Itaú Unibanco Holding S.A.

REFERENCE FORM

Base Date: December 31, 2013

(in compliance with Attachment 24 of CVM Instruction No. 480 of December 7, 2009, or “CVM Instruction 480”)

Identification	Itaú Unibanco Holding S.A., a corporation enrolled in the Legal Entity Taxpayer Registry under CNPJ/MF No. 60.872.504/0001-23, with its incorporation documents duly filed with the Commercial Registry of the State of São Paulo under NIRE No. 35.3.0001023-0, registered as a listed company before the Brazilian Securities Commission (“CVM”) under No. 19348 (the “Bank” or “Issuer”).
Head office	The Issuer’s head office is located at Praça Alfredo Egydio de Souza Aranha, 100 - Torre Olavo Setubal, in the City of São Paulo, State of São Paulo, CEP 04344-902
Investor Relations Office	The Bank’s Investor Relations area is located at Praça Alfredo Egydio de Souza Aranha, 100 - Torre Conceição – 9th floor, in the City of São Paulo, State of São Paulo. The Investor Relations Officer is Mr. Alfredo Egydio Setubal. The phone number of the Investor Relations Department is (5511) 2794-3547, the fax is (5511) 2794-3933  and the e-mail is investor.relations@itau-unibanco.com.br
Independent Auditors of the Company	PricewaterhouseCoopers Auditores Independentes for the years ended December 31, 2013, December 31, 2012 and December 31, 2011.
Underwriter	Itaú Corretora de Valores S.A.
Shareholder Service	The Issuer’s shareholder services are provided at the branches of Itaú Unibanco S.A., the head office of which is located at Praça Alfredo Egydio de Souza Aranha, 100 - Torre Olavo Setubal, in the City of São Paulo, State of São Paulo, CEP 04344-902
Newspapers in which the issuer divulges its information	Official Gazette of the State of São Paulo and Valor Econômico
Website	http://www.itau.com.br/investor-relations. The information included in the Company’s website is not an integral part of this Reference Form
Date of last review	05/23/2014

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TABLE OF CONTENTS

ITEM 1. IDENTIFICATION OF THE PEOPLE RESPONSIBLE FOR THE CONTENT OF THE FORM	2
ITEM 2. AUDITORS	3
ITEM 3. SELECTED FINANCIAL INFORMATION	6
ITEM 4. RISK FACTORS	10
ITEM 5. MARKET RISKS	32
ITEM 6. ISSUER’S HISTORY	50
ITEM 7. ACTIVITIES OF THE ISSUER	60
ITEM 8. ECONOMIC GROUP	119
ITEM 9. RELEVANT ASSETS	122
ITEM 10. COMMENTS OF EXECUTIVE OFFICERS	144
ITEM 11. PROJECTIONS	187
ITEM 12. STOCKHOLDERS’ MEETINGS AND MANAGEMENT	188
ITEM 13. MANAGEMENT COMPENSATION	258
ITEM 14. HUMAN RESOURCES	282
ITEM 15. CONTROLLING SHAREHOLDERS	288
ITEM 16. TRANSACTIONS WITH RELATED PARTIES	299
ITEM 17. CAPITAL	303
ITEM 18. SECURITIES	309
ITEM 19. REPURCHASE PLANS AND TREASURY SECURITIES	338
ITEM 20. SECURITIES TRADING POLICY	341
ITEM 21. INFORMATION DISCLOSURE POLICY	343
ITEM 22. EXTRAORDINARY BUSINESS	345
REPORT OF INDEPENDENT AUDITORS ON REFERENCE FORM (CVM INSTRUCTION 480)	347

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ITEM 1 - IDENTIFICATION OF THE PEOPLE RESPONSIBLE FOR THE CONTENT OF THE FORM

Names of people responsible for the contents of the form	Positions of the people responsible
Roberto Egydio Setubal	Chief Executive Officer
Alfredo Egydio Setubal	Investor Relations Officer

The officers mentioned above state that:

a. They have revised the reference form;

b. All information contained in the form is in compliance with the provisions of CVM Instruction No. 480, particularly Articles 14 to 19;

c. The information contained in the form is a true, accurate and complete portrait of the Issuer’s economic and financial situation and of the risks inherent to its activities and of the securities issued by it.

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ITEM 2 - AUDITORS

Items - 2.1 and 2.2 - Auditors

	2013		2012	2011
Has an auditor been engaged?			YES	YES
Auditor’s Brazilian Securities Commission (“CVM”) code	2879		2879	2879
Type of auditor
Corporate name	PricewaterhouseCoopers Auditores Independentes		PricewaterhouseCoopers Auditores Independentes	PricewaterhouseCoopers Auditores Independentes
Corporate Taxpayer’s Registry ("CNPJ") number	61.562.112/0001-20		61.562.112/0001-20	61.562.112/0001-20
Date services were contracted	1/1/2013		1/1/2012	1/1/2011
Date contracted services ended			31/12/2012	31/12/2011
		R$/thousand
	1 Agreements for the audit of the financial statements, Issue of reports required by regulatory authorities and issue of comfort letters;	39.166	1. Agreements for the audit of the financial statements, issue of reports required by regulatory authorities and issue of comfort letters;	1. Agreements for the audit of the financial statements, issue of reports required by regulatory authorities and issue of comfort letters
	2. Service agreements for assurances, preparation of audit reports for government authorities, suppliers, clients and provision of Due Diligence services;	6.773	2. Service agreements for assurance, specific audit for government authorities, suppliers, clients and provision of Due Diligence services;	2. Service agreements for the assurance, specific audit for government authorities, suppliers, clients and provision of Due Diligence services;
Description of the services contracted	3. service agreement for the review of the aspects related to the “Business Continuity Program”;	105	3. Service agreements relating assessment of vulnerability and penetration testing of applications within the Internet perimeter and review of aspects related to the Business Continuity Program;	3. Service agreements for advisory on and monitoring of Brazilian and foreign tax legislation;
	4. Other services relating to the procurement of technical material.	49	4.  Service agreements for consultancy  in connection with the organization of a subsidiary abroad and mapping and identification of opportunities in the prime services market;	4. Service agreements related to the limited assurance of the data of the Inventory of Greenhouse Gas Emissions;
			5. Service agreements for consultancy on tax matters;	5. Other related services for the acquisition of technical materials, training programs and consulting services for obtaining the GIPS (Global Investment Performance Standards) certification;
			6. Other services relating to the procurement of technical material and training.	6. Service agreement for the review of the aspects related to the Business Continuity Program.

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	2013	2012	2011
Total amount of the fees of the independent auditors separated by service	The fees of the independent auditors for the year ended December 31, 2013 amounted to R$46,093,000 and comprise audit services R$45,939,000 and other services R$154,000.
Justification for the replacement	Not applicable	Not applicable	Not applicable
Any reasons presented by the auditor contrasting with the Issuer's justification for their replacement	Not applicable	Not applicable	Not applicable
Person in charge
Name of the person in charge	Paulo Sergio Miron	Paulo Sergio Miron	Paulo Sergio Miron
Individual Taxpayer's Registry (CPF) number of the person in charge	076.444.278-30	076.444.278-30	076.444.278-30
Address
Venue	Avenida Francisco Matarazzo, 1400	Avenida Francisco Matarazzo, 1400	Avenida Francisco Matarazzo, 1400
Additional information	09-10º, 13-17º andares	09-10º, 13-17º andares	09-10º, 13-17º andares
District	Água Branca	Água Branca	Água Branca
CEP	05001-100	05001-100	05001-100
CITY CODE	11	11	11
Telephone number	3674-3746	3674-3901	3674-3901
City Code (facsimile)	3674-2030	3674-2030	3674-2030
E-mail address	paulo.miron@br.pwc.com	paulo.miron@br.pwc.com	paulo.miron@br.pwc.com

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2.3. Supply any other information that the issuer may deem relevant

The Audit Committee of Itaú Unibanco Holding S.A. is the body responsible for vouching for the performance, independence and quality of the work of the external audit companies, the committee is responsible for:

a) to supervise the work of the Conglomerate’s independent auditing companies, to assess its effectiveness and verify the compliance with applicable laws, regulation, and internal rules;

b) Establishing and disclosing, on an annual basis, the procedures for engaging services to be rendered by the companies which audit the Conglomerate’s financial statements. Revising, updating and defining: (i) The services which cannot be rendered by these companies, affecting as they would the companies’ independence and/or objectivity, (ii) Services the engagement of which has already been pre-approved by the Committee, and (iii) Services which are subject to prior submission for the Committee’s approval

c) Assessing annually with the Conglomerate’s independent audit companies: (i) The procedures for internal controls over the quality of these companies, (ii) Their independence, (iii) Questions raised by government and regulatory authorities, (iv) The relationship between these independent audit companies and the Conglomerate, and (v) The most recent revision of the company’s quality control procedures (peer review)

d) Together with the Independent Auditor, revising the scope, planning and personnel to be allocated to the execution of the Independent Auditor’s work

e) Approving the engagement of employees or service providers who have been working in the teams of the independent audit companies that render or have previously rendered audit services to the Conglomerate within the previous 12 months.

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ITEM 3 - SELECTED FINANCIAL INFORMATION

3.1- Financial information ⁽¹⁾

	¨ Company		x Consolidated
(R$)
	December 31
	2013		2012		2011
Stockholders’ equity		81,024,485,647		74,219,609,615		71,347,333,730
Total assets		1,105,721,309,697		1,014,424,676,152		851,331,535,383
Net Revenue/Income from Financial Operations		45,119,366,090		50,496,096,006		47,259,007,139
Gross income		31,524,614,653		31,134,172,891		32,835,252,912
Net income		15,695,748,624		13,593,940,171		14,620,621,197
Number of shares, former treasury shares (units) (2)		4,959,160,390		4,970,217,737		4,982,241,916
Book value per share (Reais unit) (2)		16.34		14.93		14.32
Earnings per share, net (Reais unit) (2)		3.16		2.74		2.93

(1) Financial Statement in BRGAAP

(2) For better comparability, outstanding shares as at December 31, 2012 and December 31, 2011 were adjusted by the bonus that occurred on May 21, 2013.

3.2. If the issuer disclosed in the previous year, or if it wishes to disclose in this form non-accounting measures such as EBITDA (income before interest, taxes, depreciation and amortization) or EBIT (income before interest and taxes), the issuer should:

a) Give the values of these non-accounting measures

None.

b) Reconcile the amounts disclosed and the amounts presented in the audited financial statements

None.

c) Explain why it believes that this measure is the most appropriate to give a correct understanding of its financial position and the results of its operations

None.

3.3. Identify and comment on any event subsequent to the most recent financial statements for the year that might significantly change these financial statements

None.

3.4. Describe the policy on the allocation of income for the past three years, indicating:

The Board of Directors presents to the Annual Stockholders’ Meeting, together with the financial statements, a proposal for the appropriation of net income for the year, and the main appropriations are: (i) 5% to the Legal Reserve, which should not exceed 20% of the capital stock, (ii) the distribution of dividends to shareholders (see Items “b” and “c” below), and (iii) the setting up of the following statutory reserves:

· Reserve for dividend equalization, limited to 40% of the value of the Company’s capital stock, for the purpose of paying dividends, including interest on stockholders’ equity, with the objective of maintaining the flow of payments to shareholders. This reserve will be allocated: (a) up to 50% of the fiscal year’s net income for the year, adjusted pursuant to Article 202 of the Brazilian Corporate Law, as amended, (b) up to 100% of the realized portion of reserves arising from revaluation of assets, recorded as retained earnings, (c) up to 100% of the amount of the adjustments from previous fiscal years, recorded as retained earnings, and (d) credits corresponding to the anticipated dividends.

· Reserve for working capital stock increase, limited to 30% of the value of capital, for the purpose of guaranteeing resources for operations, to be allocated up to 20% of the fiscal year’s net income, adjusted pursuant to Article 202 of the Brazilian Corporate Law.

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· A reserve for increases in the capital of investees, limited to 30% of the value of capital, for the purpose of guaranteeing the right of first refusal on capital increases in investees, and to be allocated up to 50% of the fiscal year’s net income, adjusted pursuant to Article 202 of the Brazilian Corporate Law.

Upon a proposal from the Board of Directors, amounts will be regularly capitalized from these reserves so that their aggregate balance never exceeds the limit of 95% of the capital stock. The balance of these reserves together with the legal reserve may not exceed the value of the capital stock.

a) Rules on the retention of earnings

There have been no changes to the rules regarding the retention of earnings over the past three years. Pursuant to the Brazilian Corporate Law, the shareholders may decide at a stockholders’ meeting, based on a proposal by management, on the retention of a portion of the net income for the year that had previously been approved as part of the capital budget. Additionally, the mandatory minimum dividend may not be paid in a year in which the management bodies announce to the Annual Stockholders’ Meeting that it is incompatible with the Issuer’s financial condition.

Over the past three years, no earnings have been retained, and the dividend amount paid by the Issuer has been equal to or higher than the mandatory minimum dividend (see item 3.5 below).

b) Rules on the distribution of dividends

Shareholders are entitled to receive as a mandatory dividend, each year, a minimum amount of twenty five per cent of the net income computed in the same year, adjusted by the addition or deduction of the amounts specified in letters “a” and “b” of Item I of Article 202 of the Brazilian Corporate Law, as amended, and in compliance with Items II and III of the same legal provision.

As resolved by the Board of Directors, interest on capital can be paid, including interest on capital paid or credited in the amount of the mandatory dividend, as provided for in Article 9, paragraph 7 of Law No. 9,249/95. Preferred shares have priority for the receipt of the non-cumulative annual minimum dividend per share.

Additionally, management may resolve on the distribution of additional profits whenever it deems this to be convenient for the Issuer and/or its shareholders. Such distributions do not mean that there will be a distribution of profits additional to the mandatory minimum dividend in the future.

For further information on the percentages of profits distributed over the past three years, see Item 3.5 below.

On February 28, 2013, Provisional Measure No. 608 was enacted, and established that the payment of dividends and interest on capital made by financial institutions is subject to the regulations issued by the CMN. The measure is part of recent movements to implement the liquidity requirements established by Basel III standards. On March 1, 2013, the CMN issued Resolution No. 4.193, which establishes that the dividends may not be paid if the financial institution does not comply with the additional capital requirements in effect from January 1, 2016, with gradual increases until 2019.

This restriction on the payment of dividends will be progressively applied, in accordance with the level of nonconformity with the additional capital requirements. Should a financial institution’s additional capital be lower than 25% of that established by the CMN for that year, no distribution of dividends or interest on capital will be permitted. If the additional capital is between 25% and 50% of the established amount, 80% of the intended dividends and interest on capital may not be distributed. If the additional capital is higher than 50% and lower than 75% of the required amount, 60% of the dividends and interest on capital may not be distributed. If the additional capital is higher than 75% and lower than 100% of the established amount, 40% of the dividend and interest on capital may not be distributed.

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c) Frequency of the distribution of dividends

Over the past three years, the Issuer made monthly dividend payments, based on the shareholding position on the last day of the previous month, on the first working day of the subsequent month, as well as additional payments (half yearly), for which the Board of Directors defined the base date for the shareholding position and the payment date. Regarding these half yearly payments, management verifies the existing profit, determines the amount of dividends that should be distributed as mandatory dividends (see Item “a” above), calculates the monthly amount already declared and, finally, determines the outstanding balance payable on the mandatory minimum dividend. This amount is declared as a dividend “additional” to that paid monthly.

Since July 1980, the Issuer has been compensating its shareholders by means of monthly and additional payments. These additional payments have been made, historically, twice a year and are equally distributed to common and preferred shareholders.

To see the history of payments by the Issuer, please see the Investor Relations website (www.itau.com.br/investor-relations) – Corporate Governance, Rules and Policies, Itaú Unibanco’s Stock Policy > Compensation to Stockholders).

d) Any restrictions on the distribution of dividends imposed by legislation or special regulations applicable to the issuer, as well as agreements, court, administrative or arbitration decisions

None.

3.5 In a table, please indicate for each of the past three years:

R$ million
	2013			2011			2010
adjusted net income for dividend purposes		11,078			10,260			11,296
Distributed dividends		5,095			4,518			4,394
percentage of dividends per adjusted net income		46.0	%		44.0	%		38.9	%
dividends distributed per class and type of shares:
Common shares
Interest on capital		2,150			1,891			1,897
Minimum mandatory dividend		437			398			331
Priority dividend		-			-			-
Fixed dividends		-			-			-
Preferred shares
Interest on capital		2,085			1,841			1,844
Minimum mandatory dividend		423			388			322
Priority dividend		-			-			-
Fixed dividends		-			-			-
Payment date of the minimum mandatory dividend		1st business day of the month			1st business day of the month			1st business day of the month
Rate of return in relation to stockholders’ equity		13.1	%		12.6	%		15.2	%
Retained net income		-			-			-
Date of the retention approval		-			-			-

3.6. State whether, in the past three years, dividends were declared on retained earnings or reserves recognized in prior years

The dividends declared in 2013 amounted to R$5,095 million, and this amount was not declared using the Retained Earnings or Unrealized Revenue Reserve.

The dividends declared in 2012 amounted to R$4,518 million, and this amount was not declared using the Retained Earnings or Unrealized Revenue Reserve.

The dividends declared in 2011 amounted to R$4,394 million, and this amount was not declared using the Retained Earnings or Unrealized Revenue Reserve.

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3.7. In a table, please describe the issuer’s indebtedness ratio, indicating:

	2013		2012		2011
Total amount of debt, of any nature (in Reais)		1,021,667,917		938,164,930		777,009,087
Indebtedness ratio (current liabilities plus noncurrent liabilities divided by stockholders’ equity) (%)		12.61		12.64		10.89
If the issuer wishes, another indebtedness ratio		-		-		-

Note: Amounts in thousands of Reais (except when differently stated). Consolidated balance sheet

3.8 Liabilities in accordance with their nature and maturities

(R$ thousand)
	As of December 31, 2013
Debt	Less than one year		More than one year and less than three years		More than three years and less than five years		More than five years		Total
Secured debts		4,215,025		2,700,434		482,577		55,973		7,454,009
Debts with floating guarantees		-		-		-		-		-
Unsecured debts		600,523,283		175,093,321		97,728,624		141,868,680		1,015,213,908
Total		604,738,308		177,793,755		98,211,201		141,924,653		1,022,667,917

3.9. Supply any other information that the issuer may deem relevant

All relevant information was presented in the previous items.

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ITEM 4 – RISK FACTORS

4.1. Describe the risk factors that may influence an investment decision, particularly those related to:

The risks described in this Item 4.1 are those that we consider material for both our business and investments in our securities. If any of these risks materialize, our financial condition and our business could be negatively affected, as well as the trading prices of our securities. Accordingly, investors should carefully and thoroughly assess the risk factors described below and the other information comprehended in this document.

Additional risks that we currently consider immaterial, or of which we are not aware, may have effects similar to those previously described, if they materialize.

a) The issuer

Crises and volatility in the financial markets of countries other than Brazil may affect the global financial markets and the Brazilian economy, and, consequently, us.

The economic and market conditions of other countries, including the U.S., countries of the European Union, and emerging markets, may affect the credit availability and the volume of foreign investments in Brazil, to varying degrees. Crises in these countries may decrease investors’ interest in Brazilian assets, which may materially and adversely affect the market price of our securities, making it more difficult for us to access capital markets and, as a result, to finance our operations in the future.

Banks that operate in countries considered to be emerging markets, including us, may be particularly susceptible to disruptions and reductions in the availability of credit or increases in financing costs, which may have a material adverse impact on their operations. In particular, the availability of credit to financial institutions operating in emerging markets is significantly influenced by movements of aversion to global risk. In addition, any factor impacting investors’ confidence, such as a downgrade in credit ratings or an intervention by a government or monetary authority in one of such markets, may affect the price or availability of resources for financial institutions in any of these markets, which may affect us.

Global financial crises of recent years have reduced the capacity of a number of global financial institutions to lend funds and generated losses. In addition, the downgrade of credit and debt securities ratings and uncertainty regarding the solvency of certain financial institutions and of the financial services industry in general have led to liquidity problems in the market as a whole and could have led to losses, default or bankruptcy of additional financial institutions.

The disruptions and volatility in the global financial markets caused by the recent global financial crises have brought significant consequences to Brazil and to other countries in which we operate, such as volatility in the prices of equity securities, interest rates and foreign exchange rates. Higher uncertainty and volatility resulted in a slowdown in the credit market and the economy, which, in turn, increased unemployment rates and reduced the purchasing power of consumers. Global financial crises may affect in a material and adverse way the market price of securities of Brazilian issuers and have a material adverse effect on us. Additionally, as we primarily lend to Brazilian borrowers, such events may significantly impair our clients’ ability to perform their obligations and increase overdue or non-performing loan operations, resulting in an increase of the risk associated with our lending activity, which may force us to review our risk management and loan loss reserve models.

Continuing or increased disruption or volatility in the global financial markets, or even the deterioration of the economic conditions of certain countries, could lead to other negative effects on the financial and economic environment in Brazil and other countries in which we operate, which could have a material adverse effect on us, in addition to those mentioned above.

The value of our securities and derivatives is subject to market fluctuations due to changes in Brazilian or international economic conditions and, as a result, may subject us to material losses.

The securities and derivative financial instruments in our portfolio may cause us to record gains and losses, when sold or marked to market (in the case of trading securities), and may fluctuate considerably from period to period due to domestic and international economic conditions. If, for example, we enter into derivative transactions to hedge against decreases in the value of the Brazilian real or in interest rates and the Brazilian real appreciates or interest rates increase, we may incur financial losses and such financial losses could have a material adverse effect on us. In addition, we may incur losses from fluctuations in the market value of positions held, including risks associated with transactions subject to variations in foreign exchange rates, interest rates, price indexes, and equity and commodity prices, along with various indexes on these risk factors, which could also have a material adverse effect on us.

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We cannot predict the amount of realized or unrealized gains or losses for any future period, and variations from period to period have no practical analytical value in helping us to make such a prediction. Gains or losses on our investment portfolio may not contribute to our net revenue in the future or may cease to contribute to our net revenue at levels consistent with more recent periods or may not contribute at all. We may not successfully realize the appreciation or depreciation now existing in our consolidated investment portfolio or in any assets of such portfolio.

Failures or defects in our business systems and human error or misconduct may adversely affect us.

Although we have in place information security controls, policies and procedures designed to minimize human error, and make continuous investments in infrastructure, management of crises and operations, the operational systems related to our business may stop working properly for a limited period of time or may be temporarily unavailable due to a number of factors. These factors include events that are totally or partially beyond our control such as power outages, interruption of telecommunication services, generalized system failures, as well as internal and external events that may affect third parties with which we do business or that are crucial to our business activities (including stock exchanges, clearing houses, financial dealers or service providers) and events resulting from wider political or social issues, such as cyber-attacks or unauthorized disclosures of personal information in our possession.

Operating failures, including those that result from human error and fraud, not only increase our costs and cause losses, but may also give rise to conflicts with our clients, lawsuits, regulatory fines, sanctions, intervention, reimbursements and other indemnity costs, all of which may have a material adverse effect on us.

Exposure to the Brazilian federal government debt may adversely affect us.

Like most Brazilian banks, we invest in debt securities issued by the Brazilian government. As of December 31, 2013, approximately 15.8% of all our assets and 61.0% of our securities portfolio were comprised of these debt securities. Accordingly, any failure by the Brazilian government to make timely payments under the terms of these securities, or a significant decrease in their market value, may have a material adverse effect on us.

Inadequate pricing methodologies for insurance, pension plan and capitalization products may adversely affect us.

Our insurance and pension plan subsidiaries establish prices and calculations for our insurance and pension products based on actuarial or statistical estimates. The pricing of our insurance and pension plan products is based on models that include a number of assumptions and projections that may prove to be incorrect, since these assumptions and projections involve the exercise of judgment, including as to the levels and timing of receipt or payment of premiums, contributions, provisions, benefits, claims, expenses, interest, investment results, retirement, mortality, morbidity and persistency. We could suffer losses due to events that are contrary to our expectations directly or indirectly associated to biometric and economic assumptions, as well as to the actuarial bases used for contribution and provision calculations, may take place.

Although the pricing of our insurance and pension plan products and the adequacy of the associated reserves are reassessed on a yearly basis, we cannot accurately determine whether our assets supporting our policy liabilities, together with future premiums and contributions, will be sufficient for the payment of benefits, claims, and expenses. Accordingly, the occurrence of significant deviations from our pricing assumptions could have an adverse effect on the profitability of our insurance and pension products. In addition, if we conclude that our reserves and future premiums are insufficient to cover future policy benefits and claims, we will be required to increase our reserves and record these effects in our financial statements, which may have a material adverse effect on us.

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Our policies, procedures and models related to risk control may be ineffective and our results may be adversely affected by unexpected losses.

Our risk management methods, procedures and policies, including our statistical models and tools for risk measurement, such as value at risk (VaR), and default probability estimation models, may not be fully effective in mitigating our risk exposure in all economic environments or against all types of risks, including those that we fail to identify or anticipate. Some of our qualitative tools and metrics for managing risk are based on our observations of the historical market behavior. In addition, due to limitations on information available in Brazil, to assess clients’ creditworthiness we rely largely on credit information available from our own databases, on certain publicly available consumer credit information and other sources. We apply statistical and other tools to these observations and data to quantify our risk exposure. These tools and metrics may fail to predict all types of future risk exposures. These risk exposures could, for example, arise from factors we did not anticipate or correctly evaluate in our statistical models. This would limit our ability to manage our risks. Our losses, therefore, could be significantly greater than indicated by historical measures. In addition, our quantified modeling may not take all risks into account. Our qualitative approach to managing those risks could prove insufficient, exposing us to material unexpected losses.

Our results of operations and financial position depend on our ability to evaluate losses associated with risks to which we are exposed and on our ability to build these risks into our pricing policies. We estimate our allowance for loan losses according to regulatory principles. The calculation also involves significant judgment on the part of our management. Those judgments may prove to be incorrect or change in the future depending on information as it becomes available. These factors may adversely affect us.

Damages to our reputation could harm our business and outlook.

We are highly dependent on our image and credibility to generate business. A number of factors may tarnish our reputation and generate a negative perception of the institution by our clients, counterparties, shareholders, investors, supervisors, commercial partners and other stakeholders, such as noncompliance with legal obligations, making irregular sales to clients, dealing with suppliers with questionable ethics, clients data leakage, inadequate behaviors by our employees, and third-party failures in risk management, among others. In addition, certain significant actions taken by a third party, such as competitors or other market participants, may indirectly damage our reputation with clients, investors and the market in general. Damages to our reputation could have a material adverse effect on us.

The integration of acquired or merged businesses involves certain risks that may have a material adverse effect on us.

As part of our growth strategy in the Brazilian financial sector, we engaged in a number of mergers, acquisitions and partnerships with other companies and financial institutions in the past and may carry out further transactions in the future. However, any such transactions involve risks, such as the possible incurrence of unanticipated costs as of result of difficulties in integrating systems, finance, accounting and personnel platforms, or the occurrence of unanticipated contingencies. In addition, the expected operating and financial synergies and other benefits from such transactions may not be achieved.

There is also the risk that antitrust and other regulatory authorities may impose restrictions or limitations on the transactions or on the businesses that arise from certain combinations.

If we are unable to take advantage of business growth opportunities, cost savings and other benefits we anticipate from mergers and acquisitions, or if we incur greater integration costs than we have estimated, then we may be adversely affected.

b) Its parent company, direct or indirect, or control group

Our controlling shareholder has the ability to direct our business.

On December 31, 2013, IUPAR, our controlling shareholder, directly held 51% of our common shares and 25.54% of our total capital. Please see item 8.2. Therefore, IUPAR has the power to control us, including the power to elect and dismiss the members of our Board of Directors and officers and determine the outcome of any act that requires the approval of shareholders, including transactions with related parties, corporate restructuring processes and the payment of dividends.

IUPAR is jointly controlled by Itaúsa and Cia. E. Johnston, which, in turn, are controlled by the families Egydio de Souza Aranha and Moreira Salles, respectively. The interests of IUPAR, Itaúsa, Cia. E. Johnston and the families Egydio de Souza Aranha and Moreira Salles may be different from the interests of the other shareholders.

