ITAÚ UNIBANCO S.A. MANAGEMENT REPORT To our ... - Banco Itaú

NOTE 11 - CONTINGENT ASSETS AND LIABILITIES AND LEGAL LIABILITIES – TAX AND SOCIAL
SECURITY
In the ordinary course of its businesses, ITAÚ UNIBANCO and its subsidiaries are involved in contingencies that
may be classified as follows:
a) Contingent Assets: there are no contingent assets recorded.
b) Contingent Liabilities: The criteria to quantify contingencies are adequate in relation to the specific
characteristics of civil, labor and tax lawsuits portfolios, as well as other risks.
- Civil lawsuits
Collective lawsuits (related to claims considered similar and usual and the amounts of which are not
considered significant): contingencies are determined on a monthly basis and the expected amount of losses
is accrued according to statistical references that take into account the type of lawsuit and the characteristics
of the legal body (Small Claims Court or Regular Court).
Individual lawsuits (related to claims with unusual characteristics or involving significant amounts):
determined from time to time, based on the amount claimed and the likelihood of loss, which, in turn, is
estimated according to the “ex facto” and “ex jure” characteristics related to such lawsuit. The amounts which
likelihood of loss is considered probable are accrued.
Contingencies usually arise from revision of contracts and compensation for property damage and pain and
suffering; most of these lawsuits are filed in the Small Claims Court and therefore limited to 40 minimum
monthly wages.
The bank is also party to specific lawsuits over the charging of understated inflation adjustment to savings
accounts in connection with economic plans.
The case law at the Federal Supreme Court is favorable to banks in relation to an economic phenomenon
similar to savings, as in the case of adjustment to time deposits and contracts in general. Additionally, the
Superior Court of Justice has recently decided that the term for filing public civil actions over understated
inflation is five years. In view of such decision, some of the lawsuits may be dismissed because they were
filed after a five-year period.
In the accounting books, the amounts related to civil lawsuits which likelihood of loss is possible, which total
estimated risk amounts to R$ 763,985, are not recognized; these refer to claims on compensation or
collection, the individual amounts of which are not significant.
- Labor claims
Collective lawsuits (related to claims considered similar and which each individual amount is not considered
significant): The expected amount of loss is determined and accrued monthly by the moving average of
payments in relation to lawsuits settled in the last 12 months, plus the average cost of fees. These are
adjusted to the amounts deposited as guarantee for their execution when realized.
Individual lawsuits (related to claims with unusual characteristics or involving significant amounts):
determined from time to time, based on the amount claimed and the likelihood of loss, which, in turn, is
estimated according to the “de facto” and “de jure” characteristics related to such lawsuit. The amounts of
losses which likelihood of loss is considered probable are accrued.
Contingencies are related to lawsuits in which alleged labor rights based on labor legislation specific to the
related profession, such as overtime, salary equalization, reinstatement, transfer allowance, pension plan
supplement and other, are discussed.