Exhibit 99.2

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 and of changes in financial position 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, 2007 and 2006, 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 26 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	2007			2006			2007			2006
CURRENT ASSETS		93,647,416			59,105,843			109,986,335			73,417,207
CASH AND DUE FROM BANKS		2,511,237			1,201,720			4,430,425			1,349,160
SHORT-TERM INTERBANK INVESTMENTS (Note 4)		41,192,331			24,597,283			36,437,215			19,192,247
Securities purchased under resale agreements		31,067,884			14,512,414			31,067,884			14,515,133
Interbank deposits		10,078,720			10,061,981			5,323,604			4,654,226
Foreign currency investments		45,727			22,888			45,727			22,888
MARKETABLE SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (Note 5)		11,137,543			5,005,432			15,732,768			12,283,077
Own portfolio		6,411,792			3,217,100			11,053,430			10,253,637
Subject to repurchase commitments		1,490,834			944,273			1,493,898			947,489
Pledged with Brazilian Central Bank		1,585,294			-			1,585,294			26,657
Pledged under guarantees rendered		482,512			198,196			459,402			387,157
Unrestricted notes		-			27,997			-			27,997
Derivative financial instruments (Note 5(f))		1,167,111			617,866			1,140,744			640,140
INTERBANK ACCOUNTS		6,616,964			5,077,128			6,797,072			5,243,940
Payments and receipts pending settlement		57,807			22,126			59,482			23,031
Compulsory deposits:
- Brazilian Central Bank		6,518,743			5,017,423			6,683,141			5,176,668
- National Housing System - SFH		1,524			837			1,524			837
Correspondent banks		38,890			36,742			52,925			43,404
INTERDEPARTMENTAL ACCOUNTS		31,609			42,480			34,390			42,819
Third-party funds in transit		241			1,508			241			1,508
Internal transfers of funds		31,368			40,972			34,149			41,311
LENDING OPERATIONS		22,956,330			17,622,198			29,640,839			23,436,091
Lending operations: (Note 6(a))
- Public sector		181,211			196,927			181,211			196,927
- Private sector		23,690,584			18,491,949			31,592,419			25,206,506
Allowance for losses on lending (Note 6(d))		(915,465	)		(1,066,678	)		(2,132,791	)		(1,967,342	)
LEASING OPERATIONS		409,415			38,595			2,509,670			893,952
Leasing operations: (Note 6(a))
- Private sector		412,135			38,803			2,587,992			910,564
Allowance for losses on leasing (Note 6(d))		(2,720	)		(208	)		(78,322	)		(16,612	)
OTHER CREDITS		8,393,845			5,159,498			13,602,835			10,220,290
Foreign exchange portfolio (Note 7(a))		4,022,023			3,429,393			4,022,023			3,429,393
Income receivable		1,152,087			138,131			426,008			285,123
Negotiation and intermediation of securities		578,738			26,714			822,150			127,490
Deferred tax (Note 19(a))		776,588			674,454			1,350,816			1,203,458
Receivables from credit card operations		-			-			3,472,335			2,484,001
Insurance premium		-			-			1,246,914			1,154,547
Prepaid taxes		316,718			403,438			1,241,513			796,110
Sundry (Note 8)		1,588,295			502,030			1,135,246			812,870
Allowance for losses on other credits (Note 6(d))		(40,604	)		(14,662	)		(114,170	)		(72,702	)
OTHER ASSETS		398,142			361,509			801,121			755,631
Other assets		147,420			162,736			261,590			260,577
Allowance for losses on other assets		(31,508	)		(28,161	)		(68,121	)		(59,110	)
Prepaid expenses (Note 9)		282,230			226,934			607,652			554,164

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	2007			2006			2007			2006
LONG-TERM ASSETS		48,602,195			32,947,824			37,287,013			27,863,358
INTERBANK INVESTMENTS (Note 4)		1,318,179			1,270,913			1,235,037			1,069,495
Interbank deposits		1,318,179			1,270,913			1,235,037			1,069,495
MARKETABLE SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (Note 5)		27,942,090			17,211,417			10,240,894			7,821,979
Own portfolio		6,898,591			3,273,807			4,285,470			3,960,929
Subject to repurchase commitments		16,663,403			13,370,907			2,271,510			3,206,803
Pledged with Brazilian Central Bank		1,558,771			-			1,558,771			-
Pledged under guarantees rendered		1,888,109			231,649			1,029,392			314,007
Derivative financial instruments (Note 5(f))		933,216			335,054			1,095,751			340,240
INTERBANK ACCOUNTS		56,060			52,869			56,060			52,869
Compulsory deposits:
- National Housing System - SFH		56,060			52,869			56,060			52,869
LENDING OPERATIONS		15,350,904			11,562,190			15,933,960			12,440,282
Lending operations: (Note 6(a))
- Public sector		631,328			748,583			631,328			748,583
- Private sector		15,210,824			11,349,478			15,842,773			12,271,920
Allowance for losses on lending (Note 6(d))		(491,248	)		(535,871	)		(540,141	)		(580,221	)
LEASING OPERATIONS		541,837			48,713			3,814,552			1,021,892
Leasing operations: (Note 6(a))
- Private sector		545,436			48,975			3,935,958			1,040,840
Allowance for losses on leasing (Note 6(d))		(3,599	)		(262	)		(121,406	)		(18,948	)
OTHER CREDITS		2,769,398			2,420,747			5,185,196			4,853,548
Receivables on guarantees honored		33,590			4,148			33,590			4,148
Foreign exchange portfolio (Note 7(a))		494,013			21,223			494,013			21,223
Income receivable		27,105			31,617			82,841			40,154
Deferred tax (Note 19(a))		1,081,546			708,503			2,073,321			1,644,076
Prepaid taxes		20,428			96,367			157,512			193,058
Sundry (Note 8)		1,115,577			1,562,083			2,350,764			2,961,503
Allowance for losses on other credits (Note 6(d))		(2,861	)		(3,194	)		(6,845	)		(10,614	)
OTHER ASSETS		623,727			380,975			821,314			603,293
Prepaid expenses (Note 9)		623,727			380,975			821,314			603,293
PERMANENT ASSETS		15,252,863			10,644,636			2,323,599			2,497,306
INVESTMENTS		14,326,751			9,809,288			734,533			912,067
Investments in associated companies (Note 11(a))		14,228,976			9,683,524			318,629			224,986
-Local		11,231,812			6,904,944			318,629			224,986
-Foreign		2,997,164			2,778,580			-			-
Goodwill on acquisitions of subsidiary companies (Note 11(b))		73,931			95,094			257,569			547,830
Other investments		52,443			61,405			216,658			205,574
Allowance for losses		(28,599	)		(30,735	)		(58,323	)		(66,323	)
FIXED ASSETS		382,030			342,995			843,078			869,489
Land and buildings in use		183,313			182,996			608,297			625,077
Other fixed assets		1,004,096			898,542			1,591,577			1,569,791
Accumulated depreciation		(805,379	)		(738,543	)		(1,356,796	)		(1,325,379	)
DEFERRED CHARGES		544,082			492,353			745,988			715,750
Organization and expansion costs		1,072,765			909,706			1,479,096			1,378,527
Accumulated amortization		(528,683	)		(417,353	)		(733,108	)		(662,777	)
TOTAL		157,502,474			102,698,303			149,596,947			103,777,871

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	2007		2006		2007		2006
CURRENT LIABILITIES		84,026,697		46,461,034		90,652,620		56,106,522
DEPOSITS		38,213,709		21,893,444		32,497,896		20,916,218
Demand deposits		10,268,332		4,546,743		10,148,091		3,962,488
Savings deposits		10,060,219		6,279,088		10,505,892		6,756,956
Interbank deposits		7,354,135		969,087		1,149,031		259,205
Time deposits		10,400,433		9,970,642		10,564,292		9,809,685
Other deposits		130,590		127,884		130,590		127,884
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS		24,910,812		13,195,686		18,920,895		11,017,219
Own portfolio		9,759,209		7,692,381		9,641,616		7,687,147
Third parties portfolio		15,151,603		4,459,324		9,279,279		2,995,100
Unrestricted portfolio		-		1,043,981		-		334,972
RESOURCES FROM SECURITIES ISSUED (Note 12)		1,905,596		1,683,459		1,946,322		1,698,097
Mortgage notes		-		444,474		55,137		468,196
Real estate notes		417,806		827,612		417,806		827,612
Debentures		409,836		-		409,836		6,865
Securities abroad		1,077,954		411,373		1,063,543		395,424
INTERBANK ACCOUNTS		166,057		165,733		136,563		127,033
Receipts and payments pending settlement		48,701		34,356		54,447		39,759
Correspondent banks		117,356		131,377		82,116		87,274
INTERDEPARTMENTAL ACCOUNTS		626,354		527,689		627,606		528,860
Third-party funds in transit		626,342		519,303		626,414		519,317
Internal transfers of funds		12		8,386		1,192		9,543
BORROWINGS (Note 13)		5,957,582		1,685,976		6,199,789		1,894,095
Borrowings in Brazil - governmental agencies		91		195		91		195
Borrowings in Brazil - other institutions		-		-		110,285		154,412
Foreign borrowings		5,957,491		1,685,781		6,089,413		1,739,488
ONLENDING IN BRAZIL - GOVERNMENTAL AGENCIES (Note 13)		2,559,622		2,004,639		2,817,441		2,411,399
BNDES  (National Economic Development Bank)		1,400,027		1,239,695		1,400,027		1,239,695
FINAME (National Industrial Financing Authority)		1,114,930		656,123		1,372,749		1,062,883
Other		44,665		108,821		44,665		108,821
FOREIGN ONLENDINGS (Note 13)		2,286		18,724		2,286		18,724
Foreign onlendings		2,286		18,724		2,286		18,724
DERIVATIVE FINANCIAL INSTRUMENTS (Note 5(f))		3,136,180		563,647		3,115,439		575,621
Derivative financial instruments		3,136,180		563,647		3,115,439		575,621
OTHER LIABILITIES		6,548,499		4,722,037		24,388,383		16,919,256
Collection of taxes and social contributions		54,085		44,428		104,513		93,265
Foreign exchange portfolio (Note 7(a))		2,519,480		2,574,561		2,519,480		2,574,561
Social and statutory		990,946		560,432		1,598,654		616,267
Taxes and social security (Note 14)		129,025		387,409		1,192,713		751,985
Negotiation and intermediation of securities		1,374,207		49,313		1,766,622		310,675
Technical provisions for insurance, retirement and capitalization plans (Note 15(a))		-		-		10,414,381		6,920,376
Subordinated debt (Note 15(b))		14,931		452,485		14,906		429,213
Payable to merchants - credit cards		-		-		4,346,399		3,780,366
Sundry  (Note 15(c))		1,465,825		653,409		2,430,715		1,442,548

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	2007			2006			2007			2006
LONG-TERM LIABILITIES		61,610,492			46,301,021			45,116,483			36,829,903
DEPOSITS		28,861,195			25,175,447			13,144,648			14,716,402
Interbank deposits		13,619,392			10,360,731			-			-
Time deposits		15,241,803			14,814,716			13,144,648			14,716,402
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS		8,383,240			6,876,932			8,159,279			5,812,693
Own portfolio		8,383,240			6,876,932			8,159,279			5,812,693
RESOURCES FROM SECURITIES ISSUED (Note 12)		6,050,889			3,263,061			2,654,281			1,362,443
Real estate notes		208			6,062			208			6,062
Debentures		2,485,139			-			2,335,923			700,000
Securities abroad		3,565,542			3,256,999			318,150			656,381
BORROWINGS (Note 13)		1,523,223			1,288,986			1,519,059			1,271,284
Borrowings in Brazil - governmental agencies		237			508			237			508
Borrowings in Brazil - other institutions		-			-			-			2,220
Foreign borrowings		1,522,986			1,288,478			1,518,822			1,268,556
ONLENDING IN BRAZIL - GOVERNMENTAL AGENCIES (Note 13)		5,372,786			3,634,620			5,792,699			4,124,064
BNDES  (National Economic Development Bank)		2,674,095			2,074,086			2,674,095			2,074,086
FINAME (National Industrial Financing Authority)		2,477,170			1,413,124			2,897,083			1,902,568
Other		221,521			147,410			221,521			147,410
FOREIGN ONLENDINGS (Note 13)		5,297			44,809			5,297			44,809
Foreign onlendings		5,297			44,809			5,297			44,809
DERIVATIVE FINANCIAL INSTRUMENTS (Note 5(f))		805,025			154,643			805,552			154,643
Derivative financial instruments		805,025			154,643			805,552			154,643
OTHER LIABILITIES		10,608,837			5,862,523			13,035,668			9,343,565
Foreign exchange portfolio (Note 7(a))		496,258			21,110			496,258			21,110
Allowance for tax contingencies (Note 14)		1,784,630			1,011,499			2,763,805			2,022,796
Taxes and social security (Note 14)		39,255			45,771			318,726			222,303
Negotiation and intermediation of securities		111,084			-			111,084			-
Technical provisions for insurance, retirement and capitalization plans (Note 15(a))		-			-			641,112			1,942,791
Subordinated debt (Note 15(b))		5,749,737			2,824,668			5,742,046			2,810,778
Sundry (Note 15(c))		2,427,873			1,959,475			2,962,637			2,323,787
DEFERRED INCOME		27,981			15,391			56,888			31,799
Deferred income		27,981			15,391			56,888			31,799
MINORITY INTEREST		-			-			1,933,652			888,790
STOCKHOLDERS' EQUITY (Note 17)		11,837,304			9,920,857			25,608,260			20,730,504
Capital:		8,000,000			8,000,000			8,000,000			8,000,000
- Local residents		5,605,827			5,461,311			5,605,827			5,461,311
- Foreign residents		2,394,173			2,538,689			2,394,173			2,538,689
Capital reserves		160,910			160,292			160,910			160,292
Revaluation reserve on subsidiaries		4,884			5,381			4,884			5,381
Revenue reserves		3,873,989			1,916,031			3,873,989			1,916,031
Unrealized gains and losses - marketable securities and derivative financial instruments		(65,786	)		(117,649	)		(65,786	)		(117,649	)
Treasury stock		(136,693	)		(43,198	)		(136,693	)		(43,198	)
STOCKHOLDERS' EQUITY PLUS MINORITY INTEREST		-			-			13,770,956			10,809,647
TOTAL		157,502,474			102,698,303			163,367,903			114,587,518

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, except per share data

	UNIBANCO						UNIBANCO CONSOLIDATED
	2007			2006			2007			2006
REVENUE FROM FINANCIAL INTERMEDIATION		13,597,051			13,605,879			17,252,001			17,277,353
Lending operations		6,064,743			6,468,211			10,163,073			10,542,301
Leasing operations		27,569			-			599,459			235,831
Marketable securities		6,339,521			5,815,140			4,197,033			4,129,761
Financial results from insurance, pension plans and annuity products		-			-			1,228,883			1,108,572
Derivative financial instruments		719,319			819,821			593,252			752,750
Foreign exchange transactions (Note 7(b))		20,332			16,903			41,436			18,717
Compulsory deposits		425,567			485,804			428,865			489,421
EXPENSES ON FINANCIAL INTERMEDIATION		(9,293,596	)		(9,152,024	)		(8,898,290	)		(9,981,042	)
Deposits and securities sold		(7,745,388	)		(7,651,111	)		(5,126,596	)		(6,181,287	)
Price-level restatement and interest on technical provision for insurance, pension plans and annuity products		-			-			(891,823	)		(775,486	)
Borrowings and onlendings		(642,304	)		(502,132	)		(725,180	)		(601,558	)
Provision for credit losses (Note 6(f))		(905,904	)		(998,781	)		(2,154,691	)		(2,422,711	)
GROSS PROFIT FROM FINANCIAL INTERMEDIATION		4,303,455			4,453,855			8,353,711			7,296,311
OTHER OPERATING INCOME (EXPENSES)		(1,220,605	)		(1,508,915	)		(4,257,059	)		(3,776,809	)
Services rendered		2,081,508			1,964,070			3,639,738			3,581,789
Insurance, annuity products and retirement plans premiums		-			-			5,264,992			4,278,995
Changes in technical provision for insurance, annuity products  and retirement plans		-			-			(1,834,376	)		(1,526,696	)
Insurance claims		-			-			(1,251,029	)		(1,018,657	)
Private retirement plans benefit expenses		-			-			(531,301	)		(585,081	)
Selling, other insurance and private retirement plans expenses		-			-			(902,983	)		(592,262	)
Credit card selling expenses		-			-			(263,307	)		(289,808	)
Salaries, benefits, training and social security		(1,789,482	)		(1,716,178	)		(2,281,607	)		(2,200,124	)
Other administrative expenses		(1,757,524	)		(1,781,497	)		(3,438,485	)		(3,512,932	)
Financial transaction and other taxes		(592,214	)		(461,920	)		(1,207,909	)		(951,313	)
Equity in the results of associated companies (Note 11(a))		1,724,223			1,272,637			101,952			63,403
Other operating income (Note 18(a))		35,138			172,483			100,535			290,457
Other operating expenses (Note 18(b))		(922,254	)		(958,510	)		(1,653,279	)		(1,314,580	)
OPERATING INCOME BEFORE NON-RECURRING EVENTS		3,082,850			2,944,940			4,096,652			3,519,502
Profit from non-recurring events (Note 26)		848,270			(459,329	)		848,270			(459,329	)
Non-operating income (expenses)		(20,719	)		(38,074	)		(10,170	)		(52,563	)
INCOME BEFORE TAXES AND PROFIT SHARING		3,910,401			2,447,537			4,934,752			3,007,610
INCOME TAX AND SOCIAL CONTRIBUTION (Note 19(b))		899			(293,872	)		(753,999	)		(601,709	)
Provision for income tax		(118,488	)		(188,198	)		(774,806	)		(579,748	)
Provision for social contribution		(15,767	)		(75,563	)		(253,636	)		(200,973	)
Deferred tax asset change		135,154			(30,111	)		274,443			179,012
PROFIT SHARING		(463,475	)		(403,654	)		(560,220	)		(479,187	)
Management		(37,558	)		(36,762	)		(37,880	)		(36,762	)
Employees		(425,917	)		(366,892	)		(522,340	)		(442,425	)
INCOME BEFORE MINORITY INTEREST		3,447,825			1,750,011			3,620,533			1,926,714
MINORITY INTEREST		-			-			(172,708	)		(176,703	)
NET INCOME FOR THE YEAR		3,447,825			1,750,011			3,447,825			1,750,011
Number of outstanding shares (Note 17(a))		2,794,206,460			2,800,189,906
Net income shares: R$		1.23			0.62
Net equity per share:R$		4.24			3.54