Our Board of Directors is currently composed of 12 members, four of which are independent, in accordance with our corporate governance policy. A significant number of the members of our Board of Directors participate in the decision-making processes in which they are more interested than the independent members would be. As a result, the interests of these members may, sometimes, be different from those of our minority shareholders. Additionally, some of our members are affiliates of IUPAR and there may be circumstances in which there are conflicts of interest of IUPAR and its affiliates with the interest of our other shareholders. When there are these or other conflicts of interest, our minority shareholders will depend on the exercise, by the members of our Board of Directors, of their fiduciary duties as members of a Board of Directors.

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c) The shareholders

In compliance with our bylaws, we must pay to our shareholders and ADSs holders, as dividends or interest on capital, 25% of our annual net income, calculated and adjusted in accordance with Brazilian Corporate Law, which may be substantially different from our net income calculated in accordance with other accounting criteria. Net income may be used to offset losses or retained, as set forth in Brazilian Corporate Law, and it may not be made available for the payment of dividends or interest on capital. The payment of dividends or interest on capital is not mandatory in financial years that our Board of Directors determines that the distribution of dividends is not compatible with our financial position at that time.

Additionally, due to the implementation of the Basel III rules, if we do not comply with the capital requirements of the National Monetary Council (CMN), the Central Bank of Brazil may reduce the amount of dividends or even determine that they should not be paid.

Please see item 7.5 (a), Basel III Structure, Implementation of Basel III in Brazil, for further details on the payments to ADSs holders and capital requirements of CMN.

The relative price volatility and limited liquidity of the Brazilian capital markets may significantly limit the ability of our investors to sell the preferred shares underlying our ADSs, at the price and time they desire.

The investment in securities traded in emerging markets frequently involves a risk higher than an investment in securities of issuers from the U.S. or other developed countries, and these investments are generally considered more speculative. The Brazilian securities market is smaller, less liquid, more concentrated and can be more volatile than markets in the U.S. and other countries. Thus, an investor’s ability to sell preferred shares underlying ADSs at the price and time the investor desires may be substantially limited.

The preferred shares underlying our ADSs do not have voting rights, except in specific circumstances.

Pursuant to our Bylaws, the holders of preferred shares and therefore of our ADSs are not entitled to vote in our general shareholders’ meetings, except in specific circumstances. Even in such circumstances, ADS holders may be subject to practical restrictions on their ability to exercise their voting rights due to additional operational steps involved in communicating with these shareholders, as mentioned below.

According to the provisions of the ADSs deposit agreement, in the event of a general shareholders’ meeting, we will provide notice to the depositary bank, which will, to the extent practicable, send such notice to ADS holders and instructions on how such holders can participate in such general shareholders’ meeting, and ADS holders should instruct the depositary bank on how to vote in order to exercise their voting rights. This additional step of instructing the ADS depositary bank may make the process for exercising voting rights longer for ADS holders.

d) Its subsidiaries and affiliated companies

As we are a holding company, the risk factors that may influence the decision to invest in our securities arise essentially from the risk factors to which our subsidiary and affiliated companies are exposed, as described in Item 4.1.

e) Its suppliers

We are not exposed to risks related to our suppliers that could materially influence the decision to invest in our securities.

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f) Its clients

Changes in the profile of our business may adversely affect our loan portfolio.

While the quality of our loan portfolio is associated with the default risk in the sectors in which we operate, changes in our business profile may occur due to our organic growth or merger and acquisition activity, changes in the local economic scenario and, to a lesser extent, in the international scenario, in addition to changes in the tax regimes applicable to the sectors in which we operate, among other factors. Any changes affecting any of the sectors to which we have significant lending exposure may have a material adverse impact on us. Furthermore, our historical loan loss experience may not be indicative of our future loan losses.

For example, in recent years, Brazilian banks have experienced an increase in loans to consumers, particularly in the automotive sector. However, this increased demand for vehicle financing was subsequently followed by Brazilian families becoming highly indebted, which led the automotive sector to face high nonperforming loan rates, giving rise to loan losses for financial institutions due to an increased volume of provisions and a decrease in loans for vehicle acquisition.

We may incur losses associated with counterparty exposure risks.

We may incur losses if any of our counterparties fail to meet their contractual obligations, due to bankruptcy, lack of liquidity, operational failure or other reasons that are exclusively attributable to our counterparties. This counterparty risk may arise, for example, from our entering into reinsurance agreements or credit agreements pursuant to which counterparties have obligations to make payments to us and are unable to do so, carrying out transactions in the foreign currency market (or other markets) that fail to be settled at the specified time due to non-delivery by the counterparty, clearing house or other financial intermediaries. We routinely transact with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds and other institutional clients, and their failure to meet their contractual obligations may adversely affect us.

g) Economic sectors in which the issuer operates

Changes in economic conditions may adversely affect us.

Our operations are dependent upon the performance of the Brazilian economy and, to a lesser extent, the economies of other countries in which we do business. The demand for credit and financial services, as well as clients’ ability to pay, is directly impacted by macroeconomic variables, such as economic growth, income, unemployment, inflation, and fluctuations in interest and foreign exchange rates. Therefore, any significant change in the Brazilian economy and, to a lesser extent, in the economies of other countries in which we do business may affect us.

Despite Brazil’s high economic growth in recent years, growth rates began to slow down in 2011. Growth may be limited by a number of factors, including structural factors, such as inadequate infrastructure (risks of potential energy shortages, deficiencies in the transportation sector, among others) and lack of qualified professionals, which contribute to reduce the country’s productivity and efficiency levels. Depending on their intensity, these factors could lead to decreasing employment rates and to lower income and consumption levels, which could result in increased default rates and, therefore, have a material adverse effect on us.

Brazilian authorities exercise influence on the Brazilian economy. Changes in monetary, fiscal and foreign exchange policies and in the Brazilian government’s structure may adversely affect us.

Brazilian authorities intervene from time to time in the Brazilian economy, through changes in fiscal, monetary, and foreign exchange policies, which may adversely affect us. These changes may impact variables that are crucial for our growth strategy (such as foreign exchange and interest rates, liquidity in the currency market, tax burden, and economic growth), thus limiting our operations in certain markets, affecting our liquidity and our clients' ability to pay and, consequently, affecting us.

In addition, changes in the Brazilian government’s structure may result in changes in government policies, which may affect us. This uncertainty may, in the future, contribute to an increase in the volatility of the Brazilian capital markets, which, in turn, may have an adverse impact on us. Other political, diplomatic, social and economic developments in Brazil and abroad that affect Brazil may also affect us.

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Inflation and fluctuations in interest rates may have a material adverse effect on us.

Sudden increases in prices and long periods of high inflation may cause, among other effects, loss of purchasing power and distortions in the allocation of resources in the economy. Measures to combat high inflation rates include a tightening of monetary policy, with an increase in the SELIC interest rate, resulting in restrictions on credit and short-term liquidity, which may have a material adverse effect on us. Changes in interest rates may have a material effect on our net margins, since they impact our funding and credit granting costs.

In addition, increases in the SELIC interest rate could reduce demand for credit, increase the costs of our reserves and the risk of default by our clients. Conversely, decreases in the SELIC interest rate could reduce our gains from interest-bearing assets, as well as our margins.

Instability of foreign exchange rates may negatively affect us.

Brazil has a floating foreign exchange rate system, pursuant to which the market establishes the value of the Brazilian real in relation to foreign currencies. However, the Central Bank intervenes in the purchase or sale of foreign currencies for the purpose of easing variations and reducing volatility of the foreign exchange rate. In spite of those interventions, the foreign exchange rate may significantly fluctuate. In addition, in some cases, interventions made with the purpose of avoiding sharp fluctuations in the value of the Brazilian real in relation to other currencies may have the opposite effect, leading to an increase in the volatility of the applicable foreign exchange rate.

Instability in foreign exchange rates may have a material adverse effect on us, since a potential depreciation of the Brazilian real could have adverse effects on our business, including (i) losses on our liabilities denominated in or indexed to foreign currencies; (ii) a decrease in our ability to pay for obligations denominated in or indexed to foreign currencies, as it would be more costly for us to obtain the foreign currency required to meet such obligations; (iii) a decrease in the ability of our Brazilian borrowers to pay us for debts denominated in or indexed to foreign currencies, and (iv) negative effects on the market price of our securities portfolio. On the other hand, an appreciation of the Brazilian real could cause us to incur losses on assets denominated in or indexed to foreign currencies. For further information on how the effects of these variables may affect us, please see “The value of our securities and derivatives is subject to market fluctuations due to changes in Brazilian or international economic conditions and may produce material losses” below.

An expansionist fiscal policy may affect us.

An excessively expansionist fiscal policy, combined with increased intervention by the Brazilian government in the economy, could generate a loss of confidence of local and foreign investors. Less credibility could lead to the downgrading of the Brazilian sovereign debt, and negatively impact the local economy, causing the depreciation of the Brazilian real, an increase in inflation and interest rates and a deceleration of economic growth, thus adversely affecting us.

The increasingly competitive environment and recent consolidations in the Brazilian banking industry may have a material adverse effect on our business.

The Brazilian market for financial and banking services is highly competitive. We face significant competition from other large Brazilian and international banks. Competition has increased as a result of recent consolidations among financial institutions in Brazil and of regulations that increase the clients’ ability to switch business between financial institutions. Please refer to item 7.5 (a) - Antitrust Regulation for further information about the competition on the Brazilian Markets. Such increased competition may adversely affect us by, among other things, limiting our ability to retain or increase our current client base and to expand our operations, or by impacting the fees and rates we adopt, which could reduce our profit margins on banking and other services and products we offer

h) Regulation of the sectors in which the Issuer operates

Changes in applicable law or regulations may have a material adverse effect on our business.

Changes in the law or regulations applicable to financial institutions may affect our ability to grant loans and collect debts in arrears, which may have an adverse effect on us. Other changes, including with respect to restrictions on remittances abroad and other exchange controls, may also have a material effect on us. In addition, the interpretation of the law by courts and agencies in a manner that differs from our legal advisors’ opinions may have a material impact on us.

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Financial crises may also cause the Brazilian government to change laws and regulations applicable to Brazilian financial institutions. For example, in response to the global financial crisis which began in late 2007, Brazilian national and intergovernmental regulatory entities, such as the Basel Committee on Banking Supervision, proposed regulatory reforms to prevent the recurrence of similar crises, including the Basel III framework, which increased minimum regulatory capital requirements. Please refer to section Our Risk Management, item Regulatory Environment, Basel III Framework for further details about regulatory capital requirements. Based on our current regulatory capital ratios, as well as our assumptions on expected returns and asset growth, we do not anticipate that additional capital will be required to support our operations in the near future.

Moreover, the Brazilian Congress is considering enacting new legislation that, if signed into law as currently drafted, could adversely affect us, including by making the collection of amounts from insolvent individual borrowers more difficult.

We also have operations in countries outside of Brazil, including Argentina, Chile, Colombia, Paraguay, Portugal, United Kingdom, Uruguay and the United States. Changes in the laws or regulations applicable to our business in the countries where we operate, or the adoption of new laws, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States, and related regulations, may have an adverse effect on us.

Increases in compulsory deposit requirements may have a material adverse effect on us.

Compulsory deposits are reserves that financial institutions are required to maintain with the Central Bank. Compulsory deposits generally do not provide the same returns as other investments and deposits because a portion of these compulsory deposits does not bear interest; instead, these funds must be held in Brazilian federal government securities and used to finance government programs, including a federal housing program and rural sector subsidies. The Central Bank has periodically changed the minimum level of compulsory deposits. Increases in such level reduce our liquidity to grant loans and make other investments and, as a result, may have a material adverse effect on us.

We are subject to regulation on a consolidated basis and may be subject to liquidation or intervention on a consolidated basis.

We operate in a number of credit and financial services related sectors through entities under our control. For regulation or supervision purposes, the Central Bank treats us and our subsidiaries and affiliates as a single financial institution. While our consolidated capital base provides financial strength and flexibility to our subsidiaries and affiliates, their individual activities could indirectly put our capital base at risk. Any investigation or intervention by the Central Bank, particularly in the activities carried out by any of our subsidiaries and affiliates, could have a material adverse impact on our other subsidiaries and affiliates and, ultimately, on us.

If we or any of our financial subsidiaries become insolvent, the Central Bank may carry out an intervention or liquidation process on a consolidated basis rather than conduct such procedures for each individual entity. In the event of an intervention or a liquidation process on a consolidated basis, our creditors would have claims on our assets and the assets of our consolidated financial subsidiaries. In this case, credits of the same nature held against us and our consolidated financial subsidiaries would rank equally in respect of payment. If the Central Bank carries out a liquidation or intervention process with respect to us or any of our financial subsidiaries on an individual basis, our creditors would not have a direct claim on the assets of such financial subsidiaries, and the creditors of such financial subsidiaries would have priority in relation to our creditors in connection with such financial subsidiaries’ assets. The Central Bank also has the authority to carry out other corporate reorganizations or transfers of control under an intervention or liquidation process.

Tax reforms may have a material adverse impact on us.

The Brazilian government regularly amends tax laws and regulations, including by creating new taxes, which can be temporary, and changing tax rates or their calculation basis, including in respect of tax rates applicable solely to the banking industry. Tax reforms may reduce the volume of our transactions, increase our costs or limit our profitability, and thus have a material effect on us.

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i) Foreign countries in which the Issuer operates

The risk factors related to foreign countries that could influence the decision to invest in our securities are described in sub-items (a), (f), (g) and (h) of this Item 4.1.

4.2. In relation to each of the risks mentioned above, if relevant, comment on expectations regarding any possible reduction or increase in the exposure of the issuer to such risks.

Beyond that described in item 4.1 there is no relevant expectation of any reduction or increase in the exposure to the risks of the Issuer mentioned.

4.3. Describe any legal, administrative or arbitration proceedings to which the issuer or its subsidiaries are party, specifying labor, tax and civil claims, and others: (i) that are not confidential, and (ii) that are relevant to the business of the issuer or its subsidiaries, indicating:

There are no legal, administrative or arbitration proceedings to which the Issuer is party or that are not confidential and are material to its activities.

With respect to the subsidiaries, the proceedings which the Issuer deems to be significant due to their amounts (base date December 31, 2013) are as follow:

Civil Proceedings

Case No. 2007.51.01.001894-7

a. Court: 22^nd Federal Court of the Judiciary Section of Rio de Janeiro (State of Rio de Janeiro)

b. Jurisdiction: Lower Court

c. Filing date: February 5, 2007

d. Parties to the proceedings: Association of Minority Shareholders of Publicly-Held Companies (Associação dos Acionistas Minoritários em Cia. de Capital Aberto) vs. Banco Banerj S.A. (“Banerj”), Banco do Estado do Rio de Janeiro S.A. (“Berj”), State of Rio de Janeiro and Central Bank of Brazil

e. Amounts, assets or rights involved: R$4,741,452,260.00 (originally claimed amount)

f. Main facts: The plaintiff challenges Berj’s capital increase, carried out as part of the measures for Banerj’s privatization, which would allegedly dilute the shareholding interest of the minority shareholders. It requests the annulment of the Stockholders’ Meeting that approved the capital increase, and the joint obligation of Berj, the State of Rio de Janeiro, Banerj and the Central Bank of Brazil for the payment of the alleged losses caused to the minority shareholders of the former Berj.

g. Chance of loss: Remote.

h. Analysis of impact in the event of an unfavorable decision: To indemnify the minority shareholders for the alleged losses caused by the measures adopted by the majority shareholder – the State of Rio de Janeiro – to the former Banerj.

i. Amount of provision, if any: No provision.

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Case No. 2005.70.00.027997-3

a. Court: 6^th Federal Court - Curitiba - State of Paraná

b. Jurisdiction: Federal Supreme Court

c. Filing date: October 13, 2005

d. Parties to the proceedings: State of Paraná and Public Prosecution Office of the State of Paraná vs. Federal Government, Central Bank of Brazil and Itaú Unibanco S.A.

e. Amounts, assets or rights involved: R$3,738,621,318.72 (originally claimed amount)

f. Main facts: The plaintiffs require indemnification for damages allegedly incurred by the State of Paraná as a result of the incorrect evaluation of tax credits in the privatization process of Banco Banestado S.A., which caused this government institution to take out a loan supposedly greater than necessary to restructure the financial institution in the pre-privatization period. The proceedings were challenged in court based on the claim that the tax credits were properly evaluated, and the case is awaiting the decision of the Federal Supreme Court, where the matter is being considered as an original lawsuit. It should be noted that, as set forth by the law, the privatization of Banestado was carried out through an invitation to bid. Additionally, at the time of the privatization, the tax credits were evaluated by independent banks.

g. Chance of loss: Remote.

h. Analysis of impact in the event of an unfavorable decision: Payment to the State of Paraná of the amount corresponding to the tax credits.

i. Amount of provision, if any: No provision.

Case No. 2000.51.01.030509-7

a. Court: 2^nd Federal Court of the Judicial Section of Rio de Janeiro (State of Rio de Janeiro)

b. Jurisdiction: Federal Regional Court of the 2^nd Region

c. Filing date: November 21, 2000

d. Parties to the proceedings: Federal Public Prosecution Office vs. Itaú Unibanco S.A., Banco Banerj S.A. (“Banerj”), State of Rio de Janeiro and Caixa Econômica Federal.

e. Amounts, assets or rights involved: R$942,399,095.28 (historical amount of the “B Account” set up on June 10, 1997).

f. Main facts: This is a Brazilian Class Action involving aspects of Banerj's privatization process. The so-called "B Account" (an escrow account) was set up by means of a bank loan between Caixa Econômica Federal and the State of Rio de Janeiro amounting to R$942,399,095.28. The purpose of this account is to ensure the refund to the purchaser of Banerj, awarded in lawsuits filed based on events that took place before the privatization closing date. In this proceeding, the Federal Public Prosecution Office requires the partial annulment of the agreement that authorized the transfer of the said amount to the “B Account”, as well as the joint obligation of the defendants to refund amounts unduly withdrawn, by allegedly unlawful procedures adopted for the settlement of labor claims filed by Banerj’s former employees.

g. Chance of loss: Remote.

h. Analysis of impact in the event of an unfavorable decision: To refund the amounts of the labor settlements, which were paid with funds from the “B Account”, and to prevent any new withdrawals from the “B Account”.

i. Amount of provision, if any: No provision.

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Case No. 2003.51.01.028514-2

a. Court: 2^ndFederal Court of the Judiciary Section of Rio de Janeiro (State of Rio de Janeiro)

b. Jurisdiction: Federal Regional Court of the 2^nd Region

c. Filing date: December 5, 2003

d. Parties to the proceedings: Federal Public Prosecution Office, Public Prosecution Office of the State of Rio de Janeiro and Labor Public Prosecution Office vs. Itaú Unibanco S.A.; Banco Banerj S.A. (“Banerj”), Gilberto Carlos Frizão, Manuel Antonio Granado and Otávio Aldo Ronco.

e. Amounts, assets or rights involved: R$942,399,095.28 (historical amount of the “B Account” set up on June 10, 1997).

f. Main facts: This is a Brazilian Class Action based on alleged administrative improbity, involving aspects of Banerj’s privatization process, related to the setup and use of the so-called “B Account”. In this proceeding, the plaintiffs claim that there was an undue withdrawal of funds deposited in the “B Account” through allegedly unlawful procedures adopted in relation to labor claims filed by Banerj’s former employees (i.e. the non-filing of the applicable appeals), for which reason they ask that any withdrawal from the “B Account” be previously submitted to the Finance Secretary of the State of Rio de Janeiro for approval, and assert the joint obligation of the defendants to refund the amounts unduly withdrawn and for sentencing under the penalties set forth in the Brazilian Improbity Law (Law n.º 8,429/1992), due to the administrative improbity of the individuals charged.

g. Chance of loss: Remote.

h. Analysis of impact in the event of an unfavorable decision: To refund the amounts unduly withdrawn from the “B Account”.

i. Amount of provision, if any: No provision

Tax claims

Case No. 204.699/05

a. Court: Municipal Tax Foreclosures of São Paulo

b. Jurisdiction: Appellate Court – Court of Justice of the State of São Paulo

c. Filing date: November 22, 2005

d. Parties to the proceedings: Municipality of São Paulo vs. Cia. Itauleasing de Arrendamento Mercantil

e. Amounts, assets or rights involved: R$1,783,001,851.49 (December 2013)

f. Main facts: A claim has been filed for the collection of service tax (“ISS”) on lease operations carried out throughout the country, where the location where the service was provided and the calculation basis are being challenged.

g. Chance of loss: Remote

h. Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.

i. Amount of provision: No provision

Case No. 2003.61.00.003618-5

a. Court: 25th Civil Court of the Federal Justice of São Paulo

b. Jurisdiction: Appellate Court - Federal Regional Court of the 3rd Region

c. Filing date: January 29, 2003

d. Parties to the proceedings: Internal Revenue Service of Brazil vs. Banco Itaú S/A

e. Amounts, assets or rights involved: R$1,383,900,859.37 (December 2013)

f. Main facts: We dispute the legality of IN No. 213/02, particularly the non-requirement of IRPJ/CSLL taxation on the exchange variations of investment abroad.

g. Chance of loss: Remote (R$1,368,071,917.02) and Possible (R$15,828,942.35)

h. Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.

i. Amount of provision: No provision

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Case No. 16327.721052/2011-31

a.	Court: Secretariat of the Federal Revenue Service of Brazil
b.	Jurisdiction: 2nd Level Administrative Court
c.	Filing date: September 20, 2011
d.	Parties to the proceedings: Internal Revenue Service of Brazil vs. Banco Itauleasing S/A
e.	Amounts, assets, or rights involved: R$756,257,938.51 (December 2013)
f.	Main facts: Tax assessment notices related to PIS/COFINS on profits from sales of leased assets.
g.	Chance of loss: Remote
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision: No provision

Case No. 16327.721830/2011-92

a.	Court: Secretariat of the Federal Revenue of Brazil
b.	Jurisdiction: Lower Level Administrative Court
c.	Filing date: December 28, 2011
d.	Parties to the proceedings: Internal Revenue Service of Brazil vs. Itaú Cia. Securitizadora de Créditos Financeiros
e.	Amounts, assets or rights involved: R$973.785.683,83 (December 2013)
f.	Main facts: Refers to the IRPJ and CSLL payable for the calendar year 2007 on an acquisition, related to the difference between the credit face value and its acquisition cost.
g.	Chance of loss: Remote
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged
i.	Amount of provision: No provision

Case No. 16327.721131/2012-23

a.	Court: Secretariat of the Federal Revenue of Brazil
b.	Jurisdiction: Lower Level Administrative Court
c.	Filing date: September 24, 2012
d.	Parties to the proceedings: Federal Revenue Service of Brazil vs. BFB Leasing S/A Arrendamento Mercantil
e.	Amounts, assets or rights involved: R$619,938,298.62 (December 2013)
f.	Main facts: Tax assessment notices related to PIS/COFINS on profit from sales of assets leased from January 2010 through December 2011.
g.	Chance of loss: Remote
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision: No provision

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Case No. 16327.721476/2012-87

a.	Court: Secretariat of the Federal Revenue of Brazil
b.	Jurisdiction: Lower Level Administrative Court
c.	Filing date: December 13, 2012
d.	Parties to the proceedings: Internal Revenue Service of Brazil vs. Unibanco – União de Bancos Brasileiros S/A
e.	Amounts, assets or rights involved: R$602,417,983.21 (December 2013)
f.	Main facts: Notice of Assessment of IRPJ/CSLL plus voluntary fine, isolated fine and interest in arrears, due to the disallowance of amounts accounted for as the amortization of goodwill related to the acquisition of Banco Bandeirantes S/A and its subsidiary companies.
g.	Chance of loss: Remote.
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision: No provision

Case No. 16327.721481/2012-90

a.	Court: Secretariat of the Federal Revenue of Brazil
b.	Jurisdiction: Lower Level Administrative Court
c.	Date of filing: December 14, 2012
d.	Parties to the proceedings: Internal Revenue Service of Brazil vs. Itaú Unibanco S/A
e.	Amounts, assets or rights involved: R$697,837,311.91 (December 2012)
f.	Main facts: Notice of assessment of social security contribution collectible on profit-sharing and bonuses paid to employees from January 2007 through December 2008, as well as on the SAT amounts and contributions made to benefit third parties (educational allowances).
g.	Chance of loss: Remote (R$284,267,388.21) and Possible (R$413,569,923.70)
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision: No provision

Case No. 16327.720115/2012-13

a.	Court: Secretariat of the Internal Revenue Service of Brazil
b.	Jurisdiction: 2nd Level Administrative Court
c.	Date of filing: February 1, 2012
d.	Parties to the proceedings: Internal Revenue Service of Brazil vs. Unibanco - União de Bancos Brasileiros S/A
e.	Amounts, assets or rights involved: R$530,134,804.37 (December 2013)
f.	Main facts: Notice of assessment of IRPJ tax and CSLL contribution for calendar year 2007 on alleged excess distribution of interest on capital in previous years.
g.	Chance of loss: Possible
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision: No provision

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Case No. 2006.61.00.011829-4

a.	Court: 2nd Civil Court of the Federal Justice of São Paulo
b.	Jurisdiction: Appellate Court – Federal Regional Court of the 3rd Region
c.	Date of filing: May 29, 2006
d.	Parties to the proceedings: Itaucard Financeira S/A Credito Fin. Investimento et al vs. Head of the Special Office for Financial Institutions of the Federal Revenue of Brazil l
e.	Amounts, assets or rights involved: R$1,260,378,391.14 (December 2013)
f.	Main facts: Injunction filed to avoid the expansion of the basis for calculating PIS and COFINS, introduced by Article 3rd, paragraph 1 of Law 9,718/98.
g.	Chance of loss: Probable
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision: R$1,260,378,391.14

Case No. 2009.61.00.007837-6

a.	Court: 21st Civil Court of the Federal Justice of São Paulo
b.	Jurisdiction: Appellate Court – Federal Regional Court of the 3rd Region
c.	Date of filing: March 27, 2009
d.	Parties to the proceedings: BFB Leasing vs. Head of the Special Office for Financial Institutions of the Internal Revenue Service of Brazil
e.	Amounts, assets or rights involved: R$1,686,225,127.16 (December 2012)
f.	Main facts: Injunction filed to avoid the application of Law 11,727/08, which increased the CSLL rate for financial institutions from 9% to 15%, due to the violation of the isonomy principle.
g.	Chance of loss: Probable
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision: R$1,686,225,127.16

Case No. 2008.61.00.014763-1

a.	Court: 11th Federal Civil Court of São Paulo/SP
b.	Jurisdiction: Appellate Court – Federal Regional Court of the 3rd Region
c.	Date of filing: June 23, 2008
d.	Parties to the proceedings: Dibens Leasing S.A. Arrendamento Mercantil et al vs. Head of the Special Office for Financial Institutions of the Internal Revenue Service of Brazil (“DEINF”)
e.	Amounts, assets or rights involved: R$747,953,160.23 (December 2013)
f.	Main facts: Injunction preventively filed to avoid the petitioners to be subject to rate’s increase from 9% to 15%, making them equivalent to the other taxpayers that are subject to the lower rate.Injunction rejected.The ruling was judged to be unfounded.The appeal filed by the plaintiff is awaiting decision.
g.	Chance of loss: Possible
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision: R$747,953,160.23

Case No. 10480.729104/2013-21

a.	Court: Secretariat of the Internal Revenue Service of Brazil
b.	Jurisdiction: Lower Level Administrative Court
c.	Date of filing: August 8, 2013
d.	Parties to the proceedings: Internal Revenue Service of Brazil vs. Hipercard Banco Múltiplo S/A
e.	Amounts, assets or rights involved: R$531,898,785.15 (December 2013)
f.	Main facts: IRPJ and CSLL tax assessment notice, from 2008 to 2010, for not adding the expenses arising out of amortization of goodwill related to the acquisition of Hipercard, as well as expenses resulting from interest on capital and discounts granted. There is also the collection of insufficient CSLL related to 2008 adjustment and separate fine.
g.	Chance of loss: Remote (R$273,193,771.02) and Possible (R$258,705,014.13)
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision: No provision

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Case No. 16327.721796/2011-56

a.	Court:  Brazilian Federal Revenue Service
b.	Jurisdiction: Administrative Appellate Court
c.	Filing date: December 23, 2011
d.	Parties to the proceedings: Federal Revenue Service vs. Itaú Unibanco S/A
e.	Amounts, assets or rights involved: R$ 1,448,616,221.61 (December 2013)
f.	Main facts: Assessment notice aimed at the collection of social security tax due as a result of compensation allegedly paid arising from the granting of stock options to some officers and non-declaration in the Social Security Information Form (GFIP) of the correct amounts in March, April, May and December 2006.
g.	Chance of loss: Remote (R$ 1,316,603,240.41) and Possible (R$ 132,012,981.20)
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision: No provision.

