBL/VGBL FUND QUOTAS		7,770,670		-			7,770,670		54.1	%		7,770,670			-			-			-			-			-			630,222
MARKETABLE EQUITY SECURITIES		89,190		52,372			141,562		1.0	%		141,562			-			-			-			-			-			1,119,282
Total		14,253,006		116,440			14,369,446		100	%		13,664,009			80,998			362,023			216,347			42,530			3,539			10,630,358
% per maturity term												95.1	%		0.6	%		2.5	%		1.5	%		0.3	%		0.0	%
Total - 2007		10,635,836		(5,478	)		10,630,358		100	%		2,331,109			586,306			481,632			1,975,992			1,418,482			3,831,760
% per maturity term												21.9	%		5.5	%		4.5	%		18.7	%		13.4	%		36.0	%

Trading securities are classified as current assets, regardless of their maturity dates, since these securities are actively and frequently traded.

20

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(d) Securities available for sale

	Unibanco
	2008																												2007
			Adjustment to
			market value
			(in Stockholders			Market					0-30			31-90			91-180			181-360			361-720			Over-720			Market
	Cost		equity)			value		%			days			days			days			days			days			days			value
GOVERNMENT SECURITIES - DOMESTIC		7,696,883		(51,563	)		7,645,320		20.6	%		3,875,575			65,874			533,715			299,484			752,540			2,118,132			5,044,213
Treasury bills		4,703,084		200			4,703,284		12.6	%		3,838,053			-			533,715			94,346			237,170			-			2,502,679
Financial treasury bills		357,553		(149	)		357,404		1.0	%		-			51,676			-			116,092			91,772			97,864			387,850
Treasury notes		782,660		(8,857	)		773,803		2.1	%		-			-			-			88,815			423,416			261,572			726,568
Brazilian sovereign bonds		1,851,097		(42,460	)		1,808,637		4.9	%		37,522			13,970			-			-			-			1,757,145			1,390,536
Other		2,489		(297	)		2,192		0.0	%		-			228			-			231			182			1,551			36,580
GOVERNMENT SECURITIES - ABROAD		726,481		17,098			743,579		2.0	%		-			-			-			743,579			-			-			1,484,391
Austria		-		-			-		0.0	%		-			-			-			-			-			-			646,330
Korea		726,481		17,098			743,579		2.0	%		-			-			-			743,579			-			-			838,061
BANK DEBT SECURITIES		28,104,908		(95,916	)		28,008,992		75.6	%		1,344,935			127,579			292,464			232,841			670,967			25,340,206			22,913,210
Certificates  of deposit		1,245,955		-			1,245,955		3.4	%		1,245,955			-			-			-			-			-			-
Certificates  of receivable		1,203,843		(70,895	)		1,132,948		3.1	%		71,189			10,766			12,859			39,305			175,763			823,066			132,446
Debentures		24,876,396		(14,035	)		24,862,361		67.0	%		21,607			55,522			142,174			71,304			487,825			24,083,929			21,984,806
Eurobonds and others		417,772		(10,304	)		407,468		1.1	%		6,119			8,723			209			13,435			183			378,799			597,654
Other		360,942		(682	)		360,260		1.0	%		65			52,568			137,222			108,797			7,196			54,412			198,304
PGBL/VGBL FUND QUOTAS		10,011		(60	)		9,951		0.0	%		9,951			-			-			-			-			-			10,240
MARKETABLE EQUITY SECURITIES		838,602		(174,697	)		663,905		1.8	%		663,905			-			-			-			-			-			152,506
Total		37,376,885		(305,138	)		37,071,747		100	%		5,894,366			193,453			826,179			1,275,904			1,423,507			27,458,338			29,604,560
% per maturity term												15.9	%		0.5	%		2.2	%		3.4	%		3.9	%		74.1	%
Total - 2007		29,687,593		(83,033	)		29,604,560		100	%		462,036			512,640			218,146			2,342,238			656,565			25,412,935
% per maturity term												1.6	%		1.7	%		0.8	%		7.9	%		2.2	%		85.8	%

21

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco Consolidated
	2008																												2007
			Adjustment to
			market value
			(in Stockholders			Market					0-30			31-90			91-180			181-360			361-720			Over-720			Market
	Cost		equity)			value		%			days			days			days			days			days			days			value
GOVERNMENT SECURITIES - DOMESTIC		9,473,556		(141,070	)		9,332,486		57.8	%		3,900,562			112,507			611,272			344,336			868,363			3,495,446			6,029,190
Treasury bills		4,713,259		(1,054	)		4,712,205		29.2	%		3,838,053			-			533,714			94,346			237,167			8,925			2,569,495
Financial treasury bills		707,305		(138	)		707,167		4.4	%		24,987			98,309			77,558			160,943			207,597			137,773			665,319
Treasury notes		2,199,406		(97,122	)		2,102,284		13.0	%		-			-			-			88,815			423,417			1,590,052			1,367,259
Brazilian sovereign bonds		1,851,097		(42,460	)		1,808,637		11.2	%		37,522			13,970			-			-			-			1,757,145			1,390,536
Other		2,489		(296	)		2,193		0.0	%		-			228			-			232			182			1,551			36,581
GOVERNMENT SECURITIES - ABROAD		726,481		17,098			743,579		4.6	%		-			-			-			743,579			-			-			1,485,241
Austria		-		-			-		0.0	%		-			-			-			-			-			-			646,330
Korea		726,481		17,098			743,579		4.6	%		-			-			-			743,579			-			-			838,061
United States		-		-			-		0.0	%		-			-			-			-			-			-			850
BANK DEBT SECURITIES		5,369,041		(240,355	)		5,128,686		31.8	%		1,464,430			123,929			293,793			248,818			722,850			2,274,866			2,934,541
Certificates  of deposit		1,355,038		-			1,355,038		8.4	%		1,263,957			-			-			-			342			90,739			193,772
Certificates  of receivable		1,219,837		(70,895	)		1,148,942		7.1	%		71,189			10,766			12,859			39,305			175,763			839,060			132,551
Debentures		2,024,278		(13,988	)		2,010,290		12.5	%		21,607			55,522			143,170			71,395			538,705			1,179,891			1,958,955
Eurobonds and others		300,961		(154,790	)		146,171		0.9	%		3,040			1,660			542			29,321			844			110,764			438,676
Other		468,927		(682	)		468,245		2.9	%		104,637			55,981			137,222			108,797			7,196			54,412			210,587
PGBL/VGBL FUND QUOTAS		171,760		109			171,869		1.1	%		21,869			-			-			-			-			150,000			16,338
MARKETABLE EQUITY SECURITIES		1,041,499		(274,770	)		766,729		4.7	%		766,729			-			-			-			-			-			231,502
Total		16,782,337		(638,988	)		16,143,349		100	%		6,153,590			236,436			905,065			1,336,733			1,591,213			5,920,312			10,696,812
% per maturity term												38.1	%		1.5	%		5.6	%		8.3	%		9.9	%		36.6	%
Total - 2007		10,826,081		(129,969	)		10,696,812		100	%		606,206			528,234			235,926			2,389,541			856,938			6,079,967
% per maturity term												5.7	%		4.9	%		2.2	%		22.3	%		8.1	%		56.8	%

22

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(e) Securities held to maturity

	Unibanco
	2008																									2007
						0-30			31-90			91-180			181-360			361-720			Over-720			Market
	Cost		%			days			days			days			days			days			days			value		Cost
GOVERNMENT SECURITIES - DOMESTIC		1,260,696		99.9	%		210			-			1,776			154,519			195,396			908,795			1,406,078		1,109,298
Treasury notes		42		0.1	%		38			-			-			4			-			-			42		319
Brazilian sovereign bonds		1,260,654		99.8	%		172			-			1,776			154,515			195,396			908,795			1,406,036		1,108,979
GOVERNMENT SECURITIES - ABROAD		298		0.1	%		12			10			-			6			12			258			333		242
Ecuador		286		0.1	%		-			10			-			6			12			258			321		233
Venezuela		12		0.0	%		12			-			-			-			-			-			12		9
BANK DEBT SECURITIES		-		0.0	%		-			-			-			-			-			-			-		31,593
Eurobonds and others		-		0.0	%		-			-			-			-			-			-			-		31,593
Total		1,260,994		100	%		222			10			1,776			154,525			195,408			909,053			1,406,411		1,141,133
% per maturity term							0.0	%		0.0	%		0.1	%		12.3	%		15.5	%		72.1	%
Total - 2007		1,141,133		100	%		14,158			88,698			98,666			237			116,758			822,616
% per maturity term							1.2	%		7.8	%		8.6	%		0.1	%		10.2	%		72.1	%

	Unibanco Consolidated
	2008																									2007
						0-30			31-90			91-180			181-360			361-720			Over-720			Market
	Cost		%			days			days			days			days			days			days			value		Cost
GOVERNMENT SECURITIES - DOMESTIC		3,041,645		99.8	%		210			-			2,087			154,519			199,359			2,685,470			3,314,916		2,374,140
Treasury notes		1,780,991		58.5	%		38			-			311			4			3,963			1,776,675			1,908,880		1,240,976
Brazilian sovereign bonds		1,260,654		41.4	%		172			-			1,776			154,515			195,396			908,795			1,406,036		1,133,164
GOVERNMENT SECURITIES - ABROAD		298		0.0	%		12			10			-			6			12			258			333		242
Ecuador		286		0.0	%		-			10			-			6			12			258			321		233
Venezuela		12		0.0	%		12			-			-			-			-			-			12		9
BANK DEBT SECURITIES		4,422		0.1	%		-			-			-			-			-			4,422			4,422		35,615
Eurobonds and others		-		0.0	%		-			-			-			-			-			-			-		31,594
Debentures		4,422		0.1	%		-			-			-			-			-			4,422			4,422		4,021
Total		3,046,365		100	%		222			10			2,087			154,525			199,371			2,690,150			3,319,671		2,409,997
% per maturity term							0.0	%		0.0	%		0.1	%		5.1	%		6.5	%		88.3	%
Total - 2007		2,409,997		100	%		14,158			88,698			98,665			238			117,045			2,091,193
% per maturity term							0.6	%		3.7	%		4.1	%		0.0	%		4.8	%		86.8	%

(f) Financial ability

Unibanco and its subsidiaries classified investments as held to maturity for which there is intention and financial ability to hold them to maturity. The parameters used to define financial ability are the maturities, interest rates (existence of positive spread) and the currencies of the liability positions.

(g) Fair value determination

The fair value of Marketable Securities is measured at market value, when applicable, based on the available prices of Stock Exchanges or on an internal valuation model based on the average rates for the last business day of the year, as informed by Stock Exchanges, trade associations and external entities.

(h) Derivative financial instruments

(i) The notional amounts and fair values of derivative financial instruments recorded in memorandum accounts, except for the option contracts, the exposure of which is based on the premiums paid or received, and the exposure to fair value from the amounts recorded in assets and liabilities, are as follows:

23

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco
					Amortized			Adjustment to
	Notional amount				cost			market value			Market value
	2008		2007		2008			2008			2008			2007
Futures contracts		87,350,466		108,076,440		-			-			-			-
Purchase		41,430,610		51,236,313		-			-			-			-
Currencies		1,732,731		1,214,283		-			-			-			-
Interbank interest rate		39,689,781		49,984,845		-			-			-			-
Other		8,098		37,185		-			-			-			-
Sale		45,919,856		56,840,127		-			-			-			-
Currencies		4,383,690		8,217,025		-			-			-			-
Interbank interest rate		41,481,353		48,578,205		-			-			-			-
Other		54,813		44,897		-			-			-			-
Swap contracts		38,088,020		21,279,342		80,616			(60,202	)		20,414			(827,702	)
Assets		18,218,390		12,023,188		744,792			173,937			918,729			784,503
Currencies		9,349,626		996,446		408,082			1,258			409,340			28,006
Fixed interest rate		1,254,449		1,047,480		8,266			26,247			34,513			60,607
Interbank interest rate		5,078,213		6,734,064		179,793			75,048			254,841			530,689
Stocks		11,257		-		18,146			-			18,146			-
Other		2,524,845		3,245,198		130,505			71,384			201,889			165,201
Liabilities		19,869,630		9,256,154		(664,176	)		(234,139	)		(898,315	)		(1,612,205	)
Currencies		10,376,704		1,302,343		(43,265	)		(111,424	)		(154,689	)		(193,138	)
Fixed interest rate		1,153,691		3,900,472		(20,957	)		(46,326	)		(67,283	)		(1,263,662	)
Interbank interest rate		6,897,752		2,571,241		(448,555	)		(54,012	)		(502,567	)		(91,457	)
Stocks		53,818		-		-			-			-			-
Other		1,387,665		1,482,098		(151,399	)		(22,377	)		(173,776	)		(63,948	)
Third curve swap contracts		2,699,579		3,115,893		728,298			(419,895	)		308,403			(208,676	)
Assets		1,952,869		1,965,680		802,307			(132,208	)		670,099			40,565
Currencies		1,419,204		989,758		642,823			(121,458	)		521,365			24,736
Fixed interest rate		30,163		572,040		3,697			36			3,733			2,522
Interbank interest rate		463,480		363,592		129,350			(4,659	)		124,691			12,755
Other		40,022		40,290		26,437			(6,127	)		20,310			552
Liabilities		746,710		1,150,213		(74,009	)		(287,687	)		(361,696	)		(249,241	)
Currencies		277,960		536,173		(9,363	)		(18,029	)		(27,392	)		(13,427	)
Fixed interest rate		283,019		372,777		(5,981	)		(266,612	)		(272,593	)		(234,820	)
Interbank interest rate		172,200		241,263		(58,603	)		(2,933	)		(61,536	)		(994	)
Other		13,531		-		(62	)		(113	)		(175	)		-
Forward contracts		5,973,423		5,347,667		1,145,260			(114,626	)		1,030,634			(261,286	)
Assets		4,852,577		2,073,058		1,227,499			(4,756	)		1,222,743			337,994
Currencies		3,650,693		1,441,358		1,143,950			1,541			1,145,491			42,357
Fixed interest rate		-		631,121		-			-			-			27,494
Stocks		14,207		-		104			-			104			267,510
Other		1,187,677		579		83,445			(6,297	)		77,148			633
Liabilities		1,120,846		3,274,609		(82,239	)		(109,870	)		(192,109	)		(599,280	)
Currencies		531,412		2,535,757		101,784			(112,748	)		(10,964	)		(293,086	)
Fixed interest rate		-		468,689		-			-			-			(38,773	)
Stocks		48,764		270,163		(48,764	)		(743	)		(49,507	)		(266,842	)
Other		540,670		-		(135,259	)		3,621			(131,638	)		(579	)
Option contracts		418,933,007		366,847,574		917,035			(1,586,790	)		(669,755	)		(514,269	)
Purchased options		200,743,946		194,150,199		3,004,375			1,247,515			4,251,890			773,256
Purchase of call options		138,457,461		128,900,889		2,607,649			1,165,546			3,773,195			589,559
Currencies		34,900,316		31,793,622		2,229,900			995,754			3,225,654			93,501
Interbank interest rate		103,539,586		96,970,878		360,205			169,777			529,982			472,016
Stocks		17,559		18,031		17,544			15			17,559			18,031
Other		-		118,358		-			-			-			6,011
Purchase of put options		62,286,485		65,249,310		396,726			81,969			478,695			183,697
Currencies		15,568,030		17,274,440		309,790			(215,043	)		94,747			86,125
Interbank interest rate		46,718,455		47,953,085		86,936			297,012			383,948			92,825
Stocks		-		1,755		-			-			-			1,755
Other		-		20,030		-			-			-			2,992
Sale position		218,189,061		172,697,375		(2,087,340	)		(2,834,305	)		(4,921,645	)		(1,287,525	)
Sale of call options		125,425,167		59,773,597		(1,555,118	)		(2,675,140	)		(4,230,258	)		(802,719	)
Currencies		33,301,343		8,121,843		(1,287,583	)		(1,921,243	)		(3,208,826	)		(481,342	)
Interbank interest rate		92,123,824		51,600,108		(267,535	)		(753,897	)		(1,021,432	)		(290,156	)
Stocks		-		19,989		-			-			-			(19,990	)
Other		-		31,657		-			-			-			(11,231	)
Sale of put options		92,763,894		112,923,778		(532,222	)		(159,165	)		(691,387	)		(484,806	)
Currencies		22,600,324		52,982,477		(328,069	)		137,900			(190,169	)		(376,614	)
Interbank interest rate		70,163,570		59,932,955		(204,153	)		(297,065	)		(501,218	)		(99,846	)
Stocks		-		2,080		-			-			-			(2,080	)
Other		-		6,266		-			-			-			(6,266	)
Other derivative financial instruments (*)		8,106,885		13,406,869		(97,595	)		(127,258	)		(224,853	)		(28,945	)
Asset position		3,629,809		5,954,018		360,454			60,297			420,751			164,009
Liability position		4,477,076		7,452,851		(458,049	)		(187,555	)		(645,604	)		(192,954	)
			Assets			6,139,427			1,344,785			7,484,212			2,100,327
			Liabilities			(3,365,813	)		(3,653,556	)		(7,019,369	)		(3,941,205	)
The derivatives contracts have the following settled expenses:
Compensation		0-30		31-180		181-365		Over-365			12/31/2008			12/31/2007
Futures contracts		30,066,610		12,820,570		16,676,136			27,787,150			87,350,466			108,076,440
Swap contracts		4,733,911		14,192,684		4,757,657			14,403,768			38,088,020			21,279,342
Third curve swap contracts		215,628		1,035,282		1,029,520			419,149			2,699,579			3,115,893
Forward contracts		1,219,300		2,190,516		1,603,887			959,720			5,973,423			5,347,667
Option contracts
Purchased position		143,721,678		25,230,832		13,755,026			18,036,410			200,743,946			194,150,199
Sale position		143,627,304		25,863,393		24,678,259			24,020,105			218,189,061			172,697,375
Other derivative financial
instruments		1,122,198		4,930,193		1,163,707			890,787			8,106,885			13,406,869

(*) Include, basically, contracts of Forwards - Non Deliverable Forward (NDFs) and Future T-Bill.

24

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco Consolidated
					Amortized			Adjustment to
	Notional amount				cost			market value			Market value
	2008		2007		2008			2008			2008			2007
Futures contracts		87,441,929		109,533,888		-			-			-			-
Purchase		41,522,073		51,513,017		-			-			-			-
Currencies		1,732,848		1,214,819		-			-			-			-
Interbank interest rate		39,781,127		50,261,013		-			-			-			-
Other		8,098		37,185		-			-			-			-
Sale		45,919,856		58,020,871		-			-			-			-
Currencies		4,383,690		8,360,103		-			-			-			-
Interbank interest rate		41,481,353		49,615,871		-			-			-			-
Other		54,813		44,897		-			-			-			-
Swap contracts		37,935,758		21,504,410		157,852			(112,808	)		45,044			(816,429	)
Assets		18,271,149		12,050,016		734,572			208,787			943,359			797,038
Currencies		9,162,191		996,446		408,661			1,016			409,677			28,006
Fixed interest rate		1,254,449		1,047,480		8,266			26,247			34,513			60,607
Interbank interest rate		5,102,293		6,760,893		186,562			75,048			261,610			543,225
Stocks		5,604		-		9,075			-			9,075			-
Other		2,746,612		3,245,197		122,008			106,476			228,484			165,200
Liabilities		19,664,609		9,454,394		(576,720	)		(321,595	)		(898,315	)		(1,613,467	)
Currencies		10,306,583		1,302,343		(33,467	)		(180,171	)		(213,638	)		(193,139	)
Fixed interest rate		1,153,691		3,900,472		(20,957	)		(46,326	)		(67,283	)		(1,263,662	)
Interbank interest rate		6,897,752		2,592,351		(449,697	)		(54,012	)		(503,709	)		(92,192	)
Other		1,306,583		1,659,228		(72,599	)		(41,086	)		(113,685	)		(64,474	)
Third curve swap contracts		2,699,579		3,115,893		728,298			(419,895	)		308,403			(208,676	)
Assets		1,952,869		1,965,680		802,307			(132,208	)		670,099			40,565
Currencies		1,419,204		989,758		642,823			(121,458	)		521,365			24,736
Fixed interest rate		30,163		572,040		3,697			36			3,733			2,522
Interbank interest rate		463,480		363,592		129,350			(4,659	)		124,691			12,755
Other		40,022		40,290		26,437			(6,127	)		20,310			552
Liabilities		746,710		1,150,213		(74,009	)		(287,687	)		(361,696	)		(249,241	)
Currencies		277,960		536,173		(9,363	)		(18,029	)		(27,392	)		(13,427	)
Fixed interest rate		283,019		372,777		(5,981	)		(266,612	)		(272,593	)		(234,820	)
Interbank interest rate		172,200		241,263		(58,603	)		(2,933	)		(61,536	)		(994	)
Other		13,531		-		(62	)		(113	)		(175	)		-
Forward contracts		5,996,764		5,190,347		1,166,943			(114,937	)		1,052,006			(186,147	)
Assets		4,875,918		2,146,697		1,249,182			(5,067	)		1,244,115			411,232
Currencies		3,650,693		1,441,358		1,143,950			1,541			1,145,491			42,357
Fixed interest rate		1,149,015		671,246		33,233			(6,102	)		27,131			67,454
Stocks		37,548		33,514		37,550			(298	)		37,252			300,788
Other		38,662		579		34,449			(208	)		34,241			633
Liabilities		1,120,846		3,043,650		(82,239	)		(109,870	)		(192,109	)		(597,379	)
Currencies		531,412		2,535,757		101,784			(112,748	)		(10,964	)		(293,087	)
Fixed interest rate		-		237,729		-			-			-			(36,871	)
Stocks		48,764		270,164		(48,764	)		(743	)		(49,507	)		(266,842	)
Other		540,670		-		(135,259	)		3,621			(131,638	)		(579	)
Option contracts		419,005,490		367,866,625		989,529			(1,653,940	)		(664,411	)		(362,964	)
Purchased options		200,816,429		195,169,250		3,076,869			1,189,402			4,266,271			924,561
Purchase of call options		138,529,944		129,919,940		2,680,133			1,107,433			3,787,566			740,854
Currencies		34,900,316		31,793,622		2,229,900			995,754			3,225,654			93,502
Interbank interest rate		103,539,586		96,970,878		360,205			169,777			529,982			472,016
Stocks		90,042		1,037,082		90,028			(58,098	)		31,930			169,325
Other		-		118,358		-			-			-			6,011
Purchase of put options		62,286,485		65,249,310		396,736			81,969			478,705			183,707
Currencies		15,568,030		17,274,440		309,800			(215,043	)		94,757			86,125
Interbank interest rate		46,718,455		47,953,085		86,936			297,012			383,948			92,825
Stocks		-		1,755		-			-			-			1,765
Other		-		20,030		-			-			-			2,992
Sale position		218,189,061		172,697,375		(2,087,340	)		(2,843,342	)		(4,930,682	)		(1,287,525	)
Sale of call options		125,425,167		59,773,597		(1,555,118	)		(2,684,177	)		(4,239,295	)		(802,719	)
Currencies		33,301,343		8,121,843		(1,287,583	)		(1,921,243	)		(3,208,826	)		(481,342	)
Interbank interest rate		92,123,824		51,600,108		(267,535	)		(753,897	)		(1,021,432	)		(290,156	)
Stocks		-		19,989		-			(9,037	)		(9,037	)		(19,990	)
Other		-		31,657		-			-			-			(11,231	)
Sale of put options		92,763,894		112,923,778		(532,222	)		(159,165	)		(691,387	)		(484,806	)
Currencies		22,600,324		52,982,477		(328,069	)		137,900			(190,169	)		(376,614	)
Interbank interest rate		70,163,570		59,932,955		(204,153	)		(297,065	)		(501,218	)		(99,846	)
Stocks		-		2,080		-			-			-			(2,080	)
Other		-		6,266		-			-			-			(6,266	)
Other derivative financial instruments (*)		8,106,885		8,812,672		(97,595	)		(127,258	)		(224,853	)		(110,280	)
Asset position		3,629,809		2,707,871		360,454			60,297			420,751			63,099
Liability position		4,477,076		6,104,801		(458,049	)		(187,555	)		(645,604	)		(173,379	)
			Assets			6,223,384			1,321,211			7,544,595			2,236,495
			Liabilities			(3,278,357	)		(3,750,049	)		(7,028,406	)		(3,920,991	)
The derivatives contracts have the following settled expenses:
Compensation		0-30		31-180		181-365		Over-365			12/31/2008			12/31/2007
Futures contracts		30,066,727		12,820,570		16,677,519			27,877,113			87,441,929			109,533,888
Swap contracts		4,522,151		14,193,975		4,560,652			14,658,980			37,935,758			21,504,410
Third curve swap contracts		215,628		1,035,282		1,029,520			419,149			2,699,579			3,115,893
Forward contracts		1,227,920		2,205,237		1,603,887			959,720			5,996,764			5,190,347
Option contracts
Purchased position		143,721,678		25,303,315		13,755,026			18,036,410			200,816,429			195,169,250
Sale position		143,627,304		25,863,393		24,678,259			24,020,105			218,189,061			172,697,375
Other derivative financial
instruments		1,122,198		4,930,193		1,163,707			890,787			8,106,885			8,812,672

(*) Include, basically, contracts of Forwards - Non Deliverable Forward (NDFs) and Future T-Bill.