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, except per share data

														Unrealized gain and
						Revaluation			Revenue reserves					losses - marketable
			Capital			reserve on					Statutory			securities and derivative			Treasury			Retained
	Capital		reserve			subsidiaries			Legal		reserve			financial instruments			stock			earnings			Total
At January 1, 2006		5,000,000		160,139			5,507			483,033		3,698,499			27,283			(50,828	)		-			9,323,633
Prior year adjustments  (Note 17(f))		-		-			-			-		-			-			-			(98,254	)		(98,254	)
Transfer of reserves		-		-			-			-		(98,254	)		-			-			98,254			-
Capital increase (Note 17(a))		3,000,000		-			-			-		(3,000,000	)		-			-			-			-
Purchase of treasury stocks, net		-		(526	)		-			-		(26,772	)		-			7,630			-			(19,668	)
Revaluation reserve of subdidiary companies		-		-			(126	)		-		-			-			-			-			(126	)
Restatement of exchange membership certificates		-		679			-			-		-			-			-			-			679
Fair value adjustments - marketable securities and derivative financial instruments		-		-			-			-		-			(144,932	)		-			-			(144,932	)
Net income for the year		-		-			-			-		-			-			-			1,750,011			1,750,011
Appropriation of reserves		-		-			-			87,501		772,024			-			-			(859,525	)		-
Interest on own capital proposed (Note 17(b))		-		-			-			-		-			-			-			(890,486	)		(890,486	)
At December 31, 2006		8,000,000		160,292			5,381			570,534		1,345,497			(117,649	)		(43,198	)		-			9,920,857
Prior year adjustments  (Note 17(f))		-		-			-			-		-			-			-			(48,958	)		(48,958	)
Transfer of reserves		-		-			-			-		(48,958	)		-			-			48,958			-
Purchase of treasury stocks (Note 17(e))		-		-			-			-		-			-			(110,616	)		-			(110,616	)
Sale of treasury stocks, net (Note 17(e))		-		-			-			-		(78,813	)		-			50,046			-			(28,767	)
Revaluation reserve of subdidiary companies		-		-			(497	)		-		-			-			-			-			(497	)
Restatement of exchange membership certificates		-		618			-			-		-			-			-			-			618
Fair value adjustments - marketable securities and derivative financial instruments		-		-			-			-		-			51,863			-			-			51,863
Conversion of UBB stocks for Unibanco Holdings stock (Note 17(e))		-		-			-			-		-			-			(32,925	)		-			(32,925	)
Net income for the year		-		-			-			-		-			-			-			3,447,825			3,447,825
Appropriation of reserves		-		-			-			172,391		1,913,338			-			-			(2,085,729	)		-
Interest on own capital proposed (Note 17(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
DIVIDENDS AND INTEREST ON OWN CAPITAL PER 1,000 SHARES OF CAPITAL  (Note 17(b))
	2007		2006
On common shares:    R$		0.4653		0.3235
On preferred shares:    R$		0.5119		0.3559

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

7

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND

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

STATEMENTS OF CHANGES IN FINANCIAL POSITION

FOR THE YEARS ENDED DECEMBER 31,

Amounts expressed in thousands of Reais

	UNIBANCO						UNIBANCO CONSOLIDATED
	2007			2006			2007			2006
FINANCIAL RESOURCES PROVIDED BY:		56,858,921			21,905,995			48,176,782			14,526,703
NET INCOME FOR THE YEAR		3,447,825			1,750,011			3,447,825			1,750,011
ADJUSTMENTS TO NET INCOME		(970,732	)		(640,696	)		556,622			940,042
Depreciation and amortization		229,872			213,696			361,398			387,197
Amortization of goodwill on acquired subsidiaries		21,576			361,661			290,444			611,764
Exchange losses (gains) on foreign investments		500,832			50,210			-			-
Provision (reversal) for losses on investments		(2,136	)		-			(2,278	)		296
Equity in the results of subsidiary and associated companies		(1,724,223	)		(1,272,637	)		(101,952	)		(63,403	)
Provision for forecloset assets		3,347			6,374			9,010			4,188
CHANGE IN MINORITY INTEREST		-			-			1,044,862			22,488
THIRD PARTY FUNDS:
INCREASE IN LIABILITIES		52,875,134			19,981,069			42,832,678			11,273,143
Deposits		20,006,013			6,480,741			10,009,924			133,347
Securities sold under repurchase agreements		13,221,434			8,299,594			10,250,262			5,376,102
Resources from securities issued		3,009,965			3,218,030			1,540,063			1,492,658
Interbank and interdepartmental accounts		98,989			184,994			108,276			177,943
Borrowings and onlendings		6,743,042			25,485			6,572,196			236,385
Derivative financial  instruments		3,222,915			-			3,190,727			21,786
Other liabilities		6,572,776			1,772,225			11,161,230			3,834,922
DECREASE IN ASSETS		-			192			-			311,539
Marketable securities and derivative financial instruments		-			-			-			311,539
Interbank and interdepartmental accounts		-			192			-			-
Other credits		-			-			-			-
SALE OF ASSETS AND INVESTMENTS		227,506			248,164			278,793			198,709
Foreclosed assets		68,097			61,740			118,359			107,803
Investments		149,986			186,166			105,260			86,946
Fixed assets		9,423			258			55,174			3,960
DIVIDENDS AND INTEREST ON OWN CAPITAL RECEIVED/PROPOSED FROM SUBSIDIARY AND ASSOCIATED COMPANIES		1,279,188			567,255			16,002			30,771

8

UNIBANCO - UNIÃO DE BANCOS BRASILEIROS S.A. AND

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

STATEMENTS OF CHANGES IN FINANCIAL POSITION

FOR THE YEARS ENDED DECEMBER 31,

Amounts expressed in thousands of Reais

	UNIBANCO						UNIBANCO CONSOLIDATED
	2007			2006			2007			2006
FINANCIAL RESOURCES USED FOR:		55,549,404			21,730,554			45,095,517			14,331,273
DIVIDENDS AND INTEREST ON OWN CAPITAL PROPOSED/DISTRIBUTED		1,362,096			890,486			1,362,096			890,486
CHANGE IN DEFERRED INCOME		(12,590	)		(2,911	)		(25,089	)		43,971
SALE (ACQUISITION) NET OF OWN STOCK		172,308			19,668			172,308			19,668
INVESTMENTS IN:		4,910,924			4,206,585			434,074			765,273
Foreclosed assets		52,825			148,050			130,986			196,311
Amortization of goodwill on aquisition of subsidiary companies		412			85,509			412			349,520
Investments		4,742,153			3,891,649			129,409			48,486
Fixed assets		115,534			81,377			173,267			170,956
DEFERRED CHARGES		214,525			218,159			247,132			125,341
INCREASE IN ASSETS		48,902,141			16,365,452			42,904,996			12,486,534
Interbank investments		16,642,314			7,538,061			17,410,510			5,580,068
Marketable securities and derivative financial instruments		16,859,879			4,017,557			5,865,701			-
Interbank and interdepartmental accounts		1,532,156			-			1,547,894			20,397
Lending operations		9,122,846			4,070,322			9,698,426			4,187,566
Leasing operations		863,944			87,308			4,408,378			1,089,633
Other credits		3,582,998			499,309			3,714,193			1,073,207
Other assets		298,004			152,895			259,894			535,663
DECREASE IN LIABILITIES		-			33,115			-			-
Securities sold under repurchase agreements		-			-			-			-
Resources from securities issued		-			-			-			-
Interbank and interdepartmental accounts		-			-			-			-
Derivative financial  instruments		-			33,115			-			-
Other liabilities		-			-			-			-
INCREASE IN CASH AND DUE FROM BANKS		1,309,517			175,441			3,081,265			195,430
CHANGES IN FINANCIAL POSITION
Cash and due from banks
At the beginning of the year		1,201,720			1,026,279			1,349,160			1,153,730
At the end of the year		2,511,237			1,201,720			4,430,425			1,349,160
INCREASE IN CASH AND DUE FROM BANKS		1,309,517			175,441			3,081,265			195,430

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

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, 2007 AND 2006

(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.

2.  Presentation of Financial Statements

The financial statements of Unibanco - União de Bancos Brasileiros S.A. and its foreign branches (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 11.

The consolidated financial statements have been prepared in accordance with consolidation principles determined by the Brazilian Securities Commission and 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 instruments. 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 the leasing subsidiary was reclassified by means of consolidation 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.

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 26 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 Insurances.

(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;

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, 2007 AND 2006

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

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

· the commissions related to the 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;

· 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 9% 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)   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 (c).

The allowance for credit losses 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.

(c)   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 “Unrealized gains and losses – marketable securities and derivatives”. The realized gains and losses and permanent losses are recognized in the incoming statement in a contra 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 held 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.

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, 2007 AND 2006

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

· Derivative financial instruments designed to hedge or to modify characteristics of financial assets or liabilities and (i) which are highly correlated with respect 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:

- Fair value hedge. The financial assets and liabilities and the corresponding derivative financial instruments are accounted for at fair value and any offsetting gains or losses 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 “Unrealized gains and losses – marketable securities and derivatives”. The non-effective hedge portion, if any, 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.

(d)   Prepaid expenses

It is composed by financial resources related to benefits or services that will be provided in the future.

(e)   Permanent assets

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

Investments in subsidiary and associated companies 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 11. The effects in subsidiary and associated companies related to the valuation of marketable securities and derivatives, as mentioned above in item (c), 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 when applicable by an allowance for losses, and in 2006 membership certificates of stock and commodities exchange adjusted to book equity values.

Goodwill relating to the acquisition of subsidiaries is being amortized over periods not exceeding five years, see Note 11 (b). Upon the merger of the subsidiary company with the discontinuation or expiration of the acquired brand, the respective goodwill is amortized in full.

Depreciation of fixed assets is calculated on the straight-line method at the following annual rates: buildings in use - 4%; equipment in use - 10%; and communications, data processing, and transportation systems - 20%.

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.

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, 2007 AND 2006

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

(f) 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 above in item (c).

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

(g) 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 Advisers and the Administration, 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, independently from the probable outcome of litigation in progress, which have their full amount recorded.

(h) 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 deferment 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.

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 generator plan (VGBL and PGBL) and 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 under the responsibility of 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, whose vesting event and the Mathematical Provision for Benefits granted corresponds the value of commitments whose vesting event has already occurred. Both provisions are calculated according to methodology approved in the Actuarial Note of the plan or product.

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, 2007 AND 2006

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

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

4.   Short-Term Interbank Investments

	Unibanco				Unibanco Consolidated
	2007		2006		2007		2006
Securities purchased under resale agreements		31,067,884		14,512,414		31,067,884		14,515,133
Own position		15,969,789		9,050,235		15,969,789		9,052,954
- Financial treasury bills		2,881,265		900,528		2,881,265		-
- Treasury bills		10,657,971		6,198,876		10,657,971		6,198,876
- Treasury notes		2,387,817		1,931,040		2,387,817		1,931,040
- Other		42,736		19,791		42,736		923,038
Financial Position		15,098,095		5,169,087		15,098,095		5,169,087
- Financial treasury bills		-		1,430,349		-		1,430,349
- Treasury bills		12,119,480		3,668,721		12,119,480		3,668,721
- Treasury notes		2,968,589		70,017		2,968,589		70,017
- Other		10,026		-		10,026		-
Sale Position		-		293,092		-		293,092
Interbank deposits		11,396,899		11,332,894		6,558,641		5,723,721
Foreign currency investments		45,727		22,888		45,727		22,888
Total		42,510,510		25,868,196		37,672,252		20,261,742
Current		41,192,331		24,597,283		36,437,215		19,192,247
Long-term		1,318,179		1,270,913		1,235,037		1,069,495

5.   Marketable Securities and Derivative Financial Instruments

(a)        The balances can be summarized as follows:

	Unibanco				Unibanco Consolidated
	2007		2006		2007		2006
Assets
Trading assets		6,233,613		2,535,758		10,630,358		9,294,106
Available for sale		29,604,560		16,996,533		10,696,812		6,758,488
Held to maturity		1,141,133		1,731,638		2,409,997		3,072,082
Subtotal		36,979,306		21,263,929		23,737,167		19,124,676
Derivative financial instruments		2,100,327		952,920		2,236,495		980,380
Total		39,079,633		22,216,849		25,973,662		20,105,056
Current		11,137,543		5,005,432		15,732,768		12,283,077
Long-term		27,942,090		17,211,417		10,240,894		7,821,979
Liabilities
Derivative financial instruments		3,941,205		718,290		3,920,991		730,264
Total		3,941,205		718,290		3,920,991		730,264
Current		3,136,180		563,647		3,115,439		575,621
Long-term		805,025		154,643		805,552		154,643

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, 2007 AND 2006

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

(b)   Trading assets

	Unibanco
	2007				2006
	Amortized				Amortized
Issuer/Type of investment	cost		Fair value		cost		Fair value
Federal government		3,937,123		3,908,084		1,741,841		1,760,674
Treasury bills		2,190,612		2,184,860		802,008		804,472
Financial treasury bills		107,099		107,079		207,003		206,959
Treasury notes		1,639,412		1,616,145		732,830		749,243
Brazilian sovereign bonds		-		-		358,366		356,679
Foreign government		1,386,114		1,382,873		24,958		24,889
Bank debt securities		-		-		74,928		75,375
Corporate debt securities		140,434		143,802		50,849		56,865
Debentures		55,672		59,903		50,849		56,865
Eurobonds		84,762		83,899		-		-
Mutual funds		158,652		158,652		192,665		192,665
Marketable equity securities		628,977		640,202		66,625		68,611
Total		6,251,300		6,233,613		2,510,232		2,535,758
		Unibanco Consolidated
	2007				2006
	Amortized				Amortized
Issuer/Type of investment	cost		Fair value		cost		Fair value
Federal government		5,699,563		5,678,818		6,194,838		6,242,132
Treasury bills		2,645,380		2,636,840		3,673,929		3,689,651
Financial treasury bills		371,852		371,884		686,979		687,097
Treasury notes		2,602,326		2,571,519		1,828,605		1,860,180
Other		80,005		98,575		5,325		5,204
Brazilian sovereign bonds		124,254		124,026		567,648		565,127
Foreign government		1,716,339		1,758,024		388,824		388,755
Bank debt securities		876,426		876,131		815,193		815,638
Eurobonds		27,916		27,621		96,766		97,211
Time deposits		848,510		848,510		718,427		718,427
Corporate debt securities		441,034		443,855		345,071		349,782
Debentures		308,135		312,278		297,757		302,448
Eurobonds		132,899		131,577		47,314		47,334
Mutual funds		630,222		630,222		703,399		703,399
Marketable equity securities		1,102,998		1,119,282		201,057		229,273
Total		10,635,836		10,630,358		9,216,030		9,294,106

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

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, 2007 AND 2006

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

(c)   Securities available for sale

(i)    By type:

	Unibanco
	2007							2006
	Amortized		Fair value					Amortized		Fair value
Issuer/Type of investment	cost		adjustments			Fair value		cost		adjustments			Fair value
Federal government		3,704,355		(50,678	)		3,653,677		2,115,039		(1,466	)		2,113,573
Financial treasury bills		387,754		96			387,850		267,179		(65	)		267,114
Treasury bills		2,527,654		(24,975	)		2,502,679		1,347,704		6,809			1,354,513
Treasury notes		744,683		(18,115	)		726,568		458,402		4,759			463,161
Treasury Bonds		3,125		(752	)		2,373		3,591		(288	)		3,303
Other		41,139		(6,932	)		34,207		38,163		(12,681	)		25,482
Foreign government		1,493,769		(9,378	)		1,484,391		270,815		1,047			271,862
Brazilian sovereign bonds		1,379,717		10,819			1,390,536		1,475,769		33,675			1,509,444
Bank debt securities		20,475,775		13			20,475,788		11,346,073		1,166			11,347,239
Debentures, eurobonds and other		20,475,775		13			20,475,788		11,346,073		1,166			11,347,239
Corporate debt securities		2,397,711		39,711			2,437,422		1,714,104		14,168			1,728,272
Debentures, eurobonds and other		2,397,711		39,711			2,437,422		1,714,104		14,168			1,728,272
Mutual funds		10,240		-			10,240		10,643		-			10,643
Marketable equity securities		226,026		(73,520	)		152,506		35,781		(20,281	)		15,500
Total		29,687,593		(83,033	)		29,604,560		16,968,224		28,309			16,996,533
	Unibanco Consolidated
	2007							2006
	Amortized		Fair value					Amortized		Fair value
Issuer/Type of investment	cost		adjustments			Fair value		cost		adjustments			Fair value
Federal government		4,729,056		(90,402	)		4,638,654		2,570,031		12,255			2,582,286
Financial treasury bills		665,144		175			665,319		526,711		(22	)		526,689
Treasury bills		2,595,165		(25,670	)		2,569,495		1,347,704		6,809			1,354,513
Treasury notes		1,424,483		(57,224	)		1,367,259		653,804		18,455			672,259
Treasury Bonds		3,125		(752	)		2,373		3,591		(289	)		3,302
Other		41,139		(6,931	)		34,208		38,221		(12,698	)		25,523
Foreign government		1,494,619		(9,378	)		1,485,241		270,815		1,047			271,862
Brazilian sovereign bonds		1,379,717		10,819			1,390,536		1,475,769		33,675			1,509,444
Bank debt securities		371,823		8			371,831		291,049		1,169			292,218
Debentures, eurobonds and other		371,823		8			371,831		291,049		1,169			292,218
Corporate debt securities		2,519,125		43,585			2,562,710		1,948,726		(75,798	)		1,872,928
Debentures, eurobonds and other		2,519,125		43,585			2,562,710		1,948,726		(75,798	)		1,872,928
Mutual funds		16,338		-			16,338		16,850		-			16,850
Marketable equity securities		315,403		(83,901	)		231,502		246,037		(33,137	)		212,900
Total		10,826,081		(129,269	)		10,696,812		6,819,277		(60,789	)		6,758,488

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, 2007 AND 2006

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

(ii)   By maturity:

	Unibanco
	2007				2006
	Amortized				Amortized
Maturity	cost		Fair value		cost		Fair value
Less than 3 months		809,615		811,930		232,090		225,870
Between 3 months and 1 year		2,565,619		2,560,384		1,240,036		1,230,165
Between 1 and 3 years		2,973,194		2,953,202		1,660,251		1,647,284
Between 3 and 5 years		920,167		926,340		901,503		949,175
Between 5 and 15 years		20,880,988		20,880,096		11,767,153		11,767,334
More than 15 years		1,301,744		1,309,862		1,120,767		1,150,562
No stated maturity (1)		236,266		162,746		46,424		26,143
Total		29,687,593		29,604,560		16,968,224		16,996,533
		Unibanco Consolidated
	2007				2006
	Amortized				Amortized
Maturity	cost		Fair value		cost		Fair value
Less than 3 months		884,248		886,600		439,185		342,967
Between 3 months and 1 year		2,630,582		2,625,467		1,336,355		1,326,530
Between 1 and 3 years		3,283,055		3,265,025		1,793,769		1,780,782
Between 3 and 5 years		1,198,451		1,200,997		946,155		993,851
Between 5 and 15 years		1,040,503		1,015,675		803,180		806,646
More than 15 years		1,457,501		1,455,208		1,237,746		1,277,962
No stated maturity (1)		331,741		247,840		262,887		229,750
Total		10,826,081		10,696,812		6,819,277		6,758,488

(1) Refers to marketable equity securities and mutual funds.

(d)  Securities held to maturity

(i)  By type:

	Unibanco				Unibanco Consolidated
	2007		2006		2007		2006
Issuer/Type of investment	Amortized cost
Federal government		561		2,144		1,241,218		1,304,766
Treasury notes		319		1,849		1,240,976		1,202,774
Treasury bills		-		-		-		101,697
Other		242		295		242		295
Brazilian sovereign bonds		1,108,979		1,591,749		1,133,164		1,622,097
Bank debt securities		5,212		81,170		9,234		81,170
Eurobonds and other		5,212		81,170		9,234		81,170
Corporate debt securities		26,381		56,575		26,381		64,049
Debentures		-		-		-		7,473
Eurobonds and other		26,381		56,575		26,381		56,576
Total		1,141,133		1,731,638		2,409,997		3,072,082
Market value		1,271,094		1,901,295		2,761,988		3,330,577

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, 2007 AND 2006

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

(ii)   By maturity:

	Unibanco				Unibanco Consolidated
	2007		2006		2007		2006
Maturity	Amortized cost
Less than 3 months		102,856		106,813		102,856		186,768
Between 3 months and 1 year		98,903		262,817		98,903		262,816
Between 1 and 3 years		265,466		354,699		293,961		378,302
Between 3 and 5 years		474,829		495,839		256,705		533,662
Between 5 and 15 years		198,953		511,318		1,037,055		1,109,470
More than 15 years		126		152		620,517		601,064
Total		1,141,133		1,731,638		2,409,997		3,072,082

(iii)  Financial ability

Unibanco and its subsidiaries classified investments at held to maturity for which there is intention and financial ability to hold them to maturity. Maturities are the parameters used to define financial ability, interest rate (existence of positive spread) and liabilities transactions’ currencies.

(d)   Fair value determination

The fair value of Marketable Securities is calculated by fair value, when applicable is 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 exercise, as informed by Stock Exchanges trade associations and external entities.

(f)    Derivative financial instruments

(i)    The current notional and fair values of derivative financial instruments recorded in memorandum accounts, except for the option contracts, for which the notional exposure represents the premium paid/received and the exposure at fair value represents the amounts recorded in assets and liabilities accounts, are as follows:

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, 2007 AND 2006

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

	Unibanco
					Amortized			Fair value
	Notional value				cost			adjustment			Fair value
	2007		2006		2007			2007			2007			2006
Futures contracts		108,076,440		57,190,265		-			-			-			-
Purchase		51,236,313		32,372,006		-			-			-			-
Currencies		1,214,283		1,082,760		-			-			-			-
Interbank interest rate		49,984,845		31,245,173		-			-			-			-
Other		37,185		44,073		-			-			-			-
Sale		56,840,127		24,818,259		-			-			-			-
Currencies		8,217,025		1,894,602		-			-			-			-
Interbank interest rate		48,578,205		22,866,621		-			-			-			-
Other		44,897		57,036		-			-			-			-
Swap contracts		21,279,342		11,684,029		(840,971	)		13,269			(827,702	)		394,035
Assets		12,023,188		8,314,039		693,075			91,428			784,503			605,189
Currencies		996,446		162,573		15,717			12,289			28,006			30,376
Fixed interest rate		1,047,480		639,711		59,802			805			60,607			110,269
Interbank interest rate		6,734,064		4,753,918		480,006			50,683			530,689			381,731
Other		3,245,198		2,757,837		137,550			27,651			165,201			82,813
Liabilities		9,256,154		3,369,990		(1,534,046	)		(78,159	)		(1,612,205	)		(211,154	)
Currencies		1,302,343		1,365,110		(204,421	)		11,283			(193,138	)		(70,043	)
Fixed interest rate		3,900,472		167,326		(1,243,932	)		(19,730	)		(1,263,662	)		(76,082	)
Interbank interest rate		2,571,241		1,280,580		(55,818	)		(35,639	)		(91,457	)		(39,786	)
Other		1,482,098		556,974		(29,875	)		(34,073	)		(63,948	)		(25,243	)
Third curve swap contracts		3,115,893		1,179,641		(224,311	)		15,635			(208,676	)		26,159
Assets		1,965,680		712,901		21,544			19,021			40,565			42,248
Currencies		989,758		249,414		17,099			7,637			24,736			15,863
Fixed interest rate		572,040		107,120		127			2,395			2,522			6,978
Interbank interest rate		363,592		356,367		4,333			8,422			12,755			19,407
Other		40,290		-		(15	)		567			552			-
Liabilities		1,150,213		466,740		(245,855	)		(3,386	)		(249,241	)		(16,089	)
Currencies		536,173		433,383		(8,853	)		(4,574	)		(13,427	)		(10,894	)
Fixed interest rate		372,777		26,572		(236,506	)		1,686			(234,820	)		(5,184	)
Interbank interest rate		241,263		6,785		(496	)		(498	)		(994	)		(11	)
Forward contracts		5,347,667		2,837,341		(331,137	)		69,851			(261,286	)		(111,442	)
Assets		2,073,058		522,896		291,514			46,480			337,994			73,170
Currencies		1,441,358		32,473		(11,663	)		54,020			42,357			201
Fixed interest rate		631,121		459,259		32,435			(4,941	)		27,494			41,817
Stocks		-		-		270,163			(2,653	)		267,510			-
Other		579		31,164		579			54			633			31,152
Liabilities		3,274,609		2,314,445		(622,651	)		23,371			(599,280	)		(184,612	)
Currencies		2,535,757		2,279,202		(319,200	)		26,114			(293,086	)		(152,828	)
Fixed interest rate		468,689		35,243		(35,120	)		(3,653	)		(38,773	)		(655	)
Stocks		270,163		-		(267,752	)		910			(266,842	)		-
Other		-		-		(579	)		-			(579	)		(31,129	)
Option contracts		366,847,574		173,453,432		(85,437	)		(428,832	)		(514,269	)		(71,931	)
Purchased options		194,150,199		96,517,319		777,867			(4,611	)		773,256			222,433
Purchase of purchased options		128,900,889		81,671,606		635,308			(45,749	)		589,559			133,985
Currencies		31,793,622		16,172,175		202,285			(108,784	)		93,501			63,460
Fixed interest rate		96,970,878		65,482,802		410,643			61,373			472,016			53,897
Stocks		18,031		16,629		13,008			5,023			18,031			16,628
Other		118,358		-		9,372			(3,361	)		6,011			-
Purchase of sold option		65,249,310		14,845,713		142,559			41,138			183,697			88,448
Currencies		17,274,440		1,202,500		60,912			25,213			86,125			17,852
Fixed interest rate		47,953,085		13,604,298		75,540			17,285			92,825			69,145
Stocks		1,755		38,915		1,766			(11	)		1,755			1,451
Other		20,030		-		4,341			(1,349	)		2,992			-
Sale position		172,697,375		76,936,113		(863,304	)		(424,221	)		(1,287,525	)		(294,364	)
Sale of purchased options		59,773,597		42,215,031		(468,221	)		(334,498	)		(802,719	)		(94,002	)
Currencies		8,121,843		4,329,393		(184,636	)		(296,706	)		(481,342	)		(28,789	)
Interbank interest rate		51,600,108		37,867,123		(252,945	)		(37,211	)		(290,156	)		(46,698	)
Stocks		19,989		18,515		(20,030	)		40			(19,990	)		(18,515	)
Other		31,657		-		(10,610	)		(621	)		(11,231	)		-
Sale of sold option		112,923,778		34,721,082		(395,083	)		(89,723	)		(484,806	)		(200,362	)
Currencies		52,982,477		4,857,554		(275,438	)		(101,176	)		(376,614	)		(34,176	)
Interbank interest rate		59,932,955		29,861,190		(108,995	)		9,149			(99,846	)		(163,848	)
Stocks		2,080		2,338		(3,891	)		1,811			(2,080	)		(2,338	)
Other		6,266		-		(6,759	)		493			(6,266	)		-
Other derivative financial instruments (*)		13,406,869		473,794		(49,017	)		20,072			(28,945	)		(2,191	)
Assets position		5,954,018		329,051		180,109			(16,100	)		164,009			9,880
Liabilities position		7,452,851		144,743		(229,126	)		36,172			(192,954	)		(12,071	)
			Assets			1,964,109			136,218			2,100,327			952,920
			Liabilities			(3,494,982	)		(446,223	)		(3,941,205	)		(718,290	)

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

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, 2007 AND 2006

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

	Unibanco Consolidated
					Amortized			Fair value
	Notional value				cost			adjustment			Fair value
	2007		2006		2007			2007			2007			2006
Futures contracts		109,533,888		57,190,265		-			-			-			-
Purchase		51,513,017		32,372,006		-			-			-			-
Currencies		1,214,819		1,082,760		-			-			-			-
Interbank interest rate		50,261,013		31,245,173		-			-			-			-
Other		37,185		44,073		-			-			-			-
Sale		58,020,871		24,818,259		-			-			-			-
Currencies		8,360,103		1,894,602		-			-			-			-
Interbank interest rate		49,615,871		22,866,621		-			-			-			-
Other		44,897		57,036		-			-			-			-
Swap contracts		21,504,410		11,572,669		(831,239	)		14,810			(816,429	)		393,782
Assets		12,050,016		8,214,787		705,611			91,427			797,038			604,935
Currencies		996,446		162,573		15,717			12,289			28,006			30,376
Fixed interest rate		1,047,480		496,316		59,802			805			60,607			104,230
Interbank interest rate		6,760,893		4,783,683		492,542			50,683			543,225			387,501
Other		3,245,197		2,772,215		137,550			27,650			165,200			82,828
Liabilities		9,454,394		3,357,882		(1,536,850	)		(76,617	)		(1,613,467	)		(211,153	)
Currencies		1,302,343		1,365,110		(204,422	)		11,283			(193,139	)		(70,042	)
Fixed interest rate		3,900,472		167,326		(1,243,932	)		(19,730	)		(1,263,662	)		(76,082	)
Interbank interest rate		2,592,351		1,280,580		(56,553	)		(35,639	)		(92,192	)		(39,786	)
Other		1,659,228		544,866		(31,943	)		(32,531	)		(64,474	)		(25,243	)
Third curve swap contracts		3,115,893		1,179,641		(224,311	)		15,635			(208,676	)		26,159
Assets		1,965,680		712,901		21,544			19,021			40,565			42,248
Currencies		989,758		249,414		17,099			7,637			24,736			15,863
Fixed interest rate		572,040		107,120		127			2,395			2,522			6,978
Interbank interest rate		363,592		356,367		4,333			8,422			12,755			19,407
Other		40,290		-		(15	)		567			552			-
Liabilities		1,150,213		466,740		(245,855	)		(3,386	)		(249,241	)		(16,089	)
Currencies		536,173		433,383		(8,853	)		(4,574	)		(13,427	)		(10,894	)
Fixed interest rate		372,777		26,572		(236,506	)		1,686			(234,820	)		(5,184	)
Interbank interest rate		241,263		6,785		(496	)		(498	)		(994	)		(11	)
Forward contracts		5,190,347		2,809,966		(257,428	)		71,281			(186,147	)		(95,703	)
Assets		2,146,697		483,469		364,760			46,472			411,232			100,884
Currencies		1,441,358		32,473		(11,663	)		54,020			42,357			201
Fixed interest rate		671,246		419,832		72,395			(4,941	)		67,454			57,763
Stocks		33,514		-		303,449			(2,661	)		300,788			42,920
Other		579		31,164		579			54			633			-
Liabilities		3,043,650		2,326,497		(622,188	)		24,809			(597,379	)		(196,587	)
Currencies		2,535,757		2,279,202		(319,201	)		26,114			(293,087	)		(152,828	)
Fixed interest rate		237,729		35,243		(34,656	)		(2,215	)		(36,871	)		(656	)
Stocks		270,164		-		(267,752	)		910			(266,842	)		-
Other		-		12,052		(579	)		-			(579	)		(43,103	)
Option contracts		367,866,625		173,453,432		(85,436	)		(277,528	)		(362,964	)		(71,931	)
Purchased options		195,169,250		96,517,319		777,868			146,693			924,561			222,433
Purchase of purchased options		129,919,940		81,671,606		635,309			105,545			740,854			133,985
Currencies		31,793,622		16,172,175		202,286			(108,784	)		93,502			63,460
Fixed interest rate		96,970,878		65,482,802		410,643			61,373			472,016			53,897
Stocks		1,037,082		16,629		13,008			156,317			169,325			16,628
Other		118,358		-		9,372			(3,361	)		6,011			-
Purchase of sold option		65,249,310		14,845,713		142,559			41,148			183,707			88,448
Currencies		17,274,440		1,202,500		60,912			25,213			86,125			17,852
Fixed interest rate		47,953,085		13,604,298		75,540			17,285			92,825			69,145
Stocks		1,755		38,915		1,766			(1	)		1,765			1,451
Other		20,030		-		4,341			(1,349	)		2,992			-
Sale position		172,697,375		76,936,113		(863,304	)		(424,221	)		(1,287,525	)		(294,364	)
Sale of purchased options		59,773,597		42,215,031		(468,221	)		(334,498	)		(802,719	)		(94,002	)
Currencies		8,121,843		4,329,393		(184,636	)		(296,706	)		(481,342	)		(28,789	)
Interbank interest rate		51,600,108		37,867,123		(252,945	)		(37,211	)		(290,156	)		(46,698	)
Stocks		19,989		18,515		(20,030	)		40			(19,990	)		(18,515	)
Other		31,657		-		(10,610	)		(621	)		(11,231	)		-
Sale of sold option		112,923,778		34,721,082		(395,083	)		(89,723	)		(484,806	)		(200,362	)
Currencies		52,982,477		4,857,554		(275,438	)		(101,176	)		(376,614	)		(34,176	)
Interbank interest rate		59,932,955		29,861,190		(108,995	)		9,149			(99,846	)		(163,848	)
Stocks		2,080		2,338		(3,891	)		1,811			(2,080	)		(2,338	)
Other		6,266		-		(6,759	)		493			(6,266	)		-
Other derivative financial instruments (*)		8,812,672		473,794		(145,537	)		35,257			(110,280	)		(2,191	)
Assets position		2,707,871		329,051		64,014			(915	)		63,099			9,880
Liabilities position		6,104,801		144,743		(209,551	)		36,172			(173,379	)		(12,071	)
			Assets			1,933,797			302,698			2,236,495			980,380
			Liabilities			(3,477,748	)		(443,243	)		(3,920,991	)		(730,264	)