Case No. 16327.721798/2011-45

a.	Court: Brazilian Federal Revenue Service
b.	Jurisdiction: Administrative Appellate Court
c.	Filing date: December 23, 2011
d.	Parties to the proceedings: Federal Revenue Service vs. Itaú Unibanco S/A
e.	Amounts, assets or rights involved:R$ 690,708,004.99 (December 2013)
f.	Main facts: Assessment notice requiring the payment of a fine, under Article 9 of Law No. 10,426/2002, due to the alleged failure to withhold income tax on the amounts arising from the grant of stock options to officers.
g.	Chance of loss: Remote (R$ 626,736,702.07) and Possible (R$ 63,971,302.92)
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision: No provision.

On June 25, 2013, we received an assessment notice from the Brazilian Federal Revenue Service alleging that Itaú Unibanco Holding did not pay approximately R$ 11,884.7 million in income tax, plus fines and accumulated interest, and approximately R$ 6,867.0 million in social contribution, plus fines and accumulated interest in 2008 arising from the transaction that led to the association of Itaú Holding and Unibanco Holdings S.A. The Brazilian Federal Revenue Service claims that other types of transactions should have been carried out. However, the transaction suggested by the Federal Revenue Service is not supported by the rules applicable to financial institutions.

On January 30, 2014, we were informed that the Federal Revenue Service ratified the notice in a non unanimous decision. We will appeal against this decision in the Administrative Council of Fiscal Appeals. We continue to defend that the transactions that were carried out were appropriate and legitimate, and were approved by the administrative bodies of the companies involved and their respective shareholders and, subsequently, also sanctioned by the proper regulatory authorities, including the Brazilian Securities Commission (CVM), the Central Bank of Brazil and the Brazilian Antitrust Authority (CADE). Together with our external legal advisors, we believe that the chance of loss in this tax claim is remote.

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Labor Claims

The Issuer did not identify any labor claims in progress at December 31, 2013 as being significant in terms of the matters or amounts involved. This was also true of its subsidiary companies.

Administrative or arbitration proceedings

The Issuer did not identify any administrative proceedings (except for administrative tax claims, mentioned above) or arbitration proceedings in progress as at December 31, 2013 as being significant in terms of the matters or amounts involved.

4.4. Describe the legal, administrative or arbitration procedures that are not confidential to which the issuer or its subsidiaries are party and to which the opposing parties are management members or former management members, parent companies or former parent companies, or investors of the issuer or its subsidiaries, informing:

The Issuer is not a party to proceedings filed either by its management members or former management members, or by its controlling shareholders or former controlling shareholders.

The Issuer and its subsidiaries carry out corporate transactions that are sometimes contested by minority shareholders who dispute the amounts paid for their shares. The civil lawsuits filed by investors of the Issuer are as follow:

The civil lawsuits filed by investors of subsidiaries of the Issuer are as follow:

Case No. 000.00.643149-6

a.	Court: 8thCivil Court of the Central Court House of the Judicial District of the Capital City of São Paulo.
b.	Jurisdiction: Appellate Court.
c.	Filing date: November 27, 2000.
d.	Parties to the proceedings: Sumatra Comércio e Indústria, Importações e Exportações Ltda. and João Antonio Lian vs. Banco Bandeirantes S/A
e.	Amounts, assets or rights involved: R$0.00
f.	Main facts: Action seeking (i) the annulment of resolutions passed at Banco Bandeirantes’ general meetings held in the years 1999 and 2000, in connection with the fiscal years 1998 and 1999, and to disapprove the financial statements and developments resulting from these resolutions, mainly agreements for the assignment of credits entered into by Banco Bandeirantes and Portonovo, which should be cancelled, revoking the effects deriving from these agreements, and (ii) to recover damages sustained by the plaintiffs as a result of these credit assignment agreements. Action found invalid, pending the consideration of a special appeal.
g.	Chance of loss: Remote
h.	Analysis of impact in the event of an unfavorable decision: Amount to be calculated
i.	Amount of provision, if any: No provision

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Case No. 000.00.619716-7

a.	Court: 7th Civil Court of the Central Court House of the Judicial District of the Capital City of São Paulo (SP)
b.	Jurisdiction: Superior Court of Appeals
c.	Date of filing: October 5, 2000
d.	Parties to the proceedings: Sumatra Comércio e Indústria, Importações e Exportações Ltda. and João Antonio Lian vs. Banco Bandeirantes S/A
e.	Amounts, assets and rights involved: R$174,782,148.53 (December 2013)
f.	Main facts: Action whereby the plaintiffs seek to benefit from the same terms provided in the agreement entered into by the defendants and other minority shareholders of Banco Bandeirantes, ensuring them all the rights set forth therein. Request found valid by the TJSP. Special appeal provided to suspend UBB and Bandeirantes’ legitimacy regarding acts committed by the former parent company. We must await the filing for conflict or ruling.
g.	Chance of loss: Possible
h.	Analysis of impact in the event of an unfavorable decision: Loss of the amount challenged.
i.	Amount of provision, if any: No provision

Case No. 51718900-0

a.	Court: (iii) 39th Civil Court of the Central Court House of the Judicial District of the Capital City of São Paulo (SP)
b.	Jurisdiction:(iii) Lower Level Court
c.	Date of filing:(iii) February 17, 2000
d.	Parties to the proceedings: The Estate of Yerchanik Kissajikian vs. Banco Bandeirantes S/A
e.	Amounts, assets and rights involved: R$0.00
f.	Main facts: Action wherein the plaintiffs seek adjudication on the right to subscribe R$300,000.00, as well as the adjudication of damages sustained due to the unjustified dilution of their ownership interest resulting from capital increases prompted by unjustified losses and imposed thereupon by the controlling shareholders abusing their power and decreasing the stockholders’ equity as a result of sales of assets at incompatible prices. Pending ruling.
g.	Chance of loss: Possible
h.	Analysis of impact in the event of an unfavorable decision: Amount to be calculated.
i.	Amount of provision, if any: No provision

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Case No. 583.00.2001.076875-7

a.	Court: 3rd Civil Court of the Central Court House of the Judicial District of the Capital City of São Paulo (SP)
b.	Jurisdiction: Lower Level Court
c.	Date of filing: July 5, 2001
d.	Parties to the proceedings: Antranik Kissajikian, André Kissajikian, Suely Kissajikian, Vanda Kissajikian Mordjikian and Companhia Iniciadora Predial e Comercial Empreendimentos Brasil S.A. vs. Unibanco – União de Bancos Brasileiros S/A, Caixa Geral de Depósitos S/A e Caixa Brasil Participações S/A
e.	Amounts, assets and rights involved: R$0.00
f.	Main facts: Action seeking adjudication regarding an abuse of power on the part of the controlling shareholders, as it would have diluted their ownership interest in Banco Bandeirantes’s capital stock, as well as the bank going private without a public offer. No ruling.
g.	Chance of loss: Possible
h.	Analysis of impact in the event of an unfavorable decision: Amount to be calculated.
i.	Amount of provision, if any: No provision

Case No. 000.02.066583-0

a.	Court: 4th Civil Court of the Central Court House of the Judicial District of the Capital City of São Paulo (SP)
b.	Jurisdiction: Superior Court of Appeals
c.	Date of filing: April 15, 2002
d.	Parties to the proceedings: Renato Cifali, Arlete Sanchez Morales Cifali, Sylvio Propheta de Oliveira, Luiz Carlos Ferreira and Clube de Investimentos FHS vs. Unibanco – União de Bancos Brasileiros S/A and Banco Bandeirantes S/A
e.	Amounts, assets and rights involved: R$0.00
f.	Main facts: Action whereby the plaintiffs seek the exhibition of the agreement governing the transfer of control over Banco Bandeirantes entered into by Caixa Brasil SGPS and Unibanco. Action dismissed due to lack of interest in suing. Pending consideration of a special appeal.
g.	Chance of loss: Remote
h.	Analysis of impact in the event of an unfavorable decision: Amount to be calculated.
i.	Amount of provision, if any: No provision

Case No. 000.02.052042-5

a.	Court: 15th Civil Court of the Central Court House of the Judicial District of the Capital City of São Paulo (SP)
b.	Jurisdiction: Superior Court of Appeals
c.	Date of filing: March 25, 2002
d.	Parties to the proceeding: Renato Cifali, Arlete Sanchez Morales Cifali and Panamá Empreendimentos e Participações Ltda. Vs. Unibanco – União de Bancos Brasileiros S/A e Banco Bandeirantes S/A
e.	Amounts, assets and rights involved: R$0.00
f.	Main facts: Action whereby the plaintiffs seek a ruling that the enforcement of the provisions contained in the agreement entered into between the parties is to be contingent of the fulfillment of the defendants’ obligations – exercise of the right to elect one member of the Banco Bandeirantes’s fiscal council and his/her alternate–, and to exercise the stock options. Action dismissed. Pending special appeal.
g.	Chance of loss: Remote
h.	Analysis of impact in the event of an unfavorable decision: Amount to be calculated.
i.	Amount of provision, if any: No provision

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Case No. 583.00.1998.940258-0

a.	Court: 15th Civil Court of the Central Court House of the Judicial District of the Capital City of São Paulo (SP)
b.	Jurisdiction: Appellate Court
c.	Date of filing: March 25, 2002
d.	Parties to the proceedings: Hélio Caretoni vs. Banco Bandeirantes S/A, Caixa Geral de Depósitos S/A, Unibanco – União de Bancos Brasileiros e Caixa Brasil Participações S/A
e.	Amounts, assets and rights involved: R$0.00
f.	Main facts: Action seeking to force the execution debtors to calculate the amounts due in order to be able to exercise the call option with respect to 50,000 preferred shares in Banco Bandeirantes. The execution is based on an agreement under which Caixa Brasil (the parent company of Banco Bandeirantes) conferred upon certain minority shareholders (including the plaintiff), the right to exercise put and call options relating to shares resulting from capital increases proportionally to their equity positions. Appeal granted in favor of illegitimacy. The appeal filed by the plaintiff was rejected and special appeal by the plaintiff is awaiting decision on admissibility.
g.	Chance of loss: Remote
h.	Analysis of impact in the event of an unfavorable decision: Amount to be calculated.
i.	Amount of provision, if any: No provision

Case No. 5263020-40.2007.8.13.0024

a.	Court: 3rd Court of the Federal Justice of Minas Gerais (State of Minas Gerais)
b.	Jurisdiction:: Superior Court of Appeals
c.	Filing date: August 17,1982
d.	Parties to the proceedings: Ítalo Aurélio Gaetani plus 71 Co-Plaintiffs vs. Unibanco – União de Bancos Brasileiros S/A
e.	Amounts, assets or rights involved: R$27,556,697.82 (December, 2013) (Merger of Banco Mineiro into Unibanco – União dos Bancos Brasileiros S/A).
f.	Main facts: This lawsuit refers to an indemnity claim filed by the minority shareholders due to the alleged losses incurred as a result of the process of merging Banco Mineiro into Unibanco. Motion found invalid. Pending consideration of the divergence motion by the Superior Court of Appeals.
g.	Chance of loss: Remote
h.	Analysis of impact in the event of an unfavorable decision: Loss of amount challenged.
i.	Amount of provision, if any: No provision

Case No. 0663986-15.1985.4.03.6100

a.	Court: 26th Federal Court – São Paulo (SP)
b.	Jurisdiction: Lower Court (in the phase of summons of estates)
c.	Filing date: February 14, 1985
d.	Parties to the proceedings: Elizabeth da Veiga Alves vs. Banco Itaú S/A and others
e.	Amounts, assets or rights involved: R$0,00 (Merger of Banco União Comercial into Itaú Unibanco S.A. (“Itaú Unibanco”).
f.	Main facts: Refers to a class action challenging the process for the merger of Banco União Comercial into Itaú Unibanco, claiming a refund of supposed damages that would have been borne by the Federal Government arising from this merger process. The expiration of the legal deadline was acknowledged. Pending consideration of the admissibility of the special appeal.
g.	Chance of loss: Remote.
h.	Analysis of impact in the event of an unfavorable decision: Amount to be calculated.
i.	Amount of provision, if any: No provision

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Case No. 583.00.2009.229.838-5 and 583.00.2011.137.145-3

a.	Court: (i) 39th Civil Court of the Central Court House of the Judicial District of the Capital City of São Paulo (SP), (ii) 10th Civil Court of the Central Court House of the Judicial District of the Capital City of São Paulo (SP).
b.	Jurisdiction: (i) Appellate Court, (ii) Lower Court.
c.	Date of filing: (i) February 5, 2010, (ii) April 20, 2011.
d.	Parties to the proceedings: (i) S.A. Philomeno Indústria e Comércio and Panamá Empreendimentos e Participações vs. Itaú Unibanco Holding S/A, and (ii) Philomeno Imóveis e Participações Ltda. vs. Itaú Unibanco Holding S/A
e.	Amounts, assets and rights involved: R$0.00
f.	Main facts: (i) shareholder seeking damages on the grounds of having been precluded from exercising his right as shareholder, (ii) shareholder seeking the exhibition of the agreement entered into therewith.
g.	Chance of loss: Remote: (i) the shareholder was never precluded from exercising their rights as such, and (ii) a copy of the agreement is available to the shareholder.
h.	Analysis of impact in the event of an unfavorable decision: Amount to be calculated.
i.	Amount of provision, if any: No provision

4.5. For confidential relevant proceedings in which the issuer or its subsidiaries are a party and which have not been reported in items 4.3 and 4.4 above, analyze the impact in the event of an unfavorable decision and give the amounts involved

The Issuer and its subsidiaries are not party to any confidential proceedings that are considered significant.

4.6. Describe any repetitive or related legal, administrative or arbitration proceedings based on similar legal facts or causes that are not confidential and that are collectively relevant, to which the issuer or its subsidiaries are party, specifying labor, tax and civil claims, among others, and indicating:

The Issuer does not have any repetitive or related legal, administrative or arbitration proceedings that are collectively relevant.

We present below a description of the proceedings of this nature affecting the Issuer's financial subsidiaries.

Litigation Arising from Government Monetary Stabilization Plans

From 1986 to 1994, the Brazilian federal government implemented several consecutive monetary stabilization plans, better known as Cruzado, Bresser, Verão, Collor I, Collor II and Real, to combat the high and chronic inflation which jeopardized Brazil’s stability for many years.

In order to implement these plans, the Brazilian federal government enacted several laws based on its power to regulate the monetary and financial systems, as granted by the Brazilian federal constitution.

These laws, however, started to be questioned by the holders of savings accounts at that time. They claimed alleged differences in monetary corrections in the savings account indexes, arising from changes established by these plans.

Individual claims

The Bank is a party to collective and repeated individual proceedings related to the monetary stabilization plans. Provisions have been recognized for these claims.

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Class actions

The Bank is also a party to Brazilian Class Actions proceedings regarding the same issue, filed by the Public Prosecution Office and by consumer protection associations.

A provision is recognized for each new individual claim as it arises.

Controversial case law

There is controversy regarding the case law of the Brazilian Supreme Court arising from the fact that a different treatment from that given to savings accounts has been given to similar economic phenomena. In the case of investments in Bank Deposit Certificates (“CDB”) and corrections applied to agreements in general, the established case law of the Brazilian Supreme Court has been in favor of the constitutionality of the laws governing the monetary stabilization plans. Due to this contradiction, the National Confederation of the Financial System (“CONSIF”) filed a special proceeding with the Federal Supreme Court (Accusation of Non-Compliance with the Fundamental Precept (Arguição de Descumprimento de Preceito Fundamental) No. 165, or “ADPF 165”), in which the Central Bank filed an amicus brief, arguing the that holders of savings accounts did not incur actual damages, and that the monetary stabilization plans applicable to savings accounts were in accordance with the federal constitution.

Mainly for this reason, the Bank believes in the legality of ADPF 165, and its actions were merely complying with the legal rules that established the monetary stabilization plans, strictly following the determinations of the National Monetary Council and the Central Bank of Brazil.

Other civil claims

In addition to litigation arising from government monetary stabilization plans, we are defendants in numerous civil lawsuits arising from different indemnity claims for losses, suffering and property damage, and claims resulting from the ordinary course of our business related to, for example, the contesting of bills, bounced checks and the inclusion of information in the credit protection registry.

As at December 31, 2013, the total amount of provisions related to civil litigation was R$4,473 million.

Tax Claims

In the tax sphere, the conglomerate has several claims in which the levying of Service Tax (ISS) is challenged, and for which a provision of R$367 million was recorded at December 31, 2013.

ISS leasing – place of service provision/calculation basis

Companies that carry out leasing operations within the Itaú Unibanco Conglomerate pay ISS (tax on services) to the municipality where the service provider is located, specifically, assessment and approval of credit and monitoring of agreements, pursuant to the current tax rules and regulations.

Several Itaú Unibanco conglomerate companies were assessed and became parties to execution proceedings due to the non-payment of ISS on lease operations in 300 other municipalities where the leased asset is chosen and handed over to the lessee. The calculation basis used in the tax assessment is usually higher than the consideration for the lease. The place where the service is provided and the calculation basis are challenged in these claims.

The matter was found in favor of the banks by the STJ under the procedures for the settlement of repetitive appeals. Once the leading case is judged, the decision will be applicable to all similar cases pending rulings by the STJ or other lower courts.

Pursuant to CVM Resolution No. 489/2005, no provision was recorded, considering the remote chances of losing these cases as a result of the STJ’s decision in favor of taxpayers, as indicated in the previous paragraph.

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ISS financial activity

The financial institutions of the Itaú Unibanco conglomerate pay ISS on income resulting from the effective provision of services, such as checking account opening fees and credit card management fees. On the other hand, they are assessed and become parties to tax foreclosures collecting payment of the municipal tax on other income, which is typical of the financial activity, such as income from financial operations. The conglomerate believes that the assessed income should not be characterized as arising from a service provision as it is not included in the list of taxed services attached to Supplementary Law No. 116/03, and therefore the collection of ISS is illegal.

Labor Claims

The Issuer did not identify any labor claims in progress as at December 31, 2013 as being significant in terms of the matters or amounts involved. The same was true regarding its subsidiary companies.

4.7. Describe other relevant contingencies that are not included in the previous items

We refer to Note 12 of our consolidated financial statements as at December 31, 2013 already published, which shows that there are provisions for tax contingencies and legal obligations totaling R$8,973,897 thausand (R$2,527,011 thausand for contingencies and R$6,446,886 thausand for legal obligations), and for civil contingencies amounting to R$4,472,537 thausand, while for labor proceedings the total amount is R$5,192,247 thausand and for other contingencies the total amount is R$223,235 thausand.

The main taxes theses which are subject to provisions are as follow:

	R$ thousand
Tax	Issue	Amount
CSLL	Isonomy: we claim that this tax should be levied at the regular rate of 9%, instead of the increased CSLL rate for financial and insurance companies of 15%, alleging the unconstitutionality of Article 41 of Law No. 11,727/08.		2,471,120
PIS/COFINS	Billing vs. Gross Revenue: we claim that these taxes should be levied only on revenue arising from sales of goods and services, or even the levying of PIS Repique (5% of income tax due), instead of total gross revenue, alleging the unconstitutionality of paragraph 1, Article 3, of Law No. 9,718/98.		1,788,780
IRPJ/CSLL	Taxation of Income Earned Abroad: we claim the exemption of positive results of equity in earnings from investments abroad.		499,486
PIS	Anteriority over Ninety Days and Non-retroactivity: we claim the rejection of Constitutional Amendments No. 10/96 and 17/97 in view of the anteriority and non-retroactivity principles, with regard to payments pursuant to Supplementary Law No. 07/70.		421,700

In addition to the balances provided for, Note 12 to our audited financial statements states the balances of civil contingencies evaluated as possible losses amounting to R$1,659,612 thausand, and tax contingencies evaluated as possible losses with a total amount of R$10,879,927 thausand, which is explained by the main theses described below.

Main Possible Loss Theses - Tax Contingencies

	R$ thousand
Tax	Issue	Amount
INSS	Non-wage amounts: we are defending the non-levying of this tax on these amounts, mainly profit-sharing, income, transportation vouchers and flat bonuses.		2,564,012
IRPJ/CSLL	Interest on capital: we are defending the deductibility of interest on capital declared to shareholders based on the Brazilian long-term interest rate (“TJLP”) levied on the shareholders’ interest for the year, and for prior years		1,128,399
IRPJ/CSLL/PIS/COFINS	Rejection of the Offset Request: the liquidity and certainty of the offset credit are being analyzed		1,075,353
IRPJ/CSLL	Deduction – Spread: we are defending the deductibility of spreads on the acquisition of investments with expected future profitability.		1,049,429
ISS	Banking Activities: we understand that the banking activities are not mixed up with services and/or that they are not mentioned in Supplementary Law No. 116/03 or in Decree-Law No. 406/68.		616,234

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There are no other relevant contingencies in the case of the Issuer.

4.8. For the rules of the foreign issuer’s country and the rules of the country in which the foreign issuer’s securities are held in custody, if different from the original country, please identify:

a) Restrictions imposed on the exercise of political and economic rights

Not applicable, Brazil is the country of origin of the Issuer.

b) Restrictions on outstanding securities and their transfer

Not applicable, Brazil is the country of origin of the Issuer.

c) Cases of cancellation of registration

Not applicable, Brazil is the country of origin of the Issuer.

d) Other issues of interest to investors

Not applicable, Brazil is the country of origin of the Issuer.

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ITEM 5 – MARKET RISKS

5.1. Describe, on a quantitative and qualitative basis, the main market risks to which the issuer is exposed, including those relating to foreign exchange risks and interest:

Market risk is the possibility of losses resulting from fluctuations in the market value of positions held by a financial institution, most typically caused by variations in foreign exchange rates, interest rates, Brazilian inflation indexes, equity and commodity prices, along with various indexes for these risk factors. Market risk management is the process by which our management monitors and controls risk of variations in the value of financial instruments due to market movements, while aiming to optimize the risk-return ratio through an adequate limits structure, effective risk management models and related management tools.

Our policies and general market risk management framework are consistent with the principles of CMN regulations. These principles guide our approach to market risk control and management across all business units and legal entities of the Itaú Unibanco Group.

Our market risk management strategy is aimed at balancing corporate business goals, taking into account, among other things:

• Political, economic and market conditions;

• The market risk profile of the portfolio; and

• Expertise within the group to support operations in specific markets.

Our market risk management framework is subject to the governance and hierarchy of committees, with specific limits assigned to different portfolios and levels (for example, Banking Portfolio, Trading Portfolio, Equities Desk), as well as classes of market risk (such as interest rate risk and foreign exchange risk). Daily risk reports, used by the business and control units, are also sent to senior management.  In addition, our market risk management and control process is subject to periodic reviews. The key principles underlying our market risk control are as follows:

• All market risks assumed must be in line with our risk-return objectives;

• Through disciplined dialogue, senior management is to be kept informed of the overall market risk profile and its evolution over time;

• There must be transparency as to how the business works to optimize results;

• The market risk control structure must provide early warning mechanisms to facilitate effective risk management, without obstructing the business objectives; and

• Concentration of risks must be avoided.

Market risk is controlled by an unit that is independent from our “risk originating” business units and is responsible for performing the daily activities of: (i) risk measurement, and assessment, (ii) monitoring of stress scenarios, limits and alerts; (iii) application of stress scenarios, analysis and tests; (iv) reporting of risk findings to responsible individuals within the relevant business unit, in accordance with our governance requirements; (v) monitoring the necessary actions to readjust positions and/or levels of risk to make them viable; and (vi) providing support for the launch of new financial products. To this end, we have a structured process of communication and information flow that provides information to our Superior Committees and monitors compliance with the requirements of Brazilian and relevant foreign regulatory agencies.

Our structure of limits and alerts follows the guidelines of the Board of Directors and is approved by the Superior Risk Policies Committee (CSRisc) after endorsement by the Superior Institutional Treasury Committee (CSTI). The limits range from aggregated risk indicators at the portfolio level to more granular limits at the individual desk level. This structure of limits and alerts promotes the effectiveness and coverage of control and is reviewed at least annually. Limits and alerts are calibrated based on projections of future balance sheets, stockholders’ equity available to support trading activities and the risk profile of each organizational entity, defined in terms of risk measurement as used within the risk management process. Market risk limits are monitored on a daily basis by our independent Market Risk Control Unit, which reports breaches of limits and discusses them with the relevant committees in accordance with the following procedure:

• Within one business day, to the management of the relevant business unit;

• On a weekly basis, to the Risk and Positions Committee, which is composed of our Institutional Treasury Executive Vice President, our Institutional Treasury Executive Officer, the heads of the Trading and Banking units, our Chief Risk Officer and our Director of the Market Risk Control Unit; and

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• On a monthly basis, to the Superior Institutional Treasury Committee (CSTI), which is chaired by our Chief Executive Officer.

Additionally, our Board of Directors members have established certain limits of tolerance to high-level risks that are specifically applicable to treasury activities. These limits of tolerance are monitored on a daily basis by our independent risk unit, and any breach is reported to the Committees, to the Board of Officers and the Board of Directors in accordance with the procedure mentioned above. Potential breaches are also reported to executive officers through the CSRisc, which meets every two months, and to the Board of Directors members through the CGRC, which meets every two months and reports its activities to all Board of Directors members.

We hedge transactions with clients and proprietary positions, including foreign investments, in order to mitigate risks arising from fluctuations in market risk factors (e.g., prices) and to prevent positions from breaching limits. Derivatives are commonly used for these hedging activities. When these transactions are classified as hedges for accounting purposes, specific supporting documentation is reviewed, allowing for an ongoing follow up of the hedge effectiveness (retrospectively and prospectively) and of any changes in the accounting process. The accounting and managerial hedging procedures are governed by our internal institutional polices. Our market risk framework categorizes transactions as part of either the Banking Portfolio or the Trading Portfolio, in accordance with general criteria established by the Basel Capital Accords.

The Trading Portfolio is composed of all transactions with financial and commodity instruments (including derivatives) held with the intention of trading, to benefit from arbitrage opportunities, or using such transactions to hedge risk within this portfolio, and that have no restriction on trading. Profits are based on changes in actual or expected prices in the short term.

The Banking Portfolio is predominantly characterized by trades originated from the banking business that are not classified in the trading portfolio and related to the management of our balance sheet. Treasury transactions in the banking portfolio are executed in conjunction with active management of financial risks inherent in our overall balance sheet, and are held without intent to trade in the short term. The banking portfolio may include derivatives. As a general rule, this desk’s portfolios are held without intent of resale and time horizon of medium and long term.

Market risk exposures that are inherent to many financial instruments, including derivatives, are composed of various risk factors. A risk factor refers to a market parameter whose variation impacts the evaluation of a certain position. The main risk factors measured by us are:

• Interest rates: the risk of losses from transactions that are subject to interest rate variations;

• Other foreign interest rates: the risk of losses from transactions subject to foreign interest rate variations;

• FX rates: the risk of losses from positions subject to foreign exchange rate variation (e.g., foreign currency positions);

• Brazilian inflation indexes: the risk of losses from transactions subject to variations in inflation linked indexes; and

• Equities and commodities: the risk of losses from transactions that are subject to equity and commodity price variations.

