2011 A nnual Report .12011 ANNUAL REPORT N EW HORIZONS
2011 A nnual Report .02About this Report T he year 2011 marked the beginning of a new stage in BI&P – BancoIndusval & Partners’ path of progress and BI&P’s main asset, who put into practice the values they discussed, defined and assimilated, and who lead the Bank to a new NEW CULTURE NEW STRUCTURE NEW POSITIONINGdevelopment: we attracted new partners, development horizon, effectively embodying Strategic Vision Strong and experienced Deep knowledge of marketstrengthened our management, business, the concept that “partners” brings to the management and teams variables and of oursupport and control teams, expanded the new brand. customers’ businessesrange of products we offer and markets Throughout this Report, we willwe operate in, and consolidated our present BI&P in all of its aspects, and itsmeritocracy-based work culture. That is transformation in 2011: from people to Development of edge The new headquarters and Broader product offer, tailor-the first step in our path to materialize technology, from management to results – and expertise in certain investments in technology made to meet the needsour vision of “being an innovative bank, and we will emphasize the importance of our business chains and systems provide more of our customers and thewith excellence in corporate credit and in employees, who play a major role in this new safety and efficiency industries where they operatedepth knowledge of our customers and the excellence-oriented phase.industries in which they operate, as well as Constant pursuit of Solid policies and enhanced Development of effectiveone of the leaders of the growing corporate Enjoy your reading! innovation and excellence operational procedures relationships with mid-fixed income bond market in Brazil.” sized and large corporate The theme illustrated in this Annual customers (Middle MarketReport represents this scenario: people, and Corporate)
2011 A nnual Report .03ContentsMESSAGE FROM MANAGEMENT .........04 ADMINISTRATIVE STRUCTURE .........28VISION AND VALUES .........06 People Management .........30 Risk Management .........32MAIN INDICATORS .........07 ECONOMIC AND FINANCIAL PERFORMANCE .........34CORPORATE PROFILE .........08 Credit Portfolio .........37History .........09 Funding .........38New Brand, New Bank .........09 Capital Structure .........39Strategic Partnerships .........10 Financial Transactions .........39Corporate Structure .........12 Operating Revenues and Expenses .........40 Efficiency .........41STRATEGY .........13 Net Income .........42Customers .........15 Stock Performance .........43Products .........16People .........18 SOCIAL-ENVIRONMENTAL ACTIONS .........44 Annual Social Report .........49CORPORATE GOVERNANCE .........19Guidelines .........20 FINANCIAL STATEMENTS .........51Governance Structure .........21Governance and Capital Markets .........27 CORPORATE INFORMATION .........95
2011 A nnual Report .04Message fromManagementA NEW BANK WITH 45 YEARS OF EXPERIENCE A t BI&P, 2011 was a year full of changes, novelties and improvements that helped us to recover our growth pace withsolidity and profitability. Our Bank underwent a deep restructuring management, with the admission of professionals with significant experience in the financial market, and the promotion of various professionals who already worked at the Institution. This new team MANOEL FELIX CINTRA NETOof its objectives in a process of strategic repositioning, resulting in redefined the short- and long-term goals for all of our divisions–both Chairmanchanges to shareholders, management, partners, people, systems and the front office and supporting divisions–within the concept of turningcontrols, all indispensable to make our new reality come true. BI&P into a benchmark. JAIR RIBEIRO AND More than expanding the Bank’s capital structure, these changes In order to meet these goals, each division developed its own LUIZ MASAGÃO RIBEIROwere implemented to provide a qualitative improvement within our Action Plan, engaging the whole team. These Plans were combined Co-CEOsVision of becoming “an innovative bank, with excellence in and shared among everyone, and have been systematically monitoredcorporate credit and deep knowledge of our customers’ activities by our top management. The commercial, credit, international,and the industries where they operate.” operational, legal, funding, treasury and products divisions are working Our goal is very clear: returning to our historical levels of growth at a fast pace to implement their Action Plans, so as to adopt the bestand profitability, by generating high-quality assets in the Middle practices and controls, in addition to developing products that suit ourMarket and Corporate segments, more service revenues, and reducing target customers.credit risks. Finally, we gathered the Bank’s 30 most senior employees to define The first step was the Bank’s capitalization by U.S. fund Warburg which Values would be included in our DNA – Ethics, OwnershipPincus, by the controlling shareholders, and by the new Co-CEO, Jair Attitude, Excellence, Team Work, Focus on Results, Innovation andRibeiro, who then defined the organization’s new strategic Vision. Credibility. These are the Values that guide us in our everyday activities T h e s e c o n d s t e p w a s t h e re s t r u c t u r i n g o f t h e B a n k ’s t o p and help us execute our strategy.