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

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, 2007 AND 2006

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

(ii) Nominal value by maturity and type, are as follows:

	Unibanco
	2007
			Between		Between
	Less than		3 months		1 and 3		More than
Contracts	3 months		and 1 year		years		3 years		Total
Future contracts		33,283,954		31,505,991		40,694,215		2,592,280		108,076,440
Swap contracts		4,623,608		7,996,468		4,081,012		4,578,254		21,279,342
Third curve swap contracts		2,201,244		566,954		253,096		94,600		3,115,893
Forward contracts		2,547,486		1,778,981		861,492		159,708		5,347,667
Option contracts
Purchased position		87,229,758		53,226,891		53,693,550		-		194,150,199
Sale position		90,838,204		47,049,297		34,809,874		-		172,697,375
Other financial instruments
derivative		11,704,059		1,321,696		264,345		116,769		13,406,869
		Unibanco Consolidated
	2007
			Between		Between
	Less than		3 months		1 and 3		More than
Contracts	3 months		and 1 year		years		3 years		Total
Future contracts		33,552,416		31,573,284		41,759,728		2,648,460		109,533,888
Swap contracts		4,633,608		8,010,326		4,105,092		4,755,384		21,504,410
Third curve swap contracts		2,201,244		566,954		253,096		94,600		3,115,893
Forward contracts		2,389,677		1,779,469		861,493		159,708		5,190,347
Option contracts
Purchased position		87,229,758		53,226,891		53,693,550		1,019,051		195,169,250
Sale position		90,838,204		47,049,297		34,809,874		-		172,697,375
Other financial instruments
derivative		7,109,862		1,321,696		264,345		116,769		8,812,672

(iii) Nominal value by trade location:

	Unibanco
	2007
Contracts	BM&F		CETIP	Over the  counter(1)		Bovespa		Total
Future contracts		108,076,440	-		-		-		108,076,440
Swap contracts		7,251,606	9,562,470		4,465,266		-		21,279,342
Third curve swap contracts		-	2,557,627		558,266		-		3,115,893
Forward contracts		-	5,077,504		-		270,163		5,347,667
Option contracts
Purchased position		192,545,107	1,047,478		531,390		26,224		194,150,199
Sale position		169,200,281	401,889		3,057,263		37,942		172,697,375
Other financial instruments
derivative		-	-		13,336,908		69,961		13,406,869

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, 2007 AND 2006

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

	Unibanco Consolidated
	2007
Contracts	BM&F		CETIP	Over the counter(1)		Bovespa		Total
Future contracts		109,533,888	-		-		-		109,533,888
Swap contracts		7,299,544	9,562,470		4,642,396		-		21,504,410
Third curve swap contracts		-	2,557,627		558,266		-		3,115,893
Forward contracts		-	4,846,544		-		343,803		5,190,347
Option contracts
Purchased position		192,545,107	1,047,478		1,550,441		26,224		195,169,250
Sale position		169,200,281	401,889		3,057,263		37,942		172,697,375
Other financial instruments
derivative		-	-		8,742,711		69,961		8,812,672

(1)  CETIP (Clearing House for Custody and Financial Settlement of Securities).

The amounts pledged to guarantee BM&F transactions were R$227,286 in Unibanco and R$312,469 in Unibanco Consolidated and are comprised by federal government securities.

(iv) The maturities and types of derivative financial instruments recorded in balance sheet accounts are as follows:

	Unibanco
	2007
				Between			Between
	Less than			3 months			1 and 3			More than
Contracts	3 months			and 1 year			years			3 years			Total
Assets
Swap contracts		86,662			159,327			278,816			259,698			784,503
Third curve swap contracts		28,269			7,676			3,938			682			40,565
Forward contracts		300,326			21,452			12,283			3,933			337,994
Option contracts		236,002			171,632			365,622			-			773,256
Other financial instruments derivative		145,837			9,928			8,222			22			164,009
Total		797,096			370,015			668,881			264,335			2,100,327
Liabilities
Swap contracts		(380,493	)		(1,113,005	)		(81,086	)		(37,621	)		(1,612,205	)
Third curve swap contracts		(134,456	)		(110,466	)		(309	)		(4,011	)		(249,241	)
Forward contracts		(366,293	)		(145,617	)		(46,638	)		(40,732	)		(599,280	)
Option contracts		(455,934	)		(241,058	)		(208,686	)		(381,847	)		(1,287,525	)
Other financial instruments derivative		(149,717	)		(39,141	)		(2,912	)		(1,184	)		(192,954	)
Total		(1,486,893	)		(1,649,287	)		(339,631	)		(465,394	)		(3,941,205	)

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, 2007 AND 2006

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

	Unibanco Consolidated
	2007
				Between			Between
	Less than			3 months			1 and 3			More than
Contracts	3 months			and 1 year			years			3 years			Total
Assets
Swap contracts		86,662			160,622			290,056			259,698			797,038
Third curve swap contracts		28,269			7,676			3,938			682			40,565
Forward contracts		373,100			21,916			12,283			3,933			411,232
Option contracts		236,002			171,642			365,623			151,294			924,561
Other financial instruments derivative		44,927			9,928			8,222			22			63,099
Total		768,960			371,784			680,122			415,629			2,236,495
Liabilities
Swap contracts		(380,966	)		(1,113,267	)		(81,086	)		(38,148	)		(1,613,467	)
Third curve swap contracts		(134,456	)		(110,466	)		(309	)		(4,010	)		(249,241	)
Forward contracts		(364,392	)		(145,617	)		(46,638	)		(40,732	)		(597,379	)
Option contracts		(455,934	)		(241,058	)		(208,686	)		(381,847	)		(1,287,525	)
Other financial instruments derivative		(130,142	)		(39,141	)		(2,912	)		(1,184	)		(173,379	)
Total		(1,465,890	)		(1,649,549	)		(339,631	)		(465,921	)		(3,920,991	)

(v)        Hedge Accounting

(a)  On December 31, 2007, there were derivative financial instruments recognized as cash flow hedges accounted for at fair value and associated to the US dollar fluctuations and indexed to interbank interest rate (CDI) represented by future transactions of R$35,091,662 in Unibanco and in Unibanco Consolidated, swap contracts in the amount of R$1,538,634 in Unibanco and in Unibanco Consolidated and forward transactions in the amount of R$68,962 in Unibanco and Unibanco Consolidated. Associated with variations of interbank interest rate (CDI) and assets instruments with exchange variance. These contracts presented on December 31, 2007, a loss net of applicable taxes and minority interest, in the amount of R$545 in Unibanco and R$537 in Unibanco Consolidated, which were recorded in “Unrealized gains or losses – marketable securities and derivatives”. The hedges as of December 31, 2007, were undertaken in accordance with the standards established by the Brazilian Central Bank and for 2007, was not identified ineffective hedge to be accounted.

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.

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

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, 2007 AND 2006

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

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

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

	Unibanco				Unibanco Consolidated
	2007		2006		2007		2006
By type
Discounted loans and notes		23,214,513		17,377,986		24,586,009		18,458,072
Financing		13,111,167		10,614,885		14,851,742		12,918,412
Agricultural		1,696,224		1,320,626		1,696,224		1,320,626
Real estate loans		1,692,043		1,473,440		1,697,450		1,476,306
Credit card		-		-		5,416,306		4,250,520
Total lending operations		39,713,947		30,786,937		48,247,731		38,423,936
Leasing operations		957,571		87,778		6,523,950		1,951,404
Advances on exchange contracts (1)		1,653,356		1,030,632		1,653,356		1,030,632
Total leasing operations and advances on exchange contracts		2,610,927		1,118,410		8,177,306		2,982,036
Guarantees honored		33,590		4,148		33,590		4,148
Other receivables (2)		529,520		527,092		4,976,421		3,950,597
Total other credits		563,110		531,240		5,010,011		3,954,745
Total risk		42,887,984		32,436,587		61,435,048		45,360,717
By maturity
Past-due for more than 15 days (Note 6 (d))		656,243		881,005		2,084,152		2,137,266
Falling due:
Less than 3 months (3)		12,636,077		10,626,053		21,355,681		17,413,511
Between 3 months and 1 year		13,127,199		8,557,453		17,479,398		11,489,843
Between 1 and 3 years		10,202,380		8,003,411		13,317,274		9,628,834
More than 3 years		6,266,085		4,368,665		7,198,543		4,691,263
Total risk		42,887,984		32,436,587		61,435,048		45,360,717

(1) Recorded in “Other liabilities” – “Foreign exchange portfolio”. (See Note 7 (a))

(2) Other credits refer, substantially, to receivables from purchase of assets, notes and credits receivable, insurance premium and receivables from credit card operations (with attributes of lending).

(3) Include 14 days past-due amounts.

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

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, 2007 AND 2006

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

	Unibanco
	2007				2006
			% of total				% of total
	Value		distribution		Value		distribution
Manufacturing
Electricity, gas and water		3,317,452		7.7		3,321,145		10.2
Food, beverages and tobacco		2,206,819		5.1		1,937,845		6.0
Paper, pulp and wood products		1,558,371		3.6		1,430,332		4.4
Basic metal industries		1,272,110		3.0		1,228,039		3.8
Production of machines and equipment		1,195,768		2.8		633,872		2.0
Extractive		1,166,809		2.7		738,250		2.3
Chemical and pharmaceutical		973,121		2.3		745,995		2.3
Automotive industry		755,112		1.8		1,245,661		3.8
Petroleum		706,615		1.6		420,867		1.3
Textiles, clothing and leather goods		579,062		1.4		349,979		1.1
Rubber and plastic		342,497		0.8		215,622		0.7
Electronic and communications equipment		298,576		0.7		200,470		0.6
Production of metal goods		286,012		0.7		271,747		0.8
Eletric and electronic		154,257		0.4		215,992		0.7
Other manufacturing industries		27,077		0.1		8,828		-
Subtotal		14,839,658		34.7		12,964,644		40.0
Retailers
Retail		3,224,401		7.5		3,033,677		9.4
Wholesale		3,015,155		7.0		2,120,859		6.5
Subtotal		6,239,556		14.5		5,154,536		15.9
Financial service
Financial companies		4,203,573		9.8		1,507,265		4.6
Insurance companies and private pension funds		7,074		-		72,780		0.2
Subtotal		4,210,647		9.8		1,580,045		4.8
Residential construction loans		637,791		1.5		467,846		1.4
Other services
Transportation		3,392,922		7.9		1,387,350		4.3
Construction		1,113,864		2.6		494,292		1.5
Real estate services		680,548		1.6		326,584		1.0
Post office and telecommunications		679,610		1.6		927,181		2.9
Agricultural		452,624		1.1		318,302		1.0
Health and social services		265,060		0.6		167,640		0.5
Association activities		202,599		0.5		94,555		0.3
Cultural, sports and leisure activities		164,198		0.4		33,670		0.1
Lodging and catering services		151,647		0.4		132,926		0.4
Education		101,182		0.2		103,831		0.3
Other services		1,474,005		3.4		940,582		2.9
Subtotal		8,678,259		20.3		4,926,913		15.2
Agriculture, livestock, forestry and fishing		1,255,802		2.9		1,064,215		3.3
Individual
Consumer loans		5,453,176		12.7		4,987,251		15.4
Residential mortgage loans		1,081,370		2.5		1,034,726		3.5
Lease financing		51,303		0.1		-		-
Other		440,422		1.0		256,411		0.5
Subtotal		7,026,271		16.3		6,278,388		19.4
Total		42,887,984		100.0		32,436,587		100.0

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, 2007 AND 2006

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

	Unibanco Consolidated
	2007				2006
			% of total				% of total
	Value		distribution		Value		distribution
Manufacturing
Electricity, gas and water		3,395,607		5.5		3,391,699		7.5
Food, beverages and tobacco		2,283,994		3.7		2,012,461		4.4
Paper, pulp and wood products		1,609,477		2.6		1,478,155		3.3
Basic metal industries		1,308,691		2.1		1,283,355		2.8
Production of machines and equipment		1,229,287		2.0		651,512		1.4
Extractive		1,212,926		2.0		769,603		1.7
Chemical and pharmaceutical		998,974		1.6		772,551		1.7
Automotive industry		775,097		1.3		1,276,913		2.8
Petroleum		755,130		1.2		468,446		1.0
Textiles, clothing and leather goods		596,968		1.0		371,289		0.8
Rubber and plastic		364,785		0.6		237,851		0.5
Electronic and communications equipment		307,212		0.5		206,749		0.5
Production of metal goods		299,920		0.5		285,886		0.6
Eletric and electronic		161,578		0.3		224,436		0.5
Other manufacturing industries		28,361		-		9,306		-
Subtotal		15,328,007		24.9		13,440,212		29.5
Retailers
Retail		3,474,887		5.7		3,261,878		7.2
Wholesale		3,218,797		5.2		2,285,728		5.0
Subtotal		6,693,684		10.9		5,547,606		12.2
Financial service
Financial companies		4,256,166		6.9		1,467,069		3.2
Insurance companies and private pension funds		7,507		-		74,592		0.2
Subtotal		4,263,673		6.9		1,541,661		3.4
Residential construction loans		652,943		1.1		485,499		1.1
Other services
Transportation		4,349,917		7.1		2,465,821		5.4
Construction		1,220,403		2.0		568,900		1.3
Real estate services		772,607		1.3		419,305		0.9
Post office and telecommunications		699,580		1.1		949,940		2.1
Agricultural		481,653		0.8		360,084		0.8
Health and social services		305,967		0.5		196,583		0.4
Association activities		220,064		0.4		116,757		0.3
Lodging and catering services		177,360		0.3		149,994		0.3
Cultural, sports and leisure activities		175,980		0.3		37,589		0.1
Education		122,297		0.2		123,710		0.3
Other services		1,878,166		3.1		1,331,076		2.9
Subtotal		10,403,994		17.1		6,719,759		14.8
Agriculture, livestock, forestry and fishing		1,255,802		2.0		1,064,215		2.4
Individual
Credit card		8,859,900		14.4		6,709,782		14.8
Consumer loans		8,062,444		13.1		7,664,310		16.9
Lease financing		4,385,945		7.1		889,407		2.0
Residential mortgage loans		1,088,234		1.8		1,041,855		2.3
Other		440,422		0.7		256,411		0.6
Subtotal		22,836,945		37.1		16,561,765		36.6
Total		61,435,048		100.0		45,360,717		100.0

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, 2007 AND 2006

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

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

	Unibanco
	2007				2006
Largest clients	Value		% total		Value		% total
10 largest clients		5,060,513		11.8		3,853,615		11.9
50 next largest clients		7,100,499		16.6		6,502,862		20.0
100 next largest clients		5,771,878		13.4		4,711,939		14.5
Other clients		24,955,094		58.2		17,368,171		53.6
Total		42,887,984		100.0		32,436,587		100.0

	Unibanco Consolidated
	2007				2006
Largest clients	Value		% total		Value		% total
10 largest clients		5,060,513		8.2		3,853,615		8.5
50 next largest clients		7,100,499		11.6		6,502,862		14.3
100 next largest clients		5,771,878		9.4		4,677,460		10.3
Other clients		43,502,158		70.8		30,326,780		66.9
Total		61,435,048		100.0		45,360,717		100.0

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

			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		1.3		570,095
Total				41,443,735		788,006		656,243		42,887,984		100.0		1,456,497
% of total risk														3.4	%

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, 2007 AND 2006

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

			Unibanco
			2006
	% minimum				Past due credits
Risk	allowance		Current		Falling due		Overdue		Total		Distribution		Total
level	required		credits		installments		installments(1)		credits		% of total		allowance
AA		-		15,408,151		-		-		15,408,151		47.5		80,205
A		0.5		11,179,953		-		-		11,179,953		34.5		99,152
B		1.0		2,879,484		193,464		46,947		3,119,895		9.6		93,737
C		3.0		911,772		206,697		67,841		1,186,310		3.7		142,202
D		10.0		107,424		121,270		141,067		369,761		1.1		140,509
E		30.0		35,346		77,846		55,243		168,435		0.5		104,061
F		50.0		26,569		85,617		56,049		168,235		0.5		131,223
G		70.0		10,279		53,579		57,636		121,494		0.4		115,433
H		100.0		38,195		219,936		456,222		714,353		2.2		714,353
Total				30,597,173		958,409		881,005		32,436,587		100.0		1,620,875
% of total risk														5.0	%
			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	%
			Unibanco Consolidated
			2006
	% minimum				Past due credits
Risk	allowance		Current		Falling due		Overdue		Total		Distribution		Total
level	required		credits		installments		installments(1)		credits		% of total		allowance
AA		-		19,393,086		-		-		19,393,086		42.8		80,325
A		0.5		17,559,022		-		-		17,559,022		38.7		132,258
B		1.0		3,073,011		328,047		183,406		3,584,464		7.9		99,450
C		3.0		1,416,641		309,608		197,621		1,923,870		4.2		173,569
D		10.0		160,083		167,108		258,514		585,705		1.3		174,139
E		30.0		79,372		106,349		172,179		357,900		0.8		178,645
F		50.0		56,863		103,173		163,634		323,670		0.7		223,990
G		70.0		31,606		66,477		151,320		249,403		0.5		220,466
H		100.0		99,505		273,500		1,010,592		1,383,597		3.1		1,383,597
Total				41,869,189		1,354,262		2,137,266		45,360,717		100.0		2,666,439
% of total risk														5.9	%

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

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, 2007 AND 2006

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

The allowance for credit losses is recorded in accordance with Resolution 2682 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 assess the risk of certain clients, operations or portfolios more accurately.

