HSBC J.P. Morgan Standard Chartered Bank - bicbanco

Adverse changes in Brazilian economic conditions could cause an increase in defaults by customers on their
outstanding obligations to the Bank, which could materially reduce the Bank’s earnings.
The Bank’s banking and related businesses are significantly dependent on the ability of the Bank’s
customers to make payments on their loans and meet their other obligations to the Bank. If the Brazilian economy
worsens because of, among other factors:
• the level of economic activity;
• devaluation of the real;
• inflation; or
• an increase in domestic interest rates,
a greater portion of the Bank’s customers may not be able to repay loans when due or to meet their debt
service requirements, which would increase the Bank’s past due loan portfolio and could materially affect the
Bank’s financial condition.
Differences in corporate disclosure requirements and standards.
Disclosure requirements and standards applicable to Brazilian companies differ from those in the United
States in certain respects. In general, there may be substantially less information available about Brazilian
companies, including the Bank, as a whole than there would be generally available about a publicly traded company,
especially financial institutions, in the United States or certain other countries with highly developed capital
markets.
All Brazilian companies, including the Bank, prepare their financial statements in accordance with
Brazilian GAAP, which differ in certain respects from U.S. GAAP and IFRS. Although Law No 11,638 of
December 28, 2007 and Law No. 11,941 of May 27, 2009 were enacted in order to converge Brazilian accounting
standards and rules to those of IFRS, the Bank cannot guarantee the level of convergence that will occur. As a
result, Brazilian financial statements may differ significantly from financial statements prepared in accordance with
U.S. GAAP or the accounting standards of other countries. Thus, the items appearing on the financial statements of
a company in Brazil may not reflect its financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. GAAP or such other accounting standards.
Deterioration in economic and market conditions in other countries, especially emerging market countries, may
adversely affect the Brazilian economy and the Bank’s business.
The market for securities issued by Brazilian companies is influenced by economic and market conditions
in Brazil and, to varying degrees, market conditions in other Latin American and emerging countries and the United
States. Although economic conditions are different in each country, investors’ reactions to developments in one
country may affect the capital markets in other countries.
These conditions have included the depreciation of the Mexican peso in December 1994, the Asian
economic crisis in 1997, the Russian monetary crisis in 1998, the Argentine economic and political crisis in 2002
and the crisis recently experienced in the global financial markets, which had its roots in the subprime mortgage
crisis in the United States in 2008. Crises in other emerging markets may decrease investments in securities issued
by Brazilian companies, including securities issued by the Bank. This could affect the market price of the Bank’s
shares and make its access to capital markets and financings on acceptable terms in the future difficult or impossible.
Conditions in the Brazilian economy may limit the ability of the Bank’s clients to repay their loan obligations.
The Brazilian economy has been subject to a number of disruptions and conditions that have materially
adversely affected the availability of credit to Brazilian companies. Disruptions in the Brazilian economy may
adversely affect the Bank’s ability to grow its loan portfolio and the ability of certain of its clients to timely repay
AMR-248898-v2
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