2011 A nnual Report .05 In order to stand out among other mid-sized banks, we have expanded our focusand included services to companies in theCorporate segment. We strengthened oursector segmentation, with special focus onagribusiness, which is becoming increasinglymore professionalized and profitable. T h e s t r u c t u r i n g o f a s t ro n g p ro d u c t s Our results throughout the year have shown an improvementdivision was essential to the success of that should gain pace, since the teams are already assembled andour strategy. In 2011, in addition to the integrated to the new Vision and strategy, experiencing the Valuesredevelopment of traditional products, 23 determined for the business development of BI&P.new financial products were created and In 2012, the practices and controls implemented will beimplemented, including the creation of a consolidated and improved, in order to achieve excellence in all ofderivatives division. Today we offer a broad our divisions, thus ensuring the means for the solid and consistentrange of products to the market, leveraging growth we have planned. In this context, it is critical for us tothe relationships developed by the commercial develop even further our knowledge of our customers’ activitiesdivision. In addition, we have completed the and the industries where they operate, in order to leverage thecreation of the structured operations division, quality of our credit, customize our products to the needs of ourhome to our team specializing in fixed income customers and strengthen our relationship with them, materializingmarkets and M&A. recurring businesses through offers of multiple products, thus Another change worthy of mention is the improving our efficiency, margins and profitability.new stance adopted by our credit division. In The Company underwent several changes in 2011, and willaddition to segmenting it into two different continue to grow. However, Ethics and Credibility, key values thatdivisions—Corporate and Middle Market— we have carried with us throughout our 45-year history, still guidethe analysis parameters and criteria were our actions in society and in the financial market.revisited by applying many of the concepts We appreciate the trust, support and efforts of our shareholders,used to evaluate companies in the Corporate customers, business partners, and particularly our employees andsegment to mid-sized companies. As a result, collaborators, who played a key role in the implementation ofthe analysis of the customer’s operational the corporate and organizational changes developed throughoutactivities in their industry of operation and the year, making us a stronger and more dynamic and innovativetheir payment capacity became critical for bank. There is still a lot to do for us to reach the level of growth,the approval of credit facilities, serving as profitability and excellence we aim at. 2011 was just a great startaccessory guarantees to transactions. of this new cycle.
2011 A nnual Report .06VisionB eing an innovative bank, with excellence in corporate credit andin depth knowledge of our customersand the industries in which they operate,as well as one of the leaders of thegrowing corporate fixed income bondmarket in Brazil.ValuesE thicsO wnership AttitudeE xcellenceT eam WorkF ocus on ResultsI nnovationC redibility
2011 A nnual Report .07MainIndicators Branches São Paulo Campinas Rio de Janeiro BI&P is a Brazilian bank listed on Belo Horizonte UberlândiaBM&FBovespa’s Level 2 *1 (Nível 2) of Corporate GoiâniaGovernance, and it is using its 45-year Campo Grande Curitibaexperience in the financial market to position Maringáitself as an innovative financial institution, Porto Alegrefocused on corporate credit and on creatingcustomized products and services for mid-sized AGENCY RATING LAST REPORTand large companies. In order to help our customers develop Global: BB/ Stable /B Standard & Poor’s December 2011their business in Brazil and abroad, the BI&P National - Brazil: brA+/ Stable /brA-1team, made of more than 400 employees, has Global: Ba3/ Stable /Not Primeglobal expertise and deep knowledge of market Moody’s November 2011 National - Brazil: A2.br/ Stable /BR-2variables, and is always ready to evaluateeach transaction and find the best credit and FitchRatings National - Brazil: BBB/ Stable /F3 December 2011investment options for it. With this purpose, Index: 10.08we have established bonds with our customers RiskBank January 2012 Low Risk to Short Termin order to get to know their businesses andsegments of operation, which also allows us to Consolidated - R$ million 2007 2008 2009 2010 2011(d)develop and customize products that will meet Income Statementeach of their needs. Income from Financial Intermediation 289.0 641.0 407.5 453.8 631.7 Gross Income from Financial Intermediation 129.2 200.1 94.3 141.2 52.5 With assets totaling around R$4.3 billion Net Income 45.4 71.8 12.8 29.0 (31.7)at the end of 2011, BI&P operates in various Balance Sheet Free Cash (a) 255.6 422.6 695.9 732.8 887.3modalities, such as loans, financing, foreign Credit Portfolio 1,255.2 1,723.0 1,635.9 1,876.9 2,269.6trade transactions, corporate finance, corporate, Expanded Credit Portfolio (b) 1,329.0 1,793.7 1,698.7 1,941.2 2,534.4 Total Assets 2,211.2 2,225.4 2,730.5 3,276.1 4,278.3real estate and agricultural bonds, securitization Total Deposits 810.4 824.9 1,273.2 1,577.6 1,851.2o f re c e i v a b l e s , m e r g e r s a n d a c q u i s i t i o n s , Open Market 656.6 2.7 365.8 538.6 867.9structured transactions, and debt restructuring. Loans and Onlending 229.7 775.2 520.0 453.0 682.0 Shareholders Equity 406.7 448.5 432.7 426.4 577.1 Performance Indicators (a) Free Cash = Cash and Cash Equivalents and Interfinancial Marketable Return on Average Equity (ROAE) 16.3% 16.8% 2.9% 6.8% -6.3% Securities net of Funds obtained on Return on Average Assets (ROAA) 2.7% 3.2% 0.5% 1.0% -0.8% the Open Market. (b) Expanded Credit Default Ratio (c) 0.7% 1.9% 5.4% 3.3% 4.7% Portfolio includes: Sureties, Guarantees, L/Cs, CPRs and NPs. (c) Contracts more Basel Ratio 33.2% 24.0% 22.5% 17.6% 18.2% t h a n 9 0 d a y s o v e rd u e / To t a l C re d i t Operating Indicators Portfolio. (d) Under the Investment Number of Corporate Borrowers 983 699 660 709 734 Agreements established in March 2011, complementary provisions for doubtful Number of Depositors 592 571 672 628 661 accounts were created in the amount Number of Employees 331 329 333 362 421 of R$67.2 million to segregate potential credit losses as a result of deals closed in Number of Branches 11 11 12 11 11 previous years.1. Level 2 listing as of March 1, 2012.