(e)   The balance of renegotiated transactions with clients as established in Resolution 2682 of the Brazilian National Monetary Council totaled R$621,896 (2006 - R$881,530) in Unibanco and R$972,966 (2006 - R$1,124,940) in Unibanco Consolidated. These transactions relate to the active portfolio and credits written off, and were re-classified in a manner which maintain the risk assessment and the provision for losses existing prior to renegotiation. These transactions are only re-assessed to higher classification only after the collection of a significant portion of the renegotiated debt.

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

	Unibanco						Unibanco Consolidated
	2007			2006			2007			2006
Balance at the beginning of the year		1,620,875			1,377,706			2,666,439			2,060,614
Increases		1,052,846			1,073,781			2,425,903			2,497,711
Loan charge-offs		(1,217,224	)		(830,612	)		(2,098,667	)		(1,891,886	)
Balance at the end of the year		1,456,497			1,620,875			2,993,675			2,666,439
Loan recoveries (1)		120,260			136,580			241,335			230,174

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

7.   Foreign Exchange Portfolio

(a)    Balance sheet

	Unibanco						Unibanco Consolidated
	2007			2006			2007			2006
Assets - Other credits
Unsettled exchange purchases		3,074,560			2,172,585			3,074,560			2,172,585
Rights on foreign exchange sold		1,454,137			1,508,330			1,454,137			1,508,330
(-) Received advances		(42,114	)		(251,516	)		(42,114	)		(251,516	)
Income receivable from advances on exchange contracts		29,453			21,151			29,453			21,151
Other		-			66			-			66
Total		4,516,036			3,450,616			4,516,036			3,450,616
Liabilities - Other liabilities
Unsettled exchange sales		1,450,135			1,500,811			1,450,135			1,500,811
Obligations for foreign exchange purchased		3,218,737			2,125,044			3,218,737			2,125,044
(-) Advances on exchange contracts		(1,653,356	)		(1,030,632	)		(1,653,356	)		(1,030,632	)
Other		222			448			222			448
Total		3,015,738			2,595,671			3,015,738			2,595,671
Off-balance sheet
Import credits outstanding		192,598			116,230			213,066			124,702
Confirmed export credits		8,953			8,775			8,953			9,081

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, 2007 AND 2006

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

(b)   Statement of income

	Unibanco						Unibanco Consolidated
	2007			2006			2007			2006
Income from foreign exchange transactions		4,974,076			2,401,253			5,236,558			2,672,692
Expenses from foreign exchange transactions		(4,953,744	)		(2,384,350	)		(5,195,122	)		(2,653,975	)
Net gain on foreign exchange transactions		20,332			16,903			41,436			18,717

8.   Other Credits - Sundry

	Unibanco				Unibanco Consolidated
	2007		2006		2007		2006
Escrow deposits for civil and labor suits (1)		691,202		816,479		1,825,574		2,081,311
Notes and credits receivable		562,699		552,002		611,512		695,234
Accounts receivable from temporary special administration regime		247,480		241,068		247,480		241,068
Salary advances and other		140,151		101,098		156,614		109,325
Receivables from purchase of assets		8,073		20,111		37,009		92,702
Accounts receivable from associated companies		776,352		33,033		-		-
Other		277,915		300,322		607,821		554,733
Total		2,703,872		2,064,113		3,486,010		3,774,373
Current		1,588,295		502,030		1,135,246		812,870
Long-term		1,115,577		1,562,083		2,350,764		2,961,503

(1)   Substantially related to litigations (Note 14)

9.   Prepaid Expenses

	Unibanco				Unibanco Consolidated
	2007		2006		2007		2006
Commissions and expenses on debt placements		58,132		80,068		58,150		80,068
Commissions on debt products		390,225		145,285		621,964		368,938
Exclusiving contracts for banking services		202,449		149,343		472,589		441,736
Advance of private pensions sponsor contributions		207,519		198,544		215,490		205,584
Others		47,632		34,669		60,773		61,131
Total		905,957		607,909		1,428,966		1,157,457
Current		282,230		226,934		607,652		554,164
Long-term		623,727		380,975		821,314		603,293

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, 2007 AND 2006

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

10.   Foreign Branches

As mentioned in Note 2, the financial statements of foreign branches (Grand Cayman and Nassau (2006)) are consolidated with those of Unibanco.

The balances of these branches can be summarized as follows:

	2007				2006
	US$			R$	US$			R$
	thousand		thousand		thousand		thousand
Current assets		6,676,368		11,825,851		3,559,698		7,610,634
Long-term assets		3,079,288		5,454,343		2,968,726		6,347,136
Permanent assets		67,665		119,855		65,443		139,917
Total assets		9,823,321		17,400,049		6,593,867		14,097,687
Current liabilities		6,602,030		11,694,176		3,611,241		7,720,833
Long-term liabilities		2,674,533		4,737,400		2,520,491		5,388,809
Deferred income		-		-		120		256
Branch equity		546,758		968,473		462,015		987,789
Total liabilities		9,823,321		17,400,049		6,593,867		14,097,687
Net income for the year		146,951		260,294		205,189		438,695

11.   Investments

(a)   Investments in subsidiary and associated companies

Results of investments in subsidiary and associated companies were recorded as “Equity in the results of subsidiary companies” in the statement of income. The foreign branches’ and subsidiary companies’ exchange losses in the amount of R$651,219 (2006 – R$97,700) 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:

	Number of shares
	or quotas
	(in thousands)				Percentage holding (%)				Adjusted								Equity in results
	direct and indirect						Unibanco		stockholders		Investment amount				Adjusted net		adjustments (1)
	Common		Preferred		Unibanco		Consolidated		equity		2007		2006		income (7)		2007		2006
Investments of Unibanco
Subsidiary companies
Dibens Leasing S.A. – Arrendamento Mercantil (3) and (4)		512,379		-		99.999		99.999		4,956,079		4,956,079		337,829		444,066		444,066		26,192
Unipart Participações Internacionais Ltd. (2)		5,849		-		100.000		100.000		2,743,071		2,743,071		2,542,123		192,377		192,377		175,579
Unicard Banco Múltiplo S.A. (8)		220,390,052		91,811,816		100.000		100.000		1,883,047		1,883,047		1,187,937		174,980		174,980		236,636
Banco Fininvest S.A.		8		2		99.991		100.000		1,562,123		1,562,123		1,507,251		102,677		102,677		(1,834	)
Unibanco AIG Seguros S.A.		345,014		188,814		49.902		49.902		1,591,710		794,297		728,249		274,530		143,240		164,388
Banco Dibens S.A.		20,085,509		-		99.999		100.000		494,030		494,030		477,788		34,451		34,451		21,176
Unibanco Companhia de Capitalização		4,194		-		99.999		100.000		457,706		457,706		397,753		85,280		85,280		108,338
Banco Único S.A.		2,768,397		2,768,397		100.000		100.000		289,060		285,984		270,314		21,381		21,381		27,235
Unibanco Investshop Corretora de Valores Mobiliários e Câmbio S.A.		8,060		4,955		100.000		100.000		175,203		175,203		112,202		28,147		28,147		19,611
Interbanco S.A.		24,455		-		99.996		99.999		164,130		164,128		140,950		72,566		72,566		60,339
AIG Brasil Companhia de Seguros		54,214		-		49.999		49.999		88,479		44,239		39,807		14,994		7,497		4,052
Other												466,595		1,632,470				326,940		262,526
Jointly controlled companies (i)
Maxfácil Participações		11		-		49.986		49.986		185,396		92,672		87,494		13,586		6,790		2,674
Banco Investcred Unibanco S.A. – (PontoCred)		95		-		49.997		49.997		139,421		69,706		70,576		64,933		32,420		27,411
Companhia Hipotecária Unibanco – Rodobens		6.055		-		50.000		50.000		21,937		10,968		8,634		4,659		2,540		2,332
Other												29,128		142,147				48,871		135,982
Total												14,228,976		9,683,524				1,724,223		1,272,637

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, 2007 AND 2006

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

	Number of shares				Percentage
	or quotas (in thousands)				holding (%)		Adjusted								Equity in results
	direct and indirect				Unibanco		stockholders		Investment amount				Adjusted		adjustments(1)
	Common		Preferred		Consolidated		equity		2007		2006		income(7)		2007		2006
Investment of Unibanco Consolidated
Associated companies
IRB – Brasil Resseguros S.A.		-		117		11.723		1,915,585		224,564		182,864		334,863		41,539		59,015
AIG Brasil Companhia de Seguros		54,214		-		49.999		88,479		44,239		39,807		14,994		7,497		4,052
Other										49,826		2,315				52,916		336
Total										318,629		224,986				101,952		63,403

	Number of shares or quotas						Adjusted		Adjusted net
Main direct, indirect and jointly controlled subsidiary	(in thousands)				Percentage		stockholders		income (7)
companies  invested by:	Common		Preferred		Holding (%)		equity		2007
Unipart Participações Internacionais Ltd.
Hipercard Banco Múltiplo S.A.		95,738		-		19.293		837,978		2,143
Unibanco Cayman Bank Ltd.		26,340		-		100.000		725,354		149,427
Unibanco União de Bancos Brasileiros (Luxembourg) S.A.		200		-		99.999		145,669		13,250
Unicorp Bank & Trust Ltd.		1,750		3,250		100.000		44,871		41,517
Unibanco AIG Seguros S.A.
Unibanco AIG Vida e Previdência S.A.		39,565		-		99.999		291,275		48,312
Unibanco AIG Saúde Seguradora S.A.		20,000		-		99.999		56,423		16,728
UASEG Seguros S.A.		14,400				99.999		16,126		2,264
IRB – Brasil Resseguros S.A.		-		117		11.723		1,915,585		334,863
Banco Fininvest S.A.
Luizacred S.A. Sociedade de Crédito, Financiamento e Investimento		172		172		49.999		107,771		24,619
Unicard Banco Múltiplo S.A.
Hipercard Banco Múltiplo S.A.		298,819		5,940		61.414		837,978		2,143
Dibens Leasing S.A. – Arrendamento Mercantil
Unibanco Participações Societárias S.A. (5) and (6)		8,883		6,218		51.000		2,130,437		1,245,967
Redecard S.A. (6)		156,201		-		23.211		519,300		700,765
Fininvest Negócios de Varejo Ltda.		119,778,693		-		99.993		1,197,183		6,758

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

(1)  The difference between the net income (loss) 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) The Executive Board Meetings  held in the  first half of 2006 and 2007 approved the increase in the capital of Unipart Participações Internacionais Ltd., in the amounts of R$1,489,420 and R$525,157, respectively. On December 31, 2007, the capital is represented by 5,848,786 shares, totally paid by Unibanco.

(3) The Extraordinary Shareholders’ Meetings held in March, June and October 2007, respectively, 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.

(4) 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 affiliated 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% on the capital. See Note 26.

(5) In accordance with the Company Announcement in June 2007, Unibanco had admitted a non financial company of Deutsche group as a minority partner in a non financial subsidiary, Unibanco Participações Societárias S.A. - (“UPS”), controlled by Dibens Leasing S.A. - Arrendamento Mercantil. The minority partner owns 49.00% of the UPS total capital. The UPS´business purpose is the participation on capital of Unibanco’s non-financial subsidiaries. See Note 26.

(6) In July 2007, Unibanco, through an Initial Public Offering, sold 53,798,700 shares of Redecard S.A., which represents 8.73% of the capital of that company, for the amount of R$1.5 billion. See Note 26.

(7) In the year ended December 31, 2007, the results of the following companies, considering non-recurring events, disclosed in Note 26, are as follows:

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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, 2007 AND 2006

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

Unipart Participações Internacionais Ltd.	162,708
Dibens Leasing S.A. – Arrendamento Mercantil	2,355,997
Banco Fininvest S.A.	54,773
Unicard Banco Múltiplo S.A.	396,451
Banco Dibens S.A.	21,158
Unibanco Companhia de Capitalização	85,206
Banco Único S.A.	18,871
Hipercard Banco Múltiplo S.A.	2,143

(8) 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 price per share of R$23.00 and BM&F S.A. (5,956,495 shares) for the average price of R$17.24, respectively. (See Note 26).  

(b)  Goodwill on acquisition of companies

The goodwill on acquisition of a company is based on the expectation of future earnings, with the amortization period changed 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
	2007		2006 (3)		2007		2006
Fininvest		-		-		-		291,604
Hipercard		96,768		179,711		82,943		166,554
Hipercard Investimentos (1)		-		146,316		146,316		32,847
Maxfácil (2)		62,707		79,809		17,102		5,701
Other		98,094		141,994		44,083		115,058
Total		257,569		547,830		290,444		611,764

(1) 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 with the parent company and the goodwill balance in the amount of R$110,484 was fully amortized (see Note 26).

(2)  During the third quarter, Unibanco – União de Bancos Brasileiros S.A. acquired 49.986% of the company’s capital. Goodwill paid in this transaction is based on the expectation of future profits.

(3) The accelerated depreciation of goodwill has been classified in a separate line as "Results from Non-recurring Events " based on Deliberation CVM nº 488 of 2005 in the Statement of Income. See Note 26.

12.  Deposits and Resources from Securities Issued

The deposits are presented considering: demand deposits, saving deposits, interbank deposits and time deposits.

Resources from securities issued are represented mainly by mortgage notes, debentures and real estate notes issued in Brazil and euronotes issued abroad.

(a)   The real estate notes bear interest of up to 90% of interbank interest rate and maturing up to July 2012.

(b)   Debentures

Debentures issued by Dibens Leasing S.A. - Arrendamento Mercantil are restated, bearing interest up to 102% of interbank interest rate, paid semiannually and mature in ten years corresponding to June 2016.

Debentures pledge schedules are restated, bearing interest up to 104.5% of interbank interest rate and fixed interest rate up to 11.67% with maturity up to January 2020.

(d)   Securities abroad - Euronotes

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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, 2007 AND 2006

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

				Unibanco			Unibanco Consolidated
Maturity	Currency	2007		2006			2007		2006
Less than 3 months	US$		548,720		238,266	-		544,326		236,522
	R$		182		-	-		182		-
	EUR		4,740		2,420	-		4,740		2,420
			553,642		240,686			549,248		238,942
From 3 to 12 months	US$		229,046		154,582			219,029		140,377
	EUR		1,850		2,981	-		1,850		2,981
	R$		140		-	-		140		-
	YEN		283,080		-	-		283,080		-
			514,116		157,563			504,099		143,358
From 1 to 3 years	US$		85,734		95,806	-		71,215		68,002
	R$		213,800		-	-		213,800		-
	YEN		-		318,319	-		-		318,319
			299,534		414,125			285,015		386,321
From 3 to 5 years	US$		14,520		30,918	-		4,397		18,701
	R$		-		231,223	-		-		231,219
			14,520		262,141			4,397		249,920
From 5 to 15 years	US$		3,245,816		2,571,223	-		23,066		10,630
			3,245,816		2,571,223			23,066		10,630
Total			4,627,628		3,645,738			1,365,825		1,029,171

The average interest of issues in foreign currency was 7.73% (2006 – 8.17%) per annum in Unibanco and 3.20% (2006 – 4.87%) per annum in Unibanco Consolidated.