Market risk is analyzed based on the following key metrics:

• Value at Risk (VaR): a statistical metric that quantifies potential economic losses based on normal market conditions, considering a defined holding period and confidence level;

• Losses in Stress Scenarios (Stress Testing): a simulation technique to evaluate the impact on assets, liabilities and derivatives portfolios of various risk factors in extreme market situations (based on prospective scenarios);

• Stop Loss Alert: a mechanism that triggers a management review of positions, if the accumulated losses in a given period reach specified levels;

• Concentration: cumulative exposure of certain assets or risk factors calculated at market value (MtM - Mark to Market); and

• Stressed VaR: a statistical metric derived from VaR, aimed at capturing the largest risk in simulations of the current portfolio, taking into consideration observable returns in historical scenarios.

In addition to the risk metrics described above, sensitivity and loss control measures are also analyzed. They include:

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• Gap Analysis: accumulated exposure of cash flows by risk factor, which are marked-to-market and positioned by settlement dates;

• Sensitivity (DV01 – Delta Variation Risk): impact on the market value of cash flows when a one annual basis point change is applied to current interest rates or index rates; and

• Sensitivities to Various Risk Factors (Greek): partial derivatives of a portfolio of options in connection with the prices of the underlying assets, implied volatilities, interest rates and time.

VaR - Consolidated Itaú Unibanco Holding

The internal VaR model we use assumes a one-day holding period and a 99.0% confidence level. Volatilities and correlations are estimated based on a volatility-weighing methodology that confers greater weight to the most recent information.

The table below shows the Consolidated Global VaR, comprising our Trading and Banking portfolios, and our subsidiaries abroad Itaú BBA International, Banco Itaú Argentina, Banco Itaú Chile, Banco Itaú Uruguay, Banco Itaú Paraguay and Itaú BBA Colombia showing where there are higher concentrations of market risk.

We adhered to our policy of operating within low limits in relation to capital and maintained our conservative management and portfolio diversification approach through the period.

(in millions of R$)
							December									December									December
Global VaR (*)	Average		Minimum		Maximum		31, 2013			Average		Minimum		Maximum		31, 2012			Average		Minimum		Maximum		31, 2011
Group of Risk Factor
Interest rate		172.4		65.6		416.9		69.1			191.2		71.8		427.6		348.7			100.9		24.6		222.6		104.8
Other Interest rate		26.2		8.6		76.7		45.2			20.4		7.3		49.6		11.4			29.5		12.6		59.0		23.6
FX rate		34.5		4.4		70.2		10.4			25.7		4.6		53.9		8.8			19.1		5.2		38.8		18.0
Brazilian Inflation Indexes		76.1		37.3		155.5		65.7			110.3		14.8		325.0		51.2			17.7		2.5		41.6		21.1
Equities and commodities		29.6		14.0		60.1		20.4			24.2		13.6		43.5		16.8			36.9		17.4		57.1		25.2
Foreign Units
Banco Itaú BBA International		2.4		1.6		4.1		1.9			1.7		0.7		5.1		1.1			2.9		0.4		6.5		1.5
Banco Itaú Argentina		4.0		2.2		7.4		5.7			3.0		1.7		5.6		5.5			4.0		1.6		9.4		3.7
Banco Itaú Chile		5.6		2.1		13.6		2.1			5.5		3.2		9.6		4.4			5.3		1.9		10.3		5.3
Banco Itaú Uruguai		2.8		1.5		8.9		1.7			1.7		0.3		3.4		2.0			0.5		0.2		1.1		0.7
Banco Itaú Paraguai		0.9		0.4		1.8		0.9			0.4		0.2		1.4		1.0			0.6		0.2		1.7		0.2
Banco Itaú BBA Colombia		0.4		0.0		1.3		0.2			-		-		-		-			-		-		-		-
Diversification effect (*)								(113.0	)								(77.1	)								(53.4	)
Total		224.5		97.9		443.4		110.4			289.7		118.0		601.4		373.7			142.0		74.0		278.5		150.9

(*) Reduction of risk due to the combination of all risk factors

On December 31, 2013, our average global VaR was R$224.5 million, or 0.27% of our consolidated stockholders’ equity on December 31, 2013, compared to our average global VaR of R$289.7 million on December 31, 2012 or 0.38% of our consolidated stockholders’ equity on December 31, 2012, and to R$142.0 million on December 31, 2011, or 0.19% of our consolidated stockholders’ equity on December 31, 2011. The Total VaR of our foreign units represented less than 1% of our stockholders’ equity on December 31, 2013.

VaR - Institutional Treasury Trading Portfolio

The Institutional Treasury unit segregates its risk management from the Banking and Trading Portfolios.

We recently enhanced its internal VaR methodology used for the Trading Book, migrating from the “parametric” approach to a “historical simulation” approach. This new approach uses four years of historical market data, performs a full revaluation of all positions, considers both one-day and ten-day holding periods, and reports risk at various confidence levels, including the 99.0% confidence level used under the parametric methodology. The historical simulation methodology is generally recognized to improve risk measurement for nonlinear financial products (such as options), and to more effectively capture both basis risk and statistically unusual (or “fat tail”) events. This new approach calculates VaR on both an unweighted “simple returns” basis and on a “volatility weighted” basis. We are in the process of extending the use of the historical simulation methodology beyond the Trading Book to include all other relevant portfolios that give rise to market risks.

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The Trading Portfolio takes positions aiming to optimize risk-weighted results. The Trading Portfolio seeks the best domestic and foreign market opportunities within the pre-established limits and strives to create a well-diversified risk exposure.

(in millions of R$)
							December									December									December
Trading VaR (*)	Average		Minimum		Maximum		31, 2013			Average		Minimum		Maximum		31, 2012			Average		Minimum		Maximum		31, 2011
Group of Risk Factor
Interest rate		38.2		15.7		104.9		20.1			38.3		12.8		95.4		25.2			31.2		9.5		79.0		18.4
Other Interest rate		13.7		4.5		31.7		21.7			10.7		4.2		27.2		6.4			11.5		5.5		27.1		7.5
FX rate		31.8		6.2		68.1		9.4			25.1		4.9		55.6		9.9			20.9		7.7		37.8		22.0
Brazilian Inflation Indexes		12.0		3.1		30.4		21.4			9.4		1.8		22.2		7.1			6.9		0.9		24.5		4.7
Equities and commodities		19.2		5.8		38.2		13.7			23.3		13.8		41.5		14.8			7.5		1.5		15.1		24.0
Diversification effect (*)								(56.0	)								(38.6	)								(22.6	)
Total		40.2		17.7		71.7		30.3			54.3		21.3		112.3		24.7			69.1		38.4		125.0		53.9

(*) Reduction of risk due to the combination of all risk factors

Our total average Trading Portfolio VaR was R$ 40.2 million on December 31, 2013, compared to R$54.3 million on December 31, 2012 and to R$69.1 million on December 31, 2011.

Sensitivity Analyses (Trading and Banking Portfolios)

As required by Brazilian regulation, we conduct sensitivity analysis for market risk factors considered important. The highest resulting losses are presented below, by risk factor, in each such scenario and are calculated net of tax effects, providing a view of our exposure under circumstances.

The sensitivity analyses of the Trading and Banking Portfolios presented here are based on a static assessment of the portfolio exposure. Therefore, such analyses do not consider the dynamic response capacity of management (e.g., treasury and market risk control unit) to initiate mitigating measures and minimize the possibility of significant losses. In addition, the profit or loss presented does not reflect accounting profit or losses since the analysis is intended to assess risk exposure based on the fair value of financial instruments, regardless of whether financial instruments are accounted for on an accrual basis or not.

														(in thousands of R$)
		Trading Portfolio (1)									Trading and Banking Portfolios (1)
Exposures		December 31, 2013									December 31, 2013
Risk Factors	Risk of change	Scenario I			Scenario II			Scenario III			Scenario I			Scenario II			Scenario III
Interest Rate	Fixed Income Interest Rates		(387	)		(9,632	)		(19,187	)		(2,107	)		(52,469	)		(104,507	)
Foreign Exchange Linked	Foreign Exchange Linked Interest Rates		122			(3,079	)		(6,188	)		375			(9,336	)		(18,593	)
Foreign Exchange Rates	Prices of Foreign Currencies		3,994			(99,844	)		(199,688	)		3,183			(79,568	)		(159,136	)
Price Index Linked	Price Indexes Linked Interest Rates		(758	)		(18,600	)		(36,489	)		(4,237	)		(103,960	)		(203,958	)
TR	TR Linked Interest Rates		5			(119	)		(238	)		257			(6,428	)		(12,885	)
Equities	Prices of Equities		3,597			(89,920	)		(179,839	)		2,867			(71,679	)		(143,358	)
Total without correlation			6,573			(221,193	)		(441,628	)		337			(323,439	)		(642,438	)
Total with correlation			6,336			(213,234	)		(425,738	)		325			(311,801	)		(619,322	)

(1) Amounts net of tax effects.

In order to measure these sensitivities, the following scenarios are used:

• Scenario I: Addition of one basis point to interest rates and associated indexes and one percentage point to currency and equity prices;

• Scenario II: Shocks of 25 basis points to interest rates and associated indexes and 25 percentage points to currency and equity prices, increasing and decreasing the market data at closing, considering the highest losses per risk factor; and

• Scenario III: Shocks of 50 basis points to interest rates and associated indexes and 50 percentage points to currency and equity prices, increasing and decreasing the market data at closing, considering the highest losses per risk factor.

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Backtesting

The effectiveness of the VaR model is validated by the use of backtesting techniques that compare hypotheticaldaily results with the estimated daily VaR. The number of exceptions (i.e. deviations) with respect to the pre-established VaR limits should be consistent, within an acceptable margin, with the hypothesis of 99.0% confidence intervals (i.e., there is a 1.0% probability that the financial losses are higher than the losses estimated by the model), considering a period of 250 business days (ending on December 31, 2013). The backtesting analysis presented below takes into consideration the ranges suggested by the Basel document “Supervisory Framework for the use of backtesting in conjunction with the internal models approach to market risk capital requirements.”

The ranges are divided into:

· Green (0 to 4 exceptions): corresponds to backtesting results that do not suggest any problems with the quality or accuracy of the models adopted;

· Yellow (5 to 9 exceptions): refers to an intermediate range group, which indicates the need to pay attention and/or monitor and may indicate the need for improvement actions; and

· Red (10 or more exceptions): demonstrates the need for an improvement action.

Source: Itaú Unibanco Holding

The exposure graph below illustrates the reliability of risk measures generated by the models we use in the Institutional Treasury Trading Portfolio (foreign units are not included in the graph below given the immateriality of amounts involved). The graph shows the adequacy level of the market risk models used by us, presenting the risk (absolute value) vs. return pairs for the period considered. Since the diagonal line represents the threshold where risk equals return, all the dots below this line indicate exceptions to the estimated risk. For the exposure of the Institutional Treasury Trading Portfolio, the hypothetical losses exceeded the VaR estimated by the model on 3 days in the period.

5.2. Describe the market risk management policy adopted by the issuer, its objectives, strategies and instruments, indicating:

The Issuer takes decisions based on analytical tools that enable it to make profitable transactions in safety, aiming at optimizing the risk-return ratio.

Itaú Unibanco’s risk management strategy aims at balancing the business objectives considering, among others:

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· the political, economic and market scenario;

· Itaú Unibanco’s market risk portfolio;

· the possibility of being present in specific markets.

The risk management of the Issuer follows the best corporate governance practices recommended by international organizations and the Basel Accords.

The Issuer’s market risk management rules are in line with the principles of CMN Resolution No. 3,464 of June 26, 2007, as amended, a set of principles that guide the institution’s strategy for controlling and manage market risk in all of the business units and organizational entities of Itaú Unibanco.

a) Risks that are intended to be hedged

Hedges are mainly against the risks posed by fluctuations in interest rates, inflation and exchange rates.

b) Equity hedging strategy

The organization’s equity is managed in domestic currency, and the hedging strategy is aimed at avoiding the changes in significant market factors compromising the equity value.

c) Instruments used for equity hedging purposes

When necessary, the Issuer operates with financial derivatives in the market.

d) Parameters used for managing these risks

The risk management parameters used by the Issuer include market risk metrics such as the following: Value at Risk (VaR), VaR Stress, Losses under Stress Scenarios (Stress Test), Stop Loss Alert, and Concentration.

e) If the issuer carries out transactions involving financial instruments for different equity hedging purposes, and what these purposes are

The Issuer hedges its transactions with clients and proprietary positions, including foreign investments, with the intention of mitigating the risks arising from fluctuations in prices of significant market risk factors, and adjusting the transactions to their current exposure limits. Derivatives are the most frequently used instruments for these hedging activities. In situations in which these transactions are designated for hedge accounting, specific supporting documentation is generated, including the continuous monitoring of the hedge effectiveness (retroactively and prospectively) and other changes in the accounting process. The hedge accounting and economic procedures are governed by the institutional rules in place at Itaú Unibanco.

f) Organizational structure for risk management control

Risk and Capital Management

We regard risk management as an essential instrument to optimize the use of our resources and to assist us in selecting business opportunities in order to maximize value creation to shareholders.

Our risk management process includes:

· Identification and measurement of existing and potential risks in our operations;

· Approval of risk management and control institutional policies, procedures and methodologies according to the guidelines of the Board of Directors and our corporate strategies; and

· Management of our portfolio seeking optimal risk-return ratios.

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The purpose of the identification of risks is to map the internal and external risk events that may affect the strategies and goals of our business and support units, with potential impacts on our results, capital, liquidity and reputation.

Risk management processes permeate our entire institution and are aligned with the guidelines of our Board of Directors and senior management which, through the committees described below determine overall risk management objectives by establishing targets and limits applicable to our business units. The control and capital management units, in turn, support our management by means of monitoring procedures and risk and capital analysis.

Our organizational risk management governance is structured in compliance with regulations in Brazil and abroad and in line with market best practices. Control of our credit, market, operational, liquidity and underwriting risks is performed in a centralized manner by an independent unit, led by a Vice-President reporting to the CEO and to the Board of Directors, in order to ensure that such risks are managed pursuant the Itaú Unibanco Group risk appetite and our existing policies. This independent unit is also responsible for centralizing our capital management. Centralized control is intended to provide the Board of Directors and senior management with a global view of our exposures to risks, as well as with a prospective view of our capital adequacy, so as to optimize and expedite corporate decisions.

We manage proprietary information technology (IT) systems to comply with Central Bank’s capital reserve requirements, as well as for risk measurement, following regulations and regulatory models. We also coordinate actions among different units to verify compliance with qualitative and quantitative requirements established by relevant authorities to maintain the minimum required capital and monitor risks.

In 2013, our Risk Control unit and our Business units worked together to build a new governance in credit modeling, create indicators to identify early delinquency and minimize risks in our information security.

Risk and Capital Governance

The Board of Directors is our highest authority in risk and capital management. In addition, we established committees that are responsible for risk and capital management and report directly to the Board of Directors. Committee members are elected by the Board of Directors. At the executive level, risks are managed by the Superior Committees, which are chaired by our Chief Executive Officer.

Please refer to https://www.itau.com.br/_arquivosestaticos/RI/pdf/RiskandCapitalCommitteeInternal.pdf, for further details.

The following committees are part of our risk management governance structure:

(1) CSNIR and CTAM are chaired by Itaú Unibanco Holding's main executive officer in charge of risk.

(2) CSP and CSEXT report to CSRisc only on risk matters.

Board Risk and Capital Management Committee (CGRC): supports the Board of Directors in discharging its duties related to our risk and capital management by meeting every two months and submitting reports and recommendations to assist the Board of Directors in its decision-making with respect to:

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· Supervision of our risk and capital management and control activities to ensure our adequacy to the risk levels assumed and the complexity of transactions in which we engage, as well as compliance with regulatory requirements;

· Review and approval of capital management institutional policies and strategies that establish mechanisms and procedures intended to maintaining capital compatible with the risks incurred by us;

· Determination of our minimum expected return on capital for our entire business, as well as monitor performance;

· Supervision of our incentive structures, including compensation, seeking to ensure their alignment with risk control and value creation objectives; and

· Promotion and improvement of our risk culture.

Audit Committee: we have a single Audit Committee overseeing all entities within the Itaú Unibanco Group that are either authorized to operate by the Central Bank or supervised by the SUSEP. In accordance with its internal regulation, approved by the Board of Directors, the Audit Committee meets at least quarterly and when your CEO deems necessary and is responsible for supervising the quality and integrity of our financial statements and compliance with legal and regulatory requirements, as well as supervising audit activities (both internal and independent).

Superior Risk Policies Committee (CSRisc): the CSRisc meets at least every two months and is responsible for:

· Establishing general risk policies that determine risk manager performance and approval levels for the respective risk managers of the existing risks;

· Approving the procedures necessary for compliance with our institutional policies and procedures;

· Approving decisions about taking risks with significant impact on capital and reviewing decisions by other committees within its authority level;

· Setting and monitoring limits combined by type of risk;

· Ensuring consistency of our risk and capital management over time;

· Monitoring the process for implementing risk and capital management procedures; and

· Approving risk assessment and capital calculation methodologies.

Superior Institutional Treasury Committee (CSTI): meets every month and its main responsibilities include, within the authority level established by the CSRisc, discussing and deciding on:

· Exposure limits for market risk and the maximum loss limits of positions (including stress conditions) based on those determined by CSRisc, which may include establishing additional controls and limits, when necessary;

· Guidelines for the work of, and decision-making authority delegated to, the Institutional Treasury Management Committee (CGTI);

· Retention periods with respect to our primary types of risks taking into account position amounts and market liquidity;

· Institutional treasury positions;

· Risk control models and procedures, including those in addition to those delegated by the CSRisc;

· Matters and limits related to treasury operational risk;

· Stop loss policies;

· Compensation policies (for risk alignment); and

· Accounting hedge strategies.

Superior Institutional Treasury and Liquidity Committee (CSTIL): meets on a quarterly basis and its main responsibilities include:

· Controlling the use of liquidity limits;

· Analyzing the current and future levels of liquidity and taking actions intended to promote prudent and efficient management of our cash flows; and

· Discussing and deciding, within the authority delegated by the CSRisc, maximum limits for liquidity gap, minimum reserve levels, our policy on funding and investments in the financial market, criteria for transfer pricing of funds applicable to our companies and contingency plans for liquidity.

Superior Credit Committee (CSC): meets on a weekly basis to discuss our credit risk and is our highest authority on approval of individual credit levels. Its main responsibilities include:

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· Analyzing and deciding on credit proposals that are beyond the authority of the committees reporting to it;

· Analyzing and deciding on changes to maximum credit authority levels of the committees reporting to it;

· Analyzing and deciding on credit risk polices of the wholesale bank; and

· Reviewing transactions that were not unanimously approved at the committees reporting directly to it or that were submitted to the CSC’s appreciation due to a transaction’s relevance or particular characteristics.

Superior Audit and Operational Risk Management Committee (CSAGRO): meets at least on a quarterly basis and seeks to understand the risks associated with our processes and business, defines guidelines for managing operational risks, and assesses the results of our internal control and compliance system. Its responsibilities include:

· Analyzing audit results with emphasis on matters relating to policies, investments and governance, as well as determining and monitoring related actions;

· Determining operational risk management guidelines;

· Monitoring the development of models for loss provisions and capital allocation to operational risk; and

· Analyzing the results of the activities of our internal controls, operational risks and legal compliance units.

Superior Institutional Risk Policies Committee (CSNIR): meets on a quarterly basis and reviews, validates and approves, within the authority level established by the CSRisc, our risks control and capital management institutional policies.

Model Assessment Technical Committee (CTAM): meets on a monthly basis and assesses risk models, based on the opinion of our independent model validation unit. Its main responsibilities include:

· Approving models related to risk and price calculation;

· Approving, suggesting and monitoring the action plans proposed for validated models; and

· Following-up on the performance of such models in the long term, adjusting them or developing new models as necessary.

Decisions by the CTAM are subsequently presented to the CSRisc in order to ensure that our senior management members are also informed about such decisions.

Superior Product Committee (CSP): meets on a weekly basis and is the highest authority to approve our products, operations, services and related processes. Its main responsibilities include:

· Evaluating products, operations, services and processes that are beyond the authority level of the Products Committee, which evaluates our products on an operational level;

· Ensuring our products, operations, services and processes meet the needs of clients and segments (suitability); and

· Evaluating products, operations, services and processes that involve risk to our image.

Superior Foreign Units Committee (CSEXT): meets on a quarterly basis, supervises our businesses abroad and is the highest authority for approving initiatives, transactions, services and processes in the markets where we operate outside Brazil. Its main functions include:

· Ensuring that our business initiatives in our international units comply with Itaú Unibanco Holding’s governance on matters related to accounting, corporate tax, financial and liquidity, risk control, internal control, audit and technology; and

· Making decisions with respect to initiatives, operations, services and processes that are not addressed by local committees or that involve risks to our image in the markets where we operate outside Brazil.

Risk Management

Credit Risk

Credit risk is the possibility of losses due to (i) the failure by the borrower, issuer or counterparty to perform their respective financial obligations under agreed upon terms; (ii) the devaluation of the credit agreement arising from a deterioration of the risk rating of the borrower, issuer or counterparty; (iii) the reduction of earnings or remuneration and (iv) the benefits granted upon renegotiation or the recovery costs.

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Our credit risk management structure aims to maintain the quality of our credit portfolio consistent with risk appetite levels for each market segment in which we operate. Our credit risk management institutional policy is approved by our Board of Directors and applicable to all companies and subsidiaries in Brazil and abroad.

Our credit policy is developed based on internal factors, such as borrower rating criteria, performance and evolution of portfolio, default levels, return rates, and allocated economic capital, and on external factors related to the economic environment, interest rates, market default indicators, inflation and changes in consumption levels.

Our credit risk management governance is conducted through corporate bodies that report to the Board of Directors or to our executive officers and act primarily by assessing competitive market conditions, setting our credit limits, reviewing control practices and policies and approving actions at different authority levels. The risk communication and reporting process, including the disclosure of institutional policies on credit risk management, is also part of this governance structure.

The credit rating for our wholesale transactions is based on information such as the economic and financial conditions of a potential borrower, its cash-generating capabilities, the economic group to which it belongs and the current and prospective situation of the economic sector in which it operates. Credit proposals are analyzed on a case-by-case basis through our internal approval governance structure.

With respect to our retail transactions (individuals, small and middle-market companies), rating is assigned based on two statistical models: application (in the early stages of our relationship with a customer) and behavior (used for customers with whom we already have a relationship). Decisions are made based on scoring under these models and resulting ratings are continuously monitored by our credit risk independent unit. In some cases, an individual analysis of specific cases may be performed, in which case credit approval is submitted to the applicable authority levels.

We seek to strictly control our credit exposure to clients and counterparties, taking action to remediate occasional situations in which our actual exposure exceeds targeted levels. In the cases where our actual exposure exceeds targeted levels, we may seek enforcement of contractual provisions such as the right to demand early payment or require additional guarantees.

Operational Risk

Operational risk is defined as the possibility of losses arising from failure, deficiency or inadequacy of internal processes, people or systems or from external events that affect the achievement of strategic, tactical or operational objectives. It includes legal risk associated with inadequacy or deficiency in contracts signed by us, as well as penalties due to noncompliance with laws and punitive damages to third parties arising from the activities undertaken by us.

Internally, we classify the following as first-level operational risks:

· Internal fraud;

· External fraud;

· Labor demands and deficient security in the workplace;

· Inadequate practices related to clients, products and services;

· Damages to our own physical assets or assets in use;

· Interruption of our activities;

· Failures in information technology systems; and

· Failures in the performance, compliance with deadlines and management of our activities.

In line with CMN regulation, we have an operational risk management governance structure and an institutional policy, which are annually approved by the Board of Directors and are applicable to our local and foreign companies and subsidiaries.

Our operational risk management structure is composed of activities of operational risk control and management, the purpose of which is to support proper identification and assessment of risks and our decision-making process, the creation of value for stockholders and the protection of our assets and image.

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Our operational risk management structure is supported by a governance process that is structured through discussion forums and committees that report to the CSAGRO and CSRisc, which, in turn, report to the Board of Directors, and is based on well-defined roles and responsibilities in order to reinforce the segregation of the business and management and control activities. This structure is intended to ensure independence between our units and, consequently, informed decisions with respect to risks. This independence is reflected in the risk management carried out on a decentralized basis under the responsibility of the business units and in the centralized control carried out by the operational risk and internal control and compliance units.

The purpose of operational risk management is to identify, evaluate, measure and respond to our operational risks and monitor such risks in order to maintain losses and risks within the limits established by the Board of Directors and to ensure compliance with our internal guidelines and with current regulation.

The managers of our business and support units use corporate methodologies that are built and made available by the operational risk and internal control and compliance units to support the management process. Examples of such methodologies currently in use include those for the identification of risks, self-evaluation of risks, approval of processes and products and the monitoring of key risk indicators that are supported by a database of operational losses.

The set of principles, governance, roles and responsibilities, methodologies and procedures that support our operational risk management process applied to products, services, activities, processes and systems is described and published in our operational risk management institutional policy.

The sophistication of the banking business and the evolution of technology have increased the complexity of our risk profiles and affected our operational risk management. As a result, we have established a specific structure for operational risk distinct from those traditionally applied to market and credit risks.

In line with the principles established by the CMN, we established an operational risk management policy, which is composed of a set of principles, procedures and guidelines for the management of products, processes and system´s risks, taking into consideration their respective natures and complexities. The operational risk management policy defines procedures for identifying, assessing, measuring, responding to, monitoring and reporting operational risk, as well as the roles and responsibilities of participants in the process.

Crisis Management and Business Continuity

The purpose of our Business Continuity Program is to protect our employees, ensure the continuity of the critical functions of our business lines, safeguard revenue and sustain both a stable financial market in which we operate and the trust of our clients and strategic partners in providing our services and products.

Our Business Continuity Program is composed of procedures for relocating and/or recovering operations in response to a variety of interruption levels and can be divided into two key elements:

· Crisis Management: centralized communication and response processes to manage business interruption events and any other types of threats to our image and reputation in the eyes of our employees, clients, strategic partners and regulators. The crisis management structure has a command center that constantly monitors daily transactions, as well as media channels in which we are mentioned. Our crisis management is handled by our Focal Agent Network, which is composed of representatives appointed by our business units and that work in the monitoring of potential problems, resolution of crises, continuation of business activities, improvement of processes and search for preventive actions; and

· Business Continuity Plans (PCN): procedures and information developed, consolidated and maintained so they are available for use in possible incidents, allowing the resumption of critical activities in acceptable terms and conditions. For the fast and safe resumption of our operations, our PCNs have established corporate-wide customized actions for our lines of business, including by means of:

- Disaster Recovery Plan: focused on the recovery of our primary data center, ensuring the continuity of the processing of critical systems within minimum pre-established periods;

- Workplace Contingency Plan: employees responsible for carrying out critical business functions have alternative facilities from which to perform their activities in the event the buildings in which they usually work become unavailable. There are approximately 2,000 contingency dedicated seats that are fully equipped to meet the needs of critical business units in emergency situations;

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- Emergency Plan: procedures aimed at minimizing the effects of emergency situations that may impact our facilities, with a preventive focus; and

- Processes Contingency Plan: alternatives for carrying out the critical processes identified in each of our business units.

In order to keep continuity solutions aligned with applicable requirements with respect to processes, minimum resources and legal requirements, among others, the Business Continuity Program applies the following tools to analyze our organization:

· Business Impact Analysis (BIA): evaluates how critical it is to resume processes that support the delivery of products and services. Through this analysis, we define priorities for resuming activities;

· Risk Assessment (RA): evaluates the processes and the effectiveness of the controls in place to mitigate the inherent risks of interruption as well as to implement actions to respond to business interruptions;

· Threats and Vulnerabilities Analysis (AVA): identification of threats inherent to the locations where we run our processes. The efficiency of our controls is evaluated against potential threats in order to identify vulnerabilities so that controls may be adjusted or implemented to enhance the resilience level of our critical facilities.