2011 A nnual Report .09 NEW BRAND, NEW BANK A dding “Partners” to our name was not a mere change in our brand. In 2011, the Bank consolidated strategic relationships—with shareholders, executives, employees and partners—in order to put into practice a business plan that seeks to turn the Bank into a reference in corporate credit throughCorporate Profile knowledge, innovation and excellence. This plan becomes feasible with the new structure and the engagement of strategic partners. This new design involved the admission of new shareholders: the controlling shareholders of foreign trade company Sertrading, and privateA HISTORY OF TRANSFORMATION AND PARTNERSHIPS equity fund Warburg Pincus, listed as one of the world’s largest funds. It also includes the admission of one of the best executive teams in the market,1967. Establishment of Indusval Corretora de Valores. leading the implementation of the new strategy. To make the development of the businesses with excellence our staff was also strengthened.1991. Creation of Banco Indusval, operating with a focus on corporate credit specializing in the Middle Market.2003. Merger with Banco Multistock, creating Banco Indusval Multistock. BI&P ATTRACTED THE FIRST PRIVATE EQUITY INVESTMENT IN A BRAZILIAN BANK, PAVING THE WAY FOR LONG-TERM RESOURCES FOR THE DOMESTIC2007. IPO on the BM&FBovespa and capitalization of R$227.5 million. FINANCIAL SECTOR.2009. Strategic partnership with experienced professionals for developing the business of Indusval Multistock Corretora de Valores.2011. New expansion phase with a capital increase of R$201 million (Tier I); attracting new investors: Warburg Pincus and the controlling shareholders of Sertrading; strengthening of the Bank’s management; and, under an innovative vision of excellence, the BI&P – Banco Indusval & Partners brand was born.
MATERIALIZATION OF 2011 A nnual Report .10STRATEGIC PARTNERSHIPS T he first step was the Bank’s capitalization: Warburg Pincus invested R$150 million,t h e c o n t ro l l i n g s h a re h o l d e r s o f S e r t r a d i n ginvested R$30 million, and the Bank’s controllingshareholders invested another R$21 million, in a Indusvalcapital increase of R$201 million (tier I), executed Warburg Controllingin March 2011. Pincus At the same time, the Bank acquired a 17.7% Groupinterest in Sertrading’s capital, closed a 5-year R$21 millionoperating agreement with preference in the R$150 million capital capital investment. investment, 26%acquisition of its receivables from the foreign of the capital stock.trade activity, and took over its subsidiary thatgenerates agricultural bonds (CPRs). J.P. Morgan Bank also participated in thetransaction, providing BI&P with a credit facility ofUS$25 million, and obtaining subscription rightsover preferred shares corresponding to 2.5% ofthe Bank’s capital for a future minority interest. R$30 million investment, 5.5% of the capital stock, by the controlling shareholders of Sertading. Subscription rights R$25 million investment, of preferred shares 17.7% of the capital stock. (2.5% of capital stock). Operating Agreement for US$25 million, preference in receivables 2-year credit line. acquisition. Acquisition of 100% of agricultural securities originator for R$15 million. J.P. Morgan Sertrading Sale of Vastera JPM Chase (foreign trade).
STRATEGIC PARTNERS 2011 A nnual Report .11Sertrading A leader in foreign trade services in Brazil, with a transaction volume of R$1.6 billion in 2011, Sertradingconducts exports and imports for more than 90 countries,operating through its offices in São Paulo, Rio de Janeiro, Vitória,Itajaí, Paranaguá, Franca, Varginha and China since 2001. Our partnership with Sertrading is strategic, and providesfor various synergies. The acquisition of Serglobal transfersto BI&P the expertise in agricultural bond generation (RuralProduct Certificates - CPR) developed in the last 8 years. Thepossibility for the Bank to finance transactions of Sertrading’scustomers favors the expansion of its foreign trade activities Warburg Pincusand the growth of the Bank’s Trade Finance portfolio. It alsogives access to Sertrading’s large customers, making it easierto analyze the cycle and the operating activity of importersand exporters, mitigating the risks of transactions, enabling the F ounded in 1966, Warburg Pincus, one of the largest global private equity funds manager, has already invested more than US$40 billion in circa 650 companies, in over 30 countries. With US$30 billion in assets under management at the end of 2011 and a portfolio of more than 125structuring of an offer of multiple financial products to these companies, it is highly diversified both by state and sector, as well as geographically. Warburg Pincuscustomers, and expanding the generation basis of quality assets. has vast experience in the financial industry, with investments amounting to US$8.0 billion in more than 70 banks and companies linked to the provision of financial services. • Investment of R$150 million, corresponding to 26% of the total capital.• BI&P acquires 17.7% of their capital, with an investment • Right to elect a representative in BI&P’s Board of Directors. of R$25 million and the possibility to expand its equity interest in the next two years.• Acquisition of subsidiary Serglobal Comércio de Cereais Ltda, a generator of agricultural bonds, for R$15 million.• A 5-year Operating Agreement that guarantees BI&P’s preemptive rights to finance Sertrading’s customers J.P. Morgan through the acquisition of receivables generated in the • Long-term credit facility. foreign trade activity. • Acquisition of Subscription Rights for Preferred Shares, equivalent to 2.5% of BI&P’s capital. • Sale of J.P. Morgan Chase Vastera in Brazil and Argentina, J.P. Morgan’s foreign trade companies, to Sertrading.