25

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(ii) Notional amount by trade location:

	Unibanco
	2008														2007
					Third curve
	Future		Swaps		swap		Forward		Option		Other		Total		Total
BM&F Bovespa		87,350,466		8,781,346		-		173		403,209,671		-		499,341,656		477,477,724
Over the counter		-		29,306,674		2,699,579		5,973,250		15,723,336		8,106,885		61,809,724		40,596,061
Financial institution		-		21,321,185		56,847		1,154,812		5,730,324		7,567,588		35,830,756		24,986,529
Company		-		7,872,179		2,389,204		4,802,737		9,993,012		539,297		25,596,429		15,534,261
Individual		-		113,310		253,528		15,701		-		-		382,539		75,271
Total - 2008		87,350,466		38,088,020		2,699,579		5,973,423		418,933,007		8,106,885		561,151,380		518,073,785
Total - 2007		108,076,440		21,279,342		3,115,893		5,347,667		366,847,574		13,406,869		518,073,785

	Unibanco Consolidated
	2008														2007
					Third curve
	Future		Swaps		swap		Forward		Option		Other		Total		Total
BM&F Bovespa		87,441,929		8,805,426		-		23,514		403,209,671		-		499,480,540		479,056,750
Over the counter		-		29,130,332		2,699,579		5,973,250		15,795,819		8,106,885		61,705,865		36,967,085
Financial institution		-		21,144,843		56,847		1,154,812		5,730,324		7,567,588		35,654,414		21,354,458
Company		-		7,872,179		2,389,204		4,802,737		10,065,495		539,297		25,668,912		15,537,356
Individual		-		113,310		253,528		15,701		-		-		382,539		75,271
Total - 2008		87,441,929		37,935,758		2,699,579		5,996,764		419,005,490		8,106,885		561,186,405		516,023,835
Total - 2007		109,533,888		21,504,410		3,115,893		5,190,347		367,866,625		8,812,672		516,023,835

(iii) Market value by counterparty/ trade location/maturity:

	Unibanco
	2008																						2007
			Adjustment to
			market value			Market				0-30		31-90		91-180			181-360		361-720		Over-720		Market
	Cost		(in Results)			value		%		days		days		days			days		days		days		value
Assets
Swap contracts		744,792		173,937			918,729		12.3		78,737		72,275		68,074			183,937		129,975		385,731		784,503
BM&F e Bovespa		50,140		96,204			146,344		2.0		5,831		17,814		1,977			14,318		28,477		77,926		164,214
Financial institution		200,266		77,344			277,610		3.7		9,969		23,221		39,129			61,867		32,249		111,176		164,608
Company		493,592		250			493,842		6.6		62,867		31,153		26,473			107,655		69,206		196,488		454,933
Individual		794		139			933		0.0		70		87		495			97		43		141		748
Third curve swap contracts		802,307		(132,208	)		670,099		9.0		17,636		189,549		154,285			209,274		59,661		39,694		40,565
Financial institution		3,684		683			4,367		0.1		663		1,560		1,300			845		-		-		6,474
Company		798,623		(132,891	)		665,732		8.9		16,973		187,989		152,985			208,429		59,661		39,694		34,086
Individual		-		-			-		-		-		-		-			-		-		-		5
Forward contracts		1,227,499		(4,756	)		1,222,743		16.3		145,818		199,781		254,339			469,396		147,970		5,439		337,994
BM&F e Bovespa		104		-			104		0.0		-		36		68			-		-		-		268,144
Financial institution		67,262		(6,033	)		61,229		0.8		34,007		12,233		8,783			4,547		1,658		-		18,975
Company		1,156,407		1,536			1,157,943		15.5		111,811		186,592		245,798			461,992		146,312		5,439		50,671
Individual		3,726		(259	)		3,467		0.0		-		920		(310	)		2,857		-		-		204
Option contracts
Purchased options		3,004,375		1,247,515			4,251,890		56.8		1,342,038		977,443		806,975			668,726		451,964		4,744		773,256
BM&F e Bovespa		2,869,040		1,090,582			3,959,622		52.9		1,242,454		908,997		798,363			664,444		340,621		4,744		730,512
Financial institution		42,419		68,561			110,980		1.5		3		33,310		6,509			-		71,158		-		10,675
Company		92,916		88,372			181,288		2.4		99,581		35,136		2,103			4,282		40,185		-		32,069
Other derivative financial instruments		360,454		60,297			420,751		5.6		25,964		125,071		186,642			32,098		49,817		1,159		164,009
BM&F e Bovespa		-		-			-		-		-		-		-			-		-		-		149
Financial institution		259,887		59,997			319,884		4.3		11,145		89,889		156,504			21,240		39,947		1,159		163,722
Company		100,567		300			100,867		1.3		14,819		35,182		30,138			10,858		9,870		-		138
Total - 2008		6,139,427		1,344,785			7,484,212		100.0		1,610,193		1,564,119		1,470,315			1,563,431		839,387		436,767		2,100,327
% per maturity term											21.5		20.9		19.7			20.9		11.2		5.8

26

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco
	2008																													2007
				Adjustment to
				market value			Market					0-30			31-90			91-180			181-360			361-720			Over-720			Market
	Cost			(in Results)			value			%		days			days			days			days			days			days			value
Liabilities
Swap contracts		(664,176	)		(234,139	)		(898,315	)		12.8		(89,894	)		(90,634	)		(39,290	)		(138,525	)		(199,327	)		(340,645	)		(1,612,205	)
BM&F Bovespa		(111,530	)		(70,403	)		(181,933	)		2.6		(35,779	)		(7,839	)		(9,074	)		(13,080	)		(52,823	)		(63,339	)		(95,810	)
Financial institution		(310,679	)		(132,119	)		(442,798	)		6.3		(22,044	)		(62,141	)		(10,878	)		(77,445	)		(66,895	)		(203,394	)		(1,441,517	)
Company		(241,808	)		(30,642	)		(272,450	)		3.9		(32,071	)		(20,654	)		(19,338	)		(47,942	)		(78,580	)		(73,865	)		(74,798	)
Individual		(159	)		(975	)		(1,134	)		-		-			-			-			(58	)		(1,029	)		(47	)		(80	)
Third curve swap contracts		(74,009	)		(287,687	)		(361,696	)		5.2		(82,577	)		(102,565	)		(65,294	)		(86,697	)		(3,329	)		(21,234	)		(249,241	)
Financial institution		-			-			-			-		-			-			-			-			-			-			(105	)
Company		(72,846	)		(38,386	)		(111,232	)		1.6		(7,327	)		(11,221	)		(5,186	)		(66,265	)		-			(21,234	)		(249,136	)
Individual		(1,163	)		(249,301	)		(250,464	)		3.6		(75,250	)		(91,344	)		(60,108	)		(20,432	)		(3,329	)		-			-
Forward contracts		(82,239	)		(109,870	)		(192,109	)		2.7		(79,533	)		(44,290	)		(28,023	)		(27,772	)		(11,354	)		(1,137	)		(599,280	)
BM&F Bovespa		(70	)		-			(70	)		-		-			(23	)		(48	)		-			-			-			(267,420	)
Financial institution		(31,337	)		(355	)		(31,692	)		0.5		(22,440	)		(3,815	)		(5,435	)		-			-			-			(71,876	)
Company		(50,607	)		(109,388	)		(159,995	)		2.2		(57,093	)		(40,409	)		(22,230	)		(27,772	)		(11,354	)		(1,137	)		(259,086	)
Individual		(225	)		(127	)		(352	)		-		-			(43	)		(310	)		-			-			-			(898	)
Option contracts
Sale position		(2,087,340	)		(2,834,305	)		(4,921,645	)		70.1		(1,157,651	)		(1,041,019	)		(973,783	)		(692,742	)		(435,965	)		(620,485	)		(1,287,525	)
BM&F Bovespa		(1,647,398	)		(2,069,583	)		(3,716,981	)		53.0		(933,759	)		(683,348	)		(680,946	)		(466,001	)		(332,443	)		(620,485	)		(771,884	)
Financial institution		(218,614	)		(227,136	)		(445,750	)		6.4		(38,539	)		(141,900	)		(186,822	)		(75,563	)		(2,925	)		-			(406,209	)
Company		(221,328	)		(537,586	)		(758,914	)		10.7		(185,353	)		(215,771	)		(106,015	)		(151,178	)		(100,597	)		-			(109,432	)
Other derivative financial instruments		(458,049	)		(187,555	)		(645,604	)		9.2		(194,557	)		(36,942	)		(103,113	)		(141,465	)		(152,868	)		(16,659	)		(192,954	)
BM&F Bovespa		-			-			-			-		-			-			-			-			-			-			(440	)
Financial institution		(415,072	)		(186,769	)		(601,841	)		8.6		(194,557	)		(35,350	)		(60,942	)		(141,465	)		(152,868	)		(16,659	)		(187,566	)
Company		(42,977	)		(786	)		(43,763	)		0.6		-			(1,592	)		(42,171	)		-			-			-			(4,948	)
Total - 2008		(3,365,813	)		(3,653,556	)		(7,019,369	)		100.0		(1,604,212	)		(1,315,450	)		(1,209,503	)		(1,087,201	)		(802,843	)		(1,000,160	)		(3,941,205	)
% per maturity term													22.9			18.7			17.2			15.5			11.4			14.3

	Unibanco Consolidated
	2008																						2007
			Adjustment to
			market value			Market				0-30		31-90		91-180			181-360		361-720		Over-720		Market
	Cost		(in Results)			value		%		days		days		days			days		days		days		value
Assets
Swap contracts		734,572		208,787			943,359		12.5		78,737		72,275		68,424			184,152		136,178		403,593		797,038
BM&F Bovespa		57,075		96,203			153,278		2.0		5,831		17,814		2,351			14,677		34,680		77,925		176,750
Financial institution		183,111		112,195			295,306		3.9		9,969		23,221		39,105			61,723		32,249		129,039		164,608
Company		493,592		250			493,842		6.5		62,867		31,153		26,473			107,655		69,206		196,488		454,933
Individual		794		139			933		-		70		87		495			97		43		141		748
Third curve swap contracts		802,307		(132,208	)		670,099		8.9		17,636		189,549		154,285			209,274		59,661		39,694		40,565
Financial institution		3,684		683			4,367		0.1		663		1,560		1,300			845		-		-		6,474
Company		798,623		(132,891	)		665,732		8.8		16,973		187,989		152,985			208,429		59,661		39,694		34,086
Individual		-		-			-		-		-		-		-			-		-		-		5
Forward contracts		1,249,182		(5,067	)		1,244,115		16.4		152,739		213,832		254,740			469,395		147,970		5,439		411,232
BM&F Bovespa		23,445		(310	)		23,135		0.3		8,579		14,087		469			-		-		-		341,382
Financial institution		67,262		(6,033	)		61,229		0.8		34,007		12,233		8,783			4,547		1,658		-		18,975
Company		1,154,749		1,535			1,156,284		15.3		110,153		186,592		245,798			461,991		146,312		5,439		50,671
Individual		3,726		(259	)		3,467		-		-		920		(310	)		2,857		-		-		204
Option contracts
Purchased position		3,076,869		1,189,402			4,266,271		56.6		1,342,039		991,824		806,975			668,725		451,964		4,744		924,561
BM&F Bovespa		2,869,051		1,090,582			3,959,633		52.5		1,242,455		909,007		798,363			664,443		340,621		4,744		730,523
Financial institution		42,419		68,561			110,980		1.5		3		33,310		6,509			-		71,158		-		161,969
Company		165,399		30,259			195,658		2.6		99,581		49,507		2,103			4,282		40,185		-		32,070
Other derivative financial instruments		360,454		60,297			420,751		5.6		25,964		125,071		186,642			32,098		49,817		1,159		63,099
BM&F Bovespa		-		-			-		-		-		-		-			-		-		-		149
Financial institution		259,887		59,997			319,884		4.2		11,145		89,889		156,504			21,240		39,947		1,159		62,812
Company		100,567		300			100,867		1.3		14,819		35,182		30,138			10,858		9,870		-		138
Total - 2008		6,223,384		1,321,211			7,544,595		100.0		1,617,115		1,592,551		1,471,066			1,563,644		845,590		454,629		2,236,495
% per maturity term		-		-			-		-		21.4		21.1		19.5			20.7		11.2		6.0

27

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco Consolidated
	2008																													2007
				Adjustment to
				market value			Market					0-30			31-90			91-180			181-360			361-720			Over-720			Market
	Cost			(in Results)			value			%		days			days			days			days			days			days			value
Liabilities
Swap contracts		(576,720	)		(321,595	)		(898,315	)		12.8		(89,873	)		(90,634	)		(40,432	)		(137,404	)		(199,327	)		(340,645	)		(1,613,467	)
BM&F Bovespa		(112,673	)		(70,403	)		(183,076	)		2.6		(35,779	)		(7,839	)		(10,216	)		(13,080	)		(52,823	)		(63,339	)		(96,544	)
Financial institutions		(222,080	)		(219,575	)		(441,655	)		6.3		(22,023	)		(62,141	)		(10,878	)		(76,324	)		(66,895	)		(203,394	)		(1,442,044	)
Company		(241,808	)		(30,642	)		(272,450	)		3.9		(32,071	)		(20,654	)		(19,338	)		(47,942	)		(78,580	)		(73,865	)		(74,798	)
Individual		(159	)		(975	)		(1,134	)		0.0		-			-			-			(58	)		(1,029	)		(47	)		(81	)
Third curve swap contracts		(74,009	)		(287,687	)		(361,696	)		5.2		(82,577	)		(102,565	)		(65,294	)		(86,697	)		(3,329	)		(21,234	)		(249,242	)
Financial institutions		-			-			-			-		-			-			-			-			-			-			(105	)
Company		(72,846	)		(38,386	)		(111,232	)		1.6		(7,327	)		(11,221	)		(5,186	)		(66,265	)		-			(21,234	)		(249,137	)
Individual		(1,163	)		(249,301	)		(250,464	)		3.6		(75,250	)		(91,344	)		(60,108	)		(20,432	)		(3,329	)		-			-
Forward contracts		(82,239	)		(109,870	)		(192,109	)		2.8		(79,533	)		(44,290	)		(28,023	)		(27,771	)		(11,354	)		(1,138	)		(597,379	)
BM&F Bovespa		(70	)		-			(70	)		-		-			(23	)		(48	)		-			-			-			(267,420	)
Financial institutions		(31,337	)		(355	)		(31,692	)		0.5		(22,440	)		(3,815	)		(5,435	)		-			-			-			(69,975	)
Company		(50,607	)		(109,388	)		(159,995	)		2.3		(57,093	)		(40,409	)		(22,230	)		(27,771	)		(11,354	)		(1,138	)		(259,086	)
Individual		(225	)		(127	)		(352	)		-		-			(43	)		(310	)		-			-			-			(898	)
Option contracts
Sale position		(2,087,340	)		(2,843,342	)		(4,930,682	)		70.0		(1,157,651	)		(1,041,019	)		(973,783	)		(692,741	)		(435,965	)		(629,523	)		(1,287,525	)
BM&F Bovespa		(1,647,398	)		(2,069,583	)		(3,716,981	)		52.9		(933,759	)		(683,348	)		(680,946	)		(466,000	)		(332,443	)		(620,486	)		(771,884	)
Financial institutions		(218,614	)		(227,136	)		(445,750	)		6.2		(38,539	)		(141,900	)		(186,822	)		(75,563	)		(2,925	)		-			(406,209	)
Company		(221,328	)		(546,623	)		(767,951	)		10.9		(185,353	)		(215,771	)		(106,015	)		(151,178	)		(100,597	)		(9,037	)		(109,432	)
Other derivative financial instruments		(458,049	)		(187,555	)		(645,604	)		9.2		(194,558	)		(36,942	)		(103,113	)		(141,466	)		(152,868	)		(16,657	)		(173,378	)
BM&F Bovespa		-			-			-			-		-			-			-			-			-			-			(439	)
Financial institutions		(415,072	)		(186,769	)		(601,841	)		8.6		(194,558	)		(35,350	)		(60,942	)		(141,466	)		(152,868	)		(16,657	)		(167,991	)
Company		(42,977	)		(786	)		(43,763	)		0.6		-			(1,592	)		(42,171	)		-			-			-			(4,947	)
Total - 2008		(3,278,357	)		(3,750,049	)		(7,028,406	)		100.0		(1,604,192	)		(1,315,450	)		(1,210,645	)		(1,086,079	)		(802,843	)		(1,009,197	)		(3,920,990	)
% per maturity term													22.8			18.7			17.2			15.5			11.4			14.4

On December 31, 2008 the amounts pledged to guarantee BM&F transactions were R$1,847 in Unibanco and R$14,048 in Unibanco Consolidated and are comprised of federal government securities.

The transactions shown above do not represent Unibanco’s total exposure to market, currency and interest rate risks since they only consider the derivative financial instruments.

(iv) Hedge Accounting

(a)  On December 31, 2008, there were derivative financial instruments recognized as cash flow hedges accounted for at fair value and indexed to the interbank interest rate (CDI) represented in Unibanco and in Unibanco Consolidated by future transactions in the amount of R$27,039,269 (2007 – R$35,091,662), swap contracts in the amount of R$167,078 (2007 – R$1,538,634) and forward contracts in the amount of R$62,060 (2007 – R$68,962), associated with future liability transactions with variations in the interbank interest rate (CDI). These contracts presented on December 31, 2008, losses net of applicable taxes in the amount of R$115,362 (2007 – net loss - R$545) in Unibanco and R$115,362 (2007 – R$537) in Unibanco Consolidated, recorded in “Carrying value adjustments”.

The effectiveness of the hedge portfolio as of December 31, 2008, was in accordance with the standards established by the Brazilian Central Bank, and no ineffective hedge portion to be recorded during the year, was identified.

On December 31, 2008, hedge transactions carried on by the Cayman Branch were discontinued, that represented a negative result in the amount of R$136,717, gross of the tax impact in the amount of R$46,484.

(b)  The swap transactions associated with funding and/or asset operations in the amount of R$1,152,584 (2007 – R$1,414,760) in Unibanco and in Unibanco Consolidated are recorded at current amounts, adjusted in accordance with the index variation occurred (“curve”), and are not adjusted to their fair value, in accordance with Circular nº. 3,150/02 of the Brazilian Central Bank.

28

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

7. Lending, Leasing and Other Credits Portfolio and Allowance for Credit Losses

(a) Components of the credit portfolio by type and by maturity:

	Unibanco				Unibanco Consolidated
	2008		2007		2008		2007
By type
Discounted loans and notes		28,101,845		23,214,513		29,943,113		24,586,009
Financing		17,533,157		13,111,167		18,480,463		14,851,742
Agricultural		1,290,305		1,696,224		1,290,305		1,696,224
Real estate loans		2,186,347		1,692,043		2,224,529		1,697,450
Credit card		-		-		4,870,470		5,416,306
Total lending operations		49,111,654		39,713,947		56,808,880		48,247,731
Leasing operations		613,155		957,571		9,632,951		6,523,950
Advances on exchange contracts (1)		1,548,778		1,682,809		1,548,778		1,682,809
Total leasing operations and advances
on exchange contracts		2,161,933		2,640,380		11,181,729		8,206,759
Guarantees honored		667		33,590		667		33,590
Other receivables (2)		499,612		500,067		5,906,941		4,946,968
Total other credits		500,279		533,657		5,907,608		4,980,558
Total risk		51,773,866		42,887,984		73,898,217		61,435,048
By maturity
Past-due for more than 15 days (Note 7 (d))		904,120		656,243		2,833,319		2,084,152
Falling due:
Less than 3 months (3)		13,779,037		12,636,077		22,524,935		21,355,681
Between 3 months and 1 year		16,457,231		13,127,199		22,024,126		17,479,398
Between 1 and 3 years		12,192,609		10,202,380		16,810,944		13,317,274
More than 3 years		8,440,869		6,266,085		9,704,893		7,198,543
Total risk		51,773,866		42,887,984		73,898,217		61,435,048

(1) Recorded in “Other liabilities” – “Foreign exchange portfolio”. (See Note 8 (a))

(2) Other credits refer to receivables from debtors for purchase of assets, notes and credits receivable, insurance premiums receivable and receivables from credit card operations (with attributes of lending) (Note 9).

(3) Include 14 days past-due amounts.