(e)   The other issues totaled R$15,868 (2006 - R$22,634) in Unibanco and in Unibanco Consolidated with maturities up to August 2010 and an average interest rate of 5.30% (2006 – 4.83%) per annum.

13.  Borrowings and Onlendings

Foreign borrowings consist principally for refinancing of foreign exchange transactions, imports and exports.

Onlendings in Brazil – governmental agencies are payable up to 2025, with interest rates established by operational policies of BNDES (National Economic Development Bank).

Foreign onlendings, consisting of long-term credit lines for project and trade financing, are payable up to December 2011, with an average interest rate of 5.05% (2006 – 5.17%) per annum.

14. 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.

As from first half ended June 30, 2007, we refined the method to estimate the amount of provisions for labor claims which 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) the historic percentage of the balance of judicial deposits converted into payments with respect to the labor claims with judicial deposits; and (iii) the historic average of payments made, for all other claims. In 2007, provisions in the amount of R$277,755, were booked as results from non recurring events, before the tax effects, due to the change in the method to estimate the amount of the probable losses, as described above.

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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, 2007 AND 2006

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

Civil litigation is mainly represented by claims for personal and moral injury, due to among other reasons, returns of checks, protests of notes considered not due and economic plans. As from the six-months ended June 30, 2007 we have also refined the method to estimate the amount of the provisions 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; and (iii) the historic average of payments made, for all other claims. In 2007, provisions in the amount of R$211,639 were booked as results from non recurring events, before the tax effects, due to the change in the method to estimate the amount of the probable losses, as described above.

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 our opinion or the opinion of our legal advisors, are fully provided. The claims considered as legal liabilities have a remote or possible risk of loss in accordance with the opinion of legal advisors.

On December 31, 2007, Unibanco and its subsidiaries maintained provision for such causes in the total amount of R$1,784,630 in Unibanco and R$2,763,805 in Unibanco Consolidated, mainly: (i) widening of the calculation basis of Profit Participation Program – PIS and Tax and Social Security Financing – COFINS by Law 9,718, in the amount of R$1,201,956 in Unibanco and R$1,603,270 in Unibanco Consolidated; (ii) Deductibility of interest and taxes whose payments are suspended, in the amount of R$311,107 in Unibanco and R$384,011 in Unibanco Consolidated; and (iii) Social Contribution on Net Income of non-employees companies in the amount of R$140,088 in Unibanco Consolidated. In 2007 and 2006, provisions in the amounts of R$274,042 and R$83,065, respectively, were booked as results from non recurring events, due to changes on the case laws applicable to certain tax thesis.

On December 31, 2007, according to legal advisors’ opinion, we do not record provisions for claims considered as possible loss. Such claims, mainly related to tax, net of tax effects, represent the amount of R$949,971 (2006 – R$1,043,967) in Unibanco Consolidated, in which we are contesting:

(i) Deductibility of losses on credits receivables in the amount of R$169,175 (2006 – R$141,084);

(ii) Deductibility of goodwill on investments acquisitions in the amount of R$154,834 (2006 – R$210,335);

(iii) Collection of CPMF on leasing transactions in the amount of R$145,205 (2006 – R$197,507);

(iv) Social security contribution on non remunerated earnings in the amount of R$93,551 (2006 – R$75,155);

(v) Profit from foreign country taxation criteria in the amount of R$74,970 (2006 – R$94,512); and

(vi) ISS taxation on leasing operations in the amount of R$20,598 (2006 – R$21,223).

Provisions recorded and their movements in the year ended December 31, 2007, are as follows:

	Unibanco				Unibanco Consolidated
Balance sheet	2007		2006		2007		2006
Tax litigation (1)		1,784,630		1,011,499		2,763,805		2,022,796
Labor litigation (2)		506,247		311,769		754,967		459,976
Civil litigation (2)		390,319		229,421		573,146		415,863
Total		2,681,196		1,552,689		4,091,918		2,898,635

(1) Provision for tax contingencies

(2) Recorded in Other Liabilities - Sundry (Note 15 (c))

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, 2007 AND 2006

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

	Unibanco						Unibanco Consolidated
Movements in the year	2007			2006			2007			2006
Balance at the beginning of the year		1,552,689			1,453,009			2,898,635			2,704,456
Increases		1,459,981			852,083			2,095,498			1,209,545
Releases		(104,353	)		(130,996	)		(417,690	)		(281,034	)
Interest/Monetary adjustment		180,585			129,824			179,152			210,220
Payments		(407,706	)		(577,908	)		(663,677	)		(1,022,346	)
Prior year adjustments		-			(173,323	)		-			77,794
Balance at the end of the year		2,681,196			1,552,689			4,091,918			2,898,635

15.  Other Liabilities

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

	Insurance				Private Retirement Plans				Annuity Products				Total
	2007		2006		2007		2006		2007		2006		2007		2006
Provision for unearned premiums		1,143,889		916,579		1		1		-		-		1,143,890		916,580
Loss Provision IBNR
(The provision for claims incurred but not yet reported)		199,638		227,894		1,427		5,462		-		-		201,065		233,356
Mathematical provision benefits to be granted		635,236		436,355		7,031,544		5,715,236		-		-		7,666,780		6,151,591
Mathematical provision for benefits granted		6,501		5,039		430,585		394,769		-		-		437,086		399,808
Unsettled claims		545,348		321,050		7,000		684		-		-		552,348		321,734
Provision for draws and redemptions		-		-		-		-		782,012		606,651		782,012		606,651
Other provisions		5,128		4,152		252,844		228,922		14,340		373		272,312		233,447
Total of technical provisions		2,535,740		1,911,069		7,723,401		6,345,074		796,352		607,024		11,055,493		8,863,167
Short-term		2,533,852		1,909,669		7,084,177		4,403,683		796,352		607,024		10,414,381		6,920,376
Long-term		1,888		1,400		639,224		1,941,391		-		-		641,112		1,942,791

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, 2007 AND 2006

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

(b) Subordinated debt

						Unibanco				Unibanco Consolidated
			Remuneration
	Issue	Maturity	per annum			2007		2006		2007		2006
Step-up subordinated
callable notes (1)	April  2002	April  2012		9.375	%		-		434,393		-		411,606
Step-up subordinated
callable notes (2)	December 2003	December 2013		7.375	%		355,202		428,709		347,486		414,334
Line of credit (3)	December 2004	December 2009		4.740	%		266,195		321,357		266,195		321,357
Perpetual Non-
cumulative Junior
Subordinated
Securities (4)	July 2005	Indeterminated		8.700	%		898,920		1,085,017		898,920		1,085,017
Subordinated time
deposits (5)	December 2002	December 2012	102.25% of CDI				495,355		507,677		495,355		507,677
Subordinated time
deposits (5)	November 2003	November 2013	102% of CDI				73,013		-		73,013		-
Subordinated time
deposits (6)	December 2006	December 2016	CDI + 0.47%				562,106		500,000		562,106		500,000
Subordinated time
deposits (7)	May 2007	May 2012	103.9% of CDI				1,507,652		-		1,507,652		-
Subordinated time
deposits (7)	July 2007	July 2012	CDI + 0.38%				444,168		-		444,168		-
Subordinated time
deposits (7)	August 2007	August 2012	CDI + 0.38%				208,910		-		208,910		-
Subordinated time
deposits (7)	August 2007	August 2014	CDI + 0.46%				52,244		-		52,244		-
Subordinated time
deposits (7)	October 2007	October 2012	IGPM + 7.33%				300,857		-		300,857		-
Subordinated time
deposits (7)	October 2007	October 2012	103.8% of CDI				95,288		-		95,288		-
Subordinated time
deposits (7)	October 2007	October 2014	IGPM + 7.35%				34,335		-		34,335		-
Subordinated time
deposits (7)	October 2007	October 2012	CDI + 0.45%				460,347		-		460,347		-
Subordinated time
deposits (7)	December  2007	December  2014	CDI + 0.60%				10,076		-		10,076		-
Total							5,764,668		3,277,153		5,756,952		3,239,991
Short-term							14,931		452,485		14,906		429,213
Long-term							5,749,737		2,824,668		5,742,046		2,810,778

(1) The debt was fully redeemed in April 2007.

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

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

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

(5) Subordinated time deposits can be redeemed from December 2007 and November 2008, respectively.

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

(7)  Subordinated time deposits can not be redeemed prior to contractual maturity.

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, 2007 AND 2006

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

(c) Sundry

	Unibanco			Unibanco Consolidated
	2007	2006		2007		2006
Sale of rights of receipt of future flow of payment orders abroad (1)	1,569,388		1,580,764		1,569,388		1,580,764
Provision for labor and civil litigation (Note 14)	896,566		541,190		1,328,113		875,839
Payable related to insurance companies	-		-		614,429		553,362
Provisions for payroll and administrative expenses	585,707		347,136		974,841		483,985
Credit on the release of real estate financing	54,043		27,266		54,043		27,266
Other	787,994		116,528		852,538		245,119
Total	3,893,698		2,612,884		5,393,352		3,766,335
Short-term	1,465,825		653,409		2,430,715		1,442,548
Long-term	2,427,873		1,959,475		2,962,637		2,323,787

(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$886,009 thousand (2006 – US$739,366 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.

16.  Employee Benefits

(a) Pension plan

Unibanco and its subsidiary companies provide to their employees a pension plan, based on a defined contribution through UBB-Prev – Previdência Complementar (new denomination of Trevo – Instituto Bandeirantes de Seguridade Social) a closed private entity. The program is sponsored by Unibanco, its subsidiaries and employees.

During the year ended December 31, 2007, the company sponsor contributions totaled R$23,239 (2006 – R$21,446) in Unibanco and R$25,753 (2006 – R$24,953) 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 Partner Program has become the main incentive program to executives. 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 Units stock 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 are limited to 10% of authorized capital.

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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, 2007 AND 2006

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

Up to December 31, 2007, the options activity was as follows:

Single Options

		Vesting				Exercise price
Insuance		period		Exercise		per Unit (R$)		Quantity
Nº	Date	until		period until		(IPCA)		Granted		Exercised		Cancelled		Not exercised
1st	1st quarter 2002		01.21.2007		01.20.2008		4.655		12,376,000		7,875,947		4,447,059		52,994
2nd	2nd quarter 2002		04.15.2007		04.14.2008		5.455		68,000		68,000		-		-
3rd and 4th	3rd quarter 2002		08.12.2007		08.11.2008	Up to 4,200			560,000		549,340		-		10,660
5th to 7th	4th quarter 2002		11.20.2007		11.19.2008		3.452		700,000		300,000		400,000		-
8th to 10th	1st quarter 2003		03.10.2008		03.09.2009	Up to 4,085			446,000		160,000		206,000		80,000
11th to 15th	2nd quarter 2003		06.16.2008		06.15.2009	Up to 5,150			3,464,000		1,313,336		1,244,000		906,664
16th	3rd quarter 2003		09.02.2008		09.01.2009		4.917		6,226,000		2,569,195		2,038,655		1,618,150
17th and 18th	4th quarter 2003		12.17.2008		12.16.2009	Up to 5,750			480,000		80,000		360,000		40,000
19th and 20th	1st quarter 2004		02.01.2009		01.31.2010	Up to 6,881			600,000		80,000		-		520,000
21th to 23th	2nd quarter 2004		04.13.2009		04.12.2010	Up to 7,016			1,012,240		337,414		-		674,826
24th to 26th	3rd quarter 2004		09.20.2009		09.19.2010	Up to 7,535			1,560,000		146,668		20,000.00		1,393,332
27th	1st quarter 2005		02.01.2010		01.31.2011	Up to 8,857			8,440,000		-		1,286,664		7,153,336
28th	2nd quarter 2005		05.03.2010		05.02.2011	Up to 10,375			50,000		-		50,000		-
29th	3rd quarter 2005		09.19.2010		09.18.2011	Up to 11,236			120,000		-		-		120,000
30th to 33th	3rd quarter 2006		08.30.2011		08.29.2012	Up to 16,418			630,000		-		280,000.00		350,000
34th and 35th	1st quarter 2007		03.22.2012		03.21.2013	Up to 18,705			500,000		-		-		500,000
TOTAL									37,232,240		13,479,900		10,332,378		13,419,962

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

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

The exercise price of stock option after the third quarter of 2004, is being restated, pro rata temporis, pegged accumulated to 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 (Bonificação de ações) in July 2006.

Bonus Options

The executives who opted to invest a percentage of their respective bonuses to purchase Unibanco Units received in December 2007 the following number of Bonus Units.

Insuance	Quantity of		Exercise		Quantity
Date	shareholders		period until		Granted		Not exercised
Six-month period ended December 31, 2007		51		09.03.2012		1,226,808		1,226,808
TOTAL						1,226,808		1,226,808

The exercise of these bonus units is linked to the achievement of individual objectives and the maintenance of the propriety of their own shares without changes and burden during the exercise period.

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, 2007 AND 2006

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

17.  Stockholders’ Equity

(a)   Capital

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

	2007						2006
	Outstanding		Treasury
	shares		stock		Total		Total
Common		1,511,316,336		-		1,511,316,336		1,511,316,336
Preferred		1,282,890,124		13,549,348		1,296,439,472		1,296,439,472
Total		2,794,206,460		13,549,348		2,807,755,808		2,807,755,808

Preferred shares carry no voting rights but 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, 2007, the market value of Units is R$24.73.

At the Extraordinary Shareholders Meeting held in June 2006 approval was given to the increase of the corporate capital in the amount of R$3,000,000 through the partial capitalization of statutory reserves, with the issuance of 1,398,897,476 new shares to the shareholders, in 100% proportion, approved by the Brazilian Central Bank and with record date of July 2006.

According to the provisions of the 1st paragraph of Article 25 of the Normative Instruction no. 25/2001, issued by the Brazilian Federal Revenue Secretary, the unit cost that will be ascribed to the new shares is R$2.140774 to Unibanco’s shares and R$3.310068 to Unibanco Holdings’s shares.

As of July 18, 2006, the Global Depositary Shares (“GDSs”) traded on the New York Stock Exchange by Unibanco and Unibanco Holdings represents ten (10) units.

(b)   Dividends and interest on capital

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

During 2007, the Board of Directors approved the payment of interest on own capital to the shareholders in the amount of R$1,362,096 (2006 – R$890,486), related to the year ended on December 31, 2007, comprising R$0.4653 (2006 – R$0.3235)  R$0.3955 (2006 - R$0.2751) net of applicable tax per common share and R$0.5119 (2006 – R$0.3559) R$0.4351 (2006 – R$0.3025) net of applicable tax per preferred share. The interest on own capital was calculated in accordance with article 9º of Law nº 9.249/95 with tax benefit of R$463,113 (2006 – R$302,765).

The Units had interest on capital of R$0.9131 (2006 – R$0.6555) R$0.7761 (2006 – R$0.5571) net of applicable tax being R$0.4012 (2066 – R$0.2996) R$0.3410 (2006 – R$0.2546) net of applicable tax from Unibanco Holdings and R$0.5119 (2006 – R$0.3559) R$0.4351 (2006 – R$0.3025) net of applicable tax from Unibanco. The GDS had interest on capital of R$9.1303 (2006 – R$6.1725) R$7.7608 (2006 – R$5.2464) net of applicable tax.

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, 2007 AND 2006

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

(c)   Capital reserves

These reserves are substantially represented by share premium reserve.

(d)   Statutory reserves

The balance is summarized as follows:

	2007		2006
Legal reserve		742,925		570,534
Statutory reserves:
i) Operating margin reserve – calculated based on net income for the year
after the legal deductions and dividends up to a limit of 100% of  capital
stock		3,067,166		1,281,599
ii) Special dividends reserve		63,898		63,898
Total		3,873,989		1,916,031

(e)   Treasury stock

On August 8, 2007, the Board of Directors of both Unibanco and Unibanco Holdings approved the acquisition of up to 20,000,000, of Unibanco preferred shares and Unibanco Holdings preferred shares for the purpose of maintaining these shares in treasury for further sale or cancellation, without reducing the share capital of Unibanco or Unibanco Holdings. Unibanco’s executive Board shall decide the timing and volume of the acquisitions within the limits established by the above mentioned Boards of Directors. The authorization will be valid for 6 months as from August 10, 2007, and the acquisition of the shares will be carried out at fair market value through the broker Unibanco Investshop Corretora de Valores Mobiliários S.A.