2011 A nnual Report .12CORPORATE STRUCTURE CONTROLLING GROUP A fter the capital increase of R$201.4 million, resolved in May and approved by the Central Bank of Brazilin September 2011, BI&P’s capital stock went to R$572.4 Carlos Ciampolinimillion, and is comprised of 36,945,649 common shares Luiz Masagão(ON) and 26,160,044 preferred shares (PN), totaling Antonio G. da Rocha Jair Ribeiro ON = 56%63,105,693 shares. Manoel Cintra PN = 3% In this context, the shareholders’ agreement to determine TOTAL = 34%the control group, entered into by Messrs. Manoel Felix CintraNeto, Luiz Masagão Ribeiro, Carlos Ciampolini and Antonio FREE FLOAT J.P. MORGANG. da Rocha, now also includes Mr. Jair Ribeiro da Silva Neto. Warburg Pincus Other Subscription rights to 2.5% of the ON = 13% ON = 31% Bank’s capital stock in preferred shares PN = 43% PN = 51% TOTAL = 26% TOTAL = 39% TREASURY ON = 44% | PN = 94% | TOTAL = 65% PN = 3% | TOTAL = 1% 17.7% 23.1% 100% 100% SERTRADING BRASIL AGROSEC SERGLOBAL BI&P SECURITIZADORA CEREAIS INDUSVAL & PARTNERS CORRETORA
2011 A nnual Report .14Strategy I n 2011, with the new partnerships and the s t r e n g t h e n i n g o f i t s m a n a g e m e n t , B I & P, b a s e don the Vision of “being an innovative bank,with excellence in corporate credit and in deepknowledge of our customers and the industriesin which they operate”, with active participation ofa l l i t s d i v i s i o n s , r e d i r e c t e d i t s b u s i n e s s s t r a t e g y. T h i sstrategy, which was developed for the medium and longt e r m s , t a r g e t s g ro w t h w i t h q u a l i t y a s s e t s t h ro u g h t h eoffer of multiple products and a healthy generationof recurring revenue, keeping a focus on corporatec u s t o m e r s , a l w a y s s u p p o r t e d b y t h re e k e y p i l l a r s :
2011 A nnual Report .15CUSTOMERS F ollowing its expertise in corporate credit, BI&P decided to expand its operation with larger customers – Corporate segment. This segment, in addition tobeing less susceptible to cycles of economic instability, allows for an increase inproduct distribution per customer (cross-selling) and the generation of higher stabilityin the revenue flow. BI&P also promoted changes in the Middle Market segment.The Bank adopted a series of initiatives to improve the relationship of account andproduct managers with customers, and to deepen the operations support team’sknowledge on customers’ profile and needs, promoting synergies that are translatedinto operating excellence. Structuring of sales teams The Corporate customer relationship team was strengthened by new professionals,and the Middle Market team underwent renovation with the purpose of assemblinga staff that is trained to detect business opportunities, combining the offer of variousproducts. The commercial division works in partnership with the products teams,maximizing the relationship potential between the Bank and its customers. Deep knowledge of customers and industries One of the pillars in the pursuit of excellence in BI&P’s customer relationships Closer relationships with our customersis a daily exercise to deepen our knowledge of the activities developed by these BI&P is tightening its customer relationships by engaging several areas of the bank that,customers, which includes optimizing the Bank’s expertise of the industries where together, provide better support and quality to service, expanding the alternatives to meetthey operate, in order to: customer needs more efficiently. In the Commercial division: detect business opportunities that will add value and mitigate risks for both the customer and the Bank. In the Products division: develop innovative and customized products and Middle Market: companies with annual revenue between R$40 million and R$400 million. solutions to meet the demands of customers that present an increasing level of Corporate: companies with annual revenue between R$400 million and R$2.0 billion. sophistication and competitiveness in the market. In the Credit division: in addition to segmenting credit analysis into the Corporate and Middle Market teams, these teams are also being segmented for OUR PURPOSE IS TO BECOME A REFERENCE BANK IN THE MARKET AND FOR OUR a specialized analysis in economic sectors, increasing the capacity to identify risks CUSTOMERS, SUPPORTING THE CONSTRUCTION AND DEVELOPMENT OF THEIR inherent to both the industries and the activities of each customer. BUSINESS WITH EFFECTIVE SOLUTIONS, AS WELL AS CLOSE AND CUSTOMIZED SERVICE TO MEET AND EXCEED THEIR EXPECTATIONS.