29

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(b) Components of lending, leasing and other credits by business activity:

	Unibanco
	2008					2007
			% of total					% of total
	Amount		distribution			Amount		distribution
PUBLIC SECTOR		840,784		1.6	%		812,539		1.6	%
Electricity, gas and water		546,013		1.0	%		532,978		1.0	%
Petroleum		86,616		0.2	%		84,455		0.2	%
Capture, treatment and distribution		208,155		0.4	%		195,106		0.4	%
PRIVATE SECTOR		50,933,082		98.4	%		42,075,443		98.4	%
COMPANY		42,460,249		82.0	%		35,049,172		81.9	%
Industry and Commerce		24,021,464		46.4	%		20,226,094		47.4	%
Electricity, gas and water		2,561,781		4.9	%		2,784,474		6.5	%
Food, beverages and tobacco		3,194,032		6.2	%		2,206,819		5.1	%
Paper, pulp and wood products		245,970		0.5	%		1,558,371		3.6	%
Basic metal industries		2,076,910		4.0	%		1,272,110		3.0	%
Production of machines and equipment		556,177		1.1	%		1,195,768		2.8	%
Chemical and pharmaceutical		1,533,670		3.0	%		973,121		2.3	%
Automotive industry		573,633		1.1	%		755,112		1.8	%
Petroleum		975,455		1.9	%		622,160		1.5	%
Textiles, clothing and leather goods		1,129,620		2.2	%		579,062		1.4	%
Rubber and plastic		162,095		0.3	%		342,497		0.8	%
Electronic and communications equipment		267,327		0.5	%		298,576		0.7	%
Production of metal goods		599,342		1.2	%		286,012		0.7	%
Eletric and electronic		392,344		0.8	%		154,257		0.4	%
Non-metallic minerals products factory		1,190,031.0		2.3	%		931,122		2.2	%
Office equipment and information technology factory		88,652.0		0.2	%		26,079		0.1	%
Automotive and bicycle repair		12,498.0		0.0	%		345,742		0.8	%
Retail		4,811,519.0		9.3	%		3,224,401		7.5	%
Wholesale		3,337,397.0		6.4	%		2,669,413		6.2	%
Other manufacturing industries		313,011		0.5	%		998		0.0	%
Services		15,784,421		30.5	%		13,331,589		31.2	%
Financial companies		4,666,063		9.0	%		4,203,573		9.8	%
Insurance companies and private pension funds		248,911		0.5	%		7,074		0.0	%
Transportation		3,925,299		7.6	%		3,392,922		7.9	%
Construction		1,087,692		2.1	%		1,113,864		2.6	%
Real estate services		1,348,172		2.6	%		1,318,339		3.1	%
Post office and telecommunications		1,048,121		2.0	%		679,610		1.6	%
Agricultural		118,715		0.2	%		452,624		1.1	%
Health and social services		398,414		0.8	%		265,060		0.6	%
Association activities		121,687		0.2	%		202,599		0.5	%
Cultural, sports and leisure activities		98,091		0.2	%		164,198		0.4	%
Lodging and catering services		338,352		0.7	%		151,647		0.4	%
Education		120,795		0.2	%		101,182		0.2	%
Services rendered main companies		1,253,057		2.4	%		792,912		1.8	%
Capture, treatment and  distribution		40,298		0.1	%		81,624		0.2	%
Comunication and Information		243,852		0.5	%		-		0.0	%
Vehicles, office equipment and personal effects rental		162,577		0.3	%		116,374		0.3	%
Information tecnology and connected activities		107,216		0.2	%		65,577		0.2	%
Other		457,109		0.9	%		222,410		0.5	%
PRIMARY SECTOR		2,654,364		5.1	%		1,491,489		3.4	%
Agriculture, livestock, forestry and fishing		2,465,345		4.8	%		1,255,802		2.9	%
Extractive		189,019		0.3	%		235,687		0.5	%
Individuals		8,472,833		16.4	%		7,026,271		16.4	%
Consumer loans		6,528,503		12.6	%		5,453,176		12.7	%
Residential mortgage loans		1,484,490		2.9	%		1,081,370		2.5	%
Lease financing		38,601		0.1	%		51,303		0.1	%
Other		421,239		0.8	%		440,422		1.1	%
Total		51,773,866		100.0	%		42,887,982		100.0	%

30

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco Consolidated
	2008					2007
			% of total					% of total
	Amount		distribution			Amount		distribution
PUBLIC SECTOR		840,784		1.1	%		812,539		1.3	%
Electricity, gas and water		546,013		0.7	%		532,978		0.9	%
Petroleum		86,616		0.1	%		84,455		0.1	%
Capture, treatment and distribution		208,155		0.3	%		195,106		0.3	%
PRIVATE SECTOR		73,057,433		98.9	%		60,622,507		98.7	%
COMPANY		45,720,902		61.9	%		37,785,562		61.5	%
Industry and Commerce		25,356,195		34.1	%		21,149,081		34.3	%
Electricity, gas and water		2,584,711		3.5	%		2,862,629		4.7	%
Food, beverages and tobacco		3,293,542		4.5	%		2,283,994		3.7	%
Paper, pulp and wood products		265,321		0.4	%		1,609,477		2.6	%
Basic metal industries		2,109,973		2.9	%		1,308,691		2.1	%
Production of machines and equipment		568,998		0.8	%		1,229,287		2.0	%
Chemical and pharmaceutical		1,554,299		2.1	%		998,974		1.6	%
Automotive industry		582,831		0.8	%		775,097		1.3	%
Petroleum		1,050,172		1.4	%		670,675		1.1	%
Textiles, clothing and leather goods		1,169,759		1.6	%		596,968		1.0	%
Electronic and communications equipment		280,522		0.4	%		307,212		0.5	%
Rubber and plastic		184,766		0.3	%		364,785		0.6	%
Production of metal goods		618,951		0.8	%		299,920		0.5	%
Eletric and electronic		400,111		0.5	%		161,578		0.3	%
Non-metallic minerals products factory		1,220,782		1.7	%		957,749		1.6	%
Office equipment and information technology factory		91,806		0.1	%		26,691		0.0	%
Automotive and bicycle repair		13,525		0.0	%		387,438		0.6	%
Retail		5,597,096		7.6	%		3,474,887		5.7	%
Wholesale		3,413,260		4.6	%		2,831,359		4.5	%
Other manufacturing industries		355,770		0.3	%		1,670		0.0	%
Services		17,357,455		23.3	%		15,125,502		24.5	%
Financial companies		4,711,978		6.4	%		4,256,166		6.9	%
Insurance companies and private pension funds		263,771		0.4	%		7,507		0.0	%
Transportation		4,677,468		6.3	%		4,349,917		7.1	%
Construction		1,230,822		1.7	%		1,220,403		2.0	%
Real estate services		1,390,030		1.9	%		1,425,550		2.3	%
Post office and telecommunications		1,059,488		1.4	%		699,580		1.1	%
Agricultural		128,656		0.2	%		481,653		0.8	%
Health and social services		442,546		0.6	%		305,967		0.5	%
Association activities		125,874		0.2	%		220,064		0.4	%
Lodging and catering services		365,967		0.5	%		177,360		0.3	%
Cultural, sports and leisure activities		103,847		0.1	%		175,980		0.3	%
Education		140,660		0.2	%		122,297		0.2	%
Services rendered main companies		1,317,595		1.8	%		900,133		1.5	%
Capture, treatment and  distribution		46,361		0.1	%		96,750		0.2	%
Comunication and Information		249,966		0.3	%		-		0.0	%
Vehicles, office equipment and personal effects rental		259,435		0.4	%		166,271		0.3	%
Information tecnology and connected activities		126,240		0.2	%		76,652		0.1	%
Other		716,751		0.8	%		443,252		0.6	%
PRIMARY SECTOR		3,007,252		4.1	%		1,510,979		2.4	%
Agriculture, livestock, forestry and fishing		2,806,773		3.8	%		1,255,802		2.0	%
Extractive		200,479		0.3	%		255,177		0.3	%
Individuals		27,336,531		37.0	%		22,836,945		37.1	%
Credit card		10,201,668		13.8	%		8,859,900		14.4	%
Consumer loans		8,197,083		11.1	%		8,062,444		13.1	%
Lease financing		6,865,954		9.3	%		4,385,945		7.1	%
Residential mortgage loans		1,616,985		2.2	%		1,088,234		1.8	%
Other		454,841		0.6	%		440,422		0.6	%
Total		73,898,217		100.0	%		61,435,046		100.0	%

31

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(c) Concentration of lending, leasing and other credits:

	Unibanco
	2008				2007
Largest clients	Amount		% total		Amount		% total
10 largest clients		5,890,888		11.4		5,060,513		11.8
20 next largest clients		2,631,865		5.1		3,655,000		8.5
50 next largest clients		6,511,540		12.6		5,066,753		11.8
100 next largest clients		7,545,318		14.6		4,882,066		11.4
Other clients		29,194,255		56.3		24,223,652		56.5
Total		51,773,866		100.0		42,887,984		100.0

	Unibanco Consolidated
	2008				2007
Largest clients	Amount		% total		Amount		% total
10 largest clients		5,890,888		8.0		5,060,513		8.2
20 next largest clients		2,631,865		3.6		3,655,000		6.0
50 next largest clients		6,511,540		8.8		5,066,753		8.3
100 next largest clients		7,545,318		10.2		4,882,066		7.9
Other clients		51,318,606		69.4		42,770,716		69.6
Total		73,898,217		100.0		61,435,048		100.0

(d) Components of lending, leasing and other credits and allowance for losses by risk level:

(i) By type

	Unibanco
	2008												2007
Risk levels	AA		A	B	C	D	E	F	G	H	Total		Total
Loan operation		20,089,207	17,640,827	6,848,718	1,692,898	964,384	466,923	402,752	129,991	875,954		49,111,655		39,713,947
Discounted loans and notes		10,937,683	9,935,857	3,457,021	1,321,961	688,975	442,067	376,123	116,227	825,931		28,101,846		23,214,513
Financing		7,478,459	6,542,377	2,967,197	270,411	214,820	13,862	10,311	9,367	26,353		17,533,157		13,111,167
Agricultural		312,475	595,297	293,695	25,043	34,901	3,661	9,224	272	15,737		1,290,305		1,696,224
Real estate loans		1,360,590	567,296	130,805	75,483	25,688	7,333	7,094	4,125	7,933		2,186,347		1,692,043
Leasing operations		107,320	286,027	168,868	19,344	22,485	2,535	4,756	800	1,020		613,154		957,571
Advances on exchange contracts (1)		768,698	351,105	323,089	53,527	36,354	1,435	4,199	-	10,371		1,548,778		1,653,356
Other receivables (2)		404,978	27,523	17,132	520	22,901	25,590	32	-	1,604		500,279		563,110
Total operations with credit granting characteristics		21,370,202	18,305,481	7,357,807	1,766,289	1,046,124	496,483	411,740	130,791	888,949		51,773,866		42,887,984
Guarantees honored (3)												18,133,979		14,845,317
Total with guarantees honored		21,370,202	18,305,481	7,357,807	1,766,289	1,046,124	496,483	411,740	130,791	888,949		69,907,845		57,733,301
Total - 2007		20,574,559	16,485,330	3,666,278	949,689	293,917	151,881	103,852	92,383	570,095		57,733,301

	Unibanco Consolidated
	2008												2007
Risk levels	AA		A	B	C	D	E	F	G	H	Total		Total
Loan operation		20,364,841	18,423,429	8,117,733	1,774,839	1,036,401	509,481	434,085	158,938	1,118,663		51,938,410		42,831,425
Discounted loans and notes		11,195,188	10,222,800	4,574,008	1,358,008	728,721	461,582	386,513	124,799	891,494		29,943,113		24,586,009
Financing		7,487,830	7,038,036	3,090,256	316,097	247,000	36,887	31,254	29,742	203,361		18,480,463		14,851,742
Agricultural		312,475	595,297	293,695	25,043	34,901	3,661	9,224	272	15,737		1,290,305		1,696,224
Real estate loans		1,369,348	567,296	159,774	75,691	25,779	7,351	7,094	4,125	8,071		2,224,529		1,697,450
Leasing operations		393,854	7,601,707	1,052,611	257,683	150,105	57,664	47,505	39,201	32,621		9,632,951		6,523,950
Credit card operations		3,423	5,872,766	1,547,932	730,207	447,186	223,434	195,895	152,192	1,066,690		10,239,725		5,416,306
Advances on exchange contracts (1)		768,698	351,105	323,089	53,527	36,354	1,435	4,199	-	10,371		1,548,778		1,653,356
Other receivables (2)		417,691	37,887	20,603	1,891	23,904	28,877	283	226	6,991		538,353		5,010,011
Total operations with credit granting characteristics		21,948,507	32,286,894	11,061,968	2,818,147	1,693,950	820,891	681,967	350,557	2,235,336		73,898,217		61,435,048
Guarantees honored (3)												18,148,055		14,853,350
Total with guarantees honored		21,948,507	32,286,894	11,061,968	2,818,147	1,693,950	820,891	681,967	350,557	2,235,336		92,046,272		76,288,398
Total - 2007		26,245,334	26,236,276	4,796,493	1,337,072	560,699	367,102	278,245	244,332	1,369,495		76,288,398

(1) Includes advances on exchange contracts and income receivable from advances granted, included in Other Credits/ Liabilities – foreign exchange portfolio/other receivables (Note 8);

(2) Includes securities and credits receivable, debtors for purchase of assets and endorsements and securities paid;

(3) Recorded in memorandum accounts.

32

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(ii) by risk level

			Unibanco
			2008
	% minimum				Past due credits
Risk	allowance		Current		Falling due		Overdue		Total		Distribution		Total
level	required		credits		installments		installments(1)		credits		% of total		allowance
AA		-		21,370,203		-		-		21,370,203		41.3		2,640
A		0.5		18,305,482		-		-		18,305,482		35.4		92,369
B		1.0		7,062,052		218,573		77,182		7,357,807		14.2		74,202
C		3.0		1,492,399		199,021		74,869		1,766,289		3.4		462,366
D		10.0		837,312		114,932		93,880		1,046,124		2.0		1,043,031
E		30.0		268,835		141,079		86,569		496,483		1.0		496,483
F		50.0		261,036		93,090		57,613		411,739		0.8		411,739
G		70.0		20,528		46,373		63,890		130,791		0.3		130,791
H		100.0		203,960		234,870		450,118		888,948		1.7		888,948
Total				49,821,807		1,047,938		904,120		51,773,866		100.0		3,602,569
% of total risk														7.0	%

			Unibanco
			2007
	% minimum				Past due credits
Risk	allowance		Current		Falling due		Overdue		Total		Distribution		Total
level	required		credits		installments		installments(1)		credits		% of total		allowance
AA		-		20,574,559		-		-		20,574,559		48.0		20,112
A		0.5		16,485,330		-		-		16,485,330		38.4		88,984
B		1.0		3,416,946		192,587		56,745		3,666,278		8.5		46,388
C		3.0		718,676		177,902		53,111		949,689		2.2		88,885
D		10.0		140,051		102,502		51,364		293,917		0.7		293,917
E		30.0		39,050		64,884		47,947		151,881		0.4		151,881
F		50.0		17,813		49,683		36,356		103,852		0.2		103,852
G		70.0		10,653		39,625		42,105		92,383		0.2		92,383
H		100.0		40,657		160,823		368,615		570,095		1.4		570,095
Total				41,443,735		788,006		656,243		42,887,984		100.0		1,456,497
% of total risk														3.4	%

33

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

			Unibanco Consolidated
			2008
	% minimum				Past due credits
Risk	allowance		Current		Falling due		Overdue		Total		Distribution		Total
level	required		credits		installments		installments(1)		credits		% of total		allowance
AA		-		21,948,507		-		-		21,948,507		29.7		3,842
A		0.5		32,286,894		-		-		32,286,894		43.7		162,276
B		1.0		10,284,138		536,833		240,997		11,061,968		15.0		132,123
C		3.0		2,181,993		416,744		219,410		2,818,147		3.8		493,921
D		10.0		1,202,508		224,054		267,388		1,693,950		2.3		1,229,628
E		30.0		368,007		210,156		242,728		820,891		1.1		777,582
F		50.0		336,199		142,464		203,304		681,967		0.9		675,154
G		70.0		56,097		88,971		205,489		350,557		0.5		349,938
H		100.0		479,518		301,815		1,454,003		2,235,336		3.0		2,235,336
Total				69,143,861		1,921,037		2,833,319		73,898,217		100.0		6,059,800
% of total risk														8.2	%

			Unibanco Consolidated
			2007
	% minimum				Past due credits
Risk	allowance		Current		Falling due		Overdue		Total		Distribution		Total
level	required		credits		installments		installments(1)		credits		% of total		allowance
AA		-		26,245,334		-		-		26,245,334		42.7		20,174
A		0.5		26,236,276		-		-		26,236,276		42.7		139,207
B		1.0		4,212,426		377,004		207,063		4,796,493		7.8		69,427
C		3.0		789,967		345,657		201,448		1,337,072		2.2		105,806
D		10.0		192,059		185,394		183,246		560,699		0.9		433,245
E		30.0		80,322		111,969		174,811		367,102		0.6		341,291
F		50.0		47,612		83,274		147,359		278,245		0.5		273,472
G		70.0		33,441		64,412		146,479		244,332		0.4		241,558
H		100.0		95,860		249,889		1,023,746		1,369,495		2.2		1,369,495
Total				57,933,297		1,417,599		2,084,152		61,435,048		100.0		2,993,675
% of total risk														4.9	%

(1) Include past-due for more than 15 days.

The allowance for credit losses is recorded in accordance with Resolution 2,682 of the Brazilian National Monetary Council. The minimum allowance for each level is used as a general rule, however, based on the judgment and experience of management, higher percentages are used within each level in order to contemplate the risk of certain clients, operations or portfolios more accurately.

In the second half of 2008, taking into account the economic scenario and the uncertainties associated therewith, the criteria for recognition of an additional provision for credit risks were revised to incorporate a portion related to risks associated with a more pessimistic scenario for the 2009/2010 period, not yet fully covered by the historic scenarios noted in the recent past.

(e)   The balance of renegotiated transactions with clients as established in Resolution 2,682 of the Brazilian National Monetary Council totaled R$901,489 (2007 - R$621,896) in Unibanco and R$1,442,501 (2007 - R$972,966) in Unibanco Consolidated. These transactions relate to the active portfolio and credits written off, and were recorded in a manner which maintains the risk assessment and the provision for losses existing prior to renegotiation. These transactions are only upgraded to a higher classification only after the collection of a significant portion of the renegotiated debt.

34

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(f)    Changes in the allowance for credit losses during the year:

	Unibanco						Unibanco Consolidated
	2008			2007			2008			2007
Balance at the beginning of the year		1,456,497			1,620,875			2,993,675			2,666,439
Increases		3,020,808			1,052,846			5,142,260			2,425,903
Loan charge-offs		(874,736	)		(1,217,224	)		(2,076,135	)		(2,098,667	)
Balance at the end of the year		3,602,569			1,456,497			6,059,800			2,993,675
Loan recoveries (1)		177,771			120,260			305,401			241,335

(1)  Loan recoveries were recorded as revenue from “Lending operations” and “Leasing operations”.

8. Foreign Exchange Portfolio

(a) Balance sheet

	Unibanco						Unibanco Consolidated
	2008			2007			2008			2007
Assets - Other credits
Unsettled exchange purchases		4,392,879			3,074,560			4,392,879			3,074,560
Rights on foreign exchange sold		3,944,498			1,454,137			3,944,498			1,454,137
(-) Received advances		(131,558	)		(42,114	)		(131,558	)		(42,114	)
Income receivable from advances on exchange contracts		62,944			29,453			62,944			29,453
Total		8,268,763			4,516,036			8,268,763			4,516,036
Liabilities - Other liabilities
Unsettled exchange sales		4,174,590			1,450,135			4,174,590			1,450,135
Obligations for foreign exchange purchased		3,762,225			3,218,737			3,762,225			3,218,737
(-) Advances on exchange contracts		(1,485,834	)		(1,653,356	)		(1,485,834	)		(1,653,356	)
Other		308			222			308			222
Total		6,451,289			3,015,738			6,451,289			3,015,738
Off-balance sheet
Import credits outstanding		259,662			192,598			274,244			213,066
Confirmed export credits		7,943			8,953			7,943			8,953

(b) Statement of income

	Unibanco						Unibanco Consolidated
	2008			2007			2008			2007
Income from foreign exchange transactions		12,175,341			4,974,076			12,837,367			5,236,558
Expenses from foreign exchange transactions		(11,207,971	)		(4,953,744	)		(11,863,179	)		(5,195,122	)
Net gain on foreign exchange transactions		967,370			20,332			974,188			41,436

35

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

9. Other Credits – Sundry

	Unibanco				Unibanco Consolidated
	2008		2007		2008		2007
Escrow deposits for civil and labor suits (1)		544,382		691,202		1,757,582		1,825,574
Notes and credits receivable		496,083		562,699		530,513		611,512
Accounts receivable from temporary Special Administration Regime		281,630		247,480		281,630		247,480
Salary advances and other		583,841		140,151		1,035,623		156,614
Debtors for purchase of assets		3,529		8,073		22,531		37,009
Recoverable payments		27,276		39,180		32,417		48,731
Sundry foreign debtors		20,552		622		44,425		18,863
Accounts receivable from associated companies		636,325		776,352		22,353		19,581
Other credits with granting characteristics		62,636		70,703		86,915		92,952
Other		295,333		167,410		529,424		427,694
Total		2,951,587		2,703,872		4,343,413		3,486,010
Current		1,700,249		1,588,295		1,881,893		1,135,246
Long-term		1,251,338		1,115,577		2,461,520		2,350,764

(1) Substantially related to contingent liabilities (Note 15)

10. Prepaid Expenses

	Unibanco				Unibanco Consolidated
	2008		2007		2008		2007
Commissions and expenses on debt placements		43,438		58,132		43,640		58,150
Commissions on debt products		96,647		390,225		682,550		621,964
Exclusive contracts for banking services		50,833		202,449		317,659		472,589
Advance of private pension sponsor contributions		122,356		207,519		135,087		215,490
Linked to insurance and social security		-		-		126,637		-
Others		42,577		47,632		44,212		60,773
Total		355,851		905,957		1,349,785		1,428,966
Current		163,349		282,230		225,127		607,652
Long-term		192,502		623,727		1,124,658		821,314

11. Foreign Branch

As mentioned in Note 2, the financial statements of the foreign branch (Grand Cayman) is consolidated with that of Unibanco.