Please refer to https://www.itau.com.br/_arquivosestaticos/RI/pdf/en/Corporate_Business_Continuity_Policy.pdf, for further details about our Corporate Business Continuity Policy.

Liquidity Risk

Liquidity risk is defined as the likelihood that an institution will not be able to effectively honor its expected and unexpected current and future obligations, including those from guarantee commitments, without affecting its daily operations and not incurring significant losses.

Our liquidity risk control is carried out by our risk unit that is independent of our business units and is responsible for determining the composition of our reserves, proposing assumptions for the performance of cash flows in different timeframes, proposing liquidity risk limits in accordance with the independent unit’s risk appetite, communicating any mismatches in our cash flow (between input and output) evaluating liquidity risk on an individual basis in the countries where we operate, simulating the behavior of cash flows in stress conditions, assessing and reporting in advance the risks inherent to new products and operations and reporting the information required by the regulatory agencies. All activities are subject to assessment by our independent validation, internal controls and audit units.

Our main sources of funds are interest-bearing deposits, deposits received under securities repurchase agreements, debt in the interbank market and debt in the institutional market.

Due to our stable sources of funds, which include a broad base of deposits and a large number of foreign banks with which we have long standing relationships, as well as credit lines available through which we have access to more funds, historically we have not made drawings under such credit lines.

We are investing in the improvement of our liquidity risk management structure. We always maintain a highly-liquid portfolio of marketable securities (operational reserve) available, which represents our main source of liquidity. Our operational liquidity reserve, which is the total amount of the assets that may be promptly converted into cash based on market practices and legal regulations, includes, in general: cash and deposits on demand, funded positions of securities purchased under agreements to resell to our clients and unencumbered government securities.

According to Brazilian legislation, dividends in kind may only be paid if the parent company that distributes such dividends has accounted for profit in its financial statements. Additionally, subsidiaries that are financial institutions are prohibited from lending us money but they can make deposits with us by means of Interbank Deposit Certificates (CDIs). These restrictions did not have and are not expected to have a relevant impact on our ability to meet our cash obligations.

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Social and Environmental Risk

In managing our business, we continuously take into consideration the risk of potential losses due to exposure to social and environmental events arising, directly or indirectly, from the performance of our activities. These events may arise from (i) our direct operations which may have an impact on the environment or human health, or (ii) actions of borrowers, issuers and counterparties that, somehow, generate losses to us.

Our management of social and environmental risks follows the stages of assessment, management, organizational training and participation of stakeholders. This process permeates all of our management levels and is structured by specific governance structures and policies that formalize the mechanisms for the management of social and environmental risk, in addition to strengthening our sustainability agenda in our decision-making process.

The Social and Environmental Risk Committee is a permanent non-statutory management body whose purpose is to establish our governance structure and policies for social and environmental risk issues for us.

Please refer to https://www.itau.com.br/_arquivosestaticos/RI/pdf/en/SOCIAL_ENVIRONMENTAL_RISK_POLICY.pdf, for further details about our Social and Environmental Risk Policy.

In order to avoid losses and also meet the interests of stakeholders, we have been developing internal processes aimed at the management, control and mitigation of events that may lead to our exposure to social and environmental risks, and at the maintenance of a transparent management. These include, for example, the incorporation of social and environmental variables in the processes of credit assignment, contracting of suppliers, insurance underwriting and acquisition of real estate properties for our own use, which are formalized in our social and environmental risk policies.

Insurance Risk, Pension Plan and Capitalization Products Risk

The portfolio of our insurance companies is comprised of life, large risk and extended warranty insurance, as well as pension plans and capitalization products. Insurance risk relates to underwriting risk, market risk, counterparty credit risk, and longevity risk, among others, with respect to such products.

With respect to insurance:

· Underwriting risk is the possibility of losses arising from insurance products, pension plans and capitalization products that go against our expectations and that are directly or indirectly associated with technical and actuarial bases used for calculating premiums, contributions and technical provisions.

· Market risk is the possibility of losses resulting from fluctuations in market value of assets and liabilities that comprise technical actuarial reserves.

· Counterparty credit risk is the possibility of a counterparty failing to perform its obligations in connection with settlement of transactions involving trading of financial assets or reinsurance.

· Longevity risk is the possibility that pension plans must pay benefits and annuities for longer than originally expected;

· Liquidity risk in insurance operations is the possibility that the institution may not be able to efficiently and timely honor its obligations to policyholders and beneficiaries of pension funds due to a lack of liquidity of the assets comprising the actuarial technical reserves.

In line with national and international recommended practices and in order to ensure that risks arising from insurance products, pension plans and capitalization products are properly identified, measured, assessed, reported and approved within our relevant groups, we have a risk management framework, whose guidelines are established pursuant to our internal policies, approved by our Board of Directors and applicable to companies and subsidiaries subject to those risks, in Brazil and abroad.

Our risk management process for insurance products, pension plans and capitalization products is based on responsibilities defined and distributed between our control and business units, promoting independence between them.

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The main responsibilities of our insurance risk control unit include:

· Setting governance principles and establishing institutional policies for risk management of insurance products, pension plans and capitalization products;

· Assisting insurers in the development of new products from a risk perspective;

· Assisting insurers in the development and implementation of pricing methodologies and risk models; and

· Controlling, monitoring and reporting, on a consolidated basis, risks arising from our insurance products, pension plans and capitalization products to the applicable regulatory authorities.

Our risk management framework is structured to allow the Superior Committees to participate in decisions that may involve certain levels of risks related to our insurance business, according to the thresholds and guidelines established in our policies.

Capital Management

The Board of Directors is our highest authority in capital management and is responsible for monitoring capital adequacy, approving the Internal Capital Adequacy Assessment Process (ICAAP) report and analyzing the results of the independent validation of ICAAP’s models and processes, performed by our internal controls and model validation teams, as well as approving our institutional capital management policy.

ICAAP is a process that aims to evaluate our capital adequacy level given our risk profile, our strategic guidelines and the economic environment. In order to independently validate the effectiveness of ICAAP’s processes and models, our internal controls team is responsible for evaluating our governance framework, processes, policies and activities of monitoring and reporting. Our team responsible for the technical validation of models analyzes the documentation, data, methodology, performance and the use of the models involved.

At the executive level, the CSRisc is responsible for approving risk assessment and capital calculation methodologies, as well as reviewing, monitoring and recommending capital-related documents and topics to the Board of Directors. Supporting our governance framework, we have a structure that is dedicated to managing our capital, coordinating and consolidating information and related processes, all subject to our independent validation, performed by our internal control and audit departments.

In the capital management context, we prepare a capital plan consistent with our strategic planning and designed to maintain an adequate and sustainable capital level, taking into account analyses of the economic, competitive and political environment, in addition to other external factors.

Our capital plan comprises the following:

· Our short and long-term capital goals and projections, under normal and stress scenarios, according to the Board of Directors’ guidelines;

· Description of our main sources of capital;

· Our contingency capital plan, identifying actions to be taken in the event of a potential capital deficiency.

Some of the factors taken into account in the preparation of our capital plan are:

· Analysis of the threats and opportunities related to the economic and business environment;

· Balance sheets and income statement projections;

· Targets for growth and/or market share;

· Segments targeted by us and products targeted by each segment;

· Profit sharing policies and their impacts on capital.

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As part of our capital planning, extreme market conditions are simulated, emulating serious events, in order to identify potential capital restrictions. The stress scenarios are approved by the Board of Directors, and their impacts on capital are considered when devising our strategy and positioning of our businesses and capital.

Complementing the calculation of capital to cover the risks of Pillar 1 (credit risk, market risk and operational risk), we have been developing mechanisms to identify and analyze the materiality of other risks assumed by us, in addition to methodologies for assessing and quantifying the need for additional capital to cover such risks.

In order to provide the necessary information for our executives and Board of Directors to make decisions, managerial reports are prepared and presented at committee meetings, where committee members are informed about our capital adequacy, as well as about the projections of future capital levels in normal and stress situations.

Please refer to 7.5 (a) for further details about the implementation of Basel III in Brazil.

Capital Composition

Pursuant to CMN regulations, our regulatory capital (Patrimônio de Referência or “PR”), used to monitor our compliance with the capital requirements imposed by the Central Bank, is the sum of Tier I Capital and Tier II Capital, according to which:

· Tier I Capital: comprises the Common Equity Tier I Capital (based on share capital, certain reserves and retained earnings, net from deductions and regulatory adjustments (ajustes prudenciais)), as well the Additional Tier I Capital (comprised of equity and debt instruments (hybrid capital instruments));

· Tier II Capital: comprises eligible instruments, primarily subordinated debt, subject to regulatory adjustments.

According to Central Bank regulations,which came into effect in October 2013, we must calculate our regulatory capital based on the consolidation of all our financial subsidiaries regulated by the Central Bank, including branches and foreign investments (the so called “financial conglomerate level”).

In accordance with CMN regulation, we must maintain our PR, Tier I Capital and Common Equity Tier I Capital above the minimum regulatory requirements established at all times. The risk-weighted assets (RWA) used for assessing these minimum regulatory requirements can be determined by adding the following portions:

· RWA_CPAD = portion relating to exposures to credit risk;

· RWA_CAM = portion relating to exposures in gold, foreign exchange rate and assets subject to foreign exchange rate variations;

· RWA_JUR = portion relating to exposures subject to variations of interest rates, interest coupons and coupon rates and classified in the Trading Portfolio;

· RWA_COM = portion relating to exposures subject to variations in commodity prices;

· RWA_ACS = portion relating to exposures subject to variations in equities prices and classified in the Trading Portfolio;

· RWA_OPAD = portion relating to the calculation of operational risk capital requirements.

Capital Adequacy

Our minimum regulatory capital required (Patrimônio de Referência Exigido or “PRE”) is the capital required from financial institutions to cover risk exposures inherent to their activities. To calculate the PRE, based on the RWA, a factor of 11% is applied to the total amount of RWA, in accordance with current regulation.

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Through our Internal Capital Adequacy Assessment Process (ICAAP), we ensure the sufficiency of our capital to cover credit, market and operational risks, which are represented by our minimum regulatory capital required and to cover other risks we consider material.

In order to ensure our capital strength and availability of capital to support business growth, we maintain regulatory capital levels above the minimum regulatory capital required levels, based on the BIS ratio (as defined below) and on the Common Equity Tier I, Additional Tier I Capital and Tier II Capital ratios (calculated by dividing Common Equity Tier I, Additional Tier I Capital and Tier II Capital by the total risk weighted assets).

Since October, 2013, the so called “economic-financial consolidated level” (which took into consideration all companies owned by us, regardless of whether they were regulated by the Central Bank) ceased to be the basis for determining compliance with capital requirements. Pursuant to the former rules, our regulatory capital (PR) at the economic-financial consolidated level on December 31, 2013, would have been R$118,512 million and our minimum regulatory capital (PRE), R$81,693 million.

On December 31, 2013, our regulatory capital at the financial conglomerate level reached R$125,144 million, an increase of R$5,198 million when compared to December 31, 2012, mainly due to the increase of our Tier I Capital.

	(in millions of R$)								%
Capital Composition	December		December			December
(financial conglomerate)	31, 2013		31, 2012			31, 2011			2013 - 2012			2012 - 2011
Tier I Capital		87,409		79,711			71,052			9.7			12.2
Common Equity Tier I		87,409		-			-			-			-
Additional Capital		-		-			-			-			-
Tier II Capital		37,734		40,654			21,564			(7.2	)		88.5
Exclusions (funding instruments issued by financial institutions)		-		(420	)		(55	)		-			662.8
Regulatory Capital (PR)		125,144		119,945			92,561			4.3			29.6
Minimum Regulatory Capital Required (PRE)		83,099		72,798			63,728			14.2			14.2
Excess Capital in relation to Minimum Regulatory Capital Required (PRE)		42,045		47,148			28,833			(10.8	)		63.5
Risk weighted assets (RWA)		755,441		661,797			579,338			14.1			14.2

Our BIS ratio (calculated as the ratio between regulatory capital (PR) and the total amount of risk-weighted assets) at the financial conglomerate level reached 16.6%, on December 31, 2013, a decrease compared to December 31, 2012, mainly explained by the application of Central Bank’s new capital requirement assessment rules (i.e. credit valuation adjustment for derivatives and credits to release) and changes to some of the weighting factors of our credit risk exposure. Our BIS ratio on December 31, 2013 consisted of 11.6% of Common Equity Tier I and 5% of Tier II Capital.

Please refer to item 7.5 (a) - Implementation of Basel III in Brazil, for further details about minimum capital ratios.

	(%)
Capital Ratios	December		December		December
(financial conglomerate)	31, 2013		31, 2012		31, 2011
BIS ratio		16,6		18,1		16,0
Tier I Capital		11,6		12,0		12,3
Common Equity Tier I		11,6		-
Additional Capital		-
Tier II Capital		5,0		6,1		3,7

Recent Central Bank regulations changed the procedures for calculating the RWA_CAM (portion relating to the risk of gold, foreign exchange rate and assets subject to foreign exchange rate variations).

Until December 31, 2013, in the event our exposure to gold, foreign exchange rate and assets subject to foreign exchange rate variations considered in the calculation of the RWA_CAM was equal to or below 2% of the PR, the RWA_CAM value would be equal to zero. If the recently enacted Central Bank rules (expected to be effective in 2014) were in effect in 2013, the BIS ratio would have been reduced by approximately 0.2%.

Please refer to section Our Risk Management, item 5.1

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g) The adequacy of operating structure and internal controls to verify the effectiveness of the policy adopted

The adherence of the Market Risk Control Units and management to the policies and strategies defined by the Superior Committees of the institution are periodically checked by the Internal Controls Area, subordinated to the Risk Controls Area (“ACR”).

The Internal Controls Area is responsible for the periodic quality evaluation of internal controls and the adherence of the processes to the guidelines issued by senior management.

The internal control methodology is based on the following phases:

1) Mapping of processes, ensuring that they:

• Enable an understanding of the process

• Include details of critical controls and activities

• Are up to date.

2) Development of the Risk and Control Matrix, addressing:

• The major risks of each phase

• Controls considered adequate to mitigate risks, including monitoring compliance with the defined rules and policies.

3) Analysis and conducting of tests, considering whether:

• The established tests are adequate to evaluate the effectiveness of controls

• The documentation on the testing procedure is clear and sufficiently detailed to enable the tests to be repeated

• The results of the tests effectively indicate the adequacy/inadequacy of the related control.

4) Reporting control deficiencies to the management of the related business area, for the development of action plans.

5) Monitoring the implementation of action plans for the correction of the identified control deficiencies.

5.3. State whether, in the previous year, there were significant changes in the main market risks to which the issuer is exposed or in the risk management policies adopted

For the continuous improvement of market risk management, throughout 2013, Itaú Unibanco has improved its methodology to calculate the VaR for the Trading Portfolio, migrating from the Parametric approach to “Historical Simulation.” This approach uses four years of market historical data, revaluates every position (full re-pricing), considering both the one-day and the 10-day maintenance periods; additionally, it reports the risk in a many levels of confidence, including the usual confidence level of 99%. This method is widely known for improving the evaluation of risk factors for non-linear positions and for efficiently capturing base risks and tail events. The institution calculates and follows the VaR metrics in simple unweighted returns and also considers weight for volatility. From January 2014, the reported values are the maximum daily measurement between the two methodologies.

The improvement of VaR’s calculation will be extended, during 2014, beyond the Trading Portfolio to include all important portfolios that are subject to market risks.

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5.4. Supply any other information that the issuer may deem relevant

The Issuer’s market risk management process is subject to the governance and hierarchy of Committees, and limits are specifically approved for risk management support, from aggregated risk indicators (at portfolio level) to granulated limits (at individual desk level) ensuring the effectiveness and coverage of controls. These limits are calibrated based on evaluations of projected results in balance sheets, the amount of stockholders’ equity and the risk profile of each entity, and are defined in terms of risk measurements used in the risk management process. These limits are monitored and controlled on a daily basis and results in excess of these limits are reported and discussed by the competent Committees. Risk reports, issued daily to the CEO, CRO and risk managers, are prompt, complete, accurate and, most importantly, used.

For more information on risk management, see the Investor Relations site at (www.itau.com.br/investor-relations) under the heading: Corporate Governance >> Risk Management - Pillar 3.

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ITEM 6 –ISSUER’S HISTORY 

6.1 / 6.2 / 6.3 – Issuer’s incorporation, term of duration and date of registration with CVM

Date of Issuer’s incorporation:	09.09.1943
Type of business organization:	Corporation
Country of incorporation:	Brazil
Term of duration:	Undetermined
Date of registration with CVM:	12.30.2002

6.3. Outline in brief of the history of the issuer

General

Our legal name is Itaú Unibanco Holding S.A. We were incorporated on September 9, 1943. We are organized as a publicly held corporation for an unlimited period of time under the laws of Brazil. Our head offices are located at Praça Alfredo Egydio de Souza Aranha, 100, 04344-902, São Paulo, SP, Brazil and our telephone number is +55-11-2794-3547. Our CNPJ/MF No. 60.872.504/0001-23 is registered at the Board of Trade of the State of São Paulo under NIRE No. 35300010230..Our social purpose, as established by Article 2 of our Articles of Incorporation is to undertake the banking activity in all authorized forms, including money exchange.

Our History

1924

Unibanco

· Operating Authorization of Casa Moreira Salles

1944

Itaú

· Establishment of Banco Central de Crédito S.A..

1945

Itaú

· Banco Central de Crédito S.A. started its operations

1940s to 1960s

Unibanco

· Mergers of Casa Bancária Moreira Salles, Banco Machadense and Casa Bancária de Botelhos originating Banco Moreira Salles, subsequently União de Bancos Brasileiros S.A.

· Opening of the first branch in Rio de Janeiro, the capital of the country at that time.

· Large investment in professional qualification and technology.

· Organization of BIB – Banco de Investimentos do Brasil.

· Expansion of operations, then with the largest network of branches in Brazil.

Itaú

· Opening of the first branch.

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· Change of corporate name to Banco Federal de Crédito S.A., later Banco Federal Itaú and, subsequently, Federal Itaú Sul Americano S.A., after mergers with other Brazilian banks.

· Major investment in technology.

· Implementation of the “Development Plan,” increasing the number of branches and conducting campaigns to increase deposits.

· Merger of Itaú América after the takeover of Banco da América.

1970s to 1990s

Unibanco

· Adherence to the multiservice bank system, commencement of operations of the Commercial Bank, Investment, Consumer Credit and Mortgage Loan portfolios.

· Investment in training and automation of services.

· Segmentation of clients and services and improvement of customer service.

· Assumed leadership in the credit financing market.

· Expansion of activities in the insurance industry.

· Acquisitions of other financial institutions, such as Banco Nacional, making Unibanco one of the three largest financial institutions in Brazil.

Itaú

· Takeover of Banco Aliança, a milestone for expansion in the Northeast region.

· Establishment as a multiservice bank.

· Takeovers of domestic banks, such as Banco União Comercial, making Itaú the second largest private bank in Brazil.

· Strengthening the brand and increasing competitiveness.

· Service automation, pursuant to the concept of "electronic bank."

· Expansion in the number of branches, which had a new design concept.

· Acquisition of Banco Francês e Brasileiro S.A., predecessor to Itaú Personnalité.

· Acquisition of state banks Banerj and Bemge.

2000s to 2010s

Unibanco

· Takeover of Banco Bandeirantes and Credibanco, when the Unibanco was ranked among the five largest banks in Latin America and the third largest private bank in Brazil.

· Creation of a new image of Unibanco, called “Unibanco’s Way”: a simple, straightforward, positive, good-humored and transparent bank.

Itaú

· Acquisition of the state banks Banestado and Beg, of Banco Fiat and of the Brazilian operations of Bank Boston, which increased Itaú’s presence in the high-income segment, and of BBA Creditanstalt, predecessor to Itaú BBA, the largest wholesale bank in Brazil.

2008

· Itaú and Unibanco merger, announced on November 3.

2009

· Association with Porto Seguro on August 24.

2012

· Association with Banco BMG for payroll loan transactions.

· Acquisition of total outstanding shares of Redecard.

2013

· Acquisition of Credicard on May 14.

Since the establishment of the first branch in Minas Gerais, Brazil, where the oldest institutions that make up the conglomerate were established, until the association between Itaú Holding Financeira and Unibanco - União de Bancos Brasileiros carried out in 2008, nine decades of growth and development led us to today's most valuable brand position in the Brazilian market and largest financial institution in Latin America in terms of market capitalization.

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This association gave rise to the largest Brazilian private bank and one of the 30 largest banks worldwide in market value as of January 31, 2014.  Itaú, operating since 1945 in the capital city of the State of São Paulo, and Unibanco, organized in 1924 in the city of Poços de Caldas, State of Minas Gerais, developed similar and supplementary characteristics over time.  Mergers, acquisitions and takeovers characterized their growth.

Both Itaú and Unibanco were able to anticipate market challenges, consolidating their businesses during Brazilian economic crises and expanding operations in growth periods.  They were pioneers in the use of technology to process banking business and client services and made major investments in automation and support through modern operating centers.

We have been expanding our business since the association through actions such as the acquisitions of Credicard in 2013 and the total outstanding shares of Redecard in 2012.  As of December 31, 2013, our total assets exceeded R$1.0 trillion and we had a market capitalization of R$157.0 billion.

As supporters of art, culture and social and environmental responsibility, we have provided our companies with autonomous and effective structures to spread knowledge and practices that promote sustainability. As evidence of this, we are the only Latin American bank that forms part of the Dow Jones Sustainability Index for 14 consecutive years.

6.5. Describe the main corporate events, such as takeovers, mergers, spin-offs, acquisition of shares, disposals and acquisitions of shareholding control, acquisitions and disposals of important assets, which the issuer or any of its subsidiaries or affiliated companies have carried out, indicating:

For the purposes of this item, we used as relevance criteria transactions involving amounts higher than R$500 million or which were subject to the disclosure of a material fact during the past three years.

2014

CorpBanca

Event

Operational union of Banco Itaú Chile with CorpBanca in Chile and Colombia.

Main conditions of the transaction

On January 29, 2014, Itaú Unibanco Holding S.A. (Itaú Unibanco Holding) and its subsidiary, Banco Itaú Chile (“BIC”), entered into an agreement with CorpBanca and its controlling shareholders (“Corp Group”), establishing the terms and conditions of the operational union between BIC and CorpBanca in Chile, Colombia and other countries where CorpBanca operates. This union will be formed by way of (i) BIC’s capital increase in the amount of US$652 million, carried out by Itaú Unibanco Holding or one subsidiary, (ii) merger of BIC by CorpBanca; CorpBanca will cancel BIC’s shares and issue new shares, in the estimated proportion of 85,420.07 CorpBanca’s shares for each BIC’s shares, so that the interests in the bank resulting from the merger (that will be called “Itaú CorpBanca”) are 33.58%, for Itaú Unibanco Holding, and 32.92%, for Corp Group, and (iii) subsequent integration of Itaú BBA Colômbia, S.A. into the operations of Itaú CorpBanca or its subsidiaries.The completion of this operation is subject to the compliance of certain prior conditions, including the approval by CorpBanca’s stockholders’ meeting and the proper regulatory authorities.When the BIC’s merger by CorpBanca is completed, Itaú Unibanco Holding and Corp Group will enter into a shareholder agreement with the provisions regarding the election of the administration board, the matters subject to the joint approval of Itaú Unibanco Holding and Corp Group, as well as the transfers of shares between Itaú Unibanco Holding and CorpBanca and also for third parties.

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Companies involved	Itaú Unibanco Holding S.A.; Banco Itaú Chile, Inversiones Corp Group Interhold Limitada, Inversiones Gasa Limitada, and CorpBanca.
Effects arising from the transaction on the corporate structure, particularly on the ownership interest of the issuer’s parent company, shareholders with more than 5% of the capital, and management members	There was no change in the Issuer’s corporate structure.
Corporate structure before and after the transaction	Itaú Unibanco Holding S.A.´s estimated interest in Itaú CorpBanca will be of 33.58% of the total shares. This estimated percentage will result from the share exchange ratio applied to BIC and CorpBanca’s shares, when the operation is completed, which is subjected to prior authorization of CorpBanca’s stockholders’ meeting and the proper regulatory authorities.

Itaú BBA

Event	Partial Spin-Off of Banco Itaú BBA S.A. (Itaú BBA).
Main conditions of transaction	On January 31, 2014, the Stockholders’ Meetings of Itaú BBA and Itaú Unibanco S.A. (Itaú Unibanco) approved the partial spin-off of Itaú BBA and the transfer of a portion of the equity to Itaú Unibanco. With the partial spin-off, Itaú BBA’s institutional treasury and corporate banking activities, including its securities and loan portfolios and all other assets and liabilities related to such activities, were transferred to Itaú Unibanco. Itaú BBA will retain its investment banking and cash management activities. This internal corporate restructuring process is not expected to result in any material change to the ordinary course of our business, including our internal governance, our brands and the management models of the affected business units. The main motivation for the corporate restructuring process was the optimization of the capital structure of Itaú Unibanco, due to the new Basel III rules, and the intention to concentrate all financial intermediation activities of the Itaú Unibanco Group in Itaú Unibanco. This transaction was approved by the Central Bank on May 02, 2014 and by the Central Bank of the Bahamas on May 12, 2014.
Companies involved	Banco Itaú BBA S.A and Itaú Unibanco S.A.
Effects arising from the transaction on the corporate structure, particularly on the ownership interest of the Issuer’s parent company, shareholders with more than 5% of the capital, and management members	No change in the Issuer’s corporate structure.
Corporate structure before and after the transaction	No change in the Issuer’s corporate structure.

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2013

Credicard

Event	Acquisition of Shares and Quotas of Credicard and Citifinancial.
Main conditions of transaction	On May14, 2013, Itaú Unibanco S.A. (“Itaú Unibanco”), Banco Citibank S.A. and its affiliated company Corinth HoldCo LLC (Banco Citibank S.A. and Corinth HoldCo LLC, “Citibank”) signed a purchase and sale agreement for the acquisition of 100% shares issued by Banco Citicard S.A. and 100% of quotas of Citifinancial Promotora de Negócios e Cobrança Ltda. for the approximate amount of R$2,8 million. Responsible for the offer and distribution of financial services and products, mainly personal loans and credit cards, Credicard and Citifinancial have a base of 4.8 million credit cards and a consumer credit portfolio of R$7.3 billion (gross amount in December 2012). The transaction was completed on December 20, 2013.
Companies involved	Itaú Unibanco S.A.; Corinth HoldCo LLC and Banco Citibank S.A.
Effects arising from the transaction on the corporate structure, particularly on the ownership interest of the issuer’s parent company, shareholders with more than 5% of the capital, and management members	No change in the Issuer’s corporate structure.
Corporate structure before and after the transaction	Itaú Unibanco Holding, through its subsidiaries, will hold 100% of shares of Banco Citicard S.A. and Citifinancial Promotora de Negócios e Cobrança Ltda.

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2012

Redecard 

Event	Tender Offer for the Acquisition of Redecard Shares
Main conditions of transaction	On February 7, 2012, Itaú Unibanco Holding announced its intention to acquire, directly or through its subsidiaries, all of the outstanding shares of Redecard S.A. (“Redecard”), through a public tender offer (the “Tender Offer”) aimed at cancelling Redecard’s authorization as a publicly-held company registered with the CVM. The Tender Offer targeted the acquisition of common shares of Redecard corresponding to approximately 50% of the total capital stock. On April 12, 2012, Itaú Unibanco Holding confirmed that the price to be paid in cash would be R$35.00 per share (the “Tender Offer Price”). The Tender Offer was successfully completed on September 24, 2012. As a result of the auction, Itaú Unibanco Holding acquired, through its subsidiary Banestado Participações, Administração e Serviços Ltda. (“Banestado”), 298,989,137 common shares of Redecard, representing 44.4% of Redecard’s share capital, bringing the total amount of common shares owned by us to 94.4% of Redecard’s total capital stock. On October 18, 2012, Redecard´s registration as a publicly held company was cancelled. In December 2012, the Issuer started to hold, through its affiliates, 100.0% of Redecard shares. The shares were purchased at the Tender Offer Price for a total amount of R$11,752 million (including the Tender Offer). The difference between the amount paid and the amount corresponding to the minority interest was directly recognized in the Consolidated Stockholders’ Equity under revenue reserve amounting to R$11,151 million restated up to December 31, 2012, which net of taxes totaled R$7,360 million. For further information, see explanatory Note 2-c of the Financial Statements.
Companies involved	Redecard S.A., Banestado Participações, Administração e Serviços Ltda. and Dibens Leasing S.A. - Arrendamento Mercantil.
Effects arising from the transaction on the corporate structure, particularly on the ownership interest of the issuer’s parent company, shareholders with more than 5% of the capital, and management members	No change in the Issuer’s corporate structure.
Corporate structure before and after the transaction	In December 2012, Itaú Unibanco Holding started to hold, through its affiliates, 100.0% of Redecard shares.