2011 A nnual Report .16PRODUCTS I n order to help our customers develop their business in Brazil and abroad, the BI&P team has global expertise and deep knowledgeof market variables, and is always ready to evaluate each transaction andfind the best credit and investment options for it. With this purpose, weestablish close relationships with our clients in order to understand theirbusinesses and industry segments, which also allow us to develop andcustomize products that will meet each of their needs. The success of our strategy mostly depends on our capacity to offer intelligentand efficient solutions; therefore we work on the following key points: Deep knowledge of customers’ activities and industries where they operate In order to better identify and evaluate business risks and opportunities, and also to develop more efficient products and solutions to our customers without giving up on profitability, we have been seeking specialization in the most promising economic sectors and geographic regions, and, throughout time, the creation of franchise value in certain production chains. Strengthening of the products division Professionals specializing in developing financial products and services, connecting the experience in financial institutions and in companies. This combination allows for a unique experience in structuring solutions to meet the needs of corporate customers. Knowing the specific demands and characteristics of both sides at the negotiation table is an important edge in order to quickly understand the needs, detect opportunities and develop product offering. Expansion of the product and service portfolio In order to meet an increasingly sophisticated demand, and making use of the expertise of professionals in the products division, we have expanded our product and service offer with the purpose of strengthening our relationship with customers and increasing the profitability of our operations. In 2011, 23 new products were developed. Together with existing products, they cover most needs of our target customers, in addition to building the basis for structuring customized solutions. The products division, operating in close cooperation with the commercial team, has been able to identify opportunities and develop products and services which by means of customized and recurring transactions tighten mutual benefit relationships with clients.
PRODUCTS 2011 A nnual Report .17 CLIENTSMULTIPLE PRODUCT OFFERING AGRO BONDS LCA – Agri Letter of Credit CPR – Agri Product Certificate CPR Term CPR – Physical Settlement CPR – Financial Settlement CPR – Indexed Financial Settlement CDA/WA – Inventory Financing CDCA – Certificate of Agri Credit Rights Barter CRA – Agri Receivables Certificate LOCAL CURRENCY Credit Cession Confirming Discount of Receivables Overdraft Account Export Credit Notes Working Capital Local Guarantees FOREIGN CURRENCY Export Finance (ACC/ACE) Import Finance Law Nbr. 4,131 Import Draft Discount International Guarantees (SBLC) INVESTMENT BANKING Letter of Credit Real State Products Capital Markets Corporate Finance Investment Management BNDES ONLENDINGS Mergers & Acquisitions There are more than 50 products—23 launched or Finem Syndications remodeled in 2011—in various modalities: loans Finame and financing, foreign trade transactions, corporate BNDES-Exim DERIVATIVES finance, issuance of corporate, real estate and PROCAP-AGRO Swap agricultural bonds, securitization of receivables, BNDES Progeren NDF mergers and acquisitions, structured transactions, and BNDES Automático debt restructuring. Options
2011 A nnual Report .18PEOPLE P eople are the main intangible asset of any financial institution. Through theirknowledge and experience, they are capable of Attraction Besides the significant additions to the Company’s management, both in its Board of Directors and Board of Executive Officers, in order to meet Motivation Retaining teams and keeping them producing with a focus on results is just as important as attractinggenerating relationships, developing products, the Excellence and Innovation goals proposed by the Vision, it was critical them. Therefore, in addition to the initiatives taken inevaluating and managing risks and producing to hire highly qualified and experienced professionals, as well as young people management, with the purpose of becoming,growth and sustainable results in the long term. talents with excellent education and motivation. This blend guarantees in the medium term, one of the 100 best companies The progress of any successful strategy the experience and speed required to effectively make the proposed to work for in Brazil, BI&P believes that meritocracybegins with the attraction, retention and changes. The combination of experienced and young professionals with the is the path for the success of its strategy. For thatmotivation of people, who build the company’s opportunity to take part in a transformation and expansion project like BI&P purpose, in addition to the initiatives arising from theeveryday life and implement its strategy. enables the development of our strategy with limited impacts on expenses. organizational climate research, it has strengthenedTherefore, we will begin with the actions that its performance evaluation process, adopting the 360ºare related to the people that comprise the Consolidation of the New Corporate Culture evaluation method, which is further described in theBI&P team: Such a significant transformational process in an organization requires People Management item. dedicated work to consolidate the new corporate culture. Disseminating and internalizing the Company’s Values and Vision was, and still is, OUR STRATEGY FOR CUSTOMERS AND essential for the development of an organizational culture where PRODUCTS IS SUPPORTED BY PEOPLE. managers, employees and collaborators are all integrated and working in ONLY THEY ARE CAPABLE OF GENERATING line with the same values. With that in mind, each of the Values has been RELATIONSHIPS, DEVELOPING PRODUCTS, broadly disseminated throughout the organization, so as to effectively ASSESSING AND MANAGING RISKS AND become part of the routine of all employees. PRODUCING SUSTAINABLE GROWTH AND RESULTS.