The balance of this branch can be summarized as follows:

	2008				2007
	US$		R$		US$		R$
	thousand		thousand		thousand		thousand
Current assets		5,700,935		13,323,085		6,676,368		11,825,851
Long-term assets		5,491,431		12,833,474		3,079,288		5,454,343
Permanent assets		69,025		161,311		67,665		119,855
Total assets		11,261,391		26,317,870		9,823,321		17,400,049
Current liabilities		7,149,643		16,708,716		6,602,030		11,694,176
Long-term liabilities		3,451,203		8,065,460		2,674,533		4,737,400
Branch equity		660,545		1,543,694		546,758		968,473
Total liabilities		11,261,391		26,317,870		9,823,321		17,400,049
Net income for the year		126,063		294,610		146,951		260,294

36

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

12. Investments

(a) Investments in subsidiary and associated companies

Results of investments in subsidiary and associated companies were recorded as “Equity in the results of associated companies” in the statement of income. The foreign branch and subsidiary companies’ exchange gains in the amount of R$1,753,092 (2007 – exchange loss - R$651,219) in Unibanco and in Unibanco Consolidated, were recognized as “Gross Profit from Financial Intermediation”. The investments in subsidiary and associated companies and the major transactions relating to investments in subsidiary and associated companies, were as follows:

37

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

																								Equity in the results
												Equity in the			Adjustments to									of associated
			Amortization of			Subscription/			Dividends and			results			marketable									companies from
	Balances at		goodwill/			Acquisition/			interest on capital			of associated			securities of			Exchange		Balances at		Balances at		1/1/2007 to
	12/31/2007		negative goodwill			sales			received			companies (1)			subsidiaries			variation		12/31/2008		12/31/2007		12/31/2007
Investments of Unibanco
Subsidiary companies
Dibens Leasing S.A. - Arrendamento Mercantil (2)		4,956,079		-			3,015,678			(220,095	)		911,040			(61	)		-		8,662,641		4,956,079		444,066
Unipart Participações Internacionais Ltd. (3)		2,743,071		-			937,314			(2,392,400	)		125,767			(902	)		1,378,187		2,791,037		2,743,071		192,377
Unicard Banco Múltiplo S.A. (4) and (5)		1,883,047		-			(2,189,138	)		(302,807	)		608,913			(15	)		-		-		1,883,047		174,980
Banco Fininvest S.A. (5)		1,562,123		-			1,909,254			-			(277,789	)		32			-		3,193,620		1,562,123		102,677
Unibanco Seguros S.A. (6)		794,297		(36,495	)		1,840,705			(105,134	)		235,535			(50,536	)		-		2,678,372		794,297		143,240
Banco Dibens S.A. (7)		504,841		(4,474	)		57,361			(35,000	)		53,257			-			-		575,985		504,841		34,451
Unibanco Companhia de Capitalização		457,706		-			(6,789	)		(152,481	)		121,983			(6,927	)		-		413,492		457,706		85,280
Banco Único S.A. (8)		285,984		2,171			95,360			(4,977	)		30,250			-			-		408,788		285,984		21,381
Unibanco Investshop Corretora de Vals.Mobil. e Câmbio S.A.		175,203		-			8,375			(150	)		(7,567	)		(168	)		-		175,693		175,203		28,147
Interbanco S.A. (9)		164,128		-			-			(33,743	)		105,833			-			39,780		275,998		164,128		72,566
AIG Brasil Companhia de Seguros		44,239		-			(43,308	)		(3,850	)		2,536			383			-		-		44,239		7,497
Other (10)		467,008		(527	)		122,126			(182,275	)		212,233			(2	)		56,319		674,882		467,008		326,940
Jointly controlled companies (i)
Maxfácil Participações S.A.		155,379		(17,102	)		-			(21,855	)		18,695			-			-		135,117		155,379		6,790
Banco Investcred Unibanco S.A. - PontoCred		69,706		-			4,201			(7,339	)		3,328			-			-		69,896		69,706		32,420
Companhia Hipotecária Unibanco - Rodobens (11)		10,968		-			-			(1,826	)		2,745			-			-		11,887		10,968		2,540
Other		29,128		-			(34,952	)		(519	)		36,475			-			-		30,132		29,128		48,871
TOTAL		14,302,907		(56,427	)		5,716,187			(3,464,451	)		2,183,234			(58,196	)		1,474,286		20,097,540		14,302,907		1,724,223
Investment of Unibanco Consolidated
Associated companies
AIG Brasil Companhia de Seguros		44,239		-			(43,308	)		(3,850	)		2,536			383			-		-		44,239		7,497
BIU Participações S.A.		48,866		-			-			(14,316	)		9,270			-			-		43,820		48,866		54,129
Goodwill on acquisition of companies (Note 12 (b))		257,569		(178,218	)		1,104,154			-			-			-			-		1,183,505		257,569		-
Other (12)		225,524		-			(213,712	)		(387	)		874			-			-		12,299		225,524		40,326
TOTAL		576,198		(178,218	)		847,134			(18,553	)		12,680			383			-		1,239,624		576,198		101,952

								Number of shares
			Adjusted		Adjusted			or quotes (in thousands)				Equity share in		Equity share in
			Stockholders		net			direct and indirect				voting capital		social capital
	Capital		equity		income			Common		Preferred		(%)		(%)
Investments of Unibanco
Subsidiary companies
Dibens Leasing S.A. - Arrendamento Mercantil (2)		6,229,528		8,662,641		926,718			819,143		-		99,999		99,999
Unipart Participações Internacionais Ltd. (3)		6,438		2,791,037		106,347			6,438		-		100,000		100,000
Banco Fininvest S.A. (5)		3,165,831		3,501,707		(338,027	)		19		6		99,991		100,000
Unibanco Seguros S.A. (6)		1,033,200		1,619,019		224,153			662,914		425,843		100,000		100,000
Banco Dibens S.A. (7)		518,020		569,648		31,486			23,183,982		-		99,999		100,000
Unibanco Companhia de Capitalização		317,142		413,492		115,193			4,194		-		99,999		100,000
Banco Único S.A. (8)		330,000		409,963		30,162			4,351,576		4,351,576		100,000		100,000
Unibanco Investshop Corretora de Vals.Mobil. e Câmbio S.A.		133,590		175,693		632			8,060		4,955		100,000		100,000
Interbanco S.A. (9)		25,923,360		276,001		105,085			25,923		-		99,996		99,999
Jointly controlled companies (i)
Maxfácil Participações S.A.		4,042		179,073		37,400			11		-		49,986		49,986
Banco Investcred Unibanco S.A. - PontoCred		66,019		139,801		14,680			95		-		49,997		49,997
Companhia Hipotecária Unibanco - Rodobens (11)		11,750		23,775		5,403			6,055		-		50,000		50,000
Investment of Unibanco Consolidated
Associated companies
BIU Participações S.A.		40,392		178,620		26,099			225		-		-		24.492

38

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

								Number of shares
			Adjusted		Adjusted			or quotes (in thousands)				Equity share in		Equity share in
Main direct, indirect and jointly controlled			Stockholders		net			direct and indirect				voting capital		social capital
subsidiary companies invested by:	Capital		equity		income			Common		Preferred		(%)		(%)
UNIPART PARTICIPAÇÕES INTERNACIONAIS LTD.
Unibanco Cayman Bank Ltd.		26,340		986,481		51,248			26,340		-		100,000		100,000
Unibanco União de Bancos Brasileiros (Luxembourg) S.A.		20,000		206,506		14,395			200		-		99,999		99,999
Unicorp Bank  &  Trust Ltd.		5,000		51,482		47,960			1,750		3,250		100,000		100,000
UNIBANCO AIG SEGUROS S.A.
Unibanco Vida e Previdência S.A. (13)		256,224		199,675		22,182			39,565		-		99,999		99,999
Unibanco Saúde Seguradora S.A. (14)		41,803		65,359		11,420			23,995		-		99,999		99,999
UASEG Seguros S.A.		14,400		16,978		1,116			14,400		-		99,999		99,999
BANCO FININVEST S.A.
Luizacred S.A. Sociedade de Crédito, Financiamento
e Investimento		66,623		61,059		(46,712	)		172		172		49,999		49,999
Unicard Banco Múltiplo S.A.		1,749,340		2,029,369		111,425			274,830,963		91,811,816		100,000		100,000
Hipercard Banco Múltiplo S.A.		757,467		809,909		36,789			490,295		5,940		100,000		100,000
DIBENS LEASING S.A. - ARRENDAMENTO MERCANTIL
Unibanco Participações Societárias S.A. (2) and (15)		42,780		2,200,278		381,100			8,883		6,218		51,000		51,000
Redecard S.A. (15)		473,551		722,261		1,196,121			156,201		-		23,211		23,211
Provar Negócios de Varejo Ltda. (16)		1,197,865		1,309,052		111,827			119,778,693		-		99,993		99,993

(i) The percentage shown in the Unibanco Consolidated column refers to the total percentage holding in the companies.

39

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(1) The difference between the net income and the equity results and between the stockholders equity and the investment balance were mainly, alteration of participation during the period and restatement of exchange membership certificates, recorded in stockholders equity of the investee.

(2) In June 2007, Unibanco admitted the Deutsche group as a minority shareholder in Unibanco Participações Societárias S.A. - (“UPS”), a subsidiary of Dibens Leasing S.A. - Arrendamento Mercantil. The minority shareholder became a holder of 49% of the total capital of UPS which has the business purpose of participation in Unibanco’s non-financial subsidiaries. (See Note 26).

The Extraordinary Shareholders´Meeting held in February 2008, approved the increase of capital, in the amount of R$3,000,001, through the issue of 306,764,252 common shares. The increase was approved by the Brazilian Central Bank in March 2008.

The Extraordinary Shareholders’ Meetings held in March, June and October 2007, approved the increase in capital, in the amount of R$2,800,008, represented by 431,291,927 common shares. The Brazilian Central Bank approved the increase in the capital in April, July and October 2007, respectively.

In June 2007, the Share Purchase Agreement between Dibens Leasing S.A – Arrendamento Mercantil and Fininvest Negócios e Varejo Ltda (Unibanco) and Experian Brasil Aquisições Ltda.(Experian), the Brazilian affiliate of Experian Solutions Inc, concluded the sale of 489,195 common shares of Serasa at the price of R$925.78 per share. Unibanco and Experian executed a Shareholders’ Agreement that will allow Unibanco to participate in Serasa’s management by appointing a member to the Board of Directors and by holding 6.05% of the capital. See Note 26.

(3) In June 2008, the increase in the capital of Unipart Participações Internacionais Ltd. was approved, in the amount of US$588,912 represented by 588,912 shares, totally paid by Unibanco.

(4) In October and November 2007, Unibanco, through an Initial Public Offering, sold its total investment in Bovespa Holding S.A (23,314,228 shares) for R$23.00 per share and BM&F S.A. (5,956,495 shares) for the average price of R$17.24 per share.  (See Note 26).

The Extraordinary Shareholders´Meeting held in November 2008, approved an upstream merger of Hipercard Banco Múltiplo S.A. into Unicard Banco Múltiplo S.A. Due to the upstream merger, the capital increase to R$1,749,340 was approved. These changes are pending approval by the Brazilian Central Bank.

(5) The Extraordinary Shareholders´Meeting held in November 2008, approved an upstream merger issue of Unicard Banco Múltiplo S.A. into Banco Fininvest S.A. Due to the upstream merger, the capital increase to R$3,165,831 was approved. These changes are pending approval by the Brazilian Central Bank.

(6)  In accordance with the Material Facts announced in November 2008, Unibanco – União de Bancos Brasileiros S.A. signed an agreement with American International Group, Inc. (“AIG”) to acquire, for the purchase price of US$820 million, the shares held by AIG in Unibanco AIG Seguros S.A., which shall have its name changed to Unibanco Seguros S.A.,generating goodwill in the amount of R$1,095,848 based on the expectation of future profitability to be amortized up to five years of the purchase amount, US$15 million were paid through the transfer to AIG of 54,213,937 common shares issued by AIG Brasil Companhia de Seguros held by Unibanco. These changes are pending approval by the Superintendency of Private Insurances.

(7) The Extraordinary Shareholders´Meeting held in July 2008, approved the increase of capital, in the amount of R$78,856, through the issue of 3,098,472,089 common shares, with no par value, originated by the absorption of the split-off from  Banco Único S.A. The change is pending approval by the Brazilian Central Bank.

(8) The Extraordinary Shareholders´Meeting held in April 2008, approved the increase of capital, in the amount of R$20,706, with no shares issued, capitalizing the earnings of 2007 and reserves. The Brazilian Central Bank approved this increase in April 2008. The Extraordinary Shareholders´Meetings held in July 2008, approved (i) the increase of capital in the amount of R$174,216, through the private issue of 3,166,357,881 shares being 1,583,178,941 common shares and 1,583,178,940 preferred shares, with no par value; (ii) capital reduction in the amount of R$78,856, with no change in the number of shares, through the transfer of part of the equity to Banco Dibens S.A. and (iii) increase of capital in the amount of R$81,935, with no shares issued by capitalization of the reserves. These changes are pending of the approval by the Brazilian Central Bank.

(9) The Ordinary Shareholders´Meeting held in April 2008 approved the increase of capital, in the amount of Gs1 467,360, represented by 1,467,360,000 shares.

(10) In October 2008, the Brazilian Central Bank approved the transfer of control over Bancred S.A. – Crédito, Financiamento e Investimento to Banco Cruzeiro do Sul S.A. and Unibanco – União de Bancos Brasileiros S.A., in accordance with the Agreement of February 2007.

40

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(11) The Extraordinary Shareholders´Meeting held in March 2008, approved the increase of capital in the amount of R$1,750, with no shares issued, capitalizing the earnings of 2007. The Brazilian Central Bank approved the increase in capital in June 2008.

(12) In 2007, represented principally the investment in IRB Brasil Resseguros, reclassified to other investments in 2008 and evaluated at cost because of the adoption of Law n° 11,638/07 in relation to investment evaluation.

(13) The Extraordinary Shareholders´Meeting held in November 2008 changed the name to Unibanco Vida e Previdência S.A. The Superintendency of Private Insurance approved this change in February 2009.

(14) The Extraordinary Shareholders´Meeting held in April 2008, approved the increase of capital in the amount of R$11,803, through the private issue of 3,995,140 common shares, with no par value. The Extraordinary Shareholders´meeting held in November 2008, approved the name change to Unibanco Saúde Seguradora S.A.

(15) In July 2007, Unibanco Participações Societárias S.A., through an Initial Public Offering, sold 53,798,700 shares of Redecard S.A., representing 8.73% of the company’s capital, for the amount of R$1.5 billion. (See Note 26).

(16) In August 2008, the Change and Consolidation of Statutes Agreement changed the name of Fininvest – Negócios de Varejo Ltda.,to Provar Negócios de Varejo Ltda.

(b)   Goodwill on acquisition of companies

The goodwill on acquisition of companies is based on the expectation of future earnings, with amortization in up to 5 years. The goodwill balance shown in the Unibanco consolidated financial statements and the amount amortized were as follows:

	Balance to be amortized				Amortization
	2008		2007		2008		2007
Unibanco Seguros (1)		1,059,353		-		36,495		-
Hipercard		13,825		96,768		82,943		82,943
Hipercard Investimentos (2)		-		-		-		146,316
Maxfácil		45,605		62,707		17,102		17,102
Other		64,722		98,094		41,677		44,083
Total		1,183,505		257,569		178,217		290,444

(1) Goodwill calculated in the acquisition of the shares held by American International Group, Inc. (“AIG”) in Unibanco AIG Seguros S.A., which had its name changed to Unibanco Seguros S.A.

(2) Company acquired by Hipercard Banco Múltiplo S.A., during the first quarter of 2006, as part of the agreement with a retailer partner. In December 2007, the company was merged into the parent company and the goodwill balance in the amount of R$110,484 was fully amortized

41

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

13. Fixed Asset, Intangible and Deferred Assets

	Unibanco
	12/31/2008							12/31/2007
			Acumulated							Acumulated
	Cost		depreciation			Residual		Cost		depreciation			Residual
FIXED ASSETS		1,529,289		(1,039,336	)		489,953		1,187,409		(805,379	)		382,030
LAND AND BUILDINGS IN USE		203,078		(86,789	)		116,289		183,313		(81,902	)		101,411
Land		17,952		-			17,952		13,527		-			13,527
Buildings		185,126		(86,789	)		98,337		169,786		(81,902	)		87,884
OTHER FIXED ASSETS		1,326,211		(952,547	)		373,664		1,004,096		(723,477	)		280,619
Installations		12,923		(4,326	)		8,597		8,880		(3,410	)		5,470
Furniture and equipment		395,886		(219,688	)		176,198		300,007		(195,409	)		104,598
Data processing		874,318		(714,717	)		159,601		638,971		(512,564	)		126,407
Other (communication, security and transportation)		43,084		(13,816	)		29,268		56,238		(12,094	)		44,144
INTANGIBLE		428,666		(113,313	)		315,353		-		-			-
Other intangible assets		5,062		(8	)		5,054		-		-			-
Rights for payrolls		423,604		(113,305	)		310,299		-		-			-
DEFERRED CHARGES		956,742		(404,303	)		552,439		1,072,765		(528,683	)		544,082
Leasehold improvements		361,816		(178,718	)		183,098		258,084		(151,111	)		106,973
Expenditures on acquisitions of software		298,370		(174,933	)		123,437		655,742		(344,541	)		311,201
Other deferred expenditures		296,556		(50,652	)		245,904		158,939		(33,031	)		125,908
TOTAL		2,914,697		(1,556,952	)		1,357,745		2,260,174		(1,334,062	)		926,112

	Unibanco Consolidated
	12/31/2008							12/31/2007
			Acumulated							Acumulated
	Cost		depreciation			Residual		Cost		depreciation			Residual
FIXED ASSETS		2,686,153		(1,693,323	)		992,830		2,199,874		(1,356,796	)		843,078
LAND AND BUILDINGS IN USE		616,095		(229,245	)		386,850		608,297		(218,484	)		389,813
Land		177,713		-			177,713		178,853		-			178,853
Buildings		438,382		(229,245	)		209,137		429,444		(218,484	)		210,960
OTHER FIXED ASSETS		2,070,058		(1,464,078	)		605,980		1,591,577		(1,138,312	)		453,265
Installations		106,708		(67,828	)		38,880		77,325		(52,707	)		24,618
Furniture and equipment		798,069		(473,959	)		324,110		622,945		(414,533	)		208,412
Data processing		1,139,830		(900,429	)		239,401		829,726		(651,677	)		178,049
Other (communication, security and transportation)		25,451		(21,862	)		3,589		61,581		(19,395	)		42,186
INTANGIBLE		706,856		(113,369	)		593,487		-		-			-
Other intangible assets		283,252		(65	)		283,187		-		-			-
Rights for payrolls		423,604		(113,304	)		310,300		-		-			-
DEFERRED CHARGES		1,162,965		(538,906	)		624,059		1,479,096		(733,108	)		745,988
Leasehold improvements		427,937		(249,583	)		178,354		498,055		(230,791	)		267,264
Expenditures on acquisitions of software		387,418		(244,729	)		142,689		887,188		(470,303	)		416,885
Other deferred expenditures		347,610		(44,594	)		303,016		93,853		(32,014	)		61,839
TOTAL		4,555,974		(2,345,598	)		2,210,376		3,678,970		(2,089,904	)		1,589,066

42

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

14. Funding, Borrowings and Onlendings

(a) Summary

	Unibanco
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Deposits		21,142,345		6,092,511		4,576,756		33,903,830		442,640		7,709,995		73,868,077		48	%		67,074,904		51	%
Securities sold under repurchase agreements		28,974,355		2,631,207		1,958,140		10,510,986		341,875		2,654		44,419,217		29	%		33,294,052		25	%
Real estate notes, mortgage notes, credits and similar		1,004,813		2,184,875		1,277,710		523,329		129,694		188,095		5,308,516		3	%		1,469,543		1	%
Debentures		3,301		49,710		3,600		930,874		146,473		1,680		1,135,638		1	%		2,894,975		2	%
Securities abroad		208,855		1,021,446		221,513		209,639		29,306		93,098		1,783,857		1	%		4,643,496		4	%
Borrowings in Brazil and foreign		880,731		2,267,442		1,680,667		2,057,462		658,353		69,659		7,614,314		5	%		7,480,805		6	%
Onlending on Brazil and foreign		282,711		1,307,418		1,489,041		4,177,697		1,806,274		1,061,171		10,124,312		7	%		7,939,991		6	%
Subordinated debt		17,508		1,532		350,889		1,168,500		5,033,633		1,632,742		8,204,804		5	%		5,764,668		4	%
Sale of rights of receipt of future flow of payment orders abroad		-		-		66,487		-		378,695		1,989,371		2,434,553		2	%		1,569,412		1	%
Total - 2008		52,514,619		15,556,141		11,624,803		53,482,317		8,966,943		12,748,465		154,893,288		100	%		132,131,846		100	%
% per maturity term		33.9		10.0		7.5		34.5		5.8		8.2		100.0
Total - 2007		43,001,874		6,911,205		24,810,901		34,781,766		7,733,418		14,892,682		132,131,846
% per maturity term		32.5		5.2		18.8		26.3		5.9		11.3		100.0

	Unibanco Consolidated
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Deposits		19,888,380		6,056,218		3,558,280		26,546,137		443,671		180,851		56,673,537		44	%		45,642,544		45	%
Securities sold under repurchase agreements		19,534,741		2,621,108		1,667,497		10,182,638		337,206		2,653		34,345,843		27	%		27,080,174		27	%
Real estate notes, mortgage notes, credits and similar		1,004,813		2,184,875		1,277,710		523,329		129,694		188,095		5,308,516		4	%		1,524,680		1	%
Debentures		3,301		53,181		3,600		929,830		146,473		360,680		1,497,065		1	%		2,745,759		3	%
Securities abroad		206,561		1,006,030		216,237		197,324		16,991		85,180		1,728,323		1	%		1,381,693		1	%
Borrowings in Brazil and foreign		1,049,074		2,283,456		1,689,493		2,063,211		658,353		69,659		7,813,246		6	%		7,718,848		8	%
Onlending on Brazil and foreign		303,783		1,426,231		1,606,046		4,384,376		1,907,730		1,062,894		10,691,060		8	%		8,617,723		8	%
Subordinated debt		17,508		1,478		350,889		1,168,500		5,020,328		1,632,742		8,191,445		6	%		5,756,952		6	%
Sale of rights of receipt of future flow of payment orders abroad		-		-		66,487		-		378,695		1,989,371		2,434,553		2	%		1,569,412		2	%
Total - 2008		42,008,161		15,632,577		10,436,239		45,995,345		9,039,141		5,572,125		128,683,588		100	%		102,037,785		100	%
% per maturity term		32.6		12.1		8.1		35.7		7.0		4.3		100.0
Total - 2007		37,225,881		13,713,318		12,619,778		27,274,920		7,839,712		3,364,176		102,037,785
% per maturity term		36.5		13.4		12.4		26.7		7.7		3.3		100.0

(b) Deposits

	Unibanco
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Demand deposits		3,787,396		-		-		-		-		-		3,787,396		5	%		10,261,303		15	%
Savings deposits		6,674,713		-		-		-		-		-		6,674,713		9	%		10,060,219		15	%
Interbank deposits		1,280,454		1,714,119		1,914,510		7,171,965		-		7,646,364		19,727,412		27	%		20,973,528		31	%
Time deposits		9,282,341		4,378,392		2,662,246		26,731,865		442,640		63,631		43,561,115		59	%		25,642,236		38	%
Foreign currency deposits		44,367		-		-		-		-		-		44,367		0	%		7,028		0	%
Other deposits		73,074		-		-		-		-		-		73,075		0	%		130,590		0	%
Total - 2008		21,142,345		6,092,511		4,576,756		33,903,830		442,640		7,709,995		73,868,077		100	%		67,074,904		100	%
% per maturity term		28.6		8.2		6.2		45.9		0.6		10.4		100.0
Total - 2007		23,747,212		2,064,237		12,402,260		19,560,191		182,559		9,118,445		67,074,904
% per maturity term		35.4		3.1		18.5		29.2		0.3		13.6		100.0

	Unibanco Consolidated
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Demand deposits		3,991,574		-		-		-		-		-		3,991,574		7	%		10,141,109		22	%
Savings deposits		7,399,975		-		-		-		-		-		7,399,975		13	%		10,505,892		23	%
Interbank deposits		177,148		1,321,257		162,187		15,224		158		114,463		1,790,437		3	%		1,149,031		3	%
Time deposits		8,217,523		4,734,961		3,396,093		26,530,913		443,513		66,388		43,389,391		77	%		23,708,940		52	%
Foreign currency deposits		29,086		-		-		-		-		-		29,086		0	%		6,982		0	%
Other deposits		73,074		-		-		-		-		-		73,074		0	%		130,590		0	%
Total - 2008		19,888,380		6,056,218		3,558,280		26,546,137		443,671		180,851		56,673,537		100	%		45,642,544		100	%
% per maturity term		35.1		10.7		6.3		46.8		0.8		0.3		100.0
Total - 2007		23,489,182		4,290,531		4,718,183		12,855,106		182,559		106,983		45,642,544
% per maturity term		51.5		9.4		10.3		28.2		0.4		0.2		100.0

43

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(c) Deposits received under securities repurchase agreements

	Unibanco
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Own portfolio		879,570		1,957,531		1,769,237		10,510,986		341,875		2,654		15,461,853		35	%		15,636,078		47	%
Third parties portfolio		26,018,344		29,972		188,903		-		-		-		26,237,219		59	%		15,151,603		46	%
Foreign		2,076,441		643,704		-		-		-		-		2,720,145		6	%		2,506,371		0
Total - 2008		28,974,355		2,631,207		1,958,140		10,510,986		341,875		2,654		44,419,217		100	%		33,294,052		100	%
% per maturity term		65.2		5.9		4.4		23.7		0.8		0.0		100.0
Total - 2007		17,302,912		1,988,966		5,618,935		7,324,759		1,056,005		2,475		33,294,052
% per maturity term		52.0		6.0		16.9		22.0		3.2		0.0		100.0

	Unibanco Consolidated
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Own portfolio		951,370		1,957,246		1,667,211		10,182,638		337,206		2,653		15,098,324		44	%		15,358,058		57	%
Third parties portfolio		16,630,700		20,158		286		-		-		-		16,651,144		48	%		9,279,279		34	%
Foreign		1,952,671		643,704		-		-		-		-		2,596,375		8	%		2,442,837		0
Total - 2008		19,534,741		2,621,108		1,667,497		10,182,638		337,206		2,653		34,345,842		100	%		27,080,174		100	%
% per maturity term		56.9		7.6		4.9		29.6		1.0		0.0		99.0
Total - 2007		11,441,100		4,799,876		2,679,919		7,100,798		1,056,005		2,476		27,080,174
% per maturity term		42.2		17.7		9.9		26.2		3.9		0.0		100.0

(d) Real estate, mortgage, credits and similar notes

	Unibanco
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Real estate notes		256,370		1,209,267		498,141		172,204		129,694		188,095		2,453,771		46	%		1,051,529.00		72	%
Agribusiness  notes		748,443		975,608		779,569		351,125		-		-		2,854,745		54	%		418,014		28	%
Total - 2008		1,004,813		2,184,875		1,277,710		523,329		129,694		188,095		5,308,516		100	%		1,469,543		100	%
% per maturity term		18.9		41.2		24.1		9.9		2.4		3.5		100.0
Total - 2007		102,140		593,989		773,206		208		-		-		1,469,543
% per maturity term		7.0		40.4		52.6		0.0		-		-		100.0

	Unibanco Consolidated
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Real estate notes		256,370		1,209,267		498,141		172,204		129,694		188,095		2,453,771		46	%		1,051,529.00		69	%
Agribusiness  notes		748,443		975,608		779,569		351,125		-		-		2,854,745		54	%		418,014		27	%
Other		-		-		-		-		-		-		-		0	%		55,137		4	%
Total - 2008		1,004,813		2,184,875		1,277,710		523,329		129,694		188,095		5,308,516		100	%		1,524,680		100	%
% per maturity term		18.9		41.2		24.1		9.9		2.4		3.5		100.0
Total - 2007		157,277		593,989		773,206		208		-		-		1,524,680
% per maturity term		10.3		39.0		50.7		0.0		-		-		100.0

Real estate notes bear interest of up to 100% of the interbank interest rate.