During the year ended December 31, 2007, in accordance with the Stock option program (Note 16 (b)) approved by the Extraordinary Shareholders’ Meeting in October 2001, and also due to the conversion program ended in November 2005, the following changes in treasury stock occurred:

	2007						2006
	Quantity of shares			R$ thousands			Quantity of shares			R$ thousands
Balance at the beginning of the year		7,565,902			43,198			11,265,874			50,828
Conversion of own stocks		2,991,723			32,925			(1,849,986	)		(9,511	)
Sale of own stocks		(6,752,612	)		(50,046	)		(3,576,436	)		(18,367	)
Repurchase		9,744,335			110,616			1,726,450			20,248
Balance at the end of the year		13,549,348			136,693			7,565,902			43,198

The average cost was R$25.84 per repurchased Units, and the minimum and maximum price per share were R$24.12 and R$27.50, respectively.

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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, 2007 AND 2006

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

(f) Prior year adjustments

Represented, principally, by changes in accounting polices as requires by National Council of Private Insurance (CNSP) Resolution, related to rules and procedures adopted to account for the technical reserves of the insurance, private pension entities and capitalization companies. In 2006, the amount corresponds, mainly, to the additional amount recorded as provision for fiscal contingencies, following the requirements of Deliberation CVM nº 489/05.

18.  Other Operating Income and Expenses

(a)   Other operating income

	Unibanco				Unibanco Consolidated
	2007		2006		2007		2006
Dividends/retained earnings received from other investments		5,816		93,692		25,390		151,299
Other		29,322		78,791		75,145		139,158
Total		35,138		172,483		100,535		290,457

(b)   Other operating expenses

	Unibanco				Unibanco Consolidated
	2007		2006		2007		2006
Provision for labor and civil litigations		266,857		435,155		488,352		595,988
Expense related to checks and billing, net		105,933		95,250		105,596		125,669
Correspondent banks and commision expenses		202,660		136,919		336,304		203,924
Amortization of goodwill on subsidiaries acquired		21,576		64,731		179,960		148,056
Operating losses		114,671		98,718		166,757		98,718
Reference file informations		23,274		30,976		49,997		54,465
Other		187,283		96,761		326,313		87,760
Total		922,254		958,510		1,653,279		1,314,580

19.  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.

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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, 2007 AND 2006

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

(a)   Deferred tax assets

	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 negative basis of 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 at 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

	Unibanco
	December 31,							December 31,
	2005			Increase		Realization		2006
Allowance for credit losses		356,678			387,474		335,146		409,006
Other provisions not currently deductible		460,421			623,956		526,195		558,182
Tax loss and negative basis of social contribution carry-forwards		210,115			-		114,205		95,910
Social contribution carry-forwards (Provisional Measure 2158-35)		277,620			-		22,966		254,654
Subtotal		1,304,834			1,011,430		998,512		1,317,752
Adjustment at fair value of marketable securities available for sale and derivative financial instruments		(11,223	)		76,428		-		65,205
Net deferred tax assets		1,293,611			1,087,858		998,512		1,382,957
Deferred tax assets		1,293,611							1,382,957

	Unibanco Consolidated
	December 31,									December 31,
	2006			Increase			Realization			2007
Allowance for credit losses		689,775			591,434			403,794			877,415
Other provisions not currently deductible		1,121,576			1,392,995			835,874			1,678,697
Tax loss and negative basis of 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 at 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

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, 2007 AND 2006

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

	Unibanco Consolidated
	December 31,									December 31,
	2005			Increase			Realization			2006
Allowance for credit losses		565,002			563,022			438,249			689,775
Other provisions not currently deductible		976,185			944,231			798,840			1,121,576
Tax loss and negative basis of social contribution carry-forwards		621,278			57,105			158,394			519,989
Social contribution carry-forwards
(Provisional Measure 2158-35)		476,048			-			24,781			451,267
Subtotal		2,638,513			1,564,358			1,420,264			2,782,607
Adjustment at fair value of marketable securities available for sale and derivative financial instruments		(9,670	)		74,616			19			64,927
Deferred tax obligations		(55,403	)		(38,417	)		(2,779	)		(91,041	)
Net deferred tax assets		2,573,440			1,600,557			1,417,504			2,756,493
Deferred tax assets		2,628,843									2,847,534
Deferred tax liabilities		55,403									91,041

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

On December 31, 2007, 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
2008		4,747		739,398		744,145		25,780		1,276,853		1,302,633
2009		14,575		124,675		139,250		66,101		403,660		469,761
2010		26,909		611,400		638,309		73,626		894,038		967,664
2011		48,959		71,273		120,232		88,421		112,869		201,290
2012		68,033		18,568		86,601		90,477		146,187		236,664
2013 to 2021		92,879		4,275		97,154		98,080		99,862		197,942
Total		256,102		1,569,589		1,825,691		442,485		2,933,469		3,375,954

(*)  Expected realization of deferred taxes is in conformity with MP 413/08 tax rate.

The present value of deferred taxes, calculated using the average rate of funding, net of tax effects, totaled R$1,618,358 in Unibanco and R$2,984,728 in Unibanco Consolidated.

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

	Unibanco						Unibanco Consolidated
	2007			2006			2007			2006
Income before income tax and social contribution,
net of non-recurring events and profit sharing		2,598,656			2,503,212			3,526,262			2,987,752
Income tax and social contribution expenses
at a rate of 25% and 9%		(883,543	)		(851,092	)		(1,198,929	)		(1,015,836	)
Adjustments to derive effective tax rate:
Equity in the results of subsidiary and
associated companies and exchange rate
variation on subsidiaries abroad		284,275			321,295			(186,751	)		(10,201	)
Interest on capital paid, net		454,848			278,925			476,345			323,204
Permanent differences (net)		145,319			(43,000	)		155,336			101,124
Income tax and social contribution for the year		899			(293,872	)		(753,999	)		(601,709	)

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, 2007 AND 2006

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

20.  Commitments and Guarantees

	Unibanco				Unibanco Consolidated
	2007		2006		2007		2006
Co-obligation and risks for guarantees provided		15,066,616		9,546,039		15,097,829		9,559,527
Assets under management (mainly mutual investment funds)		54,322,171		43,804,268		54,806,571		43,779,819
Lease commitments		-		10,458		8		10,474

21.  Related-Party Transactions (Unibanco)

	2007			2006
Assets
Cash and due from banks		-			84
Interbank investments		5,835,152			6,574,765
Marketable securities and derivative financial instruments (a)		20,456,232			11,280,226
Interbank accounts		(32	)		45
Lending operations		9,950			71,563
Other credits
. Income receivable
Dividends and interest on capital		1,094,219			88,975
Negotiation and intermediation of securities		10,783			-
. Sundry		776,352			33,033
Liabilities
Deposits		23,539,834			13,345,261
Securities sold under repurchase agreements		831,835			2,070,383
Resources from securities issued
. Debentures		856,334			-
. Securities abroad		3,261,881			2,616,614
Interbank accounts		36,514			43,794
Borrowings		24,780			93,057
Derivative financial instruments		21,476			-
Other liabilities
Social and statutory		726,058			385,380
Subordinated debt		7,716			37,162
Sundry		473,738			30,722

(a)  Include debentures issued by Dibens Leasing S.A. – Arrendamento Mercantil in the amount of R$20,111,516 (2006 - R$10,971,860).

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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, 2007 AND 2006

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

	2007		2006
Revenues
Lending operations		1,808		12,549
Marketable securities		2,469,603		1,841,843
Derivative financial instruments		244,864		35,493
Services rendered		349,014		290,134
Other operating income		7		1,834
Expenses
Deposits and securities sold		2,458,158		1,366,521
Borrowings and onlendings		8,336		12,906
Other administrative expenses		47,724		44,191
Other operating expenses		22,314		17,681

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.

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, through utilization of physical assets and personnel related to credit card, leasing, annuity products plans, insurance operations and brokerage.

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

22.  Financial Instruments

(a)  Purposes and use policies

Unibanco uses derivative financial instruments to manage its own overall 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 financial instruments can be used as part of asset and liability 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.

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, 2007 AND 2006

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

(d)  Fair value determination

The fair value of Marketable Securities and of Derivative Financial Instruments is calculated by fair value, when applicable is 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 exercise, as informed by Stock Exchanges trade associations and external entities.

Credit risk

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

Market and liquidity risk

The management of market risk and liquidity is conducted through daily monitoring of exposure level 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.

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

	Unibanco
	2007				2006
	Book value		Fair value		Book value		Fair value
Assets
Interbank deposits		11,396,899		11,426,898		11,332,894		11,430,251
Marketable securities		36,979,306		37,209,987		21,263,929		21,433,586
Lending operations		38,307,234		38,399,143		29,184,388		29,296,180
Derivatives, net		-		-		234,630		234,630
Liabilities
Interbank deposits		20,973,527		20,973,518		11,329,818		11,329,842
Time deposits		25,642,236		25,666,497		24,785,358		24,825,103
Mortgage notes		-		-		444,474		445,535
Debentures		2,894,975		2,900,924		-		-
Real estate notes		418,014		417,927		833,674		834,749
Resources from securities issued abroad		4,643,496		4,647,437		3,668,372		3,667,651
Derivatives, net		1,840,878		1,840,878		-		-
Subordinated debt (Note 15(b))		5,764,668		5,795,001		3,277,153		3,342,148
Other liabilities (Note 15(c))		1,569,388		1,574,774		1,580,764		1,557,311
Treasury stocks		136,693		167,538		43,198		76,417

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, 2007 AND 2006

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

	Unibanco Consolidated
	2007				2006
	Book value		Fair value		Book value		Fair value
Assets
Interbank deposits		6,558,641		6,585,467		5,723,721		5,798,934
Marketable securities		23,737,167		24,268,230		19,124,676		19,383,171
Lending operations		45,574,799		45,690,979		35,876,373		36,040,544
Derivatives, net		-		-		250,116		250,116
Liabilities
Interbank deposits		1,149,031		1,149,020		259,205		259,205
Time deposits		22,708,940		22,878,282		24,526,087		24,565,832
Mortgage notes		55,137		55,137		468,196		469,257
Debentures		2,745,759		3,606,628		706,865		706,865
Real estate notes		418,014		417,927		833,674		834,749
Resources from securities issued abroad		1,381,693		1,386,431		1,051,805		1,050,496
Derivatives, net		1,684,496		1,684,496		-		-
Subordinated debt (Note 15(b))		5,756,952		5,787,208		3,239,991		3,304,363
Other liabilities (Note 15(c))		1,569,388		1,574,774		1,580,764		1,557,311
Treasury stocks		136,693		167,538		43,198		76,417

The fair value of marketable securities was based 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.

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 resources 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 operations 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 flow of payment orders abroad was computed considering the value that could be obtained in the corresponding market.

The fair value of treasury stocks was based on the Unit’s price at December 28, 2007 on the São Paulo Stock Exchange.

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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, 2007 AND 2006

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

23.  Subsidiary Companies Information

The following tables show the balance sheets and the statements of income of Unibanco’s subsidiary companies, considering only the eliminations between the companies consolidated or combined in each group.

(a)  Foreign branches and subsidiaries include the accounts of the foreign branches (Unibanco Grand Cayman and Nassau (2006)), Unibanco – União de Bancos Brasileiros (Luxembourg) S.A. Interbanco S.A. (Paraguay), Unibanco Cayman Bank Ltd., and Unicorp Bank & Trust Ltd, (Grand Cayman):

Combined balance sheet	2007		2006
Assets
Current and long-term assets		22,072,256		16,359,111
Cash and due from banks		2,069,288		129,123
Interbank investments		2,192,542		1,819,235
Marketable securities		13,991,077		10,098,114
Interbank accounts		166,044		159,861
Lending and leasing operations		3,204,141		4,012,158
Other credits and other assets		449,164		140,620
Permanent assets		158,189		199,100
Total		22,230,445		16,558,211
Liabilities
Current and long-term liabilities		18,347,847		12,880,805
Deposits		4,225,116		2,793,025
Securities sold under repurchase agreements		2,442,837		2,988,553
Resources from securities issued		1,349,422		985,807
Interbank accounts		5,719		5,367
Borrowings and onlending		4,600,887		2,332,403
Derivative financial instruments		1,604,270		103,503
Other liabilities		4,119,596		3,672,147
Deferred income		6,922		6,535
Minority interest		3		3
Stockholders’ equity		3,875,673		3,670,868
Total		22,230,445		16,558,211

Combined statement of income	2007			2006
Revenue from financial intermediation		1,471,647			1,440,881
Expenses on financial intermediation		(852,684	)		(748,032	)
Reversal of provision for credit losses		(4,977	)		(926	)
Services rendered		85,191			75,864
Salaries, benefits, training and social security
and other administrative expenses		(71,007	)		(73,542	)
Financial transaction and other taxes		(1,139	)		(3,522	)
Other operating income (expenses)		(90,564	)		(18,517	)
Operating income, net		536,467			672,206
Results from non-recurring events		(28,579	)		-
Non-operating income, net		(1,103	)		(7,617	)
Income tax and social contribution		(10,362	)		(9,797	)
Minority interest		(3	)		(2	)
Net income for the year		496,420			654,790

The income tax and social contribution expense originated from the foreign operations, when applicable, is recorded in the multiple bank, through the addition of the net income from these operations into Unibanco’s taxable income.

49

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, 2007 AND 2006

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

(b)  Insurance and private pension entities including Unibanco AIG Seguros S.A., Unibanco AIG Saúde Seguradora S.A., Unibanco AIG Vida e Previdência S.A., Unibanco AIG Warranty S.A. and UASEG S.A.:

Combined balance sheet	2007		2006
Assets
Current and long-term assets		12,592,819		10,313,087
Cash and due from banks		42,165		46,805
Marketable securities		10,522,174		8,527,398
Insurance credits and re-insurance		1,266,423		1,120,037
Other credits and other assets		762,057		618,847
Permanent assets		414,132		378,864
Total		13,006,951		10,691,951
Liabilities
Current and long-term liabilities		11,414,923		9,225,907
Technical provisions for insurance		2,535,740		1,911,069
Technical provisions for retirement plans		7,723,401		6,345,074
Insurance and re-insurance debts		641,523		468,585
Other liabilities		514,259		501,179
Deferred income		318		6,689
Stockholders’ equity		1,591,710		1,459,355
Total		13,006,951		10,691,951

Combined statement of income	2007			2006
Retained premiums		3,858,889			3,117,079
Changes in technical reserves of insurance		(1,106,360	)		(1,079,740	)
Net claims incurred		(1,251,029	)		(1,018,657	)
Acquisition costs and other		(896,244	)		(500,514	)
Retained contributions income		813,269			677,555
Changes in technical reserves of private retirement plan		(286,447	)		(96,170	)
Benefits and redemptions expenses		(531,301	)		(585,081	)
Other operating income		138,507			236,648
Other operating expenses		(226,728	)		(204,945	)
Salaries, benefits, training and social security		(133,239	)		(134,330	)
Administrative expenses		(160,643	)		(164,546	)
Financial transaction and other taxes		(70,252	)		(45,839	)
Activities income		148,422			201,460
Financial income		1,167,369			1,060,110
Financial expenses		(921,208	)		(798,342	)
Operating income, net		394,583			463,228
Non-operating income, net		(2,365	)		(25,630	)
Income tax and social contribution		(92,706	)		(84,729	)
Profit sharing		(24,982	)		(23,246	)
Minority interest		-			(1,179	)
Net income for the year		274,530			328,444

50

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, 2007 AND 2006

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

(c)  Credit card companies, including the jointly controlled companies are as follows: Unicard Banco Múltiplo S.A. (100%), Redecard S.A. (23.21%), Hipercard Banco Múltiplo S.A. (61.414% - 100% in Unibanco Conglomerate) and Empresa Brasileira de Captura de Transações Eletrônicas Ltda. (100%):

Combined balance sheet	2007			2006
Assets
Current and long-term assets		8,319,923			7,091,489
Cash and due from banks		7,424			64,057
Interbank investments		208,929			707,281
Marketable securities		144,478			79,172
Interbank and interdepartmental accounts		13,782			22,829
Lending operations		3,345,816			2,637,118
Deferred tax and prepaid taxes		697,788			643,368
Other credits and other assets		3,901,706			2,937,664
Permanent assets		301,630			506,216
Total		8,621,553			7,597,705
Liabilities
Current and long-term liabilities		6,294,630			6,086,683
Deposits		857,227			1,926,830
Borrowings and onlendings		125,842			141,487
Resources from securities issued		182,562			220,309
Interbank and interdepartmental accounts		139			559
Taxes, social securities and provision for litigation		456,097			399,717
Other liabilities		4,672,763			3,397,781
Minority interest		323,343			323,085
Stockholders’ equity		2,003,580			1,187,937
Total		8,621,553			7,597,705
Combined statement of income	2007			2006
Revenue from financial intermediation		2,112,874			1,856,467
Expenses on financial intermediation		(196,636	)		(216,563	)
Provision for credit losses		(517,981	)		(550,636	)
Services rendered		695,122			649,321
Salaries, benefits, training and social security and other administrative expenses		(682,096	)		(686,235	)
Acquisition costs and other		(225,919	)		(247,193	)
Financial transaction and other taxes		(177,033	)		(132,703	)
Other operating income (expenses)		(443,043	)		(406,266	)
Operating income, net		565,288			266,192
Results from non-recurring events		105,187			-
Non-operating income, net		7,817			12,829
Income tax and social contribution		(172,669	)		(81,908	)
Profit sharing		(12,315	)		(11,134	)
Minority interest		(827	)		(14,090	)
Net income for the year		492,481			171,889