2011 A nnual Report .20Corporate Gover nance KEY STAKEHOLDERSGOVERNANCE GUIDELINES Money Bylaws Laundering BI&P’s management is guided by its values: Ethics, Ownership Management and Employees PreventionAttitude, Excellence, Team Work, Focus on Results, Innovation Shareholdersand Credibility. Its governance is defined by its bylaws andshareholders’ agreement, in addition to various policies andcodes, which establish the rights and duties of managers and Information Know yourshareholders, as well as the other audiences that maintain a Disclosure Clientrelationship with the Company. All employees are instructed Policyregarding the management policies and guidelines, which areavailable on the intranet and are presented in the chart below: Securities Code of Ethics Trading Policy Personal Shareholders’ Investment Agreement Policy* All documents presented are available on the Company’s website: www.bip.b.br/ir
GOVERNANCE STRUCTURE 2011 A nnual Report .21Board of Directors BI&P’s Board of Directors, with tenure up to 2013, is comprised of 4 independent members MANOEL FELIX CINTRA NETO Chairman of the Board of Directorswho are highly qualified professionals in their specific activities, in addition to its controllingshareholders. Independent members represent more than 40% of all board members. Mr. Cintra is an economist and one of the leaders of the Brazilian financial community, having served in top positions at BancoMEMBERS OF THE BOARD OF DIRECTORS IN 2011 Bozano Simonsen (1970-1984), Multiplic Bank and Brokerage (1985-1999), as CEO and partner of Multistock Bank andManoel Felix Cintra Neto Chairman Brokerage and Máxima Consumer Finance (1999-2003). AfterCarlos Ciampolini Vice-Chairman the merger with Indusval, he became one of its controllingAntônio Geraldo da Rocha Member shareholders and President (2003-2011). He also served asJair Ribeiro da Silva Neto Member Chairman of ANBID (1990-1992), Executive Officer at FEBRABANLuiz Masagão Ribeiro Member (1989-1995), Vice-Chairman of CBLC (1999-2003), Chairman ofAlain Juan Pablo Belda Fernandez Independent Member BM&F (1997-2008). Since 2009, Mr. Cintra has been ChairmanAlfredo de Goeye Junior Independent Member of ANCORD and member of the Fiscal Council of FGC. He is alsoGuilherme Affonso Ferreira Independent Member Vice-President of the Organizing Committee of the Olympic andWalter Iório Independent Member Paralympics Games Rio 2016.Fiscal Council Shareholders’ Installed in 2010, the Fiscal Council remains in activity, with the extension of the tenure of Meetingits members in 2011, providing better contribution to a proper business development. Fiscal CouncilFISCAL COUNCIL MEMBERS IN 2011 Board ofFrancisco de Paulo dos Reis Sitting Member DirectorsJairo da Rocha Soares Sitting MemberLuiz Alberto de Castro Falleiros Sitting Member Compensation Committee Executive Board BI&P CONDUCTS ITS BUSINESSES UNDER THE BESTCORPORATE GOVERNANCE PRINCIPLES AND ITS COMMITMENT Human Information Watch List Internal Audit Compliance Resources Technology Committee Committee Committee TO TRANSPARENCY, FAIRNESS AND CLARITY IN REPORTING. Committee and Safety Committee Products Assets and Legal Credit Committee Liabilities Committee Committee Committee* Access detailed information at: www.bip.b.br/eng/ri/governanca/estrutura.asp
2011 A nnual Report .22Committees BI&P maintains 10 committees and twosub-committees not established in the bylaws,which support the company’s managementin decision-making processes and in thedevelopment of initiatives related to variousissues that are relevant to the Bank’s business.With multidisciplinary composition, thesecommittees gather experienced professionalsin many areas related to their themes in theirwork routine.Board of Directors’ Advisory Committee Periodicity Purpose Periodically review executive compensation. The Compensation and Benefits Committee is composed of Messers Manoel FelixCompensation Committee Semiannual minimum Cintra Neto, Luiz Massagão Ribeiro, Jair Ribeiro da Silva Neto and Alain Juan Pablo Belda Fernandez.Board of Executive Officers’ Advisory Committees Periodicity PurposeCredit Committee Weekly To decide on credit limits and operations. To control the Bank’s liquidity; analyze cash flow projections, funding alternatives, transactions and operating limits;Assets and Liabilities Committee Weekly and approve interbank credit limits.Watch List Committee Weekly To decide on actions to be taken for renegotiation and recovery of credits overdue from 16 to 360 days.Products Committee Bi-weekly To evaluate and resolve on all matters related to new or existing products.Internal Audit Committee Monthly To monitor accounting practices and the effectiveness of internal controls. To establish policies, operating rules and strategies to disseminate the practice of internal controls to internal controlsCompliance Committee Monthly culture diffusion for risk mitigation and legal requirements compliance. Subordinate to this committee is the Ethics sub-committee that meets weekly or extraordinarly whenever necessary.Information Technology and Safety Committee Monthly To resolve on investments’ goals, strategies and execution in technology and procedures. To analyze litigation strategies, rules and procedures related to legal matters, evaluating and defining alternativesLegal Committee Monthly to mitigate specific risks.Human Resources Committee Bi-weekly To discuss the HR strategy, as well as wages, people development and organizational climate.