Agribusiness notes bear interest of up to 94% of the interbank interest rate.

44

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(e)  Resources from debentures

	Unibanco
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Debentures		3,301		49,710		3,600		930,874		146,473		1,680		1,135,638		100	%		2,894,975		100	%
Total - 2008		3,301		49,710		3,600		930,874		146,473		1,680		1,135,638		100	%		2,894,975		100	%
% per maturity term		0.3		4.4		0.3		82.0		12.9		0.1		100.0
Total - 2007		5,684		302,730		101,423		1,969,508		514,137		1,493		2,894,975
% per maturity term		0.2		10.5		3.5		68.0		17.8		0.1		100.0

	Unibanco Consolidated
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Debentures		3,301		53,181		3,600		929,830		146,473		360,680		1,497,065		100	%		2,745,758		100	%
Total - 2008		3,301		53,181		3,600		929,830		146,473		360,680		1,497,065		100	%		2,745,758		100	%
% per maturity term		0.2		3.6		0.2		62.1		9.8		24.1		100.0
Total - 2007		5,684		302,730		101,422		1,114,588		514,137		707,197		2,745,758
% per maturity term		0.2		11.0		3.7		40.6		18.7		25.8		100.0

Debentures issued by Dibens Leasing S.A. - Arrendamento Mercantil are restated and bear interest of up to 102% of the interbank interest rate.

Pledged debentures schedules are restated and bear interest of up to 106% of the interbank interest rate and fixed interest of up to 14.2%.

(f)  Securities abroad – Euronotes

	Unibanco
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Securities		-		7,580		467		1,869		-		-		9,916		1	%		15,869		0	%
Eurobonds		208,855		1,013,866		221,046		207,770		29,306		93,098		1,773,941		99	%		4,627,627		100	%
Total - 2008		208,855		1,021,446		221,513		209,639		29,306		93,098		1,783,857		100	%		4,643,496		100	%
% per maturity term		11.7		57.3		12.4		11.8		1.6		5.2		100.0
Total - 2007		180,562		497,994		399,398		305,207		14,519		3,245,816		4,643,496
% per maturity term		3.9		10.7		8.6		6.6		0.3		69.9		100.0

	Unibanco Consolidated
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Securities		-		7,580		467		1,869		-		-		9,916		1	%		15,869		1	%
Eurobonds		206,561		998,450		215,770		195,455		16,991		85,180		1,718,407		99	%		1,365,824		99	%
Total - 2008		206,561		1,006,030		216,237		197,324		16,991		85,180		1,728,323		100	%		1,381,693		100	%
% per maturity term		12.0		58.2		12.5		11.4		1.0		4.9		100.0
Total - 2007		176,089		493,519		393,935		290,687		4,397		23,066		1,381,693
% per maturity term		12.7		35.7		28.5		21.0		0.3		1.7		100.0

The average interest of issues in foreign currency was 5.52% (2007 – 7.73%) per annum in Unibanco and 5.47% (2007 - 3.20%) per annum in Unibanco Consolidated.

45

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(g)  Local Borrowings and Foreign Borrowings

	Unibanco
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Borrowings in Brazil - governmental agencies		4		18		21		46		46		18		153		0	%		328.00		0	%
Foreign borrowings		880,727		2,267,424		1,680,646		2,057,416		658,307		69,641		7,614,161		100	%		7,480,477.00		100	%
Total - 2008		880,731		2,267,442		1,680,667		2,057,462		658,353		69,659		7,614,314		100	%		7,480,805		100	%
% per maturity term		11.6		29.8		22.1		27.0		8.6		0.9		100.0
Total - 2007		1,391,491		1,054,734		3,511,357		964,635		409,989		148,599		7,480,805
% per maturity term		18.6		14.1		46.9		12.9		5.5		2.0		100.0

	Unibanco Consolidated
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Borrowings in Brazil - governmental agencies		4		18		21		46		46		18		153		0	%		91		0	%
Borrowings in Brazil - other institutions		61,359		-		5,707		7,871		-		-		74,937		1	%		110,522		1	%
Foreign borrowings		987,711		2,283,438		1,683,765		2,055,294		658,307		69,641		7,738,156		99	%		7,608,235		99	%
Total - 2008		1,049,074		2,283,456		1,689,493		2,063,211		658,353		69,659		7,813,246		100	%		7,718,848		100	%
% per maturity term		13.4		29.2		21.6		26.4		8.4		0.9		100.0
Total - 2007		1,657,953		2,058,007		2,483,830		960,813		409,646		148,599		7,718,848
% per maturity term		21.5		26.7		32.2		12.4		5.3		1.9		100.0

(h) Local Onlendings and Foreign Onlendings

	Unibanco
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
BNDES  (National Economic Development Bank)		127,772		588,060		673,398		1,556,924		926,090		823,849		4,696,093		44	%		4,074,121		47	%
FINAME (National Industrial Financing Authority)		145,893		646,916		788,085		2,530,247		809,504		179,910		5,100,555		48	%		3,592,101		42	%
Other		9,046		71,554		26,685		87,035		70,680		57,412		322,412		3	%		266,186		3	%
Foreign onlendings		-		888		873		3,491		-		-		5,252		0	%		7,583		0	%
Total - 2008		282,711		1,307,418		1,489,041		4,177,697		1,806,274		1,061,171		10,124,312		95	%		7,939,991		92	%
% per maturity term		2.8		12.9		14.7		41.3		17.8		10.5		100.0
Total - 2007		234,929		384,904		1,942,075		3,153,395		1,484,882		739,806		7,939,991
% per maturity term		3.0		4.8		24.5		39.7		18.7		9.3		100.0

	Unibanco Consolidated
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
BNDES  (National Economic Development Bank)		127,772		588,060		673,398		1,556,924		926,090		823,849		4,696,093		44	%		4,074,122		47	%
FINAME (National Industrial Financing Authority)		166,964		765,729		905,090		2,736,927		910,960		181,633		5,667,303		53	%		4,269,833		50	%
Other		9,047		71,554		26,685		87,034		70,680		57,412		322,412		3	%		266,186		3	%
Foreign onlendings		-		888		873		3,491		-		-		5,252		0	%		7,583		0	%
Total - 2008		303,783		1,426,231		1,606,046		4,384,376		1,907,730		1,062,894		10,691,060		100	%		8,617,724		100	%
% per maturity term		2.8		13.3		15.0		41.0		17.8		9.9		100.0
Total - 2007		261,652		1,149,379		1,408,697		3,456,549		1,601,641		739,806		8,617,724
% per maturity term		3.0		13.3		16.3		40.1		18.6		8.6		100.0

Foreign onlendings consist of long-term credit lines for project and trade financing with an average interest rate of 2.32% per annum.

(i) Subordinated Debt

	Unibanco
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Subordinated debt		17,508		1,532		350,889		1,168,500		5,033,633		1,632,742		8,204,804		100	%		5,764,668		100	%
Total - 2008		17,508		1,532		350,889		1,168,500		5,033,633		1,632,742		8,204,804		100	%		5,764,668		100	%
% per maturity term		0.2		0.0		4.3		14.2		61.3		19.9		100.0
Total - 2007		13,270		-		1,661		1,151,345		3,512,577		1,085,815		5,764,668
% per maturity term		0.2		-		0.0		20.0		60.9		18.8		100.0

	Unibanco Consolidated
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Subordinated debt		17,508		1,478		350,889		1,168,500		5,020,328		1,632,742		8,191,445		100	%		5,756,952		100	%
Total - 2008		17,508		1,478		350,889		1,168,500		5,020,328		1,632,742		8,191,445		100	%		5,756,952		100	%
% per maturity term		0.2		0.0		4.3		14.3		61.3		19.9		100.0
Total - 2007		13,270		1,636		-		1,143,654		3,512,577		1,085,815		5,756,952
% per maturity term		0.2		0.0		-		19.9		61.0		18.9		100.0

46

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

Description:

						Unibanco				Unibanco Consolidated
			Remuneration
	Issue	Maturity	per annum			2008		2007		2008		2007
Step-up subordinated callable notes (1)	December 2003	December 2013		7.375	%		468,932		355,202		455,573		347,486
Line of credit (2)	December 2004	December 2009		2.00	%		350,889		266,195		350,889		266,195
Perpetual Non-cumulative Junior Subordinated Securities (3)	July 2005	Indetermined		8.70	%		1,186,008		898,920		1,186,008		898,920
Subordinated time deposits (4)	December 2002	December 2012	102,25% of CDI				558,225		495,355		558,225		495,355
Subordinated time deposits (4)	November 2003	November 2013	102% of CDI				82,236		73,013		82,236		73,013
Subordinated time deposits (5)	December 2006	December 2016	CDI + 0,47%				634,573		562,106		634,573		562,106
Subordinated time deposits	May 2007	May 2012	103,9% of CDI				1,700,991		1,507,652		1,700,991		1,507,652
Subordinated time deposits	July 2007	July 2012	CDI + 0,38%				500,962		444,168		500,962		444,168
Subordinated time deposits	August 2007	August 2012	CDI + 0,38%				235,622		208,910		235,622		208,910
Subordinated time deposits	August 2007	August 2014	CDI + 0,46%				58,971		52,244		58,971		52,244
Subordinated time deposits		October 2012	IGPM + 7,33%				361,254		300,857		361,254		300,857
Subordinated time deposits	October 2007	October 2012	103,8% of CDI				107,550		95,288		107,550		95,288
Subordinated time deposits	October 2007	October 2014	IGPM + 7,35%				41,238		34,335		41,238		34,335
Subordinated time deposits	October 2007	October 2012	CDI + 0,45%				519,571		460,347		519,571		460,347
Subordinated time deposits	December  2007	December  2014	CDI + 0,60%				11,389		10,076		11,389		10,076
Subordinated time deposits (6)	1st quarter 2008	1st quarter 2013	CDI + 0,60%				914,480		-		914,480		-
Subordinated time deposits (6)	1st quarter 2008	2nd quarter 2013	106,5% of CDI				41,576		-		41,576		-
Subordinated time deposits (6)	2nd quarter 2008	2nd quarter 2013	107% of CDI				11,166		-		11,166		-
Subordinated time deposits (6)	3rd quarter 2008	3rd quarter 2015	119,8% of CDI				419,171		-		419,171		-
Total							8,204,804		5,764,668		8,191,445		5,756,952
Short-term							369,929		14,931		369,875		14,906
Long-term							7,834,875		5,749,737		7,821,570		5,742,046

(1) The debt can be fully redeemed in December 2008 or upon each subsequent interest payment. The interest rate from the  fifth year will be 9.375% per annum.

(2) The debt can not be redeemed prior to contractual maturity. The interest rate is calculated as semi-annual Libor plus 2%.

(3) The debt can be fully redeemed, only at the option of the issuer, after July 29, 2010 or upon each subsequent payment.

(4) Subordinated time deposits can be redeemed from December 2007 and November 2008.

(5) Subordinated time deposits can be redeemed from December 2011.

(6) Subordinated time deposits can be redeemed from December 2013.

(j) Securitization of foreign payment orders

	Unibanco
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Rights of receipt of future flow of payment orders abroad		-		-		66,487		-		378,695		1,989,370		2,434,552		100	%		1,569,412		100	%
Total - 2008		-		-		66,487		-		378,695		1,989,370		2,434,552		100	%		1,569,412		100	%
% per maturity term		-		-		2.7		-		15.6		81.7		100.0
Total - 2007		23,674		23,651		60,586		352,518		558,750		550,233		1,569,412
% per maturity term		1.5		1.5		3.9		22.5		35.6		35.1		100.0

	Unibanco Consolidated
	2008																	2007
	0-30		31-180		181-360		1-3		3-5		Over 5
	days		days		days		years		years		years		Total		%			Total		%
Rights of receipt of future flow of payment orders abroad		-		-		66,487		-		378,695		1,989,370		2,434,552		100	%		1,569,412		100	%
Total - 2008		-		-		66,487		-		378,695		1,989,370		2,434,552		100	%		1,569,412		100	%
% per maturity term		-		-		2.7		-		15.6		81.7		100.0
Total - 2007		23,674		23,651		60,586		352,517		558,750		550,234		1,569,412
% per maturity term		1.5		1.5		3.9		22.5		35.6		35.1		100.0

Securitizations of foreign payment orders are indexed to the U.S. dollar.

47

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

15. Contingent Assets and Liabilities and Legal Liabilities

Unibanco and its subsidiaries are parties to several disputes, including judicial lawsuits and administrative proceedings mainly related to tax, civil and labor claims.

The provisions for labor claims are based on: (i) the individual analysis regarding the potential amount of the probable losses, pursuant to the advice of our legal counsel for claims with significant individual amounts; (ii) balance of judicial deposits, for labor claims with judicial deposits, when do not evaluated by the previous criteria (2007 – based on the historical percentage of the balance of judicial deposits converted into payments with respect to the labor claims with judicial deposits, when do not evaluated to the previous criteria); and (iii) the historical average of payments made, for all other claims.

Civil litigation is represented mainly by claims for personal and moral injury, due to among other reasons, returns of checks, protests of notes considered not due and economic plans. The amount provided represents management’s estimate, considering the probability of loss in those lawsuits, based on: (i) the individual analysis regarding the potential amount of the probable losses, pursuant to the advice of our legal counsel for claims with significant individual amounts; (ii) the balance of judicial deposits converted into payments, with respect to the civil claims with judicial deposits when do not evaluated to the previous criteria; and (iii) the historical average of payments made, for all other claims.

Tax claims, which are considered legal liabilities based on Deliberation CVM nº 489, regardless of the probability of loss, and those tax claims with loss classification as probable, in accordance with the opinion of the legal advisors, are recognized at the full amount being questioned. On December 31, 2008, Unibanco and its subsidiaries maintained provisions for such causes in the total amount of R$2,205,253 (2007 – R$1,784,630) in Unibanco and R$3,508,719 (2007 – R$2,763,805) in Unibanco Consolidated, comprising mainly: (i) widening of the calculation basis of the Profit Participation Program – PIS and Tax and Social Security Financing – COFINS by Law 9,718, in the amount of R$1,541,180 (2007 – R$1,201,956) in Unibanco and R$2,112,509 (2007 – R$1,603,270) in Unibanco Consolidated; (ii) Deductibility of interest and taxes with payments suspended, in the amount of R$299,919 (2007 – R$311,107) in Unibanco and R$397,545      (2007 – R$384,011) in Unibanco Consolidated; and (iii) Social Contribution on Net Income of companies without employees in the amount of R$217,223 (2007 – R$140,088) in Unibanco Consolidated.

The tax claims considered as legal liabilities mostly have a remote or possible risk of loss in accordance with the opinion of legal advisors.

The suits which are not considered legal liabilities and those suits with loss classification as possible in accordance with the legal advisors’ opinion, are not recognized for accounting purposes and, the amount, net of tax effects, is R$1,041,592 (2007 – R$949,971) in Unibanco Consolidated. These suits include disputes regarding:

(i) Deductibility of goodwill on investment acquisitions in the amount of R$147,815 (2007 - R$154,834);

(ii) Deductibility of losses on collection of credits in the amount of R$132,246 (2007 - R$169,175);

(iii) Social security on non-remunerated earnings in the amount of R$105,516 (2007 - R$93,551);

(iv) ISS – Interbank - R$94,890;

(v) Writ of fault declaration of federal contributions and taxes - DCTF  – R$86,876;

(vi) Rejection of compensation request - R$71,596;

(vii) Foreign country taxation criteria in the amount of R$52,965 (2007 - R$74,970);

(viii) Tax losses deduction of affiliated companies without 30% restriction of R$52,080;

(ix) ITR R$50,670; and

(x) ISS taxation on leasing operations in the amount of R$39,683 (2007 - R$20,598).

48

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

Provisions recorded and their changes in the year are as follows:

	Unibanco				Unibanco Consolidated
Balance sheet	2008		2007		2008		2007
Tax litigation (1)		2,205,253		1,784,630		3,508,719		2,763,805
Labor litigation (2)		703,383		506,247		950,830		754,967
Civil litigation (2)		417,691		390,319		646,220		573,146
Total		3,326,327		2,681,196		5,105,769		4,091,918

(1) Recorded in Other Liabilities - Provision for tax contingencies

(2) Recorded in Other Liabilities - Sundry (Note 16 (b))

	Unibanco						Unibanco Consolidated
Movements in the year	2008			2007			2008			2007
Balance at the beginning of the year		2,681,196			1,552,689			4,091,918			2,898,635
Increases		967,318			1,459,981			1,573,278			2,095,498
Releases		(107,137	)		(104,353	)		(201,899	)		(417,690	)
Interest/Monetary adjustment		152,545			180,585			191,146			179,152
Payments		(367,595	)		(407,706	)		(548,674	)		(663,677	)
Balance at the end of the year		3,326,327			2,681,196			5,105,769			4,091,918

16.  Other Liabilities

(a) Technical provision for insurance, private retirement plans and annuity products:

	Insurance				Private Retirement Plans				Annuity Products				Total
	2008		2007		2008		2007		2008		2007		2008		2007
Provision for unearned premiums		644,211		1,143,889		1		1		-		-		644,212		1,143,890
Loss Provision IBNR
(The provision for claims incurred but not yet reported)		222,615		199,638		1,916		1,427		-		-		224,531		201,065
Mathematical provision benefits to be granted		556,269		635,236		8,186,421		7,031,544		-		-		8,742,690		7,666,780
Mathematical provision for benefits granted		4,967		6,501		490,817		430,585		-		-		495,784		437,086
Unsettled claims		576,275		545,348		13,163		7,000		-		-		589,438		552,348
Provision for drawings and redemptions		-		-		-		-		891,135		782,012		891,135		782,012
Other provisions		684,867		5,128		338,805		252,844		11,746		14,340		1,035,418		272,312
Total of technical provisions		2,689,204		2,535,740		9,031,123		7,723,401		902,881		796,352		12,623,208		11,055,493
Short-term		2,689,148		2,533,852		8,379,447		7,084,177		902,881		796,352		11,971,476		10,414,381
Long-term		56		1,888		651,676		639,224		-		-		651,732		641,112

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(b)  Sundry

	Unibanco				Unibanco Consolidated
	2008		2007		2008		2007
Sale of rights of receipt of future flow of payment orders abroad (1)		2,434,552		1,569,388		2,434,552		1,569,388
Provision for labor and civil litigation (Note 15)		1,121,074		896,566		1,597,050		1,328,113
Payable related to insurance companies		-		-		798,652		614,429
Provisions for payroll and administrative expenses		512,132		585,707		849,995		974,841
Liabilities for official agreements		95,644		608,476		95,644		608,476
Credit on the release of real estate financing		139,457		54,043		139,457		54,043
Other		295,031		179,518		652,134		244,062
Total		4,597,890		3,893,698		6,567,484		5,393,352
Short-term		1,088,826		1,465,825		2,467,878		2,430,715
Long-term		3,509,064		2,427,873		4,099,606		2,962,637

(1) Amount related to the sale of rights of receipt of future flow of payment orders receivable from overseas correspondent banks, in the amount of US$1,041,743 (2007 - US$886,009  thousand), bearing three-months Libor plus spread (floater), or fixed rate, payable quarterly and with maturity beginning in October 2007 and final maturity in January 2016.

17.  Employee Benefits

(a)  Pension plan

Unibanco and its subsidiary companies provide to their employees a defined contribution pension plan, through UBB-Prev – Previdência Complementar, a non-listed entity. The program is sponsored by Unibanco, its subsidiaries and employees.

During the year ended December 31, 2008, the sponsor contributions totaled R$63,569 (2007 - R$23,239) in Unibanco and R$67,106 (2007 - R$25,753) in Unibanco Consolidated.

(b)  Stock option program

Unibanco has a Stock Option Plan, which aims to align the executives’ commitment with long term results and reward exceptional performance. It is also an instrument for attraction, retention and motivation of talented people. In the Extraordinary Shareholders’ Meeting, held in March 2007, a change in the Stock Option Plan was approved to allow the establishment of a program, in which some executives are chosen to be “partners” of Unibanco. The executives must maintain the Units, subject to market conditions, for 3 to 5 years. These executives will be able to invest a percentage of their respective bonuses to acquire Unibanco Units and, for each acquired Unit each executive will receive certain amount of Bonus Units (options to acquire Units subjected to defined vesting conditions). The granted unit options can be exercised by the executives in 3 to 5 years. The annual granted options cannot exceed 1% of the authorized capital and total granted options represent 0.3% of the authorized capital and are in accordance with the limit established of 10%.

The fair value of these programs is calculated through the Binomial method for Stock Options and the

Black Scholes method for the Plan for Partners.