51

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, 2007 AND 2006

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

(d)  The companies which carry out consumer credit operations include Banco Fininvest S.A. (100%), Fininvest – Negócios de Varejo Ltda. (100%), Microinvest S.A. – Sociedade de Crédito a Microempreendedor (100%), UAM S.A. Distribuidora de Títulos e Valores Mobiliários (100%), Luizacred S.A. Sociedade de Crédito, Financiamento e Investimento (50%), Banco Investcred Unibanco S.A. (50%), Ponto Frio Leasing S.A. – Arrendamento Mercantil (50%) and Hipercard Sociedade de Crédito Financiamento e Investimento S.A. (50%):

Combined balance sheet	2007		2006
Assets
Current and long-term assets		5,827,056		4,593,919
Cash and due from banks		4,902		4,028
Interbank investments		397,262		651,843
Marketable securities		1,126,775		43,970
Interbank and interdepartmental accounts		38,918		27,073
Lending operations		2,382,809		2,105,950
Other credits and other assets		1,876,390		1,761,055
Permanent assets		167,961		133,850
Total		5,995,017		4,727,769
Liabilities
Current and long-term liabilities		2,940,759		2,487,168
Deposits		1,407,776		1,340,468
Interbank and interdepartmental accounts		2,310		(57	)
Borrowings		1,336		4,518
Derivative financial instruments		-		310
Other liabilities		1,529,337		1,141,929
Deferred income		12,137		-
Minority interest		213,108		23,050
Stockholders’ equity		2,829,013		2,217,551
Total		5,995,017		4,727,769

Combined statement of income	2007			2006
Revenue from financial intermediation		1,656,098			1,926,412
Expenses on financial intermediation		(143,694	)		(379,156	)
Provision for credit losses		(602,038	)		(822,122	)
Services rendered		510,588			434,546
Salaries, benefits, training and social security and other administrative expenses		(831,912	)		(872,206	)
Acquisition costs and other		(36,944	)		(41,393	)
Other operating income (expenses)		(212,402	)		(131,500	)
Financial transaction and other taxes		(147,683	)		(138,880	)
Operating income, net		192,013			(24,299	)
Results from non-recurring events		(51,494	)		-
Non-operating income, net		3,216			(17	)
Income tax and social contribution		(36,876	)		47,694
Profit sharing		(21,405	)		(13,075	)
Minority interest		(790	)		1,200
Net income for the year		84,664			11,503

24.  Other Information

(a)  Assets leased to third parties, in the amount of R$9,105,238 (2006 - R$2,731,958), net of depreciation, are committed for sale to the lessees, at their option, at the end of the respective contracts for R$8,624,846 (2006 - R$2,239,892) and the residual value received in advance from these lessees amounts to R$3,578,709 (2006 - R$893,856), classified as a reduction of leasing operations. Leases of third parties assets are not material.

(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 the activity. At December 31, 2007, the insurance coverage on properties and other assets in use totaled R$443,430 (2006 - R$505,274) in Unibanco and R$714,180 (2006 - R$1,184,202) in Unibanco Consolidated.

52

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, 2007 AND 2006

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

25.  Results from Non-recurring Events

	Unibanco and Unibanco Consolidated
	2007								2006
	Operational			Non-recurring		Total (1)			Total (1)
Changes in the investments of UPS
subsidiary (Note 11 (a) (5))		679,118			-		679,118			-
Sale of portion of investment in
Serasa (Note 11 (a) (4))		-			284,725		284,725			-
Gain on IPO of Redecard (Note 11 (a) (6))		-			679,774		679,774			-
Gain on IPO of BOVESPA/BM&F		-			381,514		381,514			-
Labor, civil, and tax provision (Note 14)		(763,436	)		-		(763,436	)		(107,947	)
Provision for credit losses		(179,000	)		-		(179,000	)		(49,500	)
Accelerated amortization of goodwill (Note 11 (b))		(72,919	)		-		(72,919	)		(306,047	)
Other amounts (2)		(161,506	)		-		(161,506	)		4,165
Results from non-recurring events		(497,743	)		1,346,013		848,270			(459,329	)

(1)  The amounts are presented net of applicable taxes and minority interest.

(2)  In 2007, include, principally, provision for assets associated with operations financial institution in process of liquidation.

Considering non-recurring events and the corresponding tax effects, operating income is as follows:

	2007			2006
Operating income before results from non-recurring events		4,096,652			3,519,502
Non-recurring events before tax effects		(1,044,690	)		(506,346	)
Operating income before after non-recurring events		3,051,962			3,013,156

53

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, 2007 AND 2006

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

26. 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.

26.1 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	2007			2006
Stockholder's Equity in accordance with Brazilian GAAP		11,837,304			9,920,857
Different criteria for:
Mark to market on certain available for sale securities (1)		207,498			-
Reversal of capitalized pre-operating costs (5)		(144,623	)		(184,034	)
Adjustments related to business combinations (6)		1,502,449			1,277,024
Allowance for loan losses (7)		13,159			(58,535	)
Accounting for loan and credit card fees and costs (8)		142,581			77,390
Deferred insurance acquisition costs and additional liability for pension investment contracts (9)		105,658			71,750
Stock-based compensation plans (10)		(109,663	)		(52,175	)
Provision for contingencies, including uncertain income tax positions (11)		(94,321	)		(235,196	)
Accounting for minority interest in Unibanco Participações Societárias S.A. ("UPS") (12)		254,377			-
Others		(11,760	)		(149,131	)
Deferred income tax effects of the above adjustments, when applicable		(708,721	)		(264,358	)
Minority interest		42,830			35,598
Stockholder's Equity in accordance with USGAAP		13,036,768			10,439,190

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

In thousands of Reais	2007			2006
Net Income in accordance with Brazilian GAAP		3,447,825			1,750,011
Different criteria for:
Foreign currency gains ans losses on available for sale securities (2)		205,052			136,447
Impairment on available for sale securities (3)		90,000			(73,978	)
Derivative financial instruments not qualified as cash flow hedge(4)		(11,789	)		(14,678	)
Reversal of capitalized pre-operating costs (5)		39,411			(36,730	)
Adjustments related to business combinations (6)		225,425			514,706
Allowance for loan losses (7)		71,695			43,465
Accounting for loan and credit card fees and costs (8)		65,191			41,408
Deferred insurance acquisition costs and additional liability for pension investment contracts (9)		360			(16,286	)
Stock-based compensation plans (10)		(66,263	)		(60,555	)
Provision for contingencies, including uncertain income tax positions (11)		140,875			(180,620	)
Accounting for minority interest in Unibanco Participações Societárias S.A. ("UPS") (12)		(83,280	)		-
Others		78,155			(22,394	)
Deferred income tax effects of the above adjustments, when applicable		(674,198	)		(153,080	)
Minority interest		31,914			23,310
Net Income in accordance with USGAAP		3,560,373			1,951,026
Net income applicable to common shares		1,837,753			1,003,183
Net income applicable to preferred shares		1,722,620			947,843
Basic and Diluted earnings per share
Common		1.22			0.66
Preferred		1.34			0.73
Weighted average shares outstanding - Basic
Common		1,511,316			1,511,316
Preferred		1,289,541			1,291,496
Weighted average shares outstanding - Diluted
Common		1,511,316			1,511,316
Preferred		1,295,621			1,295,478

54

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, 2007 AND 2006

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

26.2 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.  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.

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 for 2006 that were previously issued. For purposes of the reconciliation of stockholders equity as of December 31, 2006 and of net income for the year ended December 31, 2006 between Brazilian GAAP and US GAAP we have applied for US GAAP purposes hedge accounting for those instruments in the same manner we have applied in our originally issued financial statements under US GAAP  for 2006. 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.

55

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, 2007 AND 2006

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

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 5.f. (v) 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, 2007 and 2006 that are recorded under Brazilian GAAP and are reversed for US GAAP purposes.

(6) 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 its carrying amount. Under Brazilian  GAAP assets and liabilities of the entity acquired are not recorded at its 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 its 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.

56

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, 2007 AND 2006

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

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

	December 31, 2007			December 31, 2006
Balances under Brazilian GAAP:
Goodwill and negative goodwill – Gross amount		2,492,438			2,497,657
Goodwill and negative goodwill  – Accumulated depreciation		(2,245,548	)		(1,955,074	)
Goodwill and negative goodwill – Net balance		246,920			542,583
Less net balance of Goodwill and negative goodwill of entities consolidated under Brazilian GAAP that are equity accounted for under US GAAP		(77,786	)		(102,476	)
Goodwill and negative goodwill - Net balance - Companies consolidated under Brazilian GAAP (A)		169,134			440,107
Balances under US GAAP:
Goodwill – Gross amount		1,990,440			1,990,440
Goodwill – Accumulated depreciation		(513,034	)		(513,034	)
Goodwill – Net balance		1,477,406			1,477,406
Intangible assets related to business combinations– Net balance		194,177			239,725
Goodwill and intangible assets related to business combinations – Net balance (B)		1,671,583			1,717,131
Reconciling item in the reconciliation of stockholders equity (B) – (A)		1,502,449			1,277,024

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

	December 31, 2007			December 31, 2006
Reversal of amortization of goodwill recorded under Brazilian GAAP		290,444			611,764
Amortization of intangible assets related to business combinations recognized under US GAAP		(65,019	)		(97,058	)
Reconciling item in the reconciliation of net income		225,425			514,706

(7) 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 the 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.

57

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, 2007 AND 2006

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

Under Brazilian GAAP, the allowance 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.

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.

(8) 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.

(9) 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.

(10) 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). Under Brazilian GAAP for the years presented no cost of stock-based compensation plans is recognized

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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, 2007 AND 2006

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

(11) Provision for Contingencies including uncertain income tax positions

The difference in net income and stockholders’ equity  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.

(12)  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:

Liability recognized in Brazilian GAAP with respect to the option	R$	230,553
Fair value of the option - Asset	R$	23,824
Difference recognized as increase in stockholders’ equity in the reconciliation between Brazilian GAAP and US GAAP	R$	254,377

The differences in the accounting criteria used to account for the transaction between Brazilian GAAP and US GAAP result in a reduction in the gain recognized for the transactions as compared to  Brazilian GAAP as follows:

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 difference in criteria to account for option	R$	254,377
Difference recognized as reduction in income in the reconciliation between Brazilian GAAP and US GAAP	R$	(83,280	)

59

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, 2007 AND 2006

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

26.3 Summarized statement of changes in stockholders equity under US GAAP

	Year ended December 31, 2007			Year ended December 31, 2006
Opening stockholders equity		10,439,190			9,533,445
Cumulative effect of change in accounting principle					(7,200	)
Treasury stock transactions		(172,308	)		7,630
Stock option plan – Accounted for as equity - Expense for the period		7,776			15,579
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		(90,041	)		(83,196	)
Cash flow hedge, net of applicable taxes		85,115			(63,257	)
Net income for the year		3,560,373			1,951,026
Dividends		(1,348,708	)		(890,486	)
Other		88			(24,351	)
Closing stockholders equity		13,036,768			10,439,190

60

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, 2007 AND 2006

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

26.4 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”:

	Year ended December 31, 2007			Year ended December 31, 2006
Operating activities
Net income		3,447,825			1,750,011
Adjustment to reconcile net income to net cash provided by operating activities
Provision for loan and lease losses		2,154,691			605,825
Loss on sale of foreclosed assets, net		9,010			4,188
Amortization of intangible assets		290,444			611,764
Depreciation of premises and equipment		361,398			387,197
Equity in earnings of unconsolidated companies, net		(101,952	)		(63,403	)
Deferred tax		(274,443	)		(179,012	)
Provision for insurance and private retirement plans		1,834,376			1,526,696
Gain on sale of other unconsolidated companies		(1,634	)		20,274
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		(794,435	)		(950,122	)
Net (gain) loss on held to maturity		9,840			(153,487	)
Net (gain) loss on sale of premises and equipment		-			-
Minority interest		172,708			176,703
Dividends received from investments in unconsolidated companies		16,002			30,771
Changes in assets and liabilities
Trading account assets (increase) decrease		(2,080,658	)		649,636
Other assets (increase) decrease		(11,635,890	)		7,076,219
Other liabilities increase (decrease)		11,383,284			1,432,379
Net cash provided by (used in) operating activities		1,317,471			12,925,639
Investing activities
Net (increase) decrease in Central Bank compulsory deposits		(1,490,308	)		(15,614	)
Purchase of available-for-sale securities		(26,313,632	)		(16,071,163	)
Proceeds from sale and redemption of available-for-sale securities		23,169,743			14,848,754
Purchase of held-to-maturity securities		(26,626	)		(96,550	)
Proceeds from matured held-to-maturity securities		678,872			1,265,858
Net increase in loans and leases		(13,883,598	)		(5,844,499	)
Purchase of premises and equipment		(173,267	)		(170,956	)
Proceeds from sale of premises and equipment		56,270			3,719
Proceeds from sale of foreclosed assets		105,771			86,195
Purchase of unconsolidated companies		(130,439	)		(398,006	)
Acquisition of Intangible Assets		(247,132	)		(123,470	)
Proceeds from sale of unconsolidated companies		23,356			82,781
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		(15,693,491	)		(6,432,951	)
Financing activities
Net increase (decrease) in deposits		10,376,239			16,303
Net increase (decrease) in securities sold under repurchase agreements		9,961,527			4,890,952
Net increase in short-term borrowings		4,527,943			(147,000	)
Borrowings from long-term debt		7,898,075			5,317,043
Repayment of long-term debt		(4,313,759	)		(3,441,000	)
Acquisition of treasury stock		(172,307	)		(19,668	)
Dividends and interest on stockholders' equity paid		(1,027,097	)		(867,237	)
Cash received from change in interest in subsidiary (UPS)		1,951,708			-
Minority interest		(50,588	)		(150,050	)
Net cash provided by (used in) financing activities		29,151,741			5,599,343
Net increase in cash and cash equivalents		14,775,721			12,092,031
Cash and cash equivalents
At the beginning of the year		16,547,031			4,455,000
At the end of the year		31,322,752			16,547,031
Supplemental cash flow disclosure
Cash paid for interest		3,902,605			5,151,000
Cash paid for taxes on income		794,313			322,000
Non-cash transactions
Loans transferred to foreclosed assets		131,002			196,000
Dividends and interest on stockholders' equity declared but not paid		681,503			206,000
Premises and equipment acquired through capital lease		78,626			46,000

61

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, 2007 AND 2006

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

27. Subsequent Events

(a) Association 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 for the association, aiming at unifying the financial operations of Banco Itaú S.A. (ITAÚ) and Unibanco – União de Bancos Brasileiros S.A. (Unibanco). This transaction received BACEN’s approval on February 18, 2009.

This association comprised a corporate reorganization, which resulted in the migration of the current stockholders of Unibanco Holdings and Unibanco to a listed company – named at that time Banco Itaú Holding Financeira S.A. and currently named Itaú Unibanco Holding S.A. (Itaú Unibanco) control over which is shared as result of the association 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, it was approved the exchange of all shares of E.Johnston Representação e Participações S.A. (E.Johnston), Unibanco Holdings and Unibanco were for shares of Banco Itaú S.A. , then a controlled subsidiary of Itaú Unibanco, and then those shares of Banco Itaú S.A. were exchanged for shares of Itaú Unibanco,

The common shares of UNIBANCO and Unibanco Holdings held by non-controlling stockholders were 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.

On March 31, 2009, the trading symbols of securities originally issued by Unibanco and Unibanco Holdings (UBBR3, UBBR4, UBHD3, UBHD6, UBBR11 and UBB) will be unified with the trading symbols of securities issued by Itaú Unibanco (ITAU3, ITAU4 and ITU) as result of the exchange of securities issued by Unibanco and Unibanco Holdings for securities issued by Itaú Unibanco. After the exchange of securities Unibanco and Unibanco Holdings requested and obtained the delisting and deregistration of its shares.

(b) Acquisition of interest in AIG Seguros S.A.

On November 2008 we entered into an agreement with American International Group, Inc. (“AIG”) to acquire, for the purchase price of US$820 million, all 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. Out of the purchase priced the amount of US$15 million were paid through the transfer to AIG of 54,213,937 common shares of AIG Brasil Companhia de Seguros held by Unibanco. Purchase price was paid during 2008. As a result of this transaction we acquired from AIG all shares of Unibanco AIG Seguros S.A. not previously held by us and we became the only shareholder of Unibanco AIG Seguros S.A.

* * *

62