2011 A nnual Report .23BOARD OF EXECUTIVE OFFICERS Chairman of the Board of Directors Elected for the 2011/ 2012 biennium, Manoel Felix Cintra Netothe Board of Executive Officers iscomprised of nine renowned and Chief Executive Officersexperienced market professionals, under CEO CEOthe leadership of Jair Ribeiro and LuizMasagão, who share the position of Chief 1. Jair Ribeiro 2. Luiz Masagão RibeiroExecutive Officer. Kátia Moroni Francisco Cote Gil André Mesquita Gilberto Faiwichow Credit Trade Finance Commercial Products and Treasury Local and Corporate and Investor Claudio Cusin Foreign Finance Relations Corporate Fundraising Syndications Jair Balma Eliezer R. da Silva Local Middle Market Financial Funding Institutions Accounting and Compliance and Controlling Internal Controls Risk Management Administrative Legal Information Human Resources Technology1. JAIR RIBEIRO DA SILVA NETO 2. LUIZ MASAGÃO RIBEIRO Co-CEO Co-CEO Lawyer and economist, he was one of the founders and CEO of Banco Patrimônio (1988-1999), as well as CEO of Chase Business manager, he was the CEO of Indusval Corretora Manhattan Bank and Executive Officer of J.P. Morgan Chase (1998-2008), Chairman (1986-1991) and Member (NY) (2000-2003). More recently, Mr. Silva Neto served as co- (1998-2003) of BM&F’s Board of Directors, Member founder and CEO, in addition to being a shareholder, of CPM of Bovespa’s Board of Directors (1987-1992), CEO of Braxis (2006-2010), one of the largest Brazilian companies of Banco Indusval (1988-2003), Chairman of the Board IT services, the control of which was sold to European group of Directors and Managing Director of Banco Indusval Capgemini in October 2010. Jair is also the founder and (2003-2011). He is currently a Director of the Brazilian President of Casa do Saber and NGO Parceiros da Educação, Financial and Capital Markets Association (Anbima). which “adopts” public schools.
2011 A nnual Report .24BOARD OF EXECUTIVE OFFICERS Chairman of the Board of Directors Manoel Felix Cintra Neto Chief Executive Officers CEO CEO Jair Ribeiro Luiz Masagão Ribeiro 3. 4. 5. 6. Kátia Moroni Francisco Cote Gil André Mesquita Gilberto Faiwichow Credit Trade Finance Commercial Products and Treasury Local and Corporate and Investor Claudio Cusin Foreign Finance Relations Corporate Fundraising3. Syndications Financial Jair Balma Local Eliezer R. da Silva Middle Market Funding Institutions Accounting and Compliance and KATIA MORONI Controlling Internal Controls Vice-President for Trade Finance, Risk Funding and Management Syndications Administrative LegalServed as a Director in institutions suchas Banco Multiplic S.A., BankBoston N.A.,Multiplic, CVM S.A. and Santander Group from Information Human Resources Technology1994 to 2003, when she took over the positionof International Officer of Banco Indusval.4. 5. 6. FRANCISCO ANDRÉ MESQUITA GILBERTO FAIWICHOW COTE GIL Vice-President for Products, Vice-President for Treasury Vice-President for Corporate Finance and and Investor Relations Officer Commercial Division Agricultural BondsRegional Director and Executive Officer of Economist, former controller of Cotia Trading, CEO and COO Engineer, served as Financial Officer and Treasury Director ofBanco Crefisul (Citibank) (1972-1990) and of Cotia Argentina (1994-2000), Co-founder and Financial Banco ING (1987-1992); co-founder and treasurer of BancoRegional Director of Banco BBA, becoming a Officer of Sertrading (2000 – 2006), and Financial Officer of Rendimento, founder of Zoom Asset Management and partner ofshareholder and Executive Officer of BBA and, CPM Braxis (2006-2011), where he was responsible for the Black River Asset Management (Cargill) (2003-2008), in additionsubsequently, of Itaú BBA (1990-2009). acquisition and integration of seven companies. to BRL Capital (2009-2011).
2011 A nnual Report .25BOARD OF EXECUTIVE OFFICERS Chairman of the Board of Directors Manoel Felix Cintra Neto Chief Executive Officers CEO CEO Jair Ribeiro Luiz Masagão Ribeiro Kátia Moroni Francisco Cote Gil André Mesquita Gilberto Faiwichow Credit Trade Finance Local and Commercial Products and Corporate Treasury and Investor 7. Claudio Cusin Foreign Finance Relations Corporate Fundraising Jair Balma 8.Eliezer R. da Silva Syndications7. Financial Institutions Local Funding Middle Market Accounting and Compliance and Controlling Internal Controls CLAUDIO CUSIN Risk Credit Officer – Corporate Management Administrative LegalEngineer and economist, he served as credit directorat BankBoston (1988-1997), ING (1997-2002), WestLB Information Human Resources Technology(2005-2006), Banco Standard de Investimentos (2007-2009) and KdB (2010).8. 9. JAIR BALMA ELIEZER RIBEIRO Local Currency Credit Officer – Funding Officer Middle Market Business Manager, he has worked in the funding divisions of banksAccountant, he started his career at Serasa - Centralização dos Serviços Itaú (1983-1987), Multiplic (1987-1990 e 1995-1999), BCN Barclaysde Bancos S.A. (1980-1989), and later worked in credit analysis at banks: (1995-1999), Multistock (1999-2003), and as of 2003, Banco IndusvalSudameris Brasil (1989-1992), BMG (1992-1993), and as of 1994, Banco S.A., where he was appointed as Executive Officer in 2011.Indusval S.A., being appointed as Executive Officer in 2007.