In the calculation of the program costs, the following is are considered:

1.  Number of active executives

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

2.  Number of granted options

3.  Number of active options

4.  Number of exercised options

5.  Expected future option exercise

6.  Period between the granting date and vesting period

7.  Projected turnover

Up to December 31, 2008, the options activity was as follows:

I - Total granted options

Single Options

		Vesting		Exercise price
Grant		period	Exercise	per Unit (R$)		Quantity
Nº	Date	until	period until	(IPCA)		Granted		Exercised		Cancelled		Not exercised
1st	01.21.2002	01.21.2007	01.20.2008		4.655		12,376,000		7,928,941		4,447,059		-
2nd	04.15.2002	04.15.2007	04.14.2008		5.455		68,000		68,000		-		-
3rd	08.01.2002	08.01.2007	07.31.2008		4.200		200,000		200,000		-		-
4th	08.12.2002	08.12.2007	08.11.2008		3.524		360,000		360,000		-		-
5th	11.01.2002	11.01.2007	10.31.2008		3.452		200,000		200,000		-		-
6th	11.11.2002	11.11.2007	11.10.2008		3.452		200,000		-		200,000		-
7th	11.20.2002	11.20.2007	11.19.2008		3.452		300,000		100,000		200,000		-
8th	01.06.2003	01.06.2008	01.05.2009		3.331		160,000		-		160,000		-
9th	02.10.2003	02.10.2008	02.09.2009		3.892		120,000		120,000		-		-
10th	03.10.2003	03.10.2008	03.09.2009		4.085		166,000		120,000		46,000		-
11th	04.08.2003	04.08.2008	04.07.2009		4.426		1,584,000		773,334		604,000		206,666
12th	04.14.2003	04.14.2008	04.13.2009		4.472		40,000		-		40,000		-
13th	05.07.2003	05.07.2008	05.06.2009		4.205		1,120,000		869,268		-		250,732
14th	06.04.2003	06.04.2008	06.03.2009		5.103		600,000		-		600,000		-
15th	06.16.2003	06.16.2008	06.15.2009		5.150		120,000		120,000		-		-
16th	09.02.2003	09.02.2008	09.01.2009		4.917		6,226,000		3,741,497		2,073,987		410,516
17th	11.10.2003	11.10.2008	11.09.2009		4.917		360,000		-		360,000		-
18th	12.17.2003	12.17.2008	12.16.2009		5.750		120,000		80,000		-		40,000
19th	05.05.2004	01.05.2009	01.04.2010		4.917		240,000		160,000		-		80,000
20th	02.01.2004	02.01.2009	01.31.2010		6.881		360,000		240,000		120,000		-
21st	04.05.2004	04.05.2009	04.04.2010		7.016		12,240		8,160		-		4,080
22nd	04.12.2004	04.12.2009	04.11.2010		6.954		800,000		533,334		-		266,666
23rd	04.13.2004	04.13.2009	04.12.2010		7.012		200,000		133,332		2		66,666
24th	07.19.2004	07.19.2009	07.18.2010		7.452		940,000		313,336		-		626,664
25th	08.04.2004	08.04.2009	08.03.2010		4.730		600,000		-		-		600,000
26th	09.20.2004	09.20.2009	09.19.2010		7.980		20,000		-		20,000		-
27th	02.01.2005	02.01.2010	01.31.2011		9.380		8,440,000		2,152,862		1,606,662		4,680,476
28th	05.03.2005	05.03.2010	05.02.2011		10.988		50,000		-		50,000		-
29th	09.19.2005	09.19.2010	09.18.2011		11.900		120,000		-		-		120,000
30th	07.04.2006	07.04.2011	07.03.2012		15.700		250,000		-		-		250,000
31st	07.10.2006	07.10.2011	07.09.2012		15.745		80,000		-		80,000		-
32nd	07.18.2006	07.18.2011	07.17.2012		15.692		200,000		-		200,000		-
33rd	08.30.2006	08.30.2011	08.29.2012		17.387		100,000		-		-		100,000
34th	03.21.2007	03.21.2012	03.20.2013		19.809		360,000		-		-		360,000
35th	03.22.2007	03.22.2012	03.21.2013		19.785		140,000		-		-		140,000
36th	05.14.2008	05.14.2013	05.13.2014		24,615		120,000		-		-		120,000
TOTAL							37,352,240		18,222,064		10,807,710		8,322,466

The stock option program in Units (Share Deposit Certificate comprising a preferred share issued by Unibanco and a preferred share issued by Unibanco Holdings) is granted simultaneously by Unibanco and Unibanco Holdings.

The cancelled options refer to beneficiaries terminated before the end of the exercise period, except for retirees that will be continuing as participants active in the program.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

The exercise price of the option, as from the third quarter of 2004, is being restated, pro rata temporis, by the IPCA (Amplified Consumer Price Index) for the period between the issuance date and the respective exercise period of each option in Units.

The amounts and unit prices were adjusted in accordance with the issuance of bonus shares in July 2006.

Bonus Options

The executives who opted to invest a percentage of their respective bonuses to purchase Unibanco Units received the following number of Bonus Unit options.

Grant			Exercise		Quantity
Date	Quantity		period until		Granted		Cancelled		Not exercised
09.03.2007		47		03.09.2012		1,213,904		52,915		1,160,989
10.03.2007		1		03.09.2012		12,904		-		12,904
02.29.2008		1		03.09.2012		105,848		-		105,848
03.03.2008		49		03.03.2013		1,473,704		39,889		1,433,815
09.03.2008		64		03.09.2013		1,747,788		4,649		1,743,139
Total		162				4,554,148		97,453		4,456,695

The exercise of the bonus is includes an obligation of maintaining unchanged the ownership to said own

shares, without any type of encumbrance, during the exercise period.

CVM Deliberation nº 562, December 17, 2008, approved and made mandatory for listed companies the application of Technical Pronouncement CPC 10 – Share-Based Payment, issued by the CPC (Accounting Pronouncement Committee). This Pronouncement was based on International Financial Reporting Standards (IFRS )2, and aims to establish procedures for recognition and disclosure in financial statements of transactions with share-based compensation by the entity. The pronouncement requires that the effects of transactions of share-based compensation are reflected in the income statement and balance sheet of the entity, including costs associated with transactions in which stock options are granted to employees. On December 31, 2008 the total cost of granted share options was recorded in the amount of R$88,087.

II - Changes in stock options

	Single Options				Bonus Options (**)
	Quantity		Price (*)			Quantity
December 31, 2007		13,419,962		8.111			1,226,808
Options:
. Granted		120,000		24.615			3,327,340
. Cancelled		475,332		8.417			97,453
. Exercised		4,742,164		7.022			-
December 31, 2008		8,322,466		9.410			4,456,695

(*) Weighted average exercise price.

(**)The price of bonus stock options is embodied in the executive’s obligation to maintain ownership of their own shares unchanged and without any charge during the exercise term.

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UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

III - Exercised options in the period (R$)

	Quantity		Exercise		Market
Granted	of shares		price (*)		value (*)
01.21.2002		52,994		4.655		23.346
08.01.2002		10,660		4.200		22.111
02.10.2003		40,000		3.892		21.870
03.10.2003		40,000		4.085		21.540
04.08.2003		286,666		4.426		21.713
05.07.2003		122,600		4.205		25.290
06.16.2003		40,000		5.150		22.610
09.02.2003		1,172,302		4.917		18.579
01.05.2004		80,000		4.917		22.730
02.01.2004		240,000		6.881		23.010
04.05.2004		4,080		7.016		21.580
04.12.2004		266,666		6.954		21.580
04.13.2004		66,666		7.012		21.580
07.19.2004		166,668		7.221		22.200
02.01.2005		2,152,862		8.981		22.152
Total		4,742,164

(*) Weighted average exercise price.

IV - Effect of the option exercise

The value received by Unibanco for the sale of 4,742,164 Units under the regular stock option (exercise of  options) was R$33,299. This number does not include the sale of Own Shares to Partners.

18.  Stockholders’ Equity

(a)  Capital

Subscribed and paid-in capital is comprised of shares without par value, as follows:

	2008		2007
Common		1,511,316,336		1,511,316,336
Preferred		1,223,100,568		1,296,439,472
Subtotal		2,734,416,904		2,807,755,808
Treasury stock (preferred)		-		(13,549,348	)
Total outstanding shares		2,734,416,904		2,794,206,460

Preferred shares carry no voting rights, are not convertible into common shares, have priority over common shares in the reimbursement of capital, in the case of liquidation, up to the amount of capital represented by such preferred shares, and are entitled to receive a 10% greater dividend per share than that distributed to common stockholders.

Each Share Deposit Certificate (Unit) is represented by a preferred share issued by Unibanco and by a preferred share issued by Unibanco Holdings S.A. (Holdings) and is traded in the Brazilian market. On December 31, 2008, the market value of Units is R$14.85.

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UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

The Extraordinary General Meeting held on November 28, 2008, approved the rectification of the resolution taken at the Extraordinary General Meeting of the Company held on July 16, 2008, which had approved the capitalization of amounts recorded in the Company´s Reserve to ensure adequate operating margin, amounting to R$3,000,000,000.00 (Three billion of Reais), if the stock dividend was accomplished. Given that this issue of shares had not yet been performed, it was agreed that the capital increase would be effective without the issuance of shares under Article 169, Paragraph 1 of Law 6.404/76. The increase was approved on February 27, 2009 by Brazilian Central Bank.

Therefore, the stock dividend was cancelled and the capitalization of the reserves and the consequent increase in capital of R$ 8,000,000,000.00 (eight billion reais) to R$ 11,000,000,000.00 (eleven billion reais) which had been approved in the previous Meeting, were re-ratified.

In the same meeting, the cancellation of all 73,338,904 preferred shares held in treasury was approved.

As described in Note 1, the association of Itaú and Unibanco contemplated a corporate reorganization that resulted in the migration of the shareholders of Itaúsa Export SA, E. Johnston Representação e Participações S.A., Unibanco Holdings S.A. and Unibanco – União de Bancos Brasileiros S.A., through mergers, to the company currently called Itaú SA.

The Unibanco controlling shareholders paid up 50% of the shares of IUPAR – Itaú Unibanco Participações S.A previously subscribed by them, through the delivery to that company of all their Itaú Unibanco common shares. In turn, Itaúsa – Investimentos Itaú S.A paid 50% of common shares and 100% of preferred shares of IUPAR – Itaú Unibanco Holdings S.A ( “IUPAR”) previously subscribed by that company through the delivery of part of its common shares of Itaú Unibanco.

IUPAR came to hold 51% of the common shares of Itaú Unibanco, indirect controlling shareholder of Unibanco – União de Bancos Brasileiros S.A.

(b)  Dividends and interest on own capital

The mandatory minimum dividend represents at least 35% of the Bank’s annual net income, net of  transfers to the legal reserve.

During 2008, the Board of Directors approved the payment of interest on capital to the shareholders in the amount of R$860,998 (2007 – R$1,362,096) comprising declared interest on income for the year, amounting to R$0.2961 (2007 – R$0.4653), R$0.2517 (2007 – R$0.3955) net of applicable tax per common share and R$0.3258 (2007 – R$0.5119), R$0.2770 (2007 – R$0.4351) net of applicable tax per preferred share outstanding. The interest on own capital was calculated in accordance with article 9 of Law nº 9.249/95 with a tax benefit of R$344,399 (2007 – R$463,113) resulting from deduction.

The Units had interest on capital of R$0.5815 (2007 – R$0.9131), R$0.4942 (2007 – R$0.7761) net of applicable tax, being R$0.2557 (2007 – R$0,4012), R$0.2173 (2007 – R$0.341) net of applicable tax from Unibanco Holdings and R$0.3258 (2007 - R$0.5119), R$0.2769 (2007 –R$0.4351) net of applicable tax from Unibanco. The GDRs had interest on own capital of R$5.8152 (2007 – R$9.1303), R$4.9429 (2007 - R$7.7608), net of applicable withholding tax.

(c)   Capital reserves

In 2008, refer to the Stock option program and in 2007 are substantially represented by the share premium reserve.

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UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(d) Treasury stock

The material fact disclosed on October 24, 2008, announced the amendment to the Buy Back Program, which had been approved on February 13, 2008. The Board of Directors approved the increase of limits that could be purchased for maintenance in treasury, from 20,000,000 Units, to 40,000,000 Units, for further sale or cancellation, without reducing the share capital Unibanco’s executive Board shall decide the timing and volume of the acquisitions. The authorization was valid as from February 14, 2009, and the acquisition of the shares will be carried out at market value through the broker Unibanco Investshop Corretora de Valores Mobiliários S.A. or any other approved by the Executive Board.

Under the repurchase program, the shares of Unibanco Holdings are acquired by the bank, using its revenue reserves, for subsequent exchange for its own shares.

The Extraordinary General Meetings of Unibanco and Unibanco Holdings approved on November 28, 2008, the cancellations of all treasury stock, approved by the Central Bank of Brazil on February 27, 2009.

During the year ended December 31, 2008, in accordance with the Stock option program (Note 17 (b)) and the General Meetings of Unibanco and Unibanco Holdings shown above, the following changes in treasury stock occurred:

	2008						2007
	Quantity of shares			R$ thousands			Quantity of shares			R$ thousands
Balance at the beginning of the year		13,549,348			136,693			7,565,902			43,198
Exchanges of shares		29,894,778			230,726			2,991,723			32,925
Sale of own shares		(7,285,344	)		(74,243	)		(6,752,612	)		(50,046	)
Repurchase		37,180,122			242,123			9,744,335			110,616
Cancelled		(73,338,904	)		(535,299	)		-			-
Balance at the end of the year		-			-			13,549,348			136,693

The average cost was R$16.59 per repurchased Unit, and the minimum and maximum price were R$8.95 and R$18.88, respectively.

(e) Prior year adjustments

In 2007, represented principally changes in accounting policies as required by National Council of Private Insurance (CNSP) Resolution nº 162/06, related to rules and procedures adopted to account for the technical reserves of the insurance, private pension entities and capitalization companies.

19. Revenues from services rendering

The charges for services were regulated by National Monetary Council Resolution nº 3,518, applied since April 2008. The composition of these revenues is disclosed in accordance with this Resolution, including 2007 for the purpose of better comparability.

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UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

Components of the revenues from services rendering by type:

	Unibanco				Unibanco consolidated
	2008		2007		2008		2007
Revenues from service fees		1,784,878		1,905,240		3,538,764		3,380,777
Asset management		206,678		237,941		425,832		340,293
Current account		741,443		728,287		741,856		728,721
Lending and guarantees provided		398,180		281,470		435,835		373,684
Receiving services		332,807		405,954		332,907		393,078
Credit cards		-		-		1,210,780		1,151,529
Other		105,770		251,588		391,554		393,472
Income from bank charges		138,713		176,268		233,237		258,961
Register/Lending		32,309		3,509		61,010		3,509
Deposit accounts		93,569		149,149		107,526		186,014
Transfer of funds		-		-		919		-
Service package fees and other		12,835		23,610		63,782		69,438
Total		1,923,591		2,081,508		3,772,001		3,639,738

20.  Other Operating Income and Expenses

(a)  Other operating income

	Unibanco				Unibanco Consolidated
	2008		2007		2008		2007
Dividends/earnings received from other investments		6,996		5,816		66,412		11,966
Income Sistema Fácil - Tamboré		-		-		19,110		13,424
Recovery of charges and expenses		16,213		17,328		23,499		22,318
Other income - Redecard		-		-		21,206		9,366
Operating income from insurance companies		-		-		21,381		19,383
Contract cancellation of reimbursements and contract fines		52,153		-		52,153		12,000
Correspondent bank reimbursement and collection		8,875		-		67,419		-
Other		119,112		11,994		168,195		12,078
Total		203,349		35,138		439,375		100,535

(b)  Other operating expenses

	Unibanco				Unibanco Consolidated
	2008		2007		2008		2007
Provision for labor and civil litigation (Note 15)		563,545		266,857		764,166		488,352
Correspondent banks and commission expenses		117,985		149,869		261,279		283,513
Credit card, payments and statement expenses		-		-		173,248		179,960
Operating losses		135,732		114,671		263,480		166,757
Amortization of goodwill on subsidiaries acquired		58,597		21,576		178,217		127,446
Expense related to checks and billing, net		118,289		105,933		118,267		105,596
Bonus, CPMF and bank preference		42,756		52,791		42,755		52,791
Reference file information		26,304		23,274		53,433		49,997
Other		178,078		187,283		43,257		198,867
Total		1,241,286		922,254		1,898,102		1,653,279

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UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

21.  Income Tax and Social Contribution

Deferred income tax and social contribution, calculated on tax losses and social contribution carry-forwards are recorded in “Other credits – sundry”, and provisions not currently deductible are recorded in “Other credits – sundry” or in “Other liabilities – taxes and social security”, according to their nature.

Deferred tax assets on tax losses and social contribution losses are realized in accordance with the existing taxable income, and deferred income taxes on temporary differences are realized when the related provision is utilized or reversed.

(a)  Deferred tax assets

	Unibanco
	December 31,						December 31,
	2007		Increase		Realization		2008
Allowance for credit losses		448,365		1,068,692		316,999		1,200,058
Other provisions not currently deductible		1,045,206		1,810,396		938,412		1,917,190
Tax loss and social contribution carry-forwards		76,018		788,056		249		863,825
Social contribution carry-forwards (Provisional Measure 2158-35)		256,102		-		1,314		254,788
Subtotal		1,825,691		3,667,144		1,256,974		4,235,861
Adjustment to fair value of marketable securities available for sale and derivative financial instruments		32,443		165,947		-		198,390
Net deferred tax assets		1,858,134		3,833,091		1,256,974		4,434,251
Deferred tax assets		1,858,134						4,434,251

	Unibanco
	December 31,						December 31,
	2006		Increase		Realization		2007
Allowance for credit losses		409,006		305,030		265,671		448,365
Other provisions not currently deductible		558,182		1,042,506		555,482		1,045,206
Tax loss and social contribution carry-forwards		95,910		-		19,892		76,018
Social contribution carry-forwards (Provisional Measure 2158-35)		254,654		1,448		-		256,102
Subtotal		1,317,752		1,348,984		841,045		1,825,691
Adjustment to fair value of marketable securities available for sale and derivative financial instruments		65,205		-		32,762		32,443
Net deferred tax assets		1,382,957		1,348,984		873,807		1,858,134
Deferred tax assets		1,382,957						1,858,134

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UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco Consolidated
	December 31,								December 31,
	2007			Increase			Realization		2008
Allowance for credit losses		876,629			1,564,820			568,576		1,872,873
Other provisions not currently deductible		1,679,483			2,213,166			1,140,356		2,752,293
Tax loss and social contribution carry-forwards		377,357			1,272,214			58,735		1,590,836
Social contribution carry-forwards (Provisional Measure 2158-35)		442,485			-			23,875		418,610
Subtotal		3,375,954			5,050,200			1,791,542		6,634,612
Adjustment to fair value of marketable securities available for sale and derivative financial instruments		48,183			226,126			105		274,204
Deferred tax obligations		(276,869	)		(712,882	)		578		(990,329	)
Net deferred tax assets		3,147,268			4,563,444			1,792,225		5,918,487
Deferred tax assets		3,424,137								6,908,816
Deferred tax liabilities		276,869								990,329

	Unibanco Consolidated
	December 31,									December 31,
	2006			Increase			Realization			2007
Allowance for credit losses		689,775			591,434			404,580			876,629
Other provisions not currently deductible		1,121,576			1,392,995			835,088			1,679,483
Tax loss and social contribution carry-forwards		519,989			16,414			159,046			377,357
Social contribution carry-forwards (Provisional Measure 2158-35)		451,267			-			8,782			442,485
Subtotal		2,782,607			2,000,843			1,407,496			3,375,954
Adjustment to fair value of marketable securities available for sale and derivative financial instruments		64,927			12,212			28,956			48,183
Deferred tax obligations		(91,041	)		(186,300	)		(472	)		(276,869	)
Net deferred tax assets		2,756,493			1,826,755			1,435,980			3,147,268
Deferred tax assets		2,847,534									3,424,137
Deferred tax liabilities		91,041									276,869

Deferred tax assets recorded are determined at the tax rates in effect at each balance sheet date.

On December 31, 2008, the expected realization of deferred taxes is as follows:

	Unibanco						Unibanco Consolidated
	Social contribution						Social contribution
	(Provisional						(Provisional
Year	Measure 2.158-35)		Other		Total		Measure 2.158-35)		Other		Total
2009		-		669,548		669,548		36,734		1,222,402		1,259,136
2010		-		427,891		427,891		9,471		895,596		905,067
2011		9,917		497,771		507,688		21,106		1,007,122		1,028,228
2012		59,317		319,103		378,420		69,015		686,834		755,849
2013		55,546		651,930		707,476		67,526		949,339		1,016,865
2014 to 2018		130,008		1,414,830		1,544,838		214,758		1,454,709		1,669,467
Total		254,788		3,981,073		4,235,861		418,610		6,216,002		6,634,612

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UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(*)  Expected realization of deferred taxes is in conformity with Law nº 11,727/08.

The present value of deferred taxes above, calculated using the average rate of funding, net of tax effects, totaled R$3,299,897 in Unibanco and R$5,320,395 in Unibanco Consolidated.

(b)  Income tax and social contribution income (expenses):

	Unibanco						Unibanco Consolidated
	2008			2007			2008			2007
Income before income tax and social contribution, net of non-recurring events and profit sharing (i)		1,283,148			2,598,656			2,471,875			3,526,262
Income tax and social contribution expenses at a rate of 25% and 9%		(436,270	)		(883,543	)		(840,438	)		(1,198,929	)
Effects of social contribution nominal rate rising to 6% for financial and insurance companies since May 2008 (ii)		(10,654	)		-			5,902			-
Adjustments to derive effective tax rate:
Equity in the results of subsidiary and associated companies and exchange rate variation on subsidiaries abroad		1,464,806			284,275			716,040			(186,751	)
Interest on capital paid, net		138,997			454,848			363,126			476,345
Effects of social contribution rate differential		46,469			-			64,248			-
Permanent differences (net)		188,969			145,319			234,990			155,336
Income tax and social contribution for the year		1,392,317			899			543,868			(753,999	)

(i) In 2007, net of non-recurring events.

(ii) Law nº 11,727 of June 2008 approved tax measures that increased the rate of Social Contribution on the net income (CSLL) from 9% to 15% of the taxable income of financial insurance and capitalization companies as from May 1, 2008. In a Direct Claim of Unconstitutionality is agreed to by the Supreme Court, its effects shall be annulled and the deferred tax should be realized at the rate of 9%. On December 31, 2008 the increase in the social contribution rate was recognized in the deferred tax balance up to the limit of the corresponding liabilities. The deferred tax balance relating to the unrecognized rate increase, amounts to R$405,454 in Unibanco and R$607,122 in Unibanco Consolidated, net of deferred liabilities.

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UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

22.  Related-Party Transactions (Unibanco)

	2008		2007
Assets
Interbank investments		3,518,095		5,835,152
Marketable securities and derivative financial instruments		23,350,143		20,456,232
Interbank accounts		16		(32	)
Lending operations		1,962		9,950
Other credits
Income receivable
Dividends and interest on capital		1,958,823		1,094,219
Negotiation and intermediation of securities		-		10,783
Sundry		620,725		776,352
Liabilities
Deposits		23,225,082		23,539,834
Securities sold under repurchase agreements		9,386,660		831,835
Resources from securities issued
Debentures		2,922		856,334
Securities abroad		55,638		3,261,881
Interbank accounts		15,587		36,514
Borrowings		10,174		24,780
Derivative financial instruments		-		21,476
Other liabilities
Social and statutory		182,359		726,058
Subordinated debt		13,359		7,716
Sundry		23,054		473,738

	2008			2007
Revenues
Lending operations		-			1,808
Marketable securities		3,000,024			2,469,603
Derivative financial instruments		261,724			244,864
Services rendered		445,783			349,014
Other operating income		(3	)		7
Expenses
Deposits and securities sold		3,302,334			2,458,158
Borrowings and onlendings		6,239			8,336
Other administrative expenses		52,074			47,724
Other operating expenses		23,893			22,314

The amounts shown above reflect transactions between Unibanco and its subsidiary companies, and have been eliminated on consolidation. Transactions with unconsolidated related parties are limited to normal banking transactions and are not material in the operational context of Unibanco.

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UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

Related-party transactions were undertaken at average market rates in effect at the respective transaction dates, considering the absence of risk.

Services rendered relate basically to services offered by Unibanco to the group companies according to the terms of contractual agreements, for the utilization of physical assets and personnel related to credit card, leasing, annuity products, insurance and brokerage operations.

Other administrative expenses relate mainly to the payment of rents based on the fair value of the buildings according to the lease contracts.

(b) Compensation of the Key Management Personnel

The fees attributed in the period to Unibanco – União de Bancos Brasileiros S.A. officers are as follows:

	Unibanco		Unibanco Consolidated
	2008		2008
Compensation		37,970		45,910
Board of Directors		3,060		3,060
Audit Committee		620		620
Executive Board Employees		29,960		37,900
Executive Committee Employees		790		790
Executive Committee		3,540		3,540
Profit Sharing		138,130		158,540
Board of Directors		3,380		3,380
Executive Board Employees		96,130		116,540
Executive Committee Employees		4,270		4,270
Executive Committee		34,350		34,350
Contributions to Pension Plans		19,654		25,313
Board of Directors		15,000		15,000
Executive Board Employees		3,871		9,530
Executive Committee Employees		67		67
Executive Committee		716		716
Total		195,754		229,763

23.  Financial Instruments

(a)  Objectives and policies for use

Unibanco uses derivative and other financial instruments to manage its own exposures or to assist its clients in managing market risks, foreign exchange risk and interest rate risk (hedge). In addition, Unibanco enters into derivative contracts for trading purposes to take advantage of market opportunities.