Serasa 

Event	Sale of shares issued by SERASA
Main conditions of the transaction	On October 22, 2012, Itaú Unibanco Holding, through BIU Participações S.A., entered into a stock purchase agreement with Experian Brasil Ltda., under which it undertook to sell its equity stake, corresponding to 601,403 common shares, in Serasa S.A., a credit bureau. The income before tax from this sale was R$1,542 million in the fourth quarter of 2012. The transaction was closed on November 23, 2012.
Companies involved	BIU Participações S.A., Itaú Unibanco S.A., Experian Brasil Ltda. and other financial institutions that held and also sold their equity stake in Serasa S.A..
Effects arising from the transaction on the corporate structure, particularly on the ownership interest of the issuer’s parent company, shareholders with more than 5% of the capital, and management members	No change in the Issuer’s corporate structure.
Corporate structure before and after the transaction	The Issuer no longer holds any interest in the capital of Serasa S.A.

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BMG  

Event

Association with Banco BMG S.A. (“BMG”) aiming at the offering, distribution and sale of payroll loans in Brazil.

Main conditions of the transaction

On July 09, 2012, Itaú Unibanco S.A. entered into an association agreement with Banco BMG S.A., a privately-held Brazilian bank, aiming at the offering, distribution and sale of payroll loans in Brazil (the “BMG Association”). The BMG Association is structured as a new financial institution, Banco Itaú BMG Consignado S.A. (the “Association”), controlled by Itaú Unibanco S.A., which holds, directly, 70% of the shares issued by the Association. Banco BMG S.A. holds the remaining 30% stake in the Association. The initial capital stock of the Association is R$1 billion. Itaú Unibanco S.A. has the right to nominate the majority of the Board of Directors of the JV and the majority of the officers of the Association, including the Chief Executive Officer. BMG has the right to appoint commercial, operations and collections officers of the Association, subject to Itaú Unibanco S.A.’s approval. BMG shares its distribution channels with the Association, which has the right to grant 70% of the payroll loans generated by these distribution channels. The remaining 30% of these loans are granted directly by BMG. The payroll loans granted to Itaú Unibanco S.A.’s clients through Itaú Unibanco S.A.’s branches and other exclusive Itaú Unibanco S.A. channels remain separate from the operations of the Association. In addition, Itaú Unibanco S.A. will provide funding for BMG’s payroll loan transactions of up to R$300 million per month, for a five year term. Itaú Unibanco S.A. and its affiliates have the right to offer their products and services to the Association’s clients. This transaction was approved by the Brazilian Antitrust Authority (CADE) and the definitive agreements regulating the BMG Association were entered into on December 13, 2012, including an investment agreement setting forth the rights and obligations of each party with respect to the Association and an agreement for the concession of funds through the assignment of credit rights, which stipulates Itaú Unibanco S.A.’s obligation to grant funding to BMG. The closing of this transaction took place on January 7, 2013. In April, 2013, the Central Bank of Brazil approved the operation. Additionally, Itaú Unibanco S.A. entered into, on April 29, 2014, a business combination agreement with BMG (“Agreement”) that establishes the combination of the payroll loan activities of BMG and the Association, which will now be concentrated in the Association. In consideration for this combination, the ownership interest of BMG total and voting capital of the Association will be increased. The possibility of this combination was already provided for in the final contracts that regulate the BMG Association, which were signed on December 13, 2012. The capital increase of the Association is subject to satisfaction of certain conditions precedent, including the approval of the proper regulatory authorities. After this capital increase, Itaú Unibanco S.A. will be the holder of a sixty percent (60%) interest in the total and voting capital of the Association and BMG will be the holder of the remaining forty percent (40%). After the completion of the capital increase operation and during the term of the BMG Association, the Association will be the exclusive vehicle of BMG for the offer, in the Brazilian territory, of payroll loans, provided that some exceptions are observed, for a maximum period of six (06) months after the date of the capital increase.

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Companies involved	Banco BMG S.A. and Itaú Unibanco S.A.
Effects arising from the transaction on the corporate structure, particularly on the ownership interest of the issuer’s parent company, shareholders with more than 5% of the capital, and management members	No change in the Issuer’s corporate structure.
Corporate structure before and after the transaction	Itaú Unibanco S.A. will become the holder of 60% of the total and voting capital of the Association.

BPI 

Event	Sale of shares issued by Banco BPI, S.A.
Main conditions of the transaction	On April 20, 2012, Itaú Unibanco Holding, through its subsidiary IPI - Itaúsa Portugal Investimentos, SGPS, Lda. entered into an agreement for the transfer of its 18.87% interest in the capital stock of Banco BPI, S.A. to Caixabank, S.A. (“La Caixa”), a company of the La Caixa Group. This transaction was approved by the Central Bank of Portugal on April 30, 2012 and its completion occurred on May 3, 2012, when La Caixa paid to Itaú Unibanco Holding consideration of approximately €93 million for the acquisition. The transaction produced a positive effect on the consolidated stockholders’ equity amounting to approximately R$106 million, and a negative non-recurring effect of approximately R$205 million on the net income. These effects were recorded in the second quarter of 2012.
Companies involved	IPI - Itaúsa Portugal Investimentos - SGPS, Lda., Banco BPI, S.A. and CaixaBank, S.A.
Effects arising from the transaction on the corporate structure, particularly on the ownership interest of the issuer’s parent company, shareholders with more than 5% of the capital, and management members	No change in the Issuer’s corporate structure.
Corporate structure before and after the transaction	After the sale of 18.87% of the shares issued by Banco BPI S.A., the Issuer no longer holds, direct or indirectly, any interest in the capital stock of Banco BPI, S.A.

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2011 

Event	Purchase of 49% of the shares issued by BSF Holding S.A., the parent company of Banco CSF S.A. (“Banco Carrefour”).
Main conditions of the transaction	On April 14, 2011, Itaú Unibanco S.A., a subsidiary of Itaú Unibanco Holding, entered into a Share Purchase and Sale Agreement for the acquisition of 49% of Banco CSF S.A. (“Banco Carrefour”) for R$725 million. Banco Carrefour is an entity responsible for the offering and distribution, on an exclusive basis, of financial products, insurance and pension plan services in Carrefour Comércio e Indústria Ltda.’s distribution channels operated under the “Carrefour” brand in Brazil. The transaction was approved by the Central Bank of Brazil on April 23, 2012 and was completed on May 31, 2012.
Companies involved	Carrefour Comércio e Indústria Ltda., Banco CSF S.A., Carrefour Promotora de Vendas e Participações Ltda., BSF Holding S.A. and Itaú Unibanco S.A.
Effects arising from the transaction on the corporate structure, particularly on the ownership interest of the issuer’s parent company, shareholders with more than 5% of the capital, and management members	No change in the Issuer’s corporate structure.
Corporate structure before and after the transaction	After the purchase of the 49% shares issued by BSF Holding S.A., Itaú Unibanco S.A. became the indirect holder of 49% of the total and voting capital of Banco Carrefour.

6.6. Indicate whether there has been any petition for bankruptcy, provided that it was based on a significant amount, or for judicial or extrajudicial recovery from the issuer, and the current status of such petitions:

None.

6.7. Other relevant information

On August 19, 2013, Itaú Unibanco Holding S.A. through its subsidiary, Itaú Unibanco S.A. renewed for another 10 years, the commercial cooperation agreement it has with Fiat Group Automobiles S.p.A. and Fiat Automóveis S.A. The agreement provides for (i) exclusivity in the offering of financing in promotional campaigns of Fiat for the sale of new cars and (ii) the exclusive use of the Fiat brand in activities related to vehicle financing.

On June 28, 2013, Itaú Unibanco Holding S.A., through its subsidiary, Banco Itaú Uruguay S.A., entered into an agreement with Citibank N.A., Sucursal Uruguay, under which it undertook to acquire retail business in Uruguay, involving a portfolio of over 15,000 clients in current accounts, savings accounts, and deposits. This transaction was completed on December 13, 2013, with the approval of the applicable regulatory authorities.

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On June 25, 2013, Banco Itaú BMG Consignado S.A. (“Itaú BMG Consignado”), an entity indirectly controlled by Itaú Unibanco Holding S.A., entered into a Share Purchase Agreement with the controlling shareholders of Banco BMG S.A. (“Banco BMG”) whereby Itaú BMG Consignado agreed to acquire, 99.996% of the shares issued by BMG Seguradora S.A. (“BMG Seguradora”) for a purchase price of approximately R$85 million. BMG Seguradora will execute exclusivity agreements with Banco BMG S.A. and Itaú BMG Consignado for the purpose of distributing insurance products to be offered jointly with the products distributed by such financial institutions before this operation was completed on January 7, 2014. This transaction is subject to the approval of SUSEP.

On June 17, 2013, Itaú Unibanco Holding S.A. executed a memorandum of understanding (“Memorandum”) with Cencosud S.A. (“Cencosud”), a Chilean retail group, by means of which the parties have established a strategic association for 15 years. The association will aim at offering consumer finance products and services associated with the retail business of Cencosud in Chile and Argentina, in particular services and products related to the issuance and operation of credit cards. The activities of the association will be performed by companies with this particular purpose in Chile and Argentina, and their capital will be owned 51% by Itaú Unibanco Holding S.A., through its local subsidiaries, and 49% by Cencosud. On December 23, 2013, Itaú Unibanco Holding S.A. announced that despite having acted in strict compliance with the established by the memorandum and used its best efforts to negotiate definitive contracts with Cencosud, the negotiations did not succeed, as a result of which the expected association will not be formed.

On May 24, 2013, in the scope of the privatization process of IRB - Brasil Resseguros S.A. (“IRB”), Itaú Seguros S.A. and Itaú Vida e Previdência S.A. (“Seguradoras Itaú”) entered into the IRB’s shareholders’ agreement, with a 20-year term. The aforementioned shareholders’ agreement establishes IRB’s new governance and voting rights; now private companies are participating of IRB’s controlling group. Seguradoras Itaú carried out a capital increase of approximately R$2.3 million, during IRB’s privatization process, and now hold an interest of 15% in IRB’s total and voting capital stock.

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ITEM 7 - ACTIVITIES OF THE ISSUER

7.1. Briefly describe the activities carried out by the issuer and its subsidiaries

We are a holding company whose main activity is to hold ownership interests in the capital of financial institutions that, in turn, were incorporated for the purpose of developing all authorized types of banking activities, including foreign exchange transactions. Additionally, we also hold investments in companies that carry out activities related to the insurance and capital markets.

Highlights 2013

Business

Commercial banking - Retail - To improve client satisfaction we have introduced innovations in service delivery and product choices, such as extended operating hours at certain branches located in shopping malls. We have also simplified bank statements and credit card bills to improve statement understanding and transparency for clients.

New “Hiper” Brand – In October 2013, we launched “Hiper,” our new credit card brand available to all Brazilian consumers and accepted in over one million establishments accredited by Rede throughout Brazil. The “Hiper” branded products will initially be issued by Banco Itaucard S.A., or Itaucard, to our account holders and non-account holders in Brazil and may only be used for credit functions. The “Hiper” brand will not substitute the “Hipercard” brand but, rather, be another option for our clients, with different benefits from those offered for “Hipercard”, such as:

· conversion of 120% of the card’s annual fee into a bonus for mobile cellphones (currently available for 3 of the 4 largest Brazilian carriers).

· cards with the Itaucard 2.0 feature (consistent with the standard international interest model, pursuant to which lower interest rates for revolving credit facilities accrue from the date of purchase instead of the invoice due date and are limited to a maximum of 5.99% per month).

Redecard is now REDE – In 2013, we announced that Redecard S.A. would change its name to Rede. The rebranding is part of the company’s strategy to further expand its business into the digital arena, which also included the launching of e-Rede (e-commerce gateway platform) and m-Rede (mobile POS platform) in 2013.

The company’s new name, “Rede”, meaning “network” in Portuguese, summarizes the company’s key attributes, evoking technology, agility and modernity, in addition to having a youth and connectivity appeal. With the goal of being the main partner of sellers of goods and services, including small businesses and entrepreneurs, that seek to expand the potential of their businesses. Rede offers its clients a range of products to capture transactions that accompany innovative market trends, such as the increased need for payment mobility.

Use of Social Media - In less than three years, our Facebook page has reached over 6.5 million fans, we had over 168,000 followers on Twitter, over 78.2 million views on our YouTube channel, 210,000 followers on Google Plus and 7,900 followers on Instagram, as of December 2013.

Technology

We are committed to offering the most advanced technology for the convenience and security of our clients, and we continuously invest in the development and improvement of our systems.

In line with our strategy to seek efficiency in our business, in 2013 we announced several innovations for our clients, such as sending receipts of payments and taking out travel insurance through mobile phones and programming deposits in investment funds through the Internet.

Our new data center under construction in the state of São Paulo, will include cutting-edge features that are designed to give us even more flexibility and security to serve our clients. Construction work is progressing as planned and is expected to be completed in the first quarter of 2014, when the setup and migration of our technology systems are expected to start. In January 2013, our executive project was certified as Tier III by the Uptime Institute, a consulting company which evaluates capacity and expected availability of a data center, and ranks the project in one of four tiers. This new data center is expected to be one of the largest in Brazil, with capacity to support the expansion of the bank’s operations in the coming decades, while maintaining our commitment to ensure availability of financial services and seek continuous improvement in quality, speed and client satisfaction.

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In line with our strategy to improve efficiency in our businesses, new features have been made available in our digital channels, such as Internet banking and mobile banking, and investments have been made to improve and create new tools to meet the expansion of these channels, providing quality in transactions in an agile, modern and safe environment. These new features and improvements include:

· Sending receipts by phone – a functionality launched in March of 2013 that allows the costumer to send receipts of payments and transfers made through smartphones and tablets.

· Travel insurance via mobile – we launched this new feature, unique in the market, to ensure greater comfort, flexibility and convenience to clients. Insurance can be bought 24/7, including in airport lounges, just before the client’s trip starts. The product can be purchased for domestic travel or international coverage and provides medical and dental care, reimbursement of expenses in case of flight delay, damages for lost, stolen or destroyed luggage. For international travel, the costumer can choose between using an accredited network of service providers or request reimbursement of hospital or medical expenses.

· Scheduled investment in investment funds – our Internet banking system now allows for the client to schedule monthly investments.

· Biometrics – registered clients are able to withdraw funds and check current account balances and statements just by using biometric technology, improving the security of transactions. Please refer to section Itaú Unibanco Holding, item Our profile, marketing and distribution channels, ATMs, for further details.

· “One Account” Itaú – launched in August 2013, this new account option for legal entities allows the client to customize its package of services, including number of receipts, types of money transfers, and number of deposits and checks covered. Our client may simulate charges and purchase services at any time as and when needed, always through the Internet.

· Tokpag – launched in November 2013, it is an innovative application that allows account holders to transfer money using only the mobile phone number of the transferee, with the same ease and speed of sending a text message.

All IT projects are jointly executed with the business, legal and marketing units, taking into consideration sustainability aspects. It is noteworthy that all projects have valuation analysis in order to be approved and prioritized.

We have workplace contingency and disaster recovery processes for our main businesses. Our back up site is also located in the state of São Paulo. Both our primary and secondary data centers have dedicated power systems and generators that are designed to start automatically whenever a power outage occurs.

Capital Expenditures

On January 27, 2012, we announced the construction of a new technology center that constituted a total investment of approximately R$984.0 million for the first phase of the project (building).  In September 2012, we announced an investment of R$10.4 billion in technology, innovation and services. we announced an additional investment of R$687.0 million, amounting to a total investment of R$11.1 billion in technology, innovation and services to be made in the period from 2012 to 2015, of which:

· R$2.7 billion is expected to be used for data processing systems;

· R$0.8 billion is expected to be used for the acquisition of software;

· R$4.6 billion is expected to be used for system development; and

· R$3.0 billion is expected to be used for our Data Center in the state of São Paulo.

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Our new data center under construction in the state of São Paulo, will include state-of-the-art features that are designed to improve flexibility and security. Construction work started in February 2012 and is progressing as planned, with 95% of the building concluded, and is expected to be completed in the first quarter of 2014. The setup and migration of our technology systems are expected to occur in the fourth quarter of 2014, for completion by July 2016. This new data center is expected to be one of the largest in Brazil, with capacity to support the expansion of our operations in the coming decades, while maintaining our commitment to ensure availability of financial services and seek continuous improvement in quality, efficiency and client satisfaction.

Our new technology center is being funded with internal resources. Of R$11.1 billion in investments for the period from 2012 to 2015, 49% have been spent from 2012 until December 31, 2013.

Awards and Recognition

In 2013 we received a series of awards and acknowledgements that contributed to strengthen our reputation. A few of our main accomplishments are listed below:

IR Magazine Awards Brazil 2013 – Given by IR magazine, in partnership with the Brazilian Institute of Investor Relations (IBRI), this award reflects the result of a survey of the Brazilian companies with the best “investor relations” practices, conducted by the Getulio Vargas Foundation, or FGV, with approximately 400 portfolio managers and investment analysts. We were acknowledged in 4 categories in 2013: Best Annual Report, Best Conference Call, Best Meeting with the Investment Analysts Community and Best Investor Relations in the Financial Sector.

World’s Best Bank Award 2013/ Global Finance 2013 – The winners of this award are chosen in a survey with analysts, executives and consultants from financial institutions, and we were acknowledged in the following categories:

- Best Emerging Markets Banks in Latin America for Banco Itaú Paraguay;

- World’s Best Subcustodian Banks for our custody services in Brazil, Paraguay and Uruguay;

- Best Investment Bank and Best Debt Bank for Itaú BBA, outstanding financial institution in Regional Winners – Latin America and Country Winners – Brazil.

The 100 companies with the best reputation in Brazil – This survey published by “Exame.com” and by “Exame” magazine, lists the companies with the best image in the Brazilian market. We ranked first in the financial sector.

The best of Dinheiro 2013 – Promoted by “Isto É Dinheiro” magazine, this annual award acknowledges the best Brazilian companies of the year by using management criteria such as financial sustainability, human resources, innovation and quality, social and environmental responsibility and corporate governance. We ranked first in the banking sector ranking for the seventh time.

Época NEGÓCIOS 360º – Compiled by Época magazine, this guide is organized in partnership with the Dom Cabral Foundation, which carries out a thorough assessment of the largest Brazilian companies taking into consideration criteria such as financial performance, corporate governance, human resources practices, innovation, vision for the future and social and environmental responsibility. We achieved the first place in the bank sector in 2013 for the second time since this award was created in 2012.

Latin American Executive Team 2013 – Organized by the “Institutional Investor” magazine, this ranking is based on a survey conducted with over 800 managers of investment and pension funds (buy-side analysts), brokers and investment banks (sell-side analysts) operating in Latin America. We won six out of eight categories: “Best Investor Relations” by sell-side and buy-side analysts, “Best CEO” by sell-side and buy-side analysts, “Best Bank CFO” by buy-side analysts and “Best Investor Relations Professional” by buy-side analysts.

Best Cash Management Bank in Brazil – We were recognized for the sixth consecutive year by “Euromoney” magazine, one of the most important financial market publications.

Latin Finance´s Banks of the Year Awards 2013 – Considered the leading source of value-added financial markets intelligence for Latin America and the Caribbean, Latin Finance magazine elected us as the Best Bank in Latin America and the Best Bank in Brazil. Itaú BBA was also acknowledged by Latin Finance as the Best Investment Bank in Brazil.

Melhores e Maiores da Exame – Itaú Unibanco was ranked as the number one bank among the 50 largest Brazilian banks by assets. With 40 years of tradition, this is one the most respected surveys in Brazil.

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Valor 1000 – Itaú Unibanco ranked first in two categories of the Valor 1000 survey: Equity and Net Income. In its 13th year, the Valor 1000 Yearbook ranks the thousand largest companies in Brazil by net revenue, based on the IFRS balance sheet for the previous year.

The most admired companies in Brazil (Carta Capital magazine) – We were named the most admired company in the retail banking segment. In the overall ranking (which includes all economic sectors), the bank was ranked in fifth place. Roberto Setubal, our CEO, was ranked in third place among the most admired business leaders.

Most valuable brand in Brazil (Interbrand) – With a market value of R$19.3 billion, we were considered Interbrand’s Most Valuable Brand in 2013. It was the tenth time the bank ranked first.

Global Custodian – Awarded by this acknowledged publication in the securities services sector. We were selected as the “Best Custodian” in the “Agent Banks in Emerging Markets” survey, in the following markets:

- Americas and Caribbean regions for international clients;

- Chile for international clients; and

- Brazil for local and international consumers.

International Law Office – We were awarded the “Best Legal Team” in Latin America by this website in the “Regulatory (Financial Services)” category. Deemed one of the most significant acknowledgments in the legal sector, the ILO Latin American Counsel Awards 2013 had over 4,000 indications of professionals from law firms and advisory offices from Latin America. This award is promoted by the “International Law Office” website in partnership with the “Association of Corporate Counsel”.

The World’s Biggest Public Companies 2013 – We were ranked 42^nd among the 2,000 largest companies in the world, according to Forbes magazine, and the “number one”financial institution in Brazil in the general ranking of Brazilian financial institutions. Revenue, net income, assets and market value for the year 2012 were taken into consideration in the compilation of such list.

Reactions Latin America Awards – Published by the British magazine “Reactions”, this award acknowledges the main insurance companies in Latin America. Itaú Seguros was elected the best insurance company in Brazil.

The 1,000 Best Investment Funds of 2013 – awarded by the “Exame” Guide of Personal Investments. We were elected the Best Manager of the Year in a survey conducted by the Center of Finance Studies of FGV (GVCef- FGV). This award highlighted the best managers for retail, high-end clients, companies and institutional investors. Among 1,000 open-end funds analyzed, we were also elected in the Best Manager categories for the following products:

- Selective retail (funds in which investors invest between R$ 50,000 and R$ 250,000);

- Interbank rate (DI) and short-term funds;

- Indexed equity funds; and

- Multimarket investment funds

Bank of the year (The Banker) – We were recognized as 2013’s bank of the year in Brazil and Paraguay by “The Banker” magazine, one of the most recognized financial market publications in the world.

Aberje Awards – We were elected by the Brazilian Association of Corporate Communication, or Aberje, as company of the year in business communication. We also won the award in “Internal Communication and Relations ,” with the case “Financial education at IU: A challenge that begins with the employees.”

Best Companies to Launch a Career - We received the highest score in the banking and financial services sector in the list of Best Companies to Launch a Career in 2013, published by Revista Você S/A., a Brazilian magazine.

Awards for Excellence – Itaú Unibanco was recognized by Euromoney Magazine as the best bank in Uruguay in 2013.

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Sustainability

Exame Sustainability Guide – We are the first financial institution to be recognized by the Exame Guide, published by Exame magazine, as the most sustainable company of the year. We were also acknowledged as the model-enterprise in the “financial institutions” category. This recognition is the most important sustainability prize in Brazil.

Itaú Unibanco is also the first Latin American company present in the ranking “The World’s Top 20 Green Banks in 2012”, organized annually by the Bloomberg Markets magazine, which analyzes banks’ sustainability efforts, including investments in clean energy and waste reduction.

Dow Jones Sustainability World Index 2013/2014 – We were selected to be included in this index for the fourteenth consecutive year. We are the only Latin American bank that is included in the index since its launch in 1999.

BM&FBovespa’s Corporate Sustainability Index (ISE) 2013/2014 – We were selected to be included in this index in 2014 for the ninth consecutive year. The companies that comprise the index are references in socially responsible investment and act as business benchmarks in Brazil.

Additionally, we were elected one of the Brazilian companies with the best environmental practices in the Prêmio Época Empresa Verde by Época, a Brazilian magazine. We were also acknowledged as one of the leading companies in the climate change award Prêmio Época de Mudanças Climáticas.

We were also acknowledged in six categories in the Prêmio Amigo do Esporte 2013 by the Brazilian Ministry of Sports, and are considered one of the companies that invested the most in the sports sector through the Brazilian sport incentive law, supporting sports and para-sports projects.

Brand

Our brand increasingly represents the transformation in the lives of the individuals, the society and the country we want to promote. This is reflected in our products, services and attitudes. Our financial education initiatives encourage people to have a more balanced relationship with money, choose the best type of credit and plan their investments.

We are always trying to broaden the dialogue with our stakeholders. In 2013, our brand was named the most valuable in Brazil for the tenth consecutive year, with an estimated value of R$19.3 billion, according to consulting firm Interbrand. Interbrand’s analysis is based on the ability of our brand to generate financial results, influence the selection process of clients, and ensure long-term demand.

In 2013, we launched the #issomudaomundo (#thischangestheworld) platform for the purpose of establishing a link between our goal of improving people’s lives, our causes and the many projects in education, culture, sports and urban mobility that receive investments from us.

In a 2013 survey conducted by Millward Brown, a research institute, we achieved important results for the brand already in the first year of this platform: an increase of 58% in the perception as a “Bank that helps improve people’s lives” and of 44% as a “Bank that works as a transforming agent in people’s lives”. Additionally, according to a study conducted by Oficcina Sophia, a research institute, there was an increase of 62% in the number of non-clients who considered us as an option and of 146% in our prestige among non-clients.

Our Facebook page reached more than 6.5 million fans and we are the bank with the highest number of fans in the world according to the Socialbakers monitoring platform. In addition to this social network, in Twitter, we have more than 168,200 followers and in YouTube, we have over 78.2 million views of our own content in our channel. We have a structure to monitor our social media profiles, providing information regarding our services, launching products, advertisements and interacting with the general public and our clients.

According to SCUP and Socialmetrix monitoring platforms, we have been mentioned more than 833 thousand times in social networks (such as Facebook, Instagram, Google Plus and Twitter), 45% of which consisted of posts on the financial segment and 54% of which were more positive references than the average in social networks. Part of this is the result of our focus on social welfare as well as by our efforts to improve client service. By the end of 2013, we had provided 24/7 services to our clients in an average time of six minutes after the first contact by the client – a decrease of approximately 95% in relation to 2012.

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Under the #issomudaomundo (#thischangestheworld) campaign, we had a number of films made exclusively for the Internet to explain the bank’s causes. This was the first step of our brand as a content producer, sharing a point of view and seeking to establish connections based on our beliefs. The films were viewed by more than 19.8 million people in our YouTube channel and were shared by 106,600 people. One of the films was the 20th most shared film in the world in 2013. A survey conducted by Nielsen, together with Facebook, determined that the films resulted in an increase of 17.4% in a one-month period in the support for the causes supported by us, with an increase of 16% in the intention of non-clients to become clients.

7.2. With respect to each of the operating segments that have been disclosed in the most recent financial statements for the year or, when applicable, in the consolidated financial statements, please indicate the following information:

a) The products and services sold

Our Business

Overview

We provide a broad range of banking services to a diverse client base that includes individuals clients and corporate clients. We provide these services on an integrated basis through the following operating segments:

· Commercial bank - Retail: includes credit cards, asset management, insurance, pension plan and capitalization products, and a variety of credit products and services for individuals, very small and small companies;

· Wholesale bank: corporate and investment banking, including our middle-market banking business (represented by companies with annual revenues of more than R$30 million);

· Consumer credit - Retail: financial products and services to non-accountholders; and

· Activities with the market and corporation: includes results arising from capital surplus, subordinated debt surplus and the net balance of tax credits and debts.