2011 A nnual Report .26 L ALEXANDRE ATHERINO e d b y A l e x a n d re A t h e r i n o a n d L u i z F e r n a n d o Monteiro de Gouvea since 2009, a team of experienced Alexandre Atherino has worked in the capital markets sinceprofessionals works in the intermediation of transactions in the 1983, when he started his career at Doria & Atherino S/Astock, commodities, futures exchanges and public bonds at CCVM (1983-1999), playing a major role in the company’sIndusval & Partners Corretora de Valores, in full synergy with merger with Fator Corretora (1999-2008). At Banco Fatorthe Bank’s activities. and Fator Corretora, he served as CEO and was responsible • Indusval & Partners Corretora de Valores is prepared for several divisions, including Equity Research, Products and to support the distribution of fixed income bonds, Planning & Strategy. such as Debentures, Bank Deposit Certificates (CDBs), Agribusiness Credit Certificates (LCAs), and also Agribusiness Receivables Certificates (CRAs) and Real Estate Receivables Certificates (CRIs). • The Agricultural Commodities Dealing Desk is able to fastly develop commodity prices hedge transactions, LUIS FERNANDO MONTEIRO DE GOUVEA mitigating risks of product price variation. • In line with its Stock Arbitration Desk, BI&P Corretora Luis Fernando Monteiro de Gouvea has over 40 years of is the market maker for 21 BDRs (Brazilian Depositary experience in the financial market, and built his career at the R e c e i p t s ) o f U . S . c o m p a n i e s t h a t a re t r a d e d a t brokerage firm Comercial S/A. He also served as COO and main BM&FBovespa: 3M, Abbot, Apple, Avon, Arcelor Mittal, shareholder of Comercial Asset Management Administração Bank of America, Citigroup, ConocoPhillips, DuPont, de Recursos S/A (2005-2009). Comercial S/A’s history begins in Ebay, Eli Lilly, Exxon Mobil, Goldman Sachs, Google, 1971, with the participation of Luis Fernando since 1976, when Home Depot, J.P. Morgan, McDonald’s, Pfizer, United he became the company’s partner and officer. Parcel, US Steel and Walmart. In 2011, despite the highly challenging scenario for brokerageactivities, due to high competitiveness and uncertainties arisingfrom the global macroeconomic scenario, Indusval & PartnersCorretora has maintained a solid business volume, ensuring an INDUSVAL & PARTNERS CORRETORA IS THE MARKET MAKER OF 21 BDRSoutstanding position in certain segments of BM&FBovespa: (BRAZILIAN DEPOSITARY RECEIPTS) OF U.S. COMPANIES TRADED ON BM&FBOVESPA. • In the Bovespa segment: 3 rd position in forward transactions; • In the BM&F segment: it stands out in transactions with agricultural commodities, especially live cattle and coffee, ranking 9th and 12th, respectively, in 2011.
2011 A nnual Report .27BI&P confir ms its commitment to the bestCorporate Gover nance practicesMIGRATION TO THE CORPORATE GOVERNANCELEVEL 2 (NÍVEL 2) LISTING SEGMENT O n March 1, 2012, BI&P voluntarily adhered to the Listing Rules of BM&FBovespa’s Corporate Governance Level 2. Despite having initially listed its shares in Corporate Governance Level 1, BI&P already providedits shareholders with the same rights as those granted by companies listed in the Novo Mercado,except for capital consisting in common shares only, making it eligible to integrate the SpecialTag Along and Special Corporate Governance Stock Indexes. By adhering to Level 2, BI&P also provides its preferred shares with the right to vote in shareholders’meetings that address certain issues of extreme relevance for the conduction of its business. Additional voting rights in shareholders’ meetings granted to preferred shareholders, limitedto the following matters: 1. Transformation, incorporation, merger or spin-off of the Company; 2. Approve agreements between the Company and related parties, directly or indirectly, whenever resolved in a General Meeting; 3. Evaluation of assets used to pay the Company’s capital increase; 4. Choosing a specialized company to determine the Company’s Economic Value, in the event of cancellation of the register as a publicly-held Company; and 5. Amendment or cancellation of provisions in the bylaws that alter or modify requirements provided in the basic clauses of the Level 2 Listing Rules. THE COMPANY’S ADHESION TO CORPORATE GOVERNANCE LEVEL 2 SHOULD CONTRIBUTE TO INCREASING THE LIQUIDITY OF BI&P’S SHARES, IDVL3 BECAUSE IT WILL ATTRACT A DIFFERENT TYPE OF INVESTOR, ONE THAT VALUES AND IS COMMITTED TO GOOD CORPORATE GOVERNANCE STANDARDS. IDVL4
2011 A nnual Report .28AdministrativeStr ucture
2011 A nnual Report .29Administrative AdministrativeStr ucture Compliance e Internal Controls Accounting and Controlling Risk ManagementTHE BASIS FOR SAFE AND EFFICIENT BUSINESS DEVELOPMENT Legal I Human Resources n order to guarantee the implementation and development of the new business strategy, and also its continuity and expansion in a safe and efficient Information Technologymanner, it is important that the support and control divisions be committed to it. The divisions that comprise the administrative structure worked hard in 2011to internalize the culture of excellence, taking over the challenge of becoming areference in processes and systems. These divisions also received additions to their teams and invested in equipmentand systems, including the installation of the new headquarters in the Faria Limaregion, to ensure higher efficiency and proximity to our business partners. Fundamental issues for the success of our strategy are: • People Management • Risk Management