(b)  Hedge policies

Derivative and other financial instruments can be used as part of risk management and can be used on an overall basis to hedge Unibanco’s net position undertaken in certain markets or related to specific assets and liabilities attributed to a particular risk.

(c)  Strategy and management of risk

Unibanco continuously strives to improve its risk management practices, which are integrated into the various levels of the organization. A separate division is responsible for identifying, measuring and managing market, credit and operational risk on an institution-wide basis. In addition, each business division has dedicated risk management staff.

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UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(d)  Fair value determination

The fair value of Marketable Securities and Derivative Financial Instruments is calculated at market value, when applicable, based on the available prices of Stock Exchanges or on an internal valuation model based on the average rate for the last business day of the year, as informed by stock exchanges, trade associations and external entities.

Credit risk

The management of credit risk seeks to provide constant information to help in defining strategies, as well as establishing position limits, comprising exposure and trend analysis, as well as the effectiveness of credit policies.

Market and liquidity risk

The management of market and liquidity risk is conducted through daily monitoring of exposure levels vis-à-vis limits established with the help of tools such as VAR, sensitivity analysis and stress testing.

Operational risk

Operational risk management is conducted through evaluating new products and transactions, monitoring processes, defining risk indicators, and quantifying potential operating losses, allowing for the establishment of a solid culture of operational risk monitoring and mitigation.

(e) Financial instruments recorded in the financial statements compared to the respective fair values are as follows:

	Unibanco
	2008				2007
	Book value		Fair value		Book value		Fair value
Assets
Interbank deposits		11,205,943		11,937,494		11,396,899		11,426,898
Marketable securities		43,438,527		43,583,944		36,979,306		37,209,987
Lending operations		45,554,790		45,308,726		38,307,234		38,399,143
Derivatives, net		464,843		464,843		-		-
Liabilities
Interbank deposits		19,727,412		19,727,430		20,973,527		20,973,518
Time deposits		43,561,115		43,580,106		25,642,236		25,666,497
Real estate notes, mortgage notes, credits and similar		5,308,516		5,718,291		1,469,543		1,469,667
Debentures		1,135,638		1,137,959		2,894,975		2,900,924
Resources from securities issued abroad		1,783,857		1,814,321		4,643,496		4,647,437
Derivatives, net		-		-		1,840,878		1,840,878
Subordinated debt (Note 14(i))		8,204,804		8,426,840		5,764,668		5,795,001
Other liabilities (Note 16(b))		2,434,552		2,303,909		1,569,388		1,574,774
Treasury stock		-		-		136,693		167,538

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UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	Unibanco Consolidated
	2008				2007
	Book value		Fair value		Book value		Fair value
Assets
Interbank deposits		9,345,504		9,381,878		6,558,641		6,585,467
Marketable securities		33,559,160		33,832,466		23,737,167		24,089,158
Lending operations		51,232,523		50,988,276		45,574,799		45,690,979
Derivatives, net		516,189		516,189		-		-
Liabilities
Interbank deposits		1,790,437		1,790,437		1,149,031		1,149,020
Time deposits		43,389,391		43,408,097		23,708,940		23,733,200
Real estate notes, mortgage notes, credits and similar		5,308,516		5,718,291		1,524,680		1,524,804
Debentures		1,497,065		1,497,065		2,745,759		2,751,709
Resources from securities issued abroad		1,728,323		1,758,787		1,381,693		1,386,431
Derivatives, net		-		-		1,684,496		1,684,496
Subordinated debt (Note 14(i))		8,191,445		8,413,481		5,756,952		5,787,208
Other liabilities (Note 16(b))		2,434,552		2,303,909		1,569,388		1,574,774
Treasury stock		-		-		136,693		167,538

The fair value of marketable securities was based on an internal valuation model, based on the average rates for the last business day of the year, as informed by stock exchanges, trade associations and external entities.

The fair value of interbank deposits, lending operations, interbank deposits payable, time deposits and mortgage notes was based on the average rate practiced by Unibanco on the last business day of the year for similar instruments.

The fair value of obligations from securities issued abroad and subordinated debt was based on the average quoted prices in effect in the corresponding markets on the last business day of the year for similar instruments.

The fair value of derivatives was based on an internal valuation model, based on the average rate for the last business day of the year for instruments with similar maturities and indices, as informed by the Futures and Commodities Exchange – (BM&F) and trade associations.

The fair value of other liabilities related to sale of rights of receipt of future flows of payment orders abroad was computed considering the value that could be obtained in the corresponding market.

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UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

24.  Subsidiary Companies’ Information

	12/31/2008
	UBB Cayman			Interbanco			UBB Luxembourg			UBB Cayman Bank			Unicorp			UBB Sec Inc			UBB Holding			Uni-Investments			Unipart Intl			Unipart B2B			Rosefield			Consolidated
Assets
Current and Long-Term Assets
Cash and due from banks		95,075			172,137			314,172			505,871			10,989			10,654			-			5,421			1,749,781			-			21			2,864,121
Short-term interbank investments		3,782,571			112,107			-			240,730			173,081			-			-			-			1,134,515			-			-			5,443,004
Marketable securities		16,849,395			404,631			233,097			558,183			36,654			-			-			-			151,253			104,677			618			18,338,508
Lending operations, leasing operations and other credits		5,387,187			1,095,825			111,878			8,956			174,945			2,935			136			35			9,341			10,270			3,305			6,804,813
Prepaid expenses		42,331			-			219			196			-			217			-			-			-			-			-			42,963
Other assets		-			255,748			-			-			-			-			-			-			-			-			-			255,748
Permanent Assets
Investments		150,050			665			-			-			-			-			3,328			-			1,407,281			-			-			1,561,324
Fixed assets and deferred charges		11,261			22,025			7,238			-			376			112			-			-			-			-			-			41,012
Total		26,317,870			2,063,138			666,604			1,313,936			396,045			13,918			3,464			5,456			4,452,171			114,947			3,944			35,351,493
Liabilities and Equity
Current and Long-Term Liabilities
Deposits		8,124,778			1,697,018			405,689			166,519			343,517			-			-			-			-			-			-			10,737,521
Demand deposits		3,235,836			568,637			232,585			-			320,060			-			-			-			-			-			-			4,357,118
Savings deposits		-			725,263			-			-			-			-			-			-			-			-			-			725,263
Interbank deposits		134,546			153,877			13,875			166,519			-			-			-			-			-			-			-			468,817
Time deposits		4,754,396			249,241			159,229			-			23,457			-			-			-			-			-			-			5,186,323
Securities sold under repurchase agreements		2,720,145			-			-			-			-			-			-			-			-			-			-			2,720,145
Resources from securities issued		1,420,452			-			-			-			-			-			-			-			-			-			-			1,420,452
Borrowings		5,938,166			22,077			39,162			-			-			7,021			-			-			-			-			-			6,006,426
Derivative financial instruments		2,182,642			-			-			-			-			-			-			-			9,037			-			-			2,191,679
Other liabilities		4,387,993			67,997			7,613			160,936			1,046			3,569			96			6			1,652,097			1			-			6,281,354
Deferred Income		-			45			7,634			-			-			-			-			-			-			-			-			7,679
Stockholders' Equity
Capital and reserves		1,249,084			170,916			192,111			935,233			3,522			12,530			11,943			4,312			2,684,690			111,678			4,057			5,380,076
Net income for the year		294,610			105,085			14,395			51,248			47,960			(9,202	)		(8,575	)		1,138			106,347			3,268			(113	)		606,161
Total		26,317,870			2,063,138			666,604			1,313,936			396,045			13,918			3,464			5,456			4,452,171			114,947			3,944			35,351,493
Statements of Income
Revenue from financial intermediation		1,485,686			202,906			35,965			137,964			25,805			110			-			55			(5,299	)		4,768			24			1,887,984
Expenses on financial intermediation		(991,572	)		(48,944	)		(11,681	)		(64,536	)		(7,272	)		(22	)		-			-			-			-			-			(1,124,027	)
Provision for credit losses		(22,158	)		(27,166	)		(10,594	)		(106	)		25,976			(9,761	)		(8,575	)		1,140			105,911			(127	)		(135	)		54,405
Gross Profit from Financial Intermediation		471,956			126,796			13,690			73,322			44,509			(9,673	)		(8,575	)		1,195			100,612			4,641			(111	)		818,362
Other operating income (expenses)		2,459			(12,243	)		-			-			3,451			471			-			(57	)		12,423			-			(2	)		6,502
Operating Income		474,415			114,553			13,690			73,322			47,960			(9,202	)		(8,575	)		1,138			113,035			4,641			(113	)		824,864
Non-operating income (expenses)		-			3,399			973			-			-			-			-			-			-			-			-			4,372
Income Before Taxes and Profit Sharing		474,415			117,952			14,663			73,322			47,960			(9,202	)		(8,575	)		1,138			113,035			4,641			(113	)		829,236
Income tax		(179,805	)		(12,867	)		(268	)		(22,074	)		-			-			-			-			(6,688	)		(1,373	)		-			(223,075	)
Net Income (loss)		294,610			105,085			14,395			51,248			47,960			(9,202	)		(8,575	)		1,138			106,347			3,268			(113	)		606,161

64

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

	12/31/2007
	UBB Cayman			Interbanco			UBB Luxemburgo			UBB Cayman Bank			Unicorp			UBB Sec Inc			UBB Holding			Uni-Investments			Unipart Intl			Unipart B2B			Rosefield			Consolidated
Assets
Current and Long-Term Assets
Cash and due from banks		162,010			67,052			32,171			333,551			39,332			15,337			-			3,265			2,009,774			-			25			2,662,517
Short-term interbank investments		4,598,795			29,394			-			63,534			254,958			-			-			-			-			-			-			4,946,681
Marketable securities		9,787,482			367,958			196,983			3,085,261			42,165			-			-			-			850,821			80,589			545			14,411,804
Lending operations, leasing operations and other credits		2,675,256			665,340			99,587			20,125			141,693			573			103			20			1,673			9,380			2,505			3,616,255
Prepaid expenses		56,651			-			75			-			183			66			-			-			-			-			-			56,975
Other assets		-			167,797			-			-			-			-			-			-			-			-			-			167,797
Permanent Assets
Investments		113,729			-			-			-			-			-			9,022			-			1,045,019			-			-			1,167,770
Fixed assets and deferred charges		6,125			13,401			817			-			317			34			-			-			-			-			-			20,694
Total		17,400,048			1,310,942			329,633			3,502,471			478,648			16,010			9,125			3,285			3,907,287			89,969			3,075			27,050,493
Liabilities and Equity
Current and Long-Term Liabilities
Deposits		3,563,821			995,708			113,918			2,690,935			428,878			-			-			-			-			-			-			7,793,260
Demand deposits		2,082,512			331,182			32,409			27			172,150			-			-			-			-			-			-			2,618,280
Savings deposits		-			445,673			-			-			-			-			-			-			-			-			-			445,673
Interbank deposits		-			55,218			-			2,690,908			-			-			-			-			-			-			-			2,746,126
Time deposits		1,481,309			163,635			81,509			-			256,728			-			-			-			-			-			-			1,983,181
Securities sold under repurchase agreements		2,506,371			-			-			-			-			-			-			-			-			-			-			2,506,371
Resources from securities issued		1,396,783			-			-			-			-			-			-			-			-			-			-			1,396,783
Borrowings		4,497,187			60,943			58,109			-			-			6,223			-			-			-			-			-			4,622,462
Derivative financial instruments		1,584,168			-			-			-			-			-			-			-			101,437			-			-			1,685,605
Other liabilities		2,883,245			90,161			5,015			86,182			4,899			765			73			17			1,062,779			3			-			4,133,139
Deferred Income		-			-			6,922			-			-			-			-			-			-			-			-			6,922
Stockholders' Equity
Capital and reserves		708,179			92,348			132,419			575,927			3,354			11,731			11,340			2,113			2,580,363			88,329			3,152			4,209,255
Net income for the year		260,294			71,782			13,250			149,427			41,517			(2,709	)		(2,288	)		1,155			162,708			1,637			(77	)		696,696
Total		17,400,048			1,310,942			329,633			3,502,471			478,648			16,010			9,125			3,285			3,907,287			89,969			3,075			27,050,493
Statements of Income
Revenue from financial intermediation		1,217,925			114,474			28,924			600,463			28,680			623			-			104			82,353			3,150			28			2,076,724
Expenses on financial intermediation		(908,707	)		(19,340	)		(11,315	)		(396,793	)		(13,588	)		(272	)		-			-			-			-			-			(1,350,015	)
Provision for credit losses		(1,298	)		(8,765	)		(4,948	)		6,459			23,847			(3,110	)		(2,757	)		1,123			202,970			(17	)		(105	)		213,399
Gross Profit from Financial Intermediation		307,920			86,369			12,661			210,129			38,939			(2,759	)		(2,757	)		1,227			285,323			3,133			(77	)		940,108
Other operating income (expenses)		(2,516	)		(3,220	)		-			(264	)		2,578			50			469			(72	)		(86,861	)		(810	)		-			(90,646	)
Operating Income		305,404			83,149			12,661			209,865			41,517			(2,709	)		(2,288	)		1,155			198,462			2,323			(77	)		849,462
Profit from non-recurring events		-			-			-			-			-			-			-			-			(28,579	)		-			-			(28,579	)
Non-operating income (expenses)		-			(1,905	)		803			-			-			-			-			-			-			-			-			(1,102	)
Income Before Taxes and Profit Sharing		305,404			81,244			13,464			209,865			41,517			(2,709	)		(2,288	)		1,155			169,883			2,323			(77	)		819,781
Income tax		(45,110	)		(9,462	)		(214	)		(60,438	)		-			-			-			-			(7,175	)		(686	)		-			(123,085	)
Net Income (loss)		260,294			71,782			13,250			149,427			41,517			(2,709	)		(2,288	)		1,155			162,708			1,637			(77	)		696,696

65

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

25.  Other Information

(a) Assets leased to third parties, in the amount of R$15,368,025 (2007 - R$9,105,238), net of depreciation, are committed for sale to the lessees, at their option, at the end of the respective contracts for R$14,026,567 (2007 - R$8,624,846) and the residual value received in advance from these lessees amounts to R$6,425,586 (2007 - R$3,578,709), classified as a reduction of leasing operations.

(b) Unibanco and its subsidiaries insure their properties and equipment to the extent considered necessary to cover eventual losses, taking into account the nature of their activity. At December 31, 2008, the insurance coverage on properties and other assets in use totaled R$356,840 (2007 - R$443,430) in Unibanco and R$799,852 (2007 - R$ 714,180) in Unibanco Consolidated.

(c) Commitments and Guarantees

	Unibanco				Unibanco Consolidated
	2008		2007		2008		2007
Co-obligation and risks for guarantees provided		18,434,807		15,066,616		18,446,393		15,097,829

(d) Investment Funds and Asset Management

Unibanco through its subsidiaries, manages the following types of funds: fixed income, shares, open portfolio shares, investment clubs, customer portfolios, domestic and foreign, classified in memorandum accounts, and as follows:

	Unibanco
	Fair value				Fair value (*)				Quantity of funds
	2008		2007		2008		2007		2008		2007
Investment Funds		69,009,052		72,386,489		42,106,085		41,170,689		680		613
Fixed income		67,101,911		67,698,897		40,587,739		37,520,156		602		541
Stocks		1,907,141		4,687,592		1,518,346		3,650,533		78		72
Managed Portfolios		13,739,216		15,215,782		13,730,629		13,151,482		155		141
Clients		13,739,216		15,215,782		13,730,629		13,151,482		155		141
Total		82,748,268		87,602,271		55,836,714		54,322,171		835		754

	Unibanco Consolidated
	Fair value				Fair value (*)				Quantity of funds
	2008		2007		2008		2007		2008		2007
Investment Funds		69,592,895		73,055,205		42,689,928		41,839,405		680		613
Fixed income		67,322,231		67,848,129		40,808,059		37,669,388		602		541
Stocks		2,270,664		5,207,076		1,881,869		4,170,017		78		72
Managed Portfolios		13,739,216		15,215,782		13,730,629		13,151,482		155		141
Clients		13,739,216		15,215,782		13,730,629		13,151,482		155		141
Total		83,332,111		88,270,987		56,420,557		54,990,887		835		754

(*) Refers to the composition after elimination of double-counting of managed portfolios in investment funds.

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UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

(e) Single Audit Committee Report

As regulated by CMN Resolution No. 3,198, of May 27, 2004, Unibanco adopted the Single Audit Committee established by the Itaú Financial Conglomerate, through the lead company Itaú Unibanco. The summary report of the audit committee was disclosed together with the financial statements of the lead company on February 25, 2009.

(f) Corporate Law Amendments - Law 11,638/07

On December 28, 2007, Law No. 11,638 was approved in order to amend and revoke some provisions of Law No. 6,404, of December 15, 1976, and Law 6,385, of December 7, 1976 in connection with accounting practices and the preparation and disclosure of financial statements.

We present below the main changes brought by the law, already considered in the financial statements as of December 31, 2008:

I – Effects on Disclosure

• Disclosure of the Statement of Cash Flows, in lieu of the Statement of Changes in Financial Position, and the Statement of Added Value as integral parts of the financial statements required by Brazilian accounting practices. Unibanco has already voluntarily disclosed these financial statements;

• Fixed assets will now include assets arising from arrangements that transfer to the company the benefits, risks and controls of these assets and deferred charges will now include preoperating expenses and restructuring expenses. Accordingly, leasehold improvements and software purchased were reclassified from Deferred Charges to Fixed Assets and Intangible Assets, respectively, including for comparison purposes;

• Periodic analysis of the recognition, measurement and disclosure of losses in relation to the recoverable amount of assets, as regulated by CMN Resolution No. 3,566, of May 29, 2008. No losses were found by the assessment carried out by Management in the 4th quarter of 2008; and

• Creation of the subgroup “Intangible assets” in Permanent Assets, in order to classify any rights to intangible assets intended for maintenance of the company or which are exercised for such purpose, including acquired goodwill. Accordingly, acquired rights of payroll and acquisitions of customer portfolios and software were reclassified from Prepaid Expenses and Deferred Charges, respectively, including for comparison purposes.

II - Effects on Stockholders’ Equity and Income for the Year

• Lease operations: Unibanco is a lessee in financial leases. According to CVM Resolution No. 554, of November 12, 2008, these leases were recorded in assets, and the corresponding financial liabilities were recognized. Any adjustments were recorded in Retained Earnings and in the Results for 2008, net of any deferred taxes; and

• Share-based Payment In compliance with CVM Resolution No. 562, of November 17, 2008, the fair value of options granted to officers started being recognized in proportion to the vesting period, as Personnel expenses, with a contra-entry to the Capital Reserves account. The effects related to prior years arising from the application of the aforementioned procedure were recorded in Revenue Reserves.

67

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

Following is a summary of the impacts from the adoption of such rules:

	Unibanco			Unibanco Consolidated
	2008			2008
Granting of stock options
Results (1)		21,882			21,882
Stockholders' equity (2)		21,882			21,882
Financial leases
Results		(21,127	)		(33,621	)
Stockholders' equity (3)		(14,342	)		(15,136	)

(1) Recorded in profit sharing expenses

(2).Recorded in capital reserves

(3).Recorded in retained earnings

26.  Results from Non-recurring Events

As regulated by CVM Deliberation 506 of June 19, 2006, and in 2008 the events are related, principally, to provide changes in estimates.

In 2007 the main effects resulted from the sale of investments in Redecard, Bovespa, BM&F, Serasa and UPS.

	Unibanco Consolidated
	2008			2007
Profit from investment
UPS (Note 12 (a) (2))		-			679,118
Sale of portion of investment in Serasa		-			284,725
Gain from public offer of Redecard		-			679,774
Gain from public offer of BOVESPA/BM&F		-			381,514
Changes in accounting estimates
Provision for credit losses		(1,562,220	)		(179,000	)
Provision for tax, civil and labor claims (Note 15)		(390,360	)		(763,436	)
Diposal of software in deferred charges		(229,680	)		-
Derivative risks		(49,500	)		-
Depreciation rate		(48,180	)		-
Social security (PGBL/VGBL)		(36,300	)		-
Provision for disposal of assets not for own use		(34,980	)		-
Technical provision for insurance		(18,480	)		-
Pension funds		(46,000	)		-
Amortization of goodwill (Note 12 (b))		-			(72,919	)
Others (1)		(132,702	)		(161,506	)
Effect of adoption of Law No. 11.638 and others
Share-based payments		(21,882	)		-
Financial Leases		(33,621	)		-
Others		(38,000	)		-
Profit from non- recurring events		(2,641,905	)		848,270

(1) Composed basically of income and expenses from insurance, credit card and lending operations.

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27. RECONCILIATION OF CONSOLIDATED STOCKHOLDERS’ EQUITY AND OF CONSOLIDATED NET INCOME BETWEEN ACCOUNTING PRACTICES ADOTED IN BRAZIL  (“Brazilian GAAP”) AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES OF AMERICA (“US GAAP”).

The consolidated financial statements of Unibanco and its subsidiaries have been prepared following accounting practices adopted in Brazil (“Brazilian GAAP”) (Note 3) which differ significantly from generally accepted accounting principles in the United States of America (“U.S. GAAP”) as summarized in this footnote.

69

 

27.1 Tabular reconciliation of consolidated stockholders equity and net income

Stockholder's equity reconciliation of the differences between Brazilian GAAP and USGAAP at December 31:

In thousands of Reais	2008			2007
Stockholder's Equity in accordance with Brazilian GAAP		10,317,202			11,837,304
Different criteria for:
Mark to market on certain available for sale securities (1)		-			207,498
Reversal of capitalized pre-operating costs (5)		(202,741	)		(144,623	)
Reversal of software derecognized under Brazilian GAAP (6)		347,998			-
Adjustments related to business combinations (7)		1,652,657			1,502,449
Allowance for loan losses (8)		2,043,622			13,159
Accounting for loan and credit card fees and costs (9)		241,834			142,581
Deferred insurance acquisition costs and additional liability for pension investment contracts (10)		143,451			105,658
Stock-based compensation plans (11)		(43,338	)		(109,663	)
Provision for contingencies, including uncertain income tax positions (12)		(21,084	)		(94,321	)
Accounting for minority interest in Unibanco Participações Societárias S.A. ("UPS") (13)		(702,759	)		254,377
Recognition of total deferred taxes(14)		585,725			-
Others		88,826			(11,760	)
Deferred income tax effects of the above adjustments, when applicable		(1,447,052	)		(708,721	)
Minority interest		23,867			42,830
Stockholder's Equity in accordance with USGAAP		13,028,208			13,036,768

Net Income reconciliation of the differences between Brazilian GAAP and USGAAP at December 31:

In thousands of Reais	2008			2007
Net Income in accordance with Brazilian GAAP		33,560			3,447,825
Different criteria for:
Foreign currency gains ans losses on available for sale securities (2)		(821,459	)		205,052
Impairment on available for sale securities (3)		(147,933	)		90,000
Derivative financial instruments not qualified as cash flow hedge(4)		(191,456	)		(11,789	)
Reversal of capitalized pre-operating costs (5)		(58,118	)		39,411
Reversal of software derecognized under Brazilian GAAP (6)		347,998			-
Adjustments related to business combinations (7)		150,208			225,425
Allowance for loan losses (8)		2,030,463			71,695
Accounting for loan and credit card fees and costs (9)		99,253			65,191
Deferred insurance acquisition costs and additional liability for pension investment contracts (10)		37,792			360
Stock-based compensation plans (11)		41,038			(66,263	)
Provision for contingencies, including uncertain income tax positions (12)		73,237			140,875
Accounting for minority interest in Unibanco Participações Societárias S.A. ("UPS") (13)		(957,137	)		(83,280	)
Recognition of total deferred taxes(14)		585,725			-
Others		58,807			78,155
Deferred income tax effects of the above adjustments, when applicable		(356,894	)		(674,198	)
Minority interest		(18,962	)		31,914
Net Income in accordance with USGAAP		906,122			3,560,373
Net income applicable to common shares		470,335			1,837,753
Net income applicable to preferred shares		435,787			1,722,620
Basic and Diluted earnings per share
Common		0.31			1.22
Preferred		0.34			1.34
Weighted average shares outstanding - Basic
Common		1,511,316			1,511,316
Preferred		1,267,349			1,289,541
Weighted average shares outstanding - Diluted
Common		1,511,316			1,511,316
Preferred		1,268,496			1,295,621

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27.2 Narrative description of the reconciling differences

(1) Mark to market on certain available for sale securities

Under US GAAP, all marketable securities should be recorded at fair value. Under Brazilian GAAP,  investments in marketable securities that are considered as “permanent investments” should be recorded at cost. Consequently, under US GAAP, we recognized as of December 31, 2007 a reconciling item to stockholders equity for the difference between cost and fair value of marketable securities that are considered “permanent investments” under Brazilian GAAP and are classified as available for sale securities under US GAAP.  Such securities were sold during 2008 and as a result such difference does not affect consolidated stockholders’ equity as of December 31, 2008. This difference did not have any impact in net income for the years presented.

(2)  Foreign currency gains and losses  on available for sale securities

Under US GAAP, the foreign exchange gains and losses related to available for sale securities denominated in a foreign currency is considered to be part of the fair value adjustment of these instruments and is recorded directly in the stockholders’ equity. Under Brazilian GAAP, foreign exchange gains and losses are recognized directly in income. This difference does not affect stockholders’ equity but for USGAAP, the gain/loss recognized in income under Brazilian GAAP is reverted.

(3) Impairment on available for sale securities

US GAAP requires declines in the fair value of securities below their cost basis that are deemed to be other-than-temporary to be recorded in earnings as impairment losses. In determining whether a decline in fair value is other-than-temporary, in addition to the ability and positive intent to hold the investments for a period sufficient to allow for any anticipated recovery in fair value, factors such as the extent of decline in fair value below cost and the length of time that the decline has continued are considered. Under Brazilian GAAP impairment losses are recognized in income when the losses are considered of “permanent” nature. The requirements under US GAAP are stricter and consequently we recognized in the reconciliation of net income  : (i) additional impairment losses on our available for sale securities that are considered to be impaired under US GAAP, and (ii) the reversal of the effect in net income of permanent impairments recognized under Brazilian GAAP that had been recognized  as impairment loss in prior years under US GAAP.

(4) Derivative financial instruments not qualified as cash flow hedge

Under US GAAP, as from January 1, 2007, all derivative financial instruments are accounted for as trading assets or liabilities because they do not meet the strict hedge accounting criteria established under the criteria prescribed in Statement of Financial Accounting Standards (“SFAS”) 133, “Accounting for Derivative Instruments and Hedging Activities” and related authoritative literature.

Prior to January 1, 2007 in our financial statements prepared in accordance with US GAAP that we made publicly available at the time, we applied cash flow hedge accounting to certain derivative instruments that were designated as hedging the risk of changes in cash flows attributable to variability in the Brazilian benchmark interbank interest rate (CDI) relating to certain time deposits, loans and debentures.

71

We have subsequently concluded that all of the criteria in SFAS 133 had not been met for the application of cash flow hedge accounting in those previously issued consolidated financial statements under US GAAP for years ended December 31, 2006 and before. We have concluded, based on a SAB 99 analysis, that the effect of the prior errors on reported net income for those periods was immaterial to the consolidated financial statements for each of those respective years.  Given that management concluded such error was immaterial to our financial statements, we did not restate the consolidated financial statements that were previously issued. We have also concluded that the necessary cumulative adjustment to correct the effects for those years is immaterial to the consolidated financial statements for the year ended December 31, 2007. In the reconciliation of net income for 2007 we have recognized a loss of R$ 129 as a cumulative adjustment with a related income tax effect of R$44.

Brazilian GAAP permits hedge accounting for certain derivative hedging activities, including portfolio hedges, using less restrictive hedging criteria than those required under US GAAP. Under Brazilian GAAP the portion considered effective of the unrealized change in fair value of derivatives designated as hedging instruments is recognized directly in stockholders’ equity. Additionally as indicated in Note 6.h. (iv).(b) swap instruments meeting certain conditions established by the Brazilian Central Bank are not recorded at fair value but at the accrued amount of each of the two legs of the swap.  For purposes of the US GAAP reconciliation the amount recorded directly in stockholders’ equity under Brazilian GAAP is recognized in income as well as the effect of valuing at fair value swaps recorded under Brazilian GAAP at its accrued amount.

        (5) Reversal of capitalized pre-operating costs

Under US GAAP pre-operating costs are expensed as incurred while under Brazilian GAAP these costs can be capitalized and amortized during the expected period to be benefited not exceeding five years.  The effect in the reconciliation of net income includes: (i) the reversal of amortization of such costs under Brazilian GAAP, and (ii) the recognition as expense for US GAAP of amounts capitalized during the year. The effect in the reconciliation of stockholders’ equity corresponds to the unamortized balance as of December 31, 2008 and 2007 that are recorded under Brazilian GAAP and are reversed for US GAAP purposes.

        (6)  Reversal of software derecognized under Brazilian GAAP

Under Brazilian GAAP we have derecognized the carrying amount of certain softwares. Considering that for Brazilian GAAP the acquisition date of Unibanco by Itaú Unibanco Holding S.A. is considered to be the date of the shareholders meetings that has approved the transaction on November 30, 2008 we have recorded a loss for the carrying amount of certain softwares that we expect to discontinue to use at some point after the acquisition date as result of activities to integrate technology systems from both entities.

72

Under US GAAP, SFAS  144   “Impairment of long-lived assets” requires that impairment of long-lived assets (such as software for internal use) be measured under two possible models: (i) assets to be held and  used, or (ii) assets to be disposed of by sale. Since the conditions for classification of the software referred to above to be classified as “disposed of by sale” have not been met as of December 31, 2008 software must be measured following the “asset to be held and used model “. Software should be measured for impairment together with other assets and liabilities that compose the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. Management concluded that no triggering event requiring an impairment analysis existed as of December 31, 2008 with respect to the asset groups where software is included.

As a result the loss recognized under Brazilian GAAP is reverted in the reconciliation of stockholders’ equity and net income.

(7) Adjustments related to business combinations

Under Brazilian GAAP assets and liabilities of business acquired are recorded at its carrying amount and goodwill is computed as the difference between the purchase price consideration and net assets at their carrying amount. Under Brazilian  GAAP assets and liabilities of the entity acquired are not recorded at their fair value on acquisition date. Additionally under Brazilian GAAP intangible assets of the business acquired were not separately recognized. When purchase price consideration is paid in debt or equity instruments such instruments are measured at its nominal amount which in the case of equity instruments is the price agreed between the parties as of the date of the agreement to acquire a business. Goodwill under Brazilian GAAP is amortized over periods not exceeding five years. If the company acquired is merged into another company and the brand use is discontinued, goodwill is amortized in full.

Under US GAAP assets and liabilities acquired are recorded generally at their estimated fair value on the date of acquisition and debt and equity securities issued as part of purchase price consideration are valued at its estimated fair value at the time of the announcement of the transaction .

The following table presents the effect of such difference in accounting practice in stockholders’ equity:

73

	December 31, 2008			December 31, 2007
Balances under Brazilian GAAP:
Goodwill and negative goodwill – Gross amount		3,591,566			2,492,438
Goodwill and negative goodwill  – Accumulated depreciation		(2,423,735	)		(2,245,518	)
Goodwill and negative goodwill – Net balance		1,167,831			246,920
Less net balance of Goodwill and negative goodwill of entities consolidated under Brazilian GAAP that are equity accounted for under US GAAP		(45,605	)		(77,786	)
Goodwill and negative goodwill - Net balance - Companies consolidated under BrazilianGAAP (A)		1,122,226			169,134
Balances under US GAAP:
Goodwill – Gross amount		3,147,230			1,990,440
Goodwill – Accumulated depreciation		(513,034	)		(513,034	)
Goodwill – Net balance		2,634,196			1,477,406
Intangible assets related to business combinations– Net balance		549,325			194,177
Unamortized adjustment to fair value of other assets and other liabilities of Unibanco Seguros		(408,638	)		-
Goodwill and intangible assets related to business combinations – Net balance (B)		2,774,883			1,671,583
Reconciling item in the reconciliation of stockholders equity (B) – (A)		1,652,657			1,502,449

The following table presents the effect of such difference in accounting practice in net income:

	December 31, 2008			December 31, 2007
Reversal of amortization of goodwill recorded under Brazilian GAAP		178,217			290,444
Amortization of intangible assets related to business combinations recognized under US GAAP		(28,009	)		(65,019	)
Reconciling item in the reconciliation of net income		150,208			225,425

The increase in the gross amount of goodwill during the year ended December 31, 2008 results from the acquisition on November 2008 of the minority interest in Unibanco AIG Seguros S.A. (“Unibanco Seguros”) held by American  Interantional Group Inc. (“AIG”). The following table presents the change in gross amount of goodwill under Brazilian GAAP and  US GAAP for 2008:

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	Under Brazilian GAAP		Under US GAAP
Opening balance		2,491,637		1,990,440
Goodwill on acquisition of minority interest in Unibanco Seguros		1,095,847		1,156,790
Goodwill on other acquisitions		3,301		-
Closing balance		3,590,785		3,147,230

The difference in the amount of goodwill on acquisition of minority interest results from the differences in accounting criteria to determine goodwill under US GAAP and Brazilian GAAP. The following table quantifies the differences in goodwill:

	Under Brazilian GAAP		Under US GAAP
Purchase price paid (A)		1,937,224		1,937,224
Interest (50%) on net assets acquired:
At book value		841,377		841,377
Intangible assets at fair value		-		424,329
Deferred acquisition costs recognized in net assets at book value derecognized upon acquisition		-		(798,530	)
Difference between unearned premium revenue liability recorded at book value and fair value of expected future contract claims and claims expenses on the unexpired portion of the acquired contracts		-		241,908
Other adjustments including adjustments to US GAAP		-		8,770
Deferred tax effects		-		62,580
Interest on net assets acquired at fair value				780,434
Goodwill		1,095,847		1,156,790

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(8) Allowance for loan losses

Under US GAAP, we consider all larger balance nonperforming loans (amounts higher than R$ 5,000) subject to specific review for impairment. Once a loan has been identified as impaired, we measure impairment in accordance with SFAS 114, “Accounting by Creditors for Impairment of a Loan”, as amended by SFAS 118 “Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures”. The measurement of impairment on an impaired loan is based (i) on the present value of the loan’s expected cash flows discounted at the loans original effective interest rate; or (ii) the realizable value of the underlying collateral for collateral-dependent loans. If carrying value of the impaired loan exceeds the measure of estimated fair value, a specific allowance is established as a component of the allowance for loan losses.  Wholesale loans and small-balance homogeneous loans with similar characteristics, such as overdrafts, credit card loans, mortgage loans and consumer finance loans, are managed using specialized systems and processes. We use a wide range of statistical tools to evaluate loans requests and client’s performance, which include credit and behavior scoring models.

Under Brazilian GAAP, is determined based on several factors such as economic environment, accumulated experience, specific and general portfolio risks, as well as the regulations of the Central Bank.  The allowance under Brazilian GAAP  should not be less the regulatory required amount which is computed by applying specific percentages of allowance determined by the Central Bank to loans depending on the category on which they are classified. Under Brazilian GAAP, individually significant impaired loans are not measured at the present value of the expected cash flows or the realizable value of the underlying collateral. Considering the economic scenario in the second half of 2008 and the uncertainties associated the criteria to compute the allowance under Brazilian GAAP has been modified. For the corporate portfolio the allowance has been determined as a single percentage of allowance applied over all loans outstanding (including those not considered impaired). For the retail portfolio the new criteria included two main changes: (i) to use historical loss rates observed by Itaú and not the historical loss rates of Unibanco that has been historically used, and (ii) to adjust those historical rates for the estimated effect in the deteriorated economic environment.

The differences in the accounting standards between Brazilian GAAP and US GAAP has resulted in differences in the allowance for loan losses being recognized as reconciling items in the reconciliation of stockholders’ equity and of cash flows. Such differences have resulted in a significant reversion in the allowance for US GAAP as of December 31, 2008 particularly related to the use under Brazilian GAAP of a single percentage over all the corporate portfolio and to the use under Brazilian GAAP of historical loss rates of Itaú.

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(9) Accounting for loan and credit card fees and costs

Under US GAAP, loan and credit card origination fees and costs are recognized over the period in which the fee entitles the cardholders to use the credit card or over the life of the related loans as an adjustment of yield on these loans. Under Brazilian GAAP, these fees and costs are directly recognized in  income when earned or incurred.

(10) Deferred insurance acquisition costs and additional liability for pension investment contracts

Under USGAAP, the costs that vary with and are related to the production of new insurance business are deferred to the extent that such costs are deemed recoverable from future profits. Such costs include mainly commissions, costs of policy issuance and variable back-office expenses and are amortized over the expected life of the contracts in proportion to the premium income. Deferred acquisition costs are subject to recoverability testing at the end of each accounting period and, if not recoverable, are fully expensed. Under Brazilian GAAP, only commissions are deferred while all other costs are expensed as incurred.

Also, under USGAAP, pension investment contracts where the investment risk is for the account of policyholders, are considered investment contracts. For these contracts, an additional liability for the contract feature is established if the present value of expected annuitization payment at the expected annuitization date exceeds the expected account balance at the annuitization date. Under Brazilian  GAAP, additional liability for pension investment contracts is recorded in accordance with the rules and regulations issued by the insurance regulator (SUSEP), which are generally more conservative and comprehensive than under US GAAP. The effect in the reconciliation of stockholders’ equity and in net income is related to the reversal of the additional liability recognized under Brazilian GAAP following regulatory requirements that that do not satisfy the requirements of US GAAP.

(11)  Stock-based compensation plans

Under USGAAP, Unibanco records the cost of stock-based compensation plans considered as liability awards as expense against a liability, while for the plans considered as equity awards the effect is recognized as an expense against the stockholders’ equity (additional paid-in capital). Certain options granted are considered a liability-award under US GAAP  and measured at fair value at each reporting date because the exercise price is indexed to the IPCA (consumer price index).

Under Brazilian GAAP up to January 1, 2008 no cost of stock-based compensation plans is recognized. As from January 1, 2008 as further indicate in Note 17.(b) and Note 25.(f) under Brazilian GAAP stock-based compensation is recognized at the fair value of the options granted at the grant-date and are not remeasured because they are all classified as equity awards.

(12) Provision for Contingencies including uncertain income tax positions

The difference in net income and stockholders’ equity relates contingencies are the result of (i) adjustments to the amount of contingent liabilities recognized under Brazilian GAAP resulting from incorporating into the estimate of the contingent liability information available after the issuance of the statutory financial statements in accordance with Brazilian GAAP, and (ii) differences in the criteria for recognition and measurement of uncertain tax benefits which under FIN 48 should be recognized when it is more likely than not, based on the technical merits, that the position will be sustained upon examination.

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(13) Accounting for minority interest in Unibanco Participações Societárias S.A. (“UPS”)

UPS was until June 2007 a wholly-owned subsidiary of Unibanco. In July 2007 UPS issued to a subsidiary of Deutsche Bank 14,509,519 non-redeemable preferred shares for total consideration of R$ 1,951,708. After the share issuance the interest of Unibanco reduced from 100% to 51%. The non-redeemable preferred shares issued by UPS are considered to be in substance common stock following the guidance provided in Emerging Issues Task Force 02-14 “Whether an Investor Should apply the Equity Method of Accounting to Investment Other than Common Stock”.

Under Brazilian GAAP, gains from issuance of shares to third parties are recognized in income while under US GAAP results from issuance of shares by subsidiaries to third parties when the issue price per share differs from the carrying amount of the investment in the shares of the subsidiary are recognized in income limited to transactions when realization of the gain is reasonably assured.

In preparation of the transaction with Deutsche certain asset were transferred by Unibanco to UPS resulting in an increase in the tax base from transactions with stockholders. No deferred tax effect resulted under Brazilian GAAP.

As result of the differences in accounting practices the following amounts have been recognized in stockholders’ equity under US GAAP during 2007:

Gain on issuance of shares whose realization is not reasonably assured	R$	337,657
Deferred tax on transactions with stockholders	R$	217,626
Total	R$	555,283

Since shares of UPS are not listed the parties have established a transferable free-standing put and call option agreement in case either party decides to terminate the partnership. Under Brazilian  GAAP the option agreements are measured as the difference as of each measurement date between the price to be paid upon exercise by the option and the net book value of the shares of UPS. Under US GAAP the options are considered a single instrument and measured using option pricing techniques. The following table presents the amount recognized as a liability under Brazilian GAAP with respect to the option and the corresponding fair value of the option recognized for US GAAP purposes.  The significant change in the fair value of the option relates mainly to the change in the exchange rate of U.S.$ to Brazilian real from December 31, 2007 (US$ 1 = R$ 1.7713) to December 31, 2008 (US$ 1 = R$ 2,337) as the exercise price of the option is denominated in U.S.$:

	December 31, 2008			December 31, 2007
Liability recognized in Brazilian GAAP with respect to the option	R$	629,434		R$	230,553
Fair value of the option	R$	(1,332,193	)	R$	23,824
Difference recognized  in stockholders’ equity in the reconciliation between Brazilian GAAP and US GAAP	R$	(702,759	)	R$	254,377

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The differences in the accounting criteria used to account for the transaction between Brazilian GAAP and US GAAP result in the following differences in net income between Brazilian GAAP and US GAAP:

	December 31, 2008			December 31, 2007
Gain on issuance of shares recognized for US GAAP purposes in stockholders equity and recognized in income for Brazilian GAAP		-		R$	(337,657	)
Effect in income as result of the difference in criteria to account for option	R$	(957,137	)	R$	254,377
Difference recognized as reduction in income in the reconciliation between Brazilian GAAP and US GAAP	R$	(957,137	)	R$	(83,280	)

(14) Recognition of  Deferred Taxes at Enacted Rate

Law nº 11,727 of June 2008 approved tax measures that increased the rate of Social Contribution on the net income (CSLL) from 9% to 15% of the taxable income of financial insurance and capitalization companies as from May 1, 2008. A Direct Claim of Unconstitutionality has been filed with the Supreme Court with the purpose of be annulling its effects and to restore the rate to 9%. On December 31, 2008 under Brazilian GAAP deferred tax assets have been recognized limited to the amount of the increase in the tax liabilities that resulted from the change in tax rate. As a result deferred tax assets are not recorded  using the enacted tax rate applied to the temporary differences.

Under US GAAP deferred taxes are computed using the enacted tax rate.

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27.3 Summarized statement of changes in stockholders equity under US GAAP

	Year ended December 31, 2008			Year ended December 31, 2007
Opening stockholders equity		13,036,768			10,439,190
Treasury stock transactions		(397,156	)		(172,308	)
Stock option plan – Accounted for as equity - Expense for the period		47,169			7,776
Unrealized gain on change in interest in UPS		-			337,657
Deferred tax assets on transactions with stockholders - UPS		-			217,626
Unrealized gains/losses on available for sale securities, net of taxes		310,890			(90,041	)
Cash flow hedge, net of applicable taxes		-			85,115
Net income for the year		906,122			3,560,373
Dividends		(874,495	)		(1,348,708	)
Other		(1,090	)		88
Closing stockholders equity		13,028,208			13,036,768

27.4 Statement of cash flows

The statement of cash flows presented below has been prepared based on the financial statements prepared in accordance with Brazilian GAAP following the criteria for presentation of financial statements under SFAS 95 “Statement of Cash Flows”

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	Year ended December 31, 2008			Year ended December 31, 2007
Operating activities
Net income		33,560			3,447,825
Adjustment to reconcile net income to net cash provided by operating activities
Provision for loan and lease losses		2,775,261			2,154,691
Loss on sale of foreclosed assets, net		57,943			9,010
Amortization of intangible assets		178,217			290,444
Depreciation of premises and equipment		553,375			361,398
Equity in earnings of unconsolidated companies, net		(12,680	)		(101,952	)
Deferred tax		(1,947,967	)		(274,443	)
Provision for insurance and private retirement plans		2,911,412			1,834,376
Gain on sale of other unconsolidated companies		(33,769	)		(1,634	)
Gain on sale of Redecard S.A.		-			(1,436,223	)
Gain on sale of Serasa S.A.		-			(429,377	)
Gain on sale of BM&F S.A.		-			(578,529	)
Gain on decrease of ownership in UPS		-			(1,028,966	)
Net (gain) loss on sale of available-for-sale securities		(2,641,141	)		(794,435	)
Net (gain) loss on held to maturity		(561,758	)		9,840
Net (gain) loss on sale of premises and equipment		83,460			-
Minority interest of consolidated subsidiaries		340,278			172,708
Dividends received from investments in unconsolidated companies		26,396			16,002
Changes in assets and liabilities
Trading account assets (increase) decrease		(7,124,533	)		(2,080,658	)
Other assets (increase) decrease		(4,476,772	)		(11,635,890	)
Other liabilities increase (decrease)		4,475,539			11,383,284
Net cash provided by (used in) operating activities		(5,363,179	)		1,317,471
Investing activities
Net (increase) decrease in Central Bank compulsory deposits		4,562,397			(1,490,308	)
Purchase of available-for-sale securities		(22,246,374	)		(26,313,632	)
Proceeds from sale and redemption of available-for-sale securities		19,440,975			23,169,743
Purchase of held-to-maturity securities		(489,122	)		(26,626	)
Proceeds from matured held-to-maturity securities		414,513			678,872
Net increase in loans and leases		(10,815,980	)		(13,883,598	)
Purchase of premises and equipment		(532,473	)		(173,267	)
Proceeds from sale of premises and equipment		24,941			56,270
Proceeds from sale of foreclosed assets		159,166			105,771
Cash Paid on acquisition of AIG		(1,937,224	)		-
Purchase of unconsolidated companies		(360,970	)		(130,439	)
Acquisition of Intangible Assets		(130,742	)		(247,132	)
Proceeds from sale of unconsolidated companies		130,920			23,356
Proceeds from sale of Redecard S.A.		-			1,450,698
Proceeds from sale of Serasa S.A.		-			452,884
Proceeds from sale of BM&F S.A.		-			633,917
Net cash used in investing activities		(11,779,973	)		(15,693,491	)
Financing activities
Net increase (decrease) in deposits		8,931,993			10,376,239
Net increase (decrease) in securities sold under repurchase agreements		7,000,669			9,961,527
Net increase in short-term borrowings		6,101,036			4,527,943
Borrowings from long-term debt		7,854,197			7,898,075
Repayment of long-term debt		(5,806,000	)		(4,313,759	)
Acquisition of treasury stock		(397,315	)		(172,307	)
Dividends and interest on stockholders' equity paid		(1,386,796	)		(1,027,097	)
Cash received from change in interest in subsidiary (UPS)		-			1,951,708
Minority interest of consolidated subsidiaries		(231,007	)		(50,588	)
Net cash provided by (used in) financing activities		22,066,777			29,151,741
Net increase in cash and cash equivalents		4,923,625			14,775,721
Cash and cash equivalents
At the beginning of the year		31,322,752			16,547,031
At the end of the year		36,246,377			31,322,752
Supplemental cash flow disclosure
Cash paid for interest		10,088,933			3,902,605
Cash paid for taxes on income		561,544			794,313
Non-cash transactions
Loans transferred to foreclosed assets		189,369			131,002
Dividends and interest on stockholders' equity declared but not paid		182,359			681,503
Premises and equipment acquired through capital lease		48,479			78,626

 

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UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A AND

UNIBANCO – UNIÃO DE BANCOS BRASILEIROS S.A. AND SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Amounts expressed in thousands of Reais, unless otherwise indicated)

* * *

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