The services offered by our Commercial bank - Retail segment to a diversified base of individuals and companies include insurance, pension plan and capitalization products, credit cards, asset management, credit products and are customized and developed to meet clients’ demands. Our marketing strategies are tailored to each client profile and implemented through the most suitable distribution channels. We aim to increase the number of products used by our clients, thus diversifying our revenue sources. This segment represents an important funding source for our operations and generates significant financial income and banking fees.

The Commercial bank - Retail segment is comprised of the following specialized units:

· Retail banking (individuals);

· Personnalité (banking for high-income individuals);

· Public sector banking;

· Very small and small business banking;

· Insurance, private retirement and capitalization products;

· Wealth management services (private bank, asset management and securities services); and

· Real estate financing.

The Wholesale bank is responsible for our corporate and investment banking activities.

Our wholesale banking management model is based on building close relationships with our clients by obtaining an in-depth understanding of clients’ needs and offering customized solutions. Corporate activities include providing banking services to large corporations and investment banking activities include offering funding resources to the corporate sector, including through fixed and variable income instruments. In October, we announced certain changes to our management structure, pursuant to which our middle-market banking business became part of the wholesale banking segment.

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Through the Consumer credit - Retail segment, we implement our strategy of expanding our offering of financial products and services beyond our current accountholders. As such, this segment oversees the financing of vehicles outside our branch network, the offering of credit cards to individuals who are not accountholders, and lending to lower income consumers.

The Activities with the market and corporation segment manages interest income associated with our capital surplus, subordinated debt surplus and the net balance of tax credits and debits, as well as net interest income from the trading of financial assets through proprietary positions (desks), management of currency interest rate gaps and other risk factors, arbitrage opportunities in the foreign and Brazilian domestic markets, and mark-to-market of financial assets.

We also have a broad range of operations outside of Brazil and have built our international presence based on strategically positioned units in the Americas, Europe and Asia. This creates significant synergies in foreign trade finance, the placement of Eurobonds and in the offering of more sophisticated financial transactions and private banking operations. These operations are presented both in the commercial banking - retail and in the wholesale banking segments.

Commercial Bank - Retail

Overview of Accountholder Products and Services

We have a large and diverse portfolio of products to address our clients’ needs. The main products and services available to our accountholders are:

· Credit: personal loans, overdraft protection, payroll loans, vehicle financing, credit cards, mortgage and agricultural loans, working capital financing, trade note discount and export financing

· Investments: pension plans, mutual funds, time deposits, demand deposit accounts, savings accounts and capitalization plans; and

· Services: insurance (life, home, credit/cash cards, vehicles, loan protection, among others), exchange, brokerage and others.

We offer a wide range of banking products and services to a diversified base of individuals and companies, our account holders and non-account holders. We have over 40 million clients and 32,891 points of service throughout Brazil and abroad represented by 4,142 branches, 885 CSBs and 27,900 ATMs as of December 31, 2013. In addition, we also provide our clients with means of accessing and checking accounts, making payments, investments and other banking transactions without the assistance of a manager, through our “Itaú Unibanco 30 Horas” platform. Our products portfolio includes loans and a number of investment, insurance, foreign exchange and brokerage options, among others.

Our commercial banking business segment is segregated according to costumer profiles. This allows us to be closer to our clients, understand their needs and offer the most suitable products to meet their demands.

We provide exclusive services to our Itaú Uniclass retail bank clients (a detailed description of which follows in the Retail Banking section below). We offer expert services to our high-end clients by means of Itaú Personnalité and, with over 20 years of experience in wealth management, Itaú Private Bank, which provides wealth management services and is the largest private bank in Latin America. To meet the needs of our corporate clients, Itaú Empresas serves very small and small companies through a dedicated structure, with specific products and services.

In 2013, we advanced in our agenda of increasing processes and services automation, generating productivity and scale gains. Biometrics is an illustrative example of a service which resulted in increased convenience for our clients, who can operate an ATM without the need of physical card, with greater safety.

Retail Banking

Our core business is retail banking and through our retail operation we offer a dedicated service structure to consumer clients throughout Brazil. Our client service structure is targeted to offer the best solutions for each client profile. We classify our retail clients as individuals with a monthly income below R$ 10,000.00.

Our Itaú Uniclass services are available at every branch for clients who earn more than R$4,000 or R$5,000 per month, depending on the region, an innovation for Brazil’s banking sector. We offer unique services to our Itaú Uniclass clients, including investment advisory services, exclusive cashiers, special telephone service and higher credit limits and a large team of dedicated relationship managers.

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Our retail network is focused on building lasting, transparent relationships with our clients.

Personnalité

We began providing customized services to higher-income individuals in 1996 with the creation of Itaú Personnalité. Itaú Personnalité currently serves individuals who earn more than R$10,000 per month or have investments in excess of R$100,000.

Itaú Personnalité’s is focused on providing (i) financial advisory services by managers who understand the specific needs of our higher-income clients, (ii) a large portfolio of exclusive products and services and (iii) special benefits based on the type and length of relationship with the client, including discounts on various products and services. Itaú Personnalité services its clients through a dedicated network comprised of 275 branches, located in the main Brazilian cities. Itaú Personnalité clients also have access to the Itaú Unibanco network of branches and ATMs throughout the country, as well as Internet, telephone and mobile.

In 2013 we launched the new digital channel to Personnalité clients, with the new website for this segment, which offers additional contact channels, such as videochats and online customer services.

The table below shows our market position and information about competitors for the business listed below:

COMPETITION

Product/Service	Market Position	Additional Information and Main Competitors
Retail Banking(1)	In December 2013, we ranked third in retail banking in terms of market share.	Itaú Unibanco Holding has a leading position in many sectors of the Brazilian domestic financial market.  We achieved a market share of 13.5% based on total outstanding loan balance in reais as of December 2013, positioning us as the third largest bank in this segment in Brazil. Our main competitors are Caixa Econômica Federal, Banco do Brasil S.A., Banco Bradesco S.A. and Banco Santander Brasil S.A.

(1) Including Itaú Personnalité

Source: Central Bank and Itaú Unibanco Holding.

Very Small and Small Companies

To meet the needs of our corporate clients we offer customized solutions and provide detailed advice on all products and services to:

· Very small companies: a client base comprised of more than 980,000 clients with annual revenues up to R$0.5 million served by 1,647 banking branches with 2,405 managers as of December 31, 2013; and

· Small companies: a client base comprised of 408,537 companies with annual revenues from R$0.5 million to R$6 million served by 379 business offices with approximately 2,651 managers as of December 31, 2013.

All our managers are certified by the Brazilian Financial and Capital Markets Association (ANBIMA), and throughout the year they receive training to offer the best solutions for each client profile. Our clients rely on our ability to provide products, terms and rates customized to their needs.

Our strategy is to capture market opportunities by meeting the needs of these companies and their owners, particularly with respect to the management of cash flow, credit facilities, investment needs and services.

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As was the case in 2012, improving our credit portfolio and reducing our overdue loan portfolio remained our goal in 2013: credit processes, policies and tools were enhanced and we intensified our revenue collection.

Focused on meeting our clients’ needs, we developed “conta certa,” an account plan with customizable service bundles, and we extended our offerings in electronic channels enabling clients to borrow and purchase a wide range of services without having to go to one of our branches.

Improving and simplifying our operational and commercial processes were also in our agenda as we worked on simplifying time-consuming processes such as current account opening and organized our operational and commercial units to work in a standardized manner, similar to franchises.

Public Sector

Our public sector business operates in all divisions of the public sector, including the federal, state and municipal governments (in the Executive, Legislative and Judicial branches).

To service public sector clients, we use platforms that are separate from our retail banking branches, with teams of specially trained managers who offer customized solutions in tax collection, foreign exchange services, administration of public assets, payments to suppliers, payroll for civil and military servants and retirement. Based on these platforms, we have a significant amount of business with public sector clients, particularly in those Brazilian states where we acquired previously state-owned financial institutions.

In December 2013, we had 2,602 public sector clients and 15 offices in Brazil.

Wealth Management & Services

Private Bank

Itaú Private Bank is a leading wealth management player in Latin America. Our dedicated team of more than 635 professionals provided comprehensive financial services to more than 10,000 high-income families from most countries in Latin America. As of December 31, 2013, our customers count on our offices in Chile, Uruguay, Paraguay, United States, Switzerland, Cayman and the Bahamas, and seven offices in Brazil.

Our clients have access to a complete portfolio of products and services, ranging from investment management to wealth planning, credit and banking solutions. In addition to our in-house customized products and services, we offer our clients access to an open architecture of alternatives from third-party providers. As of December 31, 2013, our team, dedicated to understanding the customer and meet their needs, had more than 120 private bankers with the support of a team of investment advisors and product specialists.

Our market strategy is to consolidate our leadership position in the domestic market in Brazil and increase our market share in other major markets in the region such as Chile, Peru, Colombia, Mexico and Uruguay.

Aligned with our mission to be the leading company in client satisfaction and sustainable performance, we decided to focus our strategic priorities on the following initiatives:

• Complete review of our segmentation in Brazil with the main purpose of better supporting our clients in a new macro-economic scenario;

• Continue to invest in our international platforms in Miami and Switzerland;

• Consolidation of our European platform in Switzerland and insourcing of our IT and operations platform in Switzerland; and

• Increased operational efficiency of our platform through continuous investments in our IT and web platforms.

As client satisfaction is a top priority for us, we have also focused on initiatives to strengthen our relationship with our clients. In 2013 we performed our comprehensive client satisfaction survey for the 11th consecutive year and we hosted our “Client Advisory Board” for the third consecutive year. We promoted almost 200 events in 2013, including investment workshops, lunches with executives and specialists, and invitations to cultural and sport events.

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Itaú Asset Management

Itaú Asset Management is specialized in managing client assets in investment funds, such as fixed income, multimarket, equity and indexed funds, and assets held in managed accounts and mutual funds, both in Brazil and abroad. Our asset management business offers products for all segments of retail and wholesale banking, structuring and managing investment funds according to specific business segment profiles.

We follow different investment strategies for the various funds we manage to ensure performance and suitability to the profile of each client. In keeping with this approach, we also have a dedicated team carrying out comprehensive risk management analyses to support our portfolio managers. In addition, we have developed a proprietary methodology that integrates environmental, social and corporate governance (ESG) factors into our assessments of portfolio companies. This help us in more accurately pricing the risks and opportunities that may affect their market value.

We were selected as the Best Fund Manager of 2013 by the Brazilian magazine Exame. The analysis was conducted by the Fundação Getúlio Vargas Center for Finance Studies, which evaluated over 1,000 open-end funds. Our recognition by the market through this award, particularly in the currently demanding market environment, reflects our focus on quality management and our commitment to consistent performance that is aligned with our clients’ risk profiles.

The table below shows our market position and information about competitors for the business listed below.

COMPETITION 

Product/Service	Market Position	Additional Information and Main Competitors
Asset Management	2nd place. 14.6% of market share in terms of assets under management.	According to ANBIMA, the asset management industry in Brazil held assets totaling R$2,464 billion as of December, 2013, with competition concentrated among large and well-established retail banks. Our main competitors are Banco do Brasil S.A. and Banco Bradesco S.A.

Source: Itaú Unibanco Holding and ANBIMA (December 2013)

Itaú Securities Services

Itaú Securities Services is composed of four main business units: local custody, international custody, fiduciary services, and corporate solutions. To be efficient, these businesses have the technology as a foundation.

Pension funds, insurance companies, asset managers, international institutional investors and equity and debt issuers are our primary clients in these businesses, representing approximately 2,092 clients in 21 countries as of December 31, 2013.

On December 31, 2013, Itaú Securities Services reached R$900,101 million of assets under custody.

Itaú Securities Services business units provide the following services:

· Local Custody and Fiduciary Services: provides solutions such as custody of assets, fund accounting, administration, supervision and contracting of services for local investment funds and other portfolios;

· International Custody: provides custody and legal representation for non-resident investors in Brazil, custody of ADR programs, depository service for BDR and net asset value calculation for offshore funds;

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· Corporate Solutions: acts as transfer agent and shareholder servicer for Brazilian companies issuing equity, debentures, promissory and bank credit notes. We also work as guarantor in transactions of project finance, escrow accounts and loan and financing contracts.

Our focus is to be a full service provider for institutional clients by offering integrated solutions and an exclusive channel with specialized professionals.

As a result, Itaú Securities Services received industry awards voted on by clients as the “Best Brazilian Custodian” for domestic clients (for the fifth consecutive year), international clients (for the fourth consecutive year) and recognized as a “Top Rated” service provider in the region of the Americas and Caribbean (for the second consecutive year) according to the “Global Custodian” Magazine. In 2013, we were also recognized by ”Global Finance” Magazine as “Best Custodian” in Brazil for international clients. Our management and business governance model was awarded in 2013 the highest distinction “Troféu Governador do Estado” by the Management Excellence Institute of São Paulo.

The table below shows the market position and information about competitors in the business listed below:

COMPETITION
Product/Service	Market Position	Additional Information and Main Competitors
Local Custody and Fiduciary Services	2nd (ANBIMA)	As of December 31, 2013, Itaú had R$732,369 million of assets under custody, representing an increase of 0.98% compared to December 31, 2012. Our main competitors are Banco Bradesco S.A., Banco do Brasil S.A. and Banco Santander Brasil S.A.
International Custody	2nd (ANBIMA)	As of December 31, 2013, Itaú had R$167,732 million of assets under custody, representing a decrease of 21.78% compared to December 31, 2012 Our main competitors are: Banco Citibank S.A., JP Morgan’s Securities Services and Banco Bradesco S.A.
Corporate Solutions	Equities: 1st (BM&FBovespa) Debentures: 2nd (ANBIMA)	As of December 31, 2013 we were the transfer agent and registrar provider to 231 companies listed on BM&FBovespa, which represents 63.64% of the listed companies on that exchange. Moreover, as of December 31, 2013, we were the transfer agent in 387 debentures offerings in the Brazilian market, representing 46.97% of the debentures market in Brazil. Our main competitors in the equities market are: Banco Bradesco S.A. and Banco do Brasil S.A. Our main competitor in debentures is Banco Bradesco S.A.

Source: Itaú Unibanco Holding, ANBIMA and BM&FBovespa (December 2013).

Corporate Social Responsibility

The Itaú Social Excellence Fund (Fundo Itaú Excelência Social or “FIES”), launched in 2004, is a socially responsible investment fund. It invests in companies with superior corporate social responsibility practices with the goal of achieving higher long-term returns than those offered by the main Brazilian financial market indices. In addition to analyzing the risks and returns of companies, fund managers take into account three fundamental criteria relating to companies: corporate social activities, environmental protection aspects and good corporate governance practices. Every year the fund manager donates 50.0% of the FIES’ accumulated asset management fees to social projects in the following categories: environmental education, employment education and childhood education.

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Real Estate Financing and Mortgages

Our mortgage business is dedicated to:

• Being aligned with our strategy to invest in businesses with fewer risks;

• Contributing to the social and financial development of our clients;

• Creating loyalty – the relationships established in this sector are typically long-term.

We have been leaders in mortgage loans to individuals among Brazilian private banks from 2008 to 2013, having reached approximately 40% of market share in financed amount as of December 31, 2013,. Furthermore, we are one of the largest banks in the real estate lending market to legal entities with a share of approximately 22% of financed amount in 2013.

We offer products through our network of branches, real estate developers, real estate brokers, including our partnership with Coelho da Fonseca Empreendimentos Imobiliários Ltda. and our joint venture with LPS Brasil Consultoria de Imóveis S.A. (Lopes), called “Credipronto”. These two long-term agreements provide us with exclusive real estate financing origination at a large number of locations throughout Brazil.

Since 2007, real estate and mortgage transactions in the Brazilian market have been carried out mainly through of mortgage lien called “alienação fiduciária”, system to which the buyer becomes the owner of the property after all payments have been made, making it easier for the bank (lender) to recover the property in case of default. In others words, this system resulted in lower legal and credit risks if compared to other types of guarantees.

Another positive feature of the Brazilian market is the “constant amortization system” (CPM), pursuant to which decreasing installments provide faster amortization of a contract, reducing our loan-to-value indicator at a faster rate than other amortization systems.

As of December 31, 2013, all of our outstanding loans to individuals were made by mortgage liens (“alienação fiduciária”). In 2013, our entire credit origination was based on the “constant amortization system” (CPM) and our loan to value ratio of the portfolio reached 40%, compared to 41% in 2012.

The table below shows the market position and information about competitors for the business listed below:

COMPETITION
Product/Service	Market Position	Additional Information and Main Competitors
Real Estate Financing and Mortgages	We are in 1st place in loans to individuals among Brazilian private banks – 40.6% market share; 2nd place in loans to individuals considering all Brazilian banks – 13.5%.	The main player in the Brazilian real estate market is Caixa Econômica Federal (CEF), a government owned bank.  CEF is focused on real estate financing and, with its aggressive pricing strategy, is the leader in this market. Other competitors include Banco do Brasil S.A., Banco Santander Brasil S.A. and Banco Bradesco S.A.

Source: Itaú Unibanco Holding.

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Payroll Loans

A payroll loan is a loan with fixed installments that is directly deducted from the borrower’s payroll to the bank’s account without being recorded in the debtor’s account.

Our strategy is to expand our activities in businesses with historically lower spreads and losses, achieving a leading position in the offering, distribution and sale of payroll loans in Brazil.

To expand this business and complement our strategy, on July 9, 2012 we signed an association agreement with Banco BMG S.A. to offer, distribute and market payroll loans originated by that financial institution. Itaú BMG Consignado, the entity resulting from this association, began operations in December 2012 and is present throughout the Brazilian territory. This association was designed with the purpose of diversifying our loan portfolio, supplementing our payroll loan strategy, and improving the risk profile of our portfolio of loans to individuals. Itaú BMG Consignado also enables us to expand our business in the payroll loan sector in line with our values and transparency principles, following best management practices and policies.

Our strategy of higher growth in the National Institute of Medical Assistance and Social Welfare (Instituto Nacional de Seguridade Social – INSS) beneficiaries sector, combined with certain credit policies we adopted, allowed our portfolio evolution to be followed by a decrease in delinquency levels.

This increase in payroll loans resulted in a higher share of payroll loans within the personal loan portfolio, from 8.4% as of December 2012 to 12.4% as of December 2013.

Based on Central Bank data and publicly available financial information, our main competitors in this business areBanco do Brasil S.A., Banco Bradesco S.A. and Caixa Econômica Federal.

Insurance, pension plan and capitalization

In 2013, our insurance, pension plan and capitalization business showed an increase of 15.5% in recurring net income from 2012, as a result of our simplification of processes, improvement in efficiency, reduction in operating costs and a portfolio of products aligned with clients’ needs.

Insurance

Our insurance business provides a wide range of life and accident products, automobile and property insurance, extended warranty, travel insurance and corporate solutions for legal entities. Focused on streamlining the portfolio and distribution of our products, our insurance policies are sold, among other channels, in our branches, in association with retailers and major insurance companies, via telemarketing, Internet, ATMs, self-service terminals and mobile applications.

We operate in selected segments focusing on profitability and exploring the expansion of the channels for the offering of insurance, pension plan and capitalization products. The profitability of our operation and income generation potential with no implication of credit risk make the insurance business strategic for us, increasing revenue diversification and making our portfolio of products offered to our clients more complete.

Besides the traditional relationship manager of Agency ,we expanded our distribution channels to our account holding clients, , to digital channels, teller and ATM terminals, maximizing the return on the client flow at the branches. Insurance for personal loans sold on the Internet in 2013 had an increase of 37% in items sold against previous year. Travel insurance also excelled in the channel offer expansion and currently available on our mobile channel in addition to other traditional channels.

In 2013, we also started to develop a new Internet channel to offer our products to non-banking clients and non-credit card holders.

Our strategy to increase our level of penetration in the Brazilian insurance market varies according to the sectors we choose to compete in. In January 2014, we informed our intention to sell our high-risk insurance operation, which deals with large insurance policies for corporate losses through a bidding process. For individuals and small and medium company markets, we focus on our banking client and credit card base, increasing client penetration. We are working on improving client penetration in property and casualty insurance for small and medium companies.

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Following our goals of market share increase in our chosen markets and improving client service in 2009, we have established a partnership with Porto Seguro Group, leader of the housing and automobile insurance sector in Brazil, and currently hold 30% of the equity of Porto Seguro S.A.. The partnership includes an operating agreement with Porto Seguro Group to offer and distribute, on an exclusive basis, residential and automobile insurance products to clients in our network in Brazil and Uruguay.

On June 25, 2013, through Banco Itaú BMG Consignado, an entity indirectly controlled by us, we entered into a share purchase agreement with the controlling shareholders of Banco BMG pursuant to which we agreed to acquire 99.996% of the shares issued by BMG Seguradora. All regulatory approvals have been obtained. BMG Seguradora will enter into exclusivity agreements with Banco BMG and Banco Itaú BMG Consignado for the purpose of distributing insurance products to be offered jointly with the products distributed by such financial institutions.

In May, 2013, as part of the opening process of the Brazilian reinsurance market to private reinsurance companies and the privatization process of IRB – Brasil Resseguros S.A., or IRB, our subsidiaries Itaú Seguros S.A. and Itaú Vida e Previdência S.A. entered into a shareholders’ agreement with the Brazilian government, certain other Brazilian financial institutions and a private equity fund, providing for voting rights and a new corporate governance structure for IRB, which includes private sector companies in its controlling group. The shareholders’ agreement, valid for 20 years, became effective on October 1, 2013 and provides for ownership of 15% of IRB’s equity by our subsidiaries. The transaction was approved by the Administrative Council of Economic Defense (CADE), the Superintendency of Private Insurance (SUSEP) and the Court of Auditors (TCU).

The table below shows the market position and information about competitors for the business listed below:

COMPETITION
Product/Service	Market Position	Additional Information and Main Competitors
Insurance	Giving effect to our 30% ownership interest in Porto Seguro S.A., we had 13.8% of the Brazilian market share based on insurance premiums, excluding VGBL (Redeemable Life Insurance), from January to November, 2013.	The Brazilian insurance market is highly competitive. Our main competitors in this sector, excluding health insurance providers, are affiliated with large commercial banks, such as Banco Bradesco S.A. and Banco do Brasil S. A. Although there is a great concentration of Brazilian banks, this market is still dispersed, especially with players acting in specific niches. As of December 31, 2013 this industry consisted of approximately 123 insurance companies of various sizes, including 32 conglomerates and 60 independent companies. Our alliance with Porto Seguro S.A. resulted in gains in scale and efficiency for us.

Source: SUSEP.

Private Pension Plans

We offer private pension plans to our clients as an option for wealth and inheritance planning and income tax purposes (these products are tax-deferred). We provide our clients with a solution to ensure the maintenance of their quality of life, as a supplement to government plans, through long-term investments. Private pension products are divided into two major groups:

· PGBL (Benefits Generating Plan): the main objective of this plan is savings, but it can be purchased with an additional risk coverage. This plan is generally recommended for clients that file the complete version of the Brazilian income tax return (rather than the simplified version), because it allows clients to deduct contributions paid for tax purposes, up to 12% of annual taxable gross income;

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· VGBL (Redeemable Life Insurance): this is an insurance product structured as a pension plan. Its taxation differs from the PGBL. In the VGBLS’s case, the tax basis is the client’s earned income.

For corporate pension plans, we offer expert advice services and develop custom solutions for each organization. We have established long-term partnerships with our corporate clients, maintaining close relationships with their Human Resources units and adopting a communication strategy focused on the financial education of their employees.

The table below shows the market position and information about competitors for the business listed below:

COMPETITION
Product/Service	Market Position	Additional Information and Main Competitors
Pensions	In November 2013 our balance of provisions represented 24.4% of the market share for pension plans.	Our main competitors in private retirement plan products are controlled by large commercial banks, such as Banco Bradesco S.A. and Banco do Brasil S.A., which, like us, take advantage of their branch network to gain access to the retail market.

Source: SUSEP (Balance of provisions - Pension Plans for Individuals and Companies).

Capitalization

Capitalization products are deposit products for which the customer deposits a fixed amount once or holds monthly payments that will be returned at the end of an agreed period, adjusted by TR By acquiring the product, the client is automatically qualified to participate in periodic raffles, each time with the opportunity to win a cash prize. During the term of the product, the client can withdraw the balance deposited, less fees for early withdrawal.

To meet the needs of our clients, we launched a new capitalization certificate (PIC), more options monthly payment amounts,, according to the client’s profile, which allows us to tailor our approach according to each segment and to strengthen our long-term relationships with clients.

We distribute our capitalization products through our branch network, electronic channels and ATMs.

The table below shows the market position and information about competitors for the business listed below:

COMPETITION
Product/Service	Market Position	Additional Information and Main Competitors
Capitalization	In the period from January to November 2013 we had a market share of 11.5% in terms of revenues from sales of capitalization products.	Our main competitors in capitalization products are controlled by large commercial banks, such as Banco Bradesco S.A. and Banco do Brasil S.A., which, like us, take advantage of their branch network to gain access to the retail market. Our profitability (measured by net profits over revenues from sales) is the highest among our main competitors.

Source: SUSEP.

Wholesale Bank

Wholesale Bank is the segment responsible for banking operations of large and middle-market companies and investment banking services, carried out through Itaú BBA. It offers a wide range of products and services to the largest economic groups of Brazil. Its management model is focused on the development of close relationships with clients, gaining an in-depth knowledge of their needs and providing customized solutions.

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Our activities in this business range from typical operations of a commercial bank to capital markets operations and advisory services for mergers and acquisitions. These activities are fully integrated, which enables Itaú BBA to achieve a performance tailored to our clients’ needs.

One of the most important features of Itaú BBA is the set of initiatives linked to improving efficiency in our operations. These continuous actions, which are expected to continue to grow in the coming years, are designed to increase revenues, improve processes and reduce costs.

We focus on assessment practices and mitigation of environmental risks seeking to ensure the sustainability of the cash flows of our clients and manage our credit risk. These practices have been disseminated to other market participants through programs and partnerships with clients and international organizations such as the “Outreach Program for Latin America”, a forum for the dissemination and analysis of social and environmental risk in Latin America, led by Itaú BBA with the support of the International Finance Corporation, the Inter-American Development Bank and the United Nations.

In 2013, the servicing of middle-market corporate clients, comprising companies with annual revenues from R$30 million to R$300 million, was migrated to wholesale bank. This structure is intended to offer more specialized services, with more agility and variety of products, in order to enable a closer relationship with our clients and to increase our penetration in the middle-market corporate segment.

Investment Banking

Our investment banking business assists companies raising capital through fixed income and equity instruments in public and private capital markets, and provides advisory services in mergers and acquisitions. We advise companies, private equity funds and investors in the structuring of variable income products and in mergers and acquisitions. From research to execution, we believe we offer a wide portfolio of investment banking services with respect to Brazilian and other Latin American companies.

In investment banking, the fixed income department acts as bookrunner or manager in the issuance of debentures, promissory notes and securitization transactions.

The table below shows the market position and information about competitors for the business listed below:

COMPETITION
Product/Service	Market Position	Additional Information and Main Competitors
Investment Banking	In 2013, Itaú BBA ranked first in equity capital markets(1) and debt capital market(2) and second in merger and acquisitions(3).	In investment banking, Itaú BBA’s main competitors include Banco Santander, Banco de Investimentos Credit Suisse (Brasil) S.A., Banco Merrill Lynch de Investimentos S.A., Banco Morgan Stanley S.A., Banco JP Morgan S.A., Bradesco BBI and Banco BTG Pactual S.A.

Source: (1) ANBIMA Origination ranking by number of deals, (2) ANBIMA Distribution ranking, (3) Thomson ranking by number of deals.

Brokerage (Itaú Corretora)

Itaú Corretora has been providing brokerage services in BM&FBovespa since 1965. The brokerage services are also provided to international clients via our broker-dealers in New York, Hong Kong and Dubai. It ranked sixth among all BM&FBovespa brokers on equity trading volume and second in number of commodities and derivatives contracts in the period between January and December 2013.

Additionally, our research team ranked first in both Latin America and Brazil in the “Institutional Investor Research Ranking”, a research conducted among institutional investors.

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The table below shows the market position and information about competitors for the businesses listed below:

COMPETITION
Product/Service	Market Position	Additional Information and Main Competitors
Brokerage (Itaú Corretora) – Cash Equities	Ranked sixth in Cash Equities by trading volume.	Main Competitors: Credit Suisse Hedging-Griffo Corretora de Valores S.A., UBS Brasil Corretora, Morgan Stanley Corretora de Títulos e Valores Mobiliários S.A., XP Investimentos and Merrill Lynch S.A. Corretora de Títulos e Valores Mobiliários.
Brokerage (Itaú Corretora) – Futures and Derivatives	Ranked second in Derivatives and Futures by number of traded contracts.	Main Competitors: UBS Brasil Corretora, BTG Pactual Corretora de Títulos e Valores Mobiliários S.A., ICAP do Brasil Corretora de Titulos e Valores Mobiliarios Ltda and Tullett Prebon Brasil S.A. Corretora de Valores e Câmbio.
Research	Named Top Research House in Latin America.	Ranked best research team in Latin America by Institutional Investor survey, outperforming local and global players such as BTG Pactual Corretora de Títulos e Valores Mobiliários S.A., Credit Suisse Hedging-Griffo Corretora de Valores S.A., Bank of America Merrill Lynch S.A. Corretora de Títulos e Valores Mobiliários and JP Morgan Corretora de Câmbio e Valores Mobiliários S.A.

Source: Research Rankings: Institutional Investor Magazine.

Trading Rankings: CBLCnet

Large Companies

We offer products and services to companies with revenues over R$300 million. As of December 31, 2013, we had more than 3,000 clients.

Itaú BBA’s wholesale bank operating strategy is to offer efficient, differentiated services which meet the demands of our clients. We create and offer products and services for every business need, and conduct a segmentation based on each client profile.

Trade Financing

Our trade financing business consists of the management of financial products for export and import, foreign loans, guarantees, remittance of funds and international exchange. Our export financing to larger corporate clients is generally unsecured, but some transactions require complex guarantees, particularly those originally structured to be syndicated.

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Middle-Market Banking

In 2013, our middle-market banking business, which includes companies with annual revenues of more than R$30 million up to R$300 million, became part of the Itaú BBA management structure.

Last year, our middle-market banking business increased its share in clients with great credit rating (clients with low probability of default), with output risk customers with bad credit rating and increased operations with guarantee. Furthermore, there was a increase of non credit revenue due to focus on offering services, insurance and funding.

We are working to create and implement a new commercial model to be a market benchmark in all dimension, such as credit, product, people, among other, in order to establish a differentiated and sustainable growth for our Wholesale Bank.

We offer a full range of financial products and services to middle-market clients, including deposit accounts, investment options, insurance, private retirement plans and credit products. Credit products include investment capital loans, working capital loans, inventory financing, trade financing, foreign currency services, equipment leasing services, letters of credit and guarantees. We also carry out financial transactions on behalf of middle-market clients, including interbank transactions, open market transactions and futures, swaps, hedging and arbitrage transactions. We also offer a broad number of cash management services to our middle-market clients , including collection services, electronic payment services and Internet office banking.

Consumer Credit - Retail

Our consumer credit business is composed of financial products and services offered to account holding clients and non-account holding clients. This unit oversees the financing of vehicles, credit cards, and other complementary products, such as insurance plans, outside our branch network, mainly through partnership operations with major retailers, carries, automakers and airline companies established in Brazil.

Credit Cards and Commercial Agreements

Through proprietary and partnership operations with major retailers, telephone carriers, automakers and airline companies established in Brazil, we offer a wide range of credit and debit cards to more than 58.2 million current and non-current account holders (in number of accounts as of December 31, 2013).

Our main goals in the credit card business are to continually grow our portfolio, improve its profitability, manage the quality of our assets and pursue the total satisfaction of our clients. To this end, our credit card division focuses on the development of new products, assessment of our partnerships, control of the credit quality of our portfolio and on more efficient cost management.

In May 2013, we announced the acquisition of Banco Citicard S.A. and of Citifinancial Promotora de Negócios e Cobrança Ltda. for approximately R$2.8 billion, including the “Credicard” brand. Credicard distributes financial products and services, especially credit cards and personal loans, and had a portfolio of 4.8 million credit card accounts as of December 31, 2012. All regulatory approvals for this transaction have been obtained.

Also in May 2013, we changed our credit card reward program, called “Sempre Presente” (Always Present), and created a new platform for redemption of airline mileage awards, the “Ponto Viagem” (Travel Points), www.pontoviagem.net website, and awards in retail partners’ websites.

In October 2013, we launched “Hiper,” our new credit card brand available to all Brazilian consumers and accepted in over one million merchants acquired by Rede throughout Brazil. The “Hiper” branded products will initially be issued by Banco Itaucard S.A., or Itaucard, to our account holders and non-account holders in Brazil and initially available with credit functions. The “Hiper” brand will not substitute the “Hipercard” brand but, rather, be another option for our clients, with different benefits from those offered for “Hipercard”, such as:

· Conversion of 120% of the card’s annual fee into a bonus for mobile cellphones (currently available for 3 of the 4 largest Brazilian carriers) and

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· Cards with the Itaucard 2.0 feature (consistent with the standard international interest model, pursuant to which lower interest rates for revolving credit of up to 5.99% per month accrue from the date of purchase instead of the invoice due date -).

The table below shows the market position and information about competitors for the business listed below:

COMPETITION
Product/Service	Market Position	Additional Information and Main Competitors
Credit Cards	We believe we were the number one player in purchase volume and number of cards in Brazil in 2013.	The Brazilian credit card market is highly competitive, growing at a compound annual growth rate of over 18.0% over the last three years as of December 31, 2013, according to projections by the Brazilian Association of Credit Card Companies and Services (Associação Brasileira das Empresas de Cartões de Crédito e Serviços). Our main competitors in this business are Banco do Brasil S.A., Banco Bradesco S.A., Banco Santander Brasil S.A. and Caixa Econômica Federal.

Source: Itaú Unibanco Holding and CardMonitor.

In 2012 we announced our intention to acquire all outstanding shares of REDE, then Redecard, through a public tender offer aimed at cancelling Redecard’s authorization as a publicly-held company registered with the CVM. The tender offer targeted the acquisition of common shares of Redecard corresponding to approximately 50.0% of its share capital. On April 12, 2012, we confirmed that the price to be paid in cash would be R$35.00 per share (the “Tender Offer Price”). The tender offer was successfully completed on September 24, 2012. As a result of the auction, we acquired, through an affiliate, 298,989,137 common shares of Redecard, representing 44.4% of Redecard’s share capital, bringing the total amount of common shares owned by us to 94.4% of Redecard’s share capital. On October 18, 2012, Redecard’s registration as a publicly held company was cancelled. As of December 31, 2012, we held through our affiliates, 100.0% of Redecard’s shares, as a result of subsequent purchases. The shares were purchased at the Tender Offer Price for a total amount of R$11,752 million.

In October 2013, our acquirer business launched a new brand concept and changing its name from Redecard to REDE, to be in line with our business strategy, which has a broader scope into digital payments. The name REDE summarizes the company’s key attributes, evoking technology, agility and modernity, in addition to having a youth and connectivity appeal. While the company will continue to focus on large companies and merchants, it will also focus on end-users, particularly by offering technology-based services available through digital and mobile media. REDE is one of the two largest multi-brand acquirers of credit, debit and benefit card transactions in Brazil. REDE’s activities include merchant acquiring, capturing, transmission, processing and settlement of credit and debit card transactions, prepayment of receivables to merchants (resulting from sales made with credit cards), rental of point-of-sale terminals, or POS, check verification through POS terminals, and the capture and transmission of transactions using coupons, and loyalty programs. Our goal is to be the main partner for merchants that are seeking higher business potential. For those partners, REDE offers a series of products that follow the market’s latest trends. Among these products we highlight e-REDE, a single platform for efficient, fast and complete solutions for online payments using a robust antifraud system, and Mobile REDE, which captures the transaction using a device attached to the smartphone or tablet. It allows card reading and input of purchase data for client’s signature.

In 2013, we continued to focus on investments in IT, infrastructure and POS modernization, and through e-REDE we intensified and improved the quality of our electronic payments platform, offering not only the acquisition service, but also an antifraud gateway. Through Mobile REDE, we reinforced our position in new payments solutions for freelancers and micro entrepreneurs.

In May 2010, Hipercard, also a subsidiary of Itaú Unibanco, entered into an agreement with REDE, pursuant to which starting in the second quarter of 2010, REDE would start acquiring Hipercard transactions and Hipercard would have access to REDE’s nationwide infrastructure and network, which improved the efficiency and speed of Hipercard’s merchant affiliations.

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In 2013, REDE and Hipercard captured of R$323 billion in transactions with credit cards and debit cards, an increase of 16.2% from 2012. The number of transactions captured and processed reached 3.7 billion, representing an increase of 11.2% from 2012. In December 2013, we had 1.56 million installed POS terminals throughout Brazil, representing an increase of 8.9% from 2012. Without giving effect to Hipercard’s installed POSs, which were migrated to REDE in 2013, we had an increase of 23.6% in number of POS terminals from 2012 to 2013. The number of REDE’s affiliated clients grew 18.7% in 2013. As of December 31, 2013, REDE was present in almost all municipalities in Brazil with electric power and telecommunications network. We generally consider each POS to represent one client.

The following table sets forth the financial volume of transactions in billion of reais and the amount of transactions of credit and debit cards processed by us in 2013, 2012 and 2011:

	Financial Volume						Transactions
	2013		2012		2011		2013		2012		2011
	(In billion of R$)						(In billion)
Credit cards		209		183		173		1.8		1.7		1.6
Debit cards		114		94		79		1.8		1.6		1.4
Total		323		278		252		3.7		3.3		3.0

Vehicle Financing

In 2013, we granted R$18.9 billion in vehicle and heavy vehicle financing, a decrease of 14.2% compared to the same period of 2012.

Each vehicle financing application is reviewed based on credit scoring and dealer scoring systems. Applications with high credit scores are subject to electronic validation according to our credit policy and by credit bureaus. During 2013, we continued to focus on increasing the efficiency of our credit proposal analysis process. In December, 2013, 92.0% of all credit proposals were analyzed and decided in approximately 5 minutes, an improvement when compared to 16 minutes in June 2013. This efficiency was obtained due to an improvement in our systems.

Since 2012, we have reduced our risk exposure in this sector and focused on clients with better risk profiles, which allowed us to improve the credit quality of our vehicle loan portfolio.

In August 2013, we renewed our commercial cooperation agreement with Fiat, leader in the Brazilian vehicle industry until 2023. The agreement provides us with exclusivity to offer vehicle financing in Fiat’s marketing campaigns to sell new vehicles, and to use the Fiat brand in other activities related to vehicle financing.

The table below shows the market position and information about competitors for the business listed below:

COMPETITION
Product/Service	Market Position	Additional Information and Main Competitors
Vehicles	We have been the leaders in terms of amount financed in the 0km vehicle segment since August 2013.	Since August 2013, we believe we returned to the leadership position in terms of amounts granted for the acquisition of new vehicles, our main target in vehicle financing. Our main competitors are: Banco Bradesco S.A Banco Santander (Brasil) S.A Banco do Brasil S.A, Banco GMAC S.A, Banco Volkswagen S.A. and Cia de Crédito, Financiamento e Investimento RCI Brasil (Financeira Renault).

Source: Itaú Unibanco Holding, Cetip and Fenabrave.

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Consortia

A consortium is a self-financing system created in Brazil with a view to foster savings for the purchase of vehicles and other assets, such as real estate. Pursuant to consortium agreements, participants are pooled according to the specific asset they elect to purchase (e.g., a vehicle of a particular manufacturer and model), which will be paid for in installments. Payments made by the participants of a given consortium are used to create a “pool” of funds, which are used by one or more members of the consortium at a time to acquire the assets elected by the participants, e.g., once a month, and such members continue to make payments as scheduled. Generally, participants may receive the asset,

· during the course of the consortium agreement (before all installments are paid), if the participant pays an amount (in addition to the regularly scheduled installment due) that is higher than such an additional amount offered by any other consortium member for that period, or

· during the course of the consortium agreement (before all installments are paid), if the participant is selected by random drawing, organized by the bank, to receive the asset, while continuing to pay for the remaining installments as scheduled.

As consortia are regarded as a provision of services under Brazilian law, the management of consortia does not give rise to default risk or regulatory capital requirements for us.

Since consortia do not charge interest rates, our revenues come mainly from the administration fee charged from clients.

Given these characteristics, this business is strategic to us, contributing to revenue diversification and to a more complete product portfolio offering to our clients. In October 2013, we launched a new line of consortium products for the acquisition of heavy vehicles, which supported a growth of 28.1% in active participants among all the consortia we manage from November 2012 to November 2013. In the same period the number of consortia participants in the Brazilian market, excluding the motorcycle segment increased 14.8%.

Microcredit

Our microcredit unit offers low-income entrepreneurs who do not have the necessary attributes to participate in the traditional financial system the chance to expand and develop their businesses. Itaú Microcrédito’s loan officers reach out to new and existing clients, offering loans (coupled with a free loan-protection microinsurance) and disseminating financial concepts related to the responsible use of money.

A major benefit arising from this initiative is that micro-entrepreneurs start to develop a relationship with the formal market. Our microcredit activities are split into two levels:

· 1^st Tier Lending: includes working capital loans, or loans for upgrades and fixed assets provided to formal and informal business people engaged in small business activities. Any granting of loans requires the presence of a trained microcredit loan officer;

· 2^nd Tier Lending: loans to micro entrepreneurs through partner civil society organizations registered with the National Productive Microcredit Program. We are committed to promoting microfinance best practices and trading experiences with partner organizations.

Our investment in microcredit consolidates our strategy to act as agents of transformation in society. Microcredit is also important as it reinforces our vision of sustainability and increases our ability to spread our knowledge in financial education. The end goal is to create a virtuous cycle in which the bank stimulates the social and economic development of Brazil’s low-income population.

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Our International Business

Itaú Unibanco Holding’s Global Footprint

As of December 31, 2013 we were present in 19 countries outside of Brazil, seven of which are in Latin America. In Argentina, Chile, Paraguay and Uruguay, we offer commercial banking (retail) and wholesale banking with the main focus on commercial banking. In Mexico, we operate in the credit card segment and we are in the initial phase of opening a brokerage company and an investment bank. We also have an Itaú BBA representation office in Peru, and are gradually intensifying our presence in Colombia through our investment banking and corporate operation.

Additionally, we have operations in Europe (France, Germany, Luxembourg, Portugal, United Kingdom, Spain, and Switzerland), in the United States (Miami and New York), in the Caribbean (Cayman Islands and the Bahamas), in the Middle East (Dubai), and in Asia (Hong Kong, Shanghai and Tokyo). These are operations that mainly serve institutional, investment banking, corporate and private banking clients.

Please refer to section Performance, item Financial Performance, Results, Revenues from Operations in Brazil and Abroad, for further information.

Latin America

Our operations in Latin America are mainly focused on commercial banking and are concentrated in the Southern Cone (Argentina, Chile, Paraguay and Uruguay), but also include Colombia with investment banking and corporate operations, and Peru with corporate operations through a representation office. In Mexico, we operate in the credit card segment and we are in the initial phase of opening a brokerage company and an investment bank.

Latin America is a priority in our international expansion plans due to the geographic and cultural proximity to Brazil. Our purpose is to be recognized as “the Latin American bank”, becoming a reference in the region for all financial services provided to individuals or companies. Our target is to grow in a sustainable way, maintaining a strong relationship with the local retail and wholesale market.

In order to support our more than 1.8 million clients, as of December 31, 2013 we had a network of 246 branches and client service branches (CSBs) in Latin America (ex-Brazil). In Paraguay, we had 37 non-bank correspondents, which are points of service with a simplified structure, strategically located in supermarkets to provide services to our clients in that country. We also have 38 points of service through OCA S.A., our credit card operator in Uruguay.

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* As of December 31, 2013

Banco Itaú Argentina

We have operated in Argentina since 1979, where we focus on large companies with business ties to Brazil. In 1994, we initiated our retail operations in Buenos Aires. In 1998, we increased our presence by buying Buen Ayre Bank, subsequently renamed Banco Itaú Argentina. The GDP of Argentina increased 3.1% in 2013.

Through Banco Itaú Argentina we offer products and services in corporate banking, small- and middle-market companies and retail banking. Our corporate banking business focuses on large and institutional clients, providing lending, structured finance, investment and cash management services. Our small- and middle-market operations provide credit for working capital and investments in production capacity increases. Our retail banking business focuses on middle and upper-income clients and services offerings include current and savings accounts, personal loans and credit cards.

Banco Itaú Chile

Our business in Chile is mainly focused on retail and high-income clients, but we also operate with middle-market and large corporate clients. In 2013, we opened 7 new branches, totaling 98 branches in our service network in Chile as of December 31, 2013. The GDP of Chile increased 4.0% in 2013.

We started our activities in Chile in 2007, after Bank of America Corporation transferred the operations of BankBoston Chile and BankBoston Uruguay to us. In 2011 we acquired the high net worth portfolio of HSBC Bank and in 2012 we completed the acquisition of 50.0% of Munita, Cruzat & Claro, a leader in wealth management in Chile.

Today, we are one of the leaders in wealth management and have the second fastest growing loan portfolio in Chile, according to the Superintendency of Banks and Financial Institutions – SBIF as of November 2013. Moreover, our foreign trade portfolio and student loan program have increased as of December 31, 2013.

In line with our commitment with the Chilean market, we launched the “It Now IPSA”, the first exchange traded fund (ETF) that tracks the return of the shares of the 40 largest funds in the local market. Our ETFs are traded under the brand “It Now”. In the coming years, our expectation is to grow between 20% and 30% in the ETF industry worldwide and we believe Chile will be part of this expansion.

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Please refer to section Itaú Unibanco Holding, item 2013 Highlights, Recent Developments, for further information about the merger of Banco Itaú Chile with CorpBanca.

Banco Itaú Uruguay

Our banking operations in Uruguay include Banco Itaú Uruguay, OCA (the largest credit card issuer in Uruguay) and the pension fund management company Unión Capital AFAP S.A., making us one of the leading financial operations in Uruguay. Our strategy in Uruguay is to serve a broad range of clients through customized banking solutions. The GDP of Uruguay increased 3.8% in 2013.

Our retail banking business is focused on individuals and small business clients, with more than 297,000 clients as of December 31, 2013. Retail products and services focus on the middle and upper-income segments, and also include current and savings accounts, payroll payment, self-service areas and ATMs in all branches, and phone and Internet banking. The wholesale banking division is focused on multinational companies, financial institutions, large and middle market companies and the public sector, providing lending, cash management, treasury, trade and investment services. Additionally, our private banking business unit provides a full portfolio of local and international financial market products.

We have been the second largest private bank in Uruguay in terms of market share since July 2012 and have been recognized as the best bank in Uruguay by “Euromoney” magazine. With the purpose of maintaining this pace of growth and local penetration, in June 2013 we entered into an agreement to purchase the retail operations of Citibank in Uruguay, assuming a portfolio of over 15,000 account holder clients. The assets acquired at that time involve mainly credit card operations under the Visa, Mastercard and Diners brands, representing a portfolio of US$45.6 million in credit card loans and US$12.6 million in personal loans. This transaction closed in December 2013, after approval by the local regulatory authorities.

Banco Itaú Paraguay

Our operations in Paraguay began in 1978 and comprise retail and wholesale banking, through Banco Itaú Paraguay S.A., formerly known as Interbanco. In 1995, Interbanco was acquired by Unibanco, and the “Itaú” brand has been present in the country since 2010. The GDP of Paraguay increased 13.0% in 2013.

Banco Itaú Paraguay distributes products and services to small and middle market companies , agribusiness, large companies institutional clients and consumer clients. Banco Itaú Paraguay’s main sources of income are consumer banking products, primarily credit cards. The retail segment also focuses on payroll clients. Under corporate banking, Banco Itaú Paraguay has a well-established presence in the agribusiness sector, which has performed very well.

Our strategy for the retail and middle market segments in the last years resulted in a significant increase in our local market share. We are the leading player in the credit card segment and hold the first position among banks in Paraguay based on results, return on average equity and deposits, according to the Central Bank of Paraguay in November 2013. In 2011, 2012 and 2013, we were considered the highest regarded brand in Paraguay according to the Brazilian Institute of Public Opinion and Statistics - Paraguay Branch, and were recognized as the best bank in Paraguay by “Global Finance” magazine.

Colombia

In Colombia, our wholesale and investment bank has been operating since the end of 2012. Our target market in Colombia consists of institutional investors and large Brazilian companies operating in Colombia as well as Colombian companies operating in Brazil. The product portfolio includes loan operations, foreign trade financing, foreign exchange and derivatives and investment bank activities, such as advising on mergers and acquisitions and accessing the capital markets. We estimate that the GDP of Colombia increased 4.1% in 2013.

Our presence in Colombia is increasing, and we aim to be one of the three main investment and wholesale banks in Colombia in the next five years.

Please refer to section Itaú Unibanco Holding, item 2013 Highlights, Recent Developments, for further information about the merger of Banco Itaú Chile with CorpBanca.

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Peru

In Peru, we have a representation office and are considering expanding our activities into corporate and investment banking, following the same strategy as in Colombia, so as to take advantage of the strong growth experienced by Peru. The GDP of Peru increased 5.0% in 2013.

Mexico

In Mexico, we operate in the credit card segment and we are in the initial phase of opening a brokerage company and an investment bank. The GDP of Mexico increased 1.1% in 2013.

Other International Operations

To support our clients in cross-border financial transactions and services, our international units are active in providing our clients with a variety of financial products, such as trade financing, loans from multilateral credit agencies, off-shore loans, international cash management services, foreign exchange, letters of credit, guarantees required in international bidding processes, derivatives for hedging or proprietary trading purposes, structured transactions and international capital markets offerings.  These services are offered mainly through our branches in Nassau, New York and Cayman Islands, as well as through our other Latin American operations mentioned above.

We manage proprietary portfolios and raise funds through the issuance of securities in the international market.  Fund raising through the issuance of securities, certificates of deposit, commercial paper and trade notes can be conducted by our branches located in the Cayman Islands, Bahamas and New York, as well as through Itaú Bank Ltd., a banking subsidiary incorporated in the Cayman Islands.

Our proprietary portfolios are mainly held by Itaú Bank and our Cayman Islands branch.  These offices also enhance our ability to manage our international liquidity.

Through our international operations, we establish and monitor trade-related lines of credit from foreign banks, maintain correspondent banking relationships with money centers and regional banks throughout the world and oversee our other foreign currency-raising activities.

Itaú BBA International

Our banking activities carried out under the corporate structure of Itau BBA International are mainly focused on two business lines:

· Corporate and Investment Banking — Headquartered in the United Kingdom, but with business platforms in several cities in Europe, we meet the financial needs of companies with international presence and operations, focusing on transactions related to financing and investment relationships between companies in Latin America and Europe. The services offered include the origination of structured financing, hedging, trade financing and advisory to both European companies investing in Latin America and Latin American companies investing overseas.

· Private Banking — Under the corporate structure of Itau BBA International, we manage private banking activities in Miami, Switzerland and Luxembourg (where our activities are currently being scaled down), offering specialized financial products and services to high net-worth Latin American clients.

On February 1, 2013, Banco Itaú BBA International S.A., headquartered in Portugal, was merged into Itau BBA International Limited, headquartered in the United Kingdom. On May 17, 2013, the entity was registered as a public limited company under the trade name Itau BBA International plc. The purpose of this restructuring process is to allow Itau BBA International to improve its performance and sources of funding, expand its client base, strengthen its position as an international platform for the group, achieve greater diversification of risk and increase profitability indicators.

Additionally, Itaú BBA participates in the international capital markets as a dealer, as it has equity and fixed income sales and trading teams in São Paulo, New York, London, Hong Kong and Tokyo.  As of December 31, 2013 we had the best research analyst team in Latin America according to Institutional Investor Magazine and provide extensive coverage of over 205listed companies in Brazil, Mexico, Chile, Colombia, Peru, Panama and Argentina.  Our international fixed income and equity teams are active in trading and offering Brazilian and Latin American securities to institutional investors.

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Competitive Strengths

We believe the following strengths provide us with significant competitive advantages and distinguish us from our competitors.

Premier banking brand in Brazil

Our brands are very strong and very well recognized in Brazil. They have been associated with quality and reliability and, with our large portfolio of products, help us maintain a low client turnover rate, especially among clients in the high income segment. In 2013, our brand was elected by consulting firm Interbrand as “the most valuable brand” in Brazil for the tenth consecutive time.

Large branch network in geographic areas with high economic activities

Our Brazilian branch network, while national in scope, is strategically concentrated in the southeast of Brazil, the country’s most developed region. Our branch network in other countries of the Southern Cone (Argentina, Chile, Paraguay, and Uruguay) is also positioned in regions with high levels of economic activity. Having our branch network in key economic areas gives us a strong presence and a competitive advantage to offer our services to a broad range of clients and profit from selective market opportunities. Our exclusive ATM network allows us to offer a wide range of products and services to our clients which we see as one of our competitive strengths.

Additionally, we have refurbished branches especially for shopping malls. These branches have a new visual identity and service proposal, offering a new concept of client service and a differentiated layout inspired by the design of a retail store. Shopping mall branches have extended hours, which offers added convenient for our clients. Please refer to item 7.3 - Marketing and Distribution Channels, for further information.

We have an extensive network with 4.1 thousand branches, 885 client site branches, or CSBs, and 27.9 thousand ATMs in Brazil and abroad, as of December 31, 2013.

Diversified line of products and services

We are a multi-service bank offering a diverse line of products and services that are designed to address the needs of various types of clients, including corporate clients, very small and small enterprises, retail clients, high-income individuals, private bank clients, non-accountholders and credit card users. We believe that this business model creates opportunities to improve our relationship with clients and thereby increases our market share. We expect to maintain our leading presence by capturing a solid and increasing number of transactions across various business segments.

Technology and electronic distribution channels as drivers for sales

Our intensive use of technology and electronic distribution channels, which has contributed significantly to an increase in sales of products and services, is one of our most important competitive advantages. In 2013, we spent approximately R$5.8 billion on information technology, of which approximately R$2.0 billion was spent on the purchase of hardware and software and approximately R$3.8 billion on information technology infrastructure, operation and maintenance. We have sophisticated technology that supports certain remote banking access (e.g., call centers, Internet banking, etc.) and offers clients the ability to verify statements and perform transactions. Our sales teams can access client credit scores directly through mobile phones and credit proposals can be sent over the Internet by any broker registered with our systems.

Risk-based pricing model as a tool to manage risk while exploring opportunities

Our risk-based pricing model, as applied to our products, is an important competitive advantage as it gives us a more precise dimension of the risk equation versus return in various scenarios. This is an essential tool to explore commercial opportunities and simultaneously manage risks. Depending on the product, each contract is individually priced using risk adjusted return on capital models that give us a better assessment of the relevant market.

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b) Revenue arising from each segment and its proportion of the Issuer’s net revenue

Activities

Our segment information is based on reports used by senior management to assess the financial performance of our business and make decisions on the allocation of funds for investment and other purposes. The segment information was prepared in accordance with the accounting practices adopted in Brazil (BRGAAP) but includes the following pro forma adjustments: (i) the recognition of the impact related to the allocation of capital by means of a proprietary model; (ii) the use of financing and cost of capital, in accordance with market prices, based on some management criteria; (iii) the exclusion of non-recurring events from our results; and (iv) the reclassification of the tax effects of hedging transactions carried out for our investments abroad. The table below presents our revenues per segment for the years ended December 31, 2013, 2012 and 2011.

					(In millions of R$)
	Year ended December, 31
	2013		2012		2011
Commercial Bank - Retail		44,567		51,551		48,236
Interest margin (1)		23,719		32,770		31,584
Banking service fees		12,585		12,289		10,915
Income from insurance, private pension and capitalization operations before claim and selling expenses